SAFECO RESOURCE SERIES TRUST, 485BPOS, 1999-04-29

SAFECO RESOURCE SERIES TRUST
485BPOS, 1999-04-29

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<PAGE>

Registration Nos. 33-06547/811-4717
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
-----

Pre-Effective Amendment No. / /
------------ -----

Post-Effective Amendment No. 22 /X/
------------- -----

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
-----

Amendment No. 23 /X/
------------- -----

(Check appropriate box or boxes.)

SAFECO RESOURCE SERIES TRUST
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

10865 Willows Road NE, Redmond, WA 98052
----------------------------------------------------------------
(Address of Principal Executive Offices) ZIP Code

Registrant's Telephone Number, including Area Code (206) 545-5180
--------------------------

Name and Address of Agent for Service
----------------------------------------
DAVID F. HILL
10865 Willows Road NE
Redmond, WA 98052

Approximate Date of Proposed Public Offering: Continuous

It is proposed that this filing will become effective
immediately upon filing pursuant to paragraph (b)
-----
X on April 30, 1999 pursuant to paragraph (b)
-----
60 days after filing pursuant to paragraph (a)(1)
-----
on _________________ pursuant to paragraph (a)(1)
----- 75 days after filing pursuant to paragraph (a)(2)
on _________________ pursuant to paragraph (a)(2) of Rule 485
-----

If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Registrant is registering an indefinite number of its shares under the
Securities Act of 1933 by declaration made pursuant to Section 24(f) of the
Investment Company Act of 1940 (Act). Pursuant to Rule 24f-2 under the Act,
Registrant filed a Rule 24f-2 Notice on March 26, 1999.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

<PAGE>

SAFECO RESOURCE SERIES TRUST

Contents of Registration Statement

This registration statement consists of the following papers and documents:

Cover Sheet

Cross Reference Sheet

Growth Portfolio - Part A - Prospectus

Equity Portfolio - Part A - Prospectus

Northwest Portfolio - Part A - Prospectus

Small Company Stock Portfolio - Part A - Prospectus

Bond Portfolio - Part A - Prospectus

Money Market Portfolio - Part A - Prospectus

Growth Portfolio
Equity Portfolio

Northwest Portfolio
Small Company Stock Portfolio
Bond Portfolio
Money Market Portfolio
Part B -- Statement of Additional Information

Part C -- Other Information

Signature Page

Exhibits

<PAGE>

SAFECO RESOURCE SERIES TRUST

Registration Statement on Form N-1A
Cross Reference Sheet
PART A

Item No. Location in Prospectus
- -------- ----------------------
<S> <C>
1. Front and Back Cover Pages Front and Back Cover pages

2. Risk/Return Summary: Objective; Principal Investment
Investments, Risks and Performance Strategies; Principal Risks;
Performance

3. Risk/Return Summary: Fee Table Fees and Expenses of the
Portfolio

4. Investment Objectives, Principal Additional Facts About Investment
Strategies, and Related Risks Objectives, Strategies and Risks

5. Management's Discussion of Fund Herein incorporated by reference to
Performance Registrant's Annual Report dated
December 31, 1998 filed with the
Securities and Exchange Commission's
EDGAR system on or about March 3, 1999
----------

6. Management, Organization, and Capital Management
Structure

7. Shareholder Information Distributions and Tax Information;
Purchasing and Redeeming Shares;
Calculation of Share Price

8. Distribution Arrangements Not Applicable

9. Financial Highlights Information Financial Highlights
</TABLE>

PART B

<TABLE>
<CAPTION>
Location in Statement
Item No. of Additional Information
- -------- -------------------------
<S> <C>
10.Cover page and Table of Contents Cover page and Table of Contents

11. Fund History Description of the Trust

12. Description of the Fund and Its Description of the Trust; Fundamental
Investments and Risks Investment Policies; Non-Fundamental
Investment Policies; Additional
Investment Information

3
<PAGE>

13. Management of the Fund Trustees and Officers

14. Control Persons and Principal Holders Principal Shareholders of
Securities the Portfolios

15. Investment Advisory and Other Services Investment Advisory and Other
Services

16. Brokerage Allocation and Other Practices Brokerage Practices

17. Capital Stock and Other Securities Characteristics of the Trust's Shares

18. Purchase, Redemption and Pricing of Calculation of Share Price
Shares

19. Taxation of the Fund Distributions and Tax Information

20. Underwriters Investment Advisory and Other Services

21. Calculation of Performance Data Additional Performance Information

22. Financial Statements Financial Statements
</TABLE>

PART C

Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.

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SAFECO RESOURCE SERIES TRUST
---------------------------
GROWTH PORTFOLIO
PROSPECTUS
-----------------
April 30, 1999

AS WITH ALL MUTUAL FUND SHARES, THE SECURITIES AND EXCHANGE COMMISSION
HAS NOT APPROVED OR DISAPPROVED THE PORTFOLIO SHARES OFFERED IN THIS
PROSPECTUS AS AN INVESTMENT OR DETERMINED WHETHER THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIME.

[LOGO]
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
A WORD ABOUT THE GROWTH PORTFOLIO........................ 1

OBJECTIVE................................................ 1

PRINCIPAL INVESTMENT STRATEGIES.......................... 1

PRINCIPAL RISKS.......................................... 2

PERFORMANCE.............................................. 2

FEES AND EXPENSES OF THE PORTFOLIO....................... 4

ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES
AND RISKS................................................ 5

INFORMATION ABOUT THE TRUST.............................. 7

MANAGEMENT............................................... 8

FINANCIAL HIGHLIGHTS..................................... 8

DISTRIBUTIONS AND TAX INFORMATION........................ 9

CALCULATION OF SHARE PRICE............................... 10

PURCHASING AND REDEEMING SHARES.......................... 10
</TABLE>

-i-
<PAGE>
A WORD ABOUT THE GROWTH PORTFOLIO

The Growth Portfolio is a mutual fund used solely as an investment option for
variable annuity or variable life insurance contracts offered by insurance
companies or for qualified pension and retirement plans. You should not confuse
the Growth Portfolio with any other SAFECO mutual fund, even though one or more
of such funds may have the same or similar name, investment objective, advisor
or portfolio manager as this one. The Growth Portfolio is entirely separate from
such other funds. In particular, you should not view the investment performance
of such other funds as an indication of the performance of the Growth Portfolio
or rely upon information about any other fund in making investment decisions
about the Growth Portfolio.

OBJECTIVE

The Growth Portfolio seeks growth of capital and the increased income that
ordinarily follows from such growth.

PRINCIPAL INVESTMENT STRATEGIES

The Growth Portfolio invests most of its assets in common stocks selected
primarily for potential appreciation. In evaluating a stock's growth potential,
the portfolio manager considers the following factors:

- - The strength of the company's balance sheet

- - The quality of the management team

- - The rate at which the company's earnings are projected to grow in the future

The manager looks in particular for undervalued stocks of companies with above-
average growth potential. Although the Portfolio will invest in companies of all
sizes, companies meeting the manager's criteria for earnings growth are
typically small in size and therefore quite volatile.

Stocks may be sold if the manager believes that the growth prospects for the
company are no longer good or if the company fails to realize its growth
potential. However, the Portfolio will keep holdings through periodic downturns
if the manager believes that the long-term growth prospects for the company are
good. The Portfolio may sell some or all of its holdings in stocks that the
manager considers to be overvalued. Stocks may become overvalued as a result of

1
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PRINCIPAL INVESTMENT STRATEGIES, CONTINUED

overly-optimistic earnings forecasts or because the market places unrealistic
multiples on projected earnings. The Portfolio may also sell stocks if the
manager believes there are more attractive opportunities elsewhere or to meet
redemptions.

PRINCIPAL RISKS

Loss of money is a risk of investing in the Growth Portfolio. The value of your
investment in the Growth Portfolio is tied to the prices of the securities in
which the Portfolio invests. These prices may fluctuate in response to many
factors. The value of the Portfolio may fall if any of the following occurs:

- - The earnings of the issuers of the stocks do not meet analysts' expectations
or are otherwise disappointing.

- - The manager's judgment about the growth potential of the issuers or the value
of the stocks is incorrect.

- - The stock market declines.

- - The market does not favor small capitalization stocks.

- - An event occurs that causes the price of one of the larger positions to
decline materially.

Many of the stocks in this Portfolio are more volatile than the general market.
The stocks of small companies in particular may suffer abrupt price movements.
You should be prepared to see fluctuations in share price and variable
investment return. Due to the aggressive nature of this Portfolio, investors
should be prepared to withstand significant volatility over a period of several
years.

An investment in the Growth Portfolio is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

PERFORMANCE

The bar chart and table below should help give you a sense of the risks of
investing in the Growth Portfolio by showing you how performance has changed
from year to year and also how it has measured against the Standard & Poor's
Composite Stock Price Index (S&P 500), a widely recognized unmanaged index of
stock performance. The bar chart shows how the Growth Portfolio has performed in
each of the full calendar years since commencement of operations on

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PERFORMANCE, CONTINUED

January 7, 1993, assuming reinvestment of all distributions. The table shows the
average annual return for the Growth Portfolio relative to the S&P 500. The
Portfolio's returns are net of its expenses, but do not reflect any additional
fees and expenses that may be deducted by the variable annuity or variable life
insurance issuer or the qualified pension or retirement plan through which you
invest. Past performance cannot tell you how the Growth Portfolio will perform
in the future. As total return and principal value will fluctuate, shares when
sold may be worth more, or less, than their original cost.

GROWTH PORTFOLIO PERFORMANCE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

The highest quarterly return was 20.34% for the quarter ended September 30,
1997; and the lowest return was -25.78% for the quarter ended September 30,
1998.

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PERFORMANCE, CONTINUED
AVERAGE ANNUAL TOTAL RETURNS
AS OF 12/31/98

<TABLE>
<CAPTION>
COMMENCEMENT
OF OPERATIONS (1/7/93)
1 YEAR 5 YEARS TO DECEMBER 31, 1998
<S> <C> <C> <C>
Growth Portfolio 1.83% 25.13% 27.10%
S&P 500 Index* 28.58% 24.03% 18.35%
</TABLE>

* The S&P 500 Index is an unmanaged index containing common stocks of 500
industrial, transporta- tion, utility and financial companies, regarded as
generally representative of the U.S. stock market. The Index reflects the
reinvestment of income dividends and capital gain distributions, if any,
but does not reflect fees, brokerage commissions, or other expenses of
investing. This index is used for comparison purposes only. Performance is
based on historical earnings and does not indicate the Portfolio's future
performance.

FEES AND EXPENSES OF THE PORTFOLIO

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Portfolio.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

The Growth Portfolio has no initial sales charge (load) or deferred sales
charge. There are no exchange or redemption fees.

You may incur fees associated with the variable annuity or variable life
insurance policy or the qualified pension or retirement plan in which you
invest. Please refer to the policy prospectus or plan document for details.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM PORTFOLIO
ASSETS)

The expenses the Growth Portfolio pays before distributing net investment income
to shareholders are shown below. These expenses are stated as a percentage of

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FEES AND EXPENSES OF THE PORTFOLIO, CONTINUED

average daily net assets and are based on the actual expenses of the Growth
Portfolio for the year ended December 31, 1998. The Portfolio's expenses for
other years may vary.

<TABLE>
<S> <C>
Management Fees .74%
Distribution (12b-1) Fees 0%
Other Expenses .06%
Total Annual Fund Operating Expenses .80%
</TABLE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the Growth
Portfolio with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Growth Portfolio for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Portfolio's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
$81.68 $255.48 $444.18 $989.80
</TABLE>

ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

INVESTMENT OBJECTIVE CHANGES

In rare circumstances, the Growth Portfolio, with the approval of its board of
trustees, may change its investment objective. The Portfolio may change its
investment objective without shareholder approval. If this happens, the Growth
Portfolio may no longer be appropriate for you. Should the board of trustees
vote to change the Portfolio's objective, you will be notified in writing at
least 30 days prior to the change.

5
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ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS, CONTINUED
TEMPORARY DEFENSIVE STRATEGIES

From time to time, the Growth Portfolio may take temporary defensive positions
that are inconsistent with its principal investment policies, in an attempt to
respond to adverse market, economic, political or other conditions. If it does
so, the Portfolio may not achieve its investment objective in the short run.

APPLICATION OF INVESTMENT POLICIES

This prospectus and the Statement of Additional Information describe some of the
investment policies used by the Growth Portfolio, including any restrictions or
requirements regarding the percentage of assets that may or must be invested in
a particular type of security. These limits or requirements apply to the initial
investment by the Growth Portfolio. Subsequent market movements that cause asset
values to change will not affect the Portfolio's compliance with such limits or
requirements.

MARKET RISK

All securities transactions involve market risk. The major risk associated with
mutual funds is that the securities in the portfolio may decline in value,
causing your investment to be worth less than it was when you bought it.

YEAR 2000 ISSUES

The common practice in computer programming of using two digits to identify a
year has resulted in what is referred to as the "Year 2000 problem." If not
corrected, automated systems could misinterpret or fail to process dates
occurring after December 31, 1999. The Portfolio may be adversely affected if
the computer systems used by its primary service providers do not properly
process date-related information. The Portfolio's investment advisor,
distributor and transfer, dividend and shareholder servicing agent are taking
steps they believe are reasonably designed to address the Year 2000 problem with
respect to the computer systems that each of them uses, and to obtain
satisfactory assurances that each of the Portfolio's other major service
providers are taking similar steps to correct programming for systems with which
the Portfolio interacts.

It is not anticipated that the Portfolio will incur any charges or that there
will be any difficulties in accurate and timely reporting resulting in the
change in year

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ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS, CONTINUED

from 1999 to 2000. However, despite the efforts and plans of the Portfolio's
service providers, computer systems that are non-compliant could have a material
adverse effect on the Portfolio's business, operations or financial condition.
In addition, securities prices, and therefore the value of the assets held by
the Portfolio, may also be adversely affected if the companies or governmental
units or agencies whose securities are held by the Portfolio do not properly
process such date-related information.

PORTFOLIO TURNOVER

The Portfolio may engage in active and frequent trading to achieve its principal
investment strategies. This may lead to the realization and distribution to
shareholders of higher capital gains, thereby increasing their tax liability.
Frequent trading also increases the transaction costs of the Portfolio, which
could detract from performance. The turnover rate of the Portfolio for each of
the past five years can be found in the Financial Highlights section of this
prospectus.

INFORMATION ABOUT THE TRUST

The Growth Portfolio is a series of the SAFECO Resource Series Trust. Shares of
the Trust are offered to life insurance companies, which may or may not be
affiliated with each other, for allocation to certain of their separate accounts
established to fund variable life insurance policies and variable annuity
contracts. Shares of the Trust may also be offered directly to qualified pension
and retirement plans.

Although not currently anticipated by the Trust, there may be times in the
future when the interests of variable contract owners and qualified plan
participants will conflict because of future differences in tax treatment, or
for other reasons. The Trust's board of trustees will monitor events in order to
identify any such conflicts and determine what action, if any, should be taken.
If one or more insurance company separate accounts or qualified plans were to
withdraw their investments in the Trust as a result of any such conflict, the
Trust might be forced to sell portfolio securities at disadvantageous prices. In
addition, the Trust may refuse to sell shares of any of the Trust portfolios to
any separate account or qualified plan or terminate the offering of shares of
any of the Trust portfolios if such action is required by law or a regulatory
authority or if its board of trustees determines that it is in the best
interests of the shareholders of any Trust portfolio.

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MANAGEMENT

The investment advisor for the Growth Portfolio is SAFECO Asset Management
Company (SAM), Two Union Square, 25th Floor, Seattle, WA 98101. SAM has been an
advisor to mutual funds and other investment portfolios since 1973 and its
predecessors have been such advisors since 1932. SAM provides investment
research, advice and supervision in the ongoing management of the Portfolio.
Based on the Portfolio's investment objective and policies, SAM determines what
securities the Portfolio will purchase, retain or sell and implements those
decisions.

The Growth Portfolio pays SAM an annual management fee based on a percentage of
the Portfolio's net assets, ascertained each business day and paid monthly. The
Portfolio paid SAM a fee of .74% of the Portfolio's net assets for the year
ended December 31, 1998.

The Growth Portfolio is managed by Thomas M. Maguire, Vice President of SAM. Mr.
Maguire has served as portfolio manager for the Portfolio since it began
operations in 1993 and has served as portfolio manager for the SAFECO Growth
Fund since 1989.

FINANCIAL HIGHLIGHTS

The following financial highlights table is intended to help you understand the
Portfolio's financial performance for the past 5 years. Certain information
reflects financial results for a single Portfolio share. The total returns in
the table represent the rate that an investor would have earned on an investment
in the Portfolio (assuming reinvestment of all dividends and distributions).
This information has been audited by Ernst & Young, LLP, independent auditors,
whose report, along with the Portfolio's financial statements, are included in
the Trust's annual report to shareholders, which is available upon request.

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FINANCIAL HIGHLIGHTS, CONTINUED
SAFECO RESOURCE SERIES TRUST -- GROWTH PORTFOLIO

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 23.35 $ 19.26 $ 15.88 $ 12.98 $ 12.16
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.10) (0.04) (0.03) 0.06 --
Net realized and unrealized gain on
investments 0.53 8.62 5.12 5.26 1.45
Total from investment operations 0.43 8.58 5.09 5.32 1.45
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- -- (0.06) --
Distributions from realized gains (2.38) (4.49) (1.71) (2.36) (0.63)
Distributions from paid in capital (0.10) -- -- -- --
Total distributions (2.48) (4.49) (1.71) (2.42) (0.63)
NET ASSET VALUE AT END OF PERIOD $ 21.30 $ 23.35 $ 19.26 $ 15.88 $ 12.98
TOTAL RETURN 1.83% 44.55% 32.06% 41.00%(A) 11.92%(A)
NET ASSETS AT END OF PERIOD (000'S OMITTED) $356,407 $240,400 $109,491 $44,458 $16,156
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.80% 0.77% 0.79% 0.79% 0.71%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ N/A N/A N/A 0.84% 0.96%
RATIO OF NET INVESTMENT INCOME (LOSS) TO
AVERAGE NET ASSETS (.48%) (.25%) (.28%) 0.55% (.05%)
PORTFOLIO TURNOVER RATE 46.13% 88.99% 75.58% 111.70% 41.24%
</TABLE>

++ Prior to 1995, SAFECO Life Insurance Company paid all the expenses of the
Portfolio except for investment advisory fees. When net assets exceeded $20
million, the Portfolio was charged for all operating expenses in addition
to investment advisory fees.
(A) The total return would have been lower had certain expenses not been
reduced during the periods shown.
N/A Not applicable as no fund expenses were reimbursed.

DISTRIBUTIONS AND TAX INFORMATION

The Growth Portfolio distributes substantially all of its net investment income
and net capital gains to its shareholders (the separate accounts of
participating insurance companies and qualified plans). All dividends will be
automatically reinvested in shares of the Growth Portfolio. If you are a
variable contract owner, the tax consequences of your investment in the
Portfolio depend upon the provisions of the variable annuity or variable life
insurance policy through which

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DISTRIBUTIONS AND TAX INFORMATION, CONTINUED

you invest. You should refer to the prospectus relating to your policy for
information about taxes. Dividends and distributions made by the Portfolio to
qualified plans are not taxable to the qualified plans or to the participants of
those plans.

CALCULATION OF SHARE PRICE

The price of the Growth Portfolio's shares is based on the Portfolio's net asset
value per share (NAV). The NAV is calculated by adding up the value of all the
Growth Portfolio's assets, subtracting liabilities and dividing this sum by the
total number of shares owned by the Portfolio's shareholders. The Portfolio's
NAV is generally calculated as of the close of regular trading on the New York
Stock Exchange (NYSE) (usually 4:00 Eastern time, 1:00 Pacific time) every day
the NYSE is open. Your purchase or redemption order will be priced at the next
NAV calculated after your order is placed.

To the extent that the Portfolio's assets are traded in other markets on days
when the NYSE is closed, the value of the Portfolio's assets may be affected on
days when shareholders cannot make redemptions because the Portfolio is not open
for business. In addition, trading in some of the Portfolio's assets may not
occur on days when the Portfolio is open for business.

We obtain valuations for the Portfolio's investments from pricing services.
Prices for Exchange-traded securities are based on the last reported sale price
on the national exchange on which the securities are primarily traded, unless
there are no transactions, in which case the value is based on the last reported
bid price. Prices for non-Exchange traded securities are based on similar
securities and quotations from dealers. Investments for which a representative
value cannot be established are priced using a method the board of trustees
believes reflects fair value.

PURCHASING AND REDEEMING SHARES

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<PAGE>

PURCHASING AND REDEEMING SHARES, CONTINUED

offering of shares of the Portfolio, if such action is required by law or by any
regulatory authority or is, in the sole discretion of the trustees, necessary in
the best interests of the shareholders of the Portfolio.

In unusual situations we may suspend or delay payment for redemptions. This may
happen if:

- - The NYSE is closed

- - NYSE trading is restricted

- - The Securities and Exchange Commission declares an emergency

Also, if immediate payment could adversely affect the Portfolio, we may need to
delay payment for up to seven days.

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FOR MORE INFORMATION
------------------------------------------------

If you would like more information about the Growth Portfolio, the following
documents are available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS

Additional information about the Growth Portfolio's investments is available in
the Trust's annual and semi-annual reports to shareholders. In the Trust's
annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Portfolio's performance
during its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI provides more detailed information about the Portfolio. A current SAI is
on file with the Securities and Exchange Commission, is incorporated into this
Prospectus by reference and is legally considered part of this Prospectus.

You can get free copies of these documents or discuss your questions about the
Growth Portfolio by contacting the Portfolio at:

SAFECO Securities, Inc.
10865 Willows Road NE
Redmond, WA 98052

Telephone: 1-800-624-5711
Deaf and Hard of Hearing TTY/TDD Service 1-800-438-8718

You can review and copy the Trust's reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. To find out more about this
service, call the SEC at 1-800-SEC-0330. Reports and other information about the
Trust and the Portfolio are also available on the SEC's website at
http://www.sec.gov. You can also get copies, for a fee, by writing or calling
the Public Reference Section, Securities and Exchange Commission, Washington, DC
20549-6009.

Investment Company Act File No. 811-4717

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SAFECO RESOURCE SERIES TRUST
---------------------------
EQUITY PORTFOLIO
PROSPECTUS
-----------------
April 30, 1999

[LOGO]
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
A WORD ABOUT THE EQUITY PORTFOLIO........................ 1

OBJECTIVE................................................ 1

PRINCIPAL INVESTMENT STRATEGIES.......................... 1

PRINCIPAL RISKS.......................................... 2

PERFORMANCE.............................................. 2

FEES AND EXPENSES OF THE PORTFOLIO....................... 4

ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES
AND RISKS................................................ 5

INFORMATION ABOUT THE TRUST.............................. 6

MANAGEMENT............................................... 7

FINANCIAL HIGHLIGHTS..................................... 8

DISTRIBUTIONS AND TAX INFORMATION........................ 9

CALCULATION OF SHARE PRICE............................... 9

PURCHASING AND REDEEMING SHARES.......................... 9
</TABLE>

-I-
<PAGE>
A WORD ABOUT THE EQUITY PORTFOLIO

The Equity Portfolio is a mutual fund used solely as an investment option for
variable annuity or variable life insurance contracts offered by insurance
companies or for qualified pension and retirement plans. You should not confuse
the Equity Portfolio with any other SAFECO mutual fund, even though one or more
of such funds may have the same or similar name, investment objective, advisor
or portfolio manager as this one. The Equity Portfolio is entirely separate from
such other funds. In particular, you should not view the investment performance
of such other funds as an indication of the performance of the Equity Portfolio
or rely upon information about any other fund in making investment decisions
about the Equity Portfolio.

OBJECTIVE

The Equity Portfolio seeks long-term growth of capital and reasonable current
income.

PRINCIPAL INVESTMENT STRATEGIES

During normal market conditions, the Equity Portfolio will invest primarily in
equity securities (common stock and preferred stock), and may invest in
securities convertible into common stock (including convertible corporate bonds
and convertible preferred stock). The Portfolio typically invests in common
stocks of large, established companies that are proven performers. When
selecting stocks for the Portfolio, the portfolio manager looks for companies
having:

- - Consistent earnings growth

- - Attractive dividend income

- - Good value relative to the overall market

The Portfolio buys stocks for which the manager believes the three- to five-year
earnings per share outlook is good. The manager may sell these stocks if prices
become expensive relative to the three-year outlook for earnings or if earnings
prospects deteriorate. The Portfolio also buys stocks for which there is a
specific shorter-term earnings catalyst, such as cost cutting or restructuring.
These stocks may be sold if the earnings catalyst is not successful or if the
stock price reaches a specific target. The manager may sell part of a position
in a stock if the market value becomes too large and exceeds the desired
portfolio weighting.

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PRINCIPAL RISKS

Loss of money is a risk of investing in the Equity Portfolio. The value of your
investment in the Equity Portfolio is tied to the prices of the securities in
which the Equity Portfolio invests. As with all stock funds, the main risk of
investing in the Equity Portfolio is that the securities in the Portfolio will
fall in value, causing your investment to be worth less than when you bought it.
The price of common stocks may fluctuate in response to many factors. The value
of the Portfolio may fall if any of the following occurs:

- - The earnings of the issuers of the stocks do not meet analysts' expectations
or are otherwise disappointing.

- - The manager's judgment about the growth potential of the issuers or the value
of the stocks is incorrect.

- - The stock market declines.

- - The market does not favor large capitalization stocks.

Also, your investment returns may vary and cannot be predicted. The Equity
Portfolio may be suitable for you if you seek an attractive total return on your
investment but are uncomfortable with a more aggressive growth fund.

An investment in the Equity Portfolio is not a bank deposit and is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

PERFORMANCE

The bar chart and table below should help give you a sense of the risks of
investing in the Equity Portfolio by showing you how performance has changed
from year to year and also how it has measured against the Standard & Poor's
Composite Stock Price Index (S&P 500), a widely recognized unmanaged index of
stock performance. The bar chart shows how the Equity Portfolio has performed in
each of the last ten years, assuming reinvestment of all distributions. The
table shows the average annual return for the portfolio relative to the S&P 500.
The Equity Portfolio's returns are net of its expenses, but do not reflect any
additional fees and expenses that may be deducted by the variable annuity or
variable insurance plan or the qualified pension or retirement plan through
which you invest. Past performance cannot tell you how the Equity Portfolio will
perform in the future. As total return and principal value will fluctuate,
shares when sold may be worth more, or less, than their original cost.

2
<PAGE>
PERFORMANCE, CONTINUED
EQUITY PORTFOLIO PERFORMANCE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
RETURN
PERCENTAGE
<S> <C>
1989 27.11
1990 -5.21
1991 26.85
1992 8.06
1993 27.92
1994 8.94
1995 28.63
1996 24.79
1997 24.85
1998 24.89
</TABLE>

The highest quarterly return was 18.76% for the quarter ended December 31, 1998;
and the lowest return was -12.69% for the quarter ended September 30, 1990.

AVERAGE ANNUAL TOTAL RETURNS
AS OF 12/31/98

<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
<S> <C> <C> <C>
Equity Portfolio 24.89% 22.21% 19.13%
S&P 500 Index* 28.58% 24.03% 19.17%
</TABLE>

* The S&P 500 Index is an unmanaged index containing common stocks of 500
industrial, transporta-
tion, utility and financial companies, regarded as generally representative
of the U.S. stock market. The Index reflects the reinvestment of income
dividends and capital gain distributions, if any, but does not reflect
fees, brokerage commissions, or other expenses of investing. This index is
used for comparison purposes only. Performance is based on historical
earnings and does not indicate the Portfolio's future performance.

3
<PAGE>

FEES AND EXPENSES OF THE PORTFOLIO

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Portfolio.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

The Equity Portfolio has no initial sales charge (load) or deferred sales
charge. There are no exchange or redemption fees.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM PORTFOLIO
ASSETS)

The expenses the Equity Portfolio pays before distributing net investment income
to shareholders are shown below. These expenses are stated as a percentage of
average daily net assets and are based on the actual expenses of the Equity
Portfolio for the year ended December 31, 1998. The Portfolio's expenses for
other years may vary.

<TABLE>
<S> <C>
Management Fees .74%
Distribution (12b-1) Fees 0%
Other Expenses .04%
Total Annual Fund Operating Expenses .78%
</TABLE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the Equity
Portfolio with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Equity Portfolio for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Portfolio's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
$79.65 $249.16 $433.29 $966.05
</TABLE>

4
<PAGE>
ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

INVESTMENT OBJECTIVE CHANGES

In rare circumstances, the Equity Portfolio may, with the approval of its board
of trustees, change its investment objective. The Portfolio may change its
investment objective without shareholder approval. If this happens, the
Portfolio may no longer be appropriate for you. Should the board of trustees
vote to change the Portfolio's objective, you will be notified in writing at
least 30 days prior to the change.

TEMPORARY DEFENSIVE STRATEGIES

From time to time, the Equity Portfolio may take temporary defensive positions
that are inconsistent with its principal investment policies, in an attempt to
respond to adverse market, economic, political or other conditions. If it does
so, the Portfolio may not achieve its investment objective in the short run.

APPLICATION OF INVESTMENT POLICY LIMITATIONS

This prospectus and the Statement of Additional Information describe some of the
investment policies used by the Equity Portfolio, including any restrictions or
requirements regarding the percentage of assets that may or must be invested in
a particular type of security. These limits or requirements apply to the initial
investment by the Equity Portfolio. Subsequent market movements that cause asset
values to change will not affect the Portfolio's compliance with such limits or
requirements.

MARKET RISK

YEAR 2000 ISSUES

5
<PAGE>
ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS, CONTINUED
information. The Portfolio's investment advisor, distributor and transfer,
dividend and shareholder servicing agent are taking steps they believe are
reasonably designed to address the Year 2000 problem with respect to the
computer systems that each of them uses, and to obtain satisfactory assurances
that each of the Portfolio's other major service providers are taking similar
steps to correct programming for systems with which the Portfolio interacts.

It is not anticipated that the Portfolio will incur any charges or that there
will be any difficulties in accurate and timely reporting resulting in the
change in year from 1999 to 2000. However, despite the efforts and plans of the
Portfolio's service providers, computer systems that are non-compliant could
have a material adverse effect on the Portfolio's business, operations or
financial condition. In addition, securities prices, and therefore the value of
the assets held by the Portfolio, may also be adversely affected if the
companies or governmental units or agencies whose securities are held by the
Portfolio do not properly process such date-related information.

PORTFOLIO TURNOVER

The Portfolio may engage in active and frequent trading to acheive its principal
investment strategies. This may lead to the realization and distribution to
shareholders of higher capital gains, thereby increasing their tax liability.
Frequent trading also increases the transaction costs of the Portfolio, which
could detract from performance. The turnover rate of the Portfolio for each of
the past five years can be found in the Financial Highlights section of this
prospectus.

INFORMATION ABOUT THE TRUST

The Equity Portfolio is a series of the SAFECO Resource Series Trust. Shares of
the Trust are offered to life insurance companies, which may or may not be
affiliated with each other, for allocation to certain of their separate accounts
established to fund variable life insurance policies and variable annuity
contracts. Shares of the Trust may also be offered directly to qualified pension
and retirement plans.

6
<PAGE>
INFORMATION ABOUT THE TRUST, CONTINUED

and determine what action, if any, should be taken. If one or more insurance
company separate accounts or qualified plans were to withdraw their investments
in the Trust as a result of any such conflict, the Trust might be forced to sell
portfolio securities at disadvantageous prices. In addition, the Trust may
refuse to sell shares of any of the Trust portfolios to any separate account or
qualified plan or terminate the offering of shares of any of the Trust
portfolios if such action is required by law or a regulatory authority or if its
board of trustees determines that it is in the best interests of the
shareholders of any Trust portfolio.

MANAGEMENT

The investment advisor for the Portfolio is SAFECO Asset Management Company
(SAM), Two Union Square, 25th Floor, Seattle, WA 98101. SAM has been an advisor
to mutual funds and other investment portfolios since 1973 and its predecessors
have been such advisors since 1932. SAM provides investment research, advice and
supervision in the ongoing management of the Portfolio. Based on the Portfolio's
investment objective and policies, SAM determines what securities the Portfolio
will purchase, retain or sell and implements those decisions.

The Portfolio pays SAM an annual management fee based on a percentage of the
Portfolio's net assets, ascertained each business day and paid monthly. The
Portfolio paid SAM a fee of .74% of the Portfolio's net assets for the year
ended December 31, 1998.

The Equity Portfolio is managed by Richard D. Meagley, Vice President of SAM.
Mr. Meagley has served as portfolio manager for the Portfolio and for SAFECO
Equity Fund since 1995. Prior to these positions he served as portfolio manager
and analyst from 1992 to 1994 for Kennedy Associates, Inc., an investment
advisory firm located in Seattle, Washington. From 1991 to 1992, he was an
Assistant Vice President of SAM and the portfolio manager of the SAFECO
Northwest Fund.

7
<PAGE>
FINANCIAL HIGHLIGHTS

The following financial highlights table is intended to help you understand the
Equity Portfolio's financial performance for the past 5 years. Certain
information reflects financial results for a single Portfolio share. The total
returns in the table represent the rate that an investor would have earned on an
investment in the Equity Portfolio (assuming reinvestment of all dividends and
distributions). This information has been audited by Ernst & Young, LLP,
independent auditors, whose report, along with the Portfolio's financial
statements, are included in the Trust's annual report to shareholders, which is
available upon request.

SAFECO RESOURCE SERIES TRUST -- EQUITY PORTFOLIO

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 25.18 $ 21.75 $ 19.24 $ 16.83 $ 17.02
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.25 0.27 0.34 0.39 0.31
Net realized and unrealized gain on
investments 6.02 5.13 4.43 4.43 1.21
Total from investment operations 6.27 5.40 4.77 4.82 1.52
LESS DISTRIBUTIONS:
Dividends from net investment income (0.25) (0.27) (0.34) (0.39) (0.31)
Distributions from realized gains (1.23) (1.70) (1.92) (2.02) (1.40)
Total distributions (1.48) (1.97) (2.26) (2.41) (1.71)
NET ASSET VALUE AT END OF PERIOD $ 29.97 $ 25.18 $ 21.75 $ 19.24 $ 16.83
TOTAL RETURN 24.89% 24.85% 24.79% 28.63% 8.94%(A)
NET ASSETS AT END OF PERIOD (000'S OMITTED) $557,314 $389,256 $263,067 $169,479 $102,321
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.78% 0.75% 0.72% 0.75% 0.77%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ N/A N/A N/A N/A 0.78%
RATIO OF NET INVESTMENT INCOME TO AVERAGE
NET ASSETS 0.96% 1.19% 1.72% 2.26% 1.98%
PORTFOLIO TURNOVER RATE 31.57% 41.75% 56.99% 69.18% 28.71%
</TABLE>

++ Prior to 1994, SAFECO Life Insurance Company paid all the expenses of the
Portfolio except for investment advisory fees. When net assets exceeded $20
million, the Portfolio was charged for all operating expenses in addition
to investment advisory fees.
(A) The total return would have been lower had certain expenses not been
reduced during the period shown.
N/A Not applicable as no fund expenses were reimbursed.

8
<PAGE>
DISTRIBUTIONS AND TAX INFORMATION

The Portfolio distributes substantially all of its net investment income and net
capital gains to its shareholders (the separate accounts of participating
insurance companies and qualified plans). All dividends will be automatically
reinvested in shares of the Equity Portfolio. If you are a variable contract
owner, the tax consequences of your investment in the Portfolio depend upon the
provisions of the variable annuity or variable life insurance policy through
which you invest. You should refer to the prospectus relating to your policy for
information about taxes. Dividends and distributions made by the Portfolio to
qualified plans are not taxable to the qualified plans or to the participants of
those plans.

CALCULATION OF SHARE PRICE

The price of the Equity Portfolio's shares is based on the Portfolio's net asset
value per share (NAV). The NAV is calculated by adding up the value of all the
Equity Portfolio's assets, subtracting liabilities and dividing this sum by the
total number of shares owned by the Portfolio's shareholders. The Portfolio's
NAV is generally calculated as of the close of regular trading on the New York
Stock Exchange (NYSE) (usually 4:00 Eastern time, 1:00 Pacific time) every day
the NYSE is open. Your purchase or redemption order will be priced at the next
NAV calculated after your order is placed.

PURCHASING AND REDEEMING SHARES

Shares of the Portfolio are purchased and redeemed at net asset value.
Redemptions will be made by the separate accounts to meet obligations under the

9
<PAGE>

PURCHASING AND REDEEMING SHARES, CONTINUED

variable contracts and by the qualified plans. Variable contract owners and
qualified plan participants do not deal directly with the Trust with respect to
purchases or redemptions of shares. The board of trustees of the Trust may
refuse to sell shares of the Portfolio to any person, or may suspend or
terminate the offering of shares of the Portfolio, if such action is required by
law or by any regulatory authority or is, in the sole discretion of the
trustees, necessary in the best interests of the shareholders of the Portfolio.

In unusual situations we may suspend or delay payment for redemptions. This may
happen if:

- - The NYSE is closed

- - NYSE trading is restricted

- - The Securities and Exchange Commission declares an emergency

Also, if immediate payment could adversely affect the Portfolio, we may need to
delay payment for up to seven days.

10
<PAGE>
FOR MORE INFORMATION
------------------------------------------------

If you would like more information about the Equity Portfolio, the following
documents are available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS

Additional information about the Equity Portfolio's investments is available in
the Trust's annual and semi-annual reports to shareholders. In the Trust's
annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Portfolio's performance
during its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

You can get free copies of these documents or discuss your questions about the
Equity Portfolio by contacting the Portfolio at:

SAFECO Securities, Inc.
10865 Willows Road NE
Redmond, WA 98052

Telephone: 1-800-624-5711
Deaf and Hard of Hearing TTY/TDD Service 1-800-438-8718

You can review and copy the Trust's reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. To find out more about this
service, call the SEC at 1-800-SEC-0330. Reports and other information about
the Trust and the Portfolio are also available on the SEC's website at
http://www.sec.gov. You can also get copies, for a fee, by writing or calling
the Public Reference Section, Securities and Exchange Commission, Washington, DC
20549-6009.

Investment Company Act File No. 811-4717

11
<PAGE>
SAFECO RESOURCE SERIES TRUST
---------------------------
NORTHWEST PORTFOLIO
PROSPECTUS
-----------------
April 30, 1999

[LOGO]
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
A WORD ABOUT THE NORTHWEST PORTFOLIO..................... 1

OBJECTIVE................................................ 1

PRINCIPAL INVESTMENT STRATEGIES.......................... 1

PRINCIPAL RISKS.......................................... 2

PERFORMANCE.............................................. 2

FEES AND EXPENSES OF THE PORTFOLIO....................... 4

ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES
AND RISKS................................................ 5

INFORMATION ABOUT THE TRUST.............................. 7

MANAGEMENT............................................... 7

FINANCIAL HIGHLIGHTS..................................... 8

DISTRIBUTIONS AND TAX INFORMATION........................ 9

CALCULATION OF SHARE PRICE............................... 9

PURCHASING AND REDEEMING SHARES.......................... 10
</TABLE>

-I-
<PAGE>
A WORD ABOUT THE NORTHWEST PORTFOLIO

The Northwest Portfolio is a mutual fund used solely as an investment option for
variable annuity or variable life insurance contracts offered by insurance
companies or for qualified pension and retirement plans. You should not confuse
the Northwest Portfolio with any other SAFECO mutual fund, even though one or
more of such funds may have the same or similar name, investment objective,
advisor or portfolio manager as this one. The Northwest Portfolio is entirely
separate from such other funds. In particular, you should not view the
investment performance of such other funds as an indication of the performance
of the Northwest Portfolio or rely upon information about any other fund in
making investment decisions about the Northwest Portfolio.

OBJECTIVE

The Northwest Portfolio seeks long-term growth of capital through investing
primarily in Northwest companies.

PRINCIPAL INVESTMENT STRATEGIES

The Northwest Portfolio will ordinarily invest its assets in shares of common
stocks and preferred stocks of companies located in the Northwest, selected
primarily for potential long-term appreciation.

When selecting stocks, the manager looks for companies with:

- - Principal executive offices in Alaska, Idaho, Montana, Oregon or Washington

- - Faster earnings growth than their competitors

- - A share price that represents good value

The Portfolio may sell stocks that have reached a specific price target or that
the manager considers to be overvalued relative to other stocks in the industry.
Stocks may become overvalued when earnings forecasts are too optimistic or the
market places unrealistic multiples on projected earnings. Stocks may also be
sold if the manager believes that the growth prospects for the company are no
longer good or if the company fails to realize its growth potential. The
Portfolio may also sell stocks if the manager believes there are more attractive
opportunities elsewhere.

1
<PAGE>
PRINCIPAL RISKS

Loss of money is a risk of investing in the Northwest Portfolio. The value of
your investment in the Northwest Portfolio is tied to the prices of the
securities in which the Portfolio invests. These prices may fluctuate in
response to many factors. The value of the Portfolio may fall if any of the
following occurs:

- - The regional economy of the Northwest suffers.

- - The earnings of the issuers of the stocks do not meet analysts' expectations
or are otherwise disappointing.

- - The manager's judgment about the growth potential of the issuers or the value
of the stocks is incorrect.

- - The stock market declines.

The Northwest Portfolio carries special risks due to its geographic
concentration. These include a smaller universe of securities to choose from and
fluctuations in the regional economy. Many of the companies whose securities are
purchased for the Northwest Portfolio are small in size and may therefore be
more volatile. The Northwest Portfolio may be suitable for you if you seek
long-term growth and are prepared to withstand the risks associated with
geographic concentration.

An investment in the Portfolio is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

PERFORMANCE

The bar chart and table below should help give you a sense of the risks of
investing in the Northwest Portfolio by showing you how performance has changed
from year to year and also how it has measured against the Standard & Poor's
Composite Stock Price Index (S&P 500), a widely recognized unmanaged index of
stock performance. The bar chart shows how the Northwest Portfolio has performed
in each of the full calendar years since commencement of operations on January
7, 1993, assuming reinvestment of all distributions. The table shows the average
annual return for the Northwest Portfolio relative to the S&P 500. The
Portfolio's returns are net of its expenses, but do not reflect any additional
fees and expenses that may be deducted by the variable annuity or variable
insurance plan or the qualified pension or retirement plan through which you
invest. Past

2
<PAGE>
PERFORMANCE, CONTINUED

performance cannot tell you how the Northwest Portfolio will perform in the
future. As total return and principal value will fluctuate, shares when sold may
be worth more, or less, than their original cost.

NORTHWEST PORTFOLIO PERFORMANCE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

The highest quarterly return was 21.33% for the quarter ended December 31, 1998;
and the lowest return was -20.33% for the quarter ended September 30, 1998.

AVERAGE ANNUAL TOTAL RETURNS
AS OF DECEMBER 31, 1998

<TABLE>
<CAPTION>
COMMENCEMENT
OF OPERATIONS (1/7/93)
1 YEAR 5 YEARS TO DECEMBER 31, 1998
<S> <C> <C> <C>
Northwest Portfolio 2.89% 11.04% 9.15%
S&P 500 Index* 28.58% 24.03% 18.35%
</TABLE>

<PAGE>

FEES AND EXPENSES OF THE PORTFOLIO

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Portfolio.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

The Northwest Portfolio has no initial sales charge (load) or deferred sales
charge. There are no exchange or redemption fees.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM PORTFOLIO
ASSETS)

The expenses the Northwest Portfolio pays before distributing net investment
income to shareholders are shown below. These expenses are stated as a
percentage of average daily net assets and are based on the actual expenses of
the Northwest Portfolio for the year ended December 31, 1998. The Portfolio's
expenses for other years may vary.

<TABLE>
<S> <C>
Management Fees .74%
Distribution (12b-1) Fees 0%
Other Expenses* .25%
Total Annual Fund Operating Expenses .99%
</TABLE>

* SAFECO Life Insurance Company ("SAFECO Life") paid or reimbursed all of the
Northwest Portfolio's "Other Expenses" through January 1998. Under an
expense reimbursement agreement between the Trust and SAFECO Life, once the
Portfolio's net assets exceeded $20 million, SAFECO Life stopped paying
those expenses. The expense table reflects the fees that would have been
paid by the Portfolio if the reimbursement agreement had not been in effect
during any part of the year.

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Northwest Portfolio with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Northwest Portfolio for the
time periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each

4
<PAGE>
EXAMPLE, CONTINUED

year and that the Portfolio's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
$100.98 $315.27 $547.08 $1,213.00
</TABLE>

ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

INVESTMENT OBJECTIVE CHANGES

In rare circumstances, the Northwest Portfolio may, with the approval of its
board of trustees, change its investment objective. The Portfolio may change its
investment objective without shareholder approval. If this happens, the
Northwest Portfolio may no longer be appropriate for you. Should the board of
trustees vote to change the Portfolio's objective, you will be notified in
writing at least 30 days prior to the change.

TEMPORARY DEFENSIVE STRATEGIES

From time to time, the Northwest Portfolio may take temporary defensive
positions that are inconsistent with its principal investment policies, in an
attempt to respond to adverse market, economic, political or other conditions.
If it does so, the Portfolio may not achieve its investment objective in the
short run.

APPLICATION OF INVESTMENT POLICIES

This prospectus and the Statement of Additional Information describe some of the
investment policies used by the Northwest Portfolio, including any restrictions
or requirements regarding the percentage of assets that may or must be invested
in a particular type of security. These limits or requirements apply to the
initial investment by the Northwest Portfolio. Subsequent market movements that
cause asset values to change will not affect the Portfolio's compliance with
such limits or requirements.

5
<PAGE>
ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS, CONTINUED
MARKET RISK

YEAR 2000 ISSUES

PORTFOLIO TURNOVER

6
<PAGE>
INFORMATION ABOUT THE TRUST

The Northwest Portfolio is a series of the SAFECO Resource Series Trust. Shares
of the Trust are offered to life insurance companies, which may or may not be
affiliated with each other, for allocation to certain of their separate accounts
established to fund variable life insurance policies and variable annuity
contracts. Shares of the Trust may also be offered directly to qualified pension
and retirement plans.

MANAGEMENT

The Northwest Portfolio is managed by Bill Whitlow, Vice President of SAM. Mr.
Whitlow has served as portfolio manager for the Portfolio and for the SAFECO
Northwest Fund since 1997. From 1990 to 1997, he was a principal and director of
research for the brokerage firm of Pacific Crest Securities in Seattle,
Washington.

7
<PAGE>
FINANCIAL HIGHLIGHTS

The following financial highlights table is intended to help you understand the
Northwest Portfolio's financial performance for the past 5 years. Certain
information reflects financial results for a single Portfolio share. The total
returns in the table represent the rate that an investor would have earned on an
investment in the Northwest Portfolio (assuming reinvestment of all dividends
and distributions). This information has been audited by Ernst & Young, LLP,
independent auditors, whose report, along with the Portfolio's financial
statements, are included in the Trust's annual report to shareholders, which is
available upon request.

SAFECO RESOURCE SERIES TRUST -- NORTHWEST PORTFOLIO

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 15.20 $ 12.12 $10.85 $10.24 $ 9.94
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.05) 0.03 0.08 0.08 0.06
Net realized and unrealized gain (loss)
on investments 0.49 3.73 1.27 0.68 0.30
Total from investment operations 0.44 3.76 1.35 0.76 0.36
LESS DISTRIBUTIONS:
Dividends from net investment income -- (0.03) (0.08) (0.08) (0.06)
Distributions from realized gains -- (0.65) -- (0.07) --
Total distributions -- (0.68) (0.08) (0.15) (0.06)
NET ASSET VALUE AT END OF PERIOD $ 15.64 $ 15.20 $12.12 $10.85 $10.24
TOTAL RETURN (A) 2.89% 31.02% 12.44% 7.42% 3.65%
NET ASSETS AT END OF PERIOD (000'S OMITTED) $24,587 $19,795 $9,541 $6,312 $4,564
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.96% 0.73% 0.70% 0.71% 0.71%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ 0.99% 0.94% 1.11% 1.18% 1.23%
RATIO OF NET INVESTMENT INCOME (LOSS) TO
AVERAGE NET ASSETS (0.32%) 0.27% 0.78% 0.81% 0.72%
PORTFOLIO TURNOVER RATE 46.99% 47.85% 52.20% 21.30% 7.29%
</TABLE>

++ Prior to 1998, SAFECO Life Insurance Company paid all the expenses of the
Portfolio except for investment advisory fees. When net assets exceeded $20
million, the Portfolio was charged for all operating expenses in addition
to investment advisory fees.
(A) The total return would have been lower had certain expenses not been
reduced during the periods shown.

8
<PAGE>
DISTRIBUTIONS AND TAX INFORMATION

The Northwest Portfolio distributes substantially all of its net investment
income and net capital gains to its shareholders (the separate accounts of
participating insurance companies and qualified plans). All dividends will be
automatically reinvested in shares of the Northwest Portfolio. If you are a
variable contract owner, the tax consequences of your investment in the
Portfolio depend upon the provisions of the variable annuity or variable life
insurance policy through which you invest. You should refer to the prospectus
relating to your policy for information about taxes. Dividends and distributions
made by the Portfolio to qualified plans are not taxable to the qualified plans
or to the participants of those plans.

CALCULATION OF SHARE PRICE

The price of the Northwest Portfolio's shares is based on the Portfolio's net
asset value per share (NAV). The NAV is calculated by adding up the value of all
the Northwest Portfolio's assets, subtracting liabilities and dividing this sum
by the total number of shares owned by the Portfolio's shareholders. The
Portfolio's NAV is generally calculated as of the close of regular trading on
the New York Stock Exchange (NYSE) (usually 4:00 Eastern time, 1:00 Pacific
time) every day the NYSE is open. Your purchase or redemption order will be
priced at the next NAV calculated after your order is placed.

9
<PAGE>

PURCHASING AND REDEEMING SHARES

Shares of the Portfolio are purchased and redeemed at net asset value.
Redemptions will be made by the separate accounts to meet obligations under the
variable contracts and by the qualified plans. Variable contract owners and
qualified plan participants do not deal directly with the Trust with respect to
purchases or redemptions of shares. The board of trustees of the Trust may
refuse to sell shares of the Portfolio to any person, or may suspend or
terminate the offering of shares of the Portfolio, if such action is required by
law or by any regulatory authority or is, in the sole discretion of the
trustees, necessary in the best interests of the shareholders of the Portfolio.

In unusual situations we may suspend or delay payment for redemptions. This may
happen if:

- - The NYSE is closed

- - NYSE trading is restricted

- - The Securities and Exchange Commission declares an emergency

Also, if immediate payment could adversely affect the Portfolio, we may need to
delay payment for up to seven days.

10
<PAGE>
FOR MORE INFORMATION
------------------------------------------------

If you would like more information about the Northwest Portfolio, the following
documents are available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS

Additional information about the Northwest Portfolio's investments is available
in the Trust's annual and semi-annual reports to shareholders. In the Trust's
annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Portfolio's performance
during its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

You can get free copies of these documents or discuss your questions about the
Northwest Portfolio by contacting the Portfolio at:

SAFECO Securities, Inc.
10865 Willows Road NE
Redmond, WA 98052

Telephone: 1-800-624-5711
Deaf and Hard of Hearing TTY/TDD Service 1-800-438-8718

You can review and copy the Trust's reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. To find out more about this
service, call the SEC at 1-800-SEC-0330. Reports and other information about
the Trust and the Portfolio are also available on the SEC's website at
http://www.sec.gov. You can also get copies, for a fee, by writing or calling
the Public Reference Section, Securities and Exchange Commission, Washington, DC
20549-6009.

Investment Company Act File No. 811-4717

11
<PAGE>
SAFECO RESOURCE SERIES TRUST
---------------------------
SMALL COMPANY STOCK PORTFOLIO
PROSPECTUS
-----------------
April 30, 1999

[LOGO]
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
A WORD ABOUT THE SMALL COMPANY STOCK PORTFOLIO........... 1

OBJECTIVE................................................ 1

PRINCIPAL INVESTMENT STRATEGIES.......................... 1

PRINCIPAL RISKS.......................................... 2

PERFORMANCE.............................................. 2

FEES AND EXPENSES OF THE PORTFOLIO....................... 4

ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES
AND RISKS................................................ 6

INFORMATION ABOUT THE TRUST.............................. 7

MANAGEMENT............................................... 8

FINANCIAL HIGHLIGHTS..................................... 8

DISTRIBUTIONS AND TAX INFORMATION........................ 9

CALCULATION OF SHARE PRICE............................... 10

PURCHASING AND REDEEMING SHARES.......................... 10
</TABLE>

-I-
<PAGE>
A WORD ABOUT THE SMALL COMPANY STOCK PORTFOLIO

The Small Company Stock Portfolio is a mutual fund used solely as an investment
option for variable annuity or variable life insurance contracts offered by
insurance companies or for qualified pension and retirement plans. You should
not confuse the Small Company Stock Portfolio with any other SAFECO mutual fund,
even though one or more of such funds may have the same or similar name,
investment objective, adviser or portfolio manager as this one. The Small
Company Stock Portfolio is entirely separate from such other funds. In
particular, you should not view the investment performance of such other funds
as an indication of the performance of the Small Company Stock Portfolio or rely
upon information about any other fund in making investment decisions about the
Small Company Stock Portfolio.

OBJECTIVE

The Small Company Stock Portfolio seeks long-term growth of capital through
investing primarily in small-sized companies.

PRINCIPAL INVESTMENT STRATEGIES

The Small Company Stock Portfolio invests at least 65% of its total assets in
common stocks and preferred stocks of small-sized companies with total market
capitalization at the time of investment of less than $1 billion.

When selecting stocks for the Portfolio, the manager looks for companies having:

- - Long-term appreciation potential based on above-average or improving earnings
growth rates

- - Attractive relative values

- - A policy of reinvesting earnings back into the company rather than paying
dividends to shareholders

Typically, the portfolio will be broadly diversified among companies and
industries. However certain industry sectors may be more highly represented at
times than other sectors as a result of individual stock selection. This may
happen if companies within certain sectors exhibit more of the characteristics
sought by the manager than companies in other sectors.

1
<PAGE>
PRINCIPAL INVESTMENT STRATEGIES, CONTINUED

The Portfolio may sell stocks if the manager believes that the growth prospects
for the company are no longer good or if the company fails to realize its growth
potential. The Portfolio will sell stocks that the manager believes have limited
growth potential when the stock price reaches a specific target. In addition,
the Portfolio may sell or reduce its holdings in companies whose stock prices
are too high in relation to their prospects for growth. The Portfolio may also
sell stocks if the manager believes there are more attractive opportunities
elsewhere or to meet redemptions.

PRINCIPAL RISKS

Loss of money is a risk of investing in the Small Company Stock Portfolio. The
value of your investment in the Small Company Stock Portfolio is tied to the
prices of the securities in which the Portfolio invests. These prices may
fluctuate in response to many factors. The value of the Portfolio may fall if
any of the following occurs:

- - The earnings of the issuers of the stocks do not meet analysts' expectations
or are otherwise disappointing.

- - The manager's judgment about the growth potential of the issuers or the
relative value of the stocks is incorrect.

- - The stock market declines.

- - The market does not favor small capitalization stocks or value stocks.

- - An event occurs that causes the price of one of the larger positions to
decline materially.

Investments in small or newly formed companies involve greater risks than
investments in larger, more established issuers, and their securities can be
subject to more abrupt and erratic movements in price. Because small-company
stocks can be quite volatile, you should invest in the Small Company Stock
Portfolio only if you can withstand wide fluctuations in share price.

An investment in the Small Company Stock Portfolio is not a bank deposit and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.

2
<PAGE>
PERFORMANCE

The bar chart and table below should help give you a sense of the risks of
investing in the Small Company Stock Portfolio by showing you how it has
measured against the Russell 2000 Index, a widely recognized unmanaged index of
small company stock performance. The bar chart shows how the Small Company Stock
Portfolio has performed in 1998, assuming reinvestment of all distributions. The
table shows the average annual return for the Small Company Stock Portfolio
relative to the Russell 2000 Index. The Portfolio's returns are net of its
expenses, but do not reflect any additional fees and expenses that may be
deducted by the variable annuity or variable insurance plan or the qualified
pension or retirement plan through which you invest. Past performance cannot
tell you how the Portfolio will perform in the future. As total return and
principal value will fluctuate, shares when sold may be worth more, or less,
than their original cost.

SMALL COMPANY STOCK PORTFOLIO PERFORMANCE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
RETURN
PERCENTAGE

The highest quarterly return was 20.68% for the quarter ended March 31, 1998;
and the lowest return was -33.79% for the quarter ended September 30, 1998.

3
<PAGE>
PERFORMANCE, CONTINUED
AVERAGE ANNUAL TOTAL RETURNS
AS OF 12/31/98

<TABLE>
<CAPTION>
COMMENCEMENT
OF
OPERATIONS
1 YEAR (4/30/97)
<S> <C> <C>
Small Company Stock Portfolio -19.95% 1.66%
Russell 2000 Index* -2.24% 13.97%
</TABLE>

* The Russell 2000 Index is an unmanaged index which consists of the 2,000
smallest companies in the Russell 3000 Index. The Russell 3000 Index
consists of the 3000 largest U.S. stocks in terms of market capitalization.
The Index reflects the reinvestment of income dividends and capital gain
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing. This index is used for comparison purposes
only. Performance is based on historical earnings and does not indicate the
Portfolio's future performance.

FEES AND EXPENSES OF THE PORTFOLIO

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Portfolio.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

The Small Company Stock Portfolio has no initial sales charge (load) or deferred
sales charge. There are no exchange or redemption fees.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM PORTFOLIO
ASSETS)

The expenses the Small Company Stock Portfolio pays before distributing net
investment income to shareholders are shown below. These expenses are stated as
a

4
<PAGE>

FEES AND EXPENSES OF THE PORTFOLIO, CONTINUED

percentage of average daily net assets and are based on the actual expenses of
the Small Company Stock Portfolio for the year ended December 31, 1998. The
Portfolio's expenses for other years may vary.

<TABLE>
<S> <C>
Management Fees .85%
Distribution (12b-1) Fees 0%
Other Expenses* .30%
----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.15%
----
----
</TABLE>

* The amounts shown are based on the maximum management fee and other
expenses for the year. During the fiscal year ended December 31, 1998,
SAFECO Asset Management Company ("SAM") paid or reimbursed the Small
Company Stock Portfolio's "Other Expenses" which exceeded .10% of the
Portfolio's average annual net assets. Therefore, the Portfolio's actual
"Total Annual Fund Operating Expenses" for the year ended December 31, 1998
were .95%. SAM has agreed to make such payments or reimbursements until the
Portfolio's net assets exceed $20 million, at which time SAM will stop
making those payments.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Small
Company Stock Portfolio with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Small Company Stock Portfolio
for the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Portfolio's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
$117.21 $365.35 $632.97 $1,397.53
</TABLE>

5
<PAGE>
ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

INVESTMENT OBJECTIVE CHANGES

In rare circumstances, the Small Company Stock Portfolio may, with the approval
of its board of trustees, change its investment objective. The Portfolio may
change its investment objective without shareholder approval. If this happens,
the Small Company Stock Portfolio may no longer be appropriate for you. Should
the board of trustees vote to change the Portfolio's objective, you will be
notified in writing at least 30 days prior to the change.

TEMPORARY DEFENSIVE STRATEGIES

From time to time, the Small Company Stock Portfolio may take temporary
defensive positions that are inconsistent with its principal investment
policies, in an attempt to respond to adverse market, economic, political or
other conditions. If it does so, the Portfolio may not achieve its investment
objective in the short run.

APPLICATION OF INVESTMENT POLICY LIMITATIONS

This prospectus and the Statement of Additional Information describe some of the
investment policies used by the Small Company Stock Portfolio, including any
restrictions or requirements regarding the percentage of assets that may or must
be invested in a particular type of security. These limits or requirements apply
to the initial investment by the Small Company Stock Portfolio. Subsequent
market movements that cause asset values to change will not affect the
Portfolio's compliance with such limits or requirements.

MARKET RISK

YEAR 2000 ISSUES

6
<PAGE>
ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS, CONTINUED
information. The Portfolio's investment advisor, distributor and transfer,
dividend and shareholder servicing agent are taking steps they believe are
reasonably designed to address the Year 2000 problem with respect to the
computer systems that each of them uses, and to obtain satisfactory assurances
that each of the Portfolio's other major service providers are taking similar
steps to correct programming for systems with which the Portfolio interacts.

PORTFOLIO TURNOVER

The Portfolio may engage in active and frequent trading to achieve its principal
investment strategies. This may lead to the realization and distribution to
shareholders of higher capital gains, thereby increasing their tax liability.
Frequent trading also increases the transaction costs of the Portfolio, which
could detract from performance. The turnover rate of the Portfolio since
inception can be found in the Financial Highlights section of this prospectus.

INFORMATION ABOUT THE TRUST

The Small Company Stock Portfolio is a series of the SAFECO Resource Series
Trust. Shares of the Trust are offered to life insurance companies, which may or
may not be affiliated with each other, for allocation to certain of their
separate accounts established to fund variable life insurance policies and
variable annuity contracts. Shares of the Trust may also be offered directly to
qualified pension and retirement plans.

7
<PAGE>
INFORMATION ABOUT THE TRUST, CONTINUED

Trust's board of trustees will monitor events in order to identify any such
conflicts and determine what action, if any, should be taken. If one or more
insurance company separate accounts or qualified plans were to withdraw their
investments in the Trust as a result of any such conflict, the Trust might be
forced to sell portfolio securities at disadvantageous prices. In addition, the
Trust may refuse to sell shares of any of the Trust portfolios to any separate
account or qualified plan or terminate the offering of shares of any of the
Trust portfolios if such action is required by law or a regulatory authority or
if its board of trustees determines that it is in the best interests of the
shareholders of any Trust portfolio.

MANAGEMENT

The investment advisor for the Small Company Stock Portfolio is SAFECO Asset
Management Company (SAM), Two Union Square, 25th Floor, Seattle, WA 98101. SAM
has been an advisor to mutual funds and other investment portfolios since 1973
and its predecessors have been such advisors since 1932. SAM provides investment
research, advice and supervision in the ongoing management of the Portfolio.
Based on the Portfolio's investment objective and policies, SAM determines what
securities the Portfolio will purchase, retain or sell and implements those
decisions.

The Small Company Stock Portfolio pays SAM an annual management fee based on a
percentage of the Portfolio's net assets, ascertained each business day and paid
monthly. The Portfolio paid SAM a fee of .85% of the Portfolio's net assets for
the year ended December 31, 1998.

The Small Company Stock Portfolio is managed by Greg Eisen, Assistant Vice
President of SAM. Mr. Eisen has served as portfolio manager for the Portfolio
and for SAFECO Small Company Stock Fund since 1996. From 1992 to 1996, he served
as investment analyst for SAM. From 1986 to 1992, he was a financial analyst for
SAFECO Insurance Companies.

FINANCIAL HIGHLIGHTS

The following financial highlights table is intended to help you understand the
Portfolio's financial performance since inception. Certain information reflects
financial results for a single Portfolio share. The total returns in the table
represent the rate that an investor would have earned on an investment in the
Portfolio (assuming reinvestment of all dividends and distributions). This

8
<PAGE>
FINANCIAL HIGHLIGHTS, CONTINUED

information has been audited by Ernst & Young, LLP, independent auditors, whose
report, along with the Portfolio's financial statements, are included in the
Trust's annual report to shareholders, which is available upon request.

SAFECO RESOURCE SERIES TRUST -- SMALL COMPANY STOCK PORTFOLIO

<TABLE>
<CAPTION>
APRIL 30, 1997
(COMMENCEMENT
YEAR ENDED OF OPERATIONS) TO
DECEMBER 31 DECEMBER 31
1998 1997
<S> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $12.33 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.03) 0.01
Net realized and unrealized gain
(loss) on investments (2.43) 2.83
Total from investment operations (2.46) 2.84
LESS DISTRIBUTIONS:
Dividends from net investment income -- (0.01)
Distributions from realized gains -- (0.50)
Total distributions -- (0.51)
NET ASSET VALUE AT END OF PERIOD $9.87 $12.33
TOTAL RETURN(A) (19.95)% 28.40%**
NET ASSETS AT END OF PERIOD (000'S
OMITTED) $11,780 $10,250
RATIO OF EXPENSES TO AVERAGE NET
ASSETS 0.95% 0.95%*
RATIO OF EXPENSES TO AVERAGE NET
ASSETS BEFORE EXPENSE REIMBURSEMENTS++ 1.15% 1.24%*
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS (0.32)% 0.19%*
PORTFOLIO TURNOVER RATE 92.14% 47.91%*
</TABLE>

* Annualized.
** Not annualized.
++ Currently, SAM pays all the expenses of the Portfolio in excess of .10% of
the Portfolio's average annual net assets 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.
(A) The total return would have been lower had certain expenses not been
reduced during the periods shown.

DISTRIBUTIONS AND TAX INFORMATION

The Small Company Stock Portfolio distributes substantially all of its net
investment income and net capital gains to its shareholders (the separate
accounts of participating insurance companies and qualified plans). All
dividends will be automatically reinvested in shares of the Small Company Stock
Portfolio. If you

9
<PAGE>
DISTRIBUTIONS AND TAX INFORMATION, CONTINUED

are a variable contract owner, the tax consequences of your investment in the
Portfolio depend upon the provisions of the variable annuity or variable life
insurance policy through which you invest. You should refer to the prospectus
relating to your policy for information about taxes. Dividends and distributions
made by the Portfolio to qualified plans are not taxable to the qualified plans
or to the participants of those plans.

CALCULATION OF SHARE PRICE

The price of the Small Company Stock Portfolio's shares is based on the
Portfolio's net asset value per share (NAV). The NAV is calculated by adding up
the value of all the Small Company Stock Portfolio's assets, subtracting
liabilities and dividing this sum by the total number of shares owned by the
fund's shareholders. The Portfolio's NAV is generally calculated as of the close
of regular trading on the New York Stock Exchange (NYSE) (usually 4:00 Eastern
time, 1:00 Pacific time) every day the NYSE is open. Your purchase or redemption
order will be priced at the next NAV calculated after your order is placed.

PURCHASING AND REDEEMING SHARES

10
<PAGE>

PURCHASING AND REDEEMING SHARES, CONTINUED

to sell shares of the Portfolio to any person, or may suspend or terminate the
offering of shares of the Portfolio, if such action is required by law or by any
regulatory authority or is, in the sole discretion of the trustees, necessary in
the best interests of the shareholders of the Portfolio.

In unusual situations we may suspend or delay payment for redemptions. This may
happen if:

- - The NYSE is closed

- - NYSE trading is restricted

- - The Securities and Exchange Commission declares an emergency

Also, if immediate payment could adversely affect the Portfolio, we may need to
delay payment for up to seven days.

11
<PAGE>
FOR MORE INFORMATION
------------------------------------------------

If you would like more information about the Small Company Stock Portfolio, the
following documents are available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS

Additional information about the Small Company Stock Portfolio's investments is
available in the Trust's annual and semi-annual reports to shareholders. In the
Trust's annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Portfolio's performance
during its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

You can get free copies of these documents or discuss your questions about the
Portfolio by contacting the Portfolio at:

SAFECO Securities, Inc.
10865 Willows Road NE
Redmond, WA 98052

Telephone: 1-800-624-5711
Deaf and Hard of Hearing TTY/TDD Service 1-800-438-8718

You can review and copy the Trust's reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. To find out more about this
service, call the SEC at 1-800-SEC-0330. Reports and other information about
the Trust and the Portfolio are also available on the SEC's website at
http://www.sec.gov. You can also get copies, for a fee, by writing or calling
the Public Reference Section, Securities and Exchange Commission, Washington, DC
20549-6009.

Investment Company Act File No. 811-4717

12
<PAGE>
SAFECO RESOURCE SERIES TRUST
---------------------------
BOND PORTFOLIO
PROSPECTUS
-----------------
April 30, 1999

[LOGO]
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
A WORD ABOUT THE BOND PORTFOLIO.......................... 1

OBJECTIVE................................................ 1

PRINCIPAL INVESTMENT STRATEGIES.......................... 1

PRINCIPAL RISKS.......................................... 2

PERFORMANCE.............................................. 3

FEES AND EXPENSES OF THE PORTFOLIO....................... 4

ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES
AND RISKS................................................ 6

INFORMATION ABOUT THE TRUST.............................. 7

MANAGEMENT............................................... 8

FINANCIAL HIGHLIGHTS..................................... 8

DISTRIBUTIONS AND TAX INFORMATION........................ 9

CALCULATION OF SHARE PRICE............................... 10

PURCHASING AND REDEEMING SHARES.......................... 10
</TABLE>

-I-
<PAGE>
A WORD ABOUT THE BOND PORTFOLIO

The Bond Portfolio is a mutual fund used solely as an investment option for
variable annuity or variable life insurance contracts offered by insurance
companies or for qualified pension and retirement plans. You should not confuse
the Bond Portfolio with any other SAFECO mutual fund, even though one or more of
such funds may have the same or similar name, investment objective, advisor or
portfolio manager as this one. The Bond Portfolio is entirely separate from such
other funds. In particular, you should not view the investment performance of
such other funds as an indication of the performance of the Bond Portfolio or
rely upon information about any other fund in making investment decisions about
the Bond Portfolio.

OBJECTIVE

The Bond Portfolio seeks to provide as high a level of current income as is
consistent with the relative stability of capital.

PRINCIPAL INVESTMENT STRATEGIES

The Bond Portfolio will invest primarily in medium-term debt securities. The
Bond Portfolio may invest up to half of its assets in mortgage related
securities, including GNMA securities, mortgage pass-through securities issued
by governmental and non-governmental issuers and collateralized mortgage
obligations (CMOs), that are rated in the top two investment grades by either
Standard & Poor's or Moody's. The Bond Portfolio may also invest significantly
in debt securities of the following sectors: domestic industrials, domestic
utilities, supranationals, Yankee and foreign. The Portfolio may also invest in
below investment grade corporate debt securities. The Portfolio may sell a
security if the manager is concerned about an issuer's credit risk, if the
security becomes fully valued or if a more attractive alternative is available.

1
<PAGE>
PRINCIPAL RISKS

The Bond Portfolio is subject to interest rate risk. Generally, when market
interest rates rise the price of the Bond Portfolio's debt securities will fall,
and when market interest rates fall the price of the Bond Portfolio's debt
securities will rise. In addition, the Bond Portfolio carries risks associated
with the following securities:

- - GNMA and other mortgage-backed securities. Because the Portfolio must reinvest
principal payments it receives from its mortgage-related securities at
prevailing interest rates, which may be higher or lower than the current yield
of the Portfolio, mortgage-related securities may not be an effective means to
lock in long-term interest rates. In addition, during periods of changing
interest rates, mortgage holders may be more likely to pay off their loans
early. These prepayment fluctuations may decrease overall investment returns.

- - Bonds of foreign issuers, including Yankee sector bonds and Eurodollar bonds.
In addition to credit risk, market risk and liquidity risk, the risks of
foreign bonds include lack of information about foreign issuers, questionable
accounting and auditing practices in other countries, difficulty enforcing
claims against foreign issuers in the event of default, and the possibility
that political, social or other events will disrupt the economy of the foreign
country and cause investments in that country to lose money. Yankee sector
bonds also carry the risk of nationalization of the issuer, confiscatory
taxation by the foreign government and establishment of controls by the
foreign government that would inhibit the remittance due to the Bond
Portfolio. Eurodollar bonds are subject to the risk that a foreign government
might prevent dollar-denominated funds from flowing across its borders. To the
extent that the Portfolio owns bonds denominated in foreign currencies, it
could lose money as a result of unfavorable currency exchange rates.

- - Below investment grade securities. Risks associated with below investment
grade securities (commonly referred to as "junk" bonds) include greater
volatility, reduced liquidity and a higher risk of default.

- - Asset-backed securities. The underlying borrower(s) may default on the loan
and the recovered collateral may not be sufficient to cover the interest and
principal payments.

Loss of money is a risk of investing in the Bond Portfolio.

2
<PAGE>
PRINCIPAL RISKS, CONTINUED
This Portfolio may be suitable for you if you want higher current income than a
stable-priced money market fund, but greater price stability than a longer-term
bond fund.

An investment in the Bond Portfolio is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

PERFORMANCE

The bar chart and table below should help give you a sense of the risks of
investing in the Bond Portfolio by showing you how performance has changed from
year to year and also how it has measured against the Lehman Brothers
Govt./Corp. Index, a widely recognized index. The bar chart shows how the Bond
Portfolio has performed in each of the last ten years, assuming reinvestment of
all distributions. The table shows the average annual return for the Bond
Portfolio relative to the Lehman Brothers Govt./Corp. Index. The Portfolio's
returns are net of its expenses, but do not reflect any additional fees and
expenses that may be deducted by the variable annuity or variable insurance plan
or the qualified pension or retirement plan through which you invest. Past
performance cannot tell you how the Bond Portfolio will perform in the future.
As total return and principal value will fluctuate, shares when sold may be
worth more, or less, than their original cost.

3
<PAGE>
PERFORMANCE, CONTINUED
BOND PORTFOLIO PERFORMANCE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

The highest quarterly return was 6.27% for the quarter ended June 30, 1989; and
the lowest return was -3.15% for the quarter ended March 31, 1994.

AVERAGE ANNUAL TOTAL RETURNS
AS OF 12/31/98

<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS
<S> <C> <C> <C>
Bond Portfolio 8.90% 6.31% 8.05%
Lehman Brothers Govt./Corp.
Index* 9.47% 7.30% 9.33%
</TABLE>

* The Lehman Brothers Govt./Corp. Index is a broad-based bond market index.
It is unmanaged and includes dividends. It is generally representative of
the securities that comprise the Portfolio, but does not include operating
expenses or transaction costs. This index is used for comparison purposes
only. Performance is based on historical earnings and does not indicate the
Portfolio's future performance.

FEES AND EXPENSES OF THE PORTFOLIO

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Portfolio.

4
<PAGE>

FEES AND EXPENSES OF THE PORTFOLIO, CONTINUED

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

The Portfolio has no initial sales charge (load) or deferred sales charge. There
are no exchange or redemption fees.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM PORTFOLIO
ASSETS)

The expenses the Bond Portfolio pays before distributing net investment income
to shareholders are shown below. These expenses are stated as a percentage of
average daily net assets and are based on the actual expenses of the Portfolio
for the year ended December 31, 1998. The Portfolio's expenses for other years
may vary.

<TABLE>
<S> <C>
Management Fees .74%
Distribution (12b-1) Fees 0%
Other Expenses* .24%
Total Annual Fund Operating Expenses .98%
</TABLE>

* SAFECO Life Insurance Company ("SAFECO Life") paid or reimbursed all of the
Bond Portfolio's "Other Expenses" through June 1998. Under an expense
reimbursement agreement between the Trust and SAFECO Life, once the
Portfolio's net assets exceeded $20 million, SAFECO Life stopped paying
those expenses. The expense table reflects the fees that would have been
paid by the Portfolio if the reimbursement agreement had not been in effect
during any part of the year.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Bond
Portfolio with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Bond Portfolio for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each year
and that the Portfolio's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
$99.97 $312.13 $541.69 $1,201.36
</TABLE>

5
<PAGE>
ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

INVESTMENT OBJECTIVE CHANGES

In rare circumstances, the Bond Portfolio may, with the approval of its board of
trustees, change its investment objective. The Portfolio may change its
investment objective without shareholder approval. If this happens, the Bond
Portfolio may no longer be appropriate for you. Should the board of trustees
vote to change the Portfolio's objective, you will be notified in writing at
least 30 days prior to the change.

TEMPORARY DEFENSIVE STRATEGIES

From time to time, the Bond Portfolio may take temporary defensive positions
that are inconsistent with its principal investment policies, in an attempt to
respond to adverse market, economic, political or other conditions. If it does
so, the Portfolio may not achieve its investment objective in the short run.

APPLICATION OF INVESTMENT POLICY LIMITATIONS

This prospectus and the Statement of Additional Information describe some of the
investment policies used by the Portfolio, including any restrictions or
requirements regarding the percentage of assets that may or must be invested in
a particular type of security. These limits or requirements apply to the initial
investment by the Portfolio. Subsequent market movements that cause asset values
to change will not affect the Portfolio's compliance with such limits or
requirements.

MARKET RISK

YEAR 2000 ISSUES

6
<PAGE>
ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS, CONTINUED
and shareholder servicing agent are taking steps they believe are reasonably
designed to address the Year 2000 problem with respect to the computer systems
that each of them uses, and to obtain satisfactory assurances that each of the
Portfolio's other major service providers are taking similar steps to correct
programming for systems with which the Portfolio interacts.

PORTFOLIO TURNOVER

INFORMATION ABOUT THE TRUST

The Bond Portfolio is a series of the SAFECO Resource Series Trust. Shares of
the Trust are offered to life insurance companies, which may or may not be
affiliated with each other, for allocation to certain of their separate accounts
established to fund variable life insurance policies and variable annuity
contracts. Shares of the Trust may also be offered directly to qualified pension
and retirement plans.

7
<PAGE>
INFORMATION ABOUT THE TRUST, CONTINUED

MANAGEMENT

The investment advisor for the Bond Portfolio is SAFECO Asset Management Company
(SAM), Two Union Square, 25th Floor, Seattle, WA 98101. SAM has been an advisor
to mutual funds and other investment portfolios since 1973 and its predecessors
have been such advisors since 1932. SAM provides investment research, advice and
supervision in the ongoing management of the Portfolio. Based on the Portfolio's
investment objective and policies, SAM determines what securities the Portfolio
will purchase, retain or sell and implements those decisions.

The Bond Portfolio is managed by Michael Hughes, Assistant Vice President of
SAM. Mr. Hughes has served as portfolio manager for the Portfolio and for SAFECO
Managed Bond Fund since 1997. From 1995 to 1996, he was Vice President and a
portfolio manager for First Interstate Capital Management Company, and from 1988
to 1995 he was Vice President and portfolio manager for First Interstate Bank of
California.

FINANCIAL HIGHLIGHTS

8
<PAGE>
FINANCIAL HIGHLIGHTS, CONTINUED

SAFECO RESOURCE SERIES TRUST -- BOND PORTFOLIO

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 11.04 $ 10.75 $ 11.31 $ 10.20 $ 11.12
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.50 0.61 0.62 0.71 0.59
Net realized and unrealized gain (loss)
on investments 0.49 0.29 (0.56) 1.11 (0.92)
Total from investment operations 0.99 0.90 0.06 1.82 (0.33)
LESS DISTRIBUTIONS:
Dividends from net investment income (0.50) (0.61) (0.62) (0.71) (0.59)
Distributions from realized gains (0.12) -- -- -- --
Total distributions (0.62) (0.61) (0.62) (0.71) (0.59)
NET ASSET VALUE AT END OF PERIOD $ 11.41 $ 11.04 $ 10.75 $ 11.31 $ 10.20
TOTAL RETURN(A) 8.90% 8.41% 0.54% 17.87% (2.93%)
NET ASSETS AT END OF PERIOD (000'S OMITTED) $30,117 $17,881 $15,991 $14,257 $13,361
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.83% 0.74% 0.73% 0.72% 0.72%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ 0.98% 0.90% 0.87% 0.94% 0.89%
RATIO OF NET INVESTMENT INCOME TO AVERAGE
NET ASSETS 5.50% 5.75% 5.64% 6.50% 5.53%
PORTFOLIO TURNOVER RATE 164.82% 151.43% 140.90% 77.93% 147.22%
</TABLE>

++ Prior to 1998, SAFECO Life Insurance Company paid all the expenses of the
Portfolio except for investment advisory fees. When net assets exceeded $20
million, the Portfolio was charged for all operating expenses in addition
to investment advisory fees.
(A) Total return would have been lower had certain expenses not been reduced
during the periods shown.

DISTRIBUTIONS AND TAX INFORMATION

The Bond Portfolio distributes substantially all of its net investment income
and net capital gains to its shareholders (the separate accounts of
participating insurance companies and qualified plans). The Portfolio declares
dividends each

9
<PAGE>
DISTRIBUTIONS AND TAX INFORMATION, CONTINUED

business day and capital gains on the last business day of each year. All
dividends will be automatically reinvested in shares of the Bond Portfolio. If
you are a variable contract owner, the tax consequences of your investment in
the Portfolio depend upon the provisions of the variable annuity or variable
life insurance policy through which you invest. You should refer to the
prospectus relating to your policy for information about taxes. Dividends and
distributions made by the Portfolio to qualified plans are not taxable to the
qualified plans or to the participants of those plans.

CALCULATION OF SHARE PRICE

The price of the Bond Portfolio's shares is based on the Portfolio's net asset
value per share (NAV). The NAV is calculated by adding up the value of all the
Bond Portfolio's assets, subtracting liabilities and dividing this sum by the
total number of shares owned by the Portfolio's shareholders. The Portfolio's
NAV is generally calculated as of the close of regular trading on the New York
Stock Exchange (NYSE) (usually 4:00 Eastern time, 1:00 Pacific time) every day
the NYSE is open. Your purchase or redemption order will be priced at the next
NAV calculated after your order is placed.

PURCHASING AND REDEEMING SHARES

Shares of the Portfolio are purchased and redeemed at net asset value.
Redemptions will be made by the separate accounts to meet obligations under the

10
<PAGE>

PURCHASING AND REDEEMING SHARES, CONTINUED

In unusual situations we may suspend or delay payment for redemptions. This may
happen if:

- - The NYSE is closed

- - NYSE trading is restricted

- - The Securities and Exchange Commission declares an emergency

Also, if immediate payment could adversely affect the Portfolio, we may need to
delay payment for up to seven days.

11
<PAGE>
FOR MORE INFORMATION
------------------------------------------------

If you would like more information about the Bond Portfolio, the following
documents are available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS

Additional information about the Portfolio's investments is available in the
Trust's annual and semi-annual reports to shareholders. In the Trust's annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Portfolio's performance during its
last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

You can get free copies of these documents or discuss your questions about the
Portfolio by contacting the Portfolio at:

SAFECO Securities, Inc.
10865 Willows Road NE
Redmond, WA 98052

Telephone: 1-800-624-5711
Deaf and Hard of Hearing TTY/TDD Service 1-800-438-8718

You can review and copy the Trust's reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. To find out more about this
service, call the SEC at 1-800-SEC-0330. Reports and other information about
the Trust and the Portfolio are also available on the SEC's website at http://
www.sec.gov. You can also get copies, for a fee, by writing or calling the
Public Reference Section, Securities and Exchange Commission, Washington, DC
20549-6009.

Investment Company Act File No. 811-4717

12
<PAGE>
SAFECO RESOURCE SERIES TRUST
---------------------------
MONEY MARKET PORTFOLIO
PROSPECTUS
-----------------
April 30, 1999

[LOGO]
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
<S> <C>
A WORD ABOUT THE MONEY MARKET PORTFOLIO.................. 1

OBJECTIVE................................................ 1

PRINCIPAL INVESTMENT STRATEGIES.......................... 1

PRINCIPAL RISKS.......................................... 2

PERFORMANCE.............................................. 2

FEES AND EXPENSES OF THE PORTFOLIO....................... 3

ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES
AND RISKS................................................ 5

INFORMATION ABOUT THE TRUST.............................. 6

MANAGEMENT............................................... 7

FINANCIAL HIGHLIGHTS..................................... 7

DISTRIBUTIONS AND TAX INFORMATION........................ 8

CALCULATION OF SHARE PRICE............................... 9

PURCHASING AND REDEEMING SHARES.......................... 9
</TABLE>

-I-
<PAGE>
A WORD ABOUT THE MONEY MARKET PORTFOLIO

The Money Market Portfolio is a mutual fund used solely as an investment option
for variable annuity or variable life insurance contracts offered by insurance
companies or for qualified pension and retirement plans. You should not confuse
the Money Market Portfolio with any other SAFECO mutual fund, even though one or
more of such funds may have the same or similar name, investment objective,
advisor or portfolio manager as this one. The Money Market Portfolio is entirely
separate from such other funds. In particular, you should not view the
investment performance of such other funds as an indication of the performance
of the Money Market Portfolio or rely upon information about any other fund in
making investment decisions about the Money Market Portfolio.

OBJECTIVE

The Money Market Portfolio seeks as high a level of current income as is
consistent with the preservation of capital and liquidity through investment in
high-quality money market instruments maturing in 13 months or less.

PRINCIPAL INVESTMENT STRATEGIES

The Money Market Portfolio will purchase only high-quality securities having
minimal credit risk. The Portfolio will purchase only securities with remaining
maturities of 397 days or less and will maintain a dollar-weighted average
portfolio maturity of no more than 90 days.

The Money Market Portfolio may invest in:

- - Commercial paper of both domestic and foreign issuers

- - Negotiable and non-negotiable certificates of deposit, bankers' acceptances
and other short-term obligations of U.S. and foreign banks

- - Repurchase agreements

- - Variable and floating rate instruments

- - U.S. government securities

- - Corporate bonds

- - Mortgaged-backed and other asset-backed securities

- - When-issued securities

1
<PAGE>
PRINCIPAL INVESTMENT STRATEGIES, CONTINUED

The Portfolio may sell a security if the manager is concerned about an issuer's
credit risk or if a more attractive alternative is available.

PRINCIPAL RISKS

The Money Market Portfolio's yield will fluctuate with short-term interest
rates. The performance of the Portfolio may suffer if any of the following
occurs:

- - The issuer or guarantor of a security owned by the Portfolio defaults, becomes
insolvent, has its credit rating downgraded by a rating agency, or experiences
a credit deterioration.

- - Interest rates increase suddenly or sharply.

- - The value of foreign securities held by the Portfolio declines because of
political instability, government actions, or the lack of available
information about the issuers.

- - The manager's judgment about the relative values of the securities selected
for the Portfolio is incorrect.

An investment in the Money Market Portfolio is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Money Market Portfolio seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose money by
investing in the Portfolio.

The Portfolio may be suitable for you if you seek maximum safety and stability
of principal.

PERFORMANCE

The bar chart and table below should help give you a sense of the risks of
investing in the Money Market Portfolio by showing you how performance has
changed from year to year and by showing you how the Money Market Portfolio's
performance compares over time. The bar chart shows how the Money Market
Portfolio has performed in each of the last ten years, assuming reinvestment of
all distributions. The table shows the average annual return for the Portfolio.
The Portfolio's returns are net of its expenses, but do not reflect any
additional fees and expenses that may be deducted by the variable annuity or
variable insurance plan or the qualified pension or retirement plan through
which you invest. Past performance cannot tell you how the Portfolio will
perform in the future.

2
<PAGE>
PERFORMANCE, CONTINUED

MONEY MARKET PORTFOLIO PERFORMANCE

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

The highest quarterly return was 2.69% for the quarter ended December 31, 1989;
and the lowest return was .64% for the quarter ended June 30, 1993.

AVERAGE ANNUAL TOTAL RETURNS
AS OF 12/31/98

<TABLE>
<CAPTION>
7-DAY YIELD (PERIOD ENDED
1 YEAR 5 YEARS 10 YEARS DECEMBER 31, 1998)
<S> <C> <C> <C> <C>
Money Market Portfolio 4.95% 4.83% 5.31% 3.39%
</TABLE>

You may obtain the most current 7-day yield information for the Portfolio by
calling 1-800-426-8061.

FEES AND EXPENSES OF THE PORTFOLIO

This table describes the fees and expenses that you may pay if you buy and hold
shares of the Portfolio.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

The Money Market Portfolio has no initial sales charge (load) or deferred sales
charge. There are no exchange or redemption fees.

3
<PAGE>

FEES AND EXPENSES OF THE PORTFOLIO, CONTINUED

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM PORTFOLIO
ASSETS)

The expenses the Money Market Portfolio pays before distributing net investment
income to shareholders are shown below. These expenses are stated as a
percentage of average daily net assets and are based on the actual expenses of
the Money Market Portfolio for the year ended December 31, 1998. The Portfolio's
expenses for other years may vary.

<TABLE>
<S> <C>
Management Fees .65%
Distribution (12b-1) Fees 0%
Other Expenses* .24%
Total Annual Fund Operating Expenses .89%
</TABLE>

* SAFECO Life Insurance Company ("SAFECO Life") paid or reimbursed all of the
Money Market Portfolio's "Other Expenses" through April 1998. Under an
expense reimbursement agreement between the Trust and SAFECO Life, once the
Portfolio's net assets exceeded $20 million, SAFECO Life stopped making
those payments. The expense table reflects the fees that would have been
paid by the Portfolio if the reimbursement agreement had not been in effect
during any part of the year.

EXAMPLE

This Example is intended to help you compare the cost of investing in the Money
Market Portfolio with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in the Money Market Portfolio for
the time periods indicated and then redeem all of your shares at the end of
those periods. The Example also assumes that your investment has a 5% return
each year and that the Portfolio's operating expenses remain the same. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
$90.83 $283.84 $ 493.04 $1,096.08
</TABLE>

4
<PAGE>
ADDITIONAL FACTS ABOUT INVESTMENT OBJECTIVE, STRATEGIES AND RISKS

INVESTMENT OBJECTIVE CHANGES

In rare circumstances, the Money Market Portfolio may, with the approval of its
board of trustees, change its investment objective. The Portfolio may change its
investment objective without shareholder approval. If this happens, the Money
Market Portfolio may no longer be appropriate for you. Should the board of
trustees vote to change the Portfolio's objective, you will be notified in
writing at least 30 days prior to the change.

TEMPORARY DEFENSIVE STRATEGIES

From time to time, the Money Market Portfolio may take temporary defensive
positions that are inconsistent with its principal investment policies, in an
attempt to respond to adverse market, economic, political or other conditions.
If it does so, the Portfolio may not achieve its investment objective in the
short run.

APPLICATION OF INVESTMENT POLICY LIMITATIONS

This prospectus and the Statement of Additional Information describe some of the
investment policies used by the Money Market Portfolio, including any
restrictions or requirements regarding the percentage of assets that may or must
be invested in a particular type of security. These limits or requirements apply
to the initial investment by the Money Market Portfolio. Subsequent market
movements that cause asset values to change will not affect the Portfolio's
compliance with such limits or requirements.

MARKET RISK

YEAR 2000 ISSUES

INFORMATION ABOUT THE TRUST

The Money Market Portfolio is a series of the SAFECO Resource Series Trust.
Shares of the Trust are offered to life insurance companies, which may or may
not be affiliated with each other, for allocation to certain of their separate
accounts established to fund variable life insurance policies and variable
annuity contracts. Shares of the Trust may also be offered directly to qualified
pension and retirement plans.

6
<PAGE>
INFORMATION ABOUT THE TRUST, CONTINUED
or terminate the offering of shares of any of the Trust portfolios if such
action is required by law or a regulatory authority or if its board of trustees
determines that it is in the best interests of the shareholders of any Trust
portfolio.

MANAGEMENT

The investment advisor for the Money Market Portfolio is SAFECO Asset Management
Company (SAM), Two Union Square, 25th Floor, Seattle, WA 98101. SAM has been an
advisor to mutual funds and other investment portfolios since 1973 and its
predecessors have been such advisors since 1932. SAM provides investment
research, advice and supervision in the ongoing management of the Portfolio.
Based on the Portfolio's investment objective and policies, SAM determines what
securities the Portfolio will purchase, retain or sell and implements those
decisions.

The Money Market Portfolio pays SAM an annual management fee based on a
percentage of the Portfolio's net assets, ascertained each business day and paid
monthly. The Portfolio paid SAM a fee of .65% of the Portfolio's net assets for
the year ended December 31, 1998.

The Money Market Portfolio is managed by Naomi Urata, Assistant Vice President
of SAM. Ms. Urata has served as portfolio manager for the Portfolio and for
SAFECO Money Market Fund since 1994. She has been an investment analyst for SAM
since 1993. From 1990 to 1992 she was Cash Manager for The Seattle Times.

FINANCIAL HIGHLIGHTS

7
<PAGE>
FINANCIAL HIGHLIGHTS, CONTINUED
SAFECO RESOURCE SERIES TRUST -- MONEY MARKET PORTFOLIO

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.04 0.05 0.05 0.05 0.04
LESS DISTRIBUTIONS:
Dividends from net investment income (0.04) (0.05) (0.05) (0.05) (0.04)
NET ASSET VALUE AT END OF PERIOD 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN (A) 4.95% 5.08% 4.94% 5.56% 3.65%
NET ASSETS AT END OF PERIOD (000'S OMITTED) $27,623 $17,757 $12,493 $8,719 $9,315
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.81% 0.64% 0.62% 0.62% 0.63%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ 0.89% 0.81% 0.90% 0.87% 0.87%
RATIO OF NET INVESTMENT INCOME TO AVERAGE
NET ASSETS 4.87% 4.97% 4.86% 5.32% 3.63%
</TABLE>

DISTRIBUTIONS AND TAX INFORMATION

The Money Market Portfolio distributes substantially all of its net investment
income and net capital gains to its shareholders (the separate accounts of
participating insurance companies and qualified plans). The Portfolio declares
dividends each business day. All dividends will be automatically reinvested in
shares of the Money Market Portfolio. If you are a variable contract owner, the
tax consequences of your investment in the Portfolio depend upon the provisions
of the variable annuity or variable life insurance policy through which you
invest. You should refer to the prospectus relating to your policy for
information about taxes. Dividends made by the Portfolio to qualified plans are
not taxable to the qualified plans or to the participants of those plans.

8
<PAGE>

CALCULATION OF SHARE PRICE

The price of the Money Market Portfolio's shares is based on the Portfolio's net
asset value per share (NAV). The NAV is calculated by adding up the value of all
the Money Market Portfolio's assets, subtracting liabilities and dividing this
sum by the total number of shares owned by the Portfolio's shareholders. The
Portfolio's NAV is generally calculated as of the close of regular trading on
the New York Stock Exchange (NYSE) (usually 4:00 Eastern time, 1:00 Pacific
time) every day the NYSE is open. Your purchase or redemption order will be
priced at the next NAV calculated after your order is placed.

Like most money market funds, the Portfolio values securities on the basis of
amortized cost. Amortized cost valuation involves valuing a security at its cost
and adding or subtracting any discount or premium (reflective of maturity),
regardless of the impact of fluctuating interest rates on the market value of
the security. This method minimizes the effect of changes in a security's market
value and helps the Portfolio maintain a stable $1.00 share price.

PURCHASING AND REDEEMING SHARES

In unusual situations we may suspend or delay payment for redemptions. This may
happen if:

- - The NYSE is closed

- - NYSE trading is restricted

9
<PAGE>

PURCHASING AND REDEEMING SHARES, CONTINUED

- - The Securities and Exchange Commission declares an emergency

Also, if immediate payment could adversely affect the Portfolio, we may need to
delay payment for up to seven days.

10
<PAGE>
FOR MORE INFORMATION
------------------------------------------------

If you would like more information about the Money Market Portfolio, the
following documents are available free upon request:

ANNUAL/SEMI-ANNUAL REPORTS

Additional information about the Money Market Portfolio's investments is
available in the Trust's annual and semi-annual reports to shareholders. In the
Trust's annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected the Portfolio's performance
during its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

You can get free copies of these documents or discuss your questions about the
Money Market Portfolio by contacting the Portfolio at:

SAFECO Securities, Inc.
10865 Willows Road NE
Redmond, WA 98052

Telephone: 1-800-624-5711
Deaf and Hard of Hearing TTY/TDD Service 1-800-438-8718

You can review and copy the Trust's reports and SAIs at the Public Reference
Room of the Securities and Exchange Commission. To find out more about this
service, call the SEC at 1-800-SEC-0330. Reports and other information about
the Trust and the Portfolio are also available on the SEC's website at
http://www.sec.gov. You can also get copies, for a fee, by writing or calling
the Public Reference Section, Securities and Exchange Commission, Washington, DC
20549-6009.

Investment Company Act File No. 811-4717

11
<PAGE>

PART B

SAFECO RESOURCE SERIES TRUST

Growth Portfolio
Equity Portfolio
Northwest Portfolio
Small Company Stock Portfolio
Bond Portfolio
Money Market Portfolio

STATEMENT OF ADDITIONAL INFORMATION

APRIL 30, 1999
--------

This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current Prospectuses, each dated April 30, 1999, of the
Portfolios listed above (collectively, the "Portfolios"). Certain financial
statements for the Portfolios and the reports thereon of Ernst & Young LLP,
independent auditors, are incorporated into this Statement by reference to each
Portfolio's Annual Report for the year ended December 31, 1998. A copy of each
Portfolio's Annual Report accompanies this Statement. Copies of the Portfolios'
Prospectuses and additional copies of the Portfolios' Annual Reports may be
obtained by calling 1-800-624-5711 or by writing SAFECO Securities, Inc., 10865
Willows Road NE, Redmond, WA 98052.

Shares of the Trust are offered to life insurance companies, which may or may
not be affiliated with one another ("Participating Insurance Companies"), for
allocation to certain of their separate accounts established for the purpose of
funding variable life insurance policies and variable annuity contracts, and may
also be offered directly to qualified pension and retirement plans ("Qualified
Plans"). The Participating Insurance Companies and the Qualified Plans may or
may not make all Portfolios described in this Statement available for
investment.

<PAGE>

TABLE OF CONTENTS

<TABLE>
<S> <C>
DESCRIPTION OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . 3
CHARACTERISTICS OF THE TRUST'S SHARES. . . . . . . . . . . . . . . . . . . 3
FUNDAMENTAL INVESTMENT POLICIES. . . . . . . . . . . . . . . . . . . . . . 4
NON-FUNDAMENTAL INVESTMENT POLICIES. . . . . . . . . . . . . . . . . . . . 6
ADDITIONAL INVESTMENT INFORMATION. . . . . . . . . . . . . . . . . . . . . 11
PRINCIPAL SHAREHOLDERS OF THE PORTFOLIOS . . . . . . . . . . . . . . . . . 20
CALCULATION OF SHARE PRICE . . . . . . . . . . . . . . . . . . . . . . . . 20
ADDITIONAL PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . 22
TRUSTEES AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . 29
BROKERAGE PRACTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
DISTRIBUTIONS AND TAX INFORMATION. . . . . . . . . . . . . . . . . . . . . 32
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
</TABLE>

<PAGE>

DESCRIPTION OF THE TRUST

Each Portfolio is a series of SAFECO Resource Series Trust (the "Trust"), an
open-end management investment company, and is a diversified series of the
Trust. The Trust was formed as a Massachusetts business trust, by Trust
Instrument filed July 1, 1986, and was reorganized as a Delaware business trust
on September 30, 1993, under a Trust Instrument dated May 13, 1993.

The Trust offers its shares through six diversified portfolios: the Growth
Portfolio, Equity Portfolio, Northwest Portfolio, Small Company Stock Portfolio
("Small Company Portfolio"), Bond Portfolio and Money Market Portfolio. The
Trust may issue an unlimited number of shares of beneficial interest. The Board
of Trustees may establish additional series of shares of the Trust without the
approval of shareholders. The Portfolios offer only a single, no-load, class of
shares.

CHARACTERISTICS OF THE TRUST'S SHARES

RESTRICTIONS ON RETAINING OR DISPOSING OF SHARES

There are no restrictions on the right of shareholders to retain or dispose of
the Trust's shares, except in the event that the Trust or any of its Portfolios
is terminated in the future as a result of reorganization or liquidation and
distribution of assets.

SHAREHOLDER OBLIGATIONS AND LIABILITIES

Under Delaware law, the shareholders of the Trust will not be personally liable
for the obligations of the Trust or any Portfolio of the Trust. A shareholder
is entitled to the same limitation of personal liability extended to
shareholders of corporations. To guard against the risk that Delaware law might
not be applied in other states, the Trust Instrument requires that every written
obligation of the Trust or a Portfolio of the Trust contain a statement that
such obligation may only be enforced against the assets of the Trust or the
Portfolio of the Trust and generally provides for indemnification out of the
Trust's or the Portfolio's property of any shareholder nevertheless held
personally liable for the Trust's or a Portfolio's obligations, respectively.

DIVIDEND RIGHTS

Shareholders of a Portfolio are entitled to receive any dividends or other
distributions declared for that Portfolio. With respect to distributions, no
shares have priority or preference over any other shares of the same Portfolio.
Distributions will be made from the assets of a Portfolio, and will be paid
ratably to all shareholders of the Portfolio according to the number of shares
of such Portfolio held by shareholders on the record date.

VOTING RIGHTS

Shareholders are entitled to vote on any matter that (i) concerns an amendment
to the Trust Instrument that would affect the voting rights of shareholders,
(ii) requires a shareholder vote under the Investment Company Act of 1940 (the
"1940 Act") or any other applicable law, (iii) is submitted to them by the
Trustees in their discretion. The 1940 Act requires a shareholder vote in
certain circumstances, including to elect Trustees if the number of Trustees
that have been elected by shareholders falls below a majority, to make a
material change to the Trust's investment advisory agreement, and to change any
fundamental policy of the Trust. On any matter submitted to a vote of
shareholders, all shares of the Portfolios of the Trust then issued and
outstanding and entitled to vote shall be voted in the aggregate and not by
Portfolio except for matters concerning only a Portfolio. The holders of each
share of a Portfolio of the Trust shall be entitled to one vote for each full
share and a fractional vote for each fractional share. Shares of one Portfolio
of the Trust may not bear the same economic relationship to the Trust as shares
of another Portfolio of the Trust. Voting rights are non-cumulative and cannot
be modified without a majority vote of shareholders.

<PAGE>

Variable contract owners will be able to vote on matters presented to a vote of
shareholders of the Trust through the pass through of voting rights held by the
participating insurance companies, which will solicit voting instructions from
variable contract owners when a matter is presented to a vote of shareholders.
See the separate account prospectus for the variable contract for more
information regarding the pass-through of these voting rights.

The participants in qualified plans have no pass-through voting rights. The
trustees of such plans, or, in certain cases, a named fiduciary or an investment
manager, will vote the shares held by the qualified plans.

LIQUIDATION RIGHTS

In the event of liquidation, shareholders will be entitled to receive a pro rata
share of the net assets of the applicable Portfolio of the Trust.

PREEMPTIVE RIGHTS

Shareholders have no preemptive rights.

CONVERSION RIGHTS

Shareholders have no conversion rights.

REDEMPTION PROVISIONS

The provisions for redemption of Trust shares are set forth in the current
prospectus relating to the applicable variable annuity or variable life
insurance contract, or in the plan document relating to the applicable plan and
elsewhere in this Statement.

SINKING FUND PROVISIONS

The Trust has no sinking fund provisions.

CALLS OR ASSESSMENTS

The shares are fully paid and non-assessable.

FUNDAMENTAL INVESTMENT POLICIES

The investment policies of the Portfolios are summarized in each Portfolio's
Prospectus and described in this Statement of Additional Information. If a
policy's percentage limitation is adhered to immediately after and as a result
of an investment, a later increase or decrease in values, net assets or other
circumstances will not be considered in determining whether a Portfolio complies
with the applicable limitation (except to the extent the change may impact a
Portfolio's borrowing limit).

Each Portfolio's fundamental policies may not be changed without the approval of
a majority of its outstanding voting securities as defined in the 1940 Act. For
purposes of such approval, the vote of a majority of the outstanding voting
securities of a Portfolio means the vote, at a meeting of the shareholders of
such Portfolio duly called, (i) of 67% or more of the voting securities present
at such meeting if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy, or (ii) of more than 50% of the
outstanding voting securities, whichever is less.

FUNDAMENTAL INVESTMENT POLICIES OF THE GROWTH, EQUITY, NORTHWEST, BOND AND MONEY
MARKET PORTFOLIOS

<PAGE>

Each of the Growth Portfolio, Equity Portfolio, Northwest Portfolio, Bond
Portfolio and Money Market Portfolio will NOT:

1. Invest more than five percent (5%) of any Portfolio's total assets in the
securities of any one issuer (other than securities issued by the U.S.
Government, its agencies and instrumentalities), except (i) with respect to
the Growth, Equity, Northwest, Bond and Money Market Portfolios, up to
twenty-five percent (25%) of the value of each Portfolio's assets (not
including securities issued by another investment company) may be invested
without regard to this limit and (ii) with respect to the Bond and Money
Market Portfolios, up to one hundred percent (100%) of total assets may be
invested in obligations of or guaranteed by the U.S. Government, its
agencies or instrumentalities.

2. Purchase securities of any issuer (other than obligations of, or guaranteed
by, the U.S. Government, its agencies and instrumentalities) if such
purchase would cause more than ten percent (10%) of any class of securities
of such issuer to be held by a Portfolio.

3. a. With respect to the Growth, Equity, Northwest and Money Market
Portfolios, concentrate its investments in particular industries and
in no event will the respective Portfolio invest twenty-five (25%) or
more of its assets in any one industry. Securities of foreign banks
and foreign branches of U.S. banks are considered to be one industry.
This limitation does not apply to obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities or to
certificates of deposit or bankers' acceptances issued by domestic
banks.

b. With respect to the Bond Portfolio, invest more than twenty-five
percent (25%) of its assets in securities of issuers in the same
industry. This restriction does not apply to mortgage-related
securities or to obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.

4. Invest more than five percent (5%) of the total assets of any Portfolio in
securities of issuers which with their predecessors have a record of less
than three years continuous operation.

5. Make loans to others, except through the purchase of publicly-distributed
debt obligations or repurchase agreements.

6. Borrow money, except from banks or affiliates of SAFECO Corporation at an
interest rate not greater than that available to a Portfolio from
commercial banks, and then only for temporary or emergency purposes and not
for investment purposes, and in an amount not exceeding five percent (5%)
of a Portfolio's assets at the time of borrowing.

7. Make short sales (sales of securities not presently owned) or purchase
securities on margin, except where the Trust has at the time of the sale by
virtue of its ownership in other securities the right to obtain securities
equivalent in kind and amount to the securities sold and except for such
short-term credits as are necessary for the clearance of transactions,
respectively.

8. Purchase or retain the securities of any issuer any of whose officers,
directors or security holders is an officer or trustee of the Trust if, or
so long as, any such officer or trustee owns beneficially more than
one-half (1/2) of one percent (1%) of such securities and the officers or
trustees of the Trust, together own beneficially more than five percent
(5%) of such securities.

9. Invest in commodities or commodity futures contracts or in real estate,
except the Trust may invest in securities which are secured by real estate
and securities which are of issuers which invest in or deal in real estate.

10. Underwrite securities issued by others, except to the extent that the Trust
may be deemed to be an underwriter under the federal securities laws in
connection with the disposition of portfolio securities.

<PAGE>

11. Issue or sell any senior security.

12. Purchase from or sell portfolio securities to any officer or director, the
Trust's investment advisor, principal underwriter or any affiliates or
subsidiaries thereof.

FUNDAMENTAL INVESTMENT POLICIES OF THE SMALL COMPANY STOCK PORTFOLIO ("SMALL
COMPANY PORTFOLIO")

The Small Company Portfolio will NOT:

1. Purchase the securities of any issuer (except the U.S. Government, its
agencies or instrumentalities) if as a result more than 5% of the value of
the Small Company Portfolio's total assets would be invested in the
securities of such issuer or the Small Company Portfolio would own or hold
more than 10% of the outstanding voting securities of such issuer, except
that up to 25% of the value of such assets (which 25% shall not include
securities issued by another investment company) may be invested without
regard to these limits;

2. Borrow money, except the Small Company Portfolio may borrow money for
temporary and emergency purposes (not for leveraging or investment
purposes) in an amount not exceeding 33 1/3% of its total assets (including
the amount borrowed) less liabilities (other than borrowings). Any
borrowings by the Small Company Portfolio that come to exceed this amount
shall be reduced within three business days to the extent necessary to
comply with the 33 1/3% limit. "Business Day" means any day the New York
Stock Exchange is open for trading;

3. Act as underwriter of securities issued by any other person, firm or
corporation; except to the extent that, in connection with the disposition
of portfolio securities, the Small Company Portfolio may be deemed an
underwriter under federal securities laws;

4. Issue senior securities, except as permitted under the 1940 Act, the rules
or regulations promulgated thereunder or pursuant to a no-action letter or
an exemptive order issued by the Securities and Exchange Commission;

5. Purchase the securities of any issuer (except the U.S. Government, its
agencies or instrumentalities) if, as a result, more than 25% of the Small
Company Portfolio's total assets would be invested in securities of
companies whose principal business activities are in the same industry;

6. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; however, the Small Company
Portfolio may purchase or sell options or futures contracts and invest in
securities or other instruments backed by physical commodities;

7. Lend any security or make any loan if, as a result, more than 33 1/3% of
its total assets would be lent to other parties; however, this limit does
not apply to purchases of debt securities or to repurchase agreements; and

8. Purchase or sell real estate, except real estate investment trusts.

NON-FUNDAMENTAL INVESTMENT POLICIES

In addition to the principal investment strategies described in the Prospectus,
each Portfolio has adopted the non-fundamental policies described below that may
be changed by the Trust's Board of Trustees without shareholder approval.

NON-FUNDAMENTAL INVESTMENT POLICIES OF THE GROWTH, EQUITY, NORTHWEST, BOND AND
MONEY MARKET PORTFOLIOS

1. A Portfolio may not participate on a joint or joint and several basis in
any trading account in securities, except that a Portfolio may join with
other transactions executed by the investment adviser

<PAGE>

or the investment adviser's parent company and any subsidiary thereof, for
the purpose of seeking better net results on portfolio transactions or
lower brokerage commission rates.

2. A Portfolio may not purchase securities with unlimited liability, I.E.,
securities for which the holder may be assessed for amounts in addition to
the subscription or other price paid for the security.

3. The Equity, Bond and Money Market Portfolios may not purchase or sell put
or call options or combinations thereof.

4. The Growth and Northwest Portfolios may not purchase puts, calls,
straddles, spreads or any combination thereof if by reason thereof the
value of the Portfolio's aggregate investment in such classes of securities
would exceed 5% of its total assets.

5. A Portfolio may not invest in oil, gas or other mineral exploration or
development programs or in arbitrage transactions.

6. A Portfolio may not trade in foreign exchange, except as may be necessary
to convert the proceeds of the sale of foreign portfolio securities into
U.S. dollars.

7. A Portfolio may not enter into a repurchase agreement for longer than seven
days, except that the Money Market Portfolio may invest up to 10% of its
net assets in repurchase agreements that mature in more than 7 days.

8. A Portfolio may not purchase the securities of any other investment company
or investment trust, except by purchase in the open market where no
commission or profit to a broker or dealer results from such purchase other
than the customary broker's commissions, or except as part of a merger,
consolidation or acquisition. A Portfolio will not invest more than ten
percent (10%) of its total assets in shares of other investment companies,
invest more than five percent (5%) of its total assets in a single
investment company nor purchase more than three percent (3%) of the
outstanding voting securities of a single investment company. The Trust's
investment advisor will waive its advisory fees for assets invested in
other investment companies.

9. The Trust's Growth, Equity, Northwest and Bond Portfolios may purchase as
temporary investments for their cash commercial paper, certificates of
deposit, no-load, open-end money market funds (subject to the limitations
in subparagraph 8 above), repurchase agreements (subject to the
limitations in subparagraph 7 above) or any other short-term instrument
that the Trust's investment adviser deems appropriate.

Commercial paper must be rated A-1 or A-2 by Standard & Poor's Ratings
Group ("S&P") or Prime-1 or Prime-2 by Moody's Investors Service, Inc.
("Moodys") or issued by companies with an unsecured debt issue currently
outstanding rated AA by S&P or Aa or higher by Moody's.

10. While the Trust will not engage primarily in trading in the Growth, Equity,
Northwest and Bond Portfolios for the purpose of short-term profits, it may
at times make investments for short-term purposes when such action is
believed to be desirable and consistent with sound investment procedures.
The Trust will dispose of securities whenever it is deemed advisable
without regard to the length of time the securities have been held.

11. The Trust's Money Market Portfolio may invest in short-term instruments, or
long-term instruments with characteristics qualifying them as short-term
instruments, which at the time of purchase are rated in the highest rating
category by at least two nationally recognized rating organizations or, if
rated by only one organization, are rated in the highest category by that
organization, and which in the opinion of the Money Market Portfolio's
investment adviser present minimal credit risks.

12. The Trust's Money Market Portfolio may invest in short-term instruments, or
long-term instruments with characteristics qualifying them as short-term
instruments, which at the time of purchase are split-

<PAGE>

rated (i.e. rated in the highest category by one nationally recognized
rating organization and the second highest category by at least one other
such organization), are rated in the second highest rating category by at
least two nationally recognized rating organizations or, if rated by only
one organization are rated in the second highest category by that
organization and which in the opinion of the Money Market Portfolio's
investment adviser present minimal credit risks. However, the Money Market
Portfolio may invest no more than five percent (5%) of total assets in
these securities and may invest only the greater of $1 million or one
percent (1%) of total assets in such securities from the same issuer.

13. The Trust's Money Market Portfolio may invest in short-term instruments, or
long-term instruments with characteristics qualifying them as short-term
instruments, which are unrated if such securities are determined to be
comparable in quality to securities rated as described in paragraphs 11
and 12 and which in the opinion of the Money Market Portfolio's investment
adviser present minimal credit risks. The Money Market Portfolio will
invest no more than twenty percent (20%) of total assets in unrated
securities which in the opinion of SAFECO Asset Management Company ("SAM")
are comparable to securities in the highest rating category. Purchases of
unrated securities which in SAM's opinion are comparable to split-rated
securities are subject to the five percent (5%) and one percent (1%)
limitations described in paragraph 12.

14. Subject to the maturity requirements stated in the Money Market Portfolio's
investment objective and the quality and credit risk requirements set forth
in paragraphs 11-13, the Money Market Portfolio may purchase the following
types of securities:

a. Commercial paper obligations.

b. Negotiable and non-negotiable time deposits and certificates of
deposit, bankers' acceptances and other short-term debt obligations
of banks. The Money Market Portfolio will not invest in any
security issued by a commercial bank unless (a) the bank has total
assets of at least $1 billion or the equivalent in other currencies
or, in the case of United States banks which do not have total
assets of at least $1 billion, the aggregate investment made in any
one such bank is limited to $100,000 and the principal sum of such
investment is insured in full by the Federal Deposit Insurance
Corporation (FDIC), (b) in the case of a United States bank, it is
a member of the FDIC, and (c) in the case of a foreign bank, the
security is in the opinion of management of an investment quality
comparable with other debt securities which may be purchased by the
Money Market Portfolio. These limitations do not prohibit investment
in securities issued by foreign branches of U.S. banks, provided the
U.S. banks meet the foregoing requirements.

c. Corporate obligations such as publicly-traded bonds, debentures and
notes.

15. The Trust may not invest more than five percent (5%) of the net assets of
the Growth, Equity and Northwest Portfolios in warrants valued at the lower
of cost or market. Warrants acquired as a result of unit offerings or
attached to securities may be deemed without value for purposes of the five
percent (5%) limitation.

16. A Portfolio will not issue long-term debt securities.

17. A Portfolio will not invest in any security for the purpose of acquiring or
exercising control or management of the issuer.

18. The Growth Portfolio will normally invest a preponderance of assets in
common stocks selected primarily for potential appreciation. The Northwest
Portfolio will invest primarily in shares of common stock selected
primarily for potential appreciation that have been issued by Northwest
companies. In determining these common stocks which have the potential for
long-term growth, the Trust's investment adviser will evaluate the issuer's
financial strength, quality of management and earnings power.

<PAGE>

19. The Northwest Portfolio may occasionally invest in securities convertible
into common stock when, in the opinion of SAM, the expected total return of
a convertible security exceeds the expected total return of common stock
eligible for purchase by the Portfolio.

20. The Equity Portfolio may invest up to ten percent (10%) of its total assets
in shares of real estate investment trusts ("REITs"). The Growth and
Northwest Portfolios may invest up to five percent (5%) of their total
assets in shares of real estate investment trusts ("REITs").

21. The Equity Portfolio may invest up to 5% of total assets in closed-end
investment companies and investment trusts (other than REITS).

22. The Equity Portfolio may purchase fixed-income securities in accordance
with business and financial conditions.

23. The Bond and Money Market Portfolios may invest up to 10% of total assets
in restricted securities eligible for resale under Rule 144A ("Rule 144A
securities"), provided that SAM has determined that such securities are
liquid under guidelines adopted by the Board of Trustees.

24. The Growth, Equity and Northwest Portfolios may invest in Rule 144A
securities, provided that SAM has determined that such securities are
liquid under guidelines adopted by the Board of Trustees, except that the
Growth, Equity and Northwest Portfolios may each invest up to 10% of their
respective total assets in 144A securities that are illiquid.

25. The Growth, Equity, Northwest and Money Market Portfolios of the Trust may
not purchase foreign securities, unless at the time thereof, such purchase
would not cause more than five percent (5%) of the total assets of a
Portfolio (taken at market value) to be invested in foreign securities.
This restriction does not apply to the Bond Portfolio.

WHILE THE TRUST CAN INVEST IN THE TYPES OF SECURITIES OR ENGAGE IN THE PRACTICES
WHICH FOLLOW IF THE APPLICABLE LIMITATIONS ARE MET, IT HAS NO PRESENT INTENTION
TO DO SO IN THE COMING YEAR.

26. A Portfolio may not pledge, mortgage or hypothecate portfolio securities,
except that to secure borrowings permitted by the fundamental policy on
borrowing, a Portfolio may pledge securities having a market value at the
time of the pledge not exceeding ten percent (10%) of the Portfolio's net
assets.

NON-FUNDAMENTAL INVESTMENT POLICIES OF THE SMALL COMPANY PORTFOLIO

1. The Small Company Portfolio will not make short sales (sales of securities
not presently owned), except where the Portfolio has at the time of sale,
by virtue of its ownership in other securities, the right to obtain at no
additional cost securities equivalent in kind and amount to the securities
to be sold;

2. The Small Company Portfolio will not purchase securities issued by any
other investment company, except by purchase in the open market where no
commission or profit to a broker or dealer results from such purchase,
other than the customary broker's commissions, or except when such
purchase, although not made in the open market, is part of a merger,
consolidation or acquisition. Nothing in this policy shall prevent any
purchase for the purpose of effecting a merger, consolidation or
acquisition of assets expressly approved by the shareholders after full
disclosure of any commission or profit to the principal underwriter;

3. The Small Company Portfolio will not invest in oil, gas or other mineral
exploration, development programs or leases;

4. The Small Company Portfolio will not invest more than 5% of its net assets
in warrants. Warrants acquired by the Portfolio in units or attached to
securities are not subject to the 5% limit;

<PAGE>

5. The Small Company Portfolio will not invest more than 10% of its total
assets in real estate investment trusts, nor will the Portfolio invest in
interests in real estate investment trusts that are not readily marketable
or interests in real estate limited partnerships not listed or traded on
the Nasdaq Stock Market if, as a result, the sum of such interests
considered illiquid and other illiquid securities would exceed 15% of the
Portfolio's net assets;

6. The Small Company Portfolio will not purchase securities on margin, except
that the Portfolio may obtain such short-term credits as are necessary for
the clearance of transactions, and provided that margin payments made in
connection with futures contracts and options on futures shall not
constitute purchasing securities on margin;

7. The Small Company Portfolio may borrow money only from a bank or SAFECO
Corporation or affiliates thereof or by engaging in reverse repurchase
agreements with any party. The Portfolio will not purchase any securities
while borrowings equal to or greater than 5% of its total assets are
outstanding;

8. The Small Company Portfolio will not purchase any security, if as a result,
more than 15% of its net assets would be invested in securities that are
deemed to be illiquid because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued;

9. The Small Company Portfolio will not make loans to any person, firm or
corporation, but the purchase by the Portfolio of a portion of an issue of
publicly distributed bonds, debentures or other securities issued by
persons other than the Portfolio, whether or not the purchase was made upon
the original issue of securities, shall not be considered a loan within the
prohibition of this section;

10. The Small Company Portfolio will not purchase or retain the securities of
any issuer if, to the knowledge of the Portfolio's management, the officers
and Trustees of the Trust and the officers and directors of the investment
adviser to the Portfolio (each owning beneficially more than 0.5% of the
outstanding securities of an issuer) own in the aggregate 5% or more of the
securities of the issuer;

11. The Small Company Portfolio may invest in restricted securities eligible
for resale under Rule 144A, provided that SAM has determined that such
securities are liquid under guidelines adopted by the Board of Trustees,
except that the Portfolio may invest up to 10% of its total assets in 144A
securities that are illiquid.

12. The Small Company Portfolio shall not engage primarily in trading for
short-term profits, but it may from time to time make investments for
short-term purposes when such action is believed to be desirable and
consistent with sound investment policy. The Portfolio may dispose of
securities whenever its adviser deems advisable without regard to the
length of time they have been held;

13. The Small Company Portfolio will not purchase securities of companies which
together with any predecessors have a record of less than 3 years of
continuous operation, if such purchase at the time thereof would cause more
than 5% of the Portfolio's total assets to be invested in the securities of
such companies;

14. The Small Company Portfolio will not purchase puts, calls, straddles,
spreads or any combination thereof, if by reason thereof the value of its
aggregate investment in such classes of securities would exceed 5% of its
total assets; provided, however, that nothing herein shall prevent the
purchase, ownership, holding or sale of warrants where the grantor of the
warrants is the issuer of the underlying securities; and

15. The Small Company Portfolio will not purchase or sell commodities or
commodity contracts.

<PAGE>

ADDITIONAL INVESTMENT INFORMATION

The Portfolios may make some or all of the following investments, among others,
although they may not buy all of the types of securities that are described.

1. CLOSED-END INVESTMENT COMPANIES AND INVESTMENT TRUSTS (GROWTH AND EQUITY
PORTFOLIOS)

The Growth and Equity Portfolios may invest in closed-end investment companies
and investment trusts.

2. RESTRICTED SECURITIES AND RULE 144A SECURITIES (GROWTH, EQUITY, NORTHWEST
AND SMALL COMPANY PORTFOLIOS (COLLECTIVELY, THE "STOCK PORTFOLIOS"))

The Stock Portfolios may each invest in restricted securities eligible for
resale under Rule 144A ("Rule 144A securities"), provided that SAM has
determined that such securities are liquid under guidelines adopted by the Board
of Trustees. Restricted securities may be sold only in offerings registered
under the Securities Act of 1933, as amended ("1933 Act"), or in transactions
exempt from the registration requirements under the 1933 Act. Rule 144A under
the 1933 Act provides an exemption for the resale of certain restricted
securities to qualified institutional buyers. Investing in restricted
securities may increase the Portfolio's illiquidity to the extent that qualified
institutional buyers or other buyers become unwilling, for a time, to purchase
the securities. As a result, the Portfolio may not be able to sell these
securities when its investment adviser deems it advisable to sell, or may have
to sell them at less than fair value. In addition, market quotations are
sometimes less readily available for restricted securities. Therefore, judgment
may at times play a greater role in valuing these securities than in the case of
unrestricted securities.

Where registration is required, a Portfolio may be obligated to pay all or part
of the registration expenses, and a considerable period may elapse between the
decision to sell and the time the Portfolio may be permitted to sell a security
under an effective registration statement. If during such a period adverse
market conditions were to develop, the Portfolio might obtain a less favorable
price than prevailed when it decided to sell. To the extent privately placed
securities are illiquid, purchases thereof will be subject to any limitations on
investments in illiquid securities. Restricted securities for which no market
exists are priced at fair value as determined in accordance with procedures
approved and periodically reviewed by the Trust's Board of Trustees.

3. REPURCHASE AGREEMENTS (ALL PORTFOLIOS)

Repurchase agreements are transactions in which a Portfolio purchases securities
from a bank or recognized securities dealer and simultaneously commits to resell
the securities to the bank or dealer at an agreed-upon date and price reflecting
a market rate of interest unrelated to the coupon rate or maturity of the
purchased securities. A Portfolio maintains custody of the underlying
securities prior to their repurchase; thus, the obligation of the bank or dealer
to pay the repurchase price on the date agreed to is, in effect, secured by such
securities. If the value of these securities is less than the repurchase price,
plus any agreed-upon additional amount, the other party to the agreement must
provide additional collateral so that at all times the collateral is at least
equal to the repurchase price, plus any agreed-upon additional amount.

Repurchase agreements carry certain risks not associated with direct investments
in securities, including possible declines in the market value of the underlying
securities and delays and costs to a Portfolio if the other party to a
repurchase agreement becomes bankrupt. Each Portfolio intends to enter into
repurchase agreements only with banks and dealers in transactions believed by
SAM to present minimum credit risks in accordance with guidelines established by
the Trust's Board of Trustees. SAM will review and monitor the creditworthiness
of those institutions under the general supervision of the Board of Trustees.

The Portfolios may invest in qualified repurchase agreements, but (other than
the Money Market Portfolio) and will not purchase repurchase agreements that
mature in more than seven days. The Money

<PAGE>

Market Portfolio will invest no more than 10% of net assets in repurchase
agreements that mature in more than seven days.

4. ILLIQUID SECURITIES (ALL PORTFOLIOS)

Illiquid securities are securities that cannot be sold within seven days in the
ordinary course of business for approximately the amount at which they are
valued. The Portfolios do not intend to purchase illiquid securities but the
market for some securities may become illiquid following purchase by a
Portfolio. Due to the absence of an active trading market, a Portfolio may
experience difficulty in valuing or disposing of illiquid securities. SAM
determines the liquidity of the securities pursuant to guidelines adopted by the
Trust's Board of Trustees.

5. WARRANTS (STOCK PORTFOLIOS ONLY)

A warrant is an option issued by a corporation that gives the holder the right
to buy a stated number of shares of common stock of the corporation at a
specified price within a designated time period. Warrants may be purchased and
sold separately or attached to stocks or bonds as part of a unit offering. The
term of a warrant may run from two to five years and in some cases the term may
be longer. The exercise price carried by the warrant is usually well above the
prevailing market price of the underlying common stock at the time the warrant
is issued. The holder of a warrant has no voting rights and receives no
dividends. Warrants are freely transferable and may trade on the major national
exchanges.

Warrants may be speculative. Generally, the value of a warrant will fluctuate
by greater percentages than the value of the underlying common stock. The
primary risk associated with a warrant is that the term of the warrant may
expire before the exercise price of the common stock has been reached. Under
these circumstances, a Portfolio could lose all of its principal investment in
the warrant.

A Portfolio will invest in a warrant only if the Portfolio has the authority to
hold the underlying common stock. Additionally, if a warrant is part of a unit
offering, a Portfolio will purchase the warrant only if it is attached to a
security in which the Portfolio has authority to invest. In all cases, a
Portfolio will purchase warrants only after SAM determines that, in its opinion,
the exercise price for the underlying common stock is likely to be achieved
within the required time-frame and that an actively traded market exists. SAM
will make this determination by analyzing the issuer's financial health, quality
of management and any other factors deemed to be relevant.

The Stock Portfolios may each invest up to 5% of net assets in warrants.

6. REAL ESTATE INVESTMENT TRUSTS (EQUITY AND SMALL PORTFOLIOS)

Real estate investment trusts ("REITs") purchase real property, which is then
leased, and make mortgage investments. For federal income tax purposes REITs
attempt to qualify for beneficial tax treatment by distributing at least 95% of
their taxable income. If a REIT were unable to qualify for such beneficial tax
treatment, it would be taxed as a corporation and distributions to its
shareholders would not be deductible by it in computing its taxable income.

REITs are dependent upon the successful operation of the properties owned and
the financial condition of lessees and mortgagors. The value of REIT units will
fluctuate depending on the underlying value of the real property and mortgages
owned and the amount of cashflow (net income plus depreciation) generated and
paid out. In addition, REITs typically borrow to increase funds available for
investment. Generally there is a greater risk associated with REITs which are
highly leveraged.

The Equity and Small Company Stock Portfolios may each invest up to 10% of total
assets in REITS.

7. CONVERTIBLE SECURITIES (STOCK PORTFOLIOS)

<PAGE>

Convertible bonds and convertible preferred stock may be exchanged for a stated
number of shares of the issuer's common stock at a certain price known as the
conversion price. The conversion price is usually greater than the price of the
common stock at the time the convertible security is purchased. Generally, the
interest rate of convertible bonds and the yield of convertible preferred stock
will be lower than the issuer's non-convertible securities. Also, the value of
convertible securities will normally vary with the value of the underlying
common stock and fluctuate inversely with interest rates. However, convertible
securities may show less volatility in value than the issuer's non-convertible
securities. A risk associated with convertible bonds and convertible preferred
stock is that the conversion price of the common stock will not be attained.

The Stock Portfolios may invest (in the case of the Equity Portfolio, up to 35%
of its total assets) in convertible securities. The Equity Portfolio may invest
in convertible securities if such securities offer a higher yield than an
issuer's common stock and provide reasonable potential for capital appreciation.
The Northwest and Small Company Stock Portfolios may invest in convertible
securities when, in the opinion of SAM, the expected total return of a
convertible security exceeds the expected total return of common stock eligible
for purchase by the Northwest Portfolio. The Equity and Northwest Portfolios
may purchase convertible securities which are investment grade, i.e., rated in
the top four categories by either Standard & Poor's Corporation ("S&P") or
Moody's Investors Service, Inc. ("Moody's"). Moody's deems securities rated in
the fourth category (Baa) to have speculative characteristics. The Equity and
Northwest Portfolios may retain a convertible security that is down-graded to
below investment grade after purchase. The Equity Portfolio will not hold more
than 3% of its total assets in bonds that go into default on the payment of
principal and interest after purchase. The Small Company Stock Portfolio may
invest in convertible corporate bonds that are rated below investment grade
("high-yield" or "junk" bonds) or in comparable, unrated bonds, but less than
35% of the Portfolio's net assets will be invested in such securities. Below
investment grade bonds are speculative and involve greater investment risks than
investment grade bonds due to the issuer's reduced creditworthiness and
increased likelihood of default and bankruptcy. During periods of economic
uncertainty or change, the market prices of below investment grade bonds may
experience increased volatility. Below investment grade bonds tend to reflect
short-term economic and corporate developments to a greater extent than higher
quality bonds.

8. YANKEE DEBT SECURITIES AND EURODOLLAR BONDS (GROWTH, EQUITY, NORTHWEST,
BOND AND MONEY MARKET PORTFOLIOS ONLY)

The Yankee Sector is made up of securities issued in the U.S. by foreign
issuers. These bonds are subject to the same risks that pertain to domestic
issues, notably credit risk, market risk and liquidity risk. These bonds also
are subject to risks that may include nationalization of the issuer,
confiscatory taxation by the foreign government, establishment of controls by
the foreign government that would inhibit the remittance of amounts due a
Portfolio, lack of comparable publicly-available information concerning foreign
issuers, lack of comparable accounting and auditing practices in foreign
countries and finally, difficulty in enforcing claims against foreign issuers in
the event of default.

SAM will make every effort to analyze potential investments in foreign issuers
on the same basis as the rating services analyze domestic issuers. Because
public information is not always comparable to that available on domestic
issuers, this may not be possible. Therefore, while SAM will make every effort
to select investments in foreign securities on the same basis relative to
quality and risk as its investments in domestic securities, it may not always be
able to do so.

Eurodollar Bonds are bonds issued by either U.S. or foreign issuers that are
traded in the European bond markets and are denominated in U.S. dollars.
Eurodollar bonds are subject to the same risks that pertain to domestic issues,
notably credit risk, market risk and liquidity risk. Additionally, Eurodollar
bonds are subject to certain sovereign risks. One such risk is the possibility
that a foreign government might prevent dollar-denominated funds from flowing
across its borders. Eurodollar Bonds issued by foreign issuers are also subject
to the same risks as Yankee Sector bonds.

9. MORTGAGE-BACKED SECURITIES (BOND AND MONEY MARKET PORTFOLIOS ONLY)

<PAGE>

Unlike conventional bonds, the principal with respect to mortgage-backed
securities is paid back over the life of the loan rather than at maturity.
Consequently, the Portfolio will receive monthly scheduled payments of both
principal and interest. In addition, the Portfolio may receive unscheduled
prepayments on the underlying mortgages. Since the Portfolio must reinvest
scheduled and unscheduled principal payments at prevailing interest rates and
such interest rates may be higher or lower than the current yield of the
Portfolio's portfolio, mortgage-backed securities may not be an effective means
to lock in long-term interest rates. In addition, while prices of
mortgage-backed securities, like conventional bonds, are inversely affected by
changes in interest rate levels, because of the likelihood of increased
prepayments of mortgages in times of declining interest rates, they have less
potential for capital appreciation than comparable fixed-income securities and
may in fact decrease in value when interest rates fall.

The rate of interest payable on collateralized mortgage obligation ("CMO")
classes may be set at levels that are either above or below market rates at the
time of issuance, so that the securities will be sold at a substantial premium
to, or at a discount from, par value. There is the risk that the Portfolio may
fail to recover any premium it pays due to market conditions and/or mortgage
prepayments. A Portfolio will not invest in interest-only or principal-only
classes -- such investments are extremely sensitive to changes in interest
rates.

Some CMO classes are structured to pay interest at rates that are adjusted in
accordance with a formula, such as a multiple or fraction of the change in a
specified interest rate index, so as to pay at a rate that will be attractive in
certain interest rate environments but not in others. For example, a CMO may be
structured so that its yield moves in the same direction as market interest
rates - I.E., the yield may increase as rates increase and decrease as rates
decrease - but may do so more rapidly or to a greater degree. Other CMO classes
may be structured to pay floating interest rates that either move in the same
direction or the opposite of short-term interest rates. The market value of
such securities may be more volatile than that of a fixed rate obligation. Such
interest rate formulas may be combined with other CMO characteristics.

10. WHEN-ISSUED OR DELAYED-DELIVERY SECURITIES (MONEY MARKET AND SMALL COMPANY
PORTFOLIOS ONLY)

Under this procedure, a Portfolio agrees to acquire securities (whose terms and
conditions, including price, have been fixed by the issuer) that are to be
issued and delivered against payment in the future. Delivery of securities so
sold normally takes place 30 to 45 days (settlement date) after the date of the
commitment. No interest is earned by a Portfolio prior to the settlement date.
The value of securities sold on a "when-issued" or "delayed-delivery" basis may
fluctuate before the settlement date and the Portfolio bears the risk of such
fluctuation from the date of purchase. A Portfolio may dispose of its interest
in those securities before delivery.

11. SHORT-TERM INVESTMENTS (STOCK PORTFOLIOS AND BOND PORTFOLIO)

The Stock Portfolios and the Bond Portfolio may hold cash or invest temporarily
in high-quality commercial paper, certificates of deposit, shares of no-load,
open-end money market funds or repurchase agreements under those circumstances
where they have cash to manage for a short-term time period, for example, after
receiving proceeds from dividend distributions or the sale of portfolio
securities, or as a defensive measure when, in the investment adviser's opinion,
business or economic conditions warrant. Certificates of deposit must be issued
by banks or savings and loan associations which have total assets of at least $1
billion or, in the case of a bank or savings and loan association not having
total assets of at least $1 billion, the bank or savings and loan association is
insured by the Federal Deposit Insurance Corporation in which case the Portfolio
will limit its investment to the statutory insurance coverage.

12. FOREIGN SECURITIES (ALL PORTFOLIOS)

<PAGE>

Foreign securities are securities issued in and traded in foreign markets and
contain greater risks (including currency risk) than securities issued in and
traded in U.S. markets. The Growth, Equity, Northwest and Money Market
Portfolios may not purchase foreign securities, unless at the time thereof, such
purchase would not cause more than five percent (5%) of the total assets of a
Portfolio (taken at market value) to be invested in foreign securities. The
Money Market Portfolio may purchase dollar-denominated commercial paper issued
in the U.S. by foreign entities. The Small Company Portfolio may invest up to
10% of its total assets (taken at market value) in foreign securities. The Bond
Portfolio may invest up to 30% of its total assets (taken at market value) in
foreign securities. Foreign investments involve sovereign risk, which includes
the possibility of adverse local political or economic developments,
expropriation or nationalization of assets, imposition of withholding taxes on
dividend or interest payments and currency blockage (which would prevent
currency from being sold). Foreign investments may be affected favorably or
unfavorably by changes in currency rates and exchange control regulations.
There is generally less publicly available information about issuers of foreign
securities as compared to U.S. issuers. Many foreign companies are not subject
to accounting, auditing and financial reporting standards and requirements
comparable to those applicable to U.S. companies. Securities of some foreign
issuers are less liquid and more volatile than securities of U.S. issuers.
Financial markets on which foreign securities trade are generally subject to
less governmental regulation as compared to U.S. markets. Foreign brokerage
commissions and custodian fees are generally higher than those in the United
States.

13. ASSET-BACKED SECURITIES (GROWTH, EQUITY, NORTHWEST, BOND AND MONEY MARKET
PORTFOLIOS ONLY)

Asset-backed securities represent interests in, or are secured by and payable
from, pools of assets such as (but not limited to) consumer loans, automobile
receivable securities, credit card receivable securities, and installment loan
contracts. The assets underlying the securities are securitized through the use
of trusts and special purpose corporations. These securities may be supported
by credit enhancements such as letters of credit. Payment of interest and
principal ultimately depends upon borrowers paying the underlying loans.
Repossessed collateral may be unavailable or inadequate to support payments on
defaulted asset-backed securities. In addition, asset-backed securities are
subject to prepayment risks which may reduce the overall return of the
investment.

Automobile receivable securities represent undivided fractional interests in a
trust whose assets consist of a pool of automobile retail installment sales
contracts and security interests in vehicles securing the contracts. Payments
of principal and interest on the certificates issued by the automobile
receivable trust are passed through periodically to certificate holders and are
generally guaranteed up to specified amounts by a letter of credit issued by a
financial institution. Certificate holders may experience delays in payments or
losses if the full amounts due on the underlying installment sales contracts are
not realized by the trust because of factors such as unanticipated legal or
administrative costs of enforcing the contracts, or depreciation, damage or loss
of the vehicles securing the contracts.

Credit card receivable securities are backed by receivables from revolving
credit card accounts. Certificates issued by credit card receivable trusts
generally are pass-through securities. Competitive and general economic factors
and an accelerated cardholder payment rate can adversely affect the rate at
which new receivables are credited to an account, potentially shortening the
expected weighted average life of the credit card receivable security and
reducing its yield. Credit card accounts are unsecured obligations of the
cardholder.

14. OPTIONS ON EQUITY SECURITIES (GROWTH, NORTHWEST AND SMALL COMPANY
PORTFOLIOS ONLY)

The Growth, Northwest and Small Company Portfolios may purchase and write (i.e.,
sell) covered call options. A call option is a short-term contract pursuant to
which the purchaser or holder, in return for a premium paid, has the right to
buy the equity security underlying the option at a specified exercise price (the
strike price) at any time during the term of the option (for "American-style"
options) or on the option expiration date (for "European-style" options). The
writer of the call option, who received the premium,

<PAGE>

has the obligation, upon exercise of the option, to deliver the underlying
equity security against payment of the strike price.

The Portfolios will write call options on stocks only if they are covered, and
such options must remain covered so long as a Portfolio is obligated as a
writer. A call option is "covered" only if at the time the Portfolio writes the
call, the Portfolio holds on a share-for-share basis the same security as the
call written. A Portfolio must maintain such security in its portfolio from the
time the Portfolio writes the call option until the option is exercised,
terminated or expires. The Portfolios' use of options on equity securities is
subject to certain special risks including the risk that the market value of the
security will move adversely to the Portfolio's option position.

The Portfolios may effect "closing purchase transactions." If a Portfolio,
as a writer of an option, wishes to terminate the obligation, it may effect a
closing purchase transaction by buying an option of the same series as the
option previously written. A Portfolio will realize a profit from a closing
transaction if the price of the transaction is less than the premium received
from writing the option. Because increases in the market price of a call
option will generally reflect increases in the market price of the underlying
security, any loss resulting from a closing purchase transaction with respect
to a call option is likely to be offset in whole or in part by appreciation
of the underlying equity security owned by the Portfolio. There is no
guaranty that closing purchase transactions can be effected.

The Portfolios' use of options on equity securities is subject to certain
special risks, in addition to the risk that the market value of the security
will move adversely to the Portfolio's option position. An option position may
be closed out only on an exchange, board of trade or other trading facility that
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market on an exchange will exist for any
particular option, or at any particular time, and for some options no secondary
market on an exchange or otherwise may exist. In such event it might not be
possible to effect closing transactions in particular options. If a Portfolio as
a covered call option writer is unable to effect a closing purchase transaction
in a secondary market, it will not be able to sell the underlying security until
the option expires or it delivers the underlying security upon exercise.

Reasons for the absence of a liquid secondary market on an exchange can include
any of the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions imposed by an exchange on opening transactions or
closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an exchange or
a clearing corporation may not at all times be adequate to handle current
trading volume; or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of options (or a particular class or series of options), in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange that had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no
assurance that higher than anticipated trading activity or other unforeseen
events might not, at times, render certain of the facilities of any of the
clearing corporations inadequate, and thereby result in the institution by an
exchange of special procedures that may interfere with the timely execution of
customers' orders.

The Portfolios, under normal conditions, will not write a call option if, as a
result thereof, the aggregate value of the assets underlying all such options
(determined as of the date such options are written) would exceed 25% of the
Portfolio's net assets. The Portfolios will not purchase an option if, as a
result thereof, its aggregate investment in options would exceed 5% of its total
assets.

15. OPTIONS ON STOCK INDICES (GROWTH, NORTHWEST AND SMALL COMPANY PORTFOLIOS
ONLY)

The Growth, Northwest and Small Company Portfolios may purchase put and call
options on stock indices. Options on stock indices are similar to options on
stock except that, rather than obtaining the

<PAGE>

right to take or make delivery of stock at a specified price, an option on a
stock index gives the holder the right to receive, upon exercise of the option,
an amount of cash if the closing level of the stock index upon which the option
is based is greater than (in the case of a call) or less than (in the case of a
put) the strike price of the option. The amount of cash is equal to such
difference between the closing price of the index and the strike price of the
option times a specified multiple (the "multiplier"). If the option is
exercised, the writer is obligated, in return for the premium received, to make
delivery of this amount. Unlike stock options, all settlements are in cash, and
gain or loss depends on price movements in the stock market generally (or in a
particular industry or segment of the market) rather than price movements in
individual stocks.

The Portfolios do not intend to invest more than 5% of their net assets at any
one time in the purchase of puts and calls on stock indices. The Portfolios may
effect "closing sale transactions," whereby a Portfolio may liquidate its
position in an option it holds by selling an option of the same series as the
option previously purchased. A Portfolio will realize a profit from a closing
transaction if the price of the transaction is more than the premium paid to
purchase the option. There is no guaranty that closing sale transactions can be
effected.

Investment in options on stock indices will be subject to the same risks as
investment in options on equity securities, described above. In addition, the
distinctive characteristics of options on indices create certain risks that are
not present with stock options. Index prices may be distorted if trading of
certain stocks included in the index is interrupted. Trading in index options
also may be interrupted in certain circumstances, such as if trading were halted
in a substantial number of stocks included in the index. If this occurred, the
Portfolios would not be able to close out options that they had purchased and,
if restrictions on exercise were imposed, a Portfolio might be unable to
exercise an option it holds, which could result in substantial losses to the
Portfolio. The Portfolios generally will select stock indices that include a
number of stocks sufficient to minimize the likelihood of a trading halt in
options on the index.

Although the markets for certain index option contracts have developed rapidly,
the markets for other index options are still relatively illiquid. The ability
of the Portfolios to establish and close out positions on such options will be
subject to the development and maintenance of a liquid secondary market. It is
not certain that this market will develop in all index options contracts. The
Portfolios will not purchase any index option contract unless and until the
Portfolios' investment adviser believes the market for such options has
developed sufficiently that the risk in connection with such transactions is no
greater than the risk in connection with options on stocks.

There are other special risks involved in purchasing put and call options on
stock indices. If a Portfolio holds an index option and exercises it before
final determination of the closing index value for that day, it runs the risk
that the level of the underlying index may change before closing. If such a
change causes the exercised option to fall out-of-the-money, the Portfolio will
be required to pay the difference between the closing index value and the strike
price of the option (times the applicable multiplier) to the assigned writer.
Although the Portfolio may be able to minimize the risk by withholding exercise
instructions until just before the daily cutoff time or by selling rather than
exercising an option when the index level is close to the exercise price, it may
not be possible to eliminate this risk entirely because the cutoff times for
index options may be earlier than those fixed for other types of options and may
occur before definitive closing index values are announced.

16. COMMERCIAL PAPER AND CERTIFICATES OF DEPOSIT (SMALL COMPANY PORTFOLIO ONLY)

In making temporary investments in commercial paper and certificates of deposit,
the Portfolio will adhere to the following guidelines:

a) Commercial paper must be rated A-1 or A-2 by Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. ("S&P") or
Prime-1 or Prime-2 by Moody's Investors Services, Inc. ("Moody's") or
issued by companies with an unsecured debt issue

<PAGE>

currently outstanding rated AA by S&P or Aa by Moody's or higher.

b) Certificates of deposit ("CDs") must be issued by banks or savings and
loan associations that have total assets of at least $1 billion or, in
the case of a bank or savings and loan association not having total
assets of at least $1 billion, the bank or savings and loan
association is insured by the Federal Deposit Insurance Corporation
("FDIC").

17. CONTINGENT VALUE RIGHTS (SMALL COMPANY PORTFOLIO ONLY)

A contingent value right ("CVR") is a right issued by a corporation that takes
on a pre-established value if the underlying common stock does not attain a
target price by a specified date. Generally, a CVR's value will be the
difference between the target price and the current market price of the common
stock on the target date. If the common stock does attain the target price by
the date, the CVR expires without value. CVRs may be purchased and sold as part
of the underlying common stock or separately from the stock. CVRs may also be
issued to owners of the underlying common stock as the result of a corporation's
restructuring.

18. SOVEREIGN DEBT OBLIGATIONS (SMALL COMPANY PORTFOLIO ONLY)

Sovereign debt instruments are issued or guaranteed by foreign governments or
their agencies. Sovereign debt may be in the form of conventional securities or
other types of debt instruments such as loans or loan participations.
Governments or governmental entities responsible for repayment of the debt may
be unable or unwilling to repay principal and interest when due, and may require
renegotiation or rescheduling of debt payments. Repayment of principal and
interest may depend also upon political and economic factors.

19. INDEXED SECURITIES (STOCK PORTFOLIOS)

Indexed securities are securities whose prices are indexed to the prices of
other securities, securities indices, currencies, commodities or other financial
indicators. Indexed securities generally are debt securities whose value at
maturity or interest rate is determined by reference to a specific instrument or
statistic. Currency-indexed securities generally are debt securities whose
maturity values or interest rates are determined by reference to values of one
or more specified foreign currencies. Currency-indexed securities may be
positively or negatively indexed; I.E., their maturity value may increase when
the specified currency value increases, resulting in a security that performs
similarly to a foreign-denominated instrument, or their maturity value may
decline when foreign currencies increase, resulting in a security whose price
characteristics are similar to a put on the underlying currency.
Currency-indexed securities may also have prices that depend on the values of
different foreign securities relative to each other.

The performance of an indexed security depends largely on the performance of the
security, currency or other instrument to which they are indexed. Performance
may also be influenced by interest rate changes in the United States and foreign
countries. Indexed securities additionally are subject to credit risks
associated with the issuer of the security. Their values may decline
substantially if the issuer's creditworthiness deteriorates. Indexed securities
may also be more volatile than their underlying instruments.

20. SHORT SALES AGAINST THE BOX (SMALL COMPANY PORTFOLIO ONLY)

The Portfolio may make short sales of securities or maintain a short position,
provided that at all times when a short position is open the Portfolio owns an
equal amount of such securities or an equal amount of the securities of the same
issuer as the securities sold short (a "short sale against the box"). If the
Portfolio engages in short sales against the box, it will incur transaction
costs.

<PAGE>

21. BELOW INVESTMENT GRADE BONDS (BOND PORTFOLIO)

The Bond Portfolio may invest up to 20% of its assets in below investment grade
bonds (commonly referred to as "high-yield" or "junk" bonds). Certain
additional risks are associated with these bonds. Yields on below investment
grade bonds will fluctuate over time. These bonds tend to reflect short-term
economic and corporate developments to a greater extent than higher quality
bonds which primarily react to fluctuations in interest rates. During an
economic downturn or period of rising interest rates, issuers of below
investment grade bonds may experience financial difficulties which adversely
affect their ability to make principal and interest payments, meet projected
business goals and obtain additional financing. In addition, issuers often rely
on cash flow to service debt. Failure to realize projected cash flows may
seriously impair the issuer's ability to service its debt load which in turn
might cause a Portfolio to lose all or part of its investment in that security.
SAM will seek to minimize these additional risks through diversification,
careful assessment of the issuer's financial structure, business plan and
management team and monitoring of the issuer's progress toward its financial
goals.

The liquidity and price of below investment grade bonds can be affected by a
number of factors, including investor perceptions and adverse publicity
regarding major issues, underwriters or dealers of lower-quality corporate
obligations. These effects can be particularly pronounced in a thinly-traded
market with few participants and may adversely impact the Portfolio's ability to
dispose of the bonds as well as make valuation of the bonds more difficult.
Because there tend to be fewer investors in below investment grade bonds, it may
be difficult for the Portfolio to sell these securities at an optimum time.
Consequently, these bonds may be subject to more price changes, fluctuations in
yield and risk to principal and income than higher-rated bonds of the same
maturity.

Credit ratings evaluate the likelihood that an issuer will make principal and
interest payments, but may not reflect market value risks associated with
lower-rated bonds. Credit rating agencies may not timely revise ratings to
reflect subsequent events affecting an issuer's ability to pay principal and
interest.

22. FIXED-INCOME SECURITIES (EQUITY PORTFOLIO)

The Equity Portfolio may purchase fixed-income securities in accordance with
business and financial conditions.

23. BONDS AND OTHER DEBT SECURITIES (SMALL COMPANY PORTFOLIO)

The Small Company Stock Portfolio may invest in bonds and other debt securities
that are rated investment grade by Moody's or S&P, or unrated bonds determined
by SAM to be of comparable quality to such rated bonds. Bonds rated in the
lowest category of investment grade (Baa by Moody's and BBB by S&P) and
comparable unrated bonds have speculative characteristics and are more likely to
have a weakened capacity to make principal and interest payments under changing
economic conditions or upon deterioration in the financial condition of the
issuer. After purchase by the Portfolio, a corporate bond may be downgraded or,
if unrated, may cease to be comparable to a rated security. Neither event will
require the Portfolio to dispose of that security, but SAM will take a downgrade
or loss of comparability into account in determining whether the Portfolio
should continue to hold the security in its portfolio. In the event that 35% or
more of the Portfolio's net assets is held in securities rated below investment
grade due to a downgrade of one or more corporate bonds, SAM will engage in an
orderly disposition of such securities to the extent necessary to ensure that
the Portfolio's holdings of such securities remain below 35% of the Portfolio's
net assets.

24. SECURITIES OF UNSEASONED ISSUERS (SMALL COMPANY PORTFOLIO)

The Small Company Stock Portfolio may invest up to 5% of its total assets in
securities of unseasoned issuers. Unseasoned issuers are those companies which,
together with any predecessors, have been in operation for less than three
years.

<PAGE>

25. AMERICAN DEPOSITARY RECEIPTS (ADRs) (STOCK PORTFOLIOS)

The Stock Portfolios may each invest in American Depositary Receipts (ADRs),
which represent securities issued by a foreign issuer. ADRs are registered
receipts evidencing ownership of an underlying foreign security. They are
typically issued in the United States by a bank or trust company. ADRs involve
risks in addition to risks normally associated with securities issued by
domestic issuers, including the possibility of adverse political or economic
developments in foreign countries. Foreign companies may not be subject to
accounting standards or governmental supervision comparable to U.S. companies
and there may be less public or less current information about their operations.
In addition to the risks of foreign investment applicable to the underlying
securities, ADRs may also be subject to the risks that the foreign issuer may
not be obligated to cooperate with the U.S. bank or trust company, or that such
information in the U.S. market may not be current. ADRs which are structured
without sponsorship of the issuer of the underlying foreign security may also be
subject to the risk that the foreign issuer may not provide financial and other
material information to the U.S. bank or trust company issuer.

PRINCIPAL SHAREHOLDERS OF THE PORTFOLIOS

At March 31, 1999 SAFECO Life Insurance Company ("SAFECO Life") controlled
each of the Portfolios. At such date it owned of record the following
percentages of the outstanding shares of the Portfolios listed:

<TABLE>
<S> <C>
Equity 89.90%
Growth 80.64%
Northwest 87.02%
Bond 100%
Money Market 88.90%
Small Company 57.93%
</TABLE>

At March 31, 1999, SAM owned 12.98% of the Northwest Portfolio's outstanding
shares and 42.07% of the Small Company Portfolio's outstanding shares. At March
31, 1999, SAFECO Corporation owned 11.10% of the Money Market Portfolio's
outstanding shares.

SAFECO Life and SAM are Washington corporations and wholly owned subsidiaries
of SAFECO Corporation. SAFECO Corporation is also a Washington corporation and
has its principal place of business at SAFECO Plaza, Seattle, WA 98185. SAFECO
Life has its principal place of business at 15411 N.E. 51st Street, Redmond, WA
98052. SAM has its principal place of business at Two Union Square, 25th Floor,
Seattle, WA 98101.

Control persons of a Portfolio may control the outcome of a shareholder vote.
SAFECO Life, like other participating insurance companies who own shares of a
Portfolio, will solicit voting instructions from variable contract owners with
respect to any matters that are presented to a vote of shareholders. See
"CHARACTERISTICS OF THE TRUST'S SHARES--Voting Rights."

At March 31, 1999, AUL Group Retirement Annuity Separate Account II, whose
address of record is P.O. Box 1995, Indianapolis, IN 46206, owned of record
8.68% of the Growth Portfolio's outstanding shares, and IL Annuity, whose
address of record is 2960 N. Meridian Street, Indianapolis, IN 46208, owned of
record 5.51% of the Growth Portfolio's outstanding shares. AUL Group Retirement
Annuity Separate Account II is controlled by American United Life, and IL
Annuity is controlled by Indianapolis Life Annuity and Insurance Company.

CALCULATION OF SHARE PRICE

The net asset value per share of each of the Portfolios (other than the Money
Market Portfolio) is determined by subtracting the liabilities of the Portfolio
from its assets, and dividing the result by the number of outstanding shares.
Net asset value per share is computed as of the close of regular trading of the
New York Stock Exchange (normally 1:00 p.m. Pacific time) each day that the
Exchange is open for trading.

The Stock Portfolios generally value their portfolio securities at the
last-reported sale price on the national exchange on which the securities are
primarily traded, unless there are no transactions, in which case they shall be
valued at the last reported bid price. Securities traded over-the-counter are
valued at the last sale price, unless there is no reported sale price, in which
case the last reported bid price will be used. Portfolio securities that trade
on a stock exchange and over-the-counter are valued according to the broadest
and most representative market. Securities not traded on a national exchange
are valued based on consideration of information with respect to transactions in
similar securities, quotations from dealers and various relationships between
securities. Valuations of portfolio securities calculated in a like manner may
be obtained from a pricing service. Investments for which a representative
value cannot be

<PAGE>

established are valued at their fair value as determined in good faith by or
under the direction of the Trust's Board of Trustees.

Some of the Portfolios may invest from time to time in foreign securities.
Trading in foreign securities will generally be substantially completed each day
at various times prior to the close of the NYSE. The values of any such
securities are determined as of such times for purposes of computing the
Portfolios' net asset value. Foreign currency exchange rates are also generally
determined prior to the close of the NYSE. Foreign portfolio securities are
valued on the basis of quotations from the primary market in which they trade.
The value of foreign securities are translated from the local currency into U.S.
dollars using current exchange rates. If quotations are not readily available,
or if values have been materially affected by events occurring after the close
of a foreign market, the security will be valued at fair value as determined in
good faith by the investment advisor under procedures established by and under
general supervision of the Trust's Board of Trustees.

Options that are traded on national securities exchanges are valued at their
last sale price as of the close of option trading on such exchange. Futures
contracts will be marked to market daily, and options thereon are valued at
their last sale price, as of the close of the applicable commodities exchange.
Forward contracts are valued at the current cost of covering or offsetting such
contracts.

For the Bond Portfolio, securities are valued based on consideration of
information with respect to transactions in similar securities, quotations from
dealers, and various relationships between securities. Valuations of the Bond
Portfolio's portfolio securities calculated in a like manner may be obtained
from a pricing service. Investments for which a representative value cannot be
established are valued at their fair value as determined in good faith by or
under the direction of the Trust's Board of Trustees.

The portfolio instruments of the Money Market Portfolio are valued on the basis
of amortized cost. The valuation of the Money Market Portfolio securities based
upon its amortized cost and the maintenance of its net asset value per share at
$1.00 is permitted pursuant to Rule 2a-7 under the 1940 Act. Pursuant to that
rule, the Money Market Portfolio will maintain a dollar-weighted average
portfolio maturity of 90 days or less, purchase only securities having remaining
maturities of 397 days or less and invest only in securities determined by SAM
under guidelines adopted by the Board of Trustees to be of high quality with
minimal credit risks. The Board of Trustees has established procedures designed
to stabilize, to the extent reasonably possible, the Portfolio's price-per-share
as computed for the purpose of sales and redemptions at $1.00. These procedures
include a review of the Portfolio's holdings by the Board of Trustees, at such
intervals as it may deem appropriate, to determine whether the Portfolio's net
asset value per share, calculated by using available market quotations, deviates
from $1.00 per share and, if so, whether such deviation may result in material
dilution or is otherwise unfair to existing contract owners. In the event the
Board of Trustees determines that such a deviation exists, it will take such
corrective action as it regards as necessary and appropriate, including, but not
limited to: selling portfolio investments prior to maturity to realize capital
gains or losses or to shorten average portfolio maturity; withholding dividends;
redeeming shares in kind; or establishing the net asset value per share by using
available market quotations.

The principal risk associated with the Money Market Portfolio is that it may
experience a delay or failure in principal or interest payments at maturity of
one or more of the portfolio securities. The Money Market Portfolio's yield
will fluctuate with general money market interests rates.

Short-term debt securities held by each Portfolio having a remaining maturity of
less than 60 days when purchased, and securities originally purchased with
maturities in excess of 60 days but which currently have maturities of 60 days
or less, may be valued at cost adjusted for amortization of premiums or accrual
of discounts, or under such other methods as the Board of Trustees may from time
to time deem to be appropriate. The cost of those securities that had original
maturities in excess of 60 days shall be determined by their fair market value
up until the 61st day prior to maturity. All other securities and assets held
by the Portfolios will be appraised in accordance with those procedures
established by the Board of Trustees in good faith in computing the fair market
value of those assets.

<PAGE>

ADDITIONAL PERFORMANCE INFORMATION

GROWTH, EQUITY, NORTHWEST, BOND AND SMALL COMPANY PORTFOLIOS

The yield for the 30-day period ended December 31, 1998 for the Bond Portfolio
was 4.71%

Yield is computed using the following formula:

a-b 6
Yield = 2 [(--- +1) - 1]
cd

Where: a = dividends and interest earned during the period

b = expenses accrued for the period (net of reimbursements)

c = the average daily number of shares outstanding during the
period that were entitled to receive dividends

d = the maximum offering price per share on the last day of the
period

The total returns, expressed as a percentage, for the one-year, five-year, and
ten-year periods ended December 31, 1998 for the Equity and Bond Portfolios were
as follows:

<TABLE>
<CAPTION>
Portfolio 1 Year 5 Year 10 Year
<S> <C> <C> <C>
Equity 24.89% 172.65% 475.96%
Bond 8.90% 35.81% 116.82%
</TABLE>

The total returns, expressed as a percentage, for the one-year, five-year (if
applicable) and since effective date periods ended December 31, 1998 for the
Growth, Northwest and Small Company Portfolios were as follows:

<TABLE>
<CAPTION>
Portfolio 1 Year 5 Year Since Effective # of Months Effective Date
Date
<S> <C> <C> <C> <C> <C>
Growth 1.83% 206.75% 313.29% 71 January 7, 1993
Northwest 2.89% 68.79% 67.87% 71 January 7, 1993
Small Company -19.95% N/A 2.78% 20 April 30, 1997
</TABLE>

The average annual total returns, expressed as a percentage, for the one-, five-
and ten-year periods ended December 31, 1998 for the Equity and Bond Portfolios
were as follows:

<PAGE>

<TABLE>
<CAPTION>
Portfolio 1 Year 5 Year 10 Year
<S> <C> <C> <C>
Equity 24.89% 22.21% 19.13%
Bond 8.90% 6.31% 8.05%
</TABLE>

The average annual total returns, expressed as a percentage, for the one-year,
five-year (if applicable) and since effective date periods ended December 31,
1998 for the Growth, Northwest and Small Company Portfolios were as follows:

<TABLE>
<CAPTION>
Portfolio 1 Year 5 Year Since Effective # of Months Effective Date
Date
<S> <C> <C> <C> <C> <C>
Growth 1.83% 25.13% 27.10% 71 January 7, 1993
Northwest 2.89% 11.04% 9.15% 71 January 7, 1993
Small Company -19.95% N/A 1.66% 20 April 30, 1997
</TABLE>

The total return is computed using the following formula:

ERV-P
T = ------- X 100
P

The average annual total return is computed using the following formula:

--------
n
A =( \/ ERV/P - 1) x 100

Where: T = total return

A = average annual total return

n = number of years

ERV = ending redeemable value of a hypothetical
$1,000 investment at the end of a specified
period of time

P = a hypothetical initial investment of $1,000

In making the above calculations, all dividends and capital-gain distributions
are assumed to be reinvested at the respective Portfolio's NAV on the
reinvestment date.

MONEY MARKET PORTFOLIO:

The yield and effective yield for the Money Market Portfolio of the Trust for
the 7-day period ended December 31, 1998, were 3.39% and 3.44%, respectively.

<PAGE>

Yield is computed using the following formula:

(x-y) -z 365
Yield = [------ ] = Base Period Return X -----
y 7

Where: x = value of one share at the end of a 7-day period

y = value of one share at the beginning of a 7-day
period ($1.00)

z = capital changes during the 7-day period, if any

Effective yield is computed using the following formula:

Effective yield = [(Base Period Return + 1) 365/7 ] -1

During periods of declining interest rates, the Money Market Portfolio's yield
based on amortized cost may be higher than the yield based on market valuations.
Under these circumstances, a shareholder in the Money Market Portfolio would be
able to obtain a somewhat higher yield than would result if the Portfolio
utilized market valuations to determine its NAV. The converse would apply in a
period of rising interest rates.

In addition to performance figures, the Portfolios may advertise their rankings
as calculated by independent rating services that monitor mutual funds'
performance (E.G., CDA Investment Technologies, Lipper Analytical Services,
Inc., Morningstar, Inc., and Wiesenberger Investment Companies Service). These
rankings may be among mutual funds with similar objectives and/or size or with
mutual funds in general. In addition, the Portfolios may advertise rankings
which are in part based upon subjective criteria developed by independent rating
services to measure relative performance. Such criteria may include methods to
account for levels of risk and potential tax liability, sales commissions and
expense and turnover ratios. These rating services may also base the measure of
relative performance on time periods deemed by them to be representative of up
and down markets. The Portfolios may also describe in their advertisements the
methodology used by rating services to arrive at Portfolio ratings. In
addition, the Portfolios may also advertise individual measurements of Portfolio
performance published by the rating services, including but not limited to a
Portfolio's beta, standard deviation, and price earnings ratio.

The Portfolios may occasionally reproduce articles or portions of articles about
the Portfolios written by independent third parties such as financial writers,
financial planners and financial analysts, which have appeared in financial
publications of general circulation or financial newsletters (including but not
limited to BARRONS, BUSINESS WEEK, FABIANS, FORBES, FORTUNE, INVESTOR'S BUSINESS
DAILY, KIPLINGER'S, MONEY Magazine, MORNINGSTAR MUTUAL FUNDS, MUTUAL FUNDS
FORECASTER, MUTUAL FUNDS Magazine, NEWSWEEK, PENSIONS & INVESTMENTS, RUCKEYSER'S
MUTUAL FUNDS, TELESWITCH, TIME Magazine, U.S. NEWS AND WORLD REPORT, YOUR MONEY
and the WALL STREET JOURNAL).

Each Portfolio may present in its advertisements and sales literature (i) a
biography or the credentials of its portfolio manager (including but not limited
to educational degrees, professional designations, work experience, work
responsibilities and outside interests), (ii) current facts (including but not
limited to number of employees, number of shareholders, business
characteristics) about its investment adviser (SAM), the investment advisor's
parent company (SAFECO Corporation) or the SAFECO Family of Funds, (iii)
descriptions, including quotations attributable to the portfolio manager, of the
investment style used to manage a Portfolio, the research methodologies
underlying securities selection and a Portfolio's investment objective and (iv)
information about particular securities held by a Portfolio.

From time to time, each Portfolio may discuss its performance in relation to the
performance of relevant indices and/or representative peer groups. Such
discussions may include how a Portfolio's investment style (including, but not
limited to portfolio holdings, asset types, industry/sector weightings and the
purchase and sale of specific securities) contributed to such performance.

<PAGE>

In addition, each Portfolio may comment on the market and economic outlook in
general, on specific economic events, on how these conditions have impacted its
performance and how the portfolio manager will or has addressed such conditions.
Each Portfolio also may provide information on how much certain investments
would return over time.

Each Stock Portfolio may compare its performance against the following unmanaged
indices that (unless otherwise noted in the advertisement) assume reinvestment
of dividends:

AMEX (AMERICAN STOCK EXCHANGE) MAJOR MARKET INDEX - Price weighted
(high-priced issues have more influence than low-priced issues) average of
20 Blue Chip stocks.

DOW JONES INDUSTRIAL AVERAGE - Price weighted average of 30 actively traded
Blue Chip stocks.

NASDAQ PRICE INDEX - Market value weighted (impact of a component's price
change is proportionate to the overall market value of the issue) index of
approximately 3500 over-the-counter stocks traded on the Nasdaq.

S & P 500 COMPOSITE STOCK PRICE INDEX - Market value weighted index of 500
stock's most of which are listed on the New York Stock Exchange with some
listed on the American Stock Exchange and Nasdaq.

WILSHIRE 5000 EQUITY INDEX - Market value weighted index of approximately
5000 stocks including all stocks on the New York and American Stock
Exchanges.

MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX - Market value weighted
index of approximately 1200 companies located throughout the world.

RUSSELL 2000 INDEX - The 2000 smallest firms in the Russell 3000 Index
which is composed of the 3000 largest companies in the United States as
measured by capitalization.

PERFORMANCE INFORMATION AND QUOTED RATINGS ARE INDICATIVE ONLY OF PAST
PERFORMANCE AND ARE NOT INTENDED TO REPRESENT FUTURE INVESTMENT RESULTS.

TRUSTEES AND OFFICERS

The Trust's Board of Trustees oversees the management of the Trust, chooses the
officers of the Trust, monitors the performance of the officers, and sets the
strategic direction and policies of the Trust.

<TABLE>
<CAPTION>
Name, Address and Age Position(s) Held with the Trust Principal Occupations(s) During Past 5 Years
--------------------- ------------------------------- --------------------------------------------
<S> <C> <C>
Boh A. Dickey* Chairman and Trustee President, Chief Operating Officer, and Director of
SAFECO Plaza SAFECO Corporation. Previously, Executive Vice
Seattle, WA 98185 President and Chief Financial Officer. He has been an
(54) executive officer of SAFECO Corporation subsidiaries
since 1982. See table under "Investment Advisory and
Other Services."

Barbara J. Dingfield Trustee Director of Community Affairs for Microsoft
Microsoft Corporation Corporation, Redmond,

<PAGE>

Washington, a computer software company; former
One Microsoft Way Director and Executive Vice President of Wright
Redmond, WA 98052 Runstad & Co., Seattle, Washington, a real estate
(53) development company; Director of First SAFECO
National Life Insurance Company of New York; Board
Chair of United Way of King County; Board of Managers
of Swarthmore College.

David F. Hill* President Trustee President of SAFECO Securities, Inc. and SAFECO
10865 Willows Road NE Services Corporation; Senior Vice President of SAFECO
Redmond, WA 98052 Asset Management Company. See table under "Investment
(50) Advisory and Other Services."

Richard W. Hubbard Trustee Retired Vice President and Treasurer of the Trust and
1270 NW Blakely Ct. other SAFECO Trusts; retired Senior Vice President and
Seattle, WA 98177 Treasurer of SAFECO Corporation; former President of
(69) SAFECO Asset Management Company; Director of First
SAFECO National Life Insurance Company of New York;
Member of Diocese of Olympia Investment Committee.

Richard E. Lundgren Trustee Director of Marketing and Customer Relations, Building
764 S. 293rd Street Materials Distribution, Weyerhaeuser Company, Tacoma,
Federal Way, WA 98032 Washington, a forest products company; Director of
(61) First SAFECO National Life Insurance Company of New
York.

Larry L. Pinnt Trustee Retired Vice President and Chief Financial Officer,
1600 Bell Plaza, U.S. WEST Communications, Seattle, Washington, a
Room 1802 telephone company; Chairman of the University of
Seattle, WA 98191 Washington

<PAGE>

(64) Medical Center Board, Seattle, Washington;
Director of Cascade Natural Gas Corporation, Seattle,
Washington; Director of First SAFECO National Life
Insurance Company of New York; a Treasurer of Cancer
Care Alliance, Seattle, Washington.

John W. Schneider Trustee President of Wallingford Group, Inc., Seattle,
1808 N. 41st St. Washington, a company consulting on the
Seattle, WA 98103 acquisition/disposition and development of real
(57) estate; former President of Emerald Development Group,
Inc., Seattle, Washington; Director of First SAFECO
National Life Insurance Company of New York.

Neal Fuller Vice President Controller Vice President, Controller, Assistant Secretary and
10865 Willows Road NE Assistant Secretary Treasurer of SAFECO Securities, Inc. and SAFECO
Redmond, WA 98052 Services Corporation; Vice President, Controller,
(36) Secretary and Treasurer of SAFECO Asset Management
Company. See table under "Investment Advisory and
Other Services."

Ronald L. Spaulding Vice President Treasurer Chairman of SAFECO Asset Management Company; Treasurer
Two Union Square and Chief Investment Officer of SAFECO Corporation;
Seattle, WA 98101 Director and Vice President of SAFECO Insurance
(55) Companies; Director, Vice President and Treasurer of
First SAFECO National Life Insurance Company of New
York; former Senior Portfolio Manager of SAFECO
insurance companies and Portfolio

<PAGE>

Manager for SAFECO mutual funds. See table under
"Investment Advisory and Other Services."

David H. Longhurst Assistant Controller Assistant Controller of SAFECO Securities, Inc.,
10865 Willows Road NE SAFECO Services Corporation and SAFECO Asset
Redmond, WA 98052 Management Company; former Accounting Manager of
(41) SAFECO Asset Management Company; former Senior Manager
with Ernst & Young LLP, an independent accounting
firm.

Stephen D. Collier Assistant Secretary Assistant Secretary of SAFECO Asset Management
SAFECO Plaza Company, SAFECO Securities, Inc. and SAFECO Services
Seattle, WA 98185 Corporation. He has been an executive officer of
(46) SAFECO Corporation and subsidiaries since 1991.
</TABLE>

*Trustees who are interested persons as defined by the 1940 Act.

At March 31, 1999, none of the Trustees or officers of the Trust owned shares
of any series of the Trust.

Each Trustee and officer of the Trust holds the same position(s) with five other
registered open-end, management investment companies that have, in the
aggregate, nineteen series companies managed by SAM.

COMPENSATION TABLE
FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1998

<TABLE>
<CAPTION>
Total Compensation From
Aggregate Pension or Retirement Registrant and Fund
Compensation Benefits Accured As Estimated Annual Complex Paid to
Trustee from Regisrant Part of Fund Expenses Benefits Upon Retirement Trustees
<S> <C> <C> <C> <C>

<PAGE>

Boh A. Dickey N/A N/A N/A N/A

Barbara J. Dingfield $7,056 N/A N/A $30,375

David F. Hill N/A N/A N/A N/A

Richard W. Hubbard $6,621 N/A N/A $28,500

Richard E. Lundgren $7,056 N/A N/A $30,375

Larry L. Pinnt $7,056 N/A N/A $30,375

John W. Schneider $7,056 N/A N/A $30,375
</TABLE>

Currently, there is no pension, retirement, or other plan or any arrangement
pursuant to which Trustees or officers of the Trust are compensated by the
Trust.

INVESTMENT ADVISORY AND OTHER SERVICES

SAM, SAFECO Securities, Inc. ("SAFECO Securities") and SAFECO Services
Corporation ("SAFECO Services") are wholly-owned subsidiaries of SAFECO
Corporation, which owns operating subsidiaries in various segments of insurance
and other financially related businesses. SAFECO Securities is the principal
underwriter and SAFECO Services is the transfer, dividend and distribution
disbursement and shareholder servicing agent for each Portfolio under agreements
with the Trust.

The following individuals have the following positions and offices with the
Trust, SAM, SAFECO Securities and SAFECO Services:

<TABLE>
<CAPTION>
SAFECO SAFECO
Name Trust SAM Securities Services
- ---- ----- --- ---------- --------
<S> <C> <C> <C> <C>
B. A. Dickey Chairman Director
Trustee

<PAGE>

D. F. Hill President Senior President President
Trustee Vice Director Director
President Secretary Secretary
Director

N. A. Fuller Vice Vice Vice Vice
President President President President
Controller Controller Controller Controller
Assistant Secretary Assistant Assistant
Secretary Treasurer Secretary Secretary
Treasurer Treasurer

R. L. Spaulding Vice Chairman Director Director
President Director
Treasurer

S. C. Bauer President
Director

D. H. Longhurst Assistant Assistant Assistant Assistant
Controller Controller Controller Controller

S.D. Collier Assistant Assistant Assistant Assistant
Secretary Secretary Secretary Secretary
</TABLE>

Mr. Dickey is President, Chief Operating Officer and a Director of SAFECO
Corporation, and Mr. Spaulding is Treasurer and Chief Investment Officer of
SAFECO Corporation. Messrs. Dickey and Spaulding are also directors and
officers of other SAFECO Corporation subsidiaries.

In connection with its investment advisory contract with the Trust, SAM
furnishes or pays for all facilities and services furnished or performed for or
on behalf of the Trust and each Portfolio that include furnishing office
facilities, books, records and personnel to manage the Trust's and each
Portfolio's affairs and paying certain expenses.

The Trust Instrument of the Trust provides that the Trust will indemnify its
Trustees and its officers against liabilities and expenses reasonably incurred
in connection with litigation in which they may be involved because of their
offices with the Trust, unless it is adjudicated that they engaged in bad faith,
willful misfeasance, gross negligence, or reckless disregard of the duties
involved in the conduct of their offices. In the case of settlement, such
indemnification will not be provided unless it has been determined -- by a court
or other body approving the settlement, by a majority of a quorum of Trustees
who are neither interested persons of the Trust nor are parties to the
proceeding, based upon a review of readily available facts (rather than a
trial-type inquiry), or in a written opinion of independent counsel -- that such
officers or Trustees have not engaged in willful misfeasance, bad faith, gross
negligence, or reckless disregard of their duties.

SAM also serves as the investment advisor for other investment companies in
addition to the Portfolios. Several of these investment companies have
investment objectives similar to those of certain Portfolios. It is therefore
possible that the same securities will be purchased for both a Portfolio and
another investment company advised by SAM. When two or more funds advised by
SAM are simultaneously

<PAGE>

engaged in the purchase or sale of the same security, the prices and amounts
will be allocated in a manner considered by the officers of the funds involved
to be equitable to each fund. It is expected that the opportunity to
participate in volume transactions will produce better executions and prices for
a fund, generally. In some cases, the price of a security allocated to one fund
may be higher or lower than the price of a security allocated to another fund.

For the services and facilities furnished by SAM, the Trust has agreed to pay an
annual fee of .74% for the Growth, Equity, Northwest and Bond Portfolios, .85%
for the Small Company Portfolio and .65% for the Money Market Portfolio computed
on the basis of the average market value of the net assets of each Portfolio
ascertained each business day and paid monthly. During its last three fiscal
years, the Trust paid SAM the following investment advisory fees for each
Portfolio:

Investment Advisory Fees Paid to SAM

<TABLE>
<CAPTION>
Years Ended
----------------------------------------------------
December 31, December 31, December 31,
Portfolio 1998 1997 1996
- --------- ------------ ------------ ------------
<S> <C> <C> <C>
Equity $3,502,000 $2,429,000 $1,488,000
Bond $ 169,000 $ 120,000 $ 113,000
Northwest $ 173,000 $ 104,000 $ 56,000
Growth $2,363,000 $1,227,000 $ 519,000
Money Market $ 154,000 $ 108,000 $ 63,000
</TABLE>

The Trust paid investment advisory fees for the Small Company Portfolio of
$109,000 for the year ended December 31, 1998 and $40,000 for the period April
30, 1997 (effective date) to December 31, 1997.

State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy, MA
02170 is the custodian of the securities and cash of each Portfolio under an
agreement with the Trust. Ernst & Young LLP, 999 Third Avenue, Suite 3500,
Seattle, Washington 98104 is the independent auditor which audits the financial
statements of the Trust.

SAFECO Services, 10865 Willows Road NE, Redmond, WA 98052, is the transfer,
dividend, and distribution disbursement and shareholder servicing agent for each
Portfolio under an agreement with the Trust. SAFECO Services is responsible for
all required transfer agent activity, including maintenance of records for each
Portfolio's shareholders, records of transactions involving each Portfolio's
shares and the compilation, distribution, or reinvestment of income dividends or
capital gains distributions. SAFECO Services is not compensated by the Trust or
the Portfolios for these services.

SAFECO Securities, 10865 Willows Road NE, Redmond, WA 98052, is the principal
underwriter for each Portfolio. SAFECO Securities is a broker-dealer registered
under the Securities Exchange Act of 1934 and is a member of the National
Association of Securities Dealers, Inc. The Trust has entered into a
distribution agreement with SAFECO Securities under which SAFECO Securities
shall distribute each Portfolio's shares on a continuous best efforts basis.
SAFECO Securities is not compensated by the Trust or the Portfolios for
underwriting, distribution or other activities.

BROKERAGE PRACTICES

Brokers typically charge commissions or mark-ups/mark-downs to effect securities
transactions. The Portfolios may also purchase securities from underwriters,
the price of which will include a commission or concession paid by the issuer to
the underwriter. The purchase price of securities purchased from

<PAGE>

dealers serving as market makers will include the spread between the bid and
asked prices. Brokerage transactions involving securities of companies domiciled
in countries other than the United States will normally be conducted on the
principal stock exchanges of those countries. In most international markets,
commission rates are not negotiable and may be higher than the negotiated
commission rates available in the United States. There is generally less
government supervision and regulation of foreign stock exchanges and
broker-dealers than in the United States.

SAM determines the broker/dealers through whom securities transactions for the
Portfolios are executed. SAM may select a broker/dealer who may receive a
commission for portfolio transactions exceeding the amount another broker/dealer
would have charged for the same transaction if SAM determines that such amount
of commission is reasonable in relation to the value of the brokerage and
research services performed or provided by the broker/dealer, viewed in terms of
either that particular transaction or SAM's overall responsibilities to the
client for whose account such portfolio transaction is executed and other
accounts advised by SAM. Research services include market information, analysis
of specific issues, presentation of special situations and trading opportunities
on a timely basis, advice concerning industries, economic factors and trends,
portfolio strategy and performance of accounts. Research services come in the
form of written reports, telephone conversations between brokerage security
analysts and members of SAM's staff, and personal visits by such analysts and
brokerage strategists and economists to SAM's office.

Research services are used in advising all accounts, including accounts advised
by related persons of SAM, and not all such services are necessarily used by SAM
in connection with the specific account that paid commissions to the
broker/dealer providing such services. SAM does not acquire research services
through the generation of credits with respect to principal transactions or
transactions in financial futures.

The overall reasonableness of broker commissions paid is evaluated periodically.
Such evaluation includes review of what competing broker/dealers are willing to
charge for similar types of services and what discounts are being granted by
brokerage firms. The evaluation also considers the timeliness and accuracy of
the research received.

The following table states the total amount of brokerage expenses for the
Portfolios listed for the fiscal years ending December 31, 1998, 1997, and 1996
respectively:

<TABLE>
<CAPTION>
Years Ended
----------------------------------------------------
December 31, December 31, December 31,
Portfolio 1998 1997 1996
- --------- ------------ ------------ ------------
<S> <C> <C> <C>
Equity $327,000 $302,000 $314,000
Northwest $ 18,000 $ 17,000 $ 8,000
Growth $462,000 $313,000 $135,000
</TABLE>

The brokerage expenses for the Small Company Portfolio were $32,000 for the year
ended December 31, 1998 and $11,000 for the period from April 30, 1997
(effective date) to December 31, 1997.

Because the portfolio securities purchased and sold by the Bond and Money Market
Portfolios are traded on a principal basis, no commission is charged.

DISTRIBUTIONS AND TAX INFORMATION

DISTRIBUTIONS

The Portfolios will receive income in the form of dividends and interest earned
on their investments in securities. This income, less the expenses incurred in
their operations, is the Portfolios' net investment

<PAGE>

income, substantially all of which will be declared as dividends to the
Portfolios' shareholders (the separate accounts of Participating Insurance
Companies and Qualified Plans).

Any per-share dividend or distribution paid by a Portfolio reduces the
Portfolio's net asset value per share on the date paid by the amount of the
dividend or distribution per share. Dividends and other distributions will
generally be made in the form of additional shares of the Portfolios.

INFORMATION ON DIVIDENDS FOR THE MONEY MARKET PORTFOLIO

Because the Money Market Portfolio intends to hold its portfolio securities to
maturity and expects that most of its portfolio securities will be valued at
their amortized cost, realized gains or losses should not be a significant
factor in the computation of net income. If, however, in an unusual
circumstance, the Money Market Portfolio experiences a realized gain or loss,
shareholders of that Portfolio could receive an increased, reduced, or no
dividend for a period of time. In such an event, the Board of Trustees would
consider whether to adhere to its present dividend policy or to revise it in
light of the then-prevailing circumstances.

TAX INFORMATION

Each Portfolio is treated as a separate corporation for federal income tax
purposes. Each Portfolio intends to continue to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986
("Code"). In order to qualify for treatment as a regulated investment company
under the Code, a Portfolio must distribute to its shareholders for each taxable
year at least 90% of its investment company taxable income (consisting generally
of taxable net investment income and net short-term capital gain) ("Distribution
Requirement") and must derive at least 90% of its gross income each taxable year
from dividends, interest, payments with respect to securities loans and gains
from the sale or other disposition of securities or foreign currencies, or other
income (including gains from options, futures or forward contracts) derived with
respect to its business of investing in securities or those currencies ("Income
Requirement"). Each Portfolio intends to make sufficient distributions to
shareholders to relieve it from liability for federal excise and income taxes.

If a Portfolio fails to meet the requirements for qualification as a regulated
investment company in any taxable year, it will be subject to tax on its taxable
income at corporate rates, and all distributions from earnings and profits,
including any distributions of net tax-exempt income and net long-term capital
gains, will be taxable to shareholders as ordinary income. In addition, the
Portfolio could be required to recognize unrealized gains, pay substantial taxes
and interest, and make substantial distributions before regaining its tax status
as a regulated investment company.

Each Portfolio will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on December 31 (by election) of that year, plus certain other
amounts.

The excess of net long-term capital gains over net short-term capital loss
realized by a Portfolio on portfolio transactions, when distributed by the
Portfolio, is subject to long-term capital gains treatment under the Code,
regardless of how long the Participating Insurance Company or Qualified Plan has
held the shares of the Portfolio. Distributions of net short-term capital gains
realized from portfolio transactions are treated as ordinary income for federal
income tax purposes. The tax consequences described above apply whether
distributions are taken in cash or in additional shares.

The Trust and the Portfolios intend to comply with the requirements of Section
817(h) of the Internal Revenue Code and related regulations, including certain
diversification requirements that are in addition to the diversification
requirements of Subchapter M and the Investment Company Act. Failure to comply
with the requirements of Section 817(h) could result in taxation of the
insurance company and immediate

<PAGE>

taxation of the owners of variable contracts to the full extent of appreciation
under the contracts.

Shares of a Portfolio underlying variable contracts that comply with the
requirements of Section 817(h) and related regulations will generally be treated
as owned by the insurance company and not by the owners of variable contracts.
In that case, income derived from the appreciation in shares of the Portfolio
would not be currently taxable to the owners of variable contracts. Owners of
variable contracts that do not comply with the requirements of Section 817(h)
would generally be subject to immediate taxation of the appreciation under the
contracts.

Section 817(h) requires that the investment portfolios underlying variable life
insurance and variable annuity contracts be "adequately diversified." Section
817(h) contains a safe harbor provision which provides that a variable life
insurance or variable annuity contract will meet the diversification
requirements if, as of the close of each calendar quarter, (i) the assets
underlying the contract meet the diversification standards for a regulated
investment company under Subchapter M of the Internal Revenue Code, and (ii) no
more than 55% of the total assets of the account consist of cash, cash items,
U.S. Government securities and securities of regulated investment companies.

Treasury Department regulations provide an alternative test to the safe harbor
provision to meet the diversification requirements. Under these regulations, an
investment portfolio will be adequately diversified if (i) not more than 55% of
the value of its total assets is represented by any one investment; (ii) not
more than 70% of the value of its total assets is represented by any two
investments; (iii) not more than 80% of the value of its total assets is
represented by any three investments; and (iv) not more than 90% of the value of
its total assets is represented by any four investments. These limitations are
increased for investment portfolios which are invested in whole or in part of
U.S. Treasury securities.

Stock of a regulated investment company, such as a Portfolio, held in an
insurance company's separate accounts underlying variable life insurance or
variable annuity contracts may be treated as a single investment for purposes of
the diversification rules of Section 817(h). A special rule in Section 817(h),
however, allows a shareholder of a regulated investment company to
"look-through" the company and treat a pro rata share of the company's assets as
owned directly by the shareholder. This special "look-through" rule may make it
easier to comply with the diversification requirements of Section 817(h). To
qualify for "look-through" treatment, public access to the regulated investment
company must generally be limited to (i) the purchase of a variable contract,
(ii) life insurance companies' general accounts, and (iii) qualified pension or
retirement plans. Interests in the Portfolios are sold only to insurance
company separate accounts to fund the benefits of variable contracts, and may be
sold to qualified pension and retirement plans.

Even if the diversification requirements of Section 817(h) are met, the owner of
a variable contract might be subject to current federal income taxation if the
owner has excessive control over the investments underlying the contract. The
Treasury Department has indicated that guidelines might be forthcoming that
address this issue. At this time, it is impossible to predict when they may be
issued, what the guidelines will include and the extent, if any, to which they
may be retroactive.

In order to maintain the variable contracts' status as annuities or insurance
contracts, the Trust may in the future find it necessary, and reserves the
right, to take certain actions, including, without limitation, amending a
Portfolio's investment objective (upon SEC or shareholder approval) or
substituting shares of one Portfolio for another.

FINANCIAL STATEMENTS

The following financial statements for the Growth, Equity, Northwest, Bond,
and Money Market Portfolios and the report thereon of Ernst & Young LLP,
independent auditors, are incorporated herein by reference to each
Portfolio's Annual Report for the year ended December 31, 1998.

Portfolio of Investments as of December 31, 1998

<PAGE>

Statement of Assets and Liabilities as of December 31, 1998
Statement of Operations for the Year Ended December 31, 1998
Statement of Changes in Net Assets for the Years Ended December 31, 1998 and
December 31, 1997
Notes to Financial Statements

The following financial statements for the Small Company Portfolio and the
report thereon of Ernst & Young LLP, independent auditors, are incorporated
herein by reference to the portfolio's Annual Report for the period ended
December 31, 1998.

Portfolio of Investments as of December 31, 1998
Statement of Assets and Liabilities as of December 31, 1998
Statement of Operations for the Year Ended December 31, 1998
Statement of Changes in Net Assets for the Year Ended December 31, 1998
and the Period from April 30, 1997 (effective date) to December 31, 1997
Notes to Financial Statements

A copy of each Portfolio's Annual Report accompanies this Statement of
Additional Information. Additional copies may be obtained by calling
1-800-624-5711 or by writing to the address on the first page of this Statement
of Additional Information.

<PAGE>

SAFECO RESOURCE SERIES TRUST
PART C
OTHER INFORMATION

ITEM 23. EXHIBITS

Exhibit
Number Description Page
- ------- ----------- ----

(1) Trust Instrument/Certificate of Trust +

(2) Bylaws +

(3) Instruments Defining Rights of Security ***
Holders

(4) Investment Advisory and Management +
Contract

(5) Form of Distribution Agreement +

(6) Inapplicable

(7) Custody Agreement with State Street *
Bank and Trust Company

Amendment to Custody Agreement with
State Street Bank and Trust Company **

(8a) Transfer Agent Agreement +

(8b) Fund Participation Agreement +

(9) Opinion and Consent of Counsel *

(10) Consent of Independent Auditors (Filed
Herewith)

(11) Registrant's Annual Report for Year Ended ++
<PAGE>

December 31, 1998 Including Financial
Statements

(12) Agreement Governing Contribution to +
SAFECO Resource Series Trust by
SAFECO Life Insurance Company dated
June 23, 1986.

(13) Inapplicable

(14) Financial Data Schedules (Filed
Herewith)

(15) Inapplicable

+ Filed as an exhibit to Post Effective Amendment No. 16 filed with the SEC
on April 26, 1996.

++ Registrant's Annual Report was filed with the SEC on March 3, 1999. The
Report contains the financial statement incorporated by reference in the
Registrant's Statement of Additional Information.

* Filed as an exhibit to Post-Effective Amendment No. 18 filed with the SEC
on April 22, 1997.

** Filed as an exhibit to Post-Effective Amendment No. 20 filed with the SEC
on February 26, 1998.

*** Incorporating by reference the relevant disclosure from
Exhibits (1) and (2).

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH

SAFECO Corporation, a Washington corporation, owns 100% of SAFECO Asset
Management Company (SAM), SAFECO Services Corporation (SAFECO Services) and
SAFECO Securities, Inc. (SAFECO Securities), each a Washington corporation. SAM
is the investment advisor, SAFECO Services is the transfer agent and SAFECO
Securities is the principal underwriter for each of the SAFECO Mutual Funds.
The SAFECO Mutual Funds consist of six Delaware business trusts: SAFECO Common
Stock Trust, SAFECO Taxable Bond Trust, SAFECO Tax-Exempt Bond Trust, SAFECO
Money Market Trust, SAFECO Managed Bond Trust (formerly SAFECO Institutional
Series Trust) and SAFECO Resource Series Trust. The SAFECO Common Stock Trust
consists of eight mutual funds: SAFECO Growth Fund, SAFECO Equity Fund, SAFECO
Income Fund, SAFECO Northwest Fund, SAFECO International Stock Fund, SAFECO
Balanced Fund, SAFECO Small Company Stock Fund and SAFECO U.S. Value

<PAGE>

Fund. The SAFECO Taxable Bond Trust consists of three mutual funds: SAFECO
Intermediate-Term U.S. Treasury Fund, SAFECO GNMA Fund and SAFECO High-Yield
Bond Fund. The SAFECO Tax-Exempt Bond Trust consists of five mutual funds:
SAFECO Intermediate-Term Municipal Bond Fund, SAFECO Insured Municipal Bond
Fund, SAFECO Municipal Bond Fund, SAFECO California Tax-Free Income Fund and
SAFECO Washington State Municipal Bond Fund. The SAFECO Money Market Trust
consists of two mutual funds: SAFECO Money Market Fund and SAFECO Tax-Free Money
Market Fund. The SAFECO Managed Bond Trust consists of one mutual fund: Managed
Bond Fund (formerly Fixed Income Portfolio). The SAFECO Resource Series Trust
consists of six mutual funds: Equity Portfolio, Growth Portfolio, Northwest
Portfolio, Small Company Stock Portfolio, Bond Portfolio and Money Market
Portfolio.

SAFECO Corporation, a Washington Corporation, owns 100% of the following
Washington corporations: SAFECO Insurance Company of America, General Insurance
Company of America, First National Insurance Company of America, SAFECO Life
Insurance Company, SAFECO Assigned Benefits Service Company, SAFECO
Administrative Services, Inc., SAFECO Properties Inc., SAFECO Credit Company,
Inc., SAFECO Asset Management Company, SAFECO Securities, Inc., SAFECO Services
Corporation, SAFECO Trust Company and General America Corporation. SAFECO
Corporation owns 100% of SAFECO National Insurance Company, a Missouri
corporation, SAFECO Insurance Company of Illinois, an Illinois corporation.
General Insurance Company of America owns 100% of SAFECO Insurance Company of
Pennsylvania, a Pennsylvania corporation and SAFECO U.K. Limited, a corporation
organized under the laws of the United Kingdom. SAFECO Insurance Company of
America owns 100% of SAFECO Surplus Lines Insurance Company, a Washington
corporation, and SAFECO Management Corporation, a New York corporation. SAFECO
Life Insurance Company owns 100% of SAFECO National Life Insurance Company and
Empire Life Insurance Company, both Washington corporations, First SAFECO
National Life Insurance Company of New York, a New York corporation. SAFECO
Administrative Services, Inc. owns 100% of Employee Benefit Claims of Wisconsin,
Inc. and Wisconsin Pension and Group Services, Inc., each a Wisconsin
corporation. General America Corporation owns 100% of COMAV Managers, Inc., an
Illinois corporation, F.B. Beattie & Co., Inc., a Washington corporation,
General America Corp. of Texas, a Texas corporation, Talbot Financial
Corporation, a Washington corporation, SAFECO Select Insurance Services, Inc., a
California corporation, and R.F. Bailey Holdings Limited, a U.K. corporation.
F.B. Beattie & Co., Inc. owns 100% of F.B. Beattie Insurance Services, Inc., a
California corporation. General America Corp. of Texas is Attorney-in-fact for
SAFECO Lloyds Insurance Company and American States Lloyds Insurance Company,
both Texas corporations. R.F. Bailey Holdings Limited owns 100% of R.F. Bailey
(Underwriting Agencies) Limited, a U.K. corporation. Talbot Financial
Corporation owns 100% of Talbot Agency, Inc., a New Mexico corporation. Talbot
Agency, Inc. owns 100% of SAFECO

<PAGE>

Investment Services, Inc., a Washington corporation. SAFECO Properties Inc.
owns 100% of the following, each a Washington corporation: SAFECARE Company,
Inc. and Winmar Company, Inc. SAFECARE Company, Inc. owns 100% of the
following, each a Washington corporation: RIA Development, Inc., S.C. Arkansas,
Inc., S.C. Bellevue/Lynn, S.C. Bellevue, Inc., S.C. Marysville, Inc., SAFECARE
Company, Inc. owns 50% of Lifeguard Ventures, Inc., a California corporation,
and S.C. River Oaks, Inc., a Washington corporation. Winmar Company, Inc. owns
100% of the following: Kitsap Mall, Inc., Winmar Cascade, Inc., Winmar Metro,
Inc., Winmar Northwest, Inc., Winmar Redmond, Inc. and Winmar of Kitsap, Inc.,
each a Washington corporation, and Capitol Court Corp., a Wisconsin corporation,
SCIT, Inc., a Massachusetts corporation, Winmar Oregon, Inc., an Oregon
corporation, Winmar of Texas, Inc., a Texas corporation, and Winmar of the
Desert, Inc., a California corporation. Winmar Oregon, Inc. owns 100% of the
following, each an Oregon corporation: North Coast Management, Inc., Pacific
Surfside Corp., Winmar of Jantzen Beach, Inc. and W-P Development, Inc., and
100% of Washington Square, Inc., a Washington corporation.

SAFECO Corporation, a Washington corporation, owns 100% of American States
Financial Corporation, an Indiana corporation. American States Financial
Corporation owns 100% of American States Insurance Company, an Indiana
corporation. American States Insurance Company owns 100% of the following
Indiana corporations: American Economy Insurance Company, American States
Preferred Insurance Company, American States Life Insurance Company, and City
Insurance Agency, Inc. American States Insurance Company owns 100% of Insurance
Company of Illinois, an Illinois corporation. American Economy Insurance
Company owns 100% of American States Insurance Company of Texas, a Texas
corporation

SAFECO Corporation files a consolidated financial statement with all
subsidiaries. In addition, SAFECO Life Insurance Company files a separate
financial statement with the SEC for its variable contract, separate account
products.

ITEM 25. INDEMNIFICATION

Under the Trust Instrument of the Registrant, the Registrant's trustees,
officers, employees and agents are indemnified against certain liabilities,
subject to specified conditions and limitations.

Under the indemnification provisions in the Registrant's Trust Instrument and

<PAGE>

subject to the limitations described in the paragraph below, every person who
is, or has been, a trustee, officer, employee or agent of the Registrant shall
be indemnified by the Registrant or the appropriate Series of the Registrant
to the fullest extent permitted by law against liability and against all
expenses reasonably incurred or paid by him or her in connection with any
claim, action, suit or proceeding in which he or she becomes involved as a
party or otherwise by virtue of his or her being, or having been, a trustee,
officer, employee or agent and against amounts paid or incurred by him or her
in the settlement thereof. As used in this paragraph, "claim," "action,"
"suit" or "proceeding" shall apply to all claims, actions, suits or
proceedings (civil, criminal or other, including appeals), actual or
threatened, and the words "liability" and "expenses" shall include, without
limitation, attorneys' fees, costs, judgements, amounts paid in settlement,
fines, penalties and other liabilities.

No indemnification will be provided to a trustee, officer, employee or agent:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (a) to be liable to the Registrant or its shareholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office, or (b)
not to have acted in good faith in the reasonable belief that his or her
action was in the best interest of the Registrant; or (ii) in the event of
settlement, unless there has been a determination that such trustee, officer,
employee or agent did not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
or her office; (a) by the court or other body approving the settlement, (b)
by the vote of at least a majority of a quorum of those trustees who are
neither interested persons, as that term is defined by the Investment Company
Act of 1940, of the Registrant nor are the parties to the proceeding based
upon a review of readily available facts (as opposed to a full trial type
inquiry); or (c) by written opinion of independent legal counsel based upon a
review of readily available facts (as opposed to a full trial type inquiry).

To the maximum extent permitted by applicable law, expenses incurred in
connection with the preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described above may be paid by the
Registrant or applicable Series from time to time prior to final disposition
thereof upon receipt of an undertaking by or on behalf of such trustee,
officer, employee or agent that such amount will be paid over by him or her to
the Registrant or the applicable Series if it is ultimately determined that
he or she is not entitled to indemnification under the Trust Instrument;
provided, however, that either (i) such trustee, officer, employee or agent
shall have provided appropriate security for such undertaking, (ii) the
Registrant is insured against such losses arising out of such advance payments
or (iii) either a majority of the trustees who are neither interested persons,
as that term is defined by the Investment Company Act of 1940, of the
Registrant nor parties to the proceeding, or independent legal counsel in a
written opinion, shall have determined, based on a review of readily available
facts (as opposed to a full trial type inquiry), that there is reason to
believe that such trustee, officer,

<PAGE>

employee or agent, will not be disqualified from indemnification under
Registrant's Trust Instrument.

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, officers, employees and agents of the
Registrant pursuant to such provisions of the Trust Instrument or statutes or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in said Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a trustee,
officer, employee or agent of the Registrant in the successful defense of any
such action, suit or proceeding) is asserted by such a trustee, officer,
employee or agent in connection with the shares of any series of the
Registrant, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in said Act and will be governed by the
final adjudication of such issue.

Under an agreement with its distributor ("Distribution Agreement"), Registrant
has agreed to indemnify, defend and hold the distributor, the distributor's
several directors, officers and employees, and any person who controls the
distributor within the meaning of Section 15 of the 1933 Act, free and
harmless from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending such claims,
demands or liabilities and any counsel fees incurred in connection therewith)
which the distributor, its directors, officers or employees, or any such
controlling person may incur, under the 1933 Act or under common law or
otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in the Registration Statement or arising out of or
based upon any alleged omission to state a material fact required to be stated
or necessary to make the Registration Statement not misleading.

In no event shall anything contained in the Distribution Agreement be
construed so as to protect the distributor against any liability to the
Registrant or its shareholders to which the distributor would otherwise be
subject by reason of willful misfeasance, bad faith, or gross negligence in
the performance of its duties, or by reason of its reckless disregard of its
obligations and duties under the Distribution Agreement, and further provided
that the Registrant shall not indemnify the distributor for conduct set forth
in this paragraph.

Under an agreement with its transfer agent ("Transfer Agent Agreement"),
Registrant has agreed to indemnify and hold the transfer agent harmless
against any losses, claims, damages, liabilities or expenses (including
reasonable attorneys' fees and expenses) resulting from: (1) any claim,
demand, action or suit brought by any person other than the Registrant,
including by a shareholder, which names the transfer agent and/or the
Registrant as a party, and is not based on

<PAGE>

and does not result from the transfer agent's willful misfeasance, bad faith
or negligence or reckless disregard of duties, and arises out of or in
connection with the transfer agent's performance under the Transfer Agent
Agreement; or (2) any claim, demand, action or suit (except to the extent
contributed to by the transfer agent's willful misfeasance, bad faith or
negligence or reckless disregard of duties) which results from the negligence
of the Registrant, or from the transfer agent acting upon any instruction(s)
reasonably believed by it to have been executed or communicated by any person
duly authorized by the Registrant, or as a result of the transfer agent acting
in reliance upon advice reasonably believed by the transfer agent to have been
given by counsel for the Registrant, or as a result of the transfer agent
acting in reliance upon any instrument or stock certificate reasonably
believed by it to have been genuine and signed, countersigned or executed by
the proper person.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER AND SUB-
INVESTMENT ADVISER

The investment adviser to the Registrant, SAM, serves as an adviser to: (a)
twenty-five series (portfolios) of six registered investment companies,
including six series of Registrant and (b) a number of pension funds not
affiliated with SAFECO Corporation or its affiliates. The directors and
officers of SAM serve in similar capacities with SAFECO Corporation or its
affiliates. The information set forth under "Investment Advisory and Other
Services" in the Registrant's Statement of Additional Information is
incorporated by reference.

ITEM 27. PRINCIPAL UNDERWRITER

(a) SAFECO Securities, Inc., the principal underwriter for each series of
Registrant, acts also as the principal underwriter for each class of each
series of SAFECO Common Stock Trust, SAFECO Tax-Exempt Bond Trust, SAFECO
Taxable Bond Trust, SAFECO Money Market Trust, and SAFECO Managed Bond Trust.
In addition, SAFECO Securities, Inc. is the principal underwriter for the
sale of variable annuity contracts (SAFECO Resource Variable Account B and
SAFECO Separate Account C) and variable universal life insurance policies
(SAFECO Separate Account SL) issued by SAFECO Life Insurance Company, and
variable annuity contracts (SAFECO Separate Account S) issued by First SAFECO
National Life Insurance Company of New York.

(b) The information set forth under "Investment Advisory and Other Services" in
the Statement of Additional Information is incorporated by reference.

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS

State Street Bank and Trust Company, 1776 Heritage Drive, North Quincy, MA
maintains physical possession of the accounts, books and documents of Registrant
relating to its activities as custodian of the Registrant. SAFECO

<PAGE>

Asset Management Company, Two Union Square, 25th Floor, Seattle, Washington
98101, maintains physical possession of all other accounts, books or documents
of the Registrant required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and the rules promulgated thereunder.

ITEM 29. MANAGEMENT SERVICES

Inapplicable.

ITEM 30. UNDERTAKINGS

Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to
shareholders, upon request without charge.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement under Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, duly authorized, in the
city of Seattle, and state of Washington the 29th day of April, 1999.

SAFECO RESOURCE SERIES TRUST

By: /s/ David F. Hill
-------------------------
David F. Hill
President

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
and on the dates indicated.

<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
President and Trustee April 29, 1999
/s/ DAVID F. HILL Principal Executive Officer
-------------------------------
David F. Hill++

RONALD L. SPAULDING* Vice President April 29, 1999
------------------------------ Treasurer
/s/ Ronald L. Spaulding

NEAL A. FULLER * Vice President Controller April 29, 1999
------------------------------- Assistant Secretary
/s/ Neal A. Fuller

/s/ BOH A. DICKEY Chairman and Trustee April 29, 1999
------------------------------
Boh A. Dickey ++

<PAGE>

BARBARA J. DINGFIELD* Trustee April 29, 1999
-------------------------------
/s/ Barbara J. Dingfield

RICHARD W. HUBBARD* Trustee April 29, 1999
------------------------------
/s/ Richard W. Hubbard++

RICHARD E. LUNDGREN* Trustee April 29, 1999
-------------------------------
/s/ Richard E. Lundgren

LARRY L. PINNT* Trustee April 29, 1999
------------------------------
/s/ Larry L. Pinnt

JOHN W. SCHNEIDER* Trustee April 29, 1999
------------------------------
/s/ John W. Schneider
</TABLE>

++ Trustees who are interested persons as defined by the 1940 Act

*By: /s/ DAVID F. HILL
------------------------
Attorney-in-fact

<PAGE>

SAFECO RESOURCE SERIES TRUST

FORM N-1A

POST-EFFECTIVE AMENDMENT NO. 22

Exhibit Index

<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------- ----------- ----
<S> <C> <C>
(27.1-6) Financial Data Schedules (Filed Herewith)

(99.10) Consent of Independent Auditors (Filed Herewith)

(99.11) Registrant's Annual Report for the Year +
Ended December 31, 1998, including
Financial Statements
</TABLE>

+ An Annual Report for the Registrant's series portfolios was filed with the
SEC on March 3, 1999.

<PAGE>
<ARTICLE> 6
<CIK> 0000795892
<NAME> SAFECO RESOURCE SERIES TRUST
<SERIES>
<NUMBER> 01
<NAME> SAFECO RST GROWTH PORTFOLIO
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 355,269
<INVESTMENTS-AT-VALUE> 357,679
<RECEIVABLES> 109
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 357,788
<PAYABLE-FOR-SECURITIES> 1,135
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 246
<TOTAL-LIABILITIES> 1,381
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 353,997
<SHARES-COMMON-STOCK> 16,735
<SHARES-COMMON-PRIOR> 10,297
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,410
<NET-ASSETS> 356,407
<DIVIDEND-INCOME> 873
<INTEREST-INCOME> 141
<OTHER-INCOME> 0
<EXPENSES-NET> 2,521
<NET-INVESTMENT-INCOME> (1,507)
<REALIZED-GAINS-CURRENT> 37,143
<APPREC-INCREASE-CURRENT> (39,098)
<NET-CHANGE-FROM-OPS> (3,462)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (35,629)
<DISTRIBUTIONS-OTHER> (1,507)
<NUMBER-OF-SHARES-SOLD> 10,113
<NUMBER-OF-SHARES-REDEEMED> (5,418)
<SHARES-REINVESTED> 1,743
<NET-CHANGE-IN-ASSETS> 116,007
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2,363
<INTEREST-EXPENSE> 16
<GROSS-EXPENSE> 2,521
<AVERAGE-NET-ASSETS> 316,860
<PER-SHARE-NAV-BEGIN> 23.35
<PER-SHARE-NII> (0.10)
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<PER-SHARE-NAV-END> 21.30
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000795892
<NAME> SAFECO RESOURCE SERIES TRUST
<SERIES>
<NUMBER> 02
<NAME> SAFECO RST EQUITY PORTFOLIO
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
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</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000795892
<NAME> SAFECO RESOURCE SERIES TRUST
<SERIES>
<NUMBER> 03
<NAME> SAFECO RST NORTHWEST PORTFOLIO
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
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<PER-SHARE-NAV-BEGIN> 15.20
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</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000795892
<NAME> SAFECO RESOURCE SERIES TRUST
<SERIES>
<NUMBER> 04
<NAME> SAFECO RST SMALL COMPANY STOCK PORTFOLIO
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
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<ACCUM-APPREC-OR-DEPREC> (1,317)
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<NET-INVESTMENT-INCOME> (40)
<REALIZED-GAINS-CURRENT> (1,008)
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<NUMBER-OF-SHARES-SOLD> 680
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<NET-CHANGE-IN-ASSETS> 1,530
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<GROSS-EXPENSE> 147
<AVERAGE-NET-ASSETS> 12,734
<PER-SHARE-NAV-BEGIN> 12.33
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> (2.43)
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000795892
<NAME> SAFECO RESOURCE SERIES TRUST
<SERIES>
<NUMBER> 05
<NAME> SAFECO RST BOND PORTFOLIO
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 30,510
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<NET-INVESTMENT-INCOME> 1,247
<REALIZED-GAINS-CURRENT> 836
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<NET-CHANGE-FROM-OPS> 1,876
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<PAGE>
<ARTICLE> 6
<CIK> 0000795892
<NAME> SAFECO RESOURCE SERIES TRUST
<SERIES>
<NUMBER> 06
<NAME> SAFECO RST MONEY MARKET PORTFOLIO
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 27,555
<INVESTMENTS-AT-VALUE> 27,555
<RECEIVABLES> 214
<ASSETS-OTHER> 0
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<TOTAL-LIABILITIES> 146
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,623
<SHARES-COMMON-STOCK> 27,623
<SHARES-COMMON-PRIOR> 17,757
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
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<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 27,623
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,336
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<EXPENSES-NET> 191
<NET-INVESTMENT-INCOME> 1,145
<REALIZED-GAINS-CURRENT> 0
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<NET-CHANGE-FROM-OPS> 1,145
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1,145)
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<NUMBER-OF-SHARES-SOLD> 102,117
<NUMBER-OF-SHARES-REDEEMED> (93,279)
<SHARES-REINVESTED> 1,028
<NET-CHANGE-IN-ASSETS> 9,866
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 208
<AVERAGE-NET-ASSETS> 23,497
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> (0.04)
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.81
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<PAGE>
CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Financial
Highlights", "Investment Advisory and Other Services", and "Financial
Statements" in Post-Effective Amendment No. 22 to the Registration Statement
(Form N-1A, No. 33-06547) and related Prospectuses of SAFECO Resource Series
Trust.

We also consent to the incorporation by reference therein of our report dated
February 5, 1999 with respect to the financial statements of SAFECO Resource
Series Trust as of and for the period ended December 31, 1998 and the related
financial statement schedules included in its 1998 Annual Report filed with the
Securities and Exchange Commission.

ERNST & YOUNG LLP

Seattle, Washington
April 27, 1999