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January 23, 2019

Dear Fellow Oberweis Funds Shareholder:

2018 IN REVIEW

2018 was a difficult year for investors. Stocks, bonds, gold and oil all declined as investors grew increasingly fearful of the impact of tariffs and a prolonged US-China trade war, slowing growth, rising interest rates, and tighter monetary policy. In fact, investors were apparently so concerned that they reduced equity exposure late in 2018 at the most frantic pace since the end of 2008 (which, in retrospect, ended up being near the stock market bottom during the Global Financial Crisis).

Among the domestic funds, the Micro-Cap Fund and Small-Cap Opportunities Fund returned -12.30% and -7.23%, respectively (compared to -14.18% and -9.31% for the Russell Micro-Cap Growth and Russell 2000 Growth indices). The Small-Cap Value Fund returned -16.58% (versus -12.86% for the Russell 2000 Value Index). Among our international funds, the International Opportunities Fund returned -24.73% (versus -17.78% for the MSCI World ex-US SCG Index). The China Opportunities Fund returned -26.01% (compared to -23.26% for the MSCI Zhong Hua Small-Cap Growth Index). The Global Opportunities Fund returned -25.66% (versus -14.39% for the MSCI ACWI Small-Cap Index). Since its inception on 5/1/2018, the Emerging Markets Fund returned -21.10% (versus -18.64% for the MSCI EM Small Cap Index).

As one might expect, the environment in the fourth quarter of 2018 was extremely challenging for us, as we invest primarily in small-cap companies with valuations based on misunderstood long-term future earnings growth. In uncertain times, investors pay less attention to long-term earnings growth, flocking instead to companies with high near-term earnings certainty. Following such an environment, however, it becomes much easier for us to find small-cap stocks trading at prices that undervalue the future earnings we expect from the underlying businesses. Periods of high risk aversion often correlate to below-average stock valuations (as is the case currently), and as a result we see an above-average investment opportunity today for small-caps in almost every country we cover. The chart below illustrates the average price/earnings (P/E) ratio of each of the benchmark indices of The Oberweis Funds as of the end of 2018 compared to a year ago. As you can see, valuations have declined for US small-caps, but even more so for international small-caps. Note that although the exact P/E computation methodology can vary between data providers like Russell and MSCI, we believe it is clear that valuations for global small-caps, especially in emerging markets like China, have come down considerably relative to one year ago.

With respect to our growth-oriented funds, the average forward P/E ratio as of December 31, 2018 was 16.0 times for the Global Opportunities Fund (versus 18.4 last quarter), 15.8 times for the Small-Cap Opportunities Fund (versus 18.9 last quarter), 10.6 times for the Micro-Cap Fund (versus 14.9 last quarter), 18.0 times for the International Opportunities Fund (versus 20.5 last quarter), 12.9 times for the China Opportunities Fund (versus 13.5 last quarter), and 18.2 times for the Emerging Markets Fund (versus 16.8 times last quarter). Each of these funds invests in companies with expected earnings growth rates that are higher than that of the broader market, and in companies expected to grow faster than current market expectations. For the Small-Cap Value Fund, the average P/E ratio was 12.4 times (versus 13.9 last quarter).

As of December 31, 2018, the weighted average market capitalization was $3.4 billion for the Global Opportunities Fund, $2.4 billion for the Small-Cap Opportunities Fund, $885 million for the Micro-Cap Fund, $2.3 billion for the Small-Cap Value Fund, $3.3 billion for the International Opportunities Fund, $2.2 billion for the Emerging Markets Fund, and $60.9 billion for the China Opportunities Fund. The China Opportunities Fund’s market cap is skewed upward due to two mega-cap holdings; its median market cap is $8.6 billion.

We appreciate your investment in The Oberweis Funds and are grateful for the trust you have shown us with your valuable investments. If you have any questions about your account, please contact shareholder services at (800) 245-7311. Thank you for investing with us in The Oberweis Funds.

Sincerely,
James Oberweis
James W. Oberweis, CFA
President & Portfolio Manager

MANAGEMENT DISCUSSION ON FUND PERFORMANCE

MARKET ENVIRONMENT

Global equities returned -8.71% in 2018, as measured by the MSCI World Index. Global small-caps, as measured by the MSCI World Small-Cap Index, returned -13.86%. International small-caps underperformed versus U.S. small-caps, as evidenced by the -18.07% return on the MSCI World ex-USA Small-Cap Index. Within the United States, large-cap growth stocks outperformed small-cap growth stocks by 780 basis points, as measured by the respective returns of the Russell 1000 Growth (-1.51%) and Russell 2000 Growth (-9.31%) indices. Within domestic small-cap, growth outperformed value, with the Russell 2000 Growth Index outperforming the Russell 2000 Value Index (-12.86%) by 355 basis points for the year.

DISCUSSION OF THE OBERWEIS FUNDS

The International Opportunities Fund returned -24.73% versus -17.78% for the MSCI World ex-US Small Cap Growth Index. The portfolio benefitted from stock selection in France while stock selection in Japan and Canada detracted from performance. On a sector level, the portfolio benefitted from stock selection in materials while performance was negatively impacted by stock selection in technology. At the stock level, Burford Capital (BUR LN), D A Consortium Holdings (6534 JP), and Ubisoft Entertainment (UBI FP) were among the top contributors to performance; Japan Investment Adviser (7172 JP), Keywords Studios (KWS LN), and Aurelius Equity Opportunities (AR4 GR) were among the top detractors. OBIOX Holdings

The Global Opportunities Fund returned -25.66% versus -14.39% for the MSCI AWCI Small-Cap Index. At the country level, stock selection was adversely affected by the fund’s holdings in China, Japan, and the US. At the sector level, the Fund was negatively impacted by stock selection in technology, consumer discretionary, and industrials. At the stock level, Burlington Stores (BURL), LHC Group (LHCG), and Blucora (BCOR) were among the top contributors to performance; Curo Group (CURO), ams AG (AMS SW), and Open House (3288 JP) were among the top detractors. OBEGX Holdings

The China Opportunities Fund returned -26.01% versus -23.26% for the MSCI Zhong Hua Small Cap Growth Index. The portfolio benefitted from favorable stock selection in industrials while performance was negatively impacted by selection in consumer discretionary and technology. At the stock level, Kingdee International Software Group (268 HK), Baozun (BZUN), and China Tower (788 HK) were among the top contributors; Tencent (700 HK), New Oriental Education & Technology (EDU), and Alibaba (BABA) were among the top detractors. OBCHX Holdings

Since its inception on 5/1/2018, the Emerging Markets Fund returned -21.10% versus -18.64% for the MSCI EM Small Cap Index. At the country level, the portfolio benefitted from stock selection in China while performance was adversely affected by the fund’s holdings in Taiwan and Malaysia. At the sector level, the Fund was positively impacted by stock selection in consumer staples while performance was adversely impacted by selection in consumer discretionary and technology. At the stock level, Fila Korea (081660 KS), TCI Co (8436 TT), and IRS Brasil Resseguros (IRBR3 BS) were among the top contributors to performance; My EG Services (MYEG MK), Beauty Community (BEAUTY TB), and Ennoconn (6414 TT) were among the top detractors. OBEMX Holdings

The Oberweis Micro-Cap Fund returned -12.30% versus -14.18% for the Russell Micro-Cap Growth Index and -9.31% for the Russell 2000 Growth Index. The portfolio benefitted from favorable stock selection in healthcare while performance was adversely impacted by stock selection in technology and producer durables. At the stock level, STAAR Surgical (STAA), DMC Global (BOOM), and LHC Group (LHCG) were among the top contributors to performance. Stein Mart (SMRT), Patrick Industries (PATK), and Bridgepoint Education (BPI) were among the top detractors. OBMCX Holdings

The Small-Cap Opportunities Fund returned -7.23% versus -9.31% for the Russell 2000 Growth Index. The fund benefitted from stock selection in healthcare and consumer discretionary, while stock selection in technology and producer durables detracted from performance. STAAR Surgical (STAA), Haemonetics (HAE), and Amedisys (AMED) were among the top contributors to performance; Extreme Networks (EXTR), Mesa Air Group (MESA), and Dave & Busters (PLAY) were among the top detractors. OBSOX Holdings

The Small-Cap Value Fund returned -16.58% versus -12.86% for the Russell 2000 Value Index. The fund benefitted from stock selection in consumer staples while performance was negatively impacted by adverse stock selection in producer durables. Ensign Group (ENSG), FTI Consulting (FCN), and Matson (MATX) were among the top contributors to performance; Triumph Group (TGI), TiVo (TIVO), and CNO Financial Group (CNO) were among the top detractors. OBVLX Holdings

The portfolio turnover rates were 119% for the Micro-Cap Fund, 155% for the Global Opportunities Fund, 160% for the Small-Cap Opportunities Fund, 54% for the Small-Cap Value Fund, 85% for the China Opportunities Fund, 145% for the International Opportunities Fund and 111% for the Emerging Markets Fund. The net expense ratios for the investor share class of the Funds were 1.55% for Micro-Cap, 1.50% for Global Opportunities, 1.55% for Small-Cap Value, 1.55% for Small-Cap Opportunities, 1.86% for China Opportunities, 1.60% for International Opportunities and 1.75% for Emerging Markets.

For current performance information, please visit www.oberweisfunds.com.

1 Institutional Class shares OBGIX, OMCIX, OBSIX and OCHIX performance information was calculated using the historical performance of Investor Class shares for periods prior to May 1, 2017.

2 Life of Fund returns are from commencement of operations on 01/07/87 for the Global Opportunities Fund, 01/01/96 for the Micro-Cap Fund, 09/15/96 for the Small-Cap Opportunities Fund, 10/01/05 for the China Opportunities Fund, 02/01/07 for the International Opportunities Fund, 05/01/17 for the Institutional Share Classes and 05/01/18 for the Emerging Markets Fund Share Classes.

3 December 31, 2018 data. Expense ratio is the total net annualized fund operating expense ratio. The expense ratio gross of expense offset arrangements and expense reimbursements was 1.52%, 1.28%, 1.56%, 1.33%, 2.12%, 1.87%, 1.55%, 1.30%, 1.89%, 1.64%,1.76%, 3.97% and 3.64% for OBEGX, OBGIX, OBMCX, OMCIX, OBSOX, OBSIX,OBIVX, OBVLX, OBCHX, OCHIX, OBIOX, OBEMX and OIEMX respectively. Oberweis Asset Management, Inc. (OAM), the Fund’s investment advisor is contractually obligated through April 30, 2019 to reduce its management fees or reimburse OBEGX and OBMCX to the extent that total ordinary operating expenses, as defined, exceed in any one year the following amounts expressed as a percentage of each Fund’s average daily net assets: 1.8% of the first $50 million; plus 1.6% of average daily net assets in excess of $50 million and for OBGIX and OMCIX 1.55% of the first $50 million; plus 1.35% of average daily net assets in excess of $50 million. OAM is also contractually obligated through April 30, 2019 to reduce its management fees or reimburse OBSOX, OBVLX, OBCHX, OBIOX and OBEMX to the extent that total ordinary operating expenses exceed in any one year 1.55%, 1.30%, 2.24%, 1.60% and 1.75% expressed as a percentage of each Fund’s average daily net assets, respectively, and for OBSIX, OCHIX and OIEMX 1.30%, 1.99% and 1.50%, respectively.

4 On October 2, 2017, the Cozad Small Cap Value Fund was reorganized into OBVLX, and adopted the performance history of the Cozad Small Cap Value Fund’s Class I shares. Performance shown before October 2, 2017 is for the Cozad Small Cap Value Fund’s Class I shares. The Cozad Small Cap Value Fund acquired all of the assets and liabilities of the Cozad Small Cap Value Fund I, L.P., from its inception on September 30, 2010, in a tax free reorganization on July 1, 2014. Investor Class share OBIVX performance information was calculated using the historical performance of Institutional Class share for periods prior to May 1, 2018.

Performance data shown represents past performance and is no guarantee of future results. Investment return and principal value will fluctuate, so that you may have gain or loss when shares are sold. Current performance may be higher or lower than quoted. Visit us online at oberweisfunds.com for most recent month-end performance. The Oberweis Funds invest in rapidly growing smaller and medium sized companies which may offer greater return potential. However, these investments often involve greater risks and volatility. Foreign investments involve greater risks than U.S investments, including political and economic risks and the risk of currency fluctuations. There is no guarantee that the funds can achieve their objectives. Holdings in the Funds are subject to change. Before investing, consider the fund’s investment objectives, risks, charges, and expenses. To obtain a copy of the prospectus or summary prospectus containing this and other information please visit our website at oberweisfunds.com or call 800-323-6166. Read it carefully before investing. The Oberweis Funds are distributed by Oberweis Securities, Inc. Member: FINRA & SIPC.

The MSCI Zhong Hua Small Cap Growth Index (Net) is a free float-adjusted, market capitalization weighted index that is designed to measure the performance of small cap stocks in the developed markets and emerging markets of China and Hong Kong excluding A share classes, with minimum dividends reinvested net of withholding tax. The MSCI AC Asia Pacific Ex-Japan Small-Cap Growth Index (Net) is a free float adjusted market capitalization index that is designed to measure the equity market performance of small cap growth developed and emerging markets in the Pacific region excluding Japan, with minimum dividends reinvested net of withholding tax. The MSCI World ex-US Small Cap Growth Index (Net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of small cap growth developed markets excluding the US, with minimum dividends reinvested net of withholding tax. The MSCI ACWI Small Cap Index (Net) is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of small cap developed and emerging markets with dividends reinvested net of withholding tax. The MSCI World Index (Net) is a free float adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The MSCI Emerging Markets Small Cap Index is a free float-adjusted, market capitalization-weighted index that measures the performance of small-cap stocks in 24 emerging markets.

The Russell 2000 Index measures the performance of approximately 2,000 companies with small-market capitalizations. The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted earnings growth rates. The Russell Microcap Growth Index measures the performance of those Russell Micro Cap companies with higher price-to-book ratios and higher forecasted growth values. The performance data includes reinvested dividends. The Russell Microcap Index is represented by the smallest 1,000 securities in the small cap Russell 2000 Index plus the next 1,000 securities. Each index is an unmanaged group of stocks, whose performance does not reflect the deduction of fees, expenses or taxes. The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Value Index is an unmanaged market capitalization-weighted index of value-oriented stocks of U.S. domiciled companies that are included in the Russell 2000 Index. Value-oriented stocks tend to have lower price-to-book ratios and lower forecasted growth values.