<PAGE>
June 30, 1997
[LOGO]
Semi-Annual Report
Safeco Resource Series Trust
Growth Portfolio
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[LOGO OF SAFECO MUTUAL FUNDS]
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Portfolio Manager Letter
June 30, 1997
[PICTURE APPEARS HERE]
Tom Maguire
SAFECO RST GROWTH PORTFOLIO
SAFECO RST Growth continued to do well. The Portfolio has
outperformed both the broad market and its peer group for the quarter,
six months and year on stock picking alone. I've populated RST Growth
with companies I can comfortably own for a year--or five years.
Even though our stocks are generally unfollowed by Wall Street, I believe
them to be good companies purchased at decent prices. I'm willing to wait for
them and I'm comfortable with any ensuing volatility.
Our radio stocks really did well. I bought stock in SFX Broadcasting,
American Radio and Chancellor anticipating deregulation would allow radio
companies to own more stations in each market and with greater market share
become formidable contenders for advertising dollars.
Chancellor's gain was further enhanced when it agreed to merge with Ever-
green Media and to purchase Viacom's radio properties. Consummation of these
deals will make Chancellor America's premier radio company.
RST GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Since
1 Year Inception
--------------------
<S> <C> <C>
Growth Portfolio 33.11 30.82
</TABLE>
RST GROWTH PORTFOLIO
ILLUSTRATION OF A $10,000 INVESTMENT:
SINCE FUND INCEPTION ON JANUARY 7, 1993 TO JUNE 30, 1997*
<TABLE>
<CAPTION>
Date Growth S&P
- ---------------------------------------------------
<S> <C> <C>
01/31/93 10,000 10,000
02/28/93 9,475 10,136
03/31/93 10,059 10,350
04/30/93 9,683 10,100
05/31/93 10,535 10,369
06/30/93 10,891 10,400
07/31/93 11,297 10,358
08/31/93 12,198 10,750
09/30/93 12,822 10,667
10/31/93 13,386 10,888
11/30/93 12,792 10,785
12/31/93 13,473 10,915
01/31/94 14,382 11,286
02/28/94 13,861 10,980
03/31/94 13,351 10,503
04/30/94 13,750 10,637
05/31/94 14,094 10,811
06/30/94 13,662 10,546
07/31/94 14,216 10,892
08/31/94 14,714 11,337
09/30/94 14,626 11,060
10/31/94 15,169 11,308
11/30/94 14,936 10,897
12/31/94 15,079 11,058
01/31/95 15,148 11,344
02/28/95 15,694 11,786
03/31/95 15,671 12,133
04/30/95 15,973 12,490
05/31/95 16,670 12,997
06/30/95 17,727 13,299
07/31/95 18,506 13,739
08/31/95 18,587 13,773
09/30/95 19,644 14,354
10/31/95 19,818 14,303
11/30/95 20,666 14,929
12/31/95 21,261 15,217
01/31/96 21,476 15,735
02/29/96 22,051 15,881
03/31/96 22,654 16,033
04/30/96 24,060 16,269
05/31/96 25,519 16,688
06/30/96 24,608 16,752
07/31/96 22,439 16,012
08/31/96 24,381 16,350
09/30/96 25,827 17,270
10/31/96 26,322 17,746
11/30/96 26,898 19,086
12/31/96 28,077 18,708
01/31/97 29,769 19,875
02/28/97 28,529 20,032
03/31/97 27,480 19,211
04/30/97 26,255 20,356
05/31/97 30,395 21,594
06/30/97 32,757 22,561
</TABLE>
* Inception of Fund was January 7, 1993.
Graph and average annual return comparison begins January 31, 1993.
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.
Past performance is not predictive of future performance. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
Performance represents the performance of the Growth Portfolio only and
excludes separate account charges such as administration charges, contingent
deferred sales charges, and mortality and expense risk premiums.
- 2 -
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PORTFOLIO MANAGER LETTER (Continued)
Our health care holdings are also able growers. No matter how you cut it
health care is a growth industry, and as such we have 19.4% of net assets in-
vested in drugs and hospital supplies.
Penederm is doing well with it's toenail fungus drug. Nastech Pharmaceuti-
cal is developing nasal drug delivery, a technique that could prove to be
highly efficient. And Datascope is a good company that seems to be selling so
cheaply, I'm waiting for the day the market figures out it's priced wrong.
Waiting for MICROS Systems, the electronic ordering and inventory control
company, has been highly worthwhile. This specialty software company serving
the hospitality industry is doing extremely well. MICROS has launched new
products and logged new business, including Marriott International. In short
MICROS is revolutionizing the cash register business.
Weider, a leader in the nutritional supplement market and the manufacturer
of Tigermilk, is among our new positions. Benefiting by the wellness move-
ment's migration to main street USA, Weider's share price has moved from $11
to $17 since we purchased it.
Other new purchases include NPC, the holding company for Tony Romas and
Pizza Hut franchises, and Damark, a catalog company. Looking at our portfolio
it seems that if people order pizza, take vitamins, turn on the radio and look
at catalogs, we should do well.
HIGHLIGHTS
<TABLE>
<CAPTION>
%
TOP TEN HOLDINGS NET ASSETS
- -------------------------------------------------------------------------------
<S> <C>
MICROS Systems, Inc........................................................ 5.1%
Datascope Corp............................................................. 4.3
Weider Nutrition Int'l..................................................... 4.3
R J R Holdings............................................................. 4.2
Penederm, Inc.............................................................. 4.2
American Buildings......................................................... 3.9
Chancellor Corp............................................................ 3.6
Stage Stores, Inc.......................................................... 3.2
Damark International, Inc. ................................................ 2.9
3Com Corp.................................................................. 2.9
</TABLE>
<TABLE>
<CAPTION>
MARKET CAPITALIZATION
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<S> <C>
Large-Cap (over $4 billion) 9%
Mid-Cap ($1 billion-$4 billion) 1%
Small-Cap (under $1 billion) 89%
Cash & Other 1%
----------
Total 100%
==========
</TABLE>
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PORTFOLIO MANAGER LETTER (Continued)
In all seriousness, I sit here and feel cautiously confident. We've at-
tained good performance holding small stocks, which as a group haven't per-
formed well and hence have plenty of room to move up.
I take relatively big positions in stocks I believe in, When one of our big
positions works, performance gets a boost, when one doesn't work, performance
may suffer. So, though the short-term results can be volatile over the years,
Growth Portfolio's returns have proven quite excellent.
Yes, Growth Portfolio spurts, rather than putts along, But stay with it,
because I have your best interests at heart--that is your interest in long-term
capital appreciation.
/s/ Thomas M. Maguire
Thomas M. Maguire
- --------------------------------------------------------------------------------
After completing his MBA at the University of Washington, Thomas Maguire joined
the company as an equity analyst in 1981 and today is a Vice President. From
1984 to 1989, he comanaged the SAFECO Equity Fund.
- 4 -
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PORTFOLIO OF INVESTMENTS
SAFECO Resource Series Trust -- Growth Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS - 99.0%
BEVERAGES (ALCOHOLIC) - 1.1%
50,900 *Canandaigua Wine Co., Inc. ................................. $ 1,731
BIOTECHNOLOGY - 0.1%
35,000 *Quidel Corp. ............................................... 114
BROADCASTING (TELEVISION, RADIO, & CABLE) - 6.9%
35,700 American Radio Systems Corp. ................................ 1,424
142,400 *Chancellor Broadcasting Corp. (Class A)..................... 5,696
94,044 *SFX Broadcasting, Inc. (Class A)............................ 3,967
BUILDING MATERIALS - 0.6%
39,300 *ABT Building Products Corp. ................................ 1,032
CHEMICALS - 0.8%
86,500 *Melamine Chemicals, Inc. ................................... 1,211
CHEMICALS (SPECIALTY) - 0.6%
70,500 Spartech Corp. .............................................. 916
COMPUTERS (HARDWARE) - 5.1%
193,400 *MICROS Systems, Inc. ....................................... 8,123
COMPUTERS (NETWORKING) - 3.6%
102,000 *3Com Corp. ................................................. 4,590
83,000 *Vanstar Corp. .............................................. 1,172
COMPUTERS (PERIPHERALS) - 0.1%
15,000 *Imtec, Inc. ................................................ 120
COMPUTERS (SOFTWARE & SERVICES) - 1.6%
22,300 Computer Data Systems, Inc. ................................. 652
72,000 *Optimal Robotics Corp. ..................................... 288
57,500 *Phoenix International Ltd., Inc. ........................... 1,322
8,200 *SPSS, Inc. ................................................. 238
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<S> <C>
CONSUMER FINANCE - 0.8%
78,600 *AmeriTrade Holding Corp. ................................... $ 1,238
DISTRIBUTORS (FOOD & HEALTH) - 4.3%
431,300 +Weider Nutrition International, Inc. ....................... 6,847
ENGINEERING & CONSTRUCTION - 3.9%
234,300 *American Buildings Co. ..................................... 6,326
FINANCIAL (DIVERSIFIED) - 3.5%
178,400 *Credit Acceptance Corp. .................................... 2,297
103,900 First Financial Caribbean Corp. (ADR)........................ 3,390
GAMING, LOTTERY, & PARIMUTUEL COS. - 2.6%
386,800 *+American Coin Merchandising, Inc. ......................... 4,206
HEALTH CARE (DIVERSIFIED) - 2.1%
10,200 *Anesta Corp. ............................................... 194
92,900 *Res-Care, Inc. ............................................. 1,777
93,750 *Sano Corp. ................................................. 1,430
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS) - 9.6%
150,600 Alpharma, Inc. (Class A)..................................... 2,400
70,700 *Andrx Corp. ................................................ 2,704
109,200 *Faulding, Inc. ............................................. 1,338
101,300 *Gensia, Inc. ............................................... 450
40,000 Mylan Laboratories, Inc. .................................... 590
119,000 *Nastech Pharmaceutical Co., Inc. ........................... 1,249
492,567 *+Penederm, Inc. ............................................ 6,650
HEALTH CARE (HOSPITAL MANAGEMENT) - 2.4%
175,000 *American Healthcorp, Inc. .................................. 1,925
62,000 *Laboratory Specialists of America, Inc. .................... 174
115,200 *United Dental Care, Inc. ................................... 1,728
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
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PORTFOLIO OF INVESTMENTS (Continued)
SAFECO Resource Series Trust -- Growth Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS (CONTINUED)
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 9.8%
20,000 *Autonomous Technologies Corp. ............................... $ 82
350,000 *Datascope Corp. ............................................. 6,869
23,000 Dentsply International, Inc. ................................. 1,127
55,000 *Haemonetics Corp. ........................................... 1,052
233,900 *Lifeline Systems, Inc. ...................................... 4,503
19,100 *PolyMedica Industries, Inc. ................................. 167
67,600 *Prime Medical Services, Inc. ................................ 731
26,200 *ResMed, Inc. ................................................ 635
83,000 *UroQuest Medical Corp. ...................................... 539
HOMEBUILDING - 1.1%
86,250 *American Homestar Corp. ..................................... 1,844
HOUSEHOLD PRODUCTS (NON-DURABLES) - 1.1%
25,700 *Diamond Home Services, Inc. ................................. 247
155,000 *Home Products International, Inc. ........................... 1,531
HOUSEWARE & TOOLS - 0.8%
149,820 *Lifetime Hoan Corp. ......................................... 1,311
INSURANCE (LIFE/HEALTH) - 2.5%
193,900 *Compdent Corp. .............................................. 4,084
LEISURE TIME (PRODUCTS) - 0.5%
33,150 *Family Golf Centers, Inc. ................................... 762
20,000 *Laser Storm, Inc. ........................................... 9
MANUFACTURING (DIVERSIFIED) - 0.3%
12,500 Furon Co. .................................................... 392
14,400 *ITC Learning Corp. .......................................... 74
MANUFACTURING (SPECIALIZED) - 0.2%
21,850 *Intermagnetics General Corp. ................................ 234
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<S> <C>
OFFICE EQUIPMENT & SUPPLIES - 0.9%
75,000 Asia Pacific Wire & Cable Corp. Ltd. ......................... $ 816
87,400 *Open Plan Systems, Inc. ..................................... 350
23,200 *TRM Copy Centers Corp. ...................................... 246
PAPER & FOREST PRODUCTS - 0.3%
26,600 *Paragon Trade Brands, Inc. .................................. 454
RESTAURANTS - 5.2%
86,200 Apple South, Inc. ............................................ 1,315
339,400 *NPC International, Inc. ..................................... 3,946
42,000 *New York Bagel Enterprises................................... 178
236,000 *Rare Hospitality International, Inc. ........................ 2,920
RETAIL (HOME SHOPPING) - 2.9%
300,800 *+Damark International, Inc. ................................. 4,662
RETAIL (SPECIALTY) - 7.2%
51,500 *Alrenco, Inc. ............................................... 682
174,100 *Funco, Inc. ................................................. 3,221
37,000 *Garden Ridge Corp. .......................................... 462
296,500 *Rent-Way, Inc. .............................................. 4,373
77,800 The First Years, Inc. ........................................ 1,653
75,800 *Video Update, Inc.
(Class A)..................................................... 336
156,100 *West Coast Entertainment Corp. .............................. 820
RETAIL (SPECIALTY-APPAREL) - 4.8%
159,435 *Harold's Stores, Inc. ....................................... 1,415
197,462 *Stage Stores, Inc. .......................................... 5,159
61,000 *The Dress Barn, Inc. ........................................ 1,189
SERVICES (ADVERTISING/MARKETING) - 2.2%
89,600 *ACI Telecentrics, Inc. ...................................... 515
99,500 *APAC Teleservices, Inc. ..................................... 1,934
20,300 *IntelliQuest Information Group, Inc. ........................ 457
46,460 LCS Industries, Inc. ......................................... 671
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 6 -
<PAGE>
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PORTFOLIO OF INVESTMENTS (Continued)
SAFECO Resource Series Trust -- Growth Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS (CONTINUED)
SERVICES (COMMERCIAL & CONSUMER) - 2.6%
40,000 *FirstService Corp. .......................................... $ 265
85,600 *Renter's Choice, Inc. ....................................... 1,701
251,700 *Ultrak, Inc. ................................................ 2,234
SERVICES (DATA PROCESSING) - 0.2%
11,000 *NCO Group, Inc. ............................................. 323
SERVICES (EMPLOYMENT) - 0.5%
67,500 *Right Management Consultants, Inc. .......................... 768
TOBACCO - 5.6%
52,000 Philip Morris Cos., Inc. ..................................... 2,308
202,700 RJR Nabisco Holdings Corp. ................................... 6,689
WASTE MANAGEMENT - 0.6%
37,800 *Tetra Technologies, Inc. .................................... 935
-------
TOTAL COMMON STOCKS.................................................... 158,699
-------
WARRANTS - 0.0%
LEISURE TIME (PRODUCTS) - 0.0%
20,000 *Laser Storm, Inc. ........................................... 5
-------
TOTAL WARRANTS......................................................... 5
-------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<S> <C>
TEMPORARY INVESTMENTS - 1.1%
INVESTMENT COMPANIES:
1,703,671 SSgA Money Market Portfolio............................... $ 1,704
--------
TOTAL TEMPORARY INVESTMENTS.......................................... 1,704
--------
TOTAL INVESTMENTS--100.0%............................................ 160,408
Liabilities, less Other Assets....................................... (59)
--------
NET ASSETS........................................................... $160,349
========
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</TABLE>
*Non-income producing security.
+Affiliated issuer as defined by the Investment Company Act of 1940 (the
Portfolio controls 5% or more of the outstanding voting shares of the Company).
SEE NOTES TO FINANCIAL STATEMENTS
- 7 -
<PAGE>
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STATEMENTS OF ASSETS AND LIABILITIES
SAFECO Resource Series Trust -- Growth Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands, Except Per-Share Amounts)
- --------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, at Cost $135,669
========
Investments at Value:
Unaffiliated Issuers $142,705
Affiliated Issuers 17,703
--------
Total Investments, at value 160,408
Receivables:
Investment securities sold 144
Dividends and interest 141
Trust shares sold 939
--------
Total assets 161,632
LIABILITIES:
Payables:
Investment securities purchased 1,046
Investment advisory fees 95
Trust shares redeemed 131
Other 11
--------
Total liabilities 1,283
--------
NET ASSETS $160,349
========
Net Assets consist of:
Accumulated net investment loss $ (138)
Accumulated net realized gain on investment transactions 14,207
Net unrealized appreciation 24,740
Paid in capital (par value $.001, unlimited shares authorized) 121,540
--------
NET ASSETS $160,349
========
TRUST SHARES OUTSTANDING 7,135
========
NET ASSET VALUE PER SHARE
(NET ASSETS DIVIDED BY TRUST SHARES OUTSTANDING) $ 22.47
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 8 -
<PAGE>
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STATEMENT OF OPERATIONS
SAFECO Resource Series Trust -- Growth Portfolio
For the Six-Month Period Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
($ in Thousands)
- ------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Dividends $ 293
Interest 61
-------
Total investment income 354
EXPENSES:
Investment advisory fees 469
Legal and auditing fees 8
Custodian fees 12
Trustees' fees 2
Other 1
-------
Total expenses 492
-------
NET INVESTMENT INCOME (LOSS) (138)
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 14,207
Net change in unrealized appreciation 7,699
-------
NET GAIN ON INVESTMENTS 21,906
-------
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $21,768
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 9 -
<PAGE>
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STATEMENT OF CHANGES IN NET ASSETS
SAFECO Resource Series Trust -- Growth Portfolio
(Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX- FOR THE
MONTH PERIOD YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
(In Thousands, Except Per-Share Amounts) 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (138) $ (198)
Net realized gain on investments 14,207 9,047
Net change in unrealized appreciation 7,699 11,913
-------- --------
Net change in net assets resulting from opera-
tions 21,768 20,762
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gain on investments -- (8,849)
NET TRUST SHARE TRANSACTIONS 29,090 53,120
-------- --------
TOTAL CHANGE IN NET ASSETS 50,858 65,033
NET ASSETS AT BEGINNING OF PERIOD 109,491 44,458
-------- --------
NET ASSETS AT END OF PERIOD $160,349 $109,491
======== ========
- -----------------------------------------------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES AND AMOUNTS
SHARES:
Sales 2,294 3,213
Reinvestments -- 459
Redemptions (843) (788)
-------- --------
Net change 1,451 2,884
======== ========
AMOUNTS:
Sales $ 45,686 $ 58,239
Reinvestments -- 8,849
Redemptions (16,596) (13,968)
-------- --------
Net change $ 29,090 $ 53,120
======== ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 10 -
<PAGE>
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NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1.GENERAL
SAFECO Resource Series Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management invest-
ment company. The Trust consists of six portfolios. Shares of the Trust Portfo-
lios are available as funding vehicles for certain variable annuity and vari-
able life products sold by SAFECO Life Insurance Company and other insurance
companies.
The financial statements included herein are only those of the Growth Portfo-
lio. The financial statements of the other portfolios are presented separately.
The investment objective of the Portfolio is long term capital growth.
2.SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles, which
permits management to make certain estimates and assumptions at the date of the
financial statements.
SECURITY VALUATION. Securities in the Portfolio traded on a national exchange
or over-the-counter are valued at the last reported sales price, unless there
are no transactions in which case they are valued at the last reported bid
price. Investments in other mutual funds are valued at the net asset value.
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on investment transactions are determined using the
identified cost method.
INCOME RECOGNITION. Dividend income, less foreign taxes withheld (if any), is
recorded on the ex-dividend date.
DIVIDENDS TO SHAREHOLDERS. Dividends to shareholders from net investment in-
come and distributions of realized gains are recorded on the last business day
of December each year.
FEDERAL INCOME TAX. It is the Portfolio's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Therefore, no
federal income or excise tax provision is required.
- 11 -
<PAGE>
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NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
3.TRANSACTIONS WITH AFFILIATES
SAFECO Asset Management Company receives investment advisory fees from the
Portfolio. The fee is based on average daily net assets at an annual rate of
.74 percent.
The Portfolio may borrow money for temporary purposes from SAFECO Corpora-
tion or its affiliates at interest rates equivalent to commercial bank inter-
est rates.
At June 30, 1997, SAFECO Life Insurance Company owned over 99 percent of the
outstanding shares of the Growth Portfolio.
Prior to May, 1995, SAFECO Life Insurance Company (SAFECO) paid all the ex-
penses of the Portfolio except for investment advisory fees. Beginning in May,
1995, when net assets exceeded $20 million, the Portfolio is charged for all
operating expenses in addition to investment advisory fees.
4.INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
($ in Thousands)
- ------------------------------------------------------------------------
<S> <C>
PURCHASES FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1997 $99,335
=======
SALES FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 1997 $68,501
=======
- ------------------------------------------------------------------------
</TABLE>
Purchases and sales amounts exclude short-term investments which, at the
time of purchase, had a maturity of one year or less.
The Portfolio engaged in a purchase transaction with a fund that has a com-
mon investment advisor, SAFECO Asset Management Company. This purchase trans-
action was made at current market value pursuant to rule 17a-7 under the In-
vestment Company Act of 1940. The amount of the transaction was $107 Thousand.
Unrealized appreciation (depreciation) at June 30, 1997:
<TABLE>
<CAPTION>
($ in Thousands)
- -------------------------------------------------------------------------------
<S> <C>
Aggregate gross unrealized appreciation for investment secu-
rities in which there is an excess of value over identified
cost $34,968
Aggregate gross unrealized depreciation for investment secu-
rities in which there is an excess of identified cost over
value (10,228)
-------
NET UNREALIZED APPRECIATION $24,740
=======
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</TABLE>
- 12 -
<PAGE>
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NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
5.INVESTMENTS IN AFFILIATES
Each of the companies is listed below because the Portfolio owned at least 5%
of the company's voting securities during the six-month period ended June 30,
1997.
<TABLE>
<CAPTION>
(In Thousands)
SHARES AT SHARES AT MARKET VALUE
BEGINNING END JUNE 30,
SECURITIES OF PERIOD ADDITIONS REDUCTIONS OF PERIOD DIVIDENDS 1997
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
American Coin
Merchandising, Inc. 262 125 -- 387 -- $ 4,206
Penederm, Inc. 348 145 -- 493 -- 6,650
Wieder Nutrition -- 431 -- 431 -- 6,847
-------
TOTAL INVESTMENTS IN AF-
FILIATES $17,703
=======
- -----------------------------------------------------------------------------------------
</TABLE>
- 13 -
<PAGE>
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NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
6.FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
FOR THE JANUARY 7, 1993
SIX MONTH (COMMENCEMENT OF
PERIOD ENDED OPERATIONS) TO
JUNE 30, YEAR ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD $ 19.26 $ 15.88 $ 12.98 $ 12.16 $10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss) (0.02) (0.05) 0.06 -- 0.01
Net realized and
unrealized gain on
investments 3.23 5.14 5.26 1.45 3.60
--------- -------- --------- --------- -----------
Total from investment
operations 3.21 5.09 5.32 1.45 3.61
LESS DISTRIBUTIONS:
Dividends from net
investment income -- -- (0.06) -- (0.01)
Distributions from
realized gains -- (1.71) (2.36) (0.63) (1.44)
--------- -------- --------- --------- -----------
Total distributions -- (1.71) (2.42) (0.63) (1.45)
--------- -------- --------- --------- -----------
NET ASSET VALUE AT END
OF PERIOD $ 22.47 $ 19.26 $ 15.88 $ 12.98 $12.16
========= ======== ========= ========= ===========
TOTAL RETURN 16.67%** 32.06% 41.00%(A) 11.92%(A) 34.73%**(A)
NET ASSETS AT END OF
PERIOD (000'S OMITTED) $160,349 $109,491 $44,458 $16,156 $4,850
RATIO OF EXPENSES TO
AVERAGE NET ASSETS .77%* .79% .79% .71% .72%*
RATIO OF EXPENSES TO
AVERAGE NET ASSETS
BEFORE EXPENSE
REIMBURSEMENTS++ N/A N/A .84% .96% --
RATIO OF NET INVESTMENT
INCOME (LOSS) TO
AVERAGE NET ASSETS -.22%* -.28% .55% -.05% .08%*
PORTFOLIO TURNOVER RATE 107.39%* 75.58% 111.70% 41.24% 108.67%*
AVERAGE COMMISSION RATE
PAID $ 0.0504 $ 0.0530 -- -- --
- ----------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Not Annualized. Performance information for the period ended December 31,
1993 begins on January 31, 1993.
++ See Note 3 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been
reduced during the periods shown (See Note 3 of Notes to Financial
Statements).
N/A Not applicable as no fund expenses were reimbursed.
- 14 -
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
- 15 -
<PAGE>
SAFECO RESOURCE SERIES TRUST
BOARD OF TRUSTEES:
Boh A. Dickey, Chairman
Barbara J. Dingfield
David F. Hill
Richard W. Hubbard
Richard E. Lundgren
Larry L. Pinnt
John W. Schneider
OFFICERS:
David F. Hill, President
Ronald L. Spaulding Vice President and Treasurer
Neal A. Fuller Vice President and Controller
INVESTMENT ADVISOR:
SAFECO Asset Management Company
DISTRIBUTOR:
SAFECO Securities, Inc.
TRANSFER AGENT:
SAFECO Services Corporation
CUSTODIAN:
State Street Bank
AUDITOR:
Ernst & Young, LLP
GMF 938 8/97
LOGO Printed on Recycled Paper.
This report must be preceded or accompanied by a current prospectus.
(R) Registered trademark of SAFECO Corporation.
<PAGE>
June 30, 1997
[LOGO]
Semi-Annual Report
Safeco Resource Series Trust Northwest Portfolio
--------------
[LOGO OF SAFECO MUTUAL FUNDS]
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Portfolio Manager Letter
June 30, 1997
[PICTURE APPEARS HERE]
Bill Whitlow
SAFECO RST NORTHWEST PORTFOLIO
Since becoming Portfolio Manager in April, I've jettisoned the
small companies that held us under the broad market and re-invested in
larger capitalization companies. Clearly the quarter and year have be-
longed to large cap stocks.
Within the Northwest Universe, only 11 stocks are over $4 billion in mar-
ket capitalization. We now own seven of them. These large companies--espe-
cially Microsoft and Washington Mutual--helped us outperform in the last three
months.
Washington Mutual, aided by its acquisition of Great Western Savings,
significantly outperformed the S&P. Our overweighting in financials gave
performance a further boost as banks and savings and loans in general continued
to benefit from low interest rates, consolidation and a strong Northwest
economy during the period.
Managing the Northwest Portfolio, I won't be timing the market or making
make big sector bets. I'll just work to pick good stocks. I'll do that using
intuition I've built on 21 years of experience and the SAFECO research team.
RST NORTHWEST PORTFOLIO
<TABLE>
<CAPTION>
Since
1 Year Inception
--------------------
<S> <C> <C>
Northwest Portfolio 20.96% 9.20%
</TABLE>
RST NORTHWEST PORTFOLIO
ILLUSTRATION OF A $10,000 INVESTMENT:
SINCE FUND INCEPTION ON JANUARY 7, 1993 TO JUNE 30, 1997*
<TABLE>
<CAPTION>
Date Northwest S&P NW 50 Index
- --------------------------------------------------------------
<S> <C> <C> <C>
01/31/93 10,000 10,000 10,000
02/28/93 9,385 10,136 9,687
03/31/93 9,633 10,350 10,086
04/30/93 9,325 10,100 9,859
05/31/93 9,563 10,369 10,103
06/30/93 9,474 10,400 9,885
07/31/93 9,425 10,358 9,531
08/31/93 9,623 10,750 9,921
09/30/93 9,722 10,667 9,698
10/31/93 9,841 10,888 10,046
11/30/93 9,901 10,785 10,262
12/31/93 9,945 10,915 10,400
01/31/94 10,146 11,286 10,714
02/28/94 10,496 10,980 10,873
03/31/94 10,216 10,503 10,490
04/30/94 10,166 10,637 10,458
05/31/94 10,055 10,811 10,616
06/30/94 9,915 10,546 10,293
07/31/94 10,086 10,892 10,374
08/31/94 10,526 11,337 10,972
09/30/94 10,536 11,060 10,553
10/31/94 10,646 11,308 10,490
11/30/94 10,396 10,897 10,302
12/31/94 10,309 11,058 10,359
01/31/95 10,097 11,344 10,314
02/28/95 10,258 11,786 10,661
03/31/95 10,661 12,133 10,999
04/30/95 10,681 12,490 11,330
05/31/95 10,812 12,997 11,331
06/30/95 11,356 13,299 12,019
07/31/95 12,040 13,739 12,474
08/31/95 12,292 13,773 12,712
09/30/95 12,070 14,354 13,179
10/31/95 11,778 14,303 12,874
11/30/95 11,517 14,929 13,066
12/31/95 11,074 15,217 13,226
01/31/96 11,043 15,735 13,663
02/29/96 11,349 15,881 13,978
03/31/96 11,972 16,033 13,904
04/30/96 12,268 16,269 14,739
05/31/96 12,452 16,688 14,978
06/30/96 12,196 16,752 14,915
07/31/96 11,707 16,012 14,186
08/31/96 12,023 16,350 14,888
09/30/96 12,207 17,270 15,274
10/31/96 11,900 17,746 15,167
11/30/96 12,390 19,086 16,263
12/31/96 12,452 18,708 16,650
01/31/97 13,315 19,875 17,395
02/28/97 13,294 20,032 17,720
03/31/97 12,749 19,211 17,234
04/30/97 13,130 20,356 18,005
05/31/97 13,962 21,594 19,479
06/30/97 14,753 22,561 20,401
</TABLE>
* Inception of Fund was January 7, 1993.
Graph and average annual total return comparison begins January 31, 1993.
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.
Past performance is not predictive of future performance. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
Performance represents the performance of the Northwest Portfolio only and
excludes separate account charges such as administration charges, contingent
deferred sales charges, or mortality and expense risk premiums.
- 2 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER LETTER (Continued)
Only one of my stock picking rules is hard and fast: I only buy companies
that have been visited by me or one of our researchers. Other than that, I fa-
vor companies with valuations that are low compared to their industry group or
their own historical range and have good earnings outlooks.
I plan to hold 30 to 40 stocks of mid-to-large companies, giving the heavi-
est weightings to industries that drive the Northwest economy. That'd be ex-
port-related companies, technology and health-care. Indeed, the most substan-
tial additions I've made were to technology and healthcare.
From computer hardware and software to biotech and telecommunications,
there is no doubt that developing technology is this region's strong suit. For
that reason, our largest position is Microsoft. I don't think there's a more
powerful company in the Northwest. However, I bought more Hewlett Packard to
further expose the Portfolio to this growing sector.
And, after visiting, I added Physio-Control to our portfolio. Physio's de-
fibrillators are well-positioned in the marketplace and its stock price was
right. I also added PacifiCare, a health maintenance organization that controls
25% of the Medicare market. PacifiCare's stock price slipped on disappointing
earnings, and it was simply a matter of 'When bad things happen to good compa-
nies, we buy them'.
I also started a position in Alaska Airlines, a company I have followed for
two decades. Alaska is American's top rated airline and people on the West
Coast have money to fly it.
I added to our position in Expeditors International to capitalize on the
geographic advantage it has in international trade. Schnitzer Steel, even
though it lagged the broad market, is also
HIGHLIGHTS
<TABLE>
<CAPTION>
%
TEN LARGEST HOLDINGS NET ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Microsoft Corp. ........................................................... 6.3%
Washington Mutual Savings Bank............................................. 5.1
Schnitzer Steel Industries, Inc. .......................................... 4.5
Boeing Co. ................................................................ 4.4
Costco Companies, Inc. .................................................... 4.0
Starbucks Corp. ........................................................... 3.7
Sterling Financial Corp. .................................................. 3.6
Albertson's, Inc. ......................................................... 3.4
Intel Corp. ............................................................... 3.3
Alaska Air Group, Inc. .................................................... 3.2
</TABLE>
<TABLE>
<CAPTION>
Market Capitalization
- ------------------------------------------------------------------------------
<S> <C>
Large-Cap (over $4 billion) 43%
Mid-Cap ($1 billion-$4 billion) 14%
Small-Cap (under $1 billion) 42%
Cash & Other 1%
-------
Total 100%
=======
</TABLE>
- 3 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER LETTER (Continued)
an export play. Schnitzer will gain with growth of scrap steel exports to the
Pacific Rim.
Finally the requisite Boeing discussion: Boeing is not only at a positive
point in its business cycle, the company is reinventing itself. Acquiring Mc-
Donnell Douglas and Rockwell and increasing its airplane maintenance business,
Boeing will achieve a better business mix. The company stands to become less
cyclical and even more formidable.
In addition to investing in areas where we expect growth, I'm investing
only in companies that we know. Such intimacy helps me know when to buy and
when to sell a stock. In general, I will sell when a stock has reached our
price target, the fundamentals have deteriorated, or to raise cash to invest in
a better opportunity.
Right now, I see the Northwest itself as a better opportunity. As far as
the economists' eyes can see, our regional economy is set to outperform the na-
tional economy, which should benefit the Northwest Portfolio.
/s/ Bill Whitlow
Bill Whitlow
- --------------------------------------------------------------------------------
Bill Whitlow began his career at SAFECO in 1976 and left in 1980. Before re-
joining SAFECO in 1997 as RST Northwest Portfolio Manager, he was director of
Research at Pacific Crest Securities. He holds a BA in Chemistry from the Uni-
versity of Colorado and an MBA from the University of California at Berkeley.
He is a Chartered Financial Analyst and a member of the Washington State Gover-
nor's Council of Economic Advisors.
<TABLE>
<CAPTION>
Portfolio of Investments
SAFECO Resource Series Trust -- Northwest Portfolio
As of June 30, 1997
(Unaudited)
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 98.6%
AEROSPACE/DEFENSE - 6.8%
11,400 Boeing Co. .................................................... $ 605
5,500 Precision Castparts Corp. ..................................... 328
AIR FREIGHT - 2.0%
9,800 Expeditors International of Washington, Inc. .................. 278
AIRLINES - 3.2%
17,000 *Alaska Air Group, Inc. ....................................... 436
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
BANKS (MAJOR REGIONAL) - 8.2%
5,495 *Cascade Bancorp............................................... $ 220
15,309 Northrim Bank.................................................. 168
6,310 US Bancorp..................................................... 405
10,400 West Coast Bancorp, Inc. ...................................... 325
BEVERAGES (ALCOHOLIC) - 0.6%
11,800 *Redhook Ale Brewery, Inc. .................................... 83
BUILDING MATERIALS - 1.6%
9,600 TJ International, Inc. ........................................ 225
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 4 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO Resource Series Trust -- Northwest Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
CHEMICALS (DIVERSIFIED) - 1.0%
56,300 *Consep, Inc. ................................................. $ 141
COMPUTERS (HARDWARE) - 4.6%
7,600 Hewlett-Packard Co. ........................................... 426
9,500 *Sequent Computer Systems, Inc. ............................... 200
COMPUTERS (SOFTWARE & SERVICES) - 6.6%
5,500 *Mentor Graphics Corp. ........................................ 51
6,800 *Microsoft Corp. .............................................. 859
ELECTRIC COMPANIES - 3.6%
18,000 Houston Industries, Inc. ...................................... 386
2,700 Public Service Co. of Colorado................................. 112
ELECTRICAL EQUIPMENT - 2.3%
7,400 AMP, Inc. ..................................................... 309
ELECTRONICS (SEMICONDUCTORS) - 5.7%
3,200 *Intel Corp. .................................................. 454
5,900 *Lattice Semiconductor Corp. .................................. 333
FOOTWARE - 2.3%
5,400 NIKE, Inc. .................................................... 315
HEALTH CARE (HOSPITAL MANAGEMENT) - 3.0%
6,500 *PacifiCare Health Systems, Inc. (Class B)..................... 415
HEALTH CARE (LONG TERM CARE) - 4.7%
7,600 *Assisted Living Concepts, Inc. ............................... 210
29,500 *Emeritus Corp. ............................................... 435
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 3.2%
29,000 *Physio-Control International.................................. 435
IRON & STEEL - 8.0%
12,600 *Oregon Metallurgical Corp. ................................... 354
6,600 Oregon Steel Mills, Inc. ...................................... 132
20,700 Schnitzer Steel Industries, Inc. .............................. 616
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
NATURAL GAS - 0.8%
6,900 Cascade Natural Gas Corp. .................................. $ 113
RAILROADS - 2.9%
4,500 Burlington Northern
Santa Fe.................................................... 404
RESTAURANTS - 3.7%
13,000 *Starbucks Corp. ........................................... 506
RETAIL (DEPARTMENT STORE) - 1.4%
4,000 Nordstrom, Inc. ............................................ 196
RETAIL (FOOD CHAINS) - 3.6%
12,900 Albertson's, Inc. .......................................... 471
447 *Quality Food Centers, Inc. ................................ 17
RETAIL (GENERAL MERCHANDISE) - 4.0%
16,600 *Costco Companies, Inc. .................................... 546
RETAIL (SPECIALTY) - 3.1%
18,800 *Hollywood Entertainment Corp. ............................. 430
SAVINGS & LOAN COMPANIES - 11.7%
8,300 Interwest Bancorp........................................... 328
26,600 *Sterling Financial Corp. .................................. 495
11,700 Washington Mutual Savings Bank.............................. 699
3,882 WesterFed Financial Corp. .................................. 80
-------
TOTAL COMMON STOCKS.................................................. 13,541
-------
TEMPORARY INVESTMENTS - 1.8%
INVESTMENT COMPANIES:
242,744 SSgA Money Market Portfolio................................. 243
-------
TOTAL TEMPORARY INVESTMENTS.......................................... 243
-------
TOTAL INVESTMENTS - 100.4%........................................... 13,784
Liabilities, less Other Assets....................................... (59)
-------
NET ASSETS........................................................... $13,725
=======
- --------------------------------------------------------------------------------
</TABLE>
*Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
- 5 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
SAFECO Resource Series Trust -- Northwest Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands, Except Per-Share Amounts)
- -------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, at Cost $10,590
=======
Investments, at Value $13,784
Receivables:
Dividends and interest 13
Trust shares sold 43
-------
Total assets 13,840
LIABILITIES:
Payables:
Investment advisory fees 8
Trust shares redeemed 107
-------
Total liabilities 115
-------
NET ASSETS $13,725
=======
Net Assets consist of:
Accumulated net investment income $ 46
Accumulated net realized loss on investment transactions (76)
Net unrealized appreciation 3,194
Paid in capital (par value $.001, unlimited shares authorized) 10,561
-------
NET ASSETS $13,725
=======
TRUST SHARES OUTSTANDING 956
=======
NET ASSET VALUE PER SHARE
(Net assets divided by Trust shares outstanding) $ 14.36
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 6 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Operations
SAFECO Resource Series Trust -- Northwest Portfolio
For the Six-Month Period Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
($ in Thousands)
- ----------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Dividends $ 63
Interest 23
------
Total investment income 86
EXPENSES:
Investment advisory fees 40
Legal and auditing fees 8
Custodian fees 4
Trustees' fees 1
Other 1
------
Total expenses before reimbursement 54
Expense reimbursement 14
------
Total expenses after reimbursement 40
------
NET INVESTMENT INCOME 46
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 62
Net change in unrealized appreciation 1,886
------
NET GAIN ON INVESTMENTS 1,948
------
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $1,994
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 7 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
SAFECO Resource Series Trust -- Northwest Portfolio
(Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX- FOR THE
MONTH PERIOD YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
(In Thousands) 1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ 46 $ 62
Net realized gain (loss) on investments 62 (138)
Net change in unrealized appreciation 1,886 970
------- -------
Net change in net assets resulting from operations 1,994 894
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (62)
NET TRUST SHARE TRANSACTIONS 2,190 2,397
------- -------
TOTAL CHANGE IN NET ASSETS 4,184 3,229
NET ASSETS AT BEGINNING OF PERIOD 9,541 6,312
------- -------
NET ASSETS AT END OF PERIOD $13,725 $ 9,541
======= =======
- -------------------------------------------------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN TRUST SHARES AND AMOUNTS
SHARES:
Sales 248 315
Reinvestments -- 3
Redemptions (79) (113)
------- -------
Net change 169 205
======= =======
AMOUNTS:
Sales $ 3,226 $ 3,684
Reinvestments -- 46
Redemptions (1,036) (1,333)
------- -------
Net change $ 2,190 $ 2,397
======= =======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 8 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Notes to Financial Statements
(Unaudited)
1. GENERAL
SAFECO Resource Series Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management invest-
ment company. The Trust consists of six portfolios. Shares of the Trust Portfo-
lios are available as funding vehicles for certain variable annuity and vari-
able life products sold by SAFECO Life Insurance Company and other insurance
companies.
The financial statements included herein are only those of the Northwest
Portfolio. The financial statements of the other portfolios are presented sepa-
rately. The investment objective of the Northwest Portfolio is long term capi-
tal growth.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles, which
permits management to make certain estimates and assumptions at the date of the
financial statements.
SECURITY VALUATION. Securities in the Portfolio traded on a national exchange
or over-the-counter are valued at the last reported sales price, unless there
are no transactions in which case they are valued at the last reported bid
price. Investments in other mutual funds are valued at net asset value.
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on investment transactions are determined using the
identified cost method.
INCOME RECOGNITION. Dividend income, less foreign taxes withheld (if any), is
recorded in the ex-dividend date.
DIVIDENDS TO SHAREHOLDERS. Dividends to shareholders from net investment in-
come and distributions of realized gains are recorded on the last business day
of December each year.
FEDERAL INCOME TAX. It is the Portfolio's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Therefore, no
federal income or excise tax provision is required.
- 9 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
3. TRANSACTIONS WITH AFFILIATES
SAFECO Asset Management Company receives investment advisory fees from the
Portfolio. The fee is based on average daily net assets at an annual rate of
.74 percent.
The Portfolio may borrow money for temporary purposes from SAFECO Corporation
or its affiliates at interest rates equivalent to commercial bank interest
rates.
At June 30, 1997, SAFECO Life Insurance Company owned 100 percent of the out-
standing shares of the Portfolio.
Currently, SAFECO Life Insurance Company (SAFECO) pays all the expenses of
the Portfolio except for investment advisory fees. When net assets exceed $20
million, the Portfolio will be charged for all operating expenses in addition
to investment advisory fees. These expenses will include legal and auditing
fees, custodian fees, and other expenses.
4. INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
($ in Thousands)
- -------------------------------------------------------------------
<S> <C>
PURCHASES FOR THE SIX-MONTHS ENDED JUNE 30, 1997 $4,869
======
SALES FOR THE SIX-MONTHS ENDED JUNE 30, 1997 $1,861
======
- -------------------------------------------------------------------
</TABLE>
Purchases and sales amounts exclude short-term investments which, at the time
of purchase, had a maturity of one year or less.
Unrealized appreciation (depreciation) at June 30, 1997:
<TABLE>
<CAPTION>
($ in Thousands)
- ------------------------------------------------------------------------------
<S> <C>
Aggregate gross unrealized appreciation for investment
securities in which there is an excess of value over
identified cost $3,584
Aggregate gross unrealized depreciation for investment
securities in which there is an excess of identified cost
over value (390)
------
NET UNREALIZED APPRECIATION $3,194
======
- ------------------------------------------------------------------------------
</TABLE>
5. ACCUMULATED UNDISTRIBUTED CAPITAL LOSS
The Portfolio had $76,000 of accumulated undistributed net realized losses on
investment transactions at June 30, 1997. For Federal income tax purposes, this
will represent a capital loss carryforward which will expire in the year 2004.
- 10 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
FOR THE JANUARY 7, 1993
SIX-MONTH (COMMENCEMENT OF
PERIOD ENDED OPERATIONS) TO
JUNE 30, YEAR ENDED DECEMBER 31, DECEMBER 31,
---------------------------------------------------
1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD $ 12.12 $ 10.85 $ 10.24 $ 9.94 $ 10.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.05 0.08 0.08 0.06 0.09
Net realized and
unrealized gain (loss)
on investments 2.19 1.27 0.68 0.30 (0.06)
-------- -------- ------- ------- --------
Total from investment
operations 2.24 1.35 0.76 0.36 0.03
LESS DISTRIBUTIONS:
Dividends from net
investment income -- (0.08) (0.08) (0.06) (0.09)
Distributions from
realized gains -- -- (0.07) -- --
-------- -------- ------- ------- --------
Total distributions -- (0.08) (0.15) (0.06) (0.09)
-------- -------- ------- ------- --------
NET ASSET VALUE AT END
OF PERIOD $ 14.36 $ 12.12 $ 10.85 $ 10.24 $ 9.94
======== ======== ======= ======= ========
TOTAL RETURN(A) 18.48%** 12.44% 7.42% 3.65% (.55%)**
NET ASSETS AT END OF
PERIOD
(000'S OMITTED) $ 13,725 $ 9,541 $ 6,312 $ 4,564 $ 3,183
RATIO OF EXPENSES TO
AVERAGE NET ASSETS .71%* .70% .71% .71% .72%*
RATIO OF EXPENSES TO
AVERAGE NET ASSETS
BEFORE EXPENSE
REIMBURSEMENTS++ .91%* 1.10% 1.18% 1.23% --
RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET
ASSETS .82%* .78% .81% .72% 1.06%*
PORTFOLIO TURNOVER RATE 35.34%* 52.20% 21.30% 7.29% 3.93%*
AVERAGE COMMISSION RATE
PAID $ 0.0541 $ 0.0467 -- -- --
- ----------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Not Annualized. Performance information for the period ended December 31,
1993 begins on January 31, 1993.
++ See Note 3 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been re-
duced during the periods shown (See Note 3 of Notes to Financial State-
ments).
- 11 -
<PAGE>
SAFECO RESOURCE SERIES TRUST
BOARD OF TRUSTEES:
Boh A. Dickey, Chairman
Barbara J. Dingfield
David F. Hill
Richard W. Hubbard
Richard E. Lundgren
Larry L. Pinnt
John W. Schneider
OFFICERS:
David F. Hill, President
Ronald L. Spaulding, Vice President and Treasurer
Neal A. Fuller, Vice President and Controller
INVESTMENT ADVISOR:
SAFECO Asset Management Company
DISTRIBUTOR:
SAFECO Securities, Inc.
TRANSFER AGENT:
SAFECO Services Corporation
CUSTODIAN:
State Street Bank
AUDITOR:
Ernst & Young, LLP
GMF 942 8/97
LOGO Printed on Recycled Paper.
This report must be preceded or accompanied by a current prospectus.
(R) Registered trademark of SAFECO Corporation.
<PAGE>
June 30, 1997
[LOGO]
Semi-Annual Report
Safeco Resource Series Trust Money Market Portfolio
--------------
[LOGO OF SAFECO MUTUAL FUNDS]
<PAGE>
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- --------------------------------------------------------------------------------
Portfolio Manager Letter
June 30, 1997
[PICTURE APPEARS HERE]
Naomi Urata
RST MONEY MARKET PORTFOLIO
In the twelve-month period ended June 30, 1997, the SAFECO RST Money
Market Portfolio's total return was 4.98%. The Consumer Price Index, a
broad inflation measure, rose 2.30% for the 12 months ending June 30,
1997.
Ninety-day commercial paper rates started 1997 at 5.47% and traded in that
range until mid-March when they rose in anticipation of a rate hike by the
Federal Reserve. The Fed raised the Federal Funds rate on March 25 by 25 basis
points to 5.50%. Commercial paper rates ended the quarter at 5.63%. Thirty to
sixty-day rates rose to nearly equal one year rates. Rates are unusually flat
as the market sees very little risk of inflation and very steady rates going
forward.
The average maturity of the portfolio fluctuated between 32 and 60 days,
ending the period at 49 days. I invested in U.S. agency securities, commercial
paper issued by top-tier corporations, and a Yankee Bank certificate of depos-
it. All of the securities bear a fixed rate of interest and had
RST MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
Since
1 Year 5 Year Inception
---------------------------------
<S> <C> <C> <C>
Money Market Portfolio 4.98 4.13 5.57
Weighted Average Maturity
</TABLE>
RST MONEY MARKET PORTFOLIO
ILLUSTRATION OF A $10,000 INVESTMENT:
SINCE FUND INCEPTION ON JULY 21, 1987 TO JUNE 30, 1997*
<TABLE>
<CAPTION>
Date Mmkt
- ----------------------------------
<S> <C>
07/31/87 10,000
08/31/87 10,052
09/30/87 10,103
10/31/87 10,154
11/30/87 10,209
12/31/87 10,264
01/31/88 10,323
02/29/88 10,378
03/31/88 10,432
04/30/88 10,485
05/31/88 10,535
06/30/88 10,593
07/31/88 10,651
08/31/88 10,709
09/30/88 10,776
10/31/88 10,842
11/30/88 10,913
12/31/88 10,983
01/31/89 11,057
02/28/89 11,140
03/31/89 11,215
04/30/89 11,300
05/31/89 11,386
06/30/89 11,468
07/31/89 11,564
08/31/89 11,650
09/30/89 11,733
10/31/89 11,894
11/30/89 11,972
12/31/89 12,048
01/31/90 12,133
02/28/90 12,205
03/31/90 12,282
04/30/90 12,362
05/31/90 12,443
06/30/90 12,519
07/31/90 12,601
08/31/90 12,680
09/30/90 12,752
10/31/90 12,835
11/30/90 12,915
12/31/90 12,995
01/31/91 13,072
02/28/91 13,137
03/31/91 13,200
04/30/91 13,270
05/31/91 13,332
06/30/91 13,384
07/31/91 13,450
08/31/91 13,512
09/30/91 13,572
10/31/91 13,628
11/30/91 13,679
12/31/91 13,732
01/31/92 13,777
02/29/92 13,814
03/31/92 13,856
04/30/92 13,895
05/31/92 13,932
06/30/92 13,975
07/31/92 14,017
08/31/92 14,052
09/30/92 14,082
10/31/92 14,111
11/30/92 14,145
12/31/92 14,179
01/31/93 14,212
02/28/93 14,240
03/31/93 14,273
04/30/93 14,303
05/31/93 14,330
06/30/93 14,365
07/31/93 14,395
08/31/93 14,428
09/30/93 14,457
10/31/93 14,486
11/30/93 14,516
12/31/93 14,549
01/31/94 14,583
02/28/94 14,612
03/31/94 14,644
04/30/94 14,679
05/31/94 14,722
06/30/94 14,765
07/31/94 14,810
08/31/94 14,864
09/30/94 14,913
10/31/94 14,966
11/30/94 15,017
12/31/94 15,080
01/31/95 15,154
02/28/95 15,219
03/31/95 15,288
04/30/95 15,358
05/31/95 15,437
06/30/95 15,505
07/31/95 15,577
08/31/95 15,643
09/30/95 15,705
10/31/95 15,785
11/30/95 15,857
12/31/95 15,918
01/31/96 15,993
02/29/96 16,051
03/31/96 16,110
04/30/96 16,175
05/31/96 16,243
06/30/96 16,301
07/31/96 16,371
08/31/96 16,437
09/30/96 16,506
10/31/96 16,568
11/30/96 16,635
12/31/96 16,704
01/31/97 16,775
02/28/97 16,833
03/31/97 16,897
04/30/97 16,970
05/31/97 17,038
06/30/97 17,113
</TABLE>
* Inception of Fund was July 21, 1987.
Graph and average annual return comparison begins July 31, 1987.
The performance graph shows a hypothetical $10,000 investment in the Fund.
Past performance is not predictive of future performance. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
Performance represents the performance of the Money Market Portfolio only and
excludes separate account charges such as deductions for administration charges,
contingent deferred sales charges, and mortality and expense risk premiums.
The Money Market Portfolio seeks to maintain a $1.00 per share net asset
value. Shares of the Money Market Portfolio are neither insured nor guaranteed
by the U.S. Government. There is no assurance that the Money Market Portfolio
will maintain a stable $1.00 per share net asset value.
- 2 -
<PAGE>
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- --------------------------------------------------------------------------------
PORTFOLIO MANAGER LETTER (Continued)
maturities that were less than 13 months.
I added the following new issuers to the Portfolio's approved list: Societe
Generale, a major French bank; Hyundai Motor Finance Company, the U.S.
financing arm of Hyundai Motor Company supported by a direct pay letter of
credit from the Bank of American National Trust and Savings Association; and
National Fleet Funding Corporation, an affiliate of National Car Rental System.
I believe that the Federal Reserve will hold rates steady for the next sev-
eral months. Economic statistics reflect a tight labor market, often associated
with accelerating inflation. However, inflation has been low. Economic growth
has been slow compared to the 5.9% rate of the first quarter of 1997. It is un-
clear whether the slowdown is temporary, or if it is the beginning of a long-
term trend. I will maintain longer average maturities in spite of the uncer-
tainty.
/s/ Naomi Urata
Naomi Urata
- --------------------------------------------------------------------------------
Naomi Urata joined SAFECO in 1993 as a fixed- income analyst and began managing
the SAFECO RST Money Market Portfolio in August of 1994. Naomi holds a Masters
in Management from Yale University and is a Chartered Financial Analyst.
- 3 -
<PAGE>
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- -------------------------------------------------------------------------------
Portfolio of Investments
SAFECO Resource Series Trust -- Money Market Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000'S) (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMERCIAL PAPER - 86.5%
ASSET BACKED - 14.4%
$800 Ciesco L.P.
5.55%, due 8/08/97............................................... $ 795
800 New Center Asset Trust
5.62%, due 7/08/97............................................... 799
800 #Receivables Capital Corp. 4(2) (acquired 6/12/97)
5.56%, due 7/25/97............................................... 797
BANKS-DOMESTIC - 4.8%
800 Norwest Corp.
5.53%, due 8/13/97............................................... 795
BANKS-FOREIGN - 3.0%
500 Societe Generale NY
6.20%, due 5/12/98............................................... 501
CONGLOMERATES - 4.8%
800 B.A.T. Capital Corp.
5.60%, due 7/14/97............................................... 798
FINANCE-AUTO - 18.9%
800 Ford Motor Credit Co.
5.57%, due 7/10/97............................................... 799
750 General Motors Acceptance Corp.
5.77%, due 10/15/97.............................................. 737
800 Hyundai Motors
5.53%, due 7/07/97............................................... 799
800 National Fleet Funding
5.58%, due 7/18/97............................................... 798
FINANCE-CONSUMER - 9.6%
800 Commercial Credit CP
5.61%, due 8/05/97............................................... 796
800 Household Finance Corp.
5.57%, due 9/09/97............................................... 791
FINANCE-DIVERSIFIED & BUSINESS - 17.5%
800 Associates Corp. of North America
5.60%, due 7/21/97............................................... 797
800 General Electric Capital Corp.
5.51%, due 7/03/97............................................... 800
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000'S) (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
$500 Heller Financial, Inc.
5.36%, due 8/11/97.............................................. $ 497
800 International Lease Finance Corp.
5.56%, due 8/21/97.............................................. 794
FINANCIAL-MISCELLANEOUS - 4.5%
750 Tasmanian Public Finance Corp.
5.66%, due 8/28/97.............................................. 743
FINANCIAL SERVICES-BROKERAGE - 9.0%
700 Merrill Lynch & Co., Inc.
5.43%, due 7/16/97.............................................. 698
800 Smith Barney Inc. CP
5.54%, due 7/29/97.............................................. 797
-------
TOTAL COMMERCIAL PAPER................................................ 14,331
-------
U.S. GOVERNMENT AND AGENCY SECURITIES - 3.0%
STUDENT LOAN MARKETING ASSOCIATION - 3.0%
500 5.535%, due 2/25/98............................................. 500
-------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES........................... 500
-------
OTHER INVESTMENTS - 7.9%
INVESTMENT COMPANIES:
807 SSgA Money Market Portfolio..................................... 807
504 SSgA U.S. Treasury Money Market Portfolio....................... 504
-------
TOTAL OTHER INVESTMENTS............................................... 1,311
-------
TOTAL INVESTMENTS - 97.4%............................................. 16,142
OTHER ASSETS, LESS LIABILITIES........................................ 426
-------
NET ASSETS............................................................ $16,568
=======
- --------------------------------------------------------------------------------
</TABLE>
#Security exempt from registration and restricted as to resale only to
dealers, or through a dealer to an "accredited investor" or a "qualified
institutional buyer". The total market value of this security is $797,035 or
4.81% of net assets.
SEE NOTES TO FINANCIAL STATEMENTS
- 4 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
SAFECO Resource Series Trust -- Money Market Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands, Except Per-Share Amounts)
- ---------------------------------------------------------
<S> <C>
ASSETS:
Investments, at Cost $16,142
=======
Investments, at Value $16,142
Receivables:
Dividends and interest 17
Trust shares sold 647
-------
Total assets 16,806
LIABILITY:
Trust shares redeemed 238
-------
NET ASSETS $16,568
=======
TRUST SHARES OUTSTANDING
(Par Value $.001, unlimited shares authorized) 16,568
=======
NET ASSET VALUE PER SHARE
(Net assets divided by Trust shares outstanding) $ 1.00
=======
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
- 5 -
<PAGE>
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- --------------------------------------------------------------------------------
Statement of Operations
SAFECO Resource Series Trust -- Money Market Portfolio
For the Six-Month Period Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
($ in Thousands)
- -----------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest $432
EXPENSES:
Investment advisory fees 49
Legal and auditing fees 8
Custodian fees 3
Trustees' fees 2
Other 1
----
Total expenses before reimbursement 63
Expense reimbursement 14
----
Total expenses after reimbursement 49
----
NET INVESTMENT INCOME AND NET CHANGE IN NET ASSETS RESULTING FROM
OPERATIONS $383
====
SEE NOTES TO FINANCIAL STATEMENTS
</TABLE>
- 6 -
<PAGE>
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- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
SAFECO Resource Series Trust -- Money Market Portfolio
(Unaudited)
<TABLE>
<CAPTION>
For the Six-
Month Period For the
Ended Year Ended
June 30, December 31,
(In Thousands) 1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 383 $ 491
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (383) (491)
NET TRUST SHARE TRANSACTIONS 4,075 3,774
------- -------
TOTAL CHANGE IN NET ASSETS 4,075 3,774
NET ASSETS AT BEGINNING OF PERIOD 12,493 8,719
------- -------
NET ASSETS AT END OF PERIOD $16,568 $12,493
======= =======
- ----------------------------------------------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN TRUST SHARES AND AMOUNTS
Sales 42,712 46,941
Reinvestments 383 491
Redemptions (39,020) (43,658)
------- -------
Net change 4,075 3,774
======= =======
</TABLE>
Because share value is equal to $1.00, dollar amounts and share amounts are
identical.
SEE NOTES TO FINANCIAL STATEMENTS
- 7 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Notes to Financial Statements
(Unaudited)
1. GENERAL
SAFECO Resource Series Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management invest-
ment company. The Trust consists of six portfolios. Shares of the Trust Portfo-
lios are available as funding vehicles for certain variable annuity and vari-
able life products sold by SAFECO Life Insurance Company and other insurance
companies.
The financial statements included herein are only those of the Money Market
Portfolio. The financial statements of the other portfolios are presented sepa-
rately. The investment objective of the Money Market Portfolio is current in-
come while preserving capital and liquidity.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles, which
permits management to make certain estimates and assumptions at the date of the
financial statements.
SECURITY VALUATION. Securities in the Portfolio purchased at par are valued
at cost. All other securities are valued at amortized cost, which approximates
market value.
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on investment transactions (if any) are determined
using the identified cost method.
INCOME RECOGNITION. Interest is accrued on Portfolio investments daily. Divi-
dend income on investments in mutual funds is recorded on the ex-dividend date.
DIVIDENDS TO SHAREHOLDERS. Dividends to shareholders from net investment in-
come are declared as of the close of each business day and payment is made as
of the last business day of each month.
FEDERAL INCOME TAX. It is the Portfolio's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Therefore, no
federal income or excise tax provision is required.
- 8 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
3. TRANSACTIONS WITH AFFILIATES
SAFECO Asset Management Company receives investment advisory fees from the
Portfolio. The fee is based on average daily net assets at an annual rate of
.65 percent.
The Portfolio may borrow money for temporary purposes from SAFECO Corporation
or its affiliates at interest rates equivalent to commercial bank interest
rates.
At June 30, 1997, SAFECO Life Insurance Company owned 100 percent of the out-
standing shares of the Portfolio.
Currently, SAFECO Life Insurance Company (SAFECO) pays all the expenses of
the Portfolio except for investment advisory fees. When net assets exceed $20
million, the Portfolio will be charged for all operating expenses in addition
to investment advisory fees. These expenses will include legal and auditing
fees, custodian fees, and other expenses.
4. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
FOR THE
SIX-MONTH
PERIOD ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------------------------------------
1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.02 0.05 0.05 0.04 0.03
LESS DISTRIBUTIONS:
Dividends from net investment
income (0.02) (0.05) (0.05) (0.04) (0.03)
------- ------- ------ ------ ------
Net asset value at end of
period 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ====== ====== ======
TOTAL RETURN(A) 2.44%** 4.94% 5.56% 3.65% 2.61%
NET ASSETS AT END OF PERIOD
(000'S OMITTED) $16,568 $12,493 $8,719 $9,315 $6,327
RATIO OF EXPENSES TO AVERAGE
NET ASSETS .63%* .62% .62% .63% .64%
RATIO OF EXPENSES TO AVERAGE
NET ASSETS BEFORE EXPENSE
REIMBURSEMENTS++ .79%* .90% .87% .87% --
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 4.89%* 4.86% 5.32% 3.63% 2.61%
- -------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Not Annualized.
++ See Note 3 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been re-
duced during the periods shown (See Note 3 of Notes to Financial State-
ments).
- 9 -
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
- 10 -
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
- 11 -
<PAGE>
SAFECO RESOURCE SERIES TRUST
BOARD OF TRUSTEES:
Boh A. Dickey, Chairman
Barbara J. Dingfield
David F. Hill
Richard W. Hubbard
Richard E. Lundgren
Larry L. Pinnt
John W. Schneider
OFFICERS:
David F. Hill, President
Ronald L. Spaulding Vice President and Treasurer
Neal A. Fuller Vice President and Controller
INVESTMENT ADVISOR:
SAFECO Asset Management Company
DISTRIBUTOR:
SAFECO Securities, Inc.
TRANSFER AGENT:
SAFECO Services Corporation
CUSTODIAN:
State Street Bank
AUDITOR:
Ernst & Young, LLP
GMF 941 8/97
[LOGO] Printed on Recycled Paper.
This report must be preceded or accompanied by a current prospectus.
(R) Registered trademark of SAFECO Corporation.
<PAGE>
June 30, 1997
[LOGO]
Semi-Annual Report
Safeco Resource Series Trust
Equity Portfolio
--------------
[LOGO OF SAFECO MUTUAL FUNDS]
<PAGE>
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- --------------------------------------------------------------------------------
Portfolio Manager Letter
June 30, 1997
[PICTURE APPEARS HERE]
Rich Meagley
SAFECO RST EQUITY PORTFOLIO
SAFECO RST Equity returned 31.10% for the 12 months ended June 30,
1997, beating the Lipper peer group, but lagged the S&P 500 at 34.05%.
Three stocks held us below the broad market: Viacom, Advanta and
PacifiCare. However, far more of our stocks added to rather than detracted from
our performance. And for that reason, RST Equity beat the growth and income
peer group average which was 28.07% for the 12-month period according to Lipper
Analytical Services.
Within the Viacom organization, Blockbuster has been a bust. Competition
for leisure time attention has come from multiple fronts and, consequently,
Viacom will close some stores. Meanwhile, the MTV division is doing fine. We're
holding our position.
PacifiCare discovered the HMO it acquired, FHP, was in poorer financial
shape than anticipated. That news sent the stock reeling. None-the-less the
company's long-term fundamentals remain unchanged and the merged company con-
trols 25% of the Medicare market. I bought
RST EQUITY PORFOLIO
<TABLE>
<CAPTION>
Since
1 Year 5 Year Inception
----------------------------------
<S> <C> <C> <C>
Equity Portfolio 31.10 24.29 15.53
</TABLE>
RST EQUITY PORTFOLIO
ILLUSTRATION OF A $10,000 INVESTMENT:
SINCE FUND INCEPTION ON JULY 21, 1987 TO JUNE 30, 1997*
<TABLE>
<CAPTION>
Date Equity S&P
- ------------------------------------------------------------
<S> <C> <C> <C>
07/31/87 10,000 10,000
08/31/87 10,000 10,373
09/30/87 10,351 10,146
10/31/87 10,040 7,960
11/30/87 7,783 7,304
12/31/87 7,689 7,860
01/31/88 7,689 8,191
02/29/88 8,313 8,573
03/31/88 8,865 8,308
04/30/88 8,848 8,400
05/31/88 8,928 8,473
06/30/88 8,883 8,862
07/31/88 9,195 8,829
08/31/88 9,204 8,528
09/30/88 9,097 8,892
10/31/88 9,471 9,139
11/30/88 9,721 9,008
12/31/88 9,687 9,166
01/31/89 9,687 9,837
02/28/89 10,236 9,592
03/31/89 10,069 9,815
04/30/89 10,115 10,325
05/31/89 10,600 10,743
06/30/89 10,916 10,682
07/31/89 10,954 11,646
08/31/89 11,913 11,875
09/30/89 12,043 11,826
10/31/89 11,736 11,552
11/30/89 11,969 11,787
12/31/89 12,313 12,070
01/31/90 11,326 11,260
02/28/90 11,376 11,405
03/31/90 11,805 11,708
04/30/90 11,376 11,415
05/31/90 12,373 12,528
06/30/90 12,413 12,443
07/31/90 12,413 12,403
08/31/90 12,443 11,282
09/30/90 11,346 10,732
10/31/90 10,838 10,686
11/30/90 10,718 11,376
12/31/90 11,671 11,694
01/31/91 12,174 12,204
02/28/91 12,933 13,076
03/31/91 13,251 13,393
04/30/91 13,661 13,425
05/31/91 14,194 14,005
06/30/91 13,415 13,363
07/31/91 14,297 13,986
08/31/91 14,471 14,318
09/30/91 14,163 14,079
10/31/91 14,287 14,267
11/30/91 13,497 13,692
12/31/91 14,804 15,259
01/31/92 15,551 14,975
02/29/92 15,936 15,169
03/31/92 15,068 14,874
04/30/92 15,200 15,311
05/31/92 15,046 15,386
06/30/92 14,113 15,157
07/31/92 14,640 15,777
08/31/92 14,157 15,453
09/30/92 14,211 15,636
10/31/92 14,717 15,689
11/30/92 15,617 16,222
12/31/92 15,997 16,421
01/31/93 16,391 16,558
02/28/93 16,369 16,784
03/31/93 17,067 17,138
04/30/93 16,718 16,723
05/31/93 18,036 17,170
06/30/93 18,093 17,220
07/31/93 17,890 17,150
08/31/93 18,859 17,800
09/30/93 19,422 17,663
10/31/93 19,929 18,029
11/30/93 20,064 17,857
12/31/93 20,463 18,073
01/31/94 21,761 18,688
02/28/94 21,208 18,181
03/31/94 20,355 17,391
04/30/94 20,932 17,613
05/31/94 21,449 17,900
06/30/94 20,679 17,462
07/31/94 21,160 18,034
08/31/94 22,543 18,772
09/30/94 22,314 18,314
10/31/94 22,807 18,724
11/30/94 22,350 18,043
12/31/94 22,292 18,310
01/31/95 22,477 18,784
02/28/95 23,060 19,515
03/31/95 23,391 20,090
04/30/95 24,000 20,681
05/31/95 24,609 21,521
06/30/95 25,391 22,020
07/31/95 25,775 22,749
08/31/95 26,530 22,806
09/30/95 27,563 23,768
10/31/95 27,537 23,682
11/30/95 28,345 24,720
12/31/95 28,674 25,197
01/31/96 29,479 26,054
02/29/96 29,643 26,296
03/31/96 30,016 26,548
04/30/96 30,642 26,939
05/31/96 31,357 27,633
06/30/96 31,923 27,738
07/31/96 30,686 26,513
08/31/96 30,970 27,073
09/30/96 32,847 28,596
10/31/96 33,891 29,384
11/30/96 36,499 31,603
12/31/96 35,782 30,977
01/31/97 37,888 32,910
02/28/97 38,085 33,170
03/31/97 36,473 31,810
04/30/97 37,641 33,706
05/31/97 40,174 35,755
06/30/97 41,852 37,357
</TABLE>
* Inception of Fund was July 21, 1987.
Graph and average annual return comparison begins July 21, 1987.
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.
Past performance is not predictive of future performance. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
Performance represents the performance of the Equity Portfolio only and
excludes separate account charges such as deductions for administration charges,
contingent deferred sales charges, and mortality and expense risk premiums.
- 2 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER LETTER (Continued)
more PacifiCare on what I perceive to be a temporary setback.
Advanta was overly aggressive in its strategy to pursue market share with
low introductory rates. It now has $10 billion in credit card receivables is-
sued to what turned out to be higher risk users. We still own Advanta, but it's
the smallest position in our portfolio.
Other than the preceding stories, the past six months have been character-
ized by quality companies, low turnover and more stocks that pleased than
disappointed.
Technology helped us outperform the peer group. Microsoft was one of our
best performing stocks. So was Seagate which we sold before the stock fell in
the face of stiff competition, and questions about overcapacity. Walmart was
another stock that did well for us. We bought it late in 1995 when it was trad-
ing at a price that underestimated its growth rate.
As always, I'm trying to slowly work the cliche buy low and sell high. I
added Hewlett Packard and 3Com because their price dipped and I like their fun-
damentals. And I sold Browning Ferris, Seagate, ConAgra and Colgate when they
hit our price objective.
I've shifted our stake in the healthcare arena so that four of our six
healthcare holdings are in drugs and drugstore-type products. Changes in medi-
cal practices, the aging of America, and the aid the FDA is giving to drug de-
velopment have created a favorable environment for drug stocks. For example, we
bought SmithKline Beecham because it had a good pipeline (drugs enroute for FDA
approval) and a valuation that was below its peers. Indeed, SmithKline secured
FDA approval for wider application of its hepatitis drugs and moved up 65% over
the last 12 months.
HIGHLIGHTS
<TABLE>
<CAPTION>
%
TEN LARGEST HOLDINGS NET ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Chase Manhattan Corp. ..................................................... 4.7%
Kimberly-Clark Corp. ...................................................... 3.1
American Stores Co. ....................................................... 3.0
Hartford Financial Services Group, Inc. ................................... 3.0
Burlington Northern Santa Fe............................................... 2.7
SmithKline Beecham, plc (ADR).............................................. 2.6
Intel Corp. ............................................................... 2.5
Bell Atlantic Corp. ....................................................... 2.4
Lockheed Martin Corp. ..................................................... 2.4
Columbia/HCA Healthcare Corp. ............................................. 2.3
</TABLE>
<TABLE>
<CAPTION>
Market Capitalization
- ------------------------------------------------
<S> <C>
Large-Cap (over $4 billion) 90%
Mid-Cap ($1 billion-$4 billion) 6%
Small-Cap (under $1 billion) 1%
Cash & Other 3%
--------
Total 100%
========
</TABLE>
- 3 -
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PORTFOLIO MANAGER LETTER (Continued)
Chase is still the RST Equity Portfolio's largest holding and the reason
for holding it remains the same: cost cutting.
Hartford, Kimberly Clark, American Stores, Burlington Northern are names
that are new to the top ten--but not to the Portfolio. Again the main theme is
cost cutting: The savings and earnings growth Kimberly and Burlington Northern
can reap through their respective mergers are pretty easy to visualize. As
well, we see Hartford, recently released from ITT, becoming leaner and meaner.
American Stores has clearly laid plans to consolidate buying and distribu-
tion and bring its grocery and drugstore profit margins up to industry levels.
We bought the stock believing it could raise its margins and, subsequently its
stock price.
I've made Lockheed Martin a top-ten holding purely because it's a major
participant of the aerospace consolidation. And where there is consolidation
there can be cost cutting.
In summary, I think the market is expensive, and that perception has made
me a very cost-conscious manager. I also believe, in spite of the high prices,
there are values to be found and that you have hired me to find them. And so I
will continue forward, knowing you have hired me to invest your money in
stocks and making every effort not to pay too much for a stock in a market
that seems overpriced.
/s/ Rich Meagley
Rich Meagley
- -------------------------------------------------------------------------------
Rich Meagley joined SAFECO in 1983. After advancing from analyst to Northwest
Portfolio Manager, he left the company. He rejoined in 1995 as RST Equity
Portfolio Manager. He holds an MBA from the University of Washington, and is a
Chartered Financial Analyst.
- 4 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Portfolio of Investments
SAFECO Resource Series Trust -- Equity Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- -------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 96.9%
AEROSPACE/DEFENSE - 2.4%
78,000 Lockheed Martin Corp. ............. $ 8,078
AUTO PARTS & EQUIPMENT - 2.0%
190,000 Echlin, Inc. ...................... 6,840
BANKS (MAJOR REGIONAL) - 2.1%
108,000 NationsBank Corp. ................. 6,966
BANKS (MONEY CENTER) - 4.7%
162,000 Chase Manhattan Corp. ............. 15,724
BEVERAGES (NON-ALCOHOLIC) - 1.5%
135,000 PepsiCo, Inc. ..................... 5,071
BROADCASTING (TELEVISION, RADIO & CABLE) -
2.1%
235,000 *Viacom, Inc. (Class B)............... 7,050
CHEMICALS - 1.7%
92,000 Du Pont (E.I.) de Nemours & Co. ... 5,784
COMPUTERS (HARDWARE) - 2.1%
125,000 Hewlett-Packard Co. ............... 7,000
COMPUTERS (NETWORKING) - 1.7%
125,000* 3Com Corp. ........................ 5,625
COMPUTERS (SOFTWARE & SERVICES) - 5.4%
180,000 Electronic Data Systems Corp. ..... 7,380
45,000 Microsoft Corp. ................... 5,687
100,000 Oracle Corp. ...................... 5,037
ELECTRIC COMPANIES - 1.9%
300,000 Houston Industries, Inc. .......... 6,431
ELECTRICAL EQUIPMENT - 3.7%
155,000 AMP, Inc. ......................... 6,471
90,000 General Electric Co. .............. 5,884
ELECTRONICS (SEMICONDUCTORS) - 2.5%
58,000 Intel Corp. ....................... 8,225
ENTERTAINMENT - 1.6%
67,000 Walt Disney Co. ................... 5,377
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- -------------------------------------------------------
<C> <S> <C>
FINANCIAL (DIVERSIFIED) - 5.1%
135,000 Advanta Corp. (Class B)...............$ 4,818
150,000 Federal Home Loan Mortgage Corp. .. 5,156
165,000 Federal National Mortgage
Association........................ 7,198
HEALTH CARE (DIVERSIFIED) - 5.8%
98,000 American Home Products Corp. ...... 7,497
81,000 Bristol-Myers Squibb Co. .......... 6,561
85,000 Johnson & Johnson.................. 5,472
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS) -
2.6%
95,000 SmithKline Beecham, plc (ADR)......... 8,704
HEALTH CARE (HOSPITAL MANAGEMENT) - 4.4%
200,000 Columbia/HCA Healthcare Corp. ..... 7,862
105,000 *PacifiCare Health Systems, Inc.
(Class B)............................. 6,707
HOUSEHOLD PRODUCTS (NON-DURABLES) - 3.1%
208,000 Kimberly-Clark Corp. .............. 10,348
INSURANCE (MULTI-LINE) - 4.6%
35,500 American International Group,
Inc. .............................. 5,303
120,000 Hartford Financial Services Group,
Inc. .............................. 9,930
MANUFACTURING (DIVERSIFIED) - 4.0%
71,000 AlliedSignal, Inc. ................ 5,964
120,000 Dover Corp. ....................... 7,380
OIL (DOMESTIC INTEGRATED) - 6.7%
124,000 Exxon Corp. ....................... 7,626
112,000 Mobil Corp. ....................... 7,826
65,000 Texaco, Inc. ...................... 7,069
OIL (INTERNATIONAL INTEGRATED) - 1.8%
108,000 Royal Dutch Petroleum Co. (ADR)....... 5,872
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 5 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO Resource Series Trust -- Equity Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
PAPER & FOREST PRODUCTS - 1.7%
82,000 Willamette Industries, Inc. ................................. $ 5,740
RAILROADS - 2.7%
102,000 Burlington Northern Santa Fe................................. 9,167
RETAIL (DEPARTMENT STORES) - 2.0%
140,000 May Department Stores Co. ................................... 6,615
RETAIL (FOOD CHAINS) - 5.0%
185,000 Albertson's, Inc. ........................................... 6,753
205,000 American Stores Co. ......................................... 10,122
RETAIL (GENERAL MERCHANDISE) - 2.1%
205,000 Wal-Mart Stores, Inc. ....................................... 6,932
SERVICES (DATA PROCESSING) - 2.2%
170,000 First Data Corp. ............................................ 7,469
TELECOMMUNICATIONS (LONG DISTANCE) - 1.6%
155,000 AT&T Corp. .................................................. 5,435
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
TELEPHONE -- 4.2%
107,000 Bell Atlantic Corp. ..................................... $ 8,119
135,000 GTE Corp. ............................................... 5,923
TOBACCO - 1.9%
140,000 Philip Morris Cos., Inc. ................................ 6,213
--------
TOTAL COMMON STOCKS.................................................. 324,411
--------
TEMPORARY INVESTMENTS - 2.9%
INVESTMENT COMPANIES:
9,817,841 SSgA Money Market
Portfolio................................................ 9,818
--------
TOTAL TEMPORARY INVESTMENTS.......................................... 9,818
--------
TOTAL INVESTMENTS - 99.8%............................................ 334,229
OTHER ASSETS, LESS LIABILITIES....................................... 487
--------
NET ASSETS........................................................... $334,716
========
- --------------------------------------------------------------------------------
</TABLE>
*Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
- 6 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
SAFECO Resource Series Trust -- Equity Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands, Except Per-Share Amounts)
- -------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, at Cost $258,004
========
Investments, at Value $334,229
Receivables:
Dividends and interest 414
Trust shares sold 475
--------
Total assets 335,118
LIABILITIES:
Payables:
Investment advisory fees 208
Trust shares redeemed 182
Other 12
--------
Total liabilities 402
--------
NET ASSETS $334,716
========
Net Assets consist of:
Accumulated net investment income $ 1,820
Accumulated net realized gain on investment transactions 16,837
Net unrealized appreciation 76,225
Paid in capital (par value $.001, unlimited shares authorized) 239,834
--------
NET ASSETS $334,716
========
TRUST SHARES OUTSTANDING 13,155
========
NET ASSET VALUE PER SHARE
(NET ASSETS DIVIDED BY TRUST SHARES OUTSTANDING) $ 25.44
========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 7 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Operations
SAFECO Resource Series Trust -- Equity Portfolio
For the Six Month Period Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
($ in Thousands)
- -----------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Dividends $ 2,753
Interest 152
-------
Total investment income 2,905
EXPENSES:
Investment advisory fees 1,064
Legal and auditing fees 9
Custodian fees 7
Trustees' fees 3
Other 2
-------
Total expenses 1,085
-------
NET INVESTMENT INCOME 1,820
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments 16,837
Net change in unrealized appreciation 28,098
-------
NET GAIN ON INVESTMENTS 44,935
-------
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $46,755
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 8 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
SAFECO Resource Series Trust -- Equity Portfolio
(Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX- FOR THE
MONTH PERIOD YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
(In Thousands) 1997 1996
- -----------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,820 $ 3,679
Net realized gain on investments 16,837 20,981
Net change in unrealized appreciation 28,098 23,643
-------- --------
Net change in net assets resulting from
operations 46,755 48,303
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (3,679)
Net realized gain on investments -- (20,981)
-------- --------
Total distributions -- (24,660)
NET TRUST SHARE TRANSACTIONS 24,894 69,945
-------- --------
TOTAL CHANGE IN NET ASSETS 71,649 93,588
NET ASSETS AT BEGINNING OF PERIOD 263,067 169,479
-------- --------
NET ASSETS AT END OF PERIOD $334,716 $263,067
======== ========
- -----------------------------------------------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES AND AMOUNTS
SHARES:
Sales 2,499 3,791
Reinvestments -- 1,134
Redemptions (1,440) (1,636)
-------- --------
Net change 1,059 3,289
======== ========
AMOUNTS:
Sales $ 58,309 $ 80,468
Reinvestments -- 24,660
Redemptions (33,415) (35,183)
-------- --------
Net change $ 24,894 $ 69,945
======== ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 9 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Notes to Financial Statements
(Unaudited)
1.GENERAL
SAFECO Resource Series Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management invest-
ment company. The Trust consists of six portfolios. Shares of the Trust Portfo-
lios are available as funding vehicles for certain variable annuity and vari-
able life products sold by SAFECO Life Insurance Company and other insurance
companies.
The financial statements included herein are only those of the Equity Portfo-
lio. The financial statements of the other portfolios are presented separately.
The investment objective of the Equity Portfolio is long term capital growth
and income.
2.SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles, which
permits management to make certain estimates and assumptions at the date of the
financial statements.
SECURITY VALUATION. Securities in the Portfolio traded on a national exchange
or over-the-counter are valued at the last reported sales price, unless there
are no transactions in which case they are valued at the last reported bid
price. Investments in other mutual funds are valued at net asset value.
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on investment transactions are determined using the
identified cost method.
INCOME RECOGNITION. Dividend income, less foreign taxes withheld (if any), is
recorded on the ex-dividend date.
DIVIDENDS TO SHAREHOLDERS. Dividends to shareholders from net investment in-
come and distributions of realized gains are recorded on the last business day
of the year.
FEDERAL INCOME TAX. It is the Portfolio's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Therefore, no
federal income or excise tax provision is required.
- 10 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
3.TRANSACTIONS WITH AFFILIATES
SAFECO Asset Management Company receives investment advisory fees from the
Portfolio. The fee is based on average daily net assets at an annual rate of
.74 percent.
The Portfolio may borrow money for temporary purposes from SAFECO Corporation
or its affiliates at interest rates equivalent to commercial bank interest
rates.
At June 30, 1997, SAFECO Life Insurance Company owned over 99 percent of the
outstanding shares of the Portfolio.
Prior to May, 1994, SAFECO Life Insurance Company (SAFECO) paid all the ex-
penses of the Portfolio except for investment advisory fees. Beginning in May,
1994, the Portfolio is charged for all operating expenses in addition to in-
vestment advisory fees.
4. INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
($ in Thousands)
- ------------------------------------------------------------------
<S> <C>
PURCHASES FOR THE SIX-MONTHS ENDED JUNE 30, 1997 $87,297
=======
SALES FOR THE SIX-MONTHS ENDED JUNE 30, 1997 $64,564
=======
- ------------------------------------------------------------------
</TABLE>
Purchases and sales amounts exclude short-term investments which, at the time
of purchase, had a maturity of one year or less.
Unrealized appreciation (depreciation) at June 30, 1997:
<TABLE>
<CAPTION>
($ in Thousands)
- -----------------------------------------------------------------------------
<S> <C>
Aggregate gross unrealized appreciation for investment
securities in which there is an excess of value over
identified cost $82,907
Aggregate gross unrealized depreciation for investment
securities in which there is an excess of identified cost
over value (6,682)
-------
NET UNREALIZED APPRECIATION $76,225
=======
- -----------------------------------------------------------------------------
</TABLE>
- 11 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
5. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
FOR THE
SIX-MONTH
PERIOD ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
--------------------------------------------------
1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD $ 21.75 $ 19.24 $ 16.83 $ 17.02 $ 14.20
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.14 0.34 0.39 0.31 0.23
Net realized and
unrealized gain on
investments 3.55 4.43 4.43 1.21 3.74
-------- -------- -------- -------- ---------
Total from investment
operations 3.69 4.77 4.82 1.52 3.97
LESS DISTRIBUTIONS:
Dividends from net
investment income -- (0.34) (0.39) (0.31) (0.23)
Distributions from
realized gains -- (1.92) (2.02) (1.40) (0.92)
-------- -------- -------- -------- ---------
Total distributions -- (2.26) (2.41) (1.71) (1.15)
-------- -------- -------- -------- ---------
NET ASSET VALUE AT END
OF PERIOD $ 25.44 $ 21.75 $ 19.24 $ 16.83 $ 17.02
======== ======== ======== ======== =========
TOTAL RETURN 16.97%** 24.79% 28.63% 8.94%(A) 27.92%(A)
NET ASSETS AT END OF
PERIOD (000'S OMITTED) $334,716 $263,067 $169,479 $102,321 $ 68,157
RATIO OF EXPENSES TO
AVERAGE NET ASSETS .74%* .72% .75% .77% .73%
RATIO OF EXPENSES TO
AVERAGE NET ASSETS
BEFORE EXPENSE
REIMBURSEMENTS++ N/A N/A N/A .78% --
RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET
ASSETS 1.25%* 1.72% 2.26% 1.98% 1.71%
PORTFOLIO TURNOVER RATE 45.01%* 56.99% 69.18% 28.71% 41.35%
AVERAGE COMMISSION RATE
PAID $ 0.0573 $ 0.0584 -- -- --
- ------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Not Annualized.
++ See Note 3 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been re-
duced during the periods shown (See Note 3 of Notes to Financial State-
ments).
N/A Not applicable as no fund expenses were reimbursed.
- 12 -
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
- 13 -
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
- 14 -
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
- 15 -
<PAGE>
SAFECO RESOURCE SERIES TRUST
BOARD OF TRUSTEES:
Boh A. Dickey, Chairman
Barbara J. Dingfield
David F. Hill
Richard W. Hubbard
Richard E. Lundgren
Larry L. Pinnt
John W. Schneider
OFFICERS:
David F. Hill, President
Ronald L. Spaulding Vice President and Treasurer
Neal A. Fuller Vice President and Controller
INVESTMENT ADVISOR:
SAFECO Asset Management Company
DISTRIBUTOR:
SAFECO Securities, Inc.
TRANSFER AGENT:
SAFECO Services Corporation
CUSTODIAN:
State Street Bank
AUDITOR:
Ernst & Young, LLP
GMF 939 8/97
LOGO Printed on Recycled Paper.
This report must be preceded or accompanied by a current prospectus.
(R) Registered trademark of SAFECO Corporation.
<PAGE>
June 30, 1997
[LOGO]
Semi-Annual Report
Safeco Resource Series Trust
Small Company Stock Portfolio
--------------
[LOGO OF SAFECO MUTUAL FUNDS]
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Portfolio Manager Letter
June 30, 1997
[PICTURE APPEARS HERE]
Greg Eisen
SAFECO RST SMALL COMPANY STOCK PORTFOLIO
The SAFECO RST Small Company Stock Portfolio was launched April 30,
1997. It was a fortuitous time to begin investing because the Stock Mar-
ket has advanced significantly since that time (In fact, the second
quarter 1997 proved to be one of the best in several years for small
capitalization stocks as measured by the Russell 2000 index).
Regional banks are the largest sector in the RST Small Company. We own
banks in Florida, Texas, California, Illinois and Washington State.
Among the stocks purchased during the quarter were: Hooper Holmes, Patina
Oil and Gas, Craig Corp preference shares, American Oilfield Divers and Ovid
Technologies.
Hooper Holmes, through its subsidiary Portamedic, provides information and
specimen collection to the life insurance industry. If you ever applied for
life insurance, chances are Hooper's nurse came to your house to interview
you. The company is growing fast, with new avenues of distribution opening up
to them.
Patina Oil and Gas is a majority owned subsidiary of Snyder Oil. Snyder
and Patina have committed to removing the Patina stock from Snyder's ownership,
and the spin-off should attract attention to the cheaply valued Patina shares.
Craig Corp is another value stock. Craig's assets are primarily cash and
movie theaters in the US, Puerto Rico and Australia, some of which are operat-
ing and some are under construction.
American Oilfield Divers provides underwater construction services to the
offshore oil drilling industry, which is in a major upturn.
Ovid Technologies provides online access to research databases and full
text versions of articles to the biomedical research community. Their product
is sold directly to hospitals, research facilities, medical schools, and phar-
maceutical companies and delivered over the internet.
In summary, the small capitalization stock sector has recovered but contin-
ues to lag larger capital-
- 2 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER LETTER (Continued)
ization stocks. Because of that, small company stocks look like a bargain. Even
if we are still in the midst of a market that benefits the largest capitaliza-
tion stocks, I believe staying the course with small caps that are good busi-
nesses at cheap prices will be rewarding over the long haul.
Our portfolio will remain essentially fully invested across the broad range
of market sectors, in stocks that present the opportunity to provide better
than average returns.
/s/ Greg Eisen
Greg Eisen
- --------------------------------------------------------------------------------
Greg Eisen joined SAFECO in 1986. He holds a BA from Rutgers University and is
a Certified Public Accountant and a Chartered Financial Analyst.
HIGHLIGHTS
<TABLE>
<CAPTION>
%
TEN LARGEST HOLDINGS NET ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Cole National Corp. (Class A).............................................. 4.3%
Penederm, Inc. ............................................................ 3.9
Lancer Corp................................................................ 3.8
Stage Stores, Inc. ........................................................ 3.7
Hooper Holmes, Inc......................................................... 3.4
GATX Corp.................................................................. 3.1
Tracor, Inc................................................................ 3.0
MICROS Systems, Inc........................................................ 2.9
Vallen Corp................................................................ 2.9
PC Services Source, Inc.................................................... 2.8
</TABLE>
<TABLE>
<CAPTION>
Market Capitalization
- ------------------------------------------------------
<S> <C>
Large-Cap (over $4 billion) 0%
Med-Cap ($1 billion-$4 billion) 5%
Small-Cap (under $1 billion) 89%
Cash and Other 6%
--------
Total 100%
========
</TABLE>
- 3 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Portfolio of Investments
SAFECO Resource Series Trust -- Small Company Stock Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 91.4%
AIRLINES - 4.0%
2,700 Air Express International Corp. ............................... $ 107
23,000 *Mesa Air Group, Inc. ......................................... 124
AUTO PARTS & EQUIPMENT - 1.4%
9,000 *Deflecta-Shield Corp. ........................................ 79
BANKS - 11.1%
9,000 1st United Bancorp............................................. 158
5,985 Columbia Banking System, Inc. ................................. 121
9,500 Hanmi Bank (Los Angeles, CA)................................... 166
4,375 Independent Bankshares, Inc. .................................. 58
2,000 *Southwest Bancorp of Texas, Inc. ............................. 55
6,900 UnionBancorp, Inc. ............................................ 88
BUILDING MATERIALS - 2.2%
4,500 Zurn Industries, Inc. ......................................... 129
COMPUTERS (HARDWARE) - 5.7%
4,000 *MICROS Systems, Inc. ......................................... 168
21,000 *PC Service Source, Inc. ...................................... 165
COMPUTERS (SOFTWARE & SERVICES) - 3.5%
1,400 *RadiSys Corp. ................................................ 56
5,000 *SPSS, Inc. ................................................... 145
CONSUMER FINANCE - 2.2%
3,000 *AmeriTrade Holding Corp. ..................................... 47
2,500 *Ocwen Financial Corp. ........................................ 82
ELECTRONICS (DEFENSE) - 3.2%
7,300 *Tracor, Inc. ................................................. 183
ENGINEERING & CONSTRUCTION - 2.1%
4,500 *American Buildings Co. ....................................... 122
FINANCIAL (DIVERSIFIED) - 5.6%
3,000 First Financial Caribbean Corp. (ADR).......................... 98
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
FINANCIAL (CONTINUED)
8,300 Litchfield Financial Corp. .................................... $ 136
10,000 *Long Beach Financial Corp. ................................... 88
FOODS - 2.2%
4,500 JP Foodservice, Inc. .......................................... 129
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 1.3%
5,000 Sodak Gaming, Inc. ............................................ 74
HEALTH CARE (DIVERSIFIED) - 3.5%
9,000 Hooper Holmes, Inc. ........................................... 206
HEALTH CARE (DRUGS-MAJOR PHARMACEUTICALS) - 3.7%
16,000 *Penederm, Inc. ............................................... 216
HEALTH CARE (SPECIALIZED SERVICES) - 1.8%
10,000 Ovid Technologies, Inc. ....................................... 106
HOUSEHOLD PRODUCTS (NON-DURABLES) - 1.5%
9,000 Guest Supply, Inc. ............................................ 86
HOUSEWARES - 2.3%
15,000 *Lifetime Hoan Corp. .......................................... 131
MANUFACTURING (DIVERSIFIED) - 3.8%
9,000 *Lancer Corp. ................................................. 223
OFFICE EQUIPMENT & SUPPLIES - 2.5%
3,000 *Asia Pacific Wire & Cable Corp. Ltd. ......................... 33
7,000 Unisource Worldwide, Inc. ..................................... 112
OIL & GAS (DRILLING & EQUIPMENT) - 2.7%
9,500 *American Oilfield Divers, Inc. ............................... 114
1,700 *Stolt Comex Seaway, S.A. ..................................... 43
OIL & GAS (EXPLORATION & PRODUCTION) - 6.7%
19,000 *Patina Oil & Gas Corp. ....................................... 154
3,000 *Seitel, Inc. ................................................. 114
5,000 *Swift Energy Co. ............................................. 119
RAILROADS - 3.0%
3,000 GATX Corp. .................................................... 173
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 4 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO Resource Series Trust -- Small Company Stock Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
REAL ESTATE-NON-AFFILIATED - 2.2%
2,800 Alexandria Real Estate Equities, Inc. ........................ $ 61
3,200 Ocwen Asset Investment Corp. ................................. 65
RETAIL (SPECIALTY) - 4.2%
5,500 *Cole National Corp. (Class A)................................ 242
RETAIL (SPECIALTY-APPAREL) - 3.8%
8,500 *Stage Stores, Inc. .......................................... 222
SERVICES (COMMERCIAL & CONSUMER) - 5.2%
8,700 *Vallen Corp. ................................................ 159
7,700 York Group, Inc. ............................................. 143
-------
TOTAL COMMON STOCKS 5,301
-------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
PREFERRED STOCKS - 2.6%
ENTERTAINMENT/LEISURE - 2.6%
9,500 *Craig Corp. (Class A) .................................... 150
------
TOTAL PREFERRED STOCKS................................................ 150
------
TEMPORARY INVESTMENTS - 6.0%
INVESTMENT COMPANIES:
61,345 SSgA Money Market Portfolio................................ 61
289,092 SSgA U.S. Treasury Money Market Portfolio.................. 289
------
TOTAL TEMPORARY INVESTMENTS........................................... 350
------
TOTAL INVESTMENTS--100.0%............................................. 5,801
Liabilities, less Other Assets........................................ (2)
------
NET ASSETS............................................................ $5,799
======
- --------------------------------------------------------------------------------
</TABLE>
*Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
- 5 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
SAFECO Resource Series Trust -- Small Company Stock Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)
- -----------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, at Cost $5,186
======
Investments, at Value $5,801
Receivables:
Investment securities sold 6
Dividends and interest 2
------
Total assets 5,809
LIABILITIES:
Payables:
Investment securities purchased 5
Investment advisory fees 4
Other 1
------
Total liabilities 10
------
NET ASSETS $5,799
======
Net Assets consist of:
Accumulated net investment income $ 6
Accumulated net realized gain on investment transactions 4
Net unrealized appreciation (depreciation) 615
Paid in capital (par value $.001, unlimited shares authorized) 5,174
------
NET ASSETS $5,799
======
TRUST SHARES OUTSTANDING 516
======
NET ASSET VALUE PER SHARE
(NET ASSETS DIVIDED BY TRUST SHARES OUTSTANDING) $11.23
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 6 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Operations
SAFECO Resource Series Trust -- Small Company Stock Portfolio
For the Period from April 30, 1997 (Commencement of Operations) to June 30,
1997
(Unaudited)
<TABLE>
<CAPTION>
($ in Thousands)
- -------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Dividends $ 5
Interest 9
----
Total investment income 14
EXPENSES:
Investment advisory fees 7
Legal and auditing fees 2
Custodian fees 1
Trustees' fees 1
Other 1
----
Total expenses before reimbursement 12
Expense reimbursement 4
----
Total expenses after reimbursement 8
----
NET INVESTMENT INCOME 6
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on investments 4
Net change in unrealized appreciation 615
----
NET GAIN ON INVESTMENTS 619
----
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $625
====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 7 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
SAFECO Resource Series Trust -- Small Company Stock Portfolio
For the Period from April 30, 1997 (Commencement of Operations) to June 30,
1997
(Unaudited)
<TABLE>
<CAPTION>
(IN THOUSANDS)
- ----------------------------------------------------------
<S> <C>
OPERATIONS:
Net investment income $ 6
Net realized gain on investments 4
Net change in unrealized appreciation 615
------
Net change in net assets resulting from operations 625
NET TRUST SHARE TRANSACTIONS 5,174
------
TOTAL CHANGE IN NET ASSETS 5,799
NET ASSETS AT BEGINNING OF PERIOD --
------
NET ASSETS AT END OF PERIOD $5,799
======
- ----------------------------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN TRUST SHARES AND AMOUNTS
SHARES:
Sales 517
Reinvestments --
Redemptions --
------
Net change 517
======
AMOUNTS:
Sales $5,174
Reinvestments --
Redemptions --
------
Net change $5,174
======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 8 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Notes to Financial Statements
(Unaudited)
1.GENERAL
SAFECO Resource Series Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management invest-
ment company. The Trust consists of six portfolios. Shares of the Trust Portfo-
lios are available as funding vehicles for certain variable annuity and vari-
able life products sold by SAFECO Life Insurance Company and other insurance
companies.
The financial statements included herein are only those of the Small Company
Portfolio. The financial statements of the other portfolios are presented sepa-
rately. The investment objective of the Small Company Portfolio is long term
capital growth.
2.SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles, which
permits management to make certain estimates and assumptions at the date of the
financial statements.
SECURITY VALUATION. Securities in the Portfolio traded on a national exchange
or over-the-counter are valued at the last reported sales price, unless there
are no transactions in which case they are valued at the last reported bid
price. Investments in other mutual funds are valued at net asset value.
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on investment transactions are determined using the
identified cost method.
INCOME RECOGNITION. Dividend income, less foreign taxes withheld (if any), is
recorded on the ex-dividend date.
DIVIDENDS TO SHAREHOLDERS. Dividends to shareholders from net investment in-
come and distribution of realized gains are recorded on the last business day
of December each year.
FEDERAL INCOME TAX. It is the Portfolio's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Therefore, no
federal income or excise tax provision is required.
- 9 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
3.TRANSACTIONS WITH AFFILIATES
SAFECO Asset Management Company receives investment advisory fees from the
Portfolio. The fee is based on average daily net assets at an annual rate of
.85 percent.
The Portfolio may borrow money for temporary purposes from SAFECO Corporation
or its affiliates at interest rates equivalent to commercial bank interest
rates.
At June 30, 1997, SAFECO Life Insurance Company owned 100 percent of the out-
standing shares of the Portfolio.
Currently, SAFECO Asset Management Company pays all "other expenses" (i.e.,
expenses other than investment advisory fees) in excess of .10% of the Portfo-
lio's average annual net assets. When net assets exceed $20 million, the Port-
folio will be charged for all operating expenses.
4.INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
($ in Thousands)
- ------------------------------------------------------------------------
<S> <C>
PURCHASES FOR THE TWO-MONTH PERIOD ENDED JUNE 30, 1997 $4,914
======
SALES FOR THE TWO-MONTH PERIOD ENDED JUNE 30, 1997 $ 82
======
- ------------------------------------------------------------------------
</TABLE>
Purchases and sales amounts exclude short-term investments which, at the time
of purchase, had a maturity of one year or less.
Unrealized appreciation (depreciation) at June 30, 1997:
<TABLE>
<CAPTION>
($ in Thousands)
- -----------------------------------------------------------------------------
<S> <C>
Aggregate gross unrealized appreciation for investment
securities in which there is an excess of value over
identified cost $644
Aggregate gross unrealized depreciation for investment
securities in which there is an excess of identified cost
over value (29)
----
NET UNREALIZED APPRECIATION $615
====
- -----------------------------------------------------------------------------
</TABLE>
- 10 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
5.FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
APRIL 30, 1997
(COMMENCEMENT OF
OPERATIONS) TO
JUNE 30, 1997
- ------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.01
Net realized and unrealized gain (loss) on investments 1.22
--------
Total from investment operations 1.23
LESS DISTRIBUTIONS:
Dividends from net investment income --
Distributions from realized gains --
--------
Total distributions --
--------
NET ASSET VALUE AT END OF PERIOD $11.23
========
TOTAL RETURN(A) 12.30%**
NET ASSETS AT END OF PERIOD (000'S OMITTED) $5,799
RATIO OF EXPENSES TO AVERAGE NET ASSETS .95%*
RATIO OF EXPENSES TO AVERAGE NET ASSETS BEFORE EXPENSE
REIMBURSEMENTS++ 1.21%*
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .62%*
PORTFOLIO TURNOVER RATE 14.23%*
AVERAGE COMMISSION RATE PAID $0.0576
- ------------------------------------------------------------------------
</TABLE>
* Annualized.
** Not Annualized.
++ See Note 3 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been re-
duced during the periods shown (See Note 3 of Notes to Financial State-
ment).
- 11 -
<PAGE>
SAFECO RESOURCE SERIES TRUST
BOARD OF TRUSTEES:
Boh A. Dickey, Chairman
Barbara J. Dingfield
David F. Hill
Richard W. Hubbard
Richard E. Lundgren
Larry L. Pinnt
John W. Schneider
OFFICERS:
David F. Hill, President
Ronald L. Spaulding Vice President and Treasurer
Neal A. Fuller Vice President and Controller
INVESTMENT ADVISOR:
SAFECO Asset Management Company
DISTRIBUTOR:
SAFECO Securities, Inc.
TRANSFER AGENT:
SAFECO Services Corporation
CUSTODIAN:
State Street Bank
AUDITOR:
Ernst & Young, LLP
GMF 937 8/97
LOGO Printed on Recycled Paper.
This report must be preceded or accompanied by a current prospectus.
(R) Registered trademark of SAFECO Corporation.
<PAGE>
June 30, 1997
[LOGO]
Semi-Annual Report
Safeco Resource Series Trust Bond Portfolio
--------------
[LOGO OF SAFECO MUTUAL FUNDS]
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Portfolio Manager Letter
June 30, 1997
[PICTURE APPEARS HERE]
Mike Knebel
SAFECO RST BOND PORTFOLIO
A very robust U.S. economy in the first quarter of 1997 prompted a
renewal of inflation fears among bond market participants. The Federal
Reserve added fuel to the fire in March by raising its benchmark Fed
Funds rate from 5 1/4 to 5 1/2%. Consequently, interest rates in general
rose throughout the first four months of the year. But as data began to
appear that suggested a significant slowing in second quarter economic
activity, the market rallied, and rates fell back to where they were
when the year started. A new year, the same old story: an extremely vol-
atile--yet trendless--bond market.
This kind of environment has persisted throughout the last few
years. Consequently, our returns for the RST Bond Portfolio have suffered,
owing to our portfolios having a duration that is either too short or too long
whenever rates have changed course. We expect these same market conditions to
continue. Thus, this year we've made several changes to our bond strategy, which
should improve our performance in a wider range of market conditions.
RST BOND PORTFOLIO
Since
1 Year 5 Year Inception
----------------------------------------
Bond Portfolio 4.92 6.19 7.57
Weighted Average Maturity
RST BOND PORTFOLIO
ILLUSTRATION OF A $10,000 INVESTMENT:
SINCE FUND INCEPTION ON JULY 21, 1987 TO JUNE 30, 1997*
<TABLE>
<CAPTION>
Date Bond Shearson
- ----------------------------------------------------
<S> <C> <C> <C>
07/31/87 10,000 10,000
08/31/87 10,000 9,944
09/30/87 10,010 9,730
10/31/87 9,861 10,095
11/30/87 10,070 10,159
12/31/87 10,290 10,298
01/31/88 10,290 10,651
02/29/88 10,508 10,774
03/31/88 10,633 10,667
04/30/88 10,602 10,605
05/31/88 10,591 10,534
06/30/88 10,519 10,772
07/31/88 10,675 10,711
08/31/88 10,643 10,738
09/30/88 10,643 10,974
10/31/88 10,820 11,168
11/30/88 10,986 11,042
12/31/88 11,013 11,079
01/31/89 11,013 11,227
02/28/89 11,103 11,141
03/31/89 11,058 11,200
04/30/89 11,081 11,438
05/31/89 11,294 11,719
06/30/89 11,540 12,101
07/31/89 11,775 12,353
08/31/89 12,022 12,161
09/30/89 11,887 12,215
10/31/89 12,134 12,524
11/30/89 12,223 12,637
12/31/89 12,258 12,656
01/31/90 12,173 12,482
02/28/90 12,222 12,510
03/31/90 12,258 12,511
04/30/90 12,197 12,396
05/31/90 12,450 12,755
06/30/90 12,595 12,962
07/31/90 12,595 13,123
08/31/90 12,751 12,932
09/30/90 12,703 13,040
10/31/90 12,727 13,213
11/30/90 12,836 13,501
12/31/90 13,063 13,705
01/31/91 13,154 13,859
02/28/91 13,270 13,978
03/31/91 13,361 14,074
04/30/91 13,516 14,236
05/31/91 13,620 14,303
06/30/91 13,581 14,287
07/31/91 13,749 14,467
08/31/91 14,008 14,800
09/30/91 14,215 15,109
10/31/91 14,383 15,244
11/30/91 14,513 15,396
12/31/91 14,890 15,915
01/31/92 14,793 15,680
02/29/92 14,793 15,763
03/31/92 14,697 15,676
04/30/92 14,807 15,770
05/31/92 15,055 16,076
06/30/92 15,276 16,312
07/31/92 15,634 16,730
08/31/92 15,744 16,879
09/30/92 16,062 17,108
10/31/92 15,744 16,847
11/30/92 15,648 16,831
12/31/92 15,906 17,121
01/31/93 16,259 17,494
02/28/93 16,611 17,858
03/31/93 16,700 17,919
04/30/93 16 832 18,057
05/31/93 16,803 18,048
06/30/93 17,111 18,457
07/31/93 17,185 18,576
08/31/93 17,582 19,003
09/30/93 17,685 19,069
10/31/93 17,773 19,147
11/30/93 17,493 18,931
12/31/93 17,583 19,014
01/31/94 17,836 19,300
02/28/94 17,393 18,879
03/31/94 17,030 18,416
04/30/94 16,919 18,263
05/31/94 16,919 18,231
06/30/94 16,903 18,189
07/31/94 17,109 18,552
08/31/94 17,172 18,560
09/30/94 17,014 18,280
10/31/94 17,014 18,260
11/30/94 16,998 18,227
12/31/94 17,068 18,347
01/31/95 17,302 18,699
02/28/95 17,586 19,133
03/31/95 17,687 19,261
04/30/95 17,921 19,529
05/31/95 18,590 20,347
06/30/95 18,741 20,510
07/31/95 18,607 20,430
08/31/95 18,858 20,692
09/30/95 19,059 20,903
10/31/95 19,377 21,210
11/30/95 19,762 21,560
12/31/95 20,118 21,877
01/31/96 20,171 22,012
02/29/96 19,691 21,545
03/31/96 19,495 21,364
04/30/96 19,478 21,217
05/31/96 19,513 21,181
06/30/96 19,656 21,465
07/31/96 19,709 21,514
08/31/96 19,744 21,463
09/30/96 19,940 21,845
10/31/96 20,171 22,354
11/30/96 20,420 22,765
12/31/96 20,227 22,512
01/31/97 20,283 22,539
02/28/97 20,227 22,587
03/31/97 19,982 22,318
04/30/97 20,227 22,644
05/31/97 20,377 22,854
06/30/97 20,622 23,128
</TABLE>
* Inception of Fund was July 21, 1987.
Graph and average annual return comparison begins January 31, 1987.
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.
Past performance is not predictive of future performance. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
Performance represents the performance of the Bond Portfolio only, and
excludes separate account charges such as deductions for administration charges,
contingent deferred sales charges, or mortality and expense risk premiums.
- 2 -
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PORTFOLIO MANAGER LETTER (Continued)
First, we have refined our technique for managing the Portfolio's sensi-
tivity to changes in interest rates. While we've retained our fundamental ap-
proach of shortening the Portfolio's average maturity when rates rise (to pro-
tect principal) and lengthening when rates fall (to capture capital gains), we
expect to limit the magnitude of such changes and to make them less frequent-
ly, so that the average maturity of the Portfolio more closely reflects broad
market characteristics. In so doing, we hope to produce returns which track
the market more closely, while still offering down-side protection in bear
markets.
Second, we are placing greater emphasis on sources of potential return
other than changes in interest rates, or duration. We will be more active in
our search for mis-priced sectors of the markets and in managing our alloca-
tions to those sectors.
We reduced the RST Bond Portfolio's overall allocation to corporate bonds
to 22% over the six-month period because of the increasing risk that the dif-
ference between treasury and corporate yields would widen, causing corporate
bond values to fall. With our remaining corporate holdings, "we moved out the
yield curve" lengthening maturities and increasing the Portfolio's yield in
the process. To improve diversification, we reduced the average position in a
given company while increasing the number of different companies whose bonds
we hold.
Despite these enhancements, our strategy remains the same in two important
ways. We continue to emphasize high quality, intermediate bonds to capture
broad market returns. Therefore, the Portfolio's average maturity re-
HIGHLIGHTS
<TABLE>
<CAPTION>
%
TEN LARGEST HOLDINGS NET ASSETS
- -------------------------------------------------------------------------------
<S> <C>
U.S. Treasury Note, 6.375%, due 8/15/02................................... 23.6%
U.S. Treasury Note, 6.50%, due 10/15/06................................... 23.0
FNMA REMIC 1993-11 N, 7.35%, due 6/25/07.................................. 14.3
FNMA REMIC 1587, 6.50%, due 10/15/08...................................... 6.0
U.S. Treasury Note, 6.50%, due 5/31/01.................................... 3.4
J.C. Penney Co., Inc. .................................................... 3.2
Ford Motor Credit Co. .................................................... 3.1
Walt Disney Co. .......................................................... 3.1
Federal Home Loan Mortgage Corp. ......................................... 3.0
Dayton Hudson Corp. ...................................................... 1.7
</TABLE>
<TABLE>
<CAPTION>
Portfolio Credit Quality S&P
- ----------------------------------------------------------
<S> <C>
AAA/U.S. Gov't/Agency 74.3
AA 1.6
A 17.6
BBB 3.2
Temporary Investments 1.4
Cash and Other Assets 1.9
----------
Total 100.0
==========
</TABLE>
- 3 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER LETTER (Continued)
mains limited to 10 years or less. And, as always, changes to the Portfolio's
average maturity are made in response to, not in anticipation of, rate move-
ments. We remain trend followers, for at least until a highly accurate, reli-
able method is discovered for predicting future rates.
/s/ Michael C. Knebel
Michael C. Knebel
- --------------------------------------------------------------------------------
Mike Knebel has managed bond portfolios for SAFECO since 1989. Before that, he
managed municipal bond and money market funds for Lutheran Brotherhood. He
earned his MBA in Finance at the University of Minnesota, and he is a Chartered
Financial Analyst.
- 4 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Portfolio of Investments
SAFECO Resource Series Trust -- Bond Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000'S) (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
ASSET BACKED SECURITIES - 21.3%
COLLATERALIZED MORTGAGE OBLIGATION (CMO) - 20.3%
$1,000 FHLMC REMIC 1587
6.50%, due 10/15/08........................................... $ 971
2,300 FNMA REMIC 1993-11 N
7.35%, due 6/25/07............................................ 2,327
FINANCIAL - 1.0%
167 Chevy Chase Auto ABS
Series 1996-1, Class A
6.60%, due 12/15/02........................................... 168
-------
TOTAL ASSET BACKED SECURITIES......................................... 3,466
-------
CORPORATE BONDS - 22.4%
BANKING & FINANCE - 3.8%
250 Associates Corp. of North America
8.80%, due 8/01/98............................................ 257
135 BankAmerica Corp.
9.50%, due 4/01/01............................................ 147
200 Grand Metropolitan Investment Corp.
8.625%, due 8/15/01........................................... 213
CANADIAN PROVINCES, U.S. FUNDS - 1.6%
250 Manitoba (Province)
7.75%, due 2/01/02............................................ 260
ELECTRIC UTILITY - 1.2%
200 Virginia Electric and Power Co.
6.25%, due 8/01/98............................................ 200
ENTERTAINMENT - 3.1%
500 Walt Disney Co.
6.375%, due 3/30/01........................................... 497
FINANCE-CONSUMER - 1.6%
250 Household Finance Corp.
7.625%, due 6/15/99........................................... 255
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000'S) (000'S)
- --------------------------------------------------------------------------------
<C> <S> <C>
FINANCIAL-AUTO - 3.1%
$ 500 Ford Motor Credit Co.
7.20%, due 6/15/07............................................ $ 502
OIL & GAS DRILLING & EQUIPMENT - 1.6%
250 Texaco, Inc.
6.875%, due 7/15/99........................................... 253
RETAIL - 1.7%
250 Dayton Hudson Corp.
9.40%, due 2/15/01............................................ 270
RETAIL-DEPARTMENT STORES - 3.2%
500 J.C. Penney Co., Inc.
7.60%, due 4/01/07............................................ 517
UTILITIES-TELEPHONE - 1.5%
250 US WEST, Inc.
7.30%, due 1/15/07............................................ 251
-------
TOTAL CORPORATE BONDS................................................. 3,622
-------
U.S. GOVERNMENT AND AGENCY SECURITIES - 53.0%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 3.0%
500 Federal Home Loan Mortgage Corp.
6.875%, due 11/22/06.......................................... 491
U.S. TREASURY NOTES - 50.0%
550 6.50%, due 5/31/01............................................ 553
3,750 6.50%, due 10/15/06........................................... 3,733
3,835 6.375%, due 8/15/02........................................... 3,833
-------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES........................... 8,610
-------
TEMPORARY INVESTMENTS - 1.4%
233 SSgA Money Market Portfolio................................... 233
-------
TOTAL TEMPORARY INVESTMENTS........................................... 233
-------
TOTAL INVESTMENTS - 98.1% 15,931
Other Assets, less Liabilities........................................ 311
-------
NET ASSETS............................................................ $16,242
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 5 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
SAFECO Resource Series Trust -- Bond Portfolio
As of June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
(In Thousands, Except Per-Share Amounts)
- -------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments, at Cost $15,830
=======
Investments, at Value $15,931
Receivables:
Dividends and interest 246
Trust shares sold 78
-------
Total assets 16,255
LIABILITIES:
Payables:
Investment advisory fees 10
Trust shares redeemed 3
-------
Total liabilities 13
-------
NET ASSETS $16,242
=======
Net Assets consist of:
Accumulated net investment income $ 456
Accumulated net realized loss on investment transactions (689)
Net unrealized appreciation 101
Paid in capital (par value $.001, unlimited shares authorized) 16,374
-------
NET ASSETS $16,242
=======
TRUST SHARES OUTSTANDING 1,482
=======
NET ASSET VALUE PER SHARE
(NET ASSETS DIVIDED BY TRUST SHARES OUTSTANDING) $ 10.96
=======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 6 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Operations
SAFECO Resource Series Trust -- Bond Portfolio
For the Six-Month Period Ended June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
($ in Thousands)
- ---------------------------------------------------------------
<S> <C>
INVESTMENT INCOME:
Interest $ 514
EXPENSES:
Investment advisory fees 58
Legal and auditing fees 8
Custodian fees 2
Trustees' fees 2
Other 1
-----
Total expenses before reimbursement 71
Expense reimbursement 13
-----
Total expenses after reimbursement 58
-----
NET INVESTMENT INCOME (LOSS) 456
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments (269)
Net change in unrealized appreciation 115
-----
NET GAIN (LOSS) ON INVESTMENTS (154)
-----
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 302
=====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 7 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
SAFECO Resource Series Trust -- Bond Portfolio
(Unaudited)
<TABLE>
<CAPTION>
FOR THE SIX- FOR THE
MONTH PERIOD YEAR ENDED
ENDED JUNE 30, DECEMBER 31,
(In Thousands) 1997 1996
- ------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 456 $ 871
Net realized gain (loss) on investments (269) (188)
Net change in unrealized appreciation 115 (583)
------- -------
Net change in net assets resulting from
operations 302 100
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- (871)
NET TRUST SHARE TRANSACTIONS (51) 2,505
------- -------
TOTAL CHANGE IN NET ASSETS 251 1,734
NET ASSETS AT BEGINNING OF PERIOD 15,991 14,257
------- -------
NET ASSETS AT END OF PERIOD $16,242 $15,991
======= =======
- ------------------------------------------------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN TRUST SHARES AND AMOUNTS
SHARES:
Sales 201 464
Reinvestments -- 81
Redemptions (206) (319)
------- -------
Net change (5) 226
======= =======
AMOUNTS:
Sales $ 2,164 $ 5,170
Reinvestments -- 871
Redemptions (2,215) (3,536)
------- -------
Net change $ (51) $ 2,505
======= =======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 8 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Notes to Financial Statements
(Unaudited)
1. GENERAL
SAFECO Resource Series Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management invest-
ment company. The Trust consists of six portfolios. Shares of the Trust Portfo-
lios are available as funding vehicles for certain variable annuity and vari-
able life products sold by SAFECO Life Insurance Company and other insurance
companies.
The financial statements included herein are only those of the Bond Portfo-
lio. The financial statements of the other portfolios are presented separately.
The investment objective of the Bond Portfolio is high current income consis-
tent with relative stability of capital.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolio in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles, which
permits management to make certain estimates and assumptions at the date of the
financial statements.
SECURITY VALUATION. Investment securities are stated on the basis of valua-
tions provided by a pricing service, which uses information with respect to
transactions in securities, quotations from securities dealers, market transac-
tions in comparable securities and various relationships between securities in
determining value. Short-term investments purchased at par are valued at cost.
All other short-term investments are valued at amortized cost. Investments in
other mutual funds are valued at net asset value.
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on investment transactions are determined using the
identified cost method.
INCOME RECOGNITION. Interest is accrued on Portfolio investments daily. Divi-
dend income from investments in mutual funds is recorded on the ex-dividend
date.
DIVIDENDS TO SHAREHOLDERS. Dividends to shareholders from net investment in-
come and distributions of realized gains are recorded on the last business day
of December each year.
- 9 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
FEDERAL INCOME TAX. It is the Portfolio's policy to comply with the require-
ments of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Therefore, no
federal income or excise tax provision is required.
3. TRANSACTIONS WITH AFFILIATES
SAFECO Asset Management Company receives investment advisory fees from the
Portfolio. The fee is based on average daily net assets at an annual rate of
.74 percent.
The Portfolio may borrow money for temporary purposes from SAFECO Corporation
or its affiliates at interest rates equivalent to commercial bank interest
rates.
At June 30, 1997, SAFECO Life Insurance Company owned 100 percent of the out-
standing shares of the Portfolio.
Currently, SAFECO Life Insurance Company (SAFECO) pays all the expenses of
the Portfolio except for investment advisory fees. When net assets exceed $20
million, the Portfolio will be charged for all operating expenses in addition
to investment advisory fees. These expenses will include legal and auditing
fees, custodian fees, and other expenses.
4. INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
($ IN THOUSANDS)
- -----------------------------------------------------------------------------
<S> <C>
PURCHASES FOR THE SIX MONTHS ENDED JUNE 30, 1997 (INCLUDING
$12,813 OF U.S. GOVERNMENT AND AGENCY SECURITIES) $14,060
=======
SALES FOR THE SIX MONTHS ENDED JUNE 30, 1997 (INCLUDING
$12,165 OF U.S. GOVERNMENT AND AGENCY SECURITIES) $13,294
=======
- -----------------------------------------------------------------------------
</TABLE>
Purchases and sales amounts exclude short-term investments which, at the time
of purchase, had a maturity of one year or less.
Unrealized appreciation (depreciation) at June 30, 1997:
<TABLE>
<CAPTION>
($ IN THOUSANDS)
- -----------------------------------------------------------------------------
<S> <C>
Aggregate gross unrealized appreciation for investment
securities in which there is an excess of value over
identified cost $181
Aggregate gross unrealized depreciation for investment
securities in which there is an excess of identified cost
over value (80)
----
NET UNREALIZED APPRECIATION $101
====
- -----------------------------------------------------------------------------
</TABLE>
- 10 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
5. ACCUMULATED UNDISTRIBUTED CAPITAL LOSS
The Portfolio had $689,000 of accumulated undistributed net realized loss on
investment transactions at June 30, 1997. For Federal income tax purposes, this
will represent a capital loss carryforward which will expire between the years
2002 and 2004.
6. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
FOR THE
SIX-MONTH
PERIOD ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
-------------------------------------------
1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING
OF PERIOD $ 10.75 $ 11.31 $ 10.20 $ 11.12 $ 10.82
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.31 0.62 0.71 0.59 0.56
Net realized and unrealized
gain (loss) on investments (0.10) (0.56) 1.11 (0.92) 0.58
-------- ------- ------- ------- -------
Total from investment
operations 0.21 0.06 1.82 (0.33) 1.14
LESS DISTRIBUTIONS:
Dividends from net
investment income -- (0.62) (0.71) (0.59) (0.56)
Distributions from realized
gains -- -- -- -- (0.28)
-------- ------- ------- ------- -------
Total distributions -- (0.62) (0.71) (0.59) (0.84)
-------- ------- ------- ------- -------
NET ASSET VALUE AT END OF
PERIOD $ 10.96 $ 10.75 $ 11.31 $ 10.20 $ 11.12
======== ======= ======= ======= =======
TOTAL RETURN (A) 1.95%** 0.54% 17.87% (2.93)% 10.55%
NET ASSETS AT END OF PERIOD
(000'S OMITTED) $ 16,242 $15,991 $14,257 $13,361 $13,245
RATIO OF EXPENSES TO AVERAGE
NET ASSETS .73% * .73% .72% .72% .73%
RATIO OF EXPENSES TO AVERAGE
NET ASSETS BEFORE EXPENSE
REIMBURSEMENTS ++ .89%* .87% .94% .89% --
RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET
ASSETS 5.73% * 5.64% 6.50% 5.53% 5.68%
PORTFOLIO TURNOVER RATE 176.27%* 140.90% 77.93% 147.22% 60.20%
- -------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Not Annualized.
++ See Note 3 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been re-
duced during the periods shown (See Note 3 of Notes to Financial State-
ments).
- 11 -
<PAGE>
SAFECO RESOURCE SERIES TRUST
BOARD OF TRUSTEES:
Boh A. Dickey, Chairman
Barbara J. Dingfield
David F. Hill
Richard W. Hubbard
Richard E. Lundgren
Larry L. Pinnt
John W. Schneider
OFFICERS:
David F. Hill, President
Ronald L. Spaulding, Vice President and Treasurer
Neal A. Fuller, Vice President and Controller
INVESTMENT ADVISOR:
SAFECO Asset Management Company
DISTRIBUTOR:
SAFECO Securities, Inc.
TRANSFER AGENT:
SAFECO Services Corporation
CUSTODIAN:
State Street Bank
AUDITOR:
Ernst & Young, LLP
GMF 940 8/97
LOGO Printed on Recycled Paper.
This report must be preceded or accompanied by a current prospectus.
(R) Registered trademark of SAFECO Corporation.
