<PAGE> 1
September 30, 1996
[PICTURE OF MT. ADAMS, WASHINGTON]
SEMIANNUAL
REPORT
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]
<PAGE> 2
================================================================================
PERFORMANCE INFORMATION
SEPTEMBER 30, 1996
The Lehman Brothers Long, Long Insured and 7-Year Municipal Bond
Indices are representative total return benchmarks for the respective funds.
Operating expenses had 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.
<TABLE>
<CAPTION>
10 YEAR
OR SINCE
AVERAGE ANNUAL TOTAL RETURN 1 YEAR 5 YEAR INCEPTION
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SAFECO Intermediate-Term Municipal Bond Fund 4.20% N/A 4.96%*
Lehman Brothers 7-Year Municipal Bond Index 4.44% N/A 5.60%
- ------------------------------------------------------------------------------------------
SAFECO Insured Municipal Bond Fund 8.37% N/A 5.71%*
Lehman Brothers Long Insured Municipal Bond Index 8.14% N/A 6.45%
- ------------------------------------------------------------------------------------------
SAFECO Municipal Bond Fund 7.15% 7.38% 8.17%
Lehman Brothers Long Municipal Bond Index 8.48% 8.36% 8.79%
- ------------------------------------------------------------------------------------------
SAFECO California Tax-Free Income Fund 8.53% 7.67% 7.82%
Lehman Brothers Long Municipal Bond Index 8.48% 8.36% 8.79%
- ------------------------------------------------------------------------------------------
SAFECO Washington State Municipal Bond Fund 6.69% N/A 5.42%*
Lehman Brothers Long Municipal Bond Index 8.48% N/A 6.68%
- ------------------------------------------------------------------------------------------
</TABLE>
*Inception was on March 18, 1993. Performance information begins March 31, 1993.
<PAGE> 3
================================================================================
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND*
ILLUSTRATION OF A $10,000 INVESTMENT
<TABLE>
<CAPTION>
IT Muni Shearson
-------------------------------------
<S> <C> <C> <C>
03/31/93 10,000 10,000
04/30/93 10,068 10,062
05/31/93 10,085 10,092
06/30/93 10,245 10,277
07/31/93 10,227 10,278
08/31/93 10,438 10,461
09/30/93 10,599 10,575
10/31/93 10,652 10,602
11/30/93 10,559 10,508
12/31/93 10,744 10,701
01/31/94 10,871 10,816
02/28/94 10,601 10,581
03/31/94 10,264 10,299
04/30/94 10,308 10,375
05/31/94 10,387 10,427
06/30/94 10,351 10,408
07/31/94 10,478 10,555
08/31/94 10,552 10,610
09/30/94 10,363 10,509
10/31/94 10,176 10,403
11/30/94 9,955 10,251
12/31/94 10,140 10,407
01/31/95 10,371 10,601
02/28/95 10,649 10,840
03/31/95 10,774 10,953
04/30/95 10,822 10,982
05/31/95 11,130 11,274
06/30/95 11,085 11,265
07/31/95 11,212 11,408
08/31/95 11,328 11,543
09/30/95 11,368 11,587
10/31/95 11,496 11,688
11/30/95 11,614 11,816
12/31/95 11,683 11,879
01/31/96 11,803 11,994
02/28/96 11,789 11,953
03/31/96 11,596 11,837
04/30/96 11,575 11,816
05/31/96 11,539 11,798
06/30/96 11,590 11,889
07/31/96 11,736 11,988
08/31/96 11,755 11,994
09/30/96 11,845 12,102
</TABLE>
INVESTMENT
VALUE AS OF
SEPT. 30, 1996
SAFECO
INTERMEDIATE-TERM
MUNICIPAL BOND
FUND: $11,845
=================
LEHMAN BROTHERS
7-YEAR MUNICIPAL
INDEX; $12,102
SAFECO INSURED MUNICIPAL BOND FUND*
ILLUSTRATION OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INS Muni Shearson
-------------------------------------
<S> <C> <C> <C>
03/31/93 10,000 10,000
04/30/93 10,122 10,146
05/31/93 10,163 10,239
06/30/93 10,396 10,430
07/31/93 10,301 10,438
08/31/93 10,643 10,710
09/30/93 10,804 10,849
10/31/93 10,808 10,861
11/30/93 10,568 10,719
12/31/93 10,853 10,992
01/31/94 10,998 11,117
02/28/94 10,539 10,726
03/31/94 9,860 10,061
04/30/94 9,907 10,152
05/31/94 10,028 10,275
06/30/94 9,862 10,152
07/31/94 10,217 10,430
08/31/94 10,169 10,433
09/30/94 9,849 10,183
10/31/94 9,560 9,872
11/30/94 9,364 9,647
12/31/94 9,721 9,983
01/31/95 10,125 10,430
02/28/95 10,651 10,851
03/31/95 10,706 10,977
04/30/95 10,630 10,973
05/31/95 11,255 11,440
06/30/95 10,934 11,220
07/31/95 10,967 11,268
08/31/95 11,130 11,424
09/30/95 11,207 11,507
10/31/95 11,514 11,800
11/30/95 11,897 12,109
12/31/95 12,090 12,302
01/31/96 12,093 12,357
02/28/96 11,947 12,185
03/31/96 11,664 11,942
04/30/96 11,564 11,883
05/31/96 11,575 11,885
06/30/96 11,741 12,070
07/31/96 11,892 12,189
08/31/96 11,847 12,173
09/30/96 12,145 12,444
</TABLE>
INVESTMENT
VALUE AS OF
SEPT. 30, 1996
SAFECO INSURED
MUNICIPAL BOND
FUND; $12,145
==============
LEHMAN BROTHERS
LONG INSURED
MUNICIPAL INDEX:
$12,444
* Inception of Fund was March 18, 1993.
Graph comparison begins March 31, 1993.
-1-
<PAGE> 4
================================================================================
PERFORMANCE INFORMATION (Continued)
SEPTEMBER 30, 1996
SAFECO MUNICIPAL BOND FUND
ILLUSTRATION OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Muni Shearson
-----------------------------------------
<S> <C> <C> <C>
09/30/86 10,000 10,000
10/31/86 10,230 10,171
11/30/86 10,426 10,415
12/31/86 10,470 10,401
01/31/87 10,807 10,751
02/28/87 10,848 10,781
03/31/87 10,792 10,622
04/30/87 10,104 10,026
05/31/87 10,079 9,916
06/30/87 10,335 10,232
07/31/87 10,424 10,326
08/31/87 10,449 10,372
09/30/87 9,987 9,949
10/31/87 10,012 9,948
11/30/87 10,306 10,266
12/31/87 10,487 10,400
01/31/88 10,983 10,815
02/28/88 11,110 10,942
03/31/88 10,892 10,786
04/30/88 10,974 10,871
05/31/88 10,942 10,882
06/30/88 11,164 11,094
07/31/88 11,221 11,169
08/31/88 11,279 11,213
09/30/88 11,531 11,467
10/31/88 11,849 11,728
11/30/88 11,710 11,602
12/31/88 11,943 11,803
01/31/89 12,218 12,081
02/28/89 12,035 11,912
03/31/89 12,035 11,922
04/30/89 12,317 12,272
05/31/89 12,549 12,556
06/30/89 12,706 12,747
07/31/89 12,837 12,916
08/31/89 12,723 12,719
09/30/89 12,713 12,680
10/31/89 12,836 12,848
11/30/89 13,067 13,121
12/31/89 13,147 13,218
01/31/90 12,993 13,084
02/28/90 13,143 13,231
03/31/90 13,125 13,245
04/30/90 12,923 13,083
05/31/90 13,332 13,453
06/30/90 13,456 13,585
07/31/90 13,714 13,825
08/31/90 13,357 13,496
09/30/90 13,331 13,475
10/31/90 13,585 13,760
11/30/90 13,963 14,109
12/31/90 14,021 14,171
01/31/91 14,243 14,361
02/28/91 14,305 14,462
03/31/91 14,322 14,496
04/30/91 14,562 14,721
05/31/91 14,709 14,894
06/30/91 14,659 14,866
07/31/91 14,892 15,096
08/31/91 15,118 15,313
09/30/91 15,360 15,535
10/31/91 15,524 15,697
11/30/91 15,474 15,717
12/31/91 15,954 16,091
01/31/92 15,815 16,081
02/28/92 15,856 16,107
03/31/92 15,836 16,147
04/30/92 15,986 16,301
05/31/92 16,255 16,540
06/30/92 16,607 16,860
07/31/92 17,246 17,478
08/31/92 16,892 17,243
09/30/92 16,925 17,320
10/31/92 16,556 17,031
11/30/92 17,063 17,510
12/31/92 17,349 17,737
01/31/93 17,518 17,905
02/28/93 18,276 18,737
03/31/93 17,989 18,511
04/30/93 18,236 18,765
05/31/93 18,341 18,920
06/30/93 18,717 19,276
07/31/93 18,645 19,295
08/31/93 19,140 19,789
09/30/93 19,355 20,064
10/31/93 19,408 20,102
11/30/93 19,162 19,859
12/31/93 19,546 20,371
01/31/94 19,783 20,612
02/28/94 19,198 19,929
03/31/94 18,223 18,740
04/30/94 18,240 18,884
05/31/94 18,459 19,105
06/30/94 18,255 18,876
07/31/94 18,675 19,361
08/31/94 18,688 19,401
09/30/94 18,227 18,951
10/31/94 17,837 18,370
11/30/94 17,471 17,885
12/31/94 17,933 18,519
01/31/95 18,594 19,334
02/28/95 19,375 20,121
03/31/95 19,516 20,363
04/30/95 19,487 20,354
05/31/95 20,393 21,220
06/30/95 19,956 20,829
07/31/95 20,052 20,936
08/31/95 20,311 21,231
09/30/95 20,462 21,398
10/31/95 20,891 21,915
11/30/95 21,469 22,481
12/31/95 21,786 22,831
01/31/96 21,856 22,929
02/28/96 21,615 22,649
03/31/96 21,122 22,235
04/30/96 20,963 22,146
05/31/96 20,997 22,157
06/30/96 21,307 22,498
07/31/96 21,568 22,726
08/31/96 21,491 22,692
09/30/96 21,925 23,211
</TABLE>
INVESTMENT VALUE AS OF SEPT. 30, 1996
<TABLE>
<S> <C>
SAFECO Municipal Bond Fund $21,925
Lehman Brothers Long Municipal
Bond Index $23,211
</TABLE>
<PAGE> 5
SAFECO CALIFORNIA TAX-FREE INCOME FUND
ILLUSTRATION OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
Cal Shearson
-----------------------------------------
09/30/86 10,000 10,000
10/31/86 10,017 10,171
11/30/86 9,831 10,415
12/31/86 9,945 10,401
01/31/87 9,995 10,751
02/28/87 10,556 10,781
03/31/87 10,519 10,622
04/30/87 10,740 10,026
05/31/87 10,956 9,916
06/30/87 10,939 10,232
07/31/87 11,226 10,326
08/31/87 11,290 10,372
09/30/87 11,225 9,949
10/31/87 10,390 9,948
11/30/87 10,226 10,266
12/31/87 10,562 10,400
01/31/88 10,642 10,815
02/28/88 10,655 10,942
03/31/88 10,077 10,786
04/30/88 10,061 10,871
05/31/88 10,474 10,882
06/30/88 10,711 11,094
07/31/88 11,237 11,169
08/31/88 11,403 11,213
09/30/88 11,069 11,467
10/31/88 11,130 11,728
11/30/88 11,033 11,602
12/31/88 11,316 11,803
01/31/89 11,347 12,081
02/28/89 11,398 11,912
03/31/89 11,665 11,922
04/30/89 12,011 12,272
05/31/89 11,830 12,556
06/30/89 12,081 12,747
07/31/89 12,370 12,916
08/31/89 12,192 12,719
09/30/89 12,186 12,680
10/31/89 12,469 12,848
11/30/89 12,722 13,121
12/31/89 12,859 13,218
01/31/90 13,007 13,084
02/28/90 12,848 13,231
03/31/90 12,844 13,245
04/30/90 12,969 13,083
05/31/90 13,200 13,453
06/30/90 13,278 13,585
07/31/90 13,131 13,825
08/31/90 13,291 13,496
09/30/90 13,266 13,475
10/31/90 13,065 13,760
11/30/90 13,465 14,109
12/31/90 13,594 14,171
01/31/91 13,853 14,361
02/28/91 13,508 14,462
03/31/91 13,488 14,496
04/30/91 13,829 14,721
05/31/91 14,152 14,894
06/30/91 14,203 14,866
07/31/91 14,419 15,096
08/31/91 14,463 15,313
09/30/91 14,431 15,535
10/31/91 14,655 15,697
11/30/91 14,798 15,717
12/31/91 14,726 16,091
01/31/92 14,952 16,081
02/28/92 15,158 16,107
03/31/92 15,434 16,147
04/30/92 15,600 16,301
05/31/92 15,513 16,540
06/30/92 15,986 16,860
07/31/92 15,931 17,478
08/31/92 15,935 17,243
09/30/92 15,937 17,320
10/31/92 16,053 17,031
11/30/92 16,296 17,510
12/31/92 16,616 17,737
01/31/93 17,177 17,905
02/28/93 16,848 18,737
03/31/93 16,969 18,511
04/30/93 16,498 18,765
05/31/93 17,039 18,920
06/30/93 17,264 19,276
07/31/93 17,444 19,295
08/31/93 18,235 19,789
09/30/93 17,989 20,064
10/31/93 18,253 20,102
11/30/93 18,328 19,859
12/31/93 18,670 20,371
01/31/94 18,646 20,612
02/28/94 19,170 19,929
03/31/94 19,403 18,740
04/30/94 19,403 18,884
05/31/94 19,102 19,105
06/30/94 19,548 18,876
07/31/94 19,840 19,361
08/31/94 19,318 19,401
09/30/94 18,344 18,951
10/31/94 18,278 18,370
11/30/94 18,448 17,885
12/31/94 18,271 18,519
01/31/95 18,695 19,334
02/28/95 18,689 20,121
03/31/95 18,215 20,363
04/30/95 17,774 20,354
05/31/95 17,446 21,220
06/30/95 17,750 20,829
07/31/95 18,565 20,936
08/31/95 19,472 21,231
09/30/95 19,630 21,398
10/31/95 19,542 21,915
11/30/95 20,645 22,481
12/31/95 20,014 22,831
01/31/96 20,103 22,929
02/28/96 20,419 22,649
03/31/96 20,577 22,235
04/30/96 21,125 22,146
05/31/96 21,900 22,157
06/30/96 22,390 22,498
07/31/96 22,309 22,726
08/31/96 22,026 22,692
09/30/96 21,230 23,211
INVESTMENT
VALUE AS OF
SEPT. 30, 1996
SAFECO
CALIFORNIA TAX-FREE
INCOME FUND: $21,230
=================
LEHMAN BROTHERS
LONG MUNICIPAL
BOND INDEX; $23,211
<PAGE> 6
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND*
ILLUSTRATION OF A $10,000 INVESTMENT
- --------------------------------------------------------------------------------
Wash Muni Shearson
---------------------------------
03/31/93 10,000 10,000
04/30/93 10,146 10,137
05/31/93 10,188 10,221
06/30/93 10,433 10,413
07/31/93 10,401 10,423
08/31/93 10,684 10,690
09/30/93 10,808 10,839
10/31/93 10,828 10,859
11/30/93 10,658 10,728
12/31/93 10,874 11,005
01/31/94 11,043 11,135
02/28/94 10,665 10,766
03/31/94 10,068 10,123
04/30/94 10,115 10,201
05/31/94 10,259 10,321
06/30/94 10,083 10,197
07/31/94 10,337 10,459
08/31/94 10,300 10,481
09/30/94 10,050 10,238
10/31/94 9,782 9,923
11/30/94 9,553 9,661
12/31/94 9,934 10,004
01/31/95 10,339 10,444
02/28/95 10,730 10,870
03/31/95 10,786 11,000
04/30/95 10,754 10,995
05/31/95 11,189 11,463
06/30/95 10,986 11,252
07/31/95 11,053 11,310
08/31/95 11,195 11,469
09/30/95 11,275 11,559
10/31/95 11,519 11,839
11/30/95 11,786 12,144
12/31/95 11,910 12,333
01/31/96 11,959 12,386
02/28/96 11,848 12,235
03/31/96 11,620 12,011
04/30/96 11,556 11,963
05/31/96 11,580 11,969
06/30/96 11,714 12,154
07/31/96 11,832 12,276
08/31/96 11,798 12,258
09/30/96 12,029 12,539
INVESTMENT
VALUE AS OF
SEPT. 30, 1996
SAFECO
WASHINGTON STATE
MUNICIPAL BOND
FUND: $12,029
=================
LEHMAN BROTHERS
LONG MUNICIPAL BOND
INDEX; $12,539
* Inception of Fund was March 18, 1993.
Graph comparison begins March 31, 1993.
-2-
<PAGE> 7
================================================================================
LETTER FROM THE PRESIDENT
September 30, 1996
TABLE OF CONTENTS
Fund Managers' Reports ................................................ 5
Highlights ............................................................ 14
Portfolios of Investments ............................................. 17
Financial Statements .................................................. 36
Notes to Financial Statements ......................................... 42
[PHOTO OF DAVID F. HILL]
DEAR SHAREHOLDER:
Ambiguous economic indicators seemed to fuel investor unease, resulting
in significant volatility in the financial markets over the last six months.
Still, the net effect on the major asset classes was unsurprising: The broad
stock market as measured by the S&P rose, bond values declined slightly, and
money rates were relatively unchanged.
Those who had bailed out of the stock market in fear of the "coming
decline" missed out. Those of you who followed the rule of staying in the stock
market, but only with money that you can tolerate moving up and down, were
rewarded.
The S&P was up and down, and down severely in July, but finished the
six months with a 7.71% gain.
While some market watchers heralded the July downturn as the end of the
long-running bull market, it was not the case. The Dow Jones Industrial Average,
closed the third quarter flirting with the 6000 barrier. And the S&P's latest
12-month return of 20.32% is far ahead of 14.95%, its average annual return over
the last ten years. It is unrealistic to expect the stock market to continue to
outgain its historical averages year after year. For that reason we advise that
the money you need for nearer-term goals be invested in more stable investments.
Small stocks proved more volatile than the larger market--gaining more
in 1995 and giving back more in 1996. The Russell Small Company Index was up
15.79%, and NASDAQ gained 17.57% compared to the S&P's 20.32% gain for the year
ended September 30. Returning 8.94%, international stocks as measured
(Continued on next page.)
-3-
<PAGE> 8
================================================================================
LETTER FROM THE PRESIDENT (Continued)
by the EAFE Index continued to substantially lag the U.S. market.
Bond index returns were generally below their 10-year average annual
return.
Interest rates continued to rise during the six-month period, but the
increase was less dramatic than that experienced in the first quarter of 1996.
Thirty-year U.S. Treasury yields went from 6.67% on March 31 to 6.92% on
September 30. Since June, rates have gyrated within a fairly narrow range, and
the third quarter ended with interest rates basically unchanged.
At this writing, bonds are earning their coupons and holding their
values. This is what we want from bonds--income and relative stability of
principal.
Municipal bonds, long suppressed by cries for flat taxes, outperformed
Treasury bonds during the last six months as the flat-tax advocates were
eliminated from political contention.
While the economy so far in 1996 has been more robust than we expected,
its overall pace of growth has been modest, and recently has shown signs of
moderating further.
Despite rising nearly one full percentage point since January, interest
rates remain near 30-year lows--levels that are more likely to contribute to
growing, not to slowing the economy. Meanwhile, the inflation rate, which is
reasonably low by historical standards, is slowly increasing. And, the Fed has
declined to raise interest rates to brake the economy. We can only assume the
Fed is watching to see if today's higher interest rates will adequately slow
economic growth, effectively exorcising the specter of inflation.
Our view on the economy is that we will see a slowing of GDP growth in
1997 and that inflation will remain under control. The year 1997 could be quite
similar to 1996.
And, while we will manage your portfolios with due care and caution
given the current environment, our philosophy on investing has little to do with
our economic outlook. Fund investors should select their investments based on
their objectives, their time horizons and their comfort level.
/s/ David F. Hill
David F. Hill, President
SAFECO Mutual Funds
-4-
<PAGE> 9
================================================================================
REPORT FROM THE FUND MANAGERS
September 30, 1996
[PHOTO OF STEPHEN C. BAUER]
SAFECO TAX-EXEMPT BOND TRUST
After a summer of watchful waiting, investors decided that inflation
was still under control. The Federal Reserve decided to leave interest rates
unchanged and the bond markets breathed a sigh of relief.
And in this market, municipal bonds outperformed Treasury bonds. Over
the six months ending September 30, the Bond Buyer 40 Index, an index based on
the average yield of 40 municipal bonds, went from 6.01% to 5.89%. The 30-year
Treasury bond yield went in the opposite direction, from 6.67% to 6.92%.
Municipal bond prices were going up while Treasury prices were going down. In
fact, in terms of yield, in September municipal bonds reached their richest
level relative to Treasuries in the last two years. The main reason for this
outperformance was the elimination from the political scene of the "flat tax"
advocates.
The muni market's initial reaction to flat-tax proposals -- which would
reduce, or eliminate, the value of tax-exemption--was dramatic. In mid-1995,
municipal bonds were grossly undervalued compared to treasury bonds. As
candidates espousing flat-tax schemes were eliminated from contention, the muni
market regained its normal relationship with taxable bonds. Tax-exempts went
from yielding 95% of similar-length, taxable Treasury bonds to yielding 85% of
Treasuries.
Another factor which has benefited muni values this year was low supply
in a market with a strong demand. Individuals and insurance companies have been
big buyers of municipal bonds. Almost every new issue priced has been snapped up
by cash-laden investors. That, combined with bonds reaching maturity and massive
bond calls, virtually ensures 1996 will be the second consecutive year in which
the
(Continued on next page.)
-5-
<PAGE> 10
================================================================================
REPORT FROM THE FUND MANAGERS (Continued)
outstanding volume of tax-exempts declines.
Still to come: the presidential election may increase the bond market's
volatility in the fourth quarter. This is not a bad thing for long-term
investors. Sharp changes in prices create opportunities for those of us who take
a long view of things.
Should the Fed raise interest rates later this year, or early next, I
doubt the reaction will be either severe or long lasting. Any increase causing a
decline in prices would probably be seen as a buying opportunity, based on the
perception that the Fed will ensure a low inflation environment in which yields
could drop even lower.
Although 1996 is unlikely to match 1995's largesse, there is room for a
fine performance. Additionally, I think 1997 could bring more of the same.
Modest economic growth and the Fed's commitment to restrain inflation are good
news for bonds.
On a note that is good news for shareholders: Two long-time
contributors to the SAFECO Tax-Exempt Bond Trust now formally manage portfolios.
In July, Beverly Denny took charge of the Washington State Municipal Bond Fund
and Mary Metastasio was named manager of the Intermediate-Term Municipal Bond
Fund. Mary has been extremely successful managing our Tax-Free Money Market
Fund, and Beverly can concentrate exclusively on the Washington market, leaving
me to focus on long-term municipal bonds.
Forward we go.
/s/ Stephen C. Bauer
Stephen C. Bauer
President, SAFECO Asset Management
-6-
<PAGE> 11
================================================================================
REPORT FROM THE FUND MANAGERS (Continued)
SAFECO MUNICIPAL BOND FUND
The SAFECO Municipal Bond Fund returned 7.15% for the year ended
September 30, while the average municipal bond fund returned 5.61% according to
Lipper. The Fund ranked 20 of 230 general municipal bond funds for the one year
just ended. (For the five and ten years, the SAFECO Fund was 26 of 103, and 7 of
62 similar funds.) The Lehman Brothers Long Municipal Bond Index posted 8.48%
for the same period.
It's nearly impossible for a bond fund to beat a bond index because the
index has no expenses, no cash and no call features. The superior performance of
the Fund compared to its peer group can be attributed to both the deep discount
bonds and the premium coupon bonds we bought at out-of-favor prices.
In the last six months, transactions in the Municipal Bond Fund were
generally for one of two purposes: one, to sell pre-refunded bonds and reinvest
in longer, higher-yielding issues, and two, to improve call protection by buying
discount bonds.
At the end of March, the Fund held 13% of net assets in
advance-refunded bonds. An advance-refunded bond is a bond for which funds have
been set aside to prepay it at the first date at which it can be called. Advance
refunding effectively shortens a bond's life to seven or eight years, making it
an intermediate-term bond. While these bonds are very stable in price and an
excellent source of liquidity in any market, significant yield pickups can be
achieved by selling pre-re's and reinvesting in long-term bonds.
During the last six months I sold about $13 million of pre-re's and
bought long bonds. This reduced the percentage of pre-refunded bonds to 11% as
of September 30, 1996. The pre-refunded bonds were sold at an average yield of
4.4% and the money reinvested at a yield of 6.1%. Although substantial capital
gains were realized by the sales, they were offset by our tax-loss carryforwards
from 1994.
When the price of a bond is at par, its ability to appreciate in the
event of declining yields is
(Continued on next page.)
-7-
<PAGE> 12
================================================================================
REPORT FROM THE FUND MANAGERS (Continued)
inhibited. As yields fall lower, these par bonds are often called in and
refinanced at the new, lower rates. One way to avoid this dampening effect on
appreciation is to buy lower coupon bonds at a deep discount to par. These bonds
can appreciate a long ways before the call feature gets in the way.
For example, in April I sold the Fund's position in Clark County
Airport Improvement Revenue (6.00%, due 7/1/22) at 98.56. I reinvested the
proceeds in Waco Health Facilities (5.00%, due 11/1/25) at a price of 85.88. If
interest rates continue to fall, the Waco bonds will rise in price much faster
than the Clark County bonds (6.00%). Several smaller swaps of a similar nature
were made during the six-month period.
SAFECO CALIFORNIA TAX-FREE INCOME FUND
The SAFECO California Tax-Free Income Fund returned 8.53% for the year
ended September 30, while the average California municipal bond fund returned
6.49%. According to Lipper, that placed the SAFECO Fund 2 of 95 California funds
for the year, 4 of 46 funds for the five years, and 4 of 26 for the ten years
just ended. Meanwhile, the Lehman Brothers Long Municipal Bond Index posted
8.48% for the one-year period.
Again, our performance was due to our preference for discount bonds.
Like the SAFECO Municipal Bond Fund, the California Fund reduced its percentage
in prerefunded bonds, and improved call protection and performance by selling
par bonds and buying discounts.
The performance results are already quite striking. On May 7, I sold
San Francisco Airport bonds (6.00%) at a price near par, 98.25. With the
proceeds, I bought a discount, the California Department of Water Resources
bonds (5.25%), priced at 88.45. As of September 30, the discount, California
Water, has increased 6.4% in price, compared to the San Francisco Airport's 4%
gain. Obviously, if rates rise, the reverse will take place. The deeper discount
Water bonds will fall faster than the Airport bonds, but only until the point
the Airport 6.00% bonds break par. From that point, the two bonds would fall at
roughly the same pace.
The Foothill/Eastern Toll Road bonds (5.00%) continue to be one of the
best performers the Fund owns. These bonds and the San
-8-
<PAGE> 13
================================================================================
REPORT FROM THE FUND MANAGERS (Continued)
Joaquin Toll Road bonds have outperformed the market because the two
construction projects are proceeding ahead of schedule and under budget. Once
they have a history of toll collections, they may be upgraded by the rating
agencies, which would further enhance their value.
One new name added to the Fund was Eldorado Public Agency Financing
Authority, which is responsible for water and wastewater treatment in the
Placerville area.
SAFECO INSURED MUNICIPAL BOND FUND
The SAFECO Insured Municipal Bond Fund was ranked number 1 of 48 insured funds
with one-year records ending September 30. The SAFECO Fund returned 8.37% for
the year ended September 30, while the average insured fund returned 5.75%
according to Lipper. The Lehman Brothers Long Insured Municipal Bond Index
posted 8.14% for the same period.
Our willingness to stay fully invested in long bonds and to buy bonds
that are out of favor and on sale has enabled us to soundly outperform the Index
and our peers.
Due to its performance, the Insured Fund has attracted new money to
invest. We put it to work in Chicago General Obligation, Dade County Water and
Sewer System Revenue and Los Angeles Convention and Exhibition Center Authority
Certificates of Participation.
In addition, two exchanges were made. The Insured Fund sold San
Francisco Airport bonds (6.00%) and purchased Los Angeles County Sanitation
District Revenue bonds (5.25%) to improve call protection and performance. In
August, bonds with maturities from 13 to 20 years were sold and the proceeds
were reinvested in Huron Valley School District, Michigan (5.75%, due May 1,
2022). The result was better call protection and an average yield pickup of
.26%.
/s/ Stephen C. Bauer
Stephen C. Bauer
Portfolio Manager,
SAFECO Municipal Bond Fund
SAFECO California Tax-Free Income Fund
SAFECO Insured Municipal Bond Fund
-9-
<PAGE> 14
================================================================================
REPORT FROM THE FUND MANAGERS (Continued)
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
The SAFECO Washington State Municipal Bond Fund returned 6.69% for the
year ended September 30. The average Washington fund returned 6.50% according to
Lipper, and the Lehman Brothers Long Municipal Bond Index posted 8.48% for the
same period.
We outperformed our peer group because of our preference for long-term,
discount bonds.
As the new fund manager, I have not, and do not plan to change the
investment strategy of the Washington Fund. I will continue to favor long-term,
discount bonds. These bonds will usually have maturities of 20 years or more and
can be bought below face value, which creates appreciation as the bond matures.
In addition, I will continue to seek to buy bonds at a "good price." By
this I mean a price that is lower than where it normally trades relative to
other municipal bonds. Bonds that have long maturities and low coupons provide
higher yields, but are more volatile with greater price swings. Therefore, this
Fund is most appropriate for long-term investors.
[PHOTO OF BEVERLY DENNY]
Transactions were minimal, with three purchases and one exchange. The
purchases include limited general obligation bonds for Kent (maturing in 2026 at
a yield of 6.1%), Kitsap County Sewer Revenue bonds (maturing in 2016 and
yielding 6.05%), and Washington Higher Education Facility bonds issued for
Pacific Lutheran University (maturing in 2026 at a yield of 5.92%). All are
insured and received a rating of AAA.
The exchange involved trading Centralia Water Revenue bonds for
additional Chelan County PUD #1 bonds. Doing so, we picked up .45% in yield.
Furthermore, few new issues and a low current supply of Washington
bonds point to continued support of the current high price levels relative to
that of the national market.
/s/ Beverly Denny
Beverly Denny
SAFECO Washington State
Municipal Bond Fund Manager
-10-
<PAGE> 15
================================================================================
REPORT FROM THE FUND MANAGERS (Continued)
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
For the year ended September 30, the SAFECO Intermediate-term Municipal
Bond Fund returned 4.20%, while the average intermediate-term municipal bond
fund returned 4.31% according to Lipper. The Lehman Brothers 7-year Municipal
Bond Index posted 4.44% for the same period.
The longer average maturity of the SAFECO Intermediate Fund enhances
its performance in up markets. However, in the down market we have experienced
over most of the year, the Fund's longer maturity caused it to underperform.
Although the municipal market as a whole has improved, yields in the
intermediate municipal market have increased as bond prices have gone down. The
yield curve has flattened, and the spreads (differences between the yields of
intermediate bonds and longer maturity bonds) have narrowed. For example,
according to the Muni Fair Value Indices maintained by Bloomberg Financial
Markets, the spread between a generic AA general obligation bond with a
seven-year maturity and one with a 30-year maturity decreased by almost .4%
during the year ending September 30, 1996.
[PHOTO OF MARY V. METASTASIO]
However, all of the decline in the intermediate market occurred during
the first three quarters of the year ending September 30. Over the last three
months, both the market and the Fund's performance have improved.
The improving market allowed us to take advantage of the opportunity to
sell off some of our shorter, lower-yielding bonds at attractive levels, and
replace them with longer, higher-yielding bonds. (This is the strategy that
Steve Bauer, the previous manager, developed.) An example of this was selling
New York State Local Government Assistance Corporation bonds (4.85%, due 4/1/04
at par) and buying Massachusetts
(Continued on next page.)
-11-
<PAGE> 16
================================================================================
REPORT FROM THE FUND MANAGERS (Continued)
Water Resources Authority bonds (5.25%, due 12/1/08 at a yield of 5.20%).
I plan to continue managing the Fund with the same philosophy as in the
past, and continue to take advantage of market conditions to increase yield and
add value.
/s/ Mary V. Metastasio
Mary V. Metastasio
SAFECO Intermediate-Term
Municipal Bond Fund Manager
-12-
<PAGE> 17
S&P CREDIT RATINGS DISTRIBUTIONS
AS A PERCENTAGE OF NET ASSETS
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
- --------------------------------------------
<S> <C>
A: 20%
AA: 15%
AAA: 49%
B: 3%
BBB: 8%
NOT RATED: 2%
CASH & OTHER: 3%
</TABLE>
<TABLE>
<CAPTION>
SAFECO MUNICIPAL BOND FUND
- ---------------------------
<S> <C>
A: 28%
AA: 20%
AAA: 36%
B: 1%
BBB: 7%
NOT RATED: 7%
CASH & OTHER: 1%
</TABLE>
<TABLE>
<CAPTION>
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
- -------------------------------------------
<S> <C>
A: 23%
AA: 17%
AAA: 43%
NOT RATED: 10%
CASH & OTHER: 7%
</TABLE>
<TABLE>
<CAPTION>
SAFECO INSURED MUNICIPAL BOND FUND
- ----------------------------------
<S> <C>
AAA: 97%
CASH & OTHER: 3%
</TABLE>
<TABLE>
<CAPTION>
SAFECO CALIFORNIA TAX-FREE INCOME FUND
- --------------------------------------
<S> <C>
A: 24%
AA: 10%
AAA: 40%
BBB: 11%
NOT RATED: 10%
CASH & OTHER: 5%
</TABLE>
-13-
<PAGE> 18
================================================================================
HIGHLIGHTS
September 30, 1996
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
TOP FIVE
TYPES OF BONDS PERCENT OF NET ASSETS
- ------------------------------------------------------------------------
<S> <C>
Local G.O. - Unlimited Tax ............. 17%
Lease Rental ........................... 15%
Hospital ............................... 15%
Electric Utilities - Combination ....... 13%
Utilities - Water and Sewer ............ 13%
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
- ------------------------------------------------------------------------
New York State Housing Finance Agency
Health Facilities Revenue ............ 5.1%
North Carolina Municipal Power Agency
#1 Catawba Electric Revenue .......... 5.1%
Mississippi Hospital Equipment
and Facilities Authority ............. 4.3%
Trinity River Authority (TX) ............ 4.2%
Oklahoma Industries Authority
Health Facilities .................... 4.2%
TOP FIVE STATES PERCENT OF NET ASSETS
- ------------------------------------------------------------------------
Illinois ................................. 12%
Washington ............................... 11%
New York ................................. 9%
California ............................... 8%
Indiana .................................. 7%
</TABLE>
SAFECO INSURED MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
TOP FIVE
TYPES OF BONDS PERCENT OF NET ASSETS
- ------------------------------------------------------------------------
<S> <C>
Utilities - Sewer ........................ 18%
Electric Utilities - Combination ......... 13%
Local G.O. - Unlimited Tax ............... 11%
University Revenue ....................... 9%
Utilities - Water & Sewer ............... 9%
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
- ------------------------------------------------------------------------
Los Angeles Convention and
Exhibition Center ...................... 4.9%
Huron Valley School District
General Obligation (MI) ................ 4.8%
Board of Trustee Alabama Agriculture &
Mechanical University Revenue .......... 4.7%
Los Angeles County Sanitation District
Financing Authority Revenue ............ 4.5%
Rhode Island Health and Education
Building Corporation Higher
Education Facility Revenue ............. 3.7%
TOP FIVE STATES PERCENT OF NET ASSETS
- ------------------------------------------------------------------------
California ................................ 23%
Illinois .................................. 11%
Washington ................................ 10%
Pennsylvania .............................. 8%
Texas ..................................... 8%
</TABLE>
-14-
<PAGE> 19
================================================================================
HIGHLIGHTS (Continued)
September 30, 1996
SAFECO MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
TOP FIVE
TYPES OF BONDS PERCENT OF NET ASSETS
- ------------------------------------------------------------------------
<S> <C>
Electric Utilities - Combination .......... 15%
Escrow Secured - U.S. Treasury
(Prerefunded) .......................... 11%
Hospital .................................. 9%
Utilities - Water and Sewer ............... 7%
Utilities - Sewer ......................... 6%
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
- ------------------------------------------------------------------------
San Joaquin Hills (CA) Transportation
Corridor Agency ......................... 4.3%
Illinois Educational Facilities Authority .. 3.5%
Austin Combined Utility System ............. 3.3%
Alaska Housing Finance Corp. ............... 3.2%
East Chicago (IN) Elementary School
Building Corp. .......................... 2.6%
TOP FIVE STATES PERCENT OF NET ASSETS
- ------------------------------------------------------------------------
California ................................. 21%
Washington ................................. 11%
Illinois ................................... 10%
New York ................................... 7%
Texas ...................................... 7%
</TABLE>
SAFECO CALIFORNIA TAX-FREE INCOME FUND
<TABLE>
<CAPTION>
TOP FIVE
TYPES OF BONDS PERCENT OF NET ASSETS
- ------------------------------------------------------------------------
<S> <C>
Electric Utilities - Combination ........... 11%
Toll Road .................................. 11%
Utilities - Sewer .......................... 10%
Local G.O. - Limited Tax ................... 10%
Hospital ................................... 10%
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
- ------------------------------------------------------------------------
San Joaquin Hills Transportation
Corridor Agency .......................... 5.8%
Los Angeles County Sanitation
District Financing Authority ............. 5.8%
Pittsburg Redevelopment Agency .............. 5.2%
Foothill/Eastern Transportation
Corridor Agency .......................... 4.8%
San Jose Redevelopment Agency ............... 4.7%
</TABLE>
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
<TABLE>
<CAPTION>
TOP FIVE
TYPES OF BONDS PERCENT OF NET ASSETS
- ------------------------------------------------------------------------
<S> <C>
Local G.O. - Limited Tax .................... 15%
Hospital .................................... 12%
Local G.O. - Unlimited Tax .................. 11%
Utilities - Water ........................... 9%
Housing - Uninsured ......................... 8%
TOP FIVE HOLDINGS PERCENT OF NET ASSETS
- ------------------------------------------------------------------------
Everett School District #2
Unlimited Tax G.O. ....................... 4.6%
King County Housing Authority ............... 4.6%
Renton Water and Sewer Improvement .......... 4.3%
Snohomish County Public
Utility District #1 ...................... 4.2%
Spokane Regional Solid
Waste Management System .................. 3.9%
</TABLE>
-15-
<PAGE> 20
================================================================================
HIGHLIGHTS (Continued)
September 30, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
CURRENT YIELD (30-DAY) PERCENT
- ------------------------------------------------------------------------
<S> <C>
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND ..... 4.42%
SAFECO INSURED MUNICIPAL BOND FUND ............... 4.84%
SAFECO MUNICIPAL BOND FUND ....................... 5.26%
SAFECO CALIFORNIA TAX-FREE INCOME FUND ........... 5.18%
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND ...... 4.71%
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
WEIGHTED AVERAGE MATURITY YEARS
- ------------------------------------------------------------------------
<S> <C>
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND ...... 7.7
SAFECO INSURED MUNICIPAL BOND FUND ................ 24.3
SAFECO MUNICIPAL BOND FUND ........................ 23.8
SAFECO CALIFORNIA TAX-FREE INCOME FUND ............ 24.0
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND ....... 22.6
</TABLE>
-16-
<PAGE> 21
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO INTERMEDIATE-TERM
MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) (VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C>
BONDS-97.6%
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]* ......... 203
ARIZONA - 0.7%
100 Tucson Airport Authority
General Revenue
5.30%, due 6/01/03 [MBIA] .......... 103
CALIFORNIA - 8.3%
235 Pleasanton Joint Powers Financing
Authority Reassessment Revenue
5.80%, due 9/02/02 ................. 241
440 Sacramento Municipal
Utility District
Electric Revenue
5.50%, due 2/01/11 ................. 436
500 Santa Margarita Dana Point
Authority Revenue
5.375%, due 8/01/04 ................ 517
CONNECTICUT - 4.9%
100 Connecticut Housing
Finance Authority
Housing Mortgage
Finance Program
5.40%, due 5/15/03 ................. 103
150 Connecticut Special Tax
Obligation
Transportation Infrastructure
6.50%, due 6/01/03 ................. 164
400 East Haven Connecticut
General Obligation
6.50%, due 9/01/05 [FGIC] .......... 441
DISTRICT OF COLUMBIA - 3.0%
District of Columbia
General Obligation
150 5.75%, due 6/01/03 ................. 150
300 5.20%, due 6/01/03 ................. 290
GEORGIA - 2.7%
Georgia Municipal
Electric Authority
General Power Revenue
100 5.75%, due 1/01/03 ................. 103
300 4.75%, due 1/01/04 ................. 290
ILLINOIS - 11.9%
125 Chicago Wastewater
Transmission Revenue
5.20%, due 1/01/04 [FGIC] .......... 127
100 Illinois Health Facilities
Authority Revenue
(Brokaw-Mennonite Association)
5.60%, due 8/15/01 [FGIC] .......... 103
300 Illinois Health Facilities
Authority Revenue
(Masonic Medical Center)
5.20%, due 10/01/03 ................ 298
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-17-
<PAGE> 22
================================================================================
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) (VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C>
ILLINOIS (CONTINUED)
$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 .................. 104
500 5.50%, due 6/15/03 [MBIA] ........... 515
INDIANA - 6.5%
100 Clay School Building Corp.
First Mortgage
5.60%, due 1/01/03 [MBIA] ........... 103
200 Hammond Multi-School
Building Corp.
First Mortgage (Lake County)
5.50%, due 1/15/03 .................. 208
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 .................. 105
100 Pike Township School
Building Corp.
First Mortgage Revenue
5.70%, due 2/01/01 .................. 103
KENTUCKY - 3.6%
$500 Kentucky State Property and
Buildings
Commission Revenue
5.50%, due 9/01/04 .................. 517
LOUISIANA - 1.4%
100 Louisiana Correctional Facilities
Corp. Lease Revenue
5.55%, due 12/15/02 [FSA] ........... 103
100 Louisiana Public Facilities
Authority
Student Loan Revenue
6.20%, due 3/01/01 .................. 105
MASSACHUSETTS - 3.4%
Massachusetts Water
Resources Authority
General Revenue
400 5.25%, due 12/01/08 ................. 395
100 5.70%, due 11/01/02 ................. 104
MICHIGAN - 2.2%
300 Detroit School District
Unlimited Tax General Obligation
5.75%, due 5/01/02 .................. 311
MISSISSIPPI - 4.3%
600 Mississippi Hospital Equipment
and Facilities Authority
Revenue (Mississippi Baptist
Medical Center)
5.40%, due 5/01/04 [MBIA] ........... 613
NEW JERSEY - 0.7%
100 New Jersey Housing & Mortgage
Finance Agency Housing Revenue
6.00%, due 11/01/02 ................. 104
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-18-
<PAGE> 23
================================================================================
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) (VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C>
NEW YORK - 9.3%
$100 Metropolitan Transportation
Authority
Transit Facilities Service
Contract Revenue
5.375%, due 7/01/02 ................. $101
400 New York City Municipal Water
Finance Authority
5.00%, due 6/15/03 .................. 400
100 New York Dormitory Authority
State University Educational
Facilities Revenue
5.75%, due 5/15/01 .................. 104
700 NYS HFA Health Facilities
6.375%, due 11/01/04 ................ 732
NORTH CAROLINA - 6.6%
210 North Carolina Eastern Municipal
Power Agency System Revenue
5.50%, due 1/01/02 .................. 212
800 North Carolina Municipal
Power Agency
#1 Catawba Electric Revenue
4.10%, due 1/01/05 [AMBAC] .......... 729
OHIO - 1.7%
250 Ohio Air Quality Development
Authority Revenue
(Buckeye Power, Inc. Project)
5.00%, due 8/01/03 .................. 250
OKLAHOMA - 4.2%
$600 Oklahoma Industries Authority
Health Facilities Revenue
(Sisters of Mercy Health System,
St. Louis, Inc.)
5.20%, due 6/01/05 .................. $598
PENNSYLVANIA - 1.7%
250 Philadelphia Water and
Wastewater Revenue
5.00%, due 6/15/02 .................. 247
TEXAS - 5.7%
100 Coastal Bend Health Facility
Development Corp.
Health Services Revenue
(Incarnate Word)
5.70%, due 1/01/03 [AMBAC] .......... 104
100 Houston Sewer System Junior
Lien Revenue
5.75%, due 12/01/02 ................. 105
600 Trinity River Authority Revenue
(Tarrant County Water Project)
5.75%, due 2/01/05 .................. 607
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-19-
<PAGE> 24
================================================================================
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) (VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C>
WASHINGTON - 11.5%
$500 Snohomish & Island
County School District #401
(Stanwood) General Obligation
5.90%, due 12/15/11 [MBIA] ........ $ 512
500 Tacoma Electric System Revenue
5.80%, due 1/01/04 [FGIC] ......... 524
100 Washington Health Care
Facilities Authority Revenue
(Empire Health Service, Spokane)
5.50%, due 11/01/03 [MBIA] ........ 103
Washington Public Power
Supply System
Nuclear Project #2 Revenue
200 5.30%, due 7/01/02 ................ 202
300 4.80%, due 7/01/04 ................ 289
-------
TOTAL BONDS .................................................. 14,042
-------
TEMPORARY INVESTMENTS - 1.4%
INVESTMENT COMPANIES:
202 Federated Tax-Exempt
Money Market Fund, Inc. .......... 202
-------
TOTAL TEMPORARY INVESTMENTS ................................. 202
-------
TOTAL INVESTMENTS - 99.0% ................................... $14,244
Other Assets, less Liabilities .............................. 144
-------
NET ASSETS .................................................. $14,388
=======
</TABLE>
- ---------------------------
* 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 and the percentage of the portfolio they
guarantee at the period end are as follows:
<TABLE>
<S> <C>
FGIC: Financial Guaranty
Insurance Corp. ........................................ 16.2%
MBIA: Municipal Bond Investors
Assurance Corp. ........................................ 11.7
AMBAC: AMBAC Indemnity Corp. .................................. 5.9
FSA: Financial Security
Assurance, Inc. ........................................ 0.7
----
34.5%
</TABLE>
====
SEE NOTES TO FINANCIAL STATEMENTS
-20-
<PAGE> 25
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO INSURED MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) (VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C>
BONDS - 96.5%
ALABAMA - 4.7%
$600 Board of Trustee Alabama
Agriculture & Mechanical
University Revenue
5.50%, due 11/01/20 [MBIA]* ......... $584
ALASKA - 2.4%
300 Alaska Housing Finance Corp.
Insured Mortgage Program
5.90%, due 12/01/33 [FSA] ........... 295
CALIFORNIA - 22.9%
385 Fresno Sewer System Revenue
4.50%, due 9/01/23 [AMBAC] .......... 315
665 Los Angeles Convention and
Exhibition Center
Authority Certificates of
Participation
5.125%, due 8/15/21 [MBIA] .......... 608
600 Los Angeles County Sanitation
District
Financing Authority Revenue
(Capital Projects)
5.25%, due 10/01/19 [MBIA] .......... 562
500 Los Angeles Department of
Water and Power
Electricity Refunding Revenue
4.25%, due 11/15/14 [MBIA] .......... 414
350 Los Angeles Wastewater
System Revenue
4.70%, due 11/01/19 [FGIC] .......... 300
350 Sacramento Municipal Utility
District
Electric Revenue
4.75%, due 9/01/21 [MBIA] ........... 300
250 San Diego Public Facilities
Financing Authority
Sewer Revenue
5.00%, due 5/15/23 [AMBAC] .......... 224
145 University of California Revenue
(Multiple Purpose Projects)
4.75%, due 9/01/15 [AMBAC] .......... 128
FLORIDA - 3.7%
470 Dade County Water and Sewer
System Revenue
5.50%, due 10/01/25 [FGIC] .......... 457
ILLINOIS - 11.3%
Chicago General Obligation
100 5.875%, due 1/01/22 [AMBAC] ......... 100
500 5.125%, due 1/01/25 [FGIC] .......... 455
250 Cook County General Obligation
5.00%, due 11/15/23 [MBIA] .......... 223
200 Illinois Health Facilities
Authority Revenue
(The Children's Memorial Hospital)
5.00%, due 8/15/22 [AMBAC] .......... 177
400 Regional Transportation Authority
6.75%, due 6/01/25 [FGIC] ........... 451
INDIANA - 6.2%
100 Indiana Municipal Power Agency
Power Supply System Revenue
6.125%, due 1/01/13 [MBIA] .......... 106
250 Indiana State Office Building
Commission
Capitol Complex Revenue
5.25%, due 7/01/15 [AMBAC] .......... 236
100 Indiana Transportation Finance
Authority
Highway Revenue
5.25%, due 6/01/15 [AMBAC] .......... 96
350 Indianapolis Gas Utility Revenue
5.375%, due 6/01/21 [FGIC] .......... 330
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-21-
<PAGE> 26
================================================================================
PORTFOLIO OF INVESTMENTS (Continue)
SAFECO INSURED MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) (VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C>
IOWA - 1.9%
$250 Marshalltown Pollution Control
Revenue
(Iowa Electric Light and Power
Co. Project)
5.50%, due 11/01/23 [MBIA] ......... $240
MICHIGAN - 7.3%
350 Detroit Water Supply System
Revenue
5.00%, due 7/01/23 [FGIC] .......... 314
600 Huron Valley School District
General Obligation
5.50%, due 5/01/11 [FSA] ........... 599
MINNESOTA - 2.4%
350 Minneapolis and St. Paul Housing
and Redevelopment Authority
Health Care System Revenue
(HealthSpan)
4.75%, due 11/15/18 [AMBAC] ........ 305
NORTH CAROLINA - 1.0%
125 North Carolina Eastern Municipal
Power Agency
Power System Revenue
5.50%, due 1/01/17 [FGIC] .......... 120
PENNSYLVANIA - 8.4%
350 Montgomery County Higher
Education and Health Authority
Hospital Revenue
(Abington Memorial Hospital)
5.125%, due 6/01/24 [FGIC] ......... 320
400 Pittsburgh Water and Sewer
Authority Revenue
4.75%, due 9/01/16 [FGIC] .......... 352
445 University Area Joint Authority
Sewer Revenue
4.75%, due 11/01/20 [MBIA] ......... 384
RHODE ISLAND - 3.7%
500 Rhode Island Health and
Education Building Corporation
Higher Education Facility Revenue
5.25%, due 9/15/23 [MBIA] .......... 462
SOUTH CAROLINA - 0.8%
100 South Carolina Public Service
Authority Revenue
5.50%, due 7/01/21 [MBIA] .......... 96
TEXAS - 7.9%
200 Colorado River Municipal
Water District
Water System Revenue
5.15%, due 1/01/21 [AMBAC] ......... 184
250 Harris County Toll Road
Unlimited Tax Revenue
5.50%, due 8/15/21 [FGIC] .......... 242
Lower Colorado River Authority
Junior Lien Revenue
300 5.625%, due 1/01/17 [FSA] .......... 291
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] ......... 103
175 Trinity River Authority Regional
Wastewater System Revenue
5.00%, due 8/01/16 [AMBAC] ......... 160
VIRGINIA - 1.8%
250 Virginia Housing Development
Authority
Commonwealth Mortgage
5.25%, due 7/01/27 [AMBAC] ......... 229
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-22-
<PAGE> 27
================================================================================
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO INSURED MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) VALUE (000's)
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
WASHINGTON - 10.1%
$100 King County Public Hospital
District #1
Hospital Facilities Revenue
(Valley Medical Center)
5.50%, due 9/01/17 [AMBAC] ............... $ 95
250 Municipality of Metropolitan
Seattle Sewer Revenue
6.30%, due 1/01/33 [MBIA] ................ 260
250 Richland Water and Sewer
Improvement Revenue
5.625%, due 4/01/12 [MBIA] ............... 250
300 Snohomish County Public
Utility District #1
Electric Revenue
5.50%, due 1/01/20 [FGIC] ................ 288
$100 Washington Health Care Facilities
Authority Revenue
(Swedish Hospital Medical
Center)
6.30%, due 11/15/22 [AMBAC] .............. 104
250 Yakima-Tieton Irrigation
District Revenue
6.20%, due 6/01/19 [FSA] ................. 259
-------
TOTAL BONDS .............................. 12,028
=======
TEMPORARY INVESTMENTS - 2.3%
Investment Companies:
282 Federated Tax-Exempt
Money Market Fund, Inc. .................. 282
-------
TOTAL TEMPORARY INVESTMENTS .............. 282
-------
TOTAL INVESTMENTS - 98.8% ................ 12,310
Other Assets, less Liabilities ........... 150
-------
NET ASSETS ............................... $12,460
=======
</TABLE>
* 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 and the percentage of the portfolio they
guarantee at the period end are as follows:
MBIA: Municipal Bond Investors
Assurance Corp. ............................... 37.3%
FGIC: Financial Guaranty
Insurance Corp. ............................... 31.0
AMBAC: AMBAC Indemnity Corp. ......................... 19.6
FSA: Financial Security
Assurance, Inc. ............................... 12.1
-----
100.0%
=====
- --------------------------------------------------------------------------------
- - Prerefunded bonds are 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
-23-
<PAGE> 28
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C> <C>
BONDS - 98.5%
ALABAMA - 0.5%
$1,310
Agriculture and Mechanical
University Revenue Board of Trustees Alabama
5.50%, due 11/01/20 [MBIA]* ........ $1,274
1,000 Citronelle Industrial
Development Board
Pollution Control Revenue
8.00%, due 12/01/12 ................ 1,109
ALASKA - 3.2%
Alaska Housing Finance Corp.
Veterans Mortgage Program
785 6.50%, due 6/01/31 ................. 793
17,000 5.00%, due 12/01/18 ................ 14,910
ARIZONA - 2.5%
Phoenix Civic Improvement Corp.
Wastewater System Lease
Revenue
4,220 5.00%, due 7/01/18 [MBIA] .......... 3,874
9,800 4.75%, due 7/01/23 ................. 8,240
CALIFORNIA - 20.8%
1,500 Foothill/Eastern Transportation
Corridor Agency
Toll Road Revenue
5.00%, due 1/01/35 ................. 1,243
2,500 Los Angeles County Certificates
of Participation
(Disney Parking Project)
5.50%, due 9/01/21 ................. 2,309
13,000 Los Angeles Department of
Water and Power
Electric Plant Revenue
5.25%, due 11/15/26 ................ 11,849
Los Angeles Wastewater
System Revenue
$1,280 4.70%, due 11/01/17 [FGIC] $1,109
5,000 4.70%, due 11/01/19 [FGIC] ......... 4,282
2,200 Metropolitan Water District of
Southern California Waterworks
Revenue
5.75%, due 3/01/14 ................. 2,178
5,250 Northern California Power
Agency
Geothermal Project Revenue
5.00%, due 7/01/09 ................. 4,951
Pittsburg Redevelopment Agency
Los Medanos Community
Development Project Tax
Allocation
11,995 5.80%, due 8/01/34 [AMBAC] 11,921
6,400 4.625%, due 8/01/21 [AMBAC] 5,387
1,000 Redding Joint Powers Financing
Solid Waste and Corporation
Yard Revenue
5.00%, due 1/01/23 ................. 844
8,500 Sacramento County Sanitation
District Finance Authority
4.75%, due 12/01/23 ................ 7,225
5,000 Sacramento Municipal Utility
District Electric Revenue
6.00%, due 2/01/15 ................. 5,001
3,600 San Francisco Airport
Commission Sewer Revenue
6.00%, due 5/01/25 [FGIC] .......... 3,644
1,700 San Francisco Redevelopment
Financing Authority
Tax Allocation Revenue
4.75%, due 8/01/18 [FGIC] .......... 1,473
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-24-
<PAGE> 29
================================================================================
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C> <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] ........ $ 6,855
25,000 San Joaquin Hills Transportation
Corridor Agency Senior Lien Toll
Road Revenue
5.00%, due 1/01/33 ................ 20,937
Southern California Public Power
Authority Power Project Revenue
(Multiple Projects)
4,085 -5.50%, due 7/01/20
(Prerefunded 7/01/00 @ 100) ....... 4,250
3,165 5.50%, due 7/01/20 ................ 3,012
2,200 Southern California Public Power
Authority Power Project Revenue
(Palo Verde Project)
5.00%, due 7/01/17 ................ 1,970
COLORADO - 0.3%
1,000 Colorado Housing Finance
Authority Multi-Family
Mortgage Revenue
8.30%, due 10/01/23 ............... 1,109
295 Colorado Housing Finance
Authority Single Family
Residential Housing Revenue
8.75%, due 9/01/17 ................ 309
DELAWARE - 0.7%
4,200 Delaware River and Bay
Authority Revenue
4.75%, due 1/01/24 [MBIA] ......... 3,605
FLORIDA - 1.9%
Florida Board of Education
General Obligation
1,000 5.00%, due 6/01/12 ................ 934
3,000 5.00%, due 6/01/24 ................ 2,675
2,750 Mid-Bay Bridge Authority
Revenue
6.10%, due 10/01/22 ............... 12,736
3,000 Orlando Utility Commission Water
and Electric Revenue
5.00%, due 10/01/23 ............... 2,671
GEORGIA - 3.0%
6,750 Atlanta Water and
Sewerage Revenue
4.50%, due 1/01/18 ............... 5,671
4,000 Cobb County Kennestone
Hospital Authority Revenue
5.00%, due 4/01/24 [MBIA] ......... 3,548
5,000 Municipal Electric Authority
Project One Special Obligation
Fourth Crossover Series
6.50%, due 1/01/20 ................ 5,416
ILLINOIS - 10.2%
7,000 Chicago Wastewater
Transmission Revenue
5.125%, due 1/01/20 [FGIC] ........ 6,392
5,500 Illinois Dedicated Tax Revenue
(Civic Center)
7.00%, due 12/15/10 [AMBAC] ....... 6,084
17,500 Illinois Educational Facilities
Authority Adjustable Demand
Revenue (University of Chicago)
5.70%, due 12/01/25 ............... 17,014
5,000 Metropolitan Pier and Exposition
Authority McCormick Place
Convention Complex Hospitality
Facilities Revenue
7.00%, due 7/01/26 ................ 5,454
8,360 Regional Transportation Authority
6.75%, due 6/01/25 [FGIC] ......... 9,425
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-25-
<PAGE> 30
================================================================================
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C> <C>
ILLINOIS (CONTINUED)
$4,770 University of Illinois Auxiliary
Facilities System Revenue
5.75%, due 4/01/22 ........................ $ 4,682
INDIANA - 5.4%
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
(Prerefunded 1/15/03 @ 102) ............... 12,367
7,715 Hammond Multi-School Building
Corp. First Mortgage Revenue
6.20%, due 7/10/15 ........................ 8,007
6,450 Indianapolis Gas Utility System
Revenue
4.00%, due 6/01/11 [FGIC] ................. 5,525
IOWA - 0.2%
880 Iowa Housing Finance Authority
Multiple Family Housing Revenue
10.00%, due 4/01/23 ....................... 884
KENTUCKY - 1.9%
8,805 -Kentucky Local Correctional
Facilities Construction Authority
Multi-County Revenue
7.00%, due 11/01/14
(Prerefunded 11/01/97 @ 102) .............. 9,260
MARYLAND - 1.8%
5,125 Baltimore Project and Revenue
(Water Projects)
5.00%, due 7/01/24 ........................ 4,687
5,000 Maryland Health and Higher
Educational Facilities Authority
Revenue (University of Maryland
Medical System)
4.75%, due 7/01/23 [FGIC] ................. 4,249
MASSACHUSETTS - 2.1%
Massachusetts Water Resources
Authority General Revenue
4,500 6.00%, due 4/01/20 ........................ 4,508
4,000 5.00%, due 3/01/22 ........................ 3,577
2,500 4.75%, due 12/01/23 ....................... 2,134
MICHIGAN - 1.3%
5,000 Detroit Water Supply System
Revenue
4.75%, due 7/01/19 [FGIC] ................. 4,301
2,000 University of Michigan Hospital
Revenue
6.375%, due 12/01/24 ...................... 2,043
NEVADA - 0.2%
965 Clark County Airport Improvement
Revenue
13.00%, due 7/01/98 ....................... 1,100
NEW JERSEY - 0.4%
1,640 -New Jersey Turnpike Authority
Revenue
10.375%, due 1/01/03
(Escrowed to Maturity) .................... 1,958
NEW MEXICO - 0.5%
2,500 Farmington Collateralized
Pollution Control Revenue (Tucson
Gas and Electric Co.)
6.10%, due 1/01/08 ........................ 2,449
NEW YORK - 6.7%
New York City Municipal Water
Finance Authority Water and
Sewer System Revenue
2,205 6.00%, due 6/15/19 [FGIC] ................. 2,199
2,100 5.00%, due 6/15/17 [FGIC] ................. 1,913
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-26-
<PAGE> 31
================================================================================
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C> <C>
NEW YORK (CONTINUED)
New York Dormitory Authority
State University Educational
Facilities Revenue
$ 4,400 7.50%, due 5/15/11 ....................... $ 5,145
5,250 7.50%, due 5/15/13 ....................... 6,199
6,500 5.25%, due 5/15/15 ....................... 6,005
1,500 5.00%, due 7/01/15 ....................... 1,388
4,000 -New York Local Government
Assistance Corp.
7.00%, due 4/01/21
(Prerefunded 4/01/01 @ 100) .............. 4,388
4,700 Triborough Bridge and Tunnel
Authority Revenue
8.125%, due 1/01/12 ...................... 5,014
NORTH CAROLINA - 2.3%
11,000 North Carolina Eastern Municipal
Power Agency Power System
Revenue
6.00%, due 1/01/22 ....................... 10,900
OKLAHOMA - 1.2%
5,590 McGee Creek Authority
Water Revenue
6.00%, due 1/01/23 [MBIA] ................ 5,919
PENNSYLVANIA - 4.0%
5,000 Centre County University Area
Joint Authority Sewer Revenue
4.75%, due 11/01/20 [MBIA] ............... 4,311
6,000 -Pennsylvania Intergovernmental
Cooperative Authority Special Tax
Revenue (City of Philadelphia)
6.80%, due 6/15/22
(Prerefunded 6/15/02 @ 100) .............. 6,624
7,415 -Philadelphia Water and Sewer
Revenue
7.00%, due 8/01/18
(Prerefunded 8/01/01 @ 100) .............. 8,165
PUERTO RICO - 1.8%
10,000 Puerto Rico Highway and
Transportation Authority
Highway Revenue
5.00%, due 7/01/36 ....................... 8,693
SOUTH CAROLINA - 6.1%
10,250 Charleston County Hospital
Facility Revenue
5.00%, due 10/01/22 [MBIA] ............... 9,130
1,135 Charleston County Pollution
Control Facilities Revenue
5.90%, due 8/01/03 ....................... 1,138
4,000 Charleston Waterworks and
Sewer System Revenue
5.00%, due 1/01/16 ....................... 3,688
5,500 Pickens County and Richland
County Hospital Revenue
5.75%, due 8/01/21 [AMBAC] ............... 5,393
South Carolina Public Service
Authority Power Supply Revenue
1,395 5.70%, due 7/01/08 ....................... 1,395
10,000 5.125%, due 1/01/32 ...................... 8,735
TEXAS - 6.7%
10,000 Austin Combined Utility
System Revenue
12.50%, due 11/15/07 [MBIA] .............. 16,118
4,350 Austin Water, Sewer and
Electric Revenue
14.00%, due 11/15/01 ..................... 5,609
1,600 -Coastal Industrial Water
Authority Water Revenue
5.50%, due 12/15/09
(Escrowed to Maturity) ................... 1,605
2,260 Texas Municipal Power
Agency Revenue
5.50%, due 9/01/13 [FGIC] ................ 2,231
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-27-
<PAGE> 32
================================================================================
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C> <C>
TEXAS (CONTINUED)
$7,500 Waco Texas Health Facilities
Development Corp. Hospital
Revenue
5.00%, due 11/01/25 ...................... $6,595
UTAH - 1.1%
Intermountain Power Agency
Special Obligation First Crossover
Series
1,900 6.00%, due 7/01/23 ....................... 1,897
2,750 5.00%, due 7/01/16 ....................... 2,475
1,000 -Salt Lake City Hospital Revenue
(IHC Hospitals)
5.00%, due 6/01/15
(Escrowed to Maturity) ................... 930
VIRGINIA - 0.2%
1,155 -Richmond Metropolitan
Expressway Authority Revenue
5.60%, due 1/15/13
(Escrowed to Maturity) ................... 1,165
WASHINGTON - 10.7%
7,255 Douglas County Public Utility
District #1 Wells Hydroelectric
Revenue
8.75%, due 9/01/18 ....................... 9,370
2,500 Everett School District #2
Snohomish County Unlimited Tax
General Obligation
6.20%, due 12/01/12 [MBIA] ............... 2,628
1,750 King County Housing Authority
Pooled Housing Refunding
Revenue
6.80%, due 3/01/26 ....................... 1,823
1,650 King County Limited Tax General
Obligation (Various Purposes)
4.75%, due 1/01/19 ....................... 1,473
WASHINGTON (CONTINUED)
2,255 King County Public Hospital
District #1 Hospital Facilities
Revenue (Valley Medical Center)
5.50%, due 9/01/17 [AMBAC] ............... 2,147
4,800 Lewis County Public Utility
District #1 Cowlitz Falls
Hydroelectric Project Revenue
6.00%, due 10/01/24 ...................... 4,781
4,000 Port of Seattle Revenue
6.00%, due 12/01/14 ...................... 4,022
3,000 Washington Health Care Facilities
Authority Revenue (Fred
Hutchinson Cancer Research
Center)
7.375%, due 1/01/18 ...................... 3,234
6,350 Washington Health Care Facilities
Authority Revenue (Yakima Valley
Memorial Hospital Association)
7.25%, due 1/01/21 ....................... 7,063
8,500 Washington Public Power Supply
System Nuclear Project #1
Revenue
6.00%, due 7/01/17 ....................... 8,331
4,000 Washington Public Power Supply
System Nuclear Project #2
Revenue
6.30%, due 7/01/12 ....................... 4,209
2,610 Washington Public Power Supply
System Nuclear Project #3
Revenue
5.50%, due 7/01/18 ....................... 2,437
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-28-
<PAGE> 33
================================================================================
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C>
WEST VIRGINIA - 0.6%
$3,025 West Virginia Housing
Development Fund Single
Family Mortgage Revenue
6.125%, due 7/01/13 ................... $ 3,046
WISCONSIN - 0.2%
1,000 Wisconsin Health and Education
Facilities Authority Revenue
6.00%, due 10/01/12 [MBIA] ............. 1,006
--------
TOTAL BONDS ........................................ 476,154
--------
TOTAL INVESTMENTS - 98.5% .......................... 476,154
Other Assets, less Liabilities ..................... 7,033
--------
NET ASSETS ........................................ $483,187
========
<CAPTION>
* 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 and the percentage of the portfolio they
guarantee at the period end are as follows:
<S> <C>
MBIA: Municipal Bond Investors
Assurance Corp. ........................... 12.2%
FGIC: Financial Guaranty
Insurance Corp. ........................... 9.8
AMBAC: AMBAC Indemnity Corp. ..................... 6.5
--------
28.5%
========
</TABLE>
- - Prerefunded bonds are 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
-29-
<PAGE> 34
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO CALIFORNIA TAX-FREE
INCOME FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C>
BONDS - 94.9%
$2,250 California Department of
Water Resources
Central Valley Project
Water System Revenue
5.25%, due 12/01/24 [FGIC]* ............ $ 2,118
2,250 California Health Facilities
Financing Authority
Insured Health Facility Revenue
(Catholic Healthcare West)
4.75%, due 7/01/19 [MBIA] .............. 1,943
2,750 California Statewide Communities
Development Authority
Certificates of Participation
(The Trustees of the J.
Paul Getty Trust)
5.00%, due 10/01/23 .................... 2,448
3,715 California Statewide Communities
Development Authority
Certificates of Participation
(Childrens Hospital of
Los Angeles)
4.75%, due 6/01/21 [MBIA] .............. 3,189
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] ............ 3,153
3,150 East Bay Regional Park District
California General Obligation
5.75%, due 9/01/17 ..................... 3,097
2,000 Eldorado Public Agency
Financing Authority
5.50%, due 2/15/21 [FGIC] .............. 1,942
4,195 Foothill/Eastern Transportation
Corridor Agency
Toll Road Revenue
5.00%, due 1/01/35 ..................... 3,477
670 Inglewood Insured Hospital
Revenue
(Daniel Freeman Hospital)
6.75%, due 5/01/13 ..................... 703
Los Angeles Convention and
Exhibition Center
Authority Certificates of
Participation
1,200 - 9.00%, due 12/01/20
(Prerefunded 12/01/05 @ 100) ........... 1,562
1,300 5.125%, due 8/15/21 [MBIA] ............. 1,188
4,500 Los Angeles County Sanitation
District Financing
Authority Revenue (Capital
Projects)
5.25%, due 10/01/19 .................... 4,172
3,800 Los Angeles Department of
Water and Power
Waterworks Revenue
4.75%, due 11/15/19 .................... 3,278
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-30-
<PAGE> 35
================================================================================
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO CALIFORNIA TAX-FREE INCOME FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C>
$2,000 Los Angeles Wastewater
System Revenue
4.70%, due 11/01/17 [FGIC] ............ $ 1,732
2,500 Northern California Power
Agency
Geothermal Project Revenue
5.00%, due 7/01/09 .................... 2,358
1,350 Palomar Pomerado Health System
California Insured
Revenue Service
4.75%, due 11/01/23 [MBIA] ............ 1,141
4,435 Pittsburg Redevelopment Agency
Los Medanos Community
Development Project
Tax Allocation
4.625%, due 8/01/21 ................... 3,733
Pleasanton Joint Powers
Financing Authority
Reassessment Revenue
1,430 6.20%, due 9/02/17 .................... 1,431
1,890 6.15%, due 9/02/12 .................... 1,914
3,900 Redding Joint Powers Financing
Authority
Solid Waste and Corporation
Yard Revenue
5.00%, due 1/01/23 .................... 3,292
2,000 Riverside County Certificates of
Participation
(Capital Projects)
6.125%, due 11/01/21 .................. 2,007
1,000 Riverside County Certificates of
Participation
(Public Financing Project)
7.875%, due 12/01/15 .................. 1,026
3,000 Sacramento Municipal Utility
District
Electric Revenue
4.75%, due 9/01/21 [MBIA] ............. 2,573
1,750 San Diego Public Facilities
Financing Authority
Sewer Revenue
5.25%, due 5/15/20 .................... 1,606
5,000 San Joaquin Hills Transportation
Corridor Agency
Senior Lien Toll Road Revenue
5.00%, due 1/01/33 .................... 4,187
4,000 San Jose Redevelopment Agency
4.75%, due 8/01/22 .................... 3,422
Southern California Public
Power Authority
Power Project Revenue
(Multiple Projects)
2,665 - 5.50%, due 7/01/20
(Prerefunded 7/01/00 @ 100) ........... 2,773
1,335 5.50%, due 7/01/20 .................... 1,270
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-31-
<PAGE> 36
================================================================================
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO CALIFORNIA TAX-FREE INCOME FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C>
$1,000 Southern California Public
Power Authority
Power Project Revenue
(Transportation Project)
4.75%, due 7/01/23 ...................... $ 853
970 Stanislaus Waste-to-Energy
Financing Agency
Solid Waste Facility Revenue
7.625%, due 1/01/10 ..................... 1,046
--------
TOTAL BONDS ......................................... 68,656
--------
TEMPORARY INVESTMENTS - 3.3% Investment Companies:
$2,366 SEI Tax Exempt Trust Institutional
Tax Free Portfolio ...................... 2,366
TOTAL TEMPORARY INVESTMENTS ......................... 2,366
--------
TOTAL INVESTMENTS - 98.2% ........................... 71,022
Other Assets, less Liabilities ...................... 1,342
--------
NET ASSETS .......................................... $ 72,364
========
<CAPTION>
* 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 and the percentage of the portfolios
they guarantee at the period end are as follows:
<S> <C>
MBIA: Municipal Bond Investors
Assurance Corp. .............................. 14.6%
FGIC: Financial Guaranty Insured Corp. ............. 8.4
AMBAC: AMBAC Indemnity Corp ......................... 4.6
BIG: Bond Investors Guaranty
Insurance Co. ................................ 0.0
-----
27.6%
=====
</TABLE>
- - Prerefunded bonds are 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
-32-
<PAGE> 37
================================================================================
PORTFOLIO OF INVESTMENTS
SAFECO Washington State
Municipal Bond Fund
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT (000's) VALUE (000's)
- --------------------------------------------------------------------------------
<S> <C>
BONDS - 95.6%
$200 Chelan County Public Utility
District #1 Columbia River Rock
Hydroelectric System Revenue
6.375%, due 6/01/29 ......................... $ 201
300 Everett School District #2
Snohomish County
Unlimited Tax General Obligation
6.20%, due 12/01/12 [MBIA]* ................. 315
215 Grant County Public
Utility District #2
Wanapum Hydroelectric Revenue
6.375%, due 1/01/23 ......................... 217
100 Kent Limited Tax General
Obligation
5.75%, due 12/01/26 [MBIA] .................. 99
300 King County Housing Authority
Pooled Housing Refunding
Revenue
6.80%, due 3/01/26 .......................... 313
250 King County Limited Tax
General Obligation
(Various Purposes)
4.75%, due 1/01/19 .......................... 223
200 King County Public Hospital
District #1
Hospital Facilities Revenue
(Valley Medical Center)
5.50%, due 9/01/17 [AMBAC] .................. 191
$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 ......................... 197
100 Kitsap County, Sewer Revenue
5.75%, due 7/01/16 [MBIA] ................... 100
250 Klickitat County Public Hospital
District # 1
Unlimited Tax General Obligation
5.75%, due 10/01/27 [FGIC] .................. 246
100 Lewis County Public Utility
District #1
Cowlitz Falls Hydroelectric
Project Revenue
6.00%, due 10/01/24 ......................... 100
200 Municipality of Metropolitan
Seattle Sewer Revenue
6.30%, due 1/01/33 [MBIA] ................... 208
95 Pike Place Market Preservation
and Development
Authority Special Obligation
Revenue
6.60%, due 12/01/21 ......................... 99
100 Port of Seattle Revenue
6.00%, due 12/01/14 ......................... 101
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-33-
<PAGE> 38
================================================================================
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(000'S) VALUE (000'S)
- --------------------------------------------------------------------------------
<S> <C>
$300 Renton Water and Sewer
Improvement Revenue
5.375%, due 4/01/13 .................. $293
200 Seattle Water System Revenue
5.25%, due 12/01/23 .................. 185
295 Snohomish County Public Utility
District #1
Generation System Revenue
5.50%, due 1/01/20 [FGIC] ............ 283
250 Spokane Regional Solid Waste
Management System Revenue
6.25%, due 12/01/11 [AMBAC] .......... 264
250 Tacoma Limited Tax
General Obligation
6.25%, due 12/01/12 .................. 257
250 Tacoma Water System Revenue
5.50%, due 12/01/13 .................. 249
200 Tukwila Limited Tax
General Obligation
5.90%, due 1/01/14 ................... 204
100 Tumwater Unlimited Tax
General Obligation
5.80%, due 12/01/11 .................. 100
200 University of Washington Housing
and Dining System Revenue
5.00%, due 12/01/21 [MBIA] ........... 180
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] ........... 103
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] ........... 196
200 Washington Health Care Facilities
Authority Revenue
(Northwest Hospital, Seattle)
5.75%, due 11/15/23 [AMBAC] .......... 193
100 Washington Health Care Facilities
Authority Revenue
(Swedish Hospital Medical Center)
6.30%, due 11/15/22 [AMBAC] .......... 104
120 Washington Public Power
Supply System
Nuclear Project #2 Revenue
5.50%, due 7/01/18 ................... 112
250 Washington Higher Education
Facilities Authority
Revenue and Refunding Revenue
(Pacific Lutheran University
Project)
5.70%, due 11/01/26 [CL] ............. 243
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-34-
<PAGE> 39
================================================================================
PORTFOLIO OF INVESTMENTS (Continued)
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT(000'S) VALUE (000'S)
- --------------------------------------------------------------------------------
<S> <C>
$250 Washington State Housing
Finance Commission
Revenue (Horizon House
Project)
6.125%, due 7/01/27 [AG] ............... $ 254
250 Whatcom County Limited Tax
General Obligation
5.75%, due 12/01/12 [FSA] .............. 251
200 Yakima-Tieton Irrigation
District Revenue
6.20%, due 6/01/19 [FSA] ............... 207
------
TOTAL BONDS ................................................. 6,495
------
TEMPORARY INVESTMENTS - 0.2%
INVESTMENT COMPANIES:
16 Aim Tax-Exempt
Money Market Fund, Inc. ................ 16
------
TOTAL TEMPORARY INVESTMENTS ................................. 16
------
TOTAL INVESTMENTS - 95.8% ................................... 6,511
Other Assets, less Liabilities .............................. 282
------
NET ASSETS .................................................. $6,793
======
</TABLE>
- ---------------------
*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 and the percentage of the portfolio they
guarantee at period end are as follows:
<TABLE>
<S> <C>
MBIA: Municipal Bond Investors
Assurance Corp. .................................... 18.5%
AMBAC: AMBAC Indemnity Corp. .............................. 11.6
FGIC: Financial Guaranty
Insurance Corp. .................................... 8.1
FSA: Financial Security
Assurance, Inc. .................................... 7.1
AG: Asset Guaranty ..................................... 3.9
CL: Connie Lee ......................................... 3.7
----
52.9%
====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-35-
<PAGE> 40
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SAFECO SAFECO
INTERMEDIATE-TERM INSURED
MUNICIPAL MUNICIPAL
(In Thousands, Except Per-Share Amounts) BOND FUND BOND FUND
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at Value:
Bonds (Identified Cost $13,825 and
$11,434, respectively) $14,042 $12,028
Temporary Investments 202 282
------- -------
Total Investments 14,244 12,310
Cash -- --
Receivables
Interest 214 196
Trust Shares Sold -- 4
Deferred Organization Expense 6 6
------- -------
Total Assets 14,464 12,516
------- -------
LIABILITIES
Payables
Dividends 23 33
Investment Advisory Fees 7 7
Notes Payable -- --
Trust Shares Redeemed -- --
Organization Expense 6 6
Other 40 10
------- -------
Total Liabilities 76 56
------- -------
NET ASSETS $14,388 $12,460
======= =======
NO LOAD CLASS:
Net Assets $14,388 $12,460
Trust Shares Outstanding 1,373 1,171
------- -------
Net Asset Value, Offering Price, and
Redemption Price Per Share $ 10.48 $ 10.64
======= =======
CLASS A:
Net Assets
Trust Shares Outstanding
Net Asset Value and Redemption
Price Per Share
Maximum Offering Price Per Share
(Net Asset Value Plus Sales Charge of 4.5%)
CLASS B:
Net Assets
Trust Shares Outstanding
Net Asset Value and Offering Price Per Share
- --------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-36-
<PAGE> 41
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
As of September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SAFECO SAFECO
SAFECO CALIFORNIA WASHINGTON
MUNICIPAL TAX-FREE STATE MUNICIPAL
(In Thousands, Except Per-Share Amounts) BOND FUND INCOME FUND BOND FUND
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investments, at Value:
Bonds (Identified Cost $430,999, $63,638
and $6,255, respectively) $476,154 $68,656 $6,495
Temporary Investments -- 2,366 16
-------- ------- ------
Total Investments 476,154 71,022 6,511
Cash 2 -- --
Receivables
Interest 8,534 1,111 116
Trust Shares Sold 307 397 200
Deferred Organization Expense -- -- 2
-------- ------- ------
Total Assets 484,997 72,530 6,829
LIABILITIES
Payables
Dividends 836 99 22
Investment Advisory Fees 172 32 4
Notes Payable 330 -- --
Trust Shares Redeemed 401 16 --
Organization Expense -- -- 2
Other 71 19 8
-------- ------- ------
Total Liabilities 1,810 166 36
-------- ------- ------
NET ASSETS $483,187 $72,364 $6,793
======== ======= ======
NO LOAD CLASS:
Net Assets $482,987 $72,164 $6,593
Trust Shares Outstanding 34,946 5,980 630
-------- ------- ------
Net Asset Value, Offering Price, and
Redemption Price Per Share $ 13.82 $ 12.07 $10.45
======== ======= ======
CLASS A:
Net Assets $ 100 $ 100 $ 100
Trust Shares Outstanding 7 8 10
-------- ------- ------
Net Asset Value and Redemption
Price Per Share $ 13.82 $ 12.07 $10.45
======== ======= ======
Maximum Offering Price Per Share
(Net Asset Value Plus Sales Charge of 4.5%) $ 14.47 $ 12.64 $10.94
======== ======= ======
CLASS B:
Net Assets $ 100 $ 100 $ 100
Trust Shares Outstanding 7 8 10
-------- ------- ------
Net Asset Value and Offering Price Per Share $ 13.82 $ 12.07 $10.45
======== ======= ======
- -------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-37-
<PAGE> 42
================================================================================
STATEMENTS OF OPERATIONS
For the Six-Month Period Ended September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SAFECO SAFECO
INTERMEDIATE-TERM INSURED
MUNICIPAL MUNICIPAL
(In Thousands) BOND FUND BOND FUND
- -------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Interest $383 $343
EXPENSES
Investment Advisory Fees 40 39
Shareholder Servicing Fees 7 7
Legal and Auditing Fees 7 7
Loan Interest 1 --
Reports to Shareholders 1 1
Custodian Fees 4 3
Trustees Fees 2 2
Amortization of Organization Expenses 2 2
---- ----
Total Expenses 64 61
---- ----
NET INVESTMENT INCOME 319 282
---- ----
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net Realized (Loss) on Investments (8) (20)
Net Change in Unrealized Appreciation (5) 249
---- ----
NET GAIN (LOSS) ON INVESTMENTS (13) 229
---- ----
NET CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $306 $511
==== ====
- -------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-38-
<PAGE> 43
================================================================================
STATEMENTS OF OPERATIONS (Continued)
For the Six-Month Period Ended September 30, 1996 (Unaudited)
<TABLE>
<CAPTION>
SAFECO
SAFECO WASHINGTON
SAFECO CALIFORNIA STATE
MUNICIPAL TAX-FREE MUNICIPAL
(In Thousands) BOND FUND INCOME FUND BOND FUND
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest $14,663 $2,100 $193
EXPENSES
Investment Advisory Fees 1,018 191 21
Shareholder Servicing Fees 213 34 1
Legal and Auditing Fees 15 8 7
Loan Interest 4 1 --
Reports to Shareholders 26 4 1
Custodian Fees 6 3 3
Trustees Fees 4 2 2
Amortization of Organization Expenses -- -- 1
------- ------ ----
Total Expenses 1,286 243 36
------- ------ ----
NET INVESTMENT INCOME 13,377 1,857 157
------- ------ ----
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net Realized Gain (Loss) on Investments 1,975 169 (7)
Net Change in Unrealized Appreciation 2,625 1,094 77
------- ------ ----
NET GAIN ON INVESTMENTS 4,600 1,263 70
------- ------ ----
NET CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $17,977 $3,120 $227
======= ====== ====
- ----------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-39-
<PAGE> 44
================================================================================
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
SEPT. 30 MARCH 31 SEPT. 30 MARCH 31
(In Thousands) 1996 1996 1996 1996
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 319 $ 627 $ 282 $ 422
Net Realized Gain (Loss) on Investments (8) 7 (20) 9
Net Change in Unrealized Appreciation (5) 422 249 239
------- ------- ------- -------
Net Change in Net Assets Resulting
from Operations 306 1,056 511 670
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income (319) (627) (282) (422)
Net Realized Gain on Investments -- -- -- --
NET TRUST SHARE TRANSACTIONS
No-Load (580) 790 473 3,347
Class A -- -- -- --
Class B -- -- -- --
------- ------- ------- -------
Total (580) 790 473 3,347
------- ------- ------- -------
TOTAL CHANGE IN NET ASSETS (593) 1,219 702 3,595
NET ASSETS AT BEGINNING OF PERIOD 14,981 13,762 11,758 8,163
------- ------- ------- -------
NET ASSETS AT END OF PERIOD $14,388 $14,981 $12,460 $11,758
======= ======= ======= =======
- -------------------------------------------------------------------------------------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES AND AMOUNTS
SHARES
Sales 154 342 257 368
Reinvestments 17 33 8 8
Redemptions (226) (300) (218) (64)
------- ------- ------- -------
Net Change (55) 75 47 312
======= ======= ======= =======
AMOUNTS
Sales $ 1,597 $ 3,592 $ 2,666 $ 3,939
Reinvestments 179 350 86 81
Redemptions (2,356) (3,152) (2,279) (673)
------- ------- ------- -------
Net Change $ (580) $ 790 $ 473 $ 3,347
======= ======= ======= =======
As of September 30, 1996:
Trust Shares Authorized Unlimited Unlimited
Par Value Per Share $ .001 $ .001
Paid in Capital $14,194 $11,941
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-40-
<PAGE> 45
================================================================================
STATEMENTS OF CHANGES OF NET ASSETS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
SAFECO SAFECO CALIFORNIA
MUNICIPAL BOND FUND TAX-FREE INCOME FUND
------------------------------------------------------------------
FOR THE SIX FOR THE FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED
SEPT. 30 MARCH 31 SEPT. 30 MARCH 31
(In Thousands) 1996 1996 1996 1996
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $ 13,377 $ 26,736 $ 1,857 $ 3,520
Net Realized Gain (Loss) on Investments 1,975 2,608 169 704
Net Change in Unrealized Appreciation 2,625 11,135 1,094 1,516
-------- --------- -------- --------
Net Change in Net Assets Resulting
from Operations 17,977 40,479 3,120 5,740
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income (13,377) (26,736) (1,857) (3,520)
Net Realized Gain on Investments -- -- -- (449)
NET TRUST SHARE TRANSACTIONS
No-Load (2,256) (5,669) 355 4,717
Class A 100 -- 100 --
Class B 100 -- 100 --
-------- --------- -------- --------
Total (2,056) (5,669) 555 4,717
-------- --------- -------- --------
TOTAL CHANGE IN NET ASSETS 2,544 8,074 1,818 6,488
NET ASSETS AT BEGINNING OF PERIOD 480,643 472,569 70,546 64,058
-------- --------- -------- --------
NET ASSETS AT END OF PERIOD
$483,187 $ 480,643 $ 72,364 $ 70,546
======== ========= ======== ========
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES AND AMOUNTS
SHARES
Sales 4,026 27,285 1,453 2,471
Reinvestments 617 1,214 106 223
Redemptions (4,788) (28,766) (1,511) (2,299)
-------- --------- -------- --------
Net Change (145) (267) 48 395
======== ========= ======== ========
AMOUNTS
Sales $ 54,667 $ 377,063 $ 17,142 $ 29,742
Reinvestments 8,412 16,744 1,249 2,678
Redemptions (65,135) (399,476) (17,836) (27,703)
-------- --------- -------- --------
Net Change $ (2,056) $ (5,669) $ 555 $ 4,717
======== ========= ======== ========
As of September 30, 1996:
Trust Shares Authorized Unlimited Unlimited
Par Value Per Share $ .001 $ .001
Paid in Capital $439,713 $ 67,175
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
SAFECO WASHINGTON
STATE MUNICIPAL BOND FUND
---------------------------
FOR THE SIX FOR THE
MONTHS ENDED YEAR ENDED
SEPT. 30 MARCH 31
(In Thousands) 1996 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Net Investment Income $ 157 $ 293
Net Realized Gain (Loss) on Investments (7) 28
Net Change in Unrealized Appreciation 77 124
------ ------
Net Change in Net Assets Resulting
from Operations 227 445
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net Investment Income (157) (293)
Net Realized Gain on Investments -- (20)
NET TRUST SHARE TRANSACTIONS
No-Load 34 404
Class A 100 --
Class B 100 --
------ ------
Total 234 404
------ ------
TOTAL CHANGE IN NET ASSETS 304 536
NET ASSETS AT BEGINNING OF PERIOD 6,489 5,953
------ ------
NET ASSETS AT END OF PERIOD
$6,793 $6,489
====== ======
- --------------------------------------------------------------------------------
OTHER INFORMATION
INCREASE (DECREASE) IN FUND SHARES AND AMOUNTS
SHARES
Sales 28 50
Reinvestments 2 3
Redemptions (8) (15)
------ ------
Net Change 22 38
====== ======
AMOUNTS
Sales $ 293 $ 528
Reinvestments 23 31
Redemptions (82) (155)
------ ------
Net Change $ 234 $ 404
====== ======
As of September 30, 1996:
Trust Shares Authorized Unlimited
Par Value Per Share $ .001
Paid in Capital $6,560
- --------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-41-
<PAGE> 46
================================================================================
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
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").
NEW CLASSES OF SHARES. Effective September 30, 1996, the Municipal
Bond, California Tax-Free Income and Washington State Municipal Bond Funds began
issuing two new classes of shares-Class A and Class B shares. Unlike the no-load
class of shares (which are sold directly to the shareholder with no associated
sales or distribution charges), these new classes of shares are sold by
financial professionals to shareholders and have associated sales and
distribution charges. Each class of shares represents an interest in the net
assets of the fund. Financial highlights (see Note 6) are provided only for the
no-load class of shares since the new classes of shares were first issued on the
last day of the fiscal year.
2. SIGNIFICANT ACCOUNTING POLICIES
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. Temporary 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
-42-
<PAGE> 47
================================================================================
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
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 December.
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 is 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,
is treated as ordinary income for Federal income tax purposes.
3. ACCUMULATED UNDISTRIBUTED CAPITAL LOSS
The Funds had the following amounts of accumulated undistributed net realized
loss on investment transactions at September 30, 1996. For Federal income tax
purposes, these represent capital loss carryforwards which will expire as
follows:
<TABLE>
<CAPTION>
EXPIRATION
(In Thousands) AMOUNTS DATES
- ---------------------------------------------------------------------------
<S> <C> <C>
SAFECO Intermediate-Term Municipal Bond Fund $ 23 2002
SAFECO Insured Municipal Bond Fund 75 2001-2002
SAFECO Municipal Bond Fund 1,651 2002
</TABLE>
-43-
<PAGE> 48
================================================================================
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
4. 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 September 30, 1996, the
Municipal Bond Fund had a 5.46% note payable of $330,000 to General Insurance
Company of America (a subsidiary of SAFECO Corporation). The note was repaid on
October 3, 1996.
AFFILIATE OWNERSHIP. At September 30, 1996, SAFECO Insurance Company of
America ("SAFECO Insurance"), a wholly owned subsidiary of SAFECO Corporation,
owned 397,434 shares (29% of the outstanding shares) of the Intermediate Fund,
605,644 shares (52%) of the Insured Fund and 502,372 shares (80%) 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 paid by those Funds over the
amortization period.
-44-
<PAGE> 49
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
5. INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
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
Period Ended
September 30, 1996 $ 1,359 $ 3,133 $ 17,333 $ 6,414 $ 534
======== ======== ======== ======== ========
Sales for the Period
Ended September 30, 1996 $ 2,041 $ 1,052 $ 28,379 $ 4,389 $ 315
======== ======== ======== ======== ========
Unrealized Appreciation
(Depreciation) at
September 30, 1996
Aggregate gross unrealized
appreciation for investment
securities in which there
is an excess of value over
identified cost $ 309 $ 625 $ 45,397 $ 5,079 $ 259
Aggregate gross unrealized
depreciation for investment
securities in which there
is an excess of identified
cost over value (92) (31) (242) (61) (19)
-------- -------- -------- -------- --------
Net Unrealized Appreciation $ 217 $ 594 $ 45,155 $ 5,018 $ 240
- --------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
-45-
<PAGE> 50
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
SAFECO INTERMEDIATE-TERM MUNICIPAL BOND FUND
No-Load Class
<TABLE>
<CAPTION>
For the November 5, 1992
Six-Month (Commencement
Period Ended of Operations)
September 30 For the Year Ended March 31 to March 31
------------ ----------------------------------------------------------
1996 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 10.49 $ 10.17 $ 10.13 $ 10.25 $ 10.00
Income from Investment Operations
Net Investment Income 0.23 0.45 0.45 0.40 0.09
Net Realized and Unrealized
Gain (Loss) on Investments (0.01) 0.32 0.04 (0.12) 0.25
---------- ---------- ---------- ---------- ----------
Total from Investment Operations 0.22 0.77 0.49 0.28 0.34
Less Distributions
Dividends from Net Investment Income (0.23) (0.45) (0.45) (0.40) (0.09)
---------- ---------- ---------- ---------- ----------
Net Asset Value at End of Period $ 10.48 $ 10.49 $ 10.17 $ 10.13 $ 10.25
========== ========== ========== ========== ==========
Total Return 2.14%* 7.63% 4.97% 2.64% -0.04%***
Net Assets at End of Period (000's) $ 14,388 $ 14,981 $ 13,762 $ 10,781 $ 2,345
Ratio of Expenses to Average Net Assets 0.89%** 0.84% 0.85% 0.99% 1.95%**
Ratio of Net Investment Income
to Average Net Assets 4.44%** 4.29% 4.46% 3.85% 2.18%**
Portfolio Turnover Rate 9.58%** 9.12% 4.27% 1.49% None
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Not Annualized.
** Annualized.
*** Total return from March 18, 1993 (initial public offering) to March 31,
1993, not annualized.
-46-
<PAGE> 51
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. FINANCIAL HIGHLIGHTS (Continued)
(For a Share Outstanding Throughout the Period)
SAFECO INSURED MUNICIPAL BOND FUND
No-Load Class
<TABLE>
<CAPTION>
For the November 5, 1992
Six-Month (Commencement
Period Ended of Operations)
September 30 For the Year Ended March 31 to March 31
------------ ----------------------------------------------------------
1996 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 10.46 $ 10.05 $ 9.73 $ 10.26 $ 10.00
Income from Investment Operations
Net Investment Income 0.24 0.48 0.48 0.41 0.08
Net Realized and Unrealized
Gain (Loss) on Investments 0.18 0.41 0.32 (0.53) 0.26
---------- ---------- ---------- ---------- ----------
Total from Investment Operations 0.42 0.89 0.80 (0.12) 0.34
Less Distributions
Dividends from Net Investment Income (0.24) (0.48) (0.48) (0.41) (0.08)
---------- ---------- ---------- ---------- ----------
Net Asset Value at End of Period $ 10.64 $ 10.46 10.05 $ 9.73 $ 10.26
========== ========== ========== ========== ==========
Total Return 4.13%* 8.95% 8.58% -1.40% -0.43% ***
Net Assets at End of Period (000's) $ 12,460 $ 11,758 $ 8,163 $ 3,306 $ 2,106
Ratio of Expenses to Average Net Assets 1.01% ** 0.99% 1.08% 1.41% 1.95% **
Ratio of Net Investment Income
to Average Net Assets 4.70% ** 4.53% 5.11% 3.99% 1.90% **
Portfolio Turnover Rate 18.67% ** 3.71% 14.76% 21.19% None
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Not Annualized.
** Annualized.
*** Total return from March 18, 1993 (initial public offering) to March 31,
1993, not annualized.
-47-
<PAGE> 52
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. FINANCIAL HIGHLIGHTS (Continued)
(For a Share Outstanding Throughout the Period)
SAFECO MUNICIPAL BOND FUND
NO-LOAD CLASS
<TABLE>
<CAPTION>
FOR THE
SIX-MONTH
PERIOD ENDED
SEPTEMBER 30 FOR THE YEAR ENDED MARCH 31
-------------- --------------------------------------------------------
1996 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD $ 13.69 $ 13.36 $ 13.27 $ 14.13 $ 13.37
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.38 0.76 0.77 0.78 0.81
Net Realized and Unrealized
Gain (Loss) on Investments 0.13 0.33 0.12 (0.55) 0.94
-------------- --------- --------- --------- ---------
Total from Investment Operations 0.51 1.09 0.89 0.23 1.75
-------------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.38) (0.76) (0.77) (0.78) (0.81)
Distributions from Realized Gains -- -- (0.03) (0.31) (0.18)
-------------- --------- --------- --------- ---------
Total Distributions (0.38) (0.76) (0.80) (1.09) (0.99)
NET ASSET VALUE AT END OF PERIOD $ 13.82 $ 13.69 $ 13.36 $ 13.27 $ 14.13
============== ========= ========= ========= =========
TOTAL RETURN 3.81%* 8.23% 7.10% 1.30% 13.60
NET ASSETS AT END OF PERIOD (000'S) $ 482,987 $ 480,643 $ 472,569 $ 507,453 $ 541,515
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.54%** 0.54% 0.56% 0.52% 0.53%
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 5.60%** 5.47% 5.96% 5.49% 5.91%
PORTFOLIO TURNOVER RATE 7.37%** 12.60% 26.96% 22.07% 31.66%
</TABLE>
* Not Annualized.
** Annualized.
-48-
<PAGE> 53
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. FINANCIAL HIGHLIGHTS (Continued)
(For a Share Outstanding Throughout the Period)
SAFECO CALIFORNIA TAX-FREE INCOME FUND
NO-LOAD CLASS
<TABLE>
<CAPTION>
FOR THE
SIX-MONTH
PERIOD ENDED
SEPTEMBER 30 FOR THE YEAR ENDED MARCH 31
-------------- --------------------------------------------------------
1996 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD $ 11.86 $ 11.54 $ 11.51 $ 12.23 $ 11.60
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.31 0.62 0.63 0.66 0.68
Net Realized and Unrealized
Gain (Loss) on Investments 0.21 0.40 0.13 (0.38) 0.76
------------- --------- -------- -------- --------
Total from Investment Operations 0.52 1.02 0.76 0.28 1.44
------------- --------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.31) (0.62) (0.63) (0.66) (0.68)
Distributions from Realized Gains -- (0.08) (0.10) (0.34) (0.13)
------------- --------- -------- -------- --------
Total Distributions (0.31) (0.70) (0.73) (1.00) (0.81)
------------- --------- -------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 12.07 $ 11.86 $ 11.54 $ 11.51 $ 12.23
============= ========= ======== ======== ========
TOTAL RETURN 4.49%* 8.87% 7.01% 1.97% 12.88%
NET ASSETS AT END OF PERIOD (000'S) $ 72,164 $ 70,546 $ 64,058 $ 77,056 $ 79,872
RATIO OF EXPENSES TO AVERAGE NET ASSETS 0.70%** 0.68% 0.70% 0.68% 0.66%
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 5.30%** 5.12% 5.65% 5.31% 5.71%
PORTFOLIO TURNOVER RATE 12.96%** 16.25% 44.10% 32.58% 23.18%
</TABLE>
* Not Annualized.
** Annualized.
-49-
<PAGE> 54
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
6. FINANCIAL HIGHLIGHTS (Continued)
(For a Share Outstanding Throughout the Period)
SAFECO WASHINGTON STATE MUNICIPAL BOND FUND
NO-LOAD CLASS
<TABLE>
<CAPTION>
FOR THE November 5, 1992
SIX-MONTH (Commencement
PERIOD ENDED of Operations)
SEPTEMBER 30 FOR THE YEAR ENDED MARCH 31 to March 31
-------- ---------------------------------- ----------
1996 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD $ 10.34 $ 10.10 $ 9.91 $ 10.27 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.25 0.50 0.49 0.44 0.09
Net Realized and Unrealized
Gain (Loss) on Investments 0.11 0.27 0.19 (0.35) 0.27
-------- -------- -------- -------- --------
Total from Investment Operations 0.36 0.77 0.68 0.09 0.36
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS
Dividends from Net Investment Income (0.25) (0.50) (0.49) (0.44) (0.09)
Distributions from Realized Gains -- (0.03) -- (0.01) --
-------- -------- -------- -------- --------
Total Distributions (0.25) (0.53) (0.49) (0.45) (0.09)
-------- -------- -------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 10.45 $ 10.34 $ 10.10 $ 9.91 $ 10.27
======== ======== ======== ======== ========
TOTAL RETURN 3.53%* 7.73% 7.13% 0.68% -0.31%***
NET ASSETS AT END OF PERIOD (000'S) $ 6,593 $ 6,489 $ 5,953 $ 2,908 $ 2,163
RATIO OF EXPENSES TO AVERAGE NET ASSETS 1.11%** 1.07% 1.09% 1.44% 2.00%**
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS 4.83%** 4.78% 5.06% 4.17% 2.22%**
PORTFOLIO TURNOVER RATE 9.99%** 20.86% 9.23% 17.26% None
</TABLE>
* Not Annualized.
** Annualized.
*** Total return from March 18, 1993 (initial public offering) to
March 31, 1993, not annualized.
-50-
