Shareholder Letter

April 25, 2018

Dear Shareholder,

During the first quarter of 2018, the Osterweis Fund (the Fund) generated a total return of -2.99% versus -0.76% for the S&P 500 Index (the S&P 500). The Fund’s annualized total returns over the one year, five year, ten year and twenty year periods ending March 31, 2018 were 5.94%, 6.14%, 6.69% and 8.58%, respectively, compared to 13.99%, 13.31%, 9.49% and 6.46% for the S&P 500 over the same periods.

Performance data quoted represent past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original investment. Current performance of the Fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (866) 236 0050. An investment should not be made solely on returns. The Fund’s gross expense ratio was 1.18% and net expense ratio was 0.98% as of January 1, 2018. The Adviser has contractually agreed to waive fees through December 31, 2018. The net expense ratio is applicable to investors.

Following the persistent growth and steady returns of 2017, volatility returned to the financial markets with a vengeance in the first quarter. Investor optimism swelled early on and stocks rallied 7%, but the market (as measured by the S&P 500 Index) then experienced its first 10% pullback since 2016. Despite the volatility, when all was said and done, the S&P 500 was down a fairly modest -0.76% for the quarter.

Our recent equity performance has trailed the overall market. As often happens in the later stages of a bull market, the stock market leadership becomes increasingly concentrated in fewer and fewer stocks. It will continue to be difficult to perform as well as the averages until these popular leaders ultimately reverse and subsequently lead the market down. Meanwhile we have been positioning portfolios somewhat conservatively in very high quality companies in an effort to avoid these big losses when we inevitably enter a bear market.

We are now nine years into the bull market, and economic growth remains robust. Public spending plans and the U.S. tax overhauls could drive faster growth and earnings momentum. Risks include rising U.S. protectionism and a potential acceleration in inflation, which would motivate the Fed to increase interest rates more aggressively.

In the attached Investment Outlook , we explore technology’s expanding role throughout the economy and its contribution to the “winner-take-all” aspect of the business landscape. As discussed in an earlier missive, we increasingly favor dominant companies with growing earnings, cash flows and dividends. Ideally we like to find companies with accelerating fundamentals.

If you have any questions about your portfolio, we would be happy to discuss them with you either in person or over the phone. As always, please notify us if anything has changed with your investment objectives or financial status.

We thank you for your continued confidence in our management.

Sincerely,

John Osterweis & Team

 

Enclosure

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This commentary contains the current opinions of the author as of the date above, which are subject to change at any time. This commentary has been distributed for informational purposes only and is not a recommendation or offer of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed.

Mutual Fund investing involves risk. Principal loss is possible. The Fund may invest in medium and smaller sized companies, which involve additional risks such as limited liquidity and greater volatility. The Fund may invest in foreign and emerging market securities, which involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks may increase for emerging markets. The Fund may invest in Master Limited Partnerships, which involve risk related to energy prices, demand and changes in tax code. The Fund may invest in debt securities that are un-rated or rated below investment grade. Lower-rated securities may present an increased possibility of default, price volatility or illiquidity compared to higher-rated securities. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities.

The S&P 500 Index is an unmanaged index that is widely regarded as the standard for measuring large-cap U.S. stock market performance. One cannot invest directly in an index.

Cash flow measures the cash generating capability of a company by adding non-cash charges (e.g. depreciation) and interest expense to pretax income.

The Osterweis Funds are available by prospectus only. The Funds’ investment objectives, risks, charges and expenses must be considered carefully before investing. The summary and statutory prospectuses contain this and other important information about the Funds. You may obtain a summary or statutory prospectus by calling toll free at (866) 236-0050, or by visiting osterweis.com. Please read the prospectus carefully before investing to ensure the Fund is appropriate for your goals and risk tolerance.

Osterweis Capital Management is the adviser to the Osterweis Funds, which are distributed by Quasar Distributors, LLC. [32507]

Investment Team

Account Access

Email Update

This commentary contains the current opinions of the author as of the date above, which are subject to change at any time. This commentary has been distributed for informational purposes only and is not a recommendation or offer of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed.

The S&P 500 Index is an unmanaged index that is widely regarded as the standard for measuring large-cap U.S. stock market performance. The index does not incur expenses, is not available for investment, and includes the reinvestment of dividends.

Fund holdings are subject to change and should not be considered a recommendation to buy or sell any security.

Free cash flow represents the cash that a company is able to generate after laying out the money required to maintain and expand the company’s asset base. Free cash flow is important because it allows a company to pursue opportunities that enhance shareholder value.

The Osterweis Funds are available by prospectus only. The Funds’ investment objectives, risks, charges and expenses must be considered carefully before investing. The summary and statutory prospectuses contain this and other important information about the Funds. You may obtain a summary or statutory prospectus by calling toll free at (866) 236-0050, or by visiting www.osterweis.com/statpro. Please read the prospectus carefully before investing to ensure the Fund is appropriate for your goals and risk tolerance.

Mutual fund investing involves risk. Principal loss is possible.

The Osterweis Fund may invest in medium and smaller sized companies, which involve additional risks such as limited liquidity and greater volatility. The Fund may invest in foreign and emerging market securities, which involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks may increase for emerging markets. The Fund may invest in Master Limited Partnerships, which involve risk related to energy prices, demand and changes in tax code. The Fund may invest in debt securities that are un-rated or rated below investment grade. Lower-rated securities may present an increased possibility of default, price volatility or illiquidity compared to higher-rated securities. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities.

While the fund is no-load, management fees and other expenses still apply. Please refer to the prospectus for more information.

Osterweis Capital Management is the adviser to the Osterweis Funds, which are distributed by Quasar Distributors, LLC.

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