FPA U.S. Core Equity Fund

Avoid Permanent Capital Impairment. One of the most important aspects of successful investing is knowing how to avoid permanent capital impairment. In an effort to avoid these mistakes, the Strategy:

• maintains an investment discipline that focuses on key factors such as business quality, valuation and financial leverage.
• determines an appropriate level of diversification by number of investments and industry exposure in the portfolio.

Invest in Quality Companies at Attractive Valuations. One of the best ways to generate strong absolute returns, along with outperformance over full market cycles, is to invest in quality businesses at valuations that do not reflect the underlying companies’ quality and future growth potential. As a result, we are typically looking for quality companies that appear misunderstood and/or out of favor.

The Strategy defines quality companies as ones that we believe have:

• strong and enduring competitive positions
• growing businesses within a growing industry resulting in growing earnings
• current and/or prospective high returns on capital
• current and/or prospective robust free cash flow generation

Preference for Companies with Good Management. Ideally, we like to invest in businesses that are well managed from an operational and capital allocation standpoint. As a result, we may consider investments in good businesses that are not well-managed provided executives can be replaced and there is an ample discount to our estimate of intrinsic value. Often times, the reason a quality company is offered at a cheap price is due to poor results that stem from mismanagement.

Value investing does not protect against loss of principal and there is no assurance that the Fund will meet its objective.