<PAGE>
THE COMMERCE FUNDS
LETTER TO SHAREHOLDERS
Dear Shareholders:
On behalf of the Investment Management Group at Commerce Bank I am pleased to
write to you about the performance of The Commerce Funds for the six months
ended April 30, 1996. In this letter we provide overviews of the taxable and
tax-exempt fixed income markets as well as the U.S. and international stock
markets. Individual fund summaries, including a discussion of fund performance,
are also included.
With all of The Commerce Funds, our goal is to provide consistent long-term
performance for the shareholders. To achieve this goal we focus on buying
quality securities and carefully managing the various elements of investment
risk.
While the bond funds trailed their benchmarks over the six months ended April
30, 1996, due primarily to the longer average duration of the funds, all of our
equity funds performed at, or above, their benchmarks. The Aggressive Growth
Fund led the group with a 14.39% return based on net asset value (NAV) for the
period.
FINANCIAL MARKETS OVERVIEW
After being in tandem for most of 1995, the U.S. stock and bond markets began
to move in opposite directions in February, 1996. This was somewhat unexpected,
as we had anticipated a further modest decline in interest rates through mid-
1996. Although there remains some question as to the durability of a 1%
increase in long-term rates from February through April, this event has altered
our recent thinking somewhat with regard to both the equity and fixed income
markets over the intermediate term.
Last November, we adopted a more optimistic outlook on the stock market and
increased the equity portion of The Balanced Fund relative to fixed income
securities. Such a step was warranted given the decline in interest rates over
the course of 1995 and the positive themes we continue to believe are at work.
Although somewhat controversial at the time, we expected stocks to return
between 10% and 15% in 1996--somewhat better than fixed income results. Over
the six months ended April 30, 1996, stocks, as measured by the S&P 500,
returned 13.8% as compared to 0.5% for the Lehman Brothers Aggregate Bond Index
(Lehman Aggregate Index). Given the change in relative valuation occasioned by
this disparate performance, we have now eliminated this shift and returned to a
neutral policy stance between stocks and bonds.
Taxable Fixed Income Market
A sharp rise in interest rates and the consequential decline in bond prices
resulted from an earlier increase in measured economic activity than most
investors, ourselves included, had expected. Because bond market participants
had priced in a very different forecast, the market was vulnerable to a sudden
shift in expectations. This is exactly what happened with the release of
stronger than expected economic reports in February and March. Further
exacerbating the markets inflation fears was the sharp rise in various
agricultural and energy commodities. Over the six months ended April 30, 1996,
interest rates shifted upward with two year Treasuries rising 43 basis points to
yield 6.04% while thirty year issues rose 57 basis points to yield 6.90% This
increase in interest rates precipitated price losses for bonds and only modest
positive total returns. For example, the Lehman Aggregate Index returned 0.52%
over the period November 1, 1995 to April 30, 1996. Additional pressure on
interest rates remains in the near term, and we are modestly less optimistic
for interest rates over the balance of this year.
U.S. Stock Market
The U.S. equity market faces some difficult hurdles over the near term despite
continued positive supply/demand conditions. First, the increase in interest
rates makes stocks somewhat less attractive relative to bonds. Second, earnings
growth is decelerating, reflecting the economic slowdown resulting from the
Federal Reserve's "tightening" of monetary policy in 1994 and early 1995.
Additionally, the increase in interest rates during the first part of the year,
if sustained, could impede growth later in 1996, further pressuring corporate
earnings. Third, with the rise in the equity market and the moderation in
earnings growth, the valuation of the market, while not excessive in our view,
is clearly no longer as attractive as it was six months ago.
Despite some near term caution, we continue to maintain our long-term positive
outlook toward the U.S. equity market. Important economic, political, and
1
<PAGE>
THE COMMERCE FUNDS
LETTER TO SHAREHOLDERS--(Continued)
demographic trends support such an outlook and historical valuation measures are
likely to be exceeded over the next several years.
International Stock Markets
The international markets have shown considerable improvement in performance
over the past six months. The improved situation in Japan has been driven by
historically low interest rates as the Japanese government and the Bank of Japan
undertook stimulative policy actions. With a modest pick-up in economic
activity, the outlook for corporate earnings has also improved. Europe, on the
other hand, remains mired in economic stagnation with Germany actually slipping
into a mild recession. This has offset the positive effect of declining
interest rates on the continent. Emerging markets have also performed well with
most Latin American markets posting solid gains. However, returns to U.S.
investors have been reduced somewhat in dollar terms as our currency has
continued to strengthen relative to other major currencies.
Tax Exempt Market
Tax exempt yields, as measured by ten year AA rated general obligation bonds,
rose overall from 4.8% to 5.1% over the six months ended April 30, 1996.
Economic weakness late in 1995 caused an initial decline in rates. This spring,
as signs of a firming tone emerged, interest rates gained lost ground. Issuer
volume has run behind last year's levels which has permitted tax exempt
securities to slightly outperform the taxable market.
FUND OVERVIEWS
Short-Term Government Fund
This fund had a total return over the six months ended April 30, 1996 of 1.36%
based on NAV versus the Lipper Short U.S. Government Funds Index return of 1.84%
and the Salomon Brothers 1-5 Year Treasury/Government Sponsored Index return of
1.72%. During this period, the fund paid net investment income and capital gain
dividends totaling $0.77 per share. The fund's recent underperformance and its
longer term outperformance are both attributed largely to its longer average
durational bias and maturity profile relative to its peer funds and index.
Expectations for continued U.S. economic weakness were dashed in February as
employment growth surged, car sales rebounded, and retail sales picked up after
an anemic Christmas season. This unexpected strength was confirmed by the
initial report of 2.8% first quarter 1996 GDP growth. The stronger than
expected growth, coupled with rising commodity prices, now point toward a
possible uptick in future inflation. This change in inflationary expectations
drove interest rates higher. Accordingly, most of the funds recent cash inflow
and coupon income were reinvested in short term Treasury securities or cash
equivalents to protect the portfolio from the rising level of interest rates.
Bonds with less than a year to maturity now account for approximately 32% of the
portfolio. As the fund has grown, we have also been able to further diversify
our maturity ladder with 22 separate holdings. The net effect of our recent
investment strategy was to shorten the average maturity of the portfolio nearly
one-half year to 2.53 years. This is just short of the benchmark index, but
still longer than our peer group. We intend to maintain this posture and expect
to find an opportunity to reinvest our cash equivalents sometime in the second
half of 1996.
Bond Fund
This fund had a total return for the six months ended April 30, 1996 of
(0.02%) based on NAV versus the Lipper Intermediate Investment Grade Debt Funds
Index return of 0.37% and the Lehman Aggregate Index return of 0.52%, During
the same period, the fund paid net investment income and capital gain dividends
totaling $0.85 per share. Like the Short-Term Government Fund, the Bond Fund
maintains a slightly longer than index duration, and thus tends to amplify index
performance, both up and down.
Reversing the dramatic rally in 1995, interest rates rose materially over the
past three months. For example, the ten year Treasury yield rose from a low
yield of 5.53% in mid-January to 6.67% by the end of April. Strong cash
inflows into the fund, coupled with reinvested coupons in short-term cash
equivalents allowed us to shorten the duration or interest rate risk of the
fund. We entered the last six month period nearly 15% long relative
2
<PAGE>
THE COMMERCE FUNDS
LETTER TO SHAREHOLDERS--(Continued)
to our benchmark, the Lehman Aggregate Index, but ended the period neutral to
the index with a duration of 4.69 years. At April 30, the fund's holdings
remained largely diversified with Treasury and Agency bonds accounting for 24%
of the portfolio, asset-backed securities 27%, mortgages 19%, corporates 20% and
cash equivalents 10%. With rates now materially higher, prepayment concerns have
been reduced, increasing the attractiveness of the mortgage sector. Future
investments will likely be concentrated in the mortgage sector along with other
high quality intermediate positions. Going forward, we expect to find an
opportunity to add securities as we forecast interest rates peaking in the
second half of 1996.
Balanced Fund
This fund had a total return from November 1, 1995 through April 30, 1996, of
7.82% based on NAV versus the Lipper Balanced Funds Index return of 7.59% and a
return of 8.31% based on a composite of the S&P 500 Index with income ("S&P
500") (weighted at 60%) and the Lehman Aggregate Index (weighted at 40%). The
fund increased its equity allocation from 60% to 66% in mid November. The
overweighting in equities was maintained until April, when the fund returned to
its normal target weight of 60%. Equities posted superior performance over bonds
during this period adding incrementally to the fund's performance. Fixed income
continues to play a key role as we diversify our holdings in mortgages and the
asset-backed market. In April, the fund increased the representation of smaller
capitalized companies versus larger companies.
Growth Fund
The fund had a total return based on NAV of 11.79% from November 1, 1995
through April 30, 1996. This compares with a 13.76% return for the S&P 500 and
a 11.22% return for the Lipper Growth Funds Index for the same period.
From November through early February the market continued its record breaking
march to new highs. The S&P 500 peaked in mid-February and traded in a narrow
5% trading range through April. The market faced conflicting reports on
economic growth and rising interest rates. Normally, rising interest rates lead
to lower stock prices but the continued strong inflows into mutual funds
stabilized the market averages.
The fund has been quite active, increasing its financial sector weighting to
above 15%. The fund added several insurance companies (Travelers Group, Inc.,
Conseco, Inc. and SunAmerica, Inc.) which specialize in providing products or
services to investors. We also added BankAmerica Corp., a money center bank
that has shown strong earnings growth over the last year.
The technology sector has been extremely volatile both on the upside and
downside over the last six months. While near term results remain
unpredictable, we believe this sector plays an important role in improving
productivity for the balance of the decade. The best technology performers were
Sun Microsystems, Inc. and Adaptec, Inc.
Several of the fund's largest holdings (General Electric Co., Illinois Tool
Works, Inc., and Federal Signal Corp.) are in the producer manufacturing sector.
We believe industrial companies are well positioned to take advantage of strong
economic growth in 1997 and earnings will surprise investors on the upside.
Aggressive Growth Fund
For the six months ended April 30, 1996, this fund returned 14.39% based on
NAV. This compares with a return of 12.9% for the S&P 400 Mid-Cap Index and a
16.6% return for the Lipper Mid-Cap Funds Index.
The performance of the fund was enhanced by its disciplined process of seeking
companies with good prospects for strong earnings growth. This approach led us
to some of the best performing sectors of the market, including electronic
technology (Cognos, Inc. and Medic Computer Systems, Inc.), health care (Idexx
Laboratories, Inc. and Physician Sales and Service, Inc.) and business services
(Paychex, Inc. and Concord EFS, Inc.). Additionally, for the period ended April
30, 1996, both Cordis and MediSense, Inc. were acquired via mergers at
substantial premiums to the fund's purchase price.
While adhering strictly to a "bottoms up" approach to stock selection, we
cannot help but notice investment themes which appear in our portfolio. Several
of these include: the resurgence of agribusiness (Delta & Pine Land Co. and
Lindsay Manufacturing Co.), industrial outsourcing (Olstens Corp. and ClinTrials
Research, Inc.)
3
<PAGE>
THE COMMERCE FUNDS
LETTER TO SHAREHOLDERS--(Continued)
and corporate telecommuting and networking (Network General Corp. and Madge
Network, N.V.). Capital spending by companies to increase productivity
continues at a strong pace, turning the American workforce into the low cost,
high value-added producer of the developed world. We expect a positive business
climate on a global basis to provide excellent opportunities for growth and
expansion for many of our companies.
International Equity Fund
The Commerce International Equity Fund had a total return of 12.48% based
on NAV for the six months ended April 30, 1996. This compares to 11.3% for the
Lipper International Fund Index and 13.4% for the Morgan Stanley Europe
Australia and Far East Index ("EAFE") for the same period.
The fund continues to have its heaviest concentrations in consumer goods,
capital goods, and financial services. The fund maintains an underweighted
position in Japan (the largest component of the EAFE Index), although its
relative weighting has increased over the past six months. The increased
emphasis in Japan and other Pacific countries has come at the expense of the
United Kingdom and continental Europe. The fund has approximately 7% invested in
emerging markets (not included in the EAFE Index) which have performed well and
added to the funds results. Over time, we expect this trend to continue on a
gradual basis as more investment is directed to the emerging markets of Latin
America and the Pacific.
National Tax-Free Bond Fund
In the six months ended April 30, 1996 the fund's net asset value declined
from $18.54 to $18.29, a 1.35% change. During this period, the fund paid net
investment income and capital gain dividends totaling $0.38 per share. This
brought the total return based on NAV to 0.67% for the six months ended April
30, 1996. The Lipper General Municipal Debt Funds Index and the Merrill Lynch
Municipal Intermediate Index had returns of 0.76% and 2.31%, respectively, for
the same period. Tax exempt securities weathered the "flat tax" rhetoric of the
Presidential primary campaigns and have reestablished their previous
relationship to taxable securities. Nevertheless, talk of tax reform and the
more spectacular returns in the equity markets have diverted flows from tax-
exempt investing.
Missouri Tax-Free Bond Fund
The 0.72% total return based on NAV for the six month period ended April
30, 1996 consisted of a net asset value decline of 1.32% and an income return of
2.04%. In dollar terms, the net asset value declined $0.25 per share and the
fund paid dividends of $0.39 per share for the six month period. Comparable
total returns generated by the Lipper General Municipal Debt Funds Index and the
Merrill Lynch Municipal Intermediate Index were 0.76% and 2.31%, respectively,
for the same period. The previously initiated state sponsored school district
direct deposit program substantially increased the volume of issues that meet
the credit criteria our customers expect in our fund. State tax receipts were
large enough to trigger tax roll backs and the new tax initiatives are less
drastic than prior proposals.
In conclusion, we appreciate your support and look forward to helping you
meet your investment objectives.
Sincerely,
/s/ Peter F. Mackie
Peter F. Mackie
Executive Vice President
Commerce Bank, N.A.
May 31, 1996
Total return figures include expense waivers and reimbursements. Without such
waivers and reimbursements, total return would be reduced.
4
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
SHORT-TERM GOVERNMENT FUND
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ----------- -------- -------- -----------
<S> <C> <C> <C>
U.S. Government Agency Obligations--57.2%
Federal Agriculture Mortgage Corp.
$ 500,000 6.69% 02/10/00 $ 501,580
Federal Farm Credit Bank
1,000,000 7.17 04/03/00 1,021,410
Federal Home Loan Bank
530,000 7.13 03/27/00 540,685
1,000,000 6.63 08/28/01 1,000,840
965,000 7.56 02/27/02 1,002,847
Federal Home Loan Mortgage Corp.
1,000,000 7.93 01/20/98 1,029,690
1,000,000 7.82 01/27/98 1,028,590
500,000 7.90 01/27/00 522,890
1,000,000 6.52 08/25/00 997,030
Federal Land Bank
1,000,000 7.35 01/20/97 1,011,720
Federal National Mortgage Assn.
500,000 6.36 08/16/00 495,860
1,000,000 9.20 09/11/00 1,098,750
Israel Aid Series 5A
2,000,000 7.75 11/15/99 2,078,480
Tennessee Valley Authority 1989,
Series D
2,000,000 8.38 10/01/99 2,116,240
U.S. Department of Housing & Urban
Development Series 1995-A
1,000,000 8.15 08/01/00 1,057,710
-----------
Total U.S. Government
Agency Obligations
(cost $15,337,583)................. $15,504,322
-----------
U.S. Treasury Obligations--22.0%
United States Treasury Notes
$1,000,000 7.25% 11/30/96 $ 1,009,690
1,000,000 4.75 02/15/97 993,590
1,000,000 5.63 08/31/97 997,030
1,000,000 5.38% 05/31/98 986,720
1,000,000 6.88 07/31/99 1,016,870
1,000,000 5.75 10/31/00 974,840
-----------
Total U.S. Treasury
Obligations (cost $6,069,922)...... $ 5,978,740
-----------
Repurchase Agreements--21.0%
State Street Bank & Trust Company,
dated 04/30/96, repurchase price
$5,703,776 (U.S. Treasury Note:
$5,820,899, 6.88%, 08/31/99)
$5,703,000 4.90% 05/01/96 $ 5,703,000
-----------
Total Repurchase
Agreements (cost $5,703,000)....... $ 5,703,000
-----------
Total Investments
(cost $27,110,505/(a)/)............ $27,186,062
===========
- --------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for
investments in which value
exceeds cost............................. $ 338,159
Gross unrealized loss
for investments in which
cost exceeds value....................... (262,602)
-----------
Net unrealized gain........................ $ 75,557
===========
- --------------------------------------------------------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
/(a)/The cost stated also represents aggregate cost for income tax purposes.
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BOND FUND
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ----------- -------- -------- -----------
<S> <C> <C> <C>
Asset-Backed Securities--26.9%
CREDIT CARD--14.8%
American Express Master Trust
Series 1994-3, Class A
$ 2,000,000 7.85% 08/15/05 $ 2,076,860
Chemical Master Credit Card Trust 1
Series 1995-3, Class A
2,000,000 6.23 04/15/05 1,941,240
Choice Credit Card Master Trust
Series 1992, Class 2B
2,000,000 7.20 04/15/99 2,033,300
Discover Card Master Trust Series
1993-3, Class A
2,000,000 6.20 05/16/06 1,897,500
Discover Card Trust Series 1991-F,
Class B
2,000,000 8.35 11/21/00 2,067,500
MBNA Master Credit Card Trust
Series 1995-C, Class A
2,000,000 6.45 02/15/08 1,920,620
Standard Credit Card Master Trust
Series 1993-2, Class A
2,000,000 5.95 10/07/04 1,880,980
Standard Credit Card Master Trust
Series 1995-1, Class A
2,000,000 8.25 01/07/07 2,140,860
Standard Credit Card Master Trust
Series 1995-1, Class B
1,000,000 8.45 01/07/07 1,064,630
-----------
$17,023,490
-----------
HOME EQUITY--3.5%
Advanta Mortgage Loan Trust
Series 1994-4, Class A2
$ 4,000,000 8.92% 01/25/26 $ 4,085,120
-----------
MANUFACTURED HOUSING--8.6%
Green Tree Financial Corp.
Series 1993-4, Class A4
$ 2,000,000 6.60% 01/15/19 $ 1,943,740
Green Tree Financial Corp.
Series 1993-4, Class A5
4,000,000 7.05 01/15/19 3,823,720
Green Tree Financial Corp.
Series 1994-2, Class A4
4,000,000 7.90 05/15/19 4,082,480
-----------
$ 9,849,940
-----------
Total Asset-Backed Securities
(cost $30,172,262)................. $30,958,550
-----------
Corporate Obligations--19.2%
FINANCIAL--13.6%
American Express Credit Corp.
$ 2,000,000 6.13% 11/15/01 $ 1,936,600
BankAmerica Corp.
2,000,000 6.88 06/01/03 1,967,260
Chemical Bank
2,000,000 6.70 08/15/08 1,880,440
Chubb Capital Corp.
2,000,000 6.00 02/01/98 1,987,680
General Motors Acceptance Corp.
2,000,000 6.63 10/15/05 1,906,500
Morgan Stanley Group, Inc.
2,000,000 6.75 03/04/03 1,938,300
PNC Bank N.A.
2,000,000 7.88 04/15/05 2,067,940
Smith Barney Holdings, Inc.
2,000,000 6.63 06/01/00 1,979,860
-----------
$15,664,580
-----------
INDUSTRIAL--3.8%
Hanson Overseas BV
$ 2,500,000 6.75% 09/15/05 $ 2,381,700
Shell Oil Co.
1,000,000 6.95 12/15/98 1,009,870
Union Pacific Railroad Corp.
1,000,000 6.44 01/15/98 1,000,170
-----------
$ 4,391,740
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BOND FUND--(Continued)
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ----------- -------- -------- -----------
<S> <C> <C> <C>
Corporate Obligations--Continued
UTILITIES--1.8%
Duke Power Corp.
$ 1,000,000 7.37% 02/02/04 $ 1,012,910
Union Electric Co.
1,000,000 6.75 10/15/99 999,390
------------
$ 2,012,300
------------
Total Corporate Obligations
(cost $21,530,742)................. $ 22,068,620
------------
Foreign Bonds--0.9%
Hydro Quebec Note
$ 1,000,000 7.96% 12/17/01 $ 1,050,830
------------
Total Foreign Bonds
(cost $971,660).................... $ 1,050,830
------------
Mortgage-Backed Pass-Through Obligations--18.6%
Federal Home Loan Mortgage Corp.
$ 2,993,736 8.50% 02/01/19 $ 3,102,917
3,331,862 8.50 03/01/21 3,451,976
Federal National Mortgage Assn.
2,463,992 9.00 11/01/21 2,599,708
Government National Mortgage Assn.
4,615,650 8.00 02/15/22 4,700,625
5,337,116 7.00 09/15/23 5,160,244
2,408,837 7.50 08/20/25 2,365,912
------------
Total Mortgage-Backed
Pass-Through Obligations
(cost $20,375,023)................. $ 21,381,382
------------
U.S. Government Agency Obligations--1.7%
Federal Home Loan Bank
$ 1,000,000 6.32% 02/01/00 $ 991,020
Federal Home Loan Mortgage Corp.
1,000,000 6.20 04/15/03 963,910
------------
Total U.S. Government
Agency Obligations
(cost $1,863,696).................. $ 1,954,930
------------
U.S. Treasury Obligations--21.8%
United States Treasury Bonds
$ 5,000,000 7.25% 05/15/16 $ 5,094,550
5,000,000 7.50 11/15/16 5,228,100
United States Treasury Notes
5,000,000 5.75 10/31/00 4,874,200
5,000,000 5.75 08/15/03 4,756,250
5,000,000 7.25 08/15/04 5,180,450
------------
Total U.S. Treasury
Obligations
(cost $25,751,904)................. $ 25,133,550
------------
Repurchase Agreements--10.0%
State Street Bank & Trust Company,
dated 04/30/96, repurchase price
$11,481,563 (U.S. Treasury Note:
$11,713,787, 6.88%, 08/31/99)
$11,480,000 4.90% 05/01/96 $ 11,480,000
------------
Total Repurchase
Agreements
(cost $11,480,000)................. $ 11,480,000
------------
Total Investments
(cost $112,145,287/(a)/)........... $114,027,862
============
- ---------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for
investments in which value
exceeds cost............................ $ 3,353,271
Gross unrealized loss for
investments in which cost
exceeds value........................... (1,470,696)
Net unrealized gain....................... $ 1,882,575
============
- ---------------------------------------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
/(a)/The cost stated also represents aggregate cost for income tax purposes.
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BALANCED FUND
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------- ------------- -------
<C> <S> <C>
Common Stocks--62.9%
AEROSPACE/DEFENSE--1.3%
9,300 Lockheed Martin Corp. $ 749,812
----------
BASIC INDUSTRIES--1.1%
10,600 Aluminum Company of America $ 661,175
----------
BUILDING MATERIALS & CONSTRUCTION--0.9%
28,500 Clayton Homes, Inc. $ 527,250
----------
BUSINESS SERVICES--4.1%
8,700 Automatic Data Processing, Inc. $ 338,213
22,500 Equifax, Inc. 551,250
5,000 First Data Corp. 380,000
7,000 Olsten Corp. 212,625
7,600 Omnicom Group 329,650
12,100 Reynolds & Reynolds Co. 559,625
----------
$2,371,363
----------
CHEMICAL PRODUCTS--1.8%
8,000 Bio-Rad Laboratories, Inc./(a)/ $ 372,000
7,000 OM Group, Inc. 266,875
30,000 Terra Industries, Inc. 393,750
----------
$1,032,625
----------
COMMUNICATIONS--0.8%
9,300 SBC Communications, Inc. $ 465,000
----------
COMPUTER SERVICES/ SOFTWARE--4.5%
3,900 Cerner Corp./(a)/ $ 80,438
4,000 Cognos, Inc./(a)/ 271,000
5,200 Computer Sciences Corp./(a)(b)/ 384,800
8,300 Madge Networks N. V./(a)/ 244,850
6,000 Medic Computer Systems, Inc./(a)/ 561,000
5,200 Network General Corp./(a)/ 229,450
7,200 Parametric Technology Corp./(a)/ 289,800
13,000 Verifone, Inc./(a)/ 546,000
----------
$2,607,338
----------
CONSUMER GOODS--1.0%
6,600 Nike, Inc., Class B $ 577,500
----------
ELECTRICAL SERVICES--1.2%
19,000 Union Electric Co. $ 733,875
----------
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT--8.3%
5,700 Adaptec, Inc./(a)/ $ 327,750
6,600 ADC Telecommunications, Inc./(a)/ 277,200
14,000 Belden, Inc. 416,500
15,000 ECI Telecommunications Ltd. 391,875
6,000 Emerson Electric Co. 501,750
13,700 General Electric Co. 1,061,750
6,300 Intel Corp. 426,825
6,000 KLA Instruments Corp./(a)(b)/ 173,250
9,900 Linear Technology Corp. 340,312
10,000 Logicon, Inc./(b)/ 297,500
8,000 Symbol Technologies, Inc./(a)/ 370,000
7,800 Xilinx, Inc./(a)/ 287,625
----------
$4,872,337
----------
FINANCIAL SERVICES--7.8%
5,700 BankAmerica Corp. $ 431,775
16,000 Fair Isaac & Co., Inc. 680,000
24,800 Federal National Mortgage Assn. 759,500
9,100 Franklin Resources, Inc. 520,975
16,000 Green Tree Financial Corp. 540,000
17,300 Norwest Corp. 624,963
11,000 SunAmerica, Inc. 599,500
17,850 Synovus Financial Corp. 401,625
----------
$4,558,338
----------
FOOD & BEVERAGES--2.1%
3,100 The Coca-Cola Co. $ 252,650
7,400 CPC International, Inc. 511,525
7,200 Pepsico, Inc. 457,200
----------
$1,221,375
----------
HEALTH & MEDICAL SERVICES--7.5%
9,500 Abbott Laboratories $ 385,938
9,700 Amgen, Inc./(a)/ 557,750
24,000 Ballard Medical Products 477,000
9,400 Dentsply International, Inc. 392,450
8,900 Healthcare Compare Corp./(a)/ 419,413
11,600 Invacare Corp. 301,600
7,100 Johnson & Johnson 656,750
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BALANCED FUND
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks--Continued
HEALTH & MEDICAL SERVICES--CONTINUED
23,000 NABI, Inc./(a)/ $ 283,187
8,600 Nellcor Puritan Bennett, Inc./(a)/ 421,400
10,000 Physician Sales & Service, Inc./(a)/ 270,000
4,600 Stryker Corp. 222,525
-----------
$ 4,388,013
-----------
HOTELS & RESTAURANTS--1.1%
13,000 McDonalds Corp. $ 622,375
-----------
HOUSEHOLD DURABLES--0.2%
5,300 Leggett & Platt, Inc. $ 136,475
-----------
HOUSEHOLD PRODUCTS--0.7%
7,400 Gillette Co. $ 399,600
-----------
INDUSTRIAL MACHINERY--0.3%
5,000 Lindsay Manufacturing Co. $ 187,500
-----------
INSURANCE SERVICES--3.3%
7,000 Allied Group, Inc. $ 251,125
10,000 American Bankers Insurance Group, Inc. 395,000
9,400 Conseco, Inc. 343,100
8,500 Orion Capital Corp. 377,187
5,000 Protective Life Corp./(b)/ 173,750
6,600 Travelers Group, Inc. 405,900
-----------
$ 1,946,062
-----------
MACHINERY--5.4%
13,200 Dover Corp. $ 679,800
10,000 DT Industries, Inc. 212,500
33,000 Federal Signal Corp. 862,125
8,000 Helix Technology Corp./(a)/ 301,500
16,400 Illinois Tool Works, Inc. 1,102,900
-----------
$ 3,158,825
-----------
MANUFACTURING--0.4%
6,000 Millipore Corp. $ 251,250
-----------
OFFICE & BUSINESS EQUIPMENT--1.4%
4,800 Cabletron Systems, Inc./(a)/ $ 361,800
8,000 Sun Microsystems, Inc./(a)/ 434,000
-----------
$ 795,800
-----------
OIL & GAS--2.7%
9,500 Mobil Corp. $ 1,092,500
3,400 Royal Dutch Petroleum Co. 487,050
-----------
$ 1,579,550
-----------
PAPER & FOREST PRODUCTS--0.5%
11,000 Chesapeake Corp./(b)/ $ 317,625
-----------
PRINTING & PUBLISHING--0.3%
6,700 Banta Corp. $ 164,150
-----------
RECREATIONAL SERVICES--1.1%
15,000 Mattel, Inc. $ 390,000
4,500 Walt Disney Co. 279,000
-----------
$ 669,000
-----------
RETAIL TRADE--1.7%
5,000 Global Directmail Corp./(a)/ $ 196,250
8,900 MSC Industrial Direct, Inc./(a)/ 323,737
15,600 Walgreen Co. 499,200
-----------
$ 1,019,187
-----------
TEXTILES--0.4%
8,000 G & K Services, Inc. $ 213,000
-----------
TRANSPORTATION/STORAGE--0.8%
16,000 Air Express International Corp. $ 448,000
-----------
UTILITIES--0.2%
3,000 NIPSCO Industries, Inc. $ 107,625
-----------
Total Common Stocks
(cost $28,752,832) $36,782,025
-----------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date
- ------------- -------- --------
<S> <C> <C> <C>
Asset-Backed Securities--8.5%
CREDIT CARD--5.1%
American Express Master Trust Series 1994-3, Class A
$ 500,000 7.85% 08/15/05 $ 519,215
Choice Credit Card Master Trust Series 1992, Class 2B
500,000 7.20 04/15/99 508,325
</TABLE>
The accompanying notes are an integral part of these financial statements
9
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BALANCED FUND--(Continued)
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ----------- ---------- ---------- ---------
Asset-Backed Securities--Continued
<S> <C> <C> <C>
CREDIT CARD--CONTINUED
Discover Card Master Trust Series
1993-3, Class A
$ 500,000 6.20% 05/16/06 $ 474,375
J.C. Penney Master Credit
Card Trust Series B, Class A
500,000 8.95 10/15/01 525,930
MBNA Master Credit Card Trust
Series 1995-C, Class A
500,000 6.45 02/15/08 480,155
Standard Credit Card Master Trust
Series 1993-2, Class A
500,000 5.95 10/07/04 470,245
------------
$ 2,978,245
------------
HOME EQUITY--0.9%
Advanta Mortgage Loan Trust
Series 1994-4, Class A2
$ 500,000 8.92% 01/25/26 $ 510,640
MANUFACTURED HOUSING--2.5% ------------
Green Tree Financial Corp.
Series 1993-4, Class A4
$ 500,000 6.60% 01/15/19 $ 485,935
Green Tree Financial Corp.
Series 1993-4, Class A5
500,000 7.05 01/15/19 477,965
Green Tree Financial Corp.
Series 1994-2, Class A4
500,000 7.90 05/15/19 510,310
------------
$ 1,474,210
------------
Total Asset-Backed
Securities
(cost $4,855,683).............................. $ 4,963,095
------------
Corporate Obligations--7.7%
FINANCIAL--5.1%
BankAmerica Corp.
$ 500,000 6.88% 06/01/03 $ 491,815
Chemical Bank
500,000 6.70 08/15/08 470,110
General Electric Capital Corp.
$ 500,000 8.30% 09/20/09 $ 543,110
Morgan Stanley Group, Inc.
500,000 6.75 03/04/03 484,575
PNC Bank N.A.
500,000 7.88 04/15/05 516,985
Smith Barney Holdings, Inc.
500,000 6.63 06/01/00 494,965
------------
$ 3,001,560
------------
INDUSTRIAL--1.7%
Gannett, Inc.
$ 500,000 5.25% 03/01/98 $ 491,260
Hanson Overseas BV
500,000 6.75 09/15/05 476,340
------------
$ 967,600
------------
UTILITIES--0.9%
AT + T Corp.
$500,000 7.13% 01/15/02 $ 506,285
------------
Total Corporate
Obligations
(cost $4,261,658).............................. $ 4,475,445
------------
Mortgage-Backed Pass-Through Obligations--6.5%
Government National Mortgage Assn.
$1,153,913 8.00% 02/15/22 $ 1,175,156
1,753,237 7.00 09/15/23 1,695,134
963,535 7.50 08/20/25 946,365
------------
Total Mortgage-Backed
Pass-Through Obligations
(cost $3,643,208).............................. $ 3,816,655
------------
U.S. Government Agency Obligations--1.3%
Federal Home Loan Bank
$ 750,000 6.63% 08/28/01 $ 750,630
------------
Total U.S. Government
Agency Obligations (cost
$695,325)...................................... $ 750,630
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BALANCED FUND-(CONTINUED)
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ------------------------------------------------------------------------------------------
U.S. Treasury Obligations-6.1%
<S> <C> <C> <C>
United States Treasury Bonds
$1,000,000 7.25% 05/15/16 $ 1,018,910
1,000,000 7.50 11/15/16 1,045,620
United States Treasury Notes
500,000 5.75 10/31/00 487,420
500,000 5.75 08/15/03 475,625
500,000 7.25 08/15/04 518,045
-------------
Total U.S. Treasury Obligations (cost $3,703,358) $ 3,545,620
-------------
Repurchase Agreements-8.2%
State Street Bank & Trust Company,
dated 04/30/96, repurchase price
$4,822,656 (U.S. Treasury Note:
$4,921,025, 6.88%, 08/31/99)
$4,822,000 4.90% 05/01/96 $ 4,822,000
-------------
Total Repurchase
Agreements (cost $4,822,000)........ $ 4,822,000
-------------
Total Investments (cost $50,734,064/(c)/) $59,155,470
=============
- -----------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for
investments in which value
exceeds cost....................... $ 9,016,841
Gross unrealized loss for investments
in which cost exceeds value.......... (598,166)
-------------
Net unrealized gain................... $ 8,418,675
=============
- -----------------------------------------------------------------------
</TABLE>
The percentage shown for each investment category
reflects the value of investments in that category as a
percentage of total net assets.
/(a)/Non-income producing
security.
/(b)/There are common stock rights attached to these securities.
/(c)/The aggregate cost for federal income tax purposes is $50,736,795.
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
GROWTH FUND
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -----------------------------------------------------------------------
<S> <C> <C>
Common Stocks--96.0%
AEROSPACE/DEFENSE--2.6%
53,700 Lockheed Martin Corp. $4,329,563
------------
BASIC INDUSTRIES--2.8%
73,500 Aluminum Company of America $4,584,562
------------
BUILDING MATERIALS & CONSTRUCTION--2.9%
180,000 Clayton Homes, Inc. $3,330,000
30,500 Sherwin Williams Co./(a)/ 1,425,875
-------------
$ 4,755,875
-------------
BUSINESS SERVICES--7.5%
58,400 Automatic Data Processing, Inc. $2,270,300
162,600 Equifax, Inc. 3,983,700
29,000 First Data Corp. 2,204,000
82,000 Reynolds & Reynolds Co. 3,792,500
-------------
$12,250,500
-------------
CHEMICAL PRODUCTS--1.5%
190,000 Terra Industries, Inc. $2,493,750
------------
COMMUNICATIONS--1.7%
54,100 SBC Communications, Inc. $2,705,000
------------
COMPUTER SERVICES/SOFTWARE-2.9%
20,000 Cerner Corp./(b)/ $ 412,500
32,200 Computer Sciences Corp./(a)(b)/ 2,382,800
48,000 Parametric Technology Corp./(b)/ 1,932,000
-------------
$ 4,727,300
-------------
CONSUMER GOODS--1.9%
35,100 Nike, Inc., Class B $3,071,250
------------
ELECTRICAL SERVICES--2.8%
117,600 Union Electric Co. $4,542,300
------------
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT--10.8%
36,500 Adaptec, Inc./(b)/ $2,098,750
35,000 Emerson Electric Co. 2,926,875
81,600 General Electric Co. 6,324,000
<CAPTION>
Shares Description Value
- -----------------------------------------------------------------------
<S> <C> <C>
Common Stocks Continued
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT-CONTINUED
36,600 Intel Corp. $2,479,650
58,000 Linear Technology Corp. 1,993,750
50,000 Xilinx, Inc./(b)/ 1,843,750
-------------
$17,666,775
-------------
FINANCIAL SERVICES--13.0%
32,400 BankAmerica Corp. $2,454,300
145,400 Federal National Mortgage Assn. 4,452,875
58,400 Franklin Resources, Inc. 3,343,400
110,000 Green Tree Financial Corp. 3,712,500
106,000 Norwest Corp. 3,829,250
64,500 SunAmerica, Inc. 3,515,250
-------------
$21,307,575
-------------
FOOD & BEVERAGES--4.8%
20,700 The Coca-Cola Co. $1,687,050
46,800 CPC International, Inc. 3,235,050
45,000 Pepsico, Inc. 2,857,500
-------------
$ 7,779,600
-------------
HEALTH & MEDICAL SERVICES--9.7%
61,400 Abbott Laboratories $2,494,375
58,000 Amgen, Inc./(b)/ 3,335,000
66,000 Healthcare Compare Corp./(b)/ 3,110,250
44,000 Johnson & Johnson 4,070,000
57,700 Nellcor Puritan Bennett, Inc./(b)/ 2,827,300
-------------
$15,836,925
-------------
HOTELS & RESTAURANTS--2.5%
84,000 McDonalds Corp. $4,021,500
------------
HOUSEHOLD PRODUCTS--1.4%
43,400 Gillette Co. $2,343,600
------------
INSURANCE SERVICES--2.7%
57,600 Conseco, Inc. $2,102,400
38,000 Travelers Group, Inc. 2,337,000
------------
$ 4,439,400
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
GROWTH FUND--(Continued)
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------- -------------------- --------
<S> <C> <C>
Common Stocks--Continued
MACHINERY--9.6%
79,000 Dover Corp. $ 4,068,500
194,700 Federal Signal Corp. 5,086,537
96,800 Illinois Tool Works, Inc. 6,509,800
------------
$ 15,664,837
------------
OFFICE & BUSINESS EQUIPMENT--3.2%
32,800 Cabletron Systems, Inc./(b)/ $ 2,472,300
50,000 Sun Microsystems, Inc./(b)/ 2,712,500
------------
$ 5,184,800
------------
OIL & GAS--6.0%
57,000 Mobil Corp. $ 6,555,000
22,500 Royal Dutch Petroleum Co. 3,223,125
------------
$ 9,778,125
------------
PAPER & FOREST PRODUCTS--1.2%
70,000 Chesapeake Corp./(a)/ $ 2,021,250
------------
RECREATIONAL SERVICES--2.4%
91,250 Mattel, Inc. $ 2,372,500
26,000 Walt Disney Co. 1,612,000
------------
$ 3,984,500
------------
RETAIL TRADE--2.1%
109,000 Walgreen Co. $ 3,488,000
------------
Total Common Stocks $156,976,987
(cost $114,996,294)...... ------------
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ------------- ------------ ------------- ---------------
<S> <C> <C> <C>
Repurchase Agreements--4.4%
State Street Bank & Trust Company,
dated 04/30/96, repurchase price
$7,253,987 (U.S. Treasury Note:
$7,399,535, 6.88%, 08/31/99)
$7,253,000 4.90% 05/01/96 $ 7,253,000
Total Repurchase Agreements
(cost $7,253,000).................... $ 7,253,000
------------
Total Investments
(cost $122,249,294/(c)/)............. $164,229,987
============
- ----------------------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for
investments in which value
exceeds cost................................................... $ 42,698,057
Gross unrealized loss for
investments in which cost
exceeds value.................................................. (717,364)
------------
Net unrealized gain...................................................... $ 41,980,693
============
- ------------------------------------------------------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
/(a)/There are common stock rights attached to these securities.
/(b)/Non-income producing security.
/(c)/The cost stated also represents aggregate cost for income tax purposes.
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
AGGRESSIVE GROWTH FUND
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Common Stocks--97.9%
AEROSPACE/ DEFENSE--1.3%
18,000 Litton Industries, Inc./(a)/ $ 816,750
------------
AGRICULTURE--1.3%
18,500 Delta & Pine Land Company $ 825,562
------------
BROADCAST MEDIA--1.0%
23,000 TCA Cable TV, Inc. $ 672,750
------------
BUILDING MATERIALS & CONSTRUCTION--1.2%
42,397 Clayton Homes, Inc. $ 784,344
------------
BUSINESS SERVICES--7.4%
31,000 Devry, Inc./(a)/ $1,154,750
28,000 Olsten Corp. 850,500
11,600 Omnicom Group 503,150
17,400 Paychex, Inc. 1,178,850
23,000 Reynolds & Reynolds Co. 1,063,750
-----------
$4,751,000
-----------
CHEMICAL PRODUCTS--5.8%
23,000 Bio-Rad Laboratories, Inc./(a)/ $1,069,500
30,000 Cabot Corp. 802,500
26,500 OM Group, Inc. 1,010,313
67,000 Terra Industries, Inc. 879,375
-----------
$3,761,688
-----------
COMPUTER SERVICES/SOFTWARE--11.3%
40,000 American Management Systems, Inc./(a)/ $1,065,000
12,000 BMC Software, Inc./(a)/ 730,500
20,000 Cheyenne Software, Inc. 455,000
18,700 Cognos, Inc./(a)/ 1,266,925
27,200 Madge Networks N. V./(a)/ 802,400
11,000 Medic Computer Systems, Inc./(a)/ 1,028,500
20,200 Network General Corp./(a)/ 891,325
25,000 Verifone, Inc./(a)/ 1,050,000
-----------
$7,289,650
-----------
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT--13.5%
25,400 ADC Telecommunications, Inc./(a)/ $1,066,800
14,000 Adtran, Inc./(a)/ 742,000
15,000 Andrew Corp./(a)/ 720,000
33,500 Belden, Inc. 996,625
38,000 ECI Telecommunications Ltd. 992,750
20,000 Lattice Semiconductor Corp./(a)/ 655,000
11,000 Linear Technology Corp. 378,125
18,000 Littlefuse, Inc./(a)/ 675,000
30,500 Logicon, Inc./(b)/ 907,375
19,000 Maxim Integrated Products, Inc./(a)/ 650,750
20,000 Symbol Technologies, Inc./(a)/ 925,000
-----------
$8,709,425
------------
ENGINEERING--1.3%
29,000 Jacobs Engineering Group, Inc./(a)/ $ 804,750
------------
FINANCIAL SERVICES--9.3%
36,000 A. G. Edwards, Inc. $ 846,000
26,000 Concord EFS, Inc./(a)/ 871,000
31,000 Fair Isaac & Co., Inc. 1,317,500
15,000 Northern Trust Corp./(b)/ 843,750
20,000 SunAmerica, Inc. 1,090,000
46,800 Synovus Financial Corp. 1,053,000
-----------
$6,021,250
------------
HEALTH & MEDICAL SERVICES--14.5%
52,000 Ballard Medical Products $1,033,500
5,500 Cardinal Health, Inc. 345,125
22,000 ClinTrials Research, Inc./(a)/ 924,000
21,600 Dentsply International, Inc. 901,800
18,000 Idexx Laboratories, Inc./(a)/ 801,000
33,000 Invacare Corp. 858,000
14,000 MediSense, Inc./(a)/ 630,000
64,000 NABI, Inc./(a)/ 788,000
14,600 Nellcor Puritan Bennett, Inc./(a)/ 715,400
31,000 Physician Sales & Service, Inc./(a)/ 837,000
22,500 Rotech Medical Corp./(a)/ 933,750
12,800 Stryker Corp. 619,200
-----------
$9,386,775
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
AGGRESSIVE GROWTH FUND-(Continued)
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
------ --------------------- ----------
<S> <C> <C>
Common Stocks-Continued
INSURANCE SERVICES-6.7%
26,000 Allied Group, Inc. $ 932,750
28,000 American Bankers Insurance
Group, Inc. 1,106,000
17,875 Orion Capital Corp. 793,203
25,000 Protective Life Corp./(b)/ 868,750
15,000 W.R. Berkley Corp. 645,000
---------------
$ 4,345,703
---------------
MACHINERY-4.7%
27,000 DT Industries, Inc. $ 573,750
19,000 Duriron Co., Inc. 498,750
17,000 Helix Technology Corp./(a)/ 640,688
19,500 Idex Corp. 765,375
15,500 Lindsay Manufacturing Co. 581,250
---------------
$ 3,059,813
---------------
MANUFACTURING-4.0%
24,200 Danaher Corp. $ 952,875
31,000 Lydall, Inc./(a)/ 728,500
21,000 Millipore Corp. 879,375
---------------
$ 2,560,750
---------------
PRINTING & PUBLISHING-1.9%
28,500 Banta Corp. $ 698,250
8,000 Scholastic Corp./(a)/ 524,000
---------------
$ 1,222,250
---------------
RECREATIONAL SERVICES-2.6%
33,800 Anthony Industries, Inc. $ 963,300
20,000 Polaris Industries, Inc. 697,500
---------------
$ 1,660,800
---------------
RETAIL TRADE-3.7%
32,000 Global Directmail Corp./(a)/ $ 1,256,000
31,900 MSC Industrial Direct, Inc./(a)/ 1,160,363
---------------
$ 2,416,363
---------------
TEXTILES-1.6%
39,000 G & K Services, Inc. $ 1,038,375
---------------
TRANSPORTATION/ STORAGE-1.7%
39,800 Air Express International Corp. $ 1,114,400
---------------
<CAPTION>
Shares Description Value
------ --------------------- ----------
<S> <C> <C>
Common Stocks-Continued
UTILITIES-3.1%
10,000 Century Telephone Enterprises,
Inc./(b)/ $ 327,500
28,000 NIPSCO Industries, Inc. 1,004,500
26,000 Scana Corp. 666,250
---------------
$ 1,998,250
---------------
Total Common Stocks (cost
$51,602,637)............. $63,240,648
---------------
<CAPTION>
Principal Amount Interest Rate Maturity Date
---------------- ------------------ ---------------
<S> <C> <C>
Repurchase Agreements-2.0%
State Street Bank & Trust Company,
dated 04/30/96, repurchase price
$1,269,173 (U.S. Treasury Note:
$1,295,818, 6.88%, 08/31/99)
$1,269,000 4.90% 05/01/96 $1,269,000
Total Repurchase Agreements
(cost $ 1,269,000) $1,269,000
---------------
Total Investments (cost
$52,871,637/(c)/) $64,509,648
===============
</TABLE>
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for
investments in which value
exceeds cost........................................ $12,486,167
Gross unrealized loss for investments
in which cost exceeds value......................... (946,968)
---------------
Net unrealized gain.................................. $11,539,199
===============
- ---------------------------------------------------------------------------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
/(a)/Non-income producing security.
/(b)/There are common stock rights attached to these securities.
/(c)/The aggregate cost for federal income tax purposes is $52,970,449.
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks-89.3%
ARGENTINE PESO-0.6%
163 Baesa (Buenos Aires
Embotelladora) ADR
(Beverages/ Tobacco) $ 2,588
704 Banco de Galicia Buenos Aires
SA ADR (Financial Services) 16,544
494 Banco Frances del Rio de La
Plata ADR (Financial
Services) 14,203
1,750 Comercial de Plata (Oil & Gas) 5,233
6,373 Perez Compac SA (Diversified
Industrial Manufacturing) 39,644
360 Sociedad Comercial del Plata
ADR /(a)/ (Oil & Gas) 10,808
2,230 Telecom Argentina (Utilities) 10,081
170 Telecom Argentina ADR (Utilities) 7,693
2,900 Telefonica de Argentina ADR
(Utilities) 84,825
400 Transportadora de Gas del Sur
ADR (Utilities) 5,150
2,470 YPF Sociedad Anonima ADR
(Oil & Gas) 54,031
----------
$ 250,800
----------
AUSTRALIAN DOLLAR-1.6%
4,000 Amcor (Paper & Forest
Products) $ 28,726
14,150 Australian Gas Light Co.
(Utilities) 58,926
6,294 Broken Hill Proprietary Co.
(Mining-Metals/Minerals) 96,880
10,000 Bums Philp & Co., Ltd.
(Wholesale Trade) 20,508
3,500 Coca-Cola Amatil (Beverages/
Tobacco) 36,823
7,135 Howard Smith (Diversified
Industrial Manufacturing) 41,486
2,051 Lend Lease Corp. (Building
Materials & Construction) 31,264
5,000 National Australia Bank
(Financial Services) 44,865
9,011 News Corp. (Broadcast Media) 52,819
10,000 Publishing & Broadcasting, Ltd.
(Broadcast Media) 45,730
11,000 Tab Corp Holdings, Ltd.
(Recreational Services) 45,549
14,000 TNT, Ltd. (Transportation/
Storage) 18,591
5,500 Western Mining Corp. Holdings,
Ltd. (Mining - Metals/
Minerals) 40,104
10,000 Westpac Banking Corp.
(Financial Services) 48,558
9,000 Woodside Petroleum, Ltd.
(Oil & Gas) 52,047
----------
$ 662,876
----------
AUSTRIAN SCHILLING-0.1%
84 EVN Energie Versorgung Neider
(Utilities) $ 12,288
280 Flughafen Wien AG
(Transportation/Storage) 19,634
----------
$ 31,922
----------
BELGIAN FRANC-0.9%
265 Generale Banque (Financial
Services) $ 93,440
660 Kredietbank (Financial Services) 188,691
42 UCB (Chemical Products) 70,712
----------
$ 352,843
----------
BRAZILIAN REAL-1.6%
3,200 Brazil Fund, Inc. (Financial
Services) $ 69,200
500 Cemig - CIA Energetica Minas
Gerais ADR (Utilities) 12,945
2,930 Cemig - CIA Energetica Minas
Gerais ADR (Non-Voting)
(Utilities) 75,843
</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, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks-Continued
BRAZILIAN REAL-CONTINUED
330 Companhia Energetica de Sao
Paolo /(a)/ (Utilities) $ 3,053
370 Companhia Energetica de Sao
Paolo /(a)/ (Non-Voting) (Utilities) 3,412
2,640 Electrobas-Centrais Eletricas
Brasileiras ADR (Utilities) 31,663
1,680 Electrobas-Centrais Eletricas
Brasileiras ADR (B Shares)
(Utilities) 20,741
6,024 Telebras (Utilities) 326,049
6,170 Uniao Sid Minas Gerais-
Usiminas (Mining - Metals/
Minerals) 68,796
4,740 Usinas Siderurgicas de Minas
ADR (Building Materials &
Construction) 54,460
----------
$ 666,162
----------
BRITISH POUND STERLING-13.7%
30,000 Abbey National (Financial
Services) $ 256,356
18,000 Argos (Retail Trade) 175,613
24,000 Argyll Group (Retail Trade) 119,874
79,000 ASDA Group (Retail Trade) 134,896
4,000 BAA (Transportation/ Storage) 32,857
15,000 British Gas (Oil & Gas) 53,257
10,000 British Petroleum (Oil & Gas) 90,191
29,000 Cable & Wireless (Utilities) 227,524
20,744 Cadbury Schweppes (Food/
Grocery Products) 160,722
37,000 Caradon (Building Materials &
Construction) 128,028
13,000 Coats Viyella (Textiles) 37,453
12,000 Compass Group (Recreational
Services) 98,751
6,600 East Midlands Electricity (Utilities) 62,207
7,000 Electrocomponents (Electronics
& Other Electrical Equipment) 41,966
3,000 GKN (Automobiles &
Automobile Parts) 44,343
19,000 Glaxo Wellcome (Health/
Personal Care) 230,247
34,000 Grand Metropolitan (Beverages/
Tobacco) 223,530
29,000 Guinness (Beverages/ Tobacco) 208,545
4,000 Heywood Williams Group
(Building Materials &
Construction) 14,864
11,000 Hillsdown Holdings (Food/
Grocery Products) 29,788
26,000 Kingfisher (Retail Trade) 232,541
18,000 Ladbroke Group (Recreational
Services) 52,941
11,000 Laing (John) (Building Materials
& Construction) 50,474
10,714 London Electricity (Utilities) 132,978
16,092 National Grid Group (Utilities) 49,508
48,400 National Westminster Bank
(Financial Services) 445,991
21,500 Rank Organisation (Recreational
Services) 172,401
25,000 Reed International (Broadcast
Media) 429,893
8,000 Rolls-Royce (Aerospace/
Defense) 28,524
13,000 RTZ Corp. (Mining - Metals/
Minerals) 204,574
9,000 Sears Holdings (Retail Trade) 13,608
22,500 Shell Transport & Trading Co.
(Oil & Gas) 296,694
20,000 Smith (David S.) Holdings
(Textiles) 89,665
42,000 SmithKline Beecham/ S'Kline
Beckman (Health/ Personal
Care) 445,464
</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, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks-Continued
BRITISH POUND STERLING-CONTINUED
23,000 T & N (Automobiles &
Automobile Parts) $ 62,111
17,000 Tesco (Retail Trade) 71,739
55,500 Tomkins (Diversified Industrial
Manufacturing) 228,780
21,000 United News & Media
(Broadcast Media) 219,099
----------
$5,597,997
----------
CANADIAN DOLLAR-0.3%
2,780 Alcan Aluminum, Ltd. (Mining -
Metals/ Minerals) $ 88,426
1,120 Macmillan Bloedel, Ltd. (Paper
& Forest Products) 14,933
1,020 Royal Bank of Canada
(Financial Services) 24,239
----------
$ 127,598
----------
CHILEAN PESO-0.7%
123 AFP Providia ADR (Financial
Services) $ 2,814
590 Cervecerias Unidas (CCU) ADR
(Beverages/ Tobacco) 12,538
1,580 Chile Fund, Inc. (Financial
Services) 38,710
550 Chilectra SA ADR (Utilities) 29,307
749 Chilgener SA ADR (Utilities) 16,759
391 Companhia de
Telecomunicaciones Chile
ADR (Utilities) 35,679
1,912 Empresa Nacional de
Electricidad SA ADR (Utilities) 37,284
1,191 Enersis SA ADR (Utilities) 35,432
11,110 Five Arrows Chile Investment
Trust (Financial Services) 31,997
1,160 Genesis Chile Fund (Financial
Services) 47,270
----------
$ 287,790
----------
CHINESE YUAN-0.5%
6,900 Huaneng Power International,
Inc. ADR /(a)/ (Energy) $ 107,813
210,000 Shanghai Petrochemical
(Chemical Products) 62,440
140,000 Yizheng Chemical Fibre
(Chemical Products) 37,554
----------
$ 207,807
----------
DANISH KRONE-0.2%
615 Den Danske Bank AB (Financial
Services) $ 40,131
290 Teledanmark (Utilities) 14,598
690 Unidanmark (Financial Services) 30,758
----------
$ 85,487
----------
DEUTSCHEMARK-4.0%
118 Allianz AG Holdings (Insurance
Services) $ 202,797
30 Altana (Health/ Personal Care) 18,506
20 AVA Allgemeine Handels-Der
Verbr AG (Retail Trade) 4,940
710 Bayer AG (Chemical Products) 228,733
120 Bilfinger & Berger Bauag
(Building Materials &
Construction) 45,442
72 Buderus AG (Industrial
Machinery) 26,348
1,910 Deutsche Bank AG (Financial
Services) 91,575
464 Fielmann AG /(a)/ (Health/
Personal Care) 20,391
490 Gehe AG (Health/ Personal
Care) 283,056
37 Gehe AG - Rights /(a)/ (Health/
Personal Care) 21,084
134 Hoechst AG (Chemical
Products) 45,148
200 Hornbach Baumarkt (Retail
Trade) 7,580
</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, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks-Continued
DEUTSCHEMARK-CONTINUED
630 Hornbach Holdings AG (Retail
Trade) $ 40,345
200 Mannesmann AG (Industrial
Machinery) 68,353
503 Praktiker Bau Und Heimwerker
Markte /(a)/ (Retail Trade) 11,274
872 Rhoen-Klinikum AG (Health/
Personal Care) 105,417
784 Schering AG (Chemical
Products) 57,636
129 Siemens AG (Electronics &
Other Electrical Equipment) 70,666
4,320 Veba AG (Utilities) 214,828
130 Veba AG - Warrants (Utilities) 31,177
86 Volkswagen AG (Automobiles &
Automobile Parts) 29,701
----------
$1,624,997
----------
FINNISH MARKKA-0.1%
1,200 Nokia (AB) OY (Electronics &
Other Electrical Equipment) $ 42,880
----------
FRENCH FRANC-7.6%
495 Accor (Recreational Services) $ 68,741
380 Alcatel Alsthom (Electronics &
Other Electrical 35,720
Equipment)
1,070 Assurances Generales de
France (Insurance Services) 29,201
150 Canal Plus (Broadcast Media) 36,729
375 Carrefour (Retail Trade) 292,875
358 Castorama Dubois
Investissment (Retail Trade) 68,480
320 Chargeurs (Diversified Industrial
Manufacturing) 85,102
678 Credit Local de France
(Financial Services) 53,516
3,740 Eaux (Cie Generale Des)
(Utilities) 406,530
580 Ecco Ste (Business Services) 130,240
1,580 Elf Aquitaine (Energy) 117,439
490 GTM Entrepose (Building
Materials & Construction) 31,559
231 Guilbert SA (Business Services) 37,932
410 Havas SA (Broadcast Media) 34,035
40 Hermes International (Retail
Trade) 10,591
150 L'Oreal (Health/ Personal Care) 46,332
950 Lapeyre (Building Materials &
Construction) 52,348
179 Legrand (Electronics & Other
Electrical Equipment) 34,794
1,110 LVMH Moet-Hennessy Louis
Vuitton (Beverages/ Tobacco) 283,817
870 Pinault Printemps Redoute
(Retail Trade) 264,014
980 Poliet (Building Materials &
Construction) 100,459
450 Primagaz (Cie Des Gaz Petrole)
(Oil & Gas) 48,218
25 Primagaz (Cie Des Gaz Petrole) -
Warrants /(a)/ (Oil & Gas) 488
110 Promodes (Retail Trade) 31,594
255 Rexel (Retail Trade) 61,108
1,310 Saint Gobain (Chemical
Products) 156,836
582 Sanofi (Health/ Personal Care) 46,940
760 Schneider SA (Electronics &
Other Electrical Equipment) 35,396
240 Societe Generale (Financial
Services) 27,851
230 Sodexho (Food/ Grocery
Products) 91,150
2,100 Television Francaise (Broadcast
Media) 227,453
1,930 Total (Oil & Gas) 130,911
-----------
$ 3,078,399
-----------
</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, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks-Continued
HONG KONG DOLLAR-4.2%
24,000 Dao Heng Bank Group
(Financial Services) $ 91,836
132,295 First Pacific Co. (Financial
Services) 176,154
110,000 Guangdong Investments, Ltd.
(Real Estate) 67,901
375,000 Guangzhou Investments (Real
Estate) 93,077
29,000 Guoco Group (Financial
Services) 144,335
114,687 Hong Kong Land Holdings
(Real Estate) 245,430
294,000 Hopewell Holdings (Real Estate) 179,581
31,000 Hutchison Whampoa
(Diversified Holding
Companies) 192,360
40,000 New World Development Co.
(Real Estate) 179,433
18,000 Swire Pacific Co. (Diversified
Holding Companies) 153,578
49,000 Wharf Holdings (Diversified
Holding Companies) 181,481
----------
$1,705,166
----------
ITALIAN LIRA-1.9%
6,100 Assicurazioni Generali Spa
(Insurance Services) $ 152,224
42,430 Banca Fideuram (Financial
Services) 73,398
2,000 Danieli & Co. (Di Risp Shares)
(Building Materials &
Construction) 7,201
10,000 ENI (Ente Nazionale Idrocarburi)
(Oil & Gas) 43,246
2,526 Finanziaria Autogrill Spa /(a)/
(Recreational Services) 2,687
2,000 IMI Spa (Financial Services) 15,889
13,000 Instituto National Assicurazioni
(Insurance Services) 19,989
12,000 Italgas (Societa Italiana Il Gas)
Spa (Utilities) 41,516
1,100 RAS (Insurance Services) 12,280
3,000 Rinascente (Retail Trade) 20,777
5,415 Sasib (Di Risp Shares) (Building
Materials & Construction) 10,547
5,526 SME (Meridonale Di Finanziaria)
(Food/ Grocery Products) 6,157
32,000 STET (Utilities) 108,250
16,000 STET (Di Risp Shares) (Utilities) 41,978
28,013 Telecom Italia Spa (Utilities) 57,163
55,443 Telecom Italia Mobile (Utilities) 122,549
15,887 Telecom Italia Mobile (Di Risp
Shares) (Utilities) 22,291
2,000 Unicem (Union-CEM-March
Emil) Spa (Chemical
Products) 13,711
----------
$ 771,853
----------
JAPANESE YEN-23.4%
1,100 Advantest (Electronics & Other
Electrical Equipment) $ 54,582
6,000 Alps Electric Co. (Electronics &
Other Electrical Equipment) 70,558
13,000 Amada Co, Ltd. (Industrial
Machinery) 151,632
15,000 Canon, Inc. (Electronics & Other
Electrical Equipment) 298,293
8,000 Citizen Watch Co. (Electronics
& Other Electrical Equipment) 69,984
11,000 Dai Nippon Screen
Manufacturing (Electronics &
Other Electrical Equipment) 111,478
2,000 Daifuku Co., Ltd. (Industrial
Machinery) 31,550
11,000 Daiichi Pharmaceutical Co.
(Health/ Personal Care) 185,095
</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, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks Continued
JAPANESE YEN-CONTINUED
14,000 Daiwa House Industry Co.
(Building Materials & Construction) $223,529
17 DDI Corp. (Computers/Communication) 146,116
36 East Japan Railway (Transportation/Storage) 192,399
3,000 Fanuc Co., Ltd.
(Electronics & Other Electrical Equipment) 130,503
19,000 Hitachi (Electronics & Other
Electrical Equipment) 205,268
16,000 Hitachi Zosen Corp. (Heavy Engineering) 87,805
2,000 Honda Motor Co., Ltd.
(Automobiles & Automobile Parts) 45,700
6,000 Inax Corp. (Building Materials & Construction) 65,395
6,000 Ishihara Sangyo Kaisha (Chemical Products) 22,257
4,000 Ito-Yokado Co. (Retail Trade) 235,958
6,000 Kokuyo Co., Ltd. (Computers/Communication) 166,356
16,000 Komatsu, Ltd. (Industrial Machinery) 154,501
5,000 Komori Corp. (Industrial Machinery) 132,894
11,000 Kumagai Gumi Co.
(Building Materials & Construction) 47,220
12,000 Kuraray Co. (Chemical Products) 138,821
5,000 Kyocera Corp.
(Electronics & Other Electrical Equipment) 376,691
8,000 Makita Corp. (Industrial Machinery) 129,260
10,000 Marui Co., Ltd. (Retail Trade) 220,852
14,000 Matsushita Electric Industrial
Co. (Household Durables) 247,622
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks-Continued
JAPANESE YEN-CONTINUED
8,000 Mitsubishi Corp. (Wholesale Trade) $113,963
39,000 Mitsubishi Heavy Industries, Ltd.
(Heavy Engineering) 348,258
7,000 Mitsubishi Paper Mills, Ltd.
(Paper & Forest Products) 44,973
22,000 Mitsui Fudosan Co. (Real Estate) 290,262
5,000 Mitsui Petrochemical Industries (Oil & Gas) 42,210
5,000 Murata Manufacturing Co.
(Electronics & Other Electrical
Equipment) 194,082
3,000 National House Industrial
(Building Materials & Construction) 53,062
27,000 NEC Corp. (Electronics & Other
Electrical Equipment) 343,324
3,000 Nippon Hodo (Building
Materials & Construction) 53,349
67,000 Nippon Steel Corp. (Mining -
Metals/Minerals) 242,134
17 Nippon Telephone & Telegraph Corp.
(Computers/Communication) 131,813
14,000 Nippondenso Co. (Transportation/Storage) 305,177
14,000 Nomura Securities Co., Ltd.
(Financial Services) 305,177
7,000 Pioneer Electronic Corp.
(Household Durables) 156,604
2,000 Sangetsu Co., Ltd. (Building
Materials & Construction) 49,716
10,000 Sankyo (Health/Personal Care) 242,841
2,000 SEGA Enterprises (Diversified
Industrial Manufacturing) 102,108
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND-(CONTINUED)
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks-Continued
JAPANESE YEN-CONTINUED
14,000 Sekisui Chemical Co., Ltd.
(Building Materials & Construction) $ 176,681
11,000 Sekisui House (Building Materials &
Construction) 136,718
1,100 Seven Eleven Japan Co., Ltd. (Retail Trade) 77,929
13,000 Sharp Corp. (Household Durables) 226,206
7,350 Shinetsu Chemical Co., Ltd. (Chemical Products) 160,921
4,000 Sony Corp. (Household Durables) 260,051
21,000 Sumitomo Corp. (Wholesale Trade) 250,968
20,000 Sumitomo Electric Industries, Ltd. (Mining -
Metals/ Minerals) 286,821
7,000 Sumitomo Forestry Co., Ltd. (Paper & Forest
Products) 107,749
4,000 TDK Corp. (Household Durables) 229,074
30,000 Teijin (Chemical Products) 164,922
6,000 Tokio Marine & Fire Insurance Co. (Insurance
Services) 82,604
2,000 Tokyo Electron (Electronics & Other Electrical
Equipment) 74,382
6,000 Tokyo Steel Manufacturing (Mining - Metals/
Minerals) 121,038
10,000 Toppan Printing Co. (Broadcast Media) 147,235
3,000 Yurtec Corp. (Building Materials & Construction) 56,790
------------
$9,521,461
------------
KOREAN WON-1.0%
1,000 Korea Electric Power Corp.ADR (Utilities) $ 28,000
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks-Continued
KOREAN WON-CONTINUED
9,400 Korea Fund, Inc. /(a) /(Financial Services) $ 225,600
600 Pohang Iron & Steel, Ltd. ADR
(Mining - Metals/Minerals) 16,500
519 Samsung Electronics, Ltd. (Electronics & Other 35,238
Electrical Equipment)
1,130 Samsung Electronics, Ltd. GDR (Electronics &
Other Electrical Equipment ) 84,468
600 Samsung Electronics, Ltd. GDR /(a)/
(Non-Voting) (Electronics & Other
Electrical Equipment) 25,500
------------
$ 415,306
------------
MALAYSIAN RINGGIT-3.0%
85,000 Affin Holdings Berhad (Financial Services) $ 209,763
10,000 Affin Holdings Berhad - Warrants /(a)/
(Financial Services) 10,513
29,000 Berjaya Sports Toto Berhad (Business Services) 93,094
13,000 Commerce Asset-Holdings Berhad (Financial
Services) 52,165
43,000 MBF Capital Berhad (Financial Services) 64,532
79,000 Multi-Purpose Holding (Financial Services) 137,579
68,000 Renong Berhad (Diversified Industrial
Manufacturing) 118,422
11,200 Renong Berhad - Rights /(a)/ (Diversified
Industrial Manufacturing) 67
7,000 Renong Berhad - Warrants /(a)/ (Diversified
Industrial Manufacturing) 1,966
14,000 Tanjong (Mining - Metals/ Minerals) 53,369
86,000 Technology Resources Industries (Business
Services) 293,327
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND-(CONTINUED)
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks-Continued
MALAYSIAN RINGGIT-CONTINUED
27,000 United Engineers Berhad
(Industrial Machinery) $ 185,265
------------
$1,220,062
------------
MEXICAN PESO-1.6%
14,062 Cemex SA (Building Materials
& Construction) $ 56,021
9,860 Cemex SA (B Shares) (Building
Materials & Construction) 42,001
4,460 Cemex SA ADR (Building Materials
& Construction) 34,877
69,308 CIFRA SA de CV (Retail Trade) 93,219
11,412 Fomento Economico Mexicano
SA (Beverages/ Tabacco) 34,405
13,878 Groupo Financiero Banamex-Accivl
(B Shares) (Financial Services) 31,977
499 Groupo Financiero Banamex-Accivl
(L Shares) (Financial Services) 1,025
9,530 Gruma SA (Diversified Holding Companies) 38,479
8,795 Grupo Embotellador de Mexico /(a)/
(Paper & Forest Products) 13,376
28,450 Grupo Industrial Maseca SA (Household
Durables) 27,799
1,288 Grupo Modelo SA (Beverages/ Tobacco) 6,059
1,242 Grupo Televisa GDR (Broadcast Media) 38,502
2,151 Kimberly Clark de Mexico (Health/ Personal Care) 39,372
1,200 Panamerica Beverages ADR (Beverages/ Tobacco) 52,650
3,765 Telefonos de Mexico SA ADR (Utilities) 128,010
------------
$ 637,772
------------
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks-Continued
NETHERLANDS GUILDER-8.9%
3,127 ABN AMRO Holdings NV (Financial Services) $ 161,870
1,840 Ahold NV (Retail Trade) 90,738
208 Akzo Nobel NV (Chemical Products) 24,156
4,410 CSM CVA (Food/ Grocery Products) 212,586
44,576 Elsevier NV (Broadcast Media) 671,176
1,630 Fortis AMEV NV (Insurance Services) 116,435
690 Hagemeyer (Wholesale Trade) 47,235
4,085 Internationale Nederlanden Groep
(Financial Services) 315,404
1,408 Koninklijke Ptt Nederland (Utilities) 52,836
690 Nutricia (Verenigde Bedrijven)
NV (Food/ Grocery Products) 73,732
4,657 Polygram (Recreational Services) 277,219
4,570 Royal Dutch Petroleum Co. (Oil & Gas) 651,028
1,470 Unilever NV (Food/ Grocery Products) 200,575
6,838 Wolters Kluwer (Broadcast Media) 747,451
------------
$3,642,441
------------
NEW ZEALAND DOLLAR-0.5%
7,000 Air New Zealand, Ltd.
(Transportation/ Storage) $ 24,524
13,000 Carter Holt Harvey (Paper
& Forest Products) 30,810
7,000 Fernz Corp. (Chemical Products) 21,639
1,750 Fletcher Challenge Building (Building
Materials & Construction) 4,147
1,750 Fletcher Challenge Energy (Oil & Gas) 3,751
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(Continued)
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks-Continued
NEW ZEALAND DOLLAR-CONTINUED
23,709 Fletcher Challenge Forest Division
(Paper & Forest Products) $ 30,620
3,500 Fletcher Challenge Paper (Paper & Forest
Products) 7,213
20,000 New Zealand Telecom (Utilities) 84,908
-----------
$207,612
-----------
NORWEGIAN KRONE-1.3%
660 Bergesen D-Y ASA (Transportation/
Storage) $ 11,855
540 Kvaerner Industrier ASA (Industrial
Machinery) 22,193
5,940 Norsk Hydro (Energy) 270,797
3,800 Orkla AS (Diversified Industrial
Manufacturing) 185,673
1,390 Saga Petroleum (Oil & Gas) 18,831
-----------
$509,349
-----------
PORTUGUESE ESCUDO-0.4%
2,050 Jeronimo Martins SGPS (Food/Grocery
Products) $164,779
----------
SINGAPORE DOLLAR-2.2%
18,000 DBS Land (Real Estate) $ 72,989
5,000 Development Bank of Singapore (Financial
Services) 63,314
7,000 Far East-Levingston Shipbuliding (Heavy
Engineering) 40,834
3,600 Fraser & Neave (Beverages/Tobacco) 39,952
5,000 Jurong Shipyard (Industrial Machinery) 28,633
4,000 Keppel Corp. (Transportation/Storage) 36,139
13,000 Neptune Orient Lines (Transportation/
Storage) 14,427
<CAPTION>
Shares Description Value
- -------- ------------- -------
<S> <C> <C>
Common Stocks-Continued
SINGAPORE DOLLAR-CONTINUED
19,000 Overseas Union Bank (Financial Services) $147,329
6,000 Sembawang Corp. (Industrial Machinery) 31,159
2,000 Singapore Airlines (Transportation/
Storage) 20,203
20,000 Singapore Land (Real Estate) 142,278
4,200 Singapore Press Holdings (Broadcast
Media) 79,476
32,000 United Industrial Corp. (Real Estate) 32,553
14,800 United Overseas Bank (Financial Services) 144,241
3,200 United Overseas Bank - Warrants /(a)/
(Financial Services) 13,431
-----------
$906,958
-----------
SPANISH PESETA-2.4%
1,279 Argentaria (Financial Services) $ 51,784
2,159 Banco de Santander SA (Financial
Services) 100,312
640 Banco Popular Espanol (Financial
Services) 106,063
1,601 Centros Comerciales Pryca (Retail Trade) 36,941
4,190 Empresa Nacional de Endesa (Utilities) 263,193
181 Fomento de Construcciones Y Constra
(Utilities) 15,439
637 Gas Natural Sdg SA (Utilities) 115,782
9,100 Iberdrola SA (Utilities) 89,068
4,875 Repsol SA (Oil & Gas) 178,788
70 Repsol SA ADR (Oil & Gas) 2,590
2,140 Sevillana de Electricidad (Utilities) 17,918
-----------
$977,878
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND-(Continued)
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------ ----------- -----
Common Stocks-Continued
SWEDISH KRONA-2.2%
<C> <C> <C>
650 ASEA AB (Electronics & Other Electrical Equipment) $ 66,509
8,530 Astra AB (Health/ Personal Care) 376,666
3,710 Atlas Copco AB (Industrial Machinery) 70,562
2,650 Electrolux Co. (Household Durables) 133,623
670 Esselte (Broadcast Media) 13,435
1,100 Hennes & Mauritz AB (Retail Trade) 75,901
860 Sandvik AB (Industrial Machinery) 18,956
4,560 Sandvik AB (B Shares) (Industrial Machinery) 100,512
660 Scribona AB (Broadcast Media) 6,325
2,680 Stora Kopparbergs Bergsl AB (Paper & Forest Products) 35,957
----------
$ 898,446
----------
SWISS FRANC-3.6%
200 BBC AG Brown, Boveri & Cie
(Electronics & Other Electrical Equipment) $ 240,999
141 Ciba Geigy AG (Chemical Products) 163,658
660 CS Holdings (Financial Services) 59,940
285 Nestle SA (Food/ Grocery Products) 317,024
43 Roche Holdings AG (Health/ Personal Care) 338,216
190 Sandoz AG (Health/ Personal Care) 207,523
29 Union Bank of Switzerland (Financial Services) 28,825
320 Schweizerischer Bankverein (Financial Services) 119,855
----------
$1,476,040
----------
THAI BAHT-0.8%
2,900 Advanced Information Services
(Computers/Communication) $ 49,167
5,400 Bangkok Bank (Financial
Services) 78,290
5,570 Bank of Ayudhya (Financial
Services) 32,876
1,000 Land & House Public Co. (Real
Estate) 15,449
400 Siam Cement Public Co.
(Building Materials & Construction) 20,599
4,100 Siam Commercial Bank Public
Co. (Financial Services) 60,417
4,100 Thai Farmers Bank Public
(Financial Services) 47,099
1,900 Total Access Communication
(Computers/Communication) 16,720
-------------
$ 320,617
-------------
UNITED STATES DOLLAR-0.0%
190 Enron Global Power &
Pipelines, LLC (Energy) $ 4,703
Total Common Stocks
(cost $33,098,935) $36,398,001
-------------
Preferred Stocks0.1%
AUSTRALIAN DOLLAR-0.1%
15,000 Sydney Harbour Casino
(Recreational Services) $ 22,747
-------------
AUSTRIAN SCHILLING-0.0%
200 Creditanstalt Bankverein
(Financial Services) $ 11,164
-------------
DEUTSCHEMARK-0.0%
60 Krones AG (Industrial
Machinery) $ 20,937
-------------
Total Preferred Stocks
(cost $55,165) $ 54,848
-------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND-(CONTINUED)
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ----------- ---------- ---------- -----------
<S> <C> <C> <C>
Corporate Obligations-0.0%
BELGIAN FRANC-0.0%
Kredietbank
BEF 10 5.75% 11/30/03 $ 2,799
-----------
Total Corporate
Obligations
(cost $2,557) .............. $ 2,799
-----------
Repurchase Agreements-9.7%
State Street Bank & Trust Company,
dated 04/30/96, repurchase price
$3,970,540 (U.S. Treasury Note:
$4,052,004, 6.88%, 08/31/99)
$3,970,000 4.90% 05/01/96 $ 3,970,000
-----------
Total Repurchase
Agreements
(cost $3,970,000).......... $ 3,970,000
-----------
Total Investments
(cost $37,126,657/(b)/)..... $40,425,648
===========
- ---------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for
investments in which value
exceeds cost..................................... $ 3,819,583
Gross unrealized loss for
investments in which cost
exceeds value.................................... (563,620)
-----------
Net unrealized gain................................ $ 3,255,963
===========
- ---------------------------------------------------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
/(a)/Non-income producing security.
/(b)/The aggregate cost for federal income tax purposes is $37,169,685.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
Common and Preferred Stock Industry Concentrations
- ---------------------------------------------------------------------------
<S> <C>
Financial Services 11.3%
Utilities 7.6%
Broadcast Media 6.7%
Electronics & Other Electrical Equipment 6.5%
Health/ Personal Care 6.4%
Retail Trade 5.9%
Oil & Gas 4.1%
Building Materials & Construction 3.8%
Chemical Products 3.4%
Real Estate 3.2%
Household Durables 3.1%
Food/ Grocery Products 3.1%
Mining - Metals/ Minerals 3.0%
Industrial Machinery 2.9%
Beverages/ Tobacco 2.2%
Diversified Industrial Manufacturing 2.0%
Recreational Services 1.8%
Transportation/ Storage 1.7%
Insurance Services 1.5%
Diversified Holding Companies 1.4%
Business Services 1.4%
Computers/Communication 1.3%
Energy 1.2%
Heavy Engineering 1.2%
Wholesale Trade 1.1%
Paper & Forest Products 0.8%
Automobiles & Automobile Parts 0.4%
Textiles 0.3%
Aerospace/ Defense 0.1%
- ---------------------------------------------------------------------------
Total Common and Preferred Stocks 89.4%
- ---------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
NATIONAL TAX-FREE BOND FUND
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ----------- ---------- ---------- -----------
<S> <C> <C> <C>
Municipal Bond Obligations-98.5%
ALABAMA-2.2%
North Alabama Environmental
Improvement Authority Pollution
Control Revenue
Bonds (NR/Aa3/P-1)
$300,000 4.15%/(a)/ 12/01/00 $ 300,000
----------
ARIZONA-3.6%
Salt River Project Arizona
Agricultural Improvements
Revenue Bonds (AA/Aa)
$500,000 4.50% 01/01/04 $ 486,385
----------
DELAWARE-0.7%
Wilmington Hospital Revenue
Bonds (Toronto Dominion Bank
LOC)(AA/A-1+/Aa2/VMIG1)
$100,000 4.15%/(a)/ 07/01/11 $ 100,000
----------
FLORIDA-1.5%
Florida State Board of Education
Capital Outlay GO Bonds Series A
(AA/Aa)
$200,000 5.25% 01/01/04 $ 203,900
----------
GEORGIA-1.5%
Georgia State GO Bonds Series
D (AA+/Aaa)
$200,000 5.40% 11/01/10 $ 199,998
----------
HAWAII-3.5%
Hawaii State GO Bonds (AA/Aa)
$500,000 5.25% 06/01/11 $ 473,060
----------
ILLINOIS-1.9%
Evanston GO Bonds (NR/Aaa)
$250,000 5.30% 12/01/99 $ 257,112
----------
INDIANA-3.7%
Indianapolis Sanitation District
Bonds (AA+/NR)
$500,000 5.70% 01/01/98 $ 513,090
----------
IOWA-5.5%
Bettendorf GO Bonds Series A
(AMBAC)(NR/Aaa)
$250,000 4.70% 06/01/03 $ 249,245
Iowa City Sewer Revenue Bonds
(AMBAC)(AAA/Aaa)
250,000 6.00 07/01/08 257,092
Polk County GO Bonds (FGIC)
(AAA/Aaa)
250,000 5.50 12/01/10 245,322
----------
$ 751,659
----------
KENTUCKY-1.5%
Louisville Water Works Board Water
System Revenue Bonds (Aa/Aa)
$200,000 5.63% 11/15/06 $ 205,766
----------
MARYLAND-1.8%
Maryland State GO Bonds
(AAA/Aaa)
$250,000 4.80% 04/15/01 $ 251,305
----------
MICHIGAN-1.5%
Greenville Public Schools
GO Bonds (MBIA) (AAA/Aaa)
$200,000 5.75% 05/01/07 $ 205,350
----------
MINNESOTA-6.6%
Minneapolis GO Bonds (AAA/Aaa)
$500,000 5.30% 10/01/98 $ 513,390
St. Paul Independent School District
#625 GO Bonds Series C (AA/Aa)
400,000 5.20 02/01/07 393,504
----------
$ 906,894
----------
NEBRASKA-5.2%
Douglas County Juvenile Detention
Facility GO Bonds (AA+/Aa)
$250,000 4.80% 07/01/02 $ 250,645
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
NATIONAL TAX-FREE BOND FUND-(CONTINUED)
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ----------- ---------- ---------- -----------
<S> <C> <C> <C>
Municipal Bond Obligations-Continued
NEBRASKA-CONTINUED
Nebraska Public Power District
Revenue Bonds Series A (A+/A1)
$250,000 5.10% 01/01/06 $ 247,168
200,000 6.00 01/01/06 209,344
----------
$ 707,157
----------
NEVADA-1.5%
Clark County School District GO
Bonds Series B (FGIC) (AAA/Aaa)
$200,000 5.30% 05/01/04 $ 202,598
----------
NEW MEXICO-0.7%
Albuquerque Gross Receipts Series A
Revenue Bonds (Canadian Imperial
Bank LOC)(AA/A-1+/Aa3/VMIG 1)
$100,000 4.20%/(a)/ 07/01/22 $ 100,000
----------
OHIO-4.8%
Columbus GO Bonds Series A
(AAA/Aaa)
$250,000 4.50% 07/01/01 $ 249,075
Euclid GO Bonds (NR/Aa)
415,000 4.40 12/01/01 410,539
----------
$ 659,614
----------
SOUTH CAROLINA-1.8%
South Carolina State Capital
Improvement GO Bonds Series A
(AA+/Aaa)
$250,000 5.00% 03/01/05 $ 251,045
----------
TEXAS-14.5%
Channelview Independent School
District GO Bonds (PSFG) (NR/Aaa)
$250,000 4.75% 08/15/05 $ 242,675
Collin County GO Bonds (AA-/Aa)
400,000 5.40 02/15/09 392,368
Houston Independent School
District GO Bonds (AA+/Aa)
250,000 4.40 07/15/01 246,900
North Central Texas Health Facilities
Development Corp. Revenue
Bonds (NationsBank of Texas
SPA)(MBIA)(AAA/A-1/Aaa/VMIG1)
$100,000 4.15%/(a)/ 12/01/15 $ 100,000
San Antonio GO Bonds (AA/Aa)
200,000 5.20 08/01/02 203,716
Tarrant County GO Bonds (AA+/Aa1)
400,000 4.80 07/15/06 386,504
Texas A&M University Revenue
Bonds (AA/Aa)
200,000 5.55 05/15/01 207,084
Texas State GO Bonds Series A
(AA/Aa)
200,000 5.65 10/01/08 203,488
----------
$1,982,735
----------
UTAH-3.7%
Alpine School District GO Bonds
(FGIC-TCRS) (AAA/Aaa)
$250,000 5.40% 03/15/05 $ 252,985
Salt Lake City School District
Revenue Bonds Series A (NR/Aaa)
250,000 5.80 03/01/07 259,235
----------
$ 512,220
----------
VIRGINIA-5.1%
Virginia Beach GO Bonds (AA/Aa)
$200,000 5.20% 07/15/06 $ 201,876
Virginia State Public School
Authority Revenue Bonds (AA/Aa)
500,000 4.50 01/01/00 499,970
----------
$ 701,846
----------
WASHINGTON-18.9%
King County GO Bonds (AA+/Aa1)
$500,000 6.20% 12/01/00 $ 528,435
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
NATIONAL TAX-FREE BOND FUND-(CONTINUED)
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ----------- ---------- ---------- -----------
<S> <C> <C> <C>
Municipal Bond Obligations-Continued
WASHINGTON-CONTINUED
King County School District #412
GO Bonds (MBIA) (AAA/Aaa)
$250,000 5.75% 06/01/08 $ 255,122
Pierce County Sewer Improvements
Revenue Bonds (A+/A1)
290,000 5.45 02/01/08 288,480
Port Seattle Revenue Bonds Series A
(AMBAC)(AAA/Aaa)
500,000 6.00 02/01/99 519,250
Seattle Municipal Light & Power
Revenue Bonds Series A (AA/Aa)
250,000 5.75 08/01/09 253,413
Snohomish County GO Bonds (MBIA) (AAA/Aaa)
250,000 5.75 12/01/10 248,768
Vancouver Water & Sewer Revenue
Bonds (FGIC) (AAA/Aaa)
250,000 4.70 06/01/01 249,320
Washington State GO Bonds Series
DD-12 & CC-9 (AA/Aa)
250,000 5.38 03/01/08 249,223
-----------
$ 2,592,011
-----------
WISCONSIN-6.8%
Milwaukee GO Bonds Series C (AA+/Aa1)
$220,000 5.60% 06/15/10 $ 218,924
Waukesha County GO Bonds (NR/Aaa)
500,000 4.40 12/01/98 502,400
Wisconsin State GO Bonds Series 3 (AA/Aa)
200,000 5.25 11/01/02 205,982
-----------
$ 927,306
-----------
Total Municipal Bond
Obligations
(cost $13,483,486)........ $13,491,051
-----------
Total Investments
(cost $13,483,486/(b)/)... $13,491,051
===========
</TABLE>
- ------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for
investments in which value
exceeds cost................................... $ 98,661
Gross unrealized loss for
investments in which cost
exceeds value.................................. (91,096)
-----------
Net unrealized gain.............................. $ 7,565
===========
- ------------------------------------------------------------------------------
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
/(a)/Variable rate security. Coupon rate disclosed is that which is in effect
at April 30, 1996.
/(b)/The cost stated also represents aggregate cost for income tax purposes.
- ------------------------------------------------------------------------------
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
NR -Not Rated
PSFG -Permanent School Fund Guaranteed
SPA -Standby Purchase Agreement
TCRS -Transferable Custodial Receipts
- ------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
MISSOURI TAX-FREE BOND FUND
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ----------- ---------- ---------- -----------
<S> <C> <C> <C>
Missouri Municipal Bond Obligations-98.7%
Belton School District #124 GO
Bonds (NR/A)
$300,000 5.60% 03/01/10 $ 298,263
Benton County School District GO
Bonds (AA/NR)
300,000 4.90 03/01/04 296,334
Cass County School District #R-9 GO
Bonds (NR/A)
200,000 6.25 03/01/00 207,032
Cass County School District GO Bonds
(AA/NR)
400,000 4.75 03/01/03 393,340
Columbia School District GO Bonds (NR/Aa)
200,000 5.50 03/01/11 197,588
Columbia Special Revenue Bonds (Toronto
Dominion Bank LOC) (NR/Aa2/VMIG1)
100,000 4.20/(a)/ 06/01/08 100,000
Columbia Water & Electricity Revenue
Bonds Series A (AA/A1)
300,000 5.40 10/01/02 309,483
Hazelwood School District GO Bonds
(NR/Aa)
150,000 5.15 03/01/04 152,500
Jackson County School District GO Bonds
(NR/A1)
250,000 5.60 03/01/08 254,372
Kansas City GO Bonds (AA/Aa)
200,000 4.50 06/01/04 193,412
Kansas City Industrial Development
Authority (Mellon Bank LOC) (A/A-1/NR)
100,000 4.35/(a)/ 12/01/14 100,000
Kansas City Sewer Special Assessment GO
Bonds Series A (AA/Aa)
410,000 7.40 05/15/99 444,559
Lafayette County School District GO
Bonds (AA/NR)
$350,000 5.20% 03/01/07 342,884
Lees Summit GO Bonds Series B (AMBAC)
(AAA/Aaa)
400,000 4.20 04/01/04 382,056
Missouri State Economic Development
Export & Infrastructure Board Revenue
Bonds (NR/Aa)
200,000 5.38/(a)/ 05/01/03 199,962
Missouri State Environmental Improvement
& Energy Resources Authority Pollution
Control Revenue Bonds (AA/A1)
500,000 4.25 12/01/98 499,500
Missouri State Environmental Improvement
& Energy Resources Authority Water
Pollution Control Revenue Bonds Series A
(Aa/NR)
150,000 5.25 07/01/02 153,392
Missouri State Environmental Improvement
& Energy Resources Authority Water
Pollution Control Revenue Bonds Series C
(NR/Aa)
205,000 4.75 01/01/01 205,666
500,000 4.90 01/01/02 501,925
Missouri State Environmental Improvement
& Energy Resources Authority Water
Pollution Control Revenue Bonds Series E
(NR/Aa)
390,000 4.38 07/01/00 387,855
Missouri State GO Bonds (AAA/Aaa)
205,000 5.70 11/01/02 215,836
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
MISSOURI TAX-FREE BOND FUND-(CONTINUED)
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ----------- ---------- ---------- -----------
<S> <C> <C> <C>
Missouri Municipal Bond Obligations-Continued
Missouri State GO Bonds Series
A (AAA/Aaa)
$300,000 6.00% 04/01/00 $ 316,287
500,000 4.50 08/01/02 497,815
Missouri State Health &
Educational Facility Revenue
Bonds (Barnes-Jewish, Inc.)
(AA/Aa)
150,000 6.00 05/15/11 154,499
Missouri State Health &
Educational Facility Revenue
Bonds (prerefunded to 06/01/01)
(MBIA) (AAA/Aaa)
300,000 6.63 06/01/11 331,980
Missouri State Health &
Educational Facility Revenue
Bonds Series B (Health Midwest)
(MBIA) (AAA/Aaa)
150,000 6.10 06/01/11 154,311
Missouri State Health &
Educational Facility Washington
University Revenue Bonds
Series A (NR/Aa1)
450,000 4.75 08/15/05 436,491
Missouri State Office Building
Special Obligation Revenue
Bonds (AA/Aa)
150,000 5.50 12/01/98 154,859
Missouri State Water Pollution
Control GO Bonds Series B
(AAA/Aaa)
250,000 5.13 08/01/09 244,920
Platte County School District
#R-3 GO Bonds (AA/NR)
265,000 4.90 03/01/05 259,409
Springfield GO Bonds (NR/Aa)
$220,000 4.30 03/01/00 218,684
St. Charles School District GO
Bonds (AA/Aa)
250,000 5.00 03/01/08 241,745
St. Charles School District GO
Bonds Series A (AMBAC) (AAA/Aaa)
150,000 5.75% 03/01/11 150,722
St. Francois County School
District GO Bonds (CGIC)
(AAA/Aaa)
280,000 4.80 03/01/04 277,998
St. Louis County GO Bonds
Series B (NR/Aa1)
200,000 5.25 02/01/07 199,008
St. Louis County Rockwood
School District #R-6 GO Bonds
(NR/Aaa)
300,000 5.80 02/01/99 311,508
St. Louis County School
District GO Bonds Lindbergh
(NR/Aa)
200,000 5.40 02/15/10 196,740
St. Louis County School
District GO Bonds Parkway
(NR/Aa)
300,000 7.00 02/01/00 325,443
St. Louis School District GO
Bonds (FGIC) (AAA/Aaa)
200,000 5.40 04/01/03 206,266
St. Peters GO Bonds (NR/A1)
150,000 5.80 01/01/10 152,301
-----------
Total Missouri Municipal
Bond Obligations
(cost $10,737,115) $10,666,945
-----------
Repurchase Agreements3.6%
State Street Bank & Trust Company,
dated 04/30/96, repurchase price
$384,052 (U.S. Treasury Note:
$395,945, 6.88%, 08/31/99)
$384,000 4.90% 05/01/96 $ 384,000
-----------
Total Repurchase
Agreements
(cost $384,000)........... $ 384,000
-----------
Total Investments
(cost $11,121,115/(b)/)... $11,050,945
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
MISSOURI TAX-FREE BOND FUND-(Continued)
April 30, 1996
(Unaudited)
- ------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for
investments in which value
exceeds cost..................................... $ 35,580
Gross unrealized loss for
investments in which cost
exceeds value.................................... (105,750)
Net unrealized loss................................ $ (70,170)
===========
- ------------------------------------------------------------------------------
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
/(a)/Variable rate security. Coupon rate disclosed is that which is in effect at
April 30, 1996.
/(b)/The cost stated also represents aggregate cost for income tax purposes.
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
MISSOURI TAX-FREE BOND FUND-(CONTINUED)
April 30, 1996
(Unaudited)
- ------------------------------------------------------------------------------
Investment Abbreviations:
AMBAC-Insured by American Municipal Bond Assurance Corporation
CGIC -Insured by Capital Guaranty Insurance Corporation
FGIC -Insured by Financial Guaranty Insurance Company
GO -General Obligation
LOC -Letter of Credit
MBIA -Insured by Municipal Bond Investors Assurance Corporation
NR -Not Rated
- ------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
THE COMMERCE FUNDS
STATEMENTS OF ASSETS AND
LIABILITIES
April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Short-Term
Government Bond
Fund Fund
---------------- ----------------
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $27,110,505, $112,145,287, $50,734,064, $122,249,294, $52,871,637,
$37,126,657, $13,483,486, and $11,121,115, respectively)............................ $ 27,186,062 $ 114,027,862
Cash.................................................................................. 718 455
Receivables:
Investment securities sold.......................................................... -- --
Interest............................................................................ 342,281 1,409,961
Dividends........................................................................... -- --
Fund shares sold.................................................................... 194,695 610,637
Deferred organization expenses, net................................................... 35,992 38,192
Other................................................................................. 3,466 2,799
---------------- ----------------
Total assets.................................................................... 27,763,214 116,089,906
---------------- ----------------
LIABILITIES:
Payables:
Investment securities purchased..................................................... -- --
Fund shares redeemed................................................................ 583,287 836,818
Dividends and distributions......................................................... 39,518 80,381
Advisory fees....................................................................... 6,663 46,083
Administration fees................................................................. 3,332 13,825
Accrued expenses and other liabilities................................................ 2,148 44,703
---------------- ----------------
Total liabilities............................................................... 634,948 1,021,810
---------------- ----------------
NET ASSETS:
Paid-in capital....................................................................... 27,052,698 112,652,718
Accumulated undistributed net investment income (loss)................................ -- --
Accumulated net realized gain (loss) on investment transactions....................... 11 532,803
Accumulated net realized loss on foreign currency related transactions............... -- --
Net unrealized gain (loss) on investments............................................. 75,557 1,882,575
Net unrealized loss on translation of assets and liabilities denominated in foreign
currencies.......................................................................... -- --
---------------- ----------------
Net assets........................................................................ $ 27,128,266 $ 115,068,096
================ ================
Net asset value and redemption price per share
(net assets/shares outstanding)................................................... $ 18.32 $ 18.77
================ ================
Maximum public offering price per share (NAV per share x 1.0363).................... $ 18.98 $ 19.45
================ ================
SHARES OUTSTANDING:
Total shares outstanding, no par value (unlimited number of shares authorized).. 1,480,969 6,130,380
=============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<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>
$ 59,155,470 $164,229,987 $ 64,509,648 $ 40,425,648 $ 13,491,051 $ 11,050,945
839 46 17 121,813 -- 662
491,532 -- 531,882 751,356 100,000 200,023
235,261 987 173 541 222,304 131,906
18,883 93,881 29,237 169,061 -- --
165,313 879,090 539,075 451,127 122,000 --
36,786 39,006 35,777 35,534 40,736 40,647
1,418 3,774 864 36,887 6,761 6,564
- ------------ ------------ ------------ ------------ ------------ ------------
60,105,502 165,246,771 65,646,673 41,991,967 13,982,852 11,430,747
- ------------ ------------ ------------ ------------ ------------ ------------
1,596,250 -- 970,775 1,199,784 -- 500,944
598 1,581,855 10,447 14,156 203,037 75,000
-- -- -- -- 39,686 31,556
35,359 101,860 37,247 25,274 5,481 2,639
7,072 20,372 7,449 4,563 1,644 1,318
12,706 68,075 19,755 3,707 41,450 10,730
- ------------ ------------ ------------ ------------ ------------ ------------
1,651,985 1,772,162 1,045,673 1,247,484 291,298 622,187
- ------------ ------------ ------------ ------------ ------------ ------------
48,476,578 116,984,056 51,143,084 36,807,772 13,684,005 10,850,762
92,364 (7,200) (50,507) 116,257 -- --
1,463,169 4,517,060 1,870,412 526,730 (16) 27,968
-- -- -- (4,700) -- --
8,421,406 41,980,693 11,638,011 4,488,376 7,565 (70,170)
-- -- -- (1,189,952) -- --
- ------------ ------------ ------------ ------------ ------------ ------------
$ 58,453,517 $163,474,609 $ 64,601,000 $ 40,744,483 $ 13,691,554 $ 10,808,560
============ ============ ============ ============ ============ ============
$ 22.89 $ 26.31 $ 28.20 $ 20.81 $ 18.29 $ 18.15
============ ============ ============ ============ ============ ============
$ 23.72 $ 27.26 $ 29.22 $ 21.56 $ 18.95 $ 18.81
============ ============ ============ ============ ============ ============
2,553,491 6,214,279 2,290,837 1,958,072 748,446 595,575
============ ============ ============ ============ ============ ============
</TABLE>
35
<PAGE>
THE COMMERCE FUNDS
STATEMENTS OF OPERATIONS
For the Six Months Ended April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Short-Term
Government Bond
Fund Fund
---------------- ----------------
<S> <C> <C>
INVESTMENT INCOME:
Interest.............................................................................. $ 789,391 $ 3,683,191
Dividends/(a)/........................................................................ -- --
---------------- ----------------
Total income....................................................................... 789,391 3,683,191
---------------- ----------------
EXPENSES:
Advisory fees......................................................................... 60,122 265,221
Administration fees................................................................... 18,037 79,566
Transfer agent fees................................................................... 14,816 31,931
Custodian fees........................................................................ 13,268 14,409
Professional fees..................................................................... 4,177 24,017
Trustee fees.......................................................................... 497 2,859
Registration fees..................................................................... 7,966 9,990
Amortization of deferred organization expenses........................................ 4,970 5,274
Other................................................................................. 2,615 12,419
---------------- ----------------
Total expenses.................................................................... 126,468 445,686
Less Investment - advisory fees waived and expense reimbursements..................... (44,702) --
---------------- ----------------
Net expenses...................................................................... 81,766 445,686
---------------- ----------------
Net investment income (loss)...................................................... 707,625 3,237,505
---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain on investment transactions.......................................... -- 532,974
Net realized loss on foreign currency related transactions............................ -- --
Net change in unrealized gain (loss) on investments................................... (457,167) (4,045,536)
Net change in unrealized loss on translation of assets and liabilities denominated in
foreign currencies................................................................. -- --
---------------- ----------------
Net realized and unrealized gain (loss) on investments and foreign currency
transactions................................................................. (457,167) (3,512,562)
---------------- ----------------
Net increase (decrease) in net assets resulting from operations.................. $ 250,458 $ (275,057)
================ ================
</TABLE>
- ------------
/(a)/For the Balanced, Aggressive Growth and International Equity Funds, amount
is net of $250, $758 and $53,007 in foreign withholding taxes,
respectively.
The accompanying notes are an integral part of these financial statements.
36
<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>
$ 700,849 $ 223,930 $ 48,258 $ 78,322 $ 289,827 $ 237,520
207,200 1,090,355 210,231 338,261 -- --
- ------------ ------------ ------------ ------------ ------------ ------------
908,049 1,314,285 258,489 416,583 289,827 237,520
- ------------ ------------ ------------ ------------ ------------ ------------
264,557 581,934 193,430 225,103 30,061 24,551
39,684 116,387 38,686 22,510 9,018 7,365
20,032 43,557 22,367 18,020 11,586 11,537
17,279 15,961 17,077 96,859 14,136 13,555
10,443 36,549 12,531 7,309 5,222 4,177
1,243 4,352 1,492 870 622 497
9,218 11,502 12,165 11,253 11,732 10,993
5,080 5,385 4,939 4,907 5,329 5,318
6,512 19,023 6,309 3,935 5,394 4,463
- ------------ ------------ ------------ ------------ ------------ ------------
374,048 834,650 308,996 390,766 93,100 82,456
(75,098) -- -- (132,647) (41,997) (50,540)
- ------------ ------------ ------------ ------------ ------------ ------------
298,950 834,650 308,996 258,119 51,103 31,916
- ------------ ------------ ------------ ------------ ------------ ------------
609,099 479,635 (50,507) 158,464 238,724 205,604
- ------------ ------------ ------------ ------------ ------------ ------------
1,463,193 4,516,784 1,810,472 563,585 -- 33,115
-- -- -- (21,830) -- --
1,924,834 11,881,176 5,646,386 3,752,687 (194,039) (193,739)
-- -- -- (843,484) -- --
- ------------ ------------ ------------ ------------ ------------ ------------
3,388,027 16,397,960 7,456,858 3,450,958 (194,039) (160,624)
- ------------ ------------ ------------ ------------ ------------ ------------
$ 3,997,126 $ 16,877,595 $ 7,406,351 $ 3,609,422 $ 44,685 $ 44,980
============ ============ ============ ============ ============ ============
</TABLE>
37
<PAGE>
THE COMMERCE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Short-Term
Government Bond
Fund Fund
---------------- ----------------
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss)........................................................... $ 707,625 $ 3,237,505
Net realized gain on investment transactions........................................... -- 532,974
Net realized loss from foreign currency related transactions........................... -- --
Net change in unrealized gain (loss) on investments.................................... (457,167) (4,045,536)
Net change in unrealized loss on translation of assets and liabilities denominated in
foreign currencies................................................................... -- --
---------------- ----------------
Net increase (decrease) in net assets resulting from operations........................ 250,458 (275,057)
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............................................................. (707,625) (3,237,505)
In excess of net investment income..................................................... -- --
From net realized gain on investment transactions...................................... (246,011) (1,391,915)
---------------- ----------------
Total distributions to shareholders................................................. (953,636) (4,629,420)
---------------- ----------------
FROM SHARE TRANSACTIONS:
Net proceeds from sale of shares....................................................... 13,216,676 37,624,537
Reinvestment of dividends and distributions............................................ 677,044 4,094,402
Cost of shares redeemed................................................................ (6,273,587) (20,250,644)
---------------- ----------------
Net increase in net assets resulting from share transactions........................ 7,620,133 21,468,295
---------------- ----------------
Total increase...................................................................... 6,916,955 16,563,818
NET ASSETS:
Beginning of period.................................................................... 20,211,311 98,504,278
End of period.......................................................................... $ 27,128,266 $ 115,068,096
================ ================
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS)............................................................ -- --
================ ================
SUMMARY OF SHARE TRANSACTIONS:
Sold................................................................................... 707,701 1,934,555
Issued on reinvestment of dividends and distributions.................................. 36,282 210,316
Redeemed............................................................................... (336,523) (1,038,779)
---------------- ----------------
Increase in shares outstanding......................................................... 407,460 1,106,092
================ ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
38
<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>
$ 609,099 $ 479,635 $ (50,507) $ 158,464 $ 238,724 $ 205,604
1,463,193 4,516,784 1,810,472 563,585 -- 33,115
-- -- -- (21,830) -- --
1,924,834 11,881,176 5,646,386 3,752,687 (194,039) (193,739)
-- -- -- (843,484) -- --
- ------------------------------------------------------------------------------------------------------
3,997,126 16,877,595 7,406,351 3,609,422 44,685 44,980
- ------------------------------------------------------------------------------------------------------
(611,529) (503,044) -- (107,021) (238,724) (205,604)
-- (7,200) -- -- -- --
(1,461,563) (6,627,050) (1,205,033) (85,792) (5,570) --
- ------------------------------------------------------------------------------------------------------
(2,073,092) (7,137,294) (1,205,033) (192,813) (244,294) (205,604)
- ------------------------------------------------------------------------------------------------------
15,039,547 44,906,113 22,660,002 20,156,700 4,611,058 3,157,875
2,058,589 6,788,710 1,070,994 156,312 14,273 23,448
(8,897,345) (39,695,651) (6,996,000) (3,998,910) (1,455,487) (1,101,277)
- ------------------------------------------------------------------------------------------------------
8,200,791 11,999,172 16,734,996 16,314,102 3,169,844 2,080,046
- ------------------------------------------------------------------------------------------------------
10,124,825 21,739,473 22,936,314 19,730,711 2,970,235 1,919,422
48,328,692 141,735,136 41,664,686 21,013,772 10,721,319 8,889,138
- ------------------------------------------------------------------------------------------------------
$58,453,517 $163,474,609 $64,601,000 $40,744,483 $13,691,554 $10,808,560
======================================================================================================
$ 92,364 $ (7,200) $ (50,507) $ 116,257 -- --
======================================================================================================
672,283 1,766,056 871,384 1,026,679 247,664 170,779
91,884 272,260 41,502 8,222 768 1,270
(397,130) (1,566,632) (269,132) (204,011) (78,206) (59,512)
- ------------------------------------------------------------------------------------------------------
367,037 471,684 643,754 830,890 170,226 112,537
======================================================================================================
</TABLE>
39
<PAGE>
THE COMMERCE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the Period Ended October 31, 1995/(a)/
<TABLE>
<CAPTION>
Short-Term
Government Bond
Fund Fund
---------- ----------
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss).............. $ 1,000,936 $ 5,126,430
Net realized gain (loss) on
investment transactions................. 246,022 1,391,744
Net realized loss on foreign
currency related transactions........... -- --
Net change in unrealized gain
on investments.......................... 532,724 5,928,111
Net change in unrealized loss
on translation of assets and
liabilities denominated in
foreign currencies...................... -- --
------------ ------------
Net increase in net assets
resulting from operations............. 1,779,682 12,446,285
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.................. (1,000,936) (5,126,430)
------------ ------------
Total distributions to shareholders....... (1,000,936) (5,126,430)
------------ ------------
FROM SHARE TRANSACTIONS:
Net proceeds from sale of shares............ 29,493,841 109,057,120
Reinvestment of dividends and
distributions............................. 916,748 4,978,504
Cost of shares redeemed..................... (10,978,024) (22,851,201)
------------ ------------
Net increase in net assets
resulting from share transactions....... 19,432,565 91,184,423
------------ ------------
Total increase............................ 20,211,311 98,504,278
============ ============
NET ASSETS:
Beginning of period......................... -- --
End of period............................... $ 20,211,311 $ 98,504,278
============ ============
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME....................... -- --
============ ============
SUMMARY OF SHARE TRANSACTIONS:
Sold........................................ 1,615,040 5,978,187
Issued on reinvestment of dividends
and distributions......................... 49,473 263,196
Redeemed.................................... (591,004) (1,217,095)
------------ ------------
Increase in shares outstanding.............. 1,073,509 5,024,288
============ ============
</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.
40
<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>
$ 1,186,399 $ 858,158 $ (64,482) $ 108,874 $ 201,460 $ 171,461
1,461,539 6,627,326 1,264,973 48,937 5,554 (5,147)
-- -- -- (19,098) -- --
6,496,572 30,099,517 5,991,625 735,689 201,604 123,569
-- -- -- (346,468) -- --
------------ ------------ ------------ ------------ ------------ ------------
9,144,510 37,585,001 7,192,116 527,934 408,618 289,883
------------ ------------ ------------ ------------ ------------ ------------
(1,091,605) (834,749) -- (7,832) (201,460) (171,461)
------------ ------------ ------------ ------------ ------------ ------------
(1,091,605) (834,749) -- (7,832) (201,460) (171,461)
------------ ------------ ------------ ------------ ------------ ------------
51,759,622 134,640,655 38,077,462 23,593,942 11,045,591 9,349,674
1,089,482 821,867 -- 7,832 8,485 17,030
(12,573,317) (30,477,638) (3,604,892) (3,108,104) (539,915) (595,988)
------------ ------------ ------------ ------------ ------------ ------------
40,275,787 104,984,884 34,472,570 20,493,670 10,514,161 8,770,716
------------ ------------ ------------ ------------ ------------ ------------
48,328,692 141,735,136 41,664,686 21,013,772 10,721,319 8,889,138
-- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
$ 48,328,692 $141,735,136 $ 41,664,686 $ 21,013,772 $ 10,721,319 $ 8,889,138
============ ============ ============ ============ ============ ============
$ 94,794 $ 23,409 -- $ 64,814 -- --
============ ============ ============ ============ ============ ============
2,769,352 7,111,443 1,805,561 1,301,494 607,436 514,879
53,465 37,669 -- 435 463 933
(636,363) (1,406,517) (158,478) (174,747) (29,679) (32,774)
------------ ------------ ------------ ------------ ------------ ------------
2,186,454 5,742,595 1,647,083 1,127,182 578,220 483,038
============ ============ ============ ============ ============ ============
</TABLE>
41
<PAGE>
THE COMMERCE FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Income from Distributions to
investment operations shareholders
---------------------------- ----------------------------
Net
realized
and Net
unrealized asset
Net asset gain value,
value, Net (loss) on From net From net end
beginning investment invest- investment realized gain of Total
of period income ments/(b)/ income on investments period return/(c)/
------------- ------------- ------------- ------------- ------------- ------------- -------------
SHORT-TERM GOVERNMENT FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Six months ended (unaudited):
4/30/96 $18.83 $0.55 ($0.29) ($0.55) ($0.22) $18.32 1.36%
12/12/94/(a)/ to 10/31/95 18.00 1.06 0.83 (1.06) -- 18.83 10.72
BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended (unaudited):
4/30/96 19.61 0.59 (0.58) (0.59) (0.26) 18.77 (0.02)
12/12/94/(a)/ to 10/31/95 18.00 1.12 1.61 (1.12) -- 19.61 15.59
BALANCED FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended (unaudited):
4/30/96 22.10 0.25 1.45 (0.25) (0.66) 22.89 7.82
12/12/94/(a)/ to 10/31/95 18.00 0.59 4.06 (0.55) -- 22.10 26.14
- ---------------------------
</TABLE>
<TABLE>
<CAPTION>
Ratios assuming
no waiver of
fees or expense
reimbursements
----------------------------
Ratio Ratio
Ratio of net Ratio of net
of net investment Net of investment
expenses income Average assets at expenses income to
to average to average Portfolio commis- end to average average
net net turnover sion of period net net
assets/(d)/ assets/(d)/ rate rate (in 000's) assets/(d)/ assets/(d)/
------------- ------------- ------------- ------------- ------------- ------------- -------------
SHORT-TERM GOVERNMENT FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Six months ended (unaudited):
4/30/96 0.68% 5.88% 0% -- $27,128 1.05% 5.51%
12/12/94/(a)/ to 10/31/95 0.68 6.38 158 -- 20,211 1.14 5.92
BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended (unaudited):
4/30/96 0.84 6.10 11 -- 115,068 0.84 6.10
12/12/94/(a)/ to 10/31/95 0.88 6.64 58 -- 98,504 0.88 6.64
BALANCED FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended (unaudited):
4/30/96 1.13 2.30 23 $0.0835 58,454 1.41 2.02
12/12/94/a/ to 10/31/95 1.13 3.28 59 -- 48,329 1.45 2.96
- ---------------------------
</TABLE>
/(a)/ Commencement of operations.
/(b)/ Includes the balancing effect of calculating per share amounts.
/(c)/ 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 sales charges were taken
into account.
/(d)/ Annualized.
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
THE COMMERCE FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Income from Distributions to
Investment operations shareholders
-------------------------------------------------------------------------------
Net
realized and
Net unrealized
realized gain on Net
and foreign asset
Net asset Net unrealized currency value
value investment gain on related From net From net end
beginning income invest- trans- investment realized gain of Total
of period (loss) ments/(b)/ actions/(b)/ income on investments period return/(c)/
---------- ---------- ---------- ------------ ---------- -------------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND
- --------------------------------------------------------------------------------------------------------------------------------
Six months ended
(unaudited):
4/30/96 $24.68 $0.08 $2.76 -- ($0.08) ($1.13) $26.31 11.79%
12/12/94/(a)/ to
10/31/95 18.00 0.15 6.68 -- (0.15) -- 24.68 38.06
AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------------------------------------------------------
Six months ended
(unaudited)
4/30/96 25.30 (0.01) 3.59 -- -- (0.68) 28.20 14.39
12/12/94/(a)/ to
10/31/95 18.00 (0.04) 7.34 -- -- -- 25.30 40.56
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------------------------------------------------------
Six months ended
(unaudited)
4/30/96 18.64 0.10 2.78 (0.56) (0.08) (0.07) 20.81 12.48
12/12/94/(a)/ to
10/31/95 18.00 0.12 0.95 (0.40) (0.03) -- 18.64 3.73
- ---------------------------
</TABLE>
<TABLE>
<CAPTION>
Ratios assuming no
waiver of fees or
expense reibursements
--------------------------------
Ratio Ratio
Ratio of net Ratio of net
of net investment Net of investment
expenses income Average assets at expenses income
to average (loss) Portfolio commis- end to average (loss) to
net to average turnover ion of period net average
assets/d/ net assets/(d)/ rate rate (in 000's) assets/(d)/ net assets/(d)/
---------- ---------- ---------- ------------ ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH FUND
- --------------------------------------------------------------------------------------------------------------------------------
Six months ended
(unaudited):
4/30/96 1.08% 0.62% 15% $0.0768 $163,475 1.08% 0.62%
12/12/94/(a)/ to
10/31/95 1.11 0.81 33 -- 141,735 1.11 0.81
AGGRESSIVE GROWTH FUND
- --------------------------------------------------------------------------------------------------------------------------------
Six months ended
(unaudited)
4/30/96 1.20 (0.20) 32% 0.0808 64,601 1.20 (0.20)
12/12/94/(a)/ to
10/31/95 1.32 (0.29) 59 -- 41,665 1.32 (0.29)
INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------------------------------------------------------
Six months ended
(unaudited)
4/30/96 1.72 1.05 13% 0.0208 40,744 2.60 0.17
12/12/94/(a)/ to
10/31/95 1.81 1.06 25 -- 21,014 3.50 (0.63)
- ----------------------------
</TABLE>
/(a)/ Commencement of operations.
/(b)/ Includes the balancing effect of calculating per share amounts.
/(c)/ 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.
/(d)/ Annualized.
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
THE COMMERCE FUNDS
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Income from Distributions to
investment operations shareholders
---------------------------- ----------------------------
Net
realized
and Net Net
unrealized increase asset
Net asset gain (decrease) value,
value, Net (loss) on From net From net in net end
beginning investment invest- investment realized gain asset of
of period income ments/(b)/ income on investments value period
------------- ------------- ------------- ------------- ------------- ------------- -------------
NATIONAL TAX-FREE BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Six months ended (unaudited):
4/30/96 $18.54 $0.37 ($0.24) ($0.37) ($0.01) ($0.25) $18.29
2/21/95/(a)/ to 10/31/95 18.00 0.54 0.54 (0.54) -- 0.54 18.54
MISSOURI TAX-FREE BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended (unaudited):
4/30/96 18.40 0.39 (0.25) (0.39) -- (0.25) 18.15
2/21/95/(a)/ to 10/31/95 18.00 0.57 0.40 (0.57) -- 0.40 18.40
- ---------------------------
</TABLE>
<TABLE>
<CAPTION>
Ratios assuming
no waiver of
fees or expense
reimbursements
----------------------------
Ratio Ratio Ratio
of net of net Net Ratio of net
expenses investment assets at of investment
to average income Portfolio end expenses income to
Total net to average turnover of period to average average
return/(c)/ assets/(d)/ net assets/(d)/ rate (in 000's) net assets/(d)/ net assets/(d)/
----------- ----------- --------------- --------- ----------- --------------- ---------------
NATIONAL TAX-FREE BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Six months ended (unaudited):
4/30/96 0.67% 0.85% 3.97% 18% $13,692 1.55% 3.27%
2/21/95/(a)/ to 10/31/95 6.06 0.85 4.19 19 10,721 1.90 3.14
MISSOURI TAX-FREE BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
Six months ended (unaudited):
4/30/96 0.72 0.65 4.19 25 10,809 1.68 3.16
2/21/95/(a)/ to 10/31/95 5.45 0.65 4.41 52 8,889 2.12 2.94
- ---------------------------
</TABLE>
/(a)/ Commencement of operations.
/(b)/ Includes the balancing effect of calculating per share amounts.
/(c)/ Assumes investment 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.
/(d)/ Annualized.
The accompanying notes are an integral part of these financial statements.
44
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 1996
(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): 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 non-
diversified under the 1940 Act.
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.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts.
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 Funds 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
market discounts on debt securities. The Growth, Aggressive Growth and
International Equity Funds accrete market discounts and amortize premiums on a
yield to maturity basis. The Short-Term Government, Bond and Balanced Funds do
not accrete market 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. For all Funds, original issue
discount on debt securities is amortized to interest income over the life of the
security with a corresponding increase in the cost basis of that security.
45
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS-CONTINUED
2. SIGNIFICANT ACCOUNTING POLICIES-(Continued)
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 gain (loss) on foreign currency transactions will represent : (i)
foreign exchange gains and losses from the sale of foreign currencies and
investments; (ii) foreign exchange gains and losses between trade date and
settlement date on investment securities transactions and foreign exchange
contracts; and (iii) foreign exchange gains and losses from the difference
between amounts of dividends and interest recorded and the amounts actually
received. Net unrealized gain (loss) on translation of assets and liabilities
denominated in foreign currencies arises from changes in the value of assets and
liabilities, including investments in securities, resulting from changes in the
exchange rate.
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 as a means to manage its foreign exchange
rate risk. The aggregate principal amounts of the contracts for which delivery
is anticipated are reflected in the Funds 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 Funds 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 as a
result of the potential inability of counterparties to meet the terms of their
contracts and 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.
As of the Trusts most recent tax year-end, the following Fund had a capital
loss carry forward for U.S. federal income tax purposes:
<TABLE>
<CAPTION>
Fund Amount Year of Expiration
- ---------------------------------------------------------
<S> <C> <C>
Missouri Tax-Free Bond Fund $5,000 2003
</TABLE>
This amount is available to be carried forward to offset future capital gains
of the Fund to the extent permitted by applicable laws or regulations.
46
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS-(Continued)
2. SIGNIFICANT ACCOUNTING POLICIES-(Continued)
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 Funds
operations. If any or all of the shares held by 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 Funds 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.
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 Funds average daily net assets:
<TABLE>
<CAPTION>
<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>
47
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS-(Continued)
3. AGREEMENTS-(Continued)
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 six months ended April 30, 1996, 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, .85% for the International Equity Fund and .30% for the Missouri Tax-Free
Bond Fund. The effect of these waivers by the Advisor for the six months ended
April 30, 1996 was to reduce advisory fees by $24,049, $66,139, $97,634 and
$9,821 for the Short-Term Government, Balanced, International Equity and
Missouri Tax-Free Bond Funds, respectively.
In addition, for the six months ended April 30, 1996, 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%, 1.72%, .85% and .65% of average net
assets for the Short-Term Government, Bond, Balanced, Growth, International
Equity, National Tax-Free Bond and Missouri Tax-Free Bond Funds, respectively.
The effect of these reimbursements by the Advisor for the six months ended April
30, 1996 was to reduce expenses by $20,653, $8,959, $35,013, $41,997 and $40,719
for the Short-Term Government, Balanced, International Equity, National Tax-Free
Bond and Missouri Tax-Free Bond Funds, respectively. The amount reimbursable to
the Short-Term Government, Balanced, International Equity, National Tax-Free
Bond and Missouri Tax-Free Bond Funds at April 30, 1996 was approximately
$2,700, $1,000, $1,100, $6,700 and $6,500, respectively, and are reflected in
Other Assets in the accompanying statements of Assets and Liabilities.
Goldman Sachs Asset Management (GSAM), a separate operating division of
Goldman, Sachs & Co., serves as the Trusts administrator, pursuant to an
Administration Agreement. Under the Administration Agreement, GSAM administers
the Trusts 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 an annual rate of .15%
of the average daily net assets of each 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
has retained approximately $21,000 for the six months ended April 30, 1996.
Pursuant to a Shareholder Administrative Services 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 shareholder
administration 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 beneficially owned by clients of
such Service Organizations.
48
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS-(Continued)
4. INVESTMENT TRANSACTIONS
Purchases and proceeds of sales or maturities of long-term securities for the
six months ended April 30, 1996 were as follows:
<TABLE>
<CAPTION>
Short-Term Government Fund
<S> <C>
Purchases (excluding U.S. Government securities)............. $ --
Sales (excluding U.S. Government securities)................. --
Purchases of U.S. Government securities...................... 5,012,004
Sales of U.S. Government securities.......................... --
<CAPTION>
Bond Fund
<S> <C>
Purchases (excluding U.S. Government securities)............. $10,758,915
Sales (excluding U.S. Government securities)................. 5,517,744
Purchases of U.S. Government securities...................... 9,046,578
Sales of U.S. Government securities.......................... 5,983,844
<CAPTION>
Balanced Fund
<S> <C>
Purchases (excluding U.S. Government securities)............ $15,843,038
Sales (excluding U.S. Government securities)................. 10,282,665
Purchases of U.S. Government securities...................... 2,064,688
Sales of U.S. Government securities.......................... 1,224,043
<CAPTION>
Growth Fund
<S> <C>
Purchases (excluding U.S. Government securities)............. $32,090,313
Sales (excluding U.S. Government securities)................. 22,198,771
Purchases of U.S. Government securities...................... --
Sales of U.S. Government securities.......................... --
<CAPTION>
Aggressive Growth Fund
<S> <C>
Purchases (excluding U.S. Government securities)............. $33,146,184
Sales (excluding U.S. Government securities)................. 16,324,836
Purchases of U.S. Government securities...................... --
Sales of U.S. Government securities.......................... --
<CAPTION>
International Equity Fund
<S> <C>
Purchases (excluding U.S. Government securities)............. $17,675,012
Sales (excluding U.S. Government securities)................. 3,660,650
Purchases of U.S. Government securities...................... --
Sales of U.S. Government securities.......................... --
<CAPTION>
National Tax-Free Bond Fund
<S> <C>
Purchases (excluding U.S. Government securities)............. $6,047,120
Sales (excluding U.S. Government securities)................. 2,100,000
Purchases of U.S. Government securities...................... --
Sales of U.S. Government securities.......................... --
<CAPTION>
Missouri Tax-Free Bond Fund
<S> <C>
Purchases (excluding U.S. Government securities)............. $4,639,945
Sales (excluding U.S. Government securities)................. 2,335,235
Purchases of U.S. Government securities...................... --
Sales of U.S. Government securities.......................... --
</TABLE>
5. CONCENTRATION OF CREDIT RISK
The 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.
49
<PAGE>
[This page intentionally left blank.]
<PAGE>
The Commerce Funds
---------------------
Trustees
J. Eric Helsing, Chairman
Randall D. Barron
David L. Bodde
John J. Holland
Warren Weaver
Officers
Warren Weaver
President
Scott M. Gilman
Vice President
Paul Klug
Vice President
Nancy L. Mucker
Vice President
Pauline Taylor
Vice President
Randall D. Barron
Treasurer
W. Bruce McConnel, III
Secretary
Michael J. Richman
Assistant Secretary
Howard B. Surloff
Assistant Secretary
This Semiannual 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
INVESTMENT SUB-ADVISOR
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-SEM96
[ART APPEARS HERE]
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
Semiannual Report
April 30, 1996
