<PAGE> 1
Registration Nos. 2-25272/811-3347
- --------------------------------------------------------------------------------
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. 16 /X/
--------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 17
--------
/X/
(Check appropriate box or boxes.)
SAFECO Money Market Trust
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
SAFECO Plaza, Seattle, Washington 98185
---------------------------------------- --------
(Address of Principal Executive Offices) Zip Code
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)
-----
on pursuant to paragraph (b)
----- ------------------
X 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 ________, 1995.
================================================================================
The Exhibit Index is at page ___.
<PAGE> 2
SAFECO MONEY MARKET TRUST
Registration Statement on Form N-1A
Cross Reference Sheet
Part A
------
<TABLE>
<CAPTION>
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> 3
<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
Part B
------
Location in Statement
Item No. of Additional Information
- -------- -------------------------
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 Other Services Investment Advisory and
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
of Securities Being Offered On Calculation of Net Asset Value Per Share; Redemption
in Kind
Item 20. Tax Status Additional Tax Information Regarding the Tax-Free
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Money Fund
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> 5
SAFECO MONEY MARKET
FUND
SAFECO TAX-FREE MONEY
MARKET FUND JULY 28, 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 28, 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:
<TABLE>
<S> <C> <C>
Nationwide 1-800-624-5711 SAFECO Mutual Funds
Seattle 206-545-7319 P.O. Box 34890
Seattle, WA 98124-1890
</TABLE>
Hearing Impaired TTY/TDD Service 1-800-438-8718
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> 6
TABLE OF CONTENTS
<TABLE>
<S> <C>
Introduction to the Trust and the Funds......................
Fund Expenses................................................
Financial Highlights.........................................
The Trust and Each Fund's Investment Policies................
Information about Share Ownership and Companies that
Provide Services to the Trust.........................
Performance Information......................................
Fund Distributions and How They are Taxed....................
Tax-Deferred Retirement Plans................................
Account Statements...........................................
Account Changes and Signature Requirements...................
Share Price Calculation......................................
How to Purchase Shares.......................................
How to Redeem Shares.........................................
How to Systematically Purchase or Redeem Shares..............
How to Exchange Shares from One Fund to Another..............
Telephone Transactions.......................................
Transactions Through Registered Investment Advisers..........
</TABLE>
-2-
<PAGE> 7
- ---------------------------------------
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 which 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 preservation 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 each of
the Funds is that a Fund can 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 $___ 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:
o Seeks to maintain a $1.00 per share net asset value.
o Is 100% no-load; there are no sales or redemption charges or 12b-1 fees.
o Offers free exchanges as well as easy access to your money through telephone
redemptions and wire transfers.
o Pays dividends monthly.
o 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> 8
- -------------
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 .% .%
Tax-Free
Money Fund .% None .% .%
</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 ____ 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 $ $ $ $
Tax-Free
Money Fund $ $ $ $
</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 FUND'S 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.
-4-
<PAGE> 9
FINANCIAL HIGHLIGHTS
SAFECO Money Market Fund
[To be filed by subsequent amendment]
-5-
<PAGE> 10
FINANCIAL HIGHLIGHTS
SAFECO Tax-Free Money Market Fund
[To be filed by subsequent amendment]
-6-
<PAGE> 11
- ---------------------------------------------
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 under
each Fund's description and "Common Investment Practices" 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
-7-
<PAGE> 12
paper issued in the U.S. by foreign entities. The Fund will only
purchase such securities provided that in the opinion of SAM the
security is of an investment quality comparable to other
obligations that may be purchased by the Fund.
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 soveriegn
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
-8-
<PAGE> 13
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 vote. 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 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 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,
the 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
-9-
<PAGE> 14
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"), 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 not invest more than 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 permit 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, and 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
-10-
<PAGE> 15
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.
- -----------------------------------------------
INFORMATION ABOUT SHARE OWNERSHIP AND COMPANIES
THAT PROVIDE SERVICES 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 and generally provides for indemnification out of
Trust or Fund property of any shareholder nevertheless held personally liable
for Trust or Fund obligations, respectively.
-11-
<PAGE> 16
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 __% and __%, 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 __% and __%, 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.
-12-
<PAGE> 17
- -----------------------
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
-13-
<PAGE> 18
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 teh Money Fund.
TAXES
Each Fund intends to continue to qualify for 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 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.
-14-
<PAGE> 19
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 Corporation
offers a low-cost administration package that includes a prototype plan,
recordkeeping, testing and employee communications. Minimum investment amounts
are negotiable.
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 1-800-278-2985.
- ------------------
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
accountincluding 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 consider 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 via
-15-
<PAGE> 20
telephone request 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.
_______________________
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.
-16-
<PAGE> 21
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.
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
-17-
<PAGE> 22
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 ___ for important information.
THROUGH REGISTERED INVESTMENT ADVISERS
Please read "Transactions Through Registered Investment Advisers" on page __
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 __ for more information.
- --------------------
HOW TO REDEEM SHARES
- --------------------
BY WRITTEN REQUEST
Shares may be redeemed by sending a letter which 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 ___ 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 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 ______ for important information.
-18-
<PAGE> 23
BY REDEMPTION CHECK
SAFECO Services will send to you, free of charge, redemption checks (drafts)
payable through U.S. Bank of Washington, N.A., within 10 business days after
receipt of your written request. 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 ___ for further
information.
THROUGH REGISTERED INVESTMENT ADVISERS
Please read "Transactions Through Registered Investment Advisers" on page ___
for important information.
PLEASE NOTE THE FOLLOWING:
o 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.
o SAFECO Services charges a $10 fee to wire redemption proceeds. In
addition, some banks may charge a fee to receive wires.
o If shares are issued in certificate form, the certificates must
accompany a redemption request and be duly endorsed.
o 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.
-19-
<PAGE> 24
- -----------------------------------------------
HOW TO SYSTEMATICALLY PURCHASE OR REDEEM SHARES
- -----------------------------------------------
Call 1-800-426-6730 or 206-645-5530, 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 ___ 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.
-20-
<PAGE> 25
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 _____ for important information.
THROUGH REGISTERED INVESTMENT ADVISERS
Please read "Transactions Through Registered Investment Advisers" on page __
for important information.
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 6:00 a.m. and 5:00 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
-21-
<PAGE> 26
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 telephone 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).
-22-
<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.
-23-
<PAGE> 28
PROSPECTUS
<TABLE>
<S> <C>
TO REQUEST A PROSPECTUS: July 28, 1995
Nationwide: 1-800-426-6730 SAFECO Money Market Fund
Seattle: 206-545-5530
SAFECO Tax-Free Money Market Fund
FOR 24-HOUR PERFORMANCE FIGURES:
Nationwide: 1-800-835-4391 No-Load Funds
Seattle: 206-545-5113
FOR ACCOUNT INFORMATION OR TELEPHONE
TRANSACTIONS*:
Nationwide: 1-800-624-5711
Seattle: 206-545-7319
Hearing Impaired TTY/TDD Service:
1-800-438-8718
*ALL TELEPHONE CALLS ARE TAPE-
RECORDED FOR YOUR PROTECTION.
Mailing Address:
SAFECO MUTUAL FUNDS
P.O. Box 34890
Seattle, Washington 98124-1890
SAFECO Securities, Inc.
Distributor
</TABLE>
-24-
<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 28, 1995.
The date of this Statement of Additional Information is July 28, 1995.
<TABLE>
- ------------------------------------------------------------------------------------------
TABLE OF CONTENTS
<S> <C> <C> <C>
Overview of Investment Policies 2 Additional Information
on Dividends 13
Investment Policies of the 2
Money Fund
Investment Policies of the 4 Trustees and Officers 13
Tax-Free Money Fund
Principal Shareholder of the 16
Tax-Free Money Fund
Additional Investment Information 7 Investment Advisory and 17
Other Services
Additional Tax Information 11
Regarding the Tax-Free Brokerage Practices 19
Money Fund
Redemption in Kind 20
Additional Information On 11
Calculation of Net Asset
Value Per Share
Financial Statements 20
Additional Performance 12
Information Description of Ratings 20
</TABLE>
-1-
<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, as well as
those investment activities that are prohibited. 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 will be deemed the issuer.
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;
-2-
<PAGE> 31
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 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
-3-
<PAGE> 32
in real estate;
14. Invest in interests in oil, gas or other mineral exploration or
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
-4-
<PAGE> 33
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
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
-5-
<PAGE> 34
objective, policies and restrictions, and through investments in
qualified repurchase agreements;
10. Purchase or sell commodities or commodity contracts or invest in oil,
gas 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;
-6-
<PAGE> 35
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 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.
-7-
<PAGE> 36
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
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 extent
privately 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.
-8-
<PAGE> 37
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 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
-9-
<PAGE> 38
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
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
-10-
<PAGE> 39
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 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
-11-
<PAGE> 40
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 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, 1994 was____% and____%, 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____% and____%,
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
-12-
<PAGE> 41
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 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>
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 Trustee Manager, Corporate Contributions and
Microsoft Corporation Community Programs for Microsoft
One Microsoft Way Corporation, Redmond, Washington, a computer
Redmond, WA 98052 software company;
(49)
</TABLE>
-13-
<PAGE> 42
<TABLE>
<CAPTION>
Position Held Principal Occupation
Name, Address and Age with the Trust During Past 5 Years
- --------------------- -------------- --------------------
<S> <C> <C>
Director and former 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;
Richard W. Hubbard* Trustee Retired Vice President and Treasurer of
1270 NW Blakely Court the 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 Communications, Seattle,
Room 1802 Washington; Director of Key Bank of Washington,
Seattle, Washington 98191 Seattle, Washington; Director of PREMERA;
(60) Director of Blue Cross of Washington and
Alaska; Director of First SAFECO National
Life Insurance Company of New York.
John W. Schneider Trustee President of Merit Hotel
1808 N 41st Street
Seattle, Washington 98103
(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>
Associates, Inc., Seattle, Washington;
former President of Coast Hotels, Inc.; Director of
First SAFECO National Life Insurance Company of New York.
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 As Part of Fund Benefits Upon Fund Complex Paid to
Trustee from Registrant Expenses Retirement Trustees
------- --------------- ---------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Barbara J. Dingfield $ $ $ $
Richard E. Lundgren $ $ $ $
L.D. McClean $ $ $ $
Larry L. Pinnt $ $ $ $
John W. Schneider $ $ $ $
Boh A. Dickey $ $ $ $
Richard W. Hubbard $ $ $ $
</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
$____ 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.
PRINCIPAL SHAREHOLDER OF THE TAX-FREE MONEY FUND
As of June 30, 1995, SAFECO Insurance Company of America ("SAFECO"), a
Washington corporation, SAFECO Plaza, Seattle, Washington 98185, owned ___% of
the Tax-Free Money Fund's outstanding shares. SAFECO is a wholly-owned
subsidiary of SAFECO Corporation, a Washington corporation, having its
principal place of business at SAFECO Plaza, Seattle, Washington 98185.
-16-
<PAGE> 45
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 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
D. F. Hill President Senior Vice President President
President Director Director
Director
N. A. Fuller Vice President Vice President Vice President Vice President
Controller Controller Controller Controller
Assistant Secretary Secretary Assistant Secretary Assistant Secretary
Treasurer Treasurer Treasurer
R.L. Spaulding Vice President Director
Treasurer
S. C. Bauer President
</TABLE>
Mr. Dickey is Chief Financial Officer, Executive Vice Presidentand a director
of SAFECO Corporation and Mr. Spaulding is Assistant 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:
-17-
<PAGE> 46
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%
Over $750,000,000 .25 of 1%
</TABLE>
TAX-FREE MONEY FUND
<TABLE>
<CAPTION>
NET ASSETS 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>
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:
<TABLE>
<CAPTION>
Years Ended
March 31, 1995 March 31, 1994 March 31, 1993
-------------- -------------- --------------
<S> <C> <C> <C>
Money Fund $ $690,549 $764,611
Tax-Free
Money Fund $ $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,
-18-
<PAGE> 47
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
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:
<TABLE>
<CAPTION>
Years Ended
March 31, 1995 March 31 1994 March 31, 1993
-------------- ------------- --------------
<S> <C> <C> <C>
Money Fund $ $308,090 $329,550
Tax-Free
Money Fund $ $ 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.
-19-
<PAGE> 48
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 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 for each of the Money and Tax-Free Money
Funds and the report thereon of Ernst & Young LLP, independent auditors, are
incorporated 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:
-20-
<PAGE> 49
. 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 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.
-21-
<PAGE> 50
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
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 auditor, 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____, 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 Ernst & Young, Independent Auditor *
(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______, 1995.
* To be filed by subsequent amendment.
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 Life Insurance Company owns 100% of SAFECO National Life
Insurance
<PAGE> 53
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 April 30, 1995, the Registrant had_____ and_____ 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 Series of the Registrant to
the fullest extent permitted by law against
<PAGE> 54
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 of the
Securities and Exchange Commission, such indemnification is against
<PAGE> 55
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 Seattleand State of Washington on the 26th day of May, 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
- -------------------------
David F. Hill Principal Executive Officer 5/26/95
-------------
RONALD L. SPAULDING* Vice President
- ------------------------- -------------
Ronald L. Spaulding Treasurer
NEAL A. FULLER* Vice President
- ------------------------- -------------
Neal A. Fuller Controller and
Assistant Secretary
(Principal Financial
Officer)
/s/ BOH A. DICKEY Chairman and Trustee 5/26/95
- ------------------------- -------------
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. 16
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Description of Document Page
- ------- ----------------------- ----
<S> <C>
(27.1-2) Financial Data Schedule *
(99.1) Trust Instrument/Certificate of Trust
(99.2) Bylaws
(99.4) Stock Certificate
(99.5) Investment Advisory and Management Contract
(99.6) Distribution Agreement
(99.8) Custody Agreement
(99.9) Transfer Agent Agreement
(99.10) Opinion of Counsel
(99.11) Consent of Independent Auditors *
(99.12) Registrants Annual Report for the Year Ended *
March 31, 1995+ including Financial Statements
(99.13) Subscription Agreement
(99.16) Calculation of Performance Information *
</TABLE>
+ Filed with the SEC on or about_______, 1995 (File No. 811-3347).
* To be filed by subsequent amendment.
<PAGE> 1
EXHIBIT NO. 99.1
TRUST INSTRUMENT/CERTIFICATE OF TRUST
<PAGE> 2
EXHIBIT 99.1
CERTIFICATE OF TRUST
OF
SAFECO MONEY MARKET TRUST
This Certificate of Trust ("Certificate") is filed in accordance with
the provisions of the Delaware Business Trust Act (12 Del. Code Ann. Tit. 12
Section 3810 et seq.) and sets forth the following:
1. The name of the trust is: SAFECO Money Market Trust
("Trust").
2. The business address of the registered office of the Trust and
of the registered agent of the Trust is:
The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
3. This Certificate is effective upon filing.
4. The Trust is a Delaware business trust registered under the
Investment Company Act of 1940. Notice is hereby given that the Trust shall
consist of one or more series. The debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular series of the Trust shall be enforceable against the assets of such
series only, and not against the assets of the Trust generally or any other
series.
IN WITNESS WHEREOF, the undersigned, being the initial Trustees, have
executed this Certificate on this 13th day of May, 1993.
/S/ BOH A. DICKEY
------------------
Boh A. Dickey, as
Trustee and not individually
/S/ RICHARD W. HUBBARD
----------------------
Richard W. Hubbard, as
Trustee and not individually
<PAGE> 3
Address: SAFECO Plaza
Seattle, Washington 98185
STATE OF WASHINGTON
CITY OF SEATTLE
Before me this 13th day of May, 1993, personally appeared the above-named
Boh A. Dickey and Richard W. Hubbard, known to me to be the persons who
executed the foregoing instrument and who acknowledged that they executed the
same.
/S/BETTY J. SCHOOLING
---------------------
Notary Public
My Commission Expires: August 4, 1993
<PAGE> 4
SAFECO MONEY MARKET TRUST
TRUST INSTRUMENT
This TRUST INSTRUMENT is made on May 13, 1993, by the Trustees, to
establish a business trust for the investment and reinvestment of funds
contributed to the Trust by investors. The Trustees declare that all money and
property contributed to the Trust shall be held and managed in trust pursuant
to this Trust Instrument. The name of the Trust created by this Trust
Instrument is SAFECO Money Market Trust.
ARTICLE I
DEFINITIONS
Unless otherwise provided or required by the context:
(a) "Bylaws" means the Bylaws of the Trust adopted by the Trustees,
as amended from time to time;
(b) "Class" means the class of Shares of a Series established
pursuant to Article IV;
(c) "Commission," "Interested Person," and "Principal Underwriter"
have the meanings provided in the 1940 Act;
(d) "Covered Person" means a person so defined in Article IX, Section
2;
(e) "Delaware Act" means Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to time;
(f) "Majority Shareholder Vote" means "the vote of a majority of the
outstanding voting securities" as defined in the 1940 Act;
(g) "Net Asset Value" means the net asset value of each Series of the
Trust, determined as provided in Article V, Section 3;
<PAGE> 5
(h) "Outstanding Shares" means Shares shown on the books of the Trust
or its transfer agent as then issued and outstanding, but does not include
Shares which have been repurchased by the Trust;
(i) "Series" means a series of Shares established pursuant to Article
IV;
(j) "Shareholder" means a record owner of Outstanding Shares;
(k) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest of each Series or Class is divided
from time to time (including whole Shares and fractions of Shares);
(l) "Trust" means SAFECO Money Market Trust established hereby, and
reference to the Trust, when applicable to one or more Series, refers to that
Series;
(m) "Trustees" means the persons who have signed this Trust
Instrument, so long as they shall continue in office in accordance with the
terms hereof, and all other persons who may from time to time be duly qualified
and serving as Trustees in accordance with Article II, in all cases in their
capacities as Trustees hereunder;
(n) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the Trust or any
Series or the Trustees on behalf of the Trust or any Series;
(o) The "1940 Act" means the Investment Company Act of 1940, as
amended from time to time.
ARTICLE II
TRUSTEES
Section 1. Management of the Trust. The business and affairs of the
Trust shall be managed by or under the direction of the Trustees, and they
shall have all powers necessary or desirable to carry out that responsibility.
The Trustees may execute all instruments and take all action they deem
necessary or desirable to promote the interests of the Trust. Any
determination made by the Trustees in good faith as to what is in the interests
of the Trust shall be conclusive. The Trustees, in their capacity as such,
shall not be expected to devote their entire time to the business and affairs
of the Trust.
Section 2. Initial Trustees; Number, Election and Qualification of
Trustees. The initial Trustees shall be the persons initially signing this
Trust Instrument. The number of Trustees (other than the initial Trustees)
shall be fixed from time
- 2 -
<PAGE> 6
to time by a majority of the Trustees; provided, that there shall be at least
two (2) Trustees. The Shareholders shall elect the Trustees (other than the
initial Trustees) on such dates as the Trustees may fix from time to time.
Section 3. Term of Office. Each Trustee shall hold office for life,
or until he or she reaches seventy-two (72) years of age, or until his or her
successor is elected, or the Trust terminates; except that (a) any Trustee may
resign by delivering to the Board of Trustees or to any Trust officer a written
resignation effective upon such delivery or a later date specified therein; (b)
any Trustee may be removed with or without cause at any time by a written
instrument signed by at least two-thirds of the other Trustees, specifying the
effective date of removal; (c) any Trustee who has become physically or
mentally incapacitated or is otherwise unable to serve, may be retired by a
written instrument signed by a majority of the other Trustees, specifying the
effective date of retirement; and (d) any Trustee may be removed at any meeting
of the Shareholders by a vote of at least two-thirds of the Outstanding Shares.
Section 4. Vacancies; Appointment of Trustees. Whenever a vacancy
shall exist in the Board of Trustees, regardless of the reason for such
vacancy, the remaining Trustees shall appoint any person as they determine in
their sole discretion to fill that vacancy, subject to Sections 10 and 16(a) of
the 1940 Act. Such appointment shall be made by a written instrument signed by
a majority of the Trustees or by a resolution of the Trustees, duly adopted and
recorded in the records of the Trust, specifying the effective date of the
appointment. The Trustees may appoint a new Trustee as provided above in
anticipation of a vacancy expected to occur because of the retirement,
resignation, or removal of a Trustee, or an increase in number of Trustees,
provided that such appointment shall become effective only at or after the
expected vacancy occurs. As soon as any such Trustee has accepted his
appointment in writing, the trust estate shall vest in the new Trustee,
together with the continuing Trustees, without any further act or conveyance,
and he shall be deemed a Trustee hereunder.
Section 5. Chairman. The Trustees shall appoint one of their number
to be Chairman of the Board of Trustees. The Chairman shall preside at all
meetings of the Trustees and the Shareholders and shall perform such other
powers and duties as may from time to time be assigned by the Board of Trustees
or prescribed by the Bylaws.
Section 6. Action by the Trustees. The Trustees shall act by majority
vote at a meeting duly called (including at a telephonic meeting, unless the
1940 Act requires that a particular action be taken only at a meeting of
Trustees in person) at which a quorum is present or by written consent of a
majority of Trustees (or such greater number as may be required by applicable
law) without a meeting. A majority of the Trustees shall constitute a quorum
at
- 3 -
<PAGE> 7
any meeting. Meetings of the Trustees may be called orally or in writing by
the President of the Trust, the Secretary of the Trust, the Chairman of the
Board of Trustees, or by any two other Trustees. Notice of the time, date and
place of all Trustees meetings shall be given to each Trustee in person or by
telephone, telegram, facsimile or other electronic mechanism sent to his or her
home or business address at least twenty-four hours in advance of the meeting
or by written notice mailed to his or her home or business address at least
seventy-two hours in advance of the meeting. Oral notice is deemed to be given
upon communication. Written notice is deemed to be given, if mailed, when
deposited in the United States mail, postage pre-paid, or if sent by telegram,
facsimile or other electronic transmission, when dispatched, to the address,
telephone number or other number of the Trustee as it appears on the records of
the Trust. Notice need not be given to any Trustee who attends the meeting
without objecting to the lack of notice or who signs a waiver of notice either
before or after the meeting. Subject to the requirements of the 1940 Act, the
Trustees by majority vote may delegate to any Trustee or Trustees authority to
approve particular matters or take particular actions on behalf of the Trust.
Any written consent or waiver may be provided and delivered to the Trust by
facsimile or other similar electronic mechanism.
Section 7. Ownership of Trust Property. The Trust Property of the
Trust and of each Series shall be held separate and apart from any assets now
or hereafter held in any capacity other than as Trustee hereunder by the
Trustees or any successor Trustees. All of the Trust Property and legal title
thereto shall at all times be considered as vested in the Trustees on behalf of
the Trust, except that the Trustees may cause legal title to any Trust
Property to be held by or in the name of the Trust, or in the name of any
person as nominee. No Shareholder shall be deemed to have a severable
ownership in any individual asset of the Trust or of any Series or any right of
partition or possession thereof, but each Shareholder shall have, as provided
in Article IV, a proportionate undivided beneficial interest in the Trust or
Series represented by Shares.
Section 8. Effect of Trustees Not Serving. The death, resignation,
retirement, removal, incapacity, or inability or refusal to serve of the
Trustees, or any one of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Trust Instrument.
Section 9. Trustees, etc. as Shareholders. Subject to any
restrictions in the Bylaws, any Trustee, officer, agent or independent
contractor of the Trust may acquire, own and dispose of Shares to the same
extent as any other Shareholder; the Trustees may issue and sell Shares to and
buy Shares from any such person or any firm or company in which such person is
interested, subject only to any general limitations herein.
- 4 -
<PAGE> 8
ARTICLE III
POWERS OF THE TRUSTEES
Section 1. Powers. The Trustees in all instances shall act as
principals, free of the control of the Shareholders. The Trustees shall have
full power and authority to take or refrain from taking any action and to
execute any contracts and instruments that they may consider necessary or
desirable in the management of the Trust. The Trustees shall not in any way be
bound or limited by current or future laws or customs applicable to trust
investments, but shall have full power and authority to make any investments
which they, in their discretion, deem proper to accomplish the purposes of the
Trust. The Trustees may exercise all of their powers without recourse to any
court or other authority. Subject to any applicable limitation herein or in
the Bylaws or resolutions of the Trust, the Trustees shall have power and
authority, without limitation:
(a) To invest and reinvest cash and other property, and to hold cash
or other property uninvested, without in any event being bound or limited by
any current or future law or custom concerning investments by trustees, and to
sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease
any or all of the Trust Property; to invest in obligations and securities of
any kind, and without regard to whether they may mature before the possible
termination of the Trust; and without limitation to invest all or any part of
its cash and other property in securities issued by a registered investment
company or series thereof, subject to the provisions of the 1940 Act;
(b) To operate as and carry on the business of a registered investment
company, and exercise all the powers necessary and proper to conduct such a
business;
(c) To adopt Bylaws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent such right is not reserved to the Shareholders;
(d) To elect and remove such officers and appoint and terminate such
agents as they deem appropriate;
(e) To employ as custodian of any assets of the Trust, subject to any
provisions herein or in the Bylaws, one or more banks, trust companies or
companies that are members of a national securities exchange, or other entities
permitted by the Commission to serve as such;
(f) To retain one or more transfer agents and Shareholder servicing
agents, or both;
- 5 -
<PAGE> 9
(g) To provide for the distribution of Shares either through a
Principal Underwriter as provided herein or by the Trust itself, or both, or
pursuant to a distribution plan of any kind;
(h) To set record dates in the manner provided for herein or in the
Bylaws;
(i) To delegate such authority as they consider desirable to any
officers of the Trust and to any agent, independent contractor, manager,
investment adviser, custodian or underwriter;
(j) To sell or exchange any or all of the assets of the Trust, subject
to Article X, Section 4;
(k) To vote or give assent, or exercise any rights of ownership, with
respect to other securities or property; and to execute and deliver powers of
attorney delegating such power to other persons;
(l) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(m) To hold any security or other property (i) in a form not
indicating any trust, whether in bearer, book entry, unregistered or other
negotiable form, or (ii) either in the Trust's or Trustees' own name or in the
name of a custodian or a nominee or nominees, subject to safeguards according
to the usual practice of business trusts or investment companies;
(n) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes, and with
separate Shares representing beneficial interests in such Series, and to
establish separate Classes, all in accordance with the provisions of Article
IV;
(o) To the full extent permitted by Section 3804 of the Delaware Act,
to allocate assets, liabilities and expenses of the Trust to a particular
Series and liabilities and expenses to a particular Class or to apportion the
same between or among two or more Series or Classes, provided that any
liabilities or expenses incurred by a particular Series or Class shall be
payable solely out of the assets belonging to that Series or Class as provided
for in Article IV, Section 4;
(p) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern whose securities are held
by the Trust; to consent to any contract, lease, mortgage, purchase, or sale of
property by such corporation or concern; and to pay calls or subscriptions with
respect to any security held in the Trust;
- 6 -
<PAGE> 10
(q) To compromise, arbitrate, or otherwise adjust claims in favor of
or against the Trust or any matter in controversy including, but not limited
to, claims for taxes;
(r) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided for;
(s) To borrow money;
(t) To establish, from time to time, a minimum total investment for
Shareholders, and to require the redemption of the Shares of any Shareholders
whose investment is less than such minimum upon giving notice to such
Shareholder;
(u) To establish committees for such purposes, with such membership,
and with such responsibilities as the Trustees may consider proper, including a
committee consisting of fewer than all of the Trustees then in office, which
may act for and bind the Trustees and the Trust with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
legal action, suit or proceeding, pending or threatened;
(v) To issue, sell, repurchase, redeem, cancel, retire, acquire, hold,
resell, reissue, dispose of and otherwise deal in Shares; to establish terms
and conditions regarding the issuance, sale, repurchase, redemption,
cancellation, retirement, acquisition, holding, resale, reissuance, disposition
of or dealing in Shares; and, subject to Articles IV and V, to apply to any
such repurchase, redemption, retirement, cancellation or acquisition of Shares
any funds or property of the Trust or of the particular Series with respect to
which such Shares are issued; and
(w) To carry on any other business in connection with or incidental to
any of the foregoing powers, to do everything necessary or desirable to
accomplish any purpose or to further any of the foregoing powers, and to take
every other action incidental to the foregoing business or purposes, objects or
powers.
The clauses above shall be construed as objects and powers, and the
enumeration of specific powers shall not limit in any way the general powers of
the Trustees. Any action by one or more of the Trustees in their capacity as
such hereunder shall be deemed an action on behalf of the Trust or the
applicable Series, and not an action in an individual capacity. No one dealing
with the Trustees shall be under any obligation to make any inquiry concerning
the authority of the Trustees, or to see to the application of any payments
made or property transferred to the Trustees or upon their order. In
construing this Trust Instrument, the presumption shall be in favor of a grant
of power to the Trustees.
- 7 -
<PAGE> 11
Section 2. Certain Transactions. Except as prohibited by applicable
law, the Trustees may, on behalf of the Trust, buy any securities from or sell
any securities to, or lend any assets of the Trust to, any Trustee or officer
of the Trust or any firm of which any such Trustee or officer is a member
acting as principal, or have any such dealings with any investment adviser,
administrator, distributor or transfer agent for the Trust or with any
Interested Person of such person. The Trust may employ any such person or
entity in which such person is an Interested Person, as broker, legal counsel,
registrar, investment adviser, administrator, distributor, transfer agent,
dividend disbursing agent, custodian or in any other capacity upon customary
terms.
ARTICLE IV
SERIES; CLASSES; SHARES
Section 1. Establishment of Series or Class. The Trust shall consist
of one or more Series. The Trustees hereby establish the Series listed in
Exhibit A attached hereto and made a part hereof. Each additional Series shall
be established by the adoption of a resolution of the Trustees. The Trustees
may designate the relative rights and preferences of the Shares of each Series.
The Trustees may divide the Shares of any Series into Classes. In such case
each Class of a Series shall represent interests in the assets of that Series
and have identical voting, dividend, liquidation and other rights and the same
terms and conditions, except that expenses allocated to a Class may be borne
solely by such Class as determined by the Trustees and a Class may have
exclusive voting rights with respect to matters affecting only that Class. The
Trust shall maintain separate and distinct records for each Series and hold and
account for the assets thereof separately from the other assets of the Trust or
of any other Series. A Series may issue any number of Shares and need not
issue Shares. Each Share of a Series shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his or her pro rata share of all distributions
made with respect to such Series. Upon redemption of his or her Shares, such
Shareholder shall be paid solely out of the funds and property of such Series.
The Trustees may change the name of any Series or Class without Shareholder
approval.
Section 2. Shares. The beneficial interest in the Trust shall be
divided into Shares of one or more separate and distinct Series or Classes
established by the Trustees. The number of Shares of each Series and Class is
unlimited and each Share shall have a par value of $0.001 per Share. All
Shares issued hereunder shall be fully paid and nonassessable. Shareholders
shall have no preemptive or other right to subscribe to any additional Shares
or other securities issued by the Trust. The Trustees shall have full power
and authority, in their sole discretion and without obtaining Shareholder
approval: to issue
- 8 -
<PAGE> 12
original or additional Shares or fractional Shares at such times and on such
terms and conditions as they deem appropriate; to issue Shares which have been
repurchased by the Trust; to establish and to change in any manner Shares of
any Series or Classes with such preferences, terms of conversion, voting
powers, rights and privileges as the Trustees may determine (but the Trustees
may not change Outstanding Shares in a manner materially adverse to the
Shareholders of such Shares); to divide or combine the Shares of any Series or
Classes into a greater or lesser number; to classify or reclassify any unissued
Shares of any Series or Classes into one or more Series or Classes of Shares;
to abolish any one or more Series or Classes of Shares; to issue Shares to
acquire other assets (including assets subject to, and in connection with, the
assumption of liabilities) and businesses; and to take such other action with
respect to the Shares as the Trustees may deem desirable. Shares which have
been repurchased by the Trust and have not been reissued shall not confer any
voting rights on the Trustees and shall not be entitled to any dividends or
other distributions declared with respect to the Shares.
Section 3. Investment in the Trust. The Trustees shall accept
investments in any Series from such persons and on such terms as they may from
time to time authorize. At the Trustees' discretion, such investments, subject
to applicable law, may be in the form of cash or securities in which that
Series is authorized to invest, valued as provided in Article V, Section 3.
Investments in a Series shall be credited to each Shareholder's account in the
form of full or fractional Shares at the Net Asset Value per Share next
determined after the investment is received or accepted in good form as may be
determined by the Trustees; provided, however, that the Trustees may, in their
sole discretion (a) impose a sales charge upon investments in any Series or
Class or (b) determine the Net Asset Value per Share of the initial capital
contribution. The Trustees shall have the right to refuse to accept
investments in any Series at any time without any cause or reason therefor
whatsoever.
Section 4. Assets and Liabilities of Series. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or reinvested,
all income, earnings, profits, and proceeds thereof (including any proceeds
derived from the sale, exchange or liquidation of such assets, and any funds or
payments derived from any reinvestment of such proceeds in whatever form the
same may be), shall be held and accounted for separately from the other assets
of the Trust and every other Series and are referred to as "assets belonging
to" that Series. The assets belonging to a Series shall belong only to that
Series for all purposes, and to no other Series, subject only to the rights of
creditors of that Series. Any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as belonging to
any particular Series shall be allocated by the Trustees between and among one
or more Series as the Trustees deem fair and equitable. Each such allocation
shall be conclusive and binding upon the Shareholders of all Series for all
- 9 -
<PAGE> 13
purposes, and such assets, earnings, income, profits or funds, or payments and
proceeds thereof shall be referred to as assets belonging to that Series. The
assets belonging to a Series shall be so recorded upon the books of the Trust,
and shall be held by the Trustees in trust for the benefit of the Shareholders
of that Series. The assets belonging to a Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series, except that liabilities and expenses allocated
solely to a particular Class shall be borne by that Class. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series or Class shall be
allocated and charged by the Trustees between or among any one or more of the
Series or Classes in such manner as the Trustees deem fair and equitable. Each
such allocation shall be conclusive and binding upon the Shareholders of all
Series or Classes for all purposes.
Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or reserves
as herein provided, the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular Series shall
be enforceable against the assets of such Series only, and not against the
assets of the Trust generally or of any other Series. Notice of this
contractual limitation on liabilities among Series may, in the Trustees'
discretion, be set forth in the certificate of trust of the Trust (whether
originally or by amendment) as filed or to be filed in the Office of the
Secretary of State of the State of Delaware pursuant to the Delaware Act, and
upon the giving of such notice in the certificate of trust, the statutory
provisions of Section 3804 of the Delaware Act relating to limitations on
liabilities among Series (and the statutory effect under Section 3804 of
setting forth such notice in the certificate of trust) shall become applicable
to the Trust and each Series. Any person extending credit to, contracting with
or having any claim against any Series may look only to the assets of that
Series to satisfy or enforce any debt, with respect to that Series. No
Shareholder or former Shareholder of any Series shall have a claim on or any
right to any assets allocated or belonging to any other Series.
Section 5. Ownership and Transfer of Shares. The Trust shall maintain
a register containing the names and addresses of the Shareholders of each
Series and Class thereof, the number of Shares of each Series and Class held by
such Shareholders, and a record of all Share transfers. The register shall be
conclusive as to the identity of Shareholders of record and the number of
Shares held by them from time to time. The Trustees, in their sole discretion,
may authorize the issuance of certificates representing Shares and adopt rules
governing their use. The Trustees may make rules governing the transfer of
Shares, whether or not represented by certificates.
- 10 -
<PAGE> 14
Section 6. Status of Shares; Limitation of Shareholder Liability.
Shares shall be deemed to be personal property giving Shareholders only the
rights provided in this Trust Instrument. Every Shareholder, by virtue of
having acquired a Share, shall be held expressly to have assented to and agreed
to be bound by the terms of this Trust Instrument and to have become a party
hereto. No Shareholder shall be personally liable for the debts, liabilities,
obligations and expenses incurred by, contracted for, or otherwise existing
with respect to, the Trust or any Series. Neither the Trust nor the Trustees
shall have any power to bind any Shareholder personally or to demand payment
from any Shareholder for anything, other than as agreed by the Shareholder.
Shareholders shall have the same limitation of personal liability as is
extended to shareholders of a private corporation for profit incorporated in
the State of Delaware. Every written obligation of the Trust or any Series
shall contain a statement to the effect that such obligation may only be
enforced against the assets of the Trust or such Series; however, the omission
of such statement shall not operate to bind or create personal liability for
any Shareholder or Trustee.
ARTICLE V
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions. The Trustees may declare and pay dividends
and other distributions, including dividends on Shares of a particular Series
and other distributions from the assets belonging to that Series. The amount
and payment of dividends or distributions and their form, whether they are in
cash, Shares or other Trust Property, shall be determined by the Trustees.
Dividends and other distributions may be paid pursuant to a standing resolution
adopted once or more often as the Trustees determine. All dividends and other
distributions on Shares of a particular Series shall be distributed pro rata to
the Shareholders of that Series in proportion to the number of Shares of that
Series they held on the record date established for such payment, except that
such dividends and distributions shall appropriately reflect expenses allocated
to a particular Class of such Series. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash dividend payout plans or
similar plans as the Trustees deem appropriate.
Section 2. Redemptions. Each Shareholder of a Series or Class shall
have the right at such times as may be permitted by the Trustees to require the
Series to redeem all or any part of his or her Shares at a redemption price per
Share equal to the Net Asset Value per Share at such time as the Trustees shall
have prescribed by resolution. In the absence of such resolution, the
redemption price per Share shall be the Net Asset Value next determined after
receipt by the Series of a request for redemption in proper form less such
charges as are determined by the Trustees and described in the Trust's
Registration
- 11 -
<PAGE> 15
Statement for that Series or Class under the Securities Act of 1933. The
Trustees may specify conditions, prices, and places of redemption, and may
specify binding requirements for the proper form or forms of requests for
redemption. Payment of the redemption price may be wholly or partly in
securities or other assets at the value of such securities or assets used in
such determination of Net Asset Value, or may be in cash. Upon redemption,
Shares may be reissued from time to time. The Trustees may require
Shareholders to redeem Shares for any reason under terms set by the Trustees,
including the failure of a Shareholder to supply a personal identification
number if required to do so, or to have the minimum investment required, or to
pay when due for the purchase of Shares issued to him. To the extent permitted
by law, the Trustees may retain the proceeds of any redemption of Shares
required by them for payment of amounts due and owing by a Shareholder to the
Trust or any Series or Class. Notwithstanding the foregoing, the Trustees may
postpone payment of the redemption price and may suspend the right of the
Shareholders to require any Series or Class to redeem Shares during any period
of time when and to the extent permissible under the 1940 Act.
Section 3. Determination of Net Asset Value. The Trustees shall cause
the Net Asset Value of Shares of each Series or Class to be determined from
time to time in a manner consistent with applicable laws and regulations. The
Trustees may delegate the power and duty to determine Net Asset Value per Share
to one or more Trustees or officers of the Trust or to an investment adviser,
custodian, depository or other agent appointed for such purpose. The Net Asset
Value of Shares shall be determined separately for each Series or Class at such
times as may be prescribed by the Trustees or, in the absence of action by the
Trustees, as of the close of trading on the New York Stock Exchange on each day
for all or part of which such Exchange is open for unrestricted trading.
Section 4. Suspension of Right of Redemption. If, as referred to in
Section 2 of this Article, the Trustees postpone payment of the redemption
price and suspend the right of Shareholders to redeem their Shares, such
suspension shall take effect at the time the Trustees shall specify, but not
later than the close of business on the business day next following the
declaration of suspension. Thereafter Shareholders shall have no right of
redemption or payment until the Trustees declare the end of the suspension. If
the right of redemption is suspended, a Shareholder may either withdraw his or
her request for redemption or receive payment based on the Net Asset Value per
Share next determined after the suspension terminates.
- 12 -
<PAGE> 16
ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. The Shareholders shall have power to vote
only with respect to (a) the election of Trustees as provided in Section 2 of
this Article; (b) the removal of Trustees as provided in Article II, Section
3(d); (c) any investment advisory or management contract as provided in Article
VII, Section 1; (d) any termination of the Trust as provided in Article X,
Section 4; (e) the amendment of this Trust Instrument to the extent and as
provided in Article X, Section 8; and (f) such additional matters relating to
the Trust as may be required or authorized by law, this Trust Instrument, or
the Bylaws or any registration of the Trust with the Commission or any State,
or as the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares
shall be voted by individual Series or Class, except (a) when required by the
1940 Act, Shares shall be voted in the aggregate and not by individual Series
or Class, and (b) when the Trustees have determined that the matter affects the
interests of more than one Series or Class, then the Shareholders of all such
Series or Classes shall be entitled to vote thereon. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy or in any manner provided for in the Bylaws. The Bylaws
may provide that proxies may be given by any electronic or telecommunications
device or in any other manner, but if a proposal by anyone other than the
officers or Trustees is submitted to a vote of the Shareholders of any Series
or Class, or if there is a proxy contest or proxy solicitation or proposal in
opposition to any proposal by the officers or Trustees, Shares may be voted
only in person or by written proxy. Until Shares of a Series are issued, as to
that Series the Trustees may exercise all rights of Shareholders and may take
any action required or permitted to be taken by Shareholders by law, this Trust
Instrument or the Bylaws.
Section 2. Meetings of Shareholders. The first Shareholders' meeting
shall be held to elect Trustees at such time and place as the Trustees
designate. There shall be no annual Shareholders' meetings except as required
by law or set forth in the Bylaws. Special meetings of the Shareholders of any
Series or Class may be called by the Trustees and shall be called by the
Trustees upon the written request of Shareholders owning at least ten percent
of the Outstanding Shares of such Series or Class entitled to vote. Special
meetings of Shareholders shall be held, notice of such meetings shall be
delivered and waiver of notice shall occur according to the provisions of the
Trust's Bylaws. Any action that may be taken at a meeting of Shareholders may
be taken without a meeting according to the procedures set forth in the Trust's
Bylaws.
- 13 -
<PAGE> 17
Section 3. Quorum; Required Vote. One-third of the Outstanding Shares
of each Series or Class, or one-third of the Outstanding Shares of the Trust,
entitled to vote in person or by proxy shall be a quorum for the transaction of
business at a Shareholders' meeting with respect to such Series or Class, or
with respect to the entire Trust, respectively. Any lesser number shall be
sufficient for adjournments. Any adjourned session of a Shareholders' meeting
may be held within a reasonable time without further notice. Except when a
larger vote is required by law, this Trust Instrument or the Bylaws, a majority
of the Outstanding Shares voted in person or by proxy shall decide any matters
to be voted upon with respect to the entire Trust and a plurality of such
Outstanding Shares shall elect a Trustee; provided, that if this Trust
Instrument or applicable law permits or requires that Shares be voted on any
matter by individual Series or Classes, then a majority of the Outstanding
Shares of that Series or Class (or, if required by law, a Majority Shareholder
Vote of that Series or Class) voted in person or by proxy voted on the matter
shall decide that matter insofar as that Series or Class is concerned.
Shareholders may act as to the Trust or any Series or Class by the written
consent of a majority (or such greater amount as may be required by applicable
law) of the Outstanding Shares of the Trust or of such Series or Class, as the
case may be.
ARTICLE VII
CONTRACTS WITH SERVICE PROVIDERS
Section 1. Investment Adviser. Subject to a Majority Shareholder
Vote, the Trustees may enter into one or more investment advisory contracts on
behalf of the Trust or any Series, providing for investment advisory services,
statistical and research facilities and services, and other facilities and
services to be furnished to the Trust or Series on terms and conditions
acceptable to the Trustees. Any such contract may provide for the investment
adviser to effect purchases, sales or exchanges of portfolio securities or
other Trust Property on behalf of the Trustees or may authorize any officer or
agent of the Trust to effect such purchases, sales or exchanges pursuant to
recommendations of the investment adviser. The Trustees may authorize the
investment adviser to employ one or more sub-advisers.
Section 2. Principal Underwriter. The Trustees may enter into
contracts on behalf of the Trust or any Series or Class, providing for the
distribution and sale of Shares by the other party, either directly or as sales
agent, on terms and conditions acceptable to the Trustees. The Trustees may
adopt a plan or plans of distribution with respect to Shares of any Series or
Class and enter into any related agreements, whereby the Series or Class
finances directly or
- 14 -
<PAGE> 18
indirectly any activity that is primarily intended to result in sales of its
Shares, subject to the requirements of Section 12 of the 1940 Act, Rule 12b-1
thereunder, and other applicable rules and regulations.
Section 3. Transfer Agency, Shareholder Services, and Administration
Agreements. The Trustees, on behalf of the Trust or any Series or Class, may
enter into transfer agency agreements, Shareholder service agreements, and
administration and management agreements with any party or parties on terms and
conditions acceptable to the Trustees.
Section 4. Custodian. The Trustees shall at all times place and
maintain the cash, securities and other assets of the Trust and of each Series
with a custodian meeting the requirements of Section 17(f) of the 1940 Act and
the rules thereunder or such other entities permitted by Commission order. The
Trustees, on behalf of the Trust or any Series, may enter into an agreement
with a custodian on terms and conditions acceptable to the Trustees, providing
for the custodian, among other things, to (a) hold the securities owned by the
Trust or any Series and deliver the same upon written order or oral order
confirmed in writing, (b) to receive and receipt for any moneys due to the
Trust or any Series and deposit the same in its own banking department or
elsewhere, (c) to disburse such funds upon orders or vouchers, and (d) to
employ one or more sub-custodians.
Section 5. Parties to Contracts with Service Providers. The Trustees
may enter into any contract referred to in this Article with any entity,
although one or more of the Trustees or officers of the Trust may be an
officer, director, trustee, partner, shareholder, or member of such entity, and
no such contract shall be invalidated or rendered void or voidable because of
such relationship. No person having such a relationship shall be disqualified
from voting on or executing a contract in his or her capacity as Trustee and/or
Shareholder, or be liable merely by reason of such relationship for any loss or
expense to the Trust with respect to such a contract or accountable for any
profit realized directly or indirectly therefrom; provided, that the contract
was reasonable and fair and not inconsistent with this Trust Instrument or the
Bylaws.
Any contract referred to in Sections 1 and 2 of this Article shall be
consistent with and subject to the applicable requirements of Section 15 of the
1940 Act and the rules and orders thereunder with respect to its continuance in
effect, its termination, and the method of authorization and approval of such
contract or renewal. No amendment to a contract referred to in Section 1 of
this Article shall be effective unless assented to in a manner consistent with
the requirements of Section 15 of the 1940 Act, and the rules and orders
thereunder.
- 15 -
<PAGE> 19
ARTICLE VIII
EXPENSES OF THE TRUST AND SERIES
Subject to Article IV, Section 4, the Trust or a particular Series
shall pay, or shall reimburse the Trustees from the Trust estate or the assets
belonging to the particular Series, for the expenses and disbursements of its
organization, operations and business (unless a third party has agreed to bear
such expenses and disbursements). Such expenses and disbursements may include,
but are not limited to, the following: fees, expenses and charges of certain
third parties which may include the Trust's investment advisers, distributors,
transfer agents, custodian, independent auditors, legal counsel and
administrators; expenses of the organization of the Trust or a particular
Series; expenses of the issue, redemption and transfer of Shares; brokers'
commissions and other charges; expenses of custody and accounting services;
expenses of maintaining and servicing Shareholder accounts; expenses of
bonding and insurance; all taxes or governmental fees; costs of membership in
trade associations; all charges and expenses for equipment or services used for
communication between the Trust or any Series and any third party providing
services to the Trust or any Series; fees and expenses of Trustees' meetings,
including the compensation of Trustees who are not Interested Persons of the
Trust; Commission registration fees and related expenses; state or foreign
securities laws registration fees and related expenses; expenses of Shareholder
meetings, including the printing and distribution of proxy materials and any
other costs associated with a proxy solicitation; costs of preparing, printing
and distributing Shareholder communications such as prospectuses, statements of
additional information, and financial reports; and non-recurring expenses which
may arise, including the costs of actions, suit or proceedings to which the
Trust or a Series (or a Trustee or officer of the Trust acting as such) is a
party, and the expenses the Trust or Series may incur as a result of its
obligation to provide indemnification to its Trustees, Officers, employees or
agents. The Trustees shall have a lien on the assets belonging to the
appropriate Series, or in the case of an expense allocable to more than one
Series, on the assets of each such Series, prior to any rights or interests of
the Shareholders thereto, for the reimbursement to them of such expenses,
disbursements, losses and liabilities.
ARTICLE IX
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Liability. All persons contracting with or
having any claim against the Trust or a particular Series shall look only to
the assets of the Trust or such Series for payment under such contract or
claim; and neither the Trustees nor
- 16 -
<PAGE> 20
any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor. Every written instrument or
obligation on behalf of the Trust or any Series shall contain a statement to
the foregoing effect, but the absence of such statement shall not operate to
make any Trustee or officer of the Trust liable thereunder. Provided they have
exercised reasonable care and have acted under the reasonable belief that their
actions are in the best interest of the Trust, the Trustees and officers of the
Trust shall not be responsible or liable for any act or omission or for neglect
or wrongdoing of them or any officer, agent, employee, investment adviser or
independent contractor of the Trust, but nothing contained in this Trust
Instrument or in the Delaware Act shall protect any Trustee or officer of the
Trust against liability to the Trust or to Shareholders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
or her office.
Section 2. Indemnification. (a) Subject to the exceptions and
limitations contained in subsection (b) below:
(i) every person who is, or has been, a Trustee or an officer,
employee or agent of the Trust ("Covered Person") shall be
indemnified by the Trust or the appropriate Series 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 Covered Person and
against amounts paid or incurred by him or her in the
settlement thereof;
(ii) as used herein, the words "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,
judgments, amounts paid in settlement, fines, penalties and
other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust
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 Trust; or
- 17 -
<PAGE> 21
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person 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 of the
Trust nor are 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).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive of or affect any other rights to which any Covered Person may now or
hereafter be entitled, and shall inure to the benefit of the heirs, executors
and administrators of a Covered Person.
(d) To the maximum extent permitted by applicable law, expenses in
connection with the preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in subsection (a) of this
Section may be paid by the Trust or applicable Series from time to time prior
to final disposition thereof upon receipt of an undertaking by or on behalf of
such Covered Person that such amount will be paid over by him or her to the
Trust or applicable Series if it is ultimately determined that he or she is not
entitled to indemnification under this Section; provided, however, that either
(i) such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the proceeding, or independent
legal counsel in a written opinion, shall have determined, based upon a review
of readily available facts (as opposed to a full trial-type inquiry) that there
is reason to believe that such Covered Person will not be disqualified from
indemnification under this Section.
(e) Any repeal or modification of this Article IX by the Shareholders
of the Trust, or adoption or modification of any other provision of the Trust
Instrument or Bylaws inconsistent with this Article, shall be prospective only,
to the extent that such repeal or modification would, if applied
retrospectively, adversely affect any limitation on the liability of any
Covered Person or indemnification available to any Covered Person with respect
to any act or omission which occurred prior to such repeal, modification or
adoption.
- 18 -
<PAGE> 22
Section 3. Indemnification of Shareholders. If any Shareholder or
former Shareholder of any Series shall be held personally liable solely by
reason of his or her being or having been a Shareholder and not because of his
or her acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his or her heirs, executors, administrators or other legal
representatives or in the case of any entity, its general successor) shall be
entitled out of the assets belonging to the applicable Series to be held
harmless from and indemnified against all loss and expense arising from such
liability. The Trust, on behalf of the affected Series, shall, upon request by
such Shareholder, assume the defense of any claim made against such Shareholder
for any act or obligation of the Series and satisfy any judgment thereon from
the assets of the Series.
ARTICLE X
MISCELLANEOUS
Section 1. Trust Not a Partnership. This Trust Instrument creates a
trust and not a partnership. No Trustee shall have any power to bind
personally either the Trust's officers or any Shareholder.
Section 2. Trustee Action; Expert Advice; No Bond or Surety. The
exercise by the Trustees of their powers and discretion hereunder in good faith
and with reasonable care under the circumstances then prevailing shall be
binding upon everyone interested. Subject to the provisions of Article IX, the
Trustees shall not be liable for errors of judgment or mistakes of fact or law.
The Trustees may take advice of counsel or other experts with respect to the
meaning and operation of this Trust Instrument, and subject to the provisions
of Article IX, shall not be liable for any act or omission in accordance with
such advice or for failing to follow such advice. The Trustees shall not be
required to give any bond as such, nor any surety if a bond is obtained.
Section 3. Record Dates. The Trustees may fix in advance a date up to
seventy (70) days before the date of any Shareholders' meeting, or the date for
the payment of any dividends or other distributions, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares shall go into effect as a record date for the determination of the
Shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of such dividend or other distribution, or to
receive any such allotment of rights, or to exercise such rights in respect of
any such change, conversion or exchange of Shares. Record dates for adjourned
Shareholders' meetings shall be set according to the Trust's Bylaws.
- 19 -
<PAGE> 23
Section 4. Termination of the Trust. (a) This Trust shall have
perpetual existence. Subject to a Majority Shareholder Vote of the Trust or of
each Series to be affected, the Trustees may
(i) sell and convey all or substantially all of the assets of
the Trust or any affected Series to another Series or to
another entity which is an open-end investment company as
defined in the 1940 Act, or is a series thereof, for adequate
consideration, which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued
or contingent, of the Trust or any affected Series, and which
may include shares of or interests in such Series, entity, or
series thereof; or
(ii) at any time sell and convert into money all or
substantially all of the assets of the Trust or any affected
Series.
Upon making reasonable provision for the payment of all known liabilities of
the Trust or any affected Series in either (i) or (ii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds or assets (as
the case may be) ratably among the Shareholders of the Trust or any affected
Series; however, the payment to any particular Class of such Series may be
reduced by any fees, expenses or charges allocated to that Class.
(b) The Trustees may take any of the actions specified in subsection
(a) (i) and (ii) above without obtaining a Majority Shareholder Vote of the
Trust or any Series if a majority of the Trustees determines that the
continuation of the Trust or Series is not in the best interests of the Trust,
such Series, or their respective Shareholders as a result of factors or events
adversely affecting the ability of the Trust or such Series to conduct its
business and operations in an economically viable manner. Such factors and
events may include the inability of the Trust or a Series to maintain its
assets at an appropriate size, changes in laws or regulations governing the
Trust or the Series or affecting assets of the type in which the Trust or
Series invests, or economic developments or trends having a significant adverse
impact on the business or operations of the Trust or such Series.
(c) Upon completion of the distribution of the remaining proceeds or
assets pursuant to subsection (a), the Trust or affected Series shall terminate
and the Trustees and the Trust shall be discharged of any and all further
liabilities and duties hereunder with respect thereto and the right, title and
interest of all parties therein shall be canceled and discharged. Upon
termination of the Trust, following completion of winding up of its business,
the Trustees shall cause a certificate of cancellation of the Trust's
certificate of trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee.
- 20 -
<PAGE> 24
Section 5. Reorganization. Notwithstanding anything else herein, to
change the Trust's form of organization the Trustees may, without Shareholder
approval, (a) cause the Trust to merge or consolidate with or into one or more
entities, if the surviving or resulting entity is the Trust or another open-end
management investment company under the 1940 Act, or a series thereof, that
will succeed to or assume the Trust's registration under the 1940 Act, or (b)
cause the Trust to incorporate under the laws of Delaware. Any agreement of
merger or consolidation or certificate of merger may be signed by a majority of
Trustees and facsimile signatures conveyed by electronic or telecommunication
means shall be valid.
Pursuant to and in accordance with the provisions of Section 3815(f)
of the Delaware Act, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section 5 may effect any amendment to the
Trust Instrument or effect the adoption of a new trust instrument of the Trust
if it is the surviving or resulting trust in the merger or consolidation.
Section 6. Trust Instrument. The original or a copy of this Trust
Instrument and of each amendment hereto or Trust Instrument supplemental shall
be kept at the office of the Trust where it may be inspected by any
Shareholder. Anyone dealing with the Trust may rely on a certificate by a
Trustee or an officer of the Trust as to the authenticity of the Trust
Instrument or any such amendments or supplements and as to any matters in
connection with the Trust. The masculine gender herein shall include the
feminine and neuter genders. Headings herein are for convenience only and
shall not affect the construction of this Trust Instrument. This Trust
Instrument may be executed in any number of counterparts, each of which shall
be deemed an original.
Section 7. Applicable Law. This Trust Instrument and the Trust
created hereunder are governed by and construed and administered according to
the Delaware Act and the applicable laws of the State of Delaware; provided,
however, that there shall not be applicable to the Trust, the Trustees or this
Trust Instrument (a) the provisions of Section 3540 of Title 12 of the Delaware
Code, or (b) any provisions of the laws (statutory or common) of the State of
Delaware (other than the Delaware Act) pertaining to trusts which relate to or
regulate (i) the filing with any court or governmental body or agency of
trustee accounts or schedules of trustee fees and charges, (ii) affirmative
requirements to post bonds for trustees, officers, agents or employees of a
trust, (iii) the necessity for obtaining court or other governmental approval
concerning the acquisition, holding or disposition of real or personal
property, (iv) fees or other sums payable to trustees, officers, agents or
employees of a trust, (v) the allocation of receipts and expenditures to income
or principal, (vi) restrictions or limitations on the permissible nature,
amount or concentration of trust investments or requirements relating to the
titling, storage
- 21 -
<PAGE> 25
or other manner of holding of trust assets, or (vii) the establishment of
fiduciary or other standards of responsibilities or limitations on the acts or
powers of trustees, which are inconsistent with the limitations or liabilities
or authorities and powers of the Trustees set forth or referenced in this Trust
Instrument. The Trust shall be of the type commonly called a Delaware business
trust, and, without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust under Delaware law. The
Trust specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts under
the Delaware Act, and the absence of a specific reference herein to any such
power, privilege or action shall not imply that the Trust may not exercise such
power or privilege or take such actions.
Section 8. Amendments. The Trustees may, without any Shareholder
vote, amend or otherwise supplement this Trust Instrument by making an
amendment, a Trust Instrument supplemental hereto or an amended and restated
trust instrument; provided, that Shareholders shall have the right to vote on
any amendment (a) which would affect the voting rights of Shareholders granted
in Article VI, Section 1, (b) to this Section 8, (c) required to be approved by
Shareholders by law or by the Trust's registration statement(s) filed with the
Commission, and (d) submitted to them by the Trustees in their discretion. Any
amendment submitted to Shareholders which the Trustees determine would affect
the Shareholders of any Series shall be authorized by vote of the Shareholders
of such Series and no vote shall be required of Shareholders of a Series not
affected. Notwithstanding anything else herein, any amendment to Article IX
which would have the effect of reducing the indemnification and other rights
provided thereby to Trustees, officers, employees, and agents of the Trust or
to Shareholders or former Shareholders, and any repeal or amendment of this
sentence shall each require the affirmative vote of the holders of two-thirds
of the Outstanding Shares of the Trust entitled to vote thereon.
Section 9. Fiscal Year. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws. The Trustees may change the fiscal
year of the Trust without Shareholder approval.
Section 10. Severability. The provisions of this Trust Instrument
are severable. If the Trustees determine, with the advice of counsel, that any
provision hereof conflicts with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have
constituted a part of this Trust Instrument; provided, however, that such
determination shall not affect any of the remaining provisions of this Trust
Instrument or render invalid or improper any action taken or omitted prior to
such determination. If any provision hereof
- 22 -
<PAGE> 26
shall be held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision only in such jurisdiction
and shall not affect any other provision of this Trust Instrument.
IN WITNESS WHEREOF, the undersigned, being the initial
Trustees, have executed this Trust Instrument as of the date first above
written.
/S/BOH A. DICKEY
----------------------------
Boh A. Dickey, as
Trustee and not individually
/S/RICHARD W. HUBBARD
----------------------------
Richard W. Hubbard, as
Trustee and not individually
Address: SAFECO Plaza
Seattle, Washington 98185
STATE OF WASHINGTON ss
CITY OF SEATTLE
Before me this 13th day of May, 1993, personally appeared the
above-named Boh A. Dickey, and Richard W. Hubbard, known to me to be the
persons who executed the foregoing instrument and who acknowledged that they
executed the same.
/S/BETTY J. SCHOOLING
----------------------------
Notary Public
My Commission expires August 4, 1993.
- 23 -
<PAGE> 27
EXHIBIT A
SAFECO Money Market Fund
SAFECO Tax-Free Money Market Fund
- 24 -
<PAGE> 1
EXHIBIT NO. 99.2
BYLAWS
<PAGE> 2
EXHIBIT 99.2
BYLAWS
(As amended 2/2/95)
SAFECO MONEY MARKET TRUST
(A DELAWARE BUSINESS TRUST)
These Bylaws of SAFECO MONEY MARKET TRUST (the "Trust"), a Delaware
business trust, are subject to the Trust Instrument of the Trust dated May 13,
1993, as from time to time amended, supplemented or restated (the "Trust
Instrument"). Capitalized terms used herein have the same meanings as in the
Trust Instrument.
ARTICLE I
PRINCIPAL OFFICE AND SEAL
Section 1. Principal Office. The principal office of the Trust shall be
located in Seattle, Washington, or such other location as the Board of Trustees
may from time to time determine. The Trust may establish and maintain other
offices and places of business as the Board of Trustees may from time to time
determine.
Section 2. Seal. The seal of the Trust shall consist of a flat-faced circular
die with the words "SAFECO Money Market Trust", and with the words "Trust Seal,
1993" in the center, and with the word "Delaware" also being shown on the face
of the seal. Any Trustee or officer of the Trust shall have authority to affix
the seal to any document requiring the same.
ARTICLE II
MEETINGS OF BOARD OF TRUSTEES
Section 1. Meetings. Meetings of the Board of Trustees may be held at such
places and such times as the Trustees may from time to time determine as
provided in Article II, Section 7, of the Trust Instrument.
Section 2. Action Without a Meeting. Actions may be taken by the Board of
Trustees without a meeting or by a telephone meeting, as provided in Article
II, Section 7, of the Trust Instrument.
Section 3. Compensation of Trustees. No compensation for services as a
Trustee shall be paid to any Trustee who is at the time an employee of an
investment adviser of the Trust or any Series or Class thereof or of any entity
affiliated with the investment adviser. A Trustee who is not an employee of
such investment adviser or any of its affiliates may receive such compensation
from the Trust for his or her services and reimbursement for his or her
expenses as may be fixed from time to time by the Board of Trustees.
<PAGE> 3
ARTICLE III
BOARD COMMITTEES
Section 1. Establishment. The Board of Trustees may designate one or more
committees and shall determine the number of members of each such committee and
its powers. Each committee member shall hold office at the pleasure of the
Board of Trustees. The Board of Trustees may abolish any such committee at any
time in its sole discretion. Any committee to which the Board of Trustees
delegates any of its powers shall maintain records of its meetings and shall
report its actions to the Board of Trustees. The Board of Trustees shall have
the power to rescind any action of any committee, but no such recision shall
have retroactive effect. The Board of Trustees shall have the power at any
time to fill vacancies in the committees. The Board of Trustees may delegate
to any committee any of its powers, except the power to declare a dividend or
distribution on Shares, authorize the issuance of Shares, recommend to
Shareholders any action requiring Shareholders' approval, amend these Bylaws,
approve any merger or Share exchange, approve or terminate any contract with an
investment adviser or Principal Underwriter, or to take any other action
required by applicable law to be taken by the Board.
Section 2. Notice, Waiver, Consent, Quorum and Proceedings. In the absence of
a provision in these Bylaws or an appropriate resolution of the Trustees, each
committee may adopt such rules and regulations governing notice of its meetings
and waiver and consent to thereof, quorum and manner of acting as it shall deem
proper and desirable. In the event any member of any committee is absent from
any meeting, the members present at the meeting, whether or not they constitute
a quorum, may appoint another Trustee to act in the place of such absent
member.
Section 3. Audit Committee.
(a) Membership. The members of the Audit Committee shall be those
Trustees who are not Interested Persons of the Trust.
(b) Responsibilities and Duties. The Audit Committee shall assist
the Board of Trustees to fulfill its responsibility to shareholders, potential
shareholders and the investment community relating to corporate accounting,
financial reporting practices of the Trust and the quality and integrity of the
financial reports of the Trust. In carrying out these responsibilities the
Audit Committee will:
(i) Review and recommend to the Board of Trustees the
independent accountants to be selected to audit the financial statements of the
Trust;
- 2 -
<PAGE> 4
(ii) Meet with the independent accountants and the
officers of the Trust to review the scope of the proposed audit for the current
year and the audit procedures to be utilized;
(iii) Meet with the independent accountants and the officers
of the Trust at the conclusion of each audit to review the audit, including a
review of any comments or recommendations of the independent accountants;
(iv) Review with the independent accountants and the
officers of the Trust the adequacy and effectiveness of the internal auditing,
accounting and financial controls of the Trust and elicit any recommendations
from the independent accountants and officers of the Trust for improvements in
such controls;
(v) Review the internal audit services provided to the
Trust by the Trust's investment adviser or its affiliates;
(vi) Review the planning and results of any internal audit
examinations;
(vii) Determine whether the independent accountants are
satisfied with the disclosure and content of the financial statements included
in the annual report to shareholders and review any change in accounting
principles which materially affect such financial statements;
(viii) Review the scope of and fees for consulting services
provided by the independent accountants;
(ix) Meet in separate executive sessions with the independent
accountants and management;
(x) Report to the Board of Trustees following each meeting.
(c) Rules of Procedure. The Audit Committee shall adopt its own
rules and keep minutes of all of its meetings.
(d) Quorum. A quorum of the Audit Committee shall consist of at
least two members of the Committee.
(e) Action Without Meeting. Subject to the requirements of the
1940 Act, any action that may be or is required to be taken at a meeting of the
Audit Committee may be conducted by telephone or taken without a meeting if a
consent in writing setting forth the action so taken shall be signed by all
members of the Audit Committee. Such consent shall have the same effect as a
unanimous vote.
- 3 -
<PAGE> 5
Section 4. Pricing Committee.
(a) Membership. The Board of Trustees may annually appoint a
Pricing Committee comprised of two or more trustees or officers of SAFECO Asset
Managment Company.
(b) Responsibilities and Duties. The purpose of the Pricing
Committee shall be to value, on behalf of the Board of Trustees between
regularly scheduled trustees' meetings, any security held by or to be purchased
for the Trust or any Series which cannot be otherwise valued under the Trust's
guidelines for valuation of portfolio securities, e.g., an unrestricted
security for which market quotes are not readily available or a restricted
security ("Security").
(c) Rules of Procedure. In determining the fair value of a
Security, the Pricing Committee shall consider such factors and follow such
procedures as may be established under guidelines approved by the Trust's Board
of Trustees. The guidelines shall be periodically reviewed and approved by the
Board as frequently as the Board shall deem appropriate, but in no event less
than annually. Minutes shall be kept of each meeting of the Pricing Committee.
At the next regularly scheduled Board of Trustees' meeting following the
Pricing Committee's determination of a fair value for a Security, the Board of
Trustees shall ratify the Pricing Committee's action.
(d) Vote Required. The members of the Pricing Committee must
unanimously approve a fair value for the Security.
(e) Action Without Meeting. Any action that may be or is required
to be taken at a meeting of the Pricing Committee may be conducted by telephone
or may be taken without a meeting, if a consent in writing setting forth the
action so taken shall be signed by all members of the Pricing Committee. Such
consent shall have the same effect as a unanimous vote.
Section 5. Compensation of Committee Members. Each committee member who is
not an Interested Person of the Trust may receive such compensation from the
Trust for his or her services and reimbursement for his or her expenses as may
be fixed from time to time by the Trustees.
- 4 -
<PAGE> 6
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Trust shall be a President, a
Treasurer, a Secretary, and may include one or more Vice Presidents, Assistant
Treasurers or Assistant Secretaries, and such other officers as the Board of
Trustees may from time to time elect. The Board of Trustees may appoint any
other officers or agents and prescribe their respective rights, terms of
office, authorities and duties.
Section 2. Election, Tenure and Qualifications of Officers. The officers of
the Trust shall be elected annually by the Trustees. Each officer elected by
the Board of Trustees shall hold office until his or her successor shall have
been elected and qualified or his or her earlier resignation. Any person may
hold one or more offices of the Trust, except no one person may serve
concurrently as President and Secretary. A person who holds more than one
office in the Trust may not act in more than one capacity to execute,
acknowledge, or verify an instrument required by law to be executed,
acknowledged, or verified by more than one officer. No officer need be a
Trustee or a Shareholder of the Trust.
Section 3. Vacancies and Newly Created Offices. Whenever a vacancy shall
occur in any office, regardless of the reason for such vacancy, or if any new
office shall be created, such vacancies or newly created offices may be filled
by the Trustees at any meeting.
Section 4. Removal and Resignation. The Board of Trustees may remove any
officer or agent from office, with or without cause, by the vote of a majority
of the Trustees. Any officer may resign from office at any time by delivering a
written resignation to the Trustees, the President, the Secretary, or any
Assistant Secretary. Unless otherwise specified therein, such resignation
shall take effect upon delivery.
Section 5. Chairman. The Chairman shall have the powers and responsibilities
set forth in Article II, section 6 of the Trust Instrument and shall exercise
and perform such other powers and duties as may from time to time be assigned
by the Board of Trustees or prescribed by these Bylaws.
Section 6. President. The President shall be the chief executive officer of
the Trust. Subject to the direction of the Trustees, the President shall have
general charge, supervision and control over the business affairs of the Trust
and shall be responsible for the management thereof. In the absence of the
Chairman, or if no Chairman of the Board of Trustees has been elected, the
President shall preside at all Shareholders' and Board of Trustees' meetings
and shall in general exercise the powers and perform the duties of
- 5 -
<PAGE> 7
the Chairman. Except as the Board of Trustees may otherwise order, the
President shall have the power to grant, issue, execute or sign such powers of
attorney, proxies, agreements or other documents as may be deemed advisable or
necessary. The President also shall have the power to employ attorneys,
accountants and other advisers and agents for the Trust. The President shall
exercise such other powers and perform such other duties as the Board of
Trustees may from time to time assign to the President.
Section 7. Vice President. If the Board of Trustees elects one or more Vice
President(s), the Vice-President(s) shall have such powers and perform such
duties as may from time to time be assigned to them by the Board of Trustees or
the President. At the request or in the absence or disability of the
President, the Vice President (or, if there are two or more Vice Presidents,
then the senior of the Vice Presidents present and able to act) may perform all
the duties of the President and, when so acting, shall have all the powers of
the President. The Board of Trustees may designate one (1) or more of the Vice
Presidents as an Executive Vice President or with such other designation or
title as the Board of Trustees deem appropriate for his or her position or
duties.
Section 8. Treasurer and Assistant Treasurers. The Treasurer shall be the
principal financial officer of the Trust and shall have general charge of the
finances and books of the Trust. The Treasurer shall be responsible for
delivering all funds and securities of the Trust to its custodian. The
Treasurer shall make annual reports to the Board of Trustees regarding the
business and financial condition of the Trust as soon as possible after the
close of the Trust's fiscal year. The Treasurer also shall furnish such other
reports concerning the business and financial condition of the Trust as the
Board of Trustees may from time to time require. The Treasurer shall perform
all acts incidental to the office of Treasurer, subject to the supervision of
the Board of Trustees, and shall perform such additional duties as the Board
may from time to time designate.
Any Assistant Treasurer may perform such duties of the Treasurer as
the Board of Trustees or the Treasurer may assign, and, in the absence of the
Treasurer, may perform all the duties of the Treasurer.
Section 9. Secretary and Assistant Secretaries. The Secretary shall record
all votes and proceedings of the meetings of Trustees and Shareholders in books
to be kept for that purpose. The Secretary shall be responsible for the giving
and serving of all notices of the Trust. The Secretary shall have custody of
any seal of the Trust. The Secretary shall be responsible for the records of
the Trust, including the Share register and such other books and papers as the
Trustees may direct and such books, reports, certificates and other documents
required by law. All of such records and documents shall at all reasonable
times be kept open by
- 6 -
<PAGE> 8
the Secretary for inspection by any Trustee. The Secretary shall perform all
acts incidental to the office of Secretary, subject to the supervision of the
Trustees, and shall perform such additional duties as the Trustees may from
time to time designate.
Any Assistant Secretary may perform such duties of the Secretary as
the Trustees or the Secretary may assign, and, in the absence of the Secretary,
may perform all the duties of the Secretary.
ARTICLE V
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meetings. There shall be no annual Shareholders' meetings.
Section 2. Special Meetings. Special meetings of Shareholders of the Trust or
of any Series or Class shall be called by the Chairman, President or Secretary
whenever ordered by the Trustees, and shall be held at such time and place as
may be stated in the notice of the meeting.
Special meetings of the Shareholders of the Trust or of any Series or
Class shall also be called by the Chairman, President or Secretary upon the
written request of Shareholders owning at least ten percent of the Outstanding
Shares of the Trust or such Series or Class entitled to vote at such meeting,
provided that (1) such request shall state the purposes of such meeting and the
matters proposed to be acted on, and (2) the Shareholders requesting such
meeting shall have paid to the Trust the reasonably estimated cost of preparing
and mailing the notice thereof, which the Secretary shall determine and specify
to such Shareholders. No special meeting shall be called upon the request of
Shareholders of the Trust or of any Series or Class to consider any matter
which is substantially the same as a matter voted upon at any special meeting
of the Shareholders held during the preceding twelve months, unless requested
by the holders of a majority of all Outstanding Shares of the Trust or the
Series or Class entitled to be voted at such meeting.
If the Chairman, President or Secretary fails for more than thirty
days to call a special meeting when required to do so, the Trustees or the
Shareholders requesting such a meeting may, in the name of the Chairman,
President or Secretary, call the meeting by giving the required notice. If the
meeting is a meeting of Shareholders of any Series or Class, but not a meeting
of all Shareholders of the Trust, then only a special meeting of Shareholders
of such Series or Class shall be called and only Shareholders of such Series or
Class shall be entitled to notice of and to vote at such meeting.
- 7 -
<PAGE> 9
Section 3. Notice of Meetings; Waiver. The Chairman, President or Secretary
shall cause written notice of the place, date and time, and the purpose or
purposes for which the meeting is called. Notice shall be given at least ten
days before the date of the meeting. The written notice of any meeting may be
delivered or mailed, postage prepaid, to each Shareholder entitled to vote at
such meeting. If mailed, notice shall be deemed to be given when deposited in
the United States mail directed to the Shareholder at his or her address as it
appears on the records of the Trust. Notice of any Shareholders' meeting need
not be given to any Shareholder who is present at such meeting in person or by
proxy if a written waiver of notice, executed before or after such meeting, is
filed with the record of such meeting. Any irregularities in the notice of any
meeting or the nonreceipt of any such notice by any of the Shareholders shall
not invalidate any action otherwise properly taken at any such meeting.
Section 4. Adjourned Meetings. One or more adjournments of any Shareholders'
meetings may be taken by reason of failure of a quorum to attend a meeting or
for any other reason. Notice of adjournment of a Shareholders' meeting to
another time or place need not be given, if such time and place are announced
at the meeting at which the adjournment is taken, or reasonable notice is given
to persons present at the meeting, and the adjourned meeting is held within a
reasonable time after the date set for the original meeting. At the adjourned
meeting the Trust may transact any business which might have been transacted at
the original meeting. If after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to
Shareholders of record entitled to vote at such meeting.
Section 5. Validity of Proxies. Subject to the provisions of the Trust
Instrument, Shareholders entitled to vote may vote either in person or by
proxy, provided that either (1) a written instrument authorizing such proxy to
act has been signed and dated by the Shareholder or by his or her duly
authorized attorney, or (2) the Trustees adopt by resolution an electronic,
telephonic, computerized or other alternative to execution of a written
instrument authorizing the proxy to act, but if a proposal by anyone other than
the officers or Trustees is submitted to a vote of the Shareholders of the
Trust or of any Series or Class, or if there is a proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees, Shares may be voted only in person or by written proxy. Unless the
proxy provides otherwise, it shall not be valid for more than eleven months
before the date of the meeting. All proxies shall be delivered to the
Secretary or other person responsible for recording the proceedings before
being voted. A proxy with respect to Shares held in the name of two or more
persons shall be valid if executed by one of them unless at or prior to
exercise of such proxy the Trust receives a specific written notice to the
contrary
- 8 -
<PAGE> 10
from any one of them. Unless otherwise specifically limited by their terms,
proxies shall entitle the Shareholder to vote at any adjournment of a
Shareholders' meeting. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the challenger.
At every meeting of Shareholders, unless the voting is conducted by inspectors,
all questions concerning the qualifications of voters, the validity of proxies,
and the acceptance or rejection of votes, shall be decided by the chairman of
the meeting. Subject to the provisions of the Delaware Business Trust Act, the
Trust Instrument or these Bylaws, all matters concerning the giving, voting or
validity of proxies shall be governed by the General Corporation Law of the
State of Delaware relating to proxies, and judicial interpretations thereunder,
as if the Trust were a Delaware corporation and the Shareholders were
shareholders of a Delaware corporation.
Section 6. Quorum; Required Vote. The quorum and required vote for any
Shareholders' meeting shall be as specified in Article VI, section 3 of the
Trust Instrument.
Section 7. Record Date. The Board of Trustees may fix in advance a date up to
seventy (70) days before the date of any Shareholders' meeting as a record date
for the determination of the Shareholders entitled to notice of, and to vote
at, any such meeting. The Shareholders of record entitled to vote at a
Shareholders' meeting shall be deemed the Shareholders of record at any meeting
reconvened after one or more adjournments, unless the Board of Trustees has
fixed a new record date. If the Shareholders' meeting is adjourned for more
than one hundred twenty (120) days after the original date, the Board of
Trustees shall establish a new record date.
Section 8. Place of Meeting. All special meetings of Shareholders shall
be held at the principal place of business of the Trust or at such other place
as the Board of Trustees may from time to time designate.
Section 9. Action Without a Meeting. Any action to be taken by Shareholders
may be taken without a meeting if a majority (or such other amount as may be
required by law) of the Outstanding Shares entitled to vote on the matter
consent to the action in writing and such written consents are filed with the
records of the Shareholders' meetings. Such written consent shall be treated
for all purposes as a vote at a meeting of the Shareholders held at the
principal place of business of the Trust.
- 9 -
<PAGE> 11
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 1. Share Certificates. In lieu of issuing certificates representing
Shares, the Board of Trustees or the transfer agent or Shareholder servicing
agent may keep accounts upon the books of the Trust for record holders of such
Shares. The record holders shall be deemed, for all purposes, to be holders of
certificates for such Shares as if they accepted such certificates and shall be
held to have expressly consented to the terms thereof.
If the Board of Trustees authorizes the issuance of certificates
pursuant to Article V, Section 5 of the Trust Instrument, then such
certificates shall be in the form prescribed from time to time by the Board and
shall be signed by the President or a Vice President and by the Treasurer,
Assistant Treasurer, Secretary or Assistant Secretary of the Trust. Such
signatures may be facsimile if the certificate is signed by a transfer agent or
Shareholder servicing agent or by a registrar, other than a Trustee, officer or
employee of the Trust. If any officer who has signed any such certificate or
whose facsimile signature has been placed thereon shall have ceased to be such
an officer before the certificate is issued, then such certificate may be
issued by the Trust with the same effect as if he or she were such an officer
at the date of issue. The issuance of a certificate to one or more
Shareholders shall not require the issuance of certificates to all
Shareholders. The Board of Trustees may at any time discontinue the issuance
of certificates and may, by written notice to each Shareholder, require the
surrender of certificates to the Trust for cancellation. Such surrender and
cancellation shall not affect the ownership of Shares in the Trust.
Section 2. Transfer of Shares. The Shares of the Trust shall be transferable
only by a transfer recorded on the books of the Trust by the Shareholder of
record in person or by his or her duly authorized attorney or legal
representative. The Shares of the Trust may be freely transferred, and the
Board of Trustees may, from time to time, adopt rules and regulations regarding
the method of transfer of such Shares. Shares shall not be transferred on the
books of the Trust until all requirements of the Board, including the proper
tender of any outstanding certificates, if any, have been satisfied. The Trust
shall be entitled to treat the holder of record of any Share or Shares as the
absolute owner for all purposes, and shall not be bound to recognize any legal,
equitable or other claim or interest in such Share or Shares on the part of any
other person except as otherwise expressly provided by law.
Section 3. Lost, Stolen or Destroyed Certificates. If any Share certificate
should become lost, stolen or destroyed, a duplicate Share certificate may be
issued in place thereof, upon such terms and conditions as the Board of
Trustees may prescribe, including,
- 10 -
<PAGE> 12
but not limited to, requiring the owner of the lost, stolen or destroyed
certificate to give the Trust a bond or other indemnity, in such form and in
such amount as the Board of Trustees may direct and with such surety or
sureties as may be satisfactory to the Board sufficient to indemnify the Trust
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
ARTICLE VII
CUSTODY OF SECURITIES
Section 1. Employment of a Custodian. The Trust shall at all times place and
maintain all cash, securities and other assets of the Trust and of each Series
in the custody of a custodian meeting the requirements set forth in Article
VII, section 4 of the Trust Instrument ("Custodian"). The Custodian shall be
appointed from time to time by the Board of Trustees, who shall determine its
remuneration.
Section 2. Termination of Custodian Agreement. Upon termination of any
Custodian Agreement or the inability of the Custodian to continue to serve as
custodian, in either case with respect to the Trust or any Series, the Board of
Trustees shall (a) use its best efforts to obtain a successor Custodian; and
(b) require that the cash, securities and other assets owned by the Trust or
any Series be delivered directly to the successor Custodian.
Section 3. Other Arrangements. The Trust may make such other arrangements for
the custody of its assets (including deposit arrangements) as may be required
by any applicable law, rule or regulation.
ARTICLE VIII
FISCAL YEAR AND ACCOUNTANT
Section 1. Fiscal Year. The fiscal year of the Trust shall, unless otherwise
ordered by the Board of Trustees, be twelve calendar months ending on the 30th
day of September.
Section 2. Accountant. The Trust shall employ independent certified public
accountants as its Accountant to examine the accounts of the Trust and to sign
and certify financial statements filed by the Trust. The Accountant shall be
appointed in accordance with the requirements of Section 32(a) of the 1940 Act
and the rules thereunder. The Accountant's certificates and reports shall be
addressed both to the Board of Trustees and to the Shareholders.
- 11 -
<PAGE> 13
ARTICLE IX
AMENDMENTS
Section 1. General. Except as provided in Section 2 of this Article, all
Bylaws of the Trust shall be subject to amendment, alteration or repeal, and
new Bylaws may be made by the affirmative vote of a majority of either: (1)
the Outstanding Shares of the Trust entitled to vote at any meeting; or (2) the
Trustees.
Section 2. By Shareholders Only. After the issue of any Shares of the Trust,
no amendment, alteration or repeal of this Article shall be made except by the
affirmative vote of the holders of either: (a) more than two-thirds of the
Trust's Outstanding Shares present at a meeting at which the holders of more
than fifty percent of the Outstanding Shares are present in person or by proxy,
or (b) more than fifty percent of the Trust's Outstanding Shares.
ARTICLE X
NET ASSET VALUE
Section 1. Determination of Net Asset Value. The term "Net Asset Value" of
any Series or Class shall mean that amount by which the assets belonging to
that Series or Class exceed its liabilities, all as determined by or under the
direction of the Board of Trustees. Such value per Share shall be determined
separately for each Series or Class and shall be determined on such days and at
such times as the Board of Trustees may determine. Such determination shall be
made with respect to securities for which market quotations are readily
available, at the market value of such securities; and with respect to other
securities and assets, at the fair value as determined in good faith by the
Board of Trustees, provided, however, that the Board, without Shareholder
approval, may alter the method of appraising portfolio securities insofar as
permitted under the 1940 Act and the rules, regulations and interpretations
thereof promulgated or issued by the Commission or insofar as permitted by any
order of the Commission applicable to a Series or Class. The Board of Trustees
may delegate any of its powers and duties under this Section 1 with respect to
appraisal of assets and liabilities. At any time the Board of Trustees may
cause the Net Asset Value per Share last determined to be determined again in a
similar manner and may fix the time when such redetermined values shall become
effective.
- 12 -
<PAGE> 14
ARTICLE XI
INVESTMENTS
Section 1. Investment Objectives, Policies and Restrictions. The Trust and/or
each Series shall adhere to the fundamental and non-fundamental investment
objectives, policies and restrictions applicable to the Trust and/or each
Series included in the Trust's current effective registration statement as
filed with the Commission. If a percentage limitation is adhered to at the
time of an investment, a later increase or decrease in the percentage resulting
from a change in the value of the assets of a Series shall not be a violation
of such investment restrictions.
Section 2. Amendment of Investment Objectives, Policies and Restrictions. Any
investment objectives, policies and restrictions of the Trust or any Series
which are deemed to be fundamental may not be changed without the approval of
the holders of a majority of the Outstanding Shares of the Trust or of the
Series affected which shall mean the lesser of (i) 67% of the Shares
represented at a meeting at which more than 50% of the Outstanding Shares are
present or represented by proxy or (ii) more than 50% of the Outstanding
Shares. Any investment objectives, policies or restrictions deemed
non-fundamental may be changed by vote of the Board of Trustees.
ARTICLE XII
MISCELLANEOUS
Section 1. Inspection of Books. The Board of Trustees shall from time to
time determine whether and to what extent, and at what times and places, and
under what conditions the accounts and books of the Trust or any Series or
Class shall be open to the inspection of Shareholders. No Shareholder shall
have any right to inspect any account or book or document of the Trust except
as conferred by law or otherwise by the Board of Trustees or by resolution of
Shareholders.
Section 2. Severability. The provisions of these Bylaws are severable. If
the Board of Trustees determine, with the advice of counsel, that any provision
hereof conflicts with the 1940 Act, the regulated investment company provisions
of the Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of these
Bylaws; provided, however, that such determination shall not affect any of the
remaining provisions of these Bylaws or render invalid or improper any action
taken or omitted prior to such determination. If any provision hereof shall be
held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision only in such jurisdiction
and shall not affect any other provision of these Bylaws.
- 13 -
<PAGE> 15
Section 3. Headings. Headings are placed in these Bylaws for convenience of
reference only and in case of any conflict, the text of these Bylaws rather
than the headings shall control.
- 14 -
<PAGE> 1
EXHIBIT NO. 99.4
STOCK CERTIFICATE
<PAGE> 2
EXHIBIT 99.4
[SAFECO Symbol]
ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE
SAFECO TAX-FREE MONEY MARKET FUND
A SERIES OF SAFECO MONEY MARKET TRUST
SEATTLE, WASHINGTON
CUSIP SEE
REVERSE FOR CERTAIN
DEFINITIONS
This is to certify that,
is the owner of of the fully paid and non-assessable
shares of beneficial interest of the SAFECO Tax-Free Money Market Fund, a
series of the SAFECO Money Market Trust, with par value of $.001, transferable
on the books of the Trust in person or by duly authorized attorney upon
surrender of this certificate properly endorsed. This certificate and the
shares represented hereby are received and held subject to the provisions of
the Trust Instrument and the Bylaws of the Trust, as amended. In Witness
Whereof, SAFECO MONEY MARKET TRUST has caused this certificate to be signed by
its duly authorized officers. This certificate is not valid until
countersigned by the Transfer Agent.
Dated: SAFECO MONEY
MARKET TRUST
ELNA A. THOMSON, SECRETARY DAVID F. HILL, PRESIDENT
SAFECO SERVICES CORPORATION
BY
TRANSFER AGENT
- ------------------------------------------
AUTHORIZED SIGNATURE
[Corporate Seal containing following language: SAFECO MONEY MARKET
TRUST/DELAWARE/BUSINESS TRUST/1993/SEAL]
<PAGE> 3
DEFINITIONS
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as through they were written out on full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN Act-........Custodian.........
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gift to Minors
survivorship and not as tenants Act.........................
in common (State)
Additional abbreviations may also be used though not in the above list.
For Value received - hereby sell, assign and transfer unto
______________________________________________________________________________
______________________________________________________________________________
(NAME AND ADDRESS OF TRANSFEREE SHOULD BE PRINTED OR TYPEWRITTEN)
______________________________________________________________________________
___________________________________________________________________ Shares of
the Beneficial Interest represented by the within Certificate and do hereby
irrevocably constitute and appoint _________________________________ Attorney
to transfer the said shares on the books of the within named Trust, with full
power of substitution in the premises.
Dated_____________________
___________________ ___________________________________
Signature(s) Guaranteed Notice: The signature to this
assignment must correspond with the
name(s) as written upon the face of
the certificate in every particular,
without alteration or enlargement,
or any change whatever.
<PAGE> 4
[SAFECO Symbol]
ORGANIZED UNDER THE LAWS OF THE STATE OF DELAWARE
SAFECO MONEY MARKET FUND
A SERIES OF SAFECO MONEY MARKET TRUST
SEATTLE, WASHINGTON
CUSIP
SEE REVERSE FOR
CERTAIN DEFINITIONS
This is to certify that,
is the owner of of the fully paid
and non-assessable shares of beneficial interest of the SAFECO Money Market
Fund, a series of the SAFECO Money Market Trust, with par value of $.001,
transferable on the books of the Trust in person or by duly authorized
attorney upon surrender of this certificate properly endorsed. This
certificate and the shares represented hereby are received and held subject to
the provisions of the Trust Instrument and the Bylaws of the Trust, as
amended. In Witness Whereof, SAFECO MONEY MARKET TRUST has caused this
certificate to be signed by its duly authorized officers. This certificate is
not valid until countersigned by the Transfer Agent.
Dated: SAFECO MONEY
MARKET TRUST
ELNA A. THOMSON, SECRETARY DAVID F. HILL, PRESIDENT
SAFECO SERVICES CORPORATION
BY
TRANSFER AGENT
- -----------------------------------------------
AUTHORIZED SIGNATURE
[Corporate Seal containing following language: SAFECO MONEY MARKET
TRUST/DELAWARE/BUSINESS TRUST/1993/SEAL]
<PAGE> 5
DEFINITIONS
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as through they were written out on full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN Act-........Custodian........
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gift to Minors
survivorship and not as tenants Act.........................
in common (State)
Additional abbreviations may also be used though not in the above list.
For Value received - hereby sell, assign and transfer unto
______________________________________________________________________________
______________________________________________________________________________
(NAME AND ADDRESS OF TRANSFEREE SHOULD BE PRINTED OR TYPEWRITTEN)
______________________________________________________________________________
___________________________________________________________________ Shares of
the Beneficial Interest represented by the within Certificate and do hereby
irrevocably constitute and appoint _________________________________ Attorney
to transfer the said shares on the books of the within named Trust, with full
power of substitution in the premises.
Dated_____________________
___________________ ___________________________________
Signature(s) Guaranteed Notice: The signature to this
assignment must correspond with the
name(s) as written upon the face of
the certificate in every particular,
without alteration or enlargement,
or any change whatever.
<PAGE> 1
EXHIBIT NO. 99.5
INVESTMENT ADVISORY AND MANAGEMENT CONTRACT
<PAGE> 2
EXHIBIT 99.5
INVESTMENT ADVISORY AND MANAGEMENT CONTRACT
THIS AGREEMENT is made and executed this 30th day of September, 1993, between
SAFECO MONEY MARKET TRUST ("Trust"), a Delaware business trust and SAFECO ASSET
MANAGEMENT COMPANY ("Manager"), a Washington corporation.
WHEREAS, the Trust is registered with the Securities & Exchange
Commission as a series type, open-end, management investment company under the
Investment Company Act of 1940, as amended ("1940 Act"), and has caused its
shares of beneficial interest to be registered for sale to the public under the
Securities Act of 1933 (the "1933 Act") and various state securities laws; and
WHEREAS, the Trust intends to offer for public sale distinct series
of shares of beneficial interest ("Series"), each Series corresponding to a
distinct portfolio; and
WHEREAS, the Trust wishes to retain the Manager to provide investment
advisory, management, and administrative services to the Trust and each Series
as now exists and as hereafter may be established which are listed in Exhibit A
to this Agreement as amended from time to time; and
WHEREAS, the Manager is willing to furnish such services on the terms
and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, it is agreed as follows:
1. Appointment of Manager. The Trust hereby appoints the Manager
as investment adviser and manager of each Series to administer its affairs,
subject to the supervision of the Trust's Board of Trustees, for the period and
on the terms set forth in this Agreement. The Manager hereby accepts such
appointment and agrees to render the services required by this Agreement for
the compensation and upon such other terms and conditions as are set forth in
this Agreement. The Manager shall for all purposes herein be deemed an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
2. Duties of Series. Each Series shall at all times keep the
Manager fully informed with regard to the securities owned by it, its funds
available or to become available for investment,
<PAGE> 3
and generally as to the condition of its affairs. It shall furnish the Manager
with such other documents and information with regard to its affairs as the
Manager may from time to time reasonably request.
3. Duties of Manager.
(a) General. The Manager shall furnish to the Trust space in the
offices of the Manager or in such other place as may be agreed upon from time
to time and all necessary office facilities, equipment and personnel for
managing the affairs and investments and keeping the books of the Trust.
Subject to the supervision of the Trust's Board of Trustees, the Manager shall
regularly provide each Series with investment research, advice, management and
supervision and shall furnish a continuous investment program for each Series'
portfolio of securities consistent with each Series' investment objectives and
policies. The Manager shall determine from time to time what securities will
be purchased, retained or sold by each Series, and shall implement those
decisions, all subject to the provisions of the Trust's Trust Instrument and
Bylaws, the 1940 Act, the applicable rules and regulations of the Securities
and Exchange Commission, and other applicable federal and state law, as well as
the investment objectives and policies of each Series. The Manager will place
orders pursuant to its investment determinations for each Series either
directly with the issuer or with any broker or dealer. In placing orders with
brokers and dealers the Manager will attempt to obtain the best net price and
the most favorable execution of its orders. The Manager shall also provide
advice and recommendations with respect to other aspects of the business and
affairs of the Trust and each Series, and shall perform such other functions of
management and supervision as may be directed by the Board of Trustees of the
Trust.
(b) Reports and Records. The Manager, at its expense, shall supply
the Trust's Board of Trustees and officers with all statistical information and
reports reasonably requested by them and reasonably available to the Manager.
The Manager shall oversee the maintenance of all books and records with respect
to the Trust's and each Series' securities transactions and the keeping of the
Trust's and each Series' books of account in accordance with all applicable
federal and state laws and regulations. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Manager hereby agrees that any records which
it maintains for the Trust or any Series are the property of the Trust, and
further agrees to surrender promptly to the Trust any of such records upon the
Trust's request. The Manager further agrees to arrange for the preservation of
the records required to be maintained by Rule 31a-1 under the 1940 Act for
2
<PAGE> 4
the periods prescribed by Rule 31a-2 under the 1940 Act. The Manager shall
authorize and permit any of its directors, officers and employees, who may be
elected as directors or officers of the Trust, to serve in the capacities in
which they are elected.
4. Allocation of Expenses.
(a) (1) Manager shall pay the organizational expenses of the
Trust, which the Trust shall reimburse to Manager over a sixty-month period
commencing after the date of the Trust's initial public offering of its shares.
If the Trust shall not be obligated to reimburse the Manager for aggregate
organizational expenses of a Series in excess of a specified amount, such
amount shall be set forth in Exhibit A as amended from time to time. (2) The
Manager shall be responsible for the compensation (if any) paid to officers of
the Trust for serving in that capacity; the expenses of computing the net asset
value per share of the Trust and each Series; federal and state registration
fees for the Trust and each Series, other than the initial fees to be
reimbursed pursuant to Section 4(a)(1); all expenses of preparing, printing and
distributing advertising and sales literature for the Trust and each Series;
and the cost of fidelity bond and other insurance for the Trust and each
Series.
(b) The Trust and each Series shall bear all expenses of their
organization, operations and business not specifically assumed or agreed to be
paid by the Manager as provided in this Agreement. In particular, but without
limiting the generality of the foregoing, the Trust and each Series shall pay:
(1) Custody and Accounting Services. All expenses of the
transfer, receipt, safekeeping, servicing and accounting for the cash,
securities, and other property of the Trust and each Series, including
all charges of depositories, custodians, and other agents, if any;
(2) Shareholder Servicing. All expenses of maintaining and
servicing shareholder accounts, including all charges of the transfer,
shareholder recordkeeping, dividend disbursing, redemption, and other
agents of the Trust and each Series, if any;
(3) Shareholder Communications. All expenses of preparing,
printing, and distributing reports and certain other communications to
shareholders of the Trust and each Series;
3
<PAGE> 5
(4) Shareholder Meetings. All expenses incidental to holding
meetings of shareholders of the Trust and each Series, including the
printing of notices and proxy materials and the expenses of any proxy
solicitation;
(5) Prospectuses And Statements of Additional Information. All
expenses of preparing, printing and mailing to shareholders of annual
or more frequent revisions of the Prospectus and Statement of
Additional Information for the Trust and each Series;
(6) Communication Equipment. All charges for equipment or
services used for communication between the Manager, the Trust or each
Series and the custodian, transfer agent or any other agent selected
by the Trust;
(7) Legal and Accounting Fees and Expenses. All charges for services
and expenses of the Trust's legal counsel and independent auditors;
(8) Trustees' Fees and Expenses. All compensation of trustees,
other than those affiliated with the Manager, and all expenses
incurred in connection with their service;
(9) Issue and Redemption of Fund Shares. All expenses incurred in
connection with the issue, redemption, and transfer of shares of the
Trust and each Series, including the expense of confirming all share
transactions, and of preparing and transmitting the Trust's stock
certificates, if certificates are issued;
(10) Brokerage Commissions. All brokers' commissions and other
charges incident to the purchase, sale, or lending of portfolio
securities of the Trust and Series;
(11) Taxes. All taxes or governmental fees payable by or with
respect to the Trust and each Series to federal, state, or other
governmental agencies, domestic or foreign, including stamp or other
transfer taxes;
(12) Nonrecurring and Extraordinary Expenses. Such nonrecurring
expenses as may arise, including the costs of actions, suits, or
proceedings to which the Trust or any Series is a party and the
expenses the Trust or any Series may incur as a result of its legal
obligation to provide indemnification to its trustees, officers, and
agents.
4
<PAGE> 6
5. Non-Exclusive Services. The services of the Manager to the
Trust and each Series hereunder are not to be deemed exclusive, and the Manager
shall be free to render similar services to others so long as its services
hereunder are not impaired thereby.
6. Compensation for Services.
(a) For the services and facilities to be furnished by the Manager,
each existing Series shall pay the Manager an annual fee computed on the basis
of the average net asset value of the Series as ascertained each business day
and paid monthly in accordance with the schedule set forth in Exhibit A to this
Agreement. For purposes of computing the annual fee, the net asset value of
the Series shall be equal to the difference between its total assets and its
total liabilities (excluding from such liabilities its capital stock and
surplus) with its assets and its liabilities to be valued in accordance with
the procedures set forth in the Trust's Registration Statement.
(b) For the services and facilities to be furnished by the
Manager, any new Series of the Trust which is issued on a future date will pay
the Manager a fee according to a Schedule which will be set forth in an amended
Exhibit A to this Agreement.
(c) If SAFECO Securities, Inc., receives portfolio brokerage
commissions resulting from transactions in the portfolio of any Series
("commissions"), any management fee earned by Manager will be reduced by the
amount of such commissions so received by SAFECO Securities, Inc.
(d) The Trust and the Manager may mutually agree to reduce the
fees payable by any Series if the reduction is in the best long-range interest
of the Trust and the Manager.
(e) If the Manager shall serve for less than the whole of any
month, the monthly management fee payable by each Series shall be prorated.
7. Reimbursements by Manager. The Manager agrees to reimburse a
Series for the amount by which the Series' expenses in any full fiscal year
(excluding taxes and interest expense, brokerage expenses and extraordinary
expenses) exceed the limits prescribed by any state in which the Series shares
are qualified for sale. For the purpose of this calculation, the costs of
acquiring and disposing of portfolio securities shall be charged to the cost of
or amount realized from such securities and shall not be deemed expenses of the
Series. For purposes of
5
<PAGE> 7
determining whether the Series is entitled to reimbursement, the expenses of
the Series are calculated on a monthly basis. If a Series is entitled to a
reimbursement, that month's advisory fee will be reduced or postponed, with any
adjustments made at the end of the fiscal year.
8. Liability of Manager. The Manager assumes no responsibility
under this Agreement other than to render the services called for hereunder, in
good faith, and shall not be responsible for any action of the Trust's Board of
Trustees in following or declining to follow any advice or recommendations of
the Manager; provided, that nothing in this Agreement shall protect the Manager
against any liability to the Trust or its shareholders to which it 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 hereunder.
9. Books and Records. The Trust shall cause its books and
accounts to be audited at least once each year by a reputable, independent
public accountant or organization of public accountants who shall render a
report to the Trust.
10. Affiliation.
(a) It is understood that trustees, officers, shareholders and agents
of the Trust and each Series are or may be interested in the Manager (or any
successor thereof) as directors, officers, shareholders or otherwise, and that
the Manager (or any such successor) is or may be interested in the Trust as a
shareholder or otherwise.
(b) No trustee, officer or employee of the Trust and each Series
shall receive from the Trust any salary or other compensation as such director,
officer or employee while he or she is at the same time a director, officer, or
employee of the Manager or any affiliated company of the Manager. This
paragraph shall not apply to directors or other persons who are not regular
members of the Manager's or any affiliated company's staff.
11. Unrestricted Activities. Nothing in this Agreement shall
limit or restrict the right of any director, officer, or employee of the
Manager who may also be a trustee, officer, or employee of the Trust or any
Series, to engage in any other business or to devote his or her time and
attention in part to the management or other aspects of any other business,
whether of a similar nature or a dissimilar nature, or limit or restrict the
right of the Manager to engage in any other business or to render services of
any kind, including investment advisory and
6
<PAGE> 8
management services, to any other corporation, firm, individual or association.
12. Use of Name. In the event this Agreement is terminated by
either party or upon written notice from the Manager at any time, the Trust
hereby agrees that it will eliminate from its corporate name any reference to
the name of "SAFECO." The Trust shall have the non-exclusive use of the name
"SAFECO" in whole or in part only so long as this Agreement is effective or
until such notice is given. Notwithstanding the foregoing and in the event
that this Agreement is terminated by either party, the Manager may elect to
permit the Trust to continue to use the name "SAFECO" under such terms and
conditions as the Manager shall set forth in writing.
13. Effectiveness Date/Renewal. This Agreement will become
effective with respect to each Series on the date first written above or such
later date as indicated on Exhibit A, provided that it shall have been approved
by the Trust's Board of Trustees and by the shareholders of that Series in
accordance with the requirements of the 1940 Act and, unless sooner terminated
as provided herein, will continue in effect for two years from the above
written date. Thereafter, if not terminated, this Agreement shall continue in
effect with respect to each Series for successive annual periods ending on the
same date of each year, provided that such continuance is specifically approved
at least annually (i) by the Trust's Board of Trustees or (ii) with respect to
any Series, by a vote of a majority of the outstanding voting securities of
that Series, provided that in either event the continuance is also approved by
a majority of the Trust's trustees who are neither interested persons (as
defined in the 1940 Act) of the Trust or the Manager by vote cast at a meeting
called for the purpose of voting on such continuance.
14. Amendment. This Agreement may be amended by the parties only
if the terms of the amendment are approved by either (i) a majority of the
Trust's Board of Trustees or, (ii) with respect to any given Series, by a vote
of a majority of the outstanding voting securities of that Series at a duly
called meeting of the shareholders. In either case, the majority of the
trustees, who are neither interested persons of the Trust or the Manager, must
approve the amendment.
15. Termination. This Agreement is terminable with respect to any
Series or in its entirety without penalty by the Trust's Board of Trustees, by
vote of a majority of the outstanding voting securities of each affected Series
(as defined in the 1940 Act), or by the Manager, on not less than 60 days'
notice to the other party and will be terminated upon the mutual
7
<PAGE> 9
written consent of the Manager and the Trust. This Agreement shall terminate
automatically in the event of its assignment by the Manager and shall not be
assignable by the Trust without the consent of the Manager.
16. Limitation of Liability. Manager is hereby expressly put on
notice of (i) the limitation of shareholder, officer and trustee liability as
set forth in the Trust Instrument of the Trust and (ii) of the provisions in
the Trust Instrument permitting the establishment of separate Series and
limiting the liability of each Series to obligations of that Series. Manager
hereby agrees that obligations assumed by the Trust pursuant to this Agreement
are in all cases assumed on behalf of a particular Series and each such
obligation shall be limited in all cases to that Series and its assets.
Manager agrees that it shall not seek satisfaction of any such obligation from
the shareholders or any individual shareholder of the Trust nor from the
officers or trustees of any individual officer or trustee of the Trust.
17. Defined Terms. For the purpose of this Agreement, the terms "vote of
a majority of the outstanding voting securities," "assignment," and "interested
persons," shall have the respective meanings specified in the Investment
Company Act of 1940 when such terms are used in reference to the Trust and the
Series.
18. Entire Agreement/Enforcement of Rights. This Agreement embodies the
entire agreement between the Manager and the Trust with respect to the services
to be provided by the Manager to the Trust and each Series and supersedes any
prior written or oral agreement between those parties. In the event that
either party should be required to take legal action in order to enforce its
rights under this Agreement, the prevailing party in any such action or
proceeding shall be entitled to recover from the other party costs and
reasonable attorneys' fees.
19. Miscellaneous. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed in counterparts, each of which taken together shall
constitute one and the same instrument. Manager understands that the rights
and obligations of each Series under the Trust Instrument are separate and
distinct from those of any and all other Series.
19. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Washington and, to the
extent it involves any United States statute, in accordance with the laws of
the United States.
8
<PAGE> 10
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
ATTEST: SAFECO MONEY MARKET TRUST
/S/ELNA A. THOMSON By/S/DAVID F. HILL
- ------------------ ------------------
Elna A. Thomson David F. Hill
Secretary President
ATTEST: SAFECO ASSET MANAGEMENT COMPANY
/S/ELNA A. THOMSON By/S/RICHARD W. HUBBARD
- ------------------ -----------------------
Elna A. Thomson Richard W. Hubbard
Secretary President
9
<PAGE> 11
EXHIBIT A
SAFECO MONEY MARKET TRUST
SAFECO MONEY MARKET FUND
FEE SCHEDULE
<TABLE>
<CAPTION>
Net Assets Annual Fee
---------- ----------
<S> <C>
For assets up to and including $250,000,000 .5 of 1%
For assets in excess of $250,000,000 and
up to and including $500,000,000 .4 of 1%
For assets in excess of $500,000,000 and
up to and including $750,000,000 .3 of 1%
For assets over $750,000,000 .25 of 1%
</TABLE>
ORGANIZATIONAL EXPENSES
Not applicable.
SAFECO Asset Management Company SAFECO Money Market Trust
on behalf of
SAFECO Money Market Fund
By:/S/RICHARD W. HUBBARD By:/S/DAVID F. HILL
--------------------- ----------------
Its: President Its: President
Attest:/S/ELNA A. THOMSON Attest:/S/ELNA A. THOMSON
------------------ ------------------
Secretary Secretary
As of 9-30-93
10
<PAGE> 12
EXHIBIT A
SAFECO MONEY MARKET TRUST
SAFECO TAX-FREE MONEY MARKET FUND
FEE SCHEDULE
<TABLE>
<CAPTION>
Net Assets Annual Fee
---------- ----------
<S> <C>
For assets up to and including $100,000,000 .5 of 1%
For assets in excess of $100,000,000 and
up to and including $250,000,000 .4 of 1%
For assets in excess of $250,000,000 and
up to and including $500,000,000 .3 of 1%
For assets over $500,000,000 .2 of 1%
</TABLE>
ORGANIZATIONAL EXPENSES
Not applicable.
SAFECO Asset Management Company SAFECO Money Market Trust
on behalf of
SAFECO Tax-Free
Money Market Fund
By:/S/RICHARD W. HUBBARD By:/S/DAVID F. HILL
--------------------- ----------------
Its: President Its: President
Attest:/S/ELNA A. THOMSON Attest:/S/ELNA A. THOMSON
------------------- ------------------
Secretary Secretary
As of 9-30-93
11
<PAGE> 1
EXHIBIT NO. 99.6
DISTRIBUTION AGREEMENT
<PAGE> 2
EXHIBIT 99.6
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT, made this 30th day of September, 1993, by
and between SAFECO MONEY MARKET TRUST, a Delaware business trust ("Trust"), and
SAFECO SECURITIES, INC. a Washington corporation (the "Distributor").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission as a series type open-end investment company under the Investment
Company Act of 1940, as amended (the "1940 Act") and has caused its shares of
beneficial interest to be registered for sale to the public under the
Securities Act of 1933 (the "1933 Act") and various state securities laws; and
WHEREAS, the Trust intends to offer for public sale distinct series of
shares of beneficial interest, each corresponding to a distinct portfolio
("Series"); and
WHEREAS, the Trust wishes to retain the Distributor as the principal
underwriter in connection with the offering and sale of the shares of
beneficial interest of each Series as now exists and as hereafter may be
established which are listed on Exhibit A to this Agreement as amended from
time to time ("Shares") and to furnish certain other services to the Trust as
specified in this Agreement; and
WHEREAS, this Agreement has been approved by a vote of the Trust's
Board of Trustees, and certain trustees who are not interested persons in
conformity with Section 15(c) under the 1940 Act; and
WHEREAS, the Distributor is willing to act as principal underwriter
and to furnish such services on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed as follows:
1. Appointment of Distributor. The Trust hereby appoints the
Distributor as principal underwriter in connection with the offering and sale
of Shares of each Series. The Trust authorizes the Distributor, as exclusive
agent for the Trust, upon the commencement of operations of any Series and
subject to applicable federal and state law and the Trust Instrument and Bylaws
of the Trust: (a) to promote the Series; (b) to solicit orders for the
purchase of the Shares of the Series subject to such terms and conditions as
the Trust may specify; and (c) to accept orders for the purchase of the Shares
of the Series on behalf of the Trust. The Distributor shall comply with all
applicable federal and state laws and offer the Shares of each Series on an
agency or "best efforts" basis under which the Trust shall issue only such
Shares as are actually sold. The Distributor shall have the right to use any
list of shareholders
<PAGE> 3
of the Trust or any Series or any other list of investors which it obtains in
connection with its provision of services under this Agreement; provided,
however, that the Distributor shall not sell or knowingly provide such list or
lists to any unaffiliated person without the consent of the Trust's Board of
Trustees.
2. Duties of Trust. The Trust agrees to register the Shares with the
Securities and Exchange Commission, state and other regulatory bodies, and to
prepare and file from time to time such Prospectuses, Statements of Additional
Information, amendments, reports and other documents as may be necessary to
maintain the Registration Statement. Each Series shall bear all expenses
related to preparing and typesetting such Prospectuses, Statements of
Additional Information and other materials required by law and such other
expenses, including printing and mailing expenses, related to such Series'
communications with persons who are shareholders of that Series.
3. Duties of Distributor. The Distributor shall print and distribute
to prospective investors Prospectuses, and shall print and distribute, upon
request, to prospective investors Statements of Additional Information, and may
print and distribute such other sales literature, reports, forms and
advertisements in connection with the sale of the Shares as comply with the
applicable provisions of federal and state law. In connection with such sales
and offers of sale, the Distributor shall give only such information and make
only such statements or representations as are contained in the Prospectus,
Statement of Additional Information, or in information furnished in writing to
the Distributor by the Trust, and the Trust shall not be responsible in any way
for any other information, statements or representations given or made by the
Distributor or its representatives or agents. Except as specifically provided
in this Agreement, the Trust shall bear none of the expenses of the Distributor
in connection with its offer and sale of the Shares.
4. Other Broker Dealers. The Distributor may enter into dealer
agreements with registered and qualified securities dealers for the sale of the
Shares. The form of any such dealer agreement shall be mutually agreed upon and
approved by the Trust and the Distributor.
5. Public Offering Price. The public offering price of the Shares of
each Series shall be the net asset value per share (as determined by the Trust)
of the outstanding Shares of the Series, if any, as described in the
Registration Statement. The Trust shall furnish the Distributor with a
statement of each computation of public offering price and of the details
entering into such computation.
- 2 -
<PAGE> 4
6. Repurchase of Shares. The Distributor may at its sole discretion
repurchase Shares offered for sale by the shareholders. Repurchase of Shares
by the Distributor shall be at the net asset value next determined after a
repurchase order has been received. The Distributor will receive no commission
or other remuneration for repurchasing Shares. At the end of each business
day, the Distributor shall notify by any appropriate means, the Trust and
SAFECO Services Corporation, the Trust's transfer agent, of the orders for
repurchase of Shares received by the Distributor since the last such report,
the amount to be paid for such Shares, and the identity of the shareholders
offering Shares for repurchase. Upon such notice, the Trust shall pay the
Distributor such amounts as are required by the Distributor for the repurchase
of such Shares in cash or in the form of a credit against moneys due the Trust
from the Distributor as proceeds from the sale of Shares. The Trust reserves
the right to suspend such repurchase right upon written notice to the
Distributor. The Distributor further agrees to act as agent for the Trust to
receive and transmit promptly to the Trust's transfer agent shareholder
requests for redemption of Shares.
7. Indemnification.
(a) The Distributor shall be entitled to receive and act on the
advice of counsel for the Trust which advice shall be at the expense of the
Trust and shall be without liability for any action taken, or things done, or
omitted to be done, pursuant to such advice.
(b) The Trust agrees to indemnify, defend and hold the Distributor,
its 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 this Agreement be construed so as to protect the
Distributor against any liability to the Trust 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 this Agreement, and
further provided
- 3 -
<PAGE> 5
that the Trust shall not indemnify the Distributor for conduct set forth in
this subparagraph 7(b).
(c) The Distributor agrees to indemnify, defend and hold the Trust,
its several trustees, officers and employees and any person who controls the
Trust 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 Trust, its
trustees, 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 information furnished
in writing by the Distributor to the Trust for use in the Registration
Statement or arising out of or based upon any alleged omission to state a
material fact in connection with such information required to be stated in the
Registration Statement or necessary to make such information not misleading.
As used in this subparagraph 7(c), the term "employee" shall not include a
corporate entity under contract to provide services to the Trust or any Series,
or any employee of such a corporate entity, unless such person is otherwise an
employee of the Trust.
8. Certificates. The Trust shall not be required to issue
certificates representing Shares. If the Trust elects to issue certificates
and a shareholder request for certificates is transmitted through the
Distributor, the Trust will cause certificates evidencing the Shares owned to
be issued in such names and denominations as the Distributor shall from time to
time direct, provided that no certificates shall be issued for fractional
Shares.
9. Withdrawal of Offering. The Trust reserves the right at any time
to withdraw all offerings of the Shares of any or all Series by written notice
to the Distributor at its principal office.
10. Independent Contractor Status. The Distributor is an independent
contractor and shall be agent for the Trust only in respect to the sale and
redemption of the Shares.
11. Non-Exclusive Services. The services of the Distributor to the
Trust under this Agreement are not to be deemed exclusive, and the Distributor
shall be free to render similar services or other services to others so long as
its services hereunder are not impaired thereby.
12. Use of Name. In the event this Agreement is terminated by either
party or upon written notice from the Distributor at any time, the Trust hereby
agrees that it will eliminate from its corporate name any reference to the name
of "SAFECO." The Trust
- 4 -
<PAGE> 6
shall have the non-exclusive use of the name "SAFECO" in whole or in part only
so long as this Agreement is effective or until such notice is given.
Notwithstanding this subparagraph and in the event this Agreement is terminated
by either party, the Distributor may elect to permit the Trust to continue to
use the name "SAFECO" under such terms and conditions as the Distributor shall
set forth in writing.
13. Effective Date/Renewal. This Agreement will become effective
with respect to each Series on the date first written above or such later date
as indicated on Exhibit A and, unless sooner terminated as provided herein,
will continue in effect for two years from the above written date. Thereafter,
if not terminated, this Agreement shall continue in effect with respect to each
Series for successive annual periods ending on the same date of each year,
provided that such continuance is specifically approved at least annually (i)
by the Trust's Board of Trustees or (ii) with respect to any given Series, by a
vote of a majority of the outstanding voting securities of that Series (as
defined in the 1940 Act), provided that in either event the continuance is also
approved by majority of the Trust's trustees who are neither interested persons
(as defined in the 1940 Act) of the Trust or the Distributor by vote cast at a
meeting called for the purpose of voting on such continuance.
14. Amendment. This Agreement may be amended by the parties only if
the terms of the amendment are either (i) approved by the Trust's Board of
Trustees or, (ii) with respect to any given Series, by a vote of a majority of
the outstanding voting securities of that Series at a duly called meeting of
the shareholders. In either case, the majority of the trustees, who are
neither interested persons of the Trust or the Distributor, must approve the
amendment.
15. Termination. This Agreement is terminable with respect to any
Series or in its entirety without penalty by the Trust's Board of Trustees, by
vote of a majority of the outstanding voting securities of each affected Series
(as defined in the 1940 Act), or by the Distributor, on not less than 60 days'
notice to the other party and will be terminated upon the mutual written
consent of the Distributor and the Trust. This Agreement will also
automatically and immediately terminate in the event of its assignment.
16. Limitation of Liability. Distributor is hereby expressly put on
notice of (i) the limitation of shareholder, officer and trustee liability as
set forth in the Trust Instrument of the Trust and (ii) of the provisions in
the Trust Instrument permitting the establishment of separate Series and
limiting the liability of each Series to obligations of that Series.
Distributor hereby agrees that obligations assumed by the Trust pursuant to
this Agreement are in all cases assumed on
- 5 -
<PAGE> 7
behalf of a particular Series and each such obligation shall be limited in all
cases to that Series and its assets. Distributor agrees that it shall not seek
satisfaction of any such obligation from the shareholders or any individual
shareholder of the Trust nor from the officers or trustees or any individual
officer or trustee of the Trust.
17. Definitions. As used in this Agreement, the term(s):
(a) "net assets" shall have the meaning ascribed to it in the Trust's
Trust Instrument;
(b) "assignment", "interested person", and "majority of the
outstanding voting securities" shall have the meanings given to them by Section
2(a) of the 1940 Act, subject to such exemptions as may be granted by the
Securities and Exchange Commission by any rule, regulation or order.
(c) "Registration Statement" shall mean the registration statement
most recently filed by the Trust with the Securities and Exchange Commission
and effective under the 1940 Act and 1933 Act, as such Registration Statement
is amended by any amendments thereto at the time in effect;
(d) "Prospectus" and "Statement of Additional Information" shall mean,
respectively, the form of prospectus and statement of additional information
with respect to each Series filed by the Trust as part of the Registration
Statement.
18. Entire Agreement/Enforcement of Rights. This Agreement
embodies the entire Agreement between the Distributor and the Trust with
respect to the services to be provided by the Distributor to the Trust and each
Series and supersedes any prior written or oral agreement between those
parties. In the event that either party should be required to take legal
action in order to enforce its rights under this Agreement, the prevailing
party in any such action or proceeding shall be entitled to recover from the
other party costs and reasonable attorneys' fees.
19. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed in counterparts, each of which taken together shall
constitute one and the same instrument. Distributor understands that the
rights and obligations of each Series under the Trust Instrument are separate
and distinct from those of any and all other Series.
20. Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of Washington.
- 6 -
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be
executed by their officers thereunto duly authorized.
Attest:
SAFECO MONEY MARKET TRUST
By: /S/ ELNA A. THOMSON By: /S/ DAVID F. HILL
------------------ -----------------
Secretary President
Attest:
SAFECO SECURITIES, INC.
By: /S/ ELNA A. THOMSON By: /S/ DAVID F. HILL
------------------- -----------------
Secretary President
- 7 -
<PAGE> 9
EXHIBIT A
SAFECO MONEY MARKET TRUST
The SAFECO Money Market Trust consists of the following Series:
1. SAFECO Money Market Fund
2. SAFECO Tax-Free Money Market Fund
As of 9-30-93
- 8 -
<PAGE> 1
EXHIBIT NO. 99.8
CUSTODY AGREEMENT
<PAGE> 2
EXHIBIT 99.8
CUSTODY AGREEMENT
THIS AGREEMENT executed as of the 30th day of September, 1993, between
SAFECO MONEY MARKET TRUST, a Delaware business trust, ("Trust"), and U. S. BANK
OF WASHINGTON, N.A., a national banking association ("Bank").
WHEREAS, the Trust is registered with the Securities and Exchange
Commission as a series type open-end, management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"), and has caused its
shares of beneficial interest to be registered for sale to the public under the
Securities Act of 1933 (the "1933 Act") and various state securities laws; and
WHEREAS, the Trust may, from time to time, organize one or more series
of shares, in addition to the series set forth in Exhibit A attached hereto,
each of which shall represent an interest in a separate portfolio of cash,
securities and other assets (all such existing and additional series now or
hereafter listed on Exhibit A are referred to herein individually, as a
"Series" and collectively, as "the Series," and
WHEREAS, the Trust desires to appoint the Custodian as custodian on
behalf of the Series in accordance with the provisions of the Investment
Company Act of 1940 (the "1940 Act") and the rules and regulations thereunder,
under the terms and conditions set forth in this Agreement, and the Custodian
has agreed to act as custodian;
NOW, THEREFORE, it is agreed by and between the parties hereto as
follows:
1. Appointment. The Trust on behalf of the Series hereby appoints the
Bank as custodian of all of the Series' cash, securities and other assets, and
the Bank hereby agrees to act as such upon the terms and conditions set forth
in this Agreement.
2. Delivery, Safe Keeping. The Trust will deliver or cause to be
delivered to the Bank from time to time all cash, securities and other assets
acquired by the Series from time to time during the term of this Agreement and
shall specify the Series to which such cash, securities and other assets are to
be allocated. The Bank shall keep safely such cash, securities and other
assets as custodian for the Series and shall deposit such cash, securities and
other assets with the Bank for the account of the Series.
3. Registration of Securities. Bank will hold stocks and other
registerable portfolio securities (other than bearer securities) registered in
the name of the Series, or in the name of any nominee of the Trust on behalf of
the Series, or in the name of any nominee of Bank, or in the name or nominee
name of any sub-custodian or agent appointed under paragraph 4 for whose
fidelity and liabilities Bank shall be fully responsible, or in street
<PAGE> 3
certificate form, so-called, with or without any indication of fiduciary
capacity. Unless otherwise instructed by the Trust, Bank will register all
such portfolio securities in the name of its authorized nominee. In any event,
all such securities and other assets shall be held in an account of the Bank
containing only assets of a Series, or only assets held by a Bank as a
fiduciary or custodian for customers, and provided further, that the records of
the Bank shall indicate at all times the Series or other customer for which
such securities and other assets are held in such account and their respective
interests therein. The Trust agrees to hold Bank and its nominee harmless for
any liability as a record holder of securities held in custody.
4. Custody of Moneys or Securities/Appointment of Agents.
Notwithstanding any other provisions of this Agreement, all or any of the cash,
securities or other assets of a Series may be held in Bank's custody, provided,
however, that the Bank may at any time or times in its discretion appoint (and
may at any time remove) any other bank or trust company which is itself
qualified under the 1940 Act to act as a sub-custodian or its agent to carry
out such of the provisions of this Agreement as the Bank may from time to time
direct. The appointment of any sub-custodian or agent shall not relieve the
Bank of its responsibilities or liabilities hereunder. Neither Bank nor any
sub-custodian or agent shall be entitled to reimbursement by Trust or the
Series for any fees or expenses of any sub-custodian or agent.
5. Deposit of Trust Assets in Securities Systems. Upon order of
the Trust on behalf of any Series, the Bank may deposit and/or maintain
securities owned by a Series in a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934, which acts as a securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities Systems" in accordance with
applicable Federal Reserve Board and Securities and Exchange Commission rules
and regulations, if any, and subject to the following provisions:
(a) The Bank may keep securities of the Series in a Securities
System provided that such securities are represented in an
account ("Account") of the Bank in the Securities System which
shall not include any assets of the Bank other than assets
held as a fiduciary, custodian or otherwise for customers;
(b) The records of the Bank with respect to securities of the
Series which are maintained in a Securities System shall
identify by book-entry those securities belonging to the
Series;
2
<PAGE> 4
(c) The Bank shall pay for securities purchased for the account of
the Series upon (i) receipt of advice from the Securities
System that such securities have been transferred to the
Account, and (ii) the making of an entry on the records of the
Bank to reflect such payment and transfer for the account of
the Series. The Bank shall transfer securities sold for the
account of the Series upon (i) receipt of advice from the
Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on
the records of the Bank to reflect such transfer and payment
for the account of the Series. Copies of all advice from the
Securities System of transfers of securities for the account
of the Series shall identify the Series, be maintained for the
Series by the Bank and be provided to the Trust as its
request. Upon request, the Bank shall furnish the Trust on
behalf of the Series confirmation of each transfer to or from
the account of the Series in the form of a written advice or
notice and shall furnish to the Trust on behalf of the Series
copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the
Series.
(d) The Bank shall provide the Trust for the Series with any
report obtained by the Bank on the Securities System's
accounting system, internal accounting control and procedures
for safeguarding securities deposited in the Securities
System;
(e) The Bank shall exercise reasonable care and diligence in the
use of the Securities System on behalf of the Trust and the
Series. The Bank shall be liable to the Trust for the benefit
of the Series for any loss or damage to the Series resulting
from use of the Securities System by reason of any negligence
or willful misconduct of the Bank or any of its agents, or of
any of the Bank's or any agent's employees, or from failure of
the Bank or any such agent to enforce effectively such rights
as it may have against the Securities System. At the election
of the Trust, it shall be entitled to be subrogated to the
rights of the Bank with respect to any claim against the
Securities System or any other person which the Bank may have
as a consequence of any such loss or damage if and to the
extent that the Series has not been made whole for any such
loss or damage.
3
<PAGE> 5
6. Segregated Account. The Bank shall upon order of the Trust on
behalf of each applicable Series establish and maintain a segregated account or
accounts for and on behalf of each such Series, into which account or accounts
may be transferred cash and/or securities, including securities maintained in
an account by the Bank pursuant to paragraph 5 hereof, (i) for the purposes of
compliance by the Series with the procedures required by Investment Company Act
Release No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (ii) for other proper corporate purposes,
but only, in the case of clause (ii), upon receipt of, in addition to an order
of the Trust on behalf of the applicable Series, a writing signed by any two
individuals whose names and signatures are covered by the most recent letter
provided to the Bank as provided in paragraph 12 setting forth the purpose or
purposes of such segregated account and declaring such purposes to be proper
corporate purposes.
7. Purchases of Securities. Upon the order of the Trust on behalf
of the Series, the Bank shall receive all securities purchased for the account
of the Trust and make payment according to the terms of the order insofar as
funds are available.
8. Sale and Delivery of Securities.
(a) Upon the order of the Trust on behalf of the Series, the Bank
shall make delivery of securities held by it as custodian or held in a
Securities System account of the Bank which have been sold by the Trust. Such
delivery shall be made upon payment in a manner satisfactory to the Bank of the
amount specified in said order. The Bank shall also deliver such securities as
may be called, redeemed, retired or otherwise become payable.
(b) Subparagraph (a) shall not prevent the Bank from making:
(i) Delivery of securities for examination to the broker
selling the same in accord with the "street" delivery custom
whereby such securities are delivered to such broker in
exchange for a delivery receipt exchanged on the same day
for an uncertified check of such broker to be presented on
the same day for certification;
(ii) Delivery of securities as collateral on borrowing
effected by the Trust or any Series; and
(iii) Delivery of securities owned by the Trust or any
Series as a redemption in kind of securities issued by the
Trust or any Series.
4
<PAGE> 6
9. Collections.
(a) On a timely basis, the Bank shall: (i) collect, receive and
hold on deposit for the account of the appropriate Series, all income and other
payments with respect to the securities held by it on behalf of a Series as
custodian; (ii) advise the Trust once each business day of such receipts;
(iii) execute ownership and other certificates and affidavits for all federal
and state tax purposes in connection with the collection of bond and note
coupons; (iv) present for payment all coupons and all other income items
requiring presentation, present for payment all securities which have become
payable at maturity, upon call for redemption or otherwise; (v) endorse for
collection checks, drafts or other negotiable instruments; and (vi) do all
other things which may be necessary or proper in connection with the receipt
and collection of any such item.
(b) The Bank shall not be under any obligation or duty to take action
to effect collection of any amount, if the securities upon which such amount is
payable are in default and payment is refused after due demand or presentation.
The Bank will, however, notify the Trust of such default and refusal to pay.
10. Disbursements.
(a) Notwithstanding anything contained elsewhere in this Agreement
to the contrary and subparagraphs (b) and (c) below, the Bank shall deliver
funds of the Trust only upon the purchase of securities by the Trust on behalf
of the Series.
(b) Upon the order of the Trust for the Series, the Bank shall
make cash disbursements for the account of the Trust and any Series insofar as
funds are available for such disbursements, for the payment of taxes, expenses
and liabilities including, without limitation:
(i) Management fees payable under any management agreement with
SAFECO Asset Management Company (or its successors) or any
other person selected to serve as an investment advisor to the
Trust or any Series.
(ii) Compensation payable by the Trust or any Series to any person,
firm or corporation, including compensation payable to the
Bank under this Agreement.
(iii) Cash dividends or distributions for any Series declared by the
Board of Trustees of the Trust.
5
<PAGE> 7
(c) Without the order of the Trust, the Bank may make cash
disbursements for non-discretionary ministerial items, including but not
limited to expenses in handling securities, stamp taxes, reimbursement of the
Bank for its out-of-pocket expenses incurred in the performance of its duties
hereunder and other similar items in connection with its duties under this
Agreement. The Bank shall advise the Trust once each business day of
disbursements so made.
11. Redemption and Repurchase of Shares of the Trust. From such
funds as may be available for the purpose but subject to the limitations of the
Trust Instrument and any applicable votes of the Trust's Board of Trustees
pursuant to the Trust Instrument, the Bank shall, upon receipt of instructions
from the Trust's Transfer Agent, make funds available for payment to
shareholders who have delivered to the Transfer Agent a request for redemption
or repurchase of their shares. If payment is to be made in kind, the
instructions must be accompanied by a certified copy of a resolution of the
Trust's Board of Trustees. In connection with the redemption or repurchase of
shares of a Series, the Bank is authorized upon receipt of instructions from
the Transfer Agent to wire funds to or through a commercial bank designated by
the redeeming shareholders. In connection with the redemption or repurchase of
shares of any Series, the Bank shall honor checks drawn on the Bank by a
shareholder, which checks have been furnished by the Trust to the shareholder,
when presented to the Bank in accordance with such procedures and controls as
are mutually agreed upon from time to time between the Trust and the Bank.
12. Proper Instructions.
(a) Except in the case of non-discretionary ministerial acts, and as
otherwise specifically provided in this Agreement, all action to be taken by
the Bank as custodian shall be taken upon the order of the Trust on behalf of
the Series. An "order" of the Trust on behalf of the Series shall consist of
written instructions with respect to a specified transaction, or transactions,
which instructions shall be signed by any two individuals whose names and
signatures are covered by the most recent letter addressed to the Bank setting
forth such names and signatures and signed by the President or Treasurer and
Secretary of the Trust. An "order" may consist of oral instructions in the
case of purchases and sales of shares of registered investment companies by any
Series, but only if the Bank reasonably believes such instructions to have been
provided by a person authorized to give such instructions for the transaction
involved and if such instruction is transmitted and received in accordance with
any procedures acceptable to both the Fund and the Bank. Oral instructions
shall not be accepted by the Bank for any other type of transaction.
6
<PAGE> 8
(b) Notwithstanding anything to the contrary contained in the
Agreement, no person authorized to give an "order" as described in the
preceding paragraph, Trustee, officer, employee or agent of the Trust shall
have physical access to the assets of any Series held by the Bank nor shall the
Bank deliver any assets of a Series for delivery to an account of such person;
provided, however, that nothing in this sub-paragraph (b) shall prohibit the
Trust's independent certified public accountants from examining or reviewing
the assets of the Series held by the Bank.
13. Forwarding of Information and Proxies. The Bank will forward
promptly to the Trust for each Series all information or documents which it may
receive with respect to any securities held by a Series under this Agreement,
including all notices, reports and other financial information. Neither the
Bank, nor its nominee, shall vote any of the securities or authorize the voting
of any securities or give any consent or take any other action with respect
thereto, except as otherwise provided herein, unless directed to do so upon
order of the Trust on behalf of any Series.
14. Reorganization or Liquidation, Etc. of the Trust. In the case of
the following transactions, not in the ordinary course of business, namely, the
merger or consolidation of the Trust and another investment company, the sale
by the Trust of all, or substantially all, of its assets to another investment
company, or the liquidation or dissolution of the Trust and distribution of its
assets, the Bank shall deliver the securities held by it under this Agreement
and disburse cash only upon the order of the Trust and upon receipt of opinion
of counsel of the Trust (upon which opinion the Bank may rely without liability
to any party) to the effect that all necessary corporate action therefore has
been taken, or, concurrently with the Bank's action will be taken.
15. Compensation. Each Series shall pay to the Bank compensation for
its services under this Agreement in accordance with the attached schedule of
charges set forth in Exhibit D which may be amended from time to time by mutual
agreement. In addition, each Series will reimburse the Bank for all
out-of-pocket expenses, including taxes and other charges required to be paid
by the Bank with respect to the property of each Series, incurred by the Bank
in the performance of its duties hereunder.
16. Responsibility.
(a) In the performance of its duties under this Agreement, the Bank
shall exercise reasonable care and diligence. The Bank shall be liable to the
Trust for the benefit of the Series for any loss or damage to the Series
resulting from any negligence or willful misconduct of the Bank or any of its
agents, or of any of the Bank's or any agent's employees in the performance of
the Bank's duties under this Agreement.
7
<PAGE> 9
(b) Except as otherwise provided herein, the Bank shall not incur
liability to anyone and shall be indemnified and held harmless by the Trust and
the Series from and against all liability, claims, demands, actions, suits,
costs or expenses (including the fees of its counsel) for anything done or
suffered by the Bank in good faith in accordance with an order of the Trust or
pursuant to the terms of this Agreement. The Bank may apply for and obtain the
advice and opinion of counsel to the Trust or its own counsel with respect to
questions of law and shall be fully protected with respect to anything done or
omitted by it in good faith in conformity with such advice or opinion. The
Bank shall be protected in any action taken or omitted by it in reliance upon
any order, notice, request, certificate or other instrument reasonably believed
by it to be genuine.
(c) The Bank shall be under no duty or obligation to inquire into and
shall not be liable for:
(i) The validity of the issue of any securities
purchased by or for the Trust or any Series, the
legality of the purchases thereof or the propriety
of the amount paid therefor;
(ii) The legality of any sale of any securities by or for
the Trust or any Series or on the propriety of the
amount for which the same are sold;
(iii) The legality of an issue or sale of any shares of
the Trust or any Series or the sufficiency of the
amount to be received therefor;
(iv) The legality of the repurchase of any shares of the
Trust or any Series or the propriety of the amount
to be paid therefor;
(v) The legality of the declaration of any dividend by
the Trust or any Series or the legality of the issue
of any securities held by the Trust or any Series as
a payment in kind of such dividend;
(vi) Any property or moneys of the Trust or any Series
unless and until received by it, and any such
property or moneys delivered or paid by it pursuant
to the terms hereof.
(d) The Bank shall not be under any duty or obligation to ascertain
whether any securities at any time delivered to or held by it for the account
of a Series are such as may properly be held by a Series under the provisions
of the Trust's Instrument or Bylaws, any federal or state statutes or any rule
or regulation of any governmental agency.
8
<PAGE> 10
17. Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for purchase of securities for
the account of a Series is made by the Bank in advance of receipt of the
securities purchased in the absence of specific written instructions from the
Trust on behalf of such Series to so pay in advance, the Bank shall be
absolutely liable to the Trust for such securities to the same extent as if the
securities had been received by the Bank.
18. Records. The Bank shall with respect to each Series create and
maintain all records relating to its activities and obligations under this
Agreement in such manner as will meet the obligations of the Trust under the
1940 Act, particularly Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Trust and shall at all times
during the regular business hours of the Bank be open for inspection by duly
authorized officers, employees and agents of the Trust and employees and agents
of the Securities and Exchange Commission. The Bank shall, at the Trust's
request, supply the Trust with a tabulation of securities owned by each Series
and held by the Bank and shall, when requested to do so by the Trust and for
such compensation as shall be agreed upon between the Trust and the Bank,
include certificate numbers in such tabulations.
19. Termination. This Agreement may be terminated at any time
without penalty with respect to one or more Series by execution of any amended
Exhibit A or in its entirety by written notice delivered by either party to the
other. The effective date of termination shall be as specified in such notice,
except that at the option of the Bank or the Trust, the effective date of the
termination may be postponed to a date not more than sixty (60) days from the
date of the delivery of such notice in order to give the Bank an opportunity to
prepare for the transfer of the Trust or any Series' assets or to give the
Trust or any Series an opportunity to make suitable arrangements for a
successor custodian. Upon termination of this Agreement, the Bank shall
deliver at its office all cash, securities and other assets held by it in
accordance with paragraph 20.
20. Successor Custodian.
(a) If a successor custodian for the Trust or one or more of the
Series shall be appointed by the Trust's Board of Trustees, the Bank shall,
upon termination, deliver to such successor custodian at the office of the Bank
all cash and other assets of the Trust then held by it hereunder and, in the
case of securities, duly endorsed and in the form for transfer, all securities
of each applicable Series then held by it hereunder and shall transfer to an
account of the successor custodian all of the securities of each
9
<PAGE> 11
such Series held in a Securities System. The Bank shall take all reasonable
steps to assist in the transfer of the cash, securities and other assets of the
applicable Series to the successor custodian.
(b) If no such successor custodian shall be appointed, the Bank
shall, in like manner, upon receipt of a certified copy of a vote of the
Trust's Board of Trustees, deliver at the office of the Bank and transfer such
cash, securities and other assets in accordance with such vote.
(c) In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Trustees shall have been
delivered to the Bank on or before the date when such termination shall become
effective, then the Bank shall have the right to deliver to a bank or trust
company of its own selection (which is a "bank" as defined in the 1940 Act)
doing business in Seattle, Washington, having an aggregate capital, surplus,
and undivided profits, as shown by its last published report, of not less than
the amounts required by the 1940 Act, all cash, securities and other assets
held by the Bank on behalf of each applicable Series and all instruments held
by the Bank relative thereto and all other property held by it under this
Agreement on behalf of each applicable Series and to transfer to an account of
such successor custodian all the securities of each such Series held in any
Securities System. Thereafter, such bank or trust company shall be the
successor of the Bank under this Agreement.
(d) In the event that cash, securities and other assets remain in
the possession of the Bank after the date of termination hereof owing to
failure of the Trust to procure the certified copy of the vote referred to or
of the Board of Trustees to appoint a successor custodian, the Bank shall be
entitled to fair compensation for its services during such period as the Bank
retains possession of such cash, securities and other assets and the provisions
of this Agreement relating to the duties and obligations of the Bank shall
remain in full force and effect.
21. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto shall be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below, namely:
In the case of the Trust:
SAFECO Money Market Trust
Attn: David F. Hill, President
SAFECO Plaza
Seattle, Washington 98185
10
<PAGE> 12
and
In the case of the Bank:
U. S. Bank of Washington, N.A.
Attn: Trust Operations Department
1414 Fourth Avenue
Seattle, Washington 98101
or at such other place as such party may from time to time designate in
writing.
22. Bank representation. Bank represents that it does meet, and will
continue to meet at all times that this Agreement is in effect, the
requirements of the rules and regulations promulgated pursuant to Section 17(f)
of the Investment Company Act of 1940.
23. Limitation of Liability. Bank is hereby expressly put on
notice of (i) the limitation of shareholder, officer and trustee liability as
set forth in the Trust Instrument of the Trust and (ii) of the provisions in
the Trust Instrument permitting the establishment of separate Series and
limiting the liability of each Series to obligations of that Series. Bank
hereby agrees that obligations assumed by the Trust pursuant to this Agreement
are in all cases assumed on behalf of a particular Series and each such
obligation shall be limited in all cases to that Series and its assets. Bank
agrees that it shall not seek satisfaction of any such obligation from the
shareholders or any individual shareholder of the Trust nor from the officers
or trustees or any individual officer or trustee of the Trust.
24. Entire Agreement. This Agreement embodies the entire
Agreement between the Bank and the Trust with respect to the services to be
provided by the Bank to the Trust and each Series and supersedes any prior
written or oral agreement between those parties.
25. Miscellaneous. This Agreement shall be binding on and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be assignable by the
Trust without the written consent of the Bank or by the Bank without the
written consent of the Trust. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed in counterparts, each of which taken together shall
constitute one and the same instrument. Bank understands that the rights and
obligations of each Series under the Trust Instrument are separate and distinct
from those of any and all other Series.
11
<PAGE> 13
26. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Washington.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the day and year first above
written.
<TABLE>
<S> <C>
Attest: U. S. BANK OF WASHINGTON, N.A.
/s/ SHAWN L. STERN By /s/ P. MCCORMACK
- ------------------------------ ----------------------------
Its Assistant Vice President
------------------------
</TABLE>
<TABLE>
<S> <C>
Attest: SAFECO MONEY MARKET TRUST
/s/ ELNA A. THOMSON By /s/ DAVID F. HILL
- ------------------ ----------------
Secretary Its: President
</TABLE>
12
<PAGE> 14
EXHIBIT A
SAFECO MONEY MARKET TRUST
The SAFECO Money Market Trust consists of the following Series:
1. SAFECO Money Market Fund
2. SAFECO Tax-Free Money Market Fund
As of 9-30-93
13
<PAGE> 15
EXHIBIT B
SAFECO MONEY MARKET TRUST
ALL SERIES
PROCEDURES FOR CONTROL
Securities Held by Nominee Puget & Co.
1. All securities held in safe keeping at U.S. Bank of Washington, N.A.,
main office, will be in the name of the nominee, Puget & Co.
2. Instructions from the Trust on behalf of a Series or SAFECO Asset
Management Company, the investment adviser to the Trust, relative to
the purchase and sale of securities will be in written form on a
"Transaction Advice" form. See Exhibit C attached.
3. All accounting documents, minutes, bank records, and instructions to
brokers will identify the real ownership of securities being bought or
sold and of interest and dividends received.
4. Certificates for shares of stock and par value of bonds will be in
lots which will permit the physical separation of the securities
according to their real ownership. U.S. Bank of Washington, N.A. will
maintain such a physical separation.
5. Proceeds on securities sold and dividends or interest received in the
name of Puget & Co. will be collected by U.S. Bank of Washington,
N.A., main office. On the business day of receipt of such proceeds
the bank will credit the custodial account of the Trust with the total
amount of such proceeds, dividends or interest and will specifically
identify all collections on the statement of the Trust's account.
6. Payments for securities purchased will be made from the Trust's
custodial account upon delivery of the securities.
As of 11/4/93
14
<PAGE> 16
EXHIBIT C
TRANSACTION ADVICE
TRANS NO.:
DATE:
To: U.S. Bank - WA
1414 4th Avenue
Seattle, WA 98111
Attn: Account Representative
In accordance with the terms of our existing custody agreement, you are
authorized to settle the transaction set forth below:
ACCOUNT:
Account No.:
BROKER/DEALER:
CUSIP NO: TRADE DATE:
SETTLE DATE:
SECURITY DESCRIPTION SALE
---------------------------------
UNITS:
PRICE:
PRINCIPAL
ACCRUED INTEREST:
COMMISSION:
FEES
---------------
CASH:
BK ACCT CURR:
SETTLEMENT METHOD:
MANAGER:
SPECIAL INSTRUCTIONS:
- --------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Date:
Time:
15
<PAGE> 17
EXHIBIT D
SAFECO MONEY MARKET TRUST
ALL SERIES
Schedule of Custodian Fees with U.S. Bank of Washington, N.A.
<TABLE>
<S> <C>
Gross Billing
Cash/Asset Statements $ 5.75 each
------------------------
Cash Dividends, Registered Bonds
and Savings/Commercial Paper
Interest $ 5.50 each transaction
------------------------
Cash Disbursements $ 3.25 each transaction
------------------------
Purchase/Sale Stocks and Bonds
and Commercial Paper $38.50 each transaction
------------------------
Coupon Bond Interest $ 8.25 each transaction
------------------------
Deposits/Withdrawals -
Master Notes/Money Funds $10.00 each transaction
------------------------
Repurchase Agreements $22.00 each transaction
------------------------
Stock Dividends, Splits,
Entering Assets, Exchanges and
Transfers of Registered
Securities $14.00 each transaction
------------------------
Collateral Receipt/Delivery $20.00 each transaction
------------------------
Money Market Interest $ 2.00 each transaction
------------------------
Money Market Sweep Feature .30 of 1% on Balance in
Money Market Fund/Prime Fund
-------------------------
Administration - if applicable $45.00 per hour
------------------------
Out of Pocket Expenses (Postage,
insurance, long distance calls,
mileage, photocopying) As Incurred
</TABLE>
As of 11-4-93
16
<PAGE> 1
EXHIBIT NO. 99.9
TRANSFER AGENT AGREEMENT
<PAGE> 2
EXHIBIT 99.9
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into this 30th day of September, 1993,
between SAFECO MONEY MARKET TRUST ("Trust"), a Delaware business trust, and
SAFECO SERVICES CORPORATION ("SAFECO Services"), a Washington corporation.
WHEREAS, the Trust is registered with the Securities and Exchange Commission
as a series type open-end, management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act") and has caused its shares of
beneficial interest ("Shares") to be registered for sale to the public under
the Securities Act of 1933 (the "1933 Act") and various state securities laws;
and
WHEREAS, the Trust intends to offer for public sale distinct series of Shares
of beneficial interest, each corresponding to a distinct portfolio
(individually, "a Series" and collectively "the Series"), and
WHEREAS, the Trust wishes to retain SAFECO Services as its transfer agent,
dividend and distribution disbursement agent, and shareholder services agent on
behalf of each Series as now exists or as hereafter may be established which
are listed on Exhibit A to this Agreement as amended from time to time
("Shares")
WHEREAS, SAFECO Services is qualified and authorized to act in such
capacities;
NOW, THEREFORE, It is agreed by the parties hereto as follows:
1. Appointment. The Trust on behalf of the Series hereby appoints SAFECO
Services as the Series' transfer agent, dividend and distribution disbursement
agent and shareholder services agent, and SAFECO Services agrees to act as such
upon the terms and conditions herein set forth.
2. Documents. The Trust agrees to deliver to SAFECO Services the following
documents to enable SAFECO Services to exercise its functions under this
Agreement: (a) copies of all basic corporate documentation, including the
Trust's Trust Instrument and Bylaws; (b) evidence of creation and authorization
for issue and sale of the Trust's Shares; (c) evidence of the status of the
Trust's Shares under applicable laws, including copies of the current
registration statement or post-effective amendments to the registration
statement of the Trust's securities under the Securities Act of 1933, copies of
current prospectuses and evidence of compliance with all applicable state
securities laws. The Trust shall furnish promptly to SAFECO Services a copy of
any
<PAGE> 3
amendment or supplement to the above-mentioned documents. The Trust shall
furnish to SAFECO Services any additional documents requested by SAFECO
Services as necessary to perform the services required hereunder.
3. Duties of SAFECO Services. SAFECO Services shall perform as agent of the
Trust on behalf of the Series the following duties:
(a) Maintain a complete computerized record of each Series' shareholders,
including name(s) in which the Shares are registered, address, account number,
broker/dealer or registered representative number (if required), type of
account, number of Shares owned in certificate and non-certificate form, dates
and amounts of purchases and redemptions, dates and amounts of dividends and
capital gains distributed and reinvested, together with cost amounts.
(b) With respect to requests for the purchase, repurchase, redemption or
transfer of the Series' Shares and the receipt or disbursement of monies,
maintain records of all such transactions and from these records furnish to the
Trust as heretofore agreed, the following for each Series:
(1) Number of Shares purchased and dollar net asset
value per Share.
(2) Number of Shares repurchased or redeemed and
dollar net asset value per Share.
(3) Number of accumulated Shares outstanding.
(4) Number of opened and closed accounts.
(5) Current number of shareholder accounts.
(c) With respect to orders for the purchase of Shares of a Series
received by SAFECO Securities, Inc., principal underwriter of each Series'
Shares, from authorized broker/dealers or SAFECO registered representatives,
and orders for the repurchase of such Shares from authorized broker/dealers or
SAFECO registered representatives, SAFECO Services shall accept and execute
such orders at the prices per share next computed in accordance with Rule 22c-1
of the Investment Company Act of 1940.
(d) Following receipt of payments, upon receipt of proper instructions,
SAFECO Services, as transfer agent, shall prepare computer input entries to
register each Series' Shares upon its books in such name or names as directed.
If the Trust elects to issue certificates representing Shares of a Series, such
2
<PAGE> 4
certificates shall be issued, recorded and forwarded for delivery to proper
person(s) upon request. Whether or not certificates evidencing ownership are
issued, a confirmation showing the registration and listing the purchase
transaction shall be mailed to the Trust's shareholders.
Upon receipt of Shares for redemption or repurchase, in good delivery
form, SAFECO Services shall prepare computer input entries to clear the Shares
out of the shareholders' accounts and effect prompt payment to the authorized
broker/dealer or the shareholder.
(e) New investors or shareholders of the Trust may forward monies
directly to SAFECO Services for the purchase of shares under various plans as
described in the Trust's then current Prospectus.
With respect to such plans, SAFECO Services for each Series shall:
(1) Receive monies for the purchase of full and fractional Shares
with respect to any of the Plans. When purchase orders are received by
SAFECO Services in proper form, they shall be time-stamped and priced in
accordance with Rule 22c-1 of the Investment Company Act of 1940.
(2) Prepare computer input entries to effect the issuance of
confirmations, registration of Shares and recording of cost amounts in
shareholder accounts; record shares and net asset value amounts in the
Series' records; record shares and aggregate dollar amounts for updating Blue
Sky records, production reports, etc.
(3) Secure signed applications from each shareholder which shall
include details as to registration of Shares, social security number, birth
date (for accounts which require it), citizenship, type of account,
broker/dealer, registered representative (if required) and signature(s).
(4) Maintain signed applications, correspondence, etc. for
individual shareholders.
(5) With respect to the redemption of Shares of a Series tendered by
shareholders:
(i) Accept redemption orders as described in the Series'
then current Prospectus directly from shareholders, or their
qualified agents, upon tender of properly endorsed certificates which
meet the
3
<PAGE> 5
redemption requirements of the Trust. Shares not represented by
certificates tendered by the presentation of a written request signed
by the shareholder may be accepted without a signature guarantee
provided a signature is on file with SAFECO Services.
(ii) Pay proceeds for Shares so tendered at the
net asset value per share next computed after receipt of
tender in accordance with Rule 22c-1 of the Investment
Company Act of 1940 within the settlement period required by
the Securities Exchange Act of 1934.
(g) SAFECO Services shall perform all necessary details to complete any
transactions in connection with any exchange privileges as described in the
Series' then current Prospectus.
(h) SAFECO Services shall maintain a bank account in its own name with
any bank which qualifies under the Bylaws of the Trust, for deposit of funds
received in payment of Shares and for the withdrawal of funds in payment of
repurchases or redemptions of Shares, expenses and dividends and capital gains
distributions. After each computer run, written instructions, signed by
authorized officers or other authorized signatories, are to be forwarded to
such bank requesting the transfer of net balance to or from the Series'
custodian account with such bank.
(i) SAFECO Services shall perform all necessary details in connection
with any Withdrawal Plan, as described in the Series' then current Prospectus
including making the monthly or quarterly payments to the Plan participant, and
informing the Series with regard to Shares redeemed and total dollar amount
involved on each payment date.
Although a Withdrawal Plan terminates upon the death of the
shareholder, SAFECO Services shall not be responsible for any payments made or
other action taken in accordance with the provisions of the Plan until it has
knowledge of such death.
(j) With reference to the registration and transfer of Shares referred to
in Section (a) above, SAFECO Services shall be entitled to treat the person in
whose name any Shares are registered as the owner thereof for all purposes, and
shall not be bound to recognize any other person, whether or not SAFECO
Services shall have notice hereof, except as expressly provided under
applicable state law.
4
<PAGE> 6
(k) SAFECO Services shall use reasonable efforts to assure the accuracy
of the records it maintains under this Agreement and to issue certificates or
register Shares only to those persons or entities entitled thereto.
When a transfer of shares is demanded, SAFECO Services shall take
reasonable steps to ascertain whether or not a transfer of the Shares requested
is duly authorized. If SAFECO Services fails to take such reasonable steps, it
will be liable to any insured party for any damages incurred as a result.
SAFECO Services' transfer obligations shall run to the owners of beneficial
interest in the Shares as well as to the owners of record. SAFECO Services
shall take reasonable steps to ascertain the identity and authority of each
assignor, where he is acting in a representative capacity.
Before permitting a transfer of Shares, SAFECO Services shall make
reasonable efforts to insure that the transferee is properly described and that
the transfer instructions for the Shares are clear and not ambiguous or subject
to doubt.
(l) Upon receipt of proper instructions, SAFECO Services shall compile,
distribute or reinvest, authorized dividends and capital gains distributions to
Trust's shareholders. In this regard data shall be accumulated to enable
SAFECO Services to provide and process year-end income tax information for
shareholders, states and the Internal Revenue Service. Where required, taxes
shall be withheld from alien shareholders with foreign addresses and
accumulated for surrender to the Internal Revenue Service.
(m) Prior to each meeting of the Trust's or any Series' shareholders,
SAFECO Services shall address the Proxy Cards, prepare the Proxy Cards, Notice
of Meeting of Shareholders and Proxy Statement for mailing, and mail them to
the shareholders entitled to vote at such meeting. Upon their return by the
shareholders, SAFECO Services shall examine them and prepare a tabulation that
provides the following information for the Trust or Series as the case may be:
(1) Number of Shares outstanding and entitled to vote on the
record date for the meeting.
(2) Number of Shares voted by proxy.
(3) Number of Shares voting "for" each proposal.
(4) Number of Shares voting "against" each proposal.
5
<PAGE> 7
(5) Number of Shares voting "abstain" for each proposal.
(6) Number of shareholders involved in each above
instance.
SAFECO Services shall prepare a certified list of shareholders
eligible to vote at each meeting which shall be available on the day of the
meeting. SAFECO Services shall also prepare an "Affidavit of Mailing" to be
available for reading at each meeting stating that on the appropriate date a
responsible, named individual caused the Notice of Meeting, Proxy Card and
Proxy Statement to be mailed by United States Mail, postage prepaid, to each
and every shareholder of the Shares entitled to vote at the meeting.
(n) Countersign all certificates to be issued to shareholders of the
Trust upon receipt of payments for the Shares and request of a certificate or
certificates representing the Shares being purchased.
(o) SAFECO Services in the performance of its duties may contract from
time to time with other persons to provide software or computer time. SAFECO
Services shall advise the Trust of any such arrangements.
4. Appointment of Agents. SAFECO Services may at any time or times in
its discretion appoint (and may at any time remove) one or more other parties
as Agent to perform any or all of the services specified hereunder and carry
out such provisions of this Agreement as SAFECO Services may from time to time
direct; provided, however, that the appointment of any such Agent shall not
relieve SAFECO Services of any of its responsibilities or liabilities
hereunder.
5. Record Keeping and Other Information. SAFECO Services shall create
and maintain all records required by all applicable laws, rules and regulations
relating to the services to be performed under this Agreement, including but
not limited to records required by Section 31(a) of the Investment Company Act
of 1940 and the Rules thereunder, as the same may be amended from time to time.
All records shall be the property of the Trust and shall be available for
inspection and use by the Trust at all times. Where applicable, such records
shall be maintained by SAFECO Services for the periods and in the places
required by Rule 31a-2 under the Investment Company Act of 1940.
6
<PAGE> 8
6. Net Asset Value. Wherever used herein, the term "net asset value"
shall mean the "net asset value" as computed for each Series or Class in
accordance with the Trust's Trust Instrument and Bylaws. If any amendment is
made to said Trust Instrument or Bylaws that changes the method of said
computation, the Trust shall give SAFECO Services immediate notice of such
amendment.
7. Proper Instructions. The term "proper instructions" used in this
Agreement shall be deemed to mean any written instructions signed by authorized
persons or any oral instructions delivered in accordance with Trust
requirements.
8. Disbursement of Funds. Funds deposited in the bank account maintained
by SAFECO Services shall not be disbursed to any trustee, officer or employee
of the Trust. This provision shall not be deemed to apply to dividend payments
to any trustee, officer, or employee in his or her capacity as shareholder.
Neither shall this provision apply to the above individuals upon payments to
them for any shares redeemed for their personal accounts.
9. Compensation. SAFECO Services shall receive from each Series of the
Trust a fee in accordance with the arrangements described in Exhibit B hereto
as such Exhibit may be amended from time to time. Exhibit B may be amended or
additional Exhibits may be added, as deemed necessary from time to time by
written agreement between the Trust and SAFECO Services. Deletion of Exhibit B
shall be in accordance with the termination provisions in paragraph 16 of this
Agreement. Each Exhibit B and any amendments thereto shall be dated and signed
by the parties to this Agreement.
10. Certification of Officers/Reliance upon Certifications.
(a) The Secretary of the Trust shall be, and is hereby, directed to
certify to SAFECO Services the names of the officers of the Trust, and their
respective signatures, and in case of any change of any holder of any such
office, the fact of such change, and the name of such new officer and the
office held by him or her, together with specimens of his or her signature.
SAFECO Services is hereby authorized to honor any instructions given to SAFECO
Services by any such new officer in respect of whom it has received any such
certificate with the same force and effect (and not otherwise), as if such new
officer were named in this Agreement in the place of any person with the same
title of office.
7
<PAGE> 9
(b) The Secretary of the Trust shall be, and is hereby, authorized
and directed to notify SAFECO Services promptly in writing of any change of
officers as above provided, and that until SAFECO Services has actually
received and accepted such notice of any such change, SAFECO Services is hereby
authorized and directed to act in pursuance of this Agreement and the latest
certificates theretofore received by it; and SAFECO Services shall be
indemnified and saved harmless from any loss suffered or liability incurred by
it in so acting, even though any such officer may have been changed.
11. Audits, Inspections and Visits. SAFECO Services shall make available
during regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Trust,
any agent or person designated by the Trust, or any regulatory agency having
authority over the Trust. Upon reasonable notice by the Trust, SAFECO Services
shall make available during regular business hours its facilities and premises
employed in connection with its performance of this Agreement for reasonable
visits by the Trust, any agent or person designated by the Trust, or any
regulatory agency having authority over the Trust.
12. Acts of God, Etc. SAFECO Services shall not be liable for delays or
errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, war, riot or failure of
communications equipment of common carriers or power supply. In the event of
equipment breakdowns beyond its control, SAFECO Services shall at no additional
expense to the Trust take reasonable steps to minimize service interruptions
and mitigate their effects but shall have no liability with respect thereto.
13. Liability and Indemnification.
(a) SAFECO Services shall use reasonable care in the performance of
its duties under this Agreement.
(b) SAFECO Services shall be entitled to receive and act on the
advice of counsel for the Trust which advice shall be at the expense of the
Trust and shall be without liability for any action taken, or things done, or
omitted to be done, pursuant to such advice.
8
<PAGE> 10
(c) SAFECO Services shall not be liable for, or considered to be, the
custodian of any money called for or represented by any check, draft, or other
instrument for the payment of money delivered to it, or on behalf of the Trust.
(d) The Trust shall indemnify and hold SAFECO Services 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 Trust, including by a
shareholder, which names SAFECO Services and/or the
Trust as a party, and is not based on and does not
result from SAFECO Services' willful misfeasance, bad
faith or negligence or reckless disregard of duties,
and arises out of or in connection with SAFECO
Services' performance hereunder; or
(2) any claim, demand, action or suit (except to the
extent contributed to by SAFECO Services' willful
misfeasance, bad faith or negligence or reckless
disregard of duties) which results from the
negligence of the Trust, or from SAFECO Services
acting upon any instruction(s) reasonably believed by
it to have been executed or communicated by any
person duly authorized by the Trust, or as a result
of SAFECO Services' acting in reliance upon advice
reasonably believed by SAFECO Services to have been
given by counsel for the Trust, or as a result of
SAFECO Services 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.
14. Effective Date/Renewal. This Agreement shall become effective with
respect to the Trust and each Series on the date first written above or such
later date as indicated on Exhibit A and\or B and, unless sooner terminated as
provided herein, will continue in effect for two years from the above written
date. Thereafter, if not terminated, this Agreement shall continue in effect
with respect to each Series for successive annual periods ending on the same
date of each year, provided that such continuance is specifically approved at
least annually by a vote of the Board of Trustees of the Trust, including the
vote of a majority of the trustees who are neither interested persons of SAFECO
Services nor of the Trust at a meeting called for the purpose of voting on such
continuance.
9
<PAGE> 11
15. Amendment. This Agreement may be modified by written mutual consent,
such consent on the part of the Trust to be authorized by the vote of the Board
of Trustees.
16. Termination.
(a) Either party hereto may, at any time on no less than sixty (60) days
prior written notice to the other, terminate this Agreement with respect to the
Trust or any Series (by deleting such Series from Exhibits A and B), in any
case, without the payment of any penalty.
(b) Upon termination each Series shall pay to SAFECO Services such
compensation as may be due as of the date of such termination and shall
likewise reimburse SAFECO Services for its costs, expenses and disbursements.
(c) If a successor transfer agent is appointed by the Board of Trustees
of the Trust, SAFECO Services shall, upon termination, deliver to such
successor transfer agent at the office of the transfer agent, all transfer
records then held hereunder and all funds or other properties of the Trust and
deposited with or held by it hereunder.
(d) If no successor transfer agent is appointed, SAFECO Services shall,
in like manner, at its office, upon receipt of a certified copy of a vote of
the Trust's Board of Trustees deliver such transfer records, funds and other
properties in accordance with such vote.
(e) In the event that no written order designating a successor transfer
agent or certified copy of a vote of the shareholders shall have been delivered
to SAFECO Services on or before the date when such termination shall become
effective, then SAFECO Services shall have the right to deliver to a bank or
trust company doing business in Seattle, Washington, of its own selection,
having proper qualifications, all transfer records, funds and other properties
held by SAFECO Services and all instruments held by it relative thereto and all
other property held by it under this Agreement. Thereafter such bank or trust
company shall be the successor of SAFECO Services under this Agreement.
(f) In the event that transfer records, funds and other properties remain
in the possession of SAFECO Services after the date of termination hereof owing
to failure of the Trust to procure the certified copy above referred to, or of
the trustees to appoint a successor transfer agent, SAFECO Services shall be
entitled to fair compensation for its services during such period
10
<PAGE> 12
and the provisions of this Agreement relating to the duties and obligations of
SAFECO Services shall remain in full force and effect.
17. Limitation of Liability. SAFECO Services is hereby expressly put on
notice of (i) the limitation of shareholder, officer and trustee liability as
set forth in the Trust Instrument of the Trust and (ii) of the provisions in
the Trust Instrument permitting the establishment of separate Series and
limiting the liability of each Series to obligations of that Series. SAFECO
Services hereby agrees that obligations assumed by the Trust pursuant to this
Agreement are in all cases assumed on behalf of a particular Series and each
such obligation shall be limited in all cases to that Series and its assets.
SAFECO Services agrees that it shall not seek satisfaction of any such
obligation from the shareholders or any individual shareholder of the Trust nor
from the officers or trustees or any individual officer or trustee of the
Trust.
18. Entire Agreement/Enforcement of Rights. This Agreement embodies the
entire agreement between SAFECO Services and the Trust with respect to the
services to be provided by SAFECO Services to the Trust and each Series and
supersedes any prior written or oral agreement between those parties. In the
event that either party should be required to take legal action in order to
enforce its rights under this Agreement, the prevailing party in any such
action or proceeding shall be entitled to recover from the other party costs
and reasonable attorneys' fees. In the event that either party should be
required to take legal action in order to enforce its rights under this
Agreement, the prevailing party in any such action or proceeding shall be
entitled to recover from the other party costs and reasonable attorney's fees.
19. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed in counterparts, each of which taken together shall
constitute one and the same instrument. SAFECO Services understands that the
rights and obligations of each Series under the Trust Instrument are separate
and distinct from those of any and all other Series.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington and, to the extent it
involves any United States statute, in accordance with the laws of the United
States.
11
<PAGE> 13
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their proper officers as of the day and year first above written.
SAFECO MONEY MARKET TRUST
By /s/ DAVID F. HILL
-------------------------------
David F. Hill, President
By /s/ ELNA A. THOMSON
-------------------------------
Elna A. Thomson, Secretary
SAFECO SERVICES CORPORATION
By /s/ DAVID F. HILL
-------------------------------
David F. Hill, President
By /s/ ELNA A. THOMSON
-------------------------------
Elna A. Thomson, Secretary
- 12 -
<PAGE> 14
EXHIBIT A
SAFECO MONEY MARKET TRUST
The SAFECO Money Market Trust consists of the following Series:
1. SAFECO Money Market Trust
2. SAFECO Tax-Free Money Market Fund
As of 9-30-93
13
<PAGE> 15
EXHIBIT B
SAFECO MONEY MARKET TRUST
ALL SERIES
FEE SCHEDULES
(a) SAFECO Services shall receive from each Series of the Trust a
fee of $2.47 for each transaction which amount shall be billed and paid
monthly.
(b) For purposes of this Section transaction means:
(i) any event which results in a change in the number of
outstanding Shares of an account for which a confirmation is
generated, except that confirmations generated as a result of
or to correct an error made by SAFECO Services shall not be
included;
(ii) any cash dividend or distribution;
(iii) any change in the form of registration, or changes in
address.
SAFECO SERVICES CORPORATION SAFECO MONEY MARKET TRUST
on behalf of each Series
By: /s/ DAVID F. HILL By: /s/ DAVID F. HILL
----------------------------- ---------------------------
Its: President Its: President
Attest: /s/ ELNA A. THOMSON Attest: /s/ ELNA A. THOMSON
------------------------- -----------------------
Secretary Secretary
As of 7-29-94
14
<PAGE> 1
EXHIBIT NO. 99.10
OPINION OF COUNSEL
<PAGE> 2
EXHIBIT 99.10
July 21, 1994
Board of Directors
SAFECO Money Market Trust
SAFECO Plaza
Seattle, WA 98185
Gentlemen:
I have acted as counsel to the Registrant in connection with the filing with
the Securities and Exchange Commission of Post-Effective Amendment No. 15 to
Registration Statement No. 2-25272 on Form N-1A for the shares of the
Registrant. I have made such examination of law and have examined such records
and documents as in my opinion are necessary or appropriate to enable me to
render the following opinion:
1. The Registrant was established by a Trust Instrument dated May 13,
1993, and filed with the Delaware Secretary of State on May 17, 1993.
The Trust is at the present time validly existing as a Delaware
business trust under the laws of the state of Delaware.
2. The Registrant is authorized to issue an unlimited number of shares of
beneficial interest with a par value of .001 cent per share which
currently represent two series: SAFECO Money Market Fund and SAFECO
Tax-Free Money Market Fund.
3. All of the prescribed procedures for the issuance of the shares have
been followed, and, when such shares are issued in accordance with the
Prospectus contained in the Registration Statement, all state
requirements relating to such shares will have been complied with.
4. Upon the acceptance of payment for shares issued in accordance with
the Prospectus contained in the Registration Statement and upon
compliance with applicable law, such shares will be legally-issued,
fully paid and non-assessable shares of the Registrant.
You may use this letter, or a copy hereof, as an exhibit to the Registration
Statement.
Very truly yours,
/s/LIZBETH A. ENGLUND
- --------------------------
Lizbeth A. Englund
Associate General Counsel
<PAGE> 1
EXHIBIT NO. 99.13
SUBSCRIPTION AGREEMENT
<PAGE> 2
EXHIBIT 99.13
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into this
_________ day of ______________, 19__, between __________________________, a
Washington corporation ("Fund"), and SAFECO Life Insurance Company, a
Washington corporation ("SAFECO Life"), which is a wholly-owned subsidiary of
SAFECO Corporation.
R E C I T A L S :
WHEREAS, The Fund is a recently organized corporation formed to engage in the
business of investing, reinvesting or trading securities, or in any other
business activity incidental to the business of an investment management
company, as such is defined in Section 4(3) of the Investment Company Act of
1940 ("1940 Act"), desires to raise $5,000,000 through the sale to SAFECO
Insurance of 500,000 shares of its Common Stock, par value $.10 per share
("Common Stock"), at a price of $10 per share, and plans, subsequent to the
sale of said shares under this Agreement, to register with the Securities and
Exchange Commission ("Commission") an indefinite number of shares of its Common
Stock for offering and sale under the Securities Act of 1933 ("1933 Act)'
WHEREAS, SAFECO Life is an affiliate of SAFECO Asset Management Company ("SAM")
which has been selected by the Fund to serve as its investment adviser and is
familiar with the advisory activities, management and experience of SAM, has
received and reviewed the Registration Statement on Form N-1A that the Fund
intends to file with the Commission with respect to the registration of an
indefinite number of shares of its Common Stock and the registration of the
Fund as an investment company under the 1940 Act, has had an opportunity to ask
questions of, and receive answers from, the Fund and SAM with respect to the
proposed activities of the Fund, and, upon the basis of the information
available to it, is willing to acquire from the Fund 500,000 of its shares of
Common Stock pursuant to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
warranties contained herein, the Fund and SAFECO Insurance agree as follows:
1. STOCK PURCHASE.
Subject to the terms and conditions of this Agreement, the Fund agrees
to sell to SAFECO Life, and SAFECO Life agrees to purchase from the Fund,
500,000 shares of the Fund's Common Stock ("Shares") at a purchase price of $10
per share, for an aggregate consideration of $5,000,000.
Upon the execution of this Agreement by the parties and at the request
of the President of the Fund, SAFECO Life shall pay to the Fund $5,000,000 in
coin or currency of the United States of America which, at the time of payment,
is legal tender
<PAGE> 3
for the payment of public and private debts and the Fund shall deliver, or
cause to be delivered, to SAFECO Life a stock certificate representing the
Shares signed by duly authorized officers of the Fund and countersigned by the
Fund's transfer agent. It is hereby agreed that the stock certificate shall
bear a restrictive legend in substantially the form set forth in paragraph 2 of
this Agreement.
2. RESTRICTIONS UPON TRANSFER OF SHARES.
The Shares have not been registered by the Fund under the 1933 Act but
are being offered and will be sold to SAFECO Life pursuant to an exemption from
the registration requirements of that Act for transactions which do not involve
a public offering. The Fund does not plan, and is under no obligation to
provide for, any registration of the Shares in the future. SAFECO Life hereby
covenants that it will not sell, pledge, hypothecate or otherwise transfer any
of the Shares, or any interest therein, whether or not for consideration,
unless it has previously notified the Fund of the proposed transfer and
delivered to the Fund in legal opinion, in form and substance satisfactory to
the Fund and its counsel, that such transfer is not in violation of the 1933
Act and applicable state securities laws. Furthermore, the parties hereby
agree, that in view of the restrictions upon transfer, that the stock
certificate representing the Shares shall bear a restrictive legend that is in
substantially the following form:
"The securities represented by the stock certificate have been
acquired pursuant to an investment representation on the part of the
purchaser thereof and shall not be sold, pledged, hypothecated,
donated or otherwise transferred, whether or not for consideration, by
the purchaser except upon the issuance to the corporation of a
favorable opinion of its counsel to the effect that any such transfer
shall not be in violation of the Securities Act of 1933, as amended,
and applicable state securities laws."
3. WARRANTIES AND REPRESENTATIONS OF FUND.
The Fund hereby represents and warrants as follows:
(a) The Fund has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Washington and has
the corporate power and authority to carry on its business as presently
conducted and to perform its obligations under this Agreement.
(b) The execution, delivery and performance by the Fund of this
Agreement have been duly authorized by all necessary corporate action on the
part of the Fund.
(c) The issuance and sale of the Shares pursuant to this Agreement
have been duly authorized by all necessary corporate action on the part of the
Fund and the Shares have been duly issued and shall, upon receipt of the
purchase price specified in paragraph 1 above, by fully paid and non-assessable
and shall constitute
<PAGE> 4
valid and legal binding obligations of the Fund entitled to the benefits
granted to the Fund's shareholders under its Articles of Incorporation and
Bylaws.
(d) Neither the issuance nor sale of the Shares, nor the
consummation of any of the transactions contemplated by this Agreement, will
conflict with, result in a breach of, or constitute a default under, the terms
of the Articles of Incorporation or Bylaws of the Fund, or any indenture,
mortgage agreement, instrument or undertaking to which the Fund is a party or
is bound, or any other or regulation applicable to the Fund of any court,
regulatory body, administrative agency or governmental body having jurisdiction
over the Fund.
(e) No consent, approval, authorization or order of any court or
governmental agency or body is required for the issuance and sale of the Shares
or the consummation of the Transactions contemplated by this Agreement.
4. WARRANTIES AND REPRESENTATIONS OF SAFECO INSURANCE.
SAFECO Life hereby represents and warrants as follows:
(a) SAFECO Life has been duly incorporated and is a validly
existing corporation in good standing under the laws of the State of Washington
with full power and authority to own its property and conduct its business and
to perform its obligations under this Agreement.
(b) The execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of SAFECO
Life.
(c) Neither the execution, delivery, nor performance of this
Agreement, nor the acquisition of the Shares, will conflict with, result in a
breach of, or constitute a default under the terms of the Articles of
Incorporation or Bylaws of SAFECO Life or any indenture, mortgage agreement,
instrument or undertaking to which SAFECO is a party or bound, or any order or
regulation applicable to SAFECO Life of any court, regulatory body,
administrative agency, or governmental body having jurisdiction over SAFECO
Life.
(d) No consent, approval, authorization or order of any court or
governmental agency or body is required by SAFECO Life for the acquisition of
the Shares pursuant to this Agreement, except such as has been obtained from
the Insurance Commissioner of the State of Washington.
(e) SAFECO Life is acquiring the Shares for its own account, for
investment purposes and not with a view to the subsequent offering, sale or
distribution thereof and SAFECO Life is not participating, directly or
indirectly, in any plan or scheme involving the resale or distribution of the
Shares or any interest therein.
<PAGE> 5
(f) SAFECO Life has sufficient knowledge and experience in
business matters so as to enable it to evaluate the merits and risks of
acquiring the Shares from the Fund and has sufficient assets to bear the
economic risk of losing part or all of its investment in the Fund.
(g) SAFECO Life acknowledges that it has received and reviewed a
copy of the Registration Statement on Form N-1A that the Fund intends to file
with the Commission with respect to the registration of an indefinite number of
shares of its Common Stock under the 1933 Act and the registration of the Fund
as an investment company under the 1940 Act and that it has been afforded the
opportunity to ask questions of, and receive answers from, the Fund or SAM with
respect to the proposed operations of the Fund.
5. TRANSFER AGENT INSTRUCTIONS.
It is hereby acknowledged by the parties that the Fund's transfer
agent will be instructed not to transfer the Shares to any third party unless
it has received a copy of the legal opinion required by paragraph 2 above and
written consent to such transfer from the Fund.
6. DIVIDEND RETENTION.
SAFECO Life agrees to permit the Fund to hold all dividends accrued
and payable to it until such time as the first dividends are paid by the Fund
to any other shareholder.
7. MISCELLANEOUS.
This Agreement embodies the entire agreement and understanding between
the Fund and SAFECO Life with respect to the sale of the Shares and supersedes
any prior written or oral agreement between the parties. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Washington.
<PAGE> 6
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the date and year first above written.
____________________________________
By
---------------------------------
L.D. McClean
President
SAFECO LIFE INSURANCE COMPANY
By
---------------------------------
R.H. Eigsti
Senior Vice President
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this day personally appeared before me L.D. McClean, to me know to
be the President of _______________________________, the corporation that
executed the foregoing instrument, and acknowledged the same instrument to be
the free and voluntary act and deed of said corporation for the uses and
purposes therein mentioned, and on oath stated that he is authorized to execute
the said instrument, and that the seal affixed (if any) is the corporate seal
of said corporation.
WITNESS MY HAND AND OFFICIAL SEAL HERETO AFFIXED this ________
day of ____________, 1995.
____________________________________
Notary Public in and for the State of
Washington, residing at ____________.
