Investing Strategy

Whatever your dreams for the future, your success in reaching them will depend on your ability to build a solid financial foundation. That's why, to achieve your financial goals, you need to start planning now. Since different investments are designed to meet different objectives, however, you'll want to consider the following steps before choosing an investment:

Determine your specific goals. First, think about the reason you're investing. Do you want to save for a special vacation...put your children through college...retire early? By identifying and prioritizing your goals, you will be better able to select the investments that can help you get where you want to go. Recognize the value of time Whatever your particular goals, it's important to begin investing right away. That's because the sooner you start, the more time your money will have to grow and the less money you ultimately may need to invest. How much would you have at retirement if you invested $10,000 at age... This hypothetical example assumes an initial investment of $10,000, reinvestment of dividends, an annual return of 8%, compounded monthly, and retirement at age 65. This chart is for illustrative purposes only and is not intended to reflect the performance of any of The Commerce Funds or any other particular investment.

Establish a timetable. Setting time frames for each of your goals is key because it can help you determine how long - and how hard - your money needs to work for you. In general, the more time you have to invest, the more you should consider an investment's long-term growth potential and the less concerned you may need to be about its short-term ups and downs. The reason? Although stock market prices can fluctuate day-to-day, over the long term, the stock market historically has trended upward. Source: Stocks, Bond, Bills, and Inflation, 1998 YearbookTM, Ibbotson Associates, Chicago (annually updates work by Roger G. Ibbotson and Rex Sinquefield). This chart illustrates the range of annualized returns for the stock market as represented by the S&P 500 Stock Index, an unmanaged index of common stocks, over varying holding periods from 1926-1997. This chart is for illustrative purposes only and does not represent any particular Commerce Fund's performance. Stock market returns are historical and are not a guarantee of future results. It is not possible to invest directly in an unmanaged index.

Decide how much risk you can accept. Because no investment is risk-free, it's important to evaluate your comfort level with risk before investing. Generally, the greater the risk an investment carries, the greater its potential for reward over time. Risk tends to fall into four basic categories. Capital risk (the loss of your invested principal), inflation risk (the loss of purchasing power and inflation shrink the value of your investment), interest rate risk (the decline in value of a fixed rate investment as interest rates rise), and liquidity risk (the difficulty in selling an investment due to its fixed maturity) should all be considered when making any investment decisions. The impact of inflation on returns When most investors think of risk, they think about the chance of losing some of the money they invest. But, generally, over a period of 15 years or more, your greatest risk isn't the possibility of losing money, it's the risk of not being able to afford a comfortable future because of inflation's steady assault. As the following chart illustrates, unless the value of your investments can grow faster than inflation, your money will lose purchasing power over time. Source: Stocks, Bond, Bills, and Inflation, 1998 YearbookTM, Ibbotson Associates (annually updates work by Roger G. Ibbotson and Rex A. Sinquefield). This chart is intended to illustrate the impact of inflation on long-term returns and is not indicative of the performance of any Commerce Fund or any other particular investment. Historically, stocks tend to involve a higher degree of risk to your principal. Long-term government bonds, while less volatile, are still subject to loss in value during periods of rising interest rates. Unlike Treasury bills, stocks and corporate bonds are not guaranteed as to payment of principal and interest. Past performance is no guarantee of future results. *Inflation-adjusted returns

Take a financial inventory. Before you make any decisions about investing, it's important to think about how much money you have and how your other assets are already invested. Your total financial situation may dictate a more conservative or aggressive strategy and is key in helping you determine the types of investments that are most appropriate for you.

Invest regularly. One of the most effective strategies for reaching your long-term goals is regular investing. This is because dollar cost averaging can help you turn market fluctuations into your advantage by helping you to purchase more shares of a fund when prices are low, and fewer shares when prices are high. While investing equal amounts at regular intervals cannot ensure a profit or protect against losses in a declining market, it may help you accumulate more shares at a lower cost per share than if you invested in a lump sum. And, it can help you stay focused on your long-term goals, regardless of what's happening in the financial market. Assumes an 8% return, compounded monthly, and reinvestment of dividends and capital gains. This example is for illustrative purposes and is not intended to reflect the performance of any specific Commerce Fund. Since dollar cost averaging involves continuous investment in securities regardless of fluctuating price levels of such securities and does not ensure a profit or protect against a loss in declining markets, shareholders should consider their ability to continue to make purchases in declining markets. What a difference asset allocation can make! Asset allocation can make a real difference in portfolio performance. Consider how your assets would have grown over the past 20 years if you allocated a $10,000 portfolio three different ways. Source: Stocks, Bonds, Bills, and Inflation, 1998 YearbookTM, Ibbotson Associates (annually updates work by Roger G. Ibbotson and Rex A. Sinquefield). These are hypothetical asset allocation models provided as examples only. These models are based on historical performance and assume compounded annual returns of 14.6% for stocks, 9.5% for bonds and 7.3% for cash, based on the actual compounded annual returns for each asset class for the 20-year period ending December 31,1997, as represented by Large-Company Stocks, Long-Term Government Bonds and Treasury Bills, respectively. The performance shown does not represent the past or future performance of any specific investment.

A prospectus for the Commerce Funds containing more complete information may be obtained by calling 1-800-995-6365 or bydownloading it from this website. Please consider a Fund's objectives, risks, and charges and expenses, and read the prospectus carefully before investing. The prospectus contains this and other information about the Fund.

The mutual funds referred to in this Web site are offered and sold only to persons residing in the United States and are offered by prospectus only. The prospectus contains more complete information about the funds, including charges and expenses, and should be read carefully before investing.