<PAGE> 1
LETTER FROM SAFECO LIFE'S PRESIDENT
DEAR SPINNAKER Q AND SPINNAKER NQ FLEX PARTICIPANT:
We are pleased to present the SAFECO Life Spinnaker Q and Spinnaker NQ Flex
Variable Annuity Annual Report. Inside you will find schedules of investments
and financial statements for each of the seven portfolios. In addition, reports
from each of the portfolio managers are provided. The information presented
covers the year ending December 31, 1995.
1995 FINANCIAL MARKET REVIEW
The powerful combination of lower interest rates and robust corporate earnings
set the stage for record gains in the stock market. The Dow Jones industrial
average rose 33.45% passing both the 4000 and 5000 barrier and setting new highs
for a record 69 times. Just about everything went right for the stock market.
The Federal Reserve Board ended its credit-tightening campaign of 1994 and
loosened its monetary-policy. By lowering interest rates, the Federal Reserve
Board increased bond prices, sending yields below 6% on the 30-year Treasury
bond. Inflation remained low and continues to show signs of abating further.
Corporate profits increased strongly as U.S. businesses reaped some of the
rewards of a decade of restructuring and increasing competitiveness in the
marketplace.
FINANCIAL OUTLOOK
While the outlook is positive for long term investors, the only certainty is
that past performance is no guarantee of future results. Investors hoping for
another year of 30% gains in stock prices are likely to be disappointed. Stock
earnings growth should subside from the past two unprecedented years. A Wall
Street Journal survey of 65 economists indicates short and long term interest
rates will probably remain fairly stable through the year, held there by slow
economic growth of 2%, low inflation of around 3% and unemployment of about
5.7%.
SAFECO LIFE'S COMMITMENT
SAFECO Life remains committed to providing you quality service with efficient
and accurate reporting. We have added new customer service representatives in
our IRA and TSA units as well as toll free telephone lines designed to link you
directly with the service representative handling your account. You will also
continue to receive quarterly updates about the Myths and Realities of saving
for your retirement. Watch for news in 1996 about a voice responsive unit
allowing you access to your account information and an investor newsletter to
better serve your needs.
We appreciate your business and the opportunity to serve you. Call us at the
toll free number listed on your statement anytime between 7:00 am and 4:30 pm
(PST) if we can be of assistance.
Sincerely,
LOGO
Richard E. Zunker
President
<PAGE> 2
ANNUAL REPORT
DECEMBER 31, 1995
SAFECO SEPARATE ACCOUNT C
<TABLE>
<S> <C>
-------------------------------------------------------------------------------------
TABLE OF CONTENTS:
PAGE
SAFECO Separate Account C
Financial Statements 4
SAFECO Resource Series Trust
Equity Portfolio 12
Growth Portfolio 16
Northwest Portfolio 20
Bond Portfolio 24
Money Market Portfolio 27
Financial Statements 30
---------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
December 31, 1995
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
SUB-ACCOUNTS
--------------------------------------------------------------------------
AS OF DECEMBER 31, 1995 EQUITY GROWTH NW BOND MMKT INT'L BAL
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
-- (In Thousands, Except Per-Unit Amounts) --
ASSETS:
Investments, at value:
SAFECO Resource Series
Trust - Equity Portfolio
734,150 shares at net asset value
of $19.24 per share
(identified cost $13,937) $14,128
SAFECO Resource Series
Trust - Growth Portfolio
624,283 shares at net asset value
of $15.88 per share
(identified cost $9,296) $ 9,911
SAFECO Resource Series
Trust - Northwest Portfolio
57,748 shares at net asset value
of $10.85 per share
(identified cost $630) $ 626
SAFECO Resource Series
Trust - Bond Portfolio
56,749 shares at net asset value
of $11.31 per share
(identified cost $636) $ 642
SAFECO Resource Series
Trust - Money Market Portfolio
1,411,732 shares at net asset value
of $1.00 per share
(identified cost $1,412) $ 1,412
Scudder Variable Life Investment
Fund - International Portfolio
270,884 shares at net asset value
of $11.82 per share
(identified cost $2,991) $ 3,201
Scudder Variable Life Investment
Fund - Balanced Portfolio
153,755 shares at net asset value
of $10.95 per share
(identified cost $1,537) $ 1,684
Cash 3 - - 1 - 1 -
------- ------- -------- -------- -------- -------- --------
Total assets 14,131 9,911 626 643 1,412 3,202 1,684
------- ------- -------- -------- -------- -------- --------
LIABILITIES:
Mortality and expense risk charge payable 15 10 - 1 2 3 2
Fees payable 3 - - 1 - 1 -
------- ------- -------- -------- -------- -------- --------
Total liabilities 18 10 - 2 2 4 2
------- ------- -------- -------- -------- -------- --------
NET ASSETS $14,113 $ 9,901 $ 626 $ 641 $ 1,410 $ 3,198 $ 1,682
======= ======== ======== ======== ======== ======== ========
ACCUMULATION UNITS OUTSTANDING 438 479 58 35 98 278 135
======= ======= ======== ======== ======== ======== ========
ACCUMULATION UNIT VALUE AND REDEMPTION
PRICE PER UNIT
(Net assets divided by accumulation
units outstanding) $32.209 $20.668 $ 10.737 $ 18.045 $ 14.370 $ 11.504 $ 12.481
======= ======= ======== ======== ======== ======== ========
</TABLE>
See Notes to Financial Statements
- 4 -
<PAGE> 4
SAFECO SEPARATE ACCOUNT C
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SUB-ACCOUNTS
------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31, 1995
EQUITY GROWTH NW BOND MMKT INT'L BAL
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
-- ($ in Thousands) --
INVESTMENT INCOME:
Income dividends and capital
gain distributions $ 1,553 $ 1,295 $ 9 $ 36 $ 65 $ 8 $ 27
EXPENSES:
Mortality and expense risk
charge 104 67 5 4 15 29 11
Administration charge 13 11 1 1 2 4 1
------- ------- -------- -------- -------- -------- --------
TOTAL EXPENSES 117 78 6 5 17 33 12
------- ------- -------- -------- -------- -------- --------
NET INVESTMENT INCOME (LOSS) 1,436 1,217 3 31 48 (25) 15
------- ------- -------- -------- -------- -------- --------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on
investments 82 78 4 4 - 2 9
Net change in unrealized
appreciation 470 642 (3) 17 - 261 151
------- ------- -------- -------- -------- -------- --------
NET GAIN ON INVESTMENTS 552 720 1 21 - 263 160
------- ------- -------- -------- -------- -------- --------
NET CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS $ 1,988 $ 1,937 $ 4 $ 52 $ 48 $ 238 $ 175
======= ======= ======== ======== ======== ======== ========
</TABLE>
See Notes to Financial Statements
- 5 -
<PAGE> 5
December 31, 1995
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SUB-ACCOUNTS
------------------------------------------------------------------------------------
EQUITY GROWTH NW
------------------------------------------------------------------------------------
FOR THE YEAR OR PERIOD ENDED DECEMBER 31
1995 1994* 1995 1994* 1995 1994*
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
-- ($ in Thousands) --
OPERATIONS:
Net investment income (loss) $ 1,436 $ 321 $ 1,217 $ 97 $ 3 $ -
Net realized gain (loss) on
investments 82 7 78 3 4 1
Net change in unrealized
appreciation/depreciation 470 (279) 642 (27) (3) (1)
-------- -------- -------- -------- -------- --------
Net change in net assets
resulting from operations 1,988 49 1,937 73 4 -
NET ACCUMULATION UNIT
TRANSACTIONS 8,464 3,612 5,673 2,218 398 224
-------- -------- -------- -------- -------- --------
TOTAL CHANGE IN NET ASSETS 10,452 3,661 7,610 2,291 402 224
NET ASSETS AT BEGINNING OF YEAR 3,661 - 2,291 - 224 -
-------- -------- -------- -------- -------- --------
NET ASSETS AT END OF YEAR $ 14,113 $ 3,661 $ 9,901 $ 2,291 $ 626 $ 224
======== ======== ======== ======== ======== ========
OTHER INFORMATION
Increase (Decrease) in Units
and Amounts
UNITS:
Sales 312 146 339 156 38 22
Redemptions (18) (2) (14) (2) (2) -
-------- -------- -------- -------- -------- --------
Net change 294 144 325 154 36 22
======== ======== ======== ======== ======== ========
AMOUNTS:
Sales $ 8,986 $ 3,674 $ 5,916 $ 2,247 $ 419 $ 225
Redemptions (522) (62) (243) (29) (21) (1)
-------- -------- -------- -------- -------- --------
Net change $ 8,464 $ 3,612 $ 5,673 $ 2,218 $ 398 $ 224
======== ======== ======== ======== ======== ========
DECEMBER 31, 1995:
Paid in capital $ 12,075 $ 7,891 $ 622
Par value per unit None None None
Accumulation units authorized Unlimited Unlimited Unlimited
</TABLE>
* For the period from February 11, 1994 (Commencement of operations) to December
31, 1994.
See Notes to Financial Statements
- 6 -
<PAGE> 6
SAFECO SEPARATE ACCOUNT C
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(Continued)
<TABLE>
<CAPTION>
SUB-ACCOUNTS
--------------------------------------------------------------------------------------------
BOND MMKT INT'L BAL
--------------------------------------------------------------------------------------------
FOR THE YEAR OR PERIOD ENDED DECEMBER 31
1995 1994* 1995 1994* 1995 1994* 1995 1994*
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-- ($ in Thousands) --
OPERATIONS:
Net investment income (loss) $ 31 $ 10 $ 48 $ 9 $ (25) $ (7) $ 15 $ 2
Net realized gain (loss) on
investments 4 - - - 2 1 9 -
Net change in unrealized
appreciation/depreciation 17 (11) - - 261 (51) 151 (4)
-------- -------- -------- -------- -------- -------- -------- --------
Net change in net assets
resulting from operations 52 (1) 48 9 238 (57) 175 (2)
NET ACCUMULATION UNIT
TRANSACTIONS 370 220 (358) 1,711 1,516 1,501 1,012 497
-------- -------- -------- -------- -------- -------- -------- --------
TOTAL CHANGE IN NET ASSETS 422 219 (310) 1,720 1,754 1,444 1,187 495
NET ASSETS AT BEGINNING OF
YEAR 219 - 1,720 - 1,444 - 495 -
-------- -------- -------- -------- -------- -------- -------- --------
NET ASSETS AT END OF YEAR $ 641 $ 219 $ 1,410 $ 1,720 $ 3,198 $ 1,444 $ 1,682 $ 495
======== ======== ======== ======== ======== ======== ======== ========
OTHER INFORMATION
Increase (Decrease) in Units
and Amounts
UNITS:
Sales 29 14 618 452 168 140 92 50
Redemptions (8) - (645) (327) (28) (2) (7) -
-------- -------- -------- -------- -------- -------- -------- --------
Net change 21 14 (27) 125 140 138 85 50
======== ======== ======== ======== ======== ======== ======== ========
AMOUNTS:
Sales $ 500 $ 223 $ 8,740 $ 6,195 $ 1,817 $ 1,525 $ 1,091 $ 497
Redemptions (130) (3) (9,098) (4,484) (301) (24) (79) -
-------- -------- -------- -------- -------- -------- -------- --------
Net change $ 370 $ 220 $ (358) $ 1,711 $ 1,516 $ 1,501 $ 1,012 $ 497
======== ======== ======== ======== ======== ======== ======== ========
DECEMBER 31, 1995:
Paid in capital $ 589 $ 1,353 $ 3,017 $ 1,509
Par value per unit None None None None
Accumulation units
authorized Unlimited Unlimited Unlimited Unlimited
</TABLE>
* For the period from February 11, 1994 (Commencement of operations) to December
31, 1994.
See Notes to Financial Statements
- 7 -
<PAGE> 7
December 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
SAFECO Separate Account C is registered under the Investment Company Act of
1940, as amended, as a segregated unit investment account of SAFECO Life
Insurance Company (SAFECO), a wholly-owned subsidiary of SAFECO Corporation.
Purchasers of variable annuity products direct their investment to one of
seven sub-accounts of Separate Account C. Each sub-account invests in shares
of a designated portfolio of either the SAFECO Resource Series Trust or the
Scudder Variable Life Investment Fund. Separate Account C became available
to unitholders on February 11, 1994 (commencement of operations).
The five portfolios of SAFECO Resource Series Trust available to unitholders
are the Equity, Growth, Northwest (NW), Bond, and Money Market (MMKT)
portfolios. The two portfolios of Scudder Variable Life Investment Fund
available to unitholders are the International (INT'L) and Balanced (BAL)
portfolios.
The assets of Separate Account C are the property of SAFECO and are not
commingled with liabilities arising out of any other business of SAFECO.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION -- Investments in mutual fund shares are carried in the
statement of assets and liabilities at net asset value as reported by the
portfolio. Security transactions are recorded on the trade date. Realized
gains or losses on securities transactions are determined using the First-In
First-Out (FIFO) cost method.
DISTRIBUTIONS -- The net investment income and realized capital gains of
Separate Account C are not distributed, but are retained and reinvested for
the benefit of accumulation unit owners.
FEDERAL INCOME TAX -- Operations of Separate Account C are included in the
federal income tax return of SAFECO, which is taxed as a "life insurance
company" under the Internal Revenue Code. Under current federal income tax
law, no income taxes are payable with respect to operations of Separate
Account C.
UNIT VALUE CALCULATION -- For financial reporting purposes, amounts have
been rounded to the nearest thousand dollars, except for per unit amounts,
which may result in minor rounding differences. Per unit amounts are
calculated based on precise amounts.
3. EXPENSES
A mortality and expense risk charge is deducted by SAFECO from Separate
Account C on a daily basis which is equal, on an annual basis, to 1.25% of
the average daily net assets. The mortality risks assumed by SAFECO arise
from its contractual obligation to make annuity payments after the annuity
date for the life of the participant and to waive withdrawal charges in the
event of the death of a participant. The expense risk assumed by SAFECO is
that the costs of administering the contracts and Separate Account C will
exceed the amount received from the administration charge.
Separate Account C also pays SAFECO an amount which is equal on an annual
basis to .15% of the average daily net assets of the Separate Account for
costs associated with the administration of the
- 8 -
<PAGE> 8
SAFECO SEPARATE ACCOUNT C
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued)
3. EXPENSES - CONTINUED
sub-accounts. Since this charge is an asset-based charge, the amount of the
charge attributable to a particular contract may have no relationship to the
administrative costs actually incurred by that contract. SAFECO does not
intend to profit from this charge. This charge will be reduced to the extent
that the amount of this charge is in excess of that necessary to reimburse
SAFECO for its administrative expenses.
The following expenses are deducted from a contractholder's contract value
by SAFECO and not directly from Separate Account C. As a fee for expenses
associated with the administration of the contract owner's contract value,
an annual charge of $30 is deducted by SAFECO from the accumulated value of
each contract value on the last day of each Contract Year and in the event
of a complete withdrawal, this charge is only deducted from contracts where
the contract value is less than $50,000. In the event that an owner
withdraws all or a portion of the contract value, a contingent deferred
sales charge is imposed on the amount withdrawn in the first eight
certificate years. Any premium tax levied by a state or government entity
with respect to the Separate Account C contract will be charged against the
contract.
4. INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
SUB-ACCOUNTS
--------------------------------------------------------------------------------------
EQUITY GROWTH NW BOND MMKT INT'L BAL
--------------------------------------------------------------------------------------
-- ($ in Thousands) --
<S> <C> <C> <C> <C> <C> <C> <C>
PURCHASES for the year
ended
December 31, 1995 $10,766 $ 7,394 $ 443 $ 558 $ 9,386 $ 1,906 $ 1,120
======= ======= ======== ======== ======== ======== ========
SALES for the year ended
December 31, 1995 $ 855 $ 496 $ 42 $ 156 $ 9,695 $ 414 $ 92
======= ======= ======== ======== ======== ======== ========
</TABLE>
5. ACCUMULATION UNIT DATA
<TABLE>
<CAPTION>
SUB-ACCOUNTS
--------------------------------------------------------------------------------------
EQUITY GROWTH NW BOND MMKT INT'L BAL
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
February 11, 1994
(Commencement of
Operations) $24.528 $13.910 $ 10.073 $ 16.217 $ 13.526 $ 10.948 $ 10.435
December 31, 1994 25.373 14.864 10.134 15.521 13.811 10.498 9.988
December 31, 1995 32.209 20.668 10.737 18.045 14.370 11.504 12.481
</TABLE>
- 9 -
<PAGE> 9
December 31, 1995
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Board of Directors of SAFECO Life Insurance Company and
Participants of SAFECO Separate Account C
We have audited the accompanying statement of assets and liabilities of SAFECO
Separate Account C (comprising, respectively, the Equity, Growth, Northwest,
Bond, Money Market, International, and Balanced Sub-Accounts), as of December
31, 1995, the related statement of operations for the year then ended, and the
statement of changes in net assets and accumulation unit data for the year ended
December 31, 1995 and for the period from February 11, 1994 (commencement of
operations) to December 31, 1994. These financial statements and accumulation
unit data are the responsibility of the SAFECO Separate Account C's management.
Our responsibility is to express an opinion on these financial statements and
accumulation unit data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and accumulation
unit data are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the SAFECO Resource Series Trust and
Scudder Variable Life Investment Fund. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and accumulation unit data referred to
above present fairly, in all material respects, the financial position of each
of the respective Sub-Accounts constituting the SAFECO Separate Account C at
December 31, 1995, the results of their operations, the changes in their net
assets, and the accumulation unit data for the period referred to above, in
conformity with generally accepted accounting principles.
[ERNST & YOUNG SIG]
Seattle, Washington
January 26, 1996
- 10 -
<PAGE> 10
ANNUAL REPORT
DECEMBER 31, 1995
SAFECO RESOURCE SERIES TRUST
<PAGE> 11
December 31, 1995
- --------------------------------------------------------------------------------
INVESTMENT REVIEW
REPORT FROM EQUITY PORTFOLIO MANAGER - RICHARD MEAGLEY
For the 12 months ended December 31, 1995, the Equity Portfolio returned 28.63%
and the S&P 500 Index posted a 37.14% gain. A disappointing first quarter and
fourth quarter trouble in technology (Motorola and Advanced Micro Devices in
particular) held our returns under the S&P.
In the first quarter of 1995 I took over the Portfolio. Our Mexican companies
crashed with the peso and 10 of the 11 Real Estate Investment Trusts (REITs) we
owned lost value. Since then, I've reconfigured the holdings to reflect my
preference for large established companies.
Adding Mobil, Exxon and Royal Dutch, I took the oil group from 5.0 to 8.3
percent of assets. These stocks have gained on intelligent cost-cutting and
increased sales. Additionally, they have attractive dividends and I believe
their ability to pay them is more secure than the REIT's. I sold our REIT
holdings down to 1.7% of net assets.
Our holdings in computer software shrunk from 5.1% of net assets spread among
four names to 2.1% of net assets, all invested in Microsoft.
I consolidated our financial stocks: selling PNC Bank when it reached our target
price, selling First Interstate when a take-over bid launched it through the
target, and investing the gains in Chase Manhattan. Chase's merger with Chemical
Bank will create huge cost-cutting potential.
Federal National Mortgage Association (FNMA)was up on increases in business
volume and investment income. Given the favorable interest rate environment and
the fact that people keep buying and refinancing homes, FNMA should be able to
continue to grow earnings. We think Solomon (brokerage) has strong earnings
potential in a growing industry as well.
Favorable results for Philip Morris helped boost that stock to 4.3% of net
assets on December 31. As a consequence, I reduced our exposure in Philip Morris
to 2.4% of net assets in January 1996. GTE and Century are providing consistent
growth on the telephone side and rapid growth on the cellular side. Like AT&T,
these stocks look like they'll continue to be steady performers for a long time.
The stocks in our Portfolio belong to companies I know well and have conviction
in. None are long shots. After all, I'm managing the Equity Portfolio for
ongoing growth -- not to shoot out the lights in any one year, but to shine over
the years.
- 12 -
<PAGE> 12
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
INVESTMENT HIGHLIGHTS
As of December 31, 1995
EQUITY PORTFOLIO
ILLUSTRATION OF A $10,000 INVESTMENT:
SINCE FUND INCEPTION ON JULY 21, 1987 TO DECEMBER 31, 1995*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY S&P 500
MEASUREMENT PERIOD PORTFOLIO: INDEX:
(FISCAL YEAR COVERED) $28,674 $25,110
<S> <C> <C>
7/31/87 10000 10000
8/31/87 10000 10373
9/30/87 10351 10146
10/31/87 10040 7960
11/30/87 7783 7304
12/31/87 7689 7860
01/31/88 7689 8191
02/28/88 8313 8573
03/31/88 8865 8308
04/30/88 8848 8400
05/31/88 8928 8473
06/30/88 8883 8862
07/31/88 9195 8829
08/31/88 9204 8528
09/30/88 9097 8892
10/31/88 9471 9139
11/30/88 9721 9008
12/31/88 9687 9166
01/31/89 9687 9837
02/28/89 10236 9592
03/31/89 10069 9815
04/30/89 10115 10325
05/31/89 10600 10743
06/30/89 10916 10682
07/31/89 10954 11646
08/31/89 11913 11875
09/30/89 12043 11826
10/31/89 11736 11552
11/30/89 11969 11787
12/31/89 12313 12070
1/31/90 11326 11260
02/28/90 11376 11405
03/31/90 11805 11708
04/30/90 11376 11415
05/31/90 12373 12528
06/30/90 12413 12443
07/31/90 12413 12403
08/31/90 12443 11282
09/30/90 11346 10732
10/31/90 10838 10686
11/30/90 10718 11376
12/31/90 11671 11694
01/31/91 12174 12204
02/28/91 12933 13076
03/31/91 13251 13393
04/30/91 13661 13425
05/31/91 14194 14005
06/30/91 13415 13363
07/31/91 14297 13986
08/31/91 14471 14318
09/30/91 14163 14079
10/31/91 14287 14267
11/30/91 13497 13692
12/31/91 14804 15259
01/31/92 15551 14975
02/28/92 15936 15169
03/31/92 15068 14874
04/30/92 15200 15311
05/31/92 15046 15386
06/30/92 14113 15157
07/31/92 14640 15777
08/31/92 14157 15453
09/30/92 14211 15636
10/31/92 14717 15689
11/30/92 15617 16222
12/31/92 15997 16421
01/31/93 16391 16558
02/28/93 16369 16784
03/31/93 17067 17138
04/30/93 16718 16723
05/31/93 18036 17170
06/30/93 18093 17220
07/31/93 17890 17150
08/31/93 18859 17800
09/30/93 19422 17663
10/31/93 19929 18029
11/30/93 20064 17857
12/31/93 20463 18073
01/31/94 21761 18688
02/28/94 21208 18181
03/31/94 20355 17391
04/30/94 20932 17613
05/31/94 21449 17900
06/30/94 20679 17462
07/31/94 21160 18034
08/31/94 22543 18772
09/30/94 22314 18314
10/31/94 22807 18724
11/30/94 22350 18043
12/31/94 22292 18310
01/31/95 22477 18784
02/28/95 23060 19515
03/31/95 23391 20090
04/30/95 24000 20681
05/31/95 24609 21506
06/30/95 25391 22005
07/31/95 25775 22733
08/31/95 26530 22727
09/30/95 27563 23686
10/31/95 27537 23600
11/30/95 28345 24634
12/31/95 28674 25110
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEAR INCEPTION
- -----------------------------------------------------------
<S> <C> <C> <C>
Equity Portfolio 28.63% 19.69% 13.33%
S&P 500 Index 37.14% 16.51% 11.56%
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
% OF
TEN LARGEST HOLDINGS NET ASSETS
- ------------------------------------------------------
<S> <C>
Philip Morris Cos., Inc. 4.3%
Federal National Mortgage Association 4.0
NationsBank Corp. 3.1
GTE Corp. 3.1
Chase Manhattan Corp. 2.9
Salomon, Inc. 2.9
AT&T Corp. 2.7
Mobil Corp. 2.7
Century Telephone Enterprise Co. 2.5
May Department Stores Co. 2.5
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PURCHASES (JULY THROUGH DECEMBER) COST
- ------------------------------------------------------
<S> <C>
Federal National Mortgage Association $5,118,061
Chase Manhattan Corp. 4,844,067
Intel Corp. 4,029,500
Mobil Corp. 3,884,150
Du Pont (EI) De Nemours & Co. 3,478,400
</TABLE>
Performance represents the performance of the Equity Portfolio, but does not
include deductions for administration charges, contingent deferred sales
charges, or mortality and expense risk premiums.
The performance of the Portfolio assumes the reinvestment of all dividends and
capital gains. The Standard & Poor's 500 Index is an unmanaged index of 500
stocks weighted by market capitalization with dividends reinvested. Management
fees and other portfolio expenses have been applied to the calculation of
Portfolio performance, but not to the index. If portfolio expenses had been
applied to the index, the index values would have been lower.
Investment returns are historical and not predictive of future performance.
Portfolio share prices and investment returns will fluctuate.
*The Portfolio's inception was July 21, 1987.
Performance information begins on July 31, 1987.
<TABLE>
<CAPTION>
TOP FIVE SALES (JULY THROUGH DECEMBER) PROCEEDS
- ------------------------------------------------------
<S> <C>
First Interstate Bancorp. $4,847,321
Knight-Ridder, Inc. 3,985,015
PNC Bank Corp. 3,757,999
Mentor Graphics Corp. 3,537,081
US WEST, Inc. 3,383,291
</TABLE>
- 13 -
<PAGE> 13
December 31, 1995
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- ---------------------------------------------------------
EQUITY PORTFOLIO
- ---------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (000'S)
- ---------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS - 96.5%
BANKING & FINANCE - 9.2%
82,000 Chase Manhattan Corp. $ 4,971
50,000 Citicorp 3,363
50,000 Fleet Financial Group, Inc. 2,038
75,000 NationsBank Corp. 5,222
BROADCAST MEDIA - 2.0%
72,000 * Viacom Inc., Class B 3,411
CHEMICALS - 2.1%
50,000 Du Pont (EI) De Nemours &
Co. 3,494
COMPUTER HARDWARE - 2.1%
42,000 Hewlett-Packard Co. 3,518
COMPUTER SOFTWARE - 2.1%
41,000 * Microsoft Corp. 3,598
DRUGS & HOSPITAL SUPPLIES - 6.2%
30,000 American Home Products Corp. 2,910
66,000 Schering-Plough Corp. 3,614
41,000 Warner-Lambert Co. 3,982
ELECTRICAL EQUIPMENT & ELECTRONICS - 7.0%
59,200 * Advanced Micro Devices, Inc. 977
50,000 General Electric Co. 3,600
63,000 Intel, Corp. 3,575
66,000 Motorola, Inc. 3,762
ENTERTAINMENT - 1.9%
55,000 Walt Disney Co. 3,245
FINANCIAL SERVICES - 6.9%
55,000 Federal National Mortgage
Association 6,827
140,000 Salomon, Inc. 4,970
FOOD & TOBACCO - 10.9%
63,000 American Brands, Inc. 2,812
43,762 ConAgra, Inc. 1,805
73,000 Dole Food Co., Inc. 2,555
80,000 Philip Morris Cos., Inc. 7,240
167,500 Smart & Final, Inc. 3,559
42,550 Tasty Baking Co. 516
HOMEBUILDING - 0.2%
24,333 * Castle & Cooke, Inc. 408
HOUSEHOLD PRODUCTS - 2.0%
49,000 Colgate-Palmolive Co. 3,442
INSURANCE - 7.1%
100,000 American General Corp. 3,487
31,500 American International
Group, Inc. 2,914
100,500 Equitable Cos., Inc. 2,412
63,000 Hartford Steam Boiler
Inspection & Insurance Co. 3,150
LEISURE TIME - 1.2%
68,100 Polaris Industries, Inc. 2,000
PAPER & FOREST PRODUCTS - 6.8%
35,000 Georgia-Pacific Corp. 2,402
40,000 Kimberly-Clark Corp. 3,310
51,000 Weyerhaeuser Co. 2,206
65,000 Willamette Industries, Inc. 3,656
PETROLEUM & PETROLEUM SERVICES - 8.3%
45,000 Exxon Corp. 3,606
40,000 Mobil Corp. 4,480
13,500 Royal Dutch Petroleum Co. 1,905
52,500 Texaco, Inc. 4,121
REAL ESTATE INVESTMENT TRUSTS - 1.7%
125,000 Crown American Realty Corp. 984
78,584 HGI Realty, Inc. 1,798
RETAIL - 7.8%
100,000 Albertson's Inc. 3,287
54,000 Gap, Inc. 2,268
98,000 May Department Stores Co. 4,141
42,850 * NeoStar Retail Group, Inc. 316
140,000 Wal-Mart Stores, Inc. 3,132
TELECOMMUNICATIONS - 2.7%
70,000 AT&T Corp. 4,532
UTILITIES-TELEPHONE - 5.6%
134,000 Century Telephone
Enterprise Co. 4,254
117,900 GTE Corp. 5,188
</TABLE>
See Notes to Financial Statements
- 14 -
<PAGE> 14
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
------------------------------------------------------
EQUITY PORTFOLIO
------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (000'S)
- --------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES-ELECTRIC DISTRIBUTION - 2.1%
150,000 Houston Industries, Inc. $ 3,637
WINE & SPIRITS - 0.6%
26,900 Seagram Co., Ltd. 931
--------
TOTAL COMMON STOCKS 163,531
--------
SHORT-TERM INVESTMENTS - 5.0%
INVESTMENT COMPANIES:
$8,425,263 Short-Term Investments Co.
(Prime Portfolio) 8,425
96,960 Short-Term Investments Co.
(Treasury Portfolio) 97
--------
TOTAL SHORT-TERM INVESTMENTS 8,522
--------
TOTAL INVESTMENTS - 101.5% 172,053
Liabilities, less Other Assets (2,574)
--------
NET ASSETS $169,479
========
</TABLE>
* Non-income producing security.
See Notes to Financial Statements
- 15 -
<PAGE> 15
December 31, 1995
- --------------------------------------------------------------------------------
INVESTMENT REVIEW
REPORT FROM GROWTH PORTFOLIO MANAGER - THOMAS M. MAGUIRE
The RST Growth Portfolio had an outstanding year. The fund delivered a 41.00%
gain outpacing its peer group and the broad market which gained 37.14% as
measured by the S&P.
Our returns were above the field, simply because we "picked" well. I'm a stock
picker by nature; not a theme or sector investor and we held some smaller stocks
that did really well, Ha-Lo, Family Golf and Renter's Choice among them. Then we
locked in gains before the market took them back, by selling stocks (such as
Callaway Golf) that had experienced run-ups.
The 5.0% of net assets I invested in Family Golf Centers has grown to 5.9% of
net assets. Family Golf owns and operates pro shops, driving ranges, and par
three and executive golf courses. It builds some facilities but grows largely by
acquiring and turning around independent operations.
Ha-Lo Industries is a company that provides specialty marketing supplies -- logo
imprinted pins, mugs, hats, key chains -- on short turn-around.
I took a position in Central Parking because it owns, leases and manages parking
lots and facilities with greater sophistication than its competitors.
I bought tissue-maker Kimberly Clark for the stability it could bring. Believing
that people will keep eating and drinking no matter what the economy does, I'm
holding Philip Morris and Canandaigua Wine as well.
With technology under fire, I sold National Semiconductor in January 1996.
However, I'm still holding silicon chip maker Intel which stands to benefit by
the expected doubling of personal computer usage.
I sold some of the Mid-Atlantic Medical when it missed its projected enrollment
figures. But, I believe HMOs are a growth opportunity, so U.S. Health Care
remains among our top-ten holdings.
While I don't profess to know what the market will do, I feel good about our
Portfolio. The Fund is now largely invested in companies whose value should be
recognized even if the economy falters.
- 16 -
<PAGE> 16
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
INVESTMENT HIGHLIGHTS
As of December 31, 1995
GROWTH PORTFOLIO
ILLUSTRATION OF A $10,000 INVESTMENT:
SINCE FUND INCEPTION ON JANUARY 7, 1993 TO DECEMBER 31, 1995*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH S&P 500
MEASUREMENT PERIOD PORTFOLIO: INDEX:
(FISCAL YEAR COVERED) $21,261 $15,164
<S> <C> <C>
01/31/93 10000 10000
02/28/93 9475 10136
03/31/93 10059 10350
04/30/93 9683 10100
05/31/93 10535 10369
06/30/93 10891 10400
07/31/93 11297 10358
08/31/93 12198 10750
09/30/93 12822 10667
10/31/93 13386 10888
11/30/93 12792 10785
12/31/93 13473 10915
01/31/94 14382 11286
02/28/94 13861 10980
03/31/94 13351 10503
04/30/94 13750 10637
05/31/94 14094 10811
06/30/94 13662 10546
07/31/94 14216 10892
08/31/94 14714 11337
09/30/94 14626 11060
10/31/94 15169 11308
11/30/94 14936 10897
12/31/94 15079 11058
01/31/95 15148 11344
02/28/95 15694 11786
03/31/95 15671 12133
04/30/95 15973 12490
05/31/95 16670 12988
06/30/95 17727 13290
07/31/95 18506 13729
08/31/95 18587 13725
09/30/95 19644 14305
10/31/95 19818 14253
11/30/95 20666 14877
12/31/95 21261 15164
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
- ---------------------------------------------------------
<S> <C> <C>
Growth Portfolio 41.00% 29.51%
S&P 500 Index 37.14% 15.34%
- --------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
% OF
TEN LARGEST HOLDINGS NET ASSETS
- ------------------------------------------------------
<S> <C>
Family Golf Centers 5.9%
Central Parking Corp. 5.5
National Semiconductor Corp. 4.6
Ha-Lo Industries, Inc. 4.1
US Healthcare, Inc. 3.9
Philip Morris Cos., Inc. 3.9
Intel Corp. 3.6
Kimberly-Clark Corp. 3.5
Mid Atlantic Medical Services, Inc. 2.9
Station Casinos, Inc. 2.8
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PURCHASES (JULY THROUGH DECEMBER) COST
- ------------------------------------------------------
<S> <C>
National Semiconductor Corp. $ 2,268,202
Family Golf Centers 2,162,250
Central Parking Corp. 1,772,048
Intel Corp. 1,287,500
United Healthcare Corp. 1,171,260
</TABLE>
Performance represents the performance of the Growth Portfolio, but does not
include administration charges, contingent deferred sales charges, or mortality
and expense risk premiums.
The performance of the Portfolio assumes the reinvestment of all dividends and
capital gains. The Standard & Poor's 500 Index is an unmanaged index of 500
stocks weighted by market capitalization with dividends reinvested. Investment
management fees have been applied to the calculation of Portfolio performance,
but not to the index. If portfolio investment management fees had been applied
to the index, the index values would have been lower.
Investment returns are historical and not predictive of future performance.
Portfolio share prices and investment returns will fluctuate.
*The Portfolio's inception was January 7, 1993.
Performance information begins on January 31, 1993.
<TABLE>
<CAPTION>
TOP FIVE SALES (JULY THROUGH DECEMBER) PROCEEDS
- ------------------------------------------------------
<S> <C>
Renters Choice, Inc. $ 2,026,316
United Healthcare Corp. 1,601,423
Motorola, Inc. 1,342,666
AccuStaff, Inc. 1,298,125
Texas Instruments, Inc. 1,191,320
</TABLE>
- 17 -
<PAGE> 17
December 31, 1995
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- ------------------------------------------------------
GROWTH PORTFOLIO
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (000'S)
- ------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS - 98.7%
ADVERTISING - 4.1%
60,000 * Ha-Lo Industries, Inc. $1,845
AUTOS & AUTO PARTS - 2.3%
11,000 * Andros, Inc. 168
35,000 * Miller Industries, Inc. 866
BEVERAGE-ALCOHOLIC - 2.7%
34,800 * Canandaigua Wine Co., Class A 1,135
3,600 * Hart Brewing, Inc 55
BEVERAGE-SOFTDRINK - 1.4%
185,000 * Brio Industries, Inc. 601
BUILDING MATERIALS - 1.8%
31,600 * ABT Building Products Corp. 450
16,000 * Fibreboard Corp. 358
CHEMICALS - 0.8%
24,000 * Melamine Chemicals 228
8,800 * Nuco2, Inc. 114
COMMERCIAL SERVICES - 5.9%
10,000 Aaron Rents Inc. 180
30,000 * Datamarine Int'l, Inc. 337
50,000 * Prime Management Group, Inc. 113
45,000 * Right Management Consultants 1,046
61,000 * Youth Services
International, Inc. 946
COMPUTER SOFTWARE - 0.9%
16,300 * Ciber, Inc. 381
COMPUTER SYSTEMS - 7.3%
51,000 * Conner Peripherals 1,071
24,500 * MICROS Systems, Inc. 1,207
20,500 * Seagate Technology, Inc. 974
DRUGS & HOSPITAL SUPPLIES - 4.5%
53,100 * Maxxim Medical, Inc. 889
97,000 Medex, Inc. 1,091
ELECTRICAL EQUIPMENT & ELECTRONICS - 8.2%
28,100 Intel Corp. 1,595
91,900 * National Semiconductor Corp. 2,045
ELECTRONICS - 2.7%
14,000 * Detection Systems, Inc. 82
15,000 * Intermagnetics General Corp. 315
20,000 * Micron Technology, Inc. 793
FINANCIAL SERVICES - 3.0%
15,000 * Credit Acceptance Corp. 311
5,000 * First USA Inc. 222
43,400 First Financial Caribbean 814
FOOD & TOBACCO - 7.3%
19,200 Philip Morris Cos., Inc. 1,737
25,500 RJR Nabisco Holdings Corp. 787
50,000 * Stokely USA, Inc. 253
27,000 * Thorn Apple Valley, Inc. 452
HEALTH CARE - 9.2%
33,600 * Health Systems International,
Inc. 1,079
52,800 * Mid Atlantic Medical
Services, Inc. 1,280
37,500 US Healthcare, Inc. 1,744
HOME BUILDING - 0.3%
6,800 * Palm Harbor Homes, Inc. 148
HOSPITAL MANAGEMENT - 4.4%
115,000 * American Healthcorp 1,093
20,000 * Foundation Health Corp. 860
LEISURE TIME - 12.7%
143,000 * Family Golf Centers 2,610
26,300 * Mikohn Gaming Corp. 99
41,700 * Morrow Snowboards Inc. 677
34,050 Polaris Industries, Inc. 1,000
85,000 * Station Casinos, Inc. 1,243
MANUFACTURING - 2.4%
14,400 * Industrial Training 126
45,715 Mark IV Industries, Inc. 903
18,500 * Speizman Industries, Inc. 53
PAPER PRODUCTS & SUPPLIES - 4.0%
16,000 * Crown Vantage, Inc. 228
18,798 Kimberly-Clark Corp. 1,556
PETROLEUM & PETROLEUM SERVICES - 1.3%
5,000 Mobil Corp. 560
REAL ESTATE DEVELOPMENT - 5.5%
84,500 Central Parking Corp. 2,429
</TABLE>
See Notes to Financial Statements
- 18 -
<PAGE> 18
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
------------------------------------------------------
GROWTH PORTFOLIO
------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (000'S)
- --------------------------------------------------------
<S> <C> <C> <C> <C>
RETAIL - 3.9%
35,500 * Ezcorp, Inc. $ 169
71,060 * Harold's Stores, Inc. 862
88,500 * NPC International, Inc. Class
A 642
15,000 * Tuesday Morning Corp. 83
RETAIL-SPECIALTY - 2.1%
34,000 * American Coin Merchandising 208
32,400 * First Years, Inc. 705
-------
TOTAL COMMON STOCKS 43,818
-------
SHORT-TERM INVESTMENTS - 1.8%
INVESTMENT COMPANIES:
$784,327 Short-Term Investments Co.
(Prime Portfolio) 784
-------
TOTAL SHORT-TERM INVESTMENTS 784
-------
TOTAL INVESTMENTS - 100.5% 44,602
Liabilities, less Other Assets (144)
-------
NET ASSETS $44,458
=======
</TABLE>
* Non-income producing security.
See Notes to Financial Statements
- 19 -
<PAGE> 19
December 31, 1995
- --------------------------------------------------------------------------------
INVESTMENT REVIEW
REPORT FROM NORTHWEST PORTFOLIO MANAGER - CHARLES R. DRIGGS
Taken together, the initial public offerings we added during the year, our
technology stocks and some individual poor performers discussed below held the
Northwest Portfolio under the Murphy Favre Northwest 50 Index. For the year
ending December 31, 1995, the Portfolio returned 7.42% compared to the index's
27.68%.
Having experienced the ups and downs of establishing positions in the newly
offered stocks of Redhook Ale and Harts Brewing (craft brewers), ThrustMaster
(flight simulators and joy sticks), Semitool (silicon wafer washer), R-B Rubber
(recycles tires into rubber surfaces) and Emeritus (assisted-living), I intend
to give them time to grow.
During the year, I added to our holdings in Nordstrom, Arrow Transportation, and
Monaco Coach when their prices fell into our buy-price range. Though Monaco had
a down year, demographics point to increased motor home sales, and completion of
its announced acquisition of Holiday Rambler should more than double Monaco's
sales. Arrow should recover nicely as it grows sales to fill its expanded
carrying capacity. Nordstrom remains our Portfolio's premier retailer.
As the period closed, I did liquidate our positions in several stocks that
caused our Portfolio to lag: Eagle Hardware (wounded in the hardware store war),
MK Rail and its parent Morrison Knudson (company's outlook is dismal) and
Macheezmo Mouse Restaurants (couldn't sustain its healthy-fare niche).
I sold all the Vencor, the Kentucky-based acquirer of Hillhaven, and half the
Hollywood Entertainment for substantial gains.
We initiated a position in Egghead Software, a specialty software retailer.
Despite its recent poor performance, Egghead's turnaround plans seem promising.
West One Bancorp was acquired by US Bancorp, creating a regional powerhouse.
I'll hold the combined position. Financial stocks should outperform the market
in 1996 as they did in 1995.
Mentor Graphics trades in sympathy with semiconductor stocks and though it
suffered in the fourth quarter, we expect long-term growth from it as well as
from Merix and Lattice Semiconductor.
Meanwhile, NIKE is "just doing it". Sales are brisk, margins are high and orders
are heavy. Picking up Pope and Talbot's diaper division, Paragon is eliminating
a major competitor and acquiring huge cost-saving potential.
On the whole, we have a regional economy that is diverse and strong. I view our
Portfolio as I do the Northwest economy -- with a great deal of upside
potential. We've cleaned out the weak links and are holding shares of what we
think are the Northwest's finest companies, priced to appreciate.
- 20 -
<PAGE> 20
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
INVESTMENT HIGHLIGHTS
As of December 31, 1995
NORTHWEST PORTFOLIO
ILLUSTRATION OF A $10,000 INVESTMENT:
SINCE FUND INCEPTION ON JANUARY 7, 1993 TO DECEMBER 31, 1995*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NORTHWEST S&P 500 NORTHWEST 50
MEASUREMENT PERIOD PORTFOLIO: INDEX: INDEX:
(FISCAL YEAR COVERED) $11,074 $15,164 $13,226
<S> <C> <C> <C>
01/31/93 10000 10000 10000
02/28/93 9385 10136 9687
03/31/93 9633 10350 10086
04/30/93 9325 10100 9859
05/31/93 9563 10369 10103
06/30/93 9474 10400 9885
07/31/93 9425 10358 9531
08/31/93 9623 10750 9921
09/30/93 9722 10667 9698
10/31/93 9841 10888 10046
11/30/93 9901 10785 10262
12/31/93 9945 10915 10400
01/31/94 10146 11286 10714
02/28/94 10496 10980 10873
03/31/94 10216 10503 10490
04/30/94 10166 10637 10458
05/31/94 10055 10811 10616
06/30/94 9915 10546 10293
07/31/94 10086 10892 10374
08/31/94 10526 11337 10972
09/30/94 10536 11060 10553
10/31/94 10646 11308 10490
11/30/94 10396 10897 10302
12/31/94 10309 11058 10359
01/31/95 10097 11344 10314
02/28/95 10258 11786 10661
03/31/95 10661 12133 10999
04/30/95 10681 12490 11330
05/31/95 10812 12988 11331
06/30/95 11356 13290 12019
07/31/95 12040 13729 12474
08/31/95 12292 13725 12712
09/30/95 12070 14305 13179
10/31/95 11778 14253 12874
11/30/95 11517 14877 13066
12/31/95 11074 15164 13226
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
- ----------------------------------------------------------
<S> <C> <C>
Northwest Portfolio 7.42% 3.56%
Northwest 50 Index 27.68% 10.06%
S&P 500 Index 37.14% 15.34%
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
% OF
TEN LARGEST HOLDINGS NET ASSETS
- ------------------------------------------------------
<S> <C>
Paragon Trade Brands, Inc. 4.5%
US Bancorp 4.4
Lattice Semiconductor Corp. 4.1
Mentor Graphics Corp. 3.9
Nordstrom, Inc. 3.9
Emeritus Corp. 3.1
West Coast Bancorp, Inc. 3.0
Merix Corp. 2.9
Monaco Coach Corp. 2.7
NIKE, Inc. 2.7
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PURCHASES (JULY THROUGH DECEMBER) COST
- ------------------------------------------------------
<S> <C>
Emeritus Corp. $300,000
Lattice Semiconductor Corp. 252,000
Harts Brewing, Inc. 217,600
Egghead, Inc. 212,687
Schnitzer Steel Industries, Inc. (Class A) 140,000
</TABLE>
Performance represents the performance of the Northwest Portfolio, but does
not include deductions for administration charges, contingent deferred sales
charges, or mortality and expense risk premiums.
The performance of the Portfolio assumes the reinvestment of all dividends and
capital gains. The Standard & Poor's 500 Index is an unmanaged index of 500
stocks weighted by market capitalization with dividends reinvested. The Murphey
Favre Northwest 50 Index is an index of 50 Northwest companies weighted by their
regional impact. Investment management fees have been applied to the calculation
of Portfolio performance, but not to the indexes. If portfolio investment
management fees had been applied to the indexes, the index values would have
been lower.
Investment returns are historical and not predictive of future performance.
Portfolio share prices and investment returns will fluctuate.
*The Portfolio's inception was January 7, 1993.
Performance information begins on January 31, 1993.
<TABLE>
<CAPTION>
TOP FIVE SALES (JULY THROUGH DECEMBER) PROCEEDS
- ------------------------------------------------------
<S> <C>
Hollywood Entertainment Corp. $306,000
Vencor, Inc. 145,848
MK Rail Corp. 99,750
Advanced Technology Labs 87,500
Eagle Hardware & Garden, Inc. 65,625
</TABLE>
- 21 -
<PAGE> 21
December 31, 1995
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- ------------------------------------------------------
NORTHWEST PORTFOLIO
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (000'S)
- ------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS - 83.1%
APPAREL MANUFACTURING - 2.7%
2,400 NIKE, Inc. $ 167
AUTOS - 2.7%
19,000 * Monaco Coach Corp. 171
BANKS - 10.6%
6,050 * Cascade Bancorp 103
12,600 Northrim Bank 102
8,310 US Bancorp 279
11,220 West Coast Bancorp, Inc. 187
BEVERAGES-ALCOHOLIC - 2.6%
300 * Redhook Ale Brewery, Inc. 8
10,400 * Harts Brewing, Inc. 159
BUILDING MATERIALS - 5.0%
10,000 * BMC West Corp. 148
9,000 TJ International, Inc. 167
CHEMICALS-DIVERSIFIED - 0.6%
15,000 Consep, Inc. 41
COMMERCIAL SERVICES - 2.3%
10,000 * Barrett Business Services,
Inc. 148
COMPUTER SOFTWARE - 5.7%
13,500 * Mentor Graphics Corp. 246
1,000 * Microsoft Corp. 88
4,000 * Thrustmaster, Inc. 27
ELECTRICAL EQUIPMENT & ELECTRONICS - 11.5%
13,000 * Flir Systems, Inc. 159
8,000 * Lattice Semiconductor Corp. 261
6,000 * Merix Corp. 180
9,750 * Semitool, Inc. 127
FOOD - 2.4%
20,000 * Wholesome & Hearty Foods,
Inc. 153
HEALTH CARE - 4.6%
6,000 * Assisted Living Concepts,
Inc. 79
17,000 * Emeritus Corp. 198
5,000 * Procyte Corp. 14
HOUSEHOLD PRODUCTS - 4.5%
12,000 * Paragon Trade Brands, Inc. 281
INDUSTRIAL PRODUCTS & SUPPLIERS - 1.4%
8,200 Univar Corp. 89
MACHINERY DIVERSIFIED - 1.4%
9,200 * Flow International Corp. 86
METAL STEEL - 2.4%
5,000 Schnitzer Steel Industries,
Inc-A. 153
PAPER & FOREST PRODUCTS - 1.4%
5,500 Longview Fibre Co. 89
POLLUTION CONTROL - 1.0%
21,800 * R-B Rubber Products, Inc. 65
RETAIL-GROCERS - 3.4%
4,000 Albertson's, Inc. 131
10,000 * Carr-Gottstein Foods Co. 57
1,047 Quality Food Centers, Inc. 23
RETAIL-OTHER - 6.0%
9,000 * Hollywood Entertainment
Corp. 75
6,000 Nordstrom, Inc. 243
4,200 * Price/Costco, Inc. 64
RETAIL-SPECIALTY - 2.0%
20,000 * Egghead, Inc. 129
SAVINGS & LOANS/SAVINGS BANKS - 4.8%
4,000 Security Bancorp 84
6,655 * Sterling Financial Corp. 91
4,500 Washington Mutual
Savings Bank 130
TRANSPORTATION - 3.9%
30,000 * Arrow Transportation Co. 37
4,000 Expeditors International of
Washington, Inc. 104
9,000 Greenbrier Companies, Inc. 109
-----
TOTAL COMMON STOCKS 5,252
-----
</TABLE>
See Notes to Financial Statements
- 22 -
<PAGE> 22
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
------------------------------------------------------
NORTHWEST PORTFOLIO
------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR MARKET
PRINCIPAL VALUE
AMOUNT (000'S)
- ------------------------------------------------------
<S> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS - 17.2%
INVESTMENT COMPANIES:
$314,566 Short-Term Investments Co.
(Prime Portfolio) $ 315
270,281 Short-Term Investments Co.
(Treasury Portfolio) 270
U.S. AGENCY NOTES:
500,000 Federal National Mortgage
Association
5.67% due 1/09/96 499
------
TOTAL SHORT-TERM INVESTMENTS 1,084
------
TOTAL INVESTMENTS - 100.3% 6,336
Liabilities, less Other Assets (24)
------
NET ASSETS $6,312
======
* Non-income producing security.
</TABLE>
See Notes to Financial Statements
- 23 -
<PAGE> 23
December 31, 1995
- --------------------------------------------------------------------------------
INVESTMENT REVIEW
REPORT FROM BOND PORTFOLIO MANAGER - MICHAEL C. KNEBEL
Who would have guessed, following 1994, arguably the worst year for bonds in
three generations, that 1995 would be so kind to fixed income investors?
Benevolent it was. The bond market came roaring back, producing handsome returns
for patient investors.
The RST Bond Portfolio returned 17.87% while the broader market as measured by
the Shearson Lehman Government Corporate Index returned 19.24%. Nearly all the
difference between our return and the index can be attributed to the fact that
the index holds no cash and bears no transaction or management expenses.
We began the year holding shorter-term bonds and sounding a cautionary tone. The
Federal Reserve was still raising short-term interest rates to avoid an
overheated economy. As time moved on, the Fed's actions appear to have worked as
planned: economic growth slowed, but more importantly, inflationary pressures,
which had been building from late 1994 through May 1995, subsided significantly.
(Inflation is a bond investor's worst enemy, as it erodes the purchasing power
of bonds' principal and fixed income streams.)
As the economy cooled, and inflation fears dissipated, the market continued to
rally, steadily enhancing the Portfolio's return as the year progressed. As the
Portfolio's value increased, we gradually increased its risk profile by
extending its average maturity and increasing its interest-rate sensitivity (as
measured by "duration"). By following the market trend (rather than anticipating
where rates might go) we were able to capture much of the market's gain while
controlling the risk level of the Portfolio.
During the last six months we sold our Province of Ontario bonds, which we felt
were overvalued in light of the slowdown in the Canadian economy, and we swapped
one Ford Motor Credit bond for another to enhance yield.
What can we expect for 1996?
The temporary shutdown of many government agencies in recent weeks has delayed
release of many economic indicators, making forecasts more challenging than
normal. That said, I'll venture this: the environment for bond investors remains
positive. However, repeating the returns of 1995 would take a significantly
weaker economy than we foresee in 1996.
- 24 -
<PAGE> 24
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
INVESTMENT HIGHLIGHTS
As of December 31, 1995
BOND PORTFOLIO
ILLUSTRATION OF A $10,000 INVESTMENT:
SINCE FUND INCEPTION ON JULY 21, 1987 TO DECEMBER 31, 1995*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LEHMAN
BOND GOV'T/CORP.
MEASUREMENT PERIOD PORTFOLIO: INDEX:
(FISCAL YEAR COVERED) $20,118 $21,877
<S> <C> <C>
7/31/87 10000 10000
8/31/87 10000 9944
9/30/87 10010 9730
10/31/87 9861 10095
11/30/87 10170 10159
12/31/87 10290 10298
01/31/88 10290 10651
02/28/88 10508 10774
03/31/88 10633 10667
04/30/88 10602 10605
05/31/88 10591 10534
06/30/88 10519 10772
07/31/88 10675 10711
08/31/88 10643 10738
09/30/88 10643 10974
10/31/88 10820 11168
11/30/88 10986 11042
12/31/88 11013 11079
01/31/89 11013 11227
02/28/89 11103 11141
03/31/89 11058 11200
04/30/89 11081 11438
05/31/89 11294 11719
06/30/89 11540 12101
07/31/89 11775 12353
08/31/89 12022 12161
09/30/89 11887 12215
10/31/89 12134 12524
11/30/89 12223 12637
12/31/89 12258 12656
1/31/90 12173 12482
02/28/90 12222 12510
03/31/90 12258 12511
04/30/90 12197 12396
05/31/90 12450 12755
06/30/90 12595 12962
07/31/90 12595 13123
08/31/90 12751 12932
09/30/90 12703 13040
10/31/90 12727 13213
11/30/90 12836 13501
12/31/90 13063 13705
01/31/91 13154 13859
02/28/91 13270 13978
03/31/91 13361 14074
04/30/91 13516 14236
05/31/91 13620 14303
06/30/91 13581 14287
07/31/91 13749 14467
08/31/91 14008 14800
09/30/91 14215 15109
10/31/91 14383 15244
11/30/91 14513 15396
12/31/91 14890 15915
01/31/92 14793 15680
02/28/92 14793 15763
03/31/92 14697 15676
04/30/92 14807 15770
05/31/92 15055 16076
06/30/92 15276 16312
07/31/92 15634 16730
08/31/92 15744 16879
09/30/92 16062 17108
10/31/92 15744 16847
11/30/92 15648 16831
12/31/92 15906 17121
01/31/93 16259 17494
02/28/93 16611 17858
03/31/93 16700 17919
04/30/93 16832 18057
05/31/93 16803 18048
06/30/93 17111 18457
07/31/93 17185 18576
08/31/93 17582 19003
09/30/93 17685 19069
10/31/93 17773 19147
11/30/93 17493 18931
12/31/93 17583 19014
01/31/94 17836 19300
02/28/94 17393 18879
03/31/94 17030 18416
04/30/94 16919 18263
05/31/94 16919 18231
06/30/94 16903 18189
07/31/94 17109 18552
08/31/94 17172 18560
09/30/94 17014 18280
10/31/94 17014 18260
11/30/94 16998 18227
12/31/94 17068 18347
01/31/95 17302 18699
02/28/95 17586 19133
03/31/95 17687 19261
04/30/95 17921 19529
05/31/95 18590 20347
06/30/95 18741 20510
07/31/95 18607 20430
08/31/95 18858 20692
09/30/95 19059 20903
10/31/95 19377 21210
11/30/95 19762 21560
12/31/95 20118 21877
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEAR INCEPTION
- ------------------------------------------------------------
<S> <C> <C> <C>
Bond Portfolio 17.87% 9.02% 8.66%
Lehman Gov't/Corp. Index 19.24% 11.57% 9.75%
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
% OF
TEN LARGEST HOLDINGS NET ASSETS
- ------------------------------------------------------
<S> <C>
U.S. Treasury Interest Strip, due
5/15/05 24.8%
U.S. Treasury Principal Strip, due
5/15/05 19.1
U.S. Treasury Principal Strip, due
5/15/05 12.9
Federal National Mortgage Association,
6.25%, due 8/12/03 7.0
Ford Motor Credit Co. 4.3
Society Bank - Cleveland 3.6
Pacific Gas & Electric Co. 3.5
U.S. Treasury Note, 6.25%, due 2/15/03 3.4
Dayton Hudson Corp. 2.0
Manitoba (Province) 1.9
WEIGHTED AVERAGE MATURITY 7.3 Years
</TABLE>
Performance represents the performance of the Bond Portfolio, but does not
include deductions for administration charges, contingent deferred sales
charges, or mortality and expense risk premiums.
The performance of the Portfolio assumes the reinvestment of all dividends and
capital gains. The Lehman Gov't/Corp. Index is a representative total return
benchmark for the Portfolio. Investment management fees have been applied to the
calculation of Portfolio performance, but not to the index. If portfolio
investment management fees had been applied to the index, the index values would
have been lower.
Investment returns are historical and not predictive of future performance.
Portfolio share prices and investment returns will fluctuate.
*The Portfolio's inception was July 21, 1987.
Performance information begins on July 31, 1987.
PORTFOLIO CREDIT QUALITY
<TABLE>
<CAPTION>
MOODY'S S&P MOODY'S S&P
- ------------------------------------------------------------
<S> <C> <C> <C>
U.S.Gov't U.S. Gov't 67.2% 67.2 %
Aa AA 5.5 1.9
A A 23.7 25.3
Baa BBB 1.5 3.5
Short-Term Investments 1.1 1.1
Cash and Other Assets 1.0 1.0
-----------------
Total 100.0% 100.0%
=================
</TABLE>
- 25 -
<PAGE> 25
December 31, 1995
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
- ------------------------------------------------------
BOND PORTFOLIO
- ------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000'S) (000'S)
- ---------------------------------------------------------
<S> <C> <C> <C> <C>
CORPORATE BONDS - 30.7%
BANKING & FINANCE - 10.7%
$100 American Express Co.
8.75%, due 6/15/96 $ 101
250 Associates Corp. of North
America
8.80%, due 8/01/98 269
135 BankAmerica Corp.
9.50%, due 4/01/01 156
200 Grand Metropolitan
Investment Corp.
8.625%, due 8/15/01 226
250 Household Finance Corp.
7.625%, due 6/15/99 265
500 Society Bank - Cleveland
7.125%, due 4/15/97 510
CANADIAN PROVINCES, U.S. FUNDS - 1.9%
250 Manitoba (Province)
7.75%, due 2/01/02 273
FINANCE-AUTO - 4.3%
600 Ford Motor Credit Co. Notes
6.25%, due 8/11/00 608
OIL & GAS - 1.8%
250 Texaco Capital, Inc.
6.875%, due 7/15/99 260
RETAIL - 2.0%
250 Dayton Hudson Notes
9.40%, due 2/15/01 285
UTILITIES-ELECTRIC - 8.5%
250 Delmarva Power & Light Mtn
7.50%, due 5/01/99 263
500 Pacific Gas & Electric Co.
5.375%, due 8/01/98 495
250 Public Services Electric &
Gas Co.
6.00%, due 1/01/98 251
200 Virginia Electric & Power
Co.
6.25%, due 8/01/98 203
UTILITIES-TELEPHONE - 1.5%
$ 200 GTE Corp.
8.85%, due 3/01/98 212
------
TOTAL CORPORATE BONDS 4,377
------
U.S. GOVERNMENT AND AGENCY
SECURITIES - 67.2%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 7.0%
1,000 6.25%, due 8/12/03 1,003
U.S. TREASURY INTEREST STRIP - 19.1%
4,635 0.00%, due 5/15/05 2,730
U.S. TREASURY NOTE - 3.4%
460 6.25%, due 2/15/03 480
U.S. TREASURY PRINCIPAL STRIPS - 37.7%
3,120 0.00%, due 5/15/05 1,835
6,100 0.00%, due 5/15/05 3,529
------
TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES 9,577
------
SHORT-TERM INVESTMENTS - 1.1%
156 Short-Term Investment Co.
(Prime Portfolio) 156
------
TOTAL SHORT-TERM
INVESTMENTS 156
------
TOTAL INVESTMENTS - 99.0% 14,110
Other Assets, less Liabilities 147
------
NET ASSETS $14,257
======
</TABLE>
See Notes to Financial Statements
- 26 -
<PAGE> 26
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
INVESTMENT REVIEW
REPORT FROM MONEY MARKET PORTFOLIO MANAGER - NAOMI URATA
In the year ending December 31, 1995, the RST Money Market Portfolio's
annualized yield was 5.56%. Over the year, 90-day commercial paper rates fell
from 6.27% to 5.59%.
The .68% drop in commercial rates occurred in spite of the year opening with a
.50% rate hike by the Federal Reserve. The ultimate decline took shape as 1995
progressed on signs of a weakening economy and two .25% reductions in the
Federal Funds rate in July and December.
The short-end of the yield curve inverted in May in anticipation of further rate
drops, and remains inverted. This means overnight paper is paying more than
securities out to one year. The ultimate result of all this was lower yields for
the Money Market Portfolio and a shorter average maturity. Yields fell as rates
came down and the average maturity shortened from 42 to 32 days due to the
limited availability of attractive rates on paper with longer maturities.
The Portfolio invested in U.S. Agency Securities and commercial paper issued by
top tier corporations. All the securities were less than 13 months maturity and
bearing a fixed rate of interest.
I removed some commercial paper issuers from our approved list during the year
when their programs were eliminated or their top tier ratings were at risk.
Among those names were the issuers with letters of credit from Japanese banks.
The level of bad loans at the banks is of concern as the economy in Japan
continues to suffer from recession.
I added some new names to the approved list including top-rated Transamerica
Finance Corporation, Wachovia Bank and New Center Asset Trust, an automobile
loan receivables program of General Motors.
Current economic indicators point to slower growth in the coming year. The
inverted yield curve for short-term investments reflects a belief that rates
will continue to fall. I believe that further rate cuts by the Fed are possible
unless the economy gathers unexpected strength.
- 27 -
<PAGE> 27
December 31, 1995
- --------------------------------------------------------------------------------
INVESTMENT HIGHLIGHTS
As of December 31, 1995
MONEY MARKET PORTFOLIO
ILLUSTRATION OF A $10,000 INVESTMENT:
SINCE FUND INCEPTION ON JULY 21, 1987 TO DECEMBER 31, 1995*
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET
MEASUREMENT PERIOD PORTFOLIO:
(FISCAL YEAR COVERED) $15,918
<S> <C>
07/31/87 10000
8/31/87 10052
9/30/87 10103
10/31/87 10154
11/30/87 10209
12/31/87 10264
01/31/88 10323
02/28/88 10378
03/31/88 10432
04/30/88 10485
05/31/88 10535
06/30/88 10593
07/31/88 10651
08/31/88 10709
09/30/88 10776
10/31/88 10842
11/30/88 10913
12/31/88 10983
01/31/89 11057
02/28/89 11140
03/31/89 11215
04/30/89 11300
05/31/89 11386
06/30/89 11468
07/31/89 11564
08/31/89 11650
09/30/89 11733
10/31/89 11894
11/30/89 11972
12/31/89 12048
1/31/90 12133
02/28/90 12205
03/31/90 12282
04/30/90 12362
05/31/90 12443
06/30/90 12519
07/31/90 12601
08/31/90 12680
09/30/90 12752
10/31/90 12835
11/30/90 12915
12/31/90 12995
01/31/91 13072
02/28/91 13137
03/31/91 13200
04/30/91 13270
05/31/91 13332
06/30/91 13384
07/31/91 13450
08/31/91 13512
09/30/91 13572
10/31/91 13628
11/30/91 13679
12/31/91 13732
01/31/92 13777
02/28/92 13814
03/31/92 13856
04/30/92 13895
05/31/92 13932
06/30/92 13975
07/31/92 14017
08/31/92 14052
09/30/92 14082
10/31/92 14111
11/30/92 14145
12/31/92 14179
01/31/93 14212
02/28/93 14240
03/31/93 14273
04/30/93 14303
05/31/93 14330
06/30/93 14365
07/31/93 14395
08/31/93 14428
09/30/93 14457
10/31/93 14486
11/30/93 14516
12/31/93 14549
01/31/94 14583
02/28/94 14612
03/31/94 14644
04/30/94 14679
05/31/94 14722
06/30/94 14765
07/31/94 14810
08/31/94 14864
09/30/94 14913
10/31/94 14966
11/30/94 15017
12/31/94 15080
01/31/95 15154
02/28/95 15219
03/31/95 15288
04/30/95 15358
05/31/95 15437
06/30/95 15505
07/31/95 15577
08/31/95 15643
09/30/95 15705
10/31/95 15785
11/30/95 15857
12/31/95 15918
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEAR INCEPTION
- ------------------------------------------------------------
<S> <C> <C> <C>
Money Market Portfolio 5.56% 4.14% 5.68%
WEIGHTED AVERAGE MATURITY 32 days
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO CREDIT QUALITY PERCENT
- ------------------------------------------------------
<S> <C>
Highest Quality1 100.0%
Split-Rated2 --
Not Rated3 --
</TABLE>
Performance represents the performance of the Money Market Portfolio, but does
not include deductions for administration charges, contingent deferred sales
charges, or mortality and expense risk premiums.
Performance of the Portfolio assumes the reinvestment of all dividends and
capital gains. Investment returns are historical and not predictive of future
performance. Portfolio share prices and investment returns will fluctuate.
THE MONEY MARKET PORTFOLIO SEEKS TO MAINTAIN A $1.00 PER SHARE NET ASSET
VALUE. SHARES OF THE MONEY MARKET PORTFOLIO ARE NEITHER INSURED NOR GUARANTEED
BY THE U.S. GOVERNMENT. THERE IS NO ASSURANCE THAT THE MONEY MARKET PORTFOLIO
WILL MAINTAIN A STABLE $1.00 PER SHARE NET ASSET VALUE.
*The Portfolio's inception was July 21, 1987.
Performance information begins on July 31, 1987.
1 Rated highest quality by at least two nationally recognized rating
organizations or, when rated by only one organization, received its highest
rating.
2 Rated highest by one organization and second highest by another.
3 Although unrated, comparable in credit quality to securities in the highest or
split-rated categories, in the opinion of SAFECO Asset Management Company, the
Portfolio's investment advisor.
- 28 -
<PAGE> 28
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
------------------------------------------------------
MONEY MARKET PORTFOLIO
------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
(000'S) (000'S)
- -------------------------------------------------------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER - 90.1%
ASSET BACKED - 18.2%
$ 400 Apreco, Inc.
5.73%, due 1/24/96 $ 398
400 Corporate Asset Funding Co.
5.42%, due 5/20/96 391
400 Ciesco L.P.
5.63%, due 2/16/96 397
400 # Receivables Capital Corp.
5.71%, due 1/04/96 400
BANKS-FOREIGN - 22.9%
400 Abbey National
North America Corp.
5.62%, due 1/08/96 399
400 Halifax Building Society
5.69%, due 1/08/96 399
400 National Australia Funding
(DE), Inc.
5.66%, due 1/02/96 400
400 National & Provincial
Building Society
5.68%, due 1/16/96 399
400 Westpac Capital Corp.
5.67%, due 1/23/96 399
FINANCE-AUTO - 13.6%
400 Ford Motor Credit Co.
5.63%, due 2/01/96 398
400 General Motors Acceptance
Corp.
5.69%, due 1/26/96 398
400 New Center Asset Trust
5.75%, due 1/18/96 399
FINANCE-CONSUMER - 4.6%
400 Household Finance Corp.
5.77%, due 1/30/96 398
FINANCE-DIVERSIFIED & BUSINESS - 13.7%
400 General Electric Capital
Corp.
5.55%, due 3/29/96 394
400 Heller Financial, Inc.
5.85%, due 1/09/96 399
400 Transamerica Finance Corp.
5.72%, due 1/29/96 398
FINANCE-MISCELLANEOUS - 4.5%
400 Tasmanian Public Finance
Corp. 5.57%, due 3/25/96 395
INSURANCE-NON-AFFILIATED MULTI-LINE - 3.4%
$ 300 Prudential Funding Corp.
5.44%, due 1/10/96 300
METALS-MANUFACTURING/FABRICATING - 4.6%
400 BHP Finance (USA), Inc.
5.70%, due 2/23/96 397
UTILITIES-ELECTRIC - 4.6%
400 AES Barbers Point, Inc.
5.70%, due 1/12/96 399
-----
TOTAL COMMERCIAL PAPER 7,857
-----
U.S. GOVERNMENT & AGENCY
SECURITIES - 11.4%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 5.7%
500 5.68%, due 1/05/96 500
STUDENT LOAN MARKETING ASSOCIATION - 5.7%
500 5.65%, due 1/02/96 500
------
TOTAL U.S. GOVERNMENT & AGENCY SECURITIES
1,000
------
OTHER INVESTMENTS - 2.4%
INVESTMENT COMPANIES:
206 Short-Term Investments Co.
(Prime Portfolio) 206
------
TOTAL OTHER INVESTMENTS 206
------
TOTAL INVESTMENTS - 103.9% 9,063
Liabilities, less Other Assets (344)
------
NET ASSETS $8,719
======
</TABLE>
# Security exempt from registration and restricted as to resale only to dealers,
or through a dealer to an "accredited investor" or a "qualified institutional
buyer." At December 31, 1995, the market value of the security is $400,000 or
4.6% of net assets.
<TABLE>
<CAPTION>
- ----------------------------------------------------
ACQUISITION
ISSUE DATE COST
- ----------------------------------------------------
<S> <C> <C>
Receivables Capital
Corp.
5.71%, due 1/04/96 10/02/95 $394,036
- ----------------------------------------------------
</TABLE>
See Notes to Financial Statements
- 29 -
<PAGE> 29
December 31, 1995
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1995 PORTFOLIOS
-------------------------------------------------------------
EQUITY GROWTH NW BOND MMKT
- ------------------------------------------------------------------------------------------------------------------------
-- (In Thousands, Except Per-Share Amounts) --
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value:
Common stocks (identified cost $139,047, $38,691,
and $4,914, respectively) $ 163,531 $ 43,818 $ 5,252 - -
Corporate bonds (identified cost $4,243) - - - $ 4,377 -
U.S. Government and Agency Obligations
(identified cost $9,142) - - - 9,577 -
Short-term investments (at amortized cost which
approximates market) 8,522 784 1,084 156 $ 9,063
--------- --------- --------- --------- ---------
Total investments 172,053 44,602 6,336 14,110 9,063
Receivables:
Investment securities sold 515 - - - -
Dividends and interest 336 45 5 114 1
Trust shares sold 443 326 5 41 -
--------- --------- --------- --------- ---------
Total assets 173,347 44,973 6,346 14,265 9,064
--------- --------- --------- --------- ---------
LIABILITIES:
Payables:
Investment securities purchased 3,758 - - - -
Investment advisory fees 95 24 4 8 4
Trust shares redeemed - - - - 341
Dividends payable - 484 30 - -
Other 15 7 - - -
--------- --------- --------- --------- ---------
Total liabilities 3,868 515 34 8 345
--------- --------- --------- --------- ---------
NET ASSETS $ 169,479 $ 44,458 $ 6,312 $ 14,257 $ 8,719
========= ========= ========= ========= =========
TRUST SHARES OUTSTANDING 8,807 2,800 582 1,261 8,719
========= ========= ========= ========= =========
NET ASSET VALUE PER SHARE
(Net assets divided by Trust shares outstanding) $ 19.24 $ 15.88 $ 10.85 $ 11.31 $ 1.00
========= ========= ========= ========= =========
</TABLE>
See Notes to Financial Statements
- 30 -
<PAGE> 30
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PORTFOLIOS
-----------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1995
EQUITY GROWTH NW BOND MMKT
-----------------------------------------------------------------
-- ($ in Thousands) --
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 3,617 $ 316 $ 35 - -
Interest 421 55 50 $ 936 $ 522
--------- -------- --------- --------- ---------
Total investment income 4,038 371 85 936 522
--------- -------- --------- --------- ---------
EXPENSES:
Investment advisory fees 961 200 40 93 54
Legal and auditing fees 16 13 13 13 13
Custodian fees 30 14 4 5 4
Trustees' fees 4 3 5 3 5
Other - 2 4 7 -
--------- -------- --------- --------- ---------
Total expenses before reimbursement 1,011 232 66 121 76
Expense reimbursement (Note 4) - (14) (26) (28) (22)
--------- -------- --------- --------- ---------
Total expenses after reimbursement 1,011 218 40 93 54
--------- -------- --------- --------- ---------
NET INVESTMENT INCOME 3,027 153 45 843 468
--------- -------- --------- --------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on investments 15,778 5,752 66 116 -
Net change in unrealized appreciation 14,951 4,187 196 1,162 -
--------- -------- --------- --------- ---------
NET GAIN ON INVESTMENTS 30,729 9,939 262 1,278 -
--------- -------- --------- --------- ---------
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 33,756 $ 10,092 $ 307 $ 2,121 $ 468
========= ======== ========= ========= =========
</TABLE>
See Notes to Financial Statements
- 31 -
<PAGE> 31
December 31, 1995
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PORTFOLIOS
-----------------------------------------------------------------------------------
EQUITY GROWTH NORTHWEST
-----------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31
1995 1994 1995 1994 1995 1994
-----------------------------------------------------------------------------------
-- (In Thousands, Except Per-Share Amounts) --
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 3,027 $ 1,693 $ 153 $ (5) $ 45 $ 28
Net realized gain (loss) on
investments 15,778 7,734 5,752 755 66 12
Net change in unrealized
appreciation 14,951 (2,313) 4,187 396 196 78
--------- --------- --------- --------- --------- ---------
Net change in net assets
resulting from operations 33,756 7,114 10,092 1,146 307 118
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (3,027) (1,693) (153) - (45) (28)
Net realized gain on investments (15,778) (7,734) (5,752) (750) (41) -
Net Trust share transactions 52,207 36,477 24,115 10,910 1,527 1,291
--------- --------- --------- --------- --------- ---------
TOTAL CHANGE IN NET ASSETS 67,158 34,164 28,302 11,306 1,748 1,381
NET ASSETS AT BEGINNING OF PERIOD 102,321 68,157 16,156 4,850 4,564 3,183
--------- --------- --------- --------- --------- ---------
NET ASSETS AT END OF PERIOD $ 169,479 $ 102,321 $ 44,458 $ 16,156 $ 6,312 $ 4,564
========= ========= ========= ========= ========= =========
OTHER INFORMATION
Increase (Decrease) in Fund Shares
and Amounts
SHARES:
Sales 2,832 2,360 1,537 888 176 139
Reinvestments 977 560 341 48 5 2
Redemptions (1,083) (845) (323) (90) (45) (15)
--------- --------- --------- --------- --------- ---------
Net change 2,726 2,075 1,555 846 136 126
========= ========= ========= ========= ========= =========
AMOUNTS:
Sales $ 54,206 $ 42,171 $ 23,605 $ 11,442 $ 1,973 $ 1,431
Reinvestments 18,805 9,427 5,420 624 57 15
Redemptions (20,804) (15,121) (4,910) (1,156) (503) (155)
--------- --------- --------- --------- --------- ---------
Net change $ 52,207 $ 36,477 $ 24,115 $ 10,910 $ 1,527 $ 1,291
========= ========= ========= ========= ========= =========
DECEMBER 31, 1995:
Paid in capital $ 144,995 $ 39,331 $ 5,974
Par value per share $ 0.001 $ 0.001 $ 0.001
Trust shares authorized Unlimited Unlimited Unlimited
</TABLE>
See Notes to Financial Statements
- 32 -
<PAGE> 32
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
(Continued)
<TABLE>
<CAPTION>
PORTFOLIOS
---------------------------------------------------------------
BOND MMKT
---------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31
1995 1994 1995 1994
<S> <C> <C> <C> <C>
---------------------------------------------------------------
-- (In Thousands, Except Per-Share Amounts) --
OPERATIONS:
Net investment income (loss) $ 843 $ 735 $ 468 $ 270
Net realized gain (loss) on investments 116 (348) - -
Net change in unrealized appreciation 1,162 (781) - -
--------- --------- --------- ---------
Net change in net assets resulting from operations 2,121 (394) 468 270
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income (843) (735) (468) (270)
Net realized gain on investments - - - -
Net Trust share transactions (382) 1,245 (596) 2,988
--------- --------- --------- ---------
TOTAL CHANGE IN NET ASSETS 896 116 (596) 2,988
NET ASSETS AT BEGINNING OF PERIOD 13,361 13,245 9,315 6,327
--------- --------- --------- ---------
NET ASSETS AT END OF PERIOD $ 14,257 $ 13,361 $ 8,719 $ 9,315
========= ========= ========= =========
OTHER INFORMATION
Increase (Decrease) in Fund Shares
and Amounts
SHARES:
Sales 266 351 21,270 16,178
Reinvestments 75 72 432 270
Redemptions (390) (304) (22,298) (13,460)
--------- --------- --------- ---------
Net change (49) 119 (596) 2,988
========= ========= ========= =========
AMOUNTS:
Sales $ 2,941 $ 3,790 $ 21,270 $ 16,178
Reinvestments 843 735 432 270
Redemptions (4,166) (3,280) (22,298) (13,460)
--------- --------- --------- ---------
Net change $ (382) $ 1,245 $ (596) $ 2,988
========= ========= ========= =========
DECEMBER 31, 1995:
Paid in capital $ 13,920 $ 8,719
Par value per share $ 0.001 $ 0.001
Trust shares authorized Unlimited Unlimited
</TABLE>
See Notes to Financial Statements
- 33 -
<PAGE> 33
December 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
SAFECO Resource Series Trust (the "Trust") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Trust is comprised of the Equity, Growth,
Northwest (NW), Bond and Money Market (MMKT) Portfolios. Each of the five
Portfolios has different investment objectives. Shares of the Trust
Portfolios are available as funding vehicles for certain products sold by
SAFECO Life Insurance Company ("SAFECO"). Currently, all shares of the Trust
are owned by SAFECO or its affiliate, SAFECO Asset Management Company.
Shares of the Portfolios are also available as funding vehicles for certain
products sold by other insurance companies. 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 -- Securities in the Equity, Growth, Northwest and Bond
Portfolios traded on a national exchange or over-the-counter are valued at
the last reported sales price, unless there are no transactions in which
case they are valued at the last reported bid price. Long-term corporate
bonds and other securities not traded on a national exchange or
over-the-counter are valued based on consideration of information with
respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships between
securities. Securities in the Money Market Portfolio purchased at par are
valued at cost. All other short-term securities are valued at amortized
cost.
SECURITY TRANSACTIONS -- Security transactions are recorded on the trade
date. Realized gains and losses on securities transactions are determined
using the identified cost method.
INCOME RECOGNITION -- Interest is accrued on Portfolio investments daily.
Dividend income, less foreign taxes withheld (if any), is recorded on the
ex-dividend date.
DIVIDENDS TO SHAREHOLDERS -- In the Equity, Growth, Northwest and Bond
Portfolios, dividends from net investment income and realized gains (if any)
to shareholders are recorded on the last business day of December of each
year. In the Money Market Portfolio, dividends from net investment income
are declared as of the close of each business day and payment is made as of
the last business day of each month.
FEDERAL INCOME TAX -- It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Therefore, no federal income or excise tax provision is required.
- 34 -
<PAGE> 34
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued)
2. INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
PORTFOLIOS
-----------------------------------------------
EQUITY GROWTH NW BOND
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
-- ($ in Thousands) --
PURCHASES for the year ended December 31, 1995 (including $11,887
of U.S. Government and Agency Securities in the Bond Portfolio) $ 119,488 $ 48,909 $ 2,070 $ 12,984
========= ======== ======= ========
SALES for the year ended December 31, 1995 (including $11,250 of
U.S. Government and Agency Securities in the Bond Portfolio) $ 88,220 $ 30,367 $ 1,016 $ 13,302
========= ======== ======= ========
Purchases and sales amounts exclude short-term obligations which, at the time of purchase, had a maturity of one
year or less.
UNREALIZED APPRECIATION (DEPRECIATION) AT DECEMBER 31, 1995:
Aggregate gross unrealized appreciation for investment securities
in which there is an excess of value over identified cost $ 27,932 $ 8,028 $ 1,009 $ 601
Aggregate gross unrealized depreciation for investment securities
in which there is an excess of identified cost over value (3,448) (2,901) (671) (32)
--------- -------- ------- --------
Net unrealized appreciation $ 24,484 $ 5,127 $ 338 $ 569
========= ======== ======= ========
</TABLE>
3. ACCUMULATED UNDISTRIBUTED CAPITAL LOSS
At December 31, 1995, the Bond Portfolio had accumulated undistributed net
realized losses on investment transaction of $232,000. For federal income
tax purposes, this amount represents a capital loss carryforward which may
be utilized to offset realized gains in future years and expires December
31, 2002.
4. INVESTMENT ADVISORY FEES, EXPENSE REIMBURSEMENT AND OTHER TRANSACTIONS WITH
AFFILIATES
SAFECO Asset Management Company receives investment advisory fees from the
Trust. For the Equity, Growth, Northwest and Bond Portfolios, the fee is
based on average daily net assets at an annual rate of .74 percent. For the
Money Market Portfolio, the fee is based on average daily net assets at an
annual rate of .65 percent.
The Portfolios may borrow money for temporary purposes from SAFECO
Corporation or its affiliates at interest rates equivalent to commercial
bank interest rates.
Prior to May 5, 1994, SAFECO Life Insurance Company (SAFECO) paid all the
expenses of the portfolios except for investment advisory fees. Beginning on
May 5, 1994, any portfolio with net assets in excess of $20 million is
charged for all other operating expenses, including legal and auditing fees,
trustees' fees, custodian fees, and other expenses. For portfolios with net
assets less than $20 million, SAFECO continues to pay the portfolios' other
operating expenses. SAFECO paid for or reimbursed other operating expenses
of the Growth, Northwest, Bond and Money Market Portfolios in the amounts of
$14,000, $26,000, $28,000 and $22,000, respectively, during the year ended
December 31, 1995. Other operating expenses in prior periods were comparable
in amount to current period amounts.
- 35 -
<PAGE> 35
December 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued)
5. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
EQUITY PORTFOLIO
--------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
1995 1994 1993 1992 1991
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 16.83 $ 17.02 $ 14.20 $ 13.48 $ 11.38
INCOME FROM INVESTMENT OPERATIONS:
----------------------------------
Net investment income 0.39 0.31 0.23 0.20 0.24
Net realized and unrealized gain (loss) on
investments 4.43 1.21 3.74 0.89 2.82
--------- --------- -------- -------- --------
Total from investment operations 4.82 1.52 3.97 1.09 3.06
--------- --------- -------- -------- --------
LESS DISTRIBUTIONS:
-------------------
Dividends from net investment income (0.39) (0.31) (0.23) (0.20) (0.24)
Distributions from capital gains (2.02) (1.40) (0.92) (0.17) (0.72)
--------- --------- -------- -------- --------
Total distributions (2.41) (1.71) (1.15) (0.37) (0.96)
--------- --------- -------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 19.24 $ 16.83 $ 17.02 $ 14.20 $ 13.48
========= ========= ======== ======== ========
TOTAL RETURN 28.63% 8.94%(A) 27.92%(A) 8.06%(A) 26.85%(A)
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 169,479 $ 102,321 $ 68,157 $ 36,064 $ 20,402
RATIO OF EXPENSES TO AVERAGE NET ASSETS .75% .77% .73% .73% .73%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ N/A .78% - - -
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS 2.26% 1.98% 1.71% 1.80% 2.31%
PORTFOLIO TURNOVER RATE 69.18% 28.71% 41.35% 24.75% 43.60%
</TABLE>
++ See Note 4 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been
reduced during the periods shown (See Note 4 of Notes to Financial
Statements).
N/A Not applicable as no fund expenses were reimbursed.
- 36 -
<PAGE> 36
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued)
5. FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
GROWTH PORTFOLIO
---------------------------------------------------------------------------------------------------------------
JANUARY 7, 1993
(COMMENCEMENT OF
OPERATIONS) TO
YEAR ENDED DECEMBER 31 DECEMBER 31,
1995 1994 1993
--------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 12.98 $ 12.16 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
----------------------------------
Net investment income 0.06 - 0.01
Net realized and unrealized gain on investments 5.26 1.45 3.60
-------- -------- --------
Total from investment operations 5.32 1.45 3.61
-------- -------- --------
LESS DISTRIBUTIONS:
-------------------
Dividends from net investment income (0.06) - (0.01)
Distributions from capital gains (2.36) (0.63) (1.44)
-------- -------- --------
Total distributions (2.42) (0.63) (1.45)
-------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 15.88 $ 12.98 $ 12.16
======== ======== ========
TOTAL RETURN(A) 41.00% 11.92% 34.73%**
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 44,458 $ 16,156 $ 4,850
RATIO OF EXPENSES TO AVERAGE NET ASSETS .79% .71% .72%*
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ .84% .96% -
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .55% -.05% .08%*
PORTFOLIO TURNOVER RATE 111.70% 41.24% 108.67%*
</TABLE>
* Annualized
** Not Annualized. Performance information begins on January 31, 1993.
++ See Note 4 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been
reduced during the periods shown (See Note 4 of Notes to Financial
Statements).
- 37 -
<PAGE> 37
December 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued)
5. FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
NORTHWEST PORTFOLIO
-------------------------------------------------------------------------------------------------------------
JANUARY 7, 1993
(COMMENCEMENT OF
OPERATIONS) TO
YEAR ENDED DECEMBER 31 DECEMBER 31,
1995 1994 1993
------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 10.24 $ 9.94 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
------------------------------
Net investment income 0.08 0.06 0.09
Net realized and unrealized gain (loss) on investments 0.68 0.30 (0.06)
-------- -------- --------
Total from investment operations 0.76 0.36 0.03
-------- -------- --------
LESS DISTRIBUTIONS:
---------------
Dividends from net investment income (0.08) (0.06) (0.09)
Distributions from capital gains (0.07) - -
-------- -------- --------
Total distributions (0.15) (0.06) (0.09)
-------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 10.85 $ 10.24 $ 9.94
======== ======== ========
TOTAL RETURN(A) 7.42% 3.65% -.55%**
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 6,312 $ 4,564 $ 3,183
RATIO OF EXPENSES TO AVERAGE NET ASSETS .71% .71% .72%*
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ 1.18% 1.23% -
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS .81% .72% 1.06%*
PORTFOLIO TURNOVER RATE 21.30% 7.29% 3.93%*
</TABLE>
* Annualized
** Not Annualized. Performance information begins on January 31, 1993.
++ See Note 4 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been
reduced during the periods shown (See Note 4 of Notes to Financial
Statements).
- 38 -
<PAGE> 38
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued)
5. FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
BOND PORTFOLIO
--------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
1995 1994 1993 1992 1991
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 10.20 $ 11.12 $ 10.82 $ 10.80 $ 10.09
INCOME FROM INVESTMENT OPERATIONS:
------------------------------
Net investment income 0.71 0.59 0.56 0.58 0.70
Net realized and unrealized gain (loss) on
investments 1.11 (0.92) 0.58 0.16 0.71
-------- -------- -------- -------- --------
Total from investment operations 1.82 (0.33) 1.14 0.74 1.41
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
---------------
Dividends from net investment income (0.71) (0.59) (0.56) (0.58) (0.70)
Distributions from capital gains - - (0.28) (0.14) -
-------- -------- -------- -------- --------
Total distributions (0.71) (0.59) (0.84) (0.72) (0.70)
-------- -------- -------- -------- --------
NET ASSET VALUE AT END OF PERIOD $ 11.31 $ 10.20 $ 11.12 $ 10.82 $ 10.80
======== ======== ======== ======== ========
TOTAL RETURN(A) 17.87% -2.93% 10.55% 6.82% 13.98%
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 14,257 $ 13,361 $ 13,245 $ 9,172 $ 4,852
RATIO OF EXPENSES TO AVERAGE NET ASSETS .72% .72% .73% .74% .74%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ .94% .89% - - -
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS 6.50% 5.53% 5.68% 6.96% 7.26%
PORTFOLIO TURNOVER RATE 77.93% 147.22% 60.20% 46.66% 36.31%
</TABLE>
++ See Note 4 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been
reduced during the periods shown (See Note 4 of Notes to Financial
Statements).
- 39 -
<PAGE> 39
December 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Continued)
5. FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
--------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31
1995 1994 1993 1992 1991
---------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
------------------------------
Net investment income 0.05 0.04 0.03 0.03 0.06
LESS DISTRIBUTIONS:
---------------
Dividends from net investment income (0.05) (0.04) (0.03) (0.03) (0.06)
-------- -------- ------- ------- -------
NET ASSET VALUE AT END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======= ======= =======
TOTAL RETURN (A) 5.56% 3.65% 2.61% 3.26% 5.67%
NET ASSETS AT END OF PERIOD (000'S OMITTED) $ 8,719 $ 9,315 $ 6,327 $ 5,399 $ 4,534
RATIO OF EXPENSES TO AVERAGE NET ASSETS .62% .63% .64% .68% .74%
RATIO OF EXPENSES TO AVERAGE NET ASSETS
BEFORE EXPENSE REIMBURSEMENTS++ .87% .87% - - -
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS 5.32% 3.63% 2.61% 3.23% 5.54%
</TABLE>
++ See Note 4 of Notes to Financial Statements.
(A) The total return would have been lower had certain expenses not been
reduced during the periods shown (See Note 4 of Notes to Financial
Statements).
- 40 -
<PAGE> 40
SAFECO RESOURCE SERIES TRUST
- --------------------------------------------------------------------------------
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
SAFECO Resource Series Trust
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of SAFECO Resource Series Trust (comprising,
respectively, the Equity, Growth, Northwest, Bond, and Money Market Portfolios),
as of December 31, 1995. For the Equity, Bond, and Money Market Portfolios, we
have audited the statement of operations for the year ended December 31, 1995,
the statement of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. For the Growth and Northwest Portfolios, we have audited the
statement of operations for the year ended December 31, 1995, the statement of
changes in net assets for each of the two years in the period then ended, and
the financial highlights for each of the two years in the period then ended and
for the period from January 7, 1993 (commencement of operations) to December 31,
1993. These financial statements and financial highlights are the responsibility
of the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios constituting the SAFECO Resource Series Trust at
December 31, 1995, the results of their operations, the changes in their net
assets, and the financial highlights for the periods referred to above, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Seattle, Washington
January 26, 1996
- 41 -
