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

The U.S. economy grew at 2.1% in the third quarter of 2019, holding steady from the second quarter. Economists forecast Gross Domestic Product (GDP) of 2.5% for the fourth quarter of 2019 and flat growth of 1.8% for 2020. Consumer spending remains strong and the unemployment rate is a low 3.5%. Trade tensions with China are easing. Global growth is slow but improving modestly. We believe that recent events in the Middle East may hinder economic growth.

The Federal Reserve (Fed) cut the federal funds rate 25 basis points (bps) to a target range of 1.50% - 1.75% at its October 2019 meeting and left the rate unchanged in December. Recession fears eased, and the short end of the yield curve steepened signifcantly over the fourth quarter.

U.S. Treasury rates moved higher over the fourth quarter. The 10 Year Treasury rose to 1.92% from 1.67% at the beginning of the quarter. Positive returns were achieved by all investment grade bond sectors with corporate bonds leading the pack.

For the fourth quarter, The Commerce Bond Fund’s return of 0.17% underperformed the Bloomberg Barclays Index of 0.18%. The Fund’s maturity structure detracted from performance. The Fund’s shorter duration relative to the benchmark and its overweight to corporate bonds contributed to performance.

While low inflation and strong consumer spending continue to help grow the economy, we believe that slow global growth and Middle East tensions are reasons for caution in 2020.

Total Fund Assets as of 12/31/2019 $1,203,515,474
Net Asset Value1 $20.33
Effective Duration2 5.64 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.