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 contracted sharply over the first half of 2022 as Russia’s Ukraine incursion and China’s zero Covid policy combined to rattle global markets. First quarter Gross Domestic Product (GDP) sank to -1.6% as headline inflation continued to climb and consumer spending declined. Full year GDP estimates now range between 1.5% and 1.9% as economists see interest rate increases raising the likelihood of a recession in the next 12 months.

Inflation, as measured by the Consumer Price Index (CPI), continued to climb throughout the quarter to 8.6% year-over-year through May. The Federal Reserve (Fed) responded by aggressively tightening monetary policy. The federal funds target was raised by 50 basis points in May and another 75 basis points in June to its current target range of 1.50% - 1.75%. Market participants anticipate continued aggressive hiking to raise the upper bound on federal funds to 3.25% - 3.50% 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) relative to the long end (10 to 30 year maturities) over the period with the 5-year Treasury yield increasing to 3.03% from 2.46%.

For the second quarter, the Commerce Short Term Government Fund’s return of -1.16% underperformed the Bloomberg 1-5 Year Government Index return of -.85%. The Fund’s relative overweight to mortgages detracted from performance. The Fund’s shorter duration relative to that of its benchmark contributed to performance.

Total Fund Assets as of 6/30/2022 $56,795,584
Net Asset Value1 $15.93
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

June 2022*
July 2022*
August 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.