Seafarer®

Pursuing Lasting Progress in Emerging Markets

Letter to Shareholders – Semi-annual Report

November 2016 – In his address to shareholders, Andrew Foster reviews recent developments with the Funds and the Adviser. He discusses the launch of the Seafarer Overseas Value Fund, noting that its strategy is focused on a traditional form of value investing – adapted for the particular challenges inherent to the emerging markets – and as such it embodies an evolution in Seafarer’s investment philosophy. Andrew also addresses the recent closure of the Growth and Income Fund to most new investors, and the intention behind the closure – to ensure that the Fund has adequate capacity to serve existing shareholders’ needs, both in the present and in the future.

Letter to Shareholders

Seafarer Overseas Growth and Income Fund Portfolio Review – Third Quarter 2016

October 2016 – In his portfolio review for the Seafarer Overseas Growth and Income Fund, Andrew Foster discusses the conditions that led to the recent rally in emerging market stocks. He points out that, contrary to perception, there is a fundamental basis for the rally: the "expectations gap" has nearly closed. Andrew addresses the Fund’s underweight to Chinese stocks, particularly internet companies; and he introduces a new holding to the Fund. Andrew closes with an outlook for emerging markets: he urges investors to remain open to the possibility that a fundamental recovery is underway, but he also cautions that markets might extrapolate that trend too far, too quickly.

Portfolio Review

Seafarer Overseas Value Fund Portfolio Review – Third Quarter 2016

October 2016 – In his first portfolio review, Paul Espinosa discusses the launch of the Seafarer Overseas Value Fund during a quarter of significant appreciation in emerging market equities. Paul offers a few observations on two momentous decisions around the third quarter: the United Kingdom’s June 23 decision to leave the European Union and the International Monetary Fund’s inclusion of the Chinese renminbi in the Special Drawing Rights (SDR) currency basket effective October 1, 2016. He concludes by considering the potential long-term implications for emerging markets of the renminbi’s inclusion in the SDR, and how the changes underway may yield opportunities for the Fund.

Portfolio Review

Introducing the Seafarer Overseas Value Fund

Investor Class SFVLX
Institutional Class SIVLX
Inception Date May 31, 2016

Strategy

The Fund seeks to produce a minimum long-term rate of return by investing in developing country securities priced at a discount to their intrinsic value.

Portfolio Management

Paul Espinosa, Lead Manager
Andrew Foster, Co-Manager

Introduction to the Value Fund

Paul Espinosa defines seven sources of value in emerging markets that may represent viable opportunities for long-term investments.

News and Commentary

Market Commentary Changes to Chinese Currency Policy – Update

Daniel Duncan and Andrew Foster provide an update to their August 2015 video that addressed China’s steps to liberalize how its currency trades against the U.S. dollar. Andrew notes that, just over one year later, China is rolling back some of those liberalizations. He suggests that these policy changes are signs of strained liquidity conditions, and that risks in China’s financial system are consequently elevated. View the video.

Seafarer Overseas Growth and Income Fund Portfolio Briefing – Fourth Quarter 2016

Daniel Duncan and Andrew Foster discuss the losses in the emerging markets and the Growth and Income Fund during the fourth quarter. Andrew notes that the Fund’s losses were spurred by the performance of certain emerging market currencies in the aftermath of the U.S. election. View the video.

Seafarer Overseas Value Fund Portfolio Briefing – Fourth Quarter 2016

Daniel Duncan and Paul Espinosa discuss the top contributors and detractors to Value Fund performance during the fourth quarter. Paul relates certain of those holdings to the seven sources of value in emerging markets that he defined in a recent white paper. View the video.