MidCap Growth Fund

Overview

Objective

Seeks capital appreciation.

Strategy

Invests in a diversified portfolio of equity securities of medium-sized companies that show the potential for above-average growth in earnings.

The Management Team

The Fund is managed by the Equity Strategy Team, a group of senior-level investment professionals who average 29 years of experience.

Risk/Return

LOW - - - - - • - HIGH

In general, greater returns are associated with greater risks.

Fund Statistics

Inception Date 12/12/94
Ticker Symbol CFAGX
Cusip 200626505
Minimum Initial Investment $1,000

Commentary

U.S. equity markets were higher after the Republican sweep in the 2016 Election. We believe prospects of lower corporate taxes, less regulation and a stronger economy gave investors hope that earnings growth will begin to accelerate over the coming years. However, investors favored value stocks, driving up energy, financial and industrial sectors while neglecting sectors heavily represented in the Growth Index, such as healthcare and technology. The Commerce Mid Cap Growth Fund rose 0.84%, outperforming the Russell Mid Cap Growth Index return of 0.46%.

Stock selection was the main contributor to the Fund's performance for the period. The Fund's best performers for the period were MSC Industrial Direct Co. (1.16%), Landstar System (1.20%), and Toro Company (1.14%) up 27%, 25%, and 20%, respectively. The weakest stocks were Nielsen Holdings (0.92%), Zimmer Biomet Holdings (1.13%), and Dun & Bradstreet Corporation (1.15%), down 21%, 20% and 11%, respectively.

Sector allocation slightly detracted from the Fund's performance. The Fund's 4% overweight to the Commercial Services sector (down -5%) hurt performance. However, the Fund's 4% underweight to the Technology Services sector (down "8.8%") was a boost for performance.

During the quarter the Fund increased its position in the Finance sector from 9.6% to 10.9%, with the purchase of Gaming and Leisure Properties (1.22%). The Fund reduced its position in the Consumer Durables sector from 4.8% to 2.3% through the sale of Harley Davidson (0.00%) and Whirlpool Corporation (0.00%).

Total Fund Assets as of 12/31/2016 $112,028,232
Net Asset Value1 $34.29
Asset Allocation  
Equities 98.3%
Cash 1.7%
Weighted Average Market Capitalization $11.2 Billion

Holdings

Top Ten Equity Holdings2 as of 12/31/2016

iShares Russell MidCap Growth ETF 3.0%
Motorola Solutions, Inc. 1.3%
Hershey Company 1.3%
AutoZone, Inc. 1.3%
Extra Space Storage Inc. 1.3%
W.W. Grainger, Inc. 1.3%
SBA Communications Corp. 1.3%
Dunkin' Brands Group, Inc. 1.3%
Vantiv, Inc. Class A 1.3%
Service Corporation Intl. 1.3%

Footnotes:
1. The Net Asset Value represents the assets of the fund (ex dividend) by the total number of shares.
2. The composition of the portfolio is subject to change in the future.
3. The Russell 1000 Growth Index is an unmanaged index that measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Index figures do not reflect any fees or expenses.

Portfolio Holdings

The Fund invests in mid-capitalization securities. The securities of mid-capitalization companies involve greater risks than those associated with larger, more established companies and may be subject to more abrupt or erratic price movements.

Holdings and allocations shown are unaudited, and may not be representative of current or future investments. Holdings and allocations may not include the Fund's entire investment portfolio, which may change at any time. Fund holdings should not be relied on in making investment decisions and should not be construed as research or investment advice regarding particular securities.

Commerce MidCap Growth Fund Holdings

January, 2017*
Febuary, 2017*
March, 2017*

A prospectus for the Commerce Funds containing more complete information may be obtained by calling 1-800-995-6365 or by downloading 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.