PRESIDENT'S MESSAGE
ECONOMIC AND MARKET OUTLOOK
FUNDS' INVESTMENT HIGHLIGHTS
FUNDS' PORTFOLIOS
FINANCIAL INFORMATION
INDEPENDENT PUBLIC ACCOUNTANTS' REPORT
FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
PRESIDENT'S MESSAGE
[PHOTO, WILLIAM PAPESH, PRESIDENT, COMPOSITE FUNDS]
Composite Group's equity funds provided positive results for the year ended
October 31, 1995, with returns to Class A shareholders ranging from 20% to 26%
before sales charges. As our original fund - Composite Bond & Stock Fund - is
among the oldest in the U.S., we've gained some valuable perspectives on
investing. And one of those tells us that while shorter-range positive
performance is always welcome, it is the potential for long-term growth during
the inevitable periods of market fluctuation that is most important.
Regardless of your own objectives, we believe our three funds provide a sound
foundation for investors with long-term time horizons. That viewpoint is likely
to be particularly necessary as we look to the future.
The growth of the mutual fund industry over the past several years has been
nothing short of spectacular. Two factors are primarily responsible for this
unprecedented achievement. First, the increased recognition of the long-term
opportunities presented by the financial markets. And second, a greater
awareness of the benefits of professionally managed and diversified portfolios
of securities designed to meet a variety of investment objectives. But as the
mutual fund industry has prospered, investors find themselves presented with the
challenge of choosing among some 6,000 funds for those which most closely match
their own investment objectives and risk tolerances.
Identifying appropriate investment opportunities, especially in today's
climate of information overload, requires a depth of knowledge and experience
rarely possessed by the individual investor. It is for these reasons that we
continue to offer our funds through investment securities firms and their
registered representatives.
We believe the counseling on investments and asset allocation available from
these experts is well worth the low load fees earned by firms that distribute
our funds. Keep in mind that while a no-load fund costs nothing in sales
commissions, investors lose the value of professional help when they may need it
most. In altogether too many situations, individuals acting without the benefit
of counsel make emotional or ill-timed decisions that might ultimately work to
their disadvantage. In the final analysis, we believe your long-term interests
are best served when you choose to work with a professional whose career is tied
to helping you succeed.
We will continue to work hard to retain your trust and wish you continued
success in the years ahead.
/s/ William G. Papesh
WILLIAM G. PAPESH
PRESIDENT
<PAGE>
ECONOMIC & MARKET OUTLOOK
Although buffeted by a host of challenges, the U.S. economy remains sound, and
given agreement between Congress and the Administration on meaningful deficit
reduction, we expect it to remain so. In our view, this action is necessary in
order to provide a foundation for moderate economic growth, stable to declining
interest rates, and no significant inflationary pressures for the next several
years. Since we are optimistic that progress will be made on this front, our
long-term view of the potential for both stocks and bonds is bullish.
Near term, we do not anticipate securities to perform at the same pace as
experienced this past year. History suggests we should be wary of simply
extrapolating recent events into the near future, particularly after a virtually
unprecedented period of prosperity in the financial markets. While this could
cause concern for individuals who are active traders, mutual fund investors
whose goals are long term should remain diversified and stay the course.
Two positive trends support our contention that the years ahead could be
rewarding for investors. The first, an economic trend, is the continued control
of wage inflation. A sufficient labor supply combined with initiatives to
further increase total productivity are expected to keep wage inflation within
manageable and sensible bounds. The second is a demographic trend of
considerable importance: the aging baby boom generation. As this segment of the
population enters their 40's and alters their pattern of consumption, they will
be entering their peak earnings and savings years.
Their recognition that ever larger proportions of their net worth should be
committed to equities for the growth potential they provide should have positive
effects not only on their retirement goals, but also stimulate the markets in
general. [GRAPH]
<TABLE>
<CAPTION>
Line graph with border around
Growth of a $1 investment in various asset classes since 1925.
<S> <C> <C> <C> <C> <C>
Small Large Long-term Treasury
Company Stock Company Stock Government Bonds Bills Inflation
------------- ------------- ---------------- -------- ---------
1926 $1.00 $1.12 $1.08 $1.03 $0.99
1927 1.22 1.53 1.17 1.06 0.96
1928 1.71 2.20 1.18 1.10 0.96
1929 0.83 2.02 1.22 1.16 0.96
1930 0.51 1.52 1.27 1.18 0.90
1931 0.26 0.86 1.20 1.20 0.81
1932 0.24 0.79 1.41 1.21 0.73
1933 0.59 1.21 1.41 1.21 0.73
1934 0.74 1.20 1.55 1.21 0.75
1935 1.03 1.77 1.62 1.21 0.77
1936 1.71 2.37 1.75 1.22 0.78
1937 0.72 1.54 1.75 1.22 0.80
1938 0.95 2.02 1.85 1.22 0.78
1939 0.95 2.01 1.96 1.22 0.78
1940 0.90 1.81 2.08 1.22 0.79
1941 0.82 1.60 2.10 1.22 0.86
1942 1.19 1.93 2.16 1.22 0.94
1943 2.24 2.43 2.21 1.23 0.97
1944 3.45 2.91 2.27 1.23 0.99
1945 5.98 3.96 2.51 1.24 1.01
1946 5.29 3.64 2.51 1.24 1.20
1947 5.33 3.85 2.45 1.25 1.31
1948 5.22 4.06 2.53 1.26 1.34
1949 6.25 4.83 2.69 1.27 1.32
1950 8.68 6.36 2.69 1.29 1.39
1951 9.35 7.89 2.59 1.31 1.48
1952 9.64 9.34 2.62 1.33 1.49
1953 9.01 9.24 2.71 1.35 1.50
1954 14.47 14.11 2.91 1.36 1.49
1955 17.43 18.56 2.87 1.39 1.50
1956 18.18 19.78 2.71 1.42 1.54
1957 15.53 17.64 2.91 1.46 1.59
1958 25.60 25.30 2.73 1.49 1.61
1959 29.80 28.32 2.67 1.53 1.64
1960 28.82 28.45 3.04 1.57 1.66
1961 38.07 36.11 3.07 1.60 1.67
1962 33.54 32.95 3.28 1.65 1.69
1963 41.44 40.47 3.32 1.70 1.72
1964 51.19 47.14 3.44 1.76 1.74
1965 72.57 53.00 3.46 1.83 1.78
1966 67.48 47.67 3.59 1.92 1.84
1967 123.87 59.10 3.26 2.00 1.89
1968 168.43 65.64 3.25 2.10 1.98
1969 126.24 60.06 3.09 2.24 2.10
1970 104.23 62.47 3.46 2.38 2.22
1971 121.43 71.41 3.92 2.49 2.29
1972 126.81 84.96 4.14 2.58 2.37
1973 87.63 72.51 4.09 2.76 2.58
1974 70.15 53.31 4.27 2.99 2.89
1975 107.20 73.15 4.67 3.16 3.10
1976 168.70 90.59 5.45 3.32 3.24
1977 211.52 84.08 5.41 3.49 3.46
1978 261.14 89.60 5.35 3.74 3.78
1979 374.64 106.12 5.28 4.13 4.28
1980 524.04 140.52 5.07 4.59 4.81
1981 596.78 133.62 5.17 5.27 5.24
1982 763.94 162.23 7.25 5.82 5.44
1983 1,066.99 198.75 7.30 6.33 5.65
1984 995.83 211.21 8.43 6.96 5.87
1985 1,241.40 279.14 11.04 7.49 6.10
1986 1,326.43 330.70 13.75 7.96 6.16
1987 1,203.07 347.99 13.37 8.39 6.44
1988 1,478.22 406.49 14.67 8.92 6.72
1989 1,628.70 534.49 17.32 9.67 7.03
1990 1,277.55 517.55 18.39 10.43 7.46
1991 1,847.72 675.66 21.94 11.01 7.69
1992 2,279.17 727.48 23.71 11.40 7.91
1993 2,757.34 800.16 28.03 11.73 8.13
1994 2,842.77 810.54 25.86 12.19 8.35
12.2% 10.2% 4.8% 3.7% 3.1%
<FN>
Source: (C) Stocks, Bonds, Bills and Inflation 1995 Yearbook (TM). Ibbotson
Associates, Chicago (annual updates by Roger G. Ibbotson and Rex A.
Sinquefield). Used with permission. All rights reserved.
Investors should note that small-company stocks are generally more volatile than
those of large-company stocks. U.S. government obligations are
government-guaranteed and, if held to maturity, offer a fixed rate of return and
principal value. Indices shown above are as follows: SMALL-COMPANY STOCKS,
represented by the smallest 20% of NYSE stocks through 1981 and the Dimensional
Fund Advisors Small-Company Fund thereafter; LARGE-COMPANY STOCKS, represented
by the S&P 500 Stock Index (TM); LONG-TERM GOVERNMENT BONDS, measured using a
one-bond portfolio with a maturity near 20 years; U.S. TREASURY BILLS, measured
by the bill having the shortest maturity not less than one month at the
beginning of each month; INFLATION, represented by the Consumer Price Index.
</FN>
</TABLE>
Is there a course of action we would recommend in the period ahead?
Generalizations about specific asset allocation are dangerous. They fail to take
into account an individual's unique goals, investment time-horizon, and
tolerance for risk. So, we avoid making them. Instead, we urge that you seek the
counsel of your registered representative who can focus on your particular
circumstances.
As you plan ahead, we caution against attempts to time the market. Experienced
investors know that while past performance is no guarantee of future results,
over the long-run, market valuations have tended to rise. But shorter-term, we
know of no one who can accurately predict market direction with any consistency.
And therein lies a problem. Investors who attempt market timing - hoping to
capitalize on advances and avoid declines - are often disappointed. In fact,
market timers risk underperforming market averages. As the chart shows, in an
attempt to time the market and as a consequence missing the 10 BEST months over
a 15-year period, investment returns would have been substantially lower than
the same investment left alone over the period. Obviously, if a market timer had
missed the 10 WORST months, investment returns would have been much more
respectable. What's important to understand is that over a 15-year period, just
10 months made a significant difference. [GRAPH]
<TABLE>
<CAPTION>
Bar chart with border around
Growth over 15 years in the value of a $1 investment in the S&P 500.
<S> <C> <C>
$8
$7.50
$6 Without
Market Timing
$4
$2.75
$2 With
Market Timing
$0
<FN>
Source: Ibbotson Associates, Chicago. Used with permission. All rights reserved.
The S&P 500 Stock Index is unmanaged, and this example assumes dividends are
reinvested.
</FN>
</TABLE>
In the final analysis, we believe that those who invest appropriately on a
consistent long-term basis are far better served than those who move in and out
of investments based on predictions of valuation levels.
COMPOSITE RESEARCH & MANAGEMENT CO.
INVESTMENT TEAM
- -------------------------------------------------------------------------------
FOOTNOTES TO INVESTMENT PERFORMANCE CHARTS ON PAGES 4, 5 & 6.
INVESTMENT RETURNS AND PRINCIPAL VALUES OF FUND SHARES WILL FLUCTUATE SO THAT
AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR
ORIGINAL COST.
COMPARISONS TO FUND PERFORMANCE ON THE FOLLOWING PAGES INCLUDE THE CONSUMER
PRICE INDEX (CPI), AS A MEASURE OF CHANGE IN CONSUMER PRICES AS DETERMINED BY
THE U.S. BUREAU OF LABOR STATISTICS; THE UNMANAGED S&P 500 STOCK INDEX (S&P
500), WHICH IS CONSIDERED GENERALLY REPRESENTATIVE OF THE U.S. STOCK MARKET; AND
THE LEHMAN GOVERNMENT/CORPORATE BOND INDEX (LGCB), WHICH IS CONSIDERED
REPRESENTATIVE OF THE U.S. GOVERNMENT AND CORPORATE BOND MARKETS.
THESE INDICES ARE UNMANAGED AND DO NOT REFLECT ACTUAL INVESTMENT-RELATED
EXPENSES INCURRED BY THE FUNDS WITH WHICH THEY ARE COMPARED. FUND VALUES
PRESENTED IN THE GRAPHS ARE FOR CLASS A SHARES. CLASS B SHARE PERFORMANCE WOULD
VARY DUE TO DIFFERENT EXPENSES. EXCEPT AS NOTED, PERFORMANCE IS CALCULATED AFTER
THE 4.5% MAXIMUM SALES CHARGE FOR CLASS A SHARES AND MAXIMUM 3% CONTINGENT
DEFERRED SALES CHARGE FOR CLASS B SHARES. COMPOSITE NORTHWEST 50 CLASS A
INFORMATION IS PRESENTED SINCE INCEPTION ON 11/24/86 AND ALL FUNDS' CLASS B
INFORMATION IS PRESENTED SINCE 3/30/94, THE COMMENCEMENT OF OFFERING OF CLASS B
SHARES.
<PAGE>
INVESTMENT HIGHLIGHTS
COMPOSITE BOND & STOCK FUND
Patient investors were amply rewarded over the past year as declining interest
rates and a stable economy led to strong gains in stock and bond prices.
Composite Bond & Stock Fund performed admirably, generating a total return of
22.55%, before sales charges, for the fiscal year ended October 31, 1995. On
balance, this compares favorably to a 26.44% total return from the unmanaged S&P
500 Stock Index, and 16.16% total return from the Lehman Brothers
Government/Corporate Bond Index.
The Fund's investment approach emphasizes owning high-quality stocks and bonds
which provides the potential to generate continuity of income, conservation of
principal, and long-term growth of both income and principal. Our stock
selection process favors larger, well-capitalized companies with long records of
earnings and dividend growth. We attempt to buy these stocks at favorable
valuations with the intent to hold them for the long term. The Fund's
performance over the last year was particularly enhanced by our stock holdings
in health care and financial services companies. Both of these sectors showed
much better than average price performance and were well represented in the
Fund's holdings. In contrast, we were disappointed with underperformance in the
energy sector and with our investment in real estate investment trusts.
The Fund's bond portfolio is structured to balance risk and return
opportunities found along the yield curve by either extending or shortening the
average maturity of the bonds we hold. We also adjust the allocation between
Treasury bonds and higher-yielding corporate and mortgage bonds as market
conditions warrant to achieve the most favorable risk/reward tradeoff. Our
fixed-income strategy also had us well positioned to take advantage of the
decline in interest rates. In anticipation of this, we positioned the bond
portfolio with an average maturity of 12 years as contrasted with the benchmark
Lehman Brothers Government/Corporate Bond Index maturity of nine years. We took
this action because longer maturities historically generate higher appreciation
when interest rates decline. We also had a higher proportion of the Fund in
corporate and mortgage-backed issues which outperformed Treasury bonds of
similar maturity.
While last year's absolute performance is unlikely to be repeated in the
coming 12 months, our longer-term outlook remains decidedly optimistic.
[GRAPH]
<TABLE>
<CAPTION>
Investment Performance - Composite Bond & Stock Fund
Comparative Ending Values of $10,000 Invested on 10/31/85
Composite
Bond & Stock Fund S&P 500 LGCB CPI
----------------- ------- ------- -------
<S> <C> <C> <C> <C>
10/31/85 $9,550 $10,000 $10,000 $10,000
$11,622 $13,309 $12,001 $10,147
10/31/87 $11,209 $14,166 $12,226 $10,607
$13,196 $16,273 $13,525 $11,058
10/31/89 $14,817 $20,549 $15,167 $11,555
$13,746 $19,033 $16,002 $12,282
10/31/91 $17,100 $25,374 $18,460 $12,640
$18,831 $27,900 $20,402 $13,045
10/31/93 $21,468 $32,069 $23,184 $13,404
$21,275 $33,309 $22,108 $13,753
10/31/95 $26,073 $42,116 $25,681 $14,140
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
<S> <C> <C>
Class A With Sales Without Sales
Shares Charge Charge
--------- ------------ ---------------
One Year 17.04% 22.55%
Five Years 12.61% 13.65%
Ten Years 10.06% 10.56%
Class B
Shares
---------
One Year 18.60% 21.60%
Since 3/30/94 12.72% 14.47%
------------------------------------------------------
See footnotes on page 3 for additional information.
</TABLE>
<PAGE>
INVESTMENT HIGHLIGHTS
COMPOSITE GROWTH & INCOME FUND
The equity market - to use the vernacular of the street - was "red hot" this
past year and Composite Growth & Income Fund shared in that performance. Total
returns for the fiscal year ended October 31, 1995 were 20.87%, before sales
charges. The best performing industry sectors were technology, finance, and
portions of health care. The Fund was overweighted in finance and health care
and had good exposure to technology throughout the year.
The Fund had several stocks with particularly large gains throughout the year,
including Barra, Merck, Hewlett Packard, Dole Foods, and Franklin Resources. The
Fund's largest position throughout the year, West One Bancorp, performed
particularly well. Indeed, its operations proved irresistable to U.S. Bancorp
who acquired it to form a more powerful bank. In contrast, in the health care
industry, for example, a number of the Fund's holdings including FHP, Caremark,
and Manor Care underperformed the market, very likely because of fears of cuts
in Medicaid reimbursements to the companies. Notwithstanding the recent
performance of these companies, we believe in the long-term viability of the
sector. As expected, most of the Fund's holdings raised their dividends at rates
in excess of inflation in 1995.
Looking ahead, the Fund expects to maintain a slight overweighting in the
health care, finance, and defense-aerospace industries, and to maintain its
underweighting in the consumer durable sector. Although we continue to
anticipate an environment of slowing corporate earnings, we expect merger and
consolidation activity to remain high, as companies continue to structure their
businesses to remain competitive globally. Cyclical stocks may become good buys
if the Federal Reserve lowers interest rates materially in 1996.
As shareholders know, we are long-term investors. We avoid the risks
associated with trading stocks for a quick profit. Rather, we seek rewards from
the growth of the businesses in our portfolio. The Fund's investment strategy
will continue to focus on buying sound businesses when they represent good
value. Over the long term, we believe investors will be well served by our
philosophy of buying good businesses at attractive valuation levels. This
approach is at the heart of our investment philosophy - balancing risk and
return to achieve the Fund's primary objective of long-term capital growth.
[GRAPH]
<TABLE>
<CAPTION>
Investment Performance - Composite Growth & Income Fund
Comparative Ending Value of $10,000 Invested on 10/31/85
Composite
Growth & Income Fund S&P 500 CPI
-------------------- ------- -------
<S> <C> <C> <C>
10/31/85 $9,550 $10,000 $10,000
$12,309 $13,309 $10,147
10/31/87 $12,334 $14,166 $10,607
$14,475 $16,273 $11,058
10/31/89 $16,356 $20,549 $11,555
$13,698 $19,033 $12,282
10/31/91 $18,176 $25,374 $12,640
$19,983 $27,900 $13,045
10/31/93 $22,196 $32,069 $13,404
$24,095 $33,309 $13,753
10/31/95 $29,124 $42,116 $14,140
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
<S> <C> <C>
Class A With Sales Without Sales
Shares Charge Charge
--------- ------------ ---------------
One Year 15.43% 20.87%
Five Years 15.21% 16.28%
Ten Years 11.28% 11.80%
Class B
Shares
---------
One Year 16.95% 19.95%
Since 3/30/94 14.68% 16.41%
-----------------------------------------------------------
See footnotes on page 3 for additional information.
</TABLE>
<PAGE>
INVESTMENT HIGHLIGHTS
COMPOSITE NORTHWEST 50 FUND
Composite Northwest 50 Fund experienced strong growth in the fiscal year ended
October 31, 1995, rising a respectable 22.24%, before sales charges, as
contrasted with the unmanaged S&P 500 Stock Index return of 26.44%.
The most robust sectors in the Fund were technology and finance. Microsoft,
one of the Fund's largest holdings, was a star performer with a total return of
58.7% during the year. Other successful technology stocks in our portfolio
included Lattice Semiconductor (up 132.6%) and Flow International (up 72.8%).
West One Bancorp returned 59% during the year as it agreed to be acquired by
U.S. Bancorp (another Fund holding), which returned 24.6%. Fickle consumers and
excessive expansion of stores caused retailing to be a poor performing industry.
The retail-wholesale sector in the Fund underperformed the market averages,
rising only 8.5% with Fred Meyer dropping 42.2%, and Nordstrom slipping 24.8%.
During the second half of the fiscal year, Pacific Telecom agreed to be
acquired by Pacificorp which already owned 80% of the company. As a result,
Pacific Telecom was dropped from the Northwest 50(R) Index. It was replaced in
the Index (and Fund) by Redhook Ale Breweries, a leading craft brewer with
rapidly growing sales. Redhook has a unique distribution arrangement with
industry giant Anheuser-Busch which should help sustain sales growth.
We see a number of significant positive elements in the Northwest economy,
including a turnaround in the aerospace cycle, a strong base of technology
companies, and our proximity to growing Pacific Rim economies. We are somewhat
cautious, however, about the stock market given its stellar performance this
year. While a short-term correction sometime in the next year would not startle
us, we believe that attempting short-term market timing is generally fruitless.
Rather, we much prefer investing for the long term in companies whose potential
for growth appears attractive, despite inevitable fluctuations.
Fund investors have already received information about a proposal submitted to
shareholders to "de-couple" the Fund from the Northwest 50(R) Index. If
shareholders approve the proposal, the Fund will be renamed Composite Northwest
Fund and while continuing to invest only in Northwest companies, will become a
fully managed mutual fund. We believe that performance can be improved over time
by eliminating the current restraints and permitting portfolio managers wider
flexibility in stock selection.
[GRAPH]
<TABLE>
<CAPTION>
Investment Performance - Composite Northwest 50 Fund
Comparative Ending Value of $10,000 on 11/30/86
Composite
Northwest 50 Fund S&P 500 CPI
------------------- --------- -------
<S> <C> <C> <C>
11/30/86 $9,550 $10,000 $10,000
10/31/87 $9,386 $10,390 $10,444
$11,865 $11,936 $10,888
10/31/89 $16,154 $15,072 $11,377
$13,460 $13,960 $12,092
10/31/91 $21,601 $18,611 $12,446
$22,849 $20,463 $12,844
10/31/93 $23,721 $23,521 $13,197
$24,425 $24,431 $13,542
10/31/95 $29,858 $30,890 $13,922
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Returns
<S> <C> <C>
Class A With Sales Without Sales
Shares Charge Charge
--------- ------------ ---------------
One Year 16.77% 22.24%
Five Years 16.19% 17.27%
Since 11/24/86 13.05% 13.64%
Class B
Shares
---------
One Year 18.25% 21.25%
Since 3/30/94 10.43% 12.20%
-----------------------------------------------------
See footnotes on page 3 for additional information.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPOSITE BOND & STOCK FUND, INC.
PORTFOLIO OF INVESTMENTS IN SECURITIES
OCTOBER 31, 1995
<S> <C> <C>
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- --------
U.S. GOVERNMENT AND GOVERNMENT AGENCY OBLIGATIONS-9.36%
$ 651,712 Government National Mortgage Association, 10.00% due 8/15/2019 ... $ 712,607
2,490,194 Government National Mortgage Association, 6.50% due 1/15/2024 .... 2,424,037
500,000 U.S. Treasury Bill, 7.50%, due 12/31/1996 ........................ 510,781
6,700,000 U.S. Treasury Bill, 5.50%, due 04/30/1996 ........................ 6,700,000
1,000,000 U.S. Treasury Note, 7.125%, due 02/29/2000 ....................... 1,050,000
1,500,000 U.S. Treasury Note, 6.50%, due 05/15/2005 ........................ 1,553,437
750,000 U.S. Treasury Note, 6.375%, due 08/15/2002 ....................... 768,984
1,000,000 U.S. Treasury Note, 5.75%, due 08/15/2003 ........................ 985,937
750,000 U.S. Treasury Note, 4.00%, due 01/31/1996 ........................ 747,188
500,000 U.S. Treasury Bond, 8.375%, due 08/15/2008 ....................... 570,469
1,000,000 U.S. Treasury Bond, 7.50%, due 11/15/2016 ........................ 1,126,562
1,750,000 U.S. Treasury Bond, 6.25%, due 08/15/2023 ........................ 1,712,265
4,000,000 U.S. Treasury Bond, zero coupon, due 08/15/2012 .................. 1,360,096
----------
TOTAL U.S. GOVERNMENT AND GOVERNMENT AGENCY
OBLIGATIONS (cost $19,267,620) ................................... 20,222,363
----------
COLLATERALIZED MORTGAGE OBLIGATIONS-2.44%
1,250,000 DLJ Mortgage Acceptance Corporation, 1993-M17, 7.35%,
due 12/18/2003 ................................................ 1,240,929
1,000,000 Federal Home Loan Mortgage Corporation - CMO PAC-1(11) 1311H,
7.50%,due 7/15/2020 ............................................ 1,023,640
2,000,000 Federal Home Loan Mortgage Corporation - GNMA PAC-1(11) 2E,
6.85%,due 7/25/2018 ............................................ 2,005,620
496,216 MDC Mortgage Funding Corporation - PAC-P3, 8.20%,due 11/20/2017 .. 500,722
124,711 Merrill Lynch Mortgage Investors, Inc., 1988-H, 9.70%,due 6/15/2008 128,683
184,822 Merrill Lynch Mortgage Investors, Inc., 1988-P,
10.05%,due 12/15/2008 .......................................... 204,689
157,547 Shearson Lehman Series U, 8.75%,due 8/27/2017 .................... 159,039
----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (cost $5,112,358) ...... 5,263,322
----------
CORPORATE BONDS-19.99%
NON-CONVERTIBLE CORPORATE BONDS-10.79%
AEROSPACE/DEFENSE-1.12%
2,000,000 Boeing Company, 8.75%,due 08/15/2021 ............................. 2,408,504
----------
BANK/FINANCE-1.63%
1,000,000 Bank of New York, 7.875%,due 11/15/2002 .......................... 1,076,815
300,000 Kemper Corporation, 6.875%,due 09/15/2003 ........................ 299,157
1,000,000 Mercantile Bank, 7.625%,due 10/15/2002 ........................... 1,042,068
1,000,000 Paine Webber Group, 8.875%,due 03/15/2005 ........................ 1,112,232
----------
3,530,272
----------
BUILDING & FOREST PRODUCTS-0.47%
1,000,000 Weyerhauser Company, 7.125%,due 07/15/2023 ....................... 1,009,411
----------
ELECTRICAL EQUIPMENT-0.42%
1,000,000 Westinghouse Electric Corporation, 7.875%,due 09/01/2023 ......... 913,041
----------
FOODS-0.92%
750,000 Conagra, Inc., 9.75%,due 03/01/2021 .............................. 962,052
1,000,000 Dart & Kraft Finance, 7.75%,due 11/30/1998 ....................... 1,031,178
----------
1,993,230
----------
HEALTH/MEDICAL-0.34%
850,000 American Medical International, zero coupon, due 08/12/1997 ...... 743,538
----------
INSURANCE-1.18%
1,000,000 Continental Corporation, 7.25%,due 03/01/2003 .................... 1,014,369
1,500,000 Integon Corporation, 8.00%,due 08/15/1999 ........................ 1,528,332
----------
2,542,701
----------
MEDIA-1.45%
1,500,000 Western Publishing Group, Inc., 7.65%,due 09/15/2002 ............. 1,207,500
250,000 Tele-Communications, Inc., 9.25%,due 01/15/2023 .................. 266,299
1,500,000 Time Warner, Inc., 9.15%,due 02/01/2023 .......................... 1,647,730
----------
3,121,529
----------
OILS-0.56%
1,000,000 Coastal Corporation, 9.625%,due 05/15/2012 ....................... 1,201,292
----------
UTILITIES-ELECTRIC-1.68%
1,000,000 Commonwealth Edison Company, 9.375%,due 02/15/2000 ............... 1,101,837
1,000,000 Ohio Edison, 8.75%,due 02/15/1998 ................................ 1,043,892
500,000 Public Service Company of New Hampshire, 9.17%,due 05/15/1998 .... 528,081
350,000 Texas Utilities Electric Company, 9.70%. due 03/01/2002 .......... 402,238
500,000 Texas Utilities Electric Company, 9.50%,due 08/01/1999 ........... 550,570
----------
3,626,618
----------
UTILITIES-GAS & ELECTRIC-1.02%
1,100,000 Niagara Mohawk Power, 9.50%,due 06/01/2000 ....................... 1,109,229
1,000,000 System Energy Resources, 11.375%,due 09/01/2016 .................. 1,100,353
----------
2,209,582
----------
TOTAL NON-CONVERTIBLE CORPORATE BONDS (cost $22,698,495) ......... 23,299,718
----------
CONVERTIBLE CORPORATE BONDS-9.20%
BANK/FINANCE-1.27%
$ 1,300,000 Legg Mason, Inc., 5.25%,due 05/01/2003 ........................... $1,506,375
1,215,000 Liberty Property Trust, 8.0%,due 07/01/2001 ...................... 1,236,262
----------
2,742,637
----------
COMMUNICATIONS-0.67%
1,400,000 LDDS Communications, Inc., 5.00% due 08/15/2003 ................. 1,442,000
----------
CONSUMER PRODUCTS-0.35%
1,000,000 Bell Sports Corporation, 4.25%, due 11/15/2000 .................. 747,500
----------
MEDIA-0.51%
3,200,000 Time Warner, Inc., zero coupon, due 12/17/2012 .................. 1,092,000
----------
RETAIL SALES-1.67%
1,500,000 Costco Wholesale, 5.75%, due 05/15/2002 ......................... 1,410,000
1,300,000 Proffitt's Inc., 4.75%,due 11/01/2003 ........................... 1,085,500
850,000 Starbucks Corporation, 4.50% due 08/01/2003 ..................... 1,119,875
----------
3,615,375
----------
TECHNOLOGY/ELECTRONICS-2.10%
2,000,000 Cray Research, 6.125%,due 02/01/2011 ............................ 1,555,000
2,200,000 EMC Corporation, 4.25%,due 01/01/2001 ........................... 2,208,250
1,000,000 Motorola, Inc., zero coupon,due 09/27/2013 ...................... 803,750
----------
4,567,000
----------
TEMPORARY SERVICES-0.54%
1,000,000 Olsten Corporation, 4.875%,due 05/15/2003 ....................... 1,156,250
----------
TRANSPORTATION & EQUIPMENT-2.09%
1,670,000 Airborne Freight Corporation, 6.75%,due 08/15/2001 .............. 1,678,350
1,400,000 Air Wisconsin Services, Inc., 7.75%,due 06/15/2010 .............. 1,141,000
1,500,000 Varlen Corporation, 6.50%,due 06/01/2003 ........................ 1,685,625
----------
4,504,975
----------
TOTAL CONVERTIBLE CORPORATE BONDS (COST $19,206,104) ............ 19,867,737
----------
TOTAL CORPORATE BONDS (cost $41,904,599) ........................ 43,167,455
----------
FOREIGN OBLIGATIONS-2.72%
1,000,000 Empressa La Moderna, 10.25%,due 11/12/1997 ...................... 967,500
1,900,000 Fomento Economico Mexicano SA, 9.50%,due 07/22/1997 ............. 1,853,095
1,000,000 Province of Alberta, 9.20%,due 11/01/1997 ....................... 1,065,320
1,000,000 Province of Manitoba, 9.00%,due 12/15/2000 ...................... 1,124,180
1,500,000 United Mexican States, Series A, 6.25%,due 12/31/2019 ........... 874,220
----------
TOTAL FOREIGN OBLIGATIONS (cost $5,652,542) ..................... 5,884,315
----------
Shares Market
- ------------ Value
-------------
COMMON STOCKS-58.46%
AEROSPACE/DEFENSE-3.09%
50,000 Boeing Company .................................................. $3,281,250
15,000 Lockheed Martin Corporation ..................................... 1,021,875
80,000 Loral Corporation ............................................... 2,370,000
----------
6,673,125
----------
BANK/FINANCE-6.51%
35,000 Federal National Mortgage Association ........................... 3,670,625
65,000 Mellon Bank Corporation ......................................... 3,258,125
35,000 J.P. Morgan & Company, Inc. ..................................... 2,699,375
100,000 Norwest Corporation ............................................. 2,950,000
34,998 West One Bancorp ................................................ 1,487,415
----------
14,065,540
----------
BEVERAGES-0.75%
45,000 Seagram Company, Ltd. .......................................... 1,620,000
----------
BUILDING AND FOREST PRODUCTS-1.33%
65,000 Weyerhauser Company ............................................ 2,868,125
----------
CAPITAL GOODS-2.10%
16,950 Emerson Electric Company ....................................... 1,207,688
29,900 GATX Corporation ............................................... 1,420,250
30,000 General Electric Company ....................................... 1,897,500
----------
4,525,438
----------
CHEMICALS-1.11%
80,000 Nalco Chemical Company ......................................... 2,400,000
----------
CONSUMER NON-DURABLES/SERVICES-2.45%
36,000 Nike, Inc. ..................................................... 2,043,000
40,000 Proctor & Gamble Company ....................................... 3,240,000
----------
5,283,000
----------
ELECTRONICS/TECHNOLOGY-2.50%
30,000 Hewlett-Packard Company ........................................ 2,778,750
60,000 Raytheon Company ............................................... 2,617,500
----------
5,396,250
----------
FOODS-2.55%
55,000 Campbell Soup Company .......................................... 2,880,625
70,000 Dole Food Company .............................................. 2,633,750
----------
5,514,375
----------
HEALTH & MEDICAL-7.91%
22,500 American Home Products Corporation ............................. 1,994,062
62,500 Bausch & Lomb, Inc. ............................................ 2,164,063
70,000 Baxter International, Inc. ..................................... 2,703,750
25,000 Bristol-Myers Squibb Company ................................... 1,906,250
80,000 Caremark International, Inc. ................................... 1,650,000
33,000 Johnson & Johnson .............................................. 2,689,500
33,615 Manor Care, Inc. ............................................... 1,100,891
50,000 Merck & Company, Inc. .......................................... 2,875,000
----------
17,083,516
----------
INDUSTRIAL PRODUCTS/SERVICES-1.31%
80,000 Crane Company .................................................. 2,830,000
----------
INSURANCE-1.05%
27,000 American International Group, Inc. ............................. 2,278,125
----------
MINING-1.18%
40,250 Phelps Dodge Corporation ....................................... 2,550,844
----------
NATURAL GAS & OILS-8.91%
22,500 Atlantic Richfield Company ..................................... 2,401,875
40,000 Burlington Resources, Inc. ..................................... 1,440,000
20,000 Exxon Corporation .............................................. 1,527,500
114,000 MCN Corporation ................................................ 2,479,500
26,000 Mobil Corporation .............................................. 2,619,500
37,600 National Fuel Gas Company ...................................... 1,118,600
65,000 Phillips Petroleum Company ..................................... 2,096,250
45,500 Shell Transport & Trading Company, American Depository Receipt . 3,241,875
156,600 Westcoast Energy, Inc. ......................................... 2,309,850
----------
19,234,950
----------
RAILROADS-1.69%
55,850 Union Pacific Corporation ...................................... 3,651,194
----------
REAL ESTATE INVESTMENT TRUSTS-6.58%
39,400 BRE Properties, Inc. ........................................... 1,260,800
45,000 Developers Diversified Realty Corporation ...................... 1,282,500
54,900 Duke Realty Investments, Inc. .................................. 1,681,312
95,000 First Industrial Realty Trust .................................. 1,935,625
43,900 Health Care Property Investors, Inc. ........................... 1,487,112
43,400 Nationwide Health Properties, Inc. ............................. 1,784,825
83,300 Shurgard Storage Centers, Inc. ................................. 2,124,150
90,800 United Dominion Realty Trust ................................... 1,248,500
71,200 Wellsford Residential Property Trust ........................... 1,406,200
----------
14,211,024
----------
TOBACCO-2.17%
30,000 Phillip Morris Companies, Inc. ................................. 2,535,000
70,000 RJR Nabisco Holdings Corporation ............................... 2,152,500
----------
4,687,500
----------
UTILITIES - GAS & ELECTRIC-0.50%
45,300 DPL, Inc. ...................................................... 1,075,875
----------
UTILITIES - TELECOMMUNICATIONS-4.77%
55,000 AT&T Corporation ............................................... 3,520,000
45,500 Ameritech Corporation .......................................... 2,457,000
80,900 Frontier Corporation ........................................... 2,184,300
51,900 GTE Corporation ................................................ 2,140,875
----------
10,302,175
TOTAL COMMON STOCKS (cost $95,296,941) 126,251,056
-----------
CONVERTIBLE PREFERRED STOCKS-4.13%
CAPITAL GOODS-0.73%
27,900 GATX Corporation, Series A ..................................... 1,569,375
----------
HEALTH AND MEDICAL-0.47%
42,500 FHP International Corporation, Series A ........................ 1,009,375
----------
INSURANCE-1.98%
39,200 Integon Corporation ............................................ 2,111,900
36,000 Penncorp Financial Group ....................................... 2,169,000
----------
4,280,900
----------
NATURAL GAS PIPELINES-0.95%
30,000 Williams Companies ............................................. 2,051,250
----------
TOTAL CONVERTIBLE PREFERRED STOCK (cost $8,418,125) ............ 8,910,900
----------
Principal
Amount
- --------------
REPURCHASE AGREEMENT-2.43%
$5,256,000 Repurchase agreement with First Boston, collateralized by a
U.S. Treasury Note, in a joint trading account at 5.90% dated
10/31/1995, due 11/01/1995 with a maturity value of $5,256,861
(cost $5,256,000) .............................................. $ 5,256,000
----------
TOTAL INVESTMENTS (cost $180,908,185) .......................... 214,955,411
other assets ($1,791,807) less liabilities ($783,286) .......... 1,008,521
-----------
NET ASSETS .................................................... $215,963,932
============
<FN>
FEDERAL INCOME TAX INFORMATION:
Net unrealized appreciation of investments at October 31, 1995, of $34,047,226, based on aggregate
cost of $180,908,185, was composed of gross appreciation of $36,065,034 for investments having an
excess of value over cost and gross depreciation of $2,017,808 for investments having an
excess of cost over value.
OTHER INFORMATION:
Purchases and sales (including maturities and principal repayments) of investment securities,
other than short-term investments, aggregated $62,038,954 and $73,305,055, respectively, for
the year ended October 31, 1995, including purchases and sales of U.S. government securities
of $19,630,195 and $7,540,099.
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COMPOSITE GROWTH & INCOME FUND
PORTFOLIO OF INVESTMENTS IN SECURITIES
OCTOBER 31, 1995
<S> <C> <C>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- ------------
CONVERTIBLE CORPORATE BONDS-3.73%
COMMUNICATIONS-0.83%
$ 1,125,000 LDDS Communications, Inc., 5.00%,due 08/15/2003 ........ $ 1,158,750
------------
MEDIA-0.92%
3,763,000 Time Warner, Inc., zero Coupon,due 12/17/2012 .......... 1,284,124
------------
RETAIL-0.99%
1,745,000 Michael Stores, 4.75%,due 01/15/2003 ................... 1,389,456
------------
TRANSPORTATION & EQUIPMENT-0.99%
1,370,000 Airborne Freight Corporation, 6.75%,due 08/15/2001 ..... 1,376,850
------------
TOTAL CONVERTIBLE CORPORATE BONDS (cost $5,119,515) 5,209,180
------------
COMMON STOCKS-92.78%
Shares
----------
AEROSPACE/DEFENSE-6.38%
45,900 Boeing Company ......................................... 3,012,187
54,000 Lockheed Martin Corporation ............................ 3,678,750
74,600 Loral Corporation ...................................... 2,210,025
------------
8,900,962
------------
BANK/FINANCE-13.53%
47,400 Federal Home Loan Mortgage Corporation ................. 3,282,450
44,050 First Security Corporation ............................. 1,442,638
14,950 Franklin Resources, Inc. ............................... 758,712
35,250 JP Morgan and Company, Inc. ............................ 2,718,656
39,352 Legg Mason, Inc. ....................................... 1,131,370
53,157 Mellon Bank Corporation ................................ 2,664,495
84,712 Norwest Corporation .................................... 2,499,004
39,300 State Street Boston Corporation ........................ 1,527,788
67,010 West One Bancorp ....................................... 2,847,925
------------
18,873,038
------------
BEVERAGES-3.34%
36,000 Coca-Cola Femsa, S.A., American Depository Receipt ..... 648,000
36,200 PepsiCo, Inc. .......................................... 1,909,550
58,575 Seagram Company, Ltd. .................................. 2,108,700
------------
4,666,250
------------
BUILDING AND FOREST PRODUCTS-1.56%
49,400 Weyerhauser Company .................................... 2,179,775
------------
CAPITAL GOODS-3.58%
19,150 Emerson Electric Company ............................... 1,364,437
39,500 GATX Corporation ....................................... 1,876,250
27,650 General Electric Company ............................... 1,748,863
------------
4,989,550
------------
CHEMICALS-1.52%
70,600 Nalco Chemical Company ................................. 2,118,000
------------
CONSUMER DURABLES-1.03%
70,000 Fleetwood Enterprises .................................. 1,435,000
------------
CONSUMER NON-DURABLES/SERVICES-4.81%
65,800 Alberto Culver Company, Class A ........................ 1,780,537
30,000 Colgate Palmolive Co. .................................. 2,077,500
22,390 Nike, Inc. ............................................. 1,270,633
19,550 Proctor and Gamble Company ............................. 1,583,550
------------
6,712,220
------------
ELECTRONICS/TECHNOLOGY-10.34%
22,625 Arrow Electronics, Inc.*................................ 1,148,219
113,250 Barra, Inc.* ........................................... 1,670,438
26,900 DSC Communications Corporation*......................... 995,300
17,000 Hewlett-Packard Company ................................ 1,574,625
31,000 Microsoft Corporation* ................................. 3,100,000
37,000 Motorola, Inc. ......................................... 2,428,125
44,940 Raytheon Company ....................................... 1,960,508
88,700 Sequent Computer Systems, Inc.* ........................ 1,541,163
------------
14,418,378
------------
FOODS-3.33%
41,800 Campbell Soup Company .................................. 2,189,275
65,300 Dole Food Company ...................................... 2,456,912
------------
4,646,187
------------
HEALTH AND MEDICAL-12.45%
50,400 Abbott Laboratories .................................... 2,003,400
1,000 American Home Products Corporation ..................... 88,625
34,650 Bausch & Lomb, Inc. .................................... 1,199,756
116,418 Caremark International, Inc. ........................... 2,401,121
85,500 FHP International Corporation* ......................... 2,073,375
34,500 Forest Laboratories*.................................... 1,427,437
30,000 Johnson and Johnson .................................... 2,445,000
87,615 Manor Care, Inc. ....................................... 2,869,391
49,675 Merck and Company, Inc. ................................ 2,856,313
------------
17,364,418
------------
INDUSTRIAL PRODUCTS/SERVICES-1.52%
59,800 Crane Company .......................................... 2,115,425
------------
INSURANCE-2.77%
22,882 American International Group, Inc. ..................... 1,930,669
68,800 Integon Corporation .................................... 1,126,600
34,000 Penncorp Financial Group, Inc. ......................... 811,750
------------
3,869,019
------------
NATURAL GAS/OILS-7.81%
54,335 Burlington Resources, Inc. ............................. 1,956,060
16,630 Exxon Corporation ...................................... 1,270,116
20,000 Mobil Corporation ...................................... 2,015,000
66,000 Occidental Petroleum Corporation ....................... 1,419,000
45,000 Phillips Petroleum Company ............................. 1,451,250
39,000 Shell Transport & Trading Company, American Depository
Receipt .............................................. 2,778,750
------------
10,890,176
------------
POLLUTION CONTROL-1.37%
78,624 Donaldson Company, Inc. ................................ 1,916,460
------------
RAILROADS-2.33%
49,800 Union Pacific Corporation .............................. 3,255,675
------------
REAL ESTATE INVESTMENT TRUSTS-3.86%
50,400 Health Care Property Investors, Inc. ................... 1,707,300
22,400 Nationwide Health Properties, Inc. ..................... 921,200
108,000 Shurgard Storage Centers, Inc. ......................... 2,754,000
------------
5,382,500
------------
STEEL & IRON-0.45%
37,800 Worthington Industries ................................. 628,425
------------
TOBACCO-2.62%
30,000 Phillip Morris Companies, Inc. ......................... 2,535,000
36,600 RJR Nabisco Holdings Corporation ....................... 1,125,450
------------
3,660,450
------------
TRANSPORTATION & EQUIPMENT-1.27%
67,750 Expeditors International of Washington, Inc. ........... 1,778,437
------------
UTILITIES-GAS AND ELECTRIC-0.61%
39,020 MCN Corporation ........................................ 848,685
------------
UTILITIES-TELECOMMUNICATIONS-6.30%
64,500 AT&T Corporation ....................................... 4,128,000
38,100 GTE Corporation ........................................ 1,571,625
94,800 Lincoln Telecommunications Company ..................... 1,635,300
25,900 SBC Communications, Inc. ............................... 1,447,163
------------
8,782,088
------------
TOTAL COMMON STOCKS (cost $99,425,972) 129,431,118
------------
CONVERTIBLE PREFERRED STOCK-2.26%%
ELECTRONICS/TECHNOLOGY-1.37%
28,500 General Motors, Class-E, Series C ...................... 1,909,500
------------
INSURANCE-0.89%
23,000 Integon Corporation .................................... 1,239,125
------------
TOTAL CONVERTIBLE PREFERRED STOCK (cost $2,912,758) 3,148,625
------------
PRINCIPAL
AMOUNT
- ------------
REPURCHASE AGREEMENT-0.79%
$ 1,104,000 Repurchase agreement with First Boston, collaterized
by a U.S. Treasury Note, in a joint trading account at
5.90%, dated 10/31/95, due 11/01/95 with a maturity value
of $1,104,181 (cost $1,104,000) ........................ 1,104,000
------------
TOTAL INVESTMENTS (cost $108,562,245) 138,892,923
Other assets ($2,501,012) less liabilities ($1,892,998) 608,014
------------
NET ASSETS ............................................. $139,500,937
============
<FN>
*Non-income producing security
FEDERAL INCOME TAX INFORMATION:
Net unrealized appreciation of investments at October 31, 1995, of $30,330,678,
based on aggregate cost of $108,562,245, was composed of gross appreciation
of $31,386,618 for investments having an excess of value over cost and gross
depreciation of $1,055,940 for investments having an excess of cost over value.
OTHER INFORMATION:
Purchases and sales of investment securities, other than short-term investments,
aggregated $60,671,602 and $45,263,871, respectively, during the year ended
October 31, 1995, including purchases and sales of U.S. government securities of
$971,563 and $994,297.
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COMPOSITE NORTHWEST 50 FUND, INC.
PORTFOLIO OF INVESTMENTS IN SECURITIES
October 31, 1995
<S> <C> <C>
MARKET
SHARES VALUE
- ----------- ----------
COMMON STOCKS-98.62%
AEROSPACE/DEFENSE-7.39%
140,137 Boeing Company ........................................ $ 9,196,523
83,750 Precision Castparts Corporation ....................... 2,994,063
------------
12,190,586
------------
BANK/FINANCE-11.53%
24,301 Horizon Financial Corp ................................ 315,926
75,300 Safeco Corporation .................................... 4,833,319
248,382 US Bancorp ............................................ 7,358,317
94,479 Washington Federal, Inc. .............................. 2,161,209
102,400 West One Bancorp ...................................... 4,352,000
------------
19,020,771
------------
BEVERAGES-1.07%
59,700 Redhook Ale Brewery ................................... 1,761,150
------------
BUILDING AND FOREST PRODUCTS-8.66%
9,433 Boise Cascade Corporation ............................. 341,946
15,100 Georgia-Pacific Corporation ........................... 1,245,750
58,550 Longview Fibre Company ................................ 848,975
109,288 Louisiana Pacific Corporation ......................... 2,609,251
13,500 Pope & Talbot, Inc. ................................... 182,250
123,400 T.J. International, Inc. .............................. 2,136,363
85,400 Weyerhauser Company ................................... 3,768,275
54,500 Willamette Industries ................................. 3,161,000
------------
14,293,810
------------
CHEMICALS-0.36%
23,600 Penwest Ltd ........................................... 601,800
------------
CONSUMER NON-DURABLES-6.07%
164,400 Nike, Inc. ............................................ 9,329,700
69,700 Wholesome and Hearty Foods, Inc.* ..................... 688,287
------------
10,017,987
------------
ELECTRONICS/TECHNOLOGY-25.20%
48,800 Electro Scientific Industries* ........................ 1,512,800
93,900 Itron, Inc.* .......................................... 2,723,100
53,372 Fluke Corporation ..................................... 1,968,092
93,100 Lattice Semiconductor Corporation ..................... 3,654,175
294,500 Mentor Graphics Corporation* .......................... 6,184,500
133,800 Microsoft Corporation* ................................ 13,380,000
216,650 Sequent Computer Systems, Inc.* ....................... 3,764,294
142,000 Tektronix, Inc. ....................................... 8,413,500
------------
41,600,461
------------
HEALTH AND MEDICAL-3.27%
90,900 Advanced Technology Laboratories, Inc.* ............... 1,636,200
154,300 Immunex Corporation* .................................. 1,967,325
69,800 SpaceLabs Medical, Inc.* .............................. 1,797,350
------------
5,400,875
------------
INDUSTRIAL PRODUCTS/SERVICES-2.76%
138,550 Flow International Corporation* ....................... 1,541,369
64,400 Oregon Steel Mills, Inc. .............................. 917,700
156,500 Univar Corporation .................................... 2,093,187
------------
4,552,256
------------
MINING-1.08%
63,350 Coeur d'Alene Mines Corporation ....................... 1,069,031
96,350 Hecla Mining Company* ................................. 710,581
------------
1,779,612
------------
RETAIL SALES-18.95%
377,000 Albertson's, Inc. ..................................... 12,535,250
278,425 Price/Costco, Inc.* ................................... 4,733,225
185,800 Fred Meyer, Inc. ...................................... 3,460,525
169,000 Nordstrom, Inc. ....................................... 6,263,563
79,566 Quality Food Centers, Inc. ............................ 1,592,569
68,500 Starbucks Corporation* ................................ 2,688,625
------------
31,273,757
------------
TRANSPORTATION AND EQUIPMENT-8.67%
232,800 Airborne Freight Corporation .......................... 6,111,000
145,800 Alaska Air Group, Inc.* ............................... 2,168,775
187,300 Expeditor's International of Washington, Inc. ......... 4,916,625
26,510 PACCAR, Inc. .......................................... 1,106,792
------------
14,303,192
------------
UTILITIES-TELECOMMUNICATIONS-1.82%
63,100 US West Communications Group .......................... 3,005,138
------------
UTILITIES-GAS AND ELECTRIC-1.79%
32,500 Montana Power Company ................................. 739,375
32,000 Portland General Corporation .......................... 868,000
36,100 Puget Sound Power & Light Company ..................... 821,275
30,800 Washington Water Power Company ........................ 531,300
------------
2,959,950
------------
TOTAL COMMON STOCKS (cost $106,393,769) 162,761,345
------------
Principle
Amount
- -------------
REPURCHASE AGREEMENT-1.44%
$ 2,381,000 Repurchase agreement with First Boston,
collateralized by a U.S. Treasury Note in a joint trading
account at 5.90%,dated 10/31/95,due 11/01/95 with a
maturity value of $2,381,390 (cost $2,381,000)......... 2,381,000
------------
TOTAL INVESTMENTS (cost $108,774,769) ................. 165,142,345
Other assets ($297,991) less liabilities ($404,050).... (106,059)
------------
NET ASSETS ............................................ $165,036,286
============
<FN>
* Non-income producing security
FEDERAL INCOME TAX INFORMATION:
Net unrealized appreciation of investments at October 31, 1995 of $56,367,576 based on
aggregate cost of $108,774,769 was composed of gross appreciation of $61,542,301 for
investments having an excess of value over cost and gross depreciation of $5,174,725
for investments having an excess of cost over value.
OTHER INFORMATION:
Purchases and sales of investment securities, other than short-term investments,
aggregated $14,323,698 and $32,984,401, respectively, during the year ended October 31, 1995.
See accompanying notes to financial statements.
</FN>
</TABLE>
<PAGE>
Financial Information
October 31, 1995
INDEPENDENT PUBLIC ACCOUNTANTS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF:
COMPOSITE BOND & STOCK FUND, INC.
COMPOSITE GROWTH & INCOME FUND
COMPOSITE NORTHWEST 50 FUND, INC.
We have audited the accompanying statements of assets and liabilities of
Composite Bond & Stock Fund, Inc., Composite Growth & Income Fund, and Composite
Northwest 50 Fund, Inc., including the investment portfolios, as of October 31,
1995, the related statements of operations for the year then ended and the
related statements of changes in net assets for the years ended October 31, 1995
and 1994. For Composite Growth & Income Fund and Composite Northwest 50 Fund,
Inc.,we have audited the financial highlights for each of the five years in the
period ended October 31, 1995. For Composite Bond & Stock Fund, Inc., we have
audited the financial highlights for each of the five fiscal years in the period
ended October 31, 1995. These financial statements and financial highlights are
the responsibility of the Funds' 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 include confirming securities owned as of October 31,
1995, 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 the financial highlights referred
to above present fairly, in all material respects, the financial position of
Composite Bond & Stock Fund, Inc., Composite Growth & Income Fund, and Composite
Northwest 50 Fund, Inc., as of October 31, 1995, and the results of their
operations, the changes in their net assets, and the financial highlights for
the above-stated periods in conformity with generally accepted accounting
principles.
LEMASTER & DANIELS
CERTIFIED PUBLIC ACCOUNTANTS
SPOKANE, WASHINGTON
NOVEMBER 21, 1995
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1995
COMPOSITE COMPOSITE COMPOSITE
BOND & STOCK GROWTH & INCOME NORTHWEST 50
FUND, INC. FUND FUND, INC.
------------ --------------- -------------
<S> <C> <C> <C>
ASSETS
Investments at market (identified cost-$180,908,185,
$108,562,245 and $108,774,769, respectively) ......... $214,955,411 $138,892,923 $165,142,345
Cash ................................................... 42,932 22,995 23,517
Prepaid Expense ........................................ 11,415 12,349 17,355
Receivable for:
Investment securities sold ........................... - 2,077,231 -
Interest ............................................. 1,282,079 56,268 392
Dividends ............................................ 292,909 178,596 110,012
Sale of Fund's shares ................................ 162,472 153,573 146,715
------------ ------------ ------------
Total assets ........................................... 216,747,218 141,393,935 165,440,336
------------ ------------ ------------
LIABILITIES
Payable for:
Investment securities purchased ...................... 466,050 1,731,341 112,170
Repurchase of Fund's shares .......................... 262,360 113,817 227,607
Accrued expenses and other payables .................. 54,876 47,840 64,273
------------ ------------ -------------
Total liabilities ...................................... 783,286 1,892,998 404,050
------------ ------------ -------------
NET ASSETS $215,963,932 $139,500,937 $165,036,286
============ ============ =============
COMPOSITION OF NET ASSETS
Capital stock, at par .................................. $ 8,013 $ 953 $ 95
Additional paid-in capital ............................. 175,870,928 103,707,546 106,963,701
Undistributed net investment income .................... 933,742 293,997 80,057
Accumulated net realized gain .......................... 5,104,023 5,167,763 1,624,857
Net unrealized appreciation of investments ............. 34,047,226 30,330,678 56,367,576
------------ ------------ ------------
$215,963,932 $139,500,937 $165,036,286
============ ============ ============
SHARES OUTSTANDING .................................... 16,025,061 9,527,392 9,484,494
============ ============ ============
CLASS A SHARES:
Net asset value and redemption price per share
(net assets of $208,591,929, $130,629,739, and $157,953,013,
respectively, for 15,477,791, 8,919,303, and 9,075,219
shares outstanding, respectively) ................... $13.48 $14.65 $17.40
============ ============ ============
Offering price per share (100/95.5 of net asset value
per share) .......................................... $14.12 $15.34 $18.22
============ ============ ============
CLASS B SHARES:
Net asset value, offering price and redemption price
per share (net assets of $7,372,003, $8,871,198, and
$7,083,273, respectively, for 547,270, 608,089, and
409,275, shares outstanding, respectively)........... $13.47 $14.59 $17.31
============ =========== ============
On sales of $25,000 or more, the offering price of Class A shares is reduced.
A contingent deferred sales charge may be imposed on redemptions for Class B shares.
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the year ended October 31, 1995
COMPOSITE COMPOSITE COMPOSITE
BOND & STOCK GROWTH & INCOME NORTHWEST 50
FUND, INC. FUND FUND, INC.
------------ --------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends ............................................ $ 4,590,852 $2,753,193 $2,316,716
Interest ............................................. 5,246,073 419,700 76,213
------------ --------------- -------------
Total income ........................................... 9,836,925 3,172,893 2,392,929
------------ --------------- -------------
Expenses:
Management fees ...................................... 1,230,409 738,064 973,877
Distribution expenses-Class A ........................ 356,379 203,566 279,851
Distribution expenses-Class B ........................ 46,435 49,988 49,126
Shareholder servicing ................................ 194,112 142,648 292,144
Postage, printing and office expense ................. 118,136 90,376 186,141
Registration and filing fees ......................... 28,159 35,850 33,390
Custodial fees ....................................... 39,559 22,297 26,045
Auditing and legal fees .............................. 14,532 13,085 13,965
Directors' fees ...................................... 8,555 8,555 8,555
Insurance ............................................ 4,337 2,372 3,547
Expense reimbursement ................................ - - (116,742)
------------ --------------- --------------
Total expenses ......................................... 2,040,613 1,306,801 1,749,899
Fees paid indirectly ................................... (5,126) (3,261) (4,481)
------------ --------------- --------------
Net expenses ........................................... 2,035,487 1,303,540 1,745,418
------------ --------------- --------------
Net investment income .................................. 7,801,438 1,869,353 647,511
------------ --------------- --------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Realized gain from investment transactions ............. 5,091,453 5,167,763 3,535,477
Unrealized appreciation of investments
during the year ...................................... 27,020,438 15,766,081 26,914,344
------------ --------------- --------------
Net realized and unrealized gain
on investments ......................................... 32,111,891 20,933,844 30,449,821
------------ --------------- --------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $39,913,329 $22,803,197 $31,097,332
============ =============== ==============
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
COMPOSITE BOND & STOCK COMPOSITE GROWTH & INCOME COMPOSITE NORTHWEST 50
FUND, INC. FUND FUND, INC.
------------------------ -------------------------- ----------------------------
Years ended October 31, Years ended October 31, Years ended October 31,
1995 1994 1995 1994 1995 1994
------- ------ ------- ------ ------- --------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income ....... $7,801,438 $7,766,340 $1,869,353 $1,411,995 $647,511 $827,456
Realized gain(loss) from
investment transactions ... 5,091,453 1,382,200 5,167,763 3,331,881 3,535,477 (1,910,618)
Unrealized appreciation
(depreciation) of investments
during the year ........... 27,020,438 (11,150,310) 15,766,081 3,238,622 26,914,344 6,230,734
---------- ---------- ---------- ---------- ---------- ----------
Net increase(decrease) in net
assets resulting from
operations ................ 39,913,329 (2,001,770) 22,803,197 7,982,498 31,097,332 5,147,572
NET EQUALIZATION (DEBITS)
CREDITS ..................... - 139,287 - (11,747) - (28,319)
DIVIDENDS TO SHAREHOLDERS
From net investment income:
Class A .................. (7,611,297) (7,277,744) (1,620,482) (1,375,642) (691,134) (831,421)
Class B .................. (142,065) (44,398) (37,057) (4,042) (1,003) -
From net capital gains from
investment transactions:
Class A .................. (1,345,096) (2,302,488) (3,249,511) (6,977,882) - (6,184,903)
Class B .................. (24,534) - (82,370) - - -
NET CAPITAL SHARE
TRANSACTIONS
Class A ..................(13,056,430) 22,286,387 10,857,705 8,034,226 (24,088,466) (13,355,105)
Class B .................. 3,253,167 3,356,766 5,910,393 2,042,751 2,995,582 3,136,108
------------ ------------ ------------ ------------ ------------ ------------
Total increase(decrease) in
net assets ................ 20,987,074 14,156,040 34,581,875 9,690,162 9,312,311 (12,116,068)
NET ASSETS
Beginning of the year .......194,976,858 180,820,818 104,919,062 95,228,900 155,723,975 167,840,043
------------ ------------ ------------ ------------ ------------ ------------
End of the year ............$215,963,932 $194,976,858 $139,500,937 $104,919,062 $165,036,286 $155,723,975
============ ============ ============ ============ ============ ============
UNDISTRIBUTED NET INVESTMENT
INCOME AT END OF YEAR ......$ 933,742 $ 885,666 $ 293,997 $ 82,183 $ 80,057 $124,683
============ ============ ============ ============ ============ ============
See accompanying notes to the financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Class A Class B
--------------------------------------------------- ----------------------------------
COMPOSITE BOND & STOCK
FUND, INC. Eleven
Months Year Year March 30, 1994
Years Ended October 31, ended Ended Ended to
------------------------- October 31, November 30, October 31, October 31,
1995 1994 1993 1992(3) 1991 1995 1994(4)
------- ------- ------ ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ........ $ 11.53 $ 12.23 $ 11.27 $ 11.01 $ 9.90 $ 11.51 $ 11.49
------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income ...................... 0.50 0.46 0.48 0.44 0.55 0.39 0.18
Net Gains (Losses) on Securities
(both realized and unrealized) ............ 2.02 (0.57) 1.06 0.80 1.10 2.03 0.04
------- ------- ------- ------- ------- ------- -------
Total From Investment Operations ......... 2.52 (0.11) 1.54 1.24 1.65 2.42 0.22
------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends (from net investment income) ..... (0.49) (0.44) (0.46) (0.53) (0.54) (0.38) (0.20)
Distributions (from capital gains) ......... (0.08) (0.15) (0.12) (0.45) 0.00 (0.08) 0.00
------- ------- ------- ------- ------- ------- -------
Total Distributions ...................... (0.57) (0.59) (0.58) (0.98) (0.54) (0.46) (0.20)
------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD .............. $ 13.48 $ 11.53 $ 12.23 $ 11.27 $ 11.01 $ 13.47 $ 11.51
======= ======= ======= ======= ======= ======= =======
TOTAL RETURN (1) ............................ 22.55% -0.90% 13.99% 11.92% 16.96% 21.60% 1.94%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period ($1,000's) .......$208,592 $191,615 $180,281 $102,523 $66,090 $ 7,372 $ 3,362
Ratio of Expenses to Average Net Assets(5).. 1.02% 1.06% 1.13% 1.13%(6) 1.84% 1.14% 1.77%(6)
Ratio of Net Income to Average Net Assets .. 3.98% 3.97% 4.01% 4.30%(6) 4.90% 3.10% 3.22%(6)
Portfolio Turnover Rate(2).................. 32% 25% 19% 15%(6) 35% 32% 25%
<FN>
(1) Total Return does not reflect sales charge. Returns of less than one year are not annualized.
(2) A portfolio turnover rate is the percentage computed by taking the lesser of purchases or sales of portfolio securities
(excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the
monthly average of the market value of such securities during the period.
(3) Change in Fund's fiscal year end. See note 1.
(4) From the commencement of offering of Class B shares.
(5) Ratios for 1995 are based upon total expenses in accordance with Securities and Exchange Commission Release No. FR46 effective
September 1, 1995. Ratios for prior periods were calculated based on net expenses and have not been restated.
(6) Annualized.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Class A Class B
------------------------------------------------------- ----------------------------
COMPOSITE GROWTH &
INCOME FUND Year Ended March 30, 1994
YEARS ENDED OCTOBER 31, October 31, to October 31,
------------------------------------------------------- ------------- --------------
1995 1994 1993 1992 1991 1995 1994 (3)
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ........ $ 12.71 $ 12.81 $ 12.02 $ 11.86 $ 9.18 $ 12.68 $ 12.00
------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income ...................... 0.22 0.18 0.21 0.29 0.29 0.11 0.05
Net Gains on Securities
(both realized and unrealized) ............ 2.31 0.85 1.10 0.80 2.69 2.31 0.69
------- ------- ------- ------- ------- ------- -------
Total from investment operations ......... 2.53 1.03 1.31 1.09 2.98 2.42 0.74
------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends (from net investment income) ..... (0.19) (0.18) (0.21) (0.34) (0.30) (0.11) (0.06)
Distributions (from capital gains) ......... (0.40) (0.95) (0.31) (0.59) 0.00 (0.40) 0.00
------- ------- ------- ------- ------- ------- -------
Total Distributions ...................... (0.59) (1.13) (0.52) (0.93) (0.30) (0.51) (0.06)
------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD ............. $ 14.65 $ 12.71 $ 12.81 $ 12.02 $ 11.86 $ 14.59 $ 12.68
======= ======= ======= ======= ======= ======= =======
TOTAL RETURN (1) ........................... 20.87% 8.55% 11.06% 9.94% 32.69% 19.95% 6.14%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period ($1,000's) ....... $130,630 $102,837 $ 95,229 $81,102 $69,365 $ 8,871 $ 2,082
Ratio of Expenses to Average Net Assets(4).. 1.07% 1.10% 1.17% 1.10% 1.12% 1.91% 1.85%(5)
Ratio of Net Income to Average Net Assets .. 1.62% 1.45% 1.67% 2.37% 2.73% 0.69% 0.65%(5)
Portfolio Turnover Rate(2) ................ 39% 34% 54% 18% 26% 39% 34%
<FN>
(1) Total Return does not reflect sales charge. Returns of less than one year are not annualized.
(2) A portfolio turnover rate is the percentage computed by taking the lesser of purchases or sales of portfolio securities
(excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the
monthly average of the market value of such securities during the period.
(3) From the commencement of offering of Class B shares.
(4) Ratios for 1995 are based upon total expenses in accordance with Securities and Exchange Commission Release No. FR46 effective
September 1, 1995. Ratios for prior periods were calculated based on net expenses and have not been restated.
(5) Annualized.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Class A Class B
----------------------------------------------------------- ------------------------
COMPOSITE NORTHWEST 50
FUND, INC. Year March 30,1994
Years Ended October 31, Ended to
---------------------------------------------------------- October 31, October 31,
1995 1994 1993 1992 1991 1995 1994(4)
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ........ $ 14.30 $ 14.50 $ 14.04 $ 13.45 $ 8.43 $ 14.28 $ 14.42
------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income ...................... 0.07 0.08 0.07 0.08 0.07 (0.05) (0.02)
Net Gains (Losses) on Securities
(both realized and unrealized) ............ 3.10 0.35 0.46 0.69 5.03 3.08 (0.12)
------- ------- ------- ------- ------- ------- -------
Total From Investment Operations ......... 3.17 0.43 0.53 0.77 5.10 3.03 (0.14)
------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends (from net investment income) ..... (0.07) (0.08) (0.07) (0.07) (0.08) 0.00 0.00
Distributions (from capital gains) ......... 0.00 (0.55) 0.00 (0.11) 0.00 0.00 0.00
------- ------- ------- ------- ------- ------- -------
Total distributions ...................... (0.07) (0.63) (0.07) (0.18) (0.08) 0.00 0.00
------- ------- ------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD .............. $17.40 $ 14.30 $14.50 $14.04 $13.45 $17.31 $14.28
======= ======= ======= ======= ======= ======= =======
TOTAL RETURN (1) ........................... 22.24% 2.97% 3.82% 5.77% 60.49% 21.25% -0.97%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period ($1,000's) .......$157,953 $152,622 $168,840 $167,115 $98,754 $ 7,083 $3,102
Ratio of Expenses to Average Net Assets(3).. 1.10% 1.09% 1.09% 1.11% 1.21% 1.95% 1.96%(5)
Ratio of Net Income to Average Net Assets .. 0.44% 0.51% 0.48% 0.53% 0.63% -.45% -0.39%(5)
Portfolio Turnover Rate(2) ................ 11% 11% 8% 4% 8% 11% 11%
<FN>
NOTE: Figures representing per-share amounts have been adjusted to retroactively reflect a 2-for-1 stock split
effective December 29, 1992.
(1) Total return does not reflect sales charges. Returns of less than one year are not annualized.
(2) A portfolio turnover rate is the percentage computed by taking the lesser of purchases or sales of portfolio
securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period
and dividing it by the monthly average of the market value of such securities during the period.
(3) Fund expenses (exluding taxes, interest, portfolio brokerage, and the .75% Class B distribution fee), that exceeded 1.50% of
average daily net assets up to $30 million and 1% of such net assets over
$30 million were reimbursed by the investment adviser, Composite Research & Management Co. Ratios for 1995 are based upon total
expenses in accordance with Securities and Exchange Commission Release No. FR46 effective September 1, 1995. Ratios for prior
periods were calculated based on net expenses and have not been restated.
(4) From the commencement of offering of Class B shares.
(5) Annualized.
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ACCOUNTING POLICIES
Composite Bond & Stock Fund, Inc., and Composite Equity Series, Inc.
(Composite Growth Fund, Inc. prior to February 28, 1995), are registered under
the Investment Company Act of 1940, as amended, as open-end diversified
management investment companies. Composite Growth & Income Fund is a portfolio
of Composite Equity Series, Inc. Composite Northwest 50 Fund, Inc., is
registered under the Investment Company Act of 1940, as amended, as an open-end
non-diversified management investment company.
On January 28, 1992, the Bond & Stock Fund's Board of Directors approved a
change in its fiscal year end to October 31. Accordingly, information for the
fiscal year ended October 31, 1992, is presented for the eleven-month period
from December 1, 1991.
The Funds offer both Class A and Class B shares. Class B shares were first
offered on March 30, 1994. The two classes of shares differ in their respective
sales charges, shareholder servicing agent fees, and distribution and service
fees. All shareholders bear the common expenses of the Fund pro rata, based on
value of shares outstanding, without distinction between share class. Dividends
are declared separately for each class. Neither class has preferential dividend
rights; differences in per-share dividend rates are generally due to differences
in separate class expenses, including distribution and service fees.
Following is a summary of significant accounting policies, in conformity with
generally accepted accounting principles, which are consistently followed by
each Fund in the preparation of its financial statements.
a. Investment securities are stated on the basis of valuations provided by an
independent pricing service, approved by the Boards of Directors, which uses
information with respect to last reported sales price for securities traded
on a national securities exchange (or reported on the National Association
of Securities Dealers Automated Quotation [NASDAQ] National Market System)
or securities traded over-the-counter, in determining value. Investment
securities with less than 60 days to maturity when purchased are valued at
amortized cost which approximates market value. Investment securities not
currently quoted as described above will be priced at fair market value as
determined in good faith in a manner prescribed by the Boards of Directors.
b. Interest income is earned from the settlement date on securities purchased
and is recorded on the accrual basis. Dividend income is recorded on the
ex-dividend date.
c. Each Fund records dividends to shareholders on the record date.
d. Security transactions are accounted for on the trade date (execution date of
the order to buy or sell). Realized gain or loss from security transactions
and the change in unrealized appreciation or depreciation are determined on
the basis of identified cost.
e. Prior to June 1, 1994, each Fund followed the accounting practice of
equalization, by which a portion of the proceeds from the sales of Fund
shares and costs of repurchases of Fund shares equivalent on a per-share
basis to the amount of undistributed net investment income were credited or
charged to undistributed income. Effective June 1, 1994, the Funds no longer
recognize equalization accounting and the cumulative effect of the change in
accounting practice resulted in a reclassification of $395,473 and $351,735
from undistributed net investment income to paid-in capital for the Bond &
Stock Fund and Northwest 50 Fund, respectively. The cumulative effect for
the Growth & Income Fund was a reclassification of $149,245 from paid-in
capital to undistributed net investment income. This change had no effect on
the Funds' net assets, net asset value per share, or distributions.
f. Each Fund complies with requirements of the Internal Revenue Code applicable
to regulated investment companies and distributes taxable income so that no
provision for federal income or excise tax is required.
g. In accordance with Securities and Exchange Commission Release No. FR46
effective September 1, 1995, custodian fees have been increased by $5,126,
$3,261, and $4,481 for Composite Bond & Stock Fund, Inc., Composite Growth &
Income Fund, and Composite Northwest 50 Fund, Inc., respectively. Such
amounts relate to "expense offset arrangements." The Funds could have
otherwise employed the assets to produce income if it had not entered into
such arrangements. In accordance with the regulations, such amounts are
added to custodian fees actually incurred to arrive at gross custodian fees
and then reflected as a deduction, "fees paid indirectly," to derive net
expenses. There were no "expense offset arrangements" other than custodian
fees.
NOTE 2 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
The amounts of fees and expenses described below are shown on each Fund's
statement of operations.
Management fees were paid by each Fund to Composite Research & Management Co.,
the investment manager. Management fees for the Bond & Stock Fund and the Growth
& Income Fund are equal to an annual rate of .625% of each fund's average daily
net assets. Fees are reduced to .50% on average daily net assets in excess of
$250 million. The management fee for the Northwest 50 Fund is equal to an annual
rate of .625% of the Fund's average net assets. Should the assets of the Fund
grow to greater than $500 million, the fee would be decreased. Also, under terms
of the Northwest 50's management agreement, the Adviser will reimburse the Fund
should Fund expenses (excluding taxes, interest, and portfolio brokerage, and
the .75% Class B share distribution fee), exceed in any fiscal year 1.50% of the
average daily net assets up to $30 million, and 1% of such net assets over $30
million. For the year ended October 31, 1995, the Fund was reimbursed $116,742
under this agreement.
Directors' fees and expenses were paid directly by each Fund to directors
having no affiliation with the Funds other than in their capacity as directors.
Other officers and directors received no compensation from the Funds.
Shareholder servicing fees were paid to Murphey Favre Securities Services,
Inc., (MFSSI) the transfer and shareholder servicing agent, for services
incident to issuance and transfer of shares, maintaining shareholder lists, and
issuing and mailing distributions and reports. The authorized monthly
shareholder servicing fees are $1.35 and $1.45 per Class A and Class B shares'
accounts, respectively.
Distribution expenses were paid to Murphey Favre, Inc. (MFI), the principal
underwriter and distributor, in accordance with separate Distribution Plans for
Class A and Class B. The Funds' Boards of Directors adopted the Plans pursuant
to Rule 12b-1 of the Investment Company Act of 1940. The Class A Distribution
Plan provides that the Fund will reimburse MFI up to 0.25% of the average daily
net assets attributable to Class A shares annually for a portion of its expenses
incurred in distributing each Funds' Class A shares, including payments to
brokers. The Class B Distribution Plan provides that the Funds will pay MFI a
distribution fee, equal to 0.75% annually, and a service fee of 0.25%, of the
Funds' average daily net assets attributable to Class B shares.
For the year ended October 31, 1995, commissions (sales charges paid by
investors) on the purchases of Class A shares totaled $471,479, $384,766, and
$348,729, of which $471,445, $348,647, and $337,189 was retained by MFI, in the
Bond & Stock Fund, the Growth & Income Fund, and the Northwest 50 Fund,
respectively. For the year ended October 31, 1995, MFI received contingent
deferred sales charges of $7,413, $8,989, and $11,237 for the Bond & Stock Fund,
the Growth & Income Fund, and the Northwest 50 Fund, respectively, upon
redemption of Class B shares as reimbursement for sales commissions advanced by
MFI at the time of such sales. Also, under the terms of the distribution
contracts, MFI will reimburse each Fund if its expenses exceed the most
stringent applicable state blue sky limitation. No such reimbursemement was
required during the year ended October 31, 1995.
<TABLE>
<CAPTION>
COMPOSITE BOND & STOCK FUND, INC.
Capital stock authorized ..........300,000,000
Designated as:
Class A .........................200,000,000
Class B .........................100,000,000
Par value per share ............... $0.0005
Class A Class B
-------------------------------- ------------------------------
Year March 30, 1994
Ended to
Years ended October 31, October 31, October 31,
1995 1994 1995 1994(1)
--------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
SHARES
Sold ....................................... 1,549,537 3,721,199 277,347 297,925
Issued for reinvestment of
dividends and capital gains .............. 701,393 775,035 12,463 3,880
--------------- --------------- ------------- ---------------
2,250,930 4,496,234 289,810 301,805
Reacquired ................................. (3,397,944) (2,655,584) (34,621) (9,724)
--------------- --------------- ------------- ---------------
(1,147,014) 1,840,650 255,189 292,081
=============== =============== ============= ===============
AMOUNT
Sold ....................................... $19,292,373 $44,066,794 $3,517,987 $3,425,449
Issued for reinvestment of
dividends and capital gains .............. 8,425,803 9,068,535 164,801 44,237
--------------- --------------- ------------- ---------------
27,718,176 53,135,329 3,682,788 3,469,686
Reacquired ................................. (40,774,606) (30,848,942) (429,621) (112,920)
--------------- --------------- ------------- ---------------
$(13,056,430) $22,286,387 $3,253,167 $3,356,766
=============== =============== ============= ===============
<FN>
(1) From the commencement of offering of Class B shares.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COMPOSITE GROWTH & INCOME FUND
Capital stock authorized ..........40,000,000
Designated as:
Class A .........................25,000,000
Class B .........................15,000,000
Par value per share ............... $0.0001
Class A Class B
-------------------------------- ------------------------------
Year March 30, 1994
Ended to
Years ended October 31, October 31, October 31,
1995 1994 1995 1994(1)
--------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
SHARES
Sold ....................................... 1,994,187 1,081,213 477,156 164,120
Issued for reinvestment of
dividends and capital gains .............. 78,845 649,740 2,070 530
--------------- --------------- ------------- ---------------
2,073,032 1,730,953 479,226 164,650
Reacquired ................................. (1,247,093) (1,069,762) (35,353) (434)
--------------- --------------- ------------- ---------------
825,939 661,191 443,873 164,216
=============== =============== ============= ===============
AMOUNT
Sold ....................................... $22,670,694 $13,506,652 $6,269,139 $2,044,182
Issued for reinvestment of
dividends and capital gains .............. 4,557,325 7,873,953 118,471 3,988
--------------- --------------- ------------- ---------------
27,228,019 21,380,605 6,387,610 2,048,170
Reacquired ................................. (16,370,314) (13,346,379) (477,217) (5,419)
--------------- --------------- ------------- ---------------
$10,857,705 $8,034,226 $5,910,393 $2,042,751
=============== =============== ============= ===============
<FN>
(1) From the commencement of offering of Class B shares.
</FN>
</TABLE>
<TABLE>
<CAPTION>
COMPOSITE NORTHWEST 50 FUND, INC.
Capital stock authorized ..........10,000,000,000
Designated as:
Class A ......................... 6,000,000,000
Class B ......................... 4,000,000,000
Par value per share ............... $0.00001
Class A Class B
-------------------------------- ------------------------------
Year March 30, 1994
Ended to
Years ended October 31, October 31, October 31,
1995 1994 1995 1994(1)
--------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
SHARES
Sold ....................................... 2,053,954 2,500,842 233,910 221,815
Issued for reinvestment of
dividends and capital gains .............. 43,814 464,931 - -
--------------- --------------- ------------- ---------------
........................................... 2,097,768 2,965,773 233,910 221,815
Reacquired (3,693,516) (3,872,363) (41,868) (4,582)
--------------- --------------- ------------- ---------------
(1,595,748) (906,590) 192,042 217,233
=============== =============== ============= ===============
AMOUNT
Sold ....................................... $31,637,029 $36,424,187 $3,650,064 $3,203,931
Issued for reinvestment of
dividends and capital gains .............. 658,565 6,601,068 1,003 -
--------------- --------------- ------------- ---------------
32,295,594 43,025,255 3,651,067 3,203,931
Reacquired ................................. (56,384,060) (56,380,360) (655,485) (67,823)
--------------- --------------- ------------- ---------------
$(24,088,466) $(13,355,105) $2,995,582 $3,136,108
=============== =============== ============= ===============
<FN>
(1) From the commencement of offering of Class B shares.
</FN>
</TABLE>
<TABLE>
<CAPTION>
NOTE 4 - SHAREHOLDER MEETING RESULTS
A special meeting of the Fund's shareholders was held on March 21, 1995. Each matter voted upon at the meeting, as well as the
number of votes cast for, against or withheld, and abstained, are set forth below:
1. The Funds' shareholders elected the following nine directors:
BOND & STOCK FUND GROWTH & INCOME FUND NORTHWEST 50 FUND
---------------------- ----------------------- --------------------
SHARES SHARES SHARES
SHARES WITHHOLDING SHARES WITHHOLDING SHARES WITHHOLDING
VOTED AUTHORITY VOTED AUTHORITY VOTED AUTHORITY
"FOR" TO VOTE "FOR" TO VOTE "FOR" TO VOTE
--------- ------------ --------- ----------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Wayne L. Attwood, MD 8,736,364 111,556 4,795,376 63,342 5,234,171 97,419
Kristianne Blake 8,721,506 126,414 4,789,911 68,807 5,221,356 110,234
Anne V. Farrell 8,716,953 130,967 4,791,776 66,942 5,234,305 97,285
Edwin J. McWilliams 8,722,315 125,605 4,786,433 72,285 5,219,672 111,918
Michael K. Murphy 8,735,615 112,305 4,801,217 57,501 5,235,213 96,377
William G. Papesh 8,749,732 98,188 4,802,102 56,616 5,235,006 96,584
Jay Rockey 8,710,427 137,493 4,787,275 71,443 5,218,929 112,661
Leland J. Sahlin 8,739,440 108,480 4,796,603 62,115 5,232,895 98,695
Richard C. Yancey 8,736,020 111,900 4,800,665 58,053 5,235,994 95,596
2. The Funds' shareholders ratified the selection by a majority of the independent members of the Funds' Board of Directors of
LeMaster & Daniels as independent accountants for each Fund for the current year, subject to termination at any time without
penalty.
SHARES SHARES
VOTED VOTED
"FOR" "AGAINST" ABSTAINED
------------ ------------- -----------
<S> <C> <C> <C>
Bond & Stock Fund ..... 8,588,588 38,964 220,368
Growth & Income Fund .. 4,733,495 38,848 86,345
Northwest 50 Fund ..... 5,128,856 41,424 161,310
</TABLE>
FUND OFFICES
Composite Group of Funds
601 W. Main Avenue, Suite 801
Spokane, WA 99201-0613
Phone: (509) 353-3550
ADVISER
Composite Research & Management Co.
1201 Third Avenue, Suite 1220 Seattle, WA 98101-3015
DISTRIBUTOR
Murphey Favre, Inc.
1201 Third Avenue, Suite 780 Seattle, WA 98101-3015
CUSTODIAN
Investors Fiduciary Trust Company
127 W. 10th Street Kansas City, MO 64105-1716
INDEPENDENT PUBLIC ACCOUNTANTS
LeMaster & Daniels
601 W. Riverside, Suite 800 Spokane, WA 99201-0614
COUNSEL
Paine, Hamblen, Coffin, Brooke & Miller
717 W. Sprague Avenue, Suite 1200 Spokane, WA 99204-0464
OFFICERS
PRESIDENT
William G. Papesh
EXECUTIVE VICE PRESIDENT
Kerry K. Killinger
VICE PRESIDENTS
Gene G. Branson
Douglas D. Springer
VICE PRESIDENT & TREASURER
Monte D. Calvin
SECRETARY
John T. West
BOARD OF DIRECTORS
CHAIRMAN
Leland J. Sahlin
MEMBERS
Wayne L. Attwood, M.D.
Kristianne Blake
Anne V. Farrell
Edwin J. McWilliams
Michael K. Murphy
William G. Papesh
Jay Rockey
Richard C. Yancey
This report is submitted for the general information of shareholders of the
Funds. For more detailed information about the Funds, their officers and
directors, fees, expenses and other pertinent information, please see the
prospectus of the Funds. This report is not authorized for distribution to
prospective investors in the Funds unless preceded or accompanied by an
effective prospectus.
12/95
COMPOSITE GROUP
EQUITY FUNDS
ANNUAL REPORT
October 31, 1995
COMPOSITE BOND &
STOCK FUND, INC.
COMPOSITE GROWTH
& INCOME FUND
COMPOSITE NORTHWEST 50
FUND, INC.
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