UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-CSR
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CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
INVESTMENT COMPANY ACT FILE NUMBER 811-10467
CAUSEWAY CAPITAL MANAGEMENT TRUST
(Exact name of registrant as specified in charter)
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11111 Santa Monica Boulevard, Suite 1500
Los Angeles, CA 90025
(Address of principal executive offices) (Zip code)
SEI Investments Global Funds Services
One Freedom Valley Drive
Oaks, PA 19456
(Name and address of agent for service)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 1-866-947-7000
DATE OF FISCAL YEAR END: SEPTEMBER 30, 2009
DATE OF REPORTING PERIOD: SEPTEMBER 30, 2009
ITEM 1. REPORTS TO STOCKHOLDERS.
(CAUSEWAY FUNDS LOGO)
ANNUAL REPORT
CAUSEWAY
EMERGING
MARKETS FUND
SEPTEMBER 30, 2009
TABLE OF CONTENTS
Letter to Shareholders 2
Schedule of Investments 7
Sector Diversification 13
Statement of Assets and Liabilities 14
Statement of Operations 15
Statement of Changes in Net Assets 16
Financial Highlights 18
Notes to Financial Statements 20
Report of Independent Registered Public Accounting Firm 28
Notice to Shareholders 29
Trustees and Officers Information 30
Disclosure of Fund Expenses 33
Statement Regarding Basis for Approval of Investment Advisory Agreement 35
LETTER TO SHAREHOLDERS
For the fiscal year ended September 30, 2009, the Causeway Emerging Markets Fund
Institutional Class returned 18.25% and the Investor Class returned 18.15%
compared to the MSCI Emerging Markets Index ("EM Index") return of 19.44%. Since
the Fund's inception on March 30, 2007, its average annual total returns are
- -0.55% for the Institutional Class and -0.57% for the Investor Class compared to
the EM Index average annual total return of 2.34% for the same period. At fiscal
year-end, the Fund had net assets of $33.8 million.
PERFORMANCE REVIEW
In our investment process, we select securities using a combination of bottom-up
and top-down quantitative factors. The portfolio's exposure to our bottom-up
factors contributed positively to relative performance over the course of the
year. This was mainly attributed to the strong performance of our valuation
factors. Our momentum and earnings growth factors, on the other hand, had
negative relative performance. Our top-down factors, which have a smaller weight
in the model, also added to relative performance. Our top-down macroeconomic and
sector factors contributed positively, but the country model detracted from
relative performance.
Fund holdings in the real estate, materials, and technology hardware and
equipment industry groups added to performance relative to the performance of
those industry groups in the EM Index, while holdings in the capital goods,
food, beverage, and tobacco, and semiconductors and semi equipment industry
groups detracted from relative performance gains during the period. At the stock
level, some of the notable contributors to return this fiscal year were coal
mining company Bumi Resources (Indonesia), copper and silver mining company KGHM
Polska Miedz (Poland), metals and mining company Mechel (Russia), chemical
manufacturing company LG Chemical (Korea), and real estate development company
Shenzhen Investment (China). The notable underperformers compared to the EM
Index included steel manufacturing company G Steel (Thailand), Bank Leumi
Le-Israel, telecommunications company Vimpel-Communications (Russia), shipping
company STX Pan Ocean (Korea), and diversified holding company Alfa (Mexico).
Most emerging market currencies which float freely (including the Brazilian
Real, Korean Won, and South African Rand) had mixed performance relative to the
US Dollar in the twelve months ended September 30, 2009. And with that
performance came significant volatility. In the first six months, there was a
flight to quality on the part of investors in response to the ongoing global
credit crisis and they bought the dollar and US Treasury Bills and sold riskier
emerging market currencies and debt. During the latter six months, on the other
hand, the appetite for risk increased and emerging market currencies
appreciated.
2 CAUSEWAY EMERGING MARKETS FUND
SIGNIFICANT PORTFOLIO CHANGES
As a result of our quantitative security selection model that includes both
bottom-up as well as top-down inputs, the Fund's active exposure to several
industries and countries changed during the fiscal year. The active weightings
in the automobiles and components, diversified financials, and pharmaceuticals
and biotechnology industry groups increased, while active weightings in the
materials, technology hardware & equipment, and food and staples retailing
industry groups decreased. The largest changes in the Fund's active country
weightings (that is, compared to the country weightings in the EM Index) during
the fiscal year included China (+2.48%), Mexico (+1.39%), Malaysia (+1.34%),
South Africa (-2.71%), Thailand (-1.62) and Russia (-1.17%).
Significant purchases this year included oil and natural gas exploration and
production company, China Petroleum and Chemical Corporation, pharmaceutical
manufacturing company, Teva Pharmaceutical Industries (Israel), electric
utility, Centrais Eletricas Brasileiras (Brazil), cigarette manufacturing and
distributing company, Souza Cruz (Brazil), Bank of China and Taiwan
Semiconductor Manufacturing. Largest sales during the period included coal
mining company, Bumi Resources (Indonesia), retail holding company, Shoprite
Holdings (South Africa), Bank Leumi Le-Israel, Industrial Bank of Korea,
chemical manufacturing company, LG Chemical (Korea), and oil refining company,
Reliance Industries (India).
INVESTMENT OUTLOOK
Global growth in the fourth quarter of 2008 and the first quarter of 2009 was
decidedly negative, with some economies posting near double digit year-over-year
contractions. By the second quarter and into the third quarter, however, these
declines mitigated noticeably, with most economies showing positive growth. The
coordinated actions of governments around the world succeeded in averting a
global financial crisis. Over the course of the year, spreads in interbank
lending, commercial paper, and mortgage markets narrowed from unprecedented
highs to normal ranges.
On the inflation front, increases in generalized price levels remain subdued.
Most economies are witnessing multi-year lows in inflation. Some economies, such
as China and Taiwan, are even experiencing the opposite problem of deflation.
Going forward, however, there are some signs that inflation may pick up. First,
growth throughout the world has accelerated, and if monetary and fiscal policy
continue to be accommodative, these factors could lead to inflation. Second, we
have already seen a steady rise in commodity prices for most of 2009. This
phenomenon could lead to a more generalized increase in prices.
CAUSEWAY EMERGING MARKETS FUND 3
Fiscal and monetary stimulus continued to be accommodative across the emerging
markets over the course of the fiscal year. Among the policy actions we have
seen are governments injecting significant liquidity into the financial system,
cutting interest rates, purchasing troubled bank assets, providing emergency
loans to and, in some cases, nationalizing or taking significant stakes in
ailing financial institutions, engaging in fiscal spending, cutting taxes, and
providing subsidies to consumers. All of these actions have significantly
positively impacted the global real economy and financial system. In fact, the
next policy actions by most authorities will probably be to tighten credit,
especially if inflationary pressures become apparent, although we do not
anticipate this happening for at least a couple of quarters.
The investment outlook for emerging markets still looks positive, although not
as attractive as earlier in the year because of the considerable outperformance
already experienced. Certainly from a relative valuation perspective versus
developed equity markets, emerging markets do not look that compelling, but the
asset class is still significantly cheaper than it was during the extremes
reached in 2007. From the standpoint of growth, on the other hand, emerging
markets continue to look attractive. From a bottom-up perspective, sell-side
estimates for emerging market companies have experienced positive upgrades and
from a top-down perspective, gross domestic product growth rates for emerging
countries are increasing. Also, steep yield curves in most economies are a
positive indicator for the asset class. Short-term interest rates are low so
money is cheap, which is good for high risk, high reward assets. And long rates
are noticeably higher, indicating that markets expect growth to improve going
forward, which is also good for emerging markets. We also pay close attention to
measures of risk aversion, which include the S&P 500 Volatility Index (VIX), the
EMBI spread (emerging market bond yield - US treasury yield), and the high yield
spread. These indicators are not as bullish for the emerging markets as we
observed in 2008.
Our investment process combines value, growth, and momentum factors, while
monitoring the portfolio's exposure to quality factors. Companies with value
characteristics tend to do well in the initial stages of a bull market as
investors seek out those stocks which have the greatest financial leverage,
earnings uncertainty, and volatility. In a bear market, these stocks
underperform, trade at a discount to their higher quality peers, and become
value stocks, which are then poised to outperform during the subsequent bull
market. We are now at the point where much of the outperformance has already
occurred (relative to history) and while we think that value will continue to
generate positive returns, we think the magnitude will be less than what we have
seen over the last few months. We also expect momentum and growth factors to
perform better than they have over the last few months, as these factors
typically do not perform well at turning points in the cycle. Lastly, we also
believe that quality factors such as financial leverage, earnings uncertainty,
and volatility will add positively to relative performance in the months ahead.
4 CAUSEWAY EMERGING MARKETS FUND
We thank you for your continued confidence in Causeway Emerging Markets Fund,
and look forward to serving you in the future.
/s/ Arjun Jayaraman /s/ MacDuff Kuhnert
Arjun Jayaraman MacDuff Kuhnert
Portfolio Manager Portfolio Manager
October 14, 2009
THE ABOVE COMMENTARY EXPRESSES THE ADVISER'S VIEWS AS OF THE DATE SHOWN AND
SHOULD NOT BE RELIED UPON BY THE READER AS RESEARCH OR INVESTMENT ADVICE. THESE
VIEWS ARE SUBJECT TO CHANGE. THERE IS NO GUARANTEE THAT ANY FORECASTS MADE WILL
COME TO PASS.
CAUSEWAY EMERGING MARKETS FUND 5
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN CAUSEWAY EMERGING
MARKETS FUND, INSTITUTIONAL CLASS SHARES AND INVESTOR CLASS SHARES VERSUS THE
MSCI EMERGING MARKETS INDEX
(PERFORMANCE GRAPH)
Causeway
Emerging Causeway MSCI
Markets Fund, Emerging Emerging
Institutional Markets Fund, Markets Index
Class Investor (Gross)
------------- ------------- -------------
3/29/2007 $10,000 $10,000 $10,000
9/30/2007 $13,260 $13,290 $13,243
9/30/2008 $8,341 $8,344 $8,872
9/30/2009 $9,863 $9,859 $10,597
Annualized
One Year Inception
Return To Date
-------- ----------
Institutional
Class 18.25% -0.55%
Investor Class 18.15% -0.57%
MSCI Emerging
Markets Index 19.44% 2.34%
The performance in the above graph does not reflect the deduction of taxes the
shareholder will pay on Fund distributions or the redemptions of Fund shares.
The inception date of Causeway Emerging Markets Fund was March 30, 2007.
THE PERFORMANCE DATA REPRESENTS PAST PERFORMANCE AND IS NOT AN INDICATION OF
FUTURE RESULTS. INVESTMENT RETURN AND THE PRINCIPAL VALUE OF AN INVESTMENT WILL
FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH LESS THAN
THEIR ORIGINAL COST AND CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE
PERFORMANCE QUOTED. FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH END,
PLEASE CALL 1-866-947-7000 OR VISIT www.causewayfunds.com. INVESTMENT
PERFORMANCE REFLECTS FEE WAIVERS IN EFFECT. IN THE ABSENCE OF SUCH FEE WAIVERS,
TOTAL RETURN WOULD BE REDUCED. TOTAL RETURNS ASSUME REINVESTMENT OF DIVIDENDS
AND CAPITAL GAINS DISTRIBUTIONS AT NET ASSET VALUE WHEN PAID. INVESTOR CLASS
SHARES PAY A SHAREHOLDER SERVICE FEE OF UP TO 0.25% PER ANNUM OF AVERAGE DAILY
NET ASSETS. INSTITUTIONAL CLASS SHARES PAY NO SHAREHOLDER SERVICE FEE. IF YOUR
ACCOUNT INCURRED A REDEMPTION FEE, YOUR PERFORMANCE WILL BE LOWER THAN THE
PERFORMANCE SHOWN HERE. FOR MORE INFORMATION, PLEASE SEE THE PROSPECTUS.
THE MSCI EMERGING MARKETS INDEX IS A FREE FLOAT-ADJUSTED MARKET CAPITALIZATION
INDEX THAT IS DESIGNED TO MEASURE EQUITY MARKET PERFORMANCE IN THE GLOBAL
EMERGING MARKETS. THE INDEX DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS,
FEES AND EXPENSES ASSOCIATED WITH AN INVESTMENT IN THE FUND. IT IS NOT POSSIBLE
TO INVEST DIRECTLY IN AN INDEX. THERE ARE SPECIAL RISKS IN FOREIGN INVESTING
(PLEASE SEE NOTE 5 IN THE NOTES TO FINANCIAL STATEMENTS).
6 CAUSEWAY EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS (000)*
SEPTEMBER 30, 2009
NUMBER OF
CAUSEWAY EMERGING MARKETS FUND SHARES VALUE
- ------------------------------ --------- ------
COMMON STOCK
BRAZIL -- 13.2%
Banco Bradesco SA ADR 22,800 $ 453
Brasil Telecom SA ADR 5,400 142
Centrais Eletricas Brasileiras SA 31,600 492
Cia de Saneamento Basico do Estado de Sao Paulo ADR 12,600 478
Itau Unibanco Banco Multiplo SA ADR 8,085 163
Petroleo Brasileiro SA ADR 31,700 1,337
Souza Cruz SA 15,100 537
Tele Norte Leste Participacoes SA ADR 10,200 192
Vale SA ADR, Class B 28,500 659
------
4,453
------
CHINA -- 18.8%
Agile Property Holdings Ltd. 160,000 187
American Oriental Bioengineering Inc.(1) 28,000 136
Bank of China Ltd. 1,604,000 842
Beijing Enterprises Holdings Ltd. 36,500 193
Chaoda Modern Agriculture 233,398 141
China Agri-Industries Holdings Ltd. 257,000 239
China Construction Bank Corp., Class H 982,000 781
China Life Insurance Co. Ltd. ADR 1,100 72
China Mobile Ltd. ADR 9,000 442
China Petroleum & Chemical Corp. ADR 8,000 681
CNOOC Ltd. ADR 2,800 379
Dongfeng Motor Group Co. Ltd., Class H 382,000 404
FerroChina Ltd.(1, 2) 258,000 --
Industrial & Commercial Bank of China 369,000 277
PetroChina Co. Ltd. ADR 2,100 239
Renhe Commercial Holdings Co. Ltd. 1,048,000 211
Shanda Interactive Entertainment Ltd. ADR(1) 3,600 184
Shenzhen Investment Ltd. 558,000 215
Sohu.com Inc.(1) 1,800 124
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
CAUSEWAY EMERGING MARKETS FUND 7
SCHEDULE OF INVESTMENTS (000)* (CONTINUED)
SEPTEMBER 30, 2009
NUMBER OF
CAUSEWAY EMERGING MARKETS FUND SHARES VALUE
- ------------------------------ --------- ------
CHINA -- (CONTINUED)
Tencent Holdings Ltd. 13,100 $ 213
Want Want China Holdings Ltd. 185,000 109
Yanzhou Coal Mining Co. Ltd. ADR 19,900 287
------
6,356
------
HUNGARY -- 0.9%
OTP Bank Nyrt 10,195 294
------
INDIA -- 7.7%
Bank of India 46,891 406
Hindalco Industries Ltd. 115,741 312
ICICI Bank Ltd. ADR 3,700 143
IDBI Bank Ltd. 152,283 405
Infosys Technologies Ltd. ADR 1,700 82
Oil & Natural Gas Corp. Ltd. 25,554 625
Sesa GOA Ltd.(1) 50,660 280
Tata Consultancy Services Ltd. 9,315 121
Tata Steel Ltd. 21,214 225
------
2,599
------
INDONESIA -- 2.4%
Astra International 52,500 181
Bank Mandiri Persero 700,000 339
United Tractors Tbk PT GDR 189,500 305
------
825
------
ISRAEL -- 3.9%
Bezeq Israeli Telecommunication Corp. Ltd. 103,850 224
Cellcom Israel Ltd. ADR 7,300 222
Check Point Software Technologies(1) 10,300 292
Teva Pharmaceutical Industries Ltd. ADR 11,424 578
------
1,316
------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
8 CAUSEWAY EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS (000)* (CONTINUED)
SEPTEMBER 30, 2009
NUMBER OF
CAUSEWAY EMERGING MARKETS FUND SHARES VALUE
- ------------------------------ --------- ------
MALAYSIA -- 1.9%
Affin Holdings Bhd 214,700 $ 121
Sime Darby Bhd 80,700 198
Telekom Malaysia Bhd 164,000 145
Tenaga Nasional Bhd 73,600 174
------
638
------
MEXICO -- 4.4%
America Movil SAB de CV ADR, Class L 13,700 600
Cemex SAB de CV ADR(1) 9,252 119
Grupo Financiero Banorte SAB de CV, Class O 64,200 215
Grupo Mexico SAB de CV, Class B(1) 289,394 534
------
1,468
------
POLAND -- 2.0%
KGHM Polska Miedz SA 16,978 515
Polski Koncern Naftowy Orlen SA 15,524 162
------
677
------
RUSSIA -- 5.3%
Evraz Group SA GDR 6,191 162
LUKOIL ADR 8,575 467
Mechel ADR 8,500 153
Mobile Telesystems ADR 5,200 251
OAO Gazprom 33,594 202
OAO Gazprom ADR 13,115 306
OAO NovaTek GDR 5,029 250
------
1,791
------
SINGAPORE -- 0.4%
Yangzijiang Shipbuilding Holdings Ltd. 207,000 141
------
SOUTH AFRICA -- 4.9%
ABSA Group Ltd. 11,894 191
British American Tobacco PLC 1,090 34
</Table>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
CAUSEWAY EMERGING MARKETS FUND 9
SCHEDULE OF INVESTMENTS (000)* (CONTINUED)
SEPTEMBER 30, 2009
NUMBER OF
CAUSEWAY EMERGING MARKETS FUND SHARES VALUE
- ------------------------------ --------- ------
SOUTH AFRICA -- (CONTINUED)
Metropolitan Holdings Ltd. 123,982 $ 212
MTN Group Ltd. 25,586 418
Reinet Investments SCA(1) 1,709 2
Remgro Ltd. 45,593 539
Telkom SA Ltd. 46,145 266
------
1,662
------
SOUTH KOREA -- 13.7%
AtlasBX Co. Ltd. 8,859 133
Busan Bank 12,024 134
Daishin Securities Co. Ltd. 27,170 373
Global & Yuasa Battery Co. Ltd. 4,950 100
Honam Petrochemical Corp. 2,286 172
Hyundai Heavy Industries 1,112 170
Hyundai Mipo Dockyard 1,905 201
Korea Zinc Co. Ltd. 1,741 259
KT&G Corp. 2,672 162
LG Chemical Ltd. 2,864 532
LG Display Co. Ltd. ADR 21,500 308
LG Telecom Ltd. 52,771 381
POSCO ADR 1,100 114
Samsung Electronics Co. Ltd. 1,252 867
S-Oil Corp. 4,914 260
Sungwoo Hitech Co. Ltd. 22,742 205
Woori Finance Holdings Co. Ltd. 12,560 170
Youngone Corp. 3,854 74
------
4,615
------
TAIWAN -- 12.8%
Altek Corp. 110,225 204
Asia Optical Co. Inc. 99,070 177
AU Optronics Corp. ADR 44,395 430
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
10 CAUSEWAY EMERGING MARKETS FUND
SCHEDULE OF INVESTMENTS (000)* (CONTINUED)
SEPTEMBER 30, 2009
NUMBER OF
CAUSEWAY EMERGING MARKETS FUND SHARES VALUE
- ------------------------------ --------- -------
TAIWAN -- (CONTINUED)
China Development Financial Holding Corp.(1) 473,925 $ 126
Chunghwa Telecom Co. Ltd. ADR 8,088 146
Compal Electronics Inc. 486,959 568
Gigabyte Technology Co. Ltd. 313,000 265
Hung Sheng Construction Co. Ltd. 652,000 296
Lite-On Technology Corp. 211,472 278
Micro-Star International Co. Ltd. 169,598 111
Phihong Technology Co. Ltd. 207,000 144
Quanta Computer Inc. 191,060 402
Quanta Storage Inc. 60,660 126
Taiwan Cooperative Bank 206,000 127
Taiwan Semiconductor Manufacturing Co. Ltd. ADR 43,702 479
Tsann Kuen Enterprise Co. Ltd. 33,000 34
U-Ming Marine Transport Corp. 73,000 123
Universal Scientific Industrial Co. Ltd. 364,242 170
Wistron Corp. 71,977 134
-------
4,340
-------
THAILAND -- 1.1%
Krung Thai Bank 427,500 116
Thoresen Thai Agencies 322,720 250
-------
366
-------
TURKEY -- 1.3%
Kardemir Karabuk Demir Celik Sanayi ve Ticaret AS,
Class D(1) 362,427 155
Turk Hava Yollari 114,529 299
-------
454
-------
TOTAL COMMON STOCK
(COST $30,718) -- 94.7% 31,995
-------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
CAUSEWAY EMERGING MARKETS FUND 11
SCHEDULE OF INVESTMENTS (000)* (CONCLUDED)
SEPTEMBER 30, 2009
NUMBER OF
CAUSEWAY EMERGING MARKETS FUND SHARES VALUE
- ------------------------------ --------- -------
PREFERRED STOCK
BRAZIL -- 3.6%
Centrais Eletricas Brasileiras SA 10,500 $ 147
Cia Energetica de Minas Gerais 10,225 155
Eletropaulo Metropolitana Eletricidade de Sao Paulo SA 20,329 419
Investimentos Itau SA 40,156 243
Telemar Norte Leste SA 7,809 258
-------
1,222
-------
SOUTH KOREA -- 1.2%
Hyundai Motor Co. 11,760 408
-------
TOTAL PREFERRED STOCK
(COST $1,596) -- 4.8% 1,630
-------
TOTAL INVESTMENTS -- 99.5%
(COST $32,314) 33,625
-------
OTHER ASSETS IN EXCESS OF LIABILITIES -- 0.5% 167
-------
NET ASSETS -- 100.0% $33,792
=======
* Except for share data.
ADR American Depositary Receipt
GDR Global Depositary Receipt
(1) Non-income producing security.
(2) Security fair valued at zero due to company's insolvency.
Amounts designated as "--" are $0 or have been rounded to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
12 CAUSEWAY EMERGING MARKETS FUND
SECTOR DIVERSIFICATION
AS OF SEPTEMBER 30, 2009, THE SECTOR DIVERSIFICATION WAS AS FOLLOWS (UNAUDITED):
COMMON PREFERRED % OF NET
CAUSEWAY EMERGING MARKETS FUND STOCK STOCK ASSETS
- ------------------------------ ------ --------- --------
Consumer Discretionary 4.5% 1.2% 5.7%
Consumer Staples 4.0 0.0 4.0
Energy 15.4 0.0 15.4
Financials 21.9 0.7 22.6
Health Care 1.7 0.0 1.7
Industrials 6.0 0.0 6.0
Information Technology 15.3 0.0 15.3
Materials 12.4 0.0 12.4
Telecommunication Services 10.1 0.8 10.9
Utilities 3.4 2.1 5.5
---- --- -----
TOTAL 94.7% 4.8% 99.5%
==== ==== =====
EXCESS OF CASH AND RECEIVABLES
OVER PAYABLES 0.5
-----
NET ASSETS 100.0%
=====
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
CAUSEWAY EMERGING MARKETS FUND 13
STATEMENT OF ASSETS AND LIABILITIES (000)*
CAUSEWAY
EMERGING
MARKETS FUND
9/30/09
------------
ASSETS:
Investments at Value (Cost $32,314) $ 33,625
Receivable for Investment Securities Sold 349
Foreign Currency (Cost $262) 268
Receivable for Dividends and Interest 194
Receivable for Fund Shares Sold 16
Prepaid Expenses 6
--------
TOTAL ASSETS 34,458
--------
LIABILITIES:
Due to Custodian 265
Payable for Investment Securities Purchased 254
Accrued Foreign Capital Gains Tax on Appreciated Securities 66
Payable for Fund Shares Redeemed 14
Payable for Shareholder Service Fees -- Investor Class 5
Payable due to Investment Adviser 4
Payable due to Administrator 2
Payable for Trustees' Fees 1
Other Accrued Expenses 55
--------
TOTAL LIABILITIES 666
--------
NET ASSETS $ 33,792
========
NET ASSETS:
Paid-in Capital (unlimited authorization -- no par value) $ 45,584
Undistributed Net Investment Income 512
Accumulated Net Realized Loss on Investments (13,564)
Accrued Foreign Capital Gains Tax on Appreciated Securities (66)
Net Unrealized Appreciation on Investments 1,311
Net Unrealized Appreciation on Foreign Currencies and Translation of
Other Assets and Liabilities Denominated in Foreign Currencies 15
--------
NET ASSETS $ 33,792
========
NET ASSET VALUE PER SHARE (BASED ON NET ASSETS OF
$29,754,158 / 3,252,405 SHARES) -- INSTITUTIONAL CLASS $ 9.15
========
NET ASSET VALUE PER SHARE (BASED ON NET ASSETS OF
$4,037,500 / 438,527 SHARES) -- INVESTOR CLASS $ 9.21
========
* Except for Net Asset Value data.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
14 CAUSEWAY EMERGING MARKETS FUND
STATEMENT OF OPERATIONS (000)
CAUSEWAY
EMERGING
MARKETS FUND
10/01/08 to
9/30/09
------------
INVESTMENT INCOME:
Dividend Income (net of foreign taxes withheld of $103) $ 1,001
--------
TOTAL INVESTMENT INCOME 1,001
--------
EXPENSES:
Investment Advisory Fees 261
Administration Fees 15
Shareholder Service Fees -- Investor Class 3
Transfer Agent Fees 52
Custodian Fees 51
Professional Fees 38
Registration Fees 29
Printing Fees 18
Trustees' Fees 4
Other Fees 22
--------
TOTAL EXPENSES 493
Less:
Waiver of Investment Advisory Fees (138)
--------
NET EXPENSES 355
--------
NET INVESTMENT INCOME 646
--------
NET REALIZED AND UNREALIZED GAIN (L0SS) ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net Realized Loss from Security Transactions (12,212)
Net Realized Loss from Foreign Currency Transactions (120)
Net Change in Unrealized Appreciation on Investments 16,839
Net Change in Foreign Capital Gains Tax on Appreciated Securities (59)
Net Change in Unrealized Appreciation on Foreign Currency and Translation of
Other Assets and Liabilities Denominated in Foreign Currency 21
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS 4,469
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 5,115
========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
CAUSEWAY EMERGING MARKETS FUND 15
STATEMENT OF CHANGES IN NET ASSETS (000)
CAUSEWAY EMERGING MARKETS FUND
------------------------------
10/01/08 to 10/01/07 to
9/30/09 9/30/08
----------- -----------
OPERATIONS:
Net Investment Income $ 646 $ 843
Net Realized Loss from Security Transactions (12,212) (751)
Net Realized Loss from Foreign Currency Transactions (120) (39)
Net Change in Unrealized Appreciation (Depreciation) on Investments 16,839 (19,316)
Net Change in Foreign Capital Gains Tax on Appreciated Securities (59) --
Net Change in Unrealized Appreciation (Depreciation) on Foreign Currency
and Translation of Other Assets and Liabilities
Denominated in Foreign Currency 21 (7)
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 5,115 (19,270)
-------- --------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income Dividends:
Institutional Class (544) (348)
Investor Class (47) (106)
-------- --------
Total Net Investment Income Dividends (591) (454)
-------- --------
Net Capital Gain Distributions:
Institutional Class -- (663)
Investor Class -- (212)
-------- --------
Total Net Capital Gain Distributions -- (875)
-------- --------
TOTAL DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (591) (1,329)
-------- --------
NET INCREASE (DECREASE) IN NET ASSETS DERIVED FROM
CAPITAL SHARE TRANSACTIONS(1) (2,913) 25,865
Redemption Fees(2) 5 17
-------- --------
TOTAL INCREASE IN NET ASSETS 1,616 5,283
-------- --------
NET ASSETS:
BEGINNING OF YEAR 32,176 26,893
-------- --------
END OF YEAR $ 33,792 $ 32,176
======== ========
UNDISTRIBUTED NET INVESTMENT INCOME $ 512 $ 554
======== ========
(1) See Note 7 in the Notes to Financial Statements.
(2) See Note 2 in the Notes to Financial Statements.
Amounts designated as "--" are $0 or are rounded to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
16 CAUSEWAY EMERGING MARKETS FUND
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FINANCIAL HIGHLIGHTS
FOR THE YEAR OR PERIOD ENDED SEPTEMBER 30,
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS
Net Realized
and
Net Asset Unrealized Total
Value, Gain Dividends Distributions Dividends
Beginning Net (Loss) on Total from from Net from and
of Period Investment Investments Operations Investment Capital Distributions Redemption
($) Income ($) ($) ($) Income ($) Gains ($) ($) Fees ($)
--------- ---------- ------------ ---------- ---------- ------------- ------------- ----------
CAUSEWAY EMERGING MARKETS FUND+
INSTITUTIONAL CLASS
2009 7.96 0.16 1.18 1.34 (0.15) -- (0.15) --
2008 13.26 0.31 (5.00) (4.69) (0.21) (0.40) (0.61) --
2007(1) 10.00 0.08 3.18 3.26 -- -- -- --
INVESTOR CLASS
2009 7.97 0.17 1.19 1.36 (0.12) -- (0.12) --
2008 13.29 0.22 (4.94) (4.72) (0.20) (0.40) (0.60) --
2007(1) 10.00 0.06 3.23 3.29 -- -- -- --
(1) Commenced operations on March 30, 2007. All ratios are annualized. Total
return and portfolio turnover rate are for the period indicated and have
not been annualized.
+ Per share amounts calculated using average shares method.
Amounts designated as "--" are $0 or are rounded to $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
18 CAUSEWAY EMERGING MARKETS FUND
Ratio of
Expenses Ratio
to Average of Net
Net Asset Net Assets Ratio of Net Investment
Value, End End of Expenses to Assets Income Portfolio
of Period Total Period Average Net (Excluding to Average Turnover
($) Return(%) ($000) Assets (%) Waivers) (%) Net Assets (%) Rate(%)
- ---------- --------- ---------- ----------- ------------ -------------- ---------
9.15 18.25 29,754 1.35 1.88 2.46 92
7.96 (37.10) 28,851 1.35 1.56 2.69 100
13.26 32.60 22,376 1.35 3.24 1.44 77
9.21 18.15 4,038 1.45 1.98 2.61 92
7.97 (37.22) 3,325 1.60 1.82 1.79 100
13.29 32.90 4,517 1.58 3.16 1.02 77
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
CAUSEWAY EMERGING MARKETS FUND 19
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
Causeway Emerging Markets Fund (the "Fund") is a series of Causeway Capital
Management Trust (the "Trust"). The Trust is an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act") and is a Delaware statutory trust that was established on August 10,
2001. The Fund began operations on March 30, 2007. The Fund is authorized to
offer two classes of shares, the Institutional Class and the Investor Class. The
Declaration of Trust authorizes the issuance of an unlimited number of shares of
beneficial interest of the Fund. The Fund's prospectus provides a description of
the Fund's investment objectives, policies and strategies. The Trust has two
additional series, the financial statements of which are presented separately.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies consistently
followed by the Fund.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS - The preparation of
financial statements in conformity with generally accepted accounting principles
("GAAP") in the United States of America requires management to make estimates
and assumptions that affect the reported amount of net assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
SECURITY VALUATION - Except as described below, securities listed on a
securities exchange (except the NASDAQ Stock Market ("NASDAQ")) or
Over-the-Counter ("OTC") for which market quotations are available are valued at
the last reported sale price ("regular way") as of the close of regular trading
on each business day, or, if there is no such reported sale, at the last
reported bid price for long positions. For securities traded on NASDAQ, the
NASDAQ Official Closing Price will be used. Securities listed on multiple
exchanges or OTC markets are valued on the exchange or OTC market considered by
the Fund to be the primary market. The prices for foreign securities are
reported in local currency and converted to U.S. dollars using currency exchange
rates. Prices for most securities held in the Fund are provided daily by
recognized independent pricing agents. If a security price cannot be obtained
from an independent pricing agent, the Fund seeks to obtain a bid price from at
least one independent broker. Investments in money market funds are valued daily
at the net asset value per share.
Securities for which market prices are not "readily available" are valued in
accordance with fair value pricing procedures approved by the Fund's Board of
Trustees (the "Board"). The Fund's fair value pricing procedures are implemented
through a Fair Value Committee (the "Committee") designated by the Board. Some
of the more common reasons that may necessitate that a security be valued using
fair value pricing procedures include: the security's trading has been halted or
suspended; the security has been de-listed from a national exchange; the
security's primary trading market is temporarily closed at a time when under
normal conditions it would be open; or the security's primary pricing source is
not able or willing to provide a price.
20 CAUSEWAY EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
When the Committee values a security in accordance with the fair value pricing
procedures, the Committee will determine the value after taking into
consideration relevant information reasonably available to the Committee.
The Fund uses a third party vendor to fair value certain non-U.S. securities if
there is a movement in the U.S. market that exceeds thresholds established by
the Committee. The vendor provides a fair value for foreign securities based on
factors and methodologies involving, generally, tracking valuation correlations
between the U.S. market and each non-U.S. security.
In accordance with the authoritative guidance on fair value measurements and
disclosure under GAAP, the Fund discloses fair value of its investments in a
hierarchy that prioritizes the inputs to valuation techniques used to measure
the fair value. The objective of a fair value measurement is to determine the
price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date (an
exit price). Accordingly, the fair value hierarchy gives the highest priority to
quoted prices (unadjusted) in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3). The guidance
establishes three levels of fair value hierarchy as follows:
- Level 1 -- Unadjusted quoted prices in active markets for identical,
unrestricted assets or liabilities that the Fund has the ability to
access at the measurement date;
- Level 2 -- Quoted prices which are not active, or inputs that are
observable (either directly or indirectly) for substantially the full
term of the asset or liability; and
- Level 3 -- Prices, inputs or exotic modeling techniques which are both
significant to the fair value measurement and unobservable (supported
by little or no market activity).
Investments are classified within the level of the lowest significant input
considered in determining fair value. Investments classified within Level 3
whose fair value measurement considers several inputs may include Level 1 or
Level 2 inputs as components of the overall fair value measurement. The table
below sets forth information about the level within the fair value hierarchy at
which the Fund's investments are measured at September 30, 2009:
Investments in Level 1 Level 2+ Level 3 Total
Securities (000) (000) (000) (000)
- -------------- ------- -------- ------- -------
Common Stock
Brazil $ 4,453 $ -- $-- $ 4,453
China 2,545 3,811 -- 6,356
Hungary -- 294 -- 294
India 225 2,374 -- 2,599
Indonesia -- 825 -- 825
Israel 1,092 224 -- 1,316
Malaysia -- 638 -- 638
Mexico 1,468 -- -- 1,468
Poland -- 677 -- 677
Russia 404 1,387 -- 1,791
Singapore -- 141 -- 141
South Africa -- 1,662 -- 1,662
South Korea 422 4,193 -- 4,615
Taiwan 1,055 3,285 -- 4,340
Thailand -- 366 -- 366
Turkey -- 454 -- 454
------- ------- --- -------
Total Common Stock $11,664 $20,331 -- $31,995
Preferred Stock
Brazil $ 1,222 $-- $-- $ 1,222
South Korea -- 408 -- 408
------- ------- --- -------
Total Preferred Stock $ 1,222 $ 408 $-- $ 1,630
Total Investments
in Securities $12,886 $20,739 -- $33,625
======= ======= === =======
+ Represents securities trading primarily outside the United States, the
values of which were adjusted as a result of significant market movements
following the close of local trading.
CAUSEWAY EMERGING MARKETS FUND 21
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
The following is a reconciliation of the investments in which significant
unobservable inputs (Level 3) were used in determining value:
Investments
in Securities
(000)
-------------
Beginning balance as of October 1, 2008 $ --
Accrued discounts/premiums --
Realized gain/(loss) --
Change in unrealized appreciation/(depreciation) --
Net purchases/sales --
Net transfer in Level 3 195
Net transfer out of Level 3 (195)
-----
Ending balance as of September 30, 2009 $ --
=====
For the year ended September 30, 2009, there have been no significant changes to
the Fund's fair value methodologies.
FEDERAL INCOME TAXES -- It is the Fund's intention to continue to qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code and
to distribute all of its taxable income. Accordingly, no provision for Federal
income taxes has been made in the financial statements.
The Fund evaluates tax positions taken or expected to be taken in the course of
preparing the Fund's tax returns to determine whether it is
"more-likely-than-not" (i.e., greater than 50-percent) that each tax position
will be sustained upon examination by a taxing authority based on the technical
merits of the position. Tax positions not deemed to meet the
more-likely-than-not threshold are recorded as a tax benefit or expense in the
current year. The Fund did not record any tax provision in the current period.
However, management's conclusions regarding tax positions taken may be subject
to review and adjustment at a later date based on factors including, but not
limited to, examination by tax authorities (i.e., the last 3 tax year ends, as
applicable), on-going analysis of and changes to tax laws, regulations and
interpretations thereof.
As of and during the year ended September 30, 2009, the Fund did not have a
liability for any unrecognized tax benefits. The Fund recognizes interest and
penalties, if any, related to unrecognized tax benefits as income tax expense in
the Statement of Operations. During the year the Fund did not incur any
significant interest or penalties.
SECURITY TRANSACTIONS AND RELATED INCOME - Security transactions are accounted
for on the date the security is purchased or sold (trade date). Dividend income
is recognized on the ex-dividend date, and interest income is recognized using
the accrual basis of accounting. Costs used in determining realized gains and
losses on the sales of investment securities are those of the specific
securities sold.
FOREIGN CURRENCY TRANSLATION - The books and records of the Fund are maintained
in U.S. dollars on the following basis:
(1) the market value of investment securities, assets and liabilities is
converted at the current rate of exchange; and
(2) purchases and sales of investment securities, income and expenses are
converted at the relevant rates of exchange prevailing on the respective
dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments in
equity securities that is due to changes in the foreign exchange rates from that
which is due to changes in market prices of equity securities.
22 CAUSEWAY EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
FOREIGN CURRENCY EXCHANGE CONTRACTS - When the Fund purchases or sells foreign
securities, it may enter into foreign currency exchange contracts to minimize
foreign exchange risk from the trade date to the settlement date of the
transaction. Losses from these transactions may arise from changes in the
value of the foreign currency or if the counterparties do not perform under
the contract's terms.
EXPENSE/CLASSES - Expenses that are directly related to one Fund of the Trust
are charged directly to that Fund. Other operating expenses of the Trust are
prorated to the Fund and the other series of the Trust on the basis of relative
daily net assets. Class specific expenses are borne by that class of shares.
Income, realized and unrealized gains/losses and non-class specific expenses are
allocated to the respective classes on the basis of relative daily net assets.
DIVIDENDS AND DISTRIBUTIONS - Dividends from net investment income, if any,
are declared and paid on an annual basis. Any net realized capital gains on
sales of securities are distributed to shareholders at least annually.
REDEMPTION FEE - Through November 2008, the Fund imposed a redemption fee of 2%
on the original value of capital shares redeemed by shareholders less than 90
days after purchase. Effective December 1, 2008, the redemption fee period was
reduced to 60 days. The redemption fee does not apply to shares purchased
through reinvested distributions or shares redeemed through designated
systematic withdrawal plans. The redemption fee does not normally apply to
omnibus account arrangements through financial intermediaries where the purchase
and sale orders of a number of persons are aggregated before being communicated
to the Fund. However, the Fund seeks agreements with these intermediaries to
impose the Fund's redemption fee or a different redemption fee on their
customers if feasible, or to impose other appropriate restrictions on excessive
short-term trading. For the year ended September 30, 2009, the Institutional
Class and Investor Class received $4,812 and $492 in redemption fees,
respectively.
3. INVESTMENT ADVISORY, ADMINISTRATION, SHAREHOLDER SERVICE AND DISTRIBUTION
AGREEMENTS
The Trust, on behalf of the Fund, has entered into an Investment Advisory
Agreement (the "Advisory Agreement") with Causeway Capital Management LLC (the
"Adviser"). Under the Advisory Agreement, the Adviser is entitled to a monthly
fee equal to an annual rate of 1.00% of the Fund's average daily net assets. The
Adviser contractually agreed through September 30, 2009 to waive its fee and, to
the extent necessary, reimburse the Fund to keep total annual fund operating
expenses (excluding brokerage fees and commissions, interest, taxes, fees and
expenses of other funds in which the Fund invests, and extraordinary expenses)
from exceeding 1.35% and 1.60% of Institutional Class and Investor Class average
daily net assets, respectively. For the year ended September 30, 2009, the
Adviser waived $137,761.
The Trust and SEI Investments Global Funds Services (the "Administrator") have
entered into an Administration Agreement. Under the terms of the Administration
Agreement, the
CAUSEWAY EMERGING MARKETS FUND 23
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Administrator is entitled to an annual fee which is calculated daily and paid
monthly based on the aggregate average daily net assets of the Trust as follows:
0.06% up to $1 billion; 0.05% of the assets exceeding $1 billion up to $2
billion; 0.04% of the assets exceeding $2 billion up to $3 billion;
0.03% of the assets exceeding $3 billion up to $4 billion; and 0.02% of the
assets exceeding $4 billion. The Trust is subject to a minimum annual fee of
$165,000 for the first portfolio plus $80,000 for each additional portfolio plus
$20,000 for each additional share class (over two) in each portfolio.
The Trust has adopted a Shareholder Service Plan and Agreement for Investor
Class shares that allows the Trust to pay broker-dealers and other financial
intermediaries a fee of up to 0.25% per annum of average daily net assets for
services provided to Investor Class shareholders. For the year ended September
30, 2009, the Investor Class paid 0.10% of average daily net assets under this
plan.
The Trust and SEI Investments Distribution Co. (the "Distributor") have entered
into a Distribution Agreement. The Distributor receives no fees from the Fund
for its distribution services under this agreement.
The officers of the Trust are also officers or employees of the
Administrator, Distributor or Adviser. They receive no fees for serving as
officers of the Trust.
4. INVESTMENT TRANSACTIONS
The cost of security purchases and the proceeds from the sale of securities,
other than short-term investments, during the year ended September 30, 2009, for
the Fund were as follows:
Purchases Sales
(000) (000)
- --------- -------
$24,195 $27,057
5. RISKS OF FOREIGN INVESTING
Because the Fund invests most of its assets in foreign securities, the Fund is
subject to further risks. For example, the value of the Fund's securities may be
affected by social, political and economic developments and U.S. and foreign
laws relating to foreign investment. Further, because the Fund invests in
securities denominated in foreign currencies, the Fund's securities may go down
in value depending on foreign exchange rates. Other risks include trading,
settlement, custodial, and other operational risks; withholding or other taxes;
and the less stringent investor protection and disclosure standards of some
foreign markets. All of these factors can make foreign securities less liquid,
more volatile and harder to value than U.S. securities. These risks are higher
for emerging markets investments.
6. FEDERAL TAX INFORMATION
The Fund is classified as a separate taxable entity for Federal income tax
purposes. The Fund intends to continue to qualify as a separate "regulated
investment company" under Subchapter M of the Internal Revenue Code and make the
requisite distributions to shareholders that will be sufficient to relieve it
from Federal income tax and Federal excise tax. Therefore, no Federal tax
provision is required. To the extent that dividends from net investment income
and distributions from net realized capital gains exceed amounts reported in the
financial statements, such amounts are reported separately.
The Fund may be subject to taxes imposed by countries in which it invests in
issuers existing or operating in such countries. Such taxes are generally based
on income earned. The Fund accrues such taxes when the related income is earned.
Dividend and interest income is
24 CAUSEWAY EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
recorded net of non-U.S. taxes paid. Gains realized by the Fund on the sale of
securities in certain countries are subject to non-U.S. taxes. The Fund records
a liability based on unrealized gains to provide for potential non-U.S. taxes
payable upon the sale of these securities. For the year ended September 30,
2009, non-U.S. taxes paid on realized gains were $0 and non-U.S. taxes accrued
on unrealized gains were $66,114.
The amounts of distributions from net investment income and net realized capital
gains are determined in accordance with Federal income tax regulations, which
may differ from those amounts determined under generally accepted accounting
principles in the United States of America. These book/tax differences are
either temporary or permanent in nature. The character of distributions made
during the year from net investment income or net realized gains, and the timing
of distributions made during the year may differ from the year that the income
or realized gains (losses) were recorded by the Fund. To the extent these
differences are permanent, adjustments are made to the appropriate equity
accounts in the period that the differences arise.
Accordingly, the following permanent differences, which are primarily due to
realized losses on foreign currency transactions and reclassifications of
realized gains from passive foreign investment companies, were reclassified
to/(from) the following accounts as of September 30, 2009 (000):
Undistributed Accumulated
Net Investment Net Realized
Income Gain
- -------------- ------------
$(97) $97
These reclassifications had no impact on net assets or net asset value per
share.
The tax character of dividends and distributions declared during the fiscal
years ended September 30, 2009, and September 30, 2008 were as follows (000):
Ordinary Long-Term
Income Capital Gain Total
-------- ------------ ------
2009 $ 591 $-- $ 591
2008 1,329 -- 1,329
As of September 30, 2009, the components of accumulated losses on a tax basis
were as follows (000):
Undistributed Ordinary Income $ 767
Capital Loss Carryforwards (2,906)
Unrealized Appreciation 562
Post-October Losses (10,115)
Post-October Currency Losses (97)
Other Temporary Differences (3)
--------
Total Accumulated Losses $(11,792)
========
Post-October Losses and Post-October Currency Losses represent losses realized
on securities and currency transactions from November 1, 2008 through September
30, 2009 that, in accordance with Federal income tax regulations, the Fund may
elect to defer and treat as having arisen in the following fiscal year.
For Federal income tax purposes, capital loss carryforwards represent realized
losses that the Fund may carryforward for a maximum period of eight years and
apply against future net realized gains. The capital loss carryforwards in the
table above will expire September 30, 2017.
CAUSEWAY EMERGING MARKETS FUND 25
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
At September 30, 2009, the total cost of securities for Federal income tax
purposes and the aggregate gross unrealized appreciation and depreciation on
investment securities for the Fund were as follows (000):
Net
Federal Appreciated Depreciated Unrealized
Tax Cost Securities Securities Appreciation
- -------- ----------- ----------- ------------
$33,012 $4,936 $(4,323) $613
7. CAPITAL SHARES ISSUED AND REDEEMED (000)
Year Ended Year Ended
September 30, 2009 September 30, 2008
------------------ ------------------
SHARES VALUE SHARES VALUE
------- -------- ------ ---------
INSTITUTIONAL CLASS:
Shares Sold 767 $ 4,634 1,911 $23,873
Shares Issued in Reinvestment of
Dividends and Distributions 102 537 76 976
Shares Redeemed (1,242) (7,927) (49) (641)
------ ------- ----- -------
Decrease in Shares Outstanding Derived
from Institutional Class Transactions (373) (2,756) 1,938 24,208
------ ------- ----- -------
INVESTOR CLASS:
Shares Sold 360 2,331 400 5,301
Shares Issued in Reinvestment of
Dividends and Distributions 9 45 24 306
Shares Redeemed (348) (2,533) (347) (3,950)
------ ------- ----- -------
Increase (Decrease) in Shares Outstanding Derived
from Investor Class Transactions 21 (157) 77 1,657
------ ------- ----- -------
Decrease in Shares Outstanding from
Capital Share Transactions (352) $(2,913) 2,015 $25,865
====== ======= ===== =======
8. RECENT ACCOUNTING PRONOUNCEMENTS
Financial Accounting Standards Board ("FASB") has issued FASB ASC 105 (formerly
FASB Statement No. 168), THE "FASB ACCOUNTING STANDARDS CODIFICATION(TM)" AND
THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("ASC 105"). ASC 105
established the FASB Accounting Standards Codification(TM) ("Codification" or
"ASC") as the single source of authoritative U.S. GAAP recognized by the FASB to
be applied by nongovernmental entities. Rules and interpretive releases of the
Securities and Exchange Commission ("SEC") under authority of federal securities
laws are also sources of authoritative GAAP for SEC registrants. The
Codification supersedes all existing non-SEC accounting and reporting standards.
All other non-grandfathered, non-SEC accounting literature not included in the
Codification will become non-authoritative.
The Trust has implemented the Codification as of September 30, 2009.
26 CAUSEWAY EMERGING MARKETS FUND
NOTES TO FINANCIAL STATEMENTS
(CONCLUDED)
The Fund adopted amendments to authoritative guidance on disclosures about
derivative instruments and hedging activities during the year ended September
30, 2009, which require qualitative disclosures about the objectives and
strategies of derivative instruments, quantitative disclosures about the fair
value amounts of and gains and losses on derivative instruments, and disclosures
of credit-risk-related contingent features in hedging activities. The adoption
of the additional disclosure requirements did not have any impact on the Fund's
financial statements.
9. SIGNIFICANT SHAREHOLDER CONCENTRATION
As of September 30, 2009, one of the Fund's shareholders owned 56% of net
assets.
10. SUBSEQUENT EVENTS
As of November 25, 2009, the date the financial statements were available to be
issued, no subsequent events or transactions have occurred that would have
materially impacted the financial statements as presented.
CAUSEWAY EMERGING MARKETS FUND 27
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Shareholders of
Causeway Emerging Markets Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Causeway Emerging Markets Fund (the
"Fund") at September 30, 2009, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and its financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at September 30, 2009 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Los Angeles, California
November 25, 2009
28 CAUSEWAY EMERGING MARKETS FUND
NOTICE TO SHAREHOLDERS (Unaudited)
The information set forth below is for the Fund's fiscal year as required by
federal laws. Shareholders, however, must report distributions on a calendar
year basis for income tax purposes, which may include distributions for portions
of two fiscal years of the Fund. Accordingly, the information needed by
shareholders for income tax purposes will be sent to them in early 2010. Please
consult your tax adviser for proper treatment of this information.
For the fiscal year ended September 30, 2009, the Fund is designating the
following items with regard to distributions paid during the year:
(A) (B) (E)
Long Term Ordinary (C) (D) Dividends (1)
Capital Gains Income Tax Exempt Total for Corporate
Distributions Distributions Distributions Distributions Dividends Received
(Tax Basis) (Tax Basis) (Tax Basis) (Tax Basis) Deduction
- ------------- ------------- ------------- ------------- ------------------
0.00% 100.00% 0.00% 100.00% 0.00%
(I)
(F) Qualified
Qualified (G) (H) Short-Term
Dividend Income Foreign Interest Capital
(15% Tax Rate Tax Related Gain
for QDI) Credit Dividends Dividends
- --------------- ------- --------- ----------
40.82% 13.77% 0.34% 0.00%
Foreign taxes accrued during the fiscal year ended September 30, 2009, amounted
to $94,387 and are expected to be passed through to shareholders as foreign tax
credits on Form 1099 - Dividend for the year ending December 31, 2009. In
addition, for the fiscal year ended September 30, 2009, gross income derived
from sources within foreign countries amounted to $601,987 for the Fund.
(1) Qualified Dividends represent dividends which qualify for the corporate
dividends received deduction.
Items (A), (B), (C) and (D) are based on a percentage of the Fund's total
distribution excluding pass-through as foreign tax credit.
Item (E) is based on a percentage of ordinary income distributions of the Fund.
Item (F) represents the amount of "Qualified Dividend Income" as defined in the
Jobs and Growth Tax Relief Reconciliation Act of 2003 and is reflected as a
percentage of "Ordinary Income Distributions". It is the Fund's intention to
designate the maximum amount permitted by the law up to 100%.
Item (G) is based on a percentage of ordinary income distributions of the Fund.
Item (H) is the amount of "Interest Related Dividends" as created by the
American Jobs Creation Act of 2004 and is reflected as a percentage of net
investment income distributions that is exempt from U.S. withholding tax when
paid to foreign investors.
Item (I) is the amount of "Qualified Short-Term Capital Gain Dividends" as
created by the American Jobs Creation Act of 2004 and is reflected as a
percentage of short-term capital gain distributions that is exempt from U.S.
withholding tax when paid to foreign investors.
CAUSEWAY EMERGING MARKETS FUND 29
TRUSTEES AND OFFICERS INFORMATION (Unaudited)
Information pertaining to the Trustees and officers of the Trust is set forth
below. Trustees who are not deemed to be "interested persons" of the Trust as
defined in the 1940 Act are referred to as "Independent Board Members." Trustees
who are deemed to be "interested persons" of the Trust are referred to as
"Interested Board Members." The Trust's Statement of Additional Information
("SAI") includes additional information about the Trustees and Officers. The SAI
may be obtained without charge by calling 1-866-947-7000.
TERM OF NUMBER OF
OFFICE PORTFOLIOS
AND PRINCIPAL IN TRUST OTHER
NAME POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX DIRECTORSHIPS
ADDRESS, HELD WITH THE TIME DURING PAST OVERSEEN BY HELD BY
AGE(1) COMPANY SERVED(2) FIVE YEARS BOARD MEMBER(3) BOARD MEMBER(4)
- ---------------- ------------- ----------- ----------------------------------- --------------- ---------------
INDEPENDENT
BOARD MEMBERS(5)
John A. G. Gavin Trustee; Trustee Chairman, Gamma Holdings 3 Director, TCW
Age: 78 Chairman since 9/01; (international consulting and Funds, Inc. and
of the Chairman investment holding company) (since TCW Strategic
Board since 10/04 1968); Senior Counselor, Hicks Income Fund,
TransAmerica Partners (private Inc.; Trustee,
equity investment firm) (since Hotchkis and
2001). Wiley Funds
John R. Graham Trustee Since 10/08 Film Composer (since 2005); Senior 3 none
Age: 48 Vic President, Corporate Financial
Development and Communications, The
Walt Disney Company (2004-2005);
Senior Vice President, Mergers and
Acquisitions, Lehman Brothers Inc.
(2000-2004).
Lawry J. Meister Trustee Since 10/08 President, Steaven Jones 3 none
Age: 47 Development Company, Inc. (real
estate firm) (since 1995).
Eric H. Sussman Trustee; Trustee Tenured Lecturer, Anderson Graduate 3 Trustee,
Age: 43 Chairman since 9/01; School of Management, University of Presidio Funds
of the Chairman California, Los Angeles (since
Audit since 10/04 1995); President, Amber Capital,
Committee Inc. (real estate investment and
financial planning firm) (since
1993).
INTERESTED
BOARD MEMBERS
Mark D. Cone Trustee Since 10/08 Executive Vice President and Chief 3 none
Age: 41 Marketing Officer of the Adviser
(since 2001).
30 CAUSEWAY EMERGING MARKETS FUND
TRUSTEES AND OFFICERS INFORMATION (Unaudited)
(CONTINUED)
TERM OF NUMBER OF
OFFICE PORTFOLIOS
AND PRINCIPAL IN TRUST OTHER
NAME POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX DIRECTORSHIPS
ADDRESS, HELD WITH THE TIME DURING PAST OVERSEEN BY HELD BY
AGE(1) COMPANY SERVED(2) FIVE YEARS BOARD MEMBER(3) BOARD MEMBER(4)
- ---------------------- -------------- ----------- ----------------------------------- --------------- ---------------
OFFICERS
Turner Swan President and Since 8/01 General Counsel, Secretary, and N/A N/A
11111 Santa Secretary Member of the Adviser (since 2001).
Monica Blvd.,
15th Floor
Los Angeles, CA
90025
Age: 47
Gracie V. Fermelia Chief CCO since Chief Compliance Officer of the N/A N/A
11111 Santa Compliance 7/05; Asst. Adviser (since July 2005); Chief
Monica Blvd., Officer and Sect. since Operating Officer and Member of the
15th Floor Assistant 8/01 Adviser (since 2001).
Los Angeles, CA Secretary
90025
Age: 48
Michael Lawson(6) Treasurer Since 7/05 Director of the Administrator's N/A N/A
One Freedom Fund Accounting department (since
Valley Drive July 2005); Manager in the
Oaks, PA 19456 Administrator's Fund Accounting
Age: 48 department (November 1998 to July
2005).
Joseph M. Gallo(6) Vice President Since 7/08 Corporate Counsel of the N/A N/A
One Freedom and Assistant Administrator (since 2007);
Valley Drive Secretary Associate Counsel, ICMA Retirement
Oaks, PA 19456 Corporation (2004-2007); Federal
Age: 36 Investigator, U.S. Department of
Labor (2002-2004).
Carolyn F. Mead(6) Vice President Since 7/08 Corporate Counsel of the Administrator N/A N/A
One Freedom and Assistant (since 2007); Associate Counsel,
Valley Drive Secretary Stradley, Ronan, Stevens & Young LLP
Oaks, PA 19456 (2004-2007); Counsel, ING Variable
Age: 53 Annuities (1999-2002).
CAUSEWAY EMERGING MARKETS FUND 31
TRUSTEES AND OFFICERS INFORMATION (Unaudited)
(CONCLUDED)
TERM OF NUMBER OF
OFFICE PORTFOLIOS
AND PRINCIPAL IN TRUST OTHER
NAME POSITION(S) LENGTH OF OCCUPATION(S) COMPLEX DIRECTORSHIPS
ADDRESS, HELD WITH THE TIME DURING PAST OVERSEEN BY HELD BY
AGE(1) COMPANY SERVED(2) FIVE YEARS BOARD MEMBER(3) BOARD MEMBER(4)
- ---------------------- -------------- ----------- ----------------------------------- --------------- ---------------
Bernadette Sparling(6) Vice President Since 7/08 Corporate Counsel of the N/A N/A
One Freedom and Assistant Administrator (since 2005);
Valley Drive Secretary Associate Counsel, Blank Rome LLP
Oaks, PA 19456 (2001-2005).
Age: 32
- ----------
(1) Each Trustee may be contacted by writing to the Trustee c/o Causeway
Capital Management Trust, One Freedom Valley Drive, Oaks, PA 19456.
(2) Each Trustee holds office during the lifetime of the Trust or until his or
her sooner resignation, retirement, removal, death or incapacity in
accordance with the Trust's Declaration of Trust. The president, treasurer
and secretary each holds office at the pleasure of the Board of Trustees or
until he or she sooner resigns in accordance with the Trust's Bylaws.
(3) The "Trust Complex" consists of all registered investment companies for
which Causeway Capital Management LLC serves as investment adviser. As of
September 30, 2009, the Trust Complex consisted of one investment company
with three portfolios -- the International Value Fund, the Emerging Markets
Fund, and the Global Value Fund.
(4) Directorships of companies required to report to the Securities and
Exchange Commission under the Securities Exchange Act of 1934 (i.e.,
"public companies") or other investment companies registered under the 1940
Act.
(5) On October 10, 2008, the Trust held a Special Meeting of Shareholders to
consider a proposal to elect three additional trustees to the Trust's Board
of Trustees. The three nominees, Lawry J. Meister, John R. Graham and Mark
D. Cone, were elected to the Board by a plurality of votes of shareholders
of the entire Trust. As a result of the vote, the Trust's Board is
currently comprised of five trustees. Messrs. Gavin, Sussman and Graham and
Ms. Meister are considered Independent Board Members. Mr. Cone is
considered an Interested Board Member because he is an officer of the
Adviser.
(6) These officers of the Trust also serve as officers of one or more mutual
funds for which SEI Investments Company or an affiliate acts as investment
manager, administrator or distributor.
32 CAUSEWAY EMERGING MARKETS FUND
DISCLOSURE OF FUND EXPENSES (unaudited)
As a shareholder of the Fund, you incur two types of costs: (1) transaction
costs, including redemption fees, and (2) ongoing costs, including management
fees, shareholder service fees, and other Fund expenses. It is important for you
to understand the impact of these costs on your investment returns.
Ongoing operating expenses are deducted from a mutual fund's gross income and
directly reduce its final investment return. These expenses are expressed as a
percentage of a mutual fund's average net assets; this percentage is known as a
mutual fund's expense ratio.
The following examples use the expense ratio and are intended to help you
understand the ongoing costs (in dollars) of investing in the Fund and to
compare these costs with those of other mutual funds. The examples are based on
an investment of $1,000 made at the beginning of the period shown and held for
the entire period.
The table on the next page illustrates the Fund's costs in two ways:
ACTUAL FUND RETURN. This section helps you to estimate the actual expenses after
fee waivers that the Fund incurred over the period. The "Expenses Paid During
Period" column shows the actual dollar expense cost incurred by a $1,000
investment in the Fund, and the "Ending Account Value" number is derived from
deducting that expense cost from the Fund's gross investment return.
You can use this information, together with the actual amount you invested in
the Fund, to estimate the expenses you paid over that period. Simply divide your
actual account value by $1,000 to arrive at a ratio (for example, an $8,600
account value divided by $1,000 = 8.6), then multiply that ratio by the number
shown under "Expenses Paid During Period."
HYPOTHETICAL 5% RETURN. This section helps you compare the Fund's costs with
those of other mutual funds. It assumes that the Fund had an annual 5% return
before expenses during the year, but that the expense ratio (Column 3) for the
period is unchanged. This example is useful in making comparisons because the
Securities and Exchange Commission requires all mutual funds to make this 5%
calculation. You can assess the Fund's comparative cost by comparing the
hypothetical result for the Fund in the "Expenses Paid During Period" column
with those that appear in the same charts in the shareholder reports for other
mutual funds.
NOTE: Because the return is set at 5% for comparison purposes -- NOT the Fund's
actual return -- the account values shown may not apply to your specific
investment.
CAUSEWAY EMERGING MARKETS FUND 33
DISCLOSURE OF FUND EXPENSES (unaudited)
(CONCLUDED)
BEGINNING ENDING EXPENSES
ACCOUNT ACCOUNT ANNUALIZED PAID
VALUE VALUE EXPENSE DURING
4/1/09 9/30/09 RATIOS PERIOD*
--------- --------- ---------- ----------
CAUSEWAY EMERGING MARKETS FUND
ACTUAL FUND RETURN
Institutional Class $1,000.00 $1,694.40 1.35% $9.12
HYPOTHETICAL 5% RETURN
Institutional Class $1,000.00 $1,018.30 1.35% $6.83
CAUSEWAY EMERGING MARKETS FUND
ACTUAL FUND RETURN
Investor Class $1,000.00 $1,693.00 1.37% $9.25
HYPOTHETICAL 5% RETURN
Investor Class $1,000.00 $1,018.20 1.37% $6.93
* EXPENSES ARE EQUAL TO THE FUND'S ANNUALIZED EXPENSE RATIO MULTIPLIED BY THE
AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY 183/365 (TO REFLECT
THE ONE-HALF YEAR PERIOD).
34 CAUSEWAY EMERGING MARKETS FUND
STATEMENT REGARDING BASIS FOR APPROVAL OF INVESTMENT ADVISORY AGREEMENT
(unaudited)
Section 15(c) of the Investment Company Act of 1940, as amended (the "1940 Act")
requires the Board of Trustees (the "Board") of Causeway Capital Management
Trust (the "Trust") annually to approve the continuance of the investment
advisory agreement (the "Advisory Agreement") between the Trust and Causeway
Capital Management LLC (the "Adviser") with respect to Causeway Emerging Markets
Fund (the "Fund"). The continuance of the Advisory Agreement must be approved by
a majority of the Trustees and a majority of the independent Trustees (i.e.,
Trustees who are not "interested persons" of the Trust as defined in the 1940
Act). The Board was comprised of four independent Trustees and one interested
Trustee when the continuation of the Advisory Agreement was considered.
INFORMATION RECEIVED. At each regular quarterly meeting, the Board reviews a
wide variety of materials relating to the nature, extent and quality of the
Adviser's services, including information concerning the Fund's performance. At
least annually, the Board is provided with additional quantitative and
qualitative information to assist it in evaluating whether to approve the
continuance of the Advisory Agreement. The Board met on August 3, 2009, to
consider whether to approve the continuance of the Advisory Agreement for an
additional one-year period. In connection with the meeting, the Trustees
received and reviewed extensive materials prepared by the Adviser relating to
the Advisory Agreement in response to information requested on the Trustees'
behalf by their independent legal counsel.
FACTORS CONSIDERED. In reviewing the Advisory Agreement, the Trustees considered
a number of factors including, but not limited to: (1) the nature, extent and
quality of the services to be provided by the Adviser, (2) the investment
performance of the Fund, (3) comparisons of the services to be rendered and the
amounts to be paid under the Advisory Agreement with those of other funds and
those of the Adviser under other investment advisory agreements with other
registered investment companies and other types of clients, (4) the costs of the
services to be provided and estimated profits to be realized by the Adviser and
its affiliates from their relationship with the Fund, (5) the extent to which
economies of scale would be realized as the Fund grows and whether fee levels
reflect these economies of scale for the benefit of Fund investors, and (6) any
other benefits derived by the Adviser from its relationship with the Fund.
First, regarding the nature, extent and quality of the services to be provided
by the Adviser, the Trustees considered, among other things, the Adviser's
personnel, experience, track record and compliance program. The Trustees
considered the qualifications, backgrounds and responsibilities of the Adviser's
principal personnel who provided services to the Fund, as well as the level of
attention those individuals provide to the Fund. The Trustees noted the
Adviser's commitment to devoting resources to staffing and technology in support
of its investment management services. They also reviewed the Adviser's
investment philosophy and processes and its compliance program, and considered
the scope of the Adviser's services. The Trustees concluded that the nature,
extent and quality of the services provided by the Adviser have benefited and
will continue to benefit the Fund and its shareholders.
CAUSEWAY EMERGING MARKETS FUND 35
STATEMENT REGARDING BASIS FOR APPROVAL OF INVESTMENT ADVISORY AGREEMENT
(unaudited) (continued)
Second, regarding the investment performance of the Fund, the Trustees reviewed
the investment results of the Fund's Institutional and Investor share classes
for the quarter-to-date, year-to-date, one-year, and since inception (3/30/07)
periods ended June 30, 2009, compared to the MSCI Emerging Markets Index (the
"Index") and the mutual funds included in the Morningstar U.S. Open End
Diversified Emerging Markets funds category of funds. The Trustees noted that
the Fund's performance for the current year and the period since its inception
had been satisfactory, although its performance for interim periods had been
below the Index and the average of the funds in the Morningstar category, and
they concluded that the Adviser's record in managing the Fund indicates that its
continued management will benefit the Fund and its shareholders.
Third, the Trustees compared the Fund's advisory fee and total expenses with
those of other similar mutual funds. They noted that the Fund's advisory fee was
below the average and median advisory fees charged by funds in the Morningstar
U.S. Open End Diversified Emerging Markets funds category, and its expense
ratios, after application of the Adviser's expense limit agreement, were well
below the average and median of the funds in that Morningstar category. The
Trustees noted that the Adviser did not currently manage assets of other clients
pursuant to its emerging markets equity strategy, but compared the Fund's
advisory fee with the standard advisory fee charged by the Adviser to separate
account and group trust clients in the emerging markets equity strategy. The
Trustees noted that, although the separate account fee is somewhat lower than
the fee paid by the Fund, the differences appropriately reflected the Adviser's
significantly greater responsibilities with respect to the Fund, which include
the provision of many additional administrative and shareholder services (such
as services related to the Fund's disclosure documents, financial statements,
1940 Act compliance policies and procedures, preparation of Board and committee
materials and meetings, annual Board reports and certifications, oversight of
daily valuation, regulatory examinations and legal and compliance matters,
oversight of Fund service providers, negotiation of Fund intermediary
agreements, coordination with Fund intermediaries providing shareholder
recordkeeping services, shareholder communications, and due diligence for
advisers, consultants and institutional investors). The Trustees concluded that
the Fund's advisory fee and expense ratio were reasonable and appropriate under
the circumstances
Fourth, the Trustees considered the estimated profits realized by the Adviser
from its relationship with the Fund. They reviewed the Adviser's estimated after
tax profit margin with respect to such services and the methodology used to
generate that estimate, and noted that the cost allocation methodology presented
to the Trustees was reasonable. They noted that, due to the expense limit
agreement, the Adviser experienced significant losses managing the Fund in the
past year, and that the Adviser's sponsorship of the Fund, at least in the
Fund's early years, could involve significant further expenses to the Adviser.
36 CAUSEWAY EMERGING MARKETS FUND
STATEMENT REGARDING BASIS FOR APPROVAL OF INVESTMENT ADVISORY AGREEMENT
(unaudited) (concluded)
Fifth, regarding economies of scale, the Trustees observed that, although the
Fund's advisory fee schedule did not contain fee breakpoints, it was difficult
to determine the existence or extent of any economies of scale. They noted that
the Adviser was sharing economies of scale through the expense limit agreement,
which it had consistently maintained, requiring significant fee waivers and
reimbursements, and by devoting additional resources to technology in order to
focus on continued performance and service to the Fund's shareholders, and that
the overall level of the advisory fees paid by the Fund was reasonable. They
also noted that the Adviser, at least in the Fund's early years, would incur
significant losses in managing the Fund. The Trustees concluded that under the
circumstances the Adviser was sharing any economies of scale with the Fund
appropriately pending the Fund's future potential asset growth.
Sixth, regarding any other benefits derived by the Adviser from its relationship
with the Fund - often called "fall-out" benefits - the Trustees observed that
the Adviser does not earn common "fall-out" benefits such as affiliated custody
fees, affiliated transfer agency fees, affiliated brokerage commissions, profits
from rule 12b-1 fees, "contingent deferred sales commissions" or "float"
benefits on short-term cash. The Trustees concluded that the primary "fall-out"
benefit received by the Adviser was research services provided by brokers used
by the Fund and that this benefit was reasonable in relation to the value of the
services that the Adviser provides to the Fund.
APPROVAL. At the August 3, 2009 meeting, the Trustees discussed the information
and factors noted above and considered the approval of the Advisory Agreement
with representatives of the Adviser. The independent Trustees also met in a
private session with independent counsel at which no representatives of the
Adviser were present. In their deliberations, the independent Trustees did not
identify any particular information or factor that was determinative or
controlling, and the foregoing summary does not detail all the matters
considered. Based on their review, the Trustees (including the independent
Trustees) unanimously concluded that the Advisory Agreement is fair and
reasonable to the Fund and its shareholders, the Fund's advisory fees are
reasonable and renewal of the Advisory Agreement is in the best interests of the
Fund and its shareholders, and the Board of Trustees approved the renewal of the
Advisory Agreement for a twelve-month period beginning September 20, 2009.
CAUSEWAY EMERGING MARKETS FUND 37
NOTES
(CAUSEWAY FUNDS LOGO)
ANNUAL REPORT
CAUSEWAY
EMERGING
MARKETS FUND
SEPTEMBER 30, 2009
INVESTMENT ADVISER:
Causeway Capital Management LLC
11111 Santa Monica Boulevard
15th Floor
Los Angeles, CA 90025
DISTRIBUTOR:
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, PA 19456
TO OBTAIN MORE INFORMATION:
Call 1-866-947-7000 or visit us online at www.causewayfunds.com
This material must be preceded or accompanied by a current prospectus.
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("Commission") for the first and third quarters of each
fiscal year on Form N-Q within sixty days after the end of the period. The
Fund's Forms N-Q are available on the Commission's website at
http://www.sec.gov, and may be reviewed and copied at the Commission's Public
Reference Room in Washington, DC. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities, as well as information
relating to how the Trust voted proxies relating to portfolio securities during
the most recent 12-month period ended June 30, is available (i) without charge,
upon request, by calling 1-866-947-7000; and (ii) on the Commission's website at
http://www.sec.gov.
CCM-AR-002-0300
CAUSEWAY EMERGING MARKETS FUND
ITEM 2. CODE OF ETHICS.
The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer and principal
accounting officer. During the fiscal year ended September 30, 2009, there were
no material changes or waivers to the code of ethics.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant's board of trustees has determined that the registrant has
at least one audit committee financial expert serving on the audit committee.
(a)(2) The audit committee financial expert is Eric Sussman. Mr. Sussman is
independent as defined in Form N-CSR Item 3(a)(2).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Aggregate fees billed to the registrant for professional services rendered by
the registrant's principal accountant for the fiscal years ended September 30,
2009 and 2008 were as follows:
2009 2008
-------- --------
(a) Audit Fees $105,700 $116,700
(b) Audit-Related Fees None None
(c) Tax Fees(1) $ 22,200 $ 22,200
(d) All Other Fees None None
Note:
(1) Tax fees include amounts related to tax return and excise tax calculation
reviews.
(e)(1) The registrant's audit committee has adopted a charter that requires it
to pre-approve the engagement of auditors to (i) audit the registrant's
financial statements, (ii) provide other audit or non-audit services to the
registrant, or (iii) provide non-audit services to the registrant's investment
adviser if the engagement relates directly to the operations and financial
reporting of the registrant.
(e)(2) No services included in paragraphs (b) through (d) of this Item were
approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01
of Regulation S-X.
(f) Not applicable.
(g) For the fiscal year ended September 30, 2009, the aggregate non-audit fees
billed by the registrant's accountant for services rendered to the registrant
and the registrant's investment adviser were $22,200 and $209,114, respectively.
For the fiscal year ended September 30, 2008, the aggregate non-audit fees
billed by the
registrant's accountant for services rendered to the registrant and the
registrant's investment adviser were $22,200 and $209,751, respectively.
(h) The audit committee considered whether the provision of non-audit services
rendered to the registrant's investment adviser by the registrant's principal
accountant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X was compatible with maintaining the principal
accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to open-end management investment companies.
ITEM 6. SCHEDULE OF INVESTMENTS
See Item 1.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to open-end management investment companies.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES
Not applicable to open-end management investment companies.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to open-end management investment companies.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The registrant's procedures by which shareholders may recommend nominees to
the registrant's board of trustees are as follows: The board of trustees of the
registrant has a nominating committee comprised of all of the trustees who are
not interested persons of the registrant as defined by Section 2(a)(19) of the
Investment Company Act of 1940 (the "Independent Trustees"). The purpose of the
nominating committee is to nominate persons to serve as Independent Trustees, as
needed. According to the registrant's bylaws, any shareholder of the registrant
may submit names of individuals to be considered by the nominating committee or
the board of trustees, as applicable, provided, however, (i) that such person
was a shareholder of record at the time of submission of such names and is
entitled to vote at the meeting, and (ii) that the nominating committee or the
board of trustees, as applicable, shall make the final determination of persons
to be nominated. There have been no material changes to these procedures since
the registrant's last filing on Form N-CSR.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The certifying officers, whose certifications are included herewith, have
evaluated the registrant's disclosure controls and procedures within 90 days of
the filing date of this report. In their opinion, based on their evaluation, the
registrant's disclosure controls and procedures are adequately designed, and are
operating effectively to ensure, that information required to be disclosed by
the registrant in the reports it files or submits under the Securities Exchange
Act of 1934 is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are reasonably
likely to materially affect, the registrant's internal control over financial
reporting.
ITEMS 12. EXHIBITS.
(a)(1) Code of Ethics attached hereto.
(a)(2) Separate certifications for the principal executive officer and the
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) are filed herewith.
(b) Officer certifications as required by Rule 30a-2(b) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(b)) also accompany this filing as an
exhibit.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Causeway Capital Management Trust
By (Signature and Title)* /s/ Turner Swan
-----------------------------------
Turner Swan, President
Date: December 1, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Turner Swan
-----------------------------------
Turner Swan, President
Date: December 1, 2009
By (Signature and Title)* /s/ Michael Lawson
-----------------------------------
Michael Lawson, Treasurer
Date: December 1, 2009
* Print the name and title of each signing officer under his or her signature.