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.

The Portfolio 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 Portfolio'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, Portfolio 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), electronic component manufacturing company, Catcher Technology Co. Ltd. (Taiwan), pharmaceutical & healthcare products manufacturer, Sinopharm Group Co., (China), and pharmaceuticals manufacturer, Shanghai Pharmaceutical Holding Co., Ltd. (China). The greatest stock-level contributors to relative performance included overweight positions in mortgage lender, Indiabulls Housing Finance Ltd. (India), bank, Banco do Brasil SA (Brazil), materials conglomerate Alfa SAB de CV (Mexico), and automobile manufacturer, Kia Motors Corp. (South Korea), 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 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 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. 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.