<PAGE> 1
Registration Nos. 33-47859/811-6667
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
------------
Post-Effective Amendment No. 3 /X/
------------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 /X/
Amendment No. 6 /X/
---------
(Check appropriate box or boxes.)
SAFECO INSTITUTIONAL SERIES TRUST
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(Exact Name of Registrant as Specified in Charter)
SAFECO Plaza, Seattle, Washington 98185
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(Address of Principal Executive Offices) ZIP Code
Registrant's Telephone Number, including
Area Code (206) 545-5269
-------------------------------
Name and Address of Agent for Service
-------------------------------------
DAVID F. HILL
SAFECO Plaza
Seattle, Washington 98185
(206) 545-5269
Approximate Date of Proposed Public Offering: Continuous
It is proposed that this filing will become effective
immediately upon filing pursuant to paragraph (b)
----
x on April 28, 1995 pursuant to paragraph (b)
---- --------------
60 days after filing pursuant to paragraph (a)
----
on pursuant to paragraph (a) of Rule 485
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=================================================================
Registrant has registered an indefinite number of its shares under the
Securities Act of 1933 by declaration made pursuant to Section 24f of the
Investment Company Act of 1940 (Act). Pursuant to Rule 24f-2 under the Act,
Registrant's Rule 24f-2 Notice was filed on or about March 30, 1995.
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The Exhibit Index is at page .
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<PAGE> 2
SAFECO INSTITUTIONAL SERIES TRUST
Registration Statement on Form N-1A
Cross Reference Sheet
Part A
<TABLE>
<CAPTION>
Item No. Location in Prospectus
-------- ----------------------
<S> <C> <C>
Item 1. Cover Page Cover page
Item 2. Synopsis Introduction to the Trust and Fixed-Income
Portfolio;
Fixed-Income Portfolio Expenses
Item 3. Condensed Financial Information Financial Highlights;
Performance Information
Item 4. General Description of Registrant The Trust and Fixed-Income Portfolio's
Investment Policies; Eligible Investors;
Information about Share Ownership and
Companies which Provide Services to the
Trust; Investment Strategy; Risk Factors;
Description of Ratings
Item 5. Management of the Trust Information about Share Ownership and
Companies which Provide Services to the
Trust; Portfolio Managers; Fixed-Income
Portfolio Expenses
Item 6. Capital Stock and Other Cover Page; Person Controlling the Trust;
Securities Portfolio Distributions and How They are
Taxed; Information about Share Ownership
and Companies which Provide Services to the
Trust
Item 7. Purchase of Securities How to Purchase Shares; How to Exchange
Being Offered Shares from One Fund to Another; Share
Price Calculation; Account Statements;
Telephone Transactions; Information about
Share Ownership and Companies which Provide
Services to the Trust
Item 8. Redemption or Repurchase How to Redeem Shares; How to Exchange
Shares from One Fund to Another; Account
Changes and Signature Requirements;
Telephone Transactions
Item 9. Pending Legal Proceedings Not applicable
</TABLE>
<PAGE> 3
Part B
<TABLE>
<CAPTION>
Item No. Location in Statement
-------- of Additional Information
-------------------------
<S> <C> <C>
Item 10. Cover Page Cover page
Item 11. Table of Contents Cover page
Item 12. General Information and History Not applicable
Item 13. Investment Objectives and The Fixed-Income Portfolio's Investment
Policies Policies; Additional Investment Information
Item 14. Management of the Trust Trustees and Officers
Item 15. Control Persons and Principal Principal Shareholders of the Portfolio
Holders of Securities
Item 16. Investment Advisory and Other Investment Advisory and
Services Other Services
Item 17. Brokerage Allocation and Other Brokerage Practices
Practices
Item 18. Capital Stock and Other Not applicable
Securities
Item 19. Purchase, Redemption and Pricing Additional Information
of Securities Being Offered On Calculation of
Net Asset Value Per Share;
Redemption in Kind
Item 20. Tax Status Additional Tax Information
Item 21. Underwriters Investment Advisory and Other Services
Item 22. Calculation of Performance Data Additional Performance Information
Item 23. Financial Statements Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE> 4
SAFECO INSTITUTIONAL SERIES TRUST
FIXED-INCOME PORTFOLIO
APRIL 28, 1995
THE FIXED-INCOME PORTFOLIO DESCRIBED IN THIS PROSPECTUS IS A SERIES OF THE
SAFECO INSTITUTIONAL SERIES TRUST ("TRUST"), AN OPEN-END, MANAGEMENT INVESTMENT
COMPANY CONSISTING OF ONE PORTFOLIO.
The FIXED-INCOME PORTFOLIO has as its investment objective to provide as high a
level of total return as is consistent with the relative stability of capital
through the purchase of investment grade debt securities.
There are market risks in all securities transactions. This Prospectus sets
forth the information an investor should know before investing. PLEASE READ AND
RETAIN THE PROSPECTUS FOR FUTURE REFERENCE. A Statement of Additional
Information, dated April 28, 1995, and incorporated herein by reference, has
been filed with the Securities and Exchange Commission and is available at no
charge upon request by calling one of the numbers listed on this page. The
Statement of Additional Information contains more information about most of the
topics in this Prospectus as well as information about the trustees and officers
of the Trust.
FOR GENERAL INFORMATION AND ASSISTANCE IN OPENING NEW ACCOUNTS, PLEASE CALL OR
WRITE:
NATIONWIDE/SEATTLE 1-206-545-6475
SAFECO SECURITIES, INC.
ATTN: LESLIE EGGERLING
S-3 SAFECO PLAZA
SEATTLE, WA 98124-1890
FOR EXISTING ACCOUNT INFORMATION, ADDITIONAL PURCHASES OR EXCHANGES, PLEASE CALL
OR WRITE:
NATIONWIDE 1-800-624-5711
SEATTLE 545-7319
SAFECO MUTUAL FUNDS
P.O. BOX 34443
SEATTLE, WA 98124-1443
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
No dealer, salesperson or other person has been authorized to give any
information or to make any representation, other than those contained in this
Prospectus, in connection with the offer made by this Prospectus, and, if given
or made, such other information or representations must not be relied upon as
having been authorized by the Trust or its distributor. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy by the Trust or
by the distributor in any state in which such offer to sell or solicitation of
any offer to buy may not lawfully be made.
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-1-
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
Introduction to the Trust and Fixed-Income Portfolio........................... 3
Fixed-Income Portfolio Expenses................................................ 4
Financial Highlights........................................................... 5
Eligible Investors............................................................. 6
Fixed-Income Portfolio Investment Policies..................................... 6
Investment Strategy............................................................ 9
Risk Factors................................................................... 9
Portfolio Manager.............................................................. 9
Information About Share Ownership and Companies that Provide Services to the
Trust........................................................................ 9
Performance Information........................................................ 11
Portfolio Distributions and How They are Taxed................................. 11
Account Statements............................................................. 12
Account Changes and Signature Requirements..................................... 12
Share Price Calculation........................................................ 13
How to Purchase Shares......................................................... 13
How to Redeem Shares........................................................... 14
How to Exchange Shares From One Fund to Another................................ 15
Telephone Transactions......................................................... 16
Description of Ratings......................................................... 17
</TABLE>
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<PAGE> 6
INTRODUCTION TO THE TRUST AND
FIXED-INCOME PORTFOLIO
The Trust is a series investment company that currently issues shares
representing one mutual fund: the Fixed-Income Portfolio ("Portfolio"). The
Portfolio is a diversified series of the Trust, an open-end, management
investment company which continuously offers to sell and to redeem (buy back)
its shares at the current net asset value per share without any sales or
redemption charges or 12b-1 fees.
The Trust is designed primarily for institutional investors as an investment
vehicle for assets held by the institutions on behalf of employees who
participate in their employee benefit or pension plans. The Trust may also be
appropriate for assets held by endowments and foundations and for assets held in
an institution's own account.
The Portfolio has as its investment objective to provide as high a level of
total return as is consistent with the relative stability of capital through the
purchase of investment grade debt securities. There is, of course, no assurance
that the Portfolio will achieve its investment objective. See "Fixed-Income
Portfolio Investment Policies" for more information.
There is a risk that the market value of the Portfolio's securities may decrease
and result in a decrease in the value of a shareholder's investment. Also, the
value of shares of the Portfolio will normally fluctuate inversely with changes
in interest rates. See "Fixed-Income Portfolio Investment Policies" for more
information.
The Portfolio is managed by SAFECO Asset Management Company ("SAM"). SAM is
headquartered in Seattle, Washington and manages over $2.0 billion in mutual
fund assets as of March 31, 1995. SAM has been an adviser to mutual funds and
other investment portfolios since 1973 and its predecessors have been such
advisers since 1932. See "Information about Share Ownership and Companies that
Provide Services to the Trust" for more information.
The Portfolio:
- - Is no-load; there are no sales or redemption charges or 12b-1 fees.
- - Pays dividends, if any, monthly.
- - Requires a minimum initial investment of $250,000.
-3-
<PAGE> 7
FIXED-INCOME PORTFOLIO EXPENSES
A. SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load Imposed on Purchases None
Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fees None
Exchange Fees None
</TABLE>
SAFECO Services Corporation, the transfer agent for the Fixed-Income
Portfolio, charges a $10 fee to wire redemption proceeds.
B. ANNUAL OPERATING EXPENSES (As a Percentage of Average Net Assets)
<TABLE>
<S> <C>
Management Fee 0.50%
12b-1 Fee None
Other Expenses 0.78%
----
Total Operating Expenses 1.28%
====
</TABLE>
The amounts shown are actual expenses paid by shareholders for the period
February 28, 1994 through December 31, 1994. See "Information about Share
Ownership and Companies that Provide Services to the Trust" beginning on page
9 for more information.
C. EXAMPLE OF EXPENSES
A shareholder would pay the following expenses on a $1,000 investment
assuming 5% annual return. The example assumes that all dividends and other
distributions are reinvested and that the percentage amounts listed in
"Annual Operating Expenses" above remain the same in the years shown.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- -------- -------- ---------
<S> <C> <C> <C>
$13 $ 41 $ 70 $ 155
</TABLE>
The purpose of the tables is to assist an investor in understanding the various
costs and expenses that an investor in the Portfolio will bear, directly or
indirectly. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. THE FIXED-INCOME PORTFOLIO'S ACTUAL EXPENSES OR PERFORMANCE MAY
BE GREATER OR LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS REQUIRED BY
SECURITIES AND EXCHANGE COMMISSION REGULATIONS APPLICABLE TO ALL MUTUAL FUNDS
AND IT IS NOT A PREDICTION OF, NOR DOES IT REPRESENT, PAST OR FUTURE EXPENSES OR
THE PERFORMANCE OF THE PORTFOLIO.
-4-
<PAGE> 8
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
SAFECO INSTITUTIONAL SERIES TRUST - FIXED-INCOME PORTFOLIO
The supplemental financial information and performance data has been derived
from the Financial Statements for the Fixed-Income Portfolio and should be read
in conjunction therewith.
<TABLE>
<CAPTION>
FEBRUARY 28, 1994
(INITIAL
EFFECTIVE DATE)
TO DEC. 31, 1994
-----------------
<S> <C>
Net Asset Value at Beginning of Period.............................................. $ 8.68
Income from Investment Operations:
Net Investment Income (Loss)...................................................... 0.27
Net Realized and Unrealized (Loss) Gain on Investment Transactions................ (0.53)
------
Total from Investment Operations........................................... (0.26)
------
LESS DISTRIBUTIONS:
Dividends from Net Investment Income.............................................. (0.27)
Distributions from Capital Gains.................................................. --
------
Total Distributions........................................................ (0.27)
------
NET ASSET VALUE AT END OF PERIOD.................................................... $ 8.15
======
TOTAL RETURN........................................................................ -3.01%+
NET ASSETS AT END OF PERIOD (000'S OMITTED)......................................... $4,627
RATIO OF EXPENSES TO AVERAGE NET ASSETS............................................. 1.28%++
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS................................ 3.88%++
PORTFOLIO TURNOVER RATE............................................................. 132.26%++
</TABLE>
- ---------------
+ Not annualized.
++ Annualized.
-5-
<PAGE> 9
ELIGIBLE INVESTORS
The Trust is designed primarily for institutional investors as an investment
vehicle for assets held by the institutions on behalf of employees who
participate in their employee benefit or pension plans. It may also be
appropriate for assets held by endowments and foundations and assets held in the
institution's own account. Please note that SAFECO Services Corporation ("SAFECO
Services"), the Trust's transfer agent, may not be able to provide participant
sub-accounting services for all employee benefit or pension plans that require
such services.
FIXED-INCOME PORTFOLIO INVESTMENT POLICIES
The Trust is a Delaware business trust established by the Trust Instrument dated
May 13, 1993. The Trust currently consists of one mutual fund: the Fixed-Income
Portfolio, which is a diversified series of the Trust.
The investment objective and investment policies for the Portfolio are described
below. The Trust's Board of Trustees may change the Portfolio's investment
objective without a shareholder vote, but no change will be made without 30
days' prior written notice to shareholders of the Portfolio. In the event the
Portfolio changes its investment objective, the new objective may not meet the
investment needs of every shareholder and may be different from the objective a
shareholder considered appropriate at the time of initial investment.
Unless otherwise stated, the investment policies and limitations described below
are non-fundamental and may be changed by the Board of Trustees without
shareholder vote. If the Portfolio follows a percentage limitation at the time
of investment, a later increase or decrease in values, net assets or other
circumstances will not be considered in determining whether the Portfolio
complies with the applicable policy.
The investment objective of the Portfolio is to provide as high a level of total
return as is consistent with the relative stability of capital through purchase
of investment grade debt securities.
To pursue its objective, the Portfolio:
1. WILL INVEST AT LEAST 65% OF ITS TOTAL ASSETS IN FIXED INCOME SECURITIES.
2. WILL INVEST PRIMARILY IN INVESTMENT GRADE DEBT SECURITIES; I.E., SECURITIES
RATED IN THE TOP FOUR CATEGORIES BY EITHER STANDARD & POOR'S RATINGS GROUP
("S&P") OR MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") OR IF NOT RATED,
SECURITIES WHICH, IN THE OPINION OF SAM, ARE COMPARABLE IN QUALITY TO
INVESTMENT GRADE DEBT SECURITIES. Included in investment grade debt
securities are securities of medium grade (rated Baa by Moody's or BBB by
S&P) which have speculative characteristics and are more likely to have a
weakened capacity to make principal and interest payments under changing
economic or other conditions than higher grade securities. The Portfolio
will limit investments in such medium grade debt securities to no more than
10% of its total assets. Unrated securities are not necessarily of lower
quality than rated securities, but may not be as attractive to investors.
The Portfolio may retain debt securities which are down-graded to below
investment grade (commonly referred to as "high yield" or "junk" bonds)
after purchase, but no more than 5% of its total assets will be invested in
such securities. In addition to reviewing ratings, SAM will analyze the
quality of rated and unrated debt securities purchased for the Portfolio by
evaluating the issuer's capital
-6-
<PAGE> 10
FIXED-INCOME PORTFOLIO INVESTMENT POLICIES (CONTINUED)
structure, earnings power, quality of management and position within its
industry. For a description of ratings for debt securities, see
"Description of Ratings."
3. WILL INVEST AT LEAST 50% OF ITS TOTAL ASSETS IN OBLIGATIONS OF OR GUARANTEED
BY THE U.S. GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES. These
obligations include (a) direct obligations of the U.S. Treasury such as U.S.
Treasury notes, bills and bonds; (b) securities supported by the full faith
and credit of the U.S. Government but that are not direct obligations of the
U.S. Treasury, such as securities issued by the Government National Mortgage
Association ("GNMA"); (c) securities that are not supported by the full
faith and credit of the U.S. Government but are supported by the issuer's
ability to borrow from the U.S. Treasury such as securities issued by the
Federal National Mortgage Association ("FNMA") and the Federal Home Loan
Mortgage Corporation ("FHLMC"); and (d) securities supported solely by the
creditworthiness of the issuer such as securities issued by the Tennessee
Valley Authority ("TVA"). While U.S. Government securities are considered to
be of the highest credit quality available, they are subject to the same
market risks as comparable debt securities.
4. MAY INVEST UP TO 50% OF ITS TOTAL ASSETS IN CORPORATE DEBT SECURITIES OR
EURODOLLAR BONDS. Eurodollar bonds are bonds issued by either U.S. or
foreign issuers that are traded in the European bond markets and denominated
in U.S. dollars. The Portfolio will purchase Eurodollar bonds through U.S.
securities dealers and hold such bonds in the U.S. The delivery of
Eurodollar bonds to the Portfolio's custodian in the U.S. may cause slight
delays in settlement which are not anticipated to affect the Portfolio in
any material, adverse manner. Eurodollar bonds issued by foreign issuers are
subject to the same risks as Yankee sector bonds discussed below.
5. MAY INVEST UP TO 10% OF ITS TOTAL ASSETS IN YANKEE SECTOR DEBT SECURITIES,
which are securities issued and traded in the U.S. by foreign issuers. These
bonds have investment risks that are different from those of domestic
issuers. Such risks may include nationalization of the issuer, confiscatory
taxation by the foreign government that would inhibit the remittance of
amounts due the Portfolio, lack of comparable publicly available information
concerning foreign issuers, lack of comparable accounting and auditing
practices in foreign countries and, finally, difficulty in enforcing claims
against foreign issuers in the event of default.
Both S&P and Moody's rate Yankee sector debt obligations. If a debt
obligation is unrated, SAM will make every effort to analyze a potential
investment in the foreign issuer with respect to quality and risk on the
same basis as the rating services. Because public information is not always
comparable to that available on domestic issuers, this may not be possible.
Therefore, while SAM will make every effort to select investments in foreign
securities on the same basis, and with comparable quantities and types of
information, as its investments in domestic securities, it may not always be
able to do so.
6. MAY PURCHASE OR SELL SECURITIES ON A WHEN-ISSUED OR DELAYED-DELIVERY BASIS.
Under this procedure, the Portfolio agrees to acquire securities that are to
be issued and delivered against payment in the future, normally 30 to 45
days. The price, however, is fixed at the time of commitment. When the
Portfolio purchases
-7-
<PAGE> 11
FIXED-INCOME PORTFOLIO INVESTMENT POLICIES (CONTINUED)
when-issued or delayed-delivery securities, it will segregate liquid, high
quality securities in an amount equal in value to the purchase price of the
security. Use of these techniques may affect the Portfolio's share price in
a manner similar to the use of leveraging.
7. MAY HOLD CASH OR INVEST TEMPORARILY IN HIGH QUALITY, SHORT-TERM SECURITIES
ISSUED BY AN AGENCY OR INSTRUMENTALITY OF THE U.S. GOVERNMENT, HIGH QUALITY
COMMERCIAL PAPER, CERTIFICATES OF DEPOSIT, SHARES OF NO-LOAD, OPEN-END MONEY
MARKET FUNDS OR REPURCHASE AGREEMENTS. The Portfolio may purchase these
short-term securities as a cash management technique under those
circumstances where it has cash to manage for a short time period, for
example, after receiving proceeds from the sale of securities, dividend
distributions from portfolio securities or cash from the sale of Portfolio
shares to investors. Interest earned from these short-term securities will
be taxable to investors as ordinary income when distributed. SAM will waive
its advisory fees for Portfolio assets invested in money market funds. With
respect to repurchase agreements, the Portfolio will invest no more than 5%
of its total assets in repurchase agreements and will not purchase
repurchase agreements which mature in more than seven days.
8. MAY HOLD CASH AS A TEMPORARY DEFENSIVE MEASURE WHEN MARKET CONDITIONS SO
WARRANT.
9. MAY INVEST UP TO 5% OF ITS TOTAL ASSETS IN MUNICIPAL SECURITIES IF, IN THE
OPINION OF SAM, THE POTENTIAL FOR APPRECIATION IS GREATER THAN, AND YIELD IS
COMPARABLE TO OR GREATER THAN, SIMILARLY RATED TAXABLE SECURITIES.
10. MAY INVEST FOR SHORT-TERM PURPOSES WHEN SAM BELIEVES SUCH ACTION TO BE
DESIRABLE AND CONSISTENT WITH SOUND INVESTMENT PRACTICES. The Portfolio,
however, will not engage primarily in trading for the purpose of short-term
profits. The Portfolio may dispose of its portfolio securities whenever SAM
deems advisable, without regard to the length of time the securities have
been held.
THE PORTFOLIO HAS ADOPTED A NUMBER OF INVESTMENT RESTRICTIONS. IF THE PORTFOLIO
FOLLOWS A PERCENTAGE LIMITATION AT THE TIME OF INVESTMENT, A LATER INCREASE OR
DECREASE IN VALUES, NET ASSETS OR OTHER CIRCUMSTANCES WILL NOT BE CONSIDERED IN
DETERMINING WHETHER THE PORTFOLIO COMPLIES WITH THE APPLICABLE POLICY. THE
FOLLOWING RESTRICTIONS ARE FUNDAMENTAL POLICIES WHICH CANNOT BE CHANGED WITHOUT
SHAREHOLDER VOTE.
1. THE PORTFOLIO, WITH RESPECT TO 75% OF THE VALUE OF ITS TOTAL ASSETS, MAY NOT
INVEST MORE THAN 5% OF ITS TOTAL ASSETS IN THE SECURITIES OF ANY ONE ISSUER
(OTHER THAN U.S. GOVERNMENT SECURITIES).
2. THE PORTFOLIO, WITH RESPECT TO 100% OF THE VALUE OF ITS TOTAL ASSETS, MAY NOT
PURCHASE MORE THAN 10% OF THE OUTSTANDING VOTING SECURITIES OF ANY ONE ISSUER
(OTHER THAN U.S. GOVERNMENT SECURITIES).
3. THE PORTFOLIO MAY BORROW MONEY FOR TEMPORARY OR EMERGENCY PURPOSES ONLY FROM
A BANK OR AFFILIATE OF SAFECO CORPORATION AT AN INTEREST RATE NOT GREATER
THAN THAT AVAILABLE FROM COMMERCIAL BANKS. The Portfolio will not borrow
amounts in excess of 20% of its total assets. As a non-fundamental policy,
the Portfolio will not purchase securities if outstanding borrowings are
equal to or greater than 5% of its total assets. The Portfolio intends to
exercise its borrowing authority primarily to meet shareholder redemptions
under circumstances where redemptions exceed available cash.
For more information, see the "Fixed-Income Portfolio Investment Policies" and
"Additional Investment Information" sections of the Trust's Statement of
Additional Information.
-8-
<PAGE> 12
INVESTMENT STRATEGY
In pursuing the Portfolio's investment objective, SAM will seek to minimize the
effects of interest rate risks while pursuing total return by adjusting the
investment portfolio's average maturity in response to interest rate changes. In
general, the Portfolio will hold fixed-income securities with shorter maturities
as interest rates rise and with longer maturities as interest rates fall. The
fixed-income securities held by the Portfolio will have maturities of 10 years
or less from the date of purchase. SAM reserves the right to modify the
Portfolio's investment strategy in any respect at any time.
RISK FACTORS
Various factors may cause the value of a shareholder's investment to fluctuate.
The principal risk associated with an investment in a mutual fund like the
Portfolio is that the market value of the portfolio securities may decrease
resulting in a decrease in the value of a shareholder's investment. The value of
the Portfolio's investment portfolio will normally vary inversely with changes
in market interest rates. Generally, when market interest rates rise, the price
of the debt securities held by the Portfolio will fall, and when market interest
rates fall, the price of the debt securities will rise. Also, there is a risk
that the issuer of a security held by the Portfolio will fail to make timely
payment of principal and interest to the Portfolio.
PORTFOLIO MANAGER
The manager for the Portfolio is Michael C. Knebel, Vice President, SAM. Mr.
Knebel has served as manager or co-manager for the Portfolio since 1994. He has
served as portfolio manager for other SAFECO mutual funds since 1989.
INFORMATION ABOUT SHARE OWNERSHIP AND COMPANIES
THAT PROVIDE SERVICES TO THE TRUST
The Portfolio is a series of the SAFECO Institutional Series Trust, a Delaware
business trust, which issues an unlimited number of shares of beneficial
interest. The Board of Trustees may establish additional series of shares of the
Trust without approval of shareholders.
Shares of the Portfolio represent equal proportionate interests in the assets of
the Portfolio and have identical voting, dividend, redemption, liquidation and
other rights. All shares issued are fully paid and non-assessable, and
shareholders have no preemptive or other right to subscribe to any additional
shares.
The Trust does not intend to hold annual meetings of shareholders of the
Portfolio. The Trustees will call special meetings of shareholders of the
Portfolio only if required under the Investment Company Act of 1940, in their
discretion or upon the written request of holders of 10% or more of the
outstanding shares of the Portfolio entitled to vote.
Under Delaware law, the shareholders of the Portfolio will not be personally
liable for the obligations of the Portfolio; a shareholder is entitled to the
same limitation of personal liability extended to shareholders of corporations.
To guard against the risk that Delaware law might not be applied in other
states, the Trust Instrument requires that
-9-
<PAGE> 13
INFORMATION ABOUT SHARE OWNERSHIP AND COMPANIES
THAT PROVIDE SERVICES TO THE TRUST (CONTINUED)
every written obligation of the Trust or Portfolio contain a statement that such
obligation may be enforced only against the assets of the Trust or Portfolio and
generally provides for indemnification out of Trust or Portfolio property of any
shareholder nevertheless held personally liable for Trust or Portfolio
obligations, respectively.
SAM is the investment adviser for the Portfolio under an agreement with the
Trust. Under the agreement, SAM is responsible for the overall management of the
Trust's and Portfolio's business affairs. SAM places orders for the purchase or
sale of the Portfolio's portfolio securities. The Portfolio's turnover rate is
set forth in the "Financial Highlights" section on page 5. High turnover rates
increase transaction costs and may increase taxable gains. SAM considers these
effects when making investment decisions.
The Portfolio pays SAM an annual management fee based on a percentage of the
Portfolio's net assets ascertained each business day and paid monthly in
accordance with the schedule below. A reduction in the fees paid by the
Portfolio occurs only when the Portfolio's net assets reach the dollar amounts
of the break points and applies only to the assets that fall within the
specified range:
<TABLE>
<CAPTION>
NET ASSETS ANNUAL FEE
- ----------------------------------- ----------
<S> <C>
$0 - $100,000,000 .50 of 1%
$100,000,001 - $250,000,000 .40 of 1%
Over $250,000,000 .35 of 1%
</TABLE>
For the fiscal year ended December 31, 1994, the Portfolio's total expenses and
the compensation paid by the Portfolio to SAM, expressed as a percentage of
average net assets, were as follows:
<TABLE>
<CAPTION>
RATIO OF RATIO OF NET
EXPENSES TO COMPENSATION
AVERAGE TO AVERAGE
NET ASSETS NET ASSETS
----------- ------------
<S> <C> <C>
Fixed-Income
Portfolio 1.37% .50%
</TABLE>
The distributor of the Portfolio's shares under an agreement with the Trust is
SAFECO Securities, Inc. ("SAFECO Securities"), a broker-dealer registered under
the Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc. SAFECO Securities receives no compensation from the
Trust or the Portfolio for its services.
The transfer, dividend and distribution disbursement and shareholder servicing
agent for the Portfolio under an agreement with the Trust is SAFECO Services.
SAFECO Services receives a fee from the Portfolio for each shareholder
transaction processed for the Portfolio.
SAM, SAFECO Securities and SAFECO Services are wholly-owned subsidiaries of
SAFECO Corporation (a holding company whose primary subsidiaries are engaged in
the insurance and related financial services businesses) and are each located at
SAFECO Plaza, Seattle, Washington 98185.
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<PAGE> 14
PERFORMANCE INFORMATION
The Portfolio's yield, total return and average annual total return may be
quoted in advertisements. Yield is the annualization on a 360-day basis of the
Portfolio's net income per share over a 30-day period divided by the Portfolio's
net asset value per share on the last day of the period. The formula for the
yield calculation is defined by regulation. Consequently, the rate of actual
income distributions paid by the Portfolio may differ from quoted yield figures.
Total return is the total percentage change in an investment in the Portfolio,
assuming the reinvestment of dividends and capital gains distributions, over a
stated period of time. Average annual total return is the annual percentage
change in an investment in the Portfolio, assuming the reinvestment of dividends
and capital gains distributions over a stated period of time.
From time to time, the Portfolio may advertise its rankings. Rankings are
calculated by independent companies that monitor mutual fund performance (e.g.,
CDA Investment Technologies, Lipper Analytical Services, Inc. and Morningstar,
Inc.) and are reported periodically in national financial publications such as
Barron's, Business Week, Forbes, Investor's Business Daily, Money Magazine and
The Wall Street Journal. In addition, non-standardized performance figures may
accompany the standardized figures described above. Non-standardized figures may
be calculated in a variety of ways including, but not necessarily limited to,
different time periods and different initial investment amounts. The Portfolio
may also compare its performance to the percentage increases in relevant
indices.
Performance information and quoted rankings are indicative only of past
performance and are not intended to represent future investment results. The
Portfolio's yield and share price will fluctuate and shares, when redeemed, may
be worth more or less than a shareholder originally paid for them.
PORTFOLIO DISTRIBUTIONS AND
HOW THEY ARE TAXED
DIVIDENDS AND OTHER DISTRIBUTIONS
The Portfolio declares dividends on each business day from its net investment
income (which includes accrued interest, earned discount, and other income
earned on portfolio securities less expenses) and such shares become entitled to
declared dividends on the next business day after shares are purchased in the
shareholder's account. If a shareholder requests redemption of all shares at any
time during a month, the shareholder will receive all declared dividends through
the date of redemption, together with the proceeds of the redemption.
A shareholder's dividends and other distributions are reinvested in additional
shares of the Portfolio at net asset value per share generally determined as of
the close of business on the ex-distribution date, unless the shareholder elects
in writing to receive dividends and/or other distributions in cash and that
election is provided to SAFECO Services at the address on the Prospectus cover.
The election remains in effect until revoked by written notice in the same
manner as the distribution election. For retirement accounts, all dividends and
other distributions declared by the Portfolio must be invested in additional
shares of the Portfolio.
Please remember that if an investor purchases shares shortly before the
Portfolio pays a taxable dividend or other distribution, the investor will pay
the full price for the shares, then receive part of the price back as a taxable
distribution.
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<PAGE> 15
PORTFOLIO DISTRIBUTIONS AND
HOW THEY ARE TAXED (CONTINUED)
TAXES
The Portfolio intends to continue to qualify for treatment as a regulated
investment company under Subchapter M of the Internal Revenue Code. By so
qualifying, the Portfolio will not be subject to federal income taxes to the
extent it distributes its net investment income and realized capital gains to
its shareholders. The Portfolio will inform each shareholder as to the amount
and nature of dividends and other distributions to that shareholder's account.
Dividends and other distributions, declared in December, but received by
shareholders in January, are taxable to shareholders in the year in which
declared.
TAX WITHHOLDING INFORMATION
Investors will be asked to certify on their account application or on separate
forms that the tax identification number provided is correct and that the
investor is not subject to, or is exempt from, backup withholding for previous
under-reporting to the Internal Revenue Service.
The foregoing is only a summary of some of the important federal tax
considerations generally affecting the Portfolio and its shareholders; see the
Trust's Statement of Additional Information for a further discussion. There may
be other federal, state or local tax considerations applicable to a particular
investor. Investors therefore are urged to consult a tax advisor.
ACCOUNT STATEMENTS
Periodically, shareholders will receive account statements indicating current
fund holdings and transactions affecting their accounts. Confirmation statements
will be sent after every transaction that affects the shareholder's account
balance. Please review the information on each confirmation statement for
accuracy immediately upon receipt. If we are not notified within 30 days of any
processing error, SAFECO Services will consider the transactions listed on the
confirmation statement to be correct.
ACCOUNT CHANGES
AND SIGNATURE REQUIREMENTS
Changes to an account registration or the services an account owner has selected
must be in writing and signed by the persons specified on the account
application as having authority to make these changes. Send written changes to
SAFECO Services at the address on the Prospectus cover. Certain changes can be
made via telephone request if single signature authorization for the account has
been previously selected.
An investor must specify on the account application the number of signatures
required to authorize redemptions and exchanges and to change account
registration or the services selected. Authorizing fewer than all account owners
has important implications. For example, one owner of a joint tenant account can
redeem money or change the account registration to single ownership without the
co-owners signature. If it is not indicated otherwise on the application, the
signatures of all account
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<PAGE> 16
ACCOUNT CHANGES
AND SIGNATURE REQUIREMENTS (CONTINUED)
owners will be required to effect a transaction. The selection of fewer than all
account owner signatures may be revoked by any account owner who writes to
SAFECO Services at the address on the Prospectus cover.
SAFECO Services may require a signature guarantee for a signature that cannot be
verified by comparison to the signature(s) on the account application. A
signature guarantee may be obtained from most financial institutions, including
banks, savings and loans and broker-dealers.
SHARE PRICE CALCULATION
Because the Portfolio is no-load, its share price is equal to its net asset
value per share ("NAV") which is computed as of the close of regular trading on
the New York Stock Exchange (normally 1:00 p.m. Pacific Time) each day the
Exchange is open for trading. The NAV is calculated by subtracting the
Portfolio's liabilities from its assets and dividing the result by the number of
outstanding shares.
The values of the portfolio securities of the Portfolio are stated on the basis
of valuations provided by a pricing service approved by the Trust's Board of
Trustees, unless the Board determines such does not represent fair value. The
service uses information with respect to transactions in securities, quotations
from securities dealers, market transactions in comparable securities and
various relationships between securities to determine values. Other assets for
which a representative value cannot be established are valued at their fair
value as determined in good faith by or under the direction of the Trust's Board
of Trustees.
HOW TO PURCHASE SHARES
A completed and signed application must accompany payment for an initial
purchase by mail and in all cases is necessary before a redemption can be made.
The Portfolio only accepts funds drawn in U.S. dollars and payable through a
U.S. bank. The Portfolio does not accept currency.
Certificates for shares will not be issued.
THE PORTFOLIO HAS THE RIGHT TO REFUSE ANY INVESTMENT.
INITIAL PURCHASES
Minimum initial investment $250,000.
BY WRITTEN REQUEST
Send a check or money order made payable to SAFECO Institutional Series Trust
Fixed-Income Portfolio and a completed and signed application to the address for
SAFECO Services on the Prospectus cover.
BY WIRE
Call toll-free 1-800-624-5711 or, in Seattle, 545-7319 for instructions.
ADDITIONAL PURCHASES
No minimum additional investment amount.
BY WRITTEN REQUEST
Send a check or money order payable to SAFECO Institutional Series Trust
Fixed-Income Portfolio to the address on the Prospectus cover. Please specify
the account number.
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<PAGE> 17
HOW TO PURCHASE SHARES (CONTINUED)
BY WIRE
Instruct the bank to send wires to U.S. Bank of Washington, N.A., Seattle,
Washington, ABA #1250-0010-5, Account #0017-086083.
To ensure timely credit to a shareholder's account, ask the bank to include the
following information in its wire to U.S. Bank of Washington, N.A.:
- - SAFECO Institutional Series Trust -- Fixed-Income Portfolio
- - SAFECO account number
- - Name of the registered owner(s) of the SAFECO account
Delays of purchases caused by inadequate wire instructions are not the
responsibility of the Portfolio or SAFECO Services.
A bank may charge a fee for wire services.
BY TELEPHONE
Call 1-800-624-5711 or, in Seattle, 545-7319. This service must have been
previously selected on the account application or by written request. Not
available to open a new account.
Maximum purchase $1,000,000 per day.
Monies will be transferred from a predesignated bank account to an existing
Portfolio account. A bank may charge a fee if monies are wired to a
shareholder's Portfolio account.
Please allow fifteen business days after selecting this service for it to be
available for first use.
Telephone purchases may be unavailable from some bank accounts and non-bank
financial institutions.
Please read "Telephone Transactions" on page 16 for important information.
AUTOMATIC INVESTMENT METHOD (AIM)
Call 1-800-426-6730 for more information.
AIM enables a shareholder to make regular monthly investments by authorizing
SAFECO Services to withdraw a specific amount (minimum of $100 per withdrawal)
from the shareholder's bank account and invest it in the Portfolio.
SHARE PURCHASE PRICE
An investor will buy full and fractional shares at the NAV next computed after a
check, money order or wire has been received. For telephone purchase orders, an
investor will receive the price per share calculated on the day monies are
received from the investor's bank account. See "Share Price Calculation" on page
13 for more information.
HOW TO REDEEM SHARES
SHARE REDEMPTION PRICE AND PROCESSING
Shares will be redeemed at the NAV next calculated after receipt of a request
which meets the redemption requirements of the Portfolio. The value of the
shares redeemed may be more or less than the dollar amount of shares purchased,
depending on the market value of the shares at the time of redemption. See
"Share Price Calculation," on page 13 for more information. Under some
circumstances (e.g., a change in corporate officer or authorized trustee),
SAFECO Services may require certified copies of supporting documents before a
redemption will be made.
Redemption proceeds will normally be sent on the business day following receipt
of a redemption request. If the redemption request is received after the close
of trading on the New York Stock Exchange, proceeds will normally be sent on the
second business day following receipt. The Portfolio, however, reserves the
right to postpone
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<PAGE> 18
HOW TO REDEEM SHARES (CONTINUED)
payment of redemption proceeds for up to seven days if making immediate payment
could adversely affect the Portfolio. In addition, redemptions may be suspended
or payment dates postponed if the New York Stock Exchange is closed, its trading
is restricted or the Securities and Exchange Commission declares an emergency.
Due to the high cost of maintaining small accounts, the shareholder's account
may be closed upon 60 days' written notice if at the time of any redemption or
exchange the total value falls below $100. Shares will be redeemed at the share
price calculated on the day the account is closed.
BY WRITTEN REQUEST
Shares may be redeemed by sending a letter which specifies the account number,
the Portfolio's name and the number of shares or dollar amount an investor
wishes to redeem. The request should be sent to the address of SAFECO Services
on the Prospectus cover. The request must be signed by the appropriate persons
and in some cases a signature guarantee may be required. In all cases, SAFECO
Services must have a signed and completed application on file before a
redemption can be made. See "Account Changes and Signature Requirements" on page
12 for more information.
BY TELEPHONE
Call 1-800-624-5711 or, in Seattle, 545-7319. This service must have been
previously selected on the account application or by written request.
A shareholder may request that redemption proceeds be sent directly to a
predesignated bank or mailed to the account address of record.
Please read "Telephone Transactions" on page 16 for important information.
PLEASE NOTE THE FOLLOWING:
If shares were purchased by wire, redemption proceeds will be available
immediately. If shares were purchased by a means other than wire, the Portfolio
reserves the right to hold the proceeds of a redemption for up to 15 business
days after investment or until such time as the Portfolio has received assurance
that an investment will be honored by the bank on which it was drawn, whichever
occurs first.
SAFECO Services charges a $10 fee to wire redemption proceeds. In addition, some
banks may charge a fee to receive wires.
HOW TO EXCHANGE SHARES FROM ONE FUND
TO ANOTHER
An exchange is the redemption of shares of one SAFECO Fund such as the Portfolio
and the purchase of shares of another SAFECO Fund in accounts that are
identically registered; i.e., have the same registered owners and account
number. Exchanges are not tax-free and may result in a shareholder realizing a
gain or loss, as the case may be, for tax purposes.
Shares of a SAFECO Fund may be purchased by exchange only if that Fund is
registered for sale in the state where the shareholder resides. Before
exchanging into a SAFECO Fund, please read its Prospectus.
BY WRITTEN REQUEST
Shares may be exchanged by writing SAFECO Services at the address on the
Prospectus cover. Please designate the SAFECO Funds to be exchanged
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<PAGE> 19
HOW TO EXCHANGE SHARES FROM ONE FUND
TO ANOTHER (CONTINUED)
out of and into as well as the shareholder's account number. The request must be
signed by the number of persons designated on the shareholder's account
application and in some cases a signature guarantee may be required. See
"Account Changes and Signature Requirements" on page 12 for more information.
Under some circumstances (e.g., a change in corporate officer or death of an
owner), SAFECO Services may require certified copies of supporting documents
before an exchange can be made.
BY TELEPHONE
Call 1-800-624-5711 or, in Seattle, 545-7319.
Exchanges by telephone must be in amounts of $1,000 or more.
Not available for shares issued in certificate form.
Please read "Telephone Transactions" below for important information.
LIMITATIONS
The Portfolio reserves the right to refuse exchange purchases by any person or
group if, in SAM's judgment, the Portfolio would be unable to invest the money
effectively in accordance with that Portfolio's investment objective and
policies, or would otherwise potentially be adversely affected. The exchange
privilege is subject to termination and its terms are subject to change.
The exchange privilege is not intended to provide a means for frequent trading
in response to short-term fluctuations in the market. Excessive exchange
transactions can be disadvantageous to other shareholders and the Portfolio. A
shareholder's exchanges may be restricted or refused if the Portfolio receives
or anticipates simultaneous orders affecting significant portions of the
Portfolio's assets, for example, a pattern of exchanges that coincides with a
"market-timing" strategy.
Although the Portfolio will attempt to give a shareholder prior notice whenever
it is reasonably able to do so, it may impose these restrictions at any time.
SHARE EXCHANGE PRICE AND PROCESSING
The shares of the Portfolio or other SAFECO fund the shareholder is exchanging
from will be redeemed at the price next computed after the exchange request is
received. Normally the purchase of the SAFECO fund being exchanged into is
executed on the same day. However, each Fund reserves the right to delay the
payment of proceeds and, hence, the purchase in an exchange for up to seven days
if making immediate payment could adversely affect the investment portfolio of
the Portfolio or the other SAFECO fund whose shares are redeemed. The exchange
privilege may be modified or terminated with respect to the Portfolio at
anytime, upon at least 60 days' notice to shareholders.
TELEPHONE TRANSACTIONS
To purchase, redeem or exchange shares by telephone, call 1-800-624-5711 or, in
Seattle, 545-7319 between 5:30 a.m. and 7:00 p.m. Pacific Time, Monday through
Friday, except certain holidays. All telephone calls are tape-recorded for
shareholders' protection. During times of drastic or unusual market volatility,
it may be difficult to exercise the telephone transaction privileges.
To use the telephone purchase, redemption and exchange privileges, the
shareholder must have previously selected these services either on the
shareholder's account application or by submitting a
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<PAGE> 20
TELEPHONE TRANSACTIONS (CONTINUED)
request in writing to SAFECO Services at the address on the Prospectus cover.
Purchasing, redeeming or exchanging shares by telephone allows the Portfolio and
SAFECO Services to accept telephone instructions from an account owner or a
person preauthorized in writing by an account owner.
The Portfolio and SAFECO Services reserve the right to refuse any telephone
transaction when the Portfolio or SAFECO Services in its sole discretion is
unable to confirm to its satisfaction that a caller is the account owner or a
person preauthorized by the account owner.
The Portfolio and SAFECO Services will not be liable for the authenticity of
instructions received by telephone that the Portfolio or SAFECO Services, in its
discretion, believes to be delivered by an account owner or preauthorized
person, provided that the Portfolio or SAFECO Services follows reasonable
procedures to identify the caller. The shareholder will bear the risk of any
resulting loss. The Portfolio and SAFECO Services will follow certain procedures
designed to make sure that telephone instructions are genuine. These procedures
may include requiring the account owner to select the telephone privilege in
writing prior to first use and to designate persons authorized to deliver
telephone instructions. SAFECO Services tape-records telephone transactions and
may request certain identifying information from the caller.
The telephone transaction privileges may be suspended, limited, modified or
terminated at any time without prior notice by the Portfolio or SAFECO Services.
DESCRIPTION OF RATINGS
DESCRIPTION OF COMMERCIAL PAPER RATINGS
MOODY'S. Issuers rated Prime-1 have a superior capacity, issuers rated Prime-2
have a strong capacity and issuers rated Prime-3 have an acceptable capacity for
the repayment of short-term promissory obligations.
S&P. Commercial paper issues rated A are the highest quality obligations.
Issues in this category are regarded as having the greatest capacity for timely
payment. For issues designated A-1 the degree of safety regarding timely payment
is very strong. Issuers designated A-2 also have a strong capacity for timely
payment but not as high as A-1 issuers. Issuers designated A-3 have a
satisfactory capacity for timely payment.
DESCRIPTION OF DEBT RATINGS
MOODY'S. Excerpts from Moody's description of its ratings:
INVESTMENT GRADE:
AAA -- Judged to be of the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
AA -- Judged to be of high quality by all standards. Together with the Aaa group
they comprise what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater amplitude or
there may be other elements present which make the long term risks appear
somewhat larger than in Aaa securities.
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<PAGE> 21
DESCRIPTION OF RATINGS (CONTINUED)
A -- Have many favorable investment attributes and are to be considered as upper
medium grade obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a susceptibility
to impairment sometime in the future.
BAA -- Considered as medium grade obligations, i.e., they are neither highly
protected nor poorly secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well.
NOT INVESTMENT GRADE:
BA -- Judged to have speculative elements; their future cannot be considered as
well assured. Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good and bad times
over the future.
B -- Generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of the contract
over any long period of time may be small.
CAA -- Have poor standing. Such issues may be in default or there may be present
elements of danger with respect to principal or interest.
CA -- Represent obligations which are speculative in a high degree. Such issues
are often in default or have other marked short-comings.
C -- The lowest rated class of bonds. Issues so rated have extremely poor
prospects of ever attaining any real investment standing.
S&P. Excerpts from S&P's description of its ratings:
INVESTMENT GRADE:
AAA -- The highest rating assigned by Standard & Poor's. Capacity to pay
interest and repay principal is extremely strong.
AA -- Very strong capacity to pay interest and repay principal and differs from
the highest rated issues only in small degree.
A -- Strong capacity to pay interest and repay principal although it is somewhat
more susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.
BBB -- Have an adequate capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.
NOT INVESTMENT GRADE:
BB, B, CCC, CC -- Predominately speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "CC" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
C -- Reserved for income bonds on which no interest is being paid.
D -- In default, and payment of interest and/or repayment of principal is in
arrears.
PLUS (+) OR MINUS (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
Ratings by Moody's and S&P represent their respective opinions as to the
investment quality of the rated obligations. Investors should realize these
ratings do not constitute a guarantee that the principal and interest payable
under these obligations will be paid when due.
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<PAGE> 22
SAFECO FAMILY OF FUNDS
STABILITY OF PRINCIPAL
SAFECO Money Market Fund
SAFECO Tax-Free Money Market Fund
TAXABLE BOND INCOME
SAFECO Intermediate-Term U.S. Treasury Fund
SAFECO GNMA Fund
SAFECO High-Yield Bond Fund
TAX-FREE BOND INCOME
SAFECO Intermediate-Term Municipal Bond Fund
SAFECO Insured Municipal Bond Fund
SAFECO Municipal Bond Fund
SAFECO California Tax-Free Income Fund
SAFECO Washington State Municipal Bond Fund
HIGH CURRENT INCOME WITH LONG-TERM GROWTH
SAFECO Income Fund
LONG-TERM GROWTH
SAFECO Growth Fund
SAFECO Equity Fund
SAFECO Northwest Fund
FOR MORE COMPLETE INFORMATION ON ANY SAFECO MUTUAL FUND, INCLUDING MANAGEMENT
FEES AND EXPENSES, CALL OR WRITE FOR A FREE PROSPECTUS. PLEASE READ IT CAREFULLY
BEFORE INVESTING OR SENDING MONEY.
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<PAGE> 24
SAFECO INSTITUTIONAL SERIES TRUST
FIXED-INCOME PORTFOLIO
Statement of Additional Information
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the Prospectus for the SAFECO Institutional Series Trust
("Trust"). A copy of the Prospectus may be obtained by writing SAFECO
Securities, Inc., Attn: Leslie Eggerling, S-3, SAFECO Plaza, Seattle,
Washington 98124-1890, or by calling 1-206-545-6475.
The date of the most current Prospectus of the Trust to which this Statement
relates is April 28, 1995.
The date of this Statement of Additional Information is April 28, 1995.
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
Fixed-Income Portfolio - Principal Shareholders of the
Investment Policies 2 Portfolio 10
Additional Investment Information 5 Trustees and Officers 10
Additional Tax Information 7 Investment Advisory and
Other Services 13
Additional Information on
Calculation of Net Asset Brokerage Practices 15
Value Per Share 7
Redemption in Kind 16
Additional Performance
Information 8 Financial Statements 16
</TABLE>
<PAGE> 25
FIXED-INCOME PORTFOLIO INVESTMENT POLICIES
The Fixed-Income Portfolio ("Portfolio") is a series of the SAFECO
Institutional Series Trust ("Trust"). The investment policies of the Portfolio
are described in the Prospectus and this Statement of Additional Information.
These policies state the investment practices that the Portfolio will follow,
in some cases limiting investments to a certain percentage of assets, as well
as those activities that are prohibited. The types of securities the Portfolio
may invest in is also disclosed in the Prospectus. Before the Portfolio
purchases a security that the following policies permit but which is not
currently described in the Prospectus, the Prospectus will be amended or
supplemented to describe the security. If a policy's percentage limitation is
adhered to immediately after and as a result of the investment, a later
increase or decrease in values, net assets or other circumstances will not be
considered in determining whether the Portfolio complies with the applicable
limitation.
FUNDAMENTAL INVESTMENT POLICIES
The Portfolio's fundamental policies may not be changed without approval of a
majority of its outstanding voting securities as defined in the Investment
Company Act of 1940 ("1940 Act"). For purposes of such approval, the vote of a
majority of the outstanding voting securities of the Portfolio means the vote,
at a meeting of the shareholders of the Portfolio duly called, (i) of 67% or
more of the voting securities present at such meeting if the holders of more
than 50% of the outstanding voting securities are present or represented by
proxy, or (ii) of more than 50% of the outstanding voting securities, whichever
is less.
Under its fundamental policies, the Portfolio may NOT:
1. Purchase the securities of any issuer (except the U.S. Government, its
agencies or instrumentalities) if as a result more than five percent (5%)
of the value of total assets at the time of purchase would be invested in
the securities of such issuer, except that up to twenty-five percent (25%)
of the value of the Portfolio's assets (which twenty-five percent (25%)
shall not include securities issued by another investment company) may be
invested without regard to this five percent (5%) limitation;
2. Purchase the securities of any issuer (other than obligations of or
guaranteed by the U.S. Government, its agencies and instrumentalities) if,
as a result, more than ten percent (10%) of any class of securities of such
issuer will be held by the Portfolio;
3. Purchase securities, if as a result, twenty-five percent (25%) or more of
the Portfolio's total assets would be invested in the securities of issuers
having their principal business activities in any one industry. Securities
of foreign banks and foreign branches of U.S. banks are considered to be
one industry. This limitation does not apply to obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities or to
certificates of deposits or bankers' acceptances issued by domestic banks;
4. Purchase securities on margin, except for short-term credits necessary for
the clearance of transactions;
- 2 -
<PAGE> 26
5. Make short sales of securities (sales of securities not presently owned);
6. Make loans, except through the purchase of a portion or all of an issue of
debt securities in accordance with the Portfolio's investment objective,
policies and restrictions or through investments in qualified repurchase
agreements;
7. Borrow money, except from a bank or SAFECO Corporation or its affiliates at
an interest rate not greater than that available to the Portfolio from
commercial banks, for temporary or emergency purposes and not for
investment purposes, and then only in an amount not exceeding twenty
percent (20%) of the value of the Portfolio's total assets (including
borrowings) less liabilities (other than borrowings) immediately after such
borrowing.
8. Underwrite any issue of securities, except to the extent that the purchase
of permitted investments directly from the issuer in accordance with the
Portfolio's investment objective, policies and restrictions and the
subsequent disposition thereof may be deemed to be underwriting or the
later disposition of restricted securities acquired within the limits
imposed on the acquisition of such securities may be deemed to be an
underwriting;
9. Purchase or sell real estate or real estate limited partnerships (unless
acquired as a result of the ownership of securities or instruments) but
this shall not prevent the Portfolio from investing in permitted
investments secured by real estate or interests therein or in real estate
investment trusts;
10. Purchase or sell commodities, commodity contracts or futures contracts;
11. Participate on a joint or joint-and-several basis in any trading account in
securities, except that the Portfolio may join with other transactions
executed by the investment adviser or the investment adviser's parent
company and any subsidiary thereof, for the purpose of seeking better net
results on portfolio transactions or lower brokerage commission rates; or
12. Issue or sell any senior security, except as permitted under the 1940 Act.
NON-FUNDAMENTAL INVESTMENT POLICIES
In addition to the policies described in the Prospectus, the Portfolio has
adopted the following non-fundamental policies which may be changed by the
Trust's Board of Trustees without shareholder approval:
1. The Portfolio will not issue long-term debt securities.
2. The Portfolio will not invest in any security for the purpose of acquiring
or exercising control or management of the issuer.
3. The Portfolio will not invest in oil, gas or other mineral exploration or
development programs or leases.
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<PAGE> 27
4. The Portfolio will not invest in or sell (write) puts, calls, straddles,
spreads or any combinations thereof.
5. The Portfolio will not invest more than five percent (5%) of its total
assets in securities of issuers (including predecessor companies of the
issuer) having a record of less than three years continuous operation.
6. The Portfolio will not invest in securities with unlimited liability, e.g.,
securities the holder of which may be assessed for amounts in addition to
the subscription or other price paid for the security.
7. The Portfolio will not invest more than ten percent (10%) of its total
assets in qualified repurchase agreements and will not invest in qualified
repurchase agreements maturing in more than seven (7) days.
8. The Portfolio will not purchase the securities of any other investment
company, except by purchase in the open market where no commission or
profit to a broker or dealer results from such purchase other than the
customary broker's commissions, or except as part of a merger,
consolidation or acquisition. The Portfolio shall not invest more than ten
percent (10%) of its total assets in shares of other investment companies,
invest more than five percent (5%) of its total assets in a single
investment company nor purchase more than three percent (3%) of the
outstanding voting securities of a single investment company.
9. The Portfolio will not purchase securities if borrowings equal to or
greater than five percent (5%) of the Portfolio's total assets are
outstanding.
10. The Portfolio will invest at least sixty-five percent (65%) of its total
assets in fixed income obligations.
11. The Portfolio will invest at least fifty percent (50%) of its total assets
in obligations of or guaranteed by the U.S. Government, its agencies and
instrumentalities.
12. The Portfolio may invest up to fifty percent (50%) of its total assets in
corporate debt securities or Eurodollar bonds.
13. The Portfolio may invest up to ten percent (10%) of its total assets in
Yankee Sector debt obligations.
14. The Portfolio may purchase on a when-issued or delayed-delivery basis or
may purchase or sell securities on a forward commitment basis.
15. The Portfolio may temporarily invest its cash in high quality commercial
paper, certificates of deposit, shares of no-load, open-end money market
funds (subject to the percentage limitations set forth in subparagraph 8
above), repurchase agreements (subject to the limitations set forth in
subparagraph 7 above) or any other short-term instrument the Portfolio's
investment adviser deems appropriate.
16. The Portfolio may hold cash as a temporary defensive measure when market
conditions so warrant.
- 4 -
<PAGE> 28
17. The Portfolio shall not engage primarily in trading for short-term profits,
but it may from time to time make investments for short-term purposes when
such action is believed to be desirable and consistent with sound
investment policy. The Portfolio may dispose of securities whenever it
deems advisable without regard to the length of time they have been held.
18. The Portfolio may invest up to five percent (5%) of its total assets in
securities whose interest, in the opinion of counsel for the issuer, is
exempt from federal income taxes.
WHILE THE PORTFOLIO HAS THE AUTHORITY TO INVEST IN THE FOLLOWING TYPES OF
SECURITIES, IT HAS NO PRESENT INTENTION TO DO SO IN THE COMING YEAR. BEFORE
THE PORTFOLIO PURCHASES ANY OF THESE SECURITIES, THE PROSPECTUS WILL BE AMENDED
BY SUPPLEMENT TO DESCRIBE THE SECURITY:
19. The Portfolio may invest up to five percent (5%) of its total assets in
shares of real estate investment trusts.
20. The Portfolio may purchase securities subject to legal or contractual
restrictions on resale or illiquid securities, if no more than fifteen
percent (15%) of the Portfolio's total assets would be invested in such
securities.
21. The Portfolio may purchase foreign securities, provided that such purchase,
at the time thereof, would not cause more than ten percent (10%) of the
total assets of the Portfolio (taken at market value) to be invested in
foreign securities.
22. The Portfolio will not buy or sell foreign currency, except as may be
necessary to invest the proceeds of the sale of any foreign securities held
by the Portfolio in U.S. dollars.
ADDITIONAL INVESTMENT INFORMATION
The Portfolio may make the following investments, among others, although they
may not buy all of the types of securities that are described.
1. REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which the
Portfolio purchases securities from a bank or recognized securities dealer
and simultaneously commits to resell the securities to the bank or dealer
at an agreed-upon date and price reflecting a market rate of interest
unrelated to the coupon rate or maturity of the purchased securities. The
Portfolio maintains custody of the underlying securities prior to their
repurchase; thus, the obligation of the bank or dealer to pay the
repurchase price on the date agreed to is, in effect, secured by such
securities. If the value of these securities is less than the repurchase
price, plus any agreed-upon additional amount, the other party to the
agreement must provide additional collateral so that at all times the
collateral is at least equal to the repurchase price, plus any agreed-upon
additional amount.
Repurchase agreements carry certain risks not associated with direct
investments in securities, including possible declines in the market value
of the underlying securities and delays and costs to the Portfolio if the
- 5 -
<PAGE> 29
other party to a repurchase agreement becomes bankrupt. The Portfolio
intends to enter into repurchase agreements only with banks and dealers in
transactions believed by SAM to present minimum credit risks in accordance
with guidelines established by the Trust's Board of Trustees. SAM will
review and monitor the creditworthiness of those institutions under the
general supervision of the Board of Trustees.
2. WHEN-ISSUED OR DELAYED-DELIVERY SECURITIES. Under this procedure, the
Portfolio agrees to acquire securities (whose terms and conditions,
including price, have been fixed by the issuer) that are to be issued and
delivered against payment in the future. Delivery of securities so sold
normally takes place 30 to 45 days (settlement date) after the date of the
commitment. No interest is earned by the Portfolio prior to the settlement
date. The value of securities sold on a when-issued or delayed-delivery
basis may fluctuate before the settlement date and the Portfolio bears the
risk of such fluctuation from the date of purchase. The Portfolio may
dispose of its interest in those securities before delivery.
The Portfolio will commit to purchase such securities only with the intent
of actually acquiring the securities when issued. Assets which are
short-term, high-quality obligations will be segregated in anticipation of
making payments for securities purchased on a when-issued basis.
3. YANKEE DEBT SECURITIES AND EURODOLLAR BONDS. The Yankee Sector is made up
of securities issued in the U.S. by foreign issuers. These bonds involve
investment risks that are different from those of domestic issuers. Such
risks may include nationalization of the issuer, confiscatory taxation by
the foreign government, establishment of controls by the foreign government
that would inhibit the remittance of amounts due the Portfolio, lack of
comparable publicly available information concerning foreign issuers, lack
of comparable accounting and auditing practices in foreign countries and
finally, difficulty in enforcing claims against foreign issuers in the
event of default.
SAM will make every effort to analyze potential investments in foreign
issuers on the same basis as the rating services analyze domestic issuers.
Because public information is not always comparable to that available on
domestic issuers, this may not be possible. Therefore, while the
investment adviser will make every effort to select investment in foreign
securities on the same basis relative to quality and risk as its
investments in domestic securities, it may not always be able to do so.
Eurodollar Bonds are denominated in U.S. dollars. The Portfolio will
purchase Eurodollar Bonds through U.S. securities dealers and hold such
bonds in the U.S. The delivery of Eurodollar Bonds to the Portfolio's
custodian in the U.S. may cause slight delays in settlement which are not
anticipated to affect the Portfolio in any material, adverse manner.
Eurodollar Bonds issued by foreign issuers are subject to the same risks
as Yankee Sector bonds.
- 6 -
<PAGE> 30
ADDITIONAL TAX INFORMATION
The Portfolio intends to continue to qualify for tax treatment as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986
("Code"). In order to qualify for treatment as a regulated investment company
under the Code, the Portfolio must distribute to its shareholders for each
taxable year at least 90% of its investment company taxable income (consisting
generally of taxable net investment income and net short-term capital gain).
The Portfolio intends to make sufficient distributions to shareholders to
relieve it from liability for federal excise and income taxes.
If shares of the Portfolio are sold at a loss after being held for six months
or less, the loss will be treated as long-term, instead of short- term, capital
loss to the extent of any capital gain distributions received on those shares.
Investors also should be aware that if shares are purchased shortly before the
record date for any distribution (other than an exempt-interest dividend), the
shareholder will pay full price for the shares and receive some portion of the
purchase price back as a taxable dividend or capital gain distribution.
The Portfolio is required to withhold 31% of all taxable dividends, capital
gain distributions and redemption proceeds payable to individuals and certain
other noncorporate shareholders who do not furnish the Portfolio with a correct
taxpayer identification number. Withholding at that rate also is required from
dividends and those distributions for shareholders who otherwise are subject to
backup withholding.
ADDITIONAL INFORMATION ON CALCULATION OF NET ASSET VALUE PER SHARE
The Portfolio determines its net asset value per share ("NAV") by subtracting
its liabilities (including accrued expenses and dividends payable) from its
total assets (the market value of the securities the Portfolio holds plus cash
or other assets, including interest accrued but not yet received) and dividing
the result by the total number of shares outstanding. The NAV of the Portfolio
is calculated as of the close of regular trading on the New York Stock Exchange
("Exchange") every day the Exchange is open for trading. The Exchange is
closed on the following days: New Year's Day, President's Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Portfolio has selected a pricing service to assist in computing the value
of its securities. There are a number of pricing services available and the
decision as to whether, or how, a pricing service should be used by the
Portfolio will be subject to review by the Trust's Board of Trustees.
Short-term securities held by the Portfolio having a remaining maturity of less
than 60 days when purchased, and securities originally purchased with
maturities in excess of 60 days but which currently have maturities of 60 days
or less may be valued at cost adjusted for amortization of premiums or accrual
of discounts or under such other methods as the Board of Trustees may from
time to time deem to be appropriate. The cost of those securities that had
original maturities in excess of 60 days shall be determined by their fair
market value as of the 61st
- 7 -
<PAGE> 31
day prior to maturity. All other securities and assets held by the Portfolio
will be appraised in accordance with those procedures established by the Board
of Trustees in good faith in computing the fair market value of those assets.
ADDITIONAL PERFORMANCE INFORMATION
The yield and total return calculations set forth below are for the dates
indicated and are not a prediction of future results.
The yield for the Fixed-Income Portfolio for the 30 day period ended December
31, 1994 was 6.42%.
Yield is computed using the following formula:
a-b
Yield = 2[( ---- +1)6-1]
cd
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
The total return for the Portfolio for the period from February 28, 1994
(initial public offering) through December 31, 1994, was as follows:
TOTAL RETURN
FISCAL YEARS ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Since Initial # of Date of Initial
Public Offering Months Public Offering
--------------- ------ ---------------
<S> <C> <C> <C>
Fixed-Income
Portfolio -3.01% 10 February 28, 1994
</TABLE>
Total return is computed using the following formula:
ERV-P
T = ----- x 100
P
The average annual return for the Portfolio for the period from February 28,
1994 (initial public offering) through December 31, 1994 was as follows:
- 8 -
<PAGE> 32
AVERAGE ANNUAL TOTAL RETURN
FISCAL YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Since Initial # of Date of Initial
Public Offering Months Public Offering
--------------- ------ ---------------
<S> <C> <C> <C>
Fixed-Income
Portfolio -3.60% 10 February 28, 1994
</TABLE>
The average annual total return is computed using the following formula:
A = (n Bent Radical ERV/P - 1) x 100
Where: T = total return
A = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical
$1,000 investment at the end of a specified
period of time
P = a hypothetical initial investment of $1,000
In making the above calculation, all dividend and capital gains distributions
are assumed to be reinvested at the Portfolio's NAV on the reinvestment date.
In addition to performance figures, the Portfolio may advertise its rankings as
calculated by independent rating services which monitor mutual funds'
performance (e.g., CDA Investment Technologies, Lipper Analytical Services,
Inc., Morningstar, Inc. and Wiesenberger Investment Companies Service). These
rankings may be among mutual funds with similar objectives and/or size or with
mutual funds in general. In addition, the Portfolio may advertise rankings
which are in part based upon subjective criteria developed by independent
rating services to measure relative performance. Such criteria may include
methods to account for levels of risk and potential tax liability, sales
commissions and expense and turnover ratios. These rating services may also
base the measure of relative performance on time periods deemed by them to be
representative of up and down markets.
The Portfolio may occasionally reproduce articles or portions of articles about
the Portfolio written by independent third parties such as financial writers,
financial planners and financial analysts, which have appeared in financial
publications of general circulation or financial newsletters (including but not
limited to Barrons, Business Week, Forbes, Fortune, Investors Business Daily,
Kiplinger's, Money Magazine, Newsweek, Pensions & Investments, Time Magazine,
U.S. News and World Report and The Wall Street Journal).
The Portfolio may also present in its advertisements and sales literature (i) a
biography or the credentials of its portfolio manager (including but not
limited to educational degrees, professional designations, work experience,
work responsibilities and outside interests), (ii) descriptions, including
quotations
- 9 -
<PAGE> 33
attributable to the portfolio manager of the investment style used to manage
the Portfolio, the research methodologies underlying securities selection and
the Portfolio's investment objective, (iii) current facts (including but not
limited to number of employees, number of shareholders, business
characteristics) about the Portfolio's investment adviser (SAM), the investment
adviser's parent company (SAFECO Corporation), or the SAFECO Family of Funds
and (iv) information about particular securities held in the Portfolio's
investment portfolio.
PRINCIPAL SHAREHOLDERS OF THE PORTFOLIO
At March 31, 1995, SAFECO Asset Management Company owned 15,675 shares of the
Fixed-Income Portfolio which represented 2.76% of the Portfolio's outstanding
shares. SAFECO Asset Management Company is the investment advisor for the
Portfolio. SAFECO Asset Management Company is a Washington corporation with
its principal place of business at SAFECO Plaza, Seattle, Washington 98185.
TRUSTEES AND OFFICERS
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE WITH THE TRUST DURING PAST 5 YEARS
--------------------- -------------- --------------------
<S> <C> <C>
Boh A. Dickey * Chairman Executive Vice President
SAFECO Plaza and Chief Financial Officer and
Seattle, Washington 98185 Trustee Director of SAFECO Corporation.
(51) He has been an executive officer
of SAFECO Corporation
subsidiaries since 1982.
See table under "Investment
Advisory and Other Services."
Barbara J. Dingfield Trustee Manager, Corporate Contributions and Community
Microsoft Corporation Programs for Microsoft Corporation, Redmond,
One Microsoft Way Washington, a computer software company; Director
Redmond, WA 98052 and former Executive Vice President of Wright
(50) Runstad & Co., Seattle, Washington, a real estate
development company; Director of First SAFECO
National Life Insurance Company of New York.
Richard W. Hubbard * Trustee Retired Vice President and Treasurer of the Trust
1270 N.W. Blakely Ct. and other SAFECO Trusts; retired Senior Vice
Seattle, WA 98177 President and Treasurer of SAFECO Corporation;
(66) former President of SAFECO Asset Management
Company.
Richard E. Lundgren Trustee Director of Marketing and
764 S. 293rd Street Customer Relations, Building
Federal Way, Washington 98032 Materials Distribution,
(58) Weyerhaeuser Company, Tacoma,
Washington; Director of First SAFECO National
Life Insurance Company of New York.
</TABLE>
- 10 -
<PAGE> 34
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE WITH THE TRUST DURING PAST 5 YEARS
--------------------- -------------- --------------------
<S> <C> <C>
L. D. McClean * Trustee Retired Assistant Secretary of
7231 91st Avenue SE SAFECO Corporation and its
Mercer Island, WA 98040 property and casualty and life
(68) insurance affiliates; Director
of First SAFECO National Life
Insurance Company of New York;
former President of the SAFECO
Mutual Funds; former Director of SAFECO Asset
Management Company, SAFECO Securities, Inc. and
SAFECO Services Corporation.
Larry L. Pinnt Trustee Retired Vice President and Chief Financial
1600 Bell Plaza Officer of U.S. WEST Communications, Seattle,
Room 1802 Washington; Director of Key Bank of Washington;
Seattle, Washington 98191 Director of PREMERA; Director of Blue Cross of
(60) Washington and Alaska; Director of First SAFECO
National Life Insurance Company of New York.
John W. Schneider Trustee President of Merit Hotel
1808 North 41st Associates, Inc., Seattle,
Seattle, Washington 98103 Washington; former President of Coast Hotels,
(54) Inc.; Director of First SAFECO National Life
Insurance Company of New York.
David F. Hill President President of SAFECO Securities,
SAFECO Plaza Inc. and SAFECO Services
Seattle, Washington 98185 Corporation; Senior Vice
(47) President of SAFECO Asset
Management Company. See table
under "Investment Advisory and
Other Services."
</TABLE>
- 11 -
<PAGE> 35
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION
NAME, ADDRESS AND AGE WITH THE TRUST DURING PAST 5 YEARS
--------------------- -------------- --------------------
<S> <C> <C>
Neal A. Fuller Vice President, Vice President, Controller, Assistant Secretary
SAFECO Plaza Controller and and Treasurer of SAFECO Securities, Inc. and
Seattle, Washington 98185 Assistant Secretary SAFECO Services Corporation; Vice President,
(33) Secretary and Treasurer of SAFECO Asset
Management; former Chief Assistant Treasurer for
the State of Idaho. See table under "Investment
Advisory and Other Services."
Ronald L. Spaulding Vice President and Vice Chairman of SAFECO Asset Management Company;
SAFECO Plaza Treasurer Vice President and Treasurer of SAFECO
Seattle, Washington 98185 Corporation; Vice President and Director of
(51) SAFECO Life Insurance Company; former Senior
Portfolio Manager of SAFECO Insurance Companies'
taxable bond portfolios; former Portfolio Manager
for several SAFECO mutual funds. See table under
"Investment Advisory and Other Services."
</TABLE>
* Trustees who are interested persons as defined by the 1940 Act.
For the fiscal year ended December 31, 1994, the Trustees of the Trust not
employed by SAFECO Corporation or its affiliates as a group received $64,800
for their services as such. The officers of the Trust received no compensation
for their services as officers or, if applicable, as Trustees.
At March 31, 1995, the Trustees and officers of the Trust as a group owned none
of the outstanding shares of the Portfolio.
- 12 -
<PAGE> 36
COMPENSATION TABLE
<TABLE>
<CAPTION>
Pension or
Retirement Total Compensation
Aggregate Benefits Accrued Estimated Annual From Registrant and
Compensation from As Part of Fund Benefits Upon Fund Complex Paid to
Trustee Registrant Expenses Retirement Trustees
------- ----------------- ---------------- ---------------- --------------------
<S> <C> <C> <C> <C>
Barbara J. Dingfield
$2,400 N/A N/A $16,200
Richard E. Lundgren
$2,400 N/A N/A $16,200
L.D. McClean
$2,200 N/A N/A $14,900
Larry L. Pinnt
$2,400 N/A N/A $16,200
John W. Schneider
Boh A. Dickey $2,400 N/A N/A $16,200
Richard W. Hubbard $0 N/A N/A $0
$0 N/A N/A $0
</TABLE>
Currently, there is no pension, retirement, or other plan or any arrangement
pursuant to which Trustees or officers of the Trust are compensated by the
Trust. Each Trustee also serves as Trustee for six other registered open-end,
management investment companies that have, in the aggregate, twenty-seven
series companies managed by SAM.
INVESTMENT ADVISORY AND OTHER SERVICES
SAM, SAFECO Securities, Inc. ("SAFECO Securities") and SAFECO Services
Corporation ("SAFECO Services") are wholly-owned subsidiaries of SAFECO
Corporation. SAFECO Securities, is the principal underwriter of the Portfolio
and SAFECO Services is the transfer, dividend and distribution disbursement and
shareholder servicing agent of the Portfolio under agreements with the Trust.
The following individuals have the following positions and offices with the
Trust, SAM, SAFECO Securities and SAFECO Services:
- 13 -
<PAGE> 37
<TABLE>
<CAPTION>
SAFECO SAFECO
Name Trust SAM Securities Services
---- ----- --- ---------- --------
<S> <C> <C> <C> <C>
B. A. Dickey Chairman Director Director
Trustee
D. F. Hill President Senior Vice President President
President Director Director
Director
N. A. Fuller Vice President Vice President Vice Vice President
Controller Controller President Controller
Assistant Secretary Assistant Assistant
Secretary Treasurer Secretary Secretary
Controller Treasurer
Treasurer
R.A. Spaulding Vice President Vice President Director
Treasurer
S.C. Bauer President
</TABLE>
Mr. Dickey is Executive Vice President, Chief Financial Officer and a director
of SAFECO Corporation and Mr. Spaulding is Assistant Treasurer of SAFECO
Corporation. Mssrs. Dickey and Spaulding are also directors of other SAFECO
Corporation subsidiaries.
In connection with the investment advisory contract with the Trust, SAM
furnishes or pays for all facilities and services furnished or performed for or
on behalf of the Trust or the Portfolio which include furnishing office
facilities, books, records and personnel to manage the Trust's and the
Portfolio's affairs and paying certain expenses.
For the services and facilities furnished by SAM, the Trust has agreed to pay
an annual fee for the Portfolio computed on the basis of the average market
value of the net assets of the Portfolio ascertained each business day and paid
monthly in accordance with the following schedules. The reduction in fees
occurs only at such time as the Portfolio's net assets reach the dollar amounts
of the breakpoints and applies only to those assets which fall within the
specified range:
<TABLE>
<CAPTION>
Net Assets Fee
---------- ---
<S> <C>
For assets up to and
including $100,000,000 .50 of 1%
For assets in excess of $100,000,000
and up to and including $250,000,000 .40 of 1%
For assets over $250,000,000 .35 of 1%
</TABLE>
The Portfolio bears all expenses of its operations not specifically assumed by
SAM. SAM shall, however, reimburse the Portfolio for the amount by which the
Portfolio's expenses in any full fiscal year (excluding interest expense,
taxes, brokerage
- 14 -
<PAGE> 38
expenses and extraordinary expenses) exceed the limits prescribed by any such
state in which the Portfolio's shares are qualified for sale. Presently, the
most restrictive expense ratio limitation imposed by any such state is 2.5% of
the first $30 million of the Portfolio's average daily net assets, 2.0% of the
next $70 million of such assets, and 1.5% of the remaining net assets. For the
purpose of determining whether the Portfolio is entitled to reimbursement, the
expenses of the Portfolio are calculated on a monthly basis. If the Portfolio
is entitled to a reimbursement, that month's advisory fee will be reduced or
postponed, with any adjustment made after the end of the fiscal year.
The following table states the total amount of compensation paid by the
Portfolio to SAM for the fiscal year ending December 31, 1994.
Fees Paid to SAM
Fiscal Year Ended
December 31, 1994
-----------------
$15,869
U.S. Bank of Washington, N.A., 1420 Fifth Avenue, Seattle, Washington 98101, is
the custodian of the securities and cash of the Portfolio under an agreement
with the Trust. Ernst & Young LLP, 999 Third Avenue, Suite 3500, Seattle,
Washington, 98104 is the independent auditor, that audits the financial
statements of the Trust.
SAFECO Services, SAFECO Plaza, Seattle, Washington 98185, is the transfer,
dividend and distribution disbursement and shareholder servicing agent for the
Portfolio under an agreement with the Trust. SAFECO Services is responsible
for all required transfer agent activity, including maintenance of records of
the Portfolio's shareholders, records of transactions involving the Portfolio's
shares, and the compilation, distribution, or reinvestment of income dividends
or capital gains distributions. SAFECO Services is paid a fee of $3.10 per
shareholder transaction. The following table states the total amount of
compensation paid by the Portfolio to SAFECO Services for the fiscal year
ending December 31, 1994:
Fees Paid to SAFECO Services
Fiscal Year Ending
December 31, 1994
-----------------
$96
SAFECO Securities is the principal underwriter for the Portfolio and
distributes the Portfolio's shares on a continuous best efforts basis underan
agreement withthe Trust. SAFECO Securitiesis notcompensated bythe Trustor
thePortfolio for underwriting,distribution orother activities.
BROKERAGE PRACTICES
SAM places orders for the purchase or sale of the Portfolio's securities. In
deciding which broker to use in a given transaction, SAM uses the following
criteria:
(1) Which broker gives the best execution, (which broker is able to trade
the
- 15 -
<PAGE> 39
securities in the amounts and at the price desired and on a timely
basis);
(2) Whether the broker is known to SAM as being reputable; and
(3) All other things being equal, which broker has provided useful research
services to SAM.
Such research services as are furnished to SAM during the year, (e.g., written
reports analyzing economic and financial characteristics of the industries and
companies, telephone conversations between brokerage security analysts and
members of SAM's staff, and personal visits by such analysts and brokerage
strategists and economists to SAM's office) are used by SAM to advise all of
its clients including the Portfolio, but not all such research services
furnished to SAM are used by it to advise the Portfolio. SAM will not pay
excess commissions or mark-ups to any broker or dealer for research services or
for any other reason. Purchases and sales of portfolio securities are
transacted with the issuer or with a primary market maker, acting as principal
for the securities on a net basis, with no brokerage commission being paid by
the Portfolio. Transactions placed through dealers serving as primary market
makers reflect the spread between the bid and the asked prices. Occasionally,
the Portfolio may make purchases of underwritten issues at prices which include
underwriting fees.
REDEMPTION IN KIND
If the Trust concludes that cash payment upon redemption to a shareholder would
be prejudicial to the best interest of the other shareholders of the Portfolio,
a portion of the payment may be made in kind. The Trust has elected to be
governed by Rule 18(f)(1) under the 1940 Act pursuant to which the Trust must
redeem shares tendered by a shareholder solely in cash up to the lesser of
$250,000 or 1% of the net asset value of the Portfolio during any 90-day
period. Any shares tendered by the shareholder in excess of the
above-mentioned limit may be redeemed through distribution of the Portfolio's
assets. Any securities or other property so distributed in kind shall be
valued by the same method as is used in computing NAV. Distributions in kind
will be made in readily marketable securities, unless the investor elects
otherwise. Investors may incur brokerage costs in disposing of securities
received in such a distribution in kind.
FINANCIAL STATEMENTS
The following financial statements and the report thereon of Ernst & Young LLP,
independent auditors, are incorporated herein:
Portfolio of Investments as of December 31, 1994
Statement of Assets and Liabilities as of December 31, 1994
Statement of Operations for the Year Ended December 31, 1994
Statement of Changes in Net Assets for the Years Ended December 31, 1994
and December 31, 1993
Notes to Financial Statements
A copy of the Trust's Annual Report accompanies this Statement of Additional
Information. Additional copies may be obtained by calling SAFECO Services at
1-800-426-6730 nationwide or 206-545-5530 in Seattle or by writing to the
address on the Prospectus cover.
- 16 -
<PAGE> 40
SAFECO INSTITUTIONAL SERIES TRUST
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The following financial statements for Registrant's Fixed-Income Portfolio
for the fiscal year ended December 31, 1994 and the report thereon of
Ernst & Young LLP, independent auditors, are incorporated in the
Statement of Additional Information by reference to Registrant's Annual
Report which was filed with the SEC on March 6, 1995:
Portfolio of Investments as of December 31, 1994
Statement of Assets and Liabilities as of December 31, 1994
Statement of Operations for the Year Ended December 31, 1994
Statement of Changes in Net Assets for the Years Ended
December 31, 1994 and December 31, 1993
Notes to Financial Statements
(b) Exhibits:
<TABLE>
<CAPTION>
Exhibit
Number Description of Document Page
- ------ ----------------------- ----
<S> <C> <C>
(27.1) Financial Data Schedule
(99.1) Trust Investment/Certificate of Trust
(99.2) Bylaws
(99.5) Investment Advisory and Management Contract
(99.6) Distribution Agreement
(99.8) Custody Agreement
(99.9) Transfer Agent Agreement
(99.10) Opinion of Counsel
(99.11) Consent of Independent Auditors
(99.12) Registrant's Annual Report dated
December 31, 1994 including financial statements+
(99.13)(i) Stock Purchase Agreement
(ii) Additional Share Purchase Agreement
(99.16) Calculation of Performance Information
</TABLE>
+ Registrant's Annual Report was filed with the Securities and Exchange
Commission on or about March 6, 1995. The Report contains the financial
statements incorporated by reference in Registrant's Statement of Additional
Information.
<PAGE> 41
Item 25. Persons Controlled by or Under Common Control With Registrant
At March 31, 1995 SAFECO Asset Management Company ("SAM") owned 15,675 shares
or 2.76% of Registrant's issued and outstanding common stock. SAM is a
corporation organized under the laws of the state of Washington, Registrant's
investment adviser and a wholly-owned subsidiary of SAFECO Corporation (a
Washington Corporation).
SAFECO Corporation, a Washington corporation, owns 100% of SAFECO Asset
Management Company (SAM), SAFECO Services Corporation (SAFECO Services) and
SAFECO Securities, Inc. (SAFECO Securities), each a Washington corporation.
SAM is the investment advisor, SAFECO Services is the transfer agent and SAFECO
Securities is the principal underwriter for each of the SAFECO mutual funds.
The SAFECO Mutual Funds consist of seven Delaware business trusts: SAFECO
Common Stock Trust, SAFECO Taxable Bond Trust, SAFECO Tax-Exempt Bond Trust,
SAFECO Advisor Series Trust, SAFECO Money Market Trust, SAFECO Institutional
Series Trust and SAFECO Resource Series Trust. The SAFECO Common Stock Trust
consists of four mutual funds: SAFECO Growth Fund, SAFECO Equity Fund, SAFECO
Income Fund and SAFECO Northwest Fund. The SAFECO Taxable Bond Trust consists
of three mutual funds: SAFECO Intermediate-Term U.S. Treasury Fund, SAFECO GNMA
Fund and SAFECO High-Yield Bond Fund. The SAFECO Tax-Exempt Bond Trust
consists of five mutual funds: SAFECO Intermediate-Term Municipal Bond Fund,
SAFECO Insured Municipal Bond Fund, SAFECO Municipal Bond Fund, SAFECO
California Tax-Free Income Fund and SAFECO Washington State Municipal Bond
Fund. The SAFECO Advisor Series Trust consists of eight mutual funds: Advisor
Equity Fund, Advisor Northwest Fund, Advisor Intermediate-Term Treasury Fund,
Advisor GNMA Fund, Advisor U.S. Government Fund, Advisor Municipal Bond Fund,
Advisor Intermediate-Term Municipal Bond Fund and Advisor Washington Municipal
Bond Fund. The SAFECO Money Market Fund consists of two mutual funds: SAFECO
Money Market Fund and SAFECO Tax-Free Money Market Fund. The SAFECO
Institutional Series Trust consists of one mutual fund: Fixed-Income Portfolio.
The SAFECO Resource Series Trust consists of five mutual funds: Equity
Portfolio, Growth Portfolio, Northwest Portfolio, Bond Portfolio and Money
Market Portfolio.
SAFECO Corporation, a Washington Corporation, owns 100% of the following
Washington corporations: SAFECO Insurance Company of America, General Insurance
Company of America, First National Insurance Company of America, SAFECO Life
Insurance Company of America, SAFECO Assigned Benefits Service Company, SAFECO
Administrative Services, Inc., SAFECO Properties Inc., SAFECO Credit Company,
Inc., SAFECO Asset Management Company, SAFECO Securities, Inc., SAFECO Services
Corporation, SAFECO Trust Company and General America Corporation. SAFECO
Corporation owns 100% of SAFECO National Insurance Company, a Missouri
corporation, and SAFECO Insurance Company of Illinois, an Illinois corporation.
SAFECO Corporation owns 20% of Agena, Inc., a Washington corporation. SAFECO
Insurance Company of America owns 100% of SAFECO Management Corp., a New York
corporation, and SAFECO Surplus Lines Insurance Company, a Washington
corporation. SAFECO Life Insurance Company owns 100% of SAFECO National Life
Insurance Company, a Washington corporation, and First SAFECO National Life
Insurance Company of New York, a New York corporation. SAFECO Administrative
Services, Inc. owns 100% of Employee Benefit Claims of Wisconsin, Inc. and
Wisconsin Pension and Group Services, Inc., each a Wisconsin corporation.
General America Corporation owns 100% of COMAV Mangers, Inc., an Illinois
corporation, F.B. Beattie & Co., Inc., a Washington corporation, General
America Corp. of Texas, a Texas corporation, S&T Financial Corporation, a
Washington corporation and Whitehall Insurance Brokers, Inc., a California
corporation.
2
<PAGE> 42
F.B. Beattie & Co., Inc. owns 100% of F.B. Beattie Insurance Services, Inc., a
California corporation. General America Corp. of Texas is Attorney-in-fact for
SAFECO Lloyds Insurance Company, a Texas corporation. S&T Financial
Corporation owns 100% of PNMR Securities, Inc., a Washington corporation, and
Talbot Financial Corporation, a Washington corporation which owns 100% of
Talbot Agency, Inc., a New Mexico corporation. SAFECO Properties Inc. owns
100% of the following, each a Washington corporation: RIA Development, Inc.,
SAFECARE Company, Inc. and Winmar Company, Inc. SAFECARE Company, Inc. owns
100% of the following, each a Washington corporation: S.C. Bellevue, Inc., S.C.
Everett, Inc., S.C. Marysville, Inc., S.C. Simi Valley, Inc. and S.C.
Vancouver, Inc. SAFECARE Company, Inc. owns 50% of Lifeguard Ventures, Inc., a
California corporation. S.C. Simi Valley, Inc. owns 100% of Simi Valley
Hospital, Inc., a Washington corporation. Winmar Company, Inc. owns 50% of C-W
Properties, Inc., a Washington corporation. Winmar Company, Inc. owns 100% of
the following: Barton Street Corp., Gem State Investors, Inc., Kitsap Mall,
Inc., WNY Development, Inc., Winmar Cascade, Inc., Winmar Metro, Inc., Winmar
Northwest, Inc., Winmar Redmond, Inc. and Winmar of Kitsap, Inc., each a
Washington corporation, and Capitol Court Corp., a Wisconsin corporation,
SAFECO Properties of Boise, Inc., an Idaho corporation, SCIT, Inc., a
Massachusetts corporation, Valley Fair Shopping Centers, Inc., a Delaware
corporation, WDI Golf Club, Inc., a California corporation, Winmar Oregon,
Inc., an Oregon corporation, Winmar of Texas, Inc., a Texas corporation, Winmar
of Wisconsin, Inc., a Wisconsin corporation, and Winmar of the Desert, Inc., a
California corporation. Winmar Oregon, Inc. owns 100% of the following, each
an Oregon corporation: North Coast Management, Inc., Pacific Surfside Corp.,
Winmar of Jantzen Beach, Inc. and W-P Development, Inc., and 100% of the
following, each a Washington corporation: Washington Square, Inc. and Winmar
Pacific, Inc.
Item 26. Number of Holders of Securities
At March 31, 1995, Registrant had 4 shareholders of record in its Fixed-Income
Portfolio.
Item 27. Indemnification
Under the Trust Instrument of the Registrant, the Registrant's trustees,
officers, employees and agents are indemnified against certain liabilities,
subject to specified conditions and limitations.
Under the indemnification provisions in the Registrant's Trust Instrument and
subject to the limitations described in the paragraph below, every person who
is, or has been a trustee, officer, employee or agent of the Registrant shall
be indemnified by the Registrant or the appropriate Series of the Registrant to
the fullest extent permitted by law against liability and against all expenses
reasonably incurred or paid by him or her in connection with any claim, action,
suit or proceeding in which he or she becomes involved as a party or otherwise
by virtue of his or her being, or having been, a trustee, officer, employee or
agent and against amounts paid or incurred by him or her in the settlement
thereof. As used in this paragraph, "claim," "action," "suit" or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened, and the words, "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs,
judgements, amounts paid in settlement, fines, penalties and other liabilities.
3
<PAGE> 43
No indemnification will be provided to a trustee, officer, employee or agent:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (a) to be liable to the Registrant or its shareholders
by reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office, or (b)
not to have acted in good faith in the reasonable belief that his or her action
was in the best interest of the Registrant; or (ii) in the event of settlement,
unless there has been a determination that such trustee, officer, employee or
agent did not engage in willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office:
(a) by the court or other body approving the settlement; (b) by the vote of at
least a majority of a quorum of those trustees who are neither interested
persons, as that term is defined by the Investment Company Act of 1940, of the
Registrant nor are the parties to the proceeding based upon a review of readily
available facts (as opposed to a full trial type inquiry); or (c) by written
opinion of independent legal counsel based upon a review of readily available
facts (as opposed to a full trial type inquiry).
To the maximum extent permitted by applicable law, expenses incurred in
connection with the preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described above may be paid by the
Registrant or applicable Series from time to time prior to final disposition
thereof upon receipt of an undertaking by or on behalf of such trustee,
officer, employee or agent that such amount will be paid over by him or her to
the Registrant or the applicable Series if it is ultimately determined that he
or she is not entitled to indemnification under the Trust Instrument; provided,
however, that either (i) such trustee, officer, employee or agent shall have
provided appropriate security for such undertaking, (ii) the Registrant is
insured against such losses arising out of such advance payments or (iii)
either a majority of the trustees who are neither interested persons, as that
term is defined by the Investment Company Act of 1940, of the Registrant nor
parties to the proceeding, or independent legal counsel in a written opinion,
shall have determined, based on a review of readily available facts (as opposed
to full trial type inquiry), that there is reason to believe that such trustee,
officer, employee or agent, will not be disqualified from indemnification under
Registrant's Trust Instrument.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, officers, employees and agents of the
Registrant pursuant to such provisions of the Trust Instrument or statutes or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in said Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a trustee, officer,
employee or agent of the Registrant in the successful defense of any such
action, suit or proceeding) is asserted by such trustee, officer, employee or
agent in connection with the shares of the Registrant, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in said Act
and will be governed by the final adjudication of such issue.
Under an agreement with its distributor ("Distribution Agreement"), Registrant
has agreed to indemnify, defend and hold the distributor, the distributor's
4
<PAGE> 44
several directors, officers and employees, and any person who controls the
distributor within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
distributor, its directors, officers or employees, or any such controlling
person may incur, under the 1933 Act or under common law or otherwise, arising
out of or based upon any alleged untrue statement of a material fact contained
in the Registration Statement or arising out of or based upon any alleged
omission to state a material fact required to be stated or necessary to make
the Registration Statement not misleading, provided that in no event shall
anything contained in the Distribution Agreement be construed so as to protect
the distributor against any liability to the Registrant or its shareholders to
which the distributor would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its duties,
or by reason of its reckless disregard of its obligations and duties under the
Distribution Agreement, and further provided that the Registrant shall not
indemnify the distributor for conduct set forth in this subparagraph.
Under an agreement with its transfer agent, Registrant has agreed to indemnify
and hold the transfer agent harmless against any losses, claims, damages,
liabilities or expenses (including reasonable attorneys' fees and expenses)
resulting from: (1) any claim, demand, action or suit brought by any person
other than the Registrant, including by a shareholder, which names the transfer
agent and/or the Registrant as a party, and is not based on and does not result
from the transfer agent's willful misfeasance, bad faith or negligence or
reckless disregard of duties, and arises out of or in connection with the
transfer agent's performance hereunder; or (2) any claim, demand, action or
suit (except to the extent contributed to by the transfer agent's willful
misfeasance, bad faith or negligence or reckless disregard of duties) which
results from the negligence of the Registrant, or from the transfer agent
acting upon any instruction(s) reasonably believed by it to have been executed
or communicated by any person duly authorized by the Registrant, or as a result
of the transfer agent acting in reliance upon advice reasonably believed by the
transfer agent to have been given by counsel for the Registrant, or as a result
of the transfer agent acting in reliance upon any instrument or stock
certificate reasonably believed by it to have been genuine and signed,
countersigned or executed by the proper person.
Item 28. Business and Other Connections of Investment Adviser
The investment adviser to the Registrant, SAM, serves as an adviser to: (a)
nineteen series (portfolios) of six registered investment companies, (b) five
series of an investment company that serves as the investment vehicle for
variable insurance products and (c) a number of pension funds not affiliated
with SAFECO Corporation or its affiliates. The directors and officers of SAM
serve in similar capacities with SAFECO Corporation or its affiliates. The
information set forth under "Investment Advisory and Other Services" in the
Registrant's Statement of Additional Information is incorporated by reference.
Item 29. Principal Underwriters
(a) SAFECO Securities, Inc., the principal underwriter for Registrant, also
acts as the principal underwriter for each series of the SAFECO Common
Stock Trust, SAFECO Tax-Exempt Bond Trust, SAFECO Taxable Bond Trust,
SAFECO Money Market Trust, SAFECO Resource Series Trust and SAFECO Advisor
5
<PAGE> 45
Series Trust. In addition SAFECO Securities is the principal underwriter
for SAFECO Separate Account C, SAFECO Variable Account B and SAFECO Separate
Account SL, all of which are variable insurance products.
(b) The information set forth under "Investment Advisory and Other Services" of
the Registrant's Statement of Additional Information is incorporated by
reference.
Item 30. Location of Accounts and Records
U.S. Bank of Washington, N.A., 1420 Fifth Avenue, Seattle, Washington 98101
maintains physical possession of the accounts, books and documents of the
Registrant relating to its activities as custodian of the Registrant. SAFECO
Asset Management Company, SAFECO Plaza, Seattle, Washington 98185, maintains
physical possession of all other accounts, books or documents of the Registrant
required to be maintained by Section 31(a) of the Investment Company Act of
1940 and the rules promulgated thereunder.
Item 31. Management Services
Inapplicable.
Item 32. Undertakings
Inapplicable.
6
<PAGE> 46
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereto duly
authorized, in the City of Seattle, and State of Washington on the 26th day of
April, 1995.
SAFECO INSTITUTIONAL SERIES TRUST
By /s/ DAVID F. HILL
-------------------------------------------
David F. Hill, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following person in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C> <C>
/s/ DAVID F. HILL President
- ---------------------- (Principal Executive Officer) April 26, 1995
David F. Hill
RONALD A. SPAULDING* Vice President and Treasurer April 26, 1995
- ----------------------
Ronald A. Spaulding
NEAL A. FULLER* VicePresident April 26, 1995
- ----------------------- Controller
Neal A. Fuller Assistant Secretary
(Principal Financial Officer)
/s/ BOH A. DICKEY Chairman and Trustee April 26, 1995
- -----------------------
Boh A. Dickey
BARBARA J. DINGFIELD* Trustee April 26, 1995
- -----------------------
Barbara J. Dingfield
RICHARD W. HUBBARD* Trustee April 26, 1995
- -----------------------
Richard W. Hubbard
RICHARD E. LUNDGREN* Trustee April 26, 1995
- -----------------------
Richard E. Lundgren
L. D. MCCLEAN* Trustee April 26, 1995
- -----------------------
L. D. McClean
LARRY L. PINNT* Trustee April 26, 1995
- -----------------------
Larry L. Pinnt
JOHN W. SCHNEIDER* Trustee April 26, 1995
- -----------------------
John W. Schneider
*By /s/ BOH A. DICKEY *By /s/ DAVID F. HILL
------------------- ------------------
Boh A. Dickey David F. Hill
Attorney-in-Fact Attorney-in-Fact
</TABLE>
7
<PAGE> 47
POWER OF ATTORNEY
SAFECO INSTITUTIONAL SERIES TRUST, a Delaware business trust (the "Trust"), and
each of its undersigned officers and trustees, hereby nominates, constitutes
and appoints Boh A. Dickey and David F. Hill (with full power to each of them
to act alone) its/his/her true and lawful attorney-in-fact and agent, for
it/him/her and on its/his/her behalf and in its/his/her name, place and stead
in any and all capacities, to make, execute and sign any and all amendments to
the Trust's registration statement on Form N-1A under the Securities Act of
1933, as amended, and the Investment Company Act of 1940, as amended, as well
as any and all registration statements on Form N-14, and to file with the
Securities and Exchange Commission and any other regulatory authority having
jurisdiction over the offer and sale of shares of beneficial interest of the
Trust, any such amendment or registration statement and any and all supplements
thereto or to any prospectus or statement of additional information forming a
part of the registration statement, as well as any and all exhibits and other
documents necessary or desirable to the amendment or supplement process,
granting to such attorneys and each of them, full power and authority to do and
perform each and every act requisite and necessary and/or appropriate as fully
and with all intents and purposes as the Trust itself and the undersigned
officers and trustees themselves might or could do.
IN WITNESS WHEREOF, SAFECO INSTITUTIONAL SERIES TRUST has caused this power of
attorney to be executed in its name by its President and attested by its
Secretary, and the undersigned officers and trustees have each executed such
power of attorney, on this 15th day of January, 1995.
SAFECO INSTITUTIONAL SERIES TRUST
By: /s/ DAVID F. HILL
---------------------------------
David F. Hill
President
ATTEST:
/s/ NEAL A. FULLER
- -----------------------------
Neal A. Fuller
Assistant Secretary
(Signatures Continue on Next Page)
8
<PAGE> 48
<TABLE>
<CAPTION>
Name Title
---- -----
<S> <C>
/s/ DAVID F. HILL President
- --------------------------- Principal Executive Officer
David F. Hill
/s/ RONALD L. SPAULDING Vice President
- --------------------------- and Treasurer
Ronald L. Spaulding
/s/ NEAL A. FULLER Vice President
- --------------------------- Controller
Neal A. Fuller Assistant Secretary
(Principal Financial Officer)
/s/ BOH A. DICKEY Chairman and Trustee
- ---------------------------
Boh A. Dickey
/s/ BARBARA J. DINGFIELD Trustee
- ---------------------------
Barbara J. Dingfield
/s/ RICHARD W. HUBBARD Trustee
- ---------------------------
Richard W. Hubbard
/s/ RICHARD E. LUNDGREN Trustee
- ---------------------------
Richard E. Lundgren
/s/ L. D. MCCLEAN Trustee
- ---------------------------
L. D. McClean
/s/ LARRY L. PINNT Trustee
- ---------------------------
Larry L. Pinnt
/s/ JOHN W. SCHNEIDER Trustee
- ---------------------------
John W. Schneider
</TABLE>
9
<PAGE> 49
SAFECO INSTITUTIONAL SERIES TRUST
Form N-1A
Post-Effective Amendment No. 3
Exhibit Index
<TABLE>
<CAPTION>
Exhibit
Number Description of Document Page
- ------ ----------------------- ----
<S> <C>
(27.1) Financial Data Schedule
(99.1) Trust Investment/Certificate of Trust
(99.2) Bylaws
(99.5) Investment Advisory and Management Contract
(99.6) Distribution Agreement
(99.8) Custody Agreement
(99.9) Transfer Agent Agreement
(99.10) Opinion of Counsel
(99.11) Consent of Independent Auditors
(99.12) Registrant's Annual Report dated
December 31, 1994 including financial statements+
(99.13)(i) Stock Purchase Agreement
(ii) Additional Share Purchase Agreement
(99.16) Calculation of Performance Information
</TABLE>
+ Registrant's Annual Report was filed with the SEC on or about March 6, 1995.
11
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000887437
<NAME> SAFECO INSTITUTIONAL SERIES TRUST
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> DEC-31-1993
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 4,686,105
<INVESTMENTS-AT-VALUE> 4,562,234
<RECEIVABLES> 77,020
<ASSETS-OTHER> 24,972
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,664,226
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 37,074
<TOTAL-LIABILITIES> 37,074
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,763,053
<SHARES-COMMON-STOCK> 567,689
<SHARES-COMMON-PRIOR> 10,000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (12,033)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (123,871)
<NET-ASSETS> 4,627,152
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 191,364
<OTHER-INCOME> 0
<EXPENSES-NET> 44,809
<NET-INVESTMENT-INCOME> 146,555
<REALIZED-GAINS-CURRENT> (12,033)
<APPREC-INCREASE-CURRENT> (125,849)
<NET-CHANGE-FROM-OPS> (8,673)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 146,555
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 544,069
<NUMBER-OF-SHARES-REDEEMED> 3,588
<SHARES-REINVESTED> 17,208
<NET-CHANGE-IN-ASSETS> 4,536,383
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 15,869
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 44,809
<AVERAGE-NET-ASSETS> 3,277,587
<PER-SHARE-NAV-BEGIN> 9.08
<PER-SHARE-NII> .27
<PER-SHARE-GAIN-APPREC> (.93)
<PER-SHARE-DIVIDEND> (.27)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.15
<EXPENSE-RATIO> 1.37
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE> 1
EXHIBIT NO. 99.1
TRUST INSTRUMENT/CERTIFICATE OF TRUST
<PAGE> 2
EXHIBIT 99.1
SAFECO INSTITUTIONAL SERIES TRUST
TRUST INSTRUMENT
This TRUST INSTRUMENT is made on May 13, 1993, by the Trustees, to establish
a business trust for the investment and reinvestment of funds contributed to
the Trust by investors. The Trustees declare that all money and property
contributed to the Trust shall be held and managed in trust pursuant to this
Trust Instrument. The name of the Trust created by this Trust Instrument is
SAFECO Institutional Series Trust.
ARTICLE I
DEFINITIONS
Unless otherwise provided or required by the context:
(a) "Bylaws" means the Bylaws of the Trust adopted by the Trustees, as
amended from time to time;
(b) "Class" means the class of Shares of a Series established pursuant to
Article IV;
(c) "Commission," "Interested Person," and "Principal Underwriter" have the
meanings provided in the 1940 Act;
(d) "Covered Person" means a person so defined in Article IX, Section 2;
(e) "Delaware Act" means Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to time;
(f) "Majority Shareholder Vote" means "the vote of a majority of the
outstanding voting securities" as defined in the 1940 Act;
(g) "Net Asset Value" means the net asset value of each Series of the Trust,
determined as provided in Article V, Section 3;
<PAGE> 3
(h) "Outstanding Shares" means Shares shown on the books of the Trust or its
transfer agent as then issued and outstanding, but does not include Shares
which have been repurchased by the Trust;
(i) "Series" means a series of Shares established pursuant to Article IV;
(j) "Shareholder" means a record owner of Outstanding Shares;
(k) "Shares" means the equal proportionate transferable units of interest
into which the beneficial interest of each Series or Class is divided from time
to time (including whole Shares and fractions of Shares);
(l) "Trust" means SAFECO Institutional Series Trust established hereby, and
reference to the Trust, when applicable to one or more Series, refers to that
Series;
(m) "Trustees" means the persons who have signed this Trust Instrument, so
long as they shall continue in office in accordance with the terms hereof, and
all other persons who may from time to time be duly qualified and serving as
Trustees in accordance with Article II, in all cases in their capacities as
Trustees hereunder;
(n) "Trust Property" means any and all property, real or personal, tangible
or intangible, which is owned or held by or for the Trust or any Series or the
Trustees on behalf of the Trust or any Series;
(o) The "1940 Act" means the Investment Company Act of 1940, as amended from
time to time.
ARTICLE II
TRUSTEES
Section 1. Management of the Trust. The business and affairs of the Trust
shall be managed by or under the direction of the Trustees, and they shall have
all powers necessary or desirable to carry out that responsibility. The
Trustees may execute all instruments and take all action they deem necessary or
desirable to promote the interests of the Trust. Any determination made by the
Trustees in good faith as to what is in the interests of the Trust shall be
conclusive. The Trustees, in their capacity as such, shall not be expected to
devote their entire time to the business and affairs of the Trust.
Section 2. Initial Trustees; Number, Election and Qualification of Trustees.
The initial Trustees shall be the persons initially signing this Trust
Instrument. The number of Trustees (other than the initial Trustees) shall be
fixed from time
- 2 -
<PAGE> 4
to time by a majority of the Trustees; provided, that there shall be at least
two (2) Trustees. The Shareholders shall elect the Trustees (other than the
initial Trustees) on such dates as the Trustees may fix from time to time.
Section 3. Term of Office. Each Trustee shall hold office for life, or
until he or she reaches seventy-two (72) years of age, or until his or her
successor is elected, or the Trust terminates; except that (a) any Trustee may
resign by delivering to the Board of Trustees or to any Trust officer a written
resignation effective upon such delivery or a later date specified therein; (b)
any Trustee may be removed with or without cause at any time by a written
instrument signed by at least two-thirds of the other Trustees, specifying the
effective date of removal; (c) any Trustee who has become physically or
mentally incapacitated or is otherwise unable to serve, may be retired by a
written instrument signed by a majority of the other Trustees, specifying the
effective date of retirement; and (d) any Trustee may be removed at any meeting
of the Shareholders by a vote of at least two-thirds of the Outstanding Shares.
Section 4. Vacancies; Appointment of Trustees. Whenever a vacancy shall
exist in the Board of Trustees, regardless of the reason for such vacancy, the
remaining Trustees shall appoint any person as they determine in their sole
discretion to fill that vacancy, subject to Sections 10 and 16(a) of the 1940
Act. Such appointment shall be made by a written instrument signed by a
majority of the Trustees or by a resolution of the Trustees, duly adopted and
recorded in the records of the Trust, specifying the effective date of the
appointment. The Trustees may appoint a new Trustee as provided above in
anticipation of a vacancy expected to occur because of the retirement,
resignation, or removal of a Trustee, or an increase in number of Trustees,
provided that such appointment shall become effective only at or after the
expected vacancy occurs. As soon as any such Trustee has accepted his
appointment in writing, the trust estate shall vest in the new Trustee,
together with the continuing Trustees, without any further act or conveyance,
and he shall be deemed a Trustee hereunder.
Section 5. Chairman. The Trustees shall appoint one of their number to be
Chairman of the Board of Trustees. The Chairman shall preside at all meetings
of the Trustees and the Shareholders and shall perform such other powers and
duties as may from time to time be assigned by the Board of Trustees or
prescribed by the Bylaws.
Section 6. Action by the Trustees. The Trustees shall act by majority vote
at a meeting duly called (including at a telephonic meeting, unless the 1940
Act requires that a particular action be taken only at a meeting of Trustees in
person) at which a quorum is present or by written consent of a majority of
Trustees (or such greater number as may be required by applicable law) without
a meeting. A majority of the Trustees shall constitute a quorum at
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any meeting. Meetings of the Trustees may be called orally or in writing by
the President of the Trust, the Secretary of the Trust, the Chairman of the
Board of Trustees, or by any two other Trustees. Notice of the time, date and
place of all Trustees meetings shall be given to each Trustee in person or by
telephone, telegram, facsimile or other electronic mechanism sent to his or her
home or business address at least twenty-four hours in advance of the meeting
or by written notice mailed to his or her home or business address at least
seventy-two hours in advance of the meeting. Oral notice is deemed to be given
upon communication. Written notice is deemed to be given, if mailed, when
deposited in the United States mail, postage pre-paid, or if sent by telegram,
facsimile or other electronic transmission, when dispatched, to the address,
telephone number or other number of the Trustee as it appears on the records of
the Trust. Notice need not be given to any Trustee who attends the meeting
without objecting to the lack of notice or who signs a waiver of notice either
before or after the meeting. Subject to the requirements of the 1940 Act, the
Trustees by majority vote may delegate to any Trustee or Trustees authority to
approve particular matters or take particular actions on behalf of the Trust.
Any written consent or waiver may be provided and delivered to the Trust by
facsimile or other similar electronic mechanism.
Section 7. Ownership of Trust Property. The Trust Property of the Trust and
of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. All of the Trust Property and legal title thereto
shall at all times be considered as vested in the Trustees on behalf of the
Trust, except that the Trustees may cause legal title to any Trust Property to
be held by or in the name of the Trust, or in the name of any person as
nominee. No Shareholder shall be deemed to have a severable ownership in any
individual asset of the Trust or of any Series or any right of partition or
possession thereof, but each Shareholder shall have, as provided in Article IV,
a proportionate undivided beneficial interest in the Trust or Series
represented by Shares.
Section 8. Effect of Trustees Not Serving. The death, resignation,
retirement, removal, incapacity, or inability or refusal to serve of the
Trustees, or any one of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Trust Instrument.
Section 9. Trustees, etc. as Shareholders. Subject to any restrictions in
the Bylaws, any Trustee, officer, agent or independent contractor of the Trust
may acquire, own and dispose of Shares to the same extent as any other
Shareholder; the Trustees may issue and sell Shares to and buy Shares from any
such person or any firm or company in which such person is interested, subject
only to any general limitations herein.
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ARTICLE III
POWERS OF THE TRUSTEES
Section 1. Powers. The Trustees in all instances shall act as principals,
free of the control of the Shareholders. The Trustees shall have full power
and authority to take or refrain from taking any action and to execute any
contracts and instruments that they may consider necessary or desirable in the
management of the Trust. The Trustees shall not in any way be bound or limited
by current or future laws or customs applicable to trust investments, but shall
have full power and authority to make any investments which they, in their
discretion, deem proper to accomplish the purposes of the Trust. The Trustees
may exercise all of their powers without recourse to any court or other
authority. Subject to any applicable limitation herein or in the Bylaws or
resolutions of the Trust, the Trustees shall have power and authority, without
limitation:
(a) To invest and reinvest cash and other property, and to hold cash or other
property uninvested, without in any event being bound or limited by any current
or future law or custom concerning investments by trustees, and to sell,
exchange, lend, pledge, mortgage, hypothecate, write options on and lease any
or all of the Trust Property; to invest in obligations and securities of any
kind, and without regard to whether they may mature before the possible
termination of the Trust; and without limitation to invest all or any part of
its cash and other property in securities issued by a registered investment
company or series thereof, subject to the provisions of the 1940 Act;
(b) To operate as and carry on the business of a registered investment
company, and exercise all the powers necessary and proper to conduct such a
business;
(c) To adopt Bylaws not inconsistent with this Trust Instrument providing for
the conduct of the business of the Trust and to amend and repeal them to the
extent such right is not reserved to the Shareholders;
(d) To elect and remove such officers and appoint and terminate such agents
as they deem appropriate;
(e) To employ as custodian of any assets of the Trust, subject to any
provisions herein or in the Bylaws, one or more banks, trust companies or
companies that are members of a national securities exchange, or other entities
permitted by the Commission to serve as such;
(f) To retain one or more transfer agents and Shareholder servicing agents,
or both;
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(g) To provide for the distribution of Shares either through a Principal
Underwriter as provided herein or by the Trust itself, or both, or pursuant to
a distribution plan of any kind;
(h) To set record dates in the manner provided for herein or in the Bylaws;
(i) To delegate such authority as they consider desirable to any officers of
the Trust and to any agent, independent contractor, manager, investment
adviser, custodian or underwriter;
(j) To sell or exchange any or all of the assets of the Trust, subject to
Article X, Section 4;
(k) To vote or give assent, or exercise any rights of ownership, with respect
to other securities or property; and to execute and deliver powers of attorney
delegating such power to other persons;
(l) To exercise powers and rights of subscription or otherwise which in any
manner arise out of ownership of securities;
(m) To hold any security or other property (i) in a form not indicating any
trust, whether in bearer, book entry, unregistered or other negotiable form, or
(ii) either in the Trust's or Trustees' own name or in the name of a custodian
or a nominee or nominees, subject to safeguards according to the usual practice
of business trusts or investment companies;
(n) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes, and with
separate Shares representing beneficial interests in such Series, and to
establish separate Classes, all in accordance with the provisions of Article
IV;
(o) To the full extent permitted by Section 3804 of the Delaware Act, to
allocate assets, liabilities and expenses of the Trust to a particular Series
and liabilities and expenses to a particular Class or to apportion the same
between or among two or more Series or Classes, provided that any liabilities
or expenses incurred by a particular Series or Class shall be payable solely
out of the assets belonging to that Series or Class as provided for in Article
IV, Section 4;
(p) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern whose securities are held
by the Trust; to consent to any contract, lease, mortgage, purchase, or sale of
property by such corporation or concern; and to pay calls or subscriptions with
respect to any security held in the Trust;
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(q) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(r) To make distributions of income and of capital gains to Shareholders in
the manner hereinafter provided for;
(s) To borrow money;
(t) To establish, from time to time, a minimum total investment for
Shareholders, and to require the redemption of the Shares of any Shareholders
whose investment is less than such minimum upon giving notice to such
Shareholder;
(u) To establish committees for such purposes, with such membership, and with
such responsibilities as the Trustees may consider proper, including a
committee consisting of fewer than all of the Trustees then in office, which
may act for and bind the Trustees and the Trust with respect to the
institution, prosecution, dismissal, settlement, review or investigation of any
legal action, suit or proceeding, pending or threatened;
(v) To issue, sell, repurchase, redeem, cancel, retire, acquire, hold,
resell, reissue, dispose of and otherwise deal in Shares; to establish terms
and conditions regarding the issuance, sale, repurchase, redemption,
cancellation, retirement, acquisition, holding, resale, reissuance, disposition
of or dealing in Shares; and, subject to Articles IV and V, to apply to any
such repurchase, redemption, retirement, cancellation or acquisition of Shares
any funds or property of the Trust or of the particular Series with respect to
which such Shares are issued; and
(w) To carry on any other business in connection with or incidental to any of
the foregoing powers, to do everything necessary or desirable to accomplish any
purpose or to further any of the foregoing powers, and to take every other
action incidental to the foregoing business or purposes, objects or powers.
The clauses above shall be construed as objects and powers, and the
enumeration of specific powers shall not limit in any way the general powers of
the Trustees. Any action by one or more of the Trustees in their capacity as
such hereunder shall be deemed an action on behalf of the Trust or the
applicable Series, and not an action in an individual capacity. No one dealing
with the Trustees shall be under any obligation to make any inquiry concerning
the authority of the Trustees, or to see to the application of any payments
made or property transferred to the Trustees or upon their order. In
construing this Trust Instrument, the presumption shall be in favor of a grant
of power to the Trustees.
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Section 2. Certain Transactions. Except as prohibited by applicable law,
the Trustees may, on behalf of the Trust, buy any securities from or sell any
securities to, or lend any assets of the Trust to, any Trustee or officer of
the Trust or any firm of which any such Trustee or officer is a member acting
as principal, or have any such dealings with any investment adviser,
administrator, distributor or transfer agent for the Trust or with any
Interested Person of such person. The Trust may employ any such person or
entity in which such person is an Interested Person, as broker, legal counsel,
registrar, investment adviser, administrator, distributor, transfer agent,
dividend disbursing agent, custodian or in any other capacity upon customary
terms.
ARTICLE IV
SERIES; CLASSES; SHARES
Section 1. Establishment of Series or Class. The Trust shall consist of one
or more Series. The Trustees hereby establish the Series listed in Exhibit A
attached hereto and made a part hereof. Each additional Series shall be
established by the adoption of a resolution of the Trustees. The Trustees may
designate the relative rights and preferences of the Shares of each Series.
The Trustees may divide the Shares of any Series into Classes. In such case
each Class of a Series shall represent interests in the assets of that Series
and have identical voting, dividend, liquidation and other rights and the same
terms and conditions, except that expenses allocated to a Class may be borne
solely by such Class as determined by the Trustees and a Class may have
exclusive voting rights with respect to matters affecting only that Class. The
Trust shall maintain separate and distinct records for each Series and hold and
account for the assets thereof separately from the other assets of the Trust or
of any other Series. A Series may issue any number of Shares and need not
issue Shares. Each Share of a Series shall represent an equal beneficial
interest in the net assets of such Series. Each holder of Shares of a Series
shall be entitled to receive his or her pro rata share of all distributions
made with respect to such Series. Upon redemption of his or her Shares, such
Shareholder shall be paid solely out of the funds and property of such Series.
The Trustees may change the name of any Series or Class without Shareholder
approval.
Section 2. Shares. The beneficial interest in the Trust shall be divided
into Shares of one or more separate and distinct Series or Classes established
by the Trustees. The number of Shares of each Series and Class is unlimited
and each Share shall have a par value of $0.001 per Share. All Shares issued
hereunder shall be fully paid and nonassessable. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust. The Trustees shall have full power and
authority, in their sole discretion and without obtaining Shareholder approval:
to issue
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original or additional Shares or fractional Shares at such times and on such
terms and conditions as they deem appropriate; to issue Shares which have been
repurchased by the Trust; to establish and to change in any manner Shares of
any Series or Classes with such preferences, terms of conversion, voting
powers, rights and privileges as the Trustees may determine (but the Trustees
may not change Outstanding Shares in a manner materially adverse to the
Shareholders of such Shares); to divide or combine the Shares of any Series or
Classes into a greater or lesser number; to classify or reclassify any unissued
Shares of any Series or Classes into one or more Series or Classes of Shares;
to abolish any one or more Series or Classes of Shares; to issue Shares to
acquire other assets (including assets subject to, and in connection with, the
assumption of liabilities) and businesses; and to take such other action with
respect to the Shares as the Trustees may deem desirable. Shares which have
been repurchased by the Trust and have not been reissued shall not confer any
voting rights on the Trustees and shall not be entitled to any dividends or
other distributions declared with respect to the Shares.
Section 3. Investment in the Trust. The Trustees shall accept investments
in any Series from such persons and on such terms as they may from time to time
authorize. At the Trustees' discretion, such investments, subject to
applicable law, may be in the form of cash or securities in which that Series
is authorized to invest, valued as provided in Article V, Section 3.
Investments in a Series shall be credited to each Shareholder's account in the
form of full or fractional Shares at the Net Asset Value per Share next
determined after the investment is received or accepted in good form as may be
determined by the Trustees; provided, however, that the Trustees may, in their
sole discretion (a) impose a sales charge upon investments in any Series or
Class or (b) determine the Net Asset Value per Share of the initial capital
contribution. The Trustees shall have the right to refuse to accept
investments in any Series at any time without any cause or reason therefor
whatsoever.
Section 4. Assets and Liabilities of Series. All consideration received by
the Trust for the issue or sale of Shares of a particular Series, together with
all assets in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof (including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may
be), shall be held and accounted for separately from the other assets of the
Trust and every other Series and are referred to as "assets belonging to" that
Series. The assets belonging to a Series shall belong only to that Series for
all purposes, and to no other Series, subject only to the rights of creditors
of that Series. Any assets, income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to any
particular Series shall be allocated by the Trustees between and among one or
more Series as the Trustees deem fair and equitable. Each such allocation
shall be conclusive and binding upon the Shareholders of all Series for all
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purposes, and such assets, earnings, income, profits or funds, or payments and
proceeds thereof shall be referred to as assets belonging to that Series. The
assets belonging to a Series shall be so recorded upon the books of the Trust,
and shall be held by the Trustees in trust for the benefit of the Shareholders
of that Series. The assets belonging to a Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that Series, except that liabilities and expenses allocated
solely to a particular Class shall be borne by that Class. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular Series or Class shall be
allocated and charged by the Trustees between or among any one or more of the
Series or Classes in such manner as the Trustees deem fair and equitable. Each
such allocation shall be conclusive and binding upon the Shareholders of all
Series or Classes for all purposes.
Without limiting the foregoing, but subject to the right of the Trustees to
allocate general liabilities, expenses, costs, charges or reserves as herein
provided, the debts, liabilities, obligations and expenses incurred, contracted
for or otherwise existing with respect to a particular Series shall be
enforceable against the assets of such Series only, and not against the assets
of the Trust generally or of any other Series. Notice of this contractual
limitation on liabilities among Series may, in the Trustees' discretion, be set
forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State of
the State of Delaware pursuant to the Delaware Act, and upon the giving of such
notice in the certificate of trust, the statutory provisions of Section 3804 of
the Delaware Act relating to limitations on liabilities among Series (and the
statutory effect under Section 3804 of setting forth such notice in the
certificate of trust) shall become applicable to the Trust and each Series.
Any person extending credit to, contracting with or having any claim against
any Series may look only to the assets of that Series to satisfy or enforce any
debt, with respect to that Series. No Shareholder or former Shareholder of any
Series shall have a claim on or any right to any assets allocated or belonging
to any other Series.
Section 5. Ownership and Transfer of Shares. The Trust shall maintain a
register containing the names and addresses of the Shareholders of each Series
and Class thereof, the number of Shares of each Series and Class held by such
Shareholders, and a record of all Share transfers. The register shall be
conclusive as to the identity of Shareholders of record and the number of
Shares held by them from time to time. The Trustees, in their sole discretion,
may authorize the issuance of certificates representing Shares and adopt rules
governing their use. The Trustees may make rules governing the transfer of
Shares, whether or not represented by certificates.
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Section 6. Status of Shares; Limitation of Shareholder Liability. Shares
shall be deemed to be personal property giving Shareholders only the rights
provided in this Trust Instrument. Every Shareholder, by virtue of having
acquired a Share, shall be held expressly to have assented to and agreed to be
bound by the terms of this Trust Instrument and to have become a party hereto.
No Shareholder shall be personally liable for the debts, liabilities,
obligations and expenses incurred by, contracted for, or otherwise existing
with respect to, the Trust or any Series. Neither the Trust nor the Trustees
shall have any power to bind any Shareholder personally or to demand payment
from any Shareholder for anything, other than as agreed by the Shareholder.
Shareholders shall have the same limitation of personal liability as is
extended to shareholders of a private corporation for profit incorporated in
the State of Delaware. Every written obligation of the Trust or any Series
shall contain a statement to the effect that such obligation may only be
enforced against the assets of the Trust or such Series; however, the omission
of such statement shall not operate to bind or create personal liability for
any Shareholder or Trustee.
ARTICLE V
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions. The Trustees may declare and pay dividends and
other distributions, including dividends on Shares of a particular Series and
other distributions from the assets belonging to that Series. The amount and
payment of dividends or distributions and their form, whether they are in cash,
Shares or other Trust Property, shall be determined by the Trustees.
Dividends and other distributions may be paid pursuant to a standing resolution
adopted once or more often as the Trustees determine. All dividends and other
distributions on Shares of a particular Series shall be distributed pro rata to
the Shareholders of that Series in proportion to the number of Shares of that
Series they held on the record date established for such payment, except that
such dividends and distributions shall appropriately reflect expenses allocated
to a particular Class of such Series. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash dividend payout plans or
similar plans as the Trustees deem appropriate.
Section 2. Redemptions. Each Shareholder of a Series or Class shall have
the right at such times as may be permitted by the Trustees to require the
Series to redeem all or any part of his or her Shares at a redemption price per
Share equal to the Net Asset Value per Share at such time as the Trustees shall
have prescribed by resolution. In the absence of such resolution, the
redemption price per Share shall be the Net Asset Value next determined after
receipt by the Series of a request for redemption in proper form less such
charges as are determined by the Trustees and described in the Trust's
Registration
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Statement for that Series or Class under the Securities Act of 1933. The
Trustees may specify conditions, prices, and places of redemption, and may
specify binding requirements for the proper form or forms of requests for
redemption. Payment of the redemption price may be wholly or partly in
securities or other assets at the value of such securities or assets used in
such determination of Net Asset Value, or may be in cash. Upon redemption,
Shares may be reissued from time to time. The Trustees may require
Shareholders to redeem Shares for any reason under terms set by the Trustees,
including the failure of a Shareholder to supply a personal identification
number if required to do so, or to have the minimum investment required, or to
pay when due for the purchase of Shares issued to him. To the extent permitted
by law, the Trustees may retain the proceeds of any redemption of Shares
required by them for payment of amounts due and owing by a Shareholder to the
Trust or any Series or Class. Notwithstanding the foregoing, the Trustees may
postpone payment of the redemption price and may suspend the right of the
Shareholders to require any Series or Class to redeem Shares during any period
of time when and to the extent permissible under the 1940 Act.
Section 3. Determination of Net Asset Value. The Trustees shall cause the
Net Asset Value of Shares of each Series or Class to be determined from time to
time in a manner consistent with applicable laws and regulations. The Trustees
may delegate the power and duty to determine Net Asset Value per Share to one
or more Trustees or officers of the Trust or to an investment adviser,
custodian, depository or other agent appointed for such purpose. The Net Asset
Value of Shares shall be determined separately for each Series or Class at such
times as may be prescribed by the Trustees or, in the absence of action by the
Trustees, as of the close of trading on the New York Stock Exchange on each day
for all or part of which such Exchange is open for unrestricted trading.
Section 4. Suspension of Right of Redemption. If, as referred to in Section
2 of this Article, the Trustees postpone payment of the redemption price and
suspend the right of Shareholders to redeem their Shares, such suspension shall
take effect at the time the Trustees shall specify, but not later than the
close of business on the business day next following the declaration of
suspension. Thereafter Shareholders shall have no right of redemption or
payment until the Trustees declare the end of the suspension. If the right of
redemption is suspended, a Shareholder may either withdraw his or her request
for redemption or receive payment based on the Net Asset Value per Share next
determined after the suspension terminates.
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ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. The Shareholders shall have power to vote only
with respect to (a) the election of Trustees as provided in Section 2 of this
Article; (b) the removal of Trustees as provided in Article II, Section 3(d);
(c) any investment advisory or management contract as provided in Article VII,
Section 1; (d) any termination of the Trust as provided in Article X, Section
4; (e) the amendment of this Trust Instrument to the extent and as provided in
Article X, Section 8; and (f) such additional matters relating to the Trust as
may be required or authorized by law, this Trust Instrument, or the Bylaws or
any registration of the Trust with the Commission or any State, or as the
Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares shall be
voted by individual Series or Class, except (a) when required by the 1940 Act,
Shares shall be voted in the aggregate and not by individual Series or Class,
and (b) when the Trustees have determined that the matter affects the interests
of more than one Series or Class, then the Shareholders of all such Series or
Classes shall be entitled to vote thereon. Each whole Share shall be entitled
to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy or in any manner provided for in the Bylaws. The Bylaws
may provide that proxies may be given by any electronic or telecommunications
device or in any other manner, but if a proposal by anyone other than the
officers or Trustees is submitted to a vote of the Shareholders of any Series
or Class, or if there is a proxy contest or proxy solicitation or proposal in
opposition to any proposal by the officers or Trustees, Shares may be voted
only in person or by written proxy. Until Shares of a Series are issued, as to
that Series the Trustees may exercise all rights of Shareholders and may take
any action required or permitted to be taken by Shareholders by law, this Trust
Instrument or the Bylaws.
Section 2. Meetings of Shareholders. The first Shareholders' meeting shall
be held to elect Trustees at such time and place as the Trustees designate.
There shall be no annual Shareholders' meetings except as required by law or
set forth in the Bylaws. Special meetings of the Shareholders of any Series or
Class may be called by the Trustees and shall be called by the Trustees upon
the written request of Shareholders owning at least ten percent of the
Outstanding Shares of such Series or Class entitled to vote. Special meetings
of Shareholders shall be held, notice of such meetings shall be delivered and
waiver of notice shall occur according to the provisions of the Trust's Bylaws.
Any action that may be taken at a meeting of Shareholders may be taken without
a meeting according to the procedures set forth in the Trust's Bylaws.
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Section 3. Quorum; Required Vote. One-third of the Outstanding Shares of
each Series or Class, or one-third of the Outstanding Shares of the Trust,
entitled to vote in person or by proxy shall be a quorum for the transaction of
business at a Shareholders' meeting with respect to such Series or Class, or
with respect to the entire Trust, respectively. Any lesser number shall be
sufficient for adjournments. Any adjourned session of a Shareholders' meeting
may be held within a reasonable time without further notice. Except when a
larger vote is required by law, this Trust Instrument or the Bylaws, a majority
of the Outstanding Shares voted in person or by proxy shall decide any matters
to be voted upon with respect to the entire Trust and a plurality of such
Outstanding Shares shall elect a Trustee; provided, that if this Trust
Instrument or applicable law permits or requires that Shares be voted on any
matter by individual Series or Classes, then a majority of the Outstanding
Shares of that Series or Class (or, if required by law, a Majority Shareholder
Vote of that Series or Class) voted in person or by proxy voted on the matter
shall decide that matter insofar as that Series or Class is concerned.
Shareholders may act as to the Trust or any Series or Class by the written
consent of a majority (or such greater amount as may be required by applicable
law) of the Outstanding Shares of the Trust or of such Series or Class, as the
case may be.
ARTICLE VII
CONTRACTS WITH SERVICE PROVIDERS
Section 1. Investment Adviser. Subject to a Majority Shareholder Vote, the
Trustees may enter into one or more investment advisory contracts on behalf of
the Trust or any Series, providing for investment advisory services,
statistical and research facilities and services, and other facilities and
services to be furnished to the Trust or Series on terms and conditions
acceptable to the Trustees. Any such contract may provide for the investment
adviser to effect purchases, sales or exchanges of portfolio securities or
other Trust Property on behalf of the Trustees or may authorize any officer or
agent of the Trust to effect such purchases, sales or exchanges pursuant to
recommendations of the investment adviser. The Trustees may authorize the
investment adviser to employ one or more sub-advisers.
Section 2. Principal Underwriter. The Trustees may enter into contracts on
behalf of the Trust or any Series or Class, providing for the distribution and
sale of Shares by the other party, either directly or as sales agent, on terms
and conditions acceptable to the Trustees. The Trustees may adopt a plan or
plans of distribution with respect to Shares of any Series or Class and enter
into any related agreements, whereby the Series or Class finances directly or
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indirectly any activity that is primarily intended to result in sales of its
Shares, subject to the requirements of Section 12 of the 1940 Act, Rule 12b-1
thereunder, and other applicable rules and regulations.
Section 3. Transfer Agency, Shareholder Services, and Administration
Agreements. The Trustees, on behalf of the Trust or any Series or Class, may
enter into transfer agency agreements, Shareholder service agreements, and
administration and management agreements with any party or parties on terms and
conditions acceptable to the Trustees.
Section 4. Custodian. The Trustees shall at all times place and maintain
the cash, securities and other assets of the Trust and of each Series with a
custodian meeting the requirements of Section 17(f) of the 1940 Act and the
rules thereunder or such other entities permitted by Commission order. The
Trustees, on behalf of the Trust or any Series, may enter into an agreement
with a custodian on terms and conditions acceptable to the Trustees, providing
for the custodian, among other things, to (a) hold the securities owned by the
Trust or any Series and deliver the same upon written order or oral order
confirmed in writing, (b) to receive and receipt for any moneys due to the
Trust or any Series and deposit the same in its own banking department or
elsewhere, (c) to disburse such funds upon orders or vouchers, and (d) to
employ one or more sub-custodians.
Section 5. Parties to Contracts with Service Providers. The Trustees may
enter into any contract referred to in this Article with any entity, although
one or more of the Trustees or officers of the Trust may be an officer,
director, trustee, partner, shareholder, or member of such entity, and no such
contract shall be invalidated or rendered void or voidable because of such
relationship. No person having such a relationship shall be disqualified from
voting on or executing a contract in his or her capacity as Trustee and/or
Shareholder, or be liable merely by reason of such relationship for any loss or
expense to the Trust with respect to such a contract or accountable for any
profit realized directly or indirectly therefrom; provided, that the contract
was reasonable and fair and not inconsistent with this Trust Instrument or the
Bylaws.
Any contract referred to in Sections 1 and 2 of this Article shall be
consistent with and subject to the applicable requirements of Section 15 of the
1940 Act and the rules and orders thereunder with respect to its continuance in
effect, its termination, and the method of authorization and approval of such
contract or renewal. No amendment to a contract referred to in Section 1 of
this Article shall be effective unless assented to in a manner consistent with
the requirements of Section 15 of the 1940 Act, and the rules and orders
thereunder.
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ARTICLE VIII
EXPENSES OF THE TRUST AND SERIES
Subject to Article IV, Section 4, the Trust or a particular Series shall pay,
or shall reimburse the Trustees from the Trust estate or the assets belonging
to the particular Series, for the expenses and disbursements of its
organization, operations and business (unless a third party has agreed to bear
such expenses and disbursements). Such expenses and disbursements may include,
but are not limited to, the following: fees, expenses and charges of certain
third parties which may include the Trust's investment advisers, distributors,
transfer agents, custodian, independent auditors, legal counsel and
administrators; expenses of the organization of the Trust or a particular
Series; expenses of the issue, redemption and transfer of Shares; brokers'
commissions and other charges; expenses of custody and accounting services;
expenses of maintaining and servicing Shareholder accounts; expenses of
bonding and insurance; all taxes or governmental fees; costs of membership in
trade associations; all charges and expenses for equipment or services used for
communication between the Trust or any Series and any third party providing
services to the Trust or any Series; fees and expenses of Trustees' meetings,
including the compensation of Trustees who are not Interested Persons of the
Trust; Commission registration fees and related expenses; state or foreign
securities laws registration fees and related expenses; expenses of Shareholder
meetings, including the printing and distribution of proxy materials and any
other costs associated with a proxy solicitation; costs of preparing, printing
and distributing Shareholder communications such as prospectuses, statements of
additional information, and financial reports; and non-recurring expenses which
may arise, including the costs of actions, suit or proceedings to which the
Trust or a Series (or a Trustee or officer of the Trust acting as such) is a
party, and the expenses the Trust or Series may incur as a result of its
obligation to provide indemnification to its Trustees, Officers, employees or
agents. The Trustees shall have a lien on the assets belonging to the
appropriate Series, or in the case of an expense allocable to more than one
Series, on the assets of each such Series, prior to any rights or interests of
the Shareholders thereto, for the reimbursement to them of such expenses,
disbursements, losses and liabilities.
ARTICLE IX
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Liability. All persons contracting with or having
any claim against the Trust or a particular Series shall look only to the
assets of the Trust or such Series for payment under such contract or claim;
and neither the Trustees nor
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any of the Trust's officers, employees or agents, whether past, present or
future, shall be personally liable therefor. Every written instrument or
obligation on behalf of the Trust or any Series shall contain a statement to
the foregoing effect, but the absence of such statement shall not operate to
make any Trustee or officer of the Trust liable thereunder. Provided they have
exercised reasonable care and have acted under the reasonable belief that their
actions are in the best interest of the Trust, the Trustees and officers of the
Trust shall not be responsible or liable for any act or omission or for neglect
or wrongdoing of them or any officer, agent, employee, investment adviser or
independent contractor of the Trust, but nothing contained in this Trust
Instrument or in the Delaware Act shall protect any Trustee or officer of the
Trust against liability to the Trust or to Shareholders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
or her office.
Section 2. Indemnification. (a) Subject to the exceptions and limitations
contained in subsection (b) below:
(i) every person who is, or has been, a Trustee or an officer, employee or
agent of the Trust ("Covered Person") shall be indemnified by the Trust or
the appropriate Series to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him or her
in connection with any claim, action, suit or proceeding in which he or she
becomes involved as a party or otherwise by virtue of his or her being or
having been a Covered Person and against amounts paid or incurred by him or
her in the settlement thereof;
(ii) as used herein, the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil, criminal or
other, including appeals), actual or threatened, and the words "liability"
and "expenses" shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which the
proceeding was brought (A) to be liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his or her office, or (B)
not to have acted in good faith in the reasonable belief that his or her
action was in the best interest of the Trust; or
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<PAGE> 19
(ii) in the event of a settlement, unless there has been a determination
that such Covered Person did not engage in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct
of his or her office; (A) by the court or other body approving the
settlement; (B) by the vote of at least a majority of a quorum of those
Trustees who are neither Interested Persons of the Trust nor are parties to
the proceeding based upon a review of readily available facts (as opposed to
a full trial-type inquiry); or (C) by written opinion of independent legal
counsel based upon a review of readily available facts (as opposed to a full
trial-type inquiry).
(c) The rights of indemnification herein provided may be insured against by
policies maintained by the Trust, shall be severable, shall not be exclusive of
or affect any other rights to which any Covered Person may now or hereafter be
entitled, and shall inure to the benefit of the heirs, executors and
administrators of a Covered Person.
(d) To the maximum extent permitted by applicable law, expenses in
connection with the preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in subsection (a) of this
Section may be paid by the Trust or applicable Series from time to time prior
to final disposition thereof upon receipt of an undertaking by or on behalf of
such Covered Person that such amount will be paid over by him or her to the
Trust or applicable Series if it is ultimately determined that he or she is not
entitled to indemnification under this Section; provided, however, that either
(i) such Covered Person shall have provided appropriate security for such
undertaking, (ii) the Trust is insured against losses arising out of any such
advance payments or (iii) either a majority of the Trustees who are neither
Interested Persons of the Trust nor parties to the proceeding, or independent
legal counsel in a written opinion, shall have determined, based upon a review
of readily available facts (as opposed to a full trial-type inquiry) that there
is reason to believe that such Covered Person will not be disqualified from
indemnification under this Section.
(e) Any repeal or modification of this Article IX by the Shareholders of the
Trust, or adoption or modification of any other provision of the Trust
Instrument or Bylaws inconsistent with this Article, shall be prospective only,
to the extent that such repeal or modification would, if applied
retrospectively, adversely affect any limitation on the liability of any
Covered Person or indemnification available to any Covered Person with respect
to any act or omission which occurred prior to such repeal, modification or
adoption.
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<PAGE> 20
Section 3. Indemnification of Shareholders. If any Shareholder or former
Shareholder of any Series shall be held personally liable solely by reason of
his or her being or having been a Shareholder and not because of his or her
acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his or her heirs, executors, administrators or other legal
representatives or in the case of any entity, its general successor) shall be
entitled out of the assets belonging to the applicable Series to be held
harmless from and indemnified against all loss and expense arising from such
liability. The Trust, on behalf of the affected Series, shall, upon request by
such Shareholder, assume the defense of any claim made against such Shareholder
for any act or obligation of the Series and satisfy any judgment thereon from
the assets of the Series.
ARTICLE X
MISCELLANEOUS
Section 1. Trust Not a Partnership. This Trust Instrument creates a trust
and not a partnership. No Trustee shall have any power to bind personally
either the Trust's officers or any Shareholder.
Section 2. Trustee Action; Expert Advice; No Bond or Surety. The exercise
by the Trustees of their powers and discretion hereunder in good faith and with
reasonable care under the circumstances then prevailing shall be binding upon
everyone interested. Subject to the provisions of Article IX, the Trustees
shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the
meaning and operation of this Trust Instrument, and subject to the provisions
of Article IX, shall not be liable for any act or omission in accordance with
such advice or for failing to follow such advice. The Trustees shall not be
required to give any bond as such, nor any surety if a bond is obtained.
Section 3. Record Dates. The Trustees may fix in advance a date up to
seventy (70) days before the date of any Shareholders' meeting, or the date for
the payment of any dividends or other distributions, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares shall go into effect as a record date for the determination of the
Shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of such dividend or other distribution, or to
receive any such allotment of rights, or to exercise such rights in respect of
any such change, conversion or exchange of Shares. Record dates for adjourned
Shareholders' meetings shall be set according to the Trust's Bylaws.
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<PAGE> 21
Section 4. Termination of the Trust. (a) This Trust shall have perpetual
existence. Subject to a Majority Shareholder Vote of the Trust or of each
Series to be affected, the Trustees may
(i) sell and convey all or substantially all of the assets of the Trust or
any affected Series to another Series or to another entity which is an
open-end investment company as defined in the 1940 Act, or is a series
thereof, for adequate consideration, which may include the assumption of all
outstanding obligations, taxes and other liabilities, accrued or contingent,
of the Trust or any affected Series, and which may include shares of or
interests in such Series, entity, or series thereof; or
(ii) at any time sell and convert into money all or substantially all of the
assets of the Trust or any affected Series.
Upon making reasonable provision for the payment of all known liabilities of
the Trust or any affected Series in either (i) or (ii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds or assets (as
the case may be) ratably among the Shareholders of the Trust or any affected
Series; however, the payment to any particular Class of such Series may be
reduced by any fees, expenses or charges allocated to that Class.
(b) The Trustees may take any of the actions specified in subsection (a) (i)
and (ii) above without obtaining a Majority Shareholder Vote of the Trust or
any Series if a majority of the Trustees determines that the continuation of
the Trust or Series is not in the best interests of the Trust, such Series, or
their respective Shareholders as a result of factors or events adversely
affecting the ability of the Trust or such Series to conduct its business and
operations in an economically viable manner. Such factors and events may
include the inability of the Trust or a Series to maintain its assets at an
appropriate size, changes in laws or regulations governing the Trust or the
Series or affecting assets of the type in which the Trust or Series invests, or
economic developments or trends having a significant adverse impact on the
business or operations of the Trust or such Series.
(c) Upon completion of the distribution of the remaining proceeds or assets
pursuant to subsection (a), the Trust or affected Series shall terminate and
the Trustees and the Trust shall be discharged of any and all further
liabilities and duties hereunder with respect thereto and the right, title and
interest of all parties therein shall be canceled and discharged. Upon
termination of the Trust, following completion of winding up of its business,
the Trustees shall cause a certificate of cancellation of the Trust's
certificate of trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee.
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<PAGE> 22
Section 5. Reorganization. Notwithstanding anything else herein, to change
the Trust's form of organization the Trustees may, without Shareholder
approval, (a) cause the Trust to merge or consolidate with or into one or more
entities, if the surviving or resulting entity is the Trust or another open-end
management investment company under the 1940 Act, or a series thereof, that
will succeed to or assume the Trust's registration under the 1940 Act, or (b)
cause the Trust to incorporate under the laws of Delaware. Any agreement of
merger or consolidation or certificate of merger may be signed by a majority of
Trustees and facsimile signatures conveyed by electronic or telecommunication
means shall be valid.
Pursuant to and in accordance with the provisions of Section 3815(f) of the
Delaware Act, an agreement of merger or consolidation approved by the Trustees
in accordance with this Section 5 may effect any amendment to the Trust
Instrument or effect the adoption of a new trust instrument of the Trust if it
is the surviving or resulting trust in the merger or consolidation.
Section 6. Trust Instrument. The original or a copy of this Trust
Instrument and of each amendment hereto or Trust Instrument supplemental shall
be kept at the office of the Trust where it may be inspected by any
Shareholder. Anyone dealing with the Trust may rely on a certificate by a
Trustee or an officer of the Trust as to the authenticity of the Trust
Instrument or any such amendments or supplements and as to any matters in
connection with the Trust. The masculine gender herein shall include the
feminine and neuter genders. Headings herein are for convenience only and
shall not affect the construction of this Trust Instrument. This Trust
Instrument may be executed in any number of counterparts, each of which shall
be deemed an original.
Section 7. Applicable Law. This Trust Instrument and the Trust created
hereunder are governed by and construed and administered according to the
Delaware Act and the applicable laws of the State of Delaware; provided,
however, that there shall not be applicable to the Trust, the Trustees or this
Trust Instrument (a) the provisions of Section 3540 of Title 12 of the Delaware
Code, or (b) any provisions of the laws (statutory or common) of the State of
Delaware (other than the Delaware Act) pertaining to trusts which relate to or
regulate (i) the filing with any court or governmental body or agency of
trustee accounts or schedules of trustee fees and charges, (ii) affirmative
requirements to post bonds for trustees, officers, agents or employees of a
trust, (iii) the necessity for obtaining court or other governmental approval
concerning the acquisition, holding or disposition of real or personal
property, (iv) fees or other sums payable to trustees, officers, agents or
employees of a trust, (v) the allocation of receipts and expenditures to income
or principal, (vi) restrictions or limitations on the permissible nature,
amount or concentration of trust investments or requirements relating to the
titling, storage
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<PAGE> 23
or other manner of holding of trust assets, or (vii) the establishment of
fiduciary or other standards of responsibilities or limitations on the acts or
powers of trustees, which are inconsistent with the limitations or liabilities
or authorities and powers of the Trustees set forth or referenced in this Trust
Instrument. The Trust shall be of the type commonly called a Delaware business
trust, and, without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust under Delaware law. The
Trust specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts under
the Delaware Act, and the absence of a specific reference herein to any such
power, privilege or action shall not imply that the Trust may not exercise such
power or privilege or take such actions.
Section 8. Amendments. The Trustees may, without any Shareholder vote,
amend or otherwise supplement this Trust Instrument by making an amendment, a
Trust Instrument supplemental hereto or an amended and restated trust
instrument; provided, that Shareholders shall have the right to vote on any
amendment (a) which would affect the voting rights of Shareholders granted in
Article VI, Section 1, (b) to this Section 8, (c) required to be approved by
Shareholders by law or by the Trust's registration statement(s) filed with the
Commission, and (d) submitted to them by the Trustees in their discretion. Any
amendment submitted to Shareholders which the Trustees determine would affect
the Shareholders of any Series shall be authorized by vote of the Shareholders
of such Series and no vote shall be required of Shareholders of a Series not
affected. Notwithstanding anything else herein, any amendment to Article IX
which would have the effect of reducing the indemnification and other rights
provided thereby to Trustees, officers, employees, and agents of the Trust or
to Shareholders or former Shareholders, and any repeal or amendment of this
sentence shall each require the affirmative vote of the holders of two-thirds
of the Outstanding Shares of the Trust entitled to vote thereon.
Section 9. Fiscal Year. The fiscal year of the Trust shall end on a
specified date as set forth in the Bylaws. The Trustees may change the fiscal
year of the Trust without Shareholder approval.
Section 10. Severability. The provisions of this Trust Instrument are
severable. If the Trustees determine, with the advice of counsel, that any
provision hereof conflicts with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provision shall be deemed never to have
constituted a part of this Trust Instrument; provided, however, that such
determination shall not affect any of the remaining provisions of this Trust
Instrument or render invalid or improper any action taken or omitted prior to
such determination. If any provision hereof
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<PAGE> 24
shall be held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision only in such jurisdiction
and shall not affect any other provision of this Trust Instrument.
IN WITNESS WHEREOF, the undersigned, being the initial Trustees, have
executed this Trust Instrument as of the date first above written.
/s/ BOH A. DICKEY
---------------------------
Boh A. Dickey, as
Trustee and not individually
/s/ RICHARD W. HUBBARD
---------------------------
Richard W. Hubbard, as
Trustee and not individually
Address: SAFECO Plaza
Seattle, Washington 98185
STATE OF WASHINGTON ss
CITY OF SEATTLE
Before me this 27TH day of September, 1993, personally appeared the
above-named Boh A. Dickey, and Richard W. Hubbard, known to me to be the
persons who executed the foregoing instrument and who acknowledged that they
executed the same.
/s/ BETTY J. SCHOOLING
--------------------------------
Notary Public
My Commission expires August 4, 1997.
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<PAGE> 25
EXHIBIT A
SAFECO Fixed-Income Portfolio
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<PAGE> 26
EXHIBIT 99.1
CERTIFICATE OF TRUST
OF
SAFECO INSTITUTIONAL SERIES TRUST
This Certificate of Trust ("Certificate") is filed in accordance with the
provisions of the Delaware Business Trust Act (12 Del. Code Ann. Tit. 12
Section 3801 et seq.) and sets forth the following:
1. The name of the trust is: SAFECO Institutional Series Trust ("Trust").
2. The business address of the registered office of the Trust and of the
registered agent of the Trust is:
The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
3. This Certificate is effective upon filing.
4. The Trust is a Delaware business trust registered under the Investment
Company Act of 1940. Notice is hereby given that the Trust shall consist of
one or more series. The debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular series of the
Trust shall be enforceable against the assets of such series only, and not
against the assets of the Trust generally or any other series.
IN WITNESS WHEREOF, the undersigned, being the initial Trustees, have
executed this Certificate on this 13th day of May, 1993.
/s/ BOH A. DICKEY
----------------------------
Boh A. Dickey, as
Trustee and not individually
/s/ RICHARD W. HUBBARD
-----------------------------
Richard W. Hubbard, as
Trustee and not individually
<PAGE> 27
Address: SAFECO Plaza
Seattle, Washington 98185
STATE OF WASHINGTON )
) ss
CITY OF SEATTLE )
Before me this 13th day of May, 1993, personally appeared the above-named
Boh A. Dickey and Richard W. Hubbard, known to me to be the persons who
executed the foregoing instrument and who acknowledged that they executed the
same.
/s/ BETTY J. SCHOOLING
-------------------------------
Notary Public
My Commission expires August 4, 1993 .
<PAGE> 1
EXHIBIT NO. 99.2
BYLAWS
<PAGE> 2
EXHIBIT 99.2
BYLAWS
(As amended 2/2/95)
SAFECO INSTITUTIONAL SERIES TRUST
(A DELAWARE BUSINESS TRUST)
(AS AMENDED NOVEMBER 4, 1993)
These Bylaws of SAFECO INSTITUTIONAL TRUST (the "Trust"), a Delaware business
trust, are subject to the Trust Instrument of the Trust dated May 13, 1993, as
from time to time amended, supplemented or restated (the "Trust Instrument").
Capitalized terms used herein have the same meanings as in the Trust
Instrument.
ARTICLE I
PRINCIPAL OFFICE AND SEAL
Section 1. Principal Office. The principal office of the Trust shall be
located in Seattle, Washington, or such other location as the Board of Trustees
may from time to time determine. The Trust may establish and maintain other
offices and places of business as the Board of Trustees may from time to time
determine.
Section 2. Seal. The seal of the Trust shall consist of a flat-faced circular
die with the words "SAFECO Institutional Series Trust", and with the words
"Trust Seal, 1993" in the center, and with the word "Delaware" also being shown
on the face of the seal. Any Trustee or officer of the Trust shall have
authority to affix the seal to any document requiring the same.
ARTICLE II
MEETINGS OF BOARD OF TRUSTEES
Section 1. Meetings. Meetings of the Board of Trustees may be held at such
places and such times as the Trustees may from time to time determine as
provided in Article II, Section 7, of the Trust Instrument.
Section 2. Action Without a Meeting. Actions may be taken by the Board of
Trustees without a meeting or by a telephone meeting, as provided in Article
II, Section 7, of the Trust Instrument.
Section 3. Compensation of Trustees. No compensation for services as a
Trustee shall be paid to any Trustee who is at the time an employee of an
investment adviser of the Trust or any Series or Class thereof or of any entity
affiliated with the investment adviser. A Trustee who is not an employee of
such investment adviser or any of its affiliates may receive such compensation
from the Trust for his or her services and reimbursement for his or her
expenses as may be fixed from time to time by the Board of Trustees.
<PAGE> 3
ARTICLE III
BOARD COMMITTEES
Section 1. Establishment. The Board of Trustees may designate one or more
committees and shall determine the number of members of each such committee and
its powers. Each committee member shall hold office at the pleasure of the
Board of Trustees. The Board of Trustees may abolish any such committee at any
time in its sole discretion. Any committee to which the Board of Trustees
delegates any of its powers shall maintain records of its meetings and shall
report its actions to the Board of Trustees. The Board of Trustees shall have
the power to rescind any action of any committee, but no such recision shall
have retroactive effect. The Board of Trustees shall have the power at any
time to fill vacancies in the committees. The Board of Trustees may delegate
to any committee any of its powers, except the power to declare a dividend or
distribution on Shares, authorize the issuance of Shares, recommend to
Shareholders any action requiring Shareholders' approval, amend these Bylaws,
approve any merger or Share exchange, approve or terminate any contract with an
investment adviser or Principal Underwriter, or to take any other action
required by applicable law to be taken by the Board.
Section 2. Notice, Waiver, Consent, Quorum and Proceedings. In the absence of
a provision in these Bylaws or an appropriate resolution of the Trustees, each
committee may adopt such rules and regulations governing notice of its meetings
and waiver and consent to thereof, quorum and manner of acting as it shall deem
proper and desirable. In the event any member of any committee is absent from
any meeting, the members present at the meeting, whether or not they constitute
a quorum, may appoint another Trustee to act in the place of such absent
member.
Section 3. Audit Committee.
(a) Membership. The members of the Audit Committee shall be those Trustees
who are not Interested Persons of the Trust.
(b) Responsibilities and Duties. The Audit Committee shall assist the Board
of Trustees to fulfill its responsibility to shareholders, potential
shareholders and the investment community relating to corporate accounting,
financial reporting practices of the Trust and the quality and integrity of the
financial reports of the Trust. In carrying out these responsibilities the
Audit Committee will:
(i) Review and recommend to the Board of Trustees the independent
accountants to be selected to audit the financial statements of the Trust;
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<PAGE> 4
(ii) Meet with the independent accountants and the officers of the Trust to
review the scope of the proposed audit for the current year and the audit
procedures to be utilized;
(iii) Meet with the independent accountants and the officers of the Trust at
the conclusion of each audit to review the audit, including a review of any
comments or recommendations of the independent accountants;
(iv) Review with the independent accountants and the officers of the Trust
the adequacy and effectiveness of the internal auditing, accounting and
financial controls of the Trust and elicit any recommendations from the
independent accountants and officers of the Trust for improvements in such
controls;
(v) Review the internal audit services provided to the Trust by the
Trust's investment adviser or its affiliates;
(vi) Review the planning and results of any internal audit examinations;
(vii) Determine whether the independent accountants are satisfied with the
disclosure and content of the financial statements included in the annual
report to shareholders and review any change in accounting principles which
materially affect such financial statements;
(viii) Review the scope of and fees for consulting services provided by the
independent accountants;
(ix) Meet in separate executive sessions with the independent accountants
and management;
(x) Report to the Board of Trustees following each meeting.
(c) Rules of Procedure. The Audit Committee shall adopt its own rules and
keep minutes of all of its meetings.
(d) Quorum. A quorum of the Audit Committee shall consist of at least two
members of the Committee.
(e) Action Without Meeting. Subject to the requirements of the 1940 Act,
any action that may be or is required to be taken at a meeting of the Audit
Committee may be conducted by telephone or taken without a meeting if a consent
in writing setting forth the action so taken shall be signed by all members of
the Audit Committee. Such consent shall have the same effect as a unanimous
vote.
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<PAGE> 5
Section 4. Pricing Committee.
(a) Membership. The Board of Trustees may annually appoint a Pricing
Committee comprised of two or more trustees or officers of SAFECO Asset
Management Company.
(b) Responsibilities and Duties. The purpose of the Pricing Committee shall
be to value, on behalf of the Board of Trustees between regularly scheduled
trustees' meetings, any security held by or to be purchased for the Trust or
any Series which cannot be otherwise valued under the Trust's guidelines for
valuation of portfolio securities, e.g., an unrestricted security for which
market quotes are not readily available or a restricted security ("Security").
(c) Rules of Procedure. In determining the fair value of a Security, the
Pricing Committee shall consider such factors and follow such procedures as may
be established under guidelines approved by the Trust's Board of Trustees. The
guidelines shall be periodically reviewed and approved by the Board as
frequently as the Board shall deem appropriate, but in no event less than
annually. Minutes shall be kept of each meeting of the Pricing Committee. At
the next regularly scheduled Board of Trustees' meeting following the Pricing
Committee's determination of a fair value for a Security, the Board of Trustees
shall ratify the Pricing Committee's action.
(d) Vote Required. The members of the Pricing Committee must unanimously
approve a fair value for the Security.
(e) Action Without Meeting. Any action that may be or is required to be
taken at a meeting of the Pricing Committee may be conducted by telephone or
may be taken without a meeting, if a consent in writing setting forth the
action so taken shall be signed by all members of the Pricing Committee. Such
consent shall have the same effect as a unanimous vote.
Section 5. Compensation of Committee Members. Each committee member who is
not an Interested Person of the Trust may receive such compensation from the
Trust for his or her services and reimbursement for his or her expenses as may
be fixed from time to time by the Trustees.
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<PAGE> 6
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Trust shall be a President, a
Treasurer, a Secretary, and may include one or more Vice Presidents, Assistant
Treasurers or Assistant Secretaries, and such other officers as the Board of
Trustees may from time to time elect. The Board of Trustees may appoint any
other officers or agents and prescribe their respective rights, terms of
office, authorities and duties.
Section 2. Election, Tenure and Qualifications of Officers. The officers of
the Trust shall be elected annually by the Trustees. Each officer elected by
the Board of Trustees shall hold office until his or her successor shall have
been elected and qualified or his or her earlier resignation. Any person may
hold one or more offices of the Trust, except no one person may serve
concurrently as President and Secretary. A person who holds more than one
office in the Trust may not act in more than one capacity to execute,
acknowledge, or verify an instrument required by law to be executed,
acknowledged, or verified by more than one officer. No officer need be a
Trustee or a Shareholder of the Trust.
Section 3. Vacancies and Newly Created Offices. Whenever a vacancy shall
occur in any office, regardless of the reason for such vacancy, or if any new
office shall be created, such vacancies or newly created offices may be filled
by the Trustees at any meeting.
Section 4. Removal and Resignation. The Board of Trustees may remove any
officer or agent from office, with or without cause, by the vote of a majority
of the Trustees. Any officer may resign from office at any time by delivering a
written resignation to the Trustees, the President, the Secretary, or any
Assistant Secretary. Unless otherwise specified therein, such resignation
shall take effect upon delivery.
Section 5. Chairman. The Chairman shall have the powers and responsibilities
set forth in Article II, section 6 of the Trust Instrument and shall exercise
and perform such other powers and duties as may from time to time be assigned
by the Board of Trustees or prescribed by these Bylaws.
Section 6. President. The President shall be the chief executive officer of
the Trust. Subject to the direction of the Trustees, the President shall have
general charge, supervision and control over the business affairs of the Trust
and shall be responsible for the management thereof. In the absence of the
Chairman, or if no Chairman of the Board of Trustees has been elected, the
President shall preside at all Shareholders' and Board of Trustees' meetings
and shall in general exercise the powers and perform the duties of
- 5 -
<PAGE> 7
the Chairman. Except as the Board of Trustees may otherwise order, the
President shall have the power to grant, issue, execute or sign such powers of
attorney, proxies, agreements or other documents as may be deemed advisable or
necessary. The President also shall have the power to employ attorneys,
accountants and other advisers and agents for the Trust. The President shall
exercise such other powers and perform such other duties as the Board of
Trustees may from time to time assign to the President.
Section 7. Vice President. If the Board of Trustees elects one or more Vice
President(s), the Vice-President(s) shall have such powers and perform such
duties as may from time to time be assigned to them by the Board of Trustees or
the President. At the request or in the absence or disability of the
President, the Vice President (or, if there are two or more Vice Presidents,
then the senior of the Vice Presidents present and able to act) may perform all
the duties of the President and, when so acting, shall have all the powers of
the President. The Board of Trustees may designate one (1) or more of the Vice
Presidents as an Executive Vice President or with such other designation or
title as the Board of Trustees deem appropriate for his or her position or
duties.
Section 8. Treasurer and Assistant Treasurers. The Treasurer shall be the
principal financial officer of the Trust and shall have general charge of the
finances and books of the Trust. The Treasurer shall be responsible for
delivering all funds and securities of the Trust to its custodian. The
Treasurer shall make annual reports to the Board of Trustees regarding the
business and financial condition of the Trust as soon as possible after the
close of the Trust's fiscal year. The Treasurer also shall furnish such other
reports concerning the business and financial condition of the Trust as the
Board of Trustees may from time to time require. The Treasurer shall perform
all acts incidental to the office of Treasurer, subject to the supervision of
the Board of Trustees, and shall perform such additional duties as the Board
may from time to time designate.
Any Assistant Treasurer may perform such duties of the Treasurer as the Board
of Trustees or the Treasurer may assign, and, in the absence of the Treasurer,
may perform all the duties of the Treasurer.
Section 9. Secretary and Assistant Secretaries. The Secretary shall record
all votes and proceedings of the meetings of Trustees and Shareholders in books
to be kept for that purpose. The Secretary shall be responsible for the giving
and serving of all notices of the Trust. The Secretary shall have custody of
any seal of the Trust. The Secretary shall be responsible for the records of
the Trust, including the Share register and such other books and papers as the
Trustees may direct and such books, reports, certificates and other documents
required by law. All of such records and documents shall at all reasonable
times be kept open by
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the Secretary for inspection by any Trustee. The Secretary shall perform all
acts incidental to the office of Secretary, subject to the supervision of the
Trustees, and shall perform such additional duties as the Trustees may from
time to time designate.
Any Assistant Secretary may perform such duties of the Secretary as the
Trustees or the Secretary may assign, and, in the absence of the Secretary, may
perform all the duties of the Secretary.
ARTICLE V
MEETINGS OF SHAREHOLDERS
Section 1. Annual Meetings. There shall be no annual Shareholders' meetings.
Section 2. Special Meetings. Special meetings of Shareholders of the Trust or
of any Series or Class shall be called by the Chairman, President or Secretary
whenever ordered by the Trustees, and shall be held at such time and place as
may be stated in the notice of the meeting.
Special meetings of the Shareholders of the Trust or of any Series or Class
shall also be called by the Chairman, President or Secretary upon the written
request of Shareholders owning at least ten percent of the Outstanding Shares
of the Trust or such Series or Class entitled to vote at such meeting, provided
that (1) such request shall state the purposes of such meeting and the matters
proposed to be acted on, and (2) the Shareholders requesting such meeting shall
have paid to the Trust the reasonably estimated cost of preparing and mailing
the notice thereof, which the Secretary shall determine and specify to such
Shareholders. No special meeting shall be called upon the request of
Shareholders of the Trust or of any Series or Class to consider any matter
which is substantially the same as a matter voted upon at any special meeting
of the Shareholders held during the preceding twelve months, unless requested
by the holders of a majority of all Outstanding Shares of the Trust or the
Series or Class entitled to be voted at such meeting.
If the Chairman, President or Secretary fails for more than thirty days to
call a special meeting when required to do so, the Trustees or the Shareholders
requesting such a meeting may, in the name of the Chairman, President or
Secretary, call the meeting by giving the required notice. If the meeting is a
meeting of Shareholders of any Series or Class, but not a meeting of all
Shareholders of the Trust, then only a special meeting of Shareholders of such
Series or Class shall be called and only Shareholders of such Series or Class
shall be entitled to notice of and to vote at such meeting.
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Section 3. Notice of Meetings; Waiver. The Chairman, President or Secretary
shall cause written notice of the place, date and time, and the purpose or
purposes for which the meeting is called. Notice shall be given at least ten
days before the date of the meeting. The written notice of any meeting may be
delivered or mailed, postage prepaid, to each Shareholder entitled to vote at
such meeting. If mailed, notice shall be deemed to be given when deposited in
the United States mail directed to the Shareholder at his or her address as it
appears on the records of the Trust. Notice of any Shareholders' meeting need
not be given to any Shareholder who is present at such meeting in person or by
proxy if a written waiver of notice, executed before or after such meeting, is
filed with the record of such meeting. Any irregularities in the notice of any
meeting or the nonreceipt of any such notice by any of the Shareholders shall
not invalidate any action otherwise properly taken at any such meeting.
Section 4. Adjourned Meetings. One or more adjournments of any Shareholders'
meetings may be taken by reason of failure of a quorum to attend a meeting or
for any other reason. Notice of adjournment of a Shareholders' meeting to
another time or place need not be given, if such time and place are announced
at the meeting at which the adjournment is taken, or reasonable notice is given
to persons present at the meeting, and the adjourned meeting is held within a
reasonable time after the date set for the original meeting. At the adjourned
meeting the Trust may transact any business which might have been transacted at
the original meeting. If after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to
Shareholders of record entitled to vote at such meeting.
Section 5. Validity of Proxies. Subject to the provisions of the Trust
Instrument, Shareholders entitled to vote may vote either in person or by
proxy, provided that either (1) a written instrument authorizing such proxy to
act has been signed and dated by the Shareholder or by his or her duly
authorized attorney, or (2) the Trustees adopt by resolution an electronic,
telephonic, computerized or other alternative to execution of a written
instrument authorizing the proxy to act, but if a proposal by anyone other than
the officers or Trustees is submitted to a vote of the Shareholders of the
Trust or of any Series or Class, or if there is a proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees, Shares may be voted only in person or by written proxy. Unless the
proxy provides otherwise, it shall not be valid for more than eleven months
before the date of the meeting. All proxies shall be delivered to the
Secretary or other person responsible for recording the proceedings before
being voted. A proxy with respect to Shares held in the name of two or more
persons shall be valid if executed by one of them unless at or prior to
exercise of such proxy the Trust receives a specific written notice to the
contrary
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from any one of them. Unless otherwise specifically limited by their terms,
proxies shall entitle the Shareholder to vote at any adjournment of a
Shareholders' meeting. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its
exercise, and the burden of proving invalidity shall rest on the challenger.
At every meeting of Shareholders, unless the voting is conducted by inspectors,
all questions concerning the qualifications of voters, the validity of proxies,
and the acceptance or rejection of votes, shall be decided by the chairman of
the meeting. Subject to the provisions of the Delaware Business Trust Act, the
Trust Instrument or these Bylaws, all matters concerning the giving, voting or
validity of proxies shall be governed by the General Corporation Law of the
State of Delaware relating to proxies, and judicial interpretations thereunder,
as if the Trust were a Delaware corporation and the Shareholders were
shareholders of a Delaware corporation.
Section 6. Quorum; Required Vote. The quorum and required vote for any
Shareholders' meeting shall be as specified in Article VI, section 3 of the
Trust Instrument.
Section 7. Record Date. The Board of Trustees may fix in advance a date up to
seventy (70) days before the date of any Shareholders' meeting as a record date
for the determination of the Shareholders entitled to notice of, and to vote
at, any such meeting. The Shareholders of record entitled to vote at a
Shareholders' meeting shall be deemed the Shareholders of record at any meeting
reconvened after one or more adjournments, unless the Board of Trustees has
fixed a new record date. If the Shareholders' meeting is adjourned for more
than one hundred twenty (120) days after the original date, the Board of
Trustees shall establish a new record date.
Section 8. Place of Meeting. All special meetings of Shareholders shall be
held at the principal place of business of the Trust or at such other place as
the Board of Trustees may from time to time designate.
Section 9. Action Without a Meeting. Any action to be taken by Shareholders
may be taken without a meeting if a majority (or such other amount as may be
required by law) of the Outstanding Shares entitled to vote on the matter
consent to the action in writing and such written consents are filed with the
records of the Shareholders' meetings. Such written consent shall be treated
for all purposes as a vote at a meeting of the Shareholders held at the
principal place of business of the Trust.
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ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 1. Share Certificates. In lieu of issuing certificates representing
Shares, the Board of Trustees or the transfer agent or Shareholder servicing
agent may keep accounts upon the books of the Trust for record holders of such
Shares. The record holders shall be deemed, for all purposes, to be holders of
certificates for such Shares as if they accepted such certificates and shall be
held to have expressly consented to the terms thereof.
If the Board of Trustees authorizes the issuance of certificates pursuant to
Article V, Section 5 of the Trust Instrument, then such certificates shall be
in the form prescribed from time to time by the Board and shall be signed by
the President or a Vice President and by the Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary of the Trust. Such signatures may be
facsimile if the certificate is signed by a transfer agent or Shareholder
servicing agent or by a registrar, other than a Trustee, officer or employee of
the Trust. If any officer who has signed any such certificate or whose
facsimile signature has been placed thereon shall have ceased to be such an
officer before the certificate is issued, then such certificate may be issued
by the Trust with the same effect as if he or she were such an officer at the
date of issue. The issuance of a certificate to one or more Shareholders shall
not require the issuance of certificates to all Shareholders. The Board of
Trustees may at any time discontinue the issuance of certificates and may, by
written notice to each Shareholder, require the surrender of certificates to
the Trust for cancellation. Such surrender and cancellation shall not affect
the ownership of Shares in the Trust.
Section 2. Transfer of Shares. The Shares of the Trust shall be transferable
only by a transfer recorded on the books of the Trust by the Shareholder of
record in person or by his or her duly authorized attorney or legal
representative. The Shares of the Trust may be freely transferred, and the
Board of Trustees may, from time to time, adopt rules and regulations regarding
the method of transfer of such Shares. Shares shall not be transferred on the
books of the Trust until all requirements of the Board, including the proper
tender of any outstanding certificates, if any, have been satisfied. The Trust
shall be entitled to treat the holder of record of any Share or Shares as the
absolute owner for all purposes, and shall not be bound to recognize any legal,
equitable or other claim or interest in such Share or Shares on the part of any
other person except as otherwise expressly provided by law.
Section 3. Lost, Stolen or Destroyed Certificates. If any Share certificate
should become lost, stolen or destroyed, a duplicate Share certificate may be
issued in place thereof, upon such terms and conditions as the Board of
Trustees may prescribe, including,
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but not limited to, requiring the owner of the lost, stolen or destroyed
certificate to give the Trust a bond or other indemnity, in such form and in
such amount as the Board of Trustees may direct and with such surety or
sureties as may be satisfactory to the Board sufficient to indemnify the Trust
against any claim that may be made against it on account of the alleged loss,
theft or destruction of any such certificate or the issuance of such new
certificate.
ARTICLE VII
CUSTODY OF SECURITIES
Section 1. Employment of a Custodian. The Trust shall at all times place and
maintain all cash, securities and other assets of the Trust and of each Series
in the custody of a custodian meeting the requirements set forth in Article
VII, section 4 of the Trust Instrument ("Custodian"). The Custodian shall be
appointed from time to time by the Board of Trustees, who shall determine its
remuneration.
Section 2. Termination of Custodian Agreement. Upon termination of any
Custodian Agreement or the inability of the Custodian to continue to serve as
custodian, in either case with respect to the Trust or any Series, the Board of
Trustees shall (a) use its best efforts to obtain a successor Custodian; and
(b) require that the cash, securities and other assets owned by the Trust or
any Series be delivered directly to the successor Custodian.
Section 3. Other Arrangements. The Trust may make such other arrangements for
the custody of its assets (including deposit arrangements) as may be required
by any applicable law, rule or regulation.
ARTICLE VIII
FISCAL YEAR AND ACCOUNTANT
Section 1. Fiscal Year. The fiscal year of the Trust shall, unless otherwise
ordered by the Board of Trustees, be twelve calendar months ending on the 30th
day of September.
Section 2. Accountant. The Trust shall employ independent certified public
accountants as its Accountant to examine the accounts of the Trust and to sign
and certify financial statements filed by the Trust. The Accountant shall be
appointed in accordance with the requirements of Section 32(a) of the 1940 Act
and the rules thereunder. The Accountant's certificates and reports shall be
addressed both to the Board of Trustees and to the Shareholders.
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ARTICLE IX
AMENDMENTS
Section 1. General. Except as provided in Section 2 of this Article, all
Bylaws of the Trust shall be subject to amendment, alteration or repeal, and
new Bylaws may be made by the affirmative vote of a majority of either: (1)
the Outstanding Shares of the Trust entitled to vote at any meeting; or (2) the
Trustees.
Section 2. By Shareholders Only. After the issue of any Shares of the Trust,
no amendment, alteration or repeal of this Article shall be made except by the
affirmative vote of the holders of either: (a) more than two-thirds of the
Trust's Outstanding Shares present at a meeting at which the holders of more
than fifty percent of the Outstanding Shares are present in person or by proxy,
or (b) more than fifty percent of the Trust's Outstanding Shares.
ARTICLE X
NET ASSET VALUE
Section 1. Determination of Net Asset Value. The term "Net Asset Value" of
any Series or Class shall mean that amount by which the assets belonging to
that Series or Class exceed its liabilities, all as determined by or under the
direction of the Board of Trustees. Such value per Share shall be determined
separately for each Series or Class and shall be determined on such days and at
such times as the Board of Trustees may determine. Such determination shall be
made with respect to securities for which market quotations are readily
available, at the market value of such securities; and with respect to other
securities and assets, at the fair value as determined in good faith by the
Board of Trustees, provided, however, that the Board, without Shareholder
approval, may alter the method of appraising portfolio securities insofar as
permitted under the 1940 Act and the rules, regulations and interpretations
thereof promulgated or issued by the Commission or insofar as permitted by any
order of the Commission applicable to a Series or Class. The Board of Trustees
may delegate any of its powers and duties under this Section 1 with respect to
appraisal of assets and liabilities. At any time the Board of Trustees may
cause the Net Asset Value per Share last determined to be determined again in a
similar manner and may fix the time when such redetermined values shall become
effective.
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ARTICLE XI
INVESTMENTS
Section 1. Investment Objectives, Policies and Restrictions. The Trust and/or
each Series shall adhere to the fundamental and non-fundamental investment
objectives, policies and restrictions applicable to the Trust and/or each
Series included in the Trust's current effective registration statement as
filed with the Commission. If a percentage limitation is adhered to at the
time of an investment, a later increase or decrease in the percentage resulting
from a change in the value of the assets of a Series shall not be a violation
of such investment restrictions.
Section 2. Amendment of Investment Objectives, Policies and Restrictions. Any
investment objectives, policies and restrictions of the Trust or any Series
which are deemed to be fundamental may not be changed without the approval of
the holders of a majority of the Outstanding Shares of the Trust or of the
Series affected which shall mean the lesser of (i) 67% of the Shares
represented at a meeting at which more than 50% of the Outstanding Shares are
present or represented by proxy or (ii) more than 50% of the Outstanding
Shares. Any investment objectives, policies or restrictions deemed
non-fundamental may be changed by vote of the Board of Trustees.
ARTICLE XII
MISCELLANEOUS
Section 1. Inspection of Books. The Board of Trustees shall from time to
time determine whether and to what extent, and at what times and places, and
under what conditions the accounts and books of the Trust or any Series or
Class shall be open to the inspection of Shareholders. No Shareholder shall
have any right to inspect any account or book or document of the Trust except
as conferred by law or otherwise by the Board of Trustees or by resolution of
Shareholders.
Section 2. Severability. The provisions of these Bylaws are severable. If
the Board of Trustees determine, with the advice of counsel, that any provision
hereof conflicts with the 1940 Act, the regulated investment company provisions
of the Internal Revenue Code or with other applicable laws and regulations, the
conflicting provision shall be deemed never to have constituted a part of these
Bylaws; provided, however, that such determination shall not affect any of the
remaining provisions of these Bylaws or render invalid or improper any action
taken or omitted prior to such determination. If any provision hereof shall be
held invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision only in such jurisdiction
and shall not affect any other provision of these Bylaws.
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Section 3. Headings. Headings are placed in these Bylaws for convenience of
reference only and in case of any conflict, the text of these Bylaws rather
than the headings shall control.
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<PAGE> 1
EXHIBIT NO. 99.5
INVESTMENT ADVISORY AND MANAGEMENT CONTRACT
<PAGE> 2
EXHIBIT 99.5
INVESTMENT ADVISORY AND MANAGEMENT CONTRACT
THIS AGREEMENT is made and executed this 28th day of February, 1994, between
SAFECO INSTITUTIONAL SERIES TRUST ("Trust"), a Delaware business trust and
SAFECO ASSET MANAGEMENT COMPANY ("Manager"), a Washington corporation.
WHEREAS, the Trust is registered with the Securities & Exchange Commission as
a series type, open-end, management investment company under the Investment
Company Act of 1940, as amended ("1940 Act"), and has caused its shares of
beneficial interest to be registered for sale to the public under the
Securities Act of 1933 (the "1933 Act") and various state securities laws; and
WHEREAS, the Trust intends to offer for public sale distinct series of shares
of beneficial interest ("Series"), each Series corresponding to a distinct
portfolio; and
WHEREAS, the Manager is willing to furnish such services on the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, it is agreed as follows:
1. Appointment of Manager. The Trust hereby appoints the Manager as
investment adviser and manager of each Series to administer its affairs,
subject tot he supervision of the Trust's Board of Trustees, for the period and
on the terms set forth in this Agreement. The Manager hereby accepts such
appointment and agrees to render the services required by this Agreement for
the compensation and upon such other terms and conditions as are set forth in
this Agreement. The Manager shall for all purposes herein be deemed an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
2. Duties of Series. Each Series shall at all times keep the Manager fully
informed with regard tot he securities owned by it, its funds available or to
become available for investment, and generally as to the condition of its
affairs. It shall furnish the Manager with such other documents and
information with regard to its affairs as the Manager may from time to time
reasonably request.
<PAGE> 3
3. Duties of Manager.
(a) General. The Manager shall furnish to the Trust space in the offices of
the Manager or in such other place as may be agreed upon from time to time and
all necessary office facilities, equipment and personnel for managing the
affairs and investments and keeping the books of the Trust. Subject to the
supervision of the Trust's Board of Trustees, the Manager shall regularly
provide each Series and investment research, advice, management and supervision
and shall furnish a continuous investment program for each Series' portfolio of
securities consistent with each Series' investment objectives and policies.
The Manager shall determine from time to time what securities will be
purchased, retained or sold by each Series, and shall implement those
decisions, all subject to the provisions of the Trust's Trust Instrument and
Bylaws, the 1940 Act, the applicable rules and regulations of the Securities
and Exchange Commission, and other applicable federal and state law, as well as
the investment objectives and policies of each Series. The Manager will place
orders pursuant to its investment determinations for each Series either
directly with the issuer or with any broker or dealer. In placing orders with
brokers and dealers the Manager will attempt to obtain the best net price and
the most favorable execution of its orders. The Manager shall also provide
advice and recommendations with respect to other aspects of the business and
affairs of the Trust and each Series, and shall perform such other functions of
management and supervision as may be directed by the Board of Trustees of the
Trust.
(b) Reports and Records. The Manager, at its expense, shall supply the
Trust's Board of Trustees and officers with all statistical information and
reports reasonably requested by them and reasonably available to the Manager.
The Manager shall oversee the maintenance of all books and records with respect
to the Trust's and each Series' securities transactions and the keeping of the
Trust's and each Series' securities transactions and the keeping of the trust's
and each Series' books of account in accordance with all applicable federal and
state laws and regulations. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Manager hereby agrees that any records which it
maintains for the Trust or any Series are the property of the Trust, and
further agrees to surrender promptly to the Trust any of such records upon the
Trust's request. The Manager further agrees to arrange for the preservation of
the records required to be maintained by Rule 31a-1 under the 1940 Act for the
periods prescribed by Rule 31a-2 under the 1940 Act. The Manager shall
authorize and permit any of its directors, officers and employees, who may be
elected as directors or officers of the Trust, to serve in the capacities in
which they are elected.
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<PAGE> 4
4. Allocation of Expenses.
(a) (1) Manager shall pay the organizational expenses of the Trust, which
the Trust shall reimburse to Manager over a sixty-month period commencing after
the date of the Trust's initial public offering of its shares. If the Trust
shall not be obligated to reimburse the Manager for aggregate organizational
expenses for a Series in excess of a specified amount, such amount shall be set
forth in Exhibit A, as amended from time to time. (1) The Manager shall be
responsible for the compensation (if any) paid to officers of the Trust for
serving in that capacity; the expenses of computing the net asset value per
share of the Trust and each Series; federal and state registration fees for the
Trust and each Series, other than the initial fees to be reimbursed pursuant to
Section 4(a)(1); all expenses of preparing, printing and distributing
advertising and sales literature for the Trust and each Series; and the cost of
fidelity bond and other insurance for the Trust and each Series.
(b) The Trust and each Series shall bear all expenses of their organization,
operations and business not specifically assumed or agreed to be paid by the
Manager as provided in this Agreement. In particular, but without limiting the
generality of the foregoing, the Trust and each Series shall pay:
(1) Custody and Accounting Services. All expenses of the transfer, receipt,
safekeeping, servicing and accounting for the cash, securities, and other
property of the Trust and each Series, including all charges of depositories,
custodians, and other agents, if any;
(2) Shareholder Servicing. All expenses of maintaining and servicing
shareholder accounts, including all charges of the transfer, shareholder
recordkeeping, dividend disbursing, redemption, and other agents of the Trust
and each Series, if any;
(3) Shareholder Communications. All expenses of preparing, printing, and
distributing reports and certain other communications to shareholders of the
Trust and each Series;
(4) Shareholder Meetings. All expenses incidental to holding meetings of
shareholders of the Trust and each Series, including the printing of notices
and proxy materials and the expenses of any proxy solicitation;
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<PAGE> 5
(5) Prospectuses And Statements of Additional Information. All expenses of
preparing, printing and mailing to shareholders of annual or more frequent
revisions of the Prospectus and Statement of Additional Information for the
trust and each Series;
(6) Communication Equipment. All charges for equipment or services used for
communication between the Manager, the Trust or each Series and the
custodian, transfer agent or any other agent selected by the Trust;
(7) Legal and Accounting Fees and Expenses. All charges for services and
expenses of the Trust's legal counsel and independent auditors;
(8) Trustees' Fees and Expenses. All compensation of trustees, other than
those affiliated with the Manager, and all expenses incurred in connection
with their service;
(9) Issue and Redemption of Fund Shares. All expenses incurred in
connection with the issue, redemption, and transfer of shares of the Trust
and each Series, including the expense of confirming all share transactions,
and of preparing and transmitting the Trust's stock certificates, if
certificates are issued;
(10) Brokerage Commissions. All brokers' commissions and other charges
incident to purchase, sale, or lending of portfolio securities of the Trust
and Series;
(11) Taxes. All taxes or governmental fees payable by or with respect to the
Trust and each Series to federal, state, or other governmental agencies,
domestic or foreign, including stamp or other transfer taxes;
(12) Nonrecurring and Extraordinary Expenses. Such nonrecurring expenses as
may arise, including the costs of actions, suits, or proceedings to which the
Trust or any Series is a party and the expenses the Trust or any Series may
incur as a result of its legal obligation to provide indemnification to its
trustees, officers, and agents.
5. Non-Exclusive Services. The services of the Manager to the Trust and each
Series hereunder are not to be deemed exclusive, and the Manager shall be free
to render similar services to others so long as its services hereunder are not
impaired thereby.
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<PAGE> 6
6. Compensation for Services.
(a) For the services and facilities to be furnished by the Manager, each
existing Series shall pay the Manager an annual fee computed on the basis of
the average net asset value of the Series as ascertained each business day and
paid monthly in accordance with the schedule set forth in Exhibit A to this in
accordance with the schedule set forth in Exhibit A to this Agreement. For
purposes of computing the annual fee, the net asset value of the Series shall
be equal to the difference between its total assets and its total liabilities
(excluding from such liabilities its capital stock and surplus) with its assets
and its liabilities to be valued in accordance with the procedures set forth in
the Trust's Registration Statement.
(b) For the services and facilities to be furnished by the Manager, any new
Series of the Trust which is issued on a future date will pay the Manager a fee
according to a Schedule which will be set forth in an amended Exhibit A to this
Agreement.
(c) If SAFECO Securities, Inc., receives portfolio brokerage commissions
resulting from transactions in the portfolio of any Series ("commissions"), any
management fee earned by Manager will be reduced by the amount of such
commissions so received by SAFECO Securities, Inc.
(d) The Trust and the Manager may mutually agree to reduce the fees payable
by any Series if the reduction is in the best long-range interest of the Trust
and the Manager.
(e) If the Manager shall serve for less than the whole of any month, the
monthly management fee payable by each Series shall be prorated.
7. Reimbursements by Manager. The Manager agrees to reimburse a Series for
the amount by which the Series' expenses in any full fiscal year (excluding
taxes and interest expense, brokerage expenses and extraordinary expenses)
exceed the limits prescribed by any state in which the Series shares are
qualified for sale. For the purpose of this calculation, the costs of
acquiring and disposing of portfolio securities shall be charged to the cost of
or amount realized from such securities and shall not be deemed expenses of the
Series is entitled to reimbursement, the expenses of the Series are calculated
on a monthly basis. If a Series is entitled to a reimbursement, that month's
advisory fee will be reduced or postponed, with any adjustments made at the end
of the fiscal year.
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8. Liability of Manager. The Manager assumes no responsibility under this
Agreement other than to render the services called for hereunder, in good
faith, and shall not be responsible for any action of the Trust's Board of
Trustees in following or declining to follow any advice or recommendations of
the Manager; provided, that nothing in this Agreement shall protect the Manager
against any liability to the Trust or its shareholders to which it would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder.
9. Books and Records. The Trust shall cause its books and accounts to be
audited at least once each year by a reputable, independent public accountant
or organization of public accoun-tants who shall render a report to the Trust.
10. Affiliation.
(a) It is understood that trustees, officers, shareholders and agents of the
Trust and each Series are or may be interested in the Manager (or any successor
thereof) as directors, officers, shareholders or otherwise, and that the
Manager (or any such successor) is or may be interested in the Trust as a
shareholder or otherwise.
(b) No trustee, officer or employee of the Trust and each Series shall
receive from the Trust any salary or other compensation as such director,
officer or employee while he or she is at the same time a director, officer, or
employee of the Manager or any affiliated company of the Manager. This
paragraph shall not apply to directors or other persons who are not regular
members of the Manager's or any affiliated company's staff.
11. Unrestricted Activities. Nothing in this Agreement shall limit or
restrict the right of any director, officer, or employee of the Manager who may
also be a trustee, officer, or employee of the Trust or any Series, to engage
in any other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar nature
or a dissimilar nature, or limit or restrict the right of the Manager to engage
in any other business or to render services of any kind, including investment
advisory and management services, to any other corporation, firm, individual or
association.
6
<PAGE> 8
12. Use of Name. In the event this Agreement is terminated by either party
or upon written notice from the Manager at any time, the Trust hereby agrees
that it will eliminate from its corporate name any reference to the name of
"SAFECO." The Trust shall have the non-exclusive use of the name "SAFECO" in
whole or in part only so long as this Agreement is effective or until such
notice is given. Notwithstanding the foregoing and in the event that this
Agreement is terminated by either party, the Manager may elect to permit the
Trust to continue to use the name "SAFECO" under such terms and conditions as
the Manager shall set forth in writing.
13. Effectiveness Date/Renewal. This Agreement will become effective with
respect to each Series on the date first written above or such later date as
indicated on Exhibit A, provided that it shall have been approved by the
Trust's Board of Trustees and by the shareholders of that Series in accordance
with the requirements of the 1940 Act and, unless sooner terminated as provided
herein, will continue in effect for two years from the above written date.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to each Series for successive annual periods ending on the same date of
each year, provided that such continuance is specifically approved at least
annually (i) by the Trust's Board of Trustees or (ii) with respect to any
Series, by a vote of a majority of the outstanding voting securities of that
Series, provided that in either event the continuance is also approved by a
majority of the Trust's trustees who are neither interested persons (as defined
in the 1940 Act) of the Trust or the Manager by vote cast at a meeting called
for the purpose of voting on such continuance.
14. Amendment. This Agreement may be amended by the parties only if the
terms of the amendment are approved by either (i) a majority of the Trust's
Board of Trustees or, (ii) with respect to any given Series, by a vote of a
majority of the outstanding voting securities of that Series at a duly called
meeting of the shareholders. In either case, the majority of the trustees, who
are neither interested persons of the Trust or the Manager, must approve the
amendment.
15. Termination. This Agreement is terminable with respect to any Series or
in its entirety without penalty by the Trust's Board of Trustees, by vote of a
majority of the outstanding voting securities of each affected Series (as
defined in the 1940 Act), or by the Manager, on not less than 60 days' notice
to the other party and will be terminated upon the mutual written consent of
the Manager and the Trust. This Agreement shall terminate automatically in the
event of its assignment by the Manager and shall not be assignable by the Trust
without the consent of the Manager.
7
<PAGE> 9
16. Limitation of Liability. Manager is hereby expressly put on notice of
(i) the limitation of shareholder, officer and trustee liability as set forth
in the Trust Instrument of the Trust and (ii) of the provisions in the Trust
Instrument permitting the establishment of separate Series and limiting the
liability of each Series to obligations of that Series. Manager hereby agrees
that obligations assumed by the Trust pursuant to this Agreement are in all
cases assumed on behalf of a particular Series and each such obligation shall
be limited in all cases to that Series and its assets. Manager agrees that it
shall not seek satisfaction of any such obligation from the shareholders or any
individual shareholder of the Trust nor from the officers or trustees of any
individual officer or trustee of the Trust.
17. Defined Terms. For the purpose of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignment," and "interested
persons," shall have the respective meanings specified in the Investment
Company Act of 1940 when such terms are used in reference to the Trust and the
Series.
18. Entire Agreement/Enforcement of Rights. This Agreement embodies the
entire agreement between the Manager and the Trust with respect to the services
to be provided by the Manager to the Trust and each Series and supersedes any
prior written or oral agreement between those parties. In the event that
either party should be require to take legal action in order to enforce its
rights under this Agreement, the prevailing party in any such action or
proceeding shall be entitled to recover from the other party costs and
reasonable attorneys' fees.
19. Miscellaneous. The captions in the Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed in counterparts, each of which taken together shall
constitute one and the same instrument. Manager understands that the rights
and obligations of each Series under the Trust Instrument are separate and
distinct from those of any and all other Series.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington and, to the extent it
involves any United States statute, in accordance with the laws of the United
States.
8
<PAGE> 10
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the day and year first above written.
ATTEST: SAFECO INSTITUTIONAL SERIES TRUST
/s/ Elna A. Thomson By /s/ David F. Hill
- ------------------- -------------------------------
Elna A. Thomson David F. Hill
Secretary President
ATTEST: SAFECO ASSET MANAGEMENT COMPANY
/s/ Elna A. Thomson By /s/ Richard W. Hubbard
- ------------------- -------------------------------
Elna A. Thomson Richard W. Hubbard
Secretary President
9
<PAGE> 11
EXHIBIT A
SAFECO INSTITUTIONAL SERIES TRUST
FIXED-INCOME PORTFOLIO
FEE SCHEDULE
<TABLE>
<CAPTION>
Net Assets Annual Fee
---------- ----------
<S> <C>
For assets up to and including $100,000,000 .50 of 1%
For assets in excess of $100,000,000 and
up to and including $250,000,000 .40 of 1%
For assets over $250,000,000 .35 of 1%
</TABLE>
ORGANIZATIONAL EXPENSES
The Trust shall not be obligated to reimburse the Manager for aggregate
organizational expenses in excess of $30,000 for the Fixed-Income Portfolio
<TABLE>
<S> <C>
ATTEST: SAFECO INSTITUTIONAL SERIES TRUST
/s/ Elna A. Thomson By /s/ David F. Hill
- ------------------- -----------------------------
Elna A. Thomson David F. Hill
Secretary President
ATTEST: SAFECO ASSET MANAGEMENT COMPANY
/s/ Elna A. Thomson By /s/ Richard W. Hubbard
- ------------------- -----------------------------
Elna A. Thomson Richard W. Hubbard
Secretary President
</TABLE>
As of 2-28-94
10
<PAGE> 1
EXHIBIT NO. 99.6
DISTRIBUTION AGREEMENT
<PAGE> 2
EXHIBIT 99.6
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT, made this 28th day of February, 1994, by and
between SAFECO INSTITUTIONAL SERIES TRUST, a Delaware business trust ("Trust"),
and SAFECO SECURITIES, INC. a Washington corporation (the "Distributor").
WHEREAS, the Trust is registered with the Securities and Exchange Commission
as a series type open-end investment company under the Investment Company Act
of 1940, as amended (the "1940 Act") and has caused its shares of beneficial
interest to be registered for sale to the public under the Securities Act of
1933 (the "1933 Act") and various state securities laws; and
WHEREAS, the Trust intends to offer for public sale distinct series of shares
of beneficial interest, each corresponding to a distinct portfolio ("Series");
and
WHEREAS, the Trust wishes to retain the Distributor as the principal
underwriter in connection with the offering and sale of the shares of
beneficial interest of each Series as now exists and as hereafter may be
established which are listed on Exhibit A to this Agreement as amended from
time to time ("Shares") and to furnish certain other services to the Trust as
specified in this Agreement; and
WHEREAS, this Agreement has been approved by a vote of the Trust's Board of
Trustees, and certain trustees who are not interested persons in conformity
with Section 15(c) under the 1940 Act; and
WHEREAS, the Distributor is willing to act as principal underwriter and to
furnish such services on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, it is agreed as follows:
1. Appointment of Distributor. The Trust hereby appoints the Distributor as
principal underwriter in connection with the offering and sale of Shares of
each Series. The Trust authorizes the Distributor, as exclusive agent for the
Trust, upon the commencement of operations of any Series and subject to
applicable federal and state law and the Trust Instrument and Bylaws of the
Trust: (a) to promote the Series; (b) to solicit orders for the purchase of
the Shares of the Series subject to such terms and conditions as the Trust may
specify; and (c) to accept orders for the purchase of the Shares of the Series
on behalf of the Trust. The Distributor shall comply with all applicable
federal and state laws and offer the Shares of each Series on an agency or
"best efforts" basis under which the Trust shall issue only such Shares as are
actually sold. The Distributor shall have the right to use any list of
shareholders
<PAGE> 3
of the Trust or any Series or any other list of investors which it
obtains in connection with its provision of services under this Agreement;
provided, however, that the Distributor shall not sell or knowingly provide
such list or lists to any unaffiliated person without the consent of the
Trust's Board of Trustees.
2. Duties of Trust. The Trust agrees to register the Shares with the
Securities and Exchange Commission, state and other regulatory bodies, and to
prepare and file from time to time such Prospectuses, Statements of Additional
Information, amendments, reports and other documents as may be necessary to
maintain the Registration Statement. Each Series shall bear all expenses
related to preparing and typesetting such Prospectuses, Statements of
Additional Information and other materials required by law and such other
expenses, including printing and mailing expenses, related to such Series'
communications with persons who are shareholders of that Series.
3. Duties of Distributor. The Distributor shall print and distribute to
prospective investors Prospectuses, and shall print and distribute, upon
request, to prospective investors Statements of Additional Information, and may
print and distribute such other sales literature, reports, forms and
advertisements in connection with the sale of the Shares as comply with the
applicable provisions of federal and state law. In connection with such sales
and offers of sale, the Distributor shall give only such information and make
only such statements or representations as are contained in the Prospectus,
Statement of Additional Information, or in information furnished in writing to
the Distributor by the Trust, and the Trust shall not be responsible in any way
for any other information, statements or representations given or made by the
Distributor or its representatives or agents. Except as specifically provided
in this Agreement, the Trust shall bear none of the expenses of the Distributor
in connection with its offer and sale of the Shares.
4. Other Broker Dealers. The Distributor may enter into dealer agreements
with registered and qualified securities dealers for the sale of the Shares.
The form of any such dealer agreement shall be mutually agreed upon and
approved by the Trust and the Distributor.
5. Public Offering Price. The public offering price of the Shares of each
Series shall be the net asset value per share (as determined by the Trust) of
the outstanding Shares of the Series, if any, as described in the Registration
Statement. The Trust shall furnish the Distributor with a statement of each
computation of public offering price and of the details entering into such
computation.
- 2 -
<PAGE> 4
6. Repurchase of Shares. The Distributor may at its sole discretion
repurchase Shares offered for sale by the shareholders. Repurchase of Shares
by the Distributor shall be at the net asset value next determined after a
repurchase order has been received. The Distributor will receive no commission
or other remuneration for repurchasing Shares. At the end of each business
day, the Distributor shall notify by any appropriate means, the Trust and
SAFECO Services Corporation, the Trust's transfer agent, of the orders for
repurchase of Shares received by the Distributor since the last such report,
the amount to be paid for such Shares, and the identity of the shareholders
offering Shares for repurchase. Upon such notice, the Trust shall pay the
Distributor such amounts as are required by the Distributor for the repurchase
of such Shares in cash or in the form of a credit against moneys due the Trust
from the Distributor as proceeds from the sale of Shares. The Trust reserves
the right to suspend such repurchase right upon written notice to the
Distributor. The Distributor further agrees to act as agent for the Trust to
receive and transmit promptly to the Trust's transfer agent shareholder
requests for redemption of Shares.
7. Indemnification.
(a) The Distributor shall be entitled to receive and act on the advice of
counsel for the Trust which advice shall be at the expense of the Trust and
shall be without liability for any action taken, or things done, or omitted to
be done, pursuant to such advice.
(b) The Trust agrees to indemnify, defend and hold the Distributor, its
several directors, officers and employees, and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act, free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which the
Distributor, its directors, officers or employees, or any such controlling
person may incur, under the 1933 Act or under common law or otherwise, arising
out of or based upon any alleged untrue statement of a material fact contained
in the Registration Statement or arising out of or based upon any alleged
omission to state a material fact required to be stated or necessary to make
the Registration Statement not misleading, provided that in no event shall
anything contained in this Agreement be construed so as to protect the
Distributor against any liability to the Trust or its shareholders to which the
Distributor would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties, or by reason of
its reckless disregard of its obligations and duties under this Agreement, and
further provided
- 3 -
<PAGE> 5
that the Trust shall not indemnify the Distributor for conduct set forth in
this subparagraph 7(b).
(c) The Distributor agrees to indemnify, defend and hold the Trust, its
several trustees, officers and employees and any person who controls the Trust
within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Trust, its trustees,
officers or employees or any such controlling person may incur, under the 1933
Act or under common law or otherwise, arising out of or based upon any alleged
untrue statement of a material fact contained in information furnished in
writing by the Distributor to the Trust for use in the Registration Statement
or arising out of or based upon any alleged omission to state a material fact
in connection with such information required to be stated in the Registration
Statement or necessary to make such information not misleading. As used in
this subparagraph 7(c), the term "employee" shall not include a corporate
entity under contract to provide services to the Trust or any Series, or any
employee of such a corporate entity, unless such person is otherwise an
employee of the Trust.
8. Certificates. The Trust shall not be required to issue certificates
representing Shares. If the Trust elects to issue certificates and a
shareholder request for certificates is transmitted through the Distributor,
the Trust will cause certificates evidencing the Shares owned to be issued in
such names and denominations as the Distributor shall from time to time direct,
provided that no certificates shall be issued for fractional Shares.
9. Withdrawal of Offering. The Trust reserves the right at any time to
withdraw all offerings of the Shares of any or all Series by written notice to
the Distributor at its principal office.
10. Independent Contractor Status. The Distributor is an independent
contractor and shall be agent for the Trust only in respect to the sale and
redemption of the Shares.
11. Non-Exclusive Services. The services of the Distributor to the Trust
under this Agreement are not to be deemed exclusive, and the Distributor shall
be free to render similar services or other services to others so long as its
services hereunder are not impaired thereby.
12. Use of Name. In the event this Agreement is terminated by either party
or upon written notice from the Distributor at any time, the Trust hereby
agrees that it will eliminate from its corporate name any reference to the name
of "SAFECO." The Trust
- 4 -
<PAGE> 6
shall have the non-exclusive use of the name "SAFECO" in whole or in part only
so long as this Agreement is effective or until such notice is given.
Notwithstanding this subparagraph and in the event this Agreement is terminated
by either party, the Distributor may elect to permit the Trust to continue to
use the name "SAFECO" under such terms and conditions as the Distributor shall
set forth in writing.
13. Effective Date/Renewal. This Agreement will become effective with
respect to each Series on the date first written above or such later date as
indicated on Exhibit A and, unless sooner terminated as provided herein, will
continue in effect for two years from the above written date. Thereafter, if
not terminated, this Agreement shall continue in effect with respect to each
Series for successive annual periods ending on the same date of each year,
provided that such continuance is specifically approved at least annually (i)
by the Trust's Board of Trustees or (ii) with respect to any given Series, by a
vote of a majority of the outstanding voting securities of that Series (as
defined in the 1940 Act), provided that in either event the continuance is also
approved by majority of the Trust's trustees who are neither interested persons
(as defined in the 1940 Act) of the Trust or the Distributor by vote cast at a
meeting called for the purpose of voting on such continuance.
14. Amendment. This Agreement may be amended by the parties only if the
terms of the amendment are either (i) approved by the Trust's Board of Trustees
or, (ii) with respect to any given Series, by a vote of a majority of the
outstanding voting securities of that Series at a duly called meeting of the
shareholders. In either case, the majority of the trustees, who are neither
interested persons of the Trust or the Distributor, must approve the amendment.
15. Termination. This Agreement is terminable with respect to any Series or
in its entirety without penalty by the Trust's Board of Trustees, by vote of a
majority of the outstanding voting securities of each affected Series (as
defined in the 1940 Act), or by the Distributor, on not less than 60 days'
notice to the other party and will be terminated upon the mutual written
consent of the Distributor and the Trust. This Agreement will also
automatically and immediately terminate in the event of its assignment.
16. Limitation of Liability. Distributor is hereby expressly put on notice
of (i) the limitation of shareholder, officer and trustee liability as set
forth in the Trust Instrument of the Trust and (ii) of the provisions in the
Trust Instrument permitting the establishment of separate Series and limiting
the liability of each Series to obligations of that Series. Distributor hereby
agrees that obligations assumed by the Trust pursuant to this Agreement are in
all cases assumed on
- 5 -
<PAGE> 7
behalf of a particular Series and each such obligation shall be limited in all
cases to that Series and its assets. Distributor agrees that it shall not seek
satisfaction of any such obligation from the shareholders or any individual
shareholder of the Trust nor from the officers or trustees or any individual
officer or trustee of the Trust.
17. Definitions. As used in this Agreement, the term(s):
(a) "net assets" shall have the meaning ascribed to it in the Trust's Trust
Instrument;
(b) "assignment", "interested person", and "majority of the outstanding
voting securities" shall have the meanings given to them by Section 2(a) of the
1940 Act, subject to such exemptions as may be granted by the Securities and
Exchange Commission by any rule, regulation or order.
(c) "Registration Statement" shall mean the registration statement most
recently filed by the Trust with the Securities and Exchange Commission and
effective under the 1940 Act and 1933 Act, as such Registration Statement is
amended by any amendments thereto at the time in effect;
(d) "Prospectus" and "Statement of Additional Information" shall mean,
respectively, the form of prospectus and statement of additional information
with respect to each Series filed by the Trust as part of the Registration
Statement.
18. Entire Agreement/Enforcement of Rights. This Agreement embodies the
entire Agreement between the Distributor and the Trust with respect to the
services to be provided by the Distributor to the Trust and each Series and
supersedes any prior written or oral agreement between those parties. In the
event that either party should be required to take legal action in order to
enforce its rights under this Agreement, the prevailing party in any such
action or proceeding shall be entitled to recover from the other party costs
and reasonable attorneys' fees.
19. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed in counterparts, each of which taken together shall
constitute one and the same instrument. Distributor understands that the
rights and obligations of each Series under the Trust Instrument are separate
and distinct from those of any and all other Series.
20. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of Washington.
- 6 -
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be executed
by their officers thereunto duly authorized.
Attest: SAFECO INSTITUTIONAL SERIES TRUST
By: /s/ ELNA A. THOMSON By: /s/ DAVID F. HILL
--------------------- -------------------
Secretary President
Attest: SAFECO SECURITIES, INC.
By: /s/ ELNA A. THOMSON By: /s/ DAVID F. HILL
--------------------- -------------------
Secretary President
- 7 -
<PAGE> 9
EXHIBIT A
SAFECO INSTITUTIONAL SERIES TRUST
The SAFECO Institutional Series Trust consists of the following Series:
1. Fixed-Income Portfolio
As of 2-28-94
- 8 -
<PAGE> 1
EXHIBIT NO. 99.8
CUSTODY AGREEMENT
<PAGE> 2
EXHIBIT 99.8
CUSTODY AGREEMENT
THIS AGREEMENT executed as of the 28th day of February, 1994, between SAFECO
INSTITUTIONAL SERIES TRUST, a Delaware business trust, ("Trust"), and U. S.
BANK OF WASHINGTON, N.A., a national banking association ("Bank").
WHEREAS, the Trust is registered with the Securities and Exchange Commission
as a series type open-end, management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"), and has caused its shares of
beneficial interest to be registered for sale to the public under the
Securities Act of 1933 (the "1933 Act") and various state securities laws; and
WHEREAS, the Trust may, from time to time, organize one or more series of
shares, in addition to the series set forth in Exhibit A attached hereto, each
of which shall represent an interest in a separate portfolio of cash,
securities and other assets (all such existing and additional series now or
hereafter listed on Exhibit A are referred to herein individually, as a
"Series" and collectively, as "the Series," and
WHEREAS, the Trust desires to appoint the Custodian as custodian on behalf of
the Series in accordance with the provisions of the Investment Company Act of
1940 (the "1940 Act") and the rules and regulations thereunder, under the terms
and conditions set forth in this Agreement, and the Custodian has agreed to act
as custodian;
NOW, THEREFORE, it is agreed by and between the parties hereto as follows:
1. Appointment. The Trust on behalf of the Series hereby appoints the
Bank as custodian of all of the Series' cash, securities and other assets, and
the Bank hereby agrees to act as such upon the terms and conditions set forth
in this Agreement.
2. Delivery, Safe Keeping. The Trust will deliver or cause to be
delivered to the Bank from time to time all cash, securities and other assets
acquired by the Series from time to time during the term of this Agreement and
shall specify the Series to which such cash, securities and other assets are to
be allocated. The Bank shall keep safely such cash, securities and other
assets as custodian for the Series and shall deposit such cash, securities and
other assets with the Bank for the account of the Series.
3. Registration of Securities. Bank will hold stocks and other
registerable portfolio securities (other than bearer securities) registered in
the name of the Series, or in the name of any nominee of the Trust on behalf of
the Series, or in the name of any nominee of Bank, or in the name or nominee
name of any sub-custodian or agent appointed under paragraph 4 for whose
fidelity and liabilities Bank shall be fully responsible, or in street
<PAGE> 3
certificate form, so-called, with or without any indication of fiduciary
capacity. Unless otherwise instructed by the Trust, Bank will register all
such portfolio securities in the name of its authorized nominee. In any event,
all such securities and other assets shall be held in an account of the Bank
containing only assets of a Series, or only assets held by a Bank as a
fiduciary or custodian for customers, and provided further, that the records of
the Bank shall indicate at all times the Series or other customer for which
such securities and other assets are held in such account and their respective
interests therein. The Trust agrees to hold Bank and its nominee harmless for
any liability as a record holder of securities held in custody.
4. Custody of Moneys or Securities/Appointment of Agents. Notwithstanding
any other provisions of this Agreement, all or any of the cash, securities or
other assets of a Series may be held in Bank's custody, provided, however, that
the Bank may at any time or times in its discretion appoint (and may at any
time remove) any other bank or trust company which is itself qualified under
the 1940 Act to act as a sub- custodian or its agent to carry out such of the
provisions of this Agreement as the Bank may from time to time direct. The
appointment of any sub-custodian or agent shall not relieve the Bank of its
responsibilities or liabilities hereunder. Neither Bank nor any sub-custodian
or agent shall be entitled to reimbursement by Trust or the Series for any fees
or expenses of any sub-custodian or agent.
5. Deposit of Trust Assets in Securities Systems. Upon order of the Trust on
behalf of any Series, the Bank may deposit and/or maintain securities owned by
a Series in a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934, which acts
as a securities depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively referred
to herein as "Securities Systems" in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
(a) The Bank may keep securities of the Series in a Securities System
provided that such securities are represented in an account ("Account")
of the Bank in the Securities System which shall not include any assets
of the Bank other than assets held as a fiduciary, custodian or
otherwise for customers;
(b) The records of the Bank with respect to securities of the Series which
are maintained in a Securities System shall identify by book- entry
those securities belonging to the Series;
2
<PAGE> 4
(c) The Bank shall pay for securities purchased for the account of the
Series upon (i) receipt of advice from the Securities System that such
securities have been transferred to the Account, and (ii) the making of
an entry on the records of the Bank to reflect such payment and transfer
for the account of the Series. The Bank shall transfer securities sold
for the account of the Series upon (i) receipt of advice from the
Securities System that payment for such securities has been transferred
to the Account, and (ii) the making of an entry on the records of the
Bank to reflect such transfer and payment for the account of the Series.
Copies of all advice from the Securities System of transfers of
securities for the account of the Series shall identify the Series, be
maintained for the Series by the Bank and be provided to the Trust as
its request. Upon request, the Bank shall furnish the Trust on behalf
of the Series confirmation of each transfer to or from the account of
the Series in the form of a written advice or notice and shall furnish
to the Trust on behalf of the Series copies of daily transaction sheets
reflecting each day's transactions in the Securities System for the
account of the Series.
(d) The Bank shall provide the Trust for the Series with any report obtained
by the Bank on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities deposited
in the Securities System;
(e) The Bank shall exercise reasonable care and diligence in the use of the
Securities System on behalf of the Trust and the Series. The Bank shall
be liable to the Trust for the benefit of the Series for any loss or
damage to the Series resulting from use of the Securities System by
reason of any negligence or willful misconduct of the Bank or any of its
agents, or of any of the Bank's or any agent's employees, or from
failure of the Bank or any such agent to enforce effectively such rights
as it may have against the Securities System. At the election of the
Trust, it shall be entitled to be subrogated to the rights of the Bank
with respect to any claim against the Securities System or any other
person which the Bank may have as a consequence of any such loss or
damage if and to the extent that the Series has not been made whole for
any such loss or damage.
3
<PAGE> 5
6. Segregated Account. The Bank shall upon order of the Trust on behalf of
each applicable Series establish and maintain a segregated account or accounts
for and on behalf of each such Series, into which account or accounts may be
transferred cash and/or securities, including securities maintained in an
account by the Bank pursuant to paragraph 5 hereof, (i) for the purposes of
compliance by the Series with the procedures required by Investment Company Act
Release No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (ii) for other proper corporate purposes,
but only, in the case of clause (ii), upon receipt of, in addition to an order
of the Trust on behalf of the applicable Series, a writing signed by any two
individuals whose names and signatures are covered by the most recent letter
provided to the Bank as provided in paragraph 12 setting forth the purpose or
purposes of such segregated account and declaring such purposes to be proper
corporate purposes.
7. Purchases of Securities. Upon the order of the Trust on behalf of the
Series, the Bank shall receive all securities purchased for the account of the
Trust and make payment according to the terms of the order insofar as funds are
available.
8. Sale and Delivery of Securities.
(a) Upon the order of the Trust on behalf of the Series, the Bank shall make
delivery of securities held by it as custodian or held in a Securities System
account of the Bank which have been sold by the Trust. Such delivery shall be
made upon payment in a manner satisfactory to the Bank of the amount specified
in said order. The Bank shall also deliver such securities as may be called,
redeemed, retired or otherwise become payable.
(b) Subparagraph (a) shall not prevent the Bank from making:
(i) Delivery of securities for examination to the broker
selling the same in accord with the "street" delivery custom
whereby such securities are delivered to such broker in
exchange for a delivery mreceipt exchanged on the same day for an
uncertified check of such broker to be presented on the same day for
certification;
(ii) Delivery of securities as collateral on borrowing effected by the
Trust or any Series; and
iii) Delivery of securities owned by the Trust or any Series as a
edemption in kind of securities issued by the Trust or any Series.
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<PAGE> 6
9. Collections.
(a) On a timely basis, the Bank shall: (i) collect, receive and hold on
deposit for the account of the appropriate Series, all income and other
payments with respect to the securities held by it on behalf of a Series as
custodian; (ii) advise the Trust once each business day of such receipts;
(iii) execute ownership and other certificates and affidavits for all federal
and state tax purposes in connection with the collection of bond and note
coupons; (iv) present for payment all coupons and all other income items
requiring presentation, present for payment all securities which have become
payable at maturity, upon call for redemption or otherwise; (v) endorse for
collection checks, drafts or other negotiable instruments; and (vi) do all
other things which may be necessary or proper in connection with the receipt
and collection of any such item.
(b) The Bank shall not be under any obligation or duty to take action
to effect collection of any amount, if the securities upon which such amount is
payable are in default and payment is refused after due demand or presentation.
The Bank will, however, notify the Trust of such default and refusal to pay.
10. Disbursements.
(a) Notwithstanding anything contained elsewhere in this Agreement to the
contrary and subparagraphs (b) and (c) below, the Bank shall deliver funds of
the Trust only upon the purchase of securities by the Trust on behalf of the
Series.
(b) Upon the order of the Trust for the Series, the Bank shall make cash
disbursements for the account of the Trust and any Series insofar as funds are
available for such disbursements, for the payment of taxes, expenses and
liabilities including, without limitation:
(i) Management fees payable under any management agreement with
SAFECO Asset Management Company (or its successors) or any
other person selected to serve as an investment advisor to the
Trust or any Series.
(ii) Compensation payable by the Trust or any Series to any person,
firm or corporation, including compensation payable to the
Bank under this Agreement.
(iii) Cash dividends or distributions for any Series declared by the
Board of Trustees of the Trust.
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<PAGE> 7
(c) Without the order of the Trust, the Bank may make cash
disbursements for non-discretionary ministerial items, including but not
limited to expenses in handling securities, stamp taxes, reimbursement of the
Bank for its out-of-pocket expenses incurred in the performance of its duties
hereunder and other similar items in connection with its duties under this
Agreement. The Bank shall advise the Trust once each business day of
disbursements so made.
11. Redemption and Repurchase of Shares of the Trust. From such
funds as may be available for the purpose but subject to the limitations of the
Trust Instrument and any applicable votes of the Trust's Board of Trustees
pursuant to the Trust Instrument, the Bank shall, upon receipt of instructions
from the Trust's Transfer Agent, make funds available for payment to
shareholders who have delivered to the Transfer Agent a request for redemption
or repurchase of their shares. If payment is to be made in kind, the
instructions must be accompanied by a certified copy of a resolution of the
Trust's Board of Trustees. In connection with the redemption or repurchase of
shares of a Series, the Bank is authorized upon receipt of instructions from
the Transfer Agent to wire funds to or through a commercial bank designated by
the redeeming shareholders. In connection with the redemption or repurchase of
shares of any Series, the Bank shall honor checks drawn on the Bank by a
shareholder, which checks have been furnished by the Trust to the shareholder,
when presented to the Bank in accordance with such procedures and controls as
are mutually agreed upon from time to time between the Trust and the Bank.
12. Proper Instructions.
(a) Except in the case of non-discretionary ministerial acts, and as
otherwise specifically provided in this Agreement, all action to be taken by
the Bank as custodian shall be taken upon the order of the Trust on behalf of
the Series. An "order" of the Trust on behalf of the Series shall consist of
written instructions with respect to a specified transaction, or transactions,
which instructions shall be signed by any two individuals whose names and
signatures are covered by the most recent letter addressed to the Bank setting
forth such names and signatures and signed by the President or Treasurer and
Secretary of the Trust. An "order" may consist of oral instructions in the
case of purchases and sales of shares of registered investment companies by any
Series, but only if the Bank reasonably believes such instructions to have been
provided by a person authorized to give such instructions for the transaction
involved and if such instruction is transmitted and received in accordance with
any procedures acceptable to both the Fund and the Bank. Oral instructions
shall not be accepted by the Bank for any other type of transaction.
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<PAGE> 8
(b) Notwithstanding anything to the contrary contained in the
Agreement, no person authorized to give an "order" as described in the
preceding paragraph, Trustee, officer, employee or agent of the Trust shall
have physical access to the assets of any Series held by the Bank nor shall the
Bank deliver any assets of a Series for delivery to an account of such person;
provided, however, that nothing in this sub- paragraph (b) shall prohibit the
Trust's independent certified public accountants from examining or reviewing
the assets of the Series held by the Bank.
13. Forwarding of Information and Proxies. The Bank will forward
promptly to the Trust for each Series all information or documents which it may
receive with respect to any securities held by a Series under this Agreement,
including all notices, reports and other financial information. Neither the
Bank, nor its nominee, shall vote any of the securities or authorize the voting
of any securities or give any consent or take any other action with respect
thereto, except as otherwise provided herein, unless directed to do so upon
order of the Trust on behalf of any Series.
14. Reorganization or Liquidation, Etc. of the Trust. In the case of the
following transactions, not in the ordinary course of business, namely, the
merger or consolidation of the Trust and another investment company, the sale
by the Trust of all, or substantially all, of its assets to another investment
company, or the liquidation or dissolution of the Trust and distribution of its
assets, the Bank shall deliver the securities held by it under this Agreement
and disburse cash only upon the order of the Trust and upon receipt of opinion
of counsel of the Trust (upon which opinion the Bank may rely without liability
to any party) to the effect that all necessary corporate action therefore has
been taken, or, concurrently with the Bank's action will be taken.
15. Compensation. Each Series shall pay to the Bank compensation for its
services under this Agreement in accordance with the attached schedule of
charges set forth in Exhibit D which may be amended from time to time by mutual
agreement. In addition, each Series will reimburse the Bank for all
out-of-pocket expenses, including taxes and other charges required to be paid
by the Bank with respect to the property of each Series, incurred by the Bank
in the performance of its duties hereunder.
16. Responsibility.
(a) In the performance of its duties under this Agreement, the Bank
shall exercise reasonable care and diligence. The Bank shall be liable to the
Trust for the benefit of the Series for any loss or damage to the Series
resulting from any negligence or willful misconduct of the Bank or any of its
agents, or of any of the Bank's or any agent's employees in the performance of
the Bank's duties under this Agreement.
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<PAGE> 9
(b) Except as otherwise provided herein, the Bank shall not incur
liability to anyone and shall be indemnified and held harmless by the Trust and
the Series from and against all liability, claims, demands, actions, suits,
costs or expenses (including the fees of its counsel) for anything done or
suffered by the Bank in good faith in accordance with an order of the Trust or
pursuant to the terms of this Agreement. The Bank may apply for and obtain the
advice and opinion of counsel to the Trust or its own counsel with respect to
questions of law and shall be fully protected with respect to anything done or
omitted by it in good faith in conformity with such advice or opinion. The
Bank shall be protected in any action taken or omitted by it in reliance upon
any order, notice, request, certificate or other instrument reasonably believed
by it to be genuine.
(c) The Bank shall be under no duty or obligation to inquire into and
shall not be liable for:
(i) The validity of the issue of any securities
purchased by or for the Trust or any Series, the
legality of the purchases thereof or the propriety
of the amount paid therefor;
(ii) The legality of any sale of any securities by or for
the Trust or any Series or on the propriety of the
amount for which the same are sold;
(iii) The legality of an issue or sale of any shares of
the Trust or any Series or the sufficiency of the
amount to be received therefor;
(iv) The legality of the repurchase of any shares of the
Trust or any Series or the propriety of the amount
to be paid therefor;
(v) The legality of the declaration of any dividend by
the Trust or any Series or the legality of the issue
of any securities held by the Trust or any Series as
a payment in kind of such dividend;
(vi) Any property or moneys of the Trust or any Series
unless and until received by it, and any such
property or moneys delivered or paid by it pursuant
to the terms hereof.
(d) The Bank shall not be under any duty or obligation to ascertain
whether any securities at any time delivered to or held by it for the account
of a Series are such as may properly be held by a Series under the provisions
of the Trust's Instrument or Bylaws, any federal or state statutes or any rule
or regulation of any governmental agency.
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<PAGE> 10
17. Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for purchase of securities for
the account of a Series is made by the Bank in advance of receipt of the
securities purchased in the absence of specific written instructions from the
Trust on behalf of such Series to so pay in advance, the Bank shall be
absolutely liable to the Trust for such securities to the same extent as if the
securities had been received by the Bank.
18. Records. The Bank shall with respect to each Series create and
maintain all records relating to its activities and obligations under this
Agreement in such manner as will meet the obligations of the Trust under the
1940 Act, particularly Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Trust and shall at all times
during the regular business hours of the Bank be open for inspection by duly
authorized officers, employees and agents of the Trust and employees and agents
of the Securities and Exchange Commission. The Bank shall, at the Trust's
request, supply the Trust with a tabulation of securities owned by each Series
and held by the Bank and shall, when requested to do so by the Trust and for
such compensation as shall be agreed upon between the Trust and the Bank,
include certificate numbers in such tabulations.
19. Termination. This Agreement may be terminated at any time without
penalty with respect to one or more Series by execution of any amended Exhibit
A or in its entirety by written notice delivered by either party to the other.
The effective date of termination shall be as specified in such notice, except
that at the option of the Bank or the Trust, the effective date of the
termination may be postponed to a date not more than sixty (60) days from the
date of the delivery of such notice in order to give the Bank an opportunity to
prepare for the transfer of the Trust or any Series' assets or to give the
Trust or any Series an opportunity to make suitable arrangements for a
successor custodian. Upon termination of this Agreement, the Bank shall
deliver at its office all cash, securities and other assets held by it in
accordance with paragraph 20.
20. Successor Custodian.
(a) If a successor custodian for the Trust or one or more of the Series
shall be appointed by the Trust's Board of Trustees, the Bank shall, upon
termination, deliver to such successor custodian at the office of the Bank all
cash and other assets of the Trust then held by it hereunder and, in the case
of securities, duly endorsed and in the form for transfer, all securities of
each applicable Series then held by it hereunder and shall transfer to an
account of the successor custodian all of the securities of each
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<PAGE> 11
such Series held in a Securities System. The Bank shall take all reasonable
steps to assist in the transfer of the cash, securities and other assets of the
applicable Series to the successor custodian.
(b) If no such successor custodian shall be appointed, the Bank
shall, in like manner, upon receipt of a certified copy of a vote of the
Trust's Board of Trustees, deliver at the office of the Bank and transfer such
cash, securities and other assets in accordance with such vote.
(c) In the event that no written order designating a successor
custodian or certified copy of a vote of the Board of Trustees shall have been
delivered to the Bank on or before the date when such termination shall become
effective, then the Bank shall have the right to deliver to a bank or trust
company of its own selection (which is a "bank" as defined in the 1940 Act)
doing business in Seattle, Washington, having an aggregate capital, surplus,
and undivided profits, as shown by its last published report, of not less than
the amounts required by the 1940 Act, all cash, securities and other assets
held by the Bank on behalf of each applicable Series and all instruments held
by the Bank relative thereto and all other property held by it under this
Agreement on behalf of each applicable Series and to transfer to an account of
such successor custodian all the securities of each such Series held in any
Securities System. Thereafter, such bank or trust company shall be the
successor of the Bank under this Agreement.
(d) In the event that cash, securities and other assets remain in
the possession of the Bank after the date of termination hereof owing to
failure of the Trust to procure the certified copy of the vote referred to or
of the Board of Trustees to appoint a successor custodian, the Bank shall be
entitled to fair compensation for its services during such period as the Bank
retains possession of such cash, securities and other assets and the provisions
of this Agreement relating to the duties and obligations of the Bank shall
remain in full force and effect.
21. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto shall be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below, namely:
In the case of the Trust:
SAFECO Institutional Series Trust
Attn: David F. Hill, President
SAFECO Plaza
Seattle, Washington 98185
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<PAGE> 12
and
In the case of the Bank:
U. S. Bank of Washington, N.A.
Attn: Trust Operations Department
1414 Fourth Avenue
Seattle, Washington 98101
or at such other place as such party may from time to time designate in
writing.
22. Bank representation. Bank represents that it does meet, and will
continue to meet at all times that this Agreement is in effect, the
requirements of the rules and regulations promulgated pursuant to Section 17(f)
of the Investment Company Act of 1940.
23. Limitation of Liability. Bank is hereby expressly put on
notice of (i) the limitation of shareholder, officer and trustee liability as
set forth in the Trust Instrument of the Trust and (ii) of the provisions in
the Trust Instrument permitting the establishment of separate Series and
limiting the liability of each Series to obligations of that Series. Bank
hereby agrees that obligations assumed by the Trust pursuant to this Agreement
are in all cases assumed on behalf of a particular Series and each such
obligation shall be limited in all cases to that Series and its assets. Bank
agrees that it shall not seek satisfaction of any such obligation from the
shareholders or any individual shareholder of the Trust nor from the officers
or trustees or any individual officer or trustee of the Trust.
24. Entire Agreement. This Agreement embodies the entire
Agreement between the Bank and the Trust with respect to the services to be
provided by the Bank to the Trust and each Series and supersedes any prior
written or oral agreement between those parties.
25. Miscellaneous. This Agreement shall be binding on and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement shall not be assignable by the
Trust without the written consent of the Bank or by the Bank without the
written consent of the Trust. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed in counterparts, each of which taken together shall
constitute one and the same instrument. Bank understands that the rights and
obligations of each Series under the Trust Instrument are separate and distinct
from those of any and all other Series.
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<PAGE> 13
26. Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Washington.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
Attest: U. S. BANK OF WASHINGTON, N.A.
By
- ---------------------------- -------------------------------
Its Assistant Vice President
Attest: SAFECO INSTITUTIONAL SERIES TRUST
/s/ ELNA A. THOMSON By /s/ DAVID F. HILL
- ---------------------------- --------------------------------
Secretary Its: President
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<PAGE> 14
EXHIBIT A
SAFECO INSTITUTIONAL SERIES TRUST
The SAFECO Institutional Series Trust consists of the following Series:
1. Fixed-Income Portfolio
As of 2-28-94
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<PAGE> 15
EXHIBIT B
INSTITUTIONAL SERIES TRUST
FIXED-INCOME PORTFOLIO
PROCEDURES FOR CONTROL
Securities Held by Nominee Puget & Co.
1. All securities held in safe keeping at U.S. Bank of
Washington, N.A., main office, will be in the name of the nominee,
Puget & Co.
2. Instructions from the Trust on behalf of a Series or SAFECO Asset
Management Company, the investment adviser to the Trust, relative to
the purchase and sale of securities will be in written form on a
"Transaction Advice" form. See Exhibit C attached.
3. All accounting documents, minutes, bank records, and
instructions to brokers will identify the real ownership of securities
being bought or sold and of interest and dividends received.
4. Certificates for shares of stock and par value of bonds will be
in lots which will permit the physical separation of the
securities according to their real ownership. U.S. Bank of
Washington, N.A. will maintain such a physical separation.
5. Proceeds on securities sold and dividends or interest received in the
name of Puget & Co. will be collected by U.S. Bank of Washington,
N.A., main office. On the business day of receipt of such proceeds
the bank will credit the custodial account of the Trust with the total
amount of such proceeds, dividends or interest and will specifically
identify all collections on the statement of the Trust's account.
6. Payments for securities purchased will be made from the
Trust's custodial account upon delivery of the securities.
As of 2/28/94
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EXHIBIT C
TRANSACTION ADVICE
TRANS NO:
DATE:
To: U.S. Bank - WA
1414 4th Avenue
Seattle, WA 98111
Attn: Account Representative
In accordance with the terms of our existing custody agrement, you are
authorized to settle the transaction set forth below:
ACCOUNT:
Account No.:
BROKER/DEALER:
CUSIP NO: TRADE DATE:
SETTLE DATE:
SECURITY DESCRIPTION SALE
UNITS:
PRICE:
PRINCIPAL
ACCRUED INTEREST:
COMMISSION:
FEES
CASH:
BK ACCT CURR:
SETTLEMENT METHOD:
MANAGER:
SPECIAL INSTRUCTIONS:
- --------------------------- -----------------------
AUTHORIZED SUGNATURE AUTHORIZED SIGNATURE
Date:
Time:
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<PAGE> 17
EXHIBIT D
SAFECO INSTITUTIONAL SERIES TRUST
FIXED-INCOME PORTFOLIO
Schedule of Custodian Fees with U.S. Bank of Washington, N.A.
Gross Billing
Cash/Asset Statements $5.75 each
Cash Dividends, Registered Bonds
and Savings/Commercial Paper
Interest $5.50 each transaction
Cash Disbursements $3.25 each transaction
Purchase/Sale Stocks and Bonds
and Commercial Paper $38.50 each transaction
Coupon Bond Interest $8.25 each transaction
Deposits/Withdrawals -
Master Notes/Money Funds $10.00 each transaction
Repurchase Agreements $22.00 each transaction
Stock Dividends, Splits,
Entering Assets, Exchanges and
Transfers of Registered
Securities $14.00 each transaction
Collateral Receipt/Delivery $20.00 each transaction
Money Market Interest $2.00 each transaction
Money Market Sweep Feature .30 of 1% on Balance in
Money Market Fund/Prime Fund
Administration - if applicable $45.00 per hour
Out of Pocket Expenses (Postage,
insurance, long distance calls,
mileage, photocopying) As Incurred
As of 2/28/94
16
<PAGE> 1
EXHIBIT NO. 99.9
TRANSFER AGENT AGREEMENT
<PAGE> 2
EXHIBIT 99.9
TRANSFER AGENT AGREEMENT
THIS AGREEMENT is made and entered into this 28th day of February, 1993,
between SAFECO INSTITUTIONAL SERIES TRUST ("Trust"), a Delaware business trust,
and SAFECO SERVICES CORPORATION ("SAFECO Services"), a Washington corporation.
WHEREAS, the Trust is registered with the Securities and Exchange
Commission as a series type open-end, management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act") and has caused its
shares of beneficial interest ("Shares") to be registered for sale to the
public under the Securities Act of 1933 (the "1933 Act") and various state
securities laws; and
WHEREAS, the Trust intends to offer for public sale distinct series of
Shares of beneficial interest, each corresponding to a distinct portfolio
(individually, "a Series" and collectively "the Series"), and
WHEREAS, the Trust wishes to retain SAFECO Services as its transfer
agent, dividend and distribution disbursement agent, and shareholder services
agent on behalf of each Series as now exists or as hereafter may be established
which are listed on Exhibit A to this Agreement as amended from time to time
("Shares")
WHEREAS, SAFECO Services is qualified and authorized to act in such
capacities;
NOW, THEREFORE, It is agreed by the parties hereto as follows:
1. Appointment. The Trust on behalf of the Series hereby appoints SAFECO
Services as the Series' transfer agent, dividend and distribution disbursement
agent and shareholder services agent, and SAFECO Services agrees to act as such
upon the terms and conditions herein set forth.
2. Documents. The Trust agrees to deliver to SAFECO Services the following
documents to enable SAFECO Services to exercise its functions under this
Agreement: (a) copies of all basic corporate documentation, including the
Trust's Trust Instrument and Bylaws; (b) evidence of creation and authorization
for issue and sale of the Trust's Shares; (c) evidence of the status of the
Trust's Shares under applicable laws, including copies of the current
registration statement or post-effective amendments to the registration
statement of the Trust's securities under the Securities Act of 1933, copies of
current prospectuses and evidence of compliance with all applicable state
securities laws. The Trust shall furnish promptly to SAFECO Services a copy of
any
<PAGE> 3
amendment or supplement to the above-mentioned documents. The Trust shall
furnish to SAFECO Services any additional documents requested by SAFECO
Services as necessary to perform the services required hereunder.
3. Duties of SAFECO Services. SAFECO Services shall perform as agent of the
Trust on behalf of the Series the following duties:
(a) Maintain a complete computerized record of each Series'
shareholders, including name(s) in which the Shares are registered, address,
account number, broker/dealer or registered representative number (if
required), type of account, number of Shares owned in certificate and
non-certificate form, dates and amounts of purchases and redemptions, dates and
amounts of dividends and capital gains distributed and reinvested, together
with cost amounts.
(b) With respect to requests for the purchase, repurchase, redemption or
transfer of the Series' Shares and the receipt or disbursement of monies,
maintain records of all such transactions and from these records furnish to the
Trust as heretofore agreed, the following for each Series:
(1) Number of Shares purchased and dollar net asset
value per Share.
(2) Number of Shares repurchased or redeemed and
dollar net asset value per Share.
(3) Number of accumulated Shares outstanding.
(4) Number of opened and closed accounts.
(5) Current number of shareholder accounts.
(c) With respect to orders for the purchase of Shares of a Series
received by SAFECO Securities, Inc., principal underwriter of each Series'
Shares, from authorized broker/dealers or SAFECO registered representatives,
and orders for the repurchase of such Shares from authorized broker/dealers or
SAFECO registered representatives, SAFECO Services shall accept and execute
such orders at the prices per share next computed in accordance with Rule 22c-1
of the Investment Company Act of 1940.
(d) Following receipt of payments, upon receipt of proper instructions,
SAFECO Services, as transfer agent, shall prepare computer input entries to
register each Series' Shares upon its books in such name or names as directed.
If the Trust elects to issue certificates representing Shares of a Series, such
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<PAGE> 4
certificates shall be issued, recorded and forwarded for delivery to proper
person(s) upon request. Whether or not certificates evidencing ownership are
issued, a confirmation showing the registration and listing the purchase
transaction shall be mailed to the Trust's shareholders.
Upon receipt of Shares for redemption or repurchase, in good delivery
form, SAFECO Services shall prepare computer input entries to clear the Shares
out of the shareholders' accounts and effect prompt payment to the authorized
broker/dealer or the shareholder.
(e) New investors or shareholders of the Trust may forward monies
directly to SAFECO Services for the purchase of shares under various plans as
described in the Trust's then current Prospectus.
With respect to such plans, SAFECO Services for each Series shall:
(1) Receive monies for the purchase of full and fractional
Shares with respect to any of the Plans. When purchase orders are
received by SAFECO Services in proper form, they shall be time-stamped
and priced in accordance with Rule 22c-1 of the Investment Company Act
of 1940.
(2) Prepare computer input entries to effect the issuance of
confirmations, registration of Shares and recording of cost amounts in
shareholder accounts; record shares and net asset value amounts in the
Series' records; record shares and aggregate dollar amounts for
updating Blue Sky records, production reports, etc.
(3) Secure signed applications from each shareholder which
shall include details as to registration of Shares, social security
number, birth date (for accounts which require it), citizenship, type
of account, broker/dealer, registered representative (if required) and
signature(s).
(4) Maintain signed applications, correspondence, etc. for
individual shareholders.
(5) With respect to the redemption of Shares of a
Series tendered by shareholders:
(i) Accept redemption orders as described in the
Series' then current Prospectus directly from shareholders, or
their qualified agents, upon tender of properly endorsed
certificates which meet the
3
<PAGE> 5
redemption requirements of the Trust. Shares not represented by
certificates tendered by the presentation of a written request
signed by the shareholder may be accepted without a signature
guarantee provided a signature is on file with SAFECO Services.
(ii) Pay proceeds for Shares so tendered at the net
asset value per share next computed after receipt of tender in
accordance with Rule 22c-1 of the Investment Company Act of
1940 within the settlement period required by the Securities
Exchange Act of 1934.
(g) SAFECO Services shall perform all necessary details to complete any
transactions in connection with any exchange privileges as described in the
Series' then current Prospectus.
(h) SAFECO Services shall maintain a bank account in its own name with
any bank which qualifies under the Bylaws of the Trust, for deposit of funds
received in payment of Shares and for the withdrawal of funds in payment of
repurchases or redemptions of Shares, expenses and dividends and capital gains
distributions. After each computer run, written instructions, signed by
authorized officers or other authorized signatories, are to be forwarded to
such bank requesting the transfer of net balance to or from the Series'
custodian account with such bank.
(i) SAFECO Services shall perform all necessary details in connection
with any Withdrawal Plan, as described in the Series' then current Prospectus
including making the monthly or quarterly payments to the Plan participant, and
informing the Series with regard to Shares redeemed and total dollar amount
involved on each payment date.
Although a Withdrawal Plan terminates upon the death of the
shareholder, SAFECO Services shall not be responsible for any payments made or
other action taken in accordance with the provisions of the Plan until it has
knowledge of such death.
(j) With reference to the registration and transfer of Shares referred to
in Section (a) above, SAFECO Services shall be entitled to treat the person in
whose name any Shares are registered as the owner thereof for all purposes, and
shall not be bound to recognize any other person, whether or not SAFECO
Services shall have notice hereof, except as expressly provided under
applicable state law.
4
<PAGE> 6
(k) SAFECO Services shall use reasonable efforts to assure the accuracy
of the records it maintains under this Agreement and to issue certificates or
register Shares only to those persons or entities entitled thereto.
When a transfer of shares is demanded, SAFECO Services shall take
reasonable steps to ascertain whether or not a transfer of the Shares requested
is duly authorized. If SAFECO Services fails to take such reasonable steps, it
will be liable to any insured party for any damages incurred as a result.
SAFECO Services' transfer obligations shall run to the owners of beneficial
interest in the Shares as well as to the owners of record. SAFECO Services
shall take reasonable steps to ascertain the identity and authority of each
assignor, where he is acting in a representative capacity.
Before permitting a transfer of Shares, SAFECO Services shall make
reasonable efforts to insure that the transferee is properly described and that
the transfer instructions for the Shares are clear and not ambiguous or subject
to doubt.
(l) Upon receipt of proper instructions, SAFECO Services shall compile,
distribute or reinvest, authorized dividends and capital gains distributions to
Trust's shareholders. In this regard data shall be accumulated to enable
SAFECO Services to provide and process year-end income tax information for
shareholders, states and the Internal Revenue Service. Where required, taxes
shall be withheld from alien shareholders with foreign addresses and
accumulated for surrender to the Internal Revenue Service.
(m) Prior to each meeting of the Trust's or any Series' shareholders,
SAFECO Services shall address the Proxy Cards, prepare the Proxy Cards, Notice
of Meeting of Shareholders and Proxy Statement for mailing, and mail them to
the shareholders entitled to vote at such meeting. Upon their return by the
shareholders, SAFECO Services shall examine them and prepare a tabulation that
provides the following information for the Trust or Series as the case may be:
(1) Number of Shares outstanding and entitled to vote
on the record date for the meeting.
(2) Number of Shares voted by proxy.
(3) Number of Shares voting "for" each proposal.
(4) Number of Shares voting "against" each proposal.
5
<PAGE> 7
(5) Number of Shares voting "abstain" for each proposal.
(6) Number of shareholders involved in each above instance.
SAFECO Services shall prepare a certified list of shareholders eligible to
vote at each meeting which shall be available on the day of the meeting.
SAFECO Services shall also prepare an "Affidavit of Mailing" to be available
for reading at each meeting stating that on the appropriate date a responsible,
named individual caused the Notice of Meeting, Proxy Card and Proxy Statement
to be mailed by United States Mail, postage prepaid, to each and every
shareholder of the Shares entitled to vote at the meeting.
(n) Countersign all certificates to be issued to shareholders of the
Trust upon receipt of payments for the Shares and request of a certificate or
certificates representing the Shares being purchased.
(o) SAFECO Services in the performance of its duties may contract from
time to time with other persons to provide software or computer time. SAFECO
Services shall advise the Trust of any such arrangements.
4. Appointment of Agents. SAFECO Services may at any time or times in
its discretion appoint (and may at any time remove) one or more other parties
as Agent to perform any or all of the services specified hereunder and carry
out such provisions of this Agreement as SAFECO Services may from time to time
direct; provided, however, that the appointment of any such Agent shall not
relieve SAFECO Services of any of its responsibilities or liabilities
hereunder.
5. Record Keeping and Other Information. SAFECO Services shall create
and maintain all records required by all applicable laws, rules and regulations
relating to the services to be performed under this Agreement, including but
not limited to records required by Section 31(a) of the Investment Company Act
of 1940 and the Rules thereunder, as the same may be amended from time to time.
All records shall be the property of the Trust and shall be available for
inspection and use by the Trust at all times. Where applicable, such records
shall be maintained by SAFECO Services for the periods and in the places
required by Rule 31a-2 under the Investment Company Act of 1940.
6
<PAGE> 8
6. Net Asset Value. Wherever used herein, the term "net asset value" shall
mean the "net asset value" as computed for each Series or Class in accordance
with the Trust's Trust Instrument and Bylaws. If any amendment is made to said
Trust Instrument or Bylaws that changes the method of said computation, the
Trust shall give SAFECO Services immediate notice of such amendment.
7. Proper Instructions. The term "proper instructions" used in this
Agreement shall be deemed to mean any written instructions signed by authorized
persons or any oral instructions delivered in accordance with Trust
requirements.
8. Disbursement of Funds. Funds deposited in the bank account maintained by
SAFECO Services shall not be disbursed to any trustee, officer or employee of
the Trust. This provision shall not be deemed to apply to dividend payments to
any trustee, officer, or employee in his or her capacity as shareholder.
Neither shall this provision apply to the above individuals upon payments to
them for any shares redeemed for their personal accounts.
9. Compensation. SAFECO Services shall receive from each Series of the
Trust a fee in accordance with the arrangements described in Exhibit B hereto
as such Exhibit may be amended from time to time. Exhibit B may be amended or
additional Exhibits may be added, as deemed necessary from time to time by
written agreement between the Trust and SAFECO Services. Deletion of Exhibit B
shall be in accordance with the termination provisions in paragraph 16 of this
Agreement. Each Exhibit B and any amendments thereto shall be dated and signed
by the parties to this Agreement.
10. Certification of Officers/Reliance upon Certifications.
(a) The Secretary of the Trust shall be, and is hereby, directed to
certify to SAFECO Services the names of the officers of the Trust, and their
respective signatures, and in case of any change of any holder of any such
office, the fact of such change, and the name of such new officer and the
office held by him or her, together with specimens of his or her signature.
SAFECO Services is hereby authorized to honor any instructions given to SAFECO
Services by any such new officer in respect of whom it has received any such
certificate with the same force and effect (and not otherwise), as if such new
officer were named in this Agreement in the place of any person with the same
title of office.
7
<PAGE> 9
(b) The Secretary of the Trust shall be, and is hereby, authorized
and directed to notify SAFECO Services promptly in writing of any change of
officers as above provided, and that until SAFECO Services has actually
received and accepted such notice of any such change, SAFECO Services is hereby
authorized and directed to act in pursuance of this Agreement and the latest
certificates theretofore received by it; and SAFECO Services shall be
indemnified and saved harmless from any loss suffered or liability incurred by
it in so acting, even though any such officer may have been changed.
11. Audits, Inspections and Visits. SAFECO Services shall make available
during regular business hours all records and other data created and maintained
pursuant to this Agreement for reasonable audit and inspection by the Trust,
any agent or person designated by the Trust, or any regulatory agency having
authority over the Trust. Upon reasonable notice by the Trust, SAFECO Services
shall make available during regular business hours its facilities and premises
employed in connection with its performance of this Agreement for reasonable
visits by the Trust, any agent or person designated by the Trust, or any
regulatory agency having authority over the Trust.
12. Acts of God, Etc. SAFECO Services shall not be liable for delays or
errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, war, riot or failure of
communications equipment of common carriers or power supply. In the event of
equipment breakdowns beyond its control, SAFECO Services shall at no additional
expense to the Trust take reasonable steps to minimize service interruptions
and mitigate their effects but shall have no liability with respect thereto.
13. Liability and Indemnification.
(a) SAFECO Services shall use reasonable care in the performance of
its duties under this Agreement.
(b) SAFECO Services shall be entitled to receive and act on the
advice of counsel for the Trust which advice shall be at the expense of the
Trust and shall be without liability for any action taken, or things done, or
omitted to be done, pursuant to such advice.
8
<PAGE> 10
(c) SAFECO Services shall not be liable for, or considered to be, the
custodian of any money called for or represented by any check, draft, or other
instrument for the payment of money delivered to it, or on behalf of the Trust.
(d) The Trust shall indemnify and hold SAFECO Services harmless
against any losses, claims, damages, liabilities or expenses (including
reasonable attorneys' fees and expenses) resulting from:
(1) any claim, demand, action or suit brought by any
person other than the Trust, including by a
shareholder, which names SAFECO Services and/or the
Trust as a party, and is not based on and does not
result from SAFECO Services' willful misfeasance, bad
faith or negligence or reckless disregard of duties,
and arises out of or in connection with SAFECO
Services' performance hereunder; or
(2) any claim, demand, action or suit (except to the
extent contributed to by SAFECO Services' willful
misfeasance, bad faith or negligence or reckless
disregard of duties) which results from the
negligence of the Trust, or from SAFECO Services
acting upon any instruction(s) reasonably believed by
it to have been executed or communicated by any
person duly authorized by the Trust, or as a result
of SAFECO Services' acting in reliance upon advice
reasonably believed by SAFECO Services to have been
given by counsel for the Trust, or as a result of
SAFECO Services acting in reliance upon any
instrument or stock certificate reasonably believed
by it to have been genuine and signed, countersigned
or executed by the proper person.
14. Effective Date/Renewal. This Agreement shall become effective with
respect to the Trust and each Series on the date first written above or such
later date as indicated on Exhibit A and/or B and, unless sooner terminated as
provided herein, will continue in effect for two years from the above written
date. Thereafter, if not terminated, this Agreement shall continue in effect
with respect to each Series for successive annual periods ending on the same
date of each year, provided that such continuance is specifically approved at
least annually by a vote of the Board of Trustees of the Trust, including the
vote of a majority of the trustees who are neither interested persons of SAFECO
Services nor of the Trust at a meeting called for the purpose of voting on such
continuance.
9
<PAGE> 11
15. Amendment. This Agreement may be modified by written mutual consent, such
consent on the part of the Trust to be authorized by the vote of the Board of
Trustees.
16. Termination.
(a) Either party hereto may, at any time on no less than sixty (60) days
prior written notice to the other, terminate this Agreement with respect to the
Trust or any Series (by deleting such Series from Exhibits A and B), in any
case, without the payment of any penalty.
(b) Upon termination each Series shall pay to SAFECO Services such
compensation as may be due as of the date of such termination and shall
likewise reimburse SAFECO Services for its costs, expenses and disbursements.
(c) If a successor transfer agent is appointed by the Board of Trustees
of the Trust, SAFECO Services shall, upon termination, deliver to such
successor transfer agent at the office of the transfer agent, all transfer
records then held hereunder and all funds or other properties of the Trust and
deposited with or held by it hereunder.
(d) If no successor transfer agent is appointed, SAFECO Services shall,
in like manner, at its office, upon receipt of a certified copy of a vote of
the Trust's Board of Trustees deliver such transfer records, funds and other
properties in accordance with such vote.
(e) In the event that no written order designating a successor transfer
agent or certified copy of a vote of the shareholders shall have been delivered
to SAFECO Services on or before the date when such termination shall become
effective, then SAFECO Services shall have the right to deliver to a bank or
trust company doing business in Seattle, Washington, of its own selection,
having proper qualifications, all transfer records, funds and other properties
held by SAFECO Services and all instruments held by it relative thereto and all
other property held by it under this Agreement. Thereafter such bank or trust
company shall be the successor of SAFECO Services under this Agreement.
(f) In the event that transfer records, funds and other properties remain
in the possession of SAFECO Services after the date of termination hereof owing
to failure of the Trust to procure the certified copy above referred to, or of
the trustees to appoint a successor transfer agent, SAFECO Services shall be
entitled to fair compensation for its services during such period
10
<PAGE> 12
and the provisions of this Agreement relating to the duties and obligations of
SAFECO Services shall remain in full force and effect.
17. Limitation of Liability. SAFECO Services is hereby expressly put on
notice of (i) the limitation of shareholder, officer and trustee liability as
set forth in the Trust Instrument of the Trust and (ii) of the provisions in
the Trust Instrument permitting the establishment of separate Series and
limiting the liability of each Series to obligations of that Series. SAFECO
Services hereby agrees that obligations assumed by the Trust pursuant to this
Agreement are in all cases assumed on behalf of a particular Series and each
such obligation shall be limited in all cases to that Series and its assets.
SAFECO Services agrees that it shall not seek satisfaction of any such
obligation from the shareholders or any individual shareholder of the Trust nor
from the officers or trustees or any individual officer or trustee of the
Trust.
18. Entire Agreement/Enforcement of Rights. This Agreement embodies the
entire agreement between SAFECO Services and the Trust with respect to the
services to be provided by SAFECO Services to the Trust and each Series and
supersedes any prior written or oral agreement between those parties. In the
event that either party should be required to take legal action in order to
enforce its rights under this Agreement, the prevailing party in any such
action or proceeding shall be entitled to recover from the other party costs
and reasonable attorneys' fees. In the event that either party should be
required to take legal action in order to enforce its rights under this
Agreement, the prevailing party in any such action or proceeding shall be
entitled to recover from the other party costs and reasonable attorney's fees.
19. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed in counterparts, each of which taken together shall
constitute one and the same instrument. SAFECO Services understands that the
rights and obligations of each Series under the Trust Instrument are separate
and distinct from those of any and all other Series.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington and, to the extent it
involves any United States statute, in accordance with the laws of the United
States.
11
<PAGE> 13
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their proper officers as of the day and year first above written.
SAFECO INSTITUTIONAL SERIES TRUST
By /s/ DAVID F. HILL
-------------------------------
David F. Hill, President
By /s/ ELNA A. THOMSON
-------------------------------
Elna A. Thomson, Secretary
SAFECO SERVICES CORPORATION
By /s/ DAVID F. HILL
--------------------------------
David F. Hill, President
By /s/ ELNA A. THOMSON
--------------------------------
Elna A. Thomson, Secretary
- 12 -
<PAGE> 14
EXHIBIT A
SAFECO INSTITUTIONAL TRUST
The SAFECO Institutional Series Trust consists of the following Series:
1. Fixed-Income Portfolio
As of 2-28-94
13
<PAGE> 15
EXHIBIT B
SAFECO INSTITUTIONAL SERIES TRUST
FIXED-INCOME PORTFOLIO
FEE SCHEDULES
(a) SAFECO Services shall receive from each Series of the
Trust a fee of $2.47 for each transaction which amount shall be billed and paid
monthly.
(b) For purposes of this Section transaction means:
(i) any event which results in a change in the number of
outstanding Shares of an account for which a confirmation is
generated, except that confirmations generated as a result of
or to correct an error made by SAFECO Services shall not be
included;
(ii) any cash dividend or distribution;
(iii) any change in the form of registration, or
changes in address.
SAFECO SERVICES CORPORATION SAFECO INSTITUTIONAL SERIES TRUST
on behalf of its Fixed-
Income Portfolio
By: /s/ DAVID F. HILL By: /s/ DAVID F. HILL
---------------------------- -----------------------------
Its: President Its: President
Attest: /s/ ELNA A. THOMSON Attest: /s/ ELNA A. THOMSON
------------------------ -----------------------------
Secretary Secretary
As of 2-28-94
14
<PAGE> 1
EXHIBIT NO. 99.10
OPINION OF COUNSEL
<PAGE> 2
EXHIBIT 99.10
February 22, 1994
Board of Trustees
SAFECO Institutional Series Trust
SAFECO Plaza
Seattle, WA 98185
Gentlemen:
I have acted as counsel to the Registrant in connection with the filing with
the Securities and Exchange Commission of Pre-Effective Amendment No. 3 to
Registration Statement No. 33-47859 on Form N-1A for the shares of the
Registrant. I have made such examination of law and have examined such records
and documents as in my opinion are necessary or appropriate to enable me to
render the following opinion:
1. The Registrant was established by a Trust Instrument dated May 13, 1993, and
filed with the Delaware Secretary of State on May 17, 1993. The Trust is at
the present time validly existing as a Delaware business trust under the
laws of the state of Delaware.
2. The Registrant is authorized to issue an unlimited number of shares of
beneficial interest with a par value of $ .001 per share which currently
represent one series: the Fixed-Income Portfolio.
3. All of the prescribed procedures for the issuance of the shares have been
followed, and, when such shares are issued in accordance with the Prospectus
contained in the Registration Statement all state requirements relating to
such shares will have been complied with.
4. Upon the acceptance of payment for shares issued in accordance with the
Prospectus contained in the Registration Statement and upon compliance with
applicable law, such shares will be legally-issued, fully paid and
non-assessable shares of the Registrant.
You may use this letter, or a copy hereof, as an exhibit to the Registration
Statement.
Very truly yours,
/s/ ELNA A. THOMSON
- --------------------------
Elna A. Thomson
Corporate Counsel
<PAGE> 1
EXHIBIT NO. 99.11
CONSENT OF INDEPENDENT AUDITOR
<PAGE> 2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Investment Advisory
and Other Services" and "Financial Statements" in Post-Effective Amendment
No. 3 to the Registration Statement (Form N-1A, No. 33-47859) and related
Prospectus of SAFECO Institutional Series Trust dated April 28, 1995.
We also consent to the incorporation by reference therein of our report dated
January 27, 1995 with respect to the financial statements of SAFECO
Institutional Series Trust - Fixed-Income Portfolio for the year ended December
31, 1994 included in the 1994 Annual Report.
/s/ ERNST & YOUNG LLP
Seattle, Washington
April 24, 1995
<PAGE> 1
EXHIBIT NO. 99.12
ANNUAL REPORT/FINANCIAL STATEMENTS
<PAGE> 2
ANNUAL
REPORT
DECEMBER 31, 1994
SAFECO
Institutional
Series Trust
--------------
Fixed-Income Portfolio
MAILING ADDRESS:
SAFECO MUTUAL FUNDS
P.O. BOX 34443
SEATTLE, WA 98124-1443
FOR ACCOUNT INFORMATION
OR TELEPHONE TRANSACTIONS:
NATIONWIDE: 1-800-278-1985
SEATTLE: 545-5423
TTY/TDD: 1-800-438-8718
[ART]
[LOGO] SAFECO (R) MUTUAL FUNDS
<PAGE> 3
PERFORMANCE INFORMATION
For the Period Ended December 31, 1994
The performance of the Portfolio assumes the reinvestment of all interest and
capital gains. Operating expenses for the Portfolio have been applied, but not
to the Index. If portfolio operating expenses had been applied to the Index,
its value would have been lower.
Investment returns are historical and not predictive of future performance. The
Lehman Brothers Gov't/Corp. Index is a representative total return benchmark
for the portfolio.
<TABLE>
<CAPTION>
SINCE
TOTAL RETURN INCEPTION
- ---------------------------------------------------------
<S> <C>
SAFECO Institutional Series
Trust -- Fixed-Income -3.01%
Lehman Brothers Gov't/Corp. Index -2.82%
- ---------------------------------------------------------
</TABLE>
* The SAFECO Institutional Series Trust -- Fixed-Income Portfolio's inception
date was February 28, 1994.
SAFECO INSTITUTIONAL SERIES TRUST--
FIXED-INCOME PORTFOLIO
ILLUSTRATION OF A $10,000 INVESTMENT
- ------------------------------------
[Graph appears here showing the value of a $10,000 investment made on 2/8/94
through 12/31/94 in the Portfolio and in the Lehman Brothers
Government/Corporate Index.]
$10,000
$9,800
$9,600
$9,400
$9,200
$9,000
2/28/94 12/31/94
SAFECO Institutional Series Trust -- Fixed-Income Portfolio: $9,699
Lehman Brothers Gov't./Corp Index: $9,718
* The Fund's inception was February 28, 1994.
Index graph comparison begins February 28, 1994.
TABLE OF CONTENTS
- ------------------------------------
<TABLE>
<S> <C>
Report from the Fund Managers 1
Highlights Information 2
Portfolio of Investments 3
Financial Statements 4
Notes to Financial Statements 6
</TABLE>
<PAGE> 4
REPORT FROM THE FUND MANAGERS
SAFECO INSTITUTIONAL SERIES TRUST
February 1, 1995
PHOTO - MICHAEL C. KNEBEL
PHOTO - RONALD SPAULDING
Since its introduction on February 28 through the period ending December 31,
1994, the Institutional Series Trust -- Fixed-Income Portfolio has declined
3.01%. Over the same period, the bond market as measured by the Lehman Brothers
Government/Corporate Bond Index declined 2.82%. For the 12 months ended
December 31, the index was down 3.51%.
This last year has been the most difficult year for investors in decades.
Bond values began their year-long slide in February, when the Federal Reserve
Board began raising short-term interest rates. Only through the early summer
months, did interest rates hold fairly stable. Bond values began to fall again
in late August as the Federal Reserve resumed raising short-term rates. The
Fed's most recent action, in November, marked the sixth increase in nine
months.
The bond market's response this last time was mixed: short rates climbed
dramatically, long rates actually fell slightly, creating a yield curve that is
nearly flat beyond the two-year mark.
Investors hope the Fed's actions will slow the economy and thwart inflation.
The economy, meanwhile, shows little sign of slowing. That increases the
likelihood the Fed will again raise short-term rates in hopes of exorcising
inflation, the mortal enemy of bond investors.
The Institutional Series Trust -- Fixed-Income Portfolio is currently
positioned to capitalize on any further increases in short-term interest rates.
U.S. Treasuries comprise 55% of net assets, U.S. Agency issues represent 5% and
high-quality corporates make up the balance. The average maturity is 3.2
years, while the effective duration (a measure of sensitivity to changes in
interest rates) is 2.4, much lower than the 4.8 duration of the Lehman Brothers
Government/Corporate Index.
We will maintain the short average maturity of the portfolio until we are
convinced the Federal Reserve has won its fight against inflation and adopted a
more passive role in the financial markets. And though we believe a cautious
approach is warranted, we also believe the darkest hour of this bond market
correction is behind us. We're looking for brighter days after an ugly year.
Indeed, yielding over 71/2% at year end, the two-year treasury and its brethren
were starting to look attractive.
[Signature]
Michael C. Knebel
[Signature]
Ronald Spaulding
-1-
<PAGE> 5
HIGHLIGHTS
SAFECO INSTITUTIONAL
SERIES TRUST --
FIXED-INCOME PORTFOLIO
As of December 31, 1994
SAFECO INSTITUTIONAL SERIES TRUST --
FIXED-INCOME PORTFOLIO
BONDS BY TYPE
AS A PERCENTAGE OF NET ASSETS
- -----------------------------
[Pie chart appears here showing the assets of the Portfolio broken down by type
of asset.]
U.S. Treasury Notes: 55.1%
Utilities: 19.2%
Federal National Mortgage Association: 4.9%
Cash, Short-Term Investments and Other: 4.1%
Canadian Provinces: 2.2%
Banking & Finance: 14.5%
CURRENT YIELD (30-DAY) 6.42%
WEIGHTED AVERAGE MATURITY 3.2 YEARS
S&P CREDIT RATING DISTRIBUTION
AS A PERCENTAGE OF NET ASSSETS
- -----------------------------------------------
<TABLE>
<S> <C>
U.S. Treasury Notes (Not Rated) 60.0%
AA 14.2%
A 21.7%
Cash, Short-Term Investments and Other 4.1%
------
100.0%
------
</TABLE>
-2-
<PAGE> 6
PORTFOLIO OF INVESTMENTS
As of December 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
- ----------------------------------------------------------------
<S> <C>
CORPORATE BONDS - 35.9%
BANKING & FINANCE - 14.5%
$200 American General Finance Corp.
6.875%, due 7/01/99 $ 188
200 Associates Corp. of North America
8.80%, due 8/01/98 203
100 International Lease Finance Corp.
6.625%, due 4/01/99 94
100 Norwest Financial, Inc.
6.25%, due 3/15/99 93
100 Transamerica Finance Corp.
6.80%, due 3/15/99 94
CANADIAN PROVINCES - 2.2%
100 Manitoba (Province)
9.50%, due 9/15/98 104
UTILITIES - 19.2%
100 Central Power & Light Co.
7.50%, due 5/01/99 97
100 Consolidated Natural Gas Co.
5.875%, due 10/01/98 92
185 GTE California, Inc.
6.25%, due 1/15/98 176
250 Nova Gas Transmission
7.25%, due 7/06/99 238
100 Ontario Hydro Power Commission
5.80%, due 3/31/98 93
100 Pennsylvania Power & Light Co.
5.50%, due 4/01/98 92
100 Virginia Electric & Power Co.
7.25%, due 3/01/97 98
-----
TOTAL CORPORATE BONDS 1,662
-----
U.S. GOVERNMENT & AGENCY SECURITIES - 60.0%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.9%
$ 250 5.23%, due 11/25/98 $ 226
U.S. TREASURY NOTES - 55.1%
740 6.25%, due 2/15/03 669
50 5.875%, due 2/15/04 44
85 5.125%, due 11/15/95 83
500 5.125%, due 3/31/96 486
1,280 4.125%, due 5/31/95 1,268
------
TOTAL U.S. GOVERNMENT & AGENCY SECURITIES 2,776
------
SHORT-TERM INVESTMENTS - 2.7%
INVESTMENT COMPANIES:
124 Short-Term Investments Co.
(Prime Portfolio) 124
------
TOTAL SHORT-TERM INVESTMENTS 124
------
TOTAL INVESTMENTS - 98.6% 4,562
Other Assets, less Liabilities 65
------
NET ASSETS $4,627
======
</TABLE>
See Notes To Financial Statements
-3-
<PAGE> 7
STATEMENT OF ASSETS AND LIABILITIES
As of December 31, 1994
<TABLE>
<S> <C>
ASSETS
Investments, at Value
Corporate Bonds (Identified Cost $1,734,562) $1,661,794
U.S. Government Securities (Identified Cost $2,827,336) 2,776,233
Short-Term Investments 124,207
----------
Total Investments 4,562,234
Interest Receivable 77,020
Deferred Organization Expense (Note 1) 24,972
----------
Total Assets 4,664,226
----------
LIABILITIES
Payables
Organization Expense 24,972
Other 9,695
Investment Advisory Fees 1,844
Dividends 563
----------
Total Liabilities 37,074
----------
NET ASSETS $4,627,152
==========
SHARES OUTSTANDING (Note 2) 567,689
==========
NET ASSET VALUE PER SHARE (Net Assets Divided by Shares Outstanding) $8.15
==========
</TABLE>
See Notes to Financial Statements
-4-
<PAGE> 8
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
Interest $ 191,364
EXPENSES
Investment Advisory Fees (Note 5) $ 15,869
Legal and Auditing Fees 13,000
Trustees' Fees 9,789
Amortization of Organization Expenses 5,028
Custodian Fees 712
Corporate Fees 315
Shareholder Servicing Costs (Note 5) 96
---------
Total Expenses 44,809
---------
NET INVESTMENT INCOME 146,555
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net Realized Loss on Investment Transactions (12,033)
Net Change in Unrealized Appreciation (125,849)
---------
NET LOSS ON INVESTMENTS (137,882)
---------
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ (8,673)
=========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the Year Ended December 31
<TABLE>
<CAPTION>
1994 1993
- -----------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net Investment Income (Loss) $ 146,555 $(6,184)
Net Realized Gain (Loss) on Investment Transactions (12,033) 223
Net Change in Unrealized Appreciation (125,849) 1,222
--------- -------
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS 8,673 (4,739)
DIVIDENDS TO SHAREHOLDERS FROM
Net Investment Income (146,555) --
Net Realized Gain on Investment Transactions -- (220)
CAPITAL SHARE TRANSACTIONS (Note 2) 4,674,265 --
---------- --------
TOTAL CHANGE IN NET ASSETS 4,536,383 (4,959)
NET ASSETS AT BEGINNING OF PERIOD 90,769 95,728
---------- -------
NET ASSETS AT END OF PERIOD $4,627,152 $90,769
========== =======
</TABLE>
See Notes to Financial Statements
-5-
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The SAFECO Institutional Series Trust ("Trust") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Trust is authorized to issue up to 15
different classes of stock each representing a different investment portfolio.
At December 31, 1994 the Trust consists of one class of shares representing the
Fixed-Income Portfolio ("Portfolio").
The Trust commenced operations on June 25, 1992. On August 5, 1993, the
Trust's shareholder approved a plan of reorganization to convert the Trust from
a Massachusetts Business Trust into a Delaware Business Trust. The effective
date of the reorganization was the date shares of the Portfolio first became
available to the public, February 28, 1994. At that time, the Portfolio's Trust
shares changed from no par value to a par value of $.001. The costs of
conversion were borne by the investment adviser to the Portfolio, SAFECO Asset
Management Company.
The following is a summary of significant accounting policies
consistently followed by the Trust in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
SECURITY VALUATION. Investments in securities 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. Short-term investments purchased at par are
valued at cost. All other short-term investments are valued at amortized cost
which approximates market value.
SECURITY TRANSACTIONS. Security transactions are recorded on the trade
date. The cost of the portfolio is the same for financial statement and federal
income tax purposes. Realized gains and losses from security transactions are
determined using the identified cost basis.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Securities purchased on a
when-issued or delayed basis may be settled a month or more after the trade
date. The securities purchased are carried in the portfolio at market and are
subject to market fluctuation during this period. These securities begin
earning interest on the settlement date. As commitments to purchase when-issued
securities become fixed, the Portfolio segregates liquid assets in an amount
equal to the total obligation.
INCOME RECOGNITION. Interest is accrued on portfolio investments daily.
Bond premiums and market discounts are amortized to either call or maturity
dates
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Net investment income is
declared as a dividend to shareholders of record as of the close of each
business day and payment is made as of the last business day of each month. Net
gains realized from security transactions, if any, are normally distributed to
shareholders at the end of December.
FEDERAL INCOME AND EXCISE TAXES. The Trust intends to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies including distributing substantially all taxable income to
shareholders in a manner which results in no tax to the Trust. Therefore, no
federal income or excise tax provision is required.
DEFERRED ORGANIZATION EXPENSES. Costs related to the organization of
the Portfolio have been deferred and are being amortized to operations over a
period of sixty months, beginning on the initial public offering date. These
costs were advanced by the investment adviser and are being reimbursed by the
Portfolio over a period of not more than sixty months. If any of the original
seed money shares are redeemed by SAFECO Asset Management Company prior to the
end of the amortization period, the redemption proceeds will be reduced by a
pro rata share of the unamortized organization expenses as of the date of
redemption.
-6-
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. TRUST SHARES
At December 31, 1994, there were unlimited trust shares of $.001 par
value authorized, and aggregated paid in capital of $4,763,053. Transactions
in trust shares were as follows
<TABLE>
<CAPTION>
For the For the
Year Ended Year Ended
December 31, 1994 December 31, 1993
- ----------------------------------------------------------------------------
Shares Dollars Shares Dollars
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales 544,069 $4,561,929 -- --
Reinvestments 17,208 142,336 -- --
------- ---------- ----- ----
561,277 4,704,265 -- --
Redemptions (3,588) (30,000) -- --
------- --------- ---- ----
Net Change 557,689 $4,674,265 -- --
======= ========== ==== ====
</TABLE>
3. ACCUMULATED UNDISTRIBUTED CAPITAL LOSS
The Portfolio had an accumulated undistributed net realized loss on
transactions of $12,000 at December 31, 1994 which will expire in 2002. For
federal income tax purposes, this amount represents a capital loss carryforward
which may be utilized to offset realized gains in future years.
4. INVESTMENT TRANSACTIONS
PURCHASES AND SALES. The Portfolio had purchases and sales of securities
during the year ended December 31, 1994 of $7,705,209 and $3,221,655,
respectively (including purchases and sales of U.S. Government Securities of
$5,917,125 and $3,169,842, respectively).
UNREALIZED APPRECIATION (DEPRECIATION) AT
DECEMBER 31, 1994:
<TABLE>
<S> <C>
Aggregate gross unrealized appreciation for
investment securities in which there is an
excess of value over identified cost $ 505
Aggregate gross unrealized depreciation for
investment securities in which there is an
excess of identified cost over value (124,376)
---------
Net unrealized depreciation $(123,871)
=========
</TABLE>
5. INVESTMENT ADVISORY FEES AND OTHER
TRANSACTIONS WITH AFFILIATES
SAFECO Asset Management Company receives investment advisory fees from the
Portfolio. The fee is based on average daily net assets at the annual rate of
50/100 of one percent on the first $100 million declining in two levels to
35/100 of one percent on net assets over $250 million. SAFECO Services
Corporation receives shareholder servicing fees. At December 31, 1994, SAFECO
Asset Management Company owned 15,675 shares or 2.8% of the Trust shares. In
connection with the formation of the Trust, the investment adviser, SAFECO
Asset Management Company, advanced moneys for organizational expenses (Note 1).
The Trust may borrow money for temporary purposes from SAFECO Corporation or
its affiliates at interest rates equivalent to commercial bank interest rates.
-7-
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
June 25, 1992
(Commencement of
For the Year Ended For the Year Ended Operations) to
December 31, 1994 December 31, 1993+ December 31, 1992+
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 9.08 $ 9.57 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.27 (0.62) (0.50)
Net Realized and Unrealized (Loss) Gain
on Investments (0.93) 0.15 0.07
------ ------ -------
Total from Investment Operations (0.66) (0.47) (0.43)
------ ------ -------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.27) -- --
Dividends from Capital Gains -- (0.02)
------ ------ -------
Total Distributions (0.27) (0.02) --
------ ------ -------
NET ASSET VALUE AT END OF PERIOD $ 8.15 $ 9.08 $ 9.57
====== ====== =======
TOTAL RETURN - 3.01%# N/A N/A
NET ASSETS AT END OF PERIOD (000'S) $4,627 $91 $ 96
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.37% 11.75% 13.35%*
RATIO OF NET INVESTMENT INCOME (LOSS) TO
AVERAGE NET ASSETS 4.47% -6.57% -9.80%*
PORTFOLIO TURNOVER RATE 129.56% None None
</TABLE>
+ Financial Highlights relate only to the performance of the initial seed
investment of SAFECO Asset Management Company. Trust shares were not yet
available to the public.
# Total return from February 28, 1994 (initial public offering) to December
31, 1994, not annualized.
o Annualized
-8-
<PAGE> 12
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
SAFECO INSTITUTIONAL SERIES TRUST --
FIXED-INCOME PORTFOLIO:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of SAFECO Institutional Series Trust --
Fixed-Income Portfolio as of December 31, 1994, and the related statement of
operations for the year then ended, the statement of changes in net assets and
financial highlights for each of the two years in the period then ended, and
the financial highlights for the period from June 25, 1992 (commencement of
operations) to December 31, 1992. 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 generally accepted auditing
standards. 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. Our procedures included confirmation of securities owned as of
December 31, 1994, by correspondence with the custodian. 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
SAFECO Institutional Series Trust -- Fixed-Income Portfolio at December 31,
1994, the results of its operations, the changes in its net assets, and the
financial highlights for the periods referred to above, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Seattle, Washington
January 27, 1995
-9-
<PAGE> 13
SAFECO INSTITUTIONAL SERIES TRUST
BOARD OF DIRECTORS
Boh A. Dickey, Chairman
Barbara J. Dingfield
Richard W. Hubbard
Richard E. Lundgren
L.D. McClean
Larry L. Pinnt
John W. Schneider
OFFICERS
David F. Hill, President
Ronald L. Spaulding,
Vice President and Treasurer
Neal A. Fuller,
Vice President and Controller
INVESTMENT ADVISER
SAFECO Asset Management Company
DISTRIBUTOR
SAFECO Securities, Inc.
TRANSFER AGENT
SAFECO Services Corporation
CUSTODIAN
U.S. Bank of Washington, N.A.
GMF 772 2/95
[LOGO] Printed on Recycled Paper
This report must be preceded or accompanied by a current prospectus.
<PAGE> 1
EXHIBIT NO. 99.13 (i)
STOCK PURCHASE AGREEMENT
<PAGE> 2
EXHIBIT 99.13(i)
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into this 22nd
day of June, 1992, between SAFECO INSTITUTIONAL SERIES TRUST ("Trust"), an
unincorporated business trust organized under the laws of the Commonwealth of
Massachusetts, and SAFECO ASSET MANAGEMENT COMPANY, ("SAM"), a Washington
corporation which is a wholly-owned subsidiary of SAFECO Corporation.
R E C I T A L S:
WHEREAS, The Trust is a recently organized unincorporated business trust formed
to engage in the business of investing, reinvesting or trading securities, or
in any other business activity incidental to the business of a management
investment company, as such is defined in Section 4(3) of the Investment
Company Act of 1940 ("1940 Act");
WHEREAS, the Trust desires to raise $100,000 through the sale to SAM of 10,000
shares of the common stock ("Common Stock"), without par value, of its
Fixed-Income Portfolio, at a price of $10 per share, and plans, subsequent to
the sale of said shares under this Agreement, to register with the Securities
and Exchange Commission ("Commission") an indefinite number of shares of its
Common Stock for offering and sale under the Securities Act of 1933 ("1933
Act");
WHEREAS, SAM has received and reviewed the Registration Statement on Form N-1A
which will be filed with the Commission to register an indefinite number of
shares of the Common Stock of its Fixed-Income Portfolio and to register the
Trust as an investment company under the 1940 Act; has had an opportunity to
ask questions of and receive answers from the Trust with respect to its
proposed activities; and, upon the basis of the information available to it, is
willing to acquire from the Trust 10,000 shares of the Common Stock of its
Fixed-Income Portfolio pursuant to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
warranties contained herein, the Trust and SAM agree as follows:
1. STOCK PURCHASE.
Subject to the terms and conditions of this Agreement, the Trust agrees to
sell to SAM, and SAM agrees to purchase from the Trust, 10,000 shares of the
Common Stock of the Trust's Fixed-Income Portfolio ("Shares") at a purchase
price of $10 per share, for an aggregate consideration of $100,000.
Upon the execution of this Agreement by the parties and at the request of the
President of the Trust, SAM will pay to the Trust $100,000 in coin or currency
of the United States of
<PAGE> 3
America which, at the time of payment, is legal tender
for the payment of public and private debts and the Trust shall deliver, or
cause to be delivered, to SAM a stock certificate representing the Shares
signed by duly authorized officers of the Trust and countersigned by the
Trust's transfer agent. It is hereby agreed that the stock certificate shall
bear a restrictive legend in substantially the form set forth in paragraph 2 of
this Agreement.
2. RESTRICTIONS UPON TRANSFER OF SHARES.
The Shares have not been registered by the Trust under the 1933 Act but are
being offered and will be sold to SAM pursuant to an exemption from the
registration requirements of that Act for transactions which do not involve a
public offering. The Trust does not plan, and is under no obligation to
provide for, any registration of the Shares in the future. SAM hereby
covenants that it will not sell, pledge, hypothecate or otherwise transfer any
of the Shares, or any interest therein, whether or not for consideration,
unless it has previously notified the Trust of the proposed transfer and
delivered to the Trust a legal opinion, in form and substance satisfactory to
the Trust and its counsel, that such transfer is not in violation of the 1933
Act and applicable state securities laws. Furthermore, the parties hereby
agree that the Shares shall be subject to the following restriction on
transfer:
The securities have been acquired pursuant to an investment representation on
the part of the purchaser thereof and shall not be sold, pledged,
hypothecated, donated or otherwise transferred, whether or not for
consideration, by the purchaser except upon the issuance to the corporation
of a favorable opinion of its counsel to the effect that any such transfer
shall not be in violation of the Securities Act of 1933, as amended, and
applicable state securities laws.
3. WARRANTIES AND REPRESENTATIONS OF Trust.
The Trust hereby represents and warrants as follows:
(a) The Trust has been duly formed as an unincorporated business trust under
a Declaration of Trust and is validly existing and in good standing under the
laws of the Commonwealth of Massachusetts. The Trust has the power and
authority to carry on its business as presently conducted and to perform its
obligations under this Agreement.
(b) The execution, delivery and performance by the Trust of this Agreement
have been duly authorized by all necessary action on the part of the Trust.
(c) The issuance and sale of the Shares pursuant to this Agreement have been
duly authorized by all necessary action on
<PAGE> 4
the part of the Trust and the Shares have been duly issued and shall, upon
receipt of the purchase price specified in paragraph 1 above, be fully paid
and non-assessable and shall constitute valid and legal binding obligations
of the Trust entitled to the benefits granted to the Trust's shareholders
under its Declaration of Trust and Bylaws.
(d) Neither the issuance nor sale of the Shares, nor the consummation of any
of the transactions contemplated by this Agreement, will conflict with, result
in a breach of, or constitute a default under, the terms of the Declaration of
Trust or Bylaws of the Trust, or any indenture, mortgage agreement, instrument
or undertaking to which the Trust is a party or is bound, or any order or
regulation applicable to the Trust of any court, regulatory body,
administrative agency or governmental body having jurisdiction over the Trust.
(e) No consent, approval, authorization or order of any court or
governmental agency or body is required for the issuance and sale of the Shares
or the consummation of the transaction contemplated by this Agreement.
4. WARRANTIES AND REPRESENTATIONS OF SAM.
SAM hereby represents and warrants as follows:
(a) SAM has been duly incorporated and is a validly existing corporation in
good standing under the laws of the State of Washington with full power and
authority to own its property and conduct its business and to perform its
obligations under this Agreement.
(b) The execution, delivery and performance of this Agreement have been duly
authorized by all necessary corporate actio on the part of SAM.
(c) Neither the execution, delivery, nor performance of this Agreement, nor
the acquisition of the Shares, will conflict with, result in a breach of, or
constitute a default under, the terms of the Articles of Incorporation or
Bylaws of SAM or any indenture, mortgage agreement, instrument or undertaking
to which SAM is a party or bound, or any order or regulation applicable to SAM
of any court, regulatory body, administrative agency, or governmental body
having jurisdiction over SAM.
(d) No consent, approval, authorization or order of any court or
governmental agency or body is required by SAM for the acquisition of the
Shares pursuant to this Agreement.
(e) SAM is acquiring the Shares for its own account, for investment purposes
and not with a view to the subsequent offering, sale or distribution thereof
and SAM is not participating, directly or indirectly, in any plan or scheme
involving the resale or distribution of the Shares or any
<PAGE> 5
interest therein.
(f) SAM has sufficient knowledge and experience in business matters so as to
enable it to evaluate the merits and risks of acquiring the Shares from the
Trust and has sufficient assets to bear the economic risk of losing part or all
of its investment in the Trust.
(g) SAM acknowledges that it has received and reviewed a copy of the
Registration Statement on Form N-1A that the Trust intends to file with the
Commission to register an indefinite number of shares of the Common Stock of
its Fixed-Income Portfolio under the 1933 Act and to register the Trust as an
investment company under the 1940 Act and that it has been afforded the
opportunity to ask questions of, and receive answers from, the Trust with
respect to the proposed operations of the Trust.
5. TRANSFER AGENT INSTRUCTIONS.
It is hereby acknowledged by the parties that the Trust's transfer agent will
be instructed not to transfer the Shares to any third party unless it has
received a copy of the legal opinion required by paragraph 2 above and written
consent to such transfer from the Trust.
6. DIVIDEND RETENTION.
SAM agrees to permit the Trust to hold all dividends accrued and payable to
it on the Fixed-Income Portfolio until such time as the first dividends are
paid by the Fixed-Income Portfolio to any other shareholder.
7. DISCLAIMER.
As required by the Declaration of Trust which established the Trust, the
obligations of the Trust under this Agreement shall not be personally binding
upon, nor shall resort be had to the personal property of, the Trust's
trustees, shareholders, officers, employees and agents, under any
circumstances.
8. MISCELLANEOUS.
This Agreement embodies the entire agreement and understanding between the
Trust and SAM with respect to the sale of the Shares and supersedes any prior
written or oral agreement between the parties. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Washington.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the date and year first above written.
SAFECO Institutional Series Trust
<PAGE> 6
By: /s/ DAVID F. HILL
---------------------------
David F. Hill
President
SAFECO Asst Management Company
By: /s/ RICHARD W. HUBBARD
-----------------------------
Richard W. Hubbard
President
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this day personally appeared before me, David F. Hill, to me known to be
the President of SAFECO Institutional Series Trust, the Massachusetts business
trust that executed the foregoing instrument, and acknowledged the same
instrument to be the free voluntary act and deed of said trust for the uses and
purposes therein mentioned, and on oath stated that he is authorized to execute
the said instrument, and that the seal affixed (if any) is the seal of said
trust.
WITNESS MY HAND AND OFFICIAL SEAL HERETO AFFIXED this 22nd day of June, 1992.
/s/ MARLENE E. PULLEY
-------------------------------
Notary Public in and for
the State of Washington residing at
Bothell, Washington.
STATE OF WASHINGTON )
) ss.
COUNTY OF KING )
On this day personally appeared before me, Richard W. Hubbard, to me known to
be the President of SAFECO Asset Management Company, the corporation that
executed the foregoing instrument, and acknowledged the same instrument to be
the free voluntary act and deed of said corporation for the uses and purposes
therein mentioned, and on oath stated that he is authorized to execute the said
instrument, and that the seal affixed (if any) is the seal of said corporation.
WITNESS MY HAND AND OFFICIAL SEAL HERETO AFFIXED this 22nd day of June, 1992.
/s/ MARLENE E. PULLEY
--------------------------------
Notary Public in and for
the State of Washington residing at
Bothell, Washington.
<PAGE> 1
EXHIBIT NO. 99.13 (ii)
ADDITIONAL SHARE PURCHASE AGREEMENT
<PAGE> 2
EXHIBIT 99.13(ii)
ADDITIONAL SHARE PURCHASE AGREEMENT
THIS ADDITIONAL SHARE PURCHASE AGREEMENT ("Agreement") is made and entered into
this 15th day of February, 1994, between SAFECO INSTITUTIONAL SERIES TRUST
("Trust"), an unincorporated business trust organized under the laws of the
Commonwealth of Massachusetts, and SAFECO ASSET MANAGEMENT COMPANY, ("SAM"), a
Washington corporation which is a wholly-owned subsidiary of SAFECO
corporation.
R E C I T A L S:
WHEREAS, The Trust is an unincorporated business trust formed to engage in the
business of investing, reinvesting or trading securities, or in any other
business activity incidental to the business of a management investment
company, as such is defined in Section 4(3) of the Investment Company Act of
1940 ("1940 Act");
WHEREAS, the Trust has submitted a Registration Statement on Form N-1A to the
Securities and Exchange Commission ("Commission") to register an indefinite
number of shares of beneficial interest of its Fixed-Income Portfolio
("Shares") for offer and sale under the Securities Act of 1933 ("1933 Act") and
to register the Trust as an investment company under the 1940 Act, which
Registration Statement has nor yet been declared effective by the Commission;
WHEREAS, the Trust initially raised $100,000 through the sake to SAM of 10,000
Shares under a "Stock Purchase Agreement" dated June 22, 1992;
WHEREAS, the Trust desires to raise $50,000 of additional capital through the
sale to SAM of additional Shares, without par value, of its Fixed-Income
Portfolio, at the price per Share next computed after the additional capital is
received by the Trust's transfer agent;
WHEREAS, SAM has received and reviewed the Registration Statement, has had an
opportunity to ask questions of and receive answers from the Trust with respect
to its proposed activities, and, upon the basis of the information available to
it, is willing to acquire additional Shares of the Trust's Fixed-Income
Portfolio pursuant to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
warranties contained herein, the Trust and SAM agree as follows:
1. STOCK PURCHASE.
Subject to the terms and conditions of this Agreement, the Trust agrees to sell
to SAM, and SAM agrees to purchase from the Trust prior to the effective date
of the Trust's Registration Statement, $50,000 worth of Shares of the Trust's
Fixed-Income Portfolio at the net asset value next computed after additional
capital in the amount of $50,000 has been received by the Trust's transfer
agent.
<PAGE> 3
Upon execution of this Agreement by the parties and at the request of
the President of the Trust, SAM will pay to the Trust $50,000 in coin or
currency of the United States of America which, at the time of payment, is
legal tender for the payment of public and private debts and the Trust shall
deliver, or cause to be delivered, to SAM a share certificate representing the
Shares signed by duly authorized officers of the Trust and countersigned by the
Trust's transfer agent. It is hereby agreed that the share certificate shall
bear a restrictive legend in substantially the form set forth in paragraph 2 of
this Agreement.
2. RESTRICTIONS UPON TRANSFER OF SHARES.
The Shares have not been registered by the Trust under the 1933 Act but are
being offered and will be sold to SAM pursuant to an exemption from the
registration requirements of that Act for transactions which do not involve a
public offering. The trust does not plan, and is under no obligation to
provide for, any registration of the Shares in the future. SAM hereby
covenants that it will not sell, pledge, hypothecate or otherwise transfer any
of the Shares, or any interest therein, whether or not for consideration,
unless it has previously notified the Trust of the proposed transfer and
delivered to the Trust a legal opinion, in form and substance satisfactory to
the Trust and its counsel, that such transfer is not in violation of the 1933
Act and applicable state securities laws. Furthermore, the parties hereby
agree that the Shares shall be subject to the following restriction on
transfer:
The securities have been acquired pursuant to an investment representation on
the part of the purchaser thereof and shall not be sold, pledged,
hypothecated, donated or otherwise transferred, whether or not for
consideration, by the purchaser except upon the issuance to the trust of a
favorable opinion of its counsel to the effect that any such transfer shall
not be in violation of the Securities Act of 1933, as amended, and applicable
state securities laws.
3. WARRANTIES AND REPRESENTATIONS OF Trust.
The Trust hereby represents and warrants as follows:
(a) The Trust has been duly formed as an unincorporated business trust under a
Declaration of Trust and is validly existing and in good standing under the
laws of the Commonwealth of Massachusetts. The Trust has the power and
authority to carry on its business as presently conducted and to perform its
obligations under this Agreement.
(b) The execution, delivery and performance by the Trust of this Agreement
have been duly authorized by all necessary action on the part of the Trust.
(c) The issuance and sale of the Shares pursuant to this Agreement have been
duly authorized by all necessary action on the part of the Trust and the Shares
have been duly issued and shall, upon receipt of the amount of the capital
contribution specified in paragraph 1 above, be fully paid and non-assessable
and shall constitute valid and legal binding obligations of the Trust entitled
to the benefits granted to the Trust's shareholders under its Declaration of
Trust and Bylaws.
<PAGE> 4
(d) Neither the issuance nor sale of the Shares, nor the
consummation of any of the transactions contemplated by this Agreement, will
conflict with, result in a breach of, or constitute a default under, the terms
of the Declaration of Trust or Bylaws of the Trust, or any indenture, mortgage
agreement, instrument or undertaking to which the Trust is a party or is bound,
or any order or regulation applicable to the Trust of any court, regulatory
body, administrative agency or governmental body having jurisdiction over the
Trust.
(e) No consent, approval, authorization or order of any court or governmental
agency or body is required for the issuance and sale of the Shares or the
consummation of the transactions contemplated by this Agreement.
4. WARRANTIES AND REPRESENTATION OF SAM.
SAM hereby represents and warrants as follows:
(a) SAM has been duly incorporated and is a validly existing corporation in
good standing under the laws of the State of Washington with full power and
authority to own its property and conduct its business and to perform its
obligations under this Agreement.
(b) The execution, delivery and performance of this Agreement have been duly
authorized by all necessary corporate action on the part of SAM.
(c) Neither the execution, delivery, nor performance of this Agreement, nor
the acquisition of the Shares, will conflict with the Articles of Incorporation
or Bylaws of SAM or any indenture, mortgage agreement, instrument or
undertaking to which SAM is a party or bound, or any order or regulation
applicable to SAM of any court, regulatory body, administrative agency, or
governmental body having jurisdiction over SAM.
(d) No consent, approval, authorization or order of any court or governmental
agency or body is required by SAM for the acquisition of the Shares pursuant to
this Agreement.
(e) SAM is acquiring the Shares for its own account, for investment purposed
and not with a view to the subsequent offering, sale or distribution thereof
and SAM is not participating, directly or indirectly, in any plan or scheme
involving the resale or distribution of the Shares or any interest therein.
(f) SAM has sufficient knowledge and experience in business matters so as to
enable it to evaluate the merits and risks of acquiring the Shares from the
Trust and has sufficient assets to bear the economic risk of losing part or all
of its investment in the Trust.
(g) SAM acknowledges that it has received and reviewed a copy of the Trust's
Registration Statement, including all Pre-Effective Amendments thereto, and
that it has been afforded the opportunity to ask questions of, and receive
answers from, the Trust with respect to the proposed operations of the Trust.
<PAGE> 5
5. TRANSFER AGENT INSTRUCTIONS.
It is hereby acknowledged by the parties that the Trust's transfer agent will
be instructed not to transfer the Shares to any third party, unless it has
received a copy of the legal opinion required by paragraph 2 above and written
consent to such transfer from the Trust.
6. DIVIDEND RETENTION.
SAM agrees to permit the Trust to hold all dividends accrued and payable to it
in the Fixed-Income Portfolio until such time as the first dividends are paid
by the Fixed-Income Portfolio to any other shareholder.
7. DISCLAIMER.
As required by the Deceleration of Trust which established the Trust, the
obligations of the Trust under this Agreement shall not be personally binding
upon, nor shall resort be had to the personal property of, the Trust's
trustees, shareholders, officers, employees and agents, under any
circumstances.
8. MISCELLANEOUS.
This Agreement embodies the entire agreement and understanding between the
Trust and SAM with respect to the sale of the Shares and supersedes any prior
written or oral agreement between the parties. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Washington.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized officers as of the date and year first above written.
SAFECO Institutional Series Trust
By: /s/ DAVID F. HILL
-----------------------------
David F. Hill
President
SAFECO Asset Management Company
By: /s/ RONALD L. SPAULDING
------------------------------
Ronald L. Spaulding
Vice President
<PAGE> 6
STATE OF WASHINGTON)
) ss.
COUNTY OF KING )
On this day personally appeared before me, David F. Hill, to me known to be
the President of SAFECO Institutional Series Trust, the Massachusetts business
trust that executed the foregoing instrument, and acknowledged the same
instrument to be the free and voluntary act and deed of said trust for the uses
and purposes therein mentioned, and on oath stated that he is authorized to
execute the said instrument, and that the seal affixed (if any) is the seal of
said trust.
WITNESS MY HAND AND OFFICIAL SEAL HERETO AFFIXED this 15th day of February,
1994.
/s/ BETTY J. SCHOOLING
-------------------------------------------
Betty J. Schooling
Notary Public in and for the State of
Washington, residing at North Bend.
STATE OF WASHINGTON)
) ss.
COUNTY OF KING )
On this day personally appeared before me, Ronald L. Spaulding, to me known
to be the Vice President of SAFECO Asset Management Company, the corporation
that executed the foregoing instrument, and acknowledged the same instrument to
be the free and voluntary act and deed of said corporation for the uses and
purposes therein mentioned, and on oath stated that he is authorized to execute
the said instrument, and that the seal affixed (if any) is the seal of said
corporation.
WITNESS MY HAND AND OFFICIAL SEAL HERETO AFFIXED this 15th day of February,
1994.
/s/ BETTY J. SCHOOLING
-------------------------------------------
Betty J. Schooling
Notary Public in and for the State of
Washington, residing at North Bend.
<PAGE> 1
EXHIBIT NO. 99.16
CALCULATION OF PERFORMANCE INFORMATION
<PAGE> 2
EXHIBIT 99.16
SAFECO INSTITUTIONAL SERIES TRUST
Calculation of Performance Quotations
The yield for the SAFECO Institutional Series Trust for the 30-day period ended
December 31, 1994 is calculated as follows:
28,910 - 4,571 6
Yield = 2[(-------------- - ------------- +1) -1] = 6.42%
565,268 8.15
Where: $28,910 dividends and interest (as defined in the
instructions to Item 22(b)(ii) of Form N-1A)
earned during the period
$4,571 expenses accrued during the period
565,268 average daily number of shares outstanding
during the period
$8.15 offering price per share on December 31, 1994
<PAGE> 3
SAFECO INSTITUTIONAL SERIES TRUST
Calculation of Performance Quotations (continued)
The total return and average annual total return for the SAFECO Institutional
Series Trust for the one-year, five-year, and ten-year periods ending December
31, 1994 are calculated as follows:
Since Inception
1
Total return =$10,000.00 (1 -.0301) = $9,699
969.90 - 1,000.00
Total return = (-------------- - -------------) = 3.01%
1,000.00
_____________________
Average Annual Total Return = (1 \/ 969.90 / 1,000.00 -1) = -3.60%
Where: 10 number of months
$969.90 ending redeemable value of a hypothetical
$1,000 investment at the end of a specified
period of time
$1,000.00 a hypothetical investment of $1,000
$10,000.00 a hypothetical investment of $10,000
-.0301 the average annual total return
