MONTHLY REPORT. fpm FUNDS

Transcription

1 Date: November 30, 2006 MONTHLY REPORT fpm FUNDS Investments In GERMAN EQUITIES

2 Date: November 30, 2006 CURRENT ANALYSIS The market advanced again on balance in November, although it could not hold its highs at month s end. The movement occurred relatively evenly across all market segments. At the same time, volatility continued to fall. Market participants seem to be feeling very comfortable. In parallel, investors showed less inclination to think critically. By contrast, momentum and equity stories are more common again than in the past few years. After any serious and even then only periodic willingness to speculate had long been confined to less-capitalised shares, in November various rumours found enthusiastic takers in the large-cap segment. We think that at least by the standards of the equity market the valuations of the issues involved are high to somewhat excessive. We will not invest money with the expectation that another investor, for whatever reasons, will pay us more than a fair price. And fortunately, the situation is by no means so desperate that one would have to cling to such hearsay. There are still enough other opportunities elsewhere. With the low interest rates, there continues to be potential in the low overall valuation. However, the spread between expensive and cheap multiples has by now grown quite wide. The low valuation of the stock market emerges especially from highly capitalised players like banks and insurers. In this size class the market thinks that companies can generate little more earnings growth. In our view, that makes these shares fairly secure, while they also continue to hold opportunities. For cyclicals and restructuring cases, the situation is different: There the valuation will not bear a significant decrease in results, and earnings are already quite high. For companies in the extensive infrastructure segment, the valuation has (justly, in theory) departed from the typical valuation parameters of the equity market and is somewhere between stock market and private-equity standards. This can be appropriate, but involves above-average risks. By contrast, lower valuations are found in issues whose earnings benefited from price increases in recent years, such as power generating companies and firms in the materials industry. Here too there are now not just opportunities, but also risks: Especially an economic slowdown could lead to a drop in product prices that would make itself felt in lower earnings. This is not a foregone conclusion, but we prefer to avoid these sectors. At present, German companies are producing recordhigh yields, and not solely by management skill. Meanwhile, companies with sustained strong growth show valuations basically in line with those of the general market. Growth is thus not being rewarded with a valuation premium. Here we continue to see very superior opportunities or, at the very least, limited risks, particularly from an economic standpoint. For lack of equity stories among these companies (or more exactly, because it is always the same story), their shares are neglected in momentum-driven markets. Although this slows relative performance in the near term, the performance is covered by the fundamentals in the longer run. Even in a more difficult environment, the share prices of these companies should not be in great jeopardy. For the coming year 2007 we remain optimistic. We expect a continued positive operating-level trend for the companies in our portfolio. What is more, their valuations are anything but inflated. This leads us to project solid price gains for the coming year as well. From this point of view, the overall market too is fairly well buttressed. To be sure, given the already high yields that companies are earning, and against the backdrop of fundamentals, experience suggests that neither will the market see a huge advance. That could only happen if investors risk aversion were to keep easing, which we do not rule out: With each additional year of good performance, investors are more prepared to weight risks less heavily than opportunities. At some point, this could lead to exaggerated market levels. However, anticipating this is not our task. Yours sincerely, Martin Wirth Awards: S&P Stars: Morningstar Rating :

3 Fr ankfurt Performance Management AG Date: November 30, 2006 FPM Funds Stockpicker Germany LARGE Cap Investment objectives Performance since inception The fund invests in German equities. Investments are transacted solely on the basis of fundamental criteria. The fund invests if a company plays an influential role in its field, operates a system of price, cost and quality leadership and has been assessed attractively. The fund alternatively invests in sound companies with a very low valuation and above-average quality. The fund is geared towards generating an absolutely positive return. Consequently, we have dispensed with a benchmark. At the same time the fund is able to hold surplus cash, unless we identify an adequate number of attractive investments. Facts to the fund Redemption price Funds currency German sec.-code ISIN Front-end load Management Fee TER Distribution policy Euro A0HGEX LU % 0.9% p.a. (plus successrelated fee) 0.97 % p.a. Retained profits Launch date Fiscal year Reuters Bloomberg Price publication Videotext Investment company Depository bank Internet November 7, 2005 December 31 DWS 26 DWSFPML_LX FAZ, Handelsblatt, Börsenzeitung ARD 775 DWS Investment S.A. State Street Bank Luxemburg S.A. Ytd 1 month 3 months 1 year since launch FPM Funds DAX % % % % % % % % % % PER 2006(e) PER 2007(e) Hist. Volatility 90 days Source PER: FPM/IBES Source Volatility: Bloomberg FPM Funds DAX % % Investment Style Market Caps Sector weightings Growth 38.90% Spec. situations 7.00 % Liquidity % Big Caps % Industrial 2.67 % Financial % Technology % Utilities % Basic materials 4.74 % Communications 9.22 % Top 5 holdings:* Allianz AG Metro AG Muenchener Rueck AG Porsche AG Tele Atlas Mid Caps % Consumer cyclical % Value % Liquidity % Liquidity % Consumer non cyclical % * in alphabetical order

4 Fr ankfurt Performance Management AG Date: November 30, 2006 FPM Funds Stockpicker Germany SMALL/MID Cap Investment objectives Performance since inception The fund invests in German smaller companies. Investments are transacted solely on the basis of fundamental criteria. The fund invests if a company plays an influential role in its field, operates a system of price, cost and quality leadership and has been assessed attractively. The fund alternatively invests in sound companies with a very low valuation and above-average quality. The fund is geared towards generating an absolutely positive return. Consequently, we have dispensed with a benchmark. At the same time the fund is able to hold surplus cash, unless we identify an adequate number of attractive investments. Facts to the fund (Hardclosing of the fund on 9th September 2005) Redemption price Funds currency German sec.-code ISIN Front-end load Management Fee TER Distribution policy Euro A0DN1Q LU % 1.25% p.a. (plus success-related fee) 1.29 % p.a. Retained profits Launch date Fiscal year Reuters Bloomberg Price publication Videotext Investment company Depository bank Internet December 20, 2004 December 31 DWS 26 FPMSPGS_LX FAZ, Handelsblatt, Börsenzeitung ARD 775 DWS Investment S.A. State Street Bank Luxemburg S.A. Ytd 1 month 3 months 1 year since launch FPM Funds TECDAX MDAX SDAX % % % % + 0.9% + 0.8% + 1.4% + 3.6% + 4.5% + 7.7% + 7.6% % % % % % % % % % PER 2006(e) PER 2007(e) Hist. Volatility 90 days Source PER: FPM/IBES Source Volatility: Bloomberg FPM Funds TECDAX MDAX SDAX % 16.22% 11.52% 9.24% Investment Style Market Caps Sector weightings Growth % Value % Small Caps % Big Caps 00 % Technology % Consumer cyclical % Industrial % Top 5 holdings:* Computerlinks AG SAF AG Software AG Takkt AG Wirecard AG Special situations 1.61 % Liquidity 0.43 % Mid Cap 29.70% Liquidity 0.43 % Financial 7.78% Basic materials % Consumer non cycl. 9.58% Liquidity 0.43 % Communications 6.65 % * in alphabetical order

5 Fr ankfurt Performance Management AG Date: November 30, 2006 FPM Funds Stockpicker Germany All Cap Investment objectives Performance since inception The fund invests in German equities. Investments are transacted solely on the basis of fundamental criteria. The fund invests if a company plays an influential role in its field, operates a system of price, cost and quality leadership and has been assessed attractively. The fund alternatively invests in sound companies with a very low valuation and above-average quality. The fund is geared towards generating an absolutely positive return. Consequently, we have dispensed with a benchmark. At the same time the fund is able to hold surplus cash, unless we identify an adequate number of attractive investments. Facts to the fund (Hardclosing of the fund on 10th January 2005) Redemption price Funds currency German sec.-code ISIN Front-end load Management fee TER Distribution policy Euro LU % 0.9% p.a. (plus successrelated fee) 0.95 % p.a. Retained profits Launch date Fiscal year Reuters Bloomberg Price publication Investment company Depository bank Internet January 29, 2001 December 31 DWS 26 DWSFPMF_LX FAZ, Handelsblatt, Börsenzeitung DWS Investment S.A. State Street Bank Luxemburg S.A. Ytd 1 month 3 months 1 year since launch FPM Funds CDAX % % % % % % % % % % PER 2006(e) PER 2007(e) Hist. Volatility 90 days Source PER: FPM/IBES Source Volatility: Bloomberg FPM Funds CDAX % 11.00% Investment Style Market Caps Sector weightings Growth 53.68% Value % Liquidity 2.20 % Big Caps % Industrial % Mid Caps 33.30% Financial 41.31% Small Caps % Liquidity 2.20 % Liquidity 2.20 % Technology03.84% Utilities % Basic materials 3.01 % Communications 9.07 % Consumer cyclical 8.28 % Consumer non cyclical % Energy % Top 10 holdings:* Allianz AG AWD Holding AG Celesio AG Deutsche Bank AG Freenet.de AG Fuchs Petrolub AG HVB Mobilcom AG Muenchener Rueck AG Tele Atlas * in alphabetical order

6 Date: November 30, 2006 YOUR FOR ATTENTION: The information contained in this document does not constitute investment advice and is merely a product description. Investment decisions should always be based on the simplified or full sales prospectus, supplemented in each case by the most recent audited annual report and, in addition, by the most recent half-year report, if this report is more recent than the most recently available annual report, which taken together are the sole binding basis for the purchase of fund units. The aforementioned sales documentation is available in either electronic or printed form from your financial adviser, or from FPM Frankfurt Performance Management AG, Freiherr-vom-Stein-Str. 11, Frankfurt am Main. The sales prospectus contains detailed information on the risks involved. The information given here is based on our assessment of the current legal and tax position. All opinions given in this product information reflect the current assessment of FPM Frankfurt Performance Management AG. The opinions expressed in this assessment are subject to change without prior notice. Performance is measured by time-weighted yield, i.e. excluding initial charges. Past performance is not necessarily indicative of future returns. The units issued by DWS Investment S.A. under this fund may only be offered for purchase or sold in jurisdictions in which such offer or sale is permitted. In particular, the units have not been registered under the US Securities Act of 1933, as amended, and therefore may not be offered or sold in the United States, to US citizens or to US residents. FPM Frankfurt Performance Management AG Freiherr-vom-Stein-Straße 11 D Frankfurt am Main Telefon: Telefax: info@fpm-ag.de Web: