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 at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades. Securities that are unlisted and fixed-income and convertible securities listed on a national securities exchange for which the over-the-counter market more accurately reflects the securities’ value in the judgment of the Fund’s officers, are valued at the most recent bid price. Short-term corporate notes with maturities of 60 days or less at the time of purchase are valued at amortized cost, which approximates fair value.
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 policies adopted by authority of the Fund’s Board of Directors. 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. 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 March 31, 2013:
|
Investments
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|
Common Stocks — Long
|
|
$
|
6,967,294,680
|
|
—
|
|
—
|
|
$
|
6,967,294,680
|
|
|
Limited Partnerships
|
|
—
|
|
—
|
|
$
|
83,859,636
|
|
83,859,636
|
|
|
Convertible Bonds & Debentures
|
|
—
|
|
$
|
9,376,860
|
|
—
|
|
9,376,860
|
|
|
Corporate Bonds & Debentures
|
|
—
|
|
183,758,836
|
|
18,338,998
|
|
202,097,834
|
|
|
U.S. Government & Agencies
|
|
—
|
|
3,582,661,938
|
|
—
|
|
3,582,661,938
|
|
|
Mortgage-Backed Securities
|
|
—
|
|
—
|
|
111,296,026
|
|
111,296,026
|
|
|
Short-Term Investments
|
|
—
|
|
638,670,289
|
|
—
|
|
638,670,289
|
|
|
|
|
$
|
6,967,294,680
|
|
$
|
4,414,467,923
|
|
$
|
213,494,660
|
|
$
|
11,595,257,263
|
|
|
Currency Derivatives/Futures
|
|
$
|
—
|
|
$
|
40,477,475
|
|
$
|
—
|
|
$
|
40,477,475
|
|
|
Securities Sold Short
|
|
|
|
|
|
|
|
|
|
|
Common Stocks Sold Short
|
|
$
|
(337,131,440
|
)
|
—
|
|
—
|
|
$
|
(337,131,440
|
)
|
|
Non-Convertible Bonds & Debentures Sold Short
|
|
—
|
|
$
|
(6,985,289
|
)
|
—
|
|
(6,985,289
|
)
|
|
|
|
$
|
(337,131,440
|
)
|
$
|
(6,985,289
|
)
|
—
|
|
$
|
(344,116,729
|
)
|
The following table summarizes the Fund’s Level 3 investment securities and related transactions during the quarter ended March 31, 2013
|
Investment
|
|
Beginning Value
at December 31,
2012
|
|
Net Realized and
Unrealized Gains
(Losses)*
|
|
Purchases
|
|
(Sales)
|
|
Net Transfers In
(Out)
|
|
Ending Value
at March 31,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stocks — Long
|
|
$
|
12,884,035
|
|
—
|
|
—
|
|
—
|
|
$
|
(12,884,035
|
)
|
$
|
—
|
|
|
Limited Partnership
|
|
77,517,583
|
|
$
|
6,342,053
|
|
—
|
|
—
|
|
—
|
|
83,859,636
|
|
|
Corporate Bonds & Debentures
|
|
19,896,321
|
|
(1,557,323
|
)
|
—
|
|
—
|
|
|
|
18,338,998
|
|
|
Mortgage-Backed Securities
|
|
135,297,159
|
|
6,509,846
|
|
—
|
|
$
|
(30,510,979
|
)
|
—
|
|
111,296,026
|
|
|
|
|
$
|
245,595,098
|
|
$
|
11,294,576
|
|
—
|
|
$
|
(30,510,979
|
)
|
$
|
(12,884,035
|
)
|
$
|
213,494,660
|
|
*Net realized and unrealized gains (losses) are included in the related amounts in the statement of operations
Transfers of investments between different levels of the fair value hierarchy are recorded at market value as of the end of the reporting period. During the quarter ended March 31, 2013, Countrywide Holdings, Ltd.— A was transferred from Level 3 to Level 1 due to the fact that the shares were admitted for unconditional trading on the London Stock Exchange during the period. Going forward, the shares will be valued each day at the official closing price.
The following table summarizes the quantitative inputs and assumptions used for items categorized as items categorized as Level 3 of the fair value hierarchy as of March 31, 2013
|
Financial Assets
|
|
Fair Value at March
31, 2013
|
|
Valuation Technique(s)
|
|
Unobservable Inputs
|
|
Price/Range
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Limited Partnerships
|
|
$
|
38,396,132
|
|
NAV as Practical Expedient*
|
|
N/A
|
|
$
|
122.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
37,361,309
|
|
NAV as Practical Expedient*
|
|
N/A
|
|
$
|
108.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
8,102,195
|
|
NAV as Practical Expedient*
|
|
N/A
|
|
$
|
104.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Bonds- Long
|
|
$
|
18,338,998
|
|
Vendor Pricing
|
|
Price
|
|
$
|
154.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage-Backed Securities
|
|
$
|
111,296,026
|
|
Methods of Comparables/Consensus Pricing**
|
|
Collateral Value Estimates
|
|
$36.79- $53.52
|
|
* No adjustments were made to the NAV provided by the administrator of the Limited Partnerships. Adjustments to the NAV would be considered if the practical expedient NAV was not as of Fund’s measurement date; it was probable that the Limited Partnerships would be sold at a value materially different than the reported expedient NAV; or it was determined in accordance with the Fund’s valuation procedures that the Limited Partnerships are not being reported at fair value.
** The Methods of Comparables/Consensus Pricing valuation technique for Level 3 securities involves gathering obervable and unobservable data related to securities that exhibit characteristics that are comparable to that of the Level 3 security, and using such information as an input into the valuation of the Level 3 security. Such observable and unobservable data may include offered quotes (prices offered to the Fund by potential buyers in the market), broker quotes, and vendor prices for the comparable securities.
NOTE 2 — Federal Income Tax
The aggregate cost of investment securities (excluding securities sold short) was $9,443,858,981 for Federal income tax purposes. Net unrealized appreciation for Federal income tax consists of:
|
Gross unrealized appreciation:
|
|
$
|
1,724,803,025
|
|
|
Gross unrealized depreciation:
|
|
(207,290,609
|
)
|
|
Net unrealized appreciation:
|
|
$
|
1,517,512,416
|
|
ITEM 2. CONTROLS AND PROCEDURES.
(a)
The principal executive officer and principal financial officer of the registrant have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of the disclosure controls and procedures as of a date within 90 days of the filing date of this report.
(b)
There have been no significant changes in the registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting.
ITEM 3. EXHIBITS.
(a)
Separate certification for the registrant’s principal executive officer and principal financial officer, as required by Rule 30a-2(a) under the Investment Company Act of 1940. 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 CRESCENT FUND
|
|
|
|
|
|
|
|
|
By:
|
/s/ STEVEN T. ROMICK
|
|
|
|
Steven T. Romick, President
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Date:
|
May 23, 2013
|
|
|
|
|
|
|
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.
FPA FUNDS TRUST’S FPA CRESCENT FUND
|
By:
|
/s/ STEVEN T. ROMICK
|
|
|
|
Steven T. Romick, President
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
Date:
|
May 23, 2013
|
|
|
|
|
|
|
|
|
By:
|
/s/ J. RICHARD ATWOOD
|
|
|
|
J. Richard Atwood, Treasurer
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
Date:
|
May 23, 2013
|
|
|
|
|
|
|