0001104659-13-003173.txt : 20130117 0001104659-13-003173.hdr.sgml : 20130117 20130117150456 ACCESSION NUMBER: 0001104659-13-003173 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20130117 DATE AS OF CHANGE: 20130117 EFFECTIVENESS DATE: 20130117 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KINETICS MUTUAL FUNDS INC CENTRAL INDEX KEY: 0001083387 IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 333-78275 FILM NUMBER: 13534679 BUSINESS ADDRESS: STREET 1: 555 TAXTER ROAD STREET 2: SUITE 175 CITY: ELMSFORD STATE: NY ZIP: 10523 BUSINESS PHONE: 914-703-6900 MAIL ADDRESS: STREET 1: 555 TAXTER ROAD STREET 2: SUITE 175 CITY: ELMSFORD STATE: NY ZIP: 10523 FORMER COMPANY: FORMER CONFORMED NAME: MEDICAL FUND & THE CURE FOR CANCER INC DATE OF NAME CHANGE: 19990406 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KINETICS MUTUAL FUNDS INC CENTRAL INDEX KEY: 0001083387 IRS NUMBER: 000000000 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-09303 FILM NUMBER: 13534680 BUSINESS ADDRESS: STREET 1: 555 TAXTER ROAD STREET 2: SUITE 175 CITY: ELMSFORD STATE: NY ZIP: 10523 BUSINESS PHONE: 914-703-6900 MAIL ADDRESS: STREET 1: 555 TAXTER ROAD STREET 2: SUITE 175 CITY: ELMSFORD STATE: NY ZIP: 10523 FORMER COMPANY: FORMER CONFORMED NAME: MEDICAL FUND & THE CURE FOR CANCER INC DATE OF NAME CHANGE: 19990406 0001083387 S000017862 Kinetics Alternative Income Fund C000049583 Advisor Class A KWIAX C000049584 Advisor Class C KWICX C000049585 No Load Class KWINX C000049586 Institutional Class KWIIX 485BPOS 1 a12-29392_20485bpos.htm 485BPOS

 

Filed with the Securities and Exchange Commission on January 17, 2013

 

1933 Act Registration File No. 333-78275

1940 Act File No. 811-09303

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM N-1A

 

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

x

 

Pre-Effective Amendment No.    

 

 

 

Post-Effective Amendment No. 45

 

x

 

and/or

 

 

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

 

x

 

Amendment No. 46

 

x

 

(Check appropriate box or boxes.)

 

KINETICS MUTUAL FUNDS, INC.

(Exact Name of Registrant as Specified in Charter)

 

555 Taxter Road, Suite 175

Elmsford, New York 10523

(Address and Zip Code of Principal Executive Offices)

 

1-800-930-3828

Registrant’s Telephone Number, including Area Code

 

Leonid Polyakov

555 Taxter Road, Suite 175

Elmsford, New York 10523

(Name and Address of Agent for Service)

 

With a copy to:

Mary Jo Reilly, Esq.

Drinker Biddle & Reath LLP

One Logan Square

18th and Cherry Streets

Philadelphia, PA 19103-6996

 

It is proposed that this filing will become effective

 

x                        immediately upon filing pursuant to paragraph (b)

o                          on (date) pursuant to paragraph (b)

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

o                          on [date] pursuant to paragraph (a)(1)

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

o                          on [date] pursuant to paragraph (a)(2) of Rule 485.

 

If appropriate, check the following box:

 

o            This post-effective amendment designates a new effective date for a previously filed post-effective amendment.

 

 

 



 

EXPLANATORY NOTE

 

This PEA No. 45 hereby incorporates Parts A, B and C from the Trust’s PEA No. 44 on Form N-1A filed December 28, 2012.  This PEA No. 45 is filed for the sole purpose of submitting the XBRL exhibits for the risk/return summary first provided in PEA No. 44.

 



 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the Investment Company Act, the Registrant, Kinetics Mutual Funds, Inc., certifies that it meets all of the requirements for effectiveness of this Post-Effective Amendment No. 45 to its Registration Statement under Rule 485(b) under the Securities Act and has duly caused this Post-Effective Amendment No. 45 to its Registration Statement to be signed below on its behalf by the undersigned, duly authorized, in the City of Elmsford and State of New York, on the 17th of January, 2013.

 

 

 

KINETICS MUTUAL FUNDS, INC.

 

 

 

 

 

/s/ Peter B. Doyle*

 

 

Peter B. Doyle, President

 

Pursuant to the requirements of the Securities Act, this Post-Effective Amendment No. 45 to its Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.

 

NAME

 

TITLE

 

DATE

 

 

 

 

 

Peter B. Doyle*

 

Director, President, Chairman of the Board

 

January 17, 2013

Peter B. Doyle

 

 

 

 

 

 

 

 

 

Douglas Cohen*

 

Director

 

January 17, 2013

Douglas Cohen

 

 

 

 

 

 

 

 

 

William J. Graham*

 

Director

 

January 17, 2013

William J. Graham

 

 

 

 

 

 

 

 

 

Steven T. Russell*

 

Director

 

January 17, 2013

Steven T. Russell

 

 

 

 

 

 

 

 

 

Murray Stahl*

 

Director and Secretary

 

January 17, 2013

Murray Stahl

 

 

 

 

 

 

 

 

 

Joseph E. Breslin*

 

Director

 

January 17, 2013

Joseph E. Breslin

 

 

 

 

 

 

 

 

 

James Breen*

 

Director

 

January 17, 2013

James M. Breen

 

 

 

 

 

 

 

 

 

Leonid Polyakov*

 

Director and Treasurer

 

January 17, 2013

Leonid Polyakov

 

 

 

 

 

 

 

 

 

/s/ Jay Kesslen

 

 

 

January 17, 2013

Jay Kesslen

 

 

 

 

 

*By:

/s/ Jay Kesslen

 

 

 

 

Attorney-In-Fact pursuant to the Power of Attorney incorporated by reference to Post-Effective Amendment No. 40 to the Registration Statement filed on April 27, 2012.

 



 

EXHIBIT INDEX

 

Exhibit

 

Exhibit No.

 

 

 

Instance Document

 

EX-101.INS

 

 

 

Schema Document

 

EX-101.SCH

 

 

 

Calculation Linkbase Document

 

EX-101.CAL

 

 

 

Definition Linkbase Document

 

EX-101.DEF

 

 

 

Label Linkbase Document

 

EX-101.LAB

 

 

 

Presentation Linkbase Document

 

EX-101.PRE

 


EX-101.INS 2 ck0001083387-20120630.xml XBRL INSTANCE DOCUMENT 485BPOS 2012-06-30 0001083387 2013-01-01 KINETICS MUTUAL FUNDS INC false 2012-12-28 2013-01-01 As a non-diversified investment company, the Alternative Income Portfolio can invest a large percentage of its assets in a small number of issuers. As a result, a change in the value of any one investment may affect the overall value of the Alternative Income Portfolio's shares, and therefore the Alternative Income Fund's shares, more than shares of a diversified mutual fund that holds more investments. <tt>The Alternative Income Portfolio pays transaction costs, such as commissions, <br />when it buys and sells securities (or "turns over" its portfolio). A higher <br />portfolio turnover rate may indicate higher transaction costs and may result <br />in higher taxes when Fund shares are held in a taxable account. These costs, <br />which are not reflected in Annual Fund Operating Expenses or in the example, <br />affect the Alternative Income Portfolio's, and therefore the Alternative <br />Income Fund's, performance. During the most recent fiscal year, the <br />Alternative Income Portfolio's portfolio turnover rate was 69% of the average<br />value of its portfolio. However, that portfolio turnover rate reflects a<br />pervious investment strategy. Had the Alternative Income Portfolio followed its<br />current investment strategy during that period, it is likely that the portfolio<br />turnover would have been higher.</tt> <div style="display:none">~ http://www.kineticsfunds.com/role/ExpenseExample_S000017862Member3 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div> <div style="display:none">~ http://www.kineticsfunds.com/role/BarChartData_S000017862Member3 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div> <tt>The primary investment objective of the Alternative Income Fund (formerly <br />the Water Infrastructure Fund) is to provide current income and gains.</tt> <tt>This Example is intended to help you compare the cost of investing in the <br />Alternative Income Fund with the cost of investing in other mutual funds.<br /> <br />This Example assumes that you invest $10,000 in the Alternative Income Fund <br />for the time periods indicated and then redeem all of your shares at the end <br />of these periods. The Example also assumes that your investment has a 5% <br />return each year and that the Alternative Income Fund's operating expenses <br />remain the same.</tt> reflects no deductions for fees, expenses or taxes <tt>The Alternative Income Fund is a non-diversified fund that invests all of <br />its investable assets in the Alternative Income Portfolio (formerly the <br />Water Infrastructure Portfolio), a series of Kinetics Portfolios Trust.<br /> <br />Under normal circumstances, the Alternative Income Portfolio will hold a<br />diversified portfolio of primarily fixed income securities and implement an<br />equity put writing option strategy intended to generate returns from the <br />receipt of option premiums. The Alternative Income Portfolio will thereby <br />seek its primary investment objective of current income and gains by <br />collecting premiums on written put options, while maintaining a portfolio <br />of primarily fixed income securities to serve as collateral to, cover <br />obligations pursuant to written options and seek the secondary objective <br />of long-term growth of capital.<br /> <br />The Alternative Income Portfolio will implement option strategies on market<br />indexes, exchange-traded funds ("ETFs") or company specific equity securities,<br />receiving up-front cash payments from the purchasers of these options in<br />exchange for providing the purchasers with the right to potentially sell an<br />underlying security to the Alternative Income Portfolio. If the prevailing<br />market value of the underlying equity securities on an expiration date exceeds<br />the exercise price of the put option that the Alternative Income Portfolio has<br />written, it is expected that the option will not be exercised. In such instance,<br />the Alternative Income Portfolio would not be required to purchase any<br />securities and the received premium would be considered income. <br /> <br />At the time of writing (selling) a put option, the aggregated amount of all the<br />notional obligations of the option positions (the sum of all the exercise prices<br />referenced) held by the Alternative Income Portfolio may not exceed 100% of the<br />Alternative Income Portfolio's total assets. In this way, the Alternative Income<br />Portfolio intends to have available at all times cash or fixed income investments <br />to satisfy any obligations to purchase securities pursuant to options written.<br /> <br />The Investment Adviser will select option investments based on market volatility<br />levels, underlying security valuations and perceived market risks. Further, the<br />Investment Adviser evaluates relative option premiums and implied volatilities<br />in determining preferred option contract terms, such as exercise prices and<br />expiration dates. The Alternative Income Portfolio will typically buy or sell<br />exchange-traded options on market indexes, diversified and non-diversified ETFs,<br />and U.S. listed stocks of individual companies including American Depositary<br />Receipts ("ADRs") and real estate investment trusts ("REITs"). To the extent <br />the Alternative Income Portfolio buys or sells options on single stock equity<br />securities, the aggregate notional exposure to a specific underlying company<br />will typically not exceed 5% of the Alternative Income Portfolio's net assets <br />at the time of investment.<br /> <br />To satisfy collateral requirements related to written options and provide full<br />coverage of potential security purchase obligations related to written options,<br />the Alternative Income Portfolio may invest up to 100% of its net assets in<br />fixed income securities including cash or cash equivalents, fixed income<br />closed-end funds ("CEFs") and ETFs. There are no limitations as to the maturities <br />or credit ratings of the fixed income securities in which the Alternative Income <br />Portfolio may invest, however, fixed income securities held by the Alternative <br />Income Portfolio are generally issued by the U.S. Government or investment grade, <br />large capitalization U.S. companies.<br /> <br />In managing the Alternative Income Portfolio's fixed income holdings, the<br />Investment Adviser will focus on achieving a reasonable risk-adjusted return<br />with an emphasis on capital preservation, while seeking long term growth of<br />capital.&#xA0;&#xA0;The Investment Adviser will select fixed income securities based on<br />market liquidity, duration risk, credit risk, and yield to maturity.<br /> <br />In connection with the Alternative Income Portfolio's positions in derivatives,<br />the Alternative Income Portfolio will segregate liquid assets or will otherwise<br />cover its position in accordance with applicable Securities and Exchange<br />Commission ("SEC") requirements.</tt> THE ALTERNATIVE INCOME FUND <tt>The Alternative Income Fund seeks to obtain long-term growth of capital as <br />a secondary objective. The Alternative Income Fund is the sole "feeder fund" <br />to The Alternative Income Portfolio, a series of Kinetics Portfolios Trust.</tt> Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to average net assets before expense reimbursement found in the "Financial Highlights" section of this Prospectus which reflects the Alternative Income Fund's operating expenses and does not include Acquired Fund Fees and Expenses ("AFFE"). Effective January 1, 2013, the Barclays U.S. 1-3 Year Credit Index has replaced the S&P 500 as a more appropriate broad-based market index. Example. The Alternative Income Fund's after-tax returns as shown in the following table are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Investment Objectives The past performance of the Alternative Income Fund, before and after taxes, is not necessarily an indication of how the Alternative Income Fund or the Alternative Income Portfolio will perform in the future. Investing in common stocks has inherent risks that could cause you to lose money. Principal Investment Risks Shareholder Transaction Expenses (fees paid directly from your investment) Although your actual costs may be higher or lower, based on these assumptions your cost for the Alternative Income Fund would be: 0.69 Your actual after-tax returns depend on your tax situation and may differ from those shown. If you own Fund shares in a tax-deferred account, such as a 401(k) plan or an individual retirement account ("IRA"), the information on after-tax returns is not relevant to your investment. The Alternative Income Fund - No Load Class Calendar Year Returns as of 12/31 Performance <tt>Effective January 1, 2013, the Barclays U.S. 1-3 Year Credit Index has replaced<br />the S&amp;P 500 as a more appropriate broad-based market index. This change reflects<br />the Alternative Income Fund's revised investment strategy that does not primarily <br />invest in equity securities. Additionally, because the Fund changed its investment <br />strategy such that it no longer concentrates in the water industry, effective <br />January 1, 2013, the ISE Water Index and Palisades Water Index have been removed <br />as they are no longer appropriate comparative benchmarks for the Alternative Income <br />Fund.</tt> The bar chart and table shown below illustrate the variability of the Alternative Income Fund's returns. The bar chart indicates the risks of investing in the Alternative Income Fund by showing the changes in the Alternative Income Fund's performance from year to year (on a calendar year basis). The table shows how the Alternative Income Fund's average annual returns, before and after taxes, compare with those of a broad measure of market performance. <tt>During the period of time shown in the bar chart, the Fund's highest <br />and lowest calendar quarter returns are as follows: <br /><br />Best Quarter:&#xA0;&#xA0;2009 Q2 17.90% <br />Worst Quarter: 2011 Q3 -14.09% <br /><br />The Fund's year-to-date return as of September 30, 2012 was 9.63%.</tt> (800) 930-3828 Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Average Annual Total Returns as of 12/31/2011 Portfolio Turnover. <tt>Investing in common stocks has inherent risks that could cause you to lose<br />money. The principal risks of investing in the Alternative Income Fund, and<br />indirectly the Alternative Income Portfolio, are listed below and could<br />adversely affect the net asset value ("NAV"), total return and the value of <br />the Alternative Income Fund, Alternative Income Portfolio and your investment.<br /> <br />o&#xA0;&#xA0;Management Risks: The Alternative Income Portfolio securities selected by the <br />&#xA0;&#xA0;&#xA0;Investment Adviser may decline in value or not increase in value when the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;stock market in general is rising and may fail to meet the Alternative <br />&#xA0;&#xA0;&#xA0;Income Portfolio's, and therefore the Alternative Income Fund's, investment&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;objective. The Investment Adviser cannot guarantee the performance of the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Fund, nor can it assure you that the market value of your&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;investment will not decline.<br /><br />o&#xA0;&#xA0;Liquidity Risks: The Alternative Income Portfolio's investments in options&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;and, to the extent it invests in certain non-investment grade fixed income&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities or ETFs, makes the Alternative Income Portfolio especially&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;susceptible to the risk that during certain periods the liquidity of certain&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;issuers or industries, or all securities within particular investment&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;categories, will decrease or disappear suddenly and without warning as a&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;result of adverse market or political events, or adverse investor perceptions. <br /><br />o&#xA0;&#xA0;Exchange-Traded Funds (ETFs): ETFs are registered investment companies whose&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;shares are listed and traded on U.S. stock exchanges or otherwise traded in&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;the over-the-counter market. In general, passively-managed ETFs seek to <br />&#xA0;&#xA0;&#xA0;track a specified securities index or a basket of securities that an "index&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;provider," such as Standard &amp; Poor's, selects as representative of a market,&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;market segment or industry sector. A passively-managed ETF is designed so that<br />&#xA0;&#xA0;&#xA0;its performance will correspond closely with that of the index it tracks.&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Conversely, actively-managed ETFs seek an investment objective by investing in<br />&#xA0;&#xA0;&#xA0;a basket of securities based on the investment strategy and discretion of the <br />&#xA0;&#xA0;&#xA0;ETF's adviser. As a shareholder in an ETF, the Alternative Income Portfolio&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;will bear its pro rata portion of an ETF's expenses, including advisory fees, <br />&#xA0;&#xA0;&#xA0;in addition to its own expenses. <br /><br />o&#xA0;&#xA0;Foreign Securities Risks: The Alternative Income Portfolio may invest in&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;foreign securities directly or through ADRs, GDRs and IDRs. Foreign securities<br />&#xA0;&#xA0;&#xA0;can carry higher returns but involve more risks than those associated with&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;U.S. investments. Additional risks associated with investment in foreign&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities include currency fluctuations, political and economic instability, <br />&#xA0;&#xA0;&#xA0;differences in financial reporting standards and less stringent regulation of <br />&#xA0;&#xA0;&#xA0;securities markets. <br /><br />o&#xA0;&#xA0;Emerging Markets Risks: The risk that the securities markets of emerging&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;countries are less liquid, are especially subject to greater price volatility,<br />&#xA0;&#xA0;&#xA0;have smaller market capitalizations, have less government regulation and are&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;not subject to as extensive and frequent accounting, financial and other&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;reporting requirements as the securities markets of more developed countries&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;as have historically been the case. <br /><br />o&#xA0;&#xA0;Non-Diversification Risks: As a non-diversified investment company, the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Portfolio can invest a large percentage of its assets in <br />&#xA0;&#xA0;&#xA0;a small number of issuers. As a result, a change in the value of any one&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;investment may affect the overall value of the Alternative Income Portfolio's <br />&#xA0;&#xA0;&#xA0;shares, and therefore the Alternative Income Fund's shares, more than shares&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;of a diversified mutual fund that holds more investments. <br /><br />o&#xA0;&#xA0;Interest Rate Risk: The risk that when interest rates increase, fixed-income&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities held by the Alternative Income Portfolio will decline in value. <br />&#xA0;&#xA0;&#xA0;Long-term fixed-income securities will normally have more price volatility <br />&#xA0;&#xA0;&#xA0;because of this risk than short-term fixed-income securities. <br /><br />o&#xA0;&#xA0;Credit/Default Risk: The risk that an issuer or guarantor of fixed-income&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities held by the Alternative Income Portfolio (which may have low credit<br />&#xA0;&#xA0;&#xA0;ratings), or the counterparty in a derivative investment, may default on its&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;obligation to pay interest and repay principal. <br /><br />o&#xA0;&#xA0;Derivatives Risks: The Alternative Income Portfolio's investments in options&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;and other derivative instruments may result in loss. Derivative instruments&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;may be illiquid, difficult to price and leveraged so that small changes may&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;produce disproportionate losses to the Alternative Income Portfolio. If a&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;secondary market does not exist for an option purchased or written by the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Portfolio, it might not be possible to effect a closing&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;transaction in the option (i.e., dispose of the option), with the result that <br />&#xA0;&#xA0;&#xA0;(1) an option purchased by the Alternative Income Portfolio would have to be&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;exercised in order for the Alternative Income Portfolio to realize any profit <br />&#xA0;&#xA0;&#xA0;and (2) the Alternative Income Portfolio may not be able to sell portfolio&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities covering an option written by it until the option expires or it&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;delivers the underlying security, upon exercise. To the extent the Alternative<br />&#xA0;&#xA0;&#xA0;Income Portfolio segregates assets to cover derivative positions, the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Portfolio may impair its ability to meet current obligations, <br />&#xA0;&#xA0;&#xA0;to honor requests for redemption and to manage the Alternative Income Portfolio <br />&#xA0;&#xA0;&#xA0;properly in a manner consistent with its stated investment objective. <br /><br />o&#xA0;&#xA0;Option Transaction Risks: Purchasing and writing put and call options are&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;highly specialized activities and entail greater than ordinary investment&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;risks. The successful use of options depends in part on the ability of the&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Investment Adviser to manage future price fluctuations and the degree of&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;correlation between the options and securities markets. By writing put options<br />&#xA0;&#xA0;&#xA0;on equity securities, the Alternative Income Portfolio gives up the opportunity <br />&#xA0;&#xA0;&#xA0;to benefit from potential increases in the value of the common stocks above the <br />&#xA0;&#xA0;&#xA0;exercise prices of the written put options, but continues to bear the risk of <br />&#xA0;&#xA0;&#xA0;declines in the value of its common stock portfolio. The Alternative Income <br />&#xA0;&#xA0;&#xA0;Portfolio will receive a premium from writing a covered call option that it <br />&#xA0;&#xA0;&#xA0;retains whether or not the option is exercised. The premium received from the <br />&#xA0;&#xA0;&#xA0;written options may not be sufficient to offset any losses sustained from the <br />&#xA0;&#xA0;&#xA0;volatility of the underlying equity securities over time. <br /><br />o&#xA0;&#xA0;REITs Risk: REITs may be affected by economic forces and other factors related<br />&#xA0;&#xA0;&#xA0;to the real estate industry. Investing in REITs may involve risks similar to&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;those associated with investing in small capitalization companies. REITs may&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;have limited financial resources, may trade less frequently and in a limited&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;volume and may be subject to more abrupt or erratic price movements than&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;larger company securities. Historically, small capitalization stocks, such as <br />&#xA0;&#xA0;&#xA0;REITs, have been more volatile in price than the larger capitalization stocks <br />&#xA0;&#xA0;&#xA0;included in the S&amp;P 500&#xAE; Index. <br /><br />Who may want to invest?<br />The Alternative Income Fund may be appropriate for investors who:<br /> <br />o&#xA0;&#xA0;wish to generate income and capital; <br /><br />o&#xA0;&#xA0;want to diversify their portfolios; <br /><br />o&#xA0;&#xA0;want to allocate some portion of their long-term investments to international <br />&#xA0;&#xA0;&#xA0;equity investing; <br /><br />o&#xA0;&#xA0;are willing to accept the volatility associated with equity investing; and <br /><br />o&#xA0;&#xA0;are comfortable with the risks described herein.</tt> Fees and Expenses of the Fund Principal Investment Strategy http://www.kineticsfunds.com <tt>The bar chart and table shown below illustrate the variability of the<br />Alternative Income Fund's returns. The bar chart indicates the risks of<br />investing in the Alternative Income Fund by showing the changes in the<br />Alternative Income Fund's performance from year to year (on a calendar <br />year basis). The table shows how the Alternative Income Fund's average <br />annual returns, before and after taxes, compare with those of a broad <br />measure of market performance. The past performance of the Alternative <br />Income Fund, before and after taxes, is not necessarily an indication <br />of how the Alternative Income Fund or the Alternative Income Portfolio <br />will perform in the future. Updated performance information is available <br />on the Fund's website at http://www.kineticsfunds.com or by calling the <br />Fund toll-free at (800) 930-3828.<br /> <br />Important note about performance reflecting the Fund's prior investment<br />strategy. The performance shown prior to January 1, 2013 reflects a <br />previous investment objective and strategy. The Fund sought long-term <br />growth of capital as its primary investment objective with a secondary <br />objective to obtain current income while investing at least 80% of its <br />assets in securities of companies engaged in water infrastructure and <br />natural resources with a specific water theme and related activities. <br />After January 1, 2013, the Fund's performance will reflect the <br />significantly different investment objective of seeking to generate<br />income and capital gains with long-term growth of capital as its <br />secondary investment objective while investing in primarily fixed <br />income securities while utilizing an options strategy.</tt> <tt>This table describes the fees and expenses you may pay if you buy and hold<br />shares of the Alternative Income Fund.</tt> <div style="display:none">~ http://www.kineticsfunds.com/role/OperatingExpensesData_S000017862Member3 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div> <div style="display:none">~ http://www.kineticsfunds.com/role/PerformanceTableData_S000017862Member3 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * column rr_PerformanceMeasureAxis compact * row primary compact * ~</div> <tt>The Alternative Income Fund's after-tax returns as shown in the following table<br />are calculated using the historical highest individual federal marginal income<br />tax rates and do not reflect the impact of state and local taxes. Your actual<br />after-tax returns depend on your tax situation and may differ from those shown. <br />If you own Fund shares in a tax-deferred account, such as a 401(k) plan or an <br />individual retirement account ("IRA"), the information on after-tax returns is <br />not relevant to your investment.</tt> <div style="display:none">~ http://www.kineticsfunds.com/role/ShareholderFeesData_S000017862Member3 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div> Palisades Water Index (reflects no deductions for fees, expenses or taxes) -0.1094 -0.0364 2007-06-29 ISE Water Index (reflects no deductions for fees, expenses or taxes) -0.0627 -0.0113 2007-06-29 S&P 500® Index (reflects no deductions for fees, expenses or taxes) 0.0211 -0.0175 2007-06-29 Barclays U.S. 1-3 Year Credit Index (reflects no deductions for fees, expenses or taxes) 0.0175 0.0469 2007-06-29 The Alternative Income Fund (KWINX) No Load Return After Taxes on Distributions and Sale of Fund Shares -0.0311 -0.0389 2007-06-29 The Alternative Income Fund (KWINX) No Load Return After Taxes on Distributions -0.0558 -0.0475 2007-06-29 KWINX Worst Quarter: Best Quarter: 0.00 2012-09-30 The Alternative Income Fund (KWINX) No Load Return Before Taxes 0.0025 102 2009-06-30 556 -0.1409 -0.0112 -0.0460 2363 -0.0200 1036 0.1790 -0.0488 0.0117 -0.2517 0.0090 2014-01-01 2011-09-30 0.1646 year-to-date 0.0092 -0.0488 0.00 0.0100 0.0212 -0.0452 2007-06-29 0.0963 0.0005 As a non-diversified investment company, the Alternative Income Portfolio can invest a large percentage of its assets in a small number of issuers. As a result, a change in the value of any one investment may affect the overall value of the Alternative Income Portfolio's shares, and therefore the Alternative Income Fund's shares, more than shares of a diversified mutual fund that holds more investments. <tt>The Alternative Income Portfolio pays transaction costs, such as commissions, <br />when it buys and sells securities (or "turns over" its portfolio). A higher <br />portfolio turnover rate may indicate higher transaction costs and may result in<br />higher taxes when Fund shares are held in a taxable account. These costs, which <br />are not reflected in Annual Fund Operating Expenses or in the example, affect <br />the Alternative Income Portfolio's, and therefore the Alternative Income Fund's,<br />performance. During the most recent fiscal year, the Alternative Income <br />Portfolio's portfolio turnover rate was 69% of the average value of its portfolio. <br />However, that portfolio turnover rate reflects a pervious investment strategy. Had <br />the Alternative Income Portfolio followed its current investment strategy during <br />that period, it is likely that the portfolio turnover would have been higher.</tt> <div style="display:none">~ http://www.kineticsfunds.com/role/ExpenseExample_S000017862Member2 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div> <div style="display:none">~ http://www.kineticsfunds.com/role/BarChartData_S000017862Member2 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div> <tt>The primary investment objective of the Alternative Income Fund (formerly the<br />Water Infrastructure Fund) is to provide current income and gains.</tt> <tt>This Example is intended to help you compare the cost of investing in<br />the Alternative Income Fund with the cost of investing in other mutual <br />funds.<br /> <br />This Example assumes that you invest $10,000 in the Alternative Income Fund <br />for the time periods indicated and then redeem all of your shares at the end <br />of these periods. The Example also assumes that your investment has a 5% return<br />each year and that the Alternative Income Fund's operating expenses remain the<br />same.</tt> reflects no deductions for fees, expenses or taxes <tt>The Alternative Income Fund is a non-diversified fund that invests all of <br />its investable assets in the Alternative Income Portfolio (formerly the <br />Water Infrastructure Portfolio), a series of Kinetics Portfolios Trust. <br />Under normal circumstances, the Alternative Income Portfolio will hold a <br />diversified portfolio of primarily fixed income securities and implement <br />an&#xA0;&#xA0;equity put writing option strategy intended to generate returns from the <br />receipt of option premiums. The Alternative Income Portfolio will thereby seek <br />its primary investment objective of current income and gains by collecting premiums <br />on written put options, while maintaining a portfolio of primarily fixed income<br />securities to serve as collateral to, cover obligations pursuant to written<br />options and seek the secondary objective of long-term growth of capital.<br /> <br />The Alternative Income Portfolio will implement option strategies on market<br />indexes, exchange-traded funds ("ETFs") or company specific equity securities,<br />receiving up-front cash payments from the purchasers of these options in<br />exchange for providing the purchasers with the right to potentially sell an<br />underlying security to the Alternative Income Portfolio. If the prevailing<br />market value of the underlying equity securities on an expiration date exceeds<br />the exercise price of the put option that the Alternative Income Portfolio has<br />written, it is expected that the option will not be exercised. In such instance,<br />the Alternative Income Portfolio would not be required to purchase any<br />securities and the received premium would be considered income.&#xA0;&#xA0;<br /> <br />At the time of writing (selling) a put option, the aggregated amount of all the<br />notional obligations of the option positions (the sum of all the exercise prices<br />referenced) held by the Alternative Income Portfolio may not exceed 100% of the<br />Alternative Income Portfolio's total assets. In this way, the Alternative Income<br />Portfolio intends to have available at all times cash or fixed income investments <br />to satisfy any obligations to purchase securities pursuant to options written.<br /> <br />The Investment Adviser will select option investments based on market volatility<br />levels, underlying security valuations and perceived market risks. Further, the<br />Investment Adviser evaluates relative option premiums and implied volatilities<br />in determining preferred option contract terms, such as exercise prices and<br />expiration dates. The Alternative Income Portfolio will typically buy or sell<br />exchange-traded options on market indexes, diversified and non-diversified ETFs,<br />and U.S. listed stocks of individual companies including American Depositary<br />Receipts ("ADRs") and real estate investment trusts ("REITs"). To the extent the<br />Alternative Income Portfolio buys or sells options on single stock equity<br />securities, the aggregate notional exposure to a specific underlying company<br />will typically not exceed 5% of the Alternative Income Portfolio's net assets at<br />the time of investment.<br /> <br />To satisfy collateral requirements related to written options and provide full<br />coverage of potential security purchase obligations related to written options,<br />the Alternative Income Portfolio may invest up to 100% of its net assets in<br />fixed income securities including cash or cash equivalents, fixed income<br />closed-end funds ("CEFs") and ETFs. There are no limitations as to the<br />maturities or credit ratings of the fixed income securities in which the<br />Alternative Income Portfolio may invest, however, fixed income securities held<br />by the Alternative Income Portfolio are generally issued by the U.S. Government<br />or investment grade, large capitalization U.S. companies.<br /> <br />In managing the Alternative Income Portfolio's fixed income holdings, the<br />Investment Adviser will focus on achieving a reasonable risk-adjusted return<br />with an emphasis on capital preservation, while seeking long term growth of<br />capital.&#xA0;&#xA0;The Investment Adviser will select fixed income securities based on<br />market liquidity, duration risk, credit risk, and yield to maturity.<br /> <br />In connection with the Alternative Income Portfolio's positions in derivatives,<br />the Alternative Income Portfolio will segregate liquid assets or will otherwise<br />cover its position in accordance with applicable Securities and Exchange<br />Commission ("SEC") requirements.</tt> THE ALTERNATIVE INCOME FUND <tt>The Alternative Income Fund seeks to obtain long-term growth of capital as a<br />secondary objective. The Alternative Income Fund is the sole "feeder fund" to<br />The Alternative Income Portfolio, a series of Kinetics Portfolios Trust.</tt> Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to average net assets before expense reimbursement found in the "Financial Highlights" section of this Prospectus which reflects the Alternative Income Fund's operating expenses and does not include Acquired Fund Fees and Expenses ("AFFE"). Effective January 1, 2013, the Barclays U.S. 1-3 Year Credit Index has replaced the S&P 500 as a more appropriate broad-based market index. Example. The Alternative Income Fund's after-tax returns as shown in the following table are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Investment Objectives The past performance of the Alternative Income Fund, before and after taxes, is not necessarily an indication of how the Alternative Income Fund or the Alternative Income Portfolio will perform in the future. Investing in common stocks has inherent risks that could cause you to lose money. Principal Investment Risks Shareholder Transaction Expenses (fees paid directly from your investment) Although your actual costs may be higher or lower, based on these assumptions your cost for the Alternative Income Fund would be: Your actual after-tax returns depend on your tax situation and may differ from those shown. If you own Fund shares in a tax-deferred account, such as a 401(k) plan or an individual retirement account ("IRA"), the information on after-tax returns is not relevant to your investment. The Alternative Income Fund - Institutional Class Calendar Year Returns as of 12/31 Performance <tt>Effective January 1, 2013, the Barclays U.S. 1-3 Year Credit Index has replaced<br />the S&amp;P 500 as a more appropriate broad-based market index. This change reflects<br />the Alternative Income Fund's revised investment strategy that does not primarily <br />invest in equity securities. Additionally, because the Fund changed its investment <br />strategy such that it no longer concentrates in the water industry, effective <br />January 1, 2013, the ISE Water Index and Palisades Water Index have been removed <br />as they are no longer appropriate comparative benchmarks for the Alternative Income <br />Fund.</tt> The bar chart and table shown below illustrate the variability of the Alternative Income Fund's returns. The bar chart indicates the risks of investing in the Alternative Income Fund by showing the changes in the Alternative Income Fund's performance from year to year (on a calendar year basis). The table shows how the Alternative Income Fund's average annual returns, before and after taxes, compare with those of a broad measure of market performance. <tt>During the period of time shown in the bar chart, the Fund's highest <br />and lowest calendar quarter returns are as follows:<br /><br />Best Quarter:&#xA0;&#xA0;2009 Q2 17.97%<br />Worst Quarter: 2011 Q3 -14.07% <br /><br />The Fund's year-to-date return as of September 30, 2012 was 9.81%.</tt> (800) 930-3828 Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Average Annual Total Returns as of 12/31/2011 Portfolio Turnover. <tt>Investing in common stocks has inherent risks that could cause you to lose<br />money. The principal risks of investing in the Alternative Income Fund, and<br />indirectly the Alternative Income Portfolio, are listed below and could<br />adversely affect the net asset value ("NAV"), total return and the value of <br />the Alternative Income Fund, Alternative Income Portfolio and your investment.<br /> <br />o&#xA0;&#xA0;Management Risks: The Alternative Income Portfolio securities selected by the <br />&#xA0;&#xA0;&#xA0;Investment Adviser may decline in value or not increase in value when the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;stock market in general is rising and may fail to meet the Alternative <br />&#xA0;&#xA0;&#xA0;Income Portfolio's, and therefore the Alternative Income Fund's, investment&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;objective. The Investment Adviser cannot guarantee the performance of the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Fund, nor can it assure you that the market value of your&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;investment will not decline.&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;<br />o&#xA0;&#xA0;Liquidity Risks: The Alternative Income Portfolio's investments in options&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;and, to the extent it invests in certain non-investment grade fixed income&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities or ETFs, makes the Alternative Income Portfolio especially&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;susceptible to the risk that during certain periods the liquidity of certain&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;issuers or industries, or all securities within particular investment&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;categories, will decrease or disappear suddenly and without warning as a&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;result of adverse market or political events, or adverse investor perceptions. <br /> <br />o&#xA0;&#xA0;Exchange-Traded Funds (ETFs): ETFs are registered investment companies whose&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;shares are listed and traded on U.S. stock exchanges or otherwise traded in&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;the over-the-counter market. In general, passively-managed ETFs seek to <br />&#xA0;&#xA0;&#xA0;track a specified securities index or a basket of securities that an "index&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;provider," such as Standard &amp; Poor's, selects as representative of a market,&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;market segment or industry sector. A passively-managed ETF is designed so that<br />&#xA0;&#xA0;&#xA0;its performance will correspond closely with that of the index it tracks.&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Conversely, actively-managed ETFs seek an investment objective by investing in<br />&#xA0;&#xA0;&#xA0;a basket of securities based on the investment strategy and discretion of the <br />&#xA0;&#xA0;&#xA0;ETF's adviser. As a shareholder in an ETF, the Alternative Income Portfolio&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;will bear its pro rata portion of an ETF's expenses, including advisory fees, <br />&#xA0;&#xA0;&#xA0;in addition to its own expenses.&#xA0;&#xA0;&#xA0;&#xA0;<br /> <br />o&#xA0;&#xA0;Foreign Securities Risks: The Alternative Income Portfolio may invest in&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;foreign securities directly or through ADRs, GDRs and IDRs. Foreign securities<br />&#xA0;&#xA0;&#xA0;can carry higher returns but involve more risks than those associated with&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;U.S. investments. Additional risks associated with investment in foreign&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities include currency fluctuations, political and economic instability, <br />&#xA0;&#xA0;&#xA0;differences in financial reporting standards and less stringent regulation of <br />&#xA0;&#xA0;&#xA0;securities markets.&#xA0;&#xA0;&#xA0;<br /> <br />o&#xA0;&#xA0;Emerging Markets Risks: The risk that the securities markets of emerging&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;countries are less liquid, are especially subject to greater price volatility,<br />&#xA0;&#xA0;&#xA0;have smaller market capitalizations, have less government regulation and are&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;not subject to as extensive and frequent accounting, financial and other&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;reporting requirements as the securities markets of more developed countries&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;as have historically been the case.&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br /> <br />o&#xA0;&#xA0;Non-Diversification Risks: As a non-diversified investment company, the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Portfolio can invest a large percentage of its assets in <br />&#xA0;&#xA0;&#xA0;a small number of issuers. As a result, a change in the value of any one&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;investment may affect the overall value of the Alternative Income Portfolio's <br />&#xA0;&#xA0;&#xA0;shares, and therefore the Alternative Income Fund's shares, more than shares&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;of a diversified mutual fund that holds more investments.&#xA0;&#xA0;<br /> <br />o&#xA0;&#xA0;Interest Rate Risk: The risk that when interest rates increase, fixed-income&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities held by the Alternative Income Portfolio will decline in&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;value. Long-term fixed-income securities will normally have more price&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;volatility because of this risk than short-term fixed-income securities.&#xA0;&#xA0;<br /> <br />o&#xA0;&#xA0;Credit/Default Risk: The risk that an issuer or guarantor of fixed-income&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities held by the Alternative Income Portfolio (which may have low credit<br />&#xA0;&#xA0;&#xA0;ratings), or the counterparty in a derivative investment, may default on its&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;obligation to pay interest and repay principal.&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;<br />o&#xA0;&#xA0;Derivatives Risks: The Alternative Income Portfolio's investments in options&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;and other derivative instruments may result in loss. Derivative instruments&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;may be illiquid, difficult to price and leveraged so that small changes may&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;produce disproportionate losses to the Alternative Income Portfolio. If a&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;secondary market does not exist for an option purchased or written by the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Portfolio, it might not be possible to effect a closing&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;transaction in the option (i.e., dispose of the option), with the result that <br />&#xA0;&#xA0;&#xA0;(1) an option purchased by the Alternative Income Portfolio would have to be&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;exercised in order for the Alternative Income Portfolio to realize any profit <br />&#xA0;&#xA0;&#xA0;and (2) the Alternative Income Portfolio may not be able to sell portfolio&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities covering an option written by it until the option expires or it&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;delivers the underlying security, upon exercise. To the extent the Alternative<br />&#xA0;&#xA0;&#xA0;Income Portfolio segregates assets to cover derivative positions, the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Portfolio may impair its ability to meet current&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;obligations, to honor requests for redemption and to manage the Alternative&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Income Portfolio properly in a manner consistent with its stated&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;investment objective.&#xA0;&#xA0;&#xA0;<br /> <br />o&#xA0;&#xA0;Option Transaction Risks: Purchasing and writing put and call options are&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;highly specialized activities and entail greater than ordinary investment&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;risks. The successful use of options depends in part on the ability of the&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Investment Adviser to manage future price fluctuations and the degree of&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;correlation between the options and securities markets. By writing put <br />&#xA0;&#xA0;&#xA0;options on equity securities, the Alternative Income Portfolio gives up the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;opportunity to benefit from potential increases in the value of the common&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;stocks above the exercise prices of the written put options, but continues <br />&#xA0;&#xA0;&#xA0;to bear the risk of declines in the value of its common stock portfolio. The&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Portfolio will receive a premium from writing a covered&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;call option that it retains whether or not the option is exercised. The&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;premium received from the written options may not be sufficient to offset any <br />&#xA0;&#xA0;&#xA0;losses sustained from the volatility of the underlying equity securities over <br />&#xA0;&#xA0;&#xA0;time.&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;<br />o&#xA0;&#xA0;REITs Risk: REITs may be affected by economic forces and other factors related<br />&#xA0;&#xA0;&#xA0;to the real estate industry. Investing in REITs may involve risks similar to&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;those associated with investing in small capitalization companies. REITs may&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;have limited financial resources, may trade less frequently and in a limited&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;volume and may be subject to more abrupt or erratic price movements than&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;larger company securities. Historically, small capitalization stocks, such as <br />&#xA0;&#xA0;&#xA0;REITs, have been more volatile in price than the larger capitalization stocks <br />&#xA0;&#xA0;&#xA0;included in the S&amp;P 500&#xAE; Index.&#xA0;&#xA0;&#xA0;<br /> <br />Who may want to invest?<br />The Alternative Income Fund may be appropriate for investors who:<br /> <br />o&#xA0;&#xA0;wish to generate income and capital; <br /> <br />o&#xA0;&#xA0;want to diversify their portfolios; <br /> <br />o&#xA0;&#xA0;want to allocate some portion of their long-term investments to international <br />&#xA0;&#xA0;&#xA0;equity investing;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br /> <br />o&#xA0;&#xA0;are willing to accept the volatility associated with equity investing; and <br /> <br />o&#xA0;&#xA0;are comfortable with the risks described herein.</tt> Fees and Expenses of the Fund Principal Investment Strategy http://www.kineticsfunds.com <tt>The bar chart and table shown below illustrate the variability of the<br />Alternative Income Fund's returns. The bar chart indicates the risks of<br />investing in the Alternative Income Fund by showing the changes in the<br />Alternative Income Fund's performance from year to year (on a calendar <br />year basis). The table shows how the Alternative Income Fund's average <br />annual returns, before and after taxes, compare with those of a broad <br />measure of market performance. The past performance of the Alternative <br />Income Fund, before and after taxes, is not necessarily an indication <br />of how the Alternative Income Fund or the Alternative Income Portfolio <br />will perform in the future. Updated performance information is available <br />on the Fund's website at http://www.kineticsfunds.com or by calling the <br />Fund toll-free at (800) 930-3828.<br /> <br />Important note about performance reflecting the Fund's prior investment<br />strategy. The performance shown prior to January 1, 2013 reflects a previous<br />investment objective and strategy. The Fund sought long-term growth of <br />capital as its primary investment objective with a secondary objective to <br />obtain current income while investing at least 80% of its assets in securities <br />of companies engaged in water infrastructure and natural resources with a <br />specific water theme and related activities. After January 1, 2013, the Fund's <br />performance will reflect the significantly different investment objective <br />of seeking to generate income and capital gains with long-term growth of <br />capital as its secondary investment objective while investing in primarily <br />fixed income securities while utilizing an options strategy.</tt> <tt>This table describes the fees and expenses you may pay if you buy and hold<br />shares of the Alternative Income Fund.</tt> <div style="display:none">~ http://www.kineticsfunds.com/role/OperatingExpensesData_S000017862Member2 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div> <div style="display:none">~ http://www.kineticsfunds.com/role/PerformanceTableData_S000017862Member2 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * column rr_PerformanceMeasureAxis compact * row primary compact * ~</div> <tt>The Alternative Income Fund's after-tax returns as shown in the following table<br />are calculated using the historical highest individual federal marginal income<br />tax rates and do not reflect the impact of state and local taxes. Your actual<br />after-tax returns depend on your tax situation and may differ from those shown. <br />If you own Fund shares in a tax-deferred account, such as a 401(k) plan or an <br />individual retirement account ("IRA"), the information on after-tax returns is <br />not relevant to your investment.</tt> <div style="display:none">~ http://www.kineticsfunds.com/role/ShareholderFeesData_S000017862Member2 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div> Palisades Water Index (reflects no deductions for fees, expenses or taxes) -0.1094 -0.0364 2007-06-29 ISE Water Index (reflects no deductions for fees, expenses or taxes) -0.0627 -0.0113 2007-06-29 S&P 500® Index (reflects no deductions for fees, expenses or taxes) 0.0211 -0.0175 2007-06-29 Barclays U.S. 1-3 Year Credit Index (reflects no deductions for fees, expenses or taxes) 0.0175 0.0469 2007-06-29 The Alternative Income Fund (KWIIX) Institutional Return After Taxes on Distributions and Sale of Fund Shares -0.0281 -0.0365 2007-06-29 The Alternative Income Fund (KWIIX) Institutional Return After Taxes on Distributions -0.0518 -0.0449 2007-06-29 KWIIX Worst Quarter: Best Quarter: 0.00 2012-09-30 The Alternative Income Fund (KWIIX) Institutional Return Before Taxes 0.0020 82 2009-06-30 526 -0.1407 -0.0127 -0.0438 2299 -0.0200 996 0.1797 -0.0443 0.0112 -0.2505 0.0090 2014-01-01 2011-09-30 0.1694 year-to-date 0.0092 -0.0443 0.00 0.0080 0.0207 -0.0423 2007-06-29 0.0981 0.0005 As a non-diversified investment company, the Alternative Income Portfolio can invest a large percentage of its assets in a small number of issuers. As a result, a change in the value of any one investment may affect the overall value of the Alternative Income Portfolio's shares, and therefore the Alternative Income Fund's shares, more than shares of a diversified mutual fund that holds more investments. <tt>The Alternative Income Portfolio pays transaction costs, such as commissions, <br />when it buys and sells securities (or "turns over" its portfolio). A higher <br />portfolio turnover rate may indicate higher transaction costs and may result in <br />higher taxes when Fund shares are held in a taxable account. These costs, which <br />are not reflected in Annual Fund Operating Expenses or in the example, affect <br />the Alternative Income Portfolio's, and therefore the Alternative Income Fund's,<br />performance. During the most recent fiscal year, the Alternative Income Portfolio's <br />portfolio turnover rate was 69% of the average value of its portfolio. However, that <br />portfolio turnover rate reflects a pervious investment strategy. Had the Alternative <br />Income Portfolio followed its current investment strategy during that period, it is <br />likely that the portfolio turnover would have been higher.</tt> <div style="display:none">~ http://www.kineticsfunds.com/role/ExpenseExample_S000017862Member1 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div> <div style="display:none">~ http://www.kineticsfunds.com/role/BarChartData_S000017862Member1 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div> <tt>The primary investment objective of the Alternative Income Fund (formerly the<br />Water Infrastructure Fund) is to provide current income and gains.</tt> <tt>This Example is intended to help you compare the cost of investing in the <br />Alternative Income Fund with the cost of investing in other mutual funds.<br /> <br />This Example assumes that you invest $10,000 in the Alternative Income Fund <br />for the time periods indicated and then redeem all of your shares at the end <br />of these periods. The Example also assumes that your investment has a 5% <br />return each year and that the Alternative Income Fund's operating expenses <br />remain the same.</tt> reflects no deductions for fees, expenses or taxes <tt>The Alternative Income Fund is a non-diversified fund that invests all of its<br />investable assets in the Alternative Income Portfolio (formerly the Water<br />Infrastructure Portfolio), a series of Kinetics Portfolios Trust. Under normal<br />circumstances, the Alternative Income Portfolio will hold a diversified<br />portfolio of primarily fixed income securities and implement an equity put<br />writing option strategy intended to generate returns from the receipt of option<br />premiums. The Alternative Income Portfolio will thereby seek its primary<br />investment objective of current income and gains by collecting premiums on<br />written put options, while maintaining a portfolio of primarily fixed income<br />securities to serve as collateral to, cover obligations pursuant to written<br />options and seek the secondary objective of long-term growth of capital.<br /> <br />The Alternative Income Portfolio will implement option strategies on market<br />indexes, exchange-traded funds ("ETFs") or company specific equity securities,<br />receiving up-front cash payments from the purchasers of these options in<br />exchange for providing the purchasers with the right to potentially sell an<br />underlying security to the Alternative Income Portfolio. If the prevailing<br />market value of the underlying equity securities on an expiration date exceeds<br />the exercise price of the put option that the Alternative Income Portfolio has<br />written, it is expected that the option will not be exercised. In such instance,<br />the Alternative Income Portfolio would not be required to purchase any<br />securities and the received premium would be considered income.&#xA0;&#xA0;<br /> <br />At the time of writing (selling) a put option, the aggregated amount of all the<br />notional obligations of the option positions (the sum of all the exercise prices<br />referenced) held by the Alternative Income Portfolio may not exceed 100% of the<br />Alternative Income Portfolio's total assets. In this way, the Alternative Income<br />Portfolio intends to have available at all times cash or fixed income investments <br />to satisfy any obligations to purchase securities pursuant to options written.<br /> <br />The Investment Adviser will select option investments based on market volatility<br />levels, underlying security valuations and perceived market risks. Further, the<br />Investment Adviser evaluates relative option premiums and implied volatilities<br />in determining preferred option contract terms, such as exercise prices and<br />expiration dates. The Alternative Income Portfolio will typically buy or sell<br />exchange-traded options on market indexes, diversified and non-diversified ETFs,<br />and U.S. listed stocks of individual companies including American Depositary<br />Receipts ("ADRs") and real estate investment trusts ("REITs"). To the extent <br />the Alternative Income Portfolio buys or sells options on single stock equity<br />securities, the aggregate notional exposure to a specific underlying company<br />will typically not exceed 5% of the Alternative Income Portfolio's net assets <br />at the time of investment.<br /> <br />To satisfy collateral requirements related to written options and provide full<br />coverage of potential security purchase obligations related to written options,<br />the Alternative Income Portfolio may invest up to 100% of its net assets in<br />fixed income securities including cash or cash equivalents, fixed income<br />closed-end funds ("CEFs") and ETFs. There are no limitations as to the<br />maturities or credit ratings of the fixed income securities in which the<br />Alternative Income Portfolio may invest, however, fixed income securities <br />held by the Alternative Income Portfolio are generally issued by the U.S. <br />Government or investment grade, large capitalization U.S. companies.<br /> <br />In managing the Alternative Income Portfolio's fixed income holdings, the<br />Investment Adviser will focus on achieving a reasonable risk-adjusted return<br />with an emphasis on capital preservation, while seeking long term growth of<br />capital.&#xA0;&#xA0;The Investment Adviser will select fixed income securities based <br />on market liquidity, duration risk, credit risk, and yield to maturity.<br /> <br />In connection with the Alternative Income Portfolio's positions in derivatives,<br />the Alternative Income Portfolio will segregate liquid assets or will otherwise<br />cover its position in accordance with applicable Securities and Exchange<br />Commission ("SEC") requirements.</tt> THE ALTERNATIVE INCOME FUND <tt>The Alternative Income Fund seeks to obtain long-term growth of capital as a<br />secondary objective. The Alternative Income Fund is the sole "feeder fund" to<br />The Alternative Income Portfolio, a series of Kinetics Portfolios Trust.</tt> Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to average net assets before expense reimbursement found in the "Financial Highlights" section of this Prospectus which reflects the Alternative Income Fund's operating expenses and does not include Acquired Fund Fees and Expenses ("AFFE"). Effective January 1, 2013, the Barclays U.S. 1-3 Year Credit Index has replaced the S&P 500 as a more appropriate broad-based market index. You may qualify for sales charge discounts for Advisor Class A shares if you and your family invest, or agree to invest in the future, at least $50,000 in Advisor Class A shares of the Kinetics Funds. Example. The after-tax returns for the Alternative Income Fund's Advisor Class A shares as shown in the following table are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Investment Objectives The past performance of the Alternative Income Fund, before and after taxes, is not necessarily an indication of how the Alternative Income Fund or the Alternative Income Portfolio will perform in the future. Investing in common stocks has inherent risks that could cause you to lose money. Principal Investment Risks Shareholder Transaction Expenses (fees paid directly from your investment) Although your actual costs may be higher or lower, based on these assumptions your cost for the Alternative Income Fund would be: 0.69 Your actual after-tax returns depend on your tax situation and may differ from those shown. If you own Fund shares in a tax-deferred account, such as a 401(k) plan or an individual retirement account ("IRA"), the information on after-tax returns is not relevant to your investment. The Alternative Income Fund - Advisor Class A Calendar Year Returns as of 12/31 Sales charges are not reflected in the bar chart. If these amounts were reflected, returns would be less than those shown. Performance 50000 <tt>Effective January 1, 2013, the Barclays U.S. 1-3 Year Credit Index has replaced<br />the S&amp;P 500 as a more appropriate broad-based market index. This change reflects<br />the Alternative Income Fund's revised investment strategy that does not<br />primarily invest in equity securities. Additionally, because the Fund changed<br />its investment strategy such that it no longer concentrates in the water<br />industry, effective January 1, 2013, the ISE Water Index and Palisades Water<br />Index have been removed as they are no longer appropriate comparative benchmarks<br />for the Alternative Income Fund.</tt> The bar chart and table shown below illustrate the variability of the Alternative Income Fund's returns. The bar chart indicates the risks of investing in the Alternative Income Fund by showing the changes in the Alternative Income Fund's performance from year to year (on a calendar year basis). The table shows how the Alternative Income Fund's average annual returns, before and after taxes (after taking into account any sales charges) compare with those of a broad measure of market performance. <tt>Sales charges are not reflected in the bar chart. If these amounts were<br />reflected, returns would be less than those shown.<br /> <br />During the period of time shown in the bar chart, the Fund's highest and <br />lowest calendar quarter returns are as follows:<br /><br />Best Quarter:&#xA0;&#xA0;2009 Q2 17.81% <br />Worst Quarter: 2011 Q3 -14.15% <br /><br />The Fund's year-to-date return as of September 30, 2012 was 9.38%.</tt> (800) 930-3828 Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) Average Annual Total Returns as of 12/31/2011 Portfolio Turnover. <tt>Investing in common stocks has inherent risks that could cause you to lose<br />money. The principal risks of investing in the Alternative Income Fund, and<br />indirectly the Alternative Income Portfolio, are listed below and could<br />adversely affect the net asset value ("NAV"), total return and the value of the<br />Alternative Income Fund, Alternative Income Portfolio and your investment.<br /> <br />o&#xA0;&#xA0;Management Risks: The Alternative Income Portfolio securities selected by the <br />&#xA0;&#xA0;&#xA0;Investment Adviser may decline in value or not increase in value when the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;stock market in general is rising and may fail to meet the Alternative <br />&#xA0;&#xA0;&#xA0;Income Portfolio's, and therefore the Alternative Income Fund's, investment&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;objective. The Investment Adviser cannot guarantee the performance of the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Fund, nor can it assure you that the market value of your&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;investment will not decline.&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br /> <br />o&#xA0;&#xA0;Liquidity Risks: The Alternative Income Portfolio's investments in options&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;and, to the extent it invests in certain non-investment grade fixed income&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities or ETFs, makes the Alternative Income Portfolio especially&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;susceptible to the risk that during certain periods the liquidity of certain&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;issuers or industries, or all securities within particular investment&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;categories, will decrease or disappear suddenly and without warning as a&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;result of adverse market or political events, or adverse investor perceptions.<br /> <br />o&#xA0;&#xA0;Exchange-Traded Funds (ETFs): ETFs are registered investment companies whose&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;shares are listed and traded on U.S. stock exchanges or otherwise traded in&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;the over-the-counter market. In general, passively-managed ETFs seek to <br />&#xA0;&#xA0;&#xA0;track a specified securities index or a basket of securities that an "index&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;provider," such as Standard &amp; Poor's, selects as representative of a market,&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;market segment or industry sector. A passively-managed ETF is designed so that<br />&#xA0;&#xA0;&#xA0;its performance will correspond closely with that of the index it tracks.&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Conversely, actively-managed ETFs seek an investment objective by investing in<br />&#xA0;&#xA0;&#xA0;a basket of securities based on the investment strategy and discretion of the <br />&#xA0;&#xA0;&#xA0;ETF's adviser. As a shareholder in an ETF, the Alternative Income Portfolio&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;will bear its pro rata portion of an ETF's expenses, including advisory fees, <br />&#xA0;&#xA0;&#xA0;in addition to its own expenses.&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br /> <br />o&#xA0;&#xA0;Foreign Securities Risks: The Alternative Income Portfolio may invest in&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;foreign securities directly or through ADRs, GDRs and IDRs. Foreign securities<br />&#xA0;&#xA0;&#xA0;can carry higher returns but involve more risks than those associated with&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;U.S. investments. Additional risks associated with investment in foreign&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities include currency fluctuations, political and economic instability, <br />&#xA0;&#xA0;&#xA0;differences in financial reporting standards and less stringent regulation of <br />&#xA0;&#xA0;&#xA0;securities markets.&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br /> <br />o&#xA0;&#xA0;Emerging Markets Risks: The risk that the securities markets of emerging&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;countries are less liquid, are especially subject to greater price volatility,<br />&#xA0;&#xA0;&#xA0;have smaller market capitalizations, have less government regulation and are&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;not subject to as extensive and frequent accounting, financial and other&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;reporting requirements as the securities markets of more developed countries&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;as have historically been the case. <br /> <br />o&#xA0;&#xA0;Non-Diversification Risks: As a non-diversified investment company, the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Portfolio can invest a large percentage of its assets <br />&#xA0;&#xA0;&#xA0;in a small number of issuers. As a result, a change in the value of any one&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;investment may affect the overall value of the Alternative Income Portfolio's <br />&#xA0;&#xA0;&#xA0;shares, and therefore the Alternative Income Fund's shares, more than shares&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;of a diversified mutual fund that holds more investments. <br /> <br />o&#xA0;&#xA0;Interest Rate Risk: The risk that when interest rates increase, fixed-income&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities held by the Alternative Income Portfolio will decline in&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;value. Long-term fixed-income securities will normally have more price&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;volatility because of this risk than short-term fixed-income securities. <br /> <br />o&#xA0;&#xA0;Credit/Default Risk: The risk that an issuer or guarantor of fixed-income&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities held by the Alternative Income Portfolio (which may have low credit<br />&#xA0;&#xA0;&#xA0;ratings), or the counterparty in a derivative investment, may default on its&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;obligation to pay interest and repay principal.&#xA0;&#xA0;<br /> <br />o&#xA0;&#xA0;Derivatives Risks: The Alternative Income Portfolio's investments in options&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;and other derivative instruments may result in loss. Derivative instruments&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;may be illiquid, difficult to price and leveraged so that small changes may&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;produce disproportionate losses to the Alternative Income Portfolio. If a&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;secondary market does not exist for an option purchased or written by the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Portfolio, it might not be possible to effect a closing&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;transaction in the option (i.e., dispose of the option), with the result that <br />&#xA0;&#xA0;&#xA0;(1) an option purchased by the Alternative Income Portfolio would have to be&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;exercised in order for the Alternative Income Portfolio to realize any profit <br />&#xA0;&#xA0;&#xA0;and (2) the Alternative Income Portfolio may not be able to sell portfolio&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;securities covering an option written by it until the option expires or it&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;delivers the underlying security, upon exercise. To the extent the Alternative<br />&#xA0;&#xA0;&#xA0;Income Portfolio segregates assets to cover derivative positions, the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Portfolio may impair its ability to meet current&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;obligations, to honor requests for redemption and to manage the Alternative&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Income Portfolio properly in a manner consistent with its stated investment&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;objective.&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;<br />o&#xA0;&#xA0;Option Transaction Risks: Purchasing and writing put and call options are&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;highly specialized activities and entail greater than ordinary investment&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;risks. The successful use of options depends in part on the ability of the&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Investment Adviser to manage future price fluctuations and the degree of&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;correlation between the options and securities markets. By writing put <br />&#xA0;&#xA0;&#xA0;options on equity securities, the Alternative Income Portfolio gives up the&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;opportunity to benefit from potential increases in the value of the common&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;stocks above the exercise prices of the written put options, but continues to <br />&#xA0;&#xA0;&#xA0;bear the risk of declines in the value of its common stock portfolio. The&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;Alternative Income Portfolio will receive a premium from writing a covered&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;call option that it retains whether or not the option is exercised. The&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;premium received from the written options may not be sufficient to offset any <br />&#xA0;&#xA0;&#xA0;losses sustained from the volatility of the underlying equity securities over <br />&#xA0;&#xA0;&#xA0;time.&#xA0;&#xA0;&#xA0;<br /> <br />o&#xA0;&#xA0;REITs Risk: REITs may be affected by economic forces and other factors related<br />&#xA0;&#xA0;&#xA0;to the real estate industry. Investing in REITs may involve risks similar to&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;those associated with investing in small capitalization companies. REITs may&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;have limited financial resources, may trade less frequently and in a limited&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;volume and may be subject to more abrupt or erratic price movements than&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;&#xA0;larger company securities. Historically, small capitalization stocks, such as <br />&#xA0;&#xA0;&#xA0;REITs, have been more volatile in price than the larger capitalization stocks <br />&#xA0;&#xA0;&#xA0;included in the S&amp;P 500&#xAE; Index. <br /> <br />Who may want to invest?<br />The Alternative Income Fund may be appropriate for investors who:<br /> <br />o&#xA0;&#xA0;wish to generate income and capital; <br /> <br />o&#xA0;&#xA0;want to diversify their portfolios; <br /> <br />o&#xA0;&#xA0;want to allocate some portion of their long-term investments to international <br />&#xA0;&#xA0;&#xA0;equity investing;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;<br />&#xA0;&#xA0;<br />o&#xA0;&#xA0;are willing to accept the volatility associated with equity investing; and <br /> <br />o&#xA0;&#xA0;are comfortable with the risks described herein.</tt> Fees and Expenses of the Fund After-tax returns for Advisor Class C shares will differ. Principal Investment Strategy http://www.kineticsfunds.com <tt>The bar chart and table shown below illustrate the variability of the<br />Alternative Income Fund's returns. The bar chart indicates the risks of<br />investing in the Alternative Income Fund by showing the changes in the<br />Alternative Income Fund's performance from year to year (on a calendar year<br />basis). The table shows how the Alternative Income Fund's average annual<br />returns, before and after taxes (after taking into account any sales charges)<br />compare with those of a broad measure of market performance. The past<br />performance of the Alternative Income Fund, before and after taxes, is not<br />necessarily an indication of how the Alternative Income Fund or the Alternative<br />Income Portfolio will perform in the future. The bar chart shows how the<br />performance of Advisor Class A shares (the Class with the longest period of<br />annual returns) has varied from year to year. The returns for Advisor Class C<br />shares were different than the returns shown below because each Class of shares<br />has different expenses. Updated performance information is available on the<br />Fund's website at http://www.kineticsfunds.com or by calling the Fund toll-free<br />at (800) 930-3828.<br /> <br />Important note about performance reflecting the Fund's prior investment<br />strategy. The performance shown prior to January 1, 2013 reflects a previous<br />investment objective and strategy. The Fund sought long-term growth of capital<br />as its primary investment objective with a secondary objective to obtain current<br />income while investing at least 80% of its assets in securities of companies<br />engaged in water infrastructure and natural resources with a specific water<br />theme and related activities. After December January 1, 2013, the Fund's<br />performance will reflect the significantly different investment objective of<br />seeking to generate income and capital gains with long-term growth of capital as<br />its secondary investment objective while investing in primarily fixed income<br />securities while utilizing an options strategy.</tt> <tt>This table describes the fees and expenses you may pay if you buy and hold<br />shares of the Alternative Income Fund. You may qualify for sales charge<br />discounts for Advisor Class A shares if you and your family invest, or agree <br />to invest in the future, at least $50,000 in Advisor Class A shares of the <br />Kinetics Funds. More information about these and other discounts is available <br />from your financial professional and in the sections titled "Description of <br />Advisor Classes" beginning on page 25 of the Fund's prospectus and "Purchasing <br />Shares" beginning on page 14 of the Fund's statement of additional information.</tt> <div style="display:none">~ http://www.kineticsfunds.com/role/OperatingExpensesData_S000017862Member1 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div> <div style="display:none">~ http://www.kineticsfunds.com/role/PerformanceTableData_S000017862Member1 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * column rr_PerformanceMeasureAxis compact * row primary compact * ~</div> <tt>The after-tax returns for the Alternative Income Fund's Advisor Class A shares<br />as shown in the following table are calculated using the historical highest<br />individual federal marginal income tax rates and do not reflect the impact <br />of state and local taxes. Your actual after-tax returns depend on your tax<br />situation and may differ from those shown. If you own Fund shares in a<br />tax-deferred account, such as a 401(k) plan or an individual retirement <br />account("IRA"), the information on after-tax returns is not relevant to <br />your investment. After-tax returns are shown for Advisor Class A shares<br />only. After-tax returns for Advisor Class C shares will differ.</tt> <div style="display:none">~ http://www.kineticsfunds.com/role/ShareholderFeesData_S000017862Member1 column dei_LegalEntityAxis compact * column rr_ProspectusShareClassAxis compact * row primary compact * ~</div> Palisades Water Index (reflects no deductions for fees, expenses or taxes) -0.1094 -0.0364 2007-06-29 ISE Water Index (reflects no deductions for fees, expenses or taxes) -0.0627 -0.0113 2007-06-29 S&P 500® Index (reflects no deductions for fees, expenses or taxes) 0.0211 -0.0175 2007-06-29 Barclays U.S. 1-3 Year Credit Index (reflects no deductions for fees, expenses or taxes) 0.0175 0.0469 2007-06-29 The Alternative Income Fund (KWIAX) Advisor Class A Return After Taxes on Distributions and Sale of Fund Shares -0.0681 -0.0507 2007-06-29 The Alternative Income Fund (KWIAX) Advisor Class A Return After Taxes on Distributions -0.1108 -0.0616 2007-06-29 KWICX 0.0000 The Alternative Income Fund (KWICX) Advisor Class C Return Before Taxes 0.0025 178 783 -0.0112 3115 -0.0200 1415 -0.0551 0.0117 0.0090 2014-01-01 0.0092 0.0075 0.0175 0.0287 -0.0520 2007-06-29 0.0005 KWIAX Worst Quarter: Best Quarter: 0.0575 2012-09-30 The Alternative Income Fund (KWIAX) Advisor Class A Return Before Taxes 0.0025 695 2009-06-30 1171 -0.1415 -0.0112 -0.0480 3045 -0.0200 1672 0.1781 -0.1055 0.0117 -0.2537 0.0090 2014-01-01 2011-09-30 0.1621 year-to-date 0.0092 -0.0508 0.0025 0.0125 0.0237 -0.0598 2007-06-29 0.0938 0.0005 0001083387 ck0001083387:SummaryS000017862-1Memberck0001083387:S000017862Memberck0001083387:C000049583Member 2013-01-01 2013-01-01 0001083387 ck0001083387:SummaryS000017862-1Memberck0001083387:S000017862Memberck0001083387:C000049584Member 2013-01-01 2013-01-01 0001083387 ck0001083387:SummaryS000017862-1Memberck0001083387:S000017862Memberrr:AfterTaxesOnDistributionsMemberck0001083387:C000049583Member 2013-01-01 2013-01-01 0001083387 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ck0001083387:SummaryS000017862-3Memberck0001083387:S000017862Memberck0001083387:C000049585Member 2013-01-01 2013-01-01 0001083387 ck0001083387:SummaryS000017862-3Memberck0001083387:S000017862Memberrr:AfterTaxesOnDistributionsMemberck0001083387:C000049585Member 2013-01-01 2013-01-01 0001083387 ck0001083387:SummaryS000017862-3Memberck0001083387:S000017862Memberrr:AfterTaxesOnDistributionsAndSalesMemberck0001083387:C000049585Member 2013-01-01 2013-01-01 0001083387 ck0001083387:SummaryS000017862-3Memberck0001083387:S000017862Memberck0001083387:RRINDEX00001Member 2013-01-01 2013-01-01 0001083387 ck0001083387:SummaryS000017862-3Memberck0001083387:S000017862Memberck0001083387:RRINDEX00002Member 2013-01-01 2013-01-01 0001083387 ck0001083387:SummaryS000017862-3Memberck0001083387:S000017862Memberck0001083387:RRINDEX00003Member 2013-01-01 2013-01-01 0001083387 ck0001083387:SummaryS000017862-3Memberck0001083387:S000017862Memberck0001083387:RRINDEX00004Member 2013-01-01 2013-01-01 0001083387 ck0001083387:SummaryS000017862-3Memberck0001083387:S000017862Member 2013-01-01 2013-01-01 0001083387 2013-01-01 2013-01-01 pure iso4217:USD Because the Alternative Income Fund is the sole feeder fund to the Alternative Income Portfolio, this table and the example below reflect the aggregate expenses of the Alternative Income Fund and the Alternative Income Portfolio. Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to average net assets before expense reimbursement found in the "Financial Highlights" section of this Prospectus which reflects the Alternative Income Fund's operating expenses and does not include Acquired Fund Fees and Expenses ("AFFE"). Kinetics Asset Management LLC, the investment adviser to each portfolio ("Portfolio") of the Kinetics Portfolio Trust (the "Investment Adviser") has voluntarily agreed to waive management fees and reimburse Fund expenses so that Net Annual Fund Operating Expenses do not exceed 1.20% and 1.70%, excluding AFFE, for Advisor Class A and Advisor Class C shares, respectively, through January 1, 2014. These waivers and reimbursements may be discontinued at any time by the Investment Adviser after January 1, 2014. Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to average net assets before expense reimbursement found in the "Financial Highlights" section of this Prospectus which reflects the Alternative Income Fund's operating expenses and does not include Acquired Fund Fees and Expenses ("AFFE"). Kinetics Asset Management LLC, the investment adviser to each portfolio ("Portfolio") of the Kinetics Portfolio Trust (the "Investment Adviser") has contractually agreed to reimburse the Alternative Income Fund the portion of the shareholder servicing fee in excess of 0.05% of average daily net assets until at least January 1, 2014. In addition, the Investment Adviser to the Alternative Income Portfolio has voluntarily agreed to waive management fees and reimburse Fund expenses so that Net Annual Fund Operating Expenses do not exceed 0.75%, excluding AFFE, through January 1, 2014. These waivers and reimbursements may be discontinued at any time by the Investment Adviser after January 1, 2014. Kinetics Asset Management LLC, the investment adviser to each portfolio ("Portfolio") of the Kinetics Portfolio Trust (the "Investment Adviser") has voluntarily agreed to waive management fees and reimburse Fund expenses so that Net Annual Fund Operating Expenses do not exceed 0.95%, excluding AFFE, through January 1, 2014. These waivers and reimbursements may be discontinued at any time by the Investment Adviser after January 1, 2014. 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Kinetics Alternative Income Fund (Second Prospectus Summary) | Kinetics Alternative Income Fund
THE ALTERNATIVE INCOME FUND
Investment Objectives
The primary investment objective of the Alternative Income Fund (formerly the
Water Infrastructure Fund) is to provide current income and gains.
The Alternative Income Fund seeks to obtain long-term growth of capital as a
secondary objective. The Alternative Income Fund is the sole "feeder fund" to
The Alternative Income Portfolio, a series of Kinetics Portfolios Trust.
Fees and Expenses of the Fund
This table describes the fees and expenses you may pay if you buy and hold
shares of the Alternative Income Fund.
Shareholder Transaction Expenses (fees paid directly from your investment)
Shareholder Fees
Kinetics Alternative Income Fund
Institutional Class
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage of offering price) none
Redemption Fee (as a percentage of amount redeemed on shares held for 30 days or less, if applicable) 2.00%
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment)
Annual Fund Operating Expenses
Kinetics Alternative Income Fund
Institutional Class
Management Fees [1] 0.90%
Distribution (Rule 12b-1) Fees none
Shareholder Servicing Fees 0.20%
Other Operating Expenses 0.92%
Other Expenses 1.12%
Acquired Fund Fees and Expenses 0.05%
Total Annual Fund Operating Expenses [2] 2.07%
Less: Fee Waiver [3] 1.27%
Net Annual Fund Operating Expenses 0.80%
[1] Because the Alternative Income Fund is the sole feeder fund to the Alternative Income Portfolio, this table and the example below reflect the aggregate expenses of the Alternative Income Fund and the Alternative Income Portfolio.
[2] Total Annual Fund Operating Expenses do not correlate to the ratio of expenses to average net assets before expense reimbursement found in the "Financial Highlights" section of this Prospectus which reflects the Alternative Income Fund's operating expenses and does not include Acquired Fund Fees and Expenses ("AFFE").
[3] Kinetics Asset Management LLC, the investment adviser to each portfolio ("Portfolio") of the Kinetics Portfolio Trust (the "Investment Adviser") has contractually agreed to reimburse the Alternative Income Fund the portion of the shareholder servicing fee in excess of 0.05% of average daily net assets until at least January 1, 2014. In addition, the Investment Adviser to the Alternative Income Portfolio has voluntarily agreed to waive management fees and reimburse Fund expenses so that Net Annual Fund Operating Expenses do not exceed 0.75%, excluding AFFE, through January 1, 2014. These waivers and reimbursements may be discontinued at any time by the Investment Adviser after January 1, 2014.
Example.
This Example is intended to help you compare the cost of investing in
the Alternative Income Fund with the cost of investing in other mutual
funds.

This Example assumes that you invest $10,000 in the Alternative Income Fund
for the time periods indicated and then redeem all of your shares at the end
of these periods. The Example also assumes that your investment has a 5% return
each year and that the Alternative Income Fund's operating expenses remain the
same.
Although your actual costs may be higher or lower, based on these assumptions your cost for the Alternative Income Fund would be:
Expense Example (USD $)
Expense Example, with Redemption, 1 Year
Expense Example, with Redemption, 3 Years
Expense Example, with Redemption, 5 Years
Expense Example, with Redemption, 10 Years
Kinetics Alternative Income Fund Institutional Class
82 526 996 2,299
Portfolio Turnover.
The Alternative Income Portfolio pays transaction costs, such as commissions,
when it buys and sells securities (or "turns over" its portfolio). A higher
portfolio turnover rate may indicate higher transaction costs and may result in
higher taxes when Fund shares are held in a taxable account. These costs, which
are not reflected in Annual Fund Operating Expenses or in the example, affect
the Alternative Income Portfolio's, and therefore the Alternative Income Fund's,
performance. During the most recent fiscal year, the Alternative Income
Portfolio's portfolio turnover rate was 69% of the average value of its portfolio.
However, that portfolio turnover rate reflects a pervious investment strategy. Had
the Alternative Income Portfolio followed its current investment strategy during
that period, it is likely that the portfolio turnover would have been higher.
Principal Investment Strategy
The Alternative Income Fund is a non-diversified fund that invests all of
its investable assets in the Alternative Income Portfolio (formerly the
Water Infrastructure Portfolio), a series of Kinetics Portfolios Trust.
Under normal circumstances, the Alternative Income Portfolio will hold a
diversified portfolio of primarily fixed income securities and implement
an  equity put writing option strategy intended to generate returns from the
receipt of option premiums. The Alternative Income Portfolio will thereby seek
its primary investment objective of current income and gains by collecting premiums
on written put options, while maintaining a portfolio of primarily fixed income
securities to serve as collateral to, cover obligations pursuant to written
options and seek the secondary objective of long-term growth of capital.

The Alternative Income Portfolio will implement option strategies on market
indexes, exchange-traded funds ("ETFs") or company specific equity securities,
receiving up-front cash payments from the purchasers of these options in
exchange for providing the purchasers with the right to potentially sell an
underlying security to the Alternative Income Portfolio. If the prevailing
market value of the underlying equity securities on an expiration date exceeds
the exercise price of the put option that the Alternative Income Portfolio has
written, it is expected that the option will not be exercised. In such instance,
the Alternative Income Portfolio would not be required to purchase any
securities and the received premium would be considered income.  

At the time of writing (selling) a put option, the aggregated amount of all the
notional obligations of the option positions (the sum of all the exercise prices
referenced) held by the Alternative Income Portfolio may not exceed 100% of the
Alternative Income Portfolio's total assets. In this way, the Alternative Income
Portfolio intends to have available at all times cash or fixed income investments
to satisfy any obligations to purchase securities pursuant to options written.

The Investment Adviser will select option investments based on market volatility
levels, underlying security valuations and perceived market risks. Further, the
Investment Adviser evaluates relative option premiums and implied volatilities
in determining preferred option contract terms, such as exercise prices and
expiration dates. The Alternative Income Portfolio will typically buy or sell
exchange-traded options on market indexes, diversified and non-diversified ETFs,
and U.S. listed stocks of individual companies including American Depositary
Receipts ("ADRs") and real estate investment trusts ("REITs"). To the extent the
Alternative Income Portfolio buys or sells options on single stock equity
securities, the aggregate notional exposure to a specific underlying company
will typically not exceed 5% of the Alternative Income Portfolio's net assets at
the time of investment.

To satisfy collateral requirements related to written options and provide full
coverage of potential security purchase obligations related to written options,
the Alternative Income Portfolio may invest up to 100% of its net assets in
fixed income securities including cash or cash equivalents, fixed income
closed-end funds ("CEFs") and ETFs. There are no limitations as to the
maturities or credit ratings of the fixed income securities in which the
Alternative Income Portfolio may invest, however, fixed income securities held
by the Alternative Income Portfolio are generally issued by the U.S. Government
or investment grade, large capitalization U.S. companies.

In managing the Alternative Income Portfolio's fixed income holdings, the
Investment Adviser will focus on achieving a reasonable risk-adjusted return
with an emphasis on capital preservation, while seeking long term growth of
capital.  The Investment Adviser will select fixed income securities based on
market liquidity, duration risk, credit risk, and yield to maturity.

In connection with the Alternative Income Portfolio's positions in derivatives,
the Alternative Income Portfolio will segregate liquid assets or will otherwise
cover its position in accordance with applicable Securities and Exchange
Commission ("SEC") requirements.
Principal Investment Risks
Investing in common stocks has inherent risks that could cause you to lose
money. The principal risks of investing in the Alternative Income Fund, and
indirectly the Alternative Income Portfolio, are listed below and could
adversely affect the net asset value ("NAV"), total return and the value of
the Alternative Income Fund, Alternative Income Portfolio and your investment.

o  Management Risks: The Alternative Income Portfolio securities selected by the
   Investment Adviser may decline in value or not increase in value when the     
   stock market in general is rising and may fail to meet the Alternative
   Income Portfolio's, and therefore the Alternative Income Fund's, investment          
   objective. The Investment Adviser cannot guarantee the performance of the     
   Alternative Income Fund, nor can it assure you that the market value of your  
   investment will not decline.                                                  
  
o  Liquidity Risks: The Alternative Income Portfolio's investments in options    
   and, to the extent it invests in certain non-investment grade fixed income    
   securities or ETFs, makes the Alternative Income Portfolio especially         
   susceptible to the risk that during certain periods the liquidity of certain  
   issuers or industries, or all securities within particular investment         
   categories, will decrease or disappear suddenly and without warning as a      
   result of adverse market or political events, or adverse investor perceptions.

o  Exchange-Traded Funds (ETFs): ETFs are registered investment companies whose  
   shares are listed and traded on U.S. stock exchanges or otherwise traded in   
   the over-the-counter market. In general, passively-managed ETFs seek to
   track a specified securities index or a basket of securities that an "index         
   provider," such as Standard & Poor's, selects as representative of a market,  
   market segment or industry sector. A passively-managed ETF is designed so that
   its performance will correspond closely with that of the index it tracks.     
   Conversely, actively-managed ETFs seek an investment objective by investing in
   a basket of securities based on the investment strategy and discretion of the
   ETF's adviser. As a shareholder in an ETF, the Alternative Income Portfolio   
   will bear its pro rata portion of an ETF's expenses, including advisory fees,
   in addition to its own expenses.    

o  Foreign Securities Risks: The Alternative Income Portfolio may invest in      
   foreign securities directly or through ADRs, GDRs and IDRs. Foreign securities
   can carry higher returns but involve more risks than those associated with    
   U.S. investments. Additional risks associated with investment in foreign      
   securities include currency fluctuations, political and economic instability,
   differences in financial reporting standards and less stringent regulation of
   securities markets.   

o  Emerging Markets Risks: The risk that the securities markets of emerging      
   countries are less liquid, are especially subject to greater price volatility,
   have smaller market capitalizations, have less government regulation and are  
   not subject to as extensive and frequent accounting, financial and other      
   reporting requirements as the securities markets of more developed countries  
   as have historically been the case.     

o  Non-Diversification Risks: As a non-diversified investment company, the       
   Alternative Income Portfolio can invest a large percentage of its assets in
   a small number of issuers. As a result, a change in the value of any one        
   investment may affect the overall value of the Alternative Income Portfolio's
   shares, and therefore the Alternative Income Fund's shares, more than shares  
   of a diversified mutual fund that holds more investments.  

o  Interest Rate Risk: The risk that when interest rates increase, fixed-income  
   securities held by the Alternative Income Portfolio will decline in           
   value. Long-term fixed-income securities will normally have more price        
   volatility because of this risk than short-term fixed-income securities.  

o  Credit/Default Risk: The risk that an issuer or guarantor of fixed-income     
   securities held by the Alternative Income Portfolio (which may have low credit
   ratings), or the counterparty in a derivative investment, may default on its  
   obligation to pay interest and repay principal.                               
  
o  Derivatives Risks: The Alternative Income Portfolio's investments in options  
   and other derivative instruments may result in loss. Derivative instruments   
   may be illiquid, difficult to price and leveraged so that small changes may   
   produce disproportionate losses to the Alternative Income Portfolio. If a     
   secondary market does not exist for an option purchased or written by the     
   Alternative Income Portfolio, it might not be possible to effect a closing    
   transaction in the option (i.e., dispose of the option), with the result that
   (1) an option purchased by the Alternative Income Portfolio would have to be  
   exercised in order for the Alternative Income Portfolio to realize any profit
   and (2) the Alternative Income Portfolio may not be able to sell portfolio    
   securities covering an option written by it until the option expires or it    
   delivers the underlying security, upon exercise. To the extent the Alternative
   Income Portfolio segregates assets to cover derivative positions, the         
   Alternative Income Portfolio may impair its ability to meet current           
   obligations, to honor requests for redemption and to manage the Alternative   
   Income Portfolio properly in a manner consistent with its stated              
   investment objective.   

o  Option Transaction Risks: Purchasing and writing put and call options are     
   highly specialized activities and entail greater than ordinary investment     
   risks. The successful use of options depends in part on the ability of the    
   Investment Adviser to manage future price fluctuations and the degree of      
   correlation between the options and securities markets. By writing put
   options on equity securities, the Alternative Income Portfolio gives up the           
   opportunity to benefit from potential increases in the value of the common    
   stocks above the exercise prices of the written put options, but continues
   to bear the risk of declines in the value of its common stock portfolio. The     
   Alternative Income Portfolio will receive a premium from writing a covered    
   call option that it retains whether or not the option is exercised. The       
   premium received from the written options may not be sufficient to offset any
   losses sustained from the volatility of the underlying equity securities over
   time.                                                                         
  
o  REITs Risk: REITs may be affected by economic forces and other factors related
   to the real estate industry. Investing in REITs may involve risks similar to  
   those associated with investing in small capitalization companies. REITs may  
   have limited financial resources, may trade less frequently and in a limited  
   volume and may be subject to more abrupt or erratic price movements than      
   larger company securities. Historically, small capitalization stocks, such as
   REITs, have been more volatile in price than the larger capitalization stocks
   included in the S&P 500® Index.   

Who may want to invest?
The Alternative Income Fund may be appropriate for investors who:

o  wish to generate income and capital;

o  want to diversify their portfolios;

o  want to allocate some portion of their long-term investments to international
   equity investing;      

o  are willing to accept the volatility associated with equity investing; and

o  are comfortable with the risks described herein.
Performance
The bar chart and table shown below illustrate the variability of the
Alternative Income Fund's returns. The bar chart indicates the risks of
investing in the Alternative Income Fund by showing the changes in the
Alternative Income Fund's performance from year to year (on a calendar
year basis). The table shows how the Alternative Income Fund's average
annual returns, before and after taxes, compare with those of a broad
measure of market performance. The past performance of the Alternative
Income Fund, before and after taxes, is not necessarily an indication
of how the Alternative Income Fund or the Alternative Income Portfolio
will perform in the future. Updated performance information is available
on the Fund's website at http://www.kineticsfunds.com or by calling the
Fund toll-free at (800) 930-3828.

Important note about performance reflecting the Fund's prior investment
strategy. The performance shown prior to January 1, 2013 reflects a previous
investment objective and strategy. The Fund sought long-term growth of
capital as its primary investment objective with a secondary objective to
obtain current income while investing at least 80% of its assets in securities
of companies engaged in water infrastructure and natural resources with a
specific water theme and related activities. After January 1, 2013, the Fund's
performance will reflect the significantly different investment objective
of seeking to generate income and capital gains with long-term growth of
capital as its secondary investment objective while investing in primarily
fixed income securities while utilizing an options strategy.
The Alternative Income Fund - Institutional Class Calendar Year Returns as of 12/31
Bar Chart
During the period of time shown in the bar chart, the Fund's highest
and lowest calendar quarter returns are as follows:

Best Quarter:  2009 Q2 17.97%
Worst Quarter: 2011 Q3 -14.07%

The Fund's year-to-date return as of September 30, 2012 was 9.81%.
The Alternative Income Fund's after-tax returns as shown in the following table
are calculated using the historical highest individual federal marginal income
tax rates and do not reflect the impact of state and local taxes. Your actual
after-tax returns depend on your tax situation and may differ from those shown.
If you own Fund shares in a tax-deferred account, such as a 401(k) plan or an
individual retirement account ("IRA"), the information on after-tax returns is
not relevant to your investment.
Average Annual Total Returns as of 12/31/2011
Average Annual Total Returns Kinetics Alternative Income Fund
Label
1 Year
Since Inception
Inception Date
Institutional Class
The Alternative Income Fund (KWIIX) Institutional Return Before Taxes (4.43%) (4.23%) Jun. 29, 2007
Institutional Class After Taxes on Distributions
The Alternative Income Fund (KWIIX) Institutional Return After Taxes on Distributions (5.18%) (4.49%) Jun. 29, 2007
Institutional Class After Taxes on Distributions and Sales
The Alternative Income Fund (KWIIX) Institutional Return After Taxes on Distributions and Sale of Fund Shares (2.81%) (3.65%) Jun. 29, 2007
Barclays U.S. 1-3 Year Credit Index
Barclays U.S. 1-3 Year Credit Index (reflects no deductions for fees, expenses or taxes) 1.75% 4.69% Jun. 29, 2007
S&P 500® Index
S&P 500® Index (reflects no deductions for fees, expenses or taxes) 2.11% (1.75%) Jun. 29, 2007
ISE Water Index
ISE Water Index (reflects no deductions for fees, expenses or taxes) (6.27%) (1.13%) Jun. 29, 2007
Palisades Water Index
Palisades Water Index (reflects no deductions for fees, expenses or taxes) (10.94%) (3.64%) Jun. 29, 2007
Effective January 1, 2013, the Barclays U.S. 1-3 Year Credit Index has replaced
the S&P 500 as a more appropriate broad-based market index. This change reflects
the Alternative Income Fund's revised investment strategy that does not primarily
invest in equity securities. Additionally, because the Fund changed its investment
strategy such that it no longer concentrates in the water industry, effective
January 1, 2013, the ISE Water Index and Palisades Water Index have been removed
as they are no longer appropriate comparative benchmarks for the Alternative Income
Fund.