COMPOSITE
DEFERRED
SERIES,
INC.
SEMIANNUAL
REPORT
JUNE 30, 1995
[LOGO]
INVESTMENT
HIGHLIGHTS
FUND
PORTFOLIOS
FINANCIAL
INFORMATION
FINANCIAL
STATEMENTS
FINANCIAL
HIGHLIGHTS
NOTES TO
FINANCIAL
STATEMENTS
MESSAGE TO ANNUITYHOLDERS
The first half of 1995 ushered in much improved performance from both the
equity and bond markets. The domestic economy shifted into a slower growth mode
and various inflation indicators continued to report good news. As a
consequence, investor confidence drove the stock market to unprecedented levels
and fixed-income shareholders saw their investment regain respectability.
Composite Variable Annuity portfolio managers believe the long-term
prospects for low inflation and interest rates remain favorable. Productivity
gains throughout the American economy continue to contribute to the controlled
inflation environment, and worldwide competition should result in lower U.S.
prices over the long term. Accordingly, we believe the three portfolios of
Composite Deferred Series were not only well-structured for the recent past, but
are positioned to respond positively to the economic environment we see ahead.
The Growth portfolio continues to focus on high-quality companies, most of
which are currently expected to raise their dividends at a rate greater than
inflation. The successful execution of this strategy can help investors retain
their purchasing power by providing growth of income in excess of inflation.
Our newest portfolio, the Northwest 50, consists exclusively of companies
located in the five Northwest states of Washington, Oregon, Idaho, Montana and
Alaska. While all of these companies benefit to some extent from the region's
economy, many are national and international marketers and, hence, are less
dependent on the Northwest's economic well-being. We believe the growth in trade
and technology has helped diversify the regional economy and should provide
further benefits in the years ahead. We expect that the high-quality companies
in the portfolio will, in turn, be major beneficiaries of strength in the
various sectors of the region's diverse industrial base.
The Income portfolio was particularly well-positioned for the declining
interest rate environment of the first half of 1994. The portfolio's average
maturity was at the longer end of its intermediate-maturity range during this
period, which allowed it to capture the full effect of the rate drop through a
rising net asset value. Currently, the portfolio's average maturity is 12.2
years; credit-quality of its holdings are A1/A+, as rated by Moody's and
Standard & Poor's, respectively; and the vast majority of issues (75%) are
non-callable, with another 10% in low-coupon mortgages which are less
susceptible to refinancing.
We believe the many advantages to be found in Composite Variable Annuity
will serve you well in the years ahead. Should you have questions, I urge you to
contact your Murphey Favre representative for helpful information.
Please also know that we appreciate your business and the confidence you
have placed in us.
ROBERT W. ESCHRICH
PRESIDENT AND CHIEF EXECUTIVE OFFICER
WM LIFE INSURANCE COMPANY
INVESTMENT HIGHLIGHTS
GROWTH PORTFOLIO
As reported in the Financial Highlights section on page 18, the Growth
portfolio benefited by being 96% invested in a period in which the stock market
made all-time highs. The portfolio's position in the consumer nondurable,
financial, health care, and capital goods sectors experienced particularly
strong valuation increases during the period. The portfolio's utility and energy
investments, however, generally underperformed during the very strong stock
market of the past six months.
Looking ahead, the portfolio intends to take advantage of an economy that
will likely slow down more than most investors believe. We have overweighted
health care and financial stocks which we believe will perform reasonably well,
and we have underweighted basic industry stocks, whose performance tends to be
tied to the economy. Additionally, Boeing, one of the portfolio's largest
positions and the world's leader in design and production of commercial
aircraft, appears well-positioned to benefit from its sizable new order activity
and anticipated cost reduction measures.
Even though the market ended the period near an all time high, our outlook
remains favorable over the long term. The slow-growth, low-inflation environment
we foresee has historically been positive for stocks.
In pursuit of our investment strategy, the portfolio continues to focus on
high-quality companies, most of which are currently expected to raise their
dividends at a rate greater than inflation. The successful execution of this
strategy can help investors retain their purchasing power by providing growth of
income in excess of inflation. For example, Merck, one of the portfolio's top 10
holdings, has raised its dividend 15% annually over the past five years - far
above recent rates of inflation - and further dividend increases appear likely
in the future.
We believe an important indicator of a company's commitment to success is
the extent to which management has personal ownership of stock in the
organization. Significantly, management ownership of the companies in the
portfolio averages 15% - five times that of the typical Standard & Poor's 500
Stock Index. Legg Mason, Inc., is a good example where insiders own 18% of the
company. Strong inside ownership gives us added confidence that the company will
be managed in the best interests of shareholders.
Over the long term, we continue to believe that investors will be
well-served by our philosophy of purchasing high-quality companies at favorable
valuation levels. This approach is at the heart of our investment philosophy,
balancing risk and return to achieve the primary objectives of the portfolio.
NORTHWEST 50 PORTFOLIO
Performance of the Northwest 50 portfolio improved for the six-month period
ended June 30, 1995, as shown in the Financial Highlights section on page 18.
Strong gains were made by several of the portfolio's largest holdings, but these
returns were muted by weak performance from the retailers and a handful of other
companies.
The Puget Sound economy continued to be impacted by Boeing layoffs which
tend to mute some of the robustness in other sectors of the region. However,
Boeing's stock, something of a bellwether for the regional economy, performed
well as new aircraft orders finally started to appear. We believe that this
bodes well for both the region and the Northwest 50 portfolio over the long run.
Furthermore, the growth in trade and technology have helped diversify the
Northwest economy and should provide further benefits going forward. We expect
that the high-quality companies in the portfolio will, in turn, be major
beneficiaries of strength in the various sectors of the Northwest's diverse
industrial base.
The portfolio experienced strong performance in the technology sector.
Microsoft, the portfolio's largest position, rose 50.2% for the period. The
stock of Fluke Manufacturing rose 40.6% during the period, while Flow
International shares enjoyed a 42% gain. Of the portfolio's technology holdings,
only Sequent Computer and Immunex experienced meaningful declines in stock
valuation, falling 9.8% and 11.9%, respectively.
On the negative side, most of the portfolio's retail stocks underperformed
the market, with Fred Meyer and QFC being the worst performers in the group,
down 12.1% and 15.8%, respectively, for the period.
During this reporting period, Morrison Knudsen was dropped from the
Northwest 50 Index due to weak performance and serious uncertainties about its
financial health. It was replaced with Electro Scientific Industries, Inc.,
based in Portland, Oregon. Electro Scientific designs and manufactures
sophisticated capital equipment for the semiconductor and capacitor industries.
Both industries are enjoying strong sales due to the rapidly increasing demand
for consumer electronics such as computers, cellular telephones, and pagers.
Since its addition to the Index, Electro Scientific's stock has risen 32.3%.
INCOME PORTFOLIO
The Income portfolio experienced solid returns over the past six months as
interest rates fell sharply. This performance, as shown in the Financial
Highlights section on page 19, is in sharp contrast to last year, when the bond
market experienced one of its worst declines in history. The portfolio has taken
advantage of opportunities to add value for shareholders, with significant
success during the first half of this year.
The Income portfolio was positioned correctly for the declining interest
rate environment of the first half. The portfolio's maturity was at the longer
end of its intermediate-maturity range, which offers the potential to capture
the full effect of the rate drop through a rising net asset value. The portfolio
generally uses an intermediate-maturity profile (presently 10.7 years), which
allows us to capture favorable yields for the benefit of our shareholders who
have intermediate to long-term time horizons.
In anticipation of a slightly weaker economy, the corporate bond sector of
the portfolio continued to focus on companies that are less sensitive to
economic activity (i.e., healthcare, oil and gas, insurance, etc.).
Additionally, the position in Treasury notes and bonds was increased. The
average credit-quality of the portfolio's bonds is relatively high at AA3/AA-,
as rated by Moody's and Standard & Poor's, respectively.
The portfolio remains well-structured to avoid the substantial risks of
bonds being called or refinanced in a lower-rate environment. Presently, the
vast majority (83%) of the portfolio is invested in non-callable bonds, with
another 7% in low-coupon mortgages which are less susceptible to refinancing.
The intermediate average maturity of the portfolio, its diversification,
credit-quality, and the evaluation of the relative value within the fixed-income
markets are controlling factors we believe will continue to allow the Income
portfolio to meet its long-term investment objectives.
<TABLE>
COMPOSITE
DEFERRED SERIES, INC.
PORTFOLIO OF
INVESTMENTS
IN SECURITIES
JUNE 30,
1995
GROWTH PORTFOLIO (UNAUDITED)
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- --------- -----------
<S> <C> <C>
U.S. TREASURY NOTE 0.57%
$ 100,000 4.25%, 12/31/1995 (cost $98,533) ............................. $ 99,344
-----------
CONVERTIBLE CORPORATE BONDS 3.43%
BANK/FINANCE 0.11%
15,000 Legg Mason, Inc., 7.00%, due 06/15/2011 ..................... 18,844
-----------
COMMUNICATIONS 0.88%
160,000 LDDS Communications, 5.00%, due 08/15/2003 ................... 152,800
-----------
MEDIA 0.87%
450,000 Time Warner, Inc., zero coupon, due 12/17/2012 ............... 150,750
-----------
RETAIL 0.61%
115,000 Michael Stores, 4.75%, due 01/15/2003 ........................ 106,375
-----------
TRANSPORTATION & EQUIPMENT 0.96%
170,000 Airborne Freight, 6.75%, due 08/15/2001 ...................... 166,175
-----------
TOTAL CONVERTIBLE CORPORATE BONDS (cost $562,779) ............ 594,944
-----------
SHARES
------
PREFERRED STOCK 0.60%
2,000 Integon Corporation (cost $90,881) ........................... 104,250
-----------
COMMON STOCKS 92.29%
AEROSPACE/DEFENSE 5.53%
6,400 Boeing Company ............................................... 400,800
5,400 Loral Corporation ............................................ 279,450
3,570 Raytheon Company ............................................. 277,121
-----------
957,371
-----------
BANK/FINANCE 13.57%
4,320 Federal Home Loan Mortgage Corporation ....................... 297,000
5,900 First Security Corporation ................................... 165,200
4,000 Foothill Group, Inc. ......................................... 102,000
3,900 Franklin Resources, Inc. ..................................... 173,550
4,600 J.P. Morgan & Company, Inc. .................................. 322,575
4,725 Legg Mason, Inc. ............................................. 127,575
7,907 Mellon Bank Corporation ...................................... 329,129
6,900 Norwest Corporation .......................................... 198,375
4,100 State Street Boston Corporation .............................. 151,187
14,500 West One Bancorp ............................................. 483,937
-----------
2,350,528
-----------
BEVERAGES 2.79%
5,500 PepsiCo, Inc. ................................................ 250,937
6,700 Seagram Company, Ltd. ........................................ 231,987
-----------
482,924
-----------
BUILDING AND FOREST PRODUCTS 3.37%
6,600 Crane Company ................................................ 239,250
7,300 Weyerhaeuser Company ......................................... 344,012
-----------
583,262
CAPITAL GOODS 3.34% -----------
2,300 Emerson Electric Company ..................................... 164,450
3,300 GATX Corporation ............................................. 155,512
4,600 General Electric Company ..................................... 259,325
-----------
579,287
-----------
CHEMICALS 2.06%
9,800 Nalco Chemical Company ....................................... 356,475
-----------
CONSUMER DURABLES 1.11%
9,500 Huffy Corporation ............................................ 123,500
5,000 Sunbeam-Oster Company, Inc. .................................. 69,375
-----------
192,875
-----------
CONSUMER NON-DURABLES/SERVICES 3.38%
9,300 Alberto Culver Company Class A ............................... 239,475
1,800 Nike, Inc., Class B .......................................... 151,200
2,700 Proctor & Gamble Company ..................................... 194,063
-----------
584,738
-----------
ELECTRONICS/TECHNOLOGY 8.84%
3,800 Arrow Electronics, Inc. ...................................... 189,050
16,100 Barra, Inc.* ................................................. 158,988
2,500 DSC Communications Corporation ............................... 116,250
2,840 Hewlett-Packard Company ...................................... 211,580
5,200 Microsoft Corporation* ....................................... 469,950
3,100 Motorola, Inc. ............................................... 208,088
10,000 Sequent Computer Systems, Inc.* .............................. 178,125
-----------
1,532,031
-----------
FOODS 4.19%
11,368 Archer Daniels Midland ....................................... 211,729
4,650 Campbell Soup Company ........................................ 227,850
9,800 Dole Food Company ............................................ 285,425
-----------
725,004
-----------
HEALTH & MEDICAL 13.73%
2,800 American Home Products Corporation ........................... 216,650
5,500 Bausch & Lomb, Inc. .......................................... 228,250
5,750 Baxter International, Inc. ................................... 209,156
16,687 Caremark International, Inc. ................................. 333,740
12,900 FHP International Corporation* ............................... 296,700
3,000 Forest Laboratories, Inc. .................................... 133,125
3,800 Johnson & Johnson ............................................ 256,975
11,900 Manor Care, Inc. ............................................. 346,588
7,300 Merck & Company, Inc. ........................................ 357,700
-----------
2,378,884
-----------
INSURANCE 2.25%
2,000 American International Group, Inc. ........................... 228,000
9,550 Integon Corporation .......................................... 162,350
-----------
390,350
-----------
MEDIA 0.95%
4,000 Time Warner, Inc. ............................................ 164,500
-----------
NATURAL GAS/OILS 7.63%
1,000 Atlantic Richfield Company ................................... 109,750
6,700 Burlington Resources, Inc. ................................... 247,063
2,200 Exxon Corporation ............................................ 155,375
2,675 Mobil Corporation ............................................ 256,800
7,000 Phillips Petroleum Company ................................... 233,625
4,400 Shell Transport & Trading Company, American Depository
Receipt ...................................................... 318,450
-----------
1,321,063
-----------
POLLUTION CONTROL 1.37%
9,100 Donaldson Company, Inc. ...................................... 237,738
-----------
REAL ESTATE INVESTMENT TRUSTS 2.92%
6,700 Health Care Property Investors, Inc. ......................... 214,400
12,700 Shurgard Storage Centers, Inc. ............................... 292,100
-----------
506,500
-----------
TOBACCO 2.20%
4,000 Phillip Morris Companies, Inc. ............................... 297,500
3,000 RJR Nabisco Holdings Corporation ............................. 83,625
-----------
381,125
-----------
TRANSPORTATION 3.04%
9,600 Expeditors International of Washington, Inc. ................. 216,000
5,600 Union Pacific Corporation .................................... 310,100
-----------
526,100
-----------
UTILITIES GAS & ELECTRIC 3.20%
12,000 MCN Corporation .............................................. 237,000
12,200 Westcoast Energy, Inc. ....................................... 179,950
8,000 Western Gas Resources, Inc. .................................. 138,000
-----------
554,950
-----------
UTILITIES TELECOMMUNICATIONS 6.82%
6,350 AT&T Corporation ............................................. 337,344
8,400 ANTEC Corporation ............................................ 138,600
6,800 GTE Corporation .............................................. 232,050
10,000 Lincoln Telecommunications Company ........................... 157,500
4,000 SBC Communications, Inc. ..................................... 190,500
4,200 Telefonos de Mexico, American Depository Receipt ............. 124,425
-----------
1,180,419
-----------
TOTAL COMMON STOCKS (cost $13,265,418) 15,986,124
-----------
PRINCIPAL
AMOUNT
- ----------
SHORT-TERM INVESTMENT 2.83%
$ 491,000 Repurchase agreement with Goldman Sachs, collateralized by a
U.S. Treasury Note, in a joint trading account at 6.00% dated
06/30/1995, due 07/03/1995 with a maturity value of
$491,246 (cost $491,000) ...................................... 491,000
-----------
TOTAL INVESTMENTS (cost $14,508,611) .......................... 17,275,662
Other assets ($143,537) less liabilities ($98,315) ............ 45,222
-----------
NET ASSETS .................................................... $17,320,884
===========
<FN>
*Non-income producing security.
FEDERAL INCOME TAX INFORMATION:
Net unrealized appreciation of investments at June 30, 1995, of $2,767,051,
based on aggregate cost of $14,508,611, was composed of gross appreciation of
$3,078,872 for investments having an excess of value over cost and gross
depreciation of $311,821 for investments having an excess of cost over value.
OTHER INFORMATION:
Purchases and sales of investment securities, other than short-term investments,
aggregated $3,672,441 and $2,644,174, respectively, during the six-month period
ended June 30, 1995, including purchases of U.S. government securities of
$97,156.
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
COMPOSITE
DEFERRED SERIES, INC.
PORTFOLIO OF
INVESTMENTS
IN SECURITIES
JUNE 30,
1995
NORTHWEST 50 PORTFOLIO (UNAUDITED)
<CAPTION>
MARKET
SHARES VALUE
- -------- -----------
<S> <C> <C>
COMMON STOCKS 95.71%
AEROSPACE/DEFENSE 7.43%
5,350 Boeing Company ................................................ $ 335,044
3,225 Precision Castparts Corporation ............................... 113,278
------------
448,322
------------
BANK/FINANCE 9.73%
126 Horizon Bank .................................................. 1,439
2,900 Safeco Corporation ............................................ 166,569
9,150 U.S. Bancorp .................................................. 220,172
4,163 Washington Federal, Inc. ...................................... 91,586
3,200 West One Bancorp .............................................. 106,800
------------
586,566
------------
BUILDING & FOREST PRODUCTS 9.14%
500 Boise Cascade Corporation ..................................... 20,250
500 Georgia Pacific Corporation ................................... 43,375
1,900 Longview Fibre Company ........................................ 32,300
4,000 Louisiana Pacific Corporation ................................. 105,000
250 Pope & Talbot, Inc. ........................................... 4,063
5,100 T.J. International, Inc. ...................................... 95,625
3,200 Weyerhaeuser Company .......................................... 150,800
1,800 Willamette Industries, Inc. ................................... 99,900
-----------
551,313
-----------
CHEMICALS 0.46%
1,200 Penwest Ltd. .................................................. 27,900
-----------
CONSUMER NONDURABLES 5.73%
3,800 Nike, Inc., Class B ........................................... 319,200
2,300 Wholesome & Hearty Foods* ..................................... 26,450
-----------
345,650
-----------
ELECTRONICS/TECHNOLOGY 24.25%
1,700 Electro Scientific Industries* ................................ 56,525
3,100 Itron, Inc.* .................................................. 96,875
2,400 John Fluke Manufacturing Company .............................. 100,800
3,500 Lattice Semiconductor Corporation* ............................ 120,313
11,600 Mentor Graphics Corporation* .................................. 200,100
5,050 Microsoft Corporation* ........................................ 456,394
8,450 Sequent Computer Systems, Inc.* ............................... 150,516
5,700 Tektronix, Inc. ............................................... 280,725
-----------
1,462,248
-----------
HEALTH AND MEDICAL 3.64%
3,600 Advanced Technology Laboratories, Inc.* ....................... 56,700
5,700 Immunex Corporation* .......................................... 74,100
3,500 Spacelabs Medical, Inc.* ...................................... 88,812
-----------
219,612
-----------
INDUSTRIAL PRODUCTS/SERVICES 3.22%
6,300 Flow International Corporation* ............................... 62,606
2,400 Oregon Steel Mills, Inc. ...................................... 41,100
6,250 Univar Corporation ............................................ 90,625
-----------
194,331
-----------
MINING 1.14%
1,700 Coeur dAlene Mines Corporation ................................ 29,537
3,800 Hecla Mining Company* ......................................... 39,425
-----------
68,962
-----------
RETAIL SALES 19.42%
14,400 Albertsons, Inc. .............................................. 428,400
6,500 Fred Meyer Inc., Class A* ..................................... 176,312
6,200 Nordstrom, Inc. ............................................... 256,525
10,400 Price/Costco, Inc.* ........................................... 169,000
2,765 Quality Food Centers, Inc. .................................... 55,300
2,400 Starbucks Corporation* ........................................ 85,500
-----------
1,171,037
-----------
TRANSPORTATION & EQUIPMENT 8.31%
8,850 Airborne Freight Corporation .................................. 179,212
5,300 Alaska Air Group, Inc.* ....................................... 97,388
7,500 Expeditors International of Washington, Inc. .................. 168,750
1,190 PACCAR, Inc. .................................................. 55,632
-----------
500,982
-----------
UTILITIES GAS & ELECTRIC 1.21%
750 Montana Power Company ......................................... 17,250
1,000 Portland General Corporation .................................. 22,125
850 Puget Sound Power & Light Company ............................. 19,444
900 Washington Water Power Company ................................ 14,400
-----------
73,219
-----------
UTILITIES TELECOMMUNICATIONS 2.03%
750 Pacific Telecom, Inc. ......................................... 22,312
2,400 US West, Inc. ................................................. 99,900
-----------
122,212
-----------
TOTAL COMMON STOCKS (cost $4,907,558) 5,772,354
-----------
Principal
Amount
- ----------
SHORT-TERM INVESTMENT 4.00%
$241,000 Repurchase agreement with Goldman Sachs, collateralized by a
U.S. Treasury Note, in a joint trading account at 6.00% dated
06/30/1995, due 07/03/1995 with a maturity value of
$241,121 (cost $241,000) 241,000
-----------
TOTAL INVESTMENTS (cost $5,148,558) 6,013,354
Other assets ($23,272) less liabilities ($5,518) 17,754
-----------
NET ASSETS $ 6,031,108
===========
<FN>
*Non-income producing security.
FEDERAL INCOME TAX INFORMATION:
Net unrealized appreciation of investments at June 30, 1995, of $864,796, based
on aggregate cost of $5,148,558, was composed of gross appreciation of
$1,056,358 for investments having an excess of value over cost and gross
depreciation of $191,562 for investments having an excess of cost over value.
OTHER INFORMATION:
Purchases and sales of investment securities, other than short-term investments,
aggregated $745,290 and $187,132, respectively, during the six-month period
ended June 30, 1995.
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
COMPOSITE
DEFERRED SERIES, INC.
PORTFOLIO OF
INVESTMENTS
IN SECURITIES
JUNE 30,
1995
INCOME PORTFOLIO (UNAUDITED)
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- --------- -----------
<S> <C> <C>
U.S. TREASURY NOTES 30.96%
$ 150,000 4.00%, due 01/31/1996 ........................................... $ 148,594
1,000,000 5.75%, due 08/15/2003 ........................................... 970,625
250,000 5.875%, due 02/15/2004 .......................................... 244,375
250,000 6.375, due 08/15/2002 ........................................... 252,813
100,000 7.125%, due 02/29/2000 .......................................... 104,500
450,000 7.25%, due 08/15/2022 ........................................... 480,796
500,000 7.25%, due 11/30/1996 ........................................... 509,531
1,000,000 7.25% due 05/15/2016 ............................................ 1,065,000
200,000 7.50%, due 11/15/2024 ........................................... 221,563
-----------
TOTAL U.S. TREASURY NOTES (cost $3,893,337) 3,997,797
-----------
MORTGAGE-BACKED SECURITIES 14.66%
FEDERAL NATIONAL MORTGAGE ASSOCIATION 0.12%
15,195 9.00%, due 10/01/2004 ........................................... 15,703
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 12.43%
429,001 9.00%, due 05/15/2009 ........................................... 449,518
41,184 8.50%, due 03/15/2022 ........................................... 42,748
182,956 8.00%, due 06/15/2022 ........................................... 187,196
444,307 7.00%, due 07/15/2023 ........................................... 437,005
485,614 7.50%, due 06/01/2024 ........................................... 488,018
-----------
1,604,485
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS 2.11%
255,000 Federal Home Loan Mortgage Corporation, 7.50%, due 07/15/2020 ... 260,640
5,705 MDC Funding, 8.20%, due 11/20/2017 .............................. 5,757
6,170 Shearson Lehman, 8.75%, due 08/27/2017 .......................... 5,764
-----------
272,161
-----------
TOTAL MORTGAGE-BACKED SECURITIES (cost $1,884,502) 1,892,349
-----------
CORPORATE BONDS 40.50%
NON-CONVERTIBLE CORPORATE BONDS 38.56%
AEROSPACE/DEFENSE 1.79%
200,000 Boeing Company, 8.75%, due 08/15/2021 ........................... 231,626
-----------
BANKING 4.67%
195,000 Bank of New York, 7.875%, due 11/15/2002 ........................ 206,693
200,000 Kemper Corp., 7.875%, due 09/15/2003 ............................ 190,081
200,000 Mercantile Bank, 7.625%, due 10/15/2002 ......................... 205,779
-----------
602,553
-----------
ELECTRICAL EQUIPMENT 1.47%
200,000 Westinghouse Corporation, 7.875%, due 09/01/2023 ................ 190,290
-----------
FINANCE 5.09%
200,000 Associates Corporation Senior Notes, 8.80%, due 08/01/1998 ...... 213,696
150,000 Avco Financial Services, 8.85%, due 02/01/1996 .................. 152,275
175,000 Beneficial Corporation, 9.125%, due 02/15/1998 .................. 186,842
100,000 General Motors Acceptance Corporation, 7.75%, due 01/15/1999 .... 103,735
-----------
656,548
-----------
FINANCIAL SERVICES 1.92%
250,000 Morgan Stanley, 6.75%, due 03/04/2003 ........................... 247,555
-----------
HEALTH & MEDICAL 2.77%
150,000 American Home Products, 7.25%, due 03/01/2023 ................... 145,331
200,000 American Medical International, zero coupon, due 08/12/1997 ..... 212,800
-----------
358,131
-----------
INSURANCE 1.57%
200,000 Integon Corporation, 8.00%, due 08/15/1999 ...................... 202,321
-----------
MACHINERY 1.76%
200,000 Caterpillar Corporation, 9.375%, due 07/15/2001 ................. 227,648
-----------
MEDIA 2.26%
200,000 Time Warner, Inc., 9.15%, due 02/01/2023 ........................ 210,856
100,000 Western Publishing Group, 7.65%, due 09/15/2002 ................. 81,500
-----------
292,356
-----------
OIL AND GAS RELATEDS 5.14%
165,000 British Petroleum, 9.875%, due 03/15/2004 ....................... 199,113
200,000 Burlington Resources, 7.15%, due 05/01/1999 ..................... 205,389
200,000 Coastal Corporation, 10.75%, due 10/01/2010 ..................... 259,163
-----------
663,665
-----------
TRANSPORTATION 1.30%
150,000 Burlington Northern, 8.75%, due 02/25/2022 ...................... 167,962
-----------
UTILITIES - GAS AND ELECTRIC 8.82%
150,000 Commonwealth Edison, 9.375%, due 02/15/2000 ..................... 165,063
150,000 Consumers Power, 8.75%, due 02/15/1998 .......................... 157,048
150,000 Niagara Mohawk Power, 9.50%, due 06/01/2000 ..................... 163,866
150,000 Portland General Electric, 8.88%, due 08/12/1999 ................ 163,384
150,000 Public Service Electric & Gas, 8.875%, due 06/01/2003 ........... 166,163
150,000 Public Service Company of New Hampshire, 9.17%, due 05/15/1998 .. 158,396
150,000 Texas Utilities Electric, 9.50%, due 08/01/1999 164,744
-----------
1,138,664
-----------
TOTAL NON-CONVERTIBLE CORPORATE BONDS (cost $4,865,520) ......... 4,979,319
-----------
CONVERTIBLE CORPORATE BONDS 1.94%
FINANCIAL SERVICES 0.86%
100,000 Legg Mason Corporation, 5.25%, due 05/01/2003 ................... 110,875
-----------
RETAIL 1.08%
150,000 Costco Wholesale Corporation, 5.75%, due 05/15/2002 ............. 140,063
-----------
TOTAL CONVERTIBLE CORPORATE BONDS (cost $232,464) ............... 250,938
-----------
TOTAL CORPORATE BONDS (cost $5,097,984) ......................... 5,230,257
-----------
CANADIAN OBLIGATIONS 2.16%
150,000 Province of Alberta, 9.25%, due 04/01/2000 ...................... 168,309
100,000 Province of Manitoba, 9.625%, due 03/15/1999 .................... 110,795
-----------
TOTAL CANADIAN OBLIGATIONS (cost $256,846) ...................... 279,104
-----------
REPURCHASE AGREEMENT 10.14%
1,309,000 Repurchase agreement with Goldman Sachs collateralized by a
U.S. Treasury Note, in a joint trading account at 6.00% dated
06/30/1995, due 07/03/1995 with a maturity value of $1,309,654
(cost $1,309,000) 1,309,000
-----------
TOTAL INVESTMENTS (cost $12,441,669) 12,708,507
Other assets ($212,674) less liabilities ($9,213) 203,461
-----------
NET ASSETS $12,911,968
===========
<FN>
FEDERAL INCOME TAX INFORMATION:
Net unrealized appreciation of investments at June 30, 1995, of $266,838, based
on aggregate cost of $12,441,669, was composed of gross appreciation of $386,328
for investments having an excess of value over cost and gross depreciation of
$119,490 for investments having an excess of cost over value.
OTHER INFORMATION:
Purchases and sales of investment securities, other than short-term investments,
aggregated $1,574,436 and $1,306,103, respectively, during the six-month period
ended June 30, 1995, including purchases and sales of U.S. government securities
of $483,953 and $92,406, respectively. Principal repayments of mortgage-backed
securities aggregated $152,121.
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
COMPOSITE
DEFERRED SERIES, INC.
PORTFOLIO OF
INVESTMENTS
IN SECURITIES
JUNE 30,
1995
MONEY MARKET PORTFOLIO (UNAUDITED)
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- -----------
<S> <C> <C>
U.S. TREASURY BILL 9.04%
$ 20,000 4.94%, due 09/14/1995 (cost $19,794) .......................... $ 19,794
-----------
GOVERNMENTAL AGENCY OBLIGATIONS 88.83%
25,000 Federal Farm Credit Bank Discount Note, 5.80%, due 08/10/1995 . 24,839
120,000 Federal Home Loan Mortgage Corporation Note,
5.85%, due 07/13/1995 ......................................... 119,766
30,000 Federal Home Loan Mortgage Corporation Note,
5.86%, due 07/12/1995 ......................................... 29,946
20,000 Federal National Mortgage Association Discount Note,
5.82%, due 08/10/1995 ......................................... 19,871
215,000 Total Governmental Agency Obligations (cost $194,422) ......... 194,422
-----------
TOTAL INVESTMENTS (cost $214,216) ............................. 214,216
-----------
Other assets ($7,412) less liabilities ($2,756) 4,656
-----------
NET ASSETS $ 218,872
===========
<FN>
OTHER INFORMATION:
Purchases and maturities of investment securities, all of which were U.S.
government securities, aggregated $1,272,543 and $1,277,452, respectively,
during the six-month period ended June 30, 1995.
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
COMPOSITE
DEFERRED
SERIES, INC.
FINANCIAL
INFORMATION
JUNE 30,
1995
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1995 (UNAUDITED)
<CAPTION>
NORTHWEST MONEY
GROWTH 50 INCOME MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ASSETS
Investments at market (identified cost
$14,508,611, $5,148,558, $12,441,669
and $214,216, respectively) note 1a .......... $ 17,275,662 $ 6,013,354 $ 12,708,507 $ 214,216
Cash ............................................ 38,377 10,542 10,025 7,139
Prepaid Expense ................................. 528 133 425 10
Receivable for:
Investment securities sold .................... 54,480 -- -- --
Interest ...................................... 9,982 40 202,224 --
Sale of Funds share's ......................... 7,500 7,500 -- --
Dividends ..................................... 32,670 5,057 -- --
Expense reimbursement ......................... -- -- -- 263
----------- ------------ ------------ -----------
Total assets .................................... 17,419,199 6,036,626 12,921,181 221,628
----------- ------------ ------------ -----------
LIABILITIES
Payable for:
Investment securities purchased ............... 86,853 -- -- --
Repurchase of Funds share's ................... 1,697 546 1,265 --
Accrued expenses and other payables ........... 9,765 4,972 7,948 2,756
----------- ------------ ------------ -----------
Total liabilities ............................... 98,315 5,518 9,213 2,756
----------- ------------ ------------ -----------
NET ASSETS ...................................... $ 17,320,884 $ 6,031,108 $ 12,911,968 $ 218,872
=========== ============ ============ ===========
COMPOSITION OF NET ASSETS
Additional paid-in capital ...................... $ 14,240,796 $ 5,308,419 $ 12,786,968 $ 218,872
Undistributed net investment income ............. 1,516 228 -- --
Accumulated net realized gain (loss) ............ 311,521 (142,335) (141,838) --
Net unrealized appreciation
of investments ................................ 2,767,051 864,796 266,838 --
----------- ------------ ------------ -----------
$ 17,320,884 $ 6,031,108 $ 12,911,968 $ 218,872
=========== ============ ============ ===========
NET ASSET VALUE
Net asset value per share for 959,776, 436,721,
1,060,063, and 218,872 shares outstanding,
respectively .................................. $18.05 $13.81 $12.18 $1.00
=========== ============ ============ ===========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1995 (UNAUDITED)
NORTHWEST MONEY
GROWTH 50 INCOME MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- --------- --------- ---------
INVESTMENT INCOME
<S> <C> <C> <C> <C>
Income:
Interest ......................................................... $ 29,778 $ 4,868 $457,969 $ 6,025
Dividends ........................................................ 190,613 35,288 -- --
---------- -------- ---------- --------
Total income ....................................................... 220,391 40,156 457,969 6,025
---------- -------- ---------- --------
Expenses:
Management fees note 2 .......................................... 38,261 12,878 29,877 543
Postage, printing and office expense ............................. 9,243 4,878 7,004 1,704
Director's fees note 2 .......................................... 5,412 5,412 5,412 5,412
Custodial fees ................................................... 3,640 1,109 2,739 198
Auditing and legal fees .......................................... 4,266 1,046 3,025 750
Registration and filing fees ..................................... 405 275 549 46
Insurance ........................................................ 161 41 127 3
---------- -------- ---------- --------
Total expenses ..................................................... 61,388 25,639 48,733 8,656
Expense reimbursement .............................................. -- -- -- (2,829)
---------- -------- ---------- --------
Net expenses note 3 ............................................... 61,388 25,639 48,733 5,827
---------- -------- ---------- --------
Net investment income .............................................. 159,003 14,517 409,236 198
---------- -------- ---------- --------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Realized gain (loss) from investment transactions .................. 311,521 (14,292) (57,751) 12
Unrealized appreciation of investments during the period ........... 1,808,462 781,123 1,050,761 --
---------- -------- ---------- --------
Net realized and unrealized gain on investments .................... 2,119,983 766,831 933,010 12
---------- -------- ---------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $2,278,986 $781,348 $1,402,246 $ 210
========== ======== ========== ========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
NORTHWEST 50 MONEY MARKET
GROWTH PORTFOLIO PORTFOLIO INCOME PORTFOLIO PORTFOLIO
------------------------- ----------------------- ------------------------ ----------------------
SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR
JUNE 30, ENDED JUNE 30, ENDED JUNE 30, ENDED JUNE 30, ENDED
1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31, 1995 DECEMBER 31,
(UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) 1994 (UNAUDITED) 1994
----------- ----------- ---------- ---------- ----------- ----------- ---------- ---------
OPERATIONS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net investment income ...... $ 159,003 $ 264,291 $ 14,517 $ 28,558 $ 409,236 $ 704,261 $ 198 $ 857
Realized gain (loss) from
investment transactions .. 311,521 113,710 (14,292) (128,043) (57,751) (65,570) 12 --
Unrealized appreciation
(depreciation) of
investments during
the period ............... 1,808,462 (83,368) 781,123 16,642 1,050,761 (1,121,284) -- --
----------- ----------- ---------- ---------- ----------- ----------- --------- --------
Net increase (decrease)
in net assets resulting
from operations .......... 2,278,986 294,633 781,348 (82,843) 1,402,246 (482,593) 210 857
DIVIDENDS TO
SHAREHOLDERS
From net investment income . (157,655) (267,604) (15,080) (28,056) (409,236) (704,261) (198) (857)
From net capital gains from
investment transactions .. -- (113,710) -- (1,543) -- -- (12) --
NET CAPITAL SHARE
TRANSACTIONS note 3 ....... 1,005,050 3,041,942 617,606 2,073,984 1,076,786 2,915,753 199 857
----------- ----------- ---------- ---------- ----------- ----------- --------- --------
Total increase in net
assets 3,126,381 2,955,261 1,383,874 1,961,542 2,069,796 1,728,899 199 857
NET ASSETS
Beginning of the period 14,194,503 11,239,242 4,647,234 2,685,692 10,842,172 9,113,273 218,673 217,816
----------- ----------- ---------- ---------- ----------- ----------- --------- --------
End of the period .......... $17,320,884 $14,194,503 $6,031,108 $4,647,234 $12,911,968 $10,842,172 $218,872 $218,673
=========== =========== ========== ========== =========== =========== ========= ========
UNDISTRIBUTED NET
INVESTMENT INCOME AT
END OF PERIOD .............. $ 1,516 $ 168 $ 228 $ 791 $ -- $ -- $ -- $ --
=========== =========== ========== ========== =========== =========== ========= ========
<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
1995 YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
GROWTH PORTFOLIO: (UNAUDITED) 1994 1993 1992 1991 1990
--------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ........ $15.70 $15.71 $15.26 $14.28 $11.82 $12.89
--------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income ..................... 0.17 0.31 0.29 0.36 0.36 0.40
Net Gains or Losses on Securities
(both realized and unrealized) .......... 2.35 0.12 0.84 1.13 2.66 (1.04)
--------- ------- ------- ------- ------- -------
Total From Investment Operations ........ 2.52 0.43 1.13 1.49 3.02 (0.64)
--------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends (from net investment income) .... (0.17) (0.31) (0.28) (0.36) (0.35) (0.43)
Distributions (from capital gains) ........ -- (0.13) (0.40) (0.15) (0.21) --
--------- ------- ------- ------- ------- -------
Total Distributions ..................... (0.17) (0.44) (0.68) (0.51) (0.56) (0.43)
--------- ------- ------- ------- ------- -------
Net Asset Value, End of Period .............. $18.05 $15.70 $15.71 $15.26 $14.28 $11.82
========= ======= ======= ======= ======= =======
TOTAL RETURN <F1> ........................... 16.08% 2.72% 7.58% 10.56% 25.91% -4.96%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period ($1,000's) ...... $17,321 $14,195 $11,239 $7,455 $4,116 $2,140
Ratio of Expenses to Average Net Assets ... 0.80%<F3> 0.68% 0.76% 0.87% 1.16% 1.38%
Ratio of Net Income to Average Net Assets . 2.08%<F3> 1.97% 1.96% 2.51% 2.77% 3.41%
Portfolio Turnover Rate <F2> .............. 35%<F3> 25% 38% 13% 23% 23%
<FN>
<F1> Total return does not reflect sales charge. Returns of less than one year
are aggregate returns and not annualized.
<F2> 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.
<F3> Annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JANUARY 4, 1993
JUNE 30, 1995 TO
NORTHWEST 50 PORTFOLIO: (UNAUDITED) DECEMBER 31, 1994 DECEMBER 31, 1993 <F3>
------------ ----------------- ---------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ............ $11.97 $12.19 $12.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income ......................... 0.03 0.08 0.16
Net Gains or Losses on Securities
(both realized and unrealized) ................ 1.85 (0.21) 0.19
------ ------ ------
Total From Investment Operations ............ 1.88 (0.13) 0.35
------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net investment income) ........ (0.04) (0.08) (0.16)
Distributions (from capital gains) ............ -- (0.01) --
------ ------ ------
Total Distributions ......................... (0.04) (0.09) (0.16)
------ ------ ------
NET ASSET VALUE, END OF PERIOD .................. $13.81 $11.97 $12.19
====== ====== ======
TOTAL RETURN <F1> ............................... 15.69% -1.12% 2.95%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period ($1,000's) .......... $6,031 $4,647 $2,686
Ratio of Expenses to Average Net Assets <F4> .. 1.00%<F5> 0.87% --%<F5>
Ratio of Net Income to Average Net Assets ..... 0.56%<F5> 0.76% 1.61%<F5>
Portfolio Turnover Rate <F2> .................. 7%<F5> 17% --%<F5>
<FN>
<F1> Total return does not reflect sales charge. Returns of less than one year
are aggregate returns and not annualized.
<F2> 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.
<F3> From commencement of operations. See Note 1.
<F4> Management fees were waived and all expenses were absorbed by WM Life
Insurance Company, the sole shareholder, through December 31, 1993.
<F5> Annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
1995 YEARS ENDED DECEMBER 31,
---------- -----------------------------------------------------------
INCOME PORTFOLIO: (UNAUDITED) 1994 1993 1992 1991 1990
--------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ......... $11.22 $12.57 $12.22 $12.27 $11.44 $11.46
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income ...................... 0.40 0.79 0.85 0.86 0.91 0.95
Net Gains or Losses on Securities
(both realized and unrealized) ............. 0.90 (1.35) 0.35 (0.05) 0.83 (0.02)
------ ------ ------ ------ ------ ------
Total From Investment Operations ......... 1.30 (0.56) 1.20 0.81 1.74 0.93
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends (from net investment income) ..... (0.40) (0.79) (0.85) (0.86) (0.91) (0.95)
Distributions (from capital gains) ......... -- -- -- -- -- --
------ ------ ------ ------ ------ ------
Total Distributions ...................... (0.40) (0.79) (0.85) (0.86) (0.91) (0.95)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD ............... $12.12 $11.22 $12.57 $12.22 $12.27 $11.44
====== ====== ====== ====== ====== ======
TOTAL RETURN <F1> ............................ 12.28% -4.48% 10.02% 6.91% 15.90% 8.59%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period ($1,000's) ....... $12,912 $10,842 $9,113 $6,165 $4,407 $3,738
Ratio of Expenses to Average Net Assets .... 0.82%<F3> 0.74% 0.86% 0.88% 0.98% 1.06%
Ratio of Net Income to Average Net Assets .. 6.85%<F3> 6.79% 6.75% 7.12% 7.78% 8.43%
Portfolio Turnover Rate <F2> ............... 24%<F3> 15% 29% 37% 66% 85%
<FN>
<F1> Total return does not reflect sales charge. Returns of less than one year
are aggregate returns and not annualized.
<F2> 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.
<F3> Annualized.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
1995 YEARS ENDED DECEMBER 31,
------------------------------------------------------
MONEY MARKET PORTFOLIO: (UNAUDITED) 1994 1993 1992 1991 1990
---------- ------ ------ ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD ........... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income ........................ -- -- -- -- 0.06 0.08
Net Gains or Losses on Securities
(both realized and unrealized) -- -- -- -- -- --
------ ------ ------ ----- ----- -----
Total From Investment Operations ........... -- -- -- -- 0.06 0.08
------ ------ ------ ----- ----- -----
LESS DISTRIBUTIONS
Dividends (from net investment income) ....... -- -- -- -- (0.06) (0.08)
Distributions (from capital gains) ........... -- -- -- -- -- --
------ ------ ------ ----- ----- -----
Total Distributions ........................ -- -- -- -- (0.06) (0.08)
------ ------ ------ ----- ----- -----
NET ASSET VALUE, END OF PERIOD ................. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ===== ===== =====
TOTAL RETURN <F1> .............................. 0.09% --% --% -0.25% 5.92% 8.01%
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period ($1,000's) ......... $219 $219 $218 $218 $586 $565
Ratio of Expenses to Average Net Assets <F2> . 5.37%<F3> 3.65% 2.87% 2.82% --% --%
Ratio of Net Income to Average Net Assets .... 0.18%<F3> 0.39% --% 0.82% 5.77% 7.70%
<FN>
<F1> Total return does not reflect sales charge. Returns of less than one year
are aggregate returns and not annualized.
<F2> The Investment Adviser waived its management fee from inception of the
Portfolio through June 30, 1994; and other expenses were reimbursed to the
Portfolio by WM Life Insurance Company (WMLIC) from inception of the
Portfolio through February 29, 1992. Expenses, including the waived
management fee, in excess of revenues were reimbursed to the Portfolio by
WMLIC during the period January 1, 1993 through June 30, 1995.
<F3> Annualized.
</FN>
</TABLE>
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1995 (UNAUDITED)
NOTE 1 ACCOUNTING POLICIES
Composite Deferred Series, Inc. ("the Fund"), is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund consists of four separate portfolios which are designed to
meet a variety of investment objectives. The Growth and Income Portfolios are
diversified; the Money Market and Northwest 50 Portfolios are nondiversified. On
October 9, 1992, the Fund filed a registration statement with the United States
Securities and Exchange Commission to add the Northwest 50 Portfolio. The
registration became effective January 4, 1993.
WM Life Insurance Company ("WMLIC"), an affiliate of the investment
adviser, is the sole shareholder of the Fund. Shares are sold only to the
Composite Deferred Series variable accounts to fund the benefits under certain
flexible premium variable annuity contracts (the "contracts") issued by WMLIC.
Contract holders have the right to instruct WMLIC how to vote Fund shares
attributable to their contracts.
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 Board 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, transactions of a security,
quotations from dealers, market transactions in comparable securities, and
various relationships between securities, in determining value. Investment
securities in the Money Market Portfolio and investment securities with
less than 60 days to maturity when purchased in the Growth, Income, and
Northwest 50 Portfolios 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 Board 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. The Money Market Portfolio calculates and pays dividends to its shareholder
daily (dividends are not earned on the day of purchase but are earned on
the day of withdrawal). Dividends to the shareholders of the Growth and
Northwest 50 Portfolios are calculated and paid quarterly. The Income
Portfolio accrues shareholder dividends daily and pays such dividends
monthly. Any capital gains are paid annually.
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 is
determined on the basis of identified cost.
e. The Fund complies with requirements of the Internal Revenue Code applicable
to regulated investment companies and distributes its income so that no
provision for federal income tax is required.
NOTE 2 TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
The amounts of fees and expenses described below are shown on each
Portfolio's statement of operations.
Management fees were paid by each Portfolio to Composite Research &
Management Co., the investment adviser. Fees are based upon an annual rate of
.50% on average daily net assets as computed daily. For the Money Market
Portfolio, the investment adviser waived a portion of its management fee,
totaling $543, during the six-month period ended June 30, 1995.
Directors fees and expenses were paid directly by each Portfolio to
directors having no affiliation with the Fund other than in their capacity as
directors. Other officers and directors received no compensation from the Funds.
WMLIC, the sole shareholder, reimbursed the Money Market Portfolio for a portion
of other expenses. During the six-month period ended June 30, 1995, WMLIC
reimbursed the Money Market Portfolio $2,286.
NOTE 3 CAPITAL STOCK
At June 30, 1995, there were 10 billion shares of no par value capital
stock authorized. Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO NORTHWEST 50 PORTFOLIO
------------------------ ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1995 1994 1995 1994
---------- ---------- ---------- ----------
SHARES
<S> <C> <C> <C> <C>
Sold ........................... 133,728 298,482 75,391 208,140
Issued for reinvestment of
dividends and capital gains .. 8,976 24,096 1,153 2,331
---------- ---------- ---------- ----------
142,704 322,578 76,544 210,471
Reacquired ..................... (86,982) (134,063) (28,178) (42,389)
---------- ---------- ---------- ----------
Net increase ................... 55,722 188,515 48,366 168,082
========== ========== ========== ==========
AMOUNT
Sold ........................... $2,280,540 $4,756,061 $ 955,921 $2,554,986
Issued for reinvestment of
dividends and capital gains .. 157,655 381,314 15,080 29,600
---------- ---------- ---------- ----------
2,438,195 5,137,375 971,001 2,584,586
Reacquired ..................... (1,433,145) (2,095,433) (353,395) (510,602)
---------- ---------- ---------- ----------
Net increase ................... $1,005,050 $3,041,942 $ 617,606 $2,073,984
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
INCOME PORTFOLIO MONEY MARKET PORTFOLIO
------------------------ ---------------------------
SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31,
1995 1994 1995 1994
---------- ---------- ---------- ----------
SHARES
<S> <C> <C> <C> <C>
Sold ........................... 178,937 371,388 -- --
Issued for reinvestment of
dividends and capital gains .. 34,855 60,183 199 857
---------- ---------- ---------- ----------
213,792 431,571 199 857
Reacquired ..................... (120,306) (189,983)
---------- ---------- ---------- ----------
Net increase ................... 93,486 241,588 199 857
========== ========== ========== ==========
AMOUNT
Sold ........................... $2,072,132 $4,435,898 $ -- $ --
Issued for reinvestment of
dividends and capital gains .. 409,236 704,261 199 857
---------- ---------- ---------- ----------
2,481,368 5,140,159 199 857
Reacquired ..................... (1,404,582) (2,224,406) -- --
---------- ---------- ---------- ----------
Net increase ................... $1,076,786 $2,915,753 $199 $857
========== ========== ========== ==========
</TABLE>
NOTE 4 SHAREHOLDER MEETING RESULTS
A special meeting of the Fund's shareholder (WMLIC) was held March 21,
1995. Each matter voted upon as instructed by contract holders, as well as the
number of votes cast for, against or withheld, and abstained, are set forth
below:
1. The Fund's shareholder elected the following nine directors:
<TABLE>
<CAPTION>
GROWTH PORTFOLIO NORTHWEST 50 PORTFOLIO INCOME PORTFOLIO
------------------------ ------------------------ ------------------------
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 ............... 498,433 6,619 206,969 0 510,651 7,305
Kristianne Blake ................... 499,197 5,855 206,969 0 516,034 1,922
Anne V. Farrell .................... 499,197 5,855 205,102 1,867 516,034 1,922
Edwin J. McWilliams ................ 497,225 7,827 206,969 0 516,034 1,922
Michael K. Murphy .................. 499,197 5,855 205,102 1,867 516,034 1,922
William G. Papesh .................. 499,197 5,855 206,969 0 516,034 1,922
Jay Rockey ......................... 499,197 5,855 206,969 0 515,701 2,255
Leland J. Sahlin ................... 497,225 7,827 206,969 0 516,034 1,922
Richard C. Yancey .................. 499,197 5,855 206,969 0 516,034 1,922
</TABLE>
2. The Fund's shareholder ratified the selection by a majority of the
independent members of the Funds Board of Directors of LeMaster & Daniels as
independent accountants for the Fund for the current year, subject to
termination at any time without penalty.
<TABLE>
<CAPTION>
SHARES SHARES
VOTED VOTED
"FOR" AGAINST ABSTAINED
--------- ----------- -----------
<S> <C> <C> <C>
Growth Portfolio ........................................ 487,934 0 17,118
Northwest 50 Portfolio .................................. 204,062 0 2,906
Income Portfolio ........................................ 506,297 705 10,955
</TABLE>
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
Toll free: (800) 543-8072
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 Avenue, 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 Fund. For more detailed information
about the Fund, its officers and directors, fees, expenses
and other pertinent information, please see the prospectus
of the Fund. This report is not authorized for distribution
to prospective investors in the Fund unless preceded or
accompanied by an effective prospectus.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL IFORMATION 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> 0000808421
<NAME> COMPOSITE DEFERRED SERIES, INC.
<SERIES>
<NUMBER> 01
<NAME> MONEY MARKET PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 214,216
<INVESTMENTS-AT-VALUE> 214,216
<RECEIVABLES> 263
<ASSETS-OTHER> 7,149
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 221,628
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,756
<TOTAL-LIABILITIES> 2,756
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 218,872
<SHARES-COMMON-STOCK> 218,872
<SHARES-COMMON-PRIOR> 218,673
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 218,872
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,025
<OTHER-INCOME> 0
<EXPENSES-NET> (5,827)
<NET-INVESTMENT-INCOME> 198
<REALIZED-GAINS-CURRENT> 12
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 210
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (198)
<DISTRIBUTIONS-OF-GAINS> (12)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 199
<NET-CHANGE-IN-ASSETS> 199
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 543
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,656
<AVERAGE-NET-ASSETS> 218,872
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .001
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.001)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 5.37
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL IFORMATION 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> 0000808421
<NAME> COMPOSITE DEFERRED SERIES, INC.
<SERIES>
<NUMBER> 02
<NAME> GROWTH PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 14,508,611
<INVESTMENTS-AT-VALUE> 17,275,662
<RECEIVABLES> 104,632
<ASSETS-OTHER> 38,905
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17,419,199
<PAYABLE-FOR-SECURITIES> 86,853
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,462
<TOTAL-LIABILITIES> 98,315
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14,240,796
<SHARES-COMMON-STOCK> 959,776
<SHARES-COMMON-PRIOR> 904,054
<ACCUMULATED-NII-CURRENT> 1,516
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 311,521
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,767,051
<NET-ASSETS> 17,320,884
<DIVIDEND-INCOME> 190,613
<INTEREST-INCOME> 29,778
<OTHER-INCOME> 0
<EXPENSES-NET> (61,388)
<NET-INVESTMENT-INCOME> 159,003
<REALIZED-GAINS-CURRENT> 311,521
<APPREC-INCREASE-CURRENT> 1,808,462
<NET-CHANGE-FROM-OPS> 2,278,986
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (157,655)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 133,728
<NUMBER-OF-SHARES-REDEEMED> (86,982)
<SHARES-REINVESTED> 8,976
<NET-CHANGE-IN-ASSETS> 3,126,381
<ACCUMULATED-NII-PRIOR> 168
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 38,261
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 61,388
<AVERAGE-NET-ASSETS> 15,433,576
<PER-SHARE-NAV-BEGIN> 15.70
<PER-SHARE-NII> .17
<PER-SHARE-GAIN-APPREC> 2.35
<PER-SHARE-DIVIDEND> (.17)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.05
<EXPENSE-RATIO> .80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL IFORMATION 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> 0000808421
<NAME> COMPOSITE DEFERRED SERIES, INC.
<SERIES>
<NUMBER> 03
<NAME> INCOME PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 12,441,669
<INVESTMENTS-AT-VALUE> 12,708,507
<RECEIVABLES> 202,224
<ASSETS-OTHER> 10,450
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 12,921,181
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,213
<TOTAL-LIABILITIES> 9,213
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,786,968
<SHARES-COMMON-STOCK> 1,060,063
<SHARES-COMMON-PRIOR> 966,577
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (141,838)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 266,838
<NET-ASSETS> 12,911,968
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 457,969
<OTHER-INCOME> 0
<EXPENSES-NET> (48,733)
<NET-INVESTMENT-INCOME> 409,236
<REALIZED-GAINS-CURRENT> (57,751)
<APPREC-INCREASE-CURRENT> 1,050,761
<NET-CHANGE-FROM-OPS> 1,402,246
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (409,236)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 178,937
<NUMBER-OF-SHARES-REDEEMED> (120,306)
<SHARES-REINVESTED> 34,855
<NET-CHANGE-IN-ASSETS> 2,069,796
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (84,087)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29,877
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 48,733
<AVERAGE-NET-ASSETS> 12,091,537
<PER-SHARE-NAV-BEGIN> 11.22
<PER-SHARE-NII> .40
<PER-SHARE-GAIN-APPREC> .96
<PER-SHARE-DIVIDEND> (.40)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.18
<EXPENSE-RATIO> .82
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL IFORMATION 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> 0000808421
<NAME> COMPOSITE DEFERRED SERIES, INC.
<SERIES>
<NUMBER> 04
<NAME> NORTHWEST 50 PORTFOLIO
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 5,148,558
<INVESTMENTS-AT-VALUE> 6,013,354
<RECEIVABLES> 12,597
<ASSETS-OTHER> 10,675
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,036,626
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,518
<TOTAL-LIABILITIES> 5,518
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,308,419
<SHARES-COMMON-STOCK> 436,721
<SHARES-COMMON-PRIOR> 388,355
<ACCUMULATED-NII-CURRENT> 228
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (142,335)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 864,796
<NET-ASSETS> 6,031,108
<DIVIDEND-INCOME> 35,288
<INTEREST-INCOME> 4,868
<OTHER-INCOME> 0
<EXPENSES-NET> (25,639)
<NET-INVESTMENT-INCOME> 14,517
<REALIZED-GAINS-CURRENT> (14,292)
<APPREC-INCREASE-CURRENT> 781,123
<NET-CHANGE-FROM-OPS> 781,348
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (15,080)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 75,391
<NUMBER-OF-SHARES-REDEEMED> (28,178)
<SHARES-REINVESTED> 1,153
<NET-CHANGE-IN-ASSETS> 1,383,874
<ACCUMULATED-NII-PRIOR> 791
<ACCUMULATED-GAINS-PRIOR> (128,043)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 12,878
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 25,639
<AVERAGE-NET-ASSETS> 5,226,655
<PER-SHARE-NAV-BEGIN> 11.97
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 1.85
<PER-SHARE-DIVIDEND> (.04)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.81
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
