Exhibit (d)(3)

FEE REDUCTION COMMITMENT

This FEE REDUCTION COMMITMENT is made as of May 22, 2012 by COMMERCE INVESTMENT ADVISORS, INC. (the “Adviser”).

WHEREAS, The Commerce Funds (“Commerce”) is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); and

WHEREAS, the Adviser serves as the investment adviser to certain portfolios of The Commerce Funds (the “Funds”) set forth below, pursuant to an Amended and Restated Advisory Agreement dated November 18, 2010 (the “Advisory Agreement”); and

WHEREAS, the Adviser desires to make a permanent reduction of its contractual fee rate under the Advisory Agreement for the Funds; and

WHEREAS, the Adviser represents that the quality and quantity of its services under the Advisory Agreement will not be affected by this commitment and that its obligations under the Advisory Agreement will remain unchanged in all respects.

NOW, THEREFORE, for good and valuable consideration receipt of which is hereby acknowledged, the Adviser, intending to be legally bound, agrees as follows:

1. Effective July 1, 2012, the Adviser reduces permanently its contractual fee rate under the Advisory Agreement for the Funds as follows:

For the services provided and the expenses assumed by the Adviser pursuant to the Advisory Agreement, Commerce will pay to the Adviser, as full compensation therefor, a fee at the following annual rate of the Fund’s average net assets, which fee will be computed based on the net assets of each Fund on each day and will be paid monthly:

FUND	ANNUAL FEE RATE
Growth and MidCap Growth Funds	First $100 million .65% Next $100 million .50% In excess of $200 million .40%
Short-Term Government, National Tax-Free Intermediate Bond, Missouri Tax-Free Intermediate Bond and Kansas Tax-Free Intermediate Bond Funds	First $100 million .50% Next $100 million .35% In excess of $200 million .25%
Bond Fund	First $400 million .50% Next $300 million .35% In excess of $700 million .25%

2. Any future amendment to increase or otherwise reinstate the contractual fee rate under the Advisory Agreement for a Fund as in effect prior to the date hereof must be approved by the shareholders of that Fund as and to the extent required by the 1940 Act.

3. This Fee Reduction Commitment shall be attached to and made a part of the Advisory Agreement.

4. The Advisory Agreement shall continue in full force and effect as modified hereby.

IN WITNESS WHEREOF, the Adviser has caused this instrument to be executed by its officers designated below as of the day and year first above written.

COMMERCE INVESTMENT ADVISORS, INC.
By:	/s/ Angela M. Dew
Name:	Angela M. Dew
Title:	Vice President

ACCEPTED AND AGREED:
THE COMMERCE FUNDS
By:	/s/ William R. Schuetter
Name:	William R. Schuetter
Title:	President

- 2 -