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

On a low to high scale of 1–7, the risk level is 2
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 second quarter of 2026 was defined by a sharp reacceleration in inflation expectations. Driven by persistent energy supply shocks from Middle East conflicts, the May Consumer Price Index (CPI) jumped to 4.2% year-over-year. This price pressure was reinforced by a resilient labor market and robust consumer spending, which are projected to pull annualized Gross Domestic Product (GDP) to a stable 2.2% pace for 2026.

The Federal Reserve (Fed) held the federal funds target rate at 3.50%–3.75% throughout the quarter but delivered a distinct hawkish pivot at its June meeting. The updated "dot plot" revealed that half of the FOMC participants shifted their year-end projections higher by 25 to 50 basis points, forcing the futures market to actively price in a Fed rate hike before year-end. 


Reflecting this shift, the short end of the yield curve surged from mid-May through June, with the 2-year Treasury yield rising 38 basis points to 4.17% and the 5-year yield increasing 28 basis points to 4.23%.
The Commerce Short Term Government Fund’s return of -0.60% underperformed the Bloomberg 1-5 Year Government Index return of 0.67% for the second quarter.  The Fund’s allocation to mortgage-backed securities detracted from performance.  The Fund’s shorter duration relative to that of the index contributed to performance.
Looking ahead, the near-term outlook favors an extended "higher-for-longer" monetary stance with a bias toward raising rates. Consumer resilience should sustain growth into next quarter, but sticky core inflation remains a persistent threat.

 
 
Total Fund Assets as of 6/30/2026 $23,005,593
Net Asset Value1 $16.21
Effective Duration2 2.12 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.