Commentary

Causeway Emerging Markets Fund
Review for Quarter Ended 6/30/10

Performance Review
Causeway Emerging Markets Fund (the “Fund”) outperformed the MSCI Emerging Markets Index (“EM Index”), which posted negative performance of -8.29% during the quarter. In our investment process, we use a combination of bottom-up and top-down quantitative factors in order to perform security selection. The Fund’s exposure to our bottom-up factors added to relative performance. All three factor groups added value, with our technical factors adding the most, followed by our earnings growth factors and then by our value factors.

Our top-down factors, which have a smaller weight in the model, hurt relative performance. All three top-down groups of factors detracted value, with our country factors doing the poorest, followed by our macro factors and then our sector factors. Our quality factors delivered modest positive relative performance for the quarter, but did not meaningfully contribute to performance as our exposure to these factors was small.

From a country perspective, stock selection within Brazil contributed the most to the Fund’s return relative to the EM Index. The largest contributor to active performance was an overweight to Companhia de Saneamento Basico do Estado de Sao Paulo, a water utility, which announced better than expected quarterly earnings. Another notable contributor to relative outperformance was stock selection within Thailand. The main contribution came from Charoen Pokphand Foods PCL, a farming and food production company, which performed well after reporting a fourfold rise in first-quarter profit. The Fund benefited from its holding in the South African general merchandise, food, and liquor distributor and retailer, Massmart Holdings Limited, which outperformed the EM Index after the Company announced favorable guidance for operating profits in the second half of 2010. The Company has also been the subject of takeover speculation, with Wal-Mart Stores Inc. mentioned as a potential suitor.

Stock selection within India hurt relative Fund performance. The most negative contribution came from holding the integrated aluminum manufacturing company Hindalco Industries Limited. The stock underperformed the EM Index due to fears that a slowdown in Chinese growth would negatively impact the demand for commodities. The portfolio also had negative stock selection in China, mainly due to an overweight in the auto manufacturing company, Dongfeng Motor Group Company Limited. The Company was adversely impacted by fears that China would end a tax break for small, fuel-efficient cars. Stock selection within Poland adversely impacted the Fund, due to our holding of the copper and silver mining stock, KGHM Polska Miedz S.A., which, like Hindalco, fell on fears of slowing Chinese growth.

The quarter saw significant cross-sectional dispersion at the country/region and industry levels. Most countries and industries in the EM Index had negative returns. From a regional perspective, Eastern Europe, Middle East and Africa (EEMEA) were especially hard hit, while Asia and Latin America had mixed results. At the country level, the outperformers were Indonesia, Peru, and Colombia, and the underperformers were Hungary, Poland, and Russia. At the industry level, the outperformers were household and personal products, automobiles and components, and commercial and professional services, and the underperformers were media, materials, and semiconductors and semi equipment.

*Weights as of 6/30/10: Companhia de Saneamento Basico do Estado de Sao Paulo (2.2), Charoen Pokphand Foods PCL (1.5%), Massmart Holdings Limited (0.8%), Hindalco Industries Limited (1.8%), Dongfeng Motor Group Company Limited (0.8%), KGHM Polska Miedz S.A. (1.4%). Holdings are subject to change; additionally current and future holdings are subject to risk.