KINETICS MUTUAL FUNDS INC, 497, 2000-02-02

KINETICS MUTUAL FUNDS INC
497, 2000-02-02

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Prospectus 02.02.00

(logo) THE KINETICS
GOVERNMENT MONEY MARKET FUND

www.kineticsfunds.com

(logo) KINETICS MUTUAL FUNDS, INC.

THE KINETICS GOVERNMENT
MONEY MARKET FUND

A SERIES OF KINETICS MUTUAL FUNDS, INC.

PROSPECTUS

FEBRUARY 2, 2000

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.

<PAGE>

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

PROSPECTUS

FEBRUARY 2, 2000

THE KINETICS GOVERNMENT MONEY MARKET FUND (the "Fund") is a no-load,
diversified investment company that seeks to provide investors with
current income consistent with the preservation of capital and
maintenance of liquidity.

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

Investment Adviser

KINETICS ASSET MANAGEMENT, INC.
Minimum Initial Investment -- $1,000

<PAGE>

TABLE OF CONTENTS

RISK/RETURN SUMMARY 2

PERFORMANCE 2

FEES AND EXPENSES OF THE FUND 3

INVESTMENT OBJECTIVE AND STRATEGIES 4

MAIN RISKS 5

MANAGEMENT OF THE FUND 5

VALUATION OF FUND SHARES 5

HOW TO PURCHASE SHARES 6

HOW TO REDEEM SHARES 7

EXCHANGE PRIVILEGE 9

DISTRIBUTION AND TAXES 9

DISTRIBUTION OF SHARES 10

MASTER/FEEDER FUND STRUCTURE 10

COUNSEL AND INDEPENDENT AUDITORS 11

FINANCIAL HIGHLIGHTS 11

<PAGE>

THE KINETICS GOVERNMENT MONEY MARKET FUND

RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE

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

PRINCIPAL INVESTMENT STRATEGIES
The Fund invests primarily in money market instruments issued or guaranteed, as
to principal and interest, by the U.S. Government, its agencies or
instrumentalities. The Fund seeks to maintain a constant $1.00 net asset value
per share.

PRINCIPAL RISKS OF INVESTING IN THE FUND
The main risks of investing in the Fund are:

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

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

WHO MAY WANT TO INVEST
The Fund may be appropriate for people who:

o want to save money rather than "invest"

o require stability of principal

o prefer to receive income with relatively fewer risks

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

PERFORMANCE
- --------------------------------------------------------------------------------
Because the Fund has no operating history, there is no performance information
available at this time.

2
<PAGE>

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

FEE TABLE
<TABLE>
<CAPTION>

SHAREHOLDER TRANSACTION EXPENSES(1)
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
<S> <C>
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 Fee(2) None

Maximum Account Fee(3) None

ESTIMATED ANNUAL OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)

Management Fees 0.50%
Distribution (Rule 12b-1) Fees None
Other Expenses 0.75 %
-------

Estimated Total Annual Fund Operating Expenses 1.25%
=======

</TABLE>

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

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

3 IRA Accounts are assessed a $12.50 annual fee.

3
<PAGE>

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

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

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

INVESTMENT STRATEGIES
The Fund intends to achieve its investment objective by investing its 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 Fund's
Board of Directors, to present minimal credit risk. The Fund invests exclusively
in obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities and repurchase agreements that are fully collateralized by
such obligations ("U.S. Government Securities"). U.S. Government Securities
include direct obligations of the U.S. Treasury, such as Treasury Bills,
Treasury Notes and Treasury Bonds.

U.S. Government Securities are high quality instruments guaranteed as to
principal and interest and issued by the U.S. Treasury or by an agency or
instrumentality of the U.S. Government. Not all U.S. Government Securities are
backed by the full faith and credit of the United States however. Some are
backed by the right of the issuer to borrow from the U.S. Treasury; others are
backed by the discretionary authority of the U.S. Government to purchase the
agencies' obligations; while others are supported only by the credit of the
instrumentality. In the case of securities not backed by the full faith and
credit of the United States, the Fund 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 Fund's
portfolio investments in U.S. Government Securities, while a decline in interest
rates generally would increase the market value of the Fund's portfolio
investments in these securities.

Under a repurchase agreement, the Fund 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 Fund'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 Fund 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 Fund.

4
<PAGE>

MAIN RISKS
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT RISKS
One of the risks of investing in repurchase agreements is that the seller may
not repurchase the securities from the Fund, which may result in the Fund
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 Fund might have to wait through lengthy
court actions before selling the securities. In the event of a default or
bankruptcy by the seller, the Fund will liquidate those securities held under
the repurchase agreement, which securities constitute collateral for the
seller's obligation to repurchase the securities.

Interest Rate Risks

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

MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
INVESTMENT ADVISER

The Fund's investment adviser is Kinetics Asset Management, Inc. ("Kinetics" or
the "investment adviser"),1311 Mamaroneck Avenue, Suite 130, White Plains, New
York, 10605. The management and affairs of the Fund are supervised by its Board
of Directors whose names and general background information appear in the
statement of additional information. The investment adviser conducts investment
research and supervision for the Fund and is responsible for the purchase and
sale of securities for the Fund's portfolio. The investment adviser receives an
annual fee from the Fund for its services of 0.50% of the Fund's average daily
net assets. The investment adviser has entered into a Research Agreement with
Horizon Asset Management, Inc. for which it is responsible for the payment of
all fees owing to Horizon.

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

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

Shares of the Fund are sold at net asset value per share ("NAV"), which is
determined by the Fund as of 1:00 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 Fund 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 of $1.00. However, there is no
assurance that the $1.00 net asset value per share will be maintained.

5
<PAGE>

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 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 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:
<TABLE>
<CAPTION>

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>

<PAGE>

PURCHASE BY WIRE

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

o WIRE TO: Firstar Bank, N.A.

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

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

SUBSEQUENT INVESTMENTS
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 (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.

<PAGE>

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 contractors will be liable for any
loss or expense in acting upon instructions that are reasonably believed to be
genuine. To confirm that all telephone instructions are genuine, the Fund will
use reasonable procedures, such as requesting:

o that you correctly state your Fund account number
o the name in which your account is registered
o the social security or tax identification number under which the account is
registered
o 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.

8
<PAGE>

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

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

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

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.

9
<PAGE>

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

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

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

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

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

SHAREHOLDER SERVICING AGENT

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 0.15% of the Fund's average daily
net assets, out of which it will be responsible for the payment of a portion of
such fees to Firstar Mutual Fund Services, LLC ("Firstar") for certain
sub-administrative services rendered to the Fund by Firstar.

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

MASTER/FEEDER FUND STRUCTURE
- --------------------------------------------------------------------------------
ELECTION TO INVEST FUND ASSETS PURSUANT TO MASTER/FEEDER STRUCTURE
In lieu of investing directly, the Fund is authorized to seek to achieve its
investment objective by converting to a Master/Feeder Fund Structure pursuant to
which the Fund would invest all of its investable assets in an investment
company having substantially the same investment objective and policies as the
Fund. The Master/Feeder Fund Structure is an arrangement that allows several
investment companies with different shareholder-related features or distribution
channels, but having substantially the same investment objective, policies and
restrictions, to combine their investments by investing all of their assets in
the same portfolio instead of managing them separately thus achieving certain
economies of scale. There is no present intention to convert the Fund to a
Master/Feeder Fund Structure.

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

10
<PAGE>

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

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Because the Fund has not yet commenced investment operations, there are no
financial highlights to report.

<PAGE>

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<PAGE>

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<PAGE>

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

INVESTMENT ADVISER, Kinetics Asset Management, Inc.
ADMINISTRATOR, AND 1311 Mamaroneck Avenue
SHAREHOLDER White Plains, NY 10605
SERVICING AGENT

LEGAL COUNSEL Spitzer & Feldman P.C.
405 Park Avenue
New York, NY 10022
INDEPENDENT McCurdy and Associates CPA's, Inc.
AUDITORS 27955 Clemens Road
Westlake, OH 44145

TRANSFER AGENT, Firstar Mutual Fund Services, LLC
FUND ACCOUNTANT, 615 East Michigan Street
SUB-ADMINISTRATOR Milwaukee, WI 53202

CUSTODIAN Firstar Bank, N.A.
425 Walnut Street
Cincinnati, OH 45202

You may obtain the following and other information
on the Fund free of charge:

STATEMENTS OF ADDITIONAL INFORMATION
(SAI) DATED FEBRUARY 2, 2000

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

ANNUAL AND SEMI-ANNUAL REPORT

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

TELEPHONE: (800) 930-3828
MAIL: Kinetics Mutual Funds, Inc.
c/o Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701
INTERNET: http://www.sec.gov (text only version)
http://www.kineticsfunds.com

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

1940 Act File No. 811-09303
<PAGE>

THE KINETICS GOVERNMENT MONEY MARKET FUND
a series of Kinetics Mutual Funds, Inc.

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

February 2, 2000

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information ("SAI") is not a prospectus and should
be read in conjunction with the Fund's current Prospectus dated February 2,
2000. To obtain a copy of the Prospectus, please write the Fund at the address
set forth above or call the telephone number shown above.

<PAGE>

THE KINETICS GOVERNMENT MONEY MARKET FUND

The Fund.....................................................................3
Investment Objective, Strategies, and Risks..................................3
Investment Policies and Associated Risks.....................................3
Investment Restrictions......................................................4
Management of the Fund.......................................................5
Control Persons and Principal Holders of Securities..........................7
Investment Adviser...........................................................7
Administrative Services......................................................8
Custodian....................................................................8
Capitalization...............................................................9
Valuation of Shares..........................................................9
Purchasing Shares............................................................9
Redemption of Shares........................................................10
Brokerage...................................................................11
Taxes.......................................................................11
Performance Information.....................................................12
Independent Auditors........................................................13
Financial Statements........................................................13
Appendix....................................................................14

<PAGE>

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

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

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

The Fund seeks to provide security of principal, current income and liquidity 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 Fund will comply with the various
requirements of Rule 2a-7, which regulates money market mutual funds. The Fund
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 Fund 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 prospectus describes the principal strategies and risks of the Fund.
This section provides additional information regarding investments and
transactions that the Fund is permitted to make.

REPURCHASE AGREEMENTS

The Fund may invest in repurchase agreements which are arrangements with
banks, broker/dealers, and other recognized financial institutions to sell
securities to the Fund and to repurchase them at a mutually agreed upon
time and price within one year from the date of acquisition. The Fund 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 theFund, the Fund 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 Fund might be delayed pending court action. The
Fund believes that under the regular procedures normally in effect for
custody of the Fund's portfolio securities subject to repurchase
agreements, a court of competent jurisdiction would rule in favor of the
Fund and allow retention or disposition of such securities. The Fund will
only enter into repurchase agreements with banks and other recognized
financial institutions, such as broker/dealers, which are deemed by the
Fund's adviser to be creditworthy pursuant to guidelines established by
the Board of Directors.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

The Fund may purchase short-term obligations on a when-issued or delayed
delivery basis. These transactions are arrangements in which the Fund
purchases securities with payment and delivery scheduled for a future
time. The seller's failure to complete these transactions may cause the
Fund 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.

<PAGE>

The Fund may dispose of a commitment prior to settlement if the investment
adviser deems it appropriate to do so. In addition, the Fund 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. TheFund 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 Fund. No fees or other expenses, other
than normal transaction costs, are incurred. However, liquid assets of the
Fund sufficient to make payment for the securities to be purchased are
segregated on the Fund's records at the trade date. These assets are
marked to market daily and are maintained until the transaction is
settled. The Fund 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 Fund
may invest in the securities of othermoney 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 Fund
in shares of other money market funds may duplicate certain shareholder
expenses.

INVESTMENT RESTRICTIONS
- --------------------------------------------------------------------------------
The Fund is subject to certain investment restrictions described here, which may
be changed only with the approval of the holders of a majority of the Fund's
outstanding shares.

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).

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.

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.

<PAGE>

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
Fund's portfolio securities will not constitute a violation of such limitation.

MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
The Fund is managed by a Board of Directors. The Fund's Board of Directors
consist of eight individuals, five of whom are not "interested persons" of the
Fund 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. They establish
policies for the operation of the Fund and appoint the officers who conduct the
daily business of the Fund. Officers and directors are listed below with their
addresses, present positions with the Fund and principal occupations over at
least the last five years.

- ----------------------------------- --------- ------------------------ -------------------------------------------
NAME AND ADDRESS AGE POSITION PRINCIPAL OCCUPATION
DURING THE PAST FIVE YEARS
- ----------------------------------- --------- ------------------------ -------------------------------------------
<S> <C> <C> <C>
*Steven R. Samson 45 President & Chairman President and CEO, Kinetics Asset
477 Madison Avenue of the Board of Management, Inc. (1999 to Present);
New York, NY 10022 Directors President, The Internet Fund, Inc. (1999
to Present); Managing Director, Chase
Manhattan Bank (1993 to 1999).
- ----------------------------------- --------- ------------------------ -------------------------------------------
*Kathleen Campbell 34 Director Attorney, Campbell and Campbell,
2 Madison Avenue Counselors-at-Law (1995 to Present).
Valhalla, NY 10595
- ----------------------------------- --------- ------------------------ -------------------------------------------
Murray Stahl* 46 Director President, Horizon Asset Management, an
342 Madison Avenue investment adviser (1994 to Present).
New York, NY 10173
- ----------------------------------- --------- ------------------------ -------------------------------------------
Steven T. Russell 36 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 36 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 37 Independent Director Attorney, Bracken & Margolin, LLP (1997
856 Hampshire Road to Present).
Bayshore, NY 11706 Gabor & Gabor (1995 to 1997)
- ----------------------------------- --------- ------------------------ -------------------------------------------
Joseph E. Breslin 45 Independent Director Senior Vice President, Marketing & Sales,
One State Street IBJ Whitehall Financial Group, a
New York, NY 10004 financial services company (1999 to
Present); formerly President, J.E.
Breslin & Co., an investment management
consulting firm (1994 to 1999).

*Interested persons as defined in the 1940 Act.

COMPENSATION
For their service as Directors, the Independent Directors receive a fee of
$5,000 per year and $1,000 per meeting attended, as well as reimbursement for
expenses incurred in connection with attendance at such meetings. The
"interested persons" of the Fund receive no compensation for their service as
Directors. Because the Fund has recently commenced investment operations, the
Independent Directors have not received any compensation at this time. None of
the executive officers receive compensation from the Fund.

- ---------------------------- ----------------- ----------------------- ---------------------- ------------------------
NAME AND POSITION AGGREGATE PENSION OR RETIREMENT ESTIMATED ANNUAL TOTAL COMPENSATION
COMPENSATION BENEFITS ACCRUED AS BENEFITS UPON FROM FUND COMPLEX PAID
FROM FUND PART OF FUND EXPENSES RETIREMENT 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.

<PAGE>

**Murray Stahl became an "interested person" of the Complex (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 Complex for
being an independent director.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------
Currently, there are no control persons or principal holders of securities of
the Fund. Control persons are persons deemed to control the Fund because they
beneficently own in excess of 25% of the outstanding equity securities.
Principal holders are persons that beneficially own 5% more of the Fund's
outstanding shares.

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

On September 1, 1999, the Board of the Directors of the Fund 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 Directors of the Fund or by the vote of the
holders of a majority of the outstanding voting securities of the Fund. In
either event, it must also be approved by a majority of the Directors of the
Fund 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 Fund's Board of Directors. The Agreement may be
terminated at any time, without the payment of any penalty, by the Board of
Directors or by a vote of a majority of the outstanding voting securities of the
Fund. Ultimate decisions as to the investment policy and as to individual
purchases and sales of securities are made by the Fund's officers and Directors.
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 Fund by
continuously reviewing the portfolio and recommending to the Fund when, and to
what extent, securities should be purchased or sold. Pursuant to the Agreement,
the Adviser:

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

For these services, the Fund has agreed to pay to Kinetics an annual fee of
0.50% of the Fund's average daily net assets. All fees are computed on the
average daily closing net asset value of the Fund and are payable monthly.

<PAGE>

Fees of the custodian, administrator, fund accountant and transfer agent are
paid by the Fund. The Fund pays all other expenses, including:

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

The Adviser receives a shareholder servicing fee 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. Under an Administrative
Services Agreement with the Fund, Kinetics will be entitled to receive an annual
administration fee equal to 0.15% of the Fund'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 Fund 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 Fund's dividend disbursement agent.

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

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

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

Firstar Bank N.A. is custodian for the securities and cash of the Fund.
Under the Custodian Agreement, Firstar Bank, N.A. holds the Fund's portfolio
securities in safekeeping and keeps all necessary records and documents relating
to its duties. The custodian receives an annual fee equal to 0.01% of the Fund's
average daily net assets with a minimum annual fee of $3,000.

<PAGE>

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.

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.

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

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.

<PAGE>

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:

* the shareholder's name,

* the name of the Fund,

* the account number,

* the share or dollar amount to be redeemed, and

* 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:

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

<PAGE>

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
Fund's normal operations. Information or services may include economic studies,
industry studies, statistical analysis, corporate reports or other forms of
assistance to the Fund 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 Fund 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 Directors evaluates and reviews the
reasonableness of brokerage commissions paid semiannually.

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

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

<PAGE>

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

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

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

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

YIELD

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).

<PAGE>

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

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

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

An Annual Report is not available for the Fund at this time.

<PAGE>

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.

<PAGE>

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.