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THE COMMERCE FUNDS
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 Short-Term Government Fund
The Bond Fund
The National Tax-Free Intermediate Bond Fund
The Missouri Tax-Free Intermediate Bond Fund
Supplement dated November 27, 2000
to Service Shares and Institutional Shares Prospectuses
dated March 1, 2000
The disclosures relating to the MidCap Growth (formerly The MidCap Fund),
Growth, Value (formerly The Growth and Income Fund), International Equity and
Balanced Funds are amended to reflect the following changes:
1. MidCap Growth Fund (formerly The MidCap Fund)
. The name of the Fund is changed to the MidCap Growth Fund.
. The investment objective of the Fund is deleted and replaced with the
following revised investment objective:
To seek capital appreciation.
. The Russell Midcap Growth Index will replace the S&P Mid-Cap 400 Index as
the Fund's benchmark. The Fund is making this change because the Russell
Midcap Growth Index contains securities that are more comparable to those
held in the Fund's portfolio. The average annual total returns of the
Service Share and Institutional Share Classes of the Fund versus the Russell
Midcap Growth Index and the S&P Mid-Cap 400 Index as of 12/31/99 are as
follows:
<TABLE>
<CAPTION>
Since Since
3 5 Inception Inception
1 Year Years Years (1/2/97) (12/12/94)
<S> <C> <C> <C> <C> <C>
MidCap Growth Fund
Service Shares 25.56% N/A N/A 20.86% N/A
Institutional Shares 25.84% 21.17% 22.64% N/A 23.72%
Russell Midcap Growth Index* 51.30% 29.77% 28.03% 29.83% 28.03%
S&P Mid-Cap 400 Index** 14.73% 21.81% 23.04% 21.83% 23.78%
</TABLE>
*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 Mid-Cap 400 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.
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. The second and third paragraphs under the Fund's primary investment
strategies are deleted and replaced with the following:
. Generally invests in stocks of companies with medium-sized market
capitalizations comparable to those included 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.
2. Growth Fund
. The investment objectives of the Fund are deleted and replaced with the
following revised investment objective:
To seek capital appreciation.
. The Russell 1000 Growth Index will replace the S&P 500 Index as the Fund's
benchmark. The Fund is making this change because the sector diversification
in the Russell 1000 Growth Index is more comparable to that of the Fund. The
average annual total returns of the Service Share and Institutional Share
Classes of the Fund versus the Russell 1000 Growth Index and the S&P 500
Index as of 12/31/99 are as follows:
<TABLE>
<CAPTION>
Since Since
3 5 Inception Inception
1 Year Years Years (1/2/97) (12/12/94)
<S> <C> <C> <C> <C> <C>
Growth Fund
Service Shares 14.45% N/A N/A 23.35% N/A
Institutional Shares 14.70% 23.64% 26.34% N/A 27.10%
Russell 1000 Growth Index* 33.16% 34.07% 32.42% 34.15% 33.04%
S&P 500 Index** 21.04% 27.56% 28.54% 27.59% 28.91%
</TABLE>
*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.
The first paragraph under the Fund's primary investment strategies is amended
to substitute the Russell 1000 Growth Index for the S&P 500 Index.
3. Value Fund (formerly The Growth and Income Fund)
. The name of the Fund is changed to the Value Fund.
. The investment objective of the Fund is deleted and replaced with the
following revised investment objective:
To seek capital appreciation and, secondarily, current income.
. The Fund's benchmark for comparison of average annual total return will be
the Russell 1000 Value Index; the Fund will no longer use one of its current
benchmarks, the S&P 500 Index. The Fund is making 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 average
annual total returns of the Service
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Share and Institutional Share Classes of the Fund versus the Russell 1000
Value Index and S&P 500 Index as of 12/31/99 are contained in the Fund's
prospectuses.
. The second paragraph under the Fund's primary investment strategies is
amended to substitute the Russell 1000 Value Index for the S&P 500 Index.
. David W. Wente, Vice President, is the portfolio manager for the Value Fund
(formerly The Growth and Income Fund). Mr. Wente has been an equity analyst
on the Fund since its inception. He rejoined Commerce in 1996 after spending
two years as a financial analyst with a regional retail company. He
initially joined the Commerce Bank's Investment Management Group in 1993 and
has nine years of investment management experience.
4. International Equity Fund
As a result of a new sub-investment advisory agreement for the Fund, the
disclosure relating to the Sub-Advisor is amended as follows:
T. Rowe Price International, Inc. ("Price International" or the "Sub-Adviser")
(formerly known as Rowe-Price Fleming International, Inc.) has been the sub-
advisor 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-Advisor 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 "Advisor") and Price
International to terminate automatically. The Board of Trustees approved a new
continuing sub-investment advisory agreement between Commerce Bank, N.A. (the
"Advisor") and Price International ("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-Advisor 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 0.54% of the Fund's average daily net
assets.
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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 September 30, 2000,
Price International managed over $35.8 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-Advisor's activities under the Sub-Advisory
Agreement.
5. Balanced Fund
. John Bartlett, CFA, is the portfolio manager for the equity investments of
the Balanced Fund. Mr. Bartlett joined Commerce Bank in 1991, and is
Director of Economic & Market Strategy for Commerce Bank's Investment
Management Group. He has twenty-two years of experience.
