<PAGE>
FUND PROFILE
SAFECO Growth Fund
SAFECO Equity Fund
SAFECO Income Fund
SAFECO Northwest Fund
SAFECO International Stock Fund
SAFECO Balanced Fund
SAFECO Small Company Stock Fund
SAFECO U.S. Value Fund
No-Load Class
This profile summarizes key information about SAFECO Stock Funds that is
included in the Funds' prospectus. The Funds' prospectus includes additional
information about the Funds, including a more detailed description of the risks
associated with investing in the Funds that you may want to consider before you
invest. You may obtain the prospectus and other information about SAFECO Stock
Funds at no cost by calling 1-800-624-5711. You may also obtain this information
by visiting our Web site at www.safecofunds.com, or sending an Email request to
[email protected].
July __, 1998
<PAGE>
INVESTMENT OBJECTIVE
SAFECO Growth Fund seeks growth of capital and increased income that ordinarily
follows from such growth.
SAFECO Equity Fund seeks long-term growth of capital and reasonable current
income.
SAFECO Income Fund seeks high current income and, when consistent with its
objective, the long-term growth of capital.
SAFECO Northwest Fund seeks long-term growth of capital through investing in
Northwest companies.
SAFECO International Stock Fund seeks maximum long-term total return (capital
appreciation and income) by investing primarily in common stock of established
non-U.S. companies.
SAFECO Balanced Fund seeks growth and income consistent with the preservation of
capital.
SAFECO Small Company Stock Fund seeks long-term growth of capital through
investing primarily in small-sized companies.
SAFECO U.S. Value Fund seeks long-term growth of capital and income.
INVESTMENT STRATEGIES
SAFECO Growth Fund invests a preponderance of its assets in common stocks
selected primarily for potential appreciation. Due to the aggressive nature of
this Fund, it is suitable for investors who are prepared to withstand market
fluctuations over several years.
SAFECO Equity Fund invests principally in common stocks with strong growth
potential and attractive dividend income. This Fund is suitable for investors
seeking attractive total returns but who are uncomfortable with a more
aggressive growth fund.
SAFECO Income Fund invests primarily in common stocks and convertible
securities. Due to the conservative nature of this Fund, it is suitable for
stock investors with a lower tolerance for risk.
<PAGE>
SAFECO Northwest Fund invests primarily in common stocks issued by companies
located in Alaska, Idaho, Montana, Oregon or Washington. Stocks are selected for
their long-term appreciation potential. This Fund is suitable for investors
seeking long-term growth and who are prepared to withstand the risks associated
with geographic concentration.
SAFECO International Stock Fund invests primarily in common stocks of
established non-U.S. companies. In an attempt to reduce the risks associated
with fluctuations in foreign currency values, security prices and interest
rates, the Fund may invest in non-leveraged derivative securities such as
futures contracts and options. This Fund is suitable for investors seeking
international diversification.
SAFECO Balanced Fund invests primarily in both equity and fixed income
securities. Common stocks are selected for their long-term appreciation or
dividend potential. Fixed income securities consist of U.S. Government and
investment grade bonds. Under normal conditions, 50% to 70% of the portfolio is
invested in equities, with the balance in fixed income securities. This mix is
altered in response to changes in economic conditions and generally in small
increments. This Fund is suitable for conservative investors who want to
diversify among stocks and bonds in a single investment.
SAFECO Small Company Stock Fund invests primarily in companies with total market
capitalization of less than $1 billion. This Fund is suitable for long-term
investors who can withstand a high degree of volatility.
SAFECO U.S. Value Fund invests a preponderance of its assets in common stocks
selected for their potential appreciation and income. The Fund is suitable for
long-term investors with moderate risk tolerance.
Additional information about each Fund's investments is available in the Fund's
annual and semi-annual reports to shareholders. In the annual report you will
find a discussion of the market conditions and investment strategies that
significantly affected the Fund's performance during the last fiscal year. You
may obtain either or both of these reports at no cost by calling 1-800-624-5711.
RISKS
All securities transactions involve market risk. The major risk associated with
mutual funds is that the securities in the portfolio may decline in value,
causing your investment to be worth less than when you bought it. Specific risk
factors for selected SAFECO Funds are discussed below.
<PAGE>
SAFECO Northwest Fund is subject to special risks due to its geographic
concentration. These include a smaller universe of securities from which to
choose and fluctuations in the regional economy.
SAFECO International Stock Fund is subject to the additional risks associated
with investing outside the United States. These include local political or
economic instability and currency fluctuations. Also, the International Fund may
buy and sell derivative securities such as options and futures contracts in an
attempt to ease currency and interest rate fluctuations; these securities carry
additional risks which are outlined in the Fund's prospectus.
SAFECO Small Company Stock Fund and, to a lesser extent, SAFECO Growth Fund, are
subject to the risks associated with investing in smaller companies. These
include reduced liquidity and abrupt price movements.
An investment in the Funds is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.
PERFORMANCE
The following bar charts show how each Fund has performed in each of the past 10
years (or since inception) assuming reinvestment of all distributions. The
tables show the average annual return for each Fund relative to the S&P 500 or
other relevant index. Performance is historical and may not be indicative of
future results. Total return and principal value will fluctuate.
<TABLE>
<CAPTION>
SAFECO GROWTH FUND
For the Year Ended December 31,
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------
(%) 22.10 19.19 (14.96) 62.65 (3.07) 22.19 (1.62) 26.10 22.90 49.96
</TABLE>
The highest return reflected above was 31.27% for the quarter ended March 31,
1991; and the lowest return was -29.15% for the quarter ended September 30,
1990.
<TABLE>
<CAPTION>
SAFECO EQUITY FUND
For the Year Ended December 31,
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------
(%) 25.29 35.79 (8.57) 27.91 9.26 30.91 9.93 25.26 25.01 24.21
</TABLE>
The highest return reflected above was 16.70% for the quarter ended March 31,
1988; and the lowest return was -16.44% for the quarter ended September 30,
1990.
<TABLE>
<CAPTION>
SAFECO INCOME FUND
For the Year Ended December 31,
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------
(%) 18.98 19.22 (10.75) 23.25 11.47 12.55 (1.09) 30.36 23.99 26.43
</TABLE>
The highest return reflected above was 13.13% for the quarter ended June 30,
1997; and the lowest return was -12.80% for the quarter ended September 30,
1990.
<PAGE>
<TABLE>
<CAPTION>
SAFECO NORTHWEST FUND
Feb. 7,
(Initial Public
Offering) to
Dec. 31, 1991 For the Year Ended December 31,
1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------
(%) 15.73 14.08 1.03 (1.55) 20.17 15.04 31.12
</TABLE>
The highest return reflected above was 16.87% for the quarter ended June 30,
1997; and the lowest return was -5.59% for the quarter ended June 30, 1992.
<TABLE>
<CAPTION>
SAFECO INTERNATIONAL STOCK FUND
Three-Month For the
Period Ended Year Ended
December 31, December 31,
1996 1997
<S> <C>
------------------------------------
(%) 14.23 4.55
</TABLE>
The highest return reflected above was 9.27% for the quarter ended December 31,
1996; and the lowest return was -4.88% for the quarter ended December 31, 1997.
<TABLE>
<CAPTION>
SAFECO BALANCED FUND
Three-Month For the
Period Ended Year Ended
December 31, December 31,
1996 1997
<S> <C>
------------------------------------
(%) 11.40 16.64
</TABLE>
The highest return reflected above was 9.37% for the quarter ended June 30,
1997; and the lowest return was 0.21% for the quarter ended March 31, 1997.
<TABLE>
<CAPTION>
SAFECO SMALL COMPANY STOCK FUND
Three-Month For the
Period Ended Year Ended
December 31, December 31,
1996 1997
<S> <C>
------------------------------------
(%) 25.01 23.38
</TABLE>
The highest return reflected above was 19.73% for the quarter ended September
30, 1997; and the lowest return was -4.66% for the quarter ended March 31, 1997.
Average Annual Total Returns
As of 3/31/98
<TABLE>
<CAPTION>
1 year 5 years 10 years
------ ------- --------
<S> <C> <C> <C>
Growth Fund 73.87% 26.73% 19.30%
Equity Fund 37.97% 23.81% 19.43%
Income Fund 41.01% 18.77% 14.93%
S&P 500 Index** 47.97% 22.36% 18.90%
Northwest Fund 41.15% 14.99% 14.65%***
S&P 500 Index** 47.97% 22.36% 19.78%
U.S. Value Fund 30.95%*
S&P 500 Index** 43.88%
International Fund 17.95% 14.94%^^
MSCI EAFE Index^^^ 18.60% 8.48%
Balanced Fund 25.09% 16.66%^^
S&P 500/Lehman Brothers 33.74% 20.91%
Gov't Corporate Index#
<PAGE>
Small Company Fund 54.87% 32.69%^^
Russell 2000 Index** 42.01% 23.12%
</TABLE>
* Since inception 4/97 (not annualized).
** The indexes are unmanaged, include dividends and are representative of
relevant U.S. securities markets.
*** Since inception 2/91.
^^ Since inception 1/96.
^^^ Morgan Stanley Capital International Europe, Australia, Far East Index.
The index is unmanaged, includes dividends and is representative of
international securities markets.
# 60% S&P 500/40% Lehman Brothers Government Corporate. The indexes are
unmanaged, include dividends, and are representative of areas of the U.S.
securities markets.
Past performance is not predictive of future results. Returns and principal
value vary with market conditions. Shares when sold may be worth more, or less,
than their original cost.
FEES AND EXPENSES
Each Fund offers multiple classes of shares. The No-Load Class of shares of
each Fund is described in this Profile. This class is 100% No-Load and has no
initial or contingent deferred sales charges or Rule 12b-1 fees. There are no
redemption fees (except a $10.00 wire charge) or exchange fees.
The expenses each Fund pays before distributing net investment income to
shareholders are shown below. These expenses are stated as an percentage of
average daily net assets. They are based on the actual expenses of each Fund
(except for the U.S. Value Fund) for the year ended December 31, 1997. The
Funds' expenses for other periods may vary.
<TABLE>
<CAPTION>
FUND MANAGEMENT 12b-1 OTHER TOTAL FUND
FEES FEES EXPENSES OPERATING
EXPENSES
<S> <C> <C> <C> <C>
Growth 0.65% None 0.20% 0.85%
Equity 0.52% None 0.21% 0.73%
Income 0.65% None 0.20% 0.85%
Northwest 0.75% None 0.34% 1.09%
International Stock 1.10% None 0.53% 1.89%*
Balanced 0.75% None 0.47% 1.22%
Small Company Stock 0.85% None 0.48% 1.33%
U.S. Value 0.75% None 0.45% 1.20%**
</TABLE>
* After an expense reimbursement by SAM, the total operating expenses as a
percentage of net assets for the International Fund were 1.63%.
** The amounts shown for the U.S. Value Fund are estimated expenses based on
the Fund's maximum management fee and estimated "other expenses" for fiscal year
1998.
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
This example assumes that you invest $10,000 in a Fund for the time period
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Funds' operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Growth $90 $270 $470 $1050
Equity $70 $230 $410 $910
Income $90 $270 $470 $1050
Northwest $110 $350 $600 $1330
International $170 $510 $890 $1930
Balanced $120 $390 $670 $1480
Small Company $140 $420 $730 $1600
Value $120 $380
</TABLE>
INVESTMENT ADVISER AND PORTFOLIO MANAGERS
INVESTMENT ADVISER
SAFECO Asset Management Company ("SAM") manages all SAFECO Funds. SAM is
headquartered in Seattle, Washington, and managed over $4.3 billion in mutual
fund assets as of December 31, 1997. SAM has been an adviser to mutual funds and
other investment portfolios since 1973; its predecessors have been advisers
since 1932.
SUB-ADVISER
Bank of Ireland Asset Management (U.S.) Limited acts as sub-adviser to the
SAFECO International Stock Fund. The sub-adviser was established in 1987 and
managed over $26 billion in assets as of December 31, 1997.
PORTFOLIO MANAGERS
SAFECO Growth Fund is managed by Thomas M. Maguire, Vice President, SAM. Mr.
Maguire has served as portfolio manager since 1989.
SAFECO Equity Fund is managed by Richard D. Meagley, Vice President, SAM. Mr.
Meagley has been managing the Fund since 1995. From 1992 to 1994 he
<PAGE>
served as portfolio manager and analyst for Kennedy Associates, Inc., an
investment advisory firm located in Seattle, Washington. From 1991 to 1992 he
was an Assistant Vice President of SAM and portfolio manager of the SAFECO
Northwest Fund.
SAFECO Income Fund is managed by Thomas E. Rath, Vice President, SAM. Mr. Rath
has served as the Fund's portfolio manager since 1996 and has been a securities
analyst and portfolio manager with SAFECO Corporation since 1994. From 1992 to
1994, he was a principal and portfolio manager for Meridian Capital Management,
Inc., located in Seattle, Washington. From 1987 to 1992 he was a portfolio
manager and securities analyst for First Interstate Bank, located in Seattle,
Washington, and from 1983 to 1987 he was a securities analyst for SAFECO
Corporation.
SAFECO Northwest Fund is managed by Bill Whitlow, Vice President, SAM. Mr.
Whitlow began managing the Fund in April 1997. From 1990 to 1997 he was a
principal and manager of Pacific Northwest Research for the brokerage firm of
Pacific Crest Securities in Seattle, Washington.
SAFECO International Stock Fund is managed by a committee of portfolio managers
employed and supervised by the Sub-Adviser, Bank of Ireland Asset Management
(U.S.) Limited. All investment decisions are made by this committee and no
single person is primarily responsible for making recommendations to that
committee.
SAFECO Balanced Fund is managed by three individuals. The equity portion is
managed by Rex L. Bentley, Vice President, SAM, and Lynette D. Sagvold,
Assistant Vice President, SAM. The fixed-income portion is managed by Michael
Hughes, Assistant Vice President, SAM. Mr. Bentley and Ms. Sagvold have been
co-managing the Fund since its inception in 1996. From 1990 to 1995 Mr. Bentley
was Vice President and Investment Counsel at the investment advisory firm of
Badgley, Phelps and Bell Investment Counsel, Inc. From 1975 to 1983 he was a
securities analyst for SAFECO Corporation. From 1993 to 1995 Ms. Sagvold was a
portfolio manager and analyst for First Interstate Bank. From 1985 to 1993 she
was a portfolio manager and analyst for Key Trust Company. Mr. Hughes was Vice
President and a portfolio manager for First Interstate Capital Management
Company from 1995 to 1996, and Vice President and a portfolio manager for First
Interstate Bank of California from 1988 to 1995.
SAFECO Small Company Stock Fund is managed by Greg Eisen. Mr. Eisen has been
managing the Fund since its inception in 1996. From 1992 to 1996 he served as
investment analyst for SAM. From 1986 to 1992 he was a financial analyst for
SAFECO Insurance Companies.
SAFECO U.S. Value Fund is co-managed by Rex L. Bentley, Vice President, SAM, and
Lynette D. Sagvold, Assistant Vice President, SAM. Mr. Bentley and
<PAGE>
Ms. Sagvold have been managing the U.S. Value Fund since its inception in 1997.
From 1990 to 1995 Mr. Bentley was Vice President and Investment Counsel at the
investment advisory firm of Badgley, Phelps and Bell Investment Counsel, Inc.
From 1975 to 1983 he was a securities analyst for SAFECO Corporation. From 1993
to 1995 Ms. Sagvold was a portfolio manager and analyst for First Interstate
Bank. From 1985 to 1993 she was a portfolio manager and analyst for Key Trust
Company.
HOW TO PURCHASE SHARES
The minimum initial investment is $1,000 for regular accounts. For IRAs, Uniform
Gifts to Minors Act ("UGMA") and Uniform Transfers to Minors Act ("UTMA")
accounts, the minimum to open an account is $250. The minimum additional
investment is $100 ($50 for UGMA and UTMA accounts). You may buy shares by
completing an application and mailing it with your check to the address on the
back cover.
HOW TO REDEEM SHARES
You can sell your shares on any business day by calling (provided you have
selected the telephone redemption option) or mailing a written request.
Redemption requests received before 1:00 p.m., Pacific time, will receive that
day's closing share price and the proceeds will normally be sent to you the next
business day. You can also redeem shares via our Web site once you have
completed the On-Line Transaction form and mailed it to the Funds.
DISTRIBUTIONS
SAFECO Equity, Income, Balanced and Value Funds distribute dividends quarterly.
SAFECO Growth, Northwest, International and Small Company Funds distribute
dividends annually. Each Fund distributes capital gains on the last business
day of the year. Dividend and capital gains distributions are reinvested in
additional shares of the distributing Fund unless you elect to receive them in
cash.
Dividends are normally taxed as ordinary income (unless designated tax-exempt).
Capital gains distributions are taxed at capital gains rates; this rate will
depend on how long the Fund held the assets before they were sold.
CLIENT SERVICES
- - 24-hour, toll-free, automated performance information and transaction
capabilities
- - Automatic Investment Method ("AIM")
- - Systematic Withdrawal Plan
- - Telephone and Internet Exchange Privileges
<PAGE>
TO REQUEST A PROSPECTUS OR FOR CLIENT SERVICES*:
Nationwide 1-800-624-5711
Deaf and Hard of Hearing TTY/TDD Service: 1-800-438-8718
*All telephone calls are tape-recorded for your protection.
FOR 24-HOUR AUTOMATED PERFORMANCE INFORMATION AND
TRANSACTIONS:
Nationwide 1-800-835-4391
INTERNET: http://www.safecofunds.com
EMAIL: [email protected]
MAILING ADDRESS
REGULAR MAIL
SAFECO Mutual Funds
No-Load Class Shares
P.O. Box 34890
Seattle, WA 98124-1890
EXPRESS/OVERNIGHT MAIL
SAFECO Mutual Funds
No-Load Class Shares
10865 Willows Road
Redmond, WA 98052
INVESTOR CENTERS
1409 Fifth Avenue, Seattle, Washington
4333 Brooklyn Avenue N.E., Seattle, Washington
Redmond Town Center, 7528 164th Avenue NE, Redmond, Washington
DISTRIBUTOR: SAFECO Securities, Inc.
