<PAGE>
ANNUAL REPORT
DECEMBER 31, 1999
SAFECO RESOURCE SERIES TRUST
----------
<TABLE>
<S> <C>
Equity Portfolio .................. 2
Growth Portfolio .................. 6
Northwest Portfolio .............. 11
Small Company Stock Portfolio .... 15
Bond Portfolio ................... 19
Money Market Portfolio ........... 23
</TABLE>
[SAFECO MUTUAL FUNDS LOGO]
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO RST EQUITY PORTFOLIO
December 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The SAFECO RST Equity Portfolio ended the year below the Lipper, Inc. average
for variable annuity growth and income portfolios and the S&P 500. The
Portfolio's returns fell short because it is underweighted in technology, which
was the market's best performing sector, and overweighted in financials.
As interest rates climbed, mortgage-related stocks such as Washington Mutual,
Fannie Mae and Freddie Mac fell beyond reason. Even as analysts raised earning
estimates for Fannie Mae, investors sent the stock down.
I started to broaden our technology holdings--adding telecommunication
equipment manufacturer Lucent Technologies and beginning a position in
CenturyTel which, I think, is growing by smart acquisitions. And I look forward
to adding to technology--at reasonable prices.
I remain very cautious about valuations, which explains our weightings in
both technology and finance. In the fourth quarter, I made major additions to
Washington Mutual (WaMu) and Albertson's (another company whose stock declined
beyond its bad news). I funded the WaMu additions (and held down our financial
weighting) by eliminating U.S. Bancorp.
I tend to populate the Portfolio with long-term core positions, which I will
continue to buy and hold when they are down as long as I believe they are good
companies with fixable, short-term problems. If not, I eliminate them, as was
the case with Lockheed Martin and 3Com. Procter & Gamble, a long-term core
position, is a different story. I sold it down from our largest holding when it
was trading at 32 times year 2000 estimated earnings in a broad market selling
at 25 times. [PHOTO OF RICH MEAGLEY]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PERFORMANCE OVERVIEW
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIODS ENDED DECEMBER 31, 1999 1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
SAFECO RST Equity Portfolio 9.31% 22.30% 17.35%
S&P 500 Index 21.04% 28.54% 18.19%
Lipper, Inc. Variable Annuity Growth & Income Portfolios 14.51% 21.78% 15.13%
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT VALUE SAFECO RST EQUITY PORTFOLIO S&P 500 INDEX
<S> <C> <C>
12/89 $10,000 $10,000
1/90 $9,198 $9,329
2/90 $9,239 $9,450
3/90 $9,587 $9,700
4/90 $9,239 $9,459
5/90 $10,049 $10,379
6/90 $10,081 $10,309
7/90 $10,105 $10,276
8/90 $9,215 $9,348
9/90 $8,802 $8,894
10/90 $8,704 $8,856
11/90 $9,198 $9,428
12/90 $9,479 $9,690
1/91 $9,887 $10,111
2/91 $10,503 $10,833
3/91 $10,761 $11,095
4/91 $11,094 $11,122
5/91 $11,528 $11,600
6/91 $10,895 $11,069
7/91 $11,611 $11,584
8/91 $11,752 $11,858
9/91 $11,503 $11,660
10/91 $11,603 $11,816
11/91 $10,961 $11,341
12/91 $12,023 $12,636
1/92 $12,630 $12,401
2/92 $12,942 $12,561
3/92 $12,237 $12,317
4/92 $12,344 $12,679
5/92 $12,219 $12,741
6/92 $11,461 $12,551
7/92 $11,889 $13,064
8/92 $11,497 $12,797
9/92 $11,542 $12,947
10/92 $11,952 $12,991
11/92 $12,683 $13,433
12/92 $12,992 $13,597
1/93 $13,312 $13,711
2/93 $13,294 $13,898
3/93 $13,861 $14,191
4/93 $13,577 $13,848
5/93 $14,648 $14,217
6/93 $14,694 $14,259
7/93 $14,529 $14,201
8/93 $15,316 $14,739
9/93 $15,773 $14,623
10/93 $16,185 $14,925
11/93 $16,295 $14,783
12/93 $16,619 $14,962
1/94 $17,673 $15,470
2/94 $17,224 $15,051
3/94 $16,531 $14,396
4/94 $16,999 $14,580
5/94 $17,419 $14,819
6/94 $16,794 $14,456
7/94 $17,185 $14,931
8/94 $18,308 $15,542
9/94 $18,122 $15,162
10/94 $18,523 $15,502
11/94 $18,152 $14,938
12/94 $18,104 $15,159
1/95 $18,254 $15,552
2/95 $18,728 $16,157
3/95 $18,996 $16,633
4/95 $19,491 $17,123
5/95 $19,986 $17,806
6/95 $20,621 $18,219
7/95 $20,933 $18,823
8/95 $21,546 $18,870
9/95 $22,385 $19,666
10/95 $22,363 $19,596
11/95 $23,020 $20,455
12/95 $23,287 $20,849
1/96 $23,941 $21,558
2/96 $24,074 $21,758
3/96 $24,377 $21,968
4/96 $24,885 $22,292
5/96 $25,466 $22,866
6/96 $25,926 $22,953
7/96 $24,921 $21,939
8/96 $25,151 $22,403
9/96 $26,676 $23,662
10/96 $27,524 $24,315
11/96 $29,642 $26,151
12/96 $29,060 $25,633
1/97 $30,770 $27,234
2/97 $30,930 $27,447
3/97 $29,621 $26,322
4/97 $30,569 $27,892
5/97 $32,627 $29,589
6/97 $33,990 $30,914
7/97 $36,328 $33,373
8/97 $34,431 $31,504
9/97 $35,687 $33,229
10/97 $34,551 $32,120
11/97 $35,660 $33,606
12/97 $36,280 $34,183
1/98 $36,842 $34,560
2/98 $39,767 $37,052
3/98 $41,092 $38,948
4/98 $41,179 $39,339
5/98 $40,415 $38,664
6/98 $41,452 $40,233
7/98 $40,948 $39,806
8/98 $35,660 $34,057
9/98 $38,153 $36,239
10/98 $41,539 $39,184
11/98 $44,219 $41,558
12/98 $45,311 $43,951
1/99 $46,052 $45,789
2/99 $45,099 $44,366
3/99 $46,520 $46,141
4/99 $49,438 $47,928
5/99 $48,425 $46,796
6/99 $49,907 $49,393
7/99 $48,909 $47,851
8/99 $48,425 $47,613
9/99 $46,611 $46,308
10/99 $49,937 $49,238
11/99 $49,106 $50,242
12/99 $49,527 $53,200
</TABLE>
Performance represents the performance of the Equity
Portfolio, but does not include deductions for administration
charges, contingent deferred sales charges, or mortality
and expense risk premiums.
The performance of the Portfolio assumes the
reinvestment of all dividends and capital gains. The Standard
& Poor's 500 Index is an unmanaged index of 500 stocks
weighted by market capitalization with dividends reinvested.
Management fees and other portfolio expenses have
been applied to the calculation of Portfolio performance,
but not to the index. If portfolio expenses had been applied
to the index, the index values would have been lower.
Investment returns are historical and not predictive of future
performance. Portfolio share prices and investment returns
will fluctuate.
- 2 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
I believe the Portfolio is made up of high-quality companies with predictable
earnings growth and positioned to do well in a moderating economy.
Richard Meagley
- -------------------------------------------
Rich Meagley joined SAFECO in 1983. After advancing from analyst to Northwest
Fund Manager, he left the company. He re-joined in January 1995 as Equity
Portfolio Manager. He holds an M.B.A. from the University of Washington, and is
a Chartered Financial Analyst.
HIGHLIGHTS
- -------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
TEN LARGEST HOLDINGS NET ASSETS
- ------------------------------------------------------------------------
<S> <C>
Microsoft Corp. .................................................. 4.4%
(Computers--Software & Services)
General Electric Co. .............................................. 4.1
(Electrical Equipment)
Federal National Mortgage Association .............................. 3.3
(Financial--Diversified)
Johnson & Johnson .................................................. 3.3
(Health Care--Diversified)
Exxon Mobil Corp. ................................................. 3.2
(Oil--International Integrated)
Washington Mutual, Inc. ........................................... 3.1
(Savings & Loans)
Gannett Co., Inc. ................................................. 3.0
(Publishing--Newspapers)
Albertson's, Inc. ................................................. 3.0
(Retail--Food Chains)
Intel Corp. ....................................................... 2.9
(Electronics--Semiconductors)
Procter & Gamble Co. .............................................. 2.9
(Household Products--Nondurables)
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MARKET CAPITALIZATION
AS A PERCENTAGE OF NET ASSETS
<S> <C>
Large-Cap: (over $4 billion) 97%
Mid-Cap: ($1 billion-$4 billion) 0%
Small-Cap: (under $1 billion) 0%
Cash & Other: 3%
</TABLE>
- 3 -
<PAGE>
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
EQUITY PORTFOLIO
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 97.1%
BANKS (MAJOR REGIONAL) - 4.2%
198,000 Bank of America Corp. $9,937
315,000 Citigroup, Inc. 17,502
BANKS (MONEY CENTER) - 2.0%
170,000 Chase Manhattan Corp. 13,207
BEVERAGES (ALCOHOLIC) - 1.6%
143,000 Anheuser-Busch Co., Inc. 10,135
BEVERAGES (NON-ALCOHOLIC) - 2.3%
427,000 PepsiCo, Inc. 15,052
CHEMICALS - 3.6%
140,000 Du Pont (E.I.) de Nemours &
Co. 9,222
280,000 Praxair, Inc. 14,088
COMPUTERS (HARDWARE) - 3.8%
112,000 Hewlett-Packard Co. 12,761
112,000 International Business
Machines Corp. 12,096
COMPUTERS (SOFTWARE & SERVICES) - 4.4%
242,000 *Microsoft Corp. 28,254
ELECTRICAL EQUIPMENT - 5.9%
205,400 Emerson Electric Co. 11,785
170,000 General Electric Co. 26,307
ELECTRONICS (SEMICONDUCTORS) - 2.9%
228,000 Intel Corp. 18,767
ENTERTAINMENT - 3.3%
285,000 The Walt Disney Co. 8,336
179,000 Time Warner, Inc. 12,966
FINANCIAL (DIVERSIFIED) - 4.9%
226,000 Federal Home Loan Mortgage
Corp. 10,636
342,000 Federal National Mortgage
Association 21,354
FOODS - 2.1%
255,000 Bestfoods 13,403
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
HEALTH CARE (DIVERSIFIED) - 9.0%
500,000 Abbott Laboratories $18,156
175,000 American Home Products Corp. 6,902
185,000 Bristol-Myers Squibb Co. 11,875
229,000 Johnson & Johnson 21,326
HEALTH CARE (MAJOR PHARMACEUTICALS) - 2.4%
227,000 Merck & Co., Inc. 15,223
HOUSEHOLD PRODUCTS (NON-DURABLES) - 5.4%
255,000 Kimberly-Clark Corp. 16,639
170,000 Procter & Gamble Co. 18,626
INSURANCE (MULTI-LINE) - 3.5%
140,000 American International
Group, Inc. 15,137
162,000 Hartford Financial Services
Group, Inc. 7,675
MANUFACTURING (DIVERSIFIED) - 3.5%
208,000 Dover Corp. 9,438
200,000 Honeywell
International, Inc. 11,538
28,600 Illinois Tool Works, Inc. 1,932
OFFICE EQUIPMENT & SUPPLIES - 1.1%
315,000 Xerox Corp. 7,147
OIL (INTERNATIONAL INTEGRATED) - 5.1%
255,862 Exxon Mobil Corp. 20,613
205,000 Royal Dutch Petroleum Co.
(ADR) 12,390
PUBLISHING (NEWSPAPERS) - 3.0%
240,000 Gannett Co., Inc. 19,575
RETAIL (DEPARTMENT STORES) - 1.7%
335,000 May Department Stores Co. 10,804
RETAIL (DRUG STORES) - 2.0%
330,000 CVS Corp. 13,179
RETAIL (FOOD CHAINS) - 3.0%
600,000 Albertson's, Inc. 19,350
RETAIL (GENERAL MERCHANDISE) - 1.4%
130,000 Wal-Mart Stores, Inc. 8,986
SAVINGS & LOANS - 3.1%
780,000 Washington Mutual, Inc. 20,280
SERVICES (DATA PROCESSING) - 1.4%
173,000 Automatic Data
Processing, Inc. 9,320
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 4 -
<PAGE>
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
EQUITY PORTFOLIO
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
TELECOMMUNICATIONS (EQUIPMENT) - 1.7%
150,000 Lucent Technologies, Inc. $11,222
TELECOMMUNICATIONS (LONG DISTANCE) - 2.4%
305,000 AT&T Corp. 15,479
TELEPHONE - 6.4%
257,000 Bell Atlantic Corp. 15,822
235,000 CenturyTel, Inc. 11,133
268,500 *MCI WorldCom, Inc. 14,247
-----------
TOTAL COMMON STOCKS 629,822
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
CASH EQUIVALENTS - 2.7%
INVESTMENT COMPANIES
17,369,385 J.P. Morgan Institutional
Prime Money Market $17,369
-----------
TOTAL CASH EQUIVALENTS 17,369
-----------
TOTAL INVESTMENTS - 99.8% 647,191
Other Assets, less Liabilities (113)
-----------
NET ASSETS $ 647,078
-----------
-----------
</TABLE>
* Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
- 5 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO RST GROWTH PORTFOLIO
December 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
While the SAFECO RST Growth Portfolio's 1999 performance was disappointing,
it ended on an encouraging note. In the fourth quarter, the Portfolio
outperformed the S&P 500, returning 18.92% versus 14.88%.
Keeping true to my style--trying to buy growth at a reasonable price--caused
us to underperform as hyper-growth and technology stocks have driven the market.
The Portfolio has never owned much tech (because valuations appear excessive,
competition is intense, and I'm not comfortable with it). Until recently, we've
been able to hold our own, or outperform, without it.
The second reason for our bad (and good) performance is that I take big
positions. In 1999, a number of them disappointed. Family Golf overextended
itself by trying to grow too fast and Prison Realty Trust practiced questionable
disclosure. I've eliminated them both. Conseco--despite a number of positive
moves to enhance shareholder value, including more conservative accounting and
significant insider stock purchasing--has continued to decline. I still like it
and will wait with a reduced position, 4.5% of net assets.
Nu Skin disappointed due to problems in their largest market, Japan. I
neither bought nor sold it, as the stock could work out in a few quarters.
Despite having good operating results and good outlooks, Rent-Way and Rent-A-
Center declined on a sell recommendation that proved unfounded. I used the
weakness to buy more. Both companies operate cash businesses in a growing
market. I cut back AMFM and Emmis Communications at high valuations and invested
the proceeds in lower valued names.
[PHOTO OF THOMAS M. MAGUIRE]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PERFORMANCE OVERVIEW
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIODS ENDED DECEMBER 31, 1999 1 YEAR 5 YEAR SINCE INCEPTION
<S> <C> <C> <C>
SAFECO RST Growth Portfolio 5.63% 23.69% 23.68%
S&P 500 Index 21.04% 28.54% 21.78%
Lipper, Inc. Variable Annuity Growth Portfolios 31.48% 26.45% N/A
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT VALUE SAFECO RST GROWTH PORTFOLIO S&P 500 INDEX
<S> <C> <C>
1/93 $10,000 $10,000
1/93 $10,100 $10,200
2/93 $9,570 $10,339
3/93 $10,160 $10,557
4/93 $9,780 $10,302
5/93 $10,640 $10,577
6/93 $11,000 $10,608
7/93 $11,410 $10,565
8/93 $12,320 $10,965
9/93 $12,950 $10,879
10/93 $13,520 $11,103
11/93 $12,920 $10,998
12/93 $13,608 $11,131
1/94 $14,526 $11,509
2/94 $14,000 $11,197
3/94 $13,485 $10,710
4/94 $13,888 $10,847
5/94 $14,235 $11,024
6/94 $13,798 $10,755
7/94 $14,358 $11,107
8/94 $14,861 $11,562
9/94 $14,772 $11,280
10/94 $15,320 $11,532
11/94 $15,085 $11,113
12/94 $15,230 $11,277
1/95 $15,300 $11,570
2/95 $15,851 $12,020
3/95 $15,828 $12,374
4/95 $16,133 $12,738
5/95 $16,837 $13,247
6/95 $17,905 $13,554
7/95 $18,691 $14,003
8/95 $18,773 $14,038
9/95 $19,841 $14,630
10/95 $20,017 $14,578
11/95 $20,873 $15,217
12/95 $21,474 $15,511
1/96 $21,690 $16,038
2/96 $22,272 $16,187
3/96 $22,880 $16,343
4/96 $24,300 $16,584
5/96 $25,774 $17,011
6/96 $24,855 $17,075
7/96 $22,664 $16,321
8/96 $24,625 $16,666
9/96 $26,085 $17,603
10/96 $26,585 $18,089
11/96 $27,167 $19,455
12/96 $28,358 $19,069
1/97 $30,066 $20,260
2/97 $28,815 $20,419
3/97 $27,755 $19,582
4/97 $26,518 $20,750
5/97 $30,699 $22,012
6/97 $33,085 $22,998
7/97 $35,337 $24,827
8/97 $36,795 $23,437
9/97 $39,813 $24,720
10/97 $38,724 $23,896
11/97 $40,579 $25,001
12/97 $40,993 $25,430
1/98 $41,204 $25,711
2/98 $45,470 $27,564
3/98 $48,875 $28,975
4/98 $50,649 $29,266
5/98 $48,068 $28,764
6/98 $48,208 $29,931
7/98 $45,399 $29,613
8/98 $34,708 $25,336
9/98 $35,779 $26,959
10/98 $38,307 $29,150
11/98 $39,904 $30,916
12/98 $41,742 $32,697
1/99 $42,820 $34,064
2/99 $37,647 $33,006
3/99 $37,333 $34,326
4/99 $38,117 $35,655
5/99 $38,215 $34,814
6/99 $39,665 $36,746
7/99 $38,822 $35,598
8/99 $37,313 $35,421
9/99 $37,078 $34,450
10/99 $38,137 $36,630
11/99 $39,508 $37,377
12/99 $44,094 $39,578
</TABLE>
* The Portfolio's inception was January 7, 1993.
Performance represents the performance of the Growth
Portfolio but does not include administration charges,
contingent deferred sales charges, or mortality and expense
risk premiums.
The performance of the Portfolio assumes the reinvestment
of all dividends and capital gains. The Standard & Poor's
500 Index is an unmanaged index of 500 stocks weighted by
market capitalization with dividends reinvested . Investment
management fees have been applied to the calculation of
Portfolio performance, but not to the index. If portfolio investment
management fees had been applied to the index, the index
values would have been lower.
Investment returns are historical and not predictive of future
performance. Portfolio share prices and investment returns
will fluctuate.
- 6 -
<PAGE>
My hope for 2000 is that our performance will continue to trend above the
market as investors come to appreciate the combination of growing earnings and
good value. In the meantime, thank you for your patience. The Portfolio's
long-term record shows that hanging in there may be the best remedy for the
suffering.
Thomas M. Maguire
- -------------------------------------------
After completing his M.B.A. at the University of Washington, Thomas M. Maguire
joined the company as an equity analyst in 1981 and today is a Vice President.
From 1984 to 1989, he co-managed the SAFECO Equity Fund.
HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
TEN LARGEST HOLDINGS NET ASSETS
- ------------------------------------------------------------------------
<S> <C>
MICROS Systems, Inc. ............................................ 6.4%
(Computer--Hardware)
Rent-a-Center, Inc. .............................................. 4.9
(Services--Commercial & Consumer)
United Stationers, Inc. .......................................... 4.9
(Office Equipment & Supplies)
NCO Group, Inc. .................................................. 4.8
(Services--Commercial & Consumer)
Intranet Solutions ................................................ 4.5
(Computer--Peripherals)
Conseco, Inc. .................................................... 4.5
(Insurance--Life-Health)
PolyMedica Corp. ................................................. 4.3
(Health Care--Medical Products & Supplies)
AMFM, Inc. ....................................................... 4.0
(Broadcasting--Television, Radio & Cable)
Emisphere Technology, Inc. ....................................... 3.7
(Health Care--Diversified)
Rent-Way, Inc. ................................................... 3.1
(Services--Commercial & Consumer)
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MARKET CAPITALIZATION
AS A PERCENTAGE OF NET ASSETS
<S> <C>
Large-Cap: (over $4 billion) 12%
Mid-Cap: ($1 billion-$4 billion) 17%
Small-Cap: (under $1 billion) 69%
Cash & Other: 2%
</TABLE>
- 7 -
<PAGE>
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 98.6%
AIR FREIGHT - 0.0%
74,000 *Dynamex, Inc. (Illiquid##) $ 111
AUTO PARTS & EQUIPMENT - 0.2%
608,500 +Precision Auto Care, Inc. 685
BANKS (MAJOR REGIONAL) - 0.2%
32,595 Provident Bankshares Corp. 564
BROADCASTING (TV, RADIO & CABLE) - 5.4%
177,554 *AMFM, Inc. 13,894
21,000 *Emmis Communications Corp.
(Class A) 2,617
100,200 *Salem Communications Corp.
(Class A) 2,267
CHEMICALS (SPECIALTY) - 0.2%
72,200 *TETRA Technologies, Inc. 523
COMMUNICATION EQUIPMENT - 1.4%
107,500 *Research In Motion, Ltd. 4,965
COMPUTERS (HARDWARE) - 7.1%
299,400 *MICROS Systems, Inc. 22,156
65,000 *Optimal Robotics Corp. 2,421
COMPUTERS (PERIPHERALS) - 5.1%
425,000 *IntraNet Solutions, Inc. 15,725
124,500 *Quantum Corp. - DLT
& Storage Systems 1,883
COMPUTERS (SOFTWARE & SERVICES) - 4.6%
34,300 *Aspen Technology, Inc. 907
83,527 Autodesk, Inc. 2,819
207,000 *Cadence Design
Systems, Inc. 4,968
200,200 *Ciber, Inc. 5,505
340,000 *Phoenix International
Ltd., Inc. 1,317
50,000 *ShowCase Corp. 288
CONSUMER (JEWELRY, NOVELTIES & GIFTS) - 0.1%
31,300 *Action Performance
Cos., Inc. 360
CONSUMER FINANCE - 1.4%
201,775 *Creditrust Corp. 1,551
171,000 Doral Financial Corp. 2,105
287,800 *Towne Services, Inc. 1,151
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
DISTRIBUTORS (FOOD & HEALTH) - 2.3%
737,200 *Nu Skin Enterprises, Inc.
(Class A) $ 6,681
367,160 *Weider Nutrition
International, Inc. 1,354
ENTERTAINMENT - 1.7%
160,000 *SFX Entertainment, Inc.
(Class A) 5,790
FINANCIAL (DIVERSIFIED) - 1.3%
122,800 *BNC Mortgage, Inc. 798
100,000 Finova Group, Inc. 3,550
96,900 *United Panam Financial
Corp. 188
HEALTH CARE (DIVERSIFIED) - 4.8%
198,000 *Anesta Corp. 3,403
430,400 *Emisphere
Technologies, Inc. 12,939
21,000 *Synaptic Pharmaceutical
Corp. 142
HEALTH CARE (DRUGS - GENERIC & OTHER) - 2.1%
362,000 *Dura Pharmaceuticals, Inc. 5,045
464,000 +Nastech Pharmaceutical
Co., Inc. 1,566
37,300 *PathoGenesis Corp. 800
HEALTH CARE (HOSPITAL MANAGEMENT) - 0.2%
103,917 *AmSurg Corp. (Class B) 675
HEALTH CARE (LONG-TERM CARE) - 0.9%
239,900 *Res-Care, Inc. 3,059
HEALTH CARE (MAJOR PHARMACEUTICALS) - 4.4%
63,300 Alpharma, Inc. 1,946
148,600 Mylan Laboratories, Inc. 3,743
868,500 *Serologicals Corp. 5,211
58,281 Teva Pharmaceutical
Industries,
Ltd. (ADR) 4,178
HEALTH CARE (MANAGED CARE) - 0.1%
65,000 *Matria Healthcare, Inc. 268
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 8.0%
140,400 Datascope Corp. 5,616
247,100 *Lifeline Systems, Inc. 3,706
649,400 +PolyMedica
Industries, Inc. 15,017
477,900 *Quidel Corp. 3,286
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 8 -
<PAGE>
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
HEALTH CARE (SPECIALIZED SERVICES) - 1.1%
214,000 *American Healthcorp, Inc. $ 976
318,850 *Prime Medical
Services, Inc. 2,910
HOUSEWARES - 0.9%
117,800 First Years, Inc. 979
200,600 *Home Products
International,
Inc. 2,081
INSURANCE (LIFE & HEALTH) - 4.5%
870,637 Conseco, Inc. 15,563
LEISURE TIME (PRODUCTS) - 0.1%
161,300 *American Coin
Merchandising,
Inc. 444
LODGING (HOTELS) - 1.3%
172,200 *ResortQuest
International, Inc. 721
734,900 *Suburban Lodges of America,
Inc. 3,812
MACHINERY (DIVERSIFIED) - 0.2%
143,150 Chart Industries, Inc. 573
MANUFACTURING (DIVERSIFIED) - 0.7%
86,900 *Nortek, Inc. 2,433
OFFICE EQUIPMENT & SUPPLIES - 6.1%
331,900 +Open Plan Systems, Inc. 664
570,850 +TRM Copy Centers Corp. 3,496
595,100 *United Stationers, Inc. 16,998
PERSONAL CARE - 0.4%
211,700 *French Fragrances, Inc. 1,363
RESTAURANTS - 0.2%
96,400 *Schlotzsky's, Inc. 639
RETAIL (DEPARTMENT STORES) - 0.7%
51,700 *Rainbow Rentals, Inc, 372
27,000 *Value City Department
Stores, Inc. 408
43,100 *Whitehall Jewellers, Inc. 1,589
RETAIL (DRUG STORES) - 1.1%
93,000 CVS Corp. 3,714
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
RETAIL (FOOD CHAINS) - 0.6%
266,800 *NPC International, Inc. $ 2,101
RETAIL (HOME SHOPPING) - 1.9%
412,200 +Damark International, Inc. 6,492
RETAIL (SPECIALTY) - 1.4%
172,600 *Blue Rhino Corp. 1,683
165,100 *Funco, Inc. 1,847
115,500 *Travis Boats &
Motors, Inc. 1,386
RETAIL (SPECIALTY - APPAREL) - 1.6%
435,200 +Concepts Direct, Inc. 4,733
219,071 *Harold's Stores, Inc. 822
SERVICES (COMMERCIAL & CONSUMER) - 17.8%
64,600 *Bluegreen Corp. 323
177,600 Central Parking Corp. 3,397
278,500 *FirstService Corp. 3,812
148,400 *Iron Mountain, Inc. 5,834
39,000 *Modis Professional
Services,
Inc. 556
546,392 *NCO Group, Inc. 16,460
52,200 *Pierce Leahy Corp. 2,258
859,850 *Rent-A-Center, Inc. 17,036
579,000 *Rent-Way, Inc. 10,820
66,700 *Right Management
Consultants, Inc. 767
103,400 SunSource, Inc. 439
SERVICES (COMPUTER SYSTEMS) - 0.8%
165,000 *Computer Horizons Corp. 2,671
SERVICES (EMPLOYMENT) - 2.1%
340,600 *Hall, Kinion &
Associates, Inc. 7,323
SPECIALTY PRINTING - 2.0%
509,800 *Mail-Well, Inc. 6,882
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.7%
243,900 *CellStar Corp. 2,409
TELEPHONE - 0.9%
234,700 *Innotrac Corp. 3,227
-----------
TOTAL COMMON STOCKS 340,756
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 9 -
<PAGE>
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
CASH EQUIVALENTS - 2.0%
INVESTMENT COMPANIES
7,057,311 J.P. Morgan Institutional
Prime Money Market $ 7,057
-----------
TOTAL CASH EQUIVALENTS 7,057
-----------
TOTAL INVESTMENTS - 100.6% 347,813
Other Assets, less Liabilities (2,088)
-----------
NET ASSETS $ 345,725
-----------
-----------
</TABLE>
* Non-income producing security.
+ Affiliated issuer as defined by the Investment Company Act of 1940 (the Fund
controls 5% or more of the outstanding voting shares of the company).
## Security is valued at fair value as determined by, and under the supervision
of, the Board of Trustees.
SEE NOTES TO FINANCIAL STATEMENTS
- 10 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO RST NORTHWEST PORTFOLIO
December 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For the year ending December 31, 1999, the SAFECO RST Northwest Portfolio
handily outperformed the Lipper Inc. average for variable annuity growth
portfolios and the S&P 500. The Portfolio's outperformance is due to its heavy
concentration in technology, initial public offerings (IPOs), and its investing
universe.
Technology has surpassed aerospace as the driver of Washington's economy and
is the clear driver of the region's economy, and I've positioned the Portfolio
to take advantage of that. At December 31, 54% of net assets were in
telecommunications, medical technology and computer-related companies. Gaining
over 200% were F5 Networks, Western Wireless, NEXTLINK, VoiceStream and
SonoSite. They are respectively an Internet software company, three telecoms and
a medical technology company.
We've been very successful taking small positions in numerous start-ups. At
December 31, about 19% of net assets were invested in 11 1999 IPO companies,
including F5 Networks, WebTrends, Internap Network Services, WatchGuard and
Primus Knowledge Solutions. In general, I give preference to companies that
enable, rather than use, the Internet.
I've been buying Visio (diagramming software) since its acquisition was
announced, as Visio's value will benefit upon conversion to Microsoft stock. TJ
International (manufactured wood products) climbed on news of its takeover by
Weyerhaeuser.
To balance our tech concentration, I'm holding substantial positions in
Kroger (Fred Meyer and QFC), Costco, Albertson's, Starbucks and Washington
Mutual. I like their defensive qualities and their prices. Even though I am
managing in a growth style, I remain sensitive to value and risk.
[PHOTO OF BILL WHITLOW]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PERFORMANCE OVERVIEW
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIODS ENDED DECEMBER 31, 1999 1 YEAR 5 YEAR SINCE INCEPTION
<S> <C> <C> <C>
SAFECO RST Norwest Portfolio 54.62% 20.28% 14.77%
S&P 500 Index 21.04% 28.54% 21.78%
WM Group NW 50 Index 27.80% 28.51% N/A
Lipper, Inc. Variable Annuity Growth Portfolios 31.48% 26.45% N/A
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT VALUE
<S> <C> <C> <C>
SAFECO RST NORTHWEST PORTFOLIO S&P 500 INDEX NW 50
1/93 $10,000 $10,000 $10,000
1/93 $10,080 $10,200 $10,142
2/93 $9,460 $10,339 $9,812
3/93 $9,710 $10,557 $10,204
4/93 $9,400 $10,302 $9,962
5/93 $9,640 $10,577 $10,195
6/93 $9,550 $10,608 $9,962
7/93 $9,500 $10,565 $9,592
8/93 $9,700 $10,965 $9,972
9/93 $9,800 $10,879 $9,734
10/93 $9,920 $11,103 $10,069
11/93 $9,980 $10,998 $10,272
12/93 $10,025 $11,131 $10,395
1/94 $10,227 $11,509 $10,697
2/94 $10,580 $11,197 $10,845
3/94 $10,297 $10,710 $10,449
4/94 $10,247 $10,847 $10,405
5/94 $10,136 $11,024 $10,548
6/94 $9,995 $10,755 $10,214
7/94 $10,166 $11,107 $10,278
8/94 $10,610 $11,562 $10,857
9/94 $10,620 $11,280 $10,427
10/94 $10,731 $11,532 $10,350
11/94 $10,479 $11,113 $10,150
12/94 $10,391 $11,277 $10,192
1/95 $10,178 $11,570 $10,148
2/95 $10,340 $12,020 $10,509
3/95 $10,746 $12,374 $10,842
4/95 $10,767 $12,738 $11,155
5/95 $10,898 $13,247 $11,143
6/95 $11,446 $13,554 $11,807
7/95 $12,136 $14,003 $12,241
8/95 $12,390 $14,038 $12,461
9/95 $12,167 $14,630 $12,903
10/95 $11,873 $14,578 $12,589
11/95 $11,609 $15,217 $12,760
12/95 $11,162 $15,511 $12,899
1/96 $11,131 $16,038 $12,816
2/96 $11,440 $16,187 $13,097
3/96 $12,068 $16,343 $13,517
4/96 $12,366 $16,584 $14,314
5/96 $12,551 $17,011 $14,531
6/96 $12,294 $17,075 $14,453
7/96 $11,800 $16,321 $13,728
8/96 $12,119 $16,666 $14,393
9/96 $12,304 $17,603 $14,750
10/96 $11,996 $18,089 $14,632
11/96 $12,489 $19,455 $15,675
12/96 $12,551 $19,069 $16,026
1/97 $13,421 $20,260 $16,725
2/97 $13,400 $20,419 $17,020
3/97 $12,851 $19,582 $16,533
4/97 $13,235 $20,750 $17,255
5/97 $14,073 $22,012 $18,652
6/97 $14,871 $22,998 $19,516
7/97 $16,186 $24,827 $21,279
8/97 $15,761 $23,437 $20,572
9/97 $16,549 $24,720 $21,993
10/97 $15,772 $23,896 $20,521
11/97 $16,569 $25,001 $21,748
12/97 $16,445 $25,430 $21,238
1/98 $16,250 $25,711 $21,138
2/98 $17,906 $27,564 $23,280
3/98 $18,035 $28,975 $24,370
4/98 $18,511 $29,266 $24,554
5/98 $17,137 $28,764 $23,072
6/98 $17,505 $29,931 $24,498
7/98 $16,467 $29,613 $22,979
8/98 $13,188 $25,336 $19,295
9/98 $13,946 $26,959 $20,185
10/98 $14,833 $29,150 $22,420
11/98 $16,131 $30,916 $24,964
12/98 $16,921 $32,697 $27,946
1/99 $17,970 $34,064 $29,343
2/99 $17,278 $33,006 $28,906
3/99 $17,505 $34,326 $30,930
4/99 $17,895 $35,655 $32,158
5/99 $18,695 $34,814 $32,199
6/99 $20,134 $36,746 $33,689
7/99 $19,691 $35,598 $31,106
8/99 $19,723 $35,421 $31,009
9/99 $19,474 $34,450 $30,378
10/99 $21,497 $36,630 $31,958
11/99 $23,272 $37,377 $32,478
12/99 $26,164 $39,578 $35,716
</TABLE>
Performance represents the performance of the Northwest
Portfolio , but does not include deductions for administration
charges, contingent deferred sales charges, or mortality and
expense risk premiums.
The performance of the Portfolio assumes the reinvestment of all
dividends and capital gains. The Standard & Poor's 500 Index is an
unmanaged index of 500 stocks weighted by market capitalization
with dividends reinvested. The WM Group's Northwest 50
Index is an index of 50 Northwest companies weighted by their regional
impact. Investment management fees have been applied to the
calculation of Portfolio performance, but not to the indexes. If
portfolio investment management fees had been applied to the indexes,
the index values would have been lower.
Investment returns are historical and not predictive of future
performance. Portfolio share prices and investment returns will
fluctuate.
* The Portfolio's inception was January 7, 1993.
- 11 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
I believe the Northwest economy will outpace the nation's beyond 2000. Some
of America's fastest-growing companies are headquartered here, and I have tried
to position the SAFECO Northwest Portfolio to take advantage of them.
Bill Whitlow
- -------------------------------------------
William B. Whitlow began his career at SAFECO in 1976 and left in 1980. Before
re-joining SAFECO in April 1997 as Northwest Fund Manager, he was Director of
Research at Pacific Crest Securities. He holds a B.A. in chemistry from the U.
of Colorado and an M.B.A. from the U. of Calif. at Berkeley. He is a CFA and a
member of the Washington State Governor's Council of Economic Advisors.
HIGHLIGHTS
- -------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
TEN LARGEST HOLDINGS NET ASSETS
- ------------------------------------------------------------------------
<S> <C>
Microsoft Corp. .................................................. 5.4%
(Computer--Software & Services)
Visio Corp. ....................................................... 4.8
(Computer--Software & Services)
VoiceStream Wireless Corp. ........................................ 4.6
(Telecommunications--Cellular/Wireless)
TJ International, Inc. ............................................ 3.5
(Building Materials)
NEXTLINK Communications, Inc
(Class A) ........................................................ 3.5
(Telephone)
Hewlett-Packard Co. ............................................... 3.4
(Computer--Hardware)
Expeditors International of
Washington, Inc. ................................................ 3.3
(Air Freight)
Internap Network Services Corp. ................................... 3.2
(Computer--Software & Services)
Costco Companies, Inc. ............................................ 3.1
(Retail--General Merchandise)
Intel Corp. ....................................................... 3.0
(Electronics--Semiconductors)
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MARKET CAPITALIZATION
AS A PERCENTAGE OF NET ASSETS
<S> <C>
Large-Cap: (over $4 billion) 40%
Mid-Cap: ($1 billion-$4 billion) 17%
Small-Cap: (under $1 billion) 41%
Cash & Other: 2%
</TABLE>
- 12 -
<PAGE>
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
NORTHWEST PORTFOLIO
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 98.3%
AIR FREIGHT - 3.3%
36,000 Expeditors International of
Washington, Inc. $ 1,577
AIRLINES - 1.4%
30,000 *Northwest Airlines Corp. 667
BANKS (MAJOR REGIONAL) - 2.5%
33,092 U.S. Bancorp 788
30,250 West Coast Bancorp, Inc. 408
BANKS (REGIONAL) - 1.2%
32,500 Heritage Financial Corp. 280
33,000 Washington Banking Co. 272
BIOTECHNOLOGY - 1.6%
46,500 *Corixa Corp. 791
BUILDING MATERIALS - 3.5%
40,000 TJ International, Inc. 1,680
CHEMICALS (DIVERSIFIED) - 2.2%
62,000 Penford Corp. 1,069
COMMUNICATION EQUIPMENT - 1.2%
61,300 *GST Telecommunications,
Inc. 556
COMPUTERS (HARDWARE) - 5.1%
23,900 *Apex, Inc. 771
14,500 Hewlett-Packard Co. 1,652
COMPUTERS (PERIPHERALS) - 5.4%
26,000 *ImageX.com, Inc. 1,089
16,500 *Primus Knowledge
Solutions, Inc. 748
24,100 *WatchGuard
Technologies, Inc. 729
COMPUTERS (SOFTWARE & SERVICES) - 18.9%
4,600 *Digimarc Corp. 230
5,000 *F5 Networks, Inc. 570
8,800 *Internap Network
Services Corp. 1,522
22,200 *Microsoft Corp. 2,592
28,000 *ONYX Software Corp. 1,036
48,000 *Visio Corp. 2,280
10,000 *WebTrends Corp. 810
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
ELECTRONICS (SEMICONDUCTORS) - 3.0%
17,500 Intel Corp. $ 1,440
ENGINEERING & CONSTRUCTION - 1.0%
61,000 *Morrison Knudsen Corp. 477
HARDWARE & TOOLS - 1.0%
64,000 *Jore Corporation 500
HEALTH CARE (DIVERSIFIED) - 1.5%
18,000 American Home Products Corp. 710
HEALTH CARE (DRUGS - GENERIC & OTHER) - 1.2%
26,000 *PathoGenesis Corp. 557
HEALTH CARE (LONG-TERM CARE) - 1.3%
104,000 *Assisted Living
Concepts, Inc. 215
62,000 *Emeritus Corp. 403
HEALTH CARE (MAJOR PHARMACEUTICALS) - 4.7%
50,000 Mylan Laboratories, Inc. 1,259
65,000 *Penwest Pharmaceuticals Co. 991
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES - 3.8%
99,000 *Protocol Systems, Inc. 891
29,000 *SonoSite, Inc. 917
INSURANCE (LIFE & HEALTH) - 2.1%
40,000 StanCorp Financial
Group, Inc. 1,008
IRON & STEEL - 1.9%
48,000 Schnitzer Steel
Industries, Inc. 912
LEISURE TIME (PRODUCTS) - 1.0%
46,000 *Ambassadors
International, Inc. 503
LODGING (HOTELS) - 1.2%
69,000 *Cavanaughs Hospitality
Corp. 569
RESTAURANTS - 2.8%
56,000 *Starbucks Corp. 1,358
RETAIL (FOOD CHAINS) - 5.6%
43,500 Albertson's, Inc. 1,403
67,000 *Kroger Co. 1,265
RETAIL (GENERAL MERCHANDISE) - 3.1%
16,500 *Costco Companies, Inc. 1,506
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 13 -
<PAGE>
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
NORTHWEST PORTFOLIO
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
SAVINGS & LOANS - 2.8%
27,000 Riverview Bancorp, Inc. $ 262
41,500 Washington Mutual, Inc. 1,079
SERVICES (COMMERCIAL & CONSUMER) - 1.7%
35,500 *N2H2, Inc. 834
SERVICES (DATA PROCESSING) - 2.5%
100,000 *ARIS Corp. 1,175
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 6.2%
15,500 *VoiceStream Wireless Corp. 2,206
11,500 *Western Wireless Corp.
(Class A) 768
TELEPHONE - 3.5%
20,000 *NEXTLINK
Communications, Inc.
(Class A) 1,661
-----------
TOTAL COMMON STOCKS 46,986
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
CASH EQUIVALENTS - 2.9%
INVESTMENT COMPANIES
1,403,127 J.P. Morgan Institutional
Prime Money Market $ 1,403
-----------
TOTAL CASH EQUIVALENTS 1,403
-----------
TOTAL INVESTMENTS - 101.2% 48,389
Other Assets, less Liabilities (465)
-----------
NET ASSETS $ 47,924
-----------
-----------
</TABLE>
* Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
- 14 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO RST SMALL COMPANY STOCK PORTFOLIO
December 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
For the year 1999, the SAFECO RST Small Company Stock Portfolio lagged the
Lipper, Inc. average for small-cap variable annuity portfolios and the Russell
2000.
In the first half of the year, a few of our stocks were punished for earnings
disappointments and a number of our holdings simply went unnoticed. Our
value-oriented portfolio languished, as this year's market favored growth
stocks. In the last half of the year we increased our average market
capitalization and reconfigured our portfolio. We took advantage of a very hot
initial public offering (IPO) market, several of our long-held positions started
to work and so did new ones I'd taken to increase the Portfolio's price/earnings
ratio. In addition, Vallen, a stock I held through the Portfolio's
reconfiguration, was bought out for significant gain. Although we did stage a
comeback and finish 1999 with gains, we were not able to match the returns of
our peer group for the year.
We benefited as the stock market rewarded hot new tech issues with
unreasonably high first-day gains. Except for a few, we quickly sold the IPOs we
participated in.
Long-time holdings MICROS Systems and Optimal Robotics turned from value to
growth stocks. MICROS was up 83% during the fourth quarter on anticipation
surrounding the spin-off of its Internet reservation system. Optimal Robotics'
self-service checkout systems became profitable, and the stock climbed 166%
during the year.
Anything associated with the Internet did well. I let N2H2, an Internet
filtering service used by schools, run from 10 to 28, and then cut our position
back to around 1.2%. I bought BEA Systems (e-commerce software) at a reasonable
price and by year-end it was a momentum stock. Emmis Communications, our best
non-tech performer, gained on e-commerce advertising revenue.
[PHOTO OF GREG EISEN]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PERFORMANCE OVERVIEW
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
FOR THE PERIODS ENDED DECEMBER 31, 1999 1 YEAR SINCE INCEPTION
<S> <C> <C>
SAFECO RST Small Company Stock Portfolio 15.40% 6.60%
Russell 2000 Index 21.13% 17.13%
Lipper, Inc. Variable Annuity Small-Cap Portfolios 38.28% N/A
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT VALUE SAFECO RST SMALL COMPANY PORTFOLIO: RUSSELL 2000 INDEX
<S> <C> <C>
04/97 $10,000 $10,000
05/97 $10,680 $11,115
06/97 $11,230 $11,587
07/97 $12,010 $12,128
08/97 $12,240 $12,402
09/97 $13,450 $13,307
10/97 $12,920 $12,716
11/97 $12,840 $12,629
12/97 $12,840 $12,856
01/98 $12,757 $12,660
02/98 $14,006 $13,609
03/98 $15,495 $14,181
04/98 $16,162 $14,259
05/98 $15,443 $13,494
06/98 $15,100 $13,533
07/98 $13,506 $12,428
08/98 $9,549 $10,018
09/98 $9,997 $10,794
10/98 $9,726 $11,236
11/98 $9,893 $11,830
12/98 $10,278 $12,568
01/99 $10,611 $12,734
02/99 $9,955 $11,708
03/99 $9,414 $11,888
04/99 $9,331 $12,952
05/99 $9,404 $13,144
06/99 $9,622 $13,734
07/99 $9,789 $13,355
08/99 $9,341 $12,864
09/99 $9,372 $12,864
10/99 $9,424 $12,921
11/99 $10,664 $13,705
12/99 $11,861 $15,257
</TABLE>
* The Portfolio's inception was May 1, 1997.
Performance information begins on May 1, 1997.
Performance represents the performance of the Small Company
Portfolio , but does not include deductions for administration
charges, contingent deferred sales charges, or mortality and
expense risk premiums.
The performance of the Portfolio assumes the reinvestment of all
dividends and capital gains. The Russell 2000 Index is an
unmanaged index that is representative of the small cap market.
Investment management fees have have been applied to the
calculation of Portfolio performance, but not to the indexes.
If portfolio investment management fees had been applied to the
indexes, the index values would have been lower.
Investment returns are historical and not predictive of future
performance. Portfolio share prices and investment returns will
fluctuate.
- 15 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The IPO market was unusually active and can't be counted on for future gains.
However, I will try to participate as long as it remains lucrative, while
remaining wary of valuations which, I believe, will eventually take precedence.
At year-end, the Portfolio's P/E had climbed from 13 times at mid-year to nearly
22 times 1999 earnings, and its weighted market capitalization grew from $330
million at mid-year to $835 million. We remain in the small-cap value camp.
Greg Eisen
- -------------------------------------------
Greg Eisen joined SAFECO in 1986. He holds a B.A. from Rutgers University and is
a Certified Public Accountant and a Chartered Financial Analyst.
HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
TEN LARGEST HOLDINGS NET ASSETS
- ------------------------------------------------------------------------
<S> <C>
MICROS Systems, Inc. ............................................. 4.9%
(Computers--Hardware)
Optimal Robotics, Corp. ........................................... 4.3
(Computers--Hardware)
Imax Corp. ........................................................ 3.7
(Manufacturing Specialized)
Bea Systems, Inc. ................................................. 3.5
(Computer--Software & Services)
International Aircraft Investors, Inc. ............................ 3.3
(Aerospace/Defense)
Emmis Communications Corp. ........................................ 3.3
(Broadcasting--Television, Radio & Cable)
US Foodservice, Inc. .............................................. 2.9
(Distributors--Food & Health)
Regis Corp. ....................................................... 2.8
(Retail--Specialty)
Timberline Software Corp. ......................................... 2.7
(Computers--Software & Services)
ACT Manufacturing .................................................. 2.6
(Electronics--Component Distributors)
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MARKET CAPITALIZATION
AS A PERCENTAGE OF NET ASSETS
<S> <C>
Small-Cap:
Large (over $750 million) 4%
Medium ($250-$750 million) 44%
Small (under $250 million) 21%
Mid-Cap: ($1 billion-$4 billion) 26%
Large-Cap: (over $4 billion) 0%
Cash & Other: 5%
</TABLE>
- 16 -
<PAGE>
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SMALL COMPANY STOCK PORTFOLIO
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 95.2%
AEROSPACE/DEFENSE - 3.3%
73,950 *International Aircraft
Investors, Inc. $ 462
AIR FREIGHT - 1.8%
7,800 Air Express International
Corp. 252
AIRLINES - 2.1%
10,600 SkyWest, Inc. 297
BANKS (REGIONAL) - 1.7%
16,148 *Hanmi Bank (Los Angeles,
CA) 242
BROADCASTING (TV, RADIO & CABLE) - 5.2%
3,700 *Emmis Communications Corp.
(Class A) 461
11,700 *Salem Communications Corp.
(Class A) 265
COMPUTERS (HARDWARE) - 9.5%
1,000 *Apex, Inc. 32
9,300 *MICROS Systems, Inc. 688
16,400 *Optimal Robotics Corp. 611
COMPUTERS (PERIPHERALS) - 3.8%
4,400 *Circle.com 54
400 *Egreetings Network, Inc. 4
8,400 *GRIC Communications, Inc. 213
5,500 *Integrated Measurement
Systems,
Inc. 78
4,200 *Primus Knowledge
Solutions, Inc. 190
COMPUTERS (SOFTWARE & SERVICES) - 11.3%
7,000 *BEA Systems, Inc. 490
500 *BSQUARE Corp. 21
13,000 *Ciber, Inc. 357
1,400 *Digimarc Corp. 70
17,700 *ITT Educational
Services, Inc. 273
28,600 Timberline Software Corp. 384
DISTRIBUTORS (FOOD & HEALTH) - 2.9%
24,000 *U.S. Foodservice 402
ELECTRONICS (COMPONENT DISTRIBUTORS) - 2.6%
9,800 *ACT Manufacturing, Inc. 367
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
ENGINEERING & CONSTRUCTION - 2.1%
15,600 *Astec Industries, Inc. $ 293
FINANCIAL (DIVERSIFIED) - 1.5%
17,300 *Hawthorne Financial Corp. 216
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 2.1%
9,300 *SonoSite, Inc. 294
INSURANCE (PROPERTY-CASUALTY) - 1.8%
38,400 *American Safety Insurance
Group, Ltd. 252
MANUFACTURING (SPECIALIZED) - 3.7%
18,800 *Imax Corp. 515
OIL & GAS (DRILLING & EQUIPMENT) - 4.7%
11,500 *Marine Drilling Co., Inc 258
7,600 *Rowan Companies, Inc. 165
10,000 *UTI Energy Corp. 231
OIL & GAS (EXPLORATION & PRODUCTION) - 0.5%
4,000 *Chieftain
International, Inc. 69
REAL ESTATE INVESTMENT TRUST - 0.9%
3,900 Alexandria Real Estate
Equities, Inc. 124
RESTAURANTS - 2.3%
40,100 *Taco Cabana, Inc.
(Class A) 326
RETAIL (DEPARTMENT STORES) - 1.5%
24,500 *Musicland Stores Corp. 207
RETAIL (DISCOUNTERS) - 1.1%
28,700 *OfficeMax, Inc. 158
RETAIL (DRUG STORES) - 1.8%
56,000 *Drug Emporium, Inc. 248
RETAIL (FOOD CHAINS) - 1.5%
18,300 Ingles Markets, Inc. 204
RETAIL (SPECIALTY) - 2.8%
20,600 Regis Corp. 389
SERVICES (ADVERTISING/MARKETING) - 2.8%
17,600 *Snyder
Communications, Inc. 339
5,866 *Ventiv Health, Inc. 54
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 17 -
<PAGE>
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SMALL COMPANY STOCK PORTFOLIO
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
SERVICES (COMMERCIAL & CONSUMER) - 10.4%
16,850 Central Parking Corp. $ 322
12,900 *Dollar Thrifty Automotive
Group, Inc. 309
7,200 *N2H2, Inc. 169
14,950 *Rent-A-Center, Inc. 296
19,300 *Rent-Way, Inc. 361
TEXTILES (APPAREL) - 1.5%
14,100 *Cutter & Buck, Inc. 213
TRUCKING - 6.0%
7,000 *Landstar System, Inc. 300
24,600 Rollins Truck Leasing Corp. 294
14,000 *Swift Transportation
Co., Inc. 247
WASTE MANAGEMENT - 2.0%
12,700 Landauer, Inc. 278
-----------
TOTAL COMMON STOCKS 13,344
-----------
PREFERRED STOCKS - 1.7%
ELECTRIC COMPANIES - 0.9%
1,700 Massachusetts Electric Co. 122
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000'S)
- ---------------------------------------------------------
<C> <S> <C>
ENTERTAINMENT - 0.8%
18,100 *Craig Corp. (Class A) $ 113
-----------
TOTAL PREFERRED STOCKS 235
-----------
CASH EQUIVALENTS - 9.8%
FINANCIAL (DIVERSIFIED)
680,000 PHH Corporation 7.00%,
due 1/10/00 679
INVESTMENT COMPANIES
704,589 J.P. Morgan Institutional
Prime Money Market 705
-----------
TOTAL CASH EQUIVALENTS 1,384
-----------
TOTAL INVESTMENTS - 106.7% 14,963
Other Assets, less Liabilities (909)
-----------
NET ASSETS $ 14,054
-----------
-----------
</TABLE>
* Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
- 18 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO RST BOND PORTFOLIO
December 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The performance of the RST Bond Portfolio continued to lag Lehman Brothers
Government/ Corporate Index for the fourth quarter with returns of -0.68% versus
- -0.41%. However, 1999 was the worst year for the bond market since 1994, and the
only other year to post a negative annual return since 1973.
Most of the Portfolio's underperformance in the year occurred during the
first half of 1999--when I was optimistic. I thought economic growth would slow,
inflation would remain low and bonds would be stable, and had positioned the
portfolio accordingly. Consequently, the duration (sensitivity to changes in
interest rates) of the portfolio was too high.
The strength of the global economic recovery fueled domestic demand and added
to our own economic growth. A reversal of the late 1998 flight to quality
(demand for the safety of U.S. Treasuries) caused a sharp increase in yields and
volatility in the market. Finally, even though actual inflation fell, fears of
inflation caused the market to act as though inflation were rising.
About halfway through the year, in order to soften the blow of increasing
economic growth and higher interest rates, I reduced the portfolio's duration
and increased its yield. As a result, our relative and absolute performance
improved.
I intend to maintain the Portfolio's defensive posture until we have concrete
signs that higher interest rates are finally slowing the economy. In the
meantime, I see robust growth prompting the Federal Reserve to "tap on the
brakes" with a couple of rate increases. This
[PHOTO OF MICHAEL HUGHES]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PERFORMANCE OVERVIEW
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN FOR THE
PERIODS ENDED DECEMBER 31, 1999 1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
SAFECO RST Bond Portfolio -3.99% 6.08% 6.46%
Lehman Government/Corporate Index -2.15% 7.61% 7.65%
Lipper, Inc. Variable Annuity General Bond Portfolios 0.79% 7.84% 7.42%
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT VALUE SAFCO RST BOND PORTFOLIO LEHMAN G/C INDEX
<S> <C> <C>
12/31/89 $10,000 $10,000
1/31/90 9,931 9,863
2/28/90 9,971 9,885
3/31/90 10,000 9,886
4/30/90 9,951 9,794
5/31/90 10,157 10,079
6/30/90 10,275 10,242
7/31/90 10,403 10,369
8/31/90 10,363 10,219
9/30/90 10,383 10,304
10/31/90 10,472 10,440
11/30/90 10,599 10,667
12/31/90 10,657 10,828
1/31/91 10,731 10,950
2/28/91 10,826 11,044
3/31/91 10,900 11,120
4/30/91 11,027 11,248
5/31/91 11,111 11,301
6/30/91 11,079 11,288
7/31/91 11,217 11,430
8/31/91 11,428 11,693
9/30/91 11,597 11,938
10/31/91 11,734 12,044
11/30/91 11,840 12,164
12/31/91 12,147 12,575
1/31/92 12,069 12,388
2/29/92 12,069 12,454
3/31/92 11,990 12,386
4/30/92 12,080 12,460
5/31/92 12,282 12,701
6/30/92 12,462 12,888
7/31/92 12,755 13,217
8/31/92 12,845 13,335
9/30/92 13,103 13,517
10/31/92 12,845 13,311
11/30/92 12,766 13,299
12/31/92 12,976 13,528
1/31/93 13,264 13,822
2/28/93 13,552 14,109
3/31/93 13,624 14,157
4/30/93 13,732 14,266
5/31/93 13,708 14,258
6/30/93 13,960 14,582
7/31/93 14,020 14,675
8/31/93 14,343 15,012
9/30/93 14,427 15,064
10/31/93 14,499 15,126
11/30/93 14,271 14,955
12/31/93 14,345 15,020
1/31/94 14,551 15,246
2/28/94 14,190 14,915
3/31/94 13,893 14,550
4/30/94 13,803 14,429
5/31/94 13,803 14,403
6/30/94 13,790 14,369
7/31/94 13,958 14,656
8/31/94 14,009 14,662
9/30/94 13,880 14,440
10/31/94 13,880 14,424
11/30/94 13,867 14,398
12/31/94 13,924 14,493
1/31/95 14,115 14,772
2/28/95 14,347 15,114
3/31/95 14,429 15,215
4/30/95 14,620 15,428
5/31/95 15,166 16,074
6/30/95 15,289 16,203
7/31/95 15,180 16,140
8/31/95 15,385 16,347
9/30/95 15,549 16,513
10/31/95 15,808 16,755
11/30/95 16,122 17,031
12/31/95 16,413 17,282
1/31/96 16,456 17,390
2/29/96 16,064 17,021
3/31/96 15,905 16,878
4/30/96 15,890 16,762
5/31/96 15,919 16,734
6/30/96 16,035 16,957
7/31/96 16,079 16,997
8/31/96 16,108 16,955
9/30/96 16,268 17,256
10/31/96 16,456 17,659
11/30/96 16,659 17,984
12/31/96 16,501 17,784
1/31/97 16,547 17,805
2/28/97 16,501 17,842
3/31/97 16,302 17,630
4/30/97 16,501 17,888
5/31/97 16,624 18,055
6/30/97 16,823 18,272
7/31/97 17,299 18,831
8/31/97 17,100 18,619
9/30/97 17,376 18,912
10/31/97 17,652 19,215
11/30/97 17,668 19,316
12/31/97 17,889 19,519
1/31/98 18,197 19,794
2/28/98 18,132 19,754
3/31/98 18,180 19,815
4/30/98 18,245 19,914
5/31/98 18,472 20,128
6/30/98 18,667 20,333
7/31/98 18,650 20,349
8/31/98 19,088 20,747
9/30/98 19,590 21,340
10/31/98 19,380 21,190
11/30/98 19,412 21,316
12/31/98 19,482 21,368
1/31/99 19,584 21,520
2/28/99 19,055 21,008
3/31/99 19,123 21,113
4/30/99 19,157 21,165
5/31/99 18,884 20,947
6/30/99 18,747 20,881
7/31/99 18,679 20,824
8/31/99 18,645 20,807
9/30/99 18,833 20,994
10/31/99 18,850 21,049
11/30/99 18,833 21,037
12/31/99 18,705 20,909
</TABLE>
Performance represents the performance of the Bond
Portfolio, but does not include deductions for administration
charges, contingent deferred sales charges, or mortality
and expense risk premiums.
The performance of the Portfolio assumes the reinvestment
of all dividends and capital gains. The Lehman Gov't / Corp.
Index is a representative total return benchmark for the
Portfolio. Investment management fees have been applied
to the calculation of Portfolio performance, but not to the
index. If portfolio investment management fees had been
applied to the index, the index values would have been lower.
Investment returns are historical and not predictive of future
performance. Portfolio share prices and investment returns
will fluctuate.
- 19 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
should result in slightly higher interest rates, a flatter or possibly inverted
yield curve and, finally, a slower economy.
Michael Hughes
- -------------------------------------------
Michael Hughes joined SAFECO as portfolio manager in January 1997. He began his
investment career in 1983. He graduated magna cum laude with a B.S. in finance
from University of Colorado in Boulder and holds an M.B.A. from the University
of Southern California in Los Angeles. He is a Chartered Financial Analyst.
HIGHLIGHTS
- -------------------------------------------
<TABLE>
<CAPTION>
PERCENT OF
TEN LARGEST HOLDINGS NET ASSETS
- ----------------------------------------------
<S> <C>
U.S. Treasury Note, 7.50%, due
11/15/16 ............................. 18.9%
U.S. Treasury Note, 5.375%, due
6/30/00 ................................ 7.2
US Treasury Note, 5.875%, due 9/30/02 .... 4.1
Ford Motor Credit Co., 7.375,
due 10/28/09 ........................... 3.1
GNMA (Pool 467760), 7.00%, due 4/15/28 ... 3.1
Citicorp Mortgage Security, 6.50%,
due 6/25/29 ........................... 2.8
National Fuel Gas Co., 6.00%, due
3/01/09 ................................ 2.8
FNMA (Pool 313386), 7.00%, due 3/01/12 ... 2.8
Hertz Corp., 7.00%, due 7/01/04 .......... 2.7
US Treasury Note, 4.25%, due 11/15/03 .... 2.6
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIO CREDIT QUALITY
AS A PERCENTAGE OF NET ASSETS
<S> <C>
AAA/U.S. Gov't/Agency 68%
AA 7%
A 23%
Cash and Other Assets 2%
</TABLE>
- 20 -
<PAGE>
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
BOND PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000'S) (000'S)
- ---------------------------------------------------------
<C> <S> <C>
ASSET BACKED SECURITIES - 9.8%
ELECTRIC COMPANIES - 1.6%
$485 ComEd Transitional Funding
Trust 5.63%, due 6/25/09 $ 449
FINANCIAL (DIVERSIFIED) - 6.9%
29 Chevy Chase Auto Receivables
Trust (Class A)
6.60%, due 12/15/02 29
888 Citicorp Mortgage
Securities,
Inc.
6.50%, due 6/25/29 796
570 First USA Credit Card Master
Trust 5.28%, due 9/18/06 537
575 Fleet Credit Card Master
6.90%, due 4/16/07 573
TRUCKING - 1.3%
360 Ryder Vehicle Lease
6.89%, due 4/15/05 357
-----------
TOTAL ASSET BACKED SECURITIES 2,741
-----------
CORPORATE BONDS - 29.6%
AIR FREIGHT - 2.6%
775 Federal Express Corp.
6.845%, due 1/15/19 721
BANKS (MAJOR REGIONAL) - 1.6%
460 Bank of America Corp.
6.625%, due 6/15/04 449
CANADIAN PROVINCES - 0.9%
250 Manitoba (Province)
7.75%, due 2/01/02 249
ELECTRIC COMPANIES - 2.0%
545 Central Power & Light Co.
7.50%, due 12/01/02 550
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000'S) (000'S)
- ---------------------------------------------------------
<C> <S> <C>
FINANCIAL (DIVERSIFIED) - 10.9%
$725 CIT Group, Inc.
5.57%, due 12/08/03 $ 683
895 Ford Motor Credit Co.
7.375%, due 10/28/09 884
300 General Motors Acceptance
Corp.
5.95%, due 3/14/03 289
755 Hertz Corp.
7.00%, due 7/01/04 746
535 Sears Roebuck Acceptance
Corp.
6.25%, due 5/01/09 471
MANUFACTURING (DIVERSIFIED) - 2.3%
675 Tyco International Group SA
6.375%, due 6/15/05 633
NATURAL GAS - 2.8%
905 National Fuel Gas Co.
6.00%, due 3/01/09 795
PUBLISHING (NEWSPAPERS) - 2.4%
680 Times-Mirror Co.
6.65%, due 10/15/01 676
RETAIL (GENERAL MERCHANDISE) - 3.3%
250 Dayton Hudson Corp.
9.40%, due 2/15/01 256
680 Wal-Mart Stores, Inc.
6.15%, due 8/10/01 675
TELEPHONE - 0.8%
115 AT&T Corp.
5.625%, due 3/15/04 109
145 AT&T Corp.
6.50%, due 3/15/29 124
-----------
TOTAL CORPORATE BONDS 8,310
-----------
MORTGAGE BACKED SECURITIES - 15.7%
FEDERAL HOME LOAN MORTGAGE CORP.
(FHLMC) - 2.2%
614 7.50%, due 10/01/29 608
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 21 -
<PAGE>
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
BOND PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000'S) (000'S)
- ---------------------------------------------------------
<C> <S> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) - 8.8%
$235 6.00%, due 1/01/29 $ 215
800 7.00%, due 3/01/12 793
717 8.00%, due 2/15/29 722
283 8.00%, due 4/01/08 287
423 9.50%, due 2/01/21 449
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) - 4.7%
910 7.00%, due 4/15/28 880
435 7.75%, due 10/15/29 436
-----------
TOTAL MORTGAGE BACKED SECURITIES 4,390
-----------
U.S. GOVERNMENT OBLIGATIONS - 42.5%
U.S. FEDERAL AGENCY NOTES - 7.0%
525 5.125%, due 2/13/04 493
595 6.00%, due 8/15/02 586
440 6.375%, due 6/15/09 419
500 6.875%, due 11/22/06 484
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
(000'S) (000'S)
- ---------------------------------------------------------
<C> <S> <C>
U.S. TREASURY NOTES - 35.5%
$ 795 4.25%, due 11/15/03 $ 738
2,015 5.375%, due 6/30/00 2,011
1,165 5.875%, due 9/30/02 1,152
95 6.375%, due 8/15/02 95
385 6.50%, due 10/15/06 384
285 6.50%, due 8/15/05 285
4,970 7.50%, due 11/15/16 5,316
-----------
TOTAL U.S. GOVERNMENT OBLIGATIONS 11,963
-----------
CASH EQUIVALENTS - 1.5%
INVESTMENT COMPANIES
432 J.P. Morgan Institutional
Prime Money Market 432
-----------
TOTAL CASH EQUIVALENTS 432
-----------
TOTAL INVESTMENTS - 99.1% 27,836
Other Assets, less Liabilities 295
-----------
NET ASSETS $ 28,131
-----------
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 22 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO RST MONEY MARKET PORTFOLIO
December 31, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The SAFECO RST Money Market Portfolio 12-month return of 4.63% was slightly
lower than the average variable money market portfolio, according to Lipper,
Inc., but was significantly higher than the 2.7% yearly increase in the Consumer
Price Index.
Our performance is mostly attributable to shortening the average maturity of
the Portfolio and holding "floaters." (See discussion below.)
Facing the risk that the Fed might raise short-term interest rates, I
significantly shortened the average maturity of the Portfolio from a high of 87
days in May to 41 days at year-end. Indeed, the Fed raised rates three times
during the year from 4.75% to 5.50%. The most recent raise was in November.
Being shorter than the 53-day maturity of the average money fund reported by IBC
Financial Data has enabled me to capture higher rates a bit sooner than my
peers. For example, three-month commercial paper rates rose from a low of 4.73%
in April to 5.75% at year-end. Very close to Y2K, I was able to reinvest in
commercial paper at yields in the 6% range.
[PHOTO OF NAOMI URATA]
I bought several corporate floaters that change yields as rates rise. The
Portfolio also owns a taxable municipal seven-day floater that is even more
sensitive to rate changes, and yield 10 to 25 basis points higher than similarly
rated 30-day commercial paper. At year-end, rates on our taxable municipals
spiked as high as 7.85%, albeit only for a week. These investments are
particularly favorable in a Fed-tightening environment, as they capture any rate
increases within seven days.
As the economy continues at a strong pace with low unemployment and hints of
rising inflation, the Fed is likely to raise rates again. In anticipation, the
market has already priced
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PERFORMANCE OVERVIEW
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN FOR THE
PERIODS ENDED DECEMBER 31, 1999 1 YEAR 5 YEAR 10 YEAR
<S> <C> <C> <C>
SAFECO RST Money Market Portfolio 4.63% 5.03% 4.81%
Lipper, Inc. Variable Annuity Money Market Portfolios 4.78% 5.13% 4.92%
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT VALUE
SAFECO RST MONEY MARKET PORTFOLIO
<S> <C>
12/31/89 $10,000
1/31/90 $10,071
2/28/90 $10,130
3/31/90 $10,194
4/30/90 $10,261
5/31/90 $10,328
6/30/90 $10,391
7/31/90 $10,459
8/31/90 $10,525
9/30/90 $10,585
10/31/90 $10,653
11/30/90 $10,719
12/31/90 $10,786
1/31/91 $10,850
2/28/91 $10,904
3/31/91 $10,956
4/30/91 $11,014
5/31/91 $11,066
6/30/91 $11,109
7/31/91 $11,164
8/31/91 $11,215
9/30/91 $11,265
10/31/91 $11,312
11/30/91 $11,353
12/31/91 $11,398
1/31/92 $11,435
2/29/92 $11,466
3/31/92 $11,501
4/30/92 $11,533
5/31/92 $11,564
6/30/92 $11,600
7/31/92 $11,635
8/31/92 $11,664
9/30/92 $11,688
10/31/92 $11,713
11/30/92 $11,741
12/31/92 $11,769
1/31/93 $11,796
2/28/93 $11,820
3/31/93 $11,847
4/30/93 $11,872
5/31/93 $11,894
6/30/93 $11,923
7/31/93 $11,948
8/31/93 $11,975
9/30/93 $11,999
10/31/93 $12,023
11/30/93 $12,049
12/31/93 $12,076
1/31/94 $12,104
2/28/94 $12,128
3/31/94 $12,155
4/30/94 $12,184
5/31/94 $12,219
6/30/94 $12,255
7/31/94 $12,293
8/31/94 $12,337
9/30/94 $12,378
10/31/94 $12,422
11/30/94 $12,465
12/31/94 $12,517
1/31/95 $12,578
2/28/95 $12,632
3/31/95 $12,689
4/30/95 $12,748
5/31/95 $12,813
6/30/95 $12,869
7/31/95 $12,930
8/31/95 $12,984
9/30/95 $13,036
10/31/95 $13,102
11/30/95 $13,161
12/31/95 $13,213
1/31/96 $13,275
2/29/96 $13,322
3/31/96 $13,372
4/30/96 $13,425
5/31/96 $13,482
6/30/96 $13,530
7/31/96 $13,588
8/31/96 $13,643
9/30/96 $13,700
10/31/96 $13,752
11/30/96 $13,807
12/31/96 $13,865
1/31/97 $13,923
2/28/97 $13,972
3/31/97 $14,025
4/30/97 $14,085
5/31/97 $14,142
6/30/97 $14,204
7/31/97 $14,264
8/31/97 $14,319
9/30/97 $14,382
10/31/97 $14,446
11/30/97 $14,503
12/31/97 $14,570
1/31/98 $14,628
2/28/98 $14,684
3/31/98 $14,744
4/30/98 $14,802
5/31/98 $14,855
6/30/98 $14,919
7/31/98 $14,981
8/31/98 $15,035
9/30/98 $15,097
10/31/98 $15,163
11/30/98 $15,227
12/31/98 $15,291
1/31/99 $15,342
2/28/99 $15,398
3/31/99 $15,455
4/30/99 $15,512
5/31/99 $15,564
6/30/99 $15,618
7/31/99 $15,677
8/31/99 $15,737
9/30/99 $15,799
10/31/99 $15,861
11/30/99 $15,924
12/31/99 $16,000
</TABLE>
Performance represents the performance of the Money
Market Portfolio but does not include deductions for
administration charges, contingent deferred sales charges,
or mortality and expense risk premiums.
Performance of the Portfolio assumes the reinvestment
of all dividends.
The Money Market Portfolio seeks to maintain a
$1.00 per share net asset value. Shares of the
Money Market Portfolio are neither insured nor
guaranteed by the U.S. Government. There is no
assurance that the Money Market Portfolio will
maintain a stable $1.00 per share net asset value.
- 23 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
0.5% of tightening into short-term rates. I will maintain a short average
maturity until I see signs that rates have stabilized, and will continue to seek
yield while working to maintain safety in volatile market conditions.
Naomi Urata
- -------------------------------------------
Naomi Urata joined SAFECO in 1993 as a fixed-income analyst and began managing
the Money Market Portfolio in August of 1994. She holds a Master in Management
from Yale University and is a Chartered Financial Analyst.
- 24 -
<PAGE>
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNTS VALUE
(000'S) (000'S)
- ---------------------------------------------------------
<C> <S> <C>
COMMERCIAL PAPER - 43.8%
CONSUMER FINANCE - 12.7%
$1,300 Aristar, Inc.
5.85%, due 2/04/00 $ 1,293
1,200 Homeside Lending, Inc.
6.50%, due 1/24/00 1,196
1,200 Household Financial
6.45%, due 1/05/00 1,200
FINANCIAL (DIVERSIFIED) - 14.4%
500 General Electric Capital
5.25%, due 1/24/00 498
1,200 Moat Funding LLC
6.55%, due 1/12/00 1,198
1,300 New Center Asset Trust
6.45%, due 1/20/00 1,296
1,200 PHH Corporation
6.38%, due 1/10/00 1,199
INVESTMENT BANKING & BROKERAGE - 4.4%
1,300 Merrill Lynch
5.55%, due 1/28/00 1,295
OIL (INTERNATIONAL INTEGRATED) - 4.1%
1,200 BP Amoco Capital
6.53%, due 1/06/00 1,199
TELECOMMUNICATIONS (LONG DISTANCE) - 4.1%
1,200 MCI Capital Corp.
6.55%, due 1/26/00 1,195
TRUCKS & PARTS - 4.1%
1,200 Cooperative Association
of Tractor Dealers
6.70%, due 1/14/00 1,198
-----------
TOTAL COMMERCIAL PAPER 12,767
-----------
CORPORATE BONDS - 42.7%
BANKS (MAJOR REGIONAL) - 3.4%
1,000 Continental Bank Corp.
6.445%, due 5/18/00 1,001
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNTS VALUE
(000'S) (000'S)
- ---------------------------------------------------------
<C> <S> <C>
BANKS (REGIONAL) - 5.1%
$1,500 American Express Centurion
Bank
5.70%, due 4/24/00
Put Date 1/01/00 $ 1,500
CONSUMER FINANCE - 3.5%
1,000 Countrywide Funding Corp.
7.32%, due 8/15/00 1,007
FINANCIAL (DIVERSIFIED) - 10.0%
1,400 Finova Capital Corp.
8.00%, due 2/01/00 1,403
500 Heller Financial, Inc.
5.625%, due 3/15/00 500
1,000 #Textron Financial Corp.
(144A)
5.92%, due 5/12/00
Put Date 1/01/00 1,000
INSURANCE (LIFE & HEALTH) - 4.5%
1,300 First Allamerica Financal
6.235%, due 8/05/04
Put Date 2/03/00 1,300
INVESTMENT BANKING & BROKERAGE - 12.8%
500 #Goldman Sachs Group,
L.P. (144A)
5.15%, due 4/19/00 500
1,000 #Goldman Sachs Group,
L.P. (144A)
6.20125%, due 1/12/01
Put Date 1/15/00 1,000
1,330 Lehman Brothers
Holdings, Inc.
6.15%, due 3/15/00 1,332
900 Morgan Stanley Dean Witter
Co.
5.61125%, due 3/13/01
Put Date 12/12/00 900
TOBACCO - 3.4%
1,000 Philip Morris Cos., Inc.
9.25%, due 2/15/00 1,005
-----------
TOTAL CORPORATE BONDS 12,448
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 25 -
<PAGE>
DECEMBER 31, 1999
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNTS VALUE
(000'S) (000'S)
- ---------------------------------------------------------
<C> <S> <C>
MUNICIPAL BONDS - 3.4%
RETAIL (GENERAL MERCHANDISE) - 3.4%
$1,000 Racetrac Capital, LLC
6.49%, due 4/01/18
Put Date 1/05/00 $ 1,000
-----------
TOTAL MUNICIPAL BONDS 1,000
-----------
CASH EQUIVALENTS - 8.1%
INVESTMENT COMPANIES
894 AIM Short-Term Investments
Co. 894
LIQUID ASSETS MONEY MARKET PORTFOLIO
(INSTITUTIONAL SHARES)
1,453 J.P. Morgan Institutional
Prime Money Market 1,453
-----------
TOTAL CASH EQUIVALENTS 2,347
-----------
TOTAL INVESTMENTS - 98.0% 28,562
-----------
Other Assets, less Liabilities 573
-----------
NET ASSETS $ 29,135
-----------
-----------
</TABLE>
If a Put date is indicated, the Portfolio has a right to sell a specified
underlying security at an exercise price equal to the amortized cost of the
underlying security plus interest, if any, as of that date.
Securities with a maturity of more than thirteen months have variable rates
and/or demand features which qualify them as short-term securities. Rates
shown are those in effect on 12/31/99. These rates change periodically based
on specified market rate or indices.
# Securities are exempt from registration and restricted as to resale only to
dealers, or through a dealer to an "accredited investor" or a "qualified
institutional buyer". The total cost of such securities is $2,500,000 and the
total value is 8.6% of net assets.
SEE NOTES TO FINANCIAL STATEMENTS
- 26 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
SAFECO Resource Series Trust
As of December 31, 1999
<TABLE>
<CAPTION>
PORTFOLIOS
(In Thousands, ------------------------------------------------------------------------
Except Per-Share Amounts) EQUITY GROWTH NORTHWEST SMALL CO. BOND MMKT
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
ASSETS:
Investments, at cost $460,540 $327,603 $ 32,481 $ 13,110 $ 29,091 $ 28,562
======== ======== ========= ======== ======== ========
Investments, at value
Unaffiliated issuers $647,191 $311,348 $ 48,389 $ 14,963 $ 27,836 $ 28,562
Affiliated issuers -- 36,465 -- -- -- --
-------- -------- --------- -------- -------- --------
Total investments at value 647,191 347,813 48,389 14,963 27,836 28,562
Receivables:
Dividends and interest 672 227 17 10 316 241
Capital stock sold 222 43 183 1 1 370
Other -- -- 5 25 -- 1
-------- -------- --------- -------- -------- --------
Total assets 648,085 348,083 48,594 14,999 28,153 29,174
LIABILITIES:
Investment securities purchased -- 1,801 316 935 -- --
Capital stock redeemed 545 332 325 -- 3 16
Investment advisory fees 456 216 29 10 19 15
Dividends payable -- -- -- -- -- 8
Other 6 9 -- -- -- --
-------- -------- --------- -------- -------- --------
Total liabilities 1,007 2,358 670 945 22 39
-------- -------- --------- -------- -------- --------
NET ASSETS $647,078 $345,725 $ 47,924 $ 14,054 $ 28,131 $ 29,135
======== ======== ========= ======== ======== ========
Net assets consist of:
Accumulated net realized (loss)
on investment transactions $ -- $ (1,253) $ -- $ (2,281) $ (1,277) $ --
Net unrealized appreciation
(depreciation) 186,651 20,210 15,908 1,853 (1,255) --
Paid in capital (par value $.001,
unlimited shares authorized) 460,427 326,768 32,016 14,482 30,663 29,135
-------- -------- --------- -------- -------- --------
Net assets $647,078 $345,725 $ 47,924 $ 14,054 $ 28,131 $ 29,135
======== ======== ========= ======== ======== ========
TRUST SHARES OUTSTANDING 20,858 15,366 2,113 1,234 2,722 29,135
======== ======== ========= ======== ======== ========
NET ASSET VALUE PER SHARE
(Net assets divided by Trust
shares outstanding) $ 31.02 $ 22.50 $ 22.68 $ 11.39 $ 10.33 $ 1.00
======== ======== ========= ======== ======== ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 27 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SAFECO Resource Series Trust
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
PORTFOLIOS
------------------------------------------------------------------
EQUITY GROWTH NORTHWEST SMALL CO. BOND MMKT
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 8,921 $ 1,005 $ 145 $ 42 $ -- $ --
Interest 921 50 34 50 1,864 1,472
------- -------- --------- -------- ------- ------
Total investment income 9,842 1,055 179 92 1,864 1,472
EXPENSES:
Investment advisory fees 4,638 2,368 219 97 220 180
Legal and auditing fees 25 22 16 18 18 19
Custodian fees 37 29 5 5 6 6
Trustees fees 8 7 6 6 6 6
Other 79 89 5 12 22 7
------- -------- --------- -------- ------- ------
Total expenses before reimbursement 4,787 2,515 251 138 272 218
Expense reimbursement -- -- -- (30) -- --
------- -------- --------- -------- ------- ------
Total expenses after reimbursement 4,787 2,515 251 108 272 218
NET INVESTMENT INCOME (LOSS) 5,055 (1,460) (72) (16) 1,592 1,254
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
NET REALIZED GAIN (LOSS) FROM:
Investments in unaffiliated issuers 29,280 2,571 3,868 (1,273) (1,276) --
Investments in affiliated issuers -- (3,827) -- -- -- --
------- -------- --------- -------- ------- ------
Total net realized gain (loss) 29,280 (1,256) 3,868 (1,273) (1,276) --
Net change in unrealized appreciation
(depreciation) 20,195 17,800 10,965 3,170 (1,542) --
------- -------- --------- -------- ------- ------
NET GAIN (LOSS) ON INVESTMENTS 49,475 16,544 14,833 1,897 (2,818) --
------- -------- --------- -------- ------- ------
Net change in net assets resulting
from operations $54,530 $ 15,084 $ 14,761 $ 1,881 $(1,226) $1,254
======= ======== ========= ======== ======= ======
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 28 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This page left blank intentionally.
- 29 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
SAFECO Resource Series Trust
<TABLE>
<CAPTION>
PORTFOLIOS
--------------------------------------------------
EQUITY GROWTH
------------------------ ------------------------
YEAR ENDED DECEMBER 31 YEAR ENDED DECEMBER 31
(IN THOUSANDS) 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 5,055 $ 4,486 $ (1,460) $ (1,507)
Net realized gain (loss) on investment
transactions 29,280 21,747 (1,256) 37,143
Net change in unrealized appreciation
(depreciation) 20,195 76,782 17,800 (39,098)
-------- -------- -------- --------
Net change in net assets resulting
from operations 54,530 103,015 15,084 (3,462)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (5,098) (4,431) -- (35,629)
Net realized gain on investments (29,266) (21,763) -- --
Paid in capital -- -- -- (1,507)
-------- -------- -------- --------
Total distributions (34,364) (26,194) -- (37,136)
NET TRUST SHARE TRANSACTIONS 69,598 91,237 (25,766) 156,605
-------- -------- -------- --------
TOTAL CHANGE IN NET ASSETS 89,764 168,058 (10,682) 116,007
NET ASSETS AT BEGINNING OF PERIOD 557,314 389,256 356,407 240,400
-------- -------- -------- --------
NET ASSETS AT END OF PERIOD $647,078 $557,314 $345,725 $356,407
======== ======== ======== ========
- --------------------------------------------------------------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES AND AMOUNTS
SHARES:
Sales 6,829 6,552 5,871 10,113
Reinvestments 1,108 874 -- 1,743
Redemptions (5,675) (4,291) (7,240) (5,418)
-------- -------- -------- --------
Net Change 2,262 3,135 (1,369) 6,438
AMOUNTS:
Sales $215,939 $184,473 $116,742 $250,827
Reinvestments 34,364 26,194 -- 37,135
Redemptions (180,705) (119,430) (142,508) (131,357)
-------- -------- -------- --------
Net Change $ 69,598 $ 91,237 $(25,766) $156,605
======== ======== ======== ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 30 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PORTFOLIOS
----------------------------------------------------------------------------
NORTHWEST SMALL CO. BOND
------------------------ ------------------------ ------------------------
YEAR ENDED DECEMBER 31 YEAR ENDED DECEMBER 31 YEAR ENDED DECEMBER 31
1999 1998 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ (72) $ (73) $ (16) $ (40) $ 1,592 $ 1,247
Net realized gain (loss) on investment
transactions 3,868 (809) (1,273) (1,008) (1,276) 836
Net change in unrealized appreciation
(depreciation) 10,965 1,145 3,170 (2,360) (1,542) (207)
------- ------- ------- ------- ------- -------
Net change in net assets resulting
from operations 14,761 263 1,881 (3,408) (1,226) 1,876
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income -- -- -- -- (1,591) (1,248)
Net realized gain on investments (2,987) -- -- -- (13) (288)
Paid in capital -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total distributions (2,987) -- -- -- (1,604) (1,536)
NET TRUST SHARE TRANSACTIONS 11,563 4,529 393 4,938 844 11,896
------- ------- ------- ------- ------- -------
TOTAL CHANGE IN NET ASSETS 23,337 4,792 2,274 1,530 (1,986) 12,236
NET ASSETS AT BEGINNING OF PERIOD 24,587 19,795 11,780 10,250 30,117 17,881
------- ------- ------- ------- ------- -------
NET ASSETS AT END OF PERIOD $47,924 $24,587 $14,054 $11,780 $28,131 $30,117
======= ======= ======= ======= ======= =======
- ----------------------------------------------------------------------------------------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES AND AMOUNTS
SHARES:
Sales 889 690 369 680 946 1,518
Reinvestments 132 -- -- -- 155 135
Redemptions (480) (420) (328) (318) (1,019) (632)
------- ------- ------- ------- ------- -------
Net Change 541 270 41 362 82 1,021
AMOUNTS:
Sales $17,365 $10,765 $ 3,458 $ 8,662 $10,490 $17,725
Reinvestments 2,987 -- -- -- 1,604 1,536
Redemptions (8,789) (6,236) (3,065) (3,724) (11,250) (7,365)
------- ------- ------- ------- ------- -------
Net Change $11,563 $ 4,529 $ 393 $ 4,938 $ 844 $11,896
======= ======= ======= ======= ======= =======
<CAPTION>
PORTFOLIOS
-----------------------
MMKT
-----------------------
YEAR ENDED DECEMBER 31
1999 1998
- ---------------------------------------- -----------------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ 1,254 $ 1,145
Net realized gain (loss) on investment
transactions -- --
Net change in unrealized appreciation
(depreciation) -- --
------- --------
Net change in net assets resulting
from operations 1,254 1,145
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (1,254) (1,145)
Net realized gain on investments -- --
Paid in capital -- --
------- --------
Total distributions (1,254) (1,145)
NET TRUST SHARE TRANSACTIONS 1,512 9,866
------- --------
TOTAL CHANGE IN NET ASSETS 1,512 9,866
NET ASSETS AT BEGINNING OF PERIOD 27,623 17,757
------- --------
NET ASSETS AT END OF PERIOD $29,135 $ 27,623
======= ========
- ----------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES AND A
SHARES:
Sales 73,527 102,117
Reinvestments 1,363 1,028
Redemptions (73,378) (93,279)
------- --------
Net Change 1,512 9,866
AMOUNTS:
Sales $73,527 $102,117
Reinvestments 1,363 1,028
Redemptions (73,378) (93,279)
------- --------
Net Change $ 1,512 $ 9,866
======= ========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 31 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. GENERAL
SAFECO Resource Series Trust (the Trust) is registered under the Investment
Company Act of 1940, as amended, as a diversified, open-end management
investment company. The Trust is comprised of the Equity, Growth, Northwest,
Small Company Stock (SMALL Co.), Bond and Money Market (MMKT) Portfolios. Each
of the six Portfolios has different investment objectives. Shares of the Trust
Portfolios are available only as funding vehicles for certain variable annuity
and variable life products sold by SAFECO Life Insurance Company and other
insurance companies.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolios in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
SECURITY VALUATION. Equity securities in the Equity, Growth, Northwest and
Small Company Portfolios traded on a national exchange or over-the-counter are
valued at the last reported sales price, unless there are no transactions in
which case they are valued at the last reported bid price. Fixed income
securities in the Bond Portfolio are stated on the basis of valuations provided
by a pricing service, which uses information with respect to transactions in
securities, quotations from securities dealers, market transactions in
comparable securities and various relationships between securities in
determining value. For the Money Market Portfolio, short-term securities
purchased at par are valued at cost. Other short-term securities are valued at
amortized cost. For all Portfolios, temporary investments in other mutual funds
are valued at net asset value.
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on investment transactions are determined using the
identified cost method.
INCOME RECOGNITION. Interest is accrued on Portfolio Investments daily.
Dividend income, less foreign taxes withheld (if any), is recorded on the
ex-dividend date.
DIVIDENDS TO SHAREHOLDERS. In the Equity, Growth, Northwest, Small Company
Stock and Bond Portfolios, dividends to shareholders from net investment income
and realized gains are recorded on the last business day of December each year.
In the Money Market Portfolio, dividends to shareholders from net investment
income are declared as of the close of each business day and payment is made as
of the last business day of each month.
Income dividends and capital gain distributions are determined in accordance
with income tax regulation which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for wash
sale deferrals. Accumulated net investment income and realized gain/loss may
include temporary financial reporting and tax basis differences which will
reverse in a subsequent year.
FEDERAL INCOME TAX. It is the Trust's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no federal
income or excise tax provision is required.
- 32 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
3. TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEES. SAFECO Asset Management Company receives investment
advisory fees from the Portfolios. For the Equity, Growth, Northwest and Bond
Portfolios, the fee is based on average daily net assets at annual rate of .74%.
For the Small Company Stock Portfolio, the fee is based on average daily net
assets at an annual rate of .85%. For the Money Market Portfolio, the fee is
based on average daily net assets at an annual rate of .65%.
NOTES PAYABLE AND INTEREST EXPENSE. The Portfolios may borrow money for
temporary purposes from SAFECO Corporation or its affiliates at rates comparable
to commercial bank interest rates.
LINE OF CREDIT. The Trust, together with all other management investment
companies for which SAFECO Asset Management Company serves as investment
advisor, has line of credit arrangements with certain financial institutions.
Under these arrangements, $200 million is available to meet short-term financing
needs. No balance was outstanding under these arrangements at December 31, 1999.
AFFILIATE OWNERSHIP. At December 31, 1999, SAFECO Life Insurance Company
owned over 89% of the outstanding shares of the Equity Portfolio, 76% of the
outstanding shares of the Growth Portfolio, and 100% of the outstanding shares
in the Northwest, Small Company, Bond and Money Market Portfolios.
EXPENSE REIMBURSEMENT. For the Equity, Growth, Northwest, Bond and Money
Market Portfolios, SAFECO Life Insurance Company (SAFECO) has agreed to pay all
the expenses of the Portfolios except for investment advisory fees if net assets
of the Portfolio are below $20 million. For the Small Company Stock Portfolio,
SAFECO Asset Management Company pays all expenses other than investment advisory
fees in excess of .10% of the Portfolio's average annual net assets. When net
assets exceed $20 million, the Portfolio will be charged for all operating
expenses.
4. INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
PORTFOLIOS
-------------------------------------------------------------
EQUITY GROWTH NORTHWEST SMALL CO. BOND
(In Thousands)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Purchases for the year ended
December 31, 1999 (including $22,166
of U.S. Government and Agency
Securities in the Bond Portfolio) $242,365 $ 171,323 $ 18,945 $ 14,420 $ 43,167
======= ========== ========== ========= =========
Sales for the year ended December 31,
1999 (including $23,081 of U.S.
Government and Agency Securities in
the Bond Portfolio) $196,770 $ 203,508 $ 11,103 $ 13,727 $ 42,463
======= ========== ========== ========= =========
- ------------------------------------------------------------------------------------------------------
Purchases and sales amounts exclude
short-term investments which, at the
time of
purchase had a maturity of one year
or less.
</TABLE>
Unrealized appreciation (depreciation) at December 31, 1999:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aggregate gross unrealized appreciation
for investment securities in which
there is an excess of value over cost $210,915 $97,306 $ 19,754 $ 2,925 $ 2
Aggregate gross unrealized depreciation
for investment securities in which
there is an excess of cost over value (24,264) (77,096) (3,846) (1,072) (1,257)
------- ------- ---------------- ---------------- -----------
Net unrealized appreciation
(depreciation) $186,651 $20,210 $ 15,908 $ 1,853 $ (1,255)
======= ======= ================ ================ ===========
</TABLE>
- 33 -
<PAGE>
- ------------------------------------------------------------
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
5. INVESTMENTS IN AFFILIATES
Each of the companies is listed below because the Growth Portfolio owned at
least 5% of the company's voting securities during the year ended December 31,
1999:
<TABLE>
<CAPTION>
MARKET
SHARES AT SHARES AT VALUE
BEGINNING END OF DECEMBER 31
OF YEAR ADDITIONS REDUCTIONS YEAR DIVIDENDS 1999
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Concepts Direct, Inc. 435 -- -- 435 None $ 4,733
Damark International, Inc. 417 -- 5 412 None 6,492
Nastech Pharmaceutical Co. 466 -- 2 464 None 1,566
Open Plan Systems, Inc. 87 245 -- 332 None 664
PolyMedica Industries, Inc. 544 105 -- 649 None 15,017
Precision Auto Care 609 -- -- 609 None 685
Suburban Lodges of America 1,023 -- 288 735 None 3,812
TRM Copy Centers Corp. 492 79 -- 571 None 3,496
-----------
$ 36,465
===========
</TABLE>
6. CAPITAL LOSS CARRYFORWARD
At December 31, 1999, these portfolios had the following amounts of
accumulated net realized losses on investment transactions that represent
capital loss carryforwards for Federal Income Tax purposes, which expire as
follows:
<TABLE>
<CAPTION>
EXPIRATION
(IN THOUSANDS) AMOUNTS DATES
<S> <C> <C>
- -------------------------------------------------------------
Small Company Stock Portfolio $ 2,281 2006-2007
Bond Portfolio 1,198 2007
Growth Portfolio 1,203 2007
</TABLE>
- 34 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
EQUITY PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
NET ASSET VALUE AT BEGINNING OF PERIOD $ 29.97 $ 25.18 $ 21.75 $ 19.24 $ 16.83
INCOME FROM INVESTMENT OPERATIONS:
Net investment income: 0.26 0.25 0.27 0.34 0.39
Net realized and unrealized gain on
investments 2.53 6.02 5.13 4.43 4.43
--------------- -------- -------- -------- --------
Total from investment operations 2.79 6.27 5.40 4.77 4.82
LESS DISTRIBUTIONS:
Dividends from net investment income (0.26) (0.25) (0.27) (0.34) (0.39)
Distributions from realized gains (1.48) (1.23) (1.70) (1.92) (2.02)
--------------- -------- -------- -------- --------
Total distributions (1.74) (1.48) (1.97) (2.26) (2.41)
--------------- -------- -------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 31.02 $ 29.97 $ 25.18 $ 21.75 $ 19.24
=============== ======== ======== ======== ========
TOTAL RETURN 9.31% 24.89% 24.85% 24.79% 28.63%
NET ASSETS AT END OF PERIOD (000'S
OMITTED) $ 647,078 $557,314 $389,256 $263,067 $169,479
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.76% 0.78% 0.75% 0.72% 0.75%
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS 0.80% 0.96% 1.19% 1.72% 2.26%
PORTFOLIO TURNOVER RATE 32.47% 31.57% 41.75% 56.99% 69.18%
</TABLE>
- 35 -
<PAGE>
- ------------------------------------------------------------
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------
NET ASSET VALUE AT BEGINNING OF PERIOD $ 21.30 $ 23.35 $ 19.26 $ 15.88 $ 12.98
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.09) (0.10) (0.04) (0.03) 0.06
Net realized and unrealized gain on
investments 1.29 0.53 8.62 5.12 5.26
------- ------- ------- ------- -------
Total from investment operations 1.20 0.43 8.58 5.09 5.32
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- -- -- (0.06)
Distributions from realized gains -- (2.38) (4.49) (1.71) (2.36)
Distributions from paid in capital -- (0.10) -- -- --
------- ------- ------- ------- -------
Total distributions -- (2.48) (4.49) (1.71) (2.42)
------- ------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD $ 22.50 $ 21.30 $ 23.35 $ 19.26 $ 15.88
======= ======= ======= ======= =======
TOTAL RETURN 5.63% 1.83% 44.55% 32.06% 41.00%(A)
NET ASSETS AT END OF PERIOD
(000'S OMITTED) $345,725 $356,407 $240,400 $109,491 $44,458
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.78% 0.80% 0.77% 0.79% 0.79%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ N/A N/A N/A N/A 0.84%
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS (0.45%) (0.48%) (0.25%) (0.28%) 0.55%
PORTFOLIO TURNOVER RATE 52.96% 46.13% 88.99% 75.58% 111.70%
</TABLE>
- --------------------------------------------------------------------------------
++ See Note 3 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been
reduced during the period indicated (See Note 3 of Notes to Financial
Statements).
N/A Not applicable as no fund expenses were reimbursed.
- 36 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
NORTHWEST PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AT BEGINNING OF PERIOD $ 15.64 $ 15.20 $ 12.12 $ 10.85 $ 10.24
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.02) (0.05) 0.03 0.08 0.08
Net realized and unrealized gain on
investments 8.56 0.49 3.73 1.27 0.68
---------- ---------- ---------- ---------- ----------
Total from investment operations 8.54 0.44 3.76 1.35 0.76
LESS DISTRIBUTIONS:
Dividends from net investment income -- -- (0.03) (0.08) (0.08)
Distributions from realized gains (1.50) -- (0.65) -- (0.07)
---------- ---------- ---------- ---------- ----------
Total distributions (1.50) -- (0.68) (0.08) (0.15)
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE AT END OF PERIOD $ 22.68 $ 15.64 $ 15.20 $ 12.12 $ 10.85
========== ========== ========== ========== ==========
TOTAL RETURN 54.62% 2.89%(A) 31.02%(A) 12.44%(A) 7.42%(A)
NET ASSETS AT END OF PERIOD (000'S
OMITTED) $ 47,924 $ 24,587 $ 19,795 $ 9,541 $ 6,312
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.84% 0.96% 0.73% 0.70% 0.71%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ N/A 0.99% 0.94% 1.11% 1.18%
RATIO OF NET INVESTMENT INCOME (LOSS)
TO AVERAGE NET ASSETS (0.24%) (0.32%) 0.27% 0.78% 0.81%
PORTFOLIO TURNOVER RATE 37.32% 46.99% 47.85% 52.20% 21.30%
</TABLE>
- --------------------------------------------------------------------------------
++ See Note 3 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been
reduced during the periods shown (See Note 3 of Notes to Financial
Statements).
N/A Not applicable as no fund expenses were reimbursed.
- 37 -
<PAGE>
- ------------------------------------------------------------
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
SMALL COMPANY STOCK PORTFOLIO
<TABLE>
<CAPTION>
APRIL 30, 1997
(COMMENCEMENT OF
YEAR ENDED DECEMBER 31 OPERATIONS) TO
------------------------ DECEMBER 31
1999 1998 1997
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------
NET ASSET VALUE AT BEGINNING OF PERIOD $ 9.87 $ 12.33 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.01) (0.03) 0.01
Net realized and unrealized gain
(loss) on investments 1.53 (2.43) 2.83
------- ------- ------------------
Total from investment operations 1.52 (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 $ 11.39 $ 9.87 $ 12.33
======= ======= ==================
TOTAL RETURN (A) 15.40% (19.95%) 28.4%*
NET ASSETS AT END OF PERIOD
(000'S OMITTED) $14,054 $11,780 $ 10,250
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.95% 0.95% 0.95%**
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ 1.22% 1.15% 1.24%**
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS (0.14%) (0.32%) 0.19%**
PORTFOLIO TURNOVER RATE 127.80% 92.14% 47.91%**
</TABLE>
- --------------------------------------------------------------------------------
++ See Note 3 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been
reduced during the periods shown.
* Not Annualized
** Annualized
- 38 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
BOND PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------
NET ASSET VALUE AT BEGINNING OF PERIOD $ 11.41 $ 11.04 $ 10.75 $ 11.31 $ 10.20
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.62 0.50 0.61 0.62 0.71
Net realized and unrealized gain
(loss) on investments (1.07) 0.49 0.29 (0.56) 1.11
------------- ---------- ---------- ---------- ----------
Total from investment operations (0.45) 0.99 0.90 0.06 1.82
LESS DISTRIBUTIONS:
Dividends from net investment income (0.62) (0.50) (0.61) (0.62) (0.71)
Distributions from realized gains (0.01) (0.12) -- -- --
------------- ---------- ---------- ---------- ----------
Total distributions (0.63) (0.62) (0.61) (0.62) (0.71)
------------- ---------- ---------- ---------- ----------
NET ASSET VALUE AT END OF PERIOD $ 10.33 $ 11.41 $ 11.04 $ 10.75 $ 11.31
============= ========== ========== ========== ==========
TOTAL RETURN (3.99%) 8.90%(A) 8.41%(A) 0.54%(A) 17.87%(A)
NET ASSETS AT END OF PERIOD
(000'S OMITTED) $ 28,131 $ 30,117 $ 17,881 $ 15,991 $ 14,257
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.91% 0.83% 0.74% 0.73% 0.72%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ N/A 0.98% 0.90% 0.87% 0.94%
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS 5.33% 5.50% 5.75% 5.64% 6.50%
PORTFOLIO TURNOVER RATE 147.40% 164.82% 151.43% 140.90% 77.93%
</TABLE>
- --------------------------------------------------------------------------------
++ See Note 3 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been
reduced during the periods shown (See Note 3 of Notes to Financial
Statements).
N/A Not applicable as no fund expenses were reimbursed.
- 39 -
<PAGE>
- ------------------------------------------------------------
- ------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
7. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------
1999 1998 1997 1996 1995
<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 0.04 0.05 0.05 0.05
LESS DISTRIBUTIONS:
Dividends from net investment income (0.04) (0.04) (0.05) (0.05) (0.05)
------------ ---------- ---------- ---------- ---------
NET ASSET VALUE AT END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
============ ========== ========== ========== =========
TOTAL RETURN 4.63% 4.95%(A) 5.08%(A) 4.94%(A) 5.56%(A)
NET ASSETS AT END OF PERIOD (000'S
OMITTED) $ 29,135 $ 27,623 $ 17,757 $ 12,493 $ 8,719
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.78% 0.81% 0.64% 0.62% 0.62%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ N/A 0.89% 0.81% 0.90% 0.87%
RATIO OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS 4.52% 4.87% 4.97% 4.86% 5.32%
</TABLE>
- --------------------------------------------------------------------------------
++ See Note 3 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been
reduced during the periods shown (See Note 3 of Notes to Financial
Statements).
N/A Not applicable as no fund expenses were reimbursed.
- 40 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of the
SAFECO Resource Series Trust
We have audited the accompanying statements of assets and liabilities,
including the portfolio of investments, of the SAFECO Resource Series Trust
(comprising, respectively, the Equity Portfolio, Growth Portfolio, Northwest
Portfolio, Small Company Stock Portfolio, Bond Portfolio, and Money Market
Portfolio) as of December 31, 1999, and the related statements of operations,
the statements of changes in net assets and the financial highlights for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of December 31, 1999, by correspondence with
the custodians and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the SAFECO Resource Series Trust at
December 31, 1999, the results of their operations, the changes in their net
assets and financial highlights for each of the periods referred to above, in
conformity with accounting principles generally accepted in the United States.
[SIGNATURE]
Seattle, Washington
February 4, 2000
- 41 -
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
YEAR 2000 READINESS (UNAUDITED)
All Year 2000 readiness work was completed prior to December 31, 1999. The
Portfolios have experienced no disruption in their operations or service levels,
and do not expect to incur any future disruptions or expense in connection with
the Year 2000 issue.
<PAGE>
SAFECO RESOURCE SERIES TRUST
BOARD OF TRUSTEES:
Boh A. Dickey, Chairman
Barbara J. Dingfield
David F. Hill
Richard W. Hubbard
Richard E. Lundgren
Larry L. Pinnt
John W. Schneider
OFFICERS:
David F. Hill, President
Ronald L. Spaulding
Vice President and Treasurer
Neal A. Fuller
Vice President and Controller
David H. Longhurst
Assistant Controller
INVESTMENT ADVISOR:
SAFECO Asset
Management Company
DISTRIBUTOR:
SAFECO Securities, Inc.
TRANSFER AGENT:
SAFECO Services Corporation
CUSTODIAN:
State Street Bank
[RECYCLE LOGO] Printed on Recycled Paper.
This report must be preceded or
accompanied by a current prospectus.
-Registered Trademark- A registered trademark of SAFECO
Corporation.
