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SEMIANNUAL
REPORT
September 30, 1995
Mailing Address:
SAFECO Mutual Funds
P.O. Box 34890
Seattle, WA 98124-1890
SAFECO
For Account Information TAX-EXEMPT
or Telephone Transactions: BOND FUNDS
Nationwide: 1-800-624-5711
Seattle: 545-7319
TTY/TDD: 1-800-438-8718
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
[SAFECO MUTUAL FUNDS LOGO]
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<CAPTION>
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PERFORMANCE INFORMATION
For the Periods Ended September 30, 1995 (Unaudited)
The Lehman Brothers Municipal Long, Long Insured and 7-Year Bond Indices are
representative total return benchmarks for the respective funds. Operating
expenses have been applied to the funds, but not to the indices. If portfolio
operating expenses had been applied to the indices, their values would have been
lower. The performance of the funds assumes the reinvestment of all interest and
capital gains. Investment returns are historical and not predictive of future
performance.
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<S> <C>
SAFECO MUNICIPAL BOND FUND
ILLUSTRATION OF A $10,000 INVESTMENT
[GRAPH APPEARS HERE COMPARING
[GRAPH 1] THE TOTAL RETURN OF A $10,000
INVESTMENT IN THE FUND MADE
INVESTMENT VALUE AS OF SEPTEMBER 30, 1995 10 YEARS AGO AS COMPARED TO
THE PERFORMANCE OF THE
SAFECO MUNICIPAL BOND FUND: $25,332 APPLICABLE INDEX.]
LEHMAN BROTHERS LONG MUNICIPAL BOND INDEX: $27,340
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SAFECO CALIFORNIA TAX-FREE INCOME FUND
ILLUSTRATION OF A $10,000 INVESTMENT
[GRAPH APPEARS HERE COMPARING
[GRAPH 2] THE TOTAL RETURN OF A $10,000
INVESTMENT IN THE FUND MADE
INVESTMENT VALUE AS OF SEPTEMBER 30, 1995 10 YEARS AGO AS COMPARED TO
THE PERFORMANCE OF THE
SAFECO CALIFORNIA TAX-FREE INCOME FUND: $24,228 APPLICABLE INDEX.]
LEHMAN BROTHERS LONG MUNICIPAL BOND INDEX: $27,340
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SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND Graph appears here
ILLUSTRATION OF A $10,000 INVESTMENT comparing the total
return of a $10,000
[GRAPH 3] investment in the Fund
made on the Fund's
INVESTMENT VALUE AS OF SEPTEMBER 30, 1995 inception date as
compared to the
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND: $11,368 performance of the
applicable index.
LEHMAN BROTHERS 7-YEAR MUNICIPAL BOND INDEX: $11,587
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AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
10 YEAR
OR SINCE
1 YEAR 5 YEAR INCEPTION
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<S> <C> <C> <C>
SAFECO Intermediate-Term
Municipal Bond Fund 9.69% N/A 5.26%*
Lehman Brothers 7-Year
Municipal Bond Index 10.26% N/A 6.07%*
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SAFECO Insured
Municipal Bond Fund 13.78% N/A 4.66%*
Lehman Brothers Long
Insured Municipal Bond Index 13.00% N/A 5.76%*
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SAFECO Municipal Bond Fund 12.26% 8.95% 9.74%
Lehman Brothers Long
Municipal Bond Index 12.91% 9.67% 10.57%
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SAFECO California
Tax-Free Income Fund 12.97% 8.81% 9.25%
Lehman Brothers Long
Municipal Bond Index 12.91% 9.67% 10.57%
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SAFECO Washington State
Municipal Bond Fund 12.18% N/A 4.92%*
Lehman Brothers Long
Municipal Bond Index 12.91% N/A 5.97%*
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</TABLE>
* The Funds' inception was March 18, 1993.
Performance comparison begins March 31, 1993.
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SAFECO INSURED MUNICIPAL BOND FUND Graph appears here
ILLUSTRATION OF A $10,000 INVESTMENT comparing the total
return of a $10,000
[GRAPH 4] investment in the Fund
made on the Fund's
INVESTMENT VALUE AS OF SEPTEMBER 30, 1995 inception date as
compared to the
SAFECO INSURED MUNICIPAL BOND FUND: $11,207 performance of the
applicable index.
LEHMAN BROTHERS LONG INSURED MUNICIPAL BOND INDEX: $11,502
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SAFECO WASHINGTON STATE MUNICIPAL BOND FUND Graph appears here
ILLUSTRATION OF A $10,000 INVESTMENT comparing the total
return of a $10,000
[GRAPH 5] investment in the Fund
made on the Fund's
INVESTMENT OF VALUE AS OF SEPTEMBER 30, 1995 inception date as
compared to the
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND: $11,275 performance of the
applicable index.
LEHAMN BROTHERS LONG MUNICIPAL BOND INDEX: $11,559
Table of Contents
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President's Letter 2
Fund Manager's Report 3
Highlights 8
Portfolios of Investments 10
Financial Statements 26
Notes to Financial Statements 30
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LETTER FROM THE PRESIDENT
November 1, 1995
DEAR SHAREHOLDER:
As it was in 1994, so it has been in 1995: The health of the U.S. economy
is the theme driving the financial markets. The marked difference between the
two years is the change in investor perception of the economy.
Investors now seem to see the economy as growing at healthy, sustainable
levels with little inflationary pressure. This change in attitude, coupled with
the concept of declining interest rates, has brought surprising strength to both
the bond and stock markets.
The stock market as measured by the S&P Index climbed 29.71% in the 12
months ending September 30, 1995. The bond market as measured by the Lehman
Brothers Government/Corporate Index returned 14.35% over the same period. These
gains far outpace historical averages.
The slow domestic economic growth, low inflation and falling interest rates
that we are experiencing creates an environment that is traditionally beneficial
for bonds. The same circumstances are generally positive for the stocks of
companies that are able to grow their earnings. Companies whose earnings don't
meet analysts' expectations are likely to disappoint investors. In this climate,
stock picking ability is critical to good performance.
Beyond that, it is not our practice to prognosticate. We don't believe we
can predict short-term trends or be successful timing the market. So, we try to
stay fully invested in the best positions at the best prices we can find.
[PHOTO] DAVID F. HILL
We urge investors to take a longer view to investing as well.
Our advice is, as always, don't try to divine what the market will do
tomorrow or next month. Concentrate instead on making sure your investment
vehicles are of high quality and that they match the time horizons of your
investment objectives.
To help investors do that, we offer educational materials, including the
SAFECO Mutual Funds Personal Financial Planning Program. Please call us for your
free copy of this educational booklet and planning worksheets. For automated
performance information, try our new menu-driven price and yield line. We've
upgraded and expanded this service to provide historical performance as well as
dividends and capital gain information. To access it simply dial 1-800-835-4391
(545-5113 in Seattle).
As always, we truly value your continued confidence in SAFECO Mutual Funds.
Sincerely,
/s/ David F. Hill, President
- ----------------------------
David F. Hill
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REPORT FROM THE FUND MANAGER
November 1, 1995
SAFECO TAX-EXEMPT BOND FUNDS
The last six months has been a fabulous time to own bonds. Across all types
and all maturity ranges, bond prices have risen as yields have fallen.
And while the SAFECO Tax-Exempt Funds reported strong returns among
municipal bond funds, each one topping its peer group average, municipal bonds
did not star in this rally. Specters of tax reform that manifested in several
forms last spring caused municipals to lag other bond types.
Treasury bond yields declined 0.8% to 1.0%, while long-term, tax-exempt
yields declined about 0.2%. The intermediate maturity sector of the municipal
market performed slightly better, with those yields declining about half as much
as intermediate-term treasuries.
As the reporting period began, municipals were rallying ahead of
treasuries. Early redemptions and substantially lower new issue volume had
decreased supply, lifting the value of municipal bonds. All the technical
indicators pointed to a banner year for municipal bonds.
Then tax reform hit the news. A feature common to the reform proposals was
to make all investment returns tax free, thereby negating the tax-free value of
municipal bonds. A common omission of the proposals was a discussion of the
tremendous disruptions such a change would bring about. The taxable bond market
continued to rally, but the municipal market languished amid fears that
municipal bonds would be severely devalued by a flat tax.
Between April 15 and June 30, municipal yields rose in comparison to
treasuries. On 30-year bonds the yield ratio rose from 84% to 95%, a seven-year
high. It was clear: Many market participants believed one of the many tax
revision measures would become law, and relatively soon. And they abandoned the
long-term market.
<TABLE>
<CAPTION>
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COMPARATIVE INFORMATION
For Periods Ending AVERAGE ANNUAL TOTAL RETURN
SEPTEMBER 30, 1995 1 YEAR 5 YEAR 10 YEAR
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<S> <C> <C> <C>
SAFECO Intermediate-Term
Municipal Bond Fund* 9.69% N/A* N/A*
Lipper Average for Category 8.68% N/A N/A
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SAFECO Insured
Municipal Bond Fund* 13.78% N/A* N/A*
Lipper Average for Category 10.21% N/A N/A
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SAFECO Municipal Bond Fund 12.26% 8.95% 9.74%
Lipper Average for Category 9.84% 8.40% 9.00%
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SAFECO California
Tax-Free Income Fund 12.97% 8.81% 9.25%
Lipper Average for Category 9.58% 8.20% 8.60%
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SAFECO Washington State
Municipal Bond Fund* 12.18% N/A* N/A*
Lipper Average for Category 11.31% N/A N/A
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</TABLE>
* The Funds' inception was March 18, 1993. Investment returns are historical
and not predictive of future performance.
I think it is almost inconceivable that such a major tax revision will
occur before the elections of 1996. Even after the elections, I believe the
far-reaching effects such a revision would have makes it extremely unlikely. For
decades, scores of major policy and strategic decisions, both personal and
corporate, have been based on the current tax structure. A fundamental change in
that structure would threaten the fabric of our economy, unless it was phased in
over a very long term.
I believe that munis will regain their former yield relationship to
treasuries upon the failure of tax reform; and outperform treasuries by up to
11%. (In the unlikely event of a flat tax, munis might underperform treasuries
by 8 to 10%.)
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REPORT FROM THE FUND MANAGER (CONTINUED)
In the meantime -- yielding nearly 95% of taxable bonds on a pre-tax basis
- -- municipal bonds are at their relative cheapest point in seven years and
represent an unparalleled opportunity for yield and potential appreciation.
As an alternative to declining money market rates and the ever-more-pricey
stock market, municipal bonds may be the best buy and the best performers of
1996.
The five SAFECO Municipal Bond Funds are currently fully invested in
high-quality credits and I expect them to fully benefit from the expected
rebound in the municipal bond market.
SAFECO MUNICIPAL BOND FUND
The SAFECO Municipal Bond Fund performed very well over the 12 months
ending September 30. Total return was 12.26% which, according to Lipper
Analytical Services, ranked the Fund 11 out of 213 similar funds, which had an
average return of 9.84%. (For the five and ten years just ended, the Fund placed
20 of 98 and 6 of 54 similar funds, respectively.)
At the last report, we'd emerged from the dark market of 1994 still holding
our badly battered, long-maturity, deep-discount bonds. We stayed that course
knowing that discount bonds (bonds with coupon yields lower than the market rate
that sell at a discount to their face value) would outperform when the market
turned upward, as they did.
There were gains, but few transactions during the last six months. Those we
did complete increased the Fund's yield and maturity while maintaining its high
credit quality. Our most significant purchase increased the Fund's position in
the Aa/A+ rated Alaska Housing Finance bonds, which unlike most housing bonds
have call protection. The authority avoids the calls that occur when mortgages
are prepaid by securing the bond's income with general revenues of the housing
programs and recycling prepayments into new mortgages.
[PHOTO] STEPHEN C. BAUER
The major reason for the good performance of the SAFECO Municipal Bond Fund
was its combination of long maturities and deep discounts. I expect to maintain
this structure. The upside potential of deep discount bonds will be especially
valuable should tax reform fail and municipal yields regain their normal
relationship to treasury yields.
SAFECO CALIFORNIA TAX-FREE INCOME FUND
The SAFECO California Tax-Free Income Fund had an excellent 12 months
ending September 30. Returning 12.97%, the Fund was ranked 2 out of 92
California tax-free funds, according to Lipper Analytical Services. As a group,
the California funds posted an average return of 9.58%. (For the five and ten
years just ended, the Fund placed 5 of 46 and 3 of 20 similar funds,
respectively.)
Long-term deep discounts in the Fund were responsible for our good
performance.
During the six months, I swapped 5.75% bonds for 4.75% and 5.00% coupons to
assure we'd be holding discounted bonds. I sold the 5.75% bonds before they
reached par, as they command a better price when they
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<PAGE> 7
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still have a few points of call protection remaining. (Bonds with coupons below
market rates are typically not called and refinanced when rates fall.)
Although Orange County has not yet solved all its financial problems, the
trauma to the State's tax-exempt market has largely diminished. While Los
Angeles County and a few other issuers have some financial difficulties, other
California borrowers find access to the financial markets easy and no more
expensive (in terms of having to offer premium yields to attract investors) than
before Orange County's debacle.
A new holding by the California Fund is the Redding Joint Powers Financing
Authority Revenue bonds. These A/BBB+ rated bonds are secured by solid waste,
water and wastewater revenues, and a facilities lease.
SAFECO INSURED MUNICIPAL BOND FUND
The SAFECO Insured Municipal Bond Fund was the best performing SAFECO
Tax-Exempt Fund and the best performer in its peer group over the last year.
With a total return of 13.78% for the 12 months ended September 30, it
outperformed the insured fund group average total return of 10.21%, as well as
all 43 funds in the group measured by Lipper Analytical Services.
The reasons for this Fund's success are the same as the other Funds: it's
long maturities and many deep discounts had lots of room to appreciate when the
market turned upward. Although this approach means greater than average
volatility in the share price, I think it is the best strategy for a long-term
fund.
The use of insurance in the municipal market has grown to record levels.
Through September 30, 41% of new issues were insured. (Insurance guarantees the
timely payment of a bond's interest and principal, raising its credit rating to
AAA. It does not insure a fund's share price.) Competition among the insurers,
heightened by lower new issue volume, has reduced the cost of insurance so much
that the yield on insured bonds is close to that of uninsured bonds. Thanks to
the price war among insurers, it's cheaper than ever to own only top-rated
municipal bonds.
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
The SAFECO Washington State Municipal Bond Fund returned 12.18% which
ranked its performance third out of the 10 Washington funds for the 12 months
ended September 30, according to Lipper Analytical Services.
The average return of all Washington municipal bond funds was 11.31%,
compared to 9.84% for general municipal bond funds. Washington bonds
outperformed the nation in general due to strong demand for our bonds (our
economy is healthy) and meager supply.
Given the scarcity of long maturities and deep discount bonds in
Washington, and consequently our portfolio, the Washington Fund is the most
conservative, and usually the least volatile of the long-term SAFECO Tax-Exempt
Funds. Nonetheless, I will look for opportunities to increase yield by buying
longer maturities, and to increase call protection by buying discount bonds.
During the last six months I did sell four holdings with an average
maturity of 15 years and average yield of 5.88%. They were partially replaced
with nonprofit housing revenue bonds issued on behalf of Horizon House by the
Washington State Housing Finance Commission. These bonds have a maturity of 32
years and yield 6.25%. Horizon House is a downtown Seattle retirement facility
with 447 residents and a waiting list of 300.
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
For the 12 months ended September 30, the SAFECO Intermediate-Term
Municipal Bond Fund returned 9.69%. It was ranked 14 out of the 111
intermediate-term funds tracked by Lipper Analytical Services. The group's
average return was 8.68%.
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REPORT FROM THE FUND MANAGER (CONTINUED)
Intermediate-term funds are less threatened than longer bonds by potential
tax reform. Shorter bonds are simply more likely to mature before tax reform
might harm them. Even if a flat tax comes to pass before maturity, the impact on
the bond's price would be minimal because shorter bonds are less volatile.
Investors understand this and are more willing to own intermediate munis in
potentially volatile markets.
Still, the Fund's longer average maturity helped it outperform its peers.
The additional yield we gained by going relatively long, more than compensated
for the relative underperformance of longer to shorter maturities. (Ten-year
bonds pay about .50% more than 5-year bonds.)
As the Fund ages and its average maturity shortens, I intend to sell off
the shorter paper and reinvest in the 10-year range unless the shape of the
yield curve (the difference in yields between shorter and longer maturities)
changes. And, I don't see that happening any time soon.
/s/ Stephen C. Bauer
- ------------------------------
Stephen C. Bauer, Fund Manager
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<PAGE> 9
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S&P CREDIT RATINGS DISTRIBUTIONS
AS A PERCENTAGE OF NET ASSETS
As of September 30, 1995
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SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
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<TABLE>
<S> <C>
AAA 38.8%
AA 18.7%
A 30.4%
BBB 4.6%
BB 3.0%
NOT RATED 2.4%
CASH & OTHER 2.1%
</TABLE>
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SAFECO MUNICIPAL BOND FUND
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<TABLE>
<S> <C>
AAA 32.9%
AA 24.8%
A 23.2%
BBB 8.1%
B 0.5%
NOT RATED 7.2%
CASH & OTHER 3.3%
</TABLE>
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SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
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<TABLE>
<S> <C>
AAA 41.5%
AA 19.2%
A 22.6%
NOT RATED 14.5%
CASH & OTHER 2.2%
</TABLE>
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SAFECO INSURED MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
AAA 93.0%
CASH & OTHER 7.0%
</TABLE>
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SAFECO CALIFORNIA TAX-FREE INCOME FUND
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<TABLE>
<S> <C>
AAA 50.7%
AA 10.9%
A 17.8%
BBB 6.3%
NOT RATED 11.5%
CASH & OTHER 2.8%
</TABLE>
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HIGHLIGHTS
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
TOP FIVE TYPES OF BONDS PERCENT OF NET ASSETS
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<S> <C>
Hospital 17.7%
Local G.O. - Unlimited Tax 10.2%
Utilities - Water and Sewer 9.9%
Lease Rental 9.5%
Electric Utilities - Combination 7.9%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
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<S> <C>
Mississippi Hospital Equipment & Facilities Authority 4.3%
Oklahoma Industries Authority Health Facilities 4.2%
Trinity River Authority (TX) 4.2%
Joliet (IL) Waterworks and Sewerage 4.0%
Tacoma (WA) Electric System 3.7%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE STATES PERCENT OF NET ASSETS
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<S> <C>
Illinois 12.0%
Texas 9.4%
Washington 9.2%
New York 7.6%
Indiana 6.6%
</TABLE>
<TABLE>
<CAPTION>
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CURRENT YIELD (30-DAY) PERCENT
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<S> <C>
SAFECO Intermediate-Term Municipal Bond Fund 4.38%
SAFECO Insured Municipal Bond Fund 5.09%
SAFECO Municipal Bond Fund 5.22%
SAFECO California Tax-Free Income Fund 5.34%
SAFECO Washington State Municipal Bond Fund 5.28%
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</TABLE>
<TABLE>
<CAPTION>
SAFECO INSURED MUNICIPAL BOND FUND
TOP FIVE TYPES OF BONDS PERCENT OF NET ASSETS
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<S> <C>
Utilities - Sewer 20.3%
Electric Utilities - Combination 16.4%
Hospital 11.1%
Utilities - Water 8.4%
Utilities - Water and Sewer 6.7%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
================================================================================
<S> <C>
University Area (PA) Joint Authority Sewer 4.3%
Pittsburgh Water & Sewer Authority 3.9%
Indianapolis Gas Utility 3.6%
Montgomery County (PA) Higher Education & Health Auth. 3.5%
Detroit Water Supply System 3.5%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE STATES PERCENT OF NET ASSETS
================================================================================
<S> <C>
Washington 15.3%
California 15.0%
Pennsylvania 11.7%
Texas 10.9%
Indiana 9.6%
</TABLE>
<TABLE>
<CAPTION>
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WEIGHTED AVERAGE MATURITY YEARS
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<S> <C>
SAFECO Intermediate-Term Municipal Bond Fund 7.80
SAFECO Insured Municipal Bond Fund 23.11
SAFECO Municipal Bond Fund 22.79
SAFECO California Tax-Free Income Fund 24.68
SAFECO Washington State Municipal Bond Fund 21.45
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</TABLE>
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<PAGE> 11
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HIGHLIGHTS (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
SAFECO MUNICIPAL BOND FUND
TOP FIVE TYPES OF BONDS PERCENT OF NET ASSETS
================================================================================
<S> <C>
Electric Utilities - Combination 15.9%
Escrow Secured - U.S. Treasury (Prerefunded) 10.2%
Hospital 7.8%
Lease Rental 7.6%
Utilities - Water and Sewer 6.5%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
================================================================================
<S> <C>
San Joaquin Hills (CA) Transportation Corridor Agency 4.1%
Illinois Education Facilities Authority 3.4%
Austin Combined Utility System 3.4%
Alaska Housing Finance Corp. 3.0%
East Chicago (IN) Elementary School Building Corp. 2.5%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE STATES PERCENT OF NET ASSETS
================================================================================
<S> <C>
California 19.4%
Washington 12.0%
Illinois 7.5%
New York 6.6%
South Carolina 6.1%
</TABLE>
<TABLE>
<CAPTION>
SAFECO CALIFORNIA TAX-FREE INCOME FUND
TOP FIVE TYPES OF BONDS PERCENT OF NET ASSETS
================================================================================
<S> <C>
Utilities - Sewer 12.3%
Electric Utilities - Combination 11.5%
Hospital 11.4%
Local G.O. - Limited Tax 10.2%
Escrow Secured - U.S. Treasury (Prerefunded) 8.2%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
================================================================================
<S> <C>
Los Angeles County Sanitation District Financing
Authority 6.0%
San Joaquin Hills Transportation Corridor Agency 5.9%
Pittsburg Redevelopment Agency 5.4%
Rancho California Water District Financing Authority 4.9%
Los Angeles Department of Water & Power 4.8%
</TABLE>
<TABLE>
<CAPTION>
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
TOP FIVE TYPES OF BONDS PERCENT OF NET ASSETS
================================================================================
<S> <C>
Local G.O. - Limited Tax 17.3%
Local G.O. - Unlimited Tax 15.5%
Hospital 14.4%
Utilities - Water 12.5%
Housing - Uninsured 9.3%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
================================================================================
<S> <C>
Everett School District #2 (Snohomish County) 5.1%
King County Housing Authority 5.1%
Renton Water and Sewer Improvement 4.7%
Snohomish County Public Utility District #1 4.6%
Spokane Regional Solid Waste Management 4.3%
</TABLE>
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Portfolio of Investments
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
BONDS - 97.9%
ALASKA - 3.3%
$250 Anchorage Hospital Revenue
(Sisters of Providence)
6.75%, due 10/01/01 $270
200 Fairbanks North Star Borough General
Obligation
5.20%, due 3/01/03 [MBIA]* 204
ARIZONA - 0.7%
100 Tucson Airport Authority General Revenue
5.30%, due 6/01/03 [MBIA] 103
CALIFORNIA - 5.9%
90 California Housing Finance Agency
Multi-Unit Rental Revenue
5.50%, due 2/01/99 91
245 Pleasanton Joint Powers Financing
Authority Reassessment Revenue
5.80%, due 9/02/02 248
500 Santa Margarita Dana Point Authority Revenue
5.375%, due 8/01/04 519
CONNECTICUT - 1.9%
100 Connecticut Housing Finance Authority
Housing Mortgage Finance Program
5.40%, due 5/15/03 102
150 Connecticut Special Tax Obligation
Transportation Infrastructure
6.50%, due 6/01/03 166
DISTRICT OF COLUMBIA - 3.0%
District of Columbia General Obligation
150 5.75%, due 6/01/03 147
300 5.20%, due 6/01/03 281
GEORGIA - 6.0%
Georgia Municipal Electric Authority
General Power Revenue
100 5.75%, due 1/01/03 104
300 4.75%, due 1/01/04 289
$500 Heard County Development Authority
Pollution Control Revenue (Oglethorpe Power)
4.70%, due 1/01/04 $471
ILLINOIS - 12.0%
125 Chicago Wastewater Transmission Revenue
5.20%, due 1/01/04 [FGIC] 128
100 Illinois Health Facilities Authority Revenue
(Brokaw-Mennonite Association)
5.60%, due 8/15/01 [FGIC] 104
300 Illinois Health Facilities Authority Revenue
(Masonic Medical Center)
5.20%, due 10/01/03 296
500 Joliet Waterworks and Sewerage Revenue
7.00%, due 1/01/05 [FGIC] 573
Metropolitan Pier and Exposition Authority
(McCormick Place Expansion Project)
100 5.90%, due 6/15/03 106
500 5.50%, due 6/15/03 [MBIA] 519
INDIANA - 6.6%
100 Clay School Building Corp. First Mortgage
5.60%, due 1/01/03 [MBIA] 104
200 Hammond Multi-School Building Corp.
First Mortgage (Lake County)
5.50%, due 1/15/03 210
330 Highland School Building Corp. First
Mortgage
5.00%, due 1/05/04 325
100 Indiana Bond Bank State Revolving Fund
Program
5.90%, due 2/01/03 105
100 Indianapolis Local Public Improvement
Bond Bank Transportation Revenue
5.80%, due 7/01/03 106
100 Pike Township School Building Corp.
First Mortgage Revenue
5.70%, due 2/01/01 104
</TABLE>
See Notes to Financial Statements
================================================================================
-10-
<PAGE> 13
Portfolio of Investments
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
IOWA - 2.0%
$305 Louisa Pollution Control Revenue
4.65%, due 12/15/03 $293
KENTUCKY - 4.3%
500 Kentucky State Property and Buildings
Commission Revenue
5.50%, due 9/01/04 518
100 Kentucky Turnpike Authority
Economic Development Road Revenue
5.20%, due 7/01/03 [AMBAC] 103
LOUISIANA - 1.4%
100 Louisiana Correctional Facilities Corp.
Lease Revenue 5.55%, due 12/15/02 [FSA] 104
100 Louisiana Public Facilities Authority
Student Loan Revenue
6.20%, due 3/01/01 106
MASSACHUSETTS - 4.3%
175 Massachusetts General Obligation
5.10%, due 11/01/02 179
350 Massachusetts Health & Educational
Facilities Authority Revenue
(Brigham and Women's Hospital)
4.70%, due 7/01/03 336
100 Massachusetts Water Resources Authority
General Revenue
5.70%, due 11/01/02 105
MICHIGAN - 2.2%
300 Detroit School District Unlimited Tax
General Obligation
5.75%, due 5/01/02 315
MISSISSIPPI - 4.3%
600 Mississippi Hospital Equipment and
Facilities Authority Revenue (Mississippi
Baptist Medical Center)
5.40%, due 5/01/04 [MBIA] 617
NEVADA - 1.5%
$200 Henderson General Obligation
Limited Tax Water Revenue
5.55%, due 12/01/02 [AMBAC] $210
NEW HAMPSHIRE - 1.8%
250 New Hampshire Municipal Bond Bank
5.00%, due 8/15/01 254
NEW JERSEY - 0.7%
100 New Jersey Housing & Mortgage Finance
Agency Housing Revenue
6.00%, due 11/01/02 105
NEW YORK - 7.6%
100 Metropolitan Transportation Authority
Transit Facilities Service Contract Revenue
5.375%, due 7/01/02 102
400 New York City Municipal Water
Finance Authority
5.00%, due 6/15/03 401
100 New York Dormitory Authority
State University Educational Facilities
Revenue
5.75%, due 5/15/01 103
500 New York Local Government Assistance Corp.
4.85%, due 4/01/04 495
NORTH CAROLINA - 1.5%
210 North Carolina Eastern Municipal
Power Agency System Revenue
5.50%, due 1/01/02 210
OHIO - 1.7%
250 Ohio Air Quality Development
Authority Revenue
(Buckeye Power, Inc. Project)
5.00%, due 8/01/03 246
</TABLE>
See Notes to Financial Statements
================================================================================
-11-
<PAGE> 14
Portfolio of Investments
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
OKLAHOMA - 4.2%
$600 Health Facilities Revenue
(Sisters of Mercy Health System, St. Louis,
Inc.)
5.20%, due 6/01/05 $ 612
PENNSYLVANIA - 1.7%
250 Philadelphia Water and Wastewater Revenue
5.00%, due 6/15/02 247
SOUTH DAKOTA - 0.7%
100 South Dakota Housing Development Authority
Homeownership Mortgage Revenue
5.30%, due 5/01/03 101
TEXAS - 9.4%
250 Board of Regents of the University of
Houston System Consolidated Revenue
5.00%, due 2/15/03 [FGIC] 253
100 Coastal Bend Health Facility Development
Corp. Health Services Revenue (Incarnate
Word)
5.70%, due 1/01/03 [AMBAC] 105
100 Houston Sewer System Junior Lien Revenue
5.75%, due 12/01/02 105
300 Texas Turnpike Authority
Dallas North Tollway Revenue
4.60%, due 1/01/04 [AMBAC] 292
600 Trinity River Authority Revenue
(Tarrant County Water Project)
5.25%, due 2/01/05 [AMBAC] 609
WASHINGTON - 9.2%
500 Tacoma Electric System Revenue
5.80%, due 1/01/04 [FGIC] 530
100 Washington Health Care Facilities Authority
Revenue (Empire Health Service, Spokane)
5.50%, due 11/01/03 [MBIA] 104
100 Washington Health Care Facilities Authority
Revenue (Swedish Hospital Medical Center)
5.70%, due 11/15/02 [AMBAC] 105
Washington Public Power Supply System
Nuclear Project #2 Revenue
$ 200 5.30%, due 7/01/02 $ 202
300 4.80%, due 7/01/04 287
4,100 Yakima-Tieton Irrigation District Revenue
5.65%, due 6/01/02 [FSA] 105
-------
TOTAL BONDS 14,134
-------
SHORT-TERM INVESTMENTS - 0.9%
INVESTMENT COMPANIES:
125 Aim Tax-Exempt Money Market Fund, Inc. 125
-------
TOTAL SHORT-TERM INVESTMENTS 125
-------
TOTAL INVESTMENTS - 98.8% 14,259
Other Assets, less Liabilities 175
-------
NET ASSETS $14,434
=======
</TABLE>
- --------------------------------------------------------------------------------
DIVERSIFICATION BY GUARANTOR (PERCENT OF PORTFOLIO)
*The provider of the guarantee of timely payment of both principal and interest
is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio are:
<TABLE>
<S> <C> <C>
MBIA: Municipal Bond Investors Assurance Corp. 11.7%
FGIC: Financial Guaranty Insurance Corp. 11.2
AMBAC: AMBAC Indemnity Corp. 10.1
FSA: Financial Security Assurance, Inc. 1.5
----
34.5%
====
</TABLE>
See Notes to Financial Statements
================================================================================
-12-
<PAGE> 15
================================================================================
Portfolio of Investments
SAFECO INSURED MUNICIPAL BOND FUND
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
===========================================================================================================================
<S> <C>
BONDS - 93.0%
ALABAMA - 1.1%
$100 Montgomery Downtown Redevelopment
Authority Mortgage Revenue
(Alabama State Project)
5.50%, due 10/01/13 [MBIA]* $ 95
ALASKA - 3.2%
300 Alaska Housing Finance Corp.
Insured Mortgage Program
5.90%, due 12/01/33 [FSA] 283
CALIFORNIA - 15.0%
385 Fresno Sewer System Revenue
4.50%, due 9/01/23 [AMBAC] 307
350 Los Angeles Wastewater System Revenue
4.70%, due 11/01/19 [FGIC] 292
100 Oro Loma Sanitation District Sewer Revenue
5.20%, due 10/01/16 [AMBAC] 91
350 Sacramento Municipal Utility District
Electric Revenue
4.75%, due 9/01/21 [MBIA] 292
250 San Diego Public Facilities Financing
Authority Sewer Revenue
5.00%, due 5/15/23 [AMBAC] 217
145 University of California Revenue
(Multiple Purpose Projects)
4.75%, due 9/01/15 [AMBAC] 125
FLORIDA - 2.0%
200 Florida Municipal Power Agency
All-Requirements Power Supply Project
Revenue
5.10%, due 10/01/25 [AMBAC] 179
HAWAII - 1.1%
100 Maui County General Obligation
5.00%, due 9/01/09 [FGIC] 95
ILLINOIS - 5.5%
$100 Chicago General Obligation
5.875%, due 1/01/22 [AMBAC] $ 98
250 Cook County General Obligation
5.00%, due 11/15/23 [MBIA] 214
200 Illinois Health Facilities Authority
Revenue (The Children's Memorial Hospital)
5.00%, due 8/15/22 [AMBAC] 172
INDIANA - 9.6%
100 Indiana Municipal Power Agency
Power Supply System Revenue
6.125%, due 1/01/13 [MBIA] 105
250 Indiana State Office Building Commission
Capitol Complex Revenue
5.25%, due 7/01/15 [AMBAC] 229
350 Indianapolis Gas Utility Revenue
5.375%, due 6/01/21 [FGIC] 321
100 Indiana Transportation Finance Authority
Highway Revenue
5.25%, due 6/01/15 [AMBAC] 93
100 Kokomo Sewer Works Revenue
5.50%, due 8/01/09 [AMBAC] 99
IOWA - 2.6%
250 Marshalltown Pollution Control Revenue
(Iowa Electric Light and Power Co. Project)
5.50%, due 11/01/23 [MBIA] 233
MASSACHUSETTS - 1.0%
100 Massachusetts Municipal Wholesale Electric
Co. Power Supply System Revenue
5.00%, due 7/01/10 [AMBAC] 93
MICHIGAN - 4.6%
350 Detroit Water Supply System Revenue
5.00%, due 7/01/23 [FGIC] 308
</TABLE>
See Notes to Financial Statements
================================================================================
-13-
<PAGE> 16
================================================================================
Portfolio of Investments
SAFECO INSURED MUNICIPAL BOND FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
===========================================================================================================================
<S> <C>
MICHIGAN (CONTINUED)
$100 River Rouge School District
General Obligation Building and Site
5.50%, due 5/01/11 [FSA] $ 98
MINNESOTA - 3.4%
350 Minneapolis and St. Paul Housing and
Redevelopment Authority Health Care System
Revenue (HealthSpan)
4.75%, due 11/15/18 [AMBAC] 299
NORTH CAROLINA - 1.3%
125 North Carolina Eastern Municipal Power
Agency Power System Revenue
5.50%, due 1/01/17 [FGIC] 117
PENNSYLVANIA - 11.7%
350 Montgomery County Higher Education
and Health Authority Hospital Revenue
(Abington Memorial Hospital)
5.125%, due 6/01/24 [FGIC] 311
400 Pittsburgh Water and Sewer Authority
Revenue
4.75%, due 9/01/16 [FGIC] 344
445 University Area Joint Authority Sewer
Revenue
4.75%, due 11/01/20 [MBIA] 377
RHODE ISLAND - 1.1%
100 Clean Water Protection Finance Agency
Water Pollution Control Revolving Fund
Revenue
5.40%, due 10/01/15 [MBIA] 94
SOUTH CAROLINA - 1.1%
100 South Carolina Public Service Authority
Revenue
5.50%, due 7/01/21 [MBIA] 94
TEXAS - 10.9%
200 Colorado River Municipal Water District
Water System Revenue
5.15%, due 1/01/21 [AMBAC] 179
$250 Harris County Toll Road
Unlimited Tax Revenue
5.50%, due 8/15/21 [FGIC] $237
Lower Colorado River Authority
Junior Lien Revenue
300 5.625%, due 1/01/17 [FSA] 286
10 # 5.625%, due 1/01/17 [FSA]
(Prerefunded 1/01/15 @ 100). 10
95 Sabine River Authority
Pollution Control Revenue
(Texas Utilities Electric Co. Project)
6.55%, due 10/01/22 [FGIC] 100
175 Trinity River Authority Regional
Wastewater System Revenue
5.00%, due 8/01/16 [AMBAC] 156
VIRGINIA - 2.5%
250 Virginia Housing Development Authority
Commonwealth Mortgage
5.25%, due 7/01/27 [AMBAC] 217
WASHINGTON - 15.3%
100 King County Public Hospital District #1
Hospital Facilities Revenue
(Valley Medical Center)
5.50%, due 9/01/17 [AMBAC] 94
250 Municipality of Metropolitan
Seattle Sewer Revenue
6.30%, due 1/01/33 [MBIA] 255
250 Richland Water and Sewer
Improvement Revenue
5.625%, due 4/01/12 [MBIA] 246
300 Snohomish County Public Utility District #1
Electric Revenue
5.50%, due 1/01/20 [FGIC] 279
</TABLE>
- --------------------------------------------------------------------------------
# Prerefunded bond collateralized by securities (generally U.S. Treasury
securities) held in an irrevocable trust in an amount sufficient to pay
interest and principal.
See Notes to Financial Statements
================================================================================
-14-
<PAGE> 17
===============================================================================
Portfolio of Investments
SAFECO INSURED MUNICIPAL BOND FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
===============================================================================
<S> <C>
WASHINGTON (CONTINUED)
$125 Snohomish County School District #6
(Mukilteo) Unlimited Tax General
Obligation 5.70%, due 12/01/11 [FGIC] $ 125
100 Washington Health Care Facilities Authority
Revenue (Swedish Hospital Medical Center)
6.30%, due 11/15/22 [AMBAC] 102
250 Yakima-Tieton Irrigation District Revenue
6.20%, due 6/01/19 [FSA] 254
------
TOTAL BONDS 8,215
------
SHORT-TERM INVESTMENTS - 5.9%
INVESTMENT COMPANIES:
439 Aim Tax-Exempt Money Market Fund, Inc. 439
85 Nuveen Tax-Exempt Money
Market Fund, Inc. 84
------
TOTAL SHORT-TERM INVESTMENTS 523
------
TOTAL INVESTMENTS - 98.9% 8,738
Other Assets, less Liabilities 99
------
NET ASSETS $8,837
======
</TABLE>
- -------------------------------------------------------------------------------
DIVERSIFICATION BY GUARANTOR (Percent of Portfolio)
*The provider of the guarantee of timely payment of both principal and interest
is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio are:
<TABLE>
<CAPTION>
<S> <C> <C>
AMBAC: AMBAC Indemnity Corp. 33.5%
FGIC: Financial Guaranty Insurance Corp. 30.8
MBIA: Municipal Bond Investors Assurance Corp. 24.4
FSA: Financial Security Assurance, Inc. 11.3
-----
100.0%
=====
</TABLE>
See Notes to Financial Statements
================================================================================
-15-
<PAGE> 18
================================================================================
Portfolio of Investments
SAFECO MUNICIPAL BOND FUND
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
BONDS - 96.7%
ALABAMA - 0.2%
$ 1,000 Citronelle Industrial Development
Board Pollution Control Revenue
8.00%, due 12/01/12 $ 1,125
ALASKA - 3.2%
Alaska Housing Finance Corp.
Veterans Mortgage Program
150 8.50%, due 12/01/11 155
925 6.50%, due 6/01/31 931
17,000 - 5.00%, due 12/01/18 14,452
ARIZONA - 2.5%
Phoenix Civic Improvement Corp.
Wastewater System Lease Revenue
4,220 5.00%, due 7/01/18 [MBIA]* 3,851
9,800 4.75%, due 7/01/23 8,062
CALIFORNIA - 19.4%
2,500 Los Angeles County Certificates of
Participation (Disney Parking Project)
5.50%, due 9/01/21 2,180
13,000 Los Angeles Department of Water
and Power Electric Plant Revenue
5.25%, due 11/15/26 11,466
Los Angeles Wastewater System Revenue
1,280 4.70%, due 11/01/17 [FGIC] 1,078
5,000 4.70%, due 11/01/19 [FGIC] 4,172
2,200 Metropolitan Water District of
Southern California Waterworks Revenue
5.75%, due 3/01/14 2,163
Northern California Power
Agency Geothermal Project Revenue
2,000 6.75%, due 7/01/01 2,068
5,250 5.00%, due 7/01/09 4,955
$6,400 Pittsburg Redevelopment Agency Los Medanos
Community Development Project Tax Allocation
4.625%, due 8/01/21 [AMBAC] $5,244
2,500 Rancho California Water District
Financing Authority Revenue
4.75%, due 8/15/21 [AMBAC] 2,089
1,000 - Redding Joint Powers Financing
Solid Waste and Corp. Yard Revenue
5.00%, due 1/01/23 806
8,500 Sacramento County Sanitation
District Finance Authority
4.75%, due 12/01/23 6,984
Sacramento Municipal Utility
District Electric Revenue
1,500 6.70%, due 2/01/98 1,573
5,000 6.00%, due 2/01/15 4,882
2,500 # San Bernardino County
Certificates of Participation
6.25%, due 8/01/19
(Prerefunded 8/01/01 @ 100) 2,726
1,000 # San Diego County Regional Transportation
Commission Sales Tax Revenue
6.25%, due 4/01/08
(Prerefunded 4/01/99 @ 100) 1,065
1,700 San Francisco Redevelopment Financing
Authority Tax Allocation Revenue
4.75%, due 8/01/18 [FGIC] 1,434
</TABLE>
- --------------------------------------------------------------------------------
- - New to Portfolio since last report.
# Prerefunded bond collateralized by securities (generally U.S. Treasury
securities) held in an irrevocable trust in an amount sufficient to pay
interest and principal.
See Notes to Financial Statements
================================================================================
-16-
<PAGE> 19
================================================================================
Portfolio of Investments
SAFECO MUNICIPAL BOND FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
CALIFORNIA (CONTINUED)
$ 8,010 San Joaquin County Public Facilities
Financing Corp. Certificates of
Participation Capital Facilities Project
4.75%, due 11/15/19 [MBIA] $ 6,732
25,000 San Joaquin Hills Transportation Corridor
Agency Senior Lien Toll Road Revenue
5.00%, due 1/01/33 19,818
Southern California Public Power Authority
Power Project Revenue (Multiple Projects)
4,085 # 5.50%, due 7/01/20
(Prerefunded 7/01/00 @ 100) 4,290
3,165 5.50%, due 7/01/20 2,882
2,200 Southern California Public Power Authority
Power Project Revenue (Palo Verde Project)
5.00%, due 7/01/17 1,908
3,350 Southern California Public Power Authority
Transmission Project Revenue
7.25%, due 7/01/06 3,516
COLORADO - 0.3%
1,000 Colorado Housing Finance Authority
Multi-Family Mortgage Revenue
8.30%, due 10/01/23 1,110
365 Colorado Housing Finance Authority
Single Family Residential Housing Revenue
8.75%, due 9/01/17 390
DELAWARE - 0.7%
4,200 Delaware River and Bay Authority Revenue
4.75%, due 1/01/24 [MBIA] 3,570
FLORIDA - 1.8%
Florida Board of Education General
Obligation
$ 1,000 5.00%, due 6/01/12 $ 911
3,000 5.00%, due 6/01/24 2,614
Mid-Bay Bridge Authority Revenue
2,750 6.10%, due 10/01/22 2,651
3,000 Orlando Utility Commission
Water and Electric Revenue
5.00%, due 10/01/23 2,625
GEORGIA - 3.0%
6,750 Atlanta Water and Sewerage Revenue
4.50%, due 1/01/18 5,551
4,000 Cobb County Kennestone Hospital
Authority Revenue
5.00%, due 4/01/24 [MBIA] 3,496
5,000 Municipal Electric Authority Project One
Special Obligation Fourth Crossover Series
6.50%, due 1/01/20 5,284
ILLINOIS - 7.5%
7,000 Chicago Wastewater Transmission Revenue
5.125%, due 1/01/20 [FGIC] 6,214
5,500 Illinois Dedicated Tax Revenue
(Civic Center)
7.00%, due 12/15/10 [AMBAC] 6,097
17,500 Illinois Educational Facilities
Authority Adjustable Demand
Revenue (University of Chicago)
5.70%, due 12/01/25 16,538
2,000 # Illinois Health Facilities Authority
Revenue (Illinois Masonic Medical Center)
7.70%, due 10/01/19
(Prerefunded 10/01/99 @ 102) 2,278
</TABLE>
See Notes to Financial Statements
================================================================================
-17-
<PAGE> 20
================================================================================
Portfolio of Investments
SAFECO MUNICIPAL BOND FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
ILLINOIS (CONTINUED)
$ 1,000 Illinois Municipal Electric Authority
Revenue
5.75%, due 2/01/21 [AMBAC] $ 959
4,770 University of Illinois Auxiliary
Facilities System Revenue
5.75%, due 4/01/22 4,546
INDIANA - 5.2%
200 Beech Grove Economic Development
Revenue (Westvaco Corp.)
8.75%, due 7/01/10 202
11,000 East Chicago Elementary School
Building Corp. First Mortgage
7.00%, due 1/15/16 12,023
7,715 Hammond Multi-School Building
Corp. First Mortgage Revenue
6.20%, due 7/10/15 7,839
6,450 Indianapolis Gas Utility System Revenue
4.00%, due 6/01/11 [FGIC] 5,382
IOWA - 0.2%
880 Iowa Housing Finance Authority
Multiple Family Housing Revenue
10.00%, due 4/01/23 889
KENTUCKY - 2.0%
8,805 # Kentucky Local Correctional Facilities
Construction Authority Multi-County Revenue
7.00%, due 11/01/14
(Prerefunded 11/01/97 @ 102) 9,522
MARYLAND - 1.8%
5,125 Baltimore Project and Revenue
(Water Projects)
5.00%, due 7/01/24 4,502
$5,000 Maryland Health and Higher
Educational Facilities Authority Revenue
(University of Maryland Medical System)
4.75%, due 7/01/23 [FGIC] $4,195
MASSACHUSETTS - 3.3%
Massachusetts General Obligation
Dedicated Income Tax Revenue
3,310 7.875%, due 6/01/97 3,509
1,505 7.25%, due 6/01/96 1,536
1,000 # 7.00%, due 12/01/10
(Prerefunded 12/01/00 @ 100) 1,115
Massachusetts Water Resources
Authority General Revenue
4,500 6.00%, due 4/01/20 4,477
4,000 5.00%, due 3/01/22 3,454
2,500 4.75%, due 12/01/23 2,063
MICHIGAN - 1.3%
5,000 Detroit Water Supply System Revenue
4.75%, due 7/01/19 [FGIC] 4,275
2,000 University of Michigan Hospital Revenue
6.375%, due 12/01/24 2,031
MISSOURI - 0.4%
1,870 Missouri Environmental
Impact and Energy Resource
Authority Pollution Control Revenue
7.90%, due 11/15/14 1,979
NEVADA - 1.5%
Clark County Airport
Improvement Revenue
965 13.00%, due 7/01/98 1,172
6,000 6.00%, due 7/01/22 5,913
NEW JERSEY - 0.5%
1,795 # New Jersey Turnpike Authority Revenue
10.375%, due 1/01/03
(Escrowed to Maturity) 2,194
</TABLE>
See Notes to Financial Statements
================================================================================
-18-
<PAGE> 21
================================================================================
Portfolio of Investments
SAFECO MUNICIPAL BOND FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
NEW MEXICO - 0.5%
$ 2,500 Farmington Collateralized Pollution
Control Revenue (Tucson Gas and Electric
Co.)
6.10%, due 1/01/08 $ 2,466
NEW YORK - 6.6%
New York City Municipal Water Finance
Authority Water and Sewer System Revenue
2,205 6.00%, due 6/15/19 2,166
2,100 5.00%, due 6/15/17 [FGIC] 1,854
New York Dormitory Authority State
University Educational Facilities Revenue
4,400 7.50%, due 5/15/11 5,068
5,250 7.50%, due 5/15/13 6,093
6,500 5.25%, due 5/15/15 5,855
1,500 5.00%, due 7/01/15 1,355
4,000 # New York Local Government Assistance Corp.
7.00%, due 4/01/21
(Prerefunded 4/01/01 @ 100) 4,487
4,700 Triborough Bridge and Tunnel Authority
Revenue
8.125%, due 1/01/12 5,206
NORTH CAROLINA - 2.1%
11,000 North Carolina Eastern Municipal Power
Agency Power System Revenue
6.00%, due 1/01/22 10,350
OKLAHOMA - 1.2%
5,590 McGee Creek Authority Water Revenue
6.00%, due 1/01/23 [MBIA] 5,788
OREGON - 0.2%
1,000 Clackamas County Hospital
Facility Authority Revenue
(Sisters of Providence Hospital)
6.375%, due 10/01/05 1,074
PENNSYLVANIA - 4.0%
$ 5,000 Centre County University Area
Joint Authority Sewer Revenue
4.75%, due 11/01/20 [MBIA] $4,234
6,000 # Pennsylvania Intergovernmental
Cooperative Authority Special
Tax Revenue (City of Philadelphia)
6.80%, due 6/15/22
(Prerefunded 6/15/02 @ 100) 6,739
7,415 # Philadelphia Water and Sewer Revenue
7.00%, due 8/01/18
(Prerefunded 8/01/01 @100) 8,280
SOUTH CAROLINA - 6.1%
10,250 Charleston County Hospital Facility Revenue
5.00%, due 10/01/22 [MBIA] 8,863
1,225 Charleston County Pollution
Control Facilities Revenue
5.90%, due 8/01/03 1,227
4,000 Charleston Waterworks and
Sewer System Revenue
5.00%, due 1/01/16 3,639
700 # Myrtle Beach Water and Sewer Revenue
6.00%, due 3/01/15 [MBIA]
(Prerefunded 3/01/00 @100) 754
5,500 Pickens County and Richland County
Hospital Revenue
5.75%, due 8/01/21 [AMBAC] 5,271
South Carolina Public Service
Authority Power Supply Revenue
1,395 5.70%, due 7/01/08 1,394
10,000 5.125%, due 1/01/32 8,685
</TABLE>
See Notes to Financial Statements
================================================================================
-19-
<PAGE> 22
================================================================================
Portfolio of Investments
SAFECO MUNICIPAL BOND FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
TEXAS - 5.4%
$10,000 Austin Combined Utility System Revenue
12.50%, due 11/15/07 [MBIA] $16,504
Austin Water, Sewer and Electric Revenue
4,350 14.00%, due 11/15/01 5,956
1,600 # Coastal Industrial Water
Authority Water Revenue
5.50%, due 12/15/09
(Escrowed to Maturity) 1,546
2,260 Texas Municipal Power Agency Revenue
5.50%, due 9/01/13 [SECONDARY FGIC] 2,178
UTAH - 1.8%
Intermountain Power Agency
Special Obligation First Crossover Series
1,900 6.00%, due 7/01/23 1,877
2,750 5.00%, due 7/01/16 2,408
1,000 # Salt Lake City Hospital Revenue
(IHC Hospitals)
5.00%, due 6/01/15
(Escrowed to Maturity) 881
3,330 Utah Housing Finance Agency Single
Family Mortgage Revenue
5.875%, due 7/01/08 3,374
VIRGINIA - 1.2%
1,250 # Fairfax County Water Authority Water Revenue
6.125%, due 1/01/29
(Prerefunded 1/01/00 @ 100) 1,329
1,195 # Richmond Metropolitan Expressway
Authority Revenue
5.60%, due 1/15/13
(Escrowed to Maturity) 1,177
$3,000 # Richmond Public Utility Revenue
8.00%, due 1/15/18
(Prerefunded 1/15/98 @ 102) $3,300
WASHINGTON - 12.0%
Douglas County Public Utility
District #1 Wells Hydroelectric Revenue
5,055 8.75%, due 9/01/18 6,455
2,200 8.75%, due 9/01/18 2,965
2,500 Everett School District #2 Snohomish
County Unlimited Tax General Obligation
6.20%, due 12/01/12 [MBIA] 2,564
1,875 Federal Way School District #210 King County
Unlimited Tax General Obligation
5.75%, due 12/01/12 [FGIC] 1,875
1,750 King County Housing Authority
Pooled Housing Refunding Revenue
6.80%, due 3/01/26 1,793
1,650 King County Limited Tax General
Obligation (Various Purposes)
4.75%, due 1/01/19 1,393
2,255 King County Public Hospital District #1
Hospital Facilities Revenue (Valley Medical
Center)
5.50%, due 9/01/17 [AMBAC] 2,116
4,800 Lewis County Public Utility District #1
Cowlitz Falls Hydroelectric Project Revenue
6.00%, due 10/01/24 4,741
4,000 Port of Seattle Revenue
6.00%, due 12/01/14 3,991
3,000 Washington Health Care
Facilities Authority Revenue
(Fred Hutchinson Cancer Research Center)
7.375%, due 1/01/18 3,227
</TABLE>
See Notes to Financial Statements
================================================================================
-20-
<PAGE> 23
================================================================================
Portfolio of Investments
SAFECO MUNICIPAL BOND FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
WASHINGTON (CONTINUED)
$6,350 Washington Health Care Facilities
Authority Revenue (Yakima Valley
Memorial Hospital Association)
7.25%, due 1/01/21 $ 6,662
8,500 Washington Public Power Supply
System Nuclear Project #1 Revenue
6.00%, due 7/01/17 8,127
4,000 Washington Public Power Supply
System Nuclear Project #2 Revenue
6.30%, due 7/01/12 4,072
2,610 Washington Public Power Supply
System Nuclear Project #3 Revenue
5.50%, due 7/01/18 2,350
5,500 # Yakima-Tieton Irrigation District Revenue
8.40%, due 6/01/18
(Prerefunded 6/01/98 @ 100) 6,075
WEST VIRGINIA - 0.6%
3,025 West Virginia Housing Development
Fund Single Family Mortgage Revenue
6.125%, due 7/01/13 3,041
WISCONSIN - 0.2%
$1,000 Wisconsin Health and Education
Facilities Authority Revenue
6.00%, due 10/01/12 [MBIA] $ 1,000
--------
TOTAL BONDS 469,538
--------
SHORT-TERM INVESTMENTS - 0.8%
INVESTMENT COMPANIES:
4,009 Aim Tax-Exempt
Money Market Fund, Inc. 4,009
--------
TOTAL SHORT-TERM INVESTMENTS 4,009
--------
TOTAL INVESTMENTS - 97.5% 473,547
Other Assets, Less Liabilities 12,192
--------
NET ASSETS $485,739
========
</TABLE>
- --------------------------------------------------------------------------------
DIVERSIFICATION BY GUARANTOR (Percent of Portfolio)
* The provider of the guarantee of timely payment of both principal and interest
is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio are:
<TABLE>
<S> <C> <C>
MBIA: Municipal Bond Investors Assurance Corp. 12.2%
FGIC: Financial Guaranty Insurance Corp. 7.0
AMBAC: AMBAC Indemnity Corp. 4.6
----
23.8%
====
</TABLE>
See Notes to Financial Statements
================================================================================
-21-
<PAGE> 24
Portfolio of Investments
SAFECO CALIFORNIA TAX-FREE INCOME FUND
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
BONDS - 97.2%
$2,250 California Health Facilities
Financing Authority Insured Health Facility
Revenue (Catholic Healthcare West)
4.75%, due 7/01/19 [MBIA]* $1,884
850 California Health Facilities
Financing Authority Revenue
(O'Connor Hospital)
9.25%, due 3/01/15 886
California Statewide Communities
Development Authority
Certificates of Participation
2,750 5.00%, due 10/01/23 2,413
3,715 - 4.75%, due 6/01/21 3,089
20 Concord Redevelopment Agency Tax Allocation
Central Concord Redevelopment Project
8.00%, due 7/01/18 [BIG] 22
3,750 Culver City Redevelopment Financing
Authority Tax Allocation Revenue
4.60%, due 11/01/20 [AMBAC] 3,069
3,150 East Bay Regional Park District
California General Obligation
5.75%, due 9/01/17 3,032
670 Inglewood Insured Hospital Revenue
(Daniel Freeman Hospital)
6.75%, due 5/01/13 690
1,200 # Los Angeles Convention and Exhibition Center
Authority Certificates of Participation
9.00%, due 12/01/20
(Prerefunded 12/01/05 @ 100) 1,597
$4,500 Los Angeles County Sanitation District
Financing Authority Revenue
(Capital Projects)
5.25%, due 10/01/19 $4,021
3,800 Los Angeles Department of
Water and Power Waterworks Revenue
4.75%, due 11/15/19 3,195
2,000 Los Angeles Wastewater System Revenue
4.70%, due 11/01/17 [FGIC] 1,684
1,000 # Modesto Certificates of Participation
(Community Center Refinancing Project)
6.00%, due 11/01/15 [AMBAC]
(Prerefunded 11/01/01 @ 102) 1,096
2,500 Northern California Power Agency
Geothermal Project Revenue
5.00%, due 7/01/09 2,360
1,100 Oro Loma Sanitation District Sewer Revenue
5.20%, due 10/01/16 [AMBAC] 1,001
1,350 - Palomar Pomerado Health System
California Insured Revenue Service
4.75%, due 11/01/23 [MBIA] 1,114
4,435 Pittsburg Redevelopment Agency
Los Medanos Community
Development Project Tax Allocation
4.625%, due 8/01/21 3,634
Pleasanton Joint Powers Financing
Authority Reassessment Revenue
985 6.20%, due 9/02/17 968
1,945 6.15%, due 9/02/12 1,939
</TABLE>
- --------------------------------------------------------------------------------
- - New to Portfolio since last report.
# Prerefunded bond collateralized by securities (generally U.S. Treasury
securities) held in an irrevocable trust in an amount sufficient to pay
interest and principal.
See Notes to Financial Statements
================================================================================
-22-
<PAGE> 25
================================================================================
Portfolio of Investments
SAFECO CALIFORNIA TAX-FREE INCOME FUND (CONTINUED)
As of September 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C>
$3,950 Rancho California Water District
Financing Authority Revenue
4.75%, due 8/15/21 $3,301
3,900 - Redding Joint Powers Financing Authority
Solid Waste and Corp. Yard Revenue
5.00%, due 1/01/23 3,144
2,000 Riverside County Certificates of
Participation (Capital Projects)
6.125%, due 11/01/21 1,931
1,000 Riverside County Certificates of
Participation (Public Financing Project)
7.875%, due 12/01/15 1,050
3,000 Sacramento Municipal Utility
District Electric Revenue
4.75%, due 9/01/21 [MBIA] 2,506
1,750 San Diego Public Facilities Financing
Authority Sewer Revenue
5.25%, due 5/15/20 1,556
5,000 San Joaquin Hills Transportation Corridor
Agency Senior Lien Toll Road Revenue
5.00%, due 1/01/33 3,964
4,000 San Jose Redevelopment Agency
4.75%, due 8/01/22 3,189
Southern California Public Power Authority
Power Project Revenue (Multiple Projects)
2,665 # 5.50%, due 7/01/20
(Prerefunded 7/01/00 @ 100) 2,799
1,335 5.50%, due 7/01/20 1,216
$ 250 Southern California Public Power Authority
Power Project Revenue (Palo Verde Project)
5.75%, due 7/01/17 $ 240
1,000 - Southern California Public
Power Authority Power Project
Revenue (Transportation Project)
4.75%, due 7/01/23 831
985 Stanislaus Waste-to-Energy Financing
Agency Solid Waste Facility Revenue
7.625%, due 1/01/10 1,044
1,000 University of California Housing
System Revenue
5.00%, due 11/01/13 [MBIA] 902
-------
TOTAL BONDS 65,367
-------
TOTAL INVESTMENTS - 97.2% 65,367
Other Assets, less Liabilities 1,878
-------
NET ASSETS $67,245
=======
</TABLE>
- --------------------------------------------------------------------------------
BY GUARANTOR (PERCENT OF PORTFOLIO)
* The provider of the guarantee of timely payment of both principal and interest
is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio are:
<TABLE>
<S> <C> <C>
MBIA: Municipal Bond Investors Assurance Corp. 14.5%
AMBAC: AMBAC Indemnity Corp. 13.0
FGIC: Financial Guaranty Insured Corp. 2.6
----
30.1%
====
</TABLE>
See Notes to Financial Statements
================================================================================
-23-
<PAGE> 26
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
AS OF SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C> <C>
BONDS - 97.8%
$100 Battle Ground School District #119 Clark
County Unlimited Tax General Obligation
5.65%, due 12/01/12 $ 99
125 Centralia Water Revenue
5.65%, due 8/01/13 (AMBAC)(*) 123
100 Chelan County Public Utility District #1
Columbia River Rock Hydroelectric
System Revenue
6.375%, due 6/01/29 99
300 Everett School District #2 Snohomish County
Unlimited Tax General Obligation
6.20%, due 12/01/12 (MBIA) 308
125 Federal Way School District #210
King County Unlimited Tax General Obligation
5.75%, due 12/01/12 (FGIC) 125
105 Grant County Public Utility District #2
Wanapum Hydroelectric Revenue
5.50%, due 1/01/12 103
300 King County Housing Authority
Pooled Housing Refunding Revenue
6.80%, due 3/01/26 307
250 King County Limited Tax General
Obligation (Various Purpose)
4.75%, due 1/01/19 211
200 King County Public Hospital District #1
Hospital Facilities Revenue
(Valley Medical Center)
5.50%, due 9/01/17 (AMBAC) 188
100 King County School District #415 (Kent)
Unlimited Tax General Obligation
6.45%, due 12/01/12 107
$200 Kitsap County School District #401
(Central Kitsap) Unlimited Tax
General Obligation
5.50%, due 12/01/11 193
100 Lewis County Public Utility District #1
Cowlitz Falls Hydroelectric Project Revenue
6.00%, due 10/01/24 99
200 Municipality of Metropolitan
Seattle Sewer Revenue
6.30%, due 1/01/33 (MBIA) 204
95 Pike Place Market Preservation and
Development Authority Special Obligation
Revenue
6.60%, due 12/01/21 98
100 Port of Seattle Revenue
6.00%, due 12/01/14 100
300 Renton Water and Sewer
Improvement Revenue
5.375%, due 4/01/13 282
200 Seattle Water System Revenue
5.25%, due 12/01/23 181
125 Snohomish County Mukilteo School District #6
Unlimited Tax
General Obligation
5.70%, due 12/01/11 (FGIC) 125
295 Snohomish County Public Utility District #1
Generation System Revenue
5.50%, due 1/01/20 (FGIC) 274
250 Spokane Regional Solid Waste
Management System Revenue
6.25%, due 12/01/11 (AMBAC) 261
</TABLE>
- --------------------------------------------------------------------------------
(-) New to Portfolio since last report.
See Notes to Financial Statements
================================================================================
- 24 -
<PAGE> 27
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
AS OF SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C> <C>
$250 Tacoma Limited Tax General Obligation
6.25%, due 12/01/12 $256
250 Tacoma Water System Revenue
5.50%, due 12/01/13 242
200 Tukwila Limited Tax General Obligation
5.90%, due 1/01/14 201
100 Tumwater Unlimited Tax General Obligation
5.80%, due 12/01/11 99
100 Washington Certificates of Participation
(State Office Building Project)
6.00%, due 4/01/12 100
100 Washington Health Care Facilities Authority
Revenue (Empire Health Service Spokane)
5.80%, due 11/01/10 (MBIA) 101
200 Washington Health Care Facilities Authority
Revenue (Franciscan Health System/St. Joseph
Hospital and Health Care Center, Tacoma)
5.625%, due 1/01/13 (MBIA) 191
100 Washington Health Care Facilities Authority
Revenue (Harrison Memorial Hospital, Bremerton)
5.40%, due 8/15/23 (AMBAC) 91
200 Washington Health Care Facilities Authority
Revenue (Northwest Hospital, Seattle)
5.75%, due 11/15/23 (AMBAC) 191
100 Washington Health Care Facilities Authority
Revenue (Swedish Hospital Medical Center)
6.30%, due 11/15/22 (AMBAC) 102
120 Washington Public Power Supply
System Nuclear Project #2 Revenue
5.50%, due 7/01/18 108
$250 (-)Washington State Housing Finance
Commission Revenue (Horizon House Project)
6.125%, due 7/01/27 251
250 Whatcom County Limited Tax
General Obligation
5.75%, due 12/01/12 (FSA) 247
200 Yakima-Tieton Irrigation District Revenue
6.20%, due 6/01/19 (FSA) 201
-----
TOTAL BONDS 5,868
-----
SHORT-TERM INVESTMENTS - 1.0%
63 Aim Tax-Exempt Money Market Fund, Inc. 63
-----
TOTAL SHORT-TERM INVESTMENTS 63
-----
TOTAL INVESTMENTS - 98.8% 5,931
Other Asset, less Liabilities 71
-----
NET ASSETS $6,002
======
- --------------------------------------------------------------------------------
</TABLE>
DIVERSIFICATION BY GUARANTOR (Percent of Portfolio)
(*) The provider of the guarantee of timely payment of both principal and
interest is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio are:
<TABLE>
<S> <C> <C>
AMBAC: AMBAC Indemnity Corp. 16.3%
MBIA: Municipal Bond Investors Assurance Corp. 13.7
FGIC: Financial Guaranty Insurance Corp. 8.9
FSA: Financial Security Assurance, Inc. 7.7
----
46.6%
====
</TABLE>
See Notes to Financial Statements
- 25 -
<PAGE> 28
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES
AS OF SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
SAFECO SAFECO SAFECO SAFECO
INTERMEDIATE-TERM INSURED SAFECO CALIFORNIA WASHINGTON
(In Thousands, MUNICIPAL MUNICIPAL MUNICIPAL TAX-FREESTATE MUNICIPAL
Except Per-Share Amounts) BOND FUND BOND FUND BOND FUND INCOME FUND BOND FUND
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
ASSETS
Investments, at Value:
Bonds (Identified Cost $13,875,
$7,936, $428,505, $61,639
and $5,719, respectively) $ 14,134 $ 8,215 $ 469,538 $ 65,367 $ 5,868
Short-Term Investments 125 523 4,009 -- 63
--------- --------- --------- --------- ---------
Total Investments 14,259 8,738 473,547 65,367 5,931
Receivables
Interest 209 137 8,585 1,080 108
Trust Shares Sold -- -- 4,747 1,094 --
Investment Securities Sold -- -- -- -- 240
Deferred Organization Expense (Note 3) 10 10 -- -- 4
--------- --------- --------- --------- ---------
Total Assets 14,478 8,885 486,879 67,541 6,283
--------- --------- --------- --------- ---------
LIABILITIES
Payables
Dividends 22 29 783 98 23
Investment Securities Purchased -- -- -- -- 247
Investment Advisory Fees 6 4 160 29 3
Notes Payable (Note 3) -- -- -- 150 --
Trust Shares Redeemed -- -- 141 7 --
Organization Expense 10 10 -- -- 4
Other 6 5 56 12 4
--------- --------- --------- --------- ---------
Total Liabilities 44 48 1,140 296 281
--------- --------- --------- --------- ---------
NET ASSETS $ 14,434 $ 8,837 $ 485,739 $ 67,245 $ 6,002
========= ========= ========= ========= =========
SHARES OUTSTANDING 1,374 861 35,657 5,706 583
========= ========= ========= ========= =========
NET ASSET VALUE PER SHARE $ 10.50 $ 10.27 $ 13.62 $ 11.78 $ 10.30
========= ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
================================================================================
- 26 -
<PAGE> 29
================================================================================
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
SAFECO SAFECO SAFECO SAFECO
INTERMEDIATE-TERM INSURED SAFECO CALIFORNIA WASHINGTON
MUNICIPAL MUNICIPAL MUNICIPAL TAX-FREE STATE MUNICIPAL
(In Thousands) BOND FUND BOND FUND BOND FUND INCOME FUND BOND FUND
=============================================================================================================================
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $ 372 $ 246 $ 14,768 $ 1,976 $ 179
EXPENSES
Investment Advisory Fees (Note 3) 38 27 997 177 19
Shareholder Servicing Fees (Note 3) 9 4 258 34 1
Legal and Auditing Fees 7 7 12 7 7
Loan Interest -- 1 15 -- 1
Reports to Shareholders 1 -- 14 2 --
Custodian Fees 1 1 7 4 1
Trustees' Fees 2 -- 3 2 2
Amortization of Organization Expenses 2 2 -- -- 1
-------- --------- --------- --------- ---------
Total Expenses 60 42 1,306 226 32
-------- --------- --------- --------- ---------
NET INVESTMENT INCOME 312 204 13,462 1,750 147
-------- --------- --------- --------- ---------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net Realized Gain on
Investment Transactions -- -- 953 130 11
Net Change in Unrealized Appreciation 459 173 9,638 1,320 110
-------- --------- --------- --------- ---------
NET GAIN ON INVESTMENTS 459 173 10,591 1,450 121
-------- --------- --------- --------- ---------
NET CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 771 $ 377 $ 24,053 $ 3,200 $ 268
======== ========= ========= ========= =========
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
================================================================================
- 27 -
<PAGE> 30
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
SAFECO INTERMEDIATE-TERM SAFECO INSURED
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
--------------------------- ---------------------------
FOR THE SIX FOR THE FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
SEPTEMBER 30, MARCH 31, SEPTEMBER 30, MARCH 31,
(In Thousands) 1995 1995 1995 1995
====================================================================================================================
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 312 $ 565 $ 204 $ 310
Net Realized Gain (Loss) on Investment Transactions - (22) - (46)
Net Change in Unrealized Appreciation 459 97 173 273
----------- ---------- ----------- ----------
Net Change in Net Assets Resulting from Operations 771 640 377 537
DIVIDENDS TO SHAREHOLDERS FROM
Net Investment Income (312) (565) (204) (310)
Net Realized Gain on Investment Transactions - - - -
NET TRUST SHARE TRANSACTIONS 213 2,906 501 4,630
----------- ---------- ----------- ----------
TOTAL CHANGE IN NET ASSETS 672 2,981 674 4,857
NET ASSETS AT BEGINNING OF PERIOD 13,762 10,781 8,163 3,306
----------- ---------- ----------- ----------
NET ASSETS AT END OF PERIOD $ 14,434 $ 13,762 $ 8,837 $ 8,163
=========== ========== =========== ==========
- --------------------------------------------------------------------------------------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN SHARES
Sales 158 655(*) 75 615(**)
Reinvestments 16 32 3 4
Redemptions (153) (398) (29) (147)
----------- ---------- ----------- ----------
Net Change 21 289 49 472
=========== ========== =========== ==========
INCREASE (DECREASE) IN AMOUNTS
Sales $ 1,631 $ 6,550(*) $ 773 $ 5,994(**)
Reinvestments 172 320 31 40
Redemptions (1,590) (3,964) (303) (1,404)
----------- ---------- ----------- ----------
Net Change $ 213 $ 2,906 $ 501 $ 4,630
=========== ========== =========== ==========
As of September 30, 1995
Trust Shares Authorized Unlimited Unlimited
Par Value Per Share $ .001 $ .001
Paid In Capital $ 14,197 $ 8,622
</TABLE>
In Thousands:
(*) Includes 197 shares purchased by SAFECO Insurance for $2,000.
(**) Includes 408 shares purchased by SAFECO Insurance for $4,000.
(+) Includes 442 shares redeemed by SAFECO Insurance for $5,000.
(++) Includes 302 shares purchased by SAFECO Insurance for $3,000.
See Notes to Financial Statements
================================================================================
- 28 -
<PAGE> 31
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
(Unaudited)
<TABLE>
<CAPTION>
SAFECO SAFECO California SAFECO Washington
Municipal Bond Fund Tax-Free Income Fund State Municipal Bond Fund
- ---------------------------- ---------------------------- ----------------------------
For the Six For the For the Six For the For the Six For the
Months Ended Year Ended Months Ended Year Ended Months Ended Year Ended
September 30, March 31, September 30, March 31, September 30, March 31,
1995 1995 1995 1995 1995 1995
==============================================================================================
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 13,462 $ 28,627 $ 1,750 $ 3,828 $ 147 $ 253
953 (6,245) 130 (250) 11 1
9,638 10,408 1,320 357 110 109
---------- ---------- ---------- ---------- ---------- ----------
24,053 32,790 3,200 3,935 268 363
(13,462) (28,627) (1,750) (3,828) (147) (253)
- (1,166) - (644) - -
2,579 (37,881) 1,737 (12,461) (72) 2,935
---------- ---------- ---------- ---------- ---------- ----------
13,170 (34,884) 3,187 (12,998) 49 3,045
472,569 507,453 64,058 77,056 5,953 2,908
---------- ---------- ---------- ---------- ---------- ----------
$ 485,739 $ 472,569 $ 67,245 $ 64,058 $ 6,002 $ 5,953
========== ========== ========== ========== ========== ==========
- ----------------------------------------------------------------------------------------------
13,646 42,783 1,075 1,366 5 342)(++)
622 1,462 97 263 1 4
(13,984) (47,105) (1,019) (2,771)(+) (13) (49)
---------- ---------- ---------- ---------- ---------- ----------
284 (2,860) 153 (1,142) (7) 297
$ 184,937 $ 556,843 $ 12,582 $ 15,280 $ 51 $ 3,386)(++)
8,421 18,983 1,131 2,933 13 39
(190,779) (613,707) (11,976) (30,674)(+) (136) (490)
---------- ---------- ---------- ---------- ---------- ----------
$ 2,579 $ (37,881) $ 1,737 $ (12,461) $ (72) $ 2,935
========== ========== ========== ========== ========== ==========
Unlimited Unlimited Unlimited
$ .001 $ .001 $ .001
$ 449,986 $ 63,640 $ 5,850
</TABLE>
See Notes to Financial Statements
================================================================================
- 29 -
<PAGE> 32
================================================================================
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
The SAFECO Tax-Exempt Bond Trust ("Trust") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Trust consists of the SAFECO
Intermediate-Term Municipal Bond Fund (Intermediate Fund), SAFECO Insured
Municipal Bond Fund (Insured Fund), SAFECO Municipal Bond Fund (Municipal Fund),
SAFECO California Tax-Free Income Fund (California Fund) and SAFECO Washington
State Municipal Bond Fund (Washington Fund) (together "the Funds").
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. Tax-exempt bonds are stated on the basis of valuations
provided by a pricing service, which uses information with respect to
transactions in bonds, quotations from bond dealers, market transactions in
comparable securities and various relationships between securities in
determining value. Short-term investments are valued at cost which approximates
market.
SECURITY TRANSACTIONS. Security transactions are recorded on the trade
date. The cost of the portfolios 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 Funds segregate liquid assets in an amount equal to
the total obligation.
INCOME RECOGNITION. Interest is accrued on portfolio investments daily.
Bond premiums and original issue discounts are amortized to either call or
maturity dates. Market discount on bonds purchased after April 30, 1993 is
recorded as taxable income at disposition.
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, will normally be distributed
to shareholders at the end of March and December.
FEDERAL INCOME AND EXCISE TAXES. The Funds intend to continue to comply
with the requirements of the Internal Revenue Code applicable to regulated
investment companies by distributing substantially all income to shareholders in
a manner which results in no tax to the Funds. Therefore, no Federal income or
excise tax provision is required. In addition, the Funds intend to satisfy
conditions which will enable them to pay dividends which, for shareholders, are
exempt from Federal income taxes. Any portion of dividends representing net
short-term capital gains, however, is not exempt and will be treated as taxable
dividends for Federal income tax purposes. In addition, income which is derived
from amortization on bonds purchased below their issued price after April 30,
1993, will be treated as ordinary income for Federal income tax purposes and
related distributions will be taxable to shareholders.
================================================================================
- 30 -
<PAGE> 33
================================================================================
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
2. ACCUMULATED UNDISTRIBUTED CAPITAL GAIN/LOSS
The Intermediate, Insured, Municipal, California, and Washington Funds had
accumulated undistributed net realized gains/(losses) on transactions of
($22,000), ($64,000), ($5,280,000), ($123,000) and $3,000, respectively, at
September 30, 1995.
3. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEES. SAFECO Asset Management Company (the "Investment
Adviser") receives investment advisory fees from the Funds. For the Intermediate
Fund, the fee is based on average daily net assets at the annual rate of 55/100
of one percent on the first $250 million declining in three levels to 25/100 of
one percent on net assets over $750 million. For the Insured and Washington
Funds, the fee is based on average daily net assets at the annual rate of 65/100
of one percent on the first $250 million declining in three levels to 35/100 of
one percent on net assets over $750 million. For the Municipal and California
Funds, the fee is based on average daily net assets at the annual rate of 55/100
of one percent on the first $100 million declining in three levels to 25/100 of
one percent on net assets over $500 million.
TRANSFER AGENT FEES. SAFECO Services Corporation receives shareholder
servicing fees.
NOTES PAYABLE AND INTEREST EXPENSE. The Funds may borrow money for
temporary purposes from SAFECO Corporation or certain of its affiliates.
Interest rates equivalent to commercial bank interest rates are charged on loans
over $100,000. At September 30, 1995, the California Tax-Free Income Fund had a
5.97% note payable of $150,000 to SAFECO Life Insurance Company. The note was
repaid on October 2, 1995.
AFFILIATE OWNERSHIP. At September 30, 1995, SAFECO Insurance Company of
America ("SAFECO Insurance"), a wholly owned subsidiary of SAFECO Corporation,
owned 397,434 shares (or 28.9%) of the Intermediate Fund, 605,644 shares (or
70.3%) of the Insured Fund and 502,372 shares (or 86.2%) of the Washington Fund.
DEFERRED ORGANIZATION EXPENSES. Costs relating to the organization of the
Intermediate, Insured and Washington Funds have been deferred and are being
amortized to operations over a period of sixty months. These costs were advanced
by the Investment Adviser and are being reimbursed by those Funds over the same
period. If any of the original seed money shares for these Funds are redeemed by
SAFECO Insurance 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.
================================================================================
- 31 -
<PAGE> 34
================================================================================
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
4. INVESTMENT TRANSACTIONS SAFECO
SAFECO SAFECO SAFECO WASHINGTON
INTERMEDIATE INSURED SAFECO CALIFORNIA STATE
TERM MUNICIPAL MUNICIPAL MUNICIPAL TAX-FREE MUNICIPAL
(In Thousands) BOND FUND BOND FUND BOND FUND INCOME FUND BOND FUND
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PURCHASES FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 1995 $ -- $ -- $ 28,747 $ 8,017 $ 336
======== ======== ======== ======== ========
SALES FOR THE SIX MONTHS ENDED
SEPTEMBER 30, 1995 $ 5 $ -- $ 35,736 $ 5,183 $ 640
======== ======== ======== ======== ========
UNREALIZED APPRECIATION (DEPRECIATION)
AT SEPTEMBER 30, 1995
Aggregate gross unrealized appreciation for
investment securities in which there is an
excess of value over identified cost $ 381 $ 324 $ 42,032 $ 4,052 $ 166
Aggregate gross unrealized depreciation for
investment securities in which there is an
excess of identified cost over value (122) (45) (999) (324) (17)
-------- -------- -------- -------- --------
Net Unrealized Appreciation $ 259 $ 279 $ 41,033 $ 3,728 $ 149
======== ======== ======== ======== ========
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
================================================================================
- 32 -
<PAGE> 35
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
5. FINANCIAL HIGHLIGHTS (Continued)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
----------------------------------------------------------------
NOVEMBER 5, 1992
FOR THE SIX (COMMENCEMENT OF
MONTHS ENDED OPERATIONS) TO
SEPTEMBER 30 FOR THE YEAR ENDED MARCH 31 MARCH 31
1995 1995 1994 1993
============================================================================================================================
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 10.17 $ 10.13 $ 10.25 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.23 0.45 0.40 0.09
Net Realized and Unrealized Gain (Loss) on Investments 0.33 0.04 (0.12) 0.25
------- -------- ------- ------
Total from Investment Operations 0.56 0.49 0.28 0.34
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.23) (0.45) (0.40) (0.09)
------- -------- ------- ------
NET ASSET VALUE AT END OF PERIOD $ 10.50 $ 10.17 $ 10.13 $10.25
======= ======== ======= ======
TOTAL RETURN 5.51%*** 4.97% 2.64% -0.04%**
NET ASSETS AT END OF PERIOD (000'S) $14,434 $ 13,762 $10,781 $2,345
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.84%* 0.85% 0.99% 1.95%*
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.38%* 4.46% 3.85% 2.18%*
PORTFOLIO TURNOVER RATE None 4.27% 1.49% None
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total return from March 18, 1993, (initial public offering) to March 31,
1993, not annualized.
*** Not Annualized.
================================================================================
- 33 -
<PAGE> 36
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
5. FINANCIAL HIGHLIGHTS (Continued)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO INSURED MUNICIPAL BOND FUND
---------------------------------------------------------------
NOVEMBER 5, 1992
FOR THE SIX (COMMENCEMENT OF
MONTHS ENDED OPERATIONS) TO
SEPTEMBER 30 FOR THE YEAR ENDED MARCH 31 MARCH 31
1995 1995 1994 1993
=============================================================================================================================
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $10.05 $ 9.73 $10.26 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.25 0.48 0.41 0.08
Net Realized and Unrealized Gain (Loss) on Investments 0.22 0.32 (0.53) 0.26
------ ------ ------ ------
Total from Investment Operations 0.47 0.80 (0.12) 0.34
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.25) (0.48) (0.41) (0.08)
------ ------ ------ ------
NET ASSET VALUE AT END OF PERIOD $10.27 $10.05 $ 9.73 $10.26
====== ====== ====== ======
TOTAL RETURN 4.68%*** 8.58% -1.40% -0.43%**
NET ASSETS AT END OF PERIOD (000'S) $8,837 $8,163 $3,306 $2,106
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.00%* 1.08% 1.41% 1.95%*
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.83%* 5.11% 3.99% 1.90%*
PORTFOLIO TURNOVER RATE None 14.76% 21.19% None
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total return from March 18, 1993, (initial public offering) to March 31,
1993, not annualized.
*** Not Annualized.
================================================================================
- 34 -
<PAGE> 37
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
6. FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO MUNICIPAL BOND FUND
--------------------------------------------------------------
FOR THE SIX
MONTHS ENDED
SEPTEMBER 30 FOR THE YEAR ENDED MARCH 31
1995 1995 1994 1993 1992
====================================================================================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 13.36 $ 13.27 $ 14.13 $ 13.37 $ 12.95
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.38 0.77 0.78 0.81 0.86
Net Realized and Unrealized Gain (Loss)
on Investments 0.26 0.12 (0.55) 0.94 0.48
-------- -------- -------- -------- --------
Total from Investment Operations 0.64 0.89 0.23 1.75 1.34
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.38) (0.77) (0.78) (0.81) (0.86)
Distributions from Capital Gains -- (0.03) (0.31) (0.18) (0.06)
-------- -------- -------- -------- --------
Total Distributions (0.38) (0.80) (1.09) (0.99) (0.92)
-------- -------- -------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 13.62 $ 13.36 $ 13.27 $ 14.13 $ 13.37
======== ======== ======== ======== ========
TOTAL RETURN 4.85%** 7.10% 1.30% 13.60% 10.57%
NET ASSETS AT END OF PERIOD (000'S) $485,739 $472,569 $507,453 $541,515 $427,638
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.54%* 0.56% 0.52% 0.53% 0.54%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.61%* 5.96% 5.49% 5.91% 6.37%
PORTFOLIO TURNOVER RATE 12.35%* 26.96% 22.07% 31.66% 25.18%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Not Annualized.
================================================================================
- 35 -
<PAGE> 38
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
6. FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO CALIFORNIA TAX-FREE INCOME FUND
----------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED
SEPTEMBER 30 FOR THE YEAR ENDED MARCH 31
1995 1995 1994 1993 1992
===================================================================================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 11.54 $ 11.51 $ 12.23 $ 11.60 $ 11.24
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.31 0.63 0.66 0.68 0.71
Net Realized and Unrealized Gain (Loss)
on Investments 0.24 0.13 (0.38) 0.76 0.44
------- ------- ------ ------- -------
Total from Investment Operations 0.55 0.76 0.28 1.44 1.15
------- ------- ------ ------- -------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.31) (0.63) (0.66) (0.68) (0.71)
Distributions from Capital Gains -- (0.10) (0.34) (0.13) (0.08)
------- ------- ------ ------- -------
Total Distributions (0.31) (0.73) (1.00) (0.81) (0.79)
------- ------- ------ ------- -------
NET ASSET VALUE AT END OF PERIOD $ 11.78 $ 11.54 $ 11.51 $ 12.23 $ 11.60
======= ======= ======= ======= =======
TOTAL RETURN 4.82%** 7.01% 1.97% 12.88% 10.43%
NET ASSETS AT END OF PERIOD (000'S) $67,245 $64,058 $77,056 $79,872 $71,480
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.69%* 0.70% 0.68% 0.66% 0.67%
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 5.30%* 5.65% 5.31% 5.71% 6.13%
PORTFOLIO TURNOVER RATE 16.29%* 44.10% 32.58% 23.18% 39.35%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Not Annualized.
================================================================================
- 36 -
<PAGE> 39
================================================================================
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(Unaudited)
6. FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
- ----------------------------------------------------------------------------------------------------------------------
NOVEMBER 5, 1992
FOR THE SIX (COMMENCEMENT OF
MONTHS ENDED OPERATIONS) TO
SEPTEMBER 30 FOR THE YEAR ENDED MARCH 31 MARCH 31
1995 1995 1994 1993
======================================================================================================================
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $10.10 $ 9.91 $10.27 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.25 0.49 0.44 0.09
Net Realized and Unrealized Gain (Loss)
on Investments 0.20 0.19 (0.35) 0.27
------ ------ ------ ------
Total from Investment Operations 0.45 0.68 0.09 0.36
------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.25) (0.49) (0.44) (0.09)
Distributions from Capital Gains -- -- (0.01) --
------ ------ ------ ------
Total Distributions (0.25) (0.49) (0.45) (0.09)
------ ------ ------ ------
NET ASSET VALUE AT END OF PERIOD $10.30 $10.10 $ 9.91 $10.27
====== ====== ====== ======
TOTAL RETURN 4.53%*** 7.13% 0.68% -0.31%**
NET ASSETS AT END OF PERIOD (000'S) $6,002 $5,953 $2,908 $2,163
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.07%* 1.09% 1.44% 2.00%*
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS 4.94%* 5.06% 4.17% 2.22%*
PORTFOLIO TURNOVER RATE 16.71%* 9.23% 17.26% None
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total return from March 18, 1993, (initial public offering) to March 31,
1993, not annualized.
*** Not Annualized.
================================================================================
- 37 -
<PAGE> 40
================================================================================
SAFECO TAX-EXEMPT BOND FUNDS BULK RATE
U.S. POSTAGE
BOARD OF TRUSTEES PAID
BOH A. DICKEY, CHAIRMAN SAFECO
BARBARA J. DINGFIELD INSURANCE CO.
RICHARD W. HUBBARD
RICHARD E. LUNDGREN
I. 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.
[RECYCLE LOGO] Printed on Recycled Paper.
================================================================================
