<PAGE>
THE COMMERCE FUNDS
LETTER TO SHAREHOLDERS
Dear Shareholders,
We are pleased to present our semiannual report for the Commerce Funds
family.
We continually strive to provide you with a fund family that offers you
investment choices and competitive risk adjusted returns over the long term.
During the first half of 1997 we introduced the Growth and Income Fund
(inception date March 3, 1997) which invests in companies which we believe
represent attractive value relative to their current price and which will
provide, on average, a current yield in excess of the S&P 500 Stock Index. This
fund is of interest to those investors who desire the capital appreciation an
equity fund provides, and who want a higher level of income than is typically
achieved by a growth-oriented equity fund.
On January 2, 1997, we introduced the Service Shares for the Commerce Funds
(except National Tax-Free Bond Fund and Missouri Tax-Free Bond Fund). Service
Shares are an additional class of shares which broadens the distribution of the
Commerce Funds.
We are pleased you have chosen to invest in the Commerce Funds and we
welcome your comments and suggestions. A review of each Fund and commentary on
the financial markets follows.
Taxable Bond Funds
The U.S. economy has exhibited tremendous growth with few signs of
inflation over the recent six month period. First quarter 1997 Gross Domestic
Product (GDP) rose at an astonishing rate of 5.6%. Importantly, inflation
pressures have been modest with strong increases in productivity offsetting a
continued pickup in nominal wage growth. The large gain in GDP was influenced by
additions to inventory along with unseasonably warm weather, and has likely
borrowed from second quarter growth. The Federal Reserve has again indicated a
preemptive disposition to raise rates before clear signs of inflation, which
will create a longer term positive bias for the bond market.
Short-Term Government Fund
The Institutional Shares of the Fund had a total return for the six month
period ended April 30, 1997 of 1.68% based on net asset value ("NAV") versus the
Lipper Short U.S. Government Funds Index return of 1.96% and the Salomon
Brothers 1-5 Year Treasury/Government Sponsored Index return of 1.98%. The
Institutional Shares distributed $0.56 per share from net investment income
during the period. Service Shares recorded a total return of 1.14%, based on
NAV, since their inception on January 2, 1997 through April 30, 1997, and
distributed $0.40 per share from net investment income. The Lipper Short U.S.
Government Funds Index return and the Salomon Brothers 1-5 Year
Treasury/Government Sponsored Index recorded a return of 1.35% and 1.31%,
respectively, for the same period.
The mixed economic news has kept interest rates volatile over the time
since our last letter. Given this environment, we have positioned the fund with
a neutral duration and a higher yield than our benchmark index to help us add
relative return. The Short-Term Government Fund has used positive cash inflows
to purchase government backed mortgage securities, agency issues and Treasuries.
Bond Fund
The Institutional Shares of the Fund had a total return for the six months
ended April 30, 1997 of 1.69%, based on NAV, versus the Lipper Intermediate
Investment Grade Debt Funds Index return of 1.53% and the Lehman Brothers
Aggregate Bond Index return of 1.70%. The Institutional Shares distributed $0.60
per share from net investment income during the period. Service Shares recorded
a total return of 0.86%, based on NAV, since their inception on January 2, 1997
through April 30, 1997, and distributed $0.39 per share from net investment
income. The Lipper Intermediate Investment Grade Debt Funds Index and the Lehman
Brothers Aggregate Bond Index recorded a return of 0.77% and 0.93%,
respectively, for the same time period.
The Fund has continued its neutral position versus the duration of its
benchmark index while maintaining our higher yielding sector exposure. The Fund
continues to maintain exceptional credit quality, with an average quality rating
of AAA. The Bond Fund has used positive cash inflows to purchase government
backed mortgage securities, corporate bonds and Treasuries.
Balanced Fund
The Institutional Shares of the Fund had a total return based on NAV for
the six months ended April 30, 1997 of 5.25% as compared with the Lipper
Balanced Fund Index
1
<PAGE>
THE COMMERCE FUNDS
LETTER TO SHAREHOLDERS--(Continued)
of 6.94% and the 60% S&P 500 Index/40% Lehman Brothers Aggregate Bond Index of
9.45%. Service Shares recorded a return of 2.42%, based on NAV, since their
inception on January 2, 1997 through April 30, 1997. The Lipper Balanced Fund
Index and the 60% S&P 500 Index/40% Lehman Brothers Aggregate Bond Index
recorded a return of 3.45% and 5.67%, respectively, for the same period.
Over the last six months the Fund made changes in the 40% fixed income
target and the 60% stock target. The fixed income duration has remained neutral
with a slightly higher yield versus our benchmark. Purchases have increased our
positions in government backed mortgage securities, asset backed securities and
Treasury positions.
The 60% allocated toward equities has been divided 75% to large cap growth
stocks and 25% mid cap issues. The heaviest weighted sectors remain technology,
financial services, and producer manufacturing.
Growth and Income
The Commerce Growth and Income Fund was successfully launched March 3,
1997. The Institutional Shares of the Fund recorded a total return of -0.50%,
based on NAV for the period ending April 30, 1997. This compares with a 1.62%
return for the S&P 500 Index and a 0.06% return for the Lipper Growth and Income
Fund Index for the same time period. The Service Shares recorded a total return
of -0.56%, based on NAV, since their inception on March 3, 1997 through April
30, 1997.
The timing was a mixed blessing in that the stock market (as defined by the
S&P 500 Index) declined 4.10% for the month of March. Although this left initial
investors in the Fund with a market value below the initial $18.00 NAV, it did
provide us with an excellent opportunity to invest the positive cash flow to the
Fund. Subsequently, the recovery of the stock market in April recaptured most of
the March decline.
The Fund is well diversified across the major economic sectors as
represented in the Russell 1000 Value Index. The financial sector is by far the
largest in the portfolio. This is in keeping with the Index weight as well as
our positive assessment of many of the companies in this sector. Oil and
gas/utilities represents the next largest sector and provides much of the
current yield for the portfolio.
One interesting aspect of the Fund currently is its relatively low average
market capitalization. At a $6.6 billion weighted average market capitalization,
the Fund has a mid-cap bias. We believe this supports the notion that large
capitalization stocks are relatively expensive in the current environment, and
that "value", as we define it, is to be found in the smaller capitalization
issues.
The Commerce Growth and Income Fund exhibits many of the defensive
characteristics of a value-based investment process. The Fund's low average
price/earnings ratio and relatively high yield have contributed to positive
results relative to the S&P 500 Index each day that the Index has declined by 1%
or more.
Growth Fund
The Institutional Shares of the Fund had a total return based on NAV of
11.51% for the six months ending April 30, 1997. This compares with a 14.72%
return for the S&P 500 Index and a 8.53% return for the Lipper Growth Funds
Index. Service Shares recorded a total return of 6.79%, based on NAV, since
their inception on January 2, 1997 through April 30, 1997. The S&P 500 Index the
Lipper Growth Funds Index recorded a return of 8.81% and 4.04%, respectively,
for the same period.
There was no stopping the bull market over the last six months. The Federal
Reserve attempted to slow the pace of the economy and the stock market by
raising the federal funds rate in late March. Stock prices did respond by
tumbling for a few weeks, but abruptly turned around, recovering the entire loss
by the end of April. Valuation levels for the market have been supported by
strong earnings gains for the S&P 500 Index in the fourth quarter. Mid teens
growth in the first quarter of 1997 pleasantly surprised market forecasters. The
supply/demand picture continues to look favorable for the market, as money
continues to flow into mutual funds and corporations continue to buy back record
amounts of their own stocks.
The fund continues to overweight the financial services, technology and
producer manufacturing sectors. We have emphasized financial companies that will
benefit from increased savings from the aging baby
2
<PAGE>
THE COMMERCE FUNDS
LETTER TO SHAREHOLDERS--(Continued)
boom generation. Our strongest performers in the financial sector were
Conseco, Inc., Travelers Group, Inc., and BankAmerica Corp., all up over 25%
over the last six months.
The strongest price performance for the fund came from the technology
sector. Xilinx, Inc., Linear Technology Corp., and Microsoft Corp. all increased
50% or more over the last six months. Technology issues exhibit high stock price
volatility as products are created at a lightning pace, causing uncertainty
regarding companies' long term outlooks. We believe this is an exciting industry
in which to invest and the Fund maintains a well diversified portfolio of
companies within the group.
MidCap Fund/(a)/
The last six months have been one of the most significant periods of
under-performance for mid and small cap stocks ever recorded. Our MidCap Fund,
squarely positioned in this area, provided no safe harbor, as the total return
was -6.10% for the Institutional Shares for the six months ended April 30, 1997.
This performance trailed that of the S&P Mid Cap 400, which recorded a gain of
6.90% during the same period. Funds included in the Lipper Mid Cap Index fared
no better, as the return declined 1.78%. Service Shares recorded a total return
of -8.97%, based on NAV, since their inception on January 2, 1997 through April
30, 1997. The S&P Mid Cap 400 and the Lipper Mid Cap Index recorded a return of
1.07% and -4.90%, respectively, for the same time period.
During this period of under-performance, we have thoroughly examined our
investment process to determine which factors negatively impacted our otherwise
positive long-term results. First is the issue of company size and market
returns. For the past year, investors have favored Blue Chip stocks, which have
typically provided investors with greater liquidity and stability of earnings,
albeit with lower average growth rates. Our approach is to search for
investments among medium sized companies.
Second, our style of investment is to look for "growth" stocks. These
companies are focused on increasing sales and earnings rapidly. We believe the
above average growth these companies are experiencing will be rewarded in the
marketplace. However, over the past twelve months, these companies fell out of
favor with investors, pushing valuations to extremely low historical levels.
Our findings from scrutinizing our investment process lead us to believe
that, while difficult for shareholders, this recent period has been highly
unusual for MidCap growth stocks. The extreme manner in which many of these
companies stock prices were liquidated in the last six months suggests the
period of under-performance has run its course, and the "value" in the
marketplace lies in the high quality, mid-sized companies.
International Equity Fund
For the six months ended April 30, 1997, Institutional Shares of the Fund
produced a total return of 5.50%, based on NAV, compared to 1.71% for the Morgan
Stanley Capital International Europe, Australia and Far East ("EAFE") Index, and
8.75% for the Lipper International Equity Funds Index. Service Shares recorded a
total return of 0.23%, based on NAV, since their inception on January 2, 1997
through April 30, 1997. The EAFE Index and the Lipper International Equity Funds
Index recorded a return of -0.95% and 2.96%, respectively, for the same time
period.
Year to date has been a mixed year for investments in non-U.S. equity
markets. International markets started the year in mixed fashion, with good
results from stock markets in Europe and Latin America offset by poor
performance from the Pacific markets, most notably, Japan.
The performance of the International Equity Fund during the first quarter
was ahead of the EAFE benchmark, with country selection a positive contributor,
but stock selection a slight negative. The lack of any currency hedging also
hurt relative performance.
While Japan continues to represent the largest country weighting in the
portfolio at nearly 21%, the portfolio is underweighted in Japan compared to the
EAFE Index where the weighting for Japan is approximately 30%. This
underweighting has helped the portfolio to outperform the market index this year
to date.
Exposure to the emerging markets of Latin America has also helped the
portfolio to outperform the market index. Brazil exposure particularly added
value in early 1997. Emerging markets, which are not represented in the EAFE
Index, account for about 12.5% of the Fund's market value.
/(a)/ Formerly the Aggressive Growth Fund
3
<PAGE>
THE COMMERCE FUNDS
LETTER TO SHAREHOLDERS--(Continued)
The economic outlook world-wide remains benign, with a low growth, low
inflation scenario firmly in place in most of the non-U.S. world. This scenario
remains supportive of good corporate profits growth abroad, which should be the
principal driver of global stock market performance over the balance of the
year.
Tax-Exempt Market
In the six months ended April 30, 1997, tax exempt investors experienced a
gradually rising interest rate environment within the trading range which has
been in place since early 1996. That is to say that although rates ended the
period near their six month highs, neither the lows nor highs of 1996 were
broken. As measured by 10 year Aa rated General Obligation bonds the ending
level of 5.16% was up from the interim low of 4.76% in December. The established
trading range is bounded by a 4.50% rate set in February, 1996 and a 5.41% rate
established later that spring. Remaining within the range means that volatility
continues to decline. Only fifty basis points (0.50%) separated the high from
the low during the period whereas in the previous year the range had been ninety
basis points. This trend reflects the growth of the economy; a low and stable
inflation rate and Federal Reserve policy initiatives may serve to maintain
these favorable conditions.
The economic cycle now in its seventh year of growth has created a positive
backdrop for bond issuers. Tax receipts have risen to such an extent that in 36
states the legislators are cutting taxes in 1997. Rating changes have been
predominately favorable as upgrades are typically two to three times downgrades
for any given week. It is at times like these that credit concerns do not seem
to have much relevance. We continue to be vigilant, however, since it is
unlikely that conditions can improve much from these levels. Spending on
Medicaid and prison construction are forecasted to increase. Although the public
seems to be more receptive to state and local spending, there is a continuing
push for management improvements, elimination of government functions and
privatization. How governmental units adapt to these trends will have a lot to
do with their ability to maintain their recently enhanced ratings.
New issues volume is slightly lower than the same period last year. A
positive factor in the supply/demand equation is the renewed buying interest of
insurance companies whose profitability has made tax exempt investing
attractive. This incremental demand combined with the resolution of the tax
reform issue has caused the tax exempt market to trade relatively rich to the
taxable sector at least compared to the last couple of years. These levels
should continue. Looking ahead, a capital gains tax cut should be at least a
short term positive as gains currently locked in the stock market are
reallocated into fixed income investments.
National Tax-Free Bond Fund
For the period, the NAV of the Fund declined 0.38% to $18.39 from $18.46
reflecting the slightly higher yields noted above. Distributions totaled $0.37
per share bringing the total return to 1.60%. The Lipper General Municipal Debt
Funds Index and the Merrill Lynch Intermediate Index had returns of 1.62% and
1.49% respectively. We continue to broaden sector representation by using bonds
outside the general obligation category.
Missouri Tax-Free Bond Fund
The change in NAV from $18.26 to $18.16 represented a 0.55% decline. When
combined with the per share distribution of $0.40 the total return was 1.64%.
The Lipper General Municipal Debt Funds Index and the Merrill Lynch Municipal
Intermediate Index had returns of 1.60% and 1.49% respectively. We have
continued to add housing and higher education representation to the portfolio.
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.
April 30, 1997
Total return figures include expense waivers and reimbursements. Without such
waivers and reimbursements, total return would be reduced. Total return based on
NAV does not include sales charges.
4
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
SHORT-TERM GOVERNMENT FUND
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ------------ --------- ----------- ---------------
<S> <C> <C> <C>
Collateralized Mortgage Obligations--22.3%
Federal Home Loan Mortgage Corp.
Series 180, Class G
$ 958,613 8.00% 09/15/21 $ 964,901
Federal Home Loan Mortgage Corp.
Series 1255, Class G
455,000 7.50 07/15/21 456,988
Federal Home Loan Mortgage Corp.
Series 1727, Class E
660,000 6.50 04/15/18 653,809
Federal National Mortgage Assn.
Series 1993-29, Class FA
281,000 6.50 03/25/20 274,413
Federal National Mortgage Assn.
Series 1993-130, Class H
510,000 6.30 09/25/18 497,250
Federal National Mortgage Assn.
Series 1993-139, Class KB
1,000,000 7.00 11/25/00 1,002,810
Federal National Mortgage Assn.
Series 1993-140, Class D
1,160,000 5.50 08/25/07 1,147,675
Prudential Home Mortgage Securities
Series 1993-43, Class A1
1,042,129 5.40 10/25/23 1,026,820
Residential Funding Mortgage Securities
Series 1993-S49, Class A2
1,000,000 6.00 12/25/08 982,180
Westam Mortgage Financial Corp.
Series 7, Class F
1,675,818 9.30 10/01/15 1,721,366
---------------
Total Collateralized
Mortgage Obligations
(cost $8,762,344) ........ $ 8,728,212
---------------
Mortgage-Backed Pass-Through Obligations--9.1%
Federal Home Loan Mortgage Corp.
$ 46,630 8.75% 02/01/01 $ 47,985
96,236 8.75 04/01/01 100,145
622,796 8.25 08/01/01 638,560
972,529 7.00 05/01/26 946,388
Federal National Mortgage Assn.
495,893 6.50% 02/01/12 481,636
447,085 9.00 07/01/24 469,021
Government National Mortgage Assn.
303,025 8.00 10/15/16 311,640
555,185 8.00 07/15/17 570,136
---------------
Total Mortgage-Backed
Pass-Through Obligations
(cost $3,537,325) ....... $ 3,565,511
---------------
U.S. Government Agency Obligations--52.9%
Federal Agriculture Mortgage Corp.
$ 500,000 6.69% 02/10/00 $ 501,430
Federal Farm Credit Bank
1,000,000 7.17 04/03/00 1,014,690
1,000,000 6.10 11/19/01 975,160
Federal Home Loan Bank
530,000 7.13 03/27/00 537,452
1,000,000 7.44 08/10/01 1,025,620
1,000,000 6.53 08/28/01 992,970
1,000,000 6.63 08/28/01 995,290
965,000 7.56 02/27/02 997,414
Federal Home Loan Mortgage Corp.
1,000,000 7.93 01/20/98 1,013,440
1,000,000 7.82 01/27/98 1,012,970
500,000 7.90 01/27/00 516,485
1,000,000 6.52 08/25/00 997,500
500,000 6.70 07/25/01 499,685
Federal National Mortgage Assn.
1,000,000 6.36 08/16/00 993,910
1,000,000 9.20 09/11/00 1,077,810
250,000 6.18 03/15/01 246,055
500,000 6.63 04/18/01 498,830
700,000 6.38 08/14/01 690,592
Israel Aid Series 5A
2,000,000 7.75 11/15/99 2,054,060
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
SHORT-TERM GOVERNMENT FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- --------------- --------- ------------ -----------
<S> <C> <C> <C>
U.S. Government Agency Obligations--Continued
Tennessee Valley Authority 1989,
Series D
$2,000,000 8.38% 10/01/99 $ 2,080,620
575,000 6.00 11/01/00 563,500
U.S. Department of Housing & Urban
Development Series 1994-A
100,000 6.44 08/01/02 97,235
U.S. Department of Housing & Urban
Development Series 1995-A
1,250,000 8.15 08/01/00 1,302,500
-----------
Total U.S. Government
Agency Obligations
(cost $20,752,777) ....... $20,685,218
-----------
Short-Term Obligations--14.0%
Federal Farm Credit Bank
$3,000,000 5.37% 05/15/97 $ 2,993,758
Federal National Mortgage Assn.
2,500,000 5.44 05/01/97 2,500,000
-----------
Total Short-Term
Obligations
(cost $5,493,758) ........ $ 5,493,758
-----------
Repurchase Agreements--2.1%
State Street Bank & Trust Company,
dated 04/30/97, repurchase price
$818,117 (U.S. Treasury Bonds:
$834,847, 8.13%, 08/15/21)
$ 818,000 5.15% 05/01/97 $ 818,000
-----------
Total Repurchase
Agreements
(cost $818,000) .......... $ 818,000
-----------
Total Investments
(cost $39,364,204/(a)/)... $39,290,699
===========
- ----------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for
investments in which value
exceeds cost ........................... $ 256,271
Gross unrealized loss for
investments in which cost
exceeds value .......................... (329,776)
-----------
Net unrealized loss ..................... $ (73,505)
===========
- ----------------------------------------------------------------
</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.
6
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BOND FUND
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ------------------ ----------- ------------- ---------------
<S> <C> <C> <C>
Asset-Backed Securities--26.5%
AUTO--1.2%
NationsBank Auto Owner Trust
Series 1996-A, Class A4
$ 2,000,000 6.63% 12/15/00 $ 2,005,620
---------------
CREDIT CARD--10.8%
American Express Master Trust
Series 1994-3, Class A
$ 2,000,000 7.85% 08/15/05 $ 2,091,860
Chemical Master Credit Card Trust 1
Series 1995-3, Class A
2,000,000 6.23 04/15/05 1,943,740
Choice Credit Card Master Trust
Series 1992, Class 2B
2,000,000 7.20 04/15/99 2,019,520
Discover Card Master Trust
Series 1993-3, Class A
2,000,000 6.20 05/16/06 1,922,500
Discover Card Trust
Series 1991-F, Class B
2,000,000 8.35 11/21/00 2,043,740
MBNA Master Credit Card Trust
Series 1995-C, Class A
2,000,000 6.45 02/15/08 1,936,860
Standard Credit Card Master Trust
Series 1993-2, Class A
2,000,000 5.95 10/07/04 1,900,380
Standard Credit Card Master Trust
Series 1995-1, Class A
2,000,000 8.25 01/07/07 2,137,840
Standard Credit Card Master Trust
Series 1995-1, Class B
2,000,000 8.45 01/07/07 2,142,860
---------------
$ 18,139,300
---------------
HOME EQUITY--2.5%
Advanta Mortgage Loan Trust
Series 1994-4, Class A2
$ 4,000,000 8.92% 01/25/26 $ 4,225,160
---------------
MANUFACTURED HOUSING--12.0%
Associates Manufactured Housing
Series 1986-1, Class A5
$ 4,000,000 7.60% 03/15/27 $ 4,030,000
Green Tree Financial Corp. Series
1993-4, Class A4
2,000,000 6.60 01/15/19 1,966,860
Green Tree Financial Corp. Series
1993-4, Class A5
4,000,000 7.05 01/15/19 3,903,720
Green Tree Financial Corp. Series
1994-2, Class A4
4,000,000 7.90 05/15/19 4,138,720
Green Tree Financial Corp. Series
1996-4, Class A7
4,000,000 7.90 06/15/27 4,080,000
Green Tree Financial Corp. Series
1996-8, Class M1
2,000,000 7.85 10/15/27 2,036,240
---------------
$ 20,155,540
---------------
Total Asset-Backed Securities
(cost $43,547,427) .......... $ 44,525,620
---------------
Collateralized Mortgage Obligations--5.8%
Federal Home Loan Mortgage Corp.
Series 60, Class H
$ 7,000,000 9.00% 07/15/20 $ 6,884,010
Federal National Mortgage Assn.
Series 1993-130, Class H
1,000,000 6.30 09/25/18 975,000
PNC Mortgage Securities Corp.
Series 1996-1, Class A1
1,916,207 7.50 09/25/09 1,928,183
---------------
Total Collateralized
Mortgage Obligations
(cost $9,958,807) ........... $ 9,787,193
---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BOND FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ------------------ ----------- ------------- ----------------
<S> <C> <C> <C>
Corporate Obligations--15.2%
FINANCIAL--11.7%
American Express Credit Corp.
$ 2,000,000 6.13% 11/15/01 $ 1,937,800
BankAmerica Corp.
2,000,000 6.88 06/01/03 1,974,800
Chemical Bank
2,000,000 6.70 08/15/08 1,888,260
Chubb Capital Corp.
2,000,000 6.00 02/01/98 1,996,740
Ford Motor Company Credit Corp.
2,000,000 6.63 06/30/03 1,949,440
General Motors Acceptance Corp.
2,000,000 6.63 10/15/05 1,909,680
Morgan Stanley Group, Inc.
2,000,000 6.75 03/04/03 1,965,600
NationsBank Corp.
1,000,000 7.75 08/15/15 1,005,260
1,000,000 7.80 09/15/16 997,470
PNC Bank N.A.
2,000,000 7.88 04/15/05 2,055,140
Smith Barney Holdings, Inc.
2,000,000 6.63 06/01/00 1,988,120
---------------
$ 19,668,310
---------------
INDUSTRIAL--2.3%
Hanson Overseas BV
$ 2,000,000 6.75% 09/15/05 $ 1,933,200
Shell Oil Co.
1,000,000 6.95 12/15/98 1,007,110
Union Pacific Railroad Corp.
1,000,000 6.44 01/15/98 1,001,070
---------------
$ 3,941,380
---------------
UTILITIES--1.2%
Duke Power Corp.
$ 1,000,000 7.37% 02/02/04 $ 1,003,460
Union Electric Co.
1,000,000 6.75% 10/15/99 $ 998,820
---------------
$ 2,002,280
---------------
Total Corporate Obligations
(cost $25,051,832) .......... $ 25,611,970
---------------
Foreign Bonds--0.6%
Hydro Quebec Note
$ 1,000,000 7.96% 12/17/01 $ 1,035,450
---------------
Total Foreign Bonds
(cost $971,660) ............... $ 1,035,450
---------------
Mortgage-Backed Pass-Through Obligations--28.9%
Federal Home Loan Mortgage Corp.
$ 2,383,543 8.50% 02/01/19 $ 2,487,442
2,716,750 8.50 03/01/21 2,835,581
11,670,350 7.00 05/01/26 11,356,652
Federal National Mortgage Assn.
1,188,820 7.19 07/01/06 1,183,061
3,859,054 7.00 07/01/09 3,837,328
991,786 6.50 02/01/12 963,272
1,683,711 6.50 07/01/14 1,619,073
1,995,813 9.00 11/01/21 2,113,765
1,318,112 9.00 02/01/25 1,398,293
Government National Mortgage Assn.
3,933,802 8.00 02/15/22 4,013,658
4,932,532 7.00 09/15/23 4,803,053
2,298,054 7.50 08/20/25 2,271,466
9,851,656 7.50 07/20/26 9,725,358
---------------
Total Mortgage-Backed
Pass-Through Obligations
(cost $47,353,228) .......... $ 48,608,002
---------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BOND FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
----------- ---------- ---------- ------------
<S> <C> <C> <C>
U.S. Government Agency Obligations--1.2%
Federal Home Loan Bank
$ 1,000,000 6.32% 02/01/00 $ 993,670
Federal Home Loan Mortgage Corp.
1,000,000 6.20 04/15/03 969,840
------------
Total U.S. Government
Agency Obligations
(cost $1,863,696) ........... $ 1,963,510
------------
U.S. Treasury Obligations--15.5%
United States Treasury Bonds
$ 6,000,000 7.25% 05/15/16 $ 6,141,540
6,000,000 7.50 11/15/16 6,292,500
United States Treasury Notes
4,000,000 5.75 10/31/00 3,909,360
5,000,000 5.88 11/15/05 4,721,100
5,000,000 7.00 07/15/06 5,084,350
------------
Total U.S. Treasury
Obligations
(cost $26,571,328) .......... $ 26,148,850
------------
Short-Term Obligations--3.6%
Banc One Corp. Commercial Paper
$ 3,000,000 5.53% 05/15/97 $ 2,993,583
Merrill Lynch & Co., Inc. Commercial Paper
3,000,000 5.55 05/01/97 3,000,000
------------
Total Short-Term
Obligations
(cost $5,993,583) ........... $ 5,993,583
------------
Repurchase Agreements--1.8%
State Street Bank & Trust Company,
dated 4/30/97, repurchase price
$3,019,432 (U.S. Treasury Note:
$3,080,961, 6.38%, 04/30/99)
$ 3,019,000 5.15% 05/01/97 $ 3,019,000
------------
Total Repurchase
Agreements
(cost $3,019,000) ........... $ 3,019,000
------------
Total Investments
(cost $164,330,561/(a)/) $166,693,178
------------
- -------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for
investments in which value
exceeds cost ................................ $ 3,792,407
Gross unrealized loss for
investments in which cost
exceeds value ............................... (1,429,790)
------------
Net unrealized gain .................... $ 2,362,617
============
</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 federal income tax
purposes.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BALANCED FUND
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ----------- ------------- -------
<S> <C> <C>
Common Stocks--54.1%
AEROSPACE/DEFENSE--1.1%
9,900 Lockheed Martin Corp. $ 886,050
------------
AUTOMOTIVE PRODUCTS--1.4%
39,100 Chrysler Corp. $ 1,173,000
------------
BASIC INDUSTRIES--1.0%
11,600 Aluminum Company of America $ 810,550
------------
BIOTECHNOLOGY--0.9%
12,400 Amgen, Inc./(a)/ $ 730,050
------------
BUSINESS SERVICES--3.2%
24,600 Equifax, Inc. $ 707,250
17,000 First Data Corp. 586,500
7,600 Omnicom Group 402,800
10,000 Personnel Group of America, Inc./(a)/ 240,000
32,300 Reynolds & Reynolds Co. 670,225
------------
$ 2,606,775
------------
CHEMICAL PRODUCTS--1.3%
6,000 Du Pont (E.I.) de Nemours & Co. $ 636,750
10,500 OM Group, Inc. 292,688
5,000 Thermo Instrument Systems, Inc./(a)/ 156,875
------------
$ 1,086,313
------------
COMPUTER SERVICES/SOFTWARE--3.5%
10,000 American Management Systems, Inc./(a)/ $ 247,500
8,000 Cadence Design Systems, Inc./(a)/ 256,000
8,800 Cisco Systems, Inc./(a)/ 455,400
12,000 Cognos, Inc./(a)/ 304,500
4,100 Gateway 2000, Inc./(a)/ 224,987
7,500 McAfee Associates, Inc./(a)/ 418,125
3,500 Microsoft Corp./(a)/ 425,250
10,400 Network General Corp./(a)/ 143,000
8,800 Parametric Technology Corp./(a)/ 398,200
------------
$ 2,872,962
------------
CONSUMER GOODS--0.8%
12,400 Nike, Inc. $ 697,500
------------
DIVERSIFIED MANUFACTURING--4.8%
11,400 Allied Signal, Inc. $ 823,650
12,800 Dover Corp. 678,400
10,000 DT Industries, Inc. 260,000
28,000 Federal Signal Corp. 682,500
15,900 Illinois Tool Works, Inc. 1,452,863
------------
$ 3,897,413
------------
ELECTRICAL SERVICES--0.8%
17,500 Union Electric Co. $ 623,438
------------
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT--8.6%
20,600 Adaptec, Inc./(a)/ $ 762,200
13,200 ADC Telecommunications, Inc./(a)/ 344,850
14,000 Belden, Inc. 430,500
5,000 Emerson Electric Co. 253,750
13,900 General Electric Co. 1,541,162
6,300 Intel Corp. 964,688
11,400 Linear Technology Corp. 572,850
10,000 Logicon, Inc./(b)/ 397,500
12,000 Symbol Technologies, Inc. 388,500
7,000 Texas Instruments, Inc. 624,750
14,800 Xilinx, Inc./(a)/ 725,200
------------
$ 7,005,950
------------
FINANCIAL SERVICES--8.0%
8,100 BankAmerica Corp. $ 946,687
14,000 Fair Isaac & Co., Inc. 442,750
25,400 Federal National Mortgage Assn. 1,044,575
14,550 Franklin Resources, Inc. 860,269
17,400 Green Tree Financial Corp. 515,475
5,400 Morgan Stanley Group, Inc. 340,875
15,400 Norwest Corp. 768,075
26,775 Synovus Financial Corp. 649,294
18,000 Travelers Group, Inc. 996,750
------------
$ 6,564,750
------------
HEALTH & MEDICAL SERVICES--3.9%
9,100 Abbott Laboratories $ 555,100
24,000 Ballard Medical Products 456,000
</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, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ----------- ------------- -------
<S> <C> <C>
Common Stocks--Continued
HEALTH & MEDICAL SERVICES--CONTINUED
9,400 Dentsply International, Inc. $ 465,300
5,000 Guidant Corp. 341,250
16,100 Johnson & Johnson 986,125
3,600 McKesson Corp. 260,550
8,000 Medic Computer Systems, Inc./(a)/ 125,000
------------
$ 3,189,325
------------
HOUSEHOLD PRODUCTS--0.4%
3,500 Gillette Co. $ 297,500
------------
INDUSTRIAL MACHINERY--2.4%
14,100 Caterpillar, Inc. $ 1,254,900
7,500 Lindsay Manufacturing Co. 213,750
10,000 Sealed Air Corp./(a)/ 462,500
------------
$ 1,931,150
------------
INSURANCE SERVICES--4.1%
10,500 Allied Group, Inc. $ 388,500
10,000 American Bankers Insurance Group, Inc. 528,750
20,800 Conseco, Inc. 860,600
8,500 Orion Capital Corp. 532,313
5,000 Protective Life Corp./(b)/ 221,250
17,600 SunAmerica, Inc. 809,600
------------
$ 3,341,013
------------
OIL & GAS--3.6%
10,000 BJ Services Co./(a)/ $ 471,250
11,400 Mobil Corp. 1,482,000
5,400 Royal Dutch Petroleum ADR 973,350
------------
$ 2,926,600
------------
PHARMACEUTICALS--1.1%
10,100 Merck & Co. $ 914,050
------------
RETAIL TRADE--2.2%
20,025 Consolidated Stores Corp./(a)/ $ 801,000
20,000 Gap, Inc. 637,500
7,900 Walgreen Co. 363,400
------------
$ 1,801,900
------------
TEXTILES--0.3%
8,000 G & K Services, Inc. $ 232,000
------------
TRANSPORTATION/STORAGE--0.7%
16,000 Air Express International Corp. $ 548,000
------------
Total Common Stocks
(cost $33,613,919) ............ $44,136,289
------------
<CAPTION>
Principal Interest Maturity
Amount Rate Date
- ----------- ------------- ----------
<S> <C> <C> <C>
Asset-Backed Securities--9.3%
AUTO--0.6%
NationsBank Auto Owner Trust
Series 1996-A, Class A4
$ 500,000 6.63% 12/15/00 $ 501,405
------------
CREDIT CARD--5.0%
American Express Master Trust
Series 1994-3, Class A
$ 500,000 7.85% 08/15/05 $ 522,965
Choice Credit Card Master Trust
Series 1992, Class 2B
500,000 7.20 04/15/99 504,880
Discover Card Master Trust
Series 1993-3, Class A
500,000 6.20 05/16/06 480,625
J.C. Penney Master Credit Card Trust
Series B, Class A
500,000 8.95 10/15/01 524,350
MBNA Master Credit Card Trust
Series 1995-C, Class A
500,000 6.45 02/15/08 484,215
Standard Credit Card Master Trust
Series 1991-6, Class B
500,000 8.35 01/07/99 512,030
Standard Credit Card Master Trust
Series 1993-2, Class A
500,000 5.95 10/07/04 475,095
Standard Credit Card Master Trust
Series 1995-1, Class B
500,000 8.45 01/07/07 535,715
------------
$ 4,039,875
------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BALANCED FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ----------- ------------- ---------- -------
<S> <C> <C> <C>
Asset-Backed Securities--Continued
HOME EQUITY--0.6%
Advanta Mortgage Loan Trust Series
1994-4, Class A2
$ 500,000 8.92% 01/25/26 $ 528,145
------------
MANUFACTURED HOUSING--3.1%
Green Tree Financial Corp. Series
1993-4, Class A4
$ 500,000 6.60% 01/15/19 $ 491,715
Green Tree Financial Corp. Series
1993-4, Class A5
500,000 7.05 01/15/19 487,965
Green Tree Financial Corp. Series
1994-2, Class A4
500,000 7.90 05/15/19 517,340
Green Tree Financial Corp. Series
1996-4, Class A7
500,000 7.90 06/15/27 510,000
Green Tree Financial Corp. Series
1996-5, Class A6
500,000 7.75 07/15/27 515,155
------------
$ 2,522,175
------------
Total Asset-Backed Securities
(cost $7,447,283) ................ $ 7,591,600
------------
Collateralized Mortgage Obligations--2.4%
Federal Home Loan Mortgage Corp.
Series 60, Class H
$1,000,000 9.00% 07/15/20 $ 983,430
Federal National Mortgage Assn.
Series 1993-130, Class H
500,000 6.30 09/25/18 487,500
Residential Funding Mortgage Securities
Corp. Series 1995, Class A4
500,000 8.00 04/25/10 503,905
------------
Total Collateralized Mortgage
Obligations (cost $2,011,641) .... $ 1,974,835
------------
Corporate Obligations--6.7%
FINANCIAL--4.9%
BankAmerica Corp.
$ 500,000 6.88% 06/01/03 $ 493,700
Chemical Bank
500,000 6.70 08/15/08 472,065
Ford Motor Company Credit Corp.
500,000 6.63 06/30/03 487,360
General Electric Capital Corp.
500,000 8.30 09/20/09 549,680
Morgan Stanley Group, Inc.
500,000 6.75 03/04/03 491,400
NationsBank Corp.
500,000 7.80 09/15/16 498,735
PNC Bank N.A.
500,000 7.88 04/15/05 513,785
Smith Barney Holdings, Inc.
500,000 6.63 06/01/00 497,030
------------
$ 4,003,755
------------
INDUSTRIAL--1.2%
Gannett, Inc.
$ 500,000 5.25% 03/01/98 $ 496,350
Hanson Overseas BV
500,000 6.75 09/15/05 483,300
------------
$ 979,650
------------
UTILITIES--0.6%
AT& T Corp.
$ 500,000 7.13% 01/15/02 $ 505,085
------------
Total Corporate Obligations
(cost $5,269,223) ................ $ 5,488,490
------------
Mortgage-Backed Pass-Through Obligations--11.5%
Federal Home Loan Mortgage Corp.
$1,945,058 7.00% 05/01/26 $ 1,892,775
Federal National Mortgage Assn.
1,543,622 7.00 07/01/09 1,534,931
495,893 6.50 02/01/12 481,636
</TABLE>
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
BALANCED FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ----------- ------------- ---------- ------------
<S> <C> <C> <C>
Mortgage-Backed Pass-Through Obligations--Continued
Government National Mortgage Assn.
$ 983,450 8.00% 02/15/22 $ 1,003,414
1,620,331 7.00 09/15/23 1,577,798
919,222 7.50 08/20/25 908,586
1,970,331 7.50 07/20/26 1,945,071
------------
Total Mortgage-Backed Pass-Through
Obligations (cost $9,114,398) ..... $ 9,344,211
------------
U.S. Government Agency Obligations--0.9%
Federal Home Loan Bank
$ 750,000 6.63% 08/28/01 $ 746,467
------------
Total U.S. Government Agency
Obligations (cost $695,325) ....... $ 746,467
------------
U.S. Treasury Obligations--4.9%
United States Treasury Bonds
$1,000,000 7.25% 05/15/16 $ 1,023,590
1,000,000 7.50 11/15/16 1,048,750
United States Treasury Notes
1,000,000 5.88 11/15/05 944,220
1,000,000 7.00 07/15/06 1,016,870
------------
Total U.S. Treasury Obligations
(cost $4,106,563) ................. $ 4,033,430
------------
Repurchase Agreements--9.9%
State Street Bank & Trust Company, dated
04/30/97, repurchase price $8,061,153
(U.S. Treasury Note: $8,225,607, 5.50%,
04/15/00)
$8,060,000 5.15% 05/01/97 $ 8,060,000
------------
Total Repurchase Agreements
(cost $8,060,000) ................. $ 8,060,000
------------
Total Investments
(cost $70,318,352/(c)/) ........... $81,375,322
============
- -------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost ..........................
$11,715,975
Gross unrealized loss for investments in which
cost exceeds value .......................... (698,693)
------------
Net unrealized gain ........................... $11,017,282
============
</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 $70,358,040.
- -------------------------------------------------------------------------------
Investment Abbreviations:
ADR--American Depository Receipts
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
GROWTH AND INCOME FUND
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------ ---------------- -----------------
<S> <C> <C>
Common Stocks--94.0%
AEROSPACE/DEFENSE--3.1%
3,000 General Dynamics Corp. $ 213,750
2,100 Northrop Grumman Corp. 175,350
-----------------
$ 389,100
-----------------
AUTOMOTIVE PRODUCTS--3.9%
3,000 Borg-Warner Automotive, Inc. $ 126,000
4,600 Ford Motor Co. 159,850
3,500 General Motors Corp. 202,562
-----------------
$ 488,412
-----------------
BUILDING MATERIALS & CONSTRUCTION--1.5%
5,000 Centex Corp. $ 180,000
-----------------
BUSINESS SERVICES--0.7%
6,000 Safety Kleen Corp. $ 89,250
-----------------
CHEMICAL PRODUCTS--4.6%
4,000 BF Goodrich Co. $ 159,500
6,000 Dexter Corp. 179,250
6,000 Hanna M.A. Co. 125,250
5,800 Schulman, Inc. 110,200
-----------------
$ 574,200
-----------------
COMMUNICATIONS--0.5%
3,600 News Corp, Ltd. ADR $ 66,600
-----------------
COMPUTER SERVICES/SOFTWARE--0.9%
3,500 Sterling Software, Inc./(a)/ $ 106,750
-----------------
ELECTRICAL SERVICES--1.2%
4,000 Union Electric Co. $ 142,500
-----------------
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT--3.9%
4,500 Arrow Electronics, Inc./(a)/ $ 250,312
12,000 VLSI Technology, Inc./(a)/ 238,500
-----------------
$ 488,812
-----------------
FINANCIAL SERVICES--16.3%
2,800 A. G. Edwards, Inc. $ 98,000
2,000 BankAmerica Corp. 233,750
5,000 Bankers Trust Corp. 406,875
6,000 Bear Stearns Companies, Inc. 183,000
7,500 Equitable Companies, Inc. 219,375
2,500 JP Morgan & Co, Inc. 254,688
5,000 Lehman Brothers Holdings, Inc. 169,375
4,000 Morgan Stanley Group, Inc. 252,500
4,000 Salomon Brothers, Inc. 200,000
-----------------
$ 2,017,563
-----------------
INDUSTRIAL MACHINERY--2.1%
2,000 Ingersoll-Rand Co. $ 98,250
3,600 Springs Industries, Inc. 168,300
-----------------
$ 266,550
-----------------
INSURANCE SERVICES--15.6%
3,500 Ace, Ltd. $ 210,000
3,500 AMBAC, Inc. 226,625
3,000 Berkley W R Corp. 147,750
1,000 Cigna Corp. 150,375
2,200 Cincinnati Financial Corp. 153,450
6,000 Financial Securities Assurance Holdings,
Ltd. 194,250
4,000 Lincoln National Corp. 224,000
2,500 MBIA, Inc./(b)/ 243,438
6,000 Old Rep International Corp. 169,500
3,500 Orion Capital Corp. 219,188
-----------------
$ 1,938,576
-----------------
MINING - METALS/MINERALS--1.6%
3,000 AK Steel Holding Corp. $ 108,750
7,000 LTV Corp. 91,875
-----------------
$ 200,625
-----------------
OFFICE & BUSINESS EQUIPMENT--1.4%
4,400 Stratus Computer, Inc./(a)/ $ 171,050
-----------------
OIL & GAS--10.8%
1,300 Atlantic Richfield Co. $ 176,962
4,000 Helmerich & Payne, Inc. 191,000
5,000 Imperial Oil, Ltd. 228,125
5,000 Phillips Petroleum Co. 196,875
15,000 Quaker State Corp. 225,000
17,000 Ranger Oil, Ltd. 170,000
5,500 YPF Sociedad Anonima ADR 151,938
-----------------
$ 1,339,900
-----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
GROWTH AND INCOME FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------ ----------------- -----------------
<S> <C> <C>
Common Stocks--Continued
PAPER & FOREST PRODUCTS--1.0%
4,300 James River Corp. $ 128,462
-----------------
PHARMACEUTICALS--1.7%
18,000 Perrigo Co./(a)/ $ 211,500
-----------------
RETAIL TRADE--4.0%
4,000 Dayton Hudson Corp. $ 180,000
5,000 Great Atlantic & Pacific Tea Co., Inc. 124,375
4,000 JC Penney, Inc. 191,000
-----------------
$ 495,375
-----------------
TEXTILES--2.3%
3,000 Liz Claiborne, Inc. $ 135,750
2,000 VF Corp. 144,250
-----------------
$ 280,000
-----------------
TOBACCO--1.4%
6,000 Universal Corp. $ 168,000
-----------------
TRANSPORTATION/STORAGE--1.7%
2,300 Norfolk Southern Corp. $ 206,713
-----------------
UTILITIES--13.8%
2,500 Allegheny Power Systems, Inc. $ 65,625
7,000 Consolidated Edison Co. of New York, Inc. 194,250
1,300 Consolidated Natural Gas Co. 65,487
2,600 Duke Power Co. 114,075
6,000 Florida Progress Corp./(b)/ 184,500
3,000 FPL Group, Inc. 133,875
2,200 GPU, Inc. 70,950
2,500 Ipalco Enterprises, Inc./(b)/ 76,250
1,800 National Fuel Gas Co. of New Jersey 74,925
1,400 Northern States Power Co. of Minnesota 63,700
3,200 Northwest Natural Gas Co. 77,600
4,500 Peoples Energy Corp 151,875
7,000 Washington Gas Co. 161,000
2,200 Wicor, Inc. 77,275
2,000 Public Service Co. of Colorado 77,500
3,000 Telefonos de Mexico SA ADR 123,750
-----------------
$ 1,712,637
-----------------
Total Common Stocks
(cost $11,653,904) ............ $ 11,662,575
-----------------
<CAPTION>
Principal Interest Maturity
Amount Rate Date
- ----------------- ----------- ------------
<S> <C> <C> <C>
Repurchase Agreements--9.9%
State Street Bank & Trust Company, dated 04/30/97,
repurchase price $1,234,177 (U.S. Treasury
Bond: $1,263,209, 9.25%, 02/15/16)
$ 1,234,000 5.15% 05/01/97 $ 1,234,000
-----------------
Total Repurchase Agreements
(cost $1,234,000) ............. $ 1,234,000
-----------------
Total Investments
(cost $12,887,904/(c)/) ....... $ 12,896,575
=================
- -------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost ........................... $ 285,733
Gross unrealized loss for investments in which
cost exceeds value ........................... (277,062)
----------------
Net unrealized gain .............................. $ 8,671
=================
</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 cost stated also represents aggregate cost for federal income tax
purposes.
- -------------------------------------------------------------------------------
Investment Abbreviations:
ADR--American Depository Receipts
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
GROWTH FUND
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------------- ---------------- -------------------
<S> <C> <C>
Common Stocks--87.7%
AEROSPACE/DEFENSE--2.4%
73,000 Lockheed Martin Corp. $ 6,533,500
-------------------
AUTOMOTIVE PRODUCTS--2.8%
250,000 Chrysler Corp. $ 7,500,000
-------------------
BASIC INDUSTRIES--1.9%
74,000 Aluminum Company of America $ 5,170,750
-------------------
BIOTECHNOLOGY--1.9%
84,400 Amgen, Inc./(a)/ $ 4,969,050
-------------------
BUSINESS SERVICES--5.4%
170,000 Equifax, Inc. $ 4,887,500
118,000 First Data Corp. 4,071,000
269,000 Reynolds & Reynolds Co. 5,581,750
-------------------
$ 14,540,250
-------------------
CHEMICAL PRODUCTS--2.0%
50,000 Du Pont (E.I.) de Nemours & Co. $ 5,306,250
-------------------
COMPUTER SERVICES/SOFTWARE--3.6%
70,000 Cisco Systems, Inc./(a)/ $ 3,622,500
25,500 Microsoft Corp./(a)/ 3,098,250
63,000 Parametric Technology Corp./(a)/ 2,850,750
-------------------
$ 9,571,500
-------------------
CONSUMER GOODS--2.0%
96,500 Nike, Inc. $ 5,428,125
-------------------
DIVERSIFIED MANUFACTURING--9.4%
80,000 Allied Signal, Inc. $ 5,780,000
84,000 Dover Corp. 4,452,000
180,000 Federal Signal Corp. 4,387,500
117,000 Illinois Tool Works, Inc. 10,690,875
-------------------
$ 25,310,375
-------------------
ELECTRICAL SERVICES--1.8%
136,000 Union Electric Co. $ 4,845,000
-------------------
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT--13.6%
147,000 Adaptec, Inc./(a)/ $ 5,439,000
20,000 Emerson Electric Co. 1,015,000
95,000 General Electric Co. 10,533,125
40,200 Intel Corp. 6,155,625
75,000 Linear Technology Corp. 3,768,750
55,100 Texas Instruments, Inc. 4,917,675
97,000 Xilinx, Inc./(a)/ 4,753,000
-------------------
$ 36,582,175
-------------------
FINANCIAL SERVICES--14.7%
54,400 BankAmerica Corp. $ 6,358,000
180,000 Federal National Mortgage Assn. 7,402,500
113,700 Franklin Resources, Inc. 6,722,513
156,000 Green Tree Financial Corp. 4,621,500
40,000 Morgan Stanley Group, Inc. 2,525,000
108,000 Norwest Corp. 5,386,500
115,000 Travelers Group, Inc. 6,368,125
-------------------
$ 39,384,138
-------------------
HEALTH & MEDICAL SERVICES--4.1%
70,000 Abbott Laboratories $ 4,270,000
110,000 Johnson & Johnson 6,737,500
-------------------
$ 11,007,500
-------------------
HOUSEHOLD PRODUCTS--0.9%
28,200 Gillette Co. $ 2,397,000
-------------------
INDUSTRIAL MACHINERY--2.2%
65,000 Caterpillar, Inc. $ 5,785,000
-------------------
INSURANCE SERVICES--4.5%
152,000 Conseco, Inc. $ 6,289,000
127,000 SunAmerica, Inc. 5,842,000
-------------------
$ 12,131,000
-------------------
OIL & GAS--6.7%
82,600 Mobil Corp. $ 10,738,000
40,000 Royal Dutch Petroleum ADR 7,210,000
-------------------
$ 17,948,000
-------------------
PHARMACEUTICALS--2.5%
73,000 Merck & Co. $ 6,606,500
-------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
GROWTH FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- -------------- ---------------- -------------------
<S> <C> <C>
Common Stocks--Continued
RETAIL TRADE--5.3%
150,000 Consolidated Stores Corp./(a)/ $ 6,000,000
170,000 Gap, Inc. 5,418,750
60,800 Walgreen Co. 2,796,800
-------------------
$ 14,215,550
-------------------
Total Common Stocks
(cost $169,734,999) ......... $ 235,231,663
-------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date
- ----------------- ----------- ------------
<S> <C> <C>
Repurchase Agreements--13.6%
State Street Bank & Trust Company, dated 04/30/97,
repurchase price $36,482,218 (U.S. Treasury
Note: $37,210,532, 9.13%, 05/15/18)
$ 36,477,000 5.15% 05/01/97 $ 36,477,000
-------------------
Total Repurchase Agreements
(cost $36,477,000) .......... $ 36,477,000
-------------------
Total Investments
(cost $206,211,999/(b)/) .... $ 271,708,663
===================
</TABLE>
<TABLE>
- --------------------------------------------------------------------------------
<S> <C>
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost ......................... $ 67,256,446
Gross unrealized loss for investments in which
cost exceeds value ......................... (1,759,782)
-------------------
Net unrealized gain ............................ $ 65,496,664
===================
- -------------------------------------------------------------------------------
</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 cost stated also represents aggregate cost for federal income tax
purposes.
- -------------------------------------------------------------------------------
Investment Abbreviations:
ADR--American Depository Receipts
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
MIDCAP FUND
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------ ---------------- -----------------
Common Stocks--98.3%
<S> <C> <C>
BIOTECHNOLOGY--3.0%
24,600 Biogen, Inc. $ 787,200
45,000 Elan Corp. PLC ADR/(a)/ 1,530,000
-----------------
$ 2,317,200
-----------------
BUSINESS SERVICES--8.9%
48,400 Devry, Inc./(a)/ $ 1,064,800
19,000 Omnicom Group 1,007,000
22,100 Paychex, Inc. 1,034,556
78,000 Personnel Group of America, Inc./(a)/ 1,872,000
40,200 Reynolds & Reynolds Co. 834,150
40,000 Wallace Computer Services, Inc./(b)/ 1,070,000
-----------------
$ 6,882,506
-----------------
CHEMICAL PRODUCTS--2.4%
39,250 OM Group, Inc. $ 1,094,094
25,000 Thermo Instruments Systems, Inc./(a)/ 784,375
-----------------
$ 1,878,469
-----------------
COMPUTER SERVICES/SOFTWARE--13.1%
52,000 American Management Systems, Inc./(a)/ $ 1,287,000
24,000 BMC Software, Inc./(a)/ 1,038,000
29,000 CACI International, Inc. 496,625
42,000 Cadence Design Systems, Inc./(a)/ 1,344,000
45,700 Cognos, Inc./(a)/ 1,159,637
19,800 Gateway 2000, Inc./(a)/ 1,086,525
22,250 McAfee Associates, Inc./(a)/ 1,240,437
35,800 Network General Corp./(a)/ 492,250
22,400 Parametric Technology Corp./(a)/ 1,013,600
21,770 SunGuard Data Systems, Inc./(a)/ 966,044
-----------------
$ 10,124,118
-----------------
DIVERSIFIED MANUFACTURING--4.6%
30,800 Danaher Corp. $ 1,389,850
24,000 Helix Technology Corp. 729,000
26,000 Precision Castparts Corp./(b)/ 1,391,000
-----------------
$ 3,509,850
-----------------
ELECTRONICS & OTHER ELECTRICAL EQUIPMENT--13.8%
33,400 Adaptec, Inc./(a)/ $ 1,235,800
35,800 ADC Telecommunications, Inc./(a)/ 935,275
39,000 Andrew Corp./(a)/ 965,250
33,900 Belden, Inc. 1,042,425
32,100 Charter Power Systems, Inc. 914,850
22,000 Lattice Semiconductor Corp./(a)/ 1,229,250
35,500 Logicon, Inc./(b)/ 1,411,125
29,200 Maxim Integrated Products, Inc./(a)/ 1,543,950
43,200 Symbol Technologies, Inc. 1,398,600
-----------------
$ 10,676,525
-----------------
FINANCIAL SERVICES--12.5%
42,000 A. G. Edwards, Inc. $ 1,470,000
40,000 Concord EFS, Inc./(a)/ 790,000
43,000 Fair Isaac & Co., Inc. 1,359,875
19,800 Franklin Resources, Inc. 1,170,675
21,000 Provident Bancorp Inc 819,000
80,400 Synovus Financial Corp. 1,949,700
33,000 TCF Financial Corp. 1,348,875
31,000 United Asset Management Corp. 759,500
-----------------
$ 9,667,625
-----------------
HEALTH & MEDICAL SERVICES--7.5%
62,000 Ballard Medical Products $ 1,178,000
21,600 Dentsply International, Inc. 1,069,200
14,700 Guidant Corp. 1,003,275
29,400 HCIA, Inc./(a)/ 606,375
10,900 McKesson Corp. 788,888
20,100 Medic Computer Systems, Inc./(a)/ 314,063
24,800 Pediatrix Medical Group, Inc./(a)/ 818,400
-----------------
$ 5,778,201
-----------------
INDUSTRIAL MACHINERY--3.8%
37,000 DT Industries, Inc. $ 962,000
40,150 Lindsay Manufacturing Co. 1,144,275
17,500 Sealed Air Corp./(a)/ 809,375
-----------------
$ 2,915,650
-----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
MIDCAP FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------ ---------------- -----------------
<S> <C> <C>
Common Stocks--Continued
INSURANCE SERVICES--11.7%
42,500 Allied Group, Inc. $ 1,572,500
29,000 American Bankers Insurance
Group, Inc. 1,533,375
17,000 Equitable of Iowa Companies 830,875
24,875 Orion Capital Corp. 1,557,797
30,000 Protective Life Corp./(b)/ 1,327,500
20,000 SunAmerica, Inc. 920,000
15,800 Transatlantic Holdings, Inc. 1,307,450
-----------------
$ 9,049,497
-----------------
OIL & GAS--4.3%
22,000 BJ Services Co./(a)/ $ 1,036,750
58,000 Nabors Industries, Inc./(a)/ 1,087,500
26,000 Newpark Resources, Inc./(a)/ 1,166,750
-----------------
$ 3,291,000
-----------------
PHARMACEUTICALS--1.3%
28,000 Jones Medical Industries, Inc. $ 987,000
-----------------
RECREATIONAL SERVICES--1.1%
33,800 K2, Inc. $ 883,025
-----------------
RETAIL TRADE--3.0%
59,000 Central Garden & Pet Company/(a)/ $ 1,176,312
41,000 Lands' End, Inc. 1,096,750
-----------------
$ 2,273,062
-----------------
TEXTILES--3.4%
42,400 G & K Services, Inc. $ 1,229,600
33,000 Jones Apparel Group, Inc./(a)/ 1,377,750
-----------------
$ 2,607,350
-----------------
TRANSPORTATION/STORAGE--3.9%
38,300 Air Express International Corp. $ 1,311,775
25,300 Tidewater, Inc./(b)/ 1,015,163
20,800 United Waste Systems, Inc./(a)/ 702,000
-----------------
$ 3,028,938
-----------------
Total Common Stocks
(cost $66,583,388) ............ $ 75,870,016
=================
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- ---------------- ----------- ------------- ------------------
<S> <C> <C> <C>
Repurchase Agreements--4.2%
State Street Bank & Trust Company,
dated 04/30/97, repurchase price
$3,230,462 (U.S. Treasury Bond:
$3,299,903, 8.13%, 08/15/21)
$3,230,000 5.15% 05/01/97 $ 3,230,000
-----------------
Total Repurchase
Agreements
(cost $3,230,000) ............. $ 3,230,000
-----------------
Total Investments
(cost $69,813,388/(c)/) ....... $ 79,100,016
=================
- -------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost ........................... $ 12,142,551
Gross unrealized loss for investments
in which cost exceeds value .................. (2,855,923)
-----------------
Net unrealized gain .............................. $ 9,286,628
=================
- -------------------------------------------------------------------------------
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 cost stated also represents aggregate cost for federal income tax purposes.
- -------------------------------------------------------------------------------
Investment Abbreviations:
ADR--American Depository Receipts
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------ ---------------- -----------------
<S> <C> <C>
Common Stocks--94.3%
ARGENTINE PESO--0.9%
2,039 Banco de Galicia Buenos Aires SA ADR
(Financial Services) $ 49,605
2,614 Banco Frances del Rio de la Plata ADR
(Financial Services) 79,400
15,725 Perez Compac SA (Diversified
Industrial Manufacturing) 127,543
360 Sociedad Comercial del Plata ADR 144A
/(a)(b)/ (Oil & Gas) 10,983
2,230 Telecom Argentina (Utilities) 11,040
170 Telecom Argentina ADR (Utilities) 8,500
4,040 Telefonica de Argentina ADR
(Utilities) 134,330
400 Transportadora de Gas del Sur ADR
(Utilities) 5,000
4,628 YPF Sociedad Anonima ADR (Oil & Gas) 127,849
-----------------
$ 554,250
-----------------
AUSTRALIAN DOLLAR--1.7%
8,000 Australia & New Zealand Bank Group
(Financial Services) $ 51,096
21,150 Australian Gas Light Co. (Utilities) 121,229
11,000 Boral Ltd. (Construction) 32,426
8,294 Broken Hill Proprietary Co. (Mining -
Metals/Minerals) 116,943
1,200 Coca-Cola Amatil (Beverages/Tobacco) 13,718
8,700 Commonwealth Instalments Receipt
(Financial Services) 65,133
14,000 Fosters Brewing Group (Beverages/
Tobacco) 28,823
3,051 Lend Lease Corp. (Building Materials &
Construction) 58,388
5,189 National Australia Bank (Financial
Services) 71,018
19,000 National Mutual Holdings (Insurance
Services) 28,153
19,433 News Corp. Ltd. (Broadcast Media) 89,565
14,000 Publishing & Broadcasting, Ltd.
(Broadcast Media) 73,914
10,000 St George Bank Ltd (Financial
Services) 61,452
14,000 Tab Corp. Holdings, Ltd. (Recreational
Services) 69,165
11,500 Western Mining Corp. Holdings, Ltd.
(Mining - Metals/Minerals) 68,159
10,000 Westpac Banking Corp. (Financial
Services) 53,888
11,000 Woodside Petroleum, Ltd. (Oil & Gas) 87,499
-----------------
$ 1,090,569
-----------------
AUSTRIAN SCHILLING--0.0%
84 EVN Energie Versorgung Neider
(Utilities) $ 10,391
280 Flughafen Wien AG (Transportation/
Storage) 11,607
-----------------
$ 21,998
-----------------
BELGIAN FRANC--1.2%
294 Dexia (Financial Services) $ 29,194
368 Generale Banque (Financial Services) 152,604
33 Generale De Banque (Financial
Services) 16
1,140 Kredietbank (Financial Services) 444,042
39 UCB (Chemical Products) 107,018
-----------------
$ 732,874
-----------------
</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, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------ ---------------- -----------------
<S> <C> <C>
Common Stocks--Continued
BRAZILIAN REAL--4.2%
10,595,488 Banco Bradesco SA (Financial Services) $ 87,673
175,959 Brahma Companhia Cerevejaria (Food/
Grocery Products) 119,705
130,400 Brasmotor SA (Automobiles & Automobile
Parts) 31,267
3,200 Brazil Fund, Inc. (Financial Services) 81,600
500 Cemig - CIA Energetica Minas Gerais
ADR 144A/(b)/ (Utilities) 22,563
4,947 Cemig - CIA Energetica Minas Gerais
ADR (Non-Voting) (Utilities) 223,233
118,176 Cim Port Itau (Cia) (Utilities) 41,670
2,070 Companhia Brasileira (Utilities) 40,106
330 Companhia Energetica de Sao Paolo ADS
144A/(a)(b)/ (Utilities) 5,239
370 Companhia Energetica de Sao Paolo ADR
/(a)/ (Non-Voting) (Utilities) 5,897
1,100,736 Companhia Siderurgica Nacional (Mining
- Metals/ Minerals) 39,320
94,000 Coteminas (Textiles) 39,421
4,285 Electrobas-Centrais Eletricas
Brasileiras ADR (Utilities) 96,494
1,680 Electrobas-Centrais Eletricas
Brasileiras ADR (B Shares)
(Utilities) 39,254
77,000 Itaubanco (Financial Services) 41,631
1,352,000 Lojas Americanas SA/(a)/ (Retail
Trade) 19,196
475,000 Petroleo Brasileiros - Petrobras (Oil
& Gas) 99,824
1,568,226 Telebras (Broadcast Media) 179,885
278,000 Telecom de Rio de Janeiro Telerj
(Utilities) 46,268
8,103 Telecomunicacoes Brasileiras ADR
(Broadcast Media) 929,819
304,000 Telemig - Tele de Minas Gerais SA
(Utilities) 48,423
602,623 Telesp (Utilities) 171,126
2,700,000 Unibanco Uniao de Bancos Brasileirs
(Financial Services) 99,749
8,530 Usinas Siderurgicas de Minas ADR
(Building Materials &
Construction) 100,254
11,587 White Martins SA (Chemical Products) 39,440
-----------------
$ 2,649,057
-----------------
BRITISH POUND STERLING--15.8%
28,000 Abbey National (Financial Services) $ 390,276
25,800 Argos (Retail Trade) 269,708
90,000 Asda Group (Retail Trade) 167,747
19,000 BG (Energy) 54,814
18,000 British Petroleum (Oil & Gas) 206,548
51,000 Cable & Wireless (Utilities) 392,729
28,744 Cadbury Schweppes (Food/Grocery
Products) 238,524
54,000 Caradon (Building Materials &
Construction) 216,175
19,000 Centrica/(a)/ (Energy) 17,399
13,000 Coats Viyella (Textiles) 27,391
17,000 Compass Group (Recreational Services) 186,256
15,000 Electrocomponents (Electronics and
Other Electrical Equipment) 96,029
3,000 GKN (Automobiles & Automobile Parts) 46,288
31,000 Glaxo Wellcome (Health/Personal Care) 609,449
</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, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------ ---------------- -----------------
<S> <C> <C>
Common Stocks--Continued
BRITISH POUND STERLING--CONTINUED
60,000 Grand Metropolitan (Beverages/
Tobacco) $ 500,810
47,000 Guinness (Beverages/Tobacco) 388,493
4,000 Heywood Williams Group (Building
Materials & Construction) 15,916
15,000 Hillsdown Holdings (Food/Grocery
Products) 44,246
48,000 Kingfisher (Retail Trade) 519,676
23,000 Ladbroke Group (Recreational Services) 85,737
11,000 Laing (John) (Building Materials &
Construction) 65,430
80,400 National Westminster Bank (Financial
Services) 951,248
26,500 Rank Organisation (Recreational
Services) 182,536
41,000 Reed International (Publishing) 755,543
11,000 Rolls-Royce (Aerospace/Defense) 43,323
21,000 RTZ Corp. (Mining - Metals/Minerals) 333,549
38,000 Safeway (Retail Trade) 210,632
9,000 Sears Holdings (Retail Trade) 11,232
36,500 Shell Transport & Trading Co. (Oil &
Gas) 645,405
22,000 Smith (David S.) Holdings (Textiles) 79,870
75,000 SmithKline Beecham/S'Kline Beckman
(Health/Personal Care) 1,205,227
30,000 T & N (Automobiles & Automobile Parts) 66,126
33,000 Tesco (Retail Trade) 191,475
104,500 Tomkins (Diversified Industrial
Manufacturing) 450,519
34,000 United News & Media (Broadcast Media) 415,494
-----------------
$ 10,081,820
-----------------
CANADIAN DOLLAR--0.3%
3,850 Alcan Aluminum, Ltd. (Mining - Metals/
Minerals) $ 130,630
1,540 Royal Bank of Canada (Financial
Services) 61,402
-----------------
$ 192,032
-----------------
CHILEAN PESO--0.6%
123 AFP Providia ADR (Financial Services) $ 2,214
590 Cervecerias Unidas (CCU) ADR
(Beverages/Tobacco) 13,128
1,580 Chile Fund, Inc. (Financial Services) 38,315
550 Chilectra SA ADR (Utilities) 33,313
749 Chilgener SA ADR (Utilities) 21,347
1,661 Cia de Telecomunicaciones Chile
(Utilities) 53,775
2,312 Empresa Nacional de Electricidad SA
ADR (Utilities) 44,506
1,551 Enersis SA ADR (Utilities) 48,857
11,110 Five Arrows Chile Investment Trust
(Financial Services) 35,941
1,160 Genesis Chile Fund (Financial
Services) 53,360
1,151 Santa Isabel ADR (Retail Trade) 28,343
-----------------
$ 373,099
-----------------
CHINESE YUAN--0.4%
6,900 Huaneng Power International, Inc.
ADR/(a)/(Energy) $ 167,325
</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, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------ ---------------- -----------------
<S> <C> <C>
Common Stocks--Continued
CHINESE YUAN--CONTINUED
258,000 Shanghai Petrochemical (Chemical
Products)/(a)/ $ 63,946
186,000 Yizheng Chemical Fibre (Chemical
Products)/(a)/ 36,496
-----------------
$ 267,767
-----------------
CZECH KORUNA--0.0%
190 SPT Telecom/(a)/(Utilities) $ 20,079
-----------------
DANISH KRONE--0.2%
825 Den Danske Bank AB (Financial
Services) $ 71,351
290 Teledanmark (Utilities) 13,948
690 Unidanmark (Financial Services) 34,130
-----------------
$ 119,429
-----------------
DEUTSCHEMARK--4.0%
1,270 Allianz AG Holdings (Insurance
Services) $ 242,003
30 Altana (Health/Personal Care) 23,213
8,868 Bayer AG (Chemical Products) 352,815
4,288 Bayerische Hypo Und Wechsel Bank
(Financial Services) 133,706
1,500 Bilfinger & Berger Bauag (Building
Materials & Construction) 55,780
102 Buderus AG (Industrial Machinery) 47,825
2,330 Commerzbank AG (Financial Services) 62,495
3,581 Deutsche Bank AG (Financial Services) 188,996
3,177 Deutsche Telekom AG (Utilities) 68,941
464 Fielmann AG (Health/Personal Care) 11,950
7,351 Gehe AG (Health/Personal Care) 488,991
1,340 Hoechst AG (Chemical Products) 52,616
200 Hornbach Baumarkt (Retail Trade) 6,352
630 Hornbach Holdings AG (Retail Trade) 40,380
240 Mannesmann AG (Engineering) 94,376
503 Praktiker Bau Und Heimwerker Markte
(Retail Trade) 8,074
1,002 Rhoen-Klinikum AG (Health/Personal
Care) 129,604
310 Sap AG (Computer Services/Software) 56,440
540 Schering AG (Chemical Products) 51,761
6,778 Veba AG (Utilities) 349,115
130 Veba AG - Warrants/(a)/(Utilities) 37,683
116 Volkswagen AG (Automobiles &
Automobile Parts) 73,748
-----------------
$ 2,576,864
-----------------
FINNISH MARKKA--0.2%
2,290 Nokia (AB) OY (Electronics & Other
Electrical Equipment) $ 142,850
-----------------
FRENCH FRANC--8.0%
425 Accor (Recreational Services) $ 60,948
1,740 Alcatel Alsthom (Cie Gen El)
(Electronics & Other Electrical
Equipment) 193,482
</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, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------ ---------------- -----------------
<S> <C> <C>
Common Stocks--Continued
FRENCH FRANC--CONTINUED
1,070 Assurances Generales de France
(Insurance Services) $ 34,814
954 Axa (Diversified Holding Companies) 58,696
580 Canal Plus (Broadcast Media) 104,741
897 Carrefour (Retail Trade) 560,039
360 Chargeurs (Diversified Industrial
Manufacturing) 21,280
580 Clf Dexia France (Financial Services) 53,662
268 Credit Local de France (Financial
Services) 24,796
5,930 Eaux (Cie Generale Des) (Utilities) 826,024
2,210 Elf Aquitaine (Energy) 214,317
490 GTM Entrepose (Building Materials &
Construction) 29,510
697 Guilbert SA (Business Services) 108,673
410 Havas SA (Broadcast Media) 30,698
205 L'Oreal (Health/Personal Care) 72,741
1,160 Lapeyre (Building Materials &
Construction) 69,960
455 Legrand (Electronics & Other
Electrical Equipment) 76,788
1,579 LVMH Moet-Hennessy Louis Vuitton
(Beverages/Tobacco) 385,518
360 Pathe (Broadcast Media) 84,071
876 Pinault Printemps Redoute (Retail
Trade) 368,471
780 Primagaz (Cie Des Gaz Petrole) (Oil &
Gas) 76,443
182 Rexel (Retail Trade) 48,490
1,720 Saint Gobain (Chemical Products) 230,453
1,959 Sanofi (Health/Personal Care) 182,927
3,540 Schneider SA (Electronics & Other
Electrical Equipment) 199,548
240 Societe Generale (Financial Services) 26,893
690 Sodexho (Food/Grocery Products) 316,834
1,410 Television Francaise (Broadcast Media) 136,011
5,794 Total (Oil & Gas) 480,476
-----------------
$ 5,077,304
-----------------
HONG KONG DOLLAR--3.9%
69,000 Cathay Pacific Air (Transportation/
Storage) $ 107,332
39,000 Dao Heng Bank Group (Financial
Services) 185,271
136,573 First Pacific Co. (Financial Services) 163,080
40,000 Guoco Group (Financial Services) 190,021
134,380 Hong Kong Land Holdings (Real Estate) 279,510
240,000 Hopewell Holdings (Real Estate) 124,701
59,000 Hutchison Whampoa (Diversified) 437,940
74,262 New World Development Co. (Real
Estate) 428,518
35,000 Swire Pacific Ltd. (Transportation/
Storage) 269,961
79,000 Wharf Holdings (Diversified Holding
Companies) 298,806
-----------------
$ 2,485,140
-----------------
</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, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------ ---------------- -----------------
<S> <C> <C>
Common Stocks--Continued
ITALIAN LIRA--2.3%
15,000 Banca Commercial Italiana (Financial
Services) $ 32,196
24,680 Banca Fideuram (Financial Services) 61,982
43,526 Credito Italiano Spa (Financial
Services) 61,012
30,000 ENI (Ente Nazionale Idrocarburi) (Oil
& Gas) 152,262
849 Gucci Group NV (Textiles) 58,899
10,840 IMI Spa (Financial Services) 92,340
2,226 Industrie Natuzzi Spa (Household
Durables) 49,529
13,000 Instituto National Assicurazioni
(Insurance Services) 17,425
12,000 Italgas (Societa Italiana II Gas) Spa
(Utilities) 41,036
5,150 Mediolanum (Insurance Services) 49,329
3,000 Rinascente (Retail Trade) 15,997
16,000 Seat Spa/(a)/ (Business Services) 3,168
44,000 Seat Spa Di Risp Shares/(a)/ (Business
Services) 13,466
49,000 STET (Utilities) 231,667
16,000 STET (Di Risp Shares) (Utilities) 59,340
119,443 Telecom Italia Mobile (Utilities) 375,663
15,887 Telecom Italia Mobile (Di Risp Shares)
(Utilities) 29,368
42,013 Telecom Italia Spa (Utilities) 110,543
-----------------
$ 1,455,222
-----------------
JAPANESE YEN--21.1%
1,210 Advantest (Electronics & Other
Electrical Equipment) $ 67,204
7,000 Alps Electric Co. (Electronics & Other
Electrical Equipment) 81,617
16,000 Amada Co, Ltd. (Industrial Machinery) 119,620
30,000 Canon, Inc. (Electronics and Other
Electrical Equipment) 711,388
10,000 Citizen Watch Co. (Electronics and
Other Electrical Equipment) 71,927
13,000 Dai Nippon Screen Manufacturing
(Electronics & Other Electrical
Equipment) 103,439
3,000 Daifuku Co., Ltd. (Industrial
Machinery) 34,506
17,000 Daiichi Pharmaceutical Co. (Health/
Personal Care) 273,211
23,000 Daiwa House Industry Co. (Building
Materials & Construction) 257,297
33 DDI Corp. (Utilities) 219,159
52 East Japan Railway (Transportation/
Storage) 224,903
4,000 Fanuc Co., Ltd. (Electronics & Other
Electrical Equipment) 136,448
30,000 Hitachi (Electronics & Other
Electrical Equipment) 271,793
22,000 Hitachi Zosen Corp. (Heavy
Engineering) 76,433
2,000 Honda Motor Co., Ltd. (Automobiles &
Automobile Parts) 62,079
7,000 Inax Corp. (Building Materials &
Construction) 43,455
6,000 Ishihara Sangyo Kaisha/(a)/ (Chemical
Products) 15,079
7,000 Ito-Yokado Co. (Retail Trade) 335,841
</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, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------ ---------------- -----------------
<S> <C> <C>
Common Stocks--Continued
JAPANESE YEN--CONTINUED
13,000 Kao Corp. (Cosmetics) $ 151,574
8,000 Kokuyo Co., Ltd. (Computers/
Communication) 173,947
22,000 Komatsu, Ltd. (Industrial Machinery) 160,838
6,000 Komori Corp. (Industrial Machinery) 128,097
14,000 Kumagai Gumi Co. (Building Materials &
Construction) 18,750
19,000 Kuraray Co. (Chemical Products) 167,645
8,000 Kyocera Corp. (Electronics and Other
Electrical Equipment) 478,985
12,000 Makita Corp. (Industrial Machinery) 164,494
16,000 Marui Co., Ltd. (Retail Trade) 263,442
29,000 Matsushita Electric Industrial Co.
(Household Durables) 463,781
14,000 Mitsubishi Corp. (Wholesale Trade) 131,248
78,000 Mitsubishi Heavy Industries Ltd.
(Aerospace/Defense) 514,941
9,000 Mitsubishi Paper Mills, Ltd. (Paper &
Forest Products) 28,645
40,000 Mitsui Fudosan Co. (Real Estate) 456,927
6,000 Mitsui Petrochemical Industries (Oil &
Gas) 28,219
8,000 Murata Manufacturing Co. (Electronics
& Other Electrical Equipment) 294,954
4,000 National House Industrial (Building
Materials & Construction) 47,268
54,000 NEC Corp. (Electronics & Other
Electrical Equipment) 659,393
4,000 Nippon Hodo (Building Materials &
Construction) 28,266
106,000 Nippon Steel Corp. (Mining - Metals/
Minerals) 302,296
23 Nippon Telephone & Telegraph Corp.
(Utilities) 162,170
27,000 Nippondenso Co. (Transportation/
Storage) 614,724
24,000 Nomura Securities Co., Ltd. (Financial
Services) 268,484
10,000 Pioneer Electronic Corp. (Household
Durables) 178,832
2,000 Sangetsu Co., Ltd. (Building Materials
& Construction) 33,718
17,000 Sankyo Co. (Health/ Personal Care) 455,351
2,700 SEGA Enterprises (Diversified
Industrial Manufacturing) 71,044
26,000 Sekisui Chemical Co., Ltd. (Building
Materials & Construction) 249,892
16,000 Sekisui House (Building Materials &
Construction) 142,435
3,000 Seven Eleven Japan Co., Ltd. (Retail
Trade) 190,255
25,000 Sharp Corp. (Household Durables) 324,969
16,000 Shinetsu Chemical Co., Ltd. (Chemical
Products) 322,685
4,000 Shiseido Co. (Health/ Personal Care) 57,352
6,500 Sony Corp. (Household Durables) 473,156
33,000 Sumitomo Corp. (Wholesale Trade) 222,019
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------ ---------------- -----------
<S> <C> <C>
Common Stocks--Continued
JAPANESE YEN--CONTINUED
42,000 Sumitomo Electric Industries, Ltd.
(Electronics and Other Electrical
Equipment) $ 569,110
9,000 Sumitomo Forestry Co., Ltd. (Paper &
Forest Products) 91,464
7,000 TDK Corp. (Household Durables) 504,589
39,000 Teijin (Chemical Products) 157,616
7,000 Tokio Marine & Fire Insurance Co.
(Insurance Services) 68,381
3,300 Tokyo Electron (Electronics and Other
Electrical Equipment) 127,388
8,000 Tokyo Steel Manufacturing (Mining -
Metals/Minerals) 85,713
14,000 Toppan Printing Co. (Broadcast Media) 180,880
7,000 Uny Co. (Retail Trade) 122,976
3,000 Yurtec Corp. (Building Materials &
Construction) 28,834
------------
$13,473,146
------------
KOREAN WON--0.6%
6,000 Cho Hung Bank (Insurance Services) $ 32,422
4,200 Korea Electric Power Corp. ADR
(Utilities) 125,247
429 Korea Fund, Inc. (Financial Services) 5,523
1,060 Samsung Electronics (Electronics &
Other Electrical Equipment) 87,136
650 Samsung Electronics, Ltd. GDS 144A/(b)/
(Electronics & Other Electrical
Equipment) 31,038
2,240 Shinhan Bank (Financial Services) $ 33,188
------------
$ 314,554
------------
MALAYSIAN RINGGIT--2.4%
56,000 Affin Holdings Berhad (Financial
Services) $ 134,937
32,000 Berjaya Sports Toto Berhad (Business
Services) 152,939
18,000 Commerce Asset Holdings Berhad
(Financial Services) 107,535
60,000 MBF Capital Berhad (Financial
Services) 88,896
70,000 Multi-Purpose Holding (Financial
Services) 114,306
58,000 Multi-Purpose Holdings 3% ICULS
13/01/02 (Financial Services) 21,599
113,000 Renong Berhad (Diversified Industrial
Manufacturing) 154,819
11,200 Renong Berhad 4% ICULS 21/05/01
(Diversified Industrial
Manufacturing) 40
20,000 Resorts World Berhad (Recreational
Services) 73,682
44,000 Tanjong (Mining - Metals/Minerals) 159,471
26,000 Technology Resources Industries
(Business Services) 47,634
27,000 Time Engineering Berhad (Industrial
Machinery) 49,466
58,000 United Engineers Malaysia (Industrial
Machinery) 411,184
------------
$ 1,516,508
------------
MEXICAN PESO--1.8%
14,062 Cemex SA (Building Materials &
Construction) $ 46,009
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------ ---------------- -----------------
<S> <C> <C>
Common Stocks--Continued
MEXICAN PESO--CONTINUED
9,860 Cemex SA (B Shares) (Building
Materials & Construction) $ 36,107
7,860 Cemex SA ADR (Building Materials &
Construction) 52,976
83,641 CIFRA SA de CV (Retail Trade) 125,043
6,752 Fomento Economico Mexicano SA
(Beverages/ Tobacco) 31,863
18,158 Groupo Financiero Banamex-Accivl (B
Shares)/(a)/ (Financial Services) 38,891
499 Groupo Financiero Banamex-Accivl (L
Shares)/(a)/ (Financial Services) 998
16,324 Gruma SA /(a)/ (Diversified Holding
Companies) 78,677
3,485 Gruma SA ADS 144A/(a)(b)/ (Diversified
Holding Companies) 67,958
37,450 Grupo Industrial Maseca SA (Household
Durables) 36,571
7,058 Grupo Modelo SA (Beverages/ Tobacco) 42,811
722 Grupo Televisa GDR (Broadcast Media) 16,696
23,739 Kimberly Clark de Mexico (Health/
Personal Care) 88,127
6,040 Panamerica Beverages ADR (Beverages/
Tobacco) 175,160
8,145 Telefonos de Mexico SA ADR (Utilities) 335,981
-----------------
$ 1,173,868
-----------------
NETHERLANDS GUILDER--9.7%
5,537 ABN AMRO Holdings NV (Financial
Services) $ 380,539
3,987 Ahold NV (Retail Trade) 272,171
498 Akzo Nobel NV (Chemical Products) 64,157
1,330 Baan Co, Inc. (Business Services) 71,321
5,063 CSM CVA (Food/ Grocery Products) 290,792
57,813 Elsevier NV (Broadcast Media) 925,815
4,975 Fortis AMEV NV (Insurance Services) 187,683
1,110 Hagemeyer (Wholesale Trade) 96,569
16,352 ING Groep NV (Financial Services) 642,061
5,924 ING Groep NV - Warrants/(a)/ (Financial
Services) 53,727
1,678 Koninklijke Ptt Nederland (Utilities) 59,599
790 Nutricia (Verenigde Bedrijven) NV
(Food/ Grocery Products) 119,860
950 Otra NV (Electronics & Other
Electrical Equipment) 15,116
7,437 Polygram (Recreational Services) 364,540
7,090 Royal Dutch Petroleum Co. (Oil & Gas) 1,267,124
2,170 Unilever NV (Food/ Grocery Products) 422,016
8,246 Wolters Kluwer (Publishing) 977,263
-----------------
$ 6,210,353
-----------------
NEW ZEALAND DOLLAR--0.5%
21,909 Air New Zealand, Ltd. (Transportation/
Storage) $ 63,335
11,200 Carter Holt Harvey (Paper & Forest
Products) 24,846
7,000 Fernz Corp. (Chemical Products)
23,536
</TABLE>
The accompanying notes are an integral part of these financial statements.
28
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------ ---------------- ----------------
<S> <C> <C>
Common Stocks--Continued
NEW ZEALAND DOLLAR--CONTINUED
17,950 Fletcher Challenge Building (Building
Materials & Construction) 50,397
1,750 Fletcher Challenge Energy (Oil & Gas) 5,083
41,095 Fletcher Challenge Forest Division
(Paper & Forest Products) 56,693
12,500 Fletcher Challenge Paper (Paper & 27,730
Forest Products)
16,000 New Zealand Telecom (Utilities) 71,764
-----------------
$ 323,384
-----------------
NORWEGIAN KRONE--1.7%
1,170 Bergesen D-Y ASA (Transportation/
Storage) $ 24,152
9,730 Norsk Hydro (Energy) 474,121
6,560 Orkla AS (Diversified Industrial
Manufacturing) 549,952
1,390 Saga Petroleum (Oil & Gas) 22,447
-----------------
$ 1,070,672
-----------------
PANAMANIAN BALBOA--0.0%
567 Banco Latino Americano De Export E
Shares (Financial Services) $ 26,011
-----------------
PERUVIAN SOL--0.1%
1,320 Credicorp Ltd (Financial Services) $ 27,720
1,906 Telefonica del Peru SA ADS (Utilities) 45,744
-----------------
$ 73,464
-----------------
PORTUGUESE ESCUDO--0.5%
5,139 Jeronimo Martins SGPS (Food/ Grocery
Products) $ 307,424
428 Jeronimo Martins SGPS- Warrants/(a)/
(Food/ Grocery Products) 5,416
-----------------
$ 312,840
-----------------
RUSSIAN RUBLE--0.0%
840 Rao Gazprom ADS (Energy) $ 13,104
-----------------
SINGAPORE DOLLAR--2.1%
9,000 City Developments (Real Estate) $ 72,746
27,000 DBS Land (Real Estate) 87,295
6,000 Development Bank of Singapore
(Financial Services) 71,295
9,600 Fraser & Neave (Beverages/ Tobacco) 69,637
2,500 Keppel Corp./(a)/ (Transportation/
Storage) 10,881
4,000 Overseas Chinese Banking Corp-Alien
Market (Financial Services) 46,701
35,000 Overseas Union Bank - Foreign
(Financial Services) 229,706
33,000 Singapore Land (Real Estate) 153,886
12,200 Singapore Press Holdings (Broadcast
Media) 225,879
32,000 United Industrial Corp. (Real Estate) 24,097
26,800 United Overseas Bank (Financial
Services) 251,800
3,200 United Overseas Bank - Warrants/(a)/
(Financial Services) 11,009
20,000 Wing Tai Holdings (Textiles) 51,675
-----------------
$ 1,306,607
-----------------
SPANISH PESETA--2.2%
14 Aguas de Barcelona (Utilities) $ 535
1,579 Argentaria (Financial Services) 70,415
1,020 Banco Bilbao Vizcaya (Financial 68,649
Services)
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------ ---------------- ----------------
<S> <C> <C>
Common Stocks--Continued
SPANISH PESETA--CONTINUED
2,979 Banco de Santander SA (Financial
Services) $ 224,131
690 Banco Popular (Commercial Banks) 146,301
2,011 Centros Comerciales Pryca (Retail
Trade) 34,937
2,606 Empresa Nacional de Endesa (Utilities) 182,164
1,160 Gas Natural Sdg SA (Utilities) 246,353
12,450 Iberdrola SA (Utilities) 140,505
3,927 Repsol SA (Oil & Gas) 164,649
5,350 Telefonica de Espana (Utilities) 137,039
-----------------
$ 1,415,678
-----------------
SWEDISH KRONA--2.3%
8,600 Abb AB (Electronics & Other Electrical
Equipment) $ 104,695
14,060 Astra AB (Health/Personal Care) 558,299
4,930 Atlas Copco AB (Industrial Machinery) 122,233
3,710 Electrolux Co. (Household Durables) 212,819
670 Esselte (Broadcast Media) 15,288
1,850 Hennes & Mauritz AB (Retail Trade) 267,665
860 Sandvik AB (Industrial Machinery) 21,213
6,640 Sandvik AB (B Shares) (Industrial
Machinery) 163,361
660 Scribona AB (Broadcast Media) 8,203
-----------------
$ 1,473,776
-----------------
SWISS FRANC--5.3%
889 Adia SA (Commercial Services) $ 296,715
400 BBC AG Brown, Boveri & Cie
(Electronics & Other Electrical
Equipment) 484,363
648 Ciba Spezialitatenchemi (Chemical
Products) 55,828
880 CS Holdings (Financial Services) 99,098
495 Nestle SA (Food/Grocery Products) 601,079
738 Novartis AG (Chemical Products ) 972,252
83 Roche Holdings AG (Health/Personal
Care) 701,004
890 Schweizerischer Bankverein/(a)/
(Financial Services) 194,410
-----------------
$ 3,404,749
-----------------
THAI BAHT--0.2%
2,900 Advanced Information Services
(Computers/Communication) $ 19,317
5,450 Bangkok Bank (Financial Services) 50,489
600 Siam Cement Public Co. (Building
Materials & Construction) 16,078
5,900 Thai Farmers Bank Public-Alien Market
(Financial Services) 35,686
-----------------
$ 121,570
-----------------
UNITED STATES DOLLAR--0.0%
190 Enron Global Power & Pipelines, LLC.
(Energy) $ 5,605
-----------------
VENEZUELAN BOLIVAR--0.1%
1,160 Cia Anonima Nacional Tele Venezuela
ADS/(a)/ (Utilities) $ 34,800
-----------------
Total Common Stocks
(cost $54,771,258) ............ $ 60,111,043
-----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
- ------------------ ---------------- -----------------
Preferred Stocks--0.2%
<S> <C> <C>
AUSTRALIAN DOLLAR--0.1%
26,000 Sydney Harbour Casino /(a)/
(Recreational Services) $ 43,796
-----------------
DEUTSCHEMARK--0.1%
60 Krones AG (Industrial Machinery) $ 23,213
340 Sap AG (Non Voting) (Computer
Services/ Software) 62,609
-----------------
$ 85,822
-----------------
Total Preferred Stocks
(cost $110,406) ............... $ 129,618
-----------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date
- ----------------- ----------- ------------
Corporate Obligations--0.0%
<S> <C> <C>
BELGIAN FRANC--0.0%
Kredietbank
$ 1,000 5.75% 11/30/03 $ 3,865
-----------------
Total Corporate Obligations
(cost $2,557) ................. $ 3,865
-----------------
Repurchase Agreements--4.8%
State Street Bank & Trust Company, dated
04/30/97, repurchase price $3,030,433 (U.S.
Treasury Bond: $3,091,000, 8.13%, 8/21/21)
$ 3,030,000 5.15% 05/01/97 $ 3,030,000
-----------------
Total Repurchase Agreements
(cost $3,030,000) ............. $ 3,030,000
-----------------
Total Investments
(cost $57,914,221/(c)/) ....... $ 63,274,526
=================
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost ........................... $ 8,040,987
Gross unrealized loss for investments in which
cost exceeds value ........................... (2,732,073)
-----------------
Net unrealized gain .............................. $ 5,308,914
=================
</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)/Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration normally to qualified institutional investors.
/(c)/The aggregate cost for federal income tax purposes is $57,965,612.
- -------------------------------------------------------------------------------
Investment Abbreviations:
ADR--American Depository Receipts
ADS--American Depository Shares
GDS--Global Depository Shares
ICULS--Irredeemable Convertible Unsecured Loan Stock
- -------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
INTERNATIONAL EQUITY FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Common and Preferred Stock Industry Concentrations
- -------------------------------------------------------------------------------
<S> <C>
Financial Services 11.9%
Utilities 10.2%
Electronics & Other Electrical Equipment 7.9%
Health/ Personal Care 7.6%
Retail Trade 6.4%
Oil & Gas 5.3%
Chemical Products 4.3%
Broadcast Media 3.9%
Food/ Grocery Products 3.9%
Household Durables 3.5%
Publishing 2.7%
Building Materials & Construction 2.6%
Beverages/ Tobacco 2.6%
Real Estate 2.5%
Industrial Machinery 2.3%
Diversified Industrial Manufacturing 2.2%
Transportation/ Storage 2.1%
Mining - Metals/ Minerals 1.9%
Recreational Services 1.7%
Energy 1.5%
Insurance Services 1.0%
Aerospace/Defense 0.8%
Diversified Holding Companies 0.8%
Wholesale Trade 0.7%
Diversified 0.7%
Business Services 0.6%
Commercial Services 0.5%
Automobiles & Automobile Parts 0.4%
Textiles 0.4%
Paper & Forest Products 0.4%
Computers/Communication 0.3%
Cosmetics 0.2%
Commercial Banks 0.2%
Computer Services/ Software 0.2%
Engineering 0.1%
Heavy Engineering 0.1%
Aerospace/ Defense 0.1%
- -------------------------------------------------------------------------------
Total Common and Preferred Stocks 94.5%
- -------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
NATIONAL TAX-FREE BOND FUND
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- --------- -------- -------- -----------
<S> <C> <C> <C>
Municipal Bond Obligations--98.0%
ALABAMA--1.5%
Phenix City Industrial Development Revenue Bonds (Toronto
Dominion Bank LOC) (AA/A-1+/ NR)
$300,000 4.00%/(a)/ 06/01/28 $ 300,000
-----------
ARIZONA--2.5%
Salt River Project Arizona Agricultural Improvements Revenue
Bonds Series C (AA/Aa)
$500,000 4.50% 01/01/04 $ 489,835
-----------
FLORIDA--2.2%
Florida State Board of Education Capital Outlay GO Bonds
Series A (AA+/Aa2)
$200,000 5.25% 01/01/04 $ 202,786
Florida State Board of Education Capital Outlay GO Bonds
Series D (AA+/Aa2)
250,000 5.00 06/01/12 236,070
-----------
$ 438,856
-----------
GEORGIA--1.5%
Fulton County Residential Care Facilities Lenbrook Square
Foundation Revenue Bonds (AAA/A-1+/ NR) (Rabobank
Nederland LOC)
$100,000 4.10%/(a)/ 01/01/18 $ 100,000
Georgia State GO Bonds Series D (AA+/Aaa)
200,000 5.40 11/01/10 203,064
-----------
$ 303,064
-----------
ILLINOIS--6.1%
Chicago Metropolitan Water Reclamation GO Bonds (AA/Aa)
$500,000 4.90% 12/01/01 $ 502,215
450,000 5.60 12/01/09 460,179
Evanston GO Bonds (NR/Aaa)
$250,000 5.30% 12/01/99 $ 255,222
-----------
$1,217,616
-----------
INDIANA--1.2%
Purdue University Revenue Bonds (AMBAC) (AAA/Aaa)
$250,000 5.25% 07/01/10 $ 244,183
-----------
IOWA--3.8%
Bettendorf GO Bonds Series A (AMBAC) (NR/Aaa)
$250,000 4.70% 06/01/03 $ 249,730
Iowa City Sewer Revenue Bonds (AMBAC) (AAA/Aaa)
250,000 6.00 07/01/08 258,692
Polk County GO Bonds (FGIC) (AAA/Aaa)
250,000 5.50 12/01/10 256,030
-----------
$ 764,452
-----------
KENTUCKY--1.0%
Louisville Water Works Board Water System Revenue Bonds(AA/Aa)
$200,000 5.63% 11/15/06 $ 206,846
-----------
MARYLAND--2.5%
Washington Suburban Sanitation District GO Revenue Bonds
(AA/Aa1)
$500,000 4.75% 06/01/02 $ 499,755
-----------
MASSACHUSETTS--0.5%
Massachusetts State GO Bonds (ABN AMRO Bank N.V. LOC)
(AA/A-1+/ Aa1/VMIG1)
$100,000 3.85%/(a)/ 12/01/97 $ 100,000
-----------
MICHIGAN--1.0%
Greenville Public Schools GO Bonds (MBIA) (AAA/Aaa)
$200,000 5.75% 05/01/07 $ 206,800
-----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
NATIONAL TAX-FREE BOND FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- --------- -------- -------- -----------
<S> <C> <C> <C>
Municipal Bond Obligations--Continued
MINNESOTA--6.5%
Minneapolis GO Bonds (AAA/Aaa)
$500,000 5.30% 10/01/98 $ 509,325
Minnesota State Housing and Finance Agency Series D (AA+/Aa)
390,000 5.35 01/01/05 395,101
St. Paul Independent School District #625 GO Bonds Series C
(AA/Aa)
400,000 5.20 02/01/07 396,952
-----------
$1,301,378
-----------
NEBRASKA--4.8%
Nebraska Public Power District Revenue Bonds Series A (A+/A1)
$250,000 5.10% 01/01/06 $ 248,427
200,000 6.00 01/01/06 209,002
Omaha Public Power Revenue Bonds Series A (AA/Aa)
500,000 5.00 02/01/01 505,905
-----------
$ 963,334
-----------
NEVADA--1.0%
Clark County School District GO Bonds Series B (FGIC)(AAA/Aaa)
$200,000 5.30% 05/01/04 $ 203,028
-----------
NORTH DAKOTA--1.3%
Fargo Water Revenue Bonds (MBIA) (AAA/Aaa)
$250,000 4.90% 01/01/03 $ 250,227
-----------
OHIO--4.1%
Columbus GO Bonds Series A (AAA/Aaa)
$250,000 4.50% 07/01/01 $ 249,050
Euclid GO Bonds (NR/Aa)
415,000 4.40 12/01/01 410,925
Ohio State Infrastructure Improvement GO Bonds (AA+/Aa1)
150,000 5.20 08/01/10 148,011
-----------
$ 807,986
-----------
OREGON--2.5%
Oregon State Housing & Community Services Department Revenue
Bonds Series D (NR/Aa)
$500,000 5.55% 07/01/06 $ 502,095
-----------
PENNSYLVANIA--2.5%
Pennsylvania State GO Bonds (AA-/A1)
$500,000 5.25% 06/15/06 $ 505,380
-----------
SOUTH CAROLINA--1.3%
South Carolina State Capital Improvement GO Bonds Series A
(AA+/Aaa)
$250,000 5.00% 03/01/05 $ 250,303
-----------
TENNESSEE--2.6%
Shelby County GO Bonds Series A (AA+/Aa)
$500,000 5.63% 06/01/08 $ 516,285
-----------
TEXAS--16.7%
Channelview Independent School District GO Bonds (PSFG)
(NR/Aaa)
$250,000 4.75% 08/15/05 $ 246,285
Collin County GO Bonds (AA-/Aa)
400,000 5.40 02/15/09 397,212
Grapevine Industrial Development Revenue Bonds (Morgan
Guarantee Trust Co. LOC) (NR/Aa1/P-1)
200,000 3.95/(a)/ 12/01/24 200,000
200,000 3.95/(a)/ 12/01/24 200,000
700,000 3.95/(a)/ 12/01/24 700,000
Houston Independent School District GO Bonds (AA+/Aa)
250,000 4.40 07/15/01 247,252
Lone Star Airport Improvement Authority Revenue Bonds (Royal
Bank of Canada LOC) (NR/VMIG1)
200,000 3.95/(a)/ 12/01/14 200,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
NATIONAL TAX-FREE BOND FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- --------- -------- -------- -----------
<S> <C> <C> <C>
Municipal Bond Obligations--Continued
TEXAS--CONTINUED
San Antonio GO Bonds (AA/Aa)
$200,000 5.20% 08/01/02 $ 203,004
Tarrant County GO Bonds (AA+/Aa1)
400,000 4.80 07/15/06 386,972
Tarrant County Water Control & Improvement Revenue Bonds (AAA/Aaa)
140,000 5.00 03/01/09 135,261
Texas A&M University Revenue Bonds (AA/Aa)
200,000 5.55 05/15/01 206,760
Texas State GO Bonds Series A (AA/Aa)
200,000 5.65 10/01/08 205,762
-----------
$3,328,508
-----------
UTAH--2.6%
Alpine School District GO Bonds (FGIC-TCRS) (AAA/Aaa)
$250,000 5.40% 03/15/05 $ 253,390
Salt Lake City School District Revenue Bonds Series A (NR/Aaa)
250,000 5.80 03/01/07 260,005
-----------
$ 513,395
-----------
VIRGINIA--3.5%
Virginia Beach GO Bonds (AA/Aa)
$200,000 5.20% 07/15/06 $ 202,904
Virginia State Public School Authority Revenue Bonds (AA/Aa)
500,000 4.50 01/01/00 499,475
-----------
$ 702,379
-----------
WASHINGTON--15.1%
King & Snohomish Counties School District (AA-/Aa)
$280,000 5.20% 06/15/08 $ 278,351
King County GO Bonds Series D (AA+/Aa1)
500,000 6.20% 12/01/00 522,370
King County School District #412 GO Bonds (MBIA)(AAA/Aaa)
250,000 5.75 06/01/08 257,630
Pierce County Sewer Improvements Revenue Bonds (A+/A1)
290,000 5.45 02/01/08 290,821
Port Seattle Revenue Bonds Series A (AMBAC) (AAA/Aaa)
500,000 6.00 02/01/99 511,945
Seattle GO Bonds Series A (AA+/Aa1)
150,000 5.30 08/01/13 145,538
Seattle Municipal Light & Power Revenue Bonds Series A (AA/Aa)
250,000 5.75 08/01/09 254,563
Snohomish County GO Bonds (MBIA) (AAA/Aaa)
250,000 5.75 12/01/10 250,443
Vancouver Water & Sewer Revenue Bonds (FGIC)(AAA/Aaa)
250,000 4.70 06/01/01 249,440
Washington State GO Bonds Series DD-12 & CC-9 (AA/Aa)
250,000 5.38 03/01/08 253,980
-----------
$3,015,081
-----------
WISCONSIN--9.7%
Appleton Wisconsin Area School District GO Bonds (NR/Aa)
$500,000 5.00% 04/01/11 $ 477,765
Green Bay Public School District GO Bonds (NR/Aa)
500,000 4.90 04/01/05 497,710
Milwaukee GO Bonds Series E (AA+/Aa1)
250,000 5.50 06/15/10 251,227
</TABLE>
The accompanying notes are an integral part of these financial statements.
35
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
NATIONAL TAX-FREE BOND FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- --------- ------- -------- -----------
<S> <C> <C> <C>
Municipal Bond Obligations--Continued
WISCONSIN--CONTINUED
Waukesha County GO Bonds
(NR/Aaa)
$500,000 4.40% 12/01/98 $ 503,080
Wisconsin State GO Bonds
Series 3 (AA/Aa)
200,000 5.25 11/01/02 203,910
-----------
$1,933,692
-----------
Total Municipal Bond
Obligations
(cost $19,471,913).............. $19,564,478
-----------
Total Investments
(cost
$19,471,913/(b)/) .............. $19,564,478
===========
- --------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for
investments in which value
exceeds cost ............................ $ 165,115
Gross unrealized loss for
investments in which cost
exceeds value ........................... (72,550)
-----------
Net unrealized gain ....................... $ 92,565
===========
- --------------------------------------------------------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Investment Abbreviations:
<S> <C>
AMBAC -- Insured by American Municipal Bond Assurance Corp.
FGIC -- Insured by Financial Guaranty Insurance Co.
GO -- General Obligation
LOC -- Letter of Credit
MBIA -- Insured by Municipal Bond Investors Assurance Corp.
NR -- Not Rated
PSFG -- Permanent School Fund Guaranteed
TCRS -- Transferable Custodial Receipts
- --------------------------------------------------------------------------------
</TABLE>
/(a)/ Variable rate security. Coupon rate disclosed is that which is in effect
at April 30, 1997.
/(b)/ The cost stated also represents aggregate cost for income tax purposes.
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
MISSOURI TAX-FREE BOND FUND
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- --------- -------- -------- ---------
<S> <C> <C> <C>
Missouri Municipal Bond Obligations--97.1%
Benton County School District GO
Bonds (AA/NR)
$300,000 4.90% 03/01/04 $ 296,046
Cass County School District #R-2
GO Bonds (AA/NR)
725,000 4.80 03/01/02 719,410
Cass County School District #R-9
GO Bonds (NR/A)
200,000 6.25 03/01/00 204,984
Cass County School District GO
Bonds (AA/NR)
400,000 4.75 03/01/03 393,388
Chesterfield GO Bonds (NR/Aa2)
500,000 5.20 02/15/12 490,860
Columbia School District GO Bonds
(AA/Aa)
375,000 4.75 03/01/05 372,315
Columbia Water & Electricity
Revenue Bonds Series A (AA/A1)
300,000 5.40 10/01/02 310,197
Fort Zumwalt School District (AA/NR)
100,000 5.25 03/01/11 99,313
Hazelwood School District GO
Bonds (NR/Aa)
150,000 5.15 03/01/04 152,053
Jackson County Longview
Recreation Project (NR/A1)
350,000 8.00 11/01/07 363,657
Jackson County School District GO
Bonds (NR/A1)
250,000 5.60 03/01/08 255,827
Jasper County School District #R-9
GO Bonds (AA/NR)
500,000 5.00 09/01/03 503,195
Kansas City Chouteau Bridge
Project Series B (AA/Aa3)
380,000 5.00 05/01/11 366,289
Kansas City GO Bonds (AA/Aa)
200,000 4.50 06/01/04 195,492
Kansas City Sewer Special
Assessment GO Bonds Series A
(AA/Aa)
410,000 7.40% 05/15/99 433,604
Kansas City Water Revenue Bonds
Series A (AA/Aa)
750,000 4.85 12/01/06 740,933
Lafayette County School District GO
Bonds (AA/NR)
350,000 5.20 03/01/07 346,262
Lees Summit GO Bonds Series B
(AMBAC) (AAA/Aaa)
400,000 4.20 04/01/04 377,912
Missouri State Economic
Development Export &
Infrastructure Board Revenue
Bonds (A/NR)
200,000 5.38/(a)/ 05/01/03 200,462
Missouri State Environmental
Improvement & Energy
Resources Authority Pollution
Control Revenue Bonds (AA/A1)
500,000 4.25 12/01/98 501,040
250,000 5.50 12/01/04 259,222
Missouri State Environmental
Improvement & Energy
Resources Authority Water
Pollution Control Revenue Bonds
Series A (AA/NR)
150,000 5.25 07/01/02 153,865
Missouri State Environmental
Improvement & Energy
Resources Authority Water
Pollution Control Revenue Bonds
Series C (NR/Aa)
205,000 4.75 01/01/01 206,490
500,000 4.90 01/01/02 504,520
</TABLE>
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
MISSOURI TAX-FREE BOND FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
----------- ---------- ---------- -----------
<S> <C> <C> <C>
Missouri Municipal Bond Obligations--Continued
Missouri State Environmental
Improvement & Energy
Resources Authority Water
Pollution Control Revenue Bonds
Series D (NR/Aa)
$400,000 5.50% 01/01/08 $ 408,376
Missouri State Environmental
Improvement & Energy
Resources Authority Water
Pollution Control Revenue Bonds
Series E (NR/Aa)
390,000 4.38 07/01/00 390,491
Missouri State Fourth State Building
GO Bonds Series A (AAA/Aaa)
150,000 5.30 08/01/08 151,955
500,000 5.40 08/01/09 508,320
Missouri State GO Bonds Series A (AAA/Aaa)
500,000 4.50 08/01/02 494,910
Missouri State Health &
Educational Facility Jefferson
Memorial Hospital Revenue
Bonds (NR/Baa)
500,000 4.10/(a)/ 06/01/26 500,000
Missouri State Health & Educational
Facility Revenue Bonds (Barnes-
Jewish, Inc.) (AA/Aa)
150,000 6.00 05/15/11 156,516
Missouri State Health & Educational
Facility Revenue Bonds
(prerefunded to 06/01/01) (MBIA)
(AAA/Aaa)
300,000 6.63 06/01/11 326,130
Missouri State Health & Educational
Facility Revenue Bonds Series B
(Health Midwest) (MBIA)
(AAA/Aaa)
150,000 6.10 06/01/11 157,007
Missouri State Health & Educational
Facility Washington University
Revenue Bonds Series A
(NR/Aa1)
800,000 4.75% 08/15/05 784,920
Missouri State Housing
Development Community
Mortgage Revenue Bonds
(GNMA/FNMA) (AAA/Aaa)
205,000 5.40 03/01/06 205,554
Missouri State Housing
Development Community
Revenue Bonds Series B
(GNMA/FNMA) (AAA/NR)
245,000 5.50 03/01/06 248,224
Missouri State Housing
Development Community
Revenue Bonds Series C
(GNMA/FNMA) (AAA/NR)
245,000 4.80 09/01/01 245,742
Missouri State Water Pollution
Control GO Bonds Series A
(AAA/Aaa)
300,000 5.60 08/01/10 307,140
Platte County Missouri School
District Park Hill GO Bond
(Student Aid Direct Deposit)
(AA/Aa2)
500,000 5.20 03/01/09 494,310
Platte County School District #R-3
GO Bonds (AA/NR)
265,000 4.90 03/01/05 260,090
Springfield GO Bonds (NR/Aa)
220,000 4.30 03/01/00 219,179
St. Charles School District GO
Bonds Series A (AMBAC)
(AAA/Aaa)
150,000 5.75 03/01/11 151,744
</TABLE>
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
THE COMMERCE FUNDS
STATEMENT OF INVESTMENTS
MISSOURI TAX-FREE BOND FUND--(Continued)
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
- --------- ------- -------- -----------
<S> <C> <C> <C>
Missouri Municipal Bond Obligations--Continued
St. Francois County School District
GO Bonds (CGIC) (AAA/Aaa)
$280,000 4.80% 03/01/04 $ 277,572
St. Louis County GO Bonds Series B
(NR/Aa1)
200,000 5.25 02/01/07 200,768
750,000 5.30 02/01/08 752,873
St. Louis County Rockwood School
District #R-6 GO Bonds (NR/Aaa)
300,000 5.80 02/01/99 307,185
St. Louis County School District GO
Bonds Lindbergh (NR/Aa)
715,000 6.60 02/15/03 776,197
200,000 5.40 02/15/10 199,252
St. Louis County School District GO
Bonds Parkway (NR/Aa)
300,000 7.00 02/01/00 319,254
St. Louis School District GO Bonds
(FGIC) (AAA/Aaa)
200,000 5.40 04/01/03 205,786
St. Peters GO Bonds (NR/A1)
150,000 5.80 01/01/10 153,389
University of Missouri Health
Facilities Revenue Bonds Series
A (AMBAC) (AAA/Aaa)
150,000 5.20 11/01/10 146,309
University of Missouri Systems
Facilities Revenue Bonds
(AA+/Aa2)
250,000 4.60 11/01/00 250,798
-----------
Total Missouri Municipal
Bond Obligations
(cost $18,091,923).... $18,047,327
-----------
Repurchase Agreements--1.4%
State Street Bank & Trust Company,
dated 04/30/97, repurchase price
$259,037 (U.S. Treasury Note:
$264,544, 5.88%, 04/30/98)
$259,000 5.15% 05/01/97 $ 259,000
-----------
Total Repurchase
Agreements
(cost $259,000) ..... $ 259,000
-----------
Total Investments
(cost $18,350,923/(b)/) $18,306,327
===========
- ------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for
investments in which value
exceeds cost ............... $ 77,840
Gross unrealized loss for
investments in which cost
exceeds value .............. (122,436)
===========
Net unrealized loss .......... $ (44,596)
===========
</TABLE>
- -----------------------------------------------------------------------------
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
- -----------------------------------------------------------------------------
Investment Abbreviations:
AMBAC -- Insured by American Municipal Bond Assurance Corp.
CGIC -- Insured by Capital Guaranty Insurance Corp.
FGIC -- Insured by Financial Guaranty Insurance Co.
FNMA -- Federal National Mortgage Assn.
GNMA -- Government National Mortgage Assn.
GO -- General Obligation
MBIA -- Insured by Municipal Bond Investors Assurance Corp.
NR -- Not Rated
- -----------------------------------------------------------------------------
/(a)/ Variable rate security. Coupon rate disclosed is that which is in effect
at April 30, 1997.
/(b)/ The cost stated also represents aggregate cost for income tax purposes.
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
THE COMMERCE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Short-Term
Government Bond
Fund Fund
--------------- ----------------
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $39,364,204, $164,330,561, $70,318,352, $12,887,904, $206,211,999,
$69,813,388, $57,914,221, $19,471,913, and $18,350,923, respectively) .......... $ 39,290,699 $ 166,693,178
Cash .............................................................................. 926 221
Receivables:
Investment securities sold ...................................................... -- --
Interest ........................................................................ 518,023 1,974,180
Dividends ....................................................................... -- --
Fund shares sold ................................................................ 152,489 324,548
Deferred organization expenses, net ............................................... 26,023 27,614
Other ............................................................................. 11,068 2,917
-------------- ----------------
Total assets .................................................................. 39,999,228 169,022,658
-------------- ----------------
LIABILITIES:
Payables:
Investment securities purchased ................................................. 468,685 --
Fund shares redeemed ............................................................ 296,677 517,996
Dividends and distributions ..................................................... 73,340 172,088
Advisory fees ................................................................... 9,581 68,078
Administration fees ............................................................. 4,791 20,424
Distribution Fees ............................................................... 7 76
Accrued expenses and other liabilities ............................................ 13,155 52,375
-------------- ----------------
Total liabilities ............................................................. 866,236 831,037
-------------- ----------------
NET ASSETS:
Paid-in capital ................................................................... 39,321,444 165,777,093
Accumulated undistributed net investment income (loss) ............................ 16,269 76,707
Accumulated net realized gain (loss) on investment transactions ................... (131,216) (24,796)
Accumulated net realized loss on foreign currency related transactions ............ -- --
Net unrealized gain (loss) on investments ......................................... (73,505) 2,362,617
Net unrealized loss on translation of assets and liabilities denominated in
foreign currencies ............................................................. -- --
-------------- ----------------
Net assets .................................................................... $39,132,992 $ 168,191,621
============== ================
SHARES OUTSTANDING:
Total shares outstanding, no par value (unlimited number of shares authorized):
Institutional Shares ............................................................ 2,150,847 8,949,730
============== ================
Service Shares .................................................................. 1,923 10,798
============== ================
Institutional Shares: Net asset value per share (net assets/shares outstanding).... $18.18 $18.77
============== ================
Maximum public offering price per share /(a)/.................................... $18.55 $19.45
============== ================
Service Shares: Net asset value per share (net assets/shares outstanding).......... $18.18 $18.77
============== ================
Maximum public offering price per share /(a)/.................................... $18.55 $19.45
============== ================
</TABLE>
- -------------
/(a)/For the Short-Term Government Fund, the maximum public offering price per
share is calculated as (NAV per share x 1.0204). For all other Funds, the
maximum public offering price per share is calculated as (NAV per share x
1.0363).
/(b)/For the National Tax-Free Bond and Missouri Tax-Free Bond Funds, shares
outstanding are designated as neither Institutional Shares nor Service
Shares.
The accompanying notes are an integral part of these financial statements.
40
<PAGE>
<TABLE>
<CAPTION>
Growth and
Balanced Income
Fund Fund
-------------- ---------------
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $39,364,204, $164,330,561, $70,318,352, $12,887,904, $206,211,999,
$69,813,388, $57,914,221, $19,471,913, and $18,350,923, respectively) ......... $ 81,375,322 $ 12,896,575
Cash ............................................................................. 263 956
Receivables:
Investment securities sold ..................................................... 262,497 --
Interest ....................................................................... 374,924 176
Dividends ...................................................................... 17,168 16,774
Fund shares sold ............................................................... 195,690 197,663
Deferred organization expenses, net .............................................. 26,599 19,353
Other ............................................................................ 28,799 31,102
-------------- ---------------
Total assets ................................................................. 82,281,262 13,162,599
-------------- ---------------
LIABILITIES:
Payables:
Investment securities purchased ................................................ 363,543 697,561
Fund shares redeemed ........................................................... 257,273 --
Dividends and distributions .................................................... -- --
Advisory fees .................................................................. 48,843 6,642
Administration fees ............................................................ 9,769 1,328
Distribution Fees .............................................................. 174 79
Accrued expenses and other liabilities ........................................... 40,606 49,444
-------------- ---------------
Total liabilities ............................................................ 720,208 755,054
-------------- ---------------
NET ASSETS:
Paid-in capital .................................................................. 69,240,717 12,376,605
Accumulated undistributed net investment income (loss) ........................... 188,057 27,668
Accumulated net realized gain (loss) on investment transactions .................. 1,075,310 (5,399)
Accumulated net realized loss on foreign currency related transactions ........... -- --
Net unrealized gain (loss) on investments ........................................ 11,056,970 8,671
Net unrealized loss on translation of assets and liabilities denominated in
foreign currencies ............................................................ -- --
-------------- ---------------
Net assets ................................................................... $ 81,561,054 $ 12,407,545
============== ===============
SHARES OUTSTANDING:
Total shares outstanding, no par value (unlimited number of shares authorized):
Institutional Shares ........................................................... 3,422,064 672,190
============== ===============
Service Shares ................................................................. 22,009 20,640
============== ===============
Institutional Shares: Net asset value per share (net assets/shares outstanding)... $23.68 $17.91
============== ===============
Maximum public offering price per share /(a)/................................... $24.54 $18.56
============== ===============
Service Shares: Net asset value per share (net assets/shares outstanding)......... $23.68 $17.90
============== ===============
Maximum public offering price per share /(a)/................................... $24.54 $18.55
============== ===============
<CAPTION>
International
Growth MidCap Equity
Fund Fund Fund
--------------- -------------- ---------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value
(cost $39,364,204, $164,330,561, $70,318,352, $12,887,904, $206,211,999,
$69,813,388, $57,914,221, $19,471,913, and $18,350,923, respectively) ....... $ 271,708,663 $ 79,100,016 $ 63,274,526
Cash ........................................................................... 935 122 177,774
Receivables:
Investment securities sold ................................................... 928,155 290,059 187,299
Interest ..................................................................... 5,218 462 601
Dividends .................................................................... 113,023 10,389 334,772
Fund shares sold ............................................................. 848,742 175,420 94,727
Deferred organization expenses, net ............................................ 28,205 25,870 25,694
Other .......................................................................... 5,176 1,486 1,138
--------------- -------------- --------------
Total assets ............................................................... 273,638,117 79,603,824 64,096,531
--------------- -------------- --------------
LIABILITIES:
Payables:
Investment securities purchased .............................................. 4,946,375 2,244,946 134,695
Fund shares redeemed ......................................................... 188,326 109,798 53,167
Dividends and distributions .................................................. -- -- --
Advisory fees ................................................................ 156,947 46,860 70,097
Administration fees .......................................................... 31,389 9,372 7,648
Distribution Fees ............................................................ 954 40 20
Accrued expenses and other liabilities ......................................... 59,492 32,637 83,194
--------------- -------------- --------------
Total liabilities .......................................................... 5,383,483 2,443,653 348,821
--------------- -------------- --------------
NET ASSETS:
Paid-in capital ................................................................ 192,857,677 69,542,948 57,254,787
Accumulated undistributed net investment income (loss) ......................... 64,871 (221,409) 66,141
Accumulated net realized gain (loss) on investment transactions ................ 9,835,422 (1,447,996) 1,336,983
Accumulated net realized loss on foreign currency related transactions ......... -- -- (261,786)
Net unrealized gain (loss) on investments ...................................... 65,496,664 9,286,628 10,196,894
Net unrealized loss on translation of assets and liabilities denominated in
foreign currencies .......................................................... -- -- (4,845,309)
--------------- -------------- --------------
Net assets ................................................................. $ 268,254,634 $ 77,160,171 $ 63,747,710
=============== ============== ==============
SHARES OUTSTANDING:
Total shares outstanding, no par value (unlimited number of shares authorized):
Institutional Shares ......................................................... 8,820,029 2,954,868 2,926,766
=============== ============== ==============
Service Shares ............................................................... 73,771 3,583 3,123
=============== ============== ==============
Institutional Shares: Net asset value per share (net assets/shares outstanding). $30.16 $26.08 $21.76
=============== ============== ==============
Maximum public offering price per share /(a)/................................. $31.25 $27.03 $22.55
=============== ============== ==============
Service Shares: Net asset value per share (net assets/shares outstanding)....... $30.15 $26.07 $21.75
=============== ============== ==============
Maximum public offering price per share /(a)/................................. $31.24 $27.02 $22.54
=============== ============== ==============
<CAPTION>
National Missouri
Tax-Free Tax-Free
Bond Fund/(b)/ Bond Fund/(b)/
--------------- -----------------
<S> <C> <C>
ASSETS:
Investments in securities, at value
(cost $39,364,204, $164,330,561, $70,318,352, $12,887,904, $206,211,999,
$69,813,388, $57,914,221, $19,471,913, and $18,350,923, respectively) ........... $ 19,564,478 $ 18,306,327
Cash ............................................................................... 24,026 764
Receivables:
Investment securities sold ....................................................... -- 200,000
Interest ......................................................................... 300,144 245,656
Dividends ........................................................................ -- --
Fund shares sold ................................................................. 130,000 120,000
Deferred organization expenses, net ................................................ 30,048 29,981
Other .............................................................................. 6,804 9,891
-------------- --------------
Total assets ................................................................... 20,055,500 18,912,619
-------------- --------------
LIABILITIES:
Payables:
Investment securities purchased .................................................. -- 249,600
Fund shares redeemed ............................................................. 5,000 5,000
Dividends and distributions ...................................................... 50,783 51,792
Advisory fees .................................................................... 7,986 4,523
Administration fees .............................................................. 2,396 2,260
Distribution Fees ................................................................ -- --
Accrued expenses and other liabilities ............................................. 16,331 11,757
-------------- --------------
Total liabilities .............................................................. 82,496 324,932
-------------- --------------
NET ASSETS:
Paid-in capital .................................................................... 19,871,277 18,603,024
Accumulated undistributed net investment income (loss) ............................. 9,525 10,626
Accumulated net realized gain (loss) on investment transactions .................... (363) 18,633
Accumulated net realized loss on foreign currency related transactions ............. -- --
Net unrealized gain (loss) on investments .......................................... 92,565 (44,596)
Net unrealized loss on translation of assets and liabilities denominated in
foreign currencies .............................................................. -- --
-------------- --------------
Net assets ..................................................................... $ 19,973,004 $ 18,587,687
============== ==============
SHARES OUTSTANDING:
Total shares outstanding, no par value (unlimited number of shares authorized):
Institutional Shares ............................................................. 1,086,149 1,023,419
============== ==============
Service Shares ...................................................................
Institutional Shares: Net asset value per share (net assets/shares outstanding)..... $18.39 $18.16
============== ==============
Maximum public offering price per share /(a)/..................................... $19.06 $18.82
============== ==============
Service Shares: Net asset value per share (net assets/shares outstanding)...........
Maximum public offering price per share /(a)/.....................................
</TABLE>
<PAGE>
THE COMMERCE FUNDS
STATEMENTS OF OPERATIONS
For the Six Months Ended April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Short-Term
Government Bond
Fund Fund
-------------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Interest .............................................................................. $ 1,245,951 $ 5,697,117
Dividends/(b)/......................................................................... -- --
------------ ------------
Total investment income ............................................................. 1,245,951 5,697,117
------------ ------------
EXPENSES:
Advisory fees ......................................................................... 91,642 395,051
Administration fees ................................................................... 27,491 118,515
Transfer agent fees ................................................................... 19,780 27,013
Custodian fees ........................................................................ 25,983 28,404
Professional fees ..................................................................... 7,886 28,464
Trustee fees .......................................................................... 763 2,951
Registration fees ..................................................................... 15,688 21,325
Amortization of deferred organization expenses ........................................ 4,944 5,245
Other ................................................................................. 12,000 61,710
------------ ------------
Total expenses ...................................................................... 206,177 688,678
Less -- Investment advisory fees waived and expense reimbursements .................... (81,553) --
------------ ------------
Net expenses ........................................................................ 124,624 688,678
Distribution fees ................................................................... 7 76
------------ ------------
Total expenses and distribution fees ............................................. 124,631 688,754
------------ ------------
Net investment income (loss)......................................................... 1,121,320 5,008,363
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) on investment transactions ................................... (122,632) (24,727)
Net realized loss on foreign currency related transactions ............................ -- --
Net change in unrealized gain (loss) on investments ................................... (386,991) (2,351,246)
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 .................................................................. (509,623) (2,375,973)
============ ============
Net increase (decrease) in net assets resulting from operations .................. $ 611,697 $ 2,632,390
============ ============
</TABLE>
- --------------------
/(a)/The Growth and Income Fund commenced operations on March 3, 1997.
/(b)/For the Growth and Income Fund and the International Equity Fund, amount
is net of $229 and $66,924 in foreign withholding taxes, respectively.
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
<TABLE>
<CAPTION>
Growth and
Balanced Income
Fund Fund/(a)/
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Interest .............................................................................. $ 1,147,247 $ 36,184
Dividends/(b)/......................................................................... 245,589 10,408
------------- -------------
Total investment income ............................................................. 1,392,836 46,592
------------- -------------
EXPENSES:
Advisory fees ......................................................................... 375,270 11,779
Administration fees ................................................................... 56,292 2,356
Transfer agent fees ................................................................... 19,675 8,069
Custodian fees ........................................................................ 32,882 9,882
Professional fees ..................................................................... 16,587 3,646
Trustee fees .......................................................................... 1,711 319
Registration fees ..................................................................... 17,926 10,690
Amortization of deferred organization expenses ........................................ 5,052 646
Other ................................................................................. 43,966 2,131
------------- -------------
Total expenses ...................................................................... 569,361 49,518
Less -- Investment advisory fees waived and expense reimbursements .................... (145,296) (30,673)
------------- -------------
Net expenses ........................................................................ 424,065 18,845
Distribution fees ................................................................... 174 79
------------- -------------
Total expenses and distribution fees ............................................. 424,239 18,924
------------- -------------
Net investment income (loss)......................................................... 968,597 27,668
------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) on investment transactions ................................... 1,165,750 (5,399)
Net realized loss on foreign currency related transactions ............................ -- --
Net change in unrealized gain (loss) on investments ................................... 1,581,144 8,671
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 .................................................................. 2,746,894 3,272
------------- -------------
Net increase (decrease) in net assets resulting from operations .................. $ 3,715,491 $ 30,940
============= =============
<CAPTION>
Growth MidCap
Fund Fund
-------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Interest .............................................................................. $ 500,777 $ 40,154
Dividends/(b)/......................................................................... 1,489,528 221,218
-------------- -------------
Total investment income ............................................................. 1,990,305 261,372
-------------- -------------
EXPENSES:
Advisory fees ......................................................................... 903,827 290,667
Administration fees ................................................................... 180,765 58,134
Transfer agent fees ................................................................... 38,225 29,517
Custodian fees ........................................................................ 31,476 28,080
Professional fees ..................................................................... 41,881 17,183
Trustee fees .......................................................................... 4,426 1,760
Registration fees ..................................................................... 30,394 15,658
Amortization of deferred organization expenses ........................................ 5,356 4,912
Other ................................................................................. 83,751 36,830
-------------- -------------
Total expenses ...................................................................... 1,320,101 482,741
Less -- Investment advisory fees waived and expense reimbursements .................... -- --
-------------- -------------
Net expenses ........................................................................ 1,320,101 482,741
Distribution fees ................................................................... 954 40
-------------- -------------
Total expenses and distribution fees ............................................. 1,321,055 482,781
-------------- -------------
Net investment income (loss)......................................................... 669,250 (221,409)
-------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) on investment transactions ................................... 9,835,665 (1,249,377)
Net realized loss on foreign currency related transactions ............................ -- --
Net change in unrealized gain (loss) on investments ................................... 14,983,478 (3,574,861)
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 .................................................................. 24,819,143 (4,824,238)
-------------- -------------
Net increase (decrease) in net assets resulting from operations .................. $ 25,488,393 $ (5,045,647)
============== =============
<CAPTION>
International National
Equity Tax-Free
Fund Bond Fund
------------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Interest .............................................................................. $ 67,913 $ 445,703
Dividends/(b)/......................................................................... 518,769 --
------------- -----------
Total investment income ............................................................. 586,682 445,703
------------- -----------
EXPENSES:
Advisory fees ......................................................................... 433,698 46,160
Administration fees ................................................................... 43,385 13,848
Transfer agent fees ................................................................... 25,660 15,228
Custodian fees ........................................................................ 121,731 19,734
Professional fees ..................................................................... 10,932 3,044
Trustee fees .......................................................................... 1,141 425
Registration fees ..................................................................... 15,359 1,875
Amortization of deferred organization expenses ........................................ 4,880 5,300
Other ................................................................................. 16,330 4,031
------------- -----------
Total expenses ...................................................................... 673,116 109,645
Less -- Investment advisory fees waived and expense reimbursements .................... (175,639) (31,173)
------------- -----------
Net expenses ........................................................................ 497,477 78,472
Distribution fees ................................................................... 20 --
------------- -----------
Total expenses and distribution fees ............................................. 497,497 78,472
------------- -----------
Net investment income (loss)......................................................... 89,185 367,231
------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) on investment transactions ................................... 1,367,085 5,614
Net realized loss on foreign currency related transactions ............................ (224,293) --
Net change in unrealized gain (loss) on investments ................................... 5,228,799 (83,100)
Net change in unrealized loss on translation of assets and liabilities denominated in
foreign currencies ................................................................. (3,491,860) --
------------- -----------
Net realized and unrealized gain (loss) on investments and foreign currency
transactions .................................................................. 2,879,731 (77,486)
------------- -----------
Net increase (decrease) in net assets resulting from operations .................. $ 2,968,916 $ 289,745
============= ===========
<CAPTION>
Missouri
Tax-Free
Bond Fund
-------------
<S> <C>
INVESTMENT INCOME:
Interest .............................................................................. $ 430,660
Dividends/(b)/......................................................................... --
-----------
Total investment income ............................................................. 430,660
-----------
EXPENSES:
Advisory fees ......................................................................... 44,187
Administration fees ................................................................... 13,256
Transfer agent fees ................................................................... 15,008
Custodian fees ........................................................................ 21,933
Professional fees ..................................................................... 3,276
Trustee fees .......................................................................... 427
Registration fees ..................................................................... 1,640
Amortization of deferred organization expenses ........................................ 5,289
Other ................................................................................. 3,995
-----------
Total expenses ...................................................................... 109,011
Less -- Investment advisory fees waived and expense reimbursements .................... (51,568)
-----------
Net expenses ........................................................................ 57,443
Distribution fees ................................................................... --
-----------
Total expenses and distribution fees ............................................. 57,443
-----------
Net investment income (loss)......................................................... 373,217
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT AND FOREIGN
CURRENCY TRANSACTIONS:
Net realized gain (loss) on investment transactions ................................... 18,627
Net realized loss on foreign currency related transactions ............................ --
Net change in unrealized gain (loss) on investments ................................... (113,456)
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 .................................................................. (94,829)
-----------
Net increase (decrease) in net assets resulting from operations .................. $ 278,388
===========
</TABLE>
43
<PAGE>
THE COMMERCE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the Six Months Ended April 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
Short-Term
Government Bond
Fund Fund
----------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ......................................................... $ 1,121,320 $ 5,008,363
Net realized gain (loss) on investment transactions .................................. (122,632) (24,727)
Net realized loss from foreign currency related transactions ......................... -- --
Net change in unrealized gain (loss) on investments .................................. (386,991) (2,351,246)
Net change in unrealized loss on translation of assets and liabilities denominated in
foreign currencies ................................................................. -- --
----------- ------------
Net increase (decrease) in net assets resulting from operations .................... 611,697 2,632,390
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Institutional Shares ............................................................... (1,121,182) (5,006,590)
Service Shares ..................................................................... (138) (1,773)
From net realized gain on investment transactions
Institutional Shares ............................................................... -- (184,700)
----------- ------------
Total distributions to shareholders ............................................. (1,121,320) (5,193,063)
----------- ------------
FROM SHARE TRANSACTIONS:
Net proceeds from sale of shares
Institutional Shares ............................................................... 15,071,926 36,118,854
Service Shares ..................................................................... 34,724 201,718
Reinvestment of dividends and distributions
Institutional Shares ............................................................... 684,572 4,106,064
Service Shares ..................................................................... 138 1,103
Cost of shares redeemed
Institutional Shares ............................................................... (9,987,256) (20,880,161)
Service Shares ..................................................................... -- --
----------- ------------
Net increase in net assets resulting from share transactions .................... 5,804,104 19,547,578
----------- ------------
Total increase .................................................................. 5,294,481 16,986,905
NET ASSETS:
Beginning of period .................................................................. 33,838,511 151,204,716
----------- ------------
End of period ........................................................................ $39,132,992 $168,191,621
=========== ============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................... $ 16,269 $ 76,707
=========== ============
SUMMARY OF SHARE TRANSACTIONS:
Institutional Shares
Sold ................................................................................. 823,703 1,906,380
Issued on reinvestment of dividends and distributions ................................ 37,422 217,003
Redeemed ............................................................................. (546,009) (1,103,351)
----------- -----------
Increase in shares outstanding ..................................................... 315,116 1,020,032
=========== ===========
Service Shares
Sold ................................................................................. 1,915 10,739
Issued on reinvestment of dividends and distributions ................................ 8 59
Redeemed ............................................................................. -- --
----------- -----------
Increase in shares outstanding ..................................................... 1,923 10,798
=========== ===========
</TABLE>
- -------------
/(a)/The Growth and Income Fund commenced operations on March 3, 1997.
The accompanying notes are an integral part of these financial statements.
44
<PAGE>
<TABLE>
<CAPTION>
Growth and
Balanced Income
Fund Fund /(a)/
----------- -----------
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ........................................................ $ 968,597 $ 27,668
Net realized gain (loss) on investment transactions ................................. 1,165,750 (5,399)
Net realized loss from foreign currency related transactions ........................ -- --
Net change in unrealized gain (loss) on investments ................................. 1,581,144 8,671
Net change in unrealized loss on translation of assets and liabilities denominated in
foreign currencies ............................................................... -- --
----------- -----------
Net increase (decrease) in net assets resulting from operations .................... 3,715,491 30,940
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Institutional Shares ............................................................... (921,215) --
Service Shares ..................................................................... (1,773) --
From net realized gain on investment transactions
Institutional Shares ............................................................... (3,708,474) --
----------- -----------
Total distributions to shareholders ............................................. (4,631,462) --
----------- -----------
FROM SHARE TRANSACTIONS:
Net proceeds from sale of shares
Institutional Shares ............................................................... 20,447,067 12,088,351
Service Shares ..................................................................... 519,507 366,523
Reinvestment of dividends and distributions
Institutional Shares ............................................................... 4,562,408 --
Service Shares ..................................................................... 1,816 --
Cost of shares redeemed
Institutional Shares ............................................................... (12,934,021) (78,269)
Service Shares ..................................................................... -- --
------------ -----------
Net increase in net assets resulting from share transactions .................... 12,596,777 12,376,605
----------- -----------
Total increase .................................................................. 11,680,806 12,407,545
NET ASSETS:
Beginning of period .................................................................. 69,880,248 --
----------- -----------
End of period ........................................................................ $81,561,054 $12,407,545
=========== ===========
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................... $ 188,057 $ 27,668
=========== ===========
SUMMARY OF SHARE TRANSACTIONS:
Institutional Shares
Sold ................................................................................. 863,455 676,660
Issued on reinvestment of dividends and distributions ................................ 194,600 --
Redeemed ............................................................................. (547,418) (4,470)
----------- -----------
Increase in shares outstanding ..................................................... 510,637 672,190
=========== ===========
Service Shares
Sold ................................................................................. 21,931 20,640
Issued on reinvestment of dividends and distributions ................................ 78 --
Redeemed ............................................................................. -- --
----------- -----------
Increase in shares outstanding ..................................................... 22,009 20,640
=========== ===========
<CAPTION>
Growth MidCap
Fund Fund
--------------- ----------------
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ......................................................... $ 669,250 $ (221,409)
Net realized gain (loss) on investment transactions .................................. 9,835,665 (1,249,377)
Net realized loss from foreign currency related transactions ......................... -- --
Net change in unrealized gain (loss) on investments .................................. 14,983,478 (3,574,861)
Net change in unrealized loss on translation of assets and liabilities denominated in
foreign currencies ................................................................ -- --
------------ ------------
Net increase (decrease) in net assets resulting from operations .................... 25,488,393 (5,045,647)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Institutional Shares ............................................................... (619,199) --
Service Shares ..................................................................... (1,524) --
From net realized gain on investment transactions
Institutional Shares ............................................................... (14,172,190) (781,830)
------------ ------------
Total distributions to shareholders ............................................. (14,792,913) (781,830)
------------ ------------
FROM SHARE TRANSACTIONS:
Net proceeds from sale of shares
Institutional Shares ............................................................... 65,388,431 18,498,948
Service Shares ..................................................................... 2,199,304 100,316
Reinvestment of dividends and distributions
Institutional Shares ............................................................... 13,311,135 678,633
Service Shares ..................................................................... 1,514 --
Cost of shares redeemed
Institutional Shares ............................................................... (32,249,005) (10,931,689)
Service Shares ..................................................................... (10) --
------------ ------------
Net increase in net assets resulting from share transactions .................... 48,651,369 8,346,208
------------ ------------
Total increase .................................................................. 59,346,849 2,518,731
NET ASSETS:
Beginning of period .................................................................. 208,907,785 74,641,440
------------ ------------
End of period ........................................................................ $268,254,634 $ 77,160,171
============ ============
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................... $ 64,871 $ (221,409)
============ ============
SUMMARY OF SHARE TRANSACTIONS:
Institutional Shares
Sold ................................................................................. 2,220,179 660,467
Issued on reinvestment of dividends and distributions ................................ 468,764 23,870
Redeemed ............................................................................. (1,086,112) (389,568)
------------ ------------
Increase in shares outstanding ..................................................... 1,602,831 294,769
============ ============
Service Shares
Sold ................................................................................. 73,720 3,583
Issued on reinvestment of dividends and distributions ................................ 51 --
Redeemed ............................................................................. -- --
------------ ------------
Increase in shares outstanding ..................................................... 73,771 3,583
============ ============
<CAPTION>
International National
Equity Tax-Free
Fund Bond Fund
--------------- --------------
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ......................................................... $ 89,185 $ 367,231
Net realized gain (loss) on investment transactions .................................. 1,367,085 5,614
Net realized loss from foreign currency related transactions ......................... (224,293) --
Net change in unrealized gain (loss) on investments .................................. 5,228,799 (83,100)
Net change in unrealized loss on translation of assets and liabilities denominated in
foreign currencies ................................................................ (3,491,860) --
----------- -----------
Net increase (decrease) in net assets resulting from operations .................... 2,968,916 289,745
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Institutional Shares ............................................................... (268,546) (367,231)
Service Shares ..................................................................... -- --
From net realized gain on investment transactions
Institutional Shares ............................................................... (598,118) --
----------- -----------
Total distributions to shareholders ............................................. (866,664) (367,231)
----------- -----------
FROM SHARE TRANSACTIONS:
Net proceeds from sale of shares
Institutional Shares ............................................................... 15,098,968 4,204,062
Service Shares ..................................................................... 67,611 --
Reinvestment of dividends and distributions
Institutional Shares ............................................................... 679,367 56,832
Service Shares ..................................................................... -- --
Cost of shares redeemed
Institutional Shares ............................................................... (5,789,514) (1,823,689)
Service Shares ..................................................................... -- --
----------- -----------
Net increase in net assets resulting from share transactions .................... 10,056,432 2,437,205
----------- -----------
Total increase .................................................................. 12,158,684 2,359,719
NET ASSETS:
Beginning of period .................................................................. 51,589,026 17,613,285
----------- -----------
End of period ........................................................................ $63,747,710 $19,973,004
=========== ===========
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................... $ 66,141 $ 9,525
=========== ===========
SUMMARY OF SHARE TRANSACTIONS:
Institutional Shares
Sold ................................................................................. 701,413 227,284
Issued on reinvestment of dividends and distributions ................................ 31,993 3,071
Redeemed ............................................................................. (268,013) (98,407)
---------- -----------
Increase in shares outstanding ..................................................... 465,393 131,948
========== ===========
Service Shares
Sold ................................................................................. 3,123
Issued on reinvestment of dividends and distributions ................................ --
Redeemed ............................................................................. --
----------
Increase in shares outstanding ..................................................... 3,123
==========
<CAPTION>
Missouri
Tax-Free
Bond
Fund
--------------
<S> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ......................................................... $ 373,217
Net realized gain (loss) on investment transactions .................................. 18,627
Net realized loss from foreign currency related transactions ......................... --
Net change in unrealized gain (loss) on investments .................................. (113,456)
Net change in unrealized loss on translation of assets and liabilities denominated in
foreign currencies ................................................................ --
-----------
Net increase (decrease) in net assets resulting from operations .................... 278,388
-----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Institutional Shares ............................................................... (373,217)
Service Shares ..................................................................... --
From net realized gain on investment transactions
Institutional Shares ............................................................... (14,681)
-----------
Total distributions to shareholders ............................................. (387,898)
-----------
FROM SHARE TRANSACTIONS:
Net proceeds from sale of shares
Institutional Shares ............................................................... 3,597,640
Service Shares ..................................................................... --
Reinvestment of dividends and distributions
Institutional Shares ............................................................... 64,758
Service Shares ..................................................................... --
Cost of shares redeemed
Institutional Shares ............................................................... (1,999,615)
Service Shares ..................................................................... --
-----------
Net increase in net assets resulting from share transactions .................... 1,662,783
-----------
Total increase .................................................................. 1,553,273
NET ASSETS:
Beginning of period .................................................................. $17,034,414
-----------
End of period ........................................................................ $18,587,687
===========
ACCUMULATED UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) .................................... $ 10,626
===========
SUMMARY OF SHARE TRANSACTIONS:
Institutional Shares
Sold ................................................................................. 196,918
Issued on reinvestment of dividends and distributions ................................ 3,541
Redeemed ............................................................................. (109,692)
-----------
Increase in shares outstanding ..................................................... 90,767
===========
Service Shares
Sold .................................................................................
Issued on reinvestment of dividends and distributions ................................
Redeemed .............................................................................
Increase in shares outstanding .....................................................
</TABLE>
45
<PAGE>
THE COMMERCE FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended October 31, 1996
<TABLE>
<CAPTION>
Short-Term
Government Bond
Fund Fund
----------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ....................................................... $ 1,614,004 $ 7,329,409
Net realized gain (loss) on investment transactions ................................ (2,446) 250,806
Net realized loss from foreign currency related transactions ....................... -- --
Net change in unrealized gain (loss) on investments ................................ (219,238) (1,214,248)
Net change in unrealized loss on translation of assets and liabilities denominated
in foreign currencies ........................................................... -- --
----------- ------------
Net increase in net assets resulting from operations ............................. 1,392,320 6,365,967
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ......................................................... (1,614,004) (7,329,409)
From net realized gain on investment transactions .................................. (246,010) (1,391,915)
----------- ------------
Total distributions to shareholders .............................................. (1,860,014) (8,721,324)
----------- ------------
FROM SHARE TRANSACTIONS:
Net proceeds from sale of shares ................................................... 24,924,994 78,675,112
Reinvestment of dividends and distributions ........................................ 1,295,008 7,491,166
Cost of shares redeemed ............................................................ (12,125,108) (31,110,483)
----------- ------------
Net increase in net assets resulting from share transactions ..................... 14,094,894 55,055,795
----------- ------------
Total increase ................................................................ 13,627,200 52,700,438
NET ASSETS:
Beginning of year .................................................................. 20,211,311 98,504,278
----------- ------------
End of year......................................................................... $33,838,511 $151,204,716
=========== ============
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME ............................................................... $ 16,269 $ 76,707
=========== ============
SUMMARY OF SHARE TRANSACTIONS:
Sold ............................................................................... 1,348,707 4,132,922
Issued on reinvestment of dividends and distributions .............................. 70,101 391,702
Redeemed ........................................................................... (656,586) (1,619,214)
----------- ------------
Increase in shares outstanding ................................................... 762,222 2,905,410
=========== ============
</TABLE>
- --------------
The above information relates to Institutional Shares.
The accompanying notes are an integral part of these financial statements.
46
<PAGE>
<TABLE>
<CAPTION>
Balanced Growth
Fund Fund
----------- ------------
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ....................................................... $ 1,444,493 $ 1,215,945
Net realized gain (loss) on investment transactions ................................ 3,633,059 14,171,671
Net realized loss from foreign currency related transactions ....................... -- --
Net change in unrealized gain (loss) on investments ................................ 2,979,254 20,413,669
Net change in unrealized loss on translation of assets and liabilities denominated
in foreign currencies ........................................................... -- --
----------- ------------
Net increase in net assets resulting from operations ............................. 8,056,806 35,801,285
----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ......................................................... (1,422,102) (1,233,937)
From net realized gain on investment transactions .................................. (1,461,563) (6,627,050)
----------- ------------
Total distributions to shareholders .............................................. (2,883,665) (7,860,987)
----------- ------------
FROM SHARE TRANSACTIONS:
Net proceeds from sale of shares ................................................... 29,373,815 93,709,847
Reinvestment of dividends and distributions ........................................ 2,865,066 7,452,682
Cost of shares redeemed ............................................................ (15,860,466) (61,930,178)
----------- ------------
Net increase in net assets resulting from share transactions ..................... 16,378,415 39,232,351
----------- ------------
Total increase ................................................................ 21,551,556 67,172,649
NET ASSETS:
Beginning of year .................................................................. 48,328,692 141,735,136
----------- ------------
End of year......................................................................... $69,880,248 $208,907,785
============ ============
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME ............................................................... $ 142,448 $ 16,344
=========== ============
SUMMARY OF SHARE TRANSACTIONS:
Sold ............................................................................... 1,297,097 3,571,900
Issued on reinvestment of dividends and distributions .............................. 126,879 296,637
Redeemed ........................................................................... (699,003) (2,393,934)
----------- ------------
Increase in shares outstanding ................................................... 724,973 1,474,603
=========== ============
<CAPTION>
International
MidCap Equity
Fund Fund
----------- -----------
<S> <C> <C>
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ....................................................... $ (225,170) $ 282,561
Net realized gain (loss) on investment transactions ................................ 583,211 606,179
Net realized loss from foreign currency related transactions ....................... -- (60,783)
Net change in unrealized gain (loss) on investments ................................ 6,869,864 4,232,406
Net change in unrealized loss on translation of assets and liabilities denominated
in foreign currencies ........................................................... -- (1,006,981)
----------- -----------
Net increase in net assets resulting from operations ............................. 7,227,905 4,053,382
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ......................................................... -- (107,021)
From net realized gain on investment transactions .................................. (1,205,033) (85,792)
----------- -----------
Total distributions to shareholders .............................................. (1,205,033) (192,813)
----------- -----------
FROM SHARE TRANSACTIONS:
Net proceeds from sale of shares ................................................... 41,229,162 33,783,562
Reinvestment of dividends and distributions ........................................ 1,073,165 156,566
Cost of shares redeemed ............................................................ (15,348,445) (7,225,443)
----------- -----------
Net increase in net assets resulting from share transactions ..................... 26,953,882 26,714,685
----------- -----------
Total increase ................................................................ 32,976,754 30,575,254
NET ASSETS:
Beginning of year .................................................................. 41,664,686 21,013,772
----------- -----------
End of year......................................................................... $74,641,440 $51,589,026
=========== ===========
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME ............................................................... -- $ 245,502
=========== ===========
SUMMARY OF SHARE TRANSACTIONS:
Sold ............................................................................... 1,537,748 1,685,034
Issued on reinvestment of dividends and distributions .............................. 41,581 8,234
Redeemed ........................................................................... (566,313) (359,077)
----------- -----------
Increase in shares outstanding ................................................... 1,013,016 1,334,191
=========== ===========
<CAPTION>
National Missouri
Tax-Free Tax-Free
Bond Fund Bond Fund
----------- -----------
INCREASE IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss) ....................................................... $ 539,768 $ 506,160
Net realized gain (loss) on investment transactions ................................ (5,961) 20,856
Net realized loss from foreign currency related transactions ....................... -- --
Net change in unrealized gain (loss) on investments ................................ (25,939) (54,709)
Net change in unrealized loss on translation of assets and liabilities denominated
in foreign currencies ........................................................... -- --
----------- -----------
Net increase in net assets resulting from operations ............................. 507,868 472,307
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income ......................................................... (539,768) (506,160)
From net realized gain on investment transactions .................................. (5,570) --
----------- -----------
Total distributions to shareholders .............................................. (545,338) (506,160)
----------- -----------
FROM SHARE TRANSACTIONS:
Net proceeds from sale of shares ................................................... 10,518,564 10,435,951
Reinvestment of dividends and distributions ........................................ 54,574 71,819
Cost of shares redeemed ............................................................ (3,643,702) (2,328,641)
----------- -----------
Net increase in net assets resulting from share transactions ..................... 6,929,436 8,179,129
----------- -----------
Total increase ................................................................ 6,891,966 8,145,276
NET ASSETS:
Beginning of year .................................................................. 10,721,319 8,889,138
----------- -----------
End of year......................................................................... $17,613,285 $17,034,414
=========== ===========
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME ............................................................... $ 9,525 $ 10,626
============ ===========
SUMMARY OF SHARE TRANSACTIONS:
Sold ............................................................................... 570,941 572,789
Issued on reinvestment of dividends and distributions .............................. 2,968 3,935
Redeemed ........................................................................... (197,928) (127,110)
----------- -----------
Increase in shares outstanding ................................................... 375,981 449,614
=========== ===========
</TABLE>
47
<PAGE>
THE COMMERCE FUNDS
SHORT-TERM GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Income from Distributions to
investment operations shareholders
--------------------------------- ---------------------------------
Net
realized
and
unrealized
Net asset gain
value, Net (loss) on From net From net
beginning investment invest- investment realized gain
of period income ments/(b)/ income on investments
-------------- ------------- ----------------- ------------ -------------------
For the Six Months Ended April 30, 1997 (unaudited)
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Institutional Shares $18.43 $0.56 $(0.25) $(0.56) --
Service Shares/(a)/ 18.37 0.40 (0.19) (0.40) --
For the Year Ended October 31, 1996
- ---------------------------------------------------
Institutional Shares 18.83 1.09 (0.18) (1.09) (0.22)
For the Period December 12, 1994 (commencement of operations) through October 31, 1995
- ----------------------------------------------------------------------------------------------------------------------------
Institutional Shares 18.00 1.06 0.83 (1.06) --
</TABLE>
<TABLE>
<CAPTION>
Ratio
Net Ratio of net
asset of net investment Net
value, expenses income assets at
end to average to average Portfolio end
of Total net net turnover of period
period return/(c)/ assets assets rate (in 000's)
-------- ------------- -------------- ------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ----------------------------------------------------------------------
Institutional Shares $18.18 1.68% 0.68%/(d)/ 6.12%/(d)/ 25% $ 39,098
Service Shares/(a)/ 18.18 1.14 0.93/(d)/ 4.93/(d)/ 25 35
For the Year Ended October 31, 1996
- --------------------------------------------
Institutional Shares 18.43 5.02 0.68 5.90 12 33,839
For the Period December 12, 1994 (commencement of operations) through October 31, 1995
- ----------------------------------------------------------------------------------------------------------------------------
Institutional Shares 18.83 10.72 0.68/(d)/ 6.38/(d)/ 158 20,211
</TABLE>
<TABLE>
<CAPTION>
Ratios assuming
no waiver of
investment advisory
fees or expense
reimbursements
--------------------------------
Ratio
of net
Ratio investment
of income
expenses to
to average average
net net
assets assets
--------------- ---------------
<S> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- -----------------------------------------------------
Institutional Shares 1.13%/(d)/ 5.67%/(d)/
Service Shares/(a)/ 1.38/(d)/ 4.48/(d)/
For the Year Ended October 31, 1996
- --------------------------------------------
Institutional Shares 1.11 5.47
For the Period December 12, 1994 (commencement of operations) through October 31, 1995
- ---------------------------------------------------------------------------------------
Institutional Shares 1.14/(d)/ 5.92/(d)/
</TABLE>
- --------------------
/(a)/ Service share activity commenced on January 2, 1997.
/(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.
48
<PAGE>
THE COMMERCE FUNDS
BOND FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Income from
investment operations
----------------------------------
Net
realized
and
unrealized
Net asset gain
value, Net (loss) on
beginning investment invest-
of period income ments/(b)/
----------------- --------------- ---------------
<S> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
Institutional Shares $19.07 $0.60 $(0.28)
Service Shares/(a)/ 19.00 0.39 (0.23)
For the Year Ended October 31, 1996
- -----------------------------------
Institutional Shares 19.61 1.16 (0.28)
For the Period December 12, 1994
(commencement of operations) through October 31, 1995
- -----------------------------------------------------
Institutional Shares 18.00 1.12 1.61
<CAPTION>
Distributions to
shareholders
---------------------------------
Net
asset
value,
From net From net end
investment realized gain of Total
income on investments period return/(c)/
-------------- ----------------- ---------- ------------
<S> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
Institutional Shares $(0.60) $(0.02) $18.77 1.69%
Service Shares/(a)/ (0.39) -- 18.77 0.86
For the Year Ended October 31, 1996
- -----------------------------------
Institutional Shares (1.16) (0.26) 19.07 4.71
For the Period December 12, 1994 (commencement of operations)
through October 31, 1995
- -------------------------------------------------------------
Institutional Shares (1.12) -- 19.61 15.59
<CAPTION>
Ratio
Ratio of net
of net investment Net
expenses income assets at
to average to average Portfolio end
net net turnover of period
assets assets rate (in 000's)
-------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
Institutional Shares 0.87%/(d)/ 6.34%/(d)/ 5% $ 167,989
Service Shares/(a)/ 1.12/(d)/ 5.82/(d)/ 5 203
For the Year Ended October 31, 1996
- -----------------------------------
Institutional Shares 0.84 6.10 31 151,205
For the Period December 12, 1994
(commencement of operations) through October 31, 1995
- -----------------------------------------------------
Institutional Shares 0.88/(d)/ 6.64/(d)/ 58 98,504
</TABLE>
- --------------------
/(a)/ Service share activity commenced on January 2, 1997.
/(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.
49
<PAGE>
THE COMMERCE FUNDS
BALANCED FUND
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 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)/
------------ ------------ ------------ ----------- ---------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
Institutional Shares $24.00 $0.29 $0.94 $(0.29) $(1.26) $23.68 5.25%
Service Shares/(a)/ 23.25 0.13 0.43 (0.13) -- 23.68 2.42
For the Year Ended October 31, 1996
- -----------------------------------
Institutional Shares 22.10 0.54 2.56 (0.54) (0.66) 24.00 14.45
For the Period December 12, 1994 (commencement of operations) through October 31, 1995
- --------------------------------------------------------------------------------------
Institutional Shares 18.00 0.59 4.06 (0.55) -- 22.10 26.14
<CAPTION>
Ratios assuming
no waiver of
investment advisory
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 average to average Portfolio commis- end to average to average
net net turnover sion of period net net
assets assets rate rate (in 000's) assets assets
------------ ------------ ------------ ----------- ---------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
Institutional Shares 1.13%/(d)/ 2.58%/(d)/ 14% $0.0580 $81,040 1.52%/(d)/ 2.19%/(d)/
Service Shares/(a)/ 1.38/(d)/ 2.49/(d)/ 14 0.0580 521 1.77/(d)/ 2.10/(d)/
For the Year Ended October 31, 1996
- -----------------------------------
Institutional Shares 1.13 2.47 58 0.0764 69,880 1.45 2.15
For the Period December 12, 1994 (commencement of operations) through October 31, 1995
- --------------------------------------------------------------------------------------
Institutional Shares 1.13/(d)/ 3.28/(d)/ 59 -- 48,329 1.45/(d)/ 2.96/(d)/
</TABLE>
- --------------------
/(a)/ Service share activity commenced on January 2, 1997.
/(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.
50
<PAGE>
THE COMMERCE FUNDS
GROWTH AND INCOME FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Income from Distributions to
investment operations shareholders
------------------------------ -------------------------------
Net
realized Net
and asset
Net asset unrealized value,
value, Net loss on From net From net end
beginning investment invest- investment realized gain of
of period income ments /(b)/ income on investments period
----------- ------------ ------------ ------------ ---------------- --------
For the Period March 3, 1997 /(a)/ through April 30, 1997 (unaudited)
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional Shares $18.00 $0.04 $(0.13) -- -- $17.91
Service Shares 18.00 0.02 (0.12) -- -- 17.90
<CAPTION>
Ratio
Ratio of net
of net investment Net
expenses income assets at
to average to average Portfolio Average end
Total net net turnover commission of period
return /(c)/ assets assets rate Rate (in 000's)
-------------------------------------------------------------------------------
For the Period March 3, 1997 /(a)/ through April 30, 1997 (unaudited)
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional Shares (0.50)% 1.20%/(d)/ 1.76%/(d)/ 1% $ 0.0794 $12,039
Service Shares (0.56) 1.45/(d)/ 1.46/(d)/ 1 0.0794 369
<CAPTION>
Ratios assuming
no expense
reimbursements
--------------------------------
Ratio
Ratio of net
of net investment
expenses loss to
to average average
net net
assets assets
--------------------------------
For the Period March 3, 1997 /(a)/ through April 30, 1997 (unaudited)
- ---------------------------------------------------------------------
<S> <C> <C>
Institutional Shares 3.14%/(d)/ (0.18)%/(d)/
Service Shares 3.39/(d)/ (0.48)/(d)/
</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.
51
<PAGE>
THE COMMERCE FUNDS
GROWTH FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Income from Distributions to
investment operations shareholders
------------------------------ --------------------------------
Net
realized
and
Net asset unrealized
value, Net gain on From net From net
beginning investment invest- investment realized gain
of period income ments (b) income on investments
------------- ------------- ------------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
Institutional Shares $28.95 $0.08 $3.13 $(0.08) $(1.92)
Service Shares(a) 28.26 0.03 1.89 (0.03) --
For the Year Ended October 31, 1996
- -----------------------------------
Institutional Shares 24.68 0.19 5.40 (0.19) (1.13)
For the Period December 12, 1994 (commencement of operations) through October 31, 1995
- --------------------------------------------------------------------------------------
Institutional Shares 18.00 0.15 6.68 (0.15) --
<CAPTION>
Ratio
Net Ratio of net
asset of net investment
value, expenses income
end to average to average Portfolio
of Total net net turnover
period return/(c)/ assets assets rate
--------- ------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
Institutional Shares $30.16 11.51% 1.10%/(d)/ 0.56%/(d)/ 19%
Service Shares(a) 30.15 6.79 1.35/(d)/ 0.33/(d)/ 19
For the Year Ended October 31, 1996
- -----------------------------------
Institutional Shares 28.95 23.43 1.08 0.72 36
For the Period December 12, 1994 (commencement of operations) through October 31, 1995
- --------------------------------------------------------------------------------------
Institutional Shares 24.68 38.06 1.11/(d)/ 0.81/(d)/ 33
<CAPTION>
Net
Average assets at
commis- end
sion of period
rate (in 000's)
------------ -------------
<S> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
Institutional Shares $0.0548 $266,031
Service Shares/(a)/ 0.0548 2,224
For the Year Ended October 31, 1996
- -----------------------------------
Institutional Shares 0.0654 208,908
For the Period December 12, 1994 (commencement of operations) through October 31, 1995
- --------------------------------------------------------------------------------------
Institutional Shares -- 141,735
</TABLE>
- --------------------
/(a)/ Service share activity commenced on January 2, 1997.
/(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
52
<PAGE>
THE COMMERCE FUNDS
MIDCAP FUND
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
of period loss ments/(b)/ income on investments period
----------- ------------- ------------- ------------ --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
Institutional Shares $28.06 $(0.06) $(1.63) -- $(0.29) $26.08
Service Shares/(a)/ 28.64 (0.04) (2.53) -- -- 26.07
For the Year Ended October 31, 1996
- -------------------------------------------
Institutional Shares 25.30 (0.07) 3.51 -- (0.68) 28.06
For the Period December 12, 1994 (commencement of operations) through October 31, 1995
- --------------------------------------------------------------------------------------
Institutional Shares 18.00 (0.04) 7.34 -- -- 25.30
<CAPTION>
Ratio
Ratio of net
of net investment Net
expenses loss Average assets at
to average to average Portfolio commis- end
Total net net turnover sion of period
return/(c)/ assets assets rate rate (in 000's)
------------- ----------- ------------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
Institutional Shares (6.10)% 1.25%/(d)/ (0.57)%/(d)/ 36% $0.0608 $77,067
Service Shares/(a)/ (8.97) 1.50/(d)/ (0.80)/(d)/ 36 0.0608 93
For the Year Ended October 31, 1996
- -------------------------------------------
Institutional Shares 13.78 1.22 (0.37) 71 0.0692 74,641
For the Period December 12, 1994 (commencement
of operations) through October 31, 1995
- ------------------------------------------------ 40.56 1.32/(d)/ (0.29)/(d)/ 59 -- 41,665
Institutional Shares
</TABLE>
- ------------------
/(a)/ Service share activity commenced on January 2, 1997.
/(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.
53
<PAGE>
THE COMMERCE FUNDS
INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
Income from Distributions to
investment operations shareholders
------------------------------------ ---------------------------
Net
Net realized and
realized unrealized
and gain (loss) Net Ratio
unrealized on foreign asset of net
Net asset gain currency value, expenses
value, Net (loss) on related From net From net end to average
beginning investment invest- trans- investment realized gain of Total net
of period income ments/(b)/ actions/(b)/ income on investments period return/(c)/ assets
----------- ------------ ---------- ------------ ----------- --------------- -------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
Institutional Shares $20.96 $0.03 $2.54 $(1.43) $(0.10) $(0.24) $21.76 5.50% 1.72%/(d)/
Service Shares/(a)/ 21.70 0.05 (0.01) 0.01 -- -- 21.75 0.23 1.97/(d)/
For the Year Ended October 31, 1996
- -----------------------------------
Institutional Shares 18.64 0.11 3.02 (0.67) (0.07) (0.07) 20.96 13.25 1.72
For the Period December 12, 1994 (commencement of operations) through October 31, 1995
- --------------------------------------------------------------------------------------
Institutional Shares 18.00 0.12 0.95 (0.40) (0.03) -- 18.64 3.73 1.81/(d)/
<CAPTION>
Ratios assuming
no waiver of
investment advisory
fees or expense
reimbursements
------------------------
Ratio
Ratio of net
of net Net Ratio investment
investment Average assets at of income
income Portfolio commis- end expenses (loss) to
to average turnover sion of period to average average
net assets rate rate (in 000's) net assets net assets
----------- --------- --------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
Institutional Shares 0.31%/(d)/ 11% $0.0009 $63,680 2.33%/(d)/ (0.30)%/(d)/
Service Shares/(a)/ 2.09/(d)/ 11 0.0009 68 2.58/(d)/ 1.48/(d)/
For the Year Ended October 31, 1996
- -----------------------------------
Institutional Shares 0.74 21 0.0147 51,589 2.64 (0.18)
For the Period December 12, 1994 (commencement of operations) through October 31, 1995
- --------------------------------------------------------------------------------------
Institutional Shares 1.06/(d)/ 25 -- 21,014 3.50/(d)/ (0.63)/(d)/
</TABLE>
- -----------------
/(a)/ Commencement of operations.
/(b)/ Includes the balancing effect of calculating per share amounts.
/(c)/ Assumes investment of 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.
54
<PAGE>
THE COMMERCE FUNDS
NATIONAL TAX-FREE BOND FUND
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)/
----------- ----------- ----------- ----------- -------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
$18.46 $0.37 $(0.07) $(0.37) $ -- $18.39 1.60%
For the Year Ended October 31, 1996
- -----------------------------------
18.54 0.73 (0.07) (0.73) (0.01) 18.46 3.60
For the Period February 21, 1995 /(a)/ through October 31, 1995
- ---------------------------------------------------------------
18.00 0.54 0.54 (0.54) -- 18.54 6.06
<CAPTION>
Ratios assuming
no 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
net to average turnover of period to average to average
assets net assets rate (in 000's) net assets net assets
---------- ------------ --------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
0.85%/(d)/ 3.98%/(d)/ 21% $19,973 1.19%/(d)/ 3.64%/(d)/
For the Year Ended October 31, 1996
- -----------------------------------
0.85 3.93 34 17,613 1.55 3.23
For the Period February 21, 1995 /(a)/ through October 31, 1995
- ---------------------------------------------------------------
0.85/(d)/ 4.19/(d)/ 19 10,721 1.90/(d)/ 3.14/(d)/
</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.
55
<PAGE>
THE COMMERCE FUNDS
MISSOURI TAX-FREE BOND FUND
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/
----------- ------------ ------------ ----------- ---------------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
$18.26 $0.38 $(0.08) $(0.38) $(0.02) $18.16 1.64%
For the Year Ended October 31, 1996
- -----------------------------------
18.40 0.76 (0.14) (0.76) -- 18.26 3.43
For the Period February 21, 1995 /a/ through October 31, 1995
- -------------------------------------------------------------
18.00 0.57 0.40 (0.57) -- 18.40 5.45
<CAPTION>
Ratios assuming
no waiver of
investment advisory 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
net to average turnover of period to average to average
assets net assets rate (in 000's) net assets net assets
------------ ------------ --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
For the Six Months Ended April 30, 1997 (unaudited)
- ---------------------------------------------------
0.65%/d/ 4.22%/d/ 23% $18,588 1.23%/d/ 3.64%/d/
For the Year Ended October 31, 1996
- ------------------------------------
0.65 4.14 49 17,034 1.58 3.21
For the Period February 21, 1995 /a/ through October 31, 1995
- -------------------------------------------------------------
0.65/d/ 4.41/d/ 52 8,889 2.12/d/ 2.94/d/
</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.
56
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS
April 30, 1997
(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 nine portfolios
(individually, a "Fund" and collectively, the "Funds"): Short-Term Government
Fund, Bond Fund, Balanced Fund, Growth and Income Fund, Growth Fund, MidCap Fund
(formerly Aggressive Growth Fund), International Equity Fund, National Tax-Free
Bond Fund and Missouri Tax-Free Bond Fund. Each of the Funds (except National
Tax-Free Bond Fund and Missouri Tax-Free Bond Fund) offers two classes of
shares, Institutional Shares and Service Shares. The Growth and Income Fund
commenced investment operations on March 3, 1997 with both Institutional and
Service Shares. All other Service Shares commenced investment operations on
January 2, 1997. Each Fund is registered as a diversified management investment
company under the 1940 Act, other than the Missouri Tax-Free Bond Fund, which is
registered 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 may 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 Fund's portfolio securities
that are traded on stock exchanges outside the U.S. are based upon the price on
the exchange as of the close of business of the exchange immediately preceding
the time of valuation, except when an occurrence subsequent to the time a value
was so established is likely to have changed such value; then the fair value of
those securities will be determined through consideration of other factors by or
under the direction of the Board of Trustees. Unlisted equity and debt
securities for which market quotations are available are valued at the mean
between the most recent bid and asked prices. Fixed-income securities are valued
at prices supplied by an independent pricing service, which reflect
broker/dealer-supplied valuations and matrix pricing systems. Short-term debt
obligations maturing in sixty days or less are valued at amortized cost.
Restricted securities, and other securities for which quotations are not
available, are valued at fair value using methods approved by the Board of
Trustees.
B. Securities Transactions and Investment Income
Securities transactions are recorded on the trade date. Realized gains and
losses on sales of investments are calculated on the identified cost basis.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis.
57
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS--(Continued)
April 30, 1997
(Unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES--(Continued)
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, MidCap and International Equity
Funds accrete market discounts and amortize premiums on a yield to maturity
basis. The Short-Term Government, Bond, Balanced and Growth and Income 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.
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 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. All commitments are "marked-to-market" daily at the applicable
exchange rates and any resulting unrealized gains or losses are recorded in the
Fund's financial statements. The Fund records realized gains and losses at the
time the forward contract is offset by entry into a closing transaction or
extinguished by delivery of the currency. Risks may arise upon entering these
contracts 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.
58
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS--(Continued)
April 30, 1997
(Unaudited)
2. SIGNIFICANT ACCOUNTING POLICIES--(Continued)
As of the Trust's most recent tax year-end, the following Funds had
capital loss carryforwards for U.S. federal income tax purposes:
<TABLE>
<CAPTION>
Fund Amount Year of Expiration
------------------------------- --------------------------- -----------------------------
<S> <C> <C>
Short-Term Government Fund $8,584 2004
National Tax-Free Bond Fund $5,961 2004
</TABLE>
These amounts are available to be carried forward to offset future capital
gains of the Funds to the extent permitted by applicable laws or regulations.
G. Deferred Organization Expenses
Organization-related costs are being amortized on a straight-line basis
over a period of five years beginning with the commencement of each of the
Fund's operations. If any or all of the shares held by The Goldman Sachs Funds
Group, L.P. representing initial capital of the Funds are redeemed during the
amortization period, the redemption proceeds will be reduced by the pro rata
portion of the unamortized organizational cost balance.
H. Expenses
Expenses incurred by the Funds which do not specifically relate to an
individual Fund are allocated to the Funds based on each Fund's relative average
net assets for the period. Service Class shareholders bear all expenses and fees
relating to the Distribution Plan.
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, Growth and Income and
Growth Funds; and declared and paid annually by the MidCap 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.
59
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS--(Continued)
April 30, 1997
(Unaudited)
3. AGREEMENTS
The Funds have entered into an Advisory Agreement with Commerce Bank, N.A.
(St. Louis) and Commerce Bank, N.A. (Kansas City) (the "Advisor"). Pursuant to
the terms of the Advisory Agreement, the Advisor is responsible for managing the
investments and making investment decisions for each of the Funds. For these
services and for assuming related expenses, the Advisor is entitled to a fee,
computed daily and payable monthly, at the following annual rate of the
corresponding Fund's average daily net assets:
<TABLE>
<S> <C>
Short-Term Government Fund................................... .50%
Bond Fund.................................................... .50%
Balanced Fund................................................ 1.00%
Growth and Income Fund....................................... .75%
Growth Fund.................................................. .75%
MidCap Fund.................................................. .75%
International Equity Fund.................................... 1.50%
National Tax-Free Bond Fund.................................. .50%
Missouri Tax-Free Bond Fund.................................. .50%
</TABLE>
As authorized by the Advisory Agreement, the Advisor has entered into a
Sub-Advisory Agreement with Rowe-Price Fleming International, Inc. (the
"Sub-Advisor") whereby the Sub-Advisor manages the investment assets of the
International Equity Fund. As compensation for services rendered under the
Sub-Advisory Agreement, the Sub-Advisor is entitled to a fee from the Advisor at
the following annual rate:
<TABLE>
<CAPTION>
Average Daily Net Assets Annual Rate
------------------------ -----------
<S> <C>
First $20 million......................................... .75%
Next $30 million.......................................... .60%
Over $50 million.......................................... .50%
</TABLE>
For the period ended April 30, 1997, 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, .89% for the International Equity Fund and .30% for the Missouri Tax-Free
Bond Fund. The effect of these waivers by the Advisor for the period ended April
30, 1997 was to reduce advisory fees by $36,661, $93,811, $175,639 and $17,675
for the Short-Term Government, Balanced, International Equity and Missouri
Tax-Free Bond Funds, respectively.
In addition, for the period ended April 30, 1997, the Advisor has
voluntarily agreed to reimburse expenses (excluding interest, taxes,
distribution expenses and extraordinary expenses) to the extent that such
expenses exceed, on an annualized basis, .68%, .88%, 1.13%, 1.20%, 1.13%, 1.72%,
.85% and .65% of average net assets of the Short-Term Government, Bond,
Balanced, Growth and Income, Growth, International Equity, National Tax-Free
Bond and Missouri Tax-Free Bond Funds, respectively. The effect of these
reimbursements by the Advisor for the period ended April 30, 1997 was to reduce
expenses by $44,892, $51,485, $30,673, $31,173 and $33,893 for the Short-Term
Government, Balanced, Growth and Income, National Tax-Free Bond and Missouri
Tax-Free Bond Funds, respectively. The amount reimbursable to the Short-Term
Government, Balanced, Growth and Income, National Tax-Free Bond and Missouri
Tax-Free Bond Funds at April 30, 1997 was approximately $10,400, $27,200,
$30,700, $6,400 and $9,600, respectively, and are reflected in "Other Assets" in
the accompanying Statements of Assets and Liabilities.
60
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS--(Continued)
April 30, 1997
(Unaudited)
3. AGREEMENTS--(Continued)
Included in "Accrued expenses and other liabilities" in the accompanying
Statements of Assets and Liabilities of the Bond Fund and International Equity
Fund are approximately $500 and $5,200, respectively, related to excess
reimbursements payable to the Advisor.
Goldman Sachs Asset Management ("GSAM"), a separate operating division of
Goldman, Sachs & Co., serves as the Trust's administrator, pursuant to an
Administration Agreement. Under the Administration Agreement, GSAM administers
the Trust's business affairs. As compensation for the services rendered under
the Administration Agreement and its assumption of related expenses, GSAM is
entitled to a fee, computed daily and payable monthly, at 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. The maximum sales load imposed on sale of
shares of the Short-Term Government Fund is 2.00%; for all other Funds, the
maximum sales load imposed on the sale of shares of the Funds is 3.50%. Goldman
Sachs has advised the Trust that it has retained approximately $21,000 for the
period ended April 30, 1997.
The Trust, on behalf of each Fund (except National Tax-Free Bond Fund and
Missouri Tax-Free Bond Fund), has adopted a Distribution Plan for the Service
Shares pursuant to Rule 12b-1. Under the distribution plan, payments by each
Fund for distribution expenses may not exceed .25% (annualized) of the average
daily net assets of the Fund's Service Shares.
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. The Shareholder Servicing
expense for the period ended April 30, 1997 was approximately $4,900, $20,500,
$14,200, $38,800, $9,000 and $4,200 for the Short-Term Government, Bond,
Balanced, Growth, MidCap and International Equity Funds, respectively, and are
reflected in "Other Expenses" in the accompanying Statements of Operations.
4. 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.
61
<PAGE>
THE COMMERCE FUNDS
NOTES TO FINANCIAL STATEMENTS--(Continued)
April 30, 1997
(Unaudited)
5. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales or maturities of long-term securities
for the period ended April 30, 1997 were as follows:
<TABLE>
Short-Term Government Fund
<S> <C>
Purchases (excluding U.S. Government securities)......................................................... $ 2,150,729
Sales (excluding U.S. Government securities)............................................................. 288,788
Purchases of U.S. Government securities.................................................................. 10,477,706
Sales of U.S. Government securities...................................................................... 8,703,352
Bond Fund
Purchases (excluding U.S. Government securities)......................................................... $ 4,044,630
Sales (excluding U.S. Government securities)............................................................. 1,030,781
Purchases of U.S. Government securities.................................................................. 27,317,138
Sales of U.S. Government securities...................................................................... 6,523,536
Balanced Fund
Purchases (excluding U.S. Government securities)......................................................... $ 11,602,418
Sales (excluding U.S. Government securities)............................................................. 7,603,759
Purchases of U.S. Government securities.................................................................. 4,118,126
Sales of U.S. Government securities...................................................................... 2,319,879
Growth and Income Fund
Purchases (excluding U.S. Government securities)......................................................... $ 11,768,634
Sales (excluding U.S. Government securities)............................................................. 109,331
Purchases of U.S. Government securities.................................................................. --
Sales of U.S. Government securities...................................................................... --
Growth Fund
Purchases (excluding U.S. Government securities)......................................................... $ 59,462,929
Sales (excluding U.S. Government securities)............................................................. 42,811,447
Purchases of U.S. Government securities.................................................................. --
Sales of U.S. Government securities...................................................................... --
MidCap Fund
Purchases (excluding U.S. Government securities)......................................................... $ 33,744,032
Sales (excluding U.S. Government securities)............................................................. 27,210,488
Purchases of U.S. Government securities.................................................................. --
Sales of U.S. Government securities...................................................................... --
International Equity Fund
Purchases (excluding U.S. Government securities)......................................................... $ 14,666,892
Sales (excluding U.S. Government securities)............................................................. 6,345,592
Purchases of U.S. Government securities.................................................................. --
Sales of U.S. Government securities...................................................................... --
National Tax-Free Bond Fund
Purchases (excluding U.S. Government securities)......................................................... $ 5,752,211
Sales (excluding U.S. Government securities)............................................................. 3,814,822
Purchases of U.S. Government securities.................................................................. --
Sales of U.S. Government securities...................................................................... --
Missouri Tax-Free Bond Fund
Purchases (excluding U.S. Government securities)......................................................... $ 5,520,689
Sales (excluding U.S. Government securities)............................................................. 4,027,204
Purchases of U.S. Government securities.................................................................. --
Sales of U.S. Government securities...................................................................... --
</TABLE>
62
<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
John M. Perlowski
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 [LOGO OF COMMERCE FUNDS/TM/ APPEARS HERE]
922 Walnut Street
Kansas City, Missouri 64106
INVESTMENT ADVISORS
Commerce Bank, N.A.
922 Walnut Street The Short-Term Government Fund
Kansas City, Missouri 64106 The Bond Fund
The Balanced Fund
Commerce Bank, N.A. The Growth and Income Fund
8000 Forsyth Boulevard The Growth Fund
St. Louis, Missouri 63105 The MidCap Fund
The International Equity Fund
INVESTMENT SUB-ADVISOR The National Tax-Free Bond Fund
Rowe-Price Fleming International, Inc. The Missouri Tax-Free Bond Fund
100 East Pratt Street
Baltimore, Maryland 21202
DISTRIBUTOR
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004 Semiannual Report
ADMINISTRATOR April 30, 1997
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 LLP
1345 Chestnut Street
Philadelphia, Pennsylvania 19107
COM-SEM97
