MONTHLY REPORT. fpm FUNDS

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1 MONTHLY REPORT fpm FUNDS Investments In GERMAN EQUITIES

2 CURRENT ANALYSIS July, after getting off to a confident start and bringing a new high for the DAX in mid-month, later witnessed a sharp fall in prices. The blue-chip index itself was not all that hard-hit, but at the level of individual stocks it was a different story. Particularly steep losses were seen in shares that had previously advanced strongly and for which expectations and valuations were correspondingly quite high. Other casualties of the bloodletting, after already significantly underperforming in the first half of the year, were financial services providers, such as banks and insurance companies. They were affected by the fears over the quality of some assets, including concerns related to the crisis in the US market for subprime mortgages. With the evident problems already having led to marked reductions in the prices of these assets (which had been regarded until the last as pretty safe) and to corresponding increases in risk premiums, investors may well wonder who else will end up feeling the direct and indirect consequences. More on that below. Some of the worst performers were shares of companies that missed expectations regarding profitability and/or other metrics; their share prices plummeted spectacularly in some cases. Fortunately, this was mainly restricted to a relatively few mid- and small-caps. It once more became clear that there is no substitute for a sustained strong business model and that sensitivity to a share s valuation is likewise supremely important to the success of an investment. On the widespread jitters in financial markets: The good news is that, this time, the stock market is not where the problems are originating. But this does not mean that equities are spared the shock waves spreading from other segments of the financial markets. This is immediately apparent in the valuation of companies whose operating business is assumed to be directly or indirectly affected. In our view, the central problem is not with the US real estate market alone, but with the long-standing oversupply of liquidity in the financial system. In the past several years this glut has led to persistent unjustifiably high valuations of risky investments. Owing to the easy availability of lowcost (debt) capital, almost no risk premiums were paid any more compared to government bonds. What investors focused on was no longer the risk to the lasting value of an asset but volatility, i.e., the price swings to which many investors no longer wanted to be exposed. As it is in the nature of equity markets that this volatility cannot be avoided, great enthusiasm developed for investment products that do not fluctuate in price because they, in some cases, are not priced daily and sometimes are even priced based on the ratings assigned by the product vendors themselves. By comparison, the value of the assets ultimately invested in was not considered all that important. As long as the prices of the underlying assets were rising (which was a lengthy period), this calculus worked nicely. Since this is evidently no longer true for US properties, the first problems surfaced in the American market. The crucial question, and one that can probably only be answered several quarters from now, is whether collateral valuations and especially the risk premiums demanded for other asset classes were not also a little too optimistic. We think: For instance, when financial investors regularly pay prices for corporate acquisitions significantly above the prebid stock market prices, it is at least reasonable to suspect that the transactions overvalue the acquisition targets. Of course, this was not much of a concern for the financial investors, as the purchases were usually financed entirely from debt and the valuation risks were thus passed through to others (sometimes along with a welcome advance distribution from future cash flows). Foreseeably, when borrowing terms deteriorate (with rising credit spreads/interest rates), the one or the other such construction will tend to prove rather flimsy. In particular, the question is whether investors that financed such transactions paid enough attention to the risks. Time will tell. As to our own area of activity, the stock market: There is much to indicate that of all asset classes, equities will continue to Awards: Morningstar Rating :

3 CURRENT ANALYSIS generate strongly outperforming returns. Few segments of the equity market have seen excessive run-ups in prices in recent years. On the whole, valuations are plausible, and in some cases still low. Also and importantly, most companies balance sheets are in very good shape, as are their earnings. In the past few years companies have been managed with earning oriented; high-risk takeovers and expansion into non-core businesses have been rare. This now underpins a durable resilience. Only in some cyclical sectors but also for banks and insurers do we see uncertainties as to the longevity of the high earnings. We believe this factor is already priced into the valuations of banks and insurance companies, as is also shown by their very mediocre performance this year to date. Just when this undervaluation will resolve itself is impossible to say. A good opportunity for this to happen will be as soon as an end to the present difficulties comes into view. We believe that problems of the kind faced by IKB are not given in our own positions, or not at a remotely comparable volume. All such financial services companies in our portfolios have regularly reported their exacting risk policies (policies whose standards had sometimes been dismissed as overly stringent). On the other hand, we won t rule out that our competitors may include companies and investors that could be affected. We shall see in the months ahead. It is worth noting that increasingly in the last several years, banks have not held risks on their own books but passed them on to all manner of other investors, as touched upon above. The more aggressive these investors were and the lower their ability to absorb risk, the more readily the impact may spread to other asset classes. This in turn could hurt the German stock market, too. The rule in a liquidity crunch is that all asset classes are suddenly correlated. It also must be kept in mind that prices are set by the marginal buyer and seller, not by fair value, a fact that is well known to cause problems when liquidity is in short supply. In the long term, those investors will benefit from it who possess a measure of liquidity as well as patience, good nerves and the ability to value assets. We thus feel comfortable with the holdings of our funds. Should it all prove to be merely a storm in a tea cup which is not too likely in view of the latest reports we do not think an overly aggressive stance is advisable. Germany s DAX index of leading shares is still as high as it was in May 2007 at an altitude that, just a year ago, most investors could not imagine it reaching. This is all the more significant as interest rates worldwide have since then been rising, which in theory should have weighed on stock markets. A slightly more cautious investment strategy will thus probably not mean having to miss out on substantial opportunities. To put it all together: Currently we favour an above-average cash position and remain overweighted in stable equities with a relatively boring but fairly safe earnings outlook. We regard these issues as still significantly undervalued. Should further market turbulence be coming, we can weather it well. Should there not be, we will normally achieve a satisfactory performance with this strategy. Yours sincerely, Martin Wirth

4 Fr ankfurt Performance Management AG Date: July 31, 2007 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 % % % % % % % % % % Hist. Volatility 90 days Source Volatility: Bloomberg FPM Funds CDAX 13.54% 15.81% Investment Style Market Caps Sector weightings Growth 58.79% Value 39.76% Liquidity 1.27% Big Caps 55.16% Technology 8.25% Industrial 12.89% Mid Caps 26.21% Financial 36.06% Small Caps 17.36% Liquidity 1.27% Liquidity 1.27% Utilities 00.96% Basic Materials1.05% Communications 6.54% Consumer cyclical 18.10% Consumer non cyclical 10.56% Energy 4.32% Top 10 holdings:* Air Berlin Allianz SE_REG Bayerische Hypo-u. Vereinsb. DaimlerChrysler Deutsche Bank AG Münchener Rück AG QSC Sartorius Vz. STRATEC Biomedic. Sys. Tele Atlas * in alphabetical order

5 Fr ankfurt Performance Management AG Date: July 31, 2007 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 successrelated fee) 1.30 % 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 % % % % % % % % % % % % % % % % % % % % Hist. Volatility 90 days Source Volatility: Bloomberg FPM Funds TECDAX MDAX SDAX 10.39% 18.77% 16.31% 14.01% Investment Style Market Caps Sector weightings Growth 84.23% Small Caps 82.07% Big Caps 00 % Technology 51.57% Consumer cyclical 9.24% Industrial 22.53% Top 5 holdings:* 10TACLE Studios AG Computer Links AG SAF AG Software AG Wirecard AG Value 25.80% Mid Cap 27.96% Financial 5.43% Communications 6.81% Liquidity % Liquidity % Liquidity % Consumer non cycl % * in alphabetical order

6 Fr ankfurt Performance Management AG Date: July 31, 2007 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) 0.95 % 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 % % % % % % % % % % Hist. Volatility 90 days Source Volatility: Bloomberg FPM Funds DAX 12.21% 16.31% Investment Style Market Caps Sector weightings Value 53.02% Big Caps 63.68% Industrial 16.22% Technology 14.60% Utilities 04.20% Communications 4.39% Top 5 holdings:* Allianz Bayerische Hypo-u. Vereinsb. Deutsche Bank AG Münchener Rück AG Tele Atlas Liquidity 9.30% Growth 37.68% Mid Caps 27.02% Liquidity 9.30% Financial 31.69% Liquidity 9.30% Consumer cyclical 15.56% Consumer non cyclical 4.03% * in alphabetical order

7 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: info2@fpm-ag.de Web: