<PAGE> 1
MAILING ADDRESS:
SAFECO MUTUAL FUNDS
P.O. BOX 34890
SEATTLE, WA 98124-1890
FOR ACCOUNT INFORMATION
OR TELEPHONE TRANSACTIONS:
NATIONWIDE: 1-800-624-5711
SEATTLE: 545-7319
TTY/TDD: 1-800-438-8718
ANNUAL
REPORT
MARCH 31, 1995
SAFECO
MONEY MARKET
FUNDS
SAFECO MONEY
MARKET FUND
SAFECO TAX-FREE
MONEY MARKET FUND
SAFECO [LOGO]
MUTUAL FUNDS
<PAGE> 2
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PERFORMANCE INFORMATION
[GRAPH]
SAFECO Money Market Fund
Average Weekly Yield
for the Six-Month Period Ended March 27, 1995
This graph compares the average weekly yield for the SAFECO Money Market
Fund to the IBC/Donoghue Money Fund Average for the six-month period
ended March 27, 1995.
[GRAPH]
SAFECO Tax-Free Money Market Fund
Average Weekly Yield
for the six-month Period Ended March 26, 1995
This Graph compares the average weekly yield for the SAFECO Tax-free Money
Fund to the IBC/Donoghue Tax-Free Money Fund Average for the six-month period
ended March 26, 1995.
Investment returns are historical and not predictive of future performance.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
=================================================
<S> <C>
President's Letter 1
Money Market Fund 2
Tax-Free Money Market Fund 6
Financial Statements 12
Notes to Financial Statements 14
</TABLE>
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<PAGE> 3
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LETTER FROM THE PRESIDENT
May 1, 1995
DEAR SHAREHOLDERS:
Nineteen ninety-four proved to be a trying year for investors. The stock
market posted below average returns, and the bond market suffered one of its
worst years in history. So far this year, we have seen an improved picture, as
both the stock and bond markets have shown renewed strength.
A significant factor in last year's disappointing markets was the perceived
threat of inflation. Much of the strength we have seen this year is due to
optimism that inflation is in check. Our view is that while inflationary fears
are moderating, they are still present. Because of this, we suspect interest
rates will hold in a fairly narrow range for the remainder of 1995.
Inflationary pressures will continue to affect the stock market as well.
Corporate profits will also be a significant factor: stronger earnings will bode
well for stocks, weaker earnings may bring disappointments.
While we do not profess to know which direction the market will turn in the
short term, it is interesting to note that the gains the market experienced in
the first quarter - as measured by the S&P 500's gain of 9.73% - is nearly equal
to the stock market's long-term average annual gain.
As usual, we caution that predicting short-term trends and successfully
moving in and out of the markets is difficult, at best. While there is money to
be made in the bond and stock markets, we believe it is best made over the long
run. Indeed, the turns the markets have experienced these past 15 months
reinforce the notion that investors need to make decisions with a long-term
horizon: those who had charted an extended course, and stayed with it through
these difficult markets reaped the gains of the first quarter of 1995.
[PHOTO] DAVID F. HILL
For those investors with shorter-term goals, there are money market funds -
shorter-term, steadier investments which pay a respectable yield while aiming
for stability of principal. For those of you wishing to know more about our
basic philosophy of investing, we have prepared a small booklet, the SAFECO
Mutual Funds Personal Investment Guide. Call us at 1-800-426-6730 for your free
copy.
As always, we truly value your continued confidence in SAFECO Mutual Funds.
Sincerely,
/s/ David F. Hill
- -----------------------------
David F. Hill
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<PAGE> 4
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REPORT FROM THE FUND MANAGER
SAFECO MONEY MARKET FUND
May 1, 1995
The SAFECO Money Market Fund seven-day current yield increased from 3.99% to
5.42% in the six months ending March 31, 1995. This compares to the average
money fund yield of 5.49% according to IBC/Donoghue on March 27, 1995.
[PHOTO] NAOMI URATA
Ninety-day commercial paper rates increased from 5.50% to 6.19% over the six
months ending March 31, 1995 as the Federal Reserve raised short-term interest
rates .75% on November 15 and .50% on February 1. Since that time, rates have
fallen slightly on expectations that the Fed would not raise rates in the first
quarter. Testifying before Congress in February, Alan Greenspan signaled for the
first time since the rate increases began that the Federal Reserve is currently
on hold in its battle against rapid economic growth and inflation.
Indeed, the economy has been showing some signs of slowing. The index of
leading indicators contracted .2% in February and the employment numbers are
showing weaker than expected job growth. The consumer price index for the 12
months ending March 31, 1995 was at 2.9%, unchanged from February. In December
it was 2.7%.
Looking forward, I believe that the Fed will raise rates later in 1995: the
current slowdown in the economy may be only temporary and we could see renewed
growth in the second half of 1995. Should the economy continue to slow, the
Federal Reserve may choose to hold rates steady.
During the later part of 1994, concerns were raised about investments in
derivative securities and about borrowing to increase investment holdings and
returns. We are pleased to report that the Fund does not hold any derivative
securities nor does it borrow to increase investment returns. The risk of
leveraging does not fit my conservative approach, which is to provide as high a
level of current income as possible while seeking to protect your money.
/s/ Naomi Urata
----------------------------
Naomi Urata, Fund Manager
- -------------------------------------------------------------------------------
Naomi Urata assumed management of the SAFECO Money Market Fund on August 4,
1994. She joined SAFECO Asset Management in 1992 as a fixed income analyst. She
has an M.A. in public and private management from Yale University as well as an
M.S. in Nutrition from Tufts University. Ms. Urata enjoys Ikebana and wind
surfing.
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<PAGE> 5
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HIGHLIGHTS
SAFECO MONEY MARKET FUND
As of March 31, 1995
<TABLE>
<CAPTION>
WEIGHTED AVERAGE MATURITY 31 DAYS
================================================================================
<S> <C>
AVERAGE ANNUAL TOTAL RETURN (1 YEAR) 4.20%
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO CREDIT QUALITY PERCENT
================================================================================
<S> <C>
Highest Rated(1) 100.0%
Split Rated(2) 0.0%
Not Rated(3) 0.0%
------
100.0%
======
</TABLE>
(1) Rated highest quality by at least two nationally recognized rating
organizations or, when rated by only one organization,received its highest
rating.
(2) Rated highest by one organization and second highest by another.
(3) Although unrated, comparable in credit quality to securities in the highest
or split-rated categories, in the opinion of SAFECO Asset Management
Company, the Fund's investment advisor.
[GRAPH]
SAFECO Money Market Fund
Top 5 Types of Short-Term Investments
As a Percent of Net Assets as of March 31, 1995
U.S. Government & Agency Securities: 23.4%
Asset Backed: 15.6%
Banks - Foreign: 12.1%
Financial Services - Brokerage: 6.9%
Finance - Auto: 6.9%
- 3 -
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<PAGE> 6
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PORTFOLIO OF INVESTMENTS
SAFECO MONEY MARKET FUND
As Of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
===================================================================================
COMMERCIAL PAPER - 77.5%
<S> <C> <C>
ASSET BACKED - 15.6%
$3,000 Apreco, Inc.
6.25%, due 4/04/95 $2,998
CXC, Inc.
3,000 6.05%, due 4/25/95 2,988
3,000 6.07%, due 5/04/95 2,983
3,000 Ciesco L.P.
6.08%, due 4/19/95 2,991
Corporate Asset Funding Co.
3,000 5.94%, due 4/26/95 2,988
3,000 6.00%, due 5/16/95 2,978
Corporate Receivables Corp.
3,000 6.02%, due 4/13/95 2,994
3,000 6.05%, due 5/22/95 2,974
3,000 Receivables Capital Corp.
6.01%, due 4/21/95 2,990
BANKS-FOREIGN - 12.1%
3,000 Bank of Nova Scotia
6.05%, due 5/05/95 2,983
Halifax Building Society
3,000 6.14%, due 4/03/95 2,999
3,000 5.98%, due 5/25/95 2,973
3,000 National & Provincial Building Society
6.20%, due 4/10/95 2,995
3,000 Toronto Dominion Holding U.S.A.
6.00%, due 5/08/95 2,982
Westpac Capital Corp.
3,000 6.18%, due 4/06/95 2,997
3,000 6.02%, due 5/23/95 2,974
CHEMICALS - 1.7%
$3,000 / / U.S. Borax & Chemical (144A)
6.05%, due 4/28/95 $2,986
CONGLOMERATE - 1.7%
3,000 B.A.T. Capital Corp.
6.02%, due 5/02/95 2,984
FINANCE-AUTO - 6.9%
Ford Motor Credit Co.
3,000 6.04%, due 5/30/95 2,970
3,000 6.00%, due 6/02/95 2,969
General Motors Acceptance Corp.
3,000 6.07%, due 5/01/95 2,985
3,000 6.15%, due 6/27/95 2,955
FINANCE-CONSUMER - 3.5%
Household Finance Corp.
3,000 6.02%, due 5/31/95 2,970
3,000 6.07%, due 6/06/95 2,967
FINANCE-DIVERSIFIED &
BUSINESS - 5.2%
3,000 General Electric Capital Corp.
6.02%, due 4/12/95 2,995
Heller Financial, Inc.
3,000 6.01%, due 4/07/95 2,997
3,000 6.02%, due 6/01/95 2,969
FINANCE-EQUIPMENT
LEASING - 5.2%
International Lease Finance Corp.
3,000 6.03%, due 4/05/95 2,998
3,000 6.03%, due 6/06/95 2,967
3,000 Sanwa Business Credit Corp.
6.03%, due 4/18/95 2,992
</TABLE>
See Notes to Financial Statements
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<PAGE> 7
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PORTFOLIO OF INVESTMENTS
SAFECO MONEY MARKET FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
========================================================================================
FINANCIAL SERVICES-BROKERAGE - 6.9%
<S> <C> <C>
CS First Boston Group, Inc.
$3,000 6.00%, due 6/05/95 $ 2,968
3,000 6.09%, due 6/20/95 2,959
Merrill Lynch & Co., Inc.
3,000 6.00%, due 4/17/95 2,992
3,000 6.05%, due 5/24/95 2,973
INSURANCE NON-AFFILIATED
MULTI-LINE - 1.2%
2,125 Prudential Funding Corp.
6.40%, due 4/27/95 2,115
MISCELLANEOUS - 1.7%
3,000 U.S. Central Credit Union
6.05%, due 6/15/95 2,962
OIL & GAS - 3.5%
3,000 TOTAL
6.05%, due 6/29/95 2,955
3,000 Tonen Energy International Corp.
6.10%, due 6/14/95 2,962
TIRE AND RUBBER - 1.8%
3,000 Bridgestone/Firestone
6.00%, due 4/24/95 2,989
TOBACCO - 1.8%
3,000 Philip Morris Cos., Inc.
5.94%, due 4/20/95 2,991
TRANSPORTATION-AIRLINES - 3.5%
United Airlines First Funding Corp.
3,000 6.05%, due 4/11/95 2,995
3,000 6.08%, due 4/17/95 2,992
UTILITIES-ELECTRIC - 1.7%
$3,000 AES Barbers Point, Inc.
6.02%, due 5/26/95 $ 2,972
UTILITIES-TELEPHONE - 3.5%
AT&T Capital Corp.
3,000 6.12%, due 5/03/95 2,984
3,000 6.00%, due 6/07/95 2,967
--------
TOTAL COMMERCIAL PAPER 133,267
--------
U.S. GOVERNMENT AND AGENCY
SECURITIES - 23.4%
FEDERAL HOME LOAN BANK - 20.5%
35,330 6.10%, due 4/03/95 35,318
U.S. TREASURY NOTES - 2.9%
5,000 3.875%, due 4/30/95 4,950
TOTAL U.S. GOVERNMENT & AGENCY
SECURITIES 40,268
--------
TOTAL INVESTMENTS - 100.9% 173,535
Liabilities, less Other Assets (1,577)
--------
NET ASSETS $171,958
========
- ----------------------------------------------------------------------------------------
</TABLE>
/ / Security exempt from registration and restricted as to resale only to
dealers, or through a dealer to an "accredited investor" or a "qualified
institutional buyer". At March 31, 1995, the total market value of such
securities is $2,986,000 or 1.7% of net assets.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
ISSUE ACQUISITION DATE COST (000'S)
- --------------------------------------------------------------------------------
<S> <C> <C>
U.S. Borax & Chemical (144A) 2/7/95 $2,960
6.05%, due 4/28/95
- --------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
- 5 -
<PAGE> 8
REPORT FROM THE FUND MANAGER
SAFECO TAX-FREE MONEY MARKET FUND
May 1, 1995
The SAFECO Tax-Free Money Market Fund began the six-month period ending March
31, 1995 with a 7-day yield of 2.95% and ended it at 3.51%. The climb has been
far from steady. The yield fluctuated from a low of 2.61% in mid-October to a
high of 4.19% in early January. The Fund has continued to outperform its peers
throughout the period, as can be seen by the graph inside the front cover of
this report.
The rise in interest rates in the tax-exempt money market has been much
slower than in the taxable money market, due to short supply. Assets in tax-free
funds rose 7.1% in 1994, whereas note issuance fell 16%. The resulting shift in
the supply-demand relationship has allowed issuers to pay investors lower
interest rates.
Issuance is expected to remain low in 1995, as states and municipalities
enjoy generally good economic health. This tight supply will certainly continue
to affect yields.
Our strategy in managing the SAFECO Tax-Free Money Market Fund remains as it
has in the past - we seek to maintain a portfolio of very high quality, very
liquid securities that are not subject to federal income tax or to the
alternative minimum tax. The majority of our holdings can be tendered at face
value in one to seven days, giving the Fund a maximum amount of liquidity and
flexibility to react to changes in the market. The remainder of the portfolio is
invested in securities that are slightly longer in maturity and which provide an
opportunity to lock in additional yield. Most of the securities in our portfolio
have some type of credit enhancement, such as an unconditional letter of credit,
bond insurance, or a corporate guarantee. (These credit-enhanced securities
include those issued by entities participating in the Orange County Investment
Pool. As the credit support is unconditional, payment of interest and principal
on these securities does not depend on the credit quality of Orange County
itself.) We do not hold high-risk derivative products in the Fund.
[PHOTO] MARY V. METASTASIO
Looking toward the future, we can be certain of one thing - tax-exempt
interest rates will be pulled in various directions depending on general
interest-rate movements and supply and demand factors particular to the
tax-exempt money market and will be affected by the economic health of issuers
and their plans. Demand will depend on investors' perceptions of the economy and
of other investment alternatives. No matter what the markets do, the SAFECO
Tax-Free Money Market Fund will seek the same goal as always - to provide our
investors with safety, liquidity, and an attractive tax-free yield for their
short-term investment needs.
/s/ MARY V. METASTASIO
- ------------------------------------
Mary V. Metastasio, Fund Manager
- --------------------------------------------------------------------------------
Mary Metastasio joined SAFECO in 1980. She became a municipal securities
analyst in 1985, portfolio manager in 1987 and Vice President in 1988. She holds
an M.B.A. from the University of Washington.
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- 6 -
<PAGE> 9
HIGHLIGHTS
SAFECO TAX-FREE
MONEY MARKET FUND
As of March 31, 1995
<TABLE>
<CAPTION>
WEIGHTED AVERAGE MATURITY 62 DAYS
================================================================================
<S> <C>
AVERAGE ANNUAL TOTAL RETURN (1 YEAR) 2.84%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE STATES PERCENT OF NET ASSETS
================================================================================
<S> <C>
California 13.8%
Texas 9.9%
Washington 9.3%
Georgia 7.8%
Missouri 7.7%
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO CREDIT QUALITY PERCENT OF PORTFOLIO
================================================================================
<S> <C>
Highest Rated(1) 99.7%
Split Rated(2) 0.0%
Not Rated(3) 0.3%
------
100.0%
======
</TABLE>
(1) Rated highest quality by at least two nationally recognized rating
organizations or, when rated by only one organization, received its highest
rating.
(2) Rated highest by one organization and second highest by another.
(3) Although unrated, comparable in credit quality to securities in the highest
or split-rated categories, in the opinion of SAFECO Asset Management
Company, the Fund's investment advisor.
[GRAPH]
SAFECO Tax-Free Money Market Fund
Top 5 Types of Bonds As a Percent of Net Assets
As of March 31, 1995
Housing/Uninsured: 21.3%
IDR/PCR* Electric Utilities: 10.9%
Local G.O./Limited Tax: 8.5%
Miscellaneous Tax: 7.6%
IDR/PCR* Miscellaneous: 6.6%
*Industrial Development Revenue/Pollution Control Revenue
[GRAPH]
SAFECO Tax-Free Money Market Fund
Tax-Equivalent Yields Compared to
the Average Taxable Money Fund Yield
Graph compares SAFECO Tax-Free Money Market Fund tax-equivalent yields for 5
tax brackets to the IBC/Donoghue Taxable Money Fund Average Yield on 3/27/95.
Tax-equivalent yield comparisons vary with market conditions.
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<PAGE> 10
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PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
========================================================================================
<S> <C> <C>
MUNICIPAL BONDS - 101.0%
ALASKA - 3.1%
Alaska Industrial Development and
Export Authority Revenue
$1,325 4.55%, due 7/01/98, put date 4/07/95 $1,325
1,045 4.55%, due 7/01/01, put date 4/07/95 1,045
ARIZONA - 7.0%
3,600 Apache County Industrial Development Authority
Pollution Control Revenue
(Tucson Electric Power Co. Project)
4.25%, due 6/15/20, put date 4/07/95 3,600
1,000 Apache County Industrial Development Authority
Revenue (Tucson Electric Power Co.
Springerville Project)
4.20%, due 12/15/18, put date 4/07/95 1,000
800 Pima County Industrial Development Authority
Revenue (Tucson Electric Power Co. Projects)
4.20%, due 12/01/22, put date 4/07/95 800
CALIFORNIA - 13.8%
1,000 California Pollution Control Financing Authority
Revenue (Chevron USA, Inc. Project)
3.10%, due 5/15/02, put date 5/15/95 998
1,000 California Student Education Loan Marketing
Corp. (Student Loan Revenue Ref. Bonds)
4.40%, due 11/01/02, put date 11/01/95 1,000
1,700 Irvine Ranch Water District
Consolidated Series 1985 B
4.85%, due 10/01/09, put date 4/01/95 1,700
CALIFORNIA (CONTINUED)
$2,500 Irvine Ranch Water District
Consolidated Series 1993 A
4.85%, due 4/01/33, put date 4/01/95 $2,500
4,000 Orange County (Irvine Coast
Assessment District #88-1)
5.10%, due 9/02/18, put date 4/01/95 4,000
500 Orange County (Sanitation Districts
Capital Improvement Program Series 1990-92 A)
5.10%, due 8/01/15, put date 4/01/95 500
COLORADO - 1.9%
1,500 South Denver Metropolitan District
General Obligation
4.35%, due 12/01/05, put date 6/01/95 1,500
FLORIDA - 4.1%
850 Dade County Equipment
Special Obligation Revenue
4.45%, due 10/01/99, put date 4/07/95 850
1,280 Florida Housing Finance Agency
Multifamily Revenue
5.00%, due 12/01/09, put date 6/01/95 1,280
1,000 Putnam County Development Authority
Pollution Control Revenue (Seminole
Electric Co-op Project)
4.30%, due 3/15/14, put date 9/15/95 1,000
</TABLE>
See Notes to Financial Statements
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<PAGE> 11
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================================
<S> <C> <C>
GEORGIA - 7.8%
$2,500 Marietta Housing Authority Multifamily
Housing Revenue (Falls at Bells Ferry)
5.25%, due 1/15/09, put date 1/15/96 $2,500
Municipal Electric Authority of Georgia
2,075 4.90%, due 3/01/20, put date 3/01/96 2,075
1,500 3.85%, due 6/01/20, put date 6/01/95 1,500
ILLINOIS - 3.0%
2,320 Chicago (O'Hare International Airport)
4.25%, due 1/01/15, put date 4/07/95 2,320
IOWA - 2.2%
1,730 Polk County Hospital Equipment and
Improvement Revenue
4.25%, due 12/01/05, put date 4/07/95 1,730
KANSAS - 3.2%
1,500 Manhattan Commercial Development
Revenue (Kan/Del Hotel)
5.00%, due 8/01/16, put date 8/01/95 1,500
1,000 Wichita Revenue (CSJ Health System)
4.25%, due 10/01/11, put date 4/07/95 1,000
LOUISIANA - 1.3%
1,000 Louisiana Public Facilities Authority
Special Insurance Assessment Revenue
4.35%, due 12/01/13, put date 4/07/95 1,000
MARYLAND - 3.8%
$1,500 Howard County Multifamily Housing Revenue
(Sherwood Crossing Ltd. Partnership)
3.90%, due 6/01/08, put date 6/01/95 $1,500
1,000 Maryland Community Development Administration
Department of Housing Single Family Program
4.70%, due 4/01/17, put date 6/06/95 1,000
500 Montgomery County Industrial Development
Revenue (Information Systems & Networks)
3.95%, due 4/01/14, put date 4/03/95 500
MISSOURI - 7.7%
1,600 Callaway County Industrial Development Authority
Revenue (Callaway Community Hospital)
4.05%, due 8/01/14, put date 4/03/95 1,600
600 Kansas City Industrial Development Authority
Multifamily Housing Revenue
(J.C. Nichols Co.)
4.25%, due 5/01/15, put date 4/03/95 600
2,100 Kansas City Industrial Development Authority
(Coach House II Project)
4.25%, due 12/01/15, put date 4/03/95 2,100
1,600 St. Louis Planned Industrial Expansion Authority
Industrial Development Revenue
(Italgrani U.S.A., Inc.)
4.15%, due 6/01/03, put date 4/03/95 1,600
</TABLE>
See Notes to Financial Statements
================================================================================
- 9 -
<PAGE> 12
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
========================================================================================
<S> <C> <C>
MONTANA - 4.6%
$1,200 Forsyth, Rosebud County Pollution Control
Revenue (Pacificorp Project)
3.90%, due 1/01/18, put date 4/12/95 $1,200
2,305 Havre Industrial Development
Revenue (Safeway, Inc. Projects)
4.45%, due 6/01/06, put date 6/01/95 2,305
NEW YORK - 1.3%
1,000 New York Energy R & D Authority PCR
Long Island Lighting Co. Project Series B
4.70%, due 3/01/16, put date 3/01/96 1,000
OHIO - 3.9%
1,000 Akron Sanitary Sewer System Revenue
4.15%, due 12/01/14, put date 4/07/95 1,000
2,000 Cleveland-Cuyahoga County
Port Authority Revenue
(Rock Roll Hall of Fame and
Museum Project)
4.15%, due 12/01/15, put date 4/07/95 2,000
OKLAHOMA - 1.3%
1,000 Oklahoma Water Resources Board
State Loan Program Revenue
4.50%, due 9/01/23, put date 9/01/95 1,000
PENNSYLVANIA - 1.6%
215 Commonwealth Tax Exempt Mortgage Trust
2.95%, due 11/01/05, put date 5/01/95 215
1,000 Philadelphia Tax and Revenue Anticipation Notes
4.75%, due 6/15/95, put date 6/15/95 1,002
TENNESSEE - 5.0%
$3,400 Hamilton County Industrial Development Revenue
(Komatsu American Manufacturing Corp.)
4.25%, due 11/01/05, put date 4/07/95 $3,400
500 Knox County Industrial Development Board
Industrial Development Revenue
(Service Merchandise)
3.90%, due 12/15/08, put date 4/17/95 500
TEXAS - 9.9%
600 Austin Higher Education Authority, Inc.
Educational Facilities Revenue
(St. Edward's University)
4.25%, due 8/01/10, put date 4/03/95 600
1,900 Bexar County Housing Finance Corp.
(Altamonte/Sasa Apartments)
4.50%, due 11/01/06, put date 4/07/95 1,900
3,100 Cedar Hill Industrial Development Corp.
Revenue (Minyard Properties Project)
4.25%, due 5/01/02, put date 4/03/95 3,100
1,000 Harris County Housing Finance Corp.
Multifamily Housing Revenue
(Arbor II Ltd. Project)
4.20%, due 10/01/05, put date 10/01/95 1,000
1,000 Tarrant County Housing Finance Corp.
Multifamily Housing Revenue
(Lincoln Meadows Project) Series 1988
5.00%, due 12/01/14, put date 12/01/95 1,000
</TABLE>
See Notes to Financial Statements
================================================================================
-10-
<PAGE> 13
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C> <C>
VIRGINIA - 3.9%
$2,000 Harrisonburg Development and Housing Authority
Multifamily Housing Revenue
(Rolling Brook Village Apts. Project)
5.10%, due 2/01/09, put date 2/01/96 $ 2,000
1,000 Peninsula Ports Authority of Virginia Port Facility
Revenue (CSX Transportation, Inc. Project)
3.90%, due 12/15/12, put date 5/02/95 1,000
WASHINGTON - 9.3%
1,500 Seattle Municipal Power and Light Revenue
4.20%, due 5/01/11, put date 7/12/95 1,500
1,000 Washington Public Power Supply System
Project #2 Revenue
4.325%, due 7/01/00, put date 4/07/95 1,000
855 Washington State Housing Finance Commission
Revenue (Horizon House Project)
4.25%, due 1/01/21, put date 4/07/95 855
1,330 Washington State Housing Finance Commission
Revenue (Pioneer Human Services)
4.30%, due 7/01/11, put date 4/07/95 1,330
1,535 Washington State Housing Finance Commission
Revenue (YMCA of Greater Seattle Program)
4.50%, due 7/01/11, put date 4/01/95 1,535
1,000 Washington State Housing Finance Commission
Revenue (YMCA of Snohomish County Program)
4.40%, due 8/01/19, put date 4/01/95 1,000
WYOMING - 1.3%
$1,000 Uinta County Pollution Control Revenue
(Chevron USA, Inc. Project)
3.75%, due 6/15/97, put date 6/15/95 $ 1,000
-------
TOTAL MUNICIPAL BONDS 78,065
-------
TOTAL INVESTMENTS - 101.0% 78,065
Liabilities, less Other Assets (745)
-------
NET ASSETS $77,320
=======
</TABLE>
- --------------------------------------------------------------------------------
Securities with a maturity of more than thirteen months have variable rates
and/or demand features which qualify them as short-term securities. Rates shown
are those in effect on March 31, 1995. These rates change periodically based on
specified market rates or indices.
See Notes to Financial Statements
================================================================================
- 11 -
<PAGE> 14
STATEMENTS OF ASSETS AND LIABILITIES
As of March 31, 1995
<TABLE>
<CAPTION>
(In Thousands, Except Per Share Amounts) SAFECO MONEY MARKET FUND SAFECO TAX-FREE MONEY MARKET FUND
=======================================================================================================
<S> <C> <C>
ASSETS
Investments, at Value (Amortized Cost
$173,535 and $78,065, respectively) $173,535 $78,065
Cash 2 --
Receivables
Interest 82 526
-------- -------
Total Assets 173,619 78,591
-------- -------
LIABILITIES
Payables
Capital Stock Redeemed 1,496 627
Investment Securities Purchased -- 500
Investment Advisory Fees 76 34
Notes Payable (Note 3) -- 67
Dividends 37 20
Shareholder Servicing Fees 34 7
Other 18 16
-------- -------
Total Liabilities 1,661 1,271
-------- -------
NET ASSETS $171,958 $77,320
======== =======
SHARES OUTSTANDING (NOTE 2) 171,958 77,320
======== =======
NET ASSET VALUE PER SHARE
(Net Assets Divided by Shares Outstanding) $ 1.00 $ 1.00
======== =======
- -------------------------------------------------------------------------------------------------------
See Notes to Financial Statements
=======================================================================================================
</TABLE>
- 12 -
<PAGE> 15
STATEMENTS OF OPERATIONS
For the Year Ended March 31, 1995
<TABLE>
<CAPTION>
(In Thousands) SAFECO MONEY MARKET FUND SAFECO TAX-FREE MONEY MARKET FUND
==============================================================================================================
<S> <C> <C>
INVESTMENT INCOME
Interest $ 8,288 $ 2,907
EXPENSES
Investment Advisory Fees (Note 3) 841 425
Shareholder Servicing Fees (Note 3) 385 74
Custodian Fees 26 17
Legal and Auditing Fees 17 15
Reports to Shareholders 15 6
Trustees' Fees 6 5
Loan Interest Expense 2 2
---------- ----------
Total Expenses 1,292 544
---------- ----------
NET INVESTMENT INCOME AND NET CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 6,996 $ 2,363
========== ==========
- --------------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended March 31
<TABLE>
<CAPTION>
SAFECO MONEY MARKET FUND SAFECO TAX-FREE MONEY MARKET FUND
----------------------------- ---------------------------------
(In Thousands) 1995 1994 1995 1994
=======================================================================================================================
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 6,996 $ 3,408 $ 2,363 $ 1,589
DIVIDENDS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME (6,996) (3,408) (2,363) (1,589)
TRUST SHARE TRANSACTIONS (Note 2) (14,354) 41,776 (17,269) 12,491
--------- --------- -------- --------
TOTAL CHANGE IN NET ASSETS (14,354) 41,776 (17,269) 12,491
NET ASSETS AT BEGINNING OF PERIOD 186,312 144,536 94,589 82,098
--------- --------- -------- --------
NET ASSETS AT END OF PERIOD $ 171,958 $ 186,312 $ 77,320 $ 94,589
========= ========= ======== ========
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
================================================================================
- 13 -
<PAGE> 16
================================================================================
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The SAFECO Money Market Trust ("Trust") is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Trust consists of the SAFECO Money Market Fund ("Money
Fund") and SAFECO Tax-Free Money Market Fund ("Tax-Free Money Fund") (together
the "Funds").
The following is a summary of significant accounting policies consistently
followed by each Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
SECURITY VALUATION. Investments consist of short-term securities maturing
within thirteen months from the date of purchase. Securities in the Tax-Free
Money Fund with maturities of more than thirteen months have floating rates
and/or demand features which qualify them as short-term securities. Securities
purchased at par are valued at cost. All other securities are valued at
amortized cost, which approximates market value.
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
The cost of each portfolio is the same for financial statement and federal
income tax purposes.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. In the Tax-Free Money Fund,
securities purchased on a when-issued or delayed basis may be settled a month or
more after the trade date. The securities purchased are carried in the portfolio
at market and are subject to market fluctuation during this period. These
securities begin earning interest on the settlement date. As commitments to
purchase when-issued securities become fixed, the Tax-Free Money Fund segregates
liquid assets in an amount equal to the total obligation.
INCOME RECOGNITION. Interest is accrued on portfolio investments daily. Bond
premiums and original issue discounts are amortized to either call or maturity
dates; market discounts in the Money Fund are amortized.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Net investment income is
declared as a dividend to shareholders of record as of the close of each
business day and payment is made as of the last business day of each month.
FEDERAL INCOME AND EXCISE TAXES. The Funds intend to continue to comply with
the requirements of the Internal Revenue Code applicable to regulated investment
companies by distributing substantially all income to shareholders in a manner
which results in no tax to the Fund. Therefore, no federal income or excise tax
provision is required. The Tax-Free Money Fund intends to continue to satisfy
conditions that will enable it to designate its dividends from net investment
income as tax-exempt dividend distributions.
================================================================================
- 14 -
<PAGE> 17
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. TRUST SHARES
<TABLE>
<CAPTION>
SAFECO MONEY MARKET FUND SAFECO TAX-FREE MONEY MARKET FUND
------------------------------- ---------------------------------
FOR THE YEAR ENDED MARCH 31 FOR THE YEAR ENDED MARCH 31
(In Thousands, Except Per-Share Amounts) 1995 1994 1995 1994
===============================================================================================================
<S> <C> <C> <C> <C>
SHARES SOLD 1,216,336 1,605,281 176,342 212,888
SHARES REINVESTED 5,911 2,833 2,024 1,304
---------- ---------- -------- --------
1,222,247 1,608,114 178,366 214,192
SHARES REDEEMED (1,236,601) (1,566,338) (195,635) (201,701)
---------- ---------- -------- --------
NET CHANGE (14,354) 41,776 (17,269) 12,491
========== ========== ======== ========
</TABLE>
Because share value is equal to $1.00,
dollar amounts and share amounts are identical.
<TABLE>
<CAPTION>
As of March 31, 1995
Shares Authorized Unlimited Unlimited
<S> <C> <C>
Par Value Per Share $ .001 $ .001
Paid in Capital $ 171,958 $ 77,320
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
3. INVESTMENT ADVISORY FEES AND
OTHER TRANSACTIONS WITH AFFILIATES
SAFECO Asset Management Company receives investment advisory fees from the
Funds. For the Money Fund, the fee is based on average daily net assets at the
annual rate of 50/100 of one percent on the first $250 million declining in
three levels to 25/100 of one percent on net assets over $750 million. For the
Tax-Free Money Fund, the fee is based on average daily net assets at the annual
rate of 50/100 of one percent on the first $100 million declining in three
levels to 20/100 of one percent on net assets over $500 million. SAFECO Services
Corporation receives shareholder servicing fees.
The Funds may borrow money for temporary purposes from SAFECO Corporation or
its affiliates at interest rates less than or equivalent to commercial bank
interest rates. On March 31, 1995, the Tax-Free Money Market Fund had a loan
outstanding with SAFECO Services Corporation of $66,645 and it was repaid on
April 3, 1995.
================================================================================
- 15 -
<PAGE> 18
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SAFECO MONEY MARKET FUND
FOR THE YEAR ENDED MARCH 31
-------------------------------------------------------------
(For a Share Outstanding Throughout the Period) 1995 1994 1993 1992 1991
==================================================================================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.04 0.02 0.03 0.05 0.07
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.04) (0.02) (0.03) (0.05) (0.07)
-------- -------- --------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========= ======== ========
TOTAL RETURN 4.20% 2.48% 2.98% 5.04% 7.60%
NET ASSETS AT END OF PERIOD (000'S OMITTED) $171,958 $186,312 $ 144,536 $184,823 $224,065
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.78% 0.79% 0.77% 0.73% 0.70%
RATIO OF NET INCOME TO AVERAGE NET ASSETS 4.21% 2.47% 3.02% 5.05% 7.34%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SAFECO TAX-FREE MONEY MARKET FUND
FOR THE YEAR ENDED MARCH 31
-------------------------------------------------------------
(For a Share Outstanding Throughout the Period) 1995 1994 1993 1992 1991
==================================================================================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.03 0.02 0.03 0.04 0.05
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.03) (0.02) (0.03) (0.04) (0.05)
-------- -------- --------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========= ======== ========
TOTAL RETURN 2.84% 1.98% 2.53% 3.94% 5.39%
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 77,320 $ 94,589 $ 82,098 $ 79,849 $ 60,478
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.64% 0.64% 0.61% 0.62% 0.62%
RATIO OF NET INCOME TO AVERAGE NET ASSETS 2.79% 1.96% 2.48% 3.83% 5.24%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
- 16 -
<PAGE> 19
================================================================================
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF THE SAFECO MONEY MARKET TRUST
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the SAFECO Money Market Trust
(comprising, respectively, the SAFECO Money Market Fund and SAFECO Tax-Free
Money Market Fund) as of March 31, 1995, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1995, by correspondence with the custodian and a broker. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds constituting the SAFECO Money Market Trust at March 31,
1995, and the results of their operations for the year then ended, the changes
in their net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended, in
conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
-----------------------------
Seattle, Washington
April 26, 1995
================================================================================
- 17 -
<PAGE> 20
================================================================================
SAFECO MONEY MARKET FUNDS
BOARD OF TRUSTEES
Boh A. Dickey, Chairman
Barbara J. Dingfield
Richard W. Hubbard
Richard E. Lundgren
L.D. McClean
Larry L. Pinnt
John W. Schneider
OFFICERS
David F. Hill, President
Ronald L. Spaulding,
Vice President and Treasurer
Neal A. Fuller,
Vice President and Controller
INVESTMENT ADVISER
SAFECO Asset
Management Company
DISTRIBUTOR
SAFECO Securities, Inc.
TRANSFER AGENT
SAFECO Services Corporation
CUSTODIAN
U.S. Bank of Washington, N.A.
GMF 663 5/95
[RECYCLE LOGO] Printed on Recycled Paper
Bulk Rate
U.S. Postage
PAID
Permit No. 2405
Seattle, WA
This report must be preceded or
accompanied by a current prospectus.
(R)Registered trademark of SAFECO Corporation.
