Investing in Mutual Funds: FAQ with Commonwealth Funds

Investing in foreign securities involves certain risks that are different from investments in U.S. issuers. The foreign markets are small, their listed securities are generally less liquid, involve higher transaction costs and have greater price volatility due to changes in politics, currency rates, foreign taxation, differences in auditing and other financial standards, etc.

Equity securities are more volatile and carry more risk than other types of investments, including investments in high-grade fixed income securities. The net asset value of a Fund will fluctuate as the value of the securities in the portfolio change. Common stocks, and funds investing in common stocks, generally provide greater return potential when compared with other types of investments.

An investment in a real estate fund is subject to the same risks as a direct investment in real estate. Such risks include market risk, economic risk and mortgage rate risk.

Current performance may be lower or higher than the performance quoted on the website.

All these factors may affect the value of your investment.

The Commonwealth Funds are available through local brokers offering no load funds or by contacting Commonwealth.

Send applications and checks to:
Regular Mail:
Commonwealth International Series Trust
[Name of Fund]
c/o Ultimus Asset Services, LLC
P.O. Box 46707
Cincinnati, Ohio 45246-0707

Companies headquartered in the United States are generally referred to by United States investors as being “domestic” while companies headquartered outside the USA are referred to as “International.”

The International marketplaces of the world comprise in excess of 50% of all global equity values including those of the United States. Many companies are in “developed” or “developing” economies and many are in countries considered to be “emerging markets”. Companies within these economies have often provided investments of interest and opportunities for money managers and individuals to diversify portfolios.

International investing has certain risks associated with the process. The level of International investment experience of any money manager considered by an investor is of great importance. Please refer to www.fcacorp.com or other sections of this web site for further information.

Maintaining international portfolios can be an expensive process. The research of foreign markets, trading in different currencies, custody of assets, accurate evaluations of holdings and general overall communications are all known to be more expensive to accomplish.

Smaller funds can sometimes make meaningful investments where larger funds would not be as benefited. The smaller funds by definition have fixed costs that can be larger as a percent of their portfolio assets. As growth occurs and these fixed assets are spread over a larger asset base, the percentage cost figure could obviously become less.

Performance statistics are net of these costs.

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The management of the Commonwealth Funds does not as a matter of investment portfolio management intentionally engage in active trading. The management seeks to hold long term positions yet circumstances can occur resulting in decisions requiring a more active participation in the markets. Turnover can be affected by rebalancing of the equity portfolio among sectors, rebalancing between equities and debt instruments, investing new subscriptions as well as making required liquidations for redemptions. Turnover is not predictable and often is not dictated by the management of the funds.

The individual experience of the senior management of the Commonwealth Funds is of significant pride to the organization. Learn more by clicking here.

By studying the people of a country and sensing their needs, we seek to find “real companies” with understandable financials producing goods and services meeting these demands. We study the process of production and delivery of the products to the end consumers, seeking to find other involved companies that might be of interest.

Through a diversified portfolio, we try to capture as much of the upside of the market as possible while seeking to outperform the market on the downside. To attain these joint goals requires a unique financial acumen encompassing an understanding of the inter-workings of many moving parts of inter-related economies.

There are no set guidelines for country asset allocations. The investment process seeks to capture what is believed to be the best opportunities considering the reasonable diversification determined to be essential.

Contact FCA Corp, the Commonwealth Funds’ investment Advisor, directly with any questions you might have at 888.345.1898.

Anticipating market corrections is difficult. There are no portfolio management styles that outperform both on the upside and downside. The goal of management is to capture as much of the market upside movement as reasonably possible while maintaining some debt instruments to assist in providing stability on the downside. This is not always successful but the income streams can be stabilizing during times of market corrections.

For many years, investors focused primarily on companies of the United States referred to as “domestic”. As equity portfolios grew (particularly pension and profit sharing plans) prior to the beginning of this decade, demands for innovative investment ideas increased. Analytical skills became more technologically based; financial information flowed across borders more freely and the presentation of financial data became more standardized thus allowing for more consistent decision making processes.

As is, it seems like the international companies were in need of both investment capital and monies, not that the monies were something provided in response to the need for investment capital. The trend is in place for continued development of these countries and their markets long-term. Their demand for investment capital continues as they provide opportunities for diversification and growth.

The challenge continues to be one of positioning portfolios for growth while seeking to protect against negative trends that might develop.

The sale of securities is dictated by valuations and changes. Valuations may dictate a sale when the individual or relative security values are determined to be out of order representing an unacceptable risk-reward holding. Changes may dictate a sale when financials change, management changes, product lines or other uncertainties change resulting in an unacceptable risk-reward holding in the opinion of the fund management.

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Companies are initially acquired based on their potential ability to produce goods and services that meet perceived demands. These companies must meet both financial and management standards. If circumstances within the management, finances or marketplaces for the end products change, an analysis of the holding will be made and the stock sold if deemed appropriate.

Click here and review the performance statistics and related comments available on each of the funds within the fund family.

Contact FCA Corp, the Commonwealth Funds’ investment Advisor, directly with any questions you might have at 888.345.1898.