SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Securities Act of 1933 File #2-65242
Investment Company Act of 1940 File #811-2941
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 23 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 22 /X/
COMPOSITE CASH MANAGEMENT CO.
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(Exact name of Registrant as specified in Charter)
601 W. Main Avenue, Suite 801, Spokane, WA 99201
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(Address of principal executive offices)
1-509-353-3486
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(Registrant's telephone number, including area code)
JOHN T. WEST, CORPORATE SECRETARY
Composite Group of Funds
601 West Main Avenue, Suite 801, Spokane, WA 99201
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(Name and address of agent for service)
Approximate Date of Proposed Public Offering: April 30, 1997
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[xx] on April 30, 1997, pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[ ] on (date) pursuant to paragraph (a)(i) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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CALCULATION OF REGISTRATIAON FEE UNDER THE SECURITIES ACT OF 1933
Indefinite amount has been registered pursuant to Rule 24f-2. The Rule 24f-2
Notice for the most recent fiscal year was filed on February 25, 1997.
<PAGE>
PART A
TABLE OF CONTENTS
N-1A Item No. Location
Item 1. Cover Page ......................................... Cover Page
Item 2. Synopsis ........................................... Fee Table
About this
Prospectus
Item 3. Condensed Financial Information .................... Financial
Highlights
Calculation of
Yields
Item 4. General Description of the Registrant .............. Cover Page
The Fund's
Objectives
Investment
Practices and
Risk Factors
Investment
Restrictions
Item 5. Management of the Fund ............................. Who We Are
The Cost of
Good
Management
How to Buy
Shares
Item 6. Capital Stock and Other Securities ................. Who We Are
Distribution
of Income
Income Taxes on
Dividends
We're Here
to Help
You
Item 7. Purchase of Securities Being Offered ............... The Cost of
Good
Management
The Value of a
Single Share
How to Buy
Shares
Item 8. Redemption or Repurchase ........................... How to Sell
Shares
Item 9. Pending Legal Proceedings .......................... *
*Not applicable or negative answer
<PAGE>
PART B
TABLE OF CONTENTS
Item 10. Cover Page ......................................... Cover Page
Item 11. Table of Contents .................................. Table of
Contents
Item 12. General Information and History .................... Organization
and
Authorized
Capital
Item 13. Investment Objectives & Policies ................... See Prospectus
page 8
Investment
Practices
Brokerage
Allocations
and
Portfolio
Transactions
Item 14. Management of the Fund ............................. The Fund and
Its
Management
Item 15. Control Persons and Principal Holders of Securities. Directors &
Officers of
the Fund
Item 16. Investment Advisory and Other Services ............. The Investment
Adviser
Investment
Management
Services
Distribution
Services
Custodian
Item 17. Brokerage Allocation & Other Practices ............. Brokerage
Allocation
and Portfolio
Transactions
Item 18. Capital Stock and Other Securities ................. Organization
and
Authorized
Capital
Voting
Privileges
Item 19. Purchase, Redemption and Pricing of Securities
Being Offered ................................... How Shares are
Valued
How Shares Can
Be Purchased
How to Sell
Shares - See
Prospectus
page 13
Exchange
Privilege
Services
Provided
by the Fund
Item 20. Tax Status ......................................... Dividends,
Capital
Gain
Distributions
and Taxes
Item 21. Underwriters ....................................... Distribution
Services
Item 22. Performance Information ............................ Performance
Information
Item 23. Financial Statements ............................... Financial
Statements
and Reports
Incorporated
by Reference-
Annual Report
to Share-
holders dated
12/31/96
<PAGE>
COMPOSITE CASH MANAGEMENT COMPANY
Suite 801
601 W. Main Avenue
Spokane, Washington 99201-0613
Telephone (509) 353-3550 Toll Free (800) 543-8072
A MONEY MARKET FUND TO MEET SEVERAL INVESTOR GOALS:
Composite Cash Management Company is a mutual fund designed to enable
investors to meet several short-term goals, as summarized below. Two different
portfolios are available for your investments:
* MONEY MARKET PORTFOLIO. This Portfolio is intended to provide maximum
current income, while preserving capital and maintaining liquidity.
Investments are in high-quality money market instruments.
* TAX-EXEMPT PORTFOLIO. The objective of this Portfolio is maximum current
income that is exempt from federal income tax, while preserving capital and
maintaining liquidity. Primary investments are in high-quality, short-term
municipal obligations.
Please read this Prospectus dated April 30, 1997, and retain it for future
reference. It sets forth information about these Portfolios that a prospective
investor should know before investing.
OTHER IMPORTANT INFORMATION
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED OR GUARANTEED BY
THE UNITED STATES GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. THERE IS NO ASSURANCE THAT THE $1.00
PER SHARE NET ASSET VALUE (NAV) WILL BE MAINTAINED.
A STATEMENT OF ADDITIONAL INFORMATION ABOUT THIS FUND, DATED APRIL 30,
1997, IS ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION. IT IS INCORPORATED
BY REFERENCE INTO THIS PROSPECTUS. YOU MAY OBTAIN A FREE COPY BY CALLING OR
WRITING THE FUND AT THE LOCATION LISTED IN THE HEADING OF THIS INTRODUCTION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
CONTENTS Page
About this prospectus........................... 2
Expense information............................. 3
Financial highlights............................ 5
The Funds' objectives........................... 8
Investment practices and risk factors........... 8
Investment restrictions......................... 9
Who we are...................................... 9
The cost of good management.................... 10
The value of a single share.................... 11
How to buy shares.............................. 11
Distribution of income......................... 12
Income taxes on dividends...................... 12
Exchanges for other Composite funds............ 13
How to sell shares............................. 13
IRAs and other tax-sheltered
retirement plans............................. 14
Calculation of yields.......................... 14
Reports to shareholders........................ 15
We're here to help you......................... 15
ABOUT THIS PROSPECTUS
In this publication you will find basic information about Composite Cash
Management Co. Included are such subjects as how to buy and sell shares, as well
as details about the Fund's objectives, investment practices and restrictions,
and other matters.
If you are not familiar with mutual funds, investment terminology, or the
Composite Group of Funds, you may find it useful to understand the following key
words and terms that appear frequently on these pages:
GLOSSARY OF KEY WORDS AND TERMS
ADVISER. Composite Research & Management Co., which is called the "Adviser"
in this Prospectus, is the manager of Composite Cash Management Co., and several
other Composite mutual funds.
DISTRIBUTOR. Murphey Favre, Inc. distributes Composite Cash Management Co.
and other Composite mutual funds and is referred to as the "Distributor" in this
Prospectus.
EXCHANGE. This privilege allows shareholders to exchange shares of any
Composite fund for the same class of shares of any other Composite fund. There
is no fee or additional sales charge for such an exchange.
PORTFOLIO. The term "Portfolio" identifies one or both of the portfolios
offered through this Prospectus. These "Portfolios" are identified as follows in
this document:
MONEY MARKET. This Portfolio is intended to provide maximum current income,
while preserving capital and maintaining liquidity. Investments are in
high-quality money market instruments.
TAX-EXEMPT. The objective of this Portfolio is maximum current income that
is exempt from federal income tax, while preserving capital and maintaining
liquidity. Primary investments are in high-quality, short-term municipal
obligations.
REDEMPTION. This refers to the sale of mutual fund shares by an investor.
He or she is said to have "redeemed" the shares.
REPRESENTATIVE. This is the person who is authorized to purchase or sell
mutual fund shares on your behalf. Your representative may be an investment
representative of Washington Mutual Bank or a registered representative of
Murphey Favre, Inc. or a registered representative of another securities dealer.
STATEMENT OF ADDITIONAL INFORMATION. This is a document that has more
detailed information about the Fund than what is in this Prospectus. It is on
file with the Securities and Exchange Commission and also is available through
the Fund.
EXPENSE INFORMATION
The table below shows the Portfolio's costs and expenses that an investor
will bear both directly or indirectly and how they affect share ownership.
Operating expenses are based on the Portfolios' expenses during the fiscal year
ended December 31, 1996.
For further information on costs and expenses, please see "The cost of good
management" on Page 7.
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO TAX-EXEMPT PORTFOLIO
------------------------ -------------------------
CLASS A CLASS B CLASS A CLASS B
SHARES SHARES SHARES SHARES
SHAREHOLDER TRANSACTION EXPENSES ----------- ----------- ------------ -----------
FOR EACH PORTFOLIO:
<S> <C> <C> <C> <C>
Sales charge on purchases or reinvested dividends None None None None
Maximum contingent deferred sales charge None 4.00% None 4.00%
Redemption fee None None None None
Exchange fee None None None None
ANNUAL FUND OPERATING EXPENSES:
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Advisory fees .45% .45% .45% .45%
12b-1 expenses .01% 1.00% None 1.00%
Other expenses (after reimbursement) .33% .33% .10% .10%
----------- ----------- ------------ -----------
Total Fund operating expenses (after reimbursement) .79% 1.78% .55% 1.55%
=========== =========== ============ ===========
</TABLE>
Absent reimbursements, "Other expenses" would have been .43% for Money
Market Class A shares and .45% for Class B shares and "Total expenses" would
have been .89% and 1.90%, respectively. "Other expenses" would have been .22%
for Tax-Exempt Class A shares and 2.77% for Class B shares and "Total expenses"
would have been .72% and 4.22%, respectively.
Class B shares are offered only by exchange of Class B shares from other
Composite funds. The 4% contingent deferred sales charge declines 1% annually to
0% after four years.
There is a $10 charge for redemptions paid by Fed Funds wire, but not for
redemptions deposited to your pre-authorized bank account or paid by check.
EXAMPLE
YOU WOULD PAY THE FOLLOWING EXPENSES ON A $1,000 INVESTMENT IN ONE OF THE
PORTFOLIOS, ASSUMING YOU RECEIVE A 5% ANNUAL RETURN, THAT THE PORTFOLIO'S
EXPENSES ARE THE SAME AS THOSE SHOWN IN THE ANNUAL FUND OPERATING EXPENSES TABLE
ON THE PREVIOUS PAGE, AND THAT YOU REDEEMED YOUR SHARES AT THE END OF THE TIME
PERIODS LISTED. THE 5% FIGURE IS A CONSTANT RATE REQUIRED FOR COMPARATIVE
PURPOSES BY THE SECURITIES AND EXCHANGE COMMISSION. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL
RESULTS WILL BE GREATER OR LESS THAN THE ILLUSTRATION.
1 Year 3 Years 5 Years 10 Years
------ ------- -------- --------
Money Market Portfolio, Class A shares $ 8 $24 $42 $ 93
Money Market Portfolio, Class B shares $48 $66 $97 $158
Tax-Exempt Portfolio, Class A shares $ 6 $18 $31 $ 69
Tax-Exempt Portfolio, Class B shares $46 $59 $85 $132
Class B shares automatically convert to Class A shares after six years
without charge or tax impact. Because of this, years seven through ten reflect
Class A operating expenses. Redemption at the end of a full year results in the
imposition of the following year's contingent deferred sales charge. Class B
expenses assume contingent deferred sales charges as follows: one year, 3%;
three years, 1%; five and ten years, 0%. Long-term Class B shareholders could
pay more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers. The Class B
conversion feature is intended to reduce the likelihood this will occur.
FOR FURTHER INFORMATION
* Advisory fees - See "The cost of good management" Page 10
* 12b-1 fees - See "The cost of good management" Page 10
* Conversion of Class B shares to Class A - See "Exchanges for other
Composite funds" Page 13
FINANCIAL HIGHLIGHTS
The tables on the following pages present selected financial information
about the Portfolios, including per share data, expense ratios and other data
based on average net assets. This information has been audited by LeMaster &
Daniels PLLC, the Fund's independent auditors, whose reports appear in the
Fund's annual report. The annual report is incorporated by reference into the
Statement of Additional Information.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
MONEY MARKET PORTFOLIO - CLASS A SHARES
Years Ended December 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
------- ------- ------- ------- ------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF YEAR......... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income.... 0.0476 0.0519 0.0341 0.0238 0.0302 0.0526 0.0733 0.0826 0.0668 0.0588
Total From Investment
Operations........... 0.0476 0.0519 0.0341 0.0238 0.0302 0.0526 0.0733 0.0826 0.0668 0.0588
LESS DISTRIBUTIONS
Dividends (from net
investment income)...... (0.0476)(0.0519)(0.0341)(0.0238)(0.0302)(0.0526)(0.0733)(0.0826)(0.0668)(0.0588)
Total Distributions... (0.0476)(0.0159)(0.0341)(0.0238)(0.0302)(0.0526)(0.0733)(0.0826)(0.0668)(0.0588)
NET ASSET VALUE,
END OF YEAR .............. $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
TOTAL RETURN ............. 4.88% 5.33% 3.47% 2.41% 3.07% 5.41% 7.61% 8.60% 6.85% 5.97%
RATIOS/
SUPPLEMENTAL DATA
Net Assets, End of Year
(in thousands))......... $229,355 $171,225 $125,651 $135,187 $141,193 $178,741 $252,051 $256,017 $180,130 $137,737
Ratio of Expenses to
Average Net Assets(1) .. 0.79% 0.92% 0.95% 0.97% 0.88% 0.93% 0.97% 1.06% 1.01% 1.05%
Ratio of Net Income to
Average Net Assets...... 4.77% 5.19% 3.39% 2.38% 3.04% 5.33% 7.33% 8.26% 6.68% 5.88%
(1) Ratios of expenses to average net assets include expenses paid indirectly
beginning in fiscal year 1995. The ratios before voluntary waiver of certain
fees incurred by the Portfolio and expense reimbursements were .89% in 1996,
1.04% in 1995, and 1.04% in 1994, and 1.03% for 1993.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
TAX-EXEMPT PORTFOLIO - CLASS A SHARES
Years Ended December 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988(2)
------- ------- ------- ------- ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income............ 0.0301 0.0339 0.0235 0.0203 0.0238 0.0410 0.0561 0.0587 0.0381
Net Realized Gains on Securities. - 0.0054 - - - - - - -
Total From Investment Operations 0.0301 0.0393 0.0235 0.0203 0.0238 0.0410 0.0561 0.0587
Less Distributions
Dividends (from net investment
income) ...................... (0.0301)(0.0339)(0.0235)(0.0203)(0.0238)(0.0410)(0.0561)
Distributions (from capital gains) - (0.0054) - - - - - -
Total Distributions........... (0.0301)(0.0393)(0.0235)(0.0203)(0.0238)(0.0410)(0.0561)(0.0587)(0.0381)
NET ASSET VALUE, END OF PERIOD ... $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000 $1.0000
TOTAL RETURN ..................... 3.05% 4.01% 2.37% 2.06% 2.41% 4.19% 5.77% 6.05% 4.10%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
(in thousands) ................ $31,974 $30,988 $33,612 $34,513 $32,425 $40,060 $43,379 $25,113 $ 8,031
Ratio of Expenses to Average
Net Assets(1) ................. 0.57% 0.61% 0.60% 0.50% 0.57% 0.44% 0.24% 0.09% 0.75%
Ratio of Net Income to Average
Net Assets .................... 3.01% 3.39% 2.33% 2.03% 2.36% 4.11% 5.60% 5.97% 3.81%
(1) Ratio of expenses to average net assets includes expenses paid indirectly
beginning in fiscal 1995. The ratios before voluntary waiver of certain fees
incurred by the Portfolio and expense reimbursements were .72% for 1996,
.81% for 1995, .76% for 1994, .77% for 1993, .81% for 1992, .78% for 1991,
.83% for 1990, and .76% for 1989.
(2) Information for 1988 is since the Portfolio's inception on January 28, 1988.
(3) Annualized.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout each period)
MONEY MARKET PORTFOLIO - CLASS B SHARES
Years Ended May 2 to
December 31, Dec. 31,
--------------- ---------
1996 1995 1994(2)
------- ------- ---------
NET ASSET VALUE, BEGINNING OF PERIOD....... $1.0000 $1.0000 $1.0000
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.................... 0.0384 0.0421 0.0184
Total From Investment Operations...... 0.0384 0.0421 0.0184
LESS DISTRIBUTIONS
Dividends (from net investment income)... (0.0384)(0.0421)(0.0184)
Total Distributions................... (0.0384)(0.0421)(0.0184)
NET ASSET VALUE, END OF PERIOD ........... $1.0000 $1.0000 $1.0000
TOTAL RETURN ............................. 3.91% 4.30% 2.78%(3)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period (in thousands). $117 $74 $11
Ratio of Expenses to Average Net Assets(1) 1.69% 1.94% 1.93%(3)
Ratio of Net Income to Average Net Assets 3.87% 4.19% 3.29%(3)
(1) Ratio of expenses to average net assets includes expenses paid indirectly
beginning in fiscal 1995. The ratios before voluntary waiver of certain fees
incurred by the portfolio and expense reimbursements were 1.90% in 1996,
2.10% in 1995 and 2.62% in 1994.
(2) From the commencement of offering Class B Shares.
(3) Annualized.
<PAGE>
TAX-EXEMPT PORTFOLIO - CLASS B SHARES
Years Ended May 2 to
December 31, Dec. 31,
--------------- ---------
1996 1995 1994
------- ------- ---------
NET ASSET VALUE, BEGINNING OF PERIOD........ $1.0000 $1.0000 $1.0000
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income...................... 0.0199 0.0226 0.0097
Net Gains on Securities
(both realized and unrealized)............ - 0.0054 -
Total From Investment Operations........ 0.0199 0.0280 0.0097
LESS DISTRIBUTIONS
Dividends (from net investment income)..... (0.0199)(0.0226)(0.0097)
Distributions (from capital gains)......... - (0.0054) -
Total Distributions..................... (0.0199)(0.0280)(0.0097)
NET ASSET VALUE, END OF PERIOD ............. $1.0000 $1.0000 $1.0000
TOTAL RETURN ............................... 2.01% 2.83% 1.45%(3)
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (in thousands)... $2 $1 $1
Ratio of Expenses to Average Net Assets(1) 1.53% 1.73% 1.66%(3)
Ratio of Net Income to Average Net Assets 1.99% 2.12% 1.38%(3)
(1) Ratio of expenses to average net assets include expenses paid indirectly
beginning in fiscal 1995. The ratios before voluntary waiver of certain
fees incurred by the Portfolio and expense reimbursements were 4.22% in
1996, 3.66% in 1995 and 3.61% in 1994.
(2) From the commencement of offering Class B Shares.
(3) Annualized.
<PAGE>
THE FUND'S OBJECTIVES
Composite Research & Management Co., referred to as the "Adviser" in this
Prospectus, manages the Fund which is made up of two separate portfolios: Money
Market Portfolio and Tax-Exempt Portfolio. The Portfolios' objectives are to
maximize current income while, at the same time, preserving capital and
maintaining liquidity. They intend to do this by purchasing high-quality
investments which mature in 397 days or less with an average maturity of no more
than 90 days. Tax-Exempt Portfolio primarily invests in municipal obligations
that pay interest which is exempt from federal income tax. These objectives are
fundamental and, therefore, cannot be changed without a majority vote of the
Portfolio's outstanding shareholders. Because risks are involved, there cannot
be any assurance that a Portfolio's objectives will be attained.
INVESTMENT PRACTICES AND RISK FACTORS
The Adviser intends to achieve the Fund's objectives by following the
carefully chosen investment procedures summarized below. Included is information
about several relatively complex financial instruments. Because the Portfolios
invest in securities backed by banks and other financial institutions, changes
in the credit quality of these institutions could cause losses to a Portfolio
and affect its share price. The Statement of Additional Information contains
details concerning the types, ratings and nature of the investments and the
criteria used for evaluation and selection.
MONEY MARKET PORTFOLIO
This Portfolio invests solely in money market instruments. These are
selected from the following five general categories:
1) Obligations issued or guaranteed by the U.S. government, its agencies, or
its instrumentalities.
2) Obligations of U.S. and foreign banks with assets of more than $500 million.
3) Short-term commercial notes issued directly by businesses and banking
institutions to finance short-term cash needs. The Portfolio may only
purchase notes which have the two highest ratings by Moody's Investors
Service, Inc. ("Moody's"), or by Standard & Poor's Corporation ("S&P"); or
those issued by companies whose unsecured debt is rated A or better by
Moody's or S&P.
4) Short-term corporate obligations rated A or better by Moody's or S&P.
5) Short-term repurchase agreements.
TAX-EXEMPT PORTFOLIO
This Portfolio invests primarily in a diversified selection of short-term,
investment-grade municipal obligations, whose income is exempt from federal
income tax. Under normal market conditions, the Portfolio attempts to invest
solely in these type of obligations. The Portfolio will not invest more than 20%
of its assets in obligations that pay interest subject to alternative minimum
tax.
Municipal obligations are debt securities of states, counties, cities,
municipal agencies, and other regional districts. The obligations purchased by
the Portfolio are rated in the two highest credit categories assigned by the
major rating services, e.g. Moody's and S&P. They consist of:
1) Municipal commercial paper rated Prime-1 or 2 by Moody's or A-1 or 2 by S&P.
2) Municipal notes rated MIG 1 or 2 by Moody's or rated VMIG 1 or 2 in the case
of floating or variable rate obligations, or SP 1+ or 1 by S&P.
3) Securities of other tax-exempt mutual funds as temporary investments of cash
reserves.
If not rated, securities purchased by the Portfolio will be of comparable
quality to the above ratings as determined by the Adviser under the supervision
of the Fund's Board of Directors.
Short-term municipal notes may include, but are not limited to, tax
anticipation notes (TANs), bond anticipation notes (BANs), revenue anticipation
notes (RANs) and project notes (PNs), or other forms of short-term municipal
loans and obligations.
When, in the opinion of the Adviser, adverse market conditions exist, the
Tax-Exempt Portfolio may adopt a "defensive" strategy. In such cases, it may
temporarily invest more than 20% of its assets in taxable money market
instruments. These investments must have the quality and maturity
characteristics comparable to those for the municipal obligations of the
Portfolio, but they would produce income that is not exempt from federal income
taxes. The Adviser considers that this would be necessary only under highly
improbable circumstances. Taxable investments are limited to:
1) Obligations of the U.S. government and its agencies and instrumentalities.
2) Corporate commercial paper rated in the highest grade by either Moody's or
S&P.
3) Obligations of U.S. banks belonging to the Federal Reserve System.
4) Time or demand deposits in U.S. banks.
5) Municipal bonds or any of the previously mentioned investments subject to
short-term repurchase agreements.
INVESTMENT RESTRICTIONS
Although many of the Adviser's decisions depend on flexibility, there are
certain principles so fundamental to a Portfolio that they may not be changed
without a vote of a majority of the outstanding shares of the that Portfolio.
IN ADDITION TO OTHER RESTRICTIONS LISTED IN THE STATEMENT OF ADDITIONAL
INFORMATION, EACH OF THE PORTFOLIOS MAY NOT:
1) Invest in common stocks or other equity securities.
2) Borrow money for investment purposes, except that a portfolio may borrow up
to 5% of its total assets in emergencies and that it may borrow up to
33 1/3% of such assets to meet redemption requests that would otherwise
result in the untimely liquidation of vital parts of its portfolio.
3) Invest more than 5%* of its total assets in the securities of any single
issuer, except for the U.S. government, its agencies, or instrumentalities.
4) Invest more than 25%* of its total assets in securities of issuers in any
single industry.
*Percentage at the time investment is made.
WHO WE ARE
Composite Cash Management Company is a diversified, open-end management
investment company. It was incorporated July 2, 1979, under the laws of the
State of Washington. The Fund is a "series" company presently consisting of two
portfolios.
ADVISER. The Fund is managed by Composite Research & Management Co., which
is referred to as the "Adviser" in this Prospectus.
The Adviser has been in the business of investment management since 1944.
It currently manages more than $2.3 billion for mutual funds and institutional
advisory accounts, including more than $1.4 billion within the Composite Group
of Funds.
The Adviser advises the Fund on investment policies and specific
investments. Subject to supervision by the Fund's Board of Directors, the
Adviser determines which securities are to be bought and sold. These decisions
are based on analyses of the economy, sectors of industry, and specific
institutions. They are compiled from extensive data provided by some of the
country's largest investment firms, in addition to the Adviser's own research.
DISTRIBUTOR. Murphey Favre, Inc. is the "Distributor" for this Fund. The
Distributor is not a bank. Securities offered by it are not deposits nor bank
obligations, and they are not backed or guaranteed by a bank nor insured by the
FDIC. The value of investments may fluctuate, return on investments is not
guaranteed, and loss of principal is possible.
TRANSFER AGENT. Murphey Favre Securities Services, Inc., which serves as
the "Transfer Agent," acts as the Fund's shareholder servicing and dividend
disbursing agent.
THE ADVISER, DISTRIBUTOR AND TRANSFER AGENT, WHOSE ADDRESSES ARE LISTED ON
THE BACK COVER, ARE AFFILIATES OF WASHINGTON MUTUAL BANK AND WASHINGTON MUTUAL
FSB. THEY ARE ALSO SUBSIDIARIES OF WASHINGTON MUTUAL, INC.
OTHER IMPORTANT INFORMATION. The Fund has an authorized capitalization of
10 billion shares of capital stock. Both Portfolios offer two classes of shares,
which are described in the section concerning "How to buy shares."
The shares do not have preemptive rights, and none has preference as to
conversion, exchange, dividends, retirement, liquidation, redemption or any
other feature, except as described in "How to buy shares." The Fund does not
normally hold annual shareholder meetings. It may hold shareholder meetings from
time to time on important matters. Shares have equal voting rights on corporate
matters submitted for shareholder approval, except that each class may vote
separately on its distribution plan.
THE COST OF GOOD MANAGEMENT
Composite Research & Management Co. serves as Adviser under investment
management agreements with both Portfolios. The agreements are renewable every
year, subject to the approval of the Fund's Board of Directors or the
shareholders themselves.
BEFORE READING THIS SECTION, YOU MAY FIND IT USEFUL TO TURN BACK TO PAGE 3
TO REVIEW THE SUMMARY ON "ANNUAL FUND OPERATING EXPENSES." THAT PROVIDES AN
OVERVIEW OF MUCH OF WHAT IS COVERED IN DETAIL HERE.
ADVISORY FEES
A fee based on a percentage of average daily net assets is paid to the
Adviser for its services. This includes investment management and administrative
services and the Adviser's function as an agent for the Fund when paying a
portion of the fee to the Distributor and Transfer Agent for their services.
Advisory fees are calculated daily and paid monthly. They are equal to an
annual rate of .45% of the average daily net assets of each Portfolio. If the
average daily net assets grow to more than $1 billion in either Portfolio, the
rate will decrease to .40% with respect to that Portfolio.
DISTRIBUTION PLANS
The Fund's Board of Directors has approved and monitors a distribution plan
that meets the provisions of Rule 12b-1 under the Investment Company Act of
1940. The plan is intended to benefit shareholders by stimulating interest in
purchasing shares of the Fund and, thus, providing a consistent flow of
investment capital. This allows larger and more diversified holdings, as well as
economies of scale.
CLASS A SHARES. The plan authorizes the Fund to reimburse the Distributor
for direct costs of marketing, selling and distributing Class A shares of the
Fund, subject to directors' approval. These costs include sales literature and
prospectuses (other than those provided to current shareholders), and other
costs of sales and marketing, including any state business and occupation tax
assessed on the reimbursements.
The distribution plan allows both Portfolios to reimburse actual Class A
distribution costs subject to directors' approval. Reimbursements are not to
exceed annual limits of .15% of a Portfolio's average daily net assets
attributable to Class A shares. No service fees are paid to dealers for Class A
shares.
CLASS B SHARES. Class B shares of both Portfolios are available only by
exchange of Class B shares from other funds within the Composite Group. The plan
authorizes both Portfolios to pay the Distributor a distribution fee of .75% of
each Portfolio's average daily net assets attributable to Class B shares and a
service fee of .25% of such assets. The distribution fee is designed to permit
investors to purchase Class B shares without having to pay a front-end sales
charge. At the same time, this allows compensation to the Distributor in
connection with the sale of Class B shares. The service fee covers account
maintenance and other shareholder services.
The Distributor pays authorized dealers service fees at an annual rate of
.25% of the average daily value of Class B shares in the accounts of the dealer
or its customers.
Because the Distributor's distribution fee for Class B shares is not tied
directly to its expenses, the amount of compensation may be more or less than
its actual expenses. For this reason, the Class B distribution plan may be
characterized by the staff of the Securities and Exchange Commission as being a
"compensation" plan - in contrast to the Class A "reimbursement" plan. The Fund
is not liable for any expenses incurred by the Distributor in excess of the
compensation it receives.
TOTAL EXPENSES
Other operating expenses include fees of directors not employed by the
Adviser, Transfer Agent fees, custodial fees, auditing and legal fees, taxes,
costs of issuing and redeeming shares, publishing of reports to shareholders,
corporate meetings, and other normal costs of running a business.
The Transfer Agent fees are for shareholder services. You may be required
to pay a separate fee if you need special services such as producing and mailing
of historical account transcripts.
THE VALUE OF A SINGLE SHARE
The value of each class of shares of each Portfolio is calculated at the
end of each business day of the New York Stock Exchange or at 1:00 p.m. Pacific
time, whichever is earlier. That figure is determined separately for each class
by adding the value of its securities and other assets - and then subtracting
its liabilities. Next, the resulting figure is divided by the number of shares
of the class outstanding. That provides the net asset value per share, which is
commonly referred to as "NAV."
The securities in each Portfolio are valued using the amortized cost method
by adjusting the cost of each security for amortization of discount or premium
and accrued interest (unless unusual circumstances indicate another method of
determining fair value should be considered by the Fund's Board of Directors).
The NAV per share of most mutual funds fluctuates. However, many money
market funds, including the Portfolios of Composite Cash Management Company,
attempt to maintain the NAV at a constant $1.00 per share.
Fund shares are not guaranteed nor insured by the U.S. government, and
there is no assurance that the $1.00 per share NAV will be maintained.
HOW TO BUY SHARES
Class A shares of both Portfolios are offered continuously at NAV on any
regular business day. THERE IS NO INITIAL OR DEFERRED SALES CHARGE ON CLASS A
SHARE PURCHASES. Class B shares are offered only by exchange of Class B shares
from another Composite fund. See "Exchanges for other Composite funds."
You may buy Class A shares through Murphey Favre, Inc. (the Distributor),
Washington Mutual Bank, or through selected securities dealers. The Fund's
shares may not be available in all states.
MAIL. Accounts may be opened by mail by sending an application form
together with a check for $1,000 or more ($500 or more for IRA accounts) to the
address noted below. Application forms are available by requesting one from the
same address or by calling the Fund at 1-800-543-8072.
Composite Cash Management Company
601 W. Main Ave., Suite 801
Spokane, Washington 99201-0613
WIRE TRANSFER. Accounts may be opened even more quickly with a Federal
Reserve wire transfer of $1,000 or more. Instructions are available from the
Fund offices.
SUBSEQUENT INVESTMENTS. Subsequent investments should be in amounts of $50
or more.
SYSTEMATIC INVESTMENT PROGRAM. For your convenience, you may arrange to
have monthly purchases automatically deducted from your checking account as part
of a systematic investment program. The minimum initial and monthly investments
in this program are $50. You can arrange this at the time of your application or
you can do it later by talking to your Representative or by calling the Fund.
EFFECTIVE DATE OF PURCHASE. An order to purchase shares will be entered on
the day it is received, if it is received prior to 1:00 p.m. Pacific time.
Otherwise it will be entered on the following business day. Purchase orders are
effective when payment is received in federal funds or converted to federal
funds by the Transfer Agent. This generally occurs within one to two business
days, however, checks drawn on banks that are not members of the Federal Reserve
System may take longer to convert into federal funds. The investment will earn
income starting the day following its effective date.
OTHER INFORMATION. The Funds and the Distributor reserve the right to
refuse an order to buy shares.
In the interest of economy and shareholder convenience, physical
certificates representing Fund shares will only be issued upon written request
to the Fund or by request from your Representative. Draft writing and certain
other withdrawal options are not available for certificated shares.
DISTRIBUTION OF INCOME
Both Portfolios distribute dividends from investment income daily. Net
investment income is the difference between interest earned on Portfolio
securities and expenses.
Dividends are reinvested in additional shares at the NAV each day. In
effect, this compounds an investor's income daily. Dividends are earned on the
day of withdrawal, not the day of purchase. You may request to have dividends
deposited to a pre-authorized bank account or paid by check each month. If
you've chosen to receive dividends in cash and the U.S. Postal Service cannot
deliver your check, the Fund reserves the right to reinvest your check and to
automatically reinvest subsequent dividends in your account. The Fund may also
automatically reinvest dividends of $10 or less.
INCOME TAXES ON DIVIDENDS
Here is important information on tax provisions that relate to the
Portfolios:
MONEY MARKET PORTFOLIO. You are responsible for federal income tax (and
state and local income taxes, if applicable) on dividends from this Portfolio.
Generally, dividends paid by the Portfolio are taxable as ordinary income.
Of course, if your shares are in an IRA or other qualified retirement plan,
you will not have to pay tax on the reinvested amount until funds are withdrawn.
TAX-EXEMPT PORTFOLIO. Tax-exempt interest earned by this Portfolio retains
its tax-advantaged status when it is passed on by the Fund to investors.
However, the federal exemption may not result in exemption from state and local
taxes. A portion of the income may be subject to alternative minimum tax. Please
consult your tax advisor for more information.
Interest income earned by the Portfolio from any investments that are not
tax-exempt is taxable to you as ordinary income. (For information on how this
could happen, please see the closing segment of "How we plan to reach our
objectives.") The same is true for income from any short-term capital gains.
BOTH PORTFOLIOS. Shortly after the end of each year, the Fund will advise
you of the tax status of the dividends from your individual Portfolio. Most of
the Fund's income is expected to consist of interest.
Each Portfolio complies with provisions of the Internal Revenue Code
applicable to regulated investment companies and distributes its taxable income
accordingly. Because of this, the Fund does not anticipate being subject to
federal income or excise taxes on earnings they distribute to shareholders.
Because of tax law requirements, you must provide the Fund with an accurate
and certified Social Security number or taxpayer identification number to avoid
the 31% "backup" withholding tax.
EXCHANGES FOR OTHER COMPOSITE FUNDS
You may exchange shares of any Composite fund for the same class of shares
of any other Composite fund. In addition to the Portfolios described in this
Prospectus, there are Composite funds that invest in other types of securities,
including: stocks, a balance between stocks and bonds, income-generating
securities, tax-exempt bonds, and U.S. government securities.
Contact your Representative or the Fund offices to request a prospectus for
the Composite funds that interest you. You may arrange for automatic monthly
exchanges which are subject to the minimum investments allowed for systematic
investment plans of the acquired fund.
Exchanges are made at the prevailing NAV of the shares being exchanged. Any
contingent deferred sales charge on the subsequent sale of Class B shares
acquired by exchange will be based on the schedule applicable to the shares
given in exchange. Shares exchanged from Composite Cash Management Company will
be subject to the acquired fund's sales charge unless the shares given in
exchange were previously exchanged from a Composite fund that imposes an initial
or contingent deferred sales charge. Sales charges are fully explained in the
applicable fund's prospectus.
All exchanges are subject to the minimum investment requirements of the
Composite fund being acquired and to its availability for sale in your state of
residence. The Fund reserves the right to refuse any order for the purchase of
shares, including those by exchange. In particular, a pattern of exchanges that
coincides with a "market timing" strategy may be disruptive to the Fund and,
consequently, may be disallowed.
HOW TO SELL SHARES
You may redeem shares at any time. Requests received by 1:00 p.m. Pacific
time will result in redemption of shares on the next business day. Several
alternatives are available to you:
DRAFTS. For withdrawals of $500 or more, you may write drafts that are
similar to checks. This option is available for Class A shares and is selected
by filling out the appropriate section of the account application or by
contacting the Fund offices or your Representative.
TELEPHONE. You may authorize telephone transactions on your Fund account
application or by contacting the Fund offices or your Representative.
Provided you have pre-authorized these transactions, you may redeem or
exchange shares by telephoning 1-800-543-8072. You may also request these
transactions through your Representative. Proceeds may be directed to a
pre-authorized bank or brokerage account or to the address of record for the
account.
It may be difficult to reach the Fund offices by telephone during periods
of unusual economic or market activity. Please be persistent if this occurs. The
Transfer Agent is committed to extending its availability beyond regular 7 a.m.
to 6 p.m. (Pacific time) customer service hours during such periods. Calls
requesting telephone redemption or exchanges during periods of unusual market
activity that are received after business hours will be recorded and returned in
the order they were received.
For protection, telephone instructions are verified. This is done by
requesting personal shareholder information, providing written confirmation of
each telephone transaction, and recording telephone instructions. The Transfer
Agent may require a Letter of Authorization, other documents, or authorization
from your Representative to initiate telephone redemptions of $25,000 or more
that are not directed to your pre-authorized bank or brokerage account. All
transactions are reflected on shareholder statements. If reasonable procedures
are used, neither the Transfer Agent nor the Fund will be liable for following
telephone instructions which they reasonably believe to be genuine. Shareholders
assume the risk of any losses in such cases. However, the Transfer Agent or the
Fund may be liable for any losses because of unauthorized or fraudulent
telephone instructions if reasonable procedures are not followed.
WRITTEN REQUEST. Redemptions also may be requested by writing the Fund
offices. Written requests may require a signature guarantee, as discussed below,
and the return of any outstanding stock certificates. Changes in pre-authorized
redemption instructions or your account registration also require signature
guarantees. For your protection, the signature(s) must be guaranteed by an
officer of a U.S. bank belonging to the Federal Reserve System, a member of the
Stock Transfer Association Medallion Program, or a member of the National
Association of Securities Dealers.
PROMPT PAYMENT. Payment normally will be made on the next business day
after the transaction, but no later than seven days after unless you recently
purchased Fund shares by check. In that case, redemption proceeds may be delayed
until the Transfer Agent is reasonably satisfied that the check has been
collected. Generally this occurs within 14 days. Redemption proceeds will be
sent by check or Automated Clearing House transfer to your bank account without
charge. Wire redemption proceeds may be subject to a $10 fee. The receiving bank
also may charge a fee.
SYSTEMATIC WITHDRAWAL PLAN. Shareholders may choose to receive specific
cash withdrawals on a periodic basis. A $5,000 minimum balance is required to
establish a systematic withdrawal plan in a Fund account. Shares of the Fund
will be redeemed to provide the requested payment. Naturally, withdrawals that
continually exceed dividend income will eventually exhaust the account.
Class B shareholders may use a systematic withdrawal plan to redeem up to
12% annually of the value of the Fund account, measured at the time the plan is
established, without incurring a contingent deferred sales charge.
OTHER CONSIDERATIONS. It is costly to maintain small accounts. Because of
this, an account may be closed after 90 days advance, written notice if the
total account value falls below $700 ($500 in an IRA account) when any transfer
or redemption is made. Shares will be redeemed at the closing NAV on the day the
account is closed. To prevent an account closure, investors may increase
holdings to a minimum of $700 during the 90-day grace period.
IRAS AND OTHER TAX-SHELTERED RETIREMENT PLANS (MONEY MARKET PORTFOLIO ONLY)
Money Market Portfolio shares may be appropriate for many retirement plans,
including IRAs. Retirement plan contributions are tax-deductible in some cases,
and earnings compound on a tax-deferred basis until withdrawn.
From time to time, Murphey Favre or its affiliates may offer "IRA bonuses"
on IRA rollovers and transfers to IRA accounts maintained by them. The Fund does
not pay any portion of these bonuses. The products purchased through these
rollovers and transfers may include the Composite Group of Funds.
Information about IRAs and other qualified retirement plans is available
from the Fund offices or your Representative.
CALCULATION OF YIELDS.
From time to time, either Portfolio may advertise its yield and effective
yield.
YIELD. The "yield" refers to the income generated by an investment in the
Portfolio over a seven-day period that is identified in the advertisement. The
income is then annualized. That amount then is shown as a percentage of the
total investment.
EFFECTIVE YIELD. The "effective yield" is calculated similarly. However,
when it is annualized, the income is assumed to be reinvested, and it will show
growth from compounding. The effective yield will be higher than the yield
because of this assumed compounding.
TAX-EQUIVALENT YIELD. For the Tax-Exempt Portfolio, you may want to
calculate the tax-equivalent yield. That will show you the yield you would need
to receive from a taxable investment to reach the same earnings level as this
Portfolio. Here is how to do that: First, subtract your income tax rate from
1.0. Second, divide the Tax-Exempt Portfolio's stated yield or effective yield
by your answer to the first step. For example, to calculate a tax-equivalent
yield at a 36% tax rate, divide the Portfolio's yield by .64.
OTHER INFORMATION. Each Portfolio will include yields of each class of
shares in any advertisement or promotional material presenting performance data
for that Portfolio. The Portfolios also may quote performance results from
recognized services and publications which monitor the performance of mutual
funds. Included, too, may be comparisons of their performance with various
published historical indices.
THE FUND'S YIELDS ARE NOT FIXED, NOR IS THE PRINCIPAL GUARANTEED.
ANNUALIZATION OF RATES SHOULD NOT BE INTERPRETED AS AN INDICATION OF THE FUND'S
ACTUAL PERFORMANCE IN THE FUTURE. THE FUND DOES NOT INTEND ANY SUCH
REPRESENTATION.
REPORTS TO SHAREHOLDERS
Shareholders receive semiannual and annual reports. The financial
statements included in the annual reports are audited by independent
accountants.
Shareholders whose accounts are directly with the Fund also receive
statements at least quarterly. These statements show account transactions, the
total number of shares owned, and any dividends or distributions paid.
Shareholders also receive written confirmation at least once a month reflecting
each transaction which is not a dividend reinvestment, systematic investment
program purchase, or systematic withdrawal plan redemption.
WE'RE HERE TO HELP YOU
Any inquiries you may have about this Fund or your account should be
directed to the Fund at the address or telephone number on the front page and
back cover of this Prospectus. We will be glad to answer your questions.
For further information, please contact:
FUND OFFICES
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 1400
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
BOARD OF DIRECTORS
Wayne L. Attwood, M.D.
Kristianne Blake
Anne V. Farrell
Michael K. Murphy
William G. Papesh
Daniel L. Pavelich
Jay Rockey
Richard C. Yancey
COMPOSITE
CASH
MANAGEMENT
COMPANY
MONEY MARKET
PORTFOLIO
TAX-EXEMPT
PORTFOLIO
PROSPECTUS
APRIL 30,
1997
<PAGE>
STATEMENT OF
ADDITIONAL
INFORMATION
APRIL 30, 1997
COMPOSITE CASH MANAGEMENT COMPANY
A Money Market Fund Designed to Meet Several Investor Goals
601 W. Main Avenue, Suite 801
Spokane, WA 99201-0613
Telephone: 509-353-3550
Toll free: 800-543-8072
Composite Cash Management Company (the "Fund") aims to enable investors to meet
several short-term goals by providing a series of two separate portfolios, each
with different investment objectives. Each Portfolio offers two classes of
shares. Class A shares are offered directly to the public or via exchange of
Class A shares from other funds within the Composite Group. Class B shares are
offered only by exchange of Class B shares from other Composite funds. The
portfolios are:
MONEY MARKET PORTFOLIO: Investing in high-quality money market instruments for
maximum current income, while preserving capital and allowing liquidity.
TAX-EXEMPT PORTFOLIO: Investing in high-quality, short-term municipal
obligations for maximum current income exempt from federal income tax, while
preserving capital and allowing liquidity.
Individual portfolio investments, carefully chosen to fulfill the different
objectives, are adjusted in accordance with management's evaluation of changing
market risks and economic conditions.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. IT SHOULD BE READ
IN CONJUNCTION WITH THE FUND'S PROSPECTUS DATED APRIL 30, 1997, WHICH CAN BE
OBTAINED WITHOUT CHARGE BY CONTACTING THE FUND AT THE ABOVE ADDRESS.
TABLE OF CONTENTS
PAGE Page
The Fund and Its Management 2-7 Investment Practices 15-18
Distribution Services 7-9 Investment Restrictions 18-19
How Shares Are Valued 9 Performance Information 19-21
How Shares Can Be Brokerage Allocations and
Purchased 10 Portfolio Transactions 21-22
Redemption of Shares 10-11 General Information 23-24
Exchange Privilege 11-12 Financial Statements and
Services Provided by the Fund 12-13 Reports 24
Tax-Sheltered Retirement Plans 13-14 Appendix A 25
Dividends, Capital Gain Appendix B 26-28
Distributions and Taxes 14-15
THE FUND AND ITS MANAGEMENT
THE INVESTMENT ADVISER
As discussed under "Who We Are" in the prospectus, Composite Cash Management Co.
(the "Fund") is managed and investment decisions are made under the supervision
of Composite Research & Management Co. (the "Adviser"). Decisions to buy, sell,
or hold a particular security are made by an investment team of the Adviser,
subject to the control and final direction of the Fund's Board of Directors.
Composite Research & Management Co. is Adviser for the eight investment
companies (currently 11 separate portfolios) in the "Composite Group," namely:
Composite Bond & Stock Fund, Inc.; Composite Equity Series, Inc.; Composite
Income Fund, Inc.; Composite Tax-Exempt Bond Fund, Inc.; Composite Cash
Management Company; Composite U.S. Government Securities, Inc.; Composite
Northwest Fund, Inc.; and Composite Deferred Series, Inc. The Adviser also
provides investment advice to institutional clients.
INVESTMENT MANAGEMENT SERVICES
Advisory fees and services performed by the Adviser are discussed under "The
Cost of Good Management" in the prospectus. The investment management agreements
(the "Agreements") between the Fund and the Adviser require the Adviser to
furnish suitable office space, research, statistical and investment management
services to the Fund. It was approved by the Fund's shareholders and will
continue if approved at least annually by the Fund's Board of Directors
(including a majority of the directors who are not parties to the Agreements) by
votes cast in person at a meeting called for the purpose of voting on such
approval; or by vote of a majority of the outstanding shares of the respective
Portfolio. The Agreements can be terminated by either party on sixty (60) days'
notice, without penalty, and each provides for automatic termination upon its
assignment.
Under the provisions of the Investment Company Act of 1940 and as used elsewhere
in the prospectus and this statement of additional information, the phrase "vote
of the majority of the outstanding shares of the Fund" means the vote at any
meeting of shareholders of (a) 67% or more of the shares present at such meeting
if the shareholders of more than 50% of the outstanding shares are present or
represented by proxy; or (b) more than 50% of the outstanding shares, whichever
is less.
In payment for its services, the Adviser receives a monthly fee from each
Portfolio equal to .45% per annum computed on average daily net assets of the
first $1 billion and .40% on assets in excess of $1 billion. Prior to July 1,
1995, the fee was .50% of average daily net assets. Fees paid to the Adviser
during the fiscal years ended December 31, 1996, 1995, and 1994 for the Money
Market Portfolio were $916,867, $688,617, and $635,990, respectively. Fees paid
during 1996, 1995, and 1994 for the Tax-Exempt Portfolio were $139,482,
$143,292, and $168,779, respectively.
The Agreements require that, should the expenses of either Portfolio (excluding
taxes, interest, portfolio brokerage and the .75% Class B Distribution fee)
exceed in any fiscal year 1.5% of the average net assets of the Portfolio up to
$30 million and 1% of average net assets over $30 million, it will reimburse the
Portfolio for such excess. No reimbursements were required by these Agreements
during 1996, 1995, and 1994.
Under the terms of the Agreements, the Portfolios are required to pay fees of
directors not employed by the Adviser or its affiliates, custodial expenses,
brokerage fees, taxes, auditing and legal expenses, costs of issue, transfer,
registration or redemption of shares for sale; costs relating to disbursement of
dividends, corporate meetings, corporate reports, and the maintenance of the
Fund's corporate existence.
The Adviser, Transfer Agent, and Distributor jointly agreed to reimburse the
Tax-Exempt Portfolio for a portion of its expenses during 1996, 1995, and 1994.
Such reimbursements and waivers may continue at their discretion. Additionally,
effective September 1, 1995, the Transfer Agent agreed to waive shareholder
servicing fees for accounts below $1,000 and the Distributor reimbursed printing
and postage expenses attributable to these accounts. The Money Market
Portfolio's expense waivers and reimbursements totaled $202,612 during 1996.
Amounts waived and reimbursed to the Tax-Exempt Portfolio for the years ended
December 31, 1996, 1995, and 1994 totaled $47,274, $57,104, and $55,629,
respectively.
Investment decisions for the Fund are made independently of those for other
funds in the Composite Group. However, the Adviser may determine that the same
security is suitable for more than one of the funds. If more than one of the
funds is simultaneously engaged in the purchase or sale of the same security,
the transactions are allocated as to price and amount in accordance with a
formula considered to be equitable to each. It is recognized that in some cases
this system could have a detrimental effect on the price or volume of the
security as far as the Fund is concerned. In other cases, however, it is
believed that the ability to participate in volume transactions may provide
better executions for the Fund. It is the opinion of the Fund's Board of
Directors that these advantages, when combined with the personnel and facilities
of the Adviser's organization, outweigh possible disadvantages which may exist
from exposure to simultaneous transactions.
The Fund has adopted a code of ethics which is intended to prevent access
persons from conducting personal securities transactions which interfere with
Fund portfolio transactions or otherwise take unfair advantage of their
relationship with the Fund. In general, the personal securities transactions of
individuals with access to information regarding Fund portfolio transactions
must be pre-cleared by the Adviser's Compliance Officer and must not occur when
similar transactions are contemplated by the Fund.
GLASS-STEAGALL
The Glass-Steagall Act, among other things, generally prohibits member banks of
the Federal Reserve System from engaging to any extent in the business of
issuing, underwriting, selling or distributing securities and generally
prohibits management interlocks and affiliations between member banks and
companies engaged in certain activities. In a Statement of Policy dated
September 1, 1982, the Federal Deposit Insurance Corporation concluded that the
investment restrictions of the Glass-Steagall Act do not apply to banks or their
affiliates if the banks are not members of the Federal Reserve System.
Washington Mutual Bank is not a member bank. The Adviser has advised the Fund
that, in its view, the Glass-Steagall Act does not prohibit the activities of
the Adviser and that it may perform the services for the Fund contemplated by
the Investment Management Agreements without violation of the Glass-Steagall Act
or other applicable banking laws or regulations.
DIRECTORS AND OFFICERS OF THE FUND
The Fund's Board of Directors is elected by its shareholders. Interim vacancies
may be filled by current directors so long as at least two-thirds were
previously elected by shareholders. The Board has responsibility for the overall
management of the Fund, including general supervision and review of its
investment activities. The directors, in turn, elect the officers of the Fund
who are responsible for administering the day-to-day operations. Directors and
officers hold identical positions with each of the funds in the Composite Group.
Directors and officers of the Fund and their business experience for the past
five years are set forth below. Unless otherwise noted, the address of each
executive officer is 601 W. Main Avenue, Suite 801, Spokane, Washington
99201-0613.
WAYNE L. ATTWOOD, MD
Director
2931 S. Howard
Spokane, Washington 99203
Dr. Attwood is a retired doctor of internal medicine and gastroenterology in
Spokane, Washington.
KRISTIANNE BLAKE
Director
705 W. 7th, Suite D
Spokane, Washington 99204
Mrs. Blake is president of Kristianne Gates Blake, PS, an accounting services
firm specializing in personal financial planning and tax planning.
*ANNE V. FARRELL
Director
425 Pike Street, Suite 510
Seattle, Washington 98101
Mrs. Farrell is president and CEO of The Seattle Foundation (a charitable
foundation). In addition, she serves as a director of Washington Mutual, Inc.
*MICHAEL K. MURPHY
Director
PO Box 3366
Spokane, Washington 99220-3366
Mr. Murphy is Chairman and CEO of CPM Development Corporation (a holding company
which includes Central Pre-Mix Concrete Company). In addition, he serves as a
director of Washington Mutual, Inc.
*WILLIAM G. PAPESH
President and Director
Mr. Papesh is president and a director of the Adviser and Transfer Agent, and an
executive vice president and a director of the Distributor.
DANIEL L. PAVELICH
Director
Two Prudential Plaza
180 North Stetson Avenue, Suite 4300
Chicago, Illinois 60601
Mr. Pavelich is Chairman and CEO of BDO Seidman, a leading national accounting
and consulting firm.
JAY ROCKEY
Director
2121 - Fifth Avenue
Seattle, Washington 98121
Mr. Rockey is Chairman and CEO of The Rockey Company (a regional public
relations firm).
RICHARD C. YANCEY
Director
535 Madison Avenue
New York, New York 10022
Mr. Yancey is senior advisor to Dillon, Read & Co., Inc. (a registered broker-
dealer and investment banking firm), New York, New York.
*These directors are "interested persons" of the Fund as that term is defined in
the Investment Company Act of 1940 because they are either affiliated persons of
the Fund, its Adviser, or Distributor.
GENE G. BRANSON
Vice President
Suite 780
1201 Third Avenue
Seattle, Washington 98101
Mr. Branson is a senior vice president and director of the Distributor and
Transfer Agent and a vice president and director of the Adviser.
MONTE D. CALVIN, CPA
Vice President and Treasurer
Mr. Calvin is an executive vice president of the Transfer Agent and serves as
the chief financial officer of the Fund.
KERRY K. KILLINGER
Executive Vice President
Suite 1501
1201 Third Avenue
Seattle, Washington 98101
Mr. Killinger is president, chairman of the board, and chief executive officer
of Washington Mutual, Inc. and a director of the Adviser, Distributor, and
Transfer Agent.
JEFFREY L. LUNZER, CPA
Assistant Treasurer
Mr. Lunzer is a vice president of the Transfer Agent.
CONNIE M. LYONS
Assistant Secretary
Ms. Lyons is an employee of the Transfer Agent.
DOUGLAS D. SPRINGER
Vice President
Suite 780
1201 Third Avenue
Seattle, Washington 98101
Mr. Springer is president and a director of the Distributor and a director of
the Adviser and the Transfer Agent.
JOHN T. WEST, CPA
Secretary
Mr. West is a vice president of the Transfer Agent.
The Fund paid no remuneration to any of its officers, including Mr. Papesh and
Mr. Sahlin, during the year ended December 31, 1996. The Fund and other Funds
within the Composite Group paid directors' fees during the year ended December
31, 1996, in the amounts indicated below.
MONEY MARKET TAX-EXEMPT TOTAL
DIRECTOR PORTFOLIO PORTFOLIO COMPLEX (1)
-------------- ------------ -------------
Wayne L. Attwood, MD $1,265 $1,265 $15,000
Kristianne Blake $1,265 $1,265 $15,000
Edwin J. McWilliams $1,265 $1,265 $15,000
Jay Rockey (2) $1,265 $1,265 $15,000
Richard C. Yancey $1,178 $1,178 $14,000
(1) Each director serves in the same capacity with each Fund within the
Composite Group (eight companies) comprising 11 individual investment
portfolios.
(2) Mr. Rockey is Chairman and CEO of The Rockey Company, a public relations
firm which has received revenue from the Funds and Washington Mutual, Inc.,
parent company of the Adviser and Distributor, during the 1996 fiscal year.
As of March 31, 1997, officers, directors and their immediate families as a
group owned of record and beneficially 2,598,452 shares of Money Market
Portfolio and 326,223 shares of Tax-Exempt Portfolio which in both cases
amounted to 1% of the outstanding shares of the respective Portfolio. On that
date no individual owned of record or beneficially more than 5% of the
outstanding voting securities in either Portfolio.
Kristianne Blake, *Anne V. Farrell, *Michael K. Murphy, and Daniel L. Pavelich
serve as members of the Board's audit committee. The committee meets
periodically with the Fund's independent accountants and officers to review
accounting principles used by the Fund and the adequacy of the Fund's internal
controls.
The investment committee performs interim functions for the Board of Directors
of the Fund including dividend declaration and portfolio pricing matters.
Members are *Anne V. Farrell, *Michael K. Murphy, and Richard C. Yancey.
The valuation committee is comprised of any two directors or officers of the
Fund and one or more portfolio managers, as designated by the Fund chairman,
president or vice president/treasurer of the Fund. The committee is called upon
to value any security held by the Fund whenever the security cannot otherwise be
valued under the Fund's guidelines for valuation.
Responsibilities of the Board's nominating committee include preparing for and
recommending replacements for any vacancies in directors' positions and initial
review of policy issues regarding the size, composition, and compensation of the
Board. Members of the nominating committee are Wayne L. Attwood, MD, Daniel L.
Pavelich, and Jay Rockey. The Board's distribution committee is responsible for
reviewing distribution activities and 12b-1 expenditures to determine that there
is a reasonable likelihood the 12b-1 plan will benefit the Fund and its
shareholders. The committee meets at least annually and is responsible for
making recommendations to the Board regarding renewal or changes to the
distribution plan. Committee members are Wayne L. Attwood, MD, Kristianne Blake,
Jay Rockey, and Richard C. Yancey.
*These directors are "interested persons" of the Fund as that term is defined in
the Investment Company Act of 1940, because they are either affiliated persons
of the Fund, its Adviser, or Distributor.
DISTRIBUTION SERVICES
12b-1 PLAN
As discussed in the prospectus under "The Cost of Good Management," the
directors of the Fund have approved a plan for both classes of shares (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 which
provides that investment companies may pay distribution expenses, directly or
indirectly, according to a plan adopted by the Fund's Board of Directors.
Under the Plan, the Fund may reimburse Murphey Favre, Inc. (the "Distributor")
for Class A distribution expenses, including the cost of printing and
distributing prospectuses (to other than current shareholders), statements of
additional information and other promotional and sales literature, compensation
to sales personnel for their services, and reimbursement to the Distributor for
the direct and indirect cost of furnishing services of its personnel to assist
in the entire distribution process but excluding general and administrative
expenses.
The annual reimbursement allowed by the Plan and authorized by directors for
such Class A distribution expenses may not exceed .15% of the Fund's average
daily net assets attributable to Class A shares. Distribution expenses incurred
in the Money Market Portfolio in 1996 were .01% of average daily net assets. No
distribution expenses were incurred by the Tax-Exempt Portfolio. Directors
accepted a proposal by the Distributor to limit distribution expenses to .07% in
the Money Market Portfolio but reserve the right to increase future expenses to
the maximum limit. The Money Market Portfolio reimbursed the Distributor $20,720
for distribution expenses incurred on behalf of the Portfolio during 1996. Of
this amount, $8,115 was paid for printing and $12,605 was for other
distribution-related expenses. During 1995 and 1994, the Money Market Portfolio
reimbursed the Distributor $8,754 and $29,207, respectively.
Under the Plan, the Fund compensates the Distributor with a distribution fee at
an annual rate of .75% of the Fund's average daily net assets attributable to
Class B shares and a service fee at an annual rate of .25% of such assets.
During 1996, the Money Market and Tax-Exempt Portfolios compensated the
Distributor $1,270 and $16, respectively, for the sale of Class B shares. During
1995, the Money Market and Tax-Exempt Portfolios compensated the Distributor
$702 and $11, respectively, for the sale of Class B shares.
Under the Plan, the Fund will report at least quarterly to its Board of
Directors the amounts and purposes of all distribution expense payments. During
the continuance of the Plan, as required by Rule 12b-1, the selection and
nomination of the independent directors of the Fund will be at the discretion of
the independent directors then in office.
The Plan has been approved unanimously by the directors of the Fund, including a
majority of the independent directors who have no direct or indirect interest in
the Plan, and by the Distributor. The Plan will remain in effect for one year,
may be terminated at any time by a vote of a majority of the independent
directors or by a vote of a majority of the outstanding voting securities of the
Fund, and may be renewed from year to year thereafter only if approved by a vote
of independent directors. In approving the Plan and submitting it to
shareholders, directors of the Fund determined, in the exercise of their
business judgment and in light of their fiduciary duties as directors, that
there is a reasonable likelihood that the Plan will benefit the Fund and its
shareholders. All material amendments to the Plan must be approved by a vote of
the Fund's Board of Directors, including independent directors, and by
shareholders. The Plan will be renewed only if the directors make a similar
determination for each subsequent year of the Plan.
DISTRIBUTOR
The Distributor purchases shares of each Portfolio's capital stock in a
continuous offering to fill orders placed with it by investors and investment
dealers. It purchases and resells shares at net asset value in accordance with
terms of the Distribution Contract with the Fund. The Distributor acts in a
similar capacity for all other funds in the Composite Group.
The Distributor has not received any earnings or profits from the redemption of
Class A shares. During the fiscal year ended December 31, 1996, the Distributor
received contingent deferred sales charge payments of $5,275 and $0 upon
redemption of Class B shares of the Money Market Portfolio and Tax-Exempt
Portfolio, respectively. No brokerage fees were paid by the Fund to the
Distributor during the year, but the Distributor may act as broker on portfolio
purchases and sales should it become a member of a securities exchange.
The Fund bears the cost of registering its shares with federal and state
securities commissions and printing of prospectuses and statements of additional
information used for its shareholders. The Distributor pays for information
intended for potential shareholders but may be reimbursed by the Fund under the
Distribution Plan for such expenses applicable to Class A shares.
TRANSFER AGENT
Murphey Favre Securities Services, Inc. (the "Transfer Agent") furnishes
necessary personnel and other transfer agent services required by the Fund. The
Shareholders Service Contract was originally approved by shareholders.
The Money Market Portfolio paid the sums of $410,863, $268,265, and $259,630,
during 1996, 1995, and 1994, respectively, for these services. During the 1996,
1995, and 1994 fiscal years, the Tax-Exempt Portfolio paid $26,696, $32,355, and
$37,138, respectively, for these services.
At the date of this Statement of Additional Information, each Portfolio's
monthly shareholder servicing fee was $1.85 per account for the first 25,000
accounts, $1.55 per account thereafter for Class A accounts and $1.95 per
account for the first 25,000 Class B accounts and $1.65 per each Class B account
thereafter. The Transfer Agent has agreed to waive its fees for all accounts
with a balance of under $1,000. All requests for transfer of shares should be
directed to the Fund or to the Transfer Agent.
HOW SHARES ARE VALUED
Please see "How Shares are Valued" in the prospectus for more information. (See
"Appendix A" for a specimen price make-up sheet).
Management of the Fund has designed procedures which it believes will stabilize
each Portfolio's net asset value per share for the purposes of distribution,
redemption, and repurchase at a single value of $1.00. In the event that, on any
business day, either Portfolio's net asset value per share substantially
deviates (exceeds 1/2 of 1 percent) from $1.00, that Portfolio will (in lieu of
reducing the net asset value below $1.00 per share) apply net income to the
extent available and, if not sufficient, that Portfolio will reduce the number
of shares outstanding in order to maintain a net asset value per share of $1.00.
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 value assigned to these securities to insure
that carrying value approximates market valuation.
HOW SHARES CAN BE PURCHASED
Information concerning the purchase of shares is discussed under "How to Buy
Shares" in the prospectus. Shares in each class of each Portfolio are sold in a
continuous offering at a net asset value of $1.00 per share on any regular
business day. There is no initial sales charge on Class A shares. Class B shares
are available only by exchange of Class B shares of another Composite fund.
Class B shares may be subject to a contingent deferred sales charge for shares
purchased by exchange as discussed in the prospectus.
Investments made by an agent or fiduciary (such as a bank trust department,
investment adviser, broker or employee benefit or retirement plan) pursuant to a
periodic investment plan may have the minimum purchase requirements on initial
and subsequent investments waived. The Fund further intends to waive the minimum
purchase requirements for directors, officers and employees of Washington
Mutual, Inc. and its affiliates (including the Adviser, the Distributor, and the
Transfer Agent), as well as directors and officers of the Fund, or to any trust,
pension, profit-sharing or other benefit plan for such persons. The foregoing
privilege also will be extended to directors, officers and employees (including
their benefit plans), of other companies which enter into selling arrangements
with the Distributor. Persons may also invest in the Fund by purchasing shares
with the assistance of non-affiliated broker-dealers, who may charge a fee to
investors for their service. All investments will be credited to investors'
accounts in full and fractional shares carried to the second decimal place.
Composite Cash Management Company reserves the right to reject any order.
Certificates for full shares will be issued at no cost upon written request
only. No certificates will be issued to accounts having telephone redemption or
draft (check) writing privileges.
REDEMPTION OF SHARES
Investors may withdraw all or any portion of collected funds credited to their
account in the Fund at any time. Such withdrawal constitutes a redemption of
shares which will occur at the net asset value of $1.00 after receipt of the
redemption request at the Fund office prior to 1:00 p.m. Pacific time as
described below.
DRAFT (CHECK) WITHDRAWAL
Investors may elect to withdraw funds from their account by writing drafts
(similar to checks) on an account established by the Distributor. The
Distributor shall have the right to select the bank at which the account will be
maintained. This arrangement does not establish an account for investors with
the depository institution.
Investors must indicate their preference for the draft-writing privilege on the
new account application or other forms required by the Transfer Agent. All
drafts must be signed exactly as the account is registered. Joint registrants
may authorize one registrant to sign.
Upon request, the Fund will provide each investor with forms of drafts which may
be made payable in any amount of $500 or more. Investors using the drafts to
make withdrawals from the account will continue to earn income on the amount of
the draft until the item is presented to the Fund. Processing of these drafts
will be subject to the rules and regulations of the bank maintaining the
account.
Draft-writing will constitute instruction and authorization to the Fund, as
agent, to withdraw the indicated amounts from the investor's account. All drafts
presented are subject to the approval of the Fund and will not be paid unless
the investor's account has sufficient collected balances. The bank maintaining
the account will not provide immediate cash for drafts presented by investors,
and clearance time may be as much as ten business days. Although other banks
receiving a draft for deposit generally will process it as a regular check, they
also may not provide immediate credit.
There is currently no charge for the maintenance of this draft privilege, but
the Fund reserves the right, at any time and without notice, to impose charges
or to terminate this privilege.
GENERAL REDEMPTION INFORMATION
Investors may withdraw all or any portion of their account upon written request
and upon the return of any outstanding stock certificates to the Fund.
Signatures on the request must correspond with those on the account application
and must be guaranteed by an officer of a member bank of the Federal Reserve
System, a member of the Stock Transfer Association Medallion Program, or a
member firm of the National Association of Securities Dealers. Withdrawals may
also be made by telephone, as discussed in the prospectus. Payment will normally
be made the day following the effective date of the request.
In each of the above cases, sufficient full and fractional shares will be
redeemed to cover the amount of money withdrawn. Accounts registered in the name
of institutions, corporations, and fiduciaries may require additional
documentation prior to any withdrawal. Please contact the Fund if your account
is carried in one of these registration forms.
Investors should be certain that adequate shares and collected balances are in
their account to cover any redemption request. Requests for the withdrawal of
amounts in excess of account balances will be automatically dishonored.
Purchases made by cashier's check, certified funds, or bank wire are available
for immediate redemptions.
The right of redemption may be suspended or the date of payment postponed: (a)
during any period when the New York Stock Exchange is closed (other than
customary weekend and holiday closings); (b) when trading in the markets the
Fund normally utilizes is restricted, or an emergency exists as determined by
the Securities and Exchange Commission so that disposal of the Fund's
investments or determination of its Portfolio's net asset value is not
reasonably practicable; or (c) for such other periods as the Commission by order
may permit to protect the Fund's investors. In the event of suspension of the
right to redeem, investors may withdraw their redemption request or receive
payment based upon the net asset value computed upon the termination of the
suspension.
EXCHANGE PRIVILEGE
Shareholders may exchange shares of their portfolio for the same class of shares
in another portfolio of Composite Cash Management Company or other mutual funds
in the Composite Group. A brief discussion of such privileges is in the
prospectus under "Exchanges for Other Composite Funds." Exchanges will be made
at the respective net asset values in effect on the date of such exchange.
Shares previously subject to a sales charge may be exchanged without incurring
any additional initial or contingent deferred sales charge. Class B shares are
available only by exchange. Exchanged Class B shares will continue to be subject
to contingent deferred sales charges according to the schedule applicable to the
originally purchased shares. Sales charges are fully explained in the
prospectuses of the applicable funds. Any gains or losses realized on an
exchange should be recognized for federal income tax purposes, as required. This
privilege is not an option or right to purchase securities but is a revocable
privilege permitted under the present policies of each of the Funds. This
privilege is not available in any state or other jurisdiction where the shares
of the Fund into which the exchange is to be made are not available for sale, or
when the value of the shares presented for exchange is less than the minimum
dollar purchase required by the appropriate prospectus.
An investor may exchange some or all of his shares in the Fund for those of any
other fund in the Composite Group of Funds. These currently include:
COMPOSITE GROUP OF FUNDS
I. Composite Bond & Stock Fund: primary objective is continuity of income and
conservation of capital with long-term growth a secondary objective.
II. Composite Growth & Income Fund: primary objective is long-term growth of
principal with current income a secondary objective.
III.Composite Northwest Fund: designed to provide long-term growth of capital
by investing in a broadly diversified portfolio of common stocks selected
from companies located or doing business in the Northwest.
IV. Composite Income Fund: primary objective is current income with preservation
of principal a secondary consideration.
V. Composite U.S. Government Securities: primary objective is to provide a high
level of current income, consistent with the safety and liquidity, by
investing in U.S. government-backed securities.
VI. Composite Tax-Exempt Bond Fund: primary objective is a high level of current
income exempt from federal income taxes as is consistent with prudent
investment risk and protection of capital. (Not allowed in IRAs)
SERVICES PROVIDED BY THE FUND
SYSTEMATIC WITHDRAWAL PLAN
As described in the prospectus, the Fund offers a Systematic Withdrawal Plan.
All dividends and distributions on shares owned by shareholders participating in
this plan are reinvested in additional shares. Shares will be redeemed at the
close of business on or about the 25th day of each month preceding payment, and
payments will be mailed within three business days thereafter.
The Systematic Withdrawal Plan may involve the use of principal and is not a
guaranteed annuity. Payments under such a plan do not represent income or a
return on investment but instead are made from the redemption of Fund shares.
Naturally, withdrawals that continually exceed reinvested dividend income will
eventually exhaust the account.
A Systematic Withdrawal Plan may be terminated at any time by directing a
written request to the Fund or the Transfer Agent. Upon termination, all future
dividends and capital gain distributions will continue to be reinvested in
additional shares unless a shareholder requests otherwise.
TAX-SHELTERED RETIREMENT PLANS (MONEY MARKET PORTFOLIO ONLY)
As described in the prospectus, shares of the Money Market Portfolio may be
purchased as an investment medium for various tax-sheltered retirement plans.
The amounts of contributions to such plans are generally limited by the Internal
Revenue Code. Each of these plans involves a long-term commitment of assets, and
participants may be subject to possible regulatory penalties for excess
contributions, premature distributions, excess distributions, or insufficient
distributions after age 70 1/2.
QUALIFIED RETIREMENT PLANS
Self-employed individuals (as sole proprietors or partnerships) or corporations
may wish to purchase Fund shares in a retirement plan. Investors may obtain
information regarding these plans by contacting a Representative or the Fund's
offices.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
IRA contributions are invested when received. However, individuals establishing
a new IRA plan may rescind their plan within seven days. In the event of such
termination, their entire purchase price will be refunded by the Distributor
provided they notify the Distributor of their desire to rescind the purchase.
Termination during the seven-day period through regular redemption rather than
through rescission will result in adverse tax consequences. Internal Revenue
Service regulations prohibit revocation of rollover contributions. Any losses
derived through rescission will be absorbed by the Distributor.
Persons who request information regarding IRA plans will be provided with
application forms and information regarding eligibility and permissible
contributions.
IRA CUSTODY AGREEMENT AND SERVICE CHARGES
The IRA plan provides that the Distributor will furnish custodial services
either as agent for Washington Mutual Bank or as the named custodian. There are
set annual fees for IRA plans per participant unless made under an
employer-sponsored plan, in which case the custodial fee is negotiable. If
custodial fees are not paid annually by separate check, shares will
automatically be liquidated to cover such fees.
Unless participants elect otherwise, any capital gain distributions and income
dividends are reinvested on ex-dividend date in full and fractional shares of
the applicable Portfolio at net asset value.
IRA BONUSES
"IRA Bonuses" may periodically be credited to IRA accounts for contributions,
transfers and/or rollovers. Payments will be made at a uniform rate determined
by the Distributor or its affiliates and will be based on the value of the
rollovers and/or transfers. IRA Bonuses are not paid by the Fund.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
The Fund intends to continue to conduct its business and maintain the necessary
diversification of assets and source of income requirements to qualify as a
diversified management investment company under the Internal Revenue Code (the
"Code"). The Fund so qualified during the 1996 fiscal year. As a result, under
Subchapter M of the Code, the Fund is accorded conduit or "pass through"
treatment for federal income tax purposes during each year in which it
distributes to its shareholders 90% or more of its gross income from dividends,
interest and gains from the sale or other disposition of securities, and in
which it derives less than 30% of its gross income from gains (without deduction
for losses) from the sale or other disposition of securities held for less than
three months. In addition, if the Fund distributes 98% of its ordinary income
and capital gain net income for each calendar year, it will not be subject to
excise tax on undistributed income. The Fund intends to distribute such amounts
as necessary to avoid federal income and excise taxes.
MONEY MARKET PORTFOLIO
Under the Code, dividends from net investment income (including realized net
short-term capital gains, if any) are taxable to Portfolio investors as dividend
income. Since the Portfolio's net investment income is derived from interest
income, the dividends paid are not eligible for the 70% corporate dividends
received deduction. Dividends may also be subject to state and local taxes.
TAX-EXEMPT PORTFOLIO
Income received by the Portfolio, which is excludable from gross income under
the Code, retains its status as tax-exempt from federal income tax when income
is distributed to shareholders as such. This allowance is based on the Portfolio
holding 50% of the value of its total assets in municipal obligations at each
quarter end of its fiscal year. Interest earned by the Portfolio on municipal
bonds is not includable by the holders of shares in their respective gross
incomes for federal income tax purposes. Net interest income received by the
Portfolio from other obligations (e.g., certificates of deposit, commercial
paper, and obligations of the United States government, its agencies or
instrumentalities) and net short-term capital gains realized by the Portfolio,
if any, will be taxable to holders of shares as ordinary income. Dividend
distributions are calculated and recorded daily and distributed on the last day
of each month under the "actual earned" method. Under this method, the portion
of each distribution which is tax-exempt may vary. Any reinvestments will be
taxed to the shareholder in the same manner as if they had been distributed.
Section 265 of the Code in effect provides that interest on indebtedness
incurred, and expenses associated therewith or continuing to purchase or carry
obligations with tax-exempt interest is not deductible. Consistent with the
general view of the Internal Revenue Service, it is probable that interest on
indebtedness incurred or continuing to purchase or carry shares is not
deductible.
Interest on certain "private activity" bonds (referred to as "qualified bonds"
in the Code) is subject to the federal alternative minimum tax ("AMT"), although
the interest continues to be excluded from gross income for other purposes.
Interest from private activity municipal obligations is a tax preference item
for the purposes of determining whether a taxpayer is subject to AMT and the
amount of AMT to be paid, if any. Private activity obligations issued after
August 7, 1986, to benefit a private or industrial user or to finance a private
facility are affected by this rule. It is the current position of the staff of
the Securities and Exchange Commission that income from municipal obligations
that is a preference item for purposes of the AMT is not deemed to be
"tax-exempt." Under this position, at least 80% of the Portfolio's income
distributions would have to be exempt from the AMT as well as exempt from
federal taxes.
The exemption of interest income for federal income tax purposes does not
necessarily result in exemption under the income or other tax laws of any state
or local taxing authority. The laws of the several states and local taxing
authorities vary with respect to the taxation of such interest income and each
holder of shares of the Portfolio is advised to consult his own tax advisor in
that regard. Upon request, the Portfolio will report the source of tax-exempt
income by state. Shareholders are urged to consult their own tax advisors
regarding specific questions about federal, state and local taxes.
INVESTMENT PRACTICES
MONEY MARKET PORTFOLIO
Investment objectives and policies of the Money Market Portfolio are described
in the prospectus. The investment objective of the Portfolio is to provide a
high level of current income while at the same time preserving capital and
maintaining liquidity. It is a fundamental policy of the Portfolio to invest
only in the following money market instruments which at the time of purchase
mature within 397 days:
1. Obligations issued or guaranteed by the United States government or any
agency or instrumentality thereof. U.S. government obligations are issued by
the Treasury and include bills, certificates of indebtedness, notes, and
bonds. Agencies and instrumentalities of the U.S. government are established
under the authority of an act of Congress and include, but are not limited
to: the Government National Mortgage Association, the Tennessee Valley
Authority, the Bank for Cooperatives, the Farmers Home Administration,
Federal Home Loan Banks, Federal Intermediate Credit Banks, Federal Land
Banks and the Federal National Mortgage Association.
2. Obligations of domestic and foreign banks having total assets in excess of
500 million U.S. dollars as of the date of their most recently published
financial statement:
Certificates of deposit are receipts issued by a bank in exchange for the
deposit of funds. The bank agrees to pay the amount deposited, plus
interest, to the bearer of the receipt on the date specified on the
certificate. Because the certificate is negotiable, it can be traded in the
secondary market before maturity. Certificates of deposit purchased by the
Portfolio will not be fully insured.
Bankers' acceptances are time drafts drawn on a U.S. bank by an exporter or
importer to obtain a stated amount of funds to pay for specific merchandise
or, less frequently, foreign exchange. The draft is then "accepted" by the
U.S. bank (the drawee) which in effect unconditionally guarantees to pay the
face value of the instrument on its maturity date. The face of the
instrument specifies the terms and the nature of the underlying transaction.
Letters of credit are issued by U.S. banks and authorize the beneficiary to
draw drafts upon such U.S. banks for acceptance payment under specified
conditions. All of the securities in the Portfolio and income thereon are
payable in U.S. dollars.
3. Commercial paper (unsecured short-term notes of indebtedness issued by
business and banking firms to finance their short-term needs) purchased by
the Portfolio will consist only of direct obligations which, at the time of
their purchase, are (a) rated in the two highest ratings by Moody's
Investors Service, Inc. or by Standard & Poor's Corporation, or (b) issued
by companies having an outstanding unsecured debt issue currently rated A or
better by Moody's or by Standard & Poor's (see "Appendix B").
4. Short-term corporate obligations which at the date of investment are rated A
or better by Moody's or by Standard & Poor's (see "Appendix B").
5. Repurchase agreements: The Portfolio may acquire an underlying debt
instrument for a relatively short period (usually not more than one business
day) subject to an obligation of the seller to repurchase and the Portfolio
to sell the instrument at a fixed price. In the event the seller defaults on
his agreement to repurchase the instrument, the Portfolio may suffer a loss
because of a decline in the value of the underlying debt instrument. The
Portfolio will enter into repurchase agreements only with domestic banks or
recognized money market securities dealers, with respect to any of the
above-mentioned securities. To limit risk, repurchase agreements maturing in
more than seven days will not exceed ten percent of the total assets of the
Portfolio. The Portfolio requires daily valuation of the underlying debt
instrument for any repurchase agreement maturing in more than one (1)
business day and requires that the market value of the collateral be
maintained at a minimum of 102 percent of the current value. The Portfolio
maintains constructive possession of the securities through a safekeeping
arrangement with parties who qualify as custodians under Section 17(f) of
the Investment Company Act of 1940.
The Portfolio will invest less than 25% of its assets in bank obligations,
including foreign banks and foreign branches of U.S. domestic banks. These
investments involve risks that are different in some respects from an investment
in an investment company which invests only in debt obligations of U.S. domestic
issuers. Among the items to be considered are possible differences in foreign
versus domestic reserve regulations, future political and economic developments,
the possible imposition of withholding taxes on interest income payable on the
securities, the possible seizure or nationalization of foreign deposits, the
possible establishment of exchange controls or the adoption of other foreign
governmental restrictions which might adversely affect the payment of principal
and interest on the foreign bank obligations. Foreign reserve requirements are
lower than domestic ones, and currency blockage may develop which may prevent
the Portfolio from moving the proceeds of its investments out of foreign
countries. Any foreign bank obligations purchased will be readily marketable at
the time of purchase; however, such marketability and corresponding liquidity
may change at any time.
TAX-EXEMPT PORTFOLIO
Investment objectives and policies of the Tax-Exempt Portfolio are described in
the prospectus. The investment objective of the Portfolio is to provide maximum
current interest income which is exempt from federal income taxes while at the
same time preserving capital and maintaining liquidity. It is a fundamental
policy of the Portfolio to invest only in municipal obligations which at the
time of purchase mature within 397 days.
1. Municipal commercial paper represents very short-term, unsecured, negotiable
promissory notes issued by states, municipalities and their agencies.
Payment of principal and interest on issues of municipal paper may be made
from various sources, to the extent the funds are available therefrom.
Maturities of municipal paper generally will be shorter than the maturities
of TANs, BANs, RANs or PNs.
2. Tax anticipation notes (TANs) are issued by state and local governments to
finance their current operations. Repayment is generally to be derived from
specific future tax revenues. TANs are usually general obligations of the
issuer. A weakness in an issuer's capacity to raise taxes due to, among
other things, a decline in its tax base or a rise in delinquencies, could
adversely affect the issuer's ability to meet its obligations on outstanding
TANs.
3. Bond anticipation notes (BANs) are usually general obligations of state and
local governmental issuers which are sold to obtain interim financing for
projects that will eventually be funded through the sale of long-term debt
obligations or bonds. The ability of an issuer to meet the obligations on
its BANs is primarily dependent on the issuer's access to the long-term
municipal bond market and the likelihood that the proceeds of such bond
sales will be used to pay the principal and interest on the BANs.
4. Revenue anticipation notes (RANs) are issued by governments or governmental
bodies with the expectation that future revenues from a designated source
will be used to repay the notes. In general, they also constitute general
obligations of the issuer. A decline in the receipt of projected revenues,
such as anticipated revenues from another level of government, could
adversely affect an issuer's ability to meet its obligations on outstanding
RANs. In addition, the possibility that the revenues would, when received,
be used to meet other obligations could affect the ability of the issuer to
pay the principal and interest on RANs.
5. Project notes (PNs) are issued on behalf of local authorities at auctions
conducted by the United States Department of Housing and Urban Development
to raise funds for federally sponsored urban renewal, neighborhood
development and housing programs. PNs are backed by the full faith and
credit of the federal government through agreements with local authorities
which provide that, if required, the federal government will lend the issuer
an amount equal to the principal of and interest on the PN. Ordinarily, PNs
are repaid by rolling over the notes, or from the proceeds of new bonds or
other securities, which are issued to provide permanent financing.
Certain municipal obligations may carry variable or floating interest rates.
Variable rate instruments bear interest at rates which are readjusted at
periodic intervals so as to cause the instruments' market value to approximate
par. Floating rate instruments bear interest at rates which vary automatically
with changes in specified market rates or indices, such as the bank prime rate.
The Tax-Exempt Portfolio may invest in variable and floating rate instruments
even if they carry stated maturities in excess of 397 days, but only if the
period to the next interest change is less than 397 days. The Tax-Exempt
Portfolio will only purchase these instruments if there is a secondary market
for such instruments or if they carry demand features permitting the Portfolios
to redeem upon notice of seven days or less at par, or both. The Portfolio's
right to obtain payment at par on a demand instrument upon demand could be
affected by events occurring between the date the Portfolio elects to redeem the
instrument and the date redemption proceeds are due which affect the ability of
the issuer to pay the instrument at par value.
Although the ultimate maturity of such variable rate obligations may exceed 397
days, the Tax-Exempt Portfolio will treat the maturity of each variable rate
demand obligation, for purposes of computing its dollar-weighted average
Portfolio maturity, as the longer of (i) the notice period required before the
Portfolio is entitled to payment of the principal amount upon demand, or (ii)
the period remaining until the next interest rate adjustment.
The Portfolio may invest no more than 10% of its total assets in other
investment companies which invest in tax-exempt securities. No more than 5% of
the Portfolio's total assets may be invested in a single investment company nor
may the Portfolio purchase more than 3% of the total voting securities of a
single investment company. The Adviser will reduce its advisory fees on such
investments to offset management fees paid to the other investment company.
GENERAL POLICIES
The Fund may attempt to increase yields by trading to take advantage of
short-term market variations. This policy is expected to result in high
Portfolio turnover. This turnover may (but in the opinion of management should
not) adversely affect the Fund since the Fund does not usually pay brokerage
commissions when it purchases short-term debt obligations (see "Brokerage
Allocations and Portfolio Transactions").
Because of the many factors which influence fluctuations in the market value of
securities owned by the Fund's portfolios, including economic trends, government
actions and regulations and international monetary conditions, there can be no
assurance that the objectives of the Fund's portfolios will be achieved because
of market risks inherent in all investments. The Fund believes, however, that
through professional management, the prospects for investment success are
enhanced.
INVESTMENT RESTRICTIONS
While many decisions of the Adviser depend on flexibility, there are several
principles so fundamental to the Fund's philosophy that neither they, nor the
investment objective, may be changed without a vote of a majority of the
outstanding shares of the Fund.
Each Portfolio within the Fund may NOT:
invest in common stocks or other equity securities;
borrow money for investment purposes, except that it may borrow up to 5% of
its total assets in emergencies, and that it may borrow up to 33 1/3% of
such assets to meet redemption requests that would otherwise result in the
untimely liquidation of vital parts of its portfolio;
buy securities on margin, mortgage or pledge its securities, or engage in
"short" sales;
buy or sell options;
act as underwriter of securities issued by others;
buy securities subject to restrictions on sale (except in connection with
repurchase agreements);
buy or sell real estate, real estate investment trust securities,
commodities, or oil, gas and mineral interests;
lend money, except in connection with repurchase agreements and for
investments made in accordance with Fund policies discussed in the
prospectus;
issue senior securities;
invest more than 5%* of its total assets in the securities of any single
issuer (except for the United States government, its agencies or
instrumentalities);
invest more than 25%* of its total assets in securities of issuers in any
single industry;
invest more than 10%* of its net assets in illiquid securities;
invest in companies for the purpose of exercising control.
MONEY MARKET PORTFOLIO ONLY may NOT:
invest in other investment companies (except as part of a merger).
TAX-EXEMPT PORTFOLIO ONLY may NOT:
invest more than 20%* of its assets in obligations that pay interest subject
to federal alternative minimum tax.
* Percentage at the time the investment is made.
PERFORMANCE INFORMATION
YIELD
The current yield for each class of shares within each Portfolio is determined
by dividing the net change, exclusive of capital changes, in a hypothetical
account for a given seven calendar day period, by the value of the account at
the beginning of the period. The resulting base period return is multiplied by
365 divided by seven. The effective yield is determined by compounding for 365
days the base period return divided by seven. The results are expressed as a
percentage and yield figures are carried to the nearest hundredth of one
percent.
Class A share yields for the seven-day period ended December 31, 1996:
<TABLE>
<CAPTION>
PORTFOLIO
MONEY MARKET TAX-EXEMPT
<S> <C> <C>
Ending account value
(includes the value of any additional shares purchased with $1.000934331 $1.000655500
dividends from the original share, and all dividends declared
on both the original share and any such additional shares)
Less beginning account value $1.000000000 $1.000000000
Net Change in Account Value $ .000934331 $ .000655500
Base Period Return: Money Market Portfolio
(Net Change in Account Value) $ .000934331 = .000934331
------------------------------------------------
(Beginning Account Value) $1.000000000
Current Yield = .000934331 x 365/7 4.87%
Effective Yield =
Current Yield compounded for 365 days = 4.99%
Base Period Return: Tax-Exempt Portfolio
(Net Change in Account Value) $ .000655500 = .000655500
-------------------------------------------------
(Beginning Account Value) $1.000000000
Current Yield = .000655500 x 365/7 3.42%
Effective Yield =
Current Yield compounded for 365 days = 3.48%
Class B share yields for the seven-day period ended on December 31, 1996:
Portfolio
Money Market Tax-Exempt
Ending account value
(includes the value of any additional shares purchased with $1.000764469 $1.000474410
dividends from the original share, and all dividends declared
on both the original share and any such additional shares)
Less beginning account value 1.000000000 1.000000000
Net Change in Account Value $ .000764469 $ .000474410
Base Period Return: Money Market Portfolio
(Net Change in Account Value) $ .000764469 = .000764469
------------------------------------------------
(Beginning Account Value) $1.000000000
Current Yield = .000764469 x 365/7 = 3.99%
Effective Yield =
Current Yield compounded for 365 days = 4.07%
Base Period Return: Tax-Exempt Portfolio
(Net Change in Account Value) $ .000474410 = .000474410
------------------------------------------------
(Beginning Account Value) $1.000000000
Current Yield = .00047441 x 365/7 = 2.47%
Effective Yield =
Current Yield compounded for 365 days = 2.50%
</TABLE>
Among the factors determining yields are portfolio quality, type of investments,
operating expenses, the relative amount of new money coming into the portfolio
and the portfolio maturity.
Publishing the above yields as of a given period provides investors with a basis
for comparing the Portfolio's yield with that of other managed portfolios and
with the yields on savings accounts and money market instruments (which are
normally stated on the basis of a full year's interest). In making any such
comparisons care must be taken to consider the differences of the investment
media, as well as the differences in the methods of computing yields.
Neither Portfolio's yield is fixed, nor is principal guaranteed. Yields
fluctuate daily and the annualization of rates is not a representation by the
Fund as to what an investment in either Portfolio will actually yield for any
given period.
The weighted average maturity as of December 31, 1996, for the Money Market
Portfolio was 18 days; for the Tax-Exempt Portfolio it was 64 days.
Tax-equivalent yield for the Tax-Exempt Portfolio is calculated by dividing the
Portfolio's current yield or effective yield by the number one minus a stated
income tax rate. For example, the Portfolio's Class A share effective yield of
3.48%, for the seven day period ended December 31, 1996, would result in a
tax-equivalent yield of %, at the maximum federal tax rate of 39.6%: % divided
by (1.00 - .396) = 5.76%.
From time to time, the Portfolio may present illustrations of the relationship
between tax-exempt yields and taxable yields at various tax rates.
BROKERAGE ALLOCATIONS AND PORTFOLIO TRANSACTIONS
Portfolio securities are normally purchased directly from the issuer or from an
underwriter or a market maker for money market instruments. Usually no brokerage
commissions are paid by the Fund for these purchases. Purchases from
underwriters of Portfolio securities include a concession paid by the issuer to
the underwriter and the purchase price paid to market makers for money market
instruments may include the spread between the bid and asked price.
Under the terms of the Investment Management Agreements, Composite Research &
Management Co. acts as agent for the Fund in entering orders with broker-dealers
to execute Portfolio transactions and in negotiating commission rates where
applicable. Decisions as to eligible broker-dealers are approved by the
president of the Fund.
In executing Portfolio transactions and selecting broker-dealers, the Adviser
uses 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 Adviser 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-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-dealer.
The Adviser 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. This commission may be in excess of the amount of
commission or net price another broker or dealer would have charged for
effecting the transaction if the Adviser 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 Adviser to the
Fund and/or other accounts over which the Adviser exercises investment
discretion. The Adviser may commit to pay commission dollars to brokers or
financial institutions for specific research materials or products that it
considers useful in advising the Fund and/or its other clients. Research
services furnished to the Adviser include, for example, written and electronic
reports analyzing economic and financial characteristics, telephone
conversations between brokerage securities analysts and members of the Adviser's
staff, and personal visits by such analysts, brokerage strategists and
economists to the Adviser's office.
Some of these services are of value to the Adviser in advising clients, although
not all of these services are necessarily useful and of value in managing the
Fund. The management fee paid to the Adviser is not reduced because it receives
those services, even though it might otherwise be required to purchase these
services for cash.
The staff of the Securities and Exchange Commission has expressed the view that
the best price and execution of over-the-counter transactions in Portfolio
securities may be secured by dealing directly with principal market makers,
thereby avoiding the payment of compensation to another broker. In certain
situations, the Adviser believes that the facilities, expert personnel and
technological systems of a broker often enable the Fund to secure a net price by
dealing with a broker that is as good as or better than the price the Fund could
have received from a principal market maker, even after payment of the
compensation to the broker. The Adviser places its over-the-counter transactions
with principal market makers, but may also deal on a brokerage basis when
utilizing electronic trading networks or as circumstances warrant.
None of the brokers with whom the Fund executes Portfolio transactions has any
interest in the Adviser or the Distributor. The Distributor did not execute any
Portfolio orders for the Fund during the fiscal year, nor did the Distributor or
the Adviser receive any direct or indirect compensation as a result of Portfolio
transactions of the Fund. Shares may be sold by brokers who execute Portfolio
transactions for the Fund; however, no brokerage fees will be allocated for such
sales.
GENERAL INFORMATION
ORGANIZATION AND AUTHORIZED CAPITAL
As discussed under "Who We Are" in the prospectus, Composite Cash Management
Company was incorporated under the laws of the state of Washington on July 2,
1979, under a certificate of incorporation granting perpetual existence. The
Fund has an authorized capitalization of ten billion shares of capital stock
having a $.0001 par value.
Shares are issued by class designated by Portfolio. All shares of the Fund are
freely transferable. The shares do not have preemptive rights, and none of the
shares has any preference as to conversion, exchange, dividends, retirements,
liquidation, redemption or any other feature. Shares have equal voting rights
except that each Portfolio would vote separately on a change in investment
objective and each class has exclusive voting rights with respect to provisions
of the Distribution Plans that pertain to that class.
VOTING PRIVILEGES
The Fund is not required to hold annual meetings. When meetings are called to
elect directors, a shareholder may exercise cumulative voting privileges for the
election of directors under Washington state law in the election of directors.
Using this privilege, shareholders are entitled to one vote per share for each
director candidate. The total number of votes for directors to which a
shareholder is entitled may be accumulated and cast for each candidate in such
proportion that the shareholder may designate.
CUSTODIAN
The securities and cash owned by the Fund are held in safekeeping by Investors
Fiduciary Trust Company (IFTC), 127 West 10th, Kansas City, MO 64105. IFTC is a
wholly owned subsidiary of State Street Bank. The custodian's responsibilities
include collecting dividends, interest and principal payments on the Fund's
investments.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of LeMaster & Daniels PLLC, Certified Public Accountants, has been
selected as the independent certified public accountants of the Fund. LeMaster &
Daniels performs audit services for the Fund including the examination of the
financial statements included in annual reports to shareholders, which are
incorporated by reference into this Statement of Additional Information.
REGISTRATION STATEMENT
This Statement of Additional Information and the prospectus do not contain all
of the information set forth in the registration statement the Fund has filed
with the Securities and Exchange Commission. The complete registration statement
may be obtained from the Securities and Exchange Commission upon payment of the
fee prescribed by the rules and regulations of the Commission.
FINANCIAL STATEMENTS AND REPORTS
Semiannual and annual reports are issued to shareholders. The annual reports
include audited financial statements. The Fund's financial statements and
schedules for fiscal year 1996 appear in the annual report to shareholders dated
December 31, 1996, which is incorporated by reference into this Statement of
Additional Information and may be obtained without charge by contacting the
Fund's offices.
APPENDIX A
SPECIMEN PRICE MAKE-UP SHEET
COMPOSITE CASH MANAGEMENT COMPANY
at December 31, 1996
<TABLE>
<CAPTION>
MONEY MARKET TAX-EXEMPT
PORTFOLIO PORTFOLIO
<S> <C> <C>
Assets $233,143,865 $32,164,617
Liabilities 3,671,608 188,475
Net Assets $229,472,257 $31,976,142
Shares Outstanding
Class A 229,355,308 31,973,937
Class B 116,949 2,205
Net Assets Per Share
(Net Assets/Shares Outstanding)
Class A $1.00 $1.00
Class B $1.00 $1.00
</TABLE>
APPENDIX B
COMMERCIAL PAPER RATINGS (TAXABLE AND TAX-EXEMPT)
STANDARD & POOR'S CORPORATION: Commercial Paper Rating is a current assessment
of the likelihood of timely payment of debt having an original maturity of no
more than 365 days.
Ratings are graded into four categories, ranging from 'A' for the highest
quality obligations to 'D' for the lowest. The top two categories are as
follows:
'A': Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with the
numbers 1, 2 and 3 to indicate the relative degree of safety.
'A-1': This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics will be denoted with a plus (+) sign
designation.
'A-2': Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues designated
"A-1".
MOODY'S INVESTORS SERVICE, INC.: "Prime-1" and "Prime-2" are the two highest
commercial paper rating categories. The ratings are opinions of the ability of
issuers to repay punctually promissory obligations not having an original
maturity in excess of nine months.
Issuers rated "Prime-1" have a superior capacity for repayment of short-term
promissory obligations. "Prime-1" repayment capacity will normally be evidenced
by the following characteristics:
- --Leading market positions in well established industries.
- --High rates of return on funds employed.
- --Conservative capitalization structures with moderate reliance on debt and
ample asset protection.
- --Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- --Well established access to a range of financial markets and sources of
alternate liquidity.
Issuers rated "Prime-2" have a strong capacity for repayment of short-term
promissory obligations. This will normally be evidenced by many of the
characteristics cited above but to a lesser degree. Earnings trends and coverage
ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained.
CORPORATE BOND RATINGS
Standard & Poor's ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default-capacity and willingness of the obligor as to the
timely payment of interest and repayment of principal in accordance with the
terms of the obligation.
II. Nature of and provisions of the obligation.
III.Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization or other arrangement under the laws of
bankruptcy and other laws affecting creditors' rights.
'AAA': Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
'AA': Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
'A': Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
'BBB': Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
MOODY'S INVESTORS SERVICE, INC.: Its ratings for investment-grade corporate
bonds are as follows:
Bonds rated "Aaa" are judged to be of the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt edge". Interest
payments are protected by a large or by an exceptionally stable margin, and
principal is secure. While the various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair the fundamentally
strong position of such issues.
Bonds rated "A" possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
TAX-EXEMPT NOTE RATINGS
Standard & Poor's Corporation rating of short-term notes evolved from its
long-standing practice of evaluating the effect of such debt on bond ratings.
Its note rating symbols and definitions are as follows:
'SP-1': Very strong or strong capacity to pay principal and interest. Issues
determined to possess overwhelming safety characteristics are given a plus (+)
designation.
'SP-2': Satisfactory capacity to pay principal and interest.
'SP-3': Speculative capacity to pay principal and interest.
Moody's Investors Service, Inc. municipal note ratings are as follows:
'MIG' OR 'VMIG' 1 Best quality
'MIG' OR 'VMIG' 2 High quality
'MIG' OR 'VMIG' 3 Favorable quality
'MIG' OR 'VMIG' 4 Adequate quality
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. The Condensed Financial Information ten-year
summary is set forth on page three of Part A of this registration statement. The
annual report to shareholders, as of December 31, 1996, was filed with the
Securities and Exchange Commission via EDGAR on February 14, 1997, and is
incorporated by reference in both Parts A and B.
FILING DATE
(b) EXHIBITS INCORPORATED WITH FILED
(1a) Articles of Incorporation Form N-1A 4-24-97
(1b) Amendment to Articles of Incorporation Form N-SAR 8-23-94
(2) Bylaws Form N-1A 4-24-96
(3) Voting Trust Agreement INAP
(4) Specimen Capital Stock Certificate Form N-1A 4-24-97
(5) Investment Management Contract Form N-1A 4-24-97
(6a) Distribution Contract Form N-1A 4-24-96
(6b) Specimen Selling Agreement INAP
(7) Bonus, profit sharing, pension, or other
similar contracts for benefit of
directors or officers of the Registrant INAP
(8) Custodial Agreement Form N-1A 4-24-97
(9) Shareholders Service Contract Form N-1A 4-24-96
(10) Opinion & Consent of Counsel Form N-1A 4-24-97
(11) Accountants' Consent Form N-1A 4-24-97
(12) All financial statements omitted from
Item 23. Annual Report 2-14-97
(13) Agreements or understandings made in
consideration for providing initial
capital. Form N-1A 7-24-79
(14) Retirement Plan and Forms Form N-1A 1-22-85
(15) 12b-1 Plan See 6(a) 4-24-96
above
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
The Registrant is operated under the supervision of Composite Research &
Management Co. Composite Research is affiliated with Murphey Favre, Inc. and
Murphey Favre Securities Services, Inc. through common ownership and management.
Murphey Favre serves as principal underwriter and distributor for the
Registrant. Murphey Favre Securities Services serves as transfer agent for the
Registrant. Composite Research, Murphey Favre, and Murphey Favre Securities
Services serve in their same capacities for the seven other investment companies
within the Composite Group of Funds, namely: Composite Income Fund, Inc.;
Composite Equity Series, Inc.; Composite Tax-Exempt Bond Fund, Inc.; Composite
U.S. Government Securities, Inc.; Composite Bond & Stock Fund, Inc.; Composite
Northwest Fund, Inc; and Composite Deferred Series, Inc.
Composite Research & Management Co., Murphey Favre, and Murphey Favre Securities
Services are all wholly owned subsidiaries of Washington Mutual, Inc. All
companies named are incorporated in the State of Washington.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of ________, 1997, there were ____ Class A shareholders and ___ Class B
shareholders in the Money Market Portfolio. On the same date, there were ____
Class A shareholders and _____ Class B shareholders in the Tax-Exempt Portfolio.
ITEM 27. INDEMNIFICATION.
Registrant shall have the power to indemnify any director, officer or former
director or officer of the Corporation, or any person who may have served at the
Corporation's request as a director or officer of another corporation, against
expenses actually and reasonably incurred by such person in connection with the
defense of any action, suit or proceeding, civil or criminal, in which he
becomes a party by reason of being or having been such director or officer, to
the full extent permitted by the laws of the State of Washington, as such laws
at anytime may be in force and effect, provided however, that this
indemnification provision shall not protect, or purport to protect any director
or officer of the corporation against any liability to the corporation or to the
shareholders to which he otherwise would be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of this office.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR.
Registrant's Investment Advisor is Composite Research & Management Co., a wholly
owned subsidiary of Washington Mutual, Inc., a Washington corporation organized
in 1889. The Advisor serves in that capacity for the seven (7) other investment
companies with the Composite Group of Funds identified in Item 25.
Business and other connections of the Investment Adviser were most recently
filed on Form ADV, Securities and Exchange Commission File No. 801-4855, which
was mailed on March 11, 1997, and is incorporated herein by reference.
ITEM 29. PRINCIPAL UNDERWRITERS.
The principal underwriter for the Registrant is Murphey Favre which also serves
in the same capacity for seven (7) other investment companies identified in Item
25.
Business and other connections of the underwriter were most recently filed on
Form BD, CRD 599, with the National Association of Securities Dealers on
February 7, 1997, and are incorporated herein by reference.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the rules thereunder will be
maintained at the offices of the Registrant at 601 W. Main Avenue, Suite 801,
Spokane, Washington 99201. The Registrant's custodian activities are performed
at Investors Fiduciary Trust Company (IFTC), 127 West 10th, Kansas City, MO
64105.
ITEM 31. MANAGEMENT SERVICES.
Registrant is not a party to any management related service contract, other than
set forth in the Prospectus.
ITEM 32. UNDERTAKINGS.
The management discussion of fund performance required by Item 5A is contained
in the 12/31/96 annual report to shareholders which will be provided to each
person to whom a prospectus is delivered, upon request and without charge.
<PAGE>
SIGNATURES
FORM N-1A
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Spokane, and State of Washington
on the 24 day of April, 1997.
COMPOSITE CASH MANAGEMENT CO.
------------------------------------------
Registrant
[SEAL]
By:/s/ William G. Papesh
------------------------
ATTEST: William G. Papesh
/s/ John T. West President
- -----------------------------
John T. West, CPA /s/ Monte D. Calvin
Secretary ------------------------
Monte D. Calvin, CPA
Principal Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the date indicated:
/s/ Wayne L. Attwood March 25, 1997
- -------------------------------------------
Wayne L. Attwood, Director (Date)
/s/ Kristianne Blake March 25, 1997
- -------------------------------------------
Kristianne Blake, Director (Date)
/s/ Anne V. Farrell March 25, 1997
- -------------------------------------------
Anne V. Farrell, Director (Date)
/s/ Michael K. Murphy March 25, 1997
- -------------------------------------------
Michael K. Murphy, Director (Date)
/s/ William G. Papesh March 25, 1997
- -------------------------------------------
William G. Papesh, Director (Date)
/s/ Daniel L. Pavelich March 25, 1997
- -------------------------------------------
Daniel L. Pavelich, Director (Date
/s/ Jay Rockey March 25, 1997
- -------------------------------------------
Jay Rockey, Director (Date)
/s/ Richard C. Yancey March 25, 1997
- -------------------------------------------
Richard C. Yancey, Director (Date)
<PAGE>
- --------------------------------------------------------------------------------
EXHIBIT INDEX
- --------------------------------------------------------------------------------
EX-99.B1 CHARTER
EX-99.B4 HOLDERS RTS
EX-99.B5 ADVSR CONTR
EX-99.B8 CUST CONTR
EX-99.B10 OPINION & CONSENT OF COUNSEL
EX-99.B11 ACCOUNTANT'S CONSENT
EX-27.CLASS A FINANCIAL DATA SCHEDULE - CLASS A
EX-27.CLASS B FINANCIAL DATA SCHEDULE - CLASS B
- --------------------------------------------------------------------------------
EXHIBIT 1(a)
ARTICLES OF INCORPORATION
OF
COMPOSITE CASH MANAGEMENT COMPANY
KNOW ALL MEN BY THESE PRESENTS: That the undersigned being of legal age and
a citizen of the United States of America and the State of Washington, does this
day form a corporation under the general laws of the State of Washington, and
does hereby make, certify, execute, acknowledge and deliver the following
Articles of Incorporation:
ARTICLE I
NAME
The name of this corporation shall be:
COMPOSITE CASH MANAGEMENT COMPANY
ARTICLE II
PURPOSES
The general nature of the business of this corporation and the objects and
purposes proposed to be transacted, promoted and carried on by the corporation
are as follows:
A. To conduct and carry on the business of an investment company, and
exercise all powers necessary and appropriate thereto.
B. To invest and reinvest the property and assets of the corporation in
securities of different types and classes, including, obligations
issued or guaranteed by any state or federal government, including any
agency or instrumentality thereof, obligations of U.S. and foreign
banks, commercial paper, repurchase agreements and all other stocks,
bonds, notes, debentures, and certificates of interest or
participation of any type.
C. To act as financial or fiscal agent for any person, firm, or
corporation and as such to manage, control, and deal with, in any and
every way whatsoever, the property, holdings, investments, and
business interests thereof.
D. To endorse, guarantee, or undertake the performance of any obligation,
contract, or engagement of any other corporation, or other party, if
the corporation is interested in such obligation, contract, or
engagement.
E. To purchase, retire, redeem, hold, sell, reissue, transfer, and
otherwise deal in, shares of its own capital stock; and to apply to
such purchase, retirement, or redemption, any funds or property of the
corporation, whether capital, capital surplus, earned surplus, or
otherwise, as may be permitted by law.
F. To engage in any lawful act or activity for which corporations may be
organized under the general corporation laws of the State of
Washington and to conduct and carry on its business in any other
states, territories or foreign countries.
G. To do any and all of the acts herein set forth or implied and such
other acts as are incidental or conducive to the attainment of the
objects and purposes of the corporation; and to do any and all such
acts either as principal or in the capacity of agent, broker,
representative, or otherwise.
ARTICLE III
REGULATION OF THE INTERNAL AFFAIRS OF
THE CORPORATION
A. Preemptive Rights.
No shareholder of the corporation shall have any prior, preemptive or
other preferential right to subscribe to, purchase, or otherwise
acquire any share(s) of stock of the corporation, whether now or
hereafter authorized, and whenever issued, and the Board of Directors
may issue capital stock of the corporation for cash or other lawful
consideration without offering the same either in whole or in part to
shareholders.
B. Net Asset Value for Sales.
The Board of Directors from time to time may issue and sell the
authorized shares of the corporation in accordance with the then
applicable provisions of the Investment Company Act of 1940 and the
rules promulgated thereunder. Upon all sales of stock or fractional
shares of the corporation, whether upon original issue or from
treasury stock, the corporation shall receive not less than the net
asset value thereof, as that term may be defined by the provisions of
the Investment Company Act of 1940 and the rules promulgated
thereunder, in effect at the time of sale.
C. Purchase or Redemption at Net Asset Value.
Any owner of stock of the corporation desiring to dispose of all or
any part thereof may present the same to the corporation by depositing
with the corporation the certificate or certificates thereof or a
delivery undertaking satisfactory to the corporation or as to any
unissued but fully paid for shares or fractional shares, other
evidence of assignment and transfer of ownership of stock in the
corporation satisfactory to the corporation, and the corporation, to
the full extent to which the corporation at the time of purchase may
legally do so under the laws of the State of Washington, shall
purchase the stock so presented at the net asset value thereof. The
Board of Directors may determine from time to time the net asset value
per share of the outstanding shares of the corporation; this duty may
be delegated by the directors to one or more directors and officers of
the corporation to the extent permitted by the laws of the State of
Washington, the Investment Company Act of 1940, and any rules or
regulations adopted pursuant thereto, which may be in effect at the
time of such delegation.
ARTICLE IV
AUTHORIZED SHARES
The aggregate number of shares which the corporation shall have
authority to issue is one billion (1,000,000,000) shares of capital
stock, and the par value of each of such shares shall be .0001 per
share.
ARTICLE V
COMMENCEMENT OF BUSINESS
The corporation shall not commence business until it shall have
received consideration having a value of at least Five Hundred Dollars
($500.00) for the issuance of its shares.
ARTICLE VI
DESIGNATION OF REGISTERED AGENT
AND REGISTERED OFFICE
The registered office of the corporation shall be:
402 Spokane and Eastern Building
Spokane, Washington 99201
and the registered agent of this corporation shall be Wm. G. Papesh, his
address being the same as that of the registered office of this corporation.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS
The corporation shall have the power to indemnify any directors, officers
of former directors or officers of the corporation, or any person who may have
served at the corporation's request as a director or officer of another
corporation, against expenses actually and reasonably incurred by such person in
connection with the defense of any action, suit or proceeding, civil or
criminal, in which he becomes a party by reason of being or having been such
director or officer, to the full extent permitted by the laws of the State of
Washington, as such laws at any time may be in force and effect, provided
however, that this indemnification provision shall not protect or purport to
protect any director or officer of the corporation against any liability to the
corporation or to the shareholders to which he otherwise would be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his officer.
ARTICLE VIII
DESIGNATION OF INVESTMENT ADVISOR
AND DISTRIBUTOR
The Board of Directors, at any time and from time to time, may enter into a
contract for management or advisory services with corporations or firms selected
by the Board of Directors, so long as every such contract complies with
applicable requirements and restrictions contained in the Bylaws of this
corporation and as may be set forth or required by the Investment Company Act of
1940 and the rules promulgated thereunder. The Board of Directors further, at
any time and from time to time, may enter into a contract with corporations or
firms selected by the Board of Directors for the distribution of the capital
stock of this corporation, or other shareholder services, so long as every such
contract complies with applicable requirements and restrictions contained in the
Bylaws of this corporation and as may be set forth or required by the Investment
Company Act of 1940 and rules promulgated thereunder. The validity of any such
contract shall not be affected by the fact that any director or officer of this
corporation shall be a shareholder, director, or officer of such other
corporation and any director or officer of this corporation shall not be
disqualified from voting upon or executing such contracts, provided that any
such interest be disclosed to the directors prior to their action thereon and
provided further that a majority of the Board of Directors voting in favor of
the action shall have no such interest. Any contract approved or entered into by
the directors must conform with any applicable requirements of the Investment
Company Act of 1940, and amendments thereto, and any rules promulgated in
connection therewith.
ARTICLE IX
DIRECTORS
The management of this corporation shall be vested in a Board of Directors,
which Board shall not be less than three in number and the qualifications,
compensation, terms of office, manner of election, time and place of meeting,
powers and duties of directors shall be such as are prescribed by the Bylaws of
this corporation. The authority to make Bylaws for the corporation is expressly
vested in the Board of Directors of this corporation, and said Board may adopt,
alter, amend or repeal such Bylaws and provisions for the regulation and
management of the affairs of the corporation as shall be consistent with the
laws of the State of Washington and these Articles of Incorporation.
The names and post office addresses of the directors who shall first manage
the affairs of this corporation are as follows:
NAME ADDRESS
Leonard H. Aspinwall Fourth Floor
Spokane and Eastern Building
Spokane, WA 99201
Paul J. Chumrau Higgins Avenue at Main
Missoula, MT 59801
Harold W. Coffin 1400 Washington Trust Bank
Building
Spokane, EWA 99204
William E. Folz Moscow, ID 83843
Leonard W. Maxey North 3525 Regal Street
Spokane, WA 99207
Edwin J. McWilliams 524 West Riverside Avenue
Spokane, WA 99201
Leland J. Sahlin Fourth Floor
Spokane and Eastern Building
Spokane, WA 99201
Dr. Norman J. Sheehan South 4225 Altamont
Spokane, WA 99203
Richard C. Yancey 40 Monroe Place
Brooklyn, NY 11202
Each of said directors shall hold office until the first annual meeting of
shareholders of the corporation or until his successor has been elected and
qualified in the manner prescribed by law.
ARTICLE X
RESERVATION OF AMENDMENT POWERS
The corporation reserves the right to amend, alter, change or repeal any
provisions contained in these Articles of Incorporation in the manner now or
hereafter prescribed by statute, and all rights conferred on the stockholders
herein are granted subject to this reservation.
ARTICLE XI
TERM OF EXISTENCE
The corporation shall have perpetual existence.
ARTICLE XII
INCORPORATOR
WM. G. PAPESH shall be the incorporator of this corporation.
IN WITNESS WHEREOF, the incorporator has hereunto set his hand this 27th
day of June, 1979.
/s/
--------------------------------------
WM. G. PAPESH
402 Spokane & Eastern Building
Spokane, Washington 99201
STATE OF WASHINGTON )
: ss.
County of Spokane )
I, the undersigned, a Notary Public in and for the above-named County and
State, do hereby certify that on the 27 day of June, 1979, personally appeared
before me WM. G. PAPESH, to me known to be the individual and incorporator
described in and who executed the foregoing instrument, and acknowledged that he
signed and sealed the same as his free and voluntary act and deed for the uses
and purposes therein mentioned.
GIVEN under my hand and official seal the day and year last above written.
-------------------------------------
Notary Public in and for the State
of Washington, residing at Spokane.
ARTICLES OF AMENDMENT
OF
COMPOSITE CASH MANAGEMENT COMPANY
Articles of Amendment of the Articles of Incorporation of COMPOSITE CASH
MANAGEMENT COMPANY are herein executed by said Corporation, pursuant to the
provisions of Revised Code of Washington 23A.16.040 and 23A.16.050, as follows:
1. The name of the Corporation is COMPOSITE CASH MANAGEMENT COMPANY.
2. The amendment to the Articles of Incorporation of said Corporation is as
follows:
ARTICLE II
The general nature of the business of this corporation and the objects and
purposes to be transacted, promoted and carried on by the corporation are as
follows:
A. To conduct and carry on the business of an investment company of the
management type, and exercise all powers necessary and appropriate
thereto, with investors able to transfer shares between portfolio
classes with different investment objectives.
B. To invest and reinvest the property and assets of the corporation in
securities of different types and classes, including obligations
issued or guaranteed by any state or federal government, including any
agency or instrumentality thereof, obligations of U.S. and foreign
banks, commercial paper, repurchase agreements and all other stocks,
bonds, notes, debentures, and certificates of interest or
participation of any type.
C. To act as financial or fiscal agent for any person, firm, or
corporation and as such to manage, control, and deal with, in any and
every way whatsoever, the property, holdings, investments, and
business interests thereof.
D. To endorse, guarantee, or undertake the performance of any obligation,
contract, or engagement of any other corporation, or other party, if
the corporation is interested in such obligation, contract, or
engagement.
E. To purchase, retire, redeem, hold, sell, reissue, transfer, and
otherwise deal in, shares of its own capital stock; and to apply to
such purchase, retirement, or redemption, any funds or property of the
corporation, whether capital, capital surplus, earned surplus, or
otherwise, as may be permitted by law.
F. To engage in any lawful act or activity for which corporations may be
organized under the general corporation laws of the State of
Washington and to conduct and carry on its business in any other
states, territories or foreign countries.
G. To do any and all of the acts herein set forth or implied and such
other acts as are incidental or conducive to the attainment of the
objects and purposes of the corporation; and to do any and all such
acts either as principal or in the capacity of agent, broker,
representative or otherwise.
Article IV shall be amended to include an additional paragraph with Article
IV hereafter amended to read as follows:
ARTICLE IV
AUTHORIZED SHARES
The aggregate number of shares which the corporation shall have authority
to issue is ten billion (10,000,000,000) shares of common stock having a par
value of $.0001 per share.
The shares may be issued in one or more classes with each class designated
by a specific portfolio distinction and having such rights and preferences as
the Directors may designate or as otherwise may be set forth herein. All shares
will be freely transferable within the different classes. None of the shares
will have any preference to conversion, exchange, dividends, retirements,
liquidation, redemption or any other feature, except as may be established
uniformly within a class of shares designating each portfolio, in order to meet
investment objectives set forth in the corporation's prospectus.
Article III.C. shall be amended with Article III hereinafter stated as
follows:
ARTICLE III
REGULATION OF THE INTERNAL AFFAIRS OF
THE CORPORATION
A. Preemptive Rights.
No shareholder of the corporation shall have any prior, preemptive or
other preferential right to subscribe to, purchase, or otherwise
acquire any share(s) of stock of the corporation, whether now or
hereafter authorized, and whenever issued, and the Board of Directors
may issue capital stock of the corporation for cash or other lawful
consideration without offering the same either in whole or in part to
shareholders.
B. Net Asset Value for Sales
The Board of Directors from time to time may issue and sell the
authorized shares of the corporation in accordance with the then
applicable provisions of the Investment Company Act of 1940 and the
rules promulgated thereunder. Upon all sales of stock or fractional
shares of the corporation, whether upon original issue or from
treasury stock, the corporation shall receive not less than the net
asset value thereof, as that term may be defined by the provisions of
the Investment Company Act of 1940 and the rules promulgated
thereunder, in effect at the time of sale.
C. Purchase or Redemption at Net Asset Value.
Any owner of stock of the corporation desiring to dispose of all or
any part thereof may present the same to the corporation by depositing
with the corporation the certificate or certificates thereof or a
delivery undertaking satisfactory to the corporation or as to any
unissued but fully paid for shares or fractional shares, other
evidence of assignment and transfer of the ownership of stock in the
corporation satisfactory to the corporation, and the corporation, to
the full extent to which the corporation at the time of purchase may
legally do so under the laws of the State of Washington, shall
purchase the stock so presented at the net asset value thereof.
The Board of Directors may delegate any of its powers and duties under
this Article with respect to appraisal of assets and liabilities and
determination of net asset value or with respect to suspension of the
determination of net asset value to an officer or officers or agent or
agents of the Corporation designated from time to time by the Board of
Directors, provided that such delegation is consistent with the laws
of the State of Washington, and the Investment Company Act of 1940,
and any rules or regulations promulgated pursuant thereto then in
effect. The Board of Directors may establish such procedures as may be
appropriate providing for the automatic redemption of shares of common
stock owned by any investor whose total ownership of shares falls
below a designated minimum amount.
3. The date of the adoption of said amendment by the shareholders of said
Corporation is November 24, 1987.
4. The number of shares entitled to vote on said amendment, all of which
are capital common stock, was 136,566,402.
5. The number of shares voted for and against said amendments,
respectively, were as follows:
For amendment:
Article II: 72,959,371.26 shares
Article IV: 72,959,371.26 shares
Article III: 73,140,745.63 shares
Against amendment:
Article II: 2,808,297.54 shares
Article IV: 2,808,297.54 shares
Article III: 1,474,819.32 shares
Abstain:
Article II: 4,278,552.52 shares
Article IV: 4,278,552.52 shares
Article III: 5,430,656.37 shares
DATED: December 2, 1987
COMPOSITE CASH MANAGEMENT COMPANY
BY /s/ Leland J. Sahlin, President
STATE OF WASHINGTON )
: ss.
County of Spokane )
I certify that I know or have satisfactory evidence that Leland J. Sahlin
signed this instrument, on oath stated that he was authorized to execute the
instrument and acknowledged it as the President of COMPOSITE CASH MANAGEMENT
COMPANY to be the free and voluntary act of such party for the uses and purposes
mentioned in the instrument.
Dated December 3, 1987 /s/ LAWRENCE R. SMALL
-----------------------------------
Notary Public in and for the State
of Washington, residing at Spokane
My appointment expires 9-26-91
<PAGE>
ARTICLES OF AMENDMENT
OF
COMPOSITE CASH MANAGEMENT COMPANY
Articles of Amendment of the Articles of Incorporation of COMPOSITE CASH
MANAGEMENT COMPANY (the "Corporation") are herein executed by the Corporation
pursuant to the provisions of RCW 23B.10.060 as follows:
1. The name of the Corporation is COMPOSITE CASH MANAGEMENT COMPANY.
2. The amendment to the Articles of Incorporation of the Corporation is as
follows:
Article IV of the Articles of Incorporation hereby is amended
in its entirety to read as set forth below:
ARTICLE IV
AUTHORIZED SHARES
The total number of shares which the Corporation shall have the authority
to issue is ten billion (10,000,000,000) shares having a par value of $.0001 per
share. The shares shall be classified initially into two classes, consisting of
six billion (6,000,000,000) shares of Class A Common Stock and four billion
(4,000,000,000) shares of Class B Common Stock. The shares of the Corporation's
capital stock issued and outstanding at the effective date of the amendment
adding this provision are hereby reclassified as Class A Common Stock.
The Board of Directors is authorized to classify or to reclassify, from time to
time, any unissued shares of any class of the Corporation, including classes
established in separate portfolios, by setting, changing, eliminating or
designating specific distinctions and preferences, conversion or other rights,
powers, restrictions, limitations as to dividends, and qualifications or terms
and conditions of or rights to require redemption of such shares.
Each holder of record of a share of capital stock of the Corporation shall be
entitled to one vote for each share registered in such holder's name,
irrespective of the class thereof, and all shares of all classes shall vote
together as a single class; provided, however, that (I) as to any matter with
respect to which a separate vote of any class or of any classes voting together
as a single class is required by law pursuant to any applicable order, rule or
interpretation issued by the Securities and Exchange Commission, or otherwise,
such requirement as to a separate vote by that class or those classes voting
together as a single class, as the case may be, shall apply in lieu of a general
vote of all classes as described above, (ii) in the event that the separate vote
requirements referred to in (i) above apply with respect to one or more classes,
voting separately or as a single class, then subject to paragraph (iii) below,
the shares of all other classes not entitled to a vote of a separate class or of
separate classes voting together as a single class vote as a single class, and
(iii) as to any matter which does not affect the interest of a particular class,
such class shall not be entitled to any vote and only holders of shares of the
one or more affected classes shall be entitled to vote.
Shares of each class of stock shall be entitled to such dividends or
distributions, in stock or in cash or both, as may be declared from time to time
by the Board of Directors with respect to such class. Dividends and
distributions of income and capital gains with respect to the Class A Common
Stock or the Class B Common Stock, and any other class hereafter created may
vary among the classes to reflect differing allocations of expenses of the
Corporation among the holders of the various classes and any resultant
differences among the net asset value of the various classes of Common Stock to
such extent and for such purposes as the Board of Directors may deem necessary
or appropriate.
3. The date of the adoption of the amendment by the Corporation is January
27, 1994.
4. The amendment was adopted by (check one of the following statements):
( ) The incorporators. Shareholder action was not required.
( ) The board of directors. Shareholder action was not required.
(X) Duly approved shareholder action in accordance with the provisions of
RCW 23B.10.030 and RCW 23B.10.040.
5. These Articles of Amendment shall be effective upon filing.
DATE: February 7, 1994.
COMPOSITE CASH MANAGEMENT COMPANY
By /s/-----------------------------
William G. Papesh, President
STATE OF WASHINGTON )
) ss.
County of Spokane )
I certify that I know or have satisfactory evidence that William G. Papesh
is the person who appeared before me, and said person acknowledged that he
signed this instrument, on oath stated that he was authorized to execute the
instrument and acknowledged it as the President of COMPOSITE CASH MANAGEMENT
COMPANY to be the free and voluntary act of such party for the uses and purposes
mentioned in the instrument.
Dated: February 7, 1994
/s/
---------------------------------
Name: Lawrence R. Small
Notary Public in and for the State of Washington,
residing at Spokane
My commission expires: 9/26/95
EXHIBIT 4
SPECIMEN CAPITAL STOCK CERTIFICATE
Certificate No. Date Shares Account No.
COMPOSITE GROUP OF FUNDS
THIS IS TO CERTIFY THAT
See Reverse for
Certain Definitions
is the registered holder of
fully paid and non-assessable shares, of the par value of each of the
CAPITAL STOCK of the
incorporated under the laws of the state of Washington, transferable on the
books of the Corporation by said owner in person or by duly authorized attorney,
upon surrender of this certificate properly endorsed. This certificate is not
valid until countersigned by the Fund.
WITNESS the seal of the Corporation and the signatures of its duly
authorized officers.
Affixed: At Spokane, Washington
----------------------- --------------------------
Signature Signature
----------------------- --------------------------
Title Title
Composite Group of Funds
AUTHORIZED SIGNATURES
EXHIBIT 5
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, dated July 23, 1996, between Composite Cash Management Company
Money Market Portfolio, a Washington corporation (the "Fund") and Composite
Research & Management Co., a Washington corporation (the "Manager").
W I T N E S S E T H
WHEREAS, the Fund is a diversified, open-end management investment company,
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the 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 Directors of
the Fund, 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 Fund's Board of Directors 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 shall use reasonable care and judgment in the
management of the Fund's portfolio.
(c) The Manager, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Articles
of Incorporation (as hereinafter defined) of the Fund and by the
investment policies of the Fund as determined by the Board of
Directors of the Fund and set forth in the Prospectus and
Statement of Additional Information. All acts of the Manager
shall conform to and comply with the requirements of the 1940 Act
and all other applicable federal and state laws and regulations.
(d) The Manager shall determine the securities to be purchased or
sold by the Fund and at the Fund's expense, 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 financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis.
In evaluating the best overall terms available, and in selecting
the broker or dealer to execute a particular transaction, the
Manager also may consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided to the Fund and/or
other accounts over which the Manager exercises investment
discretion. 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.
(e) 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. In such event,
allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, shall be made by the
Manager in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to such
other fiduciary accounts.
(f) On each business day the Manager shall provide a list of all
transactions concerning the Fund's assets.
(g) When the Manager makes investment recommendations for the Fund,
its personnel shall not inquire or take into consideration
whether the issuer of the securities proposed for purchase or
sale for the Fund's account is a customer of any affiliate of the
Manager. In dealing with commercial customers, the Manager's
affiliates shall not inquire or take into consideration whether
securities of those customers are held by the Fund.
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 its officers
or employees who act as officers, directors or employees of the Fund
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 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
taxes, interest, brokerage fees and commissions, if any, fees of
directors who are not officers, directors, employees or holders of 5%
or more of the outstanding voting securities of the Manager or the
Fund's administrator or any of their affiliates, Securities and
Exchange Commission fees and state Blue Sky qualification fees,
advisory and administration fees, bookkeeping (amended 9/26/89),
charges of custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of maintaining corporate 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,
costs of stockholders' reports and corporate meetings, costs of
implementing and operating the Fund's service plan, and any
extraordinary expenses will be borne by the Fund. If, in any fiscal
year, the sum of the Fund's expenses (excluding taxes, interest and
brokerage fees but including the management fee) exceeds 1.5% of the
average net assets of the Company up to $30 million and 1% of such net
assets over $30 million, or alternatively (as defined under the
securities regulations of any state having jurisdiction over the Fund)
the expense limitations of any such state, it will reimburse the Fund
for such excess.
5. COMPENSATION. For the services provided pursuant to this Agreement,
the Fund shall pay to the Manager as full compensation therefor a
monthly fee computed on the average daily net assets of the Fund equal
to .45% per annum up to the first $1 billion; .40% on $1 billion and
above. The Fund acknowledges that the Manager, as agent for the Fund,
will allocate a portion of the fee equal to .15% of such assets to
Murphey Favre Securities Services, Inc. for administrative services,
portfolio accounting and regulatory compliance systems and a portion
of the fee equal to .125% of such assets to Murphey Favre, Inc. for
shareholder servicing activities.
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 a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in
Section 36(b) of the 1940 Act) or 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.
7. DELIVERY OF DOCUMENTS. The Fund 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) Articles of Incorporation of the Fund (such Articles as presently
in effect and as amended from time to time, the "Articles of
Incorporation");
(b) Bylaws of the Fund;
(c) Resolutions of the Board of Directors of the Fund authorizing the
appointment of the Manager and approving the form of this
Agreement;
(d) Registration Statement under the Securities Act of 1933 and under
the 1940 Act of the Fund 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's common stock;
(e) Notification of Registration of the Fund under the 1940 Act on
Form N-8A;
(f) Prospectus of the Fund (such prospectus as presently in effect
and/or as amended or supplemented from time to time, the
"Prospectus"); and
(g) 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 is a continuation of the
agreement dated July 29, 1982. Unless terminated herein, this
Agreement shall continue in effect provided such continuance is
specifically approved at least annually (a) by the vote of a majority
of those members of the Fund's Board of Directors who are not parties
to the Contract or "interested persons" to 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 Fund's
Board of Directors 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 the
provisions of the 1940 Act.
10. USE OF MANAGER'S 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 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 801, 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 Directors of the Fund 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 Fund 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 State of Washington 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.
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.
COMPOSITE CASH MANAGEMENT CO., MONEY MARKET PORTFOLIO
/s/ WILLIAM G. PAPESH
- ----------------------------------- Date--------------------------
President
COMPOSITE RESEARCH & MANAGEMENT CO.
/s/ WILLIAM G. PAPESH
- ----------------------------------- Date--------------------------
President
<PAGE>
INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT, dated July 23, 1996, between Composite Cash Management Company
Tax-Exempt Portfolio, a Washington corporation (the "Fund") and Composite
Research & Management Co., a Washington corporation (the "Manager").
W I T N E S S E T H
WHEREAS, the Fund is a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the 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 Directors of
the Fund, 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 Fund's Board of Directors 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 shall use reasonable care and judgment in the
management of the Fund's portfolio.
(c) The Manager, in the performance of its duties and obligations
under this Agreement, shall act in conformity with the Articles
of Incorporation (as hereinafter defined) of the Fund and by the
investment policies of the Fund as determined by the Board of
Directors of the Fund and set forth in the Prospectus and
Statement of Additional Information. All acts of the Manager
shall conform to and comply with the requirements of the 1940 Act
and all other applicable federal and state laws and regulations.
(d) The Manager shall determine the securities to be purchased or
sold by the Fund and at the Fund's expense, 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 financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis.
In evaluating the best overall terms available, and in selecting
the broker or dealer to execute a particular transaction, the
Manager also may consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) provided to the Fund and/or
other accounts over which the Manager exercises investment
discretion. 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.
(e) 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. In such event,
allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, shall be made by the
Manager in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to such
other fiduciary accounts.
(f) On each business day the Manager shall provide a list of all
transactions concerning the Fund's assets.
(g) When the Manager makes investment recommendations for the Fund,
its personnel shall not inquire or take into consideration
whether the issuer of the securities proposed for purchase or
sale for the Fund's account is a customer of any affiliate of the
Manager. In dealing with commercial customers, the Manager's
affiliates shall not inquire or take into consideration whether
securities of those customers are held by the Fund.
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 its officers
or employees who act as officers, directors or employees of the Fund
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 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
taxes, interest, brokerage fees and commissions, if any, fees of
directors who are not officers, directors, employees or holders of 5%
or more of the outstanding voting securities of the Manager or the
Fund's administrator or any of their affiliates, Securities and
Exchange Commission fees and state Blue Sky qualification fees,
advisory and administration fees, bookkeeping (amended 9/26/89),
charges of custodians, transfer and dividend disbursing agents' fees,
certain insurance premiums, industry association fees, outside
auditing and legal expenses, costs of maintaining corporate 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,
costs of stockholders' reports and corporate meetings, costs of
implementing and operating the Fund's service plan, and any
extraordinary expenses will be borne by the Fund. If, in any fiscal
year, the sum of the Fund's expenses (excluding taxes, interest and
brokerage fees but including the management fee) exceeds 1.5% of the
average net assets of the Company up to $30 million, and 1% of such
net assets over $30 million, or alternatively (as defined under the
securities regulations of any state having jurisdiction over the Fund)
the expense limitations of any such state, it will reimburse the Fund
for such excess.
5. COMPENSATION. For the services provided pursuant to this Agreement,
the Fund shall pay to the Manager as full compensation therefor a
monthly fee computed on the average daily net assets of the Fund equal
to .45% per annum up to the first $1 billion; .40% on $1 billion and
above. The Fund acknowledges that the Manager, as agent for the Fund,
will allocate a portion of the fee equal to .15% of such assets to
Murphey Favre Securities Services, Inc. for administrative services,
portfolio accounting and regulatory compliance systems and a portion
of the fee equal to .125% of such assets to Murphey Favre, Inc. for
shareholder servicing activities.
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 a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in
Section 36(b) of the 1940 Act) or 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.
7. DELIVERY OF DOCUMENTS. The Fund 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) Articles of Incorporation of the Fund (such Articles as presently
in effect and as amended from time to time, the "Articles of
Incorporation");
(b) Bylaws of the Fund;
(c) Resolutions of the Board of Directors of the Fund authorizing the
appointment of the Manager and approving the form of this
Agreement;
(d) Registration Statement under the Securities Act of 1933 and under
the 1940 Act of the Fund 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's common stock;
(e) Notification of Registration of the Fund under the 1940 Act on
Form N-8A;
(f) Prospectus of the Fund (such prospectus as presently in effect
and/or as amended or supplemented from time to time, the
"Prospectus"); and
(g) 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 is a continuation of the
agreement dated June 16, 1988. Unless terminated herein, this
Agreement shall continue in effect provided such continuance is
specifically approved at least annually (a) by the vote of a majority
of those members of the Fund's Board of Directors who are not parties
to the Contract or "interested persons" to 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 Fund's
Board of Directors 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 the
provisions of the 1940 Act.
10. USE OF MANAGER'S 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 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 801, 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 Directors of the Fund 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 Fund 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 State of Washington 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.
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.
COMPOSITE CASH MANAGEMENT COMPANY TAX-EXEMPT PORTFOLIO
/s/ WILLIAM G. PAPESH
- ----------------------------------- Date-----------------------------
President
COMPOSITE RESEARCH & MANAGEMENT CO.
/s/ WILLIAM G. PAPESH
- ----------------------------------- Date----------------------------
President
EXHIBIT 8
CUSTODY AGREEMENT
THIS AGREEMENT made the 1st day of September, 1992 by and between INVESTORS
FIDUCIARY TRUST COMPANY, a trust company chartered under the laws of the state
of Missouri, having its trust office located at 127 West 10th Street, Kansas
City, Missouri 64105 ("Custodian"), and COMPOSITE CASH MANAGEMENT COMPANY, a
Washington corporation, having its principal office and place of business at 601
West Riverside Avenue, Spokane Washington 99201 ("Fund").
WITNESSETH:
WHEREAS, Fund desires to appoint Investors Fiduciary Trust Company as
Custodian of the securities and monies of Fund's investment portfolio; and
WHEREAS, Investors Fiduciary Trust Company is willing to accept such
appointment;
NOW THEREFORE, for and in consideration of the mutual promises contained
herein, the parties hereto, intending to be legally bound, mutual covenant and
agree as follows:
1. APPOINTMENT OF CUSTODIAN. Fund hereby constitutes and appoints
Custodian as custodian of the securities and monies at any time owned
by the Fund.
2. DELIVERY OF CORPORATE DOCUMENTS. Fund has delivered or will deliver to
Custodian prior to the effective date of this Agreement, copies of the
following documents and all amendments or supplements thereto,
properly certified or authenticated:
A. Resolutions of the Board of Directors of the Fund appointing
Custodian as custodian hereunder and approving the form of this
Agreement; and
B. Resolutions of the Board of Directors of the Fund designating
certain persons to give instructions on behalf of the Fund to
Custodian and authorizing Custodian to rely upon written
instructions over their signatures.
3. DUTIES AND RESPONSIBILITIES OF CUSTODIAN.
A. DELIVERY OF ASSETS Fund will deliver or cause to be delivered to
Custodian on the effective date of this Agreement, or as soon
thereafter as practicable, and from time to time thereafter, all
portfolio securities acquired by it and monies then owned by it
except as permitted by the Investment Company Act of 1940 or from
time to time coming into its possession during the time this
Agreement shall continue in effect. Custodian shall have no
responsibility or liability whatsoever for or on account of
securities or monies not so delivered. All securities so
delivered to Custodian (other than bearer securities) shall be
registered in the name of Fund or its nominee, or of a nominee of
Custodian, or shall be properly endorsed and in form for transfer
satisfactory to Custodian.
B. DELIVERY OF ACCOUNTS AND RECORDS Fund shall turn over to
Custodian all of the Fund's relevant custody accounts and records
previously maintained by it or a prior custodian in order to
perform its duties hereunder. Custodian shall be entitled to rely
conclusively on the completeness and correctness of the accounts
and records turned over to it by Fund, and Fund shall indemnify
and hold Custodian harmless of and from any and all expenses,
damages and losses whatsoever arising out of or in connection
with any error, omission, inaccuracy or other deficiency of such
accounts and records or in the failure of Fund to provide any
portion of such or to provide any information needed by the
Custodian knowledgeably to perform its function hereunder.
C. DELIVERY OF ASSETS TO THIRD PARTIES. Custodian will receive
delivery of and keep safely the assets of Fund delivered to it
from time to time and the assets of each Portfolio segregated in
a separate account. Custodian will not deliver, assign, pledge or
hypothecate any such assets to any person except as permitted by
the provisions of this Agreement or any agreement executed by it
according to the terms of Section 3.S. of this Agreement. Upon
delivery of any such assets to a subcustodian pursuant to Section
3.S. of this Agreement, Custodian will create and maintain
records identifying those assets which have been delivered to the
subcustodian as belonging to the applicable Portfolio of the
Fund. The Custodian is responsible for the safekeeping of the
securities and monies of Fund only until they have been
transmitted to and received by other persons as permitted under
the terms of this Agreement, except for securities and monies
transmitted to United Missouri Bank of Kansas City, N.A. (UMBKC),
United Missouri Trust Company of New York (UMBTC), and First
National Bank of Chicago (FNBC) for which Custodian remains
responsible. Custodian shall be responsible for the monies and
securities of Fund(s) held by eligible foreign subcustodians to
the extent the domestic subcustodian with which the Custodian
contracts is responsible to Custodian. Custodian may participate
directly or indirectly through a subcustodian in the Depository
Trust Company, Treasury/Federal Reserve Book Entry System,
Participant Trust Company, Treasury/Federal Reserve Book Entry
System, Participant Trust Company or other depository approved by
the Fund (as such entities are defined at 17 CFR Section
270.17f(b)).
D. REGISTRATION OF SECURITIES. Custodian will hold stocks and other
registerable portfolio securities of Fund registered in the name
of the Fund or in the name of any nominee of Custodian for whose
fidelity and liability Custodian will be fully responsible, or in
street certificate form, so-called, with or without any
indication of fiduciary capacity. Unless otherwise instructed,
Custodian will register all such portfolio securities in the name
of its authorized nominee. All securities, and the ownership
thereof by Fund, which are held by Custodian hereunder, however,
shall at all times be identifiable on the records of the
Custodian. The Fund agrees to hold Custodian and its nominee
harmless for any liability as a record holder of securities held
in custody.
E. EXCHANGE OF SECURITIES. Upon receipt of instructions as defined
herein in Section 4.A, Custodian will exchange, or cause to be
exchanged, portfolio securities held by it for the account of
Fund for other securities or cash issued or paid in connection
with any reorganization, recapitalization, merger, consolidation,
split-up of shares, change of par value, conversion or otherwise,
and will deposit any such securities in accordance with the terms
of any reorganization or protective plan. Without instructions,
Custodian is authorized to exchange securities held by it in
temporary form for securities in definitive form, to effect an
exchange of shares when the par value of the stock is changed,
and upon receiving payment therefor, to surrender bonds or other
securities held by it at maturity or when advised of earlier call
for redemption, except that Custodian shall receive instructions
prior to surrendering any convertible security.
F. PURCHASES OF INVESTMENTS OF THE FUND. Fund will, on each business
day on which a purchase of securities shall be made by it,
deliver to Custodian instructions which shall specify with
respect to each such purchase:
1. The name of the Portfolio making such purchase;
2. The name of the issuer and description of the security;
3. The number of shares or the principal amount purchased, and
accrued interest, if any;
4. The trade date;
5. The settlement date;
6. The purchase price per unit and the brokerage commission,
taxes and other expenses payable in connection with the
purchase;
7. The total amount payable upon such purchase; and
8. The name of the person from whom or the broker or dealer
through whom the purchase was made.
In accordance with such instructions, Custodian will pay for
out of monies held for the account of Fund, but only insofar
as monies are available therein for such purpose, and
receive the portfolio securities so purchased by or for the
account of Fund except that Custodian may in its sole
discretion advance funds to the Fund which may result in an
overdraft because the monies held by the Custodian on behalf
of the Fund are insufficient to pay the total amount payable
upon such purchase. Such payment will be made only upon
receipt by Custodian of the securities so purchased in form
for transfer satisfactory to Custodian.
G. SALES AND DELIVERIES OF INVESTMENTS OF THE FUND - OTHER THAN
OPTIONS AND FUTURES
Fund will, on each business day on which a sale of
investment securities of Fund has been made, deliver to
Custodian instructions specifying with respect to each such
sale:
1. The name of the Portfolio making such sale;
2. The name of the issuer and description of the securities;
3. The number of shares or principal amount sold, and
accrued interest, if any;
4. The date on which the securities sold were purchased or
other information identifying the securities sold and
to be delivered;
5. The trade date;
6. The settlement date;
7. The sale price per unit and the brokerage commission,
taxes or other expenses payable in connection with
such sale;
8. The total amount to be received by Fund upon such sale;
and
9. The name and address of the broker or dealer through whom
or person to whom the sale was made.
In accordance with such instructions, Custodian will deliver
or cause to be delivered the securities thus designated as
sold for the account of Fund to the broker or other person
specified in the instructions relating to such sale, such
delivery to be made only upon receipt of payment therefor in
such form as is satisfactory to Custodian, with the
understanding that Custodian may deliver or cause to be
delivered securities for payment in accordance with the
customs prevailing among dealers in securities.
H. PURCHASES OR SALES OF SECURITY OPTIONS, OPTIONS ON INDICES AND
SECURITY INDEX FUTURES CONTRACTS. Fund will, on each business day
on which a purchase or sale of the following options and/or
futures shall be made by it, deliver to Custodian instructions
which shall specify with respect to each such purchase or sale:
1. The name of the Portfolio making such purchase or sale;
2. Security Options
a. The underlying security;
b. The price at which purchased or sold;
c. The expiration date; d. The number of contracts;
e. The exercise price;
f. Whether the transaction is an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased;
i. Market on which option traded;
j. Name and address of the broker or dealer through whom the
sale or purchase was made.
3. Options on Indices
a. The index;
b. The price at which purchased or sold;
c. The exercise price;
d. The premium;
e. The multiple;
f. The expiration date;
g. Whether the transaction is an opening, exercising,
expiring or closing transaction;
h. Whether the transaction involves a put or call;
i. Whether the option is written or purchased;
j. The name and address of the broker or dealer through whom
the sale or purchase was made, or other applicable
settlement instructions.
4. Security Index Futures Contracts
a. The last trading date specified in the contract and, when
available, the closing level, thereof;
b. The index level on the date the contract is entered into;
c. The multiple;
d. Any margin requirements;
e. The need for a segregated margin account (in addition to
instructions, and if not already in the possession
of Custodian, Fund shall deliver a substantially complete
and executed custodial safekeeping account and procedural
agreement which shall be incorporated by reference into
this Custody Agreement); and
f. The name and address of the futures commission merchant
through whom the sale or purchase was made, or
other applicable settlement instructions.
5. Option on Index Future Contracts
a. The underlying index futures contract;
b. The premium;
c. The expiration date;
d. The number of options;
e. The exercise price;
f. Whether the transaction involves an opening, exercising,
expiring or closing transaction;
g. Whether the transaction involves a put or call;
h. Whether the option is written or purchased; and
i. The market on which the option is traded.
I. SECURITIES PLEDGED OR LOANED. If specifically allowed for in the
prospectus of Fund:
1. Upon receipt of instructions, Custodian will release or
cause to be released securities held in custody to the
pledgee designated in such instructions by way of pledge or
hypothecation to secure any loan incurred by Fund; provided,
however, that the securities shall be released only upon
payment to Custodian of the monies borrowed, except that in
cases where additional collateral is required to secure a
borrowing already made, further securities may be released
or caused to be released for that purpose upon receipt of
instructions. Upon receipt of instructions, Custodian will
pay, but only from funds available for such purpose, any
such loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or
notes evidencing such loan.
2. Upon receipt of instructions, Custodian will release
securities held in custody to the borrower designated in
such instructions; provided, however, that the securities
will be released only upon deposit with Custodian of full
cash collateral as specified in such instructions, and that
Fund will retain the right to any dividends, interest or
distribution on such loaned securities. Upon receipt of
instructions and the loaned securities, Custodian will
release the cash collateral to the borrower.
J. ROUTINE MATTERS. Custodian will, in general, attend to all
routine and mechanical matters in connection with the sale,
exchange, substitution, purchase, transfer, or other dealings
with securities or other property of Fund except as may be
otherwise provided in this Agreement or directed from time to
time by the Board of Directors of Fund.
K. DEPOSIT ACCOUNT. Custodian will open and maintain a special
purpose deposit accounts in the name of Custodian ("Account"),
subject only to draft or order by Custodian upon receipt of
instructions. All monies received by Custodian from or for the
account of a portfolio shall be deposited in said Account,
barring events not in the control of the Custodian such as
strikes, lockouts or labor disputes, riots, war or equipment or
transmission failure or damage, fire, flood, earthquake or other
natural disaster, action or inaction of governmental authority or
other causes beyond its control, at 9:00 a.m., Kansas City time,
on the second business day after deposit of any check into Fund's
Account, Custodian agrees to make Fed Funds available to the Fund
in the amount of the check. Deposits made by Federal Reserve wire
will be available to the Fund immediately and ACH wires will be
available to the Fund on the next business day. Income earned on
the portfolio securities will be credited to the applicable
portfolio of the Fund based on the schedule attached as Exhibit
A. The Custodian will be entitled to reverse any credited amounts
where credits have been made and monies are not finally
collected. If monies are collected after such reversal, the
Custodian will credit the applicable portfolio in that amount.
Custodian may open and maintain an Account in such other banks or
trust companies as may be designated by it or by properly
authorized resolution of the Board of Directors of Fund, such
Account, however, to be in the name of custodian and subject only
to its draft or order.
L. INCOME AND OTHER PAYMENTS TO FUND
Custodian will:
1. Collect, claim and receive and deposit for the Account of
Fund all income and other payments which become due and
payable on or after the effective date of this Agreement
with respect to the securities deposited under this
Agreemenet, and credit the account of Fund in accordance
with the schedule attached hereto as Exhibit A. If for any
reason, the Fund is credited with income that is not
subsequently collected, Custodian may reverse that credited
amount;
2. Execute ownership and other certificates and affidavits for
all federal, state and local tax purposes in connection with
the collection of bond and note coupons; and
3. Take such other action as may be necessary or proper in
connection with:
a. The collection, receipt and deposit of such income and
other payments, including but not limited to the
presentation for payment of:
1. all coupons and other income items requiring
presentation; and
2. all other securities which may mature or be
called, redeemed, retired or otherwise become
payable and regarding which the Custodian has
actual knowledge, or notice of which is contained
in publications of the type to which it normally
subscribes for such purpose; and
b. the endorsement for collection, in the name of the
Fund, of all checks, drafts or other negotiable
instruments.
Custodian, however, will not be required to institute suit
or take other extraordinary action to enforce collection
except upon receipt of instructions and upon being
indemnified to its satisfaction against the costs and
expenses of such suit or other actions. Custodian will
receive, claim and collect all stock dividends, rights or
other similar items and will deal with the same pursuant to
instructions. Unless prior instructions have been received
to the contrary, Custodian will, without further
instructions, sell any rights held for the account of Fund
on the last trade date prior to the date of expiration of
such rights.
M. PAYMENT OF DIVIDENDS AND OTHER DISTRIBUTIONS. On the declaration
of any dividend or other distribution on the shares of Capital
Stock of Fund ("Fund Shares") by the Board of Directors of Fund,
Fund shall deliver to Custodian instructions with respect
thereto, including a copy of the Resolution of said Board of
Directors certified by the Secretary or Assistant Secretary of
Fund wherein there shall be set forth the record date as of which
shareholders entitled to receive such dividend or other
distribution shall be determined, the date of payment of such
dividend or distribution, and the amount payable per share on
such dividend or distribution. Except if the ex-dividend date and
the reinvestment date of any dividend are the same, in which case
funds shall remain in the Custody Account, on the date specified
in such Resolution for the payment of such dividend or other
distribution, Custodian will pay out of the monies held for the
account of Fund, insofar as the same shall be available for such
purposes, and credit to the account of the Dividend Disbursing
Agent for Fund, such amount as may be necessary to pay the amount
per share payable in cash on Fund Shares issued and outstanding
on the record date established by such Resolution.
N. SHARES OF FUND PURCHASED BY FUND. Whenever any Fund Shares are
repurchased or redeemed by Fund, Fund or its agent shall advise
Custodian of the aggregate dollar amount to be paid for such
shares and shall confirm such advice in writing. Upon receipt of
such advice, Custodian shall charge such aggregate dollar amount
to the Account of Fund and either deposit the same in the account
maintained for the purpose of paying for the repurchase or
redemption of Fund Shares or deliver the same in accordance with
such advice. Custodian shall not have any duty or responsibility
to determine that Fund Shares have been removed from the proper
shareholder account or accounts or that the proper number of such
shares have been cancelled and removed from the shareholder
records.
O. SHARES OF FUND PURCHASED FROM FUND. Whenever Fund Shares are
purchased from Fund, Fund will deposit or cause to be deposited
with Custodian the amount received for such shares. Custodian
shall not have any duty or responsibility to determine that Fund
Shares purchased from Fund have been added to the proper
shareholder account or accounts or that the proper number of such
shares have been added to the shareholder records.
P. PROXIES AND NOTICES. Custodian will promptly deliver or mail or
have delivered or mailed to Fund all proxies properly signed, all
notices of meetings, all proxy statements and other notices,
requests or announcements affecting or relating to securities
held by Custodian for Fund and will, upon receipt of
instructions, execute and deliver or cause its nominee to execute
and deliver or mail or have delivered or maield such proxies or
other authorizations as may be required. Except as provided by
this Agreement or pursuant to instructions hereafter received by
Custodian, neither it nor its nominee will exercise any power
inherent in any such securities, including any power to vote the
same, or execute any proxy, power of attorney, or other similar
instrument voting any of such securities, or give any consent,
approval or waiver with respect thereto, or take any other
similar action.
Q. DISBURSEMENTS. Custodian will pay or cause to be paid insofar as
funds are available for the purpose, bills, statements and other
obligations of Fund (including but not limited to obligations in
connection with the conversion, exchange or surrender of
securities owned by Fund, interest charges, dividend
disbursements, taxes, management fees, custodian fees, legal
fees, auditors' fees, transfer agents' fees, brokerage
commissions, compensation to personnel, and other operating
expenses of Fund) pursuant to instructions of Fund setting forth
the name of the person to whom payment is to be made, the amount
of the payment, and the purpose of the payment.
R. DAILY STATEMENT OF ACCOUNTS. Custodian will, within a reasonable
time, render to Fund as of the close of business on each day, a
detailed statement of the amounts received or paid and of
securities received or delivered for the account of Fund during
said day. Custodian will, from time to time, upon request by
Fund, render a detailed statement of the securities and monies
held for Fund under this Agreement, and Custodian will maintain
such books and records as are necessary to enable it to do so and
will permit such persons as are authorized by Fund including
Fund's independent public accountants, access to such records or
confirmation of the contents of such records; and if demanded,
will permit federal or state regulatory agencies to examine the
securities, books and records. Upon the written instructions of
Fund or as demanded by federal or state regulatory agencies,
Custodian will instruct any subcustodian to give such persons as
are authorized by Fund including Fund's independent public
accountants, access to such records or confirmation of the
contents of such records; and if demanded, to permit federal and
state regulatory agencies to examine the books, records and
securities held by subcustodian which relate to Fund.
S. APPOINTMENT OF SUBCUSTODIANS.
1. Notwithstanding any other provisions of this Agreement, all
or any of the monies or securities if Fund may be held in
Custodian's own custody or in the custody of one or more
other banks or trust companies selected by Custodian. Any
such subcustodian selected by the Custodian must have the
qualifications required for custodian under the Investment
Company Act of 1940, as amended. The Custodian may
participate directly or indirectly in the Depository Trust
Company, Treasury/Federal Reserve Book Entry System,
Participant Trust Company (as such entities are defined at
17 CFR Sec. 270.17f-4(b)), or other depository approved by
the Fund and with which Custodian has a satisfactory direct
or indirect contractual relationship. Custodian will appoint
UMBKC and UMBNY as subcustodians and Custodian shall be
responsible for UMBKC and UMBNY to the same extent it is
responsible to the Fund under Section 5 of this Agreement.
Custodian is not responsible for DTC, the Treasury/Federal
Reserve Book Entry System, and PTC except to the extent such
entities are responsible to Custodian. Upon instruction of
the Fund, Custodian shall be willing to contract with such
entities as Bank of New York (BONY), Morgan Guaranty and
Trust Company (MGTC), Chemical Bank (CB), and Bankers Trust
Company (BT) for variable rate securities and Custodian will
be responsible to the Fund to the same extent those entities
are responsible to Custodian. The Fund shall be entitled to
review Custodian's contracts with BONY, MGTC, CB, and BT.
T. ACCOUNTS AND RECORDS PROPERTY OF FUND. Custodian acknowledges
that all of the accounts and records maintained by Custodian
pursuant to this Agreement are the property of Fund, and will be
made available to Fund for inspection or reproduction within a
reasonable period of time, upon demand. Custodian will assist
Fund's independent auditors, or upon approval of Fund, or upon
demand, any regulatory body having jurisdiction over the Fund or
Custodian, in any requested review of Fund's accounts and records
but shall be reimbursed for all expenses and employee time
invested in any such review outside of routine and normal
periodic reviews.
U. ADOPTION OF PROCEDURES. Custodian and Fund may from time to time
adopt procedures as they agree upon, and Custodian may
conclusively assume that no procedure approved by Fund, or
directed by Fund, conflicts with or violates any requirements of
its prospectus, "Articles of Incorporation," Bylaws, or any rule
or regulation of any regulatory body or governmental agency. Fund
will be responsible to notify Custodian of any changes in
statutes, regulations, rules or policies which might necessitate
changes in Custodian's responsibilities or procedures.
V. OVERDRAFTS. If Custodian shall in its sole discretion advance
funds to the account of the Fund which results in an overdraft
because the monies held by Custodian on behalf of the Fund are
insufficient to pay the total amount payable upon a purchase of
securities as specified in a Fund's instructions or for some
other reason, the amount of the overdraft shall be payable by the
Fund to Custodian upon demand and shall bear an interest rate
determined by Custodian from the date advanced until the date of
payment. Custodian shall have a lien on the assets of Fund in the
amount of any outstanding overdraft.
4. INSTRUCTIONS.
A. The term "instructions," as used herein, means written or oral
instructions to Custodian from a designated representative of
Fund. Certified copies of resolutions of the Board of Directors
of Fund naming one or more designated representatives to give
instructions in the name and on behalf of Fund, may be received
and accepted from time to time by Custodian as conclusive
evidence of the authority of any designated representative to act
for Fund and may be considered to be in full force and effect
(and Custodian will be fully protected in acting in reliance
thereon) until receipt by Custodian of notice to the contrary.
Unless the resolution delegating authority to any person to give
instructions specifically requires that the approval of anyone
else will first have been obtained, Custodian will be under no
obligation to inquire into the right of the person giving such
instructions to do so. Notwithstanding any of the foregoing
provisions of this Section 4. no authorizations or instructions
received by Custodian from Fund, will be deemed to authorize or
permit any director, trustee, officer, employee, or agent of Fund
to withdraw any of the securities or similar investments of Fund
upon the mere receipt of such authorization or instructions from
such director, trustee, officer, employee or agent.
B. No later than the next business day immediately following each
oral instruction, Fund will send Custodian written confirmation
of such oral instruction. At Custodian's sole discretion,
Custodian may record on tape, or otherwise, any oral instruction
whether given in person or via telephone, each such recording
identifying the parties, the date and the time of the beginning
and ending of such oral instruction.
5. LIMITATION OF LIABILITY OF CUSTODIAN.
A. Custodian shall hold harmless and indemnify Fund from and against
any loss or liability arising out of Custodian's negligence or
bad faith. Custodian shall not be liable for consequential
damages, special, or punitive damages. Custodian may request and
obtain the advice and opinion of counsel for Fund, or of its own
counsel with respect to questions or matters of law, and it shall
be without liability to Fund for any action taken or omitted by
it in good faith, in conformity with such advice or opinion. If
Custodian reasonably believes that it could not prudently act
according to the instructions of the Fund or the Fund's counsel,
it may in its discretion, with notice to the Fund, not act
according to such instructions.
B. Custodian may rely upon the advice of Fund and upon statements of
Fund's accountants and other persons believed by, it in good
faith, to be expert in matters upon which they are consulted, and
Custodian shall not be liable for any actions taken, in good
faith, upon such statements.
C. If Fund requires Custodian in any capacity to take, with respect
to any securities, any action which involves the payment of money
by it, or which in Custodian's opinion might make it or its
nominee liable for payment of monies or in any other way,
Custodian, upon notice to Fund given prior to such actions, shall
be and be kept indemnified by Fund in an amount and form
satisfactory to Custodian against any liability on account of
such action.
D. Custodian shall be entitled to receive, and Fund agrees to pay
Custodian, on demand, reimbursement for such cash disbursements,
costs and expenses as may be agreed upon from time to time by
Custodian and Fund.
E. Custodian shall be protected in acting as custodian hereunder
upon any instructions, advice, notice, request, consent,
certificate or other instrument or paper reasonably appearing to
it to be genuine and to have been properly executed and shall,
unless otherwise specifically provided herein, be entitled to
receive as conclusive proof of any fact or matter required to be
ascertained from Fund hereunder, a certificate signed by the
Fund's President, or other officer specifically authorized for
such purpose.
F. Without limiting the generality of the foregoing, Custodian shall
be under no duty or obligation to inquire into, and shall not be
liable for:
1. The validity of the issue of any securities purchased by or
for Fund, the legality of the purchase thereof or evidence
of ownership required by Fund to be received by Custodian,
or the propriety of the decision to purchase or amount paid
therefor;
2. The legality of the sale of any securities by or for Fund,
or the propriety of the amount for which the same are sold;
3. The legality of the issue or sale of any shares of the
Capital Stock of Fund, or the sufficiency of the amount to
be received therefor;
4. The legality of the repurchase or redemption of any Fund
Shares, or the propriety of the amount to be paid therefor;
or
5. The legality of the declaration of any dividend by Fund, or
the legality of the issue of any Fund Shares in payment of
any stock dividend.
G. Custodian shall not be liable for, or considered to be Custodian
of, any money represented by any check, draft, wire transfer,
clearing house funds, uncollected funds, or instrument for the
payment of money received by it on behalf of the Fund, until
Custodian actually receives such money, provided only that it
shall advise Fund promptly if it fails to receive any such money
in the ordinary course of business, and use its best efforts and
cooperate with Fund toward the end that such money shall be
received.
H. Custodian shall not be responsible for loss occasioned by the
acts, neglects, defaults or insolvency of any broker, bank, trust
company, or any other person with whom Custodian may deal in the
absence of negligence, or bad faith on the part of the Custodian.
I. Notwithstanding anything herein to the contrary, Custodian may,
and with respect to any foreign subcustodian appointed under
Section 3.S.2. must, provide the Fund for its approval,
agreements with banks or trust companies which will act as
subcustodians for Fund pursuant to Section 3.S of this Agreement.
6. COMPENSATION. Fund will pay Custodian such compensation as is stated
in the Fee Schedule attached hereto as Exhibit B which may be changed
from time to time as agreed to in writing by Custodian and Fund.
Custodian may charge such compensation against monies held by it for
the account of Fund. Custodian will also be entitled, notwithstanding
the provisions of Sections 5.C. or 5.D. hereof, to charge against any
monies held by it for the account of Fund the amount of any loss,
damage, liability, advance, or expense for which it shall be entitled
to reimbursement under the provisions of this Agreement including fees
or expenses due to Custodian for other services provided to the Fund
by the Custodian.
7. TERMINATION. Either party to this Agreement may terminate the same by
notice in writing, delivered or mailed, postage prepaid, to the other
party hereto and received not less than ninety (90) days prior to the
date upon which such termination will take effect. Upon termination of
this Agreement, Fund will pay to Custodian such compensation for its
reimbursable disbursements, costs and expenses paid or incurred to
such date and Fund will use its best efforts to obtain a successor
custodian. Unless the holders of a majority of the outstanding shares
of "Capital Stock" of Fund vote to have the securities, funds and
other properties held under this Agreement delivered and paid over to
some other person, firm or corporation specified in the vote, having
not less than Two Million Dollars ($2,000,000) aggregate capital,
surplus and undivided profits, as shown by its last published report,
and meeting such other qualifications for custodian as set forth in
the Bylaws of Fund, the Board of Directors of Fund will, forthwith
upon giving or receiving notice of termination of this Agreement,
appoint as successor custodian a bank or trust company having such
qualifications. Custodian will, upon termination of this Agreement,
deliver to the successor custodian so specified or appointed, at
Custodian's office, all securities then held by Custodian hereunder,
duly endorsed and in form for transfer, all funds and other properties
of Fund deposited with or held by Custodian hereunder, or will
cooperate in effecting changes in book-entries at the Depository Trust
Company or in the Treasury/Federal Reserve Book-Entry System pursuant
to 31 CFR Sec. 306.118. In the event no such vote has been adopted by
the stockholders of Fund and no written order designating a successor
custodian has been delivered to Custodian on or before the date when
such termination becomes effective, then Custodian will deliver the
securities, funds and properties of Fund to a bank or trust company at
the selection of Custodian and meeting the qualifications for
custodian, if any, set forth in the Bylaws of Fund and having not less
than Two Million Dollars ($2,000,000) aggregate capital, surplus and
undivided profits, as shown by its last published report. Upon either
such delivery to a successor custodian, Custodian will have no further
obligations or liabilities under this Agreement. Thereafter such bank
or trust company will be the successor custodian under this Agreement
and will be entitled to reasonable compensation for its services. In
the event that no such successor custodian can be found, Fund will
submit to its shareholders, before permitting delivery of the cash and
securities owned by Fund to anyone other than a successor custodian,
the question of whether Fund will be liequidated or function without a
custodian. Notwithstanding the foregoing requirement as to delivery
upon termination of this Agreement, Custodian may make any other
delivery of the securities, funds and property of Fund which is
permitted by the Investment Company Act of 1940, Fund's Certificate of
Incorporation and Bylaws then in effect or apply to a court of
competent jurisdiction for the appointment of a successor custodian.
8. NOTICES. Notices, requests, instructions and other writings received
by Fund at 601 West Riverside Avenue, Suite 900, Spokane, Washington,
99201 or at such other address as Fund may have designated to
Custodian in writing, will be deemed to have been properly given to
Fund hereunder; and notices, requests, instructions and other writings
received by Custodian at its offices at 127 West 10th Street, Kansas
City, Missouri 64105, or to such other address as it may have
designated to Fund in writing, will be deemed to have been properly
given to Custodian hereunder.
9. MISCELLANEOUS.
A. This Agreement is executed and delivered in the State of Missouri
and shall be governed by the laws of said state.
B. All the terms and provisions of this Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the
respective successor and assigns of the parties hereto.
C. No provisions of the Agreement may be amended or modified, in any
manner except by a written agreement properly authorized and
executed by both parties hereto.
D. The captions in this Agreement are included for convenience of
reference only, and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or
effect.
E. This Agreement may be executed simultaneously in two or more
counterparts, each of which will be deemed an original but all of
which together will constitute one and the same instrument.
F. If any part, term or provision of this Agreement is by the courts
held to be illegal, in conflict with any law or otherwise
invalid, the remaining portion or portions shall be considered
severable and not be affected, and the rights and obligations of
the parties shall be construed and enforced as if the Agreement
did not contain the particular part, term or provision held to be
illegal or invalid.
G. Custodian will not release the identity of Fund to an issuer
which requests such information pursuant to the Shareholder
Communications Act of 1985 for the specific purpose of direct
communications between such issuer and Fund unless the Fund
directs the Custodian otherwise.
H. This Agreement may not be assigned by either party without prior
written consent of the other party.
I. If any provision of the Agreement, either in its present form or
as amended from time to time, limits, qualifies, or conflicts
with the Investment Company Act of 1940, as amended, and the
rules and regulations promulgated thereunder, such statutes,
rules and regulations shall be deemed to control and supercede
such provision without nullifying or terminating the remainder of
the provisions of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly respective authorized officers.
INVESTORS FIDUCIARY TRUST
COMPANY
B: /s/ Allen Strain
Title: Senior V.P.
COMPOSITE CASH MANAGEMENT
COMPANY
By: /s/ William G. Papesh
Title: President
<TABLE>
<CAPTION>
TRANSACTION DTC PHYSICAL FED
<S> <C> <C> <C> <C> <C> <C>
TYPE CR DATE FDS TYPE CR DATE FDS TYPE CR DATE FDS TYPE
Calls Puts As Received C of F* As Received C or F*
Maturities As Received C or F* Mat. Date C or F* Mat. Date F
Tender Reorgs. As Received C or F* As Received C N/A
Dividends Paydate C Paydate C N/A
Floating Rate Paydate C Paydate C N/A
Int.
Floating Rate N/A As Rate C N/A
Int. (No Rate) Received
Mtg. Backed P&I Paydate C Paydate + 1 C Paydate F
Bus. Day
Fixed Rate Int. Paydate C Paydate C Paydate F
Euroclear N/A C Paydate C
LEGEND
C = Clearinghouse Funds
F = Fed Funds
N/A = Not Applicable
* Availability based on how received.
</TABLE>
EXHIBIT 10
April ??, 1997
Securities and Exchange Commission
450 Fifth Street, NW
Washington DC 20549
RE: Composite Cash Management Company
(SA File No. 2-65242)
Gentlemen:
We have acted as counsel to the Composite Cash Management Company ("the
Fund") in connection with the preparation of Post-Effective Amendment No. 23
(the "Amendment") to the Fund's Registration Statement. We have reviewed the
Amendment and, in our opinion, the Amendment does not contain disclosures which
would render it ineligible to become effective pursuant to Paragraph (b) of Rule
485 under the Securities Act of 1933.
Very truly yours,
PAINE, HAMBLEN, COFFIN,
BROOKE & MILLER
/s/ Lawrence R. Small
Lawrence R. Small
<PAGE>
EXHIBIT 10
April 22, 1997
Composite Cash Management Company
601 W. Main Avenue, Suite 801
Spokane, WA 99201-0613
Gentlemen:
In connection with a Post-Effective Amendment No. 23 to the Registration
Statement now being filed by your company with the Securities and Exchange
Commission relating to an offering of shares of common stock, we certify that,
as attorneys for this corporation, we have examined the corporate proceedings
relating to its incorporation, the Bylaws, the Distributor and Management
Contracts, and such other matters and documents as we deem necessary. It is our
opinion that:
(a) Composite Cash Management Company is a corporation duly incorporated and
existing under the laws of the State of Washington, with authorized capital
stock, consisting of 10,000,000,000 shares of common stock with
6,000,000,000 shares denominated as Class A and 4,000,000,000 shares
denominated as Class B; the par value is $.0001 per share with all shares
having equal voting rights.
(b) All of the 10,000,000,000 shares have been validly and legally authorized to
be issued by proper corporate action and in conformity with the laws of the
State of Washington applicable thereto. Such authorized shares, upon their
issuance, will be for proceeds to the company of not less than the net asset
value of such shares at the time of sale after adjusting to the nearer full
cent, and will be fully paid and nonassessable.
Very truly yours,
PAINE, HAMBLEN, COFFIN,
BROOKE & MILLER LLP
/s/ Lawrence R. Small
Lawrence R. Small
<PAGE>
EXHIBIT 10
April 22, 1997
Composite Cash Management Company
601 W. Main Avenue, Suite 801
Spokane, WA 99201-0613
Gentlemen:
We hereby consent to the use of our written opinion dated April 22, 1997,
upon the validity of the organization of Composite Cash Management Company, and
upon the designation of the authorized capital stock of said company in the
Articles of Incorporation as an exhibit to Post-Effective Amendment No. 23 to
the Registration Statement now being filed with the Securities and Exchange
Commission and any Prospectus relating to the proposed offer and sale of the
capital stock of the corporation.
Very truly yours,
PAINE, HAMBLEN, COFFIN,
BROOKE & MILLER LLP
/s/ Lawrence R. Small
Lawrence R. Small
EXHIBIT 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference into the Prospectus and
Statement of Additional Information in Post-Effective Amendment No. 23 to the
Registration Statement on Form N-1A of Composite Cash Management Company of our
report dated January 24, 1997, on the financial statements and financial
highlights included in the December 31, 1996 Annual Report to Shareholders of
Composite Cash Management Company. We further consent to the reference to our
Firm under the headings "Financial Highlights" in the Prospectus and
"Independent Public Accountants" in the Statement of Additional Information.
/s/LeMater & Daniels, PLLC
LeMaster & Daniels, PLLC
Spokane, Washington
April 21, 1997
<PAGE>
EXHIBIT 11
INDEPENDENT PUBLIC ACCOUNTANTS' REPORT
Board of Directors and Shareholders of
Composite Cash Management Company
We have audited the accompanying statements of assets and liabilities, including
the investment portfolios, of Composite Cash Management Company (comprising,
respectively, the Money Market and Tax-Exempt Portfolios) as of December 31,
1996, and the related statements of operations for the year then ended, the
statements of changes in net assets for the years ended December 31, 1996
and 1995, and the financial highlights for each of the five years in the period
ended December 31, 1996. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirming securities owned as of December
31, 1996, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting Composite Cash Management Company as
of December 31, 1996, and the results of their operations, the changes in their
net assets, and their financial highlights for the above-stated periods in
conformity with generally accepted accounting principles.
/s/ LeMaster & Daniels, PLLC
Certified Public Accountants
Spokane, Washington
January 24, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S ANNUAL REPORT AND FORM N-SAR WHICH ARE ON FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH DOCUMENTS.
</LEGEND>
<CIK> 0000312346
<NAME> Money Market Portfolio Class A
<SERIES>
<NUMBER> 011
<NAME> Class A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 229,367,191
<INVESTMENTS-AT-VALUE> 229,367,191
<RECEIVABLES> 3,439,427
<ASSETS-OTHER> 337,247
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 233,143,865
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,671,608
<TOTAL-LIABILITIES> 3,671,608
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 229,472,257
<SHARES-COMMON-STOCK> 229,355,308
<SHARES-COMMON-PRIOR> 171,225,368
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 229,355,308
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,252,565
<OTHER-INCOME> 0
<EXPENSES-NET> (1,540,983)
<NET-INVESTMENT-INCOME> 9,711,582
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 9,711,582
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9,706,992)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 600,191,639
<NUMBER-OF-SHARES-REDEEMED> (551,647,506)
<SHARES-REINVESTED> 9,585,807
<NET-CHANGE-IN-ASSETS> 58,172,432
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 916,867
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,743,595
<AVERAGE-NET-ASSETS> 203,772,999
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.05)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.79
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S ANNUAL REPORT AND FORM N-SAR WHICH ARE ON FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH DOCUMENTS.
</LEGEND>
<CIK> 0000312346
<NAME> Composite Cash Management Company
<SERIES>
<NUMBER> 012
<NAME> Money Market Portfolio Class B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 229,367,191
<INVESTMENTS-AT-VALUE> 229,367,191
<RECEIVABLES> 3,439,427
<ASSETS-OTHER> 337,247
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 233,143,865
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 3,671,608
<TOTAL-LIABILITIES> 3,671,608
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 229,472,257
<SHARES-COMMON-STOCK> 116,949
<SHARES-COMMON-PRIOR> 74,457
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 116,949
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 11,252,565
<OTHER-INCOME> 0
<EXPENSES-NET> (1,540,983)
<NET-INVESTMENT-INCOME> 9,711,582
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 9,711,582
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4,590)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 429,250
<NUMBER-OF-SHARES-REDEEMED> (391,277)
<SHARES-REINVESTED> 4,519
<NET-CHANGE-IN-ASSETS> 58,172,432
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 916,867
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,743,595
<AVERAGE-NET-ASSETS> 203,772,999
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.04)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.69
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S ANNUAL REPORT AND FORM N-SAR WHICH ARE ON FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH DOCUMENTS.
</LEGEND>
<CIK> 0000312346
<NAME> Composite Cash Management Company
<SERIES>
<NUMBER> 021
<NAME> Tax-Exempt Portfolio Class A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 31,502,032
<INVESTMENTS-AT-VALUE> 31,502,032
<RECEIVABLES> 541,972
<ASSETS-OTHER> 120,613
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32,164,617
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 188,475
<TOTAL-LIABILITIES> 188,475
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31,976,142
<SHARES-COMMON-STOCK> 31,973,937
<SHARES-COMMON-PRIOR> 30,987,806
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 31,973,937
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,120,029
<OTHER-INCOME> 0
<EXPENSES-NET> (173,071)
<NET-INVESTMENT-INCOME> 946,958
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 946,958
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (946,927)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 54,027,014
<NUMBER-OF-SHARES-REDEEMED> (53,980,784)
<SHARES-REINVESTED> 939,909
<NET-CHANGE-IN-ASSETS> 987,303
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 139,482
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 220,345
<AVERAGE-NET-ASSETS> 31,484,757
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.03)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .57
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S ANNUAL REPORT AND FORM N-SAR WHICH ARE ON FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH DOCUMENTS.
</LEGEND>
<CIK> 0000312346
<NAME> Composite Cash Management Company
<SERIES>
<NUMBER> 022
<NAME> Tax-Exempt Portfolio Class B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 31,502,032
<INVESTMENTS-AT-VALUE> 31,502,032
<RECEIVABLES> 541,972
<ASSETS-OTHER> 120,613
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32,164,617
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 188,475
<TOTAL-LIABILITIES> 188,475
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31,976,142
<SHARES-COMMON-STOCK> 2,205
<SHARES-COMMON-PRIOR> 1,033
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,205
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,120,029
<OTHER-INCOME> 0
<EXPENSES-NET> (173,071)
<NET-INVESTMENT-INCOME> 946,958
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 946,958
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (31)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,901
<NUMBER-OF-SHARES-REDEEMED> (1,737)
<SHARES-REINVESTED> 8
<NET-CHANGE-IN-ASSETS> 987,303
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 139,482
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 220,345
<AVERAGE-NET-ASSETS> 31,484,757
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.02)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 1.53
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
