<PAGE>
June 30, 1997
SEMIANNUAL
REPORT
MONEY MARKET FUNDS
NO-LOAD CLASS
----------
SAFECO Money Market Fund. . . . . . . .2
SAFECO Tax-Free Money Market Fund . . .6
[LOGO]
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO MONEY MARKET FUND
JUNE 30, 1997
- --------------------------------------------------------------------------------
[PHOTO]
NAOMI URATA
In the twelve-month period ended June 30, 1997, the SAFECO Money Market
Fund's total return was 4.85%. The seven-day current yield declined from 4.71%
to a low of 4.62% on March 10, then rose to 5.01% by the end of June. The
average money fund seven-day yield as reported by IBC/Donoghue was 4.97% on July
1. The Consumer Price Index, a broad inflation measure, rose 2.30% for the
twelve months ending June 30, 1997.
Ninety-day commercial paper rates started the year at 5.47% and traded in
that range until mid-March, when they rose in anticipation of a rate hike by the
Federal Reserve. The Fed raised the Federal Funds rate on March 25 by 25 basis
points to 5.50%. Commercial paper rates ended the quarter at 5.63%. Thirty- to
sixty-day rates rose to nearly equal one-year rates. Rates are unusually flat as
the market sees very little risk of inflation and very steady rates going
forward.
I extended the seven-day weighted average maturity of the Fund from 36 days
to 54 days by
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION NO-LOAD CLASS
Average Weekly Yield for Six-Month Period Ended June 30, 1997
-------------------------------------------------------------
Money Market Mutual Fund
MMKT Class 1 Donoghue
------------------------------
12/31 4.71 4.82
01/07 4.71 4.81
01/14 4.69 4.76
01/21 4.69 4.76
01/28 4.67 4.77
02/04 4.69 4.78
02/11 4.66 4.75
02/18 4.66 4.74
02/25 4.67 4.73
03/04 4.69 4.75
03/11 4.62 4.72
03/18 4.65 4.73
03/25 4.64 4.74
04/01 4.74 4.82
04/08 4.76 4.82
04/15 4.79 4.84
04/22 4.85 4.86
04/29 4.91 4.89
05/06 4.87 4.90
05/13 4.93 4.90
05/20 4.91 4.91
05/27 4.92 4.92
06/03 4.96 4.94
06/10 4.93 4.93
06/17 4.99 4.95
06/24 4.99 4.95
07/01 5.02 4.97
Weighted Average Maturity 54 days days
Average Annual Return (1 Year) 4.85%
[GRAPH]
YIELDS ARE HISTORICAL AND NOT PREDICTIVE
OF FUTURE PERFORMANCE.
-2-
<PAGE>
adding one-year securities to the portfolio. At June 30, this average stood at
54 days.
I invested in U.S. agency securities, commercial paper issued by top-tier
corporations, bank certificates of deposits and notes, taxable municipal bonds,
and an asset-backed student loan trust. All of the securities had less than 13
months to maturity. Eight securities have a rate that floats in sync with
short-term rates.
I added the following new issuers to the approved list: Societe Generale, a
major French Bank; National Bank of Canada, a major Canadian Bank; PNC Student
Loan Trust, an issuer of asset-backed securities; and the Everett Clinic, a
medical clinic that issued a taxable municipal bond with a letter of credit from
U.S. Bank of Washington. Each is rated in the top tier and offered an increased
yield relative to other choices.
I believe that the Federal Reserve will hold rates steady for the next
several months. Economic statistics reflect a tight labor market, often
associated with accelerating inflation. However, inflation has been low.
Economic growth has been slow compared to the 5.9% rate of the first quarter of
1997. It is unclear whether the slowdown is temporary, or if it is the beginning
of a long-term trend. I will maintain longer average maturities in spite of the
uncertainty.
/s/ Naomi Urata
Naomi Urata
Money Market Fund Manager
- --------------------------------------------------------------------------------
Naomi Urata joined SAFECO in 1993 as a fixed-income analyst and began managing
the SAFECO Money Market Fund in August of 1994. She holds a Masters in
Management from Yale University and is a Chartered Financial Analyst.
HIGHLIGHTS - No-Load Class
- --------------------------------------------------------------------------------
7-DAY WEIGHTED AVERAGE MATURITY. . . . . . . . . . . . 54 DAYS
TOTAL RETURN (1 YEAR). . . . . . . . . . . . . . . . . 4.85%
-3-
<PAGE>
PORTFOLIO OF INVESTMENTS
SAFECO MONEY MARKET FUND
AS OF JUNE 30, 1997 (UNAUDITED)
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
COMMERCIAL PAPER AND
FLOATING RATE NOTES* - 94.4%
AGRICULTURAL PRODUCTS - 2.0%
$3,485 Cargill, Inc.
6.10%, due 7/01/97 . . . . . . . . . . . . . . . . . . $3,485
ASSET BACKED - 4.7%
+ Receivables Capital Corp. 4(2)
4,000 5.55%, due 7/02/97 (acquired 6/03/97). . . . . . . . . 3,999
4,000 5.55%, due 7/25/97 (acquired 6/16/97). . . . . . . . . 3,985
BANKS - DOMESTIC - 11.1%
4,000 Crestar Bank
5.50%, due 7/21/97 . . . . . . . . . . . . . . . . . . 4,000
8,000 * First Bank FSB, Fargo, ND BN
5.6575%, due 8/29/97 . . . . . . . . . . . . . . . . . 7,999
7,000 * Key Bank of Wa. BN
5.5875%, due 12/10/97. . . . . . . . . . . . . . . . . 6,997
BANKS - FOREIGN - 8.1%
5,000 National Bank of Canada
6.15%, due 5/15/98 . . . . . . . . . . . . . . . . . . 4,999
5,000 Societe Generale, NY
6.35%, due 4/15/98 . . . . . . . . . . . . . . . . . . 5,002
4,000 Westpac Capital Corp.
5.55%, due 9/15/97 . . . . . . . . . . . . . . . . . . 3,953
CONGLOMERATES - 4.7%
B.A.T. Capital Corp.
4,000 5.60%, due 7/14/97 . . . . . . . . . . . . . . . . . . 3,992
4,000 5.55%, due 7/23/97 . . . . . . . . . . . . . . . . . . 3,986
FINANCE - AUTO - 13.9%
4,000 Ford Motor Credit Co.
5.57%, due 7/10/97 . . . . . . . . . . . . . . . . . . 3,994
General Motors
Acceptance Corp.
4,000 5.77%, due 10/15/97. . . . . . . . . . . . . . . . . . 3,932
4,000 5.64%, due 7/01/97 . . . . . . . . . . . . . . . . . . 4,000
4,000 Hyundia Motors
5.53%, due 7/07/97 . . . . . . . . . . . . . . . . . . 3,996
National Fleet Funding
4,000 5.58%, due 7/18/97 . . . . . . . . . . . . . . . . . . 3,989
4,000 5.57%, due 8/15/97 . . . . . . . . . . . . . . . . . . 3,972
FINANCE - CONSUMER - 4.7%
Commercial Credit Co.
4,000 5.61%, due 8/05/97 . . . . . . . . . . . . . . . . . . 3,978
4,000 5.54%, due 8/13/97 . . . . . . . . . . . . . . . . . . 3,974
FINANCE - DIVERSIFIED & BUSINESS - 7.0%
4,000 General Electric Capital Corp.
5.51%, due 7/03/97 . . . . . . . . . . . . . . . . . . 3,999
Heller Financial, Inc.
4,000 5.66%, due 7/08/97 . . . . . . . . . . . . . . . . . . 3,996
4,000 5.36%, due 8/11/97 . . . . . . . . . . . . . . . . . . 3,976
FINANCE - EQUIPMENT LEASE - 2.3%
4,000 International Lease
Finance Corp.
5.56%, due 8/21/97 . . . . . . . . . . . . . . . . . . 3,968
FINANCE - MISCELLANEOUS - 9.3%
8,000 * PHH Corp.
6.6775%, due 6/11/98 . . . . . . . . . . . . . . . . . 8,000
8,000 * PNC Student Loan Trust
5.65%, due 7/25/98 . . . . . . . . . . . . . . . . . . 8,000
SEE NOTES TO FINANCIAL STATEMENTS
-4-
<PAGE>
PORTFOLIO OF INVESTMENTS
SAFECO MONEY MARKET FUND
AS OF JUNE 30, 1997 (UNAUDITED)
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - BROKERAGE - 12.0%
$8,500 * Dean Witter, Discover
5.6375%, due 8/08/97 . . . . . . . . . . . . . . . . . $8,500
4,000 Merrill Lynch & Co., Inc.
5.43%, due 7/16/97 . . . . . . . . . . . . . . . . . . 3,991
Smith Barney Inc. CP
4,000 5.54%, due 7/29/97 . . . . . . . . . . . . . . . . . . 3,983
4,000 5.54%, due 7/31/97 . . . . . . . . . . . . . . . . . . 3,982
HEALTHCARE - SPECIAL SERVICES - 3.1%
5,373 * Everett Clinic
5.72%, due 12/01/18. . . . . . . . . . . . . . . . . . 5,373
MACHINERY - 2.2%
3,800 Stanley Works
5.61%, due 8/06/97 . . . . . . . . . . . . . . . . . . 3,779
MISCELLANEOUS - 2.3%
4,000 Tasmanian Public Finance Corp.
5.66%, due 8/28/97 . . . . . . . . . . . . . . . . . . 3,964
STATE MUNICIPAL NOTE - 4.7%
4,100 * Chicago, Illinois, GO Unlimited
5.65%, due 1/01/01 . . . . . . . . . . . . . . . . . . 4,100
4,000 * City of Olathe, Kansas
5.60%, due 3/01/27 . . . . . . . . . . . . . . . . . . 4,000
UTILITIES - ELECTRIC - 2.3%
4,000 AES Barbers Point, Inc.
5.56%, due 7/24/97 . . . . . . . . . . . . . . . . . . 3,986
--------
TOTAL COMMERCIAL PAPER AND
FLOATING RATE NOTES. . . . . . . . . . . . . . . . . . . . . . . . . 161,829
--------
U.S. GOVERNMENT
AND AGENCY SECURITIES - 5.8%
FEDERAL NATIONAL MORTGAGE ASSOCIATION
DISCOUNT NOTES - 2.9%
5,000 5.71%, due 3/18/98 . . . . . . . . . . . . . . . . . . 4,993
STUDENT LOAN MARKETING ASSOCIATION - 2.9%
5,000 5.535%, due 2/25/98. . . . . . . . . . . . . . . . . . 4,997
--------
TOTAL U.S. GOVERNMENT
AND AGENCY SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . 9,990
--------
TOTAL INVESTMENTS - 100.2% . . . . . . . . . . . . . . . . . . . . . 171,819
Liabilities, less Other Assets . . . . . . . . . . . . . . . . . . . (312)
--------
NET ASSETS. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . $171,507
--------
--------
- -------------
+ Securities are 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 June 30, 1997, such securities are issued by
Receivables Capital Corporation. The combined value of the two issues is
$7,984,583, or 4.7% of net assets.
* Securities have variable rates which change periodically based on specified
market rates or indices. Rates shown are those in effect on June 30, 1997.
The total market value of such securities are $52,968,902, or 31% of net
assets.
SEE NOTES TO FINANCIAL STATEMENTS
-5-
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO TAX-FREE MONEY MARKET FUND
JUNE 30, 1997
- --------------------------------------------------------------------------------
[PHOTO]
MARY V. METASTASIO
The SAFECO Tax-Free Money Market Fund began the six-month period ending
June 30, 1997, with a seven-day average yield of 3.30%, and ended it at 3.38%.
The Fund outperformed the IBC/Donoghue Money Fund Averages for most of the
period, as shown on the graph below.
Interest rates in the tax-exempt money markets began the year, as they
always do, at a peak, and then quickly fell as January progressed. This is due
primarily to seasonal supply and demand factors. Corporations tend to reduce
their holdings of short-term tax-exempt securities at year-end, and then stock
up again as the new year continues. In addition, January 1 is a major interest
payment date in the municipal market, and many investors deposit these coupon
payments in their tax-free money market accounts, at least temporarily, as they
consider their longer-term investment options.
Rates stabilized as supply and demand came into more of a balance in
mid-January, and remained in a fairly narrow range until mid-April. At this
time, the next big supply and demand
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
SAFECO TAX-FREE MONEY MARKET FUND
Average Weekly Yield for Six-Month Period Ended June 30, 1997
[GRAPH]
Tax-Free MMKT Donoghue
----------------- ----------
12/30 3.27 3.27
01/06 2.80 2.86
01/13 2.93 2.82
01/20 2.94 2.86
01/27 2.94 2.90
02/03 3.04 2.93
02/10 2.94 2.78
02/17 2.99 2.78
02/24 2.99 2.80
03/03 2.96 2.82
03/10 2.70 2.61
03/17 2.63 2.56
03/24 2.85 2.75
03/31 2.96 2.89
04/07 2.92 2.80
04/14 3.01 2.90
04/21 3.22 3.14
04/28 3.52 3.51
05/05 3.40 3.43
05/12 3.29 3.33
05/19 3.32 3.30
05/26 3.26 3.25
06/02 3.22 3.20
06/09 3.09 3.00
06/16 3.18 3.19
06/23 3.27 3.27
06/30 3.38 3.43
Weighted Average Maturity 50 days
Average Annual Return (1 Year) 3.04%
YIELDS ARE HISTORICAL AND NOT PREDICTIVE
OF FUTURE PERFORMANCE.
-6-
<PAGE>
imbalance arrived, courtesy of the IRS. Money tends to flow out of tax-exempt
money market funds at this time as investors use them to pay income taxes.
Correspondingly, interest rates offered for tax-exempt money market securities
increase, as issuers woo a smaller number of buyers.
Interest rates then stayed fairly high through the end of the quarter
(relative to longer-term interest rates, which were declining) as investors
prepared for the third major supply/demand imbalance of the year, the period
covering late June and early July. Many municipalities end their fiscal years
on June 30, and consequently their short-term note issues frequently mature on
this date, resulting in a supply crunch for buyers as they try to replace those
notes in their portfolios.
Against this background of varying supply and demand scenarios, the SAFECO
Tax-Free Money Market Fund performed well, ranking 37th of 139 comparable funds
for the six-month period, and 35th of 137 funds for the year ending June 30 on
a total return basis as measured by Lipper Analytical Services. Our barbell
strategy, with its heavy weighting of very short maturities, and smaller
weighting of longer
- --------------------------------------------------------------------------------
HIGHLIGHTS
COMPARISON OF THE FUND'S
TAX-EQUIVALENT YIELDS TO THE AVERAGE
TAXABLE MONEY MARKET FUND YIELD
[GRAPH]
Comparison of the Fund's
Tax-Equivalent Yields to the Average
Taxable Money Market Fund Yield
3.38** June 30th
15% 3.98
28% 4.69
31% 4.90
36% 5.28
39.6% 5.60
4.97* July 1st
* Represents IBC/Donoghue Taxable Money Fund average yield on July 1, 1997.
** Represents the SAFECO Tax-Free Money Market Fund actual yield on
June 30, 1997, and related tax-equivalent yields assuming various
shareholder tax brackets. Tax-equivalent yield comparisons vary with
market conditions.
7-DAY WEIGHTED AVERAGE MATURITY. . . . . . . . . . . . . 50 DAYS
TOTAL RETURN (1 YEAR). . . . . . . . . . . . . . . . . . 3.04%
-7-
<PAGE>
ones, has again served us well. We have been able to take advantage of the
periodic uptick in rates, locking in some higher yields for longer periods of
time when those securities were attractively priced.
At this time the market has decided not to worry about inflation, and no
severe supply/demand gyrations are anticipated again until year-end. My crystal
ball is foggy, however, and discretion is the better part of valor, so I will
make no predictions about the direction of the market. I do predict, however,
that this Fund will be managed in a consistent manner, with an eye to providing
quality, liquidity, and a competitive yield which is exempt from federal income
tax.
/s/ Mary V. Metastasio
Mary V. Metastasio
Tax-Free Money Market
Fund Manager
Mary Metastasio joined SAFECO's Investment Department in 1985 as a securities
analyst and began managing the SAFECO Tax-Free Money Market Fund in 1987. She
holds a B.A. in Dramatic Art from Whitman College and an M.B.A. from the
University of Washington.
PORTFOLIO OF INVESTMENTS
SAFECO
TAX-FREE MONEY MARKET FUND
AS OF JUNE 30, 1997 (UNAUDITED)
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
MUNICIPAL BONDS - 98.9%
ALASKA - 3.6%
$1,265 * Alaska Industrial Development and Export
Authority Revenue
1988 A-5
4.25%, due 7/01/98, put date 7/07/97 . . . . . . . . . $1,265
1,320 Alaska Industrial Development and Export
Authority Revenue
1988 A-6
4.25%, due 7/01/01, put date 7/07/97 . . . . . . . . . 1,320
ARIZONA - 9.0%
3,600 Apache County Industrial Development Authority
Pollution Control Revenue (Tucson Electric Power Co.
Project) 1981
4.15%, due 6/15/20, put date 7/07/97 . . . . . . . . . 3,600
1,000 Apache County Industrial Development Authority Revenue
(Tucson Electric Power Co. Springerville Project) 1983
4.15%, due 12/15/18, put date 7/07/97. . . . . . . . . 1,000
800 Pima County Industrial Development Authority Revenue
(Tucson Electric Power Co. Projects) 1982
4.15%, due 12/01/22, put date 7/07/97. . . . . . . . . 800
1,000 Tucson Industrial Development Authority Revenue
(Tucson City Center Parking Garage Project)
Series 1985 A
4.25%, due 6/01/15, put date 7/07/97 . . . . . . . . . 1,000
-8-
<PAGE>
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND
AS OF JUNE 30, 1997 (UNAUDITED)
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
CALIFORNIA - 2.5%
$1,000 California Student Education Loan Marketing Corp.
(Student Loan Revenue Ref. Bonds)
3.85%, due 11/01/02, put date 11/01/97 . . . . . . . . $1,000
400 Regional Airports Improvement Corp. Fac. American
Airlines (LAX) Series A
5.50%, due 12/01/24, put date 7/01/97. . . . . . . . . 400
400 Regional Airports Improvement Corp. Fac. American
Airlines (LAX) Series B
5.50%, due 12/01/24, put date 7/01/97. . . . . . . . . 400
DISTRICT OF COLUMBIA - 1.4%
1,000 District of Columbia Supplemental Student Loan Revenue
4.33%, due 7/01/04, put date 7/01/97 . . . . . . . . . 1,000
FLORIDA - 4.7%
355 Dade County Equipment Special Obligation
Revenue 1987 A
4.30%, due 10/01/99, put date 7/07/97. . . . . . . . . 355
1,240 Dade County Equipment Special Obligation
Revenue 1988 A
4.30%, due 10/01/99, put date 7/07/97. . . . . . . . . 1,240
1,750 Florida Housing Finance Agency Multifamily Revenue
4.125%, due 12/01/09, put date 12/01/97. . . . . . . . 1,750
GEORGIA - 2.8%
2,000 Marietta Housing Authority Multifamily Housing Revenue
(Falls at Bells Ferry)
3.65%, due 1/15/09, put date 1/15/98 . . . . . . . . . 2,000
ILLINOIS - 6.6%
3,120 Chicago - O'Hare International Airport Revenue 1984 A
4.20%, due 1/01/15, put date 7/07/97 . . . . . . . . . 3,120
580 Chicago - O'Hare International Airport Revenue 1984 B
4.20%, due 1/01/15, put date 7/07/97 . . . . . . . . . 580
1,000 Illinois Development Finance Authority Revenue
(Sinai Community Institute Project) Series 1997
4.20%, due 3/01/22, put date 7/07/97 . . . . . . . . . 1,000
IOWA - 7.8%
1,000 Iowa Municipalities Workers' Compensation
Association Revenue
4.10%, due 7/01/97 . . . . . . . . . . . . . . . . . . 1,000
1,000 Iowa School Corporations Warrant Certificates Series A
4.50%, due 6/26/98 . . . . . . . . . . . . . . . . . . 1,007
3,600 Polk County Hospital Equipment and Improvement
Revenue 1985
4.15%, due 12/01/05, put date 7/07/97. . . . . . . . . 3,600
- --------------------------------------------------------------------------------
* If a put date is indicated, the Fund has a right to sell a specified
underlying security at an exercise price equal to the amortized cost of the
underlying security plus interest, if any, as of that date.
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
-9-
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
SAFECO TAX-FREE MONEY MARKET FUND
AS OF JUNE 30, 1997 (UNAUDITED)
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
KANSAS - 4.5%
$2,100 Burlington Pollution Control Revenue (Kansas City
Power and Light) Series B
3.65%, due 9/01/15, put date 8/06/97 . . . . . . . . . $2,100
1,100 Wichita Revenue (CSJ Health System)
4.35%, due 10/01/11, put date 7/07/97. . . . . . . . . 1,100
LOUISIANA - 2.8%
1,000 Louisiana Public Facilities Authority Special
Insurance Assessment Revenue
4.50%, due 12/01/13, put date 7/07/97. . . . . . . . . 1,000
1,000 Louisiana Recovery District Sales Tax Bonds
Series 1988
3.90%, due 7/01/97 . . . . . . . . . . . . . . . . . . 1,000
MARYLAND - 3.2%
2,000 Howard County Multifamily Housing Revenue (Sherwood
Crossing Ltd. Partnership)
3.95%, due 6/01/08, put date 12/01/97. . . . . . . . . 2,000
300 Montgomery County Industrial Development Revenue
(Information Systems & Networks)
3.85%, due 4/01/14, put date 7/01/97 . . . . . . . . . 300
MISSOURI - 6.0%
2,100 Kansas City Industrial Development Authority
Multifamily Housing Revenue (Coach House II Project)
4.05%, due 12/01/15, put date 7/01/97. . . . . . . . . 2,100
MISSOURI (CONTINUED)
600 Kansas City Industrial Development Authority
Multifamily Housing Revenue (J.C. Nichols Co.)
4.05%, due 5/01/15, put date 7/01/97 . . . . . . . . . 600
1,600 St. Louis Planned Industrial Expansion Authority
Industrial Development Revenue (Italgrani U.S.A., Inc.)
3.80%, due 6/01/03, put date 7/01/97 . . . . . . . . . 1,600
MONTANA - 2.8%
1,990 Havre Industrial Development Revenue (Safeway, Inc.
Projects)
3.90%, due 6/01/06, put date 12/01/97. . . . . . . . . 1,990
OKLAHOMA - 1.4%
1,000 Oklahoma Water Resources Board State Loan
Program Revenue
3.50%, due 9/01/23, put date 9/01/97 . . . . . . . . . 1,000
Pennsylvania - 5.1%
2,655 Commonwealth Tax-Exempt Mortgage Trust
4.10%, due 11/01/05, put date 11/03/97 . . . . . . . . 2,655
1,000 Washington County Authority (Higher Education Pooled
Equipment and Leasing Project) Series 1985 A
4.20%, due 11/01/05, put date 7/07/97. . . . . . . . . 1,000
SEE NOTES TO FINANCIAL STATEMENTS
-10-
<PAGE>
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND
AS OF JUNE 30, 1997 (UNAUDITED)
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
SOUTH CAROLINA - 2.1%
$1,500 York County Pollution Control Revenue (North Carolina
Electric Membership Corp. Project) Series N-6
3.55%, due 9/15/14, put date 9/15/97 . . . . . . . . . $1,500
TENNESSEE - 5.4%
3,400 Hamilton County Industrial Development Revenue
(Komatsu American Manufacturing Corp.) 1985
4.35%, due 11/01/05, put date 7/07/97. . . . . . . . . 3,400
500 Knox County Industrial Development Board Industrial
Development Revenue (Service Merchandise)
3.85%, due 12/15/08, put date 7/15/97. . . . . . . . . 500
TEXAS - 11.9%
2,300 Cedar Hill Industrial Development Corp. Revenue
(Minyard Properties Project)
3.90%, due 5/01/02, put date 7/01/97 . . . . . . . . . 2,300
1,100 Grapevine Industrial Development Corp. (American
Airlines Inc. Project) Series A4
5.50%, due 12/01/24, put date 7/01/97. . . . . . . . . 1,100
1,000 Harris County Housing Finance Corp. Multifamily
Housing Revenue (Arbor II, Ltd. Project)
4.15%, due 10/01/05, put date 10/01/97 . . . . . . . . 1,000
TEXAS (CONTINUED)
1,000 Lone Star Airport Improvement Authority, Inc.
(American Airlines Inc. Project)
Revenue Series 1984 A-4
5.50%, due 12/01/14, put date 7/01/97. . . . . . . . . 1,000
1,100 Lone Star Airport Improvement Authority, Inc.
(American Airlines Inc. Project)
Revenue Series 1984 B-2
5.50%, due 12/01/14, put date 7/01/97. . . . . . . . . 1,100
1,000 Sabine River Industrial Development Authority
(Northeast Texas Electric Cooperative, Inc. Project)
Series 1984 Q
3.50%, due 8/15/14, put date 8/15/97 . . . . . . . . . 1,000
1,000 Tarrant County Housing Finance Corp. Multifamily
Housing Revenue (Lincoln Meadows Project) Series 1988
4.10%, due 12/01/14, put date 12/01/97 . . . . . . . . 1,000
VIRGINIA - 4.9%
2,500 Harrisonburg Development and Housing Authority
Multifamily Housing Revenue (Rolling Brook
Village Apts. Project)
3.70%, due 2/01/26, put date 2/01/98 . . . . . . . . . 2,500
1,000 Peninsula Ports Authority of Virginia Port Facility
Revenue (CSX Transportation, Inc. Project)
3.65%, due 12/15/12, put date 8/12/97. . . . . . . . . 1,000
SEE NOTES TO FINANCIAL STATEMENTS
-11-
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
SAFECO TAX-FREE MONEY MARKET FUND
AS OF JUNE 30, 1997 (UNAUDITED)
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
WASHINGTON - 10.4%
$1,000 Richland Golf Enterprise Revenue 1996
4.20%, due 12/01/21, put date 7/07/97. . . . . . . . . $1,000
1,000 Seattle Municipal Light and Power Revenue
Series 1991 B
3.70%, due 5/01/11, put date 8/18/97 . . . . . . . . . 1,000
1,000 Seattle Municipal Light and Power Revenue Series 1990
3.65%, due 11/01/15, put date 8/07/97. . . . . . . . . 1,000
1,955 Washington State Housing Finance Commission Revenue
(Pioneer Human Services)
4.20%, due 7/01/11, put date 7/07/97 . . . . . . . . . 1,955
1,425 Washington State Housing Finance Commission Revenue
(YMCA of Greater Seattle Program) 1991
5.50%, due 7/01/11, put date 7/01/97 . . . . . . . . . 1,425
WASHINGTON (CONTINUED)
1,100 Washington State Housing Finance Commission Revenue
(YMCA of Snohomish County Program) 1994
5.35%, due 8/01/19, put date 7/01/97 . . . . . . . . . 1,100
--------
TOTAL MUNICIPAL BONDS. . . . . . . . . . . . . . . . . . . . . . . . 70,762
--------
OTHER INVESTMENTS - 0.9%
INVESTMENT COMPANIES:
663 Federated Tax-Exempt Money Market Fund, Inc. . . . . . 663
--------
TOTAL OTHER INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . 663
--------
TOTAL INVESTMENTS - 99.8%. . . . . . . . . . . . . . . . . . . . . . 71,425
OTHER ASSETS, LESS LIABILITIES . . . . . . . . . . . . . . . . . . . 238
--------
NET ASSETS. . .. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 71,663
--------
--------
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 June 30, 1997. These rates change periodically based on
specified market rate or indices.
SEE NOTES TO FINANCIAL STATEMENTS
-12-
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
AS OF JUNE 30, 1997 (UNAUDITED)
SAFECO MONEY SAFECO TAX-FREE
(In Thousands, Except Per-Share Amounts) MARKET FUND MONEY MARKET FUND
ASSETS
Investments, at Value (Amortized Cost
$171,819 and $71,425, respectively) $ 171,819 $ 71,425
Receivables
Investment Securities Sold -- 90
Interest 540 390
--------- ---------
Total Assets 172,359 71,905
LIABILITIES
Payables
Investment Advisory Fees 73 30
Dividends 721 192
Other 58 20
--------- ---------
Total Liabilities 852 242
--------- ---------
NET ASSETS $ 171,507 $ 71,663
--------- ---------
--------- ---------
NO-LOAD CLASS:
Net Assets $ 171,173 $ 71,663
Trust Shares Outstanding 171,173 71,663
--------- ---------
Net Asset Value, Offering Price, and
Redemption Price Per Share $ 1.00 $ 1.00
--------- ---------
--------- ---------
CLASS A:
Net Assets $ 171 --
Trust Shares Outstanding 171
---------
Net Asset Value, Offering Price, and
Redemption Price Per Share $ 1.00
---------
---------
CLASS B:
Net Assets $ 163 --
Trust Shares Outstanding 163
---------
Net Asset Value, Offering Price, and
Redemption Price Per Share $ 1.00
---------
SEE NOTES TO FINANCIAL STATEMENTS
-13-
<PAGE>
STATEMENTS OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1997 (UNAUDITED)
SAFECO MONEY SAFECO TAX-FREE
(In Thousands) MARKET FUND MONEY MARKET FUND
INVESTMENT INCOME
Interest $ 4,743 $ 1,343
EXPENSES
Investment Advisory Fees 426 181
Transfer Agent Fees 197 32
Legal and Auditing Fees 9 8
Custodian Fees 9 12
Reports to Shareholders 11 1
Trustees' Fees 2 2
Loan Interest -- 1
--------- ---------
Total Expenses 654 237
--------- ---------
NET INVESTMENT INCOME AND NET CHANGE
IN NET ASSETS RESULTING FROM OPERATIONS $ 4,089 $ 1,106
--------- ---------
--------- ---------
SEE NOTES TO FINANCIAL STATEMENTS
-14-
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
SAFECO MONEY SAFECO TAX-FREE
MARKET FUND MONEY MARKET FUND
----------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
SIX-MONTH NINE-MONTH SIX-MONTH NINE-MONTH
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
(In Thousands) JUNE 30, 1997 DEC. 31, 1996 JUNE 30, 1997 DEC. 31, 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 4,089 $ 5,795 $ 1,106 $ 1,710
DIVIDENDS TO SHAREHOLDERS FROM
NET INVESTMENT INCOME
- No-Load Class (4,078) (5,792) (1,106) (1,710)
- Class A (8) (2) -- --
- Class B (3) (1) -- --
--------- --------- --------- ---------
Total (4,089) (5,795) (1,106) (1,710)
NET TRUST SHARE TRANSACTIONS
- No-Load Class 9,817 (3,766) (1,501) (6,538)
- Class A (123) 295 -- --
- Class B 56 106 -- --
--------- --------- --------- ---------
Total 9,750 (3,365) (1,501) (6,538)
--------- --------- --------- ---------
TOTAL CHANGE IN NET ASSETS 9,750 (3,365) (1,501) (6,538)
NET ASSETS AT BEGINNING OF PERIOD 161,757 165,122 73,164 79,702
--------- --------- --------- ---------
Net Assets at End of Period $ 171,507 $ 161,757 $ 71,663 $ 73,164
--------- --------- --------- ---------
--------- --------- --------- ---------
- -------------------------------------------------------------------------------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN
TRUST SHARES AND AMOUNTS
SALES 160,314 293,668 32,801 57,064
REINVESTMENTS 3,123 5,293 821 1,533
REDEMPTIONS (153,687) (302,326) (35,123) (65,135)
--------- --------- --------- ---------
NET CHANGE 9,750 (3,365) (1,501) (6,538)
--------- --------- --------- ---------
--------- --------- --------- ---------
Because share value is equal to $1.00,
dollar amounts and share amounts are identical.
As of June 30, 1997
Shares Authorized Unlimited Unlimited
Par Value Per Share $ .001 $ .001
Paid in Capital $ 171,507 $ 71,663
- -------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-15-
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
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 and
SAFECO Tax-Free Money Market Fund (together the "Funds").
Effective September 30, 1996, the Money Market Fund began issuing two new
classes of shares--Class A and Class B shares. These new shares are distributed
by financial professionals and, like the no-load class, have no associated sales
or distribution charges.
2. SIGNIFICANT ACCOUNTING POLICIES
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 which
permit management to make certain estimates and assumptions at the date of the
financial statements.
SECURITY VALUATION. Investments consist of short-term securities maturing
within thirteen months from the date of purchase. Securities in the Tax-Free
Money Market 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 Market
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
-16-
<PAGE>
interest on the settlement date. As commitments to purchase when-issued
securities become fixed, the Tax-Free Money Market Fund segregates liquid assets
in an amount equal to the total obligation.
INCOME RECOGNITION. Interest is accrued on portfolio investments daily.
Bond premiums, original issue discounts and market discounts are amortized to
either call or maturity dates.
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. Each Fund intends 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 Market Fund intends to
satisfy conditions which will enable it to designate its dividends from net
investment income as tax-exempt dividend distributions.
3. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
SAFECO Asset Management Company receives investment advisory fees from the
Funds. For the Money Market 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 Market 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.
NOTES PAYABLE AND INTEREST EXPENSE. The Funds may borrow money for
temporary purposes from SAFECO Corporation or its affiliates. Interest rates
equivalent to commercial bank interest rates are charged on loans over $100,000.
No interest is charged on loans under $100,000.
-17-
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
SAFECO MONEY MARKET FUND
NO-LOAD CLASS
<TABLE>
<CAPTION>
SIX-MONTH NINE-MONTH
PERIOD ENDED PERIOD ENDED
JUNE 30 DEC. 31 FOR THE YEAR ENDED MARCH 31
------------------------------------------------------------------------
1997 1996 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.02 0.03 0.05 0.04 0.02
LESS DISTRIBUTIONS
Dividends from
Net Investment Income (0.02) (0.03) (0.05) (0.04) (0.02)
--------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN 2.40%* 3.54%* 5.15% 4.20% 2.48%
NET ASSETS AT
END OF PERIOD (000'S OMITTED) $ 171,173 $ 161,356 $ 165,122 $ 171,958 $ 186,312
RATIO OF EXPENSES TO
AVERAGE NET ASSETS 0.77%** 0.81%** 0.78% 0.78% 0.79%
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 4.79%** 4.66%** 5.04% 4.21% 2.47%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
** Annualized.
-18-
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
4. FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
SAFECO MONEY MARKET FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------- ---------------------------
SIX-MONTH THREE-MONTH SIX-MONTH THREE-MONTH
PERIOD ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
JUNE 30 DEC. 31 JUNE 30 DEC. 31
--------------------------- ---------------------------
1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.02 0.01 0.02 0.01
Less Distributions
Dividends from Net
Investment Income (0.02) (0.01) (0.02) (0.01)
--------- --------- --------- ---------
Net Asset Value at End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- ---------
--------- --------- --------- ---------
TOTAL RETURN 2.44%* 1.21%* 2.42%* 1.21%*
NET ASSETS AT
END OF PERIOD (000'S OMITTED) $ 171 $ 295 $ 163 $ 106
RATIO OF EXPENSES TO
AVERAGE NET ASSETS 0.66%** 0.55%** 0.73%** 0.54%**
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS 4.90%** 5.01%** 4.85%** 4.96%**
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
** Annualized.
-19-
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
4. FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
SAFECO TAX-FREE MONEY MARKET FUND
NO-LOAD CLASS
<TABLE>
<CAPTION>
SIX-MONTH NINE-MONTH
PERIOD ENDED PERIOD ENDED
JUNE 30 DEC. 31 FOR THE YEAR ENDED MARCH 31
------------------------------------------------------------------------
1997 1996 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.02 0.02 0.03 0.03 0.02
LESS DISTRIBUTIONS
Dividends from
Net Investment Income (0.02) (0.02) (0.03) (0.03) (0.02)
--------- --------- --------- --------- ---------
NET ASSET VALUE AT END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
TOTAL RETURN 1.50%* 2.29%* 3.44% 2.84% 1.98%
NET ASSETS AT
END OF PERIOD (000'S OMITTED) $ 71,663 $ 73,164 $ 79,702 $ 77,320 $ 94,589
RATIO OF EXPENSES TO
AVERAGE NET ASSETS 0.65%** 0.65%** 0.65% 0.64% 0.64%
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 3.05%** 3.03%** 3.40% 2.79% 1.96%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
** Annualized.
-20-
<PAGE>
This page left blank intentionally.
-21-
<PAGE>
This page left blank intentionally.
-22-
<PAGE>
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
SAFECO MANAGED 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
SAFECO BALANCED FUND
LONG-TERM GROWTH
SAFECO GROWTH FUND
SAFECO EQUITY FUND
SAFECO NORTHWEST FUND
SAFECO INTERNATIONAL STOCK FUND
SAFECO SMALL COMPANY STOCK FUND
SAFECO U.S. VALUE 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>
SAFECO MONEY MARKET FUNDS
BOARD OF TRUSTEES:
Boh A. Dickey, Chairman
Barbara J. Dingfield
David F. Hill
Richard W. Hubbard
Richard E. Lundgren
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 ADVISOR:
SAFECO Asset Management Company
DISTRIBUTOR:
SAFECO Securities, Inc.
TRANSFER AGENT:
SAFECO Services Corporation
CUSTODIAN:
State Street Bank
AUDITOR:
Ernst & Young, LLP
FOR SHAREHOLDER SERVICE:
Monday-Friday,
5:30am-7:00pm Pacific Time
NATIONWIDE: 1-800-624-5711
SEATTLE: (206) 545-7319
DEAF AND HARD OF HEARING
TTY/TDD SERVICE: 1-800-438-8718
FOR 24-HOUR AUTOMATED PERFORMANCE INFORMATION AND TRANSACTIONS:
NATIONWIDE: 1-800-835-4391
SEATTLE: (206) 545-5113
MAILING ADDRESS:
SAFECO Mutual Funds
P.O. Box 34890
Seattle, WA 98124-1890
INTERNET:
http://www.safecofunds.com
E-MAIL: [email protected]
GMF 663 8/97
[LOGO] Printed on Recycled Paper.
This report must be preceded or accompanied by a current prospectus.
- -Registered Trademark- Registered trademark of SAFECO Corporation.
