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Global Value Equity

Strategy Profile

The global value portfolio is constructed from an equity universe composed of companies with market capitalizations greater than $1 billion located throughout the global developed and emerging market countries. The investment process is comprised of three stages: quantitative screening and initial analysis, fundamental research, and portfolio construction.

Inception Date30 Sept 2001
Benchmark MSCI ACWI

Performance

Fund Quarter to Date Year to Date 1 Year3 Year5 Year10 Year Since Inception
Gross % 8.1%8.1%-7.2%10.9%5.6%14.6%10.4%
Net % 8.1%8.1%-7.6%10.4%5.2%13.9%9.7%
MSCI ACWI 7.9%7.9%-7.0%12.2%7.3%11.9%7.4%
MSCI World 7.8%7.8%-6.0%11.9%7.5%12.1%7.2%

Portfolio

Asset Allocation as of 31 Jan 2019

Stocks 99.1%
Cash 0.9%

Characteristics as of 31 Jan 2019

Causeway MSCI ACWI
No. of Holdings 50 2755
Wtd. Avg. Market Cap (Mn $US) $68,861 $119,599
FY2 Price/Earnings 10.7 13.7
Price/Book Value 1.4 2.2
Dividend Yield (%) 3.4 2.6

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 31 Jan 2019

Financials20.03%
Information Technology14.32%
Communication Services12.71%
Industrials12.60%
Health Care10.51%
Energy8.17%
Materials7.48%
Consumer Discretionary5.39%
Consumer Staples4.40%
Utilities3.52%
Real Estate0.00%

(VS. Benchmark)

Financials17.26%
Information Technology14.84%
Communication Services9.09%
Industrials10.43%
Health Care11.80%
Energy6.32%
Materials4.93%
Consumer Discretionary10.61%
Consumer Staples8.20%
Utilities3.26%
Real Estate3.25%
Financials
Information Technology
Communication Services
Industrials
Health Care
Energy
Materials
Consumer Discretionary
Consumer Staples
Utilities
Real Estate
Other

TOP 10 COUNTRIES as of 31 Jan 2019

United States37.48%
United Kingdom20.29%
Japan11.24%
Germany6.59%
China6.10%
Switzerland5.67%
Canada3.75%
Italy3.06%
South Korea2.24%
Netherlands2.21%
Turkey0.50%
United Arab Emirates0.00%
Brazil0.00%
Chile0.00%
Colombia0.00%
Mexico0.00%
Peru0.00%
India0.00%
Indonesia0.00%
Malaysia0.00%
Pakistan0.00%
Philippines0.00%
Taiwan0.00%
Thailand0.00%
Czech Republic0.00%
Egypt0.00%
Greece0.00%
Hungary0.00%
Poland0.00%
Qatar0.00%
Russia0.00%
South Africa0.00%
Norway0.00%
Portugal0.00%
Spain0.00%
Sweden0.00%
Israel0.00%
Austria0.00%
Belgium0.00%
Denmark0.00%
Finland0.00%
France0.00%
Ireland0.00%
New Zealand0.00%
Singapore0.00%
Australia0.00%
Hong Kong0.00%

(VS. Benchmark)

United States54.53%
United Kingdom5.17%
Japan7.51%
Germany2.68%
China3.71%
Switzerland2.62%
Canada3.08%
Italy0.70%
South Korea1.67%
Netherlands1.05%
Turkey0.08%
United Arab Emirates0.09%
Brazil0.96%
Chile0.13%
Colombia0.05%
Mexico0.34%
Peru0.05%
India1.01%
Indonesia0.28%
Malaysia0.27%
Pakistan0.00%
Philippines0.13%
Taiwan1.27%
Thailand0.29%
Czech Republic0.02%
Egypt0.01%
Greece0.03%
Hungary0.04%
Poland0.15%
Qatar0.12%
Russia0.46%
South Africa0.77%
Norway0.22%
Portugal0.05%
Spain0.94%
Sweden0.82%
Israel0.17%
Austria0.07%
Belgium0.30%
Denmark0.52%
Finland0.32%
France3.35%
Ireland0.16%
New Zealand0.07%
Singapore0.41%
Australia2.11%
Hong Kong1.20%
United States
United Kingdom
Japan
Germany
China
Switzerland
Canada
Italy
South Korea
Netherlands
Turkey
United Arab Emirates
Brazil
Chile
Colombia
Mexico
Peru
India
Indonesia
Malaysia
Pakistan
Philippines
Taiwan
Thailand
Czech Republic
Egypt
Greece
Hungary
Poland
Qatar
Russia
South Africa
Norway
Portugal
Spain
Sweden
Israel
Austria
Belgium
Denmark
Finland
France
Ireland
New Zealand
Singapore
Australia
Hong Kong
Other

TOP 10 HOLDINGS as of 31 Jan 2019

Security Country Industry % of Total
Volkswagen AG Germany Automobiles & Components 4.1
Takeda Pharmaceutical Co., Ltd. Japan Pharmaceuticals & Biotechnology 3.9
Citigroup, Inc. United States Banks 3.3
China Mobile Ltd. China Telecommunication Services 3.1
Halliburton Co. United States Energy 3.1
UniCredit S.p.A. Italy Banks 3.1
Oracle Corp. United States Software & Services 3.1
Prudential Plc United Kingdom Insurance 2.9
Micro Focus International Plc United Kingdom Software & Services 2.9
Sabre Corp. United States Software & Services 2.8

Holdings are subject to change.

Approach

The global value portfolio is constructed from an equity universe composed of companies with market capitalizations greater than $1 billion located throughout the global developed and emerging market countries. The investment process is comprised of three stages: quantitative screening and initial analysis, fundamental research, and portfolio construction.

Our global 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 of earnings 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 Global Value portfolio is a fully invested, typically 35-55 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 31 Dec 2018


Heightened geopolitical tensions and concerns of a broader slowdown in global economic growth pressured equity markets in December. The top performing markets in our investable universe were Mexico, Malaysia, the Philippines, Peru, and Indonesia. The worst performing markets were Israel, Austria, Pakistan, Belgium, and the United States. The best performing sectors in the MSCI ACWI Index* (“Index”) were utilities, materials, and real estate. The worst performing sectors were energy, health care, and financials.

The Portfolio underperformed the Index during the month, due primarily to stock selection. Attractive valuations did not provide immunity from the selling, especially in non-US equity markets. Portfolio holdings in the banks, retailing, software & services, media & entertainment, and insurance industry groups detracted from relative performance. Holdings in the telecommunication services, utilities, and pharmaceuticals & biotechnology industry groups, as well as an overweight position in the materials industry group and an underweight position in the technology hardware & equipment industry group, offset some of the underperformance. The largest detractor was global financial services giant, Citigroup, Inc. (United States). Additional notable detractors included specialty retail jeweler,Signet Group (United States), refining equipment manufacturer, Flowserve Corp. (United States), travel & tourism technology company, Sabre Corp. (United States), and energy exploration & production company, Halliburton Co. (United States). The top contributor to return was telecommunication services provider, KDDI Corp. (Japan). Other notable contributors included design-to-distribution business process services technology company, SYNNEX Corp. (United States), FedEx Corp. (United States), industrial gas company, Linde Plc (Germany), and electric & natural gas utility, Dominion Energy, Inc. (United States).**

*Effective October 1, 2018, the Global Value Equity Composite’s benchmark changed from the MSCI World Index to the MSCI ACWI Index. The MSCI ACWI Index is a free float-adjusted market capitalization index, designed to measure the equity market performance of developed and emerging markets, consisting of 23 developed country indices, including the U.S, and 24 emerging market country indices. Prior to October 1, 2018, the benchmark index for the Global Value Equity Composite was the MSCI World Index. This Index is a free float-adjusted market capitalization weighted index, designed to measure developed market equity performance, consisting of 23 developed country indices, including the U.S. The Indices are gross of withholding taxes, assume reinvestment of dividends and capital gains, and assume no management, custody, transaction or other expenses. It is not possible to invest directly in an index.

**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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