Dear Investor:

Thank you for your interest in the Perkins Discovery Fund, managed by Perkins Capital Management, Inc. (PCM). As President of PCM, I am excited about the investment opportunities presented by the marketplace.

After over 50 years in the investment management business, I have had the opportunity to be involved with many types of companies. At Perkins Capital Management, Inc., we seek to find investment opportunities primarily by searching for companies that we believe are in the process of undergoing some positive fundamental change.

Stocks are purchased when it is believed that change will result in higher earnings and/or a higher price/earnings ratio, and thus a higher share price when the change is recognized by others. Companies undergoing change may have new products, processes, strategies, management, or may be subjected to change by external forces. Perkins Capital Management uses a combination of both fundamental and technical analysis in its quest to uncover investment opportunities. We want to have a good understanding of what companies do and to know who's running them. This investment style can best be described as "bottom-up" investing, as opposed to the "top-down" style of following general market trends.

The Perkins Discovery Fund uses this approach to focus on micro-cap companies, under $500 million in market capitalization at the time of investment. While investing in smaller companies may involve greater risks, companies fitting this criteria present an opportunity to achieve superior returns because they are not well known to the investing public and have less investor following.

Our Fund provides you with an investment advisor team averaging over 34 years of investment experience. My son, Daniel S. Perkins, is co-manager of the Fund.

Please read the Perkins Discovery Fund Prospectus carefully, not only as a disclosure document, but also as your invitation to join us in the adventure of pursuing investment success through micro-cap investing. Once you have read our Prospectus you may also want to look at our Statement of Additional Information.

Sincerely,

Richard W. "Perk" Perkins
President and Portfolio Manager
Perkins Capital Management, Inc.

Small-capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies. The Fund invests in micro-cap companies which tend to perform poorly during times of economic stress. The Perkins Discovery Fund may invest in early stage companies which tend to be more volatile and somewhat more speculative than investments in more established companies. As a result, investors considering an investment in the Fund should consider their ability to withstand the volatility of the Fund's net asset value associated with the risks of the portfolio.

The Price to Earnings (P/E) Ratio is the most common measure for how expensive a stock is, and it is calculated by dividing current price of the stock by the company's trailing 12 months' earnings per share