Supplement dated November 30, 1997 to the Prospectus, as supplemented to date,of
COMPOSITE U.S. GOVERNMENT SECURITIES, INC.,
COMPOSITE INCOME FUND, INC.,
and
COMPOSITE TAX-EXEMPT BOND FUND, INC.
(dated April 30, 1997)
The Prospectus referred to above is amended and supplemented as follows:
On September 23, 1997, each Fund's Board of Directors approved an amendment
to each Fund's fundamental investment restrictions to permit each Fund to invest
in restricted securities if the securities are eligible for resale pursuant to
Rule 144A under the Securities Act of 1933, as amended.
Composite U.S. Government Securities, Inc.'s Board also approved additional
amendments to that Fund's fundamental investment restrictions to permit it to
(i) invest in securities issued by agencies or instrumentalities of the U.S.
Government and (ii) to enter into "dollar rolls" (transactions in which the Fund
sells securities for delivery in the current month and simultaneously contracts
to repurchase substantially similar securities on a specified future date).
Composite Income Fund, Inc.'s Board also approved additional amendments to
that Fund's fundamental investment restrictions to permit it (i) to invest in
securities denominated in currencies other than U.S. dollars and to engage in
certain other related transactions (such as receiving interest, dividends and
sale proceeds in currencies other than U.S. dollars or engaging in foreign
currency exchange, futures or options transactions), (ii) to enter into "dollar
rolls", (iii) to invest in securities of issuers which deal in real estate,
securities which are secured by interests in real estate, and/or securities
which represent interest in real estate and to engage in certain other related
transactions (such as acquiring and disposing of real estate or interests in
real estate acquired through exercise of rights as a holder of debt obligations
secured thereby), and (iv) to purchase and sell interest rate futures and
options.
Composite Tax-Exempt Bond Fund, Inc.'s Board also approved an additional
amendment to that Fund's fundamental investment restrictions to permit it to
purchase and sell interest rate futures and options.
Each Fund's Board also approved an amended Investment Management Agreement
for each Fund with Composite Research & Management Co. which would eliminate the
obligation to reimburse each Fund for certain expenses in excess of specified
amounts; this obligation was not in effect for the most recently completed
fiscal year of any Fund as expenses did not exceed the specified amount.
Each Fund's Board also approved an amendment of the Class A Distribution
Plan of each Fund to change that Plan from a "reimbursement" type plan to a
"compensation" type plan. Under the new Plan, the Distributor would be paid a
fixed fee rather than a variable fee based on the distribution expenses. In
either case the fee is limited to 0.25% of the Fund's average daily net assets
attributable to Class A shares.
All of the foregoing matters are subject to shareholder approval. Special
shareholder meetings have been called for December 23, 1997. If approved by
shareholders, the foregoing changes to the Investment Management Agreements,
Class A Distribution Plans, and fundamental investment restrictions would become
effective at the end of December 1997, or shortly thereafter.
For further information about the foregoing or to request the Proxy
Statement of the Composite Funds for the special shareholder meetings, please
call 1-800-453-8072.
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
Composite U.S. Government Securities, Inc.
Composite Income Fund, Inc.
Composite Tax-Exempt Bond Fund, Inc.
601 West Main Avenue, Suite 300
Spokane, Washington 99201-0613
