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International Small Cap Fund

NAV (as of 09 Nov 2018)

$11.47, -0.12

YTD

-12.24%

INCEPTION

20 Oct 2014

TICKER/CUSIP

CVISX/14949P802

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$5,000
Sales ChargeNone
Net Expense Ratio1.41%
Gross Expense Ratio3.32%
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
CVISX -9.2%-14.0%-10.8%5.9%6.2%
MSCI AC World ex USA Small Cap -9.7%-13.4%-9.4%5.9%5.5%
Fund Quarter to Date Year to Date 1 Year3 Year Since Inception
CVISX 0.2%-5.3%-1.0%11.6%9.0%
MSCI AC World ex USA Small Cap -1.4%-4.1%2.2%11.6%8.4%

Portfolio

Asset Allocation as of 30 Sep 2018

Stocks 98.9%
Cash 1.1%

Characteristics as of 30 Sep 2018

Causeway MSCI AC World ex USA Small Cap
No. of Holdings 123 4290
Wtd. Avg. Market Cap (Mn $US)$1,453$1,809
FY2 Price/Earnings8.813.8
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 30 Sep 2018

Industrials14.32%
Financials12.58%
Real Estate11.83%
Materials11.30%
Information Technology10.60%
Consumer Discretionary10.47%
Consumer Staples7.56%
Energy6.74%
Health Care6.69%
Equity Funds6.10%
Utilities0.69%
Telecommunication Services0.00%

(VS. Benchmark)

Industrials19.79%
Financials11.04%
Real Estate10.15%
Materials10.30%
Information Technology11.73%
Consumer Discretionary14.68%
Consumer Staples6.53%
Energy4.01%
Health Care7.76%
Equity Funds0.00%
Utilities2.74%
Telecommunication Services1.27%
Industrials
Financials
Real Estate
Materials
Information Technology
Consumer Discretionary
Consumer Staples
Energy
Health Care
Equity Funds
Utilities
Telecommunication Services
Other

TOP 10 COUNTRIES as of 30 Sep 2018

Japan17.47%
United Kingdom12.05%
Canada7.06%
Australia6.94%
Taiwan6.09%
Norway6.08%
Sweden5.50%
China4.76%
Mexico3.61%
India3.32%
Germany3.14%
Multi-National All Country2.49%
Italy2.28%
Netherlands2.06%
Denmark1.98%
Singapore1.85%
Malaysia1.71%
South Korea1.52%
Thailand1.40%
South Africa1.29%
Switzerland1.23%
Indonesia0.96%
Turkey0.88%
Greece0.73%
Spain0.69%
Israel0.54%
France0.38%
Belgium0.30%
Brazil0.28%
Chile0.27%
Colombia0.00%
Peru0.00%
United Arab Emirates0.00%
Pakistan0.00%
Philippines0.00%
Ireland0.00%
Austria0.00%
Finland0.00%
Portugal0.00%
Hong Kong0.00%
New Zealand0.00%
Hungary0.00%
Poland0.00%
Qatar0.00%
Russia0.00%
Czech Republic0.00%
Egypt0.00%

(VS. Benchmark)

Japan22.96%
United Kingdom13.42%
Canada7.12%
Australia5.13%
Taiwan3.80%
Norway1.49%
Sweden4.00%
China2.47%
Mexico0.67%
India2.62%
Germany4.34%
Multi-National All Country0.00%
Italy2.70%
Netherlands1.93%
Denmark1.32%
Singapore1.18%
Malaysia0.67%
South Korea3.92%
Thailand0.85%
South Africa0.99%
Switzerland3.23%
Indonesia0.43%
Turkey0.19%
Greece0.13%
Spain1.92%
Israel1.46%
France2.73%
Belgium1.26%
Brazil0.95%
Chile0.30%
Colombia0.06%
Peru0.02%
United Arab Emirates0.09%
Pakistan0.15%
Philippines0.17%
Ireland0.60%
Austria0.64%
Finland1.09%
Portugal0.28%
Hong Kong1.40%
New Zealand0.67%
Hungary0.03%
Poland0.18%
Qatar0.17%
Russia0.18%
Czech Republic0.01%
Egypt0.12%
Japan
United Kingdom
Canada
Australia
Taiwan
Norway
Sweden
China
Mexico
India
Germany
Multi-National All Country
Italy
Netherlands
Denmark
Singapore
Malaysia
South Korea
Thailand
South Africa
Switzerland
Indonesia
Turkey
Greece
Spain
Israel
France
Belgium
Brazil
Chile
Colombia
Peru
United Arab Emirates
Pakistan
Philippines
Ireland
Austria
Finland
Portugal
Hong Kong
New Zealand
Hungary
Poland
Qatar
Russia
Czech Republic
Egypt
Other

TOP 10 ACTIVE HOLDINGS as of 30 Sep 2018

Security Country Industry Active Weight*
C&C Group Plc United Kingdom Food Beverage & Tobacco 1.9
HASEKO Corp. Japan Consumer Durables & Apparel 1.9
Concentradora Fibra Danhos SA de CV Mexico Real Estate 1.9
Coretronic Corp. Taiwan Technology Hardware & Equipment 1.9
Royal Unibrew A/S Denmark Food Beverage & Tobacco 1.9
Australian Pharmaceutical Industries Ltd. Australia Health Care Equipment & Services 1.9
Yanlord Land Group Ltd. Singapore Real Estate 1.8
Shinko Electric Industries Co., Ltd. Japan Semiconductors & Semi Equipment 1.8
Canfor Pulp Products Canada Materials 1.7
FIBRA Macquarie México Mexico Real Estate 1.7

*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 30 Sep 2018


Developed equity markets appreciated in September following signs of continuing global growth, albeit less synchronized than in 2017, as the US has outpaced other developed markets. International smaller capitalization (“cap”) equities, as measured by the MSCI ACWI ex USA Small Cap Index (“Index”), underperformed international large caps by almost 2% in September. Within international smaller cap equities, emerging markets stocks underperformed developed markets stocks in September, and 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 energy, consumer staples, and materials. Information technology, real estate, and healthcare 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 September, value factors were the best performing group, however, they remain the weakest alpha factor group over the year-to-date period and over the past 12 months. Earnings growth factors generated modest performance in September, and remain one of the best performing factor groups over the year-to-date period and over the last 12 months. The price momentum factor category, as measured by our technical factors, posted positive performance during the month, and momentum’s recent performance is comparable to that of earnings growth: solidly positive over the year-to-date period and over the last 12 months. The quality factor group posted positive returns in September, and returns to these factors are now modestly positive over the year-to-date period. All bottom-up factor group returns are positive from the inception of the Fund to the end of September. Within our top-down factor groups, our country aggregate factors posted strong returns in September; however, returns to our macro factors were negative as countries with inferior macroeconomic metrics outperformed those exhibiting relatively stronger metrics. Fund holdings in the real estate, materials, and financials sectors contributed the most to relative outperformance. Holdings in the information technology, healthcare, and consumer staples 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 steel & iron distribution company, EVRAZ Plc (United Kingdom). Additional top contributors included Grieg Seafood ASA (Norway), financial services company, FIBRA Macquarie México (Mexico), Cosmo Energy Holdings Co., Ltd. (Japan), and mining company, Sandfire resources NL (Australia). The largest detractor from relative performance was electronic components manufacturer, Taiyo Yuden Co., Ltd. (Japan). Additional top detractors included semiconductor package manufacturer, Shinko Electric Industries Co., Ltd.(Japan), commercial printer, Transcontinental (Canada), pulp and paper company, Canfor Pulp Products (Canada), and lease & rental financing services company, FlexiGroup Ltd. (Australia).

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$0.3588
2016$0.2619
2015$0.2095
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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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