Commerce Kansas Tax-Free Intermediate Bond Fund

Overview Objective Seeks current income exempt from federal and, to the extent possible, from Kansas income taxes, as is consistent with the preservation of capital. Strategy Focuses primarily on investing in municipal obligations issued by the State of Kansas and its political subdivisions. Commentary Portfolio Fund Holdings Portfolio Composition Fund Manager - Brian P. Musielak, CFA Joined Commerce in 1995 Fund Manager since January, 1999 16 years of experience Risk/Return In general, greater returns are associated with greater risks. Fund Statistics: Inception Date 12/26/00 Ticker Symbol KTXIX Cusip 200626786 Minimum Initial Investment $1,000 Commentary as of 12/31/2011 This time last year the muni market was reeling from a dose of heavy issuance and fears of widespread defaults. Muni yields surged over 1.00% in the 4Q 2010 alone. Issuers were desperate to sell bonds before favorable tax programs expired at year end while skittish retail investors were redeeming muni funds at a record clip. What a difference a year makes. Looking back it turned out to be one of the greatest buying opportunities the muni market has experienced in recent memory. As 2011 unfolded, state and local governments did not default en masse. In fact, the total market value of defaults ended lower for the third consecutive year. Record budget deficits were closed, just as they had been in past recessions, with a combination of service/expense reductions and tax increases. Issuers also pulled in the reins on new debt. In the 4Q, new issue volume was down 25% versus 4Q last year. For all of 2011, only $295 billion of debt was issued in the muni market. That was the lowest amount of issuance since 2001. We expect these favorable trends to continue through the first part of next year. Despite lower yields, we still believe tax-free munis are attractive relative to most taxable bonds. For the fourth quarter, the Fund underperformed both its benchmark and its peers as measured by the Lipper Intermediate Municipal Debt Funds Category 2nd Quartile Total Return Ranking. Our holdings in long term lower grade bonds were positive contributor, while our holdings in shorter higher quality bonds were a drag to performance. Performance Report Total Fund Assets as of 12/31/2011 $103,193,548 Net Asset Value1 $19.54    Effective Duration 2 7.23 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 of determining a bond's price sensitivity, given changes in interest rates. 3. The composition of the portfolio is subject to change in the future. 4. The Fund's investments may subject shareholders to federal alternative minimum tax.

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 Fund is non-diversified. Due to the smaller number of bonds generally held in the portfolio, the Fund may be subject to greater risks than a more diversified fund. A change in the value of any single holding may affect the overall value more than it would affect a diversified fund that holds more investments. In addition, the Fund's investments may subject shareholders to federal alternative minimum tax. The investment income from this Fund may be subject to state income taxes. 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 KANSAS TAX-FREE INTERMEDIATE BOND FUND HOLDINGS November, 2011* December, 2011* January, 2012* *Adobe Acrobat 6.0® or above required. Download now for free.

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