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International Value Equity

Strategy Profile

The international value portfolio is constructed from an equity universe spanning primarily non-US, developed markets. Emerging markets investments may also be included. Eligible companies have market capitalizations generally greater than $1 billion. The investment process is comprised of three stages: quantitative screening and initial analysis, fundamental research, and portfolio construction.

Inception Date11 June 2001
Benchmark MSCI EAFE

Performance

Fund Quarter to Date Year to Date 1 Year3 Year5 Year10 Year Since Inception
Gross % 2.9%-1.2%14.7%4.8%7.5%4.6%8.4%
Net % 2.8%-1.3%14.3%4.4%7.0%4.1%7.9%
MSCI EAFE 2.4%0.9%15.1%5.4%6.4%2.9%5.9%

Portfolio

Asset Allocation as of 30 Apr 2018

Stocks 97.4%
Cash 2.6%

Characteristics as of 30 Apr 2018

Causeway MSCI EAFE
No. of Holdings 55 926
Wtd. Avg. Market Cap (Mn $US)$61,517$50,871
FY2 Price/Earnings12.013.5
Price/Book Value1.61.7
Dividend Yield (%)3.43.2

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. The FY2 P/E ratio is a forward P/E ratio using a next-twenty four months EPS estimate in the denominator.

SECTOR WEIGHTS as of 30 Apr 2018

(VS. Benchmark)

Other

TOP 10 COUNTRIES as of 30 Apr 2018

United Kingdom33.92%
Japan12.44%
Germany11.76%
Switzerland10.66%
Canada7.94%
France4.54%
South Korea3.79%
Hong Kong3.43%
Netherlands2.85%
Italy2.39%
China2.27%
Spain0.87%
Sweden0.51%
Australia0.00%
Ireland0.00%
Israel0.00%
Austria0.00%
Belgium0.00%
Denmark0.00%
Finland0.00%
New Zealand0.00%
Singapore0.00%
Norway0.00%
Portugal0.00%

(VS. Benchmark)

United Kingdom17.72%
Japan24.29%
Germany9.67%
Switzerland7.54%
Canada0.00%
France11.18%
South Korea0.00%
Hong Kong3.63%
Netherlands3.61%
Italy2.60%
China0.00%
Spain3.23%
Sweden2.55%
Australia6.61%
Ireland0.47%
Israel0.45%
Austria0.26%
Belgium1.07%
Denmark1.70%
Finland1.03%
New Zealand0.17%
Singapore1.40%
Norway0.69%
Portugal0.15%
United Kingdom
Japan
Germany
Switzerland
Canada
France
South Korea
Hong Kong
Netherlands
Italy
China
Spain
Sweden
Australia
Ireland
Israel
Austria
Belgium
Denmark
Finland
New Zealand
Singapore
Norway
Portugal
Other

TOP 10 HOLDINGS as of 30 Apr 2018

Security Country Industry % of Total
Volkswagen AG Germany Automobiles & Components 4.1
British American Tobacco plc United Kingdom Food Beverage & Tobacco 3.3
Linde AG Germany Materials 3.3
BP Plc United Kingdom Energy 3.1
Royal Dutch Shell Plc United Kingdom Energy 3.0
China Mobile Ltd. Hong Kong Telecommunication Services 2.9
Barclays Plc United Kingdom Banks 2.7
ABB Ltd. Switzerland Capital Goods 2.7
KDDI Corp. Japan Telecommunication Services 2.7
BASF SE Germany Materials 2.6

Holdings are subject to change.

Approach

The international value portfolio is constructed from an equity universe spanning primarily non-US, developed markets. Emerging markets investments may also be included. Eligible companies have market capitalizations generally greater than $1 billion. The investment process is comprised of three stages: quantitative screening and initial analysis, fundamental research, and portfolio construction.

Our international investment philosophy is value-driven with a fundamentally based, bottom-up approach to stock selection. We believe that companies derive their value from the contribution of yield and profitable re-investment back into the company.

Our philosophy on risk management is simple. We believe risk is best measured by the volatility of a portfolio's returns, not its dispersion from a benchmark. In our view, investors are rewarded over the long term by a reduction in volatility. Our goal is to construct a portfolio that provides consistent long-term, risk-adjusted returns.

The Causeway International Value portfolio is a fully invested, typically 50-80 stock portfolio, typically with a value bias. Sector and regional weights are by-products of our bottom-up approach to stock selection.

Commentary

PERFORMANCE REVIEW for the month ended 30 Apr 2018


Developed market equities rose during the month, despite the resumption of stock market volatility. The top performing markets in our investable universe included Singapore, Italy, Finland, France, and the United Kingdom. The worst performing markets included Belgium, Denmark, Austria, Sweden, and New Zealand. The best performing sectors in the MSCI EAFE Index (“Index”) were energy, telecommunication services, and utilities. The worst performing sectors were information technology, health care, and consumer staples. Every major currency except the Canadian dollar depreciated versus the US dollar during the period, thus diminishing overall returns on overseas assets for US dollar-based investors.

The Portfolio outperformed the Index during the month, due primarily to industry group allocation (a byproduct of our bottom-up stock selection process). Portfolio holdings in the software & services, automobiles & components, technology hardware & equipment, and capital goods industry groups, as well as an overweight position in the energy industry group, contributed to relative performance. Holdings in the pharmaceuticals & biotechnology, consumer durables & apparel, food beverage & tobacco, and transportation industry groups, along with an underweight position in the food & staples retailing industry group, offset a portion of the outperformance. The top contributor to return was energy supermajor, Royal Dutch Shell Plc (United Kingdom). Other notable contributors included crude oil & natural gas company, BP Plc (United Kingdom), oil & natural gas producer, Encana (Canada), internet services provider, Baidu (China), and automobile manufacturer, Volkswagen AG (Germany). The largest detractor was TakedaPharmaceutical Co., Ltd. (Japan). Additional detractors included British American Tobacco plc (United Kingdom), aerospace & defense manufacturer, Cobham Plc (United Kingdom), pharmaceutical & consumer healthcare products producer, Novartis AG (Switzerland), and pharmaceuticals & biotechnology company, Roche Holding AG (Switzerland).*

*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 portfolio holdings and characteristics are subject to change. There is no guarantee that any forecasts made will come to pass. The securities identified and described above 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. Past performance does not guarantee future results. For a description of our performance attribution methodology, or to obtain a list showing every holding's contribution to the overall account's performance during the quarter, please contact our product manager, Kevin Moutes, at 310-231-6116 or moutes@causewaycap.com.

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