Shareholder Letter

October 24, 2018

Dear Shareholder,

During the third quarter of 2018, the Osterweis Fund (the Fund) generated a total return of 4.23% versus 7.71% 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 September 30, 2018 were 9.41%, 5.91%, 8.12% and 9.93%, respectively, compared to 17.91%, 13.95%, 11.97% and 7.42% 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 1.15% and net expense ratio was 0.96% as of March 31, 2018. The Adviser has contractually agreed to waive fees through June 30, 2019. The net expense ratio is applicable to investors.

During the third quarter, U.S. stocks were buoyed by favorable domestic economic conditions, including low unemployment and moderate inflation. Economic growth and corporate earnings remained robust, ultimately overshadowing concerns surrounding the escalating U.S. - China trade war. On the other hand, it was a rough summer for international and emerging market stocks, an area we have generally avoided for some time. Developed international markets, as measured by the MSCI EAFE Index, are now negative 0.98% for the year and emerging markets, as measured by the MSCI Emerging Markets Index, lost 7.39% for the year.

Looking ahead, it appears that our favorable economic conditions are likely to continue; however, we are carefully monitoring a number of areas that could lead us to change our view. In particular we are keeping an eye on inflation indicators, continued Federal Reserve rate increases, tariff and trade war fallout, elevated equity valuations and the mid-term elections. The attached Investment Outlook walks you through our thoughts on all of these issues.

As always, we are managing portfolios for the long term. In the short term we can see various companies or sectors driving the markets, but over time what matters is investing in high quality companies that can deliver growth. We are focusing primarily on U.S. firms with clear pathways to growth, including those that have benefited from the shift to cloud computing or undergoing restructurings. 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.

The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of approximately 20 developed markets in Europe, Australasia, and Far East (excluding the U.S. & Canada).

The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of approximately 20 emerging markets.

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. [35609]

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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