Commerce National Tax-Free Intermediate Bond Fund

Overview Objective Seeks current income exempt from federal income tax consistent with the preservation of capital. Strategy Focuses on a broad range of investment-grade municipal securities, typically issued by or on behalf of the states, territories and possessions of the United States, the District of Columbia, and their respective authorities, agencies, instrumentalities and political subdivisions. Commentary Portfolio Fund Holdings Portfolio Composition Fund Manager - Brian P. Musielak, CFA Joined Commerce in 1995 Fund Manager since January, 1999 14 years of experience Risk/Return In general, greater returns are associated with greater risks. Fund Statistics: Inception Date 02/21/95 Ticker Symbol CFNLX Cusip 200626703 Minimum Initial Investment $1,000 Commentary as of 12/31/2009 After rallying the previous three quarters, the municipal market experienced a bit of a pull back in the fourth quarter of 2009.  Intermediate and long bond yields were higher by 0.20% to 0.40% for the quarter. While this pushed AAA General Obligation yields in the 25 to 30 year maturity range back above 4.00%, it is still well below historical averages.  Build America Bonds (BABs) continued to be a popular program for municipalities issuing new debt.  This federal program, which encourages municipalities to issue taxable municipal bonds by subsidizing their interest cost, has made a dramatic impact on tax-free municipal bond yields by siphoning away the supply of traditional tax-exempt issuance.  BABs accounted for 20% of the overall issuance in 2009 and over one-third the issuance in the fourth quarter. Credit spreads have been tightening off their highs for most of the year.  Despite this move, the extra yield earned by investing in A-rated credits versus AAA credits is still more than twice historical averages.   Our general trading theme heading into 2010 will be to reduce duration or market risk while selectively adding credit risk or lower rated bonds.  We do feel there will be pressure on the highest quality bond yields such as US Government debt and high quality corporate and municipal bonds.    For the fourth quarter, the Fund underperformed its benchmark, the Barclays Capital 3-15 Year Blend Index, but outperformed its peers as measured by the Lipper Intermediate Municipal Debt Funds Category 2nd Quartile Total Return Ranking. Our holdings in lower rated long bonds were a drag on performance, while a concentration in AAA rated, shorter maturity, and refunded bonds helped to offset.  As additional yield offered on lower-rated credits presents itself, we will look for opportunities to increase our exposure in that space.   Performance Report Total Fund Assets as of 12/31/2009 $174,316,241 Net Asset Value1 $18.86    Effective Duration 2 5.97 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, and investment income may be subject to state income taxes.

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's investments may subject shareholders to the federal alternative minimum tax and 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 NATIONAL TAX-FREE INTERMEDIATE BOND FUND HOLDINGS December, 2009* January, 2010* February, 2010*   *Adobe Acrobat 6.0® or above required. Download now for free.

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