KINETICS MUTUAL FUNDS INC, 497, 2000-09-15

KINETICS MUTUAL FUNDS INC
497, 2000-09-15

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September 15, 2000 PROSPECTUS www.kineticsfunds.com

[LOGO] The INTERNET Fund

[LOGO] The Internet INFRASTRUCTURE Fund

[LOGO] The Internet EMERGING GROWTH Fund

[LOGO] The Internet GLOBAL GROWTH Fund

[LOGO] The NEW PARADIGM Fund

[LOGO] The MEDICAL Fund

[LOGO] The SMALL CAP OPPORTUNITIES Fund

[LOGO] The MIDDLE EAST GROWTH Fund

[LOGO] The ASIA TECHNOLOGY Fund

Each a series of Kinetics Mutual Funds, Inc.

[LOGO] Kinetics Mutual Funds, Inc.

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

The Internet Fund..............................................................4
The Infrastructure Fund........................................................9
The Emerging Growth Fund......................................................13
The Global Growth Fund........................................................17
The New Paradigm Fund.........................................................22
The Medical Fund..............................................................26
The Small Cap Fund............................................................30
The Middle East Fund..........................................................34
The Asia Technology Fund......................................................39
Main Risks of Investing in each of the Funds..................................44
Management of the Funds and the Portfolios....................................49
Valuation of Fund Shares......................................................51
How to Purchase Shares........................................................45
How to Redeem Shares..........................................................53
Exchange Privilege............................................................54
Distributions and Taxes.......................................................56
Distribution of Shares........................................................57
Unique Characteristics of Master/Feeder Fund Structure........................58
Counsel and Independent Auditors..............................................59
Financial Highlights of the Internet Fund and Medical Fund....................60

[LOGO] Kinetics Mutual Funds, Inc.

PROSPECTUS

This Prospectus provides 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.

INVESTMENT ADVISER
Kinetics Asset Management, Inc.

MINIMUM INITIAL INVESTMENT
$1,000

SEPTEMBER 15, 2000

OVERVIEW

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 is a no-load, non-diversified investment company. Unlike many other
investment companies which directly acquire and manage their own portfolios of
securities, each Fund 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 60.

THE INTERNET FUND (the "Internet Fund") seeks to provide investors with
long-term capital growth by investing in the Internet Portfolio. The Internet
Portfolio invests primarily in the equity securities of U.S. and foreign
companies engaged in the Internet and a broad range of Internet-related
activities.

THE INTERNET INFRASTRUCTURE FUND (the "Infrastructure Fund") seeks to provide
investors with long-term capital growth by investing in the Internet
Infrastructure Portfolio (the "Infrastructure Portfolio"). The Infrastructure
Portfolio invests primarily in the equity securities of U.S. and foreign
companies engaged in developing and implementing hardware, software and
communications technologies that support the growing infrastructure and
activities of the Internet.

THE INTERNET EMERGING GROWTH FUND (the "Emerging Growth Fund") seeks to provide
investors with long-term capital growth by investing in the Internet Emerging
Growth Portfolio (the "Emerging Growth Portfolio"). The Emerging Growth
Portfolio invests primarily in the equity securities of small and medium
capitalization U.S. and foreign growth emerging companies engaged in business on
the Internet and Internet-related activities.

THE INTERNET GLOBAL GROWTH FUND (the "Global Growth Fund") seeks to provide
investors with long-term capital growth by investing in the Internet Global
Growth Portfolio (the "Global Growth Portfolio"). The Global Growth Portfolio
invests primarily in the equity securities of foreign and U.S. companies engaged
in business on the Internet and Internet-related activities.

THE NEW PARADIGM FUND (the "New Paradigm Fund") seeks to provide investors with
long-term capital growth by investing in the New Paradigm Portfolio (the "New
Paradigm Portfolio"). The New Paradigm Portfolio invests primarily in the equity
securities of U.S. and foreign companies that the investment adviser believes
are well positioned to reduce their costs, extend the reach of their
distribution channels and experience significant growth in revenues as a result
of the companies' increased involvement in, or growth of, the Internet.

THE MEDICAL FUND (the "Medical Fund") seeks to provide investors with long-term
capital growth by investing all of its investable assets in The Medical
Portfolio (the "Medical Portfolio"). The Medical Portfolio invests primarily in
the equity securities of U.S. and foreign companies engaged in medical research,
pharmaceutical treatments and related medical technology with a focus on
companies engaged in cancer research and drug development.

THE SMALL CAP OPPORTUNITIES FUND (the "Small Cap Fund") seeks to provide
investors with long-term capital growth by investing all of its investable
assets in The Small Cap Opportunities Portfolio (the "Small Cap Portfolio"). The
Small Cap Portfolio invests primarily in the equity securities of U.S. and
foreign small capitalization companies that provide attractive valuation
opportunities due to special situations such as lack of institutional ownership,
lack of significant analyst coverage, or companies with sound fundamentals that
have experienced a short-term earnings shortfall.

THE MIDDLE EAST GROWTH FUND (the "Middle East Fund") seeks to provide investors
with long-term capital growth by investing all of its investable assets in The
Middle East Growth Portfolio (the "Middle East Portfolio"). The Middle East
Portfolio invests primarily in the equity securities of foreign companies
domiciled in the Middle East region of the globe and U.S. companies engaged in
significant business activities in the Middle East.

THE ASIA TECHNOLOGY FUND (the "Asia Technology Fund") seeks to provide investors
with long-term capital growth by investing all of its investable assets in The
Asia Technology Portfolio (the "Asia Technology Portfolio"). The Asia Technology
Portfolio invests primarily in the equity securities of companies located or
operating primarily in Asia engaged in technology related business activities.
PLEASE NOTE: THE ASIA TECHNOLOGY FUND AND ASIA TECHNOLOGY PORTFOLIO WILL
COMMENCE OPERATIONS ON OCTOBER 20, 2000.

The Statement of Additional Information contains more information about the
Funds and the types of securities in which they may invest.

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

THE INTERNET FUND

INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

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. 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 U.S. and foreign companies
that provide products or services designed for the Internet or are otherwise
engaged in Internet-related activities. The Internet Portfolio may also write
and sell options on securities in which it invests for hedging purposes and/or
direct investment.

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.

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

o COMPUTER HARDWARE: 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 COMPUTER SOFTWARE: 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 VENTURE CAPITAL: Companies that invest in pre-IPO and start-up
stage companies with business models related to the Internet.

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

o INTERNET PORTALS: Companies that provide users with search-engine
services to access various sites by category on the Internet.

o WIRELESS/BROADBAND ACCESS: Com0panies that provide the infrastructure to
enable high-speed and wireless communication of data via 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 TELECOMMUNICATIONS: Companies that are primarily engaged in the development
of the telecommunications transmission lines and software technologies that
enhance the reach and bandwidth of Internet users.

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.

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 U.S. 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 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.

o OPTION TRANSACTION RISKS: The Internet Portfolio may write and sell options
on securities in which it invests for hedging purposes and/or direct
investment. Options contain certain special risks including the imperfect
correlation between the value of the option and the value of the underlying
asset.

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.

CALENDAR YEAR RETURNS AS OF 12/31

The total return for the six months ended June 30, 2000 was -28.00%

BEST QUARTER: Q1 1999 93.07%
WORST QUARTER: Q2 2000 -33.42%

AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/99
1 YEAR 3 YEARS SINCE
INCEPTION1
The Internet Fund (WWWFX) 216.50% 119.44% 105.18%
S&P 500 Index (with dividends reinvested)2 21.05% 27.56% 27.52%
NASDAQ Composite Index 86.13% 47.07% 45.68%
(with dividends reinvested)3

1. The Internet Fund commenced operation on October 21, 1996 and converted into
a feeder fund of the Internet Portfolio on May 1, 2000. The returns for the two
indexes in this column have been calculated since the Internet Fund's inception
date. Returns shown include the reinvestment of all dividends.

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. Returns shown
include the reinvestment of all dividends.

3. The NASDAQ Composite Index is a broad-based capitalization-weighted index
of all NASDAQ stocks. The returns shown include the reinvestment of all
dividends.

FEES AND EXPENSES OF THE INTERNET FUND

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

FEE TABLE1

SHAREHOLDER TRANSACTION EXPENSES2 (fees paid directly from your investment)

Maximum Sales Charge (Load) Imposed on Purchases None
(as a percentage of offering price)
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 Fee3 None
Maximum Account Fee4 None

ESTIMATED ANNUAL OPERATING EXPENSES (expenses deducted from Fund assets)

Management Fees5 1.25%
Distribution (Rule 12b-1) Fees None
Other Expenses 0.75%
Total Annual Fund Operating Expenses 2.00%6

1. This fee table reflects the aggregate expenses of the Internet Fund and the
Internet Portfolio.

2. 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 Internet Fund and any other series of Kinetics Mutual
Funds, Inc.

3. The Internet Fund's Transfer Agent charges a $5 transaction fee to
shareholder accounts for telephone exchanges between any two series of Kinetics
Mutual Funds, Inc. The Transfer Agent does not charge a transaction fee for
written exchange requests.

4. IRA accounts are assessed a $12.50 annual fee.

5. The management fees paid by the Internet Fund reflect the fees paid by the
Internet Fund and the Internet Portfolio for investment advisory services. 6.
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 the 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 the
Internet Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Internet 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 Internet Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your cost for the Internet Fund would be:

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

THE INFRASTRUCTURE FUND

INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

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. 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 U.S. 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 Infrastructure Portfolio may
also write and sell options on securities in which it invests for hedging
purposes and/or direct investment.

Infrastructure 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 WIRELESS/BROADBAND ACCESS: Companies that provide the infrastructure to
enable high-speed and wireless communication of data via the Internet.

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

o TELECOMMUNICATIONS COMPANIES: Companies that are primarily engaged in the
development of the telecommunications transmission lines and software
technologies that enhance the reach and bandwidth 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.

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 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 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 U.S. 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 Infra-structure 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.

o OPTION TRANSACTION RISKS: The Infrastructure Portfolio may write and sell
options on securities in which it invests for hedging purposes and/or
direct investment. Options contain certain special risks including the
imperfect correlation between the value of the option and the value of the
underlying asset.

PERFORMANCE OF THE INFRASTRUCTURE FUND

Because the Infrastructure Fund and its corresponding Portfolio have had
investment operations for less than a full calendar year, there is no
performance information available for this Fund or Portfolio at this time.

FEES AND EXPENSES OF THE INFRASTRUCTURE FUND

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

FEE TABLE1

SHAREHOLDER TRANSACTION EXPENSES2 (fees paid directly from your investment)

ESTIMATED ANNUAL OPERATING EXPENSES (expenses deducted from Fund assets)

Management Fees5 1.25%
Distribution (Rule 12b-1) Fees None
Other Expenses 0.75%
Estimated Total Annual Fund Operating Expenses 2.00%

1. This fee table reflects the aggregate expenses of the Infrastructure Fund and
the Infrastructure Portfolio.

2. 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 Infrastructure Fund and any other series of Kinetics
Mutual Funds, Inc.

3. The Infrastructure Fund's Transfer Agent charges a $5 transaction fee to
shareholder accounts for telephone exchanges between any two series of Kinetics
Mutual Funds, Inc. The Transfer Agent does not charge a transaction fee for
written exchange requests.

4. IRA accounts are assessed a $12.50 annual fee.

5. The management fees paid by the Infrastructure Fund reflect the fees paid by
the Infrastructure Fund and the Infrastructure Portfolio for investment advisory
services.

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Infrastructure Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Infrastructure 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 Infrastructure Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your cost for the Infrastructure Fund would be:

1 YEAR 3 YEARS
$203 $627

THE EMERGING GROWTH FUND

INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE

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

PRINCIPAL INVESTMENT STRATEGIES

The Emerging Growth Fund seeks to achieve its investment objective by investing
all of its investable assets in the Emerging Growth Portfolio. Under normal
circumstances, the Emerging Growth Portfolio invests at least 65% of its assets
primarily 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 U.S. and foreign emerging companies engaged
in the Internet and Internet-related activities. The Emerging Growth Portfolio
may also write and sell options on securities in which it invests for hedging
purposes and/or direct investment.

Emerging Growth 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
Growth 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 VENTURE CAPITAL: Companies that invest in pre-ipo and start-up stage
companies with business models related to the internet.

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

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

o INTERNET PORTALS: Companies that provide users with search-engine
services to access various sites by category on the Internet.

o WIRELESS/BROADBAND ACCESS: Companies that provide the infrastructure to
enable high-speed and wireless communication of data via the Internet.

o E-COMMERCE: Companies that derive a substantial portion of their revenue
from sales of products and services conducted via 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 Growth Portfolio may invest up to 100% of its assets in high quality
U.S. short-term debt securities and money market instruments. The Emerging
Growth 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 Growth Portfolio engages in a temporary,
defensive strategy, the Emerging Growth Portfolio and therefore, the Emerging
Growth Fund, may not achieve its investment objective.

FUND STRUCTURE

The Emerging Growth Portfolio has an investment objective identical to that of
the Emerging Growth Fund. The Emerging Growth Fund may withdraw its investment
from the Emerging Growth Portfolio at any time if the Board of Directors of the
Company determines that it is in the best interests of the Emerging Growth Fund
to do so. Upon any such withdrawal, the Directors will consider what action
might be taken, including investing all of the Emerging Growth Fund's investable
assets in another pooled investment entity having substantially the same
objective and strategies as the Emerging Growth Fund or retaining an investment
adviser, including the current investment adviser, to manage the Emerging Growth
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 Growth Fund and
indirectly the Emerging Growth Portfolio are listed below and could adversely
affect the net asset value, total return and value of the Emerging Growth Fund,
Emerging Growth 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 Growth Portfolio is likely to decline in value and you
could lose money on your investment.

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

o EMERGING, SMALL AND MEDIUM-SIZE COMPANY RISKS: The Emerging Growth
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 $5 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 Growth Portfolio may invest in
foreign securities, which can carry higher returns but involve more risks
than those associated with U.S. 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 Growth Portfolio's assets may be concentrated in the common
stock of any single issuer, which may make the value of the Emerging Growth
Portfolio's shares and, therefore the Emerging Growth Fund's shares more
susceptible to certain risks than shares of a diversified mutual fund.

o OPTION TRANSACTION RISKS: The Emerging Growth Portfolio may write and sell
options on securities in which it invests for hedging purposes and/or
direct investment. Options contain certain special risks including the
imperfect correlation between the value of the option and the value of the
underlying asset.

PERFORMANCE OF THE EMERGING GROWTH FUND

Because the Emerging Growth Fund and its corresponding Portfolio have had
investment operations for less than a full calendar year, there is no
performance information available for this Fund or Portfolio at this time.

FEES AND EXPENSES OF THE EMERGING GROWTH FUND

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

FEE TABLE1

SHAREHOLDER TRANSACTION EXPENSES2 (fees paid directly from your investment)

ESTIMATED ANNUAL OPERATING EXPENSES (expenses deducted from Fund assets)

Management Fees5 1.25%
Distribution (Rule 12b-1) Fees None
Other Expenses 0.75%
Estimated Total Annual Fund Operating Expenses 2.00%

1. This fee table reflects the aggregate expenses of the Emerging Growth Fund
and the Emerging Growth Portfolio.

2. 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 Emerging Growth Fund and any other series of Kinetics
Mutual Funds, Inc.

3. The Emerging Growth Fund's Transfer Agent charges a $5 transaction fee to
shareholder accounts for telephone exchanges between any two series of Kinetics
Mutual Funds, Inc. The Transfer Agent does not charge a transaction fee for
written exchange requests.

4. IRA accounts are assessed a $12.50 annual fee.

5. The management fees paid by the Emerging Growth Fund reflects the fees paid
by the Emerging Growth Fund and the Emerging Growth Portfolio for investment
advisory services.

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Emerging Growth Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Emerging Growth 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 Emerging Growth Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, based on these
assumptions your cost for the Emerging Growth Fund would be:

1 YEAR 3 YEARS
$203 $627

THE GLOBAL GROWTH FUND

INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE

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

PRINCIPAL INVESTMENT STRATEGIES

The Global Growth Fund seeks to achieve its investment objective by investing
all of its investable assets in the Global Growth Portfolio. Under normal
circumstances, the Global Growth 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 companies
located in at least three countries which are engaged in the Internet and
Internet-related activities. The Global Growth Portfolio may also write and sell
options on securities in which it invests for hedging purposes and/or direct
investment.

Global Growth Portfolio securities will be selected by the investment adviser
from U.S. 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 Growth Portfolio's investment criteria. Accordingly, the Global Growth
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 CONTENT DEVELOPERS: Companies that supply proprietary information and
entertainment content, such as games, music, video, graphics, news, etc.
on the Internet.

o VENTURE CAPITAL: Companies that invest in pre-IPO and start-up stage
companies with business models related to the Internet.

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

o INTERNET PORTALS: Companies that provide users with search-engine
services to access various sites by category on the Internet.

o WIRELESS/BROADBAND ACCESS: Companies that provide the infrastructure to
enable high-speed and wireless communication of data via the Internet.

o E-COMMERCE: Companies that derive a substantial portion of their revenue
from sales of products and services conducted via 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 spends 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
Global Growth Portfolio may invest up to 100% of its assets in high quality U.S.
short-term debt securities and money market instruments. The Global Growth
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 Growth Portfolio engages in a temporary, defensive
strategy, the Global Growth Portfolio and therefore, the Global Growth Fund, may
not achieve its investment objective.

FUND STRUCTURE

The Global Growth Portfolio has an investment objective identical to that of the
Global Growth Fund. The Global Growth Fund may withdraw its investment from the
Global Growth Portfolio at any time if the Board of Directors of the Company
determines that it is in the best interests of the Global Growth Fund to do so.
Upon any such withdrawal, the Directors will consider what action might be
taken, including investing all of the Global Growth Fund's investable assets in
another pooled investment entity having substantially the same objective and
strategies as the Global Growth Fund or retaining an investment adviser,
including the current investment adviser, to manage the Global Growth 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 Growth Fund and indirectly
the Global Growth Portfolio are listed below and could adversely affect the net
asset value, total return and value of the Global Growth Fund, Global Growth
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 Growth Portfolio is likely to decline in value and you
could lose money on your investment.

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 Global Growth 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 Growth Portfolio's assets.

o FOREIGN SECURITIES RISKS: The Global Growth Portfolio may invest in foreign
securities, which can carry higher returns but involve more risks than
those associated with U.S. 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 Growth Portfolio's assets may be concentrated in the common
stock of any single issuer, which may make the value of the Global Growth
Portfolio's shares and, therefore the Global Growth Fund's shares more
susceptible to certain risks than shares of a diversified mutual fund.

o OPTION TRANSACTION RISKS: The Global Growth Portfolio may write and sell
options on securities in which it invests for hedging purposes and/or
direct investment. Options contain certain special risks including the
imperfect correlation between the value of the option and the value of the
underlying asset.

PERFORMANCE OF THE GLOBAL GROWTH FUND

Because the Global Growth Fund and its corresponding Portfolio have had
investment operations for less than a full calendar year, there is no
performance information available for this Fund or Portfolio at this time.

FEES AND EXPENSES OF THE GLOBAL GROWTH FUND

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

FEE TABLE1

SHAREHOLDER TRANSACTION EXPENSES2 (fees paid directly from your investment)

ESTIMATED ANNUAL OPERATING EXPENSES (expenses deducted from Fund assets)

Management Fees5 1.25%
Distribution (Rule 12b-1) Fees None
Other Expenses 1.00%
Estimated Total Annual Fund Operating Expenses 2.25%

1. This fee table reflects the aggregate expenses of the Global Growth Fund and
the Global Growth Portfolio.

2. 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 Global Growth Fund and any other series of Kinetics Mutual
Funds, Inc.

3. The Global Growth Fund's Transfer Agent charges a $5 transaction fee to
shareholder accounts for telephone exchanges between any two series of Kinetics
Mutual Funds, Inc. The Transfer Agent does not charge a transaction fee for
written exchange requests.

4. IRA accounts are assessed a $12.50 annual fee.

5. The management fees paid by the Global Growth Fund reflects the fees paid by
the Global Growth Fund and the Global Growth Portfolio for investment advisory
services.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Global
Growth Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Global Growth 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 Global Growth Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your cost for the Global Growth Fund would be:

1 YEAR 3 YEARS
$228 $703

THE NEW PARADIGM FUND

INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

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. Under normal
circumstances, the New Paradigm 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 U.S. 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. The New Paradigm Portfolio may also write and sell options on
securities in which it invests for hedging purposes and/or direct investment.

New Paradigm 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 that provide print, broadcast, cable, satellite and
web-based information and entertainment content.

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

o REAL ESTATE DEVELOPMENT: Companies that provide commercial real estate
property and services.

o BUSINESS SERVICES: Companies that provide business-to-business products and
services.

o TRAVEL & LEISURE: Companies that provide transportation and recreational
services.

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.

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

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 U.S. 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.

o OPTION TRANSACTION RISKS: The New Paradigm Portfolio may write and sell
options on securities in which it invests for hedging purposes and/or
direct investment. Options contain certain special risks including the
imperfect correlation between the value of the option and the value of the
underlying asset.

PERFORMANCE OF THE NEW PARADIGM FUND

Because the New Paradigm Fund and its corresponding Portfolio have had
investment operations for less than a full calendar year, there is no
performance information available for this Fund or Portfolio at this time.

FEES AND EXPENSES OF THE NEW PARADIGM FUND

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

FEE TABLE1

SHAREHOLDER TRANSACTION EXPENSES2 (fees paid directly from your investment)

ESTIMATED ANNUAL OPERATING EXPENSES (expenses deducted from Fund assets)

Management Fees5 1.25%
Distribution (Rule 12b-1) Fees None
Other Expenses 0.75%
Estimated Total Annual Fund Operating Expenses 2.00%

1. This fee table reflects the aggregate expenses of the New Paradigm Fund and
the New Paradigm Portfolio.

2. 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 New Paradigm Fund and any other series of Kinetics Mutual
Funds, Inc.

3. The New Paradigm Fund's Transfer Agent charges a $5 transaction fee to
shareholder accounts for telephone exchanges between any two series of Kinetics
Mutual Funds, Inc. The Transfer Agent does not charge a transaction fee for
written exchange requests.

4. IRA accounts are assessed a $12.50 annual fee.

5. The management fees paid by the New Paradigm Fund reflects the fees paid by
the New Paradigm Fund and the New Paradigm Portfolio for investment advisory
services.

EXAMPLE

This Example is intended to help you compare the cost of investing in the New
Paradigm Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the New Paradigm 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 New Paradigm Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your cost for the New Paradigm Fund would be:

1 YEAR 3 YEARS
$203 $627

THE MEDICAL FUND

INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE

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

PRINCIPAL INVESTMENT STRATEGIES

The Medical Fund seeks to achieve its investment objective by investing all of
its investable assets in the Medical Portfolio. Under normal circumstances, the
Medical 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 U.S. 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
Medical Portfolio may also write and sell options on securities in which it
invests for hedging purposes and/or direct investment.

The Medical 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 Medical Portfolio seeks to invest in the equity
securities of companies whose research and development efforts may result in
higher stock values.

Medical 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
Medical Portfolio's investment criteria. Such companies include, but are not
limited to the following:

o PHARMACEUTICAL DEVELOPMENT: 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 BIOTECH & MEDICAL RESEARCH: 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 also looks at the
amount of capital a company spends on research and development because the
investment adviser believes that such expenditures frequently have significant
bearing on future growth.

TEMPORARY INVESTMENTS

To respond to adverse market, economic, political or other conditions, the
Medical Portfolio may invest up to 100% of its assets in high quality U.S.
short-term debt securities and money market instruments. The Medical 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 acceptances

o U.S. Government securities (i.e., U.S. Treasury obligations)

o repurchase agreements

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

FUND STRUCTURE

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

o FOREIGN SECURITIES RISKS: The Medical Portfolio may invest in foreign
securities, which can carry higher returns but involve more risks than
those associated with U.S. 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 Medical Portfolio's assets may be concentrated in the common stock of
any single issuer, which may make the value of the Medical Portfolio's
shares, and, therefore, the Medical Fund's shares, more susceptible to
certain risks than shares of a more diversified mutual fund.

o OPTION TRANSACTION RISKS: The Medical Portfolio may write and sell options
on securities in which it invests for hedging purposes and/or direct
investment. Options contain certain special risks including the imperfect
correlation between the value of the option and the value of the underlying
asset.

PERFORMANCE OF THE MEDICAL FUND

Because the Medical Fund and its corresponding Portfolio has had investment
operations for less than a full calendar year, there is no performance
information available for this Fund or Portfolio at this time.

FEES AND EXPENSES OF THE MEDICAL FUND

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

FEE TABLE 1

SHAREHOLDER TRANSACTION EXPENSES2 (fees paid directly from your investment)

ESTIMATED ANNUAL OPERATING EXPENSES (expenses deducted from Fund assets)

Management Fees5 1.25%
Distribution (Rule 12b-1) Fees None
Other Expenses 4.74%
Total Annual Fund Operating Expenses 5.99%
Expense Reimbursement 3.99%
Net Total Annual Fund Operating Expenses 2.00%6

1. This fee table reflects the aggregate expenses of the Medical Fund and the
Medical Portfolio.

2. 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 Medical Fund and any other series of Kinetics Mutual
Funds, Inc.

3. The Medical Fund's Transfer Agent charges a $5 transaction fee to shareholder
accounts for telephone exchanges between any two series of Kinetics Mutual
Funds, Inc. The Transfer Agent does not charge a transaction fee for written
exchange requests.

4. IRA accounts are assessed a $12.50 annual fee.

5. The management fees paid by the Medical Fund reflects the fees paid by the
Medical Fund and the Medical Portfolio for investment advisory services. 6. The
investment adviser has voluntarily agreed to limit the total annual operating
expenses of the Medical Fund so that they do not exceed more than 2.00% of the
Medical 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 the
Medical Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Medical 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 Medical Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your cost for the Medical Fund would be:

1 YEAR 3 YEARS
$203 $627

THE SMALL CAP FUND

INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE

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

PRINCIPAL INVESTMENT STRATEGIES

The Small Cap Fund seeks to achieve its investment objective by investing all of
its investable assets in the Small Cap Portfolio. Under normal circumstances,
the Small Cap 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 U.S. and foreign
small capitalization companies that provide attractive valuation opportunities.
The Small Cap Portfolio may also write and sell options on securities in which
it invests for hedging purposes and/or direct investment.

The Small Cap Portfolio's investment adviser believes that favorable investment
opportunities are available through companies that exhibit a number of the
following characteristics: have a market capitalization under $1 billion, have
little or no institutional ownership, have had short-term earnings shortfalls,
have had a recent IPO but have not attracted significant analyst coverage, are
selling at or below book or replacement value, and have price to earnings ratios
that are less than one half of their projected growth rate.

Small Cap Portfolio securities will be selected from companies that are engaged
in a number of industries if, in the investment adviser's opinion, the companies
meet the Small Cap Portfolio's investment criteria. Such companies include, but
are not limited to the following:

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

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

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

o MANUFACTURING AND CONSUMER PRODUCTS: Companies that manufacture and
distribute products to retail outlets.

The investment adviser considers a company's fundamentals by reviewing its
balance sheets, corporate revenues, earnings and dividends. The investment
adviser also looks at the amount of capital a company spends on research and
development.

TEMPORARY INVESTMENTS

To respond to adverse market, economic, political or other conditions, the Small
Cap Portfolio may invest up to 100% of its assets in high quality U.S.
short-term debt securities and money market instruments. The Small Cap 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 acceptances

o U.S. Government securities (i.e., U.S. Treasury obligations)

o repurchase agreements

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

FUND STRUCTURE

The Small Cap Portfolio has an investment objective identical to that of the
Small Cap Fund. The Small Cap Fund may withdraw its investment from the Small
Cap Portfolio at any time if the Board of Directors of the Company determines
that it is in the best interests of the Small Cap Fund to do so. Upon any such
withdrawal, the Directors will consider what action might be taken, including
investing all of the Small Cap Fund's investable assets in another pooled
investment entity having substantially the same objective and strategies as the
Small Cap Fund or retaining an investment adviser including, the current
investment adviser, to manage the Small Cap 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 Small Cap Fund and, indirectly,
the Small Cap Portfolio, are listed below and could adversely affect the net
asset value, total return and value of the Small Cap Fund, the Small Cap
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 Small Cap Portfolio is likely to decline in value and you could
lose money on your investment.

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

o SMALL COMPANY RISKS: The Small Cap Portfolio may invest in the stocks of
small-sized companies. Small-sized 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 Small Cap Portfolio's assets.

o FOREIGN SECURITIES RISKS: The Small Cap Portfolio may invest in foreign
securities, which can carry higher returns but involve more risks than
those associated with U.S. 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 Small Cap Portfolio's assets may be concentrated in the common stock of
any single issuer, which may make the value of the Small Cap Portfolio's
shares, and therefore, the Small Cap Fund's shares, more susceptible to
certain risks than shares of a more diversified mutual fund.

o OPTION TRANSACTION RISKS: The Small Cap Portfolio may write and sell
options on securities in which it invests for hedging purposes and/or
direct investment. Options contain certain special risks including the
imperfect correlation between the value of the option and the value of the
underlying asset.

PERFORMANCE OF THE SMALL CAP FUND

Because the Small Cap Fund and its corresponding Portfolio have had investment
operations for less than a full calendar year, there is no performance
information available for this Fund or Portfolio at this time.

FEES AND EXPENSES OF THE SMALL CAP FUND

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

FEE TABLE1

SHAREHOLDER TRANSACTION EXPENSES2 (fees paid directly from your investment)

ESTIMATED ANNUAL OPERATING EXPENSES (expenses deducted from Fund assets)

Management Fees5 1.25%
Distribution (Rule 12b-1) Fees None
Other Expenses 0.75%
Estimated Total Annual Fund Operating Expenses 2.00%

1. This fee table reflects the aggregate expenses of the Small Cap Fund and the
Small Cap Portfolio.

2. 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 Small Cap Fund and any other series of Kinetics Mutual
Funds, Inc.

3. The Small Cap Fund's Transfer Agent charges a $5 transaction fee to
shareholder accounts for telephone exchanges between any two series of Kinetics
Mutual Funds, Inc. The Transfer Agent does not charge a transaction fee for
written exchange requests.

4. IRA accounts are assessed a $12.50 annual fee.

5. The management fees paid by the Small Cap Fund reflect the fees paid by the
Small Cap Fund and the Small Cap Portfolio for investment advisory services.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Small
Cap Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Small Cap 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 Small Cap Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your cost for the Small Cap Fund would be:

1 YEAR 3 YEARS
$203 $627

THE MIDDLE EAST FUND

INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE

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

PRINCIPAL INVESTMENT STRATEGIES

The Middle East Fund seeks to achieve its investment objective by investing all
of its investable assets in the Middle East Portfolio. The Middle East Portfolio
invests primarily in common stocks, convertible securities, warrants and other
equity securities having the characteristics of common stocks, such as ADRs and
IDRs of foreign companies domiciled in the Middle East region of the globe and
U.S. companies engaged in significant business activities in the Middle East.
The Middle East Portfolio may also write and sell options on securities in which
it invests for hedging purposes and/or direct investment. The Middle East
Portfolio defines the "Middle East" to be that region ranging from Morocco on
the North African coast, including Algeria, Tunisia, Libya, Egypt, Sudan and
Chad, to the Persian Gulf region, including Israel, Lebanon, Jordan, Syria,
Iraq, Iran, Saudi Arabia, Yemen, People's Republic of Yemen, Oman, United Arab
Emirates, Qatar and Kuwait. Based on their gross domestic products and stock
market capitalizations, it is expected that Israel and Egypt will represent the
largest country investments in the Middle East Portfolio.

The Middle East Portfolio's adviser believes that the Middle East offers
significant investment opportunities. The Middle East region is characterized by
wide variations in wealth, physical resources, economic development and
demographics, among other fundamental measures. Some of these nations, notably
Israel, have attained world-class status in areas such as technological
innovation. This great divergence is encompassed in a relatively small region
and is coupled with varying degrees of progress in economic development,
privatization, and financial market deregulation.

The Middle East's positioning in the technology and biotechnology sectors and
the historical constraints on valuation due to geo-political turmoil have
created many attractive investment valuations. Historically, political risk has
been manifested in local financial markets in the form of significant valuation
discounts, particularly on an episodic short-term basis. Improved prospects for
political stability in the region and the anticipation of progress in peace
negotiations has historically resulted in significant appreciation in many of
these markets. The recent advent of the Internet has provided many technology
and bio-technology companies, with a strong track record for innovation, the
ability to communicate electronically, access and share information and conduct
business around the world.

Middle East Portfolio securities will be selected from foreign or U.S. companies
that are organized under the laws of Middle East nations or which, at the time
of investment are determined to hold a significant portion of their assets in or
derive a significant proportion of their gross revenues from Middle East
nations. These companies may be large, medium or small in size if, in the
investment adviser's opinion, the companies meet the Middle East Portfolio's
investment criteria. Accordingly, the Middle East Portfolio seeks to invest in
the 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 COMPUTER SOFTWARE: Companies that produce, manufacture and develop tools to
enhance the speed, integrity and storage of data, facilitate information
distribution and gathering, provide secure electronic transactions, and
operate other computer and telecommunications-based applications, for U.S.
and export markets.

o COMPUTER HARDWARE: 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, for U.S. and export markets.

o INTERNET: Companies that develop, produce and sell products and services
via and in support of the Internet, especially in local markets.

o PHARMACEUTICAL AND BIOTECHNOLOGY: Companies that develop and market drug
and medical treatment products and technologies, especially for the export
marketplace.

o LOCAL RETAIL FRANCHISE: Companies that benefit from regulatory, cultural or
physical characteristics specific to the region, such as non-alcoholic
brewers, air conditioning distributors and financial institutions.

o GROWTH IN POPULATION/WEALTH: Companies that benefit from local demographic
trends in fields such as real estate, mortgage banking, telecommunications
and food manufacturers/distributors.

The investment adviser selects portfolio securities by evaluating a company's
positioning and the business model as well as its ability to grow and expand its
business. The investment adviser also considers a company's fundamentals by
reviewing its balance sheets, corporate revenues, earnings and dividends. The
investment adviser also looks at the amount of capital a company spends 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
Middle East Portfolio may invest up to 100% of its assets in high quality U.S.
short-term money market instruments. The Middle East Portfolio may invest up to
35% of its assets in these securities to maintain liquidity. Some of the
short-term money market 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 Middle East Portfolio engages in this temporary,
defensive strategy, the Middle East Portfolio and, therefore, the Middle East
Fund, may not achieve its investment objective.

FUND STRUCTURE

The Middle East Portfolio has an investment objective identical to that of the
Middle East Fund. The Middle East Fund may withdraw its investment from the
Middle East Portfolio at any time if the Board of Directors of the Company
determines that it is in the best interests of the Middle East Fund to do so.
Upon any such withdrawal, the Directors will consider what action might be
taken, including investing all of the Middle East Fund's investable assets in
another pooled investment entity having substantially the same objective and
strategies as the Middle East Fund or retaining an investment adviser, including
the current investment adviser, to manage the Middle East 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 Middle East Fund and, indirectly,
the Middle East Portfolio, are listed below and could adversely affect the net
asset value, total return and value of the Middle East Fund, the Middle East
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 Middle East Portfolio is likely to decline in value and you
could lose money on your investment.

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 development. 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 TECHNOLOGY AND BIO-TECHNOLOGY INDUSTRY SPECIFIC RISKS: Companies that
conduct business on the technology and bio-technology fields are subject to
the rate of change in technology and scientific innovation, as well as
competition, which is generally higher than that of other industries.

o SMALL AND MEDIUM-SIZED COMPANY RISKS: The Middle East Portfolio may invest
in the stocks of small, medium and large-sized 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 Middle East Portfolio's assets.

o POLITICAL RISKS: The Middle East Portfolio will invest in securities of
foreign countries that have experienced historical periods of political
instability. These securities can carry higher returns but involve more
risks than those associated with U.S. investments.

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

o EMERGING MARKET RISKS: The Middle East Portfolio invests in emerging as
well as developed markets in the Middle East. Countries in emerging markets
can have relatively unstable government economies based on only a few
industries, and securities markets that trade a small number of issues.

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

o OPTION TRANSACTION RISKS: The Middle East Portfolio may write and sell
options on securities in which it invests for hedging purposes and/or
direct investment. Options contain certain special risks including the
imperfect correlation between the value of the option and the value of the
underlying asset.

PERFORMANCE OF THE MIDDLE EAST FUND

Because the Middle East Fund and its corresponding Portfolio have had investment
operations for less than a full calendar year, there is no performance
information available for this Fund or Portfolio at this time.

FEES AND EXPENSES OF THE MIDDLE EAST FUND

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

FEE TABLE1

SHAREHOLDER TRANSACTION EXPENSES2 (fees paid directly from your investment)

ESTIMATED ANNUAL OPERATING EXPENSES (expenses deducted from Fund assets)

Management Fees5 1.25%
Distribution (Rule 12b-1) Fees None
Other Expenses 1.00%
Estimated Total Annual Fund Operating Expenses 2.25%

1. This fee table reflects the aggregate expenses of the Middle East Fund and
the Middle East Portfolio.

2. 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 Middle East Fund and any other series of Kinetics Mutual
Funds, Inc.

3. The Middle East Fund's Transfer Agent charges a $5 transaction fee to
shareholder accounts for telephone exchanges between any two series of Kinetics
Mutual Funds, Inc. The Transfer Agent does not charge a transaction fee for
written exchange requests.

4. IRA accounts are assessed a $12.50 annual fee.

5. The management fees paid by the Middle East Fund reflects the fees paid by
the Middle East Fund and the Middle East Portfolio for investment advisory
services.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Middle
East Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Middle East 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 Middle East Fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these assumptions
your cost for the Middle East Fund would be:

1 YEAR 3 YEARS
$228 $703

THE ASIA TECHNOLOGY FUND

INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

INVESTMENT OBJECTIVE

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

PRINCIPAL INVESTMENT STRATEGIES

The Asia Technology Fund seeks to achieve its investment objective by investing
all of its investable assets in the Asia Technology Portfolio. Under normal
circumstances, the Asia Technology Portfolio invests, without regard to size or
industry within the technology sector, at least 65% of its assets in the equity
securities of Asian companies that the portfolio manager believes are engaged in
technology related business activities. Such companies may use technology
extensively in the development of new or improved products or processes or,
alternatively, may benefit from the commercialization of technological advances,
although they may not be involved in research and development. The Asia
Portfolio may also, from time to time, utilize certain derivatives for hedging
purposes and/or direct investment.

Under normal circumstances, the Asia Technology Portfolio will invest in at
least three different Asian countries. The Asia Technology Portfolio considers
Asian companies to include companies that are organized under the laws of any
country in the Asian region, including Sri Lanka, Hong Kong, Pakistan, Japan,
Thailand, Malaysia, Brunei, China, Cambodia, Taiwan, India, Indonesia, South
Korea, the Philippines, Singapore, Vietnam and Myanmar. The sub-adviser also
considers companies to be Asian if the Asia Fund's sub-adviser, determines that
they: (1) derive at least 50% of their revenues from goods produced or sold,
investments made or services performed in or with one or more of the Asian
countries; (2) maintain at least 50% of their assets in one or more Asian
countries; or (3) have securities which are traded principally on the stock
exchange in an Asian country.

The Asia Technology Portfolio is not restricted with respect to its allocation
of its assets among Asian countries. The sub-adviser will determine such
allocation in its discretion based on various factors such as the prospects for
economic growth, expected inflation levels, government policies and the range of
available investment opportunities.

The companies in which the Asia Technology Portfolio invests may be large,
medium or small in size if, in the adviser's opinion, the companies meet the
Asia Technology Portfolio's investment criteria. Furthermore, portfolio
securities will be selected from a wide variety of industries. Industries likely
to be represented in the investment portfolio include the Internet, computers
and computer peripherals, software, electronic components and systems,
communications equipment and services, semiconductors, media and information
services, pharmaceuticals, hospital supply and medical devices, biotechnology
products, environmental services, chemical products and synthetic materials and
defense and aerospace products and services.

Asia Technology Portfolio securities are selected based on a rigorous bottom-up
approach to identify undervalued stocks. The sub-adviser will emphasize
intensive research and stock picking as the basis of a disciplined and
systematic approach to identifying such under-priced securities. Fundamental
parameters that are value and/or growth oriented are used to screen the stock
universe to identify companies that are likely to outperform. In addition,
regular company visits are an intrinsic part of the screening process. Other
investment techniques such as top-down macro analysis and market valuation are
used by the sub-adviser to support asset allocation decisions among the various
Asian countries listed above. Quantitative tools are used by the sub-adviser to
help identify and manage the Asia Technology Portfolio's exposure to different
risk factors. The sub-adviser considers whether to sell a particular security
when any of these factors materially change.

The Asia Technology Portfolio may from time to time utilize certain
sophisticated investment techniques, including derivatives. Derivatives are
financial instruments which derive their value from the performance of an
underlying asset, another security, a commodity, or an index. Examples of these
include:

o FORWARD FOREIGN EXCHANGE CONTRACTS. When the Asia Technology Portfolio buys
a foreign security, it generally does so in a foreign currency. That
currency has a price, and that price fluctuates. In order to reduce the
risk of currency price swings or for other purposes, the Portfolio may buy
forward foreign exchange contracts on foreign currencies. These contracts
"lock in" a price for the currency at a certain future date. The Asia
Technology Portfolio may also use put and call options on foreign
currencies.

o OPTIONS AND WARRANTS. An option is a contract giving the owner the right to
buy ("call option") or sell ("put option") a security at a designated price
("strike price") on a certain date. A warrant is the equivalent of a call
option written by the issuer of the underlying security.

o FUTURES CONTRACTS. Futures contracts obligate one party to deliver and the
other party to purchase a specific quantity of a commodity or a financial
instrument at a designated future date, time and place. Stock index futures
contracts call for a cash payment based on the increase or decrease in the
value of an index. The Asia Technology Portfolio may enter into foreign
currency forward contracts, repurchase agreements, ARINs, and certain other
types of futures, options and derivatives with banks, brokerage firms and
other investors in over-the-counter markets, not through any exchange.

TEMPORARY INVESTMENTS

To respond to adverse market, economic, political or other conditions, the Asia
Technology Portfolio may invest up to 100% of its assets in high quality, debt
and money market instruments issued or guaranteed by U.S. or Asian issuers or
governments, their agencies or instrumentalities. The Asia Technology Portfolio
may invest up to 35% of its assets in these securities to maintain liquidity. To
the extent that the Asia Technology Portfolio engages in this temporary,
defensive strategy, the Asia Technology Portfolio and therefore the Asia
Technology Fund may not achieve its investment objective.

FUND STRUCTURE

The Asia Technology Portfolio has an investment objective identical to that of
the Asia Technology Fund. The Asia Technology Fund may withdraw its investment
from the Asia Technology Portfolio at any time if the Board of Directors of the
Company determines that it is in the best interests of the Asia Technology Fund
to do so. Upon any such withdrawal, the Directors will consider what action
might be taken, including investing all of the Asia Technology Fund's investable
assets in another pooled investment entity having substantially the same
objective and strategies as the Asia Technology Fund or retaining an investment
adviser, including the current investment adviser, to manage the Asia Technology
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 Asia Technology Fund and,
indirectly, the Asia Technology Portfolio, are listed below and could adversely
affect the net asset value, total return and value of the Asia Technology Fund,
the Asia Technology 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 Asia Technology Portfolio is likely to decline in value and you
could lose money on your investment.

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

o LIQUIDITY RISKS: The sub-adviser may not be able to sell investment
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 development. 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 TECHNOLOGY INDUSTRY SPECIFIC RISKS: Companies that conduct business in the
technology industries are subject to government regulation and the rate of
change in technology and scientific innovation, as well as competition,
which is generally higher than that of other industries.

o SMALL AND MEDIUM-SIZED COMPANY RISKS: The Asia Technology Portfolio may
invest in the stocks of small, medium and large-sized companies. Small and
medium-sized 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 Asia Technology Portfolio's assets.

o POLITICAL RISKS: The Asia Technology Portfolio invests in securities of
foreign countries that have experienced historical periods of political
instability. These securities can carry higher returns but involve more
risks than those associated with U.S. investments.

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

o EMERGING MARKETS RISKS: The Asia Technology Portfolio invests in emerging
as well as developed markets in Asia. Countries in emerging markets can
have relatively unstable government economies based on only a few
industries, and securities markets that trade a small number of issues.

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

o DERIVATIVES RISKS: The Asia Technology Portfolio may utilize derivatives
for hedging purposes and/or direct investment. Derivatives contain certain
special risks including the imperfect correlation between the value of the
derivative instrument and the value of the underlying asset.

PERFORMANCE OF THE ASIA TECHNOLOGY FUND

Because the Asia Technology Fund and its corresponding Portfolio have had
investment operations for less than a full calendar year, there is no
performance information available for this Fund or Portfolio at this time.

FEES AND EXPENSES OF THE ASIA TECHNOLOGY FUND

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

FEE TABLE1

SHAREHOLDER TRANSACTION EXPENSES2 (fees paid directly from your investment)

ESTIMATED ANNUAL OPERATING EXPENSES (expenses deducted from Fund assets)

Management Fees 1.25%5
Distribution (Rule 12b-1) Fees None
Other Expenses 1.00%
Estimated Total Annual Fund Operating Expenses 2.25%6

1. This fee table reflects the aggregate expenses of the Asia Technology Fund
and the Asia Technology Portfolio.

2. 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 Asia Technology Fund and any other series of Kinetics
Mutual Funds, Inc.

3. The Asia Technology Fund's Transfer Agent charges a $5 transaction fee to
shareholder accounts for telephone exchanges between any two series of Kinetics
Mutual Funds, Inc. The Transfer Agent does not charge a transaction fee for
written exchange requests.

4. IRA accounts are assessed a $12.50 annual fee.

5. The investment adviser pays the sub-adviser the .625% of the Asia Technology
Fund's management fee of 1.25% of average daily net assets. The management fees
paid by the Asia Technology Fund reflects the fees paid by the Asia Technology
Fund and the Asia Technology Portfolio for investment advisory services.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Asia
Technology Fund with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Asia Technology 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 Asia Technology Fund's operating expenses remain the
same. Although your actual costs may be higher or lower, based on these
assumptions your cost for the Asia Technology Fund would be:

1 YEAR 3 YEARS
$228 $703

MAIN RISKS OF INVESTING IN EACH OF THE FUNDS

The principal risks of investing in each Fund are described previously in this
Prospectus. The following list provides more detail about some of those risks,
along with information on additional types of risks that may apply to the Funds.

INVESTING IN MUTUAL FUNDS--ALL FUNDS

All mutual funds carry risks that 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 a 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.

MARKET RISK--ALL FUNDS

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 INTERNET FUND, THE INFRASTRUCTURE FUND,
THE EMERGING GROWTH FUND, THE GLOBAL GROWTH FUND, AND THE NEW PARADIGM FUND 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.

MEDICAL RESEARCH INDUSTRY-SPECIFIC RISKS--THE MEDICAL FUND

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.

OTHER SECURITIES A PORTFOLIO MIGHT PURCHASE--ALL FUNDS

Under normal market conditions, each Portfolio invests 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. (For the Asia Technology Fund, short-term debt securities and money
market instruments may be issued by Asian governments, their agencies or
instrumentalities.)

SECURITIES LENDING--ALL FUNDS

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 33 1/3% 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--ALL FUNDS

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--ALL FUNDS

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--ALL FUNDS

Investing in foreign securities can carry higher returns than those generally
associated with U.S. investments. However, foreign securities may be
substantially riskier than U.S. 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 U.S. 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.

EMERGING MARKET RISKS--THE MIDDLE EAST FUND AND THE ASIA TECHNOLOGY FUND

Securities issued or traded in emerging markets generally entail greater risks
than securities issued or traded in developed markets. For example, their prices
can be significantly more volatile than prices in developed countries. Emerging
market economies may also experience more severe downturns (with corresponding
currency devaluations) than developed economies. Emerging market countries may
have relatively unstable governments and may present the risk of nationalization
of businesses, expropriation, confiscatory taxation or, in certain instances,
reversion to closed market, centrally planned economies.

Because the Middle East Portfolio and the Asia Technology Portfolio invest in
emerging markets regions, these Portfolio returns will be significantly more
volatile and may differ substantially from the overall U.S. market generally.
Your investment in either of these portfolios has the risk that market changes
or other factors affecting Asian and/or Middle Eastern region countries,
including political instability and unpredictable economic conditions, may have
a more significant effect on these Portfolios' net asset values than would be
the case for a mutual fund invested in U.S. securities.

REGIONAL RISKS--THE MIDDLE EAST FUND AND THE ASIA TECHNOLOGY FUND

Certain risks associated with international investments and investing in
smaller, developing capital markets are heightened for investments in Asian
and/or Middle Eastern region countries. For example, some of the currencies of
Asian countries have experienced steady devaluations relative to the U.S.
dollar, and major adjustments have been made in certain of these currencies
periodically. Although there is a trend toward less government involvement in
commerce, governments of many Asian countries have exercised and continue to
exercise substantial influence over many aspects of the private sector. In
certain cases, the government still owns or controls many companies, including
some of the largest in the country. The same may be true of Middle Eastern
region countries. Accordingly, government actions in the future could have a
significant effect on economic conditions in Asian and Middle Eastern region
countries, which could affect private sector companies and the Portfolios, as
well as the value of the Portfolios' investment securities.

PORTFOLIO BORROWING--ALL FUNDS

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.

DERIVATIVES RISK--ALL FUNDS

Each Portfolio may invest in derivatives such as options and futures. The
successful use of the investment practices described above depends on the
portfolio manager's ability to forecast stock price movements and/or currency
exchange rate movements correctly. Should stock prices or exchange rates move
unexpectedly, a Portfolio may not achieve the anticipated benefits of the
transactions, or may realize losses, and thus be in a worse position than if
such strategies had not been used. Unlike many exchange-traded futures contracts
and options on futures contracts, there are no daily price fluctuation limits
for certain options and forward contracts, and adverse market movements could
therefore continue to an unlimited extent over a period of time. In addition,
the correlation between movements in the prices of futures contracts, options
and forward contracts and movements in the prices of the securities and
currencies hedged or used for cover will not be perfect and could produce
unanticipated losses.

A Portfolio's ability to dispose of its positions in futures contracts, options,
and forward contracts depends on the availability of liquid markets in such
instruments. Markets in options and futures with respect to a number of types of
securities and currencies are relatively new and still developing, and there is
no public market for forward contracts. It is impossible to predict the amount
of trading interest that may exist in various types of futures contracts,
options, and forward contracts. If a secondary market does not exist for an
option purchased or written by a Portfolio, it might not be possible to effect a
closing transaction in the option (i.e., dispose of the option), with the result
that (1) an option purchased by a Portfolio would have to be exercised in order
for the Portfolio to realize any profit and (2) a Portfolio may not be able to
sell currencies or portfolio securities covering an option written by the
Portfolio until the option expires or it delivers the underlying security,
futures contract or currency upon exercise. Therefore, no assurance can be given
that the Portfolios will be able to utilize these instruments effectively. In
addition, a Portfolio's ability to engage in options and futures transactions
may be limited by tax considerations and the use of certain hedging techniques
may adversely impact the characterization of income to the Portfolio for U.S.
federal income tax purposes.

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. Founded in 1996, Kinetics provides investment
advisory services to a family of ten 100% no-load mutual funds with
discretionary management authority over approximately $1.17 billion in assets at
December 31, 1999. For the Asia Technology Fund, the investment adviser also
assists and consults with the sub-adviser as to the Asia Portfolio's investment
program, approves the list of foreign countries recommended by the sub-adviser
for investment and manages the Asia Technology Portfolio's daily cash position.
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. ("Horizon Asset Management"), a New York based
investment management and research firm, for which it is responsible for the
payment of all fees owing to Horizon.

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 Chief Operating Officer of Kinetics.
Mr. Schultheis has more than 20 years of experience in the mutual fund and
financial services industries.

SUB-ADVISER--THE ASIA TECHNOLOGY FUND

The investment adviser has entered into a sub-advisory agreement with UOB Global
Capital LLC (the "sub-adviser"), to assist it in the day-to-day management of
the investment portfolio. The sub-adviser determines which securities will be
purchased, retained or sold for the Asia Technology Portfolio, places orders for
the Asia Technology Portfolio and provides the investment adviser with
information on international investment and economic developments. The
investment adviser pays the sub-adviser 0.625% of the Asia Technology
Portfolio's management fee of 1.25% of average daily net assets.

The sub-adviser is located at 592 Fifth Avenue, Suite 602, New York, New York
10036. The sub-adviser has entered into an arrangement with its affiliate, UOB
Asset Management Ltd. (UOBAM), pursuant to which UOBAM has agreed to make
available certain of its investment, operations and compliance personnel to the
sub-adviser. UOBAM is located at UOB Plaza 2, 80 Raffles Place, #03-00,
Singapore 048624. At December 31, 1999, together with its affiliates, the
sub-adviser had discretionary management authority over approximately $2.17
billion in assets.

PORTFOLIO MANAGERS

PETER B. DOYLE is the Chief Investment Strategist for all of the Portfolios
other than the Asia Technology Portfolio. Mr. Doyle also serves as the Portfolio
Manager for the New Paradigm Portfolio and is a Co-Portfolio Manager of the
Internet, Medical, Small Cap and Middle East Portfolios. 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. Previously, Mr. Doyle co-founded and has been a
Managing Director of Horizon Asset Management. 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 Bachelor of Science
in Economics from St.John's University and a Masters of Business Administration
from Fordham University.

BRUCE P. ABEL is Co-Portfolio Manager of the Medical 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.

FRED A. FROEWISS is the Portfolio Manager of the Infrastructure Portfolio.
Mr. Froewiss also serves as Co-Portfolio Manager of the New Paradigm and Small
Cap Portfolios. 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 Growth Portfolio.
Ms. Larsson also serves as Co-Portfolio Manager of the Internet Portfolio and
the Emerging Growth Portfolio. From 1996 to 1999, Ms. Larsson was an analyst at
Horizon Asset Management for the Spin-Off Report, a research service that
focuses on spin-offs, and for developing institutional market research.
Ms. Larsson joined Kinetics in 1999 as an analyst for the Internet Fund and
became Portfolio Manager of the Global Growth Portfolio when the Global Growth
Portfolio commenced investment operations in December of 1999. Ms. Larsson holds
a Bachelors of Science in 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
Growth Portfolio and Co-Portfolio Manager of the Infrastructure 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 the 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 a portfolio manager in
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.

MURRAY STAHL is Co-Portfolio Manager of the New Paradigm, Medical, Small Cap,
and Middle East Portfolios. Mr. Stahl is Chairman and a co-founder of Horizon
Asset Management. Previously, he was with Bankers Trust Company for 16 years as
a portfolio manager and research analyst, and managed approximately $600 million
of individual, trust and institutional client assets. As the senior fund
manager, he directed the investments of three of the bank's Common Trust Funds,
the Special opportunity, Utility, and Tangible Assets Funds. Mr. Stahl also
served as a member of the Equity Strategy Group as well as the Investment
Strategy Group, which established asset allocation development. Mr. Stahl holds
a Bachelor of Arts in Economics and a Masters of Arts in History from the City
University of New York and a Masters of Business Administration from Pace
University.

STEVEN M. BREGMAN, CPA, is Co-Portfolio Manager of the Global Growth and Middle
East Portfolio. Mr. Bregman, 41, was a co-founder and is a President of Horizon
Asset Management. From 1987 through late 1994, Mr. Bregman was an Investment
Officer in Bankers Trust Company's Private Clients Group, where he managed in
excess of $600 million of equity and fixed-income assets. Mr. Bregman was one
of a five-manager group responsible for managing the bank's largest individual
relationships and for setting equity investment guidelines for the Private Bank.
Mr. Bregman served in a variety of new product development projects. Mr. Bregman
received a Bachelor of Arts in Economics from the City University of New York.

THIO BOON KIAT is the portfolio manager of Asia Technology Fund. Mr. Kiat joined
the UOB Group in 1994 and who has been a portfolio manager with the sub-adviser
since April 2000. Under the supervision of Daniel Chan, a member of the
sub-adviser's Investment Committee, he is primarily responsible for the
day-to-day management of the Fund's investment portfolio. Mr. Thio, who also
serves as the Head of the Global Technology/Telecom Sector Investment Team of
UOB Asset Management Ltd. (UOBAM), has over 6 years of investment experience.
Previously, he worked in the Special Investments department at the Government of
Singapore Investment Corp. Prior to that he spent 6 years as a naval officer for
the Singapore Ministry of Defense. He holds a BBA from the National University
of Singapore and is a Certified 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 Trust's Board of Trustees.

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: 0420-00013
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
the Company. 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 mutual funds offered by the
Company and about exercising your exchange privilege.

DISTRIBUTIONS 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 New Account 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

Kinetics Funds Distributor, Inc., an affiliate of Kinetics, 1311 Mamaroneck
Avenue, Suite 130, White Plains, New York, 10605, is the distributor for the
shares of the Funds. Kinetics Funds Distributor, Inc. is a registered
broker-dealer and member of the National Association of Securities Dealers, Inc.
Shares of each Fund are offered on a continuous basis.

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 and Portfolio. Kinetics will
be entitled to receive an annual administration fee equal to the total of 0.05%
of each Fund's average daily net assets and 0.10% of each Portfolio's. Out of
these fees, Kinetics 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 that 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 Company's Board of Directors retains its right to withdraw any of the Fund's
investments from the Portfolios at any time if the Board of Directors 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.

The SAI contains more information about each Fund and Portfolio, the
Master/Feeder Fund Structure and the types of securities in which each Portfolio
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. PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Suite 1500,
Milwaukee, Wisconsin 53202, has been selected as independent auditors for the
Funds for the year ending December 31, 2000.

FINANCIAL HIGHLIGHTS OF THE INTERNET FUND AND MEDICAL FUND

The financial highlights table set forth below is intended to help you
understand the Internet Fund and Medical Fund's financial performance for its
period of operations. Most of the information reflects financial results with
respect to a single 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). The
financial information provided for the period October 21, 1996 through the year
ended December 31, 1999, has been audited by McCurdy and Associates CPA's, Inc.
whose report, along with the Internet Fund's financial statements that are
included in the Internet Fund's annual report, is available upon request.
Because the Infrastructure Fund, the Emerging Growth Fund, the Global Growth
Fund, the New Paradigm Fund, the Small Cap Fund, the Middle East Fund and the
Asia Technology Fund have been in operation for less than a year, no financial
highlights are being reported for these Funds.

INTERNET FUND
<S> <C> <C> <C> <C>

For the For the year For the For the
year ended ended December year ended period
December 31, 1998 December October 21,
31, 1999 31, 1997 1996(1) through
December 31, 1996

Net asset value beginning of period $ 15.72 $ 5.31 $ 4.71 $ 5.00
Net investment income (loss) (0.30)4 (0.08) 0.01 0.02
Net gains or losses on securities 34.33 10.50 0.59 (0.31)
(both realized and unrealized)
Total from investment operations 34.03 10.42 0.60 (0.29)
Dividends -- -- -- --
(from net investment income)
Distributions (from capital gains) (0.02) (0.01) -- --
Total distributions (0.02) (0.01) -- --
Net asset value end of period $ 49.73 $ 15.72 $ 5.31 $ 4.71
Total Return 216.50% 196.14% 12.74% (5.80)%(2)
Net assets, end of period (000's) $1,163,097 $ 22,159 $ 150 $ 113
Gross ratio of expenses to average net 2.00% 3.08% 3.60% 6.73%(3)
assets (excluding waivers)
Net ratio of expenses to average net assets 2.00% 3.08% 0.08% 0.21%(3)
Gross ratio of net income (loss) to (1.29)% (2.92)% (3.33)% (4.51)%(3)
average net assets (excluding waivers)
Net ratio of net income (loss) to average (1.29)% (2.92)% 0.19% 2.01%(3)
net assets
Portfolio turnover rate 89% 80% 50% 0%
</TABLE>

1. Commencement of Operations
2. Not Annualized
3. Annualized
4. Net investment loss per share is calculated using ending balances prior to
consideration of adjustments for permanent financial reporting and tax
differences.

THE MEDICAL FUND

For the Period
September 30,
1999(1) through
December 31, 1999

Net asset value beginning of period $10.00
Net investment income (loss) (0.02) (4)
Net gains or losses on securities 3.37
----
(both realized and unrealized)
Total from investment operations 3.35
Dividends ___
(from net investment income)
Distributions (from capital gains) ___
Total distributions ___
Net asset value end of period $13.35
======
Total Return 33.50%(2)
Net assets, end of period (000's) $6,944
Gross ratio of expenses to average net assets 5.99%(3)
(excluding waivers)
Net ratio of expenses to average net assets 2.00%(3)
Gross ratio of net income (loss) to average net (5.24)%(3)
assets (excluding waivers)
Net ratio of net income (loss) to average net (1.25)%(3)
assets
Portfolio turnover rate 1%

1 Commencement of Operations
2 Not Annualized
3 Annualized
4 Net investment loss per share is calculated using ending balances prior to
consideration of adjustments for permanent financial reporting and tax
differences.

KINETICS MUTUAL FUNDS, INC.

THE INTERNET FUND THE INTERNET INFRASTRUCTURE FUND THE INTERNET EMERGING GROWTH
FUND THE INTERNET GLOBAL GROWTH FUND THE NEW PARADIGM FUND THE MEDICAL FUND THE
SMALL CAP FUND THE MIDDLE EAST GROWTH FUND THE ASIA TECHNOLOGY FUND

Investment Adviser, KINETICS ASSET MANAGEMENT, INC.
Administrator, 1311 MAMARONECK AVENUE
and Shareholder Servicing Agent WHITE PLAINS, NY 10605

Legal Counsel SPITZER & FELDMAN P.C.
405 PARK AVENUE
NEW YORK, NY 10022

Independent Auditors PRICEWATERHOUSECOOPERS LLP
100 EAST WISCONSIN AVENUE, SUITE 1500
MILWAUKEE, WI 53202

Transfer Agent, Fund Accountant, FIRSTAR MUTUAL FUND SERVICES, LLC
and Sub-Administrator 615 EAST MICHIGAN STREET
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 September 15, 2000
The SAI of the Funds provides more details about each Fund's policies and
management. The Funds' SAI is incorporated by reference into this Prospectus.

Annual and Semi-Annual Report

The annual and semi-annual reports for each Fund 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.

To receive any of these documents or the prospectus of Kinetics Mutual Funds, to
request additional information about Kinetics Mutual Funds or to make
shareholder inquires, please contact us.

By Telephone: By Internet:
(800) 930-3828 HTTP://WWW.KINETICSFUNDS.COM

By 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 Kinetics Mutual Funds, Inc. information
(including the SAI) 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

KINETICS MUTUAL FUNDS, INC.

STATEMENT OF ADDITIONAL INFORMATION

September 15, 2000

The Internet Fund
The Internet Infrastructure Fund
The Internet Emerging Growth Fund
The Internet Global Growth Fund
The New Paradigm Fund
The Medical Fund
The Small Cap Opportunities Fund
The Middle East Growth Fund
The Asia Technology Fund

Each of the series (individually, a "Fund" and collectively, the "Funds") of
Kinetics Mutual Funds, Inc. is in a master/feeder fund structure. Each Fund is a
feeder fund to a corresponding series (individually, a "Portfolio" and
collectively, the "Portfolios") of the Kinetics Portfolios Trust. Unlike many
other investment companies which directly acquire and manage their own
portfolios of securities, the Funds seek their investment objective by investing
all of their investable assets in their corresponding Portfolios. Each Portfolio
is an open-end, non-diversified investment company with investment objectives,
strategies and policies that are substantially identical to those of their
respective feeder Fund.

This Statement of Additional Information ("SAI") provides general information
about each of the Funds and the Portfolios. This SAI is not a prospectus and
should be read in conjunction with the Funds' current Prospectus date September
15, 2000, as supplemented and amended from time to time, which is incorporated
hereto by reference. To obtain a copy of the Prospectus, please write or call
the Funds at the address or telephone number below. To obtain a copy of the
Prospectus and SAI of the Portfolios dated September 15, 2000 providing general
information about the Portfolios, which is incorporated hereto by reference,
please write or call the Portfolios at the address or telephone number shown
below.

KINETICS MUTUAL FUNDS, INC.
C/O FIRSTAR MUTUAL FUND SERVICES, LLC
P.O. BOX 701
MILWAUKEE, WI 53201-0701
PHONE: (800) 930-3828

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

TABLE OF CONTENTS

GENERAL INFORMATION ABOUT KINETICS MUTUAL FUNDS, INC..........................1
DESCRIPTION OF THE FUNDS......................................................2
INVESTMENT RESTRICTIONS.......................................................5
INVESTMENT POLICIES AND ASSOCIATED RISKS......................................7
TEMPORARY INVESTMENTS.........................................................14
PORTFOLIO TURNOVER............................................................14
MANAGEMENT OF THE FUNDS AND THE PORTFOLIOS....................................15
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES...........................17
INVESTMENT ADVISERS...........................................................20
SHAREHOLDER SERVICING.........................................................22
ADMINISTRATIVE SERVICES.......................................................23
DISTRIBUTOR...................................................................23
CUSTODIAN.....................................................................24
VALUATION OF SHARES...........................................................24
PURCHASING SHARES.............................................................25
REDEMPTION OF SHARES..........................................................25
BROKERAGE.....................................................................26
TAXES.........................................................................28
PERFORMANCE INFORMATION.......................................................29
INDEPENDENT AUDITORS..........................................................31
FINANCIAL STATEMENTS..........................................................31
APPENDIX......................................................................32

GENERAL INFORMATION ABOUT KINETICS MUTUAL FUNDS, INC.
--------------------------------------------------------------------------------

Kinetics Mutual Funds, Inc. (the "Company") is a Maryland corporation,
established on March 26, 1999. The Company is comprised of several series of
mutual funds, all of which are open-end investment companies. Kinetics
Portfolios Trust (the "Trust") is a Delaware business trust, established on
March 14, 2000. The Trust is comprised of several series of mutual funds, all of
which are open-end investment companies with investment objectives and
strategies identical to that of the individual Funds of the Company. The Funds
and Portfolios are set up in a master/feeder fund structure where each Fund is a
"feeder" fund that invests all of its investable assets in a corresponding
"master" Portfolio. The principal business office for the Company and the Trust
is located at 1311 Mamaroneck Avenue, White Plains, New York, 10605.

CAPITALIZATION

The authorized capitalization of the Company 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 Funds. 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 the Trust consists of an unlimited number of
beneficial interests with no par value. Each share has equal dividend,
distribution and liquidation rights. There are no conversion or preemptive
rights applicable to any shares of the Portfolios. 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.

The Company and the Trust each currently consist of 10 series, one of which is
discussed in a separate prospectus and SAI. The individual Fund series and
corresponding Portfolio series discussed in this SAI are as follows:

------------------------------------- ------------------------------------------
FEEDER FUNDS MASTER PORTFOLIOS
------------------------------------- ------------------------------------------
The Internet Fund The Internet Portfolio
The Internet Infrastructure Fund The Internet Infrastructure Portfolio
The Internet Emerging Growth Fund The Internet Emerging Growth Portfolio
The Internet Global Growth Fund The Internet Global Growth Portfolio
The New Paradigm Fund The New Paradigm Portfolio
The Medical Fund The Medical Portfolio
The Small Cap Opportunities Fund The Small Cap Opportunities Portfolio
The Middle East Growth Fund The Middle East Growth Portfolio
The Asia Technology Fund The Asia Technology Portfolio
------------------------------------- ------------------------------------------

MASTER/FEEDER FUND STRUCTURE

Unlike other mutual funds that directly acquire and manage their own portfolio
securities, the Funds invest all of their investable assets in the corresponding
Portfolios. Accordingly, a shareholder's interest in a Portfolio's underlying
investment securities is indirect. In addition to selling a beneficial interest
to the Fund, a Portfolio could also sell beneficial interests to other mutual
funds or institutional investors. Such investors would invest in a Portfolio on
the same terms and conditions and would pay a proportionate share of a
Portfolio's expenses. However, other mutual fund or institutional 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 a
Fund. Shareholders of a Fund should be aware that these differences would result
in differences in returns experienced by the different mutual funds or
institutional investors of a 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 a
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 each 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 Funds stabilizing their expenses or achieving greater operational
efficiencies.

The Funds' methods of operation and shareholder services are not materially
affected by their investment in the Portfolios, except that the assets of the
Funds are managed as part of a larger pool of assets. Since the Funds invest all
of their assets in the respective Portfolios, they hold only beneficial
interests in the Portfolios; the Portfolios invest directly in individual
securities of other issuers. The Fund otherwise continues its normal operation.
Each 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
each Fund.

Certain changes in a Portfolio's objective, policies and/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 Company's Board of
Directors retains its right to withdraw any of the Fund's investments from the
Portfolios 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.

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

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

DESCRIPTION OF THE FUNDS
--------------------------------------------------------------------------------

The investment objectives listed below are fundamental objectives and therefore
cannot be changed without the approval of shareholders.

THE INTERNET FUNDS

The INTERNET FUND, INTERNET INFRASTRUCTURE FUND, INTERNET EMERGING GROWTH FUND
and INTERNET GLOBAL GROWTH FUND are all non-diversified funds with the same
primary investment objective of long-term growth of capital. The Funds are
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 Funds seek to achieve their investment objective by investing all of
their investable assets in the respective Portfolios. Except during temporary
defensive periods, each Portfolio invests at least 65% of its total assets in
securities of companies that provide products or services designed for the
Internet. The Funds should not be used as a trading vehicle.

THE NEW PARADIGM FUND

The NEW PARADIGM FUND is a non-diversified fund with a primary investment
objective of 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
its corresponding Portfolio. Except during temporary defensive periods, the
Portfolio invests at least 65% of its total assets in securities of domestic and
foreign companies with business models that stand to benefit from the
utilization and growth of the Internet. This Fund should not be used as a
trading vehicle.

THE MEDICAL FUND

The MEDICAL FUND is a non-diversified fund with a primary investment objective
of long-term growth of capital. 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 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 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. This Fund should
not be used as a trading vehicle.

THE SMALL CAP OPPORTUNITIES FUND

The SMALL CAP OPPORTUNITIES FUND is a non-diversified fund with a primary
investment objective of 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,
at least 65% of the Portfolio's total assets will be invested in securities of
domestic and foreign small capitalization companies that provide attractive
valuation opportunities due to lack of institutional ownership, lack of
significant analyst coverage, or a short-term earnings disappointments. This
Fund should not be used as a trading vehicle.

THE MIDDLE EAST GROWTH FUND

The MIDDLE EAST GROWTH FUND is a non-diversified fund with a primary investment
objective of 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, at least 65% of the
Portfolio's total assets will be invested in securities of foreign and U.S.
companies that are engaged in business activities in the Middle East. This Fund
should not be used as a trading vehicle.

THE ASIA TECHNOLOGY FUND

The ASIA TECHNOLOGY FUND is a non-diversified fund with a primary investment
objective of 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, at least 65% of the
Portfolio's total assets will be invested, without regard to size or industry,
in the equity securities of Asian companies that the portfolio manager believes
will benefit significantly from technological advances or improvements. Such
companies may use technology extensively in the development of new or improved
products or processes or, alternatively, may benefit from the commercialization
of technological advances, although they may not be involved in research and
development. The Portfolio may also, from time to time, utilize certain
derivatives for hedging purposes and/or direct investment. This Fund should not
be used as a trading vehicle.

Under normal circumstances, the Portfolio will invest in at least three
different Asian countries. The Portfolio considers Asian companies to include
companies that are organized under the laws of any country in the Asian region
other than Australia and New Zealand, including the Sri Lanka, Hong Kong,
Pakistan, Japan, Thailand, Malaysia, Brunei, China, Cambodia, Taiwan, India,
Indonesia, South Korea, the Philippines, Singapore, Vietnam and Myanmar.
The Portfolio also considers companies to be Asian if UOB Global Capital LLC,
the Portfolio's sub-adviser, determines that they: (a) derive at least 50% of
their revenues from goods produced or sold, investments made or services
performed in or with one or more of the Asian countries; (b) maintain at least
50% of their assets in one or more Asian countries; or (c) have securities that
are traded principally on the stock exchange in an Asian country.

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

Unless otherwise noted, the Funds and the Portfolios have adopted and are
subject to substantially identical fundamental investment restrictions. The
investment restrictions of the Funds may be changed only with the approval of
the holders of a majority of the Funds' outstanding voting securities. The
investment restrictions of the Portfolio may be changed only with the approval
of the holders of a majority of the Portfolios' outstanding voting securities.
As used in this SAI, "a majority of a Fund's (or Portfolio's) outstanding voting
securities" means the lesser of (1) 67% of the shares of common stock/beneficial
interest of the Fund/Portfolio represented at a meeting at which more than 50%
of the outstanding shares are present, or (2) more than 50% of the outstanding
shares of common stock/beneficial interest of the Fund/Portfolio.

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

2. The Funds will not make loans.

3. With respect to 50% of its total assets, the Funds will not invest in the
securities of any issuer if as a result the Funds hold 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 Funds. This policy shall not be deemed violated to the extent that the
Funds invest all of their investable assets in the respective Portfolios.

4. The Funds 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 their 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
Funds may enter into futures contracts and related options.

5. The Funds will not invest more than 10% of the value of their net assets in
illiquid securities, restricted securities, and other securities for which
market quotations are not readily available. This policy shall not be
deemed violated to the extent that the Funds invest all of their investable
assets in the respective Portfolios.

6. The INTERNET FUND, INTERNET INFRASTRUCTURE FUND, INTERNET EMERGING GROWTH
FUND and INTERNET GLOBAL GROWTH FUND 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
Funds' total assets would be invested in the securities of such industries.
Except during temporary defensive periods, at least 65% of the Fund's'
total assets will be invested in the securities of domestic and foreign
companies that are engaged in the Internet and Internet-related activities.
This policy shall not be deemed violated to the extent that the Funds
invest all of their investable assets in their respective Portfolios.

7. The NEW PARADIGM FUND will not invest in the securities of any one
industry, with the exception of securities issued or guaranteed by the U.S.
Government, its agencies, and instrumentalities, if as a result more than
20% of the Fund's total assets would be in the securities of such
industries.

8. The MEDICAL FUND will not invest in the securities of any one industry
except in 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, 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 Fund's total assets would be invested in
the securities of such industry. Except during temporary defensive
periods, not less than 65% of the Fund's total assets will be invested in
the securities of companies engaged in the medical research, pharmaceutical
and technology industries and related technology industries, generally,
with an emphasis toward publicly traded entities engaged in cancer research
and drug development. This policy shall not be deemed violated to the
extent that the Fund invests all of its investable assets in the Portfolio.

9. The SMALL CAPITAL OPPORTUNITIES FUND will not invest in the securities of
any one industry, 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 industry. Except during temporary defensive periods, at
least 65% of the Portfolio's total assets will be invested in the
securities of domestic and foreign small capitalization companies that
provide attractive valuation opportunities due to lack of institutional
ownership, lack of significant analyst coverage, or a short-term earnings
disappointments. This policy shall not be deemed violated to the extent
that the Fund invests all of its investable assets in the Portfolio.

10. The MIDDLE EAST GROWTH FUND will not invest in the securities of any one
industry except in foreign and U.S. companies that are engaged in business
activities in the Middle East, 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 Fund's total assets would be invested in
the securities of such industry. Except during temporary defensive periods,
at least 65% of the Fund's total assets will be invested in the securities
of foreign and U.S. companies that are engaged in business activities in
the Middle East. This policy shall not be deemed violated to the extent
that the Fund invests all of its investable assets in the Portfolio.

11. The ASIA TECHNOLOGY FUND will not invest in the securities of any one
industry except in Asian companies that the portfolio manager believes will
benefit significantly from technological advances or improvements, 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
Fund's total assets would be invested in the securities of such industry.
Except during temporary defensive periods, at least 65% of the Fund's total
assets will be invested in the securities of Asian companies that the
portfolio manager believes will benefit significantly from technological
advances or improvements. This policy shall not be deemed violated to the
extent that the Fund invests all of its investable assets in the Portfolio.

12. The Funds 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 Funds may purchase and sell securities of companies
that deal in oil, gas, or mineral exploration or development programs or
interests therein.

13. The Funds will not issue senior securities.

If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in value in the
portfolio securities held by a Portfolio will not constitute a violation of such
limitation. However, in the event that a Portfolio's portfolio holdings in
illiquid securities reaches 15% of the value of its net assets, the Adviser is
authorized by the Board of Directors to make such adjustments as necessary to
reduce the holdings of illiquid securities to comply with the guidelines of
paragraph number 5 above.

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

The Funds' and the corresponding Portfolios' investment policies and risks are
substantially identical. The following paragraphs provide a more detailed
description of the investment policies and risks of the Fund's and Portfolio's
investment policies and risks identified in the Prospectus. Unless otherwise
noted, the policies described in this SAI pertain to all of the Funds and the
corresponding Portfolios. Furthermore, 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 Portfolios may invest in debt securities convertible into common stocks.
Debt purchased by the Portfolios 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.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

The Portfolios may purchase securities on a when-issued, delayed-delivery or
forward commitment basis. These transactions generally involve the purchase of a
security with payment and delivery due at some time in the future. A Portfolio
does not earn interest on such securities until settlement and bears the risk of
market value fluctuations in between the purchase and settlement dates. If the
seller fails to complete the sale, a Portfolio may lose the opportunity to
obtain a favorable price and yield. While the Portfolios will generally engage
in such when-issued, delayed-delivery and forward commitment transactions with
the intent of actually acquiring the securities, a Portfolio may sometimes sell
such a security prior to the settlement date.

The Portfolios may also sell securities on a delayed-delivery or forward
commitment basis. If the Portfolios do so, they will not participate in future
gains or losses on the security. If the other party to such a transaction fails
to pay for the securities, the Portfolios could suffer a loss.

RESTRICTED AND ILLIQUID SECURITIES

Each Portfolio may invest in a limited amount of restricted securities.
Restricted securities are securities that are thinly traded or whose resale is
restricted by federal securities laws. Restricted securities are any securities
in which the Portfolios may invest pursuant to their investment objective and
policies but which are subject to restrictions on resale under federal
securities laws.

FIXED-INCOME SECURITIES

The fixed-income securities in which the Portfolios 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 Portfolios 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
Portfolios are not required to dispose of debt securities whose ratings are
downgraded below these ratings subsequent to the Portfolios' purchase of the
securities. Relying in part on ratings assigned by credit agencies in making
investments will not protect the Portfolios from the risk that the fixed-income
securities in which the Portfolios invest will decline in value. 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 Portfolios have more than 5% of their respective 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 Portfolios 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 ADRs 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 Portfolios and that may ultimately be
available for distribution to the Portfolios' and Funds' shareholders.

DERIVATIVES

BUYING CALL AND PUT OPTIONS. The Portfolios may purchase call options. Such
transaction may be entered into in order to limit the risk of a substantial
increase in the market price of the security that each Portfolio intends to
purchase. Prior to its expiration, a call option may be sold in a closing sale
transaction. Any profit or loss from the sale will depend on whether the amount
received is more or less than the premium paid for the call option plus the
related transaction cost.

The Portfolios may purchase put options. By buying a put, each Portfolio has the
right to sell the security at the exercise price, thus limiting its risk of risk
of loss through a decline in the market value of the security until the put
expires. The amount of any appreciation in the value of the underlying security
will be partially offset by the amount of the premium paid for the put option
and any related transaction cost. Prior to its expiration, a put option may be
sold in a closing sale transaction and any profit or loss from the sale will
depend on whether the amount received is more or less than the premium paid for
the put option plus the related transaction costs.

WRITING (SELLING) CALL AND PUT OPTIONS. The Portfolios may write covered options
on equity and debt securities and indices. This means that, in the case of call
options, so long as each Portfolio is obligated as the writer of a call option,
it will own the underlying security subject to the option and, in the case of
put options, it will, through its custodian, deposit and maintain either cash or
securities with a market value equal to or greater than the exercise price of
the option.

Covered call options written by the Portfolios give the holder the right to buy
the underlying securities from the Portfolios as a stated exercise price. A call
option written by the Portfolios is "covered" if the Portfolios own the
underlying security that is subject to the call or has an absolute and immediate
right to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian
bank) upon conversion or exchange of other securities held in its portfolio. A
call option is also covered if the Portfolios hold a call on the same security
and in the same principal amount as the call written where the exercise price of
the call held (a) is equal to or less than the exercise price of the call
written or (b) is greater than the exercise price of the call written if the
difference is maintained by the Portfolios in cash and high grade debt
securities in a segregated account with its custodian bank. The Portfolios may
purchase securities, which may be covered with call options solely on the basis
of considerations consistent with the investment objectives and policies of the
Portfolios. The Portfolios' turnover may increase through the exercise of a call
option; this will generally occur if the market value of a "covered" security
increases and the Fund has not entered in to a closing purchase transaction.

As a writer of an option, each Portfolio receives a premium less a commission,
and in exchange foregoes the opportunity to profit from any increase in the
market value of the security exceeding the call option price. The premium serves
to mitigate the effect of any depreciation in the market value of the security.
The premium paid by the buyer of an option will reflect, among other things, the
relationship of the exercise price to the market price, the volatility of the
underlying security, the remaining term of the option, the existing supply and
demand, and the interest rates.

The writer of a call option may have no control over when the underlying
securities must be sold because the writer may be assigned an exercise notice at
any time prior to the termination of the obligation. Exercise of a call option
by the purchaser will cause each Portfolio to forego future appreciation of the
securities covered by the option. Whether or not an option expires unexercised,
the writer retains the amount of the premium. This amount may, in the case of a
covered call option, be offset by a decline in the market value of the
underlying security during the option period. If a call option is exercised, the
writer experiences a profit or loss from the sale of the underlying security.
Thus during the option period, the writer of a call option gives up the
opportunity for appreciation in the market value of the underlying security or
currency above the exercise price. It retains the risk of the loss should the
price of the underlying security or foreign currency decline. Writing call
options also involves risks relating to each Portfolio's ability to close out
the option it has written.

Each Portfolio may write exchange-traded call options on its securities. Call
options may be written on portfolio securities indices, or foreign currencies.
With respect to securities and foreign currencies, the Portfolio may write call
and put options on an exchange or over-the-counter. Call options on portfolio
securities will be covered since the Portfolio will own the underlying
securities. Call option on securities indices will be written only to hedge in
an economically appropriate way portfolio securities that are not otherwise
hedged with options or financial futures contracts and will be "covered" by
identifying the specific portfolio securities being hedged. Options on foreign
currencies will be covered by securities denominated in that currency. Options
on securities indices will be covered by securities that substantially
replicated the movement of the index.

A put option on a security, security index, or foreign currency gives the
purchaser of the option, in return for the premium paid to the writer (seller),
the right to sell the underlying security, index, or foreign currency at the
exercise price at any time during the option period. When each Portfolio writes
a secured put option, in will gain a profit in the amount of the premium, less a
commission, so long as the price of the underlying security remains above the
exercise price. However, each Portfolio remains obligated to purchase the
underlying security from the buyer of the put option (usually in the event the
price of the security falls bellows the exercise price) at any time during the
option period. If the price of the underlying security falls below the exercise
price, the Portfolios may realize a loss in the amount of the difference between
the exercise price and the sale price of the security, less the premium
received. Upon exercise by the purchaser, the writer of a put option has the
obligation to purchase the underlying security or foreign currency at the
exercise price. A put option on a securities index is similar to a put option on
an individual security, except that the value of the option depends on the
weighted value of the group of securities comprising the index and all
settlements are made in cash.

During the option period, the writer of a put option has assumed the risk that
the price of the underlying security or foreign currency will decline below the
exercise price. However, the writer of the put option has retained the
opportunity for an appreciated above the exercise price should the market price
of the underlying security or foreign currency increase. Writing put options
also involves risks relating to the Portfolios' ability to close out the option
that it has written.

The writer of an option who wishes to terminate his or her obligation may effect
a "closing purchase transaction" by buying an option of the same series as the
option previously written. The effect of the purchase is that the clearing
corporation will cancel the writer's position. However, a writer may not effect
a closing purchase transaction after being notified of the exercise of an
option. There is also no guarantee that the Portfolios will be able to effect a
closing purchase transaction for the options it has written.

Effecting a closing purchase transaction in the case of a written call option
will permit the Portfolios to write another call option on the underlying
security with a different exercise price, expiration date, or both. Effecting a
closing purchase transaction will also permit the Portfolios to use cash or
proceeds from the investments. If a Portfolio desires to sell a particular
security from its portfolio on which it has written a call option, it will
effect a closing purchase transaction before or at the same time as the sale of
the security.

The Portfolios will realize a profit from a closing purchase transaction if the
price of the transaction is less than the premium received from writing the
option. Likewise, the Portfolios will realize a loss from a closing purchase
transaction if the price of the transaction is more than the premium received
from writing the option. Because increases in the market price of a call option
will generally reflect increases in the market price of the underlying security,
any loss resulting from the repurchase of a call option is likely to be offset
in whole or in part by appreciation of the underlying security owned by a
Portfolio.

WRITING OVER-THE-COUNTER ("OTC") OPTIONS. The Portfolios may engage in options
transactions that trade on the OTC market to the same extent that it intends to
engage in exchange traded options. Just as with exchange traded options, OTC
options give the holder the right to buy an underlying security from, or sell an
underlying security to, an option writer at a stated exercise price. However,
OTC options differ from exchange traded options in certain material respects.

OTC options are arranged directly with dealers and not, as is the case with
exchange traded options, through a clearing corporation. Thus, there is a risk
of non-performance by the dealer. Because there is no exchange, pricing is
typically done by reference to information obtained from market makers. Since
OTC options are available for a greater variety of securities and in a wider
range of expiration dates and exercise prices, the writer of an OTC option is
paid the premium in advance by the dealer.

A writer or purchaser of a put or call option can terminate it voluntarily only
by entering into a closing transaction. There can be no assurance that a
continuously liquid secondary market will exist for any particular option at any
specific time. Consequently, the Portfolios may be able to realize the value of
an OTC option it has purchased only by exercising it or entering into a closing
sale transaction with the dealer that issued it. Similarly, when a Portfolio
writes an OTC option, it generally can close out that option prior to its
expiration only by entering into a closing purchase transaction with the dealer
to which it originally wrote to option. If a covered call option writer cannot
effect a closing transaction, it cannot sell the underlying security or foreign
currency until the option expires or the option is exercised. Therefore, the
writer of a covered OTC call option may not be able to sell an underlying
security even though it might otherwise be advantageous to do so. Likewise, the
writer of a secured OTC put option may be unable to sell the securities pledged
to secure the put for other investment purposes while it is obligated as a put
writer. Similarly, a purchaser of an OTC put or call option might also find it
difficult to terminate its position on a timely basis in the absence of a
secondary market.

The staff of the Securities and Exchange Commission has often taken the position
that purchased OTC options and the assets used to "cover" written OTC options
are illiquid securities. The Portfolios will adopt procedures for engaging in
OTC options transactions for the purpose of reducing any potential adverse
effect of such transactions on the liquidity of the Portfolios.

FUTURES CONTRACTS. The Portfolios may buy and sell stock index futures contracts
traded on domestic stock exchanges to hedge the value of its portfolio against
changes in market conditions. A stock index futures contract is an agreement
between two parties to take or make delivery of an amount of cash equal to a
specified dollar amount, times the difference between the stock index value at
the close of the last trading day of the contract and the price at which the
futures contract is originally struck. A stock index futures contract does not
involve the physical delivery of the underlying stocks in the index. Although
stock index futures contracts call for the actual taking or delivery or cash, in
most cases a Portfolio expects to liquidate its stock index futures positions
through offsetting transactions, which may result in a gain or a loss, before
cash settlement is required.

Each Portfolio will incur brokerage fees when it purchases and sells stock index
futures contracts, and at the time a Portfolio purchases or sells a stock index
futures contract, it must make a good faith deposit known as the "initial
margin". Thereafter, a Portfolio may need to make subsequent deposits, known as
"variation margin", to reflect changes in the level of the stock index. Each
Portfolio may buy or sell a stock index futures contract so long as the sum of
the amount of margin deposits on open positions with respect to all stock index
futures contracts does not exceed 5% of a Portfolio's net assets.

To the extent a Portfolio enters into a stock index futures contract, it will
maintain with its custodian bank (to the extent required by the rules of the
SEC) assets in a segregated account to cover its obligations. Such assets may
consist of cash, cash equivalents, or high quality debt securities from its
portfolio in an amount equal to the difference between the fluctuating market
value of such futures contract and the aggregate value of the initial and
variation margin payments.

RISKS ASSOCIATED WITH OPTIONS AND FUTURES. Although the Portfolios may write
covered call options and purchase and sell stock index futures contracts to
hedge against declines in market value of their portfolio securities, the use of
these instruments involves certain risks. As the writer of covered call options,
each Portfolio receives a premium but loses any opportunity to profit from an
increase in the market price of the underlying securities declines, though the
premium received may partially offset such loss.

Although stock index futures contracts may be useful in hedging against adverse
changes in the value of each Portfolio's investment securities, they are
derivative instruments that are subject to a number of risks. During certain
market conditions, purchases and sales of stock index futures contracts may not
completely offset a decline or rise in the value of each Portfolio's
investments. In the futures markets, it may not always be possible to execute a
buy or sell order at the desired price, or to close out an open position due to
market conditions, limits on open positions and/or daily price fluctuations.
Changes in the market value of each Portfolio's investment securities may differ
substantially from the changes anticipated by a Portfolio when it established
its hedged positions, and unanticipated price movements in a futures contract
may result in a loss substantially greater than such Portfolio's initial
investment in such a contract.

Successful use of futures contracts depends upon the sub-adviser's ability to
correctly predict movements in the securities markets generally or of a
particular segment of a securities market. No assurance can be given that the
sub-adviser's judgment in this respect will be correct.

The CFTC and the various exchanges have established limits referred to as
"speculative position limits" on the maximum net long or net short position that
any person may hold or control in a particular futures contract. Trading limits
are imposed on the number of contracts that any person may trade on a particular
trading day. An exchange may order the liquidation of positions found to be in
violation of these limits and it may impose sanctions or restrictions. These
trading and positions limits will not have an adverse impact on a Portfolio's
strategies for hedging its securities.

MORE ABOUT THE ASIA TECHNOLOGY FUND'S INVESTMENT IN TECHNOLOGY AND SCIENCE
DRIVEN COMPANIES. The sub-adviser for the Asia Technology Portfolio believes
that because of rapid advances in technology, science, and biotechnology, an
investment in companies with business operations in these areas will offer
substantial opportunities for long-term capital appreciation. Of course, prices
of common stocks of even the best managed, most profitable corporations are
subject to market risk, which means their stock prices can decline. In addition,
swings in investor psychology or significant trading by large institutional
investors can result in price fluctuations. Industries likely to be represented
in the portfolio include the Internet, computers, networking and internetworking
software, computer aided design, telecommunications, media and information
services, medical devices and biotechnology. The Portfolio may also invest in
the stocks of companies that should benefit from the commercialization of
technological advances, although they may not be directly involved in research
and development.

The technology, science, and biotechnology areas have exhibited and continue to
exhibit rapid growth due to the mass adoption of the Internet, both through
increasing demand for existing products and services and the broadening of the
technology market. In general, the stocks of large capitalized companies that
are well established in the technology market can be expected to grow with the
market and will frequently be found in the Portfolio's cache of investment
securities. The expansion of technology and its related industries, however,
also provides a favorable environment for investment in small to medium
capitalized companies. The Portfolio's investment policies are not limited to
any minimum capitalization requirement and the Portfolio may hold securities
without regard to the capitalization of the issuer. The sub-adviser's overall
stock selection for the Portfolio is not based on the capitalization or size of
the company but rather on an assessment of the company's fundamental prospects.

Companies in the rapidly changing fields of technology, science, and
biotechnology face special risks. For example, their products or services may
not prove commercially successful or may become obsolete quickly. The value of
the Portfolio's shares may be susceptible to factors affecting the technology
and science areas and to greater risk and market fluctuation than an investment
in a fund that invests in a broader range of portfolio securities not
concentrated in any particular industry. As such, the Portfolio is not an
appropriate investment for individuals who are not long-term investors and who,
as their primary objective, require safety of principal or stable income from
their investments. The technology, science, and biotechnology areas may be
subject to greater governmental regulation than many other areas and changes in
governmental policies and the need for regulatory approvals may have a material
adverse effect on these areas. Additionally, companies in these areas may be
subject to risks of developing technologies, competitive pressures and other
factors and are dependent upon consumer and business acceptance as new
technologies evolve.

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

Due to the changing nature of the Internet and related companies, the national
economy and market conditions, the INTERNET FUND, INTERNET INFRASTRUCTURE FUND,
INTERNET EMERGING GROWTH FUND, INTERNET GLOBAL GROWTH FUND and NEW PARADIGM FUND
or the corresponding Portfolios 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.

Due to the changing nature of the medical research, biopharmaceutical and
treatment industry, the national economy and market conditions, the MEDICAL FUND
or the corresponding Portfolio may, as a temporary defensive measure, invest
without limitation, in short-term money market securities with a rating of A2-P2
or higher.

In order to have funds available for redemption and investment opportunities,
the Portfolios may also hold a portion of their assets in cash or U.S.
short-term money market instruments. Certificates of deposit purchased by the
Portfolios 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
Portfolios will be guaranteed by U.S. or foreign banks having total assets at
the time of purchase in excess of $1 billion. The Portfolios anticipate that not
more than 10% of its total assets will be so invested or held in cash at any
given time, except when the Portfolios are 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
Funds and the Portfolios must distribute substantially all of their net income
to shareholders generally on an annual basis. Thus, the Portfolios may have to
dispose of portfolio securities under disadvantageous circumstances to generate
cash or borrow cash in order to satisfy the distribution requirement. The
Portfolios do 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.

The portfolio turnover rate for the INTERNET FUND for the past two fiscal years
was as follows:

<TABLE>
<CAPTION>
----------------------------------------------------- ------------------------ ------------------------
Portfolio turnover rate for fiscal year ended: December 31, 1999 December 31, 1998
----------------------------------------------------- ------------------------ ------------------------
<S> <C> <C>
The Internet Fund 89% 80%
----------------------------------------------------- ------------------------ ------------------------
</TABLE>

NOTE: The other Funds and Portfolios have not operated long enough to calculate
a portfolio turnover rate for one fiscal year.

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

BOARD OF DIRECTORS/BOARD OF TRUSTEES

The management and affairs of the Funds and the Portfolios are supervised by the
Board of Directors of the Company and the Board of Trustees of the Trust,
respectively. Each Board consists of the same eight individuals, five of whom
are not "interested persons" of the Company or the Trust as that term is defined
in the Investment Company Act of 1940, as amended (the "1940 Act"). The
Directors are fiduciaries for the Funds' shareholders and are governed by the
laws of the State of Maryland in this regard. The Trustees are fiduciaries for
the Portfolios' shareholders and are governed by the laws of the State of
Delaware in this regard. Each Board establishes policies for the operation of
the Funds and the Portfolios and appoints the officers who conduct the daily
business of the Funds and the Portfolios. 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 WITH THE PRINCIPAL OCCUPATION
COMPANY AND TRUST DURING THE PAST FIVE YEARS
----------------------------------- --------- ------------------------- ------------------------------------------
<S> <C> <C> <C>
*Steven R. Samson 46 President & Chairman of President and CEO, Kinetics Asset
25 Holly Place the Boards Management, Inc. (1999 to Present);
Briarcliff, NY 10510 President, The Internet Fund, Inc. (1999
to Present); Managing Director, Chase
Manhattan Bank (1993 to 1999).
----------------------------------- --------- ------------------------- ------------------------------------------
*Kathleen Campbell 35 Director/Trustee Attorney, Campbell and Campbell,
68 East Hartsdale Avenue Counselors-at-Law (1995 to Present).
Hartsdale, NY 10530
----------------------------------- --------- ------------------------- ------------------------------------------
*Murray Stahl 47 Director/Trustee President, Horizon Asset Management, an
30 Haights Cross Road investment adviser (1994 to Present).
Chappaqua, NY 10514
----------------------------------- --------- ------------------------- ------------------------------------------
Steven T. Russell 37 Independent Attorney and Counselor at Law, Steven
146 Fairview Avenue Director/Independent Russell Law Firm (1994 to Present);
Bayport, NY 11705 Trustee Professor of Business Law, Suffolk
County Community College (1997 to
Present).
----------------------------------- --------- ------------------------- ------------------------------------------
Douglas Cohen, C.P.A. 37 Independent Wagner, Awerma & Strinberg, LLP
6 Saywood Lane Director/Independent Certified Public Accountant (1997 to
Stonybrook, NY 11790 Trustee present); Leon D. Alpern & Co. (1985 to
1997)
----------------------------------- --------- ------------------------- ------------------------------------------
William J. Graham 38 Independent Attorney, Bracken & Margolin, LLP (1997
856 Hampshire Road Director/Independent to Present).
Bayshore, NY 11706 Trustee Gabor & Gabor (1995 to 1997)
----------------------------------- --------- ------------------------- ------------------------------------------
Joseph E. Breslin 46 Independent Senior Vice President, Marketing &
54 Woodland Drive Director/Independent Sales, IBJ Whitehall Financial Group, a
Rye Brook, NY 10573 Trustee financial services company (1999 to
Present); formerly President, J.E.
Breslin & Co., an investment management
consulting firm (1994 to 1999).
----------------------------------- --------- ------------------------- ------------------------------------------
John J. Sullivan 69 Independent Retired; Senior Advisor, Long Term
31 Hemlock Drive Director/Independent Credit Bank of Japan, Ltd.; Executive
Sleepy Hollow, NY 10591 Trustee Vice President, LTCB Trust Company.
----------------------------------- --------- ------------------------- ------------------------------------------
Lee W. Schultheis 44 Vice President & Managing Director & COO of Kinetics
54 Kelsey Ridge Road Treasurer of each of Asset Management (1999 to Present);
Freeport, ME 04032 the Company and the President & Director of Business.
Trust Development, Vista 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 of the Company and Trustees of the Trust, the
Independent Directors/Independent Trustees receive an aggregate fee of $15,000
per year and $1,000 per meeting attended, as well as reimbursement for expenses
incurred in connection with attendance at such meetings. In addition, each
committee chairman of the Company and the Trust (such as the Audit Committee or
Pricing Committee) receives an additional fee of $5,000 per year for his service
as chairman. The "interested persons" who serve as Directors of the Company or
Trustees of the Trust receive no compensation for their service as Directors or
Trustees. None of the executive officers receive compensation from the Funds or
the Portfolios. The following tables provide compensation information for the
Directors/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 FUNDS 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*** 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.

** Includes compensation paid by Kinetics Portfolios Trust

*** 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 $3,844 as total compensation from the Fund and Fund complex
for being an independent director.

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 Funds as of
August 31, 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. Principal
holders are persons that beneficially own 5% or more of a Fund's outstanding
shares.

<TABLE>
<CAPTION>
CONTROL PERSONS OF THE INTERNET FUND
------------------------------------------- ---------------------- -------------------- --------------------------------
Name and Address Shares % Ownership Type of Ownership
------------------------------------------- ---------------------- -------------------- --------------------------------
<S> <C> <C> <C>
National Financial Services Corp. 7,962,013.635 33.30% Record
200 Liberty Street
New York, NY 10281

Charles Schwab & Co., Inc. 3,742,058.316 15.65% Record
101 Montgomery Street
San Francisco, CA 94104

National Investor Services Corp. 1,198,374.017 5.01% Record
55 Water Street
New York, NY 10041
------------------------------------------- ---------------------- -------------------- --------------------------------
</TABLE>

<TABLE>
<CAPTION>
CONTROL PERSONS OF THE INTERNET INFRASTRUCTURE FUND
------------------------------------------ ----------------------- -------------------- --------------------------------
Name and Address Shares % Ownership Type of Ownership
------------------------------------------ ----------------------- -------------------- --------------------------------
<S> <C> <C> <C>
National Financial Services Corp. 514,571.327 23.99% Record
200 Liberty Street
New York, NY 10281

Charles Schwab & Co Inc. 352,033.828 16.42% Record
101 Montgomery Street
San Francisco, CA 94104
------------------------------------------ ----------------------- -------------------- --------------------------------
</TABLE>

<TABLE>
<CAPTION>
CONTROL PERSONS OF THE INTERNET EMERGING GROWTH FUND
------------------------------------------ ----------------------- -------------------- --------------------------------
Name and Address Shares % Ownership Type of Ownership
------------------------------------------ ----------------------- -------------------- --------------------------------
<S> <C> <C> <C>
National Financial Services Corp. 276,294.20 19.81% Record
200 Liberty Street
New York, NY 10281

Charles Schwab & Co Inc. 153,091.485 10.97% Record
101 Montgomery Street
San Francisco, CA 94104
------------------------------------------ ----------------------- -------------------- --------------------------------
</TABLE>

<TABLE>
<CAPTION>
CONTROL PERSONS OF THE INTERNET GLOBAL GROWTH FUND
------------------------------------------ ----------------------- -------------------- --------------------------------
Name and Address Shares % Ownership Type of Ownership
------------------------------------------ ----------------------- -------------------- --------------------------------
<S> <C> <C> <C>
National Financial Services Corp. 437,836.476 20.08% Record
200 Liberty Street
New York, NY 10281

Charles Schwab & Co Inc. 382,360.643 17.54% Record
101 Montgomery Street
San Francisco, CA 94104
------------------------------------------ ----------------------- -------------------- --------------------------------
</TABLE>

<TABLE>
<CAPTION>
CONTROL PERSONS OF THE NEW PARADIGM FUND
------------------------------------------ ----------------------- -------------------- --------------------------------
Name and Address Shares % Ownership Type of Ownership
------------------------------------------ ----------------------- -------------------- --------------------------------
<S> <C> <C> <C>
National Financial Services Corp. 71,917.978 20.99% Record
200 Liberty Street
New York, NY 10281

Charles Schwab & Co Inc. 31,019.36 9.05% Record
101 Montgomery Street
San Francisco, CA 94104
------------------------------------------ ----------------------- -------------------- --------------------------------
</TABLE>

<TABLE>
<CAPTION>
CONTROL PERSONS OF THE MEDICAL FUND
------------------------------------------- ---------------------- -------------------- --------------------------------
Name and Address Shares % Ownership Type of Ownership
------------------------------------------- ---------------------- -------------------- --------------------------------
<S> <C> <C> <C>
National Financial Services Corp. 811,715.755 29.10% Record
200 Liberty Street
New York, NY 10281

Charles Schwab & Co., Inc. 339,759.371 12.18% Record
101 Montgomery Street
San Francisco, CA 94104
------------------------------------------- ---------------------- -------------------- --------------------------------
</TABLE>

<TABLE>
<CAPTION>
CONTROL PERSONS OF THE SMALL CAP OPPORTUNITIES FUND
------------------------------------------ ----------------------- --------------------- -------------------------------
Name and Address Shares % Ownership Type of Ownership
------------------------------------------ ----------------------- --------------------- -------------------------------
<S> <C> <C> <C>
Janney Montgomery Scott, LLC 9,442.060 21.63% Record
1801 Market Street
Philadelphia, PA 19103-1675

Kinetics Asset Management, Inc. 5,801.847 13.29% Record
1311 Mamaroneck Ave
White Plains, NY 10605

National Investor SVC Corp. 4,189.051 9.60% Record
55 Water Street
New York, NY 10041-0001

Charles Schwab & Co., Inc. 2,642.188 6.05% Record
101 Montgomery Street
San Francisco, CA 94104

Jack W. Bone 2,512.563 5.76% Record
Phyllis AK Bone
222 Pine Tree LN
La Grange Park, IL 60526-1115
------------------------------------------ ----------------------- --------------------- -------------------------------
</TABLE>

<TABLE>
<CAPTION>
CONTROL PERSONS OF THE MIDDLE EAST GROWTH FUND
----------------------------------------- ------------------------ --------------------- -------------------------------
Name and Address Shares % Ownership Type of Ownership
----------------------------------------- ------------------------ --------------------- -------------------------------
<S> <C> <C> <C>
Lawrence P. Doyle 11,256.969 35.67% Record
545 Fremont Road
Sleepy Hollow, NY 10591

Kinetics Asset Management Inc. 10,000.00 31.69% Record
1311 Mamaroneck Avenue
White Plains, NY 10605

Doyle Family Enterprise, LLC 2,290.951 7.26% Record
48 Gamecock Lane
Babylon, NY 11702
----------------------------------------- ------------------------ --------------------- -------------------------------
</TABLE>

CONTROL PERSONS OF THE ASIA TECHNOLOGY FUND

As of August 31, 2000, there were no control persons or principal holders of
securities of the Fund. On September 1, 2000, Kinetics Asset Management Inc. was
the holder of 100% of the Fund's outstanding shares for organizational purposes
only.

MANAGEMENT OWNERSHIP

As of August 31, 2000, the officers and/or Directors of the Funds as a group own
less than 1% of the outstanding shares of the Funds.

INVESTMENT ADVISERS
--------------------------------------------------------------------------------

Kinetics Asset Management, Inc. ("Kinetics" or the "Adviser") is a New York
corporation that serves as the investment adviser to the Portfolios. 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 Chief Operating Officer of Kinetics and has more than
20 years experience in the mutual funds and financial services industries.

On April 25, 2000, the Board of the Trustees of the Trust, on behalf of the
Portfolios, 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 Portfolios. 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 Portfolios. 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 Portfolios by
continuously reviewing the portfolio and recommending to the Portfolios to what
extent, securities should be purchased or disposed. Pursuant to the Agreement,
the Adviser:

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

SUB-ADVISER

On June 20, 2000, the Board of Trustees, on behalf of the ASIA TECHNOLOGY
PORTFOLIO, approved a sub-advisory agreement between the Adviser and UOB Global
Capital LLC (the "sub-adviser"), pursuant to which the sub-adviser will assist
it in the day-to-day management of the investment portfolio. The sub-advisory
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 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. In the event that the Advisory
Agreement under any circumstances, the sub-advisory agreement shall also
automatically be terminated.

The sub-adviser determines which securities will be purchased, retained or sold
for the ASIA TECHNOLOGY Portfolio, places orders for the Portfolio and provides
the investment adviser with information on international investment and economic
developments.

Under the Sub Advisory Agreement, Kinetics supervises the sub-adviser which, in
turn, furnishes investment advice to the Fund by continuously reviewing the
portfolio and recommending to the Fund when, and to what extent, securities
should be purchased or disposed. The sub-adviser's investment decisions are made
subject to the direction and supervision of the Adviser and the Board of
Trustees. 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. Pursuant to the Agreement, the Adviser is responsible directly, or
indirectly through the sub-adviser, for:

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

ADVISORY FEES

For the above services, the Funds have each agreed to pay to Kinetics an annual
fee of 1.25% of the Funds' average daily net assets. All fees are computed on
the average daily closing net asset value ("NAV") of the Fund and are payable
monthly. The fee is higher than the fee paid by most other funds. During the
fiscal years ended December 31, 1997, 1998 and 1999, the Adviser was paid the
following amounts:

---------------------------------------- ---------- ------------ ---------------
ADVISORY FEES 1997 1998 1999
---------------------------------------- ---------- ------------ ---------------
The Internet Fund 1 $2,058 $38,561 $6,753,133
The Internet Infrastructure Fund 2 N/A N/A N/A
The Internet Emerging Growth Fund 2 N/A N/A N/A
The Internet Global Growth Fund 2 N/A N/A N/A
The New Paradigm Fund 2 N/A N/A N/A
The Medical Fund 3 N/A N/A $8,280
The Small Cap Opportunities Fund 4 N/A N/A N/A
The Middle East Growth Fund 5 N/A N/A N/A
The Asia Technology Fund 6 N/A N/A N/A
---------------------------------------- ---------- ------------ ---------------

1 The Fund started operations on October 21, 1996.
2 The Fund started operations on December 31, 1999.
3 The Fund started operations on September 30, 1999.
4 The Fund started operations on March 20, 2000.
5 The Fund started operations on March 10, 2000.
6 The Fund will commence operations on October 20, 2000.

SUB-ADVISORY FEES

For the ASIA TECHNOLOGY FUND, the sub-adviser's fees of 62.5% of the Fund's
average daily net assets are paid by the investment adviser out of the Adviser's
annual advisory fees. All fees are computed on the average daily closing net
asset value ("NAV") of the Portfolio and are payable monthly. During the fiscal
years ended December 31, 1997, 1998 and 1999, the Adviser was paid the following
amounts:

---------------------------------- ---------- ------------ ---------------
ADVISORY FEES 1997 1998 1999
---------------------------------- ---------- ------------ ---------------
The Asia Technology Fund 1 N/A N/A N/A
---------------------------------- ---------- ------------ ---------------

1 The Fund will commence operations on October 20, 2000.

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 Funds or by the Portfolios or by the Funds and the Portfolios
jointly, as more fully described below. The Funds pay 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.

SHAREHOLDER SERVICING
--------------------------------------------------------------------------------

The Adviser provides shareholder services to the Funds and receives a
shareholder servicing fee from the Funds pursuant to a Shareholder Servicing
Agreement in an amount equal to 0.25% of the Funds' 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 Funds. During the fiscal year ended December 31, 1999, the
Funds paid Kinetics the following amounts for shareholder servicing fees:

--------------------------------------------- ---------------
SHAREHOLDER SERVICING FEES 1999

--------------------------------------------- ---------------
The Internet Fund 1 $766,954
The Internet Infrastructure Fund 2 N/A
The Internet Emerging Growth Fund 2 N/A
The Internet Global Growth Fund 2 N/A
The New Paradigm Fund 2 N/A
The Medical Fund 3 $1,656
The Small Cap Opportunities Fund 4 N/A
The Middle East Growth Fund 5 N/A
The Asia Technology Fund 6 N/A
--------------------------------------------- ---------------

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

Kinetics also serves as Administrator of the Funds and the Portfolios. Under an
Administrative Services Agreement with the Funds, Kinetics will be entitled to
receive an annual administration fee equal to 0.05% of the Funds' average daily
net assets and 0.10% of the Portfolios' average daily net assets of which
Kinetics 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 Portfolios by Firstar. During the fiscal year ended
December 31, 1999, the Funds paid Kinetics the following amounts for
administrative services:

--------------------------------------------- ---------------
ADMINISTRATIVE SERVICES FEES 1999

--------------------------------------------- ---------------
The Internet Fund 1 $616,704
The Internet Infrastructure Fund 2 N/A
The Internet Emerging Growth Fund 2 N/A
The Internet Global Growth Fund 2 N/A
The New Paradigm Fund 2 N/A
The Medical Fund 3 $994
The Small Cap Opportunities Fund 4 N/A
The Middle East Growth Fund 5 N/A
The Asia Technology Fund N/A
--------------------------------------------- ---------------

Firstar, located at 615 East Michigan Street, Milwaukee, Wisconsin 53202, also
serves as the Funds' accountant and transfer agent. As such, Firstar provides
certain shareholder services and record management services as well as acts as
the Portfolios' 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:

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

DISTRIBUTOR
--------------------------------------------------------------------------------

Kinetics Funds Distributor, Inc. ("KFDI") 1311 Mamaroneck Avenue, Suite 130,
White Plains, New York 10605 is the distributor of the Funds' shares. KFDI is a
registered broker-dealer and member of the National Association of Securities
Dealers, Inc.

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

Firstar Bank, N.A. ("Firstar Bank") is custodian for the securities and cash of
the Portfolios. Under a Custody Agreement, Firstar Bank holds the Portfolios'
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
Portfolios' 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 Portfolios held by the Funds pursuant to a Sub-Custody Agreement under
which Firstar Bank is responsible for the safekeeping of the Funds' shares of
beneficial interest and all necessary records and documents relating to such
shares.

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

Shares of the Funds are sold on a continual basis at the NAV per share next
computed following acceptance of an order by the Funds. The Funds' 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. Eastern Time) 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 Portfolios' 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 Portfolios may use independent pricing services to assist in
calculating the NAV of the Portfolio's shares.

The Portfolios' 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 Portfolios.

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

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

STOCK CERTIFICATES AND CONFIRMATIONS

The Funds 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 Funds to the shareholder's
address of record.

SPECIAL INCENTIVE PROGRAMS

At various times the Funds 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 Funds, or
participate in sales programs sponsored by the Funds. 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 Funds. These programs 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 Funds 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 Funds' behalf. An order is deemed to be received when an
authorized broker or agent accepts the order. Orders will be priced at the
Funds' 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 Funds directly. Orders received by dealers by the close of trading
on the NYSE on a business day that are transmitted to the Funds by 4:00 p.m.
Eastern Time 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. Eastern Time.

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

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

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:

|X| the shareholder's name,
|X| the name of the Fund;
|X| the account number;
|X| the share or dollar amount to be redeemed; and
|X| 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:

|X| a trust company or commercial bank whose deposits are insured by the BIF,
which is administered by the FDIC;
|X| a member of the New York, Boston, American, Midwest, or Pacific Stock
Exchange;
|X| a savings bank or savings association whose deposits are insured by the
SAIF, which is administered by the FDIC; or
|X| any other "eligible guarantor institution" as defined in the Securities
Exchange Act of 1934.

The Funds do not accept signatures guaranteed by a notary public.

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

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

The Portfolio's assets are invested by the Adviser in a manner consistent with
its investment objective, strategies, policies and restrictions and with any
instructions the Board of Trustees may issue from time to time. Within this
framework, the Adviser is responsible for making all determinations as to the
purchase and sale of portfolio securities and for taking all steps necessary to
implement securities transactions on behalf of the Portfolio.

Transactions on U.S. stock exchanges, commodities markets and futures markets
and other agency transactions may involve the payment by the Adviser on behalf
of the Portfolio of negotiated brokerage commissions. Such commissions vary
among different brokers. A particular broker may charge different commissions
according to such factors as the difficulty and size of the transaction.
Transactions in foreign investments often involve the payment of fixed brokerage
commissions, which may be higher than those in the United States. There is
generally no stated commission in the case of securities traded in the
over-the-counter markets, but the price paid by the Adviser usually includes an
undisclosed dealer commission or mark-up. In underwritten offerings, the price
paid by the Adviser on behalf of the Portfolio includes a disclosed, fixed
commission or discount retained by the underwriter or dealer.

U.S. Government securities generally are traded in the over-the-counter market
through broker-dealers. A broker-dealer is a securities firm or bank that makes
a market for securities by offering to buy at one price and sell at a slightly
higher price. The difference between the prices is known as a spread.

In placing orders for the purchase and sale of portfolio securities for the
Portfolio, the Adviser seeks to obtain the best price and execution, taking into
account such factors as price, size of order, difficulty and risk of execution
and operational facilities of the firm involved. For securities traded in the
over-the-counter markets, the Adviser deals directly with the dealers who make
markets in these securities unless better prices and execution are available
elsewhere. The Adviser negotiates commission rates with brokers based on the
quality and quantity of services provided in light of generally prevailing
rates, and while the Adviser generally seeks reasonably competitive commission
rates, the Portfolio does not necessarily pay the lowest commissions available.
The Board of Trustees periodically reviews the commission rates and allocation
of orders.

When consistent with the objectives of best price and execution, business may be
placed with broker-dealers who furnish investment research or services to the
Adviser. Such research or services include advice, both orally and in writing,
as to the value of securities; the advisability of investing in, purchasing or
selling securities; and the availability of securities, or purchasers or sellers
of securities; as well as analyses and reports concerning issues, industries,
securities, economic factors and trends, portfolio strategy and the performance
of accounts. To the extent portfolio transactions are effected with
broker-dealers who furnish research services to the Adviser, the Adviser
receives a benefit, not capable of evaluation in dollar amounts, without
providing any direct monetary benefit to the Portfolio from these transactions.
The Adviser believes that most research services obtained by it generally
benefit several or all of the investment companies and private accounts which it
manages, as opposed to solely benefiting one specific managed fund or account.

The Trust, on behalf of a Portfolio, may also enter into arrangements, commonly
referred to as "broker/service arrangements" with broker-dealers pursuant to
which a broker-dealer agrees to pay the cost of certain products or services
provided to the Portfolio in exchange for fund brokerage. Under a typical
brokerage/service arrangement, a broker agrees to pay a portion the Portfolio's
custodian, administrative or transfer agency fees, etc., and, in exchange, the
Portfolio agrees to direct a minimum amount of brokerage to the broker. The
Adviser, on behalf of the Trust, usually negotiates the terms of the contract
with the service provider, which is paid directly by the broker.

The same security may be suitable for the Portfolio, another portfolio series of
the Trust or other private accounts managed by the Adviser. If and when the
Portfolio and two or more accounts simultaneously purchase or sell the same
security, the transactions will be allocated as to price and amount in
accordance with arrangements equitable to the Portfolio and the accounts. The
simultaneous purchase or sale of the same securities by the Portfolio and other
accounts may have a detrimental effect on the Portfolio, as this may affect the
price paid or received by the Portfolio or the size of the position obtainable
or able to be sold by the Portfolio.

Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc. and subject to seeking the most favorable price and execution
available and such other policies as the Trustees may determine, the Adviser may
consider sales of shares of the Portfolio as a factor in the selection of
broker-dealers to execute portfolio transactions for the Portfolio.

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

Under provisions of Sub-Chapter M of the Internal Revenue Code of 1986 as
amended, the Funds, by paying out substantially all of their investment income
and realized capital gains, have been and intend to continue to be relieved of
federal income tax on the amounts distributed to shareholders. To qualify as a
"regulated investment company" or "RIC" under Sub-Chapter M, the Funds (which is
treated separately from each other series of the Company for these purposes),
must distribute to their shareholders for each taxable year at least 90% of the
Funds' taxable income (consisting generally of net investment income and net
short-term capital gain) and must meet several additional requirements. Among
these requirements are the following:

(a) each Fund must derive at least 90% of its gross income each taxable
year from dividends, interest, payments with respect to securities loans,
gains from the disposition of foreign currencies, interest and gains from
securities transactions or other income;

(b) the Fund must derive less than 30% of its gross income each taxable year
from the sale or other disposition of securities that were held for less
than three months; and

(c) at the close of each quarter, (i) at least 50% of the value of the Funds'
total assets must be represented by cash and cash items, U.S. Government
securities, securities of other RICs and other securities limited in respect
of any one issuer, to an amount that does not exceed 5% of the value of
the Funds' total assets and that does not represent more than 10% of the
issuer's outstanding voting securities, and (ii) not more than 25% of the
value of its total assets may be invested in securities (other than U.S.
government securities) of any one issuer. Each Fund (as an investor in the
corresponding Portfolio) will be deemed to own a proportionate share of the
Portfolio's assets and to earn a proportionate share of the Portfolio's
income, for purposes of determining whether the Fund satisfies all the
requirements described above to qualify as a RIC.

Each Fund will be subject to a nondeductible 4% excise tax to the extent that it
fails to distribute by the end of the calendar year substantially all of its
ordinary income for that year and capital gain net income for the one year
period ending on October 31 of that year, plus certain other amounts.

Distribution of any net long-term capital gains realized by the Funds 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 net investment income
distributed by the Funds, 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.

Each Fund is required by federal law to withhold 31% of reportable payments
(that 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
Funds 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 Funds' 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.

<TABLE>
<CAPTION>
--------------------------------------------- --------------- --------------- ---------------
AVERAGE ANNUAL TOTAL RETURNS ENDED 12/31/99 1 YEAR 3 YEARS SINCE
INCEPTION
--------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
The Internet Fund 1 216.50% 119.44% 105.18%
The Internet Infrastructure Fund 2 N/A N/A N/A
The Internet Emerging Growth Fund 2 N/A N/A N/A
The Internet Global Growth Fund 2 N/A N/A N/A
The New Paradigm Fund 2 N/A N/A N/A
The Medical Fund 3 N/A N/A 33.50%
The Small Cap Opportunities Fund 4 N/A N/A N/A
The Middle East Growth Fund 5 N/A N/A N/A
The Asia Technology Fund 6 N/A N/A N/A
--------------------------------------------- --------------- --------------- ---------------
</TABLE>

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 Funds may advertise the performance of
registered investment companies or private accounts that have investment
objectives, policies and strategies substantially similar to those of the Funds.

COMPARISON OF FUND PERFORMANCE

The performance of the Funds 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 an index 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 NASDAQ Composite - The NASDAQ Composite Index is a broad-based capitalization
- weighted index of all NASDAQ stocks.

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

PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Suite 1500, Milwaukee,
Wisconsin 53202, serves as the Funds' independent auditors, whose services
include examination of the Funds' financial statements and the performance of
other related audit and tax services.

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

The audited financial statements for THE INTERNET FUND and THE MEDICAL FUND are
incorporated by reference to the Funds' Annual Report, for the year ended 1999,
as filed with the Securities and Exchange Commission on February 29, 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.

September 15, 2000 PROSPECTUS www.kineticsfunds.com

[LOGO] The GOVERNMENT MONEY MARKET Fund

A series of Kinetics Mutual Funds, Inc.

[LOGO] Kinetics Mutual Funds, Inc.

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

INVESTMENT OBJECTIVE AND STRATEGIES OF THE FUND 2

PRINCIPAL RISKS OF THE FUND 3

PERFORMANCE 3

FEES AND EXPENSES OF THE FUND 4

MANAGEMENT OF THE FUND AND THE PORTFOLIO 5

VALUATION OF FUND SHARES 5

HOW TO PURCHASE SHARES 6

HOW TO REDEEM SHARES 7

EXCHANGE PRIVILEGE 9

DISTRIBUTIONS AND TAXES 10

DISTRIBUTION OF SHARES 11

UNIQUE CHARACTERISTICS OF MASTER/FEEDER FUND STRUCTURE 12

COUNSEL AND INDEPENDENT AUDITORS 12

FINANCIAL HIGHLIGHTS 12

[LOGO] Kinetics Mutual Funds, Inc.

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 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 12.

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.

PROSPECTUS

This Prospectus provides 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

SEPTEMBER 15, 2000

INVESTMENT OBJECTIVE AND STRATEGIES OF THE FUND

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. The Portfolio and the Fund
each seek to maintain a constant $1.00 net asset value per share.

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.

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 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:

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. 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.

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.

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.

PERFORMANCE

Because the Fund and the Portfolio have had investment operations for less than
a full year, there is no performance information available for either the Fund
or the Portfolio 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 TABLE1

SHAREHOLDER TRANSACTION EXPENSES2 (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 Fee3 None
--------------------------------------------------------------------------------
Maximum Account Fee4 None

ESTIMATED ANNUAL OPERATING EXPENSES (expenses deducted from Fund assets)
--------------------------------------------------------------------------------
Management Fees5 0.50%
Distribution (Rule 12b-1) Fees None
Other Expenses 0.75%
--------------------------------------------------------------------------------
Estimated Total Annual Fund Operating Expenses 1.25%
--------------------------------------------------------------------------------
1. This fee table reflects the aggregate expenses of the Fund and the Portfolio.

2. 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.

3. 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.

4. IRA Accounts are assessed a $12.50 annual fee.

5. The management fees paid by the Fund reflect the fees paid by the Fund and
the Portfolio for investment advisory services.

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
--------------------------------------------------------------------------------
$127 $397
--------------------------------------------------------------------------------

MANAGEMENT OF THE FUND AND THE PORTFOLIO

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. ("Horizon Asset
Management"), a New York based investment management and research firm, for
which it is responsible for the payment of all fees owing to Horizon.

Peter B. Doyle is the Chief Investment Strategist for the Portfolio.
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 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
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 the Fund's 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 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 OVERNIGHT OR EXPRESS MAIL
--------------------------------------------------------------------------------
<S> <C>
KINETICS MUTUAL FUNDS, INC. KINETICS MUTUAL FUNDS, INC.
THE KINETICS GOVERNMENT MONEY MARKET FUND THE KINETICS GOVERNMENT MONEY MARKET 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
</TABLE>

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: 0420-00013
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
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 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.

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:

REGULAR MAIL OVERNIGHT OR EXPRESS MAIL
--------------------------------------------------------------------------------
<S> <C>

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

</TABLE>

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 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 contracors 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 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.

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
the Company. 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 mutual funds offered by the
Company and about exercising your exchange privilege.

DISTRIBUTIONS 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
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 will
generally be relieved of Federal income tax on its investment company taxable
income. 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. 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
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 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
Kinetics Funds Distributor, Inc., an affiliate of Kinetics, 1311 Mamaroneck
Avenue, Suite 130, White Plains, New York, 10605, is the distributor for the
shares of the Funds. Kinetics Funds Distributor, Inc. is a registered
broker-dealer and member of the National Association of Securities Dealers,
Inc. Shares of each Fund are offered on a continuous basis.

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 0.05% 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.

UNIQUE CHARACTERISTICS OF 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 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 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. PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Suite 1500,
Milwaukee, Wisconsin 53202, has been selected as independent auditors for the
Fund for the year ending December 31, 2000.

FINANCIAL HIGHLIGHTS

Because the Fund has been operating for less than one 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, 1311 MAMARONECK AVENUE
and Shareholder Servicing Agent WHITE PLAINS, NY 10605

Legal Counsel SPITZER & FELDMAN P.C.
405 PARK AVENUE
NEW YORK, NY 10022

Independent Auditors PRICEWATERHOUSECOOPERS LLP
100 EAST WISCONSIN AVENUE, SUITE 1500
MILWAUKEE, WI 53202

Transfer Agent, Fund Accountant, FIRSTAR MUTUAL FUND SERVICES, LLC
and Sub-Administrator 615 EAST MICHIGAN STREET
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 September 15, 2000
The SAI of 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 last fiscal year.

Telephone: Internet:
(800) 930-3828 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 SAI) 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 the 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 KINETICS GOVERNMENT MONEY MARKET FUND a series of
Kinetics Mutual Funds, Inc.

1311 Mamaroneck Avenue White Plains, NY 10605
(800) 930-3828

September 15, 2000

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information ("SAI") provides general information
about the Kinetics Government Money Market Fund (the "Fund") and the Kinetics
Government Money Market 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 Portfolios 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 September 15, 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 diversified investment company with investment objectives,
strategies and policies that are substantially identical to those of the Fund.
To obtain a copy of the Prospectus and SAI of the Portfolio dated September 15,
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 KINETICS GOVERNMENT MONEY MARKET FUND

The Fund.......................................................................1
Investment Objective, Strategies, and Risks....................................1
Investment Policies and Associated Risks.......................................1
Investment Restrictions........................................................3
Management of the Fund.........................................................4
Control Persons and Principal Holders of Securities............................7
Investment Adviser.............................................................8
Administrative Services........................................................9
Distributor...................................................................10
Custodian.....................................................................10
Valuation of Shares...........................................................10
Purchasing Shares.............................................................10
Redemption of Shares..........................................................11
Brokerage.....................................................................12
Taxes.........................................................................13
Performance Information.......................................................13
Independent Auditors..........................................................15
Financial Statements..........................................................15
Appendix......................................................................16

THE FUND

--------------------------------------------------------------------------------

Kinetics Mutual Funds, Inc. (the "Company") is a Maryland corporation,
established on March 26, 1999. The Company is comprised of several series of
mutual funds, all of which are open-end investment companies. Kinetics
Portfolios Trust (the "Trust") is a Delaware business trust, established on
March 14, 2000. The Trust is comprised of several series of mutual funds, all of
which are open-end investment companies with investment objectives and
strategies identical to that of the individual Funds of the Company. The Fund
and Portfolio are set up in a master/feeder fund structure where the Fund is a
"feeder" fund that invests all of its investable assets in a corresponding
"master" Portfolio. The principal business office for the Company and the Trust
is located at 1311 Mamaroneck Avenue, White Plains, New York, 10605.

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 Company and the Trust each currently consist of 10 series, nine of which are
discussed in a separate prospectus and SAI.

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

The investment objective of the Fund is to provide current income consistent
with the preservation of capital and maintenance of liquidity. 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 seeks to achieve its investment
objective as set forth in this SAI in order to comply with applicable laws and
regulations, including the provisions of and regulations under the Investment
Company Act of 1940 ("1940 Act"). In particular, the Portfolio will comply with
the various requirements of Rule 2a-7, which regulates money market mutual
funds. The Portfolio will also determine the effective maturity of their
investments, as well as their ability to consider a security as having received
the requisite short-term ratings by any nationally recognized statistical rating
organization (NRSRO) according to Rule 2a-7. The Portfolio may change these
operational policies to reflect changes in the laws and regulations without the
approval of shareholders.

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.

REPURCHASE AGREEMENTS

The Portfolio may invest in repurchase agreements which are arrangements with
banks, broker/dealers, and other recognized financial institutions to sell
securities to the Portfolio and to repurchase them at a mutually agreed upon
time and price within one year from the date of acquisition. The Portfolio or
its custodian will take possession of the securities subject to the terms of the
repurchase agreements, and these securities will be marked to market daily. To
the extent that the original seller does not repurchase the securities from the
Portfolio, the Portfolio could receive less than the repurchase price on any
sale of such securities. In the event that such a defaulting seller filed for
bankruptcy or became insolvent, disposition of such securities by the Portfolio
might be delayed pending court action. The Portfolio believes that under the
regular procedures normally in effect for custody of the Portfolio's assets
subject to repurchase agreements, a court of competent jurisdiction would rule
in favor of the Portfolio and allow retention or disposition of such securities.
The Portfolio will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Portfolio's adviser to be creditworthy pursuant to guidelines established by
the Board of Trustees.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

The Portfolio may purchase short-term obligations on a when-issued or delayed
delivery basis. These transactions are arrangements in which the Portfolio
purchases securities with payment and delivery scheduled for a future time. The
seller's failure to complete these transactions may cause the Portfolio to miss
a price or yield considered advantageous. Settlement dates may be a month or
more after entering into these transactions and the market values of the
securities purchased may vary from the purchase prices.

The Portfolio may dispose of a commitment prior to settlement if the investment
adviser deems it appropriate to do so. In addition, the Portfolio may enter into
transactions to sell its purchase commitments to third parties at current market
values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Portfolio may realize short-term profits or
losses upon the sale of such commitments.

These transactions are made to secure what is considered to be an advantageous
price or yield for the Portfolio. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Portfolio
sufficient to make payment for the securities to be purchased are segregated on
the Portfolio's records at the trade date. These assets are marked to market
daily and are maintained until the transaction is settled. The Portfolio does
not intend to engage in when-issued and delayed delivery transactions to an
extent that would cause the segregation of more than 20% of the total value of
its assets.

OTHER MONEY MARKET FUNDS

As an efficient means of carrying out the investment policies, the Portfolio may
invest in the securities of other money market funds. A disadvantage to
investing in other money market funds is that they also carry certain expenses
such as management fees. As a result, any investment by the Portfolio in shares
of other money market funds may duplicate certain shareholder expenses.

MASTER/FEEDER FUND STRUCTURE

Unlike other mutual funds that 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 eligible government
investment securities. 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.

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 market or credit 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 Fund will not act as underwriter for securities of other issuers.

2. The Fund will not make loans.

3. With respect to 75% of its total assets, the Fund will not invest more than
5% of its total assets in securities of any one issuer (other than U.S.
Government Securities). This policy shall not be deemed violated to the
extent that the Fund invests all of its investable assets in the Portfolio.

4. The Fund 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 Fund
may enter into futures contracts and related options.

5. The Fund will not invest in the securities of any one industry with the
exception of securities issued or guaranteed by the U.S. Government, its
agencies, and instrumentality's, if as a result, more than 25% of the
Fund's total assets would be invested in the securities of such industry.
This policy shall not be deemed violated to the extent that the Fund
invests all of its investable assets in the Portfolio.

6. The Fund will not purchase or sell commodities or commodity contracts, or
invest in oil, gas or mineral exploration or development programs or real
estate.

7. The Fund will not issue senior securities.

If a percentage limitation is satisfied at the time of investment, a later
increase or decrease in such percentage resulting from a change in value in the
securities held by the Fund will not constitute a violation of such limitation.

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

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, including the Fund, and are governed by the laws
of the State of Delaware in this regard. Each Board establishes policies for the
operation of the Fund and the Portfolio and appoints 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 46 President & Chairman President and CEO, Kinetics Asset
25 Holly Place of the Board of Management, Inc. (1999 to Present);
Briarcliff, NY 10510 Directors President, The Internet Fund, Inc. (1999
to Present); Managing Director, Chase
Manhattan Bank (1993 to 1999).
----------------------------- --------- ------------------------ -------------------------------------------
*Kathleen Campbell 35 Director Attorney, Campbell and Campbell,
68 East Hartsdale Avenue Counselors-at-Law (1995 to Present).
Hartsdale, NY 10530
----------------------------- --------- ------------------------ -------------------------------------------
*Murray Stahl 47 Director President, Horizon Asset Management, an
30 Haights Cross Road investment adviser (1994 to Present).
Chappaqua, NY 10514
----------------------------- --------- ------------------------ -------------------------------------------
Steven T. Russell 37 Independent Director Attorney and Counselor at Law,
146 Fairview Avenue Steven Russell Law Firm (1994 to
Bayport, NY 11705 Present); Professor of Business Law,
Suffolk County Community College (1997 to
Present).
----------------------------- --------- ------------------------ -------------------------------------------
Douglas Cohen, C.P.A. 37 Independent Director Wagner, Awerma & Strinberg, LLP Certified
6 Saywood Lane Public Accountant (1997 to present); Leon
Stonybrook, NY 11790 D. Alpern & Co. (1985 to 1997)
----------------------------- --------- ------------------------ -------------------------------------------
William J. Graham 38 Independent Director Attorney, Bracken & Margolin, LLP (1997
856 Hampshire Road to Present).
Bayshore, NY 11706 Gabor & Gabor (1995 to 1997)
----------------------------- --------- ------------------------ -------------------------------------------
Joseph E. Breslin 46 Independent Director Senior Vice President, Marketing & Sales,
54 Woodland Drive IBJ Whitehall Financial Group, a
Rye Brook, NY 10573 financial services company (1999 to
Present); formerly President, J.E.
Breslin & Co., an investment management
consulting firm (1994 to 1999).
----------------------------- --------- ------------------------ -------------------------------------------
John J. Sullivan 69 Independent Director Retired; Senior Advisor, Long Term Credit
31 Hemlock Drive Bank of Japan, Ltd.; Executive Vice
Sleepy Hollow, NY 10591 President, LTCB Trust Company.
----------------------------- --------- ------------------------ -------------------------------------------
Lee W. Schultheis 44 Vice President & Managing Director & COO of Kinetics Asset
54 Kelsey Ridge Road Treasurer Management (1999 to Present); President &
Freeport, ME 04032 Director of Business. Development, Vista
Fund Distributor, 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 of the Company and the Trust,
respectively, the Independent Directors/Independent Trustees receive an
aggregate fee of $15,000 per year and $1,000 per meeting attended, as well as
reimbursement for expenses incurred in connection with attendance at such
meetings. In addition, each committee chairman of the Company and the Trust
(such as the Audit committee or Pricing committee) receives an additional fee of
$5,000 per year for his service as chairman. The "interested persons" who serve
as Directors and Trustees of the Company or the Trust 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 Directors/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*** 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.

** Includes compensation paid by Kinetics Portfolios Trust

*** 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.

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
August 31, 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.

<TABLE>
<CAPTION>
------------------------------- ------------------ ------------------ ------------------
Name and Address Shares % Ownership Type of Ownership
------------------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
Kinetics Asset Management, Inc 552,807.120 20.87% Record
1311 Mamaroneck Ave
White Plains, NY 10605

Mellon Bank (DE) NA 15,163,449.640 81.06% Record
135 Santilli Hwy
Everett, MA 02149-1906
</TABLE>

MANAGEMENT OWNERSHIP

As a group, the officers and directors of the Fund own less than 1% of the
outstanding shares of the Fund.

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

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

On April 25, 2000, the Board of Trustees 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 Portfolio 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 Portfolio's Board of Trustees. The Agreement may be terminated at any
time, without the payment of any penalty, by the Board of Trustees or by a 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 Trustees. Kinetics 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.

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
0.50% 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:

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 0.05% of the Fund's average daily
net assets and 0.10% 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.

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

DISTRIBUTOR
--------------------------------------------------------------------------------

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 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.

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

Shares of the Fund are sold on a continual basis at net asset value per share
("NAV"), which is determined by the Fund as of 12:00 p.m. Eastern time each day
the New York Stock Exchange ("NYSE") is open for unrestricted business. The NYSE
is closed on the following holidays: New Year's Day, Martin Luther King, Jr.
Day, President's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.

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 Fund and the Portfolio of $1.00.
However, there is no assurance that the $1.00 net asset value per share will be
maintained.

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

Shares of the Fund are sold in a continuous offering and may be purchased on any
business day through 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 programs will not change the price you pay for
your shares or the amount that the Fund will receive from such sales.

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 12:00 p.m. EST on
that day will be effected at the NAV 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 12:00 p.m. EST.

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

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

The Kinetics Government Money Market 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:

|X| the shareholder's name,
|X| the name of the Fund,
|X| the account number,
|X| the share or dollar amount to be redeemed, and
|X| 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 a shareholder requests that redemption proceeds be sent to an address other
than that on record with the Fund or that redemption proceeds be made payable to
someone other than the shareholder(s) of record, the written request must have
signatures guaranteed by:

|X| a trust company or commercial bank whose deposits are insured by the BIF,
which is administered by the FDIC;
|X| a member of the New York, Boston, American, Midwest, or Pacific Stock
Exchanges;
|X| a savings bank or savings association whose deposits are insured by the
SAIF, which is administered by the FDIC; or
|X| 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
--------------------------------------------------------------------------------

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 will
generally be relieved of Federal income tax on its investment company taxable
income. 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.

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 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, 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.

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

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

Yield for the Fund is calculated daily based upon the seven days ending on the
day of the calculation, called the "base period." This yield is computed by:

o determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net
change excluding capital changes but including the value of any additional
shares purchased with dividends earned form the original one share and all
dividends declared on the original and any purchased shares;

o dividing the net change in the account's value by the value of the account
at the beginning of the base period to determine the base period return; and

o multiplying the base period return by (365/7).

To the extent that financial institutions and broker/dealers charge fees in
connection with services provided in conjunction with an investment in the Fund,
the performance will be reduced for those shareholders paying those fees.

EFFECTIVE YIELD

The effective yield for the Fund is computed by compounding the unannualized
base period return by: o adding 1 to the base period return; o raising the sum
to the 365/7th power; and o subtracting 1 from the result.

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 a 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 a Fund may be compared to data prepared by Lipper Analytical
Services, 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.

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

PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Suite 1500, Milwaukee,
Wisconsin, 53202, 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
--------------------------------------------------------------------------------

Because the Fund has recently commenced operations, there is no annual report
available at this time.