As the year 2009 ended and the New Year begins, the world financial markets as a whole still continue to be weighed down by lingering turmoil, which was triggered by the U.S.'s sub-prime mortgage loan problem in 2008. Unfortunately, the sub-prime crisis escalated to the worldwide financial crisis that led to the bankruptcy of Lehman Brothers Holdings Inc. on September 15, 2008. Since then, the value of financial assets has sharply declined and the world plunged into a recession, which was thought to be almost as severe as the Great Depression. To avert a greater crisis, the world leaders gathered together to discuss measures to recoup the global economy and stabilize the financial markets. These discussions led to an unprecedented worldwide coordination of aggressive monetary easing policies and massive fiscal stimulus efforts that have re-energized the global economy leading to the emergence of signs that both the financial markets and world's economy have hit bottom. Unlike past recoveries, developing nations such as China are spurring growth and outpacing developed countries.

However, foreign investors still remain cautious about the Japanese equities market and continue to be sellers, and as a result, it is not surprising that some of our clients have decided to redeem from our strategies as well. In the face of uncertain business conditions, we have undertaken difficult but necessary steps to preserve our solid organizational foundation, including downsizing our overseas offices and reducing overall head count in October 2008 and February 2009. These measures were focused on streamlining our back office and marketing functions while we have kept our fund management and research departments intact. Today, we remain focused on strengthening our core business to generate greater revenue and profits in the future.

At the end of 2008, we announced the formation of a joint venture with Lotte Group in Korea (LOTTE), which included the partial sale of the shares of our Korean subsidiary, Cosmo Investment Management Co., Ltd. (Cosmo) to LOTTE for cooperation in developing the business of Cosmo. We continue to believe that the asset management business in Korea offers many exciting opportunities, and this new joint venture between SPARX and LOTTE would greatly help Cosmo accelerate its plan to become a key player by leveraging the strength of the LOTTE brand. We are excited about the future prospects for this alliance, and it is an example of delivering "Asia Investment Intelligence" to investors around the world.

Entering 2010, the recovery of the Japanese equities market has lagged other markets as the nation's economy continues to deal with the aftereffects of the worldwide recession. However, we now clearly see new growth trends appearing as we begin to transition from the oil-based economy to the post-oil era and the emergence of a large middle class in developing countries, which will generate attractive investment opportunities for Japanese companies.

There is no doubt that our business environment remains severe, however, I believe that today's conditions present a once-in-a-lifetime opportunity. With a focus on the mid- to long-term, we are seeing many good Japanese companies that are being traded at cheap valuations. For SPARX’s future growth, we will continue to be innovative and develop new means to capitalize on today's opportunities with the world undergoing dramatic change.

As CEO, I will continue to dedicate my efforts to strengthening our business and lead SPARX "to become the most trusted and respected investment company in the world." I truly appreciate your continued support and look forward to the future. I truly appreciate your continued support and look forward to the future.

January 2010