SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement (Revised)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14-11(c) or Section 2
Composite Northwest 50 Fund, Inc.
(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total Fee Paid:
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[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify filing for which the offsetting fee was paid
previoously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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COMPOSITE NORTHWEST 50 FUND, INC.
601 West Main Avenue, Suite 801
Spokane, Washington 99201-0613
Telephone (509) 353-3550
Toll free (800) 543-8072
Dear Shareholder:
Composite Northwest 50 Fund, Inc. will hold a special meeting of shareholders on
December 15, 1995 at the offices of the Fund to consider the recommendation of
Composite Research & Management Co. (the "Adviser"), to change the manner in
which the Fund intends to meet its fundamental investment objectives. As you
know, your Fund currently invests its assets according to the composition of the
Northwest 50 (R) Index. Common stocks included in the Fund, and their relative
weightings, are based entirely on the representation within the Index.
The Adviser believes that the Fund has been able to meet its investment
objectives and provide a reasonable total return to its shareholders since its
formation in 1986. The Adviser now believes, however, that continued linkage to
the Northwest 50(R)Index will increasingly constrain portfolio managers in the
selection of securities of Northwest companies. At present, if a company is
included in the Index (and thus, the Fund) it cannot be removed unless the
company ceases to be a Northwest company or its viability is in doubt. New
companies are added to the Index only when existing Index companies are removed.
The Adviser is also limited as to the selection and weighting of industry
sectors in which the Fund may invest.
We believe that our managers should have greater flexibility to make changes in
the Fund, allowing them to adjust the portfolio for prevailing market
conditions. We feel the potential for capital appreciation will be enhanced by
providing our Adviser the ability to carefully choose common stocks from a
broader selection of Northwest companies. The proposal is fully explained in the
attached proxy material.
Thank you for your continued confidence in our Fund. We look forward to serving
your investment needs in the years to come.
William G. Papesh
President
October 31, 1995
YOUR VOTE IS IMPORTANT! WE WOULD APPRECIATE YOUR PROMPT VOTE, SIGNATURE,
AND RETURN OF THE ENCLOSED PROXY, WHICH WILL HELP AVOID THE ADDITIONAL
EXPENSE OF A SECOND SOLICITATION. THE ENCLOSED POSTAGE PREPAID ENVELOPE
IS INTENDED FOR YOUR CONVENIENCE.
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COMPOSITE NORTHWEST 50 FUND, INC.
601 West Main Avenue, Suite 801
Spokane, Washington 99201-0613
Telephone (509) 353-3550
Toll free (800) 543-8072
Notice of
Special Meeting of Shareholders
to be held December 15, 1995
A special meeting of shareholders of Composite Northwest 50 Fund, Inc. (the
"Fund"), will be held at the above address on December 15, 1995, at 3:30 p.m. to
consider and take action on the following:
(1) To authorize investment in common stocks of companies, including real estate
investment trusts, located or having business operations in five Northwest
states without regard to their representation in the Northwest 50(R) Index.
(2) To transact such other business as may properly come before the meeting or
any adjournment thereof.
Only shareholders of record on October 9, 1995, will be entitled to vote at the
meeting. The favorable vote of a majority of the outstanding shares of the Fund
is required to approve the proposal. The meeting has been called by the Board of
Directors of the Fund in accordance with the bylaws.
John T. West
Secretary
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PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of proxies
by and on behalf of the Board of Directors of Composite Northwest 50 Fund, Inc.
(the "Fund") to be used at the special meeting of shareholders to be held in the
third floor conference room at 601 West Main Avenue, Spokane, Washington on
December 15, 1995, for the purpose set forth in the accompanying notice. If the
enclosed form of proxy is executed and returned, it may be revoked prior to its
exercise by a signed written notice filed with the Fund or with its transfer
agent, Murphey Favre Securities Services, Inc., at the above address or
delivered at the special meeting.
Accompanying this statement is a notice of the special meeting of shareholders
and a form of proxy for such meeting solicited by the Board of Directors. THE
FUND'S MOST RECENT ANNUAL REPORT AND SUBSEQUENT SEMI-ANNUAL REPORT ARE AVAILABLE
WITHOUT CHARGE BY CONTACTING THE FUND AT THE LOCATION OR PHONE NUMBER ON THE
COVER PAGE OF THIS PROXY STATEMENT. This proxy statement was mailed to
shareholders on or about October 31, 1995.
Where a shareholder has specified a choice on the proxy with respect to proposal
(1), the shares will be voted accordingly. THIS PROXY IS SOLICITED BY THE BOARD
OF DIRECTORS OF THE FUND. UNLESS SPECIFIC INSTRUCTIONS ARE GIVEN, THIS PROXY
WILL BE VOTED IN FAVOR OF THE ACTIONS REFERRED TO IN PROPOSAL (1).
The close of business on October 9, 1995, has been fixed as the date on which
the record of shareholders entitled to vote at the meeting will be taken. There
were 9,451,752 shares outstanding at that time.
So far as is known to the Fund or its management, no person owned of record or
beneficially on the record date as much as 5% of the outstanding capital stock
of the Fund. Each share outstanding on the record date will be entitled to one
vote at the meeting.
All items in the proxy have been approved by the Board of Directors and no
director has given notice of dissent from any of the items to be voted thereon.
Management at this time does not intend to bring any other matters before the
meeting and does not know of any other matters which will be brought before the
meeting by others. However, in the event any business not mentioned in the proxy
statement properly comes before the meeting, then the shareholder authorizes the
persons named in the proxy to vote either for or against the questions according
to their judgment on such matters.
The Fund will bear the cost of solicitation of proxies. In addition to the
solicitation of proxies by use of the mails, some of the Fund's officers and
regular employees of Murphey Favre, Inc. (the "Distributor") may solicit proxies
personally or by telephone from shareholders at a cost not exceeding
out-of-pocket expense. The cost of such additional solicitation made otherwise
than by use of the mails is estimated at not more than $100 and is to be paid by
the Distributor.
The enclosed form of proxy contains spaces in which you may insert instructions
as to the way your shares are to be voted on proposal (1). In order that your
shares may be represented at the meeting, you are requested to complete the
proxy and return it in the envelope enclosed for your convenience, which
requires no United States postage.
PROPOSAL NO. 1 AUTHORIZATION TO INVEST IN COMMON STOCKS OF
COMPANIES, INCLUDING REAL ESTATE INVESTMENT
TRUSTS ("REITs"), LOCATED OR HAVING
BUSINESS OPERATIONS IN FIVE NORTHWEST STATES
WITHOUT REGARD TO THEIR REPRESENTATION IN THE
NORTHWEST 50(R) INDEX.
The Fund's fundamental investment objective currently states that the Fund will
invest in a portfolio based on the Northwest 50(R) Index (the "Index"), of 50
common stocks selected from companies doing business or located in the Pacific
Northwest (Alaska, Idaho, Montana, Oregon, and Washington).
Composite Research & Management Co. (the "Adviser") has recommended changing the
Fund's investment objective and policies to allow for investments in common
stocks of Northwest companies, including real estate investment trusts, without
regard to the Index. The Board of Directors has accepted and agreed with this
recommendation. IF APPROVED, THE FUND'S FUNDAMENTAL INVESTMENT OBJECTIVE WOULD
BE TO SEEK LONG-TERM GROWTH OF CAPITAL THROUGH INVESTMENTS IN THE COMMON STOCKS
OF COMPANIES LOCATED OR HAVING BUSINESS OPERATIONS IN FIVE NORTHWEST STATES:
ALASKA, IDAHO, MONTANA, OREGON, OR WASHINGTON. Directors then would change the
Fund's name to Composite Northwest Fund, Inc.
A team of investment professionals manages the Fund. Members of the team are
Jeffrey D. Huffman, CFA; Philip M. Foreman, CFA; and David W. Simpson, CFA. Mr.
Huffman has 11 years of continuous investment experience and has been employed
by the Adviser since January 1995. Mr. Foreman has been employed by the Adviser
since November 1991 and has 11 years of continuous investment experience. Mr.
Simpson has been employed by the Adviser since March 1993 and has 10 years of
continuous investment experience. Mr. Simpson is primarily responsible for
managing the Fund.
Presently the Fund's portfolio is comprised solely of common stocks in the Index
without analyzing the investment prospects of those securities having been
analyzed. Because the Index composition is determined by the Adviser, the Fund
is not technically considered an index fund although it operates in that manner.
The current investment objective does not allow for changes to the Index (and
thus, the Fund) unless a company in the Index no longer qualifies as a Northwest
company, or becomes so financially troubled that its viability is in question.
Because of this structure, the Adviser is unable to invest in certain industry
segments or companies deemed to be attractive investment opportunities.
Furthermore, the Index has a market capitalization component that causes
companies with larger market capitalizations to have larger weightings. As a
result, the performance of the Fund tends to be weighted toward the performance
of the larger capitalization companies in the Index. The Adviser is unable to
significantly adjust these weightings in the Fund even if it anticipates
superior performance from some of the smaller capitalization companies. While
smaller company stocks may involve greater risks than those of larger, more
mature issuers and their prices may fluctuate to a greater degree, they also can
potentially offer greater opportunities for capital appreciation.
The Adviser believes that it is desirable for the Fund to invest its assets in
common stocks selected on the basis of the Adviser's careful analysis. This
proposed change would provide the Fund flexibility. Under normal circumstances,
all of the Fund's portfolio, other than temporary investments of cash reserves,
would continue to be invested in common stocks of companies, including real
estate investment trusts ("REITs"), located or having business operations in the
above mentioned states. At least 65% of the Fund's total assets will be invested
in companies whose principal executive offices are located in the Northwest. By
utilizing investment management techniques, the Adviser would be able to adjust
the Fund's portfolio to various market conditions in the Northwest region. The
Adviser intends to select stocks based on a variety of criteria, including the
Adviser's expectations regarding earnings growth, valuation parameters, and
other subjective considerations including balance sheet composition, the quality
of management, and competitive position. A REIT is a corporation or trust that
combines the capital of many investors to acquire or provide financing for all
forms of commercial real estate. It is organized in a manner similar to a mutual
fund and the REIT, itself, is exempt from corporate taxation under federal law
and under the state income tax laws of most states. Consequently, the income
received by a REIT can be distributed to its shareholders (including the Fund if
an investment was made) without double taxation. Factors influencing the
investment performance of REITs include the profitability of properties owned,
amount of leverage, and amount of cash flow generated and paid out.
The Fund is classified as "non-diversified" according to the Investment Company
Act of 1940 (the "Act"). If the proposal is adopted, management currently
intends to change the composition of the portfolio in such a way as to cause the
Fund to become "diversified" within one year. This means that at least 75% of
the value of the Fund's total assets would be represented by qualified
securities, cash and cash items, and U.S. government securities. For the
purposes of this calculation, "qualified securities" are securities limited with
respect to any one issuer (at time of purchase) to an amount not greater in
value than 5% of the value of the Fund's total assets nor more than 10% of the
issuer's outstanding voting securities.
Because the Fund mirrors the Index, it has a low portfolio turnover rate; this
rate is calculated by dividing the lesser of purchases or sales of securities,
other than short-term securities, by the average of such securities over a given
period. The Adviser expects that the Fund's portfolio turnover rate will
increase if the proposal is approved. The Fund would not trade securities for
short-term profits but, if circumstances warrant, securities may be sold without
regard to the length of time held. The Adviser cannot accurately predict the
Fund's annual portfolio turnover rate but generally expects it to be below 100%.
The rate of turnover will not be a limiting factor when the Fund deems it
desirable to sell or purchase securities.
An increased portfolio turnover rate could cause the Fund to realize greater
capital gains than it has experienced since its inception. Since the Fund is
required to distribute any net capital gains to shareholders, there could be an
increase in the income tax impact to shareholders as a result of higher
portfolio turnover. Capital gains in excess of capital losses are generally
taxable to shareholders in the year distributed regardless of whether they are
received in cash or invested in additional shares of the Fund. Capital gain
distributions received in a tax deferred account, such as an individual
retirement account or a qualified retirement plan, would generally not be
subject to income tax until withdrawn from the account.
REQUIRED VOTE
Approval of the proposal requires the affirmative vote of a majority of the
shares entitled to vote as defined by the Investment Company Act of 1940, which
means the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund on record date (October 9, 1995), or (2) 67% or more of the
shares present at a meeting if more than 50% of the outstanding record date
shares are represented at the meeting in person or by proxy. If shareholders do
not approve the proposal, the Adviser will continue to operate the Fund in
accordance with its present investment policies.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS AUTHORIZE A
CHANGE IN INVESTMENT OBJECTIVES BY APPROVING THE SELECTIVE INVESTMENT IN COMMON
STOCKS OF COMPANIES, INCLUDING REAL ESTATE INVESTMENT TRUSTS ("REITs"), LOCATED
OR HAVING BUSINESS OPERATIONS IN FIVE NORTHWEST STATES WITHOUT REGARD FOR THEIR
REPRESENTATION IN THE NORTHWEST 50(R) INDEX.
ADDITIONAL INFORMATION
Because Composite Research & Management Co., Murphey Favre and Murphey Favre
Securities Services are subsidiaries of Washington Mutual, Inc., those companies
might be considered affiliates of Washington Mutual, Inc. as that term is used
in the Banking Act of 1933, popularly known as the Glass-Steagall Act. In a
Statement of Policy dated September 1, 1982, the board of directors of the
Federal Deposit Insurance Corporation concluded that the Glass-Steagall Act does
not prohibit insured non-member banks (which would include Washington Mutual,
Inc.) from establishing an affiliate relationship with subsidiaries (which would
include Composite Research, Murphey Favre and Murphey Favre Securities Services)
engaging in a broad range of securities activities. Legal counsel for Washington
Mutual, Inc. and the Fund have advised the Fund that the relationship between
the companies and Washington Mutual, Inc. does not result in an adverse impact
upon the normal investment adviser, distributor and transfer agent functions of
those three companies. If changes in federal statutes, new or modified
administrative rules, regulations or policies, or court decisions involving the
Glass-Steagall Act should indicate that adverse consequences to the Fund may
result from the relationship of the companies with Washington Mutual, Inc., then
directors of the Fund would be obligated to consider termination of the
Investment Management Agreements, the Distribution Contracts, and the
Shareholders Service Contracts.
The directors of the Adviser are Kerry K. Killinger, president, chairman of the
board and chief executive officer of Washington Mutual, Inc.; Craig E. Tall,
executive vice president of Washington Mutual, Inc.; William G. Papesh,
president of the Adviser; Gene G. Branson, executive vice president of the
Adviser; and Douglas D. Springer, president of the Distributor. All of the
directors of the Adviser also serve as directors for both Murphey Favre and
Murphey Favre Securities Services (the Distributor and the Transfer Agent,
respectively).
SUBMISSION OF CERTAIN PROPOSALS
The Fund does not hold annual shareholder meetings. Shareholders wishing to
submit proposals for inclusion in a proxy statement for a subsequent shareholder
meeting should send their written proposals to the Secretary of the Fund, 601
West Main Avenue, Suite 801, Spokane, WA 99201-0613.
OTHER BUSINESS
As far as is known, no other business than that referred to above will be acted
upon at the coming meeting. If any other business is presented for action at the
meeting, it is intended that proxies will be voted on such matters in accordance
with the judgment of the persons acting under such proxies.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
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PROXY
COMPOSITE NORTHWEST 50 FUND, INC.
(1) To authorize investment in commons stocks of
companies, including real estate investment
trusts, located or having business operations in
five Northwest states without regard to their
representation in the Northwest 50(R) Index.
FOR AGAINST ABSTAIN
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This proxy is solicited for the Board of
Directors of the Fund which recommends a vote "FOR" the proposal.
Please by sure to sign and date this Proxy. Date
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Shareholder sign here Co-owner sign here
RECORD DATE SHARES:
(over)
[FRONT]
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[BACK]
Please vote promptly!
Your vote is needed! Please vote on the reverse side of this form, sign in the
space provided and return your completed proxy in the enclosed envelope today.
You may receive additional proxies for other accounts. These are not duplicates;
you should sign and return each proxy card in order for your votes to be
counted. Please return them as soon as possible to help save the costs of
additional mailings.
The signers of this proxy hereby appoint William G. Papesh, Leland J. Sahlin,
John T. West or _____________ and each of them, proxies with full power of
substitution, to vote (according to the number of votes which the signer would
be entitled to cast if then personally present) at the shareholder meeting to be
held December 15, 1995, including adjournments.
This proxy will be voted as specified here by you. If no specification is made,
the proxy will be voted for the proposals set forth on this proxy. Signatures
should agree with the names appearing on the reverse. When signing as attorney,
executor, administrator, trustee, or guardian, please indicate capacity in which
you are acting.
