Kinetics Small Cap Partners,

L.P.

Fund Investment Objectives

The primary investment objective of the Fund is the attainment of superior long-term investment returns utilizing a fundamental, bottom-up driven value investment process. Under normal circumstances the Fund will invest at least 75% of its net assets plus any borrowings for investment purposes in small market capitalization companies that are valued at what we believe to be a material discount to fair value. We determine our estimates of fair value based upon either a net asset value calculation, discounted operating cash flow or a combination thereof. The General Partner of the Fund considers small-cap companies to be those that have a market capitalization of less than $3 billion at the time of investment. The Fund also has the ability to invest up to 25% of its net assets plus any borrowings, measured at the time of purchase, for investment purposes in companies having market capitalizations over $3 billion. The Fund may invest in a wide range of investments, including common stocks, related derivatives, futures contracts, preferred stocks, debt instruments, cash equivalents, and options on securities indices. There can be no assurance that the Fund's objectives will be satisfied.