KINETICS PORTFOLIOS TRUST, N-1A, 2000-05-01

KINETICS PORTFOLIOS TRUST
N-1A, 2000-05-01

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Filed with the Securities and Exchange Commission on April 28, 2000

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

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_|

Pre-Effective Amendment No. |_|

Post-Effective Amendment No. |_|

and

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

Amendment No. |_|

(Check appropriate box or boxes.)

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

1311 Mamaroneck Ave
White Plains, New York 10605
(Address and Zip Code of Principal Executive Offices)

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

Lee Schultheis
1311 Mamaroneck Ave
White Plains, New York 10605
(Name and Address of Agent for Service)

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

INTERESTS OFFERED PURSUANT TO THIS REGISTRATION STATEMENT ARE ISSUED SOLELY
TO ELIGIBLE INVESTORS IN PRIVATE PLACEMENT TRANSACTIONS AND DO NOT INVOLVE ANY
"PUBLIC OFFERING" WITHIN THE MEANING OF SECTION 4(2) OF THE 1933 ACT.

Approximate Date of Proposed Public Offering

INTERESTS
---------
(Title of Securities Being Registered)

It is proposed that this filing will become effective

immediately upon filing pursuant to paragraph (b)
- - ------

on pursuant to paragraph (b)
- - ------- ----------------------

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

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

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

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

THE INTERNET PORTFOLIO

THE INTERNET INFRASTRUCTURE PORTFOLIO

THE INTERNET EMERGING GROWTH PORTFOLIO

THE INTERNET GLOBAL GROWTH PORTFOLIO

THE INTERNET NEW PARADIGM PORTFOLIO

EACH A SERIES OF KINETICS PORTFOLIOS TRUST

A DELAWARE BUSINESS TRUST

[LOGO]

PROSPECTUS

April 28, 2000

EXPLANATORY NOTE

This Prospectus is being filed as a part of the Registration Statement filed by
the Trust pursuant to Section 8(b) of the Investment Company Act of 1940, as
amended ("1940 Act"). Nevertheless, beneficial interests of each portfolio
series of the Trust are not being registered under the Securities Act of 1933,
as amended (the "1933 Act"), because such interests are issued solely to
eligible investors in private placement transactions that do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act.
Accordingly, investments in any of the portfolio series of the Trust described
hereunder may currently be made only by regulated investment companies,
unregulated foreign investment companies, U.S. and non-U.S. institutional
investors, S corporations, segregated asset accounts, and certain qualified
pension and retirement plans. No part of this Prospectus or of the Trust's
Registration Statement constitutes an offer to sell, or the solicitation of an
offer to buy any beneficial interests of any of the portfolio series described
hereunder or any other portfolio series of the Trust.

Responses to Items 1, 2, 3, 5 and 9 of Part A and Items 23(e) and (i)-(k) of
Part C have been omitted pursuant to paragraph B.2.(b) of the General
Instructions to Form N-1A.

Investment Adviser

KINETICS ASSET MANAGEMENT, INC.

Minimum Initial Investment -- $1,000

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR

DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE INTERNET PORTFOLIO

THE INTERNET INFRASTRUCTURE PORTFOLIO

THE INTERNET EMERGING GROWTH PORTFOLIO

THE INTERNET GLOBAL GROWTH PORTFOLIO

THE INTERNET NEW PARADIGM PORTFOLIO

EACH A SERIES OF KINETICS PORTFOLIOS TRUST

PROSPECTUS

April 28, 2000

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

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

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

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

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

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

PART A: INFORMATION REQUIRED IN A PROSPECTUS

I. REQUIRED DISCLOSURE ITEMS

ITEM 4.: INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND RELATED
RISKS

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

THE INTERNET PORTFOLIO

(A) INVESTMENT OBJECTIVE

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

(B) IMPLEMENTATION OF INVESTMENT OBJECTIVE

To achieve the Internet Portfolio's investment objective, under normal
circumstances, at least 65% of the Internet Portfolio's total assets will be
invested in common stocks, convertible securities, warrants and other equity
securities having the characteristics of common stocks, such as American
Depositary Receipts ("ADRs") and International Depositary Receipts ("IDRs"), of
domestic and foreign companies that are engaged in the Internet and
Internet-related activities. The Internet Portfolio may also write and sell
options on securities in which it invests for hedging purposes and/or direct
investment.

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

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

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

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

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

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

The investment adviser selects portfolio securities by evaluating a company's
positioning and business model as well as its ability to grow and expand its
activities via the Internet or achieve a competitive advantage in
cost/profitability and brand image leveraging via use of the Internet. The
investment adviser also considers a company's fundamentals by reviewing its
balance sheets, corporate revenues, earnings and dividends. Furthermore, the
investment adviser looks at the amount of capital a company currently 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
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 may not achieve its investment objective.

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

(A) INVESTMENT OBJECTIVE

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

(B) IMPLEMENTATION OF INVESTMENT OBJECTIVE

To achieve the Infrastructure Portfolio's investment objective, under normal
circumstances, at least 65% of the Infrastructure Portfolio's total assets will
be invested in common stocks, convertible securities, warrants and other equity
securities having the characteristics of common stocks, such as ADRs and IDRs,
of domestic and foreign companies that are engaged in the development and
implementation of hardware, software and communications technologies that
support the growing infrastructure and activities of the Internet. The
Infrastructure Portfolio may also write and sell options on securities in which
it invests for hedging purposes and/or direct investment.

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

The investment adviser selects portfolio securities by evaluating a company's
positioning and both the current percentage and growth in percentage of
resources that it spends 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 may not achieve its investment
objective.

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

(A) INVESTMENT OBJECTIVE

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

(B) IMPLEMENTATION OF INVESTMENT OBJECTIVE

To achieve the Emerging Portfolio's investment objective, under normal
circumstances, at least 65% of the Emerging Portfolio's total assets will be
invested in common stocks, convertible securities, warrants and other equity
securities having the characteristics of common stocks, such as ADRs and IDRs of
small and medium capitalization emerging companies that are engaged in the
Internet and Internet-related activities. The Emerging Portfolio may also write
and sell options on securities in which it invests for hedging purposes and/or
direct investment.

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

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

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

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

The investment adviser selects portfolio securities by evaluating a company's
positioning and business model as well as its ability to grow and expand its
activities via the Internet or achieve a greater competitive advantage in
cost/profitability and brand image leveraging via use of the Internet. The
investment adviser also considers a company's fundamentals by reviewing its
balance sheets, corporate revenues, earnings and dividends. Furthermore, the
investment adviser looks at the amount of capital a company currently 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
Emerging Portfolio may invest up to 100% of its assets in high quality domestic
short-term debt securities and money market instruments. The Emerging Portfolio
may invest up to 35% of its assets in these securities to maintain liquidity.
Some of these short-term instruments include:

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

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

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

(A) INVESTMENT OBJECTIVE

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

(B) IMPLEMENTATION OF INVESTMENT OBJECTIVE

To achieve the Global Portfolio's investment objective, under normal
circumstances, at least 65% of the Global Portfolio's total assets will be
invested in common stocks, convertible securities, warrants and other equity
securities having the characteristics of common stocks, such as ADRs and IDRs,
of companies in at least three different countries that are engaged in the
Internet and Internet-related activities. The Global Portfolio may also write
and sell options on securities in which it invests for hedging purposes and/or
direct investment.

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

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

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

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

TEMPORARY INVESTMENTS

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

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

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

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

(A) INVESTMENT OBJECTIVE

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

(B) IMPLEMENTATION OF INVESTMENT OBJECTIVE

To achieve the New Paradigm Portfolio's investment objective, under normal
circumstances, at least 65% of the New Paradigm Portfolio's total assets will be
invested in common stocks, convertible securities, warrants and other equity
securities having the characteristics of common stocks, such as ADRs and IDRs,
of domestic and foreign companies with business models that stand to benefit
from the utilization and growth of the Internet. The New Paradigm Portfolio may
also write and sell options on securities in which it invests for hedging
purposes and/or direct investment.

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

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

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

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

The investment adviser selects portfolio securities by evaluating a company's
positioning and traditional business lines as well as its ability to expand its
activities via the Internet or achieve 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.

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 may not achieve its investment objective.

MAIN RISKS OF THE PORTFOLIOS
- - --------------------------------------------------------------------------------

INVESTING IN MUTUAL PORTFOLIOS

All mutual funds carry risk which may cause you to lose money on your investment
in one or more of the Portfolios. The following describes the primary risks of
investing in each 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 Portfolio can give any assurance that its
investment objective will be achieved. In addition, you should be aware that,
with the exception of the Internet Portfolio, none of the Portfolios have any
operating history.

MARKET RISK

The net asset value of each Portfolio will fluctuate based on changes in the
value of its underlying portfolio. The stock market is generally susceptible to
volatile fluctuations in market price. Market prices of securities in which the
Portfolios invest 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 may be worth more or less
than your original cost when you redeem your shares.

INTERNET INDUSTRY SPECIFIC RISKS

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

OTHER SECURITIES A PORTFOLIO MIGHT PURCHASE

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

SECURITIES LENDING

Each Portfolio may lend its portfolio securities to broker-dealers by entering
directly into lending arrangements with such broker-dealers or indirectly
through repurchase agreements, amounting to no more than 25% of its assets.
Repurchase transactions will be fully collateralized at all times with cash
and/or short-term debt obligations. These transactions involve some risk to a
Portfolio if the other party should default on its obligation and the Portfolio
is delayed or prevented from recovering the collateral. In the event that the
original seller defaults on its obligation to repurchase, a Portfolio will seek
to sell the collateral, which could involve costs or delays. To the extent
proceeds from the sale of collateral are less than the repurchase price, each
Portfolio forced to sell such collateral in this manner would suffer a loss.

NON-DIVERSIFICATION

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

INVESTMENT IN SMALL AND MEDIUM-SIZE COMPANIES

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

FOREIGN SECURITIES

A Portfolio may be required to obtain prior governmental approval for foreign
investments in some countries under certain circumstances. Governments may
require approval to invest in certain issuers or industries deemed sensitive to
national interests, and the extent of foreign investment in certain debt
securities and domestic companies may be subject to limitation. Individual
companies may also limit foreign ownership to prevent, among other things,
violation of foreign investment limitations.

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

OPTIONS TRANSACTIONS

Each Portfolio may write and sell options on securities in which such Portfolio
invests for hedging purposes and/or direct investment. The successful use of
options by a Portfolio is largely dependent on the ability of the Adviser to
correctly forecast interest rate and market movements. For example, if a
Portfolio were to write a call option based on the investment adviser's
expectation that the price of the underlying security would fall, but the price
were to rise instead, the Portfolio could be required to sell the security upon
exercise at a price below the current market price. Similarly, if a Portfolio
were to write a put option based on the investment adviser's expectation that
the price of the underlying security would rise, but the price were to fall
instead, the Portfolio could be required to purchase the security upon exercise
at a price higher than the current market price.

When a Portfolio purchases an option, it runs the risk that it will lose its
entire investment in the option in a relatively short period of time, unless the
Portfolio exercises the option or enters into a closing sale transaction before
the option's expiration. If the price of the underlying security does not rise
(in the case of a call) or fall (in the case of a put) to an extent sufficient
to cover the option premium and transaction costs, a Portfolio will lose part or
all of its investment in the option. This contrasts with an investment by a
Portfolio in the underlying security, since the Portfolio will not realize a
loss if the security's price does not change.

The effective use of options also depends on each Portfolio's ability to
terminate option positions at times when the investment adviser deems it
desirable to do so. There is no assurance that a Portfolio will be able to
effect closing transactions at any particular time or at an acceptable price.

PORTFOLIO BORROWING

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

MANAGEMENT OF THE PORTFOLIOS
- - --------------------------------------------------------------------------------

Each Portfolio's investment adviser is Kinetics Asset Management, Inc.
("Kinetics" or the "investment adviser"), 1311 Mamaroneck Avenue, Suite 130,
White Plains, New York, 10605. The management and affairs of each Portfolio is
supervised by the Board of Trustees whose names and general background
information appear in the SAI. The investment adviser conducts investment
research and supervision for each Portfolio and is responsible for the purchase
and sale of securities in the investment portfolio of each Portfolio. 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 Asset Management.

Peter B. Doyle is the Chairman of the Board of Trustees 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 is
has more than 20 years of experience in the mutual fund and financial services
industries.

PORTFOLIO MANAGERS

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

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

TINA LARSSON is the Portfolio Manager for the Global Portfolio. Ms. Larsson
also serves as a Co-Portfolio Manager of the Internet Portfolio and the Emerging
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, developing institutional market research. Ms. Larsson joined the
Adviser in 1999 as an Analyst for the Internet Fund and became Portfolio Manager
of the Global Portfolio when the Global 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
Portfolio and Co-Portfolio Mangager 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 IPO Value Monitor, a research service that focuses on
initial public offerings. From 1989 to 1996, Mr. Tuen was an Analyst at Bankers
Trust Company where he became Portfolio Manager of the Private Banking Group.
Mr. Tuen holds a Bachelor of Science in Business Administration from the City
University of New York and is a Chartered Financial Analyst.

MURRAY STAHL is the Co-Portfolio Mangager of the New Paradigm Portfolio.
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 banks 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 guidelines for the Private Bank, and was deeply
involved in new product development. Mr. Shahl holds a Bachelors of Arts in
Economics and a Masters of Business Administration from Pace University.

STEVEN M. BREGMAN, CFA is Co-Portfolio Manager of the Gobal Portfolio. Mr.
Bregman, 41, also co-founded 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-
mangager group responsible for managing the bank's largest individual
relationships and for setting equity investment guidelines for the Private
Bank. Mr. Bregman served as a member of the Special Situations Equity Strategy
Group and served in a variety of new product development projects. Mr. Bregman
received a Bachelor of Arts in Economics from City University of New York.

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

Shares of each Portfolio are sold at its net asset value per share ("NAV"),
which is determined by each Portfolio 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 Portfolio'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
Portfolio, including management, administration and shareholder servicing fees,
which are accrued daily.

The portfolio securities of each Portfolio 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 Portfolio, the investment adviser values
foreign securities 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 portfolio securities, these securities may be
valued at their fair value as determined in good faith by the Board of Trustees.

PURCHASE OF SHARES
- - --------------------------------------------------------------------------------

Shares of beneficial interest in each Portfolio are sold without a sales load,
at the NAV next determined after an order is received by a Portfolio. Shares in
a Portfolio are sold solely in private placement transactions that do not
involve any "public offering" within the meaning of Section 4(2) of the 1933
Act. Investments in the Portfolio may be made only by regulated investment
companies, unregulated foreign investment companies, U.S. and non-U.S.
institutional investors, S corporations, segregated asset accounts, insurance
company separate accounts, and certain qualified pension and retirement plans.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any "security" within the meaning of the 1933
Act.

There is no minimum initial or subsequent investment in the Portfolio. The
Portfolio reserves the right to cease accepting investments at any time or to
reject any investment order.

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

An investor in a Portfolio may redeem all or any portion of its investment at
the NAV next determined after a redemption request in good order is received by
such Portfolio. The proceeds of a redemption will be paid by the Portfolio in
federal funds normally on the Business Day that the redemption is effected, but
in any event within three business days, except as extensions may be permitted
by law.

Each Portfolio reserves the right to pay redemptions in kind. Unless requested
by an investor or deemed by the Adviser to be in the best interests of the
investors in a Portfolio as a group, the Portfolio will not pay a redemption in
kind to an investor, except in situations where that investor may pay
redemptions in kind.

The right of any investor to receive payment with respect to any redemption may
be suspended, or the payment of the redemption proceeds postponed, during any
period in which the NYSE is closed or trading on the NYSE is restricted or to
the extent otherwise permitted by the 1940 Act.

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

DISTRIBUTIONS

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

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

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

Each Portfolio intends to pay any dividends from investment company taxable
income and distributions representing capital gain at least annually, usually in
December. Each Portfolio 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 Portfolio and your election will be converted to
the purchase of additional shares.

TAXES

None of the Portfolios is required to pay federal income taxes on its ordinary
income and capital gain because each Portfolio is treated as a partnership for
federal income tax purposes. All interest, dividends and gains and losses of a
Portfolio are deemed to "pass through" to its shareholders, regardless of
whether such interest, dividends or gains are distributed by the Portfolio or
the Portfolio realizes losses. Under each Portfolio's operational method, it is
not subject to any federal income tax. However, each shareholder in a Portfolio
will be taxed on its proportionate share (as determined in accordance with the
Trust's Declaration of Trust and the Internal Revenue Code, as amended) of the
Portfolio's ordinary income and capital gain, to the extent that the shareholder
is subject to tax on its income. The Trust will inform shareholders of each
Portfolio of the amount and nature of such income or gain.

The foregoing discussion relates only to federal income tax law. Income from a
Portfolio also may be subject to foreign, state and local taxes, and the
treatment under foreign, state and local income tax laws may differ from the
federal income tax treatment. Shareholders should consult their tax advisors
with respect to particular questions of federal, foreign, state and local
taxation.

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

You can exchange your shares in a Portfolio for shares of any other Portfolio
offered by Kinetics Portfolios Trust at no charge. You should carefully read the
prospectus of a portfolio before exchanging shares into that portfolio. Be
advised that exercising the exchange privilege consists of two transactions: a
sale of shares in one portfolio and the purchase of shares in another. Further,
exchanges may have certain tax consequences and you could realize short- or
long-term capital gains or losses. Exchanges are generally made only between
identically registered accounts unless you send written instructions with a
signature guarantee requesting otherwise. You should request your exchange prior
to market close to obtain that day's closing NAV. Exchange requests received
after the close of the Exchange will be treated as though received on the next
business day.

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

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

PRIVATE PLACEMENT AGENT

Kinetics Funds Distributor, Inc. ("KFDI"), serves as the private placement agent
for the shares of the Portfolio on a best efforts basis. KFDI is a registered
broker-dealer and member of the National Association of Securities Dealers, Inc.
Beneficial interests in the Portfolio are issued continuously.

PORTFOLIO ADMINISTRATOR

Kinetics also serves as Administrator to the Portfolios. Kinetics will be
entitled to receive an annual administration fee equal to 0.10% of each
Portfolio'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 Portfolio by
Firstar.

CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND PORTFOLIO ACCOUNTANT

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

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

Legal matters in connection with the issuance of shares of beneficial interests
of the Trust are passed upon by Spitzer & Feldman P.C., 405 Park Avenue, New
York, New York. PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Suite
1500, Milwaukee, Wisconsin has been selected as the independent auditor for the
Trust for the year ending December 31, 2000.

THE MEDICAL PORTFOLIO

THE SMALL CAP OPPORTUNITIES PORTFOLIO

THE MIDDLE EAST GROWTH PORTFOLIO

EACH A SERIES OF KINETICS PORTFOLIOS TRUST

A DELAWARE BUSINESS TRUST

[LOGO]

PROSPECTUS

April 28, 2000

EXPLANATORY NOTE

Responses to Items 1, 2, 3, 5 and 9 of Part A and Items 23(e)
and (i)-(k) of Part C have been omitted pursuant to
paragraph B.2.(b) of the General Instructions to
Form N-1A.

THE MEDICAL PORTFOLIO

THE SMALL CAP OPPORTUNITIES PORTFOLIO

THE MIDDLE EAST GROWTH PORTFOLIO

EACH A SERIES OF KINETICS PORTFOLIOS TRUST

PROSPECTUS

April 28, 2000

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

THE SMALL CAP OPPORTUNITIES PORTFOLIO (the "Small Cap Portfolio") is a
no-load, non-diversified investment company which seeks to provide investors
with long-term capital growth by investing primarily in the equity
securities of domestic and foreign small capitalization companies that provide
attractive valuation opportunities due to lack of institutional
ownership, lack of significant analyst coverage, or short-term earnings
disappointments.

THE MIDDLE EAST GROWTH PORTFOLIO (the "Middle East Portfolio) is a no-load,
non-diversified investment company which seeks to provide investors with
long-term capital growth by investing primarily in the equity securities of
foreign companies domiciled in the Middle East
region of the globe and U.S. companies engaged in significant
business activities in the Middle East.

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

Investment Adviser

KINETICS ASSET MANAGEMENT, INC.

Minimum Initial Investment -- $1,000

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

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

THE MEDICAL PORTFOLIO

INVESTMENT OBJECTIVE

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

INVESTMENT STRATEGIES

To achieve the Medical Portfolio's investment objective, at least 65% of the
Portfolio's total assets will be invested in common stocks, convertible
securities, warrants and other equity securities having the characteristics of
common stocks, such as American Depositary Receipts ("ADRs") and International
Depositary Receipts ("IDRs"), of domestic and foreign companies engaged in the
medical research, pharmaceutical and technology industries and related medical
technology industries, generally, with an emphasis toward companies engaged in
cancer research and drug development. The 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.

The 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: Companies that develop drugs and
medications for the treatment and prevention of cancer and other
disease.

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

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

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

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

TEMPORARY INVESTMENTS

To respond to adverse market, economic, political or other conditions, the
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 may not achieve its investment objective.

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

THE SMALL CAP PORTFOLIO

INVESTMENT OBJECTIVE

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

INVESTMENT STRATEGIES

To achieve the Small Cap Portfolio's investment objective, under normal
circumstances, at least 65% of the Small Cap Portfolio's total assets will be
invested in common stocks, convertible securities, warrants and other equity
securities having the characteristics of common stocks, such as American
Depositary Receipts ("ADRs") and International Depositary Receipts ("IDRs"), of
domestic and foreign small capitalization companies. 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
disappointments, have had a recent IPO but has 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.

Portfolio securities will be selected from companies that are engaged in a
number of industries. These companies may be large, medium or small in size 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 RETAILERS: Companies that sell retail products and services via traditional
stores, catalogues, telemarketing, and web-site means.

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

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

The investment adviser considers a company's fundamentals by reviewing its
balance sheets, corporate revenues, earnings and dividends. The investment
adviser believes that dollars invested in research and development today
frequently have significant bearing on future growth.

TEMPORARY INVESTMENTS

To respond to adverse market, economic, political or other conditions, the Small
Cap Portfolio may invest up to 100% of its assets in high quality domestic
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 money market 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 Small Cap Portfolio engages in this temporary, defensive
strategy, the Small Cap Portfolio may not achieve its investment objective.

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

THE MIDDLE EAST PORTFOLIO

INVESTMENT OBJECTIVE

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

INVESTMENT STRATEGIES

To achieve the Middle East Portfolio's objective, under normal circumstances, at
least 65% of the Middle East Portfolio's total assets will be invested 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 foreign and U.S. companies
that are engaged in 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 investment 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 bio-technology 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
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 SOFTWARE COMPANIES: 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
domestic and export markets.

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

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

o LOCAL RETAIL FRANCHISE COMPANIES: 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: 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
domestic short-term debt securities and money market instruments. The Middle
East Portfolio may invest up to 35% of its assets in these securities to
maintain liquidity. Some of these short-term money market 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 Middle East Portfolio engages in this temporary,
defensive strategy, the Middle East Portfolio may not achieve its investment
objective.

MAIN RISKS OF THE PORTFOLIOS
- - --------------------------------------------------------------------------------

INVESTING IN MUTUAL FUNDS

All mutual funds carry risk, which may cause you to lose money on your
investment. The following describes the primary risks of investing in each
Portfolio based on 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, the Portfolios can give no assurance that their investment
objectives will be achieved. In addition, you should be aware that no Portfolio
has any operating history.

MEDICAL RESEARCH INDUSTRY SPECIFIC RISKS

Medical and pharmaceutical-related companies in which the Medical Portfolio
invests are generally 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.

INVESTMENT IN SMALL-AND MEDIUM-SIZED CAPITALIZATION COMPANIES

Each Portfolio will invest in companies with small and medium-sized market
capitalizations. Accordingly, the Small Cap Portfolio may be subject to the
additional risks associated with investment in companies with small capital
structures (generally a market cap of $1 billion or less). Similarly, the
Medical and Middle East Portfolios may be subject to the additional risks
associated with investment in companies with small or medium-sized capital
structures (generally a market capitalization of $5 billion or less). The market
prices of the securities of companies with small or medium-sized capital
structures tend to be more volatile than those of larger companies. Further,
these securities tend to trade at a lower volume than do those of larger, more
established companies. If a Portfolio is heavily invested in these securities,
the net asset value of that Portfolio will be more susceptible to sudden and
significant losses if the value of these securities decline.

TECHNOLOGY & BIO-TECHNOLOGY INDUSTRY SPECIFIC RISKS

The Middle East Portfolio invests in companies that derive a significant portion
of their revenues from technology and bio-technology-related activities that, in
general, are subject to the rate of change in technology and competition, which
is generally higher than that of other industries.

MARKET RISK

The net asset value of each Portfolio will fluctuate based on changes in the
value of its underlying portfolio. The stock market is generally susceptible to
volatile fluctuations in market price. Market prices of securities in which each
Portfolio invests may be adversely affected by an issuer's having experienced
losses or by the lack of earnings or by the issuer's failure to meet the
market's expectations with respect to new products or services, or even by
factors wholly unrelated to the value or condition of the issuer. The value of
the securities held by the Portfolios 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 may be worth more or less
than your original cost when you redeem your shares.

OTHER SECURITIES THE PORTFOLIOS MIGHT PURCHASE

Under normal market conditions, each Portfolio will invest at least 65% of its
total assets in equity securities, consisting of common stocks, convertible
securities, warrants and securities having the characteristics of common stocks.
With respect o the Middle East Portfolio, these may include securities that are
traded on recognized Middle East stock exchanges, such as the Tel Aviv Stock
Exchange or the Amman Financial Market, as well as securities that are traded
outside of the Middle East, including those that trade in the U.S. or other
international stock exchanges and in the U.S. over-the-counter market. If the
investment adviser believes that market conditions warrant a temporary defensive
posture, each Portfolio may invest without limitation in high quality,
short-term debt securities and money market instruments. These short-term debt
securities and money market instruments include commercial paper, certificates
of deposit, bankers' acceptances, and U.S. Government securities and repurchase
agreements. More information about these investments is disclosed in the
Statement of Additional Information ("SAI").

OPTIONS TRANSACTIONS

SECURITIES LENDING

NON-DIVERSIFICATION

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

FOREIGN SECURITIES

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

PORTFOLIO BORROWING

Each Portfolio may leverage up to 5% of its assets to fund investment activities
or to achieve higher returns. Each Portfolio may borrow money from banks for
temporary or emergency purposes in order to meet redemption requests. To reduce
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 the
Portfolio and your investment.

MANAGEMENT OF THE PORTFOLIOS
- - --------------------------------------------------------------------------------

INVESTMENT ADVISER

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

PORTFOLIO MANAGERS

PETER B. DOYLE is the Co-Portfolio Manager of the Medical and Middle East
Portfolios and is primarily responsible for the day-to-day management of each of
these Portfolios' assets and securities. In early 1996, Mr. Doyle co-founded
Kinetics, the investment adviser to the Portfolios. Mr. Doyle also co-founded
and has been a Managing Director of Horizon Asset Management since 1994. From
1988 through late 1994, Mr. Doyle was an Investment Officer in Bankers Trust
Company's Investment Services Group, where he was responsible for managing
approximately $250 million in assets. During his tenure at Bankers Trust
Company, Mr. Doyle served on the Finance and Utility research sub-groups. Mr.
Doyle holds a 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 Co-Portfolio Manager of the Small Cap Portfolio. Prior
to joining Kinetics in 1999, Mr. Froewiss was the Vice President of Investments
at Janney Montgomery Scott, LLC from 1992 to 1999. Earlier, Mr. Froewiss spent
10 years as a Portfolio Manager in the Private Banking Division of Citibank.
He started his career at IBM Corp. in the controller's office. Mr. Froewiss
holds a Bachelor of Science in Accounting and a Masters of Business
Administration from Pace University.

MURRAY STAHL is Co-Portfolio Manager of the Small Cap Portfolio. Mr. Stahl is
Chairman and a co-founder of Horizon. 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 banks
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 guidelines for the
Private Bank, and was deeply involved in new product development. Mr. Stahl
holds a Bachelors 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, CFA is Co-Portfolio Manager of the Middle East Portfolio.
Mr. Bregman's primary duties include research and analysis of equity securities
for investment in the Portfolio. Mr. Bregman, 41, also co-founded and is a
President of Horizon Asset Management, Inc., a New York based investment
management and research firm, which was established in 1994. 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 as a member of
the Special Situations Equity Strategy Group and served in a variety of new
product development projects. Mr. Bregman received a Bachelor of Arts in
Economics from City University of New York.

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

Shares of each Portfolio are sold at net asset value per share ("NAV"), which is
determined by each Portfolio 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
Portfolio's securities, cash and other assets, minus all expenses and
liabilities, by the number of shares outstanding (assets-liabilities / # of
shares outstanding = NAV). The NAV takes into account the expenses and fees of
the Portfolio, including management, administration and shareholder servicing
fees, which are accrued daily.

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 of
the Portfolios. Each Portfolio may use independent pricing services to assist in
calculating its NAV.

TRADING IN FOREIGN SECURITIES

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

PURCHASE OF SHARES
- - --------------------------------------------------------------------------------

Shares of beneficial interest of each Portfolio are sold without a sales load,
at the NAV next determined after an order is received by a Portfolio. Shares of
each Portfolio are sold solely in private placement transactions that do not
involve any "public offering" within the meaning of Section 4(2) of the 1933
Act. Investments in a Portfolio may be made only by regulated investment
companies, unregulated foreign investment companies, U.S. and non-U.S.
institutional investors, S corporations, insurance company separate accounts,
and certain qualified pension and retirement plans. This Prospectus does not
constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.

There is no minimum initial or subsequent investment in a Portfolio. Each
Portfolio reserves the right to cease accepting investments at any time or to
reject any investment order.

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

An investor in a Portfolio may redeem all or any portion of its investment at
the NAV next determined after a redemption request in good order is received by
the Portfolio. The proceeds of a redemption will be paid by the Portfolio in
federal funds normally on the Business Day that the redemption is effected, but
in any event within three business days, except as extensions may be permitted
by law.

Each Portfolio reserves the right to pay redemptions in kind. Unless requested
by an investor or deemed by the Adviser to be in the best interests of the
investors in a Portfolio as a group, a Portfolio will not pay a redemption in
kind to an investor, except in situations where that investor may pay
redemptions in kind.

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

DISTRIBUTIONS

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

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

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

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

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

Taxes

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

You can exchange your shares in a Portfolio for shares of any other portfolio
offered by Kinetics Portfolios Trust at no charge. You should carefully read the
prospectus of a portfolio before exchanging shares into that portfolio. Be
advised that exercising the exchange privilege consists of two transactions: a
sale of shares in one portfolio and the purchase of shares in another. Further,
exchanges may have certain tax consequences and you could realize short- or
long-term capital gains or losses. Exchanges are generally made only between
identically registered accounts unless you send written instructions with a
signature guarantee requesting otherwise. You should request your exchange prior
to market close to obtain that day's closing NAV. Exchange requests received
after the close of the Exchange will be treated as though received on the next
business day.

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

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

PRIVATE PLACEMENT AGENT

PORTFOLIO ADMINISTRATOR

CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND PORTFOLIO ACCOUNTANT

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

COUNSEL AND INDEPENDENT AUDITOR
- - --------------------------------------------------------------------------------

Legal matters in connection with the issuance of shares of beneficial interests
of each Portfolio are passed upon by Spitzer & Feldman P.C., 405 Park Avenue,
New York, New York. PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Suite
1500, Milwaukee, Wisconsin has been selected as the independent auditor for the
Portfolios for the year ending December 31, 2000.

THE KINETICS GOVERNMENT MONEY MARKET PORTFOLIO

A SERIES OF KINETICS PORTFOLIOS TRUST

A DELAWARE BUSINESS TRUST

[LOGO]

PROSPECTUS

April 28, 2000

EXPLANATORY NOTE

This Prospectus is being filed as a part of the Registration Statement filed by
the Trust pursuant to Section 8(b) of the Investment Company Act of 1940, as
amended ("1940 Act"). Nevertheless, beneficial interests of each portfolio
series of the Trust are not being registered under the Securities Act of 1933,
as amended (the "1933 Act"), because such interests are issued solely to
eligible investors in private placement transactions that do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act.
Accordingly, investments in the Kinetics Government Money Market Portfolio (the
"Portfolio") may currently be made only by regulated investment companies,
unregulated foreign investment companies, U.S. and non-U.S. institutional
investors, S corporations, segregated asset accounts, and certain qualified
pension and retirement plans. No part of this Prospectus or of the Trust's
Registration Statement constitutes an offer to sell, or the solicitation of an
offer to buy any beneficial interests in the Portfolio or any other portfolio
series of the Trust.

Responses to Items 1, 2, 3, 5 and 9 of Part A and Items 23(e)
and (i)-(k) of Part C have been omitted pursuant to
paragraph B.2.(b) of the General Instructions to
Form N-1A.

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

(A) INVESTMENT OBJECTIVE

INVESTMENT OBJECTIVE

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

(B) IMPLEMENTATION OF INVESTMENT OBJECTIVE

INVESTMENT STRATEGIES

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

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

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

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

MAIN RISKS OF THE PORTFOLIO
- - --------------------------------------------------------------------------------

GENERAL

The following describes the primary risks of the Portfolio based on the specific
investment objective and strategies of the Portfolio.

REPURCHASE AGREEMENT RISKS

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

INTEREST RATE RISKS

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

MANAGEMENT OF THE PORTFOLIO
- - --------------------------------------------------------------------------------

(A) MANAGEMENT

(1) INVESTMENT ADVISER

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 Asset
Management.

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.

(2) PORTFOLIO MANAGER

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

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

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

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

PURCHASE OF SHARES
- - --------------------------------------------------------------------------------

Shares of beneficial interest in the Portfolio are sold without a sales load, at
the NAV next determined after an order is received by the Portfolio. Shares in
the Portfolio are sold solely in private placement transactions that do not
involve any "public offering" within the meaning of Section 4(2) of the 1933
Act. Investments in the Portfolio may be made only by regulated investment
companies, unregulated foreign investment companies, U.S. and non-U.S.
institutional investors, S corporations, insurance company separate accounts,
and certain qualified pension and retirement plans. This Registration Statement
does not constitute an offer to sell, or the solicitation of an offer to buy,
any "security" within the meaning of the 1933 Act.

There is no minimum initial or subsequent investment in the Portfolio. The
Portfolio reserves the right to cease accepting investments at any time or to
reject any investment order.

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

An investor in the Portfolio may redeem all or any portion of its investment at
the NAV next determined after a redemption request in good order is received by
the Portfolio. The proceeds of a redemption will be paid by the Portfolio in
federal funds normally on the Business Day that the redemption is effected, but
in any event within three business days, except as extensions may be permitted
by law.

The Portfolio reserves the right to pay redemptions in kind. Unless requested by
an investor or deemed by the Adviser to be in the best interests of the
investors in the Portfolio as a group, the Portfolio will not pay a redemption
in kind to an investor, except in situations where that investor may pay
redemptions in kind.

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

DISTRIBUTIONS

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

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

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

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

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

TAXES

The Portfolio is not required to pay federal income taxes on its ordinary income
and capital gain because the Portfolio is treated as a partnership for federal
income tax purposes. All interest, dividends and gains and losses of the
Portfolio are deemed to "pass through" to its shareholders, regardless of
whether such interest, dividends or gains are distributed by the Portfolio or
the Portfolio realizes losses. Under the Portfolio's operational method, it is
not subject to any federal income tax. However, each shareholder in the
Portfolio will be taxed on its proportionate share (as determined in accordance
with the Trust's Declaration of Trust and the Internal Revenue Code, as amended)
of the Portfolio's ordinary income and capital gain, to the extent that the
shareholder is subject to tax on its income. The Trust will inform shareholders
of the Portfolio of the amount and nature of such income or gain.

The foregoing discussion relates only to federal income tax law. Income from the
Portfolio also may be subject to foreign, state and local taxes, and the
treatment under foreign, state and local income tax laws may differ from the
federal income tax treatment. Shareholders should consult their tax advisors
with respect to particular questions of federal, foreign, state and local
taxation.

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

You can exchange your shares in the Portfolio for shares of any other Portfolio
offered by Kinetics Portfolios Trust at no charge. You should carefully read the
prospectus of a portfolio before exchanging shares into that portfolio. Be
advised that exercising the exchange privilege consists of two transactions: a
sale of shares in one portfolio and the purchase of shares in another. Further,
exchanges may have certain tax consequences and you could realize short- or
long-term capital gains or losses. Exchanges are generally made only between
identically registered accounts unless you send written instructions with a
signature guarantee requesting otherwise. You should request your exchange prior
to market close to obtain that day's closing NAV. Exchange requests received
after the close of the Exchange will be treated as though received on the next
business day.

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

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

PRIVATE PLACEMENT AGENT

PORTFOLIO ADMINISTRATOR

Kinetics also serves as Administrator to the Portfolio. Kinetics will be
entitled to receive an annual administration fee equal to 0.10% of the
Portfolio'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 Portfolio by
Firstar.

CUSTODIAN, TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND PORTFOLIO ACCOUNTANT

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

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

Legal matters in connection with the issuance of shares of beneficial interests
of the Portfolio are passed upon by Spitzer & Feldman P.C., 405 Park Avenue, New
York, New York. PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Suite
1500, Milwaukee, Wisconsin has been selected as the independent auditor for the
Portfolio for the year ending December 31, 2000.

THE INTERNET PORTFOLIO

A SERIES OF KINETICS PORTFOLIOS TRUST

1311 Mamaroneck Avenue

White Plains, New York 10605

(800) 930-3828

April 28, 2000

STATEMENT OF ADDITIONAL INFORMATION

This SAI provides general information about the Portfolio. 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
Portfolio's current Prospectus dated April 28, 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 Portfolio at the address set forth
above or call the telephone number shown above.

This SAI is being filed as a part of the Registration Statement filed by the
Trust pursuant to Section 8(b) of the Investment Company Act of 1940, as amended
("1940 Act"). Nevertheless, beneficial interests of each portfolio series of the
Trust are not being registered under the Securities Act of 1933, as amended
("1933 Act"), because such interests are issued solely to in private placement
transactions to eligible investors that do not involve any "public offering"
within the meaning of Section 4(2) of the 1933 Act. Accordingly, investments in
the Portfolio may currently be made only by regulated investment companies,
unregulated foreign investment companies, U.S. and non-U.S. institutional
investors, S corporations, segregated asset accounts and certain qualified
pension and retirement plans. Neither this SAI nor the Registration Statement as
a whole constitutes an offer to sell or the solicitation of an offer to buy any
beneficial interests in this Portfolio or any other portfolio series of the
Trust.

THE INTERNET PORTFOLIO

The Portfolio..................................................................2
Investment Objective, Strategies, and Risks....................................2
Investment Policies and Associated Risks.......................................3
Investment Restrictions........................................................7
Temporary Investments..........................................................8
Portfolio Turnover.............................................................9
Management of the Portfolio....................................................9
Control Persons and Principal Holders of Securities...........................12
Investment Adviser............................................................13
Administrative Services.......................................................14
Custodian.....................................................................15
Independent Public Accountants................................................15
Brokerage.....................................................................15
Capitalization................................................................16
Purchase of Shares............................................................17
Redemption of Shares..........................................................18
Valuation of Shares...........................................................18
Taxes.........................................................................19
Performance Information.......................................................20
Financial Statements..........................................................22

THE PORTFOLIO
- - --------------------------------------------------------------------------------

The Portfolio is a series of Kinetics Portfolios Trust, a business trust
organized pursuant to a Declaration of Trust under the laws of the State of
Delaware on March 14, 2000. The Portfolio's principal office is located at 1311
Mamaroneck Avenue, White Plains, New York 10605.

The Portfolio is a non-diversified, open-end management investment company.

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

The Portfolio's primary investment objective is long-term growth of capital. The
Portfolio 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. Except during temporary defensive periods, the Portfolio invests
at least 65% of its total assets in securities of companies that provide
products or services designed for the Internet. This Portfolio should not be
used as a trading vehicle.

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

The following paragraphs provide a more detailed description of the 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 Trustees of the Trust.

COMMON AND PREFERRED STOCK

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

CONVERTIBLE DEBT SECURITIES

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

FIXED-INCOME SECURITIES

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

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

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

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

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

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

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

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

OPTIONS

Most mutual funds that use option strategies to hedge portfolio positions do not
depend solely on the option profit or loss to justify the use of options,
because such funds also take into account the profit or loss of the underlying
securities. A more detailed discussion of writing covered and uncovered options
on securities generally and the investment risks associated with such
investments is set forth below.

PURCHASING PUT AND CALL OPTIONS. The Portfolio may purchase put and call options
on securities eligible for purchase by the Portfolio and on securities indices.
Put and call options are derivative securities traded on U.S. exchanges. If the
Portfolio purchases a put option, it acquires the right to sell the underlying
security or index value at a specified price at any time during the term of the
option. If the Portfolio purchases a call option, it acquires the right to
purchase the underlying security or index value at a specified price at any time
during the term of the option. Prior to exercise or expiration, the Portfolio
may sell an option when through a "closing sale transaction," which is
accomplished by selling an option of the same series as the option previously
purchased. The Portfolio generally will purchase only those options for which
the investment adviser believes there is an active secondary market to
facilitate closing transactions.

The Portfolio may purchase call options to hedge against an increase in the
price of securities that the Portfolio wants ultimately to buy. Such hedge
protection is provided during the life of the call option since the Portfolio,
as holder of the call option, is able to buy the underlying security at the
exercise price regardless of any increase in the underlying security's market
price. In order for a call option to be profitable, the market price of the
underlying security must rise sufficiently above the exercise price to cover the
premium and transaction costs.

The Portfolio will purchase put options to hedge against a decrease in the price
of securities it holds. Such hedge protection is provided during the life of the
put option since the Portfolio, as the holder of the put option, is able to sell
the underlying security at the exercise price regardless of any decrease in the
underlying security's market price. In order for a put option to be profitable,
the market price of the underlying security must decrease sufficiently below the
exercise price to cover the premium and transaction costs.

WRITING CALL OPTIONS. The Portfolio may write covered call options on securities
eligible for purchase by the Portfolio. A call option is "covered" if the
Portfolio owns the security underlying the call or has an absolute right to
acquire the security without additional cash consideration (or, if additional
cash consideration is required, cash or cash equivalents in such amount as are
held in a segregated account by the Custodian). The writer of a call option
receives a premium and gives the purchaser the right to buy the security
underlying the option at the exercise price. The writer has the obligation upon
exercise of the option to deliver the underlying security against payment of the
exercise price during the option period. If the writer of an exchange-traded
option wishes to terminate his obligation, it may effect a "closing purchase
transaction." This is accomplished by buying an option of the same series as the
option previously written. A writer may not effect a closing purchase
transaction after it has been notified of the exercise of an option.

Effecting a closing transaction in the case of a written call option will permit
the Portfolio to write another call option on the underlying security with
either a different exercise price, expiration date or both. Also, effecting a
closing transaction allows the cash or proceeds from the concurrent sale of any
securities subject to the option to be used for other investments of the
Portfolio. If the Portfolio desires to sell a particular security from its
portfolio on which it has written a call option, it will effect a closing
transaction prior to or concurrent with the sale of the security.

The Portfolio realizes a gain from a closing transaction if the cost of the
closing transaction is less than the premium received from writing the option or
if the proceeds from the closing transaction are more than the premium paid to
purchase the option. The Portfolio realizes a loss from a closing transaction if
the cost of the closing transaction is more than the premium received from
writing the option or if the proceeds from the closing transaction are less than
the premium paid to purchase the option. However, because increases in the
market price of a call option will generally reflect increases in the market
price of the underlying security, appreciation of the underlying security owned
by the Portfolio generally offsets, in whole or in part, any loss to the
Portfolio resulting from the repurchase of a call option.

RISK FACTORS IN OPTIONS TRANSACTIONS. The successful use of options by the
Portfolio depends on the ability of the Adviser to forecast correctly interest
rate and market movements. For example, if the Portfolio were to write a call
option based on the Adviser's expectation that the price of the underlying
security would fall, but the price were to rise instead, the Portfolio could be
required to sell the security upon exercise at a price below the current market
price. Similarly, if the Portfolio were to write a put option based on the
Adviser's expectation that the price of the underlying security would rise, but
the price were to fall instead, the Portfolio could be required to purchase the
security upon exercise at a price higher than the current market price.

When the Portfolio purchases an option, it runs the risk that it will lose its
entire investment in the option in a relatively short period of time, unless the
Portfolio exercises the option or enters into a closing sale transaction before
the option's expiration. If the price of the underlying security does not rise
(in the case of a call) or fall (in the case of a put) to an extent sufficient
to cover the option premium and transaction costs, the Portfolio will lose part
or all of its investment in the option. This contrasts with an investment by the
Portfolio in the underlying security, since the Portfolio will not realize a
loss if the security's price does not change.

The effective use of options also depends on the Portfolio's ability to
terminate option positions at times when the Adviser deems it desirable to do
so. There is no assurance that the Portfolio will be able to effect closing
transactions at any particular time or at an acceptable price.

If a secondary market in options were to become unavailable, the Portfolio could
no longer engage in closing transactions. Lack of investor interest might
adversely affect the liquidity of the market for particular options or series of
options. A market may discontinue trading of a particular option or options
generally. In addition, a market could become temporarily unavailable if unusual
events --such as volume in excess of trading or clearing capability-- were to
interrupt its normal operations.

A market may at times find it necessary to impose restrictions on particular
types of options transactions, such as opening transactions. For example, if an
underlying security ceases to meet qualifications imposed by the market or an
options clearing corporation, new series of options on that security will no
longer be opened to replace expiring series, and opening transactions in
existing series may be prohibited. If an options market were to become unit
asset valuable, the Portfolio as a holder of an option would be able to realize
profits or limit losses only by exercising the option, and the Portfolio, as
option writer, would remain obligated under the option until expiration or
exercise.

Disruptions in the markets for the securities underlying options purchased or
sold by the Portfolio could result in losses on the options. If trading is
interrupted in an underlying security, the trading of options on that security
is normally halted as well. As a result, the Portfolio as purchaser or writer of
an option will be unable to close out its positions until options trading
resumes, and it may be faced with considerable losses if trading in the security
reopens at a substantially different price. In addition, an options clearing
corporation or other options markets may impose exercise restrictions. If a
prohibition on exercise is imposed at the time when trading in the option has
also been halted, the Portfolio as purchaser or writer of an option will be
locked into its position until one of the two restrictions has been lifted. If
an options clearing corporation were to determine that the available supply of
an underlying security appears insufficient to permit delivery by the writers of
all outstanding calls in the event of exercise, it may prohibit indefinitely the
exercise of put options. The Portfolio, as holder of such a put option, could
lose its entire investment if the prohibition remained in effect until the put
option's expiration.

DEALER OPTIONS. The Portfolio may engage in transactions involving dealer
options as well as exchange-traded options. Certain risks are specific to dealer
options. While the Portfolio might look to an exchange's clearing corporation to
exercise exchange-traded options, if the Portfolio purchases a dealer option it
must rely on the selling dealer to perform if the Portfolio exercises the
option. Failure by the dealer to do so would result in the loss of the premium
paid by the Portfolio as well as loss of the expected benefit of the
transaction.

Exchange-traded options generally have a continuous liquid market while dealer
options may not. Consequently, the Portfolio can realize the value of a dealer
option it has purchased only by exercising or reselling the option to the
issuing dealer. Similarly, when the Portfolio writes a dealer option, the
Portfolio can close out the option prior to its expiration only by entering into
a closing purchase transaction with the dealer. While the Portfolio will seek to
enter into dealer options only with dealers who will agree to and can enter into
closing transactions with the Portfolio, no assurance exists that the Portfolio
will at any time be able to liquidate a dealer option at a favorable price at
any time prior to expiration. Unless the Portfolio, as a covered dealer call
option writer, can effect a closing purchase transaction, it will not be able to
liquidate securities (or other assets) used as cover until the option expires or
is exercised. In the event of insolvency of the other party, the Portfolio may
be unable to liquidate a dealer option. With respect to options written by the
Portfolio, the inability to enter into a closing transaction may result in
material losses to the Portfolio. For example, because the Portfolio must
maintain a secured position with respect to any call option on a security it
writes, the Portfolio may not sell the assets which it has segregated to secure
the position while it is obligated under the option. This requirement may impair
the Portfolio's ability to sell portfolio securities at a time when such sale
might be advantageous.

The staff of the SEC takes the position that purchased dealer options are
illiquid securities. The Portfolio may treat the cover used for written dealer
options as liquid if the dealer agrees that the Portfolio may repurchase the
dealer option it has written for a maximum price to be calculated by a
predetermined formula. In such cases, the dealer option would be considered
illiquid only to the extent the maximum purchase price under the formula exceeds
the intrinsic value of the option. With that exception, however, the Portfolios
will treat dealer options as subject to the Portfolios' limitation on illiquid
securities. If the SEC changes its position on the liquidity of dealer options,
the Portfolios will change their treatment of such instruments accordingly.

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

The investment restrictions of the Portfolio may be changed only with the
approval of the holders of a majority of the Portfolio's outstanding voting
securities.

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

2. The Portfolio will not make loans.

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

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

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

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

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

8. The Portfolio will not issue senior securities.

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

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

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

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

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

MANAGEMENT OF THE PORTFOLIO
- - --------------------------------------------------------------------------------

BOARD OF TRUSTEES

The management and affairs of the Portfolio are supervised by the Board of
Trustees of the Trust. The Board consists of eight individuals, five of whom are
not "interested" persons of the Portfolio as that term is defined in the 1940
Act. The Trustees are fiduciaries for the Portfolio's investors and are governed
by the laws of the State of Delaware in this regard They establish policies for
the operation of the Portfolio and appoint the officers who conduct the daily
business of the Portfolio. Officers and Trustees of the Trust are listed below
with their addresses, present positions with the Trust and principal occupations
over at least the last five years. "Interested" Trustees are designated by an
asterisk that appears beside their names.

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

COMPENSATION

Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Trust , Kinetics Mutual Funds, Inc. or Kinetics Asset Management, Inc. receive
an aggregate annual fee of $15,000 per year for their services as Trustees or
directors of all open-end investment companies distributed by Kinetics Funds
Distributors, Inc. 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.. Payment of the annual fees is allocated among such
investment companies based on their relative net assets. Payment of meeting fees
are allocated only among those investment companies to which such meetings
relate. The "interested" Trustees of the Portfolio receive no compensation for
their service as Trustees. None of the executive officers receive compensation
from the Portfolio. The following tables provide compensation information for
the Trustees for the year-ended December 31, 1999.

<TABLE>
<CAPTION>
KINETICS PORTFOLIOS TRUST
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 Mutual Funds, Inc.

*** 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
- - --------------------------------------------------------------------------------

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. As of the commencement of investment operations of the
Portfolio, the Portfolio could be deemed to be under the control of The Internet
Fund, a series of Kinetics Mutual Funds, Inc. and the sole investor in the
Portfolio as of the date of this SAI. Similarly, as of such time, Kinetics
Mutual Funds, Inc. through its series, The Internet Fund, The Internet Emerging
Growth Fund, The Internet Global Growth Fund, The Internet Infrastructure Fund,
The Internet New Paradigm Fund, The Small Cap Opportunities Fund, The Middle
East Growth Fund, The Medical Fund, and The Kinetics Government Money Market
Fund (each a "Fund" and collectively the "Funds"), was the owner of 100% of the
value of the outstanding interests in the Trust. Any investor owning more than
50% of the value of the outstanding interests in the Portfolio may take actions
without the approval of any other investor who invests in the Portfolio.

Kinetics Mutual Funds, Inc. has informed the Trust that whenever The Internet
Fund is requested to vote on a matter pertaining to the Portfolio, The Internet
Fund will hold a meeting of its shareholders and will vote its interest in the
Portfolio in proportion to the votes cast by The Internet Fund's shareholders.
It is anticipated that other registered investment companies investing in the
Portfolio, if any, will follow the same or a similar practice, although, as of
May 1, 2000, there were no other investors in the Portfolio.

MANAGEMENT OWNERSHIP

The percentage of the Portfolio's interests owned or controlled by the executive
officers and Trustees of the Portfolio and the Trust is less than 1% of the
interests of the Portfolio.

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

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

On April 25, 2000 the Board of the Trustees of the Trust, on behalf of the
Portfolio, approved a management and advisory contract (the "Agreement") with
Kinetics. This Agreement will remain in effect for a term of two years and will
continue on a year-to-year basis thereafter 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
Trust who are neither parties to the Agreement nor "interested" persons as
defined in the 1940 Act at a meeting called for the purpose of voting on such
approval. The Adviser's investment decisions are made subject to the direction
and supervision of the Board of Trustees. The Agreement may be terminated at any
time, without the payment of any penalty, by the Board of Trustees or by vote of
a majority of the outstanding voting securities of the Portfolio. Ultimate
decisions as to the investment policy and as to individual purchases and sales
of securities are made by the Portfolio's officers and the Trustees.

PRIVATE PLACEMENT AGENT

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

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

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

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

Fees of the custodian, administrator, transfer agent and Portfolio accountant
are paid by the Portfolio.

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

Kinetics also serves as Administrator of the Portfolio. Under an Administrative
Services Agreement with the Portfolio, Kinetics will be entitled to receive an
annual administration fee equal to 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 Portfolio's accountant and transfer agent. As such, Firstar
provides certain investor services and record management services as well as
acts as the Portfolio's dividend disbursement agent.

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

|X| establish and maintain investors' 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
|X| providing such other services as the Portfolio may reasonably request.

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

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

Independent Public Accountants
- - --------------------------------------------------------------------------------

PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Suite 1500, Milwaukee,
Wisconsin has been selected as the independent auditor for the Trust for the
year ending December 31, 2000. Their services include examination of the
Trust's financial statements and the performance of other related audit and tax
services.

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 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.

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

The authorized capitalization of Kinetics Portfolio Trust consists of 1 billion
shares of beneficial interest of $0.001 par value per share. Each share has
equal dividend, distribution and liquidation rights. There are no conversion or
preemptive rights applicable to any shares of the Portfolio. All shares issued
are fully paid and non-assessable. Each holder of beneficial interest has one
vote for each share held. Each investor in a Portfolio is entitled to
participate equally in the Portfolio's earnings and assets and to vote in
proportion to the amount of its investment in the Portfolio. Voting rights are
non-cumulative.

Each investor in the Portfolio is entitled to a vote in proportion to the amount
of its investment therein. Investors in the Portfolio will all vote together in
certain circumstances (e.g., election of the Trustees and ratification of
auditors, as required by the 1940 Act and the rules thereunder). One or more
Portfolios could control the outcome of these votes. Investors do not have
cumulative voting rights, and investors holding more than 50% of the aggregate
beneficial interests in the Trust or in a Portfolio, as the case may be, may
control the outcome of votes. The Trust is not required and has no current
intention to hold annual meetings of investors, but the Trust will hold special
meetings of investors when (1) a majority of the Trustees determines to do so or
(2) investors holding at least 10% of the interests in a Portfolio (if the
meeting relates solely to that Portfolio), or investors holding at least 10% of
the aggregate interests in the Trust (if the meeting relates to the Trust and
not specifically to a Portfolio) requests in writing a meeting of investors.
Changes in fundamental policies or limitations will be submitted to investors
for approval.

The Trust is organized as a business trust under the laws of the State of
Delaware. Investors in a Portfolio will be held personally liable for its
obligations and liabilities, subject, however, to indemnification by the Trust
in the event that there is imposed upon an investor a greater portion of the
liabilities and obligations than its proportionate beneficial interest in the
Portfolio. The Declaration of Trust also provides that, subject to the
provisions of the 1940 Act, the Trust may maintain insurance (for example,
fidelity bonding and errors and omissions insurance) for the protection of the
Portfolio, investors, Trustees, officers, employees, and agents covering
possible tort and other liabilities. Thus, the risk of an investor incurring
financial loss on account of such liability would be limited to circumstances in
which the Portfolio had inadequate insurance and was unable to meet its
obligations out of its assets.

PURCHASE OF SHARES
- - --------------------------------------------------------------------------------

There is no minimum initial or subsequent investment in the Portfolio. The
Portfolio reserves the right to cease accepting investments at any time or to
reject any investment order.

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

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

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

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

The Portfolio's investment securities that are listed on a U.S. securities
exchange or NASDAQ for which market quotations are readily available are valued
at the last quoted sale price on the day the valuation is made. Price
information on listed securities is taken from the exchange where the security
is primarily traded. Options, futures, unlisted U.S. securities and listed U.S.
securities not traded on the valuation date for which market quotations are
readily available are valued at the mean of the most recent quoted bid and asked
price.

Fixed-income securities (other than obligations having a maturity of 60 days or
less) are normally valued on the basis of quotes obtained from pricing services,
which take into account appropriate factors such as institutional sized trading
in similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other market data. Fixed-income securities
purchased with remaining maturities of 60 days or less are valued at amortized
cost if it reflects fair value. In the event that amortized cost does not
reflect market, market prices as determined above will be used. Other assets and
securities for which no quotations are readily available (including restricted
securities) will be valued in good faith at fair value using methods determined
by the Board of Trustees of the Portfolio.

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

The Portfolio will be classified for federal income tax purposes as a
partnership that is not a "publicly traded partnership." As a result, the
Portfolio is not subject to federal income tax; instead, each Interestholder in
the Portfolio is required to take into account in determining its federal income
tax liability its share of the Portfolio's income, gains, losses, deductions,
and credits, without regard to whether it has received any cash distributions
from the Portfolio. The Portfolio also is not subject to Delaware income or
franchise tax.

A holder of beneficial interest in the Portfolio (an "Interestholder") is deemed
to own a proportionate share of the Portfolio's assets and to earn a
proportionate share of the Portfolio's income, for, among other things, purposes
of determining whether the Interestholder satisfies the requirements to qualify
as a regulated investment company ("RIC"). Accordingly, the Portfolio intends to
conduct its operations so that its Interestholders that invest substantially all
of their assets in the Portfolio and intend to qualify as RICs should be able to
satisfy all those requirements.

Distributions to an Interestholder from the Portfolio (whether pursuant to a
partial or complete withdrawal or otherwise) will not result in the
Interestholder's recognition of any gain or loss for federal income tax
purposes, except that: (1) gain will be recognized to the extent any cash that
is distributed exceeds the Interestholder's basis for its interest in the
Portfolio before the distribution; (2) income or gain will be recognized if the
distribution is in liquidation of the Interestholder's entire interest in the
Portfolio and includes a disproportionate share of any unrealized receivables
held by the Portfolio; (3) loss will be recognized to the extent that a
liquidation distribution consisting solely of cash and/or unrealized receivables
is less than the Interestholder's basis for its interest in the Portfolio prior
to the distribution; and (4) gain or loss may be recognized on a distribution to
an Interestholder that contributed property to the Portfolio. An
Interestholder's basis for its interest in the Portfolio generally will equal
the amount of cash and the basis of any property it invests in the Portfolio,
increased by the Interestholder's share of the Portfolio's net income and gains
and decreased by (a) the amount of cash and the basis of any property the
Portfolio distributes to the Interestholder and (b) the Interestholder's share
of the Portfolio's losses.

The income tax and estate tax consequences to a non-U.S. Interestholder entitled
to claim the benefits of an applicable tax treaty may be different from those
described herein. Non-U.S. Interestholders may be required to provide
appropriate documentation to establish their entitlement to the benefits of such
a treaty. Non-U.S. Interestholders are advised to consult their own tax advisers
with respect to the particular tax consequences to them of an investment in the
Portfolio.

The foregoing discussion relates only to federal income tax law. Income from the
Portfolio also may be subject to foreign, state and local taxes, and their
treatment under foreign, state and local income tax laws may differ from the
federal income tax treatment. Interestholders should consult their tax advisors
with respect to particular questions of federal, state and local taxation.

PRIVATE PLACEMENT AGENT

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

TOTAL RETURN

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

P(1+T)n = ERV

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

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

CUMULATIVE TOTAL RETURN

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

YIELD

Annualized yield quotations used in the Portfolio's advertising and promotional
materials are calculated by dividing the Portfolio'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 Portfolio'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 Portfolio
will fluctuate, and an investor's redemption proceeds may be more or less than
the original investment amount.

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

COMPARISON OF PORTFOLIO PERFORMANCE

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

o S&P 500 - The S&P 500 is an unmanaged mutual fund 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 Russell 2000 - The Russell 2000 is composed of the 2,000 smallest
stocks in the Russell 3000, a market value weighted index of the
3,000 largest U.S. publicly-traded companies.

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

FINANCIAL STATEMENTS

ASSETS

Cash $ 100,000

NET ASSETS $ 100,000

Kinetics Portfolios Trust

FINANCIAL STATEMENT
APRIL 27, 2000

Report of Independent Accountants

To the Shareholder and Board of Trustees of
Kinetics Portfolios Trust

In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Kinetics Portfolios
Trust (hereafter referred to as the "Trust") at April 27, 2000, in conformity
with accounting principles generally accepted in the United States. This
financial statement is the responsibility of the Trust's management; our
responsibility is to express an opinion on this financial statement based on our
audit. We conducted our audit of this financial statement in accordance with
auditing standards generally accepted in the United States which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statement is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.

PricewaterhouseCoopers LLP
Milwaukee, Wisconsin

April 27, 2000
KINETICS PORTFOLIOS TRUST
STATEMENT OF ASSETS AND LIABILITIES
- - --------------------------------------------------------------------------------

AS OF APRIL 27, 2000

The accompanying notes are an integral part of this financial statement.

[OBJECT OMITTED]
KINETICS PORTFOLIOS TRUST
NOTES TO FINANCIAL STATEMENT
AS OF APRIL 27, 2000
- - --------------------------------------------------------------------------------

1. ORGANIZATION

The Kinetics Portfolios Trust (the "Trust") was organized as a Delaware
Business Trust on March 14, 2000 and is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as an open-end management
investment company issuing its beneficial interests in series, each series
representing a distinct portfolio with its own investment objectives and
policies. The series currently authorized are The Internet Portfolio, The
Internet Emerging Growth Portfolio, The Internet Global Growth Portfolio,
The Internet New Paradigm Portfolio, The Internet Infrastructure Portfolio,
The Medical Portfolio, The Kinetics Government Money Market Portfolio, The
Small Cap Opportunities Portfolio and The Middle East Growth Portfolio (the
"Portfolios"). Pursuant to the 1940 Act, the Portfolios are
"non-diversified" series of the Trust. The Trust has had no operations
other than the contribution by Kinetics Asset Management, Inc., the
Portfolios' Adviser ("Adviser"), of $100,000, representing a beneficial
interest in the Trust. The Portfolios have had no operations through April
27, 2000. On April 28, 2000, the Trust intends to distribute the Adviser's
$100,000 contribution to the Portfolios, at which time the Adviser will
become a partner in each of the Portfolios. In addition, on April 28, 2000
various feeder funds ("Funds") sponsored by the Adviser will invest their
investable assets in the corresponding Portfolios under a master-feeder
capital structure.

2. SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION COSTS

Expenses in connection with the organization of the Trust have been
absorbed by the Funds prior to their conversion to the
master-feeder capital structure. Accordingly, no statement of
operations of the Trust has been provided.

FEDERAL INCOME TAXES

Each Portfolio intends to qualify as a partnership for federal
income tax purposes. Therefore, the Portfolios believe they
will not be subject to any federal income tax on their income
and net realized capital gains (if any). However, each
investor in the Portfolios will be taxed on its allocable
share of the Portfolio's income and capital gains for purposes
of determining its federal income tax liability.

USE OF ESTIMATES

The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities in the financial statements.
Actual results could differ from those estimates.

3. INVESTMENT ADVISER

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

The Adviser also serves as administrator to the Portfolios. Under
an Administrative Services Agreement with the Trust on behalf
of the Portfolios, the Adviser receives an annual
administration fee equal to 0.10% of the Portfolio's average
daily net assets from 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 Portfolios by Firstar.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

FITCH INVESTORS SERVICE, INC. BOND RATING DEFINITIONS

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

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

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

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

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

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

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

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

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

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

THE INTERNET INFRASTRUCTURE PORTFOLIO

A SERIES OF KINETICS PORTFOLIOS TRUST

1311 Mamaroneck Avenue

White Plains, New York 10605

(800) 930-3828

April 28, 2000

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information ("SAI") provides general information
about The Internet Infrastructure Portfolio (the "Portfolio"). 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
Portfolio's current Prospectus dated April 28, 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 Portfolio at the address set forth
above or call the telephone number shown above.

THE INTERNET INFRASTRUCTURE PORTFOLIO

The Portfolio..................................................................2
Investment Objective, Strategies, and Risks....................................2
Investment Policies and Associated Risks.......................................3
Investment Restrictions........................................................8
Temporary Investments..........................................................9
Portfolio Turnover.............................................................9
Management of the Portfolio....................................................9
Control Persons and Principal Holders of Securities...........................12
Investment Adviser............................................................13
Administrative Services.......................................................14
Custodian.....................................................................15
Independent Public Accountants................................................15
Brokerage.....................................................................15
Capitalization................................................................17
Purchase of Shares............................................................17
Redemption of Shares..........................................................18
Valuation of Shares...........................................................18
Taxes.........................................................................19
Performance Information.......................................................20
Financial Statements..........................................................22
Appendix......................................................................23

THE PORTFOLIO
- - --------------------------------------------------------------------------------

The Portfolio is a non-diversified, open-end management investment company.

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

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

COMMON AND PREFERRED STOCK

CONVERTIBLE DEBT SECURITIES

FIXED-INCOME SECURITIES

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

OPTIONS

If a secondary market in options were to become unavailable, the Portfolio could
no longer engage in closing transactions. Lack of investor interest might
adversely affect the liquidity of the market for particular options or series of
options. A market may discontinue trading of a particular option or options
generally. In addition, a market could become temporarily unavailable if unusual
events -- such as volume in excess of trading or clearing capability -- were to
interrupt its normal operations.

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

The investment restrictions of the Portfolio may be changed only with the
approval of the holders of a majority of the Portfolio's outstanding voting
securities.

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

2. The Portfolio will not make loans.

8. The Portfolio will not issue senior securities.

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

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

MANAGEMENT OF THE PORTFOLIO
- - --------------------------------------------------------------------------------

BOARD OF TRUSTEES

COMPENSATION

Kathleen Campbell* None None None None
Director

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

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

Douglas Cohen 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 Mutual Funds, Inc.

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

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. As of the commencement of investment operations, the
Portfolio could be deemed to be under the control of The Internet Infrastructure
Fund, a series of Kinetics Mutual Funds, Inc. and the sole investor in the
Portfolio as of the date of this SAI. Similarly, as of such time, Kinetics
Mutual Funds, Inc. through its series, The Internet Fund, The Internet Emerging
Growth Fund, The Internet Global Growth Fund, The Internet Infrastructure Fund,
The Internet New Paradigm Fund, The Small Cap Opportunities Fund, The Middle
East Growth Fund, The Medical Fund, and The Kinetics Government Money Market
Fund (each a "Fund" and collectively the "Funds"), was the owner of 100% of the
value of the outstanding interests in the Trust. Any investor owning more than
50% of the value of the outstanding interests in the Portfolio may take actions
without the approval of any other investor who invests in the Portfolio.

Kinetics Mutual Funds, Inc. has informed the Trust that whenever The Internet
Infrastructure Fund is requested to vote on a matter pertaining to the
Portfolio, The Internet Infrastructure Fund will hold a meeting of its
shareholders and will vote its interest in the Portfolio in proportion to the
votes cast by The Internet Infrastructure Fund's shareholders. It is anticipated
that other registered investment companies investing in the Portfolio, if any,
will follow the same or a similar practice, although, as of May 1, 2000, there
were no other investors in the Portfolio.