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SIGNATURE DAVE HILL
TITLE PRESIDENT
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Report of Ernst & Young LLP, Independent Auditors
To the Board of Trustees and Shareholders of the SAFECO
Taxable Bond Trust and SAFECO Managed Bond Trust
We have audited the accompanying statements of assets
and liabilities, including the portfolios of investments in
securities, of the SAFECO Taxable Bond Trust (comprising,
respectively, the SAFECO High-Yield Bond Fund, SAFECO GNMA
Fund, and SAFECO Intermediate-Term U.S. Treasury Fund) and
the SAFECO Managed Bond Trust - Managed Bond Fund as of
December 31, 1998, and the related statements of operations,
the statements of changes in net assets, and the financial
highlights for each of the periods indicated therein. These
financial statements and financial highlights are the
responsibility of the Trusts' 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 and
financial highlights. Our procedures included confirmation
of securities owned as of December 31, 1998, by
correspondence with the custodians and brokers. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial
highlights referred to above present fairly, in all material
respects, the financial position of each of the respective
funds constituting the SAFECO Taxable Bond Trust and SAFECO
Managed Bond Trust at December 31, 1998, the results of
their operations, the changes in their net assets, and
financial highlights for each of the periods indicated
therein, in conformity with generally accepted accounting
principles.
Seattle, Washington
February 5, 1999
