<PAGE>
ANNUAL REPORT
December 31, 1999
SAFECO Mutual Funds
Fixed-Income Funds
No-Load Class
--------------
Taxable Bond Funds
<TABLE>
<S> <C>
Intermediate-Term U.S. Treasury
Fund............................ 2
GNMA Fund......................... 5
High-Yield Bond Fund.............. 8
Managed Bond Fund................. 14
Tax-Exempt Bond Funds
Municipal Bond Market Overview.... 18
California Tax-Free Income Fund... 19
Municipal Bond Fund............... 23
Washington State Municipal Bond
Fund............................ 30
Intermediate-Term Municipal Bond
Fund............................ 34
Insured Municipal Bond Fund....... 39
Money Market Funds
Money Market Fund................. 44
Tax-Free Money Market Fund........ 48
</TABLE>
[LOGO OF SAFECO(R)]
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO Intermediate-Term
U.S. Treasury Fund
December 31, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[PHOTO OF RONALD SPAULDING]
RONALD SPAULDING
The Intermediate-Term U.S. Treasury Fund trailed the Merrill Lynch
Intermediate-Term Treasury Index, but outpaced its peer group for the
year and quarter.
Interest rates moved irregularly but inexorably higher through the
year as investors focused on economic strength, some inflationary signs,
and the near certainty that the Federal Reserve Board would raise short-
term interest rates. The Fed did move three times during the year, with the
most recent tightening move sending short-term rates to 5.50%. The five-year
U.S. Treasury, a representative holding of the Fund, started 1999 at 4.5% and
finished at 6.25%.
The Fund suffered from rising interest rates more than its com-
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - No-Load Class
<TABLE>
<CAPTION>
Average Annual Total Return
for the periods ended December 31, 1999 Quarter 1 Year 5 Year 10 Year
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SAFECO Intermediate-Term U.S. Treasury Fund (.47)% (1.98)% 6.40 % 6.56 %
Merrill Lynch Intermediate-Term Treasury Index (.02)% 0.55 % 6.98 % 7.12 %
Lipper, Inc. (Intermediate U.S. Treasury Funds) (.61)% (2.27)% 6.58 % 6.66 %
<CAPTION>
SAFECO Merrill Lynch
Intermediate-Term Intermediate-Term
U.S. Treasury Fund Treasury Index
------------------- -----------------
<S> <C> <C>
12/31/89 10,000 10,000
1/31/90 9,941 9,948
2/28/90 9,990 9,973
3/31/90 9,985 9,990
4/30/90 9,959 9,957
5/31/90 10,148 10,168
6/30/90 10,251 10,298
7/31/90 10,389 10,448
8/31/90 10,351 10,403
9/30/90 10,391 10,493
10/31/90 10,474 10,644
11/30/90 10,583 10,803
12/31/90 10,716 10,956
1/31/91 10,764 11,067
2/28/91 10,848 11,125
3/31/91 10,925 11,178
4/30/91 11,046 11,301
5/31/91 11,104 11,365
6/30/91 11,117 11,372
7/31/91 11,256 11,500
8/31/91 11,446 11,712
9/30/91 11,618 11,914
10/31/91 11,743 12,049
11/30/91 11,864 12,188
12/31/91 12,164 12,488
1/31/92 12,026 12,362
2/28/92 12,040 12,406
3/31/92 11,997 12,358
4/30/92 12,088 12,471
5/31/92 12,262 12,644
6/30/92 12,454 12,832
7/31/92 12,764 13,071
8/31/92 12,864 13,221
9/30/92 13,103 13,404
10/31/92 12,863 13,237
11/30/92 12,783 13,181
12/31/92 12,963 13,354
1/31/93 13,297 13,599
2/28/93 13,591 13,803
3/31/93 13,646 13,859
4/30/93 13,744 13,969
5/31/93 13,698 13,927
6/30/93 14,030 14,127
7/31/93 14,052 14,154
8/31/93 14,398 14,373
9/30/93 14,480 14,435
10/31/93 14,512 14,455
11/30/93 14,279 14,390
12/31/93 14,368 14,446
1/31/94 14,555 14,590
2/28/94 14,170 14,383
3/31/94 13,872 14,182
4/30/94 13,773 14,083
5/31/94 13,779 14,100
6/30/94 13,753 14,110
7/31/94 13,936 14,280
8/31/94 13,971 14,330
9/30/94 13,819 14,214
10/31/94 13,824 14,218
11/30/94 13,796 14,147
12/31/94 13,850 14,198
1/31/95 14,008 14,436
2/28/95 14,217 14,712
3/31/95 14,290 14,793
4/30/95 14,466 14,957
5/31/95 15,019 15,390
6/30/95 15,119 15,491
7/31/95 15,002 15,501
8/31/95 15,180 15,628
9/30/95 15,348 15,731
10/31/95 15,582 15,910
11/30/95 15,899 16,109
12/31/95 16,169 16,267
1/31/96 16,221 16,412
2/28/96 15,826 16,228
3/31/96 15,660 16,144
4/30/96 15,627 16,099
5/31/96 15,624 16,090
6/30/96 15,738 16,242
7/31/96 15,787 16,298
8/31/96 15,785 16,313
9/30/96 15,962 16,523
10/31/96 16,159 16,792
11/30/96 16,366 16,995
12/31/96 16,231 16,906
1/31/97 16,281 16,969
2/28/97 16,238 16,988
3/31/97 16,040 16,901
4/30/97 16,265 17,090
5/31/97 16,392 17,218
6/30/97 16,554 17,370
7/31/97 17,032 17,696
8/31/97 16,826 17,614
9/30/97 17,079 17,815
10/31/97 17,379 18,022
11/30/97 17,387 18,057
12/31/97 17,576 18,217
1/30/98 17,859 18,459
2/28/98 17,799 18,435
3/31/98 17,833 18,500
4/30/98 17,897 18,582
5/31/98 18,049 18,701
6/30/98 18,200 18,837
7/31/98 18,238 18,911
8/31/98 18,686 19,289
9/30/98 19,332 19,745
10/31/98 19,239 19,786
11/30/98 19,174 19,716
12/31/98 19,265 19,789
1/31/99 19,267 19,877
2/28/99 18,962 19,572
3/31/99 19,043 19,722
4/30/99 19,074 19,782
5/31/99 18,855 19,650
6/30/99 18,828 19,684
7/31/99 18,802 19,703
8/31/99 18,811 19,744
9/30/99 18,973 19,901
10/31/99 18,988 19,931
11/30/99 18,961 19,943
12/31/99 18,884 19,898
</TABLE>
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
- 2 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
parable index, because its average maturity (even though I short-ened it by one
year, as it became clear that interest rates were trending upward) remained
longer than the average maturity of the index. At year-end, the average matu-
rity of the Fund was 4.6 years and the index's was 3.6 years.
I expect 2000 will offer more of the same, at least in the first half. We
believe the Fed will raise short-term interest rates in February from 5.50% to
6.00% and then desist. I've positioned the Fund for this likelihood. With its
somewhat longer average maturity, it may suffer more from a rate hike, but it
should do better in the stable interest-rate environment I expect to follow.
The risk to this scenario is that the economy continues to boom, the stock
market continues to soar, and the Fed, fretting about inflation in general and
equity assets in particular, would try to deflate the stock market with a
string of rate increases. Bond investors would suffer from this medicine.
This concludes my time as your portfolio manager. As my successor, Naomi
Urata will closely monitor the bond market and work to position the Fund to
make the best of the situation, whether rates are rising or falling.
Ronald Spaulding
- --------------------------------------------------------------------------------
Ronald Spaulding is the chief investment officer of SAFECO Corporation. In
1995, he became vice president and treasurer of SAFECO Corporation, director of
the insurance subsidiaries, vice chairman of SAFECO Asset Management Company,
and vice president and treasurer of SAFECO Mutual Funds. He holds an MBA from
the University of Washington and is a Chartered Financial Analyst.
- 3 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Intermediate-Term
U.S. Treasury Fund
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
U.S. GOVERNMENT OBLIGATIONS - 97.5%
U.S. Federal Agency Notes - 18.4%
$ 500 5.75%, due 2/15/08.............................................. $ 460
500 5.785%, due 4/14/08................................................ 460
1,500 6.26%, due 9/24/04............................................... 1,463
1,500 6.875%, due 11/22/06............................................. 1,452
U.S. Treasury Bills/Strips - 5.9%
1,975 0.00%, due 2/15/07............................................... 1,238
U.S. Treasury Notes - 73.2%
2,500 5.625%, due 5/15/08.............................................. 2,352
2,600 5.875%, due 6/30/00.............................................. 2,603
3,900 6.50%, due 10/15/06.............................................. 3,889
810 6.875%, due 3/31/00................................................ 813
2,070 7.25%, due 8/15/04............................................... 2,136
1,200 7.50%, due 11/15/01.............................................. 1,226
2,200 7.75%, due 2/15/01............................................... 2,238
------
TOTAL U.S. GOVERNMENT OBLIGATIONS....................................... 20,330
------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
CASH EQUIVALENTS - 1.1%
Investment Companies
$ 221 J.P. Morgan Institutional Prime Money Market................... $ 221
------
TOTAL CASH EQUIVALENTS..................................................... 221
------
TOTAL INVESTMENTS - 98.6%............................................... 20,551
Other Assets, less Liabilities............................................. 285
------
NET ASSETS............................................................. $20,836
------
------
</TABLE>
- --------------------------------------------------------------------------------
HIGHLIGHTS
<TABLE>
<S> <C>
Current Yield (30-day)..... 5.42%
Weighted Average Maturity.. 4.7 years
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 4 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO GNMA Fund
December 31, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[PHOTO OF PAUL STEVENSON]
PAUL STEVENSON
Interest rates continued to rise into year-end on fears the Federal
Reserve would raise rates again to contain a too-strong economy, con-
sumer spending, and buoyant stock markets. To further complicate mat-
ters, the global economy is on a fast mend, with international trade ex-
pected to increase. These factors are not comforting to a market which
reacts strongly to fears of inflation and excessive economic growth. I
believe the same themes will carry over into the new year.
The SAFECO GNMA Fund finished the year ahead of its peers, but our higher
sensitivity to interest rates kept us behind the Merrill Lynch GNMA Index. The
SAFECO Fund and its peers were longer than the index, and longer bonds fared
poorly in the rising rate environment. For exam-ple, in the fourth quarter, 30-
year pass-through GNMAs
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - No-Load Class
<TABLE>
<CAPTION>
Average Annual Total Return
for the periods ended December 31, 1999 Quarter 1 Year 5 Year 10 Year
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SAFECO GNMA Fund (.07)% 0.16 % 6.97 % 6.69 %
Merrill Lynch GNMA Index .38% 1.91 % 8.15 % 8.07 %
Lipper, Inc. (GNMA Funds) (.12)% 0.11 % 7.03 % 7.02 %
<CAPTION>
SAFECO Merrill Lynch
GNMA Fund GNMA Index
---------- -------------
<S> <C> <C>
12/31/89 10,000 10,000
1/31/90 9,889 9,895
2/28/90 9,934 9,984
3/31/90 9,946 9,996
4/30/90 9,810 9,903
5/31/90 10,110 10,218
6/30/90 10,245 10,385
7/31/90 10,433 10,561
8/31/90 10,340 10,477
9/30/90 10,408 10,567
10/31/90 10,496 10,701
11/30/90 10,729 10,940
12/31/90 10,871 11,121
1/31/91 11,025 11,280
2/28/91 11,089 11,359
3/31/91 11,146 11,442
4/30/91 11,267 11,560
5/31/91 11,357 11,652
6/30/91 11,370 11,668
7/31/91 11,551 11,866
8/31/91 11,736 12,088
9/30/91 11,940 12,307
10/31/91 12,116 12,501
11/30/91 12,177 12,590
12/31/91 12,480 12,899
1/31/92 12,307 12,743
2/28/92 12,408 12,872
3/31/92 12,335 12,788
4/30/92 12,427 12,924
5/31/92 12,667 13,178
6/30/92 12,802 13,368
7/31/92 12,985 13,447
8/31/92 13,118 13,644
9/30/92 13,224 13,745
10/31/92 13,087 13,639
11/30/92 13,143 13,710
12/31/92 13,316 13,878
1/31/93 13,513 14,082
2/28/93 13,660 14,205
3/31/93 13,715 14,278
4/30/93 13,763 14,357
5/31/93 13,803 14,433
6/30/93 14,035 14,570
7/31/93 14,093 14,639
8/31/93 14,241 14,668
9/30/93 14,257 14,675
10/31/93 14,281 14,749
11/30/93 14,145 14,725
12/31/93 14,259 14,871
1/31/94 14,418 14,989
2/28/94 14,200 14,918
3/31/94 13,749 14,530
4/30/94 13,629 14,434
5/31/94 13,676 14,453
6/30/94 13,615 14,423
7/31/94 13,877 14,715
8/31/94 13,909 14,747
9/30/94 13,700 14,582
10/31/94 13,664 14,572
11/30/94 13,545 14,535
12/31/94 13,650 14,690
1/31/95 13,930 15,008
2/28/95 14,256 15,410
3/31/95 14,304 15,485
4/30/95 14,487 15,700
5/31/95 14,887 16,174
6/30/95 14,949 16,280
7/31/95 14,967 16,321
8/31/95 15,129 16,495
9/30/95 15,274 16,671
10/31/95 15,392 16,805
11/30/95 15,573 16,987
12/31/95 15,763 17,211
1/31/96 15,868 17,336
2/28/96 15,653 17,199
3/31/96 15,561 17,183
4/30/96 15,499 17,120
5/31/96 15,464 17,055
6/30/96 15,677 17,248
7/31/96 15,700 17,326
8/31/96 15,698 17,350
9/30/96 15,958 17,630
10/31/96 16,252 17,984
11/30/96 16,494 18,263
12/31/96 16,391 18,163
1/31/97 16,497 18,291
2/28/97 16,534 18,359
3/31/97 16,358 18,187
4/30/97 16,628 18,478
5/31/97 16,770 18,672
6/30/97 16,974 18,891
7/31/97 17,337 19,231
8/31/97 17,274 19,209
9/30/97 17,481 19,455
10/31/97 17,663 19,652
11/30/97 17,692 19,705
12/31/97 17,862 19,896
1/30/98 18,043 20,089
2/28/98 18,079 20,158
3/31/98 18,116 20,246
4/30/98 18,226 20,378
5/31/98 18,352 20,549
6/30/98 18,458 20,587
7/31/98 18,534 20,702
8/31/98 18,792 20,868
9/30/98 18,999 21,126
10/31/98 18,918 21,103
11/30/98 19,005 21,237
12/31/98 19,084 21,329
1/31/99 19,185 21,487
2/28/99 19,037 21,406
3/31/99 19,188 21,541
4/30/99 19,266 21,643
5/31/99 19,089 21,521
6/30/99 18,958 21,430
7/31/99 18,828 21,302
8/31/99 18,820 21,300
9/30/99 19,127 21,654
10/31/99 19,162 21,780
11/30/99 19,198 21,801
12/31/99 19,114 21,736
</TABLE>
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
- 5 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
barely broke even, returning 0.44%. 15-year pass-throughs did marginally better
at 0.48%, while the 5- and 7-year balloons generated 0.72%.
As rising rates cause the duration (sensitivity to interest rates) of mort-
gage-backed securities to lengthen, I actively shortened the Fund's average ma-
turity, especially in the last half of the year. The bulk of my trading in-
volved selling the longest assets, and defensive swaps. These were the right
moves; I just needed more of them.
In the fourth quarter, Y2K concerns ruled Wall Street, and I consolidated a
number of smaller CMO positions, while there was a strong bid, with larger,
more liquid positions.
At December 31, the Fund's average life and duration were 9.6 years and 4.8
years, compared to 8.6 years and 4.5 years for the GNMA indices. The Fund's
slightly longer average life and duration is due to its emphasis, about 69% of
net assets, on 30-year pass-throughs. The balance is invested in well-struc-
tured, intermediate- maturity CMOs.
During the first quarter, I will be looking for more defensive strategies
and possibly allocating some of the assets into 1-year pass-throughs and 7-year
balloons, as well as more overlooked sectors that appear cheap.
Paul Stevenson
- --------------------------------------------------------------------------------
Paul Stevenson joined SAFECO in 1986 as a mortgage securities analyst. He be-
came the GNMA Fund manager in 1988. Stevenson has a Bachelor of Arts in finance
from Washing- ton State University, an MBA from the University of Washington,
and is a Chartered Financial Analyst.
- 6 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO GNMA Fund
As of December 31, 1999
HIGHLIGHTS
<TABLE>
<S> <C>
Current Yield (30-day)...... 6.39%
Weighted Average Maturity... 9.6 years
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
ASSET BACKED SECURITIES - 99.0%
Collateral Mortgage Obligation (CMO) - 21.7%
$2,000 6.50%, due 12/16/24.......................................... $ 1,892
3,000 6.50%, due 6/20/29............................................. 2,841
3,904 7.00%, due 6/20/12............................................. 3,806
Federal Home Loan Mortgage Corp. (FHLMC) - 9.2%
3,291 6.00%, due 5/15/29............................................. 3,063
545 9.50%, due 4/15/21............................................... 578
Federal National Mortgage Association (FNMA) - 12.0%
4,194 7.00%, due 1/01/29............................................. 4,058
648 9.00%, due 11/01/22.............................................. 677
Government National Mortgage Association (GNMA) - 56.1%
2,476 6.00%, due 10/20/29............................................ 2,245
1,591 6.50%, due 1/20/24............................................. 1,502
2,739 7.00%, due 10/20/29............................................ 2,636
1,417 7.00%, due 5/15/23............................................. 1,379
4,264 7.00%, due 5/15/28............................................. 4,121
1,321 7.50%, due 3/15/22............................................. 1,313
2,231 7.50%, due 5/15/28............................................. 2,208
1,104 7.50%, due 9/15/22............................................. 1,097
2,834 8.25%, due 5/15/20............................................. 2,919
1,822 8.50%, due 10/20/29............................................ 1,861
828 8.50%, due 8/20/29............................................. 845
------
TOTAL ASSET BACKED SECURITIES........................................... 39,041
------
CASH EQUIVALENTS - 0.6%
Investment Companies
256 J.P. Morgan Institutional Prime Money Market................... 256
------
TOTAL CASH EQUIVALENTS.................................................. 256
------
TOTAL INVESTMENTS - 99.6%............................................... 39,297
Other Assets, less Liabilities.......................................... 152
------
NET ASSETS............................................................. $39,449
------
------
- --------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 7 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO High-Yield Bond Fund
December 31, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[PHOTO OF ROBERT KERN]
ROBERT KERN
High-yield bonds proved to be the best fixed-income investment in
1999. (The Merrill Lynch High-Yield Index returned 2.51%.) The SAFECO
High-Yield Bond Fund proved to be a great choice for high-yield invest-
ors. For the year and quarter ended December 31, 1999, the Fund
outperformed its benchmark index.
The year itself ended on a high note, with the best returns coming in the
fourth quarter. Fewer-than-expected new issues and stable cash flows lent a
positive technical tone to the market, and nearly all the Fund's holdings
showed some price increase. Cable and telecommunication issues such as
Bresnan, Metromedia Fiber, Psinet, and Rhythms NetConnections were the best
performers. 21st Century Telecom also rose significantly in price on the news
that RCN Corp. was acquiring the company. I used the
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - No-Load Class
<TABLE>
<CAPTION>
Average Annual Total Return
for the periods ended December 31, 1999 Quarter 1 Year 5 Year 10 Year
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SAFECO High-Yield Bond Fund 3.48% 3.74 % 9.30 % 9.30 %
Merrill Lynch High-Yield Master II Index 1.36% 2.51 % 9.89 % 11.34 %
Lipper, Inc. (High Current Yield Funds) 2.54% 4.53 % 8.89 % 10.08 %
<CAPTION>
SAFECO Merrill Lynch
High-Yield High-Yield
Bond Fund Master II Index
----------- ---------------
<S> <C> <C>
12/31/89 10,000 10,000
1/31/90 9,851 9,844
2/28/90 9,653 9,696
3/31/90 9,848 9,871
4/30/90 9,907 9,940
5/31/90 10,102 10,105
6/30/90 10,217 10,362
7/31/90 10,451 10,619
8/31/90 10,131 10,134
9/30/90 9,753 9,710
10/31/90 9,440 9,432
11/30/90 9,544 9,532
12/31/90 9,640 9,676
1/31/91 9,589 9,875
2/28/91 9,985 10,731
3/31/91 10,337 11,252
4/30/91 10,653 11,651
5/31/91 10,780 11,696
6/30/91 10,898 11,955
7/31/91 11,138 12,284
8/31/91 11,355 12,562
9/30/91 11,526 12,744
10/31/91 11,792 13,176
11/30/91 11,940 13,315
12/31/91 11,982 13,467
1/31/92 12,315 13,921
2/28/92 12,529 14,269
3/31/92 12,664 14,474
4/30/92 12,656 14,549
5/31/92 12,827 14,756
6/30/92 12,993 14,934
7/31/92 13,216 15,225
8/31/92 13,380 15,418
9/30/92 13,545 15,582
10/31/92 13,279 15,378
11/30/92 13,504 15,617
12/31/92 13,644 15,815
1/31/93 14,017 16,184
2/28/93 14,295 16,473
3/31/93 14,538 16,762
4/30/93 14,644 16,877
5/31/93 14,865 17,096
6/30/93 15,146 17,415
7/31/93 15,324 17,586
8/31/93 15,429 17,751
9/30/93 15,481 17,830
10/31/93 15,700 18,160
11/30/93 15,821 18,264
12/31/93 15,952 18,456
1/31/94 16,253 18,855
2/28/94 16,174 18,724
3/31/94 15,602 18,119
4/30/94 15,476 17,984
5/31/94 15,617 17,855
6/30/94 15,685 17,936
7/31/94 15,679 18,044
8/31/94 15,737 18,187
9/30/94 15,731 18,184
10/31/94 15,667 18,231
11/30/94 15,462 18,075
12/31/94 15,593 18,260
1/31/95 15,776 18,521
2/28/95 16,108 19,115
3/31/95 16,255 19,373
4/30/95 16,562 19,864
5/31/95 16,997 20,488
6/30/95 17,083 20,626
7/31/95 17,310 20,894
8/31/95 17,318 21,004
9/30/95 17,529 21,248
10/31/95 17,771 21,427
11/30/95 17,801 21,640
12/31/95 18,032 21,992
1/31/96 18,258 22,370
2/28/96 18,434 22,439
3/31/96 18,374 22,337
4/30/96 18,411 22,378
5/31/96 18,526 22,539
6/30/96 18,573 22,629
7/31/96 18,767 22,778
8/31/96 19,033 23,055
9/30/96 19,419 23,598
10/31/96 19,494 23,802
11/30/96 19,783 24,275
12/31/96 19,905 24,482
1/31/97 20,072 24,666
2/28/97 20,440 25,046
3/31/97 20,013 24,701
4/30/97 20,166 25,018
5/31/97 20,717 25,539
6/30/97 21,034 25,939
7/31/97 21,576 26,627
8/31/97 21,587 26,582
9/30/97 21,960 27,073
10/31/97 21,944 27,211
11/30/97 22,149 27,454
12/31/97 22,451 27,730
1/30/98 22,924 28,166
2/28/98 23,027 28,280
3/31/98 23,303 28,555
4/30/98 23,226 28,678
5/31/98 23,331 28,835
6/30/98 23,431 28,999
7/31/98 23,737 29,184
8/31/98 22,283 27,711
9/30/98 22,654 27,783
10/31/98 22,395 27,183
11/30/98 23,362 28,600
12/31/98 23,451 28,549
1/31/99 23,748 28,922
2/28/99 23,770 28,724
3/31/99 24,092 29,071
4/30/99 24,558 29,603
5/31/99 23,912 29,332
6/30/99 23,705 29,259
7/31/99 23,721 29,292
8/31/99 23,604 28,989
9/30/99 23,511 28,872
10/31/99 23,598 28,716
11/30/99 24,025 29,090
12/31/99 24,328 29,266
</TABLE>
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
- 8 -
<PAGE>
Credit Rating Distribution
As a Percent of Net Assets
- ------------------------------------------------------------------------------
[PIE CHART]
1) BBB 2 %
2) BB 11 %
3) B 76 %
4) CCC 3 %
5) Not Rated 1 %
6) Preferred Stock: 5 %
7) Cash & Other: 2 %
-----
100 %
price increase to reduce our exposure to Intermedia Telecom.
I bought preferred stock in CSC Holdings, the parent company of
Cablevision Systems, which serves New York, operates several cable
channels and owns a number of sports franchises. I chose the pre-
ferred stock as it yields substantially more than the bonds of this
well-rated company.
In addition to being overweighted in cable and telecommunication issues,
our large exposure to single-B-rated paper helped us outperform. That rating
category turned in the best performance in the high-yield market.
The 30-day yield on the Fund climbed to end the year at 9.47%, while the
modified duration (sensitivity to interest rates) declined to 5.2 years. I
will continue to emphasize higher yields and lower interest-rate sensitivity
in order to minimize volatility in the Fund. I do expect volatility in the
market. Robust economic growth and tight labor markets make increases in the
Fed funds likely, and both the equity and bond markets traded off early in
2000 in anticipation of Fed action.
Robert Kern
- -------------------------------------------------------------------------------
Robert Kern joined SAFECO in 1988 with BS degrees in business and accounting
from the Universities of Washington and Puget Sound, respectively. Bob is a
Certified Public Accountant and a Chartered Financial Analyst.
- 9 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HIGHLIGHTS
<TABLE>
<CAPTION>
TOP FIVE Percent of
INDUSTRIES Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Telephone................................................................... 15%
Broadcasting (TV, Radio & Cable)............................................ 13
Auto Parts & Equipment...................................................... 6
Manufacturing (Diversified)................................................. 5
Telecommunications (Long Distance).......................................... 4
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE Percent of
HOLDINGS Net Assets
- --------------------------------------------------------------------------------
<S> <C>
McLeodUSA, Inc. .......................................................... 2.7%
(Telephone)
American Axle & Manufacturing Holdings, Inc. ............................. 2.6
(Auto Parts & Equipment)
Ames Department Stores, Inc. ............................................. 2.6
(Retail - Department Stores)
Level 3 Communications, Inc. ............................................. 2.4
(Telephone)
Allied Waste Industries................................................... 2.4
(Waste Management)
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PURCHASES
For the year ended December 31, 1999 Cost
(0000'S)
- --------------------------------------------------------------------------------
<S> <C>
McLeodUSA, Inc. ......................................................... $2,041
Ames Department Stores, Inc. ............................................ 2,000
Allied Waste Industries.................................................. 1,993
American Axle & Manufacturing Holdings, Inc. ............................ 1,984
Level 3 Communications, Inc. ............................................ 1,890
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE SALES
For the year ended December 31, 1999 Proceeds
(000'S)
- --------------------------------------------------------------------------------
<S> <C>
AES Corp. ............................................................... $1,965
Randall's Food Markets, Inc. ............................................ 1,923
Lenfest Communications, Inc. ............................................ 1,590
Qwest Communications, International Inc. ................................ 1,590
Comcast Corp. ........................................................... 1,575
</TABLE>
<TABLE>
<S> <C>
Current Yield (30-day)...... 9.47%
Weighted Average Maturity... 8.2 years
</TABLE>
- 10 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO High-Yield Bond Fund
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
ASSET BACKED SECURITIES - 2.1%
Financial (Diversified) - 2.1%
$2,000 Criimi Mae Commercial Mortgage Trust Series 1998-C1 Class B 7.00%,
due 11/02/11................................................ $ 1,588
------
TOTAL ASSET BACKED SECURITIES........................................... 1,588
------
CORPORATE BONDS - 89.9%
Agricultural Products - 3.4%
1,600 #The Scott's Company (144A) 8.625%, due 1/15/09 (acquired 1/14/99)..
1,552
1,000 Sun World International, Inc. 11.25%, due 4/15/04............. 1,020
Air Freight - 1.9%
1,500 Atlas Air, Inc. 9.375%, due 11/15/06.......................... 1,447
Airlines - 1.2%
1,000 Northwest Airlines, Inc. 8.52%, due 4/07/04..................... 929
Aluminum - 2.6%
1,000 Commonwealth Aluminum Corp. 10.75%, due 10/01/06.............. 1,010
1,000 Wells Aluminum Corp. 10.125%, due 6/01/05....................... 962
Auto Parts & Equipment - 6.0%
2,000 American Axle & Manufacturing Holdings, Inc.
9.75%, due 3/01/09............................................ 2,015
1,000 Federal-Mogul Corp. 8.80%, due 4/15/07.......................... 971
1,750 Hayes Lemmerz International, Inc. 8.25%, due 12/15/08......... 1,610
Broadcasting (TV, Radio & Cable) - 10.6%
750 21st Century Telecom Group, Inc. 12.25%, beg. 2/15/03 Step Bond due
2/15/08......................................................... 501
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$1,000 Adelphia Communications Corp. 9.875%, due 3/01/05........... $ 1,015
319 AMFM Operating, Inc. 12.625%, due 10/31/06...................... 362
2,250 Bresnan Communications Group 9.25%, beg. 2/01/04
Step Bond due 2/01/09......................................... 1,552
500 Century Communications Corp. 9.50%, due 3/01/05................. 501
1,000 Chancellor Media Corp. 9.00%, due 10/01/08.................... 1,040
1,000 Charter Communications Holdings 8.625%, due 4/01/09............. 924
250 Classic Cable, Inc. 9.375%, due 8/01/09......................... 246
1,000 Falcon Holdings Group 8.375%, due 4/15/10..................... 1,009
1,000 Young Broadcasting, Inc. 9.00%, due 1/15/06..................... 962
Chemicals (Specialty) - 0.7%
500 Sovereign Specialty Chemicals, Inc. 9.50%, due 8/01/07.......... 502
Communication Equipment - 3.9%
1,500 National Equipment Services, Inc. (Series B)
10.00%, due 11/30/04.......................................... 1,500
500 National Equipment Services, Inc. (Series D)
10.00%, due 11/30/04............................................ 500
1,000 Rhythms NetConnections, Inc. 12.75%, due 4/15/09................ 968
Computers (Software & Services) - 2.0%
1,500 PSINet, Inc. 11.00%, due 8/01/09.............................. 1,545
Containers & Packaging (Paper) - 1.3%
500 Packaging Corporation of America 9.625%, due 4/01/09............ 511
500 Printpak, Inc. 10.625%, due 8/15/06............................. 480
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 11 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO HIGH-YIELD BOND FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
Entertainment - 2.8%
$ 500 Cinemark USA, Inc. (Series B) 9.625%, due 8/01/08............ $ 450
500 Cinemark USA, Inc. (Series D) 9.625%, due 8/01/08................ 450
1,250 Premier Parks, Inc. 9.25%, due 4/01/06......................... 1,228
Household Furnishings & Appliances - 1.0%
1,000 Holmes Products Corp. 9.875%, due 11/15/07....................... 730
Lodging (Hotels) - 0.6%
500 HMH Properties, Inc. 7.875%, due 8/01/08......................... 446
Manufacturing (Diversified) - 4.7%
1,000 Nortek, Inc. 8.875%, due 8/01/08................................. 950
1,560 Tekni-Plex, Inc. 9.25%, due 3/01/08............................ 1,583
1,000 #Tenneco, Inc. (144A) 11.625%, due 10/15/09 (acquired 10/08/99)......
1,020
Manufacturing (Specialized) - 2.9%
1,500 Flextronics International, Ltd. 8.75%, due 10/15/07............ 1,462
1,000 Numatics, Inc. 9.625%, due 4/01/08............................... 750
Oil & Gas (Drilling & Equipment) - 1.8%
1,500 Newpark Resources, Inc. 8.625%, due 12/15/07................... 1,395
Oil & Gas (Exploration & Production) - 3.6%
1,500 Ocean Energy, Inc. 8.375%, due 7/01/08......................... 1,440
1,275 Vintage Petroleum Corp. 9.75%, due 6/30/09..................... 1,304
Paper & Forest Products - 0.7%
500 FiberMark, Inc.
9.375%, due 10/15/06............................................. 499
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
Power Producers (Independent) - 1.6%
$ 250 AES Corp.
9.50%, due 6/01/09........................................... $ 252
1,000 Chesapeake Energy Corp. 9.625%, due 5/01/05...................... 942
Restaurants - 2.0%
1,500 Perkins Family Restaurants 10.125%, due 12/15/07............... 1,515
Retail (Department Stores) - 3.7%
2,000 Ames Department Stores, Inc. 10.00%, due 4/15/06............... 1,960
1,440 Specialty Retailers, Inc. 9.00%, due 7/15/07..................... 839
Retail (Specialty) - 1.6%
1,250 Big 5 Corp.
10.875%, due 11/15/07.......................................... 1,231
Services (Advertising/Marketing) - 1.3%
1,000 Lamar Advertising Co. 9.625%, due 12/01/06..................... 1,020
Services (Commercial & Consumer) - 3.8%
1,000 Bally Total Fitness Holdings 9.875%, due 10/15/07................ 970
1,000 United Rentals, Inc. 9.00%, due 4/01/09.......................... 945
1,000 United Rentals, Inc. Series B 9.25%, due 1/15/09................. 960
Services (Computer Systems) - 2.7%
500 #Verio, Inc. (144A) 10.625%, due 11/15/09 (acquired 11/16/99).....513
1,500 Verio, Inc.
11.25%, due 12/01/08........................................... 1,575
Telecommunications (Cellular/Wireless) - 0.5%
250 #VoiceStream Wireless Corp. (144A)
10.375%, due 11/15/09 (acquired 11/04/99)........................ 258
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 12 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO HIGH-YIELD BOND FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$ 250 #VoiceStream Wireless Corp. (144A) 11.875%, beg. 11/15/04
Step Bond due 11/15/09 (acquired 11/04/99)................... $ 150
Telecommunications (Long Distance) - 4.2%
1,250 Flag, Ltd.
8.25%, due 1/30/08............................................. 1,150
1,000 RCN Corp.
10.125%, due 1/15/10............................................. 995
1,000 Williams Communication Group, Inc.
10.875%, due 10/01/09.......................................... 1,045
Telephone - 13.3%
1,250 GCI, Inc.
9.75%, due 8/01/07............................................. 1,163
1,000 Intermedia Communications, Inc. 11.25%, beg. 7/15/02
Step Bond due 7/15/07............................................ 740
3,000 Level 3 Communications, Inc. 10.50%, beg. 12/01/03
Step Bond due 12/01/08......................................... 1,815
2,000 McLeodUSA, Inc. 9.50%, due 11/01/08............................ 2,025
1,500 Metromedia Fiber Network, Inc. 10.00%, due 11/15/08............ 1,534
500 Metromedia Fiber Network, Inc. 10.00%, due 12/15/09.............. 513
1,000 NEXTLINK Communications, Inc. 10.75%, due 11/15/08............. 1,030
2,000 NEXTLINK Communications, Inc. 9.45%, beg. 4/15/03
Step Bond due 4/15/08.......................................... 1,280
Textiles (Specialty) - 1.2%
1,000 Polymer Group, Inc. 9.00%, due 7/01/07........................... 970
Waste Management - 2.3%
2,000 Allied Waste Industies 10.00%, due 8/01/09..................... 1,790
------
TOTAL CORPORATE BONDS.................................................. 68,521
------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
PREFERRED STOCKS - 5.3%
Broadcasting (TV, Radio & Cable) - 2.4%
12 CSC Holdings, Inc.
11.125%, due 4/01/08............................................ $ 1,326
5 Sinclair Broadcast Group, Inc.
11.625%, due 3/15/09................................................ 485
Containers & Packaging (Paper) - 1.6%
11 Packaging Corporation of America 12.375%, due 4/01/10............. 1,159
Telephone - 1.3%
10 Global Crossing Holdings, Ltd.
10.50%, due 12/01/08.............................................. 1,005
-------
TOTAL PREFERRED STOCKS................................................... 3,975
-------
CASH EQUIVALENTS - 2.0%
Investment Companies
1,533 J.P. Morgan Institutional Prime Money Market...................... 1,533
-------
TOTAL CASH EQUIVALENTS................................................... 1,533
-------
TOTAL INVESTMENTS - 99.3%............................................... 75,617
Other Assets, less Liabilities............................................. 569
-------
NET ASSETS............................................................. $76,186
-------
-------
- --------------------------------------------------------------------------------
# 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". The total cost of such securities is $3,461,163 and the
total value is 4.6% of net assets.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 13 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO Managed Bond Fund
December 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[PHOTO OF MICHAEL HUGHES]
MICHAEL HUGHES
While the performance of the Managed Bond Fund continued to improve
to virtually mirror the Lehman Gov't./Corp. Index for the fourth quar-
ter, the annual performance, regrettably, trailed the benchmark. And the
absolute performance of both ventured back into negative territory.
1999 was the worst year for the bond market since 1994, and the only other
year to post a negative annual return since 1973. Most of the Fund's
underperformance in the year occurred during the first half of 1999 -- when I
was optimistic. I thought economic growth would slow, inflation would remain
low and bonds would be stable, and had positioned the portfolio accordingly.
Consequently, the duration (sensitivity to changes in interest rates) of the
portfolio was too high.
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - No-Load Class
<TABLE>
<CAPTION>
Average Annual Total Return
for the periods ended December 31, 1999 Quarter 1 Year 5 Year Since Inception*
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SAFECO Managed Bond Fund (.50)% (3.82)% 5.79 % 4.39%
Lehman Brothers Gov't/Corp. Bond Index (.41)% (2.15)% 7.61 % 5.96%
Lipper, Inc. (Intermediate Investment-Grade Bond Funds) (.20)% (1.31)% 6.80 % N/A
</TABLE>
* The Fund's inception was June 25, 1992. Graph and average annual return
comparison begins February 28, 1994.
<TABLE>
<CAPTION>
SAFECO
Managed Bond Lehman Brothers
Fund Gov't/Corp. Bond Index
------------ ----------------------
<S> <C> <C>
2/28/94 10,000 10,000
3/31/94 9,666 9,755
4/30/94 9,657 9,675
5/31/94 9,666 9,657
6/30/94 9,653 9,634
7/31/94 9,757 9,827
8/31/94 9,780 9,831
9/30/94 9,703 9,682
10/31/94 9,709 9,671
11/30/94 9,680 9,654
12/31/94 9,699 9,717
1/31/95 9,828 9,904
2/28/95 9,991 10,134
3/31/95 10,038 10,202
4/30/95 10,167 10,344
5/31/95 10,533 10,777
6/30/95 10,615 10,864
7/31/95 10,541 10,822
8/31/95 10,674 10,960
9/30/95 10,791 11,072
10/31/95 10,962 11,234
11/30/95 11,178 11,419
12/31/95 11,382 11,587
1/31/96 11,400 11,659
2/28/96 11,127 11,412
3/31/96 11,010 11,316
4/30/96 11,004 11,239
5/31/96 11,009 11,220
6/30/96 11,092 11,369
7/31/96 11,127 11,396
8/31/96 11,148 11,368
9/30/96 11,239 11,570
10/31/96 11,357 11,840
11/30/96 11,486 12,058
12/31/96 11,384 11,924
1/31/97 11,407 11,938
2/28/97 11,383 11,963
3/31/97 11,236 11,821
4/30/97 11,380 11,994
5/31/97 11,469 12,106
6/30/97 11,601 12,251
7/31/97 11,942 12,626
8/31/97 11,777 12,484
9/30/97 11,968 12,680
10/31/97 12,161 12,883
11/30/97 12,180 12,951
12/31/97 12,321 13,087
1/30/98 12,528 13,272
2/28/98 12,477 13,245
3/31/98 12,502 13,285
4/30/98 12,553 13,352
5/31/98 12,691 13,496
6/30/98 12,811 13,633
7/31/98 12,822 13,644
8/31/98 13,109 13,911
9/30/98 13,444 14,308
10/31/98 13,288 14,207
11/30/98 13,321 14,292
12/31/98 13,359 14,327
1/31/99 13,437 14,429
2/28/99 13,067 14,086
3/31/99 13,119 14,156
4/30/99 13,143 14,191
5/31/99 12,943 14,044
6/30/99 12,856 14,001
7/31/99 12,801 13,962
8/31/99 12,778 13,951
9/30/99 12,914 14,076
10/31/99 12,940 14,113
11/30/99 12,932 14,105
12/31/99 12,850 14,019
</TABLE>
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
- 14 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The strength of the global economic recovery fueled domestic
demand and added to our own economic growth. A reversal of the
late 1998 flight to quality (demand for the safety of U.S. Trea-
suries) caused a sharp increase in yields and volatility in the
market. Finally, even though actual inflation fell, fears of in-
flation caused the market to act as though inflation were rising.
About halfway through the year, in order to soften the blow of increasing
economic growth and higher interest rates, I reduced the portfolio's duration
and increased its yield. As a result, our relative and absolute performance im-
proved.
I intend to maintain the Fund's defensive posture until we have concrete
signs that higher interest rates are finally slowing the economy. In the
meantime, I see robust growth prompting the Federal Reserve to "tap on the
brakes" with a couple of rate increases. This should result in slightly higher
interest rates, a flatter or possibly inverted yield curve and, finally, a
slower economy.
Credit Rating Distribution
As a Percent of Net Assets
- --------------------------------------------------------------------------------
[PIE CHART]
U.S. Government and Corporate Bonds:
1) AAA 70 %
2) AA 4 %
3) A 21 %
4) Cash & Other: 5 %
-----
100 %
HIGHLIGHTS
<TABLE>
<CAPTION>
Percent of
BONDS BY TYPE Net Assets
- --------------------------------------------------------------------------------
<S> <C>
U.S. Government Obligations................................................ 44%
Asset Backed Securities.................................................... 10
Mortgage Backed Securities................................................. 16
Corporate Bonds............................................................ 25
Cash & Other............................................................... 5
----
100%
====
</TABLE>
<TABLE>
<S> <C>
Current Yield (30-day)...... 5.91%
Weighted Average Maturity... 11.4 years
</TABLE>
Michael Hughes
- --------------------------------------------------------------------------------
Michael Hughes joined SAFECO as a portfolio manager in January 1997. He began
his investment career in 1993. He graduated magna cum laude with a BS in fi-
nance from the University of Colorado in Boulder and holds an MBA from the Uni-
versity of Southern California in Los Angeles. He is a Chartered Financial Ana-
lyst.
- 15 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Managed Bond Fund
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
ASSET BACKED SECURITIES - 9.9%
Electric Companies - 1.4%
$125 ComEd Transitional Funding Trust 5.63%, due 6/25/09............... $116
Financial (Diversified) - 6.5%
11 Chevy Chase Auto Receivables Trust (Class A)
6.60%, due 12/15/02................................................. 11
230 Citicorp Mortgage Securities, Inc. 6.50%, due 6/25/29.............. 206
165 First USA Credit Card Master Trust 5.28%, due 9/18/06.............. 156
165 Fleet Credit Card Master
6.90%, due 4/16/07................................................. 165
Manufacturing (Specialized) - 0.8%
63 Harley-Davidson Eagle 6.20%, due 1/15/03............................ 63
Trucking - 1.2%
100 Ryder Vehicle Lease 6.89%, due 4/15/05.............................. 99
-------
TOTAL ASSET BACKED SECURITIES.............................................. 816
-------
CORPORATE BONDS - 24.8%
Air Freight - 1.4%
126 Federal Express Corp. 6.845%, due 1/15/19.......................... 117
Banks (Major Regional) - 1.4%
120 Bank of America Corp. 6.625%, due 6/15/04.......................... 117
Electric Companies - 1.8%
145 Central Power & Light Co. 7.50%, due 12/01/02...................... 146
Financial (Diversified) - 10.2%
110 CIT Group, Inc.
5.57%, due 12/08/03................................................ 103
125 First Union Corp. 6.625%, due 6/15/04.............................. 122
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
$145 Ford Motor Credit Co. 7.375%, due 10/28/09...................... $ 143
150 General Motors Acceptance Corp. 5.95%, due 3/14/03................. 145
190 Hertz Corp.
7.00%, due 7/01/04................................................. 188
160 Sears Roebuck Acceptance Corp. 6.25%, due 5/01/09.................. 141
Manufacturing (Diversified) - 2.2%
190 Tyco International Group SA 6.375%, due 6/15/05.................... 178
Natural Gas - 2.5%
240 National Fuel Gas Co. 6.00%, due 3/01/09........................... 211
Publishing (Newspapers) - 2.3%
195 Times-Mirror Co. 6.65%, due 10/15/01............................... 194
Retail (General Merchandise) - 2.2%
185 Wal-Mart Stores, Inc. 6.15%, due 8/10/01........................... 184
Telephone - 0.8%
30 AT&T Corp.
5.625%, due 3/15/04................................................. 28
40 AT&T Corp.
6.50%, due 3/15/29.................................................. 34
-------
TOTAL CORPORATE BONDS.................................................... 2,051
-------
MORTGAGE BACKED SECURITIES - 16.4%
Federal Home Loan Mortgage Corp. (FHLMC) - 2.1%
180 7.50%, due 10/01/29................................................ 178
Federal National Mortgage Association (FNMA) - 8.1%
57 6.00%, due 1/01/29.................................................. 53
196 7.00%, due 3/01/12................................................. 194
170 8.00%, due 12/01/29................................................ 172
176 8.00%, due 2/15/29................................................. 177
71 8.00%, due 4/01/08.................................................. 72
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 16 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Managed Bond Fund
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
Government National Mortgage Association (GNMA) - 6.2%
$223 7.00%, due 4/15/28.............................................. $ 215
182 7.00%, due 8/15/28................................................. 176
125 7.75%, due 10/15/29................................................ 125
-------
TOTAL MORTGAGE BACKED SECURITIES......................................... 1,362
-------
U.S. GOVERNMENT OBLIGATIONS - 43.9%
U.S. Federal Agency Notes - 9.8%
825 6.00%, due 8/15/02................................................. 813
U.S. Treasury Notes - 34.1%
100 4.25%, due 11/15/03................................................. 93
425 5.375%, due 6/30/00................................................ 424
155 5.875%, due 9/30/02................................................ 153
105 6.375%, due 8/15/02................................................ 105
340 6.50%, due 10/15/06................................................ 339
40 7.25%, due 8/15/04.................................................. 41
1,560 7.50%, due 11/15/16.............................................. 1,669
-------
TOTAL U.S. GOVERNMENT OBLIGATIONS........................................ 3,637
-------
CASH EQUIVALENTS - 4.1%
Investment Companies
337 J.P. Morgan Institutional Prime Money Market....................... 337
-------
TOTAL CASH EQUIVALENTS..................................................... 337
-------
TOTAL INVESTMENTS - 99.1%................................................ 8,203
Other Assets, less Liabilities.............................................. 75
-------
NET ASSETS.............................................................. $8,278
-------
-------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 17 -
<PAGE>
Municipal Bond
Market Overview
December 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[PHOTO OF STEPHEN C. BAUER]
STEPHEN C. BAUER
The rise in interest rates continued during the fourth quarter, mak-
ing 1999 the worst year in the bond market since 1994, and ending it on
a negative note for long-term tax-exempt investors.
According to the Bond Buyer 40 Yield-to-Maturity Index, 30-year tax-
exempt yields at the beginning of 1999 were 5.17%. They ended the second quar-
ter at 5.54%, the third at 5.89%, and the year at 6.22%, over 1% higher than
where they began. Inflation concerns were behind the rise in yields.
When rates rise, bond values fall. And the longer SAFECO Municipal Bond
Funds typically fall farther when rates rise for the same reasons they climb
higher when rates are dropping: Our strategy is to stay fully invested in long-
term bonds and to favor discounts. There is no arguing: longer bonds--though
more volatile--yield more than shorter ones. And, discount bonds--though more
volatile--offer greater appreciation potential. For investors who prefer a more
stable investment, SAFECO offers an intermediate-term municipal bond fund.
At the beginning of 1999, long-term tax-exempt bonds were yielding 100% of
the yield on 30-year Treasury bonds. At mid-year, this ratio had dropped to 90%,
as munis strongly outperformed Treasuries during the spring. In mid-August,
munis cheapened; their yields climbed from 92% to 98% of Treasury yields. The
markets generally tracked each other in the fourth quarter, and the year ended
with the ratio at 96%, still historically cheap for tax-exempt bonds.
Although there has been no evidence of increasing inflation (the nemesis of
fixed-income investors), the bond markets are still fixated on the Federal Re-
serve and its program of slowing the economy through interest rate increases.
Until there is hard evidence of the slower growth that many economists are
forecasting, it seems the Fed will continue its tight money policy, making a
bond market rally difficult. When that day of relief arrives, we expect it to
be dramatic and extensive since all possible bad news seems to be priced into
today's bond market.
- 18 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO California
Tax-Free Income Fund
December 31, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[PHOTO OF STEPHEN C. BAUER]
STEPHEN C. BAUER
In the negative environment of 1999, the California Tax-Free Income
Fund with its long (25.5-year) average-weighted maturity fared poorly.
Our core strategy of staying fully invested in long-term bonds
(which are more sensitive to changes in interest rates) produced below-
average returns as interest rates rose, just as it has produced superior
results when rates dropped. Over the longer term, the California Fund still
looks good. For the five years ended December 31, 1999, it was in the top
quartile of its category, ranking 17 out of 78 comparable funds, according to
Lipper, Inc. (For the ten years it is 14 of 37 funds, while it was 104 of 107
for the shorter one-year period.)
As the California economy rebounded from its slump of a few years ago, the
normal premium
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - No-Load Class
<TABLE>
<CAPTION>
Average Annual Total Return
for the periods ended December 31, 1999 Quarter 1 Year 5 Year 10 Year
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SAFECO California Tax-Free Income Fund (3.42)% (9.18)% 6.83 % 6.40 %
Lehman Brothers Long Municipal Bond Index (2.52)% (6.67)% 7.41 % 7.19 %
Lipper, Inc. (California Municipal Bond Funds) (2.10)% (5.16)% 6.10 % 6.12 %
<CAPTION>
SAFECO Lehman Brothers
California Tax-Free Long Municipal
Income Fund Bond Index
------------------- ---------------
<S> <C> <C>
12/31/89 10,000 10,000
1/31/90 9,889 9,899
2/28/90 10,010 10,011
3/31/90 9,992 10,021
4/30/90 9,840 9,898
5/31/90 10,141 10,178
6/30/90 10,238 10,278
7/31/90 10,433 10,459
8/31/90 10,173 10,210
9/30/90 10,159 10,194
10/31/90 10,415 10,410
11/30/90 10,659 10,674
12/31/90 10,697 10,721
1/31/91 10,860 10,865
2/28/91 10,893 10,941
3/31/91 10,869 10,968
4/30/91 11,037 11,137
5/31/91 11,145 11,268
6/30/91 11,091 11,247
7/31/91 11,261 11,421
8/31/91 11,416 11,585
9/30/91 11,624 11,753
10/31/91 11,749 11,876
11/30/91 11,684 11,891
12/31/91 12,040 12,174
1/31/92 11,998 12,167
2/28/92 12,001 12,186
3/31/92 12,003 12,217
4/30/92 12,090 12,333
5/31/92 12,273 12,513
6/30/92 12,514 12,756
7/31/92 12,937 13,223
8/31/92 12,689 13,046
9/30/92 12,780 13,103
10/31/92 12,425 12,885
11/30/92 12,833 13,248
12/31/92 13,003 13,420
1/31/93 13,138 13,546
2/28/93 13,734 14,176
3/31/93 13,549 14,005
4/30/93 13,747 14,197
5/31/93 13,804 14,314
6/30/93 14,061 14,584
7/31/93 14,043 14,598
8/31/93 14,438 14,972
9/30/93 14,613 15,180
10/31/93 14,614 15,209
11/30/93 14,386 15,025
12/31/93 14,723 15,412
1/31/94 14,942 15,594
2/28/94 14,550 15,078
3/31/94 13,815 14,178
4/30/94 13,766 14,287
5/31/94 13,894 14,454
6/30/94 13,761 14,281
7/31/94 14,080 14,648
8/31/94 14,076 14,679
9/30/94 13,718 14,338
10/31/94 13,387 13,898
11/30/94 13,139 13,531
12/31/94 13,369 14,011
1/31/95 13,982 14,627
2/28/95 14,666 15,223
3/31/95 14,784 15,406
4/30/95 14,718 15,399
5/31/95 15,549 16,055
6/30/95 15,073 15,758
7/31/95 15,141 15,839
8/31/95 15,379 16,063
9/30/95 15,498 16,189
10/31/95 15,910 16,580
11/30/95 16,494 17,008
12/31/95 16,863 17,273
1/31/96 16,802 17,347
2/28/96 16,588 17,136
3/31/96 16,096 16,822
4/30/96 15,952 16,755
5/31/96 15,967 16,763
6/30/96 16,280 17,022
7/31/96 16,467 17,190
8/31/96 16,426 17,168
9/30/96 16,819 17,549
10/31/96 17,030 17,763
11/30/96 17,478 18,145
12/31/96 17,290 18,036
1/31/97 17,107 18,000
2/28/97 17,294 18,194
3/31/97 16,924 17,880
4/30/97 17,183 18,091
5/31/97 17,514 18,441
6/30/97 17,779 18,678
7/31/97 18,709 19,357
8/31/97 18,297 19,100
9/30/97 18,550 19,375
10/31/97 18,710 19,542
11/30/97 18,894 19,715
12/31/97 19,288 20,076
1/30/98 19,495 20,291
2/28/98 19,456 20,281
3/31/98 19,438 20,309
4/30/98 19,211 20,200
5/31/98 19,694 20,596
6/30/98 19,767 20,684
7/31/98 19,784 20,732
8/31/98 20,174 21,104
9/30/98 20,493 21,397
10/31/98 20,368 21,328
11/30/98 20,534 21,437
12/31/98 20,482 21,458
1/31/99 20,744 21,668
2/28/99 20,594 21,577
3/31/99 20,588 21,640
4/30/99 20,572 21,659
5/31/99 20,334 21,488
6/30/99 19,854 21,096
7/31/99 19,783 21,086
8/31/99 19,381 20,652
9/30/99 19,260 20,545
10/31/99 18,757 20,063
11/30/99 18,953 20,343
12/31/99 18,602 20,027
</TABLE>
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
- 19 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
for California tax-exempt bonds (the 10-15 basis-point advantage over national
names) returned and was evidenced throughout 1999.
The primary activity in the California Fund during 1999 was tax swapping
(simultaneously buying and selling similar bonds to realize losses for tax rea-
sons). I was able to offset all gains for the year as well as carry forward ad-
ditional losses to use in years to come. I hope to use them, and do additional
tax swaps, in 2000. I also sold many of the advance-refunded bonds that we had
accumulated in recent years.
The Fund is positioned for a dramatic rebound should rates decline.
Stephen C. Bauer
- --------------------------------------------------------------------------------
Stephen C. Bauer joined SAFECO in 1971 as a fixed-income analyst. He became a
fund manager with the inception of the SAFECO Municipal Bond Fund in 1981, and
is President of SAFECO Asset Management Company. Bauer holds a BS in
microbiology and an MBA from the University of Washington.
HIGHLIGHTS
TOP FIVE Percent of
TYPES OF BONDS Net Assets
---------------------------------------------------
Local General Obligation (Limited Tax)......... 16%
Lease Rental................................... 16
Utilities (Water).............................. 9
Toll Road...................................... 8
Hospital....................................... 8
Percent of
TOP FIVE HOLDINGS Net Assets
---------------------------------------------------
East Bay Municipal Utility District Water
System Revenue............................... 5.4%
State of California General Obligation
Bonds........................................ 5.1
Airports Commission City and County of
San Francisco International Airport
Revenue...................................... 5.0
California Educational Facilities Authority
Revenue (Institute of Technology)............ 4.9
Redding Joint Powers Financing Authority
Solid Waste and Corporation Yard
Revenue...................................... 4.7
Credit Rating Distribution
As a Percent of Net Assets
- ------------------------------------------------------------------------------
[PIE CHART]
Municipal Bonds:
1) AAA 55 %
2) AA 8 %
3) A 14 %
4) BBB 21 %
5) Cash & Other: 2 %
-------------------------
100 %
<TABLE>
<S> <C>
Current Yield (30-day)...... 5.42%
Weighted Average Maturity... 25.5 years
</TABLE>
- 20 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO California Tax-Free
Income Fund
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
MUNICIPAL BONDS* - 98.1%
California - 98.1%
$5,000 Airports Commission City and County of San Francisco International
Airport Revenue 4.90%, due 5/01/19 [MBIA]................... $ 4,333
2,200 Alameda Corridor Transportation Authority Revenue
4.75%, due 10/01/25 [MBIA].................................... 1,799
5,500 California Educational Facilities Authority Revenue (Institute of
Technology) 4.50%, due 10/01/28............................... 4,284
2,250 California Health Facilities Financing Authority Insured Health
Facility Revenue (Catholic Health Care West) 4.75%, due 7/01/19
[MBIA]........................................................ 1,875
3,715 California Statewide Communities Development Authority Certificates
of Participation (Childrens Hospital of Los Angeles)
4.75%, due 6/01/21 [MBIA]..................................... 3,085
20 Concord Redevelopment Agency Tax Allocation Central Concord
Redevelopment Project 8.00%, due 7/01/18 [BIG]................... 20
3,750 Culver City Redevelopment Financing Authority Tax Allocation Revenue
4.60%, due 11/01/20 [AMBAC]................................... 3,071
5,000 Duarte California Certificates of Participation City of Hope Medical
Center
5.25%, due 4/01/31............................................ 3,916
6,000 East Bay Municipal Utility District Water System Revenue (Alameda
and Contra Costa Counties) 4.75%, due 6/01/34 [MBIA].......... 4,753
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$4,195 Foothill/Eastern Transportation Corridor Agency Toll Road Revenue
5.00%, due 1/01/35.......................................... $ 3,358
4,600 Long Beach Financial Authority Lease Revenue
5.00%, due 10/01/27 [MBIA].................................... 3,930
1,200 + Los Angeles Convention and Exhibition Center Authority
Certificates of Participation
9.00%, due 12/01/20 (Prerefunded 12/01/05 @ 100).............. 1,464
3,800 Los Angeles Department of Water and Power Waterworks Revenue 4.75%,
due 11/15/19 [FGIC]........................................... 3,210
3,585 Metropolitan Water District of Southern California Waterworks
Revenue
5.00%, due 7/01/37............................................ 2,975
810 Northern California Power Agency Geothermal Project Revenue 5.00%,
due 7/01/09..................................................... 783
2,350 Palomar Pomerado Health System California Insured Revenue 4.75%, due
11/01/23 [MBIA]............................................... 1,926
4,435 Pittsburg Redevelopment Agency Los Medanos Community Development
Project Tax Allocation
4.625%, due 8/01/21 [AMBAC]................................... 3,623
1,745 Pleasanton Joint Powers Financing Authority Reassessment Revenue
6.15%, due 9/02/12............................................ 1,765
1,575 Pleasanton Joint Powers Financing Authority Reassessment Revenue
6.20%, due 9/02/17............................................ 1,554
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 21 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO California Tax-Free
Income Fund
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$4,900 Redding Joint Powers Financing Authority Solid Waste and Corporation
Yard Revenue 5.00%, due 1/01/23............................. $ 4,142
5,000 Sacramento City Financing Authority Lease Revenue (Cal EPA Building)
4.75%, due 5/01/23............................................ 4,133
2,500 San Bernardino County Certificates of Participation (Medical Center
Financing Project)
5.50%, due 8/01/24............................................ 2,217
4,000 San Gabriel Valley School Finance Authority Revenue (Pamona Unified
School District)
5.50%, due 2/01/24............................................ 3,579
5,000 San Joaquin Hills Transportation Corridor Agency Senior Lien Toll
Road Revenue
5.00%, due 1/01/33............................................ 4,020
4,000 San Jose Redevelopment Agency (Merged Area Redevelopment Project Tax
Allocation) 4.75%, due 8/01/22................................ 3,197
2,500 South County Regional Wastewater Authority Revenue 5.00%, due
8/01/22 [MBIA]................................................ 2,173
1,335 Southern California Public Power Authority Power Project Revenue
(Multiple Projects) 5.50%, due 7/01/20........................ 1,249
880 Stanislaus Waste to Energy Financing Agency Solid Waste Facility
Revenue 7.625%, due 1/01/10..................................... 899
5,500 State of California General Obligation Bonds 4.75%, due 4/01/29.....
4,429
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$4,635 Thousand Oaks Certificate of Participation Wastewater System Revenue
4.875%, due 10/01/23 [FSA]...................................$ 3,887
------
TOTAL MUNICIPAL BONDS.................................................. 85,649
------
CASH EQUIVALENTS - 0.0%
Investment Companies
1 SEI Tax Exempt Institutional Tax-Free Portfolio................... 1
------
TOTAL CASH EQUIVALENTS...................................................... 1
------
TOTAL INVESTMENTS - 98.1%.............................................. 85,650
Other Assets, less Liabilities.......................................... 1,671
------
NET ASSETS............................................................ $87,321
------
------
</TABLE>
- --------------------------------------------------------------------------------
+ Prerefunded bonds are collateralized by securities (generally U.S. Treasury
securities) held in an irrevocable trust in an amount sufficient to pay
interest and principal.
* The provider of the guarantee of timely payment of both principal and
interest is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio and the percentage of the portfolio
they guarantee at the period end are as follows:
<TABLE>
<S> <C>
Municipal Bond Investors Assurance Corp. [MBIA]........................... 27.9%
Financial Guaranty Insurance Corp. [FGIC]................................. 3.7
AMBAC Indemnity Corp. [AMBAC]............................................. 7.8
Financial Security Assurance, Inc. [FSA].................................. 4.5
-------
43.9%
-------
-------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 22 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO Municipal Bond Fund
December 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[PHOTO OF STEPHEN C. BAUER]
STEPHEN C. BAUER
In the negative market of 1999, the SAFECO Municipal Bond Fund fared
surprisingly well against the Lehman Brothers Long Municipal Bond Index,
but underperformed its peers over the shorter time horizon of one year.
We generally underperform when rates rise because of our core strategy
of staying fully invested in long-term bonds (which are more sensitive
to changes in interest rates) in order to maximize tax-exempt yield.
This strategy is also why the Fund's five-year results are in the top
10% of similar funds. It ranks 14 out of 174 general market municipal
funds, according to Lipper, Inc. (For the 10-year period, the Fund ranks
20 of 79 like funds. It ranks 224 of 265 funds in 1999.)
The SAFECO Municipal Bond Fund benefited from a type of transaction that
became popular in 1999--the retirement of debt by tender offer, rather than out-
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - No-Load Class
<TABLE>
<CAPTION>
Average Annual Total Return
for the periods ended December 31, 1999 Quarter 1 Year 5 Year 10 Year
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SAFECO Municipal Bond Fund (1.92)% (6.18)% 6.72% 6.56%
Lehman Brothers Long Municipal Bond Index (2.52)% (6.67)% 7.41% 7.19%
Lipper, Inc. (General Municipal Bond Funds) (1.55)% (4.63)% 5.77% 6.19%
<CAPTION>
SAFECO Lehman Brothers
Municipal Bond Long Municipal
Fund Bond Index
-------------- ---------------
<S> <C> <C>
12/31/89 10,000 10,000
1/31/90 9,884 9,899
2/28/90 9,997 10,011
3/31/90 9,983 10,021
4/30/90 9,830 9,898
5/31/90 10,141 10,178
6/30/90 10,235 10,278
7/31/90 10,431 10,459
8/31/90 10,160 10,210
9/30/90 10,140 10,194
10/31/90 10,334 10,410
11/30/90 10,621 10,674
12/31/90 10,665 10,721
1/31/91 10,834 10,865
2/28/91 10,881 10,941
3/31/91 10,895 10,968
4/30/91 11,077 11,137
5/31/91 11,189 11,268
6/30/91 11,150 11,247
7/31/91 11,327 11,421
8/31/91 11,500 11,585
9/30/91 11,684 11,753
10/31/91 11,808 11,876
11/30/91 11,770 11,891
12/31/91 12,135 12,174
1/31/92 12,030 12,167
2/28/92 12,061 12,186
3/31/92 12,046 12,217
4/30/92 12,160 12,333
5/31/92 12,365 12,513
6/30/92 12,632 12,756
7/31/92 13,118 13,223
8/31/92 12,849 13,046
9/30/92 12,874 13,103
10/31/92 12,594 12,885
11/30/92 12,979 13,248
12/31/92 13,197 13,420
1/31/93 13,325 13,546
2/28/93 13,902 14,176
3/31/93 13,684 14,005
4/30/93 13,871 14,197
5/31/93 13,951 14,314
6/30/93 14,237 14,584
7/31/93 14,182 14,598
8/31/93 14,559 14,972
9/30/93 14,722 15,180
10/31/93 14,763 15,209
11/30/93 14,576 15,025
12/31/93 14,868 15,412
1/31/94 15,048 15,594
2/28/94 14,603 15,078
3/31/94 13,861 14,178
4/30/94 13,874 14,287
5/31/94 14,041 14,454
6/30/94 13,886 14,281
7/31/94 14,205 14,648
8/31/94 14,215 14,679
9/30/94 13,864 14,338
10/31/94 13,568 13,898
11/30/94 13,289 13,531
12/31/94 13,641 14,011
1/31/95 14,143 14,627
2/28/95 14,737 15,223
3/31/95 14,845 15,406
4/30/95 14,823 15,399
5/31/95 15,512 16,055
6/30/95 15,180 15,758
7/31/95 15,253 15,839
8/31/95 15,450 16,063
9/30/95 15,565 16,189
10/31/95 15,891 16,580
11/30/95 16,331 17,008
12/31/95 16,571 17,273
1/31/96 16,625 17,347
2/28/96 16,442 17,136
3/31/96 16,066 16,822
4/30/96 15,945 16,755
5/31/96 15,972 16,763
6/30/96 16,207 17,022
7/31/96 16,406 17,190
8/31/96 16,347 17,168
9/30/96 16,678 17,549
10/31/96 16,874 17,763
11/30/96 17,251 18,145
12/31/96 17,098 18,036
1/31/97 17,016 18,000
2/28/97 17,192 18,194
3/31/97 16,899 17,880
4/30/97 17,113 18,091
5/31/97 17,400 18,441
6/30/97 17,618 18,678
7/31/97 18,336 19,357
8/31/97 18,020 19,100
9/30/97 18,269 19,375
10/31/97 18,412 19,542
11/30/97 18,550 19,715
12/31/97 18,925 20,076
1/30/98 19,120 20,291
2/28/98 19,109 20,281
3/31/98 19,113 20,309
4/30/98 18,942 20,200
5/31/98 19,353 20,596
6/30/98 19,473 20,684
7/31/98 19,505 20,732
8/31/98 19,849 21,104
9/30/98 20,119 21,397
10/31/98 20,013 21,328
11/30/98 20,105 21,437
12/31/98 20,127 21,458
1/31/99 20,355 21,668
2/28/99 20,215 21,577
3/31/99 20,214 21,640
4/30/99 20,289 21,659
5/31/99 20,124 21,488
6/30/99 19,750 21,096
7/31/99 19,718 21,086
8/31/99 19,370 20,652
9/30/99 19,251 20,545
10/31/99 18,916 20,063
11/30/99 19,100 20,343
12/31/99 18,883 20,027
</TABLE>
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
- 23 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
right call or advance refunding. When the bonds to be retired are not (or not
yet) callable, creative investment bankers offer to purchase them at a price
set by the issuer or determined by the holders in competition (a "Dutch
auction").
The Fund sold bonds having a face value of $17,525,000 at prices signifi-
cantly above market levels to three issuers. The Long Island Power Authority
and Lower Colorado Power Authority conducted Dutch auction tenders, and the
Daughters of Charity National Health System offered to purchase two issues held
by the Fund at a fixed price. Facing deregulation, electric utilities are re-
structuring their balance sheets to become more competitive, while tenders for
hospital bonds were associated with consolidation.
Stephen C. Bauer
- --------------------------------------------------------------------------------
Stephen C. Bauer joined SAFECO in 1971 as a fixed-income analyst. He became a
fund manager with the inception of the SAFECO Municipal Bond Fund in 1981, and
is President of SAFECO Asset Management Company. Bauer holds a BS in
microbiology and an MBA from the University of Washington.
HIGHLIGHTS
<TABLE>
<S> <C>
Current Yield (30-day)...... 5.26%
Weighted Average Maturity... 23.2 years
</TABLE>
<TABLE>
<CAPTION>
Percent of
TOP FIVE HOLDINGS Net Assets
- --------------------------------------------------------------------------------
<S> <C>
San Joaquin Hills Transportation Corridor Agency Senior Lien Toll Road
Revenue.................................................................. 4.3%
Illinois Educational Facilities Authority Adjustable Demand Revenue
(University of Chicago).................................................. 3.9
Wyoming Community Development Authority Housing Revenue................... 3.6
Alaska Housing Finance Corp. (General Housing Purpose).................... 3.1
Austin Combined Utility System Revenue.................................... 3.1
</TABLE>
<TABLE>
<CAPTION>
Percent of
TOP FIVE STATES Net Assets
- --------------------------------------------------------------------------------
<S> <C>
California.................................................................. 18%
Washington.................................................................. 12
Indiana..................................................................... 9
Texas....................................................................... 8
Illinois.................................................................... 6
</TABLE>
Credit Rating Distribution
As a Percent of Net Assets
- -------------------------------------------------------------------------------
[PIE CHART]
Municipal Bonds:
1) AAA 40 %
2) AA 24 %
3) A 16 %
4) BBB 16 %
5) Not Rated 1 %
6) Cash & Other: 3 %
-----
100 %
- 24 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Municipal Bond Fund
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
MUNICIPAL BONDS* - 97.1%
Alabama - 1.9%
$1,310 + Alabama Agriculture and Mechanical University Revenue 5.50%, due
11/01/20 [MBIA] (Prerefunded 11/01/05 @ 102)................ $ 1,371
4,000 Jefferson County Sewer Revenue 5.00%, due 2/01/33 [FGIC]...... 3,299
4,250 Jefferson County Sewer Revenue 5.70%, due 2/01/20 [FGIC]...... 4,084
Alaska - 3.1%
17,000 Alaska Housing Finance Corp. (General Housing Purpose) 5.00%, due
12/01/18..................................................... 14,745
135 Alaska Housing Finance Corp. Collateralized (Veterans Mortgage
Program)
6.50%, due 6/01/31.............................................. 136
Arizona - 1.7%
9,800 Phoenix Civic Improvement Corp. Wastewater System Lease Revenue
4.75%, due 7/01/23............................................ 8,002
California - 17.8%
1,500 Foothill/Eastern Transportation Corridor Agency Toll Road Revenue
5.00%, due 1/01/35............................................ 1,201
2,500 + Los Angeles County Certificates of Participation (Disney Parking
Project)
5.50%, due 9/01/21 (Prerefunded 3/01/03 @ 100)................ 2,570
13,000 Los Angeles Department of Water and Power Electric Plant Revenue
5.25%, due 11/15/26.......................................... 11,564
5,000 Los Angeles Wastewater System Revenue
4.70%, due 11/01/19 [FGIC].................................... 4,184
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$1,700 Northern California Power Agency Geothermal Project Revenue
5.00%, due 7/01/09.......................................... $ 1,643
3,550 + Northern California Power Agency Geothermal Project Revenue
5.00%, due 7/01/09 (Prerefunded 7/01/08 @ 100)................ 3,530
6,400 Pittsburg Redevelopment Agency Los Medanos Community Development
Project Tax Allocation
4.625%, due 8/01/21 [AMBAC]................................... 5,229
11,995 Pittsburg Redevelopment Agency Los Medanos Community Development
Project Tax Allocation
5.80%, due 8/01/34 [FSA]..................................... 11,594
2,000 Redding Joint Powers Financing Authority Solid Waste and Corporation
Yard Revenue 5.00%, due 1/01/23............................... 1,691
8,750 Sacramento County Sanitation District Finance Authority Revenue
4.75%, due 12/01/23........................................... 7,188
8,010 San Joaquin County Public Facilities Financing Corp. Certificates of
Participation Capital Facilities Project 4.75%, due 11/15/19 [MBIA].
6,741
25,000 San Joaquin Hills Transportation Corridor Agency Senior Lien Toll
Road Revenue
5.00%, due 1/01/33........................................... 20,100
3,165 Southern California Public Power Authority Power Project Revenue
(Multiple Projects)
5.50%, due 7/01/20............................................ 2,962
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 25 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO MUNICIPAL BOND FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$4,085 + Southern California Public Power Authority Power Project Revenue
(Multiple Projects)
5.50%, due 7/01/20 (Prerefunded 7/01/00 @ 100).............. $ 4,117
Colorado - 0.2%
1,000 Colorado Housing Finance Authority Multi-Family Mortgage Revenue
8.30%, due 10/01/23........................................... 1,084
District of Columbia - 4.6%
10,000 District of Columbia General Obligation
5.25%, due 6/01/27 [MBIA]..................................... 8,568
16,500 Washington Convention Center Authority Dedicated Tax Revenue 4.75%,
due 10/01/28 [AMBAC]......................................... 12,958
Florida - 0.6%
2,750 Mid-Bay Bridge Authority Revenue
6.05%, due 10/01/22........................................... 2,576
Georgia - 2.5%
6,750 + Atlanta Water and Sewage Revenue
4.50%, due 1/01/18 (Prerefunded 1/01/04 @ 100)................ 6,687
5,000 Municipal Electric Authority Project One Special Obligation Fourth
Crossover Series 6.50%, due 1/01/20........................... 5,200
Hawaii - 2.5%
13,000 Honolulu City and County Wastewater System Revenue 4.50%, due
7/01/28 [FGIC]................................................ 9,836
2,420 Honolulu City and County Wastewater System Revenue 4.75%, due
7/01/28 [FGIC]................................................ 1,924
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
Illinois - 6.0%
$17,500 + Illinois Educational Facilities Authority Adjustable Demand
Revenue (University of Chicago) 5.70%, due 12/01/25 (Prerefunded
12/01/03 @ 102)............................................ $18,365
5,000 + Metropolitan Pier and Exposition Authority Mccormick Place
Convention Complex Hospitality Facilities Revenue
7.00%, due 7/01/26
(Escrowed to Maturity)....................................... 5,618
4,770 University of Illinois Auxiliary Facilities System Revenue
5.75%, due 4/01/22........................................... 4,568
Indiana - 8.5%
200 Beech Grove Economic Development Revenue (Westvaco Corp.)
8.75%, due 7/01/10............................................. 204
11,000 + East Chicago Elementary School Building Corp. First Mortgage
7.00%, due 1/15/16 (Prerefunded 1/15/03 @ 102).............. 11,884
7,715 Hammond Multi-School Building Corp. First Mortgage Revenue 6.20%,
due 7/10/15.................................................. 7,754
17,550 Indiana State Development Finance Authority Environmental Revenue
5.60%, due 12/10/32......................................... 14,451
6,450 + Indianapolis Gas Utility System Revenue
4.00%, due 6/01/11 [FGIC] (Escrowed to Maturity)............. 5,678
Maryland - 1.8%
5,125 Baltimore Project and Revenue (Water Projects) 5.00%, due 7/01/24
[FGIC]....................................................... 4,448
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 26 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO MUNICIPAL BOND FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$5,000 Maryland Health and Higher Educational Facilities Authority Revenue
(University of Maryland Medical System) 4.75%, due 7/01/23 [FGIC]...
$ 4,088
Massachusetts - 3.4%
5,750 Massachusetts Bay Transportation Authority System Revenue
4.50%, due 3/01/26 [MBIA]..................................... 4,407
5,140 Massachusetts Housing Finance Agency Housing Revenue 6.20%, due
7/01/38 [AMBAC]............................................... 5,154
2,500 Massachusetts Water Resources Authority Revenue 4.75%, due 12/01/23.
2,001
4,500 + Massachusetts Water Resources Authority Revenue 6.00%, due 4/01/20
(Prerefunded 4/01/00 @ 100)................................... 4,522
Michigan - 1.3%
5,250 Detroit Water Supply System Revenue
4.75%, due 7/01/19 [FGIC]..................................... 4,328
2,000 + University of Michigan Hospital Revenue
6.375%, due 12/01/24 (Prerefunded 12/01/00 @ 100)............. 2,041
Missouri - 0.8%
4,000 Missouri Health and Education Facilities Authority Educational
Facilities Revenue 4.75%, due 11/15/37........................ 3,046
1,000 Missouri Health and Education Facilities Authority Educational
Facilities Revenue 5.00%, due 11/15/37.......................... 806
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
New Jersey - 0.2%
$1,070 + New Jersey Turnpike Authority Revenue
10.375%, due 1/01/03 (Escrowed to Maturity)................. $ 1,180
New Mexico - 0.5%
2,420 Farmington Collateralized Pollution Control Revenue (Tucson Gas and
Electric Co.) 6.10%, due 1/01/08.............................. 2,345
New York - 5.4%
2,100 New York City Municipal Water Finance Authority Water and Sewer
System Revenue 5.00%, due 6/15/17 [FGIC]...................... 1,862
1,500 New York Dormitory Authority State University Educational Facilities
Revenue 5.00%, due 7/01/15.................................... 1,386
5,500 New York Dormitory Authority State University Educational Facilities
Revenue 5.25%, due 5/15/15.................................... 5,168
4,400 New York Dormitory Authority State University Educational Facilities
Revenue 7.50%, due 5/15/11.................................... 5,003
5,250 New York Dormitory Authority State University Educational Facilities
Revenue 7.50%, due 5/15/13.................................... 6,174
6,500 Urban Development Corp. Correctional Facilities Revenue 5.375%, due
1/01/25....................................................... 5,696
North Carolina - 2.1%
11,000 North Carolina Eastern Municipal Power Agency Power System Revenue
6.00%, due 1/01/22............................................ 9,968
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 27 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO MUNICIPAL BOND FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
Oklahoma - 1.2%
$5,590 McGee Creek Authority Water Revenue
6.00%, due 1/01/23 [MBIA].................................... $ 5,640
Pennsylvania - 1.5%
5,000 Centre County University Area Joint Authority Sewer Revenue
4.75%, due 11/01/20 [MBIA]..................................... 4,087
3,500 Pennsylvania Turnpike Common Oil Franchise Tax Revenue
4.75%, due 12/01/27 [AMBAC].................................... 2,791
South Carolina - 4.6%
755 Charleston County Pollution Control Facilities Revenue
5.90%, due 8/01/03............................................... 755
5,500 Pickens and Richland Counties Hospital Facilities Revenue
5.75%, due 8/01/21 [AMBAC]..................................... 5,214
4,705 Piedmont Municipal Power Agency Electric Revenue
4.75%, due 1/01/25 [MBIA]...................................... 3,743
15,000 Piedmont Municipal Power Agency South Carolina Electric Revenue
5.25%, due 1/01/21 [MBIA]..................................... 12,219
Texas - 7.9%
7,000 Austin Combined Utility Revenue 4.25%, due 5/15/28 [MBIA]...... 5,070
10,000 Austin Combined Utility System Revenue
12.50%, due 11/15/07 [MBIA]................................... 14,601
2,065 Austin Water, Sewer and Electric Revenue
14.00%, due 11/15/01........................................... 2,268
280 + Austin Water, Sewer and Electric Revenue
14.00%, due 11/15/01 (Escrowed to Maturity)...................... 312
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$30 + Austin Water, Sewer and Electric Revenue
14.00%, due 11/15/01 (Prerefunded Various Dates/Prices)......... $ 33
2,000 Houston Water and Sewer System Junior Lien Revenue Bond 5.375%, due
12/01/27 [FGIC].................................................. 1,787
4,000 Matagorda County Navigation District #1
5.15%, due 11/01/29 [MBIA]....................................... 3,391
5,350 North East Texas School District General Obligation 4.50%, due 10/01/28
[PSF]............................................................ 4,049
4,500 San Antonio Electric & Gas Revenue 4.50%, due 2/01/21............ 3,535
2,260 Texas Municipal Power Agency Revenue
5.50%, due 9/01/13 [FGIC]........................................ 2,234
Virginia - 1.0%
4,500 Prince William County Authority Water and Sewer Systems Revenue 4.75%,
due 7/01/29 [FGIC]............................................... 3,586
1,005 + Richmond Metropolitan Expressway Authority Revenue 5.60%, due 1/15/13
(Escrowed to Maturity)........................................... 1,006
Washington - 12.4%
7,000 CDP-King County III Lease Revenue (King Street Center Project)
5.25%, due 6/01/26 [MBIA]........................................ 6,076
5,055 Douglas County Public Utility District #1 Wells Hydroelectric Revenue
8.75%, due 9/01/18............................................... 6,192
2,200 + Douglas County Public Utility District #1 Wells Hydroelectric Revenue
8.75%, due 9/01/18 (Prerefunded 9/01/06 @ 106)................... 2,756
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 28 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO MUNICIPAL BOND FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$2,500 + Everett School District #2 Snohomish County Unlimited Tax General
Obligation
6.20%, due 12/01/12 [MBIA] (Prerefunded
12/01/03 @ 102)............................................. $ 2,670
2,200 King County Housing Authority Pooled Housing Revenue 6.80%, due
3/01/26....................................................... 2,251
1,650 King County Limited Tax General Obligation (Various Purposes) 4.75%,
due 1/01/19................................................... 1,374
2,255 King County Public Hospital District #1 Hospital Facilities Revenue
(Valley Medical Center) 5.50%, due 9/01/17 [AMBAC]............ 2,114
4,800 Lewis County Public Utility District #1 Cowlitz Falls Hydroelectric
Project Revenue 6.00%, due 10/01/24........................... 4,703
4,000 + Port of Seattle Revenue 6.00%, due 12/01/14 [AMBAC] (Prerefunded
12/01/00 @ 100)............................................... 4,069
2,930 Seattle Housing Authority Low Income Housing Revenue (Mt. Zion
Project)
6.60%, due 8/20/38............................................ 3,042
5,940 Vancouver Washington Housing Authority Revenue (Springbrook Square)
5.65%, due 3/01/31............................................ 5,142
3,000 Washington Health Care Facilities Authority Revenue (Fred Hutchinson
Cancer Research Center)
7.375%, due 1/01/18........................................... 3,126
8,500 + Washington Public Power Supply System Nuclear Project #1 Revenue
6.00%, due 7/01/17 (Prerefunded 7/01/00 @ 100)................ 8,582
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
$4,000 Washington Public Power Supply System Nuclear Project #2 Revenue
6.30%, due 7/01/12.......................................... $ 4,246
2,610 Washington Public Power Supply System Nuclear Project #3 Revenue
5.50%, due 7/01/18 [AMBAC]..................................... 2,421
Wyoming - 3.6%
18,375 Wyoming Community Development Authority Housing Revenue
5.60%, due 6/01/29............................................ 16,845
-------
TOTAL MUNICIPAL BONDS.................................................. 458,859
-------
CASH EQUIVALENTS - 1.4%
Investment Companies
6,341 Federated Tax-Exempt Money Market Fund, Inc.................... 6,341
-------
TOTAL CASH EQUIVALENTS................................................... 6,341
-------
TOTAL INVESTMENTS - 98.5%.............................................. 465,200
Other Assets, less Liabilities........................................... 7,318
-------
NET ASSETS............................................................ $472,518
-------
-------
</TABLE>
- --------------------------------------------------------------------------------
+Prerefunded bonds are collateralized by securities (generally U.S. Treasury
securities) held in an irrevocable trust in an amount sufficient to pay
interest and principal.
*The provider of the guarantee of timely payment of both principal and interest
is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio and the percentage of the portfolio
they guarantee at the period end are as follows:
<TABLE>
<S> <C>
Municipal Bond Investors Assurance Corp. [MBIA]........................... 17.1%
Financial Guaranty Insurance Corp. [FGIC]................................. 11.2
AMBAC Indemnity Corp. [AMBAC]............................................. 8.7
Financial Security Assurance, Inc. [FSA].................................. 2.5
Texas Permanent School Fund [PSF]......................................... 0.9
-------
40.4%
-------
-------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 29 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO Washington State
Municipal Bond Fund
December 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[PHOTO OF BEVERLY R. DENNY]
BEVERLY R. DENNY
The Washington State Municipal Bond Fund beat the Lipper average for
Washington Funds and the Lehman Long Municipal Bond Index for both the
quarter and year.
Municipal bond prices continued to fall during the fourth quarter. To take
advantage of increasing yields, I bought Washington State Housing Authority
Tacoma Lutheran Home 5.85%, due 1/01/24, at par in the third quarter and had
virtually no activity during the fourth quarter.
Initiative 695, instituting a flat $30 vehicle registration fee and
requiring a vote for any tax increase, passed. The effect of the lowered revenue
flow into state and county trans-
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - No-Load Class
<TABLE>
<CAPTION>
Average Annual Total Return
for the periods ended December 31, 1999 Quarter 1 Year 5 Year Since Inception*
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SAFECO Washington State Municipal Bond Fund (1.88)% (6.25)% 5.98% 4.15%
Lehman Brothers Long Municipal Bond Index (2.52)% (6.67)% 7.41% 5.44%
Lipper, Inc. (Washington State Municipal Bond Funds) (1.95)% (6.54)% 6.19% N/A
</TABLE>
* The Fund's inception date was March 18, 1993. Graph and average annual return
comparison begins on March 31, 1993.
<TABLE>
<CAPTION>
SAFECO Lehman Brothers
Washington State Long Municipal
Municipal Bond Fund Bond Index
--------------------- ---------------
<S> <C> <C>
3/31/93 10,000 10,000
4/30/93 10,146 10,137
5/31/93 10,188 10,221
6/30/93 10,433 10,413
7/31/93 10,401 10,423
8/31/93 10,684 10,690
9/30/93 10,808 10,839
10/31/93 10,828 10,859
11/30/93 10,658 10,728
12/31/93 10,874 11,005
1/31/94 11,043 11,135
2/28/94 10,665 10,766
3/31/94 10,068 10,123
4/30/94 10,115 10,201
5/31/94 10,259 10,321
6/30/94 10,083 10,197
7/31/94 10,337 10,459
8/31/94 10,300 10,481
9/30/94 10,050 10,238
10/31/94 9,782 9,923
11/30/94 9,553 9,661
12/31/94 9,934 10,004
1/31/95 10,339 10,444
2/28/95 10,730 10,870
3/31/95 10,786 11,001
4/30/95 10,754 10,995
5/31/95 11,189 11,463
6/30/95 10,986 11,252
7/31/95 11,053 11,310
8/31/95 11,195 11,469
9/30/95 11,275 11,559
10/31/95 11,519 11,839
11/30/95 11,786 12,144
12/31/95 11,910 12,333
1/31/96 11,959 12,386
2/28/96 11,848 12,236
3/31/96 11,620 12,011
4/30/96 11,556 11,963
5/31/96 11,580 11,969
6/30/96 11,714 12,154
7/31/96 11,832 12,274
8/31/96 11,798 12,258
9/30/96 12,029 12,530
10/31/96 12,134 12,683
11/30/96 12,341 12,956
12/31/96 12,272 12,878
1/31/97 12,201 12,852
2/28/97 12,320 12,991
3/31/97 12,110 12,766
4/30/97 12,265 12,917
5/31/97 12,466 13,168
6/30/97 12,600 13,336
7/31/97 13,020 13,822
8/31/97 12,862 13,638
9/30/97 13,023 13,834
10/31/97 13,097 13,953
11/30/97 13,181 14,077
12/31/97 13,369 14,335
1/30/98 13,491 14,488
2/28/98 13,510 14,481
3/31/98 13,532 14,501
4/30/98 13,434 14,423
5/31/98 13,669 14,706
6/30/98 13,729 14,769
7/31/98 13,770 14,803
8/31/98 13,980 15,069
9/30/98 14,170 15,278
10/31/98 14,108 15,229
11/30/98 14,157 15,306
12/31/98 14,170 15,321
1/31/99 14,295 15,471
2/28/99 14,229 15,406
3/31/99 14,227 15,451
4/30/99 14,255 15,465
5/31/99 14,142 15,343
6/30/99 13,928 15,063
7/31/99 13,888 15,056
8/31/99 13,645 14,746
9/30/99 13,539 14,669
10/31/99 13,322 14,326
11/30/99 13,432 14,526
12/31/99 13,284 14,300
</TABLE>
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
- 30 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
portation funds and to some local budgets will be significant. How it will af-
fect credit ratings in the state remains to be seen.
Beverly R. Denny
- --------------------------------------------------------------------------------
Beverly R. Denny came to SAFECO in 1991. She holds an MBA from the University
of Virginia and a BS in finance/economics from Babson College. She is a Chart-
ered Financial Analyst.
To New Investors:
The SAFECO Washington State Municipal Bond Fund was closed on January 20
and will be liquidated on March 31, 2000.
HIGHLIGHTS
<TABLE>
<S> <C>
Current Yield (30-day)....... 5.22%
Weighted Average Maturity.... 23.0 years
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE Percent of
TYPES OF BONDS Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Housing (Multi-Family)...................................................... 20%
Local General Obligation (Limited Tax)...................................... 18
Hospital.................................................................... 18
University Revenue.......................................................... 11
Utilities (Water)........................................................... 9
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE Percent of
HOLDINGS Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Renton Limited Tax General Obligation..................................... 4.7%
Vancouver Washington Housing Authority Revenue (Clark County)............. 4.2
King County Housing Authority Pooled Housing Revenue...................... 4.2
Vancouver Washington Housing Authority Revenue (Springbrook Square)....... 4.2
Washington Higher Education Facilities Authority Revenue and Refunding
Revenue (Gonzaga University Project)..................................... 3.9
</TABLE>
Credit Rating Distribution
As a Percent of Net Assets
- -----------------------------------------------------------------------------
[PIE CHART]
Municipal Bonds:
1) AAA 40%
2) AA 37%
3) A 14%
4) Not Rated 4%
5) Cash & Other: 5%
----
100%
- 31 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Washington State
Municipal Bond Fund
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
MUNICIPAL BONDS* - 95.4%
Washington - 95.4%
$100 Kent Limited Tax General Obligation 5.75%, due 12/01/26 [MBIA]. $ 95
300 King County Housing Authority Pooled Housing Revenue
6.80%, due 3/01/26................................................ 307
250 King County Limited Tax General Obligation (Various Purposes)
4.75%, due 1/01/19................................................ 208
200 King County Public Hospital District #1 Hospital Facilites Revenue
(Valley Medical Center) 5.25%, due 9/01/15 [AMBAC]................ 184
200 Kitsap County School District #401 Unlimited Tax General Obligation
(Central Kitsap)
5.50%, due 12/01/11............................................... 200
100 Kitsap County Sewer Revenue 5.75%, due 7/01/16 [MBIA].............. 99
250 Klickitat County Public Utility District #1 Electric Revenue
5.75%, due 10/01/27 [FGIC]........................................ 235
100 Lewis County Public Utility District #1 Cowlitz Falls Hydroelectric
Project Revenue
6.00%, due 10/01/24................................................ 98
200 Municipality of Metropolitan Seattle General Obligation
5.65%, due 1/01/20................................................ 192
350 Renton Limited Tax General Obligation
5.75%, due 12/01/17 [MBIA]........................................ 345
200 Seattle Drainage and Wastewater Utility Improvement Revenue
5.00%, due 11/01/27............................................... 167
175 Seattle Drainage and Wastewater Utility Improvement Revenue
5.25%, due 12/01/25 [MBIA]........................................ 152
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$250 Seattle Housing Authority Low Income Housing Revenue (Mt. Zion
Project)
6.60%, due 8/20/38............................................. $ 260
300 Seattle Municipal Light and Power Revenue
5.00%, due 7/01/20................................................ 258
300 Seattle Water System Revenue 5.00%, due 10/01/27 [FGIC]........... 249
200 Seattle Water System Revenue 5.25%, due 12/01/23.................. 176
300 Spokane County General Obligation 5.10%, due 12/01/18............. 268
100 Tacoma Solid Waste Utilities Revenue
5.50%, due 12/01/19 [AMBAC]........................................ 93
200 Tukwila Limited Tax General Obligation
5.90%, due 1/01/14................................................ 201
350 Vancouver Washington Housing Authority Revenue (Clark County) 5.50%,
due 3/01/28....................................................... 308
350 Vancouver Washington Housing Authority Revenue (Springbrook Square)
5.65%, due 3/01/31................................................ 303
200 + Washington Health Care Facilities Authority Revenue (Franciscan
Health System/St. Joseph Hospital, Tacoma)
5.625%, due 1/01/13 [MBIA] (Escrowed to Maturity)................. 198
150 Washington Health Care Facilities Authority Revenue (Grays Harbor
Medical Center)
5.90%, due 7/01/23 [Asset Guaranty]............................... 140
250 Washington Health Care Facilities Authority Revenue (Highline
Community Hospital)
5.00%, due 8/15/21 [Asset Guaranty]............................... 205
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 32 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$200 Washington Health Care Facilities Authority Revenue (Northwest
Hospital, Seattle)
5.75%, due 11/15/23 [AMBAC].................................... $ 187
100 + Washington Health Care Facilities Authority Revenue (Swedish
Hospital Medical System)
6.30%, due 11/15/22 (Prerefunded 11/15/02 @ 102).................. 106
250 Washington Higher Education Facilities Authority Revenue (Pacific
Lutheran University Project)
5.70%, due 11/01/26 [Connie Lee].................................. 232
350 Washington Higher Education Facilities Authority Revenue and Refunding
Revenue (Gonzaga University Project)
4.75%, due 4/01/22 [MBIA]......................................... 283
300 Washington State Housing Community Non-Profit Housing Revenue (Tacoma
Lutheran Home) 5.85%, due 1/01/24................................. 279
325 Washington State Housing Finance Commission Housing and Nonprofit
Revenue (Seattle University Auxiliary Service Project) 5.30%, due
7/01/31........................................................... 267
250 Washington State Housing Finance Commission Revenue (Horizon House
Project)
6.125%, due 7/01/27 [Asset Guaranty].............................. 254
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
$200 Washington State Various Purpose General Obligation
5.25%, due 1/01/19.............................................. $ 181
200 Yakima-Tieton Irrigation District Revenue
6.20%, due 6/01/19 [FSA]........................................... 201
-------
TOTAL MUNICIPAL BONDS.................................................... 6,931
-------
CASH EQUIVALENTS - 3.2%
Investment Companies
230 Federated Tax-Exempt Money Market Fund, Inc........................ 230
-------
TOTAL CASH EQUIVALENTS..................................................... 230
-------
TOTAL INVESTMENTS - 98.6%................................................ 7,161
Other Assets, less Liabilities............................................. 105
-------
NET ASSETS.............................................................. $7,266
-------
-------
</TABLE>
- --------------------------------------------------------------------------------
+Prerefunded bonds are collateralized by securites (generally U.S. Treasury
securities) held in an irrevocable trust in an amount sufficient to pay
interest and principal.
*The provider of the guarantee of timely payment of both principal and interest
is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio and the percentage of the portfolio
they guarantee at the period end are as follows:
<TABLE>
<S> <C>
Municipal Bond Investors Assurance Corp. [MBIA]........................... 16.9%
Financial Guaranty Insurance
Corp. [FGIC]............................................................. 7.0
AMBAC Indemnity Corp. [AMBAC]............................................. 6.7
Financial Security Assurance, Inc. [FSA].................................. 2.9
Asset Guaranty Insurance Co. [Asset Guaranty]............................. 8.7
Connie Lee Insurance Co. [Connie Lee]..................................... 3.3
-------
45.5%
-------
-------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 33 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO Intermediate-Term
Municipal Bond Fund
December 31, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[PHOTO OF MARY V. METASTASIO]
MARY V. METASTASIO
The SAFECO Intermediate-Term Municipal Bond Fund finished the year
well ahead of its peer group average, but its expenses held it behind
the Lehman Brothers 7-Year Municipal Bond Index return, which has no ex-
penses or cash flow. For the year, the Fund was 26 of 133 intermediate-
term bond funds. (For the five years ended December 31, 1999, the Fund
was 17 of 97 similar funds.)
Even though our numbers are fairly decent, the market was ugly, ugly, ugly.
Interest rates took a long, slow death march upward, except for a brief and,
ultimately, fruitless rally attempt in November. Our rela-tively lower average
maturity helped our Fund
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - No-Load Class
<TABLE>
<CAPTION>
Average Annual Total Return
for the periods ended December 31, 1999 Quarter 1 Year 5 Year Since Inception*
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SAFECO Intermediate-Term Municipal Bond Fund (.25)% (0.84)% 6.06% 4.61%
Lehman Brothers 7-Year Municipal Bond Index (.09)% (0.14)% 6.36% 5.29%
Lipper, Inc. (Intermediate Municipal Bond Funds) (.38)% (1.65)% 5.56% N/A
</TABLE>
* The Fund's inception date was March 18, 1993. Graph and average annual return
comparison begins on March 31, 1993.
<TABLE>
<CAPTION>
SAFECO Lehman Brothers
Intermediate-Term 7-Year Municipal
Municipal Bond Fund Bond Index
-------------------- ----------------
<S> <C> <C>
3/31/93 10,000 10,000
4/30/93 10,068 10,062
5/31/93 10,085 10,093
6/30/93 10,245 10,277
7/31/93 10,227 10,278
8/31/93 10,438 10,461
9/30/93 10,599 10,575
10/31/93 10,652 10,602
11/30/93 10,559 10,508
12/31/93 10,744 10,702
1/31/94 10,871 10,816
2/28/94 10,601 10,581
3/31/94 10,264 10,299
4/30/94 10,308 10,375
5/31/94 10,387 10,427
6/30/94 10,351 10,408
7/31/94 10,478 10,555
8/31/94 10,552 10,610
9/30/94 10,363 10,509
10/31/94 10,176 10,403
11/30/94 9,955 10,251
12/31/94 10,140 10,407
1/31/95 10,371 10,602
2/28/95 10,649 10,840
3/31/95 10,774 10,953
4/30/95 10,822 10,982
5/31/95 11,130 11,274
6/30/95 11,085 11,264
7/31/95 11,212 11,408
8/31/95 11,328 11,543
9/30/95 11,368 11,587
10/31/95 11,496 11,688
11/30/95 11,614 11,817
12/31/95 11,683 11,879
1/31/96 11,803 11,994
2/28/96 11,789 11,954
3/31/96 11,596 11,838
4/30/96 11,575 11,816
5/31/96 11,539 11,799
6/30/96 11,590 11,889
7/31/96 11,736 11,988
8/31/96 11,755 11,994
9/30/96 11,845 12,102
10/31/96 11,979 12,233
11/30/96 12,168 12,437
12/31/96 12,121 12,400
1/31/97 12,142 12,444
2/28/97 12,244 12,548
3/31/97 12,093 12,386
4/30/97 12,126 12,450
5/31/97 12,297 12,607
6/30/97 12,425 12,728
7/31/97 12,716 13,024
8/31/97 12,595 12,931
9/30/97 12,750 13,068
10/31/97 12,807 13,145
11/30/97 12,851 13,191
12/31/97 13,030 13,354
1/30/98 13,123 13,493
2/28/98 13,122 13,505
3/31/98 13,122 13,505
4/30/98 13,036 13,428
5/31/98 13,227 13,624
6/30/98 13,259 13,663
7/31/98 13,297 13,708
8/31/98 13,488 13,918
9/30/98 13,634 14,097
10/31/98 13,658 14,117
11/30/98 13,666 14,156
12/31/98 13,724 14,186
1/31/99 13,867 15,933
2/28/99 13,816 14,311
3/31/99 13,801 14,306
4/30/99 13,827 14,340
5/31/99 13,757 14,269
6/30/99 13,563 14,063
7/31/99 13,649 14,158
8/31/99 13,632 14,126
9/30/99 13,643 14,178
10/31/99 13,563 14,118
11/30/99 13,649 14,221
12/31/99 13,609 14,165
</TABLE>
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
- 34 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
endure the rising rates better than its fellow funds.
The municipal market, which always grinds to a halt at the end of the year,
did so earlier than usual, as many firms wanted to wrap things up early in case
Y2K complications made closing transactions difficult. The tone of the market
did nothing to encourage these firms to stay active until the ball dropped at
midnight.
The SAFECO Intermediate-Term Municipal Bond Fund was also quiet during the
latest quarter. We saw little to interest us in the market, and we did no trad-
ing. We still intend to continue very slowly extending the average maturity of
the Fund (it was 5.8 years at year-end), but will take our time, looking for
opportunities to take advantage of changes in the market as they occur.
Mary V. Metastasio
- --------------------------------------------------------------------------------
Mary V. Metastasio joined SAFECO's investment department in 1985 as a securi-
ties analyst and began managing the SAFECO Intermediate-Term Municipal Bond
Fund in 1996. She holds a BA in Dramatic Art from Whitman College and an MBA
from the University of Washington. Metastasio is chairman of the National
Federation of Municipal Analysts.
HIGHLIGHTS
<TABLE>
<S> <C>
Current Yield (30-day)........... 4.03%
Weighted Average Maturity........ 5.8 years
</TABLE>
<TABLE>
<CAPTION>
Percent of
TOP FIVE HOLDINGS Net Assets
- -------------------------------------------------------------------------------
<S> <C>
North Carolina Municipal Power Agency #1 Catawba Electric Revenue......... 5.2%
New York State Housing Finance Agency Health Facilities Revenue........... 5.0
Mississippi Hospital Equipment and Facilities Authority Revenue
(Mississippi Baptist Medical Center)..................................... 4.2
Trinity River Authority Revenue (Tarrant County Water Project)............ 4.2
Oklahoma Industries Authority Health Facilities Revenue (Sisters of Mercy
Health System, St. Louis, Inc.).......................................... 4.1
</TABLE>
<TABLE>
<CAPTION>
Percent of
TOP FIVE STATES Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Washington.................................................................. 17%
Illinois.................................................................... 16
New York.................................................................... 11
Texas....................................................................... 10
California.................................................................. 8
</TABLE>
Credit Rating Distribution
As a Percent of Net Assets
- -------------------------------------------------------------------------------
[PIE CHART]
Municipal Bonds:
1) AAA 59%
2) AA 12%
3) A 20%
4) BBB 5%
5) Cash & Other: 4%
----
100%
- -------------------------------------------------------------------------------
- 35 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Intermediate-Term
Municipal Bond Fund
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
MUNICIPAL BONDS* - 95.7%
California - 7.7%
$220 Pleasanton Joint Powers Financing Authority Reassessment Revenue
5.80%, due 9/02/02............................................. $ 225
380 + Sacramento Municipal Utility District Electric Revenue
5.50%, due 2/01/11 (Escrowed to Maturity)......................... 386
500 Santa Margarita Dana Point Authority Revenue
5.375%, due 8/01/04 [MBIA]........................................ 515
Connecticut - 3.7%
100 Connecticut Housing Finance Authority Housing Mortgage Finance Program
5.40%, due 5/15/03................................................ 101
400 East Haven Connecticut General Obligation
6.50%, due 9/01/05 [FGIC]......................................... 432
District of Columbia - 3.1%
155 District of Columbia General Obligation 5.30%, due 6/01/03........ 155
145 + District of Columbia General Obligation 5.30%, due 6/01/03
(Escrowed to Maturity)............................................ 147
75 District of Columbia General Obligation 5.75%, due 6/01/03......... 77
75 + District of Columbia General Obligation 5.75%, due 6/01/03
(Escrowed to Maturity)............................................. 77
Georgia - 0.7%
100 Georgia Municipal Electric Authority General Power Revenue
5.75%, due 1/01/03................................................ 102
Illinois - 16.1%
500 Chicago Illinois Project Series A 5.25%, due 1/01/10 [FGIC]....... 496
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$300 Illinois Health Facilities Authorities Revenue (Masonic Medical
Center) 5.20%, due 10/01/03.................................... $ 298
500 Joliet Waterworks and Sewage Revenue
7.00%, due 1/01/05 [FGIC]......................................... 546
235 + Metro Pier & Exposition Authority Dedicated State Tax Prerefunded -
Series A [MBIA]
5.50%, due 6/15/03................................................ 239
40 + Metro Pier & Exposition Authority Dedicated State Tax Prerefunded -
Series A
5.90%, due 6/15/03 (Escrowed to Maturity).......................... 41
265 Metro Pier & Exposition Authority Dedicated State Tax Unrefunded -
Series A [MBIA]
5.50%, due 6/15/03................................................ 271
25 Metro Pier & Exposition Authority Dedicated State Tax Unrefunded -
Series A
5.90%, due 6/15/03................................................. 26
35 + Metropolitan Pier and Exposition Authority McCormick Place Expansion
Project
5.90%, due 6/15/03 (Escrowed to Maturity).......................... 36
400 Peoria General Obligation 5.00%, due 1/01/06 [FGIC]............... 399
Indiana - 1.4%
100 Indiana Bond Bank State Revolving Fund Program
5.90%, due 2/01/03................................................ 103
100 Indianapolis Local Public Improvement Bond Bank Transportation Revenue
5.80%, due 7/01/03................................................ 103
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 36 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
Kentucky - 3.5%
$500 Kentucky State Property and Buildings Commission Revenue 5.50%, due
9/01/04....................................................... $ 515
Louisiana - 0.6%
85 Louisiana Public Facilities Authority Student Loan Revenue
6.20%, due 3/01/01................................................. 86
Maine - 2.0%
300 Maine Municipal Bond Bank 5.00%, due 11/01/09 [FSA]............... 296
Massachusetts - 2.7%
400 Massachusetts Water Resources Authority General Revenue
5.25%, due 12/01/08............................................... 401
Mississippi - 4.2%
600 Mississippi Hospital Equipment and Facilities Authority Revenue
(Mississippi Baptist Medical Center)
5.40%, due 5/01/04 [MBIA]......................................... 610
New Jersey - 0.6%
80 New Jersey Housing and Mortgage Finance Agency Housing Revenue 6.00%,
due 11/01/02....................................................... 81
New York - 10.5%
100 Metropolitan Transportation Authority Transit Facilities Service
Contract Revenue
5.375%, due 7/01/02............................................... 101
10 New York City Water & Sewer Systems Revenue - Series B
5.00%, due 6/15/03................................................. 10
390 New York City Water & Sewer Systems Revenue - Series B
5.00%, due 6/15/03................................................ 391
700 New York State Housing Finance Agency Health Facilities Revenue
6.375%, due 11/01/04.............................................. 733
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$300 Port Authority New York & New Jersey Consolidated Revenue
5.00%, due 10/01/09 [FGIC]..................................... $ 296
North Carolina - 5.2%
800 North Carolina Municipal Power Agency #1 Catawba Electric Revenue
4.10%, due 1/01/05 [AMBAC]........................................ 761
Oklahoma - 4.1%
600 + Oklahoma Industries Authority Health Facilities Revenue (Sisters of
Mercy Health System, St. Louis, Inc.)
5.20%, due 6/01/05 (Escrowed to Maturity)......................... 605
Pennsylvania - 3.3%
500 Philadelphia Parking Authority Airport Parking Revenue 4.875%, due
9/01/09 [FSA]..................................................... 479
Texas - 9.8%
250 Austin Combined Utility Systems Revenue
5.25%, due 11/15/06............................................... 259
100 + Coastal Bend Health Facility Development Corp. Health Services
Revenue (Incarnate Word) 5.70%, due 1/01/03 [AMBAC] (Escrowed to
Maturity)......................................................... 102
100 Houston Water and Sewer System Junior Lien Revenue
5.75%, due 12/01/02............................................... 103
350 Socorro Independent School District Unlimited Tax General Obligation
5.80%, due 2/15/11 [PSF].......................................... 357
600 + Trinity River Authority Revenue (Tarrant County Water Project)
5.25%, due 2/01/05 [AMBAC] (Partially Prerefunded 2/01/03 @ 100).. 606
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 37 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
Washington - 16.5%
$400 Clark County Public Utility District #1 Generating System Revenue
6.00%, due 1/01/07 [FGIC]..................................... $ 421
360 King County Housing Authority Pooled Housing Revenue
4.70%, due 7/01/08................................................ 340
500 Seattle Library Facilities 5.375%, due 12/01/10................... 504
500 + Snohomish and Island Counties School District #401 General
Obligation (Stanwood)
5.90%, due 12/15/11 [MBIA] (Prerefunded 12/15/05 @ 100)........... 526
500 Tacoma Electric System Revenue 5.80%, due 1/01/04 [FGIC].......... 518
100 Washington Health Care Facilities Authority Revenue
(Empire Health Service, Spokane)
5.50%, due 11/01/03 [MBIA]........................................ 102
------
TOTAL MUNICIPAL BONDS.................................................. 13,978
------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
CASH EQUIVALENTS - 2.9%
Investment Companies
$428 Federated Tax-Exempt Money Market Fund, Inc.................... $ 428
-------
TOTAL CASH EQUIVALENTS..................................................... 428
-------
TOTAL INVESTMENTS - 98.6%............................................... 14,406
Other Assets, less Liabilities............................................. 201
-------
NET ASSETS............................................................. $14,607
-------
-------
</TABLE>
- --------------------------------------------------------------------------------
+Prerefunded bonds are collateralized by securites (generally U.S. Treasury
securities) held in an irrevocable trust in an amount sufficient to pay
interest and principal.
*The provider of the guarantee of timely payment of both principal and interest
is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio and the percentage of the portfolio
they guarantee at the period end are as follows:
<TABLE>
<S> <C>
Municipal Bond Investors Assurance Corp. [MBIA]........................... 16.2%
Financial Guaranty Insurance Corp. [FGIC]................................. 22.2
AMBAC Indemnity Corp. [AMBAC]............................................. 10.5
Financial Security Assurance, Inc. [FSA].................................. 5.5
Texas Permanent School Fund [PSF]......................................... 2.6
-------
57.0%
-------
-------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 38 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO Insured Municipal Bond Fund
December 31, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[PHOTO OF STEPHEN C. BAUER]
STEPHEN C. BAUER
The Fund generally underperforms its benchmark index and peers dur-
ing periods of rising rates, just as it outperforms in bull markets. The
year 1999 was no exception. The Insured Municipal Bond Fund performed
poorly because of its core strategy of staying fully invested in long-
term bonds (which are more sensitive to changes in interest rates) in
order to maximize tax-exempt yield. This strategy is also why the Fund's
five-year results are in the top 11% of similar funds. For the five
years ended December 31, 1999, the Insured Fund was four out of 37 in-
sured funds, according to Lipper, Inc., while it was last, 48 of 48 for
the one year.
The yield spread between insured bonds and uninsured bonds remained very
narrow in 1999. Essential service bonds rated A or
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - No-Load Class
<TABLE>
<CAPTION>
Average Annual Total Return
for the periods ended December 31, 1999 Quarter 1 Year 5 Year Since Inception*
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SAFECO Insured Municipal Bond Fund (1.93)% (7.99)% 6.59% 4.25%
Lehman Brothers Long Insured Municipal Bond Index (2.55)% (7.51)% 7.13% 5.21%
Lipper, Inc. (Insured Municipal Bond Funds) (1.28)% (4.69)% 5.69% N/A
</TABLE>
* The Fund's inception date was March 18, 1993. Graph and average annual return
comparison begins on March 31, 1993.
<TABLE>
<CAPTION>
SAFECO Lehman Brothers
Insured Municipal Long Insured
Bond Fund Municipal Bond Index
------------------ --------------------
<S> <C> <C>
3/31/93 10,000 10,000
4/30/93 10,122 10,146
5/31/93 10,163 10,239
6/30/93 10,396 10,431
7/31/93 10,301 10,439
8/31/93 10,643 10,710
9/30/93 10,804 10,849
10/31/93 10,808 10,861
11/30/93 10,568 10,719
12/31/93 10,853 10,993
1/31/94 10,998 11,117
2/28/94 10,539 10,726
3/31/94 9,860 10,062
4/30/94 9,907 10,152
5/31/94 10,028 10,276
6/30/94 9,862 10,153
7/31/94 10,217 10,431
8/31/94 10,169 10,434
9/30/94 9,849 10,183
10/31/94 9,560 9,872
11/30/94 9,364 9,647
12/31/94 9,721 9,984
1/31/95 10,125 10,431
2/28/95 10,651 10,851
3/31/95 10,706 10,977
4/30/95 10,630 10,973
5/31/95 11,255 11,441
6/30/95 10,934 11,220
7/31/95 10,967 11,269
8/31/95 11,130 11,424
9/30/95 11,207 11,507
10/31/95 11,514 11,800
11/30/95 11,897 12,109
12/31/95 12,090 12,302
1/31/96 12,093 12,366
2/28/96 11,947 12,194
3/31/96 11,664 11,950
4/30/96 11,564 11,891
5/31/96 11,575 11,894
6/30/96 11,741 12,078
7/31/96 11,892 12,200
8/31/96 11,847 12,182
9/30/96 12,145 12,461
10/31/96 12,238 12,611
11/30/96 12,558 12,894
12/31/96 12,400 12,804
1/31/97 12,252 12,759
2/28/97 12,382 12,893
3/31/97 12,150 12,650
4/30/97 12,363 12,800
5/31/97 12,587 13,056
6/30/97 12,767 13,211
7/31/97 13,336 13,716
8/31/97 13,073 13,502
9/30/97 13,244 13,695
10/31/97 13,351 13,787
11/30/97 13,445 13,875
12/31/97 13,726 14,226
1/30/98 13,846 14,390
2/28/98 13,811 14,363
3/31/98 13,802 14,381
4/30/98 13,669 14,281
5/31/98 14,000 14,589
6/30/98 14,061 14,652
7/31/98 14,091 14,678
8/31/98 14,374 14,972
9/30/98 14,610 15,197
10/31/98 14,487 15,146
11/30/98 14,561 15,231
12/31/98 14,536 15,231
1/31/99 14,750 15,379
2/28/99 14,622 15,296
3/31/99 14,609 15,349
4/30/99 14,600 15,344
5/31/99 14,441 15,201
6/30/99 14,140 14,911
7/31/99 14,085 14,894
8/31/99 13,782 14,552
9/30/99 13,639 14,456
10/31/99 13,428 14,109
11/30/99 13,561 14,327
12/31/99 13,375 14,087
</TABLE>
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
- 39 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AA continue to offer only two to five basis points additional yield compared to
similar insured bonds. This means there is very little incentive for buyers of
investment-grade bonds to settle for anything less than AAA-rated insured
bonds. The exception is hospital revenue bonds. The spread between insured and
uninsured hospital bonds, particularly those rated BBB, has increased.
Most of the activity in the Insured Municipal Bond Fund during 1999 was tax
swapping, that is, I took advantage of lower prices by simultaneously purchas-
ing and selling similar bonds. Thus, the Fund maintained its positions while
realizing losses to offset current and future taxable gains. I plan to continue
to realize losses, and I hope to use them against gains, in 2000.
Stephen C. Bauer
- ------------------------------------------------------------------------------
Stephen C. Bauer joined SAFECO in 1971 as a fixed-income analyst. He became a
fund manager with the inception of the SAFECO Municipal Bond Fund in 1981, and
is President of SAFECO Asset Management Company. Bauer holds a BS in
microbiology and an MBA from the University of Washington.
HIGHLIGHTS
<TABLE>
<S> <C>
Current Yield (30-day)........ 4.93%
Weighted Average Maturity..... 24.1 years
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE Percent of
HOLDINGS Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Prince William County Authority Water and Sewer Systems Revenue............ 4.4%
Honolulu City and County Wastewater System Revenue......................... 4.4
Washington Convention Center Authority Dedicated Tax Revenue............... 4.4
Gulf Environment Services, Inc. Water and Sewer Revenue.................... 3.8
Murray City Hospital Revenue (IHC Health Service, Inc.).................... 3.6
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE Percent of
STATES Net Assets
- --------------------------------------------------------------------------------
<S> <C>
Washington.................................................................. 15%
Massachusetts............................................................... 12
Pennsylvania................................................................ 8
California.................................................................. 6
Alabama..................................................................... 6
</TABLE>
<TABLE>
<CAPTION>
Credit Rating Distribution
As a Percent of Net Assets
- -------------------------------------------------------------------------------
<S> <C>
[PIE CHART]
Municipal Bonds:
1) AAA 96%
2) Cash & Other: 4
---
100%
</TABLE>
- 40 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Insured Municipal Bond Fund
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
MUNICIPAL BONDS* - 95.9%
Alabama - 6.0%
$ 600 + Alabama Agriculture and Mechanical University Revenue 5.50%, due
11/01/20 [MBIA] (Prerefunded
11/01/05 @ 102).............................................. $ 628
750 Jefferson County Sewer Revenue 5.70%, due 2/01/20 [FGIC]........ 721
Arizona - 4.4%
1,000 Health Facilities Authority Revenue Pooled Loan Program
5.60%, due 10/01/15 [FGIC].................................... 1,000
California - 6.3%
385 Fresno Sewer System Revenue 4.50%, due 9/01/23 [AMBAC].......... 305
600 Los Angeles County Sanitation District Financing Authority Revenue
(Capital Projects) 5.25%, due 10/01/19 [MBIA]................... 551
650 Los Angeles Wastewater System Revenue
4.70%, due 11/01/19 [FGIC]...................................... 544
District of Columbia - 4.4%
1,250 Washington Convention Center Authority Dedicated Tax Revenue 4.75%,
due 10/01/28 [AMBAC]............................................ 982
Florida - 3.8%
1,000 Gulf Environment Services, Inc. Water and Sewer Revenue
5.00%, due 10/01/27 [MBIA]...................................... 843
Hawaii - 4.4%
1,300 Honolulu City and County Wastewater System Revenue 4.50%, due
7/01/28 [FGIC].................................................. 984
Illinois - 4.5%
1,000 Health Facilities Authority Revenue Decatur Hospital Project
5.60%, due 11/15/24 [MBIA].................................... 1,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
Indiana - 2.9%
$ 100 + Indiana Municipal Power Agency Power Supply System Revenue
6.125%, due 1/01/13 [MBIA] (Escrowed to Maturity).............. $107
250 Indiana State Office Building Commission Capital Complex Revenue
5.25%, due 7/01/15 [AMBAC]...................................... 229
350 Indianapolis Gas Utility Revenue 5.375%, due 6/01/21 [FGIC]..... 317
Iowa - 1.0%
250 Marshalltown Pollution Control Revenue (Iowa Electric Light and
Power Co. Project) 5.50%, due 11/01/23 [MBIA]................... 227
Massachusetts - 12.3%
750 Massachusetts Bay Transportation Authority Revenue
5.00%, due 3/01/27 [FGIC]....................................... 630
600 Massachusetts Housing Finance Agency Housing Revenue 6.20%, due
7/01/38 [AMBAC]................................................. 602
850 Massachusetts Turnpike Authority Metropolitan Highway System Revenue
5.125%, due 1/01/23 [MBIA]...................................... 740
1,000 Massachusetts Water Resources Authority Revenue 4.75%, due 8/01/37
[FSA]........................................................... 775
Michigan - 2.8%
600 + Huron Valley School District General Obligation 5.75%, due 5/01/22
[FGIC] (Prerefunded 5/01/07 @ 100).............................. 627
Minnesota - 1.3%
350 Minneapolis and St. Paul Housing and Redevelopment Authority Health
Care System Revenue (HealthSpan) 4.75%, due 11/15/18 [AMBAC].... 292
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 41 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO INSURED MUNICIPAL BOND FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
New York - 3.5%
$ 900 Long Island Power Authority Electric System Revenue 5.125%, due
12/01/22 [FSA]............................................... $ 786
North Carolina - 0.5%
125 North Carolina Eastern Municipal Power Agency Power System Revenue
5.50%, due 1/01/17 [FGIC]....................................... 119
Pennsylvania - 7.7%
1,000 Allegheny County Hospital Development Authority Revenue (Catholic
Health East) 4.875%, due 11/15/26
[AMBAC]......................................................... 800
445 Centre County University Area Joint Authority Sewer Revenue
4.75%, due 11/01/20 [MBIA]...................................... 364
650 Pittsburgh Water and Sewer Authority Revenue 4.75%, due 9/01/16
[FGIC].......................................................... 553
South Carolina - 3.6%
1,000 Piedmont Municipal Power Agency Electric Revenue
4.75%, due 1/01/25 [MBIA]....................................... 795
Texas - 3.9%
750 Austin Combined Utility Revenue 4.25%, due 5/15/28 [MBIA]....... 543
250 Harris County Toll Road Unlimited Tax Revenue
5.50%, due 8/15/21 [FGIC]....................................... 231
10 + Lower Colorado River Authority Junior Lien Revenue
5.625%, due 1/01/17 [FSA] (Prerefunded 1/01/15 @ 100)............ 10
95 Sabine River Authority Pollution Control Revenue (Texas Utilities
Electric Co. Project) 6.55%, due 10/01/22 [FGIC]................. 96
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
Utah - 3.6%
$1,000 Murray City Hospital Revenue (IHC Health Service, Inc.) 4.75%, due
5/15/20 [MBIA].............................................. $ 805
Virginia - 4.4%
1,240 Prince William County Authority Water and Sewer Systems Revenue
4.75%, due 7/01/29 [FGIC]....................................... 988
Washington - 14.6%
700 CDP-King County III Lease Revenue (King Street Center Project)
5.25%, due 6/01/26 [MBIA]....................................... 607
1,000 Central Puget Sound Regional Transportation Authority Motor Vehicle
Tax
4.75%, due 2/01/28 [FGIC]....................................... 792
100 King County Public Hospital District #1 Hospital Facilities Revenue
(Valley Medical Center) 5.50%, due 9/01/17 [AMBAC]............... 94
250 + Richland Water and Sewer Improvement Revenue 5.625%, due 4/01/12
[MBIA] (Prerefunded 4/01/03 @ 101).............................. 259
530 Snohomish County Public Utility District #1 Electric Revenue 5.50%,
due 1/01/20 [FGIC].............................................. 489
900 Washington Health Care Facilities Authority Revenue (Swedish
Hospital System) 5.25%, due 11/15/26 [AMBAC].................... 765
250 Yakima-Tieton Irrigation District Revenue
6.20%, due 6/01/19 [FSA]........................................ 252
------
TOTAL MUNICIPAL BONDS.................................................. 21,452
------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 42 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO INSURED MUNICIPAL BOND FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
CASH EQUIVALENTS - 2.8%
Investment Companies
$ 631 Federated Tax-Exempt Money Market Fund, Inc................... $ 631
-------
TOTAL CASH EQUIVALENTS..................................................... 631
-------
TOTAL INVESTMENTS - 98.7%............................................... 22,083
Other Assets, less Liabilities............................................. 281
-------
NET ASSETS............................................................. $22,364
-------
-------
</TABLE>
- --------------------------------------------------------------------------------
+Prerefunded bonds are collateralized by securities (generally U.S. Treasury
securities) held in an irrevocable trust in an amount sufficient to pay
interest and principal.
*The provider of the guarantee of timely payment of both principal and interest
is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio and the percentage of the portfolio
they guarantee at the period end are as follows:
<TABLE>
<S> <C>
Municipal Bond Investors Assurance Corp. [MBIA].......................... 34.8%
Financial Guaranty Insurance Corp. [FGIC]................................ 37.7
AMBAC Indemnity Corp. [AMBAC]............................................ 19.0
Financial Security Assurance, Inc. [FSA]................................. 8.5
-------
100.0%
-------
-------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 43 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO Money Market Fund
June 30, 1999
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[PHOTO OF NAOMI URATA]
NAOMI URATA
The SAFECO Money Market Fund outpaced the average taxable money mar-
ket fund for the fourth quarter and the year 1999. The 12-month return
on the Fund was significantly higher than the 2.7% yearly increase in
the Consumer Price Index as well.
Our above-average performance is mostly attributable to shortening the av-
erage maturity of the Fund and holding "floaters." (See discussion below.)
Facing the risk that the Fed might raise short-term interest rates, I sig-
nificantly shortened the average maturity of the Fund from a high of 88 days
in April to 43 days at year-end. Indeed, the Fed raised rates three times dur-
ing the year from 4.75% to 5.50%, most recently in November. Being shorter
than the 53-day maturity of the average money fund reported by IBC Financial
Data has enabled me to capture higher rates a bit sooner than my peers. For
example, three-month commercial paper rates rose from a low of 4.73% in April
to 5.75% at year-end. Very close to Y2K, I was able to reinvest in commercial
paper at yields in the 6% range.
I bought several corporate floaters that change yields as rates rise. The
Fund also owns several taxable municipal seven-day floaters that are even more
sen-sitive to rate changes, and yield 10 to 25 basis points higher than
similarly rated 30-day commercial paper. At year-end, rates on our taxable
municipals spiked as high as 7.85%, albeit only for a week. These investments
are particularly favorable in a Fedtightening environment, as they capture any
rate in-creases within seven days.
As the economy continues at a strong pace with low unemploy-
HIGHLIGHTS
<TABLE>
<CAPTION>
Average Annual Total Return
for the periods ended December 31, 1999 QUARTER 1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C> <C>
SAFECO Money Market Fund........................ 1.28% 4.65% 4.94% 4.76%
Lipper, Inc. (Money Market Funds)............... 1.22% 4.49% 4.95% 4.80%
</TABLE>
Weighted Average Maturity 43 days
- 44 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ment and hints of rising inflation, the Fed is likely to raise rates again. In
anticipation, the market has already priced 0.5% of tightening into short-term
rates. I will maintain a short average maturity until I see signs that rates
have stabilized, and will continue to seek yield while working to maintain
safety in volatile market conditions.
Naomi Urata
- --------------------------------------------------------------------------------
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 Manage-
ment from Yale University and is a Chartered Financial Analyst.
PORTFOLIO OF INVESTMENTS
SAFECO Money Market Fund
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
CERTIFICATES OF DEPOSIT - 4.2%
Banks (Foreign) - 4.2%
$10,000 Deutsche Bank 5.13%, due 4/20/00............................$ 9,998
------
TOTAL CERTIFICATES OF DEPOSIT............................................ 9,998
------
COMMERCIAL PAPER - 33.7%
Automobiles - 1.2%
3,000 Ford Motor Credit Co. 6.39%, due 1/07/00.......................2,998
Consumer Finance - 6.4%
11,000 Aristar, Inc.
5.85%, due 2/04/00............................................10,943
4,500 Countrywide Funding Corp.
6.18%, due 1/05/00.............................................4,498
Financial (Diversified) - 16.6%
6,000 Apreco
6.07%, due 1/19/00.............................................5,984
1,200 Apreco
7.00%, due 1/18/00.............................................1,196
5,000 Finova Capital
6.00%, due 1/28/00.............................................4,979
6,400 Heller Financial, Inc.
6.03%, due 2/03/00.............................................6,367
4,000 Moat Funding LLC
6.00%, due 2/10/00.............................................3,975
4,450 Moat Funding LLC
6.10%, due 1/31/00.............................................4,429
1,000 Moat Funding LLC
6.80%, due 1/13/00...............................................998
5,000 PHH Corporation
6.25%, due 1/10/00.............................................4,994
5,000 PHH Corporation
6.25%, due 1/13/00.............................................4,991
2,000 PHH Corporation
6.25%, due 1/25/00.............................................1,992
Retail (General Merchandise) - 4.2%
5,000 Sears Roebuck Acceptance Corp.
6.05%, due 1/14/00.............................................4,991
</TABLE>
- 45 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO MONEY MARKET FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
$ 5,000 Sears Roebuck Acceptance Corp.
6.15%, due 1/21/00..........................................$ 4,985
Telecommunications (Long Distance) - 2.1%
5,000 MCI Capital Corp. 6.55%, due 1/26/00...........................4,979
Trucks & Parts - 3.2%
5,700 Cooperative Association of Tractor Dealers
6.60%, due 1/06/00.............................................5,697
1,000 Cooperative Association of Tractor Dealers
6.90%, due 1/21/00...............................................997
1,000 Cooperative Association of Tractor Dealers
7.15%, due 1/06/00...............................................999
------
TOTAL COMMERCIAL PAPER...................................................80,992
------
CORPORATE BONDS - 44.8%
Banks (Major Regional) - 4.8%
4,000 MBNA America Bank
5.51%, due 4/13/00
Put Date 1/13/00...............................................3,999
2,500 MBNA Corp.
6.42%, due 3/09/00.............................................2,499
5,000 MBNA Corp.
6.695%, due 9/01/00
Put Date 3/01/00...............................................5,006
Banks (Regional) - 5.0%
12,000 American Express Centurion Bank
5.70%, due 4/24/00
Put Date 1/01/00..............................................12,000
Consumer Finance - 4.4%
1,630 Countrywide Funding Corp. 5.62%, due 10/16/00..................1,619
500 Countrywide Funding Corp.
7.32%, due 8/15/00...............................................504
5,000 Countrywide Home Loans, Inc. 5.195%, due 1/11/00...............5,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$ 3,460 Homeside Lending, Inc. 6.875%, due 5/15/00.................$ 3,476
Financial (Diversified) - 8.0%
3,500 Finova Capital Corp. 6.375%, due 10/15/00.....................3,493
1,665 Finova Capital Corp. 8.00%, due 2/01/00.......................1,667
2,000 Heller Financial, Inc. 5.625%, due 3/15/00....................2,002
1,000 Heller Financial, Inc. 6.50%, due 5/15/00.....................1,005
11,000 # Textron Financial Corp. (144A) 5.92%, due 5/12/00
Put Date 1/01/00.............................................11,000
Health Care (Specialized Services) - 2.0%
4,700 Everett Clinic
6.95%, due 12/01/21
Put Date 1/06/00..............................................4,700
Homebuilding - 2.9%
6,933 Summer Station Apartments, LLC 6.49%, due 6/01/19
Put Date 1/05/00..............................................6,933
Insurance (Life & Health) - 4.6%
11,000 First Allamerica Financial 6.235%, due 8/05/04
Put Date 2/03/00.............................................11,000
Investment Banking & Brokerage - 13.1%
3,500 # Goldman Sachs Group, L.P. (144A) 5.15%, due 4/19/00.........3,500
8,000 # Goldman Sachs Group, L.P. (144A) 6.20125%, due 1/12/01
Put Date 1/15/00..............................................8,000
4,000 Lehman Brothers Holdings, Inc. 6.15%, due 3/15/00.............4,004
8,000 Lehman Brothers Holdings, Inc. 6.595%, due 5/23/01
Put Date 1/23/00..............................................8,000
8,100 Morgan Stanley Dean Witter Co. 5.61125%, due 3/13/01
Put Date 12/12/00.............................................8,100
-----
TOTAL CORPORATE BONDS..................................................107,507
-----
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 46 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO MONEY MARKET FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
MUNICIPAL BONDS - 12.3%
Health Care (Diversified) - 1.6%
$ 100 Bell County Health Facilities Development Revenue
6.50%, due 7/01/00
Put Date 1/06/00...........................................$ 100
150 Maury County Health and Educational Facilities Board
Healthcare Revenue 6.50%, due 12/01/00 Put Date 1/06/00.........150
3,600 New Hampshire Business Finance Authority Revenue 6.85%, due 6/01/28
Put Date 1/06/00..............................................3,600
Health Care (Long-Term Care) - 5.4%
3,150 Bowie Assisted Living 7.90%, due 7/01/23 Put Date 1/05/00.... 3,150
200 Maryland Health and Higher Education Facilities Authority Revenue
6.80%, due 7/01/27
Put Date 1/06/00............................................... 200
2,085 Maryland Health and Higher Education Facilities Authority Revenue
7.85%, due 1/01/28
Put Date 1/05/00............................................. 2,085
2,600 Maryland Health and Higher Education Facilities Authority Revenue
7.85%, due 7/01/29
Put Date 1/05/00............................................. 2,600
4,900 Village Green Finance Co. 6.49%, due 11/01/22 Put Date 1/05/00.....
4,900
Homebuilding - 1.2%
1,000 Breckenridge Terrace LLC Tax Revenue
5.8775%, due 5/01/39 Put Date 1/06/00........................ 1,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<C> <S>
$ 2,000 Eagle County Colorado Housing Facilities Revenue
5.878%, due 5/01/39
Put Date 1/06/00........................................... $ 2,000
Retail (General Merchandise) - 3.3%
8,000 Racetrac Capital, LLC 6.49%, due 4/01/18
Put Date 1/05/00.............................................. 8,000
Services (Commercial & Consumer) - 0.8%
2,000 Wake Forest University 6.49%, due 7/01/17 Put Date 1/05/00.... 2,000
------
TOTAL MUNICIPAL BONDS................................................... 29,785
------
CASH EQUIVALENTS - 4.6%
Investment Companies
11,147 J.P. Morgan Institutional Prime Money Market................ 11,147
-------
TOTAL CASH EQUIVALENTS.................................................. 11,147
-------
TOTAL INVESTMENTS - 99.6%.............................................. 239,429
Other Assets, less Liabilities........................................... 1,030
-------
NET ASSETS............................................................ $240,459
-------
-------
</TABLE>
- --------------------------------------------------------------------------------
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.
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 12/31/99. These rates change periodically based on
specified market rate or indices.
#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." The total cost of such securities is $22,500,000 and the
total value is 9.4% of net assets.
SEE NOTES TO FINANCIAL STATEMENTS
- 47 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO Tax-Free Money Market Fund
December 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[PHOTO OF MARY V. METASTASIO]
MARY V. METASTASIO
The SAFECO Tax-Free Money Market Fund began the last quarter of 1999
with a seven-day average yield of 3.05% and ended it yielding 3.80%. For
the year, the Fund compared well, outperforming its peers.
The market, which was characterized by rising rates was friendly to
our portfolio with its heavy weighting in very short securities. Vari-
able rate demand options, or VRDOs, made up 71% of our portfolio at year end,
and their short maturity allows us to capture higher rates sooner than our
peers.
The fourth quarter was quieter than the third in the tax-exempt
money market. We experienced some calls in the longer portion of our portfolio,
with little new-issuance activity. That is reflected in the make-up of our Fund.
At year-end, 71% of the
HIGHLIGHTS
<TABLE>
<CAPTION>
Average Annual Total Return
for the periods ended December 31, 1999 Quarter 1 Year 5 Year 10 Year
----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SAFECO Tax-Free Money Market Fund 0.76% 2.77% 3.11% 3.27%
Lipper, Inc. (Tax-Exempt Money Market Funds) 0.75% 2.68% 3.03% 3.17%
</TABLE>
<TABLE>
<S> <C>
SAFECO Tax-Free Money Market Fund*
Actual Yield 3.80 %
Tax-Equivalent Yield 15% 4.47 %
Tax-Equivalent Yield 28% 5.28 %
Tax-Equivalent Yield 31% 5.51 %
Tax-Equivalent Yield 36% 5.94 %
Tax-Equivalent Yield 39.6% 6.29 %
Three-Month Treasury Bill**
Taxable Yield 5.19 %
</TABLE>
* Represents the SAFECO Tax-Free Money Market Fund actual yield on December
31, 1999, and related tax-equivalent yields assuming various shareholder
tax brackets. Tax-equivalent yield comparisions may vary with market
conditions.
** Represents the Three-Month Treasury Bill yield on December 31, 1999.
<TABLE>
<S> <C>
Weighted Average Maturity 32 Days
</TABLE>
- 48 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fund was invested in variable rate demand option bonds (VRDOs), 26% in put
bonds, and 3% in notes. We held no commercial paper as of that date. These
figures represent an increase in VRDOs, and a decrease in both put bonds and
commercial paper.
So what does the future have in store for the SAFECO Tax-Free Money Market
Fund? I plan to bring the percentage of VRDOs down to about two-thirds of the
Fund, as is our norm, with corresponding increases in the longer money market
products, such as put bonds, notes and commercial paper. January is always a
tight month in terms of supply, and a strong month in terms of demand as the
market is normally flush with cash from coupon payments and maturing paper to
be reinvested, and very few places to put it. After that supply/demand imbal-
ance is resolved, and Y2K fears have fully subsided, normal issuance and re-
marketing activity will resume and we should return to our usual portfolio
structure.
Mary V. Metastasio
- --------------------------------------------------------------------------------
Mary V. Metastasio joined SAFECO's investment department in 1985 as a securi-
ties analyst and began managing the SAFECO Tax-Free Money Market Fund in 1987.
She holds a BA in Dramatic Art from Whitman College and an MBA from the Univer-
sity of Washington. Metastasio is chairman of the National Federation of Munic-
ipal Analysts.
<TABLE>
<CAPTION>
PORTFOLIO OF INVESTMENTS
SAFECO Tax-Free Money Market Fund
As of December 31, 1999
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
MUNICIPAL BONDS - 96.3%
Alaska - 3.1%
$ 2,385 Alaska Industrial Development and Export Authority Revenue
5.55%, due 7/01/01
Put Date 1/05/00........................................... $ 2,385
Arizona - 3.6%
1,000 Apache County Industrial Development Revenue (Tucson Electric Power
Co.) 5.65%, due 12/15/18
Put Date 1/05/00..............................................1,000
800 Pima County Industrial
Development Authority Revenue
(Tucson Electric Power Co.)
5.65%, due 12/01/22
Put Date 1/05/00................................................800
1,000 Tucson Industrial Development Authority Revenue (Tucson City Center
Parking) 5.125%, due 6/01/15
Put Date 1/06/00..............................................1,000
California - 3.1%
800 Regional Airports Improvement Revenue (American Airlines, Inc.)
4.80%, due 12/01/25
Put Date 1/01/00............................................... 800
200 Regional Airports Improvement Revenue (American Airlines, Inc.)
Series C 4.80%, due 12/01/24 Put Date 1/01/00.................. 200
200 Regional Airports Improvement Revenue (American Airlines, Inc.)
Series D 4.80%, due 12/01/24 Put Date 1/01/00.................. 200
800 Regional Airports Improvement Revenue (American Airlines, Inc.)
Series E
4.80%, due 12/01/24 Put Date 1/01/00........................... 800
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 49 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$ 400 Regional Airports Improvement Revenue (American Airlines, Inc.)
Series G 4.80%, due 12/01/24 Put Date 1/01/00.............. $ 400
District of Columbia - 1.3%
1,000 District of Columbia Revenue Supplemental Student Loan
4.75%, due 7/01/04
Put Date 7/01/00............................................. 1,000
Florida - 3.9%
2,000 Florida Housing Finance Agency Multifamily Housing Revenue
(Iona Lakes Project)
3.25%, due 4/01/04
Put Date 4/01/00............................................. 2,000
1,000 Putnam County Development Authority Pollution Control Revenue
3.80%, due 12/15/09
Put Date 6/15/00............................................. 1,000
Georgia - 0.1%
85 Marietta Housing Authority
Multifamily Revenue
3.20%, due 1/15/09
Put Date 1/15/00................................................ 85
Illinois - 18.8%
3,120 Chicago O'Hare International
Airport Revenue Series A
5.55%, due 1/01/15
Put Date 1/05/00............................................. 3,120
770 Chicago O'Hare International
Airport Revenue Series B
5.55%, due 1/01/15
Put Date 1/05/00............................................... 770
3,000 Illinois Development Finance
Authority Revenue (Sinai Community Institute Project)
5.62%, due 3/01/22
Put Date 1/05/00............................................. 3,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$ 1,170 Illinois Development Finance Authority Revenue (Countryside
Montessori Schools) 5.62%, due 6/01/17
Put Date 1/06/00........................................... $ 1,170
3,800 Illinois Health Facilities Authority Revenue (Swedish Covenant
Hospital)
5.70%, due 8/01/25
Put Date 1/05/00............................................. 3,800
2,700 Jackson-Union Regional
Port District Revenue
5.70%, due 4/01/24
Put Date 1/05/00............................................. 2,700
Iowa - 9.2%
3,800 Iowa Finance Authority Revenue (Wheaton Franciscan Services)
5.60%, due 8/15/24
Put Date 1/05/00............................................. 3,800
2,000 Iowa School Corporations
Warrant Certificates
4.00%, due 6/24/00........................................... 2,008
1,310 Polk County Hospital Equipment
and Improvement Revenue
5.55%, due 12/01/05
Put Date 1/05/00............................................. 1,310
Kentucky - 1.3%
1,000 Clark County Pollution
Control Revenue (Kansas City
Power and Light)
3.70%, due 10/15/14
Put Date 4/15/00............................................. 1,000
Louisiana - 2.6%
2,000 Louisiana Public Facilities Authority Revenue 5.47%, due 12/01/13
Put Date 1/13/00............................................. 2,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 50 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
Maryland - 0.4%
$ 300 Montgomery County Industrial Development Revenue (Information
Systems and Networks)
4.05%, due 4/01/14
Put Date 1/01/00............................................ $ 300
Missouri - 3.5%
2,100 Kansas City Industrial Development Authority Multifamily Housing
Revenue (Coach House II Project) 3.85%, due 12/01/15
Put Date 1/01/00............................................. 2,100
600 Kansas City Industrial Development Authority Multifamily Housing
Revenue (J.C. Nichols Co. Project) 3.85%, due 5/01/15
Put Date 1/01/00............................................... 600
Montana - 2.2%
1,705 Havre Industrial Development Revenue (Safeway, Inc. Projects)
4.10%, due 6/01/06
Put Date 6/01/00............................................. 1,705
Oklahoma - 2.5%
955 Oklahoma Water Resources Revenue Board State Loan Program
3.60%, due 9/01/32
Put Date 3/01/00............................................... 955
1,000 Oklahoma Water Resources Revenue Board State Loan Program Series A
3.60%, due 9/01/23
Put Date 3/01/00............................................. 1,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
Pennsylvania - 1.9%
$ 1,490 Washington County Authority Lease Revenue (Higher Education Pooled
Equipment Leasing Project)
5.55%, due 11/01/05
Put Date 1/05/00........................................... $ 1,490
South Carolina - 5.6%
1,295 South Carolina Jobs Economic Development Authority Revenue
(St. Francis Hospital)
4.80%, due 7/01/22
Put Date 1/01/00............................................. 1,295
3,000 York County Pollution Control Revenue
3.60%, due 9/15/14
Put Date 3/15/00............................................. 3,000
Tennessee - 4.4%
3,400 Hamilton County Industrial Development Revenue (Komatsu American
Manufacturing Corp.)
6.20%, due 11/01/05
Put Date 1/05/00............................................. 3,400
Texas - 11.8%
3,500 ABN AMRO Munitops Certificates Trust 5.68%, due 3/07/07
Put Date 1/05/00............................................. 3,500
300 Grapevine Industrial Development Revenue (American Airlines, Inc.)
Series B2 4.80%, due 12/01/24
Put Date 1/01/00............................................... 300
1,000 Harris County Housing Finance Corp. Multifamily Housing Revenue
(Arbor II, Ltd. Project)
4.00%, due 10/01/05
Put Date 10/01/00............................................ 1,000
200 Lone Star Airport Improvement Authority Revenue
(American Airlines, Inc.) Series B4
4.80%, due 12/01/14
Put Date 1/01/00............................................... 200
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 51 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO TAX-FREE MONEY MARKET FUND
As of December 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$ 700 Lone Star Airport Improvement Authority Revenue Series A1
4.80%, due 12/01/14
Put Date 1/01/00........................................... $ 700
200 Lone Star Airport Improvement Authority Revenue Series A3
4.80%, due 12/01/14
Put Date 1/01/00............................................... 200
800 North Central Texas Health Facilities Development
(Presbyterian Medical Center)
4.80%, due 12/01/15
Put Date 1/01/00............................................... 800
400 North Central Texas Health Facilities Development (Presbyterian
Medical Center) Series C
4.80%, due 12/01/15
Put Date 1/01/00............................................... 400
1,995 Sabine River Industrial Development Authority 3.45%, due 8/15/14
Put Date 2/15/00............................................. 1,995
Virginia - 3.2%
2,500 Harrisonburg Redevelopment and Housing Authority Multifamily
Housing Revenue
3.20%, due 2/01/26
Put Date 2/01/00............................................. 2,500
Washington - 11.2%
3,520 Richland Golf Enterprise Revenue
5.40%, due 12/01/21
Put Date 1/06/00............................................. 3,520
1,765 Washington State Housing Finance Commission Housing Revenue
(Pioneer Human Services)
4.85%, due 7/01/11
Put Date 1/06/00............................................. 1,765
1,260 Washington State Housing Finance Commission Revenue
(YMCA of Greater Seattle)
4.85%, due 7/01/11
Put Date 1/01/00............................................. 1,260
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------
<C> <S>
$ 2,120 Washington State Housing Finance Commission Revenue (YMCA Snohomish
County)
5.90%, due 8/01/19
Put Date 1/01/00........................................... $ 2,120
Wyoming - 2.6%
1,975 Rock Springs Industrial Development Revenue
(Safeway, Inc. Project)
3.80%, due 3/01/02
Put Date 3/01/00............................................. 1,975
------
TOTAL MUNICIPAL BONDS.................................................. 74,428
------
TOTAL INVESTMENTS - 96.3%.............................................. 74,428
Other Assets, less Liabilities.......................................... 2,895
------
NET ASSETS............................................................ $77,323
------
------
</TABLE>
- --------------------------------------------------------------------------------
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.
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 12/31/99. These rates change periodically based on
specified market rate or indices.
SEE NOTES TO FINANCIAL STATEMENTS
- 52 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page left blank intentionally.
- 53 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
As of December 31, 1999
<TABLE>
<CAPTION>
SAFECO SAFECO SAFECO SAFECO
(In Thousands, Except Intermediate-Term GNMA High-Yield Managed
Per-Share Amounts) U.S. Treasury Fund Fund Bond Fund Bond Fund
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Investments, at Cost $21,103 $40,243 $78,293 $8,541
======= ======= ======= ======
Investments, at Value $20,551 $39,297 $75,617 $8,203
Receivables
Investment Securities Sold -- -- -- --
Trust Shares Sold 61 9 79 --
Interest 282 264 1,511 97
Other 1 -- 26 2
------- ------- ------- ------
Total Assets 20,895 39,570 77,233 8,302
Liabilities
Payables
Trust Shares Redeemed 2 33 786 --
Notes Payable -- -- -- --
Dividends 37 55 199 18
Investment Advisory Fees 11 20 39 4
Transfer Agent Fees 5 7 14 2
Other 4 6 9 --
------- ------- ------- ------
Total Liabilities 59 121 1,047 24
------- ------- ------- ------
Net Assets $20,836 $39,449 $76,186 $8,278
======= ======= ======= ======
No-Load Class:
Net Assets $19,092 $39,449 $73,004 $6,781
Trust Shares Outstanding 1,912 4,335 8,711 858
------- ------- ------- ------
Net Asset Value, Offering
Price, and Redemption Price
Per Share $ 9.99 $ 9.10 $ 8.38 $ 7.90
======= ======= ======= ======
Class A:
Net Assets $ 958 -- $ 1,583 $ 573
Trust Shares Outstanding 96 189 73
------- ------- ------
Net Asset Value and
Redemption Price Per Share $ 10.00 $ 8.38 $ 7.90
======= ======= ======
Maximum Offering Price Per
Share (Net Asset Value Plus
Sales Charge of 4.5%) $ 10.47 $ 8.77 $ 8.27
======= ======= ======
Class B:
Net Assets $ 786 -- $ 1,599 $ 924
Trust Shares Outstanding 78 191 117
------- ------- ------
Net Asset Value and Offering
Price Per Share * $ 9.99 $ 8.38 $ 7.89
======= ======= ======
</TABLE>
- --------------------------------------------------------------------------------
* For Class B shares, the redemption price per share may be lower as a result
of applying contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS
- 54 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SAFECO SAFECO SAFECO SAFECO SAFECO
California Tax-Free Municipal Washington State Intermediate-Term Insured Municipal
Income Fund Bond Fund Municipal Bond Fund Municipal Bond Fund Bond Fund
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$90,766 $458,045 $7,522 $14,280 $23,636
======= ======== ====== ======= =======
$85,650 $465,200 $7,161 $14,406 $22,083
1,674 -- -- -- --
15 22 -- -- --
1,622 8,717 132 244 364
-- -- -- 7 --
------- -------- ------ ------- -------
88,961 473,939 7,293 14,657 22,447
55 356 -- 2 19
1,425 -- -- -- --
100 798 24 32 50
41 207 3 7 10
7 27 -- 1 1
12 33 -- 8 3
------- -------- ------ ------- -------
1,640 1,421 27 50 83
------- -------- ------ ------- -------
$87,321 $472,518 $7,266 $14,607 $22,364
======= ======== ====== ======= =======
$85,782 $470,267 $6,748 $14,607 $22,364
7,771 36,472 699 1,396 2,243
------- -------- ------ ------- -------
$ 11.04 $ 12.89 $ 9.65 $ 10.46 $ 9.97
======= ======== ====== ======= =======
$ 740 $ 929 $ 191 -- --
67 72 20
------- -------- ------
$ 11.05 $ 12.90 $ 9.65
======= ======== ======
$ 11.57 $ 13.51 $10.10
======= ======== ======
$ 799 $ 1,322 $ 327 -- --
72 103 34
------- -------- ------
$ 11.04 $ 12.88 $ 9.66
======= ======== ======
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
- 55 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
As of December 31, 1999
<TABLE>
<CAPTION>
SAFECO SAFECO
(In Thousands, Except Money Market Tax-Free Money
Per-Share Amounts) Fund Market Fund
- -------------------------------------------------------------------------------
<S> <C> <C>
Assets
Investments, at Cost $239,429 $74,428
======== =======
Investments, at Value $239,429 $74,428
Receivables
Investment Securities Sold -- 2,835
Trust Shares Sold 400 2
Interest 1,699 543
Other 43 --
-------- -------
Total Assets 241,571 77,808
Liabilities
Payables
Trust Shares Redeemed 863 381
Notes Payable -- 50
Dividends 43 17
Investment Advisory Fees 109 31
Transfer Agent Fees 66 5
Other 31 1
-------- -------
Total Liabilities 1,112 485
-------- -------
Net Assets $240,459 $77,323
======== =======
No-Load Class:
Net Assets $235,926 $77,323
Trust Shares Outstanding 235,926 77,323
-------- -------
Net Asset Value, Offering Price, and
Redemption Price Per Share $ 1.00 $ 1.00
======== =======
Class A:
Net Assets $ 3,554 --
Trust Shares Outstanding 3,554
--------
Net Asset Value, Offering Price, and
Redemption Price Per Share $ 1.00
========
Maximum Offering Price Per Share (Net Asset
Value Plus Sales Charge of 4.5%) -- --
========
Class B:
Net Assets $ 979 --
Trust Shares Outstanding 979
--------
Net Asset Value, Offering Price, and
Redemption Price Per Share $ 1.00
========
</TABLE>
- --------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
- 56 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
SAFECO SAFECO SAFECO SAFECO
Intermediate-Term GNMA High-Yield Managed
(In Thousands) U.S. Treasury Fund Fund Bond Fund Bond Fund
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Investment Income
Interest $1,376 $2,911 $7,373 $ 481
Dividends -- -- 210 --
------ ------ ------ -----
Total Investment Income 1,376 2,911 7,583 481
Expenses
Investment Advisory 123 247 482 40
Transfer Agent 56 82 167 15
Fund Accounting and
Administration 13 25 48 5
Shareholder Service-Class
A 2 -- 5 1
-Class B 2 -- 5 2
Distribution-Class B 6 -- 14 6
Legal and Auditing 20 22 25 19
Custodian 3 6 8 3
Reports to Shareholders 9 13 33 7
Trustees 6 6 6 6
Interest -- -- 13 --
Other 21 13 37 20
------ ------ ------ -----
Total Expenses Before
Reimbursement 261 414 843 124
Expense Reimbursement (42) (16) (41) (40)
------ ------ ------ -----
Total Expenses After
Reimbursement 219 398 802 84
------ ------ ------ -----
Net Investment Income 1,157 2,513 6,781 397
Net Realized and
Unrealized Gain (Loss) on
Investments
Net Realized Gain (Loss)
on Investments (33) (857) (1,769) (274)
Net Change in Unrealized
Appreciation
(Depreciation) (1,619) (1,604) (2,107) (441)
------ ------ ------ -----
Net Gain (Loss) on
Investments (1,652) (2,461) (3,876) (715)
------ ------ ------ -----
Net Change in Net Assets
Resulting from Operations $ (495) $ 52 $2,905 $(318)
====== ====== ====== =====
- ------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 57 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
SAFECO SAFECO
California SAFECO Washington State
Tax-Free Municipal Municipal
(In Thousands) Income Fund Bond Fund Bond Fund
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income
Interest $ 5,849 $ 29,611 $ 428
Dividends -- -- --
-------- -------- -----
Total Investment Income 5,849 29,611 428
Expenses
Investment Advisory 553 2,359 42
Transfer Agent 87 318 4
Fund Accounting and Administration 63 164 4
Shareholder Service-Class A 2 2 1
-Class B 2 4 1
Distribution-Class B 7 11 2
Legal and Auditing 29 64 19
Custodian 11 29 2
Reports to Shareholders 30 107 1
Trustees 6 8 6
Interest 1 3 --
Other 21 107 4
-------- -------- -----
Total Expenses Before Reimbursement 812 3,176 86
Expense Reimbursement -- -- (10)
-------- -------- -----
Total Expenses After Reimbursement 812 3,176 76
-------- -------- -----
Net Investment Income 5,037 26,435 352
Net Realized and Unrealized Gain
(Loss) on Investments
Net Realized Gain (Loss) on
Investments (1,041) (1,564) (6)
Net Change in Unrealized
Appreciation (Depreciation) (14,076) (57,414) (837)
-------- -------- -----
Net Gain (Loss) on Investments (15,117) (58,978) (843)
-------- -------- -----
Net Change in Net Assets Resulting
from Operations $(10,080) $(32,543) $(491)
======== ======== =====
- -------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 58 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SAFECO SAFECO SAFECO
Intermediate-Term Insured SAFECO Tax-Free
Municipal Municipal Money Market Money Market
Bond Fund Bond Fund Fund Fund
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 749 $ 1,234 $12,532 $2,703
-- -- -- --
----- ------- ------- ------
749 1,234 12,532 2,703
76 127 1,166 393
11 20 693 58
9 14 127 48
-- -- -- --
-- -- -- --
-- -- -- --
19 20 38 25
2 4 21 8
5 8 89 22
6 6 7 6
-- -- 1 --
9 11 91 20
----- ------- ------- ------
137 210 2,233 580
(9) (6) (338) (30)
----- ------- ------- ------
128 204 1,895 550
----- ------- ------- ------
621 1,030 10,637 2,153
28 1 -- --
(777) (2,928) -- --
----- ------- ------- ------
(749) (2,927) -- --
----- ------- ------- ------
$(128) $(1,897) $10,637 $2,153
===== ======= ======= ======
- ---------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 59 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SAFECO Intermediate-Term
U.S. Treasury Fund SAFECO GNMA Fund
------------------------ ------------------------
Year Ended December 31 Year Ended December 31
(In Thousands) 1999 1998 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net Investment Income $ 1,157 $ 1,045 $ 2,513 $ 2,333
Net Realized Gain (Loss)
on Investments (33) 4 (857) 986
Net Change in Unrealized
Appreciation
(Depreciation) (1,619) 648 (1,604) (717)
------------ ------------ ----------- -----------
Net Change in Net Assets
Resulting from
Operations (495) 1,697 52 2,602
Dividends to Shareholders
from Net Investment
Income
No-Load Class (1,077) (992) (2,513) (2,333)
Class A (44) (26) -- --
Class B (36) (27) -- --
Net Realized Gain on
Investments
No-Load Class -- -- -- --
Class A -- -- -- --
Class B -- -- -- --
------------ ------------ ----------- -----------
Total (1,157) (1,045) (2,513) (2,333)
Net Trust Share
Transactions
No-Load Class (3,442) 7,754 (235) 3,704
Class A 188 450 -- --
Class B 60 331 -- --
------------ ------------ ----------- -----------
Total (3,194) 8,535 (235) 3,704
------------ ------------ ----------- -----------
Total Change in Net
Assets (4,846) 9,187 (2,696) 3,973
Net Assets at Beginning
of Period 25,682 16,495 42,145 38,172
------------ ------------ ----------- -----------
Net Assets at End of
Period $ 20,836 $ 25,682 $ 39,449 $ 42,145
============ ============ =========== ===========
- --------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 60 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SAFECO
SAFECO SAFECO California SAFECO
High-Yield Managed Tax-Free Municipal
Bond Fund Bond Fund Income Fund Bond Fund
- ------------------------ ------------------------ ----------------------- ------------------------
Year Ended December 31 Year Ended December 31 Year Ended December 31 Year Ended December 31
1999 1998 1999 1998 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 6,781 $ 6,383 $ 397 $ 278 $ 5,037 $ 4,928 $ 26,435 $ 25,941
(1,769) (57) (274) 237 (1,041) 3,251 (1,564) 8,894
(2,107) (2,997) (441) (56) (14,076) (1,778) (57,414) (3,043)
- ----------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
2,905 3,329 (318) 459 (10,080) 6,401 (32,543) 31,792
(6,470) (6,205) (346) (262) (4,966) (4,878) (26,332) (25,876)
(178) (127) (19) (9) (38) (24) (46) (33)
(133) (51) (32) (7) (33) (26) (57) (32)
-- -- -- (192) -- (3,208) -- (8,852)
-- -- -- (8) -- (19) -- (16)
-- -- -- (15) -- (27) -- (22)
- ----------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
(6,781) (6,383) (397) (493) (5,037) (8,182) (26,435) (34,831)
(3,042) 11,564 637 2,153 (11,817) 25,835 (10,899) 39,941
(1,269) 2,818 311 151 189 232 96 557
332 1,041 470 412 4 436 118 884
- ----------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
(3,979) 15,423 1,418 2,716 (11,624) 26,503 (10,685) 41,382
- ----------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
(7,855) 12,369 703 2,682 (26,741) 24,722 (69,663) 38,343
84,041 71,672 7,575 4,893 114,062 89,340 542,181 503,838
- ----------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
$ 76,186 $ 84,041 $ 8,278 $ 7,575 $ 87,321 $ 114,062 $ 472,518 $ 542,181
=========== =========== =========== =========== ========== =========== =========== ===========
- ------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 61 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SAFECO
SAFECO Intermediate-Term
Washington State Municipal
Municipal Bond Fund Bond Fund
------------------------ ------------------------
Year Ended December 31 Year Ended December 31
(In Thousands) 1999 1998 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operations
Net Investment Income $ 352 $ 359 $ 621 $ 613
Net Realized Gain (Loss)
on Investments (6) 246 28 11
Net Change in Unrealized
Appreciation
(Depreciation) (837) (133) (777) 132
----------- ----------- ----------- -----------
Net Change in Net Assets
Resulting from Operations (491) 472 (128) 756
Dividends to Shareholders
from Net Investment Income
No-Load Class (333) (343) (621) (613)
Class A (9) (9) -- --
Class B (10) (7) -- --
Net Realized Gain on
Investments
No-Load Class -- (224) (28) (6)
Class A -- (6) -- --
Class B -- (7) -- --
----------- ----------- ----------- -----------
Total (352) (596) (649) (619)
Net Trust Share
Transactions
No-Load Class (177) 541 (103) 1,570
Class A 5 (149) -- --
Class B 114 12 -- --
----------- ----------- ----------- -----------
Total (58) 404 (103) 1,570
----------- ----------- ----------- -----------
Total Change in Net Assets (901) 280 (880) 1,707
Net Assets at Beginning of
Period 8,167 7,887 15,487 13,780
----------- ----------- ----------- -----------
Net Assets at End of Period $ 7,266 $ 8,167 $ 14,607 $ 15,487
=========== =========== =========== ===========
- --------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 62 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SAFECO SAFECO
Insured SAFECO Tax-Free
Municipal Money Market Money Market
Bond Fund Fund Fund
- -------------------- ----------------------------- ----------------------------
Year Ended Year Ended Year Ended
December 31 December 31 December 31
1999 1998 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 1,030 $ 881 $10,637 $ 9,987 $ 2,153 $ 2,362
1 430 -- -- -- --
(2,928) (121) -- -- -- --
- ------- ------- -------- -------- ------- -------
(1,897) 1,190 10,637 9,987 2,153 2,362
(1,030) (881) (10,421) (9,906) (2,153) (2,362)
-- -- (168) (57) -- --
-- -- (48) (24) -- --
-- (427) -- -- -- --
-- -- -- -- -- --
-- -- -- -- -- --
- ------- ------- -------- -------- ------- -------
(1,030) (1,308) (10,637) (9,987) (2,153) (2,362)
293 8,600 11,453 47,850 (134) 2,020
-- -- 1,368 1,649 -- --
-- -- 309 256 -- --
- ------- ------- -------- -------- ------- -------
293 8,600 13,130 49,755 (134) 2,020
- ------- ------- -------- -------- ------- -------
(2,634) 8,482 13,130 49,755 (134) 2,020
24,998 16,516 227,329 177,574 77,457 75,437
- ------- ------- -------- -------- ------- -------
$22,364 $24,998 $240,459 $227,329 $77,323 $77,457
======= ======= ======== ======== ======= =======
- ---------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 63 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. GENERAL
This financial report is on 11 of the SAFECO Mutual Funds. Each Fund is a
series of one of the following trusts listed below. Each trust is registered
under the Investment Company Act of 1940, as amended, as a diversified, open-
end management investment company.
SAFECO Taxable Bond Trust
SAFECO Intermediate-Term U.S. Treasury Fund
SAFECO GNMA Fund
SAFECO High-Yield Bond Fund
SAFECO Managed Bond Trust
SAFECO Managed Bond Fund
SAFECO Tax-Exempt Bond Trust
SAFECO California Tax-Free Income Fund
SAFECO Municipal Bond Fund
SAFECO Washington State Municipal Bond Fund
SAFECO Intermediate-Term Municipal Bond Fund
SAFECO Insured Municipal Bond Fund
SAFECO Money Market Trust
SAFECO Money Market Fund
SAFECO Tax-Free Money Market Fund
Effective September 30, 1996, the Intermediate-Term U.S. Treasury, Managed
Bond, California Tax-Free Income, Municipal Bond, Washington State Municipal
Bond, and Money Market Funds began issuing two classes of shares - Class A and
Class B shares. Effective January 31, 1997, the High-Yield Bond Fund also began
issuing Class A and Class B shares. Unlike the no-load class of shares (which
are sold directly to the shareholder with no associated sales and distribution
charges), these classes of shares are sold by financial advisors to sharehold-
ers and have associated sales and distribution charges. Each class of shares
represents an interest in the net assets of the fund.
In connection with issuing Class A and Class B shares, all of the above
mentioned funds (except the Money Market Fund) adopted a Plan of Distribution
("the Plan"). Under the Plan, Class A and Class B shares pay a service fee to
the distributor, SAFECO Securities Corp., for selling its shares at the annual
rate of .25% of the average daily net assets of the
- 64 -
<PAGE>
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- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Advisor Class. Class B shares also pay the distributor a distribution fee at
the annual rate of .75% of the average daily net assets of the Class B shares.
Under the Plan, the distributor uses the service fees primarily to compen-
sate persons selling Class A and Class B shares for providing ongoing services
and the maintenance of shareholder accounts. The distributor uses the distribu-
tion fees primarily to offset the commissions it pays to financial advisors for
selling Class B shares.
Subsequent Event. On January 18, 2000, the Board of Trustees voted to liq-
uidate and dissolve the SAFECO Washington State Municipal Bond Fund on March
31, 2000. Current shareholders may sell their shares or continue to hold them
until the liquidation date, when the then-current value of their investment
will be returned to them.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles.
Security Valuation. Bonds are stated on the basis of valuations provided by
a pricing service, which uses information with respect to transactions in
bonds, quotations from bond dealers, market transactions in comparable securi-
ties and various relationships between securities in determining value. When
valuations are not readily available, securities are valued at fair value as
determined in good faith by the Board of Trustees. Investments in equity secu-
rities are valued at the last reported sales price, unless there are no trans-
actions in which case they are valued at the last reported bid price. Invest-
ments in the money market funds 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. Secu-
rities purchased at par are valued at cost. All other securities in the money
market funds are valued at amortized cost, which approximates market value.
Other temporary investments purchased at par are valued at cost.
- 65 -
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
Security Transactions. Security transactions are recorded on the trade
date. The cost of the portfolios is the same for financial statement and Fed-
eral income tax purposes. Realized gains and losses from security transactions
are determined using the identified cost basis.
Securities Purchased on a When-Issued Basis. 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 earn-
ing interest on the settlement date. As commitments to purchase when-issued
securities become fixed, the Funds segregate liquid assets in an amount equal
to the total obligation.
Income Recognition. Bond premiums and original issue discounts are amor-
tized to either call or maturity dates. In the Tax-Exempt Bond Trust, market
discount on bonds purchased after April 30, 1993 is recorded as taxable income
at disposition. Interest is accrued on bonds and temporary investments daily.
The Managed Bond Fund has elected to amortize premiums on securities purchased
above par value. The funds in the Taxable Bond Trust have not elected to amor-
tize premiums on securities purchased above par value.
Dividends and Distributions to Shareholders. Net investment income is de-
clared as a dividend to shareholders of record as of the close of each busi-
ness day and payment is made as of the last business day of each month. Net
gains realized from security transactions, if any, are normally distributed to
shareholders at the end of December.
Income dividends and capital gain distributions are determined in accor-
dance with income tax regulation which may differ from generally accepted ac-
counting principles. These differences are primarily due to differing treat-
ments for wash sale deferrals. Accumulated net investment income and realized
gain/loss may include temporary financial reporting and tax basis differences
which will reverse in subsequent year.
Federal Income and Excise Taxes. Each Fund intends to comply with the re-
quirements of the Internal Revenue Code applicable to regulated investment
companies by distributing substantially all taxable income to their sharehold-
ers in a manner which results in no tax to the Funds. Therefore, no Federal
income or excise tax provision is required. In addi-
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NOTES TO FINANCIAL STATEMENTS
tion, the Tax-Exempt Bond Trust and the Tax-Free Money Market Fund intend to
satisfy conditions which will enable them to pay dividends which, for share-
holders, are exempt from Federal income taxes. Any portion of dividends repre-
senting net short-term capital gains, however, is not exempt and is treated as
taxable dividends for Federal income tax purposes.
Estimates. The preparation of financial statements in conformity with gen-
erally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the report-
ing period. Actual results could differ from those estimates.
3. INVESTMENT TRANSACTIONS
Following is a summary of investment transactions (excluding short-term
securities) during the year ended December 31, 1999:
<TABLE>
<CAPTION>
(In Thousands) Purchases Sales
----------------------------------------------------------
<S> <C> <C>
Intermediate-Term U.S. Treasury Fund $16,163 $ 18,918
GNMA Fund 55,368 55,292
High-Yield Bond Fund 54,727 55,379
Managed Bond Fund 12,400 11,302
California Tax-Free Income Fund 25,935 36,533
Municipal Bond Fund 86,155 105,208
Washington State Municipal Bond Fund 700 790
Intermediate-Term Municipal Bond Fund 1,543 1,531
Insured Municipal Bond Fund 7,818 7,212
----------------------------------------------------------
</TABLE>
Purchases include $16,163 and $6,821 of U.S. Government securities in the In-
termediate-Term U.S. Treasury and Managed Bond Funds, respectively.
Sales include $18,918 and $6,575 of U.S. Government securities in the Interme-
diate-Term U.S. Treasury and Managed Bond Funds, respectively.
- 67 -
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
4. TRUST SHARE TRANSACTIONS
Following is a summary of transactions in shares and the related amounts
(in thousands):
<TABLE>
<CAPTION>
SAFECO Intermediate-Term U.S. Treasury Fund
-------------------------------------------------------------------
No-Load Class A Class B
----------------------- ------------------ ------------------
For the Year Ended December 31
-------------------------------------------------------------------
1999 1998 1999 1998 1999 1998
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares:
Sales 666 1,506 58 50 55 76
Reinvestments 65 53 4 2 3 2
Redemptions (1,059) (837) (43) (10) (53) (47)
-------- ------- ----- ----- ----- -----
Net Change (328) 722 19 42 5 31
======== ======= ===== ===== ===== =====
Amounts:
Sales $ 6,902 $16,057 $ 599 $ 539 $ 574 $ 799
Reinvestments 669 561 37 20 31 23
Redemptions (11,013) (8,864) (448) (109) (545) (491)
-------- ------- ----- ----- ----- -----
Net Change $ (3,442) $ 7,754 $ 188 $ 450 $ 60 $ 331
======== ======= ===== ===== ===== =====
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SAFECO GNMA Fund SAFECO High-Yield Bond Fund
------------------ ---------------------------------------------------
No-Load No-Load Class A Class B
------------------ ------------------ --------------- --------------
For the Year
Ended
December 31 For the Year Ended December 31
------------------ ---------------------------------------------------
1999 1998 1999 1998 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares:
Sales 1,131 1,678 7,351 9,834 127 319 129 138
Reinvestments 200 174 523 466 14 11 15 5
Redemptions (1,367) (1,469) (8,235) (9,014) (290) (21) (110) (25)
-------- -------- -------- -------- ------- ------ ------ ------
Net Change (36) 383 (361) 1,286 (149) 309 34 118
======== ======== ======== ======== ======= ====== ====== ======
Amounts:
Sales $ 10,681 $ 16,177 $ 63,720 $ 88,489 $ 1,097 $2,907 $1,136 $1,223
Reinvestments 1,869 1,677 4,482 4,195 122 94 123 44
Redemptions (12,785) (14,150) (71,244) (81,120) (2,488) (183) (927) (226)
-------- -------- -------- -------- ------- ------ ------ ------
Net Change $ (235) $ 3,704 $ (3,042) $ 11,564 $(1,269) $2,818 $ 332 $1,041
======== ======== ======== ======== ======= ====== ====== ======
- ---------------------------------------------------------------------------------------
</TABLE>
- 68 -
<PAGE>
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- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SAFECO Managed Bond Fund
--------------------------------------------------------------------
No-Load Class A Class B
------------------------ ------------------ ------------------
For the Year Ended December 31
--------------------------------------------------------------------
1999 1998 1999 1998 1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares:
Sales 259 329 44 31 69 48
Reinvestments 19 18 2 1 3 2
Redemptions (202) (103) (7) (15) (16) (3)
-------- -------- ----- ----- ----- -----
Net Change 76 244 39 17 56 47
======== ======== ===== ===== ===== =====
Amounts:
Sales $ 2,143 $ 2,905 $ 355 $ 271 $ 578 $ 420
Reinvestments 155 157 15 10 27 15
Redemptions (1,661) (909) (58) (130) (136) (23)
-------- -------- ----- ----- ----- -----
Net Change $ 637 $ 2,153 $ 312 $ 151 $ 469 $ 412
======== ======== ===== ===== ===== =====
- -------------------------------------------------------------------------------------
<CAPTION>
SAFECO California Tax-Free Income Fund
--------------------------------------------------------------------
No-Load Class A Class B
------------------------ ------------------ ------------------
For the Year Ended December 31
--------------------------------------------------------------------
1999 1998 1999 1998 1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares:
Sales 2,144 4,348 30 28 14 41
Reinvestments 321 494 3 2 2 3
Redemptions (3,524) (2,846) (19) (12) (17) (10)
-------- -------- ----- ----- ----- -----
Net Change (1,059) 1,996 14 18 (1) 34
======== ======== ===== ===== ===== =====
Amounts:
Sales $ 26,624 $ 56,554 $ 384 $ 366 $ 176 $ 522
Reinvestments 3,849 6,359 30 25 26 39
Redemptions (42,290) (37,078) (225) (159) (198) (125)
-------- -------- ----- ----- ----- -----
Net Change $(11,817) $ 25,835 $ 189 $ 232 $ 4 $ 436
======== ======== ===== ===== ===== =====
- -------------------------------------------------------------------------------------
</TABLE>
- 69 -
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
4.TRUST SHARE TRANSACTIONS (Continued)
<TABLE>
<CAPTION>
SAFECO Municipal Bond Fund
-------------------------------------------------------------------
No-Load Class A Class B
------------------------- ----------------- -----------------
For the Year Ended December 31
-------------------------------------------------------------------
1999 1998 1999 1998 1999 1998
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares:
Sales 6,634 7,648 9 41 27 59
Reinvestments 1,231 1,598 1 2 3 3
Redemptions (8,766) (6,515) (3) (4) (22) (1)
--------- -------- ---- ----- ----- ----
Net Change (901) 2,731 7 39 8 61
========= ======== ==== ===== ===== ====
Amounts:
Sales $ 92,371 $111,887 $125 $ 596 $ 369 $859
Reinvestments 16,926 23,242 18 26 43 41
Redemptions (120,196) (95,188) (47) (65) (294) (16)
--------- -------- ---- ----- ----- ----
Net Change $ (10,899) $ 39,941 $ 96 $ 557 $ 118 $884
========= ======== ==== ===== ===== ====
- ------------------------------------------------------------------------------------
<CAPTION>
SAFECO Washington State Municipal Bond Fund
-------------------------------------------------------------------
No-Load Class A Class B
------------------------- ----------------- -----------------
For the Year Ended December 31
-------------------------------------------------------------------
1999 1998 1999 1998 1999 1998
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares:
Sales 90 284 -- 1 10 --
Reinvestments 8 13 1 1 1 1
Redemptions (114) (247) -- (15) -- --
--------- -------- ---- ----- ----- ----
Net Change (16) 50 1 (13) 11 1
========= ======== ==== ===== ===== ====
Amounts:
Sales $ 903 $ 3,139 $ -- $ 7 $ 107 $ 3
Reinvestments 81 137 5 7 7 9
Redemptions (1,161) (2,735) -- (163) -- --
--------- -------- ---- ----- ----- ----
Net Change $ (177) $ 541 $ 5 $(149) $ 114 $ 12
========= ======== ==== ===== ===== ====
- ------------------------------------------------------------------------------------
</TABLE>
- 70 -
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SAFECO Intermediate-Term SAFECO Insured
Municipal Bond Fund Municipal Bond Fund
--------------------------------------------- --------------------------------
No-Load No-Load
--------------------------------------------- --------------------------------
For the Year Ended For the Year Ended
December 31 December 31
--------------------------------------------- ---------------------------------
1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares:
Sales 226 316 921 1,357
Reinvestments 35 31 51 59
Redemptions (270) (204) (935) (665)
------------ ------------ ---------- ---------
Net Change (9) 143 37 751
============ ============ ========== =========
Amounts:
Sales $ 2,434 $ 3,457 $ 9,799 $15,554
Reinvestments 384 345 552 676
Redemptions (2,921) (2,232) (10,058) (7,630)
------------ ------------ ---------- ---------
Net Change $ (103) $ 1,570 $ 293 $ 8,600
============ ============ ========== =========
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SAFECO Tax-Free
SAFECO Money Market Fund Money Market Fund
-------------------------------------------------------- ------------------
No-Load Class A Class B No-Load
-------------------- ---------------- ---------------- ------------------
For the Year
For the Year Ended December 31 Ended December 31
-------------------------------------------------------- ------------------
1999 1998 1999 1998 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares:
Sales 468,818 491,508 8,404 3,057 2,303 1,672 64,599 75,307
Reinvestments 9,827 9,260 157 51 41 17 1,944 2,153
Redemptions (467,192) (452,918) (7,193) (1,459) (2,035) (1,433) (66,677) (75,440)
--------- --------- ------- ------- ------- ------- -------- --------
Net Change 11,453 47,850 1,368 1,649 309 256 (134) 2,020
========= ========= ======= ======= ======= ======= ======== ========
Amounts:
Sales $ 468,818 $ 491,508 $ 8,404 $ 3,057 $ 2,303 $ 1,672 $ 64,599 $ 75,307
Reinvestments 9,827 9,260 157 51 41 17 1,944 2,153
Redemptions (467,192) (452,918) (7,193) (1,459) (2,035) (1,433) (66,677) (75,440)
--------- --------- ------- ------- ------- ------- -------- --------
Net Change $ 11,453 $ 47,850 $ 1,368 $ 1,649 $ 309 $ 256 $ (134) $ 2,020
========= ========= ======= ======= ======= ======= ======== ========
- --------------------------------------------------------------------------------------------
</TABLE>
- 71 -
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
5. COMPONENTS OF NET ASSETS
At December 31, 1999, the components of net assets were as follows:
<TABLE>
<CAPTION>
SAFECO SAFECO SAFECO
Intermediate-Term GNMA High-Yield
(In Thousands) U.S.Treasury Fund Fund Bond Fund
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate Gross
Unrealized Appreciation
on Investments in Which
There Is an Excess of
Value Over Identified
Cost
$ 42 $ 72 $ 685
Aggregate Gross
Unrealized Depreciation
on Investments in Which
There Is an Excess of
Identified Cost Over
Value
(594) (1,018) (3,361)
------- ------- --------
Net Unrealized
(Depreciation) (552) (946) (2,676)
Accumulated Net Realized
Gain (Loss) on
Investments (282)** (2,441)** (2,166)**
Paid in Capital (Par
Value $.001, Unlimited
Shares Authorized) 21,670 42,836 81,028
------- ------- --------
Net Assets at December
31, 1999 $20,836 $39,449 $ 76,186
======= ======= ========
<CAPTION>
SAFECO SAFECO
SAFECO California Tax-Free Municipal
(In Thousands) Managed Bond Fund Income Fund Bond Fund
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aggregate Gross
Unrealized Appreclation
on Investments in Which
There is an Excess of
Value Over Identified
Cost
$ -- $ 1,501 $ 27,156
Aggregate Gross
Unrealized Depreciation
on Investments in Which
There is an Excess of
Identified Cost Over
Value
(338) (6,617) (20,001)
------- ------- --------
Net Unrealized
Appreciation/(Depreciation) (338) (5,116) 7,155
Accumulated Net Realized
Gain (Loss) on
Investments:
Wash Sale Deferral* (26) -- --
Other (248)** (1,042)** (1,565)**
Paid in Capital (Par
Value $.001, Unlimited
Shares Authorized) 8,890 93,479 466,928
------- ------- --------
Net Assets at December
31, 1999 $ 8,278 $87,321 $472,518
======= ======= ========
</TABLE>
- 72 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SAFECO SAFECO SAFECO
Washington Intermediate- SAFECO SAFECO Tax-
State Term Insured Money Free Money
Municipal Municipal Municipal Market Market
(In Thousands) Bond Fund Bond Fund Bond Fund Fund Fund
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aggregate Gross
Unrealized
Appreciation on
Investments in
Which There Is an
Excess of Value
Over Identified
Cost $ 80 $ 261 $ 254 $ -- $ --
Aggregate Gross
Unrealized
Depreciation on
Investments in
Which There Is an
Excess of
Identified Cost
Over Value (441) (135) (1,807) -- --
------ ------- ------- -------- -------
Net Unrealized
Appreciation/Depreciation (361) 126 (1,553) -- --
Accumulated Net
Realized Gain
(Loss) on
Investments (6)** -- -- -- --
Paid in Capital
(Par Value $.001,
Unlimited Shares
Authorized) 7,633 14,481 23,917 240,459 77,323
------ ------- ------- -------- -------
Net Assets at
December 31, 1999 $7,266 $14,607 $22,364 $240,459 $77,323
====== ======= ======= ======== =======
- ---------------------------------------------------------------------------------------
</TABLE>
*Represents accumulated realized losses not currently available to offset fu-
ture distributions.
**At December 31, 1999, these funds had the following amounts of accumulated
net realized losses on investment transactions that represented capital loss
carryforwards for Federal income tax purposes, which expire as follows:
<TABLE>
<CAPTION>
Amounts Expiration Dates
------- ----------------
<S> <C> <C>
Intermediate-Term U.S. Treasury Fund $ 282 2001-2006
GNMA Fund 2,441 2001-2004
High-Yield Bond Fund 2,166 2004-2007
Managed Bond Fund 248 2007
California Tax-Free Income Fund 1,042 2007
Municipal Bond Fund 1,565 2007
Washington State Municipal Bond Fund 6 2007
</TABLE>
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<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
6. INVESTMENT ADVISORY FEES AND OTHER
TRANSACTIONS WITH AFFILIATES
Investment Advisory Fees. Effective May 1, 1999, shareholders approved an
amended and restated investment advisory contract with SAFECO Asset Management
Company. The fees paid by the Funds under the new contract are based on a per-
centage of each day's net assets, which, on an annual basis, are as follows:
<TABLE>
<S> <C>
Intermediate-Term U.S.
Treasury and GNMA
Funds:
First $250 million .55%
Next $500 million .50
Next $500 million .45
Over $1.25 billion .40
</TABLE>
<TABLE>
<S> <C>
High-Yield Bond Fund:
First $250 million .65%
Next $500 million .55
Over $750 million .50
</TABLE>
<TABLE>
<S> <C>
Intermediate-Term
Municipal, Municipal,
California, Insured and
Washington Funds:
First $250 million .50%
Next $500 million .45
Over $750 million .40
</TABLE>
<TABLE>
<S> <C>
Managed Bond Fund:
First $750 million .50%
Next $500 million .45
Over $1.25 billion .40
</TABLE>
<TABLE>
<S> <C>
Money Market and Tax-
Free Money Market
Funds
First $250 million .50%
Next $500 million .45
Next $500 million .40
Over $1.25 billion .35
</TABLE>
Fund Accounting and Fund Administration Fees. Beginning May 1, 1999, SAFECO
Asset Management Company receives a fee for these services based on a percent-
age of each day's net assets, which, on an annual basis is as follows:
<TABLE>
<S> <C>
Fund Accounting:
First $200 million .04%
Over $200 million .01
</TABLE>
<TABLE>
<S> <C> <C>
Fund Administration:
First $200 mil-
lion .05%
Over $200 mil-
lion .01
</TABLE>
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<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Transfer Agent, Shareholder Service, and Distribution Fees. SAFECO Services
Corporation receives transfer agent fees. SAFECO Securities, Inc. receives
shareholder service, and distribution fees.
Notes Payable and Interest Expense. The Funds may borrow money for tempo-
rary purposes from SAFECO Corporation or its affiliates at rates equivalent to
commercial bank interest rates. At December 31, 1999, the Tax-Free Money Market
Fund had a 5.47% note payable to SAFECO Life Limited Maturity of $50,000. The
note was repaid on January 3, 2000. At December 31, 1999 the California Tax-
Free Income Fund had a 5.51% note payable to SAFECO Life Limited Maturity of
$1,425,000. The note was repaid on January 4, 2000.
Line of Credit. The Trust, together with all other management investment
companies for which SAFECO Asset Management Company serves as investment advi-
sor, has line of credit arrangements with certain financial institutions. Under
these arrangements, $200 million is available to meet short-term financing
needs. No balance was outstanding under these arrangements at December 31,
1999.
Affiliate Ownership. At December 31, 1999, SAFECO Insurance Company of
America owned 500,000 shares (or 24% of outstanding shares) of the Intermedi-
ate-Term U.S. Treasury Fund, 502,372 shares (or 67%) of the Washington Fund,
397,434 shares (or 29%) of the Intermediate Municipal Fund, and 605,644 shares
(or 29%) of the Insured Fund. SAFECO Asset Management Company owned 452,103
shares (or 43%) of the Managed Bond Fund.
Expense Reimbursement. Beginning May 1, 1999, SAFECO Asset Management Com-
pany agreed to reimburse the Funds for operating expenses (i.e., all expenses
except investment advisory, distribution, service fees, and interest) which ex-
ceed, on an annual basis, 0.30% of the average daily net assets for the Money
Market and Tax-Free Money Market Funds and 0.40% for all other Funds.
Fee Waiver. SAFECO Asset Management has agreed to waive .06% of investment
advisory fees in the Tax-Free Money Market Fund for the one year period from
May 1, 1999 to May 1, 2000.
- 75 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
Dealer Concessions. SAFECO Securities, Inc. retained the following amounts
in dealer commissions from sales of Class A Shares for the year ended December
31, 1999:
<TABLE>
<CAPTION>
Commissions
Retained
- -------------------------------------------------
<S> <C>
Intermediate-Term U.S. Treasury Fund $ 665
High-Yield Bond Fund 3,523
Managed Bond Fund 791
California Tax-Free Income Fund 1,321
Municipal Bond Fund 461
- -------------------------------------------------
</TABLE>
- 76 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
SAFECO Intermediate-Term U.S. Treasury Fund
No-Load Class
<TABLE>
<CAPTION>
Three-Month
For the Year Ended Period Ended For the Year Ended
December 31 December 31 September 30
-------------------------------------------------------------
1999 1998 1997 1996 1996 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 10.74 $ 10.34 $ 10.11 $ 10.10 $ 10.24 $ 9.74
Income from Investment
Operations
Net Investment Income 0.54 0.57 0.58 0.16 0.54 0.55
Net Realized and
Unrealized Gain (Loss)
on Investments (0.75) 0.40 0.23 0.01 (0.14) 0.50
------- ------- ------- ------- --------- ---------
Total from Investment
Operations (0.21) 0.97 0.81 0.17 0.40 1.05
Less Distributions
Dividends from Net
Investment Income (0.54) (0.57) (0.58) (0.16) (0.54) (0.55)
------- ------- ------- ------- --------- ---------
Net Asset Value at End
of Period $ 9.99 $ 10.74 $ 10.34 $ 10.11 $ 10.10 $ 10.24
======= ======= ======= ======= ========= =========
Total Return (1.98%) 9.61% 8.29% 1.68%* 4.00% 11.07%
Net Assets at End of
Period (000's) $19,092 $24,061 $15,698 $14,679 $ 14,668 $ 13,774
Ratio of Gross Expenses
to Average Net Assets 1.10% 0.90% 0.92% 1.07%** 1.01% 0.96%
Ratio of Net Expenses to
Average Net Assets 0.93% 0.90% 0.92% 0.85%** 1.01% 0.96%
Ratio of Net Investment
Income to Average Net
Assets 5.22% 5.38% 5.74% 6.30%** 5.30% 5.51%
Portfolio Turnover Rate 13.93% 2.83% 82.36% 125.42%** 294.25% 124.90%
- -----------------------------------------------------------------------------------------
</TABLE>
*Not annualized.
**Annualized.
- 77 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. Financial Highlights
(For a Share Outstanding Throughout the Period)
SAFECO GNMA Fund
No-Load Class
<TABLE>
<CAPTION>
Three-Month
For the Year Ended Period Ended For the Year Ended
December 31 December 31 September 30
<S> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of
Period $ 9.64 $ 9.57 $ 9.36 $ 9.26 $ 9.45 $ 9.05
Income from Investment Operations
Net Investment Income 0.55 0.57 0.60 0.15 0.60 0.60
Net Realized and Unrealized Gain
(Loss) on Investments (0.54) 0.07 0.21 0.10 (0.19) 0.40
------- ------- ------- ------- --------- ---------
Total from Investment Operations 0.01 0.64 0.81 0.25 0.41 1.00
Less Distributions
Dividends from Net Investment
Income (0.55) (0.57) (0.60) (0.15) (0.60) (0.60)
------- ------- ------- ------- --------- ---------
Net Asset Value at End of Period $ 9.10 $ 9.64 $ 9.57 $ 9.36 $ 9.26 $ 9.45
======= ======= ======= ======= ========= =========
Total Return 0.16% 6.84% 8.97% 2.71%* 4.48% 11.49%
Net Assets at End of Period (000's) $39,449 $42,145 $38,172 $39,543 $ 39,703 $ 44,055
Ratio of Gross Expenses to Average
Net Assets 0.98% 0.94% 0.93% 1.01%** 1.03% 1.01%
Ratio of Net Expenses to Average
Net Assets 0.94% 0.94% 0.93% 1.01%** 1.03% 1.01%
Ratio of Net Investment Income to
Average Net Assets 5.92% 5.90% 6.40% 6.43%** 6.42% 6.55%
Portfolio Turnover Rate 132.51% 104.63% 82.70% 51.06%** 47.45% 131.24%
- --------------------------------------------------------------------------------------------------------
</TABLE>
*Not annualized.
**Annualized.
- 78 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. Financial Highlights
(For a Share Outstanding Throughout the Period)
SAFECO High-Yield Bond Fund
No-Load Class
<TABLE>
<CAPTION>
Three-Month
For the Year Ended Period Ended For the Year Ended
December 31 December 31 September 30
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1996 1995
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 8.78 $ 9.13 $ 8.82 $ 8.79 $ 8.68 $ 8.55
Income from Investment
Operations
Net Investment Income 0.71 0.74 0.77 0.19 0.78 0.79
Net Realized and
Unrealized Gain (Loss)
on Investments (0.40) (0.35) 0.31 0.03 0.11 0.13
------- ------- ------- ------- --------- ---------
Total from Investment
Operations 0.31 0.39 1.08 0.22 0.89 0.92
Less Distributions
Dividends from Net
Investment Income (0.71) (0.74) (0.77) (0.19) (0.78) (0.79)
------- ------- ------- ------- --------- ---------
Net Asset Value at End
of Period $ 8.38 $ 8.78 $ 9.13 $ 8.82 $ 8.79 $ 8.68
======= ======= ======= ======= ========= =========
Total Return 3.74% 4.45% 12.79% 2.50%* 10.79% 11.43%
Net Assets at End of
Period (000's) $73,004 $79,696 $71,058 $50,298 $ 47,880 $ 39,178
Ratio of Gross Expenses
to Average Net Assets 0.99% 0.92% 0.91% 0.90%** 0.94% 1.01%
Ratio of Net Expenses to
Average Net Assets 0.95% 0.92% 0.91% 0.90%** 0.94% 1.01%
Ratio of Net Investment
Income to Average Net
Assets 8.31% 8.26% 8.58% 8.56%** 8.99% 9.28%
Portfolio Turnover Rate 70.65% 64.22% 85.06% 35.01%** 92.65% 38.03%
- -----------------------------------------------------------------------------------------
</TABLE>
*Not annualized.
**Annualized.
- 79 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. Financial Highlights
(For a Share Outstanding Throughout the Period)
SAFECO Managed Bond Fund
No-Load Class
<TABLE>
<CAPTION>
For the Year Ended December 31
------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of
Period $ 8.64 $ 8.60 $ 8.35 $ 8.77 $ 8.15
Income from Investment Operations
Net Investment Income 0.41 0.42 0.42 0.41 0.44
Net Realized and Unrealized Gain
(Loss) on Investments (0.74) 0.29 0.25 (0.42) 0.94
------- ------- ------- ------- ------
Total from Investment Operations (0.33) 0.71 0.67 (0.01) 1.38
Less Distributions
Dividends from Net Investment
Income (0.41) (0.42) (0.42) (0.41) (0.44)
Distributions from Realized Gains -- (0.25) -- -- (0.32)
------- ------- ------- ------- ------
Total Distributions (0.41) (0.67) (0.42) (0.41) (0.76)
------- ------- ------- ------- ------
Net Asset Value at End of Period $ 7.90 $ 8.64 $ 8.60 $ 8.35 $ 8.77
======= ======= ======= ======= ======
Total Return (3.82%) 8.43% 8.23% 0.02% 17.35%
Net Assets at End of Period (000's) $ 6,781 $ 6,757 $ 4,627 $ 4,215 $4,497
Ratio of Gross Expenses to Average
Net Assets 1.41% 1.16% 1.15% 1.27% 1.16%
Ratio of Net Expenses to Average
Net Assets 0.94% 1.16% 1.15% 1.27% 1.16%
Ratio of Net Investment Income to
Average Net Assets 5.10% 4.79% 4.98% 4.86% 5.14%
Portfolio Turnover Rate 146.87% 132.76% 176.50% 136.29% 78.78%
</TABLE>
- --------------------------------------------------------------------------------
- 80 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. Financial Highlights
(For a Share Outstanding Throughout the Period)
SAFECO California Tax-Free Income Fund
No-Load Class
<TABLE>
<CAPTION>
Nine-Month For the
For the Year Ended Period Ended Year Ended
December 31 December 31 March 31
<S> <C> <C> <C> <C> <C>
--------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $ 12.74 $ 12.93 $ 12.22 $ 11.86 $ 11.54
Income from Investment Operations
Net Investment Income 0.56 0.60 0.60 0.47 0.62
Net Realized and Unrealized Gain
(Loss) on Investments (1.70) 0.18 0.76 0.39 0.40
------- -------- ------- ------- -------
Total from Investment Operations (1.14) 0.78 1.36 0.86 1.02
Less Distributions
Dividends from Net Investment Income (0.56) (0.60) (0.60) (0.47) (0.62)
Distributions from Realized Gains -- (0.37) (0.05) (0.03) (0.08)
------- -------- ------- ------- -------
Total Distributions (0.56) (0.97) (0.65) (0.50) (0.70)
------- -------- ------- ------- -------
Net Asset Value at End of Period $ 11.04 $ 12.74 $ 12.93 $ 12.22 $ 11.86
======= ======== ======= ======= =======
Total Return (9.18%) 6.19% 11.55% 7.42%* 8.87%
Net Assets at End of Period (000's) $85,782 $112,457 $88,379 $72,084 $70,546
Ratio of Expenses to Average Net Assets 0.74% 0.68% 0.68% 0.69%** 0.68%
Ratio of Net Investment Income to
Average Net Assets 4.66% 4.60% 4.88% 5.21%** 5.12%
Portfolio Turnover Rate 24.66% 38.78% 9.83% 10.52%** 16.25%
- -----------------------------------------------------------------------------------------------
</TABLE>
*Not annualized.
**Annualized.
- 81 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. Financial Highlights
(For a Share Outstanding Throughout the Period)
SAFECO Municipal Bond Fund
No-Load Class
<TABLE>
<CAPTION>
Nine-Month For the
For the Year Ended Period Ended Year Ended
December 31 December 31 March 31
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1996
- ---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 14.45 $ 14.52 $ 13.98 $ 13.69 $ 13.36
Income from Investment
Operations
Net Investment Income 0.69 0.73 0.75 0.57 0.76
Net Realized and
Unrealized Gain (Loss)
on Investments (1.56) 0.17 0.70 0.29 0.33
-------- -------- -------- -------- --------
Total from Investment
Operations (0.87) 0.90 1.45 0.86 1.09
Less Distributions
Dividends from Net
Investment Income (0.69) (0.73) (0.75) (0.57) (0.76)
Distributions from
Realized Gains -- (0.24) (0.16) -- --
-------- -------- -------- -------- --------
Total Distributions (0.69) (0.97) (0.91) (0.57) (0.76)
-------- -------- -------- -------- --------
Net Asset Value at End
of Period $ 12.89 $ 14.45 $ 14.52 $ 13.98 $ 13.69
======== ======== ======== ======== ========
Total Return (6.18%) 6.35% 10.68% 6.42%* 8.23%
Net Assets at End of
Period (000's) $470,267 $539,860 $502,946 $480,970 $480,643
Ratio of Expenses to
Average Net Assets 0.60% 0.51% 0.51% 0.53%** 0.54%
Ratio of Net Investment
Income to Average Net
Assets 5.04% 5.01% 5.31% 5.53%** 5.47%
Portfolio Turnover Rate 16.84% 20.80% 13.52% 6.66%** 12.60%
</TABLE>
- --------------------------------------------------------------------------------
*Not annualized.
**Annualized.
- 82 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7.Financial Highlights
(For a Share Outstanding Throughout the Period)
SAFECO Washington State Municipal Bond Fund
No-Load Class
<TABLE>
<CAPTION>
Nine-Month For the
For the Year Ended Period Ended Year Ended
December 31 December 31 March 31
<S> <C> <C> <C> <C> <C>
---------------------------------------------
<CAPTION>
1999 1998 1997 1996 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value at Beginning
of Period $10.78 $10.95 $10.53 $10.34 $10.10
Income from Investment
Operations
Net Investment Income 0.47 0.50 0.50 0.37 0.50
Net Realized and Unrealized
Gain (Loss) on Investments (1.13) 0.15 0.42 0.20 0.27
------ ------ ------ ------ ------
Total from Investment
Operations (0.66) 0.65 0.92 0.57 0.77
Less Distributions
Dividends from Net
Investment Income (0.47) (0.50) (0.50) (0.37) (0.50)
Distributions from Realized
Gains -- (0.32) -- (0.01) (0.03)
------ ------ ------ ------ ------
Total Distributions (0.47) (0.82) (0.50) (0.38) (0.53)
------ ------ ------ ------ ------
Net Asset Value at End of
Period $ 9.65 $10.78 $10.95 $10.53 $10.34
====== ====== ====== ====== ======
Total Return (6.25%) 5.99% 8.94% 5.61%* 7.73%
Net Assets at End of Period
(000's) $6,748 $7,712 $7,288 $6,558 $6,489
Ratio of Gross Expenses to
Average Net Assets 1.06% 1.03% 1.02% 1.10%** 1.07%
Ratio of Net Expenses to
Average Net Assets 0.94% 1.03% 1.02% 1.10%** 1.07%
Ratio of Net Investment
Income to Average Net
Assets 4.61% 4.50% 4.68% 4.78%** 4.78%
Portfolio Turnover Rate 9.42% 33.18% 11.67% 15.96%** 20.86%
</TABLE>
- --------------------------------------------------------------------------------
*Not annualized.
**Annualized.
- 83 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. Financial Highlights
(For a Share Outstanding Throughout the Period)
SAFECO Intermediate-Term Municipal Bond Fund
No-Load Class
<TABLE>
<CAPTION>
Nine-Month For the
For the Year Ended Period Ended Year Ended
December 31 December 31 March 31
<S> <C> <C> <C> <C> <C>
-------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 11.02 $ 10.92 $ 10.61 $ 10.49 $ 10.17
Income from Investment
Operations
Net Investment Income 0.45 0.47 0.47 0.35 0.45
Net Realized and
Unrealized Gain (Loss)
on Investments (0.54) 0.10 0.31 0.12 0.32
------- ------- ------- ------- -------
Total from Investment
Operations (0.09) 0.57 0.78 0.47 0.77
Less Distributions
Dividends from Net
Investment Income (0.45) (0.47) (0.47) (0.35) (0.45)
Distributions from
Realized Gains (0.02) -- -- -- --
------- ------- ------- ------- -------
Total Distributions (0.47) (0.47) (0.47) (0.35) (0.45)
------- ------- ------- ------- -------
Net Asset Value at End of
Period $ 10.46 $ 11.02 $ 10.92 $ 10.61 $ 10.49
======= ======= ======= ======= =======
Total Return (0.84%) 5.33% 7.50% 4.53%* 7.63%
Net Assets at End of
Period (000's) $14,607 $15,487 $13,780 $14,172 $14,981
Ratio of Gross Expenses
to Average Net Assets 0.92% 0.83% 0.83% 0.89%** 0.84%
Ratio of Net Expenses to
Average Net Assets 0.86% 0.83% 0.83% 0.89%** 0.84%
Ratio of Net Investment
Income to Average Net
Assets 4.18% 4.25% 4.37% 4.40%** 4.29%
Portfolio Turnover Rate 10.51% 4.29% 10.52% 12.81%** 9.12%
</TABLE>
- --------------------------------------------------------------------------------
*Not annualized.
**Annualized.
- 84 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. Financial Highlights
(For a Share Outstanding Throughout the Period)
SAFECO Insured Municipal Bond Fund
No-Load Class
<TABLE>
<CAPTION>
Nine-Month For the
For the Year Ended Period Ended Year Ended
December 31 December 31 March 31
<S> <C> <C> <C> <C> <C>
-------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1996
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 11.33 $ 11.36 $ 10.74 $ 10.46 $ 10.05
Income from Investment
Operations
Net Investment Income 0.48 0.49 0.50 0.37 0.48
Net Realized and
Unrealized Gain (Loss)
on Investments (1.36) 0.17 0.62 0.28 0.41
------- ------- ------- ------- -------
Total from Investment
Operations (0.88) 0.66 1.12 0.65 0.89
Less Distributions
Dividends from Net
Investment Income (0.48) (0.49) (0.50) (0.37) (0.48)
Distributions from
Realized Gains -- (0.20) -- -- --
------- ------- ------- ------- -------
Total Distributions (0.48) (0.69) (0.50) (0.37) (0.48)
------- ------- ------- ------- -------
Net Asset Value at End of
Period $ 9.97 $ 11.33 $ 11.36 $ 10.74 $ 10.46
======= ======= ======= ======= =======
Total Return (7.99%) 5.90% 10.70% 6.31%* 8.95%
Net Assets at End of
Period (000's) $22,364 $24,998 $16,516 $13,187 $11,758
Ratio of Gross Expenses
to Average Net Assets 0.91% 0.88% 0.92% 1.00%** 0.99%
Ratio of Net Expenses to
Average Net Assets 0.88% 0.88% 0.92% 1.00% 0.99%
Ratio of Net Investment
Income to Average Net
Assets 4.45% 4.29% 4.56% 4.66%** 4.53%
Portfolio Turnover Rate 32.78% 27.30% 13.02% 14.86%** 3.71%
</TABLE>
- --------------------------------------------------------------------------------
*Not annualized.
**Annualized.
- 85 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. Financial Highlights
(For a Share Outstanding Throughout the Period)
SAFECO Money Market Fund
No-Load Class
<TABLE>
<CAPTION>
Nine-Month For the
For the Year Ended Period Ended Year Ended
December 31 December 31 March 31
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1996
- ----------------------------------------------------------------------------------
<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 0.05 0.05 0.05 0.03 0.05
Less Distributions
Dividends from Net
Investment Income (0.05) (0.05) (0.05) (0.03) (0.05)
-------- -------- -------- -------- --------
Net Asset Value at End
of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return 4.65% 5.08% 4.93% 3.54%* 5.15%
Net Assets at End of
Period (000's) $240,459 $227,329 $176,623 $161,356 $165,122
Ratio of Gross Expenses
to Average Net Assets 0.95% 0.79% 0.78% 0.81%** 0.78%
Ratio of Net Expenses to
Average Net Assets 0.81% 0.79% 0.78% 0.81%** 0.78%
Ratio of Net Investment
Income to Average Net
Assets 4.55% 4.97% 4.82% 4.66%** 5.04%
</TABLE>
- --------------------------------------------------------------------------------
*Not annualized.
**Annualized.
- 86 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. Financial Highlights
(For a Share Outstanding Throughout the Period)
SAFECO Tax-Free Money Market Fund
No-Load Class
<TABLE>
<CAPTION>
Nine-Month For the
For the Year Ended Period Ended Year Ended
December 31 December 31 March 31
<S> <C> <C> <C> <C> <C>
-------------------------------------------------
<CAPTION>
1999 1998 1997 1996 1996
- ------------------------------------------------------------------------------
<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 0.03 0.03 0.02 0.03
Less Distributions
Dividends from Net
Investment Income (0.03) (0.03) (0.03) (0.02) (0.03)
------- ------- ------- ------- -------
Net Asset Value at End
of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Return 2.77% 3.07% 3.12% 2.29%* 3.44%
Net Assets at End of
Period (000's) $77,323 $77,457 $75,437 $73,164 $79,702
Ratio of Expenses to
Average Average Net
Assets 0.66%+ 0.63% 0.63% 0.65%** 0.65%
Ratio of Net Investment
Income to Average Net
Assets 2.72% 3.04% 3.11% 3.03%** 3.40%
</TABLE>
- --------------------------------------------------------------------------------
*Not annualized.
**Annualized.
+ Net of fee waiver by advisor. Absent the waiver, the ratio of expenses to
average net assets would have been 0.70% for the year ended December 31,
1999.
- 87 -
<PAGE>
Report of ERNST & YOUNG LLP, Independent Auditors
To the Board of Trustees and Shareholders of the SAFECO Taxable Bond Trust,
SAFECO Managed Bond Trust, SAFECO Tax-Exempt Bond Trust, and SAFECO Money Mar-
ket Trust
We have audited the accompanying statements of assets and liabilities, in-
cluding the portfolios of investments, of the SAFECO Taxable Bond Trust (com-
prising, respectively, the SAFECO Intermediate-Term U.S. Treasury Fund, the
SAFECO GNMA Fund, and the SAFECO High-Yield Bond Fund), the SAFECO Managed
Bond Trust (comprising the Managed Bond Fund), the SAFECO Tax-Exempt Bond
Trust (comprising, respectively, the SAFECO California Tax-Free Income Fund,
the SAFECO Municipal Bond Fund, the SAFECO Washington State Municipal Bond
Fund, the SAFECO Intermediate-Term Municipal Bond Fund, and the SAFECO Insured
Municipal Bond Fund), and the SAFECO Money Market Trust (comprising, respec-
tively, the SAFECO Money Market Fund and SAFECO Tax-Free Money Market Fund) as
of December 31, 1999, and the related statements of operations for the year
then ended, the statements of changes in net assets and the financial high-
lights for each of the periods indicated therein. These financial statements
and financial highlights are the responsibility of the Trusts' management. Our
responsibility is to express an opinion on these financial statements and fi-
nancial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and per-
form the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An au-
dit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our proce-
dures included confirmation of securities owned as of December 31, 1999, by
correspondence with the custodian and brokers. An audit also includes assess-
ing the accounting principles used and significant estimates made by manage-
ment, 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 Taxable
- 88 -
<PAGE>
Bond Trust, the SAFECO Managed Bond Trust, the SAFECO Tax-Exempt Bond Trust,
and the SAFECO Money Market Trust at December 31, 1999, the results of their
operations, the changes in their net assets, and financial highlights for each
of the periods referred to above, in conformity with accounting principles gen-
erally accepted in the United States.
/s/ ERNST & YOUNG LLP
Seattle, Washington
February 4, 2000
- 89 -
<PAGE>
Year 2000 Readiness (Unaudited)
All Year 2000 readiness work was completed prior to December 31, 1999. The
Funds have experienced no disruption in their operations or service levels, and
do not expect to incur any future disruptions or expense in connection with the
year 2000 issue.
Shareholder Meeting (Unaudited)
A joint special meeting of the Funds' shareholders was held on March 30,
1999, at which time the shareholders voted to approve changes to the Funds'
fundamental investment policies and approved an amended and restated investment
advisory contract, including a change in the fee structure. Shareholders
elected the Board of Trustees and ratified the selection of Ernst & Young LLP
as independent auditors. The results of that meeting are presented below.
<TABLE>
<CAPTION>
(In Thousands)
Proposal Trust/Fund For Against Abstain
-------- --------------------------------- ------- ------- -------
<C> <S> <C> <C> <C>
Fundamental Intermediate-Term U.S. Treasury
Investment Fund............................. 1,275 25 77
Policies GNMA Fund........................ 2,426 132 294
High-Yield Bond Fund............. 4,389 275 1,333
Managed Bond Fund................ 599 12 27
Municipal Bond Fund.............. 20,932 1,908 2,648
California Tax-Free Income Fund.. 4,549 188 699
Washington State Municipal Bond
Fund............................. 394 260 47
Intermediate-Term Municipal Bond
Fund............................. 799 241 40
Insured Municipal Bond Fund...... 1,317 208 153
Money Market Fund................ 113,201 5,139 7,603
Tax-Free Money Market Fund....... 46,632 1,920 1,940
Investment Advisory Intermediate-Term U.S. Treasury
Fund............................. 1,214 84 79
Contract GNMA Fund........................ 2,401 151 299
High-Yield Bond Fund............. 4,226 466 1,305
Managed Bond Fund................ 594 18 25
Municipal Bond Fund.............. 19,449 3,305 2,734
California Tax-Free Income Fund.. 4,406 254 776
Washington State Municipal Bond
Fund............................. 401 270 31
Intermediate-Term Municipal Bond
Fund............................. 770 251 59
Insured Municipal Bond Fund...... 1,307 218 154
Money Market Fund................ 110,460 7,606 7,877
Tax-Free Money Market Fund....... 44,775 3,422 2,295
Elect Boh A. Dickey Taxable Bond Trust............... 9,720 505
Tax-Exempt Bond Trust............ 33,179 1204
Money Market Trust............... 170,319 6,116
Managed Bond Trust............... 625 12
</TABLE>
- 90 -
<PAGE>
<TABLE>
<CAPTION>
Proposal Trust/Fund For Against Abstain
-------- ------------------------------------ ------- ------- -------
<C> <S> <C> <C> <C>
Elect Barbara J.
Dingfield Taxable Bond Trust.................. 9,687 538
Tax-Exempt Bond Trust............... 33,206 1,177
Money Market Trust.................. 169,394 7,041
Managed Bond Trust.................. 625 12
Elect David F.
Hill Taxable Bond Trust.................. 9,725 500
Tax-Exempt Bond Trust............... 33,202 1,181
Money Market Trust.................. 170,290 6,145
Managed Bond Trust.................. 625 12
Elect Richard W.
Hubbard Taxable Bond Trust.................. 9,710 515
Tax-Exempt Bond Trust............... 33,205 1,178
Money Market Trust.................. 169,808 6,627
Managed Bond Trust.................. 625 12
Elect Richard E.
Lundgren Taxable Bond Trust.................. 9,715 510
Tax-Exempt Bond Trust............... 33,232 1,151
Money Market Trust.................. 169,870 6,565
Managed Bond Trust.................. 625 12
Elect Larry L.
Pinnt Taxable Bond Trust.................. 9,716 509
Tax-Exempt Bond Trust............... 33,224 1,159
Money Market Trust.................. 169,699 6,736
Managed Bond Trust.................. 625 12
Elect John W.
Schneider Taxable Bond Trust.................. 9,717 508
Tax-Exempt Bond Trust............... 33,202 1,182
Money Market Trust.................. 169,829 6,606
Managed Bond Trust.................. 625 12
Selection of
Ernst & Taxable Bond Trust.................. 9,790 147 287
Young LLP Tax-Exempt Bond Trust............... 33,312 470 601
Money Market Trust.................. 168,894 1,937 5,604
Managed Bond Trust.................. 624 12 1
</TABLE>
- 91 -
<PAGE>
SAFECO FIXED-INCOME 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
David H. Longhurst Assistant Controller
INVESTMENT ADVISOR:
SAFECO Asset Management Company
DISTRIBUTOR:
SAFECO Securities, Inc.
TRANSFER AGENT:
SAFECO Services Corporation
CUSTODIAN:
State Street Bank
GMF 997 2/00
Printed on Recycled Paper.
This report must be preceded or accompanied by a current prospectus.
(R) A registered trademark of SAFECO Corporation.
CLIENT SERVICES*:
Monday-Friday,
5:30am-7:00pm Pacific Time
Nationwide: 1-800-624-5711
Deaf and Hard of Hearing TTY/TDD Service: 1-800-438-8718
* All telephone calls are tape-recorded for your protection.
FOR 24-HOUR AUTOMATED PERFORMANCE INFORMATION AND TRANSACTIONS:
Nationwide: 1-800-835-4391
MAILING ADDRESS:
SAFECO Mutual Funds
P.O. Box 34890
Seattle, WA 98124-1890
INTERNET:
www.safecofunds.com
EMAIL: [email protected]
