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March 2010
You should consider the investment objectives, risks, charges and
expenses of the fund carefully before investing. For a free copy of a
prospectus, which contains this and other information, visit our website at
www.kineticsfunds.com or call 1-800-930-3828. You should read the
prospectus carefully before you invest. Please read the important
disclosure at the end of this portfolio commentary.
(Click here for most recent and complete performance information)
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Dear Fellow Shareholders,
The Kinetics Multi-Disciplinary Fund (No-Load Class) produced returns of 3.42%, compared to gains of 5.37% for the S&P 500 Index and 1.08% for the CBOE Buy/Write Index.
Equities and risk assets moved sharply higher in March, with the S&P 500 Index closing up 6.03%. Index volatility eased, closing out March 2010 at 17.59 vs. 19.50 at February month-end. That said, we believe the benefit of the Fund's innovative financial strategy exhibits its potential most clearly in a declining equity market environment.
During March, Harvest Energy (“Harvest”) received an upgrade from the S&P to BB-, not the investment grade rating we were expecting. Apparently it was the highest rating S&P could give Harvest given that Harvest is a separate corporate entity from Korea National Oil (its A-rated 100% parent).
Corporate debt issuance has been extremely active in the first quarter of 2010. March 2010 saw over $40 billion worth of new issuance, far outpacing the previous record seen in November 2006 of $32 billion. A wide range of companies, including some who should not get funding, are raising significant amounts of capital at what we believe are extremely favorable rates. This has the effect of kicking fundamental issues further out into the future. The current lower VIX level may just be a natural correct reflection of this fact.
We thank you for your confidence and believe you will be rewarded for it.
The Kinetics Investment Team
Disclosure
You should consider the investment objectives, risks, charges and expenses of the Funds before investing. For a free copy of the Funds' prospectus, which contains this and other information, visit our website at www.kineticsfunds.com or call 1-800-930-3828. You should read the prospectus carefully before you invest.
The opinions expressed are not intended to be a forecast of future events, or a guarantee of future results, or investment advice. Additionally, the views expressed herein may change at any time subsequent to the date of issue hereof.
Past performance and does not guarantee future results. Due to market volatility, current performance may be more or less than for the rankings shown. Investment return and principal value will vary, and an investment can lose money.
Because the Funds [other than The Paradigm Fund, The Tactical Paradigm Fund and The Small Cap Opportunities Fund] invest in a single industry, their shares do not represent a complete investment program. Internet and biotechnology stocks are subject to a rate of change in technology, obsolescence and competition that is generally higher than that of other industries, and have experienced extreme price and volume fluctuations. International investing presents special risks including currency exchange fluctuation, government regulations, and the potential for political and economic instability. Because smaller companies [for The Global and Small Cap Opportunities Fund] often have narrower markets and limited financial resources, they present more risk than larger, more well established companies.
Non-investment grade debt securities (i.e., junk bonds) are subject to greater credit risk, price volatility and risk of loss than investment grade securities. Further, options contain special risks including the imperfect correlation between the value of the option and the value of the underlying asset.
Unlike other investment companies that directly acquire and manage their own portfolios of securities, the Funds (except the Tactical Paradigm Fund) pursue their investment objectives by investing all of their investable assets in a corresponding portfolio series of Kinetics Portfolios Trust.
You will be charged a redemption fee of 2.0% of the net amount of the redemption if you redeem or exchange your shares 30 days or less after you purchase them.
Distributor: Kinetics Funds Distributor, Inc. is an affiliate of Kinetics Asset Management, Inc., and is not an affiliate of Kinetics Mutual Funds, Inc.
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