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Emerging Markets Fund

Diversified exposure to emerging markets, capturing value and growth

NAV (as of 17 Jan 2019)

$11.88, +0.01

YTD

+4.21%

INCEPTION

30 Mar 2007

TICKER/CUSIP

CEMIX/149498107

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$1,000,000
Sales ChargeNone
Net Expense Ratio1.15%
Dividend FrequencyAnnual
Capital Gain FrequencyAnnual
Benchmark MSCI Emerging Markets

Performance

Fund Quarter to Date Year to Date 1 Year3 Year5 Year10 Year Since Inception
CEMIX -8.9%-17.9%-17.9%7.8%1.4%9.9%3.4%
MSCI Emerging Markets -7.4%-14.2%-14.2%9.7%2.0%8.4%3.1%
Fund Quarter to Date Year to Date 1 Year3 Year5 Year10 Year Since Inception
CEMIX -8.9%-17.9%-17.9%7.8%1.4%9.9%3.4%
MSCI Emerging Markets -7.4%-14.2%-14.2%9.7%2.0%8.4%3.1%

Portfolio

Asset Allocation as of 31 Dec 2018

Stocks 98.4%
Cash 1.6%

Characteristics as of 31 Dec 2018

Causeway MSCI Emerging Markets
No. of Holdings 139 1124
Wtd. Avg. Market Cap (Mn $US)$50,367$44,830
NTM Price/Earnings8.010.5
Price/Book Value1.21.5
NTM EPS Revision (Wtd. Avg)-16.5-16.7

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 2018

Financials25.18%
Information Technology16.01%
Communication Services12.47%
Energy11.93%
Materials8.31%
Industrials7.13%
Consumer Discretionary7.06%
Consumer Staples4.09%
Real Estate1.87%
Health Care1.77%
Utilities1.67%
Equity Funds0.87%

(VS. Benchmark)

Financials24.80%
Information Technology14.24%
Communication Services14.12%
Energy7.96%
Materials7.68%
Industrials5.52%
Consumer Discretionary10.43%
Consumer Staples6.71%
Real Estate3.03%
Health Care2.82%
Utilities2.68%
Equity Funds0.00%
Financials
Information Technology
Communication Services
Energy
Materials
Industrials
Consumer Discretionary
Consumer Staples
Real Estate
Health Care
Utilities
Equity Funds
Other

TOP 10 COUNTRIES as of 31 Dec 2018

China29.99%
South Korea17.12%
India12.34%
Taiwan9.52%
Brazil8.37%
Russia5.20%
Thailand3.90%
Mexico2.69%
South Africa2.32%
Malaysia1.89%
Turkey1.33%
Poland1.11%
Peru1.06%
Saudi Arabia0.59%
Indonesia0.53%
Czech Republic0.31%
United Arab Emirates0.08%
UNKNOWN0.00%
Egypt0.00%
Greece0.00%
Multi-National Emerging (ETF)0.00%
Pakistan0.00%
Philippines0.00%
Qatar0.00%
Hungary0.00%
Chile0.00%
Colombia0.00%

(VS. Benchmark)

China30.41%
South Korea13.78%
India9.39%
Taiwan11.39%
Brazil7.49%
Russia3.70%
Thailand2.42%
Mexico2.78%
South Africa6.24%
Malaysia2.44%
Turkey0.62%
Poland1.26%
Peru0.43%
Saudi Arabia0.00%
Indonesia2.31%
Czech Republic0.17%
United Arab Emirates0.76%
UNKNOWN0.00%
Egypt0.12%
Greece0.22%
Multi-National Emerging (ETF)0.00%
Pakistan0.03%
Philippines1.11%
Qatar1.10%
Hungary0.33%
Chile1.09%
Colombia0.41%
China
South Korea
India
Taiwan
Brazil
Russia
Thailand
Mexico
South Africa
Malaysia
Turkey
Poland
Peru
Saudi Arabia
Indonesia
Czech Republic
United Arab Emirates
UNKNOWN
Egypt
Greece
Multi-National Emerging (ETF)
Pakistan
Philippines
Qatar
Hungary
Chile
Colombia
Other

TOP 10 ACTIVE HOLDINGS as of 31 Dec 2018

Security Country Industry Active Weight*
Investimentos Itau Brazil Banks 2.0
China Construction Bank Corp. China Banks 1.9
Tencent Holdings Ltd. China Media & Entertainment 1.4
Samsung Electronics Co., Ltd. South Korea Technology Hardware & Equipment 1.4
PTT Public Co., Ltd. Thailand Energy 1.4
China Petroleum & Chemical Corp. China Energy 1.3
Banco do Brasil SA Brazil Banks 1.2
Lukoil Russia Energy 1.2
SK Telecom Co., Ltd. South Korea Telecommunication Services 1.0
Anhui Conch Cement Co., Ltd. China Materials 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 2018


Geopolitical tensions and concerns of a broader slowdown in global economic growth fueled stock market volatility in December and weighed on emerging market (“EM”) equities. The MSCI Emerging Markets Index (“Index”) returned -2.46% in local currency terms during the month. Economic data in China suggested continued slowing growth, which pressured Chinese equities and the broader emerging Asia region. Emerging Latin America also posted negative returns. Led by South Africa, the emerging Europe, Middle East, and Africa (“EMEA”) region ended the month in positive territory. Health care, consumer discretionary, and energy were the weakest performing sectors within the Index in local currency terms. Utilities, consumer staples, and materials were the top performing sectors during the month.

Causeway Emerging Markets Fund (“Fund”) underperformed the Index in December 2018. We use both bottom-up and top-down factor categories to forecast alpha (return in excess of the Index) for the stocks in the Fund’s investable universe. Our bottom-up value factor category was a positive indicator in December and the factor is now outperforming over most recent periods. The earnings growth factor category also delivered positive returns during the month. The price momentum factor category, as measured by our technical factors, was the top performing bottom-up factor in December, but it has been the weakest performer during the year. Of our top-down factors, the macroeconomic and country factors were negative indicators during the month. The sector and currency factors delivered positive returns during the month and were strong performers during the year.

Over the month, Fund positioning in emerging Asia detracted from performance versus the Index, primarily driven by negative stock selection in South Korea and Taiwan. Within the EMEA region, an underweight position in South Africa, the top performing country within the Index in local currency terms, detracted from relative performance. Positioning in the emerging Latin America region was neutral for performance. From a sector perspective, the largest detractors from relative performance were information technology, energy, and materials. Positioning in the financials, industrials, and consumer discretionary sectors contributed to relative performance. The largest stock-level detractors from relative performance included overweight positions in oil & gas exploration & production company, China Petroleum & Chemical Corp. (China), services provider for the electronic components industry, SK hynix Inc. (South Korea), and electronic component manufacturing company, Catcher Technology Co. Ltd. (Taiwan). The greatest stock-level contributors to relative performance included overweight positions in mortgage lender, Indiabulls Housing Finance Ltd. (India), and bank, Banco do Brasil SA (Brazil), as well as an underweight position in internet commerce company, Alibaba Group Holding Ltd. (China).

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

2018$0.2296
2017$0.2232
2016$0.1597
2015$0.1620
2014$0.2775
2013$0.0825
2012$0.2526
2011$0.0778
2010$0.2451
2009$0.2830
2008$0.1186
2007$0.2002
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Short-term Capital Gains

2018$0.0000
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

2018$0.0000
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

Consent to Electronic Delivery

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Duration of Election and Consent

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