Missouri Tax-Free Intermediate Bond Fund

Overview

Objective

Seeks current income exempt from federal and, to the extent possible, from Missouri income taxes, as is consistent with the preservation of capital.

Strategy

Focuses primarily on investing in municipal obligations issued by the State of Missouri and its political subdivisions.

Fund Manager

Brian P. Musielak, CFA
  • Joined Commerce in 1995
  • 22 years of experience
  • Fund manager since 1999

Risk/Return

LOW - - • - - - - HIGH

In general, greater returns are associated with greater risks.

Fund Statistics

Inception Date 02/21/95
Ticker Symbol CFMOX
Cusip 200626802
Minimum Initial Investment $1,000

Commentary

Following the massive fiscal stimulus passed by Congress and implementation of the Federal Reserve’s (Fed) liquidity facilities,markets began to stabilize in the face of the COVID-19 global pandemic. Risk appetites appeared to return during the second quarter as domestic equity markets rebounded in historic fashion in response to the monetary and fiscal stimulus as well as the quick turnaround of hiring and overall improving economic activity. While “shelter in place” restrictions have been relaxed,and reopening plans implemented in many states, a resurgence in COVID-19 cases began causing a handful of states to pause or even reverse course. Te Fed expressed that caution was warranted regarding the recovery, noting the elevated levels of unemployment and consumer savings. Te Fed also reiterated their commitment to highly accommodative monetary policy in order to support the economy for as long as required. The 10-year Treasury yield decreased 1 bp (basis point) from 0.67% to 0.66% while the 10-year municipal yield decreased 43 bps from 1.33% to 0.90% during the quarter. The 10-year muni/treasury ratio decreased to 136%. Credit spreads tightened back up during the quarter. Bloomberg Barclay’s high yield muni index outperformed their investment grade index by 183 bps for the quarter after a strong June. Municipal bond funds have experienced outflows of roughly $6.2 billion year-to-date, according to JP Morgan. Longer bonds outperformed shorter bonds while GO (General Obligation) bonds outperformed revenue sectors during the quarter. Lower quality bonds underperformed their higher quality counterparts.

For the second quarter, The Commerce Missouri Tax-Free Fund’s return of 1.94% underperformed the Bloomberg Barclays’ 3-15 Year Blend benchmark of 2.84%. Intermediate maturities were the most additive. Transportation and housing sectors performed the best. The Fund’s exposures to the hospital and higher education sectors lagged.

Total Fund Assets as of 6/30/2020 $378,794,398
Net Asset Value1 $20.18
Effective Duration2 4.10 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.
4. The Fund's investments may subject shareholders to federal alternative minimum tax. The investment income from this Fund 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 is non-diversified. Due to the small number of bonds generally held in the portfolio, the Fund may be subject to greater risks than a more diversified fund. A change in the value of any single holding may affect the overall value more than it would affect a diversified fund that holds more investments. In addition, the Fund's investments may subject shareholders to federal alternative minimum tax. The investment income from this Fund may be subject to 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 Missouri Tax-Free Intermediate Bond Holdings

June 2020*
July 2020*
August 2020*

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