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International Small Cap Fund

NAV (as of 14 Aug 2018)

$12.32, +0.11

YTD

-5.67%

INCEPTION

20 Oct 2014

TICKER/CUSIP

CIISX/14949P703

Fact Sheet Prospectus

Fund Profile

The Fund invests primarily in common stocks of companies with smaller market capitalizations located in developed and emerging markets outside the U.S. The Fund normally invests at least 80% of its total assets in equity securities of companies with smaller market capitalizations. Smaller market capitalization companies are companies with market capitalizations that do not exceed the highest market capitalization of a company within the Fund’s benchmark, the MSCI ACWI ex USA Small Cap Index (Gross), at the time of purchase. Some of these companies, although small by U.S. standards, might be large companies in their local markets. The Fund may continue to hold securities of a portfolio company that appreciate above the smaller market capitalization threshold and thus may from time to time hold less than 80% of its total assets in equity securities of companies with smaller market capitalizations. The Fund may invest in a wide range of industries.

Minimum Investment$1,000,000
Sales ChargeNone
Net Expense Ratio1.16%
Gross Expense Ratio3.09%
Dividend FrequencyAnnual
Capital Gain FrequencyAnnual
Benchmark MSCI AC World ex USA Small Cap

Performance

Fund Quarter to Date Year to Date 1 Year3 Year Since Inception
CIISX 2.2%-3.4%5.0%9.2%10.1%
MSCI AC World ex USA Small Cap 0.7%-2.0%7.9%9.3%9.4%
Fund Quarter to Date Year to Date 1 Year3 Year Since Inception
CIISX -6.6%-5.4%9.1%7.9%9.7%
MSCI AC World ex USA Small Cap -2.4%-2.7%11.0%8.3%9.4%

Portfolio

Asset Allocation as of 31 Jul 2018

Stocks 99.4%
Cash 0.6%

Characteristics as of 31 Jul 2018

Causeway MSCI AC World ex USA Small Cap
No. of Holdings 132 4315
Wtd. Avg. Market Cap (Mn $US)$1,326$1,812
FY2 Price/Earnings8.914.0
Price/Book Value1.11.6

A “Weighted Average” measures a characteristic by the market capitalization of each stock. Price/Book Ratio is the weighted average of the price/book ratios of all the stocks in a portfolio. The P/B ratio of a company is calculated by dividing the market price of its stock by the company’s per-share book value. The Price/Earnings Ratio is the weighted average of the price/earnings ratios of the stocks in a portfolio. The FY2 P/E ratio is a forward P/E ratio using a next-twenty four months EPS estimate in the denominator.

SECTOR WEIGHTS as of 31 Jul 2018

Industrials15.63%
Financials14.32%
Real Estate13.26%
Information Technology12.47%
Consumer Discretionary10.39%
Materials10.31%
Consumer Staples8.05%
Health Care6.32%
Energy5.88%
Equity Funds2.24%
Utilities0.50%
Telecommunication Services0.00%

(VS. Benchmark)

Industrials19.54%
Financials11.13%
Real Estate10.08%
Information Technology12.03%
Consumer Discretionary14.75%
Materials10.71%
Consumer Staples6.45%
Health Care7.41%
Energy3.87%
Equity Funds0.00%
Utilities2.78%
Telecommunication Services1.26%
Industrials
Financials
Real Estate
Information Technology
Consumer Discretionary
Materials
Consumer Staples
Health Care
Energy
Equity Funds
Utilities
Telecommunication Services
Other

TOP 10 COUNTRIES as of 31 Jul 2018

Japan18.43%
United Kingdom11.13%
Australia7.54%
Canada7.15%
Norway6.01%
Taiwan5.58%
China5.45%
Sweden4.73%
Mexico3.56%
South Korea3.22%
Germany2.98%
Denmark2.37%
Italy2.21%
Netherlands1.98%
Singapore1.86%
Malaysia1.85%
Indonesia1.66%
Switzerland1.49%
South Africa1.39%
Turkey1.27%
Thailand1.20%
India1.19%
Egypt1.09%
Multi-National All Country0.75%
France0.69%
Spain0.65%
Greece0.58%
Israel0.41%
United Arab Emirates0.31%
Brazil0.31%
Belgium0.31%
Ireland0.00%
Austria0.00%
Finland0.00%
Portugal0.00%
Hungary0.00%
Poland0.00%
Qatar0.00%
Russia0.00%
Pakistan0.00%
Philippines0.00%
Hong Kong0.00%
New Zealand0.00%
Chile0.00%
Colombia0.00%
Czech Republic0.00%
Peru0.00%

(VS. Benchmark)

Japan22.36%
United Kingdom13.60%
Australia5.07%
Canada6.93%
Norway1.42%
Taiwan3.96%
China2.70%
Sweden3.89%
Mexico0.64%
South Korea3.63%
Germany4.44%
Denmark1.42%
Italy2.74%
Netherlands1.93%
Singapore1.17%
Malaysia0.69%
Indonesia0.49%
Switzerland3.18%
South Africa1.05%
Turkey0.22%
Thailand0.74%
India3.12%
Egypt0.13%
Multi-National All Country0.00%
France2.74%
Spain1.91%
Greece0.16%
Israel1.25%
United Arab Emirates0.09%
Brazil1.04%
Belgium1.28%
Ireland0.59%
Austria0.65%
Finland1.07%
Portugal0.29%
Hungary0.03%
Poland0.20%
Qatar0.16%
Russia0.18%
Pakistan0.15%
Philippines0.18%
Hong Kong1.49%
New Zealand0.66%
Chile0.29%
Colombia0.07%
Czech Republic0.01%
Peru0.02%
Japan
United Kingdom
Australia
Canada
Norway
Taiwan
China
Sweden
Mexico
South Korea
Germany
Denmark
Italy
Netherlands
Singapore
Malaysia
Indonesia
Switzerland
South Africa
Turkey
Thailand
India
Egypt
Multi-National All Country
France
Spain
Greece
Israel
United Arab Emirates
Brazil
Belgium
Ireland
Austria
Finland
Portugal
Hungary
Poland
Qatar
Russia
Pakistan
Philippines
Hong Kong
New Zealand
Chile
Colombia
Czech Republic
Peru
Other

TOP 10 ACTIVE HOLDINGS as of 31 Jul 2018

Security Country Industry Active Weight*
Australian Pharmaceutical Industries Ltd. Australia Health Care Equipment & Services 2.1
Canfor Pulp Products Canada Materials 2.1
Concentradora Fibra Danhos SA de CV Mexico Real Estate 2.0
Shinko Electric Industries Co., Ltd. Japan Semiconductors & Semi Equipment 1.9
C&C Group Plc United Kingdom Food Beverage & Tobacco 1.9
Royal Unibrew A/S Denmark Food Beverage & Tobacco 1.9
HASEKO Corp. Japan Consumer Durables & Apparel 1.9
MIRAE ASSET Life Insurance Co., Ltd. South Korea Insurance 1.9
Taiyo Yuden Co., Ltd. Japan Technology Hardware & Equipment 1.9
Yanlord Land Group Ltd. Singapore Real Estate 1.8

*Active defined as Fund weight minus MSCI ACWI ex USA Small Cap Index weight. Holdings are subject to change.

Approach

For Causeway International Small Cap Fund, our quantitative process examines a multitude of factors within four main categories to gauge the return potential of a stock. First, we seek relatively inexpensive valuations. Second, we want to see accelerating earnings growth prospects and upward earnings estimate revisions from the sell-side analysts who cover the stock. Third, we look for positive recent momentum, since recent trends tend to persist. And fourth, we want to find quality by seeking stocks with a focus on strong free cash flow generation rather than simply sales growth. We then rank the stocks on these factors to identify candidates that we believe should produce the most attractive risk-adjusted returns. Before we establish new positions, our fundamental portfolio managers and analysts have the opportunity to review stocks in their sector of coverage and report any “red flags” that may be outside the scope of quantitative analysis.

We take many steps to monitor and manage risk within the portfolio. We start by including in our tradable universe only the roughly 2,800 stocks that trade at least $1 million per day on average, to seek sufficient liquidity and to minimize market impact when we enter and exit positions. We intend for the portfolio to also typically contain between 120 and 200 stocks at any one time, and this breadth is intended to limit idiosyncratic risk.

Commentary

PERFORMANCE REVIEW for the month ended 31 July 2018


Despite increasing trade tensions, global equity markets appreciated in July, with a tailwind of positive earnings surprises and benign economic conditions. International smaller capitalization (“cap”) equities, as measured by the MSCI ACWI ex USA Small Cap Index (“Index”), underperformed international large caps in July. Within international smaller cap equities, emerging markets stocks outperformed developed markets stocks in July, although they have underperformed significantly in the year-to-date period, as the strength in the US dollar and global trade tensions have pressured emerging markets more than developed markets. From a sector perspective, the strongest performers during the month were telecommunications services, financials, and utilities. Consumer staples, consumer discretionary, and information technology were among the weakest performing sectors.

Causeway International Small Cap Fund (“Fund”) outperformed the Index during the month. To evaluate stocks in our investable universe, our multi-factor quantitative model employs four bottom-up factor categories: valuation, earnings growth, technical indicators, and quality; and employs two top-down factor categories: macroeconomic and country. Though we analyze many different stock selection factors in our alpha model, value factors currently receive the largest weight, on average.

In July, value factors posted their strongest monthly performance in two years, however they still remain the weakest alpha factor group over the year-to-date period and over the past 12 months. Despite negative returns in July, earnings growth factors remain the best performing factor group over the year-to-date period and over the last 12 months. Technical factors posted the worst performance in July among our alpha factor groups as we saw a momentum reversal; however momentum’s performance is still positive over the year-to-date period and over the last 12 months. The quality factor group posted negative returns in July, and these factors remain modestly positive over the last 12 months. All bottom-up factor group returns are positive from the inception of the Fund to the end of July. Within our top-down factor groups, our macroeconomic factors posted positive returns in July as countries with superior macroeconomic metrics outperformed those exhibiting relatively weaker metrics. However, returns to our country aggregate factors were negative in July. Fund holdings in the consumer staples, energy, and information technology sectors contributed the most to relative outperformance. Holdings in the financials, industrials, and health care sectors offset a portion of the performance. Relative performance for the month can be mostly attributed to stock selection.

The largest contributor to performance relative to the Index was coal exploration & mining operator, PT Indo Tambangraya Tbk (Indonesia). Additional top contributors included beverage manufacturer & distributor, C&C Group Plc (United Kingdom), integrated oil refiner & producer, Esso Thailand Public Co. Ltd. (Thailand), cement manufacturer & distributor, Huaxin Cement Co., Ltd. (China), and electronic equipment manufacturer, Coretronic Corp. (Taiwan). The largest detractor from relative performance was pharmaceutical company, China Shineway Pharmaceutical Group Ltd.(China). Additional top detractors included mineral & mining company, Sandfire Resources NL (Australia), consulting services provider, Mitsubishi Research Institute, Inc. (Japan), asset management group, GAM Holding AG (Switzerland), and transportation company, Nobina AB (Sweden).

The market commentary expresses the portfolio managers’ views as of the date of this report and should not be relied on as research or investment advice regarding any stock. These views and the fund holdings and characteristics are subject to change. There is no guarantee that any forecasts made will come to pass. Any securities identified and described in this report do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable. Diversification does not protect against market loss.

Dividends

2017$0.3792
2016$0.2901
2015$0.2407
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Short-term Capital Gains

2017$0.23757
2016$0.0000
2015$0.0000
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Long-term Capital Gains

2017$0.47945
2016$0.0000
2015$0.0000
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Distributions are per share. Distribution amounts are based on gains and losses realized and income earned by the Fund through October 31 (or earlier under certain circumstances).

Documents

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