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Professionally Managed Portfolios

Filed: 11 Jun 21, 2:09pm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES




Investment Company Act file number (811-05037)



Professionally Managed Portfolios
(Exact name of registrant as specified in charter)



615 East Michigan Street
Milwaukee, WI 53202
(Address of principal executive offices) (Zip code)



Elaine E. Richards
Professionally Managed Portfolios
c/o U.S. Bank Global Fund Services
2020 E. Financial Way, Ste. 100
Glendora, CA 91741
(Name and address of agent for service)



(626) 914-7363
Registrant's telephone number, including area code



Date of fiscal year end: March 31



Date of reporting period:  March 31, 2021



Item 1. Report to Stockholders.

(a)







   
   
   
 Annual Report 
 For the Year Ended March 31, 2021 
   
   
   


Osterweis Fund 
Osterweis Strategic Income Fund 
Osterweis Strategic Investment Fund 
Osterweis Emerging Opportunity Fund 
Osterweis Total Return Fund 





Important Notice:

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Funds’ annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website www.osterweis.com/literature, and you will be notified by mail each time a report is posted and provided with a website to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action.
 
If you would like to receive paper copies and have not done so already, you may elect to receive paper copies of all future reports free of charge by contacting your financial intermediary or, if you invest directly with the Osterweis Funds, calling (866) 236-0050. Your election to receive paper reports will apply to all funds held within your account(s).
 

Disclosures

Past performance is no guarantee of future results. This commentary contains the current opinions of the author as of the referenced date, 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.
 
Fund holdings and sector allocations are subject to change at any time and should not be considered a recommendation to buy or sell any security. Current and future portfolio holdings are subject to risk. Please refer to the Schedules of Investments for complete fund holdings.
 
No part of this document may be reproduced in any form, or referred to in any other publication, without the express written permission of Osterweis Capital Management.
 
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. This index includes the reinvestment of dividends. The index does not incur expenses and is not available for investment.
 
The Bloomberg Barclays U.S. Aggregate Bond Index (BC Agg) is an unmanaged index that is widely regarded as a standard for measuring U.S. investment grade bond market performance. The 60/40 blend is composed of 60% S&P 500 and 40% BC Agg and assumes monthly rebalancing.
 
The Bloomberg Barclays U.S. Universal Bond Index (BC Univ) is an unmanaged index comprising U.S. dollar-denominated, taxable bonds that are rated investment grade or below investment grade.
 
The Russell 2000 Growth Index is a market capitalization weighted index representing those stocks within the approximately 2000 smallest companies in the universe of U.S. equities that exhibit growth characteristics.
 
These indices reflect the reinvestment of dividends and/or interest income. These indices do not incur expenses and are not available for investment.
 
A mortgage-backed security (MBS) is a type of asset-backed security that is secured by a mortgage or collection of mortgages.
 
All return and currency figures are shown in USD.
 
Cash flow measures the cash generating capability of a company by adding non-cash charges (e.g., depreciation) and interest expense to pretax income.
 
Spread is the difference in yield between a risk-free asset such as a U.S. Treasury bond and another security with the same maturity but of lesser quality.
 
Alpha is excess returns earned on an investment above the benchmark return.
 
Asset-Backed Security (ABS) is a type of financial investment that is collateralized by an underlying pool of assets-usually ones that generate a cash flow from debt, such as loans, leases, credit card balances, or receivables.
 
Duration is a commonly used measure of the potential volatility of the price of a debt security, or the aggregate market value of a portfolio of debt securities, prior to maturity. Securities with a longer duration generally have more volatile prices than securities of comparable quality with a shorter duration.
 
A basis point is a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument. One basis point is equal to 1/100th of 1% or 0.01% (0.0001).
 
Investment grade and non-investment grade (high yield) categories are determined by credit ratings from Standard and Poor’s and Moody’s, which are private independent rating services that assign grades to bonds to represent their credit quality. The issues are evaluated based on such factors as the bond issuer’s financial strength, or its ability to pay a bond’s principal and interest in a timely fashion. Standard and Poor’s ratings are expressed as letters ranging from ‘AAA’, which is the highest grade, to ‘D’, which is the lowest grade. Moody’s ratings are expressed as letters and numbers ranging from ‘Aaa’, which is the highest grade, to ‘C’, which is the lowest grade. A Standard and Poor’s rating of BBB- or higher is considered investment grade. A Moody’s rating of Baa3 or higher is considered investment grade. A Standard and Poor’s rating below BBB- is considered noninvestment grade. A Moody’s rating below Baa3 is considered non-investment grade.
 
The Global Industry Classification Standard (GICS) was developed by and is the exclusive property and a service mark of MSCI Inc. (MSCI) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (S&P) and is licensed for use by Osterweis Capital Management.
 
Neither MSCI, S&P, nor any other party involved in making or compiling the GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits), even if notified of the possibility of such damages.
 
This document must be preceded or accompanied by a current prospectus. Please refer to the prospectus for important information about the investment company including objectives, risks, charges and expenses.
 
Osterweis Capital Management is the adviser to the Osterweis Funds, which are distributed by Quasar Distributors, LLC. [OSTE-20210525-0225]
 


Table of Contents


Letter from the Chief Investment Officers 2
Manager Reviews, Fund Overviews and Schedules of Investments  
Osterweis Fund  
Portfolio Managers’ Review 4
Fund Overview 5
Schedule of Investments 6
Osterweis Strategic Income Fund  
Portfolio Managers’ Review 8
Fund Overview 9
Schedule of Investments 10
Osterweis Strategic Investment Fund  
Portfolio Managers’ Review 16
Fund Overview 18
Schedule of Investments 19
Osterweis Emerging Opportunity Fund  
Portfolio Managers’ Review 24
Fund Overview 25
Schedule of Investments 26
Osterweis Total Return Fund  
Portfolio Managers’ Review 28
Fund Overview 30
Schedule of Investments 31
Financial Statements  
Statements of Assets and Liabilities 37
Statements of Operations 38
Statements of Changes in Net Assets  
Osterweis Fund 39
Osterweis Strategic Income Fund 40
Osterweis Strategic Investment Fund 41
Osterweis Emerging Opportunity Fund 42
Osterweis Total Return Fund 43
Financial Highlights  
Osterweis Fund 44
Osterweis Strategic Income Fund 45
Osterweis Strategic Investment Fund 46
Osterweis Emerging Opportunity Fund 47
Osterweis Total Return Fund 48
Notes to Financial Statements 49
Report of Independent Registered Public Accounting Firm 61
Expense Examples 62
Trustees and Executive Officers 63
Additional Information 67
Privacy Notice 69


1

Letter from the Chief Investment Officers

April 15, 2021
 
The past twelve months have been extraordinary. The coronavirus pandemic was much more than a once-in-a-century public health disaster – it was a seismic societal event that upended long established norms and wreaked havoc on the economy. Businesses and consumers spent most of 2020 adjusting to lockdowns, shortages, and travel restrictions in real time. Life didn’t begin to return to normal until January, when the vaccine rollout began in earnest, and we still have a long way to go.
 
The equity market’s reaction to the unusual events of the past year was somewhat counterintuitive. Following the sharp selloff in February/March, stocks began a protracted rally that continued throughout the entire fiscal year. The S&P 500 increased 56.4% from April 1, 2020 to March 31, 2021.
 
At first glance, the disconnect between Wall St. and Main St. seems surprising, particularly with unemployment reaching all-time highs last year. Bull markets are supposed to be a reflection of strong underlying economic fundamentals, and clearly that wasn’t the case in 2020.
 
Nonetheless, in our view there are two important reasons the rally was rational. First, during an extended period of low interest rates, equity valuations tend to rise, and the Federal Reserve slashed short-term rates to zero shortly after the onset of the pandemic. Second, despite overall weakness, large parts of the economy were growing at accelerated rates due to structural changes caused by the pandemic.
 
During the first three fiscal quarters of this year (April – December), our approach to managing our equity portfolios, including the Osterweis Fund, the equity portion of the Strategic Investment Fund, and the Emerging Opportunity Fund, was to focus on sectors that benefitted the most from the transition to a socially distant economy. We invested in eCommerce platforms and package delivery companies, as online shopping became indispensable. Likewise, we invested in the work-from-home ecosystem, as the massive and sudden increase in remote employment benefitted those technology providers and simultaneously increased demand for internet bandwidth, which helped networking firms, data center providers, and semiconductor companies.
 
Starting around the new calendar year, as the vaccine rollout gained momentum, the economic outlook finally began to improve. Governments began easing lockdowns, raising hopes for a recovery among the hardest hit industries (travel & leisure, restaurants, etc.), while the Biden administration’s $1.9 trillion stimulus package provided relief directly to individuals and small businesses. As the economy emerged from the depths of the pandemic, investors began rotating out of technology stocks and started buying cyclical companies, which tend to outperform as macro conditions improve. This shift created some short-term volatility but did not derail the rally – it just changed the composition of the stocks that were outperforming.
 
We also liked the so-called “reopening trade” and started reorienting our portfolios toward more cyclical exposure. In the Osterweis Fund and Strategic Investment Fund, our goal is to strike the right balance between near-term cyclical opportunities and long-term secular growth winners, as we prefer to invest in firms with the ability to outperform over a longer time horizon. In the Emerging Opportunity Fund we added a few growth companies whose share prices were more sensitive to near-term profitability than to longer term financial projections, and we added secular growth companies that have a cyclical dimension to their business.
 
Fixed income markets did not follow quite the same path as the equity market during the past fiscal year, mostly because the two major market segments - investment grade and high yield – performed very differently. Both started the period well, buoyed by the Fed’s massive quantitative easing (QE) program. But the investment grade market finished the period roughly flat, as it was unable to overcome the headwinds created by rising Treasury yields during the fourth fiscal quarter. High yield bonds, on the other hand, performed well during the entire period as they tend to track the equity markets.
 


2

Letter from the Chief Investment Officers

Given the complexities in the market, we believe that fixed income will require a bit of patience in 2021. Yields are still near historic lows while duration is still near all-time highs. In the Strategic Income and Strategic Investment Funds, we have been focusing on higher quality high yield issuers with shorter to intermediate maturities. In our Total Return Fund, we are focusing on opportunities in ABS, non-agency MBS, and corporates.
 
For our latest investment insights, we invite you to visit www.osterweis.com. Additionally, if you are not currently receiving our quarterly shareholder letters electronically, please send an email to contact@osterweis.com or call (800) 700-3316. Thank you for investing with the Osterweis Funds and for your continued confidence in our management.
 
Sincerely,
 
 
 Jim Callinan, CFAJohn OsterweisLarry CordiscoCarl KaufmanEddy Vataru, CFA
 CIO –Co-CIO –Co-CIO –CIO –CIO –
 Emerging GrowthCore EquityCore EquityStrategic IncomeTotal Return

____________________
 
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.
 








3

Osterweis Fund | Portfolio Managers’ Review

Performance Summary
 
For the period of April 1, 2020 to March 31, 2021, the Osterweis Fund (the “Fund”) generated a total return of 53.48% versus 56.35% for the S&P 500. (Please see standardized performance in the table following this review.)
 
Market Review
 
The past twelve months have been an unusual period in the markets, as equities performed well despite a substantial slowdown in the economy due to Covid-19. The first three fiscal quarters were particularly challenging for industries that relied on in-person customers (brick and mortar retail, travel, entertainment, etc.) but they were a boon to technology companies that provided virtual products and services. Shares of eCommerce and work-from-home stocks surged during the pandemic, igniting a market rally that lasted throughout the entire fiscal year. However, the composition of the rally changed during the fourth fiscal quarter as vaccines became more widely available and the economy began to reopen. Investors rotated out of the technology stocks that had outperformed during the pandemic and began focusing on cyclical companies that tend to do better when the economy is improving.
 
Portfolio Review
 
For the twelve-month period ending March 31, 2021, the Fund slightly trailed the S&P 500. The equity portion of the portfolio outperformed the index, but those gains were offset by the Fund’s small cash position, which was a drag on performance. In rapidly rising markets, cash tends to have an outsized impact on returns because it lags the market by a wide margin.
 
Within the equity portfolio, our security selection was additive to performance, primarily because our positions in information technology, health care, and consumer staples each outperformed their counterparts in the index. Our sector weighting had a slightly positive impact on performance, mostly because we were underweight consumer staples, which was one of the worst performing sectors in the index during the period.
 
Over 85% of the individual stocks in the Fund and every sector delivered positive absolute returns during the period. Consumer staples and information technology performed the best on a relative basis. Utilities, health care, and communications services also performed well relative to the index. On the downside, our energy, materials, consumer discretionary, real estate, financials, and industrial holdings each lagged the benchmark.
 
Outlook & Portfolio Positioning
 
In our view the economic outlook appears favorable, so we have been gradually reorienting toward more exposure to leading cyclical businesses likely to benefit from the recovery, while also maintaining positions in long-term secular growers that have dominant market positions, enjoy pricing power, and operate in industries with great long-term tailwinds.
 

 
____________________
 
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.
 
Investment performance reflects periods during which fee waivers were in effect. In the absence of such waivers, total return would have been reduced.
 


4

Osterweis Fund | Fund Overview (Unaudited)

Average Annual Total Returns
Periods Ended March 31, 2021

      Since Inception
 1 Yr.3 Yr.5 Yr.10 Yr.15 Yr.(October 1, 1993)
Osterweis Fund   53.48%   17.87%   14.07%   10.08%     8.07%   10.88%
S&P 500 Index56.3516.7816.2913.9110.0210.28
Gross/Net Expense Ratio as of 3/31/2020: 1.20%/0.96% 1
1
As of most recent Prospectus dated June 30, 2020.  Please see the Fund’s Financial Highlights in this report for the most recent expense ratio. The Adviser has contractually agreed to waive certain fees through June 30, 2021.  The net expense ratio is applicable to investors.

The performance data quoted above represents 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 their original cost. 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.
 
Growth of $10K (Inception to 3/31/2021)

 

This chart illustrates the performance of a hypothetical $10,000 investment made on October 1, 1993 and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The returns reflect fee waivers in effect. In the absence of such waivers, total return would be reduced (See Note 3). The chart assumes reinvestment of capital gains, dividends and return of capital, if applicable, for the Fund and dividends for an index.
 
Sector Allocation (% of Net Assets)



Equities are classified by GICS sector. Bonds are classified by bond type.

Top Ten Equity Holdings (% of Net Assets)    
Alphabet, Inc. – Class C  6.6% 
Microsoft Corp.  5.3  
JPMorgan Chase & Co.  4.3  
FedEx Corp.  4.0  
Charter Communications, Inc. – Class A  3.5  
Danaher Corp.  3.2  
Union Pacific Corp.  3.1  
Sysco Corp.  3.1  
Applied Materials, Inc.  2.9  
Visa, Inc. – Class A  2.8  
Total  38.8% 

Fund holdings are subject to change.

5

Osterweis Fund | Schedule of Investments at March 31, 2021

      
Shares   Value 
Common Stocks: 97.1%   
      
Aerospace & Defense: 1.6%   
 80,580 Safran SA – ADR $2,742,943 
     
Air Freight & Logistics: 4.0%    
 23,960 FedEx Corp.  6,805,598 
     
Auto Components: 2.3%    
 28,170 
Aptiv PLC – ADR 1
  3,884,643 
     
Banks: 6.7%    
 24,945 First Republic Bank  4,159,579 
 47,395 JPMorgan Chase & Co.  7,214,941 
      11,374,520 
Chemicals: 3.7%    
 15,455 Air Products & Chemicals, Inc.  4,348,110 
 13,740 International Flavors &    
     Fragrances, Inc.  1,918,241 
      6,266,351 
Commercial Services & Supplies: 2.6%    
 41,135 Waste Connections, Inc.  4,441,757 
     
Diversified Consumer Services: 1.9%    
 18,805 Bright Horizons Family    
   
  Solutions, Inc. 1
  3,224,117 
     
Electric Utilities: 1.8%    
 40,102 NextEra Energy, Inc.  3,032,112 
     
Equity Real Estate Investment Trusts – REITS: 4.4%    
 19,795 Crown Castle International Corp.  3,407,313 
 25,660 PS Business Parks, Inc.  3,966,523 
      7,373,836 
Food & Staples Retailing: 3.1%    
 65,370 Sysco Corp.  5,147,234 
     
Health Care Equipment & Supplies: 5.7%    
 24,270 Danaher Corp.  5,462,692 
 9,990 Teleflex, Inc.  4,150,445 
      9,613,137 
Insurance: 2.2%    
 38,825 The Progressive Corp.  3,712,058 
     
Interactive Media & Services: 6.6%    
 5,374 
Alphabet, Inc. – Class C 1
  11,116,818 
     
Internet & Direct Marketing Retail: 3.8%    
 12,145 
Alibaba Group Holding Ltd. – ADR 1
  2,753,636 
 1,205 
Amazon.com, Inc. 1
  3,728,366 
      6,482,002 
IT Services: 3.9%    
 37,125 
LiveRamp Holdings, Inc. 1
  1,926,045 
 22,335 Visa, Inc. – Class A  4,728,990 
      6,655,035 
Media: 3.5%    
 9,472 Charter Communications,    
   
  Inc. – Class A 1
  5,844,413 
Multiline Retail: 2.5%    
 20,845 Dollar General Corp.  4,223,614 
     
Oil, Gas & Consumable Fuels: 1.7%    
 17,785 Pioneer Natural Resources Co.  2,824,614 
     
Pharmaceuticals: 4.0%    
 18,185 Johnson & Johnson  2,988,704 
 45,550 
Nektar Therapeutics 1
  911,000 
 33,610 Novartis AG – ADR  2,872,983 
      6,772,687 
Road & Rail: 5.6%    
 17,895 Old Dominion Freight Line, Inc.  4,302,137 
 23,530 Union Pacific Corp.  5,186,247 
      9,488,384 
Semiconductors & Semiconductor Equipment: 9.5%    
 51,170 
Advanced Micro Devices, Inc. 1
  4,016,845 
 36,859 Applied Materials, Inc.  4,924,362 
 43,370 
Micron Technology, Inc. 1
  3,825,668 
 9,350 Monolithic Power Systems, Inc.  3,302,514 
      16,069,389 
Software: 9.9%    
 37,795 Microsoft Corp.  8,910,927 
 13,855 
Synopsys, Inc. 1
  3,432,992 
 32,635 
Zendesk, Inc. 1
  4,328,054 
      16,671,973 
Specialty Retail: 4.6%    
 11,250 The Home Depot, Inc.  3,434,062 
 35,780 Ross Stores, Inc.  4,290,380 
      7,724,442 
Wireless Telecommunication Services: 1.5%    
 20,195 
T-Mobile US, Inc. 1
  2,530,232 
     
Total Common Stocks    
  (Cost $92,509,912)  164,021,909 


The accompanying notes are an integral part of these financial statements.

6

Osterweis Fund | Schedule of Investments at March 31, 2021 (Continued)

Shares   Value 
Short-Term Investments: 2.7%   
      
Money Market Funds: 2.7%   
 4,565,972 Federated Hermes U.S.   
     Treasury Cash Reserves –   
   
  Class I , 0.010% 2
 $4,565,972 
Total Money Market Funds    
  (Cost $4,565,972)  4,565,972 
Total Short-Term Investments    
  (Cost $4,565,972)  4,565,972 
Total Investments in Securities: 99.8%    
  (Cost $97,075,884)  168,587,881 
Other Assets in Excess of Liabilities: 0.2%  324,267 
Total Net Assets: 100.0% $168,912,148 

ADR – American Depositary Receipt
1
Non-income producing security.
2
Annualized seven-day effective yield as of March 31, 2021.


The accompanying notes are an integral part of these financial statements.

7

Strategic Income Fund | Portfolio Managers’ Review

Performance Summary
 
For the twelve-month period ending March 31, 2021, the Osterweis Strategic Income Fund (the “Fund”) generated a total return of 18.73%, outperforming the Bloomberg Barclays U.S. Aggregate Bond Index (the “BC Agg”), which returned 0.71% over the same period. (Please see standardized performance in the table following this review.) The Fund also outperformed the Bloomberg Barclays U.S. Universal Bond Index (the “BC Univ”), which returned 2.95% over the same period1.
 
Market Review
 
During the past twelve months, the performance of the investment grade and high yield bond markets diverged substantially. Both started the period well, buoyed by the Fed’s decisions last March to lower short-term rates to zero and initiate a massive round of quantitative easing (“QE”). But the investment grade market finished the period roughly flat, as it was unable to overcome the headwinds created by rising Treasury yields during the fourth fiscal quarter. High yield bonds, on the other hand, performed well as they tend to track the equity markets, which also had a strong fiscal year.
 
Portfolio Review
 
For the twelve months ending March 31, 2021, the Fund significantly outperformed the BC Univ, driven primarily by beneficial sector allocation and secondarily by issue selection. These relative gains were somewhat offset by duration management.
 
Sector allocation was the largest contributor to the Fund’s relative results, adding 1,300 basis points. Our significant overweight to high yield (71% for the Fund vs. 5% for the index) was a boon to relative performance, as the high yield market did well during the period. Our allocation to equity-sensitive convertibles also provided a substantive boost over the benchmark.
 
Issue selection also produced a solid contribution to our outperformance during the period, adding over 520 basis points. Most of the value added came from our high yield bonds, though our investment grade picks also gave us a further leg up. Overall, the Fund generated gains in all sectors and double-digit returns in most, boosting both absolute and relative results.
 
During the past four quarters, corporate bonds, which make up the majority of the Fund, generally fared better on the long end. As the Fund continued to focus on shorter term securities and a more defensive position compared to the benchmark, our duration management detracted from relative returns.
 
Outlook & Portfolio Positioning
 
Although the economy is improving as we emerge from the pandemic, we continue to take a cautious approach. The high yield market is not cheap, so rather than stretch for yield in lower quality companies or longer maturity paper, we are focusing on higher quality companies and bonds with shorter to medium maturities. Our healthy combination of short-term positions and cash gives us the flexibility to acquire attractive bonds when opportunities present themselves.
 
____________________
 
Mutual fund investing involves risk. Principal loss is possible.
 
The Osterweis Strategic Income 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. 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. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Small- and mid-capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies. Higher turnover rates may result in increased transaction costs, which could impact performance. From time to time, the Fund may have concentrated positions in one or more sectors subjecting the Fund to sector emphasis risk. The Fund may invest in municipal securities which are subject to the risk of default.
 
1
The Bloomberg Barclays U.S. Universal Bond Index is used in the above fixed income analysis as its investment universe more closely resembles that of the Fund’s fixed income holdings.

8

Strategic Income Fund | Fund Overview (Unaudited)

Average Annual Total Returns
Periods Ended March 31, 2021

      Since Inception
 1 Yr.3 Yr.5 Yr.10 Yr.15 Yr.(August 30, 2002)
Osterweis Strategic Income Fund  18.73%   4.78%   6.19%   4.81%   5.84%   6.50%
Bloomberg Barclays U.S. Aggregate Bond Index0.714.653.103.444.294.19
Gross/Net Expense Ratio as of 3/31/2020: 0.87% 1
1
As of most recent Prospectus dated June 30, 2020.  Please see the Fund’s Financial Highlights in this report for the most recent expense ratio.

The performance data quoted above represents 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 their original cost. 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.
 
Growth of $10K (Inception to 3/31/2021)

 
 
This chart illustrates the performance of a hypothetical $10,000 investment made on August 30, 2002 and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The chart assumes reinvestment of capital gains, dividends and return of capital, if applicable, for the Fund and dividends for an index.

Asset Sector Allocation (% of Net Assets)


Equities are classified by GICS sector.  Bonds are classified by bond type.
 
Top Holdings (% of Net Assets)    
Consolidated Energy Finance SA, 3.934%  2.0% 
Southeastern Grocers, Inc.  1.9  
Avation Capital SA, 8.250%  1.4  
Caleres, Inc., 6.250%  1.4  
Xerox Holdings Corp., 5.000%  1.4  
Donnelley Financial Solutions, Inc., 8.250%  1.4  
American Airlines 2012-2 Class C     
  Pass Through Trust, 4.700%  1.3  
XPO Logistics, Inc., 6.250%  1.3  
Michael Baker International LLC, 8.750%  1.3  
Navistar International Corp., 6.625%  1.3  
Total  14.7% 

Fund holdings are subject to change.

9

Strategic Income Fund | Schedule of Investments at March 31, 2021


Shares   Value 
Common Stocks: 2.6%   
      
Food & Staples Retailing: 2.0%   
 7,949,377 
Southeastern Grocers, Inc. 1,2
 $101,354,557 
 61,582,000 Tops Holding, Litigation    
   
  Trust Proceeds 1,2,6
  46,248 
      101,400,805 
Metals & Mining: 0.6%    
 823 
Real Alloy Holding, Inc. 1,2
  32,902,800 
     
Total Common Stocks    
  (Cost $146,373,981)  134,303,605 
        
Convertible Preferred Stocks: 1.4%    
        
Media: 0.3%    
 196,000 ViacomCBS, Inc., 5.750%  13,161,400 
     
Road & Rail: 1.1%    
 490,000 Daseke, Inc., 7.625%  59,488,936 
     
Total Convertible Preferred Stocks    
  (Cost $60,662,000)  72,650,336 
        
Principal      
Amount      
Bonds: 87.4%    
Corporate Bonds: 78.8%    
        
Air Freight & Logistics: 1.4%    
   Cargo Aircraft Management, Inc.    
$4,590,000   4.750%, 02/01/2028  4,742,044 
   XPO Logistics, Inc.    
 64,500,000   6.250%, 05/01/2025  69,179,475 
      73,921,519 
Airlines: 2.1%    
   American Airlines 2012-2    
     Class C Pass Through Trust    
 69,540,000   4.700%, 06/03/2021  69,469,973 
   United Airlines Holdings, Inc.    
 26,346,000   4.250%, 10/01/2022  26,839,988 
 12,896,000   5.000%, 02/01/2024  13,113,620 
      109,423,581 
Auto Components: 3.3%    
   American Axle & Manufacturing, Inc.    
 4,900,000   6.250%, 04/01/2025  5,053,125 
 16,600,000   6.250%, 03/15/2026  17,023,300 
 40,000,000   6.875%, 07/01/2028  42,012,000 
   The Goodyear Tire & Rubber Co.    
 25,485,000   5.125%, 11/15/2023  25,604,779 
 53,605,000   9.500%, 05/31/2025  60,171,613 
   Real Hero Merger Sub 2, Inc.    
 23,500,000   6.250%, 02/01/2029  24,293,125 
      174,157,942 
Automobiles: 1.9%    
   Ford Motor Co.    
 9,000,000   9.625%, 04/22/2030  12,574,305 
   Ford Motor Credit Co. LLC    
 23,405,000   1.048% (3 Month LIBOR    
   
  USD + 0.810%), 04/05/2021 3
  23,405,000 
 7,925,000   3.377% (3 Month LIBOR    
   
  USD + 3.140%), 01/07/2022 3
  8,020,331 
 12,051,000   4.250%, 09/20/2022  12,448,442 
 10,000,000   4.687%, 06/09/2025  10,632,000 
   Volkswagen Group of    
     America Finance LLC    
 34,000,000   1.141% (3 Month LIBOR    
   
  USD + 0.940%), 11/12/2021 3
  34,178,263 
      101,258,341 
Banks: 0.5%    
   CIT Group, Inc.    
 26,720,000   5.000%, 08/15/2022  28,161,277 
     
Beverages: 0.9%    
   Primo Water Holdings, Inc.    
 47,745,000 
  5.500%, 04/01/2025 3
  49,131,992 
     
Building Products: 3.0%    
   Builders FirstSource, Inc.    
 13,059,000   6.750%, 06/01/2027  14,022,101 
   Griffon Corp.    
 45,000,000   5.750%, 03/01/2028  48,015,000 
   Patrick Industries, Inc.    
 39,500,000   7.500%, 10/15/2027  43,203,125 
   PGT Innovations, Inc.    
 48,405,000   6.750%, 08/01/2026  51,551,325 
      156,791,551 
Capital Markets: 2.3%    
   Donnelley Financial Solutions, Inc.    
 67,379,000   8.250%, 10/15/2024  70,411,055 
   Oppenheimer Holdings, Inc.    
 49,250,000   5.500%, 10/01/2025  50,973,750 
      121,384,805 
Chemicals: 3.9%    
   Consolidated Energy Finance SA    
 103,840,000   3.934% (3 Month LIBOR    
   
  USD + 3.750%), 06/15/2022 3
  102,827,380 
 34,500,000   6.875%, 06/15/2025  35,211,563 


The accompanying notes are an integral part of these financial statements.

10

Strategic Income Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Principal     
Amount   Value 
Chemicals: 3.9% (Continued)   
  INEOS Quattro Finance 2 PLC   
$32,914,000   3.375%, 01/15/2026 $32,955,142 
   Olin Corp.    
 1,750,000   5.500%, 08/15/2022  1,830,526 
 6,750,000   9.500%, 06/01/2025  8,336,250 
 19,296,000   5.625%, 08/01/2029  20,836,400 
      201,997,261 
Commercial Services & Supplies: 3.9%    
   The Brink’s Co.    
 10,000,000   5.500%, 07/15/2025  10,581,250 
   GFL Environmental, Inc.    
 11,100,000   5.125%, 12/15/2026  11,711,610 
 19,781,000   8.500%, 05/01/2027  21,820,916 
   KAR Auction Services, Inc.    
 47,718,000   5.125%, 06/01/2025  48,326,405 
   Pitney Bowes, Inc.    
 44,500,000   7.250%, 03/15/2029  44,117,745 
   Quad/Graphics, Inc.    
 29,258,000   7.000%, 05/01/2022  29,008,868 
   R.R. Donnelley & Sons Co.    
 22,311,000   8.875%, 04/15/2021  22,478,332 
 12,928,000   7.000%, 02/15/2022  13,393,602 
      201,438,728 
Communications Equipment: 0.6%    
   Plantronics, Inc.    
 30,270,000   5.500%, 05/31/2023  30,454,950 
     
Computers & Peripherals: 3.6%    
   CPI CG, Inc.    
 42,825,000   8.625%, 03/15/2026  44,978,669 
   Dell International LLC / EMC Corp.    
 15,441,000   5.875%, 06/15/2021  15,479,603 
   NCR Corp.    
 34,425,000   5.750%, 09/01/2027  36,490,500 
 5,750,000   5.000%, 10/01/2028  5,818,281 
 10,000,000   5.125%, 04/15/2029  10,132,050 
   Xerox Holdings Corp.    
 70,000,000   5.000%, 08/15/2025  72,800,000 
      185,699,103 
Construction & Engineering: 2.3%    
   Michael Baker International LLC    
 66,404,000   8.750%, 03/01/2023  67,649,075 
   Tutor Perini Corp.    
 48,644,000   6.875%, 05/01/2025  50,361,133 
      118,010,208 
Construction Materials: 1.1%    
   Cemex SAB de CV    
 4,750,000   7.375%, 06/05/2027  5,385,313 
   US Concrete, Inc.    
 6,567,000   6.375%, 06/01/2024  6,718,862 
 42,607,000   5.125%, 03/01/2029  43,965,098 
      56,069,273 
Consumer Finance: 1.8%    
   American Express Co.    
 39,000,000   0.717% (3 Month LIBOR    
   
  USD + 0.525%), 05/17/2021 3
  39,008,090 
   Enova International, Inc.    
 40,000,000   8.500%, 09/01/2024  41,145,800 
   FirstCash, Inc.    
 15,000,000   4.625%, 09/01/2028  15,395,625 
      95,549,515 
Distributors: 1.0%    
   American Builders & Contractors    
     Supply Co., Inc.    
 47,314,000   5.875%, 05/15/2026  48,948,935 
 2,468,000   4.000%, 01/15/2028  2,472,171 
      51,421,106 
Diversified Financial Services: 1.7%    
   Aviation Capital Group LLC    
 30,000,000   1.141% (3 Month LIBOR    
   
  USD + 0.950%), 06/01/2021 3
  30,002,325 
 14,420,000   0.882% (3 Month LIBOR    
   
  USD + 0.670%), 07/30/2021 3
  14,405,877 
 5,500,000   5.500%, 12/15/2024  6,154,317 
   Burford Capital Global Finance LLC    
 38,650,000   6.250%, 04/15/2028  39,664,563 
      90,227,082 
Diversified Telecommunication Services: 1.6%    
   Lumen Technologies, Inc.    
 57,818,000   6.450%, 06/15/2021  58,294,999 
 22,925,000   5.800%, 03/15/2022  23,756,031 
      82,051,030 
Equity Real Estate Investment Trusts – REITS: 2.1%    
   Diversified Healthcare Trust    
 26,267,000   6.750%, 12/15/2021  26,595,338 
   HAT Holdings I LLC /    
     HAT Holdings II LLC    
 41,500,000   5.250%, 07/15/2024  42,930,920 
 4,000,000   6.000%, 04/15/2025  4,225,000 
   Iron Mountain, Inc.    
 20,000,000   4.500%, 02/15/2031  19,797,000 


The accompanying notes are an integral part of these financial statements.

11

Strategic Income Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Principal     
Amount   Value 
Equity Real Estate Investment   
  Trusts – REITS: 2.1% (Continued)   
  SL Green Operating Partnership L.P.   
$13,150,000   1.174% (3 Month LIBOR   
   
  USD + 0.980%), 08/16/2021 3
 $13,150,431 
      106,698,689 
Food & Staples Retailing: 3.7%    
   C&S Group Enterprises LLC    
 39,500,000   5.000%, 12/15/2028  38,512,500 
   KeHE Distributors LLC /    
     KeHE Finance Corp.    
 53,420,000   8.625%, 10/15/2026  59,555,020 
   SEG Holding LLC /    
     SEG Finance Corp.    
 15,000,000   5.625%, 10/15/2028  15,731,250 
   United Natural Foods, Inc.    
 5,000,000   6.750%, 10/15/2028  5,350,000 
   US Foods, Inc.    
 38,949,000   6.250%, 04/15/2025  41,805,325 
 29,354,000   4.750%, 02/15/2029  29,390,692 
      190,344,787 
Food Products: 0.1%    
   Simmons Food, Inc. / Simmons    
 5,000,000   4.625%, 03/01/2029  5,050,100 
     
Health Care Providers & Services: 2.5%    
   AMN Healthcare, Inc.    
 5,000,000   4.625%, 10/01/2027  5,121,875 
   Centene Corp.    
 54,965,000   5.375%, 06/01/2026  57,545,607 
 21,913,000   5.375%, 08/15/2026  23,170,806 
   Owens & Minor, Inc.    
 36,210,000   4.500%, 03/31/2029  36,436,312 
   RP Escrow Issuer LLC    
 5,000,000   5.250%, 12/15/2025  5,187,500 
      127,462,100 
Hotels, Restaurants & Leisure: 2.9%    
   Carnival Corp.    
 4,750,000   11.500%, 04/01/2023  5,451,599 
 23,616,000   7.625%, 03/01/2026  25,400,189 
 9,500,000   5.750%, 03/01/2027  9,777,495 
   International Game Technology PLC    
 5,000,000   4.125%, 04/15/2026  5,150,400 
   NCL Corp. Ltd.    
 14,750,000   12.250%, 05/15/2024  17,873,312 
 15,510,000   3.625%, 12/15/2024  14,666,644 
 7,000,000   5.875%, 03/15/2026  7,104,230 
   Six Flags Entertainment Corp.    
 31,026,000   4.875%, 07/31/2024  31,375,042 
   Six Flags Theme Parks, Inc.    
 7,500,000   7.000%, 07/01/2025  8,130,713 
   Travel + Leisure Co.    
 27,111,000   4.250%, 03/01/2022  27,466,832 
      152,396,456 
Household Durables: 2.6%    
   Empire Communities Corp.    
 47,250,000   7.000%, 12/15/2025  49,907,812 
   Installed Building Products, Inc.    
 6,750,000   5.750%, 02/01/2028  7,077,780 
   Mattamy Group Corp.    
 24,500,000   5.250%, 12/15/2027  25,709,687 
   The New Home Co., Inc.    
 39,250,000   7.250%, 10/15/2025  40,730,118 
   Taylor Morrison Communities, Inc.    
 9,500,000   5.750%, 01/15/2028  10,494,413 
      133,919,810 
Industrial Conglomerates: 1.4%    
   Icahn Enterprises L.P. /    
     Icahn Enterprises Finance Corp.    
 24,433,000   6.250%, 02/01/2022  24,494,083 
 5,635,000   4.750%, 09/15/2024  5,860,400 
 7,283,000   6.375%, 12/15/2025  7,537,905 
 30,872,000   6.250%, 05/15/2026  32,410,660 
      70,303,048 
IT Services: 2.6%    
   Alliance Data Systems Corp.    
 15,832,000   4.750%, 12/15/2024  16,277,275 
 49,250,000   7.000%, 01/15/2026  52,799,694 
   KBR, Inc.    
 20,000,000   4.750%, 09/30/2028  20,340,000 
   Unisys Corp.    
 43,250,000   6.875%, 11/01/2027  47,466,875 
      136,883,844 
Machinery: 4.0%    
   Flowserve Corp.    
 25,855,000   4.000%, 11/15/2023  27,302,304 
   Hillenbrand, Inc.    
 4,000,000   5.750%, 06/15/2025  4,277,500 
   Meritor, Inc.    
 13,848,000   6.250%, 02/15/2024  14,127,729 
   Navistar International Corp.    
 64,250,000   6.625%, 11/01/2025  66,741,615 


The accompanying notes are an integral part of these financial statements.

12

Strategic Income Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Principal     
Amount   Value 
Machinery: 4.0% (Continued)   
  Wabash National Corp.   
$38,641,000   5.500%, 10/01/2025 $39,651,269 
   Welbilt, Inc.    
 55,002,000   9.500%, 02/15/2024  56,755,189 
      208,855,606 
Media: 1.1%    
   Meredith Corp.    
 25,000,000   6.500%, 07/01/2025  26,900,125 
 30,630,000   6.875%, 02/01/2026  31,453,181 
      58,353,306 
Metals & Mining: 3.4%    
   Century Aluminum Co.    
 50,000,000   12.000%, 07/01/2025  53,875,000 
   Coeur Mining, Inc.    
 56,000,000   5.125%, 02/15/2029  53,603,200 
   Hecla Mining Co.    
 49,370,000   7.250%, 02/15/2028  53,011,037 
   Real Alloy Holding, Inc.    
 14,343,157   10.194%, (3 Month LIBOR    
     USD + 10.000%) Cash or    
     12.194% (3 Month LIBOR    
     USD + 12.000%) PIK,    
   
  05/31/2023 1,3
  14,343,157 
      174,832,394 
Mortgage Real Estate    
  Investment Trusts – REITS: 0.4%    
   Starwood Property Trust, Inc.    
 20,900,000   5.000%, 12/15/2021  21,226,562 
     
Oil, Gas & Consumable Fuels: 3.6%    
   Aker BP ASA    
 31,475,000   4.750%, 06/15/2024  32,297,357 
   Calumet Specialty Products Partners    
     L.P. / Calumet Finance Corp.    
 28,500,000 
  11.000%, 04/15/2025 3
  29,995,965 
   Genesis Energy L.P. /    
     Genesis Energy Finance Corp.    
 51,550,000   7.750%, 02/01/2028  51,629,902 
   Global Partners L.P. /    
     GLP Finance Corp.    
 30,750,000   7.000%, 08/01/2027  32,498,906 
   NGL Energy Operating LLC /    
     NGL Energy Finance Corp.    
 7,500,000   7.500%, 02/01/2026  7,709,546 
   Targa Resources Partners L.P. / Targa    
     Resources Partners Finance Corp.    
 31,849,000   4.250%, 11/15/2023  32,059,363 
      186,191,039 
Paper & Forest Products: 0.7%    
   Resolute Forest Products, Inc.    
 34,750,000   4.875%, 03/01/2026  34,880,312 
     
Pharmaceuticals: 0.9%    
   Bayer U.S. Finance II LLC    
 44,975,000   0.831% (3 Month LIBOR    
   
  USD + 0.630%), 06/25/2021 3
  45,009,689 
     
Professional Services: 0.2%    
   Korn Ferry    
 9,600,000 
  4.625%, 12/15/2027 3
  9,816,000 
     
Specialty Retail: 3.2%    
   Caleres, Inc.    
 72,713,000   6.250%, 08/15/2023  73,440,130 
   Ken Garff Automotive LLC    
 49,795,000   4.875%, 09/15/2028  49,838,571 
   Penske Automotive Group, Inc.    
 19,734,000   3.500%, 09/01/2025  20,223,403 
 13,170,000   5.500%, 05/15/2026  13,577,282 
   Rent-A-Center Inc/TX    
 9,250,000   6.375%, 02/15/2029  9,828,125 
      166,907,511 
Textiles, Apparel & Luxury Goods: 0.3%    
   The William Carter Co.    
 13,000,000   5.500%, 05/15/2025  13,889,460 
 3,000,000   5.625%, 03/15/2027  3,174,375 
      17,063,835 
Thrifts & Mortgage Finance: 2.9%    
   Nationstar Mortgage Holdings, Inc.    
 13,250,000   6.000%, 01/15/2027  13,769,665 
 19,350,000   5.500%, 08/15/2028  19,464,649 
 9,500,000   5.125%, 12/15/2030  9,347,620 
   PennyMac Financial Services, Inc.    
 56,030,000   5.375%, 10/15/2025  58,147,934 
   United Wholesale Mortgage LLC    
 47,500,000   5.500%, 11/15/2025  49,578,125 
      150,307,993 
Trading Companies & Distributors: 2.1%    
   Avation Capital SA    
 91,500,000   8.250% Cash or 9.000%    
   
  PIK, 10/31/2026 3
  73,989,188 
   Herc Holdings, Inc.    
 9,500,000   5.500%, 07/15/2027  10,127,713 
   WESCO Distribution, Inc.    
 15,125,000   7.125%, 06/15/2025  16,559,228 
 9,750,000   7.250%, 06/15/2028  10,923,949 
      111,600,078 


The accompanying notes are an integral part of these financial statements.

13

Strategic Income Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Principal     
Amount   Value 
Transportation Infrastructure: 0.5%   
  Signature Aviation US Holdings, Inc.   
$25,600,000   4.000%, 03/01/2028 $26,076,416 
     
Wireless Telecommunication Services: 0.7%    
   T-Mobile USA, Inc.    
 8,295,000   6.000%, 03/01/2023  8,357,213 
 30,000,000   6.000%, 04/15/2024  30,262,500 
      38,619,713 
Total Corporate Bonds    
  (Cost $3,996,378,960)  4,099,948,552 
        
Convertible Bonds: 8.3%    
        
Aerospace & Defense: 0.2%    
   Parsons Corp.    
 10,000,000   0.250%, 08/15/2025  11,025,000 
     
Airlines: 0.3%    
   Southwest Airlines Co.    
 8,750,000   1.250%, 05/01/2025  15,066,406 
     
Auto Components: 0.3%    
   Horizon Global Corp.    
 19,287,000   2.750%, 07/01/2022  18,511,700 
     
Automobiles: 0.3%    
   Ford Motor Co.    
 14,500,000   0.000%, 03/15/2026  14,717,500 
     
Construction & Engineering: 0.7%    
   Tutor Perini Corp.    
 35,865,000   2.875%, 06/15/2021  36,380,559 
     
Consumer Finance: 0.1%    
   EZCORP, Inc.    
 9,750,000   2.375%, 05/01/2025  7,988,906 
     
Electronic Equipment,    
  Instruments & Components: 0.4%    
   OSI Systems, Inc.    
 19,300,000   1.250%, 09/01/2022  20,904,313 
     
Energy Equipment & Services: 0.6%    
   Newpark Resources, Inc.    
 30,180,000   4.000%, 12/01/2021  30,029,100 
     
Entertainment: 0.2%    
   Live Nation Entertainment, Inc.    
 8,500,000   2.000%, 02/15/2025  9,456,250 
     
Health Care Equipment & Supplies: 0.9%    
   CONMED Corp.    
 8,755,000   2.625%, 02/01/2024  13,728,888 
   Haemonetics Corp.    
 17,750,000   0.000%, 03/01/2026  16,906,875 
   Integra LifeSciences Holdings Corp.    
 13,000,000   0.500%, 08/15/2025  14,519,700 
      45,155,463 
Health Care Technology: 0.2%    
   Tabula Rasa HealthCare, Inc.    
 8,400,000   1.750%, 02/15/2026  8,526,000 
     
Hotels, Restaurants & Leisure: 1.0%    
   Carnival Corp.    
 12,575,000   5.750%, 04/01/2023  35,348,325 
   NCL Corp. Ltd.    
 6,835,000   6.000%, 05/15/2024  15,190,787 
      50,539,112 
Internet & Direct Marketing Retail: 0.3%    
   Etsy, Inc.    
 6,532,000   0.125%, 10/01/2026  15,476,758 
     
IT Services: 0.2%    
   Euronet Worldwide, Inc.    
 8,680,000   0.750%, 03/15/2049  9,933,175 
     
Machinery: 0.2%    
   The Middleby Corp.    
 7,150,000   1.000%, 09/01/2025  10,094,906 
     
Pharmaceuticals: 0.4%    
   Jazz Investments I Ltd.    
 6,290,000   1.875%, 08/15/2021  6,451,181 
 6,000,000   1.500%, 08/15/2024  6,506,250 
 6,650,000   2.000%, 06/15/2026  8,570,188 
      21,527,619 
Real Estate Management & Development: 0.2%    
   Colliers International Group, Inc.    
 4,750,000   4.000%, 06/01/2025  8,745,937 
     
Semiconductors & Semiconductor Equipment: 0.2%    
   Cree, Inc.    
 4,051,000   0.875%, 09/01/2023  7,484,425 
   Rambus, Inc.    
 5,000,000   1.375%, 02/01/2023  5,981,500 
      13,465,925 
Software: 1.3%    
   Alteryx, Inc.    
 4,647,000   1.000%, 08/01/2026  4,220,057 
   Box, Inc.    
 5,650,000   0.000%, 01/15/2026  6,423,344 


The accompanying notes are an integral part of these financial statements.

14

Strategic Income Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Principal     
Amount   Value 
Software: 1.3% (Continued)   
  Envestnet, Inc.   
$9,490,000   0.750%, 08/15/2025 $9,501,806 
   FireEye, Inc.    
 20,566,000   1.625%, 06/01/2035  20,473,629 
   Rapid7, Inc.    
 10,000,000   0.250%, 03/15/2027  9,781,250 
   Tyler Technologies, Inc.    
 6,750,000   0.250%, 03/15/2026  7,184,531 
   Zendesk, Inc.    
 8,550,000   0.625%, 06/15/2025  11,846,880 
      69,431,497 
Thrifts & Mortgage Finance: 0.3%    
   EZCORP, Inc.    
 16,285,000   2.875%, 07/01/2024  15,003,371 
     
Total Convertible Bonds    
  (Cost $356,628,450)  431,979,497 
        
Private Mortgage Backed Obligations: 0.3%    
        
Diversified Financial Services: 0.3%    
   HAS Capital Income    
     Opportunity Fund II    
 21,807,000   8.000%, 12/31/2024    
     (Cost $21,807,000,    
     Acquisition Dates    
   
  06/10/2016, 09/19/2016) 1,5
  16,913,269 
     
Total Private Mortgage Backed Obligations    
  (Cost $21,807,000)  16,913,269 
     
Total Bonds    
  (Cost $4,374,814,410)  4,548,841,317 
        
Warrants: 0.0% 7
    
        
Trading Companies & Distributors: 0.0% 7
    
 1,601,250 Aviation PLC, Warrants    
     (Expiration Date 10/31/2026,    
   
  Exercise Price 114.5 GBp) 1,2
  848,561 
     
Total Warrants    
  (Cost $—)  848,561 
        
Shares      
Short-Term Investments: 8.1%    
        
Money Market Funds: 8.1%    
 210,176,900 Federated Hermes U.S.    
     Treasury Cash Reserves –    
   
  Class I, 0.010% 4
  210,176,900 
 210,176,900 Morgan Stanley Institutional    
     Liquidity Funds – Treasury    
   
  Securities Portfolio , 0.010% 4
  210,176,900 
Total Money Market Funds    
  (Cost $420,353,800)  420,353,800 
Total Short-Term Investments    
  (Cost $420,353,800)  420,353,800 
Total Investments in Securities: 99.5%    
  (Cost $5,002,204,190)  5,176,997,620 
Other Assets in Excess of Liabilities: 0.5%  26,892,067 
Total Net Assets: 100.0% $5,203,889,687 
 
LIBOR – London Interbank Offered Rate
PIK – Payment In Kind
USD – United States Dollar
1
Security is fair valued under the Board of Trustees and is categorized as a Level 3 security.  Significant unobservable inputs were used to determine fair value.
2
Non-income producing security.
3
Variable rate security; rate shown is the rate in effect on March 31, 2021.
4
Annualized seven-day effective yield as of March 31, 2021.
5
Security considered restricted. As of March 31, 2021, the value of the restricted securities was $16,913,269 or 0.3% of net assets.
6
Not a readily marketable security.
7
Does not round to 0.1% or (0.1)%.


The accompanying notes are an integral part of these financial statements.

15

Strategic Investment Fund | Portfolio Managers’ Review

Performance Summary
 
The Osterweis Strategic Investment Fund (the “Fund”) generated a total return of 43.15% for the twelve-month period ending March 31, 2021, outperforming its blended benchmark, composed of 60% S&P 500 Index (“S&P 500”) and 40% Bloomberg Barclays U.S. Aggregate Bond Index (“BC Agg”), which returned 31.71% over the same period. (Please see standardized performance in the table following this letter.) The Fund also outperformed a blended benchmark composed of 60% S&P 500 and 40% Bloomberg Barclays U.S. Universal Bond Index (“BC Univ”), which returned 32.84% over the same period.1
 
Market Review
 
The past twelve months have been an unusual period in the equity markets, as stocks performed well despite a substantial slowdown in the economy due to Covid-19. The first three fiscal quarters were particularly challenging for industries that relied on in-person customers (brick and mortar retail, travel, entertainment, etc.) but they were a boon to technology companies that provided virtual products and services. Shares of eCommerce and work-from-home stocks surged during the pandemic, igniting a market rally that lasted throughout the entire fiscal year. However, the composition of the rally changed during the fourth fiscal quarter as vaccines became more widely available and the economy began to reopen. Investors rotated out of the technology stocks that had outperformed during the pandemic and began focusing on cyclical companies that tend to do better when the economy is improving.
 
The past year was more complicated in the fixed income markets, as the performance of investment grade and high yield bonds diverged substantially. Both started the period well, buoyed by the Fed’s decisions last March to lower short-term rates to zero and initiate a massive round of quantitative easing (“QE”). But the investment grade market finished the period roughly flat, as it was unable to overcome the headwinds created by rising Treasury yields during the fourth fiscal quarter. High yield bonds, on the other hand, performed well as they tend to track the equity markets.
 
Portfolio Review
 
During the twelve-month period ending March 31, 2021, on average 69% of the Fund was allocated to equities, 29% to fixed income, and the rest to cash. Our equity allocation increased during the period from 63% to 71% while fixed income declined from 32% to 28%. Our allocation among these asset classes gave the Fund a solid boost over the blended benchmark during the year.
 
Equities
 
For the period, the majority of our individual stocks delivered positive absolute returns, but overall the equites in the Fund slightly trailed the S&P 500. Our security selection detracted somewhat from relative performance, but our sector allocation was additive.
 
Several sectors in the Fund’s equities outperformed the S&P 500, but those gains were offset by the sectors that lagged, which accounted for the slightly negative impact from security selection. On a relative basis, our best performing sector was consumer staples, which more than doubled the return of its counterpart in the S&P 500. In addition, information technology, utilities, communication services, and health care each delivered positive absolute and relative returns. On the downside, security selection in consumer discretionary, industrials, and financials detracted most from relative performance (though they each delivered very solid absolute returns during the period).
 
Sector allocation was modestly additive to relative performance. We were substantially underweight consumer staples, which materially lagged the return of the S&P 500, and we were materially overweight industrials, which outperformed the S&P 500, both of which boosted our relative performance. However, we were underweight consumer discretionary, which outperformed S&P 500, and we were materially overweight real estate, which underperformed the equity index.
 
____________________
 
1
The Bloomberg Barclays U.S. Universal Bond Index is used in the above fixed income analysis as its investment universe more closely resembles that of the Fund’s fixed income holdings.

 
16

Strategic Investment Fund | Portfolio Managers’ Review

 
Fixed Income
 
During the past fiscal year the fixed income portion of the Fund significantly outperformed the BC Univ, driven primarily by beneficial sector allocation and secondarily by security selection. These relative gains were dampened somewhat by duration management.
 
Sector allocation was the largest contributor to the relative fixed income results. The high yield sector performed well during the period, buoyed by support from the Fed and a strong equity market. Consequently, our significant overweight to high yield (76% for the fixed income portion of the Fund vs. 5% for the BC Univ) was a boon to relative performance. Our allocation to equity-sensitive convertibles also provided a substantive boost over the fixed income benchmark.
 
Issue selection also produced a solid contribution to our outperformance during the period. Most of the value added came from our high yield bonds, though our investment grade picks also gave us a further leg up.
 
During the past four fiscal quarters, corporate bonds, which make up the majority of the Fund’s fixed income exposure, generally fared better on the long end. As we continued to focus on shorter term securities and a more defensive position compared to the fixed income index, our duration management modestly detracted from relative returns.
 
Outlook & Portfolio Positioning
 
In our view the economic outlook appears favorable, so we have been gradually reorienting toward more exposure to leading cyclical businesses likely to benefit from the recovery, while also maintaining positions in long-term secular growers that have dominant market positions, enjoy pricing power, and operate in industries with great long-term tailwinds. We have also focused on companies capable of raising dividends over time, as this provides additional protection should inflation become a persistent problem.
 
We continue to take a cautious approach to fixed income. The high yield market is not cheap, so rather than stretch for yield in lower quality companies or longer maturity paper, we are focusing on higher quality companies and bonds with shorter to medium maturities. Our short-term positions give us the flexibility to acquire attractive bonds when opportunities present themselves.
 
____________________
 
Mutual fund investing involves risk. Principal loss is possible.
 
The Osterweis Strategic Investment Fund may invest in small- and mid-capitalization companies, which tend to have limited liquidity and greater price volatility than large-capitalization companies. 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. Higher turnover rates may result in increased transaction costs, which could impact performance. From time to time, the Fund may have concentrated positions in one or more sectors subjecting the Fund to sector emphasis risk. The Fund may also make investments in derivatives that may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. Leverage may cause the effect of an increase or decrease in the value of the portfolio securities to be magnified and the fund to be more volatile than if leverage was not used. Investments in preferred securities have an inverse relationship with changes in the prevailing interest rate. Investments in Asset Backed and Mortgage Backed Securities include additional risks that investors should be aware of such as credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments.
 
Investment performance reflects periods during which fee waivers were in effect. In the absence of such waivers, total return would have been reduced.
 

17

Strategic Investment Fund | Fund Overview (Unaudited)

Average Annual Total Returns
Periods Ended March 31, 2021

     Since Inception
 1 Yr.3 Yr.5 Yr.10 Yr.(August 31, 2010)
Osterweis Strategic Investment Fund   43.15%   12.59%   11.66%   9.00%   10.19%
60% S&P 500 Index/40% Bloomberg Barclays U.S. Aggregate Bond Index31.7112.2411.159.8710.82
S&P 500 Index56.3516.7816.2913.91  
15.75
Bloomberg Barclays U.S. Aggregate Bond Index  0.71  4.65  3.103.44  3.17
Gross/Net Expense Ratio as of 3/31/2020: 1.21% 1
1
As of most recent Prospectus dated June 30, 2020.  Please see the Fund’s Financial Highlights in this report for the most recent expense ratio.

The performance data quoted above represents 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 their original cost. 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.
 
Growth of $10K (Inception to 3/31/2021)

 


This chart illustrates the performance of a hypothetical $10,000 investment made on August 31, 2010 and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The returns reflect fee waivers in effect. In the absence of such waivers, total return would be reduced (See Note 3). The chart assumes reinvestment of capital gains, dividends and return of capital, if applicable, for the Fund and dividends for an index.
 
Asset/Sector Allocation (% of Net Assets)


Equities are classified by GICS sector. Bonds are classified by bond type.

Top Ten Equity Holdings (% of Net Assets)    
Microsoft Corp.  4.3% 
Alphabet, Inc. – Class C  4.0  
JPMorgan Chase & Co.  3.3  
FedEx Corp.  2.7  
Sysco Corp.  2.6  
Chevron Corp.  2.5  
PS Business Parks, Inc.  2.4  
Union Pacific Corp.  2.3  
The Home Depot, Inc.  2.3  
Charter Communications, Inc. – Class A  2.1  
Total  28.5% 
      
Top Ten Debt Holdings (% of Net Assets)     
Carnival Corp., 5.750%  0.8% 
Donnelley Financial Solutions, Inc., 8.250%  0.7  
Tutor Perini Corp., 6.875%  0.7  
Caleres, Inc., 6.250%  0.6  
Consolidated Energy Finance SA, 3.934%  0.6  
Alliance Data Systems Corp., 7.000%  0.5  
Navistar International Corp., 6.625%  0.5  
Oppenheimer Holdings, Inc., 5.500%  0.5  
Michael Baker International LLC, 8.750%  0.5  
R.R. Donnelley & Sons Co., 7.000%  0.4  
Total  5.8% 

Fund holdings are subject to change.

18

Strategic Investment Fund | Schedule of Investments at March 31, 2021

      
Shares   Value 
Common Stocks: 70.3%   
      
Aerospace & Defense: 3.0%   
 12,745 L3Harris Technologies, Inc. $2,583,157 
 63,405 Safran SA – ADR  2,158,306 
      4,741,463 
Air Freight & Logistics: 2.7%    
 14,850 FedEx Corp.  4,217,994 
     
Auto Components: 1.2%    
 13,625 
Aptiv PLC – ADR 1
  1,878,887 
     
Banks: 4.7%    
 13,605 First Republic Bank  2,268,634 
 33,800 JPMorgan Chase & Co.  5,145,374 
      7,414,008 
Chemicals: 3.4%    
 10,215 Air Products & Chemicals, Inc.  2,873,888 
 17,295 International Flavors &    
     Fragrances, Inc.  2,414,555 
      5,288,443 
Commercial Services & Supplies: 2.1%    
 30,170 
Waste Connections, Inc. 1
  3,257,757 
     
Electric Utilities: 1.6%    
 32,750 NextEra Energy, Inc.  2,476,227 
     
Equity Real Estate Investment Trusts – REITS: 4.4%    
 18,180 Crown Castle International Corp.  3,129,324 
 23,985 PS Business Parks, Inc.  3,707,601 
      6,836,925 
Food & Staples Retailing: 2.8%    
 18,493 
Southeastern Grocers, Inc. 1,2
  235,786 
 52,340 Sysco Corp.  4,121,252 
 2,292,000 Tops Holding, Litigation    
   
  Trust Proceeds 1,2,6
  1,721 
      4,358,759 
Health Care Equipment & Supplies: 3.3%    
 13,365 Danaher Corp.  3,008,194 
 5,330 Teleflex, Inc.  2,214,402 
      5,222,596 
Insurance: 1.9%    
 31,440 The Progressive Corp.  3,005,978 
     
Interactive Media & Services: 4.0%    
 3,007 
Alphabet, Inc. – Class C 1
  6,220,370 
     
Internet & Direct Marketing Retail: 1.2%    
 605 
Amazon.com, Inc. 1
  1,871,918 
     
IT Services: 1.8%    
 13,720 Visa, Inc. – Class A  2,904,936 
     
Media: 2.1%    
 5,401 Charter Communications,    
   
  Inc. – Class A 1
  3,332,525 
     
Metals & Mining: 0.4%    
 17 
Real Alloy Holding, Inc. 1,2
  661,200 
     
Mortgage Real Estate Investment Trusts – REITS: 2.0%    
 56,460 Hannon Armstrong Sustainable    
     Infrastructure Capital, Inc.  3,167,406 
     
Multiline Retail: 1.7%    
 13,515 Dollar General Corp.  2,738,409 
     
Oil, Gas & Consumable Fuels: 2.5%    
 38,020 Chevron Corp.  3,984,116 
     
Pharmaceuticals: 3.7%    
 19,275 Johnson & Johnson  3,167,846 
 30,880 Novartis AG – ADR  2,639,623 
      5,807,469 
Road & Rail: 3.9%    
 9,945 Old Dominion Freight Line, Inc.  2,390,877 
 16,690 Union Pacific Corp.  3,678,643 
      6,069,520 
Semiconductors & Semiconductor Equipment: 5.5%    
 18,810 
Advanced Micro Devices, Inc. 1
  1,476,585 
 17,455 Analog Devices, Inc.  2,706,922 
 23,255 Applied Materials, Inc.  3,106,868 
 3,940 Monolithic Power Systems, Inc.  1,391,647 
      8,682,022 
Software: 5.1%    
 28,395 Microsoft Corp.  6,694,689 
 10,450 
Zendesk, Inc. 1
  1,385,879 
      8,080,568 
Specialty Retail: 4.4%    
 12,035 The Home Depot, Inc.  3,673,684 
 27,250 Ross Stores, Inc.  3,267,547 
      6,941,231 
Wireless Telecommunication Services: 0.9%    
 11,640 
T-Mobile US, Inc. 1
  1,458,376 
     
Total Common Stocks    
  (Cost $67,696,010)  110,619,103 


The accompanying notes are an integral part of these financial statements.

19

Strategic Investment Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Shares   Value 
Convertible Preferred Stocks: 1.0%   
      
Media: 0.2%   
 4,000 ViacomCBS, Inc., 5.750% $268,600 
     
Road & Rail: 0.8%    
 10,000 
Daseke, Inc., 7.625% 3
  1,214,060 
     
Total Convertible Preferred Stocks    
  (Cost $1,238,000)  1,482,660 
       
Principal      
Amount      
Bonds: 27.3%    
Corporate Bonds: 21.7%    
        
Air Freight & Logistics: 0.4%    
   Cargo Aircraft Management, Inc.    
$124,000   4.750%, 02/01/2028  128,107 
   XPO Logistics, Inc.    
 500,000   6.250%, 05/01/2025  536,275 
      664,382 
Airlines: 0.3%    
   American Airlines 2012-2    
     Class C Pass Through Trust    
 460,000   4.700%, 06/03/2021  459,537 
     
Auto Components: 1.0%    
   American Axle & Manufacturing, Inc.    
 100,000   6.250%, 04/01/2025  103,125 
 400,000   6.250%, 03/15/2026  410,200 
   The Goodyear Tire & Rubber Co.    
 500,000   9.500%, 05/31/2025  561,250 
   Real Hero Merger Sub 2, Inc.    
 500,000   6.250%, 02/01/2029  516,875 
      1,591,450 
Automobiles: 0.4%    
   Ford Motor Co.    
 500,000   9.625%, 04/22/2030  698,572 
     
Building Products: 0.5%    
   Patrick Industries, Inc.    
 500,000   7.500%, 10/15/2027  546,875 
   PGT Innovations, Inc.    
 250,000   6.750%, 08/01/2026  266,250 
      813,125 
Capital Markets: 1.2%    
   Donnelley Financial Solutions, Inc.    
 1,000,000   8.250%, 10/15/2024  1,045,000 
   Oppenheimer Holdings, Inc.    
 750,000   5.500%, 10/01/2025  776,250 
      1,821,250 
Chemicals: 1.0%    
   Consolidated Energy Finance SA    
 1,000,000   3.934% (3 Month LIBOR    
   
  USD + 3.750%), 06/15/2022 3
  990,248 
   Olin Corp.    
 250,000   9.500%, 06/01/2025  308,750 
 250,000   5.625%, 08/01/2029  269,958 
      1,568,956 
Commercial Services & Supplies: 1.7%    
   GFL Environmental, Inc.    
 220,000   5.125%, 12/15/2026  232,122 
 270,000   8.500%, 05/01/2027  297,844 
   KAR Auction Services, Inc.    
 500,000   5.125%, 06/01/2025  506,375 
   Pitney Bowes, Inc.    
 500,000   7.250%, 03/15/2029  495,705 
   Quad/Graphics, Inc.    
 121,000   7.000%, 05/01/2022  119,970 
   R.R. Donnelley & Sons Co.    
 250,000   8.875%, 04/15/2021  251,875 
 676,000   7.000%, 02/15/2022  700,346 
      2,604,237 
Communications Equipment: 0.3%    
   Plantronics, Inc.    
 500,000   5.500%, 05/31/2023  503,055 
     
Computers & Peripherals: 0.8%    
   CPI CG, Inc.    
 500,000   8.625%, 03/15/2026  525,145 
   NCR Corp.    
 450,000   5.750%, 09/01/2027  477,000 
 250,000   5.000%, 10/01/2028  252,969 
      1,255,114 
Construction & Engineering: 1.1%    
   Michael Baker International LLC    
 700,000   8.750%, 03/01/2023  713,125 
   Tutor Perini Corp.    
 1,000,000   6.875%, 05/01/2025  1,035,300 
      1,748,425 
Construction Materials: 0.5%    
   Cemex SAB de CV    
 250,000   7.375%, 06/05/2027  283,437 
   US Concrete, Inc.    
 500,000   5.125%, 03/01/2029  515,938 
      799,375 


The accompanying notes are an integral part of these financial statements.

20

Strategic Investment Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Principal     
Amount   Value 
Distributors: 0.1%   
  American Builders & Contractors   
    Supply Co., Inc.   
$139,000   4.000%, 01/15/2028 $139,235 
     
Diversified Financial Services: 0.2%    
   Burford Capital Global Finance LLC    
 250,000 
  6.250%, 04/15/2028 3
  256,562 
     
Equity Real Estate Investment Trusts – REITS: 0.4%    
   HAT Holdings I LLC /    
     HAT Holdings II LLC    
 500,000   5.250%, 07/15/2024  517,240 
   SL Green Operating Partnership L.P.    
 150,000   1.174% (3 Month LIBOR    
   
  USD + 0.980%), 08/16/2021 3
  150,005 
      667,245 
Food & Staples Retailing: 1.2%    
   C&S Group Enterprises LLC    
 500,000   5.000%, 12/15/2028  487,500 
   KeHE Distributors LLC /    
     KeHE Finance Corp.    
 576,000   8.625%, 10/15/2026  642,151 
   United Natural Foods, Inc.    
 250,000   6.750%, 10/15/2028  267,500 
   US Foods, Inc.    
 500,000   4.750%, 02/15/2029  500,625 
      1,897,776 
Health Care Providers & Services: 0.2%    
   Owens & Minor, Inc.    
 250,000   4.500%, 03/31/2029  251,563 
     
Hotels, Restaurants & Leisure: 0.7%    
   Carnival Corp.    
 250,000   11.500%, 04/01/2023  286,926 
 500,000   5.750%, 03/01/2027  514,605 
   NCL Corp. Ltd.    
 250,000   12.250%, 05/15/2024  302,938 
      1,104,469 
Household Durables: 0.8%    
   Empire Communities Corp.    
 250,000   7.000%, 12/15/2025  264,062 
   Mattamy Group Corp.    
 500,000   5.250%, 12/15/2027  524,688 
   The New Home Co., Inc.    
 500,000   7.250%, 10/15/2025  518,855 
      1,307,605 
Industrial Conglomerates: 0.5%    
   Icahn Enterprises L.P. /    
     Icahn Enterprises Finance Corp.    
 280,000   6.250%, 02/01/2022  280,700 
 500,000   6.250%, 05/15/2026  524,920 
      805,620 
IT Services: 0.9%    
   Alliance Data Systems Corp.    
 750,000   7.000%, 01/15/2026  804,056 
   Unisys Corp.    
 500,000   6.875%, 11/01/2027  548,750 
      1,352,806 
Machinery: 0.9%    
   Flowserve Corp.    
 145,000   4.000%, 11/15/2023  153,117 
   Meritor, Inc.    
 194,000   6.250%, 02/15/2024  197,919 
   Navistar International Corp.    
 750,000   6.625%, 11/01/2025  779,085 
   Welbilt, Inc.    
 300,000   9.500%, 02/15/2024  309,562 
      1,439,683 
Media: 0.2%    
   Meredith Corp.    
 240,000   6.875%, 02/01/2026  246,450 
     
Metals & Mining: 0.8%    
   Coeur Mining, Inc.    
 500,000   5.125%, 02/15/2029  478,600 
   Hecla Mining Co.    
 500,000   7.250%, 02/15/2028  536,875 
   Real Alloy Holding, Inc.    
 243,104   10.194%, (3 Month LIBOR    
     USD + 10.000%) Cash or    
     12.194% (3 Month LIBOR    
   
  USD + 12.000%) PIK, 05/31/2023 2
  243,104 
      1,258,579 
Oil, Gas & Consumable Fuels: 1.1%    
   Aker BP ASA    
 250,000   4.750%, 06/15/2024  256,532 
   Calumet Specialty Products Partners    
     L.P. / Calumet Finance Corp.    
 500,000   11.000%, 04/15/2025  526,245 
   Genesis Energy L.P. /    
     Genesis Energy Finance Corp.    
 450,000   7.750%, 02/01/2028  450,697 


The accompanying notes are an integral part of these financial statements.

21

Strategic Investment Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Principal     
Amount   Value 
Oil, Gas & Consumable Fuels: 1.1% (Continued)   
  Global Partners L.P. /   
    GLP Finance Corp.   
$500,000   7.000%, 08/01/2027 $528,438 
      1,761,912 
Paper & Forest Products: 0.2%    
   Resolute Forest Products, Inc.    
 250,000   4.875%, 03/01/2026  250,938 
     
Pharmaceuticals: 0.2%    
   Bayer U.S. Finance II LLC    
 250,000   0.831% (3 Month LIBOR    
   
  USD + 0.630%), 06/25/2021 3
  250,193 
     
Professional Services: 0.3%    
   Korn Ferry    
 500,000   4.625%, 12/15/2027  511,250 
     
Specialty Retail: 1.3%    
   Caleres, Inc.    
 1,000,000   6.250%, 08/15/2023  1,010,000 
   Ken Garff Automotive LLC    
 500,000   4.875%, 09/15/2028  500,437 
   Rent-A-Center Inc/TX    
 500,000   6.375%, 02/15/2029  531,250 
      2,041,687 
Textiles, Apparel & Luxury Goods: 0.2%    
   The William Carter Co.    
 250,000   5.500%, 05/15/2025  267,105 
     
Thrifts & Mortgage Finance: 1.1%    
   Nationstar Mortgage Holdings, Inc.    
 250,000   6.000%, 01/15/2027  259,805 
 500,000   5.125%, 12/15/2030  491,980 
   PennyMac Financial Services, Inc.    
 500,000   5.375%, 10/15/2025  518,900 
   United Wholesale Mortgage LLC    
 500,000   5.500%, 11/15/2025  521,875 
      1,792,560 
Trading Companies & Distributors: 0.9%    
   Avation Capital SA    
 500,000   8.250% Cash or 9.000%    
   
  PIK, 10/31/2026 3
  404,312 
   Herc Holdings, Inc.    
 500,000   5.500%, 07/15/2027  533,037 
   WESCO Distribution, Inc.    
 250,000   7.125%, 06/15/2025  273,707 
 250,000   7.250%, 06/15/2028  280,101 
      1,491,157 
Transportation Infrastructure: 0.3%    
   Signature Aviation US Holdings, Inc.    
 400,000   4.000%, 03/01/2028  407,444 
     
Total Corporate Bonds    
  (Cost $32,659,243)  34,029,317 
        
Convertible Bonds: 5.3%    
        
Airlines: 0.3%    
   Southwest Airlines Co.    
 250,000   1.250%, 05/01/2025  430,469 
     
Auto Components: 0.3%    
   Horizon Global Corp.    
 480,000   2.750%, 07/01/2022  460,705 
     
Automobiles: 0.3%    
   Ford Motor Co.    
 500,000 
  N/A%, 03/15/2026 7
  507,500 
     
Construction & Engineering: 0.2%    
   Tutor Perini Corp.    
 250,000   2.875%, 06/15/2021  253,594 
     
Consumer Finance: 0.1%    
   EZCORP, Inc.    
 250,000   2.375%, 05/01/2025  204,844 
     
Electronic Equipment,    
  Instruments & Components: 0.1%    
   OSI Systems, Inc.    
 230,000   1.250%, 09/01/2022  249,119 
     
Energy Equipment & Services: 0.1%    
   Newpark Resources, Inc.    
 241,000   4.000%, 12/01/2021  239,795 
     
Health Care Equipment & Supplies: 0.3%    
   CONMED Corp.    
 175,000   2.625%, 02/01/2024  274,421 
   Haemonetics Corp.    
 250,000 
  0.000%, 03/01/2026 5
  238,125 
      512,546 
Hotels, Restaurants & Leisure: 1.0%    
   Carnival Corp.    
 425,000   5.750%, 04/01/2023  1,194,675 
   NCL Corp. Ltd.    
 160,000   6.000%, 05/15/2024  355,600 
      1,550,275 
Internet & Direct Marketing Retail: 0.1%    
   Etsy, Inc.    
 44,000   0.125%, 10/01/2026  104,252 


The accompanying notes are an integral part of these financial statements.

22

Strategic Investment Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Principal     
Amount   Value 
IT Services: 0.3%   
  Euronet Worldwide, Inc.   
$370,000   0.750%, 03/15/2049 $423,419 
     
Machinery: 0.3%    
   The Middleby Corp.    
 350,000   1.000%, 09/01/2025  494,156 
     
Pharmaceuticals: 0.3%    
   Jazz Investments I Ltd.    
 350,000   2.000%, 06/15/2026  451,063 
     
Real Estate Management & Development: 0.3%    
   Colliers International Group, Inc.    
 250,000   4.000%, 06/01/2025  460,312 
     
Semiconductors & Semiconductor Equipment: 0.1%    
   Cree, Inc.    
 60,000   0.875%, 09/01/2023  110,853 
     
Software: 0.9%    
   Rapid7, Inc.    
 500,000   0.250%, 03/15/2027  489,062 
   Tyler Technologies, Inc.    
 250,000   0.250%, 03/15/2026  266,094 
   Zendesk, Inc.    
 450,000   0.625%, 06/15/2025  623,520 
      1,378,676 
Thrifts & Mortgage Finance: 0.3%    
   EZCORP, Inc.    
 550,000   2.875%, 07/01/2024  506,715 
     
Total Convertible Bonds    
  (Cost $6,386,728)  8,338,293 
        
Private Mortgage Backed Obligations: 0.3%    
        
Diversified Financial Services: 0.3%    
   HAS Capital Income    
     Opportunity Fund II    
 642,000   8.000%, 12/31/2024    
     (Cost $642,000 Acquisition Dates    
   
  06/10/2016, 09/19/2016) 2,5
  497,928 
Total Private Mortgage Backed Obligations    
  (Cost $642,000)  497,928 
Total Bonds    
  (Cost $39,687,971)  42,865,538 
        
Warrants: 0.0% 8
    
        
Trading Companies & Distributors: 0.0% 8
    
 8,750 Aviation PLC, Warrants    
     (Expiration Date 10/31/2026,    
   
  Exercise Price 114.5 GBp) 1,2
  4,637 
Total Warrants    
  (Cost $—)  4,637 
        
Shares      
Short-Term Investments: 1.2%    
        
Money Market Funds: 1.2%    
 1,957,055 Federated Hermes U.S. Treasury    
   
  Cash Reserves – Class I, 0.010% 4
  1,957,055 
Total Money Market Funds    
  (Cost $1,957,055)  1,957,055 
Total Short-Term Investments    
  (Cost $1,957,055)  1,957,055 
Total Investments in Securities: 99.8%    
  (Cost $110,579,036)  156,928,993 
Other Assets in Excess of Liabilities: 0.2%  347,922 
Total Net Assets: 100.0% $157,276,915 
 
ADR – American Depositary Receipt
LIBOR – London Interbank Offered Rate
PIK – Payment In Kind
USD – United States Dollar
1
Non-income producing security.
2
Security is fair valued under the Board of Trustees and is categorized as a Level 3 security.  Significant unobservable inputs were used to determine fair value.
3
Variable rate security; rate shown is the rate in effect on March 31, 2021.
4
Annualized seven-day effective yield as of March 31, 2021.
5
Security considered restricted. As of March 31, 2021, the value of the restricted securities was $497,928 or 0.3% of net assets.
6
Not a readily marketable security.
7
Zero coupon security.
8
Does not round to 0.1% or (0.1)%, as applicable.


The accompanying notes are an integral part of these financial statements.

23

Emerging Opportunity Fund | Portfolio Managers’ Review

Performance Summary
 
For the period of April 1, 2020 to March 31, 2021, the Osterweis Emerging Opportunity Fund (the “Fund”) generated a total return of 111.27%, outperforming the Russell 2000 Growth Index (the “Russell”), which returned 90.20% over the same period. (Please see standardized performance in the table following this review.)
 
Market Review
 
Despite the economic slowdown triggered by Covid-19, the past fiscal year has been a very favorable stretch for small cap stocks. The widespread adoption of social distancing that began last spring substantially increased demand for a variety of virtual services (eCommerce, remote working, online meetings, etc.), which benefitted many smaller technology providers – particularly during the first three fiscal quarters. Small cap growth stocks performed very well until the end of 2020, but the rally began to fade during the fourth fiscal quarter as vaccines became more widely available and investors pivoted to more cyclical companies that directly benefitted from the economic recovery.
 
Portfolio Review
 
During the twelve months ending March 31, 2021, the Fund outperformed the Russell primarily due to stock selection. Our top four sectors by weight (representing 87% of the portfolio) posted strong positive absolute and relative performance. Our best performing sector was consumer discretionary, followed by industrials, information technology, and health care, all of which delivered triple digit returns. Two of our top five performing stocks were from the consumer discretionary sector. The remaining three came from information technology, health care, and industrials.
 
Sector allocation was also additive to performance. We were materially overweight consumer discretionary firms, the second best performing sector in the Russell. In addition, we were underweight health care and utilities, both of which lagged the return of the index.
 
On the downside, the biggest detractor from relative performance was security selection in financials. Those stocks delivered positive absolute performance, but they lagged the index. Only consumer staples delivered both negative absolute and relative returns (though we only held one stock in this sector, so the impact was negligible). Four of our bottom five performers were from health care. The fifth was from financials.
 
The fund also maintained an average cash position of 8.4%, which allowed us the flexibility to add new names rapidly when attractive opportunities presented themselves.
 
Outlook & Portfolio Positioning
 
Going forward, we expect the economy will continue to improve, further reducing demand for virtual services and reviving some of the industries hit hardest by the pandemic. We have cut our exposure to work-from-home stocks by about half and added growth companies whose share prices are more sensitive to near-term profitability than to longer term financial projections. We have also added companies that have a cyclical dimension to their business. Investing in these types of companies will allow us to take advantage of the so-called “reopening trade” while we continue adding secular growth companies that are well positioned to capitalize on long-term structural shifts in the economy.
 
 
____________________
 
Mutual Fund investing involves risk. Principal loss is possible.
 
The Osterweis Emerging Opportunity Fund may invest in unseasoned companies, which involve additional risks such as abrupt or erratic price movements. The Fund may invest in small and mid-sized companies, which may involve greater volatility than large-sized companies. The Fund may invest in IPOs and unseasoned companies that are in the early stages of their development and may pose more risk compared to more established companies. The Fund may invest in ETFs, which involve risks that do not apply to conventional Funds. Higher turnover rates may result in increased transaction costs, which could impact performance. From time to time, the Fund may have concentrated positions in one or more sectors subjecting the Fund to sector emphasis risk. 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.
 
Investment performance reflects periods during which fee waivers were in effect. In the absence of such waivers, total return would have been reduced.
 
Short-term Fund performance may not be sustainable for the long-term.
 

24

Emerging Opportunity Fund | Fund Overview (Unaudited)

Average Annual Total Returns
Periods Ended March 31, 2021

    Since Inception
 1 Yr.3 Yr.5 Yr.(October 1, 2012)
Osterweis Emerging Opportunity Fund  111.27%   29.45%   28.29%   20.70%
Russell 2000 Growth Index90.2017.1618.6115.27
Gross/Net Expense Ratio as of 3/31/2020: 1.27%/1.16% 1
1
As of most recent Prospectus dated June 30, 2020.  Please see the Fund’s Financial Highlights in this report for the most recent expense ratio. The Adviser has contractually agreed to waive certain fees through June 30, 2021.  The net expense ratio is applicable to investors.

The performance data quoted above represents 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 their original cost. 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. Performance prior to December 1, 2016 is that of another investment vehicle (the “Predecessor Fund”) before the commencement of the Fund’s operations. The Predecessor Fund was converted into the Fund on November 30, 2016. The Predecessor Fund’s performance shown includes the deduction of the Predecessor Fund’s actual operating expenses. In addition, the Predecessor Fund’s performance shown has been recalculated using the management fee that applies to the Fund, which has the effect of reducing the Predecessor Fund’s performance. The Predecessor Fund was not a registered mutual fund and so was not subject to the same operating expenses or investment and tax restrictions as the Fund. If it had been, the Predecessor Fund’s performance may have been lower.
 
Growth of $10K (Inception to 3/31/2021)

 

 
This chart illustrates the performance of a hypothetical $10,000 investment made on October 1, 2012 and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The returns reflect fee waivers in effect. In the absence of such waivers, total return would be reduced (See Note 3). The chart assumes reinvestment of capital gains, dividends and return of capital, if applicable, for the Fund and dividends for an index.

Sector Allocation (% of Net Assets)



Top Ten Equity Holdings (% of Net Assets)    
Meta Financial Group, Inc.  4.8% 
Brooks Automation, Inc.  4.5  
Marriott Vacations Worldwide Corp.  4.5  
Kornit Digital Ltd.  3.9  
FirstService Corp.  3.6  
Floor & Decor Holdings, Inc.  3.5  
Five9, Inc.  3.3  
Insulet Corp.  3.3  
Spirit Airlines, Inc.  3.3  
Bio-Techne Corp.  3.0  
Total  37.7% 

Fund holdings are subject to change.

25

Emerging Opportunity Fund | Schedule of Investments at March 31, 2021

      
Shares   Value 
Common Stocks: 93.8%   
      
Aerospace & Defense: 4.8%   
 33,825 
Axon Enterprise, Inc. 1
 $4,817,357 
 230,740 Kratos Defense & Security    
   
  Solutions, Inc. 1
  6,294,587 
      11,111,944 
Airlines: 3.3%    
 205,080 
Spirit Airlines, Inc. 1
  7,567,452 
     
Biotechnology: 7.9%    
 53,890 
ALX Oncology Holdings, Inc. 1
  3,973,849 
 100,691 
Iovance Biotherapeutics, Inc. 1
  3,187,877 
 19,650 
Mirati Therapeutics, Inc. 1
  3,366,045 
 130,055 
Replimune Group, Inc. 1
  3,967,978 
 39,755 
Turning Point Therapeutics, Inc. 1
  3,760,425 
      18,256,174 
Diversified Consumer Services: 2.0%    
 55,365 
Chegg, Inc. 1
  4,742,566 
     
Diversified Telecommunication Services: 1.1%    
 20,205 
Bandwidth, Inc. – Class A 1
  2,560,782 
     
Health Care Equipment & Supplies: 10.4%    
 86,685 
Eargo, Inc. 1
  4,329,916 
 29,370 
Insulet Corp. 1
  7,663,220 
 559,510 
SmileDirectClub, Inc. – Class A 1
  5,768,548 
 72,095 
Tandem Diabetes Care, Inc. 1
  6,362,384 
      24,124,068 
Health Care Providers & Services: 5.5%    
 131,175 
Accolade, Inc. 1
  5,951,410 
 150,365 
Progyny, Inc. 1
  6,692,746 
      12,644,156 
Health Care Technology: 1.0%    
 235,775 Hudson Executive Investment    
   
  Corp. – Class A 1
  2,338,888 
     
Hotels, Restaurants & Leisure: 8.4%    
 59,580 Marriott Vacations Worldwide Corp.  10,377,644 
 54,335 
Planet Fitness, Inc. – Class A 1
  4,200,095 
 37,615 Wingstop, Inc.  4,783,500 
      19,361,239 
        
Internet & Direct Marketing Retail: 3.7%    
 23,020 
Etsy, Inc. 1
  4,642,443 
 18,520 
Fiverr International Ltd. 1
  4,022,174 
      8,664,617 
Leisure Products: 1.5%    
 86,945 Callaway Golf Co.  2,325,779 
 13,480 
Malibu Boats, Inc. – Class A 1
  1,074,086 
      3,399,865 
Life Sciences Tools & Services: 3.0%    
 18,245 Bio-Techne Corp.  6,968,313 
     
Machinery: 3.9%    
 92,405 
Kornit Digital Ltd. 1
  9,159,184 
     
Real Estate Management & Development: 3.6%    
 56,525 FirstService Corp.  8,376,440 
     
Semiconductors & Semiconductor Equipment: 11.1%    
 128,480 Brooks Automation, Inc.  10,490,392 
 22,970 
Inphi Corp. 1
  4,098,077 
 29,985 MKS Instruments, Inc.  5,559,819 
 83,852 
Onto Innovation, Inc. 1
  5,509,915 
      25,658,203 
Software: 14.3%    
 17,740 
Avalara, Inc. 1
  2,367,048 
 59,505 
Cerence, Inc. 1
  5,330,458 
 33,445 
CyberArk Software Ltd. 1
  4,325,776 
 35,525 
Everbridge, Inc. 1
  4,304,920 
 49,640 
Five9, Inc. 1
  7,760,221 
 72,225 
Rapid7, Inc. 1
  5,388,707 
 61,950 
Sprout Social, Inc. – Class A 1
  3,578,232 
      33,055,362 
Specialty Retail: 3.5%    
 85,990 
Floor & Decor Holdings, Inc. 1
  8,210,325 
     
Thrifts & Mortgage Finance: 4.8%    
 245,010 Meta Financial Group, Inc.  11,101,403 
     
Total Common Stocks    
  (Cost $176,353,473)  217,300,981 


The accompanying notes are an integral part of these financial statements.

26

Emerging Opportunity Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Shares   Value 
Short-Term Investments: 5.7%   
      
Money Market Funds: 5.7%   
 13,297,937 Federated Hermes U.S. Treasury   
   
  Cash Reserves – Class I , 0.010% 2
 $13,297,937 
Total Money Market Funds    
  (Cost $13,297,937)  13,297,937 
Total Short-Term Investments    
  (Cost $13,297,937)  13,297,937 
Total Investments in Securities: 99.5%    
  (Cost $189,651,410)  230,598,918 
Other Assets in Excess of Liabilities: 0.5%  1,116,169 
Total Net Assets: 100.0% $231,715,087 
 
1
Non-income producing security.
2
Annualized seven-day effective yield as of March 31, 2021.


The accompanying notes are an integral part of these financial statements.

27

Total Return Fund | Portfolio Managers’ Review

Performance Summary
 
For the twelve-month period ending March 31, 2021, the Osterweis Total Return Fund (the “Fund”) generated a total return of 4.25%, outperforming the Bloomberg Barclays U.S. Aggregate Bond Index (the “BC Agg”), which returned 0.71% over the same period.
 
Market Review
 
During the past twelve months, the investment grade (“IG”) fixed income market was dominated by the economic and policy repercussions of the coronavirus pandemic. In the first fiscal quarter, IG bonds experienced a strong recovery following the deep selloff in March. Unprecedented support from both the Federal Reserve (the “Fed”) and Congress reversed investor sentiment and restored market confidence. IG spreads tightened considerably, nearly approaching pre-pandemic levels. Markets continued to normalize during both the second and third fiscal quarters as both corporate and mortgage spreads continued to tighten. Throughout the period, the Fed kept short rates near zero, and 10-year Treasury yields hovered near all-time lows.
 
The fourth fiscal quarter marked a turning point, as widespread distribution of the Covid-19 vaccine and the $1.9 trillion fiscal stimulus program revived some of the sectors hit hardest by the pandemic. The improving economy increased investor appetite for risk assets and stoked concerns about inflation, triggering a selloff in Treasuries. Yields on the 10-year note rose 83 basis points during the quarter, generating significant losses for the BC Agg.
 
Portfolio Review
 
During the first fiscal quarter, the Fund outperformed the index, as it was underweight Treasuries, which lagged both corporates and Mortgage-Backed Securities. Additionally, the Fund realized significant outperformance versus the mortgage portion of the index due to security selection. Our corporate position, which also provided a significant portion of our return, oscillated between index weighting to slightly overweight throughout the quarter.
 
During the second fiscal quarter, the Fund outperformed the BC Agg primarily due to security selection within corporates and MBS. Additionally, the Fund was slightly overweight corporates and substantially underweight Treasuries, which also boosted its relative performance.
 
During the third fiscal quarter, the Fund outperformed the index due to all three primary sources for alpha generation – duration management, sector allocation, and security selection. Duration hedging reduced the overall risk in the fund and added substantial value against a Treasury index that posted a negative return for the quarter. Our underweight to Treasuries and overweight to corporate bonds also contributed to our outperformance, with current coupon MBS also adding some incremental return. Security selection in corporates was also a strong contributor to performance, as our holdings in this sector outperformed the corporate index.
 
During the fourth fiscal quarter, our duration management, security selection, and sector allocation once again pushed the Fund ahead of the benchmark. Specifically, our overweight to mortgages versus Treasuries, as well as the performance of our mortgage and corporate assets versus their respective indices, were additive to performance. Finally, our interest rate hedges prevented realization of greater losses.
 

28

Total Return Fund | Portfolio Managers’ Review

Outlook & Portfolio Positioning
 
Looking ahead, we believe the fixed income market in the near-to-medium term will be driven primarily by inflation expectations and concerns about higher rates. In our view these concerns are warranted, as we feel the current wave of monetary and fiscal stimulus could have a very different impact on the economy than was experienced during prior rounds of quantitative easing. We believe the risk of higher rates mandates a shorter duration profile across all asset classes, which we currently maintain.
 
____________________
 
Mutual fund investing involves risk. Principal loss is possible.
 
The Osterweis Total Return Fund may invest fixed income securities which are subject to credit, default, extension, interest rate and prepayment risks. It may also make investments in derivatives that may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. 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 foreign and emerging market securities involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks may increase for emerging markets. Leverage may cause the effect of an increase or decrease in the value of the portfolio securities to be magnified and the Fund to be more volatile than if leverage was not used. Investments in preferred securities have an inverse relationship with changes in the prevailing interest rate. Investments in Asset Backed and Mortgage Backed Securities include additional risks that investors should be aware of such as credit risk, prepayment risk, possible illiquidity and default, as well as increased susceptibility to adverse economic developments. It may also make investments in derivatives that may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most advantageous. The Fund may invest in municipal securities which are subject to the risk of default.
 
Investment performance reflects periods during which fee waivers were in effect. In the absence of such waivers, total return would have been reduced.
 






29

Total Return Fund | Fund Overview (Unaudited)

Average Annual Total Returns
Periods Ended March 31, 2021

   Since Inception
 1 Yr.3 Yr.(December 30, 2016)
Osterweis Total Return Fund   4.25%   4.25%   3.84%
Bloomberg Barclays U.S. Aggregate Bond Index0.714.653.75
Bloomberg Barclays U.S. Aggregate Bond 1-3 Year Index1.192.952.23
ICE BofAML 3-Month Treasury Bill Index0.121.491.34
Gross/Net Expense Ratio as of 3/31/2020: 0.67%/0.67% 1
1
As of most recent Prospectus dated June 30, 2020.  Please see the Fund’s Financial Highlights in this report for the most recent expense ratio. The Adviser has contractually agreed to waive certain fees through June 30, 2021.  The net expense ratio is applicable to investors.

The performance data quoted above represents 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 their original cost. 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.
 
Growth of $10K (Inception to 3/31/2021)

 

 
This chart illustrates the performance of a hypothetical $10,000 investment made on December 30, 2016 and is not intended to imply any future performance. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The returns reflect fee waivers in effect. In the absence of such waivers, total return would be reduced (See Note 3). The chart assumes reinvestment of capital gains, dividends and return of capital, if applicable, for the Fund and dividends for an index.
 
Asset Allocation (% of Net Assets)



Top Ten Debt Holdings (% of Net Assets)    
Federal National Mortgage Association &    
  Federal Home Loan Mortgage Corporation    
  30 Year Fixed Rate TBA, Series FNCL
  2.5 4/21, 2.500%
    
  14.6% 
Federal National Mortgage Association &     
  Federal Home Loan Mortgage Corporation     
  30 Year Fixed Rate TBA, Series Pool FNCL 3
  4/21, 3.000%
     
  5.0  
Federal National Mortgage Association &     
  Federal Home Loan Mortgage Corporation     
  30 Year Fixed Rate TBA, Series FNCL 2
  4/21, 2.000%
     
  4.7  
United States Treasury Note/Bond, 0.250%  1.9  
United States Treasury Note/Bond, 0.375%  1.9  
Morgan Stanley, 4.350%  1.6  
CF Hippolyta LLC, Series SORT
  2021-1A B1, 1.980%
     
  1.4  
Verizon Communications, Inc., 0.750%  1.4  
AT&T, Inc., 0.900%  1.3  
CLI Funding VIII LLC, 1.640%  1.2  
Total  35.0% 

Fund holdings are subject to change.

30

Total Return Fund | Schedule of Investments at March 31, 2021

      
Principal     
Amount   Value 
Bonds: 90.0%   
Corporate Bonds: 37.8%   
      
Aerospace & Defense: 1.7%   
  The Boeing Co.   
$1,000,000   1.433%, 02/04/2024 $1,001,843 
 1,525,000   3.625%, 02/01/2031  1,596,246 
   Textron, Inc.    
 1,000,000   2.450%, 03/15/2031  969,774 
      3,567,863 
Air Freight & Logistics: 0.4%    
   American Airlines 2019-1    
     Class B Pass Through Trust    
 906,385   3.850%, 02/15/2028  826,547 
     
Airlines: 1.0%    
   Air Canada 2020-2 Class A    
     Pass Through Trust    
 1,000,000   5.250%, 04/01/2029  1,076,967 
   British Airways 2020-1 Class A    
     Pass Through Trust    
 991,295   4.250%, 11/15/2032  1,041,800 
      2,118,767 
Automobiles: 1.5%    
   General Motors Financial Co., Inc.    
 2,000,000   1.250%, 01/08/2026  1,962,544 
   General Motors Co.    
 1,000,000   6.125%, 10/01/2025  1,176,617 
      3,139,161 
Banks: 5.0%    
   Australia & New Zealand    
     Banking Group Ltd.    
 1,000,000   2.570% (5 Year CMT    
     Rate + 1.700%), 11/25/2035  940,350 
   Bank of America Corp.    
 1,500,000   4.250%, 10/22/2026  1,681,915 
   Barclays PLC    
 1,000,000   1.007% (1 Year CMT    
     Rate + 0.800%), 12/10/2024  1,000,741 
   HSBC Holdings PLC    
 1,000,000   4.600% (5 Year CMT    
   
  Rate + 3.649%), 12/17/2030 1,6
  989,750 
   JPMorgan Chase & Co.    
 1,900,000   3.522% (3 Month LIBOR    
   
  USD + 3.320%), 07/01/2021 1,6
  1,893,825 
 1,000,000   3.682% (3 Month LIBOR    
   
  USD + 3.470%), 04/30/2021 1,6
  1,000,537 
 1,000,000   2.956% (SOFR + 2.515%),    
   
  05/13/2031 1
  1,018,266 
   Standard Chartered PLC    
 1,000,000   3.265% (5 Year CMT    
     Rate + 2.300%), 02/18/2036  971,752 
   SVB Financial Group    
 1,000,000   4.100% (10 Year CMT    
   
  Rate + 3.064%), 02/15/2031 1,6
  1,006,875 
      10,504,011 
Capital Markets: 4.0%    
   Blackstone Holdings Finance Co. LLC    
 1,005,000 
  2.500%, 01/10/2030 1,6
  1,019,807 
   The Charles Schwab Corp.    
 1,000,000   4.000% (10 Year CMT    
   
  Rate + 3.079%), 12/01/2030 1,6
  982,900 
   Deutsche Bank AG/New York NY    
 1,000,000   2.129% (SOFR + 1.870%),    
     11/24/2026  1,002,674 
 1,000,000   3.729% (SOFR + 2.757%),    
   
  01/14/2032 1
  974,383 
   Morgan Stanley    
 3,000,000   4.350%, 09/08/2026  3,393,612 
   State Street Corp.    
 1,000,000   3.031% (SOFR + 1.490%),    
   
  11/01/2034 1
  1,032,775 
      8,406,151 
Communications Equipment: 0.4%    
   Juniper Networks, Inc.    
 1,000,000   2.000%, 12/10/2030  921,108 
     
Chemicals: 1.4%    
   LYB International Finance III LLC    
 1,000,000   1.250%, 10/01/2025  987,820 
 1,000,000   3.625%, 04/01/2051  984,909 
   PPG Industries, Inc.    
 1,000,000   1.200%, 03/15/2026  983,089 
      2,955,818 
Computers & Peripherals: 0.4%    
   Apple, Inc.    
 1,000,000   2.375%, 02/08/2041  928,027 
     
Diversified Financial Services: 3.0%    
   Aviation Capital Group LLC    
 1,200,000   0.882% (3 Month LIBOR    
   
  USD + 0.670%), 07/30/2021 1
  1,198,824 
 1,000,000   5.500%, 12/15/2024  1,118,966 
 2,000,000   1.950%, 01/30/2026  1,949,080 
   Avolon Holdings Funding Ltd.    
 1,000,000   2.125%, 02/21/2026  956,546 
 1,000,000   4.250%, 04/15/2026  1,047,898 
      6,271,314 


The accompanying notes are an integral part of these financial statements.

31

Total Return Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Principal     
Amount   Value 
Diversified Telecommunication Services: 4.3%   
  AT&T, Inc.   
$2,800,000   0.900%, 03/25/2024 $2,802,615 
 1,000,000   1.650%, 02/01/2028  967,920 
 1,000,000   3.500%, 06/01/2041  988,556 
   NTT Finance Corp.    
 1,500,000   1.591%, 04/03/2028  1,464,761 
   Verizon Communications, Inc.    
 2,850,000   0.750%, 03/22/2024  2,853,741 
      9,077,593 
Electric Utilities: 1.4%    
   Berkshire Hathaway Energy Co.    
 1,000,000   2.850%, 05/15/2051  895,610 
   Southern California Edison Co.    
 2,000,000   1.100%, 04/01/2024  2,001,283 
      2,896,893 
Equity Real Estate Investment Trusts – REITS: 0.5%    
   Boston Properties L.P.    
 1,000,000   2.550%, 04/01/2032  958,776 
     
Hotels, Restaurants & Leisure: 0.5%    
   Marriott International, Inc.    
 1,000,000   2.850%, 04/15/2031  983,525 
     
Industrial Conglomerates: 0.9%    
   Siemens Financieringsmaatschappij NV    
 2,000,000   2.875%, 03/11/2041  1,937,806 
     
Insurance: 2.2%    
   Allianz SE    
 1,600,000   3.500% (5 Year CMT    
   
  Rate + 2.973%), 11/17/2025 1,6
  1,628,000 
   Belrose Funding Trust    
 1,000,000   2.330%, 08/15/2030  964,421 
   New York Life Insurance Co.    
 1,000,000   3.750%, 05/15/2050  1,052,352 
   SBL Holdings, Inc.    
 1,000,000   5.000%, 02/18/2031  1,009,591 
      4,654,364 
Internet & Direct Marketing Retail: 0.7%    
   Expedia Group, Inc.    
 1,500,000   2.950%, 03/15/2031  1,479,286 
     
Media: 0.7%    
   Charter Communications Operating    
     LLC / Charter Communications    
     Operating Capital    
 1,500,000   3.700%, 04/01/2051  1,401,127 
        
Oil, Gas & Consumable Fuels: 2.3%    
   Enterprise Products Operating LLC    
 1,000,000   3.200%, 02/15/2052  910,808 
   Kinder Morgan, Inc.    
 1,000,000   3.600%, 02/15/2051  930,528 
   Phillips 66    
 2,000,000   1.300%, 02/15/2026  1,978,625 
   Total Capital International SA    
 1,000,000   3.127%, 05/29/2050  940,996 
      4,760,957 
Pharmaceuticals: 0.9%    
   Allergan Finance LLC    
 1,000,000   3.250%, 10/01/2022  1,027,276 
   AstraZeneca PLC    
 1,000,000   0.700%, 04/08/2026  963,325 
      1,990,601 
Semiconductors & Semiconductor Equipment: 1.0%    
   Microchip Technology, Inc.    
 2,000,000   0.972%, 02/15/2024  1,997,256 
     
Software: 0.5%    
   Oracle Corp.    
 1,000,000   3.650%, 03/25/2041  1,010,794 
     
Specialty Retail: 0.7%    
   Advance Auto Parts, Inc.    
 500,000   1.750%, 10/01/2027  491,477 
   Lowe’s Cos, Inc.    
 1,000,000   3.500%, 04/01/2051  1,013,161 
      1,504,638 
Tobacco: 1.5%    
   BAT Capital Corp.    
 2,032,000   4.390%, 08/15/2037  2,128,581 
   BAT International Finance PLC    
 1,000,000   1.668%, 03/25/2026  990,132 
      3,118,713 
Wireless Telecommunication Services: 0.9%    
   T-Mobile USA, Inc.    
 2,000,000   2.050%, 02/15/2028  1,966,880 
     
Total Corporate Bonds    
  (Cost $79,879,685)  79,377,976 


The accompanying notes are an integral part of these financial statements.

32

Total Return Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Principal     
Amount   Value 
Asset Backed Securities: 8.9%   
      
  American Credit Acceptance   
    Receivables Trust 2020-1   
$1,680,000   2.190%, 03/13/2026 $1,709,238 
   Carvana Auto Receivables    
     Trust 2021-N1    
 1,500,000   1.300%, 01/10/2028  1,502,040 
   CF Hippolyta LLC    
     Series SORT 2020-1 B1    
 1,079,402   2.280%, 07/15/2060  1,098,724 
     Series SORT 2021-1A B1    
 3,000,000   1.980%, 03/15/2061  3,000,786 
   CLI Funding VIII LLC    
 2,500,000   1.640%, 02/18/2046  2,447,628 
   Credit Acceptance Auto    
     Loan Trust 2018-1    
 250,000   3.770%, 06/15/2027  252,104 
   DT Auto Owner Trust 2021-1    
 500,000   0.840%, 10/15/2026  499,013 
   Flagship Credit Auto Trust 2020-4    
 500,000   1.280%, 02/16/2027  503,108 
   HERO Funding Trust 2021-1    
 1,000,000   2.240%, 09/20/2051  1,008,513 
   InStar Leasing III LLC    
 1,494,432   2.300%, 02/15/2054  1,469,674 
   MVW Owner Trust 2015-1    
 537,781   2.960%, 12/20/2032  539,649 
   NP SPEX L.P. 2021-1    
 1,250,000   2.230%, 03/19/2051  1,244,248 
   Progress Residential 2021-SFR1    
 500,000   1.555%, 04/17/2038  488,009 
   TRIP Rail Master Funding LLC 2014-1    
 400,028   4.085%, 04/15/2044  402,930 
   Triton Container Finance VIII LLC    
 2,000,000   1.860%, 03/20/2046  1,956,489 
   Westlake Automobile    
     Receivables Trust 2018-2    
 47,565   3.500%, 01/16/2024  47,624 
   Westlake Automobile    
     Receivables Trust 2020-1    
 380,000   2.520%, 04/15/2025  391,240 
   Westlake Automobile    
     Receivables Trust 2020-3    
 87,000   1.240%, 11/17/2025  87,828 
      18,648,845 
Total Asset Backed Securities    
  (Cost $18,778,137)  18,648,845 
        
Mortgage Backed Securities: 39.6%    
        
   Federal Home Loan Mortgage    
     Corporation REMICS: 3.1%    
   Series FHR 2512 SI    

570,087   7.394% (1 Month LIBOR    
   
  USD + 7.500%), 04/15/2024 1,2,8
 
37,346 
   Series FHR 4048 IK    
 3,461,434 
  3.000%, 05/15/2027 2
  195,671 
   Series FHR 4093 DS    
 6,642,244   6.194% (1 Month LIBOR    
   
  USD + 6.300%), 08/15/2027 1,2,8
  796,279 
   Series FHR 4216 EI    
 3,791,535 
  3.000%, 06/15/2028 2
  265,418 
   Series FHR 4360 BI    
 2,051,968 
  2.500%, 11/15/2028 2
  91,240 
   Series FHR 4341 MI    
 1,748,249 
  4.000%, 11/15/2031 2
  165,326 
   Series FHR 4093 IB    
 2,211,893 
  4.000%, 08/15/2032 2
  253,270 
   Series FHR 4114 MI    
 2,658,556 
  3.500%, 10/15/2032 2
  286,965 
   Series FHR 4170 IU    
 4,344,181 
  3.000%, 02/15/2033 2
  410,047 
   Series FHR 3171 OJ    
 946,100 
  N/A%, 06/15/2036 3,7
  831,569 
   Series FHR 3824 LS    
 698,484   6.994% (1 Month LIBOR    
   
  USD + 7.100%), 08/15/2036 1,2,8
  167,062 
   Series FHR 3236 KF    
 89,829   0.406% (1 Month LIBOR    
   
  USD + 0.300%), 11/15/2036 1
  90,625 
   Series FHR 3339 JS    
 44,655   42.146% (1 Month LIBOR    
   
  USD + 42.835%), 07/15/2037 1,8
  91,496 
   Series FHR 3380 FM    
 189,775   0.696% (1 Month LIBOR    
   
  USD + 0.590%), 10/15/2037 1
  192,731 
   Series FHR 4121 IM    
 1,472,621 
  4.000%, 10/15/2039 2
  12,531 
   Series FHR 3721 FB    
 164,008   0.606% (1 Month LIBOR    
   
  USD + 0.500%), 09/15/2040 1
  166,367 
   Series FHR 4105 LS    
 5,081,551   6.044% (1 Month LIBOR    
   
  USD + 6.150%), 08/15/2041 1,2,8
  514,628 
   Series FHR 3933 QS    
 2,734,952   5.944% (1 Month LIBOR    
   
  USD + 6.050%), 10/15/2041 1,2,8
  489,569 
   Series FHR 4340 US    
 1,763,890   6.494% (1 Month LIBOR    
   
  USD + 6.600%), 05/15/2042 1,2,8
  340,583 
   Series FHR 4076 LF    
 267,806   0.406% (1 Month LIBOR    
   
  USD + 0.300%), 07/15/2042 1
  268,211 


The accompanying notes are an integral part of these financial statements.

33

Total Return Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Principal     
Amount   Value 
  Federal Home Loan Mortgage   
    Corporation REMICS: 3.1% (Continued)   
  Series FHR 4495 PI   
$373,303 
  4.000%, 09/15/2043 2
 $38,750 
   Series FHR 4313 CS    
 3,461,180   5.944% (1 Month LIBOR    
   
  USD + 6.050%), 03/15/2044 1,2,8
  699,702 
   Series FHR 4911 IH    
 1,738,816 
  4.000%, 04/15/2049 2
  113,051 
      6,518,437 
   Federal Home Loan Mortgage    
     Corporation Strips: 0.2%    
   Series FHS 288 IO    
 1,997,264 
  3.000%, 10/15/2027 2
  131,287 
   Series FHS 272 F2    
 364,740   0.656% (1 Month LIBOR    
   
  USD + 0.550%), 08/15/2042 1
  369,086 
      500,373 
   Federal National Mortgage    
     Association & Federal Home Loan    
     Mortgage Corporation 30 Year    
     Fixed Rate TBA: 24.3%    
    FNCL 2 4/21    
 10,000,000 
  2.000%, 09/25/2050 9
  9,971,289 
    FNCL 2.5 4/21    
 30,000,000 
  2.500%, 09/25/2049 9
  30,765,820 
   Pool FNCL 3 4/21    
 10,000,000 
  3.000%, 04/15/2043 9
  10,416,600 
      51,153,709 
   Federal National Mortgage    
     Association Interest Strips: 0.5%    
   Pool FNS 419 C1    
 4,372,432 
  2.500%, 09/25/2028 1,2
  275,819 
   Pool FNS 419 C2    
 5,204,404 
  3.000%, 05/25/2029 2
  342,441 
   Pool FNS 421 C4    
 2,329,762 
  4.500%, 01/25/2030 2
  214,978 
   Pool FNS 421 C3    
 147,910 
  4.000%, 07/25/2030 2
  14,145 
   Pool FNS 387 7    
 476,047 
  5.500%, 04/25/2038 2
  103,677 
      951,060 
   Federal National Mortgage    
     Association Pool: 2.7%    
    FN AL2519    
 947,408   4.500%, 07/01/2040  1,068,009 
    FN AS5460    
 1,324,249   3.500%, 07/01/2045  1,416,850 
    FN AS6520    
 1,531,503   3.500%, 01/01/2046  1,640,133 
    FN MA3101    
 1,446,407   4.500%, 08/01/2047  1,587,832 
      5,712,824 
   Federal National Mortgage    
     Association REMICS: 5.1%    
   Series FNR 1996-45 SI    
 272,471   7.141% (1 Month LIBOR    
   
  USD + 7.250%), 02/25/2024 1,2,8
  24,081 
   Series FNR 1997-65 SI    
 688,859   7.893% (1 Month LIBOR    
   
  USD + 8.000%), 09/17/2027 1,2,8
  99,338 
   Series FNR 2012-139 DI    
 5,369,776 
  3.000%, 12/25/2027 2
  275,958 
   Series FNR 2013-29 BI    
 5,959,216 
  2.500%, 04/25/2028 2
  353,617 
   Series FNR 2015-34 AI    
 2,187,338 
  4.500%, 06/25/2030 2
  60,396 
   Series FNR 2010-119 PS    
 3,748,355   6.591% (1 Month LIBOR    
   
  USD + 6.700%), 09/25/2030 1,2,8
  517,253 
   Series FNR 2016-8 CI    
 8,159,193 
  3.000%, 03/25/2031 2
  630,437 
   Series FNR 2013-51 PI    
 2,688,334 
  3.000%, 11/25/2032 2
  259,637 
   Series FNR 2014-81 TI    
 537,348 
  4.500%, 12/25/2034 2
  53,811 
   Series FNR 2016-24 IB    
 6,071,704 
  3.500%, 05/25/2036 2
  614,184 
   Series FNR 2007-2 FT    
 250,333   0.359% (1 Month LIBOR    
   
  USD + 0.250%), 02/25/2037 1
  252,145 
   Series FNR 2016-78 CS    
 3,619,997   5.991% (1 Month LIBOR    
   
  USD + 6.100%), 05/25/2039 1,2,8
  667,039 
   Series FNR 2012-82 PS    
 3,822,285   5.991% (1 Month LIBOR    
   
  USD + 6.100%), 08/25/2041 1,2,8
  477,498 
   Series FNR 2011-100 S    
 5,375,648   6.341% (1 Month LIBOR    
   
  USD + 6.450%), 10/25/2041 1,2,8
  1,046,653 
   Series FNR 2012-15 SW    
 4,964,561   5.841% (1 Month LIBOR    
   
  USD + 5.950%), 03/25/2042 1,2,8
  821,159 
   Series FNR 2012-79 FM    
 182,130   0.559% (1 Month LIBOR    
   
  USD + 0.450%), 07/25/2042 1
  183,573 
   Series FNR 2012-128 ST    
 1,633,033   6.041% (1 Month LIBOR    
   
  USD + 6.150%), 11/25/2042 1,2,8
  372,166 
   Series FNR 2013-22 TO    
 668,847 
  N/A%, 03/25/2043 3,7
  551,454 
   Series FNR 2013-20 QS    
 6,891,772   6.041% (1 Month LIBOR    
   
  USD + 6.150%), 03/25/2043 1,2,8
  1,423,183 
   Series FNR 2014-37 PI    
 1,138,780 
  5.500%, 06/25/2044 2
  142,770 
   Series FNR 2014-50 WS    
 696,714   6.091% (1 Month LIBOR    
   
  USD + 6.200%), 08/25/2044 1,2,8
  117,494 


The accompanying notes are an integral part of these financial statements.

34

Total Return Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Principal     
Amount   Value 
  Federal National Mortgage   
    Association REMICS: 5.1% (Continued)   
  Series FNR 2016-83 BS   
$512,253   5.991% (1 Month LIBOR   
   
  USD + 6.100%), 11/25/2046 1,2,8
 $105,835 
   Series FNR 2018-51 IO    
 738,923 
  6.500%, 07/25/2048 2
  124,047 
   Series FNR 2019-41 SB    
 1,876,549   5.941% (1 Month LIBOR    
   
  USD + 6.050%), 08/25/2049 1,2,8
  342,893 
   Series FNR 2020-88 QI    
 12,508,794 
  2.000%, 05/25/2050 2
  1,210,704 
      10,727,325 
   Goldman Sachs Mortgage-Backed    
     Securities Corp Trust: 0.5%    
   Series GSMBS 2020-PJ4 A2    
 1,044,461   3.000%, 01/25/2051  1,059,613 
        
   Government National Mortgage    
     Association: 1.2%    
   Series GNR 2014-74 GI    
 285,982 
  4.000%, 05/16/2029 2
  15,586 
   Series GNR 2010-47 BX    
 373,739   6.444% (1 Month LIBOR    
   
  USD + 6.550%), 08/16/2034 1,2,8
  44,513 
   Series GNR 2011-61 WS    
 4,137,313   6.359% (1 Month LIBOR    
   
  USD + 6.470%), 02/20/2038 1,2,8
  776,886 
   Series GNR 2010-6 FG    
 160,423   0.706% (1 Month LIBOR    
   
  USD + 0.600%), 01/16/2040 1
  162,478 
   Series GNR 2016-31 CS    
 5,650,821   6.139% (1 Month LIBOR    
   
  USD + 6.250%), 07/20/2044 1,2,8
  1,207,196 
   Series GNR 2016-112 WI    
 6,881,791 
  1.696%, 03/20/2045 2
  233,484 
      2,440,143 
   JP Morgan Mortgage Trust: 0.7%    
   Series JPMMT 2014-IVR3 3A1    
 640,035   2.531%, 09/25/2044  644,396 
   Series JPMMT 2020-7 A3    
 792,950   3.000%, 01/25/2051  802,902 
      1,447,298 
   Life 2021-BMR Mortgage Trust: 0.5%    
   Series LIFE 2021-BMR C    
 1,000,000   1.206% (1 Month LIBOR    
   
  USD + 1.100%), 03/15/2038 1
  1,002,651 
        
   Wells Fargo Mortgage Backed    
     Securities Trust: 0.8%    
   Series WFMBS 2020-3 A3    
 611,878   3.000%, 06/25/2050  623,555 
   Series WFMBS 2020-4 A1    
 1,086,699   3.000%, 07/25/2050  1,106,769 
      1,730,324 
Total Mortgage Backed Securities
  (Cost $85,274,166)
  83,243,757 
     
United States Government Securities: 3.7%    
        
   United States Treasury Note/Bond    
 4,000,000   0.250%, 05/31/2025  3,923,752 
 4,000,000   0.375%, 01/31/2026  3,899,064 
      7,822,816 
Total United States Government Securities    
  (Cost $7,831,719)  7,822,816 
Total Bonds    
  (Cost $191,763,707)  189,093,395 
     
Short-Term Investments: 26.7%    
United States Government Securities: 1.0%    
   United States Treasury Bill    
 500,000 
  0.116%, 08/12/2021 5,10
  499,965 
 1,500,000 
  0.096%, 12/30/2021 5,10
  1,499,460 
      1,999,425 
Total United States Government Securities    
  (Cost $1,998,699)  1,999,425 

The accompanying notes are an integral part of these financial statements.
35

Total Return Fund | Schedule of Investments at March 31, 2021 (Continued)

      
Shares   Value 
Money Market Funds: 25.7%   
      
 54,053,509 Morgan Stanley Institutional   
     Liquidity Funds – Government   
   
  Portfolio , 0.026% 4
 $54,053,509 
Total Money Market Funds    
  (Cost $54,053,509)  54,053,509 
Total Short-Term Investments    
  (Cost $56,052,208)  56,052,934 
Total Investments in Securities: 116.7%    
  (Cost $247,815,915)  245,146,328 
Liabilities in Excess of Other Assets: (16.7)%  (35,065,686)
Total Net Assets: 100.0% $210,080,642 
 
CMT – Constant Maturity Treasury Rate
LIBOR – London Interbank Offered Rate
SOFR – Secured Overnight Financing Rate
USD – United States Dollar
1
Variable rate security; rate shown is the rate in effect on March 31, 2021.
2
Interest only security.
3
Principal only security.
4
Annualized seven-day effective yield as of March 31, 2021.
5
Rate represents the yield to maturity from purchase price.
6
Perpetual call date security. Date shown is next call date.
7
Zero coupon security.
8
Inverse floating rate security. Reference interest rates are typically based on a negative multiplier or slope. Interest rate may also be subject to a ceiling or floor.
9
Security purchased on a forward-commitment basis (“TBA Commitments”).  As of March 31, 2021, the total value of TBA Commitments was $51,153,710, or 24.3% of net assets.
10
The security or a portion of the security has been deposited as initial margin on open futures contracts and another portion is designated as collateral for futures contracts.  As of March 31, 2021, the value of securities designated as collateral was $531,964, or 0.3% of net assets.


Schedule of Futures Contracts at March 31, 2021
 
The Fund had the following futures contracts outstanding with Credit Suisse.
 
Short Futures       Unrealized    
Contracts Number of  Notional  Appreciation  Notional 
Outstanding
 Contracts  Amount  (Depreciation)  Value 
US Ultra Long            
  Bond CBT
  (06/2021)
            
  (15) $(2,731,406) $13,125  $(2,718,281)
US 5 Year                
  Note CBT
  (06/2021)
                
  (40)  (4,957,500)  21,562   (4,935,938)
US 10 Year                
  Note (06/2021)  (40)  (5,275,313)  37,813   (5,237,500)
US Long Bond                
  CBT (06/2021)  (50)  (7,755,938)  26,250   (7,729,688)
US 10 Year                
  Ultra Future
  (06/2021)
                
  (140)  (20,598,125)  481,875   (20,116,250)
      $(41,318,282) $580,625  $(40,737,657)



The accompanying notes are an integral part of these financial statements.

36

Osterweis Funds | Statements of Assets and Liabilities at March 31, 2021

        Strategic  Emerging    
  Osterweis  Strategic  Investment  Opportunity  Total Return 
  Fund  Income Fund  Fund  Fund  Fund 
ASSETS               
Investments in securities, at value (cost $97,075,884,               
  $5,002,204,190, $110,579,036, $189,651,410,
  and $247,815,915, respectively)
               
 $168,587,881  $5,176,997,620  $156,928,993  $230,598,918  $245,146,328 
Cash     394,437   6,685       
Receivables:                    
Investment securities sold           3,859,048   45,595,599 
Fund shares sold  327,877   16,553,560   4,451   219,596   92,233 
Dividends and interest  162,702   65,654,025   768,880   21,637   906,399 
Variation margin receivable              580,625 
Prepaid expenses  12,090   63,400   14,838   20,155   21,341 
Total assets  169,090,550   5,259,663,042   157,723,847   234,719,354   292,342,525 
                     
LIABILITIES                    
Payables:                    
Investment securities purchased     49,215,500   250,000   2,374,983   81,320,760 
Fund shares redeemed  91   2,372,799      383,689   239,325 
Distributions to shareholders              50,657 
Investment advisory fees, net  110,947   3,103,451   130,571   163,508   81,332 
Variation margin payable              485,780 
Administration fees  11,018   252,073   10,675   13,032   14,035 
Custody fees  1,439   41,558   1,294   2,610   2,889 
Fund accounting fees  5,440   171,973   8,362   6,793   13,314 
Transfer agent fees  9,797   485,464   9,152   18,238   16,899 
Trustee fees  5,523   27,391   5,460   5,796   5,746 
Audit fees  27,100   27,100   24,600   22,100   22,100 
Chief Compliance Officer fees  2,861   2,861   2,861   2,861   2,861 
Other accrued expenses  4,186   73,185   3,957   10,657   6,185 
Total Liabilities  178,402   55,773,355   446,932   3,004,267   82,261,883 
NET ASSETS $168,912,148  $5,203,889,687  $157,276,915  $231,715,087  $210,080,642 
                     
COMPUTATION OF NET ASSETS:                    
Net assets value (unlimited shares authorized) $168,912,148  $5,203,889,687  $157,276,915  $231,715,087  $210,080,642 
Shares (unlimited number of shares                    
  authorized without par value)  7,916,335   457,535,381   8,747,052   11,591,642   20,631,213 
Net assets value, offering, and                    
  redemption price per share $21.34  $11.37  $17.98  $19.99  $10.18 
                     
COMPONENTS OF NET ASSETS:                    
Paid-in capital $91,072,576  $5,550,978,604  $105,394,462  $159,972,198  $212,613,740 
Total distributable (accumulated) earnings (losses)  77,839,572   (347,088,917)  51,882,453   71,742,889   (2,533,098)
Net assets $168,912,148  $5,203,889,687  $157,276,915  $231,715,087  $210,080,642 


The accompanying notes are an integral part of these financial statements.

37

Osterweis Funds | Statements of Operations For the Year Ended March 31, 2021

        Strategic  Emerging    
  Osterweis  Strategic  Investment  Opportunity  Total Return 
  Fund  Income Fund  Fund  Fund  Fund 
INVESTMENT INCOME               
Income:               
Dividends $1,582,735  $4,262,689  $1,323,465  $178,713  $ 
  (net of $22,222, $—, $18,844, $4,586,
  and $—, respectively, in foreign
                    
                    
  withholding taxes and issuance fees)                    
Interest  12,035   224,654,574   2,196,528   4,641   3,526,942 
Other income  465   2,408   468   456   477 
Total investment income  1,595,235   228,919,671   3,520,461   183,810   3,527,419 
                     
EXPENSES                    
Investment advisory fees  1,430,837   32,892,224   1,338,497   1,680,948   869,916 
Administration fees  52,736   1,254,453   50,687   53,799   69,285 
Transfer agent fees  30,133   500,433   27,806   28,402   31,808 
Sub-transfer agent fees  29,813   3,359,858   21,868   80,697   97,493 
Fund accounting fees  27,256   591,073   40,222   29,288   59,527 
Audit fees  27,100   27,100   24,600   22,100   22,100 
Registration fees  22,996   102,585   14,735   31,737   23,968 
Miscellaneous expense  22,847   148,828   13,379   11,404   13,668 
Trustee fees  19,917   98,763   19,734   20,437   20,947 
Legal fees  12,553   8,381   8,395   8,261   8,334 
Chief Compliance Officer fees  10,445   10,445   10,445   10,445   10,445 
Custody fees  8,144   224,707   11,966   11,107   17,320 
Reports to shareholders  6,979   179,448   3,874   3,722   7,547 
Insurance expense  3,059   15,588   3,070   3,018   3,144 
Futures commissions merchant interest expense              408 
Total expenses  1,704,815   39,413,886   1,589,278   1,995,365   1,255,910 
Fees (waived) recouped by the Adviser  (345,519)        (146,407)   
Net expenses  1,359,296   39,413,886   1,589,278   1,848,958   1,255,910 
Net investment income (loss)  235,939   189,505,785   1,931,183   (1,665,148)  2,271,509 
                     
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS                 
Net realized gain (loss) on:                    
Investments  10,562,854   (1,263,626)  8,741,907   57,176,496   4,002,243 
Securities sold short              48,047 
Futures contracts              2,143,957 
Change in net unrealized appreciation/depreciation on:                    
Investments  47,172,471   570,798,110   35,737,880   42,588,285   (2,082,532)
Futures contracts              577,813 
Net realized and unrealized                    
  gain (loss) on investments  57,735,325   569,534,484   44,479,787   99,764,781   4,689,528 
Net increase (decrease) in net                    
  assets resulting from operations $57,971,264  $759,040,269  $46,410,970  $98,099,633  $6,961,037 


The accompanying notes are an integral part of these financial statements.

38

Osterweis Fund | Statements of Changes in Net Assets

  Year Ended  Year Ended 
  March 31, 2021  March 31, 2020 
INCREASE (DECREASE) IN NET ASSETS FROM:      
OPERATIONS      
Net investment income (loss) $235,939  $280,202 
Net realized gain (loss) on investments and distributions  10,562,854   11,815,025 
Change in net unrealized appreciation/depreciation of investments  47,172,471   (14,734,105)
Net increase (decrease) in net assets resulting from operations  57,971,264   (2,638,878)
         
DISTRIBUTIONS TO SHAREHOLDERS        
Net distributions to shareholders  (8,185,457)  (9,193,655)
         
CAPITAL SHARE TRANSACTIONS        
Net increase (decrease) in net assets derived from net change in outstanding shares 1
  8,282,947   (5,854,597)
Total increase (decrease) in net assets  58,068,754   (17,687,130)
         
NET ASSETS        
Beginning of year  110,843,394   128,530,524 
End of year $168,912,148  $110,843,394 

1 
A summary of share transactions is as follows:    
    Year Ended  Year Ended 
    March 31, 2021  March 31, 2020 
    Shares  Value  Shares  Value 
 Shares sold  769,170  $14,870,833   535,981  $9,270,100 
 Shares issued in reinvestment of distributions  387,691   7,780,949   498,900   8,650,926 
 Shares redeemed  (789,699)  (14,368,835)  (1,396,816)  (23,775,623)
 Net increase (decrease)  367,162  $8,282,947   (361,935) $(5,854,597)


The accompanying notes are an integral part of these financial statements.

39

Strategic Income Fund | Statements of Changes in Net Assets

  Year Ended  Year Ended 
  March 31, 2021  March 31, 2020 
INCREASE (DECREASE) IN NET ASSETS FROM:      
OPERATIONS      
Net investment income (loss) $189,505,785  $229,154,527 
Net realized gain (loss) on investments and distributions  (1,263,626)  (135,917,889)
Change in unrealized appreciation/depreciation on investments  570,798,110   (344,362,398)
Net increase (decrease) in net assets resulting from operations  759,040,269   (251,125,760)
         
DISTRIBUTIONS TO SHAREHOLDERS        
Net distributions to shareholders  (188,057,162)  (231,265,711)
         
CAPITAL SHARE TRANSACTIONS        
Net increase (decrease) in net assets derived from net change in outstanding shares 1
  637,300,676   (1,063,367,677)
Total increase (decrease) in net assets  1,208,283,783   (1,545,759,148)
         
NET ASSETS        
Beginning of year  3,995,605,904   5,541,365,052 
End of year $5,203,889,687  $3,995,605,904 

1 
A summary of share transactions is as follows:    
    Year Ended  Year Ended 
    March 31, 2021  March 31, 2020 
    Shares  Value  Shares  Value 
 Shares sold  135,832,063  $1,491,508,830   100,128,867  $1,093,483,662 
 Shares issued in reinvestment of distributions  14,755,280   162,788,234   18,814,566   203,284,360 
 Shares redeemed  (93,945,451)  (1,016,996,388)  (219,422,950)  (2,360,135,699)
 Net increase (decrease)  56,641,892  $637,300,676   (100,479,517) $(1,063,367,677)


The accompanying notes are an integral part of these financial statements.

40

Strategic Investment Fund | Statements of Changes in Net Assets

  Year Ended  Year Ended 
  March 31, 2021  March 31, 2020 
INCREASE (DECREASE) IN NET ASSETS FROM:      
OPERATIONS      
Net investment income (loss) $1,931,183  $2,107,215 
Net realized gain (loss) on investments and distributions  8,741,907   3,724,036 
Change in net unrealized appreciation/depreciation of investments  35,737,880   (12,349,151)
Net increase (decrease) in net assets resulting from operations  46,410,970   (6,517,900)
         
DISTRIBUTIONS TO SHAREHOLDERS        
Net distributions to shareholders  (5,020,422)  (4,748,760)
         
CAPITAL SHARE TRANSACTIONS        
Net increase (decrease) in net assets derived from net change in outstanding shares 1
  5,882,656   (10,438,787)
Total increase (decrease) in net assets  47,273,204   (21,705,447)
         
NET ASSETS        
Beginning of year  110,003,711   131,709,158 
End of year $157,276,915  $110,003,711 

1 
A summary of share transactions is as follows:    
    Year Ended  Year Ended 
    March 31, 2021  March 31, 2020 
    Shares  Value  Shares  Value 
 Shares sold  753,175  $12,702,042   296,588  $4,452,109 
 Shares issued in reinvestment of distributions  216,644   3,665,617   235,941   3,550,910 
 Shares redeemed  (672,361)  (10,485,003)  (1,295,646)  (18,441,806)
 Net increase (decrease)  297,458  $5,882,656   (763,117) $(10,438,787)


The accompanying notes are an integral part of these financial statements.

41

Emerging Opportunity Fund | Statements of Changes in Net Assets

  Year Ended  Year Ended 
  March 31, 2021  March 31, 2020 
INCREASE (DECREASE) IN NET ASSETS FROM:      
OPERATIONS      
Net investment income (loss) $(1,665,148) $(816,399)
Net realized gain (loss) on investments and distributions  57,176,496   4,759,738 
Change in unrealized appreciation/depreciation on investments  42,588,285   (12,017,714)
Net increase (decrease) in net assets resulting from operations  98,099,633   (8,074,375)
         
DISTRIBUTIONS TO SHAREHOLDERS        
Net distributions to shareholders  (20,661,011)  (6,684,032)
         
CAPITAL SHARE TRANSACTIONS        
Net increase (decrease) in net assets derived from net change in outstanding shares 1
  64,056,767   7,965,134 
Total increase (decrease) in net assets  141,495,389   (6,793,273)
         
NET ASSETS        
Beginning of year  90,219,698   97,012,971 
End of year $231,715,087  $90,219,698 

1 
A summary of share transactions is as follows:    
    Year Ended  Year Ended 
    March 31, 2021  March 31, 2020 
    Shares  Value  Shares  Value 
 Shares sold  4,651,315  $88,828,433   1,623,096  $20,575,382 
 Shares issued in reinvestment of distributions  642,334   12,782,445   248,001   2,998,331 
 Shares redeemed  (2,313,252)  (37,554,111)  (1,300,840)  (15,608,579)
 Net increase (decrease)  2,980,397  $64,056,767   570,257  $7,965,134 


The accompanying notes are an integral part of these financial statements.

42

Total Return Fund | Statements of Changes in Net Assets

  Year Ended  Year Ended 
  March 31, 2021  March 31, 2020 
INCREASE (DECREASE) IN NET ASSETS FROM:      
OPERATIONS      
Net investment income (loss) $2,271,509  $3,433,687 
Net realized gain (loss) on investments and futures contracts  6,194,247   (651,242)
Change in net unrealized appreciation/depreciation on investments and futures contracts  (1,504,719)  (16,311)
Net increase (decrease) in net assets resulting from operations  6,961,037   2,766,134 
         
DISTRIBUTIONS TO SHAREHOLDERS        
Net distributions to shareholders  (6,398,924)  (4,527,891)
         
CAPITAL SHARE TRANSACTIONS        
Net increase (decrease) in net assets derived from net change in outstanding shares 1
  51,265,652   53,444,593 
Total increase (decrease) in net assets  51,827,765   51,682,836 
         
NET ASSETS        
Beginning of year  158,252,877   106,570,041 
End of year $210,080,642  $158,252,877 

1 
A summary of share transactions is as follows:       
    Year Ended  Year Ended 
    March 31, 2021  March 31, 2020 
    Shares  Value  Shares  Value 
 Shares sold  9,805,224  $101,532,320   9,912,327  $101,153,293 
 Shares issued in reinvestment of distributions  376,805   3,914,132   190,028   1,937,926 
 Shares redeemed  (5,258,112)  (54,180,800)  (4,904,248)  (49,646,626)
 Net increase (decrease)  4,923,917  $51,265,652   5,198,107  $53,444,593 


The accompanying notes are an integral part of these financial statements.

43

Osterweis Fund | Financial Highlights

For a capital share outstanding throughout each year

  Year Ended March 31, 
  2021  2020  2019  2018  2017 
Net asset value, beginning of year $14.68  $16.25  $19.15  $26.07  $25.14 
                     
INCOME FROM INVESTMENT OPERATIONS:                    
Net investment income (loss) 1
  0.03   0.04   0.08   0.09   0.06 
Net realized and unrealized gain (loss) on investments  7.75   (0.31)  1.24   1.67   2.70 
Total from investment operations  7.78   (0.27)  1.32   1.76   2.76 
                     
LESS DISTRIBUTIONS:                    
From net investment income  (0.10)  (0.07)  (0.76)  (1.49)  (0.29)
From net realized gain  (1.02)  (1.23)  (3.46)  (7.19)  (1.54)
Total distributions  (1.12)  (1.30)  (4.22)  (8.68)  (1.83)
Net asset value, end of year $21.34  $14.68  $16.25  $19.15  $26.07 
Total return  53.48%  (2.88)%  9.86%  5.94%  11.33%
                     
SUPPLEMENTAL DATA:                    
Net assets, end of year (millions) $168.9  $110.8  $128.5  $161.8  $244.3 
Portfolio turnover rate  37%  35%  43%  47%  50%
                     
RATIOS OF EXPENSES TO AVERAGE NET ASSETS:                 
Before fees/expenses waived or recouped  1.19%  1.19%  1.17%  1.14%  1.11%
After fees/expenses waived or recouped  0.95%  0.95%  0.95%  1.12
%2
  1.11%
                     
RATIOS OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS:            
Before fees/expenses waived or recouped  (0.08)%  (0.02)%  0.21%  0.36%  0.25%
After fees/expenses waived or recouped  0.16%  0.22%  0.43%  0.38
%2
  0.25%

1
Calculated based on average shares outstanding during the period.
2
Effective January 1, 2018 the Adviser agreed to contractually limit expenses for the Fund to not exceed 0.95% of average net assets. Prior to January 1, 2018, Fund expenses were not subject to an expense limitation agreement.


The accompanying notes are an integral part of these financial statements.

44

Strategic Income Fund | Financial Highlights

For a capital share outstanding throughout each year

  Year Ended March 31, 
  2021  2020  2019  2018  2017 
Net asset value, beginning of year $9.97  $11.05  $11.27  $11.26  $10.57 
                     
INCOME FROM INVESTMENT OPERATIONS:                    
Net investment income (loss) 1
  0.45   0.47   0.50   0.51   0.57 
Net realized and unrealized gain (loss) on investments  1.40   (1.06)  (0.21)  0.00
2 
  0.69 
Total from investment operations  1.85   (0.59)  0.29   0.51   1.26 
                     
LESS DISTRIBUTIONS:                    
From net investment income  (0.45)  (0.49)  (0.51)  (0.50)  (0.57)
Total distributions  (0.45)  (0.49)  (0.51)  (0.50)  (0.57)
Net asset value, end of year $11.37  $9.97  $11.05  $11.27  $11.26 
Total return  18.73%  (5.63)%  2.67%  4.64%  12.18%
                     
SUPPLEMENTAL DATA:                    
Net assets, end of year (millions) $5,203.9  $3,995.6  $5,541.4  $6,058.0  $5,414.0 
Portfolio turnover rate  60%  40%  46%  53%  37%
                     
RATIO OF EXPENSES TO AVERAGE NET ASSETS:                 
Ratio of expenses to average net assets  0.86%  0.86%  0.84%  0.84%  0.84%
                     
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS:            
Ratio of net investment income (loss) to average net assets  4.14%  4.32%  4.52%  4.49%  5.17%

1
Calculated based on average shares outstanding during the period.
2
Does not round to $0.01 or $(0.01), as applicable.


The accompanying notes are an integral part of these financial statements.

45

Strategic Investment Fund | Financial Highlights

For a capital share outstanding throughout each year

  Year Ended March 31, 
  2021  2020  2019  2018  2017 
Net asset value, beginning of year $13.02  $14.30  $14.87  $14.77  $13.32 
                     
INCOME FROM INVESTMENT OPERATIONS:                    
Net investment income (loss) 1
  0.23   0.23   0.28   0.39   0.43 
Net realized and unrealized gain (loss) on investments  5.35   (0.96)  0.44   0.49   1.53 
Total from investment operations  5.58   (0.73)  0.72   0.88   1.96 
                     
LESS DISTRIBUTIONS:                    
From net investment income  (0.11)  (0.18)  (0.37)  (0.50)  (0.51)
From net realized gain  (0.51)  (0.37)  (0.92)  (0.28)   
Total distributions  (0.62)  (0.55)  (1.29)  (0.78)  (0.51)
Net asset value, end of year $17.98  $13.02  $14.30  $14.87  $14.77 
Total return  43.15%  (5.67)%  5.69%  5.86%  14.91%
                     
SUPPLEMENTAL DATA:                    
Net assets, end of year (millions) $157.3  $110.0  $131.7  $178.9  $196.4 
Portfolio turnover rate  51%  51%  47%  55%  53%
                     
RATIO OF EXPENSES TO AVERAGE NET ASSETS:                 
Ratio of expenses to average net assets  1.19%  1.20%  1.19%  1.15%  1.15%
                     
RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS:            
Ratio of net investment income (loss) to average net assets  1.44%  1.57%  1.91%  2.56%  3.06%

1
Calculated based on average shares outstanding during the period.


The accompanying notes are an integral part of these financial statements.

46

Emerging Opportunity Fund | Financial Highlights

For a capital share outstanding throughout each year/period
 
              Period from 
  Year Ended March 31,  November 30, 2016 
    through 
  2021  2020  2019  2018  
March 31, 2017 1
 
Net asset value, beginning of year/period $10.48  $12.06  $11.73  $10.62  $10.00 
                     
INCOME FROM INVESTMENT OPERATIONS:                    
Net investment income (loss) 2
  (0.18)  (0.10)  (0.11)  (0.12)  (0.05)
Net realized and unrealized gain (loss) on investments  11.81   (0.70)  1.25   3.26   0.67 
Total from investment operations  11.63   (0.80)  1.14   3.14   0.62 
                     
LESS DISTRIBUTIONS:                    
From net realized gain  (2.12)  (0.78)  (0.81)  (2.03)   
Total distributions  (2.12)  (0.78)  (0.81)  (2.03)   
Net asset value, end of year/period $19.99  $10.48  $12.06  $11.73  $10.62 
Total return  111.27%  (7.60)%  11.12%  31.21%  6.30
%3
                     
SUPPLEMENTAL DATA:                    
Net assets, end of year/period (millions) $231.7  $90.2  $97.0  $63.4  $43.8 
Portfolio turnover rate  111%  213%  215%  208%  62
%3
                     
RATIOS OF EXPENSES TO AVERAGE NET ASSETS:                
Before fees/expenses waived or recouped  1.19%  1.24%  1.22%  1.29%  1.60
%4
After fees/expenses waived or recouped  1.10
%6
  1.13
%6
  1.25
%5
  1.27
%5
  1.50
%4
                     
RATIOS OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS:            
Before fees/expenses waived or recouped  (1.08)%  (0.88)%  (0.88)%  (1.04)%  (1.48
)%4
After fees/expenses waived or recouped  (0.99
)%6
  (0.77
)%6
  (0.91
)%5
  (1.02
)%5
  (1.38
)%4

1
Commenced operations on November 30, 2016. Information presented is from the period November 30, 2016 to March 31, 2017.
2
Calculated based on average shares outstanding during the period.
3
Not Annualized.
4
Annualized.
5
Effective June 30, 2017 the Adviser agreed to contractually limit expenses for the Fund to not exceed 1.25% of average net assets. Prior to June 30, 2017, Fund expenses were limited to 1.50% of average net assets.
6
Effective June 30, 2019 the Adviser agreed to contractually limit expenses for the Fund to not exceed 1.10% of average net assets. Prior to June 30, 2017, Fund expenses were limited to 1.25% of average net assets.


The accompanying notes are an integral part of these financial statements.

47

Total Return Fund | Financial Highlights

For a capital share outstanding throughout each year/period
 
              Period from 
  Year Ended March 31,  December 30, 2016 
    through 
  2021  2020  2019  2018  
March 31, 2017 1
 
Net asset value, beginning of year/period $10.08  $10.14  $9.93  $10.23  $10.00 
                     
INCOME FROM INVESTMENT OPERATIONS:                    
Net investment income (loss) 2
  0.12   0.26   0.33   0.35   0.04 
Net realized and unrealized gain (loss) on investments  0.31   0.01   0.23   (0.26)  0.22 
Total from investment operations  0.43   0.27   0.56   0.09   0.26 
                     
LESS DISTRIBUTIONS:                    
From net investment income  (0.14)  (0.28)  (0.34)  (0.35)  (0.03)
From net realized gain  (0.19)  (0.05)  (0.01)  (0.04)   
Total distributions  (0.33)  (0.33)  (0.35)  (0.39)  (0.03)
Net asset value, end of year/period $10.18  $10.08  $10.14  $9.93  $10.23 
Total return  4.25%  2.74%  5.78%  0.89%  2.65
%3
                     
SUPPLEMENTAL DATA:                    
Net assets, end of year/period (millions) $210.1  $158.3  $106.6  $102.2  $46.8 
Portfolio turnover rate  616%  214%  163%  138%  27
%3
                     
RATIOS OF EXPENSES TO AVERAGE NET ASSETS:                 
Before fees/expenses waived or recouped  0.65%  0.66%  0.67%  0.70%  2.55
%4
After fees/expenses waived or recouped  0.65%  0.66%  0.67%  0.75%  0.75
%4
                     
RATIOS OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS:            
Before fees/expenses waived or recouped  1.18%  2.51%  3.27%  3.47%  (0.30
)%4
After fees/expenses waived or recouped  1.18%  2.51%  3.26%  3.42%  1.50
%4

1
Commenced operations on December 30, 2016. Information presented is from the period December 30, 2016 to March 31, 2017.
2
Calculated based on average shares outstanding during the period.
3
Not Annualized.
4
Annualized.


The accompanying notes are an integral part of these financial statements.

48

Osterweis Funds | Notes to Financial Statements at March 31, 2021

 Note 1 – Organization

The Osterweis Fund, Osterweis Strategic Income Fund, Osterweis Strategic Investment Fund, Osterweis Emerging Opportunity Fund and Osterweis Total Return Fund (each a “Fund”, collectively the “Funds”) are diversified series of shares of beneficial interest of Professionally Managed Portfolios (the “Trust”), which is registered under the Investment Company Act of 1940, as amended (the “1940 Act”) as an open-end management investment company. The Funds are investment companies and accordingly follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 “Financial Services – Investment Companies.” The Funds commenced operations on October 1, 1993, August 30, 2002, August 31, 2010, November 30, 2016 and December 30, 2016, respectively.
 
The investment objective of the Osterweis Fund is to attain long-term total returns, which it seeks by investing primarily in equity securities. The investment objective of the Osterweis Strategic Income Fund is to preserve capital and attain long-term total returns through a combination of current income and moderate capital appreciation, which it seeks by investing primarily in income bearing securities. The investment objective of the Osterweis Strategic Investment Fund is to attain long-term total returns and capital preservation, which it seeks by investing in both equity and fixed income securities that the Adviser believes can deliver attractive long-term returns and enhanced capital preservation. The investment objective of the Osterweis Emerging Opportunity Fund is to attain long-term capital appreciation. The investment objective of the Osterweis Total Return Fund is to preserve capital and attain long-term total returns through a combination of current income and moderate capital appreciation. Osterweis Capital Management, Inc. and Osterweis Capital Management, LLC may be referred to individually or collectively as the “Adviser” or “Advisers” throughout this report.
 
 Note 2 – Significant Accounting Policies

The following is a summary of significant accounting policies consistently followed by the Funds. These policies are in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
 
 A.
Security Valuation. All equity securities, which may include Real Estate Investment Trusts (“REITs”), Business Development Companies (“BDCs”) and Master Limited Partnerships (“MLPs”), that are traded on U.S. national or foreign securities exchanges are valued either at the last reported sale price on the exchange on which the security is principally traded or the exchange’s official closing price. If, on a particular day, an exchange-traded security does not trade, then the mean between the most recent quoted bid and asked prices will be used. All equity securities which may include REITs, BDCs and MLPs that are not traded on a listed exchange are valued at the last sale price in the over-the-counter market. If a non-exchange traded security does not trade on a particular day, then the mean between the last quoted closing bid and asked price will be used.
   
  Debt securities are valued by using the evaluated mean price supplied by an approved independent pricing service. The independent pricing service may use various valuation methodologies including matrix pricing and other analytical pricing models as well as market transactions and dealer quotations. These models generally consider such factors as yields or prices of bonds of comparable quality, type of issue, coupon, maturity, ratings and general market conditions. In the absence of a price from a pricing service, securities are valued at their respective fair values as determined in good faith by the Valuation Committee.
   
  Futures contracts are priced by an approved independent pricing service. Futures contracts are valued at the settlement price on the exchange on which they are principally traded.
   
  Securities for which quotations are not readily available are valued at their respective fair values as determined in good faith by the Valuation Committee. When a security is “fair valued,” consideration is given to the facts and circumstances relevant to the particular situation, including a review of various factors set forth in the pricing procedures adopted by the Funds’ Board of Trustees (the “Board”). Fair value pricing is an inherently subjective process, and no single standard exists for determining fair value. Different funds could reasonably arrive at different values for the same security. The use of fair value pricing by a fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated without regard to such considerations.

49

Osterweis Funds | Notes to Financial Statements at March 31, 2021 (Continued)

 As described above, the Funds utilize various methods to measure the fair value of their investments on a recurring basis. U.S. GAAP establishes a hierarchy that prioritizes inputs to valuation methods. The three levels of inputs are:

 Level 1 –Unadjusted quoted prices in active markets for identical assets or liabilities that the Funds have the ability to access.
   
 Level 2 –Observable inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
   
 Level 3 –Unobservable inputs for the asset or liability, to the extent relevant observable inputs are not available, representing the Funds’ own assumptions about the assumptions a market participant would use in valuing the asset or liability, and would be based on the best information available.

 The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
  
 The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
  
 The following is a summary of the inputs used to value the Funds’ investments and derivative positions as of March 31, 2021:

 Osterweis Fund Level 1  Level 2  Level 3  Total 
 Assets:            
 
Common Stocks 1
 $164,021,909  $  $  $164,021,909 
 Short-Term Investments  4,565,972         4,565,972 
 Total Assets: $168,587,881  $  $  $168,587,881 
                  
 
1  See Schedule of Investments for industry breakouts.
                
                  
 Osterweis Strategic Income Fund Level 1  Level 2  Level 3  Total 
 Assets:                
 
Common Stocks 1
 $  $  $134,303,605  $134,303,605 
 
Convertible Preferred Stocks 1
  13,161,400   59,488,936      72,650,336 
 
Corporate Bonds 1,2
     4,085,605,395   14,343,157   4,099,948,552 
 
Convertible Bonds 1
     431,979,497      431,979,497 
 Private Mortgage                
 
  Backed Obligations 1
        16,913,269   16,913,269 
 
Warrants 1
        848,561   848,561 
 Short-Term Investments  420,353,800         420,353,800 
 Total Assets: $433,515,200  $4,577,073,828  $166,408,592  $5,176,997,620 
                  
 
1  See Schedule of Investments for industry breakouts.
                
 
2  See Schedule of Investments for disclosure of Level 3 securities.
                

50

Osterweis Funds | Notes to Financial Statements at March 31, 2021 (Continued)

 The following is a reconciliation of the Osterweis Strategic Income Fund’s Level 3 assets for which significant unobservable inputs were used to determine fair value:

   Common  Corporate  Private Mortgage       
   Stocks  Bonds  Backed Obligations  Warrants  Total 
 Balance as of March 31, 2020 $93,547,212  $135,158,322  $14,488,745  $  $243,194,279 
 Acquisitions     466,604      848,561   1,315,165 
 Dispositions     (70,404,700)        (70,404,700)
 Accrued discounts/premiums     65,811         65,811 
 Realized gain (loss)     260,344         260,344 
 Change in unrealized                    
   appreciation/depreciation  40,756,393   18,266,749   2,424,524      61,447,666 
 
Transfer in and/or out of Level 3 1
     (69,469,973)        (69,469,973)
 Balance as of March 31, 2021 $134,303,605  $14,343,157  $16,913,269  $848,561  $166,408,592 
 Change in unrealized                    
   appreciation/depreciation                    
   for Level 3 investments                    
   held at March 31, 2021 $40,756,393  $(65,811) $2,424,524  $  $43,115,106 

 
1
Transfers were made into Level 2 and out of Level 3 due to the security being an evaluated price from a pricing service.

   Fair Value      
 Type of Security at 3/31/21 Valuation TechniquesUnobservable Input Input Value(s) 
 Common Stocks   Market ComparableDiscount Rate,   
     ApproachEBITDA Multiple 3.0%/5.5x
     Broker QuotesMarket Data $12.75 
   $134,303,605 Estimated ProceedsMarket Data $0.0007514 
 Corporate Bonds $14,343,157 Issue PriceMarket Data $100.00 
 Private Mortgage         
   Backed Obligations $16,913,269 Discounted Cash FlowAdjustment to yield 344 bps 
 Warrants $848,561 Black ScholesVolatility 45%

 Significant increases (decreases) in any of those inputs in isolation would result in a significantly higher (lower) fair value measurement. Increases in the adjustment to yield would decrease price and decreases in the adjustment to yield would increase price.
  
 The Trust’s valuation procedures have been adopted by the Trust’s Board, which has established a Valuation Committee to oversee valuation techniques. The Board ratifies valuation techniques quarterly.

 Osterweis Strategic            
   Investment Fund Level 1  Level 2  Level 3  Total 
 Assets:            
 
Common Stocks 1
 $109,720,396  $  $898,707  $110,619,103 
 
Convertible Preferred Stocks 1
  268,600   1,214,060      1,482,660 
 
Corporate Bonds 1
     33,786,213   243,104   34,029,317 
 
Convertible Bonds 1
     8,338,293      8,338,293 
 Private Mortgage                
 
  Backed Obligations 1
        497,928   497,928 
 
Warrants 1
        4,637   4,637 
 Short-Term Investments  1,957,055         1,957,055 
 Total Assets: $111,946,051  $43,338,566  $1,644,376  $156,928,993 
                  
 
1  See Schedule of Investments for industry breakouts.
                

51

Osterweis Funds | Notes to Financial Statements at March 31, 2021 (Continued)

 The following is a reconciliation of the Osterweis Strategic Investment Fund’s Level 3 assets for which significant unobservable inputs were used to determine fair value:

   Common  Corporate  Private Mortgage       
   Stocks  Bonds  Backed Obligations  Warrants  Total 
 Balance as of March 31, 2020 $803,897  $1,862,498  $426,550  $  $3,092,945 
 Acquisitions     7,908      4,637   12,545 
 Dispositions     (1,450,300)        (1,450,300)
 Accrued discounts/premiums     1,431         1,431 
 Realized gain (loss)     6,636         6,636 
 Change in unrealized                    
   appreciation/depreciation  94,810   274,468   71,378      440,656 
 
Transfer in and/or out of Level 3 1
     (459,537)        (459,537)
 Balance as of March 31, 2021 $898,707  $243,104  $497,928  $4,637  $1,644,376 
 Change in unrealized                    
   appreciation/depreciation                    
   for Level 3 investments                    
   held at March 31, 2021 $94,810  $(1,431) $71,378  $  $164,757 

 
1
Transfers were made into Level 2 and out of Level 3 due to the security being an evaluated price from a pricing service.

   Fair Value      
 Type of Security at 3/31/21 Valuation TechniquesUnobservable Input Input Value(s) 
 Common Stocks   Market ComparableDiscount Rate,   
     ApproachEBITDA Multiple 3.0%/5.5x
     Broker QuotesMarket Data $12.75 
   $898,707 Estimated ProceedsMarket Data $0.0007514 
 Corporate Bonds $243,104 Issue PriceMarket Data $100.00 
 Private Mortgage         
   Backed Obligations $497,928 Discounted Cash FlowAdjustment to yield 344 bps 
 Warrants $4,637 Black ScholesVolatility 45%

 Significant increases (decreases) in any of those inputs in isolation would result in a significantly higher (lower) fair value measurement. Increases in the adjustment to yield would decrease price and decreases in the adjustment to yield would increase price.
  
 The Trust’s valuation procedures have been adopted by the Trust’s Board which has established a Valuation Committee to oversee valuation techniques. The Board ratifies valuation techniques quarterly.

 Osterweis Emerging            
   Opportunity Fund Level 1  Level 2  Level 3  Total 
 Assets:            
 
Common Stocks 1
 $217,300,981  $  $  $217,300,981 
 Short-Term Investments  13,297,937         13,297,937 
 Total Assets: $230,598,918  $  $  $230,598,918 
                  
 
1  See Schedule of Investments for industry breakouts.
                

52

Osterweis Funds | Notes to Financial Statements at March 31, 2021 (Continued)

 Osterweis Total Return Fund Level 1  Level 2  Level 3  Total 
 Assets:            
 
Corporate Bonds 1
 $  $79,377,976  $  $79,377,976 
 Asset Backed Securities     18,648,845      18,648,845 
 Mortgage Backed Securities     83,243,757      83,243,757 
 United States                
 
  Government Securities 2
     7,822,816      7,822,816 
 Short-Term Investments  54,053,509   1,999,425      56,052,934 
 Total Assets: $54,053,509  $191,092,819  $  $245,146,328 
 
Other Financial Instruments 3:
                
 Interest Rate Contracts – Futures $580,625  $  $  $580,625 

 
1
See Schedule of Investments for industry breakouts.
 
2
See schedule of investments for security type breakouts.
 
3
Other Financial Instruments are derivative instruments not reflected in the Schedule of Investments, such as futures contracts, which are presented at the net unrealized appreciation/(depreciation) on the investment.

 The Funds have provided additional disclosures below regarding derivatives and hedging activity intending to improve financial reporting by enabling investors to understand how and why the Funds use futures contracts (a type of derivative), how they are accounted for and how they affect an entity’s results of operations and financial position. The Funds may use derivatives for risk management purposes or as part of its investment strategies. Derivatives are financial contracts whose values depend on, or are derived from, the value of an underlying asset, reference rate or index. The Funds may use derivatives to earn income and enhance returns, to hedge or adjust the risk profile of its portfolio, to replace more traditional direct investments and to obtain exposure to otherwise inaccessible markets.
  
 The average notional amount for futures contracts is based on the monthly notional amounts. The notional amount for futures contracts represents the U.S. dollar value of the contract as of the day of opening the transaction or latest contract reset date. The Osterweis Total Return Fund’s average notional value of futures contracts outstanding during the year ended March 31, 2021, was $16,850,239. The following tables show the effects of derivative instruments on the financial statements.
  
 Statements of Assets and Liabilities
  
 Fair values of derivative instruments as of March 31, 2021:
  
 Osterweis Total Return Fund

   Asset Derivatives as of Liability Derivatives as of
   March 31, 2021 March 31, 2021
   Balance Sheet   Balance Sheet  
 Instrument Location Fair Value Location Fair Value
 Interest Rate Variation   Variation  
   Contracts – Futures margin receivable $580,625 margin payable $485,780

 Statements of Operations
  
 The effect of derivative instruments on the Statements of Operations for the year ended March 31, 2021:
  
 Osterweis Total Return Fund

    Change in Unrealized
  Location of Gain (Loss)Realized GainAppreciation/Depreciation
  on Derivatives(Loss) on Derivativeson Derivatives
 
Instrument
Recognized in Income
Recognized in Income
Recognized in Income
 Interest RateRealized and Unrealized  
   Contracts – FuturesGain (Loss) on Investments$2,143,957$577,813

53

Osterweis Funds | Notes to Financial Statements at March 31, 2021 (Continued)

  The Osterweis Fund, Osterweis Strategic Income Fund, Osterweis Strategic Investment Fund and Osterweis Emerging Opportunity Fund did not have derivatives activity during the year ended March 31, 2021.
   
 B.
Foreign Currency. Foreign currency amounts, other than the cost of investments, are translated into U.S. dollar values based upon the spot exchange rate prior to the close of regular trading. The cost of investments is translated at the rates of exchange prevailing on the dates the portfolio securities were acquired. The Funds include foreign exchange gains and losses from dividends receivable, interest receivable and other foreign currency denominated payables and receivables in Change in net unrealized appreciation/depreciation on foreign currency translation and Net realized gain (loss) on foreign currency translation. The Funds do not isolate that portion of realized and unrealized gain (loss) on investments resulting from changes in foreign exchange rates on investments from fluctuations arising from changes in the market price of securities for financial reporting purposes. Fluctuations in foreign exchange rates on investments are thus included in Change in net unrealized appreciation/depreciation on investments and Net realized gain (loss) on investments.
   
 C.
Futures Contracts. Each Fund may purchase or sell futures contracts and options thereon to hedge against changes in interest rates, securities (through index futures or options) or currencies. The purchase of futures contracts may be more efficient or cost-effective than buying the underlying securities or assets. A futures contract is an agreement that obligates the buyer to buy and the seller to sell a specified quantity of an underlying asset (or settle for cash the value of a contract based on an underlying asset, rate or index) at a specific price on the contract maturity date. Upon entering into a futures contract, each Fund is required to pledge to the counterparty an amount of cash, U.S. Government securities or other high-quality debt securities equal to the minimum “initial margin” requirements of the exchange or the broker. Pursuant to a contract entered into with a futures commission merchant, each Fund agrees to receive from or pay to the firm an amount of cash equal to the cumulative daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin” and are recorded by the Funds as unrealized gains or losses. When the contract is closed, the Funds record a gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed. Each Fund will cover its current obligations under futures contracts by the segregation of liquid assets or by entering into offsetting transactions or owning positions covering its obligations. The Funds’ use of futures contracts may involve risks that are different from, or possibly greater than, the risk associated with investing directly in securities or other more traditional instruments. These risks include the risk that the value of the futures contracts may not correlate perfectly, or at all, with the value of the assets, reference rates or indices that they are designed to track. Other risks include: an illiquid secondary market for a particular instrument and possible exchange-imposed price fluctuation limits, either of which may make it difficult or impossible to close out a position when desired; the risk that adverse price movements in an instrument can result in a loss substantially greater than the Funds’ initial investment in that instrument (in some cases, the potential loss is unlimited); and the risk that a counterparty will not perform its obligations. The Osterweis Total Return Fund had futures contracts activity during the year ended March 31, 2021. Realized and unrealized gains and losses are included in the Statements of Operations. The Osterweis Fund, Osterweis Strategic Income Fund, Osterweis Strategic Investment Fund and Osterweis Emerging Opportunity Fund did not have futures contracts activity during the year ended March 31, 2021.
   
 D.
To-be-announced (“TBA”) Commitments. Each Fund may enter into TBA purchase commitments. In a TBA transaction, the TBA unit price and the estimated principal amount are established when a Fund enters into a contract, with the actual principal amount being within a specified range of the estimate. Securities purchased on a TBA basis are not settled until they are delivered to the Fund, which can be 15 to 45 days later. Beginning on the date the Fund enters into a TBA transaction, cash, U.S. government securities or other liquid securities are segregated in an amount equal in value to the purchase price of the TBA security. The Funds may enter into TBA sale commitments to hedge their portfolio positions or to sell securities they own under delayed delivery arrangements. Proceeds of TBA sale commitments are not received until the contractual settlement date. Unsettled TBA sale commitments are valued at current market value of the underlying securities. If the TBA sale commitment is closed through the acquisition of an offsetting purchase commitment, a Fund realizes a gain or

54

Osterweis Funds | Notes to Financial Statements at March 31, 2021 (Continued)

 loss on the commitment without regard to any unrealized gain or loss on the underlying security. If a Fund delivers securities under the commitment, the Fund realizes a gain or loss from the sale of the securities based upon the unit price established at the date the commitment was entered. The Osterweis Total Return Fund had TBAs during the year ended March 31, 2021. The Osterweis Fund, Osterweis Strategic Income Fund, Osterweis Strategic Investment Fund and Osterweis Emerging Opportunity Fund did not have TBA’s during the year ended March 31, 2021.
  
 Statements of Assets and Liabilities
  
 Fair values of TBA Commitments as of March 31, 2021:
  
 Osterweis Total Return Fund

   Asset TBAs as of Liability TBAs as of
   March 31, 2021 
March 31, 2021
   Balance Sheet   Balance Sheet  
 Instrument Location Fair Value Location Fair Value
 TBA Commitments Receivable for   Payable for investment  
   investment securities sold $20,305,078 securities purchased $71,483,203

 Statements of Operations
  
 The effect of TBA Commitments on the Statements of Operations for the year ended March 31, 2021:
  
 Osterweis Total Return Fund

    Change in Unrealized
  Location of GainRealized GainAppreciation/Depreciation
  (Loss) on TBAs(Loss) on TBAson TBAs
 
Instrument
Recognized in Income
Recognized in Income
Recognized in Income
 TBA CommitmentsRealized and Unrealized  
  Gain (Loss) on Investments$666,992$(42,302)

 E.
Federal Income Taxes. Each Fund has elected to be taxed as a “regulated investment company” and intends to distribute substantially all taxable income to its shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies. Therefore, no provision for federal income taxes or excise taxes has been made.
   
  In order to avoid imposition of the excise tax applicable to regulated investment companies, each Fund intends to declare each year as dividends, in each calendar year, at least 98.0% of its net investment income (earned during the calendar year) and 98.2% of its net realized capital gains (earned during the twelve months ended October 31) plus undistributed amounts, if any, from prior years.
   
  Net capital losses incurred after October 31, and within the taxable year, are deemed to arise on the first business day of each Fund’s next taxable year. Net investment losses incurred after December 31, and within the taxable year, are deemed to arise on the first business day of the Fund’s next taxable year.
   
  As of the fiscal year end March 31, 2021, there were no late-year or post-October losses for the Funds.
   
  As of the fiscal year end March 31, 2021, the Funds had the following capital loss carryovers available for federal income tax purposes:

   Capital Loss Carryovers 
   Short-Term  Long-Term 
 Osterweis Fund $  $ 
 Osterweis Strategic Income Fund  (8,092,848)  (520,504,102)
 Osterweis Strategic Investment Fund      
 Osterweis Emerging Opportunity Fund      
 Osterweis Total Return Fund      

55

Osterweis Funds | Notes to Financial Statements at March 31, 2021 (Continued)

  As of March 31, 2021, the Funds did not have any tax positions that did not meet the “more likely-than-not” threshold of being sustained by the applicable tax authority. Generally, tax authorities can examine all the tax returns filed for the last three years. The Funds identify their major tax jurisdictions as U.S. Federal and the Commonwealth of Massachusetts; however, as of March 31, 2021, the Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially.
   
 F.
Security Transactions and Investment Income. Investment securities transactions are accounted for on the trade date. Gains and losses realized on sales of securities are determined on an identified cost basis. Discounts/premiums on debt securities purchased are accreted/amortized over the life of the respective securities using the effective interest method. Dividend income is recorded on the ex-dividend date. Dividends received from REITs and MLPs are generally comprised of ordinary income, capital gains and may include return of capital. Interest income is recorded on an accrual basis. Withholding taxes on foreign dividends have been provided for in accordance with the Trust’s understanding of the applicable country’s tax rules and rates.
   
 G.
Distributions to Shareholders. Distributions to shareholders from net investment income and net realized gains on securities for the Osterweis Fund, Osterweis Strategic Investment Fund and Osterweis Emerging Opportunity Fund normally are declared and paid on an annual basis. Distributions to shareholders from net investment income for the Osterweis Strategic Income Fund normally are declared and paid on a quarterly basis, and distributions to shareholders from net realized gains on securities normally are declared and paid on an annual basis. Distributions to shareholders from net investment income for the Osterweis Total Return Fund normally are declared and paid on a monthly basis, and distributions to shareholders from net realized gains on securities normally are declared and paid on an annual basis. Distributions are recorded on the ex-dividend date.
   
 H.
Use of Estimates. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates.
   
 I.
Share Valuation. The net asset value (“NAV”) per share of each Fund is calculated by dividing the sum of the value of the securities held by each Fund, plus cash and other assets, minus all liabilities by the total number of shares outstanding for each Fund, rounded to the nearest cent. The Funds’ shares will not be priced on the days on which the New York Stock Exchange is closed for trading. The offering and redemption price per share for each Fund is equal to each Fund’s net asset value per share.
   
 J.
Guarantees and Indemnifications. In the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, based on experience, the Funds expect the risk of loss to be remote.
   
 K.
Illiquid Securities. Pursuant to Rule 22e-4 under the 1940 Act, the Funds have adopted a Board approved Liquidity Risk management Program (“LRMP”) that requires, among other things, that the Funds limit their illiquid investments that are assets to no more than 15% of net assets. An illiquid investment is any security which may not reasonably be expected to be sold or disposed of in current market conditions in seven calendar days or less without the sale or disposition significantly changing the market value of the investment. If at any time the Adviser determines that the value of illiquid investments held by the Funds exceeds 15% of each Funds’ net asset value, the Adviser will report the occurrence to the Trust as soon as practicable after the occurrence is observed, but no less than within one business day of verification of the occurrence. The information provided on any such report shall include an explanation of the extent and causes of the occurrence, the duration of the occurrence, and how the Adviser intends to bring the Funds’ illiquid investments back within the 15% limit within a reasonable period of time. The Adviser shall notify the Trust if the amount of the Funds’ illiquid investments that are assets remain above the 15% limit 30 calendar days from the initial occurrence (and at each consecutive 30 day period thereafter).

56

Osterweis Funds | Notes to Financial Statements at March 31, 2021 (Continued)

 L.
Offsetting Agreements. The Funds are subject to various netting arrangements, which govern the terms of certain transactions with counterparties. The arrangements allow the Funds to close out and net their total exposure to a counterparty in the event of a default with respect to all transactions governed under a single agreement with a counterparty. The following table presents derivative financial instruments that are subject to enforceable netting arrangements, collateral arrangements or other similar agreements as of March 31, 2021:
   
  Osterweis Total Return Fund

      Gross Amounts  Net Amounts     Cash    
      Offset in the  Presented in     Collateral    
   Gross  Statements of  the Statements of  Financial  Pledged  Net 
 Description Amounts  Assets and Liabilities  Assets and Liabilities  Instruments  (Received)  Amount 
 Assets                  
 Interest Rate                  
 
  Contracts – Futures 1
 $580,625  $580,625  $94,845  $  $  $94,845 
 
TBA Commitments 2
  10,008,594   10,008,594             
 
TBA Commitments 1
  10,296,484   10,296,484             
                          
 Liabilities                        
 Interest Rate                        
 
  Contracts – Futures 1
  485,780   485,780   0          
 
TBA Commitments 2
  30,703,906   30,703,906   20,695,312         20,695,312 
 
TBA Commitments 1
  30,452,344   30,452,344   20,155,860         20,155,860 
 
TBA Commitments 3
  10,326,953      10,326,953         10,326,953 

 
1
Counterparty is Credit Suisse.
 
2
Counterparty is Wells Fargo.
 
3
Counterparty is Morgan Stanley.

 M.
Restricted Cash. Restricted cash represents amounts that are held by third parties under certain of the Fund’s derivative transactions. Such cash is excluded from cash and equivalents in the Statements of Assets and Liabilities. Interest income earned on restricted cash is recorded in other income on the Statements of Operations.
   
 N.
Recently Issued Accounting Pronouncements. In March 2020, the FASB issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848)-Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional, temporary relief with respect to the financial reporting of contracts subject to certain types of modifications due to the planned discontinuation of the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates as of the end of 2021. The temporary relief provided by ASU 2020-04 is effective for certain reference rate-related contract modifications that occur during the period from March 12, 2020 through December 31, 2022. Management is evaluating the impact of ASU 2020-04 on the fund’s investments, derivatives, debt and other contracts that will undergo reference rate-related modifications as a result of the reference rate reform.
   
 O.
Reclassification of Capital Accounts. U.S. GAAP requires that certain components of net assets relating to permanent differences be reclassified between financial and tax reporting.  These reclassifications have no effect on net assets or net asset value per share. For the year ended March 31, 2021, the following adjustments were made:

   Distributable (Accumulated)    
   Earnings (Losses)  Paid-In Capital 
 Osterweis Fund $(538,056) $538,056 
 Osterweis Strategic Income Fund      
 Osterweis Strategic Investment Fund  (166,234)  166,234 
 Osterweis Emerging Opportunity Fund  (1,882,230)  1,882,230 
 Osterweis Total Return Fund  (349,430)  349,430 

  The permanent differences primarily relate to equalization or disposition of certain partnership investments.
   
 P.
Subsequent Events. In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued. The Funds have determined that there were no subsequent events that would need to be disclosed in the Funds’ financial statements.

57

Osterweis Funds | Notes to Financial Statements at March 31, 2021 (Continued)

 Note 3 – Commitments and Other Related Party Transactions

The Advisers provide the Funds with investment management services under separate Investment Advisory Agreements (the “Advisory Agreements”). Under the Advisory Agreements, the Advisers furnish all investment advice, office space, certain administrative services, and most of the personnel needed by each Fund. As compensation for their services, the Advisers are entitled to a monthly fee. For the Osterweis Fund, the Adviser is entitled to a monthly fee at an annual rate of 1.00% of the average daily net assets up to $250 million and 0.75% of the average daily net assets greater than $250 million. For the Osterweis Strategic Income Fund, the Adviser is entitled to a monthly fee at an annual rate of 1.00% of the average daily net assets up to $250 million, 0.75% of the average daily net assets from $250 million to $2.5 billion, and 0.65% of the average daily net assets greater than $2.5 billion. For the Osterweis Strategic Investment Fund, the Adviser is entitled to a monthly fee at the annual rate of 1.00% for the average daily net assets up to $500 million and 0.75% for the average daily net assets greater than $500 million. For the Osterweis Emerging Opportunity Fund, the Adviser is entitled to a monthly fee at an annual rate of 1.00% of the average daily net assets up to $500 million, 0.85% of the average daily net assets from $500 million to $1 billion, and 0.75% of the average daily net assets greater than $1 billion. For the Osterweis Total Return Fund, the Adviser is entitled to a monthly fee at an annual rate of 0.45% of the average daily net assets. The amount of investment advisory fees incurred by the Funds for the year ended March 31, 2021 is disclosed in the Statements of Operations. The investment advisory fees incurred are paid monthly to the Adviser, net of any waiver or reimbursement discussed below.
 
The Adviser has contractually agreed to limit the annual ratio of expenses (Expense Cap) for the Osterweis Fund, Osterweis Emerging Opportunity Fund and Osterweis Total Return Fund by reducing all or a portion of their fees and reimbursing Fund expenses so that each Fund’s ratios of expenses to average net assets will not exceed 0.95%, 1.10% and 0.75%, respectively. Prior to June 30, 2019 expenses for the Osterweis Emerging Opportunity Fund were limited to 1.25% of average net assets. Each Operating Expenses Limitation Agreement has an indefinite term and may be terminated at any time, and without payment of any penalty, by the Board, on behalf of the Fund, upon sixty (60) days’ written notice to the Adviser. Any fees waived and/or any Fund expenses absorbed by the Adviser pursuant to an agreed-upon expense cap shall be reimbursed by the Fund to the Adviser, if so requested by the Adviser, any time before the end of the third year following the fee waiver and/or expense absorption, provided the aggregate amount of the Fund’s current operating expenses for such year does not exceed the lesser expense cap in place at the time of waiver or at the time of reimbursement. The Fund must pay its current ordinary operating expenses before the Adviser is entitled to any reimbursements of fees and/or expenses. Any such reimbursement is also contingent upon Board review and approval. Any amount due from the Adviser is paid monthly to the Funds, if applicable. For the year ended March 31, 2021, the Adviser waived $345,519 in fees in the Osterweis Fund and $146,407 in fees in the Osterweis Emerging Opportunity Fund. As of March 31, 2021, the remaining cumulative amount the Adviser may be reimbursed is $964,964 for Osterweis Fund and $269,003 for Osterweis Emerging Opportunity Fund.
 
The Adviser may recapture a portion of the above no later than the years as stated below:
 
   March 31, 2022  March 31, 2023  March 31, 2024  Total 
 Osterweis Fund $307,423  $312,022  $345,519  $964,964 
 Osterweis Emerging Opportunity Fund     122,596   146,407   269,003 

U.S. Bancorp Fund Services, LLC, doing business as U.S. Bank Global Fund Services (“Fund Services”), acts as the Funds’ administrator, fund accountant and transfer agent. In those capacities Fund Services maintains the Funds’ books and records, calculates the Funds’ NAV, prepares various federal and state regulatory filings, coordinates the payment of fund expenses, reviews expense accruals and prepares materials supplied to the Board. The officers of the Trust and the Chief Compliance Officer are also employees of Fund Services. Fees paid by the Funds to Fund Services for these services for the year ended March 31, 2021, are disclosed in the Statements of Operations.
 
Quasar Distributors, LLC (the “Distributor”) acts as the Funds’ principal underwriter in a continuous public offering of the Funds’ shares. U.S. Bank N.A. serves as custodian to the Funds. U.S. Bank N.A. is an affiliate of Fund Services.
 
The Funds have entered into Sub-Transfer Agent Arrangements (the “Arrangements”). All Arrangements must be approved by the Board. For the year ended March 31, 2021, the Sub-Transfer Agent Fees and Transfer Agent Fees incurred by the Funds are disclosed in the Statements of Operations.
 

58

Osterweis Funds | Notes to Financial Statements at March 31, 2021 (Continued)

 Note 4 – Purchases and Sales of Securities

For the year ended March 31, 2021, the cost of purchases and proceeds from sales and maturities of securities, excluding short-term investments, were as follows:
 
   Purchases  Sales 
 Osterweis Fund $51,579,042  $50,809,743 
 Osterweis Strategic Income Fund  2,839,177,152   2,406,200,451 
 Osterweis Strategic Investment Fund  73,932,043   65,952,019 
 Osterweis Emerging Opportunity Fund  205,027,484   168,602,662 
 Osterweis Total Return Fund  1,163,577,879   1,112,397,572 

For the year ended March 31, 2021, the cost of purchases and proceeds from sales and maturities of long-term U.S. Government securities included above were as follows:
 
   Purchases  Sales 
 Osterweis Total Return Fund $182,940,759  $165,902,290 

The Osterweis Fund, Osterweis Strategic Income Fund, Osterweis Strategic Investment Fund and Osterweis Emerging Opportunity Fund did not purchase or sell U.S. Government securities during the year ended March 31, 2021.
 
 Note 5 – Distributions to Shareholders

The tax character of distributions paid during the year ended March 31, 2021, and the year ended March 31, 2020, was as follows:

   Ordinary Income 
   March 31, 2021  March 31, 2020 
 Osterweis Fund $731,863  $932,763 
 Osterweis Strategic Income Fund  188,057,162   231,265,711 
 Osterweis Strategic Investment Fund  945,892   1,693,879 
 Osterweis Emerging Opportunity Fund  16,776,530    
 Osterweis Total Return Fund  6,398,924   4,527,891 
          
   
Long-Term Capital Gains 1
 
   March 31, 2021  March 31, 2020 
 Osterweis Fund $7,453,594  $8,260,892 
 Osterweis Strategic Income Fund      
 Osterweis Strategic Investment Fund  4,074,530   3,054,881 
 Osterweis Emerging Opportunity Fund  3,884,481   6,684,032 
 Osterweis Total Return Fund      

 
1
Designated as long-term capital gain dividend, pursuant to Internal Revenue Code Section 852(b)(3).

59

Osterweis Funds | Notes to Financial Statements at March 31, 2021 (Continued)

The cost basis of investments for federal income tax purposes at fiscal year end, March 31, 2021, was as follows:
 
         Strategic  Emerging    
   Osterweis  Strategic  Investment  Opportunity  Total Return 
   Fund  Income Fund  Fund  Fund  Fund 
 Cost of investments $97,075,884  $5,006,883,398  $110,579,036  $189,801,555  $247,835,724 
 Gross tax unrealized appreciation  72,350,661   228,765,416   47,307,739   50,316,053   1,932,607 
 Gross tax unrealized depreciation  (838,664)  (58,651,194)  (957,782)  (9,518,690)  (4,622,003)
 Net tax unrealized                    
   appreciation/depreciation  71,511,997   170,114,222   46,349,957   40,797,363   (2,689,396)
 Undistributed ordinary income  1,459,601   11,393,811   3,418,331   21,552,756   155,721 
 Undistributed long-term capital gain  4,867,974      2,114,165   9,398,432    
 Total distributable earnings  6,327,575   11,393,811   5,532,496   30,951,188   155,721 
 Other accumulated gain/(loss)     (528,596,950)     (5,662)  577 
 Total distributable (accumulated)                    
   earnings (losses) $77,839,572  $(347,088,917) $51,882,453  $71,742,889  $(2,533,098)
 
The tax difference between book basis and tax basis unrealized appreciation is attributable primarily to partnership adjustments and wash sale deferrals.
 
 Note 6 – Credit Facility

U.S. Bank N.A. has made available to the Funds credit facilities pursuant to separate Loan and Security Agreements for temporary or extraordinary purposes. Credit facility details for the year ended March 31, 2021, are as follows:
 
            Osterweis    
      Osterweis  Osterweis  Emerging  Osterweis 
      Strategic  Strategic  Opportunity  Total Return 
   Osterweis Fund  Income Fund  Investment Fund  Fund  Fund 
 Maximum available credit $15,000,000  $250,000,000  $15,000,000  $8,000,000  $10,000,000 
 Largest amount outstanding                    
   on an individual day               
 Average balance when in use               
 Credit facility outstanding as of                    
   March 31, 2021               
 Average interest rate when in use               

Interest expenses for the year ended March 31, 2021, are disclosed in the Statements of Operations, as applicable.
 
 Note 7 – Risks Associated with the Discontinuation of the London Interbank Offered Rate (“LIBOR”)

The Funds invest significantly in corporate bonds that have interest rate provisions linked to LIBOR. LIBOR is used extensively in the U.S. and globally as a “benchmark” or “reference rate” for such loans. It is expected that a number of private-sector banks currently reporting information used to set LIBOR will stop doing so after 2021 when their current reporting commitment ends, which could either cause LIBOR to stop publication immediately or cause LIBOR’s regulator to determine that its quality has degraded to the degree that it is no longer representative of its underlying market. The expected discontinuation of LIBOR may impact the functioning, liquidity, and value of these
 
 Note 8 – (COVID-19) Pandemic

The global outbreak of COVID-19 (commonly referred to as “coronavirus”) has disrupted economic markets and the prolonged economic impact is uncertain. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. The operational and financial performance of the issuers of securities in which the Funds invest depends on future developments, including the duration and spread of the outbreak, and such uncertainty may in turn adversely affect the value and liquidity of the Funds’ investments, impair the Funds’ ability to satisfy redemption requests, and negatively impact the Funds’ performance. Please refer to the Funds’ prospectus for information regarding the Funds’ principal risks.
 


60

Report of Independent Registered Public Accounting Firm

To the Board of Trustees of Professionally Managed Portfolios
and Shareholders of the Osterweis Funds
 
Opinion on the Financial Statements
 
We have audited the accompanying statements of assets and liabilities of Osterweis Fund, Osterweis Strategic Income Fund, Osterweis Strategic Investment Fund, Osterweis Emerging Opportunity Fund, and Osterweis Total Return Fund (the “Funds”), each a series of Professionally Managed Portfolios (the “Trust”), including the schedules of investments, as of March 31, 2021, the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, financial highlights for each of the five years in the period then ended (with respect to Osterweis Emerging Opportunity Fund, the financial highlights for each of the four years in the period then ended and for the period November 30, 2016 to March 31, 2017, and with respect to Osterweis Total Return Fund, the financial highlights for each of the four years in the period then ended and for the period December 30, 2016 to March 31, 2017), and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Funds as of March 31, 2021, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for periods stated above, in conformity with accounting principles generally accepted in the United States of America.
 
Basis for Opinion
 
These financial statements are the responsibility of the Funds’ management. Our responsibility is to express an opinion on the Funds’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Funds in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We have served as the auditor of one or more of the funds in the Trust since 1995.
 
We conducted our audits in accordance with the standards of the PCAOB.  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Funds are not required to have, nor were we engaged to perform, an audit of the Funds’ internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Funds’ internal control over financial reporting. Accordingly, we express no such opinion.
 
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of March 31, 2021 by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
 
TAIT, WELLER & BAKER LLP
 
Philadelphia, Pennsylvania
June 1, 2021

61

Osterweis Funds | Expense Examples For the Six Months Ended March 31, 2021

As a shareholder of the Funds, you incur ongoing costs, including investment advisory fees and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period (October 1, 2020– March 31, 2021).
 
Actual Expenses
 
The “Actual” line for each of the following tables provides information about actual account values based on actual returns and actual expenses. Although the Funds charge no sales load or other transaction fees, you will be assessed fees for outgoing wire transfers, returned checks and stop payment orders at prevailing rates charged by Fund Services, the Funds’ transfer agent. If you request that a redemption be made by wire transfer, the Funds’ transfer agent currently charges a $15.00 fee. An Individual Retirement Account will be charged an annual maintenance fee. To the extent the Funds invest in shares of other investment companies as part of their strategies, you will indirectly bear your proportionate share of any fees and expenses charged by the underlying funds in which the Funds invest in addition to the expenses of the Funds. Actual expenses of the underlying funds may vary. These expenses are not included in the following examples. The following examples include, but are not limited to, investment advisory fees, fund accounting fees, fund administration fees, custody fees and transfer agent fees. However, the following examples do not include portfolio trading commissions and related expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading titled “Expenses Paid During the Period” to estimate the expenses you paid on your account during this period.
 
Hypothetical Example for Comparison Purposes
 
The “Hypothetical” line for each of the following tables provides information about hypothetical account values and hypothetical expenses based on the Funds’ actual expense ratios and an assumed rate of return of 5% per year before expenses, which is not the Funds’ actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds.
 
  Beginning  Ending    
  Account Value  Account Value  Expenses Paid 
  10/1/20  3/31/21  
During the Period 1
 
Osterweis Fund         
Actual $1,000.00  $1,184.60  $5.17 
Hypothetical (5% annual return before expenses)  1,000.00   1,020.19   4.78 
             
Strategic Income Fund            
Actual  1,000.00   1,061.20   4.32 
Hypothetical (5% annual return before expenses)  1,000.00   1,020.74   4.23 
             
Strategic Investment Fund            
Actual  1,000.00   1,160.50   6.25 
Hypothetical (5% annual return before expenses)  1,000.00   1,019.15   5.84 
             
Emerging Opportunity Fund            
Actual  1,000.00   1,274.90   6.24 
Hypothetical (5% annual return before expenses)  1,000.00   1,019.45   5.54 
             
Total Return Fund            
Actual  1,000.00   991.00   3.18 
Hypothetical (5% annual return before expenses)  1,000.00   1,021.74   3.23 

1
Expenses are equal to the annualized net expense ratio for the most recent six-month period.  The annualized six-month expense ratios for the Osterweis Fund, Osterweis Strategic Income Fund, Osterweis Strategic Investment Fund, Osterweis Emerging Opportunity Fund and Osterweis Total Return Fund were 0.95%, 0.84%, 1.16%, 1.10% and 0.64% (reflecting fee waivers and recoupments in effect), respectively, multiplied by the average account value over the period multiplied by 182/365 (to reflect the one-half year period.

62

Osterweis Funds | Trustees and Executive Officers (Unaudited)

The Board is responsible for the overall management of the Trust, including general supervision and review of the investment activities of the Funds.  The Board, in turn, elects the officers of the Trust, who are responsible for the day-to-day operations of the Trust and its separate series.  The current Trustees and executive officers of the Trust, their birth dates, positions with the Trust, terms of office with the Trust and length of time served, their principal occupations during the past five years and other directorships are set forth in the table below.
 
  Term of Number of 
  
Office(2)
 PortfoliosOther
  and in FundDirectorships
 PositionsLength 
Complex(3)
Held
Name, Addresswith theof TimePrincipal OccupationOverseenDuring Past
and Age
Trust(1)
ServedDuring Past Five Yearsby TrusteesFive Years
Independent Trustees of the Trust
Kathleen T. BarrTrusteeIndefiniteFormer owner of a registered investment Independent
(born 1955) Term; Sinceadviser, Productive Capital Management, Inc.; Director, Muzinich
c/o U.S. Bank Global Novemberformerly, Chief Administrative Officer, Senior BDC, Inc. (2019
  Fund Services 2018.Vice President and Senior Managing Director to present);
2020 E. Financial Way  of Allegiant Asset Management Company Independent
Suite 100  (merged with PNC Capital Advisors, LLC in 2009); Trustee for the
Glendora, CA 91741  formerly, Chief Administrative Officer, Chief William Blair
   Compliance Officer and Senior Vice President of Funds (2013
   PNC Funds and PNC Advantage Funds (f/k/a to present)
   Allegiant Funds) (registered investment companies). (21 series);
     Independent
     Trustee for the
     AmericaFirst
     Quantitative Funds
     (2012 to 2016).
      
      
Wallace L. CookTrusteeIndefiniteInvestment Consultant; formerly, Chief Executive Trustee, The Dana
(born 1939) Term; SinceOfficer, Rockefeller Trust Co., (prior thereto Senior Foundation.
c/o U.S. Bank Global May 1991.Vice President), and Managing Director, Rockefeller  
  Fund Services  & Co. (Investment Manager and Financial Advisor);  
2020 E. Financial Way  formerly, Senior Vice President, Norton Simon, Inc.  
Suite 100  (international consumer products conglomerate).  
Glendora, CA 91741     
      
      
Eric W. FalkeisTrusteeIndefiniteChief Executive Officer, Tidal ETF Services LLC (2018 Independent
(born 1973) Term; Sinceto present); formerly, Chief Operating Officer, Director, Muzinich
c/o U.S. Bank Global SeptemberDirexion Funds (2013 to 2018); formerly, Senior Vice BDC, Inc. (2019
  Fund Services 2011.President and Chief Financial Officer (and other to present);
2020 E. Financial WayChairpersonIndefinitepositions), U.S. Bancorp Fund Services, LLC Interested Trustee,
Suite 100 Term; Since(1997 to 2013). Tidal ETF Trust
Glendora, CA 91741 August 2019.  (2018 to present)
     (21 series); Former
     Interested Trustee,
     Direxion Funds
     (22 series),
     Direxion Shares
     ETF Trust
     (112 series) and
     Direxion Insurance
     Trust (2013
     to 2018).
      

63

Osterweis Funds | Trustees and Executive Officers (Unaudited) (Continued)

  Term of Number of 
  
Office(2)
 PortfoliosOther
  and in FundDirectorships
 PositionsLength 
Complex(3)
Held
Name, Addresswith theof TimePrincipal OccupationOverseenDuring Past
and Age
Trust(1)
ServedDuring Past Five Yearsby TrusteesFive Years
Independent Trustees of the Trust
Carl A. FroebelTrusteeIndefiniteFormerly, President and Founder, National None.
(born 1938) Term; SinceInvestor Data Services, Inc. (investment related  
c/o U.S. Bank Global May 1991.computer software).  
  Fund Services     
2020 E. Financial Way     
Suite 100     
Glendora, CA 91741     
      
      
Steven J. PaggioliTrusteeIndefiniteConsultant; formerly, Executive Vice President, Independent
(born 1950) Term; SinceInvestment Company Administration, LLC Director, Muzinich
c/o U.S. Bank Global May 1991.(mutual fund administrator). BDC, Inc. (2019
  Fund Services    to present);
2020 E. Financial Way    Independent
Suite 100    Trustee, AMG
Glendora, CA 91741    Funds (1993
     to present)
     (49 series);
     Advisory Board
     Member,
     Sustainable
     Growth
     Advisers, LP.
      
      
Ashi S. ParikhTrusteeIndefiniteInvestment professional; formerly, Chief Executive and Board of Directors
(born 1966) Term; SinceChief Investment Officer and various other positions, Member,
c/o U.S. Bank Global June 2020RidgeWorth Investments, LLC (global investment Investment
  Fund Services  management firm) (2006 to 2017); formerly, Chief Working Group,
2020 E. Financial Way  Investment Officer Institutional Growth Equities, The Ohio State
Suite 100  Eagle Asset Management (financial advisor); formerly University
Glendora, CA 91741  Sr. Managing Director, Growth Equities, Banc One Endowments and
   Investment Advisors (financial advisor). Foundation (2016
     to present); Board
     of Directors, World
     Methodist Council,
     Investment
     Committee (2018
     to present).
     Independent
     Trustee, PNC
     Funds (2018 to
     2019) (32 series);
     Interested Trustee,
     RidgeWorth Funds
     (2014 to 2017)
     (35 series).
      

64

Osterweis Funds | Trustees and Executive Officers (Unaudited) (Continued)

  Term of Number of 
  
Office(2)
 PortfoliosOther
  and in FundDirectorships
 PositionsLength 
Complex(3)
Held
Name, Addresswith theof TimePrincipal OccupationOverseenDuring Past
and Age
Trust(1)
ServedDuring Past Five Yearsby TrusteesFive Years
Officers of the Trust
Elaine E. RichardsPresidentIndefiniteSenior Vice President, U.S. Bank Global FundNotNot
(born 1968) Term; SinceServices since July 2007.Applicable.Applicable.
c/o U.S. Bank Global March 2013.   
  Fund Services     
2020 E. Financial Way     
Suite 100     
Glendora, CA 91741     
      
      
Carl G. Gee, J.D.SecretaryIndefiniteAssistant Vice President, U.S. Bank GlobalNotNot
(born 1990)& ViceTerm; SinceFund Services since August 2016; SummerApplicable.Applicable.
c/o U.S. Bank GlobalPresidentFebruaryAssociate, Husch Blackwell LLP (2015);  
  Fund Services 2021.Law Clerk, Brady Corporation (global printing  
615 East Michigan St.  systems, labels and safety products  
Milwaukee, WI 53202  company) (2014 to 2015).  
      
      
Aaron J. PerkovichViceIndefiniteVice President, U.S. Bank Global FundNotNot
(born 1973)PresidentTerm; SinceServices since June 2006.Applicable.Applicable.
c/o U.S. Bank Global March 2017.   
  Fund ServicesTreasurerIndefinite   
615 East Michigan St. Term; Since   
Milwaukee, WI 53202 August 2016.   
      
      
Melissa BreitzmanAssistantIndefiniteAssistant Vice President, U.S. Bank Global FundNotNot
(born 1983)TreasurerTerm; SinceServices LLC since June 2005.Applicable.Applicable.
c/o U.S. Bank Global August 2016.   
  Fund Services     
615 East Michigan St.     
Milwaukee, WI 53202     
      
      
Craig BentonAssistantIndefiniteAssistant Vice President, U.S. Bank Global FundNotNot
(born 1985)TreasurerTerm; SinceServices since November 2007.Applicable.Applicable.
c/o U.S. Bank Global August 2016.   
  Fund Services     
615 East Michigan St.     
Milwaukee, WI 53202     
      
      
Cory AkersAssistantIndefiniteAssistant Vice President, U.S. Bank Global FundNotNot
(born 1978)TreasurerTerm; SinceServices since October 2006.Applicable.Applicable.
c/o U.S. Bank Global August 2017.   
  Fund Services     
615 East Michigan St.     
Milwaukee, WI 53202     
      

65

Osterweis Funds | Trustees and Executive Officers (Unaudited) (Continued)

  Term of Number of 
  
Office(2)
 PortfoliosOther
  and in FundDirectorships
 PositionsLength 
Complex(3)
Held
Name, Addresswith theof TimePrincipal OccupationOverseenDuring Past
and Age
Trust(1)
ServedDuring Past Five Yearsby TrusteesFive Years
Officers of the Trust
Donna BarretteChiefIndefiniteSenior Vice President and Compliance Officer,NotNot
(born 1966)ComplianceTerm; SinceU.S. Bank Global Fund ServicesApplicable.Applicable.
c/o U.S. Bank GlobalOfficerJuly 2011.since August 2004.  
  Fund ServicesAnti-    
615 East Michigan St.Money    
Milwaukee, WI 53202Laundering    
 Officer    
 Vice    
 President    
      

(1)
All Trustees of the Trust are not “interested persons” of the Trust as defined under the 1940 Act (“Independent Trustees”).
(2)
Under the terms of the Board’s retirement policy, a Trustee shall retire at the end of the calendar year in which he or she reaches the age of 78 (or, in the case of a Trustee who was over the age of 78 at the time the retirement policy was adopted in 2019, December 31, 2021).
(3)
The Trust is comprised of numerous series managed by unaffiliated investment advisers. The term “Fund Complex” applies only to the Funds. The Funds do not hold themselves out as related to any other series within the Trust for purposes of investment and investor services, nor do they share the same investment advisor with any other series.





66

Additional Information

 Federal Tax Information (Unaudited)

For the fiscal year ended March 31, 2021, certain dividends paid by the Funds may be subject to a maximum tax rate of 23%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003 and the Tax Cuts and Jobs Act of 2017.
 
The percentage of dividends declared from ordinary income designated as qualified dividend income was as follows:
 
 Osterweis Fund87.01% 
 Osterweis Strategic Income Fund2.22% 
 Osterweis Strategic Investment Fund25.57% 
 Osterweis Emerging Opportunity Fund0.48% 
 Osterweis Total Return Fund0.00% 

For corporate shareholders, the percentage of ordinary income distributions qualifying for the corporate dividends received deduction for the fiscal year ended March 31, 2021, was as follows:
 
 Osterweis Fund61.59% 
 Osterweis Strategic Income Fund1.95% 
 Osterweis Strategic Investment Fund22.24% 
 Osterweis Emerging Opportunity Fund0.40% 
 Osterweis Total Return Fund0.00% 

The percentage of taxable ordinary income distributions that are designated as short-term capital gain distributions under Internal Revenue Code Section 871(k)(2)(C) for the fiscal year ended March 31, 2021, was as follows (unaudited).
 
 Osterweis Fund0.00% 
 Osterweis Strategic Income Fund0.00% 
 Osterweis Strategic Investment Fund8.93% 
 Osterweis Emerging Opportunity Fund100.00% 
 Osterweis Total Return Fund60.60% 


 Information About Proxy Voting

A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available upon request without charge by calling toll-free at (866) 236-0050 or by accessing the U.S. Securities and Exchange Commission’s (SEC) website at www.sec.gov.
 
Information regarding how the Funds voted proxies relating to portfolio securities during the most recent twelve months ended June 30 is available upon request without charge by calling toll-free at (866) 236-0050 or by accessing the SEC’s website at www.sec.gov
 

 Information About the Portfolio Holdings

The Funds file a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to their reports on Form N-PORT. The Funds’ Form N-PORT reports are available on the SEC’s website at www.sec.gov. The Funds’ Form N-PORT reports may also be obtained by calling toll-free (866) 236-0050.
 

67

Additional Information (Continued)

 Householding

To reduce expenses, the Funds may mail only one copy of each Fund’s prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please call toll-free at (866) 236-0050 (or contact your financial institution). We will begin sending you individual copies thirty days after receiving your request.
 

 Information About the Funds Trustees

The Statement of Additional Information (“SAI”) includes additional information about the Funds’ Trustees and is available without charge, upon request, by calling (866) 236-0050. Furthermore, you can obtain the SAI on the SEC’s website at www.sec.gov or the Funds’ website at www.osterweis.com.
 









68

Osterweis Funds | Privacy Notice (Unaudited)

The Funds collect non-public information about you from the following sources:
 
 Information we receive about you on applications or other forms;
 
 Information you give us orally; and
 
 Information about your transactions with us or others.
 
The Funds do not disclose any non-public personal information about our customers or former customers without the customer’s authorization, except as permitted by law or in response to inquiries from governmental authorities. The Funds may share information with affiliated parties and unaffiliated third parties with whom we have contracts for servicing the Funds. The Funds will provide unaffiliated third parties with only the information necessary to carry out their assigned responsibility. The Funds maintain physical, electronic and procedural safeguards to guard your non-public personal information and require third parties to treat your non-public information with the same high degree of confidentially.
 
In the event that you hold shares of a Fund through a financial intermediary, including, but not limited to, a broker-dealer, bank or trust company, the privacy policy of your financial intermediary would govern how your non-public personal information would be shared by those entities with unaffiliated third parties.
 







69


Advisers
OSTERWEIS CAPITAL MANAGEMENT, INC.
OSTERWEIS CAPITAL MANAGEMENT, LLC
One Maritime Plaza, Suite 800
San Francisco, CA 94111


Distributor
QUASAR DISTRIBUTORS, LLC
111 East Kilbourn Avenue, Suite 2200
Milwaukee, WI 53202


Custodian
U.S. BANK N.A.
Custody Operations
1555 North RiverCenter Drive, Suite 302
Milwaukee, WI 53212


Transfer Agent, Fund Accountant and Fund Administrator
U.S. BANCORP FUND SERVICES, LLC
615 East Michigan Street
Milwaukee, WI 53202
(866) 236-0050


Independent Registered Public Accounting Firm
TAIT, WELLER & BAKER LLP
Two Liberty Place
50 South 16th Street, Suite 2900
Philadelphia, PA 19102


Legal Counsel
SULLIVAN & WORCESTER LLP
1633 Broadway, 32nd Floor
New York, NY 10019



Fund Information
 
FundSymbolCUSIP
Osterweis FundOSTFX742935406
Osterweis Strategic Income FundOSTIX742935489
Osterweis Strategic Investment FundOSTVX74316J771
Osterweis Emerging Opportunity FundOSTGX74316P744
Osterweis Total Return FundOSTRX74316P736


OWRPANN – 0321


(b)
Not applicable.

Item 2. Code of Ethics.

The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer and principal financial officer.  The registrant has not made any amendments to its code of ethics during the period covered by this report.  The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report.

A copy of the registrant’s Code of Ethics is filed herewith.

Item 3. Audit Committee Financial Expert.

The registrant’s Board of Trustees of the Trust has determined that there is at least one audit committee financial expert serving on its audit committee.  Ms. Kathleen T. Barr, Messrs. Wallace L. Cook, Carl A. Froebel, Eric W. Falkeis, Steven J. Paggioli and Ashi S. Parikh and are each an “audit committee financial expert” and are considered to be “independent” as each term is defined in Item 3 of Form N-CSR.

Item 4. Principal Accountant Fees and Services.

The registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past two fiscal years.  “Audit services” refer to performing an audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.  “Audit-related services” refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit.  “Tax services” refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.  There were no “Other services” provided by the principal accountant.  The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant.

Osterweis Fund

 

FYE  3/31/2021

FYE  3/31/2020

Audit Fees

            $24,900

            $24,400

Audit-Related Fees

            N/A     

            N/A     

Tax Fees

            $2,700

            $2,700

All Other Fees

            N/A     

            N/A     


Osterweis Strategic Income Fund

 

FYE  3/31/2021

FYE  3/31/2020

Audit Fees

            $24,900

            $24,400

Audit-Related Fees

            N/A     

            N/A     

Tax Fees

            $2,700

            $2,700

All Other Fees

            N/A     

            N/A     

Osterweis Strategic Investment Fund

 

FYE  3/31/2021

FYE  3/31/2020

Audit Fees

            $22,350

            $21,900

Audit-Related Fees

            N/A     

            N/A     

Tax Fees

            $2,700

            $2,700

All Other Fees

            N/A     

            N/A     

Osterweis Emerging Opportunity Fund

 

FYE  3/31/2021

FYE  3/31/2020

Audit Fees

            $19,800

            $19,400

Audit-Related Fees

            N/A     

            N/A     

Tax Fees

            $2,700

            $2,700

All Other Fees

            N/A     

            N/A     


Osterweis Total Return Fund

 

FYE  3/31/2021

FYE  3/31/2020

Audit Fees

            $19,800

            $19,400

Audit-Related Fees

            N/A     

            N/A     

Tax Fees

            $2,700

            $2,700

All Other Fees

            N/A     

            N/A     

The audit committee has adopted pre-approval policies and procedures that require the audit committee to pre‑approve all audit and non‑audit services of the registrant, including services provided to any entity affiliated with the registrant. 

The percentages of fees billed by Tait, Weller & Baker LLP applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:

Osterweis Fund

Non-Audit Related Fees

FYE  3/31/2021

FYE  3/31/2020

Registrant

            N/A

            N/A

Registrant’s Investment Adviser

            N/A

            N/A

 

Osterweis Strategic Income Fund

Non-Audit Related Fees

FYE  3/31/2021

FYE  3/31/2020

Registrant

            N/A

            N/A

Registrant’s Investment Adviser

            N/A

            N/A

Osterweis Strategic Investment Fund

Non-Audit Related Fees

FYE  3/31/2021

FYE  3/31/2020

Registrant

            N/A

            N/A

Registrant’s Investment Adviser

            N/A

            N/A

Osterweis Emerging Opportunity Fund

Non-Audit Related Fees

FYE  3/31/2021

FYE  3/31/2020

Registrant

            N/A

            N/A

Registrant’s Investment Adviser

            N/A

            N/A

Osterweis Total Return Fund

Non-Audit Related Fees

FYE  3/31/2021

FYE  3/31/2020

Registrant

            N/A

            N/A

Registrant’s Investment Adviser

            N/A

            N/A

The registrant has not been identified by the U.S. Securities and Exchange Commission as having filed and annual report issued by a registered public accounting firm branch or office that is located in a foreign jurisdiction where the Public Company Accounting Oversight Board is unable to inspect or completely investigate because of a position taken by an authority in that jurisdiction. 

Item 5. Audit Committee of Listed Registrants.

Not applicable to open-end investment companies.

Item 6. Investments.

(a)  Schedule of Investments is included as part of the report to shareholders filed under Item 1 of this Form.

(b)  Not applicable.

Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 8. Portfolio Managers of Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 9. Purchases of Equity Securities by Closed‑End Management Investment Company and Affiliated Purchasers.

Not applicable to open-end investment companies.

Item 10. Submission of Matters to a Vote of Security Holders.

The registrant has adopted a nominating committee charter that contains the procedures by which shareholders may recommend nominees to the registrant’s board of trustees. There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees for the period.

Item 11. Controls and Procedures.

(a)  The Registrant’s President and Treasurer have reviewed the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “Act”)) as of a date within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d‑15(b) under the Securities Exchange Act of 1934.  Based on their review, such officers have concluded that the disclosure controls and procedures are effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported and made known to them by others within the Registrant and by the Registrant’s service provider.

(b)  There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the fourth fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.

Item 12. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

Not applicable to open-end investment companies.

Item 13. Exhibits.

(a)  (1) Any code of ethics or amendment thereto, that is subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit.  Filed herewith.

(2) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.  Filed herewith.

(3) Any written solicitation to purchase securities under Rule 23c‑1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons.  Not applicable to open-end investment companies.

(4) Change in the registrant’s independent public accountant.  There was no change in the registrant’s independent public accountant for the period covered by this report.

(b)  Certification pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002.  Furnished herewith.

 


SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


(Registrant) Professionally Managed Portfolios

By (Signature and Title)          /s/ Elaine E. Richards

Elaine E. Richards, President/Principal Executive Officer

Date   June 11, 2021

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

By (Signature and Title)          /s/ Elaine E. Richards

Elaine E. Richards, President/Principal Executive Officer 

Date   June 11, 2021

 

By (Signature and Title) )        /s/ Aaron J. Perkovich

Aaron J. Perkovich, Treasurer/Principal Financial Officer

Date   June 11, 2021

 

* Print the name and title of each signing officer under his or her signature.