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

Gross Domestic Product (GDP) increased 4.3% annualized for the fourth quarter of 2020. Despite the marked recovery in the second half of the year, GDP shrank by -3.5% for the full year 2020. However, all sectors of the economy has continued to recover as COVID-19 vaccination efforts rapidly expand. A total of $5 trillion in federal stimulus combined with an anticipated draw down of pent-up savings by consumers has economists predicting GDP growth of 6.5%-7.0% for 2021.

The Federal Reserve (Fed) left the federal funds target rate unchanged at 0.00% - 0.25% at its March meeting. Year-over-year headline inflation as reflected by the Consumer Price Index (CPI) stands at 1.7%., still below the Fed’s target of 2.0% plus. Falling COVID-19 risks and spending boosted by stimulus helped the unemployment rate decline to 6.0% in March.

U.S. Treasury yields moved significantly higher over the first quarter. The 5 Year Treasury rose to 0.94% from 0.36% at the beginning of the quarter. Short term rates (less than 2-years) moved lower while 2-year and longer maturities moved higher over the quarter, resulting in a steeper yield curve overall.

For the first quarter, The Commerce Short Term Government Fund’s return of -0.43% outperformed the Bloomberg Barclays 1-5 Year Government Index of -0.57%. The Fund’s overweight to mortgage-backed securities contributed to performance. With the 3- to 5-year maturities weighted more than the benchmark, the Fund’s maturity distribution relative to that of the benchmark detracted from performance.

While concerns about the appearance of virulent COVID-19 strains and uncertainty about federal spending plans persist, we believe the prevailing outlook is for a strong economic recovery in 2021.

Total Fund Assets as of 3/31/2021 $71,002,509
Net Asset Value1 $17.08
Effective Duration2 2.45 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 2021*
March 2021*
April 2021*

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.