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

As the global COVID-19 pandemic worsened, economic activity has suddenly slowed. While fourth quarter 2019 Gross Domestic Product (GDP) was 2.1% and followed a strong February 2020 employment report, March economic data was dire. Over 10 million workers filed for unemployment benefits in March. Economists expect annualized GDP to decline10% - 40% in the second quarter, accompanied by an unemployment rate as high as 15%. Consensus is for a rapid second half rebound in GDP.

The Federal Reserve (Fed) moved aggressively to provide liquidity to financial markets. The federal funds rate was cut to a target range of 0% - .25% in two unscheduled decisions in March. The Federal Reserve began quantitative easing with purchases of U.S. Treasuries and mortgage backed securities.

U.S. Treasury rates moved sharply lower over the first quarter. The 10 Year Treasury fell to .67% from 1.92% at the beginning of the quarter.

For the first quarter, the Commerce Bond Fund’s return of -1.50% underperformed the Bloomberg Barclays Index return of 3.15%. The Fund’s overweight to corporate bonds relative to the benchmark detracted from performance. The Fund’s allocation to government mortgage backed securities contributed to performance.

Unprecedented intervention by the Fed and by Congress through the $2.2 trillion CARES Act give hope that, while severe, we believe this economic downturn will be short and followed by a rapid recovery.

Total Fund Assets as of 3/31/2020 $1,187,614,933
Net Asset Value1 $19.88
Effective Duration2 5.60 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.

Commerce Bond Holdings

April 2020*
May 2020*
June 2020*

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.