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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

The economy and markets shook off President Trump’s trade war in the third quarter. Annualized Gross Domestic Product (GDP) registered 3.80% for the second quarter and is on track to repeat 3.80% for the third quarter. Regardless, we believe that uncertainty remains around the true impact of the Trump administration’s tariffs.

The Federal Reserve (Fed) cut the federal funds target rate 25 basis points (bps) to 4.00% - 4.25% in September. Personal Consumption Expenditures (PCE) inflation is trending higher and registered 2.7% in August, but sustained weaker payroll and unemployment numbers spurred the cut. Treasury futures project one or two additional rate cuts before year-end.

Expected rate cuts moved treasury bond yields significantly lower on the front end of the yield curve (0-2 years) in the third quarter. Intermediate maturities also moved slightly lower with the 5-year treasury declining six basis points to 3.74% at quarter-end.

For the third quarter, the Commerce Short Term Government Fund’s return of 1.08% underperformed the Bloomberg 1-5 Year Government Index return of 1.13%. Security selection detracted from performance as the fund reinvested matured treasury bills into longer maturity securities. The fund’s exposure to mortgage-backed securities contributed to performance.

Tariff uncertainty is curbing business investment and hiring plans. The partial shutdown of the Federal government is not helping consumer confidence. Consumer demand in the fourth quarter is expected to slow due to additional headwinds like renewed inflation, higher unemployment and fading stimulus. We believe GDP growth in the coming quarters is expected to be below trend.

 

 
 
Total Fund Assets as of 9/30/2025/2025 $30,914,705
Net Asset Value1 $16.42
Effective Duration2 2.53 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.