Overview

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.

Seafarer Overseas Value Fund

A Value Approach to Emerging Markets

Paul Espinosa describes the structural changes that have made it possible to realize a value strategy in emerging markets. He explains how the strategy’s research process is based on Seafarer’s framework of seven distinct sources of value in emerging markets.

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Gross expense ratio: ¹

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.

Sources: ALPS Fund Services, Inc., Bloomberg, Morningstar, 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 1.05%, 1.15%, and 1.35% of the Fund’s average daily net assets for the Institutional, Investor, and Retail share classes, respectively. This agreement shall continue at least through August 31, 2025.
2. The 12b-1 Fee is included in the Gross Expense Ratio for SFVRX.
3. Shareholders who sign up for an Automatic Investment Plan can request a waiver of the Institutional Class investment minimum. View the waiver program criteria.
4. Calculated as a harmonic average of the underlying portfolio holdings.
5. Based on consensus earnings estimates for next year. Excludes securities for which consensus earnings estimates are not available.
6. © Morningstar, Inc. All rights reserved. The Active Share data is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Performance

• Total Returns
• Return Characteristics

Total Returns

As of (Prior Month)

43	NAV / Index Level ()					Annualized					Cumulative	Inception Date	Net Expense Ratio2	Gross Expense Ratio2
		YTD	1 Mo	3 Mo	1 Yr	3 Yr	5 Yr	7 Yr	10 Yr	Since Inception1	Since Inception1

Gross expense ratio: ²

As of (Prior Quarter)

43	NAV / Index Level ()					Annualized					Cumulative	Inception Date	Net Expense Ratio2	Gross Expense Ratio2
		YTD	1 Mo	3 Mo	1 Yr	3 Yr	5 Yr	7 Yr	10 Yr	Since Inception1	Since Inception1

Gross expense ratio: ²

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

Fund performance is presented in U.S. dollar terms, with U.S. jurisdiction distributions reinvested on a gross (pre-tax) basis. For the Bloomberg and Morningstar indices, performance is calculated to reflect the reinvestment of dividends, capital gains, and other corporate actions net of foreign jurisdiction withholding taxes. 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.

1. “Since Inception” returns for the Bloomberg and Morningstar indices are as of the inception date of the Fund’s Institutional and Investor share classes.
2. 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 1.05%, 1.15%, and 1.35% of the Fund’s average daily net assets for the Institutional, Investor, and Retail share classes, respectively. This agreement shall continue at least through August 31, 2025.
3. Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Neither Bloomberg nor Bloomberg’s licensors approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.
4. The Seafarer Funds are not sponsored, endorsed, sold, or promoted by Morningstar, Inc. Morningstar, Inc. makes no representation or warranty, express or implied, to the shareholders of the Funds or any member of the public regarding the advisability of investing in the Funds or the ability of the Morningstar Emerging Markets Net Return U.S. Dollar Index to track general equity market performance of emerging markets.
5. As of 5/31/16.
6. © Morningstar, Inc. All rights reserved. The data in the Return Characteristics table is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

Composition

30-Day SEC Yield: ()

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.

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. Consensus estimates for earnings and EPS growth are not available for this security.
4. As of February 6, 2025, “Lion Finance Group PLC” is the new name of the company (and Value Fund holding) formerly known as “Bank of Georgia Group PLC.”
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 Materials sector for this year is influenced by a single constituent company. That company’s earnings have recently been negative. Consensus forecasts (produced by research arms of investment banks) suggest that the company's earnings will improve, leading to substantial percentage growth in profits for the sector; however, such consensus forecasts are subject to a very high degree of uncertainty.

Distributions

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

During the first quarter of 2025, the Seafarer Overseas Value Fund returned 4.94%.¹² The Fund’s benchmark indices, the Bloomberg Emerging Markets Large, Mid, and Small Cap Net Return USD Index and the Morningstar Emerging Markets Net Return USD Index, returned 1.56% and 1.17%, respectively. By way of broader comparison, the S&P 500 Index returned -4.27%.

The Fund began the quarter with a net asset value of $12.95 per share. It paid no distributions during the quarter and finished the period with a value of $13.59 per share.³

Performance

Surprises characterized the first quarter of 2025. Price action in the market diverged from the doom and gloom dominating tariff-related headlines.

As detailed above, emerging market indexes appreciated in absolute terms despite universal acknowledgement that tariffs would be detrimental to their economic growth and corporate earnings.

Another surprise was the positive contribution of Brazilian and consumer staple stocks to the performance of the Value Fund, after these figured among the top detractors to performance in the fourth quarter of 2024.

Few investors could have anticipated the first quarter’s price action, as they are generally more inclined to position portfolios based on market headlines or stock price momentum.

The new U.S. administration’s focus on brokering peace between Russia and Ukraine gave new impetus to the two Value Fund holdings in the country of Georgia that had already performed well prior to the first quarter. The prospect of peace propelled the stock price of Georgia Capital (Breakup Value and Segregated Market sources of value; the “source of value” for a Fund holding is hereafter referenced in parentheses), a conglomerate in the country; and Lion Finance (formerly known as Bank of Georgia) (Asset Productivity and Segregated Market), one of the two largest banks in Georgia.

The quarter was not all about global headlines, however, and several stocks performed well, driven by company fundamentals. Moneta Money Bank (Asset Productivity), a bank in the Czech Republic, was among the top positive contributors to the Fund, driven by strong operations and an attractive dividend yield exceeding 8%.⁴ WH Group (Management Change and Breakup Value), a Chinese pork processor and owner of Smithfield Foods in the U.S., listed the latter on the NASDAQ exchange, thus realizing much of the value trapped on its balance sheet.

One Value Fund holding significantly impacted by tariff headlines was Samsung SDI (Breakup Value and Structural Shift), a South Korean battery manufacturer for electric vehicles and consumer electronics. The stock price of Samsung SDI was severely impacted by news of tariffs specifically targeted at the auto sector, together with news that the company needs to raise equity to fund capacity expansion in the U.S. and Europe.

Also on the negative side of the ledger, Shangri-La (Breakup Value and Deleveraging), a hotel owner and operator in Asia, as well as Melco International (Asset Productivity and Deleveraging), a casino owner and operator in Macau, contributed negatively to the Fund’s performance as the rate at which their revenue recovered to pre-pandemic levels slowed down, thus decelerating their prospective rate of deleveraging.

Allocation

During the first quarter of 2025, the Value Fund established a new position in Grupo Financiero Banorte (Balance Sheet Liquidity and Structural Shift), the largest domestically-owned bank in Mexico. The Fund took advantage of negative headlines regarding tariffs against Mexico to purchase a bank with excess capital, a dividend yield above 8%, and outstanding profit margin stability.⁴

The Fund effectively exited Salik (Segregated Market and Management Change), a Dubai-based toll road operator, purely based on valuation. In my view, the stock price performance had fully captured realistic growth expectations, and it was time to redeploy the capital into other companies with higher future return potential.

The Fund also exited two companies in China. Want Want (Balance Sheet Liquidity and Structural Shift) is a snack food and beverage company that had failed to revitalize its product portfolio, leaving the stock insufficiently cheap given the absence of growth. The second exit from the country was Giordano (Structural Shift), a fashion retailer operating in China and the Middle East, whose change in control party instigated a strategy shift toward growth. As such, the stock no longer fulfilled its role in the Fund, which prized the company’s historical stable excess cash flow generation and a dividend yield in excess of 10%.⁴

Outlook

Pablo Picasso is quoted as saying that “every act of creation begins with an act of destruction.”

Plenty of ink has been spilled discussing the global tariffs imposed by the administration of President Trump in early April of 2025. There is no value added in regurgitating the same information in a different form. The aim of this Outlook section is to hopefully convey a more nuanced understanding of the controversy than what I generally encounter in the financial media.

The first point to shed light on that I have not seen anyone acknowledge is that the world economy does not operate on free-market principles. Thus, as misguided as the proposed tariffs are, it is nevertheless true that pre-tariff global trade practices were asymmetrical to begin with. One need not be a global trade expert to prove the point. The emerging markets are replete with countries that practice mercantilism. Mercantilism consists of the belief that it is preferable to export more than import and espouses the devaluation of a country’s exchange rate to achieve said objective. China’s foreign exchange reserve balance of $3 trillion is the epitome of and testament to said practice.⁵

It is also true that most countries, at least historically, have practiced mercantilism vis-à-vis the U.S. by virtue of world trade being mostly denominated in U.S. dollars. The “exorbitant privilege” that accrues to the U.S. – due to the U.S. dollar being the global reserve currency – provides the necessary context to better understand the administration’s complaint that the U.S. is being “ripped off” by other countries.

The complaint itself, however, is incorrect. This is the second area on which it is important to shed light. Trade partners willing to devalue their currencies to make exports cheaper represent a transfer of value from their citizens to the citizens of the U.S., who now have more funds left over to invest or consume than they otherwise would have had.

In other words, the United States may indeed be the target of mercantilist countries around the world, but it is not their victim.

The third area of interest surrounding the tariff controversy that is seldom discussed is why global trade – with the benefits it accrues to all parties involved – could generate sufficiently large losses to segments of an economy that it could engender a protectionist backlash of the magnitude the world is witnessing. In my opinion, the most proximate cause is the absence of the self-regulation inherent in free markets.

If markets were allowed to set prices, specifically foreign exchange rates and interest rates, China’s renminbi would have likely appreciated versus the U.S. dollar as its export surplus with the U.S. expanded, and versus other currencies as its foreign reserves accumulated to their present exorbitant level. If markets were allowed to set interest rates, it is unlikely that the U.S. would have afforded the leverage required to finance such large trade deficits. Indeed, it takes two to tango. The Federal Reserve’s ever-lower federal funds rate since the beginning of this century to the point of reaching almost zero, as well as China’s capital controls to manage the exchange rate, share responsibility for taking trade surpluses and deficits further than they otherwise would have been if leverage and exchange rates had been regulated by markets.

The practical implication of the foregoing is that it is probable that the United States has de-industrialized faster and to a greater extent than it would have under a free market system – likely leaving the economy’s manufacturing versus services mix in an unnatural or unbalanced state, which is in turn reflected in political dynamics. The so-called “Chinese miracle,” or the historically unprecedented rapid industrialization of a country the size of China, is the other side of the same coin. In other words, the notion of the Chinese miracle has equal and opposite implications for the rest of the world, and we are likely witnessing one manifestation of said consequences.

Rather than get stuck on the doom and gloom I read in virtually all financial media, I prefer to focus on the lessons to be learned from the present tariff controversy:

First, judging by the decline in U.S. equity prices as of the date of writing, the tariff impact on the U.S. economy will be sizable and negative. That negative impact in itself will make self-evident the benefits that accrue from international trade, and that the U.S. needs other countries as much as they need the U.S. This experience should go a long way to lowering, not raising, future trade barriers with attendant benefits to future international economic growth rates and investor returns.

Second, as misguided as the tariff policy is, it does place a mirror in front of other countries. In other words, to the extent that U.S. trade partners practice mercantilism or otherwise use asymmetric trade barriers, the U.S. implementing equivalent policy toward them is a valuable exercise. Note that I am not referring to the details of the so-called tariff “calculation” – which leaves much to be desired for rigor – but to the principle involved. The phrase “treat others as you would like them to treat you” comes to mind. To the extent that placing a mirror in front of other countries’ trade policy results in all countries eventually taking a step closer toward free trade and markets, the exercise will have proven a valuable one.

Thus, the world may be witnessing an act of destruction that, ironically, may create a better future. This outcome is far from certain, however. The rest of the world may respond to the United States’ new tariff policy by raising its own tariffs. The resulting spiraling tariff war would likely sink the global economy into a depression. Alternatively, both the U.S. and the rest of the world could awaken to the folly of asymmetric trade policies and intervention in free markets, and the world economy could propel into its next stage of growth.

What is a U.S.-based investor to do in the face of this binary potential future outcome? I do not think the answer is as simple as repatriating all investments to the U.S. in the case of a global recession, or investing more abroad should the tariff impasse result in more enlightened economic policy going forward. I realize this would be the instinctive, short-term response of most investors. In my experience, however, markets have a penchant for surprising investors.

I would argue that, regardless of the short-term binary outcome, under all scenarios investors should consider diversifying away from the U.S. dollar into international assets, be it developed or emerging markets. The forces raising the risk around the risk-free rate of return, or the U.S. dollar, extend beyond the policy controversy discussed in this note. U.S. dollar asset prices have outperformed the rest of the world for over a decade, valuations are generally acknowledged to be high, as are allocations to U.S. markets by global investors. Concurrently, the fundamental pillars sustaining the U.S. dollar as the global reserve currency are debilitating. Fiscal deficits have persisted and increased seemingly without restraint, while monetary policy has debased the U.S. dollar to a historically unprecedented degree with measures such as quantitative easing, including outright monetization of government debt, a measure typically witnessed only in the emerging markets.

A favorite aphorism of economists is that “there is no free lunch.” Politics, rather than free markets, took control of asymmetric global trade practices and managed exchange rates. It took decades, but eventually, dislocations to parts of the U.S. economy probably accumulated to the point of creating a political backlash against trade deficits. How long before the foregoing policies undermining the integrity of the U.S. dollar manifest in the form of a shift away from U.S. dollar assets to international, or non-dollar-based, markets?

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

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 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 March 31, 2025, securities mentioned in the portfolio review comprised the following weights in the Seafarer Overseas Value Fund: Georgia Capital PLC (4.4%), Lion Finance Group PLC (3.5%), Moneta Money Bank AS (3.8%), WH Group, Ltd. (2.8%), Samsung SDI Co., Ltd. (1.6%), Shangri-La Asia, Ltd (2.8%), Melco International Development, Ltd. (2.8%), Grupo Financiero Banorte SAB de CV (1.5%), and Salik Co. PJSC (0.03%). The Fund did not own shares in Smithfield Foods, Want Want China Holdings, Ltd., or Giordano International, Ltd. View the Fund’s Top 10 Holdings. Holdings are subject to change.

Source: ALPS Fund Services, Inc.

Source: Bloomberg Index Services Limited. BLOOMBERG® is a trademark and service mark of Bloomberg Finance L.P. and its affiliates (collectively “Bloomberg”). Bloomberg or Bloomberg’s licensors own all proprietary rights in the Bloomberg Indices. Neither Bloomberg nor Bloomberg’s licensors approves or endorses this material, or guarantees the accuracy or completeness of any information herein, or makes any warranty, express or implied, as to the results to be obtained therefrom and, to the maximum extent allowed by law, neither shall have any liability or responsibility for injury or damages arising in connection therewith.

The Seafarer Funds are not sponsored, endorsed, sold, or promoted by Morningstar, Inc. Morningstar, Inc. makes no representation or warranty, express or implied, to the shareholders of the Funds or any member of the public regarding the advisability of investing in the Funds or the ability of the Morningstar Emerging Markets Net Return U.S. Dollar Index to track general equity market performance of emerging markets.

1. References to the “Fund” pertain to the Fund’s Institutional share class (ticker: SIVLX). The Investor share class (ticker: SFVLX) returned 4.88% during the quarter. The Retail share class (ticker: SFVRX) returned 4.88% during the quarter. All returns are measured inclusive of Fund distributions paid (in relation to Fund performance) or dividends paid (in relation to index performance), reinvested in full (exclusive of any U.S. taxation) on the pertinent ex-date.
2. 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.
3. The Fund’s Investor share class began the quarter with a net asset value of $12.91 per share; and it finished the quarter with a value of $13.54 per share. The Fund’s Retail share class began the quarter with a net asset value of $12.90 per share; and it finished the quarter with a value of $13.53 per share.
4. Source: Bloomberg.
5. Source: “Federal Reserve Economic Data: Total Reserves Excluding Gold for China,” Federal Reserve Bank of St. Louis.