PRESIDENT'S MESSSAGE
FUND HIGHLIGHTS
PORTFOLIOS
FINANCIAL INFORMATION
FINANCIAL STATEMENTS
FINANCIAL HIGHLIGHTS
NOTES TO FINANCIAL STATEMENTS
MORE ABOUT THE COMPOSITE GROUP
INVESTMENT PERFORMANCE CONTINUES STRONG
As reported in the pages which follow, despite a period of extraordinary
market volatility, Composite Group's Equity Funds achieved solid investment
results for the six-month period ended April 30, 1997.
The economy looks great now. But what about its future?
Growth of the domestic economy, which was especially forceful in the first
quarter of 1997, produced the likelihood of the lowest federal budget deficit
level in 20 years. While a combination of robust sales, low inflation, a low
level of unemployment, and broad gains in productivity present a picture of
health today, this could change rapidly. An overheated economy is most surely an
open invitation to the Federal Reserve to slow things down by raising interest
rates. In that event, look for additional market correction.
In the past several reports I have taken a positive view of the markets,
but surrounded it with a cautionary note. I continue to believe that while good
buying opportunities remain, most of the market is fully valued. Given this
situation I believe it very important that you remain diversified and committed
to longer-term investing. By all means, continue to rely on professional
portfolio management and review your asset allocation periodically. Over time,
you may find the latter more responsible than anything else for meeting your
investment goals.
Important changes in the Board of Directors
An on-going strength of the Composite Group has been the counsel and
leadership provided by members of our Board of Directors. After more than 21
years as director, Edwin J. McWilliams retired from our Board in December 1996.
We deeply appreciate his guidance over those years.
Elected to succeed him was Daniel L. Pavelich, chairman and CEO of BDO
Seidman, the nation's seventh largest public accounting firm. Mr. Pavelich has
national and international perspectives, as well as intimate knowledge of our
Pacific Northwest region, having spent 27 years with Seidman in Spokane. He
moved recently to the firm's headquarters in Chicago. We're most pleased to have
Dan on our Board.
[PHOTO - RETIRING CHAIRMAN OF THE BOARD, LEE SAHLIN]
Of special note is the retirement of Chairman Lee Sahlin from our Board
this past January. Armed with a graduate degree in economics from Washington
State University, Lee joined our distributor, Murphey Favre, in 1955. Since then
he has been, at various times, the CEO of that organization as well as of the
Composite Group of Funds and Composite Research & Management Co., the Funds'
Adviser.
Lee was instrumental in not only organizing most of our Funds, but in
developing a cadre of professionals committed to a conservative, long-term
approach to the accumulation of wealth. Our shareholders and staff have been the
beneficiaries of his strengths and integrity.
WILLIAM G. PAPESH
PRESIDENT
<PAGE>
FUND HIGHLIGHTS
COMPOSITE BOND & STOCK FUND
Impacts on recent performance
Financial markets showed increased levels of volatility in recent months.
The Federal Reserve, in an effort to contain inflation risks, reacted to strong
labor markets by taking a more restrictive policy stance. Higher interest rates
in the bond market affected the stock market, which declined 8% from the middle
of February to the end of March. This was followed by a dramatic rally in the
equities markets in late April. We expect the markets will continue to be
volatile in coming months as investors contemplate what lies ahead for the
economy.
While the economy's strength surprised us, the market's response did not.
We have been positioning the Fund's holdings in anticipation of a more volatile
period. In the stock portfolio, we have been reducing positions in stocks that
had performed well, but where expectations of continued good performance were
unjustifiably high. An example would include our holdings in bank stocks, which
have performed well for several years but reached levels that we considered
fully valued. In the bond portfolio, we shortened the average maturity in
November when interest rates reached an intermediate target.
What's ahead?
We continue to be decidedly optimistic on the longer-term future for the
economy and the financial markets. Our optimism is based on three factors:
progress in reducing the nation's budget deficit which will reduce the overall
demand for credit, the aging of the "baby boom" generation requiring increased
savings for retirement, and productivity gains resulting from the introduction
of technology which allows for long-term growth of the economy without
inflationary pressures.[PHOTO - COMPOSITE GROUP EQUITY PORTFOLIO MANAGER,
JEFFREY D. HUFFMAN]
Key investment strategies
As one of the first 50 mutual funds in the U.S. - in an industry that now
has nearly 7,000 funds - our key strategy always has been to maintain a broadly
diversified portfolio of quality investments. We currently favor equity
investments to bonds because of our belief that stocks will generate superior
long-term returns. Our stock selection process favors well-established companies
that have generated high rates of return on investment and have growth
opportunities that can be funded internally. In the bond portfolio, we seek to
take advantage of interest rate changes in two ways: first, by altering the
average maturity of the portfolio based on a forecast of rates and second, by
altering the allocation between market sectors to enhance portfolio yield
without compromising principal value.
Fund Performance
Periods Ended 4/30/97
- ----------------------------------------------
Six Months
CLASS A CLASS B
SHARES SHARES
Total Return ------- -------
With sales charge 2.88% 3.28%
Without sales charge 7.73% 7.24%
Per share
Dividends $0.27 $0.21
Capital gains $0.94 $0.94
Net Asset Values
Beginning $14.71 $14.69
Ending $14.60 $14.57
- ----------------------------------------------
Average Annual Total Returns
WITH WITHOUT
CLASS A SALES SALES
SHARES CHARGE CHARGE
- ------- ------ -------
One Year 8.87% 14.00%
Five Years 11.11% 12.13%
Ten Years 9.75% 10.26%
CLASS B
SHARES
- -------
One Year 9.94% 12.94%
Life of Class 14.40% 14.65%
(since 3/30/94)
- ----------------------------------------------
Reference to sales charges above are based on the maximum 4.5% initial sales
charge for Class A shares or applicable Class B contingent deferred sales
charges of 3% for one year and 1% since March 1994. Information presented
represents past performance which cannot predict future results. 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
<PAGE>
COMPOSITE GROWTH & INCOME FUND
Impacts on recent performance
The stock market both ended 1996 and started off 1997 invigorated. This
strength was produced by favorable corporate earnings and expectations of
moderate inflation. By the end of February 1997, the market retreated and gave
up most of the 1997 gains. This sell-off was triggered by fear the Federal
Reserve would have to raise interest rates due to an overheated economy. But
stocks rallied in the later days of April and the Fund benefited from the
overall strength in blue chip stocks. Sixty-five percent of the Fund is
currently invested in large capitalization securities. Investors flocked to
strong multinational companies that have produced consistent earnings in the
period. This trend particularly benefited our holdings in General Electric,
Intel and Federal Home Loan Mortgage Corporation.
What's ahead?
We anticipate that mergers and acquisitions, along with low to very
moderate inflation, will continue. However, the Federal Reserve is now on a
mission to preemptively slow economic growth by increasing interest rates
incrementally. Historically, when the Federal Reserve raises interest rates,
stock volatility increases and consumer confidence may become a problem in
certain investment sectors. We expect that any short-term rate increases will
have a slowing effect on the economy six months out. Therefore, we are very
cautious when investing in companies whose stock values are dependent on high
consumer confidence.[PHOTO - COMPOSITE GROUP EQUITY PORTFOLIO MANAGER,
PHILIP M. FOREMAN]
Key investment strategies
Our basic strategy, as always, is to buy the stocks of good businesses when
they are at "sale prices." Good businesses generate a high return on investment,
have a competitive advantage and have barriers to entry. We are finding such
values in the computer networking area. Leading companies in this area are
helping businesses become more productive by allowing data sharing among
networked employees.
The healthcare industry is filled with good companies that represent
attractive values. This situation has been created by fears of deep budget cuts
in Medicaid and Medicare. We believe the aging of the population should fuel the
demand for healthcare services for many years to come.
Finally, restructuring situations should be good investments in 1997. Many
companies have trapped asset value that can only be realized by partial or full
sale.
Fund Performance
Periods Ended 4/30/97
- ----------------------------------------------
Six Months
CLASS A CLASS B
SHARES SHARES
Total Return ------- -------
With sales charge 6.87% 7.38%
Without sales charge 11.88% 11.38%
Per share
Dividends $0.085 $0.015
Capital gains $1.210 $1.210
Net Asset Values
Beginning $17.26 $17.17
Ending $17.95 $17.84
- ----------------------------------------------
Average Annual Total Returns
WITH WITHOUT
CLASS A SALES SALES
SHARES CHARGE CHARGE
- ------- ------ -------
One Year 14.35% 19.74%
Five Years 13.90% 14.95%
Ten Years 11.16% 11.68%
CLASS B
SHARES
- -------
One Year 15.60% 18.60%
Life of Class 19.37% 19.60%
(since 3/30/94)
- ----------------------------------------------
Reference to sales charges above are based on the maximum 4.5% initial sales
charge for Class A shares or applicable Class B contingent deferred sales
charges of 3% for one year and 1% since March 1994. Information presented
represents past performance which cannot predict future results. 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.
<PAGE>
FUND HIGHLIGHTS (CONTINUED)
COMPOSITE NORTHWEST FUND
Impacts on recent performance
Composite Northwest Fund (Class A shares) returned 15.43% during the
six-month period ended April 30, 1997. This compares favorably to the unmanaged
Standard & Poor's 500 Index which returned 14.72% over the same period. As has
been the case for some time, smaller capitalization stocks underperformed large
capitalization stocks. However, we continue to find the valuations of some
smaller capitalization companies compelling and expect to eventually be rewarded
for owning them.
The biotechnology industry provided both the best and worst stocks in our
portfolio, which is not unexpected given the volatile nature of this sector.
Immunex was up 106% due to encouraging results on a potential blockbuster drug
to treat rheumatoid arthritis. Ostex, however, declined a painful 62% due to
slow market acceptance of its test for bone loss associated with osteoporosis.
Significant performers over the period included Airborne Freight which rose
77% thanks to sharply improved earnings, and U.S. Bancorp which rose a
respectable 43% over the period as a result of its agreement to be acquired by
First Bank Systems of Minneapolis. Our portfolio's software powerhouse,
Microsoft, continued to exceed analyst estimates and rose a very respectable
77%. But the period was not without disappointments. Concerns about competitive
pressures hammered stocks in the wireless telephone industry, and Western
Wireless was not spared, losing 38% of its value. Competition also beset the
craft brewing industry, and Redhook Ale Breweries lost 44% of its value before
we eliminated the last of our position.
What's ahead?
The Northwest economy continues to fare well. The region's two major
industries, aerospace (led by Boeing) and technology (led by Microsoft and
Intel), show continued strength, and the area's economy should continue to
benefit as a result. We believe that the Fund is well positioned to take
advantage of the market's interest in companies that have global growth
opportunities as well as those that benefit from a robust local economy.[PHOTO -
COMPOSITE GROUP EQUITY PORTFOLIO MANAGER, DAVID W. SIMPSON]
Key investment strategies
The goal of the Fund is to seek long-term capital appreciation while
investing in stocks of companies headquartered or doing business in the
Northwest. To accomplish this, we seek quality growth characteristics,
defensible competitive advantages, and reasonable valuations.
Fund Performance
Periods Ended 4/30/97
- ----------------------------------------------
Six Months
CLASS A CLASS B
SHARES SHARES
Total Return ------- -------
With sales charge 10.24% 10.92%
Without sales charge 15.43% 14.92%
Per share
Dividends - 0 - - 0 -
Capital gains $1.88 $1.88
Net Asset Values
Beginning $19.69 $19.45
Ending $20.71 $20.34
- ----------------------------------------------
Average Annual Total Returns
WITH WITHOUT
CLASS A SALES SALES
SHARES CHARGE CHARGE
- ------- ------ -------
One Year 10.28% 15.49%
Five Years 10.71% 11.74%
Ten Years 12.86% 13.38%
CLASS B
SHARES
- -------
One Year 11.45% 14.45%
Life of Class 15.41% 15.65%
(since 3/30/94)
- ----------------------------------------------
Reference to sales charges above are based on the maximum 4.5% initial sales
charge for Class A shares or applicable Class B contingent deferred sales
charges of 3% for one year and 1% since March 1994. Information presented
represents past performance which cannot predict future results. 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.
<PAGE>
COMPOSITE
BOND & STOCK
FUND, INC.
PORTFOLIO OF
INVESTMENTS
IN SECURITIES
APRIL 30, 1997
COMPOSITE BOND & STOCK FUND PORTFOLIO
(UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ FIXED INCOME SECURITIES-32.60% ------------
U.S. TREASURY & AGENCY OBLIGATIONS-15.81%
$ 2,000,000 Federal National Mortgage Association,
8.25%, due 12/18/2000.......................... $ 2,105,322
1,000,000 Federal National Mortgage Association,
5.80%, due 02/22/2006.......................... 929,675
2,000,000 Federal National Mortgage Association,
5.45%, due 10/10/2003.......................... 1,860,688
3,000,000 U.S. Treasury Bond, 7.50%, due 11/15/2016........ 3,141,564
9,000,000 U.S. Treasury Bond, 6.25%, due 08/15/2023........ 8,139,384
4,000,000 U.S. Treasury Bond, zero coupon, due 08/15/2012.. 1,378,224
4,250,000 U.S. Treasury Note. 6.50%, due 11/15/2026........ 3,988,361
4,250,000 U.S. Treasury Note, 6.375%, due
03/31/2001 - 08/15/2002........................ 4,219,848
4,000,000 U.S. Treasury Note, 6.25%, due
08/31/2000 - 04/30/2001........................ 3,968,128
19,300,000 U.S. Treasury Note, 5.875%, due
10/31/1998 - 11/15/1999........................ 19,135,332
-------------
TOTAL U.S. TREASURY & AGENCY OBLIGATIONS
(cost $49,266,615) 48,866,526
-------------
MORTGAGE-BACKED SECURITIES-6.45%
GOVERNMENT AGENCY - 4.33%
1,744,704 Federal National Mortgage Association,
8.00%, due 12/01/2026.......................... 1,770,874
558,968 Government National Mortgage Association,
10.00%, due 08/15/2019......................... 613,643
1,512,397 Government National Mortgage Association,
7.00%, due 03/15/2027.......................... 1,465,609
9,178,337 Government National Mortgage Association,
6.50%, due 01/15/2024 - 05/15/2026............. 8,644,848
965,914 Government National Mortgage Association,
6.00%, due 01/15/2026 - 02/15/2026............. 883,208
-------------
13,378,182
-------------
COLLATERALIZED MORTGAGE OBLIGATIONS -
GOVERNMENT AGENCY BACKED - 1.47%
1,000,000 Federal Home Loan Mortgage Corporation -
CMO PAC-1(11) 1311H, 7.50%, due 07/15/2020..... 1,010,148
2,000,000 Federal Home Loan Mortgage Corporation -
GNMA PAC-1(11) 2E, 6.85%, due 07/25/2018....... 1,984,020
1,533,777 Weyerhaeuser 1982-C FHA Putable, 7.43%,
due 06/01/2022................................. 1,543,750
-------------
4,537,918
-------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.65%
1,250,000 DLJ Mortgage Acceptance Corp., 1993-M17,
7.35%, due 12/18/2003.......................... 1,236,854
4,005 Merrill Lynch Mortgage Investors, Inc.,
1988-H, 9.70%, due 06/15/2008.................. 4,002
132,121 Merrill Lynch Mortgage Investors, Inc.,
1988-P, 10.05%, due 12/15/2008................. 141,536
865,343 Resolution Trust Corporation - 1991-M2-A2,
7.673%, due 09/25/2020......................... 626,195
-------------
2,008,587
-------------
TOTAL MORTGAGE-BACKED SECURITIES
(cost $19,943,582)............................. 19,924,687
-------------
See accompanying notes to financial statements.
<PAGE>
COMPOSITE BOND & STOCK FUND PORTFOLIO (UNAUDITED) (CONTINUED)
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ FIXED INCOME SECURITIES (continued) ------------
CORPORATE BONDS-9.65%
$1,000,000 Aetna Services, Inc., 7.625%, due 08/15/2026..... $ 971,277
1,365,000 American Medical Association, zero coupon,
due 08/12/1997................................. 1,329,903
1,000,000 Bank of New York, 7.875%, due 11/15/2002......... 1,036,338
1,200,000 Burlington Northern, 8.75%, due 02/25/2022....... 1,303,156
1,000,000 Coastal Corporation, 9.625%, due 05/15/2012...... 1,188,634
750,000 Conagra, Inc., 9.75%, due 03/01/2021............. 900,142
1,000,000 Continental Corporation, 7.25%, due 03/01/2003... 996,997
1,000,000 Dart & Kraft Finance, 7.75%, due 11/30/1998...... 1,016,807
500,000 Developers Diversified Realty, 6.58%,
due 02/06/2001................................. 487,002
1,250,000 First Nationwide, 10.00%, due 10/01/2006......... 1,421,764
1,000,000 Franchise Finance Corporation of America,
7.00%, due 11/30/2000.......................... 997,109
1,000,000 Franchise Finance Corporation of America,
7.875%, due 11/30/2005......................... 1,023,263
1,000,000 Golden Books Publishing, 7.65%, due 09/15/2002... 910,000
1,500,000 Integon Corporation, 8.00%, due 08/15/1999....... 1,507,282
2,000,000 Loral Corporation, 7.625%, due 06/15/2025........ 1,972,136
1,000,000 Mercantile Bank, 7.625%, due 10/15/2002.......... 1,021,249
1,100,000 Niagara Mohawk Power, 9.50%, due 06/01/2000...... 1,144,074
995,000 Niagara Mohawk Power, 8.77%, due 01/01/2018...... 1,008,125
1,000,000 Ohio Edison 1st Mortgage, 8.75%, due 02/15/1998.. 1,015,615
1,000,000 Price/Costco, Inc., 7.125%, due 06/15/2005....... 974,760
500,000 Public Service Company of New Hampshire,
9.17%, due 05/15/1998.......................... 509,769
1,250,000 Riviera Holdings Corporation, 11.00%,
due 12/31/2002................................. 1,293,750
500,000 Summit Bancorp, 8.625%, due 12/10/2002........... 531,591
221,000 System Energy Resources, 11.375%,
due 09/01/2016................................. 236,795
1,000,000 Tenet Healthcare Corporation, 7.875%,
due 01/15/2003................................. 990,000
2,000,000 Time Warner, Inc., 9.15%, due 02/01/2023......... 2,148,400
1,000,000 U.S. West Capital Funding, Inc., 6.95%,
due 01/15/2037................................. 985,718
1,000,000 Westinghouse Electric Corporation, 7.875%,
due 09/01/2023................................. 902,646
-------------
TOTAL CORPORATE BONDS (cost $29,856,750)......... 29,824,302
-------------
U.S. DOLLAR FOREIGN OBLIGATIONS-0.68%
1,000,000 Province of Alberta, 9.20%, due 11/01/1997....... 1,018,670
1,500,000 United Mexican States, Series A, 6.25%,
due 12/31/2019................................. 1,087,500
-------------
TOTAL FOREIGN OBLIGATIONS (cost $1,793,487)...... 2,106,170
-------------
TOTAL FIXED INCOME SECURITIES
(cost $109,155,682)............................ 100,721,685
-------------
See accompanying notes to financial statements.
<PAGE>
MARKET
SHARES VALUE
- ------------ EQUITY SECURITIES-64.07% ------------
COMMON STOCKS-56.09%
AEROSPACE/DEFENSE - 3.34%
30,000 General Dynamics Corporation..................... $ 2,137,500
33,000 Lockheed Martin Corporation...................... 2,953,500
30,000 Northrop Grumman Corporation..................... 2,505,000
62,500 Raytheon Company................................. 2,726,562
-------------
10,322,562
-------------
APPAREL & SHOES - 1.08%
30,000 Nike, Inc., Class B.............................. 1,687,500
120,000 Stride Rite Corporation.......................... 1,650,000
-------------
3,337,500
-------------
BANKS/SAVINGS & LOANS - 2.62%
35,000 Mellon Bank Corporation.......................... 2,909,375
22,000 J.P. Morgan & Company, Inc. ..................... 2,241,250
11,000 Wells Fargo & Company............................ 2,934,250
-------------
8,084,875
-------------
BEVERAGES - 0.86%
69,500 Seagram Company, Ltd. ........................... 2,658,375
-------------
CHEMICALS - 0.93%
80,000 Nalco Chemical Company........................... 2,880,000
-------------
COMPUTER SOFTWARE - 1.22%
72,500 Computer Associates International, Inc. ......... 3,770,000
-------------
COMPUTER SYSTEMS - 1.65%
50,000 Electronic Data Systems Corporation.............. 1,668,750
65,000 Hewlett-Packard Company.......................... 3,412,500
-------------
5,081,250
-------------
ELECTRICAL EQUIPMENT - 0.90%
25,000 General Electric Company......................... 2,771,875
-------------
ELECTRONICS - GENERAL - 1.18%
80,000 Loral Space & Communications*.................... 1,170,000
45,500 Tektronix, Inc................................... 2,462,688
-------------
3,632,688
-------------
ELECTRONICS - SEMICONDUCTORS/COMPONENTS - 2.03%
55,000 Motorola, Inc. .................................. 3,148,750
35,000 Texas Instruments, Inc. ......................... 3,123,750
-------------
6,272,500
-------------
FINANCIAL SERVICES - 1.31%
80,000 Federal National Mortgage Association............ 3,290,000
16,087 Legg Mason, Inc. ................................ 764,132
-------------
4,054,132
-------------
See accompanying notes to financial statements.
<PAGE>
COMPOSITE BOND & STOCK FUND PORTFOLIO (UNAUDITED) (CONTINUED)
MARKET
SHARES EQUITY SECURITIES (continued) VALUE
- ------------ COMMON STOCKS (continued) ------------
FOODS & FOOD RETAILERS - 2.66%
80,000 Dole Food Company................................ $ 3,260,000
60,000 Sara Lee Corporation............................. 2,520,000
80,000 Supervalu, Inc. ................................. 2,450,000
-------------
8,230,000
-------------
HEALTHCARE PRODUCTS - 5.09%
53,500 Abbott Laboratories.............................. 3,263,500
70,000 Bausch & Lomb, Inc. ............................. 2,826,250
70,000 Baxter International, Inc. ...................... 3,351,250
60,000 Johnson & Johnson................................ 3,675,000
29,000 Merck & Company, Inc. ........................... 2,624,500
-------------
15,740,500
-------------
HEALTHCARE SERVICES - 2.33%
35,000 Aetna, Inc. ..................................... 3,189,375
120,000 Medpartners, Inc.*............................... 2,190,000
99,900 Olsten Corporation............................... 1,760,737
2,663 Talbert Medical Management Corporation
Stock Rights*.................................. 46,602
-------------
7,186,714
-------------
HOUSEHOLD PRODUCTS - 1.82%
17,500 Procter & Gamble Company......................... 2,200,625
17,500 Unilever Group................................... 3,434,375
-------------
5,635,000
-------------
INSURANCE - 2.12%
20,000 American International Group, Inc. .............. 2,570,000
15,000 General Re Corporation........................... 2,508,750
52,500 TIG Holdings, Inc. .............................. 1,456,875
-------------
6,535,625
-------------
MACHINERY - 1.04%
86,000 Crane Company.................................... 3,214,250
-------------
MEDIA - 1.95%
75,000 Time Warner, Inc. ............................... 3,375,000
100,000 Viacom, Inc., Class A*........................... 2,662,500
-------------
6,037,500
-------------
METALS & MINING - 0.87%
35,000 Phelps Dodge Corporation......................... 2,686,250
-------------
See accompanying notes to financial statements.
<PAGE>
MARKET
SHARES EQUITY SECURITIES (continued) VALUE
- ------------ COMMON STOCKS (continued) ------------
OILS & GAS - 4.29%
65,000 Amerada Hess Corporation......................... $ 3,160,625
20,000 Atlantic Richfield Company....................... 2,722,500
20,000 British Petroleum Company,
American Depository Receipt.................... 2,752,500
100,000 Occidental Petroleum Corporation................. 2,212,500
22,500 Shell Transport & Trading Company,
American Depository Receipt.................... 2,393,438
-------------
13,241,563
-------------
PAPER & FOREST PRODUCTS - 2.47%
75,000 Boise Cascade Corporation........................ 2,493,750
40,000 Georgia-Pacific Corporation...................... 3,120,000
50,000 Rayonier, Inc. .................................. 2,018,750
-------------
7,632,500
-------------
REAL ESTATE INVESTMENT TRUSTS - 6.87%
44,000 Capstone Capital Trust, Inc. .................... 990,000
67,500 CarrAmerica Realty Corporation................... 1,881,562
59,700 Duke Realty Investments, Inc. ................... 2,193,975
75,000 First Industrial Realty Trust.................... 2,212,500
62,500 Health Care Property Investors, Inc. ............ 2,070,313
82,500 Hospitality Properties Trust..................... 2,547,188
84,000 Nationwide Health Properties, Inc. .............. 1,680,000
65,000 Security Capital Pacific Trust................... 1,478,750
55,000 Shurgard Storage Centers, Inc. .................. 1,443,750
129,165 United Dominion Realty Trust, Inc. .............. 1,776,019
100,000 Wellsford Residential Property Trust............. 2,962,500
-------------
21,236,557
-------------
TOBACCO - 1.64%
45,000 Phillip Morris Companies, Inc. .................. 1,771,875
45,000 RJR Nabisco Holdings Corporation................. 1,338,750
75,000 UST, Inc. ....................................... 1,959,375
-------------
5,070,000
-------------
UTILITIES-GAS & ELECTRIC - 0.53%
41,500 NIPSCO Industries, Inc. ......................... 1,639,250
-------------
See accompanying notes to financial statements.
<PAGE>
COMPOSITE BOND & STOCK FUND PORTFOLIO (UNAUDITED) (CONTINUED)
MARKET
SHARES EQUITY SECURITIES (continued) VALUE
- ------------ COMMON STOCKS (continued) ------------
UTILITIES - TELECOMMUNICATIONS - 5.29%
73,000 AT&T Corporation................................. $ 2,445,500
60,000 Aliant Communications, Inc. ..................... 937,500
31,000 Alltel Corporation............................... 976,500
25,000 Ameritech Corporation............................ 1,528,125
30,000 Century Telephone Enterprises, Inc. ............. 896,250
160,000 Frontier Corporation............................. 2,540,000
60,000 GTE Corporation.................................. 2,752,500
27,000 Southern New England Telecommunications
Corporation.................................... 985,500
75,000 Sprint Corporation............................... 3,290,625
-------------
16,352,500
-------------
TOTAL COMMON STOCKS (cost $132,279,563).......... 173,303,966
-------------
CONVERTIBLE PREFERRED STOCKS-5.25%
31,500 Integon Corporation.............................. 1,228,500
10,000 Microsoft........................................ 856,250
67,500 Pacificare Health Systems, Inc. ................. 2,109,375
35,000 Penncorp Financial Group......................... 2,800,000
150,000 RJR Nabisco Holding - Series C................... 881,250
35,000 Southdown, Inc., Series D........................ 2,108,750
16,500 TCI Pacific Communications....................... 1,555,125
54,000 Time Warner Financing - $1.24 Series............. 1,998,000
25,000 Walbro Capital Trust............................. 628,125
20,000 Williams Companies, $3.50 Series................. 2,070,000
-------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(cost $14,109,223)............................. 16,235,375
-------------
PRINCIPAL
AMOUNT CONVERTIBLE BONDS-2.73%
- ------------
$1,160,000 Bell Sports Corporation, 4.25%, due 11/15/2000... 887,400
1,080,000 CII Financial, 7.50%, due 09/15/2001............. 1,000,350
750,000 Capstone Capital Corporation, 6.55%,
due 03/14/2002................................. 686,250
1,250,000 Comcast Corporation, 3.375%, due 09/09/2005...... 1,143,750
1,000,000 First State Bancorporation, 7.50%,
due 04/30/2017................................. 1,000,000
1,850,000 Jumbosports, Inc., 4.25%, due 11/01/2000......... 1,318,125
2,000,000 Tenet Healthcare Corporation, 6.00%,
due 12/01/2005................................. 2,410,000
-------------
TOTAL CONVERTIBLE CORPORATE BONDS
(cost $8,295,248).............................. 8,445,875
-------------
TOTAL EQUITY SECURITIES (cost $146,388,786)...... 197,985,216
-------------
See accompanying notes to financial statements.
<PAGE>
PRINCIPAL MARKET
AMOUNT REPURCHASE AGREEMENT-2.70% VALUE
- ------------ ------------
$ 8,335,000 Repurchase agreement with Goldman Sachs,
collateralized by a U.S. Treasury Note,
in a joint trading account at 5.15%, dated
04/30/1997, due 05/01/1997, with a maturity
value of $8,336,192 (cost $8,335,000)............ $ 8,335,000
-------------
TOTAL INVESTMENTS (cost $263,879,468)............ 307,041,901
Other assets ($3,754,973)
less liabilities ($1,800,111).................. 1,954,862
--------------
NET ASSETS....................................... $308,996,763
==============
*Non-income producing security
FEDERAL INCOME TAX INFORMATION:
Net unrealized appreciation of investments at April 30, 1997, of $43,162,433,
based on aggregate cost of $263,879,468, was composed of gross appreciation of
$48,326,667 for investments having an excess of value over cost and gross
depreciation of $5,164,234 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
$109,673,813 and $76,888,378, respectively, for the six months ended April 30,
1997, including purchases and sales of U.S. government securities of $48,101,899
and $22,130,201, respectively.
See accompanying notes to financial statements.
<PAGE>
COMPOSITE
GROWTH &
INCOME
FUND
PORTFOLIO OF
INVESTMENTS
IN SECURITIES
APRIL 30, 1997
COMPOSITE GROWTH & INCOME FUND PORTFOLIO (UNAUDITED)
MARKET
SHARES VALUE
- ------------ COMMON STOCKS-93.37% ------------
AEROSPACE/DEFENSE - 4.89%
73,902 Lockheed Martin Corporation...................... $ 6,614,229
40,000 Northrop Grumman Corporation..................... 3,340,000
52,040 Raytheon Company................................. 2,270,245
-------------
12,224,474
-------------
BANKS/SAVINGS & LOANS - 6.91%
68,000 Bank of New York Company, Inc. .................. 2,686,000
26,500 Mellon Bank Corporation.......................... 2,202,812
74,962 Norwest Corporation.............................. 3,738,730
56,300 Signet Banking Corporation....................... 1,738,262
95,150 Washington Federal, Inc. ........................ 2,283,600
17,300 Wells Fargo & Company............................ 4,614,775
-------------
17,264,179
-------------
BASIC INDUSTRY - 1.19%
101,600 WMX Technologies, Inc. .......................... 2,984,500
-------------
BEVERAGES - 2.46%
104,900 PepsiCo, Inc. ................................... 3,658,387
65,000 Seagram Company, Ltd. ........................... 2,486,250
-------------
6,144,637
-------------
CAPITAL GOODS - 1.30%
94,624 Donaldson Company, Inc........................... 3,240,872
-------------
CHEMICALS - 0.80%
113,200 Millenium Chemicals, Inc.*....................... 2,009,300
-------------
COMPUTER SOFTWARE - 6.74%
83,400 Autodesk, Inc. .................................. 2,960,700
100,100 Barra, Inc.*..................................... 2,602,600
62,300 Computer Associates International, Inc. ......... 3,239,600
216,200 Mentor Graphics.................................. 1,526,913
53,700 Microsoft Corporation*........................... 6,524,550
-------------
16,854,363
-------------
COMPUTER SYSTEMS - 2.95%
39,600 Cabletron Systems*............................... 1,366,200
26,500 Cisco Systems, Inc. ............................. 1,371,375
65,010 Electronic Data Systems Corporation.............. 2,169,709
46,800 Hewlett-Packard Company.......................... 2,457,000
-------------
7,364,284
-------------
CONSUMER DURABLES - 2.93%
59,400 Black & Decker Corporation....................... 1,989,900
141,083 Castle & Cooke, Inc.*............................ 1,939,891
121,441 Mattel, Inc. .................................... 3,385,168
-------------
7,314,959
-------------
See accompanying notes to financial statements.
<PAGE>
MARKET
SHARES VALUE
- ------------ COMMON STOCKS (continued) ------------
ELECTRICAL EQUIPMENT - 3.55%
77,550 Emerson Electric Company......................... $ 3,935,662
44,500 General Electric Company......................... 4,933,938
-------------
8,869,600
-------------
ELECTRONICS - GENERAL - 2.00%
138,000 DSC Communications Corporation*.................. 2,811,750
149,950 Loral Space & Communications*.................... 2,193,019
-------------
5,004,769
-------------
ELECTRONICS - SEMICONDUCTORS/COMPONENTS - 3.76%
29,500 Integrated Device Technology, Inc. .............. 346,625
23,500 Intel Corporation................................ 3,598,438
95,300 Motorola, Inc. ................................. 5,455,925
-------------
9,400,988
-------------
FINANCIAL SERVICES - 3.28%
185,500 Federal Home Loan Mortgage Corporation........... 5,912,812
48,052 Legg Mason, Inc. ................................ 2,282,470
-------------
8,195,282
-------------
FOODS & FOOD RETAILERS - 2.19%
46,000 Campbell Soup Company............................ 2,351,750
39,400 Dole Food Company................................ 1,605,550
49,700 Supervalu, Inc. ................................. 1,522,063
-------------
5,479,363
-------------
HEALTHCARE PRODUCTS - 6.68%
75,100 Abbott Laboratories.............................. 4,581,100
65,700 Forest Laboratories*............................. 2,242,012
103,550 Johnson & Johnson................................ 6,342,438
38,925 Merck and Company, Inc. ......................... 3,522,712
-------------
16,688,262
-------------
HEALTHCARE SERVICES - 4.23%
86,000 Cognizant Corporation............................ 2,805,750
93,200 Manor Care, Inc. ................................ 2,178,550
169,301 Medpartners, Inc.*............................... 3,089,743
31,233 Pacificare Health Systems - Class A*............. 2,397,133
6,024 Talbert Medical Management Corporation
Stock Rights*.................................. 105,420
-------------
10,576,596
-------------
HOUSEHOLD PRODUCTS - 5.10%
42,100 Alberto Culver Company, Class A.................. 1,041,975
160,000 Kimberly Clark De Mexico,
American Depository Receipt.................... 2,980,000
22,500 Proctor and Gamble Company....................... 2,829,375
30,000 Unilever Group................................... 5,887,500
-------------
12,738,850
-------------
See accompanying notes to financial statements.
<PAGE>
COMPOSITE GROWTH & INCOME FUND PORTFOLIO (UNAUDITED) (CONTINUED)
MARKET
SHARES VALUE
- ------------ COMMON STOCKS (continued) ------------
INSURANCE - 3.91%
28,332 American International Group, Inc. .............. $ 3,640,662
80,100 Integon Corporation.............................. 811,013
79,100 TIG Holdings, Inc. .............................. 2,195,025
56,316 Travelers Group, Inc. ........................... 3,118,499
-------------
9,765,199
-------------
LODGING & RESTAURANTS - 0.84%
149,515 Choice Hotels Holdings, Inc. .................... 2,093,210
-------------
MACHINERY -2.58%
100,050 Crane Company.................................... 3,739,369
59,000 Deere & Company.................................. 2,714,000
-------------
6,453,369
-------------
MEDIA - 4.79%
151,133 ACNielson Corporation............................ 2,266,995
100,000 Dun & Bradstreet Corporation..................... 2,462,500
90,600 Time Warner, Inc. ............................... 4,077,000
118,850 Viacom Inc., Class A*............................ 3,164,381
-------------
11,970,876
-------------
OILS & GAS - 6.94%
65,660 Exxon Corporation................................ 3,717,996
24,500 Mobil Corporation................................ 3,185,000
128,900 Occidental Petroleum Corporation................. 2,851,913
15,500 Royal Dutch Petroleum Company.................... 2,793,875
24,000 Texaco, Inc. .................................... 2,532,000
83,700 Union Pacific Resources Group.................... 2,270,363
-------------
17,351,147
-------------
PAPER & FOREST PRODUCTS - 1.88%
124,000 Asia Pulp & Paper Company, Ltd. ................. 1,658,500
29,000 Boise Cascade Corporation........................ 964,250
45,500 Weyerhaeuser Company............................. 2,081,625
-------------
4,704,375
-------------
REAL ESTATE INVESTMENT TRUSTS - 1.56%
62,826 Bank of America Realty........................... 1,476,411
41,000 Health Care Property Investors, Inc. ............ 1,358,125
35,600 Wellsford Residential Property Trust............. 1,054,650
-------------
3,889,186
-------------
RETAIL SALES - 1.63%
76,000 Intimate Brands, Inc. ........................... 1,415,500
64,700 Fred Meyer, Inc., Class A*....................... 2,660,788
-------------
4,076,288
-------------
See accompanying notes to financial statements.
<PAGE>
MARKET
SHARES VALUE
- ------------ COMMON STOCKS (continued) ------------
TOBACCO - 0.78%
49,500 Phillip Morris Companies, Inc. .................. $ 1,949,062
-------------
TRANSPORTATION SERVICES - 3.52%
159,500 Expeditors International of Washington, Inc. .... 3,987,500
62,050 Sabre Group Holdings, Inc. ...................... 1,590,031
50,300 Union Pacific Corporation........................ 3,206,625
-------------
8,784,156
-------------
UTILITIES-GAS AND ELECTRIC - 0.95%
32,000 Enron Corporation................................ 1,204,000
31,900 Portland General Corporation..................... 1,164,350
-------------
2,368,350
-------------
UTILITIES-TELECOMMUNICATIONS - 3.03%
90,850 AT&T Corporation................................. 3,043,475
130,000 Aliant Communications, Inc. ..................... 2,031,250
10,400 Frontier Corporation............................. 165,100
51,000 GTE Corporation.................................. 2,339,625
-------------
7,579,450
-------------
TOTAL COMMON STOCKS (cost $175,427,665).......... 233,339,946
-------------
CONVERTIBLE PREFERRED STOCKS-3.79%
37,200 Integon Corporation.............................. 1,450,800
10,000 Microsoft Preferred.............................. 856,250
75,800 Pacificare Health Systems, Inc. ................. 2,368,750
40,100 Penncorp Financial Group......................... 3,208,000
268,400 RJR Nabisco Holding Company, Series C............ 1,576,850
-------------
TOTAL CONVERTIBLE PREFERRED STOCK
(cost $9,917,869).............................. 9,460,650
-------------
PRINCIPAL
AMOUNT CONVERTIBLE BOND-0.58%
- ------------
$ 925,000 Alberto Culver Corporation, 5.50%, due 06/30/2005
(cost $1,419,468).............................. 1,437,219
-------------
U.S. TREASURY BOND-2.08%
5,550,000 6.50%, due 11/15/2026 (cost $5,151,899).......... 5,208,331
-------------
See accompanying notes to financial statements.
<PAGE>
PRINCIPAL MARKET
AMOUNT REPURCHASE AGREEMENT-0.25% VALUE
- ------------ ------------
$ 621,000 Repurchase agreement with Goldman Sachs,
collateralized by a U.S. Treasury Note, in a
joint trading account at 5.15%, dated 04/30/1997,
due 05/01/1997 with a maturity value of $621,089
(cost $621,000) $ 621,000
-------------
TOTAL INVESTMENTS (cost $192,537,901)............ 250,067,146
Other assets ($1,205,373)
less liabilities ($1,376,651).................. (171,278)
--------------
NET ASSETS....................................... $249,895,868
==============
*Non-income producing security
FEDERAL INCOME TAX INFORMATION:
Net unrealized appreciation of investments at April 30, 1997, of $57,529,245
based on aggregate cost of $192,537,901 was composed of gross appreciation of
$62,243,058 for investments having an excess of value over cost and gross
depreciation of $4,713,813 for investments having an excess of cost over value.
OTHER INFORMATION:
Purchases and sales of investment securities, other than short-term investments,
aggregated $91,928,969 and $66,608,115, respectively, during the six months
ended April 30, 1997, including purchases and sales of U.S. government
securities of $6,438,451 and $611,203.
See accompanying notes to financial statements.
<PAGE>
COMPOSITE
NORTHWEST
FUND, INC.
PORTFOLIO OF
INVESTMENTS
IN SECURITIES
APRIL 30, 1997
COMPOSITE NORTHWEST FUND PORTFOLIO (UNAUDITED)
MARKET
SHARES VALUE
- ------------ COMMON STOCKS-93.34% ------------
AEROSPACE/DEFENSE - 5.79%
102,837 Boeing Company................................... $ 10,142,299
56,675 Precision Castparts Corporation .............. 3,032,113
-------------
13,174,412
-------------
APPAREL & SHOES - 2.64%
106,700 Nike, Inc., Class B.............................. 6,001,875
-------------
BANK/SAVINGS & LOANS - 9.84%
163,800 First Savings Bank of Washington Bancorp, Inc. .. 3,439,800
24,302 Horizon Financial Corporation.................... 340,228
76,700 Interwest Bancorp, Inc. ......................... 2,185,950
136,300 Klamath First Bancorp, Inc. ..................... 2,419,325
102,900 Sterling Financial Corporation*.................. 1,620,675
138,710 US Bancorp....................................... 7,923,809
186,188 Washington Federal, Inc. ........................ 4,468,512
-------------
22,398,299
-------------
BASIC INDUSTRY - 0.21%
37,500 Morrison Knudsen Corporation*.................... 468,750
-------------
BUSINESS SERVICES - 0.83%
145,800 Barrett Business Services, Inc.*................. 1,895,400
-------------
CAPITAL GOODS - 0.88%
28,510 PACCAR, Inc. .................................... 1,992,136
-------------
COMPUTER SOFTWARE - 11.21%
160,700 CFI Proservices, Inc.*........................... 2,410,500
580,900 Mentor Graphics Corporation*..................... 4,102,606
116,450 Microsoft Corporation*........................... 14,148,675
230,800 Wall Data, Inc.*................................. 4,832,375
-------------
25,494,156
-------------
COMPUTER SYSTEMS - 5.36%
193,400 In Focus Systems, Inc.*.......................... 3,457,025
241,200 Planar Systems, Inc.*............................ 2,442,150
82,700 Radisys Corporation*............................. 2,429,313
243,400 Sequent Computer Systems, Inc.*.................. 3,863,975
-------------
12,192,463
-------------
ELECTRICAL EQUIPMENT - 1.83%
53,372 Fluke Corporation................................ 2,408,411
115,400 Merix Corporation*............................... 1,759,850
-------------
4,168,261
-------------
See accompanying notes to financial statements.
<PAGE>
COMPOSITE NORTHWEST FUND PORTFOLIO (UNAUDITED) (CONTINUED)
MARKET
SHARES VALUE
- ------------ COMMON STOCKS (continued) ------------
ELECTRONICS - GENERAL - 7.23%
128,500 Electro Scientific Industries, Inc.*............. $ 3,581,938
340,200 FEI Company*..................................... 3,253,162
130,700 Flir Systems, Inc.*.............................. 2,042,188
61,200 Itron, Inc.*..................................... 1,285,200
116,200 Tektronix, Inc. ................................. 6,289,325
-------------
16,451,813
-------------
ELECTRONICS - SEMICONDUCTORS/COMPONENTS -3.47%
16,800 Intel Corporation................................ 2,572,500
58,800 Lattice Semiconductor Corporation*............... 3,285,450
14,400 Micron Technology, Inc.*......................... 507,600
51,500 Triquint Semiconductor, Inc.*.................... 1,532,125
-------------
7,897,675
-------------
FOODS & FOOD RETAILERS - 3.73%
178,200 Albertson's, Inc. ............................... 5,880,600
65,041 Quality Food Centers, Inc.*...................... 2,609,770
-------------
8,490,370
-------------
HEALTHCARE PRODUCTS -6.37%
92,000 Advanced Technology Laboratories, Inc.*.......... 3,047,500
506,850 ICOS Corporation*................................ 3,516,272
169,300 Immunex Corporation*............................. 4,719,238
155,500 NeoRx Corporation*............................... 602,562
301,800 Ostex International, Inc.*....................... 754,500
52,800 Pathogenesis Corporation*........................ 1,386,000
22,200 SpaceLabs Medical, Inc.*......................... 466,200
-------------
14,492,272
-------------
HEALTHCARE SERVICES - 2.30%
97,760 Foundation Health Systems, Inc., Class A*........ 2,639,520
32,300 Pacificare Health Systems, Inc., Class B*........ 2,592,075
-------------
5,231,595
-------------
INSURANCE - 2.29%
130,400 Safeco Corporation............................... 5,216,000
-------------
LODGING & RESTAURANTS - 0.98%
75,000 Starbucks Corporation*........................... 2,240,625
-------------
MACHINERY - 1.49%
131,950 Flow International Corporation*.................. 1,171,056
237,400 Greenbrier Companies, Inc........................ 2,225,625
-------------
3,396,681
-------------
METALS & MINING -4.08%
291,100 Oregon Metallurgical Corporation*................ 6,695,300
19,900 Oregon Steel Mills, Inc. ........................ 328,350
101,600 Schnitzer Steel Industries Inc., Class A......... 2,260,600
-------------
9,284,250
-------------
See accompanying notes to financial statements.
<PAGE>
MARKET
SHARES VALUE
- ------------ COMMON STOCKS (continued) ------------
PAPER & FOREST PRODUCTS - 6.12%
31,633 Boise Cascade Corporation........................ $ 1,051,797
15,100 Georgia-Pacific Corporation...................... 1,177,800
42,350 Longview Fibre Company........................... 682,894
101,288 Louisiana Pacific Corporation.................... 1,886,489
51,700 TJ International................................. 1,150,325
89,800 Weyerhaeuser Company............................. 4,108,350
60,800 Willamette Industries, Inc. ..................... 3,876,000
-------------
13,933,655
-------------
REAL ESTATE INVESTMENT TRUSTS - 3.26%
143,800 Pacific Gulf Properties, Inc. ................... 3,037,775
64,300 Shurgard Storage Centers, Inc. .................. 1,687,875
91,100 Wellsford Residential Property Trust............. 2,698,838
-------------
7,424,488
-------------
RETAIL SALES - 8.36%
229,100 BMC West Corporation*............................ 2,462,825
252,825 Costco Companies, Inc.*.......................... 7,300,322
23,500 Hollywood Entertainment Corporation*............. 502,312
212,700 Fred Meyer, Inc., Class A*....................... 8,747,287
-------------
19,012,746
-------------
TRANSPORTATION SERVICES - 7.39%
164,800 Airborne Freight Corporation..................... 5,788,600
151,300 Alaska Air Group, Inc.*.......................... 3,763,588
290,400 Expeditors International of Washington, Inc. .... 7,260,000
-------------
16,812,188
-------------
UTILITIES - GAS & ELECTRIC - 1.36%
84,800 Portland General Corporation..................... 3,095,200
-------------
UTILITIES - TELECOMMUNICATIONS - 1.32%
160,500 General Communication, Inc.*..................... 1,083,375
187,300 Western Wireless Corporation, Class A*........... 1,919,825
-------------
3,003,200
-------------
TOTAL COMMON STOCKS (cost $150,490,596).......... 223,768,510
-------------
See accompanying notes to financial statements.
<PAGE>
COMPOSITE NORTHWEST FUND PORTFOLIO (UNAUDITED)
PRINCIPAL
AMOUNT REPURCHASE AGREEMENT-2.16%
- ------------
$4,922,000 Repurchase agreement with Goldman Sachs,
collateralized by a U.S. Treasury Note,
in a joint trading account at 5.15%,
dated 04/30/1997, due 05/01/1997 with a
maturity value of $4,922,704 (cost $4,922,000)... 4,922,000
-------------
TOTAL INVESTMENTS (cost $155,412,596)............ 228,690,510
Other assets ($489,466)
less liabilities ($1,629,761).................. (1,140,295)
--------------
NET ASSETS....................................... $227,550,215
==============
*Non-income producing security
FEDERAL INCOME TAX INFORMATION:
Net unrealized appreciation of investments at April 30, 1997, of $73,277,914,
based on aggregate cost of $155,412,596, was composed of gross appreciation of
$85,001,386 for investments having an excess of value over cost and gross
depreciation of $11,723,472 for investments having an excess of cost over value.
OTHER INFORMATION:
Purchases and sales of investment securities, other than short-term investments,
aggregated $47,110,313 and $41,960,459, respectively, during the six months
ended April 30, 1997.
See accompanying notes to financial statements.
<PAGE>
FINANCIAL
INFORMATION
APRIL 30, 1997
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
COMPOSITE COMPOSITE COMPOSITE
BOND & STOCK GROWTH & INCOME NORTHWEST
FUND, INC. FUND FUND, INC.
------------ --------------- -------------
<S> <C> <C> <C>
ASSETS
Investments at market (identified cost $263,879,468,
$192,537,901, and $155,412,596, respectively) $307,041,901 $250,067,146 $228,690,510
Cash........................................... 11,116 11,695 11,727
Prepaid expense................................ 20,524 18,231 16,846
Receivable for:
Investment securities sold................... 1,294,289 252,484 -
Interest..................................... 1,745,611 183,558 704
Sale of Fund's shares........................ 259,008 489,037 313,589
Dividends.................................... 424,425 250,368 146,600
------------- --------------- -------------
Total assets................................... 310,796,874 251,272,519 229,179,976
------------- --------------- -------------
LIABILITIES
Payable for:
Investment securities purchased.............. 1,335,125 963,747 1,194,700
Repurchase of Fund's shares.................. 244,283 237,976 292,412
Accrued expenses and other payables.......... 220,703 174,928 142,649
------------- --------------- -------------
Total liabilities.............................. 1,800,111 1,376,651 1,629,761
------------- --------------- -------------
NET ASSETS .................................... $308,996,763 $249,895,868 $227,550,215
============== =============== =============
COMPOSITION OF NET ASSETS
Capital stock, at par.......................... $ 10,582 $174,361,394 $ 110
Additional paid-in capital..................... 249,155,363 177,485,081 136,443,065
Undistributed net investment income (loss)..... 959,261 82,956 (4,381)
Accumulated net realized gain.................. 15,709,124 14,797,192 17,833,507
Net unrealized appreciation of investments..... 43,162,433 57,529,245 73,277,914
------------- --------------- -------------
NET ASSETS .................................... $308,996,763 $249,895,868 $227,550,215
============== =============== =============
SHARES OUTSTANDING............................. 21,164,187 13,935,713 11,006,221
============== =============== =============
Class A Shares:
Net asset value and redemption price per share
(net assets of $277,505,599, $215,533,980, and
$205,508,967 for 19,003,496, 12,009,817, and
9,922,336 shares outstanding, respectively) $14.60 $17.95 $20.71
============== =============== =============
Offering price per share
(100/95.5 of net asset value per share) .... $15.29 $18.80 $21.69
============== =============== =============
Class B Shares:
Net asset value, offering price and redemption
price per share (net assets of $31,491,164,
$34,361,888, and $22,041,248 for 2,160,691,
1,925,896, and 1,083,885 shares outstanding,
respectively) .............................. $14.57 $17.84 $20.34
============== =============== =============
On sales of $25,000 or more, the offering price of Class A is reduced. A
contingent deferred sales charge may be imposed on redemptions of Class B
shares.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
COMPOSITE COMPOSITE COMPOSITE
BOND & STOCK GROWTH & INCOME NORTHWEST
FUND, INC. FUND FUND, INC.
------------ --------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income:
Dividends..................................................... $ 2,755,799 $ 2,099,383 $ 1,089,246
Interest...................................................... 3,929,607 79,018 92,555
------------ ------------ ------------
Total income.................................................... 6,685,406 2,178,401 1,181,801
------------ ------------ ------------
Expenses:
Management fees............................................... 892,166 714,834 663,425
Distribution expenses - Class A............................... 320,140 240,047 226,923
Distribution expenses - Class B............................... 134,352 144,236 89,402
Shareholder servicing - Class A............................... 102,696 94,344 146,077
Shareholder servicing - Class B............................... 16,738 25,461 23,852
Postage, printing and office expense.......................... 80,158 74,166 70,688
Registration and filing fees.................................. 27,979 38,124 16,442
Custodial fees................................................ 20,916 20,556 14,424
Auditing and legal fees....................................... 7,217 6,607 6,851
Directors' fees............................................... 4,676 4,676 4,676
Insurance..................................................... 1,604 1,251 1,240
Expense reimbursement......................................... - - (74,490)
------------ ------------ ------------
Total expenses.................................................. 1,608,642 1,364,302 1,189,510
Fees paid indirectly............................................ (4,085) (4,155) (1,882)
------------ ------------ ------------
Net expenses.................................................... 1,604,557 1,360,147 1,187,628
------------ ------------ ------------
Net investment income (loss).................................... 5,080,849 818,254 (5,827)
------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Realized gain from investment transactions...................... 15,839,638 15,241,364 17,919,611
Unrealized appreciation of investments during the period........ 630,386 8,457,148 11,418,818
------------ ------------ ------------
Net realized and unrealized gain on investments................. 16,470,024 23,698,512 29,338,429
------------ ------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS....................................... $21,550,873 $24,516,766 $29,332,602
============ ============ ============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
COMPOSITE BOND & STOCK COMPOSITE GROWTH & COMPOSITE NORTHWEST
FUND, INC. INCOME FUND FUND, INC.
------------------------- ------------------------- ---------------------------
SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR
APRIL 30, ENDED APRIL 30, ENDED APRIL 30, ENDED
1997 OCTOBER 31, 1997 OCTOBER 31, 1997 OCTOBER 31,
(UNAUDITED) 1996 (UNAUDITED) 1996 (UNAUDITED) 1996
------------ ------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss)........ $ 5,080,849 $ 9,075,835 $ 818,254 $ 2,016,068 $ (5,827) $ 197,430
Realized gain from
investment transactions........... 15,839,638 17,743,293 15,241,364 14,044,609 17,919,611 18,297,956
Unrealized appreciation of
investments during the period..... 630,386 8,484,821 8,457,148 18,741,419 11,418,818 5,491,521
------------ ------------ ------------ ------------ ------------- ------------
Net increase in net assets
resulting from operations......... 21,550,873 35,303,949 24,516,766 34,802,096 29,332,602 23,986,907
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income:
Class A......................... (5,039,783) (8,283,363) (984,921) (1,970,751) - (276,041)
Class B......................... (403,807) (404,212) (25,831) (63,860) - -
Distributions from net capital
gains from investment transactions:
Class A......................... (16,337,631) (4,933,381) (12,746,652) (4,850,669) (16,815,469) (1,664,400)
Class B......................... (1,513,284) (193,534) (1,708,904) (350,319) (1,448,706) (80,343)
NET CAPITAL
SHARE TRANSACTIONS
Class A......................... 23,680,761 26,512,465 29,269,303 22,518,259 18,544,086 (2,041,396)
Class B......................... 9,402,068 13,691,710 10,394,211 11,596,203 6,578,284 6,398,405
------------ ------------ ------------ ------------ ------------- ------------
Total increase in net assets........ 31,339,197 61,693,634 48,713,972 61,680,959 36,190,797 26,323,132
NET ASSETS
Beginning of the period............. 277,657,566 215,963,932 201,181,896 139,500,937 191,359,418 165,036,286
------------ ------------ ------------- ------------ ------------- ------------
End of the period................... $308,996,763 $277,657,566 $249,895,868 $201,181,896 $227,550,215 $191,359,418
============ ============ ============ ============ ============= =============
UNDISTRIBUTED NET INVESTMENT
INCOME (LOSS) AT END OF PERIOD ..... $ 959,261 $ 1,322,002 $ 82,956 $ 275,454 $ (4,381) $ 1,446
============ ============ ============ ============ ============= =============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPOSITE BOND & FINANCIAL HIGHLIGHTS
STOCK FUND, INC.
CLASS A CLASS B
--------------------------------------------------------------- ------------------------------------------
SIX MONTHS ELEVEN MONTHS SIX MONTHS MARCH 30
ENDED ENDED ENDED YEARS ENDED 1994 TO
APRIL 30, 1997 YEARS ENDED OCTOBER 31, OCTOBER 31, APRIL 30, 1997 OCTOBER 31, OCTOBER 31,
(UNAUDITED) 1996 1995 1994 1993 1992(4) (UNAUDITED) 1996 1995 1994(5)
--------------- ------- ------- ------- ------- -------- -------------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ......... $14.71 $13.48 $11.53 $12.23 $11.27 $11.01 $14.69 $13.47 $11.51 $11.49
INCOME FROM ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS
Net investment income....... 0.25 0.52 0.50 0.46 0.48 0.44 0.19 0.41 0.39 0.18
Net realized and
unrealized gain (loss) ..... 0.85 1.53 2.02 (0.57) 1.06 0.80 0.84 1.53 2.03 0.04
Total from investment ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
operations............... 1.10 2.05 2.52 (0.11) 1.54 1.24 1.03 1.94 2.42 0.22
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends (from net
investment income).......... (0.27) (0.50) (0.49) (0.44) (0.46) (0.53) (0.21) (0.40) (0.38) (0.20)
Distributions (from
realized capital gains)..... (0.94) (0.32) (0.08) (0.15) (0.12) (0.45) (0.94) (0.32) (0.08) -
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions....... (1.21) (0.82) (0.57) (0.59) (0.58) (0.98) (1.15) (0.72) (0.46) (0.20)
NET ASSET VALUE, ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
END OF PERIOD ............... $14.60 $14.71 $13.48 $11.53 $12.23 $11.27 $14.57 $14.69 $13.47 $11.51
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN (1) ............ 3.58% 15.66% 22.55% -0.90% 13.99% 11.92% 3.26% 14.73% 21.60% 1.94%
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of period ($1,000's).... $277,506 $255,414 $208,592 $191,615 $180,281 $102,523 $31,491 $22,243 $7,372 $3,362
Ratio of expenses to
average net assets(2) ...... 1.02%(6) 0.98% 1.02% 1.06% 1.13% 1.13%(6) 1.83%(6) 1.87% 1.84% 1.77%(6)
Ratio of net income to
average net assets.......... 3.52%(6) 3.68% 3.98% 3.97% 4.01% 4.30%(6) 2.72%(6) 2.80% 3.10% 3.22%(6)
Portfolio turnover rate .... 55%(6) 46% 32% 25% 19% 15%(6) 55%(6) 46% 32% 25%
Average commission
paid(3) .................... $ 0.0571 $0.0632 - - - - $ 0.0571 $ 0.0632 - -
(1) Total returns do not reflect a sales charge and are not annualized.
(2) Ratio of expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(3) Average commission paid disclosure beginning in fiscal 1996.
(4) Change in Fund's fiscal year-end.
(5) From the commencement of offering of Class B shares.
(6) Annualized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPOSITE GROWTH &
INCOME FUND FINANCIAL HIGHLIGHTS
CLASS A CLASS B
--------------------------------------------------------------- ------------------------------------------
SIX MONTHS SIX MONTHS MARCH 30
ENDED ENDED YEARS ENDED 1994 TO
APRIL 30, 1997 YEARS ENDED OCTOBER 31, APRIL 30, 1997 OCTOBER 31, OCTOBER 31,
(UNAUDITED) 1996 1995 1994 1993 1992 (UNAUDITED) 1996 1995 1994(4)
--------------- ------- ------- ------- ------- ------- -------------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ......... $17.26 $14.65 $12.71 $12.81 $12.02 $11.86 $17.17 $14.59 $12.68 $12.00
INCOME FROM ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS
Net investment income....... 0.07 0.20 0.22 0.18 0.21 0.29 - 0.06 0.11 0.05
Net realized and
unrealized gain ............ 1.92 3.16 2.31 0.85 1.10 0.80 1.90 3.14 2.31 0.69
Total from investment ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
operations................ 1.99 3.36 2.53 1.03 1.31 1.09 1.90 3.20 2.42 0.74
LESS DISTRIBUTIONS ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Dividends (from net
investment income).......... (0.09) (0.21) (0.19) (0.18) (0.21) (0.34) (0.02) (0.08) (0.11) (0.06)
Distributions (from
realized capital gains)..... (1.21) (0.54) (0.40) (0.95) (0.31) (0.59) (1.21) (0.54) (0.40) -
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions....... (1.30) (0.75) (0.59) (1.13) (0.52) (0.93) (1.23) (0.62) (0.51) (0.06)
NET ASSET VALUE, ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
END OF PERIOD ............... $17.95 $17.26 $14.65 $12.71 $12.81 $12.02 $17.84 $17.17 $14.59 $12.68
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN (1) ............ 5.45% 23.61% 20.87% 8.55% 11.06% 9.94% 5.11% 22.55% 19.95% 6.14%
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of period ($1,000's).... $ 215,534 $178,331 $130,630 $102,837 $95,229 $81,102 $34,362 $22,851 $ 8,871 $ 2,082
Ratio of expenses to
average net assets(2) ...... 1.09%(5) 1.03% 1.07% 1.10% 1.17% 1.10% 1.93%(5) 1.94% 1.91% 1.85%(5)
Ratio of net income to
average net assets.......... 0.82%(5) 1.26% 1.62% 1.45% 1.67% 2.37% -0.02%(5) 0.34% 0.69% 0.65%(5)
Portfolio turnover rate .... 59%(5) 52% 39% 34% 54% 18% 59%(5) 52% 39% 34%
Average commission
paid(3) .................... $ 0.0600 $ 0.0654 - - - - $ 0.0600 $0.0654 - -
(1) Total returns do not reflect a sales charge and are not annualized.
(2) Ratio of expenses to average net assets includes expenses paid indirectly beginning in fiscal year 1995.
(3) Average commission paid disclosure beginning in fiscal 1996.
(4) From the commencement of offering of Class B shares.
(5) Annualized.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
COMPOSITE NORTHWEST FUND, INC. FINANCIAL HIGHLIGHTS (CONTINUED)
CLASS A CLASS B
--------------------------------------------------------------- ------------------------------------------
SIX MONTHS SIX MONTHS MARCH 30
ENDED ENDED YEARS ENDED 1994 TO
APRIL 30, 1997 YEARS ENDED OCTOBER 31, APRIL 30, 1997 OCTOBER 31, OCTOBER 31,
(UNAUDITED) 1996 1995 1994 1993 1992 (UNAUDITED) 1996 1995 1994(4)
--------------- ------- ------- ------- ------- ------- -------------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ......... $19.69 $17.40 $14.30 $14.50 $14.04 $13.45 $19.45 $17.31 $14.28 $14.42
INCOME FROM ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
INVESTMENT OPERATIONS
Net investment income....... 0.01 0.03 0.07 0.08 0.07 0.08 (0.02) (0.08) (0.05) (0.02)
Net realized and
unrealized gain ............ 2.89 2.47 3.10 0.35 0.46 0.69 2.79 2.40 3.08 (0.12)
Total from investment ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
operations................ 2.90 2.50 3.17 0.43 0.53 0.77 2.77 2.32 3.03 (0.14)
LESS DISTRIBUTIONS ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Dividends (from net
investment income).......... - (0.03) (0.07) (0.08) (0.07) (0.07) - - - -
Distributions (from
realized capital gains)..... (1.88) (0.18) - (0.55) - (0.11) (1.88) (0.18) - -
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions....... (1.88) (0.21) (0.07) (0.63) (0.07) (0.18) (1.88) (0.18) - -
NET ASSET VALUE, ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
END OF PERIOD ............... $20.71 $19.69 $17.40 $14.30 $14.50 $14.04 $20.34 $19.45 $17.31 $14.28
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL RETURN (1) ............ 5.39% 14.54% 22.24% 2.97% 3.82% 5.77% 5.12% 13.54% 21.25% -0.97%
RATIOS/SUPPLEMENTAL DATA
Net assets,
end of period ($1,000's).... $205,509 $176,706 $157,953 $152,622 $168,840 $167,115 $22,041 $14,653 $7,083 $3,102
Ratio of expenses to
average net assets(2) ...... 1.05%(5) 1.08% 1.10% 1.09% 1.09% 1.11% 1.93%(5) 1.98% 1.95% 1.96%(5)
Ratio of net income to
average net assets.......... 0.07%(5) 0.16% 0.44% 0.51% 0.48% 0.53% -0.81%(5) -0.76% -0.45% -0.39%(5)
Portfolio turnover rate .... 20%(5) 42% 9% 11% 8% 4% 20%(5) 42% 9% 11%
Average commission
paid(3) .................... $ 0.0563 $0.0665 - - - - $0.0563 $0.0665 - -
NOTE: Figures representing per-share amounts have been adjusted to retroactively reflect a 2 for 1 stock split effective
December 29, 1992.
(1) Total returns do not reflect a sales charge and are not annualized.
(2) Ratio of expenses to average net assets includes expenses paid indirectly beginning in fiscal 1995.
(3) Average commission paid disclosure beginning in fiscal 1996.
(4) From the commencement of offering of Class B shares.
(5) Annualized.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - ACCOUNTING POLICIES
Composite Bond & Stock Fund, Inc., Composite Equity Series, Inc., and
Composite Northwest Fund, Inc., collectively the Funds, 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.
Each Fund offers both Class A and Class B shares. The two classes of shares
differ in their respective sales charges, shareholder servicing fees, and
distribution and service fees.
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. Each Fund requires the custodian to take possession, to have legally
segregated in the Federal Reserve Book Entry System or to have segregated
within the custodian's vault, all securities held as collateral for
repurchase agreements. The market value of the underlying securities is
required to be at least 102% of the resale price at the time of purchase.
If the seller of the agreement defaults and the value of collateral
declines, or if the seller enters an insolvency proceeding, realization
of the value of the collateral by the Fund may be delayed or limited.
c. Income, expenses (other than those attributable to a specific class) and
gains and losses are allocated daily to each class based on the value of
shares outstanding. 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.
d. 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.
e. Dividends and distributions to shareholders are recorded on the ex-dividend
date.
f. 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.
g. 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. Income
dividends and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatment for deferral of wash sales.
h. Custodial fees have been increased by $4,085, $4,155, and $1,882, for the
Bond & Stock Fund, Inc., the Growth & Income Fund, and the Northwest Fund,
Inc., respectively. Such amounts relate to "expense offset arrangements."
The Funds could have otherwise employed the assets to produce income if
they had not entered into such arrangements. In accordance with the
regulations, such amounts are added to net custodial fees and then
reflected as a deduction, "fees paid indirectly," to derive net expenses.
There were no "expense offset arrangements" other than custodial fees.
i. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
NOTE 2 - COVERED CALL OPTIONS WRITTEN
Each Fund may write listed covered call options in which premiums received
are recorded as a liability which is marked to market to reflect the current
value of options written. A covered call option gives the holder the right to
buy the underlying security, which each Fund owns, at any time during the option
period at a predetermined exercise price. The risk in writing a covered call
option is that each Fund gives up the opportunity to participate in any increase
in price of the underlying security beyond the exercise price. Proceeds from
the call options exercised are increased by the amount of premium received. If
an option expires or is cancelled in a closing transaction, each Fund will
realize a gain or loss depending on whether the cost of the closing transaction,
if any, is less than or greater than the premium originally received.
Transactions in written covered call options during the six months ended
April 30, 1997, were as follows:
COMPOSITE COMPOSITE
BOND & STOCK GROWTH & INCOME
FUND, INC. FUND
-------------------- --------------------
NUMBER OF NUMBER OF
CONTRACTS PREMIUMS CONTRACTS PREMIUMS
--------- -------- --------- --------
Outstanding at October 31, 1996..... 150 $59,473 305 $76,899
Written............................. 150 18,224 130 28,426
Exercised........................... (150) (18,224) (315) (72,996)
Expired............................. (150) (59,473) (120) (32,329)
--------- -------- --------- --------
Outstanding at April 30, 1997....... 0 $59,470 0 $59,470
========= ======== ========= ========
NOTE 3 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
The amounts of fees and expenses described below are shown on each Fund's
statement of operations. Composite Research & Management Co. (the "Adviser")
manages each Fund, Murphey Favre, Inc., (the "Distributor") is the principal
underwriter, and Murphey Favre Securities Services, Inc. (the "Transfer Agent")
is the transfer and shareholder servicing agent. All are affiliates of
Washington Mutual Bank and Washington Mutual fsb and are subsidiaries of
Washington Mutual, Inc.
Management fees were paid by each Fund to the Adviser. 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 Fund is equal to an annual rate of .625% of the Fund's average daily
net assets. Should these assets of the Fund grow to greater than $500 million,
the fee would be decreased. Also, under terms of the Northwest Fund's management
agreement, the Adviser will reimburse Northwest should Fund expenses (excluding
taxes, interest, and portfolio brokerage, and the .75% Class B 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 six months ended
April 30, 1997, the Northwest Fund was reimbursed $74,490 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 the Transfer Agent for services
incidental to issuance and transfer of shares, maintaining shareholder lists,
and issuing and mailing Fund distributions and reports. The authorized monthly
shareholder servicing fees are $1.25 and $1.35 ($1.35 and $1.45 prior to April
1, 1997) per Class A and Class B share accounts, respectively.
Distribution expenses were paid to the Distributor in accordance with
separate distribution plans for Class A and Class B. Each Funds' Board of
Directors adopted the plans pursuant to Rule 12b-1 of the Investment Company Act
of 1940. The Class A distribution plan provides that each Fund will reimburse
the Distributor 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 Fund's Class A shares, including payment to brokers. The Class B
distribution plan provides that each Fund will pay the Distributor a
distribution fee equal to 0.75% and a service fee of 0.25% of the average daily
net assets attributable to Class B shares annually.
For the six months ended April 30, 1997, commissions (sales charges paid by
<PAGE>
investors) on the purchases of Class A shares totaled $425,057, $446,612, and
$320,739, of which $358,800, $384,318, and $247,900 was retained by the
Distributor in the Bond & Stock Fund, the Growth & Income Fund, and the
Northwest Fund, respectively. For the six months ended April 30, 1997, the
Distributor received contingent deferred sales charges of $22,891, $29,008, and
$16,835 for the Bond & Stock Fund, the Growth & Income Fund, and the Northwest
Fund, respectively, upon redemption of Class B shares as reimbursement for sales
commissions advanced by the Distributor at the time of such sales.
NOTE 4 - CAPITAL STOCK
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
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, 1997 OCTOBER 31, APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
-------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Shares
Sold.................................................... 1,604,484 3,502,594 617,228 1,071,938
Issued for reinvestment of dividends and capital gains.. 1,431,664 551,925 132,107 28,182
------------- ----------- ------------ -----------
3,036,148 4,054,519 749,335 1,100,120
Reacquired.............................................. (1,394,458) (2,170,504) (103,315) (132,719)
------------- ----------- ------------ -----------
Net increase............................................ 1,641,690 1,884,015 646,020 967,401
============= =========== ============ ===========
Amount
Sold.................................................... $23,393,612 $44,698,687 $9,005,996 $14,984,826
Issued for reinvestment of dividends and capital gains.. 20,614,635 12,571,523 1,898,871 592,143
------------- ----------- ------------ -----------
44,008,247 57,270,210 10,904,867 15,576,969
Reacquired.............................................. (20,327,486) (30,757,745) (1,502,799) (1,885,259)
------------- ----------- ------------ -----------
Net increase............................................ $23,680,761 $26,512,465 $9,402,068 $13.691.710
============= =========== ============ ===========
</TABLE>
<PAGE>
NOTE 4 - CAPITAL STOCK (continued)
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
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, 1997 OCTOBER 31, APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
-------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Shares
Sold.................................................... 1,523,244 2,162,456 591,275 781,671
Issued for reinvestment of dividends and capital gains.. 768,078 424,694 101,225 27,517
-------------- ----------- -------------- -----------
2,291,322 2,587,150 692,500 809,188
Reacquired.............................................. (615,563) (1,172,395) (97,769) (86,112)
-------------- ----------- -------------- -----------
Net increase............................................ 1,675,759 1,414,755 594,731 723,076
============== =========== ============== ===========
Amount
Sold.................................................... $26,881,909 $34,852,996 $10,387,994 $12,562,783
Issued for reinvestment of dividends and capital gains.. 13,223,096 6,465,408 1,729,449 413,214
-------------- ----------- -------------- -----------
40,105,005 41,318,404 12,117,443 12,975,997
Reacquired.............................................. (10,835,702) (18,800,145) (1,723,232) (1,379,794)
-------------- ----------- -------------- -----------
Net increase............................................ $29,269,303 $22,518,259 $10,394,211 $11,596,203
============== =========== ============== ===========
</TABLE>
COMPOSITE NORTHWEST 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
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------- ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
APRIL 30, 1997 OCTOBER 31, APRIL 30, 1997 OCTOBER 31,
(UNAUDITED) 1996 (UNAUDITED) 1996
-------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Shares
Sold.................................................... 747,437 1,670,374 302,861 384,301
Issued for reinvestment of dividends and capital gains.. 855,423 107,929 74,775 4,603
-------------- ----------- -------------- -----------
1,602,860 1,778.303 377,636 388,904
Reacquired.............................................. (652,900) (1,881,146) (42,279) (44,652)
-------------- ----------- -------------- -----------
Net increase (decrease)................................. 949,960 (102,843) 335,357 344,252
============== =========== ============== ===========
Amount
Sold.................................................... $15,253,896 $(30,838,126 $6,080,341 7,154,271
Issued for reinvestment of dividends and capital gains 16,535,329 1,894,196 1,445,397 80,228
-------------- ----------- -------------- -----------
31,789,225 32,732,322 7,525,738 7,234,499
Reacquired.............................................. (13,245,139) (34,773,718) (947,454) (836,094)
-------------- ----------- -------------- -----------
Net increase (decrease)................................. $18,544,086 $ (2,041,396) $6,578,284 $6,398,405
============== =========== ============== ===========
</TABLE>
<PAGE>
MORE ABOUT THE COMPOSITE GROUP
A RANGE OF OPPORTUNITY
In addition to the growth potential from our equity funds, the Composite
Group also offers investors the opportunity for current income from five
distinct portfolios. An investment in one or more of these portfolios allows you
to more closely match your objectives with sensible investment strategies.
CURRENT INCOME FROM
U.S. GOVERNMENT SECURITIES
Composite U.S. Government Securities is designed and managed to provide a
high level of current income, consistent with safety and liquidity. The Fund
seeks to achieve this objective by investing in a careful selection of
obligations issued or backed by the full faith and credit of the United States
government and in repurchase agreements that are secured by these types of
obligations. Investors should understand that individual shares of the Fund are
not guaranteed by the U.S. government and share values will fluctuate.
HIGH CURRENT INCOME
FROM QUALITY INVESTMENTS
Composite Income Fund seeks to provide an attractive level of current
income primarily from investments in corporate bonds and mortgage-backed
securities. Securities with intermediate-term maturities and carefully selected
credit quality characteristics provide the foundation for this investment
strategy.
HIGH CURRENT TAX-FREE INCOME
Composite Tax-Exempt Bond Fund seeks to provide high current income, free
from federal income tax. The Fund invests in a carefully selected portfolio of
bonds issued by states, counties, cities and other governmental bodies. In
certain circumstances, income may be subject to the alternative minimum tax or
state and local taxes.
TWO WAYS YOUR CASH
CAN EARN ITS KEEP
Composite Cash Management Co. seeks to provide current money market rates
of return, liquidity, and preservation of capital through its two portfolios.
The Money Market portfolio invests in high-quality, short-term money market
obligations of banks, businesses and the U.S. government.
The Tax-Exempt Money Market portfolio invests in high-quality, short-term
municipal bonds that are exempt from federal income tax. Both portfolios are
intended as repositories for future cash needs and offer draft writing
privileges. Shares of the Fund are free of any sales charge.
Please note that an investment in either portfolio is not insured or
guaranteed by the U.S. government, nor can there be any assurance that a stable
net asset value of $1.00 per share can be maintained.
WE'RE HERE TO HELP
If you have questions, we encourage you to visit with your registered
representative or call Composite Customer Service toll-free at 1-800-543-8072,
Monday through Friday, 7:00 a.m. - 6:00 p.m., Pacific Time.
- --------------------------------------------------------------------------------
For more information on any of the Composite Group funds, including charges
and expenses, write or call for a free prospectus. Please read it carefully
before you invest or send money.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
For further information, please contact:
FUND OFFICES
Composite Group of Funds
601 W. Main Avenue, Suite 801
Spokane, WA 99201-0613
Phone: (509) 353-3550
- --------------------------------------------------------------------------------
ADVISER
Composite Research & Management Co.
1201 Third Avenue, Suite 1220 Seattle, WA 98101-3015
DISTRIBUTOR
Murphey Favre, Inc.
1201 Third Avenue, Suite 780 Seattle, WA 98101-3015
CUSTODIAN
Investors Fiduciary Trust Company
127 W. 10th Street Kansas City, MO 64105-1716
INDEPENDENT PUBLIC ACCOUNTANTS
LeMaster & Daniels PLLC
601 W. Riverside Avenue, Suite 800 Spokane, WA 99201-0614
COUNSEL
Paine, Hamblen, Coffin, Brooke & Miller LLP
717 W. Sprague Avenue, Suite 1200 Spokane, WA 99204-0464
OFFICERS
President
William G. Papesh
Executive Vice President
Kerry K. Killinger
Vice Presidents
Gene G. Branson
Douglas D. Springer
Vice President & Treasurer
Monte D. Calvin
Secretary
John T. West
BOARD OF DIRECTORS
Wayne L. Attwood, M.D.
Kristianne Blake
Anne V. Farrell
Michael K. Murphy
William G. Papesh
Daniel L. Pavelich
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.
COMPOSITE GROUP
EQUITY
FUNDS
SEMIANNUAL
REPORT
APRIL 30,
1997
COMPOSITE BOND &
STOCK FUND, INC.
COMPOSITE GROWTH
& INCOME FUND
COMPOSITE
NORTHWEST
FUND, INC.
<PAGE>
EXHIBIT INDEX
Composite Northwest Fund, Inc.
811-4740
I. Financial Data Schedule - Class A Shares
II. Financial Data Schedule - Class B Shares
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S SEMIANNUAL REPORT AND FORM N-SAR WHICH ARE ON FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH DOCUMENTS.
</LEGEND>
<CIK> 0000796533
<NAME> COMPOSITE NORTHWEST FUND, INC.
<SERIES>
<NUMBER> 001
<NAME> CLASS A
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 155,412,596
<INVESTMENTS-AT-VALUE> 228,690,510
<RECEIVABLES> 460,893
<ASSETS-OTHER> 28,573
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 229,179,976
<PAYABLE-FOR-SECURITIES> 1,194,700
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 435,061
<TOTAL-LIABILITIES> 1,629,761
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 136,443,175
<SHARES-COMMON-STOCK> 9,922,336
<SHARES-COMMON-PRIOR> 8,972,376
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 4,381
<ACCUMULATED-NET-GAINS> 17,833,507
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 73,277,914
<NET-ASSETS> 227,550,215
<DIVIDEND-INCOME> 1,089,246
<INTEREST-INCOME> 92,555
<OTHER-INCOME> 0
<EXPENSES-NET> (1,187,628)
<NET-INVESTMENT-INCOME> (5,827)
<REALIZED-GAINS-CURRENT> 17,919,611
<APPREC-INCREASE-CURRENT> 11,418,818
<NET-CHANGE-FROM-OPS> 29,332,602
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (16,815,469)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 747,437
<NUMBER-OF-SHARES-REDEEMED> (652,900)
<SHARES-REINVESTED> 855,423
<NET-CHANGE-IN-ASSETS> 36,190,797
<ACCUMULATED-NII-PRIOR> 1,446
<ACCUMULATED-GAINS-PRIOR> 18,297,956
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 663,425
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,187,628
<AVERAGE-NET-ASSETS> 209,454,817
<PER-SHARE-NAV-BEGIN> 19.69
<PER-SHARE-NII> 0.01
<PER-SHARE-GAIN-APPREC> 2.89
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.88)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.71
<EXPENSE-RATIO> 1.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S SEMIANNUAL REPORT AND FORM N-SAR WHICH ARE ON FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH DOCUMENTS.
</LEGEND>
<CIK> 0000796533
<NAME> COMPOSITE NORTHWEST FUND, INC.
<SERIES>
<NUMBER> 002
<NAME> CLASS B
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1996
<PERIOD-END> APR-30-1997
<INVESTMENTS-AT-COST> 155,412,596
<INVESTMENTS-AT-VALUE> 228,690,510
<RECEIVABLES> 460,893
<ASSETS-OTHER> 28,573
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 229,179,976
<PAYABLE-FOR-SECURITIES> 1,194,700
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 435,061
<TOTAL-LIABILITIES> 1,629,761
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 136,443,175
<SHARES-COMMON-STOCK> 1,083,885
<SHARES-COMMON-PRIOR> 753,528
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 4,381
<ACCUMULATED-NET-GAINS> 17,833,507
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 73,277,914
<NET-ASSETS> 227,550,215
<DIVIDEND-INCOME> 1,089,246
<INTEREST-INCOME> 92,555
<OTHER-INCOME> 0
<EXPENSES-NET> (1,187,628)
<NET-INVESTMENT-INCOME> (5,827)
<REALIZED-GAINS-CURRENT> 17,919,611
<APPREC-INCREASE-CURRENT> 11,418,818
<NET-CHANGE-FROM-OPS> 29,332,602
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,448,706)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 302,861
<NUMBER-OF-SHARES-REDEEMED> (42,279)
<SHARES-REINVESTED> 74,775
<NET-CHANGE-IN-ASSETS> 36,190,797
<ACCUMULATED-NII-PRIOR> 1,446
<ACCUMULATED-GAINS-PRIOR> 18,297,956
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 663,425
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,187,628
<AVERAGE-NET-ASSETS> 209,454,817
<PER-SHARE-NAV-BEGIN> 19.45
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 2.79
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> (1.88)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.34
<EXPENSE-RATIO> 1.93
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
