THE
OSTERWEIS
FUND
--------------------------------------------------------------------------------
SEMI-ANNUAL REPORT
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For the Six Months Ending
September 30, 2000
<PAGE>
THE
OSTERWEIS
FUND
November 27, 2000
Dear Shareholders,
We are pleased to report that for the third quarter of 2000, The Osterweis Fund
(the "Fund") had a total return of 7.51%, bringing the year-to-date return to
9.75% through September 30, 2000. Performance in both periods significantly
outperformed that of the Standard & Poor's 500 Index, which declined 0.97% and
1.39% in the same periods respectively. For the six-month period ending
September 30, 2000, The Osterweis Fund was down 0.11%, compared to a minus 3.60%
total return for the Standard & Poor's 500 Index.
Total Return for Periods Average Annual
Ended September 30, 2000 Since
1 Year 5 Years Inception*
------ ------- ----------
The Osterweis Fund 44.34% 25.97% 21.21%
The excellent relative performance of the Fund reflects both sound stock picking
on our part and the poor performance of the stock market averages. As we
detailed in prior letters, the Standard & Poor's 500 Index has been driven by a
relatively small number of hot high-tech stocks such as Microsoft, Intel and
Dell. When these stocks were going up, it was hard for active managers to keep
up. But, as these technology leaders reversed direction this year, active
managers have been able to outperform. We have avoided these high-tech darlings
because we believed they were both overpriced and far more cyclical than the
average investor knew. This year, our focus on other areas has paid off.
The market has clearly entered a more volatile phase. It is hard to tell whether
the current volatility foreshadows a broad-based bear market, or simply reflects
a more benign rotation out of overvalued technology stocks into undervalued
industries. We are, therefore, managing the Fund more cautiously, with more
emphasis on depressed stocks with clearly improving fundamentals and, to a
lesser extent, on emerging companies with the potential for explosive growth.
With best regards,
/s/ John S. Osterweis
John S. Osterweis
----------
* Results shown are past performance, which should not be regarded as an
indicator of future results. The Osterweis Fund's inception was October 1,
1993. Investment return and principal value will fluctuate so that an
investor's shares when redeemed may be worth more or less than their cost.
The Osterweis Fund is distributed by First Fund Distributors, Inc.,
Phoenix, AZ 85018.
1
<PAGE>
THE OSTERWEIS FUND
SCHEDULE OF INVESTMENTS at September 30, 2000 (Unaudited)
SHARES VALUE
--------------------------------------------------------------------------------
COMMON STOCKS: 78.5%
BEVERAGES - ALCOHOLIC: 1.9%
21,600 Anheuser Busch Cos., Inc. $ 913,950
-----------
BUSINESS SERVICES: 5.7%
23,666 ACNielsen Corp.* 563,547
35,200 Convergys Corp.* 1,368,400
88,400 ServiceMaster Co. 872,950
-----------
2,804,897
-----------
COMPUTERS - PERIPHERAL EQUIPMENT: 3.0%
28,000 InFocus Corp.* 1,484,000
-----------
CONSUMER PRODUCTS: 1.3%
11,400 Kimberly Clark Corp. 636,262
-----------
COSMETICS AND TOILETRIES: 1.5%
18,480 Avon Products, Inc. 755,370
-----------
DIRECT MARKETING: 2.5%
50,000 ValueVision International, Inc.* 1,256,250
-----------
ELECTRONIC COMPONENTS: 1.7%
34,100 Universal Electronics, Inc.* 824,794
-----------
ENERGY - PIPELINES: 4.9%
58,600 Kinder Morgan, Inc. 2,398,937
-----------
FINANCIAL SERVICES: 3.2%
37,200 GATX Corp.* 1,557,750
-----------
HEAVY INDUSTRIES: 3.3%
24,000 FMC Corp.* 1,609,500
-----------
INDEPENDENT POWER PRODUCER: 8.9%
42,300 Calpine Corp.* 4,415,062
-----------
INSURANCE - PROPERTY/CASUALTY: 4.6%
31,000 XL Capital Ltd. 2,278,500
-----------
MEDIA AND BROADCASTING: 9.5%
28,000 Pegasus Communications Corp.* 1,352,750
40,100 Primedia, Inc.* 656,637
28,339 Viacom, Inc. (Class B)* 1,657,832
46,800 Westwood One, Inc.* 1,003,275
-----------
4,670,494
-----------
MEDICAL: 2.7%
85,000 Manor Care, Inc.* 1,333,438
-----------
OIL - EXPLORATION & PRODUCTION: 1.6%
12,956 Devon Energy Corp. 779,303
-----------
OIL - FIELD SERVICES: 2.0%
108,000 Newpark Resources, Inc.* 999,000
-----------
PHARMACEUTICALS: 7.7%
20,000 Bristol-Myers Squibb Co. 1,142,500
17,000 Forest Laboratories, Inc. (Class A)* 1,949,688
36,200 Nexmed, Inc.* 710,425
-----------
3,802,613
-----------
REAL ESTATE: 2.2%
48,800 Crescent Real Estate Equities 1,088,850
-----------
REMEDIATION SERVICES: 1.1%
110,405 IT Group, Inc.* 524,424
-----------
RESORTS/THEME PARKS: 2.8%
90,000 Six Flags, Inc. 1,395,000
-----------
TELECOMMUNICATIONS: 6.4%
43,500 American Tower Corp. (Class A) 1,639,406
26,970 CoreComm Ltd.* 214,074
28,541 NTL, Inc.* 1,321,817
-----------
3,175,297
-----------
TOTAL COMMON STOCKS
(Cost $21,989,149) 38,703,691
-----------
See accompanying Notes to Financial Statements.
2
<PAGE>
THE OSTERWEIS FUND
SCHEDULE OF INVESTMENTS at September 30, 2000 (Unaudited) - (Continued)
PRINCIPAL
AMOUNT VALUE
--------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS: 2.0%
$250,000 U.S. Treasury Note, 6.625%, 3/31/2002 $ 251,875
250,000 U.S. Treasury Bond, 6.250%, 1/31/2002 250,235
500,000 U.S. Treasury Note, 5.500%, 7/31/2001 496,875
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $998,591) 998,985
-----------
SHORT-TERM INVESTMENT: 10.6%
MONEY MARKET INVESTMENT: 10.6%
5,220,795 Firstar Stellar Treasury Fund (Cost $5,220,795) 5,220,795
-----------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS: 6.5%
500,000 Federal Farm Credit Bank, 6.250%, 10/2/2000 500,000
500,000 Federal Farm Credit Bank, 6.490%, 4/2/2001 500,000
500,000 Federal Farm Credit Bank, 6.670%, 2/1/2001 500,053
900,000 Federal Home Loan Bank, 6.330%, 2/22/2001 877,050
850,000 Federal Home Loan Bank, 6.370%, 2/26/2001 827,787
-----------
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS
(Cost $3,204,952) 3,204,890
-----------
TOTAL INVESTMENTS IN SECURITIES
(Cost $31,413,487+): 97.6% $48,128,361
Other Assets less Liabilities: 2.4% 1,198,727
-----------
NET ASSETS: 100.0% $49,327,088
===========
* Non-income producing security.
+ At September 30, 2000, the basis of invest- ments for federal income tax
purposes was the same as their cost for financial reporting purposes.
Unrealized appreciation and depreciation were as follows:
Gross unrealized appreciation $18,061,501
Gross unrealized depreciation (1,346,627)
-----------
Net unrealized appreciation $16,714,874
===========
See accompanying Notes to Financial Statements.
3
<PAGE>
THE OSTERWEIS FUND
STATEMENTS OF ASSETS AND LIABILITIES at September 30, 2000 (Unaudited)
ASSETS
Investments in securities, at value (cost $31,413,487)........ $48,128,361
Receivables:
Fund shares sold ........................................... 903,837
Securities sold ............................................ 777,102
Dividends and interest ..................................... 77,168
Prepaid expenses ............................................. 4,526
-----------
Total assets.............................................. 49,890,994
-----------
LIABILITIES
Payables:
Securities purchased ....................................... 500,000
Due to Advisor ............................................. 38,819
Administration fees ........................................ 7,764
Accrued expenses ............................................. 17,323
-----------
Total liabilities......................................... 563,906
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NET ASSETS...................................................... $49,327,088
===========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE
($49,327,088/1,833,507 shares outstanding; unlimited
number of shares authorized without par value)................. $ 26.90
===========
COMPONENTS OF NET ASSETS
Paid-in capital .............................................. $24,330,235
Accumulated net investment income ............................ 15,619
Accumulated net realized gain on investments ................. 8,266,360
Net unrealized appreciation on investments ................... 16,714,874
-----------
Net assets................................................ $49,327,088
===========
See accompanying Notes to Financial Statements.
4
<PAGE>
THE OSTERWEIS FUND
STATEMENT OF OPERATIONS For the Six Months Ended September 30, 2000 (Unaudited)
INVESTMENT INCOME
Income
Interest ..................................................... $ 189,978
Dividends .................................................... 146,994
Other ........................................................ 770
-----------
Total income ............................................ 337,742
-----------
Expenses
Advisory fees ................................................ 223,390
Administration fees .......................................... 44,678
Audit fees ................................................... 18,870
Fund accounting fees ......................................... 13,434
Custody fees ................................................. 6,854
Transfer agent fees .......................................... 6,805
Trustee fees ................................................. 4,060
Reports to shareholders ...................................... 1,951
Legal fees ................................................... 1,508
Insurance expense ............................................ 573
-----------
Total expenses............................................. 322,123
-----------
NET INVESTMENT INCOME ................................. 15,619
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on investments .............................. 5,003,591
Net unrealized depreciation on investments .................... (5,099,976)
-----------
Net realized and unrealized loss on investments............ (96,385)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS .. $ (80,766)
===========
See accompanying Notes to Financial Statements.
5
<PAGE>
THE OSTERWEIS FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000# MARCH 31, 2000
------------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net investment income (loss) ............................. $ 15,619 $ (172,062)
Net realized gain on investments ......................... 5,003,591 4,929,959
Net unrealized appreciation (depreciation)
on investments .......................................... (5,099,976) 12,967,001
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ................................... (80,766) 17,724,898
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ............................... -- (9)
From net realized gain ................................... -- (3,109,201)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS ................ -- (3,109,210)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets derived from net change
in outstanding shares (a) ............................... 1,381,854 8,284,669
------------ ------------
TOTAL INCREASE IN NET ASSETS ....................... 1,301,088 22,900,357
NET ASSETS
Beginning of period ...................................... 48,026,000 25,125,643
------------ ------------
END OF PERIOD ............................................ $ 49,327,088 $ 48,026,000
============ ============
(a) A summary of capital share transactions is as follows:
SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 2000# MARCH 31, 2000
---------------------- ----------------------
SHARES VALUE SHARES VALUE
-------- ----------- -------- -----------
Shares sold ....................... 121,970 $ 3,146,099 395,770 $ 8,379,354
Shares issued in reinvestment
of distributions ................. -- -- 137,309 3,064,724
Shares redeemed ................... (71,544) (1,764,245) (148,518) (3,159,409)
-------- ----------- -------- -----------
Net increase ...................... 50,426 $ 1,381,854 384,561 $ 8,284,669
======== =========== ======== ===========
</TABLE>
# Unaudited
See accompanying Notes to Financial Statements.
6
<PAGE>
THE OSTERWEIS FUND
FINANCIAL HIGHLIGHTS For a capital share outstanding throughout each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED MARCH 31,
SEPTEMBER 30, --------------------------------------------------
2000# 2000 1999 1998 1997 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ................... $26.93 $17.97 $16.99 $12.88 $11.74 $10.33
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ......... 0.01 (0.10) (0.04) 0.02 0.08 0.12
Net realized and unrealized gain
(loss) on investments ............... (0.04) 11.04 2.62 5.61 1.27 1.48
------ ------ ------ ------ ------ ------
Total from investment operations ..... (0.03) 10.94 2.58 5.63 1.35 1.60
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
From net investment income ........... -- -- -- (0.05) (0.08) (0.19)
From net capital gain ................ -- (1.98) (1.60) (1.47) (0.13) --
------ ------ ------ ------ ------ ------
Total distributions .................. -- (1.98) (1.60) (1.52) (0.21) (0.19)
------ ------ ------ ------ ------ ------
Net asset value, end of period ....... $26.90 $26.93 $17.97 $16.99 $12.88 $11.74
====== ====== ====== ====== ====== ======
Total return ......................... (0.11)%++ 63.16% 17.20% 45.77% 11.60% 15.59%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions) . $ 49.3 $ 48.0 $ 25.1 $ 22.4 $ 16.5 $ 16.9
RATIO OF EXPENSES TO AVERAGE NET ASSETS:
Before fees waived and expenses
absorbed or recouped ................ 1.42%+ 1.45% 1.69% 1.67% 1.75% 1.77%
After fees waived and expenses
absorbed or recouped ................ 1.42%+ 1.57% 1.75% 1.75% 1.75% 1.75%
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS:
Before fees waived and expenses
absorbed or recouped ................ 0.07%+ (0.36)% (0.21)% 0.21% 0.63% 1.47%
After fees waived and expenses
absorbed or recouped ................ 0.07%+ (0.48)% (0.27)% 0.13% 0.63% 1.49%
Portfolio turnover rate .............. 17.19% 38.58% 31.19% 26.27% 41.30% 57.32%
</TABLE>
+ Annualized
++ Not annualized
# Unaudited
See accompanying Notes to Financial Statements.
7
<PAGE>
THE OSTERWEIS FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 1 - ORGANIZATION
The Osterweis Fund (the "Fund") is a diversified series of shares of
beneficial interest of Professionally Managed Portfolios (the "Trust"), which is
registered under the Investment Company Act of 1940 (the "1940 Act") as an
open-end management investment company. The Fund began operations on October 1,
1993. The investment objective of the Fund is to attain long-term total returns.
The Fund seeks to achieve its objective by investing primarily in equity
securities.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund. These policies are in conformity with generally accepted
accounting principles.
A. SECURITY VALUATION. Investments in securities traded on a national
securities exchange or Nasdaq are valued at the last reported sales
price at the close of regular trading on the last business day of the
period; securities traded on an exchange or Nasdaq for which there
have been no sales and other over-the-counter securities are valued at
the last reported bid price. Securities for which quotations are not
readily available are valued at their respective fair values as
determined in good faith by the Board of Trustees. Short-term
investments are stated at cost, which when combined with accrued
interest, approximates market value.
B. FEDERAL INCOME TAXES. The Fund intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its
shareholders. Therefore, no federal income tax provision is required.
C. SECURITY TRANSACTIONS, DIVIDEND INCOME AND DISTRIBUTIONS. Security
transactions are accounted for on the trade date. The cost of
securities sold is determined on a first-in, first-out basis. Dividend
income and distributions to shareholders are recorded on the
ex-dividend date.
D. USE OF ESTIMATES. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.
E. RECLASSIFICATION OF CAPITAL ACCOUNTS. The Fund accounts and reports
for distributions to shareholders in accordance with the American
Institute of Certified Public Accountant's Statement of Position 93-2:
DETERMINATION, DISCLOSURE, AND
8
<PAGE>
THE OSTERWEIS FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL AND RETURN OF
CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES. For the year ended
March 31, 2000, the Fund decreased paid-in capital by $172,062 due to
the Fund experiencing a net investment loss during the year. Net
realized loss and net assets were not affected by this change.
NOTE 3 - COMMITMENTS AND OTHER RELATED PARTY TRANSACTIONS
For the six months ended September 30, 2000, Osterweis Capital Management,
Inc. (the "Advisor") provided the Fund with investment management services under
an Investment Advisory Agreement. The Advisor furnished all investment advice,
office space, facilities, and most of the personnel needed by the Fund. As
compensation for its services, the Advisor was entitled to a monthly fee at the
annual rate of 1.00% based upon the average daily net assets of the Fund. For
the six months ended Sep-tember 30, 2000, the Fund incurred $223,390 in advisory
fees.
Investment Company Administration, L.L.C. (the "Administrator") acts as the
Fund's Administrator under an Administration Agreement. The Administrator
prepares various federal and state regulatory filings, reports and returns for
the Fund; prepares reports and materials to be supplied to the trustees;
monitors the activities of the Fund's custodian, transfer agent and accountants;
coordinates the preparation and payment of Fund expenses and reviews the Fund's
expense accruals. For its services, the Administrator receives a monthly fee at
the following annual rate:
Under $15 million $30,000
$15 to $50 million 0.20% of average daily net assets
$50 to $100 million 0.15% of average daily net assets
$100 to $150 million 0.10% of average daily net assets
Over $150 million 0.05% of average daily net assets
For the six months ended September 30, 2000, the Fund incurred $44,678 in
administration fees.
First Fund Distributors, Inc. (the "Distributor") acts as the Fund's
principal underwriter in a continuous public offering of the Fund's shares. The
Distributor is an affiliate of the Administrator.
Certain officers and trustees of the Trust are also officers and/or
directors of the Administrator and Distributor.
9
<PAGE>
THE OSTERWEIS FUND
NOTES TO FINANCIAL STATEMENTS (Unaudited)
NOTE 4 - PURCHASES AND SALES OF SECURITIES
The cost of purchases and the proceeds from sales of securities, other than
U.S. Government and Government Agency obligations and short-term investments,
for the six months ended September 30, 2000 were $6,641,963 and $7,954,789,
respectively.
10
<PAGE>
================================================================================
Advisor
OSTERWEIS CAPITAL MANAGEMENT, INC.
One Maritime Plaza, Suite 800
San Francisco, California 94111
Distributor
FIRST FUND DISTRIBUTORS, INC. 4455 E.
Camelback Road, Suite 261E
Phoenix, Arizona 85018
Custodian
FIRSTAR INSTITUTIONAL CUSTODY SERVICES
425 Walnut Street
Cincinnati, Ohio 45202
Transfer Agent
AMERICAN DATA SERVICES, INC.
P.O. Box 5536
Hauppauge, New York 11788-0132
Independent Auditors ERNST &
YOUNG LLP 725 South Figueroa Street
Los Angeles, California 90017
Legal Counsel
PAUL, HASTINGS, JANOFSKY & WALKER LLP
345 California Street, 29th Floor
San Francisco, California 94104
================================================================================
This report is intended for shareholders of the Fund and may not be used as
sales literature unless preceded or accompanied by a current prospectus.
Past performance results shown in this report should not be considered a
representation of future performance. Share price and returns will fluctuate so
that shares, when redeemed, may be worth more or less than their original cost.
Statements and other information herein are dated and are subject to change.
