SHAREHOLDER LETTER

877.701.2883 SMEADCAP.COM 3RD QUARTER 2017 (9/30/17)

A SHARE CLASS - SVFAXI1 SHARE CLASS - SVFFX

INVESTOR SHARE CLASS - SMVLX

PerformanceAverage Annualized Total Returns as of September 30, 2017

ONE MONTH QTR YTD ONE YEAR THREE YEAR FIVE YEARANNUALIZED

SINCE INCEPTION 1/2/2008

SVFFX 2.80% 4.93% 15.92% 20.74% 9.47% 14.33% 8.44%SVFAX (w/ load) -3.11% -1.15% 9.06% 13.57% 7.06% 12.61% 7.40%

SVFAX (w/o load) 2.79% 4.88% 15.73% 20.51% 9.19% 13.96% 8.06%SMVLX 2.78% 4.85% 15.68% 20.42% 9.17% 14.03% 8.23%

RUSSELL 1000 VALUE 2.96% 3.11% 7.92% 15.12% 8.53% 13.20% 6.72%S&P 500 TR INDEX 2.06% 4.48% 14.24% 18.61% 10.81% 14.22% 8.01%

Investor Shares Gross Expense Ratio 1.26% A Shares Gross Expense Ratio 1.22% I1 Shares Gross Expense Ratio 1.00%

Performance data quoted 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 877-807-4122. Performance for SVFAX (w/load) reflects maximum sales charge of 5.75%. Performance for SVFAX does not reflect maximum sales charge of 5.75%. If reflected, the load would reduce the performance amount quoted. SVFAX imposes a 1.00% redemption fee on purchases of $1,000,000 or more that are redeemed within 18 months of purchases. Performance data does not reflect the redemption fee. If it had, returns would be reduced.

Investor Class shares of the Fund commenced operations on January 2, 2008. I1 Class shares of the Fund commenced operations on December 18, 2009. Performance shown for I1 Class shares prior to its inception reflects the performance of Investor Class shares. Class A shares of the Fund commenced operations on January 24, 2014. Performance shown for Class A shares prior to its inception reflects the performance of Investor Class shares, adjusted to reflect Class A expenses.

| Dear ShareholderThe third quarter of 2017 was rewarding for shareholders of the Smead Value Fund (SMVLX). The Fund returned 4.85% in the quarter and exceeded the S&P 500 Index return of 4.48% and the Russell 1000 Value Index return of 3.11%. We have said many times that positive markets led by glamorous growth stocks are hard to compete with and this FAANG (Facebook (FB), Amazon (AMZN), Apple (AAPL), Netflix (NFLX) and Alphabet (GOOG)) era is no exception.

Through three quarters of 2017, the Fund returned 15.68% and the S&P 500 gained 14.24%. The Russell 1000 Value has gained only 7.92% and well represents how far results have strayed from the mean of academic studies which show that less expensive stocks historically outperform average or expensive ones. The

farther you walk out on the valuation plank, the closer you are to swimming with the sharks and this market for glamour tech stocks is much closer to the end than it is to being on deck.

Three stocks, NVR (NVR), Scripps Network Interactive (SNI) and PayPal (PYPL) produced our biggest gains and positive attribution. NVR is enjoying the winds at the back of homebuilding, Scripps received a buyout from Discovery Communications (DISCA) and PayPal is seeing its network effect culminate with the glow of euphoria surrounding all things cyberspace.

The drags on our performance begin with a round trip that Alaska Airlines (ALK) took. We had enjoyed its move from $72 per share to over $100 and suffered on the return trip to $72. The rest of our grief was FAANG

SHAREHOLDER LETTER 877.701.2883 SMEADCAP.COM

A SHARE CLASS - SVFAXI1 SHARE CLASS - SVFFX

INVESTOR SHARE CLASS - SMVLX

3RD QUARTER 2017 (9/30/17)

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stock misery. Investors fled AmerisourceBergen (ABC) over fears that Amazon will successfully invade drug distribution and Disney fell over fears that Facebook, Amazon, Netflix and Alphabet will steal all of Disney’s TV, cable and movie customers. As you can see below, we believe many of the best value opportunities are what we call “anti-FAANG” companies. These are companies believed to be doomed by the molding of our entire culture to match the Millennial technology culture. Stay tuned.

| Buying Value in a Good Ol' Bull Market

Many well-regarded experts have weighed in on the length and the pricing of common stocks eight and one half years into this bull market. They range from the dire warnings of perma-bears like Marc Faber to more reserved warnings from Howard Marks and Robert Shiller. The chart below shows an example of where we are in relation to history:1

Separately, Warren Buffett and Jeremy Grantham have argued that the expensiveness of this market must be weighed against the prevailing interest rates. As recently as May of 2017, Buffett said, "If I knew that the ten-year Treasury Bonds would remain near 2%, there were two companies I should have purchased last year." In theory, the lower the riskless rate the more the future income stream of a company is worth. Grantham has effectively argued that the low interest rates make it “different

this time.” The last time that we checked, those are the scariest words in investing.

Therefore, whether you are in the "doomsday" camp, the "watch the interest rate" camp or the long-duration camp with us, the challenge is to find value investments. These value investments must be consistent with how you found value in the past. What does academia tell us about how to find alpha (outperformance) from a historical standpoint? Does this provide a template for how to make money against the current backdrop?

Valuation Matters DearlyEugene Fama and Kenneth French exposed the fact that inexpensive stocks outperform average and expensive stocks based on book value. David Dreman, in his book "Contrarian Investment Strategies," used price-to-earnings (P/E) ratios to prove the same point. Both results were based on annual re-balancing of the S&P 500 Index companies via five price quintiles. Their results are shown in the following charts.2,3

Source: Dimensional Fund Advisors (http://www.dfaus.com/philosophy/dimensions.html)

Source: Advisor Perspectives (https://www.advisorperspectives.com/dshort/updates/2017/09/06/market-cap-to-gdp-an-updated-look-at-the-buffett-valuation-indicator). Data for the time period 1/1/1971 - 6/30/2017.

Source: Dreman Value Management (http://www.dreman.com/about-dreman/the-potential-advantages-of-a-contrarian-strategy/)

P/E Quintile

SHAREHOLDER LETTER 877.701.2883 SMEADCAP.COM

A SHARE CLASS - SVFAXI1 SHARE CLASS - SVFFX

INVESTOR SHARE CLASS - SMVLX

3RD QUARTER 2017 (9/30/17)

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We love the oldest of these studies from Francis Nicholson, who showed that bargain prices can lead to more alpha when attached to longer holding periods. We believe bargain stocks are the gift which keeps on giving:4

Concentrated Portfolios and Long Holding PeriodsWhether you are in bull or bear markets, the academic work shows that alpha can be produced by high conviction portfolios which practice low turnover. Martin Cremers and Ankur Pareek have proven this and given us a chart to help us understand:5

Concentration (high active share) and low turnover may improve performance on average. Remember, Warren Buffett always reminds us that "excitement and expense are the enemies of your portfolio." Turnover definitely causes expense.

Quality Adds ValueBen Inker, via his impressive research at Grantham Mayo Van Otterloo and Co. (GMO), revealed four qualitative factors which demonstrated alpha over a 24-year time period.6

Can you see the template which the academic studies and history have provided us? We seek to combine bargain purchases made in psychologically difficult circumstances of companies which fit Inker’s quality characteristics and hold them longer than our competitors.

What Industries Dominate the Lowest P/E Quintile?As of September 25, 2017, the 100 cheapest stocks in the S&P 500 Index were concentrated in 31 financial stocks and 30 consumer discretionary stocks. Older technology stocks were the next most concentrated in the index with 10, followed by 6 industrial stocks. Therefore, if the lowest P/E quintile is going to outperform the S&P 500 over the next five to ten years, it means that the stock market could well have gone overboard on punishing financial and discretionary companies for the negatives which exist in their sector and industry. Here is what the last ten years looked like for the lowest P/E quintile versus the S&P 500:7

Source: ThinkAdvisor (http://www.thinkadvisor.com/2015/08/31/why-and-when-active-managers-shine-and-how-to-spot). Data for the time period 1/1/1995 – 12/31/2013.

Source: GMO monthly data 1/1982-12/2003.Source: Francis Nicholson study – shown in “Contrarian investment strategies: the next generation”, By David N. Dreman; Pg 143

SHAREHOLDER LETTER 877.701.2883 SMEADCAP.COM

A SHARE CLASS - SVFAXI1 SHARE CLASS - SVFFX

INVESTOR SHARE CLASS - SMVLX

3RD QUARTER 2017 (9/30/17)

3RD QUARTER SHAREHOLDER LETTER | 4

The other possibility is that value outperforms the S&P 500 by virtue of how horribly growth stocks do and how over-weighted the index has become in high P/E stocks. This was the historical aftermath of the early 1970s “Nifty Fifty” bubble and the Dotcom bubble of the late 1990s.

Merging Value with QualityAt Smead Capital Management, we seek to merge the academic work on quality from Ben Inker/GMO, low turnover and concentration from Cremers and Pareek, with the value work of Dreman and Nicholson. We seek to initiate positions in companies which meet our eight

criteria for stock selection when they fall into the lowest P/E quintile. Currently, Alaska Airlines (ALK), Target (TGT), Kroger (KR), Aflac (AFL), Wells Fargo (WFC), Lennar (LEN), JPMorgan (JPM), Bank of America (BAC) and Nordstrom (JWN) are in the lowest quintile.

In our opinion, they are not only quantifiably inexpensive, they are also qualitatively strong in relation to the lowest P/E quintile shares and the S&P 500 overall. We seek companies with long histories of profitability, wide moats, high and consistent free cash flow, strong balance sheets, heavy insider ownership with recent purchases, shareholder friendliness and buy them at price points which are depressed compared to the last five years.

Where Do We Go From Here?The last ten years included the worst bear market in 80 years. Given the fears of a deep bear market, of mean reversion in U.S. equity performance and mean reversion of Treasury interest rates, there are no guarantees. However, there weren't any guarantees at any stage of my 37 years in the stock market. Over ten years, we would expect historical academic evidence to be reconfirmed and we will continue to practice long-duration common stock ownership seeking the statistical edges which have worked in the past.

Source: The Wall Street Journal (https://blogs.wsj.com/experts/2017/09/24/is-value-investing-dead-it-depends-on-how-you-measure-it/). Data for the time period 6/30/2007 - 6/30/2017.

1Source:Advisor Perspectives (https://www.advisorperspectives.com/dshort/updates/2017/09/06/market-cap-to-gdp-an-updated-look-at-the-buffett-valuation-indicator).2Source: Dimensional Fund Advisors (http://www.dfaus.com/philosophy/dimensions.html).3Source: Dreman Value Management (http://www.dreman.com/about-dreman/the-potential-advantages-of-a-contrarian-strategy/).4Source: Francis Nicholson study – shown in “Contrarian investment strategies: the next generation”, By David N. Dreman; Pg 1435Source: ThinkAdvisor (http://www.thinkadvisor.com/2015/08/31/why-and-when-active-managers-shine-and-how-to-spot). Data for the time period 1/1/1995 – 12/31/2013.6Source: GMO monthly data 1/1982-12/2003.7Source: The Wall Street Journal (https://blogs.wsj.com/experts/2017/09/24/is-value-investing-dead-it-depends-on-how-you-measure-it/).

Alpha is a measure of performance on a risk-adjusted basis. FAANG stocks include Facebook (FB), Apple (AAPL), Amazon (AMZN), Netflix (NFLX) and Alphabet (GOOGL). A basis point is one hundredth of one percent. Earnings-per-share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability. The price-earnings ratio (P/E Ratio) measures a company's current share price relative to its per-share earnings. The price-to-book ratio (P/B Ratio) is a ratio used to compare a stock's market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter's book value per share.

The information contained herein represents the opinion of Smead Capital Management and is not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

The Smead Value Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The statutory and summary prospectuses contain this and other important information about the investment company, and it may be obtained by calling 877-807-4122, or visiting www.smeadfunds.com. Read it carefully before investing.

William SmeadPortfolio Manager

Tony Scherrer, CFACo-Portfolio Manager

Cole Smead, CFACo-Portfolio Manager

| SMEAD CAPITAL MANAGEMENT600 University Street, Suite 2412 Seattle, WA 98101

Shareholder Services 877.807.4122Sales Desk 877.701.2883

info@smeadcap.com

SMEADCAP.COM

Mutual fund investing involves risk. Principal loss is possible.

The following were the top ten holdings in the Fund as of 9/30/2017: NVR Inc 6.16%, Amgen Inc 6.08%, Berkshire Hathaway Inc B 5.68%, American Express Co 5.44%, JPMorgan Chase & Co 5.42%, Bank of America Corp 5.19%, eBay Inc 4.89%, Aflac Inc 4.85%, Lennar Corp 4.43% and Walgreens Boots Alliance Inc 4.42%. Fund holdings are subject to change at any time and should not be considered recommendations to buy or sell any security. Current and future portfolio holdings are subject to risk. The S&P 500 Index is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation. The Russell 1000 Value Index is an index of approximately 1,000 of the largest companies in the U.S. equity markets; the Russell 1000 is a subset of the Russell 3000 Index. The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 companies with lower price-to-book ratios and lower expected growth values. Information is provided for information purposes only and should not be considered tax advice. Please consult your tax advisor for further assistance.

Small- and Medium-capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies.

Active investing generally has higher management fees because of the manager’s increased level of involvement while passive investing generally has lower management and operating fees. Investing in both actively and passively managed funds involves risk, and principal loss is possible. Both actively and passively managed funds generally have daily liquidity. There are no guarantees regarding the performance of actively and passively managed funds. Actively managed mutual funds may have higher portfolio turnover than passively managed funds. Excessive turnover can limit returns and can incur capital gains.

The Smead Value Fund is distributed by ALPS Distributors, Inc. ALPS Distributors, Inc. and Smead Capital Management are not affiliated. Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. SVF000305 1/31/2018