Seafarer®

Pursuing Lasting Progress in Emerging Markets®

Seafarer Overseas Value Fund

Overview

Factsheet Prospectus Annual Report On Value
in the Emerging Markets White Paper

Investment Objective

The Fund seeks to provide long-term capital appreciation.

Strategy

The Fund invests primarily in the securities of companies located in developing countries. The Fund invests in several asset classes including common stocks, preferred stocks, and fixed-income securities.

The Fund’s portfolio is comprised of securities identified through a bottom-up security selection process based on fundamental research. The Fund seeks to produce a minimum long-term rate of return by investing in securities priced at a discount to their intrinsic value.

Share Classes

Investor Institutional
Ticker SFVLX SIVLX
CUSIP
NAV
30-Day SEC Yield – Subsidized
30-Day SEC Yield – Unsubsidized
Fund Distribution Yield
Net Expense Ratio1
Load
12b-1 Fee
Minimum Initial Investment – Regular Account
Minimum Initial Investment – Automatic Investment Plan2
Minimum Initial Investment – Retirement Account
Minimum Subsequent Investment

Underlying Portfolio Holdings

Holdings
% of Net Assets in Top 10 Holdings
Weighted Average Market Cap
Market Cap of Portfolio Median Dollar
Gross Portfolio Yield3
Price / Book Value3
Price / Earnings34
Earnings Per Share Growth34
  • Gross expense ratio: for Investor Class; for Institutional Class1 All performance is in U.S. dollars with gross (pre-tax) dividends and/or distributions reinvested. The performance data quoted represents past performance and does not guarantee future results. Future returns may be lower or higher. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.

Geographic Focus

Developing countries including, but not limited to:

Africa
Botswana
Ghana
Kenya
Mauritius
Morocco
Nigeria
Tunisia
South Africa
Zimbabwe
East and South Asia
Bangladesh
China
India
Indonesia
Malaysia
Pakistan
Philippines
South Korea
Sri Lanka
Taiwan
Thailand
Vietnam
Emerging Europe
Bosnia and Herzegovina
Bulgaria
Croatia
Czech Republic
Estonia
Georgia
Greece
Hungary
Lithuania
Kazakhstan
Poland
Romania
Russia
Serbia
Slovenia
Turkey
Ukraine
Latin America
Argentina
Brazil
Chile
Colombia
Jamaica
Mexico
Peru
Trinidad and Tobago
Middle East
Bahrain
Egypt
Jordan
Kuwait
Lebanon
Oman
Palestine
Qatar
Saudi Arabia
United Arab Emirates

Select developed countries with significant economic and financial linkages to developing countries, including Hong Kong and Singapore.

  • Sources: ALPS Fund Services, Inc., Bloomberg, Seafarer
  • Portfolio holdings are subject to change.
  1. Seafarer Capital Partners, LLC has agreed contractually to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waiver / Expense Reimbursements (inclusive of acquired fund fees and expenses, and exclusive of brokerage expenses, interest expenses, taxes and extraordinary expenses) to 1.15% and 1.05% of the Fund’s average daily net assets for the Investor and Institutional share classes, respectively. This agreement is in effect through August 31, 2020.
  2. Shareholders who sign up for an Automatic Investment Plan can request a waiver of the Institutional Class investment minimum. View the waiver program criteria.
  3. Calculated as a harmonic average of the underlying portfolio holdings.
  4. Based on consensus earnings estimates for next year. Excludes securities for which consensus earnings estimates are not available.
  5. The MSCI Emerging Markets Total Return Index, Standard (Large+Mid Cap) Core, Gross (dividends reinvested), USD is a free float-adjusted market capitalization index designed to measure equity market performance of emerging markets. Index code: GDUEEGF. It is not possible to invest directly in an index.

Performance

Factsheet Historical Fund Data

Total Returns

As of (Prior Month)

2 NAV / Index Level () Annualized Cumulative Inception Date Net Expense Ratio1 Gross Expense Ratio1
YTD 1 Mo 3 Mo 1 Yr 3 Yr 5 Yr Since Inception Since Inception

Gross expense ratio: for Investor Class; for Institutional Class1

As of (Prior Quarter)

2 NAV / Index Level () Annualized Cumulative Inception Date Net Expense Ratio1 Gross Expense Ratio1
YTD 1 Mo 3 Mo 1 Yr 3 Yr 5 Yr Since Inception Since Inception

Gross expense ratio: for Investor Class; for Institutional Class1

Growth of a $10,000 Investment Since Inception

The rates of return are hypothetical and do not represent the returns of any particular investment.

  • All performance is in U.S. dollars with gross (pre-tax) dividends and/or distributions reinvested. The performance data quoted represents past performance and does not guarantee future results. Future returns may be lower or higher. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
  • Source: ALPS Fund Services, Inc.

Return Characteristics as of

Relative to the MSCI Emerging Markets Total Return Index2 except where noted.

3 years Since Inception3
Alpha
Beta
R-squared
R-squared vs. S&P 500 Index4
Upside Capture Ratio
Downside Capture Ratio

Source: Morningstar

  1. Seafarer Capital Partners, LLC has agreed contractually to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waiver / Expense Reimbursements (inclusive of acquired fund fees and expenses, and exclusive of brokerage expenses, interest expenses, taxes and extraordinary expenses) to 1.15% and 1.05% of the Fund’s average daily net assets for the Investor and Institutional share classes, respectively. This agreement is in effect through August 31, 2020.
  2. The MSCI Emerging Markets Total Return Index, Standard (Large+Mid Cap) Core, Gross (dividends reinvested), USD is a free float-adjusted market capitalization index designed to measure equity market performance of emerging markets. Index code: GDUEEGF. It is not possible to invest directly in an index.
  3. As of 5/31/16.
  4. The S&P 500 Total Return Index is a stock market index based on the market capitalizations of 500 large companies with common stock listed on the NYSE or NASDAQ. It is not possible to invest directly in an index.

Composition

Factsheet Historical Fund Data

Holdings Portfolio Composition

Top 10 Holdings as of

Holding Sector Country Issuer Mkt Cap ($B) Yield1 Price/ Book Price/ Earnings2 EPS Growth2

Portfolio holdings are subject to change.
Sources: ALPS Fund Services, Inc., Bloomberg, Seafarer

View all Holdings

Portfolio Composition by Region as of

All Holdings ADRs, Common & Preferred Equities Only
% Net Assets Price / Earnings56 EPS Growth56
Region # of Holdings Fund +/− vs. Index3 Avg Mkt Cap ($B)4 Gross Yield5 Price / Book5 Prior Year This Year Next Year 7This Year Next Year

Sources: ALPS Fund Services, Inc., Bloomberg, Seafarer

Portfolio Composition by Sector as of

All Holdings ADRs, Common & Preferred Equities Only
% Net Assets Price / Earnings56 EPS Growth56
Sector # of Holdings 8Fund +/− vs. Index3 Avg Mkt Cap ($B)4 Gross Yield5 Price / Book5 Prior Year This Year Next Year This Year Next Year

Sources: ALPS Fund Services, Inc., Bloomberg, Seafarer

30-Day SEC Yield: subsidized SFVLX ; SIVLX / unsubsidized SFVLX ; SIVLX ()
The performance data quoted represents past performance and does not guarantee future results. Future returns may be lower or higher. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. View the Fund’s most recent month-end performance.

Portfolio Composition by Asset Class as of

Asset Class % Net Assets

Source: ALPS Fund Services, Inc.

Portfolio Composition by Market Capitalization as of

Market Capitalization % Net Assets +/− vs. Index3

Sources: ALPS Fund Services, Inc., Seafarer

Due to rounding, percentage values may not sum to 100%. Values less than 0.5% may be rounded to 0%.

  1. Yield = dividend yield for common and preferred stocks and yield to maturity for bonds.
  2. Based on consensus earnings estimates for next year.
  3. The MSCI Emerging Markets Total Return Index, Standard (Large+Mid Cap) Core, Gross (dividends reinvested), USD is a free float-adjusted market capitalization index designed to measure equity market performance of emerging markets. Index code: GDUEEGF. It is not possible to invest directly in an index.
  4. Weighted Average Market Capitalization of Issuer.
  5. Calculated as a harmonic average of the underlying portfolio holdings.
  6. Based on consensus earnings estimates. Excludes securities for which consensus earnings estimates are not available.
  7. The pronounced EPS Growth forecast for the Emerging Europe region for this year is influenced by a single constituent company. That company’s earnings have recently been very volatile. Consensus forecasts (produced by research arms of investment banks) suggest that the company's earnings will recover, leading to substantial percentage growth in profits; however, such consensus forecasts are subject to a very high degree of uncertainty.
  8. The Communications Services sector represents 0.45% of the Fund’s net assets as of 9/30/19. (A value less than 0.5% may appear as 0% due to rounding.)

Distributions

Year-end 2019 Distribution Estimates

Please note that these estimates are subject to change.1 Due to the Fund's small size, the actual distributions may vary from the estimates to a greater degree than is typical for most mutual funds.

Record
Date
Ex, Pay and
Reinvest Date
Ordinary
Income
Short Term
Capital Gains
Long Term
Capital Gains
Total Distrib.
Per Share
SFVLX (Investor Class) 12/11/19 12/12/19 $0.309 $0.008 $0.042 $0.359
SIVLX (Institutional Class) 12/11/19 12/12/19 $0.315 $0.008 $0.042 $0.365

Actual distribution amounts will be available on this page on or after the ex-date.

All shareholders of record on December 11, 2019 will receive the year-end distribution. On December 12, 2019 the share price of the Fund will be reduced by the amount of the distribution (net of any market performance), and the distribution will either be paid or reinvested as of market close (per the shareholder's previously established account settings).

Should you have any questions, please contact Shareholder Services at (855) 732-9220 (Mon–Fri 9am–8pm ET).

The estimates shown above should not be used in the computation of federal or state income taxes.

  1. Estimates are based on Fund shares outstanding as of November 13, 2019.

2019 Distribution Dates

Distribution frequency: Annual

Please note: future dates are subject to change.


Record Date
Ex, Pay and
Reinvest Date
Year-end Distribution 12/11/19 12/12/19

To be notified of distribution estimates, sign up for Seafarer email updates.

Historical Distributions

Ex, Pay and
Reinvest Date
Reinvest
NAV
Ordinary
Income
Short Term
Capital Gains
Long Term
Capital Gains
Total Distrib.
Per Share
Cumulative Distrib.
Per Share Since Inception
SFVLX (Investor Class)
SIVLX (Institutional Class)

For more information on the Fund’s distribution policies, please see the “Dividends and Distributions” section of the Prospectus.

Past performance is no guarantee of future results. There is no guarantee that the Fund will pay or continue to pay distributions.

Portfolio Review

Seafarer Overseas Value Fund

Portfolio ReviewThird Quarter 2019

Portfolio Review Portfolio Review Archives

During the third quarter of 2019, the Seafarer Overseas Value Fund returned -1.61%.1 The Fund’s benchmark, the MSCI Emerging Markets Total Return Index, returned -4.11%. By way of broader comparison, the S&P 500 Index gained 1.70%.

The Fund began the quarter with a net asset value of $11.83 per share. It paid no distributions during the quarter and finished the period with a value of $11.64 per share.2

Performance

In the third quarter of 2019, the standout feature of the Value Fund’s performance was the resilience of portfolio holding valuations in the face of the Hong Kong protests and the U.S.-China trade dispute. Importantly, the Fund offset the negative contribution to total return from its holdings in Hong Kong and China with positive contributions derived primarily from stocks that realized their value potential for company-specific reasons, and to a lesser extent through geographic diversification. More specifically, the Value strategy’s objective of seeking diversification across the seven categories of value identified in the white paper On Value in the Emerging Markets proved not only effective, but in my opinion, was more beneficial than the traditional approach of diversification across geographies.

Indeed, the largest contributor to the Fund’s total return during the third quarter was Asia Satellite Telecommunications Holdings (Deleveraging source of value; the “source of value” for a Fund holding is hereafter referenced in parenthesis). Ironically in the context of recent protests, Asia Satellite is a Hong Kong-based company that owns and operates satellites. Contradicting the widespread belief that markets are efficient, the company’s share price languished since the Value Fund purchased the stock at the Fund’s inception. Market participants seemed to ignore the company’s cash flow from operations, which management used to reduce debt and restart a dividend. Attuned to this market oversight, the controlling shareholders tendered for the publicly-traded shares of the company, which delisted in September of 2019, thus permanently locking in the Fund’s capital gain in the stock.

Another portfolio holding that appreciated against the headwind of a mediocre performance of its home country stock market index was Qatar Gas Transport (Deleveraging), an owner and operator of liquefied natural gas (LNG) vessels. In the absence of significant company developments during the quarter, I attribute the stock price appreciation to the divergence between a share price that had declined following the Gulf Cooperation Council (GCC) feud that begun in June of 2017 and the likely expansion of the company’s fleet as it seeks to accommodate an expected ramp up in Qatar’s gas output, the country’s primary national asset.

Lastly, the share price of Qualicorp (Structural Shift), a Brazilian life insurance broker, continued to appreciate strongly, ranking the company among the top contributors to Fund performance for the second quarter in a row. The company’s stock was propelled higher by persistent and substantial free cash flow generation in spite of difficult operating conditions in Brazil; return of capital to shareholders; and business development potential following the acquisition of a ten percent stake in the company by a strategic shareholder. Qualicorp’s share price rose despite factors impinging on the performance of its home market equity index.

To reiterate, in my opinion, it is unlikely that geographic diversification alone would have delivered a performance matching that of the foregoing cases of value realization. This observation is important when considering the meaningful impact on performance of the Fund’s exposure to Hong Kong-listed stocks, whose valuations suffered during the third quarter as a result of the prolongation and intensification of the Hong Kong protests and the U.S.-China trade dispute.

In particular, the stock prices of portfolio holdings Shangri-La (Breakup Value), a hotel owner and operator, and Giordano (Structural Shift), an apparel manufacturer and retailer, deteriorated meaningfully during the quarter for reasons related to their substantial profit derivation from Hong Kong. Similarly, the stock price of WH Group (Management Change), a Chinese meat processor and owner of U.S.-based Smithfield Foods, fluctuated with the sentiment around a potential resolution of the U.S.-China trade dispute. Neither geography nor speculation about the trade dispute motivate the Fund’s investment in these three companies. As their respective category of value designations indicate, each holding contributes different drivers and risks to the overall Value strategy, even if at present, each company’s stock price is besieged by the same geopolitical force.

Allocation

The Value Fund exited two holdings during the quarter: SIA Engineering (Asset Productivity), a Singaporean provider of maintenance, repair, and overhaul (MRO) services to the aircraft industry; and PFNonwovens3 (Segregated Market), a Czech manufacturer of nonwoven, absorbent textiles.

In exiting SIA Engineering, the Fund took advantage of a sharp share price rise driven by speculation that the company’s parent, Singapore Airlines, might take it private. The Fund had long held the position on the view that the industry’s maintenance cycle would return to normal after the initial aging of new generation aircraft, and the company would successfully increase employee productivity as maintenance, repair, and operations (MRO) processes became increasingly automated. While a potential privatization was not the Value strategy’s targeted driver of share price appreciation, the sharp price increase lowered the expected investment return to the Fund from taking on said cycle and business risks. Thus, the Fund exited its holding of SIA Engineering.

The Fund sold its entire holding of PFNonwovens due to the meaningful decline in share liquidity after a new controlling shareholder acquired an 88% interest in the company in the fourth quarter of 2017. While the Fund continued to hold its stake in PFNonwovens after the acquisition, to capitalize on the long-term value the new controlling shareholder planned to create, the lower share liquidity did not meet the Fund’s requirements.

During the quarter the Value Fund did not add new securities.

Outlook

There is a palpable sense of fear in the market, as evidenced by the volatility of the MSCI Emerging Markets Index during the third quarter and over the past year. While the benchmark declined -4.11% during the quarter, it swung intra-quarter from approximately flat to down -8%. Similarly, for the 12-month period ended September 30, 2019, the index declined -1.63% with an interim appreciation of approximately 5% and depreciation of -10%.

Thoughtful investors, which naturally includes all readers of this portfolio review, may question the attractiveness of investing in the emerging markets based on the recent benchmark performance track record. Alas, this is a good time to remind the reader that the Seafarer Overseas Value Fund aims to derive investment returns from the change in valuation multiple of a company’s stock as well as the income distributions of said company, which may minimize the impact of broader market forces on Fund performance. In this manner, the Value strategy aims to differentiate itself from passive approaches to investing, which by definition are subject to the whims of change in growth expectations for the market benchmark.

Thus, while the financial press endlessly chases its tail by engaging in the futile exercise of linking ex-post market moves to economic or political headlines, it should be remembered that companies remain focused on their operations. More importantly, companies constantly adapt to a fluid reality. Thus, while Singapore’s gross domestic product (GDP) growth is indeed decelerating, which may motivate growth-oriented investors to shun companies that operate there, what is more important is that the Fund’s Singapore-based holding HRnetGroup (Balance Sheet Liquidity and Segregated Market) is taking steps to increase employee productivity, diversify business offerings, and gain scale in new jurisdictions by deploying a war chest of cash it has retained for just such circumstances. I expect the work HRnetGroup engages in – not the vagaries of what other investors think of the Singaporean economy – will generate value for its shareholders. To reiterate the point, portfolio holding Wilmar International (Asset Productivity and Breakup Value) is a Singapore-headquartered processor of edible oils with meaningful operations in China. This company presents a trifecta of reasons to avoid investing in the stock. It is based in Singapore, operates in China – another economy that is slowing, and its earnings are impacted by the U.S.-China trade dispute and the volatility of palm oil prices. And yet, the stock has contributed positively to the Fund’s NAV – not because the foregoing factors are attractive to a growth-oriented investor, but because the company may crystalize the value created by management in China that is currently hidden in its balance sheet, and which an expected listing of its Chinese operations will help realize.

This is a time of perceived uncertainty, judging by the benchmark’s performance, and even confusion, based on numerous quandaries around the globe: unprecedented fiscal deficits and central bank balance sheet expansion in the U.S., while GDP is growing and inflation is close to target; negative interest rates in Europe; and emerging market central banks lowering rates while the U.S. dollar is strong. In this perplexing context, it is important to remember that companies are more flexible than policymakers to adapt to a changing reality. By remaining focused on the work of individual companies and on deriving investment returns based on the seven categories of value, the Seafarer Overseas Value Fund seeks to carve its own path.

Thank you for entrusting us with your capital. We are honored to serve as your investment adviser in the emerging markets.

Paul Espinosa
  • The performance data quoted represents past performance and does not guarantee future results. Future returns may be lower or higher. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. View the Fund’s most recent month-end performance.
  • The MSCI Emerging Markets Total Return Index, Standard (Large+Mid Cap) Core, Gross (dividends reinvested), USD is a free float-adjusted market capitalization index designed to measure equity market performance of emerging markets. Index code: GDUEEGF.
  • The S&P 500 Total Return Index is a stock market index based on the market capitalizations of 500 large companies with common stock listed on the NYSE or NASDAQ.
  • It is not possible to invest directly in an index.
  • The views and information discussed in this commentary are as of the date of publication, are subject to change, and may not reflect Seafarer’s current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. It should not be assumed that any investment will be profitable or will equal the performance of the portfolios or any securities or any sectors mentioned herein. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Seafarer does not accept any liability for losses either direct or consequential caused by the use of this information.
  • As of September 30, 2019, Qatar Gas Transport Co., Ltd. comprised 4.1% of the Seafarer Overseas Value Fund, Qualicorp Consultoria e Corretora de Seguros SA comprised 4.9% of the Fund, Shangri-La Asia, Ltd. comprised 3.4% of the Fund, Giordano International, Ltd. comprised 2.2% of the Fund, WH Group, Ltd. comprised 4.3% of the Fund, HRnetgroup, Ltd. comprised 3.2% of the Fund, and Wilmar International, Ltd. comprised 3.3% of the Fund. The Fund did not own shares in Asia Satellite Telecommunications Holdings, Ltd., Smithfield Foods, Inc., SIA Engineering Co., Ltd., PFNonwovens SA, or Singapore Airlines. View the Fund’s Top 10 Holdings. Holdings are subject to change.
  1. References to the “Fund” pertain to the Fund’s Institutional share class (ticker: SIVLX). The Investor share class (ticker: SFVLX) returned -1.69% during the quarter.
  2. The Fund’s Investor share class began the quarter with a net asset value of $11.82 per share; it finished the quarter with a value of $11.62 per share.
  3. Formerly known as Pegas Nonwovens.