FUND PORTFOLIOS
FINANCIAL INFORMATION
FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
MORE ABOUT THE COMPOSITE GROUP
PRESIDENT'S MESSAGE
The first half of 1996 ushered in a period of uncertainty and a modest change
in the direction of money market yields. Early in the year, returns were headed
downward. Later on, spurred by reports of a surprisingly healthy economy, they
began heading upwards.
As of June 30, 1996, the seven-day simple yield for Class A shares of the
Money Market portfolio was 4.48%, or 4.58%, on a compounded annual basis.*
Portions of the portfolio's fees were waived and expenses reimbursed. Without
this contribution, the Class A share seven-day simple yield for the period would
have been 4.37%. Average maturity of securities in the portfolio was reduced to
44 days which is slightly below the average for money market funds.
The Tax-Exempt portfolio Class A shares produced a seven-day simple yield of
2.97%, or 3.01%, on a compounded annual basis. Absent fee waivers and expense
reimbursements, the Class A share simple yield would have been 2.81% for the
period. Average maturity of securities in the portfolio was 55 days.
Although the economy is strengthening, there are concerns that the rate of
growth may be too high and hence, the market's anticipation of a modest rate
hike by the Federal Reserve in the months ahead. This led us to adjust the
average maturity of both portfolios slightly.
The Tax-Exempt portfolio's maturity structure was lengthened somewhat from
the average tax-exempt portfolio. There are seasonal effects which are peculiar
to this sector. In July, substantial bond calls and maturities should create a
temporary but excessive demand for tax-exempt money market securities. This high
demand usually causes yields to drop dramatically. Although it is not possible
to totally insulate the portfolio from a decline in yields, we can mitigate it
somewhat by extending maturity. This seasonal decline in yield usually lasts no
more than two to three weeks as bond investors sell their money market
securities and re-deploy their funds into bonds or other markets.
We hope you will continue to find the quality of our portfolio investments
and careful management of your money sound reasons to employ Composite Cash
Management for your cash reserve needs.
You have my sincere appreciation for your business.
/s/ William G. Papesh
WILLIAM G. PAPESH
PRESIDENT
*ALL YIELD INFORMATION REPRESENTS PAST PERFORMANCE, WHICH CANNOT GUARANTEE
FUTURE RESULTS. PRINCIPAL IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT,
AND YIELDS WILL FLUCTUATE DEPENDING ON MARKET CONDITIONS. THERE IS NO ASSURANCE
THAT THE $1.00 PER SHARE NET ASSET VALUE (NAV) WILL BE MAINTAINED. CLASS B
SHARES ARE AVAILABLE ONLY BY EXCHANGING B SHARES FROM OTHER COMPOSITE GROUP
FUNDS AND ARE INTENDED AS TEMPORARY INVESTMENTS. THE CLASS B SHARES' SEVEN-DAY
SIMPLE YIELD THROUGH JUNE 30, 1996 WAS 3.67% FOR THE MONEY MARKET PORTFOLIO AND
2.16% FOR THE TAX-EXEMPT PORTFOLIO AFTER EXPENSE REIMBURSEMENTS. THE ALTERNATIVE
MINIMUM TAX, AS WELL AS STATE AND LOCAL TAXES, MAY APPLY TO INCOME DISTRIBUTED
BY THE TAX-EXEMPT PORTFOLIO.
<PAGE>
<TABLE>
<CAPTION>
COMPOSITE
CASH
MANAGEMENT
CO.
PORTFOLIO OF
INVESTMENTS
IN SECURITIES
JUNE 30,
1996
MONEY MARKET PORTFOLIO (UNAUDITED)
Principal Market
Amount Value
- ------------ -------------
SHORT-TERM INVESTMENTS
BANKERS ACCEPTANCE-2.54%
BANKING/FINANCE-2.54%
<S> <C> <C>
$ 5,000,000 Dai Ichi Kangyo NY, 5.35%, due 07/12/1996 (cost $4,991,826) ..... $ 4,991,826
-------------
CERTIFICATE OF DEPOSIT-2.55%
BANKING/FINANCE-2.55%
5,000,000 Industrial Bank of Japan NY, 5.40%, due 07/23/1996
(cost $5,000,030)............................................. 5,000,030
-------------
COMMERCIAL PAPER-91.11%
AIRCRAFT LEASING-3.03%
6,000,000 International Lease Finance Corporation, 5.37%, due 09/04/1996... 5,941,825
-------------
AUTOS-15.72%
4,000,000 Chrysler Financial Corporation, 5.28%, due 08/07/1996............ 3,978,293
4,000,000 Ford Motor Credit Company, 5.25%, due 07/10/1996................. 3,994,750
5,000,000 Ford Motor Credit Company, 5.35%, due 08/22/1996................. 4,961,361
4,000,000 General Motors Acceptance Corporation, 4.97%, due 07/02/1996 .... 3,999,447
5,000,000 General Motors Acceptance Corporation, 5.30%, due 07/22/1996 .... 4,984,541
4,000,000 Mitsubishi Motors Credit Company, 5.75%, due 08/01/1996.......... 3,981,486
5,000,000 Mitsubishi Motors Credit Company, 5.43%, due 08/05/1996.......... 4,973,604
-------------
30,873,482
-------------
BANKING/FINANCE-8.07%
2,000,000 American Express Credit Corporation, 4.98%, due 07/29/1996....... 1,992,253
7,000,000 Banco National ele Mexico SA, 5.42%, due 10/16/1996.............. 6,887,234
7,000,000 Household Finance Corp., 5.28%, due 07/25/1996................... 6,975,360
-------------
15,854,847
-------------
BROKERAGE-8.09%
7,000,000 Goldman Sachs Group L.P., 5.35%, due 08/19/1996.................. 6,949,026
2,000,000 Merrill Lynch and Company, 5.00%, due 07/31/1996................. 1,991,667
7,000,000 Merrill Lynch and Company, 5.35%, due 08/27/1996................. 6,940,705
-------------
15,881,398
-------------
COMPUTERS/ELECTRONICS-8.09%
8,000,000 IBM Corporation, 5.29%, due 07/17/1996........................... 7,981,191
8,000,000 Sharp Electronics Corporation, 5.26%, due 09/27/1996............. 7,897,138
-------------
15,878,329
-------------
DIVERSIFIED MANUFACTURING-8.65%
3,000,000 General Electric Capital Corporation, 5.03%, due 07/05/1996 ..... 2,998,323
3,000,000 General Electric Capital Corporation, 5.03%, due 07/09/1996 ..... 2,996,646
3,000,000 General Electric Capital Corporation, 5.03%, due 07/11/1996 ..... 2,995,808
8,000,000 Hitachi America Ltd., 5.40%, due 07/09/1996...................... 7,990,400
-------------
16,981,177
-------------
INDUSTRIAL - 3.56%
7,000,000 Hosokawa Micron Int'l., Inc., 5.43%, due 07/15/1996.............. 6,985,219
-------------
INDUSTRIAL LEASING - 3.55%
7,000,000 Iris Partners, L.P., 5.40%, due 08/06/1996....................... 6,962,200
-------------
MACHINERY - AGRICULTURAL - 4.55%
5,000,000 John Deere Capital Corporation, 5.28%, due 08/13/1996............ 4,968,467
4,000,000 John Deere Capital Corporation, 5.27%, due 08/20/1996............ 3,970,722
-------------
8,939,189
-------------
OFFICE EQUIPMENT-3.54%
7,000,000 Xerox Corporation, 5.26%, due 08/20/1996......................... 6,948,862
-------------
OILS -4.02%
8,000,000 Pemex Capital, Inc., 5.40%, due 09/25/1996....................... 7,896,800
-------------
PAPER & FOREST PRODUCTS-4.04%
8,000,000 Weyerhaeuser, 5.35%, due 08/29/1996.............................. 7,929,856
-------------
RETAIL-DEPARTMENT STORES-4.57%
2,000,000 Sears Roebuck Acceptance Corporation, 5.05%, due 07/16/1996 ..... 1,995,792
3,000,000 Sears Roebuck Acceptance Corporation, 5.05%, due 07/18/1996 ..... 2,992,846
4,000,000 Sears Roebuck Acceptance Corporation, 5.31%, due 08/05/1996 ..... 3,979,350
-------------
8,967,988
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT-3.54%
7,000,000 Toshiba America, Inc., 4.89%, due 08/16/1996..................... 6,956,262
-------------
UTILITIES - ELECTRIC-8.09%
8,000,000 National Rural Utilities Cooperative Finance Corporation,
5.37%, due 09/23/1996......................................... 7,899,760
8,000,000 Oyster Creek Fuel Corporation, 5.40%, due 07/15/1996............. 7,983,200
-------------
15,882,960
-------------
TOTAL COMMERCIAL PAPER (cost $178,880,394)....................... 178,880,394
-------------
NOTES AND BONDS-1.92%
AUTOS-0.95%
1,850,000 Chrysler Financial, 8.13%, due 12/15/1996........................ 1,874,403
-------------
CONSUMER PRODUCTS & SERVICES-0.97%
1,900,000 Gillette Company, 4.75%, due 08/15/1996.......................... 1,899,197
-------------
TOTAL NOTES AND BONDS (cost $3,773,600).......................... 3,773,600
-------------
REPURCHASE AGREEMENT-2.61%
$ 5,122,000 Repurchase agreement with First Boston, collateralized
by a U.S. Treasury Note, in a joint trading account at 5.25%,
dated 06/28/1996, due 07/01/1996 with a maturity
value of $5,124,241 (cost $5,122,000).......................... $ 5,122,000
-------------
TOTAL INVESTMENTS (cost $197,767,850).......................... 197,767,850
Other assets ($2,229,480) less liabilities ($3,662,815)........ (1,433,335)
-------------
NET ASSETS..................................................... $196,334,515
=============
FEDERAL INCOME TAX INFORMATION:
The aggregate cost of investments owned at June 30, 1996, for federal income tax
and financial reporting purposes was $197,767,850.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAX-EXEMPT PORTFOLIO (UNAUDITED)
Principal Market
Amount Value
- ------------- ------------
SHORT-TERM INVESTMENTS
STATE AND MUNICIPAL SECURITIES-104.44%
ALABAMA-1.60%
<S> <C> <C>
$ 500,000 Athens Industrial Development Board Variable Rate
Demand Obligation, 3.80%*..................................... $ 500,000
------------
ARIZONA-2.60%
500,000 Arizona Municipal Finance Program, 7.50%,
due 08/01/1996, pre-refunded at 102........................... 511,591
300,000 Arizona Health Facilities, Variable Rate Demand Obligation, FGIC,
3.50%* ....................................................... 300,000
------------
811,591
------------
CALIFORNIA-4.52%
300,000 Brea Redevelopment Agency, 8.50%, due 09/15/1996,
pre-refunded at 102.5......................................... 310,355
100,000 Los Angeles Airport Variable Rate Demand Obligation, 3.65%* .... 100,000
1,000,000 South Coast California Local Education Agencies,
Pooled TRANs, 5.00%, due 08/14/1996........................... 1,001,487
------------
1,411,842
------------
COLORADO-4.64%
1,000,000 Colorado State Board of Agriculture, Revenue Bonds, MBIA,
3.80%, due 03/01/1997......................................... 1,000,000
445,000 El Paso County School District #38 Revenue Bonds, AMBAC,
5.10%, due 12/01/1996......................................... 448,274
------------
1,448,274
------------
DELAWARE-3.52%
1,100,000 Delaware Economic Development (Delmarva Power Project) Variable
Rate Demand Obligation, 3.60%*................................ 1,100,000
------------
FLORIDA-6.18%
500,000 Florida Housing Finance Authority (Village Place)
Variable Rate Demand Obligation, 3.50%*....................... 500,000
400,000 Florida Housing Finance Authority (Oak Mill)
Variable Rate Demand Obligation, 3.50%*....................... 400,000
1,000,000 Orange County General Obligation Bonds, 7.75%,
due 10/01/1996, pre-refunded at 102........................... 1,030,151
------------
1,930,151
------------
HAWAII-4.48%
1,400,000 Hawaii State Housing Finance & Development Corporation
Variable Rate Demand Obligation, 3.65%*....................... 1,400,000
------------
ILLINOIS-9.61%
1,400,000 Illinois Health Facility, Bensenville, Variable Rate Demand
Obligation, 3.45%*............................................ 1,400,000
1,100,000 Jackson/Union County Port District (ENRON Project) Variable Rate
Demand Obligation, 3.65%*..................................... 1,100,000
500,000 Wood Dale Industrial Development (Nippon Express Project)
Variable Rate Demand Obligation, 3.65%*....................... 500,000
------------
3,000,000
------------
KENTUCKY-3.20%
1,000,000 Pendleton County Variable PUT, 3.75%, due 07/01/1996............ 1,000,000
------------
LOUISIANA-0.96%
200,000 Jefferson Parish General Obligation Bonds, MBIA, 7.00%, due
09/01/1996 ................................................... 201,091
100,000 Louisiana State Recovery District Variable Rate
Demand Obligation, FGIC, 3.65%*............................... 100,000
------------
301,091
------------
MICHIGAN-9.61%
300,000 Michigan Job Development Authority (East Lansing Residence)
Variable Rate Demand Obligation, 3.75%*....................... 300,000
200,000 Michigan Job Development Authority (Kentwood Residence)
Variable Rate Demand Obligation, 3.75%*....................... 200,000
2,500,000 Michigan Hospital Finance Authority Variable Rate
Demand Obligation, 3.55%*..................................... 2,500,000
------------
3,000,000
------------
NEBRASKA-3.21%
1,000,000 Omaha Public Power Revenue Bond, 4.10%, due 02/01/1997.......... 1,002,535
------------
OHIO-3.32%
1,000,000 Ohio State University Revenue Bond, 7.45%, due 12/01/1996,
pre-refunded at 102........................................... 1,036,935
------------
OREGON-5.47%
1,000,000 Oregon State Veteran's Welfare, Variable Rate
Demand Obligation, 3.35%*..................................... 1,000,000
705,000 Tri-County Metropolitan Transportation District Revenue
Bonds, AMBAC, 6.75%, due 08/01/1996........................... 706,776
------------
1,706,776
------------
PENNSYLVANIA-3.84%
700,000 Beaver County Industrial Development Authority (Duquesne/Mansfield
Project) Variable Rate Demand Obligation, 3.25%*.............. 700,000
500,000 Washington County Higher Education
Variable Rate Demand Obligation, 3.30%*....................... 500,000
------------
1,200,000
------------
PUERTO RICO-3.20%
1,000,000 Puerto Rico Commonwealth Government
Variable Rate Demand Obligation, 3.00%*....................... 1,000,000
------------
SOUTH CAROLINA-4.07%
500,000 Charleston City Hospital Revenue (Baker Hospital) Bonds, 9.25%,
due 10/01/1996, pre-refunded at 103........................... 521,700
750,000 York County Pollution Control (Saluda River Electric CO-OP)PUT,
3.10%, due 08/15/1996......................................... 750,000
------------
1,271,700
------------
TENNESSEE-1.92%
600,000 Metro Government Nashville/Davidson County Health
Variable Rate Demand Obligation, FGIC, 3.40%*................. 600,000
------------
TEXAS-17.51%
1,440,000 Bexar County Limited General Obligation Bonds,
5.95%, due 06,15/1997......................................... 1,468,756
500,000 Brazos River Pollution Control Authority (Monsanto Co. Project)
Variable Rate Demand Obligation, 3.30%*....................... 500,000
170,000 Corpus Christi Junior College Revenue Bonds,
8.50%, due 08/01/1996, pre-refunded at 100.................... 170,671
1,000,000 Dallas Independent School District Bonds, zero coupon,
due 08/15/1996................................................ 995,251
1,400,000 Lower Naches Valley Authority Variable Rate
Demand Obligation, 3.40%*..................................... 1,400,000
930,000 North Central Texas Health District Revenue Bonds, MBIA,
5.35%, due 10/01/1996......................................... 933,661
------------
5,468,339
------------
VIRGINIA-1.11%
345,000 Fairfax County Sewer Revenue Bonds, AMBAC, 4.50%,
due 11/15/1996................................................ 345,751
------------
WASHINGTON-9.84%
1,000,000 Richland Golf Enterprise Variable Rate Demand Obligation, 3.45%* 1,000,000
1,465,000 Seattle Housing Authority/Bayview Variable Rate
Demand Obligation, 3.45%*..................................... 1,465,000
150,000 Washington State Health Care Facilities Authority (Swedish
Hospital)Revenue Bonds, AMBAC, 4.50%, due 11/15/1996.......... 150,407
250,000 Washington State Unlimited General Obligation Bond,
8.00%, due 09/01/1996, pre-refunded at 100.................... 251,900
200,000 Washington State Unlimited General Obligation Bond,
8.25%, due 02/01/1997......................................... 204,960
------------
3,072,267
------------
TOTAL STATE AND MUNICIPAL SECURITIES (cost $32,607,252)......... 32,607,252
------------
OTHER INVESTMENT-0.25%
78,500 Nuveen Tax-Exempt Money Market Fund, 3.11% (cost $78,500)....... 78,500
------------
TOTAL SHORT TERM INVESTMENTS (cost $32,685,752)................. 32,685,752
------------
Other assets ($1,949,751) less liabilities ($3,414,506)......... (1,464,755)
------------
NET ASSETS...................................................... $31,220,997
============
*Variable Rate Demand Obligations are payable on demand and secured by letters
of credit or other credit support. The interest rate, which is subject to change
periodically, is based on an index of market interest rates.
FEDERAL INCOME TAX INFORMATION:
The aggregate cost of investments owned at June 30, 1996, for federal income
tax and financial reporting purposes was $32,685,752.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
COMPOSITE
CASH
MANAGEMENT
COMPANY
FINANCIAL
INFORMATION
JUNE 30,
1996
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1996 (UNAUDITED)
MONEY
MARKET TAX-EXEMPT
PORTFOLIO PORTFOLIO
---------- ------------
<S> <C> <C>
ASSETS
Investments at value (identified cost $197,767,850
and $32,685,752, respectively).............................. $197,767,850 $ 32,685,752
Cash.......................................................... 300,659 100,536
Prepaid expense............................................... 30,626 9,570
Receivable for:
Investment securities sold.................................. - 1,300,000
Sale of Fund's shares....................................... 1,855,454 265,185
Interest.................................................... 42,741 272,633
Expense reimbursement....................................... - 1,827
------------ ------------
Total assets.................................................. 199,997,330 34,635,503
------------ ------------
LIABILITIES
Payable for:
Investment securities purchased............................. - 3,304,961
Repurchase of Fund's shares................................. 3,561,099 99,995
Accrued expenses and other payables......................... 101,716 9,550
----------- ------------
Total liabilities............................................. 3,662,815 3,414,506
----------- ------------
NET ASSETS ................................................... $196,334,515 $ 31,220,997
=========== ============
COMPOSITION OF NET ASSETS
Capital Stock, at par......................................... $ 19,633 $ 3,122
Additional paid-in capital.................................... 196,314,882 31,217,875
----------- ------------
$196,334,515 $ 31,220,997
=========== ============
SHARES OUTSTANDING ........................................... 196,334,515 31,220,997
=========== ============
CLASS A SHARES:
Net asset value, offering price, and redemption price per share
(net assets of $196,258,621 and $31,219,451, respectively,
for 196,258,621 and 31,219,451, shares outstanding,
respectively)............................................. $1.00 $1.00
CLASS B SHARES: =========== ============
Net asset value, offering price, and redemption price per share
(net assets of $75,894 and $1,546, respectively, for 75,894 and
1,546, shares outstanding, respectively).................. $1.00 $1.00
=========== ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
MONEY
MARKET TAX-EXEMPT
PORTFOLIO PORTFOLIO
----------- -----------
<S> <C> <C>
INVESTMENT INCOME
Interest income............................................................... $5,263,881 $552,754
----------- -----------
Expenses:
Management fees............................................................... 434,100 68,662
Distribution expenses - Class A............................................... 38,030 -
Distribution expenses - Class B............................................... 541 7
Shareholder servicing - Class A............................................... 202,344 13,838
Shareholder servicing - Class B............................................... 83 20
Postage, printing and office expense.......................................... 109,736 10,139
Registration and filing fees.................................................. 68,364 9,378
Custodial fees................................................................ 41,539 6,034
Directors' fees............................................................... 3,901 3,901
Auditing and legal fees....................................................... 3,837 1,808
Insurance..................................................................... 2,553 743
Expense reimbursement......................................................... (102,563) (25,468)
------------ -----------
Total expenses.................................................................. 802,465 89,062
Fees paid indirectly............................................................ (29,745) (3,448)
------------ -----------
Net expenses.................................................................... 772,720 85,614
------------ -----------
Net investment income........................................................... 4,491,161 467,140
------------ -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................................................... $4,491,161 $467,140
============ ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
MONEY MARKET TAX-EXEMPT
PORTFOLIO PORTFOLIO
------------------------- -------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
JUNE 30, ENDED JUNE 30, ENDED
1996 DECEMBER 31, 1996 DECEMBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income.................................. $ 4,491,161 $ 7,553,304 $ 467,140 $1,035,200
Realized gain from investment transactions............. - 9,864 - 165,507
------------- ------------- ------------ -----------
Net increase in net assets resulting from operations... 4,491,161 7,563,168 467,140 1,200,707
DIVIDENDS TO SHAREHOLDERS
From net investment income
Class A.............................................. (4,489,360) (7,550,363) (467,126) (1,035,177)
Class B.............................................. (1,801) (2,941) (14) (23)
From net capital gains from investment transactions
Class A.............................................. - (9,858) - (165,501)
Class B.............................................. - (6) - (6)
NET CAPITAL SHARE TRANSACTIONS
Class A.............................................. 25,033,253 45,574,783 231,645 (2,624,310)
Class B.............................................. 1,437 63,601 513 6
------------ ------------- ------------ -----------
Total increase (decrease) in net assets................ 25,034,690 45,638,384 232,158 (2,624,304)
NET ASSETS
Beginning of the period................................ 171,299,825 125,661,441 30,988,839 33,613,143
------------- ------------ ----------- ------------
End of the period...................................... $196,334,515 $171,299,825 $31,220,997 $30,988,839
============= ============ =========== ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
MONEY MARKET PORTFOLIO
CLASS A
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
1996 ------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
----------- -------- -------- -------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
INCOME FROM ----------- -------- -------- -------- ------- -------
INVESTMENT
OPERATIONS
Net Investment
Income.............. 0.0232 0.0519 0.0341 0.0238 0.0302 0.0526
----------- -------- -------- -------- ------- -------
Total From Invest-
ment Operations... 0.0232 0.0519 0.0341 0.0238 0.0302 0.0526
----------- -------- -------- -------- ------- -------
LESS DISTRIBUTIONS
Dividends (from net
investment income)... (0.0232) (0.0519) (0.0341) (0.0238) (0.0302)(0.0526)
----------- -------- -------- -------- ------- -------
Total Distributions (0.0232) (0.0519) (0.0341) (0.0238) (0.0302)(0.0526)
NET ASSET VALUE,
END OF PERIOD ......... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
=========== ======== ======== ======== ======= =======
TOTAL RETURN ........... 4.71%(3) 5.33% 3.47% 2.41% 3.07% 5.41%
RATIOS/
SUPPLEMENTAL DATA
Net Assets,
End of Period ($1,000's) $196,259 $171,225 $125,651 $135,187 $141,193 $178,741
Ratio of Expenses to
Average Net Assets(1) 0.83%(3) 0.92% 0.95% 0.97% 0.88% 0.93%
Ratio of Net Income to
Average Net Assets.... 4.79%(3) 5.19% 3.39% 2.38% 3.04% 5.33%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
SIX MONTHS
ENDED YEAR MAY 2
JUNE 30, ENDED TO
1996 DEC. 31, DEC. 31,
(UNAUDITED) 1995 1994(2)
--------- --------- ----------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ... $1.0000 $1.0000 $1.0000
INCOME FROM --------- --------- ----------
INVESTMENT
OPERATIONS
Net Investment
Income.............. 0.0184 0.0421 0.0184
--------- --------- ----------
Total From Invest-
ment Operations... 0.0184 0.0421 0.0184
--------- --------- ----------
LESS DISTRIBUTIONS
Dividends (from net
investment income)... (0.0184) (0.0421) (0.0184)
--------- --------- ----------
Total Distributions (0.0184) (0.0421) (0.0184)
--------- --------- ----------
NET ASSET VALUE,
END OF PERIOD ......... $1.0000 $1.0000 $1.0000
========= ========= =========
TOTAL RETURN ........... 3.74%(3) 4.30% 2.78%(3)
RATIOS/
SUPPLEMENTAL DATA
Net Assets,
End of Period ($1,000's) $76 $74 $11
Ratio of Expenses to
Average Net Assets(1) 1.77%(3) 1.94% 1.93%(3)
Ratio of Net Income to
Average Net Assets.... 3.70%(3) 4.19%(3) 3.29%
(1) Ratio of expenses to average net assets includes expenses paid indirectly
beginning in fiscal year 1995. The ratios before voluntary waiver of certain fees
incurred by the portfolio and expense reimbursements for Class A shares were .94%
in 1996, 1.04% in 1995, 1.04% in 1994, and 1.03% in 1993; for Class B shares,
the ratios were 1.96% in 1996, 2.10% in 1995, and 2.62% in 1994.
(2) From the commencement of offering Class B shares.
(3) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
TAX-EXEMPT PORTFOLIO
CLASS A
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
1996 --------------------------------------------
(UNAUDITED) 1995 1994(2) 1993 1992 1991
--------- ------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
INCOME FROM --------- ------- -------- ------- -------- --------
INVESTMENT
OPERATIONS
Net Investment
Income............. 0.0149 0.0339 0.0235 0.0203 0.0238 0.0410
Net Gains or (Losses)
on Securities
(both realized
and unrealized)..... 0.0000 0.0054 0.0000 0.0000 0.0000 0.0000
Total From Invest- --------- ------- -------- ------- --------- -------
ment Operations... 0.0149 0.0393 0.0235 0.0203 0.0238 0.0410
--------- -------- -------- ------- --------- -------
LESS DISTRIBUTIONS
Dividends (from net
investment income)... (0.0149) (0.0339) (0.0235) (0.0203) (0.0238) (0.0410)
Distributions (from
capital gains) ...... 0.0000 (0.0054) 0.0000 0.0000 0.0000 0.0000
--------- -------- -------- -------- -------- -------
Total Distributions (0.0149) (0.0393) (0.0235) (0.0203) (0.0238) (0.0410)
--------- -------- -------- -------- -------- -------
NET ASSET VALUE,
END OF PERIOD ......... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
========= ======== ======== ======== ======== =======
TOTAL RETURN ........... 3.02%(3) 4.01% 2.37% 2.06% 2.41% 4.19%
RATIOS/
SUPPLEMENTAL DATA
Net Assets,
End of Period ($1,000's)$31,219 $30,988 $33,612 $34,513 $32,425 $40,060
Ratio of Expenses to
Average Net Assets(1). 0.57%(3) 0.61% 0.60% 0.50% 0.57% 0.44%
Ratio of Net Income to
Average Net Assets.... 3.09%(3) 3.39% 2.33% 2.03% 2.36% 4.11%
</TABLE>
<TABLE>
<CAPTION>
CLASS B
SIX MONTHS
ENDED YEAR MAY 2,
JUNE 30, ENDED 1994 TO
1996 DEC. 31, DEC. 31,
(UNAUDITED) 1995 1994(2)
---------- --------- --------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ... $1.0000 $1.0000 $1.0000
INCOME FROM --------- -------- --------
INVESTMENT
OPERATIONS
Net Investment
Income............. 0.0096 0.0226 0.0097
Net Gains or (Losses)
on Securities
(both realized
and unrealized)..... 0.0000 0.0054 0.0000
Total From Invest- --------- -------- --------
ment Operations... 0.0096 0.0280 0.0097
--------- -------- --------
LESS DISTRIBUTIONS
Dividends (from net
investment income)... (0.0096) (0.0226) (0.0097)
Distributions (from
capital gains) ...... 0.0000 (0.0054) 0.0000
--------- -------- --------
Total Distributions (0.0096) (0.0280) (0.0097)
--------- -------- --------
NET ASSET VALUE,
END OF PERIOD ......... $1.0000 $1.0000 $1.0000
========= ======== ========
TOTAL RETURN ........... 1.93%(3) 2.83% 1.45%(3)
RATIOS/
SUPPLEMENTAL DATA
Net Assets,
End of Period ($1,000's) $2 $1 $1
Ratio of Expenses to
Average Net Assets(1). 1.55%(3) 1.73% 1.66%(3)
Ratio of Net Income to
Average Net Assets.... 1.86%(3) 2.12% 1.38%(3)
(1) Ratio of expenses to average net assets includes expenses paid indirectly
beginning in fiscal year 1995. A portion of the expenses were voluntarily waived and reimbursed
by the Adviser, Transfer Agent, and Distributor for the period April 1, 1989, through June 30, 1996.
The ratios before such waivers and expense reimbursements for Class A shares were .74% in 1996,
.81% in 1995, .76% in 1994, .77% in 1993, .81% in 1992 and .78% in 1991; for Class B shares,
the ratios were 4.45% in 1996, 3.66% in 1995, and 3.61% in 1994.
(2) From the commencement of offering Class B shares.
(3) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
Composite Cash Management Company (the "Company") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Company consists of taxable and tax-exempt
money market portfolios, each designed to meet different investment objectives.
The Company offers both Class A and Class B shares. The two classes of shares
differ in their respective sales charges, shareholder servicing fees, and
distribution and service fees. All shareholders bear common expenses of the
Company pro rata, based on value of settled shares outstanding, without
distinction between share class. Dividends are declared separately for each
class. Neither class has preferential dividends rights; differences in per share
dividend rates are generally due to differences in separate class expenses,
including distribution expenses and shareholder servicing fees.
Following is a summary of significant accounting policies, in conformity with
generally accepted accounting principles, which are consistently followed by the
Company in the preparation of its financial statements.
a. Investment securities are valued at cost as adjusted for amortization of
premiums and discounts where applicable. The Board of Directors regularly and
routinely monitors amortized cost assigned to these securities to insure that
carrying value approximates market valuation.
b. The Company distributes its net interest income daily plus or minus any
realized gains or losses, if applicable. Net interest income equals return on
the investment portfolio less expenses including management fees.
c. Interest income is determined on the basis of interest accrued and discounts
earned and is computed daily.
d. Security transactions are accounted for on trade date (execution date of the
order to buy or sell). The cost of investments sold is determined by use of
the specific identification method for both financial reporting and federal
income tax purposes.
e. The Company complies with requirements of the Internal Revenue Code
applicable to regulated investment companies and distributes its income and
realized capital gains so that no provision for federal income or excise tax
is required. Income dividends are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
f. Custodial fees have been increased by $29,745 and $3,448 for the Money Market
and Tax-Exempt portfolios, respectively. Such amounts relate to "expense
offset arrangements." The Company could have otherwise employed the assets to
produce income if it had not entered into such arrangements. In accordance
with the regulations, such amounts are added to custodial fees actually
incurred to arrive at gross custodial fees and then reflected as a deduction,
"fees paid indirectly" to derive net expenses. There were no "expense offset
arrangements" other than custodial fees.
NOTE 2 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
The amounts of fees and expenses described below are shown in the Company's
statement of operations.
Composite Research & Management Co. (the "Adviser") manages each Portfolio;
Murphey Favre, Inc. (the "Distributor"), is the principal underwriter; and
Murphey Favre Securities Services, Inc. (the "Transfer Agent") is the
shareholder servicing agent. All are affiliates of Washington Mutual Bank and
Washington Mutual fsb and subsidiaries of Washington Mutual, Inc.
a. Management fees were paid by the Company to the Adviser. Management fees are
equal to an annual rate of .50% of each Portfolio's average daily net assets
on the first $500 million; .45% on average daily net assets of $500 million
to $1 billion; and .40% on assets in excess of $1 billion.
Under terms of the management agreement, the Adviser will reimburse the
Company should any portfolio's expenses (excluding taxes, interest, and
portfolio brokerage but including the management fee) exceed in any fiscal
year 1.50% of the average daily net assets up to $30 million, and 1% of such
net assets over $30 million. No such reimbursement was required during the
six-month period ended June 30, 1996.
b. Directors' fees and expenses were paid directly to directors having no
affiliation with the Company other than in their capacity as directors. Other
officers and directors received no compensation from the Company.
c. Shareholder servicing fees were paid to the Transfer Agent for services
incidental to issuance and transfer of shares, maintaining shareholder lists,
and issuing and mailing distributions and reports. The authorized monthly
shareholder servicing fees are $1.55 and $1.65 per Class A and Class B
shareholder accounts, respectively. The Transfer Agent is currently waiving
the shareholder servicing fee on Class B shareholder accounts. Additionally,
for all shareholder accounts with balances below $1,000, the Transfer Agent
has waived shareholder servicing fees. For the six-month period ended June
30, 1996, the total shareholder servicing fees waived were $69,921 and $911
for the Money Market and Tax-Exempt portfolios, respectively.
d. Distribution expenses were paid to the Distributor, in accordance with
separate Distribution Plans for Class A and Class B shares. The Company's
Board of Directors adopted the Plans pursuant to Rule 12b-1 of the Investment
Company Act of 1940. The Class A Distribution Plan provides that the Company
will reimburse the Distributor up to 0.15% of the average daily net assets
attributable to Class A shares annually for a portion of its expenses
incurred in distributing the Company's Class A shares, including payments to
brokers. The Class B Distribution Plan provides that the Company will pay the
Distributor a distribution fee, equal to 0.75% annually, and a service fee of
0.25% of the Company's average daily net assets attributable to Class B
shares. For the six-month period ended June 30, 1996, the Distributor
received contingent deferred sales charges of $3,490 from the Money Market
portfolio, upon redemption of Class B shares as reimbursement for sales
commission advanced by the Distributor at the time of such sales.
For non-IRA shareholder accounts with balances below $1,000 and IRA
shareholder accounts with balances below $500, the Distributor has agreed to
reimburse the Company for printing and postage costs. For the six-month
period ended June 30, 1996, the Money Market and Tax-Exempt portfolios were
reimbursed a total of $32,642 and $494, respectively, for printing and
postage costs.
Under terms of the distribution contracts, the Distributor will reimburse
the Company should any portfolio's expenses exceed the most stringent
applicable state blue sky limitation. No such reimbursement was required
during the six-month period ended June 30, 1996.
e. The Adviser, Transfer Agent, and Distributor have jointly agreed to reimburse
the Tax-Exempt portfolio for a portion of expenses incurred. For the
six-month period ended June 30, 1996, the Tax-Exempt portfolio was reimbursed
a total of $24,063 under this agreement.
NOTE 3 - CAPITAL STOCK
MONEY MARKET PORTFOLIO
Capital stock authorized ............ 5,000,000,000
Designated as:
Class A............................ 3,000,000,000
Class B............................ 2,000,000,000
Par value per share.................. $0.0001
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------- ----------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, 1996 DECEMBER 31, JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
-------------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
SHARES
Sold....................................................... 290,604,220 468,926,898 240,003 157,286
Issued for reinvestment of dividends and capital gains..... 4,427,417 7,464,213 1,747 2,616
-------------- ------------ -------------- ------------
295,031,637 476,391,111 241,750 159,902
Reacquired................................................. (269,998,384) (430,816,328) (240,313) (96,301)
-------------- ------------ -------------- ------------
Net increase .............................................. 25,033,253 45,574,783 1,437 63,601
============== ============ ============== ============
</TABLE>
TAX-EXEMPT PORTFOLIO
Capital stock authorized ............ 5,000,000,000
Designated as:
Class A............................ 3,000,000,000
Class B............................ 2,000,000,000
Par value per share.................. $0.0001
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, 1996 DECEMBER 31, JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
--------------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
SHARES
Sold....................................................... 28,601,499 53,063,893 1,527 0
Issued for reinvestment of dividends and capital gains..... 463,934 1,193,764 1 19
--------------- ----------- ------------- ------------
29,065,433 54,257,657 1,528 19
Reacquired................................................. (28,833,788) (56,881,967) (1,015) (13)
--------------- ----------- ------------- ------------
Net increase (decrease).................................... 231,645 (2,624,310) 513 6
=============== =========== ============= ============
</TABLE>
<PAGE>
A FAMILY OF
FUNDS TO MEET
MOST ANY NEED
MORE ABOUT THE COMPOSITE GROUP
A RANGE OF OPPORTUNITY
The Composite Group offers investors six other distinct portfolios whose
securities range from value-oriented common stocks to U.S. government, corporate
and municipal bonds. An investment in one or more of these portfolios allows you
to more closely match your objectives with sensible investment strategies.
COMPOSITE BOND & STOCK FUND
COMPOSITE BOND & STOCK FUND is managed to provide the potential for steady
income from bonds and long-term growth of principal from stocks. Taking a
conservative approach to meeting these objectives, we place as much emphasis on
credit-quality as on yields in choosing bonds, and on fundamental values as on
the potential for appreciation in choosing stocks.
COMPOSITE GROWTH & INCOME FUND
COMPOSITE GROWTH & INCOME FUND has as its objective the long-term growth of
capital, with current income a secondary consideration. In pursuit of this
objective, the Fund invests principally in high-quality common stocks which, in
our opinion, are undervalued.
COMPOSITE NORTHWEST FUND
COMPOSITE NORTHWEST FUND seeks to provide long-term growth of capital by
investing in a portfolio whose common stocks are exclusively those of companies
located or doing business in the Northwest (Washington, Oregon, Idaho, Montana
and Alaska).
COMPOSITE U.S. GOVERNMENT
SECURITIES, INC.
COMPOSITE U.S. GOVERNMENT SECURITIES is designed and managed to provide a
high level of current income, consistent with safety and liquidity. The Fund
seeks to achieve this objective by investing in a careful selection of
obligations issued or backed by the full faith and credit of the United States
government and in repurchase agreements secured by these types of obligations.
Investors should understand that individual shares of the Fund are not
guaranteed by the U.S. government and share values will fluctuate.
COMPOSITE INCOME FUND
COMPOSITE INCOME FUND seeks to provide an attractive level of current income
primarily from investments in corporate bonds and mortgage-backed securities.
Securities with intermediate-term maturities and carefully selected
credit-quality characteristics provide the foundation for this investment
strategy.
COMPOSITE TAX-EXEMPT BOND FUND
COMPOSITE TAX-EXEMPT BOND FUND seeks to provide current income, free from
federal income tax. The Fund invests in high-quality municipal bonds which have
received one of the four highest ratings from Standard & Poor's Corporation or
Moody's Investor Service, Inc. In certain circumstances the alternative minimum
tax, as well as state and local taxes, may apply.
- --------------------------------------------------------------------------------
FOR MORE INFORMATION ON ANY OF THE COMPOSITE GROUP FUNDS, INCLUDING CHARGES
AND EXPENSES, WRITE OR CALL FOR A FREE PROSPECTUS. PLEASE READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
<PAGE>
- --------------------------------------------------------------------------------
For further information, please contact:
FUND OFFICES
Composite Group of Funds
601 W. Main Avenue, Suite 801
Spokane, WA 99201-0613
Phone: (509) 353-3550
Toll free: (800) 543-8072
- --------------------------------------------------------------------------------
ADVISER
Composite Research & Management Co.
1201 Third Avenue, Suite 1220 Seattle, WA 98101-3015
DISTRIBUTOR
Murphey Favre, Inc.
1201 Third Avenue, Suite 780 Seattle, WA 98101-3015
CUSTODIAN
Investors Fiduciary Trust Company
127 W. 10th Street Kansas City, MO 64105-1716
INDEPENDENT PUBLIC ACCOUNTANTS
LeMaster & Daniels PLLC
601 W. Riverside Avenue, Suite 800 Spokane, WA 99201-0614
COUNSEL
Paine, Hamblen, Coffin, Brooke & Miller LLP
717 W. Sprague Avenue, Suite 1200 Spokane, WA 99204-0464
OFFICERS
PRESIDENT
William G. Papesh
EXECUTIVE VICE PRESIDENT
Kerry K. Killinger
VICE PRESIDENTS
Gene G. Branson
Douglas D. Springer
VICE PRESIDENT & TREASURER
Monte D. Calvin
SECRETARY
John T. West
BOARD OF DIRECTORS
CHAIRMAN
Leland J. Sahlin
MEMBERS
Wayne L. Attwood, M.D.
Kristianne Blake
Anne V. Farrell
Edwin J. McWilliams
Michael K. Murphy
William G. Papesh
Jay Rockey
Richard C. Yancey
This report is submitted for the general information of
shareholders of the Funds. For more detailed information
about the Funds, their officers and directors, fees, expenses
and other pertinent information, please see the prospectus
of the Funds. This report is not authorized for distribution
to prospective investors in the Funds unless preceded or
accompanied by an effective prospectus.
[RECYCLE LOGO] (8/96)
COMPOSITE CASH
MANAGEMENT
COMPANY
SEMIANNUAL
REPORT
JUNE 30,
1996
