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

Equity prices continued to move higher on improved earnings and a seemingly greater confidence that positive fiscal changes are coming. Bond investors clearly took a more skeptical view. The Federal Reserve (Fed) raised rates 25 basis points (bps) in March as was anticipated. Though the equity markets digested this move as the Fed perceiving the economy as strong enough to absorb higher rates, the 10-year Treasury yield actually decreased 6bps from 2.45% to 2.39% while the 10-year municipal yield decreased 6bps from 2.31% to 2.25%. Longer bonds outperformed shorter bonds and General Obligation (GO) bonds and revenue bonds performed in-line for the quarter. The municipal curve steepened 8bps in the 10-to-30 year segment during the quarter as yields came down in the short-end, while the 30-year municipal bond was essentially flat. Lower quality bonds beat higher quality counterparts. Bloomberg Barclay's high yield municipal index beat their investment grade index by over 260bps for the quarter.

For the first quarter, the Fund's return of 1.33% underperformed the Bloomberg Barclays' 3-15 Year Blend benchmark of 1.65%. The Fund's exposures to the GO and limited-tax sectors hampered returns. Housing and water/sewer sectors supported returns, as did the Fund's longer-duration and lower-quality issues.

Total Fund Assets as of 03/31/2017 $332,135,9450
Net Asset Value1 $19.27
Effective Duration2 5.83 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 Fund Holdings

March, 2017*
April, 2017*
May, 2017*

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.