Bond Fund

Overview

Objective

Seeks total return through current income and, secondarily, capital appreciation.

Strategy

Invests primarily in a broad range of government and investment-grade corporate bonds and other fixed-income securities.

Fund Manager

Scott Colbert, CFA

  • Joined Commerce in 1993
  • 30 years of experience
  • Fund manager since Fund inception

Risk/Return

LOW - - • - - - - HIGH

In general, greater returns are associated with greater risks.

Fund Statistics

Inception Date 12/12/94
Ticker Symbol CFBNX
Cusip 200626208
Minimum Initial Investment $1,000

Commentary

Gross Domestic Product (GDP) increased 33.4% annualized for the third quarter of 2020 as consumer spending rebounded sharply and prospects for the near-term availability of an effective COVID vaccine improved. Unemployment continued to decline from 7.9% to 6.7% as of December 2020. Economic expansion is expected to continue, though at a modest 2.5% for the fourth quarter. In total, the pandemic is expected to have shrunk the US economy by -2.8% annualized in 2020.

The Federal Reserve (Fed) left the federal funds target rate unchanged at 0.00% - 0.25% at its December meeting. Year-over-year headline inflation as reflected by the Consumer Price Index (CPI) stands at 1.2%. With the Federal Reserve’s new inflation policy targeting an average rate of 2.0% over time, many economists do not expect a rate increase until 2025.

U.S. Treasury rates moved higher over the fourth quarter. The 10 Year Treasury rose to 0.91% from 0.68% at the beginning of the quarter. Short term rates were unchanged to slightly lower while five year and longer maturities moved higher over the quarter, resulting in a steeper yield curve overall.

For the fourth quarter, The Commerce Bond Fund’s return of 1.61% outperformed the Bloomberg Barclays Index of 0.67%. The Fund’s security selection and overweight to asset-backed bonds relative to the benchmark detracted from performance. The Fund’s overweight to corporate bonds contributed to performance.

Accelerating COVID cases, a faltering roll-out of vaccines, and political turmoil in Washington have economists worried that growth will stagnate in the first quarter of 2021 before resuming in the second quarter.

Total Fund Assets as of 12/31/2020 $1,288,787,579
Net Asset Value1 $21.19
Effective Duration2 5.96 Yrs.

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, which may result in greater share price volatility. Asset-backed securities may be less liquid than other securities and therefore more difficult to value and liquidate, if necessary. Foreign investments may be more volatile than investment in U.S. securities and will be subject to the risks of currency fluctuations and political developments.

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.

A prospectus for the Commerce Funds containing more complete information may be obtained by calling 1-800-995-6365 or by downloading 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.

The mutual funds referred to in this Web site are offered and sold only to persons residing in the United States and are offered by prospectus only. The prospectus contains more complete information about the funds, including charges and expenses, and should be read carefully before investing.

The method of calculation of the 30-Day Standardized Subsidized Yield is mandated by the Securities and Exchange Commission and is determined by dividing the net investment income per share earned during the last 30 days of the period by the maximum public offering price (“POP”) per share on the last day of the period. This number is then annualized. The 30-Day Standardized Subsidized Yield reflects fee waivers and/or expense reimbursements recorded by the Fund during the period. Without waivers and/or reimbursements, yields would be reduced. This yield does not necessarily reflect income actually earned and distributed by the Fund and, therefore, may not be correlated with the dividends or other distributions paid to shareholders. The 30-Day Standardized Unsubsidized Yield does not adjust for any fee waivers and/ or expense reimbursements in effect. If the Fund does not incur any fee waivers and/or expense reimbursements during the period, the 30-Day Standard Subsidized Yield and 30-Day Standardized Unsubsidized Yield will be identical.