FPA Crescent Fund’s portfolio update for the fourth quarter 2014.

FPA Crescent Fund: Activity

  • Sold out of Carefusion, Checkpoint Software, Johnson & Johnson and Wellpoint. Trimmed CVS, Intel and Norsk Hydro.
  • Added to a few names, including Carlsberg, Meggitt, Sulzer and TE Connectivity.
  • Purchased one new equity position in the quarter, United Technologies.
  • Top contributors for the quarter were CVS, Oracle Corporation, Covidien, Naspers and Express Scripts. Top detractors were Orkla, Occidental Petroleum, Canadian Natural Resources, Gazprom and Medtronic.

FPA Crescent Fund: Positioning

  • Gross exposure to equities remains at approximately 55% and net exposure is circa 51%. Fixed Income remains extremely low at around 0.7%.
  • Added to private investments, specifically real estate partnerships.
  • Cash is approximately 46.3%.

FPA Crescent Fund: Outlook

  • Challenging to find bargains. We maintain our investment discipline and continue to seek windows in which we can effectively deploy capital. We are mostly focused on the opportunities in energy sector right now.

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 www.fpafunds.com, by email at [email protected], toll-free by calling 1-800-982-4372 or by contacting the Fund in writing. 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 midcap stocks involve greater risks and they can fluctuate in price more than larger company stocks. Shortselling 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; derivatives may increase volatility.

Portfolio composition will change due to ongoing management of the funds. References to individual securities or sectors are for informational purposes only and should not be construed as recommendations by the Funds, Advisor or Distributor. Click here for current holdings.

S&P 500 Index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. The index focuses on the large-cap segment of the market, with over 80% coverage of U.S. equities, but is also considered a proxy for the total market.

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. Balanced benchmark (60% Russell 2500/ 40% Barclays Government/Credit) is a hypothetical combination of unmanaged indices comprised of 60% Russell 2500 Index and 40% Barclays Capital Government/ Credit Index, reflecting the Fund’s neutral mix of 60% stocks and 40% bonds. 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 (Trades, Portfolio) 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.

The FPA Funds are distributed by UMB Distribution Services, LLC, 235 W. Galena Street, Milwaukee, WI, 53212.

FPA Crescent Fund Fourth Quarter 2014 Update