Commerce MidCap Growth Fund

Overview Objective Seeks capital appreciation and, secondarily, current income. Strategy Invests in a diversified portfolio of equity securities of medium-sized companies that show the potential for above-average growth in earnings. Commentary Portfolio Fund Holdings Top Ten Holdings Sector Diversification Management Team The Fund is managed by the Equity Strategy Team, a group of senior-level investment professionals who average 22 years of experience. Risk/Return In general, greater returns are associated with greater risks. Fund Statistics: Institutional Shares Inception Date 12/12/94 Ticker Symbol CFAGX Cusip 200626505 Minimum Initial Investment $1,000 Commentary for Institutional Shares as of 6/30/2008 Stock prices moved higher for the first half of the quarter as the market recovered from the Bear Stearns financial collapse. As May progressed, oil prices continued to move higher, further cracks in the financial system began to appear, and with consumer and business confidence plunging, stocks prices turned down. The major averages declined reaching new lows by the end of the quarter. Energy and industrial stocks (mainly oil service) were the one bright spot in the quarter, surging 34%.  The Fund’s performance was hurt because we were underweight both of the aforementioned sectors at the beginning of the quarter. We did increase our exposure to companies exposed to energy and are now overweight the index. The top three performers in the quarter were W & T Offshore Inc. (0.86%), Consolidated Energy Inc. (2.73%), and Noble Energy Inc. (1.78%), which rose 62%, 56%, and 41%, respectively. Juniper Networks Inc. (1.86%) and MEMC Electric Inc. (1.17%) declined 31% and 30% respectively, causing our technology sector holdings to underperform in the quarter. The Fund performance was helped with our strong stock selection in financials. The financial stocks held in the Fund increased 6% while the sector declined 3%. The Fund also benefited from our underweight in retail and consumer services sectors. Performance Report Institutional Shares Total Fund Assets as of 6/30/2008 $61,361,104.83 Net Asset Value, Institutional Shares1 $30.00 Asset Allocation    Equities 99.5%    Cash 0.5% Average Market Capitalization $8.8 Billion

Holdings Top Equity Ten Holdings5 as of 6/30/2008 American Tower Corp. 2.7% Consol Energy Inc. 2.7% Verisign Inc. 2.3% Parker-Hannifin Corp. 2.3% Dresser-Rand Group Inc. 2.3% UST Inc. 2.2% Dun & Bradstreet Corp. 2.2% IMS Health Inc. 2.2% Adobe Systems Inc. 2.1% Jacobs Engineering Group Inc. 1.9%   Sector Diversification as of 6/30/2008   Fund Index*     Fund Index* Electronic Technology 13.73% 13.41%   Consumer Non-Durables 3.79% 4.32% Health Technology 11.08% 7.25%   Communications 3.71% 2.39% Industrial Services 10.17% 8.77%   Consumer Services 2.79% 7.90% Finance 9.71% 6.25%   Commercial Services 2.59% 2.81% Technology Services 9.54% 7.49%   Utilities 1.54% 4.48% Producer Manufacturing 7.38% 8.56%   Consumer Durables 1.46% 2.20% Energy Minerals 7.09% 7.29%   Other 0.48% 0.00% Health Services 5.87% 3.45%   Distribution Services 0.00% 1.17% Process Industries 5.02% 3.29%   Non-Energy Minerals 0.00% 1.66% Retail Trade 4.05% 5.48%   Transportation 0.00% 1.83%         Total 100%   *Russell Midcap Growth Index 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. Stocks of smaller companies are often more volatile and present greater risks than stocks of larger companies. At times the Fund may be unable to sell the securities it holds without a substantial drop in its price, if at all. 4. The Russell Midcap Growth Index measures the performance of those Russell Midcap 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 June, 2008* July, 2008* August, 2008*   *Adobe Acrobat 6.0® or above required. Download now for free.

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.

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