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Emerging Markets Fund

Diversified exposure to emerging markets, capturing value and growth

NAV (as of 17 Jan 2018)

$15.08, +0.10

YTD

+5.60%

INCEPTION

30 Mar 2007

TICKER/CUSIP

CEMVX/149498206

Fact Sheet Prospectus

Fund Profile

The Fund normally invests at least 80% of its total assets in equity securities of companies located in emerging (less developed) markets and other investments that are tied economically to emerging markets. Generally these investments include common stock, preferred and preference stock, American Depositary Receipts, European Depositary Receipts, Global Depositary Receipts, and exchange-traded funds (“ETFs”) that invest in emerging markets securities.

The Investment Adviser uses a quantitative investment approach to purchase and sell investments for the Fund. The Investment Adviser’s proprietary computer model analyzes a variety of factors to assist in selecting securities. The model currently analyzes factors relating to valuation, earnings growth, technical indicators, macroeconomics, currency, countries and sectors.

Minimum Investment$5,000
Sales ChargeNone
Net Expense Ratio1.43%
Dividend FrequencyAnnual
Capital Gain FrequencyAnnual
Benchmark MSCI Emerging Markets

Performance

Fund Quarter to Date Year to Date 1 Year3 Year5 Year10 Year Since Inception
CEMVX 7.3%39.5%39.5%8.3%4.7%2.4%5.5%
MSCI Emerging Markets 7.5%37.8%37.8%9.5%4.7%2.0%4.9%
Fund Quarter to Date Year to Date 1 Year3 Year5 Year10 Year Since Inception
CEMVX 7.3%39.5%39.5%8.3%4.7%2.4%5.5%
MSCI Emerging Markets 7.5%37.8%37.8%9.5%4.7%2.0%4.9%

Portfolio

Asset Allocation as of 31 Dec 2017

Stocks 97.5%
Cash 2.5%

Characteristics as of 31 Dec 2017

Causeway MSCI Emerging Markets
No. of Holdings 141 846
Wtd. Avg. Market Cap (Mn $US)$65,599$56,990
NTM Price/Earnings9.712.4
Price/Book Value1.51.8
NTM EPS Revision (Wtd. Avg)13.19.2

A "Weighted Average” measures a characteristic by the market capitalization of each stock. Price/Book Ratio is the weighted average of the price/book ratios of all the stocks in a portfolio. The P/B ratio of a company is calculated by dividing the market price of its stock by the company’s per-share book value. The Price/Earnings Ratio is the weighted average of the price/earnings ratios of the stocks in a portfolio. “Earnings-per-Share” is the portion of a company’s profit allocated to each outstanding share of common stock. “Earnings-per-Share year-over-year estimate growth (Next 12 Months)” is the average next-twelve-month earnings-per-share estimate from one year ago for an individual company compared with that estimate today; note that this calculation is done on a company by company basis and is aggregated through a weighted average based on the individual company’s weight in the corresponding index. Also note that this characteristic is supplied directly by MSCI.

SECTOR WEIGHTS as of 31 Dec 2017

Information Technology30.69%
Financials23.13%
Energy8.20%
Industrials8.01%
Materials6.43%
Consumer Discretionary5.65%
Telecommunication Services4.14%
Consumer Staples2.76%
Real Estate2.52%
Utilities2.42%
Health Care1.80%
Equity Funds1.76%

(VS. Benchmark)

Information Technology27.70%
Financials23.45%
Energy6.77%
Industrials5.23%
Materials7.41%
Consumer Discretionary10.20%
Telecommunication Services4.84%
Consumer Staples6.58%
Real Estate2.82%
Utilities2.36%
Health Care2.66%
Equity Funds0.00%
Information Technology
Financials
Energy
Industrials
Materials
Consumer Discretionary
Telecommunication Services
Consumer Staples
Real Estate
Utilities
Health Care
Equity Funds
Other

TOP 10 COUNTRIES as of 31 Dec 2017

China32.25%
South Korea17.06%
India10.08%
Taiwan9.92%
Brazil5.94%
Russia4.90%
Thailand4.45%
South Africa2.66%
Turkey2.50%
Malaysia2.00%
Multi-National Emerging (ETF)1.76%
Poland1.12%
Indonesia0.85%
Mexico0.74%
United Arab Emirates0.73%
Czech Republic0.28%
Hungary0.28%
Multi-National Emerging (ETF)0.07%
Chile0.00%
Colombia0.00%
Pakistan0.00%
Philippines0.00%
Peru0.00%
Qatar0.00%
Egypt0.00%
Greece0.00%

(VS. Benchmark)

China29.67%
South Korea15.39%
India8.77%
Taiwan11.27%
Brazil6.81%
Russia3.33%
Thailand2.28%
South Africa7.12%
Turkey1.07%
Malaysia2.36%
Multi-National Emerging (ETF)0.00%
Poland1.33%
Indonesia2.24%
Mexico2.93%
United Arab Emirates0.65%
Czech Republic0.18%
Hungary0.33%
Multi-National Emerging (ETF)0.00%
Chile1.25%
Colombia0.41%
Pakistan0.08%
Philippines1.13%
Peru0.38%
Qatar0.56%
Egypt0.11%
Greece0.33%
China
South Korea
India
Taiwan
Brazil
Russia
Thailand
South Africa
Turkey
Malaysia
Multi-National Emerging (ETF)
Poland
Indonesia
Mexico
United Arab Emirates
Czech Republic
Hungary
Multi-National Emerging (ETF)
Chile
Colombia
Pakistan
Philippines
Peru
Qatar
Egypt
Greece
Other

TOP 10 ACTIVE HOLDINGS as of 31 Dec 2017

Security Country Industry Active Weight*
PTT Public Co., Ltd. Thailand Energy 2.0
Sberbank Russia OJSC Russia Banks 1.9
China Construction Bank Corp. China Banks 1.9
Tencent Holdings Ltd. China Software & Services 1.6
SK hynix, Inc. South Korea Semiconductors & Semi Equipment 1.5
Investimentos Itau Brazil Banks 1.3
China Petroleum & Chemical Corp. China Energy 1.3
Ping An Insurance (Group) Co. of China Ltd. China Insurance 1.2
Hon Hai Precision Industry Co., Ltd. Taiwan Technology Hardware & Equipment 1.1
KB Financial Group, Inc. South Korea Banks 1.0

*Active defined as Fund weight minus MSCI EM Index weight. Holdings are subject to change.

Approach

We believe the best way to exploit the investment opportunities in emerging markets equities is through a combination of value and growth, and bottom-up and top-down factors. For Causeway Emerging Markets Fund, our quantitative stock selection process is focused on attractively valued companies with superior earnings prospects and positive market sentiment; these companies should produce consistent returns across investment cycles. We use the same approach to select sectors and countries, comparing valuation against earnings growth and market sentiment. At the country level, we also consider the health of the macro-economy. Our quantitative process seeks to combine these factors while attempting to avoid undue sources of risk, which is defined as tracking error (a measurement of dispersion from a benchmark index).

The investment process begins with a liquidity screen on emerging markets equities. Our model creates a return forecast for every stock in the investable universe. We optimize the portfolio weights to maximize portfolio return potential, targeting a 5% tracking error relative to the benchmark MSCI Emerging Markets Index, and subject to additional relative constraints (sector, country, and stock).

Causeway Emerging Markets Fund is a fully invested portfolio of typically 110-150 stocks, with an average 85% annual turnover. Typically, the Fund is undervalued relative to the benchmark on a number of metrics, with greater earnings growth expectations.

Commentary

PERFORMANCE REVIEW for the month ended 31 Dec 2017


Emerging markets equities appreciated over December 2017 to finish a banner year, handily outpacing global developed markets. Strength in global economic growth, a weak US dollar, and accommodative monetary policy globally helped propel the asset class to new highs. The MSCI Emerging Markets Index (“Index”) returned 31% in local currency terms for calendar year 2017, its best annual performance since 2009. US dollar-based investors also benefited from a currency boost to returns. Nearly every sector was in positive territory for December, with the greatest gains from health care, consumer staples and materials. The consumer discretionary, information technology and utilities sectors lagged over the month. Greece, Qatar, and Chile were the top performing markets in local currency terms for the month. South Africa, United Arab Emirates, and Taiwan were the weakest performers for the period.

Causeway Emerging Markets Fund (“Fund”) outperformed the MSCI Emerging Markets Index (“Index”) for December 2017. We use both bottom-up and top-down factors to forecast alpha (return in excess of the Index) for the stocks in the Fund’s investable universe. Of our bottom-up factors, earnings growth was an effective indicator of outperformance, and technical (price momentum) and value were weak indicators. Of our top-down factors, only our currency factors performed well for the month. Our country, macroeconomic, and sector factors posted negative returns.

Over the month, Fund positioning in all three emerging regions—Asia, Latin America, and Europe, Middle East and Africa (“EMEA”)—contributed to the Fund’s relative performance versus the Index, with the most significant country-level contributions from India and China. The top sector contributors to relative performance were financials, consumer discretionary, and utilities, partially offset by exposures to the information technology, consumer staples, and telecommunication services sectors. The greatest stock-level contributor to return versus the Index was having no exposure to Index holding Steinhoff International Holdings NV (South Africa), a household goods retailer that declined on news of accounting irregularities. Overweight positions in power generation & construction company, Tekfen Holding AS (Turkey), and financial services company, Reliance Capital Ltd (India) also contributed. The largest stock level detractors from return versus the Index were overweight positions in electronics components manufacturer, Compeq Manufacturing Co. Ltd. (Taiwan), and electronics contract manufacturer, Hon Hai Precision Industry Co., Ltd. (Taiwan), and an underweight position in financial services firm, Standard Bank Group Limited (South Africa).

The market commentary expresses the portfolio managers’ views as of the date of this report and should not be relied on as research or investment advice regarding any stock. These views and the Fund holdings and characteristics are subject to change. There is no guarantee that any forecasts made will come to pass. Any securities identified and described in this report do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable. Diversification does not protect against market loss.

Dividends

2017$0.1937
2016$0.1353
2015$0.1434
2014$0.2425
2013$0.1100
2012$0.2768
2011$0.0972
2010$0.2560
2009$0.2866
2008$0.1506
2007$0.2097
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Short-term Capital Gains

2017$0.0000
2016$0.0000
2015$0.0000
2014$0.0000
2013$0.0000
2012$0.0000
2011$0.0000
2010$0.0000
2009$0.0000
2008$0.0000
2007$0.4003
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Long-term Capital Gains

2017$0.0000
2016$0.0000
2015$0.0000
2014$0.0000
2013$0.0000
2012$0.0000
2011$0.0000
2010$0.0000
2009$0.0000
2008$0.0000
2007$0.0000
Load More

Distributions are per share. Distribution amounts are based on gains and losses realized and income earned by the Fund through October 31 (or earlier under certain circumstances).

Documents

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