<PAGE> 1
MAILING ADDRESS:
SAFECO MUTUAL FUNDS
P.O. BOX 34890
SEATTLE, WA 98124-1890
FOR ACCOUNT INFORMATION
OR TELEPHONE TRANSACTIONS:
NATIONWIDE: 1-800-624-5711
SEATTLE: 545-7319
TTY/TDD: 1-800-438-8718
ANNUAL
REPORT
MARCH 31, 1995
SAFECO
TAX-EXEMPT
BOND FUNDS
---------------
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 LOGO]
MUTUAL FUNDS
<PAGE> 2
PERFORMANCE INFORMATION
For the Periods Ended March 31, 1995
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.
[GRAPH]
SAFECO Municipal Bond Fund
Illustration of a $10,000 Investment
Graph compares the value of a $10,000 investment in the SAFECO Municipal Bond
Fund to the Lehman Brothers Long Municipal Bond Index as of March 31, 1995.
[GRAPH]
SAFECO California Tax-Free Income Fund
Illustration of a $10,000 Investment
Graph compares the value of a $10,000 investment in the SAFECO California
Tax-Free Income Fund to the Lehman Brothers Long Municipal Bond Index as of
March 31, 1995.
<PAGE> 3
[GRAPH]
SAFECO Intermediate-Term Municipal Bond Fund
Illustration of a $10,000 Investment
Graph compares a $10,000 investment in the SAFECO Intermediate-Term Municipal
Bond Fund to the Lehman Brothers 7-year Municipal Bond Index as of March 31,
1995.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
10 YEAR
For Periods Ending OR SINCE
March 31, 1995 1 YEAR 5 YEAR INCEPTION
- ------------------------------------------------------
<S> <C> <C> <C>
SAFECO Intermediate-Term
Municipal Bond Fund* 4.97% N/A 3.80%*
- ------------------------------------------------------
SAFECO Insured
Municipal Bond Fund* 8.58% N/A 3.47%*
- ------------------------------------------------------
SAFECO Municipal
Bond Fund 7.10% 8.26% 10.04%*
- ------------------------------------------------------
SAFECO California
Tax-Free Income Fund 7.01% 8.15% 9.52%*
- ------------------------------------------------------
SAFECO Washington State
Municipal Bond Fund* 7.13% N/A 3.86%*
- ------------------------------------------------------
</TABLE>
*The Funds' inception was 3/18/93. Index graph comparison begins 3/31/93.
TABLE OF CONTENTS
=================================================
President's Letter 2
Fund Manager's Report 3
Portfolios 10
Financial Statements 26
Notes to Financial Statements 30
[GRAPH]
SAFECO Insured Municipal Bond Fund
Illustration of a $10,000 Investment
Graph compares a $10,000 investment in the SAFECO Insured Municipal Bond Fund
to the Lehman Brothers Long Insured Bond Index as of March 31, 1995.
[GRAPH]
SAFECO Washington State Municipal Bond Fund
Illustration of a $10,000 Investment
Graph compares a $10,000 investment in the SAFECO Washington State Municipal
Bond Fund to the Lehman Brothers Long Municipal Bond Index as of March 31, 1995.
- 1 -
<PAGE> 4
LETTER FROM THE PRESIDENT
May 1, 1995
DEAR SHAREHOLDERS:
Nineteen ninety-four proved to be a trying year for investors. The stock
market posted below-average returns, and the bond market suffered one of its
worst years in history. So far this year, we have seen an improved picture, as
both the stock and bond markets have shown renewed strength.
A significant factor in last year's disappointing markets was the perceived
threat of inflation. Much of the strength we have seen this year is due to
optimism that inflation is in check. Our view is that while inflationary fears
are moderating, they are still present. Because of this, we suspect interest
rates will hold in a fairly narrow range for the remainder of 1995.
Inflationary pressures will continue to affect the stock market as well.
Corporate profits will also be a significant factor: stronger earnings will bode
well for stocks, weaker earnings may bring disappointments.
While we do not profess to know which direction the market will turn in the
short term, it is interesting to note that the gains the market experienced in
the first quarter - as measured by the S&P 500's gain of 9.73% - is nearly equal
to the stock market's long-term average annual gain.
As usual, we caution that predicting short-term trends and successfully
moving in and out of the markets is difficult, at best. While there is money to
be made in the bond and stock markets, we believe it is best made over the long
run. Indeed, the turns the markets have experienced these past 15 months
reinforce the notion that investors need to make decisions with a long-term
horizon: those who had charted an extended course, and stayed with it through
these difficult markets reaped the gains of the first quarter of 1995.
[PHOTO] DAVID F. HILL
For those investors with shorter-term goals, there are money market funds -
shorter-term, steadier investments which pay a respectable yield while aiming
for stability of principal. For those of you wishing to know more about our
basic philosophy of investing, we have prepared a small booklet, the SAFECO
Mutual Funds Personal Investment Guide. Call us at 1-800-426-6730 for your free
copy.
As always, we truly value your continued confidence in SAFECO Mutual Funds.
Sincerely,
/s/ DAVID F. HILL
David F. Hill
- 2 -
<PAGE> 5
REPORT FROM THE FUND MANAGER
May 1, 1995
SAFECO TAX-EXEMPT BOND FUNDS:
MUNICIPAL MARKET REVIEW AND OUTLOOK
Though long-term municipal bond yields were little changed from our last
report, interest rates and net asset values have been far from stable these past
six months. From mid-October to Thanksgiving long-term municipal bond prices
fell (yields rose), then they rebounded sharply and continued to climb through
the quarter just ended.
From January 1 to November 21, 1994, a par bond declined 21%, from 100 to 79.
By March 31, 1995 it would have recovered half that loss to trade around 89.5.
Fear of inflation and technical issues relating to supply and demand were big
factors.
The market overreacted through 1994 to forecasts for sharply higher inflation
and interest rates. When actual economic data showed only a modest increase in
inflation and a decline in economic activity, the fear abated and the bond
markets rallied.
Technical factors affecting supply and demand strongly influenced the
municipal bond market. Because of higher interest rates, new issue bond volume
was down. From 1986 to 1993, the amount of outstanding municipal bonds grew $30
to $80 billion per year. In 1994, the amount of outstanding municipal debt
shrank by about $7 billion. In 1995 it appears likely that municipal
debt will decline more than $50 billion.
This shrinkage in available bonds has already had a powerful, price-raising
effect on the municipal bond market. Even bigger imbalances will come in the
months of July and December, months when bonds predominantly fall due. The
impetus for the tax-exempt market to outperform the taxable bond market is
strong.
<TABLE>
<CAPTION>
============================================================
COMPARATIVE INFORMATION
For Periods Ending AVERAGE ANNUAL TOTAL RETURN
March 31, 1995 1 YEAR 5 YEAR 10 YEAR
- ------------------------------------------------------------
<S> <C> <C> <C>
SAFECO Intermediate-Term
Municipal Bond Fund* 4.97% N/A* N/A*
Lipper Average for Category 5.59% N/A N/A
- ------------------------------------------------------------
SAFECO Insured
Municipal Bond Fund* 8.58% N/A* N/A*
Lipper Average for Category 6.64% N/A N/A
- ------------------------------------------------------------
SAFECO Municipal
Bond Fund 7.10% 8.26% 10.04%
Lipper Average for Category 6.20% 7.82% 9.28%
- ------------------------------------------------------------
SAFECO California
Tax-Free Income Fund 7.01% 8.15% 9.52%
Lipper Average for Category 7.73% 7.58% 8.84%
- ------------------------------------------------------------
SAFECO Washington State
Municipal Bond Fund* 7.13% N/A* N/A*
Lipper Average for Category 6.76% N/A N/A
- ------------------------------------------------------------
</TABLE>
* The Funds' inception was 3/18/93.
Investment returns are historical and
not predictive of future performance.
Does the bond market rally of the last five months mean that inflation has
been licked and yields will continue to decline to the levels of 1993? Probably
not. The market rose almost six years before it declined in 1994.
In the long-run, I believe I can produce excellent long-term results without
trying to guess which way the market will go and how to time it. And so I will
keep my attention on searching for value and staying fully invested rather than
making prognostications.
(Continued on next page)
- 3 -
<PAGE> 6
REPORT FROM THE FUND MANAGER (CONTINUED)
SAFECO MUNICIPAL BOND FUND
For the 12 months ended March 31, 1995, the SAFECO Municipal Bond Fund posted
a total return of 7.10% and a very respectable ranking of 24 out of 193 similar
funds. The rankings for the five and ten years ended March 31 were 23 of 93
funds and 5 of 52 funds, respectively, according to Lipper Analytical Services.
The Fund behaved much like the rest of the market during the past six months.
It a was roller coaster ride. Declining throughout 1994, the net asset value
(NAV) dropped 17% to a low point of $11.90 on November 21. Fortunately the
market rallied in early December for a year-end NAV of $12.46. After a breather
for the winter holidays, the rally picked up speed and by March 31, the share
value was up over 12% from its November low to $13.36.
The reason for the Fund's poor 1994 performance as well as its strong
recovery in 1995 was my unwillingness to sacrifice long-term goals for
short-term success. I remained fully invested throughout the bear market and
resisted selling deep discount bonds despite their poor performance. I knew that
when the market ultimately turned, they would recover more rapidly than par and
premium bonds. (Discount bonds historically perform far better than par and
premium bonds when interest rates are falling and only slightly worse when
interest rates are rising.)
I don't expect to make any significant changes to the Fund over the next six
months. With the shrinking supply of municipal bonds, it will be more important
than ever to stay fully invested. I did do a number of swaps (exchanges of one
security for another) to realize losses for tax purposes. I'm carrying these
losses forward to offset future taxable capital gains.
[PHOTO OF STEPHEN C. BAUER]
While it is unlikely we will revisit the dramatic volatility of 1994, there
will undoubtedly be news and events that cause the bond markets to move sharply
in either direction. These market breaks frequently provide opportunities for
long-term investors. In the heat of rapidly changing markets, people tend to
overlook the values (discounting) created by short-term distortions. In the
upcoming months, I hope to be able to take advantage of these distortions.
SAFECO CALIFORNIA TAX-FREE INCOME FUND
Total return for the 12 months ended March 31, 1995 was 7.01% which ranked
the SAFECO California Tax-Free Income Fund 9 of 83 funds with similar goals,
according to Lipper Analytical Services. For the five and ten-year periods
ending March 31, the SAFECO Fund did even better, ranking 6 of 44 and 3 of 16
respectively.
During the last six months, the California municipal market was even more
volatile than the national market. Rising social service costs and declining tax
revenues have kept the state's budget under pressure for several years. That
crunch and the state's penchant for natural (and man-made) disasters caused
California municipals to trade lower more than a year ago. Just when we thought
nothing else could go wrong, Orange County declared bankruptcy and California
bonds took another hit.
-4-
<PAGE> 7
Amazingly when the market rallied after Thanksgiving, California municipals
outperformed the national market. They ended the first quarter of 1995 at their
best values relative to the national market in more than a year.
I have kept the Fund fully invested throughout the market gyrations. And, I
believe, now more than ever that staying fully invested is the single most
important factor in producing superior results over the long haul. I did some
swaps to realize losses before the market rally caused them to disappear. These
losses have been stockpiled to offset future gains.
Although the Orange County fiasco has not been fully resolved, I think there
will be no effect on the Fund. Only one holding was issued by a member of the
pool that experienced losses, the San Joaquin Hills Transportation Corridor
Agency, and its bonds are trading normally at this time.
My strategy is to continue to stay fully invested in long-term bonds with an
emphasis on call protection. As occasions warrant, I may replace pre-refunded
bonds with longer-term higher-yielding bonds. If discounts cheapen on market
weakness, I may sell higher coupon bonds to capitalize on what will probably be
a temporary phenomenon.
THE SAFECO INSURED MUNICIPAL BOND FUND
The total return for the SAFECO Insured Municipal Bond Fund for 12 months
ended March 31, 1995 was 8.58%. This was by far the best gain of all the SAFECO
tax-exempt funds and very nearly the best for any insured bond fund: for the
12-month period, the SAFECO Insured Municipal Bond Fund was second of the 41
insured funds according to Lipper Analytical Services.
The Fund has been the most volatile of all the SAFECO tax-exempt funds,
posting the biggest decline - 20% from December 23, 1993 to November 23, 1994 -
and the greatest rebound when the market turned around. The Fund's volatility,
both up and down, is a result of a long average maturity (25.3 years) and a low
average coupon (5.28%).
In February and March I traded into deeply discounted bonds which pushed the
average maturity out further, and further lowered the average coupon. This
more-aggressive strategy helped the Fund rise in value faster than it fell.
Although this strategy will produce an above-average degree of volatility, I
intend to continue this course until the full value of the long-term, highly
call-protected (by their discount) bonds which dominate the Fund is realized.
SAFECO WASHINGTON STATE
MUNICIPAL BOND FUND
The SAFECO Washington State Municipal Bond Fund returned 7.13% for the 12
months ended March 31, 1995. The Lipper average for the period for Washington
State municipal bond funds was 6.76%.
In terms of return on principal, the Washington Fund outperformed the SAFECO
tax-exempt pack. However, its yield was slightly lower than the other long-term
SAFECO tax-exempt funds due to its shorter average maturity (21.2 years).
Low issuance has made Washington bonds, particularly longer-maturity,
higher-yielding issues, quite scarce over the last few quarters. While this
shortage has enhanced the price of Washington bonds and hence the Fund's net
asset value, it has inhibited the yield, and thus inhibited a higher total
return.
(Continued on next page.)
-5-
<PAGE> 8
REPORT FROM THE FUND MANAGER (CONTINUED)
I felt very fortunate in February to buy a block of King Co. Housing
Authority 6.80% coupon, maturing 3/1/26 to yield 7.00%. These bonds are A-rated
and secured by rents from five existing multi-family apartment projects in
Bellevue and South King Co. The three issues I sold to buy the housing bonds
were sold at an average yield of about 6.00%. I am constantly alert for swaps
that increase yield, but they are very scarce.
THE SAFECO INTERMEDIATE-TERM
MUNICIPAL BOND FUND
The SAFECO Intermediate-Term Municipal Bond Fund's total return for the 12
months ending March 31, 1995 was 4.97%. The Lipper average for intermediate-term
municipals for the period was 5.59%.
The Fund underperformed because of its longer average maturity. I have not
shortened the average maturity of the Intermediate- Term Fund because I still
believe the longer end of the intermediate spectrum offers the most value.
Despite underperforming its peers, the SAFECO Intermediate-Term Municipal
Bond Fund did prove the value of intermediate funds - the chief attraction of
which is lower volatility compared to longer funds. At its low in November the
SAFECO Intermediate-Term Municipal Bond Fund was down 12.3% from its 1994
starting point, compared to the 17% to 20% drop experienced by the longer-term
SAFECO Municipal Funds.
The Intermediate-Term Fund holds about 3% of its net assets in two issues of
District of Columbia general obligation bonds that were recently downgraded to
below investment grade. The downgrading was driven by legislation that
established fiscal over-sight for the District. Regardless of the
technicalities, I am comfortable holding these bonds. I don't believe Congress
will allow the nation's capital to default on its debt.
The financial press widely reported the flattening of the yield curve during
the last year. Most of this flattening occurred where the yield curve had been
the steepest, in maturities of two years and less. In the intermediate to
long-term range, yield relationships were only modestly changed. The most
attractive part of the intermediate curve has remained seven to nine years.
Because of this, I have not changed the maturity structure of the
Intermediate-Term Bond Fund. The average maturity of the Fund is now 8.4 years
compared to 8.8 years at the end of September. This shortening is mostly due to
aging. And I expect to keep the Fund in this range for the next few months at
least.
/s/ STEPHEN C. BAUER
Stephen C. Bauer, Fund Manager
- --------------------------------------------------------------------------------
Steve Bauer joined SAFECO in 1971 as a fixed-income analyst. He became a fund
manager with the inception of the SAFECO Municipal Bond Fund in 1981, and is
President of SAFECO Asset Management. Bauer holds a B.S. in microbiology and an
M.B.A. from the University of Washington.
- 6 -
<PAGE> 9
S&P CREDIT RATINGS DISTRIBUTIONS
AS A PERCENTAGE OF NET ASSETS
As of March 31, 1995
[PIE GRAPH] [PIE GRAPH]
SAFECO Intermediate-Term
Municipal Bond Fund SAFECO Insured Municipal Bond
AAA: 39.6% AAA: 98.5%
AA: 22.3% Cash & Other, Less
A: 28.8% Liabilities: 1.5%
BBB: 6.1%
Not Rated: 2.6%
Cash & Other Less
Liabilities: 0.6%
[PIE GRAPH] [PIE GRAPH]
SAFECO California Tax-Free
SAFECO Municipal Bond Fund Income Fund
AAA: 34.6% AAA: 47.9%
AA: 23.5% AA: 15.7%
A: 25.8% A: 18.4%
BBB: 5.7% BBB: 1.6%
B: 0.5% Not Rated: 11.7%
Not Rated: 8.5% Cash & Other, Less
Cash & Other Less Liabilities: 4.7%
Liabilities: 1.4%
[PIE GRAPH]
SAFECO Washington State
Municipal Bond Fund
AAA: 46.9%
AA: 13.2%
A: 24.0%
Not Rated: 17.5%
Liabilities, Less
Cash & Other: -1.6%
- 7 -
<PAGE> 10
HIGHLIGHTS
As of March 31, 1995
<TABLE>
<CAPTION>
SAFECO Intermediate-Term Municipal Bond Fund
TOP FIVE TYPES OF BONDS PERCENT OF NET ASSETS
=====================================================
<S> <C>
Hospital 17.9%
Local G.O. - Unlimited Tax 10.3%
Utilities - Water and Sewer 10.1%
Lease Rental 9.5%
Electric Utilities - Combination 8.0%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
=====================================================
<S> <C>
Mississippi Hospital Equipment & Facilities
Authority 4.3%
Oklahoma Industries Authority Health Facilities 4.3%
Trinity River (TX) Authority 4.3%
Joliet (IL) Waterworks and Sewerage 4.1%
Tacoma (WA) Electric System 3.8%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE STATES PERCENT OF NET ASSETS
=====================================================
<S> <C>
Illinois 12.2%
Texas 9.6%
Washington 9.4%
New York 7.6%
Indiana 6.7%
</TABLE>
<TABLE>
<CAPTION>
=====================================================
CURRENT YIELD (30-DAY) PERCENT
- -----------------------------------------------------
<S> <C>
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND 4.51%
SAFECO INSURED MUNICIPAL BOND FUND 5.12%
SAFECO MUNICIPAL BOND FUND 5.55%
SAFECO CALIFORNIA TAX-FREE INCOME FUND 5.38%
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND 5.26%
- -----------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SAFECO INSURED MUNICIPAL BOND FUND
TOP FIVE TYPES OF BONDS PERCENT OF NET ASSETS
=====================================================
<S> <C>
Utilities - Sewer 21.6%
Electric Utilities - Combination 17.3%
Hospital 11.7%
Local G.O. - Unlimited Tax 7.6%
Utilities - Water and Sewer 7.1%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
=====================================================
<S> <C>
University Area (PA) Joint Authority 4.5%
Pittsburgh Water & Sewer Authority 4.1%
Indianapolis Gas Utility 3.8%
Montgomery County (PA) Higher Education &
Health Auth. 3.7%
Fresno Sewer System 3.7%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE STATES PERCENT OF NET ASSETS
=====================================================
<S> <C>
Washington 16.3%
California 15.9%
Pennsylvania 12.4%
Texas 11.7%
Indiana 10.1%
</TABLE>
<TABLE>
<CAPTION>
=====================================================
WEIGHTED AVERAGE MATURITY YEARS
- -----------------------------------------------------
<S> <C>
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND 8.37
SAFECO INSURED MUNICIPAL BOND FUND 25.33
SAFECO MUNICIPAL BOND FUND 21.47
SAFECO CALIFORNIA TAX-FREE INCOME FUND 23.00
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND 21.17
</TABLE>
-8-
<PAGE> 11
HIGHLIGHTS (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
SAFECO MUNICIPAL BOND FUND
TOP FIVE TYPES OF BONDS PERCENT OF NET ASSETS
=====================================================
<S> <C>
Electric Utilities - Combination 16.2%
Escrow Secured - U.S. Treasury (Prerefunded) 10.4%
Hospital 8.2%
Lease Rental 7.6%
Utilities - Water and Sewer 7.4%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
=====================================================
<S> <C>
San Joaquin Hills (CA) Transportation Corridor
Agency 3.9%
Austin Combined Utility System 12.50% 3.4%
Illinois Educational Facilities Authority 3.4%
East Chicago (IN) Elementary School Building
Corp. 2.5%
Los Angeles Department of Water & Power 2.4%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE STATES PERCENT OF NET ASSETS
=====================================================
<S> <C>
California 19.1%
Washington 12.2%
Illinois 9.3%
New York 6.7%
Texas 6.5%
</TABLE>
<TABLE>
<CAPTION>
SAFECO CALIFORNIA TAX-FREE INCOME FUND
TOP FIVE TYPES OF BONDS PERCENT OF NET ASSETS
=====================================================
<S> <C>
Utilities - Sewer 12.7%
Electric Utilities - Combination 10.5%
Local G.O. - Limited Tax 10.4%
Escrow Secured - U.S. Treasury (Prerefunded) 8.4%
Toll Road 5.8%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
=====================================================
<S> <C>
Los Angeles County Sanitation District
Financing Authority 6.2%
San Joaquin Hills Transportation Corridor Agency 5.8%
Pittsburg Redevelopment Agency 5.5%
Rancho California Water District Financing
Authority 5.0%
San Jose Redevelopment Agency 4.9%
</TABLE>
<TABLE>
<CAPTION>
SAFECO WASHINGTON STATE
MUNICIPAL BOND FUND
TOP FIVE TYPES OF BONDS PERCENT OF NET ASSETS
=====================================================
<S> <C>
Local G.O. - Unlimited Tax 22.3%
Local G.O. - Limited Tax 15.0%
Hospital 14.3%
Utilities - Water 10.7%
Utilities - Water and Sewer 10.4%
</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 4.6%
Snohomish County Public Utility District #1 4.5%
Spokane Regional Solid Waste Management 4.3%
</TABLE>
- 9 -
<PAGE> 12
PORTFOLIO OF INVESTMENTS
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
==========================================================================================
<S> <C> <C>
BONDS - 99.4%
ALASKA - 3.4%
$250 Anchorage Hospital Revenue (Sisters of Providence)
6.75%, due 10/01/01 $265
200 Fairbanks North Star Borough General Obligation
5.20%, due 3/01/03 [MBIA] 197
ARIZONA - 0.7%
100 Tucson Airport Authority General Revenue
5.30%, due 6/01/03 [MBIA] 99
CALIFORNIA - 6.1%
90 California Housing Finance Agency
Multi-Unit Rental Revenue
5.50%, due 2/01/99 89
250 Pleasanton Joint Powers Financing
Authority Reassessment Revenue
5.80%, due 9/02/02 249
500 Santa Margarita Dana Point Authority Revenue
5.375%, due 8/01/04 502
CONNECTICUT - 1.9%
100 Connecticut Housing Finance Authority
Housing Mortgage Finance Program
5.40%, due 5/15/03 100
150 Connecticut Special Tax Obligation
Transportation Infrastructure
6.50%, due 6/01/03 162
DISTRICT OF COLUMBIA - 3.0%
District of Columbia General Obligation
150 5.75%, due 6/01/03 141
300 5.20%, due 6/01/03 268
GEORGIA - 6.1%
Georgia Municipal Electric Authority
General Power Revenue
100 5.75%, due 1/01/03 102
300 4.75%, due 1/01/04 277
GEORGIA (CONTINUED)
$500 Heard County Development Authority
Pollution Control Revenue (Oglethorpe Power)
4.70%, due 1/01/04 $458
ILLINOIS - 12.2%
125 Chicago Wastewater Transmission Revenue
5.20%, due 1/01/04 [FGIC] 123
100 Illinois Health Facilities Authority Revenue
(Brokaw-Mennonite Association)
5.60%, due 8/15/01 [FGIC] 101
300 Illinois Health Facilities Authority Revenue
(Masonic Medical Center)
5.20%, due 10/01/03 280
500 Joliet Waterworks and Sewerage Revenue
7.00%, due 1/01/05 [FGIC] 564
Metropolitan Pier and Exposition Authority
(McCormick Place Expansion Project)
100 5.90%, due 6/15/03 103
500 5.50%, due 6/15/03 [MBIA] 504
INDIANA - 6.7%
100 Clay School Building Corp. First Mortgage
5.60%, due 1/01/03 [MBIA] 101
200 Hammond Multi-School Building Corp.
First Mortgage (Lake County)
5.50%, due 1/15/03 203
330 Highland School Building Corp. First Mortgage
5.00%, due 1/05/04 312
100 Indiana Bond Bank State Revolving Fund Program
5.90%, due 2/01/03 102
- --------------------------------------------------------------------------------
</TABLE>
* New to Portfolio since last report.
See Notes to Financial Statements
- 10 -
<PAGE> 13
PORTFOLIO OF INVESTMENTS
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
========================================================================================
<S> <C> <C>
INDIANA (CONTINUED)
$100 Indianapolis Local Public Improvement
Bond Bank Transportation Revenue
5.80%, due 7/01/03 $103
100 Pike Township School Building Corp.
First Mortgage Revenue
5.70%, due 2/01/01 101
IOWA - 2.1%
305 Louisa Pollution Control Revenue
4.65%, due 12/15/03 285
KENTUCKY - 4.3%
500 Kentucky State Property and Buildings
Commission Revenue
5.50%, due 9/01/04 497
100 Kentucky Turnpike Authority
Economic Development Road Revenue
5.20%, due 7/01/03 [AMBAC] 99
LOUISIANA - 1.5%
100 Louisiana Correctional Facilities Corp.
Lease Revenue
5.55%, due 12/15/02 [FSA] 101
100 Louisiana Public Facilities Authority
Student Loan Revenue
6.20%, due 3/01/01 103
MASSACHUSETTS - 4.4%
175 Massachusetts General Obligation
5.10%, due 11/01/02 174
350 Massachusetts Health & Educational
Facilities Authority Revenue
(Brigham and Women's Hospital)
4.70%, due 7/01/03 327
100 Massachusetts Water Resources Authority
General Revenue
5.70%, due 11/01/02 103
MICHIGAN - 2.2%
$300 Detroit School District Unlimited Tax
General Obligation
5.75%, due 5/01/02 $305
MISSISSIPPI - 4.3%
600 *Mississippi Hospital Equipment and Facilities
Authority Revenue
(Mississippi Baptist Medical Center)
5.40%, due 5/01/04 [MBIA] 596
NEVADA - 1.5%
200 Henderson General Obligation
Limited Tax Water Revenue
5.55%, due 12/01/02 [AMBAC] 204
NEW HAMPSHIRE - 1.8%
250 New Hampshire Municipal Bond Bank
5.00%, due 8/15/01 247
NEW JERSEY - 0.7%
100 New Jersey Housing & Mortgage
Finance Agency Housing Revenue
6.00%, due 11/01/02 103
NEW YORK - 7.6%
100 Metropolitan Transportation Authority
Transit Facilities Service Contract Revenue
5.375%, due 7/01/02 97
400 New York City Municipal
Water Finance Authority
5.00%, due 6/15/03 377
100 New York Dormitory Authority
State University Educational Facilities Revenue
5.75%, due 5/15/01 100
500 New York Local Government Assistance Corp.
4.85%, due 4/01/04 475
</TABLE>
See Notes to Financial Statements
- 11 -
<PAGE> 14
PORTFOLIO OF INVESTMENTS
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
<S> <C> <C>
NORTH CAROLINA - 1.5%
$210 North Carolina Eastern Municipal
Power Agency System Revenue
5.50%, due 1/01/02 $203
OHIO - 1.7%
250 Ohio Air Quality Development Authority Revenue
(Buckeye Power, Inc. Project)
5.00%, due 8/01/03 240
OKLAHOMA - 4.3%
600 Oklahoma Industries Authority
Health Facilities Revenue
(Sisters of Mercy Health System, St. Louis, Inc.)
5.20%, due 6/01/05 593
PENNSYLVANIA - 1.7%
250 Philadelphia Water and Wastewater Revenue
5.00%, due 6/15/02 240
SOUTH DAKOTA - 0.7%
100 South Dakota Housing Development Authority
Homeownership Mortgage Revenue
5.30%, due 5/01/03 98
TEXAS - 9.6%
250 Board of Regents of the University of Houston
System Consolidated Revenue
5.00%, due 2/15/03 [FGIC] 246
100 Coastal Bend Health Facility Development Corp.
Health Services Revenue (Incarnate Word)
5.70%, due 1/01/03 [AMBAC] 102
100 Houston Sewer System Junior Lien Revenue
5.75%, due 12/01/02 102
300 Texas Turnpike Authority
Dallas North Tollway Revenue
4.60%, due 1/01/04 [AMBAC] 279
600 Trinity River Authority Revenue
(Tarrant County Water Project)
5.25%, due 2/01/05 [AMBAC] 591
WASHINGTON - 9.4%
$500 Tacoma Electric System Revenue
5.80%, due 1/01/04 [FGIC] $ 516
100 Washington Health Care Facilities Authority
Revenue (Empire Health Service, Spokane)
5.50%, due 11/01/03 [MBIA] 101
100 Washington Health Care Facilities Authority
Revenue (Swedish Hospital Medical Center)
5.70%, due 11/15/02 [AMBAC] 103
Washington Public Power Supply System
Nuclear Project #2 Revenue
200 5.30%, due 7/01/02 195
300 4.80%, due 7/01/04 274
100 Yakima-Tieton Irrigation District Revenue
5.65%, due 6/01/02 [FSA] 102
-------
TOTAL BONDS 13,684
=======
SHORT-TERM INVESTMENTS - 3.8%
INVESTMENT COMPANIES:
524 Aim Tax-Exempt Money Market Fund, Inc. 524
-------
TOTAL SHORT-TERM INVESTMENTS 524
-------
TOTAL INVESTMENTS - 103.2% 14,208
Liabilities, less Other Assets (446)
-------
NET ASSETS $13,762
=======
- --------------------------------------------------------------------------------
</TABLE>
DIVERSIFICATION BY GUARANTOR (PERCENT OF PORTFOLIO)
The provider of guarantees of timely payment of both principal
and interest, if any, is identified in the brackets at the end of each
bond description. The guarantors applicable to this portfolio are:
<TABLE>
<S> <C>
MBIA: Municipal Bond Investors Assurance Corp. 11.7%
FGIC: Financial Guaranty Insurance Corp. 11.3
AMBAC: AMBAC Indemnity Corp. 10.1
FSA: Financial Security Assurance, Inc. 1.5
----
34.6%
====
</TABLE>
See Notes to Financial Statements
- 12 -
<PAGE> 15
PORTFOLIO OF INVESTMENTS
SAFECO INSURED MUNICIPAL BOND FUND
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
========================================================================================
<S> <C> <C>
BONDS - 98.5%
ALABAMA - 1.2%
$100 Montgomery Downtown Redevelopment Authority
Mortgage Revenue (Alabama State Project)
5.50%, due 10/01/13 [MBIA] $ 95
ALASKA - 3.4%
300 Alaska Housing Finance Corp.
Insured Mortgage Program
5.90%, due 12/01/33 [FSA] 276
CALIFORNIA - 15.9%
385 Fresno Sewer System Revenue
4.50%, due 9/01/23 [AMBAC] 300
350 Los Angeles Wastewater System Revenue
4.70%, due 11/01/19 [FGIC] 287
100 Oro Loma Sanitation District Sewer Revenue
5.20%, due 10/01/16 [AMBAC] 90
350 Sacramento Municipal Utility District
Electric Revenue
4.75%, due 9/01/21 [MBIA] 284
250 San Diego Public Facilities Financing Authority
Sewer Revenue
5.00%, due 5/15/23 [AMBAC] 214
145 University of California Revenue
(Multiple Purpose Projects)
4.75%, due 9/01/15 [AMBAC] 122
FLORIDA - 2.1%
200 Florida Municipal Power Agency
All-Requirements Power Supply Project Revenue
5.10%, due 10/01/25 [AMBAC] 175
HAWAII - 1.1%
$100 Maui County General Obligation
5.00%, due 9/01/09 [FGIC] $ 93
ILLINOIS - 5.8%
100 Chicago General Obligation
5.875%, due 1/01/22 [AMBAC] 95
250 Cook County General Obligation
5.00%, due 11/15/23 [MBIA] 211
200 Illinois Health Facilities Authority Revenue
(The Children's Memorial Hospital)
5.00%, due 8/15/22 [AMBAC] 167
INDIANA - 10.1%
100 Indiana Municipal Power Agency
Power Supply System Revenue
6.125%, due 1/01/13 [MBIA] 101
250 Indiana State Office Building Commission
Capitol Complex Revenue
5.25%, due 7/01/15 [AMBAC] 224
350 Indianapolis Gas Utility Revenue
5.375%, due 6/01/21 [FGIC] 314
100 Indiana Transportation Finance Authority
Highway Revenue
5.25%, due 6/01/15 [AMBAC] 91
100 Kokomo Sewer Works Revenue
5.50%, due 8/01/09 [AMBAC] 97
IOWA - 2.8%
250 Marshalltown Pollution Control Revenue
(Iowa Electric Light and Power Co. Project)
5.50%, due 11/01/23 [MBIA] 228
- ----------------------------------------------------------------------------------------
</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
- 13 -
<PAGE> 16
PORTFOLIO OF INVESTMENTS
SAFECO INSURED MUNICIPAL BOND FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
Principal Amount (000's) Market Value (000's)
========================================================================================
<S> <C> <C>
MASSACHUSETTS - 1.1%
$100 Massachusetts Municipal Wholesale Electric Co.
Power Supply System Revenue
5.00%, due 7/01/10 [AMBAC] $ 91
MICHIGAN - 4.9%
350 *Detroit Water Supply System Revenue
5.00%, due 7/01/23 [FGIC] 299
100 River Rouge School District
General Obligation Building and Site
5.50%, due 5/01/11 [FSA] 97
MINNESOTA - 3.5%
350 Minneapolis and St. Paul Housing and
Redevelopment Authority Health Care System
Revenue (HealthSpan)
4.75%, due 11/15/18 [AMBAC] 289
NORTH CAROLINA - 1.4%
125 North Carolina Eastern Municipal Power Agency
Power System Revenue
5.50%, due 1/01/17 [FGIC] 116
PENNSYLVANIA - 12.4%
350 Montgomery County Higher Education
and Health Authority Hospital Revenue
(Abington Memorial Hospital)
5.125%, due 6/01/24 [FGIC] 304
400 *Pittsburgh Water and Sewer Authority Revenue
4.75%, due 9/01/16 [FGIC] 337
445 *University Area Joint Authority Sewer Revenue
4.75%, due 11/01/20 [MBIA] 368
RHODE ISLAND - 1.1%
$100 Clean Water Protection Finance Agency
Water Pollution Control Revolving Fund Revenue
5.40%, due 10/01/15 [MBIA] $ 93
SOUTH CAROLINA - 1.1%
100 South Carolina Public Service Authority Revenue
5.50%, due 7/01/21 [MBIA] 92
TEXAS - 11.7%
200 Colorado River Municipal Water District
Water System Revenue
5.15%, due 1/01/21 [AMBAC] 176
250 Harris County Toll Road
Unlimited Tax Revenue
5.50%, due 8/15/21 [FGIC] 231
Lower Colorado River Authority
Junior Lien Revenue
300 5.625%, due 1/01/17 [FSA] 282
10 #5.625%, due 1/01/17 [FSA]
(Prerefunded 1/01/15 @ 100) 9
95 Sabine River Authority
Pollution Control Revenue
(Texas Utilities Electric Co. Project)
6.55%, due 10/01/22 [FGIC] 98
175 Trinity River Authority Regional
Wastewater System Revenue
5.00%, due 8/01/16 [AMBAC] 154
VIRGINIA - 2.6%
250 Virginia Housing Development Authority
Commonwealth Mortgage
5.25%, due 7/01/27 [AMBAC] 210
</TABLE>
See Notes to Financial Statements
- 14 -
<PAGE> 17
PORTFOLIO OF INVESTMENTS
SAFECO INSURED MUNICIPAL BOND FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
========================================================================================
<S> <C> <C>
WASHINGTON - 16.3%
$100 King County Public Hospital District #1
Hospital Facilities Revenue (Valley Medical Center)
5.50%, due 9/01/17 [AMBAC] $ 92
250 Municipality of Metropolitan Seattle Sewer Revenue
6.30%, due 1/01/33 [MBIA] 251
250 Richland Water and Sewer
Improvement Revenue
5.625%, due 4/01/12 [MBIA] 241
300 Snohomish County Public Utility District #1
Electric Revenue
5.50%, due 1/01/20 [FGIC] 271
125 Snohomish County School District #6 (Mukilteo)
Unlimited Tax General Obligation
5.70%, due 12/01/11 [FGIC] 122
100 Washington Health Care Facilities Authority
Revenue (Swedish Hospital Medical Center)
6.30%, due 11/15/22 [AMBAC] 100
250 Yakima-Tieton Irrigation District Revenue
6.20%, due 6/01/19 [FSA] 250
------
TOTAL BONDS 8,037
------
SHORT-TERM INVESTMENTS - 0.4%
INVESTMENT COMPANIES:
$36 Aim Tax-Exempt Money Market Fund, Inc. $ 36
------
TOTAL SHORT-TERM INVESTMENTS 36
------
TOTAL INVESTMENTS - 98.9% 8,073
Other Assets, less Liabilities 90
------
NET ASSETS $8,163
======
- --------------------------------------------------------------------------------
</TABLE>
DIVERSIFICATION BY GUARANTOR (PERCENT OF PORTFOLIO)
The provider of guarantees of timely payment of both principal and interest,
if any, 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. 33.4%
FGIC: Financial Guaranty Insurance Corp. 30.8
MBIA: Municipal Bond Investors Assurance Corp. 24.4
FSA: Financial Security Assurance, Inc. 11.4
-----
100.0%
=====
</TABLE>
See Notes to Financial Statements
- 15 -
<PAGE> 18
PORTFOLIO OF INVESTMENTS
SAFECO MUNICIPAL BOND FUND
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
========================================================================================
<S> <C> <C>
BONDS - 98.6%
ALABAMA - 0.2%
$1,000 Citronelle Industrial Development Board
Pollution Control Revenue
8.00%, due 12/01/12 $ 1,114
ALASKA - 0.4% Alaska Housing Finance Corp.
Veterans Mortgage Program
310 8.50%, due 12/01/11 325
1,025 6.50%, due 6/01/31 1,016
675 #Alaska Industrial Development
Authority Revenue
9.30%, due 4/01/10
(Prerefunded 4/01/95 @ 102) 691
ARIZONA - 2.5%
Phoenix Civic Improvement Corp.
Wastewater System Lease Revenue
4,220 5.00%, due 7/01/18 [MBIA] 3,704
9,800 4.75%, due 7/01/23 [MBIA] 7,994
CALIFORNIA - 19.1%
2,500 Los Angeles County Certificates of Participation
(Disney Parking Project)
5.50%, due 9/01/21 2,200
13,000 *Los Angeles Department of Water and Power
Electric Plant Revenue
5.25%, due 11/15/26 11,312
Los Angeles Wastewater System Revenue
1,280 4.70%, due 11/01/17 [FGIC] 1,062
5,000 4.70%, due 11/01/19 [FGIC] 4,098
2,200 Metropolitan Water District
of Southern California Waterworks Revenue
5.75%, due 3/01/14 2,119
CALIFORNIA (CONTINUED)
Northern California Power Agency
Geothermal Project Revenue
$2,000 6.75%, due 7/01/01 $2,071
5,250 5.00%, due 7/01/09 4,723
6,400 Pittsburg Redevelopment Agency Los Medanos
Community Development Project Tax Allocation
4.625%, due 8/01/21 [AMBAC] 5,092
2,500 Rancho California Water District
Financing Authority Revenue
4.75%, due 8/15/21 [AMBAC] 2,029
8,500 *Sacramento County Sanitation District
Finance Authority
4.75%, due 12/01/23 6,799
Sacramento Municipal Utility District
Electric Revenue
1,500 6.70%, due 2/01/98 1,560
5,000 6.00%, due 2/01/15 4,875
2,500 #San Bernardino County
Certificates of Participation
6.25%, due 8/01/19
(Prerefunded 8/01/01 @ 100) 2,666
1,000 #San Diego County
Regional Transportation Commission
Sales Tax Revenue
6.25%, due 4/01/08
(Prerefunded 4/01/99 @ 100) 1,050
- ----------------------------------------------------------------------------------------
</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 March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
========================================================================================
<S> <C> <C>
CALIFORNIA (CONTINUED)
$1,700 San Francisco Redevelopment
Financing Authority
Tax Allocation Revenue
4.75%, due 8/01/18 [FGIC] $ 1,405
8,010 San Joaquin County Public Facilities
Finance Corp. Certificates of Participation
Capital Facilities Project
4.75%, due 11/15/19 [MBIA] 6,553
25,000 San Joaquin Hills Tranportation Corridor
Agency Senior Lien Toll Road Revenue
5.00%, due 1/01/33 18,515
Southern California Public Power Authority
Power Project Revenue (Multiple Projects)
4,085 #5.50%, due 7/01/20
(Prerefunded 7/01/00 @ 100) 4,197
3,165 5.50%, due 7/01/20 2,850
1,950 Southern California Public Power Authority
Power Project Revenue (Palo Verde Project)
5.00%, due 7/01/17 1,669
3,350 Southern California Public Power Authority
Transmission Project Revenue
7.25%, due 7/01/06 3,485
COLORADO - 0.3%
1,000 Colorado Housing Finance Authority
Multi-Family Mortgage Revenue
8.30%, due 10/01/23 1,098
385 Colorado Housing Finance Authority
Single Family Residential Housing Revenue
8.75%, due 9/01/17 405
DELAWARE - 0.7%
4,200 *Delaware River and Bay Authority Revenue
4.75%, due 1/01/24 3,430
FLORIDA - 2.8%
Florida Board of Education General Obligation
$1,000 5.00%, due 6/01/12 $ 904
3,000 5.00%, due 6/01/24 2,582
Mid-Bay Bridge Authority Revenue
2,750 6.10%, due 10/01/22 2,550
5,000 6.00%, due 10/01/13 4,759
3,000 Orlando Utility Commission
Water and Electric Revenue
5.00%, due 10/01/23 2,589
GEORGIA - 3.0%
6,750 Atlanta Water and Sewerage Revenue
4.50%, due 1/01/18 5,402
4,000 Cobb County Kennestone Hospital
Authority Revenue
5.00%, due 4/01/24 [MBIA] 3,381
5,000 Municipal Electric Authority
Project One Special Obligation
Fourth Crossover Series
6.50%, due 1/01/20 5,227
ILLINOIS - 9.3%
7,000 Chicago Wastewater Transmission Revenue
5.125%, due 1/01/20 [FGIC] 6,061
1,540 Cook County General Obligation
5.00%, due 11/15/23 [MBIA] 1,301
5,500 Illinois Dedicated Tax Revenue (Civic Center)
7.00%, due 12/15/10 [AMBAC] 5,918
17,500 *Illinois Educational Facilities Authority
Adjustable Demand Revenue
(University of Chicago)
5.70%, due 12/01/25 16,169
</TABLE>
See Notes to Financial Statements
- 17 -
<PAGE> 20
PORTFOLIO OF INVESTMENTS
SAFECO MUNICIPAL BOND FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
========================================================================================
<S> <C> <C>
ILLINOIS (CONTINUED)
$2,000 #Illinois Health Facilities Authority
Revenue (Illinois Masonic Medical Center)
7.70%, due 10/01/19
(Prerefunded 10/01/99 @ 102) $ 2,252
1,000 Illinois Municipal Electric Authority Revenue
5.75%, due 2/01/21 [AMBAC] 942
7,735 Illinois Sales Tax Revenue
5.50%, due 6/15/20 6,985
4,770 University of Illinois
Auxiliary Facilities System Revenue
5.75%, due 4/01/22 4,479
INDIANA - 5.2%
200 Beech Grove Economic Development Revenue
(Westvaco Corp.)
8.75%, due 7/01/10 203
11,000 East Chicago Elementary
School Building Corp. First Mortgage
7.00%, due 1/15/16 11,662
7,715 Hammond Multi-School Building Corp.
First Mortgage Revenue
6.20%, due 7/10/15 7,679
6,450 Indianapolis Gas Utility System Revenue
4.00%, due 6/01/11 [FGIC] 5,115
IOWA - 0.2%
880 Iowa Housing Finance Authority
Multiple Family Housing Revenue
10.00%, due 4/01/23 898
KENTUCKY - 2.4%
$8,805 #Kentucky Local Correctional Facilities
Construction Authority Multi-County Revenue
7.00%, due 11/01/14
(Prerefunded 11/01/97 @ 102) $9,448
2,000 Louisville and Jefferson Counties
Metropolitan Sewer District Sewer
and Drain System Revenue
5.30%, due 5/15/19 [MBIA] 1,818
MARYLAND - 1.8%
5,125 Baltimore Project and Revenue
(Water Projects)
5.00%, due 7/01/24 4,422
5,000 *Maryland Health and Higher Educational
Facilities Authority Revenue
(University of Maryland Medical System)
4.75%, due 7/01/23 [FGIC] 4,073
MASSACHUSETTS - 3.4%
Massachusetts General Obligation
Dedicated Income Tax Revenue
3,310 7.875%, due 6/01/97 3,526
1,505 7.25%, due 6/01/96 1,551
1,000 #7.00%, due 12/01/10
(Prerefunded 12/01/00 @ 100) 1,097
Massachusetts Water Resources
Authority General Revenue
4,500 6.00%, due 4/01/20 4,359
4,000 5.00%, due 3/01/22 3,375
2,500 *4.75%, due 12/01/23 1,989
</TABLE>
See Notes to Financial Statements
- 18 -
<PAGE> 21
PORTFOLIO OF INVESTMENTS
SAFECO MUNICIPAL BOND FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
========================================================================================
<S> <C> <C>
MICHIGAN - 1.4%
$5,000 Detroit Water Supply System Revenue
4.75%, due 7/01/19 [FGIC] $4,080
300 #Grand Haven Electric System Revenue
6.75%, due 7/01/16
(Prerefunded 7/01/95 @ 101) 305
2,000 University of Michigan Hospital Revenue
6.375%, due 12/01/24 1,996
MISSOURI - 0.4%
1,870 Missouri Environmental Impact
and Energy Resource Authority
Pollution Control Revenue
7.90%, due 11/15/14 1,974
NEVADA - 0.2%
965 Clark County Airport Improvement Revenue
13.00%, due 7/01/98 1,178
NEW JERSEY - 0.5%
1,795 #New Jersey Turnpike Authority Revenue
10.375%, due 1/01/03
(Escrowed to Maturity) 2,151
NEW MEXICO - 1.5%
5,000 Albuquerque Joint Water
and Sewer System Revenue
5.50%, due 7/01/17 4,671
2,500 Farmington Collateralized Pollution Control
Revenue (Tucson Gas and Electric Co.)
6.10%, due 1/01/08 2,287
NEW YORK - 6.7%
New York City Municipal Water Finance
Authority Water and Sewer System Revenue
$2,205 6.00%, due 6/15/19 $2,136
2,100 5.00%, due 6/15/17 [FGIC] 1,823
New York Dormitory Authority
State University Educational
Facilities Revenue
4,400 7.50%, due 5/15/11 4,972
5,250 7.50%, due 5/15/13 5,986
6,500 5.25%, due 5/15/15 5,677
1,500 5.00%, due 7/01/15 1,303
4,000 #New York Local Government Assistance Corp.
7.00%, due 4/01/21
(Prerefunded 4/01/01 @ 100) 4,408
4,700 Triborough Bridge and Tunnel
Authority Revenue
8.125%, due 1/01/12 5,167
NORTH CAROLINA - 2.1%
11,000 North Carolina Eastern Municipal Power Agency
Power System Revenue
6.00%, due 1/01/22 10,085
OKLAHOMA - 1.2%
5,590 McGee Creek Authority Water Revenue
6.00%, due 1/01/23 [MBIA] 5,530
OREGON - 0.2%
1,000 Clackamas County Hospital
Facility Authority Revenue
(Sisters of Providence Hospital)
6.375%, due 10/01/05 1,036
</TABLE>
See Notes to Financial Statements
- 19 -
<PAGE> 22
PORTFOLIO OF INVESTMENTS
SAFECO MUNICIPAL BOND FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000's) MARKET VALUE (000's)
========================================================================================
<S> <C> <C>
PENNSYLVANIA - 3.9%
$5,000 Centre County University Area
Joint Authority Sewer Revenue
4.75%, due 11/01/20 [MBIA] $ 4,137
6,000 #Pennsylvania Intergovernmental
Cooperative Authority Special Tax Revenue
(City of Philadelphia)
6.80%, due 6/15/22
(Prerefunded 6/15/02 @ 100) 6,597
7,415 Philadelphia Water and Sewer Revenue
7.00%, due 8/01/18 7,623
SOUTH CAROLINA - 6.1%
10,250 Charleston County Hospital Facility Revenue
5.00%, due 10/01/22 [MBIA] 8,612
1,320 Charleston County Pollution Control
Facilities Revenue
5.90%, due 8/01/03 1,318
4,000 Charleston Waterworks
and Sewer System Revenue
5.00%, due 1/01/16 3,469
700 #Myrtle Beach Water and Sewer Revenue
6.00%, due 3/01/15 [MBIA]
(Prerefunded 3/01/00 @ 100) 741
5,500 Pickens County and Richland County
Hospital Revenue
5.75%, due 8/01/21 [AMBAC] 5,153
South Carolina Public Service Authority
Power Supply Revenue
1,395 5.70%, due 7/01/08 1,391
10,000 5.125%, due 1/01/32 8,233
TEXAS - 6.5%
$10,000 Austin Combined Utility System Revenue
12.50%, due 11/15/07 [MBIA] $16,284
4,350 Austin Water, Sewer and Electric Revenue
14.00%, due 11/15/01 6,318
1,600 #Coastal Industrial Water Authority
Water Revenue
5.50%, due 12/15/09 (Escrowed to Maturity) 1,562
4,775 Lewisville Independent School District
5.25%, due 8/15/14 [PSF] 4,332
2,260 Texas Municipal Power Agency Revenue
5.50%, due 9/01/13 [SECONDARY FGIC] 2,147
UTAH - 1.8%
Intermountain Power Agency
Special Obligation First Crossover Series
1,900 6.00%, due 7/01/23 1,842
2,750 5.00%, due 7/01/16 2,343
1,000 #Salt Lake City Hospital Revenue (IHC Hospitals)
5.00%, due 6/01/15 (Escrowed to Maturity) 887
3,440 Utah Housing Finance Agency
Single Family Mortgage Revenue
5.875%, due 7/01/08 3,449
VIRGINIA - 1.2%
1,250 #Fairfax County Water Authority Water Revenue
6.125%, due 1/01/29
(Prerefunded 1/01/00 @ 100) 1,310
1,195 #Richmond Metropolitan Expressway
Authority Revenue
5.60%, due 1/15/13 (Escrowed to Maturity) 1,180
3,000 #Richmond Public Utility Revenue
8.00%, due 1/15/18
(Prerefunded 1/15/98 @ 102) 3,300
</TABLE>
See Notes to Financial Statements
- 20 -
<PAGE> 23
PORTFOLIO OF INVESTMENTS
SAFECO MUNICIPAL BOND FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
================================================================================
WASHINGTON - 12.2%
<S> <C> <C>
$7,255 Douglas County Public Utility District #1
Wells Hydroelectric Revenue
8.75%, due 9/01/18 $9,073
2,500 Everett School District #2
Snohomish County Unlimited
Tax General Obligation
6.20%, due 12/01/12 [MBIA] 2,529
1,875 Federal Way School District #210
King County Unlimited Tax General Obligation
5.75%, due 12/01/12 [FGIC] 1,842
1,750 * King County Housing Authority
Pooled Housing Refunding Revenue
6.80%, due 3/01/26 1,768
1,650 King County Limited Tax General Obligation
(Various Purpose)
4.75%, due 1/01/19 1,316
2,255 King County Public Hospital District #1
Hospital Facilities Revenue (Valley Medical Center)
5.50%, due 9/01/17 [AMBAC] 2,073
4,800 Lewis County Public Utility District #1
Cowlitz Falls Hydroelectric Project Revenue
6.00%, due 10/01/24 4,748
4,000 Port of Seattle Revenue
6.00%, due 12/01/14 3,954
3,000 Washington Health Care Facilities
Authority Revenue
(Fred Hutchinson Cancer Research Center)
7.375%, due 1/01/18 3,195
6,350 Washington Health Care Facilities
Authority Revenue
(Yakima Valley Memorial Hospital Association)
7.25%, due 1/01/21 6,587
8,500 Washington Public Power Supply System
Nuclear Project #1 Revenue
6.00%, due 7/01/17 8,050
4,000 Washington Public Power Supply System
Nuclear Project #2 Revenue
6.30%, due 7/01/12 3,995
2,610 Washington Public Power Supply System
Nuclear Project #3 Revenue
5.50%, due 7/01/18 2,325
5,500 # Yakima-Tieton Irrigation District Revenue
8.40%, due 6/01/18
(Prerefunded 6/01/98 @ 100) 6,083
WEST VIRGINIA - 0.6%
3,025 West Virginia Housing Development Fund
Single Family Mortgage Revenue
6.125%, due 7/01/13 2,974
WISCONSIN - 0.8%
1,000 Wisconsin Health and Education
Facilities Authority Revenue
6.00%, due 10/01/12 [MBIA] 990
2,850 Wisconsin Transportation Revenue
5.50%, due 7/01/22 2,578
--------
TOTAL BONDS 465,896
--------
TOTAL INVESTMENTS - 98.6% 465,896
Cash and Other Assets,
less Liabilities 6,673
--------
NET ASSETS $472,569
========
</TABLE>
DIVERSIFICATION BY GUARANTOR (PERCENT OF PORTFOLIO)
The provider of guarantees of timely payment of both principal and interest, if
any, is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio are:
<TABLE>
<S> <C>
MBIA: Municipal Bond Investors Assurance Corp. 13.6%
FGIC: Financial Guaranty Insurance Corp. 6.8
AMBAC: AMBAC Indemnity Corp. 4.6
PSF: Permanent School Fund 0.9
25.9%
</TABLE>
See Notes to Financial Statements
- 21 -
<PAGE> 24
PORTFOLIO OF INVESTMENTS
SAFECO CALIFORNIA TAX-FREE INCOME FUND
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
===============================================================================
BONDS - 95.3%
<S> <C> <C>
$2,250 California Health Facilities Financing Authority
Insured Health Facility Revenue
(Catholic Healthcare West)
4.75%, due 7/01/19 [MBIA] $1,843
850 California Health Facilities Financing Authority
Revenue (O'Connor Hospital)
9.25%, due 3/01/15 897
2,750 California Statewide Communities
Development Authority
Certificates of Participation
5.00%, due 10/01/23 2,334
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] 2,981
3,150 East Bay Regional Park District
California General Obligation
5.75%, due 9/01/17 2,998
670 Inglewood Insured Hospital Revenue
(Daniel Freeman Hospital)
6.75%, due 5/01/13 684
1,200 # Los Angeles Convention and Exhibition Center
Authority Certificates of Participation
9.00%, due 12/01/20
(Prerefunded 12/01/05 @ 100) 1,566
4,500 Los Angeles County Sanitation District Financing
Authority Revenue (Capital Projects)
5.25%, due 10/01/20 3,965
3,000 Los Angeles County Transportation Commission
Sales Tax Revenue
5.75%, due 7/01/18 2,835
3,800 Los Angeles Department of Water and Power
Waterworks Revenue
4.75%, due 11/15/19 3,105
2,000 Los Angeles Wastewater System Revenue
4.70%, due 11/01/17 [FGIC] 1,659
1,000 # Modesto Certificates of Participation
(Community Center Refinancing Project)
6.00%, due 11/01/15 [AMBAC]
(Prerefunded 11/01/01 @ 102) 1,069
2,500 Northern California Power Agency
Geothermal Project Revenue
5.00%, due 7/01/09 2,249
1,100 Oro Loma Sanitation District Sewer Revenue
5.20%, due 10/01/16 [AMBAC] 994
4,435 Pittsburg Redevelopment Agency
Los Medanos Community Development Project
Tax Allocation
4.625%, due 8/01/21 3,529
Pleasanton Joint Powers Financing Authority
Reassessment Revenue
985 6.20%, due 9/02/17 946
1,950 6.15%, due 9/02/12 1,903
3,950 Rancho California Water District
Financing Authority Revenue
4.75%, due 8/15/21 [AMBAC] 3,206
2,000 Riverside County Certificates of Participation
(Capital Projects)
6.125%, due 11/01/21 1,936
</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
- 22 -
<PAGE> 25
PORTFOLIO OF INVESTMENTS
SAFECO CALIFORNIA TAX-FREE INCOME FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
=========================================================================================
<S> <C> <C>
$1,000 Riverside County Certificates of Participation
(Public Financing Project)
7.875%, due 12/01/15 $1,047
3,000 Sacramento Municipal Utility District
Electric Revenue
4.75%, due 9/01/21 [MBIA] 2,435
1,750 San Diego Public Facilities Financing Authority
Sewer Revenue
5.25%, due 5/15/20 1,510
5,000 San Joaquin Hills Transportation Corridor Agency
Senior Lien Toll Road Revenue
5.00%, due 1/01/33 3,703
2,000 San Jose Airport Revenue
5.75%, due 3/01/16 [MBIA] 1,918
4,000 San Jose Redevelopment Agency
4.75%, due 8/01/22 3,123
Southern California Public Power Authority
Power Project Revenue (Multiple Projects)
2,665 # 5.50%, due 7/01/20
(Prerefunded 7/01/00 @ 100) 2,738
1,335 5.50%, due 7/01/20 1,202
250 Southern California Public Power Authority
Power Project Revenue (Palo Verde Project)
5.75%, due 7/01/17 237
985 Stanislaus Waste-to-Energy Financing Agency
Solid Waste Facility Revenue
7.625%, due 1/01/10 1,033
1,535 University of California Housing
System Revenue
5.00%, due 11/01/13 [MBIA] 1,361
-------
TOTAL BONDS 61,028
-------
SHORT-TERM INVESTMENTS - 3.4%
INVESTMENT COMPANIES:
$2,173 Municipal Fund for
California Investors, Inc. $ 2,173
-------
TOTAL SHORT-TERM INVESTMENTS 2,173
-------
TOTAL INVESTMENTS - 98.7% 63,201
Other Assets,
less Liabilities 857
-------
NET ASSETS $64,058
=======
</TABLE>
DIVERSIFICATION BY GUARANTOR (PERCENT OF PORTFOLIO)
The provider of guarantees of timely payment of both principal and interest, if
any, 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. 13.5%
MBIA: Municipal Bond Investors Assurance Corp. 12.4
FGIC: Financial Guaranty Insurance Corp. 2.7
BIG: Bond Investors Guaranty Insurance Co. 0.0
------
28.6%
======
</TABLE>
See Notes to Financial Statements
- 23 -
<PAGE> 26
PORTFOLIO OF INVESTMENTS
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
===========================================================================================
<S> <C> <C>
BONDS - 101.6%
$100 Battle Ground School District #119 Clark County
Unlimited Tax General Obligation
5.65%, due 12/01/12 $ 96
125 Centralia Water Revenue
5.65%, due 8/01/13 [AMBAC] 120
100 Chelan County Public Utility District #1
Columbia River Rock Hydroelectric System
Revenue
6.375%, due 6/01/29 100
200 Clark County School District #37 (Vancouver)
Unlimited Tax General Obligation
5.55%, due 12/01/09 194
300 Everett School District #2 Snohomish County
Unlimited Tax General Obligation
6.20%, due 12/01/12 [MBIA] 303
125 Federal Way School District #210
King County Unlimited Tax General Obligation
5.75%, due 12/01/12 [FGIC] 122
105 Grant County Public Utility District #2
Wanapum Hydroelectric Revenue
5.50%, due 1/01/12 98
300 * King County Housing Authority
Pooled Housing Refunding Revenue
6.80%, due 3/01/26 303
250 King County Limited Tax General Obligation
(Various Purpose)
4.75%, due 1/01/19 199
200 King County Public Hospital District #1
Hospital Facilities Revenue
(Valley Medical Center)
5.50%, due 9/01/17 [AMBAC] 184
100 King County School District #403 (Renton)
6.125%, due 12/01/07 103
100 King County School District #415 (Kent)
Unlimited Tax General Obligation
6.45%, due 12/01/12 103
200 Kitsap County School District #401 (Central Kitsap)
Unlimited Tax General Obligation
5.50%, due 12/01/11 186
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] 201
95 Pike Place Market Preservation and Development
Authority Special Obligation Revenue
6.60%, due 12/01/21 97
100 Port of Seattle Revenue
6.00%, due 12/01/14 99
300 Renton Water and Sewer Improvement Revenue
5.375%, due 4/01/13 274
250 Richland Water and Sewer Revenue
5.625%, due 4/01/12 [MBIA] 241
100 Seattle Water System Revenue
5.25%, due 12/01/23 86
125 Snohomish County Mukilteo School District #6
Unlimited Tax General Obligation
5.70%, due 12/01/11 [FGIC] 123
295 Snohomish County Public Utility District #1
Generation System Revenue
5.50%, due 1/01/20 [FGIC] 266
</TABLE>
- ----------
* New to Portfolio since last report.
See Notes to Financial Statements
- 24 -
<PAGE> 27
PORTFOLIO OF INVESTMENTS
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND (CONTINUED)
As of March 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT (000'S) MARKET VALUE (000'S)
=============================================================================================
<S> <C> <C>
$250 Spokane Regional Solid Waste
Management System Revenue
6.25%, due 12/01/11 [AMBAC] $ 255
250 Tacoma Limited Tax General Obligation
6.25%, due 12/01/12 253
250 Tacoma Water System Revenue
5.50%, due 12/01/13 233
200 Tukwila Limited Tax General Obligation
5.90%, due 1/01/14 198
100 Tumwater Unlimited Tax General Obligation
5.80%, due 12/01/11 97
100 Walla Walla Water and Sewer Revenue
6.20%, due 8/01/12 [MBIA] 101
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] 100
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] 89
200 Washington Health Care Facilities Authority
Revenue (Northwest Hospital, Seattle)
5.75%, due 11/15/23 [AMBAC] 186
100 Washington Health Care Facilities Authority
Revenue (Swedish Hospital Medical Center)
6.30%, due 11/15/22 [AMBAC] 100
120 Washington Public Power Supply System
Nuclear Project #2 Revenue
5.50%, due 7/01/18 107
250 Whatcom County Limited Tax
General Obligation
5.75%, due 12/01/12 [FSA] 242
200 Yakima-Tieton Irrigation District Revenue
6.20%, due 6/01/19 [FSA] 200
------
TOTAL BONDS 6,049
------
TOTAL INVESTMENTS - 101.6% 6,049
Liabilities,
less Cash and Other Assets (96)
------
NET ASSETS $5,953
======
</TABLE>
DIVERSIFICATION BY GUARANTOR (PERCENT OF PORTFOLIO)
The provider of guarantees of timely payment of both principal and interest, if
any, is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio are:
<TABLE>
<CAPTION>
<S> <C> <C>
MBIA: Municipal Bond Investors Assurance Corp. 19.1%
AMBAC: AMBAC Indemnity Corp. 15.7
FGIC: Financial Guaranty Insurance Corp. 8.6
FSA: Financial Security Assurance, Inc. 7.4
------
50.8%
======
</TABLE>
See Notes to Financial Statements
- 25 -
<PAGE> 28
STATEMENTS OF ASSETS AND LIABILITIES
As of March 31, 1995
<TABLE>
<CAPTION>
SAFECO SAFECO SAFECO SAFECO
INTERMEDIATE-TERM INSURED SAFECO CALIFORNIA WASHINGTON
(In Thousands, MUNICIPAL MUNICIPAL MUNICIPAL TAX-FREE STATE 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 $13,884,
$7,931, $434,501, $58,620
and $6,010, respectively) $13,684 $8,037 $465,896 $61,028 $6,049
Short-Term Investments 524 36 -- 2,173 --
------- ------ -------- ------- ------
Total Investments 14,208 8,073 465,896 63,201 6,049
Cash -- -- 4 -- 4
Receivables
Interest 196 136 8,747 1,011 114
Capital Stock Sold -- -- 3,424 -- --
Deferred Organization Expense (Note 3) 12 12 -- -- 4
------- ------ -------- ------- ------
Total Assets 14,416 8,221 478,071 64,212 6,171
------- ------ -------- ------- ------
LIABILITIES
Payables
Notes Payable (Note 3) -- -- 4,405 -- 150
Dividends 24 29 859 104 23
Investment Securities Purchased 598 -- -- -- --
Investment Advisory Fees 6 4 169 29 3
Other 14 13 69 21 13
Organization Expense 12 12 -- -- 4
Capital Stock Redeemed -- -- -- -- 25
------- ------ -------- ------- ------
Total Liabilities 654 58 5,502 154 218
------- ------ -------- ------- ------
NET ASSETS $13,762 $8,163 $472,569 $64,058 $5,953
======= ====== ======== ======= ======
SHARES OUTSTANDING (Note 4) 1,353 812 35,373 5,553 590
======= ====== ======== ======= ======
NET ASSET VALUE PER SHARE
(Net Assets Divided
by Shares Outstanding) $ 10.17 $10.05 $ 13.36 $ 11.54 $10.10
======= ====== ======== ======= ======
</TABLE>
See Notes to Financial Statements
- 26 -
<PAGE> 29
STATEMENTS OF OPERATIONS
For the Year Ended March 31, 1995
<TABLE>
<CAPTION>
SAFECO SAFECO SAFECO SAFECO
INTERMEDIATE-TERM INSURED SAFECO CALIFORNIA WASHINGTON
(In Thousands) MUNICIPAL MUNICIPAL MUNICIPAL TAX-FREE STATE MUNICIPAL
BOND FUND BOND FUND BOND FUND INCOME FUND BOND FUND
=========================================================================================================================
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Interest $673 $375 $31,302 $4,302 $307
EXPENSES
Investment Advisory Fees (Note 3) 67 38 2,011 364 31
Shareholder Servicing Fees (Note 3) 17 5 532 69 3
Loan Interest 1 1 75 12 --
Legal and Auditing Fees 13 13 24 15 14
Reports to Shareholders 1 -- 19 3 --
Custodian Fees 2 1 11 8 1
Trustees' Fees 3 3 3 3 3
Amortization of Organization Expenses 4 4 -- -- 2
---- ---- ------- ------ ----
Total Expenses 108 65 2,675 474 54
---- ---- ------- ------ ----
NET INVESTMENT INCOME 565 310 28,627 3,828 253
---- ---- ------- ------ ----
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net Realized Gain (Loss)
on Investment Transactions (22) (46) (6,245) (250) 1
Net Change in Unrealized
Appreciation (Note 5) 97 273 10,408 357 109
---- ---- ------- ------ ----
NET GAIN ON INVESTMENTS 75 227 4,163 107 110
---- ---- ------- ------ ----
NET CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $640 $537 $32,790 $3,935 $363
==== ==== ======= ====== ====
</TABLE>
See Notes to Financial Statements
- 27 -
<PAGE> 30
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended March 31
<TABLE>
<CAPTION>
SAFECO INTERMEDIATE-TERM SAFECO INSURED
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
------------------------ -------------------
(In Thousands) 1995 1994 1995 1994
=====================================================================================
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 565 $ 282 $ 310 $ 139
Net Realized Gain (Loss) on
Investment Transactions (22) -- (46) (17)
Net Change in
Unrealized Appreciation 97 (345) 273 (218)
------- ------- ------ ------
Net Change in Net Assets
Resulting from Operations 640 (63) 537 (96)
DIVIDENDS TO SHAREHOLDERS FROM
Net Investment Income (565) (282) (310) (139)
Net Realized Gain on
Investment Transactions -- -- -- --
NET TRUST SHARE TRANSACTIONS
(Note 4) 2,906 8,781 4,630 1,435
------- ------- ------ ------
TOTAL CHANGE IN NET ASSETS 2,981 8,436 4,857 1,200
NET ASSETS AT
BEGINNING OF PERIOD 10,781 2,345 3,306 2,106
------- ------- ------ ------
NET ASSETS AT END OF PERIOD $13,762 $10,781 $8,163 $3,306
======= ======= ====== ======
</TABLE>
See Notes to Financial Statements
- 28 -
<PAGE> 31
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
For the Year Ended March 31
<TABLE>
<CAPTION>
SAFECO MUNICIPAL SAFECO CALIFORNIA SAFECO WASHINGTON STATE
BOND FUND TAX-FREE INCOME FUND MUNICIPAL BOND FUND
---------------- -------------------- -----------------------
(In Thousands) 1995 1994 1995 1994 1995 1994
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 28,627 $ 31,230 $ 3,828 $ 4,428 $ 253 $ 123
Net Realized Gain (Loss) on
Investment Transactions (6,245) 8,605 (250) 2,393 1 (5)
Net Change in
Unrealized Appreciation 10,408 (28,252) 357 (5,027) 109 (124)
-------- -------- -------- ------- ------ ------
Net Change in Net Assets
Resulting from Operations 32,790 11,583 3,935 1,794 363 (6)
DIVIDENDS TO SHAREHOLDERS FROM
Net Investment Income (28,627) (31,230) (3,828) (4,428) (253) (123)
Net Realized Gain on
Investment Transactions (1,166) (12,040) (644) (2,304) -- (4)
NET TRUST SHARE TRANSACTIONS
(Note 4) (37,881) (2,375) (12,461) 2,122 2,935 878
-------- -------- -------- ------- ------ ------
TOTAL CHANGE IN NET ASSETS (34,884) (34,062) (12,998) (2,816) 3,045 745
NET ASSETS AT
BEGINNING OF PERIOD 507,453 541,515 77,056 79,872 2,908 2,163
-------- -------- -------- ------- ------ ------
NET ASSETS AT END OF PERIOD $472,569 $507,453 $64,058 $77,056 $5,953 $2,908
======== ======== ======= ======= ====== ======
</TABLE>
See Notes to Financial Statements
- 29 -
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS
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), SAFECO Insured Municipal Bond Fund (Insured), SAFECO
Municipal Bond Fund (Municipal), SAFECO California Tax-Free Income Fund
(California) and SAFECO Washington State Municipal Bond Fund (Washington)
(together "the Funds").
The following is a summary of significant accounting policies consistently
followed by the Trust in the prep-aration 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 trans-actions, if any, will normally be distributed
to share-holders at the end of March and December. Prior to July 29, 1994, net
realized gains were distributed at the end of April and October.
Distributions in excess of net realized gains in fiscal 1994 for financial
statement purposes result from Federal excise tax distribution requirements.
These excess distributions are the result of certain losses from securities
transactions during the year ended March 31, 1994 which are treated for Federal
income tax purposes as arising in fiscal 1995.
FEDERAL INCOME AND EXCISE TAXES. The Funds intend 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,
- 30 -
<PAGE> 33
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.
2. ACCUMULATED UNDISTRIBUTED CAPITAL LOSS
The Intermediate-Term Municipal Bond Fund, Municipal Bond Fund, and
California Tax-Free Income Fund had accumulated undistributed net realized
losses on transactions of $22,000, $6,233,000, and $253,000, respectively at
March 31, 1995, which expire in the year 2003.
The Insured Municipal Bond Fund had an accumulated undistributed net realized
loss on transactions of $63,000 at March 31, 1995, of which $17,000 and $46,000
expire in 2002 and 2003, respectively.
The Washington State Municipal Bond Fund had an accumulated undistributed net
realized loss on transactions of $8,000 at March 31, 1995, which will expire in
2003.
For each Fund, these amounts represent capital loss carry forwards which can
be used in future years to offset realized gains on security transactions.
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 its affiliates. Interest rates equivalent to
commercial bank interest rates are charged on loans over $100,000. No interest
is charged on loans under $100,000. At March 31, 1995, the Municipal Fund and
Washington Fund had notes payable bearing interest at 6.12% of $4,405,000 and
$150,000, respectively, to SAFECO Life Deferred Annuity Company. The Municipal
Fund note was repaid on April 4, 1995 and the Washington Fund note was repaid on
April 7, 1995.
AFFILIATE OWNERSHIP. At March 31, 1995, SAFECO Insurance Company of America
("SAFECO Insurance"), a wholly owned subsidiary of SAFECO Corporation, owned
397,434 shares (or 29.4%) of the Intermediate Fund, 605,644 shares (or 74.6%) of
the Insured Fund and 502,372 shares (or 85.2%) 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)
4. TRUST SHARES
<TABLE>
<CAPTION>
SAFECO INTERMEDIATE-TERM SAFECO INSURED
MUNICIPAL BOND FUND MUNICIPAL BOND FUND
------------------------ -------------------
FOR THE YEAR FOR THE YEAR
ENDED MARCH 31 ENDED MARCH 31
(In Thousands, Except ------------------------ -------------------
Per-Share Amounts) 1995 1994 1995 1994
=================================================================================
<S> <C> <C> <C> <C>
SHARES
Sales 655* 1,048 615** 229
Reinvestments 32 15 4 4
--------- --------- --------- ---------
687 1,063 619 233
Redemptions (398) (228) (147) (98)
--------- --------- --------- ---------
NET CHANGE 289 835 472 135
========= ========= ========= =========
AMOUNTS
Sales $ 6,550* $ 11,015 $ 5,994** $ 2,405
Reinvestments 320 156 40 42
--------- --------- --------- ---------
6,870 11,171 6,034 2,447
Redemptions (3,964) (2,390) (1,404) (1,012)
--------- --------- --------- ---------
NET CHANGE $ 2,906 $ 8,781 $ 4,630 $ 1,435
========= ========= ========= =========
As of March 31, 1995
Shares Authorized Unlimited Unlimited
Par Value Per Share $ .001 $ .001
Paid In Capital $ 13,984 $ 8,120
</TABLE>
In Thousands:
* Includes 197 shares purchased by SAFECO Insurance for $2,000.
** Includes 406 shares purchased by SAFECO Insurance for $4,000.
- 32 -
<PAGE> 35
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. TRUST SHARES (CONTINUED)
<TABLE>
<CAPTION>
SAFECO MUNICIPAL SAFECO CALIFORNIA SAFECO WASHINGTON STATE
BOND FUND TAX-FREE INCOME FUND MUNICIPAL BOND FUND
---------------- -------------------- -----------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR
(In Thousands, ENDED MARCH 31 ENDED MARCH 31 ENDED MARCH 31
Except Per-Share ---------------- -------------------- -----------------------
Amounts) 1995 1994 1995 1994 1995 1994
===============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
SHARES
Sales 42,783 72,411 1,366 1,171 342++ 120
Reinvestments 1,462 2,103 263 369 4 2
--------- ----------- --------- --------- --------- ---------
44,245 74,514 1,629 1,540 346 122
Redemptions (47,105) (74,591) (2,771)+ (1,374) (49) (40)
--------- ----------- --------- --------- --------- ---------
NET CHANGE (2,860) (77) (1,142) 166 297 82
========= =========== ========= ========= ========= =========
AMOUNTS
Sales $ 556,843 $ 1,034,434 $ 15,280 $ 14,523 $ 3,386++ $ 1,275
Reinvestments 18,983 30,037 2,933 4,563 39 27
--------- ----------- --------- --------- --------- ---------
575,826 1,064,471 18,213 19,086 3,425 1,302
Redemptions (613,707) (1,066,846) (30,674)+ (16,964) (490) (424)
--------- ----------- --------- --------- --------- ---------
NET CHANGE $ (37,881) $ (2,375) $ (12,461) $ 2,122 $ 2,935 $ 878
========= =========== ========= ========= ========= =========
As of March 31, 1995
Shares Authorized Unlimited Unlimited Unlimited
Par Value Per Share $ .001 $ .001 $ .001
Paid In Capital $ 447,407 $ 61,903 $ 5,922
</TABLE>
In Thousands:
+ Includes 442 shares redeemed by SAFECO Insurance for $5,000.
++ Includes 302 shares purchased by SAFECO Insurance for $3,000.
- 33 -
<PAGE> 36
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENT TRANSACTIONS
<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>
PURCHASES FOR THE YEAR
ENDED MARCH 31, 1995 $ 4,268 $ 5,350 $127,205 $ 28,936 $ 3,557
======== ======== ======== ======== ========
SALES FOR THE YEAR
ENDED MARCH 31, 1995 $ 516 $ 878 $170,576 $ 43,384 $ 450
======== ======== ======== ======== ========
UNREALIZED APPRECIATION
(DEPRECIATION) AT MARCH 31, 1995
Aggregate gross unrealized
appreciation for investment
securities in which there is an
excess of value over identified cost $ 137 $ 178 $ 33,563 $ 2,928 $ 85
Aggregate gross unrealized
depreciation for investment
securities in which there is an
excess of identified cost over value (337) (72) (2,168) (520) (46)
-------- -------- -------- -------- --------
NET UNREALIZED APPRECIATION
(DEPRECIATION) $ (200) $ 106 $ 31,395 $ 2,408 $ 39
======== ======== ======== ======== ========
</TABLE>
- 34 -
<PAGE> 37
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
-----------------------------------------------
NOVEMBER 5, 1992
FOR THE FOR THE (COMMENCEMENT OF
YEAR ENDED YEAR ENDED OPERATIONS) TO
MARCH 31 MARCH 31 MARCH 31
1995 1994 1993
==============================================================================================
<S> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 10.13 $ 10.25 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.45 0.40 0.09
Net Realized and Unrealized Gain (Loss)
on Investments 0.04 (0.12) 0.25
------- ------- -------
Total from Investment Operations 0.49 0.28 0.34
------- ------- -------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.45) (0.40) (0.09)
------- ------- -------
Total Distributions (0.45) (0.40) (0.09)
------- ------- -------
NET ASSET VALUE AT END OF PERIOD $ 10.17 $ 10.13 $ 10.25
======= ======= =======
TOTAL RETURN 4.97% 2.64% -0.04% **
NET ASSETS AT END OF PERIOD (000'S OMITTED) $13,762 $10,781 $ 2,345
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.85% 0.99% 1.95% *
RATIO OF NET INCOME TO AVERAGE NET ASSETS 4.46% 3.85% 2.18% *
PORTFOLIO TURNOVER RATE 4.27% 1.49% NONE
</TABLE>
* Annualized.
** Total return from March 18, 1993, (initial public offering) to March 31,
1993, not annualized.
- 35 -
<PAGE> 38
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO INSURED MUNICIPAL BOND FUND
-----------------------------------------------
NOVEMBER 5, 1992
FOR THE FOR THE (COMMENCEMENT OF
YEAR ENDED YEAR ENDED OPERATIONS) TO
MARCH 31 MARCH 31 MARCH 31
1995 1994 1993
==============================================================================================
<S> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 9.73 $ 10.26 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.48 0.41 0.08
Net Realized and Unrealized Gain (Loss)
on Investments 0.32 (0.53) 0.26
------- ------- -------
Total from Investment Operations 0.80 (0.12) 0.34
------- ------- -------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.48) (0.41) (0.08)
------- ------- -------
Total Distributions (0.48) (0.41) (0.08)
------- ------- -------
NET ASSET VALUE AT END OF PERIOD $ 10.05 $ 9.73 $ 10.26
======= ======= =======
TOTAL RETURN 8.58% -1.40% -0.43% **
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 8,163 $ 3,306 $ 2,106
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.08% 1.41% 1.95% *
RATIO OF NET INCOME TO AVERAGE NET ASSETS 5.11% 3.99% 1.90% *
PORTFOLIO TURNOVER RATE 14.76% 21.19% None
</TABLE>
* Annualized.
** Total return from March 18, 1993, (initial public offering) to March 31,
1993, not annualized.
- 36 -
<PAGE> 39
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO MUNICIPAL BOND FUND
------------------------------------------------------
FOR THE YEAR ENDED MARCH 31
1995 1994 1993 1992 1991
========================================================================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 13.27 $ 14.13 $ 13.37 $ 12.95 $ 12.73
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.77 0.78 0.81 0.86 0.86
Net Realized and Unrealized Gain (Loss)
on Investments 0.12 (0.55) 0.94 0.48 0.26
Total from Investment Operations 0.89 0.23 1.75 1.34 1.12
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.77) (0.78) (0.81) (0.86) (0.86)
Distributions from Capital Gains (0.03) (0.31) (0.18) (0.06) (0.04)
Total Distributions (0.80) (1.09) (0.99) (0.92) (0.90)
NET ASSET VALUE AT END OF PERIOD $ 13.36 $ 13.27 $ 14.13 $ 13.37 $ 12.95
TOTAL RETURN 7.10% 1.30% 13.60% 10.57% 9.13%
NET ASSETS AT END OF PERIOD (000'S OMITTED) $472,569 $507,453 $541,515 $427,638 $331,647
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.56% 0.52% 0.53% 0.54% 0.56%
RATIO OF NET INCOME TO AVERAGE NET ASSETS 5.96% 5.49% 5.91% 6.37% 6.68%
PORTFOLIO TURNOVER RATE 26.96% 22.07% 31.66% 25.18% 38.55%
</TABLE>
- 37 -
<PAGE> 40
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO CALIFORNIA TAX-FREE INCOME FUND
---------------------------------------------------------------
FOR THE YEAR ENDED MARCH 31
1995 1994 1993 1992 1991
===================================================================================================================
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 11.51 $ 12.23 $ 11.60 $ 11.24 $ 11.07
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.63 0.66 0.68 0.71 0.71
Net Realized and Unrealized Gain (Loss)
on Investments 0.13 (0.38) 0.76 0.44 0.23
------- ------- ------- ------- -------
Total from Investment Operations 0.76 0.28 1.44 1.15 0.94
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.63) (0.66) (0.68) (0.71) (0.71)
Distributions from Capital Gains (0.10) (0.34) (0.13) (0.08) (0.06)
------- ------- ------- ------- -------
Total Distributions (0.73) (1.00) (0.81) (0.79) (0.77)
------- ------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD $ 11.54 $ 11.51 $ 12.23 $ 11.60 $ 11.24
======= ======= ======= ======= =======
TOTAL RETURN 7.01% 1.97% 12.88% 10.43% 8.78%
NET ASSETS AT END OF PERIOD (000'S OMITTED) $64,058 $77,056 $79,872 $71,480 $57,066
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.70% 0.68% 0.66% 0.67% 0.67%
RATIO OF NET INCOME TO AVERAGE NET ASSETS 5.65% 5.31% 5.71% 6.13% 6.32%
PORTFOLIO TURNOVER RATE 44.10% 32.58% 23.18% 39.35% 22.92%
</TABLE>
- 38 -
<PAGE> 41
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
6. FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
-------------------------------------------
NOVEMBER 5, 1992
FOR THE FOR THE (COMMENCEMENT
YEAR ENDED YEAR ENDED OF OPERATIONS)
MARCH 31 MARCH 31 TO MARCH 31
1995 1994 1993
=========================================================================================
<S> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 9.91 $ 10.27 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.49 0.44 0.09
Net Realized and Unrealized Gain (Loss)
on Investments 0.19 (0.35) 0.27
------- ------ -------
Total from Investment Operations 0.68 0.09 0.36
------- ------ -------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.49) (0.44) (0.09)
Distributions from Capital Gains -- (0.01) --
------- ------ -------
Total Distributions (0.49) (0.45) (0.09)
------- ------ -------
NET ASSET VALUE AT END OF PERIOD $10.10 $9.91 $ 10.27
======= ======= =======
TOTAL RETURN 7.13% 0.68% -0.31% **
NET ASSETS AT END OF PERIOD (000'S OMITTED) $5,953 $2,908 $ 2,163
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.09% 1.44% 2.00% *
RATIO OF NET INCOME TO AVERAGE NET ASSETS 5.06% 4.17% 2.22% *
PORTFOLIO TURNOVER RATE 9.23% 17.26% None
</TABLE>
* Annualized.
** Total return from March 18, 1993, (initial public offering) to March 31,
1993, not annualized.
- 39 -
<PAGE> 42
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS
OF THE SAFECO TAX-EXEMPT BOND TRUST
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of the SAFECO Tax-Exempt Bond Trust
(comprising, respectively, the SAFECO Intermediate-Term Municipal Bond Fund,
SAFECO Insured Municipal Bond Fund, SAFECO Municipal Bond Fund, SAFECO
California Tax-Free Income Fund, and SAFECO Washington State Municipal Bond
Fund) as of March 31, 1995 and the related statements of operations for the year
then ended and the statements of changes in net assets for each of the two years
in the period then ended. We have also audited the financial highlights for each
of the five years in the period then ended for the SAFECO Municipal Bond Fund
and the SAFECO California Tax-Free Income Fund and we have audited the financial
highlights for each of two years in the period then ended and for the period
from November 5, 1992 (commencement of operations) through March 31, 1993 for
the SAFECO Intermediate-Term Municipal Bond Fund, SAFECO Insured Municipal Bond
Fund, and SAFECO Washington State Municipal Bond Fund. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds constituting the SAFECO Tax-Exempt Bond Trust at March
31, 1995, and the results of their operations for the year then ended, the
changes in their net assets for each of the two years in the period then ended,
and the financial highlights for the periods referred to above, in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
---------------------
Seattle, Washington
April 26, 1995
- 40 -
<PAGE> 43
SAFECO FAMILY OF FUNDS
STABILITY OF PRINCIPAL
SAFECO Money Market Fund
SAFECO Tax-Free Money Market Fund
TAXABLE BOND INCOME
SAFECO Intermediate-Term U.S. Treasury Fund
SAFECO GNMA Fund
SAFECO High-Yield Bond Fund
TAX-FREE BOND INCOME
SAFECO Intermediate-Term Municipal Bond Fund
SAFECO Insured Municipal Bond Fund
SAFECO Municipal Bond Fund
SAFECO California Tax-Free Income Fund
SAFECO Washington State Municipal Bond Fund
HIGH CURRENT INCOME
WITH LONG-TERM GROWTH
SAFECO Income Fund
LONG-TERM GROWTH
SAFECO Growth Fund
SAFECO Equity Fund
SAFECO Northwest Fund
-----------------------------
For more complete information on any SAFECO Mutual Fund,
including management fees and expenses, call or write
for a free Prospectus. Please read it carefully before
you invest or send money.
- 41 -
<PAGE> 44
SAFECO Tax-Exempt Bond Funds
BOARD OF TRUSTEES
Boh A. Dickey, Chairman
Barbara J. Dingfield
Richard W. Hubbard
Richard E. Lundgren
L.D. McClean
Larry L. Pinnt
John W. Schneider
OFFICERS
David F. Hill, President
Ronald L. Spaulding,
Vice President and Treasurer
Neal A. Fuller,
Vice President and Controller
INVESTMENT ADVISER
SAFECO Asset
Management Company
DISTRIBUTOR
SAFECO Securities, Inc.
TRANSFER AGENT
SAFECO Services Corporation
CUSTODIAN
U.S. Bank of Washington, N.A.
GMF 713 5/95
[Recycle LOGO] Printed on Recycled Paper
Bulk Rate
U.S. Postage
P A I D
Permit No. 2405
Seattle, WA
This report must be preceded or
accompanied by a current prospectus.
(R) Registered trademark of SAFECO Corporation.
