<TABLE>
<CAPTION>
COMPOSITE DEFERRED SERIES - MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
(Unaudited)
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------- ------------
<S> <C> <C>
U.S. TREASURY BILL - 29.12%
$65,000 U.S. Treasury Bill, 4.49%, due 08/08/1996 (cost $64,692) ............. 64,692
------------
GOVERNMENTAL AGENCY OBLIGATIONS - 69.37%
25,000 Federal Agricultural Mortgage Assoc. Discount Note, 5.05%, due
09/27/1996 ...................................................... 24,691
80,000 Federal Farm Credit Bank Discount Note, 5.28%, due 08/09/1996 ........ 79,542
30,000 Federal Home Loan Mortgage Corp. Discount Note, 5.17%, due
07/22/1996 ...................................................... 29,910
20,000 Federal National Mortgage Assoc. Discount Note, 5.21%, due
07/12/1996 ...................................................... 19,968
------------
TOTAL GOVERNMENTAL AGENCY OBLIGATIONS (cost $154,111) ................ 154,111
------------
TOTAL INVESTMENTS (cost $218,803) .................................... 218,803
Other assets ($5,457) less liabilities ($2,088) ...................... 3,369
------------
NET ASSETS ........................................................... $ 222,172
============
</TABLE>
FEDERAL INCOME TAX INFORMATION:
The aggregate cost of investments at June 30, 1996, for federal income tax and
financial reporting purposes was $218,803.
See accompanying notes to financial statements.
<PAGE>
COMPOSITE DEFERRED SERIES, INC. - MONEY MARKET PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
(Unaudited)
ASSETS
Investments at market (identified cost $218,803) ............ $218,803
Cash ........................................................ 5,270
Prepaid Expense ............................................. 16
Receivable for expense reimbursement ........................ 171
-----------------
Total assets ................................................ 224,260
-----------------
LIABILITIES
Payable for accrued expenses ................................ 2,088
NET ASSETS $222,172
=================
COMPOSITION OF NET ASSETS
Additional paid-in capital .................................. $222,172
=================
NET ASSET VALUE
Net asset value per share for 222,172 shares outstanding .. $1.00
=================
See accompanying notes to financial statements.
<PAGE>
COMPOSITE DEFERRED SERIES, INC. - MONEY MARKET PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1996
(Unaudited)
INVESTMENT INCOME
Interest income ............................................. $5,549
-----------------
Expenses:
Directors' fees .......................................... 3,901
Auditing and legal fees .................................. 607
Postage, printing and office expense ..................... 600
Management fees .......................................... 550
Custodial fees ........................................... 269
Insurance ................................................ 5
Expense Reimbursement .................................... (1,060)
-----------------
Total expenses .............................................. 4,872
-----------------
Fees paid indirectly ........................................ (278)
-----------------
Net expenses ................................................ 4,594
-----------------
Net investment income ....................................... 955
-----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........ $955
=================
See accompanying notes to financial statements.
<PAGE>
COMPOSITE DEFERRED SERIES, INC. - MONEY MARKET PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Year
Ended Ended
June 30, 1996 December 31,
(Unaudited) 1995
----------------- ---------------
OPERATIONS
Net investment income ................... $955 $2,544
Realized gain from investment
transactions ............................ 0 12
----------------- ---------------
Net increase in net assets resulting
from operations ......................... 955 2,556
DIVIDENDS TO SHAREHOLDER
From net investment income ............ (955) (2,544)
From net capital gains from investment
transaction ........................ 0 (12)
NET CAPITAL SHARE TRANSACTIONS .......... 955 2,544
----------------- ---------------
Total increase in net assets ............ 955 2,544
NET ASSETS
Beginning of the period ................. 221,217 218,673
----------------- ---------------
End of the period ....................... $222,172 $221,217
================= ===============
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
COMPOSITE DEFERRED SERIES, INC. - MONEY MARKET PORTFOLIO
FINANCIAL HIGHLIGHTS
SIX MONTHS
ENDED
JUNE 30, YEARS ENDED DECEMBER 31,
1996 -----------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
--------- ------- ------- ------ ------- --------
<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 ..................... $0.00 $0.01 $0.00 $0.00 $0.00 $0.06
--------- ------- ------- ------ ------- --------
LESS DISTRIBUTIONS
Dividends (from net investment income) .... $0.00 ($0.01) $0.00 $0.00 $0.00 ($0.06)
--------- ------- ------- ------ ------- --------
NET ASSET VALUE, END OF PERIOD .............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
========= ======= ======= ====== ======= ========
TOTAL RETURN (1) ............................ 0.00% 1.16% 0.00% 0.00% -0.25% 5.92%
RATIOS/SUPPLMENTAL DATA
Net Assets, End of Period ($1,000's) ...... $222 $221 $219 $218 $218 $586
Ratio of Expenses to Average Net Assets (2) 4.43%(3) 4.54% 3.65% 2.87% 2.82% 0.00%
Ratio of Income to Average Net Assets ..... 0.82%(3) 1.16% 0.39% 0.00% 0.82% 5.77%
(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. The ratio of expenses before voluntary waiver
of certain fees incurred by the portfolio and expense reimbursements was
5.39% in 1996, 6.09% in 1995, 4.47% in 1994, 5.27% in 1993, 3.87% in 1992,
and 2.53% in 1991.
(3) Annualized.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - ACCOUNTING POLICIES
Composite Deferred Series, Inc. is registered under the Investment Company
Act of 1940, as amended, as an open-end diversified management investment
company. The Portfolio consists of four separate portfolios , Growth & Income,
Northwest, Income, and Money Market portfolios, which are designed to meet a
variety of investment objectives. THE MONEY MARKET PORTFOLIO (THE "PORTFOLIO")
IS CURRENTLY NOT OFFERED TO CONTRACT OWNERS.
WM Life Insurance Company (the "Company") is the sole shareholder of the
Portfolio. Shares are used only as funding vehicles for the Flexible Premium
Deferred Variable Annuity Contract (the "Contract") issued by the Company.
Contract owners have the right to instruct the Company how to vote Portfolio
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 the
Portfolio in the preparation of its financial statements.
a. Investment securities are valued at cost adjusted for amortization of
premiums and discounts where applicable. The Board of Directors regularly and
routinely monitors amortized cost assigned to these securities to insure that
carrying value approximates market valuation.
b. Interest income is earned from the settlement date on securities purchased
and is recorded on the accrual basis.
c. The Portfolio accrues shareholder dividends daily and pays such dividends
monthly.
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
are determined on the basis of identified cost.
e. The Portfolio complies with requirements of the Internal Revenue Code
applicable to regulated investment companies and distributes taxable income
so that no provision for federal income tax is required. Income dividends and
capital gain distributions are determined with income tax regulations which
may differ from generally accepted accounting principles.
f. Custodial fees have been increased by $278. This amount relates to "expense
offset arrangements." The Portfolio could have otherwise employed the assets
to produce income if it had not entered into such arrangements. In accordance
with the regulations, such amounts are added to custodial fees actually
incurred to arrive at gross custodial fees and then reflected as a deduction,
"fees paid directly," to derive net expenses. There were no "expense offset
arrangements" other than custodial fees.
NOTE 2 - TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
The amounts of fees and expenses described below are shown on the Portfolio's
statement of operations.
Composite Research & Management Co. (the "Adviser") manages the Portfolio and
Murphey Favre, Inc., is the principle distributor of the Contracts. Both are
affiliates of Washington Mutual Bank and Washington Mutual fsb, and are
subsidiaries of Washington Mutual, Inc. WM Life Insurance Company is a
subsidiary of Washington Mutual, Inc.
Management fees were paid by the Portfolio to the Adviser. Fees are based
upon an annual rate of 0.50% on average daily net assets as computed daily. For
the six-month period ended June 30, 1996, the Advisor voluntarily waived all
management fees of $550.
Directors' fees and expenses were paid directly by the Portfolio to directors
having no affiliation with the Portfolio other than in their capacity as
directors. Other officers and directors received no compensation from the
Portfolio.
WM Life Insurance Company has voluntarily agreed to reimburse the Portfolio
for expenses in excess of revenues. For the six-month period ended June 30,
1996, the Portfolio was reimbursed a total of $510 under this agreement.
<PAGE>
NOTE 3 - CAPITAL STOCK
At June 30, 1996, there were 10 billion shares of no par value capital stock
authorized. Transactions in capital stock were as follows:
Six Months Year
Ended Ended
June 30, 1996 December 31,
(Unaudited) 1995
---------------- -----------------
SHARES
Sold.............................. 0 0
Issued for reinvestment of
dividends and capital gains .... 955 2,544
---------------- -----------------
955 2,544
Reacquired ....................... 0 0
---------------- -----------------
955 2,544
================ =================
