First Pacific Advisors, LLC

Transcription

1 *Charles Schwab Ticker: FPC1Z FPA Crescent Fund FPACX* Third Quarter 2013 Webcast Presentation Presented by: Contrarian Value Team

2 Philosophy We endeavor to provide, over the long-term, an equity-like return with less risk than the stock market while avoiding permanent impairment of capital. We seek to identify absolute value opportunities across the capital structure. These investments typically include common and preferred stock, convertible securities, corporate, high yield, and government debt. Targeted short selling is used reduce specific risk, and as a source of return. 1

3 Fund overview - Hypothetical growth of $10,000 Calculated using Morningstar Direct June 2, 1993 through September 30, 2013 FPA Crescent S&P 500 Annualized Returns* 11.02% 8.76% Standard Deviation 10.43% 15.09% Sharpe Ratio Crescent S&P 500 $ 83,728 $ 55,109 Average Annual Total Returns as of September 30, 2013 for FPA Crescent 1 Year, 16.75% 5 Years, 9.46% 10 Years, 8.90% * Source: Morningstar. Source: Morningstar. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. The return shown is at net asset value (NAV) and does not reflect the deduction of the sales charge, which if reflected, would reduce the performance shown. Please refer to the back of the presentation for full disclosure information. Total return calculations are based on a $10,000 investment. This data represents past performance and investors should understand that investment returns and principal values fluctuate, so that when you redeem your investment it may be worth more or less than its original cost. Current month-end performance data may be obtained by calling toll-free, Expense ratio as of most recent prospectus is 1.26%. A redemption fee of 2% may apply. The Fund commenced investment operations on June 2, The performance shown for periods prior to March 1, 1996 reflects the historical performance of a predecessor fund. FPA assumed control of the predecessor fund on March 1, The FPA Crescent Fund's objectives, policies, guidelines and restrictions are, in all material respects, equivalent to those of the predecessor fund. 2

4 Performance statistics as of September 30, 2013 FPA Crescent S&P 500 Quarter 3.78% 5.24% Calendar 14.55% 19.79% 1 Year -Trailing 16.75% 19.34% 3 Years - Trailing 11.46% 16.27% 5 Years - Trailing 9.46% 10.02% 10 Years - Trailing 8.90% 7.57% 15 Years - Trailing 9.86% 5.33% From Inception* 11.02% 8.76% *Inception date is June 2, Returns 1 year or greater are annualized. Returns are calculated at net asset value after all fees and expenses. As of the most recent prospectus, the expense ratio is 1.26%. A redemption fee of 2% may apply. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. This data represents past performance and investors should understand that investment returns and principal values fluctuate, so that when you redeem your investment it may be worth more or less than its original cost. Current month-end performance data may be obtained by calling toll-free, The Fund commenced investment operations on June 2, The performance shown for periods prior to March 1, 1996 reflects the historical performance of a predecessor fund. FPA assumed control of the predecessor fund on March 1, The FPA Crescent Fund's objectives, policies, guidelines and restrictions are, in all material respects, equivalent to those of the predecessor fund. 3

5 Investment Team Andrew August Ravi R. Mehra Investment Committee Mark Landecker Managing Director Portfolio Manager Gregory M. Crouch Steven Romick Managing Partner Portfolio Manager Gregory R. Nathan Brian A. Selmo Managing Director Portfolio Manager Director of Research Sean M. Korduner Brandon G. Stranzl Christopher B. Lozano 4

6 FPA Crescent winners and losers for Q Winners Pct. of Portfolio* Performance Contribution* Losers Pct. of Portfolio* Performance Contribution* Aon Plc 3.29% 0.51% Orkla ASA 1.17% -0.16% Wpp Plc 1.48% 0.28% Hewlett Packard Company 0.44% -0.09% Thermo Fisher 2.41% 0.22% Cisco Systems 1.71% -0.05% Omnicare 0.28% 0.22% Microsoft 3.54% -0.05% Interpublic Group 1.26% 0.21% Intel 0.93% -0.05% Based on weighted contribution to quarterly performance of the Fund. *As of September 30, Portfolio composition will change due to ongoing management of the Fund. References to specific securities or sectors should not be construed as recommendations by the Fund, its Advisor or Distributor. The discussions of Fund investments represent the views of the Fund's managers at the time of each report and are subject to change without notice. These views may not be relied upon as investment advice or as an indication of trading intent on behalf of any First Pacific Advisors portfolio. Security examples featured are samples for presentation purposes and are intended to illustrate our investment philosophy and its application. It should not be assumed that most recommendations made in the future will be profitable or will equal the performance of the securities. Past performance is not a guarantee of future results. Please refer to the back of the presentation for full disclosure information. 5

7 FPA Crescent portfolio characteristics Source: FPA and Mellon 1 For Crescent Fund since 9/30/1996, based one earliest data. Market capitalization is the value of a corporation as determined by the market price of its issued and outstanding common stock. It is calculated by multiplying the number of outstanding shares by the current market price of a share. 2 Average P/E for the trailing 12 months, since 3/31/1999, based on earliest data. Price/Earnings ratio (P/E) is the price of a stock divided by its earnings per share. 3 Average since 9/30/1996,based on earliest data. 4 Average since 12/31/1997, based on earliest data. Debt/Total Capital for a fund's underlying stock holdings is calculated by dividing each security's long-term debt by its total capitalization (the sum of common equity plus preferred equity and long-term debt) and is a measure of the company's financial leverage. 5 Average since 3/31/1999, based on earliest data. Return on Equity is the amount of profit computed by dividing net income before taxes less preferred dividends by the value of stockholders equity. September 30, 2013 FPA Crescent Fund Average S&P 500 Market Capitalization (in millions) 1 $82,737 $21,409 $107,660 Price/Earnings Price/Book Debt/Capital % 11.6% 49.8% Return on Equity % 12.7% 17.8% Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown. This data represents past performance and investors should understand that investment returns and principal values fluctuate, so that when you redeem your investment it may be worth more or less than its original cost. Current month-end performance data may be obtained via or by calling toll-free,

8 FPA Crescent allocations as of September 30, 2013 Risk Asset Exposure* Common stock, long 54.2% Common stock, short -3.2% Corporate debt, long 1.1% Corporate debt, short -0.1% Mortgages (whole loans) 0.6% Other 1.4% Exposure, Net 54.0% *Portfolio composition will change due to ongoing management of the Fund. References to specific securities or sectors should not be construed as recommendations by the Fund, its Advisor or Distributor. The discussions of Fund investments represent the views of the Fund's managers at the time of each report and are subject to change without notice. These views may not be relied upon as investment advice or as an indication of trading intent on behalf of any First Pacific Advisors portfolio. Security examples featured are samples for presentation purposes and are intended to illustrate our investment philosophy and its application. It should not be assumed that most recommendations made in the future will be profitable or will equal the performance of the securities. 7

9 Total return decomposition over the past year, by region Note: ACWI is the All Country World Index. DM is the Deutsche Mark. SPX is the S&P 500 Index. TOPIX is the Tokyo Stock Price Index, EM stands for Emerging Markets. US, Japan and EM returns are in USD; European and Japanese returns are local. Sources: MSCI, Datastream, Morgan Stanley Research 8

10 Historic P/E ratio 10-year average earnings Price-Earnings Ratio Oct. 3, 2013 P/E 10-year UST Current: % Avg. Since: % % % % Source: Shiller, Robert J. Online Data Robert Shiller, econ.yale.edu/~shiller/data.htm, and Bloomberg. Data as of October 3, P/E or price-to-earnings is a valuation ratio of a company s current share price compared to its per-share earnings Year U.S. Treasury Notes 9

11 Question & Answer Session

12 Disclaimer These slides are intended as supplemental material to the 3rd Quarter 2013 FPA Crescent audio presentation that is posted on our website fpafunds.com. We do want to make sure you understand that the views expressed on these slides and in the accompanying audio presentation are as of today, October 29, 2013, and are subject to change based on market and other conditions. These views may differ from other portfolio managers and analysts of the firm as a whole, and are not intended to be a forecast of future events, a guarantee of future results or investment advice. Any mention of individual securities or sectors should not be construed as a recommendation to purchase or sell such securities, and any information provided is not a sufficient basis upon which to make an investment decision. The information provided does not constitute, and should not be construed as, an offer or solicitation with respect to any securities, products or services discussed. Past performance is not a guarantee of future results. This data represents past performance and investors should understand that investment returns and principal values fluctuate, so that when you redeem your investment it may be worth more or less than its original cost. Performance has been calculated on a total return basis, which combines principal and dividend income changes for the periods shown. Principal changes are based on the difference between the beginning and closing net asset values for the period and assume reinvestment of all dividends and distributions paid. All applicable expenses such as advisory fees have been included in calculating performance. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the security examples discussed. Current month-end performance data may be obtained by calling toll-free, You should consider the Fund s investment objectives, risks, and charges and expenses carefully before you invest. The Prospectus details the Fund's objective and policies, sales charges, and other matters of interest to the prospective investor. Please read this Prospectus carefully before investing. The Prospectus may be obtained by visiting the website at by at crm@fpafunds.com, toll-free by calling or by contacting the Fund in writing. Statistics have been obtained from sources believed to be reliable, but the accuracy and completeness cannot be guaranteed. The Standard & Poor's 500 Stock Index (S&P 500) is a capitalization-weighted index which covers industrial, utility, transportation and financial service companies, and represents approximately 75% of the New York Stock Exchange (NYSE) capitalization and 30% of NYSE issues. This index is considered a measure of large capitalization stock performance. The index does not reflect any commissions or fees which would be incurred by an investor purchasing the stocks it represents. Investments in mutual funds carry risks and investors may lose principal value. Stock markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. The Fund may purchase foreign securities, including American Depository Receipts (ADRs) and other depository receipts, which are subject to interest rate, currency exchange rate, economic and political risks; this may be enhanced when investing in emerging markets. Small and mid cap stocks involve greater risks and they can fluctuate in price more than larger company stocks. Short-selling involves increased risks and transaction costs. You risk paying more for a security than you received from its sale. The return of principal in a bond investment is not guaranteed. Bonds have issuer, interest rate, inflation and credit risks. Lower rated bonds, callable bonds and other types of debt obligations involve greater risks. Mortgage-backed securities and asset-backed securities are subject to prepayment risk and the risk of default on the underlying mortgages or other assets. The portfolio holdings as the most recent quarter end may be obtained at The FPA Funds are distributed by UMB Distribution Services, LLC, 803 W. Michigan Street, Milwaukee, WI,

13 11400 West Olympic Blvd. Suite 1200 Los Angeles, CA Contact : crm@fpafunds.com 12