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FPA Crescent Fund FPACX* Fourth Quarter 2015 Webcast Presentation Presented by: Steven Romick, Mark Landecker, and

FPA Crescent Fund

FPACX*

Fourth Quarter 2015

Webcast Presentation

Presented by: Steven Romick, Mark Landecker, and Brian Selmo

*Charles Schwab Ticker: FPC1Z

FPA Crescent Fund FPACX* Fourth Quarter 2015 Webcast Presentation Presented by: Steven Romick, Mark Landecker, and

Philosophy

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

permanent impairment of capital

  • Absolute Return Focus

  • Flexible Approach

  • Deep Research

Performance

 

60% S&P 500/

FPA Crescent

S&P 500

40% Barclays

Aggregate

Annualized returns Standard deviation Sharpe ratio 10.39% 9.01% 7.91% 10.12% 14.71% 9.00% 0.53 0.27 0.32 $120,000
Annualized returns
Standard deviation
Sharpe ratio
10.39%
9.01%
7.91%
10.12%
14.71%
9.00%
0.53
0.27
0.32
$120,000
$100,000
FPACX
$93,096
$80,000
S&P 500
$70,224
$60,000
60% S&P/40% BA
$55,804
$40,000
$20,000
$0
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
Please refer to the next page for standardized performance.
Average Annual Total Returns as of December 31, 2015 for FPA Crescent
1 Year, -2.06%
5 Years, 7.68%
10 Years, 7.11%
* 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.

Performance

Trailing Performance (%)

   

Market Cycle Performance

 

3/25/00-

10/10/07-

As of Date: 12/31/2015

Inception*

20 Years

15 Years

10 Years

5 Years

3 Years

1 Year

YTD

QTR

10/9/07

12/31/15

FPA Crescent

10.39

 
  • 9.78 10.25

7.11

7.68

8.40

-2.06

-2.06

2.80

14.70

6.12

S&P 500

9.01

 
  • 8.19 12.57

5.00

7.31

15.13

1.38

1.38

7.04

2.00

5.57

MSCI ACWI

-

-

 

-

-

6.09

7.69

-2.36

-2.36

5.03

-

1.50

CPI

NA

2.20

 

2.08

1.85

  • 1.53 0.95

0.66

0.66

0.12

2.75

1.61

60% S&P500/40% BC Agg

7.91

7.36

 

5.31

6.48

  • 8.95 9.62

1.28

1.28

4.01

3.97

5.49

Annual Performance (%)

 

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

FPA Crescent

-2.06

6.64

21.95

10.33

3.02

12.04

28.37

-20.55

6.84

12.43

10.83

10.21

S&P 500

1.38

13.69

32.39

16.00

2.11

15.06

26.46

-37.00

5.49

15.79

4.91

10.88

MSCI ACWI

-2.36

4.16

22.80

16.13

-7.35

-

-

-

-

-

-

-

CPI

0.66

0.68

1.53

1.77

3.03

1.44

2.81

-0.02

4.11

2.52

3.34

3.34

60% S&P500/40% BC Agg

1.28

10.62

17.56

11.31

4.69

12.13

18.40

-22.06

6.22

11.12

4.00

8.30

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%.

*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.

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.

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.

The story of 2015…

2015 Commodity Price Chart

The story of 2015… 2015 Commodity Price Chart 4

Broad global indices largely declined

MSCI ACWI:

-2.36%

Russell 3000:

0.48%

Russell 3000 Growth:

5.09%

 

Growth outperformed value

Russell 3000 Value:

-4.13%

Barclays U.S. Corporate High Yield:

-4.47%

Domestic high yield declined

Source: Morningstar Direct. Performance shown for 2015 in USD with dividends reinvested.

S&P 500 performance has become increasingly narrow

Without the five top contributors in the index, the S&P 500 would have also been down.

Top five contributors to 2015 S&P 500 performance

Company

2015

S&P 500 Return

Trailing P/E

Total Return

Contribution

Alphabet (Google)

46.6%

0.86%

36.4

Amazon

117.8%

0.87%

979.6

Facebook

34.2%

0.38%

105.7

General Electric

27.5%

0.36%

22.7

Microsoft

22.7%

0.45%

22.1

Average

49.8%

233.3

Total

2.93%

 

S&P 500

1.38%

S&P 500 ex-top five contributors

-1.55%

Source: Bloomberg; FPA calculations. Analysis assumes December 31, 2014 index weightings remained constant throughout 2015.

Bigger was better

Return by market capitalization

2015 S&P 500

Market Cap

2015 Average

Total Return

>$100B

4.39%

$50-100B

2.38%

$10-50B

-3.22%

$5-10B

-0.72%

<$5B

-19.60%

Source: Bloomberg; FPA calculations. Analysis assumes December 31, 2014 S&P 500 index weightings remained constant throughout 2015.

And biggest was best

Return contribution

2015 S&P 500

Market

Return

Capitalization

Contribution

Largest 30

2.93%

The other 470

-1.55%

Total

1.38%

Source: Bloomberg; FPA calculations. Largest 30 consist of the largest 30 market capitalization stocks in the S&P 500 at year-end 2014. Return contribution is calculated as

2015 total return multiplied by the average monthly 2015 implied index weights based on market capitalization. The S&P 500 actually consisted of between 502 and 506

securities throughout 2015. By “The other 470”, we simply mean the remaining securities outside the largest 30.

Winners and losers

2015

- Q4

Winners

Performance

Percent of

Losers

Performance

Percent of

Contribution

Portfolio

Contribution

Portfolio

 

Microsoft

0.91%

3.55%

Meggitt

-0.33%

1.29%

General Electric

0.36%

1.83%

Naspers/Tencent Pair Trade

-0.18%

-0.12%

Alphabet (A and C Shares)

0.35%

1.87%

Undisclosed

-0.15%

1.52%

American International Group

0.24%

2.73%

Owens-Illinois

-0.15%

0.90%

United Technologies

0.22%

2.77%

Navistar Sr. Notes (Various Issues)

-0.14%

0.67%

2015

- Year

Winners

Performance

Percent of

Losers

Performance

Percent of

Contribution

Portfolio

Contribution

Portfolio

 

Microsoft

0.85%

3.55%

Oracle

-0.72%

4.14%

Alphabet (A and C Shares)

0.54%

1.87%

Alcoa

-0.64%

2.26%

General Electric

0.44%

1.83%

Joy Global

-0.55%

0.17%

American International Group

0.26%

2.73%

Naspers/Tencent Pair Trade

-0.53%

-0.12%

CVS

0.24%

0.00%

Meggitt

-0.42%

1.29%

Based on weighted contribution to quarterly performance of the Fund. Percentage of portfolio as of December 31, 2015.

As of December 31, 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.

Active security selection drives differentiated returns

 

2007 to

2015

2014

2013

2012

2011

2010

2009

2008

2007

2015

CAGR

FPACX long equity

9.63%

-1.04%

13.67%

39.62%

17.69%

6.25%

22.30%

38.39%

-38.27%

11.47%

S&P 500

6.40%

1.38%

13.69%

32.39%

16.00%

2.11%

15.06%

26.46%

-37.00%

5.49%

Alpha vs. S&P 500

3.23%

-2.42%

-0.02%

7.23%

1.69%

4.14%

7.24%

11.93%

-1.27%

5.98%

S&P 500 Value

4.25%

-3.13%

12.36%

31.99%

17.68%

-0.48%

15.10%

21.18%

-39.22%

1.99%

Alpha vs. S&P 500 Value

5.38%

2.09%

1.31%

7.63%

0.01%

6.73%

7.20%

17.21%

0.95%

9.48%

MSCI ACWI

3.10%

-2.36%

4.16%

22.80%

16.13%

-7.35%

12.67%

34.63%

-42.19%

11.66%

Alpha vs. MSCI ACWI

6.53%

1.32%

9.51%

16.82%

1.56%

13.60%

9.63%

3.76%

3.92%

-0.19%

Past performance is not a guarantee of future results.

Source: FPA and Morningstar Direct. FPACX returns are gross of fees as of December 31, 2015.

Market cycle returns

3/25/2000 – 10/9/2007 10/10/2007 – 12/31/2015 $30,000 $18,000 FPACX S&P 500 MSCI ACWI FPACX S&P 500
3/25/2000 – 10/9/2007
10/10/2007 – 12/31/2015
$30,000
$18,000
FPACX
S&P 500
MSCI ACWI
FPACX
S&P 500
Russell 2500
$16,000
$25,000
$14,000
$20,000
$12,000
$10,000
$15,000
$8,000
$10,000
$6,000
$4,000
$5,000
Annualized
Max
Annualized
Max
Return
Drawdown
Return
Drawdown
FPA Crescent Fund
(Average liquidity =
14.70%
-13.44%
29.50%) 1
FPA Crescent Fund
(Average liquidity =
6.12%
-30.60%
31.30%) 1
Russell 2500 Index
S&P 500 Index
60% S&P 500 / 40% BC Agg.
8.08%
-33.82%
-23.88%
MSCI ACWI
S&P 500 Index
60% S&P 500 / 40% BC Agg.
1.50%
-57.49%
2.00%
-45.83%
5.57%
-54.71%
3.97%
5.49%
-35.30%

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.

  • 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.

Downside capture – less risk over the long-term

“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)

We have successfully protected capital during large drawdowns.

Drawdowns in >10% market declines*

Added large caps to tool kit

Added developed non-US and EM stocks to tool kit

 

2007-2009

2010

2011

2015-2016

FPA Crescent

-30.6%

-7.2%

-12.8%

-11.7%

MSCI ACWI

-57.5%

-13.9%

-22.4%

-18.1%

Russell 3000

-55.1%

-15.6%

-20.2%

-13.0%

S&P 500

-54.7%

-15.0%

-18.5%

-11.3%

         

Drawdown vs MSCI ACWI

 

52%

57%

65%

Drawdown vs Russell 3000

56%

     

Our quest for value has increasingly taken us overseas and our portfolio is more global than it has been in the past.

Currently, almost half the equity holdings (totaling almost a third of the Fund’s equity exposure) are foreign-domiciled.

*Since the 2007 S&P 500 peak

Source: Morningstar Direct, FPA. Long-term will generally include bear markets (20%+ declines) and other large corrections. Equity exposure data as of 12/31/2015.

Drawdowns referenced above are individual max drawdowns from 2007-2009, and S&P 500 peak and trough dates (4/23/2010-7/2/2010, 4/29/2011-10/3/2011, and

5/21/2015-1/20/2016). The Fund added large capitalization stocks to its opportunity set beginning around 2007 and added developed non-U.S. and emerging market stocks to

its opportunity set beginning around 2009.

Geographic exposure

 

Domicile

Revenue

North America

71.0%

35.2%

South America / Latin America

0.0%

2.6%

Uncategorized Americas

-

10.1%

Western / Northern Europe

24.8%

14.8%

Central / Eastern Europe

3.8%

1.5%

Asia / Pacific

-4.3%

6.4%

Middle East / Africa

4.7%

10.6%

Uncategorized Non-US

-

18.8%

Domicile and revenue composition for the equity positions only in the FPA Crescent Fund as of December 31, 2015. Source: Bloomberg

Portfolio characteristics

 

FPACX

FPACX

S&P 500

Q4 2015

Average

Market Capitalization, Wgt. Avg. (in millions)

1

$112,169

$30,165

$140,350

Market Capitalization, Median (in millions)

1

$26,168

$9,314

$18,062

Price/Earnings

2

21.0

16.8

20.5

Price/Book

3

1.6

1.7

2.8

Debt/Capital

4

-18.9%

8.1%

53.8%

Return on Equity

5

11.3%

12.8%

17.7%

Source: FPA and Mellon

  • 1 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 quarter’s 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.

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.

Portfolio allocation

Risk Asset

Year End

2015

Year End

Average

  • 2014 Since Inception

Common stock, long

59.5%

55.5%

53.2%

Common stock, short

-3.6%

-4.2%

-4.8%

Corporate debt

3.9%

1.4%

12.4%

Mortgages

1.0%

1.4%

0.6%

Other

0.4%

0.8%

0.3%

Exposure, Net

61.2%

54.9%

63.3%

No. of Equity Positions

46

51

38

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.

Global markets tailwind – declining interest rates

Rates can’t go down forever.

10-year government bond rate 12% 10% 8% 6% 4% 2% 0% U.S. Japan Euro Area 10-Year
10-year government bond rate
12%
10%
8%
6%
4%
2%
0%
U.S.
Japan
Euro Area
10-Year Government Bond Rate

Source: https://data.oecd.org/interest/long-term-interest-rates.htm. Euro Area consists of 19 countries. As of December 31, 2015.

Global markets tailwind – low/negative interest rates

■ Negative sovereign yields across Europe and Japan. Bond Maturity Year 1 2 3 4 5
■ Negative sovereign yields across Europe and Japan.
Bond Maturity Year
1
2
3
4
5
6
7
8
9
10
Switzerland
Germany
Austria
Belgium
Finland
Netherlands
Denmark
France
Ireland
Sweden
Japan
Italy
Spain
Average Yield
-0.37%
-0.35%
-0.25%
-0.12%
0.05%
0.21%
0.36%
0.51%
0.68%
0.91%
Negative
Positive

Source: Bloomberg. As of January 8, 2016.

Global markets tailwind - QE

Central bank balance sheets vs MSCI ACWI

$12,000,000 450 400 $10,000,000 350 $8,000,000 300 250 $6,000,000 200 $4,000,000 150 100 $2,000,000 50 $-
$12,000,000
450
400
$10,000,000
350
$8,000,000
300
250
$6,000,000
200
$4,000,000
150
100
$2,000,000
50
$-
0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Central Bank Balance Sheets
MSCI ACWI
Millions of USD
MSCI ACWI

Source: Federal Reserve Bank of St. Louis; Bloomberg. Central Bank Balance Sheets total is the sum of Federal Reserve, Bank of Japan, and ECB assets. ECB assets are the

aggregate assets of 11-19 countries. Asset values converted into USD using the applicable currency cross rates at each year-end.

U.S. market tailwind – share repurchases

U.S. market tailwind – share repurchases Source: I/B/E/S; Company Reports, Deutsche Bank. http://www.businessinsider.com/contribution-buybacks-eps-growth-2015-11. 19

Source: I/B/E/S; Company Reports, Deutsche Bank. http://www.businessinsider.com/contribution-buybacks-eps-growth-2015-11.

U.S. market tailwind – stock scarcity value

Number of Listed Firms in U.S. Stock Market, 1975-2015

Excluding Investment Funds and Trusts

U.S. market tailwind – stock scarcity value Number of Listed Firms in U.S. Stock Market, 1975-2015

Source: http://www.bloombergview.com/articles/2015-06-24/where-have-all-the-publicly-traded-companies-gone-

U.S. stocks an endangered species?

U.S. stocks an endangered species? Source: Wilshire Associates. Number of index constituents as of September 30,

Source: Wilshire Associates. Number of index constituents as of September 30, 2015.

Historic P/E ratio using 10-year average earnings

10-Year US Treasury Notes 50 18% Jan. 13, 2016 P/E 10-Year UST 45 16% Current 24.0
10-Year US Treasury Notes
50
18%
Jan. 13, 2016
P/E
10-Year UST
45
16%
Current
24.0
2.13%
Since 1881
16.7
4.59%
40
Since 1930
17.6
5.09%
14%
Since 1950
19.0
5.81%
35
Since 1970
19.6
6.67%
12%
30
10%
25
8%
20
6%
15
4%
10
2%
5
0
0%
1881
1894
1908
1921
1934
1948
1961
1974
1988
2001
2015
CAPE Price E10 Ratio
Interest Rate
Price-Earnings Ratio

P/E is in the 89

th

percentile

Source: Shiller, Robert J. Online Data Robert Shiller, www.econ.yale.edu/~shiller/data.htm. Data as of January 13, 2016. P/E or price-to-earnings is a valuation ratio of a

company’s current share price compared to its per-share earnings. Past performance is no guarantee of future results.

Stock valuations are historically high

S&P 500 valuations at most recent market peaks vs. year-end 2015

 

Price/Earnings

Price/Sales

Price/Book

(median)

(median)

(median)

March 31, 2000

18.9

1.4

2.9

September 30, 2007

18.2

1.7

3.1

December 31, 2015

18.7

2.1

2.9

Source: Bloomberg. As of December 31, 2015.

What comes next?

S&P 500

2000-2015 2200 2000 ? 1800 1600 1400 1200 1000 800 600
2000-2015
2200
2000
?
1800
1600
1400
1200
1000
800
600

Source: Bloomberg. As of December 31, 2015.

More volatility likely S&P 500 Volatility (VIX) 90 80 70 60 50 40 30 20 10
More volatility likely
S&P 500 Volatility (VIX)
90
80
70
60
50
40
30
20
10
0

Source: Bloomberg, March 2,1990 – December 31, 2015.

Opportunistic high yield exposure

BofA Merrill Lynch US High Yield Master II Option-Adjusted Spread

vs

% of Assets in High Yield FPA Crescent High Yield/Distressed Exposure 20% 35% 18% 30% 16%
% of Assets in High Yield
FPA Crescent High Yield/Distressed Exposure
20%
35%
18%
30%
16%
25%
14%
12%
20%
10%
15%
8%
6%
10%
4%
5%
2%
0%
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
High Yield Option-Adjusted Spread
High Yield Option-Adjusted Spread

Source: FPA, Federal Reserve Bank of St. Louis, December 31, 2015.

High yield spreads have widened but mostly energy

High yield spreads ex-energy and metals

High yield spreads have widened but mostly energy High yield spreads ex-energy and metals Source: J.P.

Source: J.P. Morgan. As of December 31, 2015.

Wider spreads but yields still below average

BofA Merrill Lynch High Yield Index (YTM) vs. average of 5- and 10-year US Treasury yields

As of Dec. 31

High Yield

5-Year UST

Spread

10-Year UST

Spread

 

vs. 5-Year

vs. 10-Year

Current

8.9%

1.8%

7.1%

2.3%

6.6%

High

21.7%

9.5%

19.8%

9.3%

18.8%

Low

5.8%

0.6%

2.8%

1.5%

2.8%

Average

10.4%

4.5%

5.9%

5.0%

5.4%

Source: Federal Reserve Bank of St. Louis. BofA Merrill Lynch US High Yield Master II Index. As of December 31, 2015.

Default rate remains low

Default Rate (based on par amount) – Trailing Twelve Months

Default rate remains low Default Rate (based on par amount) – Trailing Twelve Months Source: J.P.

Source: J.P. Morgan. January 4, 2016.

Recoveries have been worse of late

High Yield Bond Recoveries (1982-2015)

Recoveries have been worse of late High Yield Bond Recoveries (1982-2015) Source: Moody's Investors Service; J.P.

Source: Moody's Investors Service; J.P. Morgan. January 4, 2016.

High yield bond return distribution

Gross yield – (Default rate x (1-Recovery rate) = Net yield

 

Gross Yield

Default Rate

Recovery Rate

Net Yield

Case 1

7.0%

BAML HY Index

3.6% avg

41.5% avg

4.9%

 

12/31/2014

11.0% peak

41.5% avg

0.6%

 

11.0% peak

22.0% trough

-1.6%

Case 2

8.9%

BAML HY Index

3.6% avg

41.5% avg

6.8%

 

12/31/2015

11.0% peak

41.5% avg

2.5%

 

11.0% peak

22.0% trough

0.3%

Case 3

13.4%

FPA Crescent

3.6% avg

41.5% avg

11.3%

 

12/31/2015

11.0% peak

41.5% avg

7.0%

 

11.0% peak

22.0% trough

4.8%

Case 4

20.0%

High Gross

3.6%

avg

41.5% avg

17.9%

 

Yield Environment

11.0%

peak

41.5% avg

13.6%

 

11.0% peak

22.0% trough

11.4%

Source: FPA; J.P. Morgan. 1982-2015.

Unprecedented high yield issuance

High Yield New Issues 1997-2015

Unprecedented high yield issuance High Yield New Issues 1997-2015 Source: Barclays Capital. As of January 1,

Source: Barclays Capital. As of January 1, 2016.

Easy credit → increase in defaults

Easy credit → increase in defaults Source: J.P. Morgan; S&P LCD. January 4, 2016. 33

Source: J.P. Morgan; S&P LCD. January 4, 2016.

Refinancing needs will be significant

High Yield Bond and Institutional Loan Maturities

Refinancing needs will be significant High Yield Bond and Institutional Loan Maturities ■ $760 billion in

$760 billion in high yield bonds mature in 2020-2022, roughly half the high yield market.

Source: J.P. Morgan; Markit. As of December 2015.

Q & A

Q & A

Holdings as of December 31, 2015

Consumer Discretionary

5.46%

Genting Malaysia Berhad

0.38%

Interpublic Group of Companies

1.15%

Naspers Limited – N Shares

2.46%

WPP PLC

1.47%

Consumer Staples

3.93%

Anheuser-Busch Inbev SA/NV – ADR

0.71%

Carlsberg A/S – B

0.94%

Henkel AG & Co. KGAA

0.68%

Orkla ASA

0.34%

Unilever N.V.

1.04%

Walgreens Boots Alliance Inc.

0.22%

Energy

2.47%

Gazprom OAO - ADR

0.26%

Halliburton Company

0.55%

Lukoil OAO - ADR

0.26%

Occidental Petroleum

1.16%

Rosneft Oil Company – Reg S GDR

0.11%

Surgutneftegas-Preference

0.13%

Financials

14.92%

Alleghany Corporation

0.71%

American Express Company

1.01%

American International Group, Inc.

2.73%

Aon

3.37%

Bank of America Corporation

1.64%

CIT Group

1.16%

Citigroup

2.76%

Groupe Bruxelles Lambert S.A.

1.26%

Sberbank of Russia – Preference

0.12%

Sberbank of Russia - ADR

0.16%

Health Care

1.64%

Express Scripts

0.36%

Thermo Fisher Scientific Inc.

1.28%

Industrials

7.99%

Esterline Technologies Corporation

1.24%

General Electric Co.

1.83%

Jardine Matheson Holdings Limited

0.32%

Jardine Strategic Holdings Limited

0.37%

Joy Global Inc.

0.17%

Meggitt PLC

1.29%

United Technologies Corporation

2.77%

Information Technology

16.57%

Analog Devices, Inc.

1.13%

Cisco Systems

2.19%

Google Inc. – Class A

0.94%

Google Inc. – Class C

0.93%

Microsoft

3.55%

Oracle Corporation

4.14%

Qualcomm Incorporated

0.75%

TE Connectivity

2.31%

Yahoo

0.63%

Materials

3.47%

Alcoa Inc.

2.26%

MMC Norilsk Nickel OJSC - ADR

0.31%

Owens-Illinois

0.90%

Other

3.09%

Undisclosed

3.09%

Common stocks - short

-3.60%

Limited Partnerships

0.29%

U.S. Farming Realty Trust I & II

0.29%

Corporate Bonds & Notes

3.89%

Bombardier

0.45%

California Resources Corporation

0.12%

Consol Energy

0.70%

Glencore (Various issues)

0.36%

iStar Financial Inc.

0.13%

Navistar International Corporation

0.67%

RELP (4-11)

0.41%

Rice Energy

0.07%

Ship Loan Participation (Northern Shipping)

0.46%

Springleaf Financial Services

0.17%

Walter Investment Management Corporation

0.35%

Mortgages

0.98%

Stanwich Mortgage Loan Trust (Various

0.18%

issues)

Sunset Mortgage Loan Company

0.80%

Derivatives/futures

0.14%

Cash and equivalents (net of liabilities)

38.76%

U.S. government and agencies

34.09%

Commercial paper, money market

4.67%

Total net assets

100%

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.

Disclaimer

These slides are intended as supplemental material to the 4th Quarter 2015 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, January 29, 2016 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, 1-800-982-4372.

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 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.

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 rat e 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.

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 deposit ory 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 stock s 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.

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 issuer’s 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.

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.