COMMERCE FUNDS, 485APOS, 2000-12-21

COMMERCE FUNDS
485APOS, 2000-12-21

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<PAGE>

As filed with the Securities and Exchange Commission on December 21, 2000

Securities Act File No. 33-80966
Investment Company Act File No. 811-8598
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No ___ [_]

Post-Effective Amendment No. 14 [X]

and

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 15 [X]

____________________________

The Commerce Funds
(Exact Name of Registrant as Specified in Charter)

4900 Sears Tower
Chicago, IL 60606
(Address of Principal Executive Offices)

Registrant's Telephone Number:
800-995-6365

W. Bruce McConnel, III
Drinker Biddle & Reath LLP
One Logan Square
18/th/ and Cherry Streets
Philadelphia, Pennsylvania 19103-6996
(Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box)

[_] immediately upon filing pursuant to paragraph (b)
[_] on (date) pursuant to paragraph (b)
[_] 60 days after filing pursuant to paragraph (a)(1)
[X] on February 23, 2001 pursuant to paragraph (a)(1)
[_] 75 days after filing pursuant to paragraph (a)(2)
[_] on (date) pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:

[_] this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.

Title of Securities Being Registered: None
<PAGE>

[GRAPHIC]
THE COMMERCE FUNDS
Service Shares Prospectus
February 23, 2001

The MidCap Growth Fund
(formerly The MidCap Fund)

The Growth Fund

The Value Fund
(formerly The Growth and
Income Fund)

The International Equity Fund

The Balanced Fund

The Core Equity Fund

The Short-Term
Government Fund

The Bond Fund

The National Tax-Free
Intermediate Bond Fund

The Missouri Tax-Free
Intermediate Bond Fund

The Kansas Tax-Free
Intermediate Bond Fund

These securities have not been approved or disapproved by the Securities and
Exchange Commission, nor has the Securities and Exchange Commission passed upon
the accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.

[LOGO OF COMMERCE FUNDS]
<PAGE>

[GRAPHIC]
<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
Overview of Each Fund
MidCap Growth 3
Growth 7
Value 11
International Equity 15
Balanced 20
Core Equity 26
Short-Term Government 30
Bond 35
National Tax-Free Intermediate Bond 40
Missouri Tax-Free Intermediate Bond 45
Kansas Tax-Free Intermediate Bond 50
Investment Securities and Practices 55
Account Policies and Features 64
Buying Service Shares 64
Redeeming Service Shares 71
General Policies 73
Business of the Commerce Funds 75
Tax Information 76
Service Providers 77
</TABLE>

The Commerce Funds PAGE 1
---------------
.
<PAGE>

The Commerce Funds

What These Funds Are: These Funds are mutual funds. A mutual fund is a pooled
investment that gives you an opportunity to participate in financial markets.
Each Fund is professionally managed. Each Fund has stated goals that it
attempts to reach. However, as with all mutual funds, none of these Funds can
offer guaranteed results. You could lose money in these Funds.

The Commerce Funds consists of eleven investment portfolios, each of which has
a separate pool of assets with separate investment objectives and policies.
This Prospectus offers Service Shares of eleven of these investment portfolios.

The MidCap Growth Fund seeks capital appreciation.

The Growth Fund seeks capital appreciation.

The Value Fund seeks capital appreciation and, secondarily, current income.

The International Equity Fund seeks total return with an emphasis on growth of
capital.

The Balanced Fund seeks total return through a balance of capital appreciation
and current income consistent with preservation of capital.

The Core Equity Fund seeks capital appreciation and, secondarily, current
income.

The Short-Term Government Fund seeks current income consistent with
preservation of principal.

The Bond Fund seeks total return through current income and, secondarily,
capital appreciation.

The National Tax-Free Intermediate Bond Fund seeks current income exempt from
federal income tax as is consistent with the preservation of capital.

The Missouri Tax-Free Intermediate Bond Fund seeks current income exempt from
federal and, to the extent possible, from Missouri income taxes, as is
consistent with the preservation of capital.

The Kansas Tax-Free Intermediate Bond Fund seeks current income exempt from
federal and, to the extent possible, from Kansas income taxes, as is consistent
with the preservation of capital.

What These Funds Are Not : An investment in any of these Funds is not a bank
deposit. Your investment is not insured or guaranteed by the FDIC or any other
agency of the government.

PAGE 2 The Commerce Funds
---------------
.
<PAGE>

MidCap Growth Fund
--------------------------------------------------------------------------------

Paul D. Cox,
CFA and
Portfolio Manager

. Joined the Investment Management Group of Commerce Bank in 1989
. Fund manager since Fund inception
. Director of Equity Management for Commerce Bank's Investment Management Group
. 21 years of experience

Please see the table on p. 55 for more detailed information about the
investment practices of the MidCap Growth Fund and the risks associated with
those practices.

[GRAPHIC]

Investment Objectives
-------------------------------------------------------------------------

. Seeks capital appreciation.

[GRAPHIC]

Primary Investment Strategies
---------------------------------------

. Invests, under normal market conditions, at least 65% of its total assets in
equity securities, primarily common stocks.
. Generally invests in stocks of companies with medium-sized market
capitalizations comparable to those in the Russell Midcap Growth Index.
Currently, the size of those companies is generally below $20 billion. The
Adviser believes that these companies have the capacity for above-average
earnings growth. The Fund invests in companies in anticipation of capital
gains only, without consideration of dividends.

[GRAPHIC]

Primary Risks of Investing in the Fund
---------------------------------------
Investment Risk: The value of your investment in this Fund may go up or down,
which means that you could lose money.
Small Company Stock Risk: Investing in securities of smaller companies may be
riskier than investing in larger, more established companies. Smaller companies
are more vulnerable to adverse developments because of more limited product
lines, markets or financial resources. Also, smaller company stocks may trade
less often and in limited volume compared to stocks trading on a national
securities exchange. Security prices of small company stocks may be more
volatile than the prices of larger company stocks. As a result, this Fund's net
asset value may be subject to rapid and substantial changes if it invests in
small company stocks.
Market Risk: General economic conditions and/or the activities of individual
companies may cause the value of the securities in the Fund to increase or
decrease. The Fund's net asset value may fluctuate with movements in the equity
market.
Management Risk: A strategy used by the Adviser may fail to produce the
intended results.

An investment in the Fund is not a deposit of Commerce Bank and is not insured
or guaranteed by the FDIC or any other governmental agency.

The Commerce Funds PAGE 3
---------------
.
<PAGE>

MidCap Growth Fund (continued)
-------------------------------------------------------------------------
[GRAPHIC]

MidCap Growth Fund Past Performance (formerly the MidCap Fund)
-----------------------------------------------------------

The chart and table below provide some indication of the risks of investing in
the Fund by showing its annual returns and long-term performance. The bar chart
shows the Fund's performance from calendar year to calendar year since
inception of the Service Shares. The table compares the Fund's performance over
time to that of broad-based securities market indices. Both charts assume
reinvestment of dividends and distributions. As with all mutual funds, how this
Fund performed in the past is not a prediction of how it will perform in the
future.

Year-by-Year Total Returns as of 12/31 Each Year

[GRAPH]

1998 16.92%
1999 25.56%
2000 %

(percentage)

Best Calendar Quarter: %, Quarter
Worst Calendar Quarter: %, Quarter

These figures do not reflect any applicable sales charges. If sales charges
were reflected, returns would be less than shown.

Average Annual Total Return as of 12/31/00

<TABLE>
<CAPTION>
Since Inception
1 Year 3 Years (1/2/97)
<S> <C> <C> <C>
MidCap Growth Fund % % %
Russell Midcap
Growth Index* % % %
S&P 400 Mid-Cap % % %
Index**
</TABLE>
* The Russell Midcap Growth Index replaced the S&P 400 Mip-Cap Index as the
MidCap Growth Fund's benchmark. The Fund made this change because the Russell
Midcap Growth Index contains securities that are more comparable to those
held in the Fund's portfolio. The Russell Midcap Growth Index measures the
performance of those Russell Midcap companies with higher price-to-book
ratios and higher forecasted growth values. The Index figures do not reflect
any fees or expenses.
** The S&P 400 Mid-Cap Index is a capitalization-weighted index that measures
the performance of the mid-range sector of the U.S. stock market. The Index
figures do not reflect any fees or expenses.

PAGE 4 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------

[GRAPHIC]

Fees and Expenses
-----------------------------------------------------------

<TABLE>
<CAPTION>
MidCap Growth Fund (1)
Service Shares
<S> <C>
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 3.50%
Maximum Sales Charge (load) Imposed on Reinvested
Distributions None
Maximum Deferred Sales Charge (load) Imposed on
Redemptions (2) None
Redemption Fees None
Annual Fund Operating Expenses
(expenses deducted from Fund assets)
Management Fees 0.75%
Distribution (12b-1) Fees 0.25%
Other Expenses (3) 0.39%
-----
Total Annual Fund Operating Expenses (4) 1.39%
Less: Fee Waiver 0.02%
-----
Net Annual Fund Operating Expenses (5) 1.37%
=====
</TABLE>
(1) Formerly the MidCap Fund.
(2) A deferred sales charge of 1.00% is assessed on certain redemptions of
shares that are purchased with no initial sales charge as part of an
investment of $1,000,000 or more.
(3) "Other Expenses" include shareholder servicing fees of up to 0.25%,
annualized, of the average daily net assets of Shares held under the
Shareholder Administrative Services Plan.
(4) The Adviser intends to voluntarily reimburse expenses, excluding interest,
taxes and extraordinary expenses, during the current fiscal year to the
extent necessary for the MidCap Growth Fund to maintain Total Fund
Operating Expenses of not more than 1.39% of average daily net assets. The
Adviser reserves the right to discontinue the expense reimbursement at any
time.
(5) Until October 31, 2001, the Administrator has contractually agreed to waive
the administration fee to 0.13% of the average daily net assets.

Example: The following example is intended to help you compare the cost of
investing in this Fund with the cost of investing in other mutual funds. It
makes the following assumptions: you invest $10,000 in the Fund for the time
periods indicated, your investment has a 5% return each year, and the Fund's
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
$487 $775 $1,084 $1,960
</TABLE>
continued

The Commerce Funds PAGE 5
---------------
.
<PAGE>

MidCap Growth Fund (continued)
--------------------------------------------------------------------------------

[GRAPHIC]

MidCap Growth Fund Financial Highlights(a)
-----------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended 10/31
----------------------------------
Service Shares 2000 1999 1998 1997(b)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ $ 32.40 $ 32.94 $ 28.64
Income from investment operations:
Net investment loss (0.31)(f) (0.16) (0.11)
Net realized and unrealized gains(c) 9.27 (f) 1.42 4.41
Distributions to shareholders:
From net investment income -- -- --
From net realized gains (1.61) (1.80) --
Net asset value, end of period $ $ 39.75 $ 32.40 $ 32.94
Total return(d) % 28.63% 3.68% 15.01%
Net assets at end of period (in 000's) $ $ 3,384 $ 1,236 $ 658
Ratio of net expenses to average net
assets % 1.39% 1.41% 1.48%(e)
Ratio of net investment loss to average
net assets % (0.86)% (0.82)% (0.95)%(e)
Portfolio turnover rate % 98% 76% 89%
</TABLE>
(a) Formerly the MidCap Fund.
(b) Service Shares were first offered to the public on January 2, 1997.
(c) Includes the balancing effect of calculating per share amounts.
(d) 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.
(e) Annualized.
(f) Calculated based on average shares outstanding methodology.

PAGE 6 The Commerce Funds
---------------
.
<PAGE>

Growth Fund
--------------------------------------------------------------------------------

Joseph C. Williams III, CFA and Portfolio Manager

. Joined Commerce Bank in 1975
. Fund manager since Fund inception
. 24 years of experience

Please see the table on p. 55 for more detailed information about the
investment practices of the Growth Fund and the risks associated with those
practices.

[GRAPHIC]

Investment Objectives
-------------------------------------------------------------------------

. Seeks capital appreciation.

[GRAPHIC]

Primary Investment Strategies
---------------------------------------

. Invests principally in stocks of companies that have shown and are expected
to show above-average growth in earnings and return on equity. It also
invests in stocks that show the potential to achieve dividend growth superior
to that of the Russell 1000 Growth Index, although the Fund does not invest
exclusively in companies that pay a dividend. The Fund's Adviser believes
that investing in companies with strong earnings and return on equity growth
will lead to future capital appreciation.
. Generally purchases common stock of companies with market capitalizations
over $750 million. The average capitalization of companies whose stocks were
held by the Fund as of December 31, 2000 was $ billion.
. Invests, under normal market conditions, at least 65% of total assets in
equity securities, primarily common stock.
. Anticipates using 45 to 60 stocks to achieve a diversified portfolio.

[GRAPHIC]

Primary Risks of Investing in the Fund
---------------------------------------

Management Risk: A strategy used by the Adviser may fail to produce the
intended results.

An investment in the Fund is not a deposit of Commerce Bank and is not insured
or guaranteed by the FDIC or any other governmental agency.

The Commerce Funds PAGE 7
---------------
.
<PAGE>

Growth Fund (continued)
-------------------------------------------------------------------------
[GRAPHIC]

Growth Fund Past Performance
-----------------------------------------------------------

Year-by-Year Total Returns as of 12/31 Each Year

[GRAPH]

1998 28.35%
1999 14.45%
2000 %

(percentage)

Best Calendar Quarter: %, Quarter
Worst Calendar Quarter: %, Quarter

These figures do not reflect any applicable sales charges. If these charges
were reflected, returns would be less than shown.

Average Annual Total Return as of 12/31/00

<TABLE>
<CAPTION>
Since Inception
1 Year 3 Years (1/2/97)
<S> <C> <C> <C>
Growth Fund % % %
Russell 1000 Growth
Index* % % %
S&P 500 Index** % % %
</TABLE>
* The Russell 1000 Growth Index replaced the S&P 500 Index as the Growth Fund's
benchmark. The Fund made this change because the sector diversification in
the Russell 1000 Growth Index is more comparable to that of the Fund. The
Russell 1000 Growth Index measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth
values. The Index figures do not reflect any fees or expenses.
** The S&P 500 Index is an unmanaged index that emphasizes large capitalization
companies. The Index figures do not reflect any fees or expenses.

PAGE 8 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------

[GRAPHIC]

Fees and Expenses
-----------------------------------------------------------

<TABLE>
<CAPTION>
Growth Fund
Service Shares
<S> <C>
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 3.50%
Maximum Sales Charge (load) Imposed on Reinvested Distributions None
Maximum Deferred Sales Charge (load) Imposed on Redemptions (1) None
Redemption Fees None
Annual Fund Operating Expenses
(expenses deducted from Fund assets)
Management Fees 0.75%
Distribution (12b-1) Fees 0.25%
Other Expenses (2) 0.33%
-----
Total Annual Fund Operating Expenses (3) 1.33%
Less: Fee Waiver 0.02%
-----
Net Annual Fund Operating Expenses (4) 1.31%
=====
</TABLE>
(1) A deferred sales charge of 1.00% is assessed on certain redemptions of
shares that are purchased with no initial sales charge as part of an
investment of $1,000,000 or more.
(2) "Other Expenses" include shareholder servicing fees of up to 0.25%,
annualized, of the average daily net assets of Shares held under the
Shareholder Administrative Services Plan.
(3) The Adviser intends to voluntarily reimburse expenses, excluding interest,
taxes, distribution fees and extraordinary expenses, during the current
year to the extent necessary for the Growth Fund to maintain Total Annual
Fund Operating Expenses of not more than 1.38% of average daily net assets.
The Adviser reserves the right to discontinue the expense reimbursement at
any time.
(4) Until October 31, 2001, the Administrator has contractually agreed to waive
the administration fee to 0.13% of the average daily net assets.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
$481 $757 $1,053 $1,895
</TABLE>
continued

The Commerce Funds PAGE 9
---------------
.
<PAGE>

Growth Fund (continued)
--------------------------------------------------------------------------------

[GRAPHIC]

Growth Fund Financial Highlights
----------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended 10/31
---------------------------------
Service Shares 2000 1999 1998 1997(a)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ $ 37.29 $ 34.50 $28.26
Income from investment operations:
Net investment income (loss) (0.12) (0.01) 0.09
Net realized and unrealized gains(b) 6.37 5.05 6.25
Distributions to shareholders:
From net investment income -- (0.01) (0.10)
From net realized gains (5.47) (2.24) --
Net asset value, end of period $ $ 38.07 $ 37.29 $34.50
Total return(c) % 17.97% 15.10% 22.47%
Net assets at end of period (in 000's) $ $14,468 $ 8,965 $5,758
Ratio of net expenses to average net
assets % 1.33% 1.33% 1.36%(d)
Ratio of net investment income (loss) to
average net assets % (0.36)% (0.06)% 0.35%(d)
Portfolio turnover rate % 35% 53% 32%
</TABLE>
(a) Service Shares were first offered to the public on January 2, 1997.
(b) Includes the balancing effect of calculating per share amounts.
(c) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
(d) Annualized.

PAGE 10 The Commerce Funds
---------------
.
<PAGE>

Value Fund
--------------------------------------------------------------------------------

David W. Wente, Vice President and Portfolio Manager

. Originally joined Commerce Bank in 1993
. Rejoined Commerce Bank in 1996
. Formerly a financial analyst with a regional retail company
. Equity Analyst for the Fund since inception
. Fund manager since 2000
. 9 years of experience

Please see the table on p. 55 for more detailed information about the
investment practices of the Value Fund and the risks associated with those
practices.
[GRAPHIC]

Investment Objectives
-------------------------------------------------------------------------

. Seeks capital appreciation and, secondarily, current income.

[GRAPHIC]

Primary Investment Strategies
---------------------------------------

. Invests, under normal market conditions, at least 65% of total assets in
equity securities, primarily common stock.
. To achieve capital appreciation and current income, the Fund looks for
companies whose stock is selling below fair value compared to its future
potential and has the potential to provide a higher current yield (current
income) than that of the Russell 1000 Value Index. The Fund seeks a higher
return than the market index over time as the stocks it purchases rise in
price to more normal valuations.
. Generally purchases common stock of companies with market capitalizations
over $500 million. The average capitalization of companies whose stocks were
held by the Fund was $ billion as of December 31, 2000. This compares to an
average capitalization of $ billion for the Russell 1000 Value Index on the
same date.
. Anticipates using 50 to 70 stocks to achieve a diversified portfolio.

[GRAPHIC]

Primary Risks of Investing in the Fund
---------------------------------------

Investment Risk: The value of your investment in this Fund may go up or down,
which means that you could lose money. The types of stocks held by the Fund may
not perform as well as other types of stocks.
Market Risk: General economic conditions and/or the activities of individual
companies may cause the value of the securities in the Fund to increase or
decrease. The Fund's net asset value may fluctuate with movements in the equity
market.
Management Risk: A strategy used by the Adviser may fail to produce the
intended results.

An investment in the Fund is not a deposit of Commerce Bank, N.A. (Commerce
Bank), and is not insured or guaranteed by the FDIC or any other governmental
agency.

The Commerce Funds PAGE 11
---------------
.
<PAGE>

Value Fund (continued)
-------------------------------------------------------------------------
[GRAPHIC]

Value Fund Past Performance (formerly the Growth and Income Fund)
-----------------------------------------------------------

Year-by-Year Total Returns as of 12/31 Each Year

[GRAPH]

1998 (1.22)%
1999 (3.23)%
2000 %

(percentage)

Best Calendar Quarter: %, Quarter
Worst Calendar Quarter: %, Quarter

These figures do not reflect any applicable sales charges. If these charges
were reflected, returns would be less than shown.

Average Annual Total Return as of 12/31/00

<TABLE>
<CAPTION>
Since Inception
1 Year 3 Years (3/3/97)
<S> <C> <C> <C>
Value Fund % % %
Russell 1000 Value
Index* % % %
S&P 500 Index** % % %
</TABLE>
* The Russell 1000 Value Index replaced the S&P 500 Index as the Value Fund's
primary benchmark, the Fund will no longer use both benchmarks. The Fund made
this change because the Russell 1000 Value Index contains securities that are
more comparable to those held in the Fund's portfolio than the S&P 500 Index.
The Russell 1000 Value Index measures the performance of the 1,000 largest
U.S. companies based on total market capitalization, with lower price-to-book
ratios and lower forecasted growth values. The Index figures do not reflect
any fees or expenses.
** The S&P 500 Index is an unmanaged index that emphasizes large
capitalization companies. The Index figures do not reflect any fees or
expenses.

PAGE 12 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------

[GRAPHIC]

Fees and Expenses
-----------------------------------------------------------

<TABLE>
<CAPTION>
Value Fund(1)
Service Shares
<S> <C>
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 3.50%
Maximum Sales Charge (load) Imposed on Reinvested Distributions None
Maximum Deferred Sales Charge (load) Imposed on Redemptions (2) None
Redemption Fees None
Annual Fund Operating Expenses
(expenses deducted from Fund assets)
Management Fees 0.75%
Distribution (12b-1) Fees 0.25%
Other Expenses (3) 0.40%
-----
Total Annual Fund Operating Expenses (4) 1.40%
Less: Fee Waiver 0.02%
-----
Net Annual Fund Operating Expenses (5) 1.38%
=====
</TABLE>
(1) Formerly the Growth and Income Fund.
(2) A deferred sales charge of 1.00% is assessed on certain redemptions of
shares that are purchased with no initial sales charge as part of an
investment of $1,000,000 or more.
(3) "Other Expenses" include shareholder servicing fees of up to 0.25%,
annualized, of the average daily net assets of Shares held under the
Shareholder Administrative Services Plan.
(4) The Adviser intends to voluntarily reimburse expenses, excluding interest,
taxes, distribution fees and extraordinary expenses, during the current
year to the extent necessary for the Value Fund to maintain Total Annual
Fund Operating Expenses of not more than 1.45% of average daily net assets.
The Adviser reserves the right to discontinue the expense reimbursement at
any time.
(5) Until October 31, 2001, the Administrator has contractually agreed to waive
the administration fee to 0.13% of the average daily net assets.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
$488 $778 $1,089 $1,971
</TABLE>

continued

The Commerce Funds PAGE 13
---------------
.
<PAGE>

Value Fund (continued)
--------------------------------------------------------------------------------
[GRAPHIC]

Value Fund(a) Financial Highlights
----------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended 10/31
------------------------ 3/3/97(b) through
Service Shares 2000 1999 1998 10/31/97
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $ $ 21.73 $ 21.81 $ 18.00
Income from investment operations:
Net investment income 0.11 0.16 0.12
Net realized and unrealized gain (loss)(c) (0.11) (0.09) 3.80
Distributions to shareholders:
From net investment income (0.09) (0.11) (0.11)
From net realized gains (0.23) (0.04) --
Net asset value, end of period $ $ 21.41 $ 21.73 $ 21.81
Total return(d) % 0.02% 0.30% 21.81%
Net assets at end of period (in
000's) $ $ 989 $ 1,365 $ 2,588
Ratio of net expenses to average
net assets % 1.40% 1.41% 1.45%(e)
Ratio of net investment income to average
net assets % 0.42% 0.60% 1.02%(e)
Ratios assuming no expense
reimbursements:
Ratio of expenses to average net
assets % 1.40% 1.41% 2.27%(e)
Ratio of net investment income to
average net assets % 0.42% 0.60% 0.20%(e)
Portfolio turnover rate % 64% 55% 5%
</TABLE>
(a) Formerly the Growth and Income Fund.
(b) Commencement of operations.
(c) Includes the balancing effect of calculating per share amounts.
(d) 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.
(e) Annualized.

PAGE 14 The Commerce Funds
---------------
.
<PAGE>

International Equity Fund
--------------------------------------------------------------------------------

The International Equity Fund is sub-advised by T. Rowe Price International,
Inc.

The Fund has an Investment Advisory Group that has day-to-day responsibility
for managing the portfolio and developing and executing the Fund's investment
program.

Please see the table on p. 55 for more detailed information about the
investment practices of the International Equity Fund and the risks associated
with those practices.
[GRAHIC]

Investment Objective
---------------------------------------

Seeks total return with an emphasis on capital growth.

[GRAPHIC]

Primary Investment Strategies
---------------------------------------

. Invests at least 65% of total assets in common stock of established companies
that conduct their principal activities or are located outside the United
States or whose securities are traded in foreign markets.
. The Fund will be invested in any of the non-U.S. regions of the global equity
markets, including (but not limited to) the Far East (including Japan) and
Europe (including the UK). The Fund will invest in emerging markets, such as
Latin America, on an opportunistic basis.
. Focuses on purchasing securities of large and, to a lesser extent, medium-
sized companies, although stocks may be purchased without regard to a
company's market capitalization. Stocks of medium-sized companies will be
purchased on an opportunistic basis.
. Focuses on investing in stocks with superior growth prospects at a reasonable
price. The Fund believes that investing in such companies will produce solid
performance relative to recognized international indices.
. May also invest in other types of securities, including convertibles,
warrants, preferred stocks, corporate and government debt, futures, and
options.
. May invest freely in securities of foreign issuers in the form of sponsored
and unsponsored American Depository Receipts and European Depository Receipts.

[GRAHIC]
Primary Risks of Investing in the Fund
---------------------------------------

Investment Risk: The value of your investment in this Fund may go up or down,
which means that you could lose money. International funds, in general, have
volatile net asset values. The Fund may not be an appropriate investment if you
cannot bear financially the loss of at least a significant portion of your
investment.

The Commerce Funds PAGE 15
---------------
.
<PAGE>

International Equity Fund (continued)
-------------------------------------------------------------------------

Market Risk: General economic conditions and/or the activities of individual
companies may cause the value of the securities in the Fund to increase or
decrease. The Fund's net asset value may fluctuate with movements in the
various international equity markets.
Management Risk: A strategy used by the Sub-Adviser may fail to produce the
intended results.
Currency Risk: This refers to a decline in the value of a foreign currency
versus the U.S. dollar, which reduces the dollar value of securities
denominated in that currency. The overall impact on the Fund's holdings can be
significant and long-lasting depending on the currencies represented in the
portfolio, how each one appreciates or depreciates in relation to the U.S.
dollar, and whether currency positions are hedged. Under normal conditions, the
Fund does not engage in extensive foreign currency hedging programs. Further,
exchange rate movements are unpredictable and it is not possible to effectively
hedge the currency risks of many developing countries.
Foreign Risk: Foreign securities can be riskier and more volatile than U.S.
securities. Adverse political, social and economic developments in foreign
countries or changes in the value of foreign currency can make it harder for
the portfolio to sell its securities and could reduce the value of your shares.
Changes in or the lack of tax, accounting and regulatory standards and
difficulties in obtaining information about foreign companies can negatively
affect investment decisions. Also, the costs of investing abroad are usually
higher than those of investing within the United States.
Emerging Market Risk: To the extent that the Fund has investments in emerging
market countries, it will potentially be subject to abrupt and severe price
declines. Investments in these countries are much riskier than those in mature
countries.
Futures/Options Risk: To the extent the Fund uses futures and options, it is
exposed to additional volatility and potential losses.

An investment in the Fund is not a deposit of Commerce Bank and is not insured
or guaranteed by the FDIC or any other governmental agency.

PAGE 16 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------
[GRAPHIC]

International Equity Fund Past Performance
-----------------------------------------------------------
The chart and table below provide some indication of the risks of investing in
the Fund by showing its annual returns and long-term performance. The bar chart
shows the Fund's performance from calendar year to calendar year since
inception of the Service Shares. The table compares the Fund's performance over
time to that of a broad-based securities market index. Both charts assume
reinvestment of dividends and distributions. As with all mutual funds, how this
Fund performed in the past is not a prediction of how it will perform in the
future. The Fund's performance reflects expense limitations in effect. If
expense limitations were not in place, the Fund's performance would have been
reduced.

Year-by-Year Total Returns as of 12/31 Each Year

[GRAPH]

1998 15.24%
1999 31.57%
2000 %

(percentage)

Best Calendar Quarter: %, Quarter
Worst Calendar Quarter: %, Quarter

These figures do not reflect any applicable sales charges. If sales charges
were reflected, returns would be less than shown.

Average Annual Total Return as of 12/31/00

<TABLE>
<CAPTION>
Since Inception
1 Year 3 Years (1/2/97)
<S> <C> <C> <C>
International Equity % % %
Fund
MSCI EAFE Index* % % %
</TABLE>
* The MSCI EAFE Index is an unmanaged index composed of a sample of companies
representative of the market structure of 20 European and Pacific Basin
countries. The Index figures do not reflect any fees or expenses.
continued

The Commerce Funds PAGE 17
---------------
.
<PAGE>

International Equity Fund (continued)
-------------------------------------------------------------------------

[GRAPHIC]

Fees and Expenses
-----------------------------------------------------------
The following table shows the fees and expenses that you would pay directly or
indirectly if you invested in this Fund. Shareholder Fees are paid directly
from your account. Total Annual Fund Operating Expenses are deducted from the
Fund's assets, not from your account, so they affect the share price of the
Fund.

<TABLE>
<CAPTION>
International Equity Fund
Service Shares
<S> <C>
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (load) Imposed on Purchases
(as a percentage of offering price) 3.50%
Maximum Sales Charge (load) Imposed on Reinvested
Distributions None
Maximum Deferred Sales Charge (load) Imposed on
Redemptions (1) None
Redemption Fees None
Annual Fund Operating Expenses
(expenses deducted from Fund assets)
Management Fees (1) 1.50%
Distribution (12b-1) Fees 0.25%
Other Expenses (2) 0.44%
-----
Total Annual Fund Operating Expenses 2.19%
Less: Fee Waiver 0.56%
-----
Net Annual Fund Operating Expenses(4) 1.63%
=====
</TABLE>
(1) The Adviser has contractually agreed to waive a portion of its management
fees at least until October 31, 2001. As a result of this fee waiver,
Management Fees will be approximately 0.94% of average daily net assets.
(2) A deferred sales charge of 1.00% is assessed on certain redemptions of
shares that are purchased with no initial sales charge as part of an
investment of $1,000,000 or more.
(3) "Other Expenses" include shareholder servicing fees of up to 0.25%,
annualized, of the average daily net assets of Shares held under the
Shareholder Administrative Services Plan.
(4) Until October 31, 2001, the Administrator has contractually agreed to waive
the administration fee to 0.13% of the average daily net assets.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
$510 $846 $1,205 $2,215
</TABLE>

PAGE 18 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------

[GRAPHIC]

International Equity Fund Financial Highlights
-----------------------------------------------------------

The following table describes the Fund's performance for the time periods
stated. The total return figures show how much you would have earned (or lost)
on an investment in the Fund during each time period, assuming you had
reinvested all dividends and distributions. Some of the information reflects
financial results for a single Fund share. The information has been audited by
, the Funds' independent accountants. Their report, along with the Fund's
financial statements, is incorporated by reference in the Funds' Statement of
Additional Information (available upon request).
<TABLE>
<CAPTION>
Year Ended 10/31
--------------------------------
Service Shares 2000 1999 1998 1997(a)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ $ 22.92 $ 22.06 $ 21.70
Income from investment operations:
Net investment income 0.10 0.05 0.01
Net realized and unrealized gains(b) 4.34 1.44 0.35
Distributions to shareholders:
From net investment income (0.06) (0.06) --
From net realized gains -- (0.57) --
Net asset value, end of period $ $ 27.30 $ 22.92 $ 22.06
Total return(c) % 19.39% 6.88% 1.66%
Net assets at end of period (in 000's) $ $ 499 $ 379 $ 231
Ratio of net expenses to average net
assets % 1.78% 1.87% 1.97%(d)
Ratio of net investment income to average
net assets % 0.33% 0.19% 0.14%(d)
Ratios assuming no voluntary waiver of
fees or expenses limitations:
Ratio of expenses to average net assets % 2.32% 2.39% 2.48%(d)
Ratio of net investment loss to average
net assets % (0.21)% (0.33)% (0.37)%(d)
Portfolio turnover rate % 32% 22% 22%
</TABLE>
(a) Service Shares were first offered to the public on January 2, 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 Commerce Funds PAGE 19
---------------
.
<PAGE>

Balanced Fund
-------------------------------------------------------------------------

Scott M. Colbert, CFA and Portfolio Manager

. Joined Commerce Bank in 1993
. Fund manager since Fund inception
. Director of Fixed-Income Management for Commerce Bank's Investment Management
Group
. 14 years of experience

John Bartlett, CFA and Portfolio Manager

. Joined Commerce Bank in 1991
. Fund manager since 2000
. Director of Economic & Market Strategy for Commerce Bank's Investment
Management Group
. 23 years of experience

Please see the table on p. 55 for more detailed information about the
investment practices of the Balanced Fund and the risks associated with those
practices.
[GRAPHIC]

Investment Objectives
---------------------------------------

Seeks total return through a balance of capital appreciation and current
income, consistent with preservation of capital.

[GRAHIC]

Primary Investment Strategies
---------------------------------------

The Fund pursues its objective through investment in stocks, bonds, and cash
equivalents. The actual mix of equity and fixed-income securities will vary;
however, under normal conditions, the Fund intends to invest 60% of its total
assets in stocks and 40% in bonds. Investment in stocks could range as high as
75% of the total assets and as low as 42%.

Equity Investment Strategies
. Normally invests the equity portion in common stocks, preferred stocks, and
securities or bonds that are convertible into common or preferred stocks.
. Utilizes a broadly diversified portfolio with both value (low price/book and
price/earnings ratios) and growth characteristics to achieve capital
appreciation and current income.
. Normally purchases stocks of companies with market capitalizations of over
$200 million. The average capitalization of companies whose stock was held by
the Fund as of December 31, 2000 was $ billion.

PAGE 20 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------

maximum or minimum duration of any individual security it holds. For example,
if the duration of the Lehman Brothers Aggregate Bond Index were 4.5 years,
the Fund's fixed-income assets would have a duration between 3.15 years and
5.85 years. Duration is a linear measure of interest rate risk. For example, a
portfolio with a duration of 2 years would lose 2% of its value if interest
rates rose by 1%, or it would gain 2% if interest rates declined by 2%. A
portfolio with a duration of 4 years would be twice as volatile as a portfolio
with a duration of 2 years.
. Actively manages credit and sector allocations to enhance returns relative to
the unmanaged benchmark.

[GRAPHIC]

Primary Risks of Investing in the Fund
-------------------------------------------------------------------------

Investment Risk: The value of your investment in this Fund may go up or down,
which means that you could lose money.
Market Risk: General economic conditions and/or the activities of individual
companies may cause the value of the securities in the Fund to increase or
decrease.
Interest Rate Risk: Generally, the market value of fixed-income securities in
the Fund can be expected to go up when interest rates go down and to go down
when interest rates go up. Longer-term bonds and zero coupon bonds are usually
more sensitive to interest rate changes than shorter-term bonds. In general,
the longer the average maturity of bonds in the Fund, the more the Fund's share
price will go up or down in response to interest rate changes.
Management Risk: A strategy used by the Adviser may fail to produce the
intended results.
Credit Risk: An issuer of bonds may default on its obligation to pay interest
and repay principal. A bond's credit rating could be downgraded. The Fund could
lose money in either of these instances.
Asset-Backed Risk: Asset-backed securities may involve certain risks not
presented by other securities. These risks include a greater risk of default
during periods of economic downturn than other securities. Also, asset-backed
securities may be less liquid and therefore more difficult to value and
liquidate, if necessary.
Mortgage-Backed Risk: In addition to prepayment, call and extension risks,
mortgage-backed securities may be subject to special risks, including price
volatility, liquidity, and enhanced sensitivity to interest rates.
Call Risk: An issuer may exercise its right to pay principal on an obligation
held by a Fund (such as a mortgage-backed or asset-backed security) earlier
than expected. This may happen when interest rates decline. Under these
circumstances, a Fund may be unable to recoup all of its initial investment and
will also suffer from having to reinvest in lower yielding securities.
continued

The Commerce Funds PAGE 21
---------------
.
<PAGE>

Balanced Fund (continued)
-------------------------------------------------------------------------

An investment in the Fund is not a deposit of Commerce Bank and is not insured
or guaranteed by the FDIC or any other governmental agency.

PAGE 22 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------

[GRAPHIC]

Balanced Fund Past Performance
-----------------------------------------------------------

Year-by-Year Total Returns as of 12/31 Each Year

[GRAPH]

1998 12.92%
1999 4.96%
2000 %

(percentage)

Best Calendar Quarter: %, Quarter
Worst Calendar Quarter: %, Quarter

These figures do not reflect any applicable sales charges. If sales charges
were reflected, returns would be less than shown.

Average Annual Total Return as of 12/31/00

<TABLE>
<CAPTION>
Since Inception
1 Year 3 Years (1/2/97)
<S> <C> <C> <C>
Balanced Fund % % %
S&P 500 Index* % % %
Lehman Bros. Aggregate Bond Index** % % %
60% S&P 500/40% Lehman Bros. Aggregate Bond % % %
Index***
</TABLE>
* The S&P 500 Index is an unmanaged index that emphasizes large capitalization
companies.
** The Lehman Brothers Aggregate Bond Index is a broad market-weighted index
comprised of three major classes of investment grade bonds with maturities
greater than one year.
*** The 60% S&P 500/40% Lehman Brothers Aggregate Bond Index is a composite of
the S&P 500 Index (with income) (weighted at 60%) and the Lehman Brothers
Aggregate Bond Index (weighted at 40%).
The Index figures do not reflect any fees or expenses.
continued

The Commerce Funds PAGE 23
---------------
.
<PAGE>

Balanced Fund (continued)
-------------------------------------------------------------------------

[GRAPHIC]

Fees and Expenses
-----------------------------------------------------------

<TABLE>
<CAPTION>
Balanced Fund
Service Shares
<S> <C>
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (load) Imposed on Purchases
(as a percentage of offering price) 3.50%
Maximum Sales Charge (load) Imposed on Reinvested Distributions None
Maximum Deferred Sales Charge (load) Imposed on Redemptions (1) None
Redemption Fees None
Annual Fund Operating Expenses
(expenses deducted from Fund assets)
Management Fees 1.00%
Distribution (12b-1) Fees 0.25%
Other Expenses (2) 0.46%
-----
Total Annual Fund Operating Expenses (3) 1.71%
Less: Fee Waiver and Expense Reimbursement 0.43%
-----
Net Annual Fund Operating Expenses (4) 1.28%
=====
</TABLE>
(1) A deferred sales charge of 1.00% is assessed on certain redemptions of
shares that are purchased with no initial sales charge as part of an
investment of $1,000,000 or more.
(2) "Other Expenses" include shareholder servicing fees of up to 0.25%,
annualized, of the average daily net assets of Shares held under the
Shareholder Administrative Services Plan.
(3) The Adviser has contractually agreed to reduce or limit the Total Annual
Fund Operating Expenses, excluding interest, taxes and extraordinary
expenses, at least until October 31, 2001, such that the Net Annual Fund
Operating Expenses are expected to be 1.28% for fiscal year 2001.
(4) Until October 31, 2001, the Administrator has contractually agreed to waive
the administration fee to 0.13% of the average daily net assets.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
$476 $742 $1,028 $1,841
</TABLE>

PAGE 24 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------

[GRAPHIC]

Balanced Fund Financial Highlights
-----------------------------------------------------------
The following table describes the Fund's performance for the time periods
stated. The total return figures show how much you would have earned (or lost)
on an investment in the Fund during each time period, assuming you had
reinvested all dividends and distributions. Some of the information reflects
financial results for a single Fund share. The information has been audited by
, the Funds' independent accountants. Their report, along with the Fund's
financial statements, is incorporated by reference in the Funds' Statement of
Additional Information (available upon request).

<TABLE>
<CAPTION>
Year Ended 10/31
------------------------------
Service Shares 2000 1999 1998 1997(a)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ $27.01 $26.66 $23.25
Income from investment operations:
Net investment income 0.64 0.53 0.40
Net realized and unrealized gains(b) 1.22 1.65 3.42
Distributions to shareholders:
From net investment income (0.62) (0.53) (0.41)
From net realized gains (2.98) (1.30) --
Net asset value, end of period $ $25.27 $27.01 $26.66
Total return(c) % 7.38% 8.36% 16.53%
Net assets at end of period (in 000's) $ $2,735 $2,594 $1,219
Ratio of net expenses to average net assets % 1.38% 1.38% 1.38%(d)
Ratio of net investment income to average
net assets % 2.47% 1.99% 2.13%(d)
Ratios assuming no voluntary waiver of fees
or expense limitations:
Ratio of expenses to average net assets % 1.74% 1.74% 1.78%(d)
Ratio of net investment income to average
net assets % 2.11% 1.63% 1.73%(d)
Portfolio turnover rate % 11% 68% 31%
</TABLE>
(a) Service Shares were first offered to the public on January 2, 1997.
(b) Includes the balancing effect of calculating per share amounts.
(c) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, and 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 Commerce Funds PAGE 25
---------------
.
<PAGE>

Core Equity Fund
-------------------------------------------------------------------------

Michael E. Marks, CFA and Portfolio Manager

. Joined Commerce Bank in 1999
. Fund manager since Fund inception
. 7 years of experience

Please see the table onp. 55 for moredetailed informationabout the investment
practices of the Core Equity Fund and the risks associated with those
practices.
[GRAPHIC]
Investment Objectives
---------------------------------------

Seeks capital appreciation and, secondarily, current income.

[GRAPHIC]
Primary Investment Strategies
---------------------------------------

. Invests principally in stocks of companies whose valuations and earnings
potentials are attractive.
. Through a disciplined approach, the Fund seeks a blend of companies either
selling below fair value or producing strong earnings leading to future
capital appreciation.
. Generally purchases common stock of companies whose characteristics are
comparable to those included in the S&P 500 Index.
. Invests, under normal market conditions, at least 65% of its total assets in
equity securities, primarily common stock.

[GRAPHIC]
Primary Risks of Investing in the Fund
---------------------------------------

An investment in the Fund is not a deposit of Commerce Bank, N.A. (Commerce
Bank), and is not insured or guaranteed by the FDIC or any other governmental
agency.

PAGE 26 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------
[GRAPHIC]

Core Equity Fund Past Performance
-------------------------------------------------------------------------

The Fund was recently organized and does not yet have a performance record as
an investment company registered under the Investment Company Act of 1940 (the
"Act"). The bar chart and table below provide some indication of the risks of
investing in the Fund by showing the annual returns and long-term performance
of the Personal Stock Fund (the "Common Trust Fund"), the predecessor common
trust fund that, in all material respects, had the same investment objective,
policies, guidelines and investment limitations as the Fund. The Common Trust
Fund was not registered under the Act and therefore was not subject to certain
investment restrictions imposed by the Act. If the Common Trust Fund had been
registered under the Act, the performance shown may have been adversely
affected. The performance is for periods before the effective date of this
Prospectus.

The table shows the Common Trust Fund's performance from calendar year to
calendar year since its inception. The table compares the Common Stock Trust
Fund's performance over time to that of a broad-based securities market index.
The total return calculations in the bar chart and the table have been restated
to include the estimated expenses of the Service Class but do not include
waived fees or reimbursed expenses. Both charts assume reinvestment of
dividends and distributions. Interests in the Common Trust Fund were sold to
investors without a sales charge. The Service Shares' sales charge of 3.50% is
not included in the bar chart below. However, the sales charge is included in
the table below. If the Service Shares' sales charge of 3.50% had been included
in the total return reflected in the bar chart, performance would be reduced.
As with all mutual funds, how the Common Trust Fund performed in the past is
not a prediction of how the Fund will perform in the future.

Year-by-Year Total Returns as of 12/31 Each Year

[GRAPH]

1990 4.31%
1991 40.03%
1992 3.47%
1993 0.89%
1994 (0.54)%
1995 38.26%
1996 22.47%
1997 29.08%
1998 27.86%
1999 14.26%
2000 %

(percentage)
Best Calendar Quarter: %, Quarter
Worst Calendar Quarter: %, Quarter

Average Annual Total Return as of 12/31/00

<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
<S> <C> <C> <C>
Core Equity Fund % % %
S&P 500 Index* % % %
</TABLE>
*The S&P 500 Index is an unmanaged index that emphasizes large capitalization
companies.
The Index figures do not reflect any fees or expenses.
continued

The Commerce FundsPAGE 27
---------------
.
<PAGE>

Core Equity Fund (continued)
-------------------------------------------------------------------------

[GRAPHIC]
Fees and Expenses
-----------------------------------------------------------

<TABLE>
<CAPTION>
Core Equity Fund
Service Shares
<S> <C>
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (load) Imposed on Purchases
(as a percentage of offering price) 3.50%
Maximum Sales Charge (load) Imposed on Reinvested
Distributions None
Maximum Deferred Sales Charge (load) Imposed on Redemptions
(1) None
Redemption Fees None
Annual Fund Operating Expenses
(expenses deducted from Fund assets)
Management Fees 0.75%
Distribution (12b-1) Fees 0.25%
Other Expenses (2) 0.29%
-----
Total Annual Fund Operating Expenses (3) 1.29%
Less: Fee Waiver 0.02%
-----
Net Annual Fund Operating Expenses (4) 1.27%
=====
</TABLE>
(1) A deferred sales charge of 1.00% is assessed on certain redemptions of
shares that are purchased with no initial sales charge as part of an
investment of $1,000,000 or more.
(2) "Other Expenses" may include shareholder servicing fees of up to 0.25%,
annualized, of the average daily net assets of Shares held under the
Shareholder Administrative Services Plan.
(3) The Fund's Total Annual Fund Operating Expenses are estimated based on
expenses expected to be incurred in the current fiscal year. The Adviser
intends to voluntarily reimburse expenses, excluding interest, taxes and
extraordinary expenses, during the current fiscal year to the extent
necessary for the Core Equity Fund to maintain Total Annual Fund Operating
Expenses of not more than 1.38% of average daily net assets. The Adviser
reserves the right to discontinue the expense reimbursement at any time.
(4) Until October 31, 2001, the Administrator has contractually agreed to waive
the administration fee to 0.13% of the average daily net assets.

<TABLE>
<CAPTION>
1 Year 3 Years
<S> <C> <C>
$475 $743
</TABLE>

PAGE 28 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------

[GRAPHIC]
Core Equity Fund Financial Highlights
-----------------------------------------------------------

The Fund commenced operations as of December , 2000. Therefore, financial
highlights are unavailable for the Fund.

The Commerce Funds PAGE 29
---------------
.
<PAGE>

Short-Term Government Fund
-------------------------------------------------------------------------

Scott M. Colbert, CFA and Portfolio Manager

. Joined Commerce Bank in 1993
. Fund manager since Fund inception
. Director of Fixed-Income Management for Commerce Bank's Investment Management
Group
. 14 years of experience

Please see the table on p. 55 for more detailed information about the
investment practices of the Short-Term Government Fund and the risks associated
with those practices.
[GRAPHIC]

Investment Objectives
---------------------------------------

Seeks current income consistent with preservation of principal.

[GRAPHIC]

Primary Investment Strategies
---------------------------------------

The Fund employs the following strategies in an effort to achieve current
income and principal preservation:

. Security Types: Invests primarily in securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, (including U.S. Treasury
bills, notes and bonds) and government mortgage-backed securities (pools of
mortgage loans sold to investors by various governmental agencies). May also
purchase other mortgage-backed securities, which are sold to investors by
private issuers.

. Maturity Distribution: Emphasizes purchasing short-term bonds. The Fund
invests at least 65% of its total assets in securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities, and government
mortgage-backed securities that have average lives or remaining maturities of
five years or less.

. Actively manages maturities to take advantage of changes in interest rates.
The dollar-weighted average maturity of the Fund's investments will not
exceed three years.

[GRAPHIC]

Primary Risks of Investing in the Fund
---------------------------------------

Investment Risk: The value of your investment in this Fund may go up or down,
which means that you could lose money.
Interest Rate Risk: Generally, the market value of fixed-income securities in
the Fund can be expected to go up when interest rates go down and to go down
when interest rates go up. Longer-term bonds and zero coupon bonds are usually
more sensitive to interest rate changes than shorter-term bonds. In general,
the longer the average maturity of bonds in the Fund, the more the Fund's share
price will go up or down in response to interest rate changes.
Market Risk: General economic conditions and/or the activities of individual
companies may cause the value of the securities in the Fund to increase or
decrease.

PAGE 30 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------

Credit Risk: An issuer of fixed-income securities could default on its
obligation to pay interest and repay principal. A bond's credit rating could be
downgraded. The Fund could lose money in either of these instances.
Management Risk: A strategy used by the Adviser could fail to produce the
intended results.
Call Risk: An issuer may exercise its right to pay principal on an obligation
held by the Fund (such as a mortgage-backed or asset-backed security) earlier
than expected. This may happen when interest rates decline. Under these
circumstances, the Fund may be unable to recoup all of its initial investment
and will also suffer from having to reinvest in lower yielding securities.
Extension Risk: An issuer may exercise its right to pay principal on an
obligation held by the Fund (such as a mortgage-backed or asset-backed
security) later than expected. This may happen when interest rates rise. Under
these circumstances, the value of the obligation will decrease and the Fund
will also suffer from the inability to invest in higher-yielding securities.
Mortgage-Backed Risk: In addition to prepayment, call and extension risks,
mortgage-backed securities, especially collateralized mortgage-backed
securities, may be subject to special risks, including price volatility,
liquidity, and enhanced sensitivity to interest rates.
Prepayment Risk: Prepayment of the underlying mortgage collateral of some
fixed-income securities may result in a decreased rate of return and a decline
in value of the securities.
Government Securities Risk: The U.S. Government may not provide financial
support to U.S. Government agencies, instrumentalities or sponsored enterprises
if it is not obligated to do so.
Maturity Risk: The Fund will not necessarily hold its securities to maturity,
which could result in a loss of principal.

An investment in the Fund is not a deposit of Commerce Bank and is not insured
or guaranteed by the FDIC or any other governmental agency.
continued

The Commerce Funds PAGE 31
---------------
.
<PAGE>

Short-Term Government Fund (continued)
-------------------------------------------------------------------------

[GRAPHIC]

Short-Term Government Fund Past Performance
-----------------------------------------------------------

The chart and table below provide some indication of the risks of investing in
the Fund by showing its annual returns and long-term performance. The bar chart
shows the Fund's performance from calendar year to calendar year since
inception of the Service Shares. The table compares the Fund's performance over
time to that of a broad-based securities market index. Both charts assume
reinvestment of dividends and distributions. As with all mutual funds, how this
Fund performed in the past is not a prediction of how it will perform in the
future. The Fund's performance reflects expense limitations in effect. If
expense limitations were not in place, the Fund's performance would have been
reduced.

Year-By-Year Total Returns as of 12/31 Each Year

[GRAPH]

1998 6.87%
1999 1.78%
2000 %

(percentage)

Best Calendar Quarter: %, Quarter
Worst Calendar Quarter: %, Quarter

These figures do not reflect any applicable sales charges. If sales charges
were reflected, returns would be less than shown.

Average Annual Total Return as of 12/31/00

<TABLE>
<CAPTION>
Since Inception
1 Year 3 Years (1/2/97)
<S> <C> <C> <C>
Short-Term Government Fund % % %
Salomon Brothers 1-5 Year Treasury/Govt. % % %
Sponsored Index *
</TABLE>
* The Salomon Brothers 1-5 Year Treasury/Government Sponsored Index is
comprised of Treasury securities with a minimum principal amount of $1
billion and U.S. Government securities with a minimum principal amount of
$100 million. The securities range in maturity from one to five years. The
Index figures do not reflect any fees or expenses.

PAGE 32 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------

[GRAPHIC]
Fees and Expenses
-----------------------------------------------------------

(1) A deferred sales charge of 1.00% is assessed on certain redemptions of
shares that are purchased with no initial sales charge as part of an
investment of $1,000,000 or more.
(2) "Other Expenses" include shareholder servicing fees of up to 0.25%,
annualized, of the average daily net assets of Shares held under the
Shareholder Administrative Services Plan.
(3) The Adviser has contractually agreed to reduce or limit the Total Annual
Fund Operating expenses, excluding interest, taxes and extraordinary
expenses, at least until October 31, 2001, to 0.93% of the Fund's average
daily net assets.
(4) Until October 31, 2001, the Administrator has contractually agreed to waive
the administration fee to 0.13% of the average daily net assets.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
$293 $490 $704 $1,320
</TABLE>
continued

The Commerce Funds PAGE 33
---------------
.
<PAGE>

Short-Term Government Fund (continued)
--------------------------------------------------------------------------------

[GRAPHIC]
Short-Term Government Fund Financial Highlights
-----------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended 10/31
----------------------------
Service Shares 2000 1999 1998 1997(a)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ $18.79 $18.48 $18.37
Income from investment operations:
Net investment income 1.00 1.06 0.92
Net realized and unrealized gains (loss)(b) (0.72) 0.31 0.11
Distribution to shareholders:
From net investment income (0.99) (1.06) (0.92)
From net realized gains (0.01) -- --
Net asset value, end of period $ $18.07 $18.79 $18.48
Total return(c) % 1.57% 7.67% 5.81%
Net assets at end of period $ $1,022 $ 968 $ 450
Ratio of net expenses to average net assets % 0.93% 0.93% 0.93%(d)
Ratio of net investment income to average net
assets % 5.46% 5.63% 5.64%(d)
Ratios assuming no voluntary waiver of fees or
expense limitations:
Ratio of expenses to average net assets % 1.17% 1.29% 1.36%(d)
Ratio of net investment income to average net
assets % 5.22% 5.28% 5.21%(d)
Portfolio turnover rate % 10% 48% 36%
</TABLE>
(a) Service Shares were first offered to the public on January 2, 1997.
(b) Includes the balancing effect of calculating per share amounts.
(c) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period, and no
sales charges. Total return would be reduced if sales charges were taken
into account.
(d) Annualized.

PAGE 34 The Commerce Funds
---------------
.
<PAGE>

Bond Fund
--------------------------------------------------------------------------------

Scott M. Colbert, CFA and Portfolio Manager
. Joined Commerce in 1993
. Fund manager since Fund inception
. Director of Fixed-Income Management for
Commerce Bank's Investment Management Group
. 14 years of experience

Duration is a linear measure of interest rate risk. For example, a portfolio
with a duration of 2 years would lose 2% of its value if interest rates rose by
1%, or it would gain 2% if interest rates declined by 2%. A portfolio with a
duration of 4 years would be twice as volatile as a portfolio with a duration
of 2 years.

Please see the table on p. 55 for more detailed information about the
investment practices of the Bond Fund and the risks associated with those
practices.

[GRAPHIC]

Investment Objective
---------------------------------------

Seeks total return through current income and, secondarily, capital
appreciation.

[GRAPHIC]

Primary Investment Strategies
---------------------------------------

. Credit Quality: Invests at least 65% of its total assets in fixed-income
securities (bonds) rated at the time of purchase A- or better by one of the
four major ratings services or considered by the Adviser to be of equivalent
quality.
. The market-weighted average credit rating of the Fund's entire portfolio will
be AA-/Aa3 or better.
. Security Types: In seeking current income and capital appreciation, the Fund
invests in a diversified portfolio of investment-grade corporate debt
obligations and obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. The Fund may invest up to 65% of its total
assets in mortgage-backed and asset-backed securities.
. Maturity Distribution: To achieve capital appreciation, the Fund's average
effective duration will be within 30% of the duration of the Lehman Brothers
Aggregate Bond Index, although the Fund has no restriction on the maximum or
minimum duration of any individual security it holds. For example, if the
duration of the Lehman Aggregate Bond Index were 4.5 years, the Fund's assets
would have a duration of between 3.15 years and 5.85 years.

[GRAPHIC]

Primary Risks of Investing in the Fund
---------------------------------------

The Commerce Funds PAGE 35
---------------
.
<PAGE>

Bond Fund (continued)
-------------------------------------------------------------------------
could be downgraded. The Fund could lose money in either of these instances.
The Fund may invest up to 35% of its assets in obligations rated BBB or Baa by
certain ratings services. These obligations are considered to have speculative
characteristics and are riskier than higher-rated obligations.
Management Risk: A strategy used by the Adviser may fail to produce the
intended results.
Mortgage-Backed Risk: Mortgage-backed securities, especially collateralized
mortgage-backed securities, may be subject to additional risks, including price
volatility, liquidity, and enhanced sensitivity to interest rates.
Asset-Backed Risk: Asset-backed securities may involve certain risks not
presented by other securities. These risks include a greater risk of default
during periods of economic downturn than other securities. Also, asset-backed
securities may be less liquid than other securities and therefore more
difficult to value and liquidate, if necessary.
Call Risk: An issuer may exercise its right to pay principal on an obligation
held by the Fund (such as a mortgage-backed or asset-backed security) earlier
than expected. This may happen when interest rates decline. Under these
circumstances, the Fund may be unable to recoup all of its initial investment
and will also suffer from having to reinvest in lower yielding securities.
Extension Risk: An issuer may exercise its right to pay principal on an
obligation held by the Fund (such as a mortgage-backed or asset-backed
security) later than expected. This may happen when interest rates rise. Under
these circumstances, the value of the obligation will decrease and the Fund
will also suffer from the inability to invest in higher-yielding securities.
Prepayment Risk: Prepayment of the underlying mortgage collateral of some
fixed-income securities may result in a decreased rate of return and a decline
in value of the securities.
Government Securities Risk: The U.S. Government may not provide financial
support to U.S. Government agencies, instrumentalities or sponsored enterprises
if it is not obligated to do so.
Maturity Risk: The Fund will not necessarily hold its securities to maturity,
which could result in loss of principal.

An investment in the Fund is not a deposit of Commerce Bank and is not insured
or guaranteed by the FDIC or any other governmental agency.

PAGE 36 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------
[GRAPHIC]

Bond Fund Past Performance
-----------------------------------------------------------

The chart and table below provide some indication of the risks of investing in
the Fund by showing its annual returns and long-term performance. The bar chart
shows the Fund's performance from calendar year to calendar year since
inception of the Service Shares. The table compares the Fund's performance over
time to that of a broad-based securities market index. Both charts assume
reinvestment of dividends and distributions. As with all mutual funds, how this
Fund performed in the past is not a prediction of how it will perform in the
future. The Fund's performance reflects expense limitations in effect. If
expense limitations were not in place, the Fund's performance would have been
reduced.

Year-By-Year Total Returns as of 12/31 Each Year

[GRAPH]

1998 7.95%
1999 (1.17)%
2000

(percentage)

Best Calendar Quarter: %, Quarter
Worst Calendar Quarter: %, Quarter

These figures do not reflect any applicable sales charges. If sales charges
were reflected, returns would be less than shown.

Average Annual Total Return as of 12/31/00

<TABLE>
<CAPTION>
Since Inception
1 Year 3 Years (1/2/97)
<S> <C> <C> <C>
Bond Fund % % %
Lehman Bros. % % %
Aggregate Bond
Index*
</TABLE>
* The Lehman Brothers Aggregate Bond Index is a broad market-weighted index
comprised of three major classes of investment-grade bonds with maturities
greater than one year. The Index figures do not reflect any fees or expenses.

continued

The Commerce Funds PAGE 37
---------------
.
<PAGE>

Bond Fund (continued)
-------------------------------------------------------------------------

[GRAPHIC]
Fees and Expenses
-----------------------------------------------------------

<TABLE>
<CAPTION>
Bond Fund
Service Shares
<S> <C>
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 3.50%
Maximum Sales Charge (load) Imposed on Reinvested Distributions None
Maximum Deferred Sales Charge (load) Imposed on Redemptions (1) None
Redemption Fees None
Annual Fund Operating Expenses
(expenses deducted from Fund assets)
Management Fees 0.50%
Distribution (12b-1) Fees 0.25%
Other Expenses (2) 0.31%
-----
Total Annual Fund Operating Expenses (3) 1.06%
Less: Fee Waiver 0.02%
-----
Net Annual Fund Operating Expenses (4) 1.04%
=====
</TABLE>
(1) A deferred sales charge of 1.00% is assessed on certain redemptions of
shares that are purchased with no initial sales charge as part of an
investment of $1,000,000 or more.
(2) "Other Expenses" include shareholder servicing fees of up to 0.25%,
annualized, of the average daily net assets of Shares held under the
Shareholder Administrative Services Plan.
(3) The Adviser intends to voluntarily reimburse expenses, excluding interest,
taxes, distribution fees and extraordinary expenses, during the current
year to the extent necessary for the Bond Fund to maintain Total Annual
Fund Operating Expenses of not more than 1.13% of average daily net assets.
The Adviser reserves the right to discontinue the expense reimbursement at
any time.
(4) Until October 31, 2001, the Administrator has contractually agreed to waive
the administration fee to 0.13% of the average daily net assets.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
$454 $675 $914 $1,599
</TABLE>

PAGE 38 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------
[GRAPHIC]
Bond Fund Financial Highlights
-----------------------------------------------------------
The following table describes the Fund's performance for the periods indicated.
The total return figures show how much you would have earned (or lost) on an
investment in the Fund during each time period, assuming you had reinvested all
dividends and distributions. Some of the information reflects financial results
for a single Fund share. The information has been audited by , the Funds'
independent accountants. Their report, along with the Fund's financial
statements, is incorporated by reference in the Funds' Statement of Additional
Information (available upon request).

<TABLE>
<CAPTION>
Year Ended 10/31
------------------------------
Service Shares 2000 1999 1998 1997(a)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ $19.85 $19.43 $19.00
Income from investment operations:
Net investment income 1.11 1.11 0.94
Net realized and unrealized gains (loss)(b) (1.05) 0.42 0.43
Distributions to shareholders:
From net investment income (1.11) (1.11) (0.94)
From net realized gains (0.23) -- --
Net asset value, end of period $ $18.57 $19.85 $19.43
Total return(c) 0.29% 8.05% 7.48%
Net assets at end of period (in 000s) $ $1,180 $1,059 $ 739
Ratio of net expenses to average net assets % 1.06% 1.08% 1.10%(d)
Ratio of net investment income to average net
assets % 5.80% 5.59% 5.67%(d)
Portfolio turnover rate % 16% 30% 19%
</TABLE>

(a) Service Shares were first offered to the public on January 2, 1997.
(b) Includes the balancing effect of calculating per share amounts.
(c) Assumes investment at the net asset value at the beginning of the period,
reinvestment of all dividends and distributions, a complete redemption of
the investment at the net asset value at the end of the period and no sales
charges. Total return would be reduced if sales charges were taken into
account.
(d) Annualized.

The Commerce Funds PAGE 39
---------------
.
<PAGE>

National Tax-Free Intermediate Bond Fund
-------------------------------------------------------------------------

Brian P. Musielak, CFA and Portfolio Manager

. Joined Commerce Bank in 1995
. Fund manager since 1999
. 6 years of experience

Please see the table on p. 55 for more detailed information about the
investment practices of the National Tax-Free Intermediate Bond Fund and the
risks associated with those practices.

[GRAPHIC]
Investment Objective
---------------------------------------

Seeks current income exempt from federal income tax as is consistent with the
preservation of capital.

[GRAPHIC]
Primary Investment Strategies
---------------------------------------

The Fund employs the following strategies in an effort to achieve current
income and capital preservation:
. Security Types: Intends to invest primarily (at least 80%) in investment-
grade municipal bonds issued by or on behalf of the states, territories and
possessions of the United States, the District of Columbia and their
respective authorities, agencies, instrumentalities and political
subdivisions, the interest on which, in the opinion of bond counsel, is
exempt from regular federal income and federal alternative minimum taxes. The
Fund's 80% investment strategy is fundamental--meaning that it can only
changed by the holder's of a majority of the outstanding voting securities of
the Fund.
. Up to 20% of the Fund's net assets may be invested in municipal obligations
that are not exempt from regular federal income tax.
. Credit Quality: The market-weighted average credit rating of the Fund's
entire portfolio will be AA or better.
. Maturity Distribution: Actively manages maturities to take advantage of
changes in interest rates. The average weighted effective maturity of the
Fund's portfolio securities will be three to ten years, under normal market
conditions.
. The average effective duration of the Fund will be within 30% of the duration
of the Merrill Lynch Municipal Intermediate Index, although the Fund has no
restriction as to the maximum or minimum duration of any individual security
it holds. For example, if the duration of the Merrill Lynch Municipal
Intermediate Index were 5.4 years, the Fund's assets would have a duration of
between 3.78 years and 7.02 years.
. Strives to minimize net realized capital gains.

PAGE 40 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------
[GRAPHIC]
Primary Risks of Investing in the Fund
-----------------------------------------------------------

An investment in the Fund is not a deposit of Commerce Bank and is not insured
or guaranteed by the FDIC or any other governmental agency.

continued

The Commerce Funds PAGE 41
---------------
.
<PAGE>

National Tax-Free Intermediate Bond Fund (continued)
-------------------------------------------------------------------------
[GRAPHIC]
National Tax-Free Intermediate Bond Fund Past Performance
-----------------------------------------------------------

Service Shares of the Fund have less than one calendar year's performance. For
this reason, the performance information shown below is for another class of
shares (Institutional Shares) that is not offered in this Prospectus but would
have similar annual returns because both classes of shares will be invested in
the same portfolio of securities. Annual returns will differ only to the extent
that Service Shares have a 0.25% distribution (12b-1) fee and, unlike
Institutional Shares, are subject to a maximum sales charge of 2.00%.

The chart and table below provide some indication of the risks of investing in
the Fund by showing the annual returns and long-term performance of the
Institutional Shares. The bar chart shows the Institutional Shares performance
from calendar year to year since its inception. The table compares the
Institutional Shares' performance over time to that of a broad-based securities
market index. Both charts assume reinvestment of dividends and distributions.
As with all mutual funds, how the Fund performed in the past is not a
prediction of how it will perform in the future. The performance of the
Institutional Shares reflects expense limitations in effect. If expense
limitations were not in place, the performance of the Institutional Shares
would have been reduced. The Service Shares' sales charge of 2.00% is not
included in the bar chart below. However, the sales charge is included in the
table below. Institutional Shares are not subject to a sales charge. If the
Service Shares' sales charge of 2.00% had been included in the average annual
total return reflected in the bar chart, performance would have been reduced.

Year-by-Year Total Returns as of 12/31 Each Year (Institutional Shares)

[GRAPH]

1996 2.97%
1997 6.54%
1998 5.56%
1999 (1.12)%
2000

(percentage)

Best Calendar Quarter: %, Quarter
Worst Calendar Quarter: %, Quarter

Average Annual Total Return as of 12/31/00

<TABLE>
<CAPTION>
Since Inception
1 Year 3 Years 5 Years (2/21/95)
<S> <C> <C> <C> <C>
National Tax-
Free
Intermediate
Bond Fund
(Institutional
Shares) % % % %
Merrill Lynch
Municipal
Intermediate
Index* % % % %
</TABLE>
* The Merrill Lynch Municipal Intermediate Index is comprised of investment-
grade municipal securities ranging from 1 to 12 years in maturity. The Index
figures do not reflect any fees or expenses.

PAGE 42 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------
[GRAPHIC]
Fees and Expenses
-----------------------------------------------------------

<TABLE>
<CAPTION>
National Tax-Free
Intermediate Bond Fund
Service Shares
<S> <C>
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (load) Imposed on Purchases
(as a percentage of offering price) 2.00%
Maximum Sales Charge (load) Imposed on Reinvested
Distributions None
Maximum Deferred Sales Charge (load) Imposed on
Redemptions (1) None
Redemption Fees None
Annual Fund Operating Expenses
(expenses deducted from Fund assets)
Management Fees 0.50%
Distribution (12b-1) Fees 0.25%
Other Expenses (2) 0.55%
-----
Total Annual Fund Operating Expenses (3) 1.30%
Less: Fee Waiver and Expense Reimbursement 0.35%
-----
Net Annual Fund Operating Expenses (4) 0.95%
=====
</TABLE>
(1) A deferred sales charge of 1.00% is assessed on certain redemptions of
shares that are purchased with no initial Sales charge as part of an
investment of $1,000,00 or more.
(2) "Other Expenses" include shareholder servicing fees of up to 0.25%,
annualized, of the average daily net assets of shares held under the
Shareholder Administrative Services Plan.
(3) The Adviser has contractually agreed to reduce or limit the Total Annual
Fund Operating Expenses, excluding interest, taxes and extraordinary
expenses, at least until October 31, 2001, to 0.95% of the Fund's average
daily net assets. Total Annual Fund Operating Expenses are estimated based
on expenses expected to be incurred by the Fund in the current fiscal year.
(4) Until October 31, 2001, the Administrator has contractually agreed to waive
the administration fee to 0.13% of the average daily net assets. Net Annual
Fund Operating Expenses are estimated based on expenses expected to be
incurred by the Class in the current fiscal year.
Example: The following example is intended to help you compare the cost of
investing in this Fund with the cost of investing in other mutual funds. It
makes the following assumptions: you invest $10,000 in the Fund for the time
periods indicated, your investment has a 5% return each year, and the Fund's
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:
<TABLE>
<CAPTION>
1 Year 3 Years
<S> <C> <C>
$295 $570
</TABLE>
continued

The Commerce Funds PAGE 43
---------------
.
<PAGE>

National Tax-Free Intermediate Bond Fund (continued)
--------------------------------------------------------------------------------

[GRAPHIC]
National Tax-Free Intermediate Bond Fund Financial Highlights
-----------------------------------------------------------

The following table describes the Fund's performance for Institutional Shares
since its inception. Because Service Shares have less than one calendar year's
performance, the Fund's Institutional Share performance is provided below. The
total return figures show how much you would have earned (or lost) on an
investment in the Fund during each time period, assuming you had reinvested all
dividends and distributions. Some of the information reflects financial results
for a single Fund share. The information has been audited by , the Funds'
independent accountants. Their report, along with the Fund's financial
statements, is incorporated by reference in the Fund's Statement of Additional
Information (available upon request).

<TABLE>
<CAPTION>
Year Ended 10/31 2/21/95(a)
------------------------------------------- through
Institutional Shares 2000 1999 1998 1997 1996 10/31/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 19.33 $ 18.85 $ 18.46 $ 18.54 $ 18.00
Income from investment
operations:
Net investment income 0.74 0.74 0.72 0.73 0.54
Net realized and
unrealized gain
(loss)(b) (0.93) 0.48 0.39 (0.07) 0.54
Distributions to
shareholders:
From net investment
income (0.74) (0.74) (0.72) (0.73) (0.54)
From net realized gains (0.16) -- -- (0.01) --
Net asset value, end of
period $ 18.24 $ 19.33 $ 18.85 $ 18.46 $ 18.54
Total return(c) (1.08)% 6.59% 6.16% 3.60% 6.06%
Net assets at end of
period (in 000's) $40,243 $33,528 $25,281 $17,613 $10,721
Ratio of net expenses to
average net assets 0.70% 0.74% 0.85% 0.85% 0.85%(d)
Ratio of net investment
income to average
net assets 3.90% 3.87% 3.89% 3.93% 4.19%(d)
Ratios assuming no
voluntary waiver of
fees or expense
limitations:
Ratio of expenses to
average net assets 0.93% 1.04% 1.15% 1.55% 1.90%(d)
Ratio of net investment
income to average net
assets 3.67% 3.57% 3.59% 3.23% 3.14%(d)
Portfolio turnover rate 35% 41% 6% 34% 19%
</TABLE>
(a) Commencement of operations.
(b) Includes the balancing effect of calculating per share amounts.
(c) Assumes investment at the beginning of the period, reinvestment of all
dividends and distributions, and a complete redemption of the investment at
the net asset value at the end of the period.
(d) Annualized.

PAGE 44 The Commerce Funds
---------------
.
<PAGE>

Missouri Tax-Free Intermediate Bond Fund
--------------------------------------------------------------------------------

Brian P. Musielak, CFA and Portfolio Manager

. Joined Commerce Bank in 1995
. Fund manager since 1999
. 6 years of experience

Please see the table on p. 55 for more detailed information about the
investment practices of the Missouri Tax-Free Intermediate Bond Fund and the
risks associated with those practices.
[GRAPHIC]
Investment Objective
---------------------------------------

Seeks current income exempt from federal and, to the extent possible, from
Missouri income taxes, as is consistent with the preservation of capital.

[GRAPHIC]
Primary Investment Strategies
---------------------------------------

The Fund employs the following strategies in an effort to achieve current
income and capital preservation:
. Security Types: Under normal market conditions, invests at least 80% of its
total assets in municipal obligations, 65% of which are issued by the State
of Missouri and its political subdivisions. The Fund's 80% investment
strategy is fundamental--meaning that it can only be changed by the holders
of a majority of the outstanding voting securities of the Fund.
. Seeks to maximize the proportion of its dividends that are exempt from both
federal and Missouri income tax.
. Strives to minimize net realized capital gains.
. Maturity Distribution: Under normal market conditions, the average weighted
maturity of the Fund's portfolio securities will be three to ten years.
. Credit Quality: Actively manages maturities to take advantage of changes in
interest rates. The market-weighted average credit rating of the Fund's
entire portfolio will be AA or better.

[GRAPHIC]
Primary Risks of Investing in the Fund
---------------------------------------

The Commerce Funds PAGE 45
---------------
.
<PAGE>

Missouri Tax-Free Intermediate Bond Fund (continued)
-------------------------------------------------------------------------
Credit Risk: An issuer of bonds may default on its obligation to pay interest
and repay principal. Also, a bond's credit rating could be downgraded. The Fund
could lose money in either of these instances.
Management Risk: A strategy used by the Adviser may fail to produce the
intended results.
State-Specific Risk: The Fund invests its assets predominantly in Missouri
obligations. The actual payment of principal and interest on these obligations
is dependent on the Missouri General Assembly allotting money each fiscal year
for these payments. You should also be aware that provisions of the Missouri
Constitution and other laws could result in certain adverse consequences
affecting Missouri obligations.
Non-Diversified Risk: The Missouri Tax-Free Intermediate Bond Fund is non-
diversified. Non-diversified funds typically hold fewer securities than
diversified funds do. Consequently, the change in value of any one security may
affect the overall value of a non-diversified portfolio more than it would a
diversified portfolio. In addition, a non-diversified portfolio may be more
susceptible to economic, political and regulatory developments than a
diversified investment portfolio with similar objectives. When a Fund's assets
are concentrated in obligations payable from revenues of similar projects
issued by issuers located in the same state, or in industrial development
bonds, the Fund will be subject to the particular risks (including legal and
economic conditions) relating to such securities to a greater extent than if
its assets were not so concentrated.
Tax Risk: A fund that invests in municipal obligations may be more adversely
impacted by changes in tax rates and policies than other funds. Dividends
derived from interest on obligations of other governmental issuers are exempt
from federal income tax but may be subject to Missouri income tax.
Municipal Obligation Risk: Payment on municipal obligations held by the Fund
relating to certain projects may be secured by mortgages or deeds of trust. In
the event of a default, enforcement of a mortgage or deed of trust will be
subject to statutory enforcement procedures and limitations on obtaining
deficiency judgments. Moreover, collection of the proceeds from that
foreclosure may be delayed and the amount of the proceeds received may not be
enough to pay the principal or accrued interest on the defaulted municipal
obligations.

An investment in the Fund is not a deposit of Commerce Bank and is not insured
or guaranteed by the FDIC or any other governmental agency.

PAGE 46 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------
[GRAPHIC]
Missouri Tax-Free Intermediate Bond Fund Past Performance
-----------------------------------------------------------

Year-by-Year Total Returns as of 12/31 Each Year (Institutional Shares)

[GRAPH]

1996 2.67%
1997 6.84%
1998 5.41%
1999 (1.00)%
2000 %

(percentage)

Best Calendar Quarter: %, Quarter
Worst Calendar Quarter: %, Quarter

Average Annual Total Return as of 12/31/00

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years
<S> <C> <C> <C>
Missouri Tax-Free
Intermediate Bond Fund
(Institutional Shares) % % %
Merrill Lynch Municipal
Intermediate Index* % % %
</TABLE>
* The Merrill Lynch Municipal Intermediate Index is comprised of investment-
grade municipal securities ranging from 1 to 12 years in maturity. The Index
figures do not reflect any fees or expenses.
continued

The Commerce Funds PAGE 47
---------------
.
<PAGE>

Missouri Tax-Free Intermediate Bond Fund (continued)
-------------------------------------------------------------------------

[GRAPHIC]
Fees and Expenses
-----------------------------------------------------------
The following table shows the fees and expenses that you would pay directly or
indirectly if you invested in this Fund. Shareholder Fees are paid directly
from your account. Total Annual Fund Operating Expenses are deducted from the
Fund's assets, not from your account, so they affect the share price of the
Fund.

<TABLE>
<CAPTION>
Missouri Tax-Free
Intermediate Bond Fund
Service Shares
<S> <C>
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (load) Imposed on Purchases
(as a percentage of offering price) 2.00%
Maximum Sales Charge (load) Imposed on Reinvested
Distributions None
Maximum Deferred Sales Charge (load) Imposed on
Redemptions (1) None
Redemption Fees None
Annual Fund Operating Expenses
(expenses deducted from Fund assets)
Management Fees 0.50%
Distribution (12b-1) Fees 0.25%
Other Expenses (2) 0.55%
-----
Total Annual Fund Operating Expenses (3) 1.30%
Less: Fee Waiver and Expense Reimbursement 0.40%
-----
Net Annual Fund Operating Expenses (4) 0.90%
=====
</TABLE>
(1) A deferred sales charge of 1% is assessed on certain redemptions of shares
that are purchased with no initial sales charge as part of an investment of
$1,000,000 or more.
(2) "Other Expenses" include shareholder servicing fees of up to 0.25%,
annualized, of the average daily net assets of Shares held under the
Shareholder Administrative Services Plan.
(3) The Adviser has contractually agreed to reduce or limit the Total Annual
Fund Operating Expenses, excluding interest, taxes and extraordinary
expenses, at least until October 31, 2001, to 0.90% of the Fund's average
daily net assets. Total Annual Fund Operating Expenses are estimated based
on fees and expenses expected to be incurred by the Fund in the current
fiscal year.
(4) Until October 31, 2001, the Administrator has contractually agreed to waive
the administration fee to 0.13% of the average daily net assets. Net Annual
Fund Operating Expenses are estimated based on fees and expenses expected
to be incurred by the Class in the current fiscal year.
Example: The following example is intended to help you compare the cost of
investing in this Fund with the cost of investing in other mutual funds. It
makes the following assumptions: you invest $10,000 in the Fund for the time
periods indicated, your investment has a 5% return each year, and the Fund's
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:

<TABLE>
<CAPTION>
1 Year 3 Years
<S> <C> <C>
$290 $565
</TABLE>

PAGE 48 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------

[GRAPHIC]
Missouri Tax-Free Intermediate Bond Fund Financial Highlights
-----------------------------------------------------------

The following table describes the Fund's performance for Institutional Shares
for the periods indicated. Because Service Shares have less than one calendar
year's performance, the Fund's Institutional Share performance is provided
below. The total return figures show how much you would have earned (or lost)
on an investment in the Fund during each time period, assuming you had
reinvested all dividends and distributions. Some of the information reflects
financial results for a single Fund share. The information has been audited by
, the Funds' independent accounts. Their report, along with the Fund's
financial statements, is incorporated by reference in the Fund's Statement of
Additional Information (available upon request).

<TABLE>
<CAPTION>
Year Ended 10/31 2/21/95(a)
------------------------------------------- through
Institutional Shares 2000 1999 1998 1997 1996 10/31/95
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ $ 19.07 $ 18.61 $ 18.26 $ 18.40 $18.00
Income from investment
operations:
Net investment income 0.73 0.74 0.76 0.76 0.57
Net realized and
unrealized gain
(loss)(b) (0.90) 0.47 0.37 (0.14) 0.40
Distributions to
shareholders:
From net investment
income (0.73) (0.74) (0.76) (0.76) (0.57)
From net realized gains (0.10) (0.01) (0.02) -- --
Net asset value, end of
period $ $ 18.07 $ 19.07 $ 18.61 $ 18.26 $18.40
Total return(c) (0.95)% 6.65% 6.31% 3.43% 5.45%
Net assets at end of
period (in 000s) $ $42,641 $34,051 $24,434 $17,034 $8,889
Ratio of net expenses to
average net assets 0.65% 0.65% 0.65% 0.65% 0.65%(d)
Ratio of net investment
income to average net
assets 3.91% 3.93% 4.14% 4.14% 4.41%(d)
Ratios assuming no
voluntary waiver of
fees or expense
limitations:
Ratio of expenses to
average net assets 0.92% 1.03% 1.21% 1.58% 2.12%(d)
Ratio of net investment
income to average net
assets 3.64% 3.55% 3.58% 3.21% 2.94%(d)
Portfolio turnover rate 21% 34% 13% 49% 52%
</TABLE>
(a) Commencement of operations.
(b) Includes the balancing effect of calculating per share amounts.
(c) Assumes investment at the beginning of the period, reinvestment of all
dividends and distributions and a complete redemption of the investment at
the net asset value at the end of the period.
(d) Annualized.

The Commerce FundsPAGE 49
---------------
.
<PAGE>

Kansas Tax-Free Intermediate Bond Fund
-------------------------------------------------------------------------

Brian P. Musielak, CFA and Portfolio Manager

. Joined Commerce Bank in 1995
. Fund manager since Fund inception
. 6 years of experience

Please see the table onp. 55 for moredetailed informationabout the Kansas Tax-
Free Intermediate Bond Fund and the risks associated with those practices.
[GRAPHIC]
Investment Objective
---------------------------------------

Seeks current income exempt from federal and, to the extent possible, from
Kansas income taxes, as is consistent with the preservation of capital.

[GRAPHIC]
Primary Investment Strategies
---------------------------------------

The Fund employs the following strategies in an effort to achieve current
income and capital preservation:
. Security Types: Under normal market conditions, invests at least 80% of its
total assets in municipal obligations, 65% of which are issued by the State
of Kansas and its political subdivisions. The Fund's 80% investment strategy
is fundamental--meaning that it can only be changed by the holders of a
majority of the outstanding voting securities of the Fund.
. Seeks to maximize the proportion of its dividends that are exempt from both
federal and Kansas income tax.
. Strives to minimize net realized capital gains.
. Credit Quality: Actively manages maturities to take advantage of changes in
interest rates. The market-weighted average credit rating of the Fund's
entire portfolio will be A or better.
. Maturity Distribution: Under normal market conditions, the average weighted
maturity of the Fund's portfolio securities will be five to ten years.

[GRAPHIC]
Primary Risks of Investing in the Fund
---------------------------------------

Investment Risk: The value of your investment in this Fund may go up or down,
which means that you could lose money.
Interest Rate Risk: Generally, the market value of fixed-income securities can
be expected to go up when interest rates go down and to go down when interest
rates go up. Longer-term bonds and zero coupon bonds are usually more sensitive
to interest rate changes than shorter-term bonds. In general, the longer the
average maturity of bonds in the Fund, the more the Fund's share price will go
up or down in response to interest rate changes.
Market Risk: General economic conditions and/or the activities of individual
issuers may cause the value of the securities in the Fund to increase or
decrease.

PAGE 50 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------
Credit Risk: An issuer of bonds may default on its obligation to pay interest
and repay principal. Also, a bond's credit rating could be downgraded. The Fund
could lose money in either of these instances.
Management Risk: A strategy used by the Adviser may fail to produce the
intended results.
State-Specific Risk: The Fund invests its assets predominantly in Kansas
Obligations. The actual payment of principal and interest on these obligations
is dependent on the Kansas legislature allotting money each fiscal year for
these payments. You should also be aware that provisions of the Kansas
Constitution and other laws could result in certain adverse consequences
affecting Kansas Obligations.
Non-Diversified Risk: The Kansas Tax-Free Intermediate Bond Fund is non-
diversified. Non-diversified funds typically hold fewer securities than
diversified funds do. Consequently, the change in value of any one security may
affect the overall value of a non-diversified portfolio more than it would a
diversified portfolio. In addition, a non-diversified portfolio may be more
susceptible to economic, political and regulatory developments than a
diversified investment portfolio with similar objectives. When a Fund's assets
are concentrated in obligations payable from revenues of similar projects
issued by issuers located in the same state, or in industrial development
bonds, the Fund will be subject to the particular risks (including legal and
economic conditions) relating to such securities to a greater extent than if
its assets were not so concentrated.
Tax Risk: A fund that invests in municipal obligations may be more adversely
impacted by changes in tax rates and policies than other funds. Dividends
derived from interest on obligations of other governmental issuers are exempt
from federal income tax but may be subject to Kansas income tax.
Municipal Obligation Risk: Payment on municipal obligations held by the Fund
relating to certain projects may be secured by mortgages or deeds of trust. In
the event of a default, enforcement of a mortgage or deed of trust will be
subject to statutory enforcement procedures and limitations on obtaining
deficiency judgments. Moreover, collection of the proceeds from that
foreclosure may be delayed and the amount of the proceeds received may not be
enough to pay the principal or accrued interest on the defaulted municipal
obligations.

An investment in the Fund is not a deposit of Commerce Bank and is not insured
or guaranteed by the FDIC or any other governmental agency.
continued

The Commerce FundsPAGE 51
---------------
.
<PAGE>

Kansas Tax-Free Intermediate Bond Fund (continued)
-------------------------------------------------------------------------
[GRAPHIC]
Kansas Tax-Free Intermediate Bond Fund Past Performance
-----------------------------------------------------------

The Fund was recently organized and does not yet have a performance record as
an investment company registered under the Investment Company Act of 1940 (the
"Act"). The bar chart and table below provide some indication of the risks of
investing in the Fund by showing the annual returns and long-term performance
of the Kansas Tax-Free Fund (the "Kansas Common Trust Fund"), the predecessor
common trust fund that, in all material respects, had the same investment
objective, policies, guidelines and investment limitations as the Fund. The
Kansas Common Trust Fund was not registered under the Act and therefore was not
subject to certain investment restrictions imposed by the Act. If the Kansas
Common Trust Fund had been registered under the Act, the performance shown may
have been adversely affected. The performance is for periods before the
effective date of this Prospectus.

The table shows the Kansas Common Trust Fund's performance from calendar year
to calendar year since its inception. The table compares the Kansas Common
Trust Fund's performance over time to that of a broad-based securities market
index. The total return calculations in the bar chart and the table have been
restated to include the estimated expenses of the Service Class but do not
include waived fees or reimbursed expenses. Both charts assume reinvestment of
dividends and distributions. Interests in the Kansas Common Trust Fund were
sold to investors without a sales charge. The Service Shares' sales charge of
2.00% is not included in the bar chart below. However, the sales charge is
included in the table below. If the Service Shares' sales charge of 2.00% had
been included in the total return reflected in the bar chart, performance would
be reduced. As with all mutual funds, how the Kansas Common Trust Fund
performed in the past is not a prediction of how the Fund will perform in the
future.

Year-by-Year Total Returns as of 12/31 Each Year

[GRAPH]

1990 6.28%
1991 8.31%
1992 5.38%
1993 7.25%
1994 (4.81)%
1995 12.43%
1996 2.85%
1997 6.23%
1998 4.85%
1999 (0.65)%
2000 %

(percentage)
Best Calendar Quarter: %, Quarter
Worst Calendar Quarter: %, Quarter

Average Annual Total Return as of 12/31/00

<TABLE>
<CAPTION>
1 Year 5 Years 10 Years
<S> <C> <C> <C>
Kansas Tax-Free
Intermediate Bond Fund % % %
Merrill Lynch Municipal
Intermediate Index* % % %
</TABLE>
*The Merrill Lynch Municipal Intermediate Index is comprised of investment-
grade municipal securities ranging from 1 to 12 years in maturity. The Index
figures do not reflect any fees or expenses.

PAGE 52 The Commerce Funds
---------------
.
<PAGE>

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Kansas Tax-Free
Intermediate Bond Fund
Service Shares
<S> <C>
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (load) Imposed on Purchases
(as a percentage of offering price) 2.00%
Maximum Sales Charge (load) Imposed on Reinvested
Distributions None
Maximum Deferred Sales Charge (load) Imposed on
Redemptions (1) None
Redemption Fees None
Annual Fund Operating Expenses
(expenses deducted from Fund assets)
Management Fees 0.50%
Distribution (12b-1) Fees 0.25%
Other Expenses (2) 0.55%
-----
Total Annual Fund Operating Expenses (3) 1.30%
Less: Fee Waiver and Expense Reimbursement 0.40%
-----
Net Annual Fund Operating Expenses (4) 0.90%
=====
</TABLE>
(1) A deferred sales charge of 1% is assessed on certain redemptions of shares
that are purchased with no initial sales charge as part of an investment of
$1,000,000 or more.
(2) "Other Expenses" may include shareholder servicing fees of up to 0.25%,
annualized, of the average daily net assets of Shares held under the
Shareholder Administrative Services Plan.
(3) The Adviser has contractually agreed to waive fees and/or reimburse
expenses in order to keep Total Annual Fund Operating Expenses, excluding
interest, taxes and extraordinary expenses, from exceeding 0.90% of the
Fund's average daily net assets until October 31, 2001. Total Annual Fund
Operating Expenses are estimated based on expenses expected to be incurred
in the current fiscal year.
(4) Until October 31, 2001, the Administrator has contractually agreed to waive
the administration fee to 0.13% of the average daily net assets. Net Annual
Fund Operating Expenses are estimated based on expenses expected to be
incurred by the Class in the current fiscal year.
Example: The following example is intended to help you compare the cost of
investing in this Fund with the cost of investing in other mutual funds. It
makes the following assumptions: you invest $10,000 in the Fund for the time
periods indicated, your investment has a 5% return each year, and the Fund's
expenses remain the same. Although your actual costs may be higher or lower,
based on these assumptions your costs would be:

<TABLE>
<CAPTION>
1 Year 3 Years
<S> <C> <C>
$290 $565
</TABLE>

continued

The Commerce Funds PAGE 53
---------------
.
<PAGE>

Kansas Tax-Free Intermediate Bond Fund (continued)
--------------------------------------------------------------------------------

[GRAPHIC]
Kansas Tax-Free Intermediate Bond Fund Financial Highlights
-----------------------------------------------------------

The Fund commenced operations as of December , 2000. Therefore, financial
highlights are unavailable for the Fund.

PAGE 54 The Commerce Funds
---------------
.
<PAGE>

Investment Securities and Practices
----------------------------------------------------------------------

This table shows some of the investment methods and securities that the
Funds may use. The Funds' Statement of Additional Information (available on
request) contains a more complete discussion of the securities and
practices each Fund may use, and the risks involved. The Funds' Annual
Report shows the securities and practices each Fund is currently using. We
encourage you to obtain and read a copy of the Statement of Additional
Information and the Annual Report should you have any questions about the
Funds' investment policies. The investment securities and practices that
are considered to be "principal" investment securities and practices are
discussed above each Fund.

<TABLE>
<S> <C>
Key:
# = percent of total assets
the Fund may invest e= equity portion of the Balanced Fund
a = permitted f= fixed-income portion of the Balanced Fund
x= not permitted
</TABLE>

-----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Short -
Term Kansas
MidCap Internat'l Core Govern- National Missouri Tax-
Growth Growth Value Equity Balanced Equity ment Bond Tax-Free Tax-Free Free
Investment Securities

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
American Depositary
Receipts 10(/2/) 10(/2/) 10(/2/) a 10e(/1/) 10(/2/) x x x x x
Asset-Backed
Securities x x x x 65f(/1/) x x 65(/4/) x x x
Convertible
Securities a a a a ae a x a x x x
Corporate Debt
Obligations x x x a af(/1/) x x a x x x
Emerging Market
Securities x x x a x x x x x x x
Equity Securities a a a a ae a x x x x x
European Depository
Receipts x x x a x x x x x x x
Foreign Equity
Securities 10(/2/) 10(/2/) 10(/2/) a 10e(/1/) 10(/2/) x x x x x
Foreign Debt and
Foreign Government
Securities x x x a 20f(/1/) x x 20 x x x
Hybrids x x x 10 x x x x x x x
Mortgage-Related
Securities x x x x 65f (/1/) x a/3/ 65(/4/) x x x
Municipal
Obligations x x x x 20f (/1/) x x 20 a a a
Stripped Securities x x x x af x x a x x x
U.S. Government
Obligations a a a a af a a(/3/) a a a a
Variable and
Floating Rate
Instruments a a a a a a a a a a a
Zero Coupon Bonds a a a a af a a a a a a
</TABLE>

-----------------------------------------------------------------------------

The Commerce Funds PAGE 55
---------------
.
<PAGE>

-----------------------------------------------------------------------------

<TABLE>
<CAPTION>
Short -
Term Kansas
MidCap Internat'l Core Govern- National Missouri Tax-
Growth Growth Value Equity Balanced Equity ment Bond Tax-Free Tax-Free Free
Investment Practices

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Cross Hedging of
Currencies x x x a x x x x x x x
Foreign Currency
Exchange Contracts x x x a x x x x x x x
Futures Contracts &
Related Options a a a a af a x a a a a
Interest Rate Swaps,
Mortgage Swaps, Caps
and Floors x x x x af x a a a a a
Mortgage Dollar Rolls x x x x af x a a x x x
Options on Foreign
Currencies x x x a x x x x x x x
Options on Securities
and Securities Indices 25 25 25 5 5 25 5 5 5(/5/) 5(/5/) 5(/5/)
Repurchase Agreements 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3 33 1/3
Standby Commitments x x x x x x x x a a a
When-Issued and Forward
Commitments a a a a a a a a 25 25 25
</TABLE>
-----------------------------------------------------------------------------

(1) Of the fixed-income portion of its portfolio, the Balanced Fund may
invest: (1) 65% in asset-backed and/or mortgage-backed securities; (2)
20% in municipal obligations; and (3) 20% in debt obligations of foreign
issuers. Of the equity portion of its portfolio, the Balanced Fund may
invest up to 10% in securities issued by foreign issuers, including
ADRs.

(2) The MidCap Growth, Growth, Value and Core Equity Funds may invest up to
10% of their total assets in foreign securities, including ADRs.

(3) At least 65% of the Short-Term Government Fund's investments will be in
U.S. Government issued or guaranteed securities (including mortgage-
related securities issued or guaranteed by the U.S. Government) that
have average lives or remaining maturities of five years or less.

(4) The Bond Fund may invest up to 65% of its total assets in asset-backed
and/or mortgage-related securities.

(5) The National, Missouri and Kansas Tax-Free Intermediate Bond Funds may
not purchase put and call options or write covered call and put options
on securities related to foreign currencies.

PAGE 56 The Commerce Funds
---------------
.
<PAGE>

Risks: The following chart summarizes the types of risks from which loss
may result. More information about risks associated with the Funds provided
on the following pages and in the Funds' Statement of Additional
Information, which is available on request. The risks that are considered
to be "principal" risks are discussed above under each Fund.

<TABLE>
<CAPTION>
Short -
Term Kansas
MidCap Internat'l Core Govern- National Missouri Tax-
Growth Growth Value Equity Balanced Equity ment Bond Tax-Free Tax-Free Free
Risks Associated with
These Investments
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Asset-Backed Risk X X
Call Risk X X X
Credit Risk X X X X X X
Currency Risk X
Emerging Market Risk X
Extension Risk X X X
Euro Risk X
Foreign Risk X X X
Futures/Options Risk X X X
Government Securities
Risk X X
Interest Rate Risk X X X X X X
Investment Risk X X X X X X X X X X X
Management Risk X X X X X X X X X X X
Market Risk X X X X X X X X X X X
Maturity Risk X X X X X X
Mortgage-Backed Risk X X X
Municipal Obligation
Risk X X X
Non-Diversified Risk X X
Portfolio Turnover Risk X X X X X X X X X X X
Prepayment Risk X X X
Short-Term Investing
Risk X X X X X X X X X X X
Small Company Stock Risk X
State Specific Risk X X
Tax Risk X X X
</TABLE>

The Commerce Funds PAGE 57
---------------
.
<PAGE>

holder frequently has no recourse against the entity that originated the loans
or receivables. Credit card receivables are generally unsecured and the debtors
are entitled to the protection of a number of state and federal consumer credit
laws, many of which have given debtors the right to set off certain amounts
owed on the credit cards, thereby reducing the balance due. In addition,
default may require repossession of the personal property of the debtor, which
may be difficult or impossible in some cases. Most issuers of automobile
receivables permit the servicers to return possession of the underlying
obligations. If the servicers were to sell these obligations to another party,
there is a risk that the purchaser would acquire an interest superior to that
of the holders of the related automobile receivables. In addition, because of
the number of vehicles involved in a typical issuance and technical
requirements under state law, the trustee for the automobile receivables may
not have an effective security interest in all of the obligations backing such
receivables. Therefore, there is a possibility that recoveries of repossessed
collateral may not, in some cases, be able to support payments on these
securities.
Call Risk: An issuer may exercise its right to pay principal on an obligation
held by a Fund (such as a mortgage-backed or asset-backed security) earlier
than expected. This may happen when interest rates decline. Under these
circumstances, a Fund may be unable to recoup all of its initial investment and
will also suffer from having to reinvest in lower-yielding securities.
Credit Risk: An issuer of bonds may default on its obligation to pay interest
and repay principal. A bond's credit rating could be downgraded. A Fund could
lose money in either of these instances. The Bond Fund may invest up to 35% of
its assets in obligations rated BBB or Baa by certain ratings services. These
obligations are considered to have speculative characteristics and are riskier
than higher rated obligations.
Currency Risk: Fluctuations in the exchange rates between the U.S. dollar and
foreign currencies may negatively affect an investment. A decline in the value
of a foreign currency versus the U.S. dollar reduces the dollar value of
securities denominated in that currency. Exchange rate movements can be large
and unpredictable and can last for extended periods. Absent other events which
could otherwise affect the value of a foreign security (such as a change in the
political climate or an issuer's credit quality), appreciation in the value of
a foreign currency generally can be expected to increase the value of a foreign
currency-denominated security in terms of U.S. dollars. An increase in foreign
interest rates or a decline in the value of the foreign currency relative to
the U.S. dollar generally can be expected to depress the value of a foreign
currency-denominated security.
Although a Fund may invest in securities denominated in foreign currencies, its
portfolio securities and other assets are valued in U.S. dollars. Currency
exchange rates may fluctuate significantly over short periods of time causing,
together with other factors, a Fund's net asset value to fluctuate as well.
Currency exchange rates generally are determined by the forces of supply and
demand in the foreign exchange markets and the relative merits of investments
in different countries, actual or anticipated changes in interest rates and
other complex factors, as seen from an international perspective. Currency
exchange rates also may be affected unpredictably by the intervention or the
failure to intervene by U.S. or foreign governments or central banks, or by
currency

PAGE 58 The Commerce Funds
---------------
.
<PAGE>

controls or political developments in the U.S. or foreign governments or
central banks, or by currency controls or political developments in the U.S. or
abroad. To the extent that a Fund's total assets, adjusted to reflect the
Fund's net position after giving effect to currency transactions, are
denominated in the currencies of foreign countries, the Fund will be more
susceptible to the risk of adverse economic and political developments within
those countries. In addition, the respective net currency positions of the
International Equity Fund may expose it to risks independent of its securities
positions. Although the net long and short foreign currency exposure of the
International Equity Fund will not exceed its total asset value, to the extent
that the Fund is fully invested in foreign securities while also maintaining
currency positions, it may be exposed to greater risk than it would have if it
did not maintain the currency positions. The Funds investing in foreign
securities are all subject to the possible imposition of exchange control
regulations or freezes on convertibility of currency.
The International Equity Fund may enter into forward currency exchange
contracts in an effort to hedge all or any portion of its portfolio positions.
Specifically, foreign currency contracts may be used for this purpose to reduce
the level of volatility caused by changes in foreign currency exchange rates or
when such transactions are economically appropriate for the reduction of risks
in the ongoing management of the Fund. Although the contracts may be used to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time they tend to limit any potential gain that might be realized
should the value of such currency increase. The Fund may also enter into
foreign currency exchange contracts to seek to increase total return when the
Adviser anticipates that a foreign currency will appreciate or depreciate in
value, but securities denominated in that currency do not present attractive
investment opportunities and are not held by the Fund. In addition, the
International Equity Fund may engage in cross-hedging by using forward
contracts in one currency to hedge against fluctuations in the value of
securities denominated in a different currency if the Adviser believes that
there is a pattern of correlation between the currencies.
Emerging Market Risk: To the extent that a Fund has investments in emerging
market countries, it will be subject to abrupt and severe price declines. Many
of the economic and political structures of these countries do not compare
favorably with the United States in terms of wealth and stability, and their
financial markets may lack liquidity. Investments in these countries are much
riskier than those in mature countries. The International Equity Fund may
invest its assets in countries with emerging economies or securities markets.
Most of these countries are located in the Asia-Pacific region, Eastern Europe,
Latin and South America and Africa. Political and economic structures in many
of these countries may be undergoing significant evolution and rapid
development, and such countries may lack the social, political and economic
stability characteristic of more developed countries. Some of these countries
may have failed in the past to recognize private property rights and at times
have nationalized or expropriated the assets of private companies. As a result,
the risks of investing in foreign securities, including the risks of
nationalization and expropriation may be heightened. In addition, unanticipated
political or social developments may affect the value of the Fund's investments
in those countries and the availability of additional investments in those
countries. The small size and

The Commerce Funds PAGE 59
---------------
.
<PAGE>

inexperience of the securities markets in certain countries and limited volume
of trading in securities in those countries may make the Fund's investments in
such countries illiquid and more volatile than investments in most Western
European countries. There may be little financial or accounting information
available with respect to issuers located in certain of such countries, and it
may be difficult as a result to assess the value or prospects of an investment
in such issuers.
Extension Risk: An issuer may exercise its right to pay principal on an
obligation held by a Fund (such as a mortgage-backed or asset-backed security)
later than expected. This may happen when interest rates rise. Under these
circumstances, the value of the obligation will decrease and a Fund will also
suffer from the inability to invest in higher-yielding securities.
Euro Risk: A single european common currency, the euro, was introduced on
January 1, 1999. The move to a shared common currency shared by 11 diverse
nations with varying economic and political systems carries risks for funds
with significant investments in euro-denominated assets. (The participating
nations are Germany, France, Italy, the Netherlands, Spain, Portugal, Austria,
Belgium, Finland, Ireland, and Luxembourg.) The euro, or the economies of those
countries, could be adversely affected if the European Economic and Monetary
Union does not appear to be working smoothly. On the other hand, the euro may
be beneficial over time by encouraging competition and productivity. Because of
the number of countries using this single currency, a significant portion of
the assets held by the Funds may be denominated in the euro.
Foreign Risk: Foreign securities can be riskier and more volatile than U.S.
securities. Adverse political, social and economic developments in foreign
countries (including the possible seizure or nationalization of foreign
holdings, the possible establishment of exchange controls or the adoption of
other governmental restrictions) or changes in the value of foreign currency
can make it harder for the portfolio to sell its securities and could reduce
the value of your shares. Changes in or the lack of tax, accounting, and
regulatory standards and difficulties in obtaining information about foreign
companies can negatively affect investment decisions. Also, the costs
attributable to investing abroad are usually higher than those of investing in
the United States. These costs include higher transaction and custody costs as
well as the imposition of additional taxes by foreign governments. Foreign
investments also involve risks associated with the level of currency exchange
rates, less market liquidity, more market volatility and political and economic
instability. Additionally foreign banks and foreign branches of domestic banks
are subject to less stringent reserve requirements and to different accounting,
auditing and recordkeeping requirements.
The International Equity, Balanced and Bond Funds may invest in foreign debt
and in the securities of foreign governments. The risks of such investments
include the risk that foreign governments may default on their obligations, may
not respect the integrity of such debt, may attempt to renegotiate the debt at
a lower rate and may not honor investments by U.S. entities or citizens.
The MidCap Growth, Growth, Value, International Equity, Core Equity and
Balanced Funds may invest in ADRs, some of which may not be sponsored by the
issuing

PAGE 60 The Commerce Funds
---------------
.
<PAGE>

institution. A non-sponsored depository may not be required to disclose
material information that a sponsored depository would be required to provide
under its contractual relationship with the issuer. Accordingly, there may not
be a correlation between such information and the market value of such
securities.
Futures/Options Risk: To the extent a Fund uses futures and options, it is
exposed to additional volatility and potential losses. Futures (a type of
potentially high-risk derivative) are often used to manage or hedge risk
because they enable the investor to buy or sell an asset in the future at an
agreed-upon price. Options (another type of potentially high-risk derivative)
give the investor the right (where the investor purchases the option), or the
obligation (where the investor writes (sells) the option), to buy or sell an
asset at a predetermined price in the future. Futures and options contracts may
be made or sold for any number of reasons, including: to manage fund exposure
to changes in securities prices and foreign currencies; as an efficient means
of adjusting fund overall exposure to certain markets; in an effort to enhance
income; as a cash management tool; to protect the value of portfolio
securities; and to adjust portfolio duration. Call and put options may be
purchased or sold on securities, financial indices, and foreign currencies.
Futures contracts and options may not always be successful hedges; their prices
can be highly volatile; using them could lower fund total return and the
potential loss from the use of futures can exceed the fund's initial investment
in such contracts.
Government Securities Risk: The U.S. Government may not provide financial
support to U.S. Government agencies, instrumentalities or sponsored enterprises
if it is not obligated to do so by law.
Interest Rate Risk: Generally, the market value of fixed-income securities in a
Fund can be expected to go up when interest rates go down and to go down when
interest rates go up (although many mortgage related securities will have less
potential than other debt securities for capital appreciation during period of
declining rates). Longer-term bonds and zero coupon bonds are usually more
sensitive to interest rate changes than shorter-term bonds. In general, the
longer the average maturity of bonds in a Fund, the more a Fund's share price
will go up or down in response to interest rate changes.
Investment Risk: The value of your investment in a Fund may go up or down,
which means that you could lose money.
Management Risk: A strategy used by the Adviser may fail to produce the
intended results. The Adviser's assessment of companies whose securities are
held by a Fund may prove incorrect, resulting in losses or poor performance,
even under favorable market and interest rate conditions.
Market Risk: General economic conditions and/or the activities of individual
companies may cause the value of the securities in a Fund to increase or
decrease. A Fund's NAV may fluctuate with movements in the equity markets.
Maturity Risk: A Fund will not necessarily hold its securities to maturity,
which could result in loss of principal.
Mortgage-Backed Risk: In addition to prepayment, call and extension risks,
mortgage-backed securities may be subject to special risks, including price
volatility, liquidity, and enhanced sensitivity to interest rates.
Collateralized mortgage-backed securities (CMOs)

The Commerce Funds PAGE 61
---------------
.
<PAGE>

may exhibit even more price volatility and interest rate risk than other
mortgage-backed securities. They may lose liquidity as CMO market makers may
choose not to repurchase, or may offer prices, based on current market
conditions, that are unacceptable to the Fund based on the Adviser's analysis
of the market value of the security. The Bond and Balanced Funds may purchase
"stripped" mortgage-backed securities (SMBS) and other types of "stripped"
securities. SMBS, in particular, are more volatile and sensitive to interest
rate changes than ordinary debt securities, and there is a greater risk that a
Fund's initial investment in these securities may not be fully recouped.
Municipal Obligation Risk: Payment on municipal obligations held by a Fund
relating to certain projects may be secured mortgages or deeds of trust. In the
event of a default, enforcement of a mortgage or deed of trust will be subject
to statutory enforcement procedures and limitations on obtaining deficiency
judgment. Moreover, collection of the proceeds from that foreclosure may be
delayed and the amount of the proceeds received may not be enough to pay the
principal or accrued interest on the defaulted municipal obligations. The
obligations of the issuer to pay the principal of and interest on a municipal
obligation are subject to the provisions of bankruptcy, insolvency and other
laws affecting the rights and remedies of creditors, such as the Federal
Bankruptcy Act, and laws, if any, that may be enacted by Congress or state
legislatures extending the time for payment of principal or interest or
imposing other constraints upon the enforcement of such obligations. There is
also the possibility that, as a result of litigation or other conditions, the
power or ability of the issuer to pay when due the principal of or interest on
a municipal obligation may be materially affected. Municipal lease obligations
and certificates of participation are subject to the added risk that the
governmental lessee will fail to appropriate funds to enable it to meet its
payment obligations under the lease. Although these obligations may be secured
by the leased equipment or facilities, the disposition of the property in the
event of non-appropriation or foreclosure might prove difficult, time consuming
and costly, and result in a delay in recovering or the failure to fully recover
a Fund's original investment.
Non-Diversified Risk: The Missouri Tax-Free Intermediate Bond and the Kansas
Tax-Free Intermediate Bond Funds are non-diversified. Non-diversified funds
typically hold fewer securities than diversified funds do. Consequently, the
change in value of any one security may affect the overall value of a non-
diversified portfolio more than it would a diversified portfolio. In addition,
a non-diversified portfolio may be more susceptible to economic, political and
regulatory developments than a diversified investment portfolio with similar
objectives. When a Funds' assets are concentrated in obligations payable from
revenues of similar projects issued by issuers located in the same state, or in
industrial development bonds, the Funds will be subject to the particular risks
(including legal and economic conditions) relating to such securities to a
greater extent than if its assets were not so concentrated.
Portfolio Turnover Risk: The Funds may buy and sell investments relatively
often. Such a strategy often involves higher expenses, including brokerage
commissions, and may increase the amount of capital gains (and, in particular,
short-term gains) realized by a portfolio. Shareholders must pay tax on such
capital gains.

PAGE 62 The Commerce Funds
---------------
.
<PAGE>

Prepayment Risk: Prepayment of the underlying mortgage collateral of some
fixed-income securities may result in a decreased rate of return.
Short-Term Investing Risk: For temporary defensive purposes, the Adviser may
decide to suspend the normal investment activities of a Fund by investing up to
100% of its assets in cash and cash equivalent short-term obligations,
including money market instruments, a term that includes bank obligations,
commercial paper, U.S. Government obligations, foreign government securities
(if permitted) and repurchase agreements. Bank obligations include obligations
of foreign banks or foreign branches of U.S. banks. The Adviser may temporarily
adopt a defensive position to reduce changes in the value of a Fund's shares
that may result from adverse market, economic, political or other conditions.
When the Adviser pursues a temporary defensive strategy, the Funds may not be
following their stated objectives and may not profit from favorable
developments that they would have otherwise profited from if they were pursuing
their normal investment strategies.
Small Company Stock Risk: Investing in securities of smaller companies may be
riskier than investing in securities of larger, more established companies.
Smaller companies are more vulnerable to adverse developments because of more
limited product lines, markets or financial resources. They often depend on a
smaller, less experienced management group. Also, smaller company stocks may
trade less often and in limited volume compared to stocks trading on a national
securities exchange. Security prices of small company stocks may be more
volatile than the prices of larger company stocks. As a result, a Fund's NAV
may be subject to rapid and substantial changes if it invests in small company
stocks.
State-Specific Risk: The Missouri Tax-Free Intermediate Bond Fund invests its
assets predominantly in Missouri Obligations. The actual payment of principal
and interest on these obligations is dependent on the Missouri General Assembly
allotting money each fiscal year for these payments. You should also be aware
that provisions of the Missouri Constitution and other laws could result in
certain adverse consequences affecting Missouri Obligations. Increased
urbanization and continued decline in defense appropriations by the U.S.
Congress have had and will continue to have an adverse impact on the State of
Missouri in the forseeable future.
The Kansas Tax-Free Intermediate Bond Fund invests its assets predominantly in
Kansas Obligations. The actual payment of principal and interest on these
obligations is dependent on the Kansas legislature alloting the money each
fiscal year for these payments. You should also be aware that provisions of the
Kansas Constitution and other laws could result in certain adverse consequences
affecting these obligations.
Tax Risk: A fund that invests in municipal obligations may be more adversely
impacted by changes in tax rates and policies than other funds. Interest income
on municipal obligations is normally not subject to regular federal income tax.
Any proposed or actual changes in federal income tax rates or exempt statutes
that apply to interest income, therefore, can significantly affect the demand
for and supply, liquidity and marketability of municipal obligations, which
could in turn affect a fund's ability to buy and sell municipal obligations at
favorable yield and price levels.

The Commerce Funds PAGE 63
---------------
.
<PAGE>

Account Policies And Features
--------------------------------------------------------------------------------

The following information is intended to help you understand how to purchase
and redeem shares of The Commerce Funds. It will also explain the features you
can use to customize your Commerce Funds account to meet your needs.

Buying Service Shares
--------------------------------------------------------------------------------

How Are Service Shares Priced?
You pay a sales charge (load) to invest in these Funds. Service Shares of the
Funds are purchased at their public offering price (POP), which is a Fund's net
asset value (NAV) per share plus a front-end sales charge. The NAV is generally
calculated as of the close of trading (usually 4 p.m. Eastern time) on the New
York Stock Exchange (NYSE) every day the NYSE is open. Your order will be
priced at the NAV next calculated after your order is received in good order by
The Commerce Funds' Transfer Agent plus any applicable sales charge. Therefore,
to receive the NAV of any given day, The Commerce Funds must receive your order
in good form by the close of regular trading on the NYSE that day. If The
Commerce Funds receives and accepts your order after the NYSE closes, you will
receive the NAV that is calculated on the close of trading on the following
day. The Commerce Funds are open for business on the same days as the NYSE.
Each Fund's investments are valued based on market value, or where market
quotations are not readily available, based on fair value as determined in good
faith by the Funds' Board of Trustees. Certain short-term securities may be
valued at amortized cost, which approximates fair value.

Trading in foreign securities is generally completed before the end of regular
trading on the NYSE and may occur on weekends and U.S. holidays and at other
times when the NYSE is closed. As a result, there may be delays in reflecting
changes in the market values of foreign securities in the calculation of the
NAV for any Fund invested in foreign securities. You may not be able to redeem
or purchase shares of an affected Fund during these times.

How to Calculate NAV

<TABLE>
<S> <C>
(Value of Assets Attributable to the Class) - (Liabilities Attributable to the Class)
NAV = -------------------------------------------------------------------------------------
Number of Outstanding Shares of the Class
</TABLE>

PAGE 64 The Commerce Funds
---------------
.
<PAGE>

Sales Charge: The maximum front-end sales charge is 3.50% for the MidCap Growth
Fund, the Growth Fund, the Value Fund, the International Equity Fund, the
Balanced Fund, the Core Equity and the Bond Fund. The maximum front-end sales
charge is 2.00% for the Short-Term Government Fund, the National Tax-Free
Intermediate Bond Fund, the Missouri Tax-Free Intermediate Bond Fund, and the
Kansas Tax-Free Intermediate Bond Fund and may be less based on the amount you
invest, as shown in the following chart:

MidCap Growth, Growth, Value, International Equity, Balanced, Core Equity, and
Bond Funds:

<TABLE>
<CAPTION>
Maximum Dealer's
As a % of As a % of Reallowance as a %
offering price net asset value of offering price
Amount of Purchase per share per share per share*
<S> <C> <C> <C>
Less than $100,000 3.50 3.63 3.15
$100,000 but less than
$250,000 2.50 2.56 2.25
$250,000 but less than
$500,000 1.50 1.52 1.35
$500,000 but less than
$1,000,000 1.00 1.01 0.90
$1,000,000 or more 0.00** 0.00** 1.00***
</TABLE>

* Dealer's reallowance may be changed periodically.
** There is no initial sales charge on purchases of $1,000,000 or more of
Service Shares; however, a contingent deferred sales charge (CDSC) of 1.00%
will be imposed on the lesser of the POP or the NAV of the shares on the
redemption date for shares redeemed within 18 months after purchase.
*** The Distributor may pay placement fees to dealers of up to 1.00% of the
POP on purchases of Service Shares of $1,000,000 or more.

Short-Term Government, National Tax-Free Intermediate Bond, Missouri Tax-Free
Intermediate Bond, and Kansas Tax-Free Intermediate Bond Funds:

<TABLE>
<CAPTION>
Maximum Dealer's
As a % of As a % of Reallowance as a %
offering price net asset value of offering price
Amount of Purchase per share per share per share*
<S> <C> <C> <C>
Less than $500,000 2.00 2.04 1.80
$500,000 but less than
$1,000,000 1.00 1.01 0.90
$1,000,000 or more 0.00** 0.00** 1.00***
</TABLE>

* Dealer's reallowance may be changed periodically.
** There is no initial sales charge on purchases of $1,000,000 or more of
Service Shares; however, a CDSC of 1.00% will be imposed on the lesser of
the POP or the NAV of the shares on the redemption date for shares redeemed
within 18 months after purchase.
*** The Distributor may pay placement fees to dealers of up to 1.00% of the
POP on Service Shares purchases of $1,000,000 or more.

The Commerce Funds PAGE 65
---------------
.
<PAGE>

When There Is No Sales Charge: There is generally no sales charge on Service
Shares purchased by the following types of investors or transactions:
. automatic reinvestments and cross reinvestments of dividends and capital gain
distributions;
. the Exchange Privilege described below;
. the Redemption Reinvestment Privilege described below;
. non-profit organizations, foundations and endowments qualified under Section
501(c)(3) of the Internal Revenue Code (excluding individual tax sheltered
annuities);
. any state, county or city, or any instrumentality, department, authority or
agency thereof, prohibited by applicable laws from paying a sales charge for
the purchase of Fund shares;
. registered representatives of dealers who have entered into dealer agreements
with Goldman, Sachs & Co. to the extent permitted by such firms and for their
customers;
. financial planners and their clients;
. customers of Commerce Bank's Investment Management Group (IMG) who purchase
shares for an account that is outside the IMG relationship; or
. immediate family (other than spouses and legal dependents) of employees,
directors, advisory directors, officers and retirees of Commerce Bancshares,
Inc., Goldman, Sachs & Co., State Street Bank and Trust Company and National
Financial Data Services, Inc. or their subsidiaries or affiliates.

What Is The Minimum Investment For The Funds?

<TABLE>
<CAPTION>
Initial Additional
Investment Investments
<S> <C> <C>
Regular Account $1,000 $250
Automatic Investment Account $ 500 $50/month
Individual Retirement Accounts (except SEP & SIMPLE
IRAs), Keogh plans, corporate retirement plans, public
employer deferred plans, profit sharing plans and
401(k) plans $1,000 $250
SEP and SIMPLE IRAs $ 50 $50/month
</TABLE>

Who Can Buy Service Shares?

This prospectus describes the Services Shares of each Fund. Services Shares are
offered primarily to:

. individuals, corporations or other entities, purchasing for their own
accounts or for the accounts of others, and to qualified banks, savings and
loan associations, and broker/dealers on behalf of their customers; and

. financial planners and their clients.

PAGE 66 The Commerce Funds
---------------
.
<PAGE>

The Commerce Funds is also authorized to issue an additional class of shares,
Institutional Shares. Institutional Shares are offered primarily to:

. participants in employer-sponsored defined contribution plans when such plans
offer The Commerce Funds as one of their investment options;

. any investor who has been a continuous shareholder in The Commerce Funds
since January 1, 1997 or before;

. employees, directors, advisory directors, officers and retirees (as well as
their spouses and legal dependents) of Commerce Bancshares, Inc., Goldman,
Sachs & Co., State Street Bank and Trust Company and National Financial Data
Services, Inc. or their subsidiaries or affiliates; and

. financial planners, broker/dealers and their clients.

How Do I Buy Service Shares?

The following section describes features and gives specific instructions on how
to purchase Service Shares directly from The Commerce Funds. The Commerce Funds
has authorized certain dealers to purchase shares of Funds on behalf of their
clients. Some of the account features and instructions described in this
section may not be applicable to clients of these dealers.

The Commerce Funds PAGE 67
---------------
.
<PAGE>

1. Consider The Following Features To Customize Your Account:

. Making Automatic Investments: The Automatic Investment feature lets you
transfer money from your financial institution account into your Fund account
automatically either on the 1st or the 15th of the month. The Automatic
Investment feature is one way to use dollar cost averaging to invest (see
below). Only accounts at U.S. financial institutions that permit automatic
withdrawals through the Automated Clearing House (ACH) are eligible. Check
with your financial institution to determine eligibility.

. Using Dollar Cost Averaging: Dollar cost averaging involves investing a
dollar amount at regular intervals. Because more shares are purchased during
periods with lower share prices and fewer shares are purchased when the price
is higher, your average cost per share may be reduced. In order to be
effective, dollar cost averaging should be followed on a regular basis. You
should be aware, however, that shares bought using dollar cost averaging are
made without regard to their price on the day of investment or to market
trends. In addition, while you may find dollar cost averaging to be
beneficial, it will not prevent a loss if you ultimately redeem your shares
at a price that is lower than their purchase price. Dollar cost averaging
does not assure a profit or protect against a loss in a declining market.
Since dollar cost averaging involves investment in securities regardless of
fluctuating price levels, you should consider your financial ability to
continue to purchase through periods of low price levels. You can invest
through dollar cost averaging on your own or through the Automatic Investment
feature described above.

. Using Rights Of Accumulation: When you buy Service Shares of The Commerce
Funds, your current total investment determines the sales charge (load) you
pay. Since larger investments receive a discounted sales charge, the sales
charge (load) you pay may subsequently be reduced as you build your
investment.

To buy Service Shares at a reduced sales charge under Rights of Accumulation,
you must indicate at the time of purchase that a quantity discount is
applicable. (See section 5 of the application.) A reduction in sales charge is
subject to a check of appropriate records, after which you will receive the
lowest applicable sales charge.

Example: Suppose you own Service Shares with a current total value of $90,000
that can be traced back to the purchase of the shares with a sales charge. If
you subsequently invest $10,000 in any Fund within The Commerce Funds family
(except the Short-Term Government Fund), you will pay a reduced sales charge
of 2.50% of the POP on the additional purchase.

. Using Letters Of Intent: You may also buy Service Shares at a reduced sales
charge under a written Letter of Intent, a non-binding commitment to invest a
total of at least $100,000 in one or more Fund of The Commerce Funds within a
period of 13 months and under the terms and conditions of the Letter of
Intent. Service Shares you buy under a Letter of Intent will be eligible for
the same sales charge discount that

PAGE 68 The Commerce Funds
---------------
.
<PAGE>

would have been available had all of your Service Shares been purchased at
once. To use this feature, complete the Letter of Intent section on your
account application. A Letter of Intent must be filed with The Commerce Funds
within 90 days of the first investment under the Letter of Intent provision.

Things To Consider When Completing A Letter Of Intent:
. The Letter of Intent does not bind you to buy or sell shares of the full
amount at the sales charge indicated. However, you must complete the intended
purchase to obtain the reduced sales charge.
. When you sign a Letter of Intent, The Commerce Funds will hold in escrow a
sufficient number of shares which can be sold to make up any difference in
the sales charge on the amount actually invested.
. After you fulfill the terms of the Letter of Intent, the shares in escrow
will be released.
. If your aggregate investment exceeds that indicated in your Letter of Intent,
you will receive an adjustment which reflects the further reduced sales
charge applicable to your excess investment.
. You may combine purchases that are made by members of your immediate family,
or the total investments of a trustee or custodian of any qualified pension
or profit-sharing plan or IRA established for your benefit. Please reference
on the account application the accounts that are to be combined for this
purpose.

2. Contact The Commerce Funds To Open Your Account:

[GRAPHIC]

By Mail:
-----------------------------------------------------------
Complete an account application. Mail the completed application and a
check payable to The Commerce Funds to:
The Commerce Funds
c/o Shareholder Services
P.O. Box 219525
Kansas City, MO 64121-9525
[GRAPHIC]

In Person:
-----------------------------------------------------------
You are welcome to stop by a Commerce Bank office location, where a
registered investment representative can assist you in opening an
account.

. Federal regulations require you to provide a certified Taxpayer
Identification Number upon opening or reopening an account.

. If your check used for investment does not clear, a fee may be imposed by the
Transfer Agent. All payments by check must be in U.S. dollars and must be
drawn only on U.S. financial institutions.

The Commerce Funds PAGE 69
---------------
.
<PAGE>

How Do I Add To My Commerce Funds Account?

To add to your original investment, you may either mail your additional
investment to the address above or you may use Electronic Funds Transfer.

[GRAPHIC]
By Electronic Funds Transfer:
-----------------------------------------------------------
To use Electronic Funds Transfer, have your bank send your investment
to:

Investors Fiduciary Trust Company, with these instructions:
--ABA #101003621
--Account #756-044-3
--Your name and address
--Your social security or tax ID number
--Name of the Fund
--Class of shares
--Your new account number

What Are My Options For Changing My Investment Within The Commerce Funds?

. Changing Shares From Fund To Fund: As a shareholder, you have the privilege
of exchanging your shares for Service Shares of any other Commerce Fund.
Exchanges may also be made into the Service Shares of Goldman Sachs
Institutional Liquid Assets Prime Obligations Portfolio ("Money Market
Fund"). Goldman Sachs Asset Management, a unit of the Investment Management
Division of Goldman, Sachs & Co., serves as investment adviser for the Money
Market Fund.

Service Shares being exchanged are subject to the minimum initial and
subsequent investment requirements as described above. The Commerce Funds
reserves the right to reject any exchange request and the exchange privilege
may be modified or terminated at any time. At least 60 days' notice of any
material modification or termination of the exchange privilege will be given
to shareholders except where notice is not required under the regulations of
the Securities and Exchange Commission (SEC). Before exchanging your shares,
you should consider carefully the investment objectives, policies, risks and
expenses of the Fund you are acquiring.

. Making Automatic Exchanges: You may request on your account application that
a specified dollar amount of Service Shares be automatically exchanged for
Service Shares of any other Commerce Fund. These automatic exchanges may be
made on any one day of each month and are subject to the following
conditions: 1) the minimum dollar amount for automatic exchanges must be at
least $250 per month; 2) the value of the account in the originating Fund
must be at least $1,000 after the exchange; 3) the value of the account in
the acquired Fund must equal or exceed the acquired Fund's minimum initial
investment requirement; and 4) the names, addresses and taxpayer
identification number for the shareholder accounts of the exchanged and
acquired Funds must be identical.

PAGE 70 The Commerce Funds
---------------
.
<PAGE>

.Cross Reinvesting Of Distributions: You may invest dividend or capital gain
distributions from one Fund of the Service Class to another Fund of the
Service Class. If you elect to reinvest the distributions paid by one Fund in
shares of another Fund of The Commerce Funds, the dividends or distributions
will be treated as received by you for tax purposes. Cross reinvestment
privileges do not apply to the Money Market Fund described under "Changing
Shares From Fund to Fund."

Redeeming Service Shares
--------------------------------------------------------------------------------

You May Sell Shares At Any Time: Your shares will be sold at the NAV next
calculated after The Commerce Funds' Transfer Agent receives your properly
completed order. Your order will be processed promptly and you will generally
receive the proceeds within a week. Please note: If the Fund has not yet
collected payment for the shares you are selling, it may delay sending the
proceeds for up to 15 business days.

Receipt Of Proceeds From A Sale: Ordinarily, sale proceeds will be disbursed
the next business day following receipt by the Transfer Agent of a properly
completed order. Payment by check will ordinarily be made within seven calendar
days following redemption or you may have your proceeds sent by federal wire to
your financial institution account. Proceeds will normally be wired the
business day after your request to redeem shares is received in good order by
the Transfer Agent. Your request to wire proceeds is subject to the financial
institution's wire charges.

Written requests to sell Service Shares must be signed by each shareholder,
including each joint owner. Certain types of redemption requests will need to
include a signature guarantee. You may obtain a signature guarantee from most
banks or securities dealers. Guarantees from notaries public will not be
accepted.

How Do I Redeem Shares From My Commerce Funds Account?

The following section describes how to redeem shares directly through The
Commerce Funds. The Commerce Funds has authorized certain dealers to redeem
shares of Funds on behalf of their clients. Some of the account features and
instructions described in this section may not be applicable to clients of
these dealers.

The Commerce Funds PAGE 71
---------------
.
<PAGE>

1. Consider Using An Automated Redemption:

. Making Automatic Withdrawals: If you are a shareholder with an account valued
at $5,000 or more, you may withdraw amounts in multiples of $100 or more from
your account on a monthly, quarterly, semi-annual or annual basis through the
Automatic Withdrawal feature. At your option, you may choose to have your
automatic withdrawal paid either by check or directly deposited into a
financial institution account. Withdrawals paid by check are distributed on
or about the 15th of the month. Direct deposits made to a financial
institution account can be made on any day of the month. To participate in
this feature, supply the necessary information on the account application or
in a subsequent written request. This feature may be suspended should the
value of your account fall below $500.

2. Contact The Commerce Funds To Redeem Shares From Your Account

[GRAPHIC]

By Mail:
-----------------------------------------------------------
Write a letter to us that gives the following information:
--names of all account owners
--your account number
--the name of the Fund
--the dollar amount you want to redeem
--what we should do with the proceeds

Each owner, including each joint owner should sign the letter. Mail your
request to:
The Commerce Funds
c/o Shareholder Services
P. O. Box 219525
Kansas City, MO 64121-9525

[GRAPHIC]

By Telephone--Requesting Proceeds Be Wired:
-----------------------------------------------------------
Call The Commerce Funds with your request. Please see "What Are The
Important Things To Consider When Contacting The Commerce Funds by
Telephone?" below for specific instructions. When requesting a
redemption by wire you must be redeeming shares in the amount of $1,000
or more. Also, the Fund must have your financial institution account
information already on file. Proceeds will be wired directly to this
designated account.

[GRAPHIC]

By Telephone--Requesting Proceeds Be Sent By Check:
-----------------------------------------------------------
Call The Commerce Funds at 1-800-995-6365 (8 a.m. - 5 p.m. CST) with
your request. Please see "What Are The Important Things to Consider When
Contacting The Commerce Funds by Telephone?" below for specific
instructions. The check will be made payable to the shareholder(s) of
record and sent to the address listed on your account.

PAGE 72 The Commerce Funds
---------------
.
<PAGE>

[GRAPHIC]

What Are The Important Things To Consider When Contacting The Commerce Funds By
Telephone?

You may call us at 1-800-995-6365 (8 a.m. - 5 p.m. CST) to explain what you
want to do. To make additions by phone or request electronic transfers or
request redemptions, we need your prior written authorization. If you did not
check the box in Section 8 of your original account application, you must send
us a letter that gives us this authorization.

Telephone purchases will be made at the NAV next determined after the Transfer
Agent receives an order in good form. If you should experience difficulty in
redeeming your shares by telephone (e.g., because of unusual market activity),
we urge you to consider redeeming your shares by mail.

You should note that the Transfer Agent may act on a telephone purchase or
redemption request from any person representing himself to be you and
reasonably believed by the Transfer Agent to be genuine. Neither The Commerce
Funds nor any of its service contractors will be liable for any loss or expense
in acting on telephone instructions that are reasonably believed to be genuine.
In attempting to confirm that telephone instructions are genuine, The Commerce
Funds will use all procedures considered reasonable; the Funds may be liable
for any losses if they fail to do so.

General Policies
--------------------------------------------------------------------------------

Dividend And Distribution Policies: As a Fund shareholder, you are entitled to
any dividends and distributions from net investment income and net realized
capital gains. You may choose one of the following distribution options for
dividends and capital gains:

(1) reinvest all dividend and capital gain distributions in additional
Service Shares,
(2) receive dividend distributions in cash and reinvest capital gain
distributions in additional Service Shares,
(3) receive all dividend and capital gain distributions in cash, or
(4) have all dividend and capital gain distributions deposited directly
into your designated account at a financial institution.

If you do not select an option when you open an account, all distributions will
automatically be reinvested in additional Service Shares of the same Fund. For
your protection, if you elect to have distributions mailed to you and these
cannot be delivered, they will be reinvested in additional Service Shares of
the same Fund. To change your

The Commerce Funds PAGE 73
---------------
.
<PAGE>

distribution option, contact The Commerce Funds at 1-800-995-6365 (8 a.m. - 5
p.m. CST). The change will become effective after it is received in good order
and processed by the Transfer Agent.
<TABLE>
<CAPTION>
Monthly Quarterly Annual Net Realized
Fund Dividends* Dividends** Dividends*** Capital Gains ****
<S> <C> <C> <C> <C> <C> <C>
MidCap Growth X X
Growth X X
Value X X
International Equity X X
Balanced X X
Core Equity X X
Short-Term Government X X
Bond X X
National Tax-Free
Intermediate Bond X X
Missouri Tax-Free
Intermediate Bond X X
Kansas Tax-Free
Intermediate Bond X X
</TABLE>
* Monthly dividends are declared daily but are only distributed on or about
the last business day of the month.
** Quarterly dividends are both declared and paid on the calendar quarter
months.
*** Annual dividends are both declared and paid in December.
**** Each Fund declares and distributes net realized capital gains annually
(December).

The Commerce Funds Reserves The Right To:
. Redeem your account involuntarily if, after 60 days' written notice, your
account's value remains below a $500 minimum balance. We will not redeem your
account involuntarily if the value falls below the minimum balance solely as
a result of market conditions. Retirement accounts and certain other accounts
will not be subject to automatic liquidation.

. Suspend or delay the payment of redemption proceeds when the NYSE is closed
(other than for customary weekend and holiday closings), during periods when
trading on the NYSE is restricted as determined by the SEC, during any
emergency as determined by the SEC or during other periods of unusual market
conditions.

. Without notice, stop offering shares of a Fund, reject any purchase order
(including exchanges), or bar an investor who is engaging in excessive
trading from purchasing or exchanging shares of a Fund.

PAGE 74 The Commerce Funds
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.
<PAGE>

will be priced at the Fund's POP next computed after they are accepted by the
financial institution or its designee. Financial institutions are responsible
to their customers and The Commerce Funds for timely transmission of all
subscription and redemption requests, investment information, documentation and
money.

Business Of The Commerce Funds
--------------------------------------------------------------------------------

Shareholder Servicing
The Commerce Funds have adopted a distribution plan under Rule 12b-1 that
permits each Fund to pay up to 0.25% annually of their average daily net assets
attributable to the Service Class Shares. The Funds also have adopted a
Shareholder Administrative Services Plan that permits each Fund to pay up to
0.25% of average daily net assets of Shares held under the plan to third
parties for providing shareholder services to the Shareholder Administrative
Services Plan participants. Because these fees are paid out of each Fund's
assets, over time they will increase the cost of your investment and may cost
you more than paying other types of sales charges.

Certain financial institutions may charge their customers account fees for
purchasing or redeeming shares of The Commerce Funds. These institutions may
provide shareholder services to their clients that are not available to a
shareholder dealing directly with The Commerce Funds. Each institution is
responsible for notifying its customers regarding its fees and additional or
changed purchase or redemption terms. You should contact your financial
institution for this information.

The Distributor and its affiliates may, out of its administration fee or other
resources, pay a fee of up to 0.25% of the amount invested or additional
incentives to dealers who initiate and are responsible for purchases of shares
of The Commerce Funds. In addition, at its expense, the Distributor will
provide additional compensation and promotional incentives to dealers in
connection with the sales of shares of the Funds. Subject to NASD regulation,
compensation may include promotional and other merchandise, sales and training
programs and other special events sponsored by dealers. Compensation may also
include payment for reasonable expenses incurred in connection with trips taken
by invited registered representatives for meetings or seminars of a business
nature.

The Commerce Funds will not issue share certificates. The Transfer Agent will
maintain a complete record of your account and will issue you a statement at
least quarterly. You will also be sent confirmations of purchases and
redemptions.

As a shareholder in the Funds, you will receive an Annual Report and a Semi-
Annual Report. To eliminate unnecessary duplication, only one copy of such
reports will be sent to the same mailing address. If you would like a duplicate
copy to be mailed to you, please contact The Commerce Funds at 1-800-995-6365
(8 a.m. - 5 p.m. CST).

The Commerce Funds PAGE 75
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.
<PAGE>

Tax Information
--------------------------------------------------------------------------------

The following is a brief summary of the federal income tax consequences of
investing in The Commerce Funds. You may also have to pay state and local taxes
on your investment, and you should always consult with your tax adviser for
specific guidance on your investment in The Commerce Funds.

Taxes on Distributions
The Funds' distributions will generally be taxable to shareholders as ordinary
income and capital gains (which may be taxable at different rates depending on
the length of time the Fund held the relevant assets). You will be subject to
income tax on these distributions regardless of whether they are paid in cash
or reinvested in additional shares. Once a year, The Commerce Funds will send
you a statement showing the types and total amount of distributions you
received during the previous year.

You should note that if you purchase shares just before a distribution, the
purchase price would reflect the amount of the upcoming distribution. In this
case, you would be taxed on the entire amount of the distribution received,
even though, as an economic matter, the distribution simply constitutes a
return of your capital. This is known as "buying into a dividend."

Taxes on Exchanges and Redemptions
When you redeem or exchange shares in any Fund, you may recognize a gain or
loss for income tax purposes. This gain or loss will be based on the difference
between your tax basis in the shares and the amount you receive for them. To
aid in computing your tax basis, you generally should retain your account
statements for the periods during which you held shares. Any loss realized on
shares held for six months or less will be treated as a long-term capital loss
to the extent of any capital gain dividends that were received with respect to
the shares. The one major exception to these tax rules is that distributions
on, and sales, exchanges and redemptions of, shares held in an IRA (or other
tax qualified plan) will not be currently taxable.

Backup Withholding
By law, The Commerce Funds must withhold 31% of your distributions and proceeds
if you have not provided complete, correct taxpayer information.

International Equity Fund
It is expected that the International Equity Fund will be subject to foreign
withholding taxes with respect to dividends or interest received from sources
in foreign countries. The International Equity Fund may elect to treat a
proportionate amount of such taxes as constituting a distribution to each
shareholder, which would allow each shareholder either (1) to credit such
proportionate amount of taxes against U.S. federal income tax liability or (2)
to take such amount as an itemized deduction.

PAGE 76 The Commerce Funds
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<PAGE>

Tax Consequences Of The National Tax-Free Intermediate Bond, Missouri Tax-Free
Intermediate Bond and Kansas Tax-Free Intermdiate Bond Funds
The National Tax-Free Intermediate Bond, Missouri Tax-Free Intermediate Bond
and Kansas Tax-Free Intermediate Bond Funds' distributions will generally
constitute tax-exempt income for shareholders for federal income tax purposes.
It is possible, depending on the Funds' investments, that a portion of the
Funds' distributions could be taxable to shareholders as ordinary income or
capital gains. Moreover, although distributions are exempt for federal income
tax purposes, they will generally constitute taxable income for state and local
income tax purposes except that, subject to limitations that vary depending on
the state, distributions from interest paid by a state or municipal entity may
be exempt from tax in that state.

Missouri Taxes: Resident individuals, trusts and estates resident in Missouri,
and corporations within Missouri tax jurisdiction will not be subject to
Missouri income tax on dividends from the Missouri Tax-Free Intermediate Bond
Fund that are derived from interest on obligations of the State of Missouri and
its political subdivisions (to the extent such interest is exempt from federal
income tax) or on obligations issued by the U.S. Government, the Government of
Puerto Rico, the Virgin Islands or Guam. Resident individuals, trusts and
estates and corporations generally will be subject to Missouri income tax on
other dividends received from the Fund, including dividends derived from
interest on obligations of other issuers and all long-term and short-term
capital gains.

Kansas Taxes: Resident individuals, trusts and estates resident in Kansas, and
corporations within Kansas tax jurisdiction will not be subject to Kansas
income tax on dividends from the Kansas Tax-Free Intermediate Bond Fund that
are derived from interest on obligations of the State of Kansas and its
political subdivisions (to the extent such interest is exempt from federal
income tax) or on obligations issued by the U.S. Government, the Government of
Puerto Rico, the Virgin Islands or Guam. Resident individuals, trusts and
estates and corporations generally will be subject to Kansas income tax on
other dividends received from the Fund, including dividends derived from
interest on obligations of other issuers and all long-term and short-term
capital gains.

Service Providers
--------------------------------------------------------------------------------

Investment Adviser: Commerce Bank, N.A. (the "Adviser")
Commerce Bank, N.A. serves as Adviser for the Funds, selecting investments and
making purchases and sale orders for securities in each Fund's portfolio.
Commerce Bank, with offices at 8000 Forsyth Boulevard, St. Louis, Missouri
63105 and 1000 Walnut Street, Kansas City, Missouri 64106, is a subsidiary of
Commerce Bancshares, Inc., a registered multi-bank holding company. Commerce
Bank has provided investment management services to The Commerce Funds since
1994, to private and public pension funds, endowments and foundations since
1946 and to individuals since 1906. As of December 31, 2000, the Adviser and
its affiliates had approximately $ billion in assets under management.

The Commerce Funds PAGE 77
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<PAGE>

The Adviser receives a fee for the advisory services provided and expenses
assumed under the Advisory Agreement. During the last fiscal year, the Funds
paid the Adviser the following fees, calculated as a percentage of the Funds'
average daily net assets:
<TABLE>
<CAPTION>
Actual Rate Paid in
Fiscal Year 2000
<S> <C>
MidCap Growth Fund 0.75%
Growth Fund 0.75%
Value Fund 0.75%
International Equity Fund 0.96%
Balanced Fund 0.66%
Short-Term Government Fund 0.30%
Bond Fund 0.50%
National Tax-Free Intermediate Bond Fund 0.35%
Missouri Tax-Free Intermediate Bond Fund 0.30%
<CAPTION>
Contractual Rate
<S> <C>
Core Equity Fund 0.75%
Kansas Tax-Free Intermediate Bond Fund 0.50%
</TABLE>

Any difference between the contractual fees and the actual fees paid by the
Funds reflects that the Adviser did not charge the full amount of the fees to
which it would have been entitled. The Adviser's voluntary waivers with respect
to the Growth Fund and the Bond Fund may be discontinued at any time. The
Adviser has contractually agreed until October 31, 2001 to waive fees and/or
reimburse expenses with respect to the International Equity Fund, Balanced
Fund, Short-Term Government Fund, National Tax-Free Intermediate Bond Fund,
Missouri Tax-Free Intermediate Bond Fund and Kansas Tax-Free Intermediate Bond
Fund.

PAGE 78 The Commerce Funds
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<PAGE>

Fund Managers:

<TABLE>
<CAPTION>
Person Fund(s) Experience
<C> <C> <S>
Joined Commerce Bank in
John Bartlett, CFA, Equity portion of Balanced 1991
Vice President and Fund manager since 2000
Director of Economic & 23 years of experience
Market Strategy
Joined Commerce Bank in
Scott M. Colbert, CFA, Short-Term Government, 1993
Fund manager since
Vice President and Director Bond, fixed-income portion of inception
of Fixed Income Balanced 14 years of experience
Management
Joined Commerce Bank in
Paul D. Cox, CFA, MidCap Growth 1989
Fund manager since
Vice President and inception
Director of Equity 21 years of experience
Management
David W. Wente, Value Originally joined
Commerce
Vice President Bank in 1993
Rejoined Commerce Bank
in 1996
Formerly a financial
analyst with a regional
retail company
Equity Analyst for the
Fund since inception
Fund manager since 2000
9 years of experience
Joined Commerce Bank in
Joseph C. Williams III, CFA Growth 1975
Fund manager since
and Vice President inception
24 years of experience
Joined Commerce Bank in
Brian P. Musielak, CFA and National Tax-Free, Missouri 1995
Assistant Vice President Tax-Free and Kansas* Fund manager since 1999
Tax-Free Intermediate Bond (since inception*)
6 years of experience
Joined Commerce Bank in
Michael E. Marks, Core Equity 1999
Formerly a Portfolio
CFA and Vice President Manager and
Senior Investment
Analyst from
November 1993 to October
1998
at IAA Trust Company
Fund manager since Fund
inception
7 years of experience
</TABLE>

Sub-Adviser: T. Rowe Price International, Inc. ("Price International" or the
"Sub-Adviser")
T. Rowe Price International, Inc. ("Price International" or the "Sub-Adviser")
(formerly known as Rowe-Price Fleming International, Inc.) has been the sub-
adviser to the 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. The Board of Trustees approved a new
continuing sub-investment advisory agreement between Commerce Bank, N.A. (the
"Adviser") and Price International

The Commerce Funds PAGE 79
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.
<PAGE>

("New Sub-Advisory Agreement"). The shareholders of the Fund approved the New
Sub-Advisory Agreement at a shareholder meeting on November 20, 2000.

For the services provided and expenses assumed under the Sub-Advisory
Agreement, the Adviser will pay the Sub-Adviser a monthly management fee at an
annual rate of 0.75% of the first $20 million of the average daily net assets
of the 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 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. For
the fiscal year ended October 31, 2000, Price International received advisory
fees at the effective annual rate of % of the Fund's average daily net
assets.

Under the Old Agreement, the 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 the Fund's average daily net assets when the Fund's
average daily net assets exceeded $500 million.

As noted 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 December 31, 2000,
Price International managed over $ billion in investments for individual
and institutional accounts.

Commerce Bank's Investment Advisory Group has overall responsibility for
managing the portfolio, developing and executing the Fund's investment program
and for supervising the Sub-Adviser's activities under the Sub-Advisory
Agreements.

Administrator: Goldman Sachs Asset Management ("GSAM" or the "Administrator")
GSAM serves as Administrator of each of the Funds. GSAM is located at 32 Old
Slip, New York, New York 10005. GSAM is a unit of the Investment Management
Division of Goldman, Sachs & Co., the Distributor of the Funds.

Distributor: Goldman, Sachs & Co. ("Goldman" or the "Distributor")
Shares of each Fund are sold on a continuous basis by Goldman as Distributor.
Goldman is located at 85 Broad Street, New York, New York 10004.

Transfer Agent: State Street Bank and Trust Company ("State Street" or the
"Transfer Agent")
State Street has delegated its responsibilities as Transfer Agent to its
indirect subsidiary, National Financial Data Services, Inc. ("NFDS"). State
Street is located at 225 Franklin Street, Boston, Massachusetts 02110. NFDS is
located at 330 W. 9th Street, Kansas City, Missouri 64105.

Custodian: State Street Bank and Trust Company (the "Custodian")
State Street also serves as the Custodian of each of the Funds.

PAGE 80 The Commerce Funds
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<PAGE>

[GRAPHIC]
<PAGE>

How Can I Contact The Commerce Funds?
If you would like more information about The Commerce Funds, you may request the
following documents:

Statement of Additional Information
The Statement of Additional Information (SAI) contains additional information
about the Funds and is incorporated by reference into this prospectus.

Securities and Exchange Commission Reports
You can review, after paying a duplicating fee, the reports of the Funds and the
SAI by writing to the SEC's Public Reference Section, Washington, D.C.
20459-0102 or by electronic request to: [email protected]. Call the SEC at
(202) 942-8090 for information on operation of the public reference room. You
can get copies of this information for free on the SEC's EDGAR database at
http://www.sec.gov.

The Funds' investment company registration number is 811-8598.

Annual and Semi-Annual Reports
The Funds' annual and semi-annual reports contain additional information about
the Funds' investments. The annual report also discusses market conditions and
investment strategies that significantly affected the Funds' performance during
their last fiscal year. To make shareholder inquiries or to receive free copies
of the SAI and the annual and semi-annual reports, contact The Commerce Funds in
writing, via the World Wide Web, or by telephone, as listed below.

[LOGO OF COMMERCE FUNDS]

P.O. Box 219525
Kansas City, Missouri 64121-9525

www.commercefunds.com

1 - 800 - 995 - 6365
(8 a.m. - 5 p.m. CST)
<PAGE>

THE COMMERCE FUNDS

Institutional Shares Prospectus

February 23, 2001

The MidCap Growth Fund
(formerly The MidCap Fund)

The Growth Fund

The Value Fund
(formerly The Growth and
Income Fund)

The International Equity Fund

The Balanced Fund

The Core Equity Fund

The Short-Term
Government Fund

The Bond Fund

The National Tax-Free
Intermediate Bond Fund

The Missouri Tax-Free
Intermediate Bond Fund

The Kansas Tax-Free
Intermediate Bond Fund

[LOGO OF COMMERCE FUNDS]

<PAGE>

[PHOTO]
<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
Overview of Each Fund
MidCap Growth 3
Growth 6
Value 10
International Equity 14
Balanced 19
Core Equity 24
Short-Term Government 28
Bond 33
National Tax-Free Intermediate Bond 38
Missouri Tax-Free Intermediate Bond 43
Kansas Tax-Free Intermediate Bond 48
Investment Securities and Practices 53
Account Policies and Features 62
Buying Institutional Shares 62
Redeeming Institutional Shares 66
General Policies 69
Business of the Commerce Funds 69
Tax Information 71
Service Providers 73
</TABLE>

The Commerce Funds PAGE 1
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<PAGE>

The Commerce Funds

What These Funds Are:
These Funds are mutual funds. A mutual fund is a pooled investment that gives
you an opportunity to participate in financial markets. Each Fund is
professionally managed. Each Fund has stated goals that it attempts to reach.
However, as with all mutual funds, none of these Funds can offer guaranteed
results. You could lose money in these Funds.

The Commerce Funds consists of eleven investment portfolios, each of which has
a separate pool of assets with separate investment objectives and policies.
This Prospectus offers Institutional Shares of all eleven investment
portfolios.