COMPOSITE DEFERRED SERIES INC, 485APOS, 1999-03-02

COMPOSITE DEFERRED SERIES INC
485APOS, 1999-03-02

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SECURITIES & EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Securities Act of 1933 File #33-11010
Investment Company Act of 1940 File #811-4962
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 16 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 16 /X/

COMPOSITE DEFERRED SERIES, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in Charter)

1201 Third Avenue, Suite 1400, Seattle, WA 98101
- --------------------------------------------------------------------------------
(Address of principal executive offices)

1-206-461-8622
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)

John T. West, Corporate Secretary With a copy to:
Composite Deferred Series, Inc. Brian McCabe
1201 Third Avenue Ropes & Gray
Suite 1400 One International Place
Seattle, WA 98101 Boston, MA 02110
- --------------------------------------------------------------------------------
(Name and address of agent for service)

Approximate Date of Proposed Public Offering: May 1, 1999
It is proposed that this filing will become effective:

[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on (date)pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(i) of Rule 485
[X] on May 1, 1999 pursuant to paragraph (a)(i) of Rule 485
[ ] 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
- --------------------------------------------------------------------------------

<PAGE>

May 1, 1999

COMPOSITE DEFERRED SERIES, INC.
SUITE 1400
1201 THIRD AVENUE
SEATTLE, WASHINGTON 98101

A MUTUAL FUND FORMED TO MEET A BROAD RANGE OF INVESTMENT OBJECTIVES

Composite Deferred Series, Inc., (the "Fund") is a mutual fund designed to
provide a broad range of investment alternatives with its series of three
separate Portfolios. The Portfolios have distinct investment objectives and
policies. Currently investments in shares of the Portfolios may only be made by
the WM Deferred Variable Accounts, separate accounts established and maintained
by WM Life Insurance Company for the purpose of funding annuity contracts issued
by the Company. The terms "shareholder" or "shareholders" in this Prospectus
shall refer to the Accounts. The Portfolios are:

- - GROWTH & INCOME PORTFOLIO.
- - NORTHWEST PORTFOLIO.
- - INCOME PORTFOLIO.

This Prospectus describes the Portfolios that are available as underlying
investments through your variable annuity contract. For information about your
variable annuity contract, including information about insurance-related
expenses, see the prospectus for your variable annuity contract, which
accompanies this Prospectus.

CONTENTS PAGE
Risk/Return Summary. . . . . . . . . . . . . . . . . . . . . . .
Investment Practices and Risk Factors. . . . . . . . . . . . . .
Investment Restrictions. . . . . . . . . . . . . . . . . . . . .
Who We Are . . . . . . . . . . . . . . . . . . . . . . . . . . .
The Value of a Single Share. . . . . . . . . . . . . . . . . . .
How to Buy Shares. . . . . . . . . . . . . . . . . . . . . . . .
Distribution of Income and Capital Gains . . . . . . . . . . . .
Income Taxes on Dividends and Capital Gains. . . . . . . . . . .
How to Sell Shares . . . . . . . . . . . . . . . . . . . . . . .
We're Here to Help You . . . . . . . . . . . . . . . . . . . . .
Financial Highlights . . . . . . . . . . . . . . . . . . . . . .

The Securities and Exchange Commission has not approved or
disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a crime.

-2-
<PAGE>

RISK/RETURN SUMMARY

This summary identifies the investment objective, principal investment
strategies and principal risks of each Portfolio. The principal investment
strategies contained in these summaries are not, however, the only investment
strategies available to the Portfolios, and any number of the principal
investment strategies may not be in use at any given time. For a discussion of
all of the investment strategies available to the Portfolios, please see the
Statement of Additional Information (the "SAI").

A "Summary of Principal Risks" describing the principal risks of investing
in the Portfolios begins on page ___. You can find additional information about
each Portfolio, including a more detailed description of the risks of an
investment in each Portfolio, after this summary. Please be sure to read the
more complete descriptions of the Portfolios, and the related risks, before you
invest.

Below the description of each Portfolio is a bar chart showing how the
investment returns of its shares have varied in the past ten years, or in the
years since the Portfolio began if it is less than ten years old. The table
following each bar chart shows how average annual returns of the Portfolio
compare to returns of a broad-based securities market index for the last one,
five and ten years (or, for newer Portfolios, for shorter periods). Performance
shown does not reflect any insurance-related charges or expenses. PAST
PERFORMANCE IS NOT NECESSARILY AN INDICATION OF FUTURE PERFORMANCE.

There can be no assurance that any Portfolio will achieve its objective.
It is possible to lose money on investments in the Portfolios. An investment in
a Portfolio is not a deposit of a bank and is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.

Investors ("Contract Owners") should be aware that the market value of the
Portfolio selected will affect the value of the Flexible Premium Variable
Annuity Contract (the "Contract") and the amount of annuity payments received
under the Contract. See the attached Prospectus for the Contract which describes
the relationship between increases or decreases in the net asset value of
Portfolio shares (and any distributions on such shares) and the benefits
provided under the Contract.

-3-
<PAGE>

GROWTH & INCOME PORTFOLIO

- - OBJECTIVE. This Portfolio seeks to provide long-term capital growth.
Current income is a secondary consideration.
- - PRINCIPAL INVESTMENT STRATEGIES. The Portfolio invests primarily in common
stocks.

YEARLY PERFORMANCE*

<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Return (%) ____ ____ ____ ____ ____ ____ 33.70 22.09 29.66
</TABLE>

CALENDAR YEAR

During the periods shown above, the highest quarterly return was __% (for
the quarter ended ________ __, 19__), and the lowest was _____% (for the
quarter ended _________ __, 19__). For the quarter ended March 31, 1999, the
Portfolio's return was ___%.

PERFORMANCE TABLE*
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (FOR PAST ONE PAST FIVE PAST TEN
PERIODS ENDING DECEMBER 31, 1998) YEAR YEARS YEARS
- --------------------------------------------------------------------------------
Portfolio Shares
- --------------------------------------------------------------------------------
Standard & Poor's 500 Composite Index**
- --------------------------------------------------------------------------------

* The Portfolio's performance through __________ __, 19__ benefitted from the
agreement of WM Advisors and its affiliates to limit the Portfolio's expenses.

** This index represents an unmanaged weighted index of 500 industrial,
transportation, utility and financial companies widely regarded by investors as
representative of the stock market.

-4-

<PAGE>

NORTHWEST PORTFOLIO

- - OBJECTIVE. This Portfolio seeks long-term growth of capital.

- - PRINCIPAL INVESTMENT STRATEGIES. The Portfolio invests primarily in common
stocks of companies located or doing business in Alaska, Idaho, Montana,
Oregon and Washington. The Portfolio's investments may include REPURCHASE
AGREEMENTS and REAL ESTATE INVESTMENT TRUSTS (REITS).

YEARLY PERFORMANCE*

<TABLE>
<CAPTION>
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Annual Return (%) -1.12 26.03 22.23 32.92
</TABLE>

During the periods shown above, the highest quarterly return was ___% (for
the quarter ended ________ __, 19__), and the lowest was ____% (for the quarter
ended ________ __, 19__). For the quarter ended March 31, 1999, the Portfolio's
return was _____%.

PERFORMANCE TABLE*

- ----------------------------------------------------------------------
SINCE
AVERAGE ANNUAL TOTAL RETURNS PAST ONE INCEPTION
(FOR PERIODS ENDING DECEMBER 31, 1998) YEAR (1/4/93)
- ----------------------------------------------------------------------
Portfolio Shares
- ----------------------------------------------------------------------
Standard & Poor's 500 Composite Index**
- ----------------------------------------------------------------------

* The Portfolio's performance through __________ __, 19__ benefitted from the
agreement of WM Advisors and its affiliates to limit the Portfolio's expenses.

** This index represents an unmanaged weighted index of 500 industrial,
transportation, utility and financial companies widely regarded by investors as
representative of the stock market.

-5-
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INCOME PORTFOLIO

- - OBJECTIVE. This Portfolio seeks a high level of current income consistent
with protection of capital.

- - PRINCIPAL INVESTMENT STRATEGIES. The Portfolio invests primarily in a
diversified pool of fixed-income securities including U.S. Government
securities and mortgage-backed securities (including collateralized
mortgage obligations), up to 20% of which may be in lower-rated securities
(which are sometimes called "junk bonds"). The Portfolio may also invest
in convertible securities.

YEARLY PERFORMANCE*

CALENDAR YEAR

During the periods shown above, the highest quarterly return was ____% (for the
quarter ended _____ __, 19__), and the lowest was ______% (for the quarter
ended ______ __, 19__). For the quarter ended March 31, 1999, the Portfolio's
return was _____%.

PERFORMANCE TABLE*

- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (FOR PAST ONE PAST FIVE PAST TEN
PERIODS ENDING DECEMBER 31, 1998) YEAR YEARS YEARS
- --------------------------------------------------------------------------------
Portfolio Shares
- --------------------------------------------------------------------------------
Lehman Brothers Government/Corporate
Bond Index**
- --------------------------------------------------------------------------------

* The Portfolio's performance through __________ __, 19__ benefitted from the
agreement of WM Advisors and its affiliates to limit the Portfolio's expenses.

** This index is generally considered representative of the U.S. government and
corporate bond markets.

-6-
<PAGE>

SUMMARY OF PRINCIPAL RISKS

The value of your investment in a Portfolio changes with the value of the
investments held by that Portfolio. Many factors can affect that value.
Factors that can affect a particular Portfolio as a whole are called "principal
risks." They are summarized in this section. The chart at the end of this
section displays similar information. All Portfolios are subject to principal
risks. These risks can change over time, because the types of investments made
by the Portfolios can change over time. Those sections also include more
information about the Funds, their investments and the related risks.

- - MARKET RISK. Each of the Portfolios is subject to market risk, which is
the general risk of unfavorable changes in the market value of a
Portfolio's securities holdings. The Growth & Income and Northwest
Portfolios, by investing in equity securities, such as common stock,
preferred stock and convertible securities, are exposed to the risk of
changes in the value of equity securities. Those risks include the risks
of broader market declines as well as more specific risks affecting the
issuer, such as management performance, financial leverage, industry
problems and reduced demand for the issuer's goods or services.

Another aspect of market risk is interest rate risk. As interest rates
rise, your investment in a Portfolio is likely to be worth less because its
income-producing equity or debt investments are likely to be worth less.

The Income Portfolio is subject to interest rate risk, even though it
generally invests its assets in the highest quality debt securities, such
as U.S. Government securities.

Interest rate risk is generally greater for debt securities with longer
maturities. This risk is compounded for the Income Portfolio, which may
invest in mortgage-backed or other asset-backed securities that may be
prepaid. These securities have variable maturities that tend to lengthen
when that is least desirable - when interest rates are rising. Increased
market risk is also likely as a result of the Income Portfolio's such as
the investment in debt securities paying no interest, such as zero-coupon,
principal-only and interest-only securities.

- - CREDIT RISK. Each of the Portfolios may be subject to credit risk to the
extent it invests in fixed-income securities. This is the risk that the
issuer or the guarantor of a debt security, or the counterparty to any of a
Portfolio's investment transactions (including without limitation
repurchase agreements, reverse repurchase agreements, securities loans and
other over-the-counter transactions), will be unable or unwilling to make
timely principal and/or interest payments, or to otherwise honor its
obligations. Varying degrees of credit risk, often reflected in credit
ratings, apply. Credit risk is particularly significant for the Income
Portfolio's investments in lower-rated securities. These securities and
similar unrated securities (commonly known as "junk bonds") have
speculative elements or are predominantly speculative credit risks. The
Income and Growth & Income Portfolios, which may make foreign investments
denominated in U.S. dollars, are also subject to increased credit risk
because of the difficulties of requiring foreign entities to honor their
contractual commitments, and because a number of foreign governments and
other issuers are already in default.

-7-
<PAGE>

- - CURRENCY RISK. The Income and Growth & Income Portfolios, which may invest
in securities denominated in, and/or receive revenues in, foreign
currencies will be subject to currency risk. This is the risk that those
currencies will decline in value relative to the U.S. dollar, or, in the
case of hedging positions, that the U.S. dollar will decline in value
relative to the currency hedged.

- - FOREIGN INVESTMENT RISK. The Income and Growth & Income Portfolios, which
may make foreign investments, may experience more rapid and extreme changes
in value than Funds with investments solely in securities of U.S.
companies. This is because the securities markets of many foreign
countries are relatively small, with a limited number of companies
representing a small number of industries. Additionally, foreign
securities issuers are usually not subject to the same degree of regulation
as U.S. issuers. Reporting, accounting and auditing standards of foreign
countries differ, in some cases significantly, from U.S. standards. Also,
nationalization, expropriation or confiscatory taxation, currency blockage,
political changes or diplomatic developments could adversely affect a
Portfolio's investments in a foreign country. In the event of
nationalization, expropriation or other confiscation, a Portfolio could
lose its entire investment. Adverse developments in certain regions, such
as Southeast Asia, may adversely affect the markets of other countries
whose economies appear to be unrelated.

- - GEOGRAPHIC CONCENTRATION RISK. The Northwest Portfolio invests significant
portions of its assets in the concentrated geographic areas of the
northwestern United States, and thus generally has more exposure to
regional economic risks than funds making investments more broadly.

- - LEVERAGING RISK. When a Portfolio is borrowing money or otherwise
leveraging its portfolio, the value of an investment in that Portfolio will
be more volatile and all other risks will tend to be compounded. The
Income Portfolio may achieve leverage by using reverse repurchase
agreements, and the Growth & Income Portfolio may achieve leverage through
the use of inverse floating rate investments.

- - DERIVATIVES RISK. Each of the Portfolios may, subject to the limitations
and restrictions stated elsewhere in this Prospectus and the SAI, use
strategic transactions involving derivatives, such as forward contracts,
futures contracts, options, swaps, caps, floors and collars, which are
financial contracts whose value depends on, or is derived from, the value
of something else, such as an underlying asset, reference rate or index.
In addition to other risks, such as the credit risk of the counterparty,
derivatives involve the risk of mispricing or improper valuation and the
risk that changes in the value of the derivative may not correlate
perfectly with relevant assets, rates and indices.

- - LIQUIDITY RISK. Liquidity risk exists when particular investments are
difficult to purchase or sell, possibly preventing a Portfolio from selling
out of these illiquid securities at an advantageous price. All of the
Portfolios may be subject to liquidity risk. Portfolios that engage in
strategic transactions, make foreign investments, and invest in securities
involving substantial market and/or credit risk tend to involve greater
liquidity risk.

- - MANAGEMENT RISK. Each Portfolio is subject to management risk because it is
an actively managed investment portfolio. WM Advisors will apply its
investment techniques and risk analyses in making investment decisions for
the Portfolios, but there can be no guarantee that they will produce the
desired results. In some cases derivatives and other investments may be
unavailable or WM Advisors

-8-
<PAGE>

may choose not to use them under market conditions when their use would
have been beneficial to the Portfolios.

- - SMALLER COMPANY RISK. Market risk and liquidity risk are particularly
pronounced for stocks of companies with relatively small market
capitalizations. These companies may have limited product lines, markets
or financial resources or they may depend on a few key employees. The
Growth & Income and Northwest Portfolios generally have the greatest
exposure to this risk.

PRINCIPAL RISKS BY PORTFOLIO

The following chart summarizes the principal risks of each Portfolio. Risks not
marked for a particular Portfolio may, however, still apply to some extent to
that Portfolio at various times.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FUND MARKET CREDIT CURRENCY FOREIGN LEVERAGING GEOGRAPHIC DERIVATIVES LIQUIDITY MANAGEMENT SMALLER
RISK RISK RISK INVESTMENT RISK CONCENTRATION RISK RISK RISK COMPANY
RISK RISK RISK
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Income Fund X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
Growth & X X X X X X X X
Income Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Northwest Fund X X X X X X X X
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

-9-

<PAGE>

INVESTMENT PRACTICES AND RISK FACTORS

This section provides additional information about the principal investment
strategies and principal risks of the Portfolios.

GROWTH & INCOME PORTFOLIO

Currently, equity investments are selected from high-quality companies with
solid business fundamentals that the Adviser believes have a competitive
advantage. Securities may be purchased on a recognized exchange, over-the-
counter, or through the NASDAQ system.

Although the Portfolio is diversified and management believes the Portfolio
to be invested prudently, the Portfolio is subject to market risk and financial
risk.

NORTHWEST PORTFOLIO

Common stocks are selected from high-quality companies with solid business
fundamentals that the Adviser believes have a competitive advantage. Since the
Portfolio concentrates on companies located or doing business in the Northwest,
a portion of its performance is dependent on the region's economic conditions.
Because of this, it could be adversely impacted by industrial and business
trends within the five-state area. Some of the companies whose securities are
held by the Portfolio may have significant national or international markets for
their products and services. Therefore, its performance could also be affected
by national or international economic conditions.

INCOME PORTFOLIO

A diversified portfolio of debt issues and other obligations is carefully
selected by the Adviser to provide high current yields consistent with moderate
risk. Accordingly, the Portfolio invests most of its assets in the following:

1) Debt and convertible debt securities which enjoy the four highest
ratings of Standard & Poor's or Moody's Investor's Service, Inc.
(Securities rated BBB by Standard & Poor's or Baa by Moody's may have
speculative characteristics. See the Statement of Additional
Information, Appendix B, for a detailed description of these ratings.)
2) Debts of the U.S. government and its agencies, including mortgage-
backed securities.
3) Obligations of U.S. banks that belong to the Federal Reserve System.
(The Portfolio may invest no more than 25% of its total assets in
these issues.)
4) Preferred stocks and convertible preferred stocks which enjoy the four
highest ratings of Standard & Poor's or Moody's.
5) The highest grade commercial paper as rated by Standard & Poor's or
Moody's.
6) Short-term repurchase agreements (usually not more than seven days).
7) Deposits in U.S. banks. (Unless these are liquid, they may not exceed
10% of the Portfolio's total assets.)

The Income Portfolio invests most of its assets in investment-grade
corporate bonds, and should be subject to risk, to market risk, and to moderate
credit current income volatility.

The market value of fixed-income debt securities is affected by changes in
general market interest rates. If interest rates fall, the market value of
fixed-income securities tends to rise; but if interest rates rise, the value of

-10-

<PAGE>

fixed-income securities tends to fall. This market risk affects all fixed-income
securities, but lower-rated and unrated securities may be subject to greater
market risk than higher-rated (lower-yield) securities. For further details on
risk, see the Statement of Additional Information.

OTHER INVESTMENT PRACTICES

MONEY MARKET INSTRUMENTS. The Portfolios are permitted to invest in money
market instruments for temporary or defensive purposes. The money market
investments permitted include obligations of the U.S. government and its
agencies and instrumentalities; short-term corporate debt securities; commercial
paper including bank obligations; certificates of deposit; and repurchase
agreements.

REPURCHASE AGREEMENTS. The Portfolios may invest in repurchase agreements.
In a repurchase agreement, the Portfolio buys a security at one price and agrees
to sell it back at a higher price. If the seller defaults on its agreement to
repurchase the security, the Portfolio may suffer a loss because of a decline in
the value of the underlying debt security.

Repurchase agreements will only be entered into with brokers, dealers or
banks that meet credit guidelines adopted by the Fund's Board of Directors. To
limit risk, repurchase agreements maturing in more than seven days will not
exceed 10% of the Portfolio's total assets.

REAL ESTATE INVESTMENT TRUSTS. Up to 25% of Growth & Income or Northwest
Portfolio's assets may be invested in real estate investment trusts ("REITs").
Factors influencing the investment performance of REITs include the profitable
operation of properties owned, financial condition of lessees and mortgagors,
underlying value of the real property and mortgages owned, amount of financial
leverage, and the amount of cash flow generated and paid out.

COVERED CALL OPTIONS. Growth & Income and Northwest Portfolios may, if the
Adviser considers it appropriate, write (sell) covered call options. A call
option is "covered" if the Portfolio owns the security underlying the option it
has written or it maintains enough cash, cash equivalents or liquid securities
to purchase the underlying security. If a Portfolio sells a covered call option,
it becomes obligated to deliver the securities underlying the option if the
purchaser chooses to exercise the option before its termination date. In return,
the Portfolio receives a premium from the purchaser which it keeps, regardless
of whether the option is exercised. During the option period, the Portfolio
gives up any possible capital appreciation above the agreed-upon price if the
market price of the underlying security rises.

WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES. The Growth & Income and Income
Portfolios may purchase securities on what is called a "when-issued" or
"delayed-delivery" basis. This is done to obtain what is considered to be an
advantageous yield or price at the time of the transaction. With these
transactions, securities are bought under an agreement that payment and delivery
will take place no more than 120 days in the future.

The payment obligation and interest rates to be received are fixed at the
time the Portfolio enters into the commitment. Thus, it is possible that the
market value at the time of settlement could be higher or lower than the
purchase price, if the general level of interest rates has changed. No interest
will accrue to the Portfolio until settlement.

-11-
<PAGE>

The Portfolios are prohibited from entering into when-issued or delayed-
delivery commitments that, in total, exceed 20% of the market value of its total
assets minus all other liabilities (except for the obligations created by these
commitments).

MORTGAGE-BACKED SECURITIES. The Growth & Income and Income Portfolios may
invest in mortgage-backed securities. These may include "pass-through"
instruments or collateralized mortgage obligations. The holder of a pass-through
instrument receives a share of all interest and principal payments from the
mortgages underlying the certificate, net of certain fees. Collateralized
mortgage obligations differ from traditional pass-through instruments in that
they generally distribute principal and interest from their underlying pool of
mortgages sequentially rather than on a pro-rata basis. Generally there are
multiple classes of ownership providing for successively longer expected
maturities.

Mortgage-backed securities, because of the pass-through of prepayments of
principal on the underlying mortgage obligations, almost always have an
effective maturity that is shorter than the stated maturity. The prepayment
characteristics of the underlying mortgages vary, so it is not possible to
accurately predict the life of a particular mortgage-backed security.

During periods of declining interest rates, prepayment of mortgages
underlying mortgage-backed securities can be expected to slow.

When the mortgage obligations are prepaid, the Portfolio reinvests the
prepaid amounts in securities whose yields reflect interest rates prevailing at
the time. Therefore, the Portfolio's ability to maintain high-yielding
mortgage-backed securities will be adversely affected to the extent that
prepayments of mortgages must be reinvested in securities which have lower
yields than the prepaid mortgages. In addition, prepayments of mortgages which
underlie securities purchased at a premium could result in capital losses.
During periods of rising interest rates, slower prepayments limit the ability to
reinvest in higher yielding securities.

LOWER-RATED SECURITIES. To increase yield, the Adviser may also invest up
to 20% of the Income Portfolio's assets in below investment-grade securities or
in non-rated securities the Adviser believes to be comparable. Lower-rated and
unrated securities are generally subject to greater financial risk than higher-
rated securities, as there is a greater probability that issuers of lower-rated
securities will not be able to pay the principal and interest due on such
securities, especially during periods of adverse economic conditions. The market
price of lower-rated securities generally fluctuates more than those of higher-
rated securities, which may affect the value of the Portfolio. Securities which
are rated lower than BBB or Baa (commonly referred to as "junk bonds") should be
considered speculative as such ratings indicate a quality of less than
investment grade. Securities rated BBB or Baa, although investment grade, also
reflect speculative characteristics. The Adviser will only invest in these
lower-rated securities if it believes the income and yield are sufficient to
justify the incremental risk.

INVESTMENT RESTRICTIONS

While many of the decisions of the Adviser depend on flexibility, there are
certain principles so fundamental that they are required as matters of policy.

These may not be changed without a vote of the majority of the outstanding
shares of the respective Portfolio.

IN ADDITION TO OTHER RESTRICTIONS LISTED IN THE STATEMENT OF ADDITIONAL
INFORMATION, EACH PORTFOLIO MAY NOT:

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<PAGE>

- invest more than 5%* of its total assets in the securities of any
single issuer (other than U.S. government securities), except that up
to 25% of assets may be invested without regard to this 5% limitation;
- acquire more than 10%* of the voting securities of any company;
- invest more than 25%* of its assets in any single industry;
- borrow money (except it may borrow up to 5% of its total assets for
emergency, non-investment purposes, or up to 33 1/3% to meet
redemption requests that would otherwise result in the untimely
liquidation of vital parts of its portfolios).

* Percentage at the time the investment is made.

WHO WE ARE

Composite Deferred Series, Inc. was incorporated under the laws of
Washington on December 8, 1986, as an open-end management investment company. It
is a series company consisting of three separate Portfolios, each of which is
classified as diversified under the Investment Company Act of 1940.

Shares of the Portfolios are currently sold only to, and are owned entirely
by, the WM Deferred Variable Accounts (the "Accounts") to fund the benefits
under certain flexible premium variable annuity contracts (the "Contracts")
issued by WM Life Insurance Company, the "Company." The Accounts, for which WM
Funds Distributor, Inc. serves as "Distributor," will invest in shares of the
Portfolios as directed by the Contract Owner whose allocation rights are further
described in the attached Prospectus for the Contracts. The Company may cause
the Accounts to sell shares to the extent necessary to provide benefits under
the Contracts.

The Fund is managed by WM Advisors, Inc. (the "Adviser"). The Adviser and
Distributor are indirect wholly owned subsidiaries of Washington Mutual, Inc.
The Adviser manages other mutual funds with differing objectives, as well as
institutional advisory accounts, and has been in the business of investment
management since 1944. The Adviser's address is 1201 Third Avenue, Suite 1400,
Seattle, Washington 98101-3015.

The Adviser advises the Fund on investment policies and specific
investments. Subject to supervision by the Fund's Board of Directors, the
Adviser determines which securities are to be bought or sold. These decisions
are based on analyses of the nation's economy, sectors of industry and specific
corporations. They are compiled from extensive data provided by some of the
country's largest investment firms, in addition to the Adviser's own
investigation.

William G. Papesh is president of the Fund and of the Adviser. A team of
the Adviser's investment professionals manage each Portfolio under supervision
of the Adviser's investment committee. The primary Portfolio managers
___________________ are for the Growth & Income Portfolio; Gary J. Pokrzywinski,
CFA, for the Income Portfolio; and David W. Simpson, CFA, for the Northwest
Portfolio. Mr. _________ has been employed by the Adviser since ________________
and has ____ years of continuous investment experience. Mr. Pokrzywinski has
been employed by the Adviser since July 1992 and has 13 years of continuous
experience in fixed-income and financial market analysis. Mr. Simpson has been
employed by the Adviser since March 1993 and has 12 years of continuous
investment experience.

Management has included a discussion of performance in the Fund's annual
report which is available upon request and without charge by calling the Fund
offices.

-13-
<PAGE>

The Fund has an authorized capitalization of 10 billion shares of capital
stock. Shares are designated by Portfolio. All shares of the Fund are freely
transferable. They do not have preemptive rights, and none of the shares have
any preference to conversion, exchange, dividends, retirements, liquidation,
redemption or any other feature. The Fund does not normally hold annual
meetings. It may hold shareholder meetings from time to time on important
matters. With certain exceptions, such as changes of investment objective and
approval of the management contract, all shares have equal voting rights on any
corporate matter requiring shareholder approval. Investors (contract owners) may
instruct the Company on voting shares at shareholders' meetings. (See the
Prospectus for the Account, "Voting Rights," for a discussion of pass-through
voting.)

WM Advisors, Inc. serves as "Adviser" under an investment management
agreement with the Fund. The agreement is renewable every year subject to the
approval of the Fund's Board of Directors.

A fee based on a percentage of average daily net assets is paid to the
Adviser for its services. This includes investment management and administrative
services and the Adviser's function as an agent for the Fund in paying that
portion of the fee owed to the Distributor for its services. The Fund is
responsible for paying expenses of operation that are not assumed by the
Adviser.

Each Portfolio pays advisory fees equal to an annual rate of .50% of the
average daily net asset value of the Portfolio. Advisory fees are calculated
daily and paid monthly.

Other operating expenses include fees of directors not employed by the
Adviser, custodial fees, auditing and legal fees, publishing reports to
shareholders, corporate meetings, and other normal costs of running a business.

THE VALUE OF A SINGLE SHARE

The value of each Portfolio is calculated at the end of each business day
the New York Stock Exchange is open or 1:00 p.m. Pacific time, whichever is
earlier. That figure is determined by adding the value of the securities and
other assets and subtracting any liabilities of the Portfolio. That amount,
divided by the number of shares outstanding, is the net asset value per share,
which is commonly referred to as "NAV."

Investment securities and other assets are valued primarily on the basis of
market quotations or, if quotations are not readily available, by a method that
the Board of Directors believes accurately reflects fair value. Foreign
securities are valued on the basis of quotations from the primary market in
which they are traded, and are translated from the local currency into U.S.
dollars using current exchange rates. As a result, changes in the value of those
currencies in relation to the U.S. dollar may affect the Portfolios' NAV.
Because foreign markets may be open at different times than the New York Stock
Exchange, the value of the Portfolios' shares may change on days when
shareholders are not able to buy or sell them. If events materially affecting
the values of the Portfolios' foreign investments occur between the closed
foreign markets and the close of regular trading on the New York Stock Exchange,
those investments may be valued at their fair value.

HOW TO BUY SHARES

Investments in shares of the Portfolios may only be made by the WM Deferred
Variable Accounts, separate accounts established and maintained by WM Life
Insurance Company for the purpose of funding annuity contracts issued by the
Company. Investors desiring to purchase annuity contracts supported by any of
the portfolios of Composite Deferred Series should read this prospectus in
conjunction with the Account Prospectus.

-14-

<PAGE>

Portfolio shares are offered to the Accounts without sales charge at the
NAV next determined after receipt by the Fund of the purchase order.

DISTRIBUTION OF INCOME AND CAPITAL GAINS

The Portfolios distribute dividends from net investment income which is
essentially interest and dividends from securities held minus expenses. They
also make capital gain distributions if realized gains from the sale of
securities exceed realized losses. Dividends from net investment income and any
distributions of realized capital gains are reinvested in additional shares of
the respective Portfolio at net asset value.

For the Income Portfolio, dividends are accrued daily and paid monthly,
when available; for the Growth & Income Portfolio, dividends are declared and
paid quarterly, when available; and for the Northwest Portfolio, dividends are
declared and paid annually, when available. Any net realized capital gains will
be paid annually.

INCOME TAXES ON DIVIDENDS AND CAPITAL GAINS

The Portfolios qualify as regulated investment companies under the Internal
Revenue Code. As long as they remain qualified, they will not be subject to
federal income tax on income and capital gains distributed to its shareholders.
Portfolios within a series fund are treated separately for federal income tax
purposes.

Since the Accounts will be the only shareholders of the Fund, no discussion
is included about the federal income tax consequences to shareholders. For
information concerning the federal income tax consequences to holders of
variable annuity contracts, see the attached Prospectus for the Flexible Premium
Deferred Variable Annuity Contracts.

HOW TO SELL SHARES

Shares of the Fund's portfolios may be redeemed for cash at any time by
the. There is no charge levied by the Fund for redemption of Portfolio shares,
nor is any fee imposed on the exchange of shares of one Portfolio for those of
another. The share price paid on sales or exchanges will be the NAV next
determined after receipt of the request.

Contract Owners should see the Prospectus for the Accounts for information
on surrenders and withdrawals under the annuity contracts and any charges
associated with the annuity contracts. (See the Prospectus for the Accounts for
a discussion of contingent deferred sales charge.)

WE'RE HERE TO HELP YOU

Any inquiries you may have regarding this Fund or your account may be
directed to your investment representative or to [WM Life Insurance Company] at
the address or telephone number on Page [ ] of their Prospectus.

FINANCIAL HIGHLIGHTS

The tables on this and the following page presents selected financial
information about the Portfolios, including per share data, expense ratios and
other data based on average net assets. Information relating to the year ended
December 31, 1998 has been audited by Deloitte & Touche LLP, the Fund's
independent auditors, and information

-15-

<PAGE>

relating to prior periods has been audited by LeMaster & Daniels PLLC. The
reports of Deloitte & Touche LLP and LeMaster & Daniels PLLC appear in the
Fund's annual reports for the years ended December 31, 1998 and 1997,
respectively. The annual reports are incorporated by reference into the
Statement of Additional Information.

GROWTH &
INCOME
PORTFOLIO

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1998
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF PERIOD. . . . . . . . $24.32 $20.22 $15.70 $15.71
------- ------- ------- -------
INCOME FROM
INVESTMENT
OPERATIONS
Net Investment
Income. . . . . . . . . . . 0.29 0.34 0.35 0.31
Net Gains or
Losses on
Securities (both
realized
and unrealized. . . . . . . 6.49 4.10 4.90 0.12
------- ------- ------- -------
Total from
Investment
Operations . . . . . . . . . 6.78 4.44 5.25 0.43
------- ------- ------- -------
DISTRIBUTIONS
Dividends (from
net investment income. . . . (0.29) (0.34) (0.35) (0.31)
Distributions
(from capital
gains . . . . . . . . . . . (1.75) - (0.38) (0.13)
------- ------- ------- -------
Total Distribution. . . . . . (2.04) (0.34) (0.73) (0.44)
------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD. . . . . . . . $29.06 $24.32 $20.22 $15.70
------- ------- ------- -------
------- ------- ------- -------
TOTAL RETURN (1) . . . . . . 29.66% 22.09% 33.70% 2.72%
RATIOS/SUPPLEMENTAL
DATA
Net Assets,
End of Period
($1,000's) . . . . . . . . . $57,255 $41,402 $24,448 $14,195
Ratio of
Expenses to
Average Net Assets (2). . . . 0.59% 0.61% 0.70% 0.68%
Portfolio Turnover
Rate. . . . . . . . . . . . . .50% .45% .36% .25%
</TABLE>

(1) Total returns do not reflect a sales charge.
(2) Ratio of expenses to average net assets includes expenses paid indirectly
beginning in fiscal 1995.
(3) Average commission paid disclosure is required beginning in fiscal year
1996.

-16-
<PAGE>

NORTHWEST PORTFOLIO

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,

1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF
PERIOD . . . . . . . . . . . . . . $18.23 $14.99 $11.97 $12.19

INCOME FROM INVESTMENT
OPERATIONS
Net Investment
Income . . . . . . . . . . . . . 0.07 0.09 0.09 0.08
Net Gains or
Losses on
Securities
(both realized and
unrealized). . . . . . . . . . . 5.80 3.24 3.02 (0.21)
Total From
Investment
Operations . . . . . . . . . . . 5.87 3.33 3.11 (0.13)

LESS
DISTRIBUTIONS
Dividends (from net investment
income). . . . . . . . . . . . . (0.07) (0.09) (0.09) (0.08)
Distributions
(from capital gains). . . . . . . (0.48) - - (0.01)
------- ------- ------- -------
Total Distributions . . . . . . . (0.55) (0.09) (0.09) (0.09)
------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD. . . . . . . . . . $23.55 $18.23 $14.99 $11.97
------- ------- ------- -------
------- ------- ------- -------
TOTAL RETURN(2) . . . . . . . . . 32.92% 22.23% 26.03% -1.12%
RATIOS/SUPPLEMENTAL
DATA
Net Assets,
End of Period ($1,000's) . . . . $19,924 $12,770 $7,495 $4,647
Ratio of
Expenses to
Average Net Assets(3). . . . . . 0.68% 0.77% 0.90% 0.87%
Ratio of Net
Income to
Average Net Assets . . . . . . . 0.31% 0.56% 0.67% 0.76%
Portfolio Turnover
Rate . . . . . . . . . . . . . . 31% 31% 11% 17%
</TABLE>

(1) From commencement of operations on January 4, 1993.
(2) Total returns do not reflect a sales charge. Returns of less than one year
are not annualized.
(3) Ratio of expenses to average net assets includes expenses paid indirectly
beginning in fiscal 1995. The ratio of expenses before management fee
waiver and expense reimbursements was 1.45% for fiscal 1993.
(4) Average commission paid disclosure is required beginning in fiscal year
1996.
(5) Annualized.

-17-
<PAGE>

INCOME PORTFOLIO

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,

1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE
BEGINNING OF
PERIOD . . . . . . . . . . . . . . $12.08 $12.59 $11.22 $12.57
------- ------- ------- -------
INCOME FROM
INVESTMENT
OPERATIONS
Net Investment
Income . . . . . . . . . . . . . 0.79 0.78 0.79 0.79
Net Gains or
Losses on
Securities
(both realized and
unrealized). . . . . . . . . . . 0.45 (0.51) 1.37 (1.35)
------- ------- ------- -------
Total From
Investment
Operations . . . . . . . . . . . 1.24 0.27 2.16 (0.56)
------- ------- ------- -------
LESS
DISTRIBUTIONS
Dividends (from
net investment income) . . . . . (0.79) (0.78) (0.79) (0.79)
NET ASSET VALUE,
END OF PERIOD. . . . . . . . . . $12.53 $12.08 $12.59 $11.22
------- ------- ------- -------
------- ------- ------- -------
TOTAL RETURN (1). . . . . . . . . 10.62% 2.34% 19.86% -4.48%

RATIOS/SUPPLEMENTAL
DATA
Net Assets,
End of Period ($1,000's) . . . . $18,364 $17,385 $15,206 $10,842
Ratio of
Expenses to
Average Net Assets(3). . . . . . 0.70% 0.67% 0.76% 0.74%
Ratio of Net
Income to
Average Net Assets . . . . . . . 6.48% 6.46% 6.62% 6.79%
Portfolio Turnover
Rate (2) . . . . . . . . . . . . 9% 11% 14% 15%
Average Commission
</TABLE>

(1) Total returns do not reflect a sales charge.
(2) The ratio of expenses to average net assets includes expenses paid
indirectly beginning in fiscal 1995.

-18-
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

May 1, 1999

COMPOSITE DEFERRED SERIES, INC.

A Mutual Fund Formed to Meet a Broad Range of Investment Objectives

1201 Third Avenue, Suite 1400
Seattle, WA 98101
Toll free: 800-543-8072

Composite Deferred Series, Inc. (the "Fund") aims to enable investors to
meet a broad range of investment alternatives by providing a series of three
separate portfolios, each with a different investment objective. Additional
portfolios may be created by the Board of Directors, from time to time, without
further action on the part of existing investors. Investors choose whichever
portfolio best suits their needs and may exchange portfolios within the Fund
without charge as their investment objectives or economic conditions change. The
portfolios are:

- GROWTH & INCOME PORTFOLIO: The primary objective of this Portfolio is
long-term capital growth. Current income is a secondary
consideration. Investments are made in a diversified pool of common
stocks and other securities.

- NORTHWEST PORTFOLIO: This Portfolio seeks long-term growth of capital
by investing in common stocks of companies located or doing business
in Alaska, Idaho, Montana, Oregon and Washington.

- INCOME PORTFOLIO: The objective of this Portfolio is to provide a high
level of current income that is consistent with protection of
shareholders' capital. It pursues this objective through careful
investment in a diversified pool of debt securities.

Individual portfolio investments, carefully chosen to fulfill the diverse
objectives, are adjusted in accordance with WM Advisors, Inc.'s (the "Adviser")
evaluation of changing market risks and economic conditions. There can be no
assurance that these investment objectives will be achieved.

THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. IT SHOULD BE READ
IN CONJUNCTION WITH THE FUND'S PROSPECTUS DATED MAY 1, 1999, AS WELL AS THE
PROSPECTUS FOR THE FLEXIBLE PREMIUM DEFERRED VARIABLE ANNUITY CONTRACTS ISSUED
BY WM LIFE INSURANCE COMPANY WHICH MAY BE OBTAINED WITHOUT CHARGE BY CONTACTING
WM LIFE INSURANCE AT THE ADDRESS SHOWN IN THEIR PROSPECTUS. THIS STATEMENT IS
INTENDED TO PROVIDE ADDITIONAL INFORMATION REGARDING THE ACTIVITIES AND
OPERATION OF THE FUND WHEN ALLOCATING AN INVESTMENT UNDER THE FLEXIBLE PREMIUM
DEFERRED VARIABLE ANNUITY CONTRACT TO THE FUND.

-19-
<PAGE>

TABLE OF CONTENTS

Page Page

The Fund and Its Management Brokerage Allocations and
Distribution Services Portfolio Transactions
How Shares Are Valued General Information
How Shares Can Be Purchased Financial Statements and
Redemption of Shares Reports
Dividends, Capital Gain Appendix A
Distributions and Taxes Appendix B
Investment Practices
Investment Restrictions

THE FUND AND ITS MANAGEMENT
WM DEFERRED VARIABLE ACCOUNT

Currently, shares of the Fund's portfolios are sold only to the WM Deferred
Variable Accounts (the "Accounts") to fund the benefits under certain flexible
premium deferred variable annuity contracts (the "Contracts") issued by WM Life
Insurance Company (the "Company"). In the future, shares may be sold to certain
other separate accounts and affiliated entities of the Company. The Accounts
will invest in shares of the various portfolios of the Fund as directed by the
investor (the "Contract Owner"), whose allocation rights are further described
in the prospectus for the Contracts. The Company may sell shares to the extent
necessary to provide benefits under the Contracts.

THE INVESTMENT ADVISER

As discussed under "Who We Are" in the prospectus, Composite Deferred
Series, Inc. (the "Fund") is managed and investment decisions are made under the
supervision of WM Advisors, Inc. (the "Adviser"). Decisions to buy, sell, or
hold a particular security are made by an investment team of the Adviser,
approved by an investment committee of the Adviser, subject to the control and
final direction of the Fund's Board of Directors.

The Adviser has been in the business of investment management since 1944.
Its responsibilities include formulating each Portfolio's investment policies
(subject to terms of the Prospectus and this SAI), analyzing economic trends,
directing and evaluating the investment services provided by the sub-advisors
and monitoring each Portfolio's investment performance and reporting to the
Board of Directors, as well as providing certain administrative services. The
Adviser is an indirect wholly owned subsidiary of Washington Mutual, Inc., a
publicly owned financial services company.

INVESTMENT MANAGEMENT SERVICES

Advisory fees and services performed by the Adviser are discussed in the
prospectus. The investment management agreement (the "Agreement") between the
Fund and the Adviser requires the Adviser to furnish suitable office space,
research, statistical and investment management services to the Fund. It was
approved by the Fund's shareholder and will continue if approved at least
annually by the Fund's Board of Directors (including a majority of

-20-
<PAGE>

the directors who are not parties to the Agreement) by votes cast in person at a
meeting called for the purpose of voting on such approval; or by vote of a
majority of the outstanding shares of the Fund. The Agreement can be terminated
by either party on sixty (60) days' notice, without penalty, and provides for
automatic termination upon its assignment.

Under the provisions of the Investment Company Act of 1940 and as used
elsewhere in the prospectus and this statement of additional information, the
phrase "vote of the majority of the outstanding shares of the Fund" means the
vote at any meeting of shareholders of (a) 67% or more of the shares present at
such meeting, if the shareholders of more than 50% of the outstanding shares are
present or represented by proxy, or (b) more than 50% of the outstanding shares,
whichever is less. The Accounts will vote shares as directed by Contract Owners.

In payment for its services, the Adviser receives a monthly fee from each
Portfolio equal to .50% per annum computed on the average daily net assets of
each portfolio. For 1998, management fees paid by Growth & Income Portfolio,
Income Portfolio, and Northwest Portfolio were _____, _____, and $ _____,
respectively. For 1997, management fees paid by Growth & Income Portfolio,
Income Portfolio and Northwest Portfolio were, $255,114, $88,173, and $85,274
respectively. For 1996, management fees paid by Growth & Income Portfolio,
Income Portfolio and Northwest Portfolio were $162,589, $80,985, and $49,023,
respectively.

Under the terms of the Agreement, the Fund is required to pay fees of
directors not employed by the Adviser or its affiliates, custodial expenses,
brokerage fees, taxes, auditing and legal expenses, costs of issue, transfer,
registration or redemption of shares for sale, and costs relating to
disbursement of dividends, corporate meetings, corporate reports, and the
maintenance of the Fund's corporate existence.

Investment decisions for each Portfolio are made independently of those for
other funds (or portfolios) in the WM Group of Funds. However, the Adviser may
determine that the same security is suitable for more than one of the funds. If
more than one of the funds is simultaneously engaged in the purchase or sale of
the same security, the transactions are allocated as to price and amount in
accordance with a formula considered to be equitable to each. It is recognized
hat in some cases this system could have a detrimental effect on the price or
volume of the security as far as the Portfolios are concerned. In other cases,
however, it is believed that the ability to participate in volume transactions
may provide better executions for each Portfolio. It is the opinion of the
Fund's Board of Directors that these advantages, when combined with the
personnel and facilities of the Adviser's organization, outweigh possible
disadvantages which may exist from exposure to simultaneous transactions.

The Fund has adopted a code of ethics which is intended to prevent access
persons from conducting personal securities transactions which interfere with
Fund portfolio transactions or otherwise take unfair advantage of their
relationship with the Fund. In general, the personal securities transactions of
individuals with access to information regarding Fund portfolio transactions
must be pre-cleared by the Adviser's Compliance Officer and must not occur when
similar transactions are contemplated by the Fund.

GLASS-STEAGALL

The Glass-Steagall Act, among other things, generally prohibits member
banks of the Federal Reserve System from engaging to any extent in the business
of issuing, underwriting, selling or distributing securities and generally
prohibits management interlocks and affiliations between member banks and
companies engaged in certain activities. In a Statement of Policy dated
September 1, 1982, the Federal Deposit Insurance Corporation concluded that the
investment restrictions of the Glass-Steagall Act do not apply to banks or their
affiliates if the banks are not members

-21-
<PAGE>

of the Federal Reserve System. Washington Mutual Bank is not a member bank. The
Adviser has advised the Fund that, in its view, the Glass-Steagall Act does not
prohibit the activities of the Adviser and that it may perform the services for
the Fund contemplated by the Investment Management Agreement without violation
of the Glass-Steagall Act or other applicable banking laws or regulations.

DIRECTORS AND OFFICERS OF THE FUND

The Fund's Board of Directors is elected by the shareholder as directed by
Contract Owners. Interim vacancies may be filled by the current directors so
long as at least two-thirds were previously elected by the shareholder. The
Board has responsibility for the overall management of the Fund, including
general supervision and review of its investment activities. The directors, in
turn, elect officers who are responsible for administering the Fund's day-to-day
operations. Directors and officers hold identical positions with each of the
funds in the WM Group. Their business experience for the past five years is set
forth below. Unless otherwise noted, the address of each officer is 1201 Third
Avenue, Suite 1400, Seattle, WA 98101.

WAYNE L. ATTWOOD, MD (1/28/29)
Director
2931 S. Howard
Spokane, Washington 99203

Dr. Attwood is a retired doctor of internal medicine and gastroenterology.
Former president, Medical Staff - Sacred Heart Medical Center; former president
of Spokane Society of Internal Medicine; and former president of Spokane
Physicians for Social Responsibility.

KRISTIANNE BLAKE (1/22/54)
Director
705 W. 7th, Suite D
Spokane, Washington 99204

Mrs. Blake is a CPA specializing in personal financial and tax planning since
1975. Served as a partner with the accounting firm of Deloitte, Haskins & Sells
prior to starting own firm in 1987. Community activities include: United Way of
Spokane County - board chair; YMCA of the Inland Northwest - treasurer; Junior
League of Spokane - past president; Spokane Intercollegiate Research &
Technology Institute Foundation - board member; Spokane Joint Center for Higher
Education - board member; Spokane Area Chamber of Commerce - board member; and
St. George's School - board member.

*ANNE V. FARRELL (7/17/35)
Director
425 Pike Street, Suite 510
Seattle, Washington 98101

Mrs. Farrell joined the Seattle Foundation (a charitable foundation) in 1980 as
executive vice president. Became president in 1984. Also serves on the board of
Washington Mutual Bank and Blue Cross of Washington and Alaska. Listed in Who's
Who in America. Past President of the Nature Conservancy of Washington, Lakeside
School and Seattle Rotary Club. Currently a Regent at Seattle University and
president of the Rainier Club in Seattle.

-22-
<PAGE>

*MICHAEL K. MURPHY (1/14/37)
Director
PO Box 3366
Spokane, Washington 99203

Mr. Murphy is Chairman and CEO of CPM Development Corporation (a holding company
which includes Central Pre-Mix Concrete Company) and president of Inland Asphalt
Company. Member of the board of directors for Washington Mutual, Inc.
("Washington Mutual"), and Momentum, Inc. Former president and director of
Inland Empire Chapter - Associated General Contractors, and former director of
National Aggregates Associates.

*WILLIAM G. PAPESH (1/21/43)
President and Director

Mr. Papesh is president and director of WM Advisors, Inc. (the "Advisor"), WM
Shareholder Services, Inc. ("Shareholder Services"), WM Funds Distributor, Inc.
(the "Distributor") and WM Financial Services, Inc. (a registered investment
adviser and broker/dealer).

DANIEL L. PAVELICH (9/12/44)
Director
Two Prudential Plaza
180 North Stetson Avenue, Suite 4300
Chicago, Illinois 60601

Mr. Pavelich is Chairman and CEO of BDO Seidman, a leading national accounting
and consulting firm. Worked in Seidman's Spokane office for 27 years and is a
former presiding member of the firm's board of directors. A member of the
American Institute of CPAs and served as a vice president of the Washington
Society of CPAs' board of directors.

JAY ROCKEY (1/5/28)
Director
2121 - Fifth Avenue
Seattle, Washington 98121

Mr. Rockey is founder and chairman of The Rockey Company, a public relations and
marketing communications consulting firm with headquarters in Seattle and
offices in Portland and Spokane. Founder and director of RXL Pulitzer, an
international multimedia company that is a joint venture with Pulitzer
Publishing Co. of St. Louis. History includes managing New York City public
relations for Aluminum Company of America, director of public relations for the
Seattle World's Fair and the presidency of the Public Relations Society of
America.

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<PAGE>

RICHARD C. YANCEY (5/28/26)
Director
535 Madison Avenue
New York, New York 10022

Investment Banker - Dillon, Read & Co., Inc., New York City, 1952 through 1992.
Served as vice president, managing director and director and senior advisor at
Dillon, Read & Co. Member of the boards of directors of AdMedia Partners, Inc.,
CapMAC Holdings Inc., Fiberite, Inc., The Scoreboard, Inc., and Czech and Slovak
American Enterprise Fund.

*These directors are "interested persons" of the Fund as that term is defined in
the Investment Company Act of 1940, because they are either affiliated persons
of the Fund, its Adviser, or Distributor.

GENE G. BRANSON (12/26/45)
Vice President
11th Floor
601 W. Main Street
Spokane, WA 99201

Senior Vice President and Director of the Distributor and Shareholder Services
and Vice President and Director of the Advisor.

MONTE D. CALVIN, CPA (1/22/44)
Senior Vice President and Chief Financial Officer
601 W. Main Avenue
Suite 300
Spokane, WA 99201

Executive Vice President and Director of Shareholder Services; Director of the
Advisor and the Distributor.

SANDRA CAVANAUGH (5/10/54)
Senior Vice President
1631 Broadway
Sacramento, CA 95818

First Vice President and Director of the Distributor since September 1997.
Director of Advisor and Shareholder Services. Prior to joining the Distributor,
Ms. Cavanaugh held senior level positions with AIM Funds Distributor, First
Interstate Investments and ASB Financial Services.

-24-

<PAGE>

JOHN T. WEST (1/21/55)
Vice President, Secretary and Compliance Officer
601 W. Main Avenue
Suite 300
Spokane, WA 99201

Vice President of Shareholder Services.

[The Fund paid no remuneration to any of its officers, including Mr. Papesh
during the year ended December 31, 1998.] The Fund and other Funds within the
Composite Group paid directors' fees during the year ended December 31, 1998, in
the amounts indicated below.

GROWTH &
INCOME NORTHWEST INCOME
DIRECTOR PORTFOLIO PORTFOLIO PORTFOLIO

Wayne L. Attwood, MD $ $ $
Kristianne Blake
Daniel L. Pavelich
Jay Rockey
Richard C. Yancey

(1) Each director serves in the same capacity with each Fund in the WM Group of
Funds.

As of April __, 1999, officers, directors and their immediate families as a
group owned of record and beneficially less than 1% of the shares outstanding of
any portfolio of the Fund. The WM Deferred Variable Account of WM Life Insurance
Company is the sole shareholder of the Fund.

DISTRIBUTION SERVICES

DISTRIBUTOR

WM Funds Distributor, Inc. (the "Distributor") will purchase and resell
shares of the Fund's capital stock to fill orders placed with it by the
Accounts. Currently, shares of the Fund's portfolios may only be sold to the WM
Deferred Variable Accounts or to any future separate account developed by WM
Life Insurance Company.

The Distributor has not received any earnings or profits from the
redemption of Fund shares. No brokerage fees were paid by the Fund to the
Distributor during the year. The Distributor may act as broker on portfolio
purchases and sales should it become a member of a national securities exchange.

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<PAGE>

HOW SHARES ARE VALUED

Investment securities are stated on the basis of valuations provided by an
independent pricing service, approved by the Fund's Board of Directors, which
uses information with respect to valuations based upon transactions of a
security, quotations from dealers, market transactions in comparable securities,
and various relationships between securities in determining value. Investment
securities with less than 60 days to maturity when purchased are valued at
amortized cost which approximates market value. Investment securities not
currently quoted as described above will be priced at fair market value as
determined in good faith in a manner prescribed by the Board of Directors.

HOW SHARES CAN BE PURCHASED

Information concerning the purchase of shares is discussed under "How to
Buy Shares" in the prospectus. Shares of the Fund are sold in a continuous
offering and may be purchased only by the WM Deferred Variable Accounts,
separate accounts established and maintained by WM Life Insurance Company for
the purpose of funding variable annuity contracts. The Accounts pay the net
asset value next determined after the Fund receives the purchase order. The Fund
receives the entire net asset value of all shares sold. (See Appendix A for a
specimen price make-up sheet.)

REDEMPTION OF SHARES

Shares of any portfolio of the Fund can be redeemed by the Accounts at any
time for cash, without sales charge, at the net asset value next determined
after receipt of the redemption request. Variable Annuity Contract Owners should
be aware, however, that a contingent deferred sales charge may be applied to
surrenders and withdrawals under the Contract as described in the Contract
prospectus.

The Fund reserves the right to suspend the right of redemption or to
postpone the date of payment upon redemption of the shares of any portfolio for
any period during which the New York Stock Exchange is closed (other than
weekend and holiday closings) or trading on that Exchange is restricted, or
during which an emergency exists (as determined by the Securities and Exchange
Commission) as a result of which disposal of portfolio securities is not
reasonably practicable or it is not reasonably practicable for the portfolio to
determine the value of its net assets, or for such other period as the
Securities and Exchange Commission may, by order, permit for the protection of
shareholders.

DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES

The Fund intends to continue to conduct its business and maintain the
necessary diversification of assets and source of income requirements to qualify
as a diversified management investment company under the Internal Revenue Code
(the "Code"). The Fund so qualified during the 1998 fiscal year. As a result,
under Subchapter M of the Code, the Fund is accorded conduit or "pass through"
treatment for federal income tax purposes during each year in which it
distributes to its shareholders 90% or more of its gross income from dividends,
interest and gains from the sale or other disposition of securities. The Fund
intends to distribute such amounts as necessary to avoid federal income taxes.

Dividends from net investment income and any distributions of realized
capital gains will be paid in additional shares of the portfolio paying the
dividend or making the distribution and credited to the Account. Any such
reinvestment will be without charge at the net asset value of the respective
portfolio.

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<PAGE>

Since [WM Life Insurance Company] is the only shareholder of the Fund, no
discussion is included about the federal income tax consequences to
shareholders. For information concerning the federal tax consequences to holders
of variable annuity contracts, see the prospectus for the Flexible Premium
Deferred Variable Annuity Contracts.

INVESTMENT PRACTICES

The investment objectives and policies of the Fund's three separate
portfolios appear in the prospectus and are extended below. Portfolio
investments are adjusted in accordance with management's evaluation of changing
market risks and economic conditions. Such changes are made as management
believes necessary to meet the objectives of the portfolios and the best
interest of investors.

In addition to these policies, the Fund is subject to investment
restrictions which cannot be changed without approval of a majority of
outstanding shares. These restrictions are discussed under "Investment
Restrictions." No significant investment policies can be changed without
shareholder approval.

Because of the many factors which influence fluctuations in the market
value of securities owned by the Fund, including economic trends, government
actions and regulations, and international monetary conditions, there can be no
assurance that the objectives of the Fund's portfolios will be achieved. There
are market risks inherent in all investments. The Fund believes, however, that
through professional management the prospects for investment success are
enhanced.

GROWTH & INCOME PORTFOLIO

The investment objectives and policies of the Growth & Income Portfolio are
described in the prospectus. The Portfolio aims to achieve long-term growth of
principal with current income a secondary consideration through the use of a
flexible investment policy. Portfolio investments are adjusted in accordance
with management's evaluation of changing market risks. Thus the relative
proportion of various types of securities held may vary significantly. The
Portfolio attempts to anticipate market conditions and economic changes. It
pursues its objective by usually placing emphasis on the selection and ownership
of common stocks (although the Portfolio may also invest in bonds, preferred
stocks, U.S. Treasury bills, certificates of deposit, and repurchase
agreements). There may be times when it appears prudent to reduce the proportion
of common stocks held to not less than 35% of the portfolio's total net assets.
During such periods, the investment in fixed-income securities, bonds and
preferred stocks may exceed that of common stocks.

NORTHWEST PORTFOLIO

The investment objective and policies of the Northwest Portfolio are
described in the prospectus. Portfolio investments are adjusted in accordance
with management's evaluation of changing market risks and economic conditions.
Such changes are made as management believes necessary to meet the objectives of
the Fund and the best interest of investors.

The Portfolio's investment objective is to provide long-term growth of
capital by investing in common stocks of companies doing business or located in
the Northwest region (Alaska, Idaho, Montana, Oregon and Washington). Under
normal circumstances, at least 65% of its assets will be invested in companies
whose principal executive offices are located in these states.

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<PAGE>

INCOME PORTFOLIO

Investment objectives and policies of the Income Portfolio are described in
the prospectus. The investment objective of the Portfolio is to provide a high
current yield consistent with moderate risk. The Portfolio will invest in the
following:

1. Debt and convertible debt securities (payable in U.S. funds) which have a
rating within the four highest grades as determined by Standard & Poor's
(AAA, AA, A, or BBB) or Moody's Investors Service, Inc. (Aaa, Aa, A or
Baa). Under present commercial bank regulations, bonds rated in these
categories generally are regarded as eligible for bank investment.
Securities rated BBB or Baa may have speculative characteristics. Up to 20%
of the Portfolio's total assets may be invested in debt, convertible debt,
preferred stocks, and convertible preferred stocks which are not rated
within the four highest grades by Standard & Poor's or Moody's. These
issues must be rated B (Standard & Poor's) or B (Moody's) or better, or may
be non-rated obligations which the Adviser believes to be of comparable
quality. This practice may involve higher risks, but the Adviser will only
use such practices if it believes the income and yield is sufficient to
justify such risks. See Appendix B for a detailed description of these
ratings.

2. Debt instruments issued or guaranteed by the United States government or
its agencies or instrumentalities.

3. Obligations of U.S. banks that are members of the Federal Reserve System,
not to exceed 25% of the Portfolio's total assets.

4. Preferred stocks and convertible preferred stocks which have a rating
within the four highest grades of Standard & Poor's (AAA, AA, A and BBB) or
Moody's (Aaa, Aa, A and Baa) ratings applicable to such securities.

5. The highest-grade commercial paper as rated by Standard & Poor's (A-1) or
by Moody's (Prime 1).

6. Repurchase agreements: The Portfolio may acquire an underlying debt
instrument, secured by the full faith and credit of the United States
government, for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase and the Portfolio to
resell the instrument at a fixed price.

7. Time or demand deposits in U.S. banks, but not to exceed 10% of the
Portfolio's total assets if they are of an illiquid nature.

The Portfolio will not directly purchase common stocks; however, it may
retain up to 10% of the value of the Portfolio's total assets in common stocks
acquired either by conversion of fixed-income securities or by the exercise of
warrants or rights attached thereto.

Although no more than 20% of the Fund's total assets may be invested in
"high yield" securities (i.e., not rated among the four highest grades, commonly
referred to as "junk" bonds), these securities, whether rated or unrated, may be
subject to greater market fluctuations and risks of loss of income and principal
than the lower yielding, higher-rated, fixed-income securities which comprise
most of the Portfolio. Risks of high-yield securities include: (i) limited
liquidity and secondary market support; (ii) substantial market price volatility
resulting from changes in prevailing interest rates; (iii) subordination to the
prior claims of banks and other senior lenders; (iv) the operation of mandatory
sinking fund or call/redemption provisions during periods of

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<PAGE>

declining interest rates whereby the Fund may reinvest premature redemption
proceeds in lower yielding portfolio securities; (v) the possibility that
earnings of the issuer may be insufficient to meet its debt service; and (vi)
the issuer's low creditworthiness and potential for insolvency during periods of
rising interest rates and economic downturn.

As a result of the limited liquidity of high-yield securities, their prices
may decline rapidly in the event a significant number of holders decide to sell.
The high-yield bond market has grown primarily during a period of long economic
expansion, and it is uncertain how it would perform during an economic downturn.
An economic downturn or an increase in interest rates could severely disrupt the
market for high-yield bonds and adversely affect the value of outstanding bonds
and the ability of the issuers to repay principal and interest. In addition,
there have been several Congressional attempts to limit the use of and/or tax of
high yield bonds, or otherwise diminish their advantages, which, if enacted,
could adversely affect the value of these securities and the Fund's net asset
value.

The Fund's average portfolio quality during 1996 is presented below:

Percentage of Average
S&P Rating Total Assets
--------------------- ---------------------
AAA (or US Treasury)
AA
A
BBB
BB
B
Not Rated

The Portfolio has a policy not to concentrate its investments and
accordingly will not invest more than 25% of its total assets in any one
industry. The Portfolio considers the Electric Utilities, Electric and Gas
Utilities, Gas Utilities, and Telephone Utilities to be separate industries.
Foreign issues will also be considered a separate industry. This policy on
industry classification may result in increased risk.

In view of such possible investment in these industries, an investment in
the Portfolio should be made with an understanding of their characteristics and
the risks which such an investment may entail. General problems of the utility
industries include the difficulty in obtaining an adequate return on invested
capital (even in spite of frequent increases in rates which have been granted by
the public service commissions having jurisdiction), difficulty in financing
large construction programs during an inflationary period, restrictions on
operations, difficulty in obtaining fuel for electric generation at reasonable
prices, uncertainty in obtaining natural gas for resale, and the effects of
energy conservation.

Federal, state and municipal governmental authorities may, from time to
time, review existing (and impose additional) regulations governing the
licensing, construction and operating of nuclear power plants. Any of these
delays or the suspension of operations of such plants which have been or are
being financed by proceeds of certain obligations held in the Portfolio may
affect the payment of interest on or the repayment of the principal amount of
such obligations. The Fund is unable to predict the ultimate form any such
regulations may take or the impact such regulations may have on the obligations
of the Portfolio.

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<PAGE>

The Portfolio does not intend to engage in active Portfolio trading;
however, in certain cases, it will seek to take advantage of market developments
and yield disparities. This may result in the sale of securities held for a
short time. Such strategies may result in increases or decreases in the income
available for distribution to shareholders and the recognition of gain or loss
on the sale of securities.

The net asset value of the shares of an open-end investment company
investing primarily in fixed-income securities changes as the general level of
interest rates fluctuate. When interest rates decline, the market value of a
portfolio can be expected to rise; conversely, when interest rates rise, the
market value of a portfolio can be expected to decline.

INVESTMENT PRACTICES COMMON TO ALL PORTFOLIOS

COMMON MANAGEMENT

Investment decisions for Composite Deferred Series, Inc. are made
independently of those made for other investment companies managed by the
Adviser. However, the Adviser may determine that the same security is held in
the portfolio of more than one of the funds in the WM Group. If more than one of
such funds is simultaneously engaged in the purchase or sale of the same
security, the transactions are allocated as to price and amount in accordance
with a formula considered to be equitable to each. It is recognized that, in
some cases, this system could have a detrimental effect on the price or volume
of the security as far as the Fund is concerned. In other cases, however, it is
believed that the ability to participate in volume transactions will provide
better executions for the Fund. It is the opinion of the Board of Directors of
the Fund that these advantages, when combined with the personnel and facilities
of the Adviser's organization, outweigh possible disadvantages which may exist
from exposure of simultaneous transactions.

Mortgage-backed Securities and Forward Commitments (Growth & Income and
Income Portfolios only) The Portfolios may invest in mortgage-backed securities
including those representing an undivided ownership interest in a pool of
mortgages, e.g., GNMA, FNMA and FHLMC certificates. The mortgages backing these
securities include conventional thirty-year fixed rate mortgages, fifteen-year
fixed rate mortgages, graduated-payment mortgages and adjustable rate mortgages.
The U.S. government or the issuing agency guarantees the payment of interest and
principal for these securities. The guarantees, however, do not extend to the
securities' yield or value, which are likely to vary inversely with fluctuations
in interest rates, nor do the guarantees extend to the yield or value of the
Portfolios' shares. These certificates are, in most cases, "pass-through"
instruments through which the holder receives a share of all interest and
principal payments from the mortgages underlying the certificate, net certain
fees. Because the prepayment characteristics of the underlying mortgages vary,
it is not possible to predict accurately the average life or realized yield of a
particular issue of pass-through certificates.

Mortgage-backed securities are often subject to more rapid repayment than
their stated maturity date would indicate as a result of the pass-through of
prepayments of principal on the underlying mortgage obligations. For example,
securities backed by mortgages with thirty-year maturities are customarily
treated as prepaying fully in the twelfth year, and securities backed by
mortgages with fifteen-year maturities are customarily treated as prepaying
fully in the seventh year. While the timing of prepayments of graduated payment
mortgages differs somewhat from that of conventional mortgages, the prepayment
experience of graduated payment mortgages is basically the same as that of the
conventional mortgages of the same maturity dates over the life of the pool.

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<PAGE>

During periods of declining interest rates, prepayment of mortgages
underlying mortgage-backed securities can be expected to accelerate. When the
mortgage obligations are prepaid, the Portfolios reinvest the prepaid amounts in
securities, the yields of which reflect interest rates prevailing at the time.
Therefore, the ability to maintain high-yielding, mortgage-backed securities
will be adversely affected to the extent that prepayments of mortgages must be
reinvested in securities which have lower yields than the prepaid mortgages.
Moreover, prepayments of mortgages which underlie securities purchased at a
premium could result in capital losses.

The Portfolios may also purchase or sell securities (including GNMA, FNMA,
and FHLMC certificates) on a when-issued or delayed-delivery basis (known
generally as forward commitments). When-issued or delayed-delivery transactions
arise when securities are purchased or sold by the portfolios with payment and
delivery taking place in the future in order to secure what is considered to be
an advantageous price and yield to the Portfolios at the time of entering into
the transaction. However, the yield on a comparable security available when
delivery takes place may vary from the yield on the security at the time that
the when-issued or delayed-delivery transaction was entered into. When the
Portfolios engage in when-issued and delayed-delivery transactions, they rely on
the seller or buyer, as the case may be, to consummate the transaction. Failure
to consummate the transaction may result in the Portfolio missing the
opportunity to obtain a price or yield considered to be advantageous.

When-issued and delayed delivery transactions may be expected to settle
within three months from the date the transactions are entered into. No payment
or delivery, however, is made by the Portfolios until they receive delivery or
payment from the other party to the transaction.

LENDING OF SECURITIES

Each Portfolio may lend up to 30% of its securities to the National
Association of Securities Dealers, Inc., registered broker-dealers and Federal
Reserve member banks. Such loans will be made pursuant to agreements requiring
the broker-dealer or bank to fully and continuously secure the loan by cash or
other securities in which the Portfolio may invest equal to the market value of
the securities loaned.

The Portfolios will continue to receive interest and dividend income and
any capital gains (losses) from the loaned securities. They receive compensation
for lending their securities in the form of fees. The Adviser believes that each
Portfolio within the Fund can benefit from such lending because of added
incremental income from lending fees and expanded Portfolio return.

The Portfolios will enter into securities lending and repurchase
transactions only with parties who meet creditworthiness standards approved by
the Fund's Board of Directors and monitored by the Adviser. In the event of a
default or bankruptcy by a seller or borrower, the Portfolios will promptly
liquidate collateral. However, the exercise of the right to liquidate such
collateral could involve certain costs or delays and, to the extent that
proceeds from any sale of collateral on a default of the seller or borrower were
less than the seller's or borrower's obligations, the Portfolios could suffer a
loss.

INVESTMENT RESTRICTIONS

While many of the decisions of the Adviser depend on flexibility, there are
certain principles so fundamental that they are required as matters of policy.
These may not be changed without a vote of the majority of the outstanding
shares of the respective Portfolio.

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<PAGE>

EACH PORTFOLIO MAY NOT:

* with respect to 75% of total assets, invest more than 5%* of its total
assets in the securities of any single company or issuer (other than U.S.
government securities);

* invest in any company for the purpose of management or control nor acquire
more than 10%* of the voting securities of any company;

* invest in other investment companies (except as part of a merger);

* underwrite the securities of other issuers (except in connection with the
sale of GNMA certificates);

* buy securities subject to restrictions under federal securities laws, or to
restrictions on disposition (except repurchase agreements);

* invest more than 25%* of its assets in any single industry or in foreign
securities;

* invest more than 10%* of its assets in foreign securities not payable in
U.S. dollars;

* buy securities on margin, or engage in "short" sales;

* invest in real estate, oil and gas interests, or commodities (except Growth
& Income and Northwest Portfolios may invest in publicly traded real estate
investment trusts);

* buy or sell options (except for covered call options in the Growth & Income
and Northwest Portfolios);

* borrow money (except it may borrow up to 5% of its total assets for
emergency, non- investment purposes, or up to 33 1/3% to meet redemption
requests that would otherwise result in the untimely liquidation of vital
parts of its Portfolios);

* lend money (except for the execution of repurchase agreements);

* buy or sell futures related securities (except for forward commitments of
GNMAs and other mortgage-backed securities);

* issue senior securities.

* Percentage at the time the investment is made.

BROKERAGE ALLOCATIONS AND PORTFOLIO TRANSACTIONS

Under terms of the Investment Management Agreement, WM Advisors, Inc. acts
as agent for the Fund in entering orders with broker-dealers to execute
portfolio transactions and in negotiating commission rates where applicable.
Decisions as to eligible broker-dealers are approved by the president of the
Fund.

In executing portfolio transactions and selecting broker-dealers, the
Adviser shall use its best efforts to seek, on behalf of the Fund, the best
overall terms available. In assessing the best overall terms available for any
transaction, the Adviser may consider all factors it deems relevant, including
the breadth of the market in the

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<PAGE>

security, the price of the security, the size of the transaction, the
reputation, financial condition, experience and execution capability of a
broker-dealer, and the amount of the commission and the value of any brokerage
and research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934, as amended) provided by a broker-dealer.

The Adviser is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Fund. This commission may be in excess of the amount of
commission or net price another broker or dealer would have charged for
effecting the transaction if the Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of that particular
transaction or in terms of the overall responsibilities of the Adviser to the
Fund and/or other accounts over which the Adviser exercises investment
discretion. The Adviser may commit to pay commission dollars to brokers or
financial institutions for specific research materials or products that it
considers useful in advising the institutions for specific research materials or
products that it considers useful in advising the Fund and/or its other clients.

Research services furnished to the Adviser include, for example, written
and electronic reports analyzing economic and financial characteristics of
industries and companies, reports concerning portfolio strategies and
characteristics, telephone conversations between brokerage securities analysts
and members of the Adviser's staff, and personal visits by such analysts,
brokerage strategists and economists to the Adviser's office.

Some of these services are of value to the Adviser in advising various
clients, although not all of these services are necessarily useful and of value
in managing the Fund. The management fee paid to the Adviser is not reduced
because it receives those services, even though it might otherwise be required
to purchase these services for cash.

The staff of the Securities and Exchange Commission has expressed the view
that the best price and execution of over-the-counter transactions in portfolio
securities may be secured by dealing directly with principal market makers,
thereby avoiding the payment of compensation to another broker. In certain
situations, the Adviser believes that the facilities, expert personnel and
technological systems of a broker often enable the Fund to secure a net price by
dealing with a broker that is as good as or better than the price the Fund could
have received from a principal market maker, even after payment of the
compensation to the broker. The Adviser places its over-the-counter transactions
with principal market makers, but may also deal on a brokerage basis when
utilizing electronic trading networks or as circumstances warrant.

None of the broker-dealers with whom the Fund deals has any interest in the
Adviser, Distributor or Administrator. The Distributor will not execute any
portfolio orders for the Fund during the fiscal year, nor will the Distributor
or the Adviser receive any direct or indirect compensation as a result of
portfolio transactions of the Fund. Although Fund shares may be sold by brokers
who execute portfolio transactions for the Fund, no brokerage will be allocated
for such sales.

Portfolio turnover rate is calculated by dividing the lesser of purchases
or sales of securities, excluding securities having maturity dates at
acquisition of one year or less, by the average value of such portfolio
securities during the fiscal year. The turnover rates for the Growth & Income,
Income and Northwest portfolios for 1998 were __%, __% and __%, respectively.
The turnover rates for the Growth & Income, Income and Northwest Portfolios for
1997 were 50%, 9%, and 31%, respectively.

GENERAL INFORMATION

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ORGANIZATION AND AUTHORIZED CAPITAL

As discussed under "Who We Are" in the prospectus, Composite Deferred
Series, Inc. was incorporated under the laws of the State of Washington on
December 8, 1986, under a certificate of incorporation granting perpetual
existence. The Fund has an authorized capitalization of 10 billion shares of
capital stock, without par value. Shares are issued by class designated by the
Portfolio. All shares of the Fund are freely transferable. The shares do not
have preemptive rights, and none of the shares has any preference as to
conversion, exchange, dividends, retirements, liquidation, redemption or any
other feature. Shares have equal voting rights.

VOTING PRIVILEGES

The Accounts will vote their shares as instructed by Contract Owners. The Fund
is not required to hold annual meetings. When meetings are called to elect
directors, Contract Owners may exercise cumulative voting privileges for the
election of directors under Washington state law in the election of directors.
Using this privilege, Contract Owners are entitled to one vote for each contract
unit owned by them. The total number of votes for directors to which a Contract
Owner is entitled may be accumulated and cast for each candidate in such
proportion that the Contract Owner may designate. Only the Contract Owners of a
particular Portfolio may vote on any change of investment objective for that
Portfolio.

CUSTODIAN

The securities and cash owned by each Portfolio are held in safekeeping by
Investors Fiduciary Trust Company (IFTC), 127 West 10th, Kansas City, MO 64105.
IFTC is a wholly owned subsidiary of State Street Bank. The custodian's
responsibilities include collecting dividends, interest and principal payments
on each Fund's investments.

INDEPENDENT PUBLIC ACCOUNTANTS

The firm of Deloitte & Touche LLP, serves as the independent accountants of
the Fund. Deloitte & Touche performs audit services for the Fund including the
examination of the financial statements included in the annual report to
shareholders, which is incorporated by reference into this statement of
additional information. For years ending prior to December 31, 1998, LeMaster &
Daniels PLLC, Certified Public Accountants, served as independent accountants of
the Fund.

REGISTRATION STATEMENT

This statement of additional information and the prospectus do not contain
all of the information set forth in the registration statement the Fund has
filed with the Securities and Exchange Commission. The complete registration
statement may be obtained from the Securities and Exchange Commission upon
payment of the fee prescribed by the rules and regulations of the Commission.

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FINANCIAL STATEMENTS AND REPORTS

Semiannual and annual reports are issued to shareholders. The annual
reports include audited financial statements. The Fund's annual reports to
shareholders dated December 31, 1998 and December 31, 1997, respectively, which
are incorporated by reference into this Statement of Additional Information, may
be obtained without charge by contacting the Fund's offices.

APPENDIX A

DESCRIPTION OF SECURITY RATINGS

BONDS

MOODY'S INVESTORS SERVICE, INC. (MOODY'S):

Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
subject to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.

A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa: Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and characterize bonds in this
class.

B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

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<PAGE>

Ca: Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings.

C: Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa through B in its corporate bond rating system.
Modifier 1 indicates that the security ranks in the higher end of its generic
rating category; Modifier 2 indicates a mid-range ranking; and Modifier 3
indicates that the issue ranks in the lower end of its generic rating category.

STANDARD & POOR'S (S & P)

AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only to a small degree.

A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.

BBB: Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.

BB, B, CCC, CC, C: Debt rated BB, B, CCC, CC, and C is regarded, on balance
as predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and C the highest degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.

BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB rating.

B: Debt rated B has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied BB or BB-rating.

CCC: Debt rated CCC has a currently identifiable vulnerability to default
and is dependent upon favorable business, financial, or economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the

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capacity to pay interest and repay principal. The CCC rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.

CC: The rating CC is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.

C: The rating C is typically applied to debt subordinated to senior debt
which is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy has been filed but debt service
payments are continued.

CI: The rating CI is reserved for income bonds on which no interest is
being paid.

D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition of debt service payments are jeopardized.

Note: Plus (+) or Minus (-): The ratings from AA to CCC may be modified by
the addition of a plus or minus sign to show relative standing within the major
categories.

PREFERRED STOCKS

Moody's preferred stock rating symbols and their definitions are as
follows:

aaa: An issue which is rated aaa is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of preferred stocks.

aa: An issue which is rated aa is considered a high-grade preferred stock.
This rating indicates that there is reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.

a: An issue which is rated a is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the "aaa"
and "aa" classifications, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.

An issue which is rated baa is considered to be medium grade, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.

S&P's quality ratings on preferred stock are expressed by symbols like
those used in rating bonds. They represent a considered judgment of the relative
security of dividends and -- what is thereby implied -- the prospective yield
stability of the stock.

AAA: This is the highest rating that may be assigned by Standard & Poor to
a preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.

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AA: A preferred stock issue rated AA also qualifies as a high-quality fixed
income security. The capacity to pay preferred stock obligations is very strong,
although not as overwhelming as for issues rated AAA.

A: An issue rated A is backed by a sound capacity to pay the preferred
stock obligations although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.

BBB: An issue rated BBB is regarded as backed by an adequate capacity to
pay the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the A category.

BB, B, CCC: Preferred stock in these categories are regarded, on
balance, as predominately speculative with respect to the issuer's capacity
to pay preferred stock obligations. BB indicates the lowest degree of
speculation and CCC the highest degree of speculation. While such issues will
likely have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.

COMMERCIAL PAPER

A1 and Prime 1 commercial paper ratings issued by Standard & Poor's
Corporation (S&P) and Moody's Investors Services, Inc. (Moody's) are the highest
ratings these corporations issue.

Commercial paper rated A1 by S&P has the following characteristics:
Liquidity ratios are adequate to meet cash requirements. Long-term senior debt
is rated A or better. The issuer has access to at least two additional channels
of borrowing. Basic earnings and cash flow have an upward trend with allowance
made for unusual circumstances. Typically, the issuer's industry is well
established and the issuer has a strong position within the industry. The
reliability and quality of management are unquestioned. Relative strength or
weakness of the above factors determine whether the issuer's commercial paper is
rated A1, A2 or A3.

Among factors considered by Moody's in assigning ratings are the following:
(1) evaluation of the management of the issuer; (2) economic evaluation of the
issuer's industry or industries and an appraisal of speculative-type risks which
may be inherent in certain areas; (3) evaluation of the issuer's products in
relation to competition and customer acceptance; (4) liquidity; (5) amount and
quality of long-term debt; (6) trend of earnings over a period of ten years; (7)
financial strength of a parent company and the relationships which exist with
the issuer; and (8) recognition by the management of obligations which may be
present or may arise as a result of public interest questions and preparation to
meet such obligations.

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PART C

OTHER INFORMATION

ITEM 23. EXHIBITS

Filing
Incorporated Date
Exhibits With Filed
-------- ------------ ------
(a) Articles of Incorporation Form N-1A 4-24-97
(b) Bylaws Form N-1A 2-29-96
(c) Instruments defining the (see (a) and
Rights of Shareholders (b) above) N/A
(d) Investment Management Agreement Form N-1A 4-24-97
(e) Distribution Contract Form N-1A 3-31-87
(f) Bonus, profit sharing, pension or
other similar contracts for
benefit of directors or officers
of the Registrant N/A
(g) Custody Agreement Form N-1A 4-24-97
(h) Shareholders Service Contract Form N-1A 2-29-96
(i) Opinion and Consent of Counsel Form N-1A 4-30-98
(j) Accountants' Consent
(k) All financial statements omitted
from Item 23. N/A
(l) Agreements or understandings made N/A
in consideration for providing
initial capital N/A
(m) 12b-1 Plan N/A
(n) Financial Data Schedules
(o) 18f-3 Plan N/A

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT

N/A

ITEM 25. INDEMNIFICATION.

Registrant shall have the power to indemnify any director, officer or
former director or officer of the Corporation, or any person who may have served
at the Corporation's request as a director or officer of another corporation,
against expenses actually and reasonably incurred by such person in connection
with the defense of any action, suit or proceeding, civil or criminal, in which
he becomes a party by reason of being or having been such director or officer,
to the full extent permitted by the laws of the state of Washington, as such
laws at anytime may be in force and effect, provided, however, that this
indemnification provision shall not protect, or purport to protect, any director
or officer of the corporation against any liability to the corporation or

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to the shareholders to which he otherwise would be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of this office.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

Directors Past Two Fiscal Years
- --------- ---------------------
Monte D. Calvin WM Shareholder Services, Inc.
First Vice President, 601 West Main Ave., Suite 300, Spokane, WA 98201
Director

Treasurer, Director April 1997 - present
WM Advisors, Inc.
1201 Third Ave., Suite 1400, Seattle, WA 98101

Vice President, Treasurer July 1997 - present
Director WM Funds Distributor, Inc.
601 West Main Ave., Suite 300, Spokane, WA 98201

Craig S. Davis July 1997 - present
Director WM Funds Distributor, Inc.
601 West Main Ave., Suite 300, Spokane, WA 98201

Director WM Shareholder Services, Inc.
601 West Main Ave., Suite 300, Spokane, WA 98201

Director April 1997 - present
WM Advisors, Inc.
1201 Third Ave., Suite 1400, Seattle, WA 98101

Executive Vice President December - present
Washington Mutual, Inc.
1201 Third Ave., Seattle, WA 98101

Chairman January 1996 - July 1997
ASB Financial Services, Irvin, CA

J. Pamela Dawson July 1997 - present
Director WM Funds Distributor, Inc.
601 West Main Ave., Suite 300, Spokane, WA 98201

Director WM Shareholder Services, Inc.
601 West Main Ave., Suite 300, Spokane, WA 98201

Director April 1997 - present
WM Advisors, Inc.
1201 Third Ave., Suite 1400, Seattle, WA 98101

President March 1997 - present
WM Financial Services
1201 Third Ave., 7th Floor, Seattle, WA 98101

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<PAGE>

President December 1996 - July 1997
ASB Financial Services, Irvine, CA

Senior Vice November 1996 - December 1996
President/Regional Manager Wells Fargo Securities/First Interstate,
Houston, TX

Kerry K. Killinger WM Advisors, Inc.
Director 1201 Third Ave., Suite 1400, Seattle, WA 98101

CEO, Chairman, Director Washington Mutual Bank
1201 Third Avenue, Seattle, WA 98101

Director July 1997 - present
WM Funds Distributor, Inc.
601 West Main Ave., Suite 300, Spokane, WA 98201

Director WM Shareholder Services, Inc.
601 West Main Ave., Suite 300, Spokane, WA 98201

Sharon L. Howells WM Advisors, Inc.
First Vice President, 1201 Third Ave., Suite 1400, Seattle, WA 98101
Corporate Secretary

Vice President, July 1997 - present
Corporate Secretary WM Funds Distributor, Inc.
601 West Main Ave., Suite 300, Spokane, WA 98201

Corporate Secretary WM Shareholder Services, Inc.
601 West Main Ave., Suite 300, Spokane, WA 98201

Jeffrey D. Huffman WM Advisors, Inc.
Vice President 1201 Third Ave., Suite 1400, Seattle, WA 98101

B. Joel King March 1998 - present
Vice President WM Advisors, Inc.
1201 Third Ave., Suite 1400, Seattle, WA 98101

Vice President January 1996 - February 1998
Bennington Capital Management
1420 Fifth Ave., Seattle, WA 98101

William G. Papesh WM Advisors, Inc.
President, Director 1201 Third Ave., Suite 1400, Seattle, WA 98101

President, Director WM Shareholder Services, Inc.
601 West Main Ave., Suite 300, Spokane, WA 98201

Director WM Insurance Services
1201 Third Ave., Seattle, WA 98101

President, Director WM Group of Funds
601 West Main Ave., Suite 300, Spokane, WA 98201

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<PAGE>

President, Director July 1997 - present
WM Funds Distributor, Inc.
601 West Main Ave., Suite 300, Spokane, WA 98201

Brian L. Placzek WM Advisors, Inc.
Vice President 1201 Third Ave., Suite 1400, Seattle, WA 98101

Gary J. Pokrzywinski WM Advisors, Inc.
Vice President 1201 Third Ave., Suite 1400, Seattle, WA 98101

Audrey S. Quaye February 1996 - present
Vice President WM Advisors, Inc.
1201 Third Ave., Suite 1400, Seattle, WA 98101

Credit Analyst January 1996 - February 1996
Tandem Computers, Cupertino, CA

Stephen C. Scott March 1998 - present
Vice President WM Advisors, Inc.
1201 Third Ave., Suite 1400, Seattle, WA 98101

Senior Investment Advisor Sierra Investment Services Corporation
9301 Corbin Ave., Northridge, CA 91324

President Sierra Investment Services Corporation
9301 Corbin Ave., Northridge, CA 91324

David W. Simpson WM Advisors, Inc.
Vice President 1201 Third Ave., Suite 1400, Seattle, WA 98101

Linda C. Walk December 1997 - present
Vice President WM Advisors, Inc.
1201 Third Ave., Suite 1400, Seattle, WA 98101

November 1996 - November 1997
Laid Norton Trust Company
Norton Building, Suite 1600, Seattle, WA 98104

January 1996 - July 1996
Ernst & Young LLP
2001 Market Street, 41st Floor, Philadelphia,
PA 19103

ITEM 27. PRINCIPAL UNDERWRITERS.

(a) The principal underwriter for each Registrant is WM Funds Distributor,
Inc.

(b) The Directors and Officers of WM Funds Distributor, Inc., their
positions with WM Funds Distributor, Inc. and the WM Group of Funds are set
forth in the table below. The principal business address of WM Funds
Distributor, Inc. and each of its directors and officers is 1201 Third Avenue,
Suite 1400, Seattle, Washington 98101.

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Name and Position And Positions And
Principal Business Offices With Offices With
Address Underwriter Registrant
------- ----------- ----------

William G. Papesh President President

Sandra A. Cavanaugh First Vice President Senior Vice President

Monte D. Calvin Vice President, Chief Financial Officer,
Treasurer Senior Vice President

Sharon L. Howells Vice President, Senior Vice President
Corporate Secretary

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.

All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the rules thereunder will be
maintained at the offices of the Registrant at 1201 Third Avenue, Suite 1400,
Seattle, Washington 98101. The Registrant's custodian activities are performed
at Investors Fiduciary Trust Company (IFTC), 127 W. 10th, Kansas City, MO 64105.

ITEM 29. MANAGEMENT SERVICES.

Registrant is not a party to any management related service contract, other than
as set forth in the Prospectus.

ITEM 30. UNDERTAKINGS.

Management has included a discussion of Fund performance in the Fund's annual
report which is available upon request and without charge.

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<PAGE>

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Seattle, and State of Washington on the 25th day
of February, 1999.

COMPOSITE DEFERRED SERIES, INC.

By: WILLIAM G. PAPESH*
-------------------------
William G. Papesh
President, Principal Executive Officer

MONTE D. CALVIN
-------------------------
Monte D. Calvin, CPA
Principal Financial Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the date indicated:

February __, 1999
- ---------------------------------
Wayne L. Attwood, Director

ANNE V. FARRELL* February 25, 1999
- ---------------------------------
Anne V. Farrell, Director

KRISTIANNE BLAKE* February 25, 1999
- ---------------------------------
Kristianne Blake, Director

February __, 1999
- ---------------------------------
Michael K. Murphy, Director

WILLIAM G. PAPESH* February 25, 1999
- ---------------------------------
William G. Papesh, Director

February __, 1999
- ---------------------------------
Daniel L. Pavelich, Director

JAY ROCKEY* February 25, 1999
- ---------------------------------
Jay Rockey, Director

RICHARD C. YANCEY* February 25, 1999
- ---------------------------------
Richard C. Yancey, Director

*By: WILLIAM G. PAPESH
----------------------------
William G. Papesh
Pursuant to Powers of Attorney
Filed herewith

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<PAGE>

COMPOSITE DEFERRED SERIES, INC.

POWER OF ATTORNEY

Each of the undersigned does hereby constitute and appoint Monte D.
Calvin, Sandra A. Cavanaugh, William G. Papesh and John T. West, and each of
them acting alone, as his/her true and lawful attorney and agent, with power of
substitution or resubstitution, to do any and all acts and things and to
execute any and all instruments which said attorney and agent may deem
necessary or advisable or which may be required to enable Composite Deferred
Series, Inc. (the "Registrant") to comply with the Securities Act of 1933, as
amended (the "1933 Act") and the Investment Company Act of 1940, as amended
(the "1940 Act"), and any rules, regulations or requirements of the Securities
and Exchange Commission in respect thereof, in connection with the Registrant's
Registration Statement on Form N-1A pursuant to the 1933 Act and/or the 1940
Act, together with any and all amendments thereto, including specifically, but
without limiting the generality of the foregoing, the power and authority to
sign in the name and on behalf of the undersigned as a director of the
Registrant each such Registration Statement and any and all such amendments
filed with the Securities and Exchange Commission under the 1933 Act and/or the
1940 Act, and any other instruments or documents related thereto, and the
undersigned does hereby ratify and confirm all that said attorney and agent
shall do or cause to be done by virtue hereof.

Signature: ANNE V. FARRELL Date: February 25, 1999
--------------------

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COMPOSITE DEFERRED SERIES, INC.

POWER OF ATTORNEY

Signature: KRISTIANNE BLAKE Date: February 25, 1999
--------------------

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COMPOSITE DEFERRED SERIES, INC.

POWER OF ATTORNEY

Signature: WILLIAM G. PAPESH Date: February 25, 1999
--------------------

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COMPOSITE DEFERRED SERIES, INC.

POWER OF ATTORNEY

Signature: JAY ROCKEY Date: February 25, 1999
--------------------

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COMPOSITE DEFERRED SERIES, INC.

POWER OF ATTORNEY

Signature: RICHARD C. YANCEY Date: February 25, 1999
--------------------

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- --------------------------------------------------------------------------------
EXHIBIT INDEX
- --------------------------------------------------------------------------------
EX-99.B11 ACCOUNTANT'S CONSENT - [to be filed by amendment]
EX-27.CLASS A FINANCIAL DATA SCHEDULES - [to be filed by amendment]
- --------------------------------------------------------------------------------

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