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International Small Cap Fund

NAV (as of 25 May 2018)

$12.99, -0.10

YTD

-0.54%

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 Ratio1.31%
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 -0.4%0.8%22.9%9.1%12.2%
MSCI AC World ex USA Small Cap 1.2%0.9%18.9%9.1%11.0%
Fund Quarter to Date Year to Date 1 Year3 Year Since Inception
CIISX 1.2%1.2%25.9%11.9%12.7%
MSCI AC World ex USA Small Cap -0.3%-0.3%21.0%10.8%10.9%

Portfolio

Asset Allocation as of 30 Apr 2018

Stocks 99%
Cash 1%

Characteristics as of 30 Apr 2018

Causeway MSCI AC World ex USA Small Cap
No. of Holdings 139 4321
Wtd. Avg. Market Cap (Mn $US)$1,236$1,869
FY2 Price/Earnings8.914.3
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 Apr 2018

Financials15.09%
Industrials14.40%
Consumer Discretionary13.41%
Real Estate13.23%
Materials12.90%
Information Technology9.03%
Energy7.28%
Health Care5.60%
Consumer Staples4.98%
Equity Funds2.37%
Utilities0.68%
Telecommunication Services0.00%

(VS. Benchmark)

Financials10.68%
Industrials19.01%
Consumer Discretionary15.71%
Real Estate10.01%
Materials10.92%
Information Technology11.78%
Energy3.59%
Health Care7.64%
Consumer Staples6.76%
Equity Funds0.00%
Utilities2.78%
Telecommunication Services1.13%
Financials
Industrials
Consumer Discretionary
Real Estate
Materials
Information Technology
Energy
Health Care
Consumer Staples
Equity Funds
Utilities
Telecommunication Services
Other

TOP 10 COUNTRIES as of 30 Apr 2018

Japan17.29%
United Kingdom8.57%
China7.70%
Australia7.28%
Canada6.13%
Taiwan4.84%
Switzerland4.67%
Norway3.94%
Germany3.86%
Italy3.67%
Thailand3.39%
Sweden2.91%
South Africa2.64%
South Korea2.13%
Singapore2.06%
Malaysia2.04%
Turkey1.88%
Indonesia1.87%
Mexico1.82%
Netherlands1.76%
India1.70%
France1.36%
Egypt1.05%
Greece0.80%
Israel0.74%
Spain0.72%
Belgium0.56%
Multi-National All Country0.38%
Brazil0.33%
Denmark0.30%
United Arab Emirates0.29%
Finland0.26%
Austria0.00%
Ireland0.00%
Portugal0.00%
Hungary0.00%
Poland0.00%
Qatar0.00%
Russia0.00%
Pakistan0.00%
Philippines0.00%
Czech Republic0.00%
Hong Kong0.00%
New Zealand0.00%
Chile0.00%
Colombia0.00%
Peru0.00%

(VS. Benchmark)

Japan22.17%
United Kingdom12.99%
China4.55%
Australia4.60%
Canada6.60%
Taiwan3.75%
Switzerland3.27%
Norway1.37%
Germany4.35%
Italy3.06%
Thailand0.81%
Sweden3.51%
South Africa1.20%
South Korea3.82%
Singapore1.16%
Malaysia0.70%
Turkey0.26%
Indonesia0.50%
Mexico0.62%
Netherlands1.76%
India3.12%
France2.70%
Egypt0.13%
Greece0.18%
Israel1.05%
Spain1.88%
Belgium1.32%
Multi-National All Country0.00%
Brazil1.20%
Denmark1.14%
United Arab Emirates0.11%
Finland1.07%
Austria0.61%
Ireland0.81%
Portugal0.27%
Hungary0.02%
Poland0.20%
Qatar0.09%
Russia0.14%
Pakistan0.18%
Philippines0.18%
Czech Republic0.02%
Hong Kong1.47%
New Zealand0.69%
Chile0.28%
Colombia0.07%
Peru0.03%
Japan
United Kingdom
China
Australia
Canada
Taiwan
Switzerland
Norway
Germany
Italy
Thailand
Sweden
South Africa
South Korea
Singapore
Malaysia
Turkey
Indonesia
Mexico
Netherlands
India
France
Egypt
Greece
Israel
Spain
Belgium
Multi-National All Country
Brazil
Denmark
United Arab Emirates
Finland
Austria
Ireland
Portugal
Hungary
Poland
Qatar
Russia
Pakistan
Philippines
Czech Republic
Hong Kong
New Zealand
Chile
Colombia
Peru
Other

TOP 10 ACTIVE HOLDINGS as of 30 Apr 2018

Security Country Industry Active Weight*
Supermax Corp. Bhd. Malaysia Health Care Equipment & Services 2.0
AGF Management Canada Diversified Financials 2.0
Unipol Gruppo SpA Italy Insurance 2.0
Esso Thailand Public Co. Ltd. Thailand Energy 2.0
Yuexiu Property Co., Ltd. China Real Estate 1.9
Keihin Corp. Japan Automobiles & Components 1.8
Sandfire Resources NL Australia Materials 1.8
FIBRA Macquarie México Mexico Real Estate 1.8
Yanlord Land Group Ltd. Singapore Real Estate 1.8
Harmony Gold Mining Co. Ltd. South Africa Materials 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 30 Apr 2018


Developed market equities rose during the month, despite the resumption of stock market volatility. International smaller capitalization (“cap”) equities, as measured by the MSCI ACWI ex USA Small Cap Index (“Index”), were up as well. International smaller cap equities slightly underperformed large caps in April. Within international smaller cap equities, emerging markets stocks underperformed developed markets stocks in April, though emerging markets stocks still remain ahead year-to-date. From a sector perspective, the strongest performers were energy, utilities, and telecommunication services. Information technology, health care, and real estate were among the weakest performing sectors.

Causeway International Small Cap Fund (“Fund”) underperformed 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.

Following six months of negative returns, value factors rebounded in April, posting the best returns among our factor groups. Nevertheless, returns to value are still slightly negative year-to-date and over the past 12 months. Earnings growth factors posted positive returns in April, and they remain the best performing factor group year-to-date and over the last 12 months. Technicalfactors posted negative monthly returns, though momentum is one of the best-performing factor groups over the last 12 months. The quality factor group posted negative returns in April, but remains slightly positive over the last 12 months. All bottom-up factor group returns are positive from the inception of the
Fund to the end of April. Our macroeconomic and country aggregate factor groups posted negative returns in the month of April as countries with superior relative macroeconomic and bottom-up metrics, such as Russia, underperformed those exhibiting relatively weaker metrics, such as the United Kingdom.

Fund holdings in the real estate, materials, and consumer discretionary sectors contributed the most to relative underperformance. Holdings in the health care, financials, and industrials sectors offset a portion of the underperformance. Relative performance for the month can be mostly attributed to stock selection. The largest detractor from performance relative to the performance of the Index was gold miner, Harmony Gold Mining Co. Ltd.(South Africa). Additional top detractors included electronics manufacturer, Radiant Opto-Electronics Corp. (Taiwan), coal exploration & mining operator, PT Indo Tambangraya Megah Tbk (Indonesia), automotive products manufacturer, Showa Corp. (Japan), and lithium battery producer, Simplo Technology Co., Ltd. (Taiwan). The largest contributor to relative performance was latex glove manufacturer, Supermax Corp. Bhd. (Malaysia). Additional detractors included oil & gas exploration company, Beach Energy Ltd. (Australia), insurance & banking services company, Unipol Gruppo SpA (Italy), energy service company, Petrofac Ltd. (United Kingdom), 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$0.3792
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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