You are on page 1of 32

s

o
s
i
v
d
FPA Crescent
Fund
A
c
i
f
i
c
a
P
FPACX*

t
rs

i
F

*Charles Schwab Ticker: FPC1Z

Third Quarter 2015


Webcast Presentation

Presented by: Contrarian Value Team

L
,

C
L

Philosophy

s
r

L
,

C
L

Seek long-term, equity-like returns with less risk than the stock market while avoiding
permanent impairment of capital

o
s
i
v
d
A
c

Absolute Return Focus


Flexible Approach
Deep Research

i
F

t
rs

a
P

i
f
i
c

Performance

Annualized returns
Standard deviation

$120,000
$100,000
$80,000

$40,000
$20,000
$0
1993

t
rs

1995

a
P
1997

1999

i
f
i
c
2001

S&P 500

10.37%
10.13%

8.79%
14.70%

7.81%
9.00%

0.53

0.26

0.31

s
r

o
s
i
v
d
A
c

Sharpe ratio

$60,000

FPA Crescent

60% S&P 500/


40% Barclays
Aggregate

2003

2005

2007

2009

2011

2013

L
,

C
L

FPACX

$90,556

S&P 500

$65,604

60% S&P/40% BA

$53,651

2015

Please refer to the next page for standardized performance.


Average Annual Total Returns as of September 30, 2015 for FPA Crescent
1 Year, -2.34%
5 Years, 8.41%
10 Years, 6.90%
* 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, 1-800-982-4372. Expense
ratio as of most recent prospectus is 1.11%. A redemption fee of 2% may apply. The Fund commenced investment operations on June 2, 1993. 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, 1996. The FPA Crescent Fund's objectives, policies,
guidelines and restrictions are, in all material respects, equivalent to those of the predecessor fund. Standard deviation is a measure of the dispersion of a set of data from its mean. Sharpe ratio
is the average return earned in excess of the risk-free rate per unit of volatility or standard deviation.

i
F

Performance
Trailing Performance (%)
As of Date: 9/30/2015

L
,

C
L

Market Cycle Performance

Inception* 20 Years

FPA Crescent
S&P 500
CPI
60% S&P500/40% BC Agg

10.37
8.79
NA
7.81

15 Years

9.75
8.14
2.22
7.43

10 Years

Annual Performance (%)

FPA Crescent
S&P 500
CPI
60% S&P500/40% BC Agg

2013

2012

6.64
13.69
0.68
10.62

21.95
32.39
1.53
17.56

10.33
16.00
1.77
11.31

3 Years

1 Year

s
r

YTD

o
s
i
v
d
A
c

10.15
3.96
2.11
4.81

2014

5 Years

i
f
i
c

6.90
6.80
1.80
6.22

8.41
13.34
1.71
9.33

8.08
12.40
0.92
8.14

-2.34
-0.61
-0.03
0.95

-4.73
-5.29
0.54
-2.62

QTR

-4.73
-6.44
-0.09
-3.39

3/25/0010/9/07

10/10/079/30/15

14.70
2.00
2.75
3.97

5.95
4.85
1.71
5.14

2011

2010

2009

2008

2007

2006

2005

2004

2003

3.02
2.11
3.03
4.69

12.04
15.06
1.44
12.13

28.37
26.46
2.81
18.40

-20.55
-37.00
-0.02
-22.06

6.84
5.49
4.11
6.22

12.43
15.79
2.52
11.12

10.83
4.91
3.34
4.00

10.21
10.88
3.34
8.30

26.15
28.68
2.04
18.48

Performance is annualized for periods exceeding 1 Year. Past performance is not a guarantee of future results. Calculated using Morningstar Direct.
Expense ratio as of the most recent prospectus is 1.11%.

a
P

*The Fund commenced investment operations on June 2, 1993. 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, 1996. The FPA Crescent Fund's objectives, policies, guidelines and restrictions are, in all material respects,
equivalent to those of the predecessor fund.

t
rs

Market Cycle Performance reflects two most recent market cycles (peak to peak) defined as a period that contains a decline of at least 20% from the previous market peak over at
least a two-month period and a rebound to establish a new peak above the previous one by S&P 500 Index.

i
F

This presentation is for informational purposes only and does not constitute an offer of securities nor the solicitation for purchase or sale of any securities.
This presentation is confidential and is not intended for public use or distribution. The information presented may not be reproduced or distributed without prior written consent of
First Pacific Advisors, LLC (FPA). Certain information contained herein has been obtained from third parties and is believed to be reliable; however, FPA assumes no
responsibility for the accuracy of the information.
Past performance is no guarantee of future results and current performance may be higher or lower than 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, 1-800-982-4372.

Flexible approach FPA Crescent risk exposure &


subsequent 2-year return
100%

s
r

90%

o
s
i
v
d
A
c

80%
70%
60%
50%
40%
30%
1996

1998

Risk
Exposure

2000

c
a

# of Quarterly
Periods

ri s

P
t

fi i

2002

2004

Avg Subsequent
2-Yr Return

2006

2008

2010

L
,

2012

C
L

2014

Risk
Exposure

# of Quarterly
Periods

Avg Subsequent
2-Yr Return

<55%

20

6.46%

<60%

30

7.98%

>65%

33

10.93%

<65%

38

9.03%

>70%

21

13.15%

<70%

50

8.55%

>75%

14

14.81%

>80%

11

15.03%

Source: Morningstar Direct. Last data point as of September 30, 2015. Past performance is no guarantee of future results.
4

5-year rolling returns by market type


30%

FPA Crescent

20%

Most recent period

0%

-10%

-20%

-30%
-30%

c
a

ri s

P
t

FPACX

-20%

S&P 500

FPACX Outperformed

s
r

o
s
i
v
d
A
c

10%

fi i

-10%

0%

10%

L
,

20%

C
L

30%

S&P 500

Down Market 5yr


average return
below 0%

Normal Market 5yr


average return
0-10%

Robust Market 5yr


average return
above 10%

9.54%

8.71%

12.12%

-1.81%

3.30%

18.37%

100% of periods

97.5% of periods

16.3% of periods

(49 of 49)

(77 of 79)

(13 of 80)

Rolling 5-year monthly returns as of September 30, 2015. Past performance is not a guarantee of future results.
Source: Morningstar Direct.
5

Active security selection drives differentiated returns

2007 to
2015
CAGR

9 Mos
YTD
2015

2014

FPACX long equity

9.05%

-7.64%

13.67%

39.62%

17.69%

6.25%

S&P 500

5.76%

-5.29%

13.69%

32.39%

16.00%

Alpha vs. S&P 500

3.29%

-2.35%

-0.02%

7.23%

S&P 500 Value

3.68%

-8.66%

12.36%

Alpha vs. S&P 500 Value

5.37%

1.02%

i
F

t
rs

a
P

2013

2012

2011

s
r

2010

2009

2008

22.30%

38.39%

-38.27%

11.47%

2.11%

15.06%

26.46%

-37.00%

5.49%

1.69%

4.14%

7.24%

11.93%

-1.27%

5.98%

31.99%

17.68%

-0.48%

15.10%

21.18%

-39.22%

1.99%

7.63%

0.01%

6.73%

7.20%

17.21%

0.95%

9.48%

i
f
i
c

o
s
i
v
d
A
c

1.31%

L
,

C
L
2007

Past performance is not a guarantee of future results.


Source: FPA and Morningstar Direct. FPACX returns are gross of fees as of September 30, 2015.
6

Focus on after-tax returns

L
,

C
L

FPA Crescents long-term approach to investing has led to low portfolio turnover and tax efficiency compared to other,
similar funds.

s
r

o
s
i
v
d
A
c

This has meant that FPA Crescents tax-adjusted Morningstar category rankings are as good or better than its
pre-tax rankings.

Pre-tax and post-tax returns with Morningstar category rankings


Period

FPA Crescent FPA Crescent


Pre-tax Return Pre-tax Rank

c
a

15-year
10-year

P
t
5-year

s
r
i
F

fi i

10.15%
6.90%
8.41%

FPA Crescent
Tax-adjusted
Return

FPA Crescent
Tax-adjusted
Rank

99%

9.13%

99%

95%

5.80%

95%

75%

7.43%

81%

As of September 30, 2015. FPA Crescent is in the Morningstar Moderate Allocation Category. Past performance is not a guarantee of future results.
Source: Morningstar Direct.
7

Q3 2015: Winners and Losers

Winners

Performance
Contribution

Percent of
Portfolio

Losers

Google

0.20%

1.52%

Oracle

Sound Holding FP

0.05%

0.37%

Joy Global

Microsoft

0.04%

3.58%

Glencore Sr. Notes (Various


Issues)

0.03%

0.36%

Energy Select Sector SPDR


Fund (Short)

0.03%

i
F

t
rs

a
P

s
r

Performance
Contribution

Percent of
Portfolio

-0.38%

4.10%

-0.37%

0.28%

Aon

-0.35%

3.25%

Citigroup

-0.26%

2.65%

United Technologies

-0.25%

2.57%

i
f
i
c

o
s
i
v
d
A
c

0.00%

L
,

C
L

Based on weighted contribution to quarterly performance of the Fund. Percentage of portfolio as of September 30, 2015.
As of September 30, 2015. 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.

Portfolio characteristics

FPACX
Q3 2015
Market Capitalization (in millions)1
Price/Earnings2
Price/Book3
Debt/Capital4
Return on Equity5

t
rs

a
P

s
r

FPACX
Average

o
s
i
v
d
A
c

$94,789

$29,100

16.9

16.7

1.6

1.7

L
,
S&P 500

$128,470
18.9
2.6

-20.9%

8.5%

52.2%

13.2%

12.8%

17.5%

i
f
i
c

C
L

Source: FPA and Mellon


For Crescent Fund since 9/30/1996, based on 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 P/E and average P/E reflect 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. Price/Book ratio is the current closing price of the stock by the latest quarters book value per share.
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.

i
F

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 http://www.fpafunds.com/crescent or by calling toll-free, 1-800-982-4372.

Geographic exposure

Domicile

o
s
i
v
d
A
c

North America
South America / Latin America
Uncategorized Americas
Western / Northern Europe
Central / Eastern Europe
Asia / Pacific
Middle East / Africa

i
f
i
c

Uncategorized Non-US

t
rs

i
F

a
P

s
r

Revenue

70.4%

43.9%

0.0%

2.3%

6.4%

25.1%

13.7%

3.9%

1.4%

-3.7%

8.2%

4.3%

7.5%

L
,

C
L

16.6%

Domicile and revenue composition for the equity positions only in the FPA Crescent Fund as of September 30, 2015. Source: Bloomberg
10

Portfolio allocation

Risk Asset

Q3 2015

s
r

Year End
2014

o
s
i
v
d
A
c

L
,

Average
Since Inception

Common stock, long

58.1%

55.5%

Common stock, short

-3.1%

-4.2%

3.4%

1.4%

12.4%

0.9%

1.4%

0.6%

0.4%

0.8%

0.3%

59.7%

54.9%

63.3%

53

51

38

Corporate debt
Mortgages
Other
Exposure, Net

c
a

No. of Equity Positions

s
r
i
F

P
t

fi i

C
L

53.2%
-4.8%

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.
11

2015 FPA Crescent portfolio activity

Risk Exposure

3/31/2015
6/30/2015
7/31/2015

i
f
i
c

8/31/2015

a
P

9/30/2015

i
F

t
rs

Source: FPA.

s
r

o
s
i
v
d
A
c

12/31/2014

54.9%

55.7%

L
,

C
L

57.6%

54.6%

55.5%

59.7%

12

2015 FPA Crescent portfolio activity

Positions exited
Purchases - % average AUM

i
F

t
rs

a
P

2015 9 mos

14

o
s
i
v
d
A
c

Positions initiated

i
f
i
c

Sales - % average AUM

s
r

Q3 2015

11.9%

20.6%

9.3%

15.6%

L
,

C
L

Source: FPA. Positions initiated and exited are for equity and high yield debt positions only. Average AUM for Q3 2015 represents the average net assets of
the fund at each month end from 6/30/2015 9/30/2015. Average AUM for 2015 9 mos represents the average net assets of the fund at each month end
from 12/31/2014 9/30/2015.
13

2015 FPA Crescent portfolio activity

L
,

C
L

Average trailing P/E of companies purchased and sold in 2015, including both positions initiated and liquidated:
P/E

Sells

i
F

t
rs

a
P

s
r

o
s
i
v
d
A
c

Buys

14.4x

19.4x

i
f
i
c

Disclaimer: P/E uses income in the denominator, even though income can be vastly different than free cash flow. We therefore use free cash flow. In
addition, trailing metrics may not be reflective of a business earnings power.
Source: Bloomberg. As of September 30, 2015. P/E ratios were calculated using the Funds average purchase or sales price divided by trailing 12 months
diluted earnings per share from continuing operations.
14

Historic P/E ratio using 10-year average earnings

45
40

Price-Earnings Ratio

35

Oct. 2, 2015
Current
Since 1881
Since 1930
Since 1950
Since 1970

P/E
24.8
16.6
17.6
19.0
19.6

10-Year UST
2.00%
4.60%
5.10%
5.83%
6.69%

o
s
i
v
d
A
c

30
25
20
15

c
a

10
5
0
1881

P
t

1894

s
r
i
F

1908

1921

L
,

18%
16%
14%
12%
10%
8%

fi i

6%

10-Year US Treasury Notes

s
r

50

C
L

4%
2%
0%

1934

1948

CAPE Price E10 Ratio

1961

1974

1988

2001

2015

Interest Rate

Source: Shiller, Robert J. Online Data Robert Shiller, www.econ.yale.edu/~shiller/data.htm, and Bloomberg. Data as of October 2, 2015. P/E or price-to-earnings is a valuation
ratio of a companys current share price compared to its per-share earnings. Past performance is no guarantee of future results.

15

Stock valuations are historically high

s
r

i
F

t
rs

a
P

o
s
i
v
d
A
c

L
,

C
L

i
f
i
c

Source: http://www.advisorperspectives.com/dshort/updates/PE-Ratios-and-Market-Valuation.php. As of October 1, 2015.

16

US Treasury yields

s
r

16%

o
s
i
v
d
A
c

14%
12%
10%
8%
6%
4%
2%
0%

i
F

t
rs

a
P

i
f
i
c

3-Month Treasury Yield

L
,

C
L

10-Year Treasury Yield

Source: Federal Reserve Bank of St. Louis. Data from January 4, 1982 October 27, 2015.
17

Flexible approach opportunistic high yield exposure

L
,

Bank of America Merrill Lynch US High Yield Master II Option-Adjusted Spread

s
r

High Yield Option-Adjusted Spread

18%
16%
14%
12%
10%
8%

c
a

6%
4%

P
t

2%

fi i

s
r
i
F

30%

25%

20%

15%

10%

5%

0%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
% of Assets in High Yield

35%

% of Assets in High Yield

o
s
i
v
d
A
c

20%

C
L

0%

High Yield Option-Adjusted Spread

Source: Federal Reserve Bank of St. Louis, September 30, 2015.


18

High yield index spreads

s
r

2,000
1,800

o
s
i
v
d
A
c

1,600
1,400
1,200
1,000
800
600
400
200
0

i
F

t
rs

a
P

i
f
i
c

L
,

C
L

Average: 579 bps

U.S. Corporate High Yield - Spread over Treasuries

Index

iShares iBoxx $ High Yield Corporate Bond ETF

9 Mos
YTD 2015
-4.03%

Source: Barclays and Morningstar. Graph represents the Barclays U.S. Corporate High Yield Index spread relative to U.S. Treasuries from 8/15/2000 9/30/2015.
19

High yield index spreads and energy sub-component

s
r

2,000
1,800

o
s
i
v
d
A
c

1,600
1,400
1,200
1,000
800
600
400
200
0

t
rs

a
P

i
f
i
c

U.S. Corporate High Yield - Spread over Treasuries

i
F

L
,

C
L

High Yield Energy - Spread over Treasuries

Source: Barclays. Graph represents the Barclays U.S. Corporate High Yield Index and its energy sub-component spreads over U.S. Treasuries from
8/15/2000 9/30/2015.
20

US primary dealers holdings of corporate debt

s
r

i
F

t
rs

a
P

o
s
i
v
d
A
c

L
,

C
L

i
f
i
c

US primary dealers holdings of corporate debt securities have declined by over 80% since peaking in October 2007. Note: The data are split into two time
periods (July 2001 March 2013 and April 2013 Now) due to changes in data structure. Source: New York Fed, CLSA.
21

Compounders: The worlds great businesses

L
,

We think of Compounders as infinite duration bonds with rising coupons


We think of long-term returns on compounders equal to:

o
s
i
v
d
A
c

s
r

C
L

Owner earnings* + Long-term organic growth in owner earnings


= Long-term return to owner before capital allocation

a
P

i
f
i
c

Current Portfolio Examples: Oracle, Aon, Thermo Fisher, United Technologies

i
F

t
rs

*Free cash flow after investment required to sustain competitive position and pursue organic growth

This example is provided to assist in understanding the research used by the Advisor. It is not meant to be construed as a prediction of the future
return of this security. 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.
22

United Technologies (UTX) a Compounder

s
r

Leading Franchises

a
P

o
s
i
v
d
A
c

L
,

C
L

i
f
i
c

Ubiquitous, necessary businesses in attractive markets. Sustainable, long-term business prospects for Otis, Carrier and Pratt.
Diversified by end market, product, cycle, technology and geography.

t
rs

Compelling Economics

ROE>20%. ROTE>100%. Return on incremental capital >20%.

i
F

Fort Knox Balance Sheet

Debt less than 1.5x ebitda A rated


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. As of 9/30/2015, United Technologies represented 2.57% of Crescent Funds total net assets.
Source: Company reports.
23

UTX - Buttressed by long-term mega trends

s
r

t
rs

a
P

o
s
i
v
d
A
c

L
,

C
L

i
f
i
c

Bigger and more profitable 5 and 10 years from now

i
F

FPA expects UTXs businesses to grow on back of long-term macro drivers, resulting in an attractive 10%+ long-term
owners return (FCF + growth)
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. As of 9/30/2015, United Technologies represented 2.57% of Crescent Funds total net assets.
Source: Company reports.
24

UTX - Grows and throws

s
r

Shareholder Focus

a
P

o
s
i
v
d
A
c

L
,

C
L

i
f
i
c

UTX business grows and throws FCF we expect continued shareholder friendly use of FCF and balance sheet consistent
with company history and reputation of new CEO Greg Hayes
Compelling Valuation

t
rs

Net of Sikorsky proceeds, 11-13x 2016 earnings power


7-9% FCF yield in blue chip collection of business, growing 3-6% (on average over time depending on economy)
10-15% expected owner return with limited fundamental risk and management team pursuing shareholder friendly capital
allocation

i
F

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. As of 9/30/2015, United Technologies represented 2.57% of Crescent Funds total net assets.
Source: Company reports.
25

s
r

Q&A

t
rs

i
F

a
P

For Institutional Use Only/Not for Public Use

i
f
i
c

o
s
i
v
d
A
c

L
,

C
L

Market cycle returns


3/25/2000 10/9/2007
$18,000

$30,000
FPACX

S&P 500

L
,

10/10/2007 9/30/2015
Russell 2500

FPACX

s
r

S&P 500

$16,000

o
s
i
v
d
A
c

$25,000

$14,000

$20,000

$12,000
$10,000

$15,000

MSCI ACWI

C
L

$8,000

$10,000

$6,000

$5,000

a
P

i
f
i
c

Annualized
Return

FPA Crescent Fund


(Average liquidity = 29.50%)1

t
rs

S&P 500 Index

i
F

Russell 2500 Index

60% S&P 500 / 40% BC Agg.

$4,000

Max
Drawdown

Annualized
Return

Max
Drawdown

14.70%

-10.94%

FPA Crescent Fund


(Average liquidity = 31.30%)1

5.95%

-28.84%

2.00%

-44.73%

S&P 500 Index

4.85%

-50.95%

8.08%

-27.27%

MSCI ACWI

0.93%

-54.92%

3.97%

-22.82%

60% S&P 500 / 40% BC Agg.

5.14%

-32.54%

Market Cycle Performance reflects two most recent market cycles (peak to peak) defined as a period that contains a decline of at least 20% from the previous market peak over at least a twomonth period and a rebound to establish a new peak above the previous one by S&P 500 Index.
1 We

make a distinction between cash and liquidity, although we sometimes use them interchangeably. Cash includes the cash received from securities sold short and, as a result, can appear
to overstate the cash balance. Therefore, we believe liquidity, which nets that out, is the more appropriate measure. Past performance is no guarantee of future result.

27

Downside Capture - less risk over the long-term

L
,

C
L

We believe our flexible approach greatly enhances the likelihood that we will deliver an equity-like return with less
risk over the long-term. (FPA Crescent Policy Statement)

s
r

Long-term will generally include bear markets (20% declines) and other large corrections.

o
s
i
v
d
A
c

We have successfully protected capital better than the S&P 500 during large drawdowns:

Ten largest S&P 500 drawdowns since FPA Crescents 1993 inception
Drawdown
within the
following period
2007 2009
1999 2002
2011
1998
2010

a
P

2002 2003

t
rs

2015
1994

i
F

2012

1996 1997

S&P 500

FPA Crescent

FPA Crescent
Downside Capture
as % of S&P 500

-50.95%

-28.84%

57%

-44.73%

-20.00%

45%

-16.26%

-11.58%

71%

-15.37%

-14.80%

96%

-12.80%

-5.98%

47%

-9.72%

-4.33%

45%

-8.36%

-6.29%

75%

-6.96%

-3.87%

56%

-6.60%

-5.36%

81%

-5.60%

-3.04%

54%

i
f
i
c

Average

63%

As of September 30, 2015. Past performance is not a guarantee of future results.


Source: Morningstar Direct.
28

2015 index comparison 9 mos YTD 2015


Index

1H 2015

Q3 2015

9 Mos
YTD 2015

MSCI USA Momentum


Russell 1000 Growth
MSCI ACWI Growth
FPA Crescent
Russell 1000
MSCI EAFE
S&P 500
Russell 2000 Growth
MSCI World
MSCI ACWI
Russell 2000
MSCI USA Value
Russell 1000 Value
MSCI ACWI Value
Russell 2000 Value
MSCI EM

5.62%
3.96%
4.83%
0.00%
1.71%
5.52%
1.23%
8.74%
2.63%
2.66%
4.75%
-1.52%
-0.61%
0.45%
0.76%
2.95%

-4.42%
-5.29%
-8.59%
-4.73%
-6.83%
-10.23%
-6.44%
-13.06%
-8.45%
-9.45%
-11.92%
-7.25%
-8.39%
-10.33%
-10.73%
-17.90%

0.95%
-1.54%
-4.17%
-4.73%
-5.24%
-5.28%
-5.29%
-5.47%
-6.04%
-7.04%
-7.73%
-8.66%
-8.96%
-9.92%
-10.06%
-15.47%

5.79%
-0.23%
6.02%

-7.84%
-9.18%
1.34%

-2.55%
-9.40%
6.84%

0.23%
-5.79%
-1.23%
-2.66%

4.45%
3.11%
1.71%
4.72%

4.67%
-2.18%
0.56%
2.31%

a
P

Growth index average


Value index average
Growth vs Value

t
rs

FPACX vs.
Value index average
Growth index average
S&P 500
MSCI ACWI

i
F

o
s
i
v
d
A
c

s
r

i
f
i
c

L
,

C
L

Growth
Value

As of June 30, 2015 and September 30, 2015. Past performance is not a guarantee of future results.
Source: Morningstar Direct. All index performance numbers are in USD with dividends reinvested.
29

FPA Crescent holdings as of September 30, 2015


Consumer Discretionary
Genting Malaysia Berhad
Interpublic Group of Companies
Naspers Limited N Shares
WPP PLC

4.88%
0.35%
0.95%
2.25%
1.33%

Consumer Staples
Anheuser-Busch Inbev SA/NV ADR
Carlsberg A/S B
CVS Caremark
Henkel AG & Co. KGAA
Orkla ASA
Unilever N.V.
Walgreens Boots Alliance Inc.

4.93%
0.67%
1.03%
0.27%
0.62%
0.56%
0.95%
0.83%

Energy
Bennu Oil & Gas Series A
Bennu Oil & Gas Series B
Canadian Natural Resources Limited
Gazprom OAO - ADR
Halliburton Company
Lukoil OAO - ADR
Occidental Petroleum
Rosneft Oil Company Reg S GDR
Surgutneftegas-Preference

2.50%
0.00%
0.00%
0.37%
0.28%
0.20%
0.27%
1.13%
0.12%
0.13%

Financials
Alleghany Corporation
American Express Company
American International Group, Inc.
Aon
Bank of America Corporation
CIT Group
Citigroup
Groupe Bruxelles Lambert S.A.
Sberbank of Russia Preference
Sberbank of Russia - ADR

i
F

t
rs

Health Care
Express Scripts
Thermo Fisher Scientific Inc.

a
P

Industrials
Esterline Technologies Corporation
General Electric Co.
Jardine Matheson Holdings Limited
Jardine Strategic Holdings Limited
Joy Global Inc.
Meggitt PLC
United Technologies Corporation

1.79%
0.59%
1.20%

16.20%
1.15%
0.27%
2.09%
0.78%
0.74%
3.58%
4.10%
0.81%
2.14%
0.54%

Materials
Alcoa Inc.
MMC Norilsk Nickel OJSC - ADR
Owens-Illinois

3.53%
2.21%
0.35%
0.97%

Telecommunication Services
Vodafone Group Plc - ADR

0.20%
0.20%

Other
Undisclosed

3.04%
3.04%

Common stocks - short


Limited Partnerships
Sound Holdings FP
U.S. Farming Realty Trust I & II

L
,

C
L

Corporate Bonds & Notes


ATP Oil & Gas Corporation
Bombardier
California Resources Corporation
Consol Energy
Glencore (Various issues)
iStar Financial Inc.
Navistar International Corporation
RELP (4-11)
Ship Loan Participation (Northern Shipping)
Springleaf Financial Services
Walter Investment Management Corporation

3.40%
0.00%
0.37%
0.19%
0.37%
0.36%
0.13%
0.72%
0.39%
0.47%
0.17%
0.23%

Mortgages
Stanwich Mortgage Loan Trust (Various
issues)
Sunset Mortgage Loan Company

0.87%

Derivatives/futures

0.15%

s
r

o
s
i
v
d
A
c

Information Technology
Analog Devices, Inc.
Arris Group, Inc.
Cisco Systems
Google Inc. Class A
Google Inc. Class C
Microsoft
Oracle Corporation
Qualcomm Incorporated
TE Connectivity
Yahoo

i
f
i
c

13.28%
0.70%
0.26%
2.50%
3.25%
1.50%
1.07%
2.65%
1.11%
0.10%
0.14%

7.43%
1.05%
1.48%
0.32%
0.29%
0.28%
1.44%
2.57%

0.20%
0.67%

Cash and equivalents (net of liabilities)

40.27%

U.S. government and agencies

36.30%

Commercial paper, money market

3.97%

Total net assets

100%

-3.13%
0.66%
0.37%
0.29%

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.
30

Disclaimer
These slides are intended as supplemental material to the 3rd Quarter 2015 FPA Crescent audio presentation that is posted on our website fpafunds.com.

L
,

C
L

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, 2015 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.

s
r

o
s
i
v
d
A
c

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, 1-800-982-4372.

You should consider the Funds investment objectives, risks, and charges and expenses carefully before you invest. The Prospectus
details the Fund's objective and policies 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 www.fpafunds.com, by email at
crm@fpafunds.com, toll-free by calling 1-800-982-4372 or by contacting the Fund in writing.

i
f
i
c

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. The Consumer Price Index (CPI) is an unmanaged index representing the rate of the inflation of the U.S. consumer prices as determined by the
U.S. Department of Labor Statistics. There can be no guarantee that the CPI or other indexes will reflect the exact level of inflation at any given time. 60% S&P500/40% Barclays Aggregate Index
is a hypothetical combination of unmanaged indices comprised of 60% S&P 500 Index and 40% Barclays Aggregate Index, the Fund's neutral mix of 60% stocks and 40% bonds.

a
P

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.

t
rs

Interest rate risk is when interest rates go up, the value of fixed income securities, such as bonds, typically go down and investors may lose principal value. Credit risk is the risk of loss of principal
due to the issuers failure to repay a loan. Generally, the lower the quality rating of a security, the greater the risk that the issuer will fail to pay interest fully and return principal in a timely manner. If
an issuer defaults the security may lose some or all of its value.

i
F

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 http://fpafunds.com/docs/funf-holdings/2015-09-crescent---excluding-cusip-and-sedol.pdf?sfvrsn=2
The FPA Funds are distributed by UMB Distribution Services, LLC, 235 W. Galena Street, Milwaukee, WI, 53212.

31

You might also like