SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement (Revised)
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14-11(c) or Section 2
Composite Deferred Series, Inc. - Northwest 50 Portfolio
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
--------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------
5) Total Fee Paid:
--------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify filing for which the offsetting fee was paid
previoously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
3) Filing Party:
---------------------------------------------------------------
4) Date Filed:
---------------------------------------------------------------
<PAGE>
WMLife Insurance Co. (logo)
1201 Third Avenue, Suite 600
Seattle, WA 98101-3015
October 26, 1995
To Our Composite Variable Annuity Contract Owners:
The Northwest 50 Portfolio (the "Portfolio") of Composite Deferred Series, Inc.
(the "Fund"), will hold a special meeting of shareholders on December 15, 1995
at the offices of the Fund to the recommendation of Composite Research &
Management Co. (the "Adviser"), to change the manner in which the Portfolio
intends to meet its fundamental investment objectives. Your Portfolio currently
invests its assets according to the composition of the Northwest 50(R) Index.
Common stocks included in the Portfolio, and their relative weightings, are
based entirely on their representation within the Index.
The Adviser believes that the Portfolio has been able to meet its investment
objectives and provide a reasonable total return to its contract owners since
its formation in 1986. The Adviser now believes, however, that continued linkage
to the Northwest 50(R) Index will increasingly constrain portfolio managers. At
present, if a company is included in the Index (and thus, the Portfolio), it
cannot be removed unless the company ceases to be a Northwest company or its
viability is in doubt. New companies are added to the Index only when existing
Index companies are removed. The Adviser is also limited as to the selection and
weighting of industry sectors in which the Portfolio may invest.
We believe that our managers should have greater flexibility to make changes in
the Portfolio, allowing them to adjust the portfolio for prevailing market
conditions. We believe the potential for capital appreciation will be enhanced
by providing our Adviser the ability to carefully select common stocks of
Northwest companies. The proposal is fully explained in the attached proxy
material.
Thank you for your continued confidence in our Portfolio. We look forward to
serving your investment needs in the years to come.
Sincerely,
/s/ Robert W. Eschrich
Robert W. Eschrich, President
WM Life Insurance Co.
YOUR VOTE IS IMPORTANT! WE WOULD APPRECIATE YOUR PROMPT VOTE, SIGNATURE, AND
RETURN OF THE ENCLOSED PROXY, WHICH WILL HELP AVOID THE ADDITIONAL EXPENSE OF A
SECOND SOLICITATION. THE ENCLOSED POSTAGE PREPAID ENVELOPE IS INTENDED FOR YOUR
CONVENIENCE.
- -------------------------------------------------------------------------------
PLEASE DETACH HERE, SIGN AND RETURN
PROXY
Composite Deferred Series, Inc.
Northwest 50 Portfolio
1) To authorize investment in commons stocks of companies,
including real estate investment trusts, located or
having business operations in five Northwest states
without regard to their representation in the
Northwest 50(R) Index.
FOR AGAINST ABSTAIN
------- -------- --------
[CLIENT NAME] This proxy is solicited for the Board of Directors of the
[ACCOUNT NUMBER] Fund which recommends a vote "FOR" the proposal.
[NUMBER OF UNITS]
Please be sure to sign and date this Proxy.
Contract Owner
- --------------------------------------
Co-owner
- --------------------------------------
Date
- --------------------------------------
(over)
[BACK]
Please vote promptly!
Your vote is needed! Please vote on the reverse side of this form, sign in the
space provided and return your completed proxy in the enclosed envelope today.
You may receive additional proxies for other accounts. These are not duplicates;
you should sign and return each proxy card in order for your votes to be
counted. Please return them as soon as possible to help save the costs of
additional mailings.
The signers of this proxy hereby direct WM Life Insurance Company or its proxy
to vote at the special shareholder meeting of COMPOSITE DEFERRED SERIES, INC.,
NORTHWEST 50 PORTFOLIO to be held December 15, 1995, including adjournments,
upon the proposal listed on the reverse side of this card.
This proxy is solicited by the Board of Directors of the Fund which recommends a
vote "FOR" the proposal.
<PAGE>
COMPOSITE DEFERRED SERIES, INC.
NORTHWEST 50 PORTFOLIO
601 West Main Avenue, Suite 801
Spokane, Washington 99201-0613
Telephone (509) 353-3550
Toll free (800) 543-8072
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 15, 1995
A special meeting of shareholders of the Northwest 50 Portfolio (the
"Portfolio") of Composite Deferred Series, Inc. (the "Fund"), will be held at
the above address on December 15, 1995, at 3:30 p.m. to consider and take action
on the following:
(1) To authorize investment in common stocks of companies, including real estate
investment trusts, located or having business operations in five Northwest
states without regard to their representation in the Northwest 50(R) Index.
(2) To transact such other business as may properly come before the meeting or
any adjournment thereof.
Only shareholders of record on October 9, 1995, will be entitled to vote at the
meeting. The favorable vote of a majority of the outstanding shares of the
Portfolio is required to approve the proposal. The meeting has been called by
the Board of Directors of the Fund in accordance with the bylaws.
John T. West
Secretary
YOUR VOTE IS IMPORTANT! WE WOULD APPRECIATE YOUR PROMPT VOTE, SIGNATURE, AND
RETURN OF THE ENCLOSED PROXY. THE ENCLOSED POSTAGE PREPAID ENVELOPE IS INTENDED
FOR YOUR CONVENIENCE.
<PAGE>
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of proxies
by and on behalf of the Board of Directors of Composite Deferred Series, Inc.
(the "Fund") to be used at the special meeting of shareholders to be held in the
third floor conference room at 601 West Main Avenue, Spokane, Washington on
December 15, 1995, for the purpose set forth in the accompanying notice. If the
enclosed form of proxy is executed and returned, it may be revoked prior to its
exercise by a signed written notice filed with the Fund or with its transfer
agent, Murphey Favre Securities Services, Inc., at the above address or
delivered at the special meeting.
Accompanying this statement is a notice of the special meeting of shareholders
and a form of proxy for such meeting solicited by the Board of Directors. THE
FUND'S MOST RECENT ANNUAL REPORT AND SUBSEQUENT SEMI-ANNUAL REPORT ARE AVAILABLE
WITHOUT CHARGE BY CONTACTING THE FUND AT THE LOCATION OR PHONE NUMBER ON THE
COVER PAGE OF THIS PROXY STATEMENT. This proxy statement was mailed to
shareholders on or about October 31, 1995.
Where a shareholder has specified a choice on the proxy with respect to proposal
(1), the shares will be voted accordingly. THIS PROXY IS SOLICITED BY THE BOARD
OF DIRECTORS OF THE FUND. UNLESS SPECIFIC INSTRUCTIONS ARE GIVEN, THIS PROXY
WILL BE VOTED IN FAVOR OF THE ACTIONS REFERRED TO IN PROPOSAL (1).
The close of business on October 9, 1995, has been fixed as the date on which
the record of shareholders entitled to vote at the meeting will be taken. There
were 454,543 shares outstanding in the Northwest 50 portfolio at that time, all
of which were owned by the Composite Deferred Variable Account of WM Life
Insurance Company.
So far as is known to the Fund or its management, no person owned of record or
beneficially on the record date as much as 5% of the outstanding capital stock
of the Fund. Each share outstanding on the record date will be entitled to one
vote at the meeting.
All items in the proxy have been approved by the Board of Directors and no
director has given notice of dissent from any of the items to be voted thereon.
Management at this time does not intend to bring any other matters before the
meeting and does not know of any other matters which will be brought before the
meeting by others. However, in the event any business not mentioned in the proxy
statement properly comes before the meeting, then the shareholder authorizes the
persons named in the proxy to vote either for or against the questions according
to their judgment on such matters.
The Portfolio will bear the cost of solicitation of proxies. In addition to the
solicitation of proxies by use of the mails, some of the Fund's officers and
regular employees of Murphey Favre, Inc. (the "Distributor") may solicit proxies
personally or by telephone from shareholders at a cost not exceeding
out-of-pocket expense. The cost of such additional solicitation made otherwise
than by use of the mails is estimated at not more than $100 and is to be paid by
the Distributor.
The enclosed form of proxy contains spaces in which you may insert instructions
as to the way your shares are to be voted on proposal (1). In order that your
shares may be represented at the meeting, you are requested to complete the
proxy and return it in the envelope enclosed for your convenience, which
requires no United States postage.
The following proposal applies to the Northwest 50 Portfolio only:
PROPOSAL NO. 1 AUTHORIZATION TO INVEST IN COMMON STOCKS OF
COMPANIES, INCLUDING REAL ESTATE INVESTMENT
TRUSTS ("REITs"), LOCATED OR HAVING
BUSINESS OPERATIONS IN FIVE NORTHWEST STATES
WITHOUT REGARD TO THEIR REPRESENTATION IN THE
NORTHWEST 50(R) INDEX.
The Portfolio's fundamental investment objective currently states that it will
invest in a portfolio based on the Northwest 50(R) Index (the "Index"), of 50
common stocks selected from companies doing business or located in the Pacific
Northwest (Alaska, Idaho, Montana, Oregon, and Washington).
Composite Research & Management Co. (the "Adviser") has recommended changing the
Portfolio's investment objective and policies to allow for investments in common
stocks of Northwest companies, including real estate investment trusts, without
regard to the Index. The Board of Directors has accepted and agreed with this
recommendation. IF APPROVED, THE PORTFOLIO'S FUNDAMENTAL INVESTMENT OBJECTIVE
WOULD BE TO SEEK LONG-TERM GROWTH OF CAPITAL THROUGH INVESTMENTS IN THE COMMON
STOCKS OF COMPANIES LOCATED OR HAVING BUSINESS OPERATIONS IN FIVE NORTHWEST
STATES: ALASKA, IDAHO, MONTANA, OREGON, OR WASHINGTON. Directors then would
change the Portfolio's name to Northwest Portfolio.
A team of investment professionals manages the Fund. Members of the team are
Jeffrey D. Huffman, CFA; Philip M. Foreman, CFA; and David W. Simpson, CFA. Mr.
Huffman has 11 years of continuous investment experience and has been employed
by the Adviser since January 1995. Mr. Foreman has been employed by the Adviser
since November 1991 and has 11 years of continuous investment experience. Mr.
Simpson has been employed by the Adviser since March 1993 and has 10 years of
continuous investment experience. Mr. Simpson is primarily responsible for
managing the Portfolio.
Presently the Portfolio is comprised solely of common stocks in the Index
without analyzing the investment prospects of those securities having been
analyzed. Because the Index composition is determined by the Adviser, the
Portfolio is not technically considered an index portfolio although it operates
in that manner. The current investment objective does not allow for changes to
the Index (and thus, the Portfolio) unless a company in the Index no longer
qualifies as a Northwest company, or becomes so financially troubled that its
viability is in question. Because of this structure, the Adviser is unable to
invest in certain industry segments or companies deemed to be attractive
investment opportunities. Furthermore, the Index has a market capitalization
component that causes companies with larger market capitalizations to have
larger weightings. As a result, the performance of the Portfolio tends to be
weighted toward the performance of the larger capitalization companies in the
Index. The Adviser is unable to significantly adjust these weightings in the
Portfolio even if it anticipates superior performance from some of the smaller
capitalization companies. While smaller company stocks may involve greater risks
than those of larger, mature issuers and their prices may fluctuate to a greater
degree, they also can potentially offer greater opportunities for capital
appreciation.
The Adviser believes that it is desirable for the Portfolio to invest its assets
in common stocks selected on the basis of the Adviser's careful analysis. This
proposed change would provide the Portfolio flexibility. Under normal
circumstances, all of the Portfolio, other than temporary investments of cash
reserves, would continue to be invested in common stocks of companies, including
real estate investment trusts ("REITs"), located or having business operations
in the above mentioned states. At least 65% of the Portfolio's total assets will
be invested in companies whose principal executive offices are located in the
Northwest. By utilizing investment management techniques, the Adviser would be
able to adjust the Portfolio to various market conditions in the Northwest
region. The Adviser intends to select stocks based on a variety of criteria,
including the Adviser's expectations regarding earnings growth, valuation
parameters, and other subjective considerations including balance sheet
composition, the quality of management, and competitive position. A "REIT" is a
corporation or trust that combines the capital of many investors to acquire or
provide financing for all forms of commercial real estate. It is organized in a
manner similar to a mutual fund and the REIT, itself, is exempt from corporate
taxation under federal law and under the state income tax laws of most states.
Consequently, the income received by a REIT can be distributed to its
shareholders (including the Portfolio if an investment was made) without double
taxation. Factors influencing the investment performance of REITs include the
profitability of properties owned, amount of leverage, and amount of cash flow
generated and paid out.
The Portfolio is classified as "non-diversified" according to the Investment
Company Act of 1940 (the "Act"). If the proposal is adopted, management
currently intends to change the composition of the Portfolio in such a way as to
cause the Portfolio to become "diversified" within one year. This means that at
least 75% of the value of the Portfolio's total assets would be represented by
qualified securities, cash and cash items, and U.S. government securities. For
the purposes of this calculation, "qualified securities" are securities limited
with respect to any one issuer (at time of purchase) to an amount not greater in
value than 5% of the value of the Fund's total assets nor more than 10% of the
issuer's outstanding voting securities.
Because the Portfolio mirrors the Index, it has a low portfolio turnover rate;
this rate is calculated by dividing the lesser of purchases or sales of
securities, other than short-term securities, by the average of such securities
over a given period. The Adviser expects that the portfolio turnover rate will
increase if the proposal is approved. The Portfolio would not trade securities
for short-term profits but, if circumstances warrant, securities may be sold
without regard to the length of time held. The Adviser cannot accurately predict
the annual portfolio turnover rate but generally expects it to be below 100%.
The rate of turnover will not be a limiting factor when the Portfolio deems it
desirable to sell or purchase securities.
REQUIRED VOTE
Approval of the proposal requires the affirmative vote of a majority of the
shares entitled to vote as defined by the Investment Company Act of 1940, which
means the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Portfolio on record date (October 9, 1995), or (2) 67% or more of
the shares present at a meeting if more than 50% of the outstanding record date
shares are represented at the meeting in person or by proxy. If shareholders do
not approve the proposal, the Adviser will continue to operate the Fund in
accordance with its present investment policies.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS AUTHORIZE A
CHANGE IN INVESTMENT OBJECTIVES BY APPROVING THE SELECTIVE INVESTMENT IN COMMON
STOCKS OF COMPANIES, INCLUDING REAL ESTATE INVESTMENT TRUSTS ("REITs"), LOCATED
OR HAVING BUSINESS OPERATIONS IN FIVE NORTHWEST STATES WITHOUT REGARD FOR THEIR
REPRESENTATION IN THE NORTHWEST 50(R) INDEX.
ADDITIONAL INFORMATION
Because Composite Research & Management Co., Murphey Favre and Murphey Favre
Securities Services are subsidiaries of Washington Mutual, Inc., those companies
might be considered affiliates of Washington Mutual, Inc. as that term is used
in the Banking Act of 1933, popularly known as the Glass-Steagall Act. In a
Statement of Policy dated September 1, 1982, the board of directors of the
Federal Deposit Insurance Corporation concluded that the Glass-Steagall Act does
not prohibit insured non-member banks (which would include Washington Mutual,
Inc.) from establishing an affiliate relationship with subsidiaries (which would
include Composite Research, Murphey Favre and Murphey Favre Securities Services)
engaging in a broad range of securities activities. Legal counsel for Washington
Mutual, Inc. and the Fund have advised the Fund that the relationship between
the companies and Washington Mutual, Inc. does not result in an adverse impact
upon the normal investment adviser, distributor and transfer agent functions of
those three companies. If changes in federal statutes, new or modified
administrative rules, regulations or policies, or court decisions involving the
Glass-Steagall Act should indicate that adverse consequences to the Fund may
result from the relationship of the companies with Washington Mutual, Inc., then
directors of the Fund would be obligated to consider termination of the
Investment Management Agreements, the Distribution Contracts, and the
Shareholders Service Contracts.
The directors of the Adviser are Kerry K. Killinger, president, chairman of the
board and chief executive officer of Washington Mutual, Inc.; Craig E. Tall,
executive vice president of Washington Mutual, Inc.; William G. Papesh,
president of the Adviser; Gene G. Branson, executive vice president of the
Adviser; and Douglas D. Springer, president of the Distributor. All of the
directors of the Adviser also serve as directors for both Murphey Favre and
Murphey Favre Securities Services (the Distributor and the Transfer Agent,
respectively).
SUBMISSION OF CERTAIN PROPOSALS
The Fund does not hold annual shareholder meetings. Shareholders wishing to
submit proposals for inclusion in a proxy statement for a subsequent shareholder
meeting should send their written proposals to the Secretary of the Fund, 601
West Main Avenue, Suite 801, Spokane, WA 99201-0613.
OTHER BUSINESS
As far as is known, no other business than that referred to above will be acted
upon at the coming meeting. If any other business is presented for action at the
meeting, it is intended that proxies will be voted on such matters in accordance
with the judgment of the persons acting under such proxies.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
