SPARX FUNDS PLC INTERIM REPORT AND UNAUDITED CONDENSED FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017

Transcription

1 INTERIM REPORT AND UNAUDITED CONDENSED FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017

2 Contents Company Information 2 Unaudited Statement of Financial Position 3 Unaudited Statement of Comprehensive Income 5 Unaudited Statement of Changes in Net Assets Attributable to Holders of Redeemable Participating Shares 6 Unaudited Statement of Cash Flows 7 Notes to the Unaudited Financial Statements 8 Unaudited Schedule of Investments 16 Unaudited Schedule of Changes in Composition of Portfolio 20 Unaudited Disclosure of Remuneration Policy 22 1

3 COMPANY INFORMATION Registered Office: 33 Sir John Rogerson s Quay, Dublin 2, Ireland DIRECTORS Mr. Brian Wilkinson (Independent Non-executive) Mr. Paul McNaughton (Non-executive) Mr. Shinji Naito (Non-executive) Mr. Brian Morikuni (Non-executive) DISTRIBUTOR SPARX Overseas Ltd. 6 Front Street Hamilton HM11 Bermuda INVESTMENT ADVISOR LEGAL ADVISOR AS TO IRISH LAW SPARX Asset Management Co., Ltd Dillon Eustace Shinagawa Season Terrace 6F 33 Sir John Rogerson s Quay Konan Dublin 2 Minato-ku Ireland Tokyo, Japan DEPOSITARY* SPONSORING BROKER HSBC Institutional Trust Services (Ireland) DAC Dillon Eustace 1 Grand Canal Square 33 Sir John Rogerson s Quay Grand Canal Harbour Dublin 2 Dublin 2 Ireland Ireland AUDITORS SECRETARY Grant Thornton Tudor Trust Limited City Quay 33 Sir John Rogerson s Quay Dublin 2 Dublin 2 Ireland Ireland ADMINISTRATOR GOVERNANCE CONSULTANTS HSBC Securities Services (Ireland) DAC Bridge Consulting 1 Grand Canal Square 33 Sir John Rogerson s Quay Grand Canal Harbour Dublin 2 Dublin 2 Ireland Ireland * Pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (as amended) and Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertakings for Collective Investment in Transferable Securities) Regulations 2015, all reference to Custodian have been changed to Depository. 2

4 UNAUDITED STATEMENT OF FINANCIAL POSITION AS AT 30 APRIL 2017 SPARX JAPAN SPARX JAPAN SMALLER SMALLER TOTAL SPARX JAPAN FUND COMPANIES FUND TOTAL SPARX JAPAN FUND COMPANIES FUND 30 APRIL 30 APRIL 30 APRIL 31 OCTOBER 31 OCTOBER 31 OCTOBER NOTES JPY JPY JPY JPY JPY JPY ASSETS Cash and cash equivalents 3,647,774,704 3,509,986, ,788,166 5,767,873,050 5,607,823, ,049,776 Financial assets at fair value through profit or loss 4 - Transferable securities 82,399,328,830 79,032,964,630 3,366,364,200 65,317,108,920 61,475,618,120 3,841,490,800 - Financial derivative instruments 291,591, ,319, , ,792, ,127,331 6,665,501 Due from shareholders 400,177, ,177, ,152, ,152,045 - Investments sold not yet settled 277,475, ,475, Dividends receivable 418,022, ,867,754 29,154, ,783, ,243,625 31,539,700 Other receivables 583, ,595 26, , , ,596 TOTAL ASSETS 87,434,952,892 83,901,348,185 3,533,604,707 71,692,557,262 67,652,494,889 4,040,062,373 LIABILITIES Bank overdraft ,266,683 13,266,683 - Financial liabilities at fair value through profit or loss 4 - Financial derivative instruments 224, , Due to shareholders , ,067 Investments purchased not yet settled 2 279,560, ,560,937-22,154, ,061 21,237,906 Investment advisory fees payable 2 72,112,740 69,084,803 3,027,937 60,227,121 56,798,851 3,428,270 Administration fees payable 21,932,386 16,933,315 4,999,071 25,309,963 18,970,423 6,339,540 Depositary fees payable 2 5,574,995 4,769, ,390 4,907,798 4,089, ,631 Other payables and accrued expenses 88,757,445 82,153,222 6,604,223 57,195,078 48,478,678 8,716,400 TOTAL LIABILITIES 468,163, ,726,309 15,436, ,859, ,520,863 41,338,814 NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE PARTICIPATING SHARES 86,966,789,657 83,448,621,876 3,518,167,781 71,508,697,585 67,509,974,026 3,998,723,559 The notes on page 8 to 15 form an integral part of these financial statements 3

5 UNAUDITED STATEMENT OF FINANCIAL POSITION AS AT 30 APRIL 2017 (CONTINUED) SPARX JAPAN SPARX JAPAN SPARX SMALLER SPARX SMALLER JAPAN FUND COMPANIES JAPAN FUND COMPANIES 30 APRIL 30 APRIL 31 OCTOBER 31 OCTOBER Net Asset Value per share JPY Institutional A Class Shares 20,405 17,990 18,705 16,139 JPY Institutional B Class Shares 14,199 12,552 12,977 11,218 USD Hedged Class A Shares $120 - US$110 - USD Hedged Class B Shares $136 $120 US$124 US$107 EUR Hedged Class A Shares GBP Hedged Class B Shares USD Hedged Class C Shares $ Number of shares in issue JPY Institutional A Class Shares 1,550,544 23,367 1,464,056 26,744 JPY Institutional B Class Shares 2,525, ,609 2,271, ,581 USD Hedged Class A Shares 34,866-27,726 - USD Hedged Class B Shares 737,330 1, ,282 51,127 EUR Hedged Class A Shares 27,611-26,253 - GBP Hedged Class B Shares 37, USD Hedged Class C Shares 306, The notes on page 8 to 15 form an integral part of these financial statements 4

6 UNAUDITED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017 SPARX JAPAN SPARX JAPAN TOTAL SPARX JAPAN FUND SMALLER COMPANIES FUND TOTAL SPARX JAPAN FUND SMALLER COMPANIES FUND 30 APRIL 30 APRIL 30 APRIL 30 APRIL 30 APRIL 30 APRIL NOTES JPY JPY JPY JPY JPY JPY INCOME Dividends 577,761, ,350,386 37,410, ,189, ,318, ,870,900 Less: Withholding tax (88,484,153) (82,754,663) (5,729,490) (77,829,155) (60,542,975) (17,286,180) Other income 1,626,784 1,563,066 63, , , ,175 TOTAL INVESTMENT INCOME 490,903, ,158,789 31,745, ,045, ,355,797 95,689,895 EXPENSES Investment advisory fees 2 442,307, ,134,539 19,172, ,952, ,271,577 73,680,435 Administration fees 2 82,857,712 72,780,653 10,077,059 79,151,992 63,470,585 15,681,407 Depositary fees 2 27,024,269 23,982,472 3,041,797 24,111,667 19,853,321 4,258,346 Directors' fees and expenses 2 1,219,324 1,379,738 (160,414) 4,238,096 2,968,693 1,269,403 Audit fees 3,421,606 2,534, ,591 2,686,923 2,383, ,117 Transaction costs 8,643,795 2,566,117 6,077,678 1,163, , ,699 Other expenses 3,698,078 1,584,685 2,113,393 3,276,970 1,714,629 1,562,341 OPERATING EXPENSES 569,172, ,962,219 41,210, ,580, ,864,209 97,716,748 NET INVESTMENT EXPENSE (78,268,289) (68,803,430) (9,464,859) (100,535,265) (98,508,412) (2,026,853) Net realised gain/(loss) on: RG-Investments 224,736,802 87,149, ,587, ,921, ,830, ,091,083 RG-Forward foreign exchange contracts 544,768, ,003,713 38,764,334 (1,073,201,296) (968,001,159) (105,200,137) RG-Foreign exchange (96,820,957) (95,898,108) (922,849) (5,368,887) (1,727,785) (3,641,102) Net change in fair value of investments and foreign exchange UG-Investments 6,671,571,199 6,405,101, ,469,339 (6,148,235,071) (5,338,868,315) (809,366,756) RG-Forward foreign exchange contracts 160,573, ,968,139 (6,394,689) (208,478,811) (195,788,606) (12,690,205) UG-Foreign exchange (1,855,507) (1,164,807) (690,700) 2,813,695 2,140, ,185 PROFIT/(LOSS) ATTRIBUTABLE TO HOLDERS OF REDEEMABLE PARTICIPATING SHARES FROM OPERATIONS 7,424,704,745 6,999,356, ,347,847 (6,757,084,012) (6,018,923,227) (738,160,785) The notes on page 8 to 15 form an integral part of these financial statements 5

7 UNAUDITED STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE PARTICIPATING SHARES FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017 SPARX JAPAN SPARX JAPAN SMALLER SMALLER TOTAL SPARX JAPAN FUND COMPANIES FUND TOTAL SPARX JAPAN FUND COMPANIES FUND 30 APRIL 30 APRIL 30 APRIL 30 APRIL 30 APRIL 30 APRIL JPY JPY JPY JPY JPY JPY Net assets attributable to holders of redeemable participating shares at 1 November 71,508,697,585 67,509,974,026 3,998,723,559 69,343,413,218 57,781,654,027 11,561,759,191 Profit/(loss) attributable to holders of redeemable participating shares from operations 7,424,704,745 6,999,356, ,347,847 (6,757,084,012) (6,018,923,227) (738,160,785) Proceeds from issuance of redeemable participating shares JPY Institutional A Class Shares 1,776,222,438 1,751,641,850 24,580,588 1,487,728, ,885,164 1,205,843,000 JPY Institutional B Class Shares 3,748,690,192 3,671,980,185 76,710,007 8,944,959,694 8,701,926, ,033,322 USD Hedged Class A Shares 311,351, ,351,105-1,059,678, ,872, ,805,981 USD Hedged Class B Shares ,066,315,811 2,066,315,811 - EUR Hedged Class A Shares 51,960,796 51,960, ,326, ,326,646 - GBP Hedged Class B Shares 528,543, ,543, USD Hedged Class C Shares 3,485,229,928 3,485,229, Payment on redemption of redeemable participating shares JPY Institutional A Class Shares (81,460,036) - (81,460,036) (927,191,524) (447,279,354) (479,912,170) JPY Institutional B Class Shares (468,001,938) (150,579,298) (317,422,640) (4,484,072,474) (3,658,114,545) (825,957,929) USD Hedged Class A Shares (207,646,206) (207,646,206) - (821,253,878) - (821,253,878) USD Hedged Class B Shares (1,082,333,805) (474,022,261) (608,311,544) (312,990,833) (3,881,889) (309,108,944) EUR Hedged Class A Shares (29,169,046) (29,169,046) NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE PARTICIPATING SHARES AT 30 APRIL 86,966,789,657 83,448,621,876 3,518,167,781 70,060,829,750 59,990,781,962 10,070,047,788 The notes on page 8 to 15 form an integral part of these financial statements 6

8 UNAUDITED STATEMENT OF CASH FLOWS FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017 SPARX JAPAN SPARX JAPAN SMALLER SMALLER TOTAL SPARX JAPAN FUND COMPANIES FUND TOTAL SPARX JAPAN FUND COMPANIES FUND 30 APRIL 30 APRIL 30 APRIL 30 APRIL 30 APRIL 30 APRIL JPY JPY JPY JPY JPY JPY Cash flows from operating activities Profit/(loss) attributable to holders of redeemable participating shares from operations 7,424,704,745 6,999,356, ,347,847 (6,757,084,012) (6,018,923,227) (738,160,785) Adjustments to reconcile profit/(loss) for the period to net cash from operating activity Purchases of investments (12,363,275,744) (11,814,238,052) (549,037,692) (10,042,258,105) (7,786,277,085) (2,255,981,020) Sales of investments 2,177,363, ,142,933 1,428,220,902 3,778,002,167 1,192,462,820 2,585,539,347 Net realised gain on investments (224,736,802) (87,149,531) (137,587,271) (775,921,623) (581,830,540) (194,091,083) Net unrealised (gain)/loss on investments (6,671,571,199) (6,405,101,860) (266,469,339) 6,148,235,071 5,338,868, ,366,756 Net unrealised (gain)/loss on forward foreign exchange contracts (160,573,450) (166,968,139) 6,394, ,478, ,788,606 12,690,205 Increase in investments sold not yet settled (277,475,223) (277,475,223) - (247,604,128) (213,527,236) (34,076,892) Increase in amounts due from shareholders (234,025,503) (234,025,503) - (179,706,249) (59,706,249) (120,000,000) (Increase)/decrease in dividends receivable (108,238,899) (110,624,129) 2,385,230 (58,877,305) (21,669,905) (37,207,400) Decrease/(Increase) in other receivables 263,741 (26,101) 289, , , ,763 Decrease in due to shareholders (798,067) - (798,067) 9,388,528-9,388,528 Increase/(decrease) in investments purchased not yet settled 257,405, ,643,876 (21,237,906) (77,683,141) 152,545,239 (230,228,380) Increase/(decreaes) in investment advisory fees payable 11,885,619 12,285,952 (400,333) 1,107, , ,069 (Decrease)/increase in administration fees payable (3,377,577) (2,037,108) (1,340,469) (1,566,396) 471,410 (2,037,806) Increase/(decrease) in depositary fees payable 667, ,438 (13,241) 217, ,624 (114,773) Increase/(decrease) in other payables and accrued expenses 31,562,367 33,674,544 (2,112,177) 7,561, ,378 6,942,180 Net cash (used in)/provided by operating activities (10,140,218,990) (11,023,861,005) 883,642,015 (7,987,393,997) (7,799,851,706) (187,542,291) Cash flows from financing activities Proceeds from issuance of redeemable participating shares 9,901,998,358 9,800,707, ,290,595 14,020,009,253 12,337,326,950 1,682,682,303 Payment on redemption of redeemable participating shares (1,868,611,031) (861,416,811) (1,007,194,220) (6,545,508,709) (4,109,275,788) (2,436,232,921) Net cash provided by used in financing activities 8,033,387,327 8,939,290,952 (905,903,625) 7,474,500,544 8,228,051,162 (753,550,618) Net (decrease)/increase in cash and cash equivalents (2,106,831,663) (2,084,570,053) (22,261,610) (512,893,453) 428,199,456 (941,092,909) Cash at beginning of the period 5,754,606,367 5,594,556, ,049,776 5,527,678,247 4,239,885,274 1,287,792,973 Cash at end of the period 3,647,774,704 3,509,986, ,788,166 5,014,784,794 4,668,084, ,700,064 Supplemental disclosure of cash flow information Dividends received 429,726,257 39,796, ,648,241 75,663,500 The notes on page 8 to 15 form an integral part of these financial statements 7

9 1. Principal accounting policies SPARX FUNDS PLC NOTES TO THE UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017 These condensed financial statements of Sparx Funds Plc (the Company ) are prepared in accordance with International Financial Reporting Standards ( IFRS ) and interpretations adopted by the International Accounting Standards Board ( IASB ). Specifically these financial statements have been prepared in accordance with IAS (International Accounting Standard) 34: Interim Financial Reporting. The Company is authorised by the Central Bank of Ireland pursuant to the provisions of the European Communities (Undertakings for Collective Investment in Transferable Securities) ( UCITS ) (Amendment) Regulations, 2016 and the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) (Undertaking for Collective Investments in Transferable Securities) Regulations 2015 (the Central Bank UCITS Regulations ). The comparative figures for the Statement of Financial Position relate to the year ended 31 October The comparative figures for the Statement of Comprehensive Income, Statement of Changes in Net Assets Attributable to Holders of Redeemable Participating Shares and Statement of Cash Flows relate to the period from 1 November 2015 to 30 April The accounting policies used in the preparation of these condensed financial statements are consistent with those used in the Company s most recent annual financial statements for the year ended 31 October There have been no changes to the Company s accounting policies except as describe below, since the date of the Company s last annual financial statements, for the year ended 31 October The format of these condensed financial statements differs in some respects from that of the most recent annual financial statements, in that the notes to the condensed financial statements are presented in summary form. The Company s Sub-Funds are considered to have one operating segment and therefore IFRS 8 Operating Segments has not been adopted in the financial statements. New standards and interpretations not adopted Amendments to IAS 1 Disclosure Initiative: In December 2014, the International Accounting Standards Board (the IASB or the Board) issued amendments to IAS 1 - Presentation of Financial Statements and an exposure draft proposing amendments to IAS 7 - Statement of Cash Flows as part of its Disclosure Initiative. The following narrow-scope amendments have been made to IAS 1: Materiality and aggregation: clarifies that an entity should not obscure useful information by aggregating or disaggregating information; and that materiality considerations apply to the primary statements, notes and any specific disclosure requirements in IFRSs, i.e. disclosures specifically required by IFRSs need to be provided only if the information is material. Statement of financial position and statement of profit or loss and other comprehensive income: clarifies that the list of line items specified by IAS 1 for these statements can be disaggregated and aggregated as relevant. Additional guidance has been added on the presentation of subtotals in these statements. Presentation of items of other comprehensive income ( OCI ): clarifies that an entity s share of OCI of equityaccounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss. Notes to the Financial Statements: clarifies that entities have flexibility when designing the structure of the notes and provides guidance on how to determine a systematic order of the notes. Also, unhelpful examples regarding the identification of significant accounting policies have been removed. The amendments are applicable for annual periods beginning on or after 1 January Adoption of this amendment is not expected to have a material impact on the presentation of Company s financial statements. 8

10 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL Principal accounting policies (Continued) New standards and interpretations not adopted (continued) Amendments to IAS 7 - Statements of cash flow Amendments to IAS 7, Statements of cash flow effective for annual periods beginning on or after 1 January The IASB requires that the following changes in liabilities arising from financing activities are disclosed (to the extent necessary): (i) changes from financing cash flows; (ii) changes arising from obtaining or losing control of subsidiaries or other businesses; (iii) the effect of changes in foreign exchange rates; (iv) changes in fair values; and (v) other changes. The amendments state that one way to fulfil the new disclosure requirement is to provide a reconciliation between the opening and closing balances in the statement of financial position for liabilities arising from financing activities. Finally, the amendments state that changes in liabilities arising from financing activities must be disclosed separately from changes in other assets and liabilities. Earlier application is permitted. The Company does not expect the measurement and classification requirements to have a significant impact on its financial statements. IFRS 9 Financial Instruments: IFRS 9 deals with classification and measurement of financial assets and its requirements represent a significant change from the existing requirements in IAS 39 in respect of financial assets. The standard contains two primary measurement categories for financial assets: amortised cost and fair value. A financial asset would be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, and the asset s contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. All other financial assets would be measured at fair value. The standard eliminates the existing IAS 39 categories of held to maturity, available for sale and loans and receivables. For an investment in an equity instrument which is not held for trading, the standard permits an irrevocable election, on initial recognition, on an individual share-by-share basis, to present all fair value changes from the investment in other comprehensive income. No amount recognised in other comprehensive income would ever be reclassified to profit or loss. However, dividends on such investments are recognised in profit or loss, rather than other comprehensive income unless they clearly represent a partial recovery of the cost of the investment. Investments in equity instruments in respect of which an entity does not elect to present fair value changes in other comprehensive income would be measured at fair value with changes in fair value recognised in profit or loss. The standard requires that derivatives embedded in contracts with a host that is a financial asset within the scope of the standard are not separated; instead the hybrid financial instrument is assessed in its entirety as to whether it should be measured at amortised cost or fair value. The standard is effective for annual periods beginning on or after 1 January Earlier application is permitted. The Company does not expect the measurement and classification requirements to have a significant impact on its financial statements. IFRS 15 Revenue from Contracts with Customers: IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15 revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach to measuring and recognising revenue. The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IFRS. Either a full or modified retrospective application is required for annual periods beginning on or after 1 January 2018 with early adoption permitted. The Company is currently assessing the impact of IFRS 15 and not expected to have a material impact on the presentation of Company s financial statements. 9

11 2. Fees and Expenses SPARX FUNDS PLC NOTES TO THE UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017 (CONTINUED) Investment Advisory fees SPARX Asset Management Co., Ltd (the Investment Advisor ) is entitled to a fee as follows on the Net Asset Value of each class of SPARX Japan Fund and SPARX Japan Smaller Companies Fund. The Investment Advisor is also entitled to be reimbursed its out-of-pocket expenses out of the assets of the Company. SPARX Japan SPARX Japan Fund % Smaller Companies Fund % JPY Institutional A Class Shares JPY Institutional B Class Shares USD Hedged Class A Shares USD Hedged Class B Shares USD Hedged Class C Shares 0.90 N/A EUR Hedged Class A Shares EUR Hedged Class B Shares CHF Hedged Class A Shares CHF Hedged Class B Shares GBP Hedged Class A Shares GBP Hedged Class B Shares Investment advisory fees charged for the period from 1 November 2016 to 30 April 2017 were JPY 442,307,492 (30 April 2016: JPY 416,952,012). Investment Advisory fees and distributor fees payable at 30 April 2016 were JPY 72,112,740 (31 October 2016: JPY 60,227,121). Administration and depositary fees The Company pays HSBC Securities Services (Ireland) DAC (the Administrator ) and HSBC Institutional Trust Services (Ireland) DAC (the Depositary ) out of the assets of each Fund an annual fee, accrued at each Valuation Point and payable monthly in arrears. The Administrator is entitled to a fee of 0.125% per annum of the Net Asset Value of each Fund up to US$250 million, a fee of 0.10% per annum of the Net Asset Value on the next US$250 million. The Administrator is entitled to receive 0.075% per annum in respect of any assets under management over US$500 million. The Administrators fee is subject to a minimum monthly fee for the first share class of US$9,000 and a minimum monthly fee of US$650 for every additional share class. In addition, the Company pays annual fees of US$8,000 per set of annual financial statements for the Company and initial Fund, plus an additional fee of US$1,600 for each additional Fund created thereafter. A fee of US$5,000 is charged in respect of the interim financial statements for the Company and initial Fund, plus an additional fee of US$1,200 for each additional Fund established thereafter. The Administrator is also entitled to any reasonable out-of-pocket expenses incurred on behalf of the Fund. The Depositary is entitled to a fee of 0.05% per annum of the Net Asset Value of each Fund up to US$250 million, a fee of 0.04% per annum of the Net Asset Value on the next US$250 million and the Depositary is entitled to receive a fee of 0.03% per annum in respect of any assets under custody above US$500 million, subject to a minimum monthly fee of US$4,000. The Depositary was also entitled to any reasonable out-of-pocket expenses incurred on behalf of the Fund. Administration fees charged for the period from 1 November 2016 to 30 April 2017 were JPY 82,857,712 (30 April 2016: JPY 79,151,992) and depositary fees charged were JPY 27,024,269 (30 April 2016: JPY 24,111,667). Administration fees payable at 30 April 2016 were JPY 21,932,386 (31 October 2016: JPY 25,309,963) and depositary fees payable were JPY 5,574,995 (31 October 2016: JPY 4,907,798). 10

12 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017 (CONTINUED) 2. Fees and Expenses (continued) Directors fees and expenses The Directors shall be entitled to a fee and remuneration for their services at a rate to be determined by the Directors up to a maximum in aggregate of EUR 75,000 per annum. Mr. Shinji Naito and Mr. Brian Morikuni have waived their entitlement to receive remuneration. Directors may be entitled to special remuneration if called upon to perform any special or extra services to the Company. All Directors will be entitled to reimbursement by the Company of expenses properly incurred in connection with the business of the Company or the discharge of their duties. Directors fees charged for the period from 1 November 2016 to 30 April 2017 were JPY 1,219,324 (30 April 2016: JPY 4,238,096), of which JPY 2,311,717 (31 October 2016: JPY 5,743,163) was payable at 30 April Distributions to shareholders The Directors are empowered to declare and pay dividends for Shares of any sub-fund in the Company. It is not currently intended to distribute dividends to the shareholders, the current intention being that income and earnings and gains of the Funds will be accumulated and reinvested on behalf of shareholders. 4. Financial Assets and Liabilities at Fair Value through Profit or Loss SPARX Japan SPARX Smaller Total Japan Fund Companies Fund 30 April April April 2017 Financial Assets JPY JPY JPY Held for trading: - listed equity securities held for trading 82,399,328,830 79,032,964,630 3,366,364,200 - forward currency contracts 291,591, ,319, ,117 82,690,919,844 79,324,284,527 3,366,635,317 Financial Liabilities Held for trading: - forward currency contracts (224,732) (224,427) (305) ( 224,732) (224,427) (305) SPARX Japan SPARX Smaller Total Japan Fund Companies Fund 31 October October October 2016 JPY JPY JPY Financial Assets Held for trading: - listed equity securities held for trading 65,317,108,920 61,475,618,120 3,841,490,800 - forward currency contracts 130,792, ,127,331 6,665,501 65,447,901,752 61,599,745,451 3,848,156,301 11

13 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017 (CONTINUED) 4. Financial Assets and Liabilities at Fair Value through Profit or Loss (Continued) The following table presents the financial instruments carried on the Statement of Financial Position by caption and by level within the valuation hierarchy as at 30 April SPARX Japan Fund Level 1 Level 2 Level 3 Total JPY JPY JPY JPY Financial assets at fair value through profit or loss - listed equity securities 79,032,964, ,032,964,630 - forward currency contracts - 291,319, ,319,897 79,032,964, ,319,897-79,324,284,527 Financial liabilities at fair value through profit or loss - forward currency contracts - (224,427) - (224,427) - (224,427) - (224,427) SPARX Japan Smaller Companies Fund Level 1 Level 2 Level 3 Total JPY JPY JPY JPY Financial assets at fair value through profit or loss - listed equity securities 3,366,364, ,366,364,200 - forward currency contracts - 271, ,117 3,366,364, ,117-3,366,635,317 Financial liabilities at fair value through profit or loss - forward currency contracts - (305) - (305) - (305) - (305) The following table presents the financial instruments carried on the Statement of Financial Position by caption and by level within the valuation hierarchy as at 31 October SPARX Japan Fund Level 1 Level 2 Level 3 Total JPY JPY JPY JPY Financial assets at fair value through profit or loss - listed equity securities 61,475,618, ,475,618,120 - forward currency contracts - 124,127, ,127,331 61,475,618, ,127,331-61,599,745,451 SPARX Japan Smaller Companies Fund Level 1 Level 2 Level 3 Total JPY JPY JPY JPY Financial assets at fair value through profit or loss - listed equity securities 3,841,490, ,841,490,800 - forward currency contracts - 6,665,501-6,665,501 3,841,490,800 6,665,501-3,848,156,301 12

14 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017 (CONTINUED) 4. Financial Assets and Liabilities at Fair Value through Profit or Loss (Continued) Investments Investments whose values are based on quoted market prices in active markets are classified within level 1. These include active listed equities. The Directors do not adjust the quoted price for such instruments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price. Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within level 2. At the period end, the Company held forward currency contracts categorised as level 2 securities. Investments classified within level 3 have significant unobservable inputs, as they trade infrequently or not at all. At the period end, the Company did not hold any level 3 securities. There were no transfers between Level 1 and Level 2 during the period. The Company has not disclosed the fair values in a fair value hierarchy for cash at bank and other debtors and creditors as their carrying values are reasonable approximation of fair value. Offsetting Financial Assets and Financial Liabilities As at 30 April 2017, the Funds are subject to an enforceable master netting arrangement in the form of an ISDA agreement with the derivative counterparties. Under the terms of this agreement, offsetting of derivative contracts is permitted only in the event of bankruptcy or default of either party to the agreement. No financial assets or liabilities, subject to enforceable master netting arrangements or similar arrangements, are presented on a net basis in the Statement of Financial Position of the Funds as at 30 April The gross amounts of unrealised gains and losses on forwards, by counterparty, are disclosed in Schedule of Investments of the Funds. As at the 30 April 2017, the amount of unrealised losses on open forwards offset against unrealised gains was JPY 224,732 (2016: JPY Nil). As at 30 April 2017, there are no collateral balances held with the Company. 5. Soft Commissions There were no soft commission arrangements affecting the Company during the period 1 November 2016 to 30 April

15 NOTES TO THE UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017 (CONTINUED) 6. Comparative Net Asset Value Table The Net Asset Value and Net Asset Value per share are detailed below. Net Asset Value 30 April October April 2016 SPARX Japan Fund JPY Institutional A Class Shares 31,638,759,263 27,384,735,759 25,748,725,339 JPY Institutional B Class Shares 35,859,005,433 29,471,231,255 21,913,606,897 USD Hedged Class A Shares $4,189,344 US$3,049,645 US$21,405,223 USD Hedged Class B Shares $99,957,458 US$95,081,026 US$88,327,553 EUR Hedged Class A Shares 3,276,998 2,873,353 3,784,218 GBP Hedged Class B Shares 3,719, USD Hedged Class C Shares $30,854, SPARX Japan Smaller Companies Fund JPY Institutional A Class Shares 420,375, ,610,624 4,945,336,579 JPY Institutional B Class Shares 3,082,799,542 2,990,493,396 4,390,785,350 USD Hedged Class A Shares - - US$1,441,370 USD Hedged Class B Shares $134,774 US$5,480,653 US$5,347,011 Net Asset Value per Share 30 April October April 2016 SPARX Japan Fund JPY Institutional A Class Shares 20,405 18,705 17,430 JPY Institutional B Class Shares 14,199 12,977 12,057 USD Hedged Class A Shares $120 US$110 US$102 USD Hedged Class B Shares $136 US$124 US$115 EUR Hedged Class A Shares GBP Hedged Class B Shares USD Hedged Class C Shares $ SPARX Japan Smaller Companies Fund JPY Institutional A Class Shares 17,990 16,139 15,997 JPY Institutional B Class Shares 12,552 11,218 11,078 USD Hedged Class A Shares - - US$103 USD Hedged Class B Shares $120 US$107 US$ Exchange rates The following exchange rates were used to translate assets and liabilities into the reporting currency (Japanese Yen) at 30 April 2017: Yen : Euro 1 : Yen : US Dollar 1 : Yen : Sterling Pounds 1 : The following exchange rates were used to translate assets and liabilities into the reporting currency (Japanese Yen) at 31 October 2016: Yen : Euro 1 : Yen : US Dollar 1 : Yen : Sterling Pounds 1 : Yen : Swiss Francs 1 :

16 8. Related parties SPARX FUNDS PLC NOTES TO THE UNAUDITED FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017 (CONTINUED) Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operational decisions. Mr. Brian Morikuni is a Director of SPARX Overseas Ltd. ( SOL ). SOL and the Investment Advisor are whollyowned subsidiaries of SPARX Group Co. Ltd. Mr. Paul McNaughton is a Director of Bridge Consulting. Bridge Consulting are governance consultants to the Company. For further details on related party transactions fees including Investment Advisory and Directors Fees, please refer to note 2. In accordance with the requirements of the Central Bank UCITS Regulations all transactions carried out with the Company by the promoter, manager, trustee, investment adviser and associates/group companies ( connected parties ) must be carried out as if negotiated at arm s length and be in the best interests of shareholders. The Directors are satisfied that there are arrangements (evidenced by written procedures) in place to ensure that the obligations set out in the Central Bank UCITS Regulations are applied to all transactions with connected parties and transactions with connected parties entered into during the period complied with the obligations set out in the Central Bank UCITS Regulations. 9. Significant matters arising during the period A revised prospectus of the Company was filed with the Central Bank of Ireland for noting on 13 December 2016 to reflect: Insertion of relevant updates to reflect the requirements of Directive 2014/91/EU ( UCITS V ) as implemented into Ireland by the European Union (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations, 2016; Insertion of relevant updates to reflect the requirements of the Central Bank (Supervision and Enforcement) Act 2013 (Section 48(1)) Undertakings for Collective Investment in Transferable Securities) Regulations) 2015; Amendment to reflect the new address of the Investment Advisor; Updates to Risk Factors section of prospectus, to include addition of cyber security and other risks; Updating Irish company legislation references from the Companies Act, to the Companies Act, 2014; Updates to reflect the ESMA Remuneration Guidelines; Insertion of disclosures in relation to the Investor Money Regulations Updated Irish taxation section to accord with the OECD s Common Reporting Standard among other updates; Consolidation and updates to the share class information cards for the SPARX Japan Fund and the SPARX Japan Smaller Companies Fund; and There were no other significant events occurred during the period which may require adjustment or disclosure in the financial statements. 10. Subsequent Events There have been no any events subsequent to the period ended 30 April 2017 that may require adjustment or disclosure in the financial statements. 11. Approval of the Financial Statements The financial statements were approved by the Board of Directors on 21 June

17 SPARX JAPAN FUND UNAUDITED SCHEDULE OF INVESTMENTS AS AT 30 APRIL 2017 Financial Assets at Fair Value through Fair Value % of Net Quantity Profit or Loss JPY Asset Value Equity securities Japan 2,195,600 Asics Corporation 4,327,527, ,500 Daikin Industries 3,123,012, ,500 Daiwa ETF 1,322,580, ,386,800 Fuji Seal 3,680,567, ,101,100 Isuzu Motors 3,176,863, ,500 Itochu 301,804, ,300 Kao 4,133,300, ,400 Keyence 3,825,920, ,000 Komatsu 181,292, ,146,700 Kubota 3,763,165, ,500 Mani 609,331, ,000 Marubeni 252,595, ,774,200 Misumi 3,745,336, ,425,000 Mitsubishi 3,424,987, ,111,200 Mizuho Financial Group 1,040,640, ,700 Nidec 3,747,674, ,206,360 Nomura Topix ETF 1,913,286, ,200 Pigeon 2,360,490, ,100 Recruit Holdings Co Ltd 3,834,593, ,980,700 Rohto Pharmaceutical 4,117,875, ,300 Ryohin Keikaku 3,049,482, ,100 Shimano 3,833,453, ,200 Softbank 4,577,252, ,900 Sumitomo Corporation 915,278, ,000 Sumitomo Mitsui Financial 3,488,904, ,006,100 Terumo 4,089,796, ,700 Toyota Motor 2,025,949, ,539,600 Uni Charm 4,170,006, Total equity securities 79,032,964, Forward foreign currency contracts - unrealised gains EUR 3,158,754 / JPY 369,676,256 31/5/ ,514, GBP 24,316 / JPY 3,466,280 31/5/ ,535 - GBP 34,654 / JPY 4,902,779 31/5/ ,154 - GBP 253,912 / JPY 36,416,020 31/5/ ,082 - GBP 144,422 / JPY 20,389,612 31/5/ ,456 - GBP 316,348 / JPY 44,181,625 31/5/2017 1,324,995 - GBP 1,387,512 / JPY 197,793,652 31/5/2017 1,799,472 - GBP 448,522 / JPY 62,641,124 31/5/2017 1,878,590 - USD 102,919 / JPY 11,360,119 31/5/ ,446 - USD 4,036,234 / JPY 439,928,889 31/5/2017 8,469, USD 29,352,692 / JPY 3,199,293,688 31/5/ ,594, USD 96,289,045 / JPY 10,495,014,780 31/5/ ,056, Total forward foreign currency contracts - unrealised gains 291,319, Total Financial Assets at Fair Value through Profit or Loss 79,324,284,

18 SPARX JAPAN FUND UNAUDITED SCHEDULE OF INVESTMENTS AS AT 30 APRIL 2017 (CONTINUED) Financial Assets at Fair Value through Fair Value % of Net Quantity Profit or Loss JPY Asset Value Financial Liabilities at Fair Value through Profit or Loss Forward foreign currency contracts - unrealised losses EUR 89,840 / JPY 10,902,843 31/5/2017 (4,255) - USD 2,801,343 / JPY 311,351,031 31/5/2017 (140,526) - USD 853,565 / JPY 94,868,159 31/5/2017 (42,818) - USD 241,936 / JPY 26,908,474 31/5/2017 (30,959) - USD 117,016 / JPY 13,005,604 31/5/2017 (5,869) - Total Financial Liabilities at Fair Value through Profit or Loss (224,427) - Other Net Assets 4,124,561, Total Net Assets Attributable to Holders of Redeemable Participating Shares 83,448,621, % of Total Analysis of Net Investments (Unaudited) Assets Transferable securities admitted to an official stock exchange listing or dealt on another regulated market 79,032,964, Financial derivative instruments 291,095,

19 SPARX JAPAN SMALLER COMPANIES FUND UNAUDITED SCHEDULE OF INVESTMENTS AS AT 30 APRIL 2017 Financial Assets at Fair Value through Fair Value % of Net Quantity Profit or Loss JPY Asset Value Equity securities Japan 45,600 Ahresty Corporation 50,798, ,300 Ariake Japan 86,715, ,400 Asia Pile Holdings 54,265, ,000 Bic Camera 116,445, ,000 Central Glass 88,206, ,600 Daido Metal 107,698, ,900 DIC 110,623, ,400 Ferrotec 107,855, ,000 FP Corporation 137,800, ,000 Hanwa Corporation 70,310, ,500 IDOM Inc 38,317, ,300 ITmedia Inc 39,731, ,600 Keisei Electric Railway 102,328, ,000 Mani 57,620, ,800 Maruwa 134,524, ,000 MEC 95,680, ,500 Miura 165,229, ,200 N Field Co Ltd 69,791, ,400 Nippon Aqua 87,719, ,000 Nippon Soda 77,916, ,900 Nissei ASB Machine 120,001, ,900 Open House 245,786, ,000 Prima Meat Packers 107,940, ,100 Rengo 123,409, ,000 Sanyo Denki 116,713, ,800 Ship Healthcare Holdings 122,277, ,400 SRA Holdings 95,839, ,700 Taiyo Holdings 93,126, ,000 Takuma 75,205, ,500 Teikoku Piston Ring Company 174,607, ,400 Tosei 165,007, ,400 Toyo Construction 126,876, Total equity securities 3,366,364, Forward foreign currency contracts - unrealised gains USD 128,302 / JPY 13,984,223 31/5/ , USD 2,640 / JPY 291,358 31/5/2017 1,884 - Forward foreign currency contracts - unrealised gains 271, Total Financial Assets at Fair Value through Profit or Loss 3,366,635,

20 SPARX JAPAN SMALLER COMPANIES FUND UNAUDITED SCHEDULE OF INVESTMENTS AS AT 30 APRIL 2017 (CONTINUED) Fair Value JPY % of Net Asset Value Financial Liabilities at Fair Value through Profit or Loss Forward foreign currency contracts-unrealised losses USD 3,700 / JPY 411,398 31/5/2017 (305) - Total Financial Liabilities at Fair Value through Profit or Loss (305) - Other Net Assets 151,532, Total Net Assets Attributable to Holders of Redeemable Participating Shares 3,518,167, % of Total Analysis of Net Investments (Unaudited) Assets Transferable securities admitted to an official stock exchange listing or dealt on another regulated market 3,366,364, Financial derivative instruments 270,

21 SPARX JAPAN FUND UNAUDITED SCHEDULE OF CHANGES IN COMPOSITION OF PORTFOLIO FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017 Number of shares Cost/Proceeds JPY All purchases Recruit Holdings Co Ltd 681,100 3,049,279,089 Sumitomo Corporation 408,200 1,830,151,409 Asics Corporation 627,000 1,215,496,121 Terumo 219, ,249,798 Toyota Motor 102, ,838,692 Isuzu Motors 426, ,443,481 Daikin Industries 44, ,840,670 Mizuho Financial Group 2,158, ,861,360 Nomura Topix ETF 326, ,651,599 Kao 86, ,288,253 Shimano 26, ,270,306 Uni Charm 170, ,998,758 Kubota 183, ,157,909 Rohto Pharmaceutical 128, ,205,451 Keyence ,464,397 Misumi 20,500 40,544,882 Mitsubishi 16,000 40,357,120 All Sales Nomura Topix ETF 457,340 (715,411,762) Daiwa ETF 21,330 (33,731,171) The Unaudited Changes in Composition of Portfolio reflect the aggregate purchases of a security exceeding one percent of the total value of purchases and aggregate disposals of a security greater than one percent of the total sales for the year. At a minimum the largest 20 purchases and largest 20 sales must be given. 20

22 SPARX JAPAN SMALLER COMPANIES FUND UNAUDITED SCHEDULE OF CHANGES IN COMPOSITION OF PORTFOLIO FOR THE PERIOD FROM 1 NOVEMBER 2016 TO 30 APRIL 2017 Number of shares Cost/Proceeds JPY All purchases Ferrotec 81, ,612,035 Descente 79, ,797,280 Keisei Electric Railway 38, ,052,589 N Field Co Ltd 54,500 77,200,259 Asia Pile Holdings Corporation 89,400 51,342,870 ITmedia Inc 59,300 36,630,653 Miura 20,000 35,529,510 Taiyo Holdings 3,000 14,745,278 Daido Metal 6,800 7,127,218 Major Sales Jaccs 292,000 (142,298,760) Hanwa Corporation 132,000 (101,858,936) Ariake Japan 14,700 (96,411,088) SRA Holdings 32,500 (82,544,602) Fuji Oil 211,700 (78,402,394) Mitsui Sugar 23,800 (55,593,573) Daido Metal 55,200 (54,506,307) Open House 20,000 (53,396,989) Prima Meat Packers 125,000 (53,345,913) FP Corporation 9,000 (49,326,693) Nippon Soda 86,000 (47,763,064) Ship Healthcare Holdings 13,000 (39,101,424) DIC 10,100 (38,903,201) Sanyo Denki 50,000 (38,760,703) Toyo Construction 88,800 (36,293,346) Tosei 40,000 (33,322,331) Metawater Corporation 10,300 (30,202,503) Bic Camera 26,400 (27,327,737) Miura 15,600 (27,326,930) Teikoku Piston Ring Company 8,400 (26,299,077) Sun Corporation 35,000 (25,541,163) Maruwa 6,100 (24,486,250) Rengo 35,000 (23,991,198) GCA Savvian Corporation 21,600 (17,649,416) MEC 15,000 (16,007,636) Central Glass 33,000 (14,441,776) The Unaudited Changes in Composition of Portfolio reflect the aggregate purchases of a security exceeding one percent of the total value of purchases and aggregate disposals of a security greater than one percent of the total sales for the year. At a minimum the largest 20 purchases and largest 20 sales must be given. 21

23 Unaudited Disclosure of Remuneration Policy European Union (Undertakings for Collective Investment in Transferable Securities) (Amendment) Regulations Under European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011, as amended (the UCITS Regulations ), management companies and self managed investment companies must establish and apply remuneration policies and practices that are consistent with and promote sound and effective risk management. Variable remuneration paid to certain identified senior staff, risk takers and employees whose professional activities have a material impact on the risk profile of the management of the Company or self managed investment company must be structured so as to align the interests of those staff with the interests of investors. The requirements include, among other things, the retention and deferral of a proportion of the variable remuneration over appropriate periods and the payment of part in non cash instruments (known as the pay out process rules). Current remuneration policies and practices are already aligned to an extent with the applicable remuneration requirements under the UCITS Regulations and/or to other equally effective regimes however, to the extent necessary, changes may need to be made in due course. A detailed remuneration policy is available to investors on request. 22