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SAFECO INSTITUTIONAL SERIES TRUST
SUPPLEMENT TO THE PROSPECTUS
JULY 7, 1995
The following information is added at the end of the fourth full paragraph of
the section entitled "Fixed-Income Portfolio Investment Policies" on page 8:
11. MAY INVEST IN ASSET-BACKED SECURITIES, WHICH REPRESENT
INTERESTS IN, OR ARE SECURED BY AND PAYABLE FROM, POOLS OF
ASSETS SUCH AS CONSUMER LOANS, AUTOMOBILE RECEIVABLE
SECURITIES, CREDIT CARD RECEIVABLE SECURITIES, AND INSTALLMENT
LOAN CONTRACTS. These securities may be supported by credit
enhancements such as letters of credit. Payment of interest
and principal ultimately depends upon borrowers paying the
underlying loans. There exists a risk of default by the
underlying borrowers and recovery on repossessed collateral
may be unavailable or inadequate to support payments on
asset-backed securities. In addition, asset-backed securities
are subject to prepayment risks which may reduce the overall
return of the investment.
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SAFECO INSTITUTIONAL SERIES TRUST
SUPPLEMENT TO THE STATEMENT OF ADDITIONAL INFORMATION
JULY 7, 1995
The following information is added at the end of the last paragraph of the
section entitled "Additional Investment Information" on page 6:
4. ASSET-BACKED SECURITIES. Asset-backed securities represent
interests in, or are secured by and payable from, pools of
assets such as consumer loans, automobile receivable
securities, credit card receivable securities, and installment
loan contracts. The assets underlying the securities are
securitized through the use of trusts and special purpose
corporations. These securities may be supported by credit
enhancements such as letters of credit. Payment of interest
and principal ultimately depends upon borrowers paying the
underlying loans. There exists a risk of default by the
underlying borrowers and recovery on repossessed collateral
may be unavailable or inadequate to support payments on
asset-backed securities. In addition, asset-backed securities
are subject to prepayment risks which may reduce the overall
return of the investment.
Automobile receivable securities represent undivided
fractional interests in a trust whose assets consist of a pool
of automobile retail installment sales contracts and security
interests in the vehicles securing the contracts. Payments of
principal and interest on the certificates issued by the
automobile receivable trust are passed through periodically to
certificate holders and are generally guaranteed up to
specified amounts by a letter of credit issued by a financial
institution. Certificate holders may experience delays in
payment or losses if the full amounts due on the underlying
installment sales contracts are not realized by the trust
because of factors such as unanticipated legal or
administrative costs of enforcing the contracts, or
depreciation, damage or loss of the vehicles securing the
contracts.
Credit card receivable securities are backed by receivables
from revolving credit card accounts. Certificates issued by
credit card receivable trusts generally are pass-through
securities. Competitive and general economic factors and
accelerated cardholder payment rate can adversely affect the
rate at which new receivables are credited to an account,
potentially shortening the expected weighted average life of
the credit card receivable security and reducing its yield.
Credit card accounts are unsecured obligations of the
cardholder.
