<PAGE>
THE COMMERCE FUNDS
LETTER TO SHAREHOLDERS
DEAR SHAREHOLDERS:
I am pleased to send you our first report to shareholders. In addition to
this letter with our market outlook for each portfolio, it contains financial
statements including each portfolio's statement of investments.
MARKET OVERVIEW
The driving factor behind the strong performance of the U.S. bond and stock
markets since November 1994 continues to be the decline in interest rates in
all but the money market sector. This decline in interest rates is attribut-
able to two primary factors.
The first is a positive inflation outlook. Inflation as measured by the Con-
sumer Price Index ended in 1994 at a lower rate of increase than it ended
1993. This confirmed our view that inflation would not become a serious prob-
lem in this cycle and would likely peak in the 3.0% to 3.5% range in the first
half of 1995. This would represent another important milestone in the longer
term decline from the high inflationary peak of the early 1980s. The primary
factors behind this excellent performance have been the early and resolute ac-
tion of the Federal Reserve and important structural changes in the U.S. econ-
omy. We remain convinced that the U.S. is headed toward a prolonged period of
low and stable inflation.
The second reason for the decline in interest rates has been a clear slowing
in the rate of economic growth. After growing at a rate in excess of 4% in
1994, the U.S. economy appears set to slow to a more modest 2.8% to 3.0% rate
on a year-over-year basis. While we do not anticipate a recession, we do ex-
pect economic growth to be quite modest over the balance of 1995. This will
lower credit demands and capacity constraints, thereby reducing potential in-
flationary pressures.
The decline in interest rates has propelled the bond market to significant
gains since last November, reversing, in part, the sharp sell-off over the
course of 1994. Against the background of improved valuation and continued
strength in corporate profits, the stock market rallied sharply over the same
period in tandem with the decline in interest rates. Looking ahead, as eco-
nomic growth moderates, questions will likely emerge with regard to the out-
look for the sustainability of corporate profit increases. This raises some
potential risks for the stock market over the near term. While a period of
consolidation should be expected, we believe that a further decline in inter-
est rates and the absence of a recession will provide a positive underpinning
for the stock market.
Longer term, we remain quite optimistic with regard to the outlook for the
U.S. financial markets, especially the stock market. Important economic, demo-
graphic and political trends are emerging that we expect will provide powerful
stimuli to both markets. As such, we remain fully invested in our portfolios
as discussed below.
SHORT-TERM GOVERNMENT FUND
This fund has a total return since inception (December 12, 1994) through
April 30, 1995 of 4.92% based on net asset value versus the Lipper Short U.S.
Government Funds Index return of 4.64% and the Salomon Brothers
Treasury/Government 1-5 Index return of 5.13%. The fund distributed $.46 per
share from net investment income during the period from inception through
April 30, 1995. The fund's return strength is attributed to its longer dura-
tion and average maturity position relative to its peers.
The expectation of a slowdown in the economy, and the subsequent downward
pressure this would place on short-term interest rates, prompted the fund to
add to its duration position in January. The fund's asset mix is made up al-
most completely of U.S. Government Agency Obligations. These securities offer
a spread pickup of, on average, twenty-five basis points over comparable Trea-
suries, with little credit risk. With the recent economic statistics pointing
to a more stable to slowing economy, the Federal Reserve is expected to adopt
a neutral or easing policy in the coming months. Therefore, the fund will con-
tinue to hold its longer maturity position.
BOND FUND
This fund has a total return since inception (December 12, 1994) through
April 30, 1995 of 6.38% based on net asset value versus the Lipper Intermedi-
ate Investment Grade Debt Funds Index return of 5.94% and the Lehman Brothers
Aggregate Bond Index return of 6.80%, for the same time period. The fund dis-
tributed $.51 per share from net investment income during the period from in-
ception through April 30, 1995. The fund's return strength is attributed to
its longer duration and average maturity position relative to its peers.
The intermediate sector of the yield curve has benefitted most from the re-
cent bond rally. As such, the fund has consolidated much of its asset mix into
this intermediate maturity range by liquidating some of its longer maturity
securities. The cash generated from these sales was invested mainly in inter-
mediate-term Treasury securities with maturities of up to eight years. The
fund will continue to hold a portfolio that is longer in duration relative to
other indexes, as the expectation in the market place is for a continued bond
rally, with little upward pressure on interest rates in the coming months.
1
<PAGE>
THE COMMERCE FUNDS
LETTER TO SHAREHOLDERS--(Continued)
BALANCED FUND
This fund has a total return since inception (December 12, 1994) through
April 30, 1995 of 11.19% based on net asset value versus the Lipper Balanced
Funds Index return of 9.87% and a return of 12.40% based on a composite of the
S&P 500 Index (weighted at 60%) and Lehman Brothers Aggregate Bond Index
(weighted at 40%). The fund distributed $.26 per share from net investment in-
come during the period from inception through April 30, 1995. The fund has
continued to add duration within its fixed income portion in order to take ad-
vantage of lower interest rates in the face of a slowdown in the economy. The
fund has also recently made an asset allocation toward equities, reflecting a
relative value judgement within the two market areas.
GROWTH FUND
This fund earned a return of 16.95% based on net asset value from its incep-
tion on December 12, 1994 and ending April 30, 1995. This compares with a
16.25% return for the S&P 500 Index and a 14.51% return for the Lipper Growth
Funds Index.
Over the last five months, the stock market has moved to all-time highs, led
by the strong performance in the technology sector. The fund had over 20% in-
vested in technology issues, nearly twice the weight of the S&P 500 Index.
Semiconductors (Intel Corp. and Texas Instruments, Inc.), rose over 45% during
the period, followed closely by software companies (Microsoft Corp. and Sili-
con Graphics, Inc.).
Financial issues (Green Tree Financial Corp. and Federal National Mortgage
Assn.) responded favorably to the declining long-term interest rates.
Another area of strength for the fund was companies having large interna-
tional sales exposure. With a weak dollar, international earnings have come in
stronger for health care companies (Abbott Laboratories and Johnson & Johnson)
and consumer brand name companies (McDonalds Corp. and Coca Cola Co.).
AGGRESSIVE GROWTH FUND
From its date of inception on December 12, 1994 through April 30, 1995, this
fund earned a return of 19.94% based on net asset value. This compares with a
return of 15.05% for the S&P 400 Mid-Cap Index and a 8.55% return for the
Lipper Mid-Cap Funds Index.
The performance of the fund versus the benchmark was due chiefly to partici-
pation during the period in the strongest performing sectors of the market,
notably electronic technology (Micron Technology and 3-Com), health care
(Cordis Corp. and Stryker Corp.) and financial services (Sunamerica, Inc. and
Synovus Financial Corp.).
In selecting stocks for this fund, we use "bottom-up" security analysis, an
approach to security selection that focuses primarily on the company and com-
pany-related matters. Increased earnings for the companies selected using this
approach as well as declining interest rates were factors that strengthened
the values of companies held in the portfolio.
Stabilizing the portfolio are many companies in the area of producer manu-
facturing (Danaher Corp. and Modine Manufacturing Co.). This is in line with a
thesis we developed in our Long Term Outlook, which said that for the rest of
this decade, relative profitability will swing to the productive side of the
economy at the expense of the consumptive side. So far, this theme seems to be
on the right track, as capital spending continues to grow dramatically, in-
creasing productivity, through the implementation of new technology.
INTERNATIONAL EQUITY FUND
This fund has a total return since inception (December 12, 1994) through
April 30, 1995 of .44%, based on net asset value, which compares with a 2.35%
return for the Lipper International Funds Index and a return of 5.81% for the
Europe Asia Far East ("EAFE") Index.
The international markets have been buffeted by several factors over the
course of the last six months. Most markets were negatively impacted in the
second half of 1994 by rising interest rates in the U.S. and Europe. This fac-
tor carried over into early 1995. Additionally, the Mexico crisis resulted in
sharp declines in that market and, to a somewhat lesser extent, other Latin
American markets. The fallout also impacted other emerging markets as invest-
ors' sense of risk heightened as a result of the Mexican debacle. Finally, the
dollar/yen problem has contributed to renewed downward pressure on the Japa-
nese economy and market in the first part of 1995.
The fund has its heaviest sector concentrations in consumer goods, capital
goods, basic industries and financials with light exposure to energy and util-
ities. The fund maintains an underweight in Japan and a neutral weight in Eu-
rope relative to the EAFE Index. It also has positions in several smaller mar-
kets, many of which are not represented in the EAFE Index. The sharp declines
in Latin America negatively impacted results, although the portfolio's expo-
sure to these markets was small on an absolute basis. After a sharp initial
decline, the fund has now moved above its initial public offering price of
$18.00 as most markets (with the notable exception of Japan) have begun to re-
cover from the weakness of late 1994 and early 1995.
2
<PAGE>
THE COMMERCE FUNDS
LETTER TO SHAREHOLDERS--(Continued)
TAX-EXEMPT MARKET
In the most recent period, the tax-exempt market confronted both a lack of
supply and tax revision conjecture. The former acted to raise prices as demand
exceeded the more limited supply, while the latter served as an excuse to un-
wind some of the excessive tightness that subsequently developed. Tax-exempts
generally lag the taxable market during rallies. Through mid-April we experi-
enced an exception to this. Then the suggestion of a flat tax caused partici-
pants to step back and reassess the relationship between the two sectors, and
a more normal pattern developed.
NATIONAL TAX-FREE BOND FUND
Since the fund's inception on February 21, 1995, its net asset value de-
clined .28% to its April 30, 1995 value of $17.95. Distributions from incep-
tion to April 30, 1995 of $.16 per share brought the total return to .58%
based on net asset value, while the Lipper General Municipal Debt Funds Index
and the Merrill Lynch Municipal Intermediate Index had returns of 1.86% and
2.12%, respectively, for the same time period. Holdings have included state
general obligation bonds, as well as those of cities and counties. Bonds
backed by the revenues of regional electric utilities and local water projects
have also been included.
MISSOURI TAX-FREE BOND FUND
This fund's increase in net asset value to $18.01, coupled with the per
share distribution of $.17, resulted in a total return of .98% based on net
asset value from inception (February 21, 1995) to April 30, 1995. The Lipper
General Municipal Debt Funds Index and the Merrill Lynch Municipal Intermedi-
ate Index earned returns of 1.86% and 2.12%, respectively, for the same time
period. New issue supply was sparse in Missouri during the early part of 1995,
as it was nationally. The political climate emphasizing fiscal conservatism
was not particularly conducive to large public projects.
In conclusion, we appreciate your support and look forward to helping you
meet your investment objectives.
/s/ Peter F. Mackie
Peter F. Mackie
Executive Vice President
Commerce Bank, N.A.
June 1, 1995
3
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
SHORT-TERM GOVERNMENT FUND
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- -----------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS--86.4%
Federal Home Loan Bank
$1,000,000 6.63% 08/28/01 $ 972,520
Federal Home Loan Mortgage Corp.
2,000,000 6.72 10/11/96 2,000,320
2,000,000 7.93 01/20/98 2,050,940
2,000,000 7.82 01/27/98 2,045,940
Federal Land Bank
1,000,000 7.35 01/20/97 1,009,220
Federal National Mortgage Assn.
1,000,000 7.90 08/12/96 1,014,220
1,000,000 9.20 09/11/00 1,093,590
Israel Aid Series 5A
2,000,000 7.75 11/15/99 2,053,320
Tennessee Valley Authority 1989 Series D
2,000,000 8.38 10/01/99 2,098,740
-----------
Total U.S. Government Agency Obligations
(cost $14,018,821).......................... $14,338,810
-----------
U.S. TREASURY OBLIGATIONS--6.1%
United States Treasury Note
$1,000,000 6.88% 04/30/97 $ 1,005,310
-----------
Total U.S. Treasury Obligations
(cost $1,001,719)........................... $ 1,005,310
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- --------------- ------------ ------------- -----------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS--5.9%
State Street Bank & Trust Company,
dated 04/28/95, repurchase price
$982,450 (U.S. Treasury Note:
$965,000, 7.50%, 12/31/96)
$ 982,000 5.50% 05/01/95 $ 982,000
-----------
Total Repurchase Agreements
(cost $982,000)................................. $ 982,000
-----------
Total Investments
(identified cost $16,002,540(a))................ $16,326,120
===========
- -----------------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments
in which value exceeds cost......................... $ 323,580
Gross unrealized loss for investments
in which cost exceeds value......................... 0
-----------
Net unrealized gain.................................. $ 323,580
===========
- -----------------------------------------------------------------------------------------
</TABLE>
(a) The cost stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BOND FUND
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- -----------
<S> <C> <C> <C>
ASSET-BACKED SECURITIES--27.9%
American Express Master Trust Series
1994-3, Class A
$2,000,000 7.85% 08/15/05 $ 2,028,740
Choice Credit Card Master Trust Series
1992, Class 2B
2,000,000 7.20 04/15/99 1,990,000
Discover Card Trust Series 1992-B, Class B
3,000,000 7.50 06/16/00 3,012,180
Green Tree Financial Corp. Series 1993-4,
Class A4
2,000,000 6.60 01/15/19 1,819,360
Green Tree Financial Corp. Series 1993-4,
Class A5
4,000,000 7.05 01/15/19 3,512,480
Green Tree Financial Corp. Series 1994-2,
Class A4
4,000,000 7.90 05/15/19 3,977,480
Standard Credit Card Master Trust Series
1991-6, Class B
2,000,000 8.35 01/07/00 2,056,240
Standard Credit Card Master Trust Series
1995-1, Class A
2,000,000 8.25 01/08/07 2,076,200
Standard Credit Card Master Trust Series
1995-1, Class B
1,000,000 8.45 01/08/07 1,038,100
Standard Credit Card Trust Series 1990-6,
Class 6A
2,000,000 9.38 09/10/98 2,093,120
-----------
Total Asset-Backed Securities
(cost $23,021,356).......................... $23,603,900
-----------
CORPORATE OBLIGATIONS--23.1%
FINANCIAL--14.3%
Bankamerica Corp.
$2,000,000 6.88% 06/01/03 $ 1,884,040
CIT Group Holdings, Inc.
1,000,000 5.63 04/01/98 958,260
Chemical Bank
2,000,000 6.70 08/15/08 1,773,580
Chubb Capital Corp.
2,000,000 6.00 02/01/98 1,941,580
Morgan Stanley Group, Inc.
2,000,000 6.75 03/04/03 1,860,260
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- -----------
<S> <C> <C> <C>
CORPORATE OBLIGATIONS--CONTINUED
FINANCIAL--(Continued)
PNC Funding Corp.
$2,000,000 6.13% 09/01/03 $ 1,774,460
Smith Barney Holdings, Inc.
2,000,000 6.63 06/01/00 1,907,360
-----------
12,099,540
-----------
INDUSTRIAL--4.2%
Pepsico, Inc.
1,000,000 7.75 10/01/98 1,015,870
Phillip Morris Companies, Inc.
500,000 9.45 11/19/97 524,230
Shell Oil Co.
1,000,000 6.95 12/15/98 992,320
Union Pacific Railroad Co.
1,000,000 6.44 01/15/98 983,020
-----------
3,515,440
-----------
UTILITIES--4.6%
Duke Power Corp.
1,000,000 7.37 02/02/04 988,820
Union Electric Co.
2,000,000 6.75 10/15/99 1,950,020
Wisconsin Electric Power Co.
1,000,000 5.88 10/01/97 975,670
-----------
3,914,510
-----------
Total Corporate Obligations
(cost $18,925,375).......................... $19,529,490
-----------
FOREIGN BONDS--1.2%
Hydro Quebec Note
$1,000,000 7.96% 12/17/01 $ 1,017,370
-----------
Total Foreign Bonds
(cost $971,660)............................. $ 1,017,370
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS--32.7%
Federal Home Loan Bank
$1,000,000 6.32% 02/01/00 $ 969,570
Federal Home Loan Mortgage Corp.
1,000,000 6.20 04/15/03 935,160
3,620,488 8.50 02/01/19 3,696,590
4,050,965 8.50 03/01/21 4,135,751
Federal National Mortgage Assn.
2,974,892 9.00 11/01/21 3,095,881
4,165,873 8.00 04/01/24 4,155,459
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BOND FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- -----------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS--CONTINUED
Government National Mortgage Assn.
$5,233,947 8.00% 02/15/22 $ 5,230,649
5,783,326 7.00 09/15/23 5,474,266
-----------
Total U.S. Government Agency Obligations
(cost $26,659,592).......................... $27,693,326
-----------
U.S. TREASURY OBLIGATIONS--12.2%
United States Treasury Bonds
$4,000,000 7.50% 11/15/16 4,018,120
4,000,000 8.13 08/15/19 4,283,120
United States Treasury Note
2,000,000 7.25 08/15/04 2,023,740
-----------
Total U.S. Treasury Obligations
(cost $10,130,469).......................... $10,324,980
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- --------------- ------------ ------------- -----------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS--4.0%
State Street Bank & Trust Company,
dated 04/28/95, repurchase price
$3,395,556 (U.S. Treasury Note:
3,330,000, 7.50%, 12/31/96)
$3,394,000 5.50% 05/01/95 $ 3,394,000
-----------
Total Repurchase Agreements
(cost $3,394,000)............................... $ 3,394,000
-----------
Total Investments
(cost $83,102,452(a))........................... $85,563,066
===========
- ------------------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which value
exceeds cost........................................ $ 2,464,101
Gross unrealized loss for investments in which cost
exceeds value....................................... (3,487)
-----------
Net unrealized gain.................................. $ 2,460,614
===========
- ------------------------------------------------------------------------------------------
</TABLE>
(a) The cost stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BALANCED FUND
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------ ----------- -----------
<C> <S> <C>
COMMON STOCKS--52.8%
AUTOMOBILES & AUTOMOBILE PARTS--2.7%
20,200 Federal Signal Corp. $ 457,025
4,300 Genuine Parts Co.(a) 166,625
10,600 Harley Davidson, Inc.(a) 253,075
3,300 Modine Manufacturing Co. 111,787
-----------
988,512
-----------
BANKING--2.3%
6,300 First Union Corp.(a) 285,075
17,300 Norwest Corp. 458,450
4,900 Synovus Financial Corp. 101,063
-----------
844,588
-----------
BROADCAST MEDIA--1.0%
4,200 Capital Cities/ABC, Inc.(a) 354,900
-----------
BUILDING MATERIALS & CONSTRUCTION--2.6%
16,700 Clayton Homes, Inc. 281,812
3,400 Flour Corp.(a) 175,100
5,400 Leggett & Platt, Inc. 207,900
8,300 Sherwin Williams Co.(a) 295,688
-----------
960,500
-----------
BUSINESS SERVICES--3.4%
5,700 Automatic Data Processing, Inc. 366,225
8,400 Equifax, Inc. 271,950
4,200 Fiserv, Inc.(b) 111,300
2,800 Omnicom Group 155,750
13,000 Reynolds & Reynolds Co. 344,500
-----------
1,249,725
-----------
CHEMICAL PRODUCTS--0.4%
2,800 Great Lakes Chemical Corp. 164,500
-----------
COMMUNICATIONS--2.0%
9,200 DSC Communications Corp.(a)(b) 340,400
9,300 Southwestern Bell Corp. 410,363
-----------
750,763
-----------
COMPUTER SERVICES/SOFTWARE--3.8%
2,000 Adobe Systems, Inc. 116,500
3,800 Cerner Corp.(b) 201,875
6,900 Computer Sciences Corp.(a)(b) 340,688
4,000 Fair Isaac & Company, Inc. 185,000
2,000 Legent Corp.(b) 54,500
2,900 Microsoft Corp.(b) 237,437
2,700 Parametric Technology Corp.(b) 128,250
6,000 Verifone, Inc.(b) 141,750
-----------
1,406,000
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------ ----------- -----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
ELECTRICAL SERVICES--1.3%
14,000 Union Electric Co. $ 498,750
-----------
ELECTRONICS & OTHER ELECTRICAL
EQUIPMENT--8.2%
6,600 ADC Telecommunications, Inc.(b) 217,800
9,500 Adaptec, Inc.(b) 304,000
9,200 American Power Conversion Co.(b) 156,400
12,200 General Electric Co. 683,200
4,000 Intel Corp. 409,500
1,000 KLA Instruments Corp.(a)(b) 62,000
3,000 Linear Technology Corp. 179,250
7,000 Oak Industries, Inc.(b) 204,750
5,200 Pioneer Standard Electronics, Inc. 101,400
8,600 Sensormatic Electronics Corp. 255,850
8,000 Silicon Graphics, Inc.(b) 300,000
1,600 Texas Instruments, Inc. 169,600
-----------
3,043,750
-----------
FINANCIAL SERVICES--3.5%
6,000 Federal National Mortgage Assn. 529,500
7,300 Franklin Resources, Inc. 293,825
9,200 Green Tree Financial Corp. 376,050
2,300 Sunamerica, Inc. 112,700
-----------
1,312,075
-----------
FOOD & BEVERAGES--2.3%
6,000 CPC International, Inc. 351,750
10,100 McDonalds Corp. 353,500
4,000 Pepsico, Inc. 166,500
-----------
871,750
-----------
HEALTH & MEDICAL SERVICES--7.0%
9,500 Abbott Laboratories 374,063
5,200 Amgen, Inc.(b) 377,975
2,000 Cardinal Health, Inc. 92,250
11,600 Healthcare Compare Corp.(b) 348,725
5,300 Invacare Corp. 209,350
6,300 Johnson & Johnson 409,500
5,300 Manor Care, Inc. 155,687
10,200 Nellcor, Inc.(b) 423,300
1,900 Pacificare Health Systems, Inc.(b) 116,850
2,600 Stryker Corp. 117,325
-----------
2,625,025
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BALANCED FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------ ----------- -----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
HOUSEHOLD PRODUCTS--1.7%
4,600 Colgate Palmolive Co. $ 323,150
3,700 Gillette Co. 303,400
-----------
626,550
-----------
INSURANCE SERVICES--0.3%
3,000 Orion Capital Corp.(a) 105,375
-----------
MANUFACTURING--MISCELLANEOUS--1.8%
13,200 Illinois Tool Works, Inc. 661,650
-----------
MINING--METALS/MINERALS--0.3%
3,000 Trinity Industries, Inc. 115,875
-----------
OFFICE & BUSINESS EQUIPMENT--0.7%
5,700 Cabletron Systems, Inc.(b) 270,750
-----------
OIL & GAS--2.0%
7,800 Mobil Corp.(a) 740,025
-----------
PAPER & FOREST PRODUCTS--0.5%
2,600 Alco Standard Corp. 184,275
-----------
PUBLISHING--0.2%
2,800 Banta Corp. 93,800
-----------
RECREATIONAL SERVICES--1.0%
15,000 Mattel, Inc. 356,250
-----------
RETAIL--2.6%
5,600 Circuit City Stores, Inc.(a) 144,900
8,000 Dollar General Corp. 186,000
7,700 Walgreen Co.(a) 361,900
11,500 Walmart Stores, Inc. 273,125
-----------
965,925
-----------
RUBBER & PLASTIC PRODUCTS--0.4%
4,700 Lancaster Colony Corp.(a) 163,325
-----------
TEXTILES--0.3%
2,800 Cintas Corp. 107,800
-----------
TRANSPORTATION/STORAGE--0.5%
8,000 Air Express International Corp. 188,000
-----------
Total Common Stocks
(cost $17,093,411).......... $19,650,438
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- --------- -------- -------- -----------
<S> <C> <C> <C>
ASSET-BACKED SECURITIES--11.6%
American Express Master Trust Series
1994-3, Class A
$ 500,000 7.85% 08/15/05 $ 507,185
Choice Credit Card Master Trust Series
1992-2, Class B
500,000 7.20 04/15/99 497,500
Discover Card Trust Series 1992-B, Class B
1,000,000 7.50 06/16/00 1,004,060
Green Tree Financial Corp. Series 1993-4,
Class A4
500,000 6.60 01/15/19 454,840
Green Tree Financial Corp. Series 1993-4,
Class A5
1,000,000 7.05 01/15/19 878,120
Green Tree Financial Corp. Series 1994-2,
Class A4
1,000,000 7.90 05/15/19 994,370
-----------
Total Asset-Backed Securities
(cost $4,210,291)............................ $ 4,336,075
-----------
CORPORATE OBLIGATIONS--14.4%
FINANCIAL--10.4%
Bankamerica Corp.
$ 500,000 6.88% 06/01/03 $ 471,010
Chemical Bank
500,000 6.70 08/15/08 443,395
General Electric Capital Corp.
1,000,000 8.30 09/20/09 1,086,490
Lehman Brothers Holdings, Inc.
500,000 8.38 04/01/97 504,180
Morgan Stanley Group, Inc.
500,000 6.75 03/04/03 465,065
PNC Funding Corp.
500,000 6.13 09/01/03 443,615
Smith Barney Holdings, Inc.
500,000 6.63 06/01/00 476,840
-----------
$ 3,890,595
-----------
INDUSTRIAL--1.3%
Gannett, Inc.
500,000 5.25 03/01/98 $ 476,440
-----------
UTILITIES--2.7%
AT&T Corp.
1,000,000 7.13 01/15/02 $ 987,170
-----------
Total Corporate Obligations
(cost $5,130,672)............................ $ 5,354,205
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BALANCED FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- ----------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY OBLIGATIONS--10.3%
Federal Home Loan Bank
$ 750,000 6.63% 08/28/01 $ 729,390
Government National Mortgage Assn.
1,899,816 7.00 09/15/23 1,798,290
Government National Mortgage Assn.
1,308,487 8.00 02/15/22 1,307,662
----------
Total U.S. Government Agency Obligations (cost
$3,651,135)................................... $3,835,342
----------
U.S. TREASURY OBLIGATIONS--5.6%
United States Treasury Bond
$1,000,000 8.13% 08/15/19 $1,070,780
United States Treasury Note
1,000,000 7.25 08/15/04 1,011,870
----------
Total U.S. Treasury Obligations
(cost $2,058,750)............................. $2,082,650
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
---------- -------- -------- -----------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS--5.8%
State Street Bank & Trust Company,
dated 04/28/95, repurchase price
$2,165,992 (U.S. Treasury Note:
$2,125,000, 7.50%, 12/31/96)
$2,165,000 5.50% 05/01/95 $ 2,165,000
-----------
Total Repurchase Agreements
(cost $2,165,000)........................... $ 2,165,000
-----------
Total Investments
(cost $34,309,259(c))....................... $37,423,710
-----------
- -------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Federal Income Tax Information:
Gross unrealized gain for investments in
which value exceeds cost................... $3,223,741
Gross unrealized loss for investments in
which cost exceeds value................... (109,290)
----------
Net unrealized gain......................... $3,114,451
==========
- --------------------------
</TABLE>
(a) There are common stock rights attached to these securities.
(b) Non-income producing security.
(c) The cost stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
GROWTH FUND
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ------------
<C> <S> <C>
COMMON STOCKS--95.9%
AUTOMOBILES & AUTOMOBILE PARTS--6.4%
171,000 Federal Signal Corp. $ 3,868,875
39,600 Genuine Parts Co.(a) 1,534,500
80,500 Harley Davidson, Inc.(a) 1,921,938
------------
7,325,313
------------
BANKING--4.1%
41,500 First Union Corp.(a) 1,877,875
106,000 Norwest Corp. 2,809,000
------------
4,686,875
------------
BROADCAST MEDIA--1.9%
25,200 Capital Cities/ABC, Inc.(a) 2,129,400
------------
BUILDING MATERIALS & CONSTRUCTION--4.8%
104,000 Clayton Homes, Inc. 1,755,000
28,800 Flour Corp.(a) 1,483,200
62,300 Sherwin Williams Co.(a) 2,219,437
------------
5,457,637
------------
BUSINESS SERVICES--5.3%
33,600 Automatic Data Processing, Inc. 2,158,800
51,600 Equifax, Inc. 1,670,550
83,700 Reynolds & Reynolds Co. 2,218,050
------------
6,047,400
------------
COMMUNICATIONS--4.8%
61,200 DSC Communications Corp.(a)(b) 2,264,400
72,000 Southwestern Bell Corp. 3,177,000
------------
5,441,400
------------
COMPUTER SERVICES/SOFTWARE--5.0%
11,200 Cerner Corp.(b) 595,000
45,700 Computer Sciences Corp.(a)(b) 2,256,438
14,300 Microsoft Corp.(b) 1,170,813
35,600 Parametric Technology Corp.(b) 1,691,000
------------
5,713,251
------------
ELECTRICAL SERVICES--3.9%
125,600 Union Electric Co. 4,474,500
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
ELECTRONICS & OTHER ELECTRICAL
EQUIPMENT--15.6%
58,000 Adaptec, Inc.(b) $ 1,856,000
82,900 American Power Conversion Co.(b) 1,409,300
73,800 General Electric Co. 4,132,800
30,000 Intel Corp. 3,071,250
31,000 Linear Technology Corp. 1,852,250
60,700 Sensormatic Electronics Corp. 1,805,825
54,100 Silicon Graphics, Inc.(b) 2,028,750
14,900 Texas Instruments, Inc. 1,579,400
------------
17,735,575
------------
FINANCIAL SERVICES--7.1%
47,000 Federal National Mortgage Assn. 4,147,750
41,800 Franklin Resources, Inc. 1,682,450
54,700 Green Tree Financial Corp. 2,235,863
------------
8,066,063
------------
FOOD & BEVERAGES--6.0%
38,700 CPC International, Inc. 2,268,787
18,400 Coca Cola Co. 1,069,500
60,500 McDonalds Corp. 2,117,500
33,000 Pepsico, Inc. 1,373,625
------------
6,829,412
------------
HEALTH & MEDICAL SERVICES--10.5%
60,000 Abbott Laboratories 2,362,500
34,700 Amgen, Inc.(b) 2,522,256
78,700 Healthcare Compare Corp.(b) 2,365,919
42,000 Johnson & Johnson 2,730,000
46,700 Nellcor, Inc.(b) 1,938,050
------------
11,918,725
------------
HOUSEHOLD PRODUCTS--3.0%
33,100 Colgate Palmolive Co. 2,325,275
12,800 Gillette Co. 1,049,600
------------
3,374,875
------------
MANUFACTURING--MISCELLANEOUS--3.9%
88,000 Illinois Tool Works, Inc. 4,411,000
------------
MINING--METALS/MINERALS--1.5%
45,100 Trinity Industries, Inc. 1,741,987
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
GROWTH FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ------------
<C> <S> <C>
COMMON STOCKS--CONTINUED
OFFICE & BUSINESS EQUIPMENT--1.5%
35,200 Cabletron Systems, Inc.(b) $ 1,672,000
------------
OIL & GAS--3.9%
47,100 Mobil Corp.(a) 4,468,612
------------
RECREATIONAL SERVICES--2.3%
92,050 Mattel, Inc. 2,186,188
8,000 Walt Disney Co. 443,000
------------
2,629,188
------------
RETAIL--2.8%
43,700 Walgreen Co.(a) 2,053,900
50,000 Walmart Stores, Inc. 1,187,500
------------
3,241,400
------------
RUBBER & PLASTIC PRODUCTS--1.6%
53,000 Lancaster Colony Corp.(a) 1,841,750
------------
Total Common Stocks
(cost $94,014,271)...... $109,206,363
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- --------------- -------- ------------- ------------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS--4.9%
State Street Bank & Trust Company,
dated 04/28/95, repurchase price
$5,600,566 (U.S. Treasury Note:
$5,495,000, 7.50%, 12/31/96)
$5,598,000 5.50% 05/01/95 $ 5,598,000
------------
Total Repurchase Agreements
(cost $5,598,000)............................... $ 5,598,000
------------
Total Investments
(cost $99,612,271(c))........................... $114,804,363
============
- -----------------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which value
exceeds cost........................................ $ 15,556,784
Gross unrealized loss for investments in which cost
exceeds value....................................... (364,692)
------------
Net unrealized gain.................................. $ 15,192,092
============
- -----------------------------------------------------------------------------------------
</TABLE>
(a) There are common stock rights attached to these securities.
(b) Non-income producing security.
(c) The cost stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
AGGRESSIVE GROWTH FUND
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------ ----------- -----------
<C> <S> <C>
COMMON STOCKS--93.7%
AEROSPACE/DEFENSE--1.5%
8,000 Watkins-Johnson Co. $ 317,000
-----------
AUTOMOBILES & AUTOMOBILE PARTS--4.9%
10,000 Echlin, Inc.(a) 365,000
8,000 Magna International, Inc. 277,000
11,500 Modine Manufacturing Co. 389,562
-----------
1,031,562
-----------
BANKING--2.0%
15,200 Synovus Financial Corp. 313,500
4,000 West One Bancorp. 110,500
-----------
424,000
-----------
BUILDING MATERIALS & CONSTRUCTION--3.2%
19,718 Clayton Homes, Inc. 332,741
9,000 Leggett & Platt, Inc. 346,500
-----------
679,241
-----------
BUSINESS SERVICES--10.0%
7,000 DeVry, Inc.(b) 267,750
12,500 Equifax, Inc. 404,688
14,600 Fiserv, Inc.(b) 386,900
5,800 Omnicom Group 322,625
7,600 Paychex, Inc. 361,950
14,000 Reynolds & Reynolds Co. 371,000
-----------
2,114,913
-----------
CHEMICAL PRODUCTS--2.3%
15,000 Om Group, Inc. 358,125
6,000 RPM, Inc. 118,500
-----------
476,625
-----------
COMPUTER SERVICES/SOFTWARE--13.0%
8,000 Adobe Systems, Inc. 466,000
7,200 Autodesk, Inc. 245,250
7,000 Davidson & Associates, Inc.(b) 238,000
7,000 Fair Isaac & Company, Inc. 323,750
13,000 Keane, Inc.(b) 328,250
12,700 Network General Corp.(b) 331,787
9,000 Parametric Technology Corp.(b) 427,500
16,000 Verifone, Inc.(b) 378,000
-----------
2,738,537
-----------
ELECTRICAL SERVICES--4.1%
10,500 LG&E Energy Corp. 405,563
10,500 Scana Corp. 450,188
-----------
855,751
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------ ----------- -----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
ELECTRONICS & OTHER ELECTRICAL
EQUIPMENT--20.0%
9,200 ADC Telecommunications, Inc.(b) $ 303,600
9,300 Arrow Electronics, Inc.(b) 432,450
7,000 Dionex Corp.(a)(b) 290,500
4,400 KLA Instruments Corp.(a)(b) 272,800
7,500 Linear Technology Corp. 448,125
10,000 Littlefuse, Inc.(b) 338,750
11,250 Molex, Inc. 424,688
13,000 Oak Industries, Inc.(b) 380,250
23,250 Pioneer Standard Electronics, Inc. 453,375
10,000 Symbol Technologies, Inc.(b) 331,250
15,900 VLSI Technology, Inc.(b) 338,869
3,517 Vishay Intertechnology, Inc.(b) 207,943
-----------
4,222,600
-----------
FINANCIAL SERVICES--2.1%
9,000 Sunamerica, Inc. 441,000
-----------
HEALTH & MEDICAL SERVICES--12.8%
8,000 Biomet, Inc.(b) 140,000
7,500 Cardinal Health, Inc. 345,937
4,300 Cordis Corp.(b) 308,525
7,500 Invacare Corp. 296,250
15,000 Manor Care, Inc. 440,625
9,000 Nellcor, Inc.(b) 373,500
5,000 Pacificare Health Systems, Inc.(b) 307,500
6,800 Stryker Corp. 306,850
6,000 Sunrise Medical, Inc.(b) 181,500
-----------
2,700,687
-----------
HOUSEHOLD FURNISHINGS & APPLIANCES--0.3%
3,000 Juno Lighting, Inc.(a) 62,250
-----------
INDUSTRIAL MACHINERY--3.7%
13,200 Danaher Corp. 392,700
10,500 Idex Corp. 350,437
2,000 Watts Industries, Inc. 45,125
-----------
788,262
-----------
INSURANCE SERVICES--1.8%
10,875 Orion Capital Corp.(a) 381,984
-----------
PAPER & FOREST PRODUCTS--2.6%
2,200 Alco Standard Corp. 155,925
19,000 American Management Systems, Inc.(b) 401,375
-----------
557,300
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
AGGRESSIVE GROWTH FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------ ----------- -----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
PUBLISHING--1.0%
6,000 Banta Corp. $ 201,000
-----------
RETAIL--4.0%
10,000 Circuit City Stores, Inc.(a) 258,750
12,656 Dollar General Corp. 294,258
12,000 Gymboree Corp.(b) 282,000
-----------
835,008
-----------
RUBBER & PLASTIC PRODUCTS--1.7%
10,400 Lancaster Colony Corp.(a) 361,400
-----------
TEXTILES--1.2%
6,700 Cintas Corp. 257,950
-----------
TRANSPORTATION/STORAGE--1.5%
13,500 Air Express International Corp. 317,250
-----------
Total Common Stocks
(cost $17,382,509).......... $19,764,320
===========
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- --------------- -------- ------------- -----------
<S> <C> <C> <C>
REPURCHASE AGREEMENTS--13.0%
State Street Bank & Trust Company,
dated 04/28/95, repurchase price
$2,736,254 (U.S. Treasury Note:
$2,685,000, 7.50%, 12/31/96)
$2,735,000 5.50% 05/01/95 $ 2,735,000
-----------
Total Repurchase Agreements
(cost $2,735,000)............................... $ 2,735,000
-----------
Total Investments
(cost $20,117,509(c))........................... $22,499,320
===========
- -----------------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which value
exceeds cost........................................ $ 2,481,411
Gross unrealized loss for investments in which cost
exceeds value....................................... (100,100)
-----------
Net unrealized gain.................................. $ 2,381,311
===========
- -----------------------------------------------------------------------------------------
</TABLE>
(a) There are common stock rights attached to these securities.
(b) Non-income producing security.
(c) The cost for federal income tax purposes is $20,118,009.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ----------
<C> <S> <C>
COMMON STOCKS--79.4%
ARGENTINE PESOS--0.0%
820 Telefonica De Argentina (Utilities) $ 3,558
----------
AUSTRALIAN DOLLARS--2.2%
6,150 Australian Gas Light Co. (Utilities) 20,129
11,000 Australian National Industries (Industrial Machinery) 11,521
2,000 Broken Hill Proprietary Co.
(Mining--Metals/Minerals) 29,093
5,000 Burns Philp & Co., Ltd. (Retail) 12,655
2,000 Coca-Cola Amatil (Food & Beverages) 12,219
1,000 Lend Lease Corp. (Building Materials & Construction) 12,772
3,000 MIM Holdings, Ltd. (Mining--Metals/Minerals) 4,386
3,000 Mayne Nickless, Ltd. (Transportation/Storage) 14,161
4,000 News Corporation, Ltd. (Broadcast Media) 19,434
4,000 Publishing & Broadcasting, Ltd. (Broadcast Media) 11,492
19,000 TNT, Ltd. (Transportation/Storage) 27,086
5,000 Tab Corp. Holdings, Ltd. (Mining--Metals/Minerals)(a) 11,274
5,500 Western Mining Corp. Holdings, Ltd. (Mining--
Metals/Minerals) 31,122
4,000 Woodside Petroleum, Ltd. (Oil & Gas) 16,350
4,000 Woolworths, Ltd. (Retail) 8,699
----------
242,393
----------
AUSTRIAN SCHILLINGS--0.1%
100 Flughafen Wien AG (Transportation/Storage) 4,451
100 Oesterreichische Elektrizitats (Utilities) 6,594
----------
11,045
----------
BELGIAN FRANCS--1.2%
90 Fortis AG (Insurance Services) 9,274
65 Generale Banque (Financial Services) 20,436
190 Kredietbank (Financial Services) 46,484
60 UCB (Chemical Products) 53,207
----------
129,401
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
BRITISH POUNDS STERLING--12.9%
22,000 ASDA Group (Retail) $ 29,022
8,000 Abbey National (Financial Services) 59,974
5,000 Argos (Retail) 32,738
7,000 Argyll Group (Retail) 32,207
1,000 BAA (Transportation/Storage) 7,625
5,000 British Gas (Oil & Gas) 24,212
3,000 British Petroleum (Oil & Gas) 21,598
8,000 Cable & Wireless (Utilities) 51,609
6,743 Cadbury Schweppes (Food & Beverages) 48,598
14,000 Caradon PLC (Building Materials & Construction) 55,856
6,000 Clyde Petroleum (Oil & Gas) 4,585
5,000 Coats Viyella (Textiles) 16,329
3,600 East Midlands Electricity (Utilities) 38,166
1,000 Eastern Group (Utilities) 10,232
2,000 First National Finance Corp. (Financial Services) 2,413
5,000 Glaxo Wellcome (Health & Medical Services) 59,081
9,000 Grand Metropolitan
(Food & Beverages) 57,770
8,000 Guinness (Food & Beverages) 60,489
1,000 Heath (CE) (Insurance Services) 3,861
2,000 Heywood Williams Group (Building Materials &
Construction) 7,963
4,000 Hillsdown Holdings (Food & Beverages) 11,840
6,000 Kingfisher (Retail) 43,147
7,000 Ladbroke Group (Recreational Services) 20,270
4,000 Laing (John) (Building Materials & Construction) 12,870
4,000 London Electricity (Utilities) 41,120
13,400 National Westminster Bank (Financial Services) 116,409
4,000 RTZ Corp. (Mining--Metals/Minerals) 50,901
6,500 Rank Organisation (Recreational Services) 44,337
8,000 Reed International (Broadcast Media) 102,960
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
BRITISH POUNDS STERLING--Continued
3,000 Rolls-Royce (Automobiles & Automobile Parts) $ 8,253
4,000 Sears Holdings (Retail) 6,725
5,000 Shell Transport & Trading Co. (Oil & Gas) 59,202
3,000 Smith (David S.) Holdings (Textiles) 26,786
13,000 Smith Kline Beecham/ S'Kline Beckman (Health & Medical
Services) 99,027
1,000 South Western Electricity (Utilities) 10,698
8,000 T & N (Automobiles & Automobile Parts) 19,434
6,000 Tesco (Retail) 26,979
17,500 Tomkins (Industrial Machinery) 65,878
6,000 United Newspapers (Broadcast Media) 47,780
----------
1,438,944
----------
CANADIAN DOLLARS--0.2%
840 Alcan Aluminium, Ltd. (Mining--Metals/Minerals) 23,733
----------
DANISH KRONER--0.2%
195 Den Danske Bank AB (Financial Services) 11,710
100 Teledanmark (Utilities) 5,215
160 Unidanmark (Financial Services) 7,316
----------
24,241
----------
DEUTSCHE MARK--4.0%
20 AVA Allegemeine Handels-Der Verbr AG (Retail) 7,497
28 Allianz AG (Insurance Services) 51,245
10 Allianz AG Holdings (Warrants) (Financial Services) 8,780
140 Bayer AG (Chemical Products) 34,412
20 Bayerische Motoren Werke AG (Automobiles & Automobile Parts) 10,236
40 Bilfinger & Berger Bauag (Building Materials & Construction) 18,626
20 Buderus AG (Industrial Machinery) 10,769
66 Deutsche Bank AG (Financial Services) 32,341
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
DEUTSCHE MARK--Continued
120 Gehe AG (Health & Medical Services) $ 51,553
90 Hoechst AG (Chemical Products) 19,177
20 Hornbach (Retail) 23,946
10 Hornbach Baumarkt AG (Retail) 6,314
20 Krones AG (Industrial Machinery) 9,515
175 Mannesmann AG (Industrial Machinery) 47,430
36 Rhoen-Klinikum AG (Health & Medical Services) 34,254
60 Schering AG (Chemical Products) 44,482
100 Veba International Finance (Financial Services) 11,821
100 Volkswagen AG (Automobiles & Automobile Parts) 27,860
----------
450,258
----------
FINNISH MARKKAA--0.1%
340 Nokia (AB) OY (Electronics & Other Electrical Equipment) 13,868
----------
FRENCH FRANCS--7.1%
265 Accor (Recreational Services) 30,356
150 Assurances Generales De France (Insurance Services) 4,954
300 Carnaud Metal Box (Building Materials & Construction) 10,626
130 Carrefour (Retail) 65,086
100 Chargeurs SA (Industrial Machinery) 19,905
970 Eaux (Cie Generale Des) (Utilities) 102,053
175 Ecco Ste (Business Services) 23,886
520 Elf Aquitaine (Oil & Gas) 41,475
150 GTM Entrepose (Building Materials & Construction) 12,552
40 L'Oreal (Household Durables) 10,513
270 LVMH Moet-Hennessy Louis Vuitton (Food & Beverages) 51,275
310 Lafarge-Coppee SA (Building Materials & Construction) 24,115
350 Lapeyre (Building Materials & Construction) 22,933
20 Legrand (Electronics & Other Electrical Equipment) 28,923
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
FRENCH FRANCS--(Continued)
150 Peugeot (Automobiles & Automobile Parts) $ 21,601
100 Pinault (Building Materials & Construction) 22,586
150 Pinault Printemps Redoute (Retail) 33,878
300 Poliet (Building Materials & Construction) 26,505
50 Primagaz (Cie Des Gaz Petrole) (Oil & Gas) 9,363
25 Rexel (Retail) 4,113
460 Saint Gobain (Chemical Products) 59,421
90 Societe Generale (Financial Services) 9,871
30 Sodexho (Food & Beverages) 5,648
560 Television Francais (Broadcast Media) 51,069
590 Total (Oil & Gas) 36,813
1,100 Valeo (Automobiles & Automobile Parts)(a) 62,557
----------
792,077
----------
HONG KONG DOLLARS--2.1%
14,000 Great Eagle Holdings (Real Estate) 25,139
12,000 Hutchison Whampoa (Financial Services) 52,086
26,000 Shanghai Petrochemical (Chemical Products) 7,473
9,000 Swire Pacific Co. (Financial Services) 60,167
22,000 Wharf Holdings (Financial Services) 65,935
52,000 Yizheng Chemical Fibre (Chemical Products) 17,298
----------
228,098
----------
ITALIAN LIRE--2.0%
2,100 Assicurazioni Generali Spa (Insurance Services) 50,455
9,000 Banca Fideuram (Financial Services) 10,892
1,000 Danieli & Co. (Building Materials & Construction) 3,211
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
ITALIAN LIRE--(Continued)
1,000 IMI Spa (Financial Services) $ 6,093
4,000 Istituto National Assicurazioni (Insurance Services)(a) 5,376
2,000 Italgas (Societa Italiana II Gas) Spa (Utilities) 5,257
1,000 Rinascente (La) (Retail) 5,522
3,000 SME (Meridionale Di Finanziaria) (Food & Beverages) 7,145
10,000 STET (Utilities) 28,427
4,000 STET (Di Risp Shares) (Utilities) 9,158
3,000 Sasib (Building Materials &
Construction) 6,771
18,000 Telecom Italia Spa (Utilities) 47,904
15,000 Telecom Italia Spa (Di Risp Shares) (Utilities) 31,222
----------
217,433
----------
JAPANESE YEN--20.2%
2,000 Alps Electric Co. (Electronics & Other Electrical
Equipment) 23,092
4,000 Amada Co., Ltd. (Industrial Machinery) 42,757
1,000 Aoyama Trading Co. (Retail) 19,402
4,000 Canon, Inc. (Electronics & Other Electrical Equipment) 66,183
2,000 Citizen Watch Co. (Electronics & Other Electrical
Equipment) 14,355
3,000 Dai Nippon Screen Manufacturing (Electronics & Other
Electrical Equipment)(a) 19,462
1,000 Daifuku Co., Ltd. (Industrial Machinery) 13,094
3,000 Daiichi Pharmaceutical (Health & Medical Services) 48,566
4,000 Daiwa House Industry Co. (Building Materials &
Construction) 66,659
6 East Japan Railway (Transportation/Storage) 31,211
1,000 Fanuc Co., Ltd. (Electronics & Other Electrical
Equipment) 45,233
6,000 Hitachi (Electronics & Other Electrical Equipment) 61,064
4,000 Hitachi Zosen Corp. (Industrial Machinery) 19,188
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
JAPANESE YEN--(Continued)
2,000 Honda Motor Co., Ltd. (Automobiles & Automobile Parts) $ 32,377
2,000 Inax Corp. (Building Materials & Construction) 21,402
2,000 Ishihara Sangyo Kaisha (Chemical Products)(a) 7,928
1,000 Ito-Yokado Co. (Retail) 53,922
1,000 Kawada Kogyo (Mining--Metals/Minerals) 9,582
2,000 Kokuyo Co., Ltd. (Computer Services/Software) 51,422
6,000 Komatsu, Ltd. (Industrial Machinery) 47,708
2,000 Komori Corp. (Industrial Machinery) 49,756
4,000 Kumagai Gumi Co. (Building Materials & Construction) 22,283
4,000 Kuraray Co. (Chemical Products) 47,566
1,000 Kyocera Corp. (Electronics & Other Electrical Equipment) 77,372
3,000 Makita Corp. (Industrial Machinery) 46,423
3,000 Marui Co., Ltd. (Retail) 46,066
4,000 Matsushita Electric Industrial Co. (Household Durables) 67,135
3,000 Mitsubishi Corp. (Electronics & Other Electrical
Equipment) 37,853
10,000 Mitsubishi Heavy Industries, Ltd. (Industrial Machinery) 72,610
3,000 Mitsubishi Paper Mills, Ltd. (Paper & Forest Products) 21,676
6,000 Mitsui Fudosan Co. (Real Estate) 69,849
2,000 Mitsui Petrochemical Industries (Oil & Gas) 18,950
1,000 Murata Manufacturing Co. (Electronics & Other Electrical
Equipment) 40,233
5,000 NEC Corp. (Electronics & Other Electrical Equipment) 55,350
1,000 National House Industries (Building Materials &
Construction) 20,474
2,000 Nippon Hodo Co. (Building Materials & Construction) 34,758
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
JAPANESE YEN--(Continued)
18,000 Nippon Steel Corp. (Mining--Metals/Minerals) $ 71,563
4,000 Nippondenso Co. (Transportation/Storage) 80,467
2,000 Pioneer Electronic Corp. (Household Durables) 42,138
2,000 Sankyo Co. (Health & Medical Services) 48,090
4,000 Sekisui Chemical Co., Ltd. (Building Materials &
Construction) 49,994
3,000 Sekisui House (Building Materials & Construction) 39,638
4,000 Sharp Corp. (Household Durables) 65,706
1,000 Shinetsu Chemical Co., Ltd. (Chemical Products) 19,402
1,000 Sony Corp. (Household Durables) 50,470
6,000 Sumitomo Corp. (Retail) 59,636
5,000 Sumitomo Electric Industries, Ltd. (Mining--Metals/Minerals) 67,849
2,000 Sumitomo Forestry Co., Ltd. (Building Materials &
Construction) 35,472
1,000 TDK Corp. (Household Durables) 45,709
7,000 Teijin (Chemical Products) 39,495
2,000 Tokio Marine & Fire Insurance Co. (Insurance Services) 23,807
1,000 Tokyo Electron (Electronics & Other Electrical Equipment) 31,187
1,000 Tokyo Steel Manufacturing (Mining--Metals/Minerals) 20,950
1,000 Toppan Printing Co. (Business Services) 14,522
1,000 Yurtec Corp. (Building Materials & Construction) 22,140
----------
2,251,196
----------
MALAYSIAN RINGGITS--2.4%
29,000 Affin Holdings Berhad (Financial Services) 40,599
6,000 Aokam Perdana Berhad
(Paper & Forest Products) 26,947
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
MALAYSIAN RINGGITS--(Continued)
3,000 Commerce Asset-Holdings Berhad (Financial Services) $ 5,584
24,000 Renong Berhad (Industrial Machinery) 36,706
5,000 Resort World Berhad (Recreational Services) 26,300
23,000 Technology Resources Industries (Real Estate)(a) 58,628
13,000 United Engineers (Malaysia) Berhad (Industrial Machinery) 74,691
----------
269,455
----------
MEXICAN PESOS--0.2%
2,420 Grupo Embotellador De Mexico (Paper & Forest Products) 13,525
4,200 Tolmex SA De Cv (Building Materials & Construction) 14,018
----------
27,543
----------
NETHERLANDS GUILDERS--8.2%
680 ABN AMRO Holdings NV (Financial Services) 26,147
590 Ahold NV (Retail) 20,292
310 Akzo Nobel NV (Chemical Products) 35,940
1,340 CSM CVA (Food & Beverages) 61,364
15,670 Elsevier NV (Broadcast Media) 171,577
510 Fortis AMEV NV (Insurance Services) 26,935
130 Hagemeyer (Retail) 11,220
1,090 Internationale Nederlanden Groep (Financial Services) 57,428
620 Koninklijke Ptt Nederland (Transportation/Storage) 21,604
190 Nutricia (Verenigde Bedrijven) (Food & Beverages) 11,601
1,330 Polygram NV (Recreational Services) 75,041
1,080 Royal Dutch Petroleum Co. (Oil & Gas) 133,209
420 Unilever NV (Food & Beverages) 56,185
2,540 Wolters Kluwer (Broadcast Media) 206,622
----------
915,165
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
NEW ZEALAND DOLLARS--1.4%
10,000 Carter Holt Harvey (Paper & Forest Products) $ 25,407
2,000 Fernz Corp. (Chemical Products) 7,393
22,000 Fletcher Challenge (Paper & Forest Products) 59,148
7,000 Fletcher Challenge Forest Division (Paper & Forest
Products) 9,786
2,000 Independant Newspapers (New Zealand) (Broadcast Media) 7,259
10,000 New Zealand Telecom (Utilities) 42,008
----------
151,001
----------
NORWEGIAN KRONER--1.3%
330 Bergesen D-Y AS (Transportation/Storage) 7,196
520 Kvaemer Industrier (Industrial Machinery) 23,763
1,590 Norsk Hydro (Energy) 64,630
1,110 Orkla AS (Industrial Machinery) 47,611
370 Saga Petroleum (Oil & Gas) 5,073
----------
148,273
----------
SINGAPORE DOLLARS--2.3%
7,000 DBS Land (Real Estate) 19,290
2,000 Far East-Levingston Shipbuilding (Industrial Machinery) 8,755
3,000 Hong Kong Land Holdings (Real Estate) 4,047
3,000 Jurong Shipyard (Industrial Machinery) 23,036
1,000 Keppel Corp. (Transportation/Storage) 8,109
6,000 Neptune Orient Lines (Transportation/Storage) 6,889
2,000 Overseas Union Bank (Financial Services) 11,554
3,000 Overseas Union Enterprises (Real Estate) 17,438
4,000 Sembawang Corp. (Industrial Machinery) 27,413
3,000 Singapore Airlines (Transportation/Storage) 28,848
4,000 Singapore Land (Real Estate) 25,834
1,000 Singapore Press Holdings (Broadcast Media) 17,223
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
SINGAPORE DOLLARS--Continued
11,000 United Industrial Corp. (Real Estate) $ 10,262
4,000 United Overseas Bank (Financial Services) 41,622
1,000 United Overseas Bank (Warrants) (Financial Services) 5,239
----------
255,559
----------
SPANISH PESETAS--1.8%
110 Banco De Popular Espanol (Financial Services) 15,034
500 Banco De Santander SA (Financial Services) 18,262
1,660 Centros Comerciales Pryca (Retail) 29,404
1,020 Empresa Nacional De Elec(Endesa) (Utilities)(a) 48,236
180 Fomento De Construcciones Y Constra (Utilities) 16,527
330 Gas Natural Sdg SA (Utilities) 32,981
1,380 Repsol (Oil & Gas) 43,956
----------
204,400
----------
SWEDISH KRONOR--1.8%
240 Asea AB (Electronics & Other Electrical Equipment) 20,238
2,200 Astra AB (Health & Medical Services) 63,215
1,250 Atlas Copco AB (Industrial Machinery) 17,195
690 Electrolux Co. (Household Durables) 35,214
290 Esselte (Broadcast Media) 3,790
340 Hennes & Mauritz AB (Retail) 22,964
290 Sandvik AB (A Shares) (Industrial Machinery) 5,406
1,060 Sandvik AB (B Shares) (Industrial Machinery) 19,685
200 Stora Kopparbergs Bergsl AB (Paper & Forest Products) 13,426
----------
201,133
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
SWISS FRANCS--3.1%
91 BBC AG Brown, Boveri & Cie (Electronics & Other
Electrical Equipment) $ 89,785
48 CS Holdings (Financial Services) 20,058
30 Ciba Geigy AG (Chemical Products) 20,518
75 Nestle SA (Food & Beverages) 73,214
6,885 Roche Holdings AG (Health & Medical Services) 48,050
60 Sandoz AG (Health & Medical Services) 39,204
100 Schweizerischer Bankverein (Financial Services) 32,888
28 Union Bank of Switzerland (Financial Services) 25,745
----------
349,462
----------
THAILAND BAHT--1.1%
500 Advanced Information Services (Alien Market) (Computer
Services/Software) 7,319
200 Advanced Information Services (Local Market) (Computer
Services/Software) 2,944
2,000 Bangkok Bank (Financial Services) 19,354
4,300 Bank of Ayudhya (Financial Services) 19,232
400 Land & House Public Co. (Real Estate) 7,058
400 Shinawatra Computer & Communication Co. (Computer
Services/Software) 8,945
400 Siam Cement Public Co. (Building Materials &
Construction) 22,997
1,500 Siam Commercial Bank Public Co. (Financial Services) 12,686
2,000 Thai Farmers Bank Public (Financial Services) 17,565
700 United Communication Industries (Utilities) 10,246
----------
128,346
----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
------- ----------- ----------
<C> <S> <C>
COMMON STOCKS--CONTINUED
UNITED STATES DOLLARS--3.5%
310 Baesa (Buenos Aires Ebotelladora) (Food & Beverages) $ 8,525
420 Banco De Galicia Buenos Aires SA (Financial Services) 6,773
1,700 Brazil Fund, Inc. (Financial Services) 44,625
24,310 CIFRA SA De Cv (Retail) 36,951
790 Chile Fund (Financial Services) 37,426
280 Chilectra SA (Utilities) 14,233
610 Grupo Televisa (Broadcast Media) 12,276
14,000 Hong Kong Land Holdings (Real Estate) 26,320
440 Panamerica Beverages (Food & Beverages) 11,440
70 Repsol SA (Oil & Gas) 2,240
1,000 Samsung Electronics (Electronics & Other Electrical
Equipment) 50,000
1,140 Telecomunicacoes Brasilera (Utilities) 40,772
880 Telefonica De Argentina (Utilities) 20,680
1,970 Telefonos De Mexico SA De Cv (Utilities) 59,593
840 YPF Sociedad Anonima (Oil & Gas) 17,010
----------
388,864
----------
Total Common Stocks
(cost $8,692,324)....................................... $8,865,446
----------
PREFERRED STOCKS--0.3%
AUSTRALIAN DOLLARS--0.2%
2,000 News Corporation, Ltd. (Broadcast Media) $ 8,830
4,000 TNT, Ltd. (Transportation/Storage) 6,139
----------
14,969
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES DESCRIPTION VALUE
---------- ----------- -----------
<C> <S> <C> <C>
PREFERRED STOCKS--CONTINUED
AUSTRIAN SCHILLINGS--0.0%
70 Creditanstalt Bankverein
(Financial Services) $ 4,006
BRITISH POUNDS STERLING--0.0%
1,000 First National Finance Corp.
(Financial Services) 2,091
DEUTSCHE MARK--0.1%
190 Fielmann AG
(Health & Medical Services) 7,765
-----------
Total Preferred Stocks
(cost $26,236)............... $ 28,831
-----------
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE
---------- -------- ----------------
<C> <S> <C> <C>
CORPORATE OBLIGATIONS--0.0%
BELGIAN FRANCS--0.0%
Kredietbank
$ 1,000 5.75% 11/30/03 $ 2,531
-----------
Total Corporate Obligations
(cost $2,557)................ $ 2,531
-----------
REPURCHASE AGREEMENTS--43.2%
State Street Bank & Trust Company
dated 04/28/95, repurchase price
$4,831,213 (U.S. Treasury Note:
$4,740,000, 7.50%, 12/31/96)
$4,829,000 5.50% 05/01/95 $ 4,829,000
-----------
Total Repurchase Agreements
(cost $4,829,000)............ $ 4,829,000
-----------
Total Investments
(cost $13,550,117(b))........ $13,725,808
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON AND PREFERRED STOCK INDUSTRY
CONCENTRATIONS
- ---------------------------------------------------
<S> <C>
Financial Services 8.9%
Industrial Machinery 6.6%
Utilities 6.2%
Electronics & Other Electrical Equipment 6.0%
Broadcast Media 5.9%
Retail 5.7%
Building Materials & Construction 5.3%
Health & Medical Services 4.5%
Food & Beverages 4.3%
Oil & Gas 3.9%
Chemical Products 3.7%
Mining--Metals/Minerals 2.9%
Household Durables 2.8%
Real Estate 2.4%
Transportation/Storage 2.2%
Recreational Services 1.8%
Automobiles & Automobile Parts 1.6%
Insurance Services 1.6%
Paper & Forest Products 1.5%
Computer Services/Software 0.6%
Energy 0.6%
Textiles 0.4%
Business Services 0.3%
- ---------------------------------------------------
TOTAL COMMON AND PREFERRED STOCKS 79.7%
- ---------------------------------------------------
</TABLE>
<TABLE>
- -------------------------------------------------------------------------------
<S> <C>
Federal Income Tax Information:
Gross unrealized gain for investments in which value exceeds
cost.......................................................... $ 388,577
Gross unrealized loss for investments in which cost exceeds
value......................................................... (222,707)
---------
Net unrealized gain ........................................... $ 165,870
=========
- --------------
</TABLE>
(a) Non-income producing security.
(b) The cost for federal income tax purposes is $13,559,938.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
NATIONAL TAX-FREE BOND FUND
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- --------- -------- -------- ----------
<S> <C> <C> <C>
MUNICIPAL BOND OBLIGATIONS--96.7%
FLORIDA--3.5%
Florida State Board of Education Capital
Outlay GO Bonds Series A (AA/Aa)
$200,000 5.25% 01/01/04 $ 198,476
----------
GEORGIA--3.5%
Georgia State GO Bonds Series D
(AA+/Aaa)
200,000 5.40 11/01/10 194,882
----------
ILLINOIS--4.5%
Evanston GO Bonds (Aaa)
250,000 5.30 12/01/99 254,347
----------
IOWA--8.7%
Iowa City Sewer Revenue Bonds (AMBAC)
(AAA/Aaa)
250,000 6.00 07/01/08 251,418
Polk County GO Bonds (FGIC) (AAA/Aaa)
250,000 5.50 12/01/10 239,645
----------
491,063
----------
KENTUCKY--3.5%
Louisville Water Works Board Water
System Revenue Bonds (Aa/Aa)
200,000 5.63 11/15/06 199,576
----------
MARYLAND--4.4%
Maryland State GO Bonds (AAA/Aaa)
250,000 4.80 04/15/01 246,187
----------
MICHIGAN--7.1%
Greenville Public Schools GO Bonds (MBIA)
(AAA/Aaa)
200,000 5.75 05/01/07 201,456
Michigan State Hospital Financing Authority (Manufacturers National
Detroit LOC)
(A/A-1/A1/VMIG1)
200,000 4.55(a) 06/01/01 200,000
----------
401,456
----------
NEBRASKA--3.6%
Nebraska Public Power District Revenue Bonds Series A (A+/A1)
200,000 6.00 01/01/06 205,962
----------
NEVADA--3.5%
Clark County School District GO Bonds
(FGIC) (AAA/Aaa)
200,000 5.30 05/01/04 195,804
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- --------- -------- -------- ----------
<S> <C> <C> <C>
MUNICIPAL BOND OBLIGATIONS--CONTINUED
NEW MEXICO--3.6%
Albuquerque Gross Receipts Series A
Revenue Bonds (Canadian Imperial
Bank LOC) (AA/A-1+/Aa3/VMIG1)
$200,000 4.55%(a) 07/01/22 $ 200,000
----------
NORTH CAROLINA--3.6%
Winston-Salem Water & Sewer System
Revenue Bonds (Wachovia Bank SPA)
(AA+/A-1+/Aa/VMIG1)
200,000 4.50(a) 06/01/14 200,000
----------
OKLAHOMA--3.2%
Tulsa GO Bonds (AA/Aa)
185,000 5.40 06/01/07 182,253
----------
SOUTH CAROLINA--4.3%
South Carolina State Capital Improvement
GO Bonds Series A (AA+/Aaa)
250,000 5.00 03/01/05 244,667
----------
TEXAS--10.7%
San Antonio GO Bonds (AA/Aa)
200,000 5.20 08/01/02 199,862
Texas A&M University Revenue Bonds
(AA/Aa)
200,000 5.55 05/15/01 203,784
Texas State GO Bonds Series A (AA/Aa)
200,000 5.65 10/01/08 199,244
----------
602,890
----------
UTAH--8.9%
Alpine School District GO Bonds
(FGIC-TCRS) (AAA/Aaa)
250,000 5.40 03/15/05 247,723
Salt Lake City School District Revenue
Bonds Series A (Aaa)
250,000 5.80 03/01/07 253,338
----------
501,061
----------
VIRGINIA--3.5%
Virginia Beach GO Bonds (AA/Aa)
200,000 5.20 07/15/06 195,342
----------
WASHINGTON--13.0%
King County School District #412 GO
Bonds (MBIA) (AAA/Aaa)
250,000 5.75 06/01/08 247,275
Snohomish County GO Bonds (MBIA)
(AAA/Aaa)
250,000 5.75 12/01/10 243,225
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
NATIONAL TAX-FREE BOND FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
- --------- -------- -------- ----------
<S> <C> <C> <C>
MUNICIPAL BOND OBLIGATIONS--CONTINUED
WASHINGTON--Continued
Washington State GO Bonds
Series DD-12 & CC-9 (AA/Aa)
$250,000 5.38% 03/01/08 $ 240,895
----------
731,395
----------
WISCONSIN--3.6%
Wisconsin State GO Bonds Series 3
(AA/Aa)
200,000 5.25 11/01/02 200,242
----------
Total Municipal Bond
Obligations
(cost $5,466,096)............................ $5,445,603
----------
REPURCHASE AGREEMENTS--6.3%
State Street Bank & Trust Company,
dated 04/28/95, repurchase price
$357,164 (U.S. Treasury Note:
$355,000, 7.50%, 12/31/96)
$357,000 5.50% 05/01/95 $ 357,000
----------
Total Repurchase Agreements
(cost $357,000).............................. $ 357,000
----------
Total Investments
(cost $5,823,096(b))......................... $5,802,603
==========
</TABLE>
<TABLE>
- ------------------------
<S> <C>
Federal Income Tax Information:
Gross unrealized gain for investments
in which value exceeds cost.................. $ 9,884
Gross unrealized loss for investments
in which cost exceeds value.................. (30,377)
--------
Net unrealized loss........................... $(20,493)
========
- ------------------------
</TABLE>
(a) Variable rate security. Coupon rate disclosed is that which is in effect
at April 30, 1995.
(b) The cost stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
INVESTMENT ABBREVIATIONS:
AMBAC--Insured by American Municipal Bond Assurance Corporation
FGIC --Insured by Financial Guaranty Insurance Company
GO --General Obligation
LOC --Letter of Credit
MBIA --Insured by Municipal Bond Investors Assurance Corporation
SPA --Standby Purchase Agreement
TCRS --Transferable Custodial Receipts
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
MISSOURI TAX-FREE BOND FUND
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
--------- -------- -------- ----------
<S> <C> <C> <C>
MISSOURI MUNICIPAL BOND OBLIGATIONS--88.7%
Clay County School District#40 GO Bonds
(CGIC) (AAA/Aaa)
$150,000 6.00% 03/01/14 $ 150,800
Columbia GO Bonds (AA/Aa)
150,000 4.50 10/01/96 150,358
Columbia Special Revenue Bonds (Toronto
Dominion Bank LOC) (Aa2/VMIG1)
200,000 4.60(a) 06/01/08 200,000
Hazelwood School District GO Bonds (Aa)
150,000 5.15 03/01/04 149,358
Jackson County School District GO Bonds
(A1)
150,000 5.50 03/01/07 150,081
Joplin School District GO Bonds (FGIC)
(AAA/Aaa)
150,000 5.63 03/01/13 145,154
Kansas City GO Bonds (AA/Aa)
150,000 5.75 10/01/09 149,698
Missouri State Environmental Improvement
& Energy Resources Authority Water Pollution
Control Series A (Aa)
150,000 5.25 07/01/02 149,547
Missouri State GO Bonds (AAA/Aaa)
205,000 5.70 11/01/02 212,407
Missouri State GO Bonds Series A (AAA/Aaa)
300,000 6.00 04/01/99 312,882
300,000 6.00 04/01/00 314,484
Missouri State Health & Educational Facility
Revenue Bonds (Barnes-Jewish Inc.)
(AA/Aa)
150,000 6.00 05/15/11 150,456
Missouri State Health & Educational Facility
Revenue Bonds Series B (Health Midwest)
(MBIA) (AAA/Aaa)
150,000 6.10 06/01/11 151,675
Missouri State Office Building Special Obligation Revenue Bonds (AA/Aa)
150,000 5.50 12/01/98 153,305
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL INTEREST MATURITY
AMOUNT RATE DATE VALUE
--------- -------- -------- ----------
<S> <C> <C> <C>
MISSOURI MUNICIPAL BOND OBLIGATIONS--CONTINUED
Sikeston Electric Revenue Bonds (MBIA)
(AAA/Aaa)
$150,000 5.00% 06/01/96 $ 150,505
Springfield Public Utilities COP (AMBAC)
(AAA/Aaa)
150,000 5.20 12/15/03 146,635
Springfield School District GO Bonds
Series A (MBIA) (AAA/Aaa)
150,000 5.25 03/01/11 139,318
St. Charles County Community College
GO Bonds (AMBAC) (AAA/Aaa)
150,000 4.65 02/15/98 149,526
St. Charles School District GO Bonds
Series A (AMBAC) (AAA/Aaa)
150,000 5.75 03/01/11 148,910
St. Louis County School District GO Bonds
(AA/Aa)
150,000 5.38 02/15/10 144,435
St. Louis Water Revenue Bonds (FGIC)
(AAA/Aaa)
150,000 5.85 07/01/05 154,266
St. Peters GO Bonds (A1)
150,000 5.80 01/01/10 149,840
----------
Total Missouri Municipal Bond Obligations
(cost $3,723,711)............................ $3,723,640
----------
REPURCHASE AGREEMENTS--7.2%
State Street Bank & Trust Company,
dated 04/28/95, repurchase price
$303,139 (U.S. Treasury Note:
$300,000, 7.50%, 12/31/96)
$303,000 5.50% 05/01/95 $ 303,000
----------
Total Repurchase Agreements
(cost $303,000).............................. $ 303,000
----------
Total Investments
(cost $4,026,711(b))......................... $4,026,640
==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
MISSOURI TAX-FREE BOND FUND--(CONTINUED)
APRIL 30, 1995
(UNAUDITED)
<TABLE>
- -----------------------------------------------
<S> <C>
Federal Income Tax Information:
Gross unrealized gain for investments
in which value exceeds cost......... $ 7,990
Gross unrealized loss for investments
in which cost exceeds value......... (8,061)
-------
Net unrealized loss.................. $ (71)
=======
- -----------------------------------------------
</TABLE>
(a) Variable rate security. Coupon rate disclosed is that which is in effect at
April 30,1995.
(b) The cost stated also represents aggregate cost for federal income tax
purposes.
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
INVESTMENT ABBREVIATIONS:
AMBAC--Insured by American Municipal Bond Assurance Corporation
CGIC --Insured by Capital Guaranty Insurance Corporation
COP --Certificates of Participation
FGIC --Insured by Financial Guaranty Insurance Company
GO --General Obligation
MBIA --Insured by Municipal Bond Investors Assurance Corporation
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
THE COMMERCE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SHORT-TERM
GOVERNMENT BOND
FUND FUND
----------- -----------
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $16,002,540, $83,102,452, $34,309,259,
$99,612,271, $20,117,509, $13,550,117, $5,823,096,
and $4,026,711, respectively)........................ $16,326,120 $85,563,066
Cash.................................................. 733 559
Receivables:
Investment securities sold............................ -- --
Interest.............................................. 278,158 1,118,600
Dividends............................................. -- --
Fund shares sold...................................... 87,196 148,440
Deferred organization expenses, net................... 45,161 45,161
Other................................................. 3,463 3,103
----------- -----------
Total assets......................................... 16,740,831 86,878,929
----------- -----------
LIABILITIES:
Payables:
Investment securities purchased....................... -- 988,313
Fund shares redeemed.................................. 108,875 1,072,951
Dividends and distributions........................... 7,066 14,933
Advisory fees......................................... 4,371 34,618
Administration fees................................... 2,185 10,386
Accrued expenses and other liabilities................ 28,932 85,854
----------- -----------
Total liabilities.................................... 151,429 2,207,055
----------- -----------
NET ASSETS:
Paid-in capital....................................... 16,171,211 81,980,939
Accumulated undistributed net investment income
(loss)............................................... -- --
Accumulated net realized gain (loss) on investment
transactions......................................... 94,611 230,321
Accumulated net realized foreign currency gain........ -- --
Net unrealized gain (loss) on investments............. 323,580 2,460,614
Net unrealized gain on translation of assets and
liabilities denominated in foreign currencies........ -- --
----------- -----------
Net assets........................................... $16,589,402 $84,671,874
=========== ===========
Net asset value per share
(net assets/shares outstanding)...................... $ 18.42 $ 18.62
----------- -----------
Maximum public offering price per share (NAV per share
X 1 .0363)........................................... $ 19.09 $ 19.30
----------- -----------
SHARES OUTSTANDING:
Total shares outstanding, no par value (unlimited
number of shares authorized)......................... 900,530 4,548,251
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE INTERNATIONAL NATIONAL MISSOURI
BALANCED GROWTH GROWTH EQUITY TAX-FREE TAX-FREE
FUND FUND FUND FUND BOND FUND BOND FUND
----------- ------------ ----------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$37,423,710 $114,804,363 $22,499,320 $13,725,808 $5,802,603 $4,026,640
818 139 973 90 156 664
2,143,112 2,748,810 432,569 -- -- --
180,756 2,566 1,254 2,213 73,154 49,764
15,165 113,507 5,721 28,974 -- --
12,385 181,446 462,372 157,916 -- 101,930
45,161 45,161 45,161 45,161 51,447 51,447
2,667 7,297 1,271 32,778 3,911 3,907
----------- ------------ ----------- ----------- ---------- ----------
39,823,774 117,903,289 23,448,641 13,992,940 5,931,271 4,234,352
----------- ------------ ----------- ----------- ---------- ----------
2,497,642 3,737,447 2,302,313 2,764,499 256,799 --
4,269 138,257 -- -- -- --
-- -- -- 3,707 19,857 14,255
22,843 68,111 11,805 6,035 2,217 972
4,568 13,622 2,361 1,005 665 486
43,508 108,882 33,519 50,385 21,975 21,232
----------- ------------ ----------- ----------- ---------- ----------
2,572,830 4,066,319 2,349,998 2,825,631 301,513 36,945
----------- ------------ ----------- ----------- ---------- ----------
33,803,262 97,991,118 18,316,122 10,998,450 5,650,251 4,198,469
104,338 33,564 (21,883) 16,094 -- --
228,893 620,196 422,593 (34,966) -- (991)
-- -- -- 1,442 -- --
3,114,451 15,192,092 2,381,811 (142,210) (20,493) (71)
-- -- -- 328,499 -- --
----------- ------------ ----------- ----------- ---------- ----------
$37,250,944 $113,836,970 $21,098,643 $11,167,309 $5,629,758 $4,197,407
=========== ============ =========== =========== ========== ==========
$ 19.76 $ 20.98 $ 21.59 $ 18.05 $ 17.95 $ 18.01
----------- ------------ ----------- ----------- ---------- ----------
$ 20.48 $ 21.74 $ 22.37 $ 18.71 $ 18.60 $ 18.66
----------- ------------ ----------- ----------- ---------- ----------
1,885,451 5,425,572 977,204 618,570 313,699 233,091
=========== ============ =========== =========== ========== ==========
</TABLE>
27
<PAGE>
THE COMMERCE FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED APRIL 30, 1995 (a)
(UNAUDITED)
<TABLE>
<CAPTION>
SHORT-TERM
GOVERNMENT BOND
FUND FUND
---------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Interest................................................. $489,239 $2,528,934
Dividends (b)............................................ -- --
-------- ----------
Total income............................................ 489,239 2,528,934
-------- ----------
EXPENSES:
Advisory fees (c)........................................ 20,558 155,940
Administration fees...................................... 10,279 46,782
Transfer agent fees...................................... 7,405 12,196
Custodian fees........................................... 9,801 11,282
Professional fees........................................ 4,835 21,997
Trustee fees............................................. 653 3,049
Registration fees........................................ 4,835 19,514
Amortization of deferred organization expenses........... 3,833 3,833
Other.................................................... 4,879 21,299
-------- ----------
Total expenses.......................................... 67,078 295,892
Less--Expenses reimbursable by Advisor................... 20,478 21,438
-------- ----------
Net expenses............................................ 46,600 274,454
-------- ----------
Net investment income (loss)............................ 442,639 2,254,480
-------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND
FOREIGN CURRENCY TRANSACTIONS:
Net realized gain (loss) on investment transactions...... 94,611 230,321
Net realized gain from foreign currency related
transactions............................................ -- --
Net change in unrealized gain (loss) on investments...... 323,580 2,460,614
Net change in unrealized gain on translation of assets
and liabilities denominated in foreign currencies....... -- --
-------- ----------
Net realized and unrealized gain (loss) on investments
and foreign currency transactions..................... 418,191 2,690,935
-------- ----------
Net increase in net assets resulting from operations... $860,830 $4,945,415
======== ==========
</TABLE>
- -------
(a) The Short-Term Government, Bond, Balanced, Growth, Aggressive Growth, and
International Equity Funds commenced operations on December 12, 1994; the
National Tax-Free Bond Fund and the Missouri Tax-Free Bond Fund commenced
operations on February 21, 1995.
(b) For the Aggressive Growth and International Equity Funds, amount is net of
$144 and $5,941 in foreign withholding taxes, respectively.
(c) During the period ended April 30, 1995, the Advisor waived fees of
$13,706, $36,116, $12,523, and $1,377 for the Short-Term Government,
Balanced, International Equity, and Missouri Tax-Free Bond Funds,
respectively.
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE INTERNATIONAL NATIONAL MISSOURI
BALANCED GROWTH GROWTH EQUITY TAX-FREE TAX-FREE
FUND FUND FUND FUND BOND FUND BOND FUND
---------- ----------- ---------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C>
$ 670,674 $ 648,902 $ 26,626 $ 33,290 $ 50,592 $38,033
90,816 207,295 47,361 31,035 -- --
---------- ----------- ---------- -------- -------- -------
761,490 856,197 73,987 64,325 50,592 38,033
---------- ----------- ---------- -------- -------- -------
108,347 302,844 46,098 18,785 4,680 2,065
21,669 60,569 9,220 3,131 1,404 1,033
8,712 13,939 7,405 6,752 3,545 3,409
12,066 12,022 13,764 32,494 7,036 7,445
9,452 27,878 4,835 2,527 2,373 1,937
1,307 3,920 653 348 327 273
8,015 24,175 5,401 3,398 3,164 2,782
3,833 3,833 3,833 3,833 2,018 2,018
9,496 26,742 4,661 2,523 2,619 2,453
---------- ----------- ---------- -------- -------- -------
182,897 475,922 95,870 73,791 27,166 23,415
19,654 19,638 -- 33,393 19,210 18,941
---------- ----------- ---------- -------- -------- -------
163,243 456,284 95,870 40,398 7,956 4,474
---------- ----------- ---------- -------- -------- -------
598,247 399,913 (21,883) 23,927 42,636 33,559
---------- ----------- ---------- -------- -------- -------
228,893 620,196 422,593 (34,966) -- (991)
-- -- -- 1,442 -- --
3,114,451 15,192,092 2,381,811 (142,210) (20,493) (71)
-- -- -- 328,499 -- --
---------- ----------- ---------- -------- -------- -------
3,343,344 15,812,288 2,804,404 152,765 ( 20,493) (1,062)
---------- ----------- ---------- -------- -------- -------
$3,941,591 $16,212,201 $2,782,521 $176,692 $ 22,143 $32,497
========== =========== ========== ======== ======== =======
</TABLE>
29
<PAGE>
THE COMMERCE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED APRIL 30, 1995 (a)
(UNAUDITED)
<TABLE>
<CAPTION>
SHORT-TERM
GOVERNMENT BOND
FUND FUND
----------- ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss)...................... $ 442,639 $ 2,254,480
Net realized gain (loss) on investment
transactions..................................... 94,611 230,321
Net realized gain from foreign currency related
transactions..................................... -- --
Net change in unrealized gain (loss) on invest-
ments............................................ 323,580 2,460,614
Net change in unrealized gain on translation of
assets and liabilities denominated in foreign
currencies....................................... -- --
----------- ------------
Net increase in net assets resulting from
operations...................................... 860,830 4,945,415
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income........................ (442,639) (2,254,480)
----------- ------------
Total distributions to shareholders.............. (442,639) (2,254,480)
----------- ------------
FROM SHARE TRANSACTIONS:
Net proceeds from sale of shares.................. 20,422,560 92,316,307
Reinvestment of dividends and distributions....... 430,729 2,230,497
Cost of shares redeemed........................... (4,682,078) (12,565,865)
----------- ------------
Net increase in net assets resulting from share
transactions.................................... 16,171,211 81,980,939
----------- ------------
Total increase................................... 16,589,402 84,671,874
NET ASSETS:
Beginning of period............................... -- --
----------- ------------
End of period..................................... $16,589,402 $ 84,671,874
=========== ============
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS)...................... $ -- $ --
=========== ============
SUMMARY OF SHARE TRANSACTIONS:
Sold.............................................. 1,132,090 5,112,486
Issued on reinvestment of dividends and
distributions.................................... 23,579 121,496
Redeemed.......................................... (255,139) (685,731)
----------- ------------
Increase (decrease) in shares outstanding......... 900,530 4,548,251
=========== ============
</TABLE>
- -------
(a) The Short-Term Government, Bond, Balanced, Growth, Aggressive Growth, and
International Equity Funds commenced operations on December 12, 1994; the
National Tax-Free Bond and the Missouri Tax-Free Bond Funds commenced
operations on February 21, 1995.
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
<TABLE>
<CAPTION>
AGGRESSIVE INTERNATIONAL NATIONAL MISSOURI
BALANCED GROWTH GROWTH EQUITY TAX-FREE TAX-FREE
FUND FUND FUND FUND BOND FUND BOND FUND
----------- ------------ ------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 598,247 $ 399,913 $ (21,883) $ 23,927 $ 42,636 $ 33,559
228,893 620,196 422,593 (34,966) -- (991)
-- -- -- 1,442 -- --
3,114,451 15,192,092 2,381,811 (142,210) (20,493) (71)
-- -- -- 328,499 -- --
----------- ------------ ------------- ----------- ---------- ----------
3,941,591 16,212,201 2,782,521 176,692 22,143 32,497
----------- ------------ ------------- ----------- ---------- ----------
(493,909) (366,349) -- (7,833) (42,636) (33,559)
----------- ------------ ------------- ----------- ---------- ----------
(493,909) (366,349) -- (7,833) (42,636) (33,559)
----------- ------------ ------------- ----------- ---------- ----------
40,916,794 110,458,082 19,803,658 13,097,785 5,913,917 4,437,197
493,908 364,619 -- 7,832 1,419 2,055
(7,607,440) (12,831,583) (1,487,536) (2,107,167) (265,085) (240,783)
----------- ------------ ------------- ----------- ---------- ----------
33,803,262 97,991,118 18,316,122 10,998,450 5,650,251 4,198,469
----------- ------------ ------------- ----------- ---------- ----------
37,250,944 113,836,970 21,098,643 11,167,309 5,629,758 4,197,407
-- -- -- -- -- --
----------- ------------ ------------- ----------- ---------- ----------
$37,250,944 $113,836,970 $ 21,098,643 $11,167,309 $5,629,758 $4,197,407
=========== ============ ============= =========== ========== ==========
$ 104,338 $ 33,564 $ (21,883) $ 16,094 $ -- $ --
=========== ============ ============= =========== ========== ==========
2,263,461 6,069,721 1,049,919 739,479 328,296 246,326
25,806 18,286 -- 435 79 114
(403,816) (662,435) (72,715) (121,344) (14,676) (13,349)
----------- ------------ ------------- ----------- ---------- ----------
1,885,451 5,425,572 977,204 618,570 313,699 233,091
=========== ============ ============= =========== ========== ==========
</TABLE>
31
<PAGE>
THE COMMERCE FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING FOR THE PERIOD ENDED APRIL 30, 1995 (a)
(UNAUDITED)
<TABLE>
<CAPTION>
DISTRIBUTIONS TO
INCOME FROM INVESTMENT OPERATIONS SHAREHOLDERS
---------------------------------------------------- ------------------------
NET
NET REALIZED AND
REALIZED UNREALIZED GAIN NET NET
AND ON TOTAL INCREASE ASSET
NET ASSET NET UNREALIZED FOREIGN INCOME TOTAL (DECREASE) VALUE,
VALUE, INVESTMENT GAIN CURRENCY FROM FROM NET DISTRIBUTIONS IN NET END
BEGINNING INCOME (LOSS) ON RELATED INVESTMENT INVESTMENT TO ASSET OF
OF PERIOD (LOSS) INVESTMENTS(d) TRANSACTIONS(d) OPERATIONS INCOME SHAREHOLDERS VALUE PERIOD
--------- ---------- -------------- --------------- ---------- ---------- ------------- ---------- ------
SHORT-TERM GOVERNMENT FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Period ended: 4/30/95 $18.00 $ 0.46 $ 0.42 $ -- $0.88 $(0.46) $(0.46) $ 0.42 $18.42
BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 18.00 0.51 0.62 -- 1.13 (0.51) (0.51) 0.62 18.62
BALANCED FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 18.00 0.32 1.70 -- 2.02 (0.26) (0.26) 1.76 19.76
GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 18.00 0.08 2.97 -- 3.05 (0.07) (0.07) 2.98 20.98
AGGRESSIVE GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 18.00 (0.02) 3.61 -- 3.59 -- -- 3.59 21.59
INTERNATIONAL EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 18.00 0.06 (0.03) 0.05 0.08 (0.03) (0.03) 0.05 18.05
NATIONAL TAX-FREE BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 18.00 0.16 (0.05) -- 0.11 (0.16) (0.16) (0.05) 17.95
MISSOURI TAX-FREE BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 18.00 0.17 0.01 -- 0.18 (0.17) (0.17) 0.01 18.01
<CAPTION>
RATIOS ASSUMING
NO WAIVER OF
FEES OR EXPENSE
REIMBURSEMENTS
---------------------------
RATIO RATIO
RATIO OF NET OF NET
OF NET INVESTMENT NET RATIO INVESTMENT
EXPENSES INCOME ASSETS AT OF INCOME
TO AVERAGE (LOSS) PORTFOLIO END EXPENSES (LOSS) TO
TOTAL NET TO AVERAGE TURNOVER OF PERIOD TO AVERAGE AVERAGE
RETURN(b) ASSETS(c) NET ASSETS(c) RATE (IN 000'S) NET ASSETS(c) NET ASSETS(c)
--------- ---------- ------------- --------- ---------- ------------- -------------
SHORT-TERM GOVERNMENT FUND
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Period ended: 4/30/95 4.92% 0.68% 6.46% 111% $ 16,589 1.18% 5.96%
BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 6.38 0.88 7.23 27 84,672 0.95 7.16
BALANCED FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 11.19 1.13 4.14 36 37,251 1.52 3.75
GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 16.95 1.13 0.99 12 113,837 1.18 0.94
AGGRESSIVE GROWTH FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 19.94 1.56 (0.36) 31 21,099 1.56 (0.36)
INTERNATIONAL EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 0.44 1.94 1.15 27 11,167 4.14 (1.05)
NATIONAL TAX-FREE BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 0.58 0.85 4.56 11 5,630 2.91 2.50
MISSOURI TAX-FREE BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------------
Period ended: 4/30/95 0.98 0.65 4.87 21 4,197 3.60 1.92
</TABLE>
- -------------
(a) For the period from commencement of operations to April 30, 1995. The
Short-Term Government, Bond, Balanced, Growth, Aggressive Growth and
International Equity Funds commenced operations on December 12, 1994; the
National Tax-Free Bond and Missouri Tax-Free Bond Funds commenced
operations on February 21, 1995.
(b) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no
sales charges. Total return would be reduced if a sales charge were taken
into account.
(c) Annualized.
(d) Includes the balancing effect of calculating per share amounts.
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1995
(UNAUDITED)
1. ORGANIZATION
The Commerce Funds (the "Trust") is a Delaware business trust registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end, management investment company. The Trust consists of eight
portfolios (individually, a "Fund" and collectively, the "Funds"): the Short
Term Government Fund, Bond Fund, Balanced Fund, Growth Fund, Aggressive Growth
Fund, International Equity Fund, National Tax-Free Bond Fund and Missouri Tax-
Free Bond Fund. Each Fund is classified as a diversified management investment
company under the 1940 Act, other than the Missouri Tax-Free Bond Fund, which
is classified as a non-diversified Fund under the 1940 Act. The National Tax-
Free Bond Fund and the Missouri Tax-Free Bond Fund commenced investment
operations on February 21, 1995. All other Funds commenced investment
operations on December 12, 1994.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds which are in conformity with those generally accepted in
the investment company industry.
A. Investment Valuation
Investments in securities traded on a U.S. exchange or the NASDAQ system are
valued at their last sale or closing price on the principal exchange on which
they are traded or NASDAQ, on the valuation day; if no sale occurs, securities
traded on a U.S. exchange or NASDAQ are valued at the mean between the closing
bid and asked prices. The value of a Fund's portfolio securities that are
traded on stock exchanges outside the U.S. are based upon the price on the
exchange as of the close of business of the exchange immediately preceding the
time of valuation, except when an occurrence subsequent to the time a value
was so established is likely to have changed such value; then the fair value
of those securities will be determined through consideration of other factors
by or under the direction of the Board of Trustees. Unlisted equity and debt
securities for which market quotations are available are valued at the mean
between the most recent bid and asked prices. Fixed-income securities are
valued at prices supplied by an independent pricing service, which reflect
broker/dealer-supplied valuations and matrix pricing systems. Short-term debt
obligations maturing in sixty days or less are valued at amortized cost.
Restricted securities, and other securities for which quotations are not
available, are valued at fair value using methods approved by the Board of
Trustees.
B. Securities Transactions and Investment Income
Securities transactions are recorded on the trade date. Realized gains and
losses on sales of investments are calculated on the identified cost basis.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis.
C. Premiums and Discounts on Debt Securities Owned
The National Tax-Free Bond and the Missouri Tax-Free Bond Funds amortize
premiums on debt securities on the effective yield basis, and do not accrete
discounts on debt securities. The Growth, Aggressive Growth and International
Equity Funds amortize market discounts and premiums. The Short-Term
Government, Bond, and Balanced Funds do not accrete discounts or amortize
premiums on long-term debt securities. The Short-Term Government, Bond and
Balanced Funds invest in mortgage-backed securities. Certain mortgage security
paydown gains and losses are taxable as ordinary income. Such paydown gains
and losses increase or decrease taxable ordinary income available for
distributions and are included in interest income in the accompanying
Statements of Operations. Original issue discounts on debt securities are
amortized to interest income over the life of the security with a
corresponding increase in the cost basis of that security.
D. Foreign Currency Translations
The books and records of the Funds are maintained in U.S. dollars. Amounts
denominated in foreign currencies are translated into U.S. dollars on the
following basis: (i) investment valuations, other assets and liabilities
initially expressed in foreign currencies are converted each business day into
U.S. dollars based on current exchange rates; and (ii) purchases and sales of
foreign investments, income and expenses are converted into U.S. dollars based
upon currency exchange rates prevailing on the respective dates of such
transactions.
Net realized and unrealized gain (loss) on foreign currency transactions
will represent : (i) foreign exchange gains and losses from the sale and
holdings of foreign currencies and investments; (ii) gains and losses between
trade date
33
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
D. Foreign Currency Translations--(Continued)
and settlement date on investment securities transactions and foreign exchange
contracts; and (iii) gains and losses from the difference between amounts of
dividends and interest recorded and the amounts actually received. Unrealized
gains and losses, not relating to securities, which result from changes in
foreign currency exchange rates, have been included in the net unrealized gain
(loss) on foreign currency transactions.
E. Forward Foreign Currency Exchange Contracts
The International Equity Fund is authorized to enter into forward foreign
currency exchange contracts for the purchase of a specific foreign currency at
a fixed price on a future date as a hedge or cross-hedge against either
specific transactions or portfolio positions. The aggregate principal amounts
of the contracts for which delivery is anticipated are reflected in the Fund's
accounts, while the aggregate principal amounts are reflected in the
accompanying Statements of Assets and Liabilities if the Fund intends to
settle the contract prior to delivery. All commitments are "marked-to-market"
daily at the applicable exchange rates and any resulting unrealized gains or
losses are recorded in the Fund's financial statements. The Fund records
realized gains and losses at the time the forward contract is offset by entry
into a closing transaction or extinguished by delivery of the currency. Risks
may arise upon entering these contracts from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
F. Federal Taxes
Each Fund intends to comply with the requirements of the Internal Revenue
Code of 1986, as amended, applicable to regulated investment companies and to
distribute each year substantially all of its investment company taxable and
tax-exempt income to its shareholders. Accordingly, no federal income tax
provisions are required. The characterization of distributions to shareholders
for financial reporting purposes is determined in accordance with income tax
rules.
G. Deferred Organization Expenses
Organization-related costs are being amortized on a straight-line basis over
a period of five years beginning with the commencement of each of the Fund's
operations. If any or all of the shares held by the Goldman, Sachs & Co.
representing initial capital of the Funds are redeemed during the amortization
period, the redemption proceeds will be reduced by the pro rata portion of the
unamortized organizational cost balance.
H. Expenses
Expenses incurred by the Funds which do not specifically relate to an
individual Fund are allocated to the Funds based on each Fund's relative
average net assets for the period.
I. Repurchase Agreements
During the term of a repurchase agreement, the market value of the
underlying collateral, including accrued interest, is required to equal or
exceed the value of the repurchase agreement. The underlying collateral for
all repurchase agreements is held in safekeeping in the customer-only account
of State Street Bank & Trust Company, the Funds' custodian, or at sub-
custodians. The market value of the underlying collateral is monitored by
daily pricing.
In connection with transactions in repurchase agreements, if the seller
defaults and the value of the security declines, or if the seller enters an
insolvency proceeding, realization of the collateral by the Trust may be
delayed or limited.
J. Dividends and Distributions to Shareholders
Dividends from net investment income are declared daily and paid monthly by
the Short-Term Government, Bond, National Tax-Free Bond and Missouri Tax-Free
Bond Funds; declared and paid quarterly by the Balanced and Growth Funds; and
declared and paid annually by the Aggressive Growth and International Equity
Funds. Each Fund's net realized capital gains (including net short-term
capital gains), if any, are declared and distributed at least annually.
Distributions to shareholders are recorded on the ex-dividend date.
34
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. AGREEMENTS
The Funds have entered into an Advisory Agreement with Commerce Bank, N.A.
(St. Louis) and Commerce Bank, N.A. (Kansas City) (the "Advisor"). Pursuant to
the terms of the Advisory Agreement, the Advisor is responsible for managing
the investments and making investment decisions for each of the Funds. For
these services and for assuming related expenses, the Advisor is entitled to a
fee, computed daily and payable monthly, at the following annual rate of the
corresponding Fund's average daily net assets:
<TABLE>
<S> <C>
Short-Term Government Fund......................................... .50%
Bond Fund.......................................................... .50%
Balanced Fund...................................................... 1.00%
Growth Fund........................................................ .75%
Aggressive Growth Fund............................................. .75%
International Equity Fund.......................................... 1.50%
National Tax-Free Bond Fund........................................ .50%
Missouri Tax-Free Bond Fund........................................ .50%
</TABLE>
As authorized by the Advisory Agreement, the Advisor has entered into a Sub-
Advisory Agreement with Rowe-Price Fleming International, Inc., (the "Sub-
Advisor") whereby the Sub-Advisor manages the investment assets of the
International Equity Fund. As compensation for services rendered under the
Sub-Advisory Agreement, the Sub-Advisor is entitled to a fee from the Advisor
at the following annual rate:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS ANNUAL RATE
------------------------ -----------
<S> <C>
First $20 million.......................................... .75%
Next $30 million........................................... .60%
Over $50 million........................................... .50%
</TABLE>
For the period ended April 30, 1995, the Advisor has voluntarily agreed to
waive a portion of its advisory fee for certain portfolios. The resulting
advisory fees are .30% for the Short-Term Government Fund, .75% for the
Balanced Fund, .90% for the International Equity Fund and .30% for the
Missouri Tax-Free Bond Fund. The effect of these waivers by the Advisor and
Sub-Advisor for the period ended April 30, 1995 was to reduce advisory fees by
approximately $13,700, $36,100, $12,500 and $1,400 for the Short-Term
Government, Balanced, International Equity and Missouri Tax-Free Bond Funds,
respectively.
In addition, for the period ended April 30, 1995, the Advisor has
voluntarily agreed to reimburse expenses (excluding interest, taxes, and
extraordinary expenses) to the extent that such expenses exceed, on an
annualized basis, .68%, .88%, 1.13%, 1.13%, .85% and .65% for the Short-Term
Government, Bond, Balanced, Growth, National Tax-Free Bond, and Missouri Tax-
Free Bond Funds, respectively. For the International Equity Fund, the Advisor
has reimbursed the Fund's expenses at varying amounts. The effect of these
reimbursements by the Advisor for the period ending April 30, 1995 was to
reduce expenses by approximately $20,500, $21,400, $19,700, $19,600, $33,400,
$19,200, and $19,000 for the Short-Term Government, Bond, Balanced, Growth,
International Equity, National Tax-Free Bond and Missouri Tax-Free Bond Funds,
respectively. The amounts reimbursable to the Short-Term Government, Balanced,
International Equity, National Tax-Free Bond, and Missouri Tax-Free Bond were
approximately $1,900, $600, $17,300, $4,100, and $4,100, respectively, and are
reflected in "Other assets" in the accompanying Statements of Assets and
Liabilities. Included in "Accrued expenses and other liabilities" in the
accompanying Statements of Assets and Liabilities of the Bond and Growth Funds
are approximately $7,400 and $13,700, respectively, related to excess
reimbursements payable to the Advisor.
Goldman Sachs Asset Management, ("GSAM"), a separate operating division of
Goldman, Sachs & Co., serves as the Trust's administrator, pursuant to an
Administration Agreement. Under the Administration Agreement, GSAM administers
the Trust's business affairs. As compensation for the services rendered under
the Administration Agreement and its assumption of related expenses, GSAM is
entitled to a fee, computed daily and payable monthly, at the annual rate of
.15% of the average daily net assets of the corresponding Fund.
Goldman, Sachs & Co. serves as Distributor of shares of the Funds pursuant
to a Distribution Agreement and may receive a portion of the sales load
imposed on the sale of shares of the Funds. Goldman Sachs has advised the
Trust that it retained approximately $5,500 for the period ended April 30,
1995.
35
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
3. AGREEMENTS - (CONTINUED)
Pursuant to a Shareholder Servicing Plan adopted by its Board of Trustees,
the Funds may enter into agreements with service organizations such as banks
and financial institutions, which may include the Advisor and its affiliates
("Service Organizations"), under which they will render shareowner
administrative support services. For these services, the Service Organizations
are entitled to receive fees from a Fund at an annual rate of up to .25% of
the average daily net asset value of Fund shares held by such Service
Organizations. There were no Service Organization agreements in effect as of
April 30, 1995.
4. INVESTMENT TRANSACTIONS
Purchases and proceeds of sales or maturities of long-term securities for
the Short-Term Government, Bond, Balanced, Growth, Aggressive Growth, and
International Equity Funds for the period December 12, 1994 to April 30, 1995,
and for the National Tax-Free Bond and Missouri Tax-Free Bond Funds for the
period February 21, 1995 to April 30, 1995, were as follows:
<TABLE>
<S> <C>
SHORT-TERM GOVERNMENT FUND (a)
Purchases (excluding U.S. Government securities).................. $ --
Sales (excluding U.S. Government securities)...................... --
Purchases of U.S. Government securities........................... 32,846,818
Sales of U.S. Government securities............................... 17,920,689
BOND FUND (a)
Purchases (excluding U.S. Government securities).................. $ 54,753,528
Sales (excluding U.S. Government securities)...................... 11,939,810
Purchases of U.S. Government securities........................... 45,198,635
Sales of U.S. Government securities............................... 8,732,172
BALANCED FUND (a)
Purchases (excluding U.S. Government securities).................. $ 35,045,108
Sales (excluding U.S. Government securities)...................... 8,783,303
Purchases of U.S. Government securities........................... 9,130,337
Sales of U.S. Government securities............................... 3,539,495
GROWTH FUND (a)
Purchases (excluding U.S. Government securities).................. $104,344,931
Sales (excluding U.S. Government securities)...................... 10,950,856
Purchases of U.S. Government securities........................... --
Sales of U.S. Government securities............................... --
AGGRESSIVE GROWTH FUND (a)
Purchases (excluding U.S. Government securities).................. $ 21,523,250
Sales (excluding U.S. Government securities)...................... 4,563,334
Purchases of U.S. Government securities........................... --
Sales of U.S. Government securities............................... --
INTERNATIONAL EQUITY FUND
Purchases (excluding U.S. Government securities).................. $ 9,925,830
Sales (excluding U.S. Government securities)...................... 1,191,161
Purchases of U.S. Government securities........................... --
Sales of U.S. Government securities............................... --
NATIONAL TAX-FREE BOND FUND
Purchases (excluding U.S. Government securities).................. $ 5,846,280
Sales (excluding U.S. Government securities)...................... 380,000
Purchases of U.S. Government securities........................... --
Sales of U.S. Government securities............................... --
</TABLE>
36
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
4. INVESTMENT TRANSACTIONS - (CONTINUED)
<TABLE>
<S> <C>
MISSOURI TAX-FREE BOND FUND
Purchases (excluding U.S. Government securities).................... $4,252,720
Sales (excluding U.S. Government securities)........................ 526,895
Purchases of U.S. Government securities............................. --
Sales of U.S. Government securities................................. --
</TABLE>
- -------
(a) Initial shares of the Funds were issued in exchange for assets transferred
from existing collective funds managed by the Advisor.
5. CONCENTRATION OF CREDIT RISK
The Commerce Missouri Tax-Free Bond Fund invests substantially all of its
assets in debt obligations of issuers located in the state of Missouri. The
issuers' abilities to meet their obligations may be affected by Missouri
economic or political developments.
37
<PAGE>
THE COMMERCE FUNDS
-----------------------------
TRUSTEES
J. Eric Helsing, Chairman
Randall D. Barron
David L. Bodde
John J. Holland
P.V. Miller
OFFICERS
P.V. Miller
President
Paul Klug
Vice President
Nancy L. Mucker
Vice President
Pauline Taylor
Vice President
Randall D. Barron
Treasurer
W. Bruce McConnel, III
Secretary
Scott M. Gilman
Assistant Secretary
Michael J. Richman
Assistant Secretary
Howard B. Surloff
Assistant Secretary
This Semi-Annual Report is authorized for distribution to prospective
investors only when preceded or accompanied by a Commerce Funds Prospectus
which contains facts concerning The Commerce Funds' objectives and policies,
management, expenses and other information. Shares of the Funds are not
deposits or obligations of, or guaranteed, endorsed or otherwise supported by,
Commerce Bank, N.A. (St. Louis), Commerce Bank, N.A. (Kansas City), their
parent or affiliates, and the shares are not Federally insured or guaranteed
by the U.S. Government, the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other governmental agency. An investment in the Funds
involves investment risks, including possible loss of principal.
<PAGE>
THE COMMERCE FUNDS
922 Walnut Street
Kansas City, Missouri 64106
INVESTMENT ADVISORS
Commerce Bank N.A.
922 Walnut Street
Kansas City, Missouri 64106
Commerce Bank N.A.
8000 Forsyth Boulevard
St. Louis, Missouri 63105
Rowe-Price Fleming International, Inc.
25 Copthall Avenue
London, England EC2R 7DR
DISTRIBUTOR
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
ADMINISTRATOR
Goldman Sachs Asset Management
One New York Plaza
New York, New York 10004
CUSTODIAN
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
National Financial Data Services, Inc.
1004 Baltimore Street
Kansas City, Missouri 64105
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP
1000 Walnut Street
Kansas City, Missouri 64106
LEGAL COUNSEL
Drinker Biddle & Reath
1345 Chestnut Street
Philadelphia, Pennsylvania 19107
COM-SEM94
[ART]
The Short-Term Government Fund
The Bond Fund
The Balanced Fund
The Growth Fund
The Aggressive Growth Fund
The International Equity Fund
The National Tax-Free Bond Fund
The Missouri Tax-Free Bond Fund
Semi-Annual Report
April 30, 1995
