Quarterly report December 2013

Transcription

1 Quarterly report December 2013 Seite 1

2 13 Quarterly Report December current analysys By Martin Wirth Founder and Member of the Board Martin Wirth The year 2013 brought substantial gains for the German equity market. The mid cap indices advanced by between 29,3% to 40,9%. The DAX added 25,5% and the C-DAX 26,7%. Our FPM Funds Stockpicker Germany All Cap gained 34,9% and the FPM Funds Stockpicker Germany Small/Mid Cap 36,7%. The value-based active stock picking paid out for our investors. These are handsome results, but the question, as ever, is what is ahead in the new year before us. To get an idea of where things may go from here, we should first trace the trajectory from past to present. So, let's start with a look back. The price gains in 2013 were marked by two developments: earnings stagnation and an increase in valuations. This combination evidently strikes some commentators as dubious. But it is often overlooked that the valuations both of the German and the other European stock markets were depressed in the last few years. The cause, as is well known, was the financial crisis followed by the European debt crisis and the associated fear of the euro's disintegration. This threat has receded significantly for the time being. In our view, the critical reason was not the market intervention of the ECB (the purchases of government bonds, low interest rates, extensive financing of banks even for not exclusively account exclusively top-quality collateral, etc.), but simply the levelling of imbalances in the eurozone, which can be seen in the dwindling of the current account deficits of south eastern European countries. As a result, these nations (at least in accounting terms) are no longer dependent on transfers from the core countries. It was the European Central Bank which made it possible to take this sustainable route: Without its stepping in, we would have seen an economic meltdown. The ECB therefore probably made the right choice. With the rebalancing of the current accounts, the incentive to withdraw from membership in the euro is virtually gone. And with the reduced threat of the euro's collapse, the excessive risk premiums have shrunk considerably. The stock markets were able to climb, despite the lasting recession in Europe. We have laid out the underlying logic for readers more than once over the past two years, so we won't belabour the point by going into it again. Those who acted on this logic were able to achieve a more than solid performance in the equity market. Those who did not, may have had to watch their savings deposits for any gain. With that, let's move from the high ground of the macro level to street level, i.e., the stock market. Performance-wise, the market in 2013 can be broadly divided into four groups of shares. Page 2

3 13 Quarterly Report December current analysys By Martin Wirth First of all, the companies of high quality with stable or rising earnings: This group was the first choice of investors who ventured back into equities. Coming from a low valuation, they charted strong price gains and remained a good choice in the past two years, after already having been the last refuge for many investors in the years before. The trend of above-average performance held until into the second quarter of After that, the absolute multiples and especially the relative valuation compared to shares of more average quality rose to record heights. For the first time in more than half a decade, the high-quality group then went on to underperform in the price charts. As the second group we can delineate the more average, often cyclical, companies with good earnings in line with the circumstances. These are issues such as automotive suppliers and machinery makers. Many of these companies have adjusted perfectly to the business environment and, despite a lack of macroeconomic impetus, are delivering record results partially. While the valuation did not reflect this until into 2013, that all changed from the second quarter. Since then, the companies with this profile have been the big gainers. The third group in our view is made up of those companies which are also cyclical and of fairly average quality, but with a weak earnings trend, usually owing to business conditions. Their price performance is less enjoyable but the valuation based on net assets remains correspondingly low. Examples are the basic materials-related industries. The fourth group has few members, but the majority of them are highly capitalised: companies for which conditions have changed and the regulatory environment is still unclear. These are primarily banks and utilities, but not insurers, which by now rank among the shares deemed desirable. The companies in the fourth group were hit from two sides: The old, partly obsolete portion of their business must be reduced or exited, while the future still holds much eventually uncertainty. Not surprisingly, this has a pronounced impact on the earnings situations. Whether this business transformation is always based on wise requirements is questionable. And these requirements are not always predictable, because they are sometimes irrational. But the situation is what it is: not great. What is certain is that the current environment will change. Sooner or later, things will thus find a new equilibrium, both in terms of regulation and the clearing up of legacy burdens, and with respect to the business models. However, the banks probably have an advantage here: It is easier to close a commodity trading department than to write off a portfolio of power stations. As soon as the fog of uncertainty lifts, significant price gains are conceivable. An example is Aareal-Bank, which by now has eliminated its bad debts and, with growing earnings, has considerably reduced its discount relative to book value. For the purpose of looking ahead, we can thus summarize: Risk premiums have fallen, valuations have risen accordingly, and, thanks to the recession, corporate earnings in the market overall stagnate. What might 2014 bring? Presumably, Europe will emerge from its recession next year. With that, the economy could finally become a moderate stimulus to corporate earnings again. Should this not be the case, share prices can be expected to stagnate. Although the valuation of the German equity market is average by historical standards and remains plain cheap compared to the bond market, the valuation in the past also factored in some degree of growth. Without this growth, companies will generate earnings (thus raising their value), but their share price performance may then be hurt by a valuation contraction, thus potentially leaving little movement on balance. We are optimistic in this regard: The European countries should not have as much need to curb spending as this year. This means that, while there will be further austerity measures in 2014, the rate of the increase will decline. always Page 3

4 13 Quarterly Report December current analysys By Martin Wirth As well, the improvement in bond markets should, with the usual lag, also make itself felt in the real economy. Finally, the propensity to invest has been (too?) low for years and thus leaves room for possible catch-up effects. With risk premiums still easing, any threat to the real economy is quite limited as it stands today. In recent years, for lack of financing options, there probably also were no significant misallocations at the macroeconomic or company level: Discipline, including cost discipline, is a major driver of corporate profitability. The bad news, concerning players ranging from large banks to Thyssen, has its origins in the time before the financial crisis. With this in mind, we are going into the new year with a certain preference for cyclicals. But given the reduced discount to the market as a whole, our positioning has become more diversified again. We also see opportunities in banks, as soon as there are signs of a shedding of bad debts. portfolios in good time. The future will always be uncertain, however the percipience of this fact varies. Consequently, we do not seek to be masters of prediction but masters of adaptation to changes in the environment. And we try hard not let our willingness to make adjustments be affected by whether we like the changes in conditions or not. Protesting that The ECB is not allowed to do that can qualify people for leadership positions at the Bundesbank. Whether it means they would be suited for the demands of portfolio management is a different matter. Yours sincerely, Martin Wirth What may go wrong? The debt problem in Europe is far from solved all there is is a road map towards a solution. Whether the route on that map will be followed, and followed for the long periods required, is impossible to say. The kinds of difficulty of adjusting to new realities can be seen in France and Italy both of them countries that did not come under pressure from the financial markets and especially from the EU. Here, structural reforms were dawdled or their necessity simply denied. In fact, it is unclear whether there is even a basic understanding of such exigencies. And look at Germany: The Maastricht criteria are supposed to be met again in about ten years, yet the new German government acts as if it had won the jackpot in a lottery. No sign of debt reduction... an example to everyone, and not a good one. Considering all this, it is clearly important to keep an eye on the risks despite the otherwise justified improvement in financial markets. And should everything turn out differently, we will try to ensure that these differences too are reflected in our portfolios Page 4

5 AS OF: December 31 st, 2013 FPM Funds Stockpicker Germany All Cap Equity funds Germany ISIN: LU Investment Policy The FPM Funds Stockpicker Germany All Cap invests primarily in German equities. The objective of the investment policy of the sub-fund FPM Funds Stockpicker Germany All Cap is to gain the greatest possible return on investments in Euro. The subfund's assets are primarily invested in shares, share certificates, convertible bonds, convertible debentures and warrant-linked bonds, participation and dividend-right certificates, warrants for securities, as well as in variable and fixed interest securities of issuers with their registered office in the Federal Republic of Germany. In addition, the subfund s assets may be invested in all other permissible assets. General Fund Information Fund category: Equity Funds Germany Investment company: FPM Funds SICAV / Luxemburg Management company: DWS Investment S.A., Luxemburg Custodian bank: State Street Bank Luxemburg Fund manager: Manfred Piontke and Martin Wirth Fund currency: Euro End of fiscal year: December 31 st Fund volume in million Euro: Permitted to trade in: Germany, Austria, Switzerland, Luxembourg, France, Spain DWS risk category: 4 Share class C 1 Ratings & Awards: Launch date: January 29th, 2001 Distribution policy: Retaining additional share class FPM Funds Stockpicker Germany All Cap I ISIN: LU uro-fund Award nd rank over 10 years, Lipper Fund Awards Germany & Austria st rank over 3 years FERI Fund Rating 2 (A) SAUREN Fund Manager - Rating - 2 gold medals 3 ISIN: LU Fund price share class C Redemption price: Issue price: week high*: week low*: * redemption price Performance shar class c Time period: 1 m 3 m Performance: % 11.73% conditions share class c Max. front-end load: 4.00% Management fee: 0.90% p.a. Exit charge: Performance fee: TER (fiscal year 2012): 4 6 m 21.14% 1 year 34.88% 3 years 32.07% 0.00% success related fee of 15%, provided that the performance of the shares exceeds 4% per half-year 1.00% p.a. 5 years % 10 years % since inception % years since inception (January 29, 2001) Jan-14 Jul-13 Jan-13 Jul-12 Jan-12 Jul-11 Jan-11 Jul-10 Jan-10 Jul-09 Jan-09 Jul-08 Jan-08 Jul-07 Jan-07 Jul-06 Jan-06 Jul-05 Jan-05 Jul-04 Jan-04 Jul-03 Jan-03 Jul-02 Jan-02 Jul-01 Jan-01 Jan-14 Oct-13 Jul-13 Apr-13 Jan-13 Oct-12 Jul-12 Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 Oct-10 Jul-10 Apr-10 Jan-10 Oct-09 Jul-09 Apr-09 Jan-09 Please note the footnotes on page 8. Page 1 of 12 FPM Funds Stockpicker Germany All Cap

6 AS OF: December 31 st, 2013 Performance in recent 12-month-periods 6 share class c % % % % % Risk assessment share class c max. profit 7 max. loss 7 1 year % % 3 years % % Fund manager comment volatility % 16.52% sharpe-ratio The year 2013 brought substantial gains for the German equity market. The equities were marked by earnings stagnation and an increase in valuations. But it is often overlooked that the valuations both of the German and the other European stock markets were depressed in the last few years. The cause was the financial crisis followed by the European debt crisis and the associated fear of the euro's disintegration. This threat has receded significantly for the time being. We are confident for the upcoming year and have a certain preference for cyclicals. But given the reduced discount to the market as a whole, our positioning has become more diversified again. We also see opportunities in banks, as soon as there are signs of a shedding of bad debts. Portfolio structure Current month Previous month Basic Materials 2.61% Basic Materials 3.07% Communications 7.66% Communications 8.82% Consumer, Cyclicals 24.09% Consumer, Cyclicals 21.92% Consumer, Noncyclicals 23.70% Consumer, Noncyclicals 22.13% Financials 13.17% Financials 12.86% Industrials 16.43% Industrials 18.63% Technologies 12.34% Technologies 12.58% TOP 10 holdings Security Freenet Sixt Pref. Porsche Automobil Holding Pref. Biotest Pref. Grammer Dialog Semiconductor Drägerwerk Commerzbank Konv. Schaltbau Holding Dürr Investment degree * in % of the fund s assets current weighting * 7.46% 7.05% 6.51% 6.14% 5.00% 4.91% 4.88% 4.01% 3.95% 3.71% 97.39% previous month * 7.19% 5.96% 4.30% 4.55% 4.73% 3.48% 3.61% 3.12% 3.82% 3.69% 81.52% Please note the footnotes on page 8. Page 2 of 12 FPM Funds Stockpicker Germany All Cap

7 AS OF: December 31 st, 2013 FPM Funds Stockpicker Germany small/mid Cap Equity funds Germany ISIN: LU Investment Policy The FPM Funds Stockpicker Germany Small/Mid Cap invests primarily in German equities. The objective of the investment policy of the sub-fund FPM Funds Stockpicker Germany Small/Mid Cap is to gain the greatest possible return on investments in Euro. The subfund's assets are primarily invested in shares, share certificates, convertible bonds, convertible debentures and warrant-linked bonds, participation and dividend-right certificates, warrants for securities, as well as in variable and fixed interest securities of issuers with their registered office in the Federal Republic of Germany. In addition, the subfund s assets may be invested in all other permissible assets. General Fund Information Fund category: Equity Funds Germany Investment company: FPM Funds SICAV / Luxemburg Management company: DWS Investment S.A., Luxemburg Custodian bank: State Street Bank Luxemburg Fund manager: Martin Wirth and Raik Hoffmann Fund currency: Euro Launch date: December 20 th, 2004 Distribution policy: Retaining End of fiscal year: December 31 st Fund volume in million Euro: Suitable for saving plan: Yes Suitable for capital-building payment: Yes Permitted to trade in: Germany, Austria, Switzerland, Luxembourg, France, Spain DWS risk category: 4 Ratings & Awards: FERI Fund Rating 2 (B) Fund price conditions Redemption price: Max. front-end load: 4.00% Issue price: Management fee: 1.25% p.a. Exit charge: 0.00% 52-week high*: 52-week low*: Performance fee: success related fee of 15%, provided that the performance of the shares exceeds 4% per half-year * redemption price TER (fiscal year 2012): % p.a. Performance Time period: 1 m 3 m 6 m 1 year 3 years 5 years since inception Performance: % 8.88% 20.85% 36.72% 57.08% % % years since inception (December 20, 2004) Feb-14 Sep-13 Apr-13 Nov-12 Jun-12 Jan-12 Aug-11 Mar-11 Oct-10 May-10 Dec-09 Jul-09 Feb-09 Sep-08 Apr-08 Nov-07 Jun-07 Jan-07 Aug-06 Mar-06 Oct-05 May-05 Dec-04 Jan-14 Oct-13 Jul-13 Apr-13 Jan-13 Oct-12 Jul-12 Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 Oct-10 Jul-10 Apr-10 Jan-10 Oct-09 Jul-09 Apr-09 Jan-09 Please note the footnotes on page 8. Page 3 of 12 FPM Funds Stockpicker Germany Small/Mid Cap

8 AS OF: December 31 st, 2013 Performance in recent 12-month-periods Risk assessment 1 year 3 years max. profit % % max. loss % % Fund manager comment 36.72% 23.55% -7.01% 28.76% 44.64% volatility % 14.70% sharpe-ratio The year 2013 brought substantial gains for the German equity market. The equities were marked by earnings stagnation and an increase in valuations. But it is often overlooked that the valuations both of the German and the other European stock markets were depressed in the last few years. The cause was the financial crisis followed by the European debt crisis and the associated fear of the euro's disintegration. This threat has receded significantly for the time being. We are confident for the upcoming year and have a certain preference for cyclicals. But given the reduced discount to the market as a whole, our positioning has become more diversified again. We also see opportunities in banks, as soon as there are signs of a shedding of bad debts. Portfolio structure Current month Previous month Communications 10.54% Communications 10.92% Consumer, Cyclicals 17.07% Consumer, Cyclicals 15.29% Consumer, Noncyclicals 5.74% Consumer, Noncyclicals 5.15% Energy 1.77% Energy 2.22% Financials 9.14% Financials 10.21% Industrials 42.78% Industrials 42.82% Technologies 12.96% Technologies 13.40% TOP 10 holdings Security DMG MORI SEIKI Leoni Reg. Takkt STO Pref. Sartorius Pref. Rheinmetall Ord. Aurubis Freenet United Internet Reg. Grenkeleasing Investment degree * in % of the fund s assets current weighting * 6.27% 5.89% 4.85% 4.53% 4.33% 4.02% 3.99% 3.91% 3.89% 3.67% 95.21% previous month * 6.05% 5.86% 2.52% 4.65% 4.04% 2.42% 2.31% 3.71% 3.68% 3.84% 86.24% Please note the footnotes on page 8. Page 4 of 12 FPM Funds Stockpicker Germany Small/Mid Cap

9 AS OF: December 31 st, 2013 FPM Funds Stockpicker Germany large Cap Equity funds Germany ISIN: LU Investment Policy The FPM Funds Stockpicker Germany Large Cap invests primarily in German equities. The objective of the investment policy of the sub-fund FPM Funds Stockpicker Germany Large Cap is to gain the greatest possible return on investments in Euro. The subfund's assets are primarily invested in shares, share certificates, convertible bonds, convertible debentures and warrant-linked bonds, participation and dividend-right certificates, warrants for securities, as well as in variable and fixed interest securities of issuers with their registered office in the Federal Republic of Germany. In addition, the subfund s assets may be invested in all other permissible assets. General Fund Information Fund category: Equity Funds Germany Investment company: FPM Funds SICAV / Luxemburg Management company: DWS Investment S.A., Luxemburg Custodian bank: State Street Bank Luxemburg Fund manager: Raik Hoffmann and Martin Wirth Fund currency: Euro Launch date: November 7 th, 2005 Distribution policy: Retaining End of fiscal year: December 31 st Fund volume in million Euro: 6.86 Suitable for saving plan: Yes Suitable for capital-building payment: Yes Permitted to trade in: Germany, Austria, Luxembourg, France DWS risk category: 3 Ratings & Awards: FERI Fund Rating 2 (B) Fund price conditions Redemption price: Max. front-end load: 4.00% Issue price: Management fee: 0.90% p.a. Exit charge: 0.00% 52-week high*: 52-week low*: Performance fee: success related fee of 15%, provided that the performance of the shares exceeds 4% per half-year * redemption price TER (fiscal year 2012): % p.a. Performance Time period: 1 m 3 m 6 m 1 year 3 years 5 years since inception Performance: % 9.56% 19.07% 23.82% 42.39% % 71.30% years since inception (November 7, 2005) Mar-14 Oct-13 May-13 Dec-12 Jul-12 Feb-12 Sep-11 Apr-11 Nov-10 Jun-10 Jan-10 Aug-09 Mar-09 Oct-08 May-08 Dec-07 Jul-07 Feb-07 Sep-06 Apr-06 Nov-05 Jan-14 Oct-13 Jul-13 Apr-13 Jan-13 Oct-12 Jul-12 Apr-12 Jan-12 Oct-11 Jul-11 Apr-11 Jan-11 Oct-10 Jul-10 Apr-10 Jan-10 Oct-09 Jul-09 Apr-09 Jan-09 Please note the footnotes on page 8. Page 5 of 12 FPM Funds Stockpicker Germany Large Cap

10 AS OF: December 31 st, 2013 Performance in recent 12-month-periods Risk assessment 1 year 3 years max. profit % 80.33% max. loss % % Fund manager comment 23.82% 25.89% -8.65% 10.91% 29.05% volatility % 14.98% sharpe-ratio The year 2013 brought substantial gains for the German equity market. The equities were marked by earnings stagnation and an increase in valuations. But it is often overlooked that the valuations both of the German and the other European stock markets were depressed in the last few years. The cause was the financial crisis followed by the European debt crisis and the associated fear of the euro's disintegration. This threat has receded significantly for the time being. We are confident for the upcoming year and have a certain preference for cyclicals. But given the reduced discount to the market as a whole, our positioning has become more diversified again. We also see opportunities in banks, as soon as there are signs of a shedding of bad debts. Portfolio structure Current month Previous month Basic Materials 20.67% Basic Materials 16.99% Communications 8.84% Communications 9.55% Consumer, Cyclicals 22.23% Consumer, Cyclicals 22.04% Consumer, Noncyclicals 8.14% Consumer, Noncyclicals 8.71% Financials 23.50% Financials 27.69% Industrials 11.21% Industrials 10.21% Technologies 5.40% Technologies 4.82% TOP 10 holdings Security Deutsche Bank Reg. HeidelbergCement Daimler Reg. Porsche Automobil Holding Pref. SAP Commerzbank Konv. BMW Ord. Lanxess ThyssenKrupp AG Freenet Investment degree * in % of the fund s assets current weighting * 7.98% 6.52% 5.79% 5.31% 4.54% 4.25% 3.99% 3.90% 3.87% 3.80% 84.07% previous month * 8.32% 5.90% 5.37% 6.60% 4.48% 7.99% 4.97% 3.58% 0.00% 4.60% 92.86% Please note the footnotes on page 8. Page 6 of 12 FPM Funds Stockpicker Germany Large Cap

11 AS OF: December 31 st, 2013 Investment philosophy "Advancement through knowledge" - this is what lies at the heart of our investment philosophy. We acquire this knowledge through intensive, personal management meetings with the companies in which we invest. This approach makes us unique in the market and forms the basis of our success. The investment philosophy of FPM AG is based on three cornerstones: We primarily invest in stocks of German companies with high potential that we have identified as undervalued. Companies are selected on the basis of our own methodical and fundamental analysis (primary research). Our assessment of companies is based on regular, face-to-face discussions between management and our fund managers. The systematic implementation of our investment philosophy offers our investors a large number of advantages. Regular management meetings allow us to acquire high quality information and gain valuable insights into the market and competitors. Our analysis are not concerned with short-term trends; instead they focus on identifying high-quality companies before they come to the market's attention. The performance of companies that have good fundamental prospects but are undervalued on the market can increase considerably. The FPM Funds are well suited for medium to long-term investment for targeted and regular asset growth for investment in capital-building payment schemes Chances price increases on the stock market related to the market, industry and company opportunity for above-average participation on performance through a valuation- and quality-oriented investment process and active stock picking Risks The prices of the assets contained in the fund determine fund price. They are subject to daily fluctuations and may also fall. Market risk: The performance of financial products depends on the performance of the capital markets, which in turn are affected by real framework conditions as well as irrational factors (sentiment, opinions and rumors). Default risk: The counterparties' partial or non-ability to fulfill their contractual payment obligations may result in losses for the investment fund. The risk of a decline in the assets of issuers cannot be eliminated even by the most careful selection of the securities. Currency risk: The value of assets invested in currencies other than the respective sub-fund currency is subject to fluctuation. Concentration risk: By a concentration of investments in particular markets or assets, the investment fund becomes particularly dependent on these few markets and assets. Increased volatility: Due to its permitted investment universe and its compositions as well as the use of derivative instruments, the investment fund is subject to markedly increased volatility. Risks in connection with derivative transactions, in particular options: Price changes in the underlying instrument can devalue an option. Options have a leverage effect that influences the investment fund markedly more than the underlying instrument. Selling options bears the risk that the investment fund experiences a loss of an indefinite amount. The unit price may at any time be lower than the purchase price at which the customer acquired the unit. The prospectus contains a detailed description of the risks involved. Please note the footnotes on page 8. Page 7 of 12 FPM Funds

12 AS OF: December 31 st, 2013 Disclaimer The information contained in this document does not constitute investment advice and is merely a brief summary of key aspects of the funds. Full details of the funds can be found in the key investor information document and the sales prospectus, supplemented in each case by the most recent audited annual report and the most recent half-year report, if this report is more recent than the most recently available annual report. These documents constitute the sole binding basis for the purchase of fund units. They are available free of charge in either electronic or printed form from FPM (FPM AG), Freiherrvom-Stein-Str. 11, Frankfurt am Main, from DWS Investment GmbH, Mainzer Landstraße , D Frankfurt am Main or from DWS Investment S. A., 2, Boulevard Konrad Adenauer, L-1115 Luxemburg. The sales prospectus contains detailed information on the risks involved. All opinions given in this product information reflect the current assessment of FPM which may change without notice. In cases where information contained in this document derives from third parties, FPM AG accepts no liability for the accuracy, completeness or appropriateness of such information, also FPM AG only uses data that it deems to be reliable. Calculation of performance is based on the time-weighted return (BVI method) and excludes initial charges. Individual costs such as fees, commissions and other charges have not been included in this presentation and would have an adverse impact on returns if they were included. Past performance is not a reliable indicator of future returns. Further information on taxation can be found in the sales prospectus. The units issued by DWS Investment S. A. under these funds may only be offered for purchase or sold in jurisdictions in which such offer or sale is permitted. The units in these funds are not allowed to be offered for purchase or sold either in the US or to or for the account of US citizens or US persons domiciled in the US. This document and the information contained therein must not be distributed in the US. The distribution and publication of this document as well as the offering or sale of the fund s units may be subject to restrictions in other jurisdictions as well. FPM Freiherr-vom-Stein-Straße 11 D Frankfurt am Main Telephone: Fax: fpm-funds@fpm-ag.de Internet: Footnotes 1 Since inception of new share classes for retail and institutional clients on December 20th, 2012 the "FPM Funds Stockpicker Germany All Cap was renamed "FPM Funds Stockpicker Germany All Cap C. 2 Rating as of ; more information at 3 Rating as of ; more information at 4 Total expense in per cent of the average fund volume of the fiscal year closed on 31 December. In accordance with the respective national practice, this ratio only includes the expenses incurred for the investment fund (without transaction costs). 5 Calculated on the basis of time-weighted return (BVI method). Front-end load was excluded. Past performance is not a reliable indicator of future returns. 6 The future trend indicator relates to each 12-month period indicated. On those days which fall on weekends or national holidays, the price from the previous day or the last available price is used, as no stock quotations are made on such days. 7 Maximum historical loss/profit that would have been possible with an investment period of one/three year(s) since inception of the fund. 8 Volatility in % is calculated on the basis of weekly (up to 3 years) or monthly data (from 3 years). (Source: Deutsche Performancemessungs- Gesellschaft für Wertpapierportfolios mbh (short: DPG)) 9 The risk-free interest rate depends on the three-month interest rate. A negative sharpe ratio has no significance. (Source: Deutsche Performancemessungs-Gesellschaft für Wertpapierportfolios mbh (short: DPG)) Please note the footnotes on page 8. Page 8 of 12 FPM Funds

13 As of: December 31 st, 2013 TOP 25 S Equity funds Europe ISIN: DE Investment Policy The investment objective of the TOP 25 S is to outperform the German Stock Index DAX as well as superior capital growth. This could mean an above-average loss risk of the assets used as well as increased creditworthiness risks. At least 51% of the value of the sub-pool of assets is invested in equities, however the actual equity exposure is changed by using derivatives. At least two thirds of these equities have to be issued by companies with their registered office in Germany, Austria or Switzerland. The selection of individual stocks is based on an active selection process. It is intended to hold an average of 25 different equities on behalf of the sub-pool of assets. General Fund information Fund category: Equity Funds Europe Investment company: FPM Deutsche Investmentaktiengesellschaft TGV Management company: DWS Investment GmbH Custodian bank: State Street Bank Germany Fund manager: Thomas Seppi, Raik Hoffmann and Martin Wirth Fund currency: Euro Launch date: September 24 th, 2008 Distribution policy: Distributing End of fiscal year: March 31 st Fund volume in million Euro: 9.07 Suitable for saving plan: Yes Suitable for capital-building payment: Yes Permitted to trade in: Germany, Austria, Spain, Luxembourg DWS risk category: 4 Fund prices Redemption price: Issue price: 52-weeks high*: 52-weeks low*: conditions Max. front-end load: Management fee: Exit charge: Performance fee: TER (fiscal year 2012/2013): 2 Dividend: 5.00% 1.75% p.a. 0.00% success-related fee of 15% provided that the performance of the shares exceeds > 4 % p.a % p.a. May 11, 2009; May 10, 2010; May 9, 2011; * redemption price Performance Time period: Performance: 3 1 m 0.20% 3 m 3.94% 6 m 9.61% 1 year 7.50% May 9, 2012 and May 10, 2013 each years -6.51% 5 years 38.51% since inception 41.67% years since inception (September 24, 2008) Dec-13 Sep-13 Jun-13 Mar-13 Dec-12 Sep-12 Jun-12 Mar-12 Dec-11 Sep-11 Jun-11 Mar-11 Dec-10 Sep-10 Jun-10 Mar-10 Dec-09 Sep-09 Jun-09 Mar-09 Dec-08 Sep-08 Jan-14 Nov-13 Sep-13 Jul-13 May-13 Mar-13 Jan-13 Nov-12 Sep-12 Jul-12 May-12 Mar-12 Jan-12 Nov-11 Sep-11 Jul-11 May-11 Mar-11 Jan-11 Please note the footnotes on page 12. Page 9 of 12 TOP 25 S

14 As of: December 31 st, 2013 Performance in recent 12-month-periods 3, % 6.22% % 19.37% 24.11% Risk assessment max. profit 5 max. loss 5 1 year 28.91% % 3 years 36.21% -8.37% Fund managers analysis volatility % 10.47% sharpe-ratio negative The year 2013 brought substantial gains for the German equity market. The equities were marked by earnings stagnation and an increase in valuations. But it is often overlooked that the valuations both of the German and the other European stock markets were depressed in the last few years. The cause was the financial crisis followed by the European debt crisis and the associated fear of the euro's disintegration. This threat has receded significantly for the time being. We are confident for the upcoming year and have a certain preference for cyclicals. But given the reduced discount to the market as a whole, our positioning has become more diversified again. We also see opportunities in banks, as soon as there are signs of a shedding of bad debts. Portfolio structure Current month Previous month Basic Materials 11.43% Basic Materials 11.57% Communications 12.86% Communications 12.47% Consumer, Cyclicals 12.10% Consumer, Cyclicals 12.20% Consumer, Noncyclicals 16.05% Consumer, Noncyclicals 15.85% Financials 15.76% Financials 15.90% Industrials 20.66% Industrials 20.54% Technologies 11.14% Technologies 11.47% TOP 10 holdings Security Freenet Bayer EADS Münchener Rückversicherungs-Gesellschaft Volkswagen Ord. Siemens Reg. Axel Springer Vink. Reg. Fraport AG Frankfurt Airport Services DMG MORI SEIKI Allianz SE Investment degree * in % of the fund s assets current weighting * 4.07% 3.95% 3.81% 3.71% 3.69% 3.63% 3.61% 3.60% 3.59% 3.59% 34.92% previous weighting * 3.90% 3.74% 3.59% 3.70% 3.54% 3.54% 3.42% 3.58% 3.50% 3.51% 86.12% Please note the footnotes on page 12. Page 10 of 12 TOP 25 S

15 As of: December 31 st, 2013 Investment philosophy The investment philosophy of FPM for the TOP 25 S is based on four cornerstones: We invest solely in stocks of German, Austrian and Swiss companies with high potential that we have identified as undervalued. Essential parts of the stock selection are direct, regular, face-to-face discussions between management and our fund managers. Our assessment of companies is based on our own methodical and fundamental analysis. In the TOP 25 S, the fundamental investment style is supplemented by clear stop-loss rules and active investment level steering, supported by the "FPM Market Indicator". The systematic implementation of our investment philosophy offers our investors a large number of advantages. This is because: Regular management meetings allow us to acquire quality information and gain valuable insights into the market and competitors. The performance of companies that have good fundamental prospects but are undervalued on the market can increase considerably. The combination with technical indicators makes historical correlations possible and finally results in active risk management. The active utilisation of derivatives enables us to also achieve profits in markets that trade sideways or down and thus benefit from fluctuations on the stock markets achieving additional return on our portfolio. The "FPM Market Indicator" enables us to detect market trends early with historical market behavior with our own indicator serving as its basis. The TOP 25 S is well suited for medium- to long-term investment for investors who want active steering of the investment level for experienced shareholders who are familiar with the opportunities and risks of volatile investments and who are in a position to temporarily bear substantial losses Chances price increases on the stock market related to the market, industry and company performance chances through a combination of a successful stock picking approach and active steering of the investment level, in markets that trade upwards, sideways or down Risks The prices of the assets contained in the fund determine fund price. They are subject to daily fluctuations and may also fall. Market risk: The performance of financial products depends on the performance of the capital markets, which in turn are affected by real framework conditions as well as irrational factors (sentiment, opinions and rumors). Default risk: The counterparties' partial or non-ability to fulfill their contractual payment obligations may result in losses for the investment fund. The risk of a decline in the assets of issuers cannot be eliminated even by the most careful selection of the securities. Currency risk: The value of assets invested in currencies other than the respective sub-fund currency is subject to fluctuations. Concentration risk: By a concentration of investments in particular markets or assets, the investment fund becomes particularly dependend on these few markets and assets. Increased volatility: Due to its permitted investment universe and its compositions as well as the use of derivative instruments, the investment fund is subject to markedly increased volatility. Risks in connection with derivative transactions, in particular options: Price changes in the underlying instrument can devalue an option. Options have a leverage effect that influences the investment fund more strongly than the underlying instrument. Selling options bears the risk that the investment fund experiences a loss of an indefinite amount. The derivatives strategy can result in a neutralising, a strengthening or a hedging positioning of the TOP 25 S on the market. The unit price may at any time be lower than the purchase price at which the customer acquired the unit. The prospectus contains a detailed description of the risks involved. Please note the footnotes on page 12. Page 11 of 12 TOP 25 S

16 As of: December 31 st, 2013 Disclaimer The information contained in this document does not constitute investment advice and is merely a brief summary of key aspects of the funds. Full details of the funds can be found in the key investor information document and the sales prospectus, supplemented in each case by the most recent audited annual report and the most recent half-year report, if this report is more recent than the most recently available annual report. These documents constitute the sole binding basis for the purchase of fund units. They are available free of charge in either electronic or printed form from FPM, Freiherr-vom-Stein- Str. 11, Frankfurt am Main and from DWS Investment GmbH, Mainzer Landstraße , D Frankfurt am Main, and provided that Luxembourg funds are involved, from DWS Investment S. A., 2, Boulevard Konrad Adenauer, L-1115 Luxembourg. The sales prospectus contains detailed information on the risks involved. All opinions given in this product information reflect the current assessment of FPM which may change without notice. In cases where information contained in this document derives from third parties, FPM Frankfurt Performance accepts no liability for the accuracy, completeness or appropriateness of such information, also FPM only uses data that it deems to be reliable. Calculation of performance is based on the time-weighted return (BVI method) and excludes initial charges. Individual costs such as fees, commissions and other charges have not been included in this presentation and would have an adverse impact on returns if they were included. Past performance is not a reliable indicator of future returns. Further information on taxation can be found in the sales prospectus. The units issued under this sub-pool of assets may only be offered for purchase or sold in jurisdictions in which such offer or sale is permitted. The units in this sub-pool of assets are not allowed to be offered for purchase or sold either in the US or to or for the account of US citizens or US persons domiciled in the US. This document and the information contained therein must not be distributed in the US. The distribution and publication of this document as well as the offering or sale of the fund s units may be subject to restrictions in other jurisdictions as well. FPM Freiherr-vom-Stein-Straße 11 D Frankfurt am Main Telefon: Fax: fpm-funds@fpm-ag.de Internet: Footnotes 1 The share value of the TOP 25 S must be greater than in the previous 5 accounting periods in order for a success-related fee to be charged. The first accounting period commences on 1 July 2013 and ends on 31 March The subsequent accounting periods commence on 1 April and end on 31 March of the following year. 2 Total expense in per cent of the average fund volume of the fiscal year closed on 31 March. In accordance with the respective national practice, this ratio only includes the expenses incurred for the investment fund (without transaction costs). 3 Calculated on the basis of time-weighted return (BVI method). Front-end load was excluded. Past performance is not a reliable indicator of future returns. 4 The future trend indicator relates to each 12-month period indicated. On those days which fall on weekends or national holidays, the price from the previous day or the last available price is used, as no stock quotations are made on such days. 5 Maximum historical loss/profit that would have been possible with an investment period of one/three year(s) since inception of the fund. 6 Volatility in % is calculated on the basis of weekly (up to 3 years) or monthly data (from 3 years). (Source: Deutsche Performancemessungs- Gesellschaft für Wertpapierportfolios mbh (short: DPG)) 7 The risk-free interest rate depends on the three-month interest rate. A negative sharpe ratio has no significance. (Source: Deutsche Performancemessungs-Gesellschaft für Wertpapierportfolios mbh (short: DPG)) Please note the footnotes on page 12. Page 12 of 12 TOP 25 S