Commerce Short Term Government Fund

Overview Objective Seeks current income consistent with preservation of principal. Strategy Invests primarily in U.S. Government securities and government mortgage-backed securities. Commentary Portfolio Fund Holdings Portfolio Composition Fund Manager - Scott M. Colbert, CFA Joined Commerce in 1993 Fund Manager since Fund inception 24 years of experience Risk/Return   In general, greater returns are associated with greater risks. The Short-Term Government Fund's net asset value and yield are not guaranteed by the U.S. Government or by its agencies, instrumentalities or sponsored enterprises. Fund Statistics: Inception Date 12/12/94 Ticker Symbol CFSTX Cusip 200626109 Minimum Initial Investment $1,000 Commentary as of 12/31/2011 During the past quarter investment markets calmed down and domestic economic activity appeared to be expanding at a moderate rate in the midst of some apparent slowing in global economic growth. Recent gains in manufacturing and consumer sentiment suggest that so far the U.S. is withstanding the economic crisis in Europe. Employment conditions continue to improve with the unemployment rate dropping to the lowest level in almost three years. After both of the Federal Open Market Committee (FOMC) meetings in the fourth quarter, the Federal Reserve (Fed) kept the federal funds rate near zero. Inflation has moderated in recent months, and is expected to continue to ease. The Fed reiterated their plan to keep short term rates low at least through mid 2013. The Treasury sector outperformed both agency debentures and non-agency mortgage-backed securities. Treasury yields on the short end of the yield curve were nearly unchanged for the quarter, with five year Treasury yields declining the most. The Short-Term Government Fund’s performance for the fourth quarter lagged the Citigroup 1-5 Year Treasury/Government Sponsored Index for the period. An overweight in Agency debentures and a shorter duration relative to its benchmark hindered performance. In our opinion the pace of economic activity is expected to pick up slowly in 2012, supported by accommodative monetary policy and improvements in business and consumer sentiment. However, we believe the events of the Eurozone will continue to dominate the markets during the first quarter of 2012. Performance Report Total Fund Assets as of 12/31/2011 $129,010,357 Net Asset Value1 $18.08    Effective Duration 2 1.93 years

Footnotes: 1. The Net Asset Value represents the assets of the fund (ex dividend) by the total number of shares. 2. Duration is the method determining a bond's price sensitivity, given changes in interest rates. 3. The composition of the portfolio is subject to change in the future.

Portfolio Holdings Investments in fixed income securities are subject to the risks associated with debt securities including credit and interest rate risk. When interest rates rise, the prices of bonds and therefore the value of fixed income mutual fund shares can decrease and an investor can lose principal value. The guarantee on U.S. government securities applies only to the underlying securities of the Fund if held to maturity and not to the value of the Fund's shares. Mortgage-backed securities are subject to prepayment risks. These risks may result in greater share price volatility. 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 SHORT-TERM GOVERNMENT FUND HOLDINGS November, 2011* December, 2011* January, 2012* *Adobe Acrobat 6.0® or above required. Download now for free.

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