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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
  • 23 years of experience

    Risk/Return

    Risk/Return

    In general, greater returns are associated with greater risks.


  • Fund Statistics:
    Inception Date 12/12/94
    Ticker Symbol CFSTX
    Cusip 200626109
    Minimum Initial Investment $1,000


    Commentary as of 3/31/2010

    A difficult job market, ongoing weakness in housing, and a fragile consumer confidence have put some bumps in the road, constraining the economic recovery.  However, positive momentum is growing as conditions begin to improve.  Modest gains in employment and increases in capital spending are helping smooth the path to recovery.

    After both of the Federal Open Market Committee meetings in the first quarter the Federal Reserve (the “Fed”) kept the federal funds rate near zero.  Comments from its last meeting still contained its “extended period” language (in regard to how long it will be before the Fed raises rates).  In our view, this suggests that the Fed is inclined to keep the fed funds rate near zero as long as inflation expectations are contained and economic growth is subdued.

    After moving up and down in a range, yields on the short end of the treasury yield curve finished the quarter down, but close to where they started the quarter.  Yields for 2 to 5 year treasuries decreased 12 to 14 basis points.  At the end of the quarter spreads widened just slightly for mortgage-backed securities (MBS), as the Fed’s agency mortgage securities purchase program was discontinued.

    The Short-Term Government Fund’s return for the first quarter exceeded the Citigroup 1-5 Year Treasury/Government Index.  The Fund’s underweight in treasuries and corresponding overweight in agency and MBS holdings, helped performance.  With interest rates declining slightly, the Fund’s shorter duration relative to its benchmark hindered performance.

    For the coming quarter we expect rates to rise modestly as a new higher range for interest rates develops. 

     

     

     


    Performance Report


    Total Fund Assets as of 3/31/2010
    $122,962,024
    Net Asset Value1 $18.14
       Effective Duration 2 2.23 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

     

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