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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cma Treasury Fund (MM) | NASDAQ:CMTXX | NASDAQ | Ordinary Share |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.00 | - |
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
|
x
|
||||
Pre-Effective Amendment No.
|
|||||
Post-Effective Amendment No.
|
44
|
x
|
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
|
x
|
||||
Amendment No.
|
45
|
x
|
Mary Jo Reilly, Esq.
|
Drinker Biddle & Reath LLP
|
One Logan Square
|
18
th
and Cherry Streets
|
Philadelphia, PA 19103-6996
|
[ ]
|
immediately upon filing pursuant to paragraph (b)
|
[X]
|
on January 1, 2013 pursuant to paragraph (b)
|
[ ]
|
60 days after filing pursuant to paragraph (a)(1)
|
[ ]
|
on [date] pursuant to paragraph (a)(1)
|
[ ]
|
75 days after filing pursuant to paragraph (a)(2)
|
[ ]
|
on [date] pursuant to paragraph (a)(2) of Rule 485.
|
[ ]
|
This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
|
3
|
|
3
|
|
9
|
|
10
|
|
10
|
|
10
|
|
14
|
|
14
|
|
15
|
|
17
|
|
18
|
|
21
|
|
22
|
|
24
|
|
25
|
|
27
|
|
27
|
|
28
|
|
28
|
Shareholder Transaction Expenses
(fees paid directly from your investment)
|
Advisor
Class A
|
Advisor
Class C
|
|
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price)
|
5.75%
|
None
|
|
Redemption Fee (as a percentage of amount redeemed on shares held for 30 days or less, if applicable)
|
2.00%
|
2.00%
|
Annual Fund Operating Expenses
(expenses
that you pay each year as a percentage of the value of your investment
)
|
Advisor
Class A
|
Advisor
Class C
|
||
Management Fees
(1)
|
0.90%
|
0.90%
|
||
Distribution (Rule 12b-1) Fees
|
0.25%
|
0.75%
|
||
Other Expenses
|
1.17%
|
1.17%
|
||
Shareholder Servicing Fees
|
0.25% |
0.25%
|
||
Other Operating Expenses
|
0.92% |
0.92%
|
||
Acquired Fund Fees and Expenses
|
0.05%
|
0.05%
|
||
Total Annual Fund Operating Expenses
(2)
|
2.37%
|
2.87%
|
||
Less: Fee Waiver
(3)
|
1.12%
|
1.12%
|
||
Net Annual Fund Operating Expenses
|
1.25%
|
1.75%
|
(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 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.
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
|
Advisor Class A
|
$695
|
$1,171
|
$1,672
|
$3,045
|
Advisor Class C
|
$178
|
$783
|
$1,415
|
$3,115
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
wish to generate income and capital;
|
»
|
want to diversify their portfolios;
|
»
|
want to allocate some portion of their long-term investments to international equity investing;
|
»
|
are willing to accept the volatility associated with equity investing; and
|
»
|
are comfortable with the risks described herein.
|
Best Quarter:
|
2009
|
Q2
|
17.81%
|
Worst Quarter:
|
2011
|
Q3
|
-14.15%
|
1 Year
|
Since Inception
(June 29, 2007)
|
|
The Alternative Income Fund (KWIAX) Advisor Class A
|
||
Return Before Taxes
|
-10.55%
|
-5.98%
|
Return After Taxes on Distributions
|
-11.08%
|
-6.16%
|
Return After Taxes on Distributions and Sale of Fund Shares
|
-6.81%
|
-5.07%
|
The Alternative Income Fund (KWICX) Advisor Class C
|
||
Return Before Taxes
|
-5.51%
|
-5.20%
|
Barclays U.S. 1-3 Year Credit Index
(reflects no deductions for fees, expenses or taxes)
|
1.75%
|
4.69%
|
S&P 500
®
Index
(reflects no deductions for fees, expenses or taxes)
|
2.11%
|
-1.75%
|
ISE Water Index
(reflects no deductions for fees, expenses or taxes)
|
-6.27%
|
-1.13%
|
Palisades Water Index
(reflects no deductions for fees, expenses or taxes)
|
-10.94%
|
-3.64%
|
Investment team member
|
Primary Title
|
Years of Service with the Fund
|
Peter B. Doyle
|
Investment Team Member
|
1
|
Murray Stahl
|
Co-Portfolio Manager
|
1
|
David Kingsley
|
Investment Team Member
|
1
|
Derek Devens
|
Co-Portfolio Manager
|
1
|
James Davolos
|
Investment Team Member
|
>1
|
Regular Mail | Overnight or Express Mail |
Kinetics Mutual Funds, Inc. | Kinetics Mutual Funds, Inc |
The Alternative Income Fund | The Alternative Income Fund |
c/o U.S. Bancorp Fund Services, LLC | c/o U.S. Bancorp Fund Services, LLC |
P.O. Box 701 | 615 East Michigan Street, 3rd Floor |
Milwaukee, WI 53201-0701 | Milwaukee, WI 53202 |
Wire to: | U.S. Bank, N.A. | |
» | ABA Number: | 075000022 |
» | Credit: | U.S. Bancorp Fund Services, LLC |
» | Account: | 112-952-137 |
» | Further Credit: | Kinetics Mutual Funds, Inc. |
The Alternative Income Fund | ||
(Shareholder Name/Account Registration) | ||
(Shareholder Account Number) |
»
|
If ownership has changed on your account;
|
»
|
When redemption proceeds are payable or sent to any person, address or bank account not on record;
|
»
|
Written requests to wire redemption proceeds (if not previously authorized on the account);
|
»
|
When establishing or modifying certain services on an account; and
|
»
|
If a change of address request was received by the Transfer Agent within the last 15 days.
|
Regular Mail | Overnight or Express Mail |
Kinetics Mutual Funds, Inc. | Kinetics Mutual Funds, Inc |
The Alternative Income Fund | The Alternative Income Fund |
c/o U.S. Bancorp Fund Services, LLC | c/o U.S. Bancorp Fund Services, LLC |
P.O. Box 701 | 615 East Michigan Street, 3rd Floor |
Milwaukee, WI 53201-0701 | Milwaukee, WI 53202 |
»
|
indicate the name of the Fund;
|
»
|
be signed exactly as the shares are registered, including the signature of each owner (including a signature guarantee when required);
|
»
|
specify the number of shares or dollar amount to be redeemed; and
|
»
|
indicate your account registration number.
|
»
|
your Fund account number;
|
»
|
the name in which your account is registered;
|
»
|
the social security or tax identification number under which the account is registered; and
|
»
|
the address of the account holder, as stated in the Application.
|
»
|
You are an employee of a broker-dealer or agent that has a selling agreement with the distributor;
|
»
|
You buy Advisor Class A shares under a wrap program or other all inclusive fee program offered by your broker-dealer or agent; or
|
»
|
The sales charge is voluntarily waived under certain circumstances by your broker-dealer or agent at their discretion.
|
»
|
purchasing larger quantities of shares or putting a number of purchases together to obtain the quantity discounts indicated above;
|
»
|
signing a letter of intent that you intend to purchase more than $50,000 worth of shares over the next 13 months (see “Letter of Intent – Advisor Class A Shares” below);
|
»
|
using the reinvestment privilege which allows you to redeem shares and then immediately reinvest them without a sales charge within 60 days;
|
»
|
combining concurrent purchases of Advisor Class A shares from different Funds to obtain the quantity discounts indicated above; and
|
»
|
through rights of accumulation as discussed below.
|
^
|
Commencement of operations.
|
(1)
|
Information presented relates to a share of capital stock outstanding for each period.
|
(2)
|
Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
|
|
Amount calculated is less than $0.005.
|
(4)
|
The total return calculation does not reflect the 5.75% front end sales charge on Advisor Class A shares.
|
(5)
|
Not annualized.
|
(6)
|
Annualized.
|
(7)
|
Portfolio turnover rate is the annual turnover of The Alternative Income Portfolio.
|
(8)
|
Portfolio turnover rate is the turnover from inception date through year end of The Alternative Income Portfolio.
|
^
|
Commencement of operations.
|
(1)
|
Information presented relates to a share of capital stock outstanding for each period.
|
(2)
|
Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
|
(3)
|
Amount calculated is less than $0.005.
|
(4)
|
Not annualized.
|
(5)
|
Annualized.
|
(6)
|
Portfolio turnover rate is the annual turnover of The Alternative Income Portfolio.
|
(7)
|
Portfolio turnover rate is the turnover from inception date through year end of The Alternative Income Portfolio.
|
Investment Adviser
|
Kinetics Asset Management LLC
|
and Shareholder Servicing Agent
|
555 Taxter Road, Suite 175
|
|
Elmsford, NY 10523
|
Legal Counsel
|
Drinker Biddle & Reath LLP
|
|
One Logan Square
|
|
Suite 2000
|
|
Philadelphia, PA 19103-6996
|
Independent Registered Public
|
Tait, Weller & Baker LLP
|
Accounting Firm
|
1818 Market Street, Suite 2400
|
|
Philadelphia, PA 19103
|
Distributor
|
Kinetics Funds Distributor, LLC
|
|
470 Park Avenue South
|
|
New York, NY 10016
|
Transfer Agent, Fund Accountant,
|
U.S. Bancorp Fund Services, LLC
|
and Administrator
|
615 East Michigan Street
|
|
Milwaukee, WI 53202
|
Custodian
|
U.S. Bank N.A.
|
|
1555 N. River Center Drive, Suite 302
|
|
Milwaukee, WI 53212
|
1
|
|
1
|
|
7
|
|
8
|
|
8
|
|
8
|
|
12
|
|
12
|
|
13
|
|
14
|
|
16
|
|
19
|
|
19
|
|
22
|
|
23
|
|
23
|
|
23
|
|
24
|
Shareholder Transaction Expenses
(fees paid directly from your investment)
|
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)
|
Institutional
Class
|
|
Management Fees
(1)
|
0.90%
|
|
Distribution (Rule 12b-1) Fees
|
None
|
|
Other Expenses
|
1.12%
|
|
Shareholder Servicing Fees
|
0.20%
|
|
Other Operating Expenses
|
0.92%
|
|
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.
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
|
Institutional Class
|
$82
|
$526
|
$996
|
$2,299
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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
.
|
»
|
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.
|
»
|
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.
|
»
|
wish to generate income and capital;
|
»
|
want to diversify their portfolios;
|
»
|
want to allocate some portion of their long-term investments to international equity investing;
|
»
|
are willing to accept the volatility associated with equity investing; and
|
»
|
are comfortable with the risks described herein.
|
Best Quarter:
|
2009
|
Q2
|
17.97%
|
Worst Quarter:
|
2011
|
Q3
|
-14.07%
|
1 Year
|
Since
Inception
(June 29, 2007)
|
|
The Alternative Income Fund (KWIIX) Institutional
|
||
Return Before Taxes
|
-4.43%
|
-4.23%
|
Return After Taxes on Distributions
|
-5.18%
|
-4.49%
|
Return After Taxes on Distributions and Sale of Fund Shares
|
-2.81%
|
-3.65%
|
Barclays U.S. 1-3 Year Credit Index (reflects no deductions for fees, expenses or taxes)
|
1.75%
|
4.69%
|
S&P 500
®
Index
(reflects no deductions for fees, expenses or taxes)
|
2.11%
|
-1.75%
|
ISE Water Index
(reflects no deductions for fees, expenses or taxes)
|
-6.27%
|
-1.13%
|
Palisades Water Index
(reflects no deductions for fees, expenses or taxes)
|
-10.94%
|
-3.64%
|
Investment team member
|
Primary Title
|
Years of Service with the Fund
|
Peter B. Doyle
|
Investment Team Member
|
1
|
Murray Stahl
|
Co-Portfolio Manager
|
1
|
David Kingsley
|
Investment Team Member
|
1
|
Derek Devens
|
Co-Portfolio Manager
|
1
|
James Davolos
|
Investment Team Member
|
>1
|
Regular Mail | Overnight or Express Mail |
Kinetics Mutual Funds, Inc. | Kinetics Mutual Funds, Inc |
The Alternative Income Fund | The Alternative Income Fund |
c/o U.S. Bancorp Fund Services, LLC | c/o U.S. Bancorp Fund Services, LLC |
P.O. Box 701 | 615 East Michigan Street, 3rd Floor |
Milwaukee, WI 53201-0701 | Milwaukee, WI 53202 |
Wire to: | U.S. Bank, N.A. | |
» | ABA Number: | 075000022 |
» | Credit: | U.S. Bancorp Fund Services, LLC |
» | Account: | 112-952-137 |
» | Further Credit: | Kinetics Mutual Funds, Inc. |
The Alternative Income Fund | ||
(Shareholder Name/Account Registration) | ||
(Shareholder Account Number) |
»
|
If ownership has changed on your account;
|
»
|
When redemption proceeds are payable or sent to any person, address or bank account not on record;
|
»
|
Written requests to wire redemption proceeds (if not previously authorized on the account);
|
»
|
When establishing or modifying certain services on an account; and
|
»
|
If a change of address request was received by the Transfer Agent within the last 15 days.
|
Regular Mail | Overnight or Express Mail |
Kinetics Mutual Funds, Inc. | Kinetics Mutual Funds, Inc |
The Alternative Income Fund | The Alternative Income Fund |
c/o U.S. Bancorp Fund Services, LLC | c/o U.S. Bancorp Fund Services, LLC |
P.O. Box 701 | 615 East Michigan Street, 3rd Floor |
Milwaukee, WI 53201-0701 | Milwaukee, WI 53202 |
»
|
indicate the name of the Fund;
|
»
|
be signed exactly as the shares are registered, including the signature of each owner (including a signature guarantee when required);
|
»
|
specify the number of shares or dollar amount to be redeemed; and
|
»
|
indicate your account registration number.
|
»
|
your Fund account number;
|
»
|
the name in which your account is registered;
|
»
|
the social security or tax identification number under which the account is registered; and
|
»
|
the address of the account holder, as stated in the Application.
|
^
|
Commencement of operations.
|
(1)
|
Information presented relates to a share of capital stock outstanding for each period.
|
(2)
|
Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
|
(3)
|
Amount calculated is less than $0.005.
|
(4)
|
Not Annualized.
|
(5)
|
Annualized.
|
(6)
|
Portfolio turnover rate is the annual turnover of The Alternative Income Portfolio.
|
(7)
|
Portfolio turnover rate is the turnover from inception date through year end of The Alternative Income Portfolio.
|
Investment Adviser
|
Kinetics Asset Management LLC
|
and Shareholder Servicing Agent
|
555 Taxter Road, Suite 175
|
|
Elmsford, NY 10523
|
Legal Counsel
|
Drinker Biddle & Reath LLP
|
|
One Logan Square
|
|
Suite 2000
|
|
Philadelphia, PA 19103-6996
|
Independent Registered Public
|
Tait, Weller & Baker LLP
|
Accounting Firm
|
1818 Market Street, Suite 2400
|
|
Philadelphia, PA 19103
|
Distributor
|
Kinetics Funds Distributor, LLC
|
|
470 Park Avenue South
|
|
New York, NY 10016
|
Transfer Agent, Fund Accountant,
|
U.S. Bancorp Fund Services, LLC
|
and Administrator
|
615 East Michigan Street
|
|
Milwaukee, WI 53202
|
Custodian
|
U.S. Bank N.A.
|
|
1555 N. River Center Drive, Suite 302
|
|
Milwaukee, WI 53212
|
1
|
|
1
|
|
7
|
|
8
|
|
8
|
|
8
|
|
12
|
|
12
|
|
13
|
|
15
|
|
16
|
|
20
|
|
20
|
|
23
|
|
23
|
|
24
|
|
24
|
|
25
|
Shareholder Transaction Expenses
(fees paid directly from your investment)
|
No Load
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)
|
No Load
Class
|
|
Management Fees
(1)
|
0.90%
|
|
Distribution (Rule 12b-1) Fees
|
None
|
|
Other Expenses
|
1.17%
|
|
Shareholder Servicing Fees
|
0.25%
|
|
Other Operating Expenses
|
0.92%
|
|
Acquired Fund Fees and Expenses
|
0.05%
|
|
Total Annual Fund Operating Expenses
(2)
|
2.12%
|
|
Less: Fee Waiver
(3)
|
1.12%
|
|
Net Annual Fund Operating Expenses
|
1.00%
|
(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 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.
|
1 Year
|
3 Years
|
5 Years
|
10 Years
|
|
No Load Class
|
$102
|
$556
|
$1,036
|
$2,363
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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.
|
»
|
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
.
|
»
|
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.
|
»
|
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.
|
»
|
wish to generate income and capital;
|
»
|
want to diversify their portfolios;
|
»
|
want to allocate some portion of their long-term investments to international equity investing;
|
»
|
are willing to accept the volatility associated with equity investing; and
|
»
|
are comfortable with the risks described herein.
|
Best Quarter:
|
2009
|
Q2
|
17.90%
|
Worst Quarter:
|
2011
|
Q3
|
-14.09%
|
1 Year
|
Since
Inception
(June 29, 2007)
|
|
The Alternative Income Fund (KWINX) No Load
|
||
Return Before Taxes
|
-4.88%
|
-4.52%
|
Return After Taxes on Distributions
|
-5.58%
|
-4.75%
|
Return After Taxes on Distributions and Sale of Fund Shares
|
-3.11%
|
-3.89%
|
Barclays U.S. 1-3 Year Credit Index (reflects no deductions for fees, expenses or taxes)
|
1.75%
|
4.69%
|
S&P 500
®
Index
(reflects no deductions for fees, expenses or taxes)
|
2.11%
|
-1.75%
|
ISE Water Index (reflects no deductions for fees, expenses or taxes)
|
-6.27%
|
-1.13%
|
Palisades Water Index (reflects no deductions for fees, expenses or taxes)
|
-10.94%
|
-3.64%
|
Investment team member
|
Primary Title
|
Years of Service with the Fund
|
Peter B. Doyle
|
Investment Team Member
|
1
|
Murray Stahl
|
Co-Portfolio Manager
|
1
|
David Kingsley
|
Investment Team Member
|
1
|
Derek Devens
|
Co-Portfolio Manager
|
1
|
James Davolos
|
Investment Team Member
|
>1
|
Regular Mail | Overnight or Express Mail |
Kinetics Mutual Funds, Inc. | Kinetics Mutual Funds, Inc |
The Alternative Income Fund | The Alternative Income Fund |
c/o U.S. Bancorp Fund Services, LLC | c/o U.S. Bancorp Fund Services, LLC |
P.O. Box 701 | 615 East Michigan Street, 3rd Floor |
Milwaukee, WI 53201-0701 | Milwaukee, WI 53202 |
Wire to: | U.S. Bank, N.A. | |
» | ABA Number: | 075000022 |
» | Credit: | U.S. Bancorp Fund Services, LLC |
» | Account: | 112-952-137 |
» | Further Credit: | Kinetics Mutual Funds, Inc. |
The Alternative Income Fund | ||
(Shareholder Name/Account Registration) | ||
(Shareholder Account Number) |
»
|
If ownership has changed on your account;
|
»
|
When redemption proceeds are payable or sent to any person, address or bank account not on record;
|
»
|
Written requests to wire redemption proceeds (if not previously authorized on the account);
|
»
|
When establishing or modifying certain services on an account; and
|
»
|
If a change of address request was received by the Transfer Agent within the last 15 days.
|
Regular Mail | Overnight or Express Mail |
Kinetics Mutual Funds, Inc. | Kinetics Mutual Funds, Inc |
The Alternative Income Fund | The Alternative Income Fund |
c/o U.S. Bancorp Fund Services, LLC | c/o U.S. Bancorp Fund Services, LLC |
P.O. Box 701 | 615 East Michigan Street, 3rd Floor |
Milwaukee, WI 53201-0701 | Milwaukee, WI 53202 |
»
|
indicate the name of the Fund;
|
»
|
be signed exactly as the shares are registered, including the signature of each owner (including a signature guarantee when required);
|
»
|
specify the number of shares or dollar amount to be redeemed; and
|
»
|
indicate your account registration number.
|
»
|
your Fund account number;
|
»
|
the name in which your account is registered;
|
»
|
the social security or tax identification number under which the account is registered; and
|
»
|
the address of the account holder, as stated in the Application.
|
(1)
|
Information presented relates to a share of capital stock outstanding for each period.
|
(2)
|
Net investment income per share represents net investment income divided by the average shares outstanding throughout the period.
|
(3)
|
Amount calculated is less than $0.005.
|
(4)
|
Not annualized.
|
(5)
|
Annualized.
|
(6)
|
Portfolio turnover rate is the annual turnover of The Alternative Income Portfolio.
|
(7)
|
Portfolio turnover rate is the turnover from inception date through year end of The Alternative Income Portfolio.
|
Investment Adviser
|
Kinetics Asset Management LLC
|
and Shareholder Servicing Agent
|
555 Taxter Road, Suite 175
|
|
Elmsford, NY 10523
|
Legal Counsel
|
Drinker Biddle & Reath LLP
|
|
One Logan Square
|
|
Suite 2000
|
|
Philadelphia, PA 19103-6996
|
Independent Registered Public
|
Tait, Weller & Baker LLP
|
Accounting Firm
|
1818 Market Street, Suite 2400
|
|
Philadelphia, PA 19103
|
Distributor
|
Kinetics Funds Distributor, LLC
|
|
470 Park Avenue South
|
|
New York, NY 10016
|
Transfer Agent, Fund Accountant,
|
U.S. Bancorp Fund Services, LLC
|
and Administrator
|
615 East Michigan Street
|
|
Milwaukee, WI 53202
|
Custodian
|
U.S. Bank N.A.
|
|
1555 N. River Center Drive, Suite 302
|
|
Milwaukee, WI 53212
|
Fund
|
Ticker Symbol
|
|||
No Load Class
|
Advisor Class A
|
Advisor Class C
|
Institutional Class
|
|
The Alternative Income Fund (formerly the Water Infrastructure Fund)
|
KWINX
|
KWIAX
|
KWICX
|
KWIIX
|
2
|
|
3
|
|
4
|
|
4
|
|
12
|
|
12
|
|
13
|
|
20
|
|
22
|
|
22
|
|
26
|
|
26
|
|
27
|
|
27
|
|
28
|
|
28
|
|
29
|
|
30
|
|
31
|
|
34
|
|
35
|
|
37
|
|
39
|
|
39
|
|
40
|
|
48
|
2 |
3 |
1.
|
The Fund/Portfolio will not act as underwriter for securities of other issuers.
|
2.
|
The Fund/Portfolio will not make loans amounting to more than 33 1/3% of its total assets (including any collateral posted) or 50% of its total assets (excluding any collateral posted).
|
3.
|
With respect to 50% of its total assets, the Fund/Portfolio will not invest in the securities of any issuer if as a result the Fund/Portfolio holds more than 10% of the outstanding securities or more than 10% of the outstanding voting securities of such issuer. This policy shall not be deemed violated to the extent that the Fund invests all of its investable assets in its respective Portfolio.
|
4.
|
The Fund/Portfolio will not borrow money or pledge, mortgage, or hypothecate its assets except to facilitate redemption requests that might otherwise require the untimely disposition of portfolio securities and then only from banks and in amounts not exceeding the lesser of 10% of its total assets valued at cost or 5% of its total assets valued at market at the time of such borrowing, pledge, mortgage, or hypothecation and except that, with respect to the Fund/Portfolio, the Fund/Portfolio may enter into futures contracts and related options.
|
5.
|
The
Alternative Income Fund/Portfolio
will not invest more than 15% of the value of its net assets in illiquid securities, restricted securities, and other securities for which market quotations are not readily available. This policy shall not be deemed violated to the extent that the Fund invests all of its investable assets in the respective Portfolio.
|
6.
|
The
Alternative Income Fund/Portfolio
will not invest in the securities of any one industry with the exception of securities issued or guaranteed by the U.S. Government, its agencies and instrumentalities, if, as a result, more than 25% of the Fund’s/Portfolio’s total net assets would be invested in the securities of such industries. This policy shall not be deemed violated to the extent that the Fund invests all its investable assets in the Portfolio.
|
7.
|
The Fund/Portfolio will not purchase or sell commodities or commodity contracts, or invest in oil, gas or mineral exploration or development programs or real estate except that the Fund/Portfolio may purchase and sell securities of companies that deal in oil, gas, or mineral exploration or development programs or interests therein.
|
8.
|
The Fund/Portfolio will not issue senior securities.
|
4 |
5 |
6 |
7 |
8 |
9 |
10 |
11 |
12 |
Portfolio turnover rate for:
|
Fiscal Year Ended December 31, 2011
|
Fiscal Year Ended December 31, 2010
|
The Alternative Income Portfolio
|
69%
|
111%
|
13 |
Name, Address and Age
|
Position(s) Held with
Company/ Trust
|
Term of Office and
Length of Time Served
|
Principal Occupation(s)
During Past Five Years
|
# of Portfolios in Fund Complex** Overseen by Director/ Trustee
|
Other Directorships
Held by Director/ Trustee
|
Steven T. Russell (48)
c/o Kinetics Asset Management LLC
555 Taxter Road, Suite 175
Elmsford, New York 10523
|
Independent Director/ Independent Trustee
|
Indefinite/
12 years
|
Attorney and Counselor at Law, Partner, Law firm of Russell and Fig (September 2002 to April 2010); Steven Russell Law Firm (April 2010 to present); Professor of Business Law and Finance, Suffolk County Community College (1997 to Present).
|
16
|
Director, The Magnetic Fund of Long Island, LP (a private investment company).
|
Douglas Cohen CPA (50)
c/o Kinetics Asset Management LLC
555 Taxter Road, Suite 175
Elmsford, New York 10523
|
Independent Director/ Independent Trustee
|
Indefinite/
12 years
|
Chief Financial Officer, Sunrise Credit Services, Inc. (2005 to Present); Wagner & Zwerman, LLP Certified Public Accountant (1997 to 2005).
|
16
|
Director,
The Kinetics Fund, Inc. (a private investment company).
|
William J. Graham (50)
c/o Kinetics Asset Management LLC
555 Taxter Road, Suite 175
Elmsford, New York 10523
|
Independent Director/ Independent Trustee
|
Indefinite/
12 years
|
Attorney, William J. Graham, PC (2001 to Present); Bracken & Margolin, LLP (1997 to 2001)
|
16
|
N/A
|
14 |
Name, Address and Age
|
Position(s) Held with
Company/ Trust
|
Term of Office and
Length of Time Served
|
Principal Occupation(s)
During Past Five Years
|
# of Portfolios in Fund Complex** Overseen by Director/ Trustee
|
Other Directorships
Held by Director/ Trustee
|
15 |
Name, Address and Age
|
Position(s) Held
with the
Company/
Trust
|
Term of Office and
Length of Time Served
|
Principal Occupation(s)
During Past Five Years
|
# of Portfolios in Fund
Complex** Overseen by Director/
Trustee
|
Other Directorships
Held by Director/Trustee
|
Murray Stahl* (59)
c/o Kinetics Asset Management LLC
555 Taxter Road, Suite 175
Elmsford, New York 10523
|
Director/Trustee & Secretary
|
Indefinite/
12 years
|
Chairman,
The FRMO Corp. (2001 to Present) (provides consulting services to private investment funds and research services with respect to marketable securities); Chairman and Chief Investment Officer Horizon Kinetics, LLC, (formerly, Horizon Asset Management, LLC (an investment adviser) (1994 to Present); Kinetics Asset Management LLC and Kinetics Mutual Funds, Inc. (2002 to Present).
|
16
|
Chairman of Horizon Kinetics, LLC; Chairman of FRMO Corporation.
|
Peter B. Doyle* (50)
c/o Kinetics Asset Management LLC
555 Taxter Road, Suite 175
Elmsford, New York 10523
|
Director/Trustee, President & Chairman of the Board
|
Indefinite/
10 years
|
President, Kinetics Asset Management LLC (2002 to Present); Director, Kinetics Advisers, LLC (2000 to Present); Director and Officer, Horizon Asset Management, LLC (1994 to Present); Chief Investment Strategist, Kinetics Asset Management LLC and Kinetics Mutual Funds, Inc. (1998 to Present).
|
16
|
Director,
The Kinetics Fund, Inc. (a private investment company); Director and Officer of FRMO Corporation.
|
Leonid Polyakov* (53)
c/o Kinetics Asset Management LLC
555 Taxter Road, Suite 175
Elmsford, New York 10523
|
Director/Trustee & Treasurer
|
Indefinite/
8 years
|
CFO, Kinetics Asset Management LLC (2000 to Present); President, Kinetics Funds Distributor, LLC (2002 to Present); Director, Kinetics Advisers, LLC (2000 to Present); formerly, CFO, KBD Securities, LLC (2000 to Present).
|
16
|
Director,
The Kinetics Fund, Inc. (a private investment company).
|
*
|
Directors/Trustees who are considered "interested persons" as defined in Section 2(a)(19) of the 1940 Act because of their association with the Adviser and its affiliates.
|
**
|
The term “fund complex” refers to the Company and the Trust, which hold themselves out as related for investment purposes.
|
16 |
17 |
Audit Committee
|
||
Members
|
Description
|
# of Meetings during Past
Fiscal Year
|
James M. Breen
Joseph E. Breslin
Douglas Cohen, CPA*
William J. Graham
Steven T. Russell
|
Responsible for advising the full Board with respect to accounting, auditing and financial matters affecting the Fund/Portfolio.
|
The Committee met two times during the year ended December 31, 2011.
|
Pricing Committee
|
||
Members
|
Description
|
# of Meetings during Past Fiscal Year
|
James M. Breen
Joseph E. Breslin*
Douglas Cohen
William J. Graham
Steven T. Russell
|
Responsible for (1) monitoring the valuation of the Portfolio’s securities and other investments; and (2) as required by the Portfolio’s valuation policies, when the full Board is not in session, determining the fair value of illiquid and other holdings after consideration of all relevant factors, which determinations shall be reported to the full Board.
|
The Committee met two times during the year ended December 31, 2011.
|
18 |
Name of Director/Trustee
|
Dollar Range of
Equity Securities in the Fund
|
Aggregate Dollar Range of
Equity Securities in
All Funds/Portfolios
Overseen by Director/Trustee
|
INDEPENDENT DIRECTORS/TRUSTEES
|
||
Steven T. Russell
|
None
|
None
|
Douglas Cohen
|
None
|
$50,001-$100,000
|
William J. Graham
|
None
|
$10,001-$50,000
|
Joseph E. Breslin
|
None
|
$50,001-$100,000
|
James M. Breen
|
None
|
None
|
INTERESTED DIRECTORS/TRUSTEES
|
||
Murray Stahl
|
None |
Over $100,000
|
Leonid Polyakov
|
$10,001-$50,000 |
Over $100,000
|
Peter B. Doyle
|
$10,001-$50,000 |
Over $100,000
|
(1)
|
“Interested person” as defined under the 1940 Act.
|
(2)
|
Includes compensation paid by Kinetics Portfolios Trust.
|
19 |
Name and Address
|
Parent
Company
|
Jurisdiction
|
%
Ownership
|
Type of
Ownership
|
Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104-4151
|
The Charles Schwab Corporation
|
DE
|
24.70%
|
Record
|
First Clearing, LLC
Special Custody Account
FEBO Customer
2801 Market Street
St. Louis, MO 63103-2523
|
N/A
|
N/A
|
20.55%
|
Record
|
National Financial Services, LLC
FEBO
Peter Brendan Doyle
35 Greenacres Avenue
Scarsdale, NY 10583-1413
|
N/A
|
N/A
|
5.12%
|
Record
|
Name and Address
|
Parent
Company
|
Jurisdiction
|
%
Ownership
|
Type of
Ownership
|
UBS Wealth Management, USA
Omni Account M/F
ATTN: Department Manager
1000 Harbor Boulevard,
5
th
Floor
Weehawken, NJ 07086-6761
|
UBS Americas Inc.
|
DE
|
31.31%
|
Record
|
First Clearing, LLC
Special Custody Account
FEBO Customer
2801 Market Street
St. Louis, MO 63103-2523
|
N/A
|
N/A
|
22.90%
|
Record
|
20 |
Name and Address
|
Parent
Company
|
Jurisdiction
|
%
Ownership
|
Type of
Ownership
|
First Clearing, LLC
Special Custody Account
FEBO Customer
2801 Market Street
St. Louis, MO 63103-2523
|
N/A
|
N/A
|
21.16%
|
Record
|
Morgan Stanley & Co.
FBO Premier Management LTD
2230 S MacArthur Drive
Suite 9
Alexandria, LA 71301-3059
|
N/A
|
N/A
|
7.45%
|
Record
|
UBS Wealth Management, USA
Omni Account M/F
ATTN: Department Manager
1000 Harbor Boulevard,
5
th
Floor
Weehawken, NJ 07086-6761
|
N/A
|
N/A
|
6.78%
|
Record
|
Name and Address
|
Parent
Company
|
Jurisdiction
|
%
Ownership
|
Type of
Ownership
|
Horizon Kinetics LLC
ATTN Robin Shulman CCO
470 Park Avenue South,
4
th
Floor
New York, NY 10016-6819
|
Kinetics Asset Management LLC
|
NY
|
59.56%
|
Record
|
MSSB C/F
Concepcion Tan Yen
IRA Standard
1051 North 18
th
Street
Allentown, PA 18104-3133
|
N/A
|
N/A
|
6.03%
|
Record
|
Citigroup Global Markets, Inc.
333 West 34
th
Street
New York, NY 10001-2402
|
N/A
|
N/A
|
5.79%
|
Record
|
Kinetics Asset Management LLC
ATTN Leonid Polyakov
555 Taxter Road, Suite 175
Elmsford, NY 10523-2314
|
N/A
|
N/A
|
5.31%
|
Record
|
21 |
22 |
(1)
|
renders research, statistical and advisory services to the Portfolio;
|
(2)
|
makes specific recommendations based on the Portfolio’s investment requirements; and
|
(3)
|
pays the salaries of those of the Portfolio’s employees who may be officers or directors or employees of the Adviser.
|
Advisory Fees
(1)
|
2011
|
2010
|
2009
|
The Alternative Income Fund
|
$104,640
|
$187,048
|
$89,713
|
(1)
|
Fees reflect Portfolio level expenses allocated to the Fund. Prior to January 1, 2013, the Fund’s advisory fee was 1.25%.
|
2011
|
2010
|
2009
|
||||
Waiver and Reimbursements
|
Advisory Fee Waiver
|
Expense Reimbursements
|
Advisory Fee Waiver
|
Expense Reimbursements
|
Advisory Fee Waiver
|
Expense Reimbursements
|
The Alternative Income Fund
|
$112,918
|
$0
|
$137,029
|
$0
|
$123,364
|
$0
|
·
|
fees and expenses of directors not affiliated with the Adviser;
|
·
|
legal and accounting fees;
|
·
|
interest, taxes, and brokerage commissions; and
|
·
|
record keeping and the expense of operating its offices.
|
23 |
Category of Account
|
Total Number of
Accounts Managed
|
Total Assets in
Accounts Managed
(in Millions)
|
Number of Accounts
for which Advisory Fee is
Based on Performance
|
Assets in Accounts
f
or which Advisory Fee is
Based on Performance
(in Millions)
|
Other Registered Investment Companies
|
8
|
$1,201.24
|
0
|
$0.00
|
Other Pooled Investment Vehicles
|
11
|
$747.95
|
8
|
$176.44
|
Other Accounts
|
555
|
$1,048.44
|
3
|
$215.33
|
Category of Account
|
Total Number of
Accounts Managed
|
Total Assets in
Accounts Managed
(in Millions)
|
Number of Accounts
for which Advisory Fee is
Based on Performance
|
Assets in Accounts
for which Advisory Fee is
Based on Performance
(in Millions)
|
Other Registered Investment Companies
|
10
|
$1,781.00
|
0
|
$0.00
|
Other Pooled Investment Vehicles
|
22
|
$1,128.53
|
20
|
$929.04
|
Other Accounts
|
778
|
$1,399.81
|
7
|
$250.20
|
Category of Account
|
Total Number of
Accounts Managed
|
Total Assets in
Accounts Managed
(in Millions)
|
Number of Accounts
for which Advisory Fee is
Based on Performance
|
Assets in Accounts
for which Advisory Fee is
Based on Performance
(in Millions)
|
Other Registered Investment Companies
|
2
|
$63.95
|
0
|
$0.00
|
Other Pooled Investment Vehicles
|
4
|
$99.39
|
4
|
$99.39
|
Other Accounts
|
0
|
$0.00
|
0
|
$0.00
|
24 |
Category of Account
|
Total Number of
Accounts Managed
|
Total Assets in
Accounts Managed
(in Millions)
|
Number of Accounts
for which Advisory Fee is
Based on Performance
|
Assets in Accounts
for which Advisory Fee is
Based on Performance
(in Millions)
|
Other Registered Investment Companies
|
2
|
$63.95
|
0
|
$0.00
|
Other Pooled Investment Vehicles
|
0
|
$0.00
|
0
|
$0.00
|
Other Accounts
|
0
|
$0.00
|
0
|
$0.00
|
Category of Account
|
Total Number of
Accounts Managed
|
Total Assets in
Accounts Managed
(in Millions)
|
Number of Accounts
for which Advisory Fee is
Based on Performance
|
Assets in Accounts
for which Advisory Fee is
Based on Performance
(in Millions)
|
Other Registered Investment Companies
|
4
|
$1,000.85
|
0
|
$0.00
|
Other Pooled Investment Vehicles
|
0
|
$0.00
|
0
|
$0.00
|
Other Accounts
|
0
|
$0.00
|
0
|
$0.00
|
Dollar Range of Equity Securities in the Fund Beneficially Owned
A.
None
B.
$1-$10,000
C.
$10,001-$50,000
D.
$50,001-$100,000
E.
$100,001-$500,000
F.
$500,001-$1,000,000
G.
Over $1,000,000
|
Name of Fund
|
|||||
Peter Doyle
|
Murray Stahl
|
James Davolos
|
David Kingsley
|
Derek Devens
|
|
The Alternative Income Fund
|
E
|
A
|
A
|
A
|
E
|
25 |
Shareholder Servicing Fees
|
2011
|
2010
|
2009
|
The Alternative Income Fund
(1)
|
$42,799
|
$62,825
|
$42,554
|
(1)
|
The Adviser waived shareholder servicing fees in the amount of $2,089, $6,482 and $1,091 for the Institutional Class of the Alternative Income Fund for the fiscal year ended December 31, 2011, 2010 and 2009, respectively.
|
Administrative Services Fees
(1)
|
2011
|
2010
|
2009
|
The Alternative Income Fund
|
$14,421
|
$20,552
|
$12,994
|
(1)
|
Fees reflect Fund level expenses as well as Portfolio level expenses allocated to the Fund.
|
26 |
·
|
establish and maintain shareholders’ accounts and records,
|
·
|
process purchase and redemption transactions,
|
·
|
process automatic investments of client account cash balances,
|
·
|
answer routine client inquiries regarding the Portfolio,
|
·
|
assist clients in changing dividend options,
|
·
|
account designations, and addresses, and
|
·
|
providing such other services as the Portfolio may reasonably request.
|
Fund
|
2011
|
2010
|
2009
|
The Alternative Income Fund
|
$29,294
|
$118,102
|
$123,843
|
Fund
|
2011
|
2010
|
2009
|
The Alternative Income Fund
|
$2,650
|
$12,605
|
$12,905
|
Fund
|
Net Underwriting
Discounts and Commissions
(1)
|
Compensation on
Redemption and Repurchase
|
Brokerage Commissions
in Connection with
Fund Transactions
|
Other
Compensation
(2)
|
Alternative Income Fund
|
$2,650
|
0
|
0
|
0
|
(1)
|
Represents amounts received from front-end sales charges on Advisor Class A shares.
|
(2)
|
Represents payments made under Distribution Plans (see “Distribution Plans” below.)
|
27 |
·
|
the advertising and marketing of shares of the Fund covered by the Plans;
|
·
|
preparing, printing, and distributing Prospectuses and sales literature to prospective shareholders, brokers, or administrators; and
|
·
|
implementing and operating the Plans.
|
12b-1 Fees
|
2011
|
Alternative Income Fund
|
$17,006
|
12b-1 Fees
|
2011
|
Alternative Income Fund
|
$20,016
|
28 |
29 |
(Value of Assets of the Class) - (Liabilities of the Class)
|
=
|
NAV per share
|
Shares Outstanding of the Class
|
·
|
twenty calendar days after the end of each calendar month, the Adviser may post (a) the top fifteen (15) securities held by the Fund/Portfolio and their respective percentage of the Portfolio on the Company’s website and (b) the top five (5) performing and the bottom five (5) performing securities held by each of the Trust’s portfolios; and
|
·
|
as required by the federal securities laws, the Fund/Portfolio will disclose portfolio holdings in their applicable regulatory filings, including shareholder reports, reports on Forms N-CSR and N-Q or such other filings, reports or disclosure documents as the applicable regulatory authorities may require.
|
30 |
31 |
Fund
|
Net
Asset
Value
|
Maximum
Sales
Charge
|
Offering
Price to
Public
|
The Alternative Income Fund
|
$8.53
|
5.75%
|
$9.05
|
·
|
You are an employee of a broker-dealer or agent that has a selling agreement with the Distributor;
|
·
|
You buy Advisor Class A shares under a wrap program or other all-inclusive program offered by your broker-dealer or agent; or
|
·
|
The sales charge is voluntarily waived under certain circumstances by your broker-dealer or agent at their discretion.
|
·
|
purchasing larger quantities of shares or putting a number of purchases together to obtain the discounts
|
·
|
signing a 13-month
letter of intent
|
·
|
using the reinvestment privilege
|
·
|
making concurrent purchases
|
32 |
·
|
By Telephone
|
·
|
In Writing
|
33 |
·
|
the shareholder’s name,
|
·
|
the name of the Fund;
|
·
|
the account number;
|
·
|
the share or dollar amount to be redeemed; and
|
·
|
signatures by all shareholders on the account.
|
34 |
·
|
a trust company or commercial bank whose deposits are insured by the Bank Insurance Fund, which is administered by the Federal Deposit Insurance Corporation (“FDIC”);
|
·
|
a member of the New York, Boston, American, Midwest, or Pacific Stock Exchange;
|
·
|
a savings bank or savings association whose deposits are insured by the Savings Association Insurance Fund, which is administered by the FDIC; or
|
·
|
any other “eligible guarantor institution” as defined in the Securities Exchange Act of 1934.
|
35 |
36 |
Total Brokerage Commissions Paid
|
2011
|
2010
|
2009
|
The Alternative Income Portfolio
|
$17,044
|
$50,757
|
$24,375
|
Fund
|
Regular Broker-Dealer
|
Value
|
The Alternative Income Portfolio
|
U.S. Bank, N.A.
|
$239,000
|
37 |
Fund
|
2018
|
2017
|
2016
|
2015
|
2014
|
2013
|
The Alternative Income Fund
|
$2,203,647
|
$4,868,599
|
$1,430,796
|
-
|
-
|
-
|
38 |
39 |
40 |
41 |
42 |
43 |
44 |
45 |
46 |
47 |
48 |
·
|
An auditor has a financial interest in or association with the company, and is therefore not independent;
|
·
|
There is reason to believe that the independent auditor has rendered an opinion which is neither accurate nor indicative of the company’s financial position;
|
·
|
Poor accounting practices are identified that rise to a serious level of concern, such as: fraud; misapplication of GAAP; and material weaknesses identified in Section 404 disclosures; or
|
·
|
Fees for non-audit services (“Other” fees) are excessive.
|
·
|
Non-audit (“other”) fees >audit fees + audit-related fees + tax compliance/preparation fees
|
1. Board Accountability
|
2. Board Responsiveness
|
3. Director Independence
|
4. Director Competence
|
49 |
·
|
A classified board structure;
|
·
|
A supermajority vote requirement;
|
·
|
Either a plurality vote standard in uncontested director elections or a majority vote standard with no plurality carve-out for contested elections;
|
·
|
The inability of shareholders to call special meetings;
|
·
|
The inability of shareholders to act by written consent;
|
·
|
A dual-class capital structure; and/or
|
·
|
A non–shareholder- approved poison pill.
|
·
|
The date of the pill‘s adoption relative to the date of the next meeting of shareholders– i.e. whether the company had time to put the pill on ballot for shareholder ratification given the circumstances;
|
·
|
The issuer‘s rationale;
|
·
|
The issuer's governance structure and practices; and
|
·
|
The issuer's track record of accountability to shareholders.
|
50 |
|
1.11. There is a significant misalignment between CEO pay and company performance (
pay for performance
);
|
|
1.12. The company maintains significant
problematic pay practices
;
|
|
1.13. The board exhibits a significant level of
poor communication and responsiveness
to shareholders;
|
|
1.14. The company fails to submit one-time
transfers of stock options
to a shareholder vote; or
|
|
1.15. The company fails to fulfill the terms of a
burn rate commitment
made to shareholders.
|
·
|
The company's response, including:
|
|
O
|
Disclosure of engagement efforts with major institutional investors regarding the issues that contributed to the low level of support;
|
|
O
|
Specific actions taken to address the issues that contributed to the low level of support;
|
|
O
|
Other recent compensation actions taken by the company;
|
·
|
Whether the issues raised are recurring or isolated;
|
·
|
The company's ownership structure; and
|
·
|
Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.
|
51 |
·
|
The board's rationale for selecting a frequency that is different from the frequency that received a plurality;
|
·
|
The company's ownership structure and vote results;
|
·
|
ISS' analysis of whether there are compensation concerns or a history of problematic compensation practices; and
|
·
|
The previous year's support level on the company's say-on-pay proposal.
|
52 |
·
|
Medical issues/illness;
|
·
|
Family emergencies; and
|
·
|
Missing only one meeting.
|
·
|
Long-term financial performance of the target company relative to its industry;
|
·
|
Management’s track record;
|
·
|
Background to the proxy contest;
|
·
|
Qualifications of director nominees (both slates);
|
·
|
Strategic plan of dissident slate and quality of critique against management;
|
·
|
Likelihood that the proposed goals and objectives can be achieved (both slates);
|
·
|
Stock ownership positions.
|
·
|
Company-specific factors; and
|
·
|
Proposal-specific factors, including:
|
|
O
|
The ownership thresholds proposed in the resolution (i.e., percentage and duration);
|
|
O
|
The maximum proportion of directors that shareholders may nominate each year; and
|
|
O
|
The method of determining which nominations should appear on the ballot if multiple shareholders submit nominations.
|
53 |
·
|
Whether the company has been materially harmed by shareholder litigation outside its jurisdiction of incorporation, based on disclosure in the company’s proxy statement; and
|
·
|
Whether the company has the following good governance features:
|
|
O
|
An annually elected board;
|
|
O
|
A majority vote standard in uncontested director elections; and
|
|
O
|
The absence of a poison pill, unless the pill was approved by shareholders.
|
·
|
No lower than a 20% trigger, flip-in or flip-over;
|
·
|
A term of no more than three years;
|
·
|
No dead-hand, slow-hand, no-hand or similar feature that limits the ability of a future board to redeem the pill;
|
·
|
Shareholder redemption feature (qualifying offer clause); if the board refuses to redeem the pill 90 days after a qualifying offer is announced, 10 percent of the shares may call a special meeting or seek a written consent to vote on rescinding the pill.
|
·
|
The ownership threshold to transfer (NOL pills generally have a trigger slightly below 5 percent);
|
·
|
The value of the NOLs;
|
·
|
Shareholder protection mechanisms (sunset provision, or commitment to cause expiration of the pill upon exhaustion or expiration of NOLs);
|
·
|
The company's existing governance structure including: board independence, existing takeover defenses, track record of responsiveness to shareholders, and any other problematic governance concerns; and
|
·
|
Any other factors that may be applicable.
|
54 |
·
|
Shareholders' current right to act by written consent;
|
·
|
The consent threshold;
|
·
|
The inclusion of exclusionary or prohibitive language;
|
·
|
Investor ownership structure; and
|
·
|
Shareholder support of, and management's response to, previous shareholder proposals.
|
·
|
An unfettered3 right for shareholders to call special meetings at a 10 percent threshold;
|
·
|
A majority vote standard in uncontested director elections;
|
·
|
No non-shareholder-approved pill; and
|
·
|
An annually elected board.
|
·
|
Past Board Performance:
|
|
O
|
The company's use of authorized shares during the last three years
|
·
|
The Current Request:
|
|
O
|
Disclosure in the proxy statement of the specific purposes of the proposed increase;
|
|
O
|
Disclosure in the proxy statement of specific and severe risks to shareholders of not approving the request; and
|
|
O
|
The dilutive impact of the request as determined by an allowable increase calculated by ISS (typically 100 percent of existing authorized shares) that reflects the company's need for shares and total shareholder returns.
|
55 |
·
|
Past Board Performance:
|
|
O
|
The company's use of authorized preferred shares during the last three years;
|
·
|
The Current Request:
|
|
O
|
Disclosure in the proxy statement of the specific purposes for the proposed increase;
|
|
O
|
Disclosure in the proxy statement of specific and severe risks to shareholders of not approving the request;
|
|
O
|
In cases where the company has existing authorized preferred stock, the dilutive impact of the request as determined by an allowable increase calculated by ISS (typically 100 percent of existing authorized shares) that reflects the company's need for shares and total shareholder returns; and
|
|
O
|
Whether the shares requested are blank check preferred shares that can be used for antitakeover purposes.
|
·
|
The company discloses a compelling rationale for the dual-class capital structure, such as:
|
|
O
|
The company's auditor has concluded that there is substantial doubt about the company's ability to continue as a going concern; or
|
|
O
|
The new class of shares will be transitory;
|
·
|
The new class is intended for financing purposes with minimal or no dilution to current shareholders in both the short term and long term; and
|
·
|
The new class is not designed to preserve or increase the voting power of an insider or significant shareholder.
|
·
|
Valuation
- Is the value to be received by the target shareholders (or paid by the acquirer) reasonable? While the fairness opinion may provide an initial starting point for assessing valuation reasonableness, emphasis is placed on the offer premium, market reaction and strategic rationale.
|
·
|
Market reaction
- How has the market responded to the proposed deal? A negative market reaction should cause closer scrutiny of a deal.
|
·
|
Strategic rationale
- Does the deal make sense strategically? From where is the value derived? Cost and revenue synergies should not be overly aggressive or optimistic, but reasonably achievable. Management should also have a favorable track record of successful integration of historical acquisitions.
|
·
|
Negotiations and process
- Were the terms of the transaction negotiated at arm's-length? Was the process fair and equitable? A fair process helps to ensure the best price for shareholders. Significant negotiation "wins" can also
signify the deal makers' competency. The comprehensiveness of the sales process (e.g., full auction, partial auction, no auction) can also affect shareholder value.
|
·
|
Conflicts of interest
- Are insiders benefiting from the transaction disproportionately and inappropriately as compared to non-insider shareholders? As the result of potential conflicts, the directors and officers of the company may be more likely to vote to approve a merger than if they did not hold these interests. Consider whether these interests may have influenced these directors and officers to support or recommend the merger. The CIC figure presented in the "ISS Transaction Summary" section of this report is an aggregate figure that can in certain cases be a misleading indicator of the true value transfer from shareholders to insiders. Where such figure appears to be excessive, analyze the underlying assumptions to determine whether a potential conflict exists.
|
·
|
Governance
- Will the combined company have a better or worse governance profile than the current governance profiles of the respective parties to the transaction? If the governance profile is to change for the worse, the burden is on the company to prove that other issues (such as valuation) outweigh any deterioration in governance.
|
56 |
|
1.
|
Maintain appropriate pay-for-performance alignment, with emphasis on long-term shareholder value: This principle encompasses overall executive pay practices, which must be designed to attract, retain, and appropriately motivate the key employees who drive shareholder value creation over the long term. It will take into consideration, among other factors, the link between pay and performance; the mix between fixed and variable pay; performance goals; and equity-based plan costs;
|
|
2.
|
Avoid arrangements that risk “pay for failure”: This principle addresses the appropriateness of long or indefinite contracts, excessive severance packages, and guaranteed compensation;
|
|
3.
|
Maintain an independent and effective compensation committee: This principle promotes oversight of executive pay programs by directors with appropriate skills, knowledge, experience, and a sound process for compensation decision-making (e.g., including access to independent expertise and advice when needed);
|
|
4.
|
Provide shareholders with clear, comprehensive compensation disclosures: This principle underscores the importance of informative and timely disclosures that enable shareholders to evaluate executive pay practices fully and fairly;
|
|
5.
|
Avoid inappropriate pay to non-executive directors: This principle recognizes the interests of shareholders in ensuring that compensation to outside directors does not compromise their independence and ability to make appropriate judgments in overseeing managers’ pay and performance. At the market level, it may incorporate a variety of generally accepted best practices.
|
·
|
There is a significant misalignment between CEO pay and company performance (
pay for performance
);
|
·
|
The company maintains significant
problematic pay practices
;
|
·
|
The board exhibits a significant level of
poor communication and responsiveness
to shareholders.
|
57 |
·
|
There is no MSOP on the ballot, and an AGAINST vote on an MSOP is warranted due to pay for performance misalignment, problematic pay practices, or the lack of adequate responsiveness on compensation issues raised previously, or a combination thereof;
|
·
|
The board fails to respond adequately to a previous MSOP proposal that received less than 70 percent support of votes cast;
|
·
|
The company has recently practiced or approved problematic pay practices, including option repricing or option backdating; or
|
·
|
The situation is egregious.
|
·
|
A pay for performance misalignment is found, and a significant portion of the CEO’s misaligned pay is attributed to non-performance-based equity awards, taking into consideration:
|
|
O
|
Magnitude of pay misalignment;
|
|
O
|
Contribution of non-performance-based equity grants to overall pay; and
|
|
O
|
The proportion of equity awards granted in the last three fiscal years concentrated at the named executive officer (NEO) level.
|
·
|
The degree of alignment between the company's TSR rank and the CEO's total pay rank within a peer group, as measured over one-year and three-year periods (weighted 40/60);
|
·
|
The multiple of the CEO's total pay relative to the peer group median.
|
58 |
·
|
The ratio of performance- to time-based equity awards;
|
·
|
The ratio of performance-based compensation to overall compensation;
|
·
|
The completeness of disclosure and rigor of performance goals;
|
·
|
The company's peer group benchmarking practices;
|
·
|
Actual results of financial/operational metrics, such as growth in revenue, profit, cash flow, etc., both absolute and relative to peers;
|
·
|
Special circumstances related to, for example, a new CEO in the prior fiscal year or anomalous equity grant practices (e.g., biennial awards); and
|
·
|
Any other factors deemed relevant.
|
·
|
Problematic practices related to non-performance-based compensation elements;
|
·
|
Incentives that may motivate excessive risk-taking; and
|
·
|
Options Backdating.
|
·
|
Repricing or replacing of underwater stock options/SARS without prior shareholder approval (including cash buyouts and voluntary surrender of underwater options);
|
·
|
Excessive perquisites or tax gross-ups, including any gross-up related to a secular trust or restricted stock vesting;
|
·
|
New or extended agreements that provide for:
|
|
O
|
CIC payments exceeding 3 times base salary and average/target/most recent bonus;
|
|
O
|
CIC severance payments without involuntary job loss or substantial diminution of duties ("single" or "modified single" triggers);
|
|
O
|
CIC payments with excise tax gross-ups (including "modified" gross-ups).
|
·
|
Multi-year guaranteed bonuses;
|
·
|
A single or common performance metric used for short- and long-term plans;
|
·
|
Lucrative severance packages;
|
·
|
High pay opportunities relative to industry peers;
|
·
|
Disproportionate supplemental pensions; or
|
·
|
Mega annual equity grants that provide unlimited upside with no downside risk.
|
59 |
·
|
Reason and motive for the options backdating issue, such as inadvertent vs. deliberate grant date changes;
|
·
|
Duration of options backdating;
|
·
|
Size of restatement due to options backdating;
|
·
|
Corrective actions taken by the board or compensation committee, such as canceling or re-pricing backdated options, the recouping of option gains on backdated grants; and
|
·
|
Adoption of a grant policy that prohibits backdating, and creates a fixed grant schedule or window period for equity grants in the future.
|
·
|
Failure to respond to majority-supported shareholder proposals on executive pay topics; or
|
·
|
Failure to adequately respond to the company's previous say-on-pay proposal that received the support of less than 70 percent of votes cast, taking into account:
|
|
O
|
The company's response, including:
|
|
§
Disclosure of engagement efforts with major institutional investors regarding the issues that contributed to the low level of support;
|
|
§
Specific actions taken to address the issues that contributed to the low level of support;
|
|
§
Other recent compensation actions taken by the company;
|
|
O
|
Whether the issues raised are recurring or isolated;
|
|
O
|
The company's ownership structure; and
|
|
O
|
Whether the support level was less than 50 percent, which would warrant the highest degree of responsiveness.
|
60 |
·
|
Recently adopted or materially amended agreements that include excise tax gross-up provisions (since prior annual meeting);
|
·
|
Recently adopted or materially amended agreements that include modified single triggers (since prior annual meeting);
|
·
|
Single trigger payments that will happen immediately upon a change in control, including cash payment and such items as the acceleration of performance-based equity despite the failure to achieve performance measures;
|
·
|
Single-trigger vesting of equity based on a definition of change in control that requires only shareholder approval of the transaction (rather than consummation);
|
·
|
Potentially excessive severance payments;
|
·
|
Recent amendments or other changes that may make packages so attractive as to influence merger agreements that may not be in the best interests of shareholders;
|
·
|
In the case of a substantial gross-up from pre-existing/grandfathered contract: the element that triggered the gross-up (i.e., option mega-grants at low point in stock price, unusual or outsized payments in cash or equity made or negotiated prior to the merger); or
|
·
|
The company's assertion that a proposed transaction is conditioned on shareholder approval of the golden parachute advisory vote. ISS would view this as problematic from a corporate governance perspective.
|
·
|
The total cost of the company’s equity plans is unreasonable;
|
·
|
The plan expressly permits repricing;
|
·
|
A pay-for-performance misalignment is found;
|
·
|
The company’s three year burn rate exceeds the burn rate cap of its industry group;
|
·
|
The plan has a liberal change-of-control definition; or
|
·
|
The plan is a vehicle for problematic pay practices.
|
·
|
Whether adoption of the proposal is likely to enhance or protect shareholder value;
|
·
|
Whether the information requested concerns business issues that relate to a meaningful percentage of the company's business as measured by sales, assets, and earnings;
|
·
|
The degree to which the company's stated position on the issues raised in the proposal could affect its reputation or sales, or leave it vulnerable to a boycott or selective purchasing;
|
·
|
Whether the issues presented are more appropriately/effectively dealt with through governmental or company-specific action;
|
·
|
Whether the company has already responded in some appropriate manner to the request embodied in the proposal;
|
·
|
Whether the company's analysis and voting recommendation to shareholders are persuasive;
|
·
|
What other companies have done in response to the issue addressed in the proposal;
|
·
|
Whether the proposal itself is well framed and the cost of preparing the report is reasonable;
|
·
|
Whether implementation of the proposal’s request would achieve the proposal’s objectives;
|
·
|
Whether the subject of the proposal is best left to the discretion of the board;
|
·
|
Whether the requested information is available to shareholders either from the company or from a publicly available source; and
|
·
|
Whether providing this information would reveal proprietary or confidential information that would place the company at a competitive disadvantage.
|
61 |
·
|
There are no recent, significant controversies, fines or litigation regarding the company’s political contributions or trade association spending; and
|
·
|
The company has procedures in place to ensure that employee contributions to company-sponsored political action committees (PACs) are strictly voluntary and prohibit coercion.
|
·
|
The company's current disclosure of policies and oversight mechanisms related to its direct political contributions and payments to trade associations or other groups that may be used for political purposes, including information on the types of organizations supported and the business rationale for supporting these organizations; and
|
·
|
Recent significant controversies, fines, or litigation related to the company's political contributions or political activities.
|
·
|
The company's current disclosure of relevant policies and oversight mechanisms;
|
·
|
Recent significant controversies, fines, or litigation related to the company's public policy activities; and
|
·
|
The impact that the policy issues may have on the company's business operations.
|
62 |
·
|
The company's current level of disclosure of relevant policies and oversight mechanisms;
|
·
|
The company's current level of such disclosure relative to its industry peers;
|
·
|
Potential relevant local, state, or national regulatory developments; and
|
·
|
Controversies, fines, or litigation related to the company's hydraulic fracturing operations.
|
63 |
64 |
65 |
|
I.
|
A copy of these Proxy Policies and Procedures.
|
|
II.
|
A copy of the ISS Proxy Voting Guidelines.
|
66 |
|
III.
|
A copy of proxy statements received regarding underlying portfolio securities held by Clients (received through ISS, with either hard copies held by ISS or electronic filings from the SEC’s EDGAR system).
|
|
IV.
|
Records of each vote cast on behalf of Clients including: (i) the name of the issuer of the portfolio security; (ii) the exchange ticker symbol of the portfolio security; (iii) the Council on Uniform Security Identification Procedures (“CUSIP”) number for the portfolio security; (iv) the shareholder meeting date; (v) a brief identification of the matter voted on; (vi) whether the matter was proposed by the issuer or by a security holder; (vii) whether the Advisers cast its vote on the matter; (viii) how the Advisers cast its vote (e.g., for or against proposal, or abstain; for or withhold regarding election of directors); and (ix) whether the Advisers cast its vote for or against management.
|
|
IV.
|
A copy of any document created by the CCO or Proxy Administrator that was material to making a decision on how to vote proxies on behalf of a Client or that memorialized the basis for the decision.
|
|
V.
|
A copy of each written Client request for proxy voting information and a copy of any written response by the Advisers.
|
67 |
Item 28.
|
Exhibits
|
(a)
|
Articles of Incorporation
|
|
(1)
|
Articles of Amendment and Restatement.
1
|
|
(2)
|
Articles of Amendment to Articles of Amendment and Restatement
.
2
|
|
(3)
|
Articles of Amendment to Articles of Amendment and Restatement
10
|
|
(4)
|
Articles Supplementary
.
2
|
|
(5)
|
Articles Supplementary.
4
|
|
(6)
|
Articles Supplementary
.
6
|
|
(7)
|
Articles Supplementary
.
10
|
|
(8)
|
Articles Supplementary.
12
|
|
(b)
|
|
|
(c)
|
Instruments Defining Rights of Security Holders.
Incorporated by reference to Articles of Incorporation and Bylaws.
|
|
(d)
|
Investment Advisory Agreements.
|
|
(1)
|
Investment Advisory Agreements
between Kinetics Portfolios Trust and Kinetics Asset Management LLC (formerly known as Kinetics Asset Management, Inc.) (Internet, Global, Paradigm, Medical and Small Cap Opportunities Portfolios) incorporated by reference to Registration Statement for Kinetics Portfolios Trust (File No. 811-09923) filed on May 1, 2000.
|
|
(1)(i)
|
Addendums to Investment Advisory Agreements
between Kinetics Portfolios Trust and Kinetics Asset Management LLC (formerly known as Kinetics Asset Management, Inc.) (Internet, Global, Paradigm, Medical and Small Cap Opportunities Portfolios) incorporated by reference to Amendment No. 5 to Registration Statement for Kinetics Portfolios Trust (File No. 811-09923) filed on May 1, 2002.
|
|
(2)
|
Investment Advisory Agreement
between Kinetics Portfolios Trust and Kinetics Asset Management LLC (formerly known as Kinetics Asset Management, Inc.) (Market Opportunities Portfolio) incorporated by reference to Amendment No. 13 to Registration Statement for Kinetics Portfolios Trust (File No. 811-09923) filed on May 1, 2006.
|
|
(3)
|
Investment Advisory Agreement
between Kinetics Portfolios Trust and Kinetics Asset Management LLC (formerly known as Kinetics Asset Management, Inc.) (Water Infrastructure Portfolio)
incorporated by reference to Amendment No. 16 to Registration Statement for Kinetics
Portfolios Trust (File No. 811-09923) filed on June 29, 2007.
|
|
(4)
|
Investment Advisory Agreement
between Kinetics Portfolios Trust and Kinetics Asset Management LLC (formerly known as Kinetics Asset Management, Inc.) (Multi-Disciplinary Portfolio) incorporated by reference to Amendment No. 17 to Registration Statement for Kinetics Portfolios Trust (File No. 811-09923) filed on February 8, 2008.
|
(e)
|
Underwriting Contracts
|
|
(1)
|
Distribution Agreement
between Kinetics Mutual Funds, Inc. and Kinetics Funds Distributor, LLC dated September 15, 2000.
2
|
|
(1)(i)
|
Schedule A dated December 18, 2009 to the Distribution Agreement
between Kinetics Mutual Funds, Inc. and Kinetics Funds Distributors, LLC
13
|
|
(2)
|
Sub-Distribution Agreement
between Kinetics Mutual Funds, Inc., Kinetics Funds Distributor, LLC and Quasar Distributors, LLC dated September 20, 2000.
2
|
|
(2)(i)
|
Fourth Amendment dated December 18, 2009 to the Sub-Distribution Agreement
between Kinetics Mutual Funds, Inc., Kinetics Funds Distributor, LLC and Quasar Distributors, LLC dated September 20, 2000
12
|
|
(f)
|
Bonus or Profit Sharing Contracts.
Not applicable.
|
|
(g)
|
Custodian Agreements
|
|
(1)
|
Custody Agreement
between Registrant, Kinetics Portfolios Trust and U.S. Bank N.A. dated June 26, 2006.
7
|
|
(1)(i)
|
Fourth Amendment dated December 18, 2009 to Custody Agreement
between Registrant, Kinetics Portfolios Trust and U.S. Bank N.A. dated June 26, 2006.
12
|
|
(h)
|
Other Material Contracts
|
|
(1)
|
Fund Administration Servicing Agreement
between Registrant and U.S. Bancorp Fund Services, LLC
dated January 1, 2002.
7
|
|
(1)(i)
|
Seventh Amendment dated December 18, 2009 to Fund Administration Servicing Agreement
between Registrant and U.S. Bancorp Fund Services, LLC dated January 1, 2002.
12
|
|
(2)
|
Fund Accounting Servicing Agreement
between Registrant, Kinetics Portfolios Trust and U.S. Bancorp Fund Services, LLC dated December 15, 2005.
4
|
|
(2)(i)
|
Fifth Amendment dated December 18, 2009 to Fund Accounting Servicing Agreement
between Registrant, Kinetics Portfolios Trust and U.S. Bancorp Fund Services, LLC dated December 15, 2005.
12
|
|
(3)
|
Transfer Agent Servicing Agreement
between Registrant and U.S. Bancorp Fund Services, LLC dated December 18, 2009.
12
|
|
(4)
|
Shareholder Servicing Agreement
between Registrant and
Kinetics Asset Management LLC (formerly known as
Kinetics Asset Management, Inc.) with respect to the No Load, Advisor Class A, B and C Shares.
5
|
|
(4)(i)
|
Schedule A dated December 18, 2009 to Shareholder Servicing Agreement
between Registrant and
Kinetics Asset Management LLC (formerly known as
Kinetics Asset Management, Inc.)
12
|
|
(5)
|
Shareholder Servicing Agreement
between Registrant and
Kinetics Asset Management LLC (formerly known as
Kinetics Asset Management, Inc). with respect to the Institutional Share Class.
3
|
|
(5)(i)
|
Waiver and Reimbursement Agreement
with respect to the Shareholder Servicing Agreement for the Institutional Share Class dated December 18, 2009
– to
be filed by amendment.
|
|
(6)
|
Agreement of the Joint Insureds
between Registrant, Kinetics Portfolios Trust and The Internet Fund, Inc.
1
|
|
(7)
|
Power of Attorney
14
|
(i)
|
Legal Opinions.
|
|
(1)
|
Legal opinion
dated October 4, 2004.
2
|
|
(2)
|
Legal opinion
dated January 31, 2006.
4
|
|
(3)
|
Legal opinion
dated April 10, 2007.
6
|
|
(4)
|
Legal opinion
dated November 16, 2007.
8
|
|
(j)
|
Other Opinions.
|
|
(1)
|
Consent of Counsel
– filed herewith
.
|
|
(2)
|
Consent of Independent Registered Public Accounting Firm
– filed herewith.
|
|
(k)
|
Omitted Financial Statements.
Not applicable.
|
|
(l)
|
Initial Capital Understanding.
1
|
|
(m)
|
Rule 12b-1 Plans.
|
|
(1)
|
Retail Distribution Plan for Advisor Class A Shares (12b-1 Plan).
9
|
|
(1)(i)
|
Exhibit A to the Retail Distribution Plan for Advisor Class A Shares.
12
|
|
(2)
|
Retail Distribution Plan for Advisor Class C Shares (12b-1 Plan).
9
|
|
(2)(i)
|
Exhibit A to the Retail Distribution Plan for Advisor Class C Shares.
12
|
|
(n)
|
Rule 18f-3 Plan.
9
|
|
(1)
|
Exhibit A to the Rule 18f-3 Plan.
12
|
(o)
|
Reserved.
|
|
(p)
|
Code of Ethic
s.
|
|
(1)
|
Code of Ethics
for Kinetics Portfolio Trust, Kinetics Mutual Funds, Inc., Kinetics Funds Distributor, LLC, KBD Securities, LLC, Kinetics Asset Management LLC (formerly known as
Kinetics Asset Management, Inc.)
and Kinetics Advisers, LLC
11
|
|
1
|
Filed September 7, 1999 with Pre-Effective Amendment No. 3 to the Registration Statement.
|
|
2
|
Filed October 4, 2004 with Post-Effective Amendment No. 15 to the Registration Statement.
|
|
3
|
Filed April 29, 2005 with Post-Effective Amendment No. 18 to the Registration Statement.
|
|
4
|
Filed January 31, 2006 with Post-Effective Amendment No. 22 to the Registration Statement.
|
|
5
|
Filed May 1, 2006 with Post-Effective Amendment No. 23 to the Registration Statement.
|
|
6
|
Filed April 10, 2007 with Post-Effective Amendment No. 24 to the Registration Statement.
|
|
7
|
Filed June 29, 2007 with Post-Effective Amendment No. 27 to the Registration Statement.
|
|
8
|
Filed November 16, 2007 with Post-Effective Amendment No. 28 to the Registration Statement.
|
|
9
|
Filed February 8, 2008 with Post-Effective Amendment No. 30 to the Registration Statement.
|
|
10
|
Filed May 1, 2008 with Post-Effective Amendment No. 32 to the Registration Statement.
|
|
11
|
Filed April 30, 2009 with Post-Effective Amendment No. 33 to the Registration Statement.
|
|
12
|
Filed December 30, 2009 with Post-Effective Amendment No. 35 to the Registration Statement.
|
|
13
|
Filed April 30, 2010 with Post-Effective Amendment No. 37 to the Registration Statement.
|
|
14
|
Filed April 27, 2012 with Post-Effective Amendment No. 40 to the Registration Statement.
|
ITEM 29.
|
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
|
ITEM 30.
|
INDEMNIFICATION
|
|
Reference is made to the Ninth paragraph of Registrant’s Articles of Amendment and Restatement, Article VIII of Registrant’s Amended and Restated By-Laws, and Paragraph 10(a) of the Distribution Agreement between Registrant and Kinetics Funds Distributor, LLC. With respect to the Registrant, the general effect of these provisions is to indemnify any person (trustee, director, officer, employee or agent, among others) who was or is a party to any proceeding by reason of their actions performed in their official or duly authorized capacity on behalf of the Company. With respect to Kinetics Funds Distributor, LLC, the general effect of the relevant provisions is to indemnify those entities for claims arising out of any untrue statement or material fact contained in the Funds’ Registration Statement, reports to shareholders or advertising and sales literature.
|
|
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant, the Registrant has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
|
ITEM 31.
|
BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER:
|
|
Kinetics Asset Management LLC is an investment adviser registered under the Investment Advisers Act of 1940, as amended. Information regarding the business, vocation or employment of a substantial nature of the Adviser and its officers is incorporated by reference to the information contained in Statement of Additional Information of this Registration Statement.
|
ITEM 32.
|
PRINCIPAL UNDERWRITERS:
|
Name and Principal
Business Address
|
Position and Offices with
Kinetics Funds Distributor, LLC
|
Positions and Offices with
Registrant
|
Leonid Polyakov
470 Park Avenue South
New York, NY 10016
|
President
|
Director, Treasurer
|
ITEM 33.
|
LOCATION OF ACCOUNTS AND RECORDS:
|
ITEM 34.
|
MANAGEMENT SERVICES:
|
Not applicable.
|
ITEM 35.
|
UNDERTAKINGS:
|
Not applicable.
|
NAME
|
TITLE
|
DATE
|
Peter B. Doyle*
|
Director, President, Chairman of the Board
|
December 28, 2012
|
Peter B. Doyle
|
||
Douglas Cohen*
|
Director
|
December 28, 2012
|
Douglas Cohen
|
||
William J. Graham*
|
Director
|
December 28, 2012
|
William J. Graham
|
||
Steven T. Russell*
|
Director
|
December 28, 2012
|
Steven T. Russell
|
||
Murray Stahl*
|
Director and Secretary
|
December 28, 2012
|
Murray Stahl
|
||
Joseph E. Breslin*
|
Director
|
December 28, 2012
|
Joseph E. Breslin
|
||
James Breen*
|
Director
|
December 28, 2012
|
James M. Breen
|
||
Leonid Polyakov
*
|
Director and Treasurer
|
December 28, 2012
|
Leonid Polyakov
|
||
/s/ Jay Kesslen
|
December 28, 2012
|
|
Jay Kesslen
|
Exhibit No.
|
|
Consent of Counsel
|
EX.99.j.1
|
Consent of Independent Registered Public Accounting Firm
|
EX.99.j.2
|
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