<PAGE> 1
Registration Nos. 2-25272/811-3347
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. _________ /_/
Post-Effective Amendment No. 17 /X/
--------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /_/
Amendment No. 18 /X/
--------
(Check appropriate box or boxes.)
SAFECO Money Market Trust
(Exact Name of Registrant as Specified in Charter)
<TABLE>
<S> <C>
SAFECO Plaza, Seattle, Washington 98185
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(Address of Principal Executive Offices) Zip Code
</TABLE>
Registrant's Telephone Number, including Area Code (206) 545-5000
Name and Address of Agent for Service
DAVID F. HILL
SAFECO Plaza
Seattle, Washington 98185
(206) 545-5269
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective:
_____ immediately upon filing pursuant to paragraph (b)
X on July 31, 1995 pursuant to paragraph (b)
-----
_____ 60 days after filing pursuant to paragraph (a)
_____ on __________________ pursuant to paragraph (a) of Rule 485
================================================================================
Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 by declaration made pursuant to Section 24(f) of the
Investment Company Act of 1940 (Act). Pursuant to Rule 24f-2 under the Act,
Registrant's Rule 24f-2 Notice was filed on May 10, 1995.
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The Exhibit Index is at page __.
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Amount of Proposed Proposed
Securities Shares Maximum Maximum Amount of
Being Being Offering Price Aggregate Registration
Registered Registered Per Unit Offering Price Fee
- ---------- ---------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Shares of
Beneficial
Interest:
SAFECO Money
Market Fund: 168,828 $1.00 $168,828
SAFECO Tax-
Free Money
Market Fund: 160,730 $1.00 $160,730
Total for
Registrant: 329,558 $329,558* $100.00*
</TABLE>
================================================================================
The fee for the above shares to be registered by this filing has been computed
on the basis of the price in effect on July 31, 1995.
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* Calculation of the proposed maximum aggregate offering price has been made
pursuant to Rule 24e-2 under the Investment Company Act of 1940. During its
fiscal year ended March 31, 1995, Registrant redeemed or repurchased 1,432,236
shares of beneficial interest. During its current fiscal year, Registrant used
1,392,678 of the shares it redeemed or repurchased for a reduction pursuant to
paragraph (c) of Rule 24f-2 under the Investment Company Act of 1940.
Registrant is filing this post-effective amendment to register the remaining
39,558 shares redeemed or repurchased during its fiscal year ended March 31,
1995. During its current fiscal year Registrant has filed no other
post-effective amendments for the purpose of the reduction pursuant to
paragraph (a) of Rule 24e-2.
<PAGE> 3
SAFECO MONEY MARKET TRUST
Registration Statement on Form N-1A
Cross Reference Sheet
<TABLE>
<CAPTION>
Part A
------
Location
Item No. in Prospectus
- ------- -------------
<S> <C> <C>
Item 1. Cover Page Cover page
Item 2. Synopsis Introduction to the
Trust and the Funds;
Fund Expenses
Item 3. Condensed Financial Information Financial Highlights;
Performance Information
Item 4. General Description of Registrant The Trust and Each Fund's
Investment Policies;
Information about Share
Ownership and Companies that
Provide Services to the Trust
Item 5. Management of the Trust Information about Share
Ownership and Companies
that Provide Services to
the Trust; Fund Expenses
Item 6. Capital Stock and Other Securities Cover Page; Fund Distributions
and How They are Taxed;
Information About Share
Ownership and Companies that
Provide Services to the Trust
Item 7. Purchase of Securities Being Offered How to Purchase Shares;
How to Exchange Shares
From One Fund to Another;
Share Price Calculation;
How to Systematically
Purchase or Redeem Shares;
Tax-Deferred Retirement Plans;
Account Statements;
Telephone Transactions;
Transactions Through Registered
Investment Advisers
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Item 8. Redemption or Repurchase How to Redeem Shares; How to
Exchange Shares From One Fund
to Another; How to Systematically
Purchase or Redeem Shares; Account
Changes and Signature Requirements;
Account Statements; Telephone
Transactions; Transactions Through
Registered Investment Advisers
Item 9. Pending Legal Proceedings Not applicable
</TABLE>
<TABLE>
<CAPTION>
Part B
------
Location in Statement
Item No. of Additional Information
- -------- -------------------------
<S> <C> <C>
Item 10. Cover page Cover page
Item 11. Table of Contents Cover page
Item 12. General Information and History Not applicable
Item 13. Investment Objectives and Policies Overview of Investment Policies;
Additional Investment Information;
Investment Policies of the Money Fund;
Investment Policies of the Tax-Free
Money Fund; Description of Ratings
Item 14. Management of the Trust Trustees and Officers
Item 15. Control Persons and Principal Principal Shareholder
Holders of Securities of the Tax-Free Money Fund
Item 16. Investment Advisory and Investment Advisory and
Other Services Other Services
Item 17. Brokerage Allocation and Other Brokerage Practices
Practices
Item 18. Capital Stock and Other Securities Additional Information on Dividends
Item 19. Purchase, Redemption and Pricing Additional Information On Calculation
of Securities Being Offered of Net Asset Value Per Share;
Redemption in Kind
Item 20. Tax Status Additional Tax Information
Regarding the Tax-Free Money Fund
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
Item 21. Underwriters Investment Advisory and Other
Services
Item 22. Calculation of Performance Data Additional Performance Information
Item 23. Financial Statements Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE> 6
Prospectus
July 31, 1995
SAFECO Money
Market Fund
SAFECO Tax-Free
Money Market Fund
[SAFECO MUTUAL FUNDS LOGO]
<PAGE> 7
SAFECO MONEY MARKET FUND
SAFECO TAX-FREE MONEY MARKET FUND
July 31, 1995
Each Fund described in this Prospectus is a series of the SAFECO Money Market
Trust ("Trust"), an open-end, management investment company consisting of two
separate series.
The SAFECO MONEY MARKET FUND has as its investment objective to seek as high a
level of current income as is consistent with the preservation of capital and
liquidity through investment in high-quality money market instruments maturing
in thirteen months or less.
The SAFECO TAX-FREE MONEY MARKET FUND has as its investment objective to provide
as high a level of current income exempt from federal income tax as is
consistent with a portfolio of high-quality, short-term municipal obligations
selected on the basis of liquidity and preservation of capital.
INVESTMENTS IN THE FUNDS ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT A FUND WILL MAINTAIN A STABLE
$1.00 SHARE PRICE.
MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY
DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.
There are market risks in all securities transactions. This Prospectus sets
forth the information a prospective investor should know before investing.
PLEASE READ AND RETAIN THE PROSPECTUS FOR FUTURE REFERENCE. A Statement of
Additional Information, dated July 31, 1995, and incorporated herein by
reference, has been filed with the Securities and Exchange Commission and is
available at no charge upon request by calling one of the numbers listed on this
page. The Statement of Additional Information contains more information about
most of the topics in this Prospectus as well as information about the trustees
and officers of the Trust.
For additional assistance, please call or write:
NATIONWIDE: 1-800-624-5711; SEATTLE: 206-545-7319
HEARING IMPAIRED 1-800-438-8718
TTY/TDD SERVICE
SAFECO MUTUAL FUNDS
P.O. BOX 34890
SEATTLE, WA 98124-1890
ALL TELEPHONE CALLS ARE TAPE-RECORDED FOR YOUR PROTECTION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-1-
<PAGE> 8
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION TO THE TRUST AND THE FUNDS............................................. 3
FUND EXPENSES....................................................................... 4
FINANCIAL HIGHLIGHTS................................................................ 5
THE TRUST AND EACH FUND'S INVESTMENT POLICIES....................................... 7
INFORMATION ABOUT SHARE OWNERSHIP AND COMPANIES THAT
PROVIDE SERVICES TO THE TRUST.................................................... 11
PERFORMANCE INFORMATION............................................................. 12
FUND DISTRIBUTIONS AND HOW THEY ARE TAXED........................................... 12
TAX-DEFERRED RETIREMENT PLANS....................................................... 13
ACCOUNT STATEMENTS.................................................................. 14
ACCOUNT CHANGES AND SIGNATURE REQUIREMENTS.......................................... 14
SHARE PRICE CALCULATION............................................................. 15
HOW TO PURCHASE SHARES.............................................................. 15
HOW TO REDEEM SHARES................................................................ 16
HOW TO SYSTEMATICALLY PURCHASE OR REDEEM SHARES..................................... 18
HOW TO EXCHANGE SHARES FROM ONE FUND TO ANOTHER..................................... 18
TELEPHONE TRANSACTIONS.............................................................. 19
TRANSACTIONS THROUGH REGISTERED INVESTMENT ADVISERS................................. 20
</TABLE>
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<PAGE> 9
INTRODUCTION TO THE TRUST AND THE FUNDS
The Trust is a series investment company that currently issues shares
representing two mutual funds: SAFECO Money Market Fund ("Money Fund") and
SAFECO Tax-Free Money Market Fund ("Tax-Free Money Fund") (together, the
"Funds"). Each Fund is a diversified series of the Trust, an open-end,
management investment company that continuously offers to sell and redeem (buy
back) its shares at the current net asset value per share without any sales or
redemption charges or 12b-1 fees. Each Fund intends to maintain a net asset
value per share of $1.00.
The MONEY FUND has as its investment objective to seek as high a level of
current income as is consistent with the preservation of capital and liquidity
through investment in high-quality money market instruments maturing in thirteen
months or less.
The TAX-FREE MONEY FUND has as its investment objective to provide as high a
level of current income exempt from federal income tax as is consistent with a
portfolio of high-quality, short-term municipal obligations selected on the
basis of liquidity and preser vation of capital.
There is, of course, no assurance that a Fund will achieve its investment
objective. See "The Trust and Each Fund's Investment Policies" for more
information.
The principal risk associated with an investment in a mutual fund like either of
the Funds is that they may experience a delay or failure in principal or
interest payments at maturity of one or more of the portfolio securities. Each
Fund's yield will fluctuate with general money market interest rates. See "The
Trust and Each Fund's Investment Policies" for further information.
Each Fund is managed by SAFECO Asset Management Company ("SAM"). SAM is
headquartered in Seattle, Washington and manages over $2 billion in mutual fund
assets as of June 30, 1995. SAM has been an adviser to mutual funds and other
investment portfolios since 1973 and its predecessors have been such advisers
since 1932. See "Information About Share Ownership and Companies that Provide
Services to the Trust" for more information.
Each Fund:
- - Seeks to maintain a $1.00 per share net asset value.
- - Is 100% no-load; there are no sales or redemption charges or 12b-1 fees.
- - Offers free exchanges as well as easy access to your money through
telephone redemptions and wire transfers.
- - Pays dividends monthly.
- - Has a minimum initial investment of $1,000 for regular accounts and $250
for IRAs. No minimum initial investment is required to establish the
Automatic Investment Method ("AIM") or Payroll Deduction Plan.
-3-
<PAGE> 10
FUND EXPENSES
A. SHAREHOLDER TRANSACTION EXPENSES FOR EACH FUND
<TABLE>
<CAPTION>
SALES
SALES LOAD IMPOSED DEFERRED
LOAD IMPOSED ON REINVESTED SALES REDEMPTION EXCHANGE
FUND ON PURCHASES DIVIDENDS LOAD FEES FEES
- ---- ------------ ------------- -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Money Fund None None None None None
Tax-Free
Money Fund None None None None None
</TABLE>
SAFECO Services Corporation, the transfer agent for the Funds, charges a $10 fee
to wire redemption proceeds.
B. ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<TABLE>
<CAPTION>
TOTAL
MANAGEMENT OTHER OPERATING
FUND 12B-1 FEE + FEE + EXPENSES = EXPENSES
- ---- --------- ---------- -------- ---------
<S> <C> <C> <C> <C>
Money Fund None .50% .28% .78%
Tax-Free
Money Fund None .50% .14% .64%
</TABLE>
The amounts shown are actual expenses paid by shareholders of the Money and
Tax-Free Money Funds for the fiscal year ended March 31, 1995. See "Information
About Share Ownership and Companies that Provide Services to the Trust" on page
11 for more information.
C. EXAMPLE OF EXPENSES
You would pay the following expenses on a $1,000 investment assuming 5% annual
return. The example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed in "Annual Operating Expenses"
above remain the same in the years shown.
<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---- ------ ------- ------- --------
<S> <C> <C> <C> <C>
Money Fund $8 $25 $43 $97
Tax-Free
Money Fund $7 $20 $36 $80
</TABLE>
The purpose of the tables is to assist you in understanding the various costs
and expenses that an investor in each Fund would bear, directly or indirectly.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. A FUNDGS ACTUAL EXPENSES OR PERFORMANCE MAY BE GREATER OR LESS THAN
THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS REQUIRED BY SECURITIES AND EXCHANGE
COMMISSION REGULATIONS APPLICABLE TO ALL MUTUAL FUNDS AND IT IS NOT A PREDICTION
OF, NOR DOES IT REPRESENT, PAST OR FUTURE EXPENSES OR THE PERFORMANCE OF ANY
FUND.
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<PAGE> 11
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
SAFECO MONEY MARKET FUND
The following supplemental financial information and performance data has been
derived from the Financial Statements audited by Ernst & Young LLP, independent
auditors. The information should be read in conjunction with the financial
statements, related notes and other financial information incorporated by
reference herein.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
1995 1994 1993 1992 1991 1990 1989 1988
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value
at beginning
of period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income..................... .04 .02 .03 .05 .07 .08 .08 .06
LESS
DISTRIBUTIONS:
Dividends from
net investment
income..................... (.04) (.02) (.03) (.05) (.07) (.08) (.08) (.06)
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value at
end of period.............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ======== ======== ========
Total return................. 4.20% 2.48% 2.98% 5.04% 7.60% 8.77% 7.86% 6.56%
Net assets at end
of period
(000's omitted)............ $171,958 $186,312 $144,536 $184,823 $224,065 $225,974 $177,813 $119,709
Ratio of expenses to
average net assets......... .78% .79% .77% .73% .70% .71% .74% .79%
Ratio of net investment
income to average
net assets................. 4.21% 2.47% 3.02% 5.05% 7.34% 8.45% 7.66% 6.49%
<CAPTION>
YEAR ENDED MARCH 31
1987 1986
------------------
<S> <C> <C>
Net asset value
at beginning
of period.................. $ 1.00 $ 1.00
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income..................... .06 .07
LESS
DISTRIBUTIONS:
Dividends from
net investment
income..................... (.06) (.07)
------- -------
Net asset value at
end of period.............. $ 1.00 $ 1.00
======= =======
Total return................. 5.90%* 7.66%*
Net assets at end
of period
(000's omitted)............ $57,998 $39,231
Ratio of expenses to
average net assets......... .82% .86%
Ratio of net investment
income to average
net assets................. 5.71% 7.35%
</TABLE>
* Unaudited.
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<PAGE> 12
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
SAFECO TAX-FREE MONEY MARKET FUND
The following supplemental financial information and performance data has been
derived from the Financial Statements audited by Ernst & Young LLP, independent
auditors. The information should be read in conjunction with the financial
statements, related notes and other financial information incorporated by
reference herein.
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value
at beginning
of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income.................. .03 .02 .03 .04 .05 .06 .05 .04 .03 .04
LESS
DISTRIBUTIONS:
Dividends from
net investment
income.................. (.03) (.02) (.03) (.04) (.05) (.06) (.05) (.04) (.03) (.04)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net asset value at
end of period........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total return.............. 2.84% 1.98% 2.53% 3.94% 5.39% 5.92% 5.27% 4.33% 3.79%* 4.71%*
Net assets at end
of period
(000's omitted)......... $77,320 $94,589 $82,098 $79,849 $60,478 $52,092 $44,623 $37,492 $19,039 $15,516
Ratio of expenses to
average net assets...... .64% .64% .61% .62% .62% .63% .63% .64% .66% .73%
Ratio of net investment
income to average
net assets.............. 2.79% 1.96% 2.48% 3.83% 5.24% 5.75% 5.15% 4.35% 3.68% 4.79%
</TABLE>
* Unaudited.
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<PAGE> 13
THE TRUST AND EACH FUND'S INVESTMENT POLICIES
The Trust is a Delaware business trust established by the Trust Instrument dated
May 13, 1993. The Trust currently consists of two mutual funds: Money Market
Fund and Tax-Free Money Market Fund, each of which is a diversified series of
the Trust.
The investment objective and investment policies for each Fund are described
below. The Trust's Board of Trustees may change a Fund's objective without
shareholder vote, but no such change will be made without 60 days' prior written
notice to shareholders of that Fund. In the event a Fund changes its investment
objective, the new objective may not meet the investment needs of every
shareholder and may be different from the objective a shareholder considered
appropriate at the time of initial investment. It is the policy of both the
Money Fund and Tax-Free Money Fund to seek to maintain a net asset value per
share of $1.00. Current holdings and recent investment strategies are described
in the Funds' financial reports which are sent to shareholders twice a year.
Each Fund has adopted a number of investment restrictions. If a Fund follows a
percentage limitation at the time of investment, a later increase or decrease in
values, net assets or other circumstances will not be considered in determining
whether a Fund complies with the applicable policy. Unless otherwise stated, all
investment policies and limitations described below are non-fundamental and may
be changed by the Trust's Board of Trustees without shareholder vote.
MONEY FUND
The investment objective of the Money Fund is to seek as high a level of current
income as is consistent with the preservation of capital and liquidity through
investment in high-quality money market instruments maturing in thirteen months
or less.
To pursue its objective, the Money Fund:
1. WILL PURCHASE ONLY HIGH QUALITY SECURITIES THAT, IN THE OPINION OF SAM
OPERATING UNDER GUIDELINES ESTABLISHED BY THE BOARD OF TRUSTEES, PRESENT
MINIMAL CREDIT RISKS AFTER AN EVALUATION OF THE CREDIT QUALITY OF THE
ISSUER OR OF ANY ENTITY PROVIDING A CREDIT ENHANCEMENT FOR THE SECURITY.
The Fund complies with industry-standard guidelines on the quality and
maturity of its investments, which are designed to help maintain a stable
$1.00 share price. The Fund invests in instruments with remaining
maturities of 397 days or less and maintains a dollar-weighted average
portfolio maturity of not more than 90 days.
2. MAY INVEST IN COMMERCIAL PAPER OBLIGATIONS. Commercial paper is a
short-term instrument issued by corporations, financial institutions,
governmental entities and other entities. The principal risk associated
with commercial paper is the potential insolvency of the issuer. In
addition to commercial paper obligations of domestic corporations, the
Fund may also purchase dollar-denominated commercial paper issued in the
U.S. by foreign entities. While investments in foreign securities are
intended to reduce risk by providing further diversification, such
investments involve sovereign and other risks, in addition to the credit
and market risks normally associated with domestic securities. These
additional risks include the possibility of adverse political and economic
developments (including political instability) and the potentially adverse
effects of unavailability of public information regarding issuers, reduced
governmental supervision regarding financial markets, reduced liquidity of
certain financial markets, and the lack of uniform accounting, auditing,
and financial standards or the application of standards that are different
or less stringent than those applied in the U.S. The Fund will only
purchase such securities, if, in the opinion of SAM, the security is of an
investment quality comparable to other obligations that may be purchased
by the Fund.
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<PAGE> 14
THE TRUST AND EACH FUND'S INVESTMENT POLICIES (CONTINUED)
3. MAY INVEST IN NEGOTIABLE AND NON-NEGOTIABLE DEPOSITS, BANKERS' ACCEPTANCES
AND OTHER SHORT-TERM OBLIGATIONS OF U.S. BANKS. Companies in the financial
services industry are subject to various risks related to that industry,
such as government regulation, changes in interest rates, and exposure on
loans, including loans to foreign borrowers. The Fund may also invest in
dollar-denominated securities issued by foreign banks (including foreign
branches of U.S. banks) provided that, in the opinion of SAM, the security
is of an investment quality comparable to other obligations which may be
purchased by the Fund. Foreign banks may not be subject to accounting
standards or governmental supervision comparable to U.S. banks, and there
may be less public information available about their operations. In
addition, foreign securities may be subject to risks relating to the
political and economic conditions of the foreign country involved, which
could affect the payment of principal and interest.
4. MAY INVEST IN U.S. GOVERNMENT SECURITIES. U.S. government securities
include (a) securities supported by the full faith and credit of the U.S.
government but that are not direct obligations of the U.S. Treasury, (b)
securities that are not supported by the full faith and credit of the U.S.
government but are supported by the issuer's ability to borrow from the
U.S. Treasury such as securities issued by the Federal National Mortgage
Association ("FNMA") and the Federal Home Loan Mortgage Association
("FHLMC"), and (c) securities supported solely by the creditworthiness of
the issuer such as securities issued by the Tennessee Valley Authority
("TVA"). While U.S. government securities are considered to be of the
highest credit quality available, they are subject to the same market
risks as comparable debt securities.
5. MAY INVEST IN EURODOLLAR AND YANKEE OBLIGATIONS. Eurodollar bank
obligations are dollar-denominated certificates of deposit and time
deposits issued outside the U.S. capital markets by foreign branches of
U.S. banks and by foreign banks. Yankee bank obligations are
dollar-denominated obligations issued in the U.S. capital markets by
foreign banks.
Eurodollar and Yankee obligations are subject to the same
risks that pertain to domestic issues, notably credit risk, market risk
and liquidity risk. Additionally, Eurodollar (and to a limited extent,
Yankee) obligations are subject to certain sovereign risks. One such risk
is the possibility that a foreign government might prevent
dollar-denominated funds from flowing across its borders. Other risks
include: adverse political and economic developments in a foreign country;
the extent and quality of government regulation of financial markets and
institutions; the imposition of foreign withholding taxes; and
expropriation or nationalization of foreign issuers. Eurodollar and Yankee
obligations will undergo the same credit analysis as domestic issues in
which the Fund invests, and foreign issuers will be required to meet the
same tests of financial strength as the domestic issuers approved for the
Fund.
TAX-FREE MONEY FUND
The investment objective of the Tax-Free Money Fund is to provide as high a
level of current income exempt from federal income tax as is consistent with a
portfolio of high-quality, short-term municipal obligations selected on the
basis of liquidity and preservation of capital. The Tax-Free Money Fund's
investment objective is a fundamental policy that may not be changed without
shareholder approval. The term "municipal obligations" as used in this
Prospectus means those obligations issued by or on behalf of states, territories
or possessions of the U.S. and the
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<PAGE> 15
THE TRUST AND EACH FUND'S INVESTMENT POLICIES (CONTINUED)
District of Columbia and their political subdivisions, agencies and
instrumentalities, the interest on which in the opinion of counsel for the
issuer is exempt from federal income tax.
To pursue its investment objective, the Tax-Free Money Fund:
1. WILL PURCHASE ONLY HIGH QUALITY SECURITIES THAT, IN THE OPINION OF SAM
OPERATING UNDER INFORMATION ABOUT SHARE OWNERSHIP AND COMPANIES THAT
PROVIDE SERVICES TO THE TRUST GUIDELINES ESTABLISHED BY THE BOARD OF
TRUSTEES, PRESENT MINIMAL CREDIT RISKS AFTER AN EVALUATION OF THE CREDIT
QUALITY OF THE ISSUER OR OF ANY ENTITY PROVIDING A CREDIT ENHANCEMENT FOR
THE SECURITY. The Fund complies with industry-standard guidelines on the
quality and maturity of its investments, which are designed to help
maintain a stable $1.00 share price. The Fund invests in instruments with
remaining maturities of 397 days or less and maintains a dollar-weighted
average portfolio maturity of not more than 90 days.
2. WILL INVEST, DURING NORMAL MARKET CONDITIONS AND AS A MATTER OF
FUNDAMENTAL POLICY, AT LEAST 80% OF ITS NET ASSETS IN SECURITIES THE
INTEREST ON WHICH IS EXEMPT FROM FEDERAL INCOME TAX.
3. WILL INVEST IN MUNICIPAL NOTES. Municipal notes include bond anticipation
notes, tax anticipation notes and revenue anticipation notes, municipal
bonds, and municipal commercial paper. These instruments are generally
issued to provide for short-term capital needs of the issuer. The
principal risk associated with municipal notes is that the issuer may fail
to make timely payments of principal and interest to the Fund.
4. MAY INVEST UP TO 10% OF ITS TOTAL ASSETS IN SHARES OF NO-LOAD, OPEN-END
INVESTMENT COMPANIES THAT INVEST IN TAX-EXEMPT SECURITIES WITH REMAINING
MATURITIES OF THIRTEEN MONTHS OR LESS. Such shares will only be purchased
if SAM determines that they provide a better combination of yield and
liquidity than a direct investment in short-term, tax-exempt securities.
SAM will waive its advisory fees for assets invested in other investment
companies. The Fund will not invest more than 5% of its total assets in a
single investment company.
5. MAY INVEST (AS A TEMPORARY ACCOMMODATION OR IN AN EMERGENCY SITUATION) UP
TO 20% OF ITS NET ASSETS IN SHORT-TERM TAXABLE INVESTMENTS SUCH AS DIRECT
OBLIGATIONS OF THE U.S. GOVERNMENT, CERTIFICATES OF DEPOSIT AND COMMERCIAL
PAPER MEETING THE NECESSARY QUALITY REQUIREMENTS.
COMMON INVESTMENT PRACTICES
Each Fund:
1. MAY INVEST IN REPURCHASE AGREEMENTS. In a repurchase agreement, a Fund
buys securities at one price and simultaneously agrees to sell them back
at a higher price. Delays or losses could result if the counterparty to
the agreement defaults or becomes insolvent. Each Fund will invest no more
than 10% of total assets in repurchase agreements and will not purchase
repurchase agreements that mature in more than seven days.
2. MAY INVEST IN VARIABLE AND FLOATING RATE INSTRUMENTS. The interest rates
on variable rate instruments reset periodically on specified dates so as
to cause the instruments' market value to approximate their par value. The
interest rates on floating rate instruments change whenever there is a
change in a designated benchmark rate. Variable and floating rate
instruments may have put features. Puts may also be mandatory which
requires the Fund to act to keep the bond.
3. MAY INVEST UP TO 5% OF ITS TOTAL ASSETS IN RESTRICTED SECURITIES ELIGIBLE
FOR RESALE UNDER RULE 144A UNDER THE SECURITIES ACT OF 1933 ("1933 ACT")
("RULE 144A SECURITIES") AND COMMERCIAL PAPER SOLD PURSUANT TO SECTION
4(2) OF THE 1933 ACT ("SECTION 4(2) PAPER"),
-9-
<PAGE> 16
THE TRUST AND EACH FUND'S INVESTMENT POLICIES (CONTINUED)
PROVIDED THAT SAM HAS DETERMINED THAT SUCH SECURITIES ARE LIQUID UNDER
GUIDELINES ADOPTED BY THE BOARD OF TRUSTEES. Restricted securities may
only be sold in offerings registered under the 1933 Act or in transactions
exempt from the registration requirements under the 1933 Act. Rule 144A
under the 1933 Act provides an exemption for the resale of certain
restricted securities to qualified institutional buyers. Investing in
restricted securities eligible for resale under Rule 144A could have the
effect of increasing a Fund's illiquidity to the extent that qualified
institutional buyers or other buyers are unwilling to purchase the
securities. Section 4(2) of the 1933 Act exempts from the registration
requirements of the Securities Act of 1933 securities sold by the issuer
in private transactions. Because Section 4(2) paper is a restricted
security, investing in Section 4(2) paper could have the effect of
increasing a Fund's illiquidity to the extent that buyers are unwilling to
purchase the securities.
The following restrictions are fundamental policies and cannot be changed
without shareholder vote. Each Fund:
1. MAY INVEST UP TO 5% OF ITS ASSETS IN THE SECURITIES OF ANY ONE ISSUER
OTHER THAN U.S. GOVERNMENT SECURITIES (EXCEPT, WITH RESPECT TO THE
TAX-FREE MONEY FUND ONLY, THAT UP TO 25% OF THAT FUND'S ASSETS MAY BE
INVESTED WITHOUT REGARD TO THE 5% LIMITATION, WHICH 25% DOES NOT INCLUDE
SECURITIES ISSUED BY OTHER INVESTMENT COMPANIES).
2. MAY INVEST UP TO 25% OF ITS TOTAL ASSETS IN ANY ONE INDUSTRY (INCLUDING
SECURITIES ISSUED BY FOREIGN BANKS AND FOREIGN BRANCHES OF U.S. BANKS),
PROVIDED, HOWEVER, THAT THIS LIMITATION DOES NOT APPLY TO U.S. GOVERNMENT
SECURITIES, OR TO CERTIFICATES OF DEPOSIT OR BANKERS' ACCEPTANCES ISSUED
BY DOMESTIC BANKS. The Tax-Free Money Fund will not invest more than 25%
of its total assets to be invested in any one industry, or in municipal
obligations and other permitted investments, the interest on which is
payable from revenues on similar types of projects.
3. MAY BORROW MONEY FOR TEMPORARY OR EMERGENCY PURPOSES (BUT NOT FOR
INVESTMENT PURPOSES) FROM A BANK OR AFFILIATES OF SAFECO CORPORATION AT AN
INTEREST RATE NOT GREATER THAN THAT AVAILABLE FROM COMMERCIAL BANKS. A
Fund will not borrow amounts in excess of 20% of total assets and will not
purchase securities if borrowings equal to or greater than 5% of total
assets are outstanding. Each Fund intends to primarily exercise its
borrowing authority to meet shareholder redemptions under circumstances
where redemptions exceed available cash.
For more information, see the "Investment Policies" and "Additional Investment
Information" sections of the Trust's Statement of Additional Information.
RISK FACTORS
When you sell your shares, they should be worth the same amount as when you
bought them. Of course, there is no guarantee that either Fund will maintain a
stable $1.00 share price. The principal risk associated with an investment in a
mutual fund like either of the Funds is that they may experience a delay or
failure in principal or interest payments at maturity of one or more of the
portfolio securities. It is possible that a major change in interest rates or a
default on the Funds' investments could cause their share prices (and the value
of your investment) to fall. Both Funds' yield will fluctuate with general
interest rates and the value of the Funds' portfolios will fluctuate inversely
with changes in interest rates. With respect to the Tax-Free Money Fund, the
ability of issuers of municipal obligations to make principal and interest
payments is dependent on the receipt of revenue and subject to bankruptcy and
insolvency laws.
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<PAGE> 17
INFORMATION ABOUT SHARE OWNERSHIP AND COMPANIES THAT PROVIDE SERVICE TO THE
TRUST
Each Fund is a series of SAFECO Money Market Trust, a Delaware business trust
that issues an unlimited number of shares of beneficial interest. The Board of
Trustees may establish additional series of shares of the Trust without approval
of shareholders.
Shares of each Fund represent equal proportionate interests in the assets of
that Fund only and have identical voting, dividend, redemption, liquidation and
other rights. All shares issued are fully paid and non-assessable, and
shareholders have no preemptive or other right to subscribe to any additional
shares.
The Trust does not intend to hold annual meetings of shareholders of the Funds.
The Trustees will call a special meeting of shareholders of a Fund only if
required under the Investment Company Act of 1940 or in their discretion or upon
the written request of holders of 10% or more of the outstanding shares of the
Fund entitled to vote.
Under Delaware law, the shareholders of the Funds will not be personally liable
for the obligations of any Fund; a shareholder is entitled to the same
limitation of personal liability extended to shareholders of corporations. To
guard against the risk that Delaware law might not be applied in other states,
the Trust Instrument requires that every written obligation of the Trust or Fund
contain a statement that such obligation may be enforced only against the assets
of the Trust or Fund.
SAM is the investment adviser for each Fund under an agreement with the Trust.
Under the agreement, SAM is responsible for the management of the Trust's and
each Fund's business affairs. Each Fund pays SAM an annual management fee based
on a percentage of that Fund's net assets ascertained each business day and paid
monthly in accordance with the schedules below. A reduction in the fees paid by
a Fund occurs only when that Fund's net assets reach the dollar amounts of the
break points and applies only to the assets that fall within the specified
range:
MONEY FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL FEE
<S> <C>
$0 - $250,000,000 .5 of 1%
$250,000,001 - $500,000,000 .4 of 1%
$500,000,001 - $750,000,000 .3 of 1%
Over $750,000,000 .25 of 1%
</TABLE>
TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
NET ASSETS ANNUAL FEE
<S> <C>
$0 - $100,000,000 .5 of 1%
$100,000,001 - $250,000,000 .4 of 1%
$250,000,001 - $500,000,000 .3 of 1%
Over $500,000,000 .2 of 1%
</TABLE>
For the fiscal years ended March 31, 1995 the ratios of expenses to average net
assets for the Money and Tax-Free Money Funds were .78% and .64%, respectively,
and the ratios of the net compensation paid to SAM to the average net assets of
the Money and Tax-Free Money Funds were .50% and .50%, respectively.
The distributor of each Fund's shares under an agreement with the Trust is
SAFECO Securities, Inc. ("SAFECO Securities"), a broker-dealer registered under
the Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc. SAFECO Securities receives no compensation from the
Trust or the Funds for its services.
The transfer, dividend and distribution disbursement and shareholder servicing
agent for each Fund under an agreement with the Trust is SAFECO Services
Corporation ("SAFECO Services"). SAFECO Services receives a fee from a Fund for
each shareholder transaction processed for that Fund.
SAM, SAFECO Securities and SAFECO Services are wholly-owned subsidiaries of
SAFECO Corporation (a holding company whose primary subsidiaries are engaged in
the insurance and related financial services businesses) and are each located at
SAFECO Plaza, Seattle, Washington 98185.
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<PAGE> 18
PERFORMANCE INFORMATION
Each Fund's yield, effective yield and tax-equivalent yield may be quoted in
advertisements.
Yield is the annualization on a 365-day basis of either Fund's net income over a
7-day period. Effective yield is the annualization, on a 365-day basis, of
either Fund's net income over a 7-day period with dividends reinvested. The
effective yield will be slightly higher than the yield because of the
compounding effect of this assumed reinvestment. Tax-equivalent yield is, given
an investor's tax bracket, the taxable yield necessary to equal the Tax-Free
Money Fund's yield on an after-tax basis over the same period of time.
From time to time, the Funds may advertise rankings. Rankings are calculated by
independent companies that monitor mutual fund performance (e.g., CDA Investment
Technologies, Lipper Analytical Services, Inc., and Morningstar, Inc.) and are
reported periodically in national financial publications such as Barron's,
Business Week, Forbes, Investor's Business Daily, Money Magazine, and The Wall
Street Journal. In addition, non-standardized performance figures may accompany
the standardized figures described above. Non-standardized figures may be
calculated in a variety of ways, including but not necessarily limited to,
different time periods and different initial investment amounts. Each Fund may
also compare its performance to the performances of relevant indices.
Performance information and quoted rankings are indicative only of past
performance and are not intended to represent future investment results. Each
Fund's yield will fluctuate.
FUND DISTRIBUTIONS AND HOW THEY ARE TAXED
DIVIDEND AND OTHER DISTRIBUTIONS
Each Fund declares an income dividend each business day based on net investment
income; i.e., all of its interest income earned on the securities in its
portfolio less all of its expenses. Income dividends are payable on the last
business day of each month. Your shares become entitled to declared dividends
on the next business day after shares are purchased in your account. If you
request redemption of all your shares at any time during the month, you will
receive all declared income dividends through the date of redemption together
with the proceeds of the redemption.
A shareholder's dividends and other distributions are reinvested in additional
shares of the distributing Fund at net asset value per share generally
determined as of the close of business on the ex-distribution date, unless the
shareholder elects in writing to receive dividends or other distributions in
cash and that election is provided to SAFECO Services at the address on the
Prospectus cover. The election remains in effect until revoked by written notice
by the shareholder in the same manner as the distribution election. For
retirement accounts, all dividends and other distributions declared by the Money
Fund must be invested in additional shares of the Money Fund.
TAXES
Each Fund intends to continue to qualify for favorable tax treatment as a
regulated investment company under the Internal Revenue Code. By so qualifying,
each Fund will not be subject to federal income taxes to the extent it
distributes its net investment income and realized capital gains to its
shareholders.
TAX STATUS OF DIVIDENDS
Each Fund will inform you as to the amount and nature of dividends and other
distributions to your
-12-
<PAGE> 19
FUND DISTRIBUTIONS AND HOW THEY ARE TAXED (CONTINUED)
account. Dividends and other distributions declared in December, but received by
shareholders in January, are taxable to shareholders in the year in which
declared.
Distributions you receive from the Money Fund will be taxable as dividend income
whether received in cash or in additional Money Fund shares. Distributions you
receive from the Tax-Free Money Fund will normally be exempt from federal income
tax. However, from time to time, a portion of the Tax-Free Money Fund's assets
may be temporarily invested in fixed-income obligations, the interest on which
when distributed to the Fund's shareholders will be subject to federal income
taxes. Substantially all dividends of the Tax-Free Money Fund are expected to be
exempt from federal income tax, but may be subject to state or local taxes.
TAX WITHHOLDING INFORMATION
You will be asked to certify on your account application or on a separate form
that the taxpayer identification number you provide is correct and that you are
not subject to, or are exempt from, backup withholding for previous
underreporting to the Internal Revenue Service.
Retirement plan distributions may be subject to federal income tax withholding.
However, you may elect to not have any distributions withheld by checking the
appropriate box on the Redemption Request form or by instructing SAFECO Services
in writing at the address on the Prospectus cover.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders; see the
Trust's Statement of Additional Information for a further discussion. There may
be other federal, state or local tax considerations applicable to a particular
investor. You therefore are urged to consult your tax adviser.
TAX-DEFERRED RETIREMENT PLANS
SAFECO Services offers a variety of tax-deferred retirement plans for
individuals, businesses and non-profit organizations. An account may be
established under one of the following plans which allow you to defer investment
income from federal income tax while you save for retirement. Many of the SAFECO
Funds may be used as an investment vehicle for these plans.
INDIVIDUAL RETIREMENT ACCOUNT (IRAs). IRAs are tax-deferred retirement accounts
for anyone under age 70 1/2 with earned income. The maximum annual contribution
is $2,000 per person ($2,250 for you and a non-working spouse). An annual
custodial fee will be charged for any part of a calendar year in which you have
an IRA investment in a Fund.
SIMPLIFIED EMPLOYEE PENSION IRA (SEP-IRAs). SEP-IRAs are easily administered
retirement plans for small businesses and self-employed individuals. Annual
contributions of up to $30,000 may be made to SEP-IRA accounts. SEP-IRAs have
the same investment minimums and custodial fees as regular IRAs.
403(b) PLANS. 403(b) plans are retirement plans for tax-exempt organizations and
school systems to which employers and employees both may contribute. Minimum
investment amounts are negotiable.
401(k) PLANS. 401(k) plans allow employers and employees to make tax deductible
contributions to a retirement account. SAFECO Services offers a low-cost
administration package that includes a prototype plan, recordkeeping, testing
and employee communications. Minimum investment amounts are negotiable.
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<PAGE> 20
TAX-DEFERRED RETIREMENT PLANS (CONTINUED)
PROFIT SHARING AND MONEY PURCHASE PENSION PLANS. These plans allow corporations,
partnerships and self-employed persons to make annual, tax-deductible
contributions to a retirement account for each person covered by a plan. A plan
may be adopted individually or paired with another plan to maximize
contributions. SAFECO Services offers an administration package for these plans.
Minimum investment amounts are negotiable.
THE ASSETS OF THESE PLANS MAY NOT BE INVESTED IN THE TAX-FREE MONEY FUND.
For information about the above accounts and plans, please call 1-800-278-1985.
ACCOUNT STATEMENTS
Periodically, you will receive an account statement indicating your current fund
holdings and transactions affecting the account. Confirmation statements will be
sent to you confirming each transaction that takes place in your account
including investments, redemptions and exchanges. Dividend distributions are
confirmed at the end of each quarter. Please review the information on each
confirmation statement for accuracy immediately upon receipt. If you do not
notify us within 30 days of any processing error, SAFECO Services will consid er
the transactions listed on the confirmation statement to be correct.
ACCOUNT CHANGES AND SIGNATURE REQUIREMENTS
Changes to your account registration or the services you have selected must be
in writing and signed by the number of owners specified on your account
application as having authority to make these changes. Send written changes to
SAFECO Services at the address on the Prospectus cover. Certain changes to the
Automatic Investment Method and Systematic Withdrawal Plan can be made by
telephone if you have previously selected single signature authorization for
your account.
You must specify on your account application the number of
signatures required to authorize redemptions and exchanges and to change account
registration or the services selected. Authorizing fewer than all account owners
has important implications. For example, one owner of a joint tenant account can
redeem money or change the account registration to single ownership without the
co-owner's signature. If you do not indicate otherwise on the application, the
signatures of all account owners will be required to effect a transaction. Your
selection of fewer than all account owner signatures may be revoked by any
account owner who writes to SAFECO Services at the address on the Prospectus
cover.
SAFECO Services may require a signature guarantee for a signature that cannot be
verified by comparison to the signature(s) on your account application. A
signature guarantee may be obtained from most financial institutions, including
banks, savings and loans and broker-dealers.
-14-
<PAGE> 21
SHARE PRICE CALCULATION
The net asset value per share ("NAV") of each Fund is computed as of the close
of regular trading on the New York Stock Exchange (normally 1:00 p.m. Pacific
time) each day that Exchange is open for trading. The NAV is calculated by
subtracting a Fund's liabilities from its assets and dividing the result by the
number of outstanding shares. Each Fund intends to maintain an NAV of $1.00.
Like most money market funds, each Fund values the securities it owns on the
basis of amortized cost. Each Fund may use amortized cost valuation as long as
the Board of Trustees determines that it fairly reflects market value. Amortized
cost valuation involves valuing a security at its cost and adding or
subtracting, ratably to maturity, any discount or premium, regardless of the
impact of fluctuating interest rates on the market value of the security. This
method minimizes the effect of changes in a security's market value and helps
each Fund maintain a stable $1.00 share price.
HOW TO PURCHASE SHARES
A completed and signed application must accompany payment for an initial
purchase by mail and in all cases is necessary before a redemption can be made.
Specific applications for retirement accounts must be completed and signed
before any retirement account can be set up (Money Fund only). The Funds only
accept funds drawn in U.S. dollars and payable through a U.S. bank. The Funds do
not accept currency. The Funds issue shares in uncertificated form. Certificates
for whole shares will be issued without charge only upon written request. You
will be required to post a bond to replace missing certificates.
The Funds have the right to refuse any investment.
INITIAL PURCHASES
MINIMUM INITIAL INVESTMENT $1,000.
IRA $250 (MONEY FUND ONLY)
Minimum initial investments are negotiable for retirement accounts other than
IRAs (Money Fund Only).
No minimum initial investment is required to establish the Automatic Investment
Method or Payroll Deduction Plan.
BY WRITTEN REQUEST
Send a check or money order made payable to the applicable Fund and a completed
and signed application to the address on the Prospectus cover.
BY WIRE
Call toll-free 1-800-624-5711 or, in Seattle, 206-545-7319 for instructions.
Not available for retirement accounts.
ADDITIONAL PURCHASES
MINIMUM ADDITIONAL INVESTMENTS $100 (EXCEPT DIVIDEND REINVESTMENTS).
Minimum additional investments are negotiable for retirement plans other than
IRAs (Money Fund Only).
BY WRITTEN REQUEST
Send a check or money order payable to the applicable Fund to the address on the
Prospectus cover. Please specify your account number.
-15-
<PAGE> 22
HOW TO PURCHASE SHARES (CONTINUED)
BY WIRE
Instruct your bank to send wires to U.S. Bank of Washington, N.A., Seattle,
Washington, ABA #1250-0010-5, Account #0017-086083.
To ensure timely credit to your account, ask your bank to include the following
information in its wire to U.S. Bank of Washington, N.A.:
- - SAFECO Fund Name
- - SAFECO account number
- - Name of the registered owner(s) of the SAFECO account
Delays of purchases caused by inadequate wire instructions are not the
responsibility of the Funds or SAFECO Services.
Your bank may charge a fee for wire services.
BY TELEPHONE
Call 1-800-624-5711 or, in Seattle, 206-545-7319. You must have previously
selected this service on your account application or by written request. Not
available to open a new account or for retirement accounts.
Maximum purchase $100,000 per day, minimum purchase $100 per day.
Monies will be transferred from your predesignated bank account to your existing
Fund account. Your bank may charge a fee if monies are wired to your Fund
account. Please allow 15 business days after selecting this service for it to be
available for use. Telephone purchases may be unavailable from some bank
accounts and non-bank financial institutions. Please read "Telephone
Transactions" on page 19 for important information.
THROUGH REGISTERED INVESTMENT ADVISERS
Please read "Transactions Through Registered Investment Advisers" on page 20 for
important information.
SHARE PURCHASE PRICE
You will buy full and fractional shares at the NAV next computed after your
check, money order or wire is received. For telephone purchase orders, you will
receive the price per share calculated on the day monies are received from your
bank account. Each Fund intends to maintain an NAV of $1.00. See "Share Price
Calculation" on page 15 for more information.
HOW TO REDEEM SHARES
BY WRITTEN REQUEST
Shares may be redeemed by sending a letter that specifies your account number,
the Fund's name and the number of shares or dollar amount you wish to redeem.
The request should be sent to the address on the Prospectus cover. The request
must be signed by the appropriate number of owners and in some cases a signature
guarantee may be required. In all cases, SAFECO Services must have a signed and
completed application on file before a redemption can be made. See "Account
Changes and Signature Requirements" on page 14 for more information.
Retirement account shareholders of the Money Fund must specify whether or not
they elect 10% federal income tax withholding from a distribution.
BY TELEPHONE
Call 1-800-624-5711 or, in Seattle, 206-545-7319. You must have previously
selected this service on your account application or by written request.
Telephone
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<PAGE> 23
HOW TO REDEEM SHARES (CONTINUED)
redemptions are not available for retirement accounts or shares issued in
certificate form. You may request that redemption proceeds be sent directly to
your predesignated bank or mailed to your account address of record.
PLEASE READ "TELEPHONE TRANSACTIONS" ON PAGE 19 FOR IMPORTANT INFORMATION.
BY REDEMPTION CHECK
SAFECO Services will send to you, free of charge, redemption checks (drafts)
payable through U.S. Bank of Washington, N.A. Redemption checks are not
available to IRA shareholders or for shares issued in certificate form.
Redemption checks may be made payable to any person or entity and must contain
the proper number of signatures. Redemption checks must be for $500 or more.
Neither the Funds nor SAFECO Services will be liable for payment of postdated
redemption checks. See "Account Changes and Signature Requirements" on page 14
for further information.
THROUGH REGISTERED INVESTMENT ADVISERS
Please read "Transactions Through Registered Investment Advisers" on page 20 for
important information.
PLEASE NOTE THE FOLLOWING:
If your shares were purchased by wire, redemption proceeds will be available
immediately. If shares were purchased by means other than wire, each Fund
reserves the right to hold the proceeds of your redemption for up to 15 business
days after investment or until such time as the Fund has received assurance that
your investment will be honored by the bank on which it was drawn, whichever
occurs first.
SAFECO Services charges a $10 fee to wire redemption proceeds. In addition, some
banks may charge a fee to receive wires.
If shares are issued in certificate form, the certificates must accompany a
redemption request and be duly endorsed.
Under some circumstances (e.g., a change in corporate officer or death of an
owner), SAFECO Services may require certified copies of supporting documents
before a redemption will be made.
SHARE REDEMPTION PRICE AND PROCESSING
Your shares will be redeemed at the NAV next calculated after receipt of your
request that meets the redemption requirements of the Funds. Redemption proceeds
will normally be sent on the business day following receipt of your redemption
request. If your redemption request is received after the close of trading on
the New York Stock Exchange (normally 1:00 p.m. Pacific time), proceeds will
normally be sent on the second business day following receipt. Each Fund,
however, reserves the right to postpone payment of redemption proceeds for up to
seven days if making immediate payment could adversely affect its portfolio. In
addition, redemptions may be suspended or payment dates postponed if the New
York Stock Exchange is closed, its trading is restricted or the Securities and
Exchange Commission declares an emergency.
Due to the high cost of maintaining small accounts, your account may be closed
upon 60 days' written notice if at the time of any redemption or exchange the
total value falls below $100. Your shares will be redeemed at the share price
calculated on the day your account is closed.
-17-
<PAGE> 24
HOW TO SYSTEMATICALLY PURCHASE OR REDEEM SHARES
Call 1-800-426-6730 or 206-545-5530, in Seattle, for more information.
AUTOMATIC INVESTMENT METHOD (AIM)
AIM enables you to make regular monthly investments by authorizing SAFECO
Services to withdraw a specific amount (minimum of $100 per withdrawal per Fund)
from your bank account and invest the amount in either Fund.
PAYROLL DEDUCTION PLAN
An employer or other entity using group billing may establish a
self-administered payroll deduction plan in either Fund. Payroll deduction
amounts are negotiable.
SYSTEMATIC WITHDRAWAL PLAN
This plan enables you to receive a portion of your investment on a monthly
basis. A Fund automatically redeems shares in your account and sends you a
withdrawal check (minimum amount $50 per Fund) on or about the fifth business
day of every month.
HOW TO EXCHANGE SHARES FROM ONE FUND TO ANOTHER
An exchange is the redemption of shares of one SAFECO Fund and the purchase of
shares of another SAFECO Fund in accounts that are identically registered; i.e.,
have the same registered owners and account number. For income tax purposes,
depending on the cost or other basis of the shares you exchange, you may realize
a capital gain or loss when you make an exchange. You may purchase shares of a
SAFECO Fund by exchange only if it is registered for sale in the state where you
reside. Before exchanging into a SAFECO Fund, please read its Prospectus.
BY WRITTEN REQUEST
Shares may be exchanged by writing SAFECO Services at the address on the
Prospectus cover. Please designate the SAFECO Funds you wish to exchange out of
and into as well as your account number. The request must be signed by the
number of owners designated on your account application and in some cases a
signature guarantee may be required. See "Account Changes and Signature
Requirements" on page 14 for more information.
If the shares you want to exchange are evidenced by certificates, the
certificates must accompany the request and be duly endorsed.
Under some circumstances (e.g., a change in corporate officer or death of an
owner), SAFECO Services may require certified copies of supporting documents
before an exchange can be made.
BY TELEPHONE
Call 1-800-624-5711 or, in Seattle, 206-545-7319.
Exchanges by telephone must be in amounts of $1,000 or more. Telephone
exchanges are not available for shares issued in certificate form. Please read
"Telephone Transactions" on page 19 for important information.
THROUGH REGISTERED INVESTMENT ADVISERS
Please read "Transactions Through Registered Investment Advisers" on page 20 for
important information.
-18-
<PAGE> 25
HOW TO EXCHANGE SHARES FROM ONE FUND TO ANOTHER (CONTINUED)
LIMITATIONS
Each Fund reserves the right to refuse exchange purchases by any person or group
if, in SAM's judgment, the Fund would be unable to invest the money effectively
in accordance with that Fund's investment objective and policies or would
otherwise potentially be adversely affected.
The exchange privilege is not intended to provide a means for frequent trading
in response to short-term fluctuations in the market. Excessive exchange
transactions can be disadvantageous to other shareholders and the Funds. Your
exchanges may be restricted or refused if a Fund receives or anticipates
simultaneous orders affecting significant portions of that Fund's assets, for
example, a pattern of exchanges that coincides with a "market-timing" strategy.
Although a Fund will attempt to give you prior notice whenever it is reasonably
able to do so, it may impose the above restrictions at any time.
SHARE EXCHANGE PRICE AND PROCESSING
The shares of the SAFECO Fund you are exchanging from will be redeemed at the
price next computed after your exchange request is received. Normally the
purchase of the SAFECO Fund you are exchanging into is executed on the same day.
However, each Fund reserves the right to delay the payment of proceeds and,
hence, the purchase in an exchange for up to seven days if making immediate
payment could adversely affect the portfolio of the Fund whose shares are being
redeemed. The exchange privilege may be modified or terminated with respect to a
Fund at anytime, upon at least 60 days' notice to shareholders.
TELEPHONE TRANSACTIONS
To purchase, redeem or exchange shares by telephone, call 1-800-624-5711 or, in
Seattle, 206-545-7319 between 5:30 a.m. and 7:00 p.m. Pacific time, Monday
through Friday, except certain holidays. All telephone calls are tape-recorded
for your protection. During times of drastic or unusual market volatility, it
may be difficult for you to exercise the telephone transaction privileges.
TO USE THE TELEPHONE PURCHASE, REDEMPTION AND EXCHANGE PRIVILEGES, YOU MUST HAVE
PREVIOUSLY SELECTED THESE SERVICES EITHER ON YOUR ACCOUNT APPLICATION OR BY
HAVING SUBMITTED A REQUEST IN WRITING TO SAFECO SERVICES AT THE ADDRESS ON THE
PROSPECTUS COVER. Purchasing, redeeming or exchanging shares by telephone allows
the Funds and SAFECO Services to accept telephone instructions from an account
owner or a person preauthorized in writing by an account owner.
Each Fund and SAFECO Services reserve the right to refuse any telephone
transaction when a Fund or SAFECO Services in its sole discretion is unable to
confirm to its satisfaction that a caller is the account owner or a person
preauthorized by the account owner.
The Funds and SAFECO Services will not be liable for the authenticity of
instructions received by telephone that a Fund or SAFECO Services, in its
discretion, believes to be delivered by an account owner or preauthorized
person, provided that the Fund or SAFECO Services follows reasonable procedures
to identify the caller. The shareholder will bear the risk of any resulting
loss. The Funds and SAFECO Services will follow certain procedures designed to
make sure that telephone instructions are genuine. These procedures may include
requiring the account owner to select the tele-
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<PAGE> 26
TELEPHONE TRANSACTIONS (CONTINUED)
phone privileges in writing prior to first use and to designate persons
authorized to deliver telephone instructions. SAFECO Services tape-records
telephone transactions and may request certain identifying information from the
caller.
The telephone transaction privileges may be suspended, limited, modified or
terminated at any time without prior notice by the Funds or SAFECO Services.
TRANSACTIONS THROUGH REGISTERED INVESTMENT ADVISERS
SAFECO Services may accept instructions for share transactions and account
information changes from investment advisers who are acting on behalf of
shareholders, provided that the adviser is registered under the Investment
Advisers Act of 1940, has a signed agreement with SAFECO Services and has an
executed power of attorney from the shareholder, in an acceptable form, on file
with SAFECO Services. Advisers may charge a fee to shareholders for their
services that the Trust, the Funds and SAFECO Services have no control over or
involvement with. Advisers are responsible for the prompt forwarding of
instructions on shareholders' accounts to SAFECO Services and are bound by the
terms of this Prospectus. The Trust, the Funds, SAFECO Services and their
affiliated companies will not be responsible to any shareholder for any losses,
liabilities, costs or expenses associated with any investment advice or
recommendation provided by the adviser to the shareholder or for accepting and
following any instructions from such adviser on the shareholder's account(s).
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<PAGE> 27
SAFECO FAMILY OF FUNDS
STABILITY OF PRINCIPAL
SAFECO Money Market Fund
SAFECO Tax-Free Money Market Fund
TAXABLE BOND INCOME
SAFECO Intermediate-Term U.S. Treasury Fund
SAFECO GNMA Fund
SAFECO High-Yield Bond Fund
TAX-FREE BOND INCOME
SAFECO Intermediate-Term Municipal Bond Fund
SAFECO Insured Municipal Bond Fund
SAFECO Municipal Bond Fund
SAFECO California Tax-Free Income Fund
SAFECO Washington State Municipal Bond Fund
HIGH CURRENT INCOME WITH LONG-TERM GROWTH
SAFECO Income Fund
LONG-TERM GROWTH
SAFECO Growth Fund
SAFECO Equity Fund
SAFECO Northwest Fund
FOR MORE COMPLETE INFORMATION ON ANY SAFECO MUTUAL FUND, INCLUDING MANAGEMENT
FEES AND EXPENSES, CALL OR WRITE FOR A FREE PROSPECTUS. PLEASE READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
-21-
<PAGE> 28
TO REQUEST A PROSPECTUS Bulk Rate
Nationwide: 1-800-426-6730 U.S. Postage
Seattle: 545-5530 PAID
SAFECO
FOR 24 HOUR PERFOMANCE FIGURES: Insurance Co.
Nationwide: 1-800-835-4391
Seattle: 545-5113
FOR ACCOUNT INFORMATION OR TELEPHONE TRANSACTIONS:
Nationwide: 1-800-624-5711
Seattle: 545-7319
Hearing Impaired TTY/TDD Service: 1-800-438-8718
All telephone calls are taperecorded for your protection.
MAILING ADDRESS:
Safeco Mutual Funds
P.O.Box 34890
Seattle, WA 98124-1890
EXPRESS/OVERNIGHT MAIL:
Safeco Mutual Funds
4333 Brooklyn Avenue N.E.
Seattle, WA 98105
SAFECO SECURITIES, INC. DISTRIBUTOR
MEMBER OF
100% NO-LOAD(TM) MUTUAL FUND COUNCIL
GMF 416 7/95
Printed on Recycled Paper
(R) Registered trademark of SAFECO Corporation.
<PAGE> 29
SAFECO MONEY MARKET TRUST:
SAFECO MONEY MARKET FUND
SAFECO TAX-FREE MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus for the SAFECO Money Market Fund and SAFECO
Tax-Free Money Market Fund. A copy of the Prospectus may be obtained by
writing SAFECO Mutual Funds, P.O. Box 34890, Seattle, Washington 98124-1890, or
by calling TOLL FREE:
Nationwide
1-800-426-6730
Seattle
206-545-5530
The date of the most current Prospectus of the Funds to which this Statement of
Additional Information relates is July 31, 1995.
The date of this Statement of Additional Information is July 31, 1995.
______________________________________________________________________________
TABLE OF CONTENTS
<TABLE>
<S> <C>
Overview of Investment Policies 2
Investment Policies of the 2
Money Fund
Investment Policies of the 4
Tax-Free Money Fund
Additional Investment Information 7
Additional Tax Information 11
Regarding the Tax-Free
Money Fund
Additional Information On 11
Calculation of Net Asset
Value Per Share
Additional Performance 12
Information
Additional Information
on Dividends 13
Trustees and Officers 13
Investment Advisory and 17
Other Services
Brokerage Practices 19
Redemption in Kind 20
Financial Statements 20
Description of Ratings 20
</TABLE>
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<PAGE> 30
OVERVIEW OF INVESTMENT POLICIES
SAFECO Money Market Fund ("Money Fund") and SAFECO Tax-Free Money Market Fund
("Tax-Free Money Fund") (together the "Funds") are each a series of the SAFECO
Money Market Trust ("Trust"). The investment policies of each Fund are
described in the Prospectus and this Statement of Additional Information.
These policies state the investment practices that the Funds will follow, in
some cases limiting investments to a certain percentage of assets . The types
of securities a Fund may purchase are also disclosed in the Prospectus. If a
policy's percentage limitation is adhered to immediately after and as a result
of the investment, a later increase or decrease in percentage beyond the
specified limit resulting from a change in values, net assets or other
circumstances will not be considered in determining whether a Fund complies
with the applicable limitation. With respect to the Tax-Free Money Fund's
investment restrictions, the entity that has the ultimate responsibility for
the payment of interest and principal on a particular security is deemed the
issuer for purposes of the investment policies.
Each Fund's fundamental policies may not be changed without the approval of a
majority of its outstanding voting securities. For purposes of such approval,
the vote of a majority of the outstanding voting securities of a Fund means the
vote, at a meeting of the shareholders of such Fund duly called, (i) of 67% or
more of the voting securities present at such meeting if the holders of more
than 50% of the outstanding voting securities are present or represented by
proxy, or (ii) of more than 50% of the outstanding voting securities, whichever
is less.
Non-fundamental investment policies may be changed by the Trust's Board of
Trustees without shareholder approval.
INVESTMENT POLICIES OF THE MONEY FUND
FUNDAMENTAL INVESTMENT POLICIES
The Money Fund has adopted the following fundamental policies. The Money Fund
will NOT:
1. Purchase securities of any issuer, other than obligations of, or
guaranteed by, the U.S. Government, its agencies or
instrumentalities, if, as a result, more than five percent (5%)
of the value of the Money Fund's assets would be invested in
securities of such issuer;
2. Purchase more than ten percent (10%) of any class of securities
of any issuer. All issues of debt securities of any issuer are
considered as one class;
3. Concentrate more than twenty-five percent (25%) of the value of
its total assets in any one industry including securities issued
by foreign banks and foreign branches of U.S. banks; provided,
however, that this limitation does not apply to obligations
issued or guaranteed by the U.S. Government, or its agencies or
instrumentalities, or to certificates of deposit or bankers'
acceptances issued by domestic banks;
4. Invest more than five percent (5%) of the Money Fund's total
assets in securities of issuers that with their predecessors have
a record
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<PAGE> 31
of less than three years' continuous operation;
5. Invest more than five percent (5%) of the Money Fund's total
assets in securities restricted as to disposition under the
federal securities laws;
6. Invest more than ten percent (10%) of the Money Fund's total
assets in time deposits, repurchase agreements maturing in more
than seven days and other non-negotiable instruments;
7. Enter into repurchase agreements if, as a result thereof, more
than ten percent (10%) of the Fund's total assets valued at the
time of the transaction would be subject to repurchase agreements
maturing in more than seven days;
8. Make loans to others, except through the purchase of publicly
distributed debt obligations or repurchase agreements;
9. Borrow money, except from a bank or affiliates of SAFECO
Corporation at an interest rate not greater than that available
to the Money Fund from commercial banks, for temporary or
emergency purposes and not for investment purposes, and then only
in an amount not exceeding twenty percent (20%) of its total
assets (including borrowings) less liabilities (other than
borrowings) immediately after such borrowing. The Money Fund
will not purchase securities if borrowings in excess of five
percent (5%) of the Fund's total assets are outstanding;
10. Make short sales of securities or purchase securities on margin,
except for such short-term credits as are necessary for the
clearance of transactions, or purchase or sell any put or call
options or combinations thereof;
11. Pledge, mortgage or hypothecate, or in any other manner transfer
as security for indebtedness any security owned by the Money
Fund, except as may be necessary in connection with permissible
borrowings mentioned in paragraph 9 above, and then such
pledging, mortgaging or hypothecating may not exceed fifteen
percent (15%) of the Money Fund's total assets, taken at cost;
provided, however, that as a matter of operating policy the Money
Fund will limit any such pledging, mortgaging or hypothecating to
ten percent (10%) of its net assets, taken at market, in order
to comply with certain state investment restrictions;
12. Purchase or retain securities of any issuer if any of the
officers or directors of the Money Fund or its investment adviser
owns beneficially more than one-half (1/2) of one percent (1%) of
the securities of such issuer and together own more than five
percent (5%) of the securities of such issuer;
13. Invest in commodities or commodity futures contracts or in real
estate, although the Money Fund may invest in securities which
are secured by real estate and securities of issuers that invest
or deal in real estate;
14. Invest in interests in oil, gas or other mineral exploration or
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<PAGE> 32
development programs, although it may invest in securities of
issuers that invest in or sponsor such programs;
15. Purchase securities of other investment companies;
16. Underwrite securities issued by others except to the extent the
Money Fund may be deemed to be an underwriter, under the federal
securities laws, in connection with the disposition of portfolio
securities; or
17. Issue or sell any senior security, except that this restriction
shall not be construed to prohibit the Money Fund from borrowing
funds (i) on a temporary basis as permitted by Section 18(g) of
the Investment Company Act of 1940, or (ii) from any bank
provided, that immediately after such borrowing, there is an
asset coverage of at least three hundred percent (300%) for all
such borrowings and provided, further, that in the event that
such asset coverage shall at any time fall below three hundred
percent (300%), the Money Fund shall, within three (3) days
thereafter (not including Sundays and holidays), or such longer
period as the Securities and Exchange Commission may prescribe by
rules and regulations, reduce the amount of its borrowings to an
extent that the asset coverage of such borrowings shall be at
least three hundred percent (300%) (for purposes of this
restriction, the terms "senior security" and "asset coverage"
shall be understood to have the meaning assigned to those terms
in Section 18 of the Investment Company Act of 1940).
NON-FUNDAMENTAL INVESTMENT POLICIES
The Money Fund has adopted the following non-fundamental policies with respect
to its investment activities:
1. The Money Fund will not invest in securities with unlimited
liability; e.g., securities the holder of which may be assessed
for amounts in addition to the subscription or other price paid
for the security.
2. The Money Fund will not buy or sell foreign currency, except as
may be necessary to convert the proceeds of the sale of foreign
securities in the Fund's portfolio into U.S. dollars.
3. The Money Fund may invest up to five percent (5%) of its total
assets in restricted securities eligible for resale under Rule
144A ("Rule 144A securities") or Section 4(2) of the Securities
Act of 1933 ("Section 4(2) securities"), provided that SAFECO
Asset Management Company ("SAM"), the Fund's investment advisor,
has determined that such securities are liquid under guidelines
adopted by the Board of Trustees.
INVESTMENT POLICIES OF THE TAX-FREE MONEY FUND
FUNDAMENTAL INVESTMENT POLICIES
The Tax-Free Money Fund has adopted the following fundamental policies. The
Tax-Free Money Fund may NOT:
1. Purchase the securities of any issuer (except the U.S. Government, its
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<PAGE> 33
agencies or instrumentalities), if as a result more than five percent
(5%) of the value of its total assets would be invested in the
securities of such issuer, except that up to twenty-five percent (25%)
of the value of the Tax-Free Money Fund's assets (which twenty- five
percent (25%) shall not include securities issued by another investment
company) may be invested without regard to this five percent (5%)
limitation;
2. Underwrite any issue of securities, except to the extent that the pur-
chase of municipal obligations or other permitted investments directly
from the issuer in accordance with the Tax-Free Money Fund's investment
objective, policies and restrictions and the later disposition thereof
may be deemed to be underwriting;
3. Purchase or sell real estate, but this shall not prevent the Tax-Free
Money Fund from investing in municipal obligations or other permitted
investments secured by real estate or interests therein;
4. Purchase or retain for the Tax-Free Money Fund's portfolio the
securities of any issuer if, to the Tax-Free Money Fund's knowledge, the
officers or directors of the Tax-Free Money Fund, or its investment
adviser, who individually own more than one-half (1/2) of one percent
(1%) of the outstanding securities of such an issuer, together own more
than five percent (5%) of such outstanding securities;
5. Participate on a joint or a joint-and-several basis in any trading
account in securities, except that the Tax-Free Money Fund may, for the
purpose of seeking better net results on portfolio transactions or lower
brokerage commission rates, join with other transactions executed by the
investment adviser or the investment adviser's parent company or any
subsidiary thereof;
6. Purchase from, or sell portfolio securities to, any officer or director,
the Tax-Free Money Fund's investment adviser, principal underwriter or
any affiliates or subsidiaries thereof;
7. Borrow money, except from a bank or affiliates of SAFECO Corporation at
an interest rate not greater than that available to the Tax-Free Money
Fund from commercial banks, for temporary or emergency purposes and not
for investment purposes, and then only in an amount not exceeding twenty
percent (20%) of its total assets (including borrowings) less
liabilities (other than borrowings) immediately after such borrowing.
The Tax-Free Money Fund will not purchase securities if borrowings in
excess of five percent (5%) of the Fund's total assets are outstanding;
8. Pledge, mortgage or hypothecate its assets, except that, to secure
borrowings permitted by subparagraph 7 above, it may pledge securities
having a market value at the time of pledge not exceeding ten percent
(10%) of the cost of the Tax-Free Money Fund's total assets;
9. Make loans, except through the purchase of a portion of an issue of debt
securities in accordance with the Tax-Free Money Fund's investment
objective, policies and restrictions, and through investments in
qualified repurchase agreements;
10. Purchase or sell commodities or commodity contracts or invest in oil,
gas
-5-
<PAGE> 34
or other mineral exploration or development programs;
11. Make short sales of securities or purchase securities on margin, except
for such short-term credits as are necessary for the clearance of
transactions;
12. Knowingly purchase or otherwise acquire any securities that are subject
to legal or contractual restrictions on resale or for which there is no
readily available market, except, however, the Tax-Free Money Fund may
invest up to ten percent (10%) of its net assets in qualified repurchase
agreements that mature in more than seven (7) days;
13. Purchase securities (other than obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities), if as a result more
than twenty-five percent (25%) of the Tax-Free Money Fund's total assets
would be invested in any one industry (governmental issuers of special
or general tax-exempt securities are not considered part of any one
industry);
14. Purchase an industrial development bond, if as a result of such purchase
more than five percent (5%) of the Tax-Free Money Fund's total assets
would be invested in industrial development bonds where the payment of
principal and interest is the responsibility of a company with less than
three years' operating history;
15. Issue or sell any senior security, except that this restriction shall
not be construed to prohibit the Tax-Free Money Fund from borrowing
funds (i) on a temporary basis as permitted by Section 18(g) of the
Investment Company Act of 1940, or (ii) from any bank, provided that
immediately after such borrowing, there is an "asset coverage" of at
least three hundred percent (300%) for all such borrowings and provided,
further, that in the event that such "asset coverage" shall at any time
fall below three hundred percent (300%), the Tax-Free Money Fund shall,
within three (3) days thereafter (not including Sundays and holidays),
or such longer period as the Securities and Exchange Commission may
prescribe by rules and regulations, reduce the amount of its borrowings
to an extent that the asset coverage of such borrowings shall be at
least three hundred percent (300%) (for purposes of this restriction,
the terms "senior security" and "asset coverage" shall have the meanings
assigned to those terms in the Investment Company Act of 1940);
16. Permit more than twenty-five (25%) of its total assets to be invested in
municipal obligations and other permitted investments, the interest on
which is payable from revenues on similar types of projects, such as:
sports, convention or trade show facilities; airports or mass
transportation; sewage or solid waste disposal facilities; or air or
water pollution control projects;
17. Write, purchase or sell puts, calls or combinations thereof; however,
the Tax-Free Money Fund may purchase municipal obligations subject to
standby commitments, variable rate demand notes or repurchase agreements
in accord with its investment objective and policies;
18. Permit more than twenty percent (20%) of its net assets to be invested,
during normal market conditions, in securities whose interest is NOT, in
the Tax-Free Money Fund's opinion, exempt from federal income tax, as
long
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<PAGE> 35
as the Fund has as its investment objective to provide as high a level
of current interest income exempt from federal income tax as is
consistent with the relative stability of capital. As a matter of
operating policy, the Tax-Free Money Fund may base its opinion on an
opinion of counsel for the issuer. The Tax-Free Money Fund may invest
in taxable securities if the Fund's investment adviser believes the
yields then available on municipal obligations are not attractive and
wishes to defer the investment in municipal obligations having longer
maturities until conditions in the municipal bond market improve. If
any taxable securities are held, as a matter of operating policy, the
Tax-Free Money Fund will not hold more than five percent (5%) of its
total assets in the securities of any one issuer; or
19. Purchase securities if as a result of such purchase more than five
percent (5%) of the Tax-Free Money Fund's total assets would be invested
in securities where the payment of principal and interest is the
responsibility of a company with less than three years' operating
history.
For purposes of the above investment restrictions, the entity which has
the ultimate responsibility for the payment of interest and principal on
a particular security will be deemed to be its issuer.
NON-FUNDAMENTAL INVESTMENT POLICIES
The Tax-Free Money Fund has adopted the following non-fundamental policies with
respect to its investment activities:
1. The Fund will not invest in securities with unlimited liability;
e.g., securities the holder of which may be assessed for amounts
in addition to the subscription or other price paid for the
security.
2. The Fund will not buy or sell foreign currency, except as may be
necessary to convert the proceeds of the sale of foreign
securities in the Fund's portfolio into U.S. dollars.
3. The Fund may purchase shares of no-load, open-end investment
companies that invest in tax-exempt securities with remaining
maturities of thirteen (13) months or less.
4. While the Tax-Free Money Fund does not seek profits from
short-term trading, it may sell any security prior to maturity to
enhance yield, protect principal or improve liquidity.
5. The Fund reserves the right to hold cash, if necessary, as a
temporary defensive measure or in an emergency situation.
6. The Fund may invest up to five percent (5%) of its total assets
in Rule 144A securities or Section 4(2) securities, provided that
SAM has determined that such securities are liquid under
guidelines adopted by the Board of Trustees.
ADDITIONAL INVESTMENT INFORMATION
1. QUALITY AND MATURITY. Pursuant to procedures adopted by the Board of
Trustees, the Funds may purchase only high-quality securities that SAM
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<PAGE> 36
believes present minimal credit risks. To be considered high quality, a
security must be rated in accordance with applicable rules in one of the
two highest categories for short-term securities by at least two
nationally recognized rating services (or by one, if only one rating
service has rated the security); or, if unrated, judged to be of
equivalent quality by SAM.
High-quality securities are divided into "first tier" and "second tier"
securities. First tier securities are those deemed to be in the highest
rating category (e.g., A-1 by Standard & Poor's Rating Group ("S&P")) and
second tier securities are those deemed to be in the second highest
rating category (e.g., A-2 by S&P).
Each Fund may not invest more then 5% of its total assets in second tier
securities. In addition, a Fund may not invest more than 1% of its total
assets or $1 million (whichever is greater) in the second tier securities
of a single issuer.
The Funds currently intend to limit their investments to securities with
remaining maturities of 397 days or less, and to maintain a
dollar-weighted average maturity of 90 days or less. When determining
the maturity of a security, a Fund may look to an interest rate reset or
demand feature.
A security is considered to be rated if either the security itself is
assigned a rating or the issuer is assigned a rating for comparable
short-term debt obligations. The rating of a security with a remaining
maturity greater than thirteen months which has a demand feature is
determined by looking either to the rating of the party ultimately
responsible for payment (for example, a bank issuing a letter of credit
or company providing a guarantee) or to the short-term ratings of the
security, depending on whether the demand feature is unconditional or
conditional. See "Description of Ratings" on page 20 for further
explanation of rating categories.
2. RESTRICTED SECURITIES AND RULE 144A SECURITIES. Restricted securities
are securities that may be sold only in a public offering with respect to
which a registration statement is in effect under the 1933 Act or, if
they are unregistered, in a privately negotiated transaction or pursuant
to an exemption from registration. In recognition of the increased size
and liquidity of the institutional markets for unregistered securities
and the importance of institutional investors in the formation of
capital, the Securities and Exchange Commission ("SEC") has adopted Rule
144A under the 1933 Act, which is designed to further facilitate
efficient trading among institutional investors by permitting the sale of
Rule 144A securities to qualified institutional buyers. To the
extentprivately placed securities held by a Fund qualify under Rule 144A
and an institutional market develops for those securities, the Fund
likely will be able to dispose of the securities without registering
them under the 1933 Act. SAM, acting under guidelines established by the
Trust's Board of Trustees, may determine that certain securities
qualified for trading under Rule 144A are liquid.
Where registration is required, a Fund may be obligated to pay all or
part of the registration expenses, and a considerable period may elapse
between the decision to sell and the time the Fund may be permitted to
sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, the Fund might
obtain a
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<PAGE> 37
less favorable price then prevailed when it decided to sell. To the
extent privately placed securities are illiquid, purchases thereof will
be subject to any limitations on investments in illiquid securities.
Restricted securities for which no market exists are priced at fair value
as determined in accordance with procedures approved and periodically
reviewed by the Trust's Board of Trustees.
3. MUNICIPAL BONDS. Municipal bonds are issued to raise longer-term capital
but, when purchased by the Tax-Free Fund, will have thirteen (13) months
or less remaining until maturity or will have a variable or floating rate
of interest. These issues may be either general obligation bonds or
revenue bonds.
4. VARIABLE AND FLOATING RATE INSTRUMENTS. Certain municipal obligations
may carry variable or floating rates of interest. Variable rate
instruments bear interest at rates that are readjusted at periodic
intervals so as to cause the instruments' market value to approximate
their par value. Floating rate instruments bear interest at rates which
vary automatically with changes in specified market rates or indices,
such as the bank prime rate. A Fund's right to obtain payment at par on
a demand instrument upon demand could be affected by events occurring
between the date the Fund elects to redeem the instrument and the date
redemption proceeds are due which affect the ability of the issuer to pay
the instrument at par value.
5. TERM PUT BONDS. Term put bonds are variable rate obligations which have
a maturity in excess of one year with the option to put back (sell back)
the bonds on a specified put date. On the put date, the interest rate of
the bond is reset according to current market conditions and accrues at
the reset rate until the next put date. Puts may also be mandatory which
requires a Fund to keep the bonds. Put bonds are generally
credit-enhanced by collateral, guaranteed investment contracts, surety
bonds, a letter of credit or insurance which guarantees the payment of
principal and interest.
6. BOND ANTICIPATION NOTES (BANS). These notes are usually general
obligations of state and local governmental issuers which are sold to
obtain interim financing for projects that will eventually be funded
through the sale of long-term debt obligations or bonds. The ability of
an issuer to meet the obligations on its BANs is primarily dependent on
the issuer's access to the long-term municipal bond market and the
likelihood that the proceeds of such bond sales will be used to pay the
principal and interest on the BANs.
7. TAX ANTICIPATION NOTES (TANS). These notes are issued by state and local
governments to finance their current operations. Repayment is generally
to be derived from specific future tax revenues. Tax anticipation notes
are usually general obligations of the issuer. A weakness in an
issuer's capacity to raise taxes due to, among other things, a decline in
its tax base or a rise in delinquencies, could adversely affect the
issuer's ability to meet its obligations on outstanding TANs.
8. REVENUE ANTICIPATION NOTES (RANS). These notes are issued by governments
or governmental bodies with the expectation that future revenues from a
designated source will be used to repay the notes. In general, they also
constitute general obligations of the issuer. A decline in the receipt
of project revenues, such as anticipated revenues from another level of
government, could adversely affect an issuer's ability to meet its
-9-
<PAGE> 38
obligations on outstanding RANs. In addition, the possibility that the
revenues would, when received, be used to meet other obligations could
affect the ability of the issuer to pay the principal and interest on
RANs.
9. TAX-EXEMPT COMMERCIAL PAPER. These are short-term securities issued by
states, municipalities and their agencies. Tax-exempt commercial paper
may be structured similarly to put bonds with credit enhancements, long
nominal maturities, and mandatory put dates, which are agreed upon by the
buyer and the seller at the time of purchase. The put date acts as a
maturity date for the security, and generally will be shorter than the
maturities of Project Notes (PNs), BANs, RANs or TANs. There is a
limited secondary market for issues of tax-exempt commercial paper.
10. ILLIQUID SECURITIES. Illiquid securities are securities that cannot be
sold within seven days in the ordinary course of business for
approximately the amount at which they are valued. Due to the absence of
an active trading market, a Fund may experience difficulty in valuing or
disposing of illiquid securities. SAM determines the liquidity of the
securities under guidelines adopted by the Trust's Board of Trustees.
11. FOREIGN ISSUERS. Obligations of foreign issuers involve certain
additional risks. These risks may include future unfavorable political
and economic developments, withholding taxes, seizures of foreign
deposits, currency controls, interest limitations, or other governmental
restrictions that might affect payment of principal or interest.
Additionally, there may be less public information available about
foreign banks and their branches. Foreign issuers may be subject to less
governmental regulation and supervision than U.S. issuers. Foreign
issuers also generally are not bound by uniform accounting, auditing, and
financial reporting requirements comparable to those applicable to U.S.
issuers.
12. SECURITIES ISSUED BY BANKS. Investments may be made in U.S.
dollar-denominated time deposits, certificates of deposit, and bankers'
acceptances of U.S. banks and their branches located outside of the
United States, U.S. branches and agencies of foreign banks, and foreign
branches of foreign banks. The Funds may also invest in U.S.
dollar-denominated securities issued or guaranteed by other U.S. or
foreign issuers, including U.S. and foreign corporations or other
business organizations, foreign governments, foreign government agencies
or instrumentalities, and U.S. and foreign financial institutions,
including savings and loan institutions, insurance companies and mortgage
bankers, as well as banks.
The obligations of foreign branches of U.S. banks may be general
obligations of the parent bank in addition to the issuing branch, or may
be limited by the terms of a specific obligation and by governmental
regulation. Payment of interest and principal on these obligations may
also be affected by governmental action in the country of domicile of the
branch (generally referred to as sovereign risk). In addition, evidence
of ownership of portfolio securities may be held outside of the U.S. and
the Funds may be subject to the risks associated with the holding of such
property overseas. Various provisions of federal law governing the
establishment and operation of U.S. branches do not apply to foreign
branches of U.S. banks.
Obligations of U.S. branches and agencies of foreign banks may be general
obligations of the parent bank in addition to the issuing branch, or may
be
-10-
<PAGE> 39
limited by the terms of a specific obligation and by federal and state
regulation, as well as by governmental action in the country in which the
foreign bank has its head office.
ADDITIONAL TAX INFORMATION REGARDING THE TAX-FREE MONEY FUND
The tax-exempt interest portions of each daily dividend will be based upon the
ratio of the Tax-Free Money Fund's tax-exempt income to taxable income for the
entire fiscal year (average annual method). As a result, the percentage of
tax-exempt income for any particular distribution may be substantially
different from the percentage of the Tax-Free Money Fund's income that was
tax-exempt during the period covered by that distribution. The Tax-Free Money
Fund will advise its shareholders of this ratio within 60 days after the close
of the Tax-Free Money Fund's fiscal year (March 31).
Interest on indebtedness incurred or continued by a shareholder to purchase or
carry shares of the Tax-Free Money Fund is not deductible. In addition,
entities or persons who are "substantial users" (or related persons) of
facilities financed by most "private activity" bonds should consult their tax
advisers before purchasing shares of the Tax-Free Money Fund. "Substantial
user" is generally defined to include a "non-exempt person" who regularly uses
in a trade or business a part of a facility financed from the proceeds of most
"private activity" bonds.
In the future, proposals may be introduced before Congress for the purpose of
further restricting or even eliminating the federal income tax exemption for
interest on all or certain types of municipal obligations. If such a proposal
were enacted, the availability of municipal obligations for investment by the
Fund and the value of the Fund's portfolio would be affected. In such event,
the Fund would review its investment objective and policies.
ADDITIONAL INFORMATION ON CALCULATION OF NET ASSET VALUE PER SHARE
Each Fund determines its net asset value per share ("NAV") by subtracting its
liabilities (including accrued expenses and dividends payable) from its total
assets (the market value of the securities the Fund holds plus cash or other
assets, including interest accrued but not yet received) and dividing the
result by the total number of shares outstanding. The NAV of each Fund is
calculated as of the close of regular trading on the New York Stock Exchange
("Exchange") every day the Exchange is open for trading and at such other times
and/or on such other days as there is sufficient trading. The Exchange is
closed on the following days: New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
The portfolio instruments of each Fund are valued on the basis of amortized
cost. The valuation of each Fund's portfolio securities based upon amortized
cost, and the maintenance of each Fund's NAV at $1.00, are permitted pursuant
to Rule 2a-7 under the Investment Company Act of 1940. Pursuant to that Rule,
each Fund maintains a dollar-weighted average portfolio maturity of 90 days or
less, purchases only securities having remaining maturities of thirteen months
or less, and invests only in securities determined by SAM, under guidelines
adopted by the Trust's Board of Trustees, to be of high quality and to present
minimal credit risks. The Board of Trustees has established procedures
designed to stabilize, to the extent reasonably possible, each Fund's
price-per-share as computed for the purpose of sales and redemptions at $1.00.
These procedures include a review
-11-
<PAGE> 40
of each Fund's portfolio holdings by the Board of Trustees, at such intervals
as the Board deems appropriate, to determine whether a Fund's net asset value
per share, calculated by using available market quotations, deviates from $1.00
per share and, if so, whether such deviation may result in material dilution
or is otherwise unfair to existing shareholders of that Fund. In the event the
Board determines that such a deviation exists in a Fund, the Trustees will
take such corrective action with respect to the Fund as they regard as
necessary and appropriate, including: selling portfolio investments prior to
maturity to realize capital gains or losses or to shorten average portfolio
maturity, withholding dividends, redeeming shares in kind, establishing the NAV
by using available market quotations; or such other measures as the Trustees
deem appropriate.
ADDITIONAL PERFORMANCE INFORMATION
The yield and effective yield for the Money Fund for the 7-day period ended
March 31, 1995 was 5.42% and 5.56%, respectively.
The yield and tax-equivalent yield at a tax rate of 39.6% for the Tax-Free
Money Fund for the 7-day period ended March 31, 1994 was 3.51% and 5.81%,
respectively.
Yield is computed using the following formula:
(x-y)-z 365
Yield = [ ------- ] = Base Period Return x ---
y 7
Where: x = value of one share at the end of a 7-day period
y = value of one share at the beginning of a 7-day period
($1.00)
z = capital changes during the 7-day period, if any
Effective yield is computed using the following formula:
Effective yield = [(Base Period Return + 1) 365/7] -1
Tax-equivalent yield is computed using the following formula:
eg
Tax-equivalent yield = [ ----- ] + [e (1-g)]
1-f
Where: e = yield as calculated above
f = tax rate
g = percentage of yield which is tax-free
During periods of declining interest rates, each Fund's yield based on
amortized cost may be higher than the yield based on market valuations. Under
these
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<PAGE> 41
circumstances, a shareholder in either Fund would be able to obtain a somewhat
higher yield than would result if each Fund utilized market valuations to
determine its NAV. The converse would apply in a period of rising interest
rates.
Each Fund may present in its advertisements and sales literature (i) a
biography or the credentials of its portfolio manager (including but not
limited to educational degrees, professional designations, work experience,
work responsibilities and outside interests), (ii) current facts (including but
not limited to number of employees, number of shareholders, business
characteristics) about its investment adviser (SAM) the investment adviser's
parent company (SAFECO Corporation) or the SAFECO Family of Funds, and (iii)
descriptions, including quotations attributable to the portfolio manager, of
the investment style used to manage a Fund's portfolio, the research
methodologies underlying securities selection and a Fund's investment
objective, and (iv) information about particular securities held in a Fund's
portfolio.
ADDITIONAL INFORMATION ON DIVIDENDS
Because each Fund intends to hold its portfolio securities to maturity and
expects that most of its portfolio securities will be valued at their amortized
cost, realized gains or losses should not be a significant factor in the
computation of net income. Should, however, in an unusual circumstance, either
Fund experience a realized gain or loss, a shareholder of that Fund could
receive an increased, reduced, or no dividend for a period of time. In such an
event, the Trust's Board of Trustees would consider whether to adhere to its
present dividend policy or to revise it in light of the then-prevailing
circumstances.
TRUSTEES AND OFFICERS
<TABLE>
<CAPTION>
Position Held Principal Occupation
Name, Address and Age with the Trust During Past 5 Years
--------------------- -------------- --------------------
<S> <C> <C> <C>
Boh A. Dickey* Chairman Executive Vice President, Chief Financial
SAFECO Plaza and Trustee Officer and Director of SAFECO Corporation.
Seattle, Washington 98185 He has been an executive officer of SAFECO
(50) Corporation subsidiaries since 1982. See
table under "Investment Advisory and Other
Services."
Barbara J. Dingfield Microsoft Trustee Manager, Corporate Contributions and
Corporation Community Programs for Microsoft
One Microsoft Way Corporation, Redmond, Washington, a computer
Redmond, WA 98052 software company; Director and former
(49) Executive Vice President of Wright Runstad &
Co., Seattle, Washington, a real estate
development company; Director of First
SAFECO National Life Insurance Company of New
York.
</TABLE>
-13-
<PAGE> 42
<TABLE>
<CAPTION>
Position Held Principal Occupation
Name, Address and Age with the Trust During Past 5 Years
--------------------- -------------- --------------------
<S> <C> <C>
Richard W. Hubbard* Trustee Retired Vice President and Treasurer of the
1270 NW Blakely Court Trust and other SAFECO Trusts; retired
Seattle, WA 98177 Senior Vice President and Treasurer of
(66) SAFECO Corporation; former President of
SAFECO Asset Management Company.
Richard E. Lundgren Trustee Director of Marketing and Customer Relations,
764 S. 293rd Street Building Materials Distribution, Weyerhaeuser
Federal Way, Washington 98032 Company, Tacoma, Washington; Director of
(57) First SAFECO National Life Insurance Company
of New York.
L.D. McClean* Trustee Retired Assistant Secretary of SAFECO
7231 91st Avenue SE Corporation and its property and casualty
Mercer Island, WA 98040 and life insurance affiliates; Director of
(68) First SAFECO National Life Insurance Company
of New York; former President of the SAFECO
Mutual Funds; former Director of SAFECO
Asset Management, Company, SAFECO Securities,
Inc. and SAFECO Services Corporation.
Larry L. Pinnt Trustee Retired Vice President and Chief Financial
1600 Bell Plaza Officer, U S WEST
Room 1802 Communications, Seattle,
Seattle, Washington 98191 Washington; Director of Key Bank of
(60) Washington, Seattle, Washington; Director
of PREMERA; Director of Blue Cross of
Washington and Alaska; Director of First
SAFECO National Life Insurance Company of New
York.
President of Wallingford Group, Inc.,
John W. Schneider Trustee Seattle, Washington; former President of
1808 N 41st Street Coast Hotels, Inc.; Director of First SAFECO
Seattle, Washington 98103 National Life Insurance Company of New York.
(53)
</TABLE>
-14-
<PAGE> 43
<TABLE>
<CAPTION>
Position Held Principal Occupation
Name, Address and Age with the Trust During Past 5 Years
--------------------- -------------- --------------------
<S> <C> <C>
David F. Hill President President of SAFECO Securities, Inc. and
SAFECO Plaza SAFECO Services Corporation and Senior Vice
Seattle, Washington 98185 President of SAFECO Asset Management Company.
(46) See table under "Investment Advisory and
Other Services."
Neal A. Fuller Vice President, Vice President, Controller and Assistant
SAFECO Plaza Controller, Secretary of SAFECO Securities, Inc. and
Seattle, Washington 98185 Assistant SAFECO Services Corporation; Vice President,
(33) Secretary Controller, Secretary and Treasurer of SAFECO
Asset Management Company; former Chief
Assistant Treasurer for the State of Idaho.
See table under "Investment Advisory and
Other Services."
Ronald L. Spaulding Vice President Vice Chairman of SAFECO Asset Management
SAFECO Plaza Treasurer Company; Vice President and Treasurer of
Seattle, Washington 98185 SAFECO Corporation; Vice President and
(51) Director of SAFECO Life Insurance Company;
former Senior Portfolio Manager of SAFECO
Insurance Companies; former Portfolio
Manager for several SAFECO mutual funds. See
table under "Investment Advisory and Other
Services."
</TABLE>
* Trustees who are interested persons as defined by the Investment Company
Act of 1940.
-15-
<PAGE> 44
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension or
Retirement Total Compensation
Aggregate Benefits Accrued Estimated Annual From Registrant and
Compensation from As Part of Fund Benefits Upon Fund Complex Paid to
Trustee Registrant Expenses Retirement Trustees
------- ---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Barbara J. Dingfield $2,400 N/A N/A $16,550
Richard E. Lundgren $2,400 N/A N/A $16,550
L.D. McClean $2,200 N/A N/A $15,150
Larry L. Pinnt $2,400 N/A N/A $16,550
John W. Schneider $2,400 N/A N/A $16,550
Boh A. Dickey $ 0 $ 0
Richard W. Hubbard $ 950 N/A N/A $ 6,650
</TABLE>
Currently, there is no pension, retirement, or other plan or any arrangement
pursuant to which Trustees or officers of the Trust are compensated by the
Trust. Each Trustee also serves as trustee for six other registered open-end,
management investment companies that have, in the aggregate, twenty-six series
companies managed by SAM.
For the fiscal year ended March 31, 1995 the Trustees of the Trust not employed
by SAFECO Corporation or its affiliates, as a group, received compensation of
$6,375 per Fund for their services as Trustees. The officers of the Trust
receive no compensation for their service as officers or, if applicable, as
Trustees.
At June 30, 1995 the Trustees and officers of the Trust as a group owned less
than 1% of the outstanding shares of each Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
SAM, SAFECO Securities, Inc. ("SAFECO Securities") and SAFECO Services
Corporation ("SAFECO Services") are wholly-owned subsidiaries of SAFECO
Corporation. SAFECO Securities is the principal underwriter of each Fund and
SAFECO Services is the transfer, dividend and distribution disbursement and
shareholder servicing agent of
-16-
<PAGE> 45
each Fund.
The following individuals have the following positions and offices with the
Trust, SAM, SAFECO Securities and SAFECO Services:
<TABLE>
<CAPTION>
SAFECO SAFECO
Name Trust SAM Securities Services
---- ----- --- ---------- --------
<S> <C> <C> <C> <C>
B. A. Dickey Chairman Director Director
Trustee Chairman
D. F. Hill President Senior Vice President President
President Director Secretary
Director Secretary Director
N. A. Fuller Vice President Vice President Vice Vice
Controller Controller President President Controller
Assistant Secretary Secretary Controller Assistant Secretary
Treasurer Assistant Treasurer
Secretary
Treasurer
R.L. Spaulding Vice President Vice Chairman Director Director
Treasurer Director
S. C. Bauer President
Director
</TABLE>
Mr. Dickey is Chief Financial Officer, Executive Vice President and a director
of SAFECO Corporation and Mr. Spaulding is Treasurer and Vice President of
SAFECO Corporation. Messrs. Dickey and Spaulding are also directors of several
other SAFECO Corporation subsidiaries.
In connection with its investment advisory contract with the Trust, SAM
furnishes or pays for all facilities and services furnished or performed for or
on behalf of the Trust and each Fund which includes furnishing office
facilities, books, records and personnel to manage the Trust's and each Fund's
affairs and paying certain expenses.
For the services and facilities furnished by SAM, each Fund has agreed to pay
an annual fee computed on the basis of the average market value of the net
assets of each Fund ascertained each business day and paid monthly in
accordance with the following schedules. The reduction in fees occurs only at
such time as the respective Fund's net assets reach the dollar amounts of the
break points and applies only to those assets that fall within the specified
range:
MONEY MARKET FUND
<TABLE>
<CAPTION>
NET ASSETS FEE
<S> <C>
$0 - $250,000,000 .5 of 1%
$250,000,001 - $500,000,000 .4 of 1%
$500,000,001 - $750,000,000 .3 of 1%
</TABLE>
-17-
<PAGE> 46
<TABLE>
<S> <C>
Over $750,000,000 .25 of 1%
TAX-FREE MONEY FUND
NET ASSETS FEE
$0 - $100,000,000 .5 of 1%
$100,000,001 - $250,000,000 .4 of 1%
$250,000,001 - $500,000,000 .3 of 1%
Over $500,000,000 .2 of 1%
</TABLE>
Each Fund bears all expenses of its operations not specifically assumed by SAM.
SAM has agreed to reimburse each Fund for the amount by which the Fund's
expenses in any full fiscal year (excluding interest expense, taxes, brokerage
expenses and extraordinary expenses) exceed the limits prescribed by any state
in which a Fund's shares are qualified for sale. Presently, the most
restrictive expense ratio limitation imposed by any such state is 2.5% of the
first $30 million of the Fund's average daily net assets, 2.0% of the next $70
million of such assets, and 1.5% of the remaining net assets. For the purpose
of determining whether a Fund is entitled to reimbursement, the expenses of the
Fund are calculated on a monthly basis. If a Fund is entitled to a
reimbursement, that month's advisory fee will be reduced or postponed, with any
adjustment made after the end of the fiscal year.
The following table states the total amounts of compensation paid to SAM for
the past three fiscal years for the Money and Tax-Free Money Funds:
Years Ended
<TABLE>
<CAPTION>
March 31, 1995 March 31, 1994 March 31, 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Money Fund $840,727 $690,549 $764,611
Tax-Free
Money Fund $424,888 $401,632 $400,304
</TABLE>
U.S. Bank of Washington, N.A., 1420 Fifth Avenue, Seattle, Washington 98101, is
the custodian of the securities, cash and other assets of each Fund under an
agreement with the Trust. Ernst & Young LLP, 999 Third Avenue, Suite 3500,
Seattle, Washington 98104, is the independent auditor of each Fund's financial
statements.
SAFECO Services, SAFECO Plaza, Seattle, Washington 98185, is the transfer,
dividend and distribution disbursement and shareholder servicing agent for each
Fund under an agreement with the Trust. SAFECO Services is responsible for all
required transfer agent activity, including maintenance of records for each
Fund's shareholders, records of transactions involving each Fund's shares, and
the compilation, distribution, or reinvestment of income dividends or capital
gains distributions, for a fee of $3.10 per each shareholder transaction. The
-18-
<PAGE> 47
following table shows the total fees paid to SAFECO Services by each Fund as
compensation for its services as transfer agent for the past three fiscal
years:
Years Ended
<TABLE>
<CAPTION>
March 31, 1995 March 31, 1994 March 31, 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Money Fund $385,495 $308,090 $329,550
Tax-Free
Money Fund $ 74,294 $ 63,163 $ 62,670
</TABLE>
SAFECO Securities is the principal underwriter for each Fund and distributes
each Fund's shares on a continuous best efforts basis under an agreement with
the Trust. SAFECO Securities is not compensated by the Trust or the Funds for
underwriting, distribution or other activities.
BROKERAGE PRACTICES
SAM places orders for the purchase or sale of the Funds' portfolio securities.
In deciding which broker to use in a given transaction, SAM uses the following
criteria:
(1) Which broker gives the best execution (i.e., which broker is able to
trade the securities in the size and at the price desired and on a
timely basis);
(2) Whether the broker is known to SAM as being reputable; and
(3) All other things being equal, which broker has provided useful research
services to SAM.
Such research services as are furnished to SAM during the year (e.g., written
reports analyzing economic and financial characteristics of industries and
companies, telephone conversations between brokerage security analysts and
members of SAM's staff, and personal visits by such analysts and brokerage
strategists and economists to SAM's office) are used by SAM to advise all of
its clients including the Funds, but not all such research services furnished
to SAM are used by it to advise the Funds. SAM does not pay excess commissions
or mark-ups to any broker or dealer for research services or for any other
reason. Since purchases of money market instruments and municipal obligations
from brokers as principals do not involve the payment of brokerage commissions,
neither Fund expects to incur brokerage expense.
REDEMPTION IN KIND
If the Trust concludes that cash payment upon redemption to a shareholder would
be prejudicial to the best interest of the other shareholders of a Fund, a
portion of the payment may be made in kind. The Trust has elected to be
governed by Rule 18(f)(1) under the Investment Company Act of 1940, pursuant to
which the Trust must redeem shares tendered by a shareholder of a Fund solely
in cash up to the lesser of $250,000 or 1% of the net asset value of a Fund
during any 90-day period. Any shares tendered by the shareholder in excess of
the above-mentioned limit may be redeemed through distribution of a Fund's
assets. Any securities or other property so distributed in kind shall be
valued by the same method as is used in computing NAV. Distributions in kind
will be made in
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<PAGE> 48
readily marketable securities, unless the investor elects otherwise. Investors
may incur brokerage costs in disposing of securities received in such a
distribution in kind.
FINANCIAL STATEMENTS
The following financial statements and the report thereon of Ernst & Young
LLP, independent auditors, are incorporated herein by reference to the Trust's
Annual Report for the year ended March 31, 1995:
Portfolio of Investments as of March 31, 1995
Statement of Assets and Liabilities as of March 31, 1995
Statement of Operations for the Year ended March 31, 1995
Statement of Changes in Net Assets for the Years Ended March 31, 1995
and March 31, 1994
Notes to Financial Statements
A copy of the Trust's Annual Report accompanies this Statement of Additional
Information. Additional copies may be obtained by calling SAFECO Services at
1-800-426-6730 nationwide or 206-545-5530 in Seattle or by writing to the
address on the Prospectus cover.
DESCRIPTION OF RATINGS
Ratings by Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's
Rating Group ("Standard & Poor's") represent their respective opinions as to
the investment quality of the rated obligations. Investors should realize
these ratings do not constitute a guarantee that the principal and interest
payable under these obligations will be paid when due.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S.
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations with an original maturity not exceeding one
year.
Prime-1: Issuers (or supporting institutions) rated Prime-1 (P-1) have a
superior ability for repayment of senior short-term debt obligations. P-1
repayment ability will often be evidenced by many of the following
characteristics:
. Leading market positions in well-established industries.
. High rates of return on funds employed.
. Conservative capitalization structure with moderate reliance on debt
and ample asset protection.
. Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
. Well-established access to a range of financial markets and assured
sources of alternate liquidity.
Prime-2: Issuers (or supporting institutions) rated Prime-2 (P-2) have a
strong ability for repayment of senior short-term obligations. This will
normally be evidenced by many of the characteristics cited above, but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to
-20-
<PAGE> 49
variation. Capitalization characteristics, while still appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.
STANDARD & POOR'S.
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days.
A-1: This highest category indicates that the degree of safety regarding
timely payment is strong. Those issues determined to possess extremely strong
safety characteristics are denoted with a plus sign (+) designation.
A-2: Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated A-1.
DESCRIPTION OF BOND RATINGS
Excerpts from MOODY'S description of its two highest bond ratings:
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 likely 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.
Excerpts from STANDARD & POOR'S description of its two highest bond ratings:
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 highest-rated issues only in small degree.
PLUS (+) MINUS (-) Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus
and minus signs, however, are not used in the "AAA" category.
DESCRIPTION OF RATINGS FOR MUNICIPAL NOTES,
TAX-EXEMPT DEMAND NOTES AND OTHER SHORT-TERM OBLIGATIONS
STANDARD & POOR'S
Ratings for municipal notes and other short-term obligations are designated by
Standard & Poor's note rating. These ratings reflect liquidity concerns and
market access risks unique to notes. Notes due in three years or less will
-21-
<PAGE> 50
likely receive a note rating.
SP-1 Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will
be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
Standard & Poor's assigns "dual" ratings to all long-term debt issues that have
as part of their provisions a demand or double feature.
The first rating addresses the likelihood of repayment of principal and
interest as due, and the second rating addresses only the demand feature. The
long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols are used to denote the put
option (for example, "AAA/A-1+"). For the newer "demand notes," Standard &
Poor's note rating symbols, combined with the commercial paper symbols, are
used (for example, "SP-1+/A-1+").
MOODY'S
Moody's rates municipal notes and other short-term obligations using Moody's
Investment Grade (MIG). A short-term obligation having a demand feature (a
variable-rate demand obligation) will be designated VMIG. This distinction
recognizes differences between short-term credit risk and long-term credit risk
as well as differences between short-term issues making payments on fixed
maturity dates (MIG) and those making payments on periodic demand (VMIG).
MIG/VMIG 1: This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or
demonstrated broadbased access to the market for refinancing.
MIG 2/VMIG 2: This designation denotes high quality. Margins of protection
are ample although not so large as in the preceding group.
-22-
<PAGE> 51
SAFECO MONEY MARKET TRUST
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The following financial statements for each series of Registrant for
the fiscal year ended March 31, 1995 and the report thereon of Ernst &
Young LLP, independent auditors, are incorporated in the Statement
of Additional Information by reference to pages ___ of the
Registrant's Annual Report filed with the SEC on or about May 30,
1995:
Portfolio of Investments as of March 31, 1995
Statement of Assets and Liabilities as of March 31, 1995
Statement of Operations For the Year Ended March 31, 1995
Statement of Changes in Net Assets For the Years Ended
March 31, 1995 and March 31, 1994
Notes to Financial Statements
Financial statements from the Registrant's Annual Report are filed as
Exhibit 12.
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description of Document Page
- ------- ----------------------- ----
<S> <C> <C>
(27.1-2) Financial Data Schedule
(99.1) Trust Instrument/Certificate of Trust *
(99.2) Bylaws *
(99.3) Inapplicable
(99.4) Stock Certificate *
(99.5) Investment Advisory and Management Contract *
(99.6) Distribution Agreement *
(99.7) Inapplicable
(99.8) Custody Agreement *
(99.9) Transfer Agent Agreement *
(99.10) Opinion of Counsel *
(99.11) Consent of Independent Auditors
(99.12) Registrant's Annual Report for the
Year Ended March 31, 1995+ including
Financial Statements
(99.13) Subscription Agreement *
</TABLE>
<PAGE> 52
<TABLE>
<S> <C>
(99.14) Inapplicable
(99.15) Inapplicable
(99.16) Calculation of Performance Information
</TABLE>
+ The Registrant's Annual Report was filed with the SEC on or about
May 30, 1995.
* Filed as an Exhibit to Post-Effective Amendment No. 16 dated July
31, 1995 and filed with the SEC on May 30, 1995.
Item 25. Persons Controlled By or Under Common Control With Registrant
SAFECO Corporation, a Washington corporation, owns 100% of SAFECO Asset
Management Company (SAM), SAFECO Services Corporation (SAFECO Services) and
SAFECO Securities, Inc. (SAFECO Securities), each a Washington corporation.
SAM is the investment advisor, SAFECO Services is the transfer agent and SAFECO
Securities is the principal underwriter for each of the SAFECO mutual funds.
The SAFECO Mutual Funds consist of seven Delaware business trusts: SAFECO
Common Stock Trust, SAFECO Taxable Bond Trust, SAFECO Tax-Exempt Bond Trust,
SAFECO Advisor Series Trust, SAFECO Money Market Trust, SAFECO Institutional
Series Trust and SAFECO Resource Series Trust. The SAFECO Common Stock Trust
consists of four mutual funds: SAFECO Growth Fund, SAFECO Equity Fund, SAFECO
Income Fund and SAFECO Northwest Fund. The SAFECO Taxable Bond Trust consists
of three mutual funds: SAFECO Intermediate-Term U.S. Treasury Fund, SAFECO GNMA
Fund and SAFECO High-Yield Bond Fund. The SAFECO Tax-Exempt Bond Trust
consists of five mutual funds: SAFECO Intermediate-Term Municipal Bond Fund,
SAFECO Insured Municipal Bond Fund, SAFECO Municipal Bond Fund, SAFECO
California Tax-Free Income Fund and SAFECO Washington State Municipal Bond
Fund. The SAFECO Advisor Series Trust consists of eight mutual funds: Advisor
Equity Fund, Advisor Northwest Fund, Advisor Intermediate-Term Treasury Fund,
Advisor GNMA Fund, Advisor U.S. Government Fund, Advisor Municipal Bond Fund,
Advisor Intermediate-Term Municipal Bond Fund and Advisor Washington Municipal
Bond Fund. The SAFECO Money Market Fund consists of two mutual funds: SAFECO
Money Market Fund and SAFECO Tax-Free Money Market Fund. The SAFECO
Institutional Series Trust consists of one mutual fund: Fixed-Income Portfolio.
The SAFECO Resource Series Trust consists of five mutual funds: Equity
Portfolio, Growth Portfolio, Northwest Portfolio, Bond Portfolio and Money
Market Portfolio.
SAFECO Corporation, a Washington Corporation, owns 100% of the following
Washington corporations: SAFECO Insurance Company of America, General Insurance
Company of America, First National Insurance Company of America, SAFECO Life
Insurance Company of America, SAFECO Assigned Benefits Service Company, SAFECO
Administrative Services, Inc., SAFECO Properties Inc., SAFECO Credit Company,
Inc., SAFECO Asset Management Company, SAFECO Securities, Inc., SAFECO Services
Corporation, SAFECO Trust Company and General America Corporation. SAFECO
Corporation owns 100% of SAFECO National Insurance Company, a Missouri
corporation, and SAFECO Insurance Company of Illinois, an Illinois corporation.
SAFECO Corporation owns 20% of Agena, Inc., a Washington corporation. SAFECO
Insurance Company of America owns 100% of SAFECO Management Corp., a New York
corporation, and SAFECO Surplus Lines Insurance Company, a Washington
corporation. SAFECO
<PAGE> 53
Life Insurance Company owns 100% of SAFECO National Life Insurance Company, a
Washington corporation, and First SAFECO National Life Insurance Company of New
York, a New York corporation. SAFECO Administrative Services, Inc. owns 100%
of Employee Benefit Claims of Wisconsin, Inc. and Wisconsin Pension and Group
Services, Inc., each a Wisconsin corporation. General America Corporation owns
100% of COMAV Mangers, Inc., an Illinois corporation, F.B. Beattie & Co., Inc.,
a Washington corporation, General America Corp. of Texas, a Texas corporation,
S&T Financial Corporation, a Washington corporation and Whitehall Insurance
Brokers, Inc., a California corporation. F.B. Beattie & Co., Inc. owns 100% of
F.B. Beattie Insurance Services, Inc., a California corporation. General
America Corp. of Texas is Attorney-in-fact for SAFECO Lloyds Insurance Company,
a Texas corporation. S&T Financial Corporation owns 100% of PNMR Securities,
Inc., a Washington corporation, and Talbot Financial Corporation, a Washington
corporation which owns 100% of Talbot Agency, Inc., a New Mexico corporation.
SAFECO Properties Inc. owns 100% of the following, each a Washington
corporation: RIA Development, Inc., SAFECARE Company, Inc. and Winmar Company,
Inc. SAFECARE Company, Inc. owns 100% of the following, each a Washington
corporation: S.C. Bellevue, Inc., S.C. Everett, Inc., S.C. Marysville, Inc.,
S.C. Simi Valley, Inc. and S.C. Vancouver, Inc. SAFECARE Company, Inc. owns
50% of Lifeguard Ventures, Inc., a California corporation. S.C. Simi Valley,
Inc. owns 100% of Simi Valley Hospital, Inc., a Washington corporation. Winmar
Company, Inc. owns 50% of C-W Properties, Inc., a Washington corporation.
Winmar Company, Inc. owns 100% of the following: Barton Street Corp., Gem State
Investors, Inc., Kitsap Mall, Inc., WNY Development, Inc., Winmar Cascade,
Inc., Winmar Metro, Inc., Winmar Northwest, Inc., Winmar Redmond, Inc. and
Winmar of Kitsap, Inc., each a Washington corporation, and Capitol Court
Corp., a Wisconsin corporation, SAFECO Properties of Boise, Inc., an Idaho
corporation, SCIT, Inc., a Massachusetts corporation, Valley Fair Shopping
Centers, Inc., a Delaware corporation, WDI Golf Club, Inc., a California
corporation, Winmar Oregon, Inc., an Oregon corporation, Winmar of Texas, Inc.,
a Texas corporation, Winmar of Wisconsin, Inc., a Wisconsin corporation, and
Winmar of the Desert, Inc., a California corporation. Winmar Oregon, Inc. owns
100% of the following, each an Oregon corporation: North Coast Management,
Inc., Pacific Surfside Corp., Winmar of Jantzen Beach, Inc. and W-P
Development, Inc., and 100% of the following, each a Washington corporation:
Washington Square, Inc. and Winmar Pacific, Inc.
Item 26. Number of Holders of Securities
At June 30, 1995, the Registrant had 10,567 and 2,114 shareholders of record
in its SAFECO Money Market Fund and SAFECO Tax-Free Money Market Fund,
respectively.
Item 27. Indemnification
Under the Trust Instrument of the Registrant, the Registrant's trustees,
officers, employees and agents are indemnified against certain liabilities,
subject to specified conditions and limitations.
Under the indemnification provisions in the Registrant's Trust Instrument and
subject to the limitations described in the paragraph below, every person who
is, or has been, a trustee, officer, employee or agent of the Registrant shall
be indemnified by the Registrant or the appropriate
<PAGE> 54
Series of the Registrant to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him or her in
connection with any claim, action, suit or proceeding in which he or she
becomes involved as a party or otherwise by virtue of his or her being, or
having been, a trustee, officer, employee or agent and against amounts paid or
incurred by him or her in the settlement thereof. As used in this paragraph,
"claim," "action," "suit" or "proceeding" shall apply to all claims, actions,
suits or proceedings (civil, criminal or other, including appeals), actual or
threatened, and the words "liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgements, amounts paid in settlement,
fines, penalties and other liabilities.
No indemnification will be provided to a trustee, officer, employee or agent:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (a) to be liable to the Registrant or its shareholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office, or (b)
not to have acted in good faith in the reasonable belief that his or her action
was in the best interest of the Registrant; or (ii) in the event of settlement,
unless there has been a determination that such trustee, officer, employee or
agent did not engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office;
(a) by the court or other body approving the settlement, (b) by the vote of at
least a majority of a quorum of those trustees who are neither interested
persons, as that term is defined by the Investment Company Act of 1940, of the
Registrant nor are the parties to the proceeding based upon a review of readily
available facts (as opposed to a full trial type inquiry); or (c) by written
opinion of independent legal counsel based upon a review of readily available
facts (as opposed to a full trial type inquiry).
To the maximum extent permitted by applicable law, expenses incurred in
connection with the preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described above may be paid by the
Registrant or applicable Series from time to time prior to final disposition
thereof upon receipt of an undertaking by or on behalf of such trustee,
officer, employee or agent that such amount will be paid over by him or her to
the Registrant or the applicable Series if it is ultimately determined that he
or she is not entitled to indemnification under the Trust Instrument; provided,
however, that either (i) such trustee, officer, employee or agent shall have
provided appropriate security for such undertaking, (ii) the Registrant is
insured against such losses arising out of such advance payments or (iii)
either a majority of the trustees who are neither interested persons, as that
term is defined by the Investment Company Act of 1940, of the Registrant nor
parties to the proceeding, or independent legal counsel in a written opinion,
shall have determined, based on a review of readily available facts (as opposed
to a full trial type inquiry), that there is reason to believe that such
trustee, officer, employee or agent, will not be disqualified from
indemnification under Registrant's Trust Instrument.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, officers, employees and agents of the
Registrant pursuant to such provisions of the Trust Instrument or statutes or
otherwise, the Registrant has been advised that in the opinion
<PAGE> 55
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in said Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a trustee,
officer, employee or agent of the Registrant in the successful defense of any
such action, suit or proceeding) is asserted by such a trustee, officer,
employee or agent in connection with the shares of any series of the
Registrant, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in said Act and will be governed by the
final adjudication of such issue.
Under an agreement with its distributor ("Distribution Agreement"), Registrant
has agreed to indemnify, defend and hold the distributor, the distributor's
several directors, officers and employees, and any person who controls the
distributor within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
distributor, its directors, officers or employees, or any such controlling
person may incur, under the 1933 Act or under common law or otherwise, arising
out of or based upon any alleged untrue statement of a material fact contained
in the Registration Statement or arising out of or based upon any alleged
omission to state a material fact required to be stated or necessary to make
the Registration Statement not misleading, provided that in no event shall
anything contained in the Distribution Agreement be construed so as to protect
the distributor against any liability to the Registrant or its shareholders to
which the distributor would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its duties,
or by reason of its reckless disregard of its obligations and duties under the
Distribution Agreement, and further provided that the Registrant shall not
indemnify the distributor for conduct set forth in this subparagraph.
Under an agreement with its transfer agent, Registrant has agreed to indemnify
and hold the transfer agent harmless against any losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees and expenses)
resulting from: (1) any claim, demand, action or suit brought by any person
other than the Registrant, including by a shareholder, which names the transfer
agent and/or the Registrant as a party, and is not based on and does not result
from the transfer agent's willful misfeasance, bad faith or negligence or
reckless disregard of duties, and arises out of or in connection with the
transfer agent's performance hereunder; or (2) any claim, demand, action or
suit (except to the extent contributed to by the transfer agent's willful
misfeasance, bad faith or negligence or reckless disregard of duties) which
results from the negligence of the Registrant, or from the transfer agent
acting upon any instruction(s) reasonably believed by it to have been executed
or communicated by any person duly authorized by the Registrant, or as a result
of the transfer agent acting in reliance upon advice reasonably believed by the
transfer agent to have been given by counsel for the Registrant, or as a result
of the transfer agent acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine and signed,
countersigned or executed by the proper person.
<PAGE> 56
Item 28. Business and Other Connections of Investment Adviser
The investment adviser to Registrant, SAFECO Asset Management Company, serves
as an adviser to: (a) twenty-eight series (portfolios) of seven registered
investment companies, including five series of an investment company that
serves as an investment vehicle for variable insurance products and (b) a
number of pension funds not affiliated with SAFECO Corporation or its
affiliates. The directors and officers of SAM serve in similar capacities with
SAFECO Corporation or its affiliates. The information set forth under
"Investment Advisory and Other Services" in the Statement of Additional
Information is incorporated by reference.
Item 29. Principal Underwriters
(a) SAFECO Securities, Inc., the principal underwriter for each series
of Registrant, also acts as the principal underwriter for each
series of the SAFECO Common Stock Trust, SAFECO Tax-Exempt Bond
Trust, SAFECO Taxable Bond Trust, SAFECO Institutional Series
Trust, SAFECO Resource Series Trust and SAFECO Advisor Series
Trust. In addition, SAFECO Securities is the principal
underwriter for SAFECO Separate Account C, SAFECO Variable Account
B and SAFECO Separate Account SL, all of which are variable
insurance products.
(b) The information set forth under "Investment Advisory and Other
Services" in the Statement of Additional Information is
incorporated by reference.
Item 30. Location of Accounts and Records
U.S. Bank of Washington, N.A., 1420 Fifth Avenue, Seattle, Washington 98101
maintains physical possession of the accounts, books and documents of the
Registrant relating to its activities as custodian of the Registrant. SAFECO
Asset Management Company, SAFECO Plaza, Seattle, Washington 98185, maintains
physical possession of all other accounts, books or documents of the Registrant
required to be maintained by Section 31(a) of the Investment Company Act of
1940 and the rules promulgated thereunder.
Item 31. Management Services
Inapplicable.
Item 32. Undertakings
Inapplicable.
<PAGE> 57
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has 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 28th day of July, 1995.
SAFECO MONEY MARKET TRUST
By /s/ DAVID F. HILL
------------------------
David F. Hill, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C>
/s/ DAVID F. HILL President 7/28/95
------------------------- Principal Executive Officer -------------
David F. Hill
RONALD L. SPAULDING* Vice President
------------------------- Treasurer -------------
Ronald L. Spaulding
NEAL A. FULLER* Vice President
------------------------- Controller and
Neal A. Fuller Assistant Secretary
(Principal Financial
Officer) -------------
7/28/95
/s/ BOH A. DICKEY Chairman and Trustee -------------
-------------------------
Boh A. Dickey
BARBARA J. DINGFIELD* Trustee -------------
--------------------------
Barbara J. Dingfield
RICHARD W. HUBBARD* Trustee -------------
--------------------------
Richard W. Hubbard
RICHARD E. LUNDGREN* Trustee -------------
--------------------------
Richard E. Lundgren
L.D. MCCLEAN* Trustee -------------
--------------------------
L.D. McClean
LARRY L. PINNT* Trustee -------------
--------------------------
Larry L. Pinnt
JOHN W. SCHNEIDER* Trustee -------------
--------------------------
John W. Schneider
*By: /s/ BOH A. DICKEY
--------------------
Boh A. Dickey
Attorney-in-Fact
*By: /s/ DAVID F. HILL
--------------------
David F. Hill
Attorney-in-Fact
</TABLE>
<PAGE> 58
SAFECO MONEY MARKET TRUST
Form N-1A
Post-Effective Amendment No. 17
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Description of Document Page
- ------- ----------------------- ----
<S> <C> <C>
(27.1-2) Financial Data Schedule
(99.11) Consent of Independent Auditors
(99.12) Registrants Annual Report for the Year Ended
March 31, 1995+ including Financial Statements
(99.16) Calculation of Performance Information
</TABLE>
+ Filed with the SEC on or about May 30, 1995 (File No. 811-3347).
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000356822
<NAME> SAFECO MONEY MARKET TRUST
<SERIES>
<NUMBER> 1
<NAME> SAFECO MONEY MARKET FUND
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 173,535
<INVESTMENTS-AT-VALUE> 173,535
<RECEIVABLES> 82
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 173,619
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,661
<TOTAL-LIABILITIES> 1,661
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 171,958
<SHARES-COMMON-STOCK> 171,958
<SHARES-COMMON-PRIOR> 186,312
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 171,958
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8,288
<OTHER-INCOME> 0
<EXPENSES-NET> 1,292
<NET-INVESTMENT-INCOME> 6,996
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 6,996
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 6,996
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,216,336
<NUMBER-OF-SHARES-REDEEMED> 1,236,601
<SHARES-REINVESTED> 5,911
<NET-CHANGE-IN-ASSETS> (14,354)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 841
<INTEREST-EXPENSE> 2
<GROSS-EXPENSE> 1,292
<AVERAGE-NET-ASSETS> 166,054
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.04
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000356822
<NAME> SAFECO MONEY MARKET TRUST
<SERIES>
<NUMBER> 2
<NAME> SAFECO TAX-FREE MONEY MARKET FUND
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-START> APR-01-1994
<PERIOD-END> MAR-31-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 78,065
<INVESTMENTS-AT-VALUE> 78,065
<RECEIVABLES> 526
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 78,591
<PAYABLE-FOR-SECURITIES> 500
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 771
<TOTAL-LIABILITIES> 1,271
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 77,320
<SHARES-COMMON-STOCK> 77,320
<SHARES-COMMON-PRIOR> 97,589
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 77,320
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,907
<OTHER-INCOME> 0
<EXPENSES-NET> 544
<NET-INVESTMENT-INCOME> 2,363
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 2,363
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,363
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 176,342
<NUMBER-OF-SHARES-REDEEMED> 195,635
<SHARES-REINVESTED> 2,024
<NET-CHANGE-IN-ASSETS> (17,269)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 425
<INTEREST-EXPENSE> 2
<GROSS-EXPENSE> 544
<AVERAGE-NET-ASSETS> 84,675
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE> 1
EXHIBIT NO. 99.11
CONSENT OF INDEPENDENT AUDITORS
<PAGE> 2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Financial
Highlights", "Investment Advisory and Other Services" and "Financial
Statements" in Post-Effective Amendment No. 17 to the Registration Statement
(Form N-1A, No. 2-25272) and related Prospectus of SAFECO Money Market Trust
dated July 31, 1995.
We also consent to the incorporation by reference therein of our report dated
April 26, 1995, with respect to the financial statements of SAFECO Money
Market Trust included in the 1995 Annual Report filed with the Securities and
Exchange Commission.
Seattle, Washington
July 25, 1995
<PAGE> 1
EXHIBIT NO. 99.12
FINANCIAL STATEMENTS
<PAGE> 2
MAILING ADDRESS:
SAFECO MUTUAL FUNDS
P.O. BOX 34890
SEATTLE, WA 98124-1890
FOR ACCOUNT INFORMATION
OR TELEPHONE TRANSACTIONS:
NATIONWIDE: 1-800-624-5711
SEATTLE: 545-7319
TTY/TDD: 1-800-438-8718
ANNUAL
REPORT
MARCH 31, 1995
SAFECO
MONEY MARKET
FUNDS
SAFECO MONEY
MARKET FUND
SAFECO TAX-FREE
MONEY MARKET FUND
SAFECO [LOGO]
MUTUAL FUNDS
<PAGE> 3
================================================================================
PERFORMANCE INFORMATION
[GRAPH]
SAFECO Money Market Fund
Average Weekly Yield
for the Six-Month Period Ended March 27, 1995
This graph compares the average weekly yield for the SAFECO Money Market
Fund to the IBC/Donoghue Money Fund Average for the six-month period
ended March 27, 1995.
[GRAPH]
SAFECO Tax-Free Money Market Fund
Average Weekly Yield
for the six-month Period Ended March 26, 1995
This Graph compares the average weekly yield for the SAFECO Tax-free Money
Fund to the IBC/Donoghue Tax-Free Money Fund Average for the six-month period
ended March 26, 1995.
Investment returns are historical and not predictive of future performance.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
=================================================
<S> <C>
President's Letter 1
Money Market Fund 2
Tax-Free Money Market Fund 6
Financial Statements 12
Notes to Financial Statements 14
</TABLE>
================================================================================
<PAGE> 4
================================================================================
LETTER FROM THE PRESIDENT
May 1, 1995
DEAR SHAREHOLDERS:
Nineteen ninety-four proved to be a trying year for investors. The stock
market posted below average returns, and the bond market suffered one of its
worst years in history. So far this year, we have seen an improved picture, as
both the stock and bond markets have shown renewed strength.
A significant factor in last year's disappointing markets was the perceived
threat of inflation. Much of the strength we have seen this year is due to
optimism that inflation is in check. Our view is that while inflationary fears
are moderating, they are still present. Because of this, we suspect interest
rates will hold in a fairly narrow range for the remainder of 1995.
Inflationary pressures will continue to affect the stock market as well.
Corporate profits will also be a significant factor: stronger earnings will bode
well for stocks, weaker earnings may bring disappointments.
While we do not profess to know which direction the market will turn in the
short term, it is interesting to note that the gains the market experienced in
the first quarter - as measured by the S&P 500's gain of 9.73% - is nearly equal
to the stock market's long-term average annual gain.
As usual, we caution that predicting short-term trends and successfully
moving in and out of the markets is difficult, at best. While there is money to
be made in the bond and stock markets, we believe it is best made over the long
run. Indeed, the turns the markets have experienced these past 15 months
reinforce the notion that investors need to make decisions with a long-term
horizon: those who had charted an extended course, and stayed with it through
these difficult markets reaped the gains of the first quarter of 1995.
[PHOTO] DAVID F. HILL
For those investors with shorter-term goals, there are money market funds -
shorter-term, steadier investments which pay a respectable yield while aiming
for stability of principal. For those of you wishing to know more about our
basic philosophy of investing, we have prepared a small booklet, the SAFECO
Mutual Funds Personal Investment Guide. Call us at 1-800-426-6730 for your free
copy.
As always, we truly value your continued confidence in SAFECO Mutual Funds.
Sincerely,
/s/ David F. Hill
- -----------------------------
David F. Hill
================================================================================
- 1 -
<PAGE> 5
================================================================================
REPORT FROM THE FUND MANAGER
SAFECO MONEY MARKET FUND
May 1, 1995
The SAFECO Money Market Fund seven-day current yield increased from 3.99% to
5.42% in the six months ending March 31, 1995. This compares to the average
money fund yield of 5.49% according to IBC/Donoghue on March 27, 1995.
[PHOTO] NAOMI URATA
Ninety-day commercial paper rates increased from 5.50% to 6.19% over the six
months ending March 31, 1995 as the Federal Reserve raised short-term interest
rates .75% on November 15 and .50% on February 1. Since that time, rates have
fallen slightly on expectations that the Fed would not raise rates in the first
quarter. Testifying before Congress in February, Alan Greenspan signaled for the
first time since the rate increases began that the Federal Reserve is currently
on hold in its battle against rapid economic growth and inflation.
Indeed, the economy has been showing some signs of slowing. The index of
leading indicators contracted .2% in February and the employment numbers are
showing weaker than expected job growth. The consumer price index for the 12
months ending March 31, 1995 was at 2.9%, unchanged from February. In December
it was 2.7%.
Looking forward, I believe that the Fed will raise rates later in 1995: the
current slowdown in the economy may be only temporary and we could see renewed
growth in the second half of 1995. Should the economy continue to slow, the
Federal Reserve may choose to hold rates steady.
During the later part of 1994, concerns were raised about investments in
derivative securities and about borrowing to increase investment holdings and
returns. We are pleased to report that the Fund does not hold any derivative
securities nor does it borrow to increase investment returns. The risk of
leveraging does not fit my conservative approach, which is to provide as high a
level of current income as possible while seeking to protect your money.
/s/ Naomi Urata
----------------------------
Naomi Urata, Fund Manager
- -------------------------------------------------------------------------------
Naomi Urata assumed management of the SAFECO Money Market Fund on August 4,
1994. She joined SAFECO Asset Management in 1992 as a fixed income analyst. She
has an M.A. in public and private management from Yale University as well as an
M.S. in Nutrition from Tufts University. Ms. Urata enjoys Ikebana and wind
surfing.
================================================================================
- 2 -
<PAGE> 6
================================================================================
HIGHLIGHTS
SAFECO MONEY MARKET FUND
As of March 31, 1995
<TABLE>
<CAPTION>
WEIGHTED AVERAGE MATURITY 31 DAYS
================================================================================
<S> <C>
AVERAGE ANNUAL TOTAL RETURN (1 YEAR) 4.20%
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO CREDIT QUALITY PERCENT
================================================================================
<S> <C>
Highest Rated(1) 100.0%
Split Rated(2) 0.0%
Not Rated(3) 0.0%
------
100.0%
======
</TABLE>
(1) Rated highest quality by at least two nationally recognized rating
organizations or, when rated by only one organization,received its highest
rating.
(2) Rated highest by one organization and second highest by another.
(3) Although unrated, comparable in credit quality to securities in the highest
or split-rated categories, in the opinion of SAFECO Asset Management
Company, the Fund's investment advisor.
[GRAPH]
SAFECO Money Market Fund
Top 5 Types of Short-Term Investments
As a Percent of Net Assets as of March 31, 1995
U.S. Government & Agency Securities: 23.4%
Asset Backed: 15.6%
Banks - Foreign: 12.1%
Financial Services - Brokerage: 6.9%
Finance - Auto: 6.9%
- 3 -
================================================================================
<PAGE> 7
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO MONEY MARKET FUND
As Of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
===================================================================================
COMMERCIAL PAPER - 77.5%
<S> <C> <C>
ASSET BACKED - 15.6%
$3,000 Apreco, Inc.
6.25%, due 4/04/95 $2,998
CXC, Inc.
3,000 6.05%, due 4/25/95 2,988
3,000 6.07%, due 5/04/95 2,983
3,000 Ciesco L.P.
6.08%, due 4/19/95 2,991
Corporate Asset Funding Co.
3,000 5.94%, due 4/26/95 2,988
3,000 6.00%, due 5/16/95 2,978
Corporate Receivables Corp.
3,000 6.02%, due 4/13/95 2,994
3,000 6.05%, due 5/22/95 2,974
3,000 Receivables Capital Corp.
6.01%, due 4/21/95 2,990
BANKS-FOREIGN - 12.1%
3,000 Bank of Nova Scotia
6.05%, due 5/05/95 2,983
Halifax Building Society
3,000 6.14%, due 4/03/95 2,999
3,000 5.98%, due 5/25/95 2,973
3,000 National & Provincial Building Society
6.20%, due 4/10/95 2,995
3,000 Toronto Dominion Holding U.S.A.
6.00%, due 5/08/95 2,982
Westpac Capital Corp.
3,000 6.18%, due 4/06/95 2,997
3,000 6.02%, due 5/23/95 2,974
CHEMICALS - 1.7%
$3,000 / / U.S. Borax & Chemical (144A)
6.05%, due 4/28/95 $2,986
CONGLOMERATE - 1.7%
3,000 B.A.T. Capital Corp.
6.02%, due 5/02/95 2,984
FINANCE-AUTO - 6.9%
Ford Motor Credit Co.
3,000 6.04%, due 5/30/95 2,970
3,000 6.00%, due 6/02/95 2,969
General Motors Acceptance Corp.
3,000 6.07%, due 5/01/95 2,985
3,000 6.15%, due 6/27/95 2,955
FINANCE-CONSUMER - 3.5%
Household Finance Corp.
3,000 6.02%, due 5/31/95 2,970
3,000 6.07%, due 6/06/95 2,967
FINANCE-DIVERSIFIED &
BUSINESS - 5.2%
3,000 General Electric Capital Corp.
6.02%, due 4/12/95 2,995
Heller Financial, Inc.
3,000 6.01%, due 4/07/95 2,997
3,000 6.02%, due 6/01/95 2,969
FINANCE-EQUIPMENT
LEASING - 5.2%
International Lease Finance Corp.
3,000 6.03%, due 4/05/95 2,998
3,000 6.03%, due 6/06/95 2,967
3,000 Sanwa Business Credit Corp.
6.03%, due 4/18/95 2,992
</TABLE>
See Notes to Financial Statements
================================================================================
- 4 -
<PAGE> 8
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO MONEY MARKET FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
========================================================================================
FINANCIAL SERVICES-BROKERAGE - 6.9%
<S> <C> <C>
CS First Boston Group, Inc.
$3,000 6.00%, due 6/05/95 $ 2,968
3,000 6.09%, due 6/20/95 2,959
Merrill Lynch & Co., Inc.
3,000 6.00%, due 4/17/95 2,992
3,000 6.05%, due 5/24/95 2,973
INSURANCE NON-AFFILIATED
MULTI-LINE - 1.2%
2,125 Prudential Funding Corp.
6.40%, due 4/27/95 2,115
MISCELLANEOUS - 1.7%
3,000 U.S. Central Credit Union
6.05%, due 6/15/95 2,962
OIL & GAS - 3.5%
3,000 TOTAL
6.05%, due 6/29/95 2,955
3,000 Tonen Energy International Corp.
6.10%, due 6/14/95 2,962
TIRE AND RUBBER - 1.8%
3,000 Bridgestone/Firestone
6.00%, due 4/24/95 2,989
TOBACCO - 1.8%
3,000 Philip Morris Cos., Inc.
5.94%, due 4/20/95 2,991
TRANSPORTATION-AIRLINES - 3.5%
United Airlines First Funding Corp.
3,000 6.05%, due 4/11/95 2,995
3,000 6.08%, due 4/17/95 2,992
UTILITIES-ELECTRIC - 1.7%
$3,000 AES Barbers Point, Inc.
6.02%, due 5/26/95 $ 2,972
UTILITIES-TELEPHONE - 3.5%
AT&T Capital Corp.
3,000 6.12%, due 5/03/95 2,984
3,000 6.00%, due 6/07/95 2,967
--------
TOTAL COMMERCIAL PAPER 133,267
--------
U.S. GOVERNMENT AND AGENCY
SECURITIES - 23.4%
FEDERAL HOME LOAN BANK - 20.5%
35,330 6.10%, due 4/03/95 35,318
U.S. TREASURY NOTES - 2.9%
5,000 3.875%, due 4/30/95 4,950
TOTAL U.S. GOVERNMENT & AGENCY
SECURITIES 40,268
--------
TOTAL INVESTMENTS - 100.9% 173,535
Liabilities, less Other Assets (1,577)
--------
NET ASSETS $171,958
========
- ----------------------------------------------------------------------------------------
</TABLE>
/ / Security exempt from registration and restricted as to resale only to
dealers, or through a dealer to an "accredited investor" or a "qualified
institutional buyer". At March 31, 1995, the total market value of such
securities is $2,986,000 or 1.7% of net assets.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ISSUE ACQUISITION DATE COST (000'S)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. Borax & Chemical (144A) 2/7/95 $2,960
6.05%, due 4/28/95
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
- 5 -
<PAGE> 9
REPORT FROM THE FUND MANAGER
SAFECO TAX-FREE MONEY MARKET FUND
May 1, 1995
The SAFECO Tax-Free Money Market Fund began the six-month period ending March
31, 1995 with a 7-day yield of 2.95% and ended it at 3.51%. The climb has been
far from steady. The yield fluctuated from a low of 2.61% in mid-October to a
high of 4.19% in early January. The Fund has continued to outperform its peers
throughout the period, as can be seen by the graph inside the front cover of
this report.
The rise in interest rates in the tax-exempt money market has been much
slower than in the taxable money market, due to short supply. Assets in tax-free
funds rose 7.1% in 1994, whereas note issuance fell 16%. The resulting shift in
the supply-demand relationship has allowed issuers to pay investors lower
interest rates.
Issuance is expected to remain low in 1995, as states and municipalities
enjoy generally good economic health. This tight supply will certainly continue
to affect yields.
Our strategy in managing the SAFECO Tax-Free Money Market Fund remains as it
has in the past - we seek to maintain a portfolio of very high quality, very
liquid securities that are not subject to federal income tax or to the
alternative minimum tax. The majority of our holdings can be tendered at face
value in one to seven days, giving the Fund a maximum amount of liquidity and
flexibility to react to changes in the market. The remainder of the portfolio is
invested in securities that are slightly longer in maturity and which provide an
opportunity to lock in additional yield. Most of the securities in our portfolio
have some type of credit enhancement, such as an unconditional letter of credit,
bond insurance, or a corporate guarantee. (These credit-enhanced securities
include those issued by entities participating in the Orange County Investment
Pool. As the credit support is unconditional, payment of interest and principal
on these securities does not depend on the credit quality of Orange County
itself.) We do not hold high-risk derivative products in the Fund.
[PHOTO] MARY V. METASTASIO
Looking toward the future, we can be certain of one thing - tax-exempt
interest rates will be pulled in various directions depending on general
interest-rate movements and supply and demand factors particular to the
tax-exempt money market and will be affected by the economic health of issuers
and their plans. Demand will depend on investors' perceptions of the economy and
of other investment alternatives. No matter what the markets do, the SAFECO
Tax-Free Money Market Fund will seek the same goal as always - to provide our
investors with safety, liquidity, and an attractive tax-free yield for their
short-term investment needs.
/s/ MARY V. METASTASIO
- ------------------------------------
Mary V. Metastasio, Fund Manager
- --------------------------------------------------------------------------------
Mary Metastasio joined SAFECO in 1980. She became a municipal securities
analyst in 1985, portfolio manager in 1987 and Vice President in 1988. She holds
an M.B.A. from the University of Washington.
================================================================================
- 6 -
<PAGE> 10
HIGHLIGHTS
SAFECO TAX-FREE
MONEY MARKET FUND
As of March 31, 1995
<TABLE>
<CAPTION>
WEIGHTED AVERAGE MATURITY 62 DAYS
================================================================================
<S> <C>
AVERAGE ANNUAL TOTAL RETURN (1 YEAR) 2.84%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE STATES PERCENT OF NET ASSETS
================================================================================
<S> <C>
California 13.8%
Texas 9.9%
Washington 9.3%
Georgia 7.8%
Missouri 7.7%
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO CREDIT QUALITY PERCENT OF PORTFOLIO
================================================================================
<S> <C>
Highest Rated(1) 99.7%
Split Rated(2) 0.0%
Not Rated(3) 0.3%
------
100.0%
======
</TABLE>
(1) Rated highest quality by at least two nationally recognized rating
organizations or, when rated by only one organization, received its highest
rating.
(2) Rated highest by one organization and second highest by another.
(3) Although unrated, comparable in credit quality to securities in the highest
or split-rated categories, in the opinion of SAFECO Asset Management
Company, the Fund's investment advisor.
[GRAPH]
SAFECO Tax-Free Money Market Fund
Top 5 Types of Bonds As a Percent of Net Assets
As of March 31, 1995
Housing/Uninsured: 21.3%
IDR/PCR* Electric Utilities: 10.9%
Local G.O./Limited Tax: 8.5%
Miscellaneous Tax: 7.6%
IDR/PCR* Miscellaneous: 6.6%
*Industrial Development Revenue/Pollution Control Revenue
[GRAPH]
SAFECO Tax-Free Money Market Fund
Tax-Equivalent Yields Compared to
the Average Taxable Money Fund Yield
Graph compares SAFECO Tax-Free Money Market Fund tax-equivalent yields for 5
tax brackets to the IBC/Donoghue Taxable Money Fund Average Yield on 3/27/95.
Tax-equivalent yield comparisons vary with market conditions.
================================================================================
- 7 -
<PAGE> 11
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
========================================================================================
<S> <C> <C>
MUNICIPAL BONDS - 101.0%
ALASKA - 3.1%
Alaska Industrial Development and
Export Authority Revenue
$1,325 4.55%, due 7/01/98, put date 4/07/95 $1,325
1,045 4.55%, due 7/01/01, put date 4/07/95 1,045
ARIZONA - 7.0%
3,600 Apache County Industrial Development Authority
Pollution Control Revenue
(Tucson Electric Power Co. Project)
4.25%, due 6/15/20, put date 4/07/95 3,600
1,000 Apache County Industrial Development Authority
Revenue (Tucson Electric Power Co.
Springerville Project)
4.20%, due 12/15/18, put date 4/07/95 1,000
800 Pima County Industrial Development Authority
Revenue (Tucson Electric Power Co. Projects)
4.20%, due 12/01/22, put date 4/07/95 800
CALIFORNIA - 13.8%
1,000 California Pollution Control Financing Authority
Revenue (Chevron USA, Inc. Project)
3.10%, due 5/15/02, put date 5/15/95 998
1,000 California Student Education Loan Marketing
Corp. (Student Loan Revenue Ref. Bonds)
4.40%, due 11/01/02, put date 11/01/95 1,000
1,700 Irvine Ranch Water District
Consolidated Series 1985 B
4.85%, due 10/01/09, put date 4/01/95 1,700
CALIFORNIA (CONTINUED)
$2,500 Irvine Ranch Water District
Consolidated Series 1993 A
4.85%, due 4/01/33, put date 4/01/95 $2,500
4,000 Orange County (Irvine Coast
Assessment District #88-1)
5.10%, due 9/02/18, put date 4/01/95 4,000
500 Orange County (Sanitation Districts
Capital Improvement Program Series 1990-92 A)
5.10%, due 8/01/15, put date 4/01/95 500
COLORADO - 1.9%
1,500 South Denver Metropolitan District
General Obligation
4.35%, due 12/01/05, put date 6/01/95 1,500
FLORIDA - 4.1%
850 Dade County Equipment
Special Obligation Revenue
4.45%, due 10/01/99, put date 4/07/95 850
1,280 Florida Housing Finance Agency
Multifamily Revenue
5.00%, due 12/01/09, put date 6/01/95 1,280
1,000 Putnam County Development Authority
Pollution Control Revenue (Seminole
Electric Co-op Project)
4.30%, due 3/15/14, put date 9/15/95 1,000
</TABLE>
See Notes to Financial Statements
================================================================================
- 8 -
<PAGE> 12
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================================
<S> <C> <C>
GEORGIA - 7.8%
$2,500 Marietta Housing Authority Multifamily
Housing Revenue (Falls at Bells Ferry)
5.25%, due 1/15/09, put date 1/15/96 $2,500
Municipal Electric Authority of Georgia
2,075 4.90%, due 3/01/20, put date 3/01/96 2,075
1,500 3.85%, due 6/01/20, put date 6/01/95 1,500
ILLINOIS - 3.0%
2,320 Chicago (O'Hare International Airport)
4.25%, due 1/01/15, put date 4/07/95 2,320
IOWA - 2.2%
1,730 Polk County Hospital Equipment and
Improvement Revenue
4.25%, due 12/01/05, put date 4/07/95 1,730
KANSAS - 3.2%
1,500 Manhattan Commercial Development
Revenue (Kan/Del Hotel)
5.00%, due 8/01/16, put date 8/01/95 1,500
1,000 Wichita Revenue (CSJ Health System)
4.25%, due 10/01/11, put date 4/07/95 1,000
LOUISIANA - 1.3%
1,000 Louisiana Public Facilities Authority
Special Insurance Assessment Revenue
4.35%, due 12/01/13, put date 4/07/95 1,000
MARYLAND - 3.8%
$1,500 Howard County Multifamily Housing Revenue
(Sherwood Crossing Ltd. Partnership)
3.90%, due 6/01/08, put date 6/01/95 $1,500
1,000 Maryland Community Development Administration
Department of Housing Single Family Program
4.70%, due 4/01/17, put date 6/06/95 1,000
500 Montgomery County Industrial Development
Revenue (Information Systems & Networks)
3.95%, due 4/01/14, put date 4/03/95 500
MISSOURI - 7.7%
1,600 Callaway County Industrial Development Authority
Revenue (Callaway Community Hospital)
4.05%, due 8/01/14, put date 4/03/95 1,600
600 Kansas City Industrial Development Authority
Multifamily Housing Revenue
(J.C. Nichols Co.)
4.25%, due 5/01/15, put date 4/03/95 600
2,100 Kansas City Industrial Development Authority
(Coach House II Project)
4.25%, due 12/01/15, put date 4/03/95 2,100
1,600 St. Louis Planned Industrial Expansion Authority
Industrial Development Revenue
(Italgrani U.S.A., Inc.)
4.15%, due 6/01/03, put date 4/03/95 1,600
</TABLE>
See Notes to Financial Statements
================================================================================
- 9 -
<PAGE> 13
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
========================================================================================
<S> <C> <C>
MONTANA - 4.6%
$1,200 Forsyth, Rosebud County Pollution Control
Revenue (Pacificorp Project)
3.90%, due 1/01/18, put date 4/12/95 $1,200
2,305 Havre Industrial Development
Revenue (Safeway, Inc. Projects)
4.45%, due 6/01/06, put date 6/01/95 2,305
NEW YORK - 1.3%
1,000 New York Energy R & D Authority PCR
Long Island Lighting Co. Project Series B
4.70%, due 3/01/16, put date 3/01/96 1,000
OHIO - 3.9%
1,000 Akron Sanitary Sewer System Revenue
4.15%, due 12/01/14, put date 4/07/95 1,000
2,000 Cleveland-Cuyahoga County
Port Authority Revenue
(Rock Roll Hall of Fame and
Museum Project)
4.15%, due 12/01/15, put date 4/07/95 2,000
OKLAHOMA - 1.3%
1,000 Oklahoma Water Resources Board
State Loan Program Revenue
4.50%, due 9/01/23, put date 9/01/95 1,000
PENNSYLVANIA - 1.6%
215 Commonwealth Tax Exempt Mortgage Trust
2.95%, due 11/01/05, put date 5/01/95 215
1,000 Philadelphia Tax and Revenue Anticipation Notes
4.75%, due 6/15/95, put date 6/15/95 1,002
TENNESSEE - 5.0%
$3,400 Hamilton County Industrial Development Revenue
(Komatsu American Manufacturing Corp.)
4.25%, due 11/01/05, put date 4/07/95 $3,400
500 Knox County Industrial Development Board
Industrial Development Revenue
(Service Merchandise)
3.90%, due 12/15/08, put date 4/17/95 500
TEXAS - 9.9%
600 Austin Higher Education Authority, Inc.
Educational Facilities Revenue
(St. Edward's University)
4.25%, due 8/01/10, put date 4/03/95 600
1,900 Bexar County Housing Finance Corp.
(Altamonte/Sasa Apartments)
4.50%, due 11/01/06, put date 4/07/95 1,900
3,100 Cedar Hill Industrial Development Corp.
Revenue (Minyard Properties Project)
4.25%, due 5/01/02, put date 4/03/95 3,100
1,000 Harris County Housing Finance Corp.
Multifamily Housing Revenue
(Arbor II Ltd. Project)
4.20%, due 10/01/05, put date 10/01/95 1,000
1,000 Tarrant County Housing Finance Corp.
Multifamily Housing Revenue
(Lincoln Meadows Project) Series 1988
5.00%, due 12/01/14, put date 12/01/95 1,000
</TABLE>
See Notes to Financial Statements
================================================================================
-10-
<PAGE> 14
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C> <C>
VIRGINIA - 3.9%
$2,000 Harrisonburg Development and Housing Authority
Multifamily Housing Revenue
(Rolling Brook Village Apts. Project)
5.10%, due 2/01/09, put date 2/01/96 $ 2,000
1,000 Peninsula Ports Authority of Virginia Port Facility
Revenue (CSX Transportation, Inc. Project)
3.90%, due 12/15/12, put date 5/02/95 1,000
WASHINGTON - 9.3%
1,500 Seattle Municipal Power and Light Revenue
4.20%, due 5/01/11, put date 7/12/95 1,500
1,000 Washington Public Power Supply System
Project #2 Revenue
4.325%, due 7/01/00, put date 4/07/95 1,000
855 Washington State Housing Finance Commission
Revenue (Horizon House Project)
4.25%, due 1/01/21, put date 4/07/95 855
1,330 Washington State Housing Finance Commission
Revenue (Pioneer Human Services)
4.30%, due 7/01/11, put date 4/07/95 1,330
1,535 Washington State Housing Finance Commission
Revenue (YMCA of Greater Seattle Program)
4.50%, due 7/01/11, put date 4/01/95 1,535
1,000 Washington State Housing Finance Commission
Revenue (YMCA of Snohomish County Program)
4.40%, due 8/01/19, put date 4/01/95 1,000
WYOMING - 1.3%
$1,000 Uinta County Pollution Control Revenue
(Chevron USA, Inc. Project)
3.75%, due 6/15/97, put date 6/15/95 $ 1,000
-------
TOTAL MUNICIPAL BONDS 78,065
-------
TOTAL INVESTMENTS - 101.0% 78,065
Liabilities, less Other Assets (745)
-------
NET ASSETS $77,320
=======
</TABLE>
- --------------------------------------------------------------------------------
Securities with a maturity of more than thirteen months have variable rates
and/or demand features which qualify them as short-term securities. Rates shown
are those in effect on March 31, 1995. These rates change periodically based on
specified market rates or indices.
See Notes to Financial Statements
================================================================================
- 11 -
<PAGE> 15
STATEMENTS OF ASSETS AND LIABILITIES
As of March 31, 1995
<TABLE>
<CAPTION>
(In Thousands, Except Per Share Amounts) SAFECO MONEY MARKET FUND SAFECO TAX-FREE MONEY MARKET FUND
=======================================================================================================
<S> <C> <C>
ASSETS
Investments, at Value (Amortized Cost
$173,535 and $78,065, respectively) $173,535 $78,065
Cash 2 --
Receivables
Interest 82 526
-------- -------
Total Assets 173,619 78,591
-------- -------
LIABILITIES
Payables
Capital Stock Redeemed 1,496 627
Investment Securities Purchased -- 500
Investment Advisory Fees 76 34
Notes Payable (Note 3) -- 67
Dividends 37 20
Shareholder Servicing Fees 34 7
Other 18 16
-------- -------
Total Liabilities 1,661 1,271
-------- -------
NET ASSETS $171,958 $77,320
======== =======
SHARES OUTSTANDING (NOTE 2) 171,958 77,320
======== =======
NET ASSET VALUE PER SHARE
(Net Assets Divided by Shares Outstanding) $ 1.00 $ 1.00
======== =======
- -------------------------------------------------------------------------------------------------------
See Notes to Financial Statements
=======================================================================================================
</TABLE>
- 12 -
<PAGE> 16
STATEMENTS OF OPERATIONS
For the Year Ended March 31, 1995
<TABLE>
<CAPTION>
(In Thousands) SAFECO MONEY MARKET FUND SAFECO TAX-FREE MONEY MARKET FUND
==============================================================================================================
<S> <C> <C>
INVESTMENT INCOME
Interest $ 8,288 $ 2,907
EXPENSES
Investment Advisory Fees (Note 3) 841 425
Shareholder Servicing Fees (Note 3) 385 74
Custodian Fees 26 17
Legal and Auditing Fees 17 15
Reports to Shareholders 15 6
Trustees' Fees 6 5
Loan Interest Expense 2 2
---------- ----------
Total Expenses 1,292 544
---------- ----------
NET INVESTMENT INCOME AND NET CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 6,996 $ 2,363
========== ==========
- --------------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended March 31
<TABLE>
<CAPTION>
SAFECO MONEY MARKET FUND SAFECO TAX-FREE MONEY MARKET FUND
----------------------------- ---------------------------------
(In Thousands) 1995 1994 1995 1994
=======================================================================================================================
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 6,996 $ 3,408 $ 2,363 $ 1,589
DIVIDENDS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME (6,996) (3,408) (2,363) (1,589)
TRUST SHARE TRANSACTIONS (Note 2) (14,354) 41,776 (17,269) 12,491
--------- --------- -------- --------
TOTAL CHANGE IN NET ASSETS (14,354) 41,776 (17,269) 12,491
NET ASSETS AT BEGINNING OF PERIOD 186,312 144,536 94,589 82,098
--------- --------- -------- --------
NET ASSETS AT END OF PERIOD $ 171,958 $ 186,312 $ 77,320 $ 94,589
========= ========= ======== ========
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
================================================================================
- 13 -
<PAGE> 17
================================================================================
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The SAFECO Money Market Trust ("Trust") is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Trust consists of the SAFECO Money Market Fund ("Money
Fund") and SAFECO Tax-Free Money Market Fund ("Tax-Free Money Fund") (together
the "Funds").
The following is a summary of significant accounting policies consistently
followed by each Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
SECURITY VALUATION. Investments consist of short-term securities maturing
within thirteen months from the date of purchase. Securities in the Tax-Free
Money Fund with maturities of more than thirteen months have floating rates
and/or demand features which qualify them as short-term securities. Securities
purchased at par are valued at cost. All other securities are valued at
amortized cost, which approximates market value.
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
The cost of each portfolio is the same for financial statement and federal
income tax purposes.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. In the Tax-Free Money Fund,
securities purchased on a when-issued or delayed basis may be settled a month or
more after the trade date. The securities purchased are carried in the portfolio
at market and are subject to market fluctuation during this period. These
securities begin earning interest on the settlement date. As commitments to
purchase when-issued securities become fixed, the Tax-Free Money Fund segregates
liquid assets in an amount equal to the total obligation.
INCOME RECOGNITION. Interest is accrued on portfolio investments daily. Bond
premiums and original issue discounts are amortized to either call or maturity
dates; market discounts in the Money Fund are amortized.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Net investment income is
declared as a dividend to shareholders of record as of the close of each
business day and payment is made as of the last business day of each month.
FEDERAL INCOME AND EXCISE TAXES. The Funds intend to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated investment
companies by distributing substantially all income to shareholders in a manner
which results in no tax to the Fund. Therefore, no federal income or excise tax
provision is required. The Tax-Free Money Fund intends to continue to satisfy
conditions that will enable it to designate its dividends from net investment
income as tax-exempt dividend distributions.
================================================================================
- 14 -
<PAGE> 18
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. TRUST SHARES
<TABLE>
<CAPTION>
SAFECO MONEY MARKET FUND SAFECO TAX-FREE MONEY MARKET FUND
------------------------------- ---------------------------------
FOR THE YEAR ENDED MARCH 31 FOR THE YEAR ENDED MARCH 31
(In Thousands, Except Per-Share Amounts) 1995 1994 1995 1994
===============================================================================================================
<S> <C> <C> <C> <C>
SHARES SOLD 1,216,336 1,605,281 176,342 212,888
SHARES REINVESTED 5,911 2,833 2,024 1,304
---------- ---------- -------- --------
1,222,247 1,608,114 178,366 214,192
SHARES REDEEMED (1,236,601) (1,566,338) (195,635) (201,701)
---------- ---------- -------- --------
NET CHANGE (14,354) 41,776 (17,269) 12,491
========== ========== ======== ========
</TABLE>
Because share value is equal to $1.00,
dollar amounts and share amounts are identical.
<TABLE>
<CAPTION>
As of March 31, 1995
Shares Authorized Unlimited Unlimited
<S> <C> <C>
Par Value Per Share $ .001 $ .001
Paid in Capital $ 171,958 $ 77,320
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
3. INVESTMENT ADVISORY FEES AND
OTHER TRANSACTIONS WITH AFFILIATES
SAFECO Asset Management Company receives investment advisory fees from the
Funds. For the Money Fund, the fee is based on average daily net assets at the
annual rate of 50/100 of one percent on the first $250 million declining in
three levels to 25/100 of one percent on net assets over $750 million. For the
Tax-Free Money Fund, the fee is based on average daily net assets at the annual
rate of 50/100 of one percent on the first $100 million declining in three
levels to 20/100 of one percent on net assets over $500 million. SAFECO Services
Corporation receives shareholder servicing fees.
The Funds may borrow money for temporary purposes from SAFECO Corporation or
its affiliates at interest rates less than or equivalent to commercial bank
interest rates. On March 31, 1995, the Tax-Free Money Market Fund had a loan
outstanding with SAFECO Services Corporation of $66,645 and it was repaid on
April 3, 1995.
================================================================================
- 15 -
<PAGE> 19
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SAFECO MONEY MARKET FUND
FOR THE YEAR ENDED MARCH 31
-------------------------------------------------------------
(For a Share Outstanding Throughout the Period) 1995 1994 1993 1992 1991
==================================================================================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.04 0.02 0.03 0.05 0.07
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.04) (0.02) (0.03) (0.05) (0.07)
-------- -------- --------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========= ======== ========
TOTAL RETURN 4.20% 2.48% 2.98% 5.04% 7.60%
NET ASSETS AT END OF PERIOD (000'S OMITTED) $171,958 $186,312 $ 144,536 $184,823 $224,065
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.78% 0.79% 0.77% 0.73% 0.70%
RATIO OF NET INCOME TO AVERAGE NET ASSETS 4.21% 2.47% 3.02% 5.05% 7.34%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SAFECO TAX-FREE MONEY MARKET FUND
FOR THE YEAR ENDED MARCH 31
-------------------------------------------------------------
(For a Share Outstanding Throughout the Period) 1995 1994 1993 1992 1991
==================================================================================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.03 0.02 0.03 0.04 0.05
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.03) (0.02) (0.03) (0.04) (0.05)
-------- -------- --------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========= ======== ========
TOTAL RETURN 2.84% 1.98% 2.53% 3.94% 5.39%
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 77,320 $ 94,589 $ 82,098 $ 79,849 $ 60,478
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.64% 0.64% 0.61% 0.62% 0.62%
RATIO OF NET INCOME TO AVERAGE NET ASSETS 2.79% 1.96% 2.48% 3.83% 5.24%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
- 16 -
<PAGE> 20
================================================================================
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF THE SAFECO MONEY MARKET TRUST
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the SAFECO Money Market Trust
(comprising, respectively, the SAFECO Money Market Fund and SAFECO Tax-Free
Money Market Fund) as of March 31, 1995, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1995, by correspondence with the custodian and a broker. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds constituting the SAFECO Money Market Trust at March 31,
1995, and the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
-----------------------------
Seattle, Washington
April 26, 1995
================================================================================
- 17 -
<PAGE> 21
================================================================================
SAFECO MONEY MARKET FUNDS
BOARD OF TRUSTEES
Boh A. Dickey, Chairman
Barbara J. Dingfield
Richard W. Hubbard
Richard E. Lundgren
L.D. McClean
Larry L. Pinnt
John W. Schneider
OFFICERS
David F. Hill, President
Ronald L. Spaulding,
Vice President and Treasurer
Neal A. Fuller,
Vice President and Controller
INVESTMENT ADVISER
SAFECO Asset
Management Company
DISTRIBUTOR
SAFECO Securities, Inc.
TRANSFER AGENT
SAFECO Services Corporation
CUSTODIAN
U.S. Bank of Washington, N.A.
GMF 663 5/95
[RECYCLE LOGO] Printed on Recycled Paper
Bulk Rate
U.S. Postage
PAID
Permit No. 2405
Seattle, WA
This report must be preceded or
accompanied by a current prospectus.
(R)Registered trademark of SAFECO Corporation.
<PAGE> 1
EXHIBIT NO. 99.16
CALCULATION OF PERFORMANCE INFORMATION
<PAGE> 2
SAFECO TAX-FREE MONEY MARKET FUND
Calculation of Performance Quotations
The yield and effective yield for the SAFECO Tax-Free Market Fund for the 7-day
period ended March 31, 1995 is calculated as follows:
(1.000673-1.00)-0 365
Yield = [-----------------------] = Base Period Return X ----- = 3.51%
1.00 7
Effective Yield = [( .000672610 + 1)365/7] - 1 = 3.57%
Where: $1.000672610 = value of one share at the end of a 7-day
period (as defined in the instructions to
Item 22(b)(ii) of Form N-1A)
$1.00 = value of one share at the beginning of a
7-day period
$0.00 = capital changes during the period, if any.
$0.000672610 = Base Period Return
The "tax-equivalent" yield for the Tax-Free Money Fund for the 7-day period
ended March 31, 1995 is calculated as follows:
3.51% x 1
Tax-equivalent yield = [-----------] + [ 3.51 (1-1) ] = 5.81%
1-.39.6
Where: 3.51% = "yield" as calculated above
39.6% = tax rate
100% = percentage of "yield" which is tax-free
<PAGE> 3
SAFECO MONEY MARKET FUND
Calculation of Performance Quotations
The yield and effective yield for the SAFECO Money Market Fund for the 7-day
period ended March 31, 1995 is calculated as follows:
(1.001039-1.00)-0 365
Yield = [-----------------------] = Base Period Return X ----- = 5.42%
1.00 7
Effective Yield = [( .001039040 + 1)365/7] - 1 = 5.56%
Where: $1.001039040 = value of one share at the end of a 7-day
period (as defined in the instructions to
Item 22(b)(ii) of Form N-1A)
$1.00 = value of one share at the beginning of a
7-day period
$0.00 = capital changes during the period, if any.
$0.001039040 = Base Period Return
