SIERRA ASSET MANAGEMENT PORTFOLIOS, PRES14A, 1997-10-27

SIERRA ASSET MANAGEMENT PORTFOLIOS
PRES14A, 1997-10-27

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<PAGE> 1
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12

Sierra Asset Management Portfolios
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement., if other than Registrant)

Payment of Filing Fee (Check the appropriate box):

[x] No fee required.
[ ] Fee computed on table below per exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

-----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:

-----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: *

-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:

-----------------------------------------------------------------------
5) Total fee paid:

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

* Set forth the amount on which the filing fee is calculated and state how it
was determined.

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:
-----------------------------------------------
2) Form, Schedule or Registration Statement No.:
-------------------------
3) Filing Party:
---------------------------------------------------------
4) Date Filed:
-----------------------------------------------------------

<PAGE> 2

INFORMATION ABOUT YOUR PROXY STATEMENT

Q. WHY AM I RECEIVING THIS PROXY STATEMENT?

A. The parent company of the investment adviser, Great Western Financial
Corporation, has merged with Washington Mutual, Inc. Washington Mutual is the
parent of Composite Research & Management Co., the adviser of the Composite
Funds. Washington Mutual has decided to consolidate the Sierra Funds and the
Composite Funds into a single family of funds. As a result of this
consolidation, it is being proposed that the Sierra Asset Management
Portfolios (the "Trust") (1) restructure its board to include the current
trustees and the current directors of the Composite Funds and (2) approve
Composite Research & Management Co. as the Funds' new investment adviser.

Q. HOW WILL THIS AFFECT MY ACCOUNT?

A. You can expect the same level of management expertise and shareholder service
that you currently receive. The nominees for the Board of Trustees and the
new investment adviser have extensive experience in the management of mutual
funds designed for the individual investor. With respect to the new advisory
agreement, the primary difference will be that the proposed new investment
adviser, Composite Research & Management Co., will directly provide portfolio
management services for the Income Portfolio, Value Portfolio, Balanced
Portfolio, Growth Portfolio and Capital Growth Portfolio. The new investment
advisory arrangement will not increase the fees paid by the Portfolios.

Q. WHY DO I NEED TO VOTE?

A. Your vote is needed to ensure that the proposals can be acted upon. Your
immediate response on the enclosed proxy card(s) will help prevent the need
for any further solicitations for a shareholder vote. We encourage all
shareholders to participate in the governance of the Trust.

Q. HOW DOES THE BOARD OF TRUSTEES SUGGEST THAT I VOTE?

A. After careful consideration, the Board of Trustees unanimously recommends
that you vote "FOR" each item proposed on the enclosed proxy card(s).

Q. WHO IS PAYING FOR EXPENSES RELATED TO THE SHAREHOLDER MEETING?

A. Composite Research & Management Co., the Trust's proposed new investment
adviser, or its affiliates will pay for expenses relating to the shareholder
meeting. The Trust will not pay any expenses relating to the shareholder
meeting.

Q. WHERE DO I MAIL MY PROXY CARD?

A. You may use the enclosed postage-paid envelope or mail your proxy card(s) to:

[Address]

Q. WHOM DO I CALL IF I HAVE QUESTIONS?

A. We will be happy to answer your questions about the proxy solicitation.
Please call us at [number] between [times] Pacific Time, Monday through
Friday.
<PAGE> 3

PRELIMINARY COPY

SIERRA ASSET MANAGEMENT PORTFOLIOS
9301 CORBIN AVENUE, SUITE 333
NORTHRIDGE, CALIFORNIA 91324

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

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON , 1997

TO THE SHAREHOLDERS OF SIERRA ASSET MANAGEMENT PORTFOLIOS:

You are cordially invited to attend a special meeting of the shareholders
of Sierra Asset Management Portfolios (the "Trust"), a Massachusetts business
trust, on at p.m. Pacific Time or at any adjournment thereof (the
"Special Meeting"), at the offices of Sierra Fund Administration Corporation
("Sierra Administration"), 9301 Corbin Avenue, Suite 333, Northridge, California
91324. Shareholders of the Income Portfolio, Value Portfolio, Balanced
Portfolio, Growth Portfolio and Capital Growth Portfolio (each a "Portfolio,"
and collectively the "Portfolios") will be asked to consider the proposals set
forth below and to transact such other business as may be properly brought
before the Special Meeting:

PROPOSAL 1: To consider and act upon a proposal to elect a Board of Trustees
(voted on by the shareholders of the Trust as a whole).

PROPOSAL 2: To approve or disapprove a new Investment Management Agreement
between the Trust, on behalf of each Portfolio, and Composite
Research & Management Co. ("Composite") (voted on separately by
shareholders of each Portfolio).

PROPOSAL 3: To transact such other business as may properly come before this
Special Meeting or any adjournments thereof.

Only shareholders of the Trust at the close of business on
are entitled to notice of, and to vote at, the special meeting.

Whether or not you expect to be present at the Special Meeting, please
complete and promptly return the enclosed Proxy Card. A postage paid envelope is
enclosed for your convenience so that you may return your Proxy Card as soon as
possible. It is most important and in your interest for you to sign and date
your Proxy Card and return it so that a quorum will be present and a maximum
number of shares may be voted. The Proxy is revocable at any time prior to its
use.

By Order of the Board of Trustees

Keith B. Pipes
Secretary
Dated: October , 1997
<PAGE> 4

PRELIMINARY COPY

SIERRA ASSET MANAGEMENT PORTFOLIOS
9301 CORBIN AVENUE, SUITE 333
NORTHRIDGE, CALIFORNIA 91324

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

PROXY STATEMENT

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

This Proxy Statement is furnished by the Board of Trustees (the "Board") of
Sierra Asset Management Portfolios (the "Trust") on behalf of the Income
Portfolio, Value Portfolio, Balanced Portfolio, Growth Portfolio, and Capital
Growth Portfolio (each a "Portfolio," and collectively the "Portfolios"), in
connection with the solicitation of proxies for use at the special meeting of
shareholders of the Portfolios to be held on , at p.m. Pacific
Time, or at any adjournment thereof (the "Special Meeting"), at the offices of
Sierra Fund Administration Corporation ("Sierra Administration"), 9301 Corbin
Avenue, Suite 333, Northridge, California 91324. It is expected that the Notice
of Special Meeting, the Proxy Statement and Proxy Cards will be mailed to
shareholders on or about October , 1997.

The primary purpose of the Special Meeting is to (1) ask shareholders to
elect a board of Trustees, (2) permit shareholders of each Portfolio to consider
a new Investment Management Agreement (the "New Management Agreement") between
the Trust and Composite Research & Management Co. ("Composite"). The Trust's New
Management Agreement is similar in substance to the Trust's current Investment
Advisory Agreement (the "Current Advisory Agreement").

If you do not expect to be present at the Special Meeting and wish your
shares to be voted, please date and sign the enclosed Proxy Card ("Proxy") and
mail it in the enclosed reply envelope, allowing sufficient time for the Proxy
to be received on or before p.m. Pacific Time on , 1997. No
postage is required if the Proxy is mailed in the United States. If the
accompanying Proxy is executed properly and returned, shares represented by it
will be voted at the Special Meeting in accordance with the instructions on the
Proxy. However, if no instructions are specified, shares will be voted FOR each
proposal listed above (each a "Proposal" and, together, the "Proposals"). All
shareholders of the Trust are entitled to vote on Proposals 1 and 2.
Shareholders may revoke their Proxies at any time prior to the time they are
voted by giving written notice to the Secretary of the Trust, by delivering a
subsequently dated Proxy or by attending and voting at the Special Meeting.

The close of business on , 1997 has been fixed as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of, and to vote at, the Special Meeting and at any adjournment thereof.
The table below sets forth the number of shares outstanding for each of the
Portfolios being solicited by this Proxy Statement:

<TABLE>
<CAPTION>
PORTFOLIO SHARES OUTSTANDING
---------------------------------------------------- ------------------
<S> <C>
Income Portfolio....................................
Value Portfolio.....................................
Balanced Portfolio..................................
Growth Portfolio....................................
Capital Growth Portfolio............................
</TABLE>

Each full share will be entitled to one vote at the Special Meeting and each
fraction of a share will be entitled to the fraction of a vote equal to the
proportion of a full share represented by the fractional share.

[The expenses of the Special Meeting will be borne by Composite and its
affiliates.] The solicitation of Proxies will be largely by mail, but may
include telephonic, telegraphic or oral communication by employees and officers
of Composite and Sierra Fund Administration Corporation ("Sierra
Administration"), their
<PAGE> 5

affiliates, or third parties hired for such purpose. It is expected that the
Notice of Special Meeting, the Proxy Statement and Proxy Card will be mailed to
shareholders on or about .

THE TRUST WILL FURNISH TO SHAREHOLDERS, WITHOUT CHARGE, A COPY OF THE
ANNUAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 1997, UPON REQUEST. THE ANNUAL
REPORT OF THE TRUST MAY BE OBTAINED BY WRITTEN REQUEST TO THE TRUST, 9301 CORBIN
AVENUE, SUITE 333, NORTHRIDGE, CALIFORNIA 91324 OR BY CALLING (800) 222-5852.

The Trust is registered as an open-end management investment company under
the Investment Company Act of 1940 (the "1940 Act") and its shares are
registered under the Securities Act of 1933.

INTRODUCTION

On July 1, 1997, Great Western Financial Corporation ("GWFC"), the indirect
parent of Sierra Investment Services Corporation ("Sierra Services"), the
Trust's current investment adviser, and Washington Mutual, Inc. ("Washington
Mutual"), a publicly held financial services company, consummated a previously
announced Agreement and Plan of Merger resulting in the merger of GWFC with and
into a wholly owned subsidiary of Washington Mutual (the "Merger"). As a result
of the Merger, Sierra Services and its affiliates are now indirect subsidiaries
of Washington Mutual.

The Special Meeting is being called in preparation for the planned
consolidation of the mutual funds managed by Sierra Services and its affiliates
("Sierra"), and those managed by Composite, which also is an indirect subsidiary
of Washington Mutual. The planned consolidation will result in the mutual funds
currently managed by Sierra and Composite having a common Board and a single
investment adviser. This Proxy Statement relates only to the Proposals and the
relevant Portfolios listed above, none of which are being reorganized and does
not address the proposed reorganizations of any underlying funds in which the
Portfolios may invest.

PROPOSAL 1: TO CONSIDER AND ACT UPON A PROPOSAL TO ELECT A BOARD OF TRUSTEES OF
THE TRUST.

At the Special Meeting, it is proposed that thirteen Trustees be elected to
hold office until their successors are duly elected and qualified. The persons
named in the accompanying Proxy intend, in the absence of contrary instructions,
to vote all Proxies on behalf of the shareholders for the election of David E.
Anderson, Wayne L. Attwood, M.D., Arthur H. Bernstein, Esq., Kristianne Blake,
Edmond R. Davis, Esq., John W. English, Anne V. Farrell, Michael K. Murphy,
Alfred E. Osborne, Jr., Ph.D., William G. Papesh, Daniel L. Pavelich, Jay Rockey
and Richard C. Yancey (each a "Nominee" and collectively, the "Nominees").
Messrs. Anderson, Bernstein, Davis, English and Osborne are currently members of
the Board of Trustees. Messrs. Attwood, Murphy, Papesh, Pavelich, Rockey and
Yancey and Mmes. Blake and Farrell currently serve on the Board of Directors of
the mutual funds managed by Composite (the "Composite Funds"), but have not
previously served on the Board of Trustees. Approval of this Proposal will
provide a single Board combining the current Trustees of the Trust and the
current Directors of the Composite Funds.

Each of the Nominees has consented to being named in this Proxy Statement
and to serving as a Trustee if elected. The Trust knows of no reason why any
Nominee would be unable or unwilling to serve if elected. If any or all of the
Nominees should become unavailable for election due to events not now known or
anticipated, the persons named as proxies will vote for such other nominee or
nominees as the trustees may recommend.

The Trust is organized as a business trust under the laws of the
Commonwealth of Massachusetts. Under Massachusetts law, the Trust is not
required to hold annual meetings. The Trust has availed itself of this provision
and achieves cost savings by eliminating printing costs, mailing charges and
other expenses involved in routine annual meetings. Because the Trust does not
hold regular annual shareholder meetings, each Nominee, if elected, will hold
office until his or her successor is elected and qualified.

Even with the elimination of routine annual meetings, the Board may call
special meetings of shareholders for action by shareholder vote as may be
required by the 1940 Act, or as required or permitted by the Master Trust
Agreement. Shareholder meetings will be held, in compliance with the 1940 Act,
to elect Trustees under certain circumstances. Shareholder meetings may also be
held by the Trust for other purposes,

2
<PAGE> 6

including to approve investment policy changes, a new investment advisory
agreement or other matters requiring shareholder action under the 1940 Act.

A meeting also may be called by shareholders holding at least 10% of the
shares entitled to vote at the meeting for the purpose of voting upon the
removal of Trustees, in which case shareholders may receive assistance in
communicating with other shareholders as if the provisions contained in Section
16(c) of the 1940 Act applied.

INFORMATION REGARDING NOMINEES

The following information is provided for each Nominee. It includes his or
her name, position with the Trust, if any, tenure in office, age, principal
occupations or employment during the past five years, trusteeships/directorships
with other companies which file reports periodically with the Securities and
Exchange Commission ("SEC"), number of trustee positions with the registered
investment companies which hold themselves out to investors as related companies
for purposes of investment and investor services or to which Sierra Services or
an affiliated person of Sierra Services provides investment advisory or
administration services (the "Sierra Fund Complex," consisting of the Trust,
Sierra Trust Funds, The Sierra Variable Trust and Sierra Prime Income Fund and
the "Composite Funds," consisting of Composite Bond & Stock Fund, Inc.,
Composite Growth & Income Fund, Composite Northwest Fund, Inc., Composite U.S.
Government Securities, Inc., Composite Income Fund, Inc., Composite Tax-Exempt
Bond Fund, Inc. and Composite Cash Management Company), number of shares of the
Portfolios of the Trust beneficially owned and percentage of shares of the
Portfolios of the Trust beneficially owned. As of July 1, 1997, the Nominees as
a group beneficially owned an aggregate of less than 1% of the shares of each
Portfolio of the Trust and the Trustees and officers of the Trust as a group
beneficially owned an aggregate of less than 1% of the shares of each Portfolio
of the Trust.

3
<PAGE> 7

<TABLE>
<CAPTION>
PERCENTAGE
ADDRESS AND BUSINESS EXPERIENCE DURING OF
NAME, AGE AND POSITION THE PAST FIVE YEARS (INCLUDING ALL SHARES BENEFICIALLY OWNED AS OF OUTSTANDING
WITH THE TRUST DIRECTORSHIPS) JULY 1, 1997** SHARES
- -------------------------------- --------------------------------------- --------------------------------- -----------
<S> <C> <C> <C>
Alfred E. Osborne, Jr. Ph.D.(52) 110 Westwood Plaza, Suite C305, Los None ***
Trustee since 1996. Angeles, CA 90095-1481.
Professor, The Anderson School and
Director, The Harold Price Center for
Entrepreneurial Studies at University
of California at Los Angeles, 1972 to
present; Independent general partner,
Technology Funding Venture Partners V,
1990 to present. Director, Times Mirror
Company, 1980 to present; Director,
United States Filter Corporation, 1991
to present; Director, Nordstrom, Inc.,
1987 to present; Director, Greyhound
Lines, Inc., 1994 to present. Trustee
of 4 trusts in the Sierra Fund Complex,
1989 to 1993 and 1996 to present.
Wayne L. Attwood, M.D.(68) 2931 S. Howard, Spokane, WA 99203. None ***
Nominee Retired. Formerly, Doctor of internal
medicine and gastroenterology. Director
of all of the Composite Funds.
Kristianne Blake(43) 705 W. 7th, Suite D, Spokane, WA 99203. None ***
Nominee President, Kristianne Gates Blake, PS.
Director of all of the Composite Funds.
Anne V. Farrell*(62) 425 Pike Street, Suite 510, Seattle, WA None ***
Nominee 98101. President and Chief Executive
Officer, The Seattle Foundation.
Director, Washington Mutual, Inc.
Director of all of the Composite Funds.
Michael K. Murphy*(60) P.O. Box 3366, Spokane, WA 99220. None ***
Nominee Chairman and Chief Executive Officer,
CPM Development Corporation. Director,
Washington Mutual, Inc. Director of all
of the Composite Funds.
William G. Papesh*(54) 601 W. Main Avenue, Suite 801, Spokane, None ***
Nominee WA 99201. President and Director,
Composite, 1995 to present; President
and Director, Composite Funds
Distribution, Inc., 1997 to present;
President and Director, Murphey Favre
Securities Services, Inc., 1987 to
present; Director of all of the
Composite Funds, 1989 to present.
Daniel L. Pavelich(53) Two Prudential Plaza, 180 North Stetson None ***
Nominee Ave., Suite 4300, Chicago, Il 60601.
Chairman and Chief Executive Officer,
BDO Seidman. Director of all of the
Composite Funds.
Jay Rockey(69) 2121 Fifth Avenue, Seattle, WA 98121. None ***
Nominee Chairman and Chief Executive Officer,
The Rockey Company. Director of all of
the Composite Funds.
Richard C. Yancey(71) 535 Madison Avenue, New York, NY 10022. None ***
Nominee Senior Advisor, Dillon, Read & Co.,
Inc. Director of all of the Composite
Funds.
</TABLE>

4
<PAGE> 8

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

* Denotes an individual who is an "interested person" as defined in the 1940
Act.

** This information has been provided by each Nominee for Trustee of the Fund.

*** As of July 1, 1997, the Nominees of the Trust as a group beneficially owned
an aggregate of less than 1% of the shares of each Portfolio of the Trust.

COMPENSATION OF TRUSTEES

No director, officer or employee of GW Securities, Sierra Services, a
registered investment advisor and broker-dealer, Sierra Administration or First
Data Investor Services Group, Inc., or any of their affiliates receives any
compensation from the Trust for serving as an officer or Trustee of the Trust.
The Trust pays each Trustee who is not an "interested person" within the meaning
of the 1940 Act ("Disinterested Trustee") $250 per board meeting attended, $200
per Audit and/or Nominating Committee meeting attended and reimbursement for
travel and out-of-pocket expenses. Officers of the Trust who are employees of
Sierra Services or its affiliates may be considered to have received
remuneration indirectly.

Pursuant to an exemptive order granted by the SEC, the Trust's eligible
Trustees may participate in a deferred compensation plan (the "Plan") which may
be terminated at any time. Under the Plan, Trustees may elect to defer receipt
of all or a portion of their fees which, in accordance with the Plan, are
invested in mutual fund shares. Upon termination of the Plan, Trustees that have
deferred accounts under the Plan will be paid benefits no later than the time
the payments would otherwise have been made without regard to such termination.
All benefits provided under these plans are funded and any payments to Plan
participants are paid solely out of the Trust's assets.

The aggregate compensation payable by the Trust to each of the Trustees
serving during the fiscal year ended June 30, 1997, is set forth in the
compensation table below. The aggregate compensation payable to such Trustees
during the fiscal year ended June 30, 1997, by the Sierra Fund Complex is also
set forth in the compensation table below. The Trustees do not receive any
pension or retirement benefits from any Trust.

COMPENSATION TABLE

<TABLE>
<CAPTION>
ESTIMATED TOTAL COMPENSATION
AGGREGATE COMPENSATION FROM REGISTRANT AND FUND COMPLEX
FROM REGISTRANT FOR THE PAID TO TRUSTEES
FISCAL YEAR ENDED FOR THE FISCAL YEAR
NAME OF PERSON, POSITION JUNE 30, 1997 ENDED JUNE 30, 1997
----------------------------------- ----------------------- --------------------------------
<S> <C> <C>
*James H. Overholt+................ $ 0 $0 for service on 2 boards
President and Trustee
David E. Anderson................. $ 1,000 $42,000 for service on 4 boards
Trustee
Arthur H. Bernstein, Esq.++....... $ 1,500 $54,063 for service on 4 boards
Chairman of the Board and Trustee
Edmond R. Davis, Esq.............. $ 1,000 $42,000 for service on 4 boards
Trustee
John W. English................... $ 1,000 $42,000 for service on 4 boards
Trustee
Alfred E. Osborne, Jr............. $ 1,000 $42,000 for service on 4 boards
Trustee
</TABLE>

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

* A Trustee who is an "interested person" as defined in the Investment Company
Act.

+ Mr. Overholt was appointed a trustee of the Trust and Sierra Prime Income
Fund on June 2, 1997. He replaced Mr. Brian Cerini, who resigned effective
June 1, 1997. Neither Mr. Overholt nor Mr. Cerini received any compensation
from the Trust or the Fund Complex.

5
<PAGE> 9

++ Mr. Bernstein was paid $1,500, $1,500 and $1,125 for Audit Committee Meetings
held by Sierra Trust Funds, Sierra Variable Trust and Sierra Prime Income
Fund, respectively. On June 2, 1997, he was appointed Chairman of the Boards
of each Trust in the Fund Complex.

MEETINGS AND COMMITTEES OF THE BOARD OF TRUSTEES

There were twelve meetings of the Board of Trustees, including two
telephonic meetings, held during the fiscal year ended June 30, 1997. During
that fiscal year, all Trustees attended at least 75% of the meetings of the
Board.

The Board has an Audit Committee. The Audit Committee makes recommendations
to the full Board with respect to the engagement of independent accountants and
reviews, with the independent accountants, the results of the audit engagement
and matters having a material effect on the Portfolios' financial operations.
The members of the Audit Committee during the fiscal year ended June 30, 1997,
were Messrs. Bernstein (Chairman), Anderson, Davis, English and Osborne, each of
whom is a Disinterested Trustee. The Audit Committee met once during the fiscal
year ended June 30, 1997 and all members attended the meeting. The Chairman of
the Audit Committee receives $1,500 for each Audit Committee meeting attended.

BOARD APPROVAL OF THE ELECTION OF TRUSTEES

At a meeting of the Board held on October 28, 1997, the Board recommended
that shareholders vote FOR each of the Nominees for Trustee named herein. In
recommending that shareholders elect the Nominees as Trustees of the Trust, the
Board considered the Nominees' experience and qualifications. In particular,
each of the Nominees who has not previously served on the Board has previous
experience serving on the Board of Directors of various funds in the Composite
Family of Funds.

SHAREHOLDER APPROVAL OF THE ELECTION OF TRUSTEES

The Election of each Nominee requires the affirmative vote of aplurality of
all votes cast at the Special Meeting, provided that a majority of the shares
entitled to vote are present in person or by Proxy at the Special Meeting. If
your shares are represented at the meeting but you give no voting instructions,
your shares will be voted FOR all Nominees named herein. If the Nominees are not
approved by shareholders of the Trust, the Board will consider alternative
nominations.

THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF THE
TRUST VOTE FOR THE ELECTION OF THE TRUSTEES.

PROPOSAL 2: TO APPROVE OR DISAPPROVE A NEW INVESTMENT MANAGEMENT AGREEMENT
BETWEEN THE TRUST, ON BEHALF OF EACH PORTFOLIO, AND COMPOSITE
RESEARCH & MANAGEMENT CO.

The Board has determined that it would be in the best interest of each
Portfolio and their shareholders to retain Composite as the investment adviser
for each Portfolio and recommends that shareholders of each Portfolio approve
Composite as its adviser and approve the New Management Agreement between the
Trust, on behalf of each Portfolio, and Composite, a form of which is attached
hereto as Exhibit A. The Trustees of the Trust, including all of the
Disinterested Trustees, approved the New Management Agreement with respect to
each Portfolio at a meeting held on October 28, 1997. The Trustees do not
anticipate, as a result of the change in investment advisers, any reduction in
the quality of services now provided to the Portfolios.

The Trustees recommend that Composite replace the Portfolios' current
investment adviser, Sierra Services. Sierra Services, as the result of a recent
merger between Washington Mutual and Sierra Services' former indirect parent,
GWFC, is an indirect subsidiary of Washington Mutual. Washington Mutual has
indicated that it intends to consolidate all of its investment advisory
businesses within Composite. As a result of such consolidation, which would
likely occur in early 1998, Sierra Services would cease to exist as a separate
entity.

6
<PAGE> 10

SIERRA SERVICES

Sierra Services provides its proprietary asset allocation services to the
Portfolios, formulates the Portfolios' investment policies, analyzes economic
and market trends, exercises investment allocation over the assets of the
Portfolios and monitors the allocation of each Portfolio's assets and each
Portfolio's performance. Although it is expected that each Portfolio will
typically be fully invested in underlying funds as part of a "fund of funds"
arrangement, Sierra Services may, from time to time, direct the investment of
each Portfolios' cash balances in money market securities or in other
instruments, including stocks or bond index futures and options thereon. Sierra
Services is both a registered broker-dealer and member of the NASD, and a
registered investment advisor. Sierra Services is a wholly owned subsidiary of
Sierra Capital Management Corporation which is an indirect wholly owned
subsidiary of Washington Mutual.

COMPOSITE

Composite, a subsidiary of Washington Mutual, with principal offices
located at 1201 Third Avenue, Seattle, Washington 98101, is also registered
under the Advisers Act. Composite has been in the investment management business
since 1944 and currently manages more than $2.6 billion for mutual funds and
institutional accounts, including more than $1.7 billion within the Composite
Funds. It is anticipated that Composite would retain investment discretion for
all of the Portfolios. The name, addresses and principal occupations of the
directors and principal executive officers of Composite are as follows:

<TABLE>
<CAPTION>
NAME AND POSITION
WITH THE ADVISER ADDRESS PRINCIPAL OCCUPATION
- ------------------- ------------------ ---------------------------------------
<S> <C> <C>
William G. Papesh 1201 Third Avenue Director and President, Composite;
Director Seattle, WA 98101 Director and President, Murphey
Favre Securities Services Inc.
Kerry K. Killinger 1201 Third Avenue Chairman, Chief Executive Officer
Director Seattle, WA 98101 and Director, Washington Mutual
Bank
Monte D. Calvin 1201 Third Avenue Executive Vice President, Murphey
Director and Seattle, WA 98101 Favre Securities Services Inc.
Treasurer
Craig S. Davis 1201 Third Avenue Executive Vice President,
Director Seattle, WA 98101 Washington Mutual; Chairman, ASB
Financial Services
J. Pamela Dawson 1201 Third Avenue President, WM Financial Service,
Director Seattle, WA 98101 Inc.; President, ASB Financial
Services, Inc.
</TABLE>

THE INVESTMENT MANAGEMENT AGREEMENT

In anticipation of the consolidation of Sierra Services with Composite, the
Trustees of the Portfolio, including the Disinterested Trustees, unanimously
approved the New Management Agreement. Although the form of the New Management
Agreement is different from the form of the Current Advisory Agreement, the
material provisions of the New Management Agreement but for the exceptions
highlighted below, are substantially similar to the material provisions of the
Current Advisory Agreement between Sierra Services and the Portfolios. (1) The
new investment adviser; (2) the dates of execution, effectiveness and initial
term; (3) the deletion of provisions relating to state expense limits that have
been preempted by federal law; (4) a specific provision allowing for amendment
of the Agreement; (5) a provision restricting the Trust's use of the proprietary
names "Sierra" and "Composite;" and (6) the provision for termination of the New
Management Agreement by the Adviser upon 60 days notice, rather than the 90 days
notice required under the Current Advisory Agreement. See "The New Management
Agreement" below.

7
<PAGE> 11

THE CURRENT ADVISORY AGREEMENT

The Current Advisory Agreement between Sierra Services and each of the
Portfolios, was most recently renewed by the Trustees at a meeting of the Board
held on [September 9, 1997], is dated and was last approved by the shareholders
of each Portfolio on the following dates:

<TABLE>
<CAPTION>
DATE OF INVESTMENT DATE LAST APPROVED BY
PORTFOLIO ADVISORY AGREEMENT SHAREHOLDERS
------------------------------------- ------------------ ---------------------
<S> <C> <C>
Income Portfolio..................... May 21, 1996 *
Value Portfolio...................... May 21, 1996 *
Balanced Portfolio................... May 21, 1996 *
Growth Portfolio..................... May 21, 1996 *
Capital Growth Portfolio............. May 21, 1996 *
Growth Portfolio..................... May 21, 1996 *
</TABLE>

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

* Approved by Sole Shareholder at commencement of operations.

The Current Advisory Agreement provides that subject to the supervision and
direction of the Board of Trustees, Sierra Services, in return for its fee, will
(1) provide general oversight of investment advisory services for each Portfolio
in accordance with the Trust Agreement, the 1940 Act, the Advisers Act and with
the investment objectives and policies as stated in the Prospectus and Statement
of Additional Information, as then in effect; (2) participate in the formulation
of each Portfolio's investment policies; (3) analyze economic and market trends
affecting each Portfolio; (4) monitor the expenses incurred by each Portfolio;
(5) monitor the brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) that are provided to each
Portfolio and that may be considered by each Portfolio's investment sub-adviser
in selecting brokers or dealers to execute particular transactions; and (6)
monitor and evaluate the services provided by each Portfolio's investment
sub-adviser under its investment sub-advisory agreement, including, without
limitation, the sub-advisor's adherence to the Portfolio's investment
objective(s) and policies and the Portfolio's investment performance. Subject to
the approval of the Board and the shareholders of each Portfolio, Sierra
Services may delegate certain of its duties enumerated above to one or more
sub-advisers.

The Current Advisory Agreement provides for payment of compensation to
Sierra Services on the first business day of each month for the previous month
for each Portfolio at the annual rate of 0.15% of the Portfolio's average daily
net assets.

The Current Advisory Agreement provides that Sierra Services will bear all
expenses in connection with the performance of its services under the Current
Advisory Agreement. Each Portfolio assumes and shall pay or cause to be paid all
other expenses of such Portfolio.

The Current Advisory Agreement is terminable, without penalty, on 60 days
written notice, by the Board or by vote of holders of a majority of a
Portfolios' shares, or upon 90 days written notice, by Sierra Services. The
Current Advisory Agreement will terminate automatically in the event of its
assignment.

The Current Advisory Agreement obligates Sierra Services, in the
performance of its duties, to exercise its best judgment in rendering its
services, but provides that Sierra Services shall not be liable for any act or
omission which does not constitute willful misfeasance, bad faith or gross
negligence on the part of Sierra Services or its officers, Trustees or
employees, or reckless disregard by Sierra Services of its obligations and
duties under the agreement. The Current Advisory Agreement also provide that any
claims by Sierra Services against a Portfolio may be satisfied only from the
assets of that Portfolio, and that no shareholder, Trustee or officer of a
Portfolio, or any other Portfolio may be held personally liable or responsible
for any obligations arising out of such agreement.

The Trust also has in place an administration agreement with Sierra
Administration dated , 1996 (the "Administration Agreement"), which
provides, that Sierra Administration will (a) assist in supervising all aspects
of the operations of the Trust except those performed by the Trust's investment
adviser under its

8
<PAGE> 12

investment advisory agreement; (b) supply the Trust with office facilities
(which may be in Sierra Administration's own offices), statistical and research
data, data processing services, clerical, accounting and bookkeeping services
(including, but not limited to, the calculation of (i) the net asset values of
shares of the Trust, (ii) distribution fees), internal auditing and legal
services, internal executive and administrative services, and stationary and
office supplies; (c) prepare reports to the Trust's shareholders and materials
for the Board of Trustees of the Trust; (d) prepare tax returns and reports to
and filings with the Securities and Exchange Commission and state Blue Sky
authorities; (e) cooperate with the Trust's transfer agent for the purpose of
establishing the implementing procedures to ensure that the Trust's transfer
agency and shareholder relations functions are efficiently carried out; and (f)
provide such other similar services as the Trust may reasonably request to the
extent permitted under application statutes, rules and regulations. Sierra
Administration may delegate its obligations, in whole or in part, to one or more
sub-administrators, however, such delegation does not relieve Sierra
Administration of its responsibilities. Sierra Administration is not responsible
for the performance of any duties which are required to be performed by the
Trust's transfer agent.

Sierra Administration receives a fee of 0.50% of the average daily net
assets of the Trust out of which it pays its expenses and any fees payable to a
sub-administrator and custodian.

The substance of the current Administration Agreement will continue for the
Trust, with the exception that the new administration agreement will replace
Sierra Administration with Murphey Favre Securities Services, Inc., a subsidiary
of Washington Mutual. The fee payable to Murphey Favre under the new agreement
with be the same as currently received by Sierra Administration.

For the fiscal year ended June 30, 1997, the Trust paid management fees to
Sierra Services, administration fees to Sierra Fund Administration Corporation,
and distribution fees to Sierra Investment Services Corporation as follows:

<TABLE>
<CAPTION>
PORTFOLIO MANAGEMENT FEES* ADMINISTRATION FEES* DISTRIBUTION FEES
---------------------------------- ---------------- -------------------- -----------------
<S> <C> <C> <C>
Income Portfolio.................. (19,517) 11,762 53,316
Value Portfolio................... (18,896) 7,547 67,146
Balanced Portfolio................ 65,712 449,218 735,397
Growth Portfolio.................. 107,009 607,123 1,103,001
Capital Growth Portfolio.......... (10,970) 38,905 193,954
</TABLE>

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

*After fee waivers.

THE NEW MANAGEMENT AGREEMENT

The Board approved the proposed New Management Agreement between the
Portfolio and Composite on October 28, 1997, a form of which is attached as
Exhibit A hereto. Although the form of the New Management Agreement is
substantially different from the form of the Current Advisory Agreement, the
material provisions of the New Management Agreement are substantially similar to
the material provisions of the Current Advisory Agreement, except for (1) the
new adviser; (2) the dates of execution, effectiveness and initial term; (3) the
deletion of provisions relating to state expense limits that have been preempted
by federal law; and (4) the provisions for the termination of the New Management
Agreement by the adviser upon 60 days notice, rather than the 90 days notice
required under the Current Advisory Agreement.

The New Management Agreement provides for payment to Composite of a monthly
fee computed on the average daily net assets for each Portfolio at the annual
rate of .15%.

The investment advisory fee as a percentage of net assets payable by the
Portfolios will be the same under the New Management Agreement as under the
Current Advisory Agreement. If the investment advisory fee under the New
Management Agreement had been in effect for these Portfolio's most recently
completed fiscal year, the advisory fee to which Composite would have been
entitled, would have been identical to that to which it was entitled under the
Current Advisory Agreement.

9
<PAGE> 13

A portion of the fee payable to Composite under the New Management
Agreement will be allocated to Murphey Favre Securities Services, Inc. for
administrative services, portfolio accounting and regulatory compliance systems,
and to Composite Funds Distributor, Inc. for facilitating the distribution of
each Portfolio.

The New Management Agreement would take effect upon the later to occur of
(1) the obtaining of shareholder approval or (2) January 1, 1998. The New
Management Agreement will continue in effect for an initial two-year term and
thereafter for successive annual periods as long as such continuance is approved
in accordance with the 1940 Act.

In evaluating the New Management Agreement, the Board based its
determination primarily on its conclusion that Composite could provide a level
of service to the Portfolios that meets or exceeds the current level of service
provided to the Portfolios, and took into account that the fees and expenses
payable by the Portfolios under the New Management Agreement are substantially
identical to those payable under the Current Advisory Agreement. Before reaching
its conclusions, the Board conducted an extensive "due diligence" review. Among
other things, the Board received reports from counsel and independent experts
specifically hired to evaluate Composite's ability to manage the Portfolios. The
Board also was informed of the resources of Washington Mutual that could be made
available to Composite and the Portfolios. The Trustees also considered
Composite's experience as adviser and service provider to the Composite Funds.

Although the Merger did not result in "a change of control" of Sierra
Services, in light of the upcoming consolidation of Sierra Services with
Composite, the Board was assured on behalf of Sierra Services and Composite that
they intend to comply with the requirements of Section 15(f) of the 1940 Act.
Section 15(f) provides a non-exclusive safe harbor for an investment adviser to
an investment company or any of its affiliated persons to receive any amount or
benefit in connection with a change in control of the investment adviser that
results in the "assignment" of an advisory agreement, as that term is defined in
the 1940 Act, so long as the following two conditions are met. First, for a
period of three years after the change of control, at least 75% of the board
members of the investment company must not be interested persons of the acquired
adviser or the acquiror (Sierra Services and Composite, respectively, in this
case). If the nominees listed in Proposal 1 above are elected by shareholders,
the Trust would be in compliance with this provision of Section 15(f). Second,
an "unfair burden" must not be imposed upon the investment company as a result
of such transaction or any express or implied terms, conditions or
understandings applicable thereto. The term "unfair burden" is defined in
Section 15(f) to include any arrangement during the two-year period after the
assignment whereby the investment adviser, or any interested person of any such
adviser, receives or is entitled to receive any compensation, directly or
indirectly, from the investment company or its shareholders (other than fees for
bona fide investment advisory or other services) or from any person in
connection with the purchase or sale of securities or other property to, from or
on behalf of the investment company (other than bona fide ordinary compensation
as principal underwriter for such investment company). Sierra Services and
Composite are not aware of any express or implied term, condition, arrangement
or understanding that would impose an "unfair burden" on the Trust as a result
of the recent Merger or the upcoming consolidation of Sierra Services with
Composite.

[The Board also considered that the costs of the Special Meeting would be
borne by Composite.]

After consideration of the above factors and such other factors and
information that the Board deemed relevant, the Board, including the
Disinterested Trustees, unanimously approved the New Management Agreement with
respect to each Portfolio and voted to recommend its approval to the
shareholders of each Portfolio.

In the event that shareholders of a Portfolio do not approve the New
Management Agreement, the Current Advisory Agreement will remain in effect and
the Board will take such action as it deems in the best interest of the
Portfolio and its shareholders, which may include proposing that shareholders
approve an agreement in lieu of the New Management Agreement.

10
<PAGE> 14

SHAREHOLDER APPROVAL OF THE NEW MANAGEMENT AGREEMENT

Approval of the New Management Agreement requires the affirmative vote of a
majority of the outstanding shares of each Portfolio. For purposes of this
proposal, "majority of the outstanding shares" means the vote of (1) 67% or more
of a Portfolio's outstanding shares present at the Special Meeting, if the
holders of more than 50% of the outstanding shares of the Portfolio are present
in person or represented by Proxy, or (2) more than 50% of a Portfolio's
outstanding shares, whichever is less.

THE BOARD OF TRUSTEES RECOMMENDS THAT THE SHAREHOLDERS OF EACH PORTFOLIO VOTE
FOR APPROVAL OF THE NEW MANAGEMENT AGREEMENT.

ADDITIONAL INFORMATION

TRUSTEES AND EXECUTIVE OFFICERS

Information about the Trust's current Trustees is set forth under Proposal
1 above. Presently, no officer of the Trust is an officer, employee, director or
shareholder of Composite. Nonetheless, each of the following officers of the
Trust are officers or employees of an entity that is under common control with
Composite:

<TABLE>
<CAPTION>
ADDRESS AND BUSINESS EXPERIENCE
DURING THE PAST SHARES BENEFICIALLY
NAME, AGE AND POSITION FIVE YEARS (INCLUDING ALL OWNED AS OF
WITH THE TRUST DIRECTORSHIPS)** JULY 1, 1997
- ------------------------------------- ------------------------------------- -------------------
<S> <C> <C>
James H. Overholt (50) President and Chief Executive ***
President and Chief Executive Officer, Sierra Capital Management
Officer Corporation ("SCMC"), 1997 to
present; President and Director,
Sierra Administration, 1997 to
present; Chairman, Sierra Advisors,
1997 to present; President and Chief
Executive Officer, Sierra Services,
1997 to present; President and Chief
Executive Officer, Great Western
Financial Securities Corporation,
1996 to present; President and Chief
Executive Officer, Bank South
Investment Services, 1994 to 1995;
President and Chief Executive
Officer, Wachovia Brokerage Services,
1991 to 1993;
Keith B. Pipes (41) Senior Vice President, Chief ***
Executive Vice President, Treasurer Financial Officer and Secretary,
and Secretary SCMC, 1988 to present; Chief
Financial Officer, Secretary and
Treasurer, Sierra Administration,
1988 to present; Executive Vice
President and Secretary, Sierra
Advisors, 1988 to present; Senior
Vice President, Chief Financial
Officer and Secretary, Sierra
Services, 1992 to present;
Michael D. Goth (52) Chief Operating Officer, Sierra ***
Senior Vice President Advisers, 1991 to present.
Stephen C. Scott (52) President and Chief Investment ***
Senior Vice President Officer, Sierra Advisers, 1988 to
present; Senior Vice President and
Chief Investment Officer, Sierra
Investment Services, 1996 to present.
</TABLE>

11
<PAGE> 15

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

** The address of each officer of the Trust affiliated with Sierra Advisors or
Sierra Investment Services is 9301 Corbin Avenue, Suite 333, Northridge, CA
91324.

*** As of July 1, 1997, the officers of the Trust as a group beneficially owned
an aggregate of less than 1% of the shares of each Portfolio of the Trust.

Each officer of the Trust will hold such office until a successor has been
elected by the Board. It is the intention of the Nominees, if elected, to
replace certain of the Trust's officers with individuals familiar with
Composite's mutual fund organization.

INVESTMENT ADVISER AND PRINCIPAL UNDERWRITER

Sierra Services, located at 9301 Corbin Avenue, Northridge, California
91324, acts as the Trust's principal underwriter or distributor. Sierra Services
is a indirect subsidiary of Sierra Capital Management Corp, which is an indirect
wholly owned subsidiary of Washington Mutual. For the fiscal year ended June 30,
1997, the Trust paid Sierra Services an aggregate fee of $2,152.81 for services
rendered as the distributor. See "Sierra Services" on page 7. Effective January
1, 1998, Composite Funds Distributor, Inc., located at ,
will become the Trust's distributor. Composite Funds Distributor, Inc. is a
wholly owned subsidiary of Washington Mutual.

ADMINISTRATOR

Sierra Administration, located at 9301 Corbin Avenue, Northridge,
California 91324, acts as the Trust's administrator. Sierra Administration is a
wholly owned subsidiary of Sierra Capital Management Corporation which is
located at the same address. For the fiscal year ended June 30, 1997, the Trust
paid Sierra Administration an aggregate fee of $1,745,622 for services rendered
as the administrator. Effective January 1, 1998, Murphey Favre Securities
Services, Inc., located at 6501 W. Main Avenue, Spokane, WA 99201, will become
the Trust's administrator. Murphey Favre Securities Services, Inc. is a wholly
owned subsidiary of Washington Mutual.

PORTFOLIO TRANSACTIONS

In the fiscal year ended June 30, 1997 the Trust paid no brokerage
commissions to affiliated brokers.

12
<PAGE> 16

BENEFICIAL OWNERS

To the Trust's knowledge, as of the Record Date, the following were
beneficial owners of 5% or more of the outstanding shares of each Portfolio.

<TABLE>
<CAPTION>
AMOUNT OF BENEFICIAL PERCENT OF TOTAL SHARES
NAME AND ADDRESS OWNERSHIP OUTSTANDING
---------------- -------------------- -----------------------
<S> <C> <C>

</TABLE>

SUBMISSION OF SHAREHOLDER PROPOSALS

As a Massachusetts business trust, the Trust and Portfolios are not
required to hold annual shareholders' meetings. Shareholders wishing to submit
proposals for inclusion in a proxy statement for a subsequent meeting should
send their written proposals to Sierra Asset Management Portfolios, 9301 Corbin
Avenue, Northridge, California 91324, c/o Secretary, Sierra Asset Management
Portfolios.

REQUIRED VOTE

Approval of Proposal 1 requires the affirmative vote of a plurality of all
votes cast at the Special Meeting, provided that a majority of the outstanding
shares entitled to vote are present in person or in proxy. Approval of Proposal
2 requires the affirmative vote of a majority of the outstanding shares of a
Portfolio. As defined in the 1940 Act, the vote of a majority of the outstanding
shares means the vote of (1) 67% or more of a Portfolio's outstanding shares
present at a meeting, if the holders of more than 50% of the outstanding shares
of a Portfolio are present or represented by proxy, or (2) more than 50% of a
Portfolio's outstanding shares, whichever is less.

Abstentions and broker "non-votes" (that is, proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
for which the brokers or nominees do not have discretionary power) will not be
counted for or against the Proposals but will be counted for purposes of
determining whether a quorum is present. Abstentions and broker non-votes will
be counted as votes present for purposes of determining a "majority of the
outstanding voting securities" present at the Special Meeting and will therefore
have the effect of counting against Proposal 2. The Trust believes that brokers
who hold shares as record owners for beneficial owners have the authority under
the rules of the various stock exchanges to vote those shares with respect to
the Proposal when they have not received instructions from beneficial owners.

13
<PAGE> 17

OTHER MATTERS

No business other than the matters described above is expected to come
before the Special Meeting, but should any matter incident to the conduct of the
Special Meeting or any question as to an adjournment of the Special Meeting
arise, the persons named in the enclosed Proxy will vote thereon according to
their best judgment in the interest of the Trust.

SHAREHOLDERS ARE REQUESTED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY
CARD PROMPTLY. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.

By Order of the Trustees,

Keith B. Pipes
Secretary

Dated: , 1997

14
<PAGE> 18
EXHIBIT A

SIERRA ASSET MANAGEMENT PORTFOLIOS

INVESTMENT MANAGEMENT AGREEMENT

INVESTMENT MANAGEMENT AGREEMENT (this "Agreement"), dated ,
1997, between the Sierra Asset Management Portfolios, a Massachusetts business
trust, (the "Trust"), on behalf of each of its investment portfolios which are
listed on the signature page of this Agreement (each referred to herein as a
"Fund") and Composite Research & Management Co., a Washington corporation (the
"Manager").

WITNESSETH

WHEREAS, the Trust is an open-end management investment company, registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and

WHEREAS, each Fund desires to retain the Manager to render investment
management services to the Fund, and the Manager is willing to render such
services;

NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:

1. Appointment. The Fund hereby appoints the Manager to act as investment
manager to the Fund for the period and on the terms set forth in this Agreement.
The Manager accepts such appointment and agrees to render the services herein
described, for the compensation herein provided.

2. Management. Subject to the supervision of the Board of Trustees of the
Trust, the Manager shall manage the investment operations of the Fund and the
composition of the Fund's portfolio, including the purchase, retention and
disposition of securities therefor, in accordance with the Fund's investment
objectives, policies and restrictions as stated in the Prospectus and Statement
of Additional Information (as such terms are hereinafter defined) and
resolutions of the Trust's Board of Trustees and subject to the following
understandings:

(a) The Manager shall provide supervision of the Fund's investments,
furnish a continuous investment program for the Fund's portfolio and
determine from time to time what securities will be purchased, retained, or
sold by the Fund, and what portion of the assets will be invested or held
as cash.

(b) The Manager, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Declaration of Trust
(as hereinafter defined) of the Trust and the investment policies of the
Fund as determined by the Board of Trustees of the Trust.

(c) The Manager shall determine the securities to be purchased or sold
by the Fund and shall place orders for the purchase and sale of portfolio
securities pursuant to its determinations with brokers or dealers selected
by the Manager. In executing portfolio transactions and selecting brokers
or dealers, the Manager shall use its best efforts to seek on behalf of the
Fund the best overall terms available. In assessing the best overall terms
available for any transaction, the Manager may consider all factors it
deems relevant, including the breadth of the market in the security, the
price of the security, the size of the transaction, the timing of the
transaction, the reputation, financial condition, experience, and execution
capability of a broker or dealer, the amount of commission, and the value
of any brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934, as amended) provided
by a broker or dealer. The Manager is authorized to pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Fund which is in excess of the
amount of commission another broker or dealer would have charged for
effecting the transaction if the Manager determines in good faith that such
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of
that particular transaction or in terms of the overall responsibilities of
the Manager to the Fund and/or other accounts over which the Manager
exercises investment discretion.

-1-
<PAGE> 19

(d) On occasions when the Manager deems the purchase or sale of a
security to be in the best interest of the Fund as well as other fiduciary
accounts for which it has investment responsibility, the Manager, to the
extent permitted by applicable laws and regulations, may aggregate the
securities to be so sold or purchased in order to obtain the best
execution, most favorable net price or lower brokerage commissions.

(e) Subject to the provisions of the Agreement and Declaration of
Trust of the Trust and the Investment Company Act of 1940, as amended (the
"1940 Act"), the Manager, at its expense, may select and contract with one
or more investment advisers (the "Sub-adviser") for the Fund to perform
some or all of the services for which it is responsible pursuant to this
Section 2. The Manager shall be solely responsible for the compensation of
any Sub-adviser of the Fund for its services to the Fund. The Manager may
terminate the services of any Sub-adviser at any time in its sole
discretion, and shall at such time assume the responsibilities of such
Sub-adviser unless and until a successor Sub-adviser is selected. To the
extent that more than one Sub-adviser is selected, the Manager shall, in
its sole discretion, determine the amount of the Fund's assets allocated to
each such Subadviser.

3. Services Not Exclusive. The investment management services rendered by
the Manager hereunder to the Fund are not to be deemed exclusive, and the
Manager shall have the right to render similar services to others, including,
without limitation, other investment companies.

4. Expenses. During the term of this Agreement, the Manager shall pay all
expenses incurred by it in connection with its activities under this Agreement
including the salaries and expenses of any of the officers or employees of the
Manager who act as officers, Trustees or employees of the Trust but excluding
the cost of securities purchased for the Fund and the amount of any brokerage
fees and commissions incurred in executing portfolio transactions for the Fund,
and shall provide the Fund with suitable office space. Other expenses to be
incurred in the operation of the Fund (other than those borne by any third
party), including without limitation, taxes, interest, brokerage fees and
commissions, fees of Trustees who are not officers, directors, or employees of
the Manager, federal registration fees and state Blue Sky qualification fees,
administration fees, bookkeeping, charges of custodians, transfer and dividend
disbursing agents' fees, certain insurance premiums, industry association fees,
outside auditing and legal expenses, costs of maintaining the Fund's or the
Trust's existence, costs of independent pricing services, costs attributable to
investor services (including, without limitation, telephone and personnel
expenses), costs of preparing, printing and distributing prospectuses to
existing shareholders, costs of stockholders' reports and meetings of
shareholders and Trustees of the Fund or the Trust, as applicable, and any
extraordinary expenses will be borne by the Fund.

5. Compensation. For the services provided pursuant to this Agreement,
each Fund shall pay to the Manager as full compensation therefor a monthly fee
computed on the average daily net assets of the Fund as stated in Schedule A
attached hereto. The Fund acknowledges that the Manager, as agent for the Fund,
will allocate a portion of the fee equal to the sub-advisory fee payable to the
sub-advisor, if any, under its sub-advisory agreement to the sub-advisor for
sub-advisory services. The Fund acknowledges that the Manager, as agent for the
Fund, will allocate a portion of the fee to Murphey Favre Securities Services,
Inc. for administrative services, portfolio accounting and regulatory compliance
systems. The Manager also from time to time and in such amounts as it shall
determine in its sole discretion may allocate a portion of the fee to Composite
Funds Distributor, Inc. for facilitating distribution of the Fund. This payment
would be made from revenue which otherwise would be considered profit to the
Manager for its services. This disclosure is being made to the Fund solely for
the purpose of conforming with requirements of the Washington Department of
Revenue for exclusion of revenue from the Washington Business and Occupation
Tax.

6. Limitation of Liability. The Manager shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Fund in connection
with the matters to which this Agreement relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.

-2-
<PAGE> 20

7. Delivery of Documents. The Trust has heretofore delivered to the
Manager true and complete copies of each of the following documents and shall
promptly deliver to it all future amendments and supplements thereto, if any:

(a) Agreement and Declaration of Trust (such Agreement and Declaration
as presently in effect and as amended from time to time, the "Declaration
of Trust");

(b) Bylaws of the Trust;

(c) Registration Statement under the Securities Act of 1933 and under
the 1940 Act of the Trust on Form N-1A, and all amendments thereto, as
filed with the Securities and Exchange Commission (the "Registration
Statement") relating to the Fund and the shares of the Fund;

(d) Notification of Registration of the Trust under the 1940 Act on
Form N-8A;

(e) Prospectuses of the Fund (such prospectuses as presently in effect
and/or as amended or supplemented from time to time, the "Prospectus"); and

(f) Statement of Additional Information of the Fund (such statement as
presently in effect and/or as amended or supplemented from time to time,
the "Statement of Additional Information").

8. Duration and Termination. This Agreement shall become effective as of
the date first above-written for an initial period of two years and shall
continue thereafter so long as such continuance is specifically approved at
least annually (a) by the vote of the Board of Trustees including a majority of
those members of the Trust's Board of Trustees who are not parties to this
Agreement or "interested persons" of any such party, cast in person at a meeting
called for that purpose, or by vote of a majority of the outstanding voting
securities of the Fund. Notwithstanding the foregoing, (a) this Agreement may be
terminated at any time, without the payment of any penalty, by either the Fund
(by vote of the Trust's Board of Trustees or by vote of a majority of the
outstanding voting securities of the Fund) or the Manager, on sixty (60) days
prior written notice to the other and (b) shall automatically terminate in the
event of its assignment. As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the meanings assigned to such terms in the 1940 Act.

9. Amendments. No provision of this Agreement may be amended, modified,
waived or supplemented except by a written instrument signed by the party
against which enforcement is sought. No amendment of this Agreement shall be
effective until approved in accordance with any applicable provisions of the
1940 Act.

10. Use of Name and Logo. The Fund agrees that it shall furnish to the
Manager, prior to any use or distribution thereof, copies of all prospectuses,
statements of additional information, proxy statements, reports to stockholders,
sales literature, advertisements, and other material prepared for distribution
to stockholders of the Fund or to the public, which in any way refer to or
describe the Manager or which include any trade names, trademarks or logos of
the Manager or of any affiliate of the Manager. The Fund further agrees that it
shall not use or distribute any such material if the Manager reasonably objects
in writing to such use or distribution within five (5) business days after the
date such material is furnished to the Manager.

The Manager and/or its affiliates own the names "Sierra," "Composite" and
any other names which may be listed from time to time on a Schedule B to be
attached hereto that they may develop for use in connection with the Fund, which
names may be used by the Fund or the Trust only with the consent of the Manager
and/or its affiliates. The Manager, on behalf of itself and/or its affiliates,
consents to the use by the Trust and by the Fund of such names or any other
names embodying such names, but only on condition and so long as (i) this
Agreement shall remain in full force, (ii) the Fund and the Trust shall fully
perform, fulfill and comply with all provisions of this Agreement expressed
herein to be performed, fulfilled or complied with by it, and (iii) the Manager
is the manager of the Fund and the Trust. No such name shall be used by the Fund
or the Trust at any time or in any place or for any purposes or under any
conditions except as provided in this section. The foregoing authorization by
the Manager, on behalf of itself and/or its affiliates, to the Fund and the
Trust to use such names as part of a business or name is not exclusive of the
right of the Manager and/or its affiliates themselves to use, or to authorize
others to use, the same; the Fund and the Trust acknowledge and agree that as
between the Manager and/or its affiliates and the Fund or the Trust, the Manager
and/or its

-3-
<PAGE> 21

affiliates have the exclusive right so to use, or authorize others to use, such
names, and the Fund and the Trust agree to take such action as may reasonably be
requested by the Manager, on behalf of itself and/or its affiliates, to give
full effect to the provisions of this section (including, without limitation,
consenting to such use of such names). Without limiting the generality of the
foregoing, the Fund and the Trust agree that, upon (i) any violation of the
provisions of this Agreement by the Fund or the Trust or (ii) any termination of
this Agreement, by either party or otherwise, the Fund and the Trust will, at
the request of the Manager, on behalf of itself and/or its affiliates, made
within six months after such violation or termination, use its best efforts to
change the name of the Fund and the Trust so as to eliminate all reference, if
any, to such names and will not thereafter transact any business in a name
containing such names in any form or combination whatsoever, or designate itself
as the same entity as or successor to an entity of such names, or otherwise use
such names or any other reference to the Manager and/or its affiliates, except
as may be required by law. Such covenants on the part of the Fund and the Trust
shall be binding upon it, its Trustees, officers, shareholders, creditors and
all other persons claiming under or through it.

The provisions of this section shall survive termination of this Agreement.

11. Notices. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered or mailed by
registered mail, postage prepaid, if to the Fund: 601 W. Main Ave., Suite 300,
Spokane, Washington 99201; or if to the Manager: 1201 Third Avenue, Suite 1220,
Seattle, Washington 98101; or to either party at such other address as such
party shall designate to the other by a notice given in accordance with the
provisions of this section.

12. Miscellaneous.

(a) Except as otherwise expressly provided herein or authorized by the
Board of Trustees of the Trust from time to time, the Manager for all purposes
herein shall be deemed to be an independent contractor and shall have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.

(b) The Trust shall furnish or otherwise make available to the Manager such
information relating to the business affairs of the Fund as the Manager at any
time or from time to time reasonably requests in order to discharge its
obligations hereunder.

(c) This Agreement shall be governed by and construed in accordance with
the laws of The Commonwealth of Massachusetts and shall inure to the benefit of
the parties hereto and their respective successors.

(d) If any provision of this Agreement shall be held or made invalid or by
any court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.

13. Declaration of Trust and Limitation of Liability. A copy of the
Declaration of Trust of the Trust is on file with the Secretary of State of The
Commonwealth of Massachusetts, and notice is hereby given that this Agreement is
executed by an officer of the Trust on behalf of the Trustees of the Trust, as
trustees and not individually, on further behalf of the Fund, and that the
obligations of this Agreement shall be binding upon the assets and properties of
the Fund only and shall not be binding upon the assets and properties of any
other series of the Trust or upon any of the Trustees, officers, employees,
agents or shareholders of the Fund or the Trust individually.

-4-
<PAGE> 22

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the date first above-written.

SIERRA ASSET MANAGEMENT PORTFOLIOS, on
behalf of its portfolios INCOME
PORTFOLIO, VALUE PORTFOLIO, BALANCED
PORTFOLIO, GROWTH PORTFOLIO and
CAPITAL GROWTH PORTFOLIO

By:
------------------------------------
Name:
Title:

Attest:

By:
--------------------------------
Name:
Title:
COMPOSITE RESEARCH & MANAGEMENT CO.

By:
------------------------------------
William G. Papesh
President

Attest:

By:
--------------------------------
Sharon L. Howells
Secretary

-5-
<PAGE> 23

SIERRA ASSET MANAGEMENT PORTFOLIOS

The management fee to be charged for advisory services (including
sub-advisory fees, if any) for each Portfolio is based upon a percentage of the
average daily net assets of such Portfolio. The total management fee to be paid
monthly for each Portfolio is as follows:

<TABLE>
<CAPTION>
ANNUAL FEE
----------
<S> <C>
Income Portfolio................................ 0.15%
Value Portfolio................................. 0.15%
Balanced Portfolio.............................. 0.15%
Growth Portfolio................................ 0.15%
Capital Growth Portfolio........................ 0.15%
</TABLE>

-6-
<PAGE> 24

SIERRA ASSET MANAGEMENT PORTFOLIOS
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS

NOVEMBER , 1997

THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF
SIERRA ASSET MANAGEMENT PORTFOLIOS

This proxy is for your use in voting on various matters relating to Sierra
Asset Management Portfolios (the "Trust"). The undersigned shareholder(s) of the
Income Portfolio, Balanced Portfolio, Value Portfolio, Growth Portfolio and
Capital Growth Portfolio (each a "Portfolio," and collectively the
"Portfolios"), revoking previous proxies, hereby appoint(s) and
and each of them (with full power of substitution) the proxies of the
undersigned to attend the Special Meeting of Shareholders of the Portfolios to
be held on November , 1997 and any adjournments thereof (the "Special
Meeting"), to vote all of the shares of the Portfolios that the signer would be
entitled to vote if personally present at the Special Meeting and on any matter
incident to the conduct of the Special Meeting, all as set forth in the Notice
of Special Meeting of Shareholders and Proxy Statement of the Board of Trustees.
Said proxies are directed to vote or refrain from voting pursuant to the Proxy
Statement as indicated upon the matters set forth below.

This proxy will be voted as indicated below. If no indication is made, this
proxy will be voted FOR the proposals set forth below. The undersigned
acknowledges receipt with this proxy of a copy of the Notice of Special Meeting
of Shareholders and the Proxy Statement of the Board of Trustees.

(1) To consider and act upon
a proposal to elect a
Board of Trustees.

[ ] FOR all of the
nominees listed below.

[ ] WITHHOLD AUTHORITY
to vote for all of the
nominees listed below.

[ ] FOR all of the nominees listed below except for
those whose names have been stricken.

(Instructions: To withhold authority to vote for any or all of the nominees,
strike a line through the name(s) of such nominee(s) below.)

<TABLE>
<S> <C> <C>
Arthur H. Bernstein Wayne L. Attwood William G. Papesh
David E. Anderson Kristianne Blake Daniel L. Pavelich
Edmond R. Davis Anne V. Farrell Jay Rockey
John W. English Michael K. Murphy Richard C. Yancey
Alfred E. Osborne, Jr.
</TABLE>
<PAGE> 25

(2) To approve a new Investment Advisory Agreement, on behalf of each Portfolio,
between the Trust, on behalf of each Portfolio, and Composite Research &
Management Co.
[ ] FOR [ ] AGAINST [ ] ABSTAIN

(3) To transact such other business as may properly come before the Special
Meeting or an adjournment thereof.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

Please Date:

Date: , 1997

-------------------------
(Signature of
shareholder)

-------------------------
(Co-owner signature, if
any)

-------------------------
(Printed name of
shareholder)

-------------------------
(Printed name of
Co-owner, if any)

Please print and sign
your name in the space
provided to authorize the
voting of your shares as
indicated and return
promptly. When signing on
behalf of a corporation,
partnership, estate,
trustor in any other
representative capacity
please sign your name and
title. For joint
accounts, each joint
owner must sign.

PLEASE COMPLETE, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
NO POSTAGE NECESSARY IF MAILED IN THE UNITED STATES.