N-Q 1 a17-24674_1nq.htm N-Q

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM N-Q

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

 

Investment Company Act file number

811-8544

 

FPA Funds Trust

(Exact name of registrant as specified in charter)

 

11601 WILSHIRE BLVD., STE 1200

LOS ANGELES, CALIFORNIA

 

90025

(Address of principal executive offices)

 

(Zip code)

 

 

 

 

 

Copy to:

J. RICHARD ATWOOD, PRESIDENT

 

MARK D. PERLOW, ESQ.

FPA Funds Trust

 

DECHERT LLP

11601 WILSHIRE BLVD., STE 1200

 

ONE BUSH STREET STE. 1600

LOS ANGELES, CALIFORNIA 90025

 

SAN FRANCISCO, CA 94104

(Name and address of agent for service)

 

Registrant’s telephone number, including area code:

(310) 473-0225

 

 

Date of fiscal year end:

December 31

 

 

Date of reporting period:

September 30, 2017

 

 


 

ITEM 1. Schedule of Investments.

 


 

FPA INTERNATIONAL VALUE FUND

PORTFOLIO OF INVESTMENTS

September 30, 2017

(Unaudited)

 

 

 

Shares

 

Fair Value

 

COMMON STOCKS

 

 

 

 

 

APPLICATION SOFTWARE — 7.0%

 

 

 

 

 

Amadeus IT Group SA (Spain)

 

80,115

 

$

5,206,890

 

SAP SE (Germany)

 

28,124

 

3,080,994

 

TOTVS SA (Brazil)

 

968,766

 

9,574,026

 

 

 

 

 

$

17,861,910

 

FLOW CONTROL EQUIPMENT — 5.8%

 

 

 

 

 

KSB AG (Preference Shares) (Germany)

 

11,668

 

$

6,356,691

 

Skellerup Holdings Ltd. (New Zealand)

 

4,165,542

 

5,084,824

 

Sulzer AG (Switzerland)

 

26,694

 

3,153,605

 

 

 

 

 

$

14,595,120

 

PACKAGED FOOD — 4.4%

 

 

 

 

 

Alicorp SAA (Peru)

 

2,075,502

 

$

5,893,856

 

Nestle SA (Switzerland)

 

61,860

 

5,180,819

 

 

 

 

 

$

11,074,675

 

INDUSTRIAL DISTRIBUTION & RENTAL — 4.4%

 

 

 

 

 

Ashtead Group plc (Britain)

 

223,200

 

$

5,380,590

 

Cie de Saint-Gobain (France)

 

94,870

 

5,653,438

 

 

 

 

 

$

11,034,028

 

EDUCATIONAL SERVICES — 3.0%

 

 

 

 

 

G8 Education Ltd. (Australia)

 

2,356,876

 

$

7,524,344

 

 

 

 

 

 

 

BANKS — 2.9%

 

 

 

 

 

Allied Irish Banks plc (Ireland)

 

1,212,090

 

$

7,284,617

 

 

 

 

 

 

 

CONSTRUCTION & MINING MACHINERY — 2.8%

 

 

 

 

 

Fenner plc (Britain)

 

1,571,606

 

$

7,102,320

 

 

 

 

 

 

 

AIRLINES — 2.6%

 

 

 

 

 

Ryanair Holdings plc (Ireland)*

 

345,437

 

$

6,663,001

 

 

 

 

 

 

 

COMML & RES BLDG EQUIP & SYS — 2.6%

 

 

 

 

 

Volution Group plc (Britain)

 

2,455,915

 

$

6,548,940

 

 

 

 

 

 

 

ADVERTISING & MARKETING — 2.6%

 

 

 

 

 

Publicis Groupe SA (France)

 

38,530

 

$

2,690,877

 

WPP AUNZ Ltd. (Australia)

 

4,464,522

 

3,852,168

 

 

 

 

 

$

6,543,045

 

BEVERAGES — 2.4%

 

 

 

 

 

Britvic plc (Britain)

 

589,236

 

$

5,965,246

 

 

 

 

 

 

 

PROFESSIONAL SERVICES — 2.3%

 

 

 

 

 

Pagegroup plc (Britain)

 

892,017

 

$

5,951,410

 

 

 

 

 

 

 

MEASUREMENT INSTRUMENTS — 2.3%

 

 

 

 

 

Koh Young Technology, Inc. (South Korea)

 

101,570

 

$

5,941,581

 

 

See notes to financial statements.

 


 

 

 

Shares or
Principal
Amount

 

Fair Value

 

COMMUNICATIONS EQUIPMENT — 2.0%

 

 

 

 

 

Scout24 AG (Germany)

 

124,680

 

$

5,098,633

 

 

 

 

 

 

 

DEFENSE PRIMES — 2.0%

 

 

 

 

 

Avon Rubber plc (Britain)

 

399,059

 

$

5,013,176

 

 

 

 

 

 

 

CONSUMER FINANCE — 1.8%

 

 

 

 

 

Worldpay Group plc (Britain)**

 

844,020

 

$

4,603,114

 

 

 

 

 

 

 

MEDICAL EQUIPMENT — 1.7%

 

 

 

 

 

Koninklijke Philips NV (Netherlands)

 

107,300

 

$

4,429,750

 

 

 

 

 

 

 

OTHER SPEC RETAIL - DISCRETIONARY — 1.6%

 

 

 

 

 

Luxottica Group SpA (Italy)

 

71,360

 

$

3,988,458

 

 

 

 

 

 

 

HEALTH CARE SUPPLY CHAIN — 1.2%

 

 

 

 

 

Essilor International SA (France)

 

24,520

 

$

3,035,676

 

 

 

 

 

 

 

AIRCRAFT & PARTS — 1.1%

 

 

 

 

 

Meggitt plc (Britain)

 

383,790

 

$

2,679,390

 

 

 

 

 

 

 

INTERNET MEDIA — 1.0%

 

 

 

 

 

Baidu, Inc. (ADR) (China)*

 

10,105

 

$

2,502,908

 

 

 

 

 

 

 

INFRASTRUCTURE SOFTWARE — 0.9%

 

 

 

 

 

Oracle Corporation

 

49,710

 

$

2,403,479

 

 

 

 

 

 

 

OTHER COMMERCIAL SERVICES — 0.9%

 

 

 

 

 

ALS, Ltd. (Australia)

 

364,952

 

$

2,238,618

 

 

 

 

 

 

 

REAL ESTATE SERVICES — 0.9%

 

 

 

 

 

LSL Property Services plc (Britain)

 

697,233

 

$

2,197,921

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMMON STOCKS — 4.9%

 

 

 

$

12,534,679

 

 

 

 

 

 

 

TOTAL COMMON STOCKS — 65.1%
(Cost $138,840,038)

 

 

 

$

164,816,039

 

 

 

 

 

 

 

TOTAL INVESTMENT SECURITIES — 65.1%
(Cost $138,840,038)

 

 

 

$

164,816,039

 

 

See notes to financial statements.

 


 

SHORT-TERM INVESTMENTS — 34.2%

 

 

 

 

 

State Street Bank Repurchase Agreement — 0.12% 10/2/2017

 

 

 

 

 

(Dated 09/29/2017, repurchase price of $86,629,866, collateralized by $87,030,000 principal amount U.S. Treasury Notes - 2.25% 2024, fair value $88,362,777)

 

$

86,629,000

 

$

86,629,000

 

TOTAL SHORT-TERM INVESTMENTS
(Cost $86,629,000)

 

 

 

$

86,629,000

 

 

 

 

 

 

 

TOTAL INVESTMENTS — 99.3%
(Cost $225,469,038)

 

 

 

$

251,445,039

 

Other Assets and Liabilities, net — 0.7%

 

 

 

1,881,797

 

NET ASSETS — 100.0% — NOTE 2

 

 

 

$

253,326,836

 

 

*                 Non-income producing security.

**          Restricted securities. This restricted security constituted 1.82% of total net assets at September 30, 2017, most of which are considered liquid by the Adviser. This security is not registered and may not be sold to the public. There are legal and/or contractual restrictions on resale. The Fund does not have the right to demand that such securities be registered. The values of these securities are determined by valuations provided by pricing services, brokers, dealers, market makers, or in good faith under policies adopted by authority of the Fund’s Board of Trustees.

 

As permitted by U.S. Securities and Exchange Commission regulations, “Other” Common Stocks include holdings in their first year of acquisition that have not previously been publicly disclosed.

 

At September 30, 2017 the Fund, held forward foreign currency contracts, which are considered derivative instruments, each of whose counterparty is Barclays Capital, as follows:

 

 

 

Local
Contract

 

Settlement

 

 

 

Valuation at

 

Unrealized

 

Foreign Currency Sold

 

Amount

 

Date

 

Counterparty

 

September 30, 2017

 

Depreciation

 

EUR

 

23,867,000

 

12/20/2017

 

Barclays Capital

 

$

28,331,160

 

$

(2,525,444

)

EUR

 

3,672,000

 

03/21/2018

 

Barclays Capital

 

4,382,696

 

(225,662

)

GBP

 

8,374,000

 

03/21/2018

 

Barclays Capital

 

11,279,739

 

(525,596

)

GBP

 

1,926,000

 

03/21/2018

 

Barclays Capital

 

2,594,313

 

(74,142

)

 

 

 

 

 

 

 

 

$

46,587,908

 

$

(3,350,844

)

 

See notes to financial statements.

 


 

FPA INTERNATIONAL VALUE FUND

PORTFOLIO OF INVESTMENTS - RESTRICTED SECURITIES

September 30, 2017

 

 

 

 

 

 

 

 

 

Fair Value as a % of

 

Issuer

 

Acquisition Date (s)

 

Cost

 

Fair Value

 

Net Assets

 

Worldpay Group plc

 

04/11/2017, 04/12/2017, 04/18/2017, 04/28/2017, 05/02/2017, 05/03/2017, 05/10/2017, 05/11/2017, 05/22/2017, 09/15/2017

 

$

3,147,548

 

$

4,603,114

 

1.82

%

 

See notes to financial statements.

 


 

NOTE 1 — Disclosure of Fair Value Measurements

 

The Fund uses the following methods and inputs to establish the fair value of its assets and liabilities.  Use of particular methods and inputs may vary over time based on availability and relevance as market and economic conditions evolve.

 

Equity securities are generally valued each day at the official closing price of, or the last reported sale price on, the exchange or market on which such securities principally are traded, as of the close of business on that day.  If there have been no sales that day, equity securities are generally valued at the last available bid price.  Securities that are unlisted and fixed-income and convertible securities listed on a national securities exchange for which the over-the-counter (OTC) market more accurately reflects the securities’ value in the judgment of the Fund’s officers, are valued at the most recent bid price.  Events occurring after the close of trading on non-U.S. exchanges may result in adjustments to the valuation of foreign securities to reflect their fair value as of the close of regular trading on the NYSE. The Fund may utilize an independent fair valuation service in adjusting the valuations of foreign securities. Currency forwards are valued at the closing currency exchange rate which is not materially different from the forward rate.  Short-term corporate notes with maturities of 60 days or less at the time of purchase are valued at amortized cost.

 

Securities for which representative market quotations are not readily available or are considered unreliable by the Adviser are valued as determined in good faith under procedures adopted by the authority of the Fund’s Board of Trustees. Various inputs may be reviewed in order to make a good faith determination of a security’s value.  These inputs include, but are not limited to, the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions.  Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations of investments that would have been used had greater market activity occurred.

 

The Fund classifies its assets based on three valuation methodologies.  Level 1 values are based on quoted market prices in active markets for identical assets.  Level 2 values are based on significant observable market inputs, such as quoted prices for similar assets and quoted prices in inactive markets or other market observable inputs as noted above including spreads, cash flows, financial performance, prepayments, defaults, collateral, credit enhancements, and interest rate volatility.  Level 3 values are based on significant unobservable inputs that reflect the Fund’s determination of assumptions that market participants might reasonably use in valuing the assets.  The valuation levels are not necessarily an indication of the risk associated with investing in those securities. The following table presents the valuation levels of the Fund’s investments as of September 30, 2017:

 


 

Investments

 

Level 1

 

Level 2

 

Level 3

 

Total

 

Common Stocks

 

 

 

 

 

 

 

 

 

Application Software

 

$

17,861,910

 

$

—

 

$

—

 

$

17,861,910

 

Flow Control Equipment

 

14,595,120

 

—

 

—

 

14,595,120

 

Packaged Food

 

11,074,675

 

—

 

—

 

11,074,675

 

Industrial Distribution & Rental

 

11,034,028

 

—

 

—

 

11,034,028

 

Educational Services

 

7,524,344

 

—

 

—

 

7,524,344

 

Banks

 

7,284,617

 

—

 

—

 

7,284,617

 

Construction & Mining Machinery

 

7,102,320

 

—

 

—

 

7,102,320

 

Airlines

 

6,663,001

 

—

 

—

 

6,663,001

 

Comml & Res Bldg Equip & Sys

 

6,548,940

 

—

 

—

 

6,548,940

 

Advertising & Marketing

 

6,543,045

 

—

 

—

 

6,543,045

 

Beverages

 

5,965,246

 

—

 

—

 

5,965,246

 

Professional Services

 

5,951,410

 

—

 

—

 

5,951,410

 

Measurement Instruments

 

5,941,581

 

—

 

—

 

5,941,581

 

Communications Equipment

 

5,098,633

 

—

 

—

 

5,098,633

 

Defense Primes

 

5,013,176

 

—

 

—

 

5,013,176

 

Consumer Finance

 

4,603,114

 

—

 

—

 

4,603,114

 

Medical Equipment

 

4,429,750

 

—

 

—

 

4,429,750

 

Other Spec Retail - Discretionary

 

3,988,458

 

—

 

—

 

3,988,458

 

Health Care Supply Chain

 

3,035,676

 

—

 

—

 

3,035,676

 

Aircraft & Parts

 

2,679,390

 

—

 

—

 

2,679,390

 

Internet Media

 

2,502,908

 

—

 

—

 

2,502,908

 

Infrastructure Software

 

2,403,479

 

—

 

—

 

2,403,479

 

Other Commercial Services

 

2,238,618

 

—

 

—

 

2,238,618

 

Real Estate Services

 

2,197,921

 

—

 

—

 

2,197,921

 

Other Common Stocks

 

12,534,679

 

—

 

—

 

12,534,679

 

Short-Term Investment

 

—

 

86,629,000

 

—

 

86,629,000

 

 

 

$

164,816,039

 

$

86,629,000

 

$

—

 

$

251,445,039

 

Forward Foreign Currency Contracts Payable (currency risk)

 

$

(3,350,844

)

$

—

 

$

—

 

$

(3,350,844

)

 


 

Transfers of investments between different levels of the fair value hierarchy are recorded at market value as of the end of the reporting period.  There were no transfers between Level 1, 2, or 3 during the period ended September 30, 2017.

 

Forward foreign currency contracts:  Forward foreign currency contracts are agreements to exchange one currency for another at a future date and at a specified price.  The Funds’ transactions in forward foreign currency contracts are limited to transaction and portfolio hedging.  The contractual amounts of forward foreign currency contracts do not necessarily represent the amounts potentially subject to risk.  The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered and could exceed the net unrealized value shown in the tables below.  Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movements in currency values.  Forward foreign currency contracts are valued daily at the foreign exchange rates as of the close of the New York Stock Exchange.

 

NOTE 2 — Federal Income Tax

 

The cost of investment securities held at September 30, 2017 (excluding short-term investments), was $141,006,820 for federal income tax purposes.  Net unrealized appreciation consists of:

 

Gross unrealized appreciation:

 

$

24,664,247

 

Gross unrealized depreciation:

 

(855,028

)

Net unrealized appreciation:

 

$

23,809,219

 

 


 

ITEM 2. CONTROLS AND PROCEDURES.

 

(a)                                 The registrant’s principal executive and principal financial officers have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective, as of a date within 90 days of the filing date of this Form N-Q based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934.

 

(b)                                 There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d))under the 1940 Act that occurred during the registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

ITEM 3. EXHIBITS.

 

(a)                                 The certifications required by Rule 30a-2(a) under the 1940 Act are attached hereto.

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

FPA FUNDS TRUST’S FPA INTERNATIONAL VALUE FUND

 

 

 

By:

/s/ J. Richard Atwood

 

 

 

 

 

J. Richard Atwood,

 

 

 

 

 

President (Principal Executive Officer)

 

 

 

Date: November 29, 2017

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:

/s/ J. Richard Atwood

 

 

 

 

 

J. Richard Atwood,

 

 

 

 

 

President (Principal Executive Officer)

 

 

 

Date: November 29, 2017

 

 

By:

/s/ E. Lake Setzler III

 

 

 

 

 

E. Lake Setzler III,

 

 

 

 

 

Treasurer (Principal Financial Officer)

 

 

 

Date: November 29, 2017