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

Scott Colbert, CFA
  • Joined Commerce in 1993
  • 34 years of experience
  • Fund manager since Fund inception

Risk/Return

LOW - • - - - - - HIGH

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

The economy finished 2021 on a strong note, with a 6.9% rise in the fourth quarter as inventory investment and personal consumption pushed Gross Domestic Product (GDP) to 5.7% for the full year 2021. The major event of the first quarter of 2022 was Russia’s invasion of Ukraine in late February. While paling in significance to the ensuing humanitarian crisis, the most significant impact to the US economy has been higher energy prices. Estimates for first quarter 2022 annualized GDP reflect uncertainty and now range from 1.0% to 2.0%.

Inflation, as measured by the Consumer Price Index (CPI), continued to climb throughout the quarter to 7.9% year-over-year through February. The Federal Reserve (Fed) responded by tightening monetary policy. Purchases of treasury and mortgage-backed securities ended in March, and the federal funds target range was also increased at the March meeting to .25%- .50%. The market is projecting as many as six rate hikes by year end.

Inflation concerns and Fed action drove U.S. Treasury yields higher over the first quarter. Treasury yields rose more sharply in the short end of the curve (1 to 5 year maturities) over the period with the 5-year Treasury yield increasing to 2.46% from 1.26%.

For the first quarter, The Commerce Short Term Government Fund’s return of -3.11% outperformed the Bloomberg 1-5 Year Government Index return of -3.37%. The Fund’s shorter duration relative to that of its benchmark contributed to performance. The Fund’s relative overweight to mortgages detracted from performance.

War in Ukraine and yet another wave of COVID-19 in China are weighing on global growth. The US will be impacted, however we believe that corporate profits and strong consumer demand should continue to grow the economy at a projected 3.2% - 3.4% for the year.

Total Fund Assets as of 3/31/2022 $59,143,001
Net Asset Value1 $16.18
Effective Duration2 2.52 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. 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

February 2022*
March 2022*
April 2022*

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.

The method of calculation of the 30-Day Standardized Subsidized Yield is mandated by the Securities and Exchange Commission and is determined by dividing the net investment income per share earned during the last 30 days of the period by the maximum public offering price (“POP”) per share on the last day of the period. This number is then annualized. The 30-Day Standardized Subsidized Yield reflects fee waivers and/or expense reimbursements recorded by the Fund during the period. Without waivers and/or reimbursements, yields would be reduced. This yield does not necessarily reflect income actually earned and distributed by the Fund and, therefore, may not be correlated with the dividends or other distributions paid to shareholders. The 30-Day Standardized Unsubsidized Yield does not adjust for any fee waivers and/ or expense reimbursements in effect. If the Fund does not incur any fee waivers and/or expense reimbursements during the period, the 30-Day Standard Subsidized Yield and 30-Day Standardized Unsubsidized Yield will be identical.