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Short-Term Government Fund

Overview

Objective Seeks current income consistent with preservation of principal.
Strategy Invests primarily in U.S. Government securities and government mortgage-backed securities.
Fund Manager The Fund is managed by the Fixed Income Team, a group of senior-level investment professionals who average 29 years of experience.
Risk/Return

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In general, greater returns are associated with greater risks.
The Short-Term Government Fund's net asset value and yield are not guaranteed by the U.S. Government or by its agencies, instrumentalities or sponsored enterprises.
 

Fund Statistics

Inception Date 12/12/94
Ticker Symbol CFSTX
Cusip 200626109
Minimum Initial Investment $1,000
 

Commentary

Despite a shutdown of the federal government that lasted 43 days into the start of the quarter, annualized Gross Domestic Product (GDP) is projected to be 2.70% for the fourth quarter and follows a strong 4.30% registered in the third quarter. Concerns about trade policy continued to fade into year end, though imminent Supreme Court rulings on global tariffs may bring economic volatility at the start of 2026.

The Federal Reserve (Fed) cut the federal funds target rate twice over the course of the quarter to the current 3.50%-3.75% range. Slowing employment and price stability were cited as reasons for the accommodation, though the shutdown muddied economic data. Treasury futures forecast two additional cuts over the course of 2026.

 U.S. Treasury yields reacted to the Fed’s actions by moving lower for short maturities. For the fourth quarter yields moved sharply lower for 0-2 year maturities while the yield on the 5 Year Treasury declined 8 basis points to 3.67% at year end.

The Commerce Short Term Government Fund’s return of 1.05% underperformed the Bloomberg 1-5 Year Government Index return of 1.16% for the fourth quarter. The Fund’s shorter duration detracted from performance as rates fell. The Fund’s overweight to mortgage-backed securities contributed to performance.

Consensus forecasts project 2026 GDP growth between 2.0% and 2.5%, likely a slowdown from 2025 as unemployment stabilizes. Regardless, mid-term election issues are expected to drive expansive fiscal policy. Business investment into AI infrastructure along with a steady consumer spending argue for continued steady economic expansion

 
 
Total Fund Assets as of 12/31/2025 $30,484,656
Net Asset Value1 $16.48
Effective Duration2 2.37 Yrs.
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. These risks may result in greater share price volatility.

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 Short-Term Government Holdings

 

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. Please click the links for additional disclosures.