<PAGE>
SCHEDULE 14A
(Rule 14a-101
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE COMMERCE FUNDS
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
THE COMMERCE FUNDS
P.O. Box 219525
Kansas City, Missouri 64121-9525
Dear Shareholder:
You are cordially invited to attend the Special Meeting of
Shareholders (the "Meeting") of The Commerce Funds (the "Company") to be held on
Monday, November 20, 2000 at 10:00 a.m., Eastern time, at the offices of Goldman
Sachs Asset Management, 32 Old Slip, New York, New York 10005 in Conference Room
17B.
At the Meeting, shareholders will be asked to vote on the following
matters: (1) approval by the shareholders of the International Equity Fund of a
new sub-investment advisory agreement between T. Rowe-Price International, Inc.
and Commerce Bank, N.A.; (2) approval by the shareholders of the Growth Fund of
an amendment to the investment objective of the Growth Fund, as discussed in the
accompanying Proxy Statement; (3) approval by the shareholders of the Value Fund
(formerly the Growth and Income Fund) of an amendment to the investment
objective of the Value Fund, as discussed in the accompanying proxy; (4)
approval by the shareholders of the MidCap Growth Fund (formerly the MidCap
Fund) of an amendment to the investment objective of the MidCap Growth Fund, as
discussed in the accompanying proxy; and (5) election of the trustees of the
Company.
Whether or not you plan to be present at a Meeting, your vote is
needed. If you do not plan to be present at the Meeting, please complete, sign
and return the enclosed proxy card promptly in order that the Meeting can be
held and the maximum number of shares may be voted. Your prompt response will
help reduce proxy costs - which are paid by the Company and its shareholders -
and will also mean that you can avoid receiving follow-up phone calls or
mailings.
We look forward to seeing you at the Meeting or to receiving your
proxy card so your shares may be voted at the Meeting.
Sincerely yours,
Warren W. Weaver
President
SHAREHOLDERS ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED ENVELOPE.
<PAGE>
THE COMMERCE FUNDS
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
October 31, 2000
To the Shareholders of The
Commerce Funds:
A Special Meeting of Shareholders (the "Meeting") of The Commerce
Funds (the "Company") will be held on Monday, November 20, 2000 at 10:00 a.m.
Eastern time, at the offices of Goldman Sachs Asset Management, 32 Old Slip, New
York, New York 10005 in Conference Room 17B.
The Meeting will be held for the following purposes:
(1) To approve a new sub-investment advisory agreement between T.
Rowe-Price International, Inc. and Commerce Bank, N.A. on behalf
of the International Equity Fund;
(2) To approve an amendment to the investment objective of the Growth
Fund;
(3) To approve an amendment to the investment objective of the Value
Fund (formerly the Growth and Income Fund);
(4) To approve an amendment to the investment objective of the MidCap
Growth Fund (formerly the MidCap Fund); and
(5) To elect Messrs. John Eric Helsing, Warren W. Weaver, Randall D.
Barron, David L. Bodde and John Joseph Holland as Trustees of The
Commerce Funds.
The proposals referred to above are discussed in the Proxy Statement
attached to this Notice. Each shareholder is invited to attend the Meeting in
person. Only shareholders of record at the close of business on October 4, 2000,
the record date for the Meeting, have the right to notice of and the right to
vote at the Meeting or any adjournment thereof. You do not need to attend the
Meeting to participate - you can vote by mail, with the enclosed proxy card.
<PAGE>
Your prompt response will help reduce proxy costs - which are paid for
by the Company and its shareholders - and will also mean that you can avoid
receiving follow-up phone calls or mailings.
Your Board of Trustees unanimously recommends that you vote in favor
of each Proposal, including the election of the nominees as Trustees.
By Order of the Board of Trustees
of The Commerce Funds:
W. Bruce McConnel
Secretary
<PAGE>
WE NEED YOUR PROXY VOTE IMMEDIATELY
A SHAREHOLDER MAY THINK HIS OR HER VOTE IS NOT IMPORTANT, BUT IT IS VITAL. BY
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LAW, THE SPECIAL MEETING OF SHAREHOLDERS SCHEDULED FOR NOVEMBER 20, 2000 WILL
HAVE TO BE ADJOURNED WITHOUT CONDUCTING ANY BUSINESS IF LESS THAN A MAJORITY OF
THE SHARES ELIGIBLE TO VOTE ARE REPRESENTED AT THE MEETING WITH RESPECT TO
PROPOSALS 1 - 4 AND IF LESS THAN ONE-THIRD OF THE SHARES ELIGIBLE TO VOTE ARE
REPRESENTED WITH RESPECT TO PROPOSAL 5. IN THAT EVENT, THE COMMERCE FUNDS WOULD
CONTINUE TO SOLICIT VOTES IN AN ATTEMPT TO ACHIEVE A QUORUM. CLEARLY, YOUR VOTE
COULD BE CRITICAL IN ALLOWING THE COMMERCE FUNDS TO HOLD THE MEETING AS
SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD PROMPTLY.
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<PAGE>
THE COMMERCE FUNDS
P.O. Box 219525
Kansas City, Missouri 64121-9525
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of The Commerce Funds (the "Company"). The
Special Meeting will be held at the offices of Goldman Sachs Asset Management,
32 Old Slip, New York, New York 10005 on November 20, 2000 at 10:00 a.m. Eastern
time in Conference Room 17B. The Special Meeting and any adjournments thereof
are referred to in this Proxy Statement as the "Meeting."
It is expected that the solicitation of proxies will be primarily by mail.
However, the Company's officers, investment adviser and administrator may also
solicit proxies by telephone, facsimile or personal interview. The proxy costs
with respect to Proposal 1 will be borne by T. Rowe-Price International, Inc.,
the International Equity Fund's Sub-Adviser. The Company will bear the proxy
solicitation costs with respect to Proposal No. 5. The proxy costs with respect
to Proposal Nos. 2, 3 and 4 will be borne by the Growth Fund, the Value Fund and
the MidCap Growth Fund, respectively. It is anticipated that the aggregate proxy
costs will not exceed $18,000.
The following table summarizes the proposals to be voted on at the Meeting
and indicates those shareholders who are being solicited with respect to each
proposal.
<TABLE>
<CAPTION>
Proposal Shareholders Solicited
-------- ----------------------
<S> <C>
1. To approve a new sub-investment advisory The shareholders of the International Equity Fund
agreement between T. Rowe-Price International, will vote separately as a single class.
Inc. and Commerce Bank, N.A., on behalf of the
International Equity Fund.
2. To approve an amendment to the investment The shareholders of the Growth Fund will vote
objective of the Growth Fund. separately as a single class.
3. To approve an amendment to the investment The shareholders of the Value Fund will vote
objective of the Value Fund. separately as a single class.
4. To approve an amendment to the investment The shareholders of the MidCap Growth Fund will vote
objective of the MidCap Growth Fund. separately as a single class.
5. To elect Messrs. John Eric Helsing, Warren W. The shareholders of each Fund of the Company will
Weaver, Randall D. Barron, David L. Bodde and John vote together as a single class.
Joseph Holland as Trustees of The Commerce Funds.
</TABLE>
-1-
<PAGE>
If you vote by mail, complete, date, sign and promptly return the enclosed
proxy cards in the accompanying envelope. If the enclosed proxy cards are
properly executed and returned prior to the Meeting, the shares represented
thereby will be voted in accordance with the instructions marked on the proxy
cards or, if no instructions are marked on the proxy cards, the proxies will be
voted FOR the Proposals, including the election of the nominees as Trustees, as
described in this Proxy Statement and in the discretion of the persons named as
proxies in connection with any other matter that may properly come before the
Meeting or any adjournment(s) thereof.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by submitting to the Company a written notice of revocation or a
subsequently executed proxy or by attending the Meeting and electing to vote in
person. This Proxy Statement and the enclosed Proxy are expected to be first
mailed to shareholders on or about October 31, 2000.
The Company will furnish, without charge, additional copies of The Commerce
Funds' annual and semi-annual reports to shareholders dated October 31, 1999 and
April 30, 2000, respectively, to any shareholder upon request. The annual and
semi-annual reports to shareholders may be obtained by writing to: The Commerce
Funds, P.O. Box 219525, Kansas City, Missouri 64121-9525, by calling (800) 995-
6365 or by e-mail request to [email protected]
THE BOARD OF TRUSTEES OF THE COMMERCE FUNDS UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE
PROPOSALS DESCRIBED IN THIS PROXY STATEMENT.
-2-
<PAGE>
PROPOSAL 1: APPROVAL OF NEW SUB-INVESTMENT ADVISORY AGREEMENT
Introduction
At the Meeting, shareholders of the International Equity Fund will be
asked to vote on the approval of a new sub-investment advisory agreement for the
Fund. The principal terms of the proposed sub-investment advisory agreement are
summarized below. A copy of the proposed sub-investment advisory agreement is
attached to this Proxy Statement as Appendix 1. The description of the proposed
sub-investment advisory agreement that follows is qualified in its entirety by
reference to Appendix 1.
Why are International Equity Fund shareholders being asked to approve a new sub-
investment advisory agreement?
T. Rowe Price International, Inc. ("Price International" or the "Sub-
Adviser") (formerly known as Rowe-Price Fleming International, Inc.), has been
the sub-investment adviser to the International Equity Fund since its inception
in 1994. Prior to August 8, 2000, Price International was 50% owned by Robert
Fleming Holdings Limited and 50% owned by T. Rowe Price Associates, Inc. ("T.
Rowe Price"). On August 8, 2000, T. Rowe Price became the sole owner of Price
International. At the same time, T. Rowe Price changed the name of the Sub-
Adviser from Rowe-Price Fleming International, Inc. to T. Rowe Price
International, Inc. The August 8, 2000 purchase caused the sub-investment
advisory agreement in effect as of that date ("Old Agreement") between Commerce
Bank, N.A. (the "Adviser") and Price International to terminate automatically.
In order to avoid disruption of the International Equity Fund's investment
management program, the Board of Trustees of the Company, in accordance with
Rule 15a-4 under the Investment Company Act of 1940 (the "1940 Act"), approved
an interim sub-investment advisory agreement ("Current Agreement") between the
Adviser and Price International. The Current Agreement has a term of 150 days
from August 8, 2000. Therefore, in order to ensure continuity and avoid
disruption of the International Equity Fund's investment management program, the
Board has approved a continuing sub-investment advisory agreement (the "Proposed
Agreement") between the Adviser and Price International and recommends that
shareholders of the International Equity Fund also approve this agreement.
How does the Proposed Agreement differ from the Old Agreement?
The Proposed Agreement does not differ from the Old Agreement, except
as discussed below.
The Proposed Agreement is the same as the Old Agreement, except that
it reflects the new name of the Sub-Adviser to the International Equity Fund -T.
Rowe Price International, Inc. instead of Rowe-Price Fleming International, Inc.
There are no changes in the services being provided. As discussed below, the
fees under the Proposed Agreement will be reduced compared to the Old Agreement.
In addition, the term of the Proposed Agreement runs from year to year, rather
than for 150 days, subject to approval of the Board of Trustees (including a
majority of Trustees who are not "interested persons," as defined in the 1940
Act, of Price International or the Company). Additionally, the Current Agreement
includes a provision
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<PAGE>
requiring the sub-investment advisory fees due Price International for the
period beginning August 8, 2000, the effective date of the Current Agreement and
ending on the inception of the Proposed Agreement, to be held in escrow pending
approval of the Proposed Agreement. The Proposed Agreement does not have an
escrow arrangement.
What matters were considered by the Board in recommending the Proposed
Agreement?
On April 26, 2000, the Board of Trustees of the Company, including the
Trustees who are not "interested persons" of Price International or the Company,
unanimously voted to approve the Proposed Agreement. In authorizing the Proposed
Agreement, the Board considered that the investment advisory fees to be paid by
the International Equity Fund and the level of services to be received by the
Fund were the same as under the Current Agreement and were less than the fees
under the Old Agreement. The Board also considered the performance of the Fund
on an absolute basis and relative to other international mutual funds, the level
of investment advisory fees charged by the Fund and other comparable
international mutual funds and the overall expense ratio of the Fund in relation
to other international mutual funds. The Board also considered the expertise,
personnel and resources Price International was willing to commit to the
management of the Fund. Finally, the Board took into account all of the
information presented to it at its October 25, 1999 Board meeting, in connection
with its annual review of the Fund's sub-investment advisory agreement. After
reviewing all of this information, the Board unanimously recommended that
shareholders of the International Equity Fund approve the Proposed Agreement.
When were the Current and Old Agreements last approved?
The Current Agreement was approved by the Trustees of the Company,
including a majority of the Trustees who are not "interested persons" of Price
International or the Company, on July 26, 2000, and became effective on August
8, 2000. The Old Agreement was last approved by the Trustees on October 25,
1999.
What are the continuation and termination provisions of the Proposed Agreement?
By its terms, the Proposed Agreement will continue in effect from year
to year as long as it is approved annually by the Company's Board of Trustees
(at a meeting called for that purpose) of by vote of a majority of the
International Equity Fund's outstanding shares. In either case, renewal of the
Proposed Agreement must be approved by the Company's Board of Trustees,
including by a majority of the Trustees who are not "interested persons" of
Price International or the Company. The Proposed Agreement is subject to
termination without penalty on 60 days' written notice by either party to the
other and will terminate automatically in the event of assignment.
-4-
<PAGE>
What fees does the International Equity Fund currently pay to Price
International and the Adviser for their services and how do the fees paid to
Price International compare to fees paid under the Old Agreement?
For its services to the International Equity Fund under the Current
Agreement, Price International is paid a management fee ("Management Fee") at
the rate of 0.75% of the first $20 million of the average daily net assets of
the International Equity Fund; 0.60% of the next $30 million of average daily
net assets of the Fund; and 0.50% of the average daily net assets of the Fund in
excess of $50 million. When average daily net assets exceed $200 million, the
fee will be reset to 0.50% of all Fund assets with a transitional credit
provided on assets between $184 million and $200 million; and when average daily
net assets of the Fund exceed $500 million, the fee will be reset to 0.45% of
all Fund assets. The transitional credit is determined by dividing the product
of (i) the excess in assets of the Fund over $184 million and (ii) $80,000, by
$16 million. As noted, the Management Fees payable under the Current Agreement,
for the period beginning August 8, 2000 and ending on the inception date of the
Proposed Agreement, are being held in escrow pending approval of the Proposed
Agreement.
Under the Old Agreement, the International Equity Fund paid Price
International the same Management Fee as described in the preceding paragraph,
except that the Management Fee was not reset to 0.45% of all of the Fund's
average daily net assets when the Fund's average daily net assets exceeded $500
million.
Under the investment advisory agreement between the Adviser and the
Fund, the Adviser is entitled to receive 1.50% of the International Equity
Fund's average daily net assets as compensation for its services to the Fund.
The Adviser is responsible for paying the Management Fees to the Sub-Adviser.
During the fiscal year ended October 31, 1999, the International Equity Fund
paid the Adviser, after fee waivers, fees at the rate of 0.96% of average daily
net assets of the Fund. During the fiscal year ended October 31, 1999, the Sub-
Adviser and Adviser were paid (after fee waivers) $622,712 and $423,307,
respectively, for their services to the International Equity Fund.
How do the fees the International Equity Fund currently pays to Price
International compare to the Sub-Adviser's other mutual fund clients?
The table below sets forth the name of each other investment company,
with investment objectives similar to the International Equity Fund, for which
Price International or an affiliate thereof acts as investment adviser or sub-
adviser, the annual rate of compensation (i.e., the fee Price International is
paid for its services as adviser to the respective portfolio), and the net
assets of the investment company as of June 30, 2000.
-5-
<PAGE>
Table 1 - Comparison of Advisory Fees of T. Rowe Price Funds Advised by Price
International
<TABLE>
<CAPTION>
Net Assets of Fund at Annual Rate of Fees Waived or
Name of Fund 06/30/00 (in thousands) Compensation Reduced
------------ ----------------------- -------------- -------
<S> <C> <C> <C>
Foreign Equity Fund $ 3,360,796 0.70% No
T. Rowe Price $12,011,954 0.67% No
International Stock
Fund
T. Rowe Price $767,025 1.05%* No
International Stock
Portfolio
</TABLE>
* The T. Rowe Price International Stock Portfolio pays an all-inclusive fee
that includes operating expenses.
The table below sets forth the name of each other investment company, with
investment objectives similar to the International Equity Fund, for which Price
International acts as a sub-investment adviser, the annual rate of compensation
(i.e., the fee Price International is paid for its services as sub-investment
adviser to the respective portfolio), and the net assets of the investment
company as of June 30, 2000.
-6-
<PAGE>
Table 2 - Comparison of Sub-Advisory Fees of Funds Sub-Advised by Price
International
<TABLE>
<CAPTION>
Subadvised Mutual Net Assets of Fund at Annual Contractual Fee Waived or
Funds: Name of Fund 06/30/00 (in thousands)* Rate of Compensation Reduced
-------------------- ------------------------ -------------------- -------
<S> <C> <C> <C>
Endeavor Series Trust $223,607 .75% of the first $20 million Yes
T. Rowe Price .60% of the next $30 million
International Stock .50% above $50 million**
Portfolio
EQ Advisors Trust $244,639 .75% of the first $20 million Yes
T. Rowe Price .60% of the next $30 million
International Stock .50% above $50 million**
Portfolio
John Hancock Variable $102,752 .75% of the first $20 million Yes
Series Trust I .60% of the next $30 million
International .50% above $50 million**
Opportunities I
Portfolio
John Hancock Variable $ 26,108 .75% of the first $20 million Yes
Series Trust I .60% of the next $30 million
International .50% above $50 million**
Opportunities II
Portfolio
LB Series Fund, Inc. $600,967 .75% of the first $20 million Yes
World Growth Portfolio .60% of the next $30 million
.50% above $50 million**
Lutheran Brotherhood $142,639 .50% on all assets once assets Yes
World Growth Fund exceed $200 million***
Manufacturers $286,236 .75% of the first $50 million Yes
Investment Trust .50% of the next $150 million
International Stock .50% on all assets once assets
Trust exceed $200 million***
SunAmerica Style Select $ 61,476 .75% of the first $20 million Yes
Series, Inc. .60% of the next $30 million
International Equity .50% above $50 million**
Portfolio
The Vantagepoint Funds $112,456 .75% of the first $20 million Yes
International Fund .60% of the next $30 million
.50% above $50 million**
</TABLE>
* The net asset figures for sub-advised funds are based on internal T. Rowe
Price records.
** Price International has agreed to waive its fees so that at $200 million,
the sub-advisory fee would be 0.50% on all assets.
*** Price International has agreed to waive its fees so that at $500 million,
the sub-advisory fee would be 0.45% on all assets.
-7-
<PAGE>
What services does Price International provide under the Current and Proposed
Agreements?
The services provided by Price International under the Proposed Agreement
are the same as those provided under the Current Agreement. Under the Current
and Proposed Agreements, Price International provides the Fund with
discretionary investment services. Specifically, Price International is
responsible for supervising and directing the investments of the International
Equity Fund in accordance with the Fund's investment objective, investment
strategies and investment restrictions, as provided in its Prospectus and
Statement of Additional Information. Price International is also responsible for
effecting all securities transactions on behalf of the Fund, including the
negotiation of commissions and the allocation of principal business and
portfolio brokerage. The Current and Proposed Agreements provide that the
International Equity Fund will bear all expenses of its operations not
specifically assumed by Price International.
Under the investment advisory agreement between the Adviser and the Fund,
the Adviser is responsible for supervising Price International's investment
activities and for performing certain other oversight and compliance functions
related to the International Equity Fund.
The Current and Proposed Agreements provide that Price International, its
directors, officers, employees, and certain other persons performing specific
functions for the International Equity Fund will only be liable to the Fund for
losses resulting from willful misfeasance, bad faith, gross negligence, or
reckless disregard of Price International's duties under the Agreements.
Who are the Adviser and Sub-Adviser?
Commerce Bank, N.A. serves as investment adviser to the Company's Funds,
including the International Equity Fund. The Adviser has offices at 8000 Forsyth
Boulevard, St. Louis, Missouri 63105 and 1000 Walnut Street, Kansas City,
Missouri 64106. The Adviser is a wholly-owned subsidiary of Commerce Bancshares,
Inc., a registered multi-bank holding company, with offices at 1000 Walnut
Street, Kansas City, Missouri 64106. The Adviser has provided investment
management services to the Company since 1994, to private and public pension
funds, endowments and foundations since 1946 and to individuals since 1906. As
of June 30, 2000, the Adviser and its affiliates had approximately $10.1 billion
under management.
As set forth above, Price International is a wholly-owned subsidiary of T.
Rowe Price. Price International's and T. Rowe Price's offices are each located
at 100 East Pratt Street, Baltimore, Maryland 21202. As of June 30, 2000, Price
International managed over $39.2 billion in investments for individual and
institutional accounts.
The principal executive officers and directors of the Adviser and their
principal occupations as of December 31, 1999 are set forth on Annex A hereto.
The principal executive officers and directors of the Sub-Adviser and their
principal occupations as of August 8, 2000 are also set forth on Annex A hereto.
-8-
<PAGE>
Who else provides services to the Fund?
Goldman, Sachs & Co., which is located at 85 Broad Street, New York, New
York 10005, is the distributor for the Company. The administrator is Goldman
Sachs Asset Management ("GSAM"), 32 Old Slip, New York, New York 10005. GSAM is
a unit of the Investment Management Division of Goldman, Sachs & Co.
The aggregate amount of commissions paid to affiliated brokers by the Fund
for the fiscal year ended October 31, 1999 and the percentages these amounts
represented of the total commissions paid by the Fund over that period are set
forth below. All of these brokers, except Goldman, Sachs & Co. and Goldman Sachs
International, Ltd., ceased to be affiliates of the Fund on August 8, 2000 when
Price International became a wholly owned subsidiary of T. Rowe Price.
Table 3 - Affiliated Brokerage Commissions
<TABLE>
<CAPTION>
Total brokerage % of total Fund brokerage
commissions paid to commissions paid to
Broker Name affiliated brokers affiliated brokers
----------- ------------------ ------------------
<S> <C> <C>
Goldman, Sachs & Co. $ 171 0.14%
Goldman Sachs International, Ltd. $7,052 5.74%
Jardine Fleming $ 348 0.28%
Jardine Fleming Hong Kong $ 883 0.72%
Robert Fleming & Co., London $ 139 0.11%
Robert Fleming Securities, Ltd. $1,620 1.32%
</TABLE>
What Will Happen If Shareholders Do Not Approve The Proposed Agreement?
If shareholders of the International Equity Fund do not approve the
Proposed Agreement, the Board will promptly seek to enter into a new sub-
advisory arrangement for the Fund, subject to requisite shareholder approval.
-9-
<PAGE>
What vote is required to approve the Proposed Agreement?
Proposal No. 1 requires the affirmative vote of the lesser of (a) 67% of
the shares present at the Meeting of the International Equity Fund in person or
by proxy, if more than 50% of the outstanding shares of the Fund are present in
person or by proxy or (b) a majority of the Fund's outstanding shares. The
International Equity Fund's Institutional and Service Share Classes will vote as
one class on the Proposal.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE PROPOSED AGREEMENT
-10-
<PAGE>
PROPOSAL 2: APPROVAL TO AMEND THE GROWTH FUND'S
INVESTMENT OBJECTIVE
Introduction
At the Meeting, shareholders of the Growth Fund will be asked to approve an
amendment to the Fund's investment objective. The Growth Fund's investment
objective is fundamental - meaning that it can only be changed by a vote of a
majority of the outstanding shares of the Fund as set forth in the 1940 Act.
What are the current and proposed investment objectives of the Growth Fund?
The Growth Fund's current investment objective is to seek capital
appreciation and, secondarily, current income and dividend growth potential. At
a meeting of the Company's Board of Trustees on September 21, 2000, the Trustees
approved an amendment to the Fund's investment objective to delete the Fund's
secondary investment objectives. The Board also recommended that the amendment
be submitted to the Fund's shareholders for approval at the Meeting. If approved
by shareholders, the Growth Fund's investment objective would be to seek capital
appreciation. The Fund's current and proposed amended investment objectives are
set forth below:
Current Investment Objective Amended Investment Objective
---------------------------- ----------------------------
To seek capital appreciation, To seek capital appreciation
and, secondarily, current income
and dividend growth potential
Why have the Trustees recommended the amendment?
The Growth Fund's primary investment objective since inception has been to
seek capital appreciation. In order to fulfill this objective, the Adviser
purchases growth-oriented securities on behalf of the Fund. The Growth Fund uses
the Russell 1000 Growth Index as its primary benchmark to evaluate the Fund's
performance. The Russell 1000 Growth Index measures performance of those Russell
1000 companies with higher price-to-book and higher forecasted growth values.
The Adviser believes that, under current market conditions, it may become
difficult to fulfill the Fund's primary objective and track its benchmark index,
while at the same time fulfilling its secondary objectives. This is because most
growth-oriented securities, including securities of issuers included in the
Russell 1000 Growth Index, may, but do not always provide current income or
necessarily possess dividend-growth potential. Accordingly, the Adviser believes
that deleting the Fund's secondary objectives would more accurately reflect the
Adviser's investment process and current market conditions.
The amended investment objective is not intended to change the way in which
the Fund has been managed or to change its investment risks. Rather, the amended
statement of the Growth Fund's investment objective is intended to more
accurately describe the characteristics of
-11-
<PAGE>
securities that the Fund would generally expect to hold. While this change in
investment objective is not expected to affect the Fund's total return, there
can be no assurances in this regard. For the reasons set forth above, the Board
of Trustees believes that the amendment to the Growth Fund's investment
objective is in the best interests of shareholders.
What vote is required to approve the amendment to the Growth Fund's investment
objective?
Proposal No. 2 requires the affirmative vote of the lesser of (a) 67% of
the outstanding shares of the Growth Fund present at the meeting in person or by
proxy, if more than 50% of the outstanding shares of the Growth Fund are present
in person or by proxy or (b) a majority of the Growth Fund's outstanding shares.
The Growth Fund's Service Class and Institutional Class will vote as a single
class on Proposal No. 2.
If approved by shareholders, when will the amended investment objective take
effect?
If shareholders of the Growth Fund approve the Fund's proposed amended
investment objective, the amendment will take effect as soon as practicable
after the Meeting.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE GROWTH FUND'S
AMENDED INVESTMENT OBJECTIVE
-12-
<PAGE>
PROPOSAL 3: APPROVAL TO AMEND THE VALUE FUND'S
INVESTMENT OBJECTIVE
Introduction
At the Meeting, shareholders of the Value Fund (formerly the Growth and
Income Fund) will be asked to approve an amendment to the Fund's investment
objective. The Value Fund's investment objective is fundamental - meaning that
it can only be changed by a vote of a majority of the outstanding shares of the
Fund as set forth in the 1940 Act.
What are the Current and Proposed Investment objectives of the Value Fund?
The Value Fund's current investment objective is to seek capital
appreciation and current income. At a meeting of the Company's Board of Trustees
on September 21, 2000, the Trustees approved an amendment to the Fund's
investment objective to add the word "secondarily" before the words "current
income." The Board's action will have the result of making "current income" a
secondary, rather than a primary, investment objective. The Board also
recommended that the amendment be submitted to the Fund's shareholders for
approval at the Meeting. If approved by shareholders, the Value Fund's
investment objective would be to seek capital appreciation and, secondarily,
current income. The Fund's current and proposed amended investment objectives
are set forth below:
Current Investment Objective Amended Investment Objective
---------------------------- ----------------------------
To seek capital appreciation and To seek capital appreciation and,
current income secondarily, current income
Why have the Trustees recommended the Amendment?
The Value Fund's investment objective since inception has been to seek
capital appreciation and current income. The Adviser invests the Fund's assets
principally in stocks of companies that are selling below fair value compared to
their future potential. The Adviser believes that under current market
conditions it is likely to encounter difficulties in fulfilling the Fund's two
objectives (capital appreciation and current income). This is because most of
the companies with stocks that sell below fair value and offer the opportunity
for capital appreciation frequently do not pay current income. Therefore, the
Adviser believes that making "current income" a secondary investment objective
would more accurately reflect the Adviser's investment process and current
market conditions.
The amended investment objective is not intended to change the way in which
the Fund has been managed or to change its investment risks. Rather, the amended
statement of the Value Fund's investment objective is intended to more
accurately describe the characteristics of securities that the Fund would
generally expect to hold. While this change in investment objective is not
expected to affect the Fund's total return, there can be no assurances in this
regard. For the reasons set forth above, the Board of Trustees believes that the
amendment to the Value Fund's investment objective is in the best interests of
shareholders.
-13-
<PAGE>
What vote is required to approve the amendment to the Value Fund's investment
objective?
Proposal No. 3 requires the affirmative vote of the lesser of (a) 67% of
the outstanding shares of the Value Fund present at the meeting in person or by
proxy, if more than 50% of the outstanding shares of the Value Fund are present
in person or by proxy or (b) a majority of the Value Fund's outstanding shares.
The Value Fund's Service Class and Institutional Class will vote as a single
class on Proposal No. 3.
If approved by shareholders, when will the amended investment objective take
effect?
If shareholders of the Value Fund approve the Fund's proposed amended
investment objective, the amendment will take effect as soon as practicable
after the Meeting.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE VALUE FUND'S AMENDED
INVESTMENT OBJECTIVE
-14-
<PAGE>
PROPOSAL 4: APPROVAL TO AMEND THE MIDCAP GROWTH FUND'S
INVESTMENT OBJECTIVE
Introduction
At the Meeting, shareholders of the MidCap Growth Fund (formerly the MidCap
Fund) will be asked to approve an amendment to the Fund's investment objective.
The MidCap Growth Fund's investment objective is fundamental - meaning that it
can only be changed by a vote of a majority of the outstanding shares of the
Fund as set forth in the 1940 Act.
What are the current and proposed investment objectives of the MidCap Growth
Fund?
The MidCap Growth Fund's current investment objective is to seek long-term
capital appreciation. At a meeting of the Company's Board of Trustees on
September 21, 2000, the Trustees approved an amendment to the Fund's investment
objective to delete the word "long-term" from the Fund's investment objective.
The Board also recommended that the amendment be submitted to the Fund's
shareholders for approval at the Meeting. If approved by shareholders, the
MidCap Growth Fund's investment objective would be to seek capital appreciation.
The Fund's current and proposed amended investment objectives are set forth
below:
Current Investment Objective Amended Investment Objective
---------------------------- ----------------------------
To seek long-term capital appreciation To seek capital appreciation
Why have the Trustees recommended the amendment?
The MidCap Growth Fund's investment objective since inception has been to
seek long-term capital appreciation. In order to fulfill this objective, the
Adviser has generally purchased stocks of companies with medium-sized market
capitalizations (less than $10 billion) and the potential for above-average
earnings growth. The MidCap Growth Fund recently changed the benchmark index
that it uses to evaluate the Fund's performance from the S&P 400 Mid-Cap Index
to the Russell MidCap Growth Index. The Adviser also changed its primary
investment strategy to state that the Fund generally invests in stocks of
companies whose characteristics are comparable to those included in the Russell
MidCap Growth Index. The Adviser believes that the companies comprising the
Russell MidCap Growth Index can generally be expected to provide capital
appreciation in the short term as well as the long term. Therefore, the Adviser
believes that as a result of this change in investment strategy, a broader
statement of the Fund's investment objective would be more accurate and
appropriate. For these reasons, it has recommended that the words "long-term" be
deleted from the Fund's investment objective. While this change in investment
objective is not expected to affect the Fund's total return, there can be no
assurances in this regard. Based on the Adviser's recommendation, the Board of
-15-
<PAGE>
Trustees believes that the amendment to the MidCap Growth Fund's investment
objective is in the best interests of shareholders.
What vote is required to approve the amendment to the MidCap Growth Fund's
investment objective?
Proposal No. 4 requires the affirmative vote of the lesser of (a) 67% of
the outstanding shares of the MidCap Growth Fund present at the meeting in
person or by proxy, if more than 50% of the outstanding shares of the MidCap
Growth Fund are present in person or by proxy or (b) a majority of the MidCap
Growth Fund's outstanding shares. The MidCap Growth Fund's Service Class and
Institutional Class will vote as a single class on Proposal No. 4.
If approved by shareholders, when will the amended investment objective take
effect?
If shareholders of the MidCap Growth Fund approve the Fund's proposed
amended investment objective, the amendment will take effect as soon as
practicable after the Meeting.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE MIDCAP GROWTH FUND'S
AMENDED INVESTMENT OBJECTIVE
-16-
<PAGE>
PROPOSAL 5: ELECTION OF TRUSTEES
Introduction
At the Meeting, shareholders of the Company will be asked to consider
the election of five Board members who will constitute the entire Board of
Trustees of the Company. Each Board member so elected will hold office until his
successor is elected and qualifies, or until his term as a Trustee is terminated
as provided in the Company's By-Laws.
Who Are the Nominees and When Were They Last Elected?
The nominees are described in the table below.
Table 4 - Trustees
<TABLE>
<CAPTION>
Trustee Principal Occupation During
Name Age Since Past 5 Years and Other Affiliations
---- --- ----- -----------------------------------
<S> <C> <C> <C>
John Eric Helsing 66 8/94 Chairman of the Board of Trustees. Retired. Former Professor and Chairman,
Department of Business Administration and Economics of William Jewell College.
Former Lecturer at William Jewell College. Director, Valentine Radford
Communications and Trustee, Midwest Research Institute.
Warren W. Weaver/1/ 69 2/96 President of the Company. Retired. Former Vice Chairman, Commerce Bancshares,
Inc. and Commerce Bank, N.A. Director, Milbank Mfg. Company. Director, Roddis
Lumber Company. Advisory Director of Aon. Advisory Director of Commerce Bank, N.A.
Randall D. Barron/1/ 70 8/94 Treasurer of the Company. Retired. Former President, Missouri Division,
Southwestern Bell Telephone Company. Former Director, Commerce Bancshares, Inc.
David L. Bodde 57 8/94 Charles N. Kimball Professor of Technology and Innovation, University of Missouri,
Kansas City since July 1996. Vice President, Midwest Research Institute since
January 1991. Director, Missouri Technological Corporation. Director, Kansas
City Power and Light Company.
John Joseph Holland 50 8/94 President and CEO, Butler Manufacturing Company from January 1999 to the present.
Executive Vice President from June 1998 to January 1999 and Vice President and
Chief Financial Officer from January 1990 to June 1998. Director, Allendale
Insurance Company.
</TABLE>
_______________
/1/ Trustees who are "interested persons" of the Company, as defined in the
1940 Act. Mr. Weaver is an interested Trustee because he is President of the
Company, owns securities of the Adviser's parent corporation, Commerce
Bancshares Corp., and serves as an Advisory Director of the Adviser. Mr. Barron
is an interested Trustee because he is Treasurer of the Company, owns an
interest in Commerce Bancshares Corp. and owns an interest in a common trust
fund for which the Adviser serves as trustee.
-17-
<PAGE>
All nominees are incumbent Trustees who are standing for re-election.
All nominees, except Mr. Weaver, were most recently elected as Trustees of the
Company by consent of the sole shareholder on November 28, 1994. Mr. Weaver was
elected Trustee of the Company at a regular meeting of the Board of Trustees
held on February 29, 1996.
How often does the Board of Trustees meet and what Committees does it have?
During the fiscal year ended October 31, 1999, the Trustees met four
times. Each of the current Trustees attended all of the meetings of the Board.
The Board of the Company has a Nominating Committee consisting of
Messrs. Bodde, Helsing and Holland, all non-interested Trustees. The Nominating
Committee is responsible for considering candidates for election to the Board of
Trustees in the event a position is vacated or created. The Nominating Committee
was constituted in October 1999. The Committee will consider nominees
recommended by the Company's shareholders. Shareholders who wish to recommend a
nominee should send nominations to the Secretary of the Company.
The Company does not have an Audit Committee or Compensation
Committee.
How much are the Trustees paid for their services?
Effective July 26, 2000, each Trustee of the Company receives a fee of
$2,000 for each regular and special meeting of the Board of Trustees attended in
person, plus $750 for each special meeting of the Board attended by telephone.
In addition, the Chairman of the Board receives an annual fee of $2,000 for his
services in this capacity. All Trustees are reimbursed for out-of-pocket
expenses incurred in connection with their attendance at meetings.
Each Trustee is entitled to participate in The Commerce Funds Deferred
Compensation Plan (the "Plan"). Under the Plan, a Trustee may elect to have his
or her deferred fees treated as if they had been invested by the Company in the
shares of one or more portfolios of the Company, and the amount paid to the
Trustees under the Plan will be determined based on the performance of such
investments. Deferral of Trustees' fees will have no effect on a portfolio's
assets, liabilities and net income per share, and will not obligate the Company
to retain the services of any Trustee or obligate a portfolio to any level of
compensation to the Trustee.
The following table provides certain information about the fees paid
by the Company to the Trustees for services rendered during the fiscal year
ended October 31, 1999:
-18-
<PAGE>
Table 5 - Trustees Fees
<TABLE>
<CAPTION>
Aggregate Pension or Retirement Aggregate
Name of Compensation Benefits Accrued as Part Compensation
Person/Position from the Trust* of Fund Expenses from the Fund
--------------- -------------- ---------------- -------------
<S> <C> <C> <C>
John Eric Helsing $6,000 $0 N/A
Trustee, Chairman
Warren W. Weaver $6,000 $0 N/A
Trustee, President
Randall D. Barron $6,000 $0 N/A
Trustee, Treasurer
David L. Bodde $6,000 $0 N/A
Trustee
John Joseph Holland $6,000 $0 N/A
Trustee
</TABLE>
* During the fiscal year ended October 31, 1999, each Trustee was entitled to
receive $1,500 for each regular meeting of the Board of Trustees attended
in person, plus $750 for each special meeting of the Board attended by
telephone. The Chairman was not entitled to receive any fees in 1999 for
his services in this capacity. During this period, the following Trustees
deferred the amounts shown pursuant to the Plan: Eric Helsing ($6,000) and
David L. Bodde ($6,000).
As of October 4, 2000, the Trustees of the Company as a group owned
beneficially less than 1% of the outstanding shares of each Fund of the Company,
and less than 1% of the outstanding shares of all Funds of the Company in the
aggregate.
Who are the Company's officers?
The officers of the Company are elected by the Trustees and serve at
the pleasure of the Board. The following table sets forth certain information
about the Company's officers, except Messrs. Weaver and Barron, about whom
information is provided in Table 4.
-19-
<PAGE>
Table 6 - Officers
<TABLE>
<CAPTION>
Name, Address Officer Position with
and Age Since Company Principal Occupation During Past 5 Years
------- ----- ------- ----------------------------------------
<S> <C> <C> <C>
James A. McNamara 1999 Vice President Vice President, Goldman Sachs & Co. since April 1998. Senior Vice
Goldman, Sachs & Co. President and Eastern Regional Manager for Dreyfus Institutional
4900 Sears Tower Service Corp. from 1996 to 1998. From 1993 to 1996 Vice President,
Chicago, IL 60606 Institutional Sales Representative, Midwestern United States for
DOB: 10/2/62 Dreyfus.
John Perlowski 1996 Vice President Vice President, Goldman Sachs & Co., since July 1995. Director/Fund
Goldman, Sachs & Co. Accounting & Custody, Investors Bank & Trust Co., November 1993 to
32 Old Slip July 1995. Formerly, Manager, Audit Division, Arthur Andersen,
New York, NY 10005 September 1986 to November 1993.
DOB: 11/7/64
William Schuetter 2000 Vice President Vice President, Commerce Bank, N.A., 1998 to present.
Commerce Bank, N.A. Vice President of Fund Accounting, UMB Bank, from
1000 Walnut Street 1996 - 1998. Assistant Vice President, Manager of Income
Kansas City, MO 64106 Processing, UMB Bank from 1993 - 1996.
DOB: 4/17/60
Larry Franklin 2000 Vice President Vice President, Commerce Bank, N.A., 1993 - present. Business
Commerce Bank, N.A. Manager, The Commerce Funds, 1993 - 1996; Administrative Director
1000 Walnut Street 1996 - 1998; and Managing Director, 1998 - present.
Kansas City, MO 64106
DOB: 2/21/47
Philip V. Giuca, Jr. 1998 Assistant Assistant Treasurer and Vice President, Goldman, Sachs & Co. from
Goldman, Sachs & Co. Treasurer May 1992 to the present.
10 Hanover Square
New York, NY 10004
DOB: 3/03/62
Peter Fortner 2000 Assistant Vice President, Goldman Sachs Investment Management, July 2000 to
Goldman, Sachs & Co. Treasurer present. Assistant Treasurer of Goldman Sachs' proprietary mutual
32 Old Slip funds. Vice President/Accounting Manager for Prudential Investment
New York, NY 10005 Fund Management LLC in their mutual fund administration group from
DOB: 1/25/58 1985 to 2000.
W. Bruce McConnel 1994 Secretary Partner of the law firm Drinker Biddle & Reath LLP.
Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, PA
19103-6996
DOB: 2/7/43
</TABLE>
-20-
<PAGE>
<TABLE>
<CAPTION>
Name, Address Officer Position with
and Age Since Company Principal Occupation During Past 5 Years
------- ----- ------- ----------------------------------------
<S> <C> <C> <C>
Amy Belanger, Esq. 2000 Assistant Vice President and Assistant General Counsel, Goldman, Sachs & Co.
Goldman, Sachs & Co. Secretary 1998 to present. Formerly an Associate of Dechert Price & Rhoads,
32 Old Slip 1996 - 1998.
New York, NY 10005
DOB: 9/3/69
Howard B. Surloff 1994 Assistant Assistant General Counsel, Goldman, Sachs & Co. since November 1993
Goldman, Sachs & Co. Secretary and General Counsel of the U.S. Funds Group since January 1999.
19th Floor Assistant General Counsel since November 1995 and Vice President of
Legal Department Goldman Sachs since May 1994. Formerly Associate of Shereff,
32 Old Slip Friedman, Hoffman & Goodman.
New York, NY 10005
DOB: 6/21/65
</TABLE>
The officers of the Company receive no compensation directly from the
Company for performing the duties of their office. Each of the Company's
officers, except for Messrs. McConnel, Franklin and Schuetter, also serves as an
officer of one or more other mutual funds with which Goldman, Sachs & Co. has a
business relationship.
What Vote is Required to Elect the Trustees?
With respect to the Company, the five nominees who receive the highest
number of votes cast at the Meeting will be elected as Trustees. Cumulative
voting is not permitted. Should any nominee withdraw from the election or
otherwise be unable to serve, the named proxies will vote for the election of
such substitute nominee as the Board of Trustees may recommend unless a decision
is made to reduce the number of Trustees. All shares represented by valid
proxies will be voted in the election of Trustees for each nominee named above
unless authority to vote for a particular nominee is withheld.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" THE ELECTION OF EACH OF THE TRUSTEES
-21-
<PAGE>
VOTING INFORMATION
Who Can Vote?
Only shareholders of record at the close of business on September 29,
2000, the record date for the Meeting, will be entitled to notice of and to vote
at the Meeting. On that date, the number of outstanding shares of each of the
Commerce Funds were as follows:
Table 6 - Number of Outstanding Shares
<TABLE>
<CAPTION>
Number of Shares
Fund Institutional Class Service Class
---- ------------------- -------------
<S> <C> <C>
Commerce MidCap Growth Fund* 4,258,129 100,080
Commerce Growth Fund 10,057,692 363,514
Commerce Value Fund** 3,672,625 43,418
Commerce International Equity Fund 6,221,461 29,156
Commerce Balanced Fund 3,702,996 106,237
Commerce Short-Term Government Fund 4,542,239 58,276
Commerce Bond Fund 17,868,098 66,491
Commerce National Tax-Free Intermediate Bond Fund 2,170,362 N/A
Commerce Missouri Tax-Free Intermediate Bond Fund 2,071,803 N/A
</TABLE>
________________________
* formerly the Commerce MidCap Fund
** formerly the Commerce Growth and Income Fund
How Can I Vote?
You can vote by:
1. Completing, signing and returning the enclosed proxy card(s)
promptly in the postage-paid envelope; or
2. Attending the meeting and voting in person.
What's a Quorum?
A quorum is constituted by the presence in person or by proxy of the
holders of more than 50% of the outstanding shares entitled to vote at the
Meeting with respect to Proposals 1 through 4. With respect to Proposal 5, a
quorum is constituted by the presence in person or by proxy of the holders of
one-third of the outstanding shares entitled to vote at the Meeting. For
purposes of determining the presence of a quorum, abstentions and broker "non-
votes" (that is, proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owners or other persons
entitled to vote shares on a particular matter with
-22-
<PAGE>
respect to which the brokers or nominees do not have discretionary power), will
be treated as shares that are present at the Meeting. A vote cast does not
include an abstention or the failure to vote for or against a proposal.
Therefore, for purposes of determining the affirmative vote of a "majority of
the outstanding shares," an abstention or the failure to vote, including a
broker non-vote, will be the equivalent of voting against a proposal.
In the event that a quorum of a Fund or the Company is not present at
the Meeting or at any adjournment thereof, or in the event that a quorum is
present at the Meeting but sufficient votes to approve one or more proposals are
not received, the persons named as proxies, or their substitutes, may propose
and vote for one or more adjournments of the Meeting to permit the further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of those shares affected by the adjournment that are represented
at the Meeting in person or by proxy. A shareholder vote may be taken with
respect to one or more of the proposals prior to any such adjournment as to
which sufficient votes have been received for approval.
What percentage of shares of the Company's Funds does the Adviser hold?
At the record date for the Meeting, the Adviser held of record
approximately the following percentage of outstanding shares of the Company's
Funds in a fiduciary capacity or as or custodian for its customers. The Adviser
intends to vote shares of beneficial interest in the Funds over which it has
investment discretion FOR all of the proposals, including for each of the
Trustee nominees. This means that the Adviser has the voting power to cause each
of the proposals, including the election of each of the Trustee nominees, to be
adopted by shareholders.
Table 7 - Shares Held of Record by Adviser
<TABLE>
<CAPTION>
% Held in a Fiduciary Capacity or as
------------------------------------
Custodian
---------
Fund
----
Institutional Class Service Class
------------------- -------------
<S> <C> <C>
Commerce MidCap Growth Fund* 83% 5%
Commerce Growth Fund 75% 11%
Commerce Value Fund** 96% 0%
Commerce International Equity Fund 92% 3%
Commerce Balanced Fund 70% 8%
Commerce Short-Term Government Fund 95% 23%
Commerce Bond Fund 95% 28%
Commerce National Tax-Free Intermediate Bond Fund 94% N/A
Commerce Missouri Tax-Free Intermediate Bond Fund 90% N/A
</TABLE>
* formerly the Commerce Mid-Cap Fund
** formerly the Commerce Growth and Income Fund
-23-
<PAGE>
Does any Shareholder Own More than 5% of the Company or the Funds?
The name, address and share ownership of each person who may have sole
or shared voting or investment power with respect to more than 5% of each Fund's
outstanding shares at the record date were:
Table 8 - Shareholders Who Own 5% or More of a Fund
<TABLE>
<CAPTION>
Number of
Outstanding Percent
Fund Shareholder Shares of Class
---- ----------- ------ --------
<S> <C> <C> <C>
Bond Fund Hoco & Co. 9,181,346 51%
(Institutional) Mutual Funds
P.O. Box 13366
Kansas City, MO
Mori & Co. 6,765,294 37%
Mutual Funds
P.O. Box 13366
Kansas City, MO
Bond Fund Fringe Benefit-Rockhurst High 18,919 28%
(Service) Mutual Fund Processing
P.O. Box 13366
Kansas City, MO
Aileen Frye Rev. Trust 3,694 5%
Barbara J. & Larry W. Doran TTE
U/A 10/28/1993
6301 Fremont Rd.
Ozark, MO
National Tax-Free Mori & Co. 1,529,553 69%
Intermediate Bond Fund Mutual Funds
(Institutional) P.O. Box 13366
Kansas City, MO
Hoco & Co. 560,120 25%
Mutual Funds
P.O. Box 13366
Kansas City, MO
</TABLE>
-24-
<PAGE>
<TABLE>
<CAPTION>
Number of
Outstanding Percent
Fund Shareholder Shares of Class
---- ----------- ------ --------
<S> <C> <C> <C>
Helen Pierson Trust 193,242 9%
C/o Commerce Bank
8000 Forsyth
St. Louis, MO
Missouri Tax-Free Mori & Co. 1,554,077 74%
Intermediate Bond Fund Mutual Funds
(Institutional) P.O. Box 13366
Kansas City, MO
Hoco & Co. 268,241 12%
Mutual Funds
P.O. Box 13366
Kansas City, MO
Short-Term Government Fund Hoco & Co. 2,568,848 56%
(Institutional) Mutual Funds
P.O. Box 13366
Kansas City, MO
GEHA Pension Plan 545,582 5%
C/o Commerce Bank
8000 Forsyth
St. Louis, MO
Growth Fund Fringe Benefit-Rockhurst High 33,506 9%
(Service) Mutual Fund Processing
P.O. Box 13366
Kansas City, MO
Balanced Fund Hoco & Co. 2,597,274 70%
(Institutional) Mutual Funds
P.O. Box 13366
Kansas City, MO
Investors Fiduciary Trust Co. 190,140 5%
Attn: Trust Operations
801 Pennsylvania Ave.
Kansas City, MO
</TABLE>
-25-
<PAGE>
<TABLE>
<CAPTION>
Number of
Outstanding Percent
Fund Shareholder Shares of Class
---- ----------- ------ --------
<S> <C> <C> <C>
GEHA Pension Plan 517,344 14%
C/o Commerce Bank
8000 Forsyth
St. Louis, MO
A.E. Lottes Company 401(k) 240,428 6%
C/o Commerce Bank
8000 Forsyth
St. Louis, MO
Balanced Fund Fringe Benefit-Rockhurst High 8,618 8%
(Service) Mutual Fund Processing
P.O. Box 13366
Kansas City, MO
Columbus Circle Trust Company 5,991 5%
Custodian
FBO DCCCA Inc., 403b
Metro Center
1 Station Pl.
Stamford, CT
Barbara P. Lawton Rev. Liv. Trust 5,532 5%
Barbara P. Lawton TTEE
1430 Timberbrook Dr.
St. Louis, MO
MidCap Growth Fund Hoco & Co. 2,295,225 53%
(Institutional) Mutual Funds
P.O. Box 13366
Kansas City, MO
Mori & Co. 1,152,522 27%
Mutual Funds
P.O. Box 13366
Kansas City, MO
MidCap Growth Fund (Service) Earl E. & Myrtle E. Walker Fndtn. 12,256 12%
12071 Carberry Pl.
St. Louis, MO
</TABLE>
-26-
<PAGE>
<TABLE>
<CAPTION>
Number of
Outstanding Percent
Fund Shareholder Shares of Class
---- ----------- ------ --------
<S> <C> <C> <C>
Kathleen S. Mueller 7,837 7%
John D. Mueller
4739 Belleview
Kansas City, MO
Earl E. Walker TTEE 6,537 6%
Earl E. Walker II Amend. Indt. Of
Trust
12071 Carberry Pl.
St. Louis, MO
Myrtle E. Walker TTEE 6,537 6%
Myrtle E. Walker Indenture of Trust
12071 Carberry Pl.
St. Louis, MO
Fringe Benefit-Rockhurst High 5,238 5%
Mutual Fund Processing
P.O. Box 13366
Kansas City, MO
International Equity Fund Hoco & Co. 3,899,178 62%
(Institutional) Mutual Funds
P.O. Box 13366
Kansas City, MO
Mori & Co. 1,697,850 27%
Mutual Funds
P.O. Box 13366
Kansas City, MO
Enterprise Rent-A-Car International 1,000,169 16%
C/o Commerce Bank
8000 Forsyth
St. Louis, MO
</TABLE>
-27-
<PAGE>
<TABLE>
<CAPTION>
Number of
Outstanding Percent
Fund Shareholder Shares of Class
---- ----------- ------ --------
<S> <C> <C> <C>
International Equity Fund Boulevard Enterprises 4,090 14%
(Service) A Partnership
Gus Jainas
2530 Southwest Blvd.
Kansas City, MO
Columbus Circle Trust Company 2,347 8%
Custodian
FBO DCCCA Inc., 403b
Metro Center
1 Station Pl.
Stamford, CT
Value Fund Hoco & Co. 2,109,049 57%
(Institutional) Mutual Funds
P.O. Box 13366
Kansas City, MO
Mori & Co. 1,285,112 34%
Mutual Funds
P.O. Box 13366
Kansas City, MO
Value Fund NFSC/FMTC IRA 3,529 8%
(Service) FBO Deborah J. Groves
3029 Mimosa St. #2
Cape Girardeau, MO
Surgical Arts of St. Louis Ltd. 2,374 5%
Robert V. Cralle TTEE
11125 Dunn Road, Suite 301
St. Louis, MO
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one or
more controlled companies more than 25% of the voting securities of a company is
presumed to "control" such company.
* * * * * *
-28-
<PAGE>
Does the Company Know of Any Other Matters to Come Before the Meeting?
No business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of shareholders
arise, including any question as to an adjournment of the Meeting, the persons
named in the enclosed Proxy will vote thereon according to their best judgment
in the interests of each Fund and the Company.
The Company does not intend to hold meetings of shareholders except to the
extent that such meetings may be required under the 1940 Act, as amended, or
state law. Shareholders who wish to submit proposals for inclusion in the Proxy
Statement for a subsequent shareholder meeting should send their written
proposals to the Company at its principal office within a reasonable time before
such meeting.
Dated: October 31, 2000
-29-
<PAGE>
Annex A
<TABLE>
<CAPTION>
======================================================================================================================
Name and Position with Name and Principal Connection with Other Company
Commerce Bank, N.A. Business Address of Other Company
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mr. John O. Brown, Key Industries, Inc. Director
Vice Chairman and Director 523 East Wall
Ft. Scott, KS 66701-1554
----------------------------------------------------------------------------------------------------------------------
Mr. Jonathan M. Kemper, Tower Properties Company Director
Vice Chairman and Director 911 Main Street, Suite 100
Kansas City, MO 64106
Commerce Bancshares, Inc. Vice Chairman
1000 Walnut Street
Kansas City, MO 64106
----------------------------------------------------------------------------------------------------------------------
Mr. Edward J. Reardon II None None
Executive Vice President and Director
----------------------------------------------------------------------------------------------------------------------
Mr. Robert C. Matthews, Jr. None None
Executive Vice President and Director
----------------------------------------------------------------------------------------------------------------------
Mr. David W. Kemper, Tower Properties Company Director
Chairman, President, CEO and Director 911 Main Street, Suite 100
Kansas City, MO 64106
Commerce Bancshares, Inc. Chairman, President and Chief
1000 Walnut Street Executive Officer
Kansas City, MO 64106
Business Men's Assurance Company of Director
America
One Penn Valley Park
Kansas City, MO 64108
Seafield Capital Corporation Director
2600 Grand Avenue Suite 500
Kansas City, MO 64108
Wave Technologies International, Inc. Director
10845 Olive Blvd.
St. Louis, MO 63146
Ralcorp Holdings, Inc. Director
901 Chouteau Avenue
St. Louis, MO 63102
----------------------------------------------------------------------------------------------------------------------
Mr. Seth M. Leadbeater, None None
Executive Vice President and Director
======================================================================================================================
</TABLE>
-1-
<PAGE>
The information with respect to each director and officer of Price
International is as follows:
<TABLE>
<CAPTION>
===========================================================================================================================
Name Position with T. Rowe-Price Connection with T. Rowe-Price
International, Inc. Associates, Inc.
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mr. Martin G. Wade Chairman of the Board Director and Managing Director
---------------------------------------------------------------------------------------------------------------------------
Mr. M. David Testa Director Vice Chairman of the Board, Chief
Investment Officer, Managing Director
---------------------------------------------------------------------------------------------------------------------------
Mr. James S. Riepe Director Vice Chairman of the Board, Managing
Director
---------------------------------------------------------------------------------------------------------------------------
Mr. George A. Roche Director Chairman of the Board, President,
Managing Director
---------------------------------------------------------------------------------------------------------------------------
Mr. David J.L. Warren Director, President and Chief Executive Managing Director
Officer
---------------------------------------------------------------------------------------------------------------------------
Mr. John R. Ford Director, Chief Investment Officer Managing Director
---------------------------------------------------------------------------------------------------------------------------
Mr. George A. Murnaghan Executive Vice President Managing Director
===========================================================================================================================
</TABLE>
-2-
<PAGE>
Appendix I
----------
THE COMMERCE FUNDS
SUB-ADVISORY AGREEMENT
INTERNATIONAL EQUITY FUND
AGREEMENT, dated as of _________, 2000 among Commerce Bank, N.A. (the
"Advisor"), and T. Rowe Price International, Inc., a corporation with its
principal office and, place of business at 100 East Pratt Street, Baltimore,
Maryland ("Sub-Advisor");
WHEREAS, THE COMMERCE FUNDS (the "Trust") is registered as an open-
end, diversified management investment company under the Investment Company Act
of 1940, as amended (the "1940 Act");
WHEREAS, the Advisor has been appointed as investment advisor to the
Trust's International Equity Fund (the "Fund"); and
WHEREAS, the Advisor wishes to retain the Sub-Advisor to assist them
in the provision of a continuous investment program for the Fund and the Sub-
Advisor is willing to render such assistance;
WHEREAS, the Board of Trustees of the Fund and the Fund's shareholders
have approved this Agreement, and the Sub-Advisor is willing to furnish such
services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
1. Appointment. The Advisor hereby appoints Sub-Advisor to act as
-----------
sub-advisor for the Fund as permitted by the Advisor's Advisory Agreement with
the Trust. The Sub-Advisor accepts such appointment and agrees to render the
services required hereby for the compensation provided in this Agreement.
2. Sub-Advisory Services. Subject to the supervision of the Trust's
---------------------
Board of Trustees and the Advisor, the Sub-Advisor will provide a continuous
investment program for the Fund, including investment research and management
with respect to all securities and investments and cash equivalents in the Fund.
The Sub-Advisor will determine from time to time what securities and other
investments will be purchased, retained or sold by the Fund, subject to the
Advisor's approval of the overall investment objection of each Fund, and will
<PAGE>
arrange for the purchase and sale of securities and other investments of the
Fund. The Sub-Advisor will provide the services under this Agreement, in
accordance with the Fund's investment objective, policies and restrictions as
stated in the Prospectus, Statement of Additional Information and supplements
and resolutions adopted from time to time by the Trust's Board of Trustees. The
Sub-Advisor further agrees that it:
(a) will perform its obligations hereunder in conformity with all
applicable Rules and Regulations of the SEC, and will in addition conduct its
activities under this Agreement in accordance with other applicable law;
(b) will telecopy or send electronically trade information to the
Advisor or its agent on the first business day following the day of the trade
and cause broker confirmations to be sent directly to the Advisor;
(c) will place all orders for the purchase and sale of portfolio
securities for the account of the Fund with brokers or dealers selected by the
Sub-Advisor. In executing portfolio transactions and in selecting brokers or
dealers, the Sub-Advisor will use its reasonable effort to seek on behalf of the
Fund the best overall terms available. In assessing the best overall terms
available for any transaction, the Sub-Advisor shall consider all factors it
deems relevant, including, the breadth of the market in the security, the price
of the security, the financial condition and execution capability of the broker
or dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In evaluation the best overall
terms available, and in selecting the broker or dealer to execute a particular
transaction, the Sub-Advisor may also consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934, as amended) provided to the Fund and/or other accounts to which the
Sub-Advisor or any affiliate thereof exercise investment discretion. The Sub-
Advisor is authorized, subject to the prior approval of the Trust's Board of
Trustees, to pay to a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund which
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if, but only if, the Sub-Advisor
determines in good faith that such commission was reasonable in relation to the
value of the brokerage and research services provided by such broker or dealer -
- viewed in terms of that particular transaction or in terms of the overall
responsibility of the Sub-Advisor to the Fund and to the Trust. In no instance
will portfolio securities be purchased from or sold to the Sub-Advisor or the
principal underwriter for the Trust or an affiliated person of either acting as
principal or as broker, except as permitted by law. In executing portfolio
transactions for the Fund, the Sub-Advisor, to the extent permitted by
applicable laws and regulations, may but shall not be obligated to aggregate the
securities to be sold or purchased with those of their other clients where such
aggregation is not inconsistent with the policies set forth in the Fund's
Prospectus. In such event, the Sub-Advisor will allocate the securities so
purchased or sold, and the expenses incurred in the transaction, in the manner
it considers to be the most equitable and consistent with its fiduciary
obligation to the Fund and such other clients;
(d) will not make loans to any person to purchase or carry Fund
shares or make interest bearing loans to the Fund, except as provided in the
Fund's Prospectus and Statement of Additional Information;
-2-
<PAGE>
(e) will maintain all books and records with respect to the
securities transactions of the Fund entered into pursuant to this Agreement;
keep books of account with respect to the Fund as required in connection with
its services under the 1940 Act; and furnish the Trust's Board of Trustees with
such periodic and special reports as the Board may reasonably request; and
(f) will treat confidentiality and as proprietary information of the
Trust all records and other information relative to the Trust and prior, present
or potential shareholders of the Fund, except for such information that is in
the public domain, and will not use such records and information for any purpose
other than performance of its responsibilities and duties hereunder except where
the Sub-Advisor may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust.
Without limiting the generality of the foregoing, the Sub-Advisor further
agrees that it will:
(g) manage in periodic consultation with the Advisor the Fund's
temporary investments in securities;
(h) place orders for the Fund either directly with the issuer or with
any broker or dealer;
(i) manage the Fund's overall cash position, and determine from time
to time what portion of the Fund's assets will be held in different currencies;
(j) as requested on a reasonable basis, provide the Advisor with
foreign broker research;
(k) provide the advisor with a quarterly review of international
economic and investment developments, and occasional "White Papers" on
international investment issues; and
(l) attend regular business and investment related meetings with the
Trust's Board of Trustees and the Advisor if requested to do so by the Trust or
Advisor.
3. Services Not Exclusive. (a) Sub-Advisor agrees not to solicit any
----------------------
bank prospect for the purposes of providing the services provided hereunder with
respect to an investment program similar to the International Equity Fund in
Kansas, Missouri and the region of Southern Illinois. Provided however, that
nothing in this paragraph shall preclude the Sub-Advisor from servicing bank
clients in the above-mentioned area or any bank prospect that relocates its
headquarters in Kansas, Missouri or Southern Illinois.
(b) Subject to subsection (a) above, the services furnished by the
Sub-Advisor hereunder are deemed not to be exclusive and nothing in this
Agreement shall (i) prevent the Sub-Advisor or any affiliated person (as defined
in the 1940 Act) of the Sub-Advisor from acting as investment advisor or manager
for any other person or persons, including without
-3-
<PAGE>
limitation other management investment companies with investment objectives and
policies the same as or similar to those of the Fund or (ii) limit or restrict
the Sub-Advisor or any such affiliated person from buying, selling or trading
any securities or other investments (including any securities or other
investments which the Fund is eligible to buy) for its own accounts or for the
accounts of others for whom it may be acting.
(c) Nothing contained in this agreement (including, without
limitation, the Sub-Advisor's confidentiality obligation under Section 2(f)),
however, shall prohibit the Sub-Advisor from advertising or soliciting the
public generally with respect to other products or services, regardless of
whether such advertisement or solicitation may include prior, present or
potential shareholders of the Trust.
4. Books and Records. In compliance with the requirements of Rule 31a-3
-----------------
under the 1940 Act, the Sub-Advisor hereby agrees that all records which it
maintains for the Trust and the Fund are the property of the Trust and further
agrees to surrender promptly to the Trust any such records upon the Trust's
request. The Sub-Advisor further agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1.
5. Expenses. During the term of this Agreement, the Sub-Advisor will pay
--------
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for the Fund.
6. Compensation. For the services provided and the expenses assumed
------------
pursuant to this Agreement, the Advisor will pay the Sub-Advisor monthly and the
Sub-Advisor will accept as full compensation therefor: a fee at the following
annual rates based on the average daily net assets of the Fund:
First $20 million .75%
Next $30 million .60%
In excess of $50 million .50%
provided that, when average daily net assets exceed $200 million, the fee shall
-------------
be reset to .50% of all Fund assets with a transitional credit provided on
assets between $184 million and $200 million according to the formula set forth
in Schedule A; and provided further that, when average daily net assets exceed
---------------------
$500 million, the fee shall be reset to .45% of all Fund assets.
With each monthly fee payment, Adviser or its agent shall provide Sub-
Advisor with a worksheet showing the average daily net assets of the Fund for
the monthly period and the calculation of the Sub-Advisory fee.
If this Agreement becomes effective or terminates before the end of any
month, the fee (if any) for the period from the effective date to the end of the
month or from the beginning of the month to the date of termination, as the case
may be, shall be prorated according to the proportion which such period bears to
the full month in which such effectiveness or termination occurs.
-4-
<PAGE>
7. Limitation of Liability of the Sub-Advisor. The Sub-Advisor or any of
------------------------------------------
its officers, directors or employees shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust or any Fund in
connection with the matters to which this Agreement relates, except a loss
resulting from bad faith, willful misconduct or gross negligence in the
performance of these duties or for losses resulting from a breach of its
fiduciary duty with respect to the receipt of compensation for services.
8. Duration and Termination. The term of this Agreement shall begin on
------------------------
the date first above written and, unless sooner terminated as hereinafter
provided, shall continue until November 30, 2001 and thereafter shall continue
automatically for successive annual periods, provided such continuance is
specifically approved at least annually by the Trust's Board of Trustees or vote
of the lesser of (a) 67% of the shares of the Fund represented at a meeting if
holders of more than 50% of the outstanding shares of the Fund are present in
person or by proxy or (b) more than 50% of the outstanding shares of the Fund,
provided that in either event its continuance also is approved by a majority of
the Trust's Trustees who are not "interested persons" (as defined in the 1940
Act) of any party to this Agreement, by vote cast in person at a meeting called
for the purpose of voting on such approval. This Agreement is terminable at any
time without penalty, on 60 days notice, by the Advisor, Sub-Advisor or by the
Trust's Board of Trustees or by a vote of the lesser of (a) 67% of the shares of
the Fund represented at a meeting if holders of more than 50% of the outstanding
shares of the Fund are present in person or by proxy or (b) more than 50% of the
outstanding shares of the Fund. This Agreement will terminate automatically in
the event of its assignment (as defined in the 1940 Act). Termination of this
Agreement shall not affect the right of the Sub-Advisor to receive payments on
any unpaid balance of the compensation earned prior to such termination.
9. Amendment of this Agreement. No provision of this Agreement may be
---------------------------
waived, changed, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the waiver, change,
discharge or termination is sought, and no amendment of this Agreement shall be
effective until approved by the vote of a majority of the outstanding voting
securities of the Fund.
Notice. Any notice, advice or report to be given pursuant to this Agreement
------
shall be delivered or mailed:
To the Sub-Advisor at:
---------------------
George Murnaghan
T. Rowe-Price International, Inc.
100 E. Pratt Street
Baltimore, Maryland 21202
With copy to:
Darrell N. Braman, Esq.
T. Rowe Price International, Inc.
100 E. Pratt Street
Baltimore, Maryland 21202
-5-
<PAGE>
To the Advisor at:
------------------
J. Daniel Stinnett, Esquire
Commerce Bank, N.A.
P.O. Box 419248
1000 Walnut Street
Kansas City, Missouri 64199-3686
To the Trust at:
----------------
W. Bruce McConnel, III, Esq.
Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, PA 19103-6996
10. Miscellaneous. The captions in this Agreement are included for
-------------
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law. However, any litigation brought by either party to
this Agreement shall be adjudicated in the appropriate court of jurisdiction
within the State of Missouri.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
COMMERCE BANK, N.A.
Attest:
________________________ By:_______________________________
T. ROWE-PRICE INTERNATIONAL INC.
Attest:
________________________ By:_______________________________
-6-
<PAGE>
Schedule A
Formula for crediting Fund against annual contractual fees payable to Sub-
Advisor:
Portfolio asset size - $184 million x $80,000
----------------------------------------------
$16 million
The credit is determined by prorating the difference between the
contractual-tiered fee and the flat fee ($80,000 per annum at all asset levels)
over the difference between $200 million and the current portfolio size for
billing purposes. The credit would approach $80,000 annually when the Fund size
was close to $200 million and fall to zero at $184 million.
The following example may be helpful in understanding the arrangement:
Portfolio Size $200 million $192 million $184 million
--------------
Fee Schedule 50 basis points Contractual-tiered Contractual-tiered
------------ flat schedule, with schedule (no credit)
transitional credit
Annual fee
before credit $1,000,000 $1,040,000 $1,000,000
-------------
Transitional credit - $ 40,000 -
-------------------
Net annual fee $1,000,000 $1,000,000 $1,000,000
--------------
<PAGE>
This Proxy, if properly executed, will be voted as specified below with respect
to the actions to be taken on the following proposals. IN THE ABSENCE OF ANY
SPECIFICATION, THIS PROXY WILL BE VOTED "FOR" PROPOSALS NOS. 1 THROUGH 5.
<TABLE>
<CAPTION>
For International Equity Fund
Shareholders only:
<S> <C> <C>
THE COMMERCE FUNDS 1. To approve a new Sub-Investment For Against Abstain
Mark box at right if an [_] Advisory Agreement between T. Rowe-Price [_] [_] [_]
address change or comment has International, Inc. and Commerce Bank,
been noted on the reverse N.A., on behalf of the International
side of this card. Equity Fund.
CONTROL NO.:
For Growth Fund Shareholders only:
2. To approve an amendment to the For Against Abstain
investment objectives of the Growth Fund. [_] [_] [_]
For Value Fund Shareholders only:
3. To approve an amendment to the For Against Abstain
investment objective of the Value Fund. [_] [_] [_]
For MidCap Growth Fund Shareholders only:
4. To approve an amendment to the For Against Abstain
investment objective of the MidCap Growth [_] [_] [_]
Fund.
For all Shareholders:
5. To Elect Trustees-Nominees: For All With For All
(01) John Eric Helsing Nominees hold Except
(02) Warren W. Weaver [_] [_] [_]
(03) Randall D. Barron
(04) David L. Bodde
(05) John Joseph Holland
NOTE: If you do not wish your shares voted "For" a particular nominee, mark the
"For All Except" box and strike a line through the name(s) of the nominee(s).
Your shares will be voted for the remaining nominee(s).
</TABLE>
Please be sure to sign and date this Proxy. Date:_______________
RECORD DATE
_____________________ __________________ SHARES: ________
Shareholder sign here Co-owner sign here
<PAGE>
THE COMMERCE FUNDS
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF THE COMMERCE FUNDS
The undersigned hereby appoints Larry Franklin, William Schuetter and
Diana McCarthy (the "Proxies"), and each of them, attorneys and proxies of the
undersigned, each with power of substitution and resubstitution, to attend, vote
and act for the undersigned at the Special Meeting of Shareholders (the
"Meeting") of the Commerce Funds (the "Company") to be held at the offices of
Goldman Sachs Asset Management, 32 Old Slip, New York, New York 10005 in
Conference Room 17B at 10:00 a.m., Eastern time on Monday, November 20, 2000 and
at any adjournment(s) or postponement(s) thereof. The undersigned thereby
acknowledges receipt of the Notice of Special Meeting and Proxy Statement.
The proxies shall cast votes according to the number of shares of the
Fund which the undersigned may be entitled to vote with respect to the proposals
set forth on the reverse side, in accordance with the specification indicated,
if any, and shall have all the powers which the undersigned would possess if
personally present. In their discretion, the Proxies, and each of them, are
authorized to vote upon any other business that may properly come before the
Meeting, or any adjournment(s) or postponement(s) thereof, including any
adjournment(s) or postponement(s) necessary to obtain requisite quorums and/or
approvals. The undersigned hereby revokes any prior proxy to vote at the
Meeting, and hereby ratifies and confirms all that said Proxies, or any of them,
may lawfully do by virtue hereof or thereof.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as your name appears on the books of the Company.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation, this signature should be that of an
authorized officer who should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
______________________________________ _________________________________
______________________________________ _________________________________
______________________________________ _________________________________
