MidCap Growth Fund

Overview

Objective

Seeks capital appreciation.

Strategy

Invests in a diversified portfolio of equity securities of medium-sized companies that show the potential for above-average growth in earnings.

The Management Team

The Fund is managed by the Equity Strategy Team, a group of senior-level investment professionals who average 31 years of experience.

Risk/Return

LOW - - - - - • - HIGH

In general, greater returns are associated with greater risks.

Fund Statistics

Inception Date 12/12/94
Ticker Symbol CFAGX
Cusip 200626505
Minimum Initial Investment $1,000

Commentary

Following the sharp selloff of in the fourth quarter of 2018, the Russell Mid Cap Growth index rallied back, recovering all the of the losses in the first quarter 2019. We believe the rally was fueled in part by the Federal Reserve (Fed) backing off from further interest rate hikes along with more optimistic US-China trade headlines. The Commerce Mid Cap Growth Fund finished the quarter up 18.05%, underperforming the Russell Mid Cap Growth Index return of 19.62%.

The Fund’s sector allocations detracted from the Fund’s relative performance. The Fund’s 4% underweight to the Electronic Technology sector (up 27%) hurt the Fund’s performance. However, the Fund’s 2% underweight to the Consumer Durables sector (only up 13%), slightly boosted the Fund’s performance.

Stock selection also detracted from the Fund’s relative performance. The weakest stocks were Nu Skin Enterprises (0.00%), International Flavors & Fragrances (1.28%), and Citrix Systems (1.20%), down -13.8%, -3.5%, and -2.4%, respectively. The Fund’s strongest stocks for the period were Cadence Design Systems (1.25%), SS&C Technologies Holdings (1.24%), and Bio-Techne Corporation (1.21%) up 46.1%, 41.4%, and 37.4%, respectively.

During the quarter the Fund increased its position in the Technology Services sector from 20.3% to 22.3%, with the purchase of Akamai Technologies, Inc. (1.20%) and Manhattan Associates, Inc. (1.21%), which created the Fund’s overweight to the sector. The Fund decreased its position to the Health Technology sector from 9.9% to 8.7% through the sale of Bruker Corporation (0.00%), increasing the Fund’s overweight to the sector.

Total Fund Assets as of 3/31/2019 $180,374,907
Net Asset Value1 $40.41
Asset Allocation  
Equities 99.9%
Cash 0.1%
Weighted Average Market Capitalization 14.9 Billion

Holdings

Top Ten Equity Holdings2 as of 3/31/2019

Wendy's Company 1.3%
Church & Dwight Co. Inc. 1.3%
McCormick & Company 1.3%
Armstrong World Industries 1.3%
Fidelity National Information Services 1.3%
Domino's Pizza, Inc. 1.3%
KAR Auction Services, Inc. 1.3%
Fiserv, Inc. 1.3%
Synopsys, Inc. 1.3%
Dunkin' Brands Group, Inc. 1.3%

Footnotes:
1. The Net Asset Value represents the assets of the fund (ex dividend) by the total number of shares.
2. The composition of the portfolio is subject to change in the future.
3. The Russell 1000 Growth Index is an unmanaged index that measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Index figures do not reflect any fees or expenses.

Portfolio Holdings

The Fund invests in mid-capitalization securities. The securities of mid-capitalization companies involve greater risks than those associated with larger, more established companies and may be subject to more abrupt or erratic price movements.

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 MidCap Growth Holdings

March 2019*
April 2019*
May 2019*

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.

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