<PAGE> 1
SEMIANNUAL
REPORT
================================================================================
SEPTEMBER 30, 1995
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
SAFECO
MONEY MARKET
FUNDS
--------
SAFECO MONEY
MARKET FUND
SAFECO TAX-FREE
MONEY MARKET FUND
[LOGO] SAFECO
MUTUAL FUNDS
<PAGE> 2
================================================================================
PERFORMANCE INFORMATION
================================================================================
SAFECO MONEY MARKET FUND
AVERAGE WEEKLY YIELD
FOR SIX-MONTH PERIOD ENDED SEPTEMBER 25, 1995
[GRAPH 1] Graph appears here comparing the
average weekly yield of the Fund
SAFECO MONEY MARKET FUND to the IBC/Donoghue average yield
for the six-month period ended
IBC/DONOGHUE MONEY FUND AVERAGE September 25, 1995.
================================================================================
SAFECO TAX-FREE MONEY MARKET FUND
AVERAGE WEEKLY YIELD
FOR SIX-MONTH PERIOD ENDED SEPTEMBER 25, 1995
[GRAPH 2] Graph appears here comparing the
average weekly yield of the Fund
SAFECO MONEY MARKET FUND to the IBC/Donoghue average yield
for the six-month period ended
IBC/DONOGHUE MONEY FUND AVERAGE September 25, 1995.
SAFECO TAX-FREE MONEY MARKET FUND
IBC/DONOGHUE TAX-FREE MONEY FUND AVERAGE
Yields are historical and not predictive of future performance.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
================================================================================
<S> <C>
President's Letter 1
SAFECO Money Market Fund 2
SAFECO Tax-Free Money Market Fund 6
Financial Statements 12
Notes to Financial Statements 15
================================================================================
</TABLE>
<PAGE> 3
================================================================================
LETTER FROM THE PRESIDENT
November 1, 1995
DEAR SHAREHOLDER:
As it was in 1994, so it has been in 1995: The health of the U.S. economy
is the theme driving the financial markets. The marked difference between the
two years is the change in investor perception of the economy.
Investors now seem to see the economy as growing at healthy, sustainable
levels with little inflationary pressure. This change in attitude, coupled with
the concept of declining interest rates, has brought surprising strength to both
the bond and stock markets.
The stock market as measured by the S&P Index climbed 29.71% in the 12
months ending September 30, 1995. The bond market as measured by the Lehman
Brothers Government/Corporate Index returned 14.35% over the same period. These
gains far outpace historical averages.
The slow domestic economic growth, low inflation and falling interest rates
that we are experiencing creates an environment that is traditionally beneficial
for bonds. The same circumstances are generally positive for the stocks of
companies that are able to grow their earnings. Companies whose earnings don't
meet analysts' expectations are likely to disappoint investors. In this climate,
stock picking ability is critical to good performance.
Beyond that, it is not our practice to prognosticate. We don't believe we
can predict short-term trends or be successful timing the market. So, we try to
stay fully invested in the best positions at the best prices we can find.
We urge investors to take a longer view to investing as well.
[PHOTO] DAVID F. HILL
Our advice is, as always, don't try to divine what the market will do
tomorrow or next month. Concentrate instead on making sure your investment
vehicles are of high quality and that they match the time horizons of your
investment objectives.
To help investors do that, we offer educational materials, including the
SAFECO Mutual Funds Personal Financial Planning Program. Please call us for your
free copy of this educational booklet and planning worksheets. For automated
performance information, try our new menu-driven price and yield line. We've
upgraded and expanded this service to provide historical performance as well as
dividends and capital gain information. To access it simply dial 800-835-4391
(545-5113 in Seattle).
As always, we truly value your continued confidence in SAFECO Mutual Funds.
Sincerely,
/s/ David F. Hill
- ---------------------
David F. Hill
President
================================================================================
- 1 -
<PAGE> 4
================================================================================
REPORT FROM THE FUND MANAGER
SAFECO MONEY MARKET FUND
November 1, 1995
[PHOTO] Naomi Urata
The SAFECO Money Market Fund's seven-day current yield decreased from 5.42%
to 5.05% in the six months ending September 30, 1995. This slightly
underperformed the average money fund yield of 5.18% reported by IBC/Donoghue on
September 25, 1995. The Fund's total return of 5.09% surpassed the consumer
price index, a broad inflation measure, which climbed 2.50% for the 12 months
ending September 30, 1995.
The fall in short-term yields was driven by the Federal Reserve's July
reduction in the Federal Funds rate of .25% to 5.75%. This move brought the Fed
to a neutral position on monetary policy. Since the Fed's move, short-term rates
have traded lower and then slightly higher due to uncertainty regarding another
drop in the Federal Funds rate.
I believe that the Fed will hold rates steady through the end of the year
as long as the economy continues its slow growth scenario. Recent data suggest
the U.S. economy grew at about 3% during the third quarter. Gross Domestic
Product (GDP) is projected to grow at 2.00-2.50% in the fourth quarter. The two
main determinants of inflation (real wage growth and productivity) suggest
inflation is subdued. Wage growth has been restrained as productivity has
improved.
The commercial paper rates in the short-end are currently inverted out to
180 days (30-day rates are 5.73%, higher than 180-day rates, which are 5.58%).
This inversion suggests that market participants believe that short-term rates
will decline in the next six months.
Going toward the future, the yield on the Fund should fall, and then
stabilize in tandem with rates. I believe this stabilization will occur at, or
slightly below, our current yields.
In the event the Fed reduces the Fed Funds rate further, I will extend the
average maturity of the Fund to lock in current yields. In the meantime, with a
44-day average maturity, we're taking advantage of the present inversion.
The SAFECO Money Market Fund will continue its objective of seeking as high
a level of current income as is compatible with maintaining a net asset value
per share of $1.00 and providing liquidity for your cash needs. I will take
advantage of opportunities to buy low-cost, high-quality investments that
satisfy our high credit standards. I follow these objectives to provide a safe
vehicle for your short-term investment needs such as harboring your cash, or
saving -- for emergencies, for a new car, for a down payment on a home.
/s/ Naomi Urata
- --------------------
Naomi Urata
================================================================================
- 2 -
<PAGE> 5
================================================================================
HIGHLIGHTS
SAFECO MONEY MARKET FUND
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
WEIGHTED AVERAGE MATURITY 44 days
================================================================================
<S> <C>
TOTAL RETURN (1 YEAR) 5.09%
</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.
================================================================================
SAFECO MONEY MARKET FUND
TOP 5 TYPES OF SHORT-TERM INVESTMENTS AS OF
SEPTEMBER 30, 1995
[GRAPH 3]
Graph here shows the percentage of total assets invested in each of the five
largest types of investments held by the Fund.
================================================================================
- 3 -
<PAGE> 6
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO MONEY MARKET FUND
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
COMMERCIAL PAPER - 81.9%
ASSET BACKED - 17.6%
Apreco, Inc.
$4,000 5.67%, due 11/07/95 $ 3,977
3,625 5.67%, due 10/27/95 3,610
Ciesco L.P.
4,000 5.70%, due 10/30/95 3,981
3,000 5.63%, due 11/02/95 2,985
Corporate Asset Funding Co.
4,000 5.70%, due 10/03/95 3,998
4,000 5.67%, due 11/21/95 3,967
- Receivables Capital Corp. 4(2)
3,000 5.75%, due 10/02/95 2,999
4,000 5.70%, due 11/29/95 3,962
BANKS-DOMESTIC - 1.8%
3,000 Norwest Corp.
5.73%, due 10/24/95 2,989
BANKS-FOREIGN - 11.0%
4,000 Abbey National North America
5.62%, due 1/08/96 3,938
1,500 Cheltenham & Gloucester Building Society
5.60%, due 12/08/95 1,484
3,000 Halifax Building Society
5.62%, due 10/06/95 2,998
3,000 National & Provincial Building Society
5.77%, due 10/16/95 2,993
National Australia Funding (DE), Inc.
3,000 5.75%, due 11/20/95 2,976
4,000 5.62%, due 10/05/95 3,997
COMPUTER SYSTEMS - 1.2%
2,000 Epson America, Inc.
5.80%, due 10/25/95 1,991
CONGLOMERATE - 2.4%
4,000 B.A.T. Capital Corp.
5.70%, due 10/18/95 3,989
FINANCE-AUTO - 14.8%
Ford Motor Credit Co.
4,000 5.68%, due 12/07/95 3,957
3,000 5.50%, due 10/04/95 2,998
General Motors Acceptance Corp.
4,000 5.70%, due 11/28/95 3,963
4,000 5.58%, due 1/26/96 3,927
Mitsubishi Motors Credit of America, Inc.
4,000 5.72%, due 1/05/96 3,938
3,000 5.55%, due 12/05/95 2,970
3,000 New Center Asset Trust
5.70%, due 10/10/95 2,995
FINANCE-DIVERSIFIED & BUSINESS - 8.9%
General Electric Capital Corp.
4,000 5.65%, due 1/19/96 3,930
4,000 5.64%, due 12/01/95 3,961
Heller Financial, Inc.
3,000 5.76%, due 11/27/95 2,972
4,000 5.69%, due 10/26/95 3,984
FINANCE-EQUIPMENT LEASING - 3.6%
3,000 International Lease Finance Corp.
5.63%, due 10/16/95 2,992
3,000 Sanwa Business Credit Corp.
5.67%, due 11/09/95 2,981
</TABLE>
See Notes to Financial Statements
================================================================================
- 4 -
<PAGE> 7
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO MONEY MARKET FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
FINANCIAL SERVICES-BROKERAGE - 3.5%
$3,000 CS First Boston Group, Inc.
5.60%, due 10/12/95 $ 2,994
3,000 Merrill Lynch & Co., Inc.
5.67%, due 1/03/96 2,955
INSURANCE NON-AFFILIATED MULTI-LINE - 3.5%
Prudential Funding Corp.
3,000 5.65%, due 12/11/95 2,966
3,000 5.44%, due 1/10/96 2,954
MISCELLANEOUS - 2.3%
4,000 Tasmanian Public Finance Corp.
5.57%, due 3/25/96 3,890
OIL & GAS - 2.4%
4,000 Tonen Energy International Corp.
5.75%, due 12/14/95 3,952
PAPER PRODUCTS - 2.4%
4,000 Southeast Paper Manufacturing Co.
5.64%, due 12/18/95 3,950
TOBACCO - 2.4%
4,000 Philip Morris Cos., Inc.
5.67%, due 10/23/95 3,986
UTILITIES-ELECTRIC - 4.1%
4,000 AES Barbers Point, Inc.
5.63%, due 12/21/95 3,947
3,000 AES Shady Point, Inc.
5.83%, due 10/20/95 2,990
--------
TOTAL COMMERCIAL PAPER 136,986
--------
U.S. GOVERNMENT AND AGENCY SECURITIES - 12.3%
FEDERAL HOME LOAN MORTGAGE CORP. - 0.4%
570 6.30%, due 10/02/95 570
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 11.9%
20,000 5.65%, due 10/04/95 19,987
--------
TOTAL U.S. GOVERNMENT AND
AGENCY SECURITIES 20,557
--------
FLOATING RATE MEDIUM-TERM NOTES - 7.8%
8,000 Household Finance Corp.
5.86%, due 10/28/95 8,000
5,000 Wachovia Bank of NC
5.81%, due 5/31/96 5,000
--------
TOTAL FLOATING RATE MEDIUM-TERM NOTES 13,000
--------
TOTAL INVESTMENTS - 102.0% 170,543
Liabilities, less Other Assets (3,285)
--------
NET ASSETS $167,258
========
</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 September 30, 1995, the total market value of such securities is
$6,961,000 or 4.2% of net assets.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ISSUE ACQUISITION DATE COST (000'S)
- --------------------------------------------------------------------------------
<S> <C> <C>
Receivables Capital Corp. 8/31/95 $3,943,000
5.70, due 11/29/95
Receivables Capital Corp. 8/21/95 2,980,000
5.75, due 10/02/95
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
================================================================================
- 5 -
<PAGE> 8
================================================================================
REPORT FROM THE FUND MANAGER
SAFECO TAX-FREE MONEY MARKET FUND
November 1, 1995
[PHOTO] Mary V. Metastasio
The SAFECO Tax-Free Money Market Fund continued to outperform its peers
throughout the period, as can be seen by the graph inside the front cover of
this report. It has also performed well when compared to taxable short-term
options, ending the period at a taxable equivalent yield of 5.93% (based on the
maximum federal tax bracket of 39.6%). Our policy of purchasing very high
quality, liquid securities which are not subject to federal income tax or
alternative minimum tax contributes to this superior performance.
Your tax-free money market fund began the six-month reporting period ending
September 30, 1995 with a 7-day average yield of 3.51% and ended it at 3.58%.
Interest rates have not been as steady as these figures imply, however. The
Fund's yield ranged from a high of 3.97% in mid-May to a low of 2.97% in
mid-July.
This fluctuation and rising of yields at a time when interest rates in
general are falling is due to supply and demand.
The tax-exempt money market has always been supply and demand driven. The
market itself is much smaller than the taxable money market, and therefore more
easily affected by these factors. Issuance (supply) tends to be both cyclical
and political, as municipalities' use of short-term debt is tied to the fiscal
years of the issuers and the fiscal beliefs of their leaders.
On the demand side, we see fluctuations as well. For example, investors
frequently use tax-free money market funds as a place to park cash while
evaluating other investment opportunities. Asset levels fall when investors find
stocks and long-term bonds to be attractive investments, and they rise when
investors move out of these markets into cash.
During the last six months, issuance has been quite low, minimizing supply
shifts. Demand, on the other hand, has varied considerably as indicated by total
assets of tax-free money market funds. These assets have ranged from $113 to
$124 billion during the period. As the demand for short-term tax-exempt debt
influences the interest rates that must be offered to attract investors, these
asset level changes have greatly influenced fund yield levels. As the reporting
period drew to a close, total assets of tax-free funds (demand) fell, and
interest rates rose correspondingly.
The future will undoubtedly bring us a tax-exempt money market which
continues to be driven by supply and demand, as well as the economic factors
which affect all markets. We will maintain the majority of our fund assets in
very short maturity securities, giving us a great deal of flexibility to respond
to changes in the market, with the remainder in longer maturities which allow us
to lock in some higher yields.
We anticipate that we will continue to be well-positioned to provide our
shareholders with safety, liquidity, and an attractive and competitive tax-free
yield for their short-term investment needs in any market environment.
/s/ Mary V. Metastasio
- ----------------------
Mary V. Metastasio
================================================================================
- 6 -
<PAGE> 9
<TABLE>
<CAPTION>
==================================================================================================================
HIGHLIGHTS
SAFECO TAX-FREE
MONEY MARKET FUND
As of September 30, 1995 (Unaudited)
<S> <C>
WEIGHTED AVERAGE MATURITY 65 DAYS
==================================================================================================================
TOTAL RETURN (1 YEAR) 3.42%
TOP FIVE STATES PERCENT OF NET ASSETS
==================================================================================================================
Washington 12.2%
Texas 10.7%
California 8.8%
Arizona 7.4%
Georgia 6.3%
PORTFOLIO CREDIT QUALITY PERCENT OF PORTFOLIO
==================================================================================================================
Highest Rated(1) 98.4%
Split Rated(2) 0.0%
Not Rated(3) 1.6%
------
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.
<TABLE>
<CAPTION>
==================================================================================================================
SAFECO TAX-FREE MONEY MARKET FUND
TOP 5 TYPES OF BONDS AS A PERCENT OF NET ASSETS
AS OF SEPTEMBER 30, 1995
<S> <C>
Graph here shows the percentage
[GRAPH 4] of total assets invested in each
of the five largest types of
* Industrial Development Revenue/Pollution Control Revenue investments held by the Fund.
</TABLE>
<TABLE>
<CAPTION>
==================================================================================================================
SAFECO TAX-FREE MONEY MARKET FUND
COMPARISON OF THE FUND'S TAX-EQUIVALENT YIELDS
TO THE AVERAGE TAXABLE MONEY MARKET FUND YIELD
<S> <C>
[GRAPH 5] Graph here compares
the IBC/Donoghue
* Represents IBC/Donoghue Taxable Money Fund on September 25, 1995. Taxable Money Fund yield
on September 25, 1995 to
** Represents the SAFECO Tax-Free Money Market Fund actual yield on September the Fund's tax-equivalent
30, 1995 and related tax-equivalent yields assuming various shareholder tax yield assuming various
brackets. shareholders' tax brackets.
Tax-equivalent yield comparisons vary with market conditions.
==================================================================================================================
</TABLE>
- 7 -
<PAGE> 10
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
MUNICIPAL BONDS - 102.2%
ALASKA - 3.2%
Alaska Industrial Development and
Export Authority Revenue
$1,295 4.60%, due 7/01/98, put date 10/06/95 $1,295
1,015 4.60%, due 7/01/01, put date 10/06/95 1,015
ARIZONA - 7.4%
3,600 Apache County Industrial
Development Authority Pollution
Control Revenue (Tucson Electric
Power Co. Project)
4.375%, due 6/15/20, put date 10/06/95 3,600
1,000 Apache County Industrial
Development Authority Revenue
(Tucson Electric Power Co.
Springerville Project)
4.35%, due 12/15/18, put date 10/06/95 1,000
800 Pima County Industrial
Development Authority Revenue
(Tucson Electric Power Co. Projects)
4.35%, due 12/01/22, put date 10/06/95 800
CALIFORNIA - 8.8%
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
200 Irvine Ranch Water District
Consolidated Series 1989
5.10%, due 6/01/15, put date 10/01/95 200
2,500 Orange County (Irvine Coast
Assessment District #88-1)
4.70%, due 9/02/18, put date 10/01/95 2,500
1,000 Orange County Local Transportation
Authority Sales Tax Revenue
3.60%, due 11/07/95 1,000
700 Orange County Water
District 1990 Project B
4.85%, due 8/15/15, put date 10/01/95 700
1,000 South Coast Local Education
Agencies Pooled Tax and Revenue
Anticipation Notes
5.00%, due 8/14/96 1,004
COLORADO - 2.0%
1,500 South Denver Metropolitan
District General Obligation
4.00%, due 12/01/05, put date 12/01/95 1,500
DISTRICT OF COLUMBIA - 1.4%
1,000 District of Columbia Supplemental
Student Loan Revenue
4.10%, due 7/01/04, put date 7/01/96 1,000
FLORIDA - 3.6%
850 Dade County Equipment Special
Obligation Revenue
4.50%, due 10/01/99, put date 10/06/95 850
1,280 Florida Housing Finance Agency
Multifamily Revenue
5.00%, due 12/01/09, put date 12/01/95 1,280
470 Jacksonville Electric Authority Revenue
(St. Johns River)
7.25%, due 10/01/13, call date 10/02/95 470
</TABLE>
See Notes to Financial Statements
================================================================================
- 8 -
<PAGE> 11
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
GEORGIA - 6.3%
$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
2,075 Municipal Electric Authority of Georgia
4.90%, due 3/01/20, put date 3/01/96 2,075
ILLINOIS - 3.2%
2,320 Chicago (O'Hare International
Airport) Revenue
4.35%, due 1/01/15, put date 10/06/95 2,320
IOWA - 2.7%
1,000 Iowa Municipalities Workers Compensation
Association Revenue
4.10%, due 7/01/97, put date 7/01/96 1,000
1,000 Iowa School Corporations
Warrant Certificates
4.375%, due 6/28/96 1,006
KANSAS - 4.1%
2,000 Manhattan Commercial Development
Revenue (Kan/Del Hotel)
4.80%, due 8/01/16, put date 10/06/95 2,000
1,000 Wichita Revenue (CSJ Health System)
4.40%, due 10/01/11, put date 10/06/95 1,000
KENTUCKY - 1.4%
1,000 Clark County Pollution Control
Revenue (East Kentucky Power Co-op)
4.15%, due 10/15/14, put date 10/15/95 1,000
LOUISIANA - 1.4%
1,000 Louisiana Public Facilities Authority
Special Insurance Assessment Revenue
4.85%, due 12/01/13, put date 10/06/95 1,000
MARYLAND - 3.5%
2,075 Howard County Multifamily
Housing Revenue (Sherwood Crossing
Ltd. Partnership)
4.25%, due 6/01/08, put date 6/01/96 2,075
500 Montgomery County Industrial
Development Revenue (Information
Systems & Networks)
3.80%, due 4/01/14, put date 10/02/95 500
MISSOURI - 5.9%
2,100 Kansas City Industrial Development
Authority (Coach House II Project)
4.10%, due 12/01/15, put date 10/02/95 2,100
600 Kansas City Industrial Development
Authority Multifamily Housing
Revenue (J.C. Nichols Co.)
4.10%, due 5/01/15, put date 10/02/95 600
1,600 St. Louis Planned Industrial Expansion
Authority Industrial Development
Revenue (Italgrani U.S.A., Inc.)
4.00%, due 6/01/03, put date 10/02/95 1,600
MONTANA - 4.7%
1,200 Forsyth, Rosebud County Pollution
Control Revenue (Pacificorp Project)
3.65%, due 1/01/18, put date 10/03/95 1,200
2,215 Havre Industrial Development Revenue
(Safeway, Inc. Projects)
3.95%, due 6/01/06, put date 12/01/95 2,215
NEW YORK - 1.4%
1,000 New York State Energy R & D
Authority PCR (Long Island Lighting
Co. Project) 1985 Series B
4.70%, due 3/01/16, put date 3/01/96 1,000
</TABLE>
See Notes to Financial Statements
================================================================================
- 9 -
<PAGE> 12
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
OHIO - 3.2%
$ 300 Akron Sanitary Sewer System Revenue
4.40%, due 12/01/14, put date 10/06/95 $ 300
2,000 Cleveland-Cuyahoga County Port
Authority Revenue (Rock and Roll
Hall of Fame and Museum Project)
4.40%, due 12/01/15, put date 10/06/95 2,000
OKLAHOMA - 1.4%
1,000 Oklahoma Water Resources Board
State Loan Program Revenue
3.95%, due 9/01/23, put date 3/01/96 1,000
PENNSYLVANIA - 0.2%
180 Commonwealth Tax Exempt
Mortgage Trust
4.20%, due 11/01/05, put date 11/01/95 180
SOUTH CAROLINA - 2.7%
1,250 York County Pollution Control
Revenue (North Carolina Electric
Membership Corp. Project) Series N-6
3.75%, due 9/15/14, put date 3/15/96 1,250
750 York County (Saluda River Electric
Coop., Inc. Project) Pooled Series 1984 E-2
3.80%, due 8/15/14, put date 2/15/96 750
TENNESSEE - 5.3%
3,400 Hamilton County Industrial
Development Revenue (Komatsu
American Manufacturing Corp.)
4.40%, due 11/01/05, put date 10/06/95 3,400
500 Knox County Industrial Development
Board Industrial Development
Revenue (Service Merchandise)
3.85%, due 12/01/08, put date 10/16/95 500
TEXAS - 10.7%
600 Austin Higher Education Authority, Inc.
Educational Facilities Revenue
(St. Edward's University)
4.15%, due 8/01/10, put date 10/02/95 600
2,700 Cedar Hill Industrial Development Corp.
Revenue (Minyard Properties Project)
3.95%, due 5/01/02, put date 10/02/95 2,700
Harris County Housing Finance Corp.
Multifamily Housing Revenue
(Arbor II, Ltd. Project)
1,000 4.20%, due 10/01/05, put date 10/01/95 1,000
1,000 3.95%, due 10/01/05, put date 10/01/96 1,000
1,500 State of Texas Tax and Revenue
Anticipation Notes Series 1995 A
4.75%, due 8/30/96 1,510
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
VIRGINIA - 4.1%
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)
3.80%, due 12/15/12, put date 11/08/95 1,000
WASHINGTON - 12.2%
2,000 Chelan County Public Utility
District #1 Revenue
4.20%, due 6/01/15, put date 10/06/95 2,000
</TABLE>
See Notes to Financial Statements
================================================================================
- 10 -
<PAGE> 13
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
WASHINGTON (CONTINUED)
$1,000 Seattle Municipal Power and
Light Revenue
3.40%, due 11/01/15, put date 11/07/95 $ 1,000
1,000 Washington Public Power Supply
System Project #2 Revenue
4.50%, due 7/01/00, put date 10/06/95 1,000
2,130 Washington State Housing
Finance Commission Revenue
(Pioneer Human Services)
3.85%, due 7/01/11, put date 7/07/95 2,130
1,535 Washington State Housing
Finance Commission Revenue
(YMCA of Greater Seattle Program)
4.70%, due 7/01/11, put date 10/16/95 1,535
1,200 Washington State Housing
Finance Commission Revenue
(YMCA of Snohomish County Program)
4.70%, due 8/01/19, put date 10/16/95 1,200
WYOMING - 1.4%
$1,000 Uinta County Pollution Control
Revenue (Chevron USA, Inc. Project)
3.75%, due 6/15/97, put date 12/15/95 $ 1,000
-------
TOTAL MUNICIPAL BONDS 74,460
-------
TOTAL INVESTMENTS - 102.2% 74,460
Liabilities, less Other Assets (1,574)
-------
NET ASSETS $72,886
=======
</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 September 30, 1995. These rates change periodically based
on specified market rates or indices.
See Notes to Financial Statements
================================================================================
- 11 -
<PAGE> 14
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES
As of September 30, 1995 (Unaudited)
<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
$170,543 and $74,460, respectively) $ 170,543 $ 74,460
Cash 5 --
Dividends and Interest Receivable 20 457
---------- ----------
Total Assets 170,568 74,917
---------- ----------
LIABILITIES
Payables
Capital Stock Redeemed 3,166 950
Investment Securities Purchased -- 1,000
Investment Advisory Fees 71 29
Dividends 26 21
Notes Payable -- 16
Other 47 15
---------- ----------
Total Liabilities 3,310 2,031
---------- ----------
NET ASSETS $ 167,258 $ 72,886
========== ==========
SHARES OUTSTANDING 167,258 72,886
========== ==========
NET ASSET VALUE PER SHARE
(Net Assets Divided by Shares Outstanding) $ 1.00 $ 1.00
========== ==========
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
================================================================================
- 12 -
<PAGE> 15
================================================================================
STATEMENTS OF OPERATIONS
For the Six Months Ended September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
(In Thousands) SAFECO MONEY MARKET FUND SAFECO TAX-FREE MONEY MARKET FUND
====================================================================================================================
<S> <C> <C>
INVESTMENT INCOME
Interest $ 5,203 $ 1,600
EXPENSES
Investment Advisory Fees (Note 2) 431 191
Shareholder Servicing Fees (Note 2) 222 40
Custodian Fees 15 9
Legal and Auditing Fees 9 7
Reports to Shareholders 10 2
Trustees' Fees 3 3
Loan Interest Expense 2 3
---------- ----------
Total Expenses 692 255
NET INVESTMENT INCOME AND NET CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 4,511 $ 1,345
========== ==========
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
================================================================================
- 13 -
<PAGE> 16
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
SAFECO MONEY MARKET FUND SAFECO TAX-FREE MONEY MARKET FUND
------------------------ ---------------------------------
FOR THE FOR THE FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
SEPTEMBER 30 MARCH 31 SEPTEMBER 30 MARCH 31
(In Thousands) 1995 1995 1995 1995
====================================================================================================================
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 4,511 $ 6,996 $ 1,345 $ 2,363
DIVIDENDS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME (4,511) (6,996) (1,345) (2,363)
TRUST SHARE TRANSACTIONS (4,700) (14,354) (4,434) (17,269)
--------- ---------- ---------- ---------
TOTAL CHANGE IN NET ASSETS (4,700) (14,354) (4,434) (17,269)
NET ASSETS AT BEGINNING OF PERIOD 171,958 186,312 77,320 94,589
--------- ---------- ---------- ---------
NET ASSETS AT END OF PERIOD $ 167,258 $ 171,958 $ 72,886 $ 77,320
========= ========== ========== =========
- --------------------------------------------------------------------------------------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN TRUST SHARES AND AMOUNTS
SHARES SOLD 490,293 1,216,336 62,506 176,342
SHARES REINVESTED 3,876 5,911 1,176 2,024
SHARES REDEEMED (498,869) (1,236,601) (68,116) (195,635)
--------- ---------- ---------- ---------
NET CHANGE (4,700) (14,354) (4,434) (17,269)
========= ========== ========== =========
Because share value is equal to $1.00,
dollar amounts and share amounts are identical.
As of September 30, 1995
Shares Authorized Unlimited Unlimited
Par Value Per Share $ .001 $ .001
Paid in Capital $ 167,258 $ 72,886
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
================================================================================
- 14 -
<PAGE> 17
================================================================================
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
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
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 satisfy
conditions which will enable it to designate its dividends from net investment
income as tax-exempt dividend distributions.
================================================================================
- 15 -
<PAGE> 18
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
2. 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 equivalent to commercial bank interest
rates. On September 30, 1995, the Tax-Free Money Market Fund had a loan
outstanding with SAFECO Services Corporation of $15,660. The note was repaid on
October 2, 1995.
3. FINANCIAL HIGHLIGHTS
SAFECO MONEY MARKET FUND
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
SEPTEMBER 30 FOR THE YEAR ENDED MARCH 31
------------------------------------------------------------------
(For a Share Outstanding Throughout the Period) 1995 1995 1994 1993 1992
=======================================================================================================================
<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 0.04 0.02 0.03 0.05
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.03) (0.04) (0.02) (0.03) (0.05)
--------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
TOTAL RETURN 2.63%** 4.20% 2.48% 2.98% 5.04%
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 167,258 $ 171,958 $ 186,312 $ 144,536 $ 184,823
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.83%* 0.78% 0.79% 0.77% 0.73%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.38%* 4.21% 2.47% 3.02% 5.05%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized
** Not Annualized
================================================================================
- 16 -
<PAGE> 19
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
3. FINANCIAL HIGHLIGHTS
SAFECO TAX-FREE MONEY MARKET FUND
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED
SEPTEMBER 30 FOR THE YEAR ENDED MARCH 31
------------------------------------------------------------------
(For a Share Outstanding Throughout the Period) 1995 1995 1994 1993 1992
=======================================================================================================================
<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 0.02 0.03 0.02 0.03 0.04
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.02) (0.03) (0.02) (0.03) (0.04)
-------- --------- -------- --------- --------
NET ASSET VALUE AT END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ========= ======== ========= ========
TOTAL RETURN 1.76%** 2.84% 1.98% 2.53% 3.94%
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 72,886 $ 77,320 $ 94,589 $ 82,098 $ 79,849
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.67%* 0.64% 0.64% 0.61% 0.62%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 3.54%* 2.79% 1.96% 2.48% 3.83%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Not Annualized.
================================================================================
- 17 -
<PAGE> 20
================================================================================
SAFECO MONEY MARKET FUNDS -------------
BULK RATE
BOARD OF TRUSTEES U.S. POSTAGE
BOH A. DICKEY, CHAIRMAN P A I D
BARBARA J. DINGFIELD SAFECO
RICHARD W. HUBBARD INSURANCE CO.
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. DANK OF WASHINGTON N.A.
