The document provides 10 reasons to allocate to microcap stocks in portfolios. It summarizes that microcaps have historically posted the best long-term returns compared to other market cap classes. It also notes that microcaps remain inefficient due to low analyst coverage and can provide diversification benefits through lower correlation to other assets. The document argues that microcaps are less susceptible to economic downturns and have historically performed well following interest rate hikes.

1. TOP 10 REASONS TO ALLOCATE
TO MICROCAP IN PORTFOLIOS

2. REASON #10
MICROCAPS USE DISCLOSURES
Disclosure
The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The Summary
Prospectus and Statutory Prospectus contain this and other important information about the investment company, and it may
be obtained by calling (800) 331-8936 or by visiting perrittcap.com. Read it carefully before investing.
Mutual fund investing involves risk. Principal loss is possible. The Fund invests in smaller companies, which involve additional
risks such as limited liquidity and greater volatility. The Fund invests in micro-cap companies which tend to perform poorly during times of economic stress. The Fund may invest in early stage companies which tend to be more volatile and somewhat more
speculative than investments in more established companies.
Index performance is not indicative of fund’s performance. Past performance does not guarantee future results. Current performance can be obtained by calling 1-800-331-8936. The Russell Microcap index is a capitalization weighted index of 2,000 small
cap and micro cap stocks that captures the smallest 1,000 companies in the Russell 2000, plus 1,000 smaller U.S.-based listed
stocks. It is not possible to invest directly in an index.
The Fund is distributed by Quasar Distributors, LLC.
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3. REASON #9 MICROCAPS HAVE HISTORICALLY PERFORMED WELL
FOLLOWING RATE HIKES
RUSSELL 2000 INDEX RETURNS FOLLOWING FED FUNDS RATE INCREASE
Hike Date 3 months
after
6 months
12 months
after
8/7/80
13.9%
12.7%
2/1/83
16.6%
27.8%
10/1/86
-0.5%
22.9%
2/4/94
-2.6%
-5.4%
6/30/99
-8.3%
6.4%
6/30/04
-4.1%
9.5%
Averages 2.5%
12.3%
after
27.0%
13.0%
17.6%
after
18 months
3.3%
28.9%
7.3%
-2.7%
16.5%
13.4%
3.8%
9.4%
16.4%
15.6%
10.0%
Source: Capital IQ
The Russell 2,000 Index consists of the smallest 2,000 companies in a group of 3,000 U.S. companies in the Russell 3000 Index, as ranked by market capitalization.
The Russell Microcap index is a capitalization weighted index of 2,000 small cap and micro cap stocks that captures the smallest 1,000 companies in the Russell 2000,
plus 1,000 smaller U.S.-based listed stocks. You cannot invest directly in an index.
2 | perrittcap • com

4. REASON #8
MICROCAPS CAN LOWER CORRELATION
CORRELATIONS OF ANNUAL RETURNS 1926-2013
Category
Large Company
Small Company
L-T Government
Treasury
Stocks
Stocks
Bonds
Bills
Large Company
1.00
Small Company
0.79
1.00
Long-Term Gov’t Bonds
0.01
-0.08
1.00
-0.01
-0.09
0.18
Treasury Bills
1.00
Source: Ibbotson Classic Yearbook, 2013
Small company stocks defined as the bottom quintile of securities ranked by market capitalization from 1926-2012. Large company stocks are represented by
the S&P 500 index. Long-term Government Bonds are constructed with data from The Wall Street Journal. To the greatest extent possible, a one-bond portfolio
with a term of approximately 20 years and a reasonable coupon was used each year. For the U.S. Treasury Bill index, data from The Wall Street Journal are
used. Each month a one-bill portfolio containing the shortest-term bill having not less than one month to maturity is constructed. The Consumer Price Index
for All Urban Consumers is used to measure inflation Source: Ibbotson & Associates Stocks, Bonds, Bills and Inflation Yearbook, 2013.
Correlation is a statistical measure of how two securities move in relation to each other.
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5. REASON #7
MICRO-CAPS HAVE HISTORICALLY DONE WELL IN
LOW-GROWTH ENVIRONMENTS
Decade
2000's
1930's
1970's
1980's
1990's
1950's
1960's
1940's
Large-cap
1.8%
1.9%
8.2%
13.1%
17.7%
15.4%
7.5%
12.4%
Annualized Change (%)
Small-cap Micro-cap
6.3%
7.4%
8.0%
12.5%
15.1%
14.1%
8.5%
5.7%
15.5%
17.3%
14.2%
14.0%
11.0%
12.2%
19.3%
26.7%
GDP
1.5%
2.7%
3.2%
3.2%
3.4%
3.5%
4.2%
5.6%
Source: Furey Research Partners December 2013
Small company stocks defined as the bottom quintile of securities ranked by market capitalization from 1926-2012. Microcap stocks defined as the bottom two deciles of securities ranked by
market capitalization from 1926-2012. Large company stocks are represented by the S&P 500 index. Source: Ibbotson & Associates Stocks, Bonds, Bills and Inflation Yearbook, 2013
Past performance does not guarantee future results
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6. REASON #6 MICRO-CAPS HAVE HISTORICALLY HAD LOWER FIXED COSTS
Fixed Costs as % of Sales by Market Cap Group
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
>$12b
Source: Furey Research Partners December 2013
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$6-12b
$3-6b
Market Cap Group
$300m-$3b
<$300m

7. REASON #5 SINCE 1993, OVER 50% OF ALL PUBLIC M&A
TRANSACTIONS OCURRED AT THE MICRO-CAP LEVEL
Percent of U.S. Public M&A Deals, by Market Cap Group (1993-2013)
60%
50%
40%
30%
20%
10%
0%
>$12b
$6b-$12b
Source: Furey Research Partners, January 2014
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$3b-$6b
$300m-$3b
<=$300m

8. REASON #4 MICRO-CAPS HAVE HISTORICALLY HAD A HIGH DEGREE OF INSIDER
OWNERSHIP, WHICH ALIGN MANAGEMENT AND INVESTOR INTERESTS
Average Insider Ownership, by Market Cap Group
30%
25%
20%
15%
10%
5%
0%
>$12b
Source: Furey Research Partners
January 2014
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$6b-$12b
$3b-$6b
$300m-$3b
<=$300m

9. REASON #3
WE BELIEVE MICRO-CAPS REMAIN THE LAST INEFFICIENT
CUSTOM RESEARCH
MARKET CAP CLASS
FUREY RESEARCH PARTNERS
‘
FUREY RESEARCH PARTNERS -- CUSTOM RESEARCH & ANALYSIS
Percent of Stocks with No Analyst Coverage, by Market Cap Group
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
>$12b
$6b-$12b
Source: Furey Research Partners and FactSet
Source: Furey Research Partners
As of January 2014
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$3b-$6b
$300m-$3b
<=$300m

10. REASON #2 MICRO-CAPS ARE UNDER-COVERED IN OUR VIEW
Average Analyst Coverage, by Market Cap Group
25
20
15
10
5
0
>$12b
Source: Furey Research Partner
As of January 2014
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$6b-$12b
$3b-$6b
$300m-$3b
<=$300m

11. REASON #1 MICRO-CAPS HAVE HISTORICALLY POSTED THE BEST
LONG-TERM RETURNS
$1.00 Invested from 12/31/25 to 12/31/12
Source: Ibbotson Classic Yearbook, 2013
This chart illustrates the performance of a hypothetical $1 investment made on December 31, 1925. It assumes the reinvestment of dividends and capital
gains, but does not reflect the effect of any applicable sales charges or redemption fees. The chart does not imply any future performance
Small company stocks defined as the bottom quintile of securities ranked by market capitalization from 1926-2012. Microcap stocks defined as the bottom two deciles of securities
ranked by market capitalization from 1926-2012. Mid cap stocks are defined as deciles 5-6. Large company stocks are represented by the S&P 500 index. Source: Ibbotson & Associates Stocks, Bonds, Bills and Inflation Yearbook, 2013
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