Dear Shareholder:
Performance Overview
The FPA Crescent Fund – Institutional Class (“Fund” or “Crescent”) declined 0.49% in Q3 2023 but gained 21.28% in the trailing twelve months.1 The Fund captured 102.3% of the MSCI ACWI's return in the trailing twelve months, outperforming its 73.1% average net risk exposure.2
Performance versus Illustrative Indices3
| Q3 2023 | Trailing 12-month | |
| FPA Crescent | -0.49% | 21.28% |
| FPA Crescent – Long Equity | -1.20% | 29.39% |
| MSCI ACWI | -3.40% | 20.80% |
| S&P 500 | -3.27% | 21.62% |
| 60% MSCI ACWI / 40% Bloomberg US Agg | -3.31% | 12.50% |
| 60% S&P 500 / 40% Bloomberg US Agg | -3.24% | 13.01% |
Portfolio discussion
Crescent's top five performers contributed 7.91% to its return in the previous twelve months, while its bottom five detracted 0.69%.
Of the contributors and detractors listed, we haven't recently addressed International Flavors & Fragrances (IFF). IFF missed financial targets and lowered guidance for 2023, which, along with the delays in the company's efforts to reduce its debt load, led to a significant decline in its stock price. We have added to our position, as we view much of the company's business as resilient and high quality, while the company's debt should prove manageable considering its low cost and long duration.
We have discussed most of the other positions in the last year, which you can find in our archived commentaries.
Closing
Geopolitical instability has the world wobbling on its axis. Our thoughts are with you and yours both here and abroad.
Respectfully submitted,
FPA Crescent Portfolio Managers
October 25, 2023
1. Effective September 4, 2020, the previous single class of shares of the Fund was renamed the Institutional Class shares. Unless otherwise noted, all data herein is representative of the Institutional Share Class.
2. Risk assets are any assets that are not risk free and generally refers to any financial security or instrument, such as equities, commodities, high-yield bonds, and other financial products that are likely to fluctuate in price. Risk exposure refers to the Fund's exposure to risk assets as a percent of total assets. The Fund's net risk exposure as of September 30, 2023 was 71.9%.
3. Comparison to the indices is for illustrative purposes only. The Fund does not include outperformance of any index or benchmark in its investment objectives. An investor cannot invest directly in an index. The long equity segment of the Fund is presented gross of investment management fees, transactions costs, and Fund operating expenses, which if included, would reduce the returns presented. Long equity holdings only includes equity securities excluding paired trades, short-sales, and preferred securities. The long equity performance information shown herein is for illustrative purposes only and may not reflect the impact of material economic or market factors. No representation is being made that any account, product, or strategy will or is likely to achieve profits, losses, or results similar to those shown. Long equity performance does not represent the return an investor in the Fund can or should expect to receive. Fund shareholders may only invest or redeem their shares at net asset value.
