Causeway Global Absolute Return (GAR) strategy is designed for investors who want equity-like returns with low volatility and low market correlation. The strategy invests in global developed markets equities, using swap agreements or direct investments to obtain exposures to long and short positions.

Causeway uses its fundamental global value equity strategy to manage the long exposures and its quantitative investment strategy to manage the short exposures. Both the long and short portfolios seek to add alpha, which is amplified by leverage up to 4x, with a target of 3x.

The GAR strategy mitigates risk in a number of ways: on the short side, qualitative risk is captured by a fundamental review of short positions, and short exposures are constrained. Unrealized gains or losses through swap agreements are also constrained, limiting counterparty risk. There are approximately twice as many short exposures as long, mitigating idiosyncratic risk.

The GAR portfolio has 85-180 long/short exposures. The dollar amount of the long exposures is generally equivalent to the dollar amount of the short exposures, but the portfolio may have sector or regional biases.

Inception Date 02/28/2011

Top Ten Long Positions Company Ending Weight (%) JGC CORP 4.74% UNITEDHEALTH GROUP 4.35% AKZO NOBEL 4.34% MICROSOFT CORP 4.25% TESCO PLC 4.14% WESTERN UNION CO 4.00% NOVARTIS AG-REG SHS 3.99% POSTNL NV 3.95% ORACLE CORP 3.94% REED ELSEVIER NV 3.94%

Top Ten Short Positions Company Ending Weight (%) CITIGROUP INC -3.34% AMAZON.COM INC -3.28% APPLE INC -3.24% COCA-COLA CO/THE -3.19% ARCHER-DANIELS-MIDLAND CO -3.06% GLAXOSMITHKLINE PLC -3.03% THOMSON CORP -2.99% LOEWS CORP -2.89% TOBU RAILWAY CO LTD -2.89% RECKITT BENCKISER GROUP PLC -2.86%

Causeway Global Absolute Return Portfolio outperformed the BofA Merrill Lynch 3-Month U.S. Treasury Bill Index for the quarter. The Portfolio’s global long portfolio outperformed the MSCI World Index (“World Index”), benefiting overall performance. The Portfolio's global short portfolio also outperformed the World Index, detracting from overall portfolio performance.

Fuelled by additional doses of quantitative easing, the first two months of calendar 2012 proved to be a reversal of the latter half of 2011 (especially the July through October 2011 period). The euphoria waned in March, however, as investors rotated out of cyclical stocks to more economically defensive holdings. Despite these shifts, and due primarily to superior stock selection, the Fund’s global long portfolio outperformed the World Index this quarter. The top performing markets in the Index included Germany, Singapore, Belgium, Denmark, and Finland. Japan delivered the best performance measured in yen, but translated into US dollars, the returns nearly halved. The biggest laggards included Spain, Portugal, Canada, the United Kingdom, and Israel. Top performing sectors in the World Index included the following economically cyclical sectors: information technology, financials, consumer discretionary, industrials, and materials, while four of the five biggest laggards were traditional defensives: telecommunication services, utilities, health care, and consumer staples as well as energy. Relative performance was strengthened by portfolio holdings in the transportation, energy, and health care equipment & services industry groups. Meanwhile, holdings in the consumer services and diversified financials industry groups as well as an underweight to the technology hardware & equipment industry group detracted from relative performance.

We use a quantitative approach to select securities exposures for the global short portfolio of the total portfolio. Our quantitative process seeks to take short positions in stocks which we believe are overvalued and have deteriorating earnings growth dynamics, poor technical price movements, and insolvency risk and/or inferior quality of earnings. In the first quarter, only our valuation metrics effectively identified underperforming securities. Technical factors, including longer term price momentum, were problematic, as last year’s underperforming stocks tended to perform well in the first quarter of this year. Companies with deteriorating earnings growth, which typically underperform, also performed well in the first quarter, negatively impacting short-side performance. Our financial strength and quality metrics had a slightly negative performance impact, as poor quality stocks marginally outperformed other stocks.

From an industry group perspective, short-side positive attribution effects were strongest in the capital goods, telecommunication services, and consumer durables & apparel industry groups. Negative attribution effects were strongest in the semiconductors & semi equipment, commercial & professional services, and transportation industry groups. Stock selection was successful in Asia and in Europe, partially offset by shorts in North America, the United Kingdom, and Switzerland. There was also a significant positive allocation effect from the United States country allocation decision.

*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.