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Emerging Markets Fund

Diversified exposure to emerging markets, capturing value and growth

NAV (as of 19 Oct 2018)

$11.78, +0.08

YTD

-16.87%

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 -1.2%-9.9%-3.2%10.2%3.5%6.9%4.3%
MSCI Emerging Markets -0.9%-7.4%-0.4%12.8%4.0%5.8%3.9%
Fund Quarter to Date Year to Date 1 Year3 Year5 Year10 Year Since Inception
CEMIX -1.2%-9.9%-3.2%10.2%3.5%6.9%4.3%
MSCI Emerging Markets -0.9%-7.4%-0.4%12.8%4.0%5.8%3.9%

Portfolio

Asset Allocation as of 30 Sep 2018

Stocks 96.9%
Cash 3.1%

Characteristics as of 30 Sep 2018

Causeway MSCI Emerging Markets
No. of Holdings 142 1150
Wtd. Avg. Market Cap (Mn $US)$56,603$50,249
NTM Price/Earnings8.511.0
Price/Book Value1.41.6
NTM EPS Revision (Wtd. Avg)-2.2-7.4

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 30 Sep 2018

Information Technology25.71%
Financials22.72%
Energy11.30%
Consumer Discretionary8.59%
Materials8.14%
Industrials6.90%
Consumer Staples3.51%
Telecommunication Services3.28%
Real Estate2.50%
Health Care1.95%
Utilities1.60%
Equity Funds0.72%

(VS. Benchmark)

Information Technology26.92%
Financials23.21%
Energy8.22%
Consumer Discretionary9.03%
Materials7.89%
Industrials5.44%
Consumer Staples6.57%
Telecommunication Services4.49%
Real Estate2.78%
Health Care3.04%
Utilities2.41%
Equity Funds0.00%
Information Technology
Financials
Energy
Consumer Discretionary
Materials
Industrials
Consumer Staples
Telecommunication Services
Real Estate
Health Care
Utilities
Equity Funds
Other

TOP 10 COUNTRIES as of 30 Sep 2018

China31.97%
South Korea16.66%
Taiwan11.29%
India9.91%
Brazil5.72%
Russia4.93%
Thailand4.13%
Malaysia2.55%
Mexico2.48%
South Africa2.47%
Turkey1.05%
Peru0.84%
Poland0.74%
Multi-National Emerging (ETF)0.72%
Saudi Arabia0.44%
United Arab Emirates0.41%
Indonesia0.34%
Czech Republic0.29%
Multi-National Emerging (ETF)0.04%
Pakistan0.00%
Philippines0.00%
Qatar0.00%
Hungary0.00%
Chile0.00%
Colombia0.00%
Egypt0.00%
Greece0.00%

(VS. Benchmark)

China30.99%
South Korea14.88%
Taiwan12.29%
India8.53%
Brazil6.19%
Russia3.70%
Thailand2.48%
Malaysia2.43%
Mexico3.16%
South Africa6.09%
Turkey0.61%
Peru0.41%
Poland1.22%
Multi-National Emerging (ETF)0.00%
Saudi Arabia0.00%
United Arab Emirates0.66%
Indonesia1.95%
Czech Republic0.19%
Multi-National Emerging (ETF)0.00%
Pakistan0.06%
Philippines0.96%
Qatar0.94%
Hungary0.29%
Chile1.10%
Colombia0.47%
Egypt0.13%
Greece0.29%
China
South Korea
Taiwan
India
Brazil
Russia
Thailand
Malaysia
Mexico
South Africa
Turkey
Peru
Poland
Multi-National Emerging (ETF)
Saudi Arabia
United Arab Emirates
Indonesia
Czech Republic
Multi-National Emerging (ETF)
Pakistan
Philippines
Qatar
Hungary
Chile
Colombia
Egypt
Greece
Other

TOP 10 ACTIVE HOLDINGS as of 30 Sep 2018

Security Country Industry Active Weight*
China Petroleum & Chemical Corp. China Energy 1.8
China Construction Bank Corp. China Banks 1.8
PTT Public Co., Ltd. Thailand Energy 1.5
Investimentos Itau Brazil Banks 1.3
SK hynix, Inc. South Korea Semiconductors & Semi Equipment 1.3
Lukoil Russia Energy 1.2
Anhui Conch Cement Co., Ltd. China Materials 1.1
Samsung Electronics Co., Ltd. South Korea Technology Hardware & Equipment 1.1
Ping An Insurance (Group) Co. of China Ltd. China Insurance 1.0
SK Innovation Co., Ltd. South Korea Energy 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 30 Sep 2018


Emerging market equities posted negative returns in September as country-specific challenges and continuing trade tensions weighed on performance. The MSCI Emerging Markets Index (“Index”) returned -1.13% in local currency terms during the month. Emerging Asia was the poorest performing region group during the month as Chinese and Indian equities, which together comprise 40% of the overall Index, both underperformed. Within the emerging Europe, Middle East, and Africa (“EMEA”) region, Russian equities contributed to performance, partially offsetting negative returns posted by South African stocks during the month. Led by Brazil, emerging Latin America was the best performing region group within the Index in local currency terms. Real estate, consumer discretionary, and health care were the weakest sectors within the Index during the month. Energy, industrials, and communication services were the top performing sectors in local currency terms.

Causeway Emerging Markets Fund (“Fund”) underperformed the Index in September 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 strong indicator in September and the factor has delivered positive returns for the year-to-date period. The earnings growth factor category was also a positive indicator during the month and it has been the strongest factor over most recent trailing periods. The price momentum factor category, as measured by our technical factors, was negative in September. Of our top-down factors, the sector and currency factors were positive indicators of performance while the macroeconomic and country factors were negative.

Over the month, Fund positioning in emerging Asia detracted from relative performance versus the Index, primarily driven by negative stock selection in Taiwan, India, and South Korea. Within the emerging Latin America region, stock selection in Brazil detracted from relative performance. Positioning in the EMEA region, including holdings in Russia, South Africa, and Turkey, contributed to relative performance. From a sector perspective, the largest detractors from relative performance were information technology, consumer discretionary, and consumer staples. Positioning in the energy, communication services, and financials sectors contributed to relative performance. The largest stock-level detractors from relative performance were overweight positions in electronic components manufacturer, Yageo Corp.(Taiwan), mortgage lender, Indiabulls Housing Finance Ltd. (India), and products & services provider for the electronic components industry, SK hynix, Inc. (South Korea). The greatest stock level-contributors to relative performance were overweight positions in oil exploration & production company, Lukoil (Russia), financial & industrial holdings company, Investimentos Itau (Brazil), and integrated oil & gas company, SK Innovation Co., Ltd. (South Korea).

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$0.2232
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

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

Consent to Electronic Delivery

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