<PAGE>
The Commerce Funds
Semi-Annual Report - April 30, 1999
[GRAPHIC APPEARS HERE]
commerce funds
<PAGE>
Building on Your Values
The value of a shared perspective
At The Commerce Funds, we have a simple, straightforward mission: to build
relationships that have lasting value to our clients.
We achieve our mission by keeping our focus squarely on what matters most: the
financial success and well-being of the customers we serve. At The Commerce
Funds, looking at the world through our customers' eyes has helped us to create
a family of mutual funds designed to assist you in meeting the financial
challenges that lie ahead.
The power of professional commitment
Behind each of The Commerce Funds is a consistent, long-term investment
philosophy and a commitment to the highest investment standards. Our success in
helping investors like you reach their financial goals has proven the wisdom of
this careful, disciplined approach to investing.
Your relationship with The Commerce Funds is built on a foundation of shared
values and many years of investment experience. Working from this solid
foundation, we're equipped to help our customers meet the challenge of investing
for a lifetime.
Strength, insight, and service: good reasons to invest with
The Commerce Funds.
The Commerce Funds
International Equity
MidCap
Growth
RISK Growth and Income POTENTIAL RETURN
[DOWNWARD FACING ARROW Balanced [UPWARD FACING ARROW
APPEARS HERE] Missouri Tax-Free APPEARS HERE]
Intermediate Bond
National Tax-Free
Intermediate Bond
Bond
Short-Term Government
In general, greater returns are associated with greater risks.
<PAGE>
COMMERCE FUNDS
Shareholder Letter
Dear Shareholder,
We are pleased to provide you this semiannual update on The Commerce Funds.
In this report, you will find performance and financial information about
each of the nine Commerce Funds portfolios. To help you put that information
in context, we offer the following economic and financial market update.
Market and Economic Update
In our view, a policy change of fundamental importance oc-
curred in the fall of 1998 which proved to be the primary
catalyst for financial markets over the past six months.
This policy change was signaled by President Clinton at the
time of the meeting of the G-7 countries in Washington,
D.C. last October. He stated, "the balance of risks has now
shifted from inflation to slowdown. The principal goal of
policy-makers must now be growth. The most important thing
we can do is to keep our economy growing." This was a sig-
nal to the world that steps, both monetary and fiscal,
should be taken in order to revive world economic growth.
We have seen substantial follow-through on the monetary
side by the central banks of the world. In the United
States, the Federal Reserve reduced the Federal Funds rate
three times by a total of 0.75%.
As a consequence, stock and bond markets in the United
States, as well as other countries, reacted as one would
expect, sharply reversing their results over the prior six
months. From November 1, 1998 through April 30, 1999, the
S&P 500 Stock Index rose 31.4%, while the Lehman
Government/Corporate Bond Index returned approximately
(0.12)%. The prospect for faster economic growth favors
stocks as the outlook for corporate profits improves while,
at the same time, rising demand for credit and the poten-
tial for inflationary pressures makes the outlook for bonds
more uncertain.
The character of the various markets has also been influ-
enced by this change. In the bond market, the flight to
quality which marked the bond rally of 1998 gave way to a
shift toward lower credit instruments. Over the past six
months, returns for corporate, mortgage-backed, and asset-
backed securities were modestly positive, while returns for
government securities were slightly negative.
In the equity market, we witnessed a continuation of last
year's trend toward large capitalization growth stocks to
the detriment of both small companies and more value-ori-
ented companies. Underneath the results for the six months,
however, a change in market focus has occurred. Starting in
April, a substantial change in these prior trends began to
emerge with both the indices for small capitalization
stocks and value stocks outpacing the S&P 500 Index ("S&P
500"). Again we attribute this to the improved outlook for
world growth later in 1999 and into the year 2000. As eco-
nomic growth and, subsequently, profits begin to broaden,
more companies beyond the narrowly focused leadership in
the S&P 500 will benefit. The result going forward will
likely be more modest performance by the capitalization
weighted, growth oriented S&P 500, but better results from
many of the broader market indices.
1
<PAGE>
COMMERCE FUNDS
While remaining generally positive in our outlook for the
economy, both in the United States and worldwide, we have
grown increasingly cautious about the U.S. equity market.
Numerous valuation measures of the U.S. equity market have
reached historical extremes and there are signs of specula-
tive excesses. As a result, we expect a more difficult pe-
riod ahead for the equity market marked by greater
volatility. In such periods, it is important to remain fo-
cused on long-term objectives and maintain adequate diver-
sification.
In the following pages, the Equity and Fixed-Income invest-
ment teams offer their comments on how each Commerce Fund
fared over the past six months and what strategies they are
employing for the future. We appreciate your investment and
we look forward to helping you build on your investment
values over the long-term. We are pleased to have you as a
Commerce Funds shareholder.
Sincerely,
Peter F. Mackie
President
Investment Management Group
Commerce Bank, N.A.
2
<PAGE>
COMMERCE SHORT-TERM GOVERNMENT FUND
Shareholder Letter
Dear Shareholder,
We are pleased to report on the performance of the Commerce Short-Term Gov-
ernment Fund for the 6-month period ended April 30, 1999.
Performance Review
For the six-month period ending April 30, 1999, the Insti-
tutional Shares of the Fund had a total return of 0.85%,
based on Net Asset Value (NAV) (assumes expense waivers and
reimbursements). The Service Shares had a total return of
0.73% for the same time period, based on NAV (assumes ex-
pense waivers and reimbursements). This compares to the
Lipper Short-Term U.S. Government Funds Index six-month re-
turn of 1.04% and the Salomon Brothers 1-5 Year
Treasury/Government Sponsored Index six-month return of
0.74%. Past performance is no guarantee of future results.
(The Fund's NAV and yield are not guaranteed by the U.S.
government or by its agencies, instrumentalities, or spon-
sored enterprises.)
Portfolio Highlights
. The Fund was positioned with a near maximum maturity dur-
ing the first half of the fiscal period. We sought to add
value for our shareholders by investing in higher-yielding
securities, including mortgage-backed securities with
short, stable average lives.
. We expect that well structured mortgage securities will
continue to provide good risk adjusted returns.
We thank you for your investment and look forward to your
continued confidence.
Sincerely,
Fixed-Income Funds Team
Investment Management Group
Commerce Bank, N.A.
May 28, 1999
3
<PAGE>
COMMERCE SHORT-TERM GOVERNMENT FUND
Statement of Investments
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Collateralized Mortgage Obligations - 29.9%
Bear Stearns Mortgage Securities, Inc. Series 1998-1, Class A17
$ 250,000 5.00% 03/25/28 $ 220,527
CMC Securities Corp. REMIC Series 1993-B, Class B4
148,324 6.85 04/25/23 147,912
Countrywide Home Loans, Inc Series 1997-4, Class A
407,093 8.00 07/25/27 417,416
Federal Home Loan Mortgage Corp.
2,000,000 5.00 01/15/04 1,945,620
Federal Home Loan Mortgage Corp. REMIC PAC
Series 1205, Class G
243,082 7.00 03/15/07 247,107
Federal Home Loan Mortgage Corp. REMIC PAC
Series 1360, Class PE
77,258 3.50 12/15/17 76,847
Federal Home Loan Mortgage Corp. REMIC PAC
Series 1526, Class N
965,913 6.50 12/15/22 972,848
Federal Home Loan Mortgage Corp. REMIC PAC
Series 1619, Class EC
329,081 5.60 11/15/23 328,051
Federal Home Loan Mortgage Corp. REMIC
Series 1112, Class F
4,290 8.40 01/15/21 4,281
Federal Home Loan Mortgage Corp. REMIC
Series 1574, Class P
39,373 6.50 07/15/23 39,459
Federal Home Loan Mortgage Corp. REMIC
Series 1617, Class C
149,000 6.50 02/15/23 146,811
Federal Home Loan Mortgage Corp. REMIC
Series 1632, Class B
200,000 6.00 11/15/23 189,374
Federal Home Loan Mortgage Corp. REMIC
Series 1727, Class E
649,610 6.50 04/15/18 655,495
Federal Home Loan Mortgage Corp. Series 180, Class G
199,934 8.00 09/15/21 200,746
Federal Home Loan Mortgage Corp. Series 1255, Class G
178,600 7.50 07/15/21 181,056
Federal Home Loan Mortgage Corp. Series 1650, Class K
880,000 6.50 01/15/24 866,216
Federal Home Loan Mortgage Corp. Series 1652, Class PJ
500,000 6.60 08/15/22 508,125
Federal Home Loan Mortgage Corp. Series 2032, Class L
533,476 10.34(a) 09/15/27 527,704
Federal Home Loan Mortgage Corp. Series 2103, Class TE
385,000 6.00 12/15/28 362,739
Federal National Mortgage Assn. REMIC PAC
Series 1991-118, Class K
215,206 7.00 08/25/21 216,953
Federal National Mortgage Assn. REMIC PAC
Series 1992-129, Class G
94,993 4.00 06/25/18 94,339
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Collateralized Mortgage Obligations - (continued)
Federal National Mortgage Assn. REMIC PAC
Series 1992-49, Class H
$ 19,173 7.00% 05/25/20 $ 19,119
Federal National Mortgage Assn. REMIC PAC
Series 1993-208, Class L
17,837 6.50 03/25/23 17,898
Federal National Mortgage Assn. REMIC PAC
Series 1996-28, Class PE
281,000 6.50 03/25/20 284,864
Federal National Mortgage Assn. REMIC PAC
Series G92-35, Class D
210,000 4.50 08/25/21 204,945
Federal National Mortgage Assn. REMIC
Series 1992-1, Class E
363,331 7.50 01/25/07 372,527
Federal National Mortgage Assn. REMIC
Series 1993-225C, Class NE
1,750,390 6.50 12/25/22 1,720,844
Federal National Mortgage Assn. REMIC
Series 1993-245, Class N
200,000 6.50 12/25/23 198,750
Federal National Mortgage Assn. REMIC
Series 1993-76, Class A
357,532 6.00 06/25/08 357,085
Federal National Mortgage Assn. REMIC
Series 1994-23, Class A
117,706 6.00 12/25/22 117,374
Federal National Mortgage Assn. REMIC
Series G94-9, Class C
192,399 6.25 04/17/10 191,737
Federal National Mortgage Assn. REMIC
Series X-130A, Class H
510,000 6.30 09/25/18 513,825
Federal National Mortgage Assn. REMIC
Series X-225C, Class G
630,334 6.50 11/25/22 618,516
Federal National Mortgage Assn. REMIC
Series X-225C, Class NB
893,191 6.50 12/25/22 893,468
Federal National Mortgage Assn. REMIC
Series X-225C, Class NC
3,229,000 6.50 03/25/23 3,231,002
Federal National Mortgage Assn. Series 1993-139,
Class KB
625,069 7.00 11/25/00 629,557
Federal National Mortgage Assn. Series 1993-183,
Class K
500,000 6.50 07/25/23 496,405
Federal National Mortgage Assn. Series 1995-19E,
Class L
213,231 6.25 08/25/08 210,032
Federal National Mortgage Assn. Series 1998-63,
Class PL
530,000 6.00 11/25/27 505,652
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
COMMERCE SHORT-TERM GOVERNMENT FUND
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Collateralized Mortgage Obligations - (continued)
GE Capital Mortgage Services, Inc. REMIC
Series 1997-8, Class A11
$1,500,000 7.25% 10/25/27 $1,478,565
GE Capital Mortgage Services, Inc. Series 1993-16,
Class A4
30,031 6.25 12/25/23 29,984
Independent National Mortgage Corp. REMIC
Series 1995-M, Class A1
20,669 7.50 09/25/25 20,585
Prudential Home Mortgage Securities Co. REMIC PAC Series 1993-3, Class A6
3,966,376 7.40 02/25/08 4,069,224
Prudential Home Mortgage Securities Series 1993-43,
Class A1
245,712 5.40 10/25/23 244,712
Prudential Home Mortgage Securities Series 1993-28,
Class M
1,270,763 7.38 08/25/23 1,293,300
Residential Accredit Loans, Inc. Series 1999-QS2,
Class A5
1,750,000 6.50 02/25/29 1,648,815
Residential Funding Mortgage Securities I, Inc.
REMIC PAC Series 1994-S1, Class A7
108,215 6.57 01/25/24 108,023
Residential Funding Mortgage Securities I, Inc. REMIC Series 1995-S12,
Class A2
1,107,482 7.25 08/25/10 1,116,474
Residential Funding Mortgage Securities I, Inc. REMIC Series 1997-S3,
Class A3
250,000 7.30 03/25/07 252,724
Residential Funding Mortgage Securities
Series 1993-S49, Class A2
466,938 6.00 12/25/08 467,082
Saxon Mortgage Securities Corp. REMIC
Series 1993-8A, Class 1A5
500,000 7.38 09/25/23 507,562
Securitized Asset Sales, Inc. Series 1993-7, Class T
470,000 6.25 12/25/23 461,625
--------------------------------------------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS
(cost $30,480,586) $ 30,631,901
--------------------------------------------------------------------------------------------------
Mortgage-Backed Pass-Through Obligations - 5.6%
Federal Home Loan Mortgage Corp.
$ 12,678 8.75% 02/01/01 $ 12,853
19,647 8.75 04/01/01 20,844
167,613 8.25 08/01/01 170,756
106,955 7.75 09/01/07 109,983
Federal National Mortgage Assn.
309,077 8.00 12/01/07 320,040
346,649 6.50 02/01/12 349,904
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Mortgage-Backed Pass-Through Obligations - (continued)
Federal National Mortgage Assn. - (continued)
$ 155,608 9.00% 07/01/24 $ 166,485
1,040,743 7.50 10/01/27 1,069,686
1,001,406 7.00 04/01/28 1,014,544
1,255,493 7.00 05/01/28 1,271,965
650,417 7.00 12/01/28 658,951
Government National Mortgage Assn.
237,697 8.00 10/15/16 249,433
308,953 8.00 07/15/17 324,014
----------------------------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED PASS-THROUGH
OBLIGATIONS
(cost $5,718,542) $ 5,739,458
----------------------------------------------------------------------------------------------
U.S. Government Agency Obligations - 57.5%
Federal Agriculture Mortgage Corp.
$ 500,000 6.69% 02/10/00 $ 505,380
Federal Farm Credit Bank
5,000,000 4.70(a) 05/26/99 4,983,750
1,000,000 7.17 04/03/00 1,017,030
1,000,000 6.10 11/19/01 1,017,340
Federal Home Loan Bank
7,000,000 4.69(a) 05/19/99 6,983,655
1,000,000 6.32 02/01/00 1,006,870
530,000 7.13 03/27/00 538,114
1,250,000 7.44 08/10/01 1,304,687
1,000,000 6.53 08/28/01 1,025,000
1,750,000 6.63 08/28/01 1,799,227
965,000 7.56 02/27/02 1,015,662
4,000,000 7.17 07/22/02 4,193,760
2,000,000 5.13 09/15/03 1,964,060
1,630,000 6.89 04/06/04 1,707,425
1,700,000 5.43 09/24/08 1,634,125
Federal Home Loan Mortgage Corp.
3,500,000 4.80(a) 05/05/99 3,498,145
5,000,000 4.69(a) 05/14/99 4,991,550
500,000 7.90 01/27/00 508,985
1,000,000 6.52 08/25/00 1,015,940
500,000 6.70 07/25/01 513,830
200,000 5.75 04/15/08 198,374
Federal National Mortgage Assn.
750,000 8.35 11/10/99 761,370
1,000,000 9.20 09/11/00 1,051,090
3,500,000 5.72 01/09/01 3,519,670
250,000 6.18 03/15/01 253,593
500,000 6.63 04/18/01 511,560
700,000 6.38 08/14/01 714,987
500,000 7.50 02/11/02 525,235
3,300,000 5.75 04/15/03 3,321,153
330,000 6.05 05/29/03 330,360
625,000 7.40 07/01/04 670,994
215,000 7.88 02/24/05 237,139
500,000 7.65 03/10/05 546,330
Israel Aid Series 5A
2,000,000 7.75 11/15/99 2,027,220
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
COMMERCE SHORT-TERM GOVERNMENT FUND
Statement of Investments (continued)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
U.S. Government Agency Obligations - (continued)
Student Loan Marketing Assn.
$ 180,000 6.05% 09/14/00 $ 181,885
Tennessee Valley Authority 1989, Series D
800,000 8.38 10/01/99 810,128
575,000 6.00 11/01/00 581,199
U.S. Department of Housing & Urban Development
Series 1994-A
100,000 6.44 08/01/02 102,329
U.S. Department of Housing & Urban Development
Series 1995-A
1,250,000 8.15 08/01/00 1,286,550
----------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(cost $59,172,717) $ 58,855,701
----------------------------------------------------------------------------------------------
U.S. Treasury Obligation - 0.6%
United States Treasury Note
$ 600,000 5.75% 08/15/03 $ 610,968
----------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATION
(cost $612,515) $ 610,968
----------------------------------------------------------------------------------------------
Repurchase Agreement - 6.1%
State Street Bank & Trust Company(b)
$6,286,000 4.72% 05/03/99 $ 6,286,000
----------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(cost $6,286,000) $ 6,286,000
----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $102,270,360)(c) $102,124,028
----------------------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost $ 589,868
Gross unrealized loss for investments in which
cost exceeds value (736,200)
----------------------------------------------------------------------------------------------
Net unrealized loss $ (146,332)
----------------------------------------------------------------------------------------------
</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 rate disclosed for this security represents the yield to maturity.
(b) The Repurchase Agreement is fully Collateralized by U.S. Treasury securi-
ties.
(c) The cost stated also represents aggregate cost for federal income.
------------------------------------------------------------------------------
Investment Abbreviations:
PAC --Planned Amortization Class
REMIC --Real Estate Mortgage Investment Conduit
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
COMMERCE BOND FUND
Shareholder Letter
Dear Shareholder,
We are pleased to report on the performance of the Commerce Bond Fund for the
6-month period ended April 30, 1999.
Performance Review
For the six-month period ending April 30, 1999, the Insti-
tutional Shares of the Fund had a total return of 1.25%,
based on Net Asset Value (NAV). The Service Shares had a
total return of 1.12% for the same time period, based on
NAV. This compares to the Lipper Intermediate Investment
Grade Debt Funds Index six-month return of 0.70% and the
Lehman Brothers Aggregate Bond Index six-month return of
0.69%. Past performance is no guarantee of future results.
(The Fund's NAV and yield are not guaranteed by the U.S.
government or by its agencies, instrumentalities, or spon-
sored enterprises.)
Portfolio Highlights
. The Fund shortened its duration during the first half of
the fiscal year. We continued to run our duration slightly
short of our benchmark. Strong economic activity in the
United States has made the bond market fearful of a rise in
inflation. This has caused rates to rise from their lows of
last October.
. Rates rose across the curve as the financial crisis of
last summer faded. The markets in the Far East started to
rally as the worst for those countries seemed over. Even
the devaluation by Brazil did not scare investors. As in-
vestors regained their courage, they sold Treasuries to
purchase corporate and mortgage securities.
. Credit spreads continued to tighten. The Fund was well po-
sitioned to take advantage of this as we sold most of our
Treasuries in favor of corporate bonds and asset-backed se-
curities. The Fund continues to maintain exceptional credit
quality with an average rating of AA+.
We thank you for your investment and look forward to your
continued confidence.
Sincerely,
Fixed-Income Funds Team
Investment Management Group
Commerce Bank, N.A.
May 28, 1999
7
<PAGE>
COMMERCE BOND FUND
Statement of Investments
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Asset-Backed Securities - 31.5%
Auto - 1.6%
Fifth Third Bank Auto Grantor Trust Series 1996-A, Class A
$1,497,108 6.20% 09/15/01 $ 1,501,779
NationsBank Auto Owner Trust Series 1996-A, Class A4
4,500,000 6.63 12/15/00 4,518,270
------------
6,020,049
----------------------------------------------------------------------------------------------
Commercial - 0.7%
First Union-Lehman Brothers-Bank of America
Series 1998-C2, Class B
2,500,000 6.64 03/18/11 2,464,625
----------------------------------------------------------------------------------------------
Credit Card - 10.3%
American Express Credit Account Master Trust
Series 1994-3, Class A
2,000,000 7.85 08/15/05 2,158,120
American Express Credit Account Master Trust
Series 1996-1, Class B
2,000,000 6.95 12/15/03 2,042,500
Chemical Master Credit Card Trust 1 Series 1995-3,
Class A
2,000,000 6.23 04/15/05 2,028,120
Chemical Master Credit Card Trust I Series 1996-1,
Class B
1,000,000 5.71 09/15/03 997,500
Chemical Master Credit Card Trust I Series 1996-2,
Class A
2,500,000 5.98 09/15/08 2,481,250
Chemical Master Credit Card Trust I Series 1996-2,
Class B
2,500,000 6.16 09/15/08 2,465,625
Citibank Credit Card Master Trust I Series 1997-6,
Class B
1,417,467 6.24(a) 08/15/06 1,024,120
Discover Card Master Trust I Series 1993-3, Class A
2,000,000 6.20 11/15/03 2,023,740
First USA Credit Card Master Trust Series1997-6,
Class B
2,200,000 6.58 03/17/05 2,228,094
First USA Secured Note Trust Series 1998-2, Class C+
3,000,000 6.80 02/18/11 2,932,969
First USA Secured Note Trust Series 1999-1, Class C+
3,500,000 6.42 10/19/06 3,466,094
Household Affinity Credit Card Trust Series 1994,
Class B
2,500,000 6.05 06/15/99 2,504,675
MBNA Master Credit Card Trust Series 1995-C, Class A
2,000,000 6.45 02/15/08 2,043,120
Metris Master Trust Series 1997-1, Class A
2,500,000 6.87 10/20/05 2,557,025
Metris Master Trust Series 1997-1, Class B
1,000,000 7.11 10/20/05 1,021,250
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Asset-Backed Securities - (continued)
Credit Card - (continued)
Standard Credit Card Master Trust Series 1993-2,
Class A
$2,000,000 5.95% 10/07/04 $ 2,009,860
Standard Credit Card Master Trust Series 1995-1,
Class A
2,000,000 8.25 01/07/07 2,206,200
Standard Credit Card Master Trust Series 1995-1,
Class B
2,000,000 8.45 01/07/07 2,215,860
------------
38,406,122
--------------------------------------------------------------------------------------------------
Equipment - 0.2%
Green Tree Recreational, Equipment & Consumer Trust 1996-A, Class A1
505,212 5.55 02/15/18 501,726
--------------------------------------------------------------------------------------------------
Home Equity - 6.4%
Access Financial Mortgage Loan Trust Series 1996-2,
Class A4
1,500,000 7.63 09/18/21 1,547,927
Advanta Mortgage Loan Trust Series 1994-4, Class A2
3,003,260 8.92 01/25/26 3,283,434
American Business Financial Services, Inc. Series 1996-1, Class A+
3,992,735 7.95 09/15/26 4,084,132
Corestates Home Equity Trust Series 1993-2, Class A
292,552 5.10 03/15/09 291,274
GE Capital Mortgage Services, Inc. Series 1997-HE1,
Class B1
1,195,660 7.50 03/25/07 1,156,574
GE Capital Mortgage Services, Inc. Series 1997-HE1,
Class M
1,913,056 7.50 03/25/27 1,963,722
GE Capital Mortgage Services, Inc. Series 1997-HE4,
Class B1
3,903,413 7.33 12/25/28 3,880,084
GE Capital Mortgage Services, Inc. Series 1997-HE4,
Class M
1,951,706 7.14 12/25/28 1,951,335
Merrill Lynch Mortgage Investors, Inc. Series 1999-H1, Class A3
3,500,000 6.76 09/20/26 3,505,460
Merrill Lynch Mortgage Investors, Inc. Series 1991-H1, Class M1
2,000,000 7.36 07/15/11 2,012,500
------------
23,676,442
--------------------------------------------------------------------------------------------------
Manufactured Housing - 12.0%
Associates Manufactured Housing Series 1996-1, Class A5
5,000,000 7.60 03/15/27 5,182,661
Green Tree Financial Corp. Series 1993-4, Class A4
2,000,000 6.60 01/15/19 2,032,940
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
COMMERCE BOND FUND
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Asset-Backed Securities - (continued)
Manufactured Housing - (continued)
Green Tree Financial Corp. Series 1993-4, Class A5
$4,000,000 7.05% 01/15/19 $ 4,125,783
Green Tree Financial Corp. Series 1994-2, Class A45
4,000,000 7.90 05/15/19 4,152,353
Green Tree Financial Corp. Series 1995-1, Class B1
200,000 9.00 06/15/25 208,868
Green Tree Financial Corp. Series 1995-5, Class B1
2,000,000 7.30 09/15/26 1,995,620
Green Tree Financial Corp. Series 1995-8, Class B1
200,000 7.30 12/15/26 201,836
Green Tree Financial Corp. Series 1996-3, Class A4
1,000,000 7.10 05/15/27 1,024,660
Green Tree Financial Corp. Series 1996-4, Class A7
4,000,000 7.90 06/15/27 4,227,200
Green Tree Financial Corp. Series 1996-8, Class M1
2,000,000 7.85 10/15/27 2,046,080
Green Tree Financial Corp. Series 1997-3, Class B1
1,500,000 7.51 07/15/28 1,464,645
Green Tree Financial Corp. Series 1997-3, Class M1
3,250,000 7.53 07/15/28 3,312,953
Green Tree Financial Corp. Series 1997-6, Class M1
2,500,000 7.21 06/15/27 2,532,025
Green Tree Financial Corp. Series 1998-3, Class A6
800,000 6.76 03/01/30 799,496
Green Tree Financial Corp. Series 1999-1, Class M1
1,750,000 6.56 11/01/28 1,704,063
Green Tree Financial Corp. Series 1999-1, Class M2
750,000 7.34 11/01/28 745,545
Green Tree Home Improvement Loan Trust Series 1997-E, Class HEM1
2,500,000 7.28 01/15/29 2,540,700
Indymac Manufactured Housing Contract (Credit Suisse First Boston) Series
1997-1, Class A3
2,850,968 6.61 02/25/28 2,888,573
Indymac Manufactured Housing Contract (Credit Suisse First Boston) Series
1997-1, Class M
2,000,000 7.11 02/25/28 1,933,780
Oakwood Mortgage Investors, Inc. Series 1997-A, Class A5
1,500,000 7.12 05/15/27 1,553,227
------------
44,673,008
--------------------------------------------------------------------------------------------------
Utilities - 0.3%
California Infrastructure PG&E-1 (Pacific Gas and Electric) Series 1997-1,
Class A6
1,250,000 6.32 09/25/05 1,271,088
--------------------------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(cost $115,100,231) $117,013,060
--------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Collateralized Mortgage Obligations - 9.1%
Asset Securitization Corp. Class A1E
$2,500,000 7.53% 04/14/29 $ 2,662,725
Asset Securitization Corp. Class A1
5,148,718 7.10 08/13/29 5,362,235
Asset Securitization Corp. Class A2
1,250,000 7.21 01/13/30 1,335,862
Bear Stearns Mortgage Securities, Inc. Series 1998-1,
Class A17
1,000,000 5.00 03/25/28 882,110
Countrywide Mortgage Backed Securities, Inc. REMIC PAC Series 1993-B,
Class A5
1,290,796 6.75 11/25/23 1,277,475
Federal Home Loan Mortgage Corp. Series 1652, Class PJ
3,000,000 6.60 08/15/22 3,048,750
Federal Home Loan Mortgage REMIC PAC Series 1579, Class PM
1,235,000 6.70 09/15/23 1,228,430
Federal National Mortgage Assn. REMIC Series 1992-1, Class E
1,816,656 7.50 01/25/07 1,862,636
Federal National Mortgage Assn. REMIC Series X-130A, Class H
1,500,000 6.30 09/25/18 1,511,250
LB Commercial Conduit Mortgage Trust Series 1998-C4, Class A1B
3,000,000 6.21 10/15/08 2,957,461
Mortgage Capital Funding, Inc. Series 1996-MC1,
Class A2A
2,860,933 7.35 07/15/05 2,967,503
Norwest Asset Securities Corp. Series 1998-21, Class B1
1,266,175 6.50 09/25/13 1,248,512
PNC Mortgage Securities Corp. REMIC Series 1996-1, Class A10
1,712,123 7.50 09/25/09 1,749,036
Prudential Home Mortgage Securities Series 1993-28,
Class M
2,541,527 7.38 08/25/23 2,586,599
Residential Asset Securitization Trust REMIC Series
1997-A1, Class A7
3,000,000 7.38 03/25/27 3,056,942
--------------------------------------------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE
OBLIGATIONS (cost $33,687,710) $ 33,737,526
--------------------------------------------------------------------------------------------------
Corporate Obligations - 30.5%
Financial - 17.1%
Allstate Corp.
$ 814,000 6.75% 05/15/18 $ 807,691
American Express Credit Corp.
2,000,000 6.13 11/15/01 2,016,960
American Financial Group, Inc.
1,500,000 7.12 04/15/09 1,454,760
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
COMMERCE BOND FUND
Statement of Investments (continued)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Corporate Obligations - (continued)
Financial - (continued)
Apache Finance Property, Ltd.
$2,250,000 7.00% 03/15/09 $ 2,273,724
Associates Corp. N.A.
1,900,000 6.95 11/01/18 1,908,474
Banco Latinoamericano SA+
2,500,000 7.05 07/19/99 2,508,500
BankAmerica Corp.
3,500,000 6.88 06/01/03 3,629,080
Bankboston N. A.
1,775,000 6.38 04/15/08 1,757,161
Case Corp.+
2,500,000 6.25 12/01/03 2,450,920
Chemical Bank
2,000,000 6.70 08/15/08 2,033,940
Donaldson Lufkin and Jenrette, Inc.
1,250,000 6.00 12/01/01 1,252,525
Equitable Life Assurance Society of the United States+
6,000,000 7.70 12/01/15 6,234,240
Ford Motor Company Credit Corp.
2,000,000 6.63 06/30/03 2,045,760
General Motors Acceptance Corp.
2,000,000 5.88 01/22/03 1,993,960
2,000,000 6.63 10/15/05 2,017,300
Hanson Overseas BV
2,000,000 6.75 09/15/05 2,050,880
Household Financial Corp.
1,500,000 6.50 11/15/08 1,492,185
Merrill Lynch & Company, Inc.
1,900,000 5.71 01/15/02 1,895,630
Metropolitan Life Insurance Co.+
4,000,000 7.70 11/01/15 4,200,000
Morgan Stanley Group, Inc.
2,000,000 6.75 03/04/03 2,056,360
NationsBank Corp.
1,000,000 7.75 08/15/15 1,084,480
1,000,000 7.80 09/15/16 1,092,510
PNC Bank, N.A.
2,000,000 7.88 04/15/05 2,151,400
Salomon Smith Barney, Inc.
3,500,000 6.63 06/01/00 3,537,170
Swiss Bank Corp.
4,000,000 7.38 06/15/17 4,118,440
5,000,000 7.50 07/15/25 5,212,955
------------
63,277,005
--------------------------------------------------------------------------------------------------
Industrial - 10.1%
Conoco, Inc.
1,500,000 6.35 04/15/09 1,484,745
1,500,000 6.95 04/15/29 1,466,190
Ford Motor Co.
5,000,000 6.50 08/01/18 4,823,000
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Corporate Obligations - (continued)
Industrial - (continued)
General Motors Acceptance Corp.
$2,000,000 6.15% 04/05/07 $ 1,982,460
Lafarge Corp.
3,500,000 6.88 07/15/13 3,592,211
Receipts On Corporate Securities Trust CHR-1998-1+
5,122,079 6.50 08/01/18 5,084,242
Receipts On Corporate Securities Trust NSC-1998-1+
4,135,302 6.38 05/15/17 4,036,580
Ryder System, Inc.
4,000,000 6.60 11/15/05 3,936,880
Service Master Co.
3,000,000 7.10 03/01/18 2,813,340
St. Paul Companies, Inc.
4,000,000 6.38 12/15/08 3,927,504
TRW, Inc.
2,500,000 6.05 01/15/05 2,434,150
Union Oil Co.
1,000,000 7.62 03/21/02 1,025,760
1,000,000 7.70 04/05/02 1,027,960
------------
37,635,022
--------------------------------------------------------------------------------------------------
Utilities - 3.3%
AT&T Corp.
1,500,000 6.50 03/15/29 1,432,965
GTE Corp.
6,000,000 6.84 04/15/18 5,994,060
Hydro Quebec Note
1,000,000 7.96 12/17/01 1,051,150
Sprint Capital Corp.
3,000,000 6.88 11/15/28 2,907,768
Union Electric Co.
1,000,000 6.75 10/15/99 1,007,370
------------
12,393,313
--------------------------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(cost $113,573,890) $113,305,340
--------------------------------------------------------------------------------------------------
Mortgage-Backed Pass-Through Obligations - 16.9%
Federal Home Loan Mortgage Corp.
$1,502,055 6.00% 12/01/13 $ 1,482,332
1,483,416 6.00 12/01/13 1,454,816
1,234,563 8.50 02/01/19 1,303,612
1,416,086 8.50 03/01/21 1,495,726
9,209,421 7.00 05/01/26 9,341,760
Federal National Mortgage Assn.
1,155,398 7.19 07/01/06 1,215,277
3,336,208 5.50 01/01/09 3,259,842
2,337,588 7.00 07/01/09 2,387,987
693,297 6.50 02/01/12 699,807
1,222,197 6.50 07/01/14 1,218,958
1,067,585 9.00 11/01/21 1,135,633
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
COMMERCE BOND FUND
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Mortgage-Backed Pass-Through Obligations - (continued)
Federal National Mortgage Assn. - (continued)
$1,165,619 6.50% 04/01/24 $ 1,160,152
973,963 6.00 05/01/24 946,575
1,065,735 6.50 05/01/24 1,060,406
1,230,206 6.50 07/01/24 1,224,055
1,241,258 6.50 07/01/24 1,235,052
697,342 6.00 09/01/24 677,733
1,616,039 6.50 09/01/24 1,607,958
474,244 9.00 02/01/25 504,624
2,875,479 6.50 03/01/26 2,860,181
1,368,624 7.00 08/01/28 1,386,581
1,202,781 7.00 09/01/28 1,218,561
1,866,666 7.00 10/01/28 1,891,157
3,827,156 6.50 12/01/28 3,802,012
1,078,292 7.00 12/01/28 1,092,439
2,452,758 6.50 01/01/29 2,436,643
Government National Mortgage Assn.
2,634,572 8.00 02/15/22 2,754,788
3,571,472 7.00 09/15/23 3,631,758
1,221,379 7.50 08/20/25 1,254,197
6,814,568 7.50 07/20/26 6,997,675
--------------------------------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED PASS-THROUGH
OBLIGATIONS
(cost $60,864,190) $ 62,738,297
--------------------------------------------------------------------------------------------------
U.S. Government Agency Obligations - 2.7%
Federal Home Loan Bank
$1,000,000 6.32% 02/01/00 $ 1,006,870
Federal Home Loan Mortgage Corp.
1,000,000 6.20 04/15/03 1,020,310
Federal National Mortgage Assn.
8,000,000 5.75 04/15/03 8,051,280
--------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY
OBLIGATIONS
(cost $9,907,133) $ 10,078,460
--------------------------------------------------------------------------------------------------
U.S. Treasury Obligations - 2.4%
United States Treasury Bond
$1,000,000 7.88% 02/15/21 $ 1,236,090
United States Treasury Notes
151,000 7.25 08/15/04 164,401
7,000,000 6.50 10/15/06 7,461,580
--------------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(cost $8,998,536) $ 8,862,071
--------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Commercial Papers - 4.0%
General Electric Cap Corp.
$5,000,000 4.80%(a) 06/14/99 $ 4,970,850
GTE Funding, Inc.
5,000,000 4.81(a) 05/12/99 4,992,682
5,000,000 4.79(a) 05/24/99 4,984,762
------------------------------------------------------------------------------------------------
TOTAL COMMERCIAL PAPERS
(cost $14,948,294) $ 14,948,294
------------------------------------------------------------------------------------------------
Repurchase Agreement - 2.3%
State Street Bank & Trust Company(b)
$8,706,000 4.72% 05/03/99 $ 8,706,000
------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(cost $8,706,000) $ 8,706,000
------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $365,785,984)(c) $369,389,048
------------------------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost $ 6,527,726
Gross unrealized loss for investments in which
cost exceeds value (2,924,662)
------------------------------------------------------------------------------------------------
Net unrealized gain $ 3,603,064
------------------------------------------------------------------------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
+ Securities that may be resold to "Qualified Institutional Buyers" under
Rule 144A or securities offered pursuant to Section 4(2) of the Securities
Act of 1933, as amended. These securities have been determined to be liq-
uid under guidelines established by the Board of Trustees.
(a) The rate disclosed for this security represents the yield to maturity.
(b) The Repurchase Agreement is fully collateralized by U.S. Treasury securi-
ties.
(c) The cost stated also represents aggregate cost for federal income.
------------------------------------------------------------------------------
Investment Abbreviations:
PAC--Planned Amortization Class
REMIC--Real Estate Mortgage Investment Conduit
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
COMMERCE BALANCED FUND
Shareholder Letter
Dear Shareholder,
We are pleased to report on the performance of the Commerce Balance Fund for
the 6-month period ended April 30, 1999.
Performance Review
For the six-month period ending April 30, 1999, the Insti-
tutional Shares of the Fund had a total return of 9.60%
based on NAV (assumes expense waivers). The Service Shares
had a total return of 9.52% based on NAV (assumes expense
waivers) for the same time period. This compares to the
Lipper Balanced Funds Index six-month return of 12.80%, the
composite of 60% of the Standard and Poor's 500 Index with
Income and 40% of the Lehman Brothers Aggregate Bond Index
six-month return of 13.29%, the S&P 500 Stock Index six-
month return of 22.32% and the Lehman Brothers Aggregate
Index six-month return of 0.69%. Past performance is no
guarantee of future results. (The Fund's NAV is not guaran-
teed by the U.S. government or by its agencies, instrumen-
talities, or sponsored enterprises.)
Portfolio Highlights
. Over the last six months, the Fund has been reducing its
exposure to the equity market. At the beginning of the pe-
riod, the Fund was invested 61% in equities versus a long
term target of 60%. As the equity market moved substan-
tially higher over the last six months, we have been in-
creasingly concerned that equities were becoming overvalued
relative to fixed income investments. By the end of April,
the Fund had reduced equities to 53%, the lowest level of
equity exposure since the Fund began operations. This re-
flects our belief that the risk adjusted return is better
for bonds than stocks at this time. On a short term basis,
the reduction in equities has hurt the Fund's results, but
we continue to believe the risk of a decline in equity
prices is high.
. The equity portion of the Fund is composed of a well di-
versified portfolio of large and mid cap growth stocks and
value stocks. Over the last six months, only large cap
growth stocks were able to outperform the S&P's 500 aver-
age. Therefore, the exposure to mid cap and value stocks
was a drag on the performance results during this time pe-
riod. However we have seen the two laggard styles start to
outperform the S&P's 500 average in April.
. The fixed-income portion of the Fund shortened its dura-
tion over the last six months. We continued to run the du-
ration slightly short of our benchmark. Strong economic
activity in the United States has made the fixed-income
market fearful of a rise in inflation. This has caused
rates to rise from their lows of last October.
We thank you for your investment and look forward to your
continued confidence.
Sincerely,
Balanced Fund Team
Investment Management Group
Commerce Bank, N.A.
May 28, 1999
12
<PAGE>
COMMERCE BALANCED FUND
Statement of Investments
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 52.6%
Advertising - 1.1%
15,600 Omnicom Group, Inc. $ 1,131,000
4,000 WPP Group PLC ADR 351,000
------------
1,482,000
-------------------------------------------------------
Airlines - 1.6%
12,000 Delta Air Lines, Inc. 761,250
15,000 Skywest, Inc. 390,000
29,300 Southwest Airlines Co. 954,081
------------
2,105,331
-------------------------------------------------------
Apparel - 1.4%
20,000 Jones Apparel Group, Inc.* 660,000
8,500 Tommy Hilfiger Corp.* 593,937
13,000 VF Corp. 669,500
------------
1,923,437
-------------------------------------------------------
Auto Parts - 0.3%
5,000 Johnson Controls Inc 364,687
-------------------------------------------------------
Banks - 2.2%
14,000 Comerica, Inc. 910,875
11,500 First Union Corp. 636,813
10,400 Northern Trust Corp. 968,500
11,500 Wells Fargo Company 496,656
------------
3,012,844
-------------------------------------------------------
Biotechnology - 0.3%
2,000 Biogen, Inc.* 190,125
5,000 Elan Corp. PLC ADR* 257,500
------------
447,625
-------------------------------------------------------
Chemicals - 1.2%
17,000 Air Products & Chemicals, Inc. 799,000
22,000 BF Goodrich Co. 874,500
------------
1,673,500
-------------------------------------------------------
Computer Software - 1.8%
24,000 Compuware Corp.* 585,000
5,600 Microsoft Corp.* 455,350
21,750 Oracle Corp.* 588,609
41,500 Sterling Software, Inc.* 858,531
------------
2,487,490
-------------------------------------------------------
Consumer Specialties - 0.4%
8,400 Maytag Corporation 574,350
-------------------------------------------------------
Diversified Commercial Services - 1.0%
10,000 Dendrite International, Inc.* 258,750
7,400 Paychex, Inc. 377,862
16,800 Robert Half International, Inc.* 401,100
5,000 Sabre Group Holdings, Inc.* 260,625
------------
1,298,337
-------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Diversified Financial Services - 1.3%
9,000 Citigroup, Inc. $ 677,250
8,000 Equitable Companies, Inc. 538,500
6,900 Federal National Mortgage Association 489,469
------------
1,705,219
------------------------------------------------------------
EDP Peripherals - 0.8%
6,500 EMC Corp.* 708,094
6,400 Symbol Technologies, Inc. 305,600
------------
1,013,694
------------------------------------------------------------
EDP Services/Distribution - 0.6%
8,000 Affiliated Computer Services, Inc.* 306,000
18,000 Computer Horizons Corp.* 254,250
5,000 Galileo International, Inc.* 245,000
------------
805,250
------------------------------------------------------------
Electronic Components - 0.1%
3,000 Sanmina Corp.* 199,125
------------------------------------------------------------
Electronic Data Processing - 1.0%
6,000 Ceridian Corp.* 219,750
20,000 Compaq Computer Corp. 446,250
3,000 International Business Machines,
Inc. 627,563
------------
1,293,563
------------------------------------------------------------
Forest Products - 0.6%
36,000 Louisiana Pac Corp. 749,250
------------------------------------------------------------
Homebuilding - 0.4%
25,450 DR Horton, Inc. 491,503
------------------------------------------------------------
Household Supplies - 0.4%
5,000 Clorox Co. 576,875
------------------------------------------------------------
Home Furnishing - 1.6%
15,000 Ethan Allen Interiors, Inc. 760,313
18,000 Furniture Brands International, Inc.* 451,125
38,000 Leggett & Platt, Inc. 876,375
------------
2,087,813
------------------------------------------------------------
Hospital/Medical Nursing Services - 0.7%
30,400 Lincare Holdings, Inc.* 900,600
------------------------------------------------------------
Industrial Machinery/Components - 1.8%
22,000 Ingersoll-Rand Co. 1,522,125
12,000 Illinois Tool Works, Inc. 924,000
------------
2,446,125
------------------------------------------------------------
Industrial Specialties - 0.5%
24,000 Owens-Illinois, Inc.* 696,000
------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
COMMERCE BALANCED FUND
Statement of Investments (continued)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Insurance - 4.1%
27,000 Ace, Ltd. $ 816,750
17,000 Allstate Corp. 618,375
14,000 AMBAC Financial Group, Inc. 845,250
5,000 American International Group, Inc. 587,188
13,000 Financial Security Assurance Holdings, Ltd. 742,625
5,000 Lincoln National Corp. 480,313
32,000 Old Republic International Corp. 626,000
10,000 Protective Life Corp. 391,875
5,000 Transatlantic Holdings, Inc. 384,375
------------
5,492,751
------------------------------------------------------------------
Integrated Oil - 2.8%
12,000 Chevron Corp. 1,197,000
10,000 Exxon Corp. 830,625
28,000 Texaco, Inc. 1,757,000
------------
3,784,625
------------------------------------------------------------------
Investment Services - 2.8%
20,000 A. G. Edwards, Inc. 700,000
7,000 DST Systems, Inc.* 407,750
8,000 Franklin Resources, Inc. 320,000
13,000 Merrill Lynch & Company, Inc. 1,091,187
13,200 Morgan Stanley Dean Witter & Co. 1,309,275
------------
3,828,212
------------------------------------------------------------------
Medical Electronics - 0.4%
7,100 Medtronic Inc. 510,756
------------------------------------------------------------------
Medical Specialties - 1.4%
2,000 Allergan Inc 179,750
13,500 Biomet, Inc. 553,500
7,000 Guidant Corp. 375,813
15,000 Ocular Sciences, Inc.* 457,500
8,000 Quintiles Transnational Corp.* 324,500
------------
1,891,063
------------------------------------------------------------------
Metals - 1.3%
35,000 AK Steel Holding Corp. 910,000
30,000 USX-US Steel Group 907,500
------------
1,817,500
------------------------------------------------------------------
Military/Government/Technical - 0.6%
11,500 General Dynamics Corp. 807,875
------------------------------------------------------------------
Motor Vehicles - 1.4%
28,500 Ford Motor Co. 1,822,219
------------------------------------------------------------------
Multi-Sector Companies - 0.8%
9,000 General Electric Co. 949,500
4,000 Metzler Group, Inc.* 111,500
------------
1,061,000
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Oil & Gas Production - 0.8%
17,500 Conoco, Inc. (Class A) $ 474,688
9,500 Royal Dutch Petroleum ADR 557,531
------------
1,032,219
---------------------------------------------------------
Office Equipment Supplies - 1.3%
22,000 Herman Miller, Inc. 438,625
3,000 Lexmark International Group, Inc.* 370,500
16,000 Xerox Corp. 940,000
------------
1,749,125
---------------------------------------------------------
Oilfield Services - 0.6%
33,675 Helmerich & Payne, Inc. 867,131
---------------------------------------------------------
Other Transportation/Services - 0.2%
9,000 Airborne Freight Corp. 288,000
---------------------------------------------------------
Paper - 0.3%
6,500 International Paper Co. 346,531
---------------------------------------------------------
Pharmaceuticals - 2.4%
9,800 Abbott Laboratories 474,688
6,000 Johnson & Johnson 585,000
12,000 Pharmacia & Upjohn, Inc. 672,000
24,000 Schering-Plough Corp. 1,159,500
9,000 Watson Pharmaceuticals, Inc.* 364,500
------------
3,255,688
---------------------------------------------------------
Precision Instruments - 0.3%
4,000 Waters Corp.* 420,500
---------------------------------------------------------
Publishing - 0.3%
17,000 Harte-Hanks Communication, Inc. 429,250
---------------------------------------------------------
Retail - 1.2%
8,000 Dayton Hudson Corp. 538,500
5,000 Express Scripts, Inc.* 368,125
45,000 K Mart Corp.* 669,375
------------
1,576,000
---------------------------------------------------------
Semiconductors - 1.2%
9,100 Linear Technology Corp. 517,562
12,000 Motorola Inc. 961,500
3,000 Vitesse Semiconductor Corp. 138,937
------------
1,617,999
---------------------------------------------------------
Services to the Health Industry - 0.3%
5,600 McKesson, Inc. 196,000
6,000 Omnicare, Inc. 144,375
------------
340,375
---------------------------------------------------------
Specialty Retail - 3.4%
4,000 Abercrombie & Fitch Co.* 380,500
10,000 Bed Bath & Beyond, Inc.* 356,875
9,000 Best Buy Co., Inc.* 429,750
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
COMMERCE BALANCED FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Specialty Retail - continued
7,318 CVS Corp. $ 348,520
5,000 Linens-n-Things, Inc.* 228,750
16,500 Lowes Companies, Inc. 870,375
15,000 Office Depot, Inc.* 330,000
10,000 The Gap, Inc. 665,625
30,000 TJX Companies, Inc. 999,375
------------
4,609,770
----------------------------------------------------------
Telecommunications - 1.8%
12,750 AT&T Corp. 643,875
9,000 Century Telephone Enterprises, Inc. 362,250
10,000 GTE Corp. 669,375
14,000 SBC Communications, Inc. 784,000
------------
2,459,500
----------------------------------------------------------
Telecommunications Equipment - 1.1%
5,300 Cisco Systems, Inc.* 604,531
8,100 Tellabs, Inc.* 887,456
------------
1,491,987
----------------------------------------------------------
Utilities - Electric/Water - 0.7%
8,500 Consolidated Edison, Inc. 386,219
10,000 FPL Group, Inc. 563,750
------------
949,969
----------------------------------------------------------
TOTAL COMMON STOCKS
(cost $54,320,658) $ 70,784,663
----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Fixed Income - 46.6%
Asset-Backed Securities - 14.2%
Auto - 0.4%
Nations Bank Auto Owner Trust Series 1996-A, Class A4
$ 500,000 6.63% 12/15/00 $ 502,030
--------------------------------------------------------------------------------------------------
Commercial - 0.4%
First Union-Lehman Brothers-Bank of America Series 1998-C2, Class B
500,000 6.64 03/18/11 492,925
--------------------------------------------------------------------------------------------------
Credit Card - 4.4%
American Express Credit Account Master Trust Series 1996-1, Class B
500,000 6.95 12/15/03 510,625
American Express Master Trust Series 1994-3, Class A
500,000 7.85 08/15/05 539,530
Discover Card Master Trust I Series 1993-3, Class A
1,250,000 6.20 05/16/06 1,264,838
First USA Credit Card Master Trust Series 1998-2, Class C+
500,000 6.80 02/18/11 488,828
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Fixed Income - (continued)
Asset-Backed Securities - (continued)
Credit Card - (continued)
First USA Credit Card Master Trust Series 1999-1, Class C+
$ 500,000 6.42% 10/19/06 $ 495,156
J.C. Penney Master Credit Card Trust Series B, Class A
500,000 8.95 10/15/01 531,260
MBNA Master Credit Card Trust Series 1995-C, Class A
500,000 6.45 02/15/08 510,780
Metris Master Trust Series 1997-1, Class B
500,000 7.11 10/20/05 510,625
Standard Credit Card Master Trust Series 1993-2, Class A
500,000 5.95 10/07/04 502,465
Standard Credit Card Master Trust Series 1995-1, Class B
500,000 8.45 01/07/07 553,965
------------
5,908,072
--------------------------------------------------------------------------------------------------
Home Equity - 3.8%
Access Financial Mortgage Loan Trust Series 1996-2, Class A4
500,000 7.63 09/18/21 515,976
Advanta Mortgage Loan Trust Series 1994-4, Class A2
375,408 8.92 01/25/26 410,429
American Business Financial Services, Inc. 1996-1, Class A
399,274 7.95 09/15/26 408,413
Corestates Home Equity Trust Series 1993-2, Class A
292,552 5.10 03/15/09 291,274
First Plus Home Loan Trust Series 1997-3, Class A5
500,000 6.86 10/10/13 507,465
GE Capital Mortgage Services, Inc. Series 1997-HE1, Class B1
478,264 7.50 03/25/07 462,629
GE Capital Mortgage Services, Inc. Series 1997-HE1, Class M
478,264 7.50 03/25/27 490,930
GE Capital Mortgage Services, Inc. Series 1997-HE4, Class M
487,927 7.14 12/25/28 487,834
Merrill Lynch Mortgage Investors, Inc. Series 1999-H1, Class A3
1,500,000 6.76 09/20/26 1,502,340
------------
5,077,290
--------------------------------------------------------------------------------------------------
Manufactured Housing - 5.2%
Associates Manufactured Housing Series 1996-1, Class A5
500,000 7.60 03/15/27 518,266
Green Tree Financial Corp. Series 1993-4, Class A4
500,000 6.60 01/15/19 508,235
Green Tree Financial Corp. Series 1993-4, Class A5
500,000 7.05 01/15/19 515,723
Green Tree Financial Corp. Series 1994-2, Class A4
500,000 7.90 05/15/19 519,044
Green Tree Financial Corp. Series 1996-3, Class A4
1,000,000 7.10 05/15/27 1,024,660
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
COMMERCE BALANCED FUND
Statement of Investments (continued)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Fixed Income - (continued)
Asset-Backed Securities - (continued)
Manufactured Housing - (continued)
Green Tree Financial Corp. Series 1996-4, Class A7
$ 500,000 7.90% 06/15/27 $ 528,400
Green Tree Financial Corp. Series 1996-5, Class A6
500,000 7.75 07/15/27 525,531
Green Tree Financial Corp. Series 1997-3, Class M1
1,000,000 7.53 07/15/28 1,019,370
Green Tree Financial Corp. Series 1999-1, Class M1
250,000 6.56 11/01/28 243,438
Green Tree Home Improvement Loan Trust Series 1997-E, Class HEM1
500,000 7.28 01/15/29 508,140
Oakwood Mortgage Investors, Inc. Series 1995-B, Class A3
600,000 6.90 01/15/21 613,968
Oakwood Mortgage Investors, Inc. Series 1997-A, Class A5
500,000 7.12 05/15/27 517,742
------------
7,042,517
--------------------------------------------------------------------------------------------------
TOTAL ASSET-BACKED SECURITIES
(cost $18,728,938) $ 19,022,834
--------------------------------------------------------------------------------------------------
Collateralized Mortgage Obligations - 4.4%
Asset Securitization Corp. Class A1
$ 472,446 7.10% 08/13/29 $ 492,038
Federal Home Loan Mortgage Corp. REMIC PAC Series 159, Class H
1,226,870 4.50 09/15/21 1,171,229
Federal National Mortgage Assn. REMIC Series 1993-225, Class NB
413,514 6.50 12/25/22 413,642
Federal National Mortgage Assn. Series 1996-68, Class VC
1,500,000 6.50 09/18/10 1,500,465
Mortgage Capital Funding, Inc. Series 1996-MC1, Class A2A
357,617 7.35 07/15/05 370,938
Prudential Home Mortgage Securities Serires 1993-28, Class M
423,588 7.38 08/25/23 431,100
Residential Asset Securitization REMIC Trust Series 1997-A5, Class A13
500,000 7.75 07/25/27 509,912
Residential Asset Securitization Trust REMIC Series 1997-A1, Class A7
500,000 7.38 03/25/27 509,490
Residential Funding Mortgage Securities Corp. Series 1995, Class A4
500,000 8.00 04/25/10 512,030
--------------------------------------------------------------------------------------------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(cost $5,802,200) $ 5,910,844
--------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Fixed Income - (continued)
Corporate Obligations - 15.3%
Financial - 8.9%
Apache Finance Property Ltd.
$ 500,000 7.00% 03/15/09 $ 505,272
Banco Latinoamericano SA+
1,000,000 7.05 07/19/99 1,003,400
BankAmerica Corp.
500,000 6.88 06/01/03 518,440
Chemical Bank
500,000 6.70 08/15/08 508,485
Citicorp
500,000 6.38 11/15/08 497,270
Donaldson Lufkin and Jenrette, Inc.
750,000 6.11 05/15/01 748,875
Equitable Life Assurance Society of the United States+
1,000,000 7.70 12/01/15 1,039,040
Ford Motor Company Credit Corp.
500,000 6.63 06/30/03 511,440
General Electric Capital Corp.
500,000 8.30 09/20/09 583,135
Hanson Overseas BV
500,000 6.75 09/15/05 512,720
Lehman Brothers Holdings, Inc.
750,000 6.63 04/01/04 752,063
Merrill Lynch & Company, Inc.
500,000 5.71 01/15/02 498,850
Metropolitan Life Insurance Co.+
1,000,000 7.70 11/01/15 1,050,000
Morgan Stanley Group, Inc.
500,000 6.75 03/04/03 514,090
NationsBank Corp.
500,000 7.80 09/15/16 546,255
PNC Bank, N.A.
500,000 7.88 04/15/05 537,850
Salomon Smith Barney, Inc.
500,000 6.63 06/01/00 505,310
Swiss Bank Corp.
1,145,000 7.38 06/15/17 1,178,903
------------
12,011,398
--------------------------------------------------------------------------------------------------
Industrial - 4.5%
Conoco, Inc.
500,000 6.35 04/15/09 494,915
500,000 6.95 04/15/29 488,730
General Motors Acceptance Corp.
1,250,000 6.15 04/05/07 1,239,038
Lafarge Corp.
500,000 6.88 07/15/13 513,173
Receipts On Corporate Securities Trust CHR-1998-1+
731,726 6.50 08/01/18 726,320
Receipts On Corporate Securities Trust NSC-1998-1+
1,170,276 6.38 05/15/17 1,142,338
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
COMMERCE BALANCED FUND
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Fixed Income - (continued)
Corporate Obligations - (continued)
Industrial - (continued)
Service Master Co.
$ 500,000 7.10% 03/01/18 $ 468,890
St. Paul Companies, Inc.
1,000,000 6.38 12/15/08 981,876
------------
6,055,280
--------------------------------------------------------------------------------------------------
Utilities - 1.8%
AT&T Corp.
500,000 7.13 01/15/02 516,805
500,000 6.00 03/15/09 488,690
500,000 6.50 03/15/29 477,655
GTE Corp.
500,000 6.84 04/15/18 499,505
Sprint Capital Corp.
500,000 6.88 11/15/28 484,628
------------
2,467,283
--------------------------------------------------------------------------------------------------
TOTAL CORPORATE OBLIGATIONS
(cost $20,357,142) $ 20,533,961
--------------------------------------------------------------------------------------------------
Mortgage-Backed Pass-Through Obligations - 10.0%
Federal Home Loan Mortgage Corp.
$ 600,822 6.00% 12/01/13 $ 592,933
1,416,834 7.00 05/01/26 1,437,194
Federal National Mortgage Assn.
935,035 7.00 07/01/09 955,195
346,649 6.50 02/01/12 349,904
593,366 6.00 12/01/13 581,926
1,004,273 6.50 03/01/24 999,563
825,544 6.50 04/01/24 821,673
1,386,374 6.50 04/01/24 1,379,872
1,097,927 7.00 07/01/28 1,112,332
1,435,396 6.50 11/01/28 1,425,965
997,288 6.00 01/01/29 966,432
Government National Mortgage Assn.
1,173,224 7.00 09/15/23 1,193,028
488,551 7.50 08/20/25 501,679
1,048,395 7.50 07/20/26 1,076,565
--------------------------------------------------------------------------------------------------
TOTAL MORTGAGE-BACKED PASS-THROUGH OBLIGATIONS
(cost $13,088,148) $ 13,394,261
--------------------------------------------------------------------------------------------------
U.S. Government Agency Obligations - 1.1%
Federal National Mortgage Assn.
$1,500,000 6.52% 07/11/07 $ 1,553,670
--------------------------------------------------------------------------------------------------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS
(cost $1,617,000) $ 1,553,670
--------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Fixed Income - (continued)
U.S. Treasury Obligations - 0.9%
United States Treasury Bonds
$ 300,000 7.25% 05/15/16 $ 343,218
775,000 7.50 11/15/16 907,719
----------------------------------------------------------------------------------------------
TOTAL U.S. TREASURY OBLIGATIONS
(cost $1,198,211) $ 1,250,937
----------------------------------------------------------------------------------------------
TOTAL FIXED INCOME
(cost $60,791,639) $ 61,666,507
----------------------------------------------------------------------------------------------
Repurchase Agreement - 0.8%
State Street Bank & Trust Company(a)
$1,063,000 4.72% 05/03/99 $ 1,063,000
----------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(cost $1,063,000) $ 1,063,000
----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $116,175,297)(b) $133,514,170
----------------------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost $ 19,640,685
Gross unrealized loss for investments in which
cost exceeds value (2,301,812)
----------------------------------------------------------------------------------------------
Net unrealized gain $ 17,338,873
----------------------------------------------------------------------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
* Non-income producing security.
+ Securities that may be resold to "Qualified Institutional Buyers" under
Rule 144A or securities offered pursuant to Section 4(2) of the Securities
Act of 1933, as amended. These securities have been determined to be
liquid under guidelines established by the board of Trustees.
(a) The repurchase agreement is fully collateralized by U.S. Treasury securi-
ties.
(b) The cost stated also represents aggregate cost for federal income tax
purposes.
------------------------------------------------------------------------------
Investment Abbreviations:
ADR--American Depository Receipt
PAC--Planned Amortization Class
REMIC--Real Estate Mortgage Investment Conduit
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
COMMERCE GROWTH AND INCOME FUND
Shareholder Letter
Dear Shareholder,
We are pleased to report on the performance of the Commerce Growth and Income
Fund for the 6-month period ended April 30, 1999.
Performance Review
For the six-month period ending April 30, 1999, the Insti-
tutional Shares of the Fund had a total return of 10.07%
based on NAV. The Service Shares had a total return of
9.92% based on NAV for the same time period. This compares
to the Lipper Growth and Income Funds Index six-month re-
turn of 17.85%, the S&P's 500 Index with Income six-month
return of 22.32% and the Russell 1000 Value Index six-month
return of 19.02%. Past performance is no guarantee of fu-
ture results. (The Fund's NAV is not guaranteed by the U.S.
government or by its agencies, instrumentalities, or spon-
sored enterprises.)
Portfolio Highlights
. In our letter at the end of the fiscal year we noted,
"while weak growth may continue to penalize both value and
smaller companies in the near term, we believe recent ac-
tion by the Federal Reserve portends a period of stronger
growth as we move into the middle of 1999." It turned out
to be more the "threat" to economic growth than any actual
weakness that caused investors to flock to a handful of
large capitalization, consistent growth companies over the
course of 1998 and into 1999 to the detriment of the value
companies in which we are investing in the Fund. As such,
performance continued to lag over the course of the past
six months.
. On the other hand, our prediction with regard to the ac-
tion by the Federal Reserve and its impact has come to pass
right on schedule. We witnessed much stronger relative per-
formance by both value and smaller capitalization companies
in April as investors began to assess the positive impact
on global economic growth following the many interest rate
cuts around the world after the Fed's action. The Fund's
performance improved dramatically in April as many of the
depressed cyclical sectors represented in the Fund, includ-
ing chemicals, energy and basic materials, rose sharply in
response to projections of an improvement in the world eco-
nomic environment and an attendant broadening in profit
growth.
. One of the steps we have taken over the past six months to
improve performance includes increasing the average capi-
talization of the stocks held in the Fund. Several impor-
tant large capitalization additions to the Fund since the
beginning of the year include Motorola, IBM, and AT&T. Ad-
ditionally, we have narrowed our focus by including fewer
names in the portfolio. Finally, we have increased our sec-
tor weight in those areas expected to benefit from stronger
world growth, including capital goods and process indus-
tries.
. As we look forward, we believe the Fund is well positioned
to benefit from the changes taking place in the market and
the steps we have taken. We remain committed to our value
mandate and believe our process will provide much stronger
relative results over the coming months.
We thank you for your investment and look forward to your
continued confidence.
Sincerely,
Growth and Income Fund Team
Investment Management Group
Commerce Bank, N.A.
May 28, 1999
18
<PAGE>
COMMERCE GROWTH AND INCOME FUND
Statement of Investments
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 98.2%
Airlines - 1.3%
18,800 Delta Air Lines, Inc. $ 1,192,625
------------------------------------------------------------------
Apparel - 2.0%
35,000 VF Corp. 1,802,500
------------------------------------------------------------------
Auto Parts - 1.2%
14,100 Johnson Controls Inc 1,028,419
------------------------------------------------------------------
Banks - 7.7%
29,987 Bank America Corp. 2,159,064
23,200 Bank of New York, Inc. 928,000
30,000 Comerica, Inc. 1,951,875
33,000 First Union Corp. 1,827,375
-----------
6,866,314
------------------------------------------------------------------
Chemicals - 4.9%
49,000 Air Products & Chemicals, Inc. 2,303,000
52,000 BF Goodrich Co. 2,067,000
-----------
4,370,000
------------------------------------------------------------------
Computer Software - 2.3%
100,000 Sterling Software, Inc.* 2,068,750
------------------------------------------------------------------
Diversified Financial Services - 3.1%
20,000 Equitable Companies, Inc. 1,346,250
20,300 Federal National Mortgage Association 1,440,031
-----------
2,786,281
------------------------------------------------------------------
Electronic Data Processing - 1.9%
8,000 International Business Machines, Inc. 1,673,500
------------------------------------------------------------------
Forest Products - 2.4%
105,000 Louisiana Pac Corp. 2,185,312
------------------------------------------------------------------
Homebuilding - 1.0%
25,000 Centex Corp. 914,062
------------------------------------------------------------------
Industrial Machinery/Components - 3.1%
39,850 Ingersoll-Rand Co. 2,757,122
------------------------------------------------------------------
Industrial Specialties - 2.6%
79,000 Owens-Illinois, Inc.* 2,291,000
------------------------------------------------------------------
Insurance - 14.4%
64,000 Ace, Ltd. 1,936,000
45,000 Allstate Corp. 1,636,875
36,000 AMBAC Financial Group, Inc. 2,173,500
14,000 American International Group, Inc. 1,644,125
39,000 Financial Security Assurance Holdings, Ltd. 2,227,875
14,350 Lincoln National Corp. 1,378,497
95,000 Old Republic International Corp. 1,858,438
-----------
12,855,310
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Integrated Oil Companies - 7.8%
18,500 Chevron Corp. $ 1,845,375
20,600 Exxon Corp. 1,711,087
78,000 Imperial Oil, Ltd. 1,618,500
29,000 Texaco, Inc. 1,819,750
-----------
6,994,712
-------------------------------------------------------
Investment Services - 5.4%
48,000 A. G. Edwards, Inc. 1,680,000
18,000 Merrill Lynch & Company, Inc. 1,510,875
16,200 Morgan Stanley Dean Witter & Co. 1,606,838
-----------
4,797,713
-------------------------------------------------------
Medical Specialties - 0.5%
8,300 Bard C R, Inc. 406,700
-------------------------------------------------------
Metal - 3.3%
60,000 AK Steel Holding Corp. 1,560,000
44,800 USX-US Steel Group 1,355,200
-----------
2,915,200
-------------------------------------------------------
Military/Government/Technical - 2.0%
26,000 General Dynamics Corp. 1,826,500
-------------------------------------------------------
Motor Vehicles - 5.0%
42,000 Ford Motor Co. 2,685,375
20,000 General Motors Corp. 1,778,750
-----------
4,464,125
-------------------------------------------------------
Oil & Gas Production - 3.5%
51,000 Conoco, Inc. 1,383,375
51,850 Devon Energy Corp. 1,724,013
-----------
3,107,388
-------------------------------------------------------
Oilfield Services - 1.8%
60,775 Helmerich & Payne, Inc. 1,564,956
-------------------------------------------------------
Paper - 1.3%
22,000 International Paper Co. 1,172,875
-------------------------------------------------------
Pharmaceuticals - 1.9%
30,000 Pharmacia & Upjohn, Inc. 1,680,000
-------------------------------------------------------
Retail - 2.1%
125,000 K Mart Corp.* 1,859,375
-------------------------------------------------------
Semiconductors - 3.0%
33,000 Motorola, Inc. 2,644,125
-------------------------------------------------------
Telecommunications - 9.6%
35,250 AT&T Corp. 1,780,125
52,500 BellSouth Corp. 2,349,375
30,450 GTE Corp. 2,038,247
43,500 SBC Communications, Inc. 2,436,000
-----------
8,603,747
-------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
19
<PAGE>
COMMERCE GROWTH AND INCOME FUND
Statement of Investments (continued)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Utilities - Electric/Water - 3.1%
28,700 Consolidated Edison, Inc. $ 1,304,056
25,400 FPL Group, Inc. 1,431,925
-----------
2,735,981
------------------------------------------------
TOTAL COMMON STOCKS
(cost $77,622,490) $87,564,592
------------------------------------------------
TOTAL INVESTMENTS
(cost $77,622,490)(a) $87,564,592
------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for invest-
ments in which value exceeds
cost $11,523,757
Gross unrealized loss for invest-
ments in which cost exceeds
value (1,591,925)
------------------------------------------------
Net unrealized gain $ 9,931,832
------------------------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
* Non-income producing security.
(a) The aggregate cost for federal income tax purposes is $77,632,760.
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
COMMERCE GROWTH FUND
Shareholder Letter
Dear Shareholder,
We are pleased to report on the performance of the Commerce Growth Fund for
the 6-month period ended April 30, 1999.
Performance Review
For the six-month period ending April 30, 1999, the Insti-
tutional Shares of the Fund had a total return of 22.66%
based on NAV. The Service Shares had a total return of
22.53% based on NAV for the same time period. This compares
to the Lipper Growth Funds Index six-month return of 23.72%
and the S&P's 500 Index with Income six-month return of
22.32%. Past performance is no guarantee of future results.
(The Fund's NAV is not guaranteed by the U.S. government or
by its agencies, instrumentalities, or sponsored enter-
prises.)
Portfolio Highlights
. Over the last six months, the leadership of the market has
been provided by the technology sector. We began building
the Fund's technology representation in the fall, as many
technology stocks suffered significant declines late last
summer. Two additions were Tellabs and Oracle. Over the
last six months, several of the technology holdings have
increased over 80%. We have recently reduced our technology
weighting, as the stock prices have moved ahead of their
strong fundamental outlook.
. The Fund continued to increase its holdings of companies
that are favorably affected by the strong economic growth
in the United States. Economists have been surprised by the
continued strength in consumer spending. We have over 25%
of the Fund in companies that directly benefit from the
surge in consumer spending. Industries that are favorably
affected by consumer spending are retailing, apparel, fur-
niture, home builders, and autos. Maytag was a recent addi-
tion to the consumer specialties sector.
. We also like the manufacturing sectors of the market. New
additions over the last six months were Ingersoll Rand,
United Technologies, and Johnson Controls. As economies
outside the United States begin to improve later this year,
we expect the manufacturing sectors to be a beneficiary.
. The Fund continued to reduce its exposure to the financial
sector. Over the last twelve months, the exposure has de-
clined over 50% to the current weighting of 12%.
We thank you for your investment and look forward to your
continued confidence.
Sincerely,
Growth Fund Team
Investment Management Group
Commerce Bank, N.A.
May 28, 1999
21
<PAGE>
COMMERCE GROWTH FUND
Statement of Investments
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 95.6%
Advertising - 2.4%
165,700 Omnicom Group, Inc. $ 12,013,250
-----------------------------------------------------------------
Aerospace - 0.8%
27,600 United Technologies Corp. 3,998,550
-----------------------------------------------------------------
Airlines - 2.1%
323,100 Southwest Airlines Co. 10,520,944
-----------------------------------------------------------------
Apparel - 5.1%
426,000 Jones Apparel Group, Inc.* 14,058,000
162,000 Tommy Hilfiger Corp.* 11,319,750
------------
25,377,750
-----------------------------------------------------------------
Auto Parts - 0.8%
52,000 Johnson Controls Inc 3,792,750
-----------------------------------------------------------------
Banks - 3.3%
109,000 Northern Trust Corp. 10,150,625
146,200 Wells Fargo Company 6,314,013
------------
16,464,638
-----------------------------------------------------------------
Computers Software - 4.8%
342,000 Compuware Corp.* 8,336,250
76,000 Microsoft Corp.* 6,179,750
338,400 Oracle Corp.* 9,157,950
------------
23,673,950
-----------------------------------------------------------------
Consumer Specialties - 2.4%
175,700 Maytag Corporation 12,013,487
-----------------------------------------------------------------
Diversified Commercial Services - 1.3%
269,000 Robert Half International, Inc.* 6,422,375
-----------------------------------------------------------------
Diversified Financial Services - 1.4%
95,400 Federal National Mortgage Association 6,767,437
-----------------------------------------------------------------
Diversified Manufacturing - 2.3%
173,100 Danaher Corp. 11,500,331
-----------------------------------------------------------------
EDP Peripherals - 2.2%
101,500 EMC Corp.* 11,057,156
-----------------------------------------------------------------
EDP Services/Distribution - 0.7%
255,000 Computer Horizons Corp.* 3,601,875
-----------------------------------------------------------------
Electronic Data Processing - 1.4%
312,500 Compaq Computer Corp. 6,972,656
-----------------------------------------------------------------
Home Furnishing - 5.3%
243,000 Ethan Allen Interiors, Inc. 12,317,062
609,000 Leggett & Platt, Inc. 14,045,062
------------
26,362,124
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Homebuilding - 1.4%
369,800 DR Horton, Inc. $ 7,141,762
--------------------------------------------------------------
Hospital/Medical Nursing Services - 2.1%
345,000 Lincare Holdings, Inc. 10,220,625
--------------------------------------------------------------
Household Supplies - 1.8%
78,300 Clorox Co. 9,033,862
--------------------------------------------------------------
Industrial Machinery/Component - 5.8%
153,300 Ingersoll-Rand Co. 10,606,444
235,000 Illinois Tool Works, Inc. 18,095,000
------------
28,701,444
--------------------------------------------------------------
Insurance - 2.4%
100,000 American International Group, Inc. 11,743,750
--------------------------------------------------------------
Investment Services - 4.7%
202,000 Franklin Resources, Inc. 8,080,000
90,000 Merrill Lynch & Company, Inc. 7,554,375
76,700 Morgan Stanley Dean Witter & Co. 7,607,681
------------
23,242,056
--------------------------------------------------------------
Medical Electronics - 1.8%
127,900 Medtronic Inc. 9,200,806
--------------------------------------------------------------
Medical Specialties - 1.6%
200,000 Biomet, Inc. 8,200,000
--------------------------------------------------------------
Motor Vehicles - 2.2%
173,200 Ford Motor Co. 11,073,975
--------------------------------------------------------------
Multi-Sector Companies - 3.4%
160,000 General Electric Co. 16,880,000
--------------------------------------------------------------
Office Equipment Supplies - 4.8%
487,000 Herman Miller, Inc. 9,709,563
237,400 Xerox Corp. 13,947,250
------------
23,656,813
--------------------------------------------------------------
Oil & Gas Production - 1.6%
134,000 Royal Dutch Petroleum ADR 7,864,125
--------------------------------------------------------------
Pharmaceuticals - 5.8%
154,000 Abbott Laboratories 7,459,375
90,700 Johnson & Johnson 8,843,250
261,000 Schering-Plough Corp. 12,609,563
------------
28,912,188
--------------------------------------------------------------
Retail - 1.9%
140,000 Dayton Hudson Corp. 9,423,750
--------------------------------------------------------------
Semiconductors - 2.1%
184,000 Linear Technology Corp. 10,465,000
--------------------------------------------------------------
Services to the Health Industry - 2.0%
167,900 Cardinal Health, Inc. 10,042,519
--------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
COMMERCE GROWTH FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Specialty Retail - 7.4%
179,000 Lowes Companies, Inc. 9,442,250
179,800 The Gap, Inc. 11,967,938
455,000 TJX Companies, Inc. 15,157,188
------------
36,567,376
---------------------------------------------------------------
Telecommunications - 1.4%
173,400 Century Telephone Enterprises, Inc. 6,979,350
---------------------------------------------------------------
Telecommunications Equipment - 5.0%
94,300 Cisco Systems, Inc.* 10,756,094
131,000 Tellabs, Inc.* 14,352,688
------------
25,108,782
---------------------------------------------------------------
TOTAL COMMON STOCKS
(cost $324,851,978) $474,997,456
---------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Repurchase Agreement - 5.4%
State Street Bank & Trust Company(a)
$26,836,000 4.72% 05/03/99 $ 26,836,000
-----------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(cost $26,836,000) $ 26,836,000
-----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $351,687,978)(b) $501,833,456
-----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
--------------------------------
<S> <C> <C> <C>
Federal Income
Tax Information:
Gross unrealized
gain for
investments in
which value
exceeds cost $161,606,674
Gross unrealized
loss for
investments in
which cost
exceeds value (11,461,196)
--------------------------------
Net unrealized
gain $150,145,478
--------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
* Non-income producing security
(a) The repurchase agreement is fully collateralized by U.S. Treasury securi-
ties.
(b) The cost stated also represents aggregate cost for federal income tax
purposes.
------------------------------------------------------------------------------
Investment Abbreviations:
ADR--American Depository Receipt
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
COMMERCE MIDCAP FUND
Shareholder Letter
Dear Shareholder,
We are pleased to report on the performance of the Commerce MidCap Fund for
the 6-month period ended April 30, 1999.
Performance Review
For the six-month period ending April 30, 1999, the Insti-
tutional Shares of the Fund had a total return of 14.86%
based on NAV. The Service Shares had a total return of
14.72% based on NAV for the same time period. This compares
to the Lipper Mid-Cap Funds Index six-month return of
23.96% and the S&P's Mid Cap 400 Index six-month return of
18.86%. Past performance is no guarantee of future results.
(The Fund's NAV is not guaranteed by the U.S. government or
by its agencies, instrumentalities, or sponsored enter-
prises.)
For the six months ending April 30, 1999, the Fund's NAV
gained 14.86% in value. By comparison, the S&P's Mid Cap
400 Index gained 18.80%. The difference in performance oc-
curred in the month of April. The Index is comprised
largely of companies that are more economically sensitive.
Investors have recently begun to anticipate an increase in
economic growth overseas. Investment in these stocks drove
the Index up 7.9% in April alone.
Portfolio Highlights
. The Fund favors investing in companies whose earnings are
not so dependent on economic cycles. Consequently, when
such swings in sentiment occur, stable growth portfolios
like ours tend to lag behind more cyclical indices. Rather
than chase the recent change in market leadership, we will
continue to search for companies that are creating their
own opportunities.
. Preferences notwithstanding, the Fund is invested in sec-
tors of the economy which will benefit even more from a re-
covery in global economic health. The technology, including
semiconductors, capital equipment and communications sec-
tors, will benefit tremendously from stable world markets.
Likewise, certain manufacturers, already lean and profit-
able, will fare even better as prospects from overseas im-
prove.
. On the other hand, several sectors are under severe pres-
sure. Most health care companies have been under a cloud of
late as Congress wrestles with expanding Medicare coverage.
Concerns of regulatory overkill abound.
. The relative valuation of mid- and small-capitalization
companies is very attractive versus large companies. We
have, in recent months, begun to see a gradual shift in in-
vestor preference toward these companies. Relative perfor-
mance has improved, and money flows into aggressive mutual
funds has picked up. We will watch closely for more signs
of long-term fundamental change.
We thank you for your investment and look forward to your
continued confidence.
Sincerely,
MidCap Fund Team
Investment Management Group
Commerce Bank, N.A.
May 28, 1999
24
<PAGE>
COMMERCE MIDCAP FUND
Statement of Investments
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 95.4%
Advertising - 2.8%
25,600 Omnicom Group, Inc. $ 1,856,000
25,800 WPP Group PLC ADR 2,263,950
------------
4,119,950
-----------------------------------------------------------------
Aerospace - 1.3%
39,100 Gulfstream Aerospace Corp.* 1,906,125
-----------------------------------------------------------------
Airlines - 1.4%
48,900 Skywest, Inc. 1,271,400
25,650 Southwest Airlines Co. 835,228
------------
2,106,628
-----------------------------------------------------------------
Apparel - 1.8%
78,000 Jones Apparel Group, Inc.* 2,574,000
-----------------------------------------------------------------
Banks - 3.0%
15,900 First Tennessee National Corp. 685,687
42,700 Firstar Corp. 1,283,669
27,300 National Commerce Bancorp 682,500
17,900 Northern Trust Corp. 1,666,937
------------
4,318,793
-----------------------------------------------------------------
Biotechnology - 2.4%
20,300 Biogen, Inc.* 1,929,769
29,500 Elan Corp. PLC ADR* 1,519,250
------------
3,449,019
-----------------------------------------------------------------
Bulding Products - 1.5%
33,100 Southdown, Inc.* 2,120,469
-----------------------------------------------------------------
Computer Software - 7.2%
31,700 Adobe Systems, Inc. 2,008,988
47,300 BMC Software, Inc.* 2,036,856
46,900 Check Point Software Technologies, Ltd.* 1,653,225
47,800 Citrix Systems, Inc.* 2,031,500
80,800 Compuware Corp.* 1,969,500
20,200 Legato Systems, Inc.* 816,838
------------
10,516,907
-----------------------------------------------------------------
Construction/Agri. Equip/Truck - 1.1%
30,600 Navistar International Corp. 1,600,762
-----------------------------------------------------------------
Diversified Commercial Services - 6.4%
70,200 Dendrite International, Inc.* 1,816,425
54,500 Maximus Inc.* 1,417,000
37,875 Paychex, Inc. 1,933,992
54,900 Profit Recovery Group International, Inc.* 2,003,850
15,000 Sabre Group Holdings, Inc.* 781,875
43,100 Viad Corp.* 1,424,994
------------
9,378,136
-----------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Diversified Financial Services - 1.0%
8,800 Capital One Financial Corp. $ 1,528,450
------------------------------------------------------------
Diversified Manufacturing - 1.7%
36,200 Danaher Corp. 2,405,037
------------------------------------------------------------
EDP Peripherals - 3.6%
51,900 Electronics For Imaging, Inc.* 2,455,519
14,600 Network Appliances, Inc.* 734,563
41,450 Symbol Technologies, Inc. 1,979,238
------------
5,169,320
------------------------------------------------------------
EDP Services/Distribution - 6.5%
53,000 Affiliated Computer Services, Inc.* 2,027,250
31,400 CSG Systems International, Inc.* 1,212,825
39,200 Galileo International, Inc.* 1,920,800
59,000 Henry Jack & Assoc., Inc.* 1,947,000
43,100 QRS Corp.* 2,370,500
------------
9,478,375
------------------------------------------------------------
Electronic Components - 1.9%
17,000 Power Integrations* 667,250
31,600 Sanmina Corp.* 2,097,450
------------
2,764,700
------------------------------------------------------------
Electronic Data Processing - 1.3%
52,000 Ceridian Corp.* 1,904,500
------------------------------------------------------------
Homebuilding - 1.6%
40,500 Crossmann Communities, Inc.* 1,063,125
69,000 DR Horton, Inc. 1,332,562
------------
2,395,687
------------------------------------------------------------
Home Furnishing - 1.3%
77,300 Furniture Brands International, Inc.* 1,937,331
------------------------------------------------------------
Hospital/Medical Nursing Services - 1.1%
56,300 Lincare Holdings, Inc.* 1,667,887
------------------------------------------------------------
Industrial Machinery/Components - 1.6%
33,400 Ingersoll-Rand Co. 2,310,862
------------------------------------------------------------
Insurance - 4.3%
12,700 Hartford Life, Inc. 693,425
46,000 Mutual Risk Management, Ltd. 1,788,250
59,000 Protective Life Corp. 2,312,063
19,200 Transatlantic Holdings, Inc. 1,476,000
------------
6,269,738
------------------------------------------------------------
Investment Services - 2.2%
32,000 A. G. Edwards, Inc. 1,120,000
36,200 DST Systems, Inc.* 2,108,650
------------
3,228,650
------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
COMMERCE MIDCAP FUND
Statement of Investments (continued)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Media Conglomerates/Other - 0.9%
51,500 Apollo Group, Inc.* $ 1,274,625
---------------------------------------------------------
Medical Specialties - 6.6%
28,000 Allergan Inc 2,516,500
22,800 Biomatrix, Inc.* 750,975
24,500 Guidant Corp. 1,315,344
75,300 Ocular Sciences, Inc.* 2,296,650
18,300 Osteotech, Inc.* 661,088
50,300 Quintiles Transnational Corp.* 2,040,294
------------
9,580,851
---------------------------------------------------------
Military/Government/Technical - 0.3%
13,900 EG & G, Inc. 434,375
---------------------------------------------------------
Multi-Sector Companies - 0.9%
45,700 Metzler Group, Inc.* 1,273,887
---------------------------------------------------------
Office Equipment Supplies - 2.0%
15,300 Lexmark International Group, Inc.* 1,889,550
50,400 Herman Miller, Inc. 1,004,850
------------
2,894,400
---------------------------------------------------------
Other Transportation/Services - 0.6%
26,100 Airborne Freight Corp. 835,200
---------------------------------------------------------
Pharmaceuticals - 1.2%
43,500 Watson Pharmaceuticals, Inc.* 1,761,750
---------------------------------------------------------
Precision Instruments - 1.5%
20,300 Waters Corp.* 2,134,037
---------------------------------------------------------
Publishing - 2.9%
79,700 Harte-Hanks Communication, Inc. 2,012,425
62,000 New York Times Co. 2,139,000
------------
4,151,425
---------------------------------------------------------
Publishing Services - 1.1%
49,140 SunGard Data Systems, Inc.* 1,569,409
---------------------------------------------------------
Restaurants - 1.1%
58,800 Brinker International Inc.* 1,624,350
---------------------------------------------------------
Retail - 2.4%
36,350 Dollar Tree Stores, Inc.* 1,326,775
29,800 Express Scripts, Inc.* 2,194,025
------------
3,520,800
---------------------------------------------------------
Semiconductors - 2.4%
42,600 Maxim Integrated Products, Inc.* 2,385,600
25,200 Vitesse Semiconductor Corp.* 1,167,075
------------
3,552,675
---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Services to the Health Industry - 1.9%
19,050 Cardinal Health, Inc. $ 1,139,428
11,900 McKesson, Inc. 416,500
47,900 Omnicare, Inc. 1,152,594
------------
2,708,522
----------------------------------------------------
Specialty Retail - 9.0%
23,000 Abercrombie & Fitch Co.* 2,187,875
61,900 Bed Bath & Beyond, Inc.* 2,209,056
42,000 Best Buy Co., Inc.* 2,005,500
31,384 CVS Corp. 1,494,663
46,800 Linens-n-Things, Inc.* 2,141,100
51,150 Office Depot, Inc.* 1,125,300
60,200 TJX Companies, Inc. 2,005,413
------------
13,168,907
----------------------------------------------------
Telecommunication Equipment - 3.6%
35,300 ADC Telecommunications, Inc.* 1,687,781
16,500 Comverse Technology, Inc.* 1,058,063
34,600 ECI Telecommunications Ltd.* 1,275,875
13,600 Harmonic, Inc.* 620,500
13,700 Transwitch Corp.* 602,800
------------
5,245,019
----------------------------------------------------
TOTAL COMMON STOCKS
(cost $108,522,002) $138,881,558
----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<C> <S> <C> <C>
Repurchase Agreement - 1.8%
State Street Bank & Trust
Company(a)
$2,587,000 4.72% 05/03/99 $ 2,587,000
--------------------------------------------
TOTAL REPURCHASE AGREEMENT
(cost $2,587,000) $ 2,587,000
--------------------------------------------
TOTAL INVESTMENTS
(cost $111,109,002)(b) $141,468,558
--------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
COMMERCE MIDCAP FUND
<TABLE>
-------------------------------
<S> <C> <C> <C>
Federal Income
Tax Information:
Gross unrealized
gain for invest-
ments in
which value ex-
ceeds cost $33,422,254
Gross unrealized
loss for invest-
ments in
which cost ex-
ceeds value (3,274,384)
-------------------------------
Net unrealized
gain $30,147,870
-------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
* Non-income producing security.
(a) The repurchase agreement is fully collateralized by U.S. Treasury securi-
ties.
(b) The aggregate cost for federal income tax purposes is $111,320,688.
------------------------------------------------------------------------------
Investment Abbreviations:
ADR--American Depository Receipt
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
27
<PAGE>
COMMERCE INTERNATIONAL EQUITY FUND
Shareholder Letter
Dear Shareholder,
We are pleased to report on the performance of the Commerce International Eq-
uity Fund for the 6-month period ended April 30, 1999.
Performance Review
The Institutional Shares produced a total return of 13.17%
for the six-month period ending April 30, 1999, based on
NAV (assumes expense waivers). The Service Shares had a to-
tal return of 13.13% for the six-month period based on NAV
(assumes expense waivers). These returns somewhat lagged
the return of the Morgan Stanley Capital International Eu-
rope, Australia, and Far East (EAFE) Index for the same
time period, which was 15.44%. The Lipper International Eq-
uity Funds Index return was 14.06% for the six-month peri-
od. On a rolling three year basis, the Fund's Institutional
Share's annualized total return of 9.38% based on NAV has
slightly exceeded the return of the EAFE Index, which was
9.17%. Past performance is no guarantee of future results.
(The Fund's NAV is not guaranteed by the U.S. government or
by its agencies, instrumentalities, or sponsored enter-
prises.)
Portfolio Highlights
. Calendar year 1999 to date has been a very volatile one
for investments in non-U.S. equity markets. After a very
strong start, particularly in Europe in reaction to the in-
ception of the European Monetary Union, non-U.S. equity
markets have experienced a great deal of volatility in
price and total return. Brazil's currency devaluation,
which occurred in January of 1999, raised the level of con-
cern surrounding the stability of Latin American markets,
and contributed to the overall volatility. However, since
that time, a great deal of progress has been made in Bra-
zil, and the situation seems to have stabilized at this
point. In fact, Latin American markets have rebounded quite
strongly, climbing approximately 14% in the month of April
1999. The continued strength of the U.S. dollar has de-
tracted from total non-U.S. equity market returns for a
U.S.-based investor.
. Recent interest rate cuts and corporate mergers and acqui-
sitions activity have helped propel European markets for-
ward. A more positive outlook for global economic growth
has led to a recent rally in the more cyclical, value-ori-
ented stocks. Japan has experienced an increase in foreign
buying, as well as an increased hope of economic recovery,
which has helped the Japanese stock market to rally in
1999.
. We believe that the European economy can gradually
strengthen, helped by continuing recovery in Asia and Latin
America, and stabilization in Japan. In contrast to the
quiet economic background, we anticipate that the corporate
sector will remain dynamic as consolidation continues
across the region and businesses act to improve returns.
. The Fund is positioned to take advantage of anticipated
strengthening in the European economies, with nearly 70% of
the Fund positioned in the United Kingdom and Europe com-
bined. The Japanese position remains underweight, with 17%
of the Fund invested in Japan, relative to a 23% weight in
the EAFE Index. The Latin American weighting remains at
less than 5% of the Fund.
We thank you for your investment and look forward to your
continued confidence.
Sincerely,
Sincerely,
International Equity Fund Team
Investment Management Group International Equity Team
Commerce Bank, N.A. Rowe Price-Fleming Information
Inc.
May 28, 1999
28
<PAGE>
COMMERCE INTERNATIONAL EQUITY FUND
Statement of Investments
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - 95.9%
Argentine Peso - 0.9%
3,737 Banco de Galicia Buenos Aires ADR (Banks) $ 86,185
3,794 Banco Frances Del Rio De La Plata ADR (Financial
Services) 96,747
6,570 Telefonica de Argentina ADR (Utilities) 245,554
13,537 YPF Sociedad Anonima ADR (Oil & Gas) 568,554
-----------
997,040
-----------------------------------------------------------------------------
Australian Dollar - 2.8%
19,953 Australian Gas & Light Co. (Utilities) 141,282
7,000 Brambles Industries Ltd. (Transportation/Storage) 205,695
14,000 Broken Hill Proprietary Co. (Mining - Metals/Minerals) 158,275
76,820 Colonial Ltd. (Financial Services) 289,255
21,028 Commonwealth Bank of Australia (Financial Services) 382,879
99,000 Goodman Fielder Wattie, Ltd. (Food Products) 95,649
12,416 Lend Lease Corp. (Financial Services) 167,390
30,539 News Corp., Ltd. (Media) 255,929
46,000 Publishing & Broadcasting Ltd. (Media) 309,184
26,000 Tab Corp. Holdings, Ltd. (Recreational Services) 211,456
69,765 Telstra Corp.* (Utilities) 378,569
51,302 Westpac Banking Corp. (Banks) 391,637
-----------
2,987,200
-----------------------------------------------------------------------------
Brazilian Real - 1.5%
611 Cemig-CIA Energetica Minas Gerais ADR (Utilities)+ 14,658
6,053 Cemig-CIA Energetica Minas Gerais ADR (Non-Voting)
(Utilities) 143,002
6,351 Companhia Brasileira de Distribuicao Grupo Pao de
Acucar (Utilities) 110,746
14,845 Telecomunicacoes Brasileiras ADR (Telecommunications) 1,160
13,977 Telecomunicacoes Brasileiras ADR (Telecommunications) 1,274,528
4,700 Unibanco-Uniao De Bancos Brasileirs GDR* (Financial
Services) 116,619
-----------
1,660,713
-----------------------------------------------------------------------------
British Pound Sterling - 19.1%
28,000 Abbey National (Insurance) 630,610
103,000 Asda Group (Consumer Products) 342,991
38,000 BG (Gas Distribution & Pipeline) 213,957
29,000 BP Amoco (Oil & Gas) 550,497
66,000 Cable & Wireless (Telecommunications) 945,481
45,744 Cadbury Schweppes (Food Products) 610,415
83,600 Caradon (Building Materials & Construction) 212,490
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
British Pound Sterling - (continued)
36,000 Centrica* (Energy) $ 72,971
46,000 Compass Group (Food Products) 473,601
121,776 Diageo PLC (Beverages/Tobacco) 1,402,651
26,000 Electrocomponents (Electronics) 221,679
10,000 GKN (Industrial Machinery) 170,683
48,000 Glaxo Wellcome (Pharmaceuticals) 1,422,348
5,000 Hays PLC (Diversified Holding Companies) 55,500
4,000 Heywood Williams Group (Building Materials &
Construction) 17,696
126,000 Kingfisher Group (Retail Trade) 1,881,021
50,000 Ladbroke Group (Hotels & Restaurants) 240,300
11,000 Laing(John) (Household Durables) 56,449
117,400 National Westminster Bank (Banks) 2,823,477
25,500 Rank Group (Commercial Services) 106,041
114,000 Reed International (Publishing) 1,037,081
27,000 Rolls Royce (Aerospace/Defense) 125,092
38,000 Rio Tinto (Mining - Metals/Minerals) 663,267
63,000 Safeway (Retail Trade) 262,492
227,500 Shell Transport & Trading Co. (Oil & Gas) 1,705,463
35,000 Smith (David S) Holdings (Paper & Forest Products) 75,448
144,800 Smithkline Beecham (Health & Medical Services) 1,914,765
177,000 Tesco (Food Products) 526,057
138,980 Tomkins (Diversified Holding Companies) 585,772
60,000 Unilever NV (Consumer Products) 533,284
48,000 United News & Media Plc (Publishing) 583,765
-----------
20,463,344
-----------------------------------------------------------------------------
Canadian Dollar - 0.2%
5,410 Alcan Aluminum, Ltd. (Mining - Metals/Minerals) 170,674
1,950 Royal Bank of Canada (Financial Services) 95,086
-----------
265,760
-----------------------------------------------------------------------------
Chilean Peso - 0.1%
2,440 Chilectra SA ADR (Utilities)+ 53,961
-----------------------------------------------------------------------------
Chinese Yuan - 0.2%
12,900 Huaneng Power International, Inc. ADR (Energy) 173,344
-----------------------------------------------------------------------------
Danish Krone - 0.4%
1,525 Den Danske Bank AB (Financial Services) 175,581
1,520 Tele Danmark AS (Telecommunications) 156,641
1,250 Unidanmark (Financial Services) 85,818
-----------
418,040
-----------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
29
<PAGE>
COMMERCE INTERNATIONAL EQUITY FUND
Statement of Investments (continued)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Euro - 37.7%
Belgium - 1.6%
945 Credit Communal De Belg* (Dexia) (Financial Services) $ 145,352
15,498 Fortis Belgium (Insurance) 519,814
13,230 KBC Bancassurance Holding (Financial Services) 820,401
600 Societe Europeenne Des Satellites* (Media) 91,828
2,850 UCB (Chemical Products) 132,473
-----------
1,709,868
----------------------------------------------------------------------------
Germany - 6.0%
1,770 Allianz AG Holdings (Insurance) 563,753
8,669 Bayer AG (Chemical Products) 368,149
12,562 Bayerische Vereinsbank (Financial Services) 818,790
8,226 Deutsche Bank AG (Financial Services) 477,947
914 Deutsche Bank AG (Financial Services) 53,105
11,471 Deutsche Telekom AG (Telecommunications) 452,000
11,508 Dresdner Bank AG (Financial Services) 496,008
13,241 Gehe AG (Health/Personal Care) 608,469
3,470 Hoechst AG (Chemical Products) 164,407
6,860 Mannesmann AG (Industrial Machinery) 902,964
1,832 Rhon-Klinikum AG (Health/Personal Care) 183,856
1,430 Sap AG (Computer Services/Software) 457,728
3,682 Siemens AG (Electronics & Other Electrical Equipment) 272,277
8,248 Veba AG (Utilities) 452,214
2,230 Volkswagen AG (Automobiles & Automobile Parts) 158,072
-----------
6,429,739
----------------------------------------------------------------------------
Finland - 0.9%
12,320 Nokia (AB) OY (Telecommunications) 949,433
----------------------------------------------------------------------------
France - 10.5%
3,660 Alcatel Alsthom (Cie Gen El) (Computers/Office) 449,279
6,157 Axa UAP (Insurance) 794,820
909 Carrefour (Retail Trade) 720,201
4,135 Credit Commercial de France (Financial Services) 436,821
1,440 Danone (Food Products) 384,868
705 Dexia France (Financial Services) 98,681
848 Dexia France (Financial Services) 118,697
2,920 Elf Aquitaine (Oil & Gas) 453,449
325 L'Oreal (Health/Personal Care) 208,058
1,781 Lafarge SA (Building Materials & Construction) 173,093
1,790 Lapeyre (Building Materials & Construction) 136,149
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Euro - (continued)
France - (continued)
1,225 Legrand (Electronics) $ 292,464
5,560 Pin Printemps Redo (Retail Trade) 922,153
2,480 Saint Gobain (Chemical Products) 425,729
4,787 Sanofi (Health/Personal Care) 749,951
9,834 Schneider SA (Electronics) 641,498
1,994 Societe Generale (Financial Services) 356,835
4,088 Sodexho Alliance (Food Products) 670,673
3,010 ST Microelectronics (Electronics-Semiconductors) 313,525
2,180 Television Francaise (Media) 426,046
7,734 Total (Oil & Gas) 1,058,858
6,040 Vivendi (Utilities) 1,410,763
-----------
11,242,611
----------------------------------------------------------------------------
Ireland - 0.1%
8,677 CBT Group ADR* (Computer Services/Software) 134,494
----------------------------------------------------------------------------
Italy - 6.0%
12,600 Assicurazioni Generali Spa (Insurance) 490,497
23,000 Banca Commerciale Italiana (Banks) 189,275
137,000 Banca Di Roma (Financial Services) 225,774
7,000 Banca Popolare Di Brescia (Financial Services) 240,701
103,309 Ente Nazionale Idrocarburi (Oil & Gas) 679,915
2,372 Gucci Group NV ADR (Textiles) 178,938
195,000 Istituto National Assicurazioni (Insurance) 514,995
23,000 Italgas (Societa Italiana Il Gas) Spa (Utilities) 102,291
36,025 Mediolanum (Insurance) 237,855
30,362 San Paolo IMI* (Financial Services) 455,457
123,443 Telecom Italia Mobile SPA (Utilities) 735,485
171,340 Telecom Italia Spa (Telecommunications) 1,822,706
114,094 Unicredito Italiano Spa (Financial Services) 578,539
-----------
6,452,428
----------------------------------------------------------------------------
Netherlands - 9.1%
20,456 ABN AMRO Holdings NV (Banks) 487,299
20,266 Ahold (Koninklijke) NV (Food Products) 752,527
1,992 Akzo Nobel NV (Chemical Products) 89,961
11,050 ASM Lithography Holding NV* (Electronics-
Semiconductors) 465,762
7,783 CSM CVA (Food Products) 416,031
49,850 Elsevier NV (Media) 745,161
570 Equant NV* (Computer Services/Software) 51,725
19,320 Fortis AMEV NV (Insurance) 687,805
25,582 ING Groep NV (Financial Services) 1,575,548
2,598 Koninklijke KPN NV (Utilities) 108,409
6,800 Koninklijke Numico NV (Food Products) 255,733
</TABLE>
The accompanying notes are an integral part of these financial statements.
30
<PAGE>
COMMERCE INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Euro - (continued)
Netherlands - (continued)
9,060 Koninklijke Philips Electronics (Electronics) $ 780,035
13,210 Royal Dutch Petroleum Co. (Energy) 768,923
2,598 TNT Post Groep NV (Financial Services) 69,985
7,680 Unilever NV (Consumer Products) 525,732
5,320 VNU NV (Publishing) 215,248
41,824 Wolters Kluwer (Media) 1,820,335
-----------
9,816,219
-------------------------------------------------------------------------------
Portugal - 0.4%
10,996 Jeronimo Martins SGPS (Food Products) 361,844
3,665 Jeronimo Martins SGPS* (Food Products) 117,313
-----------
479,157
-------------------------------------------------------------------------------
Spain - 3.1%
11,676 Argentaria Corp Bancaria de Espana (Banks) 274,567
12,090 Banco Bilbao Vizcaya SA (Financial Services) 180,850
1,840 Banco Popular Espanol (Banks) 130,233
23,705 Banco Santander Central Hispano (Banks) 514,863
16,316 Endesa SA (Electrical Services) 362,650
2,979 Gas Natural Sdg SA (Utilities) 240,275
27,640 Iberdrola SA (Utilities) 386,885
11,541 Repsol SA (Oil & Gas) 187,755
22,565 Telefonica de Espana (Utilities) 1,057,201
-----------
3,335,279
-------------------------------------------------------------------------------
Total Euro 40,549,228
-------------------------------------------------------------------------------
Hong Kong Dollar - 2.1%
15,000 Cheung Kong Holdings Ltd. (Real Estate) 136,434
120,000 China Telecom Ltd.* (Telecommunications) 274,029
54,000 CLP Holdings Ltd. (Utilities) 289,821
47,000 Henderson Land Development Co. (Recreational
Services) 284,389
64,400 Hong Kong Telecom (Telecommunications) 173,234
6,800 HSBC Holdings (Financial Services) 252,664
77,000 Hutchison Whampoa (Diversified Holding Companies) 690,427
23,000 Sun Hung Kai Properties Co. (Real Estate) 201,780
-----------
2,302,778
-------------------------------------------------------------------------------
Japanese Yen - 17.3%
9,000 Alps Electric Co. (Electronics) 152,613
21,000 Amada Co, Ltd. (Industrial Machinery) 131,887
38,000 Canon Inc. (Electronics & Other Electrical Equipment) 929,158
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Japanese Yen - (continued)
10,000 Citizen Watch Co. (Electronics & Other Electrical
Equipment) $ 82,901
20,000 Daiichi Pharmaceutical Co. (Health/Personal Care) 324,904
26,000 Daiwa House Industry Co. (Building Materials &
Construction) 310,250
54 DDI Corp. (Utilities) 268,146
37,000 Denso Corp. (Transportation/Storage) 751,340
57 East Japan Railway (Railroads) 336,501
5,600 Fanuc Co., Ltd. (Electronics) 243,845
12,000 Fujitsu Limited (Computers/Office) 205,493
47,000 Hitachi (Electronics) 343,192
3,000 Honda Motor Co. Ltd. (Automobiles & Automobile
Parts) 132,139
6,000 Ito-Yokado Co. (Retail Trade) 368,280
21,000 Kao Corp. (Cosmetics) 532,825
13,000 Kokuyo Company, Ltd. (Computer Services/Software) 195,403
11,000 Komori Corp. (Industrial Machinery) 203,567
26,000 Kuraray Co. (Chemical Products) 296,098
9,000 Kyocera Corp. (Electronics & Other Electrical
Equipment) 534,333
17,000 Makita Corp. (Industrial Machinery) 182,499
32,000 Marui Co., Ltd. (Retail Trade) 530,832
40,000 Matsushita Electric Industrial Co. (Electronics) 760,342
32,000 Mitsubishi Corp. (Wholesale Trade) 211,690
120,000 Mitsubishi Heavy Industries Ltd. (Industrial
Machinery) 525,540
58,000 Mitsui Fudosan Co. (Real Estate) 534,249
13,000 Murata Manufacturing Co. (Electronics) 752,219
69,000 NEC Corp. (Electronics) 823,932
88 Nippon Telephone & Telegraph Corp. (Utilities) 957,964
47,000 Nomura Securities Co., Ltd. (Financial Services) 506,917
11 NTT Mobile Communications Network
(Telecommunications) 644,783
5,000 Pioneer Electronic Corp.* (Household Durables) 95,043
27,000 Sankyo Co. (Financial Services) 566,362
43,000 Sekisui Chemical Co. Ltd. (Building Materials &
Construction) 287,339
26,000 Sekisui House (Building Materials & Construction) 291,090
3,000 Seven Eleven Japan Co., Ltd. (Retail Trade) 255,987
14,000 Shinetsu Chemical Co., Ltd. (Chemical Products) 445,487
13,000 Shiseido Co. (Health/Personal Care) 204,656
9,900 Sony Corp. (Household Durables) 924,343
48,000 Sumitomo Corp. (Wholesale Trade) 354,513
61,000 Sumitomo Electric Industries, Ltd. (Electronics &
Other Electrical Equipment) 738,109
9,000 TDK Corp. (Household Durables) 680,539
</TABLE>
The accompanying notes are an integral part of these financial statements.
31
<PAGE>
COMMERCE INTERNATIONAL EQUITY FUND
Statement of Investments (continued)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Japanese Yen - (continued)
13,000 Tokio Marine & Fire Insurance Co. (Insurance) $ 151,424
5,300 Tokyo Electron (Electronics & Other Electrical Equipment) 301,792
25,000 Toppan Printing Co. (Media) 300,620
14,000 Uny Co. (Retail Trade) 222,743
-----------
18,593,889
-------------------------------------------------------------------------------
Korean Won - 0.2%
2,151 Samsung Electronics (Electronics) 165,420
-------------------------------------------------------------------------------
Mexican Peso - 1.5%
295 Cemex SA (Building Materials & Construction) 1,373
9,860 Cemex SA (B Shares) (Building Materials & Construction) 45,779
15,860 Cemex SA ADS (Building Materials & Construction) 147,619
46,500 Fomento Econ Mexico SA* (Diversified Holding Companies) 166,071
16,928 Gruma SA De CV* (Diversified Holding Companies) 32,464
3,613 Gruma SA De CV ADR* (Diversified Holding Companies) 28,001
68,450 Grupo Industrial Maseca SA (Household Durables) 47,411
59,232 Grupo Modelo SA (Beverages/Tobacco) 156,093
4,222 Grupo Televisa, GDR (Media) 173,102
33,739 Kimberly Clark de Mexico (Health/Personal Care) 131,451
9,145 Telefonos de Mexico SA ADR (Financial Services) 692,734
4,800 TV Azteca ADS* (Media) 33,600
-----------
1,655,698
-------------------------------------------------------------------------------
New Zealand Dollar - 0.3%
62,000 Telecom Corp. of New Zealand IR (Utilities) 322,954
-------------------------------------------------------------------------------
Norwegian Krone - 1.2%
1,170 Bergesen D-Y ASA (Transportation/Storage) 17,526
13,830 Norsk Hydro (Energy) 618,857
34,540 Orkla SA (Food Products) 579,315
2,690 Saga Petroleum ASA* (Oil & Gas) 29,791
-----------
1,245,489
-------------------------------------------------------------------------------
Russian Ruble - 0.0%
3,560 Rao Gazprom ADS (Energy) 37,825
-------------------------------------------------------------------------------
Singapore Dollar - 0.4%
10,503 Singapore Press Holdings (Media) 154,793
30,000 United Overseas Bank (Banks) 231,681
-----------
386,474
-------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Common Stocks - (continued)
Swedish Krona - 3.7%
18,810 ABB AB (Electronics) $ 261,962
25,098 Astrazeneca (Pharmaceuticals) 978,694
11,470 Atlas Copco AB (Industrial Machinery) 301,806
30,690 Electrolux AB (Appliance Manufacturer) 622,021
2,530 Esselte (Media) 39,433
1,855 Granges AB (Mining - Metals/Minerals) 31,441
10,090 Hennes & Mauritz AB (Retail Trade) 869,436
84,800 Nordbanken Holding AB (Financial Services) 532,701
10,210 Sandvik AB (B Shares) (Industrial Machinery) 230,533
7,762 Securitas AB (Commercial Services) 114,999
------------
3,983,026
--------------------------------------------------------------------------
Swiss Franc - 6.3%
300 ABB AG (Electronics) 437,504
1,319 Adecco SA (Business Services) 664,817
2,560 Credit Suisse Group (Financial Services) 507,570
855 Nestle SA (Food Products) 1,582,005
848 Novartis AG (Chemical Products) 1,241,125
83 Roche Holdings AG (Health/Personal Care) 975,959
480 Swisscom AG (Telecommunications) 176,181
3,390 UBS AG (Banks) 1,150,960
------------
6,736,121
--------------------------------------------------------------------------
TOTAL COMMON STOCKS
(cost $85,521,148) $102,998,304
--------------------------------------------------------------------------
Preferred Stocks - 1.3%
Australian Dollar - 0.3%
26,215 News Corporation, Ltd. (Media) $ 204,912
96,200 Star City Holdings LTD (Recreational Services) 108,223
------------
313,135
--------------------------------------------------------------------------
Brazilian Real - 0.6%
13,550,488 Banco Bradesco SA (Banks) 73,422
137,000 Banco Itau SA (Financial Services) 72,995
2,560,126 Cemig-Cia Energetica Minas Gerais (Utilities) 61,653
118,176 Ciment Itau (Building Materials & Construction) 12,807
1,774,463 Petroleo Brasileiro-Petrobras (Oil & Gas) 285,346
</TABLE>
The accompanying notes are an integral part of these financial statements.
32
<PAGE>
COMMERCE INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Shares Description Value
<C> <S> <C>
Preferred Stocks - (continued)
Brazilian Real - (continued)
3,978 Telemig-Telec de Minas Gerais SA (Utilities) $ 103
1,028,953 Telesp (Telecommunications) 134,427
982,766 Telesp Celular SA (Telecommunications) 42,304
------------
683,057
------------------------------------------------------------------------------
Deutschemark - 0.4%
464 Fielmann AG (Health/Personal Care) 18,136
420 Fresenius AG (Health & Medical Services) 73,209
766 SAP AG (Non Voting) (Computer Services/Software) 287,267
------------
378,612
------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(cost $1,555,279) $ 1,374,804
------------------------------------------------------------------------------
Warrants - 0.0%
Brazilian Real - 0.0%
10,054 Telesp* (Telecommunications) $ --
------------------------------------------------------------------------------
Spanish Peseta - 0.0%
22,565 Telefonica* (Telecommunications) 21,144
------------------------------------------------------------------------------
TOTAL WARRANTS
(cost $14,389) $ 21,144
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Repurchase Agreement - 1.0%
State Street Bank & Trust Company(a)
$1,074,000 4.72% 05/03/99 $ 1,074,000
-----------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(cost $1,074,000) $ 1,074,000
-----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $86,164,816)(b) $105,468,252
-----------------------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost 22,973,014
Gross unrealized loss for investments in which
cost exceeds value (3,745,099)
-----------------------------------------------------------------------------------------------
Net unrealized gain $ 19,227,915
-----------------------------------------------------------------------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
* Non-income producing security.
+ Securities that may be resold to "Qualified Institutional Buyers" under
Rule 144A or securities offered pursuant to Section 4(2) of the Securities
Act of 1933, as amended. These securities have been determined to be liquid
under guidelines established by the board of Trustees.
(a) The repurchase agreement is fully collateralized by U.S. Treasury securi-
ties.
(b) The aggregate cost for federal income tax purposes is $86,240,337.
------------------------------------------------------------------------------
Investment Abbreviations:
ADR--American Depository Receipt
ADS--American Depository Shares
GDR--Global Depository Receipt
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
COMMERCE INTERNATIONAL EQUITY FUND
Statement of Investments (continued)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Percentage of
Total Net Assets
Common and Preferred Stock Industry Concentrations
<S> <C>
Financial Services 10.9%
Utilities 7.0
Telecommunications 6.6
Food Products 6.4
Banks 5.9
Retail Trade 5.6
Electronics 5.5
Oil & Gas 5.1
Insurance 4.3
Media 4.2
Health/Personal Care 3.2
Chemical Products 2.9
Electronics & Other Electrical Equipment 2.7
Industrial Machinery 2.5
Pharmaceuticals 2.2
Health & Medical Services 1.9
Publishing 1.7
Household Durables 1.7
Energy 1.6
Building Materials & Construction 1.5
Beverages/Tobacco 1.5
Diversified Holding Companies 1.4
Consumer Products 1.3
Computer Services/Software 1.0
Mining - Metals/Minerals 1.0
Transportation/Storage 0.9
Real Estate 0.8
Electronics-Semiconductors 0.7
Business Services 0.6
Computers/Office 0.6
Appliance Manufacturer 0.6
Recreational Services 0.6
Wholesale Trade 0.5
Cosmetics 0.5
Electrical Services 0.3
Railroads 0.3
Automobiles & Automobile Parts 0.3
Hotels & Restaurants 0.2
Commercial Services 0.2
Gas Distribution & Pipeline 0.2
Textiles 0.2
Aerospace/Defense 0.1
Paper & Forest Products 0.1
------------------------------------------------------------
TOTAL COMMON AND PREFERRED STOCKS 97.2%
------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
34
<PAGE>
COMMERCE NATIONAL TAX-FREE INTERMEDIATE BOND FUND
Shareholder Letter
Dear Shareholder,
We are pleased to report on the performance of the Commerce National Tax-Free
Intermediate Bond Fund for the 6-month period ended April 30, 1999.
Performance Review
For the six-month period ending April 30, 1999, the Fund
had a total return of 1.34% based on NAV (assumes expense
waivers and reimbursements). This compares to the Lipper
Intermediate Municipal Debt Funds Index six-month return of
1.35% and the Merrill Lynch Municipal Intermediate Index
six-month return of 1.64%. Past performance is no guarantee
of future results. (The Fund's NAV and yield are not guar-
anteed by the U.S. government or by its agencies, instru-
mentalities, or sponsored enterprises.)
Portfolio Highlights
. Recall from our fiscal year-end report, new issue volume
in the municipal market was on pace to challenge the all-
time record set in 1993 for supply of $292 billion. Despite
falling short of those levels, the heavy new issue volume
in 1998 pushed long-term municipal bond yields higher than
yields earned on taxable U.S. Treasury bonds. Over the
course of the last six months, this anomaly has corrected
itself as interest rates increased steadily, limiting the
appeal of new issue borrowings. In addition, as supply sub-
sided, credit spreads continued to move inward. One notable
exception was in the health care sector where systematic
pressures such as reduced Medicare reimbursements and an
increase in competition drove yields on lower quality cred-
its upward.
. Our main focus of improving the relative yield of the Fund
has not changed. As such, recent purchases continue to be
concentrated in the higher yielding sectors of the munici-
pal market, including health care. The duration of the Fund
slipped to the lower end of our target range of 5.50-5.75
years. This resulted in a price sensitivity slightly lower
than the Lipper Intermediate Municipal Debt Funds Index and
slightly long the Merrill Lynch Municipal Intermediate In-
dex.
We thank you for your investment and look forward to your
continued confidence.
Sincerely,
Fixed-Income Funds Team
Investment Management Group
Commerce Bank, N.A.
May 28, 1999
35
<PAGE>
COMMERCE NATIONAL TAX-FREE INTERMEDIATE BOND FUND
Statement of Investments
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Municipal Bond Obligations - 92.1%
Arizona - 2.1%
Arizona State Trans Board Excise Tax Revenue (AA-/Aa2)
$500,000 5.00% 07/01/05 $ 526,180
Page AZ Municipal Property Corp. (AAA/AAA)
300,000 5.00 07/01/13 309,837
-----------
836,017
-------------------------------------------------------------------------------------------------
Florida - 0.5%
Florida State Board of Education Capital Outlay GO Bonds Series A
(AA+/Aa2)
200,000 5.25 01/01/04 211,384
-------------------------------------------------------------------------------------------------
Georgia - 0.5%
Georgia State GO Bonds Series D (AA+/Aaa)
200,000 5.40 11/01/10 218,262
-------------------------------------------------------------------------------------------------
Hawaii - 0.8%
Honolulu HI City and County (AA3/AA-)
300,000 7.25 07/01/02 330,765
-------------------------------------------------------------------------------------------------
Illinois - 6.9%
Chicago IL ST University Revenue (AAA/Aaa)
300,000 5.50 12/01/23 315,393
Chicago Metropolitan Water Reclamation GO Bonds (AA/Aa)
500,000 4.90 12/01/01 515,945
450,000 5.60 12/01/09 494,447
Evanston GO Bonds (NR/Aaa)
250,000 5.30 12/01/99 253,160
Illinois Development Financial Authority Revenue (AAA/NR)
300,000 5.70 01/01/18 322,983
Illinois ST GO Bonds (AAA/Aaa)
300,000 5.00 03/01/17 297,534
Illinois ST Sales Tax Revenue (AA2/AAA)
300,000 6.50 06/15/22 353,607
Kankakee River Met Agency Il Sewer Treatment Facility Revenue (AAA/AAA)
265,000 5.00 05/01/22 256,557
-----------
2,809,626
-------------------------------------------------------------------------------------------------
Indiana - 5.0%
Elkhart County IN Hospital Authority Revenue (A1/NR)
700,000 5.25 08/15/18 688,282
Merrillville IN Multi Sch Bldg (AAA/Aaa)
500,000 6.65 07/01/06 576,335
Plymouth IN Multi Sch Bldg (AAA/Aaa)
700,000 5.75 07/01/06 764,491
-----------
2,029,108
-------------------------------------------------------------------------------------------------
Iowa - 1.3%
Bettendorf GO Bonds Series A (AMBAC) (NR/Aaa)
250,000 4.70 06/01/03 258,600
Bettendorf GO Bonds Series A (AMBAC) (NR/Aaa)
250,000 6.00 07/01/08 262,250
-----------
520,850
-------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Municipal Bond Obligations - (continued)
Kansas - 2.5%
Kansas State Development Financial Authority Revenue Public Water Supply
(A2/AA-)
$500,000 5.00% 04/01/16 $ 499,410
Kansas State Development Financial Authority Revenue Water Pollution
Control (AA+/Aa1)
250,000 5.25 11/01/09 267,482
Olathe KS Certificate Participation (A-/NR)
250,000 4.80 09/01/07 254,742
-----------
1,021,634
-------------------------------------------------------------------------------------------------
Kentucky - 1.2%
Kentucky Infrastructure Authority Revenue Bonds (A/A2)
485,000 5.13 06/01/11 500,787
-------------------------------------------------------------------------------------------------
Louisiana - 3.3%
Louisiana Public Facilities Authority Hospital Revenue (AAA/Aaa)
500,000 5.00 07/01/04 522,350
Louisiana State GO Bonds (AMBAC) (AAA/Aaa)
250,000 5.00 04/15/02 259,125
Orleans Parish LA Parishwide School District (AAA/NR)
500,000 7.00 09/01/03 563,610
-----------
1,345,085
-------------------------------------------------------------------------------------------------
Maine - 0.8%
Regional Waste System ME Solid Waste (NR/AA)
300,000 5.25 07/01/04 317,013
-------------------------------------------------------------------------------------------------
Maryland - 1.3%
Washington Suburban Sanitation District GO Bonds (AA/Aa1)
500,000 4.75 06/01/02 516,715
-------------------------------------------------------------------------------------------------
Massachusetts - 1.9%
Massachusetts State GO Series A (MBIA) (AA-/Aaa)
700,000 5.60 02/01/07 754,607
-------------------------------------------------------------------------------------------------
Michigan - 4.7%
Detroit Michigan Sewer Disposal Revenue (AAA/AAA)
300,000 6.00 07/01/04 327,978
Greenville Public Schools GO Bonds (MBIA) (AAA/Aaa)
200,000 5.75 05/01/07 218,466
Michigan State Housing Development Authority Series B (AMBAC) (AAA/NR)
500,000 4.80 12/01/10 498,665
Muskegon Heights MI Public Schools (AAA/AAA)
320,000 5.50 05/01/09 347,933
Waterford Township School District Bonds (Q-SBLF) (AA/Aa2)
500,000 4.85 06/01/10 511,395
-----------
1,904,437
-------------------------------------------------------------------------------------------------
Minnesota - 1.9%
Minnesota State Housing and Finance Agency Series D (AA+/Aa)
340,000 5.35 01/01/05 354,787
</TABLE>
The accompanying notes are an integral part of these financial statements.
36
<PAGE>
COMMERCE NATIONAL TAX-FREE INTERMEDIATE BOND FUND
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Municipal Bond Obligations - (continued)
Minnesota - continued
St. Paul Independent School District #625 GO Bonds Series C (AA/Aa)
$400,000 5.20% 02/01/07 $ 418,936
-----------
773,723
-------------------------------------------------------------------------------------------------
Missouri - 10.2%
Belton MO Certificate Participation (NR/AAA)
535,000 4.70 03/01/12 533,946
Clay County Public Building Authority Leasehold Rev (FSA) (AAA/NR)
850,000 5.10 05/15/10 880,464
Jackson County MO Leasehold Revenue (AMBAC) (AAA/Aaa)
500,000 4.00 12/01/04 501,475
Missouri State Health & Educational Facilities Revenue (BBB+/NR)
500,000 4.75 02/15/05 506,265
New Liberty MO Hospital District Revenue (AAA/NR)
500,000 5.00 12/01/10 514,940
Osage Beach MO Waterworks and Sewer System Revenue (NR/NR)
280,000 4.75 12/01/11 273,540
Perry County MO Hospital Revenue (NR/NR)
105,000 4.30 06/01/01 105,038
100,000 4.45 06/01/02 100,054
110,000 4.90 06/01/06 110,127
Saint Peters MO (AAA/NR)
290,000 7.20 01/01/09 354,319
St. Charles County MO Industrial Development (NR/NR)
250,000 5.00 02/01/29 250,860
-----------
4,131,028
-------------------------------------------------------------------------------------------------
Nebraska - 3.4%
Nebraska Public Power District Revenue Series A (AAA/A1)
250,000 5.10 01/01/06 265,250
Nebraska Public Power District Revenue Series A (MBIA) (AAA/Aaa)
500,000 5.25 01/01/04 528,020
Nebraska Public Power District Revenue Series A, MBIA-IBC (AAA/AAA)
95,000 4.50 01/01/00 95,791
Omaha Public Power Revenue Bonds Series A (AA/Aa)
500,000 5.00 02/01/01 511,500
-----------
1,400,561
-------------------------------------------------------------------------------------------------
Nevada - 0.5%
Clark County School District GO Bonds Series B (FGIC) (AAA/Aaa)
200,000 5.30 05/01/04 211,660
-------------------------------------------------------------------------------------------------
New York - 7.3%
New York Dormitory Authority Revenue (MBIA-IBC) (AAA/Aaa)
500,000 4.50 07/01/06 510,405
New York GO Bonds Series A (A-/A3)
500,000 5.25 08/01/07 528,715
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Municipal Bond Obligations - (continued)
New York - (continued)
New York GO Bonds Series J (A-/A3)
$500,000 5.25% 08/01/11 $ 519,770
New York ST Energy Resh and Development Series A (A-/NR)
250,000 7.15 12/01/20 277,695
New York State Dorm Authority Revenue Series B (A-/A3)
540,000 5.00 05/15/08 561,875
New York State Urban Development Corp Revenue (BBB+/Baa1)
500,000 6.25 01/01/07 557,130
-----------
2,955,590
-------------------------------------------------------------------------------------------------
North Carolina - 1.7%
North Carolina Medical Care Community Hospital Revenue (A+/A1)
695,000 4.40 02/15/04 703,924
-------------------------------------------------------------------------------------------------
Ohio - 0.4%
Ohio State Infrastructure Improvement GO Bonds (AA+/Aa1)
150,000 5.20 08/01/10 158,436
-------------------------------------------------------------------------------------------------
Oregon - 1.3%
Oregon State Housing & Community Services Department Revenue Bonds
Series D (NR/Aa)
500,000 5.55 07/01/06 522,450
-------------------------------------------------------------------------------------------------
Pennsylvania - 2.7%
Pennsylvania State GO Bonds (AA-/A1)
500,000 5.25 06/15/06 526,125
Pennsylvania State Industrial Development Authority Revenue (AAA/Aaa)
500,000 6.00 07/01/08 561,325
-----------
1,087,450
-------------------------------------------------------------------------------------------------
South Carolina - 2.0%
South Carolina State Capital Improvement GO Bonds
Series A (AA+/Aaa)
250,000 5.00 03/01/05 263,520
York County School District #1 GO Bonds Series A (MBIA SCSDE)
(AAA/AA/Aaa/Aa1)
500,000 7.00 07/01/03 561,345
-----------
824,865
-------------------------------------------------------------------------------------------------
South Dakota - 4.4%
South Dakota Health & Educational Revenue Bonds (MBIA) (AAA/Aaa)
500,000 5.00 09/01/04 522,995
South Dakota Housing Development Authority Revenue (AAA/Aa1)
660,000 4.60 05/01/05 663,425
315,000 4.65 05/01/06 319,505
South Dakota ST Health and Educational Revenue (BAA2/BBB)
250,000 7.25 04/01/03 285,238
-----------
1,791,163
-------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
37
<PAGE>
COMMERCE NATIONAL TAX-FREE INTERMEDIATE BOND FUND
Statement of Investments (continued)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Municipal Bond Obligations - (continued)
Tennessee - 1.3%
Shelby County GO Bonds Series A (AA+/Aa)
$500,000 5.63% 06/01/06 $ 543,825
-------------------------------------------------------------------------------------------------
Texas - 3.6%
Channelview Independent School District GO Bonds (PSFG) (NR/Aaa)
250,000 4.75 08/15/05 257,748
Guadalupe County TX (AAA/Aaa)
340,000 5.60 02/01/05 366,003
Hidalgo County TX Health Service Corp. (AAA/AAA)
85,000 7.35 08/01/99 87,511
San Antonio GO Bonds (AA/Aa)
200,000 5.20 08/01/02 209,004
Tarrant County Water Control & Improvement Revenue Bonds (AAA/Aaa)
140,000 5.00 03/01/09 142,523
Texas A&M University Revenue Bonds (AA/Aa)
200,000 5.55 05/15/01 207,876
Texas State GO Bonds Series A (AA/Aa)
200,000 5.65 10/01/08 215,996
-----------
1,486,661
-------------------------------------------------------------------------------------------------
Utah - 3.5%
Alpine School District GO Bonds (FGIC-TCRS) (AAA/Aaa)
250,000 5.40 03/15/05 259,292
Intermountain Power Agency Revenue Series A (MBIA) (AAA/Aaa)
800,000 6.00 07/01/08 897,480
Intermountain Power Agency Revenue Series B (A+/A1)
250,000 5.10 07/01/03 261,197
-----------
1,417,969
-------------------------------------------------------------------------------------------------
Virginia - 1.2%
Virginia Beach GO Bonds (AA/Aa)
200,000 5.20 07/15/06 213,190
Virginia ST Public School Authority (AA1/AA+)
300,000 5.10 08/01/14 307,680
-----------
520,870
-------------------------------------------------------------------------------------------------
Washington - 10.2%
King County GO Bonds Series D (AA+/Aa1)
500,000 6.20 12/01/00 520,930
Kitsap County School District No 400 (A/NR)
680,000 6.05 12/01/00 706,704
Metro Washington DC Airports Authority Rev
Series B (AAA/Aaa)
500,000 5.25 10/01/09 528,735
Metro Washington DC Airports Authority Revenue Series B (AAA/Aaa)
500,000 5.25 10/01/12 517,785
Pierce County Sewer Improvements Revenue
Bonds (A+/A1)
290,000 5.45 02/01/08 300,573
Seattle GO Bonds Series A (AA+/Aa1)
150,000 5.30 08/01/13 156,809
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Municipal Bond Obligations - (continued)
Washington - (continued)
Spokane County School District #354 GO Bonds (A+/A)
$370,000 5.20% 12/01/06 $ 389,092
Vancouver Water & Sewer Revenue Bonds (FGIC)
(AAA/Aaa)
250,000 4.70 06/01/01 255,187
Washington Higher Educational Facility University of Puget Sound Revenue
Bonds (A+/A2)
500,000 5.00 10/01/06 519,405
Washington State GO Bonds Series DD-12 & CC-9
(AA/Aa)
250,000 5.38 03/01/08 268,402
-----------
4,163,622
------------------------------------------------------------------------------------------------
Wisconsin - 3.7%
Green Bay Public School District GO Bonds (NR/Aa)
500,000 4.90 04/01/05 521,305
Milwaukee GO Bonds Series E (AA+/Aa1)
250,000 5.50 06/15/10 267,410
Wisconsin State Clean Water Revenue Bonds Series 1 (AA+/Aa2)
500,000 5.25 06/01/10 524,440
Wisconsin State GO Bonds Series 3 (AA/Aa)
200,000 5.25 11/01/02 210,930
-----------
1,524,085
------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BOND OBLIGATIONS
(cost $36,763,681) $37,534,172
------------------------------------------------------------------------------------------------
Short-Term Obligations - 6.4%
Nevada - 0.3%
Reno Hospital Revenue (VMIG1/A-1+)
100,000 4.25(a) 05/03/99(a) 100,000
------------------------------------------------------------------------------------------------
North Dakota - 0.3%
Grand Forks ND Health Care Facilities (VMIG1/NR)
100,000 4.25(a) 05/03/99(a) 100,000
------------------------------------------------------------------------------------------------
Tennessee - 1.7%
Metro Nashville Airport Authority Spl (P1/A-1+)
700,000 4.25(a) 05/03/99(a) 700,000
------------------------------------------------------------------------------------------------
Texas - 4.1%
Grapevine Industrial Development Corp. (American
Airlines-B1) (NR/P-1)
400,000 4.25(a) 05/03/99(a) 400,000
Grapevine Industrial Development Corp. (American
Airlines-B2) (NR/P-1)
100,000 4.25(a) 05/03/99(a) 100,000
Grapevine Industrial Development Revenue Bonds (Morgan Guarantee Trust
Co. LOC) (NR/Aa1/P-1)
500,000 4.25(a) 05/03/99(a) 500,000
Harris County Health Facilities Development Corp. RB for St. Luke's
Episcopal Hospital Series 1997 A (A-1+/NR)
400,000 4.25(a) 05/03/99(a) 400,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
COMMERCE NATIONAL TAX-FREE INTERMEDIATE BOND FUND
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Short-Term Obligations - (continued)
Texas - continued
Harris County Health Facilities Development Corp. RB for St. Luke's
Episcopal Hospital Series 1997 B (A-1+/NR)
$300,000 4.25(a)% 05/03/99(a) $ 300,000
-----------
1,700,000
--------------------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(cost $2,600,000) $ 2,600,000
--------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $39,363,681)(b) $40,134,172
--------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
Federal Income
Tax Information:
Gross unrealized
gain for
investments in
which value
exceeds cost $ 814,219
Gross unrealized
loss for
investments in
which cost
exceeds value (43,728)
-------------------------------
Net unrealized $ 770,491
gain
-------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
(a) Variable rate security. Coupon rate disclosed is that which is in effect
at April 30, 1999. The maturity date shown is the next reset date.
(b) The cost stated also represents aggregate cost for federal income tax
purposes.
------------------------------------------------------------------------------
Investment Abbreviations:
AMBAC--Insured by American Municipal Bond Assurance Corporation
FGIC--Insured by Financial Guaranty Insurance Company
GO--General Obligation
LOC--Letter of Credit
MBIA--Insured by Municipal Bond Investors Assurance Corporation
NR--Not Rated
PSFG--Permanent School Fund Guaranteed
TCRS--Transferable Custodial Receipts
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
39
<PAGE>
COMMERCE MISSOURI TAX-FREE INTERMEDIATE BOND FUND
Shareholder Letter
Dear Shareholder,
We are pleased to report on the performance of the Commerce Missouri Tax-Free
Intermediate Bond Fund for the 6-month period ended April 30, 1999.
Performance Review
For the six-month period ending April 30, 1999, the Fund
had a total return of 1.40% based on NAV (assumes expense
waivers and reimbursements). This compares to the Lipper
Intermediate Municipal Debt Funds Index six-month return of
1.35% and the Merrill Lynch Municipal Intermediate Index
six-month return of 1.64%. Past performance is no guarantee
of future results. (The Fund's NAV and yield are not guar-
anteed by the U.S. government or by its agencies, instru-
mentalities, or sponsored enterprises.)
Portfolio Highlights
. Recall from our fiscal year-end report, new issue volume
in the municipal market was on pace to challenge the all-
time record set in 1993 for supply of $292 billion. Despite
falling short of those levels, the heavy new issue volume
in 1998 pushed long-term municipal bond yields higher than
yields earned on taxable U.S. Treasury bonds. Over the
course of the last six months, this anomaly has corrected
itself as interest rates increased steadily limiting the
appeal of new issue borrowings. In addition, as supply sub-
sided, credit spreads continued to move inward. One notable
exception was in the health care sector where systematic
pressures such as reduced Medicare reimbursements and an
increase in competition drove yields on lower quality cred-
its upward.
. Our main focus of improving the relative yield of the Fund
has not changed. As such, recent purchases continue to be
concentrated in the higher yielding sectors of the munici-
pal market including health care. The duration of the Fund
slipped to the lower end of our target range of 5.50-5.75
years. This resulted in a price sensitivity slightly lower
than the Lipper Intermediate Municipal Debt Funds Index and
slightly long the Merrill Lynch Municipal Intermediate In-
dex.
We thank you for your investment and look forward to your
continued confidence.
Sincerely,
Fixed-Income Funds Team
Investment Management Group
Commerce Bank, N.A.
40
<PAGE>
COMMERCE MISSOURI TAX-FREE INTERMEDIATE BOND FUND
Statement of Investments
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Missouri Municipal Bond Obligations - 88.9%
Belton Cap Improvement Sales Tax Revenue Bonds (MBIA) (NR/Aaa)
$ 200,000 5.00% 03/01/05 $ 209,650
200,000 5.00 03/01/06 209,878
Belton MO Certificate Participation (AAA/NR)
500,000 4.75 03/01/13 498,465
Branson MO Reorganized School District (AAA/AAA)
300,000 5.50 03/01/14 325,059
Chesterfield GO Bonds (NR/Aa2)
500,000 5.20 02/15/12 516,420
Clay County MO Pub Bldg Auth Leasehold Rev Series A (FSA)(AAA/NR)
665,000 5.00 05/15/09 688,940
Clay County MO Pub Bldg Auth Leasehold Rev Series C (FSA) (AAA/NR)
40,000 5.00 05/15/09 41,440
Columbia Water & Electricity Revenue Bonds Series A (AA/A1)
300,000 5.40 10/01/02 316,068
Fort Zumwalt School District (AA/NR)
100,000 5.25 03/01/11 104,691
Hazelwood School District GO Bonds (NR/Aa)
150,000 5.15 03/01/04 158,027
Jackson County MO Leasehold Revenue (AMBAC) (AAA/Aaa)
500,000 4.00 12/01/04 501,475
Jackson County Reorganized School District #7 Lees Summit Lease
Partnership COP Bonds (AMBAC) (AAA/AAA)
265,000 4.50 03/01/04 271,447
Jackson County Reorganized School District #7 Lees Summit Lease
Partnership Revenue Bonds (AMBAC) (NR/Aaa)
310,000 4.15 03/01/05 310,620
Jackson County Reorganized School District #7 Lees Summit GO Bonds (Ref &
Impt Direct Deposit) (AA/Aa2)
500,000 4.50 03/01/05 511,280
Jackson County MO School District #7 Less Summit
GO Bonds (NR/A1)
250,000 5.60% 03/01/08 262,225
Jasper County School District #R-9 GO Bonds (AA/NR)
500,000 5.00 09/01/03 524,090
Kansas City Chouteau Bridge Project Series B (AA/Aa3)
380,000 5.00 05/01/11 392,498
Kansas City MO GO Bonds (AA/Aa3)
200,000 4.50 06/01/04 203,554
Kansas City MO GO Bonds Series A (AA/Aa3)
500,000 5.25 03/01/10 532,660
Kansas City MO Water Revenue (AA3/AA)
270,000 5.60 12/01/01 283,416
Kansas City Sewer Special Assessment GO Bonds Series A (AA/Aa)
410,000 7.40 05/15/99 410,476
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Missouri Municipal Bond Obligations - (continued)
Missouri High ED Student Loan (AAA/NR)
$ 500,000 4.50% 02/15/10 $ 494,920
Missouri State Environmental Improvement & Energy Resources Authority
Pollution Control Revenue Bonds (Elec Coop Thomas Hill) (AA/A1)
250,000 5.50 12/01/04 267,013
500,000 5.50 12/01/06 539,415
Missouri State Environmental Improvement & Energy Resources Authority
Water Pollution Control Revenue
Bonds Series A (AA/NR)
150,000 5.25 07/01/02 157,040
Missouri State Environmental Improvement & Energy Resources Authority
Water Pollution Control Revenue
Bonds Series C (NR/Aa)
205,000 4.75 01/01/01 208,747
500,000 4.90 01/01/02 515,530
Missouri State Environmental Improvement & Energy Resources Authority
Water Pollution Control Revenue
Bonds Series D (NR/Aa)
400,000 5.50 01/01/08 430,276
Missouri State Environmental Improvement & Energy Resources Authority
Water Pollution Control Revenue
Bonds Series E (NR/Aa)
390,000 4.38 07/01/00 393,994
Missouri State Fourth State Building GO Bonds Series A (AAA/Aaa)
500,000 7.00 04/01/04 570,010
150,000 5.30 08/01/08 161,068
500,000 5.40 08/01/09 536,760
Missouri State GO Bonds Series A (AAA/Aaa)
500,000 4.50 08/01/02 514,695
500,000 6.50 08/01/14 531,110
Missouri State Health & Educational Facilities Revenue (BBB+/NR)
500,000 4.75 02/15/05 506,265
Missouri State Health & Educational Facility
Revenue Bonds (Barnes-Jewish, Inc.) (AA/Aa2)
400,000 6.00 05/15/07 445,748
150,000 6.00 05/15/11 168,641
Missouri State Health & Educational Facility Revenue Bonds (Barnes-
Jewish, Inc.) (AMBAC-TRCS) (AAA/Aaa)
1,000,000 5.15 05/15/10 1,046,260
Missouri State Health & Educational Facility Revenue
Bonds (Children Mercy Hosp.)(A+/NR)
750,000 5.25 05/15/18 745,522
Missouri State Health & Educational Facility Revenue Bonds (The Barstow
School) (NR/NR)
405,000 4.75 10/01/10 393,178
Missouri State Health & Educational Facility Revenue
Bonds (prerefunded to 06/01/01) (MBIA) (AAA/Aaa)
300,000 6.63 06/01/11 323,841
</TABLE>
The accompanying notes are an integral part of these financial statements.
41
<PAGE>
COMMERCE MISSOURI TAX-FREE INTERMEDIATE BOND FUND
Statement of Investments (continued)
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Missouri Municipal Bond Obligations - (continued)
Missouri State Health & Educational Facility Revenue Bonds Series B
(Health Midwest) (MBIA) (AAA/Aaa)
$ 150,000 6.10% 06/01/11 $ 163,021
Missouri State Health & Educational Facility Washington University
Revenue Bonds Series A (NR/Aa1)
800,000 4.75 08/15/05 831,624
Missouri State Housing Development Community Mortgage Revenue Bond
(GNMA/FNMA) (AAA/NR)
375,000 4.55 03/01/04 379,511
Missouri State Housing Development Community Mortgage Revenue Bonds (AMT-
Singlefam-Homeowner Loan A-2) (GNMA/FNMA) (AAA/Aaa)
195,000 5.40 03/01/06 203,106
Missouri State Housing Development Community Mortgage Revenue Bonds (AMT-
Singlefam-Homeowner Loan B-2 (GNMA/FNMA) (AAA/NR)
375,000 5.20 03/01/08 389,212
Missouri State Housing Development Community Mortgage Revenue Bonds
(Single Family Homeownership-B) (GNMA/FNMA) (AAA/NR)
190,000 5.50 03/01/06 199,109
Missouri State Housing Development Community Mortgage Revenue Bonds
Series C (GNMA/FNMA) (AAA/NR)
210,000 4.80 09/01/01 213,958
Missouri State Housing Development Community Mortgage Revenue Bonds
Series C-2 (GNMA/FNMA)(AAA/NR)
240,000 4.90 03/01/07 243,881
Missouri State Regal Convention & Sports Complex
Authority Revenue Bonds (A+/Aa3)
640,000 4.75 08/15/04 660,448
500,000 5.20 08/15/07 521,700
Missouri State Water Pollution Control GO Bonds
Series A (AAA/Aaa)
300,000 5.60 08/01/10 324,795
New Liberty Hospital District Revenue Bonds (MBIA) (NR/Aaa)
375,000 4.25 12/01/02 380,955
515,000 5.00 12/01/10 530,388
380,000 5.13 12/01/12 390,256
Osage Beach MO Waterworks and Sewer System
Revenue (NR/NR)
220,000 4.75 12/01/11 214,925
500,000 5.35 12/01/17 494,185
Perry County MO Hospital Revenue (NR/NR)
420,000 5.40 06/01/11 420,470
Platte County Missouri School District Park Hill GO Bond (Student Aid
Direct Deposit) (AA/Aa2)
500,000 5.20 03/01/09 528,230
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Missouri Municipal Bond Obligations - (continued)
Richmond Heights CTFS Partnership Capital Improvement Projects Series A
Certificate Participation (MBIA) (AAA/Aaa)
$ 550,000 4.60% 02/15/05 $ 563,706
575,000 4.70 02/15/06 589,726
Springfield GO Bonds (NR/Aa)
220,000 4.30 03/01/00 221,940
Springfield MO School Dist#12 Series B (FGIC) (AAA/Aaa)
620,000 9.50 03/01/07 834,136
Springfield Public Building Corp. Leasehold Revenue
Bond (AMBAC) (AAA/NR)
225,000 4.50 03/01/08 227,439
250,000 4.85 03/01/10 255,203
390,000 5.00 02/15/16 391,895
St. Charles County Francis Howell School District GO
Bonds (FGIC) (AAA/Aaa)
700,000 4.60 03/01/04 718,963
St. Charles County Francis Howell School District GO
Bonds (Student Aid Direct Deposit) (AA/NR)
485,000 4.50 03/01/04 497,227
St. Charles County MO Industrial Development (Housing Vanderbilt Apts)
(NR/NR)
350,000 5.00 02/01/29 351,204
St. Charles County MO School District (A2/AAA)
700,000 5.05 03/01/19 702,639
St. Charles County MO School District GO Bonds Series A (AMBAC) (AAA/Aaa)
150,000 5.75 03/01/11 157,053
St. Louis Board of Education GO Bonds Series A
(FGIC State Aid Direct Deposit) (AAA/Aaa)
500,000 4.40 04/01/07 507,995
St. Louis Board of Education GO Bonds Series B (FGIC) (AAA/Aaa)
905,000 5.50 04/01/10 975,581
St. Louis County MO Certificate Partnership (AA2/AA)
500,000 4.40 05/15/11 488,350
St. Louis County MO GO Bonds Series B (NR/Aa1)
200,000 5.25% 02/01/07 208,236
750,000 5.30 02/01/08 782,175
St. Louis County MO Regal Convention & Sports Complex Authority Series C
(AAA/Aaa)
530,000 7.90 08/15/21 615,913
St. Louis County MO Rockwood School District (AA2/AA)
800,000 5.13 02/01/07 848,952
740,000 4.63 07/01/08 759,995
St. Louis County MO School District GO Bonds (FGIC) (AAA/Aaa)
200,000 5.40 04/01/03 212,400
</TABLE>
The accompanying notes are an integral part of these financial statements.
42
<PAGE>
COMMERCE MISSOURI TAX-FREE INTERMEDIATE BOND FUND
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Missouri Municipal Bond Obligations - (continued)
St. Louis County MO School District GO Bonds Lindbergh (NR/Aa)
$ 715,000 6.60% 02/15/03 $ 784,784
200,000 5.40 02/15/10 213,454
St. Louis County School District GO Bonds Parkway (NR/Aa)
300,000 7.00 02/01/00 308,238
St. Peters GO Bonds (AAA/NR)
500,000 7.20 01/01/09 610,895
St. Peters GO Bonds (NR/A1)
150,000 5.80 01/01/10 160,770
University Missouri Development Foundation Power Leasehold Revenue
Bonds (AAA/NR)
500,000 5.75 05/01/13 544,180
University Missouri Health Facilities Revenue Bonds
Series A (AMBAC) (AAA/Aaa)
150,000 5.20 11/01/10 156,740
University of Missouri Systems Facilities Revenue Bonds (AA+/Aa2)
250,000 4.60 11/01/00 254,465
--------------------------------------------------------------------------------------------
TOTAL MISSOURI MUNICIPAL BOND
OBLIGATIONS (cost $36,521,136) $37,256,440
--------------------------------------------------------------------------------------------
Short-Term Obligations - 6.7%
Independence MO Ind Dev Auth Rev Bonds (Credit Local de France LOC;
Expire: 11/15/07; Direct Pay 100%) (AA+/NR)
$2,100,000 4.25%(a) 05/03/99(a) $ 2,100,000
Missouri State Health & Educational Facility Revenue Bond (Drury
College) Series A (Chase Manhattan Bank LOC); Expire: 8/12/01,
Direct Pay 100%) (NR/aA2/VMIG1)
200,000 4.30(a) 05/03/99(a) 200,000
Missouri State Health & Educational Facility St. Francis Medical
Center Revenue Bonds Series A (Credit Local de France LOC; Expire:
6/19/03, Direct Pay 100%)
(AA+/A-1+/NR)
500,000 4.25(a) 05/03/99(a) 500,000
--------------------------------------------------------------------------------------------
TOTAL SHORT-TERM OBLIGATIONS
(cost $2,800,000) $ 2,800,000
--------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal Interest Maturity
Amount Rate Date Value
<S> <C> <C> <C>
Repurchase Agreement - 3.8%
State Street Bank & Trust Company(b)
$1,606,000 4.72% 05/03/99 $ 1,606,000
--------------------------------------------------------------------------------------------------
TOTAL REPURCHASE AGREEMENT
(cost $1,606,000) $ 1,606,000
--------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS
(cost $40,927,137)(c) $41,662,440
--------------------------------------------------------------------------------------------------
Federal Income Tax Information:
Gross unrealized gain for investments in which
value exceeds cost $ 782,040
Gross unrealized loss for investments in which
cost exceeds value (46,737)
--------------------------------------------------------------------------------------------------
Net unrealized gain $ 735,303
--------------------------------------------------------------------------------------------------
</TABLE>
The percentage shown for each investment category reflects the value of
investments in that category as a percentage of total net assets.
(a) Variable rate security. Coupon rate disclosed is that which is in effect
at April 30, 1999. The maturity date shown is the next reset date.
(b) The repurchase agreement is fully collateralized by U.S. Treasury securi-
ties.
(c) The cost stated also represents aggregate cost for federal income tax
purposes.
------------------------------------------------------------------------------
Investment Abbreviations:
AMBAC--Insured by American Municipal Bond Assurance Corporation
CGIC--Insured by Capital Guaranty Insurance Corporation
FGIC--Insured by Financial Guaranty Insurance Company
GO--General Obligation
LOC--Letter of Credit
MBIA--Insured by Municipal Bond Investors Assurance Corporation
NR--Not Rated
------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
COMMERCE FUNDS
Statements of Assets and Liabilities
April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Short-Term
Government Balanced
Fund Bond Fund Fund
Assets:
<S> <C> <C> <C>
Investments in securities, at value
(cost $102,270,360, $365,785,984,
$116,175,297, $77,622,490,
$351,687,978, $111,109,002,
$86,164,816, $39,363,681 and
$40,927,137, respectively) $102,124,028 $369,389,048 $133,514,170
Cash and Foreign Currency 18,163 36,066 537
Receivables:
Investment securities sold 46,358 562,129 287,180
Interest 783,169 3,560,777 708,552
Dividends -- -- 49,082
Fund shares sold 529,130 1,920,779 240,536
Deferred organization expenses, net 6,087 6,459 6,225
Other 572 2,742 2,962
------------------------------------------------------------------------------
Total assets 103,507,507 375,478,000 134,809,244
------------------------------------------------------------------------------
Liabilities:
Payables:
Investment securities purchased 877,177 2,988,428 --
Fund shares redeemed 234 180,945 123,019
Dividends and distributions 198,076 568,257 --
Advisory fees 12,422 147,863 70,795
Administrative fees 11,688 44,354 16,857
Shareowner servicing fees 4,758 28,308 24,785
Distribution fees-service shares 1,030 1,245 2,942
Accrued expenses and other liabili-
ties 34,870 74,830 42,614
------------------------------------------------------------------------------
Total liabilities 1,140,255 4,034,230 281,012
------------------------------------------------------------------------------
Net Assets:
Paid-in capital 102,385,949 365,990,732 113,065,317
Accumulated undistributed net in-
vestment income (loss) 43,164 110,651 309,526
Accumulated net realized gain (loss)
on investment transactions and
foreign currency transactions 84,471 1,739,323 3,814,516
Net unrealized gain (loss) on in-
vestments and translation of assets
and liabilities denominated in for-
eign currencies (146,332) 3,603,064 17,338,873
------------------------------------------------------------------------------
NET ASSETS $102,367,252 $371,443,770 $134,528,232
------------------------------------------------------------------------------
Shares Outstanding:
Total shares outstanding, no par
value (unlimited number of shares
authorized):
Institutional Shares 5,511,006 19,213,315 5,021,974
Service Shares 54,717 58,276 114,234
Institutional Shares: Net asset
value and maximum public offering
price per share (net assets/shares
outstanding)(b) $ 18.39 $ 19.27 $ 26.19
Service Shares: Net asset value per
share (net assets/shares outstand-
ing) $ 18.40 $ 19.28 $ 26.17
Maximum public offering price per
share(c) $ 18.78 $ 19.98 $ 27.12
------------------------------------------------------------------------------
</TABLE>
(a) The National Tax-Free Intermediate Bond and Missouri Tax-Free Intermedi-
ate Bond Funds were formerly known as the National Tax-Free Bond Fund and
the Missouri Tax-Free Bond Fund, respectively.
(b) Effective November 1, 1998, the sales charge was removed for the National
Tax-Free Intermediate Bond and Missouri Tax-Free Intermediate Bond Funds.
(c) 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
1.03624).
The accompanying notes are an integral part of these financial statements.
44
<PAGE>
COMMERCE FUNDS
<TABLE>
<CAPTION>
Growth National Missouri
and Tax-Free Tax-Free
Income MidCap International Intermediate Intermediate
Fund Growth Fund Fund Equity Fund Bond Fund(a) Bond Fund(a)
<S> <C> <C> <C> <C> <C>
$87,564,592 $501,833,456 $141,468,558 $105,468,252 $40,134,172 $41,662,440
465,225 310 29 281,613 65,346 279
-- 5,707,549 6,377,058 1,324,615 -- --
-- 3,519 339 140 594,135 499,345
106,812 167,158 5,903 468,863 -- --
1,206,507 852,270 402,768 235,127 427,700 577,250
11,353 6,605 6,058 6,014 8,674 8,650
797 5,608 996 872 286 330
---------------------------------------------------------------------------------
89,355,286 508,576,475 148,261,709 107,785,496 41,230,313 42,748,294
---------------------------------------------------------------------------------
-- 10,700,108 2,437,065 90,394 346,848 700,000
103,204 268,942 163,810 80,088 -- 15,072
-- -- -- -- 104,009 99,788
54,639 311,218 91,486 84,816 11,128 7,553
10,931 62,244 18,298 13,186 4,900 5,008
7,281 64,454 11,141 6,492 -- --
1,447 13,510 2,071 809 -- --
52,384 76,838 36,600 101,940 16,409 19,905
---------------------------------------------------------------------------------
229,886 11,497,314 2,760,471 377,725 483,294 847,326
---------------------------------------------------------------------------------
82,408,233 318,482,334 105,996,401 85,118,642 39,835,712 41,092,353
13,165 (561,960) (559,654) 96,486 21,096 22,131
(3,238,100) 29,013,309 9,704,935 2,895,618 119,720 51,181
9,942,102 150,145,478 30,359,556 19,297,025 770,491 735,303
---------------------------------------------------------------------------------
$89,125,400 $497,079,161 $145,501,238 $107,407,771 $40,747,019 $41,900,968
---------------------------------------------------------------------------------
3,733,034 12,166,731 4,004,513 4,125,273 2,137,854 2,220,789
48,904 363,273 72,610 17,786 -- --
$ 23.57 $ 39.67 $ 35.69 $ 25.92 $ 19.06 $ 18.87
$ 23.58 $ 39.54 $ 35.45 $ 25.87 -- --
$ 24.43 $ 40.97 $ 36.73 $ 26.81 -- --
---------------------------------------------------------------------------------
</TABLE>
45
<PAGE>
COMMERCE FUNDS
Statements of Operations
For the Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Short-Term
Government Bond Balanced
Fund Fund Fund
<S> <C> <C> <C>
Investment Income:
Interest $ 2,563,049 $11,006,756 $ 1,786,477
Dividends(a) -- -- 413,562
-------------------------------------------------------------------------------
Total income 2,563,049 11,006,756 2,200,039
-------------------------------------------------------------------------------
Expenses:
Advisory fees 196,332 805,529 668,692
Administration fees 58,900 241,659 100,304
Shareowner servicing fees 19,776 91,459 87,095
Transfer agent fees 29,628 32,934 24,400
Custodian fees 31,565 36,552 44,109
Professional fees 8,253 28,856 11,405
Registration fees 16,437 31,781 23,730
Trustee fees 890 3,474 1,341
Distribution fees-Service Shares 1,275 1,331 3,567
Amortization of deferred organization
expenses 4,943 5,245 5,052
Other 10,804 31,373 22,012
-------------------------------------------------------------------------------
Total expenses 378,803 1,310,193 991,707
-------------------------------------------------------------------------------
Less -- Investment advisory fees
waived and expense reimbursements (110,516) -- (247,416)
-------------------------------------------------------------------------------
Net expenses 268,287 1,310,193 744,291
-------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 2,294,762 9,696,563 1,455,748
-------------------------------------------------------------------------------
Realized and unrealized gain (loss) on
investments and foreign currency
transactions:
Net realized gain (loss) from:
Investment transactions 84,475 1,735,797 3,745,480
Foreign currency transactions -- -- --
Net change in unrealized gain (loss)
on:
Investments (1,661,417) (7,575,063) 7,006,721
Translation of assets and liabilities
denominated in foreign currencies -- -- --
-------------------------------------------------------------------------------
Net realized and unrealized gain
(loss) on investments and foreign
currency transactions (1,576,942) (5,839,266) 10,752,201
-------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $ 717,820 $ 3,857,297 $12,207,949
-------------------------------------------------------------------------------
</TABLE>
(a) Amount is net of $2,828, $576 and $74,422 respectively, for the Growth
and Income, MidCap and International Equity Funds in withholding taxes.
The accompanying notes are an integral part of these financial statements.
46
<PAGE>
COMMERCE FUNDS
<TABLE>
<CAPTION>
National Missouri
Growth Tax-Free Tax-Free
and Income Growth MidCap International Intermediate Intermediate
Fund Fund Fund Equity Fund Bond Fund Bond Fund
<S> <C> <C> <C> <C> <C>
$ 12,769 $ 501,878 $ 61,771 $ 314,239 $ 824,583 $ 836,206
815,927 1,529,086 244,370 701,654 -- --
------------------------------------------------------------------------------------
828,696 2,030,964 306,141 1,015,893 824,583 836,206
------------------------------------------------------------------------------------
348,685 1,800,430 573,199 801,603 90,623 92,505
69,737 360,086 114,640 80,160 27,187 27,751
26,514 204,634 50,810 26,227 -- --
27,417 46,390 33,151 30,699 13,686 14,451
23,178 41,976 28,669 118,040 23,796 23,275
10,296 43,479 12,826 10,513 4,383 3,875
19,085 24,487 21,094 18,762 1,645 4,508
1,040 4,612 1,488 1,188 447 445
1,600 14,786 2,411 667 -- --
1,984 5,356 4,913 4,880 5,300 5,289
8,211 47,029 22,594 12,094 3,654 3,599
------------------------------------------------------------------------------------
537,747 2,593,265 865,795 1,104,833 170,721 175,698
------------------------------------------------------------------------------------
-- -- -- (286,314) (43,850) (55,442)
------------------------------------------------------------------------------------
537,747 2,593,265 865,795 818,519 126,871 120,256
------------------------------------------------------------------------------------
290,949 (562,301) (559,654) 197,374 697,712 715,950
------------------------------------------------------------------------------------
(3,209,502) 29,012,699 10,021,600 4,616,339 119,802 51,225
-- -- -- (86,072) -- --
11,565,903 66,844,440 11,298,779 8,495,465 (348,474) (255,540)
-- -- -- (18,798) -- --
------------------------------------------------------------------------------------
8,356,401 95,857,139 21,320,379 13,006,934 (228,672) (204,315)
------------------------------------------------------------------------------------
$8,647,350 $95,294,838 $20,760,725 $13,204,308 $ 469,040 $ 511,635
------------------------------------------------------------------------------------
</TABLE>
47
<PAGE>
COMMERCE FUNDS
Statements of Changes in Net Assets
For the Six Months Ended April 30, 1999 (Unaudited)
<TABLE>
<CAPTION>
Short-Term
Government Bond Balanced
Fund Fund Fund
<S> <C> <C> <C>
Increase (Decrease) in Net Assets:
From operations:
Net investment income (loss) $ 2,294,762 $ 9,696,563 $ 1,455,748
Net realized gain (loss) on
investments and foreign currency
transactions 84,475 1,735,797 3,745,480
Net change in unrealized gain
(loss) on investments and
translation of assets and
liabilities denominated in foreign
currencies (1,661,417) (7,575,063) 7,006,721
------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 717,820 3,857,297 12,207,949
------------------------------------------------------------------------------
Distributions to Shareholders:
From net investment income
Institutional Shares (2,245,593) (9,665,188) (1,390,462)
Service Shares (28,309) (30,636) (27,020)
From net realized gain on
investment transactions
Institutional Shares (47,999) (3,616,243) (13,708,759)
Service Shares (693) (12,411) (298,063)
------------------------------------------------------------------------------
Total distributions to
shareholders (2,322,594) (13,324,478) (15,424,304)
------------------------------------------------------------------------------
From share transactions:
Proceeds from sale of shares
Institutional Shares 47,520,312 96,474,010 15,182,563
Service Shares 1,806,654 141,108 625,560
Reinvestment of dividends and
distributions
Institutional Shares 1,501,006 8,989,731 15,082,463
Service Shares 17,240 38,399 307,653
Cost of shares redeemed
Institutional Shares (15,612,939) (31,104,136) (19,295,768)
Service Shares (1,765,949) (82,792) (469,098)
------------------------------------------------------------------------------
Net increase in net assets
resulting from share transactions 33,466,324 74,456,320 11,433,373
------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) 31,861,550 64,989,139 8,217,018
------------------------------------------------------------------------------
Net assets:
Beginning of period 70,505,702 306,454,631 126,311,214
------------------------------------------------------------------------------
End of period $102,367,252 $371,443,770 $134,528,232
------------------------------------------------------------------------------
Accumulated undistributed net
Investment income (loss) $ 43,164 $ 110,651 $ 309,526
------------------------------------------------------------------------------
Summary of Share Transactions:
Institutional Shares
Sold 2,570,761 4,956,102 581,866
Issued on reinvestment of
dividends and distributions 81,131 459,625 604,655
Redeemed (843,493) (1,591,689) (740,448)
------------------------------------------------------------------------------
Increase (decrease) in shares
outstanding 1,808,399 3,824,038 446,073
------------------------------------------------------------------------------
Service Shares
Sold 97,833 7,201 23,837
Issued on reinvestment of
dividends and distributions 931 1,962 12,349
Redeemed (95,548) (4,229) (17,977)
------------------------------------------------------------------------------
Increase (decrease) in shares
outstanding 3,216 4,934 18,209
------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
48
<PAGE>
COMMERCE FUNDS
<TABLE>
<CAPTION>
National Missouri
Growth Tax-Free Tax-Free
and Income Growth MidCap International Intermediate Intermediate
Fund Fund Fund Equity Fund Bond Fund Bond Fund
<S> <C> <C> <C> <C> <C>
$ 290,949 $ (562,301) $ (559,654) $ 197,374 $ 697,712 $ 715,950
(3,209,502) 29,012,699 10,021,600 4,530,267 119,802 51,225
11,565,903 66,844,440 11,298,779 8,476,667 (348,474) (255,540)
----------------------------------------------------------------------------------------
8,647,350 95,294,838 20,760,725 13,204,308 469,040 511,635
----------------------------------------------------------------------------------------
(308,015) (151,251) -- (447,364) (697,712) (715,990)
(2,638) -- -- (952) -- --
(1,000,492) (60,788,010) (7,035,654) -- (282,625) (185,340)
(14,161) (1,370,831) (63,725) -- -- --
----------------------------------------------------------------------------------------
(1,325,306) (62,310,092) (7,099,379) (448,316) (980,337) (901,330)
----------------------------------------------------------------------------------------
15,674,028 77,599,754 21,838,264 16,387,735 9,772,097 12,308,620
67,904 4,157,775 1,241,058 1,661,488 -- --
858,199 51,640,718 4,974,933 302,905 132,396 156,334
16,418 1,357,104 63,715 945 -- --
(28,407,450) (88,512,620) (36,451,406) (23,600,787) (2,173,961) (4,225,283)
(396,049) (910,293) (98,083) (1,640,463) -- --
----------------------------------------------------------------------------------------
(12,186,950) 45,332,438 (8,431,519) (6,888,177) 7,730,532 8,239,671
----------------------------------------------------------------------------------------
(4,864,906) 78,317,184 5,229,827 5,867,815 7,219,235 7,849,976
----------------------------------------------------------------------------------------
93,990,306 418,761,977 140,271,411 101,539,956 33,527,784 34,050,992
----------------------------------------------------------------------------------------
$89,125,400 $497,079,161 $145,501,238 $107,407,771 $40,747,019 $41,900,968
----------------------------------------------------------------------------------------
$13,165 $ (561,960) $ (559,654) $ 96,486 $ 21,096 $ 22,131
----------------------------------------------------------------------------------------
702,674 2,022,192 630,629 675,381 509,902 649,424
40,017 1,464,533 148,905 12,621 6,905 8,248
(1,273,483) (2,287,081) (1,043,827) (961,966) (113,267) (222,887)
----------------------------------------------------------------------------------------
(530,792) 1,199,644 (264,293) (273,964) 403,540 434,785
----------------------------------------------------------------------------------------
3,041 108,335 35,341 67,117 -- --
766 38,598 1,918 39 -- --
(17,714) (24,084) (2,807) (65,929) -- --
----------------------------------------------------------------------------------------
(13,907) 122,849 34,452 1,227 -- --
----------------------------------------------------------------------------------------
</TABLE>
49
<PAGE>
COMMERCE FUNDS
Statements of Changes in Net Assets
For the Year Ended October 31, 1998
<TABLE>
<CAPTION>
Short-Term
Government Bond Balanced
Fund Fund Fund
<S> <C> <C> <C>
Increase (Decrease) in Net Assets:
From operations:
Net investment income (loss) $ 3,383,938 $ 15,691,122 $ 2,750,156
Net realized gain (loss) on
investments and foreign currency
transactions 228,646 3,849,016 14,126,371
Net change in unrealized gain
(loss) on investments and
translation of assets and
liabilities denominated in foreign
currencies 887,152 2,052,158 (6,792,419)
------------------------------------------------------------------------------
Net Increase (decrease) in net
assets resulting from operations 4,499,736 21,592,296 10,084,108
------------------------------------------------------------------------------
Distributions to Shareholders:
From net investment income:
Institutional Shares (3,391,516) (15,642,257) (2,649,664)
Service Shares (33,839) (48,371) (43,961)
From net realized gain on
investment transactions:
Institutional Shares -- -- (5,448,631)
Service Shares -- -- (66,436)
------------------------------------------------------------------------------
Total distributions to
shareholders (3,425,355) (15,690,628) (8,208,692)
------------------------------------------------------------------------------
From share transactions:
Proceeds from sale of shares:
Institutional Shares 35,298,819 124,463,979 37,176,250
Service Shares 558,189 341,018 1,570,001
Reinvestment of dividends and
distributions:
Institutional Shares 2,127,602 10,866,284 8,031,502
Service Shares 25,076 44,692 105,688
Cost of shares redeemed:
Institutional Shares (17,791,072) (53,619,651) (29,167,152)
Service Shares (77,342) (84,976) (281,352)
------------------------------------------------------------------------------
Net increase in net assets
resulting from share transactions 20,141,272 82,011,346 17,434,937
------------------------------------------------------------------------------
TOTAL INCREASE 21,215,653 87,913,014 19,310,353
------------------------------------------------------------------------------
Net assets:
Beginning of year 49,290,049 218,541,617 107,000,861
------------------------------------------------------------------------------
End of year $ 70,505,702 $306,454,631 $126,311,214
------------------------------------------------------------------------------
Accumulated Undistributed Net
Investment Income $ 22,304 $ 109,912 $ 271,260
------------------------------------------------------------------------------
Summary of Share Transactions:
Institutional Shares
Sold 1,903,333 6,349,549 1,363,665
Issued on reinvestment of
dividends and distributions 114,766 552,687 300,769
Redeemed (959,304) (2,720,225) (1,054,815)
------------------------------------------------------------------------------
Increase in shares outstanding 1,058,795 4,182,011 609,619
------------------------------------------------------------------------------
Service Shares
Sold 29,958 17,372 57,190
Issued on reinvestment of
dividends and distributions 1,352 2,273 3,950
Redeemed (4,168) (4,350) (10,832)
------------------------------------------------------------------------------
Increase (decrease) in shares
outstanding 27,142 15,295 50,308
------------------------------------------------------------------------------
</TABLE>
(a) The National Tax-Free Intermediate Bond and Missouri Tax-Free
Intermediate Bond Funds were formerly known as the National Tax-Free Bond
Fund and the Missouri Tax-Free Bond Fund, respectively.
The accompanying notes are an integral part of these financial statements.
50
<PAGE>
COMMERCE FUNDS
<TABLE>
<CAPTION>
National Missouri
Growth and Tax-Free Tax-Free
Income Growth MidCap International Intermediate Intermediate
Fund Fund Fund Equity Fund Bond Fund(a) Bond Fund(a)
<S> <C> <C> <C> <C> <C>
$ 660,152 $ 779,020 $ (770,517) $ 426,296 $ 1,124,055 $ 1,135,027
986,021 62,159,771 6,782,606 (1,583,499) 282,675 185,385
(4,499,448) (7,637,153) (3,186,658) 6,493,395 484,832 536,591
----------------------------------------------------------------------------------------
(2,853,275) 55,301,638 2,825,431 5,336,192 1,891,562 1,857,003
----------------------------------------------------------------------------------------
(649,065) (672,603) -- (284,322) (1,124,055) (1,135,027)
(7,017) (1,362) -- (617) -- --
(96,153) (22,597,342) (6,316,543) (2,052,413) -- (18,974)
(4,884) (384,442) (36,686) (6,198) -- --
----------------------------------------------------------------------------------------
(757,119) (23,655,749) (6,353,229) (2,343,550) (1,124,055) (1,154,001)
----------------------------------------------------------------------------------------
66,921,460 101,540,731 53,751,656 38,758,637 11,904,162 13,626,116
845,014 3,281,298 747,791 200,795 -- --
515,244 20,410,434 4,555,044 1,653,469 149,809 193,371
8,795 381,744 36,634 6,737 -- --
(16,381,268) (87,122,002) (28,264,874) (20,520,621) (4,574,500) (4,905,167)
(2,069,988) (907,527) (127,510) (55,621) -- --
----------------------------------------------------------------------------------------
49,839,257 37,584,678 30,698,741 20,043,396 7,479,471 8,914,320
----------------------------------------------------------------------------------------
46,228,863 69,230,567 27,170,943 23,036,038 8,246,978 9,617,322
----------------------------------------------------------------------------------------
47,761,443 349,531,410 113,100,468 78,503,918 25,280,806 24,433,670
----------------------------------------------------------------------------------------
$ 93,990,306 $418,761,977 $140,271,411 $101,539,956 $33,527,784 $34,050,992
----------------------------------------------------------------------------------------
$ 32,869 $ 151,592 $ -- $ 347,428 $ 21,096 $ 22,171
----------------------------------------------------------------------------------------
2,886,337 2,754,076 1,567,306 1,685,123 624,858 723,684
22,352 588,450 136,501 75,866 7,857 10,270
(715,652) (2,329,380) (839,957) (902,867) (239,516) (260,635)
----------------------------------------------------------------------------------------
2,193,037 1,013,146 863,850 858,122 393,199 473,319
----------------------------------------------------------------------------------------
35,269 87,121 20,737 8,322 -- --
379 11,026 1,101 309 -- --
(91,504) (24,603) (3,660) (2,521) -- --
----------------------------------------------------------------------------------------
(55,856) 73,544 18,178 6,110 -- --
----------------------------------------------------------------------------------------
</TABLE>
51
<PAGE>
COMMERCE FUNDS
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Income from Distributions
investment operations to shareholders
------------------------- ------------------------------
Net asset Net realized From net
value, Net and unrealized From net realized
beginning investment gain (loss) on investment gain on
of period income investments(b) income investments
SHORT-TERM GOVERNMENT FUND
<S> <C> <C> <C> <C> <C>
For the Six Months Ended
April 30, 1999 (unau-
dited)
Institutional Shares $18.78 $0.54 $(0.38) $(0.54) $(0.01)
Service Shares 18.79 0.52 (0.39) (0.51) (0.01)
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1998
Institutional Shares 18.47 1.10 0.32 (1.11) --
Service Shares 18.48 1.06 0.31 (1.06) --
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1997
Institutional Shares 18.43 1.11 0.04 (1.11) --
Service Shares(a) 18.37 0.92 0.11 (0.92) --
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 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) --
BOND FUND
For the Six Months Ended
April 30, 1999 (unau-
dited)
Institutional Shares $19.84 $0.58 $(0.34) $(0.58) $(0.23)
Service Shares 19.85 0.56 (0.34) (0.56) (0.23)
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1998
Institutional Shares 19.43 1.15 0.41 (1.15) --
Service Shares 19.43 1.11 0.42 (1.11) --
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1997
Institutional Shares 19.07 1.17 0.39 (1.18) (0.02)
Service Shares(a) 19.00 0.94 0.43 (0.94) --
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1996
Institutional Shares 19.61 1.16 (0.28) (1.16) (0.26)
---------------------------------------------------------------------------------------------
For the Period December
12, 1994 (Commencement
of Operations) through
October 31, 1995
Institutional Shares 18.00 1.12 1.61 (1.12) --
---------------------------------------------------------------------------------------------
</TABLE>
(a) For the period January 2, 1997 (date of initial public offering) through
October 31, 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>
COMMERCE FUNDS
<TABLE>
<CAPTION>
Ratios assuming no waiver of
investment advisory fees or
expense reimbursements
----------------------------
Net assets Ratio of Ratio of Ratio of Ratio of
Net asset at end of net expenses net investment expenses to net investment Portfolio
value, end Total period to average income to average average income to average turnover
of period return(c) (in 000s) net assets net assets net assets net assets rate
<S> <C> <C> <C> <C> <C> <C> <C>
$18.39 0.85% $101,361 0.68%(d) 5.85%(d) 0.96%(d) 5.57%(d) 8%
18.40 0.73 1,006 0.93(d) 5.66(d) 1.21(d) 5.38(d) 8
- -----------------------------------------------------------------------------------------------------------
18.78 7.94 69,538 0.68 5.90 1.04 5.55 48
18.79 7.67 968 0.93 5.63 1.29 5.28 48
- -----------------------------------------------------------------------------------------------------------
18.47 6.45 48,840 0.68 6.04 1.11 5.61 36
18.48 5.81 450 0.93(d) 5.64(d) 1.36(d) 5.21(d) 36
- -----------------------------------------------------------------------------------------------------------
18.43 5.02 33,839 0.68 5.90 1.11 5.47 12
- -----------------------------------------------------------------------------------------------------------
18.83 10.72 20,211 0.68(d) 6.38(d) 1.14(d) 5.92(d) 158
$19.27 1.25% $370,320 0.81%(d) 6.02%(d) 0.81%(d) 6.02%(d) 12%
19.28 1.12 1,124 1.06(d) 5.75(d) 1.06(d) 5.75(d) 12
- -----------------------------------------------------------------------------------------------------------
19.84 8.27 305,396 0.83 5.86 0.83 5.86 30
19.85 8.05 1,059 1.08 5.59 1.08 5.59 30
- -----------------------------------------------------------------------------------------------------------
19.43 8.50 217,803 0.85 6.14 0.85 6.14 19
19.43 7.48 739 1.10(d) 5.67(d) 1.10(d) 5.67(d) 19
- -----------------------------------------------------------------------------------------------------------
19.07 4.71 151,205 0.84 6.10 0.84 6.10 31
- -----------------------------------------------------------------------------------------------------------
19.61 15.59 98,504 0.88(d) 6.64(d) 0.88(d) 6.64(d) 58
- -----------------------------------------------------------------------------------------------------------
</TABLE>
53
<PAGE>
COMMERCE FUNDS
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Income from Distributions
investment operations to shareholders
------------------------- ------------------------------
Net asset Net realized From net
value, Net and unrealized From net realized
beginning investment gain on investment gain on
of period income investments(b) income investments
BALANCED FUND
<S> <C> <C> <C> <C> <C>
For the Six Months Ended
April 30, 1999 (unau-
dited)
Institutional Shares $27.04 $3.25 $ 2.13 $(3.25) $(2.98)
Service Shares 27.01 3.22 2.14 (3.22) (2.98)
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1998
Institutional Shares 26.67 0.59 1.67 (0.59) (1.30)
Service Shares 26.66 0.53 1.65 (0.53) (1.30)
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1997
Institutional Shares 24.00 0.59 3.93 (0.59) (1.26)
Service Shares(a) 23.25 0.40 3.42 (0.41) --
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1996
Institutional Shares 22.10 0.54 2.56 (0.54) (0.66)
---------------------------------------------------------------------------------------------
For the Period December
12, 1994 (Commencement
of Operations) Through
October 31, 1995
Institutional Shares 18.00 0.59 4.06 (0.55) --
GROWTH AND INCOME FUND
For the Six Months Ended
April 30, 1999 (unau-
dited)
Institutional Shares $21.72 $0.30 $ 2.09 $(0.31) $(0.23)
Service Shares 21.73 0.29 2.07 (0.28) (0.23)
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1998
Institutional Shares 21.82 0.18 (0.05) (0.19) (0.04)
Service Shares 21.81 0.16 (0.09) (0.11) (0.04)
---------------------------------------------------------------------------------------------
For the Period March 3,
1997 (Commencement of
Operations) Through Oc-
tober 31, 1997
Institutional Shares 18.00 0.15 3.80 (0.13) --
Service Shares 18.00 0.12 3.80 (0.11) --
---------------------------------------------------------------------------------------------
</TABLE>
(a) For the period January 2, 1997 (date of initial public offering) through
October 31, 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.
54
<PAGE>
COMMERCE FUNDS
<TABLE>
<CAPTION>
Ratios assuming no waiver of
investment advisory fees or
expense reimbursements
------------------------------
Net assets Ratio of Ratio of Ratio of Ratio of
Net asset at end of net expenses net investment expenses to net investment Portfolio
value, end Total period to average income to average average income to average turnover
of period return(c) (in 000's) net assets net assets net assets net assets rate
<S> <C> <C> <C> <C> <C> <C> <C>
$26.19 9.60% $131,539 1.11%(d) 2.18%(d) 1.48%(d) 1.81%(d) 29%
26.17 9.52 2,989 1.36(d) 1.93(d) 1.73(d) 1.56(d) 29
- -----------------------------------------------------------------------------------------------------------
27.04 8.68 123,717 1.13 2.20 1.49 1.84 68
27.01 8.36 2,594 1.38 1.99 1.74 1.63 68
- -----------------------------------------------------------------------------------------------------------
26.67 19.92 105,782 1.13 2.44 1.53 2.04 31
26.66 16.53 1,219 1.38(d) 2.13(d) 1.78(d) 1.73(d) 31
- -----------------------------------------------------------------------------------------------------------
24.00 14.45 69,880 1.13 2.47 1.45 2.15 58
- -----------------------------------------------------------------------------------------------------------
22.10 26.14 48,329 1.13(d) 3.28(d) 1.45(d) 2.96(d) 59
$23.57 10.07% $ 87,972 1.15%(d) 0.63%(d) 1.15%(d) 0.63%(d) 31%
23.58 9.92 1,153 1.40(d) 0.39(d) 1.40(d) 0.39(d) 31
- -----------------------------------------------------------------------------------------------------------
21.72 0.53 92,625 1.16 0.82 1.16 0.82 55
21.73 0.30 1,365 1.41 0.60 1.41 0.60 55
- -----------------------------------------------------------------------------------------------------------
21.82 22.00 45,173 1.20(d) 1.30(d) 2.02(d) 0.48(d) 5
21.81 21.81 2,588 1.45(d) 1.02(d) 2.27(d) 0.20(d) 5
- -----------------------------------------------------------------------------------------------------------
</TABLE>
55
<PAGE>
COMMERCE FUNDS
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Income from Distributions
investment operations to shareholders
------------------------- ------------------------------
Net asset Net Net realized From net
value, investment and unrealized From net realized
beginning income gain on investment gain on
of period (loss) investments(b) income investments
GROWTH FUND
<S> <C> <C> <C> <C> <C>
For the Six Months Ended
April 30, 1999 (unau-
dited)
Institutional Shares $37.37 $ 5.45 $2.83 $(5.48) $(0.50)
Service Shares 37.29 5.40 2.82 (5.47) (0.50)
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1998
Institutional Shares 34.54 0.07 5.06 (0.06) (2.24)
Service Shares 34.50 (0.01) 5.05 (0.01) (2.24)
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1997
Institutional Shares 28.95 0.19 7.51 (0.19) (1.92)
Service Shares(a) 28.26 0.09 6.25 (0.10) --
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 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) --
MIDCAP FUND
For the Six Months Ended
April 30, 1999 (unau-
dited)
Institutional Shares $32.57 $(0.14) $4.87 $ -- $(1.61)
Service Shares 32.40 (0.13) 4.79 -- (1.61)
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1998
Institutional Shares 33.02 (0.13) 1.48 -- (1.80)
Service Shares 32.94 (0.16) 1.42 -- (1.80)
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1997
Institutional Shares 28.06 (0.13) 5.38 -- (0.29)
Service Shares(a) 28.64 (0.11) 4.41 -- --
---------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1996
Institutional Shares 25.30 (0.07) 3.51 -- (0.68)
---------------------------------------------------------------------------------------------
For the Period December
12, 1994 (Commencement
of Operations) through
October 31, 1995
Institutional Shares 18.00 (0.04) 7.34 -- --
---------------------------------------------------------------------------------------------
</TABLE>
(a) For the period January 2, 1997 (date of initial public offering) through
October 31, 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.
56
<PAGE>
COMMERCE FUNDS
<TABLE>
<CAPTION>
Net
assets
at end Ratio of
of Ratio of net investment
Net asset period net expenses income (loss) Portfolio
value, end Total (in to average to average turnover
of period return(c) 000's) net assets net assets rate
<S> <C> <C> <C> <C> <C>
$39.67 22.66% $482,715 1.07%(d) (0.23)%(d) 17%
39.54 22.53 14,364 1.32(d) (0.48)(d) 17
- ------------------------------------------------------------------------
37.37 15.38 409,797 1.08 0.20 53
37.29 15.10 8,965 1.33 (0.06) 53
- ------------------------------------------------------------------------
34.54 28.12 343,773 1.11 0.60 32
34.50 22.47 5,758 1.36(d) 0.35(d) 32
- ------------------------------------------------------------------------
28.95 23.43 208,908 1.08 0.72 36
- ------------------------------------------------------------------------
24.68 38.06 141,735 1.11(d) 0.81(d) 33
$35.69 14.86% $142,927 1.13%(d) (0.73)%(d) 41%
35.45 14.72 2,574 1.38(d) (1.00)(d) 41
- ------------------------------------------------------------------------
32.57 3.96 139,035 1.16 (0.58) 76
32.40 3.68 1,236 1.41 (0.82) 76
- ------------------------------------------------------------------------
33.02 18.88 112,442 1.23 (0.61) 89
32.94 15.01 658 1.48(d) (0.95)(d) 89
- ------------------------------------------------------------------------
28.06 13.78 74,641 1.22 (0.37) 71
- ------------------------------------------------------------------------
25.30 40.56 41,665 1.32(d) (0.29)(d) 59
- ------------------------------------------------------------------------
</TABLE>
57
<PAGE>
COMMERCE FUNDS
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Income from Distributions
investment operations to shareholders
--------------------------- ------------------------------
Net realized
and unrealized
gain (loss) on
Net asset investments and From net
value, Net foreign From net realized
beginning investment currency related investment gain on
of period Income transactions(b) income investments
INTERNATIONAL EQUITY FUND
<S> <C> <C> <C> <C> <C>
For the Six Months Ended
April 30, 1999 (unau-
dited)
Institutional Shares $23.00 $0.04 $2.98 $(0.10) $ --
Service Shares 22.92 0.07 2.94 (0.06) --
-----------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1998
Institutional Shares 22.10 0.10 1.45 (0.08) (0.57)
Service Shares 22.06 0.05 1.44 (0.06) (0.57)
-----------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1997
Institutional Shares 20.96 0.06 1.42 (0.10) (0.24)
Service Shares(a) 21.70 0.01 0.35 -- --
-----------------------------------------------------------------------------------------------
For the Year Ended Octo-
ber 31, 1996
Institutional Shares 18.64 0.11 2.35 (0.07) (0.07)
-----------------------------------------------------------------------------------------------
For the Period December
12, 1994 (Commencement
of Operations) through
October 31, 1995
Institutional Shares 18.00 0.12 0.55 (0.03) --
-----------------------------------------------------------------------------------------------
</TABLE>
(a) For the period January 2, 1997 (date of initial public offering) through
October 31, 1997.
(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 sales charges were taken
into account.
(d) Annualized.
The accompanying notes are an integral part of these financial statements.
58
<PAGE>
COMMERCE FUNDS
<TABLE>
<CAPTION>
Ratios assuming no waiver of
investment advisory fees or
expense reimbursements
----------------------------
Ratio of
Net assets Ratio of Ratio of Ratio of net investment
Net asset at end of net expenses net investment expenses to income (loss) Portfolio
value, end Total period to average Income to average average to average turnover
of period return(c) (in 000's) net assets net assets net assets net assets rate
<S> <C> <C> <C> <C> <C> <C> <C>
$25.92 13.17% $106,948 1.53%(d) 0.37%(d) 2.07%(d) (0.17%)(d) 11%
25.87 13.13 460 1.79(d) 0.46(d) 2.32(d) (0.21)(d) 11
- ---------------------------------------------------------------------------------------------------------------------------
23.00 7.16 101,161 1.62 0.46 2.14 (0.06) 22
22.92 6.88 379 1.87 0.19 2.39 (0.33) 22
- ---------------------------------------------------------------------------------------------------------------------------
22.10 7.15 78,273 1.72 0.35 2.23 (0.16) 22
22.06 1.66 231 1.97(d) 0.14(d) 2.48(d) (0.37)(d) 22
- ---------------------------------------------------------------------------------------------------------------------------
20.96 13.25 51,589 1.72 0.74 2.64 (0.18) 21
- ---------------------------------------------------------------------------------------------------------------------------
18.64 3.73 21,014 1.81(d) 1.06(d) 3.50(d) (0.63)(d) 25
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
59
<PAGE>
COMMERCE FUNDS
Financial Highlights
Selected Data for a Share Outstanding Throughout Each Period
<TABLE>
<CAPTION>
Income from Distributions
investment operations to shareholders
------------------------- ---------------------------------
Net asset Net realized
value, Net and unrealized From net From net
beginning investment gain (loss) on investment realized gain
of period income investments(b) income on investments
NATIONAL TAX-FREE INTERMEDIATE BOND FUND
<S> <C> <C> <C> <C> <C>
For the Six Months Ended
April 30, 1999 (unau-
dited) $19.33 $0.37 $(0.11) $(0.37) $(0.16)
For the Year Ended Octo-
ber 31, 1998 18.85 0.74 0.48 (0.74) --
For the Year Ended Octo-
ber 31, 1997 18.46 0.72 0.39 (0.72) --
For the Year Ended Octo-
ber 31, 1996 18.54 0.73 (0.07) (0.73) (0.01)
For the Period February
21, 1995(a)
through October 31,
1995 18.00 0.54 0.54 (0.54) --
MISSOURI TAX-FREE INTERMEDIATE BOND FUND
For the Six Months Ended
April 30, 1999 (unau-
dited) $19.07 $0.36 $(0.10) $(0.36) $(0.10)
For the Year Ended Octo-
ber 31, 1998 18.61 0.74 0.47 (0.74) (0.01)
For the Year Ended Octo-
ber 31, 1997 18.26 0.76 0.37 (0.76) (0.02)
For the Year Ended Octo-
ber 31, 1996 18.40 0.76 (0.14) (0.76) --
For the Period February
21, 1995(a)
through October 31,
1995 18.00 0.57 0.40 (0.57) --
------------------------------------------------------------------------------------------------
</TABLE>
(a) Commencement of operations.
(b) Includes the balancing effect of calculating per share amounts.
(c) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no
sales charges. Total return would be reduced if a sales charge were taken
into account.
(d) Annualized.
The accompanying notes are an integral part of these financial statements.
60
<PAGE>
COMMERCE FUNDS
<TABLE>
<CAPTION>
Ratios assuming no waiver of
investment advisory fees and
expense reimbursements
----------------------------
Net assets Ratio of Ratio of Ratio of Ratio of
Net asset at end of net expenses net investment expenses to net investment Portfolio
value, end Total period, to average income to average average net income to average turnover
of period return(c) (in 000's) net assets net assets assets net assets rate
<S> <C> <C> <C> <C> <C> <C> <C>
$19.06 1.34% $40,747 0.70%(d) 3.85%(d) 0.94%(d) 3.61%(d) 15%
19.33 6.59 33,528 0.74 3.87 1.04 3.57 41
18.85 6.16 25,281 0.85 3.89 1.15 3.59 6
18.46 3.60 17,613 0.85 3.93 1.55 3.23 34
18.54 6.06 10,721 0.85(d) 4.19(d) 1.90(d) 3.14(d) 19
$18.87 1.40% $41,901 0.65%(d) 3.87%(d) 0.95%(d) 3.57%(d) 10%
19.07 6.65 34,051 0.65 3.93 1.03 3.55 34
18.61 6.31 24,434 0.65 4.14 1.21 3.58 13
18.26 3.43 17,034 0.65 4.14 1.58 3.21 49
18.40 5.45 8,889 0.65(d) 4.41(d) 2.12(d) 2.94(d) 52
- -----------------------------------------------------------------------------------------------------------
</TABLE>
61
<PAGE>
COMMERCE FUNDS
Notes to Financial Statements
April 30, 1999 (unaudited)
1. ORGANIZATION
The Commerce Funds (the "Trust") is a Delaware business trust registered un-
der the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end, management investment company. The Trust consists of nine portfo-
lios (individually, a "Fund" and collectively, the "Funds"): Short-Term Gov-
ernment Fund, Bond Fund, Balanced Fund, Growth and Income Fund, Growth Fund,
MidCap Fund, International Equity Fund, National Tax-Free Intermediate Bond
Fund and Missouri Tax-Free Intermediate Bond Fund (formerly National Tax-Free
Bond Fund and Missouri Tax-Free Bond Fund, respectively). Each of the Funds
(except National Tax-Free Intermediate Bond Fund and Missouri Tax-Free Inter-
mediate Bond Fund which only offer Institutional Shares) offer two classes of
shares, Institutional Shares and Service Shares. Each Fund is registered as a
diversified management investment company under the 1940 Act, other than the
Missouri Tax-Free Intermediate Bond Fund, which is registered as non-diversi-
fied 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 manage-
ment to make estimates and assumptions that may affect the reported amounts.
A. Investment Valuation -- Investments in securities traded on a U.S. ex-
change 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
United States are based upon the price on that exchange as of the close of
business of the exchange immediately preceding the time of valuation. Un-
listed 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 val-
ued 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 as of the trade date. Realized gains and losses on sales of in-
vestments are calculated on the identified cost basis. Dividend income is re-
corded on the ex-dividend date and interest income is recorded on the accrual
basis.
C. Premiums and Discounts on Debt Securities Owned -- The National Tax-Free
Intermediate Bond and the Missouri Tax-Free Intermediate 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 Eq-
uity Funds accrete market discounts and amortize premiums on a yield to matu-
rity 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 increase or decrease ordinary taxable income available for distribu-
tions and are included in interest income in the accompanying Statements of
Operations. For all Funds, original issue discount on debt securities is am-
ortized 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) investments, other
assets and liabilities initially expressed in foreign currencies are con-
verted each business day into U.S. dollars based on current
62
<PAGE>
COMMERCE FUNDS
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; (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 div-
idends 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 liabili-
ties.
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 port-
folio positions as a means to manage its foreign exchange rate risk. All com-
mitments 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 for-
ward contract is offset by entry into a closing transaction or extinguished
by delivery of the currency. Risks may arise upon entering into these con-
tracts as a result of the potential inability of counterparties to meet the
terms of their contracts and unanticipated movements in the value of a for-
eign 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 taxable and
tax-exempt income to its shareholders. Accordingly, no federal income tax
provisions are required. The characterization of distributions to sharehold-
ers for financial reporting purposes is determined in accordance with income
tax rules.
As of the Trust's most recent tax year-end, the International Equity Fund
had capital loss carryforwards for U.S. federal income tax purposes:
<TABLE>
<CAPTION>
Fund Amount Year of Expiration
--------------------------------------------------------------------------------------
<S> <C> <C>
International Equity Fund $1,426,951 2006
--------------------------------------------------------------------------------------
</TABLE>
This amount is available to be carried forward to offset future capital
gains of the Fund to the extent permitted by applicable laws or regulations.
G. Deferred Organization Expenses -- Organization costs are being amortized
on a straight-line basis over a period of five years beginning with the com-
mencement of each of the Fund's operations. If any or all of the shares held
by The Goldman Sachs 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 organization expense.
H. Expenses -- Expenses incurred by the Funds which do not specifically re-
late to an individual Fund are allocated to the Funds based on each Fund's
relative average daily 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 re-
quired to equal or exceed the value of the repurchase agreement. The under-
lying collateral for all repurchase agreements is held in safekeeping in the
customer-only account, at 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 de-
faults and the value of the security declines, or if the seller enters an in-
solvency proceeding, realization of the collateral by the Trust may be
delayed or limited.
J. Dividends and Distributions to Shareholders -- Dividends from net invest-
ment income are declared daily and paid monthly by the Short-Term Government,
Bond, National Tax-Free Intermediate Bond and Missouri Tax-Free Intermediate
63
<PAGE>
COMMERCE FUNDS
Notes to Financial Statements (continued)
April 30, 1999 (unaudited)
Bond Funds; declared and paid quarterly by the Balanced, Growth and Income
and Growth Funds; and declared and paid annually by the MidCap and Interna-
tional Equity Funds. Each Fund's net realized capital gains (including net
short-term capital gains), if any, are declared and distributed at least an-
nually. Distributions to shareholders are recorded on the ex-dividend date.
3. AGREEMENTS
The Funds have entered into an Advisory Agreement with Commerce Bank, N.A.
(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>
<CAPTION>
Fund Annual Rate
--------------------------------------------------
<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 Intermediate Bond Fund .50%
--------------------------------------------------
Missouri Tax-Free Intermediate 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 Inter-
national 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>
In addition, the sub-advisor has voluntarily agreed to waive a portion of
its sub-advised fees on the International Equity Fund when the Fund's assets
exceed $200 million to 0.50% of the average daily net assets of the Fund.
For the six months ended April 30, 1999, 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, .63% for the Bal-
anced Fund, .96% for the International Equity Fund, .35% for the National
Tax-Free Intermediate Bond Fund and .30% for the Missouri Tax-Free Intermedi-
ate Bond Fund. The effect of these waivers by the Advisor for the six months
ended April 30, 1999 was to reduce advisory fees by $78,533, $247,416,
$286,314, $27,187 and $37,002 for the Short-Term Government, Balanced, Inter-
national Equity, National Tax-Free Intermediate Bond and Missouri Tax-Free
Intermediate Bond Funds, respectively.
In addition, for the six months ended April 30, 1999, the Advisor has vol-
untarily agreed to reimburse expenses (excluding interest, taxes, distribu-
tion 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% and
.65% of average net assets of the Short-Term Government,
64
<PAGE>
COMMERCE FUNDS
Bond, Balanced, Growth and Income, Growth, International Equity and Missouri
Tax-Free Intermediate Bond Funds, respectively. Effective February 6, 1998,
the Advisor has voluntarily agreed to reimburse expenses (excluding interest,
taxes, distribution expenses and extraordinary expenses) for the National
Tax-Free Intermediate Bond Fund to the extent that such expenses exceed, on
an annualized basis .70% of average net assets. Prior thereto, the expense
limitation was .85% of average net assets. The effect of these reimbursements
by the Advisor for the period ended April 30, 1999 was to reduce expenses by
$31,983, $16,663 and $18,440 for the Short-Term Government, National Tax-Free
Intermediate Bond and Missouri Tax-Free Intermediate Bond Funds, respective-
ly. The amount reimbursable to the Short-Term Government, National Tax-Free
Intermediate Bond and Missouri Tax-Free Intermediate Bond Funds at April 30,
1999, was $10,954, $328 and $2,468, respectively, and are netted in "Advisory
fees payable" in the accompanying Statements of Assets and Liabilities.
Goldman Sachs Asset Management ("GSAM"), a separate operating division of
Goldman, Sachs & Co., serves as the Trust's administrator, pursuant to an Ad-
ministration 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 charge im-
posed on the sale of shares of the Funds. The maximum sales charge imposed on
the sale of Service Shares of the Short-Term Government Fund is 2.00%; for
all other Funds' Service Shares, the maximum sales charge is 3.50%. Effective
November 1, 1998, the 3.50% sales charge was removed from Institutional
Shares of the National Tax-Free Intermediate Bond and the Missouri Tax-Free
Intermediate Bond Funds. Goldman Sachs & Co. has advised the Trust that it
has retained approximately $13,000 on the sale of shares of the Funds for the
six months ended April 30, 1999.
The Trust, on behalf of each Fund (except the National Tax-Free Intermediate
Bond Fund and Missouri Tax-Free Intermediate Bond Fund), has adopted a Dis-
tribution Plan for the Service Shares pursuant to Rule 12b-1 under the 1940
Act. Under the distribution plan, payments by each Fund for distribution ex-
penses 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 share-
holder administration support services. For these services, the Service Orga-
nizations 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
4. INVESTMENT TRANSACTIONS
Purchases and proceeds from sales or maturities of long-term securities for
the six months ended April 30, 1999 were as follows:
<TABLE>
<S> <C>
Short-Term Government Fund
Purchases (excluding U.S. Government securities) $ 2,479,394
Sales (excluding U.S. Government securities) 2,396,347
Purchases of U.S. Government securities 19,993,240
Sales of U.S. Government securities 9,675,460
-------------------------------------------------------------
Bond Fund
Purchases (excluding U.S. Government securities) $53,757,013
Sales (excluding U.S. Government securities) 15,837,464
Purchases of U.S. Government securities 45,017,612
Sales of U.S. Government securities 34,613,806
-------------------------------------------------------------
</TABLE>
65
<PAGE>
COMMERCE FUNDS
Notes to Financial Statements (continued)
April 30, 1999 (unaudited)
<TABLE>
<S> <C>
Balanced Fund
Purchases (excluding U.S. Government securities) $29,238,793
Sales (excluding U.S. Government securities) 36,055,046
Purchases of U.S. Government securities 9,892,851
Sales of U.S. Government securities 3,302,024
-------------------------------------------------------------
Growth and Income Fund
Purchases (excluding U.S. Government securities) $29,078,666
Sales (excluding U.S. Government securities) 42,263,591
Purchases of U.S. Government securities --
Sales of U.S. Government securities --
-------------------------------------------------------------
Growth Fund
Purchases (excluding U.S. Government securities) $80,033,575
Sales (excluding U.S. Government securities) 96,201,608
Purchases of U.S. Government securities --
Sales of U.S. Government securities --
-------------------------------------------------------------
MidCap Fund
Purchases (excluding U.S. Government securities) $61,670,786
Sales (excluding U.S. Government securities) 79,068,996
Purchases of U.S. Government securities --
Sales of U.S. Government securities --
-------------------------------------------------------------
International Equity Fund
Purchases (excluding U.S. Government securities) $11,795,097
Sales (excluding U.S. Government securities) 17,927,914
Purchases of U.S. Government securities --
Sales of U.S. Government securities --
-------------------------------------------------------------
National Tax-Free Intermediate Bond Fund
Purchases (excluding U.S. Government securities) $10,495,282
Sales (excluding U.S. Government securities) 5,190,769
Purchases of U.S. Government securities --
Sales of U.S. Government securities --
-------------------------------------------------------------
Missouri Tax-Free Intermediate Bond Fund
Purchases (excluding U.S. Government securities) $ 7,804,912
Sales (excluding U.S. Government securities) 3,354,004
Purchases of U.S. Government securities --
Sales of U.S. Government securities --
-------------------------------------------------------------
</TABLE>
66
<PAGE>
COMMERCE FUNDS
5. CONCENTRATION OF RISK
Under normal conditions, the Missouri Tax-Free Intermediate Bond and National
Tax-Free Intermediate Bond Funds will invest at least 80% of their net assets
in tax-exempt securities. Although they do not expect to do so, the Funds may
invest up to 20% of their net assets in private activity bonds that may sub-
ject certain investors to the federal alternative minimum tax.
In addition, the Missouri Tax-Free Intermediate Bond Fund invests substan-
tially all of its assets in debt obligations of issuers located in the State
of Missouri. The National Tax-Free Intermediate Bond Fund may invest signifi-
cant amounts in selected states. The issuers' abilities to meet their obliga-
tions may be affected by the states' economic and political developments.
Emerging markets securities are volatile. They are subject to substantial
currency fluctuations and sudden economic and political developments. At
times the International Equity Fund may be unable to sell certain of its
portfolio securities without a substantial drop in price, if at all.
67
<PAGE>
The Commerce Funds
Trustees
J. Eric Helsing, Chairman
Randall D. Barron
David L. Bodde
John J. Holland
Warren Weaver
Officers
Warren Weaver, President
Philip V. Giuca Jr., Vice President
Gordon F. Linke, Vice President
Nancy L. Mucker, Vice President
John M. Perlowski, Vice President
Randall D. Barron, Treasurer
W. Bruce McConnel III, Secretary
Michael J. Richman, Assistant Secretary
Howard B. Surloff, Assistant Secretary
This Semiannual Report contains facts concerning The Commerce Funds' objectives
and policies, management, expenses, and other information. For more complete
information about The Commerce Funds, a prospectus may be obtained by calling
1-800-995-6365. An investor should read the prospectus carefully before
investing or sending money.
Shares of the Funds are not deposits or obligations of, or guaranteed, endorsed,
or otherwise supported by Commerce Bank, N.A., its 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 the possible loss of the principal amount invested. The Commerce Funds
are advised by Commerce Bank, N.A., which receives a fee for its services. The
Commerce Funds are distributed by Goldman, Sachs & Co.
<PAGE>
INVESTMENT ADVISER
Commerce Bank, N.A.
INVESTMENT SUB-ADVISER,
INTERNATIONAL EQUITY FUND
Rowe Price-Fleming International, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
CUSTODIAN
State Street Bank & Trust Company
225 Franklin Street
Boston, Massachusetts 02110
TRANSFER AGENT
National Financial Data Services, Inc.
330 W. 9th
4th Floor
Kansas City, Missouri 64105
DISTRIBUTOR
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
ADMINISTRATOR
Goldman Sachs Asset Management
One New York Plaza
New York, New York 10004
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
1000 Walnut Street
Kansas City, Missouri 64106
LEGAL COUNSEL
Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, PA 19103-6996
[LOGO OF COMMERCE FUNDS APPEARS HERE]
8000 Forsyth Boulevard
Suite 606
St. Louis, Missouri 63105
922 Walnut Street
Suite 606
Kansas City, Missouri 64106
www.commercefunds.com
1-800-995-6365
CB 5026
Date of first use: 6/28/99
