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

During the third quarter, US economy recovered strongly. Consumer confidence and employment continued to improve. Housing has been especially robust with pending home sales up 21% year-over-year. However, the pandemic still looms large and has reaccelerated in parts of the country, notably in the Midwest. Virus containment is unlikely until an effective vaccine can be widely distributed while limited quantities could be made available before the end of the year via the FDA’s Emergency Use Authorization. Negotiations are on-going with congressional leaders regarding fiscal stimulus of another package in the $2 trillion realm. The Federal Reserve (Fed) has committed to keeping the Fed Funds rate at the zero bound through the end of 2023. Municipal bonds outperformed US Treasuries while both curves steepened modestly. The 10-year Treasury yield increased 3 bps (basis points) from 0.66% to 0.69% while the 10-year municipal yield decreased 3 bps from 0.90% to 0.87% during the quarter. The 10-year muni/treasury ratio decreased to 126%. Credit spreads continued to tighten during the quarter. Bloomberg Barclay’s high yield muni index outperformed their investment grade index by 186 bps for the quarter. Longer bonds outperformed shorter bonds while GO (General Obligation) bonds underperformed revenue sectors. Lower quality bonds outperformed their higher quality counterparts.

For the third quarter, The Commerce Missouri Tax-Free Fund’s return of 0.54% underperformed the Bloomberg Barclays’ 3-15 Year Blend benchmark of 1.23%. Intermediate maturities were the most additive. Transportation and water/sewer sectors performed the best. The Fund’s exposures to the pre-refunded and not-for-profit sectors lagged.

Total Fund Assets as of 9/30/2020 $385,404,013
Net Asset Value1 $20.20
Effective Duration2 4.06 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

August 2020*
September 2020*
October 2020*

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