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International Small Cap Fund

NAV (as of 22 Aug 2017)

$13.11, +0.05

YTD

+24.62%

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 Ratio1.33%
Gross Expense Ratio3.45%
Dividend FrequencyAnnual
Capital Gain FrequencyAnnual
BenchmarkMSCI AC World ex USA Small Cap

Performance

Fund Quarter to Date Year to Date 1 Year Since Inception
CIISX 6.1%24.0%22.0%12.0%
MSCI AC World ex USA Small Cap 3.6%20.0%18.4%9.9%
Fund Quarter to Date Year to Date 1 Year Since Inception
CIISX 7.8%16.8%22.5%10.0%
MSCI AC World ex USA Small Cap 6.4%15.8%20.8%8.8%

Portfolio

Asset Allocation as of 31 Jul 2017

Stocks 99.4%
Cash 0.6%

Characteristics as of 31 Jul 2017

Causeway MSCI AC World ex USA Small Cap
No. of Holdings 114 4319
Wtd. Avg. Market Cap (Mn $US)$1,278$1,715
FY2 Price/Earnings9.114.5
Price/Book Value1.31.6

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 2017

Industrials17.22%
Financials14.84%
Real Estate14.50%
Information Technology13.79%
Consumer Discretionary12.20%
Materials11.68%
Energy6.35%
Health Care3.29%
Consumer Staples2.20%
Utilities1.73%
Equity Funds1.30%
Telecommunication Services0.00%

(VS. Benchmark)

Industrials19.99%
Financials10.59%
Real Estate10.11%
Information Technology12.17%
Consumer Discretionary15.61%
Materials10.89%
Energy3.44%
Health Care6.76%
Consumer Staples6.45%
Utilities2.85%
Equity Funds0.00%
Telecommunication Services1.15%
Industrials
Financials
Real Estate
Information Technology
Consumer Discretionary
Materials
Energy
Health Care
Consumer Staples
Utilities
Equity Funds
Telecommunication Services
Other

TOP 10 COUNTRIES as of 31 Jul 2017

Japan16.14%
United Kingdom8.50%
China7.88%
Canada7.83%
Italy6.93%
France5.80%
Australia4.75%
South Korea4.24%
Norway3.32%
Germany3.14%
Taiwan2.79%
Sweden2.57%
Netherlands2.37%
Indonesia2.09%
Austria2.04%
Greece1.99%
Mexico1.95%
Belgium1.85%
Turkey1.83%
Spain1.72%
Singapore1.71%
Thailand1.59%
India1.30%
Finland1.14%
New Zealand1.03%
Switzerland0.90%
Israel0.62%
Hong Kong0.52%
Malaysia0.50%
Egypt0.32%
Peru0.00%
United Arab Emirates0.00%
Brazil0.00%
Chile0.00%
Colombia0.00%
Pakistan0.00%
Philippines0.00%
Czech Republic0.00%
Hungary0.00%
Poland0.00%
Qatar0.00%
Russia0.00%
South Africa0.00%
Portugal0.00%
Denmark0.00%
Ireland0.00%

(VS. Benchmark)

Japan21.15%
United Kingdom13.19%
China4.52%
Canada6.77%
Italy2.93%
France3.13%
Australia4.44%
South Korea3.50%
Norway1.19%
Germany4.89%
Taiwan3.91%
Sweden3.81%
Netherlands1.58%
Indonesia0.50%
Austria0.70%
Greece0.17%
Mexico0.67%
Belgium1.32%
Turkey0.27%
Spain1.72%
Singapore1.10%
Thailand0.77%
India3.06%
Finland1.08%
New Zealand0.80%
Switzerland3.46%
Israel1.05%
Hong Kong1.60%
Malaysia0.70%
Egypt0.08%
Peru0.03%
United Arab Emirates0.13%
Brazil1.09%
Chile0.25%
Colombia0.08%
Pakistan0.21%
Philippines0.22%
Czech Republic0.03%
Hungary0.03%
Poland0.28%
Qatar0.12%
Russia0.14%
South Africa1.10%
Portugal0.27%
Denmark1.26%
Ireland0.69%
Japan
United Kingdom
China
Canada
Italy
France
Australia
South Korea
Norway
Germany
Taiwan
Sweden
Netherlands
Indonesia
Austria
Greece
Mexico
Belgium
Turkey
Spain
Singapore
Thailand
India
Finland
New Zealand
Switzerland
Israel
Hong Kong
Malaysia
Egypt
Peru
United Arab Emirates
Brazil
Chile
Colombia
Pakistan
Philippines
Czech Republic
Hungary
Poland
Qatar
Russia
South Africa
Portugal
Denmark
Ireland
Other

TOP 10 ACTIVE HOLDINGS as of 31 Jul 2017

Security Country Industry Active Weight*
ASTM SpA Italy Transportation 2.1
UNIQA Insurance Group AG Austria Insurance 2.0
AGF Management Canada Diversified Financials 2.0
Tosoh Corp. Japan Materials 2.0
Hemfosa Fastigheter AB Sweden Real Estate 2.0
Motor Oil (Hellas) Corith Refineries SA Greece Energy 1.9
Cape Plc United Kingdom Commercial & Professional Services 1.9
ASR Nederland NV Netherlands Insurance 1.9
Macquarie México Real Estate Management SA de CV Mexico Real Estate 1.9
Yuzhou Properties Co., Ltd. China Real Estate 1.9

*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 Jul 2017


International smaller capitalization equities delivered strong returns in July, with all eleven sectors within the MSCI ACWI ex USA Small Cap Index (“Index”) contributing. The top performing sectors were information technology, financials, and telecommunication services. Healthcare, consumer staples, and consumer discretionary sectors were the weakest performers, but still posted positive returns. Smaller capitalization equities overall performed broadly in-line with larger capitalization equities in July. However, within emerging markets, small capitalization stocks underperformed large capitalization stocks by over 2.5% [in July], continuing a trend over the last 12 months.

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 broad bottom-up factor categories: valuation, earnings growth, technical indicators, and financial strength. Value factors posted positive returns for July, and value remains the best-performing factor group over the 2017 year-to-date period and over the past 12 months. Earnings growth factors posted positive returns for July, though earnings growth is the worst performing factor group in the last 12 months with roughly flat returns over that period. Technical factors were the strongest performing group in the month of July and posted their best month in the last 12 months. Returns to momentum are only slightly positive over the last 12 months. The financial strength factor group posted positive returns in July, and financial strength remains the most consistent factor group in the last twelve months with only one month of negative returns. All factor group returns were positive in July, positive over the 2017 year-to-date period, and all remain positive on an inception-to-date basis.

Fund holdings in industrials, materials, and financials sectors contributed the most to relative performance. However, holdings in information technology, utilities, and consumer discretionary sectors offset a portion of the outperformance. July’s strong performance was primarily driven by stock selection. The largest contributor to relative performance was energy services company, Cape plc (United Kingdom). Additional top contributors included motorway & infrastructure construction company, ASTM SpA (Italy), property developer, CIFI Holdings (Group) Co. Ltd. (Hong Kong), land developer, Agile Group Holdings Limited (Hong Kong), and chemical & specialty materials manufacturer, Tosoh Corporation (Japan). The largest detractor to relative performance was semiconductor package manufacturer, Shinko Electric Industries Co., Ltd. (Japan). Additional detractors included IT infrastructure company, Atea ASA (Norway), passenger & cargo airline company, Air France-KLM SA (France), construction services company, Carillion plc (United Kingdom), and property development & management firm, Sansiri Public Co. Ltd. (Thailand).

 

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

2016$0.2901
2015$0.2407
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Short-term Capital Gains

2016$0.0000
2015$0.0000
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Long-term Capital Gains

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

Consent to Electronic Delivery

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