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Emerging Markets Fund

Diversified exposure to emerging markets, capturing value and growth

NAV (as of 22 May 2017)

$12.15, +0.03

YTD

+17.96%

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 Ratio1.18%
Dividend FrequencyAnnual
Capital Gain FrequencyAnnual
BenchmarkMSCI Emerging Markets

Performance

Fund Quarter to Date Year to Date 1 Year3 Year5 Year Since Inception
CEMIX 1.4%15.9%21.3%2.3%3.0%4.1%
MSCI Emerging Markets 2.2%13.9%19.6%2.2%1.9%3.3%
Fund Quarter to Date Year to Date 1 Year3 Year5 Year Since Inception
CEMIX 14.3%14.3%19.9%2.1%2.5%3.9%
MSCI Emerging Markets 11.5%11.5%17.7%1.5%1.2%3.1%

Portfolio

Asset Allocation as of 30 Apr 2017

Stocks 97.8%
Cash 2.2%

Characteristics as of 30 Apr 2017

Causeway MSCI Emerging Markets
No. of Holdings 143 829
Wtd. Avg. Market Cap (Mn $US)$40,104$39,001
NTM Price/Earnings9.212.1
Price/Book Value1.31.6
NTM EPS Revision (Wtd. Avg)12.73.5

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 Apr 2017

Information Technology27.37%
Financials23.50%
Energy10.38%
Industrials8.95%
Materials5.10%
Consumer Discretionary4.63%
Consumer Staples3.60%
Utilities3.59%
Telecommunication Services3.19%
Equity Funds2.80%
Real Estate2.39%
Health Care2.30%

(VS. Benchmark)

Information Technology25.08%
Financials23.99%
Energy7.18%
Industrials5.83%
Materials7.29%
Consumer Discretionary10.51%
Consumer Staples6.90%
Utilities2.75%
Telecommunication Services5.56%
Equity Funds0.00%
Real Estate2.54%
Health Care2.35%
Information Technology
Financials
Energy
Industrials
Materials
Consumer Discretionary
Consumer Staples
Utilities
Telecommunication Services
Equity Funds
Real Estate
Health Care
Other

TOP 10 COUNTRIES as of 30 Apr 2017

China26.10%
South Korea16.75%
Taiwan11.85%
India9.60%
Brazil6.70%
Russia5.74%
Thailand4.52%
South Africa3.36%
Multi-National Emerging (ETF)2.80%
Malaysia2.05%
Turkey1.64%
Mexico1.51%
Indonesia1.44%
Poland1.43%
United Arab Emirates1.14%
Qatar0.42%
Hungary0.41%
Czech Republic0.34%
Multi-National Emerging (ETF)0.13%
Peru0.00%
Egypt0.00%
Greece0.00%
Philippines0.00%
Chile0.00%
Colombia0.00%

(VS. Benchmark)

China27.05%
South Korea14.91%
Taiwan12.27%
India8.85%
Brazil7.43%
Russia3.72%
Thailand2.20%
South Africa6.85%
Multi-National Emerging (ETF)0.00%
Malaysia2.49%
Turkey1.11%
Mexico3.63%
Indonesia2.54%
Poland1.32%
United Arab Emirates0.73%
Qatar0.77%
Hungary0.30%
Czech Republic0.18%
Multi-National Emerging (ETF)0.00%
Peru0.35%
Egypt0.12%
Greece0.35%
Philippines1.20%
Chile1.21%
Colombia0.42%
China
South Korea
Taiwan
India
Brazil
Russia
Thailand
South Africa
Multi-National Emerging (ETF)
Malaysia
Turkey
Mexico
Indonesia
Poland
United Arab Emirates
Qatar
Hungary
Czech Republic
Multi-National Emerging (ETF)
Peru
Egypt
Greece
Philippines
Chile
Colombia
Other

TOP 10 ACTIVE HOLDINGS as of 30 Apr 2017

Security Country Industry Active Weight*
China Petroleum & Chemical Corp. China Energy 1.7
PTT Public Co., Ltd. Thailand Energy 1.7
Investimentos Itau Brazil Banks 1.5
Bank Of China China Banks 1.3
Sberbank Russia OJSC Russia Banks 1.3
Lukoil Russia Energy 1.3
Hon Hai Precision Industry Co., Ltd. Taiwan Technology Hardware & Equipment 1.3
Samsung Electronics Co., Ltd. South Korea Technology Hardware & Equipment 1.0
Polski Koncern Naftowy ORLEN SA Poland Energy 1.0
Korea Electric Power Corp. South Korea Utilities 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 Apr 2017


Emerging markets equities increased their gains in April 2017. The MSCI Emerging Markets Index (“Index”) returned 2.2% in US dollar terms, modestly outperforming the MSCI World Index. Economic growth within the emerging markets asset class has improved, and valuations lured investors, particularly given the brightening earnings outlooks for many emerging markets companies. In the Index, nearly every sector appreciated over the period. The top performing sectors were information technology, consumer discretionary, and financials. The utilities, materials, and health care sectors were the worst performers. From a country perspective, Turkey, Poland, and Greece appreciated the most over the month. Peru, Egypt, and Qatar were the weakest performers.

Causeway Emerging Markets Fund (“Fund”) underperformed the Index for the month of April. 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. On the bottom-up side, value underperformed in April while our earnings growth and technical factors outperformed. Over longer periods, we have seen the strongest predictive power from value followed by earnings growth. On the top-down side, factor performance was generally negative in April. Our country and sector factors were negative while our macroeconomic and currency factors were close to neutral. We recently added data from the Organization for Economic Cooperation and Development’s Leading Economic Indicators (OECD LEI) in the fourth quarter of 2016 to seek to enhance the performance of our macroeconomic factor.

The Fund’s positioning in emerging Asia contributed the most to relative underperformance versus the Index, most notably from stock selection in China. Fund exposure to the emerging Europe, Middle East, and Africa (EMEA) region also detracted from relative performance, while exposure to the Latin America region was neutral. Consumer discretionary and telecommunication services were the largest sector-level relative detractors versus the Index, partially offset by the Fund’s positioning in the materials and real estate sectors. The top individual detractors from relative performance were an underweight position in electronic and print media platform operator, Naspers Limited (South Africa) and overweight positions in oil exploration & production company, Oil Co. LUKOIL PJSC (Russia) and integrated circuit manufacturer, Taiwan Semiconductor Manufacturing Co., Ltd. (Taiwan). This was partially offset by positive contributions from overweight positions in crude oil refiner, Polski Koncern Naftowy ORLEN S.A. (Poland), electronics contract manufacturer, Hon Hai Precision Industry Co., Ltd. (Taiwan), and bank, Turkiye Vakiflar Bankasi Turk Anonim Ortakligi (Turkey).

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

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

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

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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