SAFECO ADVISOR SERIES TRUST, 497, 1995-04-03

SAFECO ADVISOR SERIES TRUST
497, 1995-04-03

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<PAGE> 1

PROSPECTUS

SAFECO ADVISOR EQUITY FUND
SAFECO ADVISOR NORTHWEST FUND
SAFECO ADVISOR INTERMEDIATE-TERM TREASURY FUND
SAFECO ADVISOR U.S. GOVERNMENT FUND
SAFECO ADVISOR GNMA FUND
SAFECO ADVISOR MUNICIPAL BOND FUND
SAFECO ADVISOR INTERMEDIATE-TERM MUNICIPAL BOND FUND
SAFECO ADVISOR WASHINGTON MUNICIPAL BOND FUND

March 31, 1995

Each of the funds described in this Prospectus is a series of the SAFECO Advisor
Series Trust ("Trust"), an open-end, management investment company consisting of
eight separate series.

There are market risks in all securities transactions. This Prospectus sets
forth the information a prospective investor should know before investing.
PLEASE READ AND RETAIN THE PROSPECTUS FOR FUTURE REFERENCE. A Statement of
Additional Information, dated March 31, 1995 and incorporated herein by
reference, has been filed with the Securities and Exchange Commission and is
available at no charge upon request by calling the number listed on this page.
The Statement of Additional Information contains more information about most of
the topics in this Prospectus as well as information about the trustees and
officers of the Trust.

For additional assistance, please call or write your investment professional or
SAFECO Securities, Inc. ("SAFECO Securities"):

Nationwide 1-800-463-8791

SAFECO Advisor Series Trust
P.O. Box 34680
Seattle, WA 98124-1680

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
THE U.S. GOVERNMENT OR ANY BANK, NOR ARE FUND SHARES FEDERALLY INSURED OR
OTHERWISE PROTECTED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD, OR ANY OTHER AGENCY.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

No dealer, salesperson or other person has been authorized to give any
information or to make any representation, other than those contained in this
Prospectus, and, if given or made, such other information or representations
must not be relied upon as having been authorized by the Trust or SAFECO
Securities. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy by the Trust or by SAFECO Securities in any
state in which such offer or solicitation may not lawfully be made.

- 1 -
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C>
INTRODUCTION TO THE TRUST AND THE FUNDS................................................. 3

The Funds..................................................................... 3

Risk Factors.................................................................. 3

Investment Adviser............................................................ 4

Alternative Purchase Arrangement.............................................. 4

FUND EXPENSES........................................................................... 4

FINANCIAL HIGHLIGHTS.................................................................... 6

INVESTMENT POLICIES, RISK FACTORS AND PORTFOLIO MANAGERS................................ 14

Advisor Equity Fund........................................................... 14

Advisor Northwest Fund........................................................ 15

Advisor Intermediate Treasury Fund............................................ 15

Advisor Government Fund....................................................... 16

Advisor GNMA Fund............................................................. 16

Advisor Municipal, Advisor Intermediate Municipal
and Advisor Washington Municipal Funds...................................... 17

Common Investment Practices................................................... 20

Risk Factors.................................................................. 20

Portfolio Managers............................................................ 21

INFORMATION ABOUT INVESTING IN FUND SHARES.............................................. 22

Alternative Purchase Arrangement.............................................. 22

How to Purchase Shares........................................................ 22

How to Exchange Shares from One Fund to Another............................... 26

How to Redeem Shares.......................................................... 26

How to Systematically Purchase or Redeem Shares............................... 27

Account Changes and Signature Requirements.................................... 28

Account Statements............................................................ 28

Telephone Transactions........................................................ 28

Share Valuation............................................................... 28

Fund Distributions and How They are Taxed..................................... 29

Performance Information....................................................... 30

INFORMATION ABOUT SHARE OWNERSHIP AND COMPANIES WHICH PROVIDE
SERVICES TO THE TRUST................................................................. 30

General Fund Information...................................................... 30

Tax-Deferred Retirement Plans................................................. 31

Distribution Plans............................................................ 31

Persons Controlling the Funds................................................. 32

RATINGS SUPPLEMENT...................................................................... 32

Description of Debt Ratings................................................... 32
</TABLE>

- 2 -
<PAGE> 3

INTRODUCTION TO THE TRUST AND THE FUNDS

The Trust is a series investment company that currently issues shares
representing eight mutual funds: SAFECO Advisor Equity Fund ("Advisor Equity
Fund"), SAFECO Advisor Northwest Fund ("Advisor Northwest Fund"), SAFECO Advisor
Intermediate-Term Treasury Fund ("Advisor Intermediate Treasury Fund"), SAFECO
Advisor U.S. Government Fund ("Advisor Government Fund"), SAFECO Advisor GNMA
Fund ("Advisor GNMA Fund"), SAFECO Advisor Municipal Bond Fund ("Advisor
Municipal Fund"), SAFECO Advisor Intermediate-Term Municipal Bond Fund ("Advisor
Intermediate Municipal Fund") and SAFECO Advisor Washington Municipal Bond Fund
("Advisor Washington Municipal Fund") (collectively the "Funds" or "SAFECO
Advisor Funds"). Each Fund is a diversified series of the Trust, an open-end,
management investment company which continuously offers to sell and to redeem
(buy back) its shares.

THE FUNDS

The ADVISOR EQUITY FUND has as its investment objective to seek long-term growth
of capital and reasonable current income. To pursue its objective, the Fund
invests principally in common stocks selected for appreciation and/or dividend
potential and from a long-range investment standpoint.

The ADVISOR NORTHWEST FUND has as its investment objective to seek long-term
growth of capital through investing primarily in Northwest companies. To pursue
its objective, the Fund will invest at least 65% of its total assets in
securities issued by companies with their principal executive offices located in
Alaska, Idaho, Montana, Oregon or Washington ("Northwest").

The ADVISOR INTERMEDIATE TREASURY FUND, ADVISOR GOVERNMENT FUND and ADVISOR GNMA
FUND each has as its investment objective to seek as high a level of current
income as is consistent with the preservation of capital.

To pursue its objective, the ADVISOR INTERMEDIATE TREASURY FUND, during
normal market conditions, will invest at least 65% of its total assets in
direct obligations of the U.S. Treasury and will maintain a portfolio
having an average dollar-weighted maturity of between three and ten years.

To pursue its objective, the ADVISOR GOVERNMENT FUND, during normal market
conditions, will invest at least 65% of its total assets in U.S. Government
securities.

To pursue its objective, the ADVISOR GNMA FUND, during normal market
conditions, will invest at least 65% of its total assets in mortgage-backed
securities issued by the Government National Mortgage Association ("GNMA").

The ADVISOR MUNICIPAL FUND, ADVISOR INTERMEDIATE MUNICIPAL FUND and ADVISOR
WASHINGTON MUNICIPAL FUND each has as its investment objective to provide as
high a level of current interest income exempt from federal income tax as is
consistent with prudent investment risk. During normal market conditions each
Fund will invest at least 80% of its net assets in municipal securities, the
interest on which is exempt from federal income tax, and will invest at least
65% of its total assets in investment grade municipal bonds having a maturity of
over one year.

To pursue its objective, the ADVISOR MUNICIPAL FUND will invest primarily
in investment grade municipal bonds whose interest is exempt from federal
income tax and seek to maintain a portfolio having an average
dollar-weighted maturity of between twenty and twenty-five years.

To pursue its objective, the ADVISOR INTERMEDIATE MUNICIPAL FUND will
invest primarily in investment grade municipal bonds whose interest is
exempt from federal income tax and will maintain a portfolio having an
average dollar-weighted maturity of between three and ten years.

To pursue its objective, the ADVISOR WASHINGTON MUNICIPAL FUND will
invest primarily in investment grade municipal bonds whose interest is
exempt from federal income tax and that are issued by the State of
Washington or one of its political subdivisions, municipalities, agencies,
instrumentalities or public authorities and seek to maintain a portfolio
having an average dollar-weighted maturity of between twenty and
twenty-five years.

There is, of course, no assurance that a Fund will achieve its investment
objective. See "Investment Policies, Risk Factors and Portfolio Managers" at
pages 14 to 21 for more information.

RISK FACTORS

There is a risk that the market value of each Fund's portfolio securities may
decrease and result in a decrease in the value of a shareholder's investment.
The Advisor Equity Fund may invest up to 15% of its total assets in
below-investment grade convertible corporate bonds. These bonds are subject to
greater fluctuations in value and risk of loss of income and principal than
investment grade or high quality securities. Because the Advisor Northwest Fund
concentrates its investments primarily in the Northwest and the Advisor
Washington Municipal Fund concentrates its investments in Washington State,
these Funds may each be subject to special risks. Investors should carefully
consider the

- 3 -
<PAGE> 4

investment risks of such geographic concentration before purchasing shares of
these Funds. See "Risk Factors" on page 20 for more information.

INVESTMENT ADVISER

Each Fund is managed by SAFECO Asset Management Company ("SAM"). SAM is
headquartered in Seattle, Washington and manages over $2.0 billion in mutual
fund assets as of February 28, 1995. SAM has been an adviser to mutual funds and
other investment portfolios since 1973 and its predecessors have been such
advisers since 1932. See "General Fund Information" on page 30 for more
information.

ALTERNATIVE PURCHASE ARRANGEMENT

Each Fund issues three classes of shares. Class A shares are sold to investors
choosing the initial sales charge alternative with a service fee. Class B shares
are sold to investors choosing the contingent deferred sales charge alternative
with service and distribution fees and which convert automatically to Class A
shares approximately eight years after purchase. Class C shares are sold to
investors choosing the alternative with no initial or deferred sales charge, but
with service and distribution fees. See "Information About Investing in Fund
Shares" on page 22 for more information.

FUND EXPENSES

A. SHAREHOLDER TRANSACTION EXPENSES FOR EACH FUND

Sales Charge on None None None None None None None None None
Reinvested Dividends

Maximum Contingent None 5.0% None None 5.0% None None 5.0% None
Deferred Sales Charge
(As a Percentage of
Redemption Proceeds)
Redemption Fee None None None None None None None None None

Exchange Fee None None None None None None None None None
</TABLE>

SAFECO Services, Inc., the transfer agent for the Funds, charges a $10 fee to
wire redemption proceeds.

B. ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)

<TABLE>
<CAPTION>
ADVISOR GOVERNMENT, ADVISOR INTERMEDIATE
ADVISOR ADVISOR GNMA AND MUNICIPAL, ADVISOR
EQUITY AND ADVISOR ADVISOR INTERMEDIATE MUNICIPAL AND ADVISOR
NORTHWEST FUNDS TREASURY FUNDS WASHINGTON MUNICIPAL FUNDS
--------------------------- --------------------------- ---------------------------
Class A Class B Class C Class A Class B Class C Class A Class B Class C
------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fee .75% .75% .75% .60% .60% .60% .60% .60% .60%
12b-1 Fees .25% 1.00% 1.00% .25% 1.00% 1.00% .25% 1.00% 1.00%
Other Expenses (estimated) .40% .40% .40% .40% .40% .40% .40% .40% .40%
------- ------- ------- ------- ------- ------- ------- ------- -------
Total Operating 1.40% 2.15% 2.15% 1.25% 2.00% 2.00% 1.25% 2.00% 2.00%
Expenses..............
======= ======= ======= ======= ======= ======= ======= ======= =======
</TABLE>

- 4 -
<PAGE> 5

The amounts shown are annualized expenses based on the maximum management and
12b-1 service and distribution fees and estimated "Other Expenses" and "Total
Operating Expenses" for the fiscal period ending December 31, 1994. See "General
Fund Information" on page 30 for more information. Sales charge waivers are
available for Class A and Class B shares and reduced sales charge purchase plans
are available for Class A shares. See "How to Purchase Shares" on page 22 for
more information. The maximum 5% contingent deferred sales charge on Class B
shares applies to redemptions during the first year after purchase, declining in
subsequent years, and reaching 0% after six years. Class B shares convert
automatically into Class A shares of the same Fund approximately eight years
after purchase. See "Purchasing Class B Shares" on page 25 for more information.
The management fees paid by the Advisor Equity Fund and the Advisor Northwest
Fund are higher than the management fees paid by most other investment
companies. 12b-1 fees have the following two components:

<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
12b-1 service fees 0.25% 0.25% 0.25%
12b-1 distribution fees 0.00% 0.75% 0.75%
</TABLE>

12b-1 distribution fees are asset-based sales charges. Long-term Class B and
Class C shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by the National Association of Securities
Dealers, Inc.

C. EXAMPLE OF EXPENSES

You would pay the following expenses on a $1,000 investment assuming a 5% annual
return. The example assumes that all dividends and other distributions are
reinvested and that the percentage amounts listed in "Annual Operating Expenses"
above remain the same in the years shown.

<TABLE>
<CAPTION>
1 Year 3 Years
------ -------
<S> <C> <C>
Advisor Equity and Northwest Funds
Class A Shares(1)................................................................. $ 61 $90
Class B Shares
Assuming shares are redeemed at the end of the period(2)....................... 72 97
Assuming no redemption at the end of the period................................ 22 67
Class C Shares.................................................................... 22 67
Advisor Intermediate Treasury, Government, and GNMA Funds
Class A Shares(1)................................................................. 60 85
Class B Shares
Assuming shares are redeemed at the end of the period(2)....................... 70 93
Assuming no redemption at the end of the period................................ 20 63
Class C Shares.................................................................... 20 63
Advisor Municipal, Intermediate Municipal and Washington Municipal Funds
Class A Shares(1)................................................................. 60 85
Class B Shares
Assuming shares are redeemed at the end of the period(2)....................... 70 93
Assuming no redemption at the end of the period................................ 20 63
Class C Shares.................................................................... 20 63
</TABLE>

(1)Includes deduction at the time of purchase of the maximum sales charge.

(2)Includes deduction at the time of redemption of the applicable contingent
deferred sales charge.

The purpose of the tables is to assist you in understanding the various costs
and expenses that an investor in each Fund would bear, directly or indirectly.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES. A
FUND'S ACTUAL EXPENSES OR PERFORMANCE MAY BE GREATER OR LESS THAN THOSE SHOWN.
THE ASSUMED 5% ANNUAL RETURN IS REQUIRED BY SECURITIES AND EXCHANGE COMMISSION
REGULATIONS APPLICABLE TO ALL MUTUAL FUNDS AND IT IS NOT A PREDICTION OF, NOR
DOES IT REPRESENT, FUTURE PERFORMANCE OF ANY FUND.

- 5 -
<PAGE> 6

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

SAFECO ADVISOR SERIES TRUST -- EQUITY FUND

The supplemental financial information and performance data has been derived
from the Financial Statements and should be read in conjunction therewith.

For the period September 30, 1994 (Commencement of Operations) through December
31, 1994

<TABLE>
<CAPTION>
SAFECO ADVISOR EQUITY FUND
-----------------------------------
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Net Asset Value at Beginning of Period.............................. $10.00 $10.00 $10.00
Income From Investment Operations
Net Investment Income (Loss)...................................... 0.03 0.01 0.01
Net Realized and Unrealized Loss on Investments................... (0.24) (0.24) (0.24)
------- ------- -------
Total from Investment Operations.................................. (0.21) (0.23) (0.23)
Less Distributions
Dividends from Net Investment Income.............................. (0.03) (0.01) (0.01)
Distributions from Capital Gains.................................. -- -- --
------- ------- -------
Total Distributions............................................... (0.03) (0.01) (0.01)
------- ------- -------
Net Asset Value at End of Period.................................. $ 9.76 $ 9.76 $ 9.76
======= ======= =======
Total Return(a)..................................................... -2.10%** -2.29%** -2.29%**
Net Assets at End of Period (000's)................................. $1,628 $1,629 $1,635
Ratio of Expenses to Average Net Assets............................. 2.57%* 3.31%* 3.32%*
Ratio of Net Investment Income (Loss) to Average Net Assets......... 1.18%* 0.44%* 0.44%*
Portfolio Turnover Rate............................................. 34.83%* 34.83%* 34.83%*
</TABLE>

(a) Total return excludes the effects of sales charges. If sales charges were
included, the total return for Class A and Class B shares would be lower.

** Not Annualized.

* Annualized.

- 6 -
<PAGE> 7

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

SAFECO ADVISOR SERIES TRUST -- NORTHWEST FUND

The supplemental financial information and performance data has been derived
from the Financial Statements and should be read in conjunction therewith.

For the period September 30, 1994 (Commencement of Operations) through December
31, 1994

<TABLE>
<CAPTION>
SAFECO ADVISOR NORTHWEST FUND
-----------------------------------
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Net Asset Value at Beginning of Period.............................. $10.00 $10.00 $10.00
Income From Investment Operations
Net Investment Income (Loss)...................................... (0.01) (0.02) (0.02)
Net Realized and Unrealized Loss on Investments................... (0.24) (0.25) (0.25)
------- ------- -------
Total from Investment Operations.................................. (0.25) (0.27) (0.27)
------- ------- -------
Less Distributions
Dividends from Net Investment Income.............................. -- -- --
Distributions from Capital Gains.................................. -- -- --
------- ------- -------
Total Distributions............................................... 0.00 0.00 0.00
------- ------- -------
Net Asset Value at End of Period.................................. $ 9.75 $ 9.73 $ 9.73
======= ======= =======
Total Return(a)..................................................... -2.50%** -2.70%** -2.70%**
Net Assets at End of Period (000's)................................. $1,626 $1,622 $1,625
Ratio of Expenses to Average Net Assets............................. 2.28%* 3.03%* 3.03%*
Ratio of Net Investment Income (Loss) to Average Net Assets......... -0.20%* -0.95%* -0.95%*
Portfolio Turnover Rate............................................. None None None
</TABLE>

(a) Total return excludes the effects of sales charges. If sales charges were
included, the total return for Class A and Class B shares would be lower.

** Not Annualized.

* Annualized.

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<PAGE> 8

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

SAFECO ADVISOR SERIES TRUST -- INTERMEDIATE-TERM TREASURY FUND

The supplemental financial information and performance data has been derived
from the Financial Statements and should be read in conjunction therewith.

For the period September 30, 1994 (Commencement of Operations) through December
31, 1994

<TABLE>
<CAPTION>
SAFECO ADVISOR
INTERMEDIATE-TERM TREASURY FUND
--------------------------------------
Class A Class B Class C
-------- -------- --------
<S> <C> <C> <C>
Net Asset Value at Beginning of Period............................ $10.00 $10.00 $10.00
Income From Investment Operations
Net Investment Income (Loss).................................... 0.11 0.09 0.09
Net Realized and Unrealized Loss on Investments................. (0.07) (0.07) (0.07)
-------- -------- --------
Total from Investment Operations................................ 0.04 0.02 0.02
-------- -------- --------
Less Distributions
Dividends from Net Investment Income............................ (0.11) (0.09) (0.09)
Distributions from Capital Gains................................ -- -- --
-------- -------- --------
Total Distributions............................................. (0.11) (0.09) (0.09)
-------- -------- --------
Net Asset Value at End of Period................................ $ 9.93 $ 9.93 $ 9.93
======= ======= =======
Total Return(a)................................................... 0.41%** 0.22%** 0.22%**
Net Assets at End of Period (000's)............................... $1,655 $1,655 $1,664
Ratio of Expenses to Average Net Assets........................... 1.86%* 2.61%* 2.61%*
Ratio of Net Investment Income (Loss) to Average Net Assets....... 4.42%* 3.67%* 3.67%*
Portfolio Turnover Rate........................................... 346.43%* 346.43%* 346.43%*
</TABLE>

(a) Total return excludes the effects of sales charges. If sales charges were
included, the total return for Class A and Class B shares would be lower.

** Not Annualized.

* Annualized.

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<PAGE> 9

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

SAFECO ADVISOR SERIES TRUST -- U.S. GOVERNMENT FUND

The supplemental financial information and performance data has been derived
from the Financial Statements and should be read in conjunction therewith.

For the period September 30, 1994 (Commencement of Operations) through December
31, 1994

<TABLE>
<CAPTION>
SAFECO ADVISOR
U.S. GOVERNMENT FUND
-----------------------------------
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Net Asset Value at Beginning of Period............................ $10.00 $10.00 $10.00
Income From Investment Operations
Net Investment Income (Loss).................................... 0.11 0.09 0.09
Net Realized and Unrealized Loss on Investments................. (0.01) (0.01) (0.01)
------- ------- -------
Total from Investment Operations................................ 0.10 0.08 0.08
------- ------- -------
Less Distributions
Dividends from Net Investment Income............................ (0.11) (0.09) (0.09)
Distributions from Capital Gains................................ -- -- --
------- ------- -------
Total Distributions............................................. (0.11) (0.09) (0.09)
------- ------- -------
Net Asset Value at End of Period................................ $ 9.99 $ 9.99 $ 9.99
======= ======= =======
Total Return(a)................................................... 0.99%** 0.79%** 0.79%**
Net Assets at End of Period (000's)............................... $1,665 $1,664 $1,664
Ratio of Expenses to Average Net Assets........................... 1.85%* 2.60%* 2.60%*
Ratio of Net Investment Income (Loss) to Average Net Assets....... 4.29%* 3.54%* 3.54%*
Portfolio Turnover Rate........................................... 445.09%* 445.09%* 445.09%*
</TABLE>

(a) Total return excludes the effects of sales charges. If sales charges were
included, the total return for Class A and Class B shares would be lower.

** Not Annualized.

* Annualized.

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<PAGE> 10

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

SAFECO ADVISOR SERIES TRUST -- GNMA FUND

The supplemental financial information and performance data has been derived
from the Financial Statements and should be read in conjunction therewith.

For the period September 30, 1994 (Commencement of Operations) through December
31, 1994

<TABLE>
<CAPTION>
SAFECO ADVISOR GNMA FUND
-----------------------------------
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Net Asset Value at Beginning of Period.............................. $10.00 $10.00 $10.00
Income From Investment Operations
Net Investment Income (Loss)...................................... 0.13 0.11 0.11
Net Realized and Unrealized Loss on Investments................... (0.20) (0.20) (0.20)
------- ------- -------
Total from Investment Operations.................................. (0.07) (0.09) (0.09)
------- ------- -------
Less Distributions
Dividends from Net Investment Income.............................. (0.13) (0.11) (0.11)
Distributions from Capital Gains.................................. -- -- --
------- ------- -------
Total Distributions............................................... (0.13) (0.11) (0.11)
------- ------- -------
Net Asset Value at End of Period.................................. $ 9.80 $ 9.80 $ 9.80
======= ======= =======
Total Return(a)..................................................... -0.72%** -0.90%** -0.90%**
Net Assets at End of Period (000's)................................. $1,633 $1,633 $1,632
Ratio of Expenses to Average Net Assets............................. 1.98%* 2.73%* 2.73%*
Ratio of Net Investment Income (Loss) to Average Net Assets......... 5.11%* 4.36%* 4.36%*
Portfolio Turnover Rate............................................. 2.74%* 2.74%* 2.74%*
</TABLE>

(a) Total return excludes the effects of sales charges. If sales charges were
included, the total return for Class A and Class B shares would be lower.

** Not Annualized.

* Annualized.

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<PAGE> 11

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

SAFECO ADVISOR SERIES TRUST -- MUNICIPAL BOND FUND

The supplemental financial information and performance data has been derived
from the Financial Statements and should be read in conjunction therewith.

For the period September 30, 1994 (Commencement of Operations) through December
31, 1994

<TABLE>
<CAPTION>
SAFECO ADVISOR
MUNICIPAL BOND FUND
-----------------------------------
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Net Asset Value at Beginning of Period............................ $10.00 $10.00 $10.00
Income From Investment Operations
Net Investment Income (Loss).................................... 0.08 0.06 0.06
Net Realized and Unrealized Loss on Investments................. (0.10) (0.10) (0.10)
------- ------- -------
Total from Investment Operations................................ (0.02) (0.04) (0.04)
------- ------- -------
Less Distributions
Dividends from Net Investment Income............................ (0.08) (0.06) (0.06)
Distributions from Capital Gains................................ -- -- --
------- ------- -------
Total Distributions............................................. (0.08) (0.06) (0.06)
------- ------- -------
Net Asset Value at End of Period................................ $ 9.90 $ 9.90 $ 9.90
======= ======= =======
Total Return(a)................................................... -0.16%** -0.35%** -0.35%**
Net Assets at End of Period (000's)............................... $1,650 $1,650 $1,649
Ratio of Expenses to Average Net Assets........................... 1.92%* 2.67%* 2.67%*
Ratio of Net Investment Income (Loss) to Average Net Assets....... 3.33%* 2.59%* 2.59%*
Portfolio Turnover Rate........................................... 492.95%* 492.95%* 492.95%*
</TABLE>

(a) Total return excludes the effects of sales charges. If sales charges were
included, the total return for Class A and Class B shares would be lower.

** Not Annualized.

* Annualized.

- 11 -
<PAGE> 12

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

SAFECO ADVISOR SERIES TRUST -- INTERMEDIATE-TERM
MUNICIPAL BOND FUND

The supplemental financial information and performance data has been derived
from the Financial Statements and should be read in conjunction therewith.

For the period September 30, 1994 (Commencement of Operations) through December
31, 1994

<TABLE>
<CAPTION>
SAFECO ADVISOR INTERMEDIATE-
TERM MUNICIPAL BOND FUND
-----------------------------------
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Net Asset Value at Beginning of Period.............................. $10.00 $10.00 $10.00
Income From Investment Operations
Net Investment Income (Loss)...................................... 0.07 0.05 0.05
Net Realized and Unrealized Loss On Investments................... (0.20) (0.20) (0.20)
------- ------- -------
Total from Investment Operations.................................. (0.13) (0.15) (0.15)
------- ------- -------
Less Distributions
Dividends from Net Investment Income.............................. (0.07) (0.05) (0.05)
Distributions from Capital Gains.................................. -- -- --
------- ------- -------
Total Distributions............................................... (0.07) (0.05) (0.05)
------- ------- -------
Net Asset Value at End of Period.................................. $ 9.80 $ 9.80 $ 9.80
======= ======= =======
Total Return(a)..................................................... -1.29%** -1.48%** -1.48%**
Net Assets at End of Period (000's)................................. $1,633 $1,633 $1,633
Ratio of Expenses to Average Net Assets............................. 1.87%* 2.62%* 2.62%*
Ratio of Net Investment Income (Loss) to Average Net Assets......... 2.85%* 2.10%* 2.10%*
Portfolio Turnover Rate............................................. 513.36%* 513.36%* 513.36%*
</TABLE>

(a) Total return excludes the effects of sales charges. If sales charges were
included, the total return for Class A and Class B shares would be lower.

** Not Annualized.

* Annualized.

- 12 -
<PAGE> 13

FINANCIAL HIGHLIGHTS

(For a Share Outstanding Throughout the Period)

SAFECO ADVISOR SERIES TRUST -- WASHINGTON MUNICIPAL BOND FUND

The supplemental financial information and performance data has been derived
from the Financial Statements and should be read in conjunction therewith.

For the period September 30, 1994 (Commencement of Operations) through December
31, 1994

<TABLE>
<CAPTION>
SAFECO ADVISOR WASHINGTON
MUNICIPAL BOND FUND
-----------------------------------
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Net Asset Value at Beginning of Period............................ $10.00 $10.00 $10.00
Income From Investment Operations
Net Investment Income (Loss).................................... 0.09 0.07 0.07
Net Realized and Unrealized Loss On Investments................. (0.18) (0.18) (0.18)
------- ------- -------
Total from Investment Operations................................ (0.09) (0.11) (0.11)
------- ------- -------
Less Distributions
Dividends from Net Investment Income............................ (0.09) (0.07) (0.07)
Distributions from Capital Gains................................ -- -- --
------- ------- -------
Total Distributions............................................. (0.09) (0.07) (0.07)
------- ------- -------
Net Asset Value at End of Period................................ $ 9.82 $ 9.82 $ 9.82
======= ======= =======
Total Return(a)................................................... -0.93%** -1.12%** -1.12%
Net Assets at End of Period (000's)............................... $1,636 $1,667 $1,694
Ratio of Expenses to Average Net Assets........................... 1.90%* 2.64%* 2.65%*
Ratio of Net Investment Income (Loss) to Average Net Assets....... 3.48%* 2.72%* 2.72%*
Portfolio Turnover Rate........................................... 510.18%* 510.18%* 510.18%*
</TABLE>

(a) Total return excludes the effects of sales charges. If sales charges were
included, the total return for Class A and Class B shares would be lower.

** Not Annualized.

* Annualized.

- 13 -
<PAGE> 14

INVESTMENT POLICIES, RISK FACTORS AND PORTFOLIO MANAGERS

The Trust is a Delaware business trust established by a Trust Instrument dated
March 31, 1994. The Trust currently consists of eight mutual funds: Advisor
Equity Fund, Advisor Northwest Fund, Advisor Intermediate Treasury Fund, Advisor
Government Fund, Advisor GNMA Fund, Advisor Municipal Fund, Advisor Intermediate
Municipal Fund and Advisor Washington Municipal Fund, each of which is a
diversified series of the Trust.

The investment objective and investment policies for each Fund are described
below. The Trust's Board of Trustees may change a Fund's investment objective
without shareholder vote, but no such change will be made without 30 days' prior
written notice to shareholders of that Fund. In the event a Fund changes its
investment objective, the new objective may not meet the investment needs of
every shareholder and may be different from the objective a shareholder
considered appropriate at the time of initial investment.

Unless otherwise stated, the investment policies and limitations described below
under each Fund's description and "Common Investment Practices" are non-
fundamental and may be changed by the Board of Trustees without shareholder
vote.

ADVISOR EQUITY FUND

The investment objective of the Advisor Equity Fund is to seek long-term growth
of capital and reasonable current income. The Fund does not seek to achieve both
growth and income with every portfolio investment. Rather, the Fund attempts to
manage the portfolio as a whole so as to achieve a reasonable balance between
growth and income on an overall basis.

To pursue its objective, the Advisor Equity Fund:

1. WILL INVEST, DURING NORMAL MARKET CONDITIONS, AT LEAST 65% OF ITS TOTAL
ASSETS IN EQUITY SECURITIES (WHICH INCLUDE COMMON STOCKS, PREFERRED STOCKS
AND SECURITIES CONVERTIBLE INTO COMMON STOCKS).

2. WILL INVEST PRINCIPALLY IN COMMON STOCKS SELECTED BY SAM PRIMARILY FOR
APPRECIATION AND/OR DIVIDEND POTENTIAL AND FROM A LONG-RANGE INVESTMENT
STANDPOINT.

3. MAY INVEST UP TO 15% OF ITS TOTAL ASSETS IN SECURITIES CONVERTIBLE INTO
COMMON STOCK, E.G., CONVERTIBLE PREFERRED STOCK AND CONVERTIBLE CORPORATE
BONDS. Convertible securities are senior in rank to common stock in a
corporation's capital structure and, therefore, generally present less risk
than a corporation's common stock, although the extent of such a reduction in
risk is dependent on the credit quality of the issuer. SAM will purchase
convertible securities for the Fund if such securities offer a higher yield
than an issuer's common stock and provide reasonable potential for capital
appreciation. In periods of rising interest rates, a corporation's common
stock may increase in value more than its convertible securities because of
investors' demand to maintain the convertible securities yield with the
market.

The Advisor Equity Fund may invest up to 15% of its total assets in
convertible corporate bonds that are rated below investment grade (Ba or
below by Moody's Investors Service, Inc. ("Moody's") or BB and below by
Standard & Poor's Ratings Group ("S&P")) or in unrated bonds determined by
SAM to be of comparable quality to such rated bonds (commonly referred to as
high-yield or "junk" bonds). The Fund will not purchase a convertible
corporate bond rated below Ca by Moody's or CC by S&P or which is in default
on payment of principal and interest. Bonds rated Ca or CC are highly
speculative and have greater uncertainties or major risk exposures.

Below-investment grade bonds are speculative and involve greater investment
risks than investment grade bonds due to the issuer's reduced
creditworthiness and increased likelihood of default and bankruptcy. During
periods of economic uncertainty or change, the market prices of
below-investment grade bonds may experience increased volatility. Below-
investment grade bonds tend to reflect short-term economic and corporate
developments to a greater extent than higher quality bonds.

After purchase by the Advisor Equity Fund, a corporate bond may be downgraded
or, if unrated, may cease to be comparable to a rated security. Neither event
will require the Fund to dispose of that security, but SAM will take a
downgrade or loss of comparability into account in determining whether the
Fund should continue to hold the security in its portfolio. The Fund will not
hold more than 3% of its total assets in bonds that go into default on the
payment of principal and interest after purchase. In the event that an amount
in excess of 15% of the Fund's net assets is held in securities rated below-
investment grade due to a downgrade of one or more corporate bonds, SAM will
engage in an orderly disposition of such securities to the extent necessary
to ensure that the Fund's holdings of such securities do not exceed 15% of
the Fund's net assets.

SAM uses S&P and Moody's ratings only as a preliminary indicator of
investment quality. SAM will determine the quality of bonds by evaluating
such factors as the issuer's capital structure, earnings power and quality of
management. Unrated securities are not necessarily of lower quality than
rated securities, but may not be as attractive to as many

- 14 -
<PAGE> 15

investors. In addition, SAM will periodically monitor the issuer's
creditworthiness whether rated or not rated.

4. MAY INVEST UP TO 10% OF ITS TOTAL ASSETS IN REAL ESTATE INVESTMENT TRUSTS
("REITS"). REITs purchase real property, which is then leased, and make
mortgage investments. REITs are dependent upon the successful operation of
the properties owned and the financial condition of lessees and mortgagors.
The value of REIT shares will fluctuate depending on the underlying value of
the real property and mortgages owned and the amount of cash flow (net income
plus depreciation) generated and paid out. In addition, REITs typically
borrow to increase funds available for investment. Generally there is a
greater risk associated with highly leveraged REITs.

5. MAY INVEST IN AMERICAN DEPOSITARY RECEIPTS ("ADRS"), WHICH REPRESENT
SECURITIES ISSUED BY A FOREIGN ISSUER. THE ADVISOR EQUITY FUND ALSO MAY
INVEST UP TO 10% OF ITS TOTAL ASSETS IN FOREIGN SECURITIES. (THE 10%
LIMITATION DOES NOT APPLY TO FOREIGN SECURITIES DENOMINATED IN U.S. DOLLARS.)
Foreign securities and ADRs may be affected by political or economic
developments in foreign countries. Foreign companies may not be subject to
accounting standards or governmental supervision comparable to U.S.
companies, and there may be less public information about their operations.
In addition, foreign markets may be less liquid or more volatile than U.S.
markets and may offer less protection to investors. Investments in foreign
securities may also be subject to special risks, such as governmental
regulation of foreign exchange transactions and changes in rates of exchange
with the U.S. dollar.

6. MAY INVEST UP TO 5% OF ITS TOTAL ASSETS IN RESTRICTED SECURITIES ELIGIBLE FOR
RESALE UNDER RULE 144A ("RULE 144A SECURITIES"), PROVIDED THAT SAM HAS
DETERMINED THAT SUCH SECURITIES ARE LIQUID UNDER GUIDELINES ADOPTED BY THE
BOARD OF TRUSTEES. Restricted securities may be sold only in offerings
registered under the Securities Act of 1933 ("1933 Act") or in transactions
exempt from the registration requirements under the 1933 Act. Rule 144A
provides an exemption for the resale of certain restricted securities to
qualified institutional buyers. Investing in Rule 144A securities may
increase the Advisor Equity Fund's illiquidity to the extent that qualified
institutional buyers or other buyers are unwilling to purchase the
securities.

ADVISOR NORTHWEST FUND

The investment objective of the Advisor Northwest Fund is to seek long-term
growth of capital through investing primarily in Northwest companies. During
normal market conditions, the Fund will invest at least 65% of its total assets
in securities issued by companies whose principal executive offices are located
in the Northwest.

To pursue its objective, the Advisor Northwest Fund:

1. WILL ORDINARILY INVEST PRINCIPALLY IN COMMON STOCKS SELECTED BY SAM PRIMARILY
FOR POTENTIAL LONG-TERM APPRECIATION. In determining those common stocks
which have the potential for long-term appreciation, SAM will evaluate the
issuer's financial strength, quality of management and earnings power.

2. MAY INVEST IN SECURITIES CONVERTIBLE INTO COMMON STOCK WHEN, IN THE OPINION
OF SAM, THE EXPECTED TOTAL RETURN OF A CONVERTIBLE SECURITY EXCEEDS THE
EXPECTED TOTAL RETURN OF COMMON STOCK ELIGIBLE FOR PURCHASE BY THE FUND. The
Fund may purchase convertible bonds or convertible preferred stock which may
be exchanged for a stated number of shares of the issuer's common stock at a
certain price. The Fund will purchase those convertible securities which, in
SAM's opinion, have underlying common stock with potential for long-term
growth. The Fund will purchase convertible securities which are investment
grade, i.e., rated in the top four categories by either S&P or Moody's.
Moody's deems securities rated in the fourth category (Baa) to have
speculative characteristics. The Fund may retain a debt security that is
downgraded to below investment grade after purchase. In the event that an
amount in excess of 5% of the Fund's net assets is held in securities rated
below investment grade due to a downgrade of one or more convertible
securities, SAM will engage in an orderly disposition of such securities to
the extent necessary to ensure that the Fund's holdings of such securities do
not exceed 5% of the Fund's net assets. For a description of ratings, see
"Ratings Supplement" on page 32 and "Description of Preferred Stock Ratings"
in the Trust's Statement of Additional Information. The value of convertible
securities will normally vary with the value of the underlying common stock
and fluctuate inversely with interest rates.

ADVISOR INTERMEDIATE TREASURY FUND

The investment objective of the Advisor Intermediate Treasury Fund is to seek as
high a level of current income as is consistent with the preservation of
capital. The Fund will seek to maintain a portfolio of U.S. Treasury obligations
with an average dollar-weighted maturity of between three and ten years.
Although the average dollar-weighted maturity of the portfolio will fall within
a range of three to ten years, individual obligations held by the Fund may have
maturities outside that range.

- 15 -
<PAGE> 16

To pursue its objective, the Advisor Intermediate Treasury Fund:

1. WILL INVEST, DURING NORMAL MARKET CONDITIONS, AT LEAST 65% OF ITS TOTAL
ASSETS IN DIRECT OBLIGATIONS OF THE U.S. TREASURY, SUCH AS U.S. TREASURY
BILLS, NOTES AND BONDS. These securities are supported by the full faith and
credit of the U.S. Government.

2. MAY INVEST UP TO 35% OF ITS TOTAL ASSETS IN:

- OTHER U.S. GOVERNMENT SECURITIES, including (a) securities supported by the
full faith and credit of the U.S. Government but that are not direct
obligations of the U.S. Treasury, (b) securities that are not supported by
the full faith and credit of the U.S. Government but are supported by the
issuer's ability to borrow from the U.S. Treasury such as securities issued
by the Federal National Mortgage Association ("FNMA") and the Federal Home
Loan Mortgage Corporation ("FHLMC"), and (c) securities supported solely by
the creditworthiness of the issuer such as securities issued by the
Tennessee Valley Authority ("TVA"). While U.S. Government securities are
considered to be of the highest credit quality available, they are subject
to the same market risks as comparable debt securities.

- CORPORATE DEBT SECURITIES that at the time of purchase are rated in the top
three grades (A or higher) by either S&P or Moody's, or, if unrated,
determined by SAM to be of comparable quality to such rated debt
securities. In addition to reviewing ratings, SAM will analyze the quality
of rated and unrated corporate bonds for purchase by the Fund by evaluating
various factors that may include the issuer's capital structure, earnings
power and quality of management. See "Ratings Supplement" on page 32.

3. MAY INVEST UP TO 5% OF ITS TOTAL ASSETS IN EACH OF THE FOLLOWING:

- YANKEE SECTOR DEBT SECURITIES, which are securities issued and traded in
the U.S. by foreign issuers. These debt securities have investment risks
that are different from those of domestic issuers. SAM will attempt, to the
extent possible, to analyze potential investments in foreign issuers on the
same basis as the rating services analyze domestic issuers.

- EURODOLLAR BONDS, which are bonds issued by either U.S. or foreign issuers
that are traded in European bond markets and denominated in U.S. dollars.
The Fund will purchase Eurodollar bonds through U.S. securities dealers and
hold such bonds in the U.S.

- MUNICIPAL SECURITIES, if in the opinion of SAM, the potential for
appreciation or yield is comparable to or greater than similarly-rated
taxable securities.

ADVISOR GOVERNMENT FUND

The investment objective of the Advisor Government Fund is to seek as high a
level of current income as is consistent with the preservation of capital.

To pursue its objective, the Advisor Government Fund:

1. WILL INVEST, DURING NORMAL MARKET CONDITIONS, AT LEAST 65% OF ITS TOTAL
ASSETS IN U.S. GOVERNMENT SECURITIES.While U.S. Government securities are
considered to be of the highest credit quality available, they are subject to
the same market risks as comparable debt securities. Examples of U.S.
Government securities supported by the full faith and credit of the U.S.
Government that the Fund may purchase are U.S. Treasury bills, notes, and
bonds and GNMA mortgage-backed securities. Examples of U.S. Government
securities that the Fund may purchase that are not supported by the full
faith and credit of the U.S. Government but are supported by the issuer's
ability to borrow from the U.S. Treasury are securities issued by FNMA and
FHLMC. Examples of U.S. Government securities supported solely by the
creditworthiness of the issuer are securities issued by the TVA.

2. MAY INVEST UP TO 35% OF ITS TOTAL ASSETS IN MARKETABLE STRAIGHT-DEBT
CORPORATE SECURITIES WHICH ARE OF INVESTMENT GRADE.

ADVISOR GNMA FUND

The investment objective of the Advisor GNMA Fund is to seek as high a level of
current interest income as is consistent with the preservation of capital.

To pursue its objective, the Advisor GNMA Fund:

1. DURING NORMAL MARKET CONDITIONS, WILL INVEST AT LEAST 65% OF ITS TOTAL ASSETS
IN MORTGAGE-BACKED SECURITIES ISSUED BY GNMA INCLUDING COLLATERALIZED
MORTGAGE OBLIGATIONS ("CMOS"). The GNMA securities in which the Advisor GNMA
Fund will invest represent ownership in a pool of mortgage loans. Each
mortgage loan in the pool is either insured by the Federal Housing
Administration or Farmers Home Administration or guaranteed by the Veterans
Administration. Once approved by GNMA, the timely payment of principal and
interest by each mortgage pool is guaranteed by GNMA. The GNMA guarantee
represents a general obligation of the U.S. Treasury.

GNMA securities in which the Advisor GNMA Fund will invest will be "modified
pass-through" securities and CMOs, including interests in real estate
mortgage investment conduits. "Pass-through"

- 16 -
<PAGE> 17

means that the scheduled monthly interest and principal payments relating to
mortgages in the pool will be "passed through" to investors. (See the following
section for description of CMOs.) Unlike conventional bonds, the principal with
respect to GNMA securities is paid back over the life of the loan rather than
at maturity. Consequently, the Fund will receive monthly scheduled payments
of both principal and interest.

Since the Advisor GNMA Fund must reinvest scheduled and unscheduled principal
payments at prevailing interest rates at the time of such investment, and
such interest rates may be higher or lower than the current yield of the
Fund's portfolio, GNMA securities may not be an effective means to lock in
long-term interest rates. In addition, while prices of GNMA securities, like
conventional bonds, are inversely affected by changes in interest rate
levels, because of the likelihood of increased prepayments of mortgages in
times of declining interest rates, they have less potential for capital
appreciation than comparable fixed-income securities and may in fact decrease
in value when interest rates fall.

2. MAY INVEST UP TO 35% OF ITS TOTAL ASSETS IN:

- OTHER U.S. GOVERNMENT SECURITIES, including (a) securities backed by the
full faith and credit of the U.S. Government such as U.S. Treasury bills,
notes and bonds, and securities issued by the Farmers Home Administration;
(b) securities issued by U.S. Government agencies or instrumentalities that
are not backed by the full faith and credit of the U.S. Government but are
supported by the issuer's right to borrow from the U.S. Treasury, such as
securities issued by FNMA and FHLMC; and (c) securities supported solely by
the creditworthiness of the issuer, such as securities issued by the TVA.
While U.S. Government securities are considered to be of the highest credit
quality available, they are subject to the same market risks as comparable
debt securities.

- OTHER COLLATERALIZED MORTGAGE OBLIGATIONS issued by the U.S. Government or
one of its agencies or instrumentalities (such as FNMA or FHLMC) or by
private issuers which are collateralized by securities issued by the U.S.
Government or one of its agencies or instrumentalities (such as GNMA, FNMA
or FHLMC). CMOs issued by private issuers are not treated as U.S.
Government securities. CMOs are securities collateralized by a portfolio of
mortgages or mortgage-backed securities. The issuer's obligation to make
interest and principal payments on the CMO is secured by the underlying
portfolio of mortgages or mortgage-backed securities. CMOs are issued with
a number of classes or series that have different maturities and that may
represent interests in some or all of the interest or principal of the
underlying collateral or a combination thereof.

- CORPORATE DEBT SECURITIES that are of investment grade. Corporate debt
securities that are investment grade are rated in one of the four highest
grades assigned by Moody's or S&P or, if unrated, determined by SAM to be
of comparable quality to such rated debt securities. Moody's deems
securities rated in the fourth category (Baa) to have speculative
characteristics. The Advisor GNMA Fund may retain a debt security which is
downgraded to below investment grade after purchase. In the event that, due
to a downgrade of one or more debt securities, an amount in excess of 5% of
the Fund's net assets is held in securities rated below investment grade,
SAM will engage in an orderly disposition of such securities to the extent
necessary to ensure that the Fund's holdings of such securities do not
exceed 5% of the Fund's net assets. For an explanation of ratings, see
"Ratings Supplement" on page 32.

ADVISOR MUNICIPAL, ADVISOR
INTERMEDIATE MUNICIPAL AND ADVISOR
WASHINGTON MUNICIPAL FUNDS

The Advisor Municipal, Advisor Intermediate Municipal and Advisor Washington
Municipal Funds (together the "Municipal Bond Funds") each has as its investment
objective to provide as high a level of current interest income exempt from
federal income tax as is consistent with prudent investment risk.

To pursue its objective, each Municipal Bond Fund:

1. WILL INVEST, DURING NORMAL MARKET CONDITIONS, AS A MATTER OF FUNDAMENTAL
POLICY AT LEAST 80% OF ITS NET ASSETS IN SECURITIES, THE INTEREST ON WHICH IS
EXEMPT FROM FEDERAL INCOME TAX. Each Municipal Bond Fund will invest at least
65% of its total assets in municipal bonds having a maturity in excess of one
year which at the time acquired are investment grade, i.e., rated in one of
the four highest grades assigned by Moody's or S&P or, if unrated, determined
by SAM to be of comparable quality. The term "municipal bonds" as used in
this Prospectus means those debt obligations issued by or on behalf of
states, territories or possessions of the U.S. and the District of Columbia
or their political subdivisions, municipalities, agencies, instrumentalities
or public authorities, the interest on which in the opinion of bond counsel
is exempt from federal income tax. A Fund may invest up to 20% of its total
assets in unrated municipal bonds determined by SAM to be of comparable
quality to bonds rated investment grade. A Fund will invest no more than 35%
of its total assets in municipal bonds rated in the fourth highest grade or
in comparable unrated

- 17 -
<PAGE> 18

bonds. Such bonds are of medium grade, have speculative characteristics and
are more likely to have a weakened capacity to make principal and interest
payments under changing economic conditions or upon deterioration in the
financial condition of the issuer.

In addition to reviewing ratings, SAM will analyze the quality of rated and
unrated municipal bonds for purchase by a Municipal Bond Fund by evaluating
various factors that may include the issuer's or guarantor's financial
resources and liquidity, economic feasibility of revenue bond project
financing and general purpose borrowings, cash flow and ability to meet
anticipated debt service requirements, quality of management, sensitivity to
economic conditions, operating history and any relevant political or
regulatory matters. SAM may also evaluate trends in the economy, the
financial markets or specific geographic areas in determining whether to
purchase a bond. For a description of municipal bond ratings, see the
"Ratings Supplement" on page 32.

After purchase by a Municipal Bond Fund, a municipal bond may be downgraded
to below-investment grade or, if unrated, may cease to be comparable to a
rated investment grade security (such below-investment grade securities are
commonly referred to as high-yield or "junk" bonds). Neither event will
require a Municipal Bond Fund to dispose of that security, but SAM will take
a downgrade or loss of comparability into account in determining whether the
Fund should continue to hold the security in its portfolio. A Fund will not
hold more than 5% of its net assets in such below-investment grade
securities.

The anticipated ranges of the average dollar-weighted maturities of the
investment portfolios of the Advisor Municipal Fund, Advisor Intermediate
Municipal Fund and the Advisor Washington Municipal Fund are, respectively,
20 to 25 years, 3 to 10 years, and 20 to 25 years. Individual bonds held in a
Fund's portfolio may have maturities that are longer or shorter than the
expected average dollar-weighted maturity of that Fund.

2.MAY INVEST IN ANY OF THE FOLLOWING TYPES OF MUNICIPAL BONDS:

- REVENUE BONDS, which are "limited obligation" bonds that provide financing
for specific projects or public facilities. These bonds are backed by
revenues generated by a particular project or facility or by a special tax.
A "resource recovery bond" is a type of revenue bond issued to build waste
facilities or plants. An "industrial development bond" is a type of revenue
bond that is backed by the credit of a private issuer, which generally does
not have access to the resources or taxing authority of a municipality for
payment and may involve greater risk. If a Municipal Bond Fund invests in
revenue bonds, they will primarily be bonds issued to finance various
projects, including but not limited to education, hospital, housing, waste
treatment and utilities. Each Municipal Bond Fund will not purchase private
activity bonds or any other type of revenue bonds, the interest on which
may be subject to the alternative minimum tax.

- GENERAL OBLIGATION BONDS, which are bonds that provide general purpose
financing for state and local governments and are backed by the taxing
power of the state or local government as the case may be. Payment of
principal and interest to a Municipal Bond Fund holding such a bond may be
dependent on an appropriation by the issuer's legislative body. The taxes
or special assessments that can be levied for the payment of principal and
interest on general obligation bonds may be either limited or unlimited as
to rate or amount.

- VARIABLE AND FLOATING RATE OBLIGATIONS, which are municipal obligations
that carry variable or floating rates of interest. Variable rate
instruments bear interest at rates which are readjusted at periodic
intervals. Floating rate instruments bear interest at rates which vary
automatically with changes in specified market rates or indices, such as
the bank prime rate. Accordingly, as interest rates fluctuate, the
potential for capital appreciation or depreciation of these obligations is
less than those for fixed rate obligations. Floating and variable rate
obligations carry demand features that permit a Fund to tender (sell) them
back to the issuer at par prior to maturity and on short notice. A Fund's
ability to obtain payment from the issuer at par may be affected by events
occurring between the date the Fund elects to tender the obligation to the
issuer and the date redemption proceeds are payable to the Fund. A Fund
will purchase floating and variable rate obligations only if, at the time
of purchase, there is a secondary market for such instruments. For purposes
of calculating average weighted maturity, each Municipal Fund will treat
variable and floating rate obligations as having a maturity equal to the
period remaining until the date it can next exercise the demand feature by
selling the security back to the issuer.

- PUT BONDS, which are municipal bonds that give the holder the unconditional
right to sell the bond back to the issuer at a specified price and exercise
date, and PUT BONDS WITH DEMAND FEATURES. The obligation to purchase the
bond on the exercise date may be supported by a letter of credit or other
arrangement from a bank, insurance company or other financial institution,
the credit

- 18 -
<PAGE> 19

standing of which affects the credit quality of the bond. A demand feature
is a put that entitles the holder to repayment of the principal amount of
the underlying security on no more than 30 days' notice at any time or at
specified intervals.

- MUNICIPAL LEASE OBLIGATIONS, which are obligations issued by or on behalf
of state or local government authorities to acquire land, equipment or
facilities and may be subject to annual budget appropriations. These
obligations themselves are not typically backed by the credit of the
municipality or the state but are secured by rent payments made by the
municipality or state pursuant to a lease. If the lease is assigned, the
interest on the obligation may become taxable. The leases underlying
certain municipal lease obligations provide that lease payments are subject
to partial or full abatement if, because of material damage or destruction
of the lease property, there is substantial interference with the lessee's
use or occupancy of such property. This "abatement risk" may be reduced by
the existence of insurance covering the leased property, the maintenance by
the lessee of reserve funds or the provision of credit enhancements such as
letters of credit. Certain municipal lease obligations also contain
"non-appropriation" clauses that provide that the municipality has no
obligation to make lease or installment purchase payments in future years
unless money is appropriated for such purpose on a yearly basis. Some
municipal lease obligations of this type are insured as to timely payment
of principal and interest, even in the event of a failure by the
municipality to appropriate sufficient funds to make payments under the
lease. However, in the case of an uninsured municipal lease obligation, a
Fund's ability to recover under the lease in the event of a non-
appropriation or default will be limited solely to the repossession of
leased property without recourse to the general credit of the lessee, and
disposition of the property in the event of foreclosure might prove
difficult. If rent is abated because of damage to the leased property or if
the lease is terminated because monies are not appropriated for the
following year's lease payments, the issuer may default on the obligation
causing a loss to a Fund.

Certificates of participation in municipal lease obligations, which are
certificates issued by state or local governments that entitle the holder
of the certificate to a proportionate interest in the lease purchase
payments made. The Municipal Bond Funds will invest in only those municipal
lease obligations (including certificates of participation) that are, in
the opinion of SAM, liquid securities under guidelines adopted by the
Trust's Board of Trustees. Generally, municipal lease obligations and
certificates of participation will be determined to be liquid if they have
a readily available market after an evaluation of all relevant factors. The
Municipal Bond Funds do not presently intend to purchase municipal lease
obligations that are not rated by Moody's or S&P.

- PARTICIPATION INTERESTS, which are interests in municipal bonds and
floating and variable rate obligations that are owned by banks. These
interests carry a demand feature that permits a Municipal Bond Fund holding
an interest to tender (sell) it back to the bank. Generally, the bank will
accept tender of the participation interest with same day notice, but may
require up to 5 days' advance notice. The demand feature is usually backed
by an irrevocable letter of credit or guarantee of the bank. The credit
rating of the bank affects the credit quality of the participation
interest.

- MUNICIPAL NOTES, which are notes generally issued to provide for short-term
capital needs and generally have maturities of one year or less. A Fund may
purchase municipal notes as a medium for its short-term investments. Notes
include tax anticipation, revenue anticipation and bond anticipation notes
and tax-exempt commercial paper. A Fund will invest only in those municipal
notes that at the time of purchase, are rated within one of the three
highest grades by Moody's or S&P or, if unrated by these agencies,
determined by SAM, to be of comparable quality.

3. WILL INVEST, DURING NORMAL MARKET CONDITIONS, AT LEAST 65% OF ITS TOTAL
ASSETS IN MUNICIPAL BONDS ISSUED BY THE STATE OF WASHINGTON OR ONE OF ITS
POLITICAL SUBDIVISIONS, MUNICIPALITIES, AGENCIES, INSTRUMENTALITIES OR PUBLIC
AUTHORITIES. (Advisor Washington Municipal Fund only.) The Advisor Washington
Municipal Fund may not be suitable for every eligible investor. Since the
State of Washington currently has no personal income tax, there are no tax
benefits at the state level to an investor. An investor in the Advisor
Washington Municipal Fund will generally earn dividend income free from
federal income taxes as does an investor in the Advisor Municipal and Advisor
Intermediate Municipal Funds. However, an investment in the Advisor
Washington Municipal Fund may be subject to greater risks than an investment
in the Advisor Municipal and Advisor Intermediate Municipal Funds due to the
concentration of its portfolio investments in a single state. See "Risk
Factors" below for further information.

- 19 -
<PAGE> 20

COMMON INVESTMENT PRACTICES

Each of the Funds may follow the investment practices described below (unless
otherwise indicated):

1. HOLD CASH OR INVEST TEMPORARILY IN HIGH QUALITY, SHORT-TERM SECURITIES ISSUED
BY AN AGENCY OR INSTRUMENTALITY OF THE U.S. GOVERNMENT, HIGH QUALITY
COMMERCIAL PAPER, CERTIFICATES OF DEPOSIT AND SHARES OF NO-LOAD, OPEN-END
MONEY MARKET FUNDS. A Fund may purchase these short-term securities as a cash
management technique under those circumstances where it has cash to manage
for a short time period, for example, after receiving proceeds from the sale
of securities, dividend distributions from portfolio securities or cash from
the sale of Fund shares to investors. Interest earned from these short-term
securities will be taxable to investors as ordinary income when distributed.
SAM will waive its advisory fees for Fund assets invested in money market
funds.

2. INVEST FOR SHORT-TERM PURPOSES WHEN SAM BELIEVES SUCH ACTION TO BE DESIRABLE
AND CONSISTENT WITH SOUND INVESTMENT PRACTICES. Each Fund, however, will not
engage primarily in trading for the purpose of short-term profits. A Fund may
dispose of its portfolio securities whenever SAM deems advisable, without
regard to the length of time the securities have been held. The portfolio
turnover rates for each Fund is not expected to exceed 50%.

3. PURCHASE OR SELL SECURITIES ON A "WHEN-ISSUED" OR "DELAYED-DELIVERY" BASIS.
Under this procedure, a Fund agrees to acquire or sell securities that are to
be delivered against payment in the future, normally 30 to 45 days. The
price, however, is fixed at the time of commitment. When a Fund purchases
when-issued or delayed-delivery securities, it will earmark liquid, high
quality securities in an amount equal in value to the purchase price of the
security. Use of this technique may affect a Fund's share price in a manner
similar to leveraging.

4.INVEST UP TO 5% OF NET ASSETS IN REPURCHASE AGREEMENT TRANSACTIONS.

5. INVEST UP TO 5% OF NET ASSETS IN WARRANTS, BUT WILL LIMIT INVESTMENTS IN
WARRANTS WHICH ARE NOT LISTED ON THE NEW YORK OR AMERICAN STOCK EXCHANGE TO
NO MORE THAN 2% OF NET ASSETS. (Advisor Equity and Advisor Northwest Funds
only.)

6. INVEST UP TO 10% OF ITS NET ASSETS IN ILLIQUID SECURITIES, WHICH ARE
SECURITIES THAT CANNOT BE SOLD WITHIN SEVEN DAYS IN THE ORDINARY COURSE OF
BUSINESS FOR APPROXIMATELY THE AMOUNT AT WHICH THEY ARE VALUED. Due to the
absence of an active trading market, a Fund may experience difficulty in
valuing or disposing of illiquid securities. SAM determines the liquidity of
the securities under guidelines adopted by the Trust's Board of Trustees.

Each Fund has adopted a number of investment restrictions. If a Fund follows a
percentage limitation at the time of investment, a later increase or decrease in
values, net assets or other circumstances will not be considered in determining
whether a Fund complies with the applicable policy. The following restrictions
are fundamental policies which cannot be changed without shareholder vote.

1. EACH FUND, WITH RESPECT TO 75% OF THE VALUE OF ITS TOTAL ASSETS, MAY NOT
INVEST MORE THAN 5% OF ITS TOTAL ASSETS IN THE SECURITIES OF ANY ONE ISSUER
(OTHER THAN U.S. GOVERNMENT SECURITIES).

2. EACH FUND, WITH RESPECT TO 75% OF THE VALUE OF ITS TOTAL ASSETS, MAY NOT
PURCHASE MORE THAN 10% OF THE OUTSTANDING VOTING SECURITIES OF ANY ONE ISSUER
(OTHER THAN U.S. GOVERNMENT SECURITIES).

3. EACH FUND MAY BORROW MONEY ONLY FOR TEMPORARY OR EMERGENCY PURPOSES FROM A
BANK OR AFFILIATES OF SAFECO CORPORATION AT AN INTEREST RATE NOT GREATER THAN
THAT AVAILABLE FROM COMMERCIAL BANKS. A Fund will not borrow amounts in
excess of 20% of its total assets (including borrowings) less liabilities
(other than borrowings) immediately after such borrowings. As a
non-fundamental policy, a Fund will not purchase securities if outstanding
borrowings are equal to or greater than 5% of its total assets. Each Fund
intends to exercise its borrowing authority primarily to meet shareholder
redemptions under circumstances where redemption requests exceed available
cash.

For more information, see the "Investment Objectives and Policies" and
"Additional Investment Information" sections of the Trust's Statement of
Additional Information.

RISK FACTORS

Various factors may cause the value of a shareholder's investment in a Fund to
fluctuate. The principal risk factor associated with an investment in a mutual
fund like any of the Funds is that the market value of the portfolio securities
may decrease resulting in a decrease in the value of a shareholder's investment.

The value of the Advisor Intermediate Treasury, Advisor Government, Advisor
GNMA, Advisor Municipal, Advisor Intermediate Municipal and Advisor Washington
Municipal Funds' portfolios will normally fluctuate inversely with changes in
market interest rates. Generally, when market interest rates rise, the price of
bonds will fall, and when market interest rates fall, the price of bonds will
rise. Also, there is a risk that the issuer of

- 20 -
<PAGE> 21

a bond or other debt security will fail to make timely payments of principal and
interest to the Funds. For a description of the risks of investing in certain
types of instruments, see generally pages 14 to 21 herein.

ADVISOR NORTHWEST FUND

An investment in the Advisor Northwest Fund may be subject to different risks
than a mutual fund whose investments are more geographically diverse. Since the
Fund invests primarily in companies whose principal executive offices are
located in the Northwest, the number of issuers whose securities are eligible
for purchase is significantly less than for many other mutual funds. Also, some
companies whose securities are held in the Fund's portfolio may primarily
distribute products or provide services in a specific locale or in the Northwest
region. The long-term growth of these companies can be significantly affected by
business trends in and the economic health of those geographic areas. Other
companies whose securities are held by the Fund may have a predominately
national or partially international market for their products or services and
are more likely to be impacted by national or international trends. As a result,
the performance of the Fund may be influenced by business trends or economic
conditions not only in a specific locale or in the Northwest region but also on
a national or international level, depending on the companies whose securities
are held in its portfolio at any particular time.

ADVISOR WASHINGTON MUNICIPAL FUND

Because the Advisor Washington Municipal Fund concentrates its investments in a
single state, there is a greater risk of fluctuation in the values of its
portfolio securities than with mutual funds whose investments are more
geographically diverse. Investors should carefully consider the investment risks
of such concentration. The Fund's share price may be affected by political and
economic developments within Washington State and by the financial condition of
Washington State and its public authorities and political subdivisions. See
"Investment Risks of Concentration in Washington Issuers" in the Trust's
Statement of Additional Information for more information.

The information in the following discussion is drawn primarily from official
statements relating to state securities offerings which are dated prior to the
date of this Prospectus. The Advisor Washington Municipal Fund has not
independently verified any of the information in the discussion below.

The economy of the State of Washington consists of both export and local
industries. The State's leading export industries are aerospace, manufacturing,
timber and agriculture. The State's manufacturing base consists primarily of
aircraft manufacture. The Boeing Company, a major aerospace firm, is the largest
commercial employer in the State and has a significant impact on the State in
terms of production, employment and labor earnings. Financial performance of
Boeing has been strong in recent years as measured by increased sales, airplane
deliveries and backlogs or orders. In January, 1993, Boeing announced production
cuts and is expected to substantially trim jobs over the next several years.
Such cuts may have an adverse effect on the Washington economy. Forest products
rank second behind aerospace in value of total production. Although productivity
in the forest products industry has increased steadily in recent years, declines
in production are expected in the future. Although unemployment in the timber
industry is anticipated in certain regions, the impact is not expected to affect
the State's overall economic performance. Growth in agriculture has been an
important factor in the State's economic growth over the past decade. The State
is the home of many technology firms of which approximately half are computer
related. Microsoft, the world's largest microcomputer software company, is
headquartered in Redmond, Washington.

State law requires a balanced budget. The Governor has a statutory
responsibility to reduce expenditures across the board to avoid any cash deficit
at the end of a biennium. In addition, state law prohibits state tax revenue
growth from exceeding the growth rate of state personal income. To date,
Washington State tax revenue increases have remained substantially below the
applicable limit. At any given time, there are numerous lawsuits against the
State which could affect its revenues and expenditures.

PORTFOLIO MANAGERS

ADVISOR EQUITY FUND

The portfolio manager for the Advisor Equity Fund is Richard D. Meagley, Vice
President, SAM. Mr. Meagley began serving as portfolio manager for the Fund in
January, 1995. He is also the portfolio manager for other SAFECO funds. Prior to
these positions, he served as a portfolio manager and analyst for Kennedy
Associates, Inc., an investment advisory firm located in Seattle, Washington,
from 1992 through 1994. He was an Assistant Vice President of SAM and the
portfolio manager of a SAFECO fund from 1991 to 1992. From 1983 to 1991, Mr.
Meagley was an investment portfolio manager and securities analyst for SAM.

ADVISOR NORTHWEST FUND

The portfolio manager for the Advisor Northwest Fund is Charles R. Driggs,
Assistant Vice President, SAM. Mr. Driggs has served as portfolio manager of a
similar mutual fund since 1992. From 1984 through 1992, Mr. Driggs was a
securities analyst for SAM specializing in the banking and insurance industries.

- 21 -
<PAGE> 22

ADVISOR INTERMEDIATE TREASURY AND ADVISOR GOVERNMENT FUNDS

The portfolio manager for the Advisor Intermediate Treasury and Advisor
Government Funds is Michael C. Knebel, Vice President, SAM. Mr. Knebel has
served as portfolio manager for various SAFECO funds since 1988.

ADVISOR GNMA FUND

The portfolio manager for the Advisor GNMA Fund is Paul A. Stevenson, Vice
President, SAM. Mr. Stevenson has served as portfolio manager for another SAFECO
fund since 1988. In addition, he is an Assistant Vice President of SAFECO Life
Insurance Company.

ADVISOR MUNICIPAL, ADVISOR INTERMEDIATE MUNICIPAL AND ADVISOR WASHINGTON
MUNICIPAL FUNDS

The portfolio manager for Advisor Municipal, Advisor Intermediate Municipal and
Advisor Washington Municipal Funds is Stephen C. Bauer, President, SAM. Mr.
Bauer has been a portfolio manager for other SAFECO municipal bond funds since
1972.

INFORMATION ABOUT INVESTING IN FUND SHARES

ALTERNATIVE PURCHASE ARRANGEMENT

The alternative purchase arrangement permits an investor to choose the method of
purchasing shares that is most beneficial given the amount of the purchase, the
length of time the investor expects to hold the shares, and other circumstances.
Investors should consider whether, during the anticipated life of their
investment in a Fund, the accumulated distribution and service fees and
contingent deferred sales charges on Class B shares prior to conversion, or the
accumulated distribution and service fees on Class C shares, would be less than
the initial sales charge and accumulated service fee on Class A shares purchased
at the same time.

Class A shares will normally be more beneficial than Class B or Class C shares
to investors who qualify for reduced initial sales charges or a sales load
waiver on Class A shares. Class A shares are subject to a service fee (but not a
distribution fee) and, accordingly, pay correspondingly higher dividends per
share than Class B shares or Class C shares. However, because initial sales
charges are deducted at the time of purchase, investors purchasing Class A
shares would not have all their funds invested initially and, therefore, would
initially own fewer shares.

Investors not qualifying for reduced initial sales charges who expect to
maintain their investment for an extended period of time might consider
purchasing Class B shares because Class B shares redeemed more than six years
after their purchase are not subject to a contingent deferred sales charge and a
shareholder's Class B shares automatically convert to Class A shares (which are
subject to lower continuing charges) approximately eight years after the date of
issuance. Class B shares, however, are subject to a contingent deferred sales
charge for an initial six-year period.

Other investors, especially those who do not qualify for a reduced sales charge
and who expect to maintain their investment for a shorter period of time than
six years, might determine that it would be more advantageous to purchase Class
C shares so that their funds will be fully invested from the date of purchase,
although those shares are subject to higher continuing distribution charges. For
example, based on current fees and expenses, an investor subject to the 4.75%
initial sales charge on Class A shares would have to hold his or her investment
approximately seven years for the Class C distribution and service fees to
exceed the initial sales charge plus the accumulated service fees of Class A
shares. This example does not take into account the time value of money which
further reduces the impact of the Class C distribution and service fees on the
investment or fluctuations in net asset value, which will affect the actual
amount of service and distribution fees paid.

HOW TO PURCHASE SHARES

When placing purchase orders, investors should specify whether the order is for
Class A, Class B or Class C shares of a Fund. All share purchase orders that
fail to specify a class will automatically be invested in Class A shares.

- 22 -
<PAGE> 23

The minimum initial investment is $1,000 (IRA $250). The minimum additional
investment is $100 (except dividend reinvestment plans). Minimum initial
investments are negotiable for retirement accounts other than IRAs. No minimum
initial investment is required to establish an Automatic Investment Plan.

Shares of the Funds are available for purchase through investment professionals
who work at broker-dealers, banks and other financial institutions with which
SAFECO Securities, the distributor of the shares of the Funds, has entered into
selling agreements. Orders received by such financial institutions before 1:00
p.m. Pacific Time on any day the New York Stock Exchange is open for regular
trading will be effected that day, provided that such order is transmitted to
SAFECO Services, Inc. ("SAFECO Services"), the transfer agent for the Funds,
prior to 2:00 p.m. Pacific Time on such day. Investment professionals will be
responsible for forwarding the investor's order to SAFECO Services so that it
will be received prior to such time.

Broker-dealers, banks and other financial institutions that do not have selling
agreements with SAFECO Securities also may offer to place orders for the
purchase of Fund shares. Purchases made through these investment firms will be
effected at the public offering price next determined after the order is
received by SAFECO Services. Such financial institutions may charge the investor
a transaction fee as determined by the financial institution. That fee will be
in addition to the sales charge payable by the investor with respect to Class A
shares, and may be avoided by purchasing shares through a broker-dealer, bank or
other financial institution that has a selling agreement with SAFECO Securities.

Broker-dealers, banks, financial institutions and any other person entitled to
receive compensation for selling or servicing Fund shares may receive different
levels of compensation with respect to one particular class of Fund shares over
another. Sales persons of broker-dealers, banks and other financial institutions
that sell Advisor Fund shares are eligible to receive merchandise, trips and
gift certificates, the amount of which varies depending on the amount of shares
sold.

The Funds reserve the right to refuse any offer to purchase shares of any class.

PURCHASING CLASS A SHARES

The public offering price of the Class A shares of each Fund is the next
determined net asset value per share (see "Share Valuation" on page 28 for
additional information) plus any sales charge which will vary with the size of
the purchase as shown in the following schedule:

<TABLE>
<CAPTION>
Sale Charge as Broker
Percentage of Reallowance as
Amount of Purchase --------------------- Percentage of
at the Public Offering Net the Offering
Offering Price Price Investment Price
- -------------------- -------- ---------- --------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.00%
$50,000 but less
than $100,000 4.25% 4.44% 3.50%
$100,000 but less
than $250,000 3.75% 3.90% 3.00%
$250,000 but less
than $500,000 3.00% 3.09% 2.25%
$500,000 but less
than $1,000,000 2.25% 2.30% 1.50%
$1,000,000 or more 1.00% 1.01% .50%
</TABLE>

From time to time, SAFECO Securities may reallow to broker-dealers, banks and
other financial institutions the full amount of the sales charge on Class A
shares. In some instances, SAFECO Securities may offer these reallowances only
to those financial institutions that have sold or may sell significant amounts
of Class A shares. These commissions also may be paid to financial institutions
that initiate purchases made pursuant to sales charge waivers (1) and (8),
described below under "Sales Charge Waivers -- Class A shares." To the extent
that SAFECO Securities reallows 90% or more of the sales charge to a financial
institution, such financial institution may be deemed to be an underwriter under
the 1933 Act.

The following describes purchases that may be aggregated for purposes of
determining the amount of purchase:

1. Individual purchases on behalf of a single purchaser and the purchaser's
spouse and their children under the age of 21 years. This includes shares
purchased in connection with an employee benefit plan(s) exclusively for the
benefit of such individual(s), such as an IRA, individual plans under Section
403(b) of the Internal Revenue Code of 1986, as amended ("Code"), or
single-participant Keogh-type plans. This also includes purchases made by a
company controlled by such individual(s);

2. Individual purchases by a trustee or other fiduciary purchasing shares for a
single trust estate or a single fiduciary account, including an employee
benefit plan (such as employer-sponsored pension, profit-sharing and stock
bonus plans, including plans under Code Section 401(k), and medical, life and
disability insurance trusts) other than a plan described in (1) above; or

- 23 -
<PAGE> 24

3. Individual purchases by a trustee or other fiduciary purchasing shares
concurrently for two or more employee benefit plans of a single employer or
of employers affiliated with each other (excluding an employee benefit plan
described in (2) above).

SALES CHARGE WAIVERS -- CLASS A SHARES

Class A shares are sold at net asset value per share without imposition of sales
charges when investments are made by the following classes of investors:

1. Registered representatives or full-time employees of broker-dealers, banks
and other financial institutions that have entered into selling agreements
with SAFECO Securities, and the children, spouse and parents of such
representatives and employees, and employees of financial institutions that
directly, or through their affiliates, have entered into selling agreements
with SAFECO Securities;

2. Companies exchanging shares with or selling assets to one or more of the
Funds pursuant to a merger, acquisition or exchange offer;

3. Any of the companies affiliated with SAFECO Securities;

4. Purchases made through the automatic investment of dividends and
distributions paid by another SAFECO Advisor Fund;

5. Clients of administrators or consultants to tax-qualified employee benefit
plans which have entered into agreements with affiliates of SAFECO
Securities;

6. Retirement plan participants who borrow from their retirement accounts by
redeeming Fund shares and subsequently repay such loans via a purchase of
Fund shares;

7. Retirement plan participants who receive distributions from a tax-qualified
employer-sponsored retirement plan, which is invested in Fund shares, the
proceeds of which are reinvested in Fund shares;

8. Accounts as to which a broker-dealer, bank or other financial institution
charges an account management fee, provided the financial institution has
entered into an agreement with SAFECO Securities regarding such accounts; and

9. Current or retired officers, directors, trustees or employees of the Trust or
SAFECO Corporation or affiliated companies of SAFECO Corporation and the
children, spouse and parents of such persons.

REINSTATEMENT PRIVILEGE

Shareholders who redeem their Class A shares in a Fund have a one-time privilege
to reinstate their investment by investing the proceeds of the redemption at net
asset value per share without a sales charge in Class A shares of the Fund
and/or one or more of the other Funds. SAFECO Services must receive from the
investor or the investor's broker-dealer, bank or other financial institution
within 60 days after the date of the redemption both a written request for
reinvestment and a check not exceeding the amount of the redemption proceeds.
The reinstatement purchase will be effected at the net asset value per share
next determined after such receipt.

REDUCED SALES CHARGE PLANS -- CLASS A SHARES

Class A shares of the Funds may be purchased at reduced sales charges either
through the Right of Accumulation or under a Letter of Intent. For more details
on these plans, investors should contact their broker-dealer, bank or other
financial institution or SAFECO Services.

Pursuant to the RIGHT OF ACCUMULATION, investors are permitted to purchase Class
A shares of the Funds at the sales charge applicable to the total of (a) the
dollar amount then being purchased plus (b) the dollar amount equal to the total
purchase price of the investor's concurrent purchases of the other SAFECO
Advisor Funds plus (c) the dollar amount equal to the current public offering
price of all shares of SAFECO Advisor Funds already held by the investor. To
receive the Right of Accumulation, at the time of purchase investors must give
their broker-dealers, banks or other financial institutions sufficient
information to permit confirmation of qualification. THE FOREGOING RIGHT OF
ACCUMULATION APPLIES ONLY TO CLASS A SHARES OF THE FUNDS.

In executing a LETTER OF INTENT ("LOI"), an investor should indicate an
aggregate investment amount he or she intends to invest in Class A shares of
SAFECO Advisor Funds in the following thirteen months. The LOI is included as
part of the Account Application. The sales charge applicable to that aggregate
amount then becomes the applicable sales charge on all purchases made
concurrently with the execution of the LOI and in the thirteen months following
that execution. If an investor executes an LOI within 90 days of a prior
purchase of Class A shares, the prior purchase may be included under the LOI and
an appropriate adjustment, if any, with respect to the sales charges paid by the
investor in connection with the prior purchase will be made, based on the
then-current net asset value(s) of the pertinent Fund(s).

If at the end of the thirteen month period covered by the LOI, the total amount
of purchases does not equal the amount indicated, the investor will be required
to pay the difference between the sales charges paid at the

- 24 -
<PAGE> 25

reduced rate and the sales charges applicable to the purchases actually made.
Shares having a value equal to 5% of the amount specified in the LOI will be
held in escrow during the thirteen month period (while remaining registered in
the investor's name) and are subject to redemption to assure any necessary
payment to SAFECO Securities of a higher applicable sales charge.

AN LOI WILL APPLY ONLY TO CLASS A SHARES OF THE FUNDS. The value of Class B or
Class C shares of any SAFECO Advisor Fund will not be counted toward the
fulfillment of an LOI.

PURCHASING CLASS B SHARES

The public offering price of the Class B shares of each Fund is the next
determined net asset value per share. No initial sales charge is imposed.
However, a contingent deferred sales charge is imposed on certain redemptions of
Class B shares. Because the Class B shares are sold without an initial sales
charge, the investor receives Fund shares equal to the full amount of the
investment.

Class B shares of a Fund that are redeemed will not be subject to a contingent
deferred sales charge to the extent that the value of such shares represents:
(a) reinvestment of dividends or other distributions or (b) shares redeemed more
than six years after their purchase.

Redemptions of most other Class B shares will be subject to a contingent
deferred sales charge. See "Contingent Deferred Sales Charge Waivers." The
amount of any applicable contingent deferred sales charge will be calculated by
multiplying the lesser of the original purchase price or the net asset value of
such shares at the time of redemption by the applicable percentage shown in the
table below. Accordingly, no charge is imposed on increases in the net asset
value above the original purchase price:

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE AS A
PERCENTAGE OF THE
LESSER OF NET ASSET
VALUE AT REDEMPTION
OR THE ORIGINAL
REDEMPTION DURING PURCHASE PRICE
- -------------------------- ---------------------
<S> <C>
1st Year Since Purchase 5%
2nd Year Since Purchase 4%
3rd Year Since Purchase 3%
4th Year Since Purchase 3%
5th Year Since Purchase 2%
6th Year Since Purchase 1%
Thereafter 0%
</TABLE>

In determining whether a contingent deferred sales charge is applicable to a
redemption, the calculation will be made in a manner that results in the lowest
possible rate. It will be assumed that the redemption is made first of amounts
representing shares acquired pursuant to the reinvestment of dividends and
distributions; and then of amounts representing the cost of shares held for the
longest period of time.

For example, assume an investor purchased 100 shares at $10 per share at a cost
of $1,000. Subsequently, the shareholder acquired 15 additional shares through
dividend reinvestment. During the second year after the purchase, the investor
decided to redeem $500 of his or her investment. Assuming at the time of the
redemption a net asset value of $11 per share, the value of the investor's
shares would be $1,265 (115 shares at $11 per share). The contingent deferred
sales charge would not be applied to the value of the reinvested dividend
shares. Therefore, the 15 shares currently valued at $165.00 would be sold
without a contingent deferred sales charge. The number of shares needed to fund
the remaining $335.00 of the redemption would equal 30.455. Using the lower of
cost or market price to determine the contingent deferred sales charge, the
original purchase price of $10.00 per share would be used. The contingent
deferred sales charge calculation would therefore be 30.455 shares times $10.00
per share at a contingent deferred sales charge rate of 4% (the applicable rate
in the second year after purchase) for a total contingent deferred sales charge
of $12.18.

For federal income tax purposes, the amount of the contingent deferred sales
charge will reduce the gain or increase the loss, as the case may be, on the
amount recognized on the redemption of shares. The amount of any contingent
deferred sales charge will be paid to SAFECO Securities.

CONTINGENT DEFERRED SALES CHARGE WAIVERS

The contingent deferred sales charge will be waived in the following
circumstances: (a) total or partial redemptions made within one year following
the death or disability of a shareholder; (b) redemptions made pursuant to any
systematic withdrawal plan based on the shareholder's life expectancy including
substantially equal periodic payments prior to age 59 1/2 which are described in
Code section 72(t) and required minimum distributions after age 70 1/2 including
those required minimum distributions made in connection with customer accounts
under Section 403(b) of the Code and other retirement plans; (c) total or
partial redemption resulting from a distribution following retirement in the
case of a tax-qualified employer-sponsored retirement plan; (d) when a
redemption results from a tax-free return of an excess contribution pursuant to
Section 408(d)(4) or (5) of the Code; (e) reinvestment in Class B shares of the
Fund within 60 days of prior redemption; (f) redemptions pursuant to the Fund's
right to liquidate a shareholder's account involuntarily; and (g) redemptions
pursuant to distributions from a tax-qualified employer-sponsored retirement
plan, that

- 25 -
<PAGE> 26

are invested in SAFECO Advisor Funds and that are permitted to be made without
penalty pursuant to the Code (other than tax-free rollovers or transfers of
asset).

CONVERSION OF CLASS B SHARES

A shareholder's Class B shares will automatically convert to Class A shares in
the same Fund approximately eight years after the date of issuance, together
with a pro rata portion of all Class B shares representing dividends and other
distributions paid in additional Class B shares. The Class B shares so converted
will no longer be subject to the higher expenses borne by Class B shares. The
conversion will be effected at the relative net asset values per share of the
two classes on the first business day of the month in which the eighth
anniversary of the issuance of the Class B shares occurs. If a shareholder
effects one or more exchanges among Class B shares of the Funds during the
eight-year period, the holding periods for the shares so exchanged will be
counted toward the eight-year period. Because the net asset value per share of
the Class A shares may be higher than that of the Class B shares at the time of
conversion, a shareholder may receive fewer Class A shares than the number of
Class B shares converted, although the dollar value will be the same.

PURCHASING CLASS C SHARES

The public offering price of Class C shares of each Fund is the next determined
net asset value per share. Neither an initial sales charge on purchase nor a
contingent deferred sales charge on redemptions will be charged. Because the
Class C shares are sold without an initial sales charge, the investor receives
shares equal to the full amount of the investment. The Class C distribution and
service fees enable the Funds to sell Class C shares without either an initial
or contingent deferred sales charge. Class C shares do not convert to any other
class of shares of the Funds and incur higher combined ongoing distribution and
service fees than Class A shares. Such shares therefore have a higher expense
ratio and pay correspondingly lower dividends than Class A shares.

HOW TO EXCHANGE SHARES FROM ONE FUND TO ANOTHER

Shares of one class of a Fund may be exchanged for shares of the same class of
shares of any other Fund, based on their next-determined respective net asset
values, without imposition of any sales charges, provided that the shareholder
account registration remains identical. CLASS A SHARES MAY BE EXCHANGED ONLY FOR
CLASS A SHARES OF OTHER SAFECO ADVISOR FUNDS. CLASS B SHARES MAY BE EXCHANGED
ONLY FOR CLASS B SHARES OF OTHER SAFECO ADVISOR FUNDS. CLASS C SHARES MAY BE
EXCHANGED ONLY FOR CLASS C SHARES OF OTHER SAFECO ADVISOR FUNDS. The exchange of
Class B shares will not be subject to a contingent deferred sales charge. For
purposes of computing the contingent deferred sales charge, the length of time
of ownership of Class B shares will be measured from the date of original
purchase and will not be affected by the exchange. EXCHANGES ARE NOT TAX-FREE
AND MAY RESULT IN A SHAREHOLDER'S REALIZING A GAIN OR LOSS, AS THE CASE MAY BE,
FOR TAX PURPOSES. See "Fund Distributions and How They are Taxed" on page 29 for
more information. A shareholder may purchase shares of a SAFECO Advisor Fund by
exchanges only if it is registered for sale in the state where the shareholder
resides.

EXCHANGES BY TELEPHONE

A shareholder may give exchange instructions to the shareholder's broker-dealer,
bank or other financial institution or to SAFECO Services by telephone at the
appropriate toll-free number provided on the cover of this Prospectus. Exchange
orders will be accepted by telephone provided that the exchange involves only
uncertificated shares or certificated shares for which certificates previously
have been deposited in the shareholder's account. See "Telephone Transactions"
on page 28 for more information.

EXCHANGES BY MAIL

Exchange orders should be sent by mail to the investor's broker-dealer, bank or
other financial institution. If a shareholder has an account at SAFECO Services,
exchange orders may be sent to the address set forth on the cover of this
Prospectus.

SHARE EXCHANGE PRICE AND PROCESSING

The shares of the SAFECO Advisor Fund you are exchanging from will be redeemed
at the price next computed after your exchange request is received. Normally the
purchase of the SAFECO Advisor Fund you are exchanging into is executed on the
same day. However, each Fund reserves the right to delay the payment of proceeds
and, hence, the purchase in an exchange for up to seven days if making immediate
payment could adversely affect the portfolio of the Fund whose shares are
redeemed. The exchange offer may be modified or terminated with respect to a
Fund at anytime, upon at least 60 days' notice to shareholders.

HOW TO REDEEM SHARES

As described below, shares of the Funds may be redeemed at their next-determined
net asset value (subject to any applicable contingent deferred sales charge for
Class B shares) and redemption proceeds will be sent to shareholders within
seven days of the receipt of a redemption request. Shareholders who have
purchased shares through broker-dealers, banks or other financial institutions
that sell shares may redeem shares

- 26 -
<PAGE> 27

through such firms; if the shares are held in the "street name" of the
broker-dealer, bank or other financial institution, the redemption must be made
through such firm.

Please note the following:

- If your shares were purchased by wire, redemption proceeds will be
available immediately. If shares were purchased by other than wire, each
Fund reserves the right to hold the proceeds of your redemption for up to
15 business days after investment or until such time as the Fund has
received assurance that your investment will be honored by the bank on
which it was drawn, whichever occurs first.

- SAFECO Services charges a $10 fee to wire redemption proceeds. In
addition, some banks may charge a fee to receive wires.

- If shares are issued in certificate form, the certificates must accompany
a redemption request and be duly endorsed.

- Under some circumstances (e.g., a change in corporate officer or death of
an owner), SAFECO Services may require certified copies of supporting
documents before a redemption can be made.

REDEMPTIONS THROUGH BROKER-DEALERS, BANKS AND
OTHER FINANCIAL INSTITUTIONS

Shareholders with accounts at broker-dealers, banks and other financial
institutions that sell shares of the Funds may submit redemption requests to
such firms. Broker-dealers, banks or other financial institutions may honor a
redemption request either by repurchasing shares from a redeeming shareholder at
the shares' net asset value per share next computed after the firm receives the
request or by forwarding such requests to SAFECO Services. Redemption proceeds
(less any applicable contingent deferred sales charge for Class B shares)
normally will be paid by check. Broker-dealers, banks and other financial
institutions may impose a service charge for handling redemption transactions
placed through them and may impose other requirements concerning redemptions.
Accordingly, shareholders should contact the investment professional at their
broker-dealer, bank or other financial institution for details.

Redemption requests may also be transmitted to SAFECO Services by telephone (for
amounts of less than $100,000) or by mail.

SHARE REDEMPTION PRICE AND PROCESSING

Your shares will be redeemed at the net asset value per share (subject to any
applicable contingent deferred sales charge) next calculated after receipt of
your request which meets the redemption requirements of the Funds. The value of
the shares you redeem may be more or less than the dollar amount you purchased,
depending on the market value of the shares at the time of redemption. See
"Share Valuation" on page 28 for more information.

Redemption proceeds will normally be sent on the next business day following
receipt of your redemption request. If your redemption request is received after
1:00 p.m. Pacific time, proceeds will normally be sent on the second business
day following receipt. Each Fund, however, reserves the right to postpone
payment of redemption proceeds for up to seven days if making immediate payment
could adversely affect its portfolio. In addition, redemptions may be suspended
or payment dates postponed if the New York Stock Exchange is closed or its
trading is restricted or if the SEC declares an emergency.

Due to the high cost of maintaining small accounts, your account may be closed
upon 60 days' written notice if at the time of any redemption or exchange the
total value falls below $100. Your shares will be redeemed at the net asset
value per share calculated on the day your account is closed and the proceeds
will be sent to you.

HOW TO SYSTEMATICALLY PURCHASE OR REDEEM SHARES

Call your investment professional or SAFECO Services at 1-800-463-8791 for more
information.

AUTOMATIC INVESTMENT METHOD (AIM)

AIM enables you to make regular monthly investments by authorizing SAFECO
Services to withdraw a specific amount (minimum of $100 per withdrawal per Fund)
from your bank account and invest the amount in any Fund.

PAYROLL DEDUCTION PLAN

An employer or other entity using group billing may establish a
self-administered payroll deduction plan in any Fund. Payroll deduction amounts
are negotiable.

SYSTEMATIC WITHDRAWAL PLAN

This plan enables you to receive a portion of your investment on a monthly
basis. A Fund automatically redeems shares in your account and sends you a
withdrawal check (minimum amount $50 per Fund) on or about the fifth business
day of every month. Because Class A shares are subject to sales charges,
shareholders should not concurrently purchase Class A shares with respect to an
account which is utilizing a systematic withdrawal plan. Class B shares are not
available for a systematic withdrawal plan.

- 27 -
<PAGE> 28

ACCOUNT CHANGES AND SIGNATURE REQUIREMENTS

Changes to your account registration or the services you have selected must be
in writing and signed by the number of owners specified on your account
application as having authority to make these changes. Send written changes to
the broker-dealer, bank or other financial institution where your account is
maintained. (Changes made to accounts maintained at SAFECO Services should be
sent to the address on the Prospectus cover.) Certain changes to the Automatic
Investment Method and Systematic Withdrawal Plan can be made via telephone
request if you have previously selected single signature authorization for your
account.

You must specify on your account application the number of signatures required
to authorize redemptions and exchanges and to change account registration or the
services selected. Authorizing fewer than all account owners has important
implications. For example, one owner of a joint tenant account can redeem money
or change the account registration to single ownership without the co-owner's
signature. If you do not indicate otherwise on the application, the signatures
of all account owners will be required to effect a transaction. Your selection
of fewer than all account owner signatures may be revoked by any account owner
who writes to SAFECO Services or the financial institution where your account is
maintained.

The broker-dealer, bank or financial institution where your account is
maintained or SAFECO Services may require a signature guarantee for a signature
which cannot be verified by comparison to the signature(s) on your account
application. A signature guarantee may be obtained from most financial
institutions including banks, savings and loans and broker-dealers.

ACCOUNT STATEMENTS

Periodically, you will receive an account statement indicating your current fund
holdings and transactions affecting your account. Confirmation statements will
be sent to you after every transaction (except reinvestments) that affects your
account balance. Please review the information on each confirmation statement
for accuracy immediately upon receipt. If you do not notify us within 30 days of
any processing error, SAFECO Services will consider the transactions listed on
the confirmation statement to be correct.

TELEPHONE TRANSACTIONS

To redeem or exchange shares by telephone, call 1-800-463-8791 between 6:00 a.m.
and 5:00 p.m. Pacific time, Monday through Friday, except certain holidays. All
telephone calls are tape-recorded for your protection. During times of drastic
or unusual market volatility, it may be difficult for you to exercise the
telephone transaction privileges.

To use the telephone redemption and exchange privileges, you must have
previously selected these services either on your account application or by
submitting a request in writing to SAFECO Services at the address on the
Prospectus cover. Redeeming or exchanging shares by telephone allows the Funds
and SAFECO Services to accept telephone instructions from an account owner or a
person preauthorized in writing by an account owner.

Each of the Funds and SAFECO Services reserve the right to refuse any telephone
transaction when a Fund or SAFECO Services, in its sole discretion, is unable to
confirm to its satisfaction that a caller is the account owner or a person
preauthorized by the account owner.

The Funds and SAFECO Services will not be liable for the authenticity of
instructions received by telephone which a Fund or SAFECO Services, in its
discretion, believes to be delivered by an account owner or preauthorized
person, provided that the Fund or SAFECO Services follows reasonable procedures
to identify the caller. The shareholder will bear the risk of any resulting
loss. The Funds and SAFECO Services will follow certain procedures designed to
make sure that telephone instructions are genuine. These procedures may include
requiring the account owner to select the telephone privilege in writing prior
to first use, and to designate persons authorized to deliver telephone
instructions. SAFECO Services tape-records telephone transactions and may
request certain identifying information from the caller.

The telephone transaction privileges may be suspended, limited, modified or
terminated at any time without prior notice by the Funds or SAFECO Services.

SHARE VALUATION

The net asset value per share ("NAV") of each class of each Fund is computed at
the close of regular trading on the New York Stock Exchange (normally 1:00 p.m.
Pacific time) each day that Exchange is open for trading. The NAV is calculated
by subtracting a Fund's liabilities from its assets and dividing the result by
the number of outstanding shares. NAV is determined separately for each class of
shares of each Fund.

In general, portfolio securities are valued at the last reported sale price on
the national exchange on which the securities are primarily traded, unless there
are no transactions in which case they shall be valued at the last reported bid
price. Securities traded over-the-counter are valued at the last sale price,
unless there is no reported sale price in which case the last reported bid price
will be used. Portfolio securities that are traded on a stock exchange and
over-the-counter are

- 28 -
<PAGE> 29

valued according to the broadest and most representative market. Securities not
traded on a national exchange are valued based on consideration of information
with respect to transactions in similar securities, quotations from dealers and
various relationships between securities. Other assets for which a
representative value cannot be established are valued at their fair value as
determined in good faith by or under the direction of the Trust's Board of
Trustees. The values of certain portfolio securities may be computed on the
basis of valuations provided by a pricing service, unless the Board of Trustees
determine such valuations do not represent fair value.

The NAV of the Class B and Class C shares of each Fund will generally be lower
than that of its Class A shares because of the higher expenses borne by the
Class B and Class C shares. The NAVs of the three Classes of a Fund's shares
also may differ slightly due to differing allocations of Class-specific
expenses. The NAVs of the three Classes of each Fund's shares will tend to
converge, however, immediately after the payment of dividends.

Call 1-800-463-8794 for 24 hour price information.

FUND DISTRIBUTIONS AND HOW THEY
ARE TAXED

DIVIDENDS AND OTHER DISTRIBUTIONS

The Advisor Equity and Advisor Northwest Funds declare dividends on the last
business day of each calendar quarter, and each other Fund declares dividends on
the last business day of each month, from its net investment income (which
includes accrued interest, earned discount, and other income earned on portfolio
securities less expenses) and such shares become entitled to declared dividends
on the next business day after shares are purchased in your account. If you
request redemption of all your shares at any time during a month, you will
receive all declared dividends through the date of redemption, together with the
proceeds of the redemption.

Dividends paid by a Fund on its Class A, Class B and Class C shares are
calculated at the same time in the same manner. However, because of the higher
service and distribution charges associated with Class B and Class C shares, the
dividends paid by a Fund on its Class B and Class C shares will be lower than
those paid on that Fund's Class A shares.

A shareholder's dividends and other distributions are reinvested in additional
shares of the distributing Fund at NAV (without sales charge) generally
determined as of the close of business on the ex-distribution date, unless the
shareholder elects in writing to receive dividends and/or other distributions in
cash and that election is provided to your broker-dealer, bank or other
financial institution or SAFECO Services at the address on the Prospectus cover.
The election remains in effect until revoked by written notice by the
shareholder in the same manner as the distribution election. For retirement
accounts, all dividends and other distributions declared by a Fund must be
invested in additional shares of that Fund.

Please remember that if you purchase shares shortly before a Fund pays a taxable
dividend or other distribution, you will pay the full price for the shares, then
receive part of the price back as a taxable distribution.

TAXES

Each Fund intends to qualify for treatment as a regulated investment company
under the Internal Revenue Code. By so qualifying, a Fund will not be subject to
federal income taxes to the extent it distributes its net investment income and
realized capital gains to its shareholders.

Each Fund will inform you as to the amount and nature of dividends and other
distributions to your account. Dividends and other distributions declared in
December, but received by shareholders in January, are taxable to shareholders
in the year in which declared. Special rules apply when you dispose of Class A
shares through a redemption or exchange within 90 days after your purchase
thereof and subsequently reacquire Class A shares of the same Fund or acquire
Class A shares of another Fund without paying a sales charge due to the exchange
privilege or reinstatement privilege. See "How to Purchase
Shares -- Reinstatement Privilege" on page 24 for more information. In these
cases, any gain on the disposition of the original Class A shares will be
increased, or any loss decreased, by the amount of the sales charge paid when
you acquired those shares, and that amount will increase the basis of the shares
subsequently acquired. In addition, if you purchase shares of a Fund (whether
pursuant to the reinstatement privilege or otherwise) within thirty days before
or after redeeming other shares of that Fund (regardless of class) at a loss,
all or part of that loss will not be deductible and will increase the basis of
the newly purchased shares.

ADVISOR MUNICIPAL, ADVISOR INTERMEDIATE MUNICIPAL AND ADVISOR WASHINGTON
MUNICIPAL FUNDS

A portion of a Municipal Bond Fund's assets may from time to time be temporarily
invested in fixed-income obligations, the interest on which when distributed to
the Fund's shareholders will be subject to federal income taxes. As a matter of
non-fundamental investment policy, the Municipal Bond Funds will not purchase
so-called "non-essential or private activity" bonds, the interest on which would
constitute a preference item for shareholders in determining their alternative
minimum tax.

- 29 -
<PAGE> 30

Substantially all dividends are expected to be exempt from federal income tax,
but may be subject to state or local taxes; however, distributions of net
realized capital gains are fully taxable. Shareholders may lose the tax-exempt
status on the accrued income of a municipal bond if they redeem their shares
before a dividend has been declared. Shareholders of each Municipal Bond Fund
may want to consult their tax advisers regarding their investments in a
Municipal Bond Fund.

Currently the State of Washington has no state personal income tax. When and if
Washington State enacts a personal income tax, there can be no assurance that
distributions from the Advisor Washington Municipal Fund would be exempt from
such a tax.

ADVISOR INTERMEDIATE TREASURY AND ADVISOR GOVERNMENT FUNDS

All states treat the pass-through of interest earned on U.S. Treasury securities
as tax-free income in the calculation of their state income tax. This treatment
may be dependent upon the maintenance of certain percentages of Fund ownership
of these securities. The Advisor Intermediate Treasury Fund will invest
primarily in these securities while the Advisor Government Fund can but is not
obligated to primarily invest in those securities.

TAX WITHHOLDING INFORMATION

You will be asked to certify on your account application or on a separate form
that the taxpayer identification number you provide is correct and that you are
not subject to, or are exempt from, backup withholding for previous
underreporting to the Internal Revenue Service.

Retirement plan distributions may be subject to federal income tax withholding.
However, you may elect to not have any distributions withheld by checking the
appropriate box on the Redemption Request form or by instructing your
broker-dealer, bank or other financial institution or SAFECO Services in writing
at the address on the Prospectus cover.

The foregoing is only a summary of some of the important federal tax
considerations generally affecting each Fund and its shareholders; see the
Trust's Statement of Additional Information for a further discussion. There may
be other federal, state or local tax considerations applicable to a particular
investor. You therefore are urged to consult your tax adviser.

PERFORMANCE INFORMATION

Each Fund's yield, tax-equivalent yield (for the Municipal Bond Funds), total
return and average annual total return may be quoted in advertisements.

From time to time, a Fund may advertise its ranking. Rankings are calculated by
independent companies that monitor mutual fund performance (e.g. CDA Investment
Technologies, Lipper Analytical Services, Inc. and Morningstar, Inc.) and are
reported periodically in national financial publications such as Barron's,
Business Week, Forbes, Investor's Business Daily, Money Magazine, and The Wall
Street Journal. In addition, non-standardized performance figures may accompany
the standardized figures described above. Non-standardized figures may be
calculated in a variety of ways including, but not necessarily limited to,
different time periods and different initial investment amounts. Non-
standardized return does not reflect initial or contingent sales charges and
would be lower if such charges were included. Each Fund may also compare its
performance to the percentage increase in the Standard & Poor's 500 or other
relevant indices.

Performance information and quoted rankings are indicative only of past
performance and are not intended to represent future investment results. Each
Fund's yield and share price will fluctuate and your shares, when redeemed, may
be worth more or less than you originally paid for them.

INFORMATION ABOUT SHARE OWNERSHIP AND COMPANIES WHICH PROVIDE SERVICES TO THE
TRUST

GENERAL FUND INFORMATION

Each Fund is a series of SAFECO Advisor Series Trust, a Delaware business trust,
which issues an unlimited number of shares of beneficial interest. The Board of
Trustees may establish additional series of shares or classes of shares of the
Trust without approval of shareholders.

Shares of each Fund class represent equal proportionate interests in the assets
of that Fund class only and have identical voting, dividend, redemption,
liquidation and other rights. All shares issued are fully paid and
nonassessable, and shareholders have no preemptive or other right to subscribe
to any additional shares.

The Trust does not intend to hold annual meetings of shareholders of the Funds.
The Trustees will call a special meeting of shareholders of a Fund only if
required under the 1940 Act, in their discretion or upon the written request of
holders of 10% or more of the outstanding shares of the Fund entitled to vote.

- 30 -
<PAGE> 31

Under Delaware law, the shareholders of the Funds will not be personally liable
for the obligations of any Fund; a shareholder is entitled to the same
limitation of personal liability extended to shareholders of corporations. To
guard against the risk that Delaware law might not be applied in other states,
the Trust Instrument requires that every written obligation of the Trust or Fund
contain a statement that such obligation may be enforced only against the assets
of the Trust or Fund and generally provides for indemnification out of Trust or
Fund property of any shareholder nevertheless held personally liable for Trust
or Fund obligations, respectively.

SAM is the investment adviser for each Fund under an agreement with the Trust.
Under the agreement, SAM is responsible for the overall management of the
Trust's and each Fund's business affairs. SAM places orders for the purchase or
sale of each Fund's portfolio securities. Each Fund pays SAM an annual
management fee based on a percentage of that Fund's net assets ascertained each
business day and paid monthly in accordance with the schedules below. A
reduction in the fees paid by a Fund occurs only when that Fund's net assets
reach the dollar amounts of the breakpoints and applies only to the assets that
fall within the specified range:

ADVISOR EQUITY AND ADVISOR NORTHWEST FUNDS

<TABLE>
<CAPTION>
NET ASSETS ANNUAL FEE
---------------------------------- ----------
<S> <C>
$0 - $500,000,000 .75 of 1%
$500,000,001 - $1,000,000,000 .65 of 1%
Over $1,000,000,000 .55 of 1%
</TABLE>

ADVISOR INTERMEDIATE TREASURY, ADVISOR GOVERNMENT,
ADVISOR GNMA, ADVISOR MUNICIPAL,
ADVISOR INTERMEDIATE MUNICIPAL AND
ADVISOR WASHINGTON MUNICIPAL FUNDS

<TABLE>
<CAPTION>
NET ASSETS ANNUAL FEE
---------------------------------- ----------
<S> <C>
$0 - $500,000,000 .60 of 1%
$500,000,001 - $1,000,000,000 .50 of 1%
Over $1,000,000,000 .40 of 1%
</TABLE>

The distributor of each Fund's shares under an agreement with the Trust is
SAFECO Securities, Inc. ("SAFECO Securities"), a broker-dealer registered under
the Securities Exchange Act of 1934 and a member of the National Association of
Securities Dealers, Inc.

The transfer, dividend and distribution disbursement and shareholder servicing
agent for each Fund under an agreement with the Trust is SAFECO Services
Corporation ("SAFECO Services").

SAM, SAFECO Securities and SAFECO Services are wholly-owned subsidiaries of
SAFECO Corporation (a holding company whose primary subsidiaries are engaged in
the insurance and related financial services businesses) and are each located at
SAFECO Plaza, Seattle, Washington 98185.

While the use of this combined Prospectus and the Trust's combined Statement of
Additional Information subjects each Fund to possible liability as the result of
statements or omissions regarding another Fund, the Trust's Board of Trustees
considers the benefits to the respective Fund of using a combined Prospectus and
a combined Statement of Additional Information to outweigh such risk.

TAX-DEFERRED RETIREMENT PLANS

SAFECO offers tax-deferred retirement plans for individuals and businesses. An
account may be established under one of the following plans which allow you to
defer investment income from federal income tax while you save for retirement.
The SAFECO Advisor Funds, with the exception of the Municipal Funds, may be used
as investment vehicles for these plans.

- - INDIVIDUAL RETIREMENT ACCOUNTS (IRAS). IRAs are tax-deferred retirement
accounts for anyone under age 70 1/2 with earned income. The maximum annual
contribution is $2,000 per person ($2,250 for you and a non-working spouse).
An annual custodial fee will be charged for any part of a calendar year in
which you have an IRA investment in a Fund.

- - SIMPLIFIED EMPLOYEE PENSION IRA (SEP-IRAS). SEP-IRAs are easily administered
retirement plans for small businesses and self-employed individuals. Annual
contributions up to $30,000 may be made to SEP-IRA accounts. SEP-IRAs have the
same investment minimums and custodial fees as regular IRAs.

For information about establishing a SAFECO IRA or SEP-IRA, please call your
investment professional.

DISTRIBUTION PLANS

The Trust on behalf of each Class has entered into a Distribution Services
Agreement (each an "Agreement") with SAFECO Securities. The Trust has also
adopted a plan pursuant to Rule 12b-1 under the Investment Company Act of 1940
with respect to each Class (the "Plans"). Pursuant to the Plans, each Class pays
SAFECO Securities a quarterly service fee, at the annual rate of 0.25% of the
aggregate average daily net assets of a Class. Class B and C shares each pay
SAFECO Securities a quarterly distribution fee at the annual rate of 0.75% of
the aggregate average daily net assets of a Class.

Under all three plans, SAFECO Securities will use the service fees primarily to
compensate persons selling shares of the Funds for the provision of personal
service and/or the maintenance of shareholder accounts.

SAFECO Securities will use the distribution fees under the Class B and Class C
Plans to offset the commissions it pays to broker-dealers, banks or other
financial institutions for selling the Funds' Class B and Class C

- 31 -
<PAGE> 32

shares. In addition, SAFECO Securities will use the distribution fees under the
Class B and Class C Plans to offset each Fund's marketing costs attributable to
such Classes, such as preparation of sales literature, advertising and printing
and distributing prospectuses and other shareholder materials to prospective
investors. SAFECO Securities also may use the distribution fees to pay other
costs allocated to SAFECO Securities' distribution activities, including acting
as shareholder of record, maintaining account records and other overhead
expenses.

SAFECO Securities will receive the proceeds of the initial sales charge paid
upon the purchase of Class A shares and the contingent deferred sales charge
paid upon applicable redemptions of Class B shares, and may use these proceeds
for any of the distribution expenses described above. The amount of sales charge
reallowed to broker-dealers, banks or other financial institutions who sell
Class A shares will equal the percentage of the amount invested in accordance
with the schedule set forth in "Purchasing Class A Shares" on page 23. SAFECO
Securities, out of its own resources, will pay a brokerage commission equal to
(i) 3.00% of the amount invested to broker-dealers, banks and other financial
institutions who sell Class B shares and (ii) 1.00% of the amount invested to
broker-dealers, banks and other financial institutions who sell Class C shares.

During the period they are in effect, the Plans and related Agreements obligate
the Funds to pay service and distribution fees to SAFECO Securities as
compensation for its service and distribution activities, not as reimbursement
for specific expenses incurred. Thus, even if SAFECO Securities' expenses exceed
its service or distribution fees for any Fund, the Fund will not be obligated to
pay more than those fees and, if SAFECO Securities' expenses are less than such
fees, it will retain its full fees and realize a profit. Each Fund will pay the
service and distribution fees to SAFECO Securities until either the applicable
Plan or Agreement is terminated or not renewed.

As interpreted by courts and administrative agencies, the Glass-Steagall Act and
other applicable laws and regulations limit the ability of a bank or other
depository institution to become an underwriter or distributor of securities.
However, in the opinion of the Trust's management, based on the advice of
counsel, these laws and regulations do not prohibit such depository institutions
from providing services for investment companies. The State of Texas requires
that shares of the Fund may be sold in that state only by dealers or other
financial institutions that are registered there as broker-dealers.

PERSONS CONTROLLING THE FUNDS

At March 31, 1995, SAFECO Corporation controlled the Advisor Equity Fund,
Advisor Northwest Fund, Advisor Intermediate Treasury Fund, Advisor Government
Fund and Advisor GNMA Fund. At March 31, 1995, SAM, a wholly-owned subsidiary of
SAFECO Corporation, controlled the Advisor Municipal Fund, Advisor Intermediate
Municipal Fund and Advisor Washington Municipal Fund. SAFECO Corporation and SAM
have their principal place of business at SAFECO Plaza, Seattle, Washington
98185.

RATINGS SUPPLEMENT

DESCRIPTION OF DEBT RATINGS

Ratings by Moody's and S&P represent their respective opinions as to the
investment quality of the rated obligations. Investors should realize these
ratings do not constitute a guarantee that the principal and interest payable
under these obligations will be paid when due.

Excerpts from Moody's description of its ratings:

INVESTMENT GRADE:

Aaa -- Judged to be of the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edge." Interest payments
are protected by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues.

Aa -- Judged to be of high quality by all standards. Together with the Aaa
group, they comprise what are generally known as high grade bonds. They are
rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities.

A -- Have many favorable investment attributes and are to be considered as upper
medium grade obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a susceptibility
to impairment sometime in the future.

Baa -- Considered as medium grade obligations, i.e., they are neither highly
protected nor poorly secured. Interest payments and principal security appear
ade-

- 32 -
<PAGE> 33

quate for the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics and in fact have speculative
characteristics as well.

BELOW-INVESTMENT GRADE:

Ba -- Judged to have speculative elements; their future cannot be considered as
well assured. Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good and bad times
over the future.

B -- Generally lack characteristics of the desirable investment. Assurance of
interest and principal payments or of maintenance of other terms of contract
over any long period of time may be small.

Caa -- Have poor standing. Such issues may be in default or there may be present
elements of danger with respect to principal or interest.

Ca -- Represent obligations which are speculative in a high degree. Such issues
are often in default or have other marked shortcomings.

C -- The lowest rated class of bonds and issues so rated can be regarded as
having extremely poor prospects of ever attaining any real investment standing.

Excerpts from S&P's description of its ratings:

INVESTMENT GRADE:

AAA -- The highest rating assigned by S&P. Capacity to pay interest and repay
principal is extremely strong.

AA -- Very strong capacity to pay interest and repay principal and differs from
the highest rated issues only in small degree.

A -- Strong capacity to pay interest and repay principal although it is somewhat
more susceptible to the adverse effects of changes in circumstances and economic
conditions than debt in higher rated categories.

BBB -- Have an adequate capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher rated
categories.

BELOW-INVESTMENT GRADE:

BB, B, CCC, CC -- Predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "CC" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

C -- Reserved for income bonds on which no interest is being paid.

D -- In default, and payment of interest and/or repayment of principal is in
arrears.

Plus (+) or Minus (-): The ratings from "AA" to "B" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.

DESCRIPTION OF RATINGS OF STATE AND MUNICIPAL NOTES AND OTHER SHORT-TERM LOANS:

Excerpts from Moody's description of its ratings:

Moody's ratings for state and municipal notes and other short-term loans are
designated "Moody's Investment Grade" ("MIG" or, for variable or floating rate
obligations, "VMIG"). Such ratings recognize the differences between short-term
credit risk and long-term risk. Factors affecting the liquidity of the borrower
and short-term cyclical elements are critical in short-term ratings. Symbols
used will be as follows:

MIG-1/VMIG-1. This designation denotes best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.

MIG-2/VMIG-2. This designation denotes high quality. Margins of protection are
ample although not so large as in the preceding group.

MIG-3/VMIG-3. This designation denotes favorable quality. All security elements
are accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.

MIG-4/VMIG-4. This designation denotes adequate quality. Protection commonly
regarded as required of an investment security is present and although not
distinctly or predominantly speculative, there is specific risk.

Excerpts from S&P's description of its ratings:

Standard & Poor's tax-exempt note ratings are generally given to such notes that
mature in three years or less. The three rating categories are as follows:

SP-1. Very strong or strong capacity to pay principal and interest. Those issues
determined to possess overwhelming safety characteristics will be given a plus
(+) designation.

SP-2. Satisfactory capacity to pay principal and interest.

SP-3. Speculative capacity to pay principal and interest.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

Excerpts from Moody's description of its ratings:

Commercial paper rated Prime-1 by Moody's are judged
by Moody's to be of the best quality. Their short-term debt
obligations carry the smallest degree of investment
risk. Margins of support for current indebtedness

- 33 -
<PAGE> 34

are large or stable with cash flow and asset protection well assured. Current
liquidity provides ample coverage of near-term liabilities and unused
alternative financing arrangements are generally available. While protective
elements may change over the intermediate or longer term, such changes are most
unlikely to impair the fundamentally strong position of short-term obligations.

Excerpts from S&P's description of its ratings:

Commercial paper rated A by S&P have the following characteristics. Liquidity
ratios are better than industry average. Long-term debt rating is A or better.
The issuer has access to at least two additional channels of borrowing. Basic
earnings and cash flow are in an upward trend. Typically, the issuer is a strong
company in a well-established industry and has superior management. Issuers
rated A are further refined by use of numbers 1, 2, and 3 to denote relative
strength within this highest classification. Those issues rated A-1 that are
determined by S&P to possess overwhelming safety characteristics are denoted
with a plus (+) sign designation.

- 34 -
<PAGE> 35

SAFECO Securities, Inc.
Distributor

PROSPECTUS

March 31, 1995

SAFECO Advisor Series Trust:

SAFECO Advisor Equity Fund

SAFECO Advisor Northwest Fund

SAFECO Advisor Intermediate-Term
Treasury Fund

SAFECO Advisor U.S. Government Fund

SAFECO Advisor GNMA Fund

SAFECO Advisor Municipal Bond Fund

SAFECO Advisor Intermediate-Term
Municipal Bond Fund

SAFECO Advisor Washington
Municipal Bond Fund

- 35 -
<PAGE> 36

[This page left blank intentionally]

- 36 -
<PAGE> 37

SAFECO ADVISOR SERIES TRUST:
SAFECO ADVISOR EQUITY FUND
SAFECO ADVISOR NORTHWEST FUND
SAFECO ADVISOR INTERMEDIATE-TERM TREASURY FUND
SAFECO ADVISOR U.S. GOVERNMENT FUND
SAFECO ADVISOR GNMA FUND
SAFECO ADVISOR MUNICIPAL BOND FUND
SAFECO ADVISOR INTERMEDIATE-TERM MUNICIPAL BOND FUND
SAFECO ADVISOR WASHINGTON MUNICIPAL BOND FUND

STATEMENT OF ADDITIONAL INFORMATION

This combined Statement of Additional Information is not a prospectus and
should be read in conjunction with the combined Prospectus for the Funds. A
copy of the Prospectus may be obtained by writing SAFECO Mutual Funds, P.O. Box
34890, Seattle, Washington 98124-1680, or by calling toll free 1-800-463-8791.

The date of the Prospectus of the Funds to which this Statement of Additional
Information relates is March 31, 1995.

The date of this Statement of Additional Information is March 31, 1995.
___________________________________________________________________________

TABLE OF CONTENTS

<TABLE>
<S> <C> <C> <C>
Investment Policies 2 Additional Performance 15
Information

Additional Investment 5 Principal Shareholders of
Information the Funds 18

Special Risks of Below 7 Trustees and Officers 19
Investment Grade Bonds -
Advisor Equity Fund Investment Advisory and 22
Other Services
Investment Risks of 7
Concentration in Washington Brokerage Practices 27
Issuers
Redemption in Kind 28
Additional Tax Information 12
Financial Statements 28
Conversion of Class B Shares 14
Description of Preferred
Additional Information on 14 Stock Ratings 29
Calculation of Net Asset
Value Per Share
</TABLE>

<PAGE> 38
INVESTMENT POLICIES

SAFECO Advisor Equity Fund ("Advisor Equity Fund"), SAFECO Advisor Northwest
Fund ("Advisor Northwest Fund"), SAFECO Advisor Intermediate-Term Treasury Fund
("Advisor Intermediate Treasury Fund"), SAFECO Advisor U.S. Government Fund
("Advisor Government Fund"), SAFECO Advisor GNMA Fund ("Advisor GNMA Fund"),
SAFECO Advisor Municipal Bond Fund ("Advisor Municipal Fund"), SAFECO Advisor
Intermediate-Term Municipal Bond Fund ("Advisor Intermediate Municipal Fund")
and SAFECO Advisor Washington Municipal Bond Fund ("Advisor Washington
Municipal Fund") (collectively, the "Funds") are each a series of the SAFECO
Advisor Series Trust ("Trust"). The investment policies of each Fund are
described in the Prospectus and this Statement of Additional Information.
These policies state the investment practices that the Funds will follow, in
some cases limiting investments to a certain percentage of assets, as well as
those investment activities which are prohibited. The types of securities a
Fund may invest in are also disclosed in the Prospectus. Before a Fund
purchases a security which the following policies permit but which is not
currently described in the Prospectus, the Prospectus will be amended or
supplemented to describe the security. If a policy's percentage limitation is
adhered to immediately after and as a result of the investment, a later
increase or decrease in values, net assets or other circumstances will not be
considered in determining whether a Fund complies with the applicable
limitation.

FUNDAMENTAL INVESTMENT POLICIES

Each Fund's fundamental policies may not be changed without approval of a
majority of its outstanding voting securities as defined in the Investment
Company Act of 1940 ("1940 Act"). For purposes of such approval, the vote of a
majority of the outstanding voting securities of a Fund means the vote, at a
meeting of the shareholders of such Fund duly called, (i) of 67% or more of the
voting securities present at such meeting if the holders of more than 50% of
the outstanding voting securities are present or represented by proxy, or (ii)
of more than 50% of the outstanding voting securities, whichever is less.

1. BORROWING. No Fund may borrow money, except from banks or affiliates of
SAFECO Corporation at an interest rate not greater than that available to
the Fund from commercial banks for temporary or emergency purposes and in
amounts not in excess of twenty percent (20%) of its total assets (including
borrowings) less liabilities (other than borrowings) immediately after such
borrowing.

2. COMMODITIES. No Fund may purchase physical commodities or contracts thereon
unless acquired as a result of the ownership of securities or instruments,
but this restriction shall not prohibit a Fund from purchasing futures
contracts or options (including options on futures contracts, but excluding
options or futures contracts on physical commodities) or from investing in
securities of any kind.

3. DIVERSIFICATION. No Fund may, with respect to 75% of the value of its total
assets, purchase the securities of any issuer (other than U.S. Government
securities) if, as a result, (i) more than 5% of the value of the Fund's
total assets would be invested in the securities of that issuer or (ii) the
Fund would hold more than 10% of the outstanding voting securities of that
issuer.

4. INDUSTRY CONCENTRATION. No Fund may purchase any security if, as a result,
25% or more of its total assets (taken at current value) would be invested
in the securities of issuers having their principal business

2
<PAGE> 39
activities in the same industry. This limitation does not apply to U.S.
Government securities.

5. LENDING. No Fund may lend any security or make any other loan if, as
result, more than 33-1/3% of its total assets (taken at current value) would
be lent to other parties, except in accordance with its investment
objective, policies, and limitations (i) through the purchase of a portion
of an issue of debt securities or (ii) by engaging in repurchase agreements.

6. REAL ESTATE. No Fund may purchase or sell real estate (but this restriction
shall not prevent a Fund from investing in securities issued by companies or
entities such as real estate investment trusts that own or deal in real
estate or interests therein, securities or participation interests in pools
of real estate mortgage loans, and securities or instruments secured by real
estate or interests therein.

7. SENIOR SECURITIES. No Fund may issue senior securities, except as permitted
under the 1940 Act.

8. UNDERWRITING. No Fund may underwrite securities of other issuers, except to
the extent that a Fund, in disposing of portfolio securities, may be deemed
to be an underwriter within the meaning of the Securities Act of 1933 ("1933
Act").

In addition to the foregoing fundamental investment policies, which apply to
each Fund, the following fundamental investment policies apply to the Advisor
Municipal, Advisor Intermediate Municipal and Advisor Washington Municipal
Funds:

1. PROJECTS. No Fund may purchase a security if, as a result, 25% or more of
its total assets (taken at current value) would be invested in obligations,
the interest of which is payable from revenues on similar types of projects.
As a matter of operating policy, similar types of projects may include
sports, convention or trade show facilities, airports or mass
transportation, sewage or solid waste disposal facilities, and air or water
pollution control projects.

2. STATE CONCENTRATION. No Fund may purchase a security if, as a result, 25%
or more of its total assets (taken at current value) would be invested in
securities whose issuers are located in the same state. (This limitation
does not apply to the Advisor Washington Municipal Fund.)

NON-FUNDAMENTAL INVESTMENT POLICIES

In addition to the policies described in the Prospectus, each Fund has adopted
the following non-fundamental investment policies which may be changed by the
Trust's Board of Trustees without shareholder approval:

1. BORROWING. A Fund may not purchase securities if outstanding borrowings
equal or exceed 5% of its total assets.

2. LENDING. A Fund may not make any loans except for the purchase of debt
securities and engaging in repurchase agreements.

3. INVESTMENTS IN OTHER INVESTMENT COMPANIES. No Fund may purchase securities
of other investment companies, except to the extent permitted by the 1940
Act and in the open market at no more than customary brokerage commission
rates. This limitation does not apply to securities received or acquired as
dividends, through offers of exchange, or as a result of a reorganization,
consolidation, or merger.

3
<PAGE> 40
4. MARGIN TRANSACTIONS. No Fund may purchase securities on margin from
brokers or other lenders, except that a Fund may obtain such short-term
credits as are necessary for the clearance of securities transactions.
Margin payments in connection with transactions in futures contracts and
options on futures contracts shall not constitute the purchase of
securities on margin and shall not be deemed to violate the foregoing
limitation.

5. SHORT SALES. No Fund may sell securities short, unless it owns or has
the right to obtain without payment of additional consideration securities
equivalent in kind and amount to the securities sold. Transactions in
futures contracts and options shall not constitute selling securities
short.

6. OWNERSHIP OF FUND SECURITIES BY OFFICERS AND TRUSTEES. No Fund may
purchase or retain the securities of any issuer if, to the knowledge of
the Fund's management, those officers and trustees of the Trust and
officers and directors of SAFECO Asset Management Company ("SAM"), the
investment adviser for each Fund, who each own individually more than 1/2
of 1% of the outstanding securities of such issuer, together own more than
5% of such securities.

7. UNSEASONED ISSUERS. No Fund may purchase the securities of any issuer
(other than securities issued or guaranteed by domestic or foreign
governments or political subdivisions thereof) if, as a result, more than
5% of the Fund's total assets would be invested in the securities of
business enterprises that, including predecessors, have a record of less
than three years of continuous operation.

8. ILLIQUID SECURITIES. No Fund may purchase any security if, as a
result, more than 10% of its net assets would be invested in illiquid
securities. Illiquid securities include securities that cannot be sold
within seven days in the ordinary course of business for approximately the
amount at which the Fund has valued the securities, such as repurchase
agreements maturing in more than seven days.

9. FOREIGN SECURITIES. No Fund may invest more than 10% of the value of its
total assets in securities of foreign issuers, provided that this
limitation shall not apply to foreign securities denominated in U.S.
dollars.

10. OIL AND GAS PROGRAMS. No Fund may invest in participation or other direct
interests in oil, gas, or other mineral leases or exploration or
development programs, but each Fund may purchase securities of companies
that own interests in any of the foregoing.

11. REAL ESTATE. No Fund may purchase or sell interests in real estate
limited partnerships; and no Fund may purchase any security if, as a
result, more than 10% of its total assets would be invested in securities
of real estate investment trusts.

12. WARRANTS. No Fund may invest more than 5% of its net assets in warrants,
including warrants that are not listed on the New York or American Stock
Exchanges, or more than 2% of its net assets in unlisted warrants. For
purposes of this limitation, warrants are valued at the lower of cost or
market value and warrants acquired by a Fund in units or attached to
securities may be deemed to be without value.

13. COMMODITIES. No Fund currently intends to invest in commodities
(including future contracts or options thereon).

4
<PAGE> 41
14. OPTIONS. No Fund currently intends to purchase or write put or call
options or enter into straddles.

ADDITIONAL INVESTMENT INFORMATION

Each Fund may make the following investments, among others, although they may
not buy all of the types of securities that are described.

1. RESTRICTED SECURITIES AND RULE 144A SECURITIES. Restricted securities are
securities that may be sold only in a public offering with respect to which
a registration statement is in effect under the 1933 Act or, if they are
unregistered, in a privately negotiated transaction or pursuant to an
exemption from registration. In recognition of the increased size and
liquidity of the institutional markets for unregistered securities and the
importance of institutional investors in the formation of capital, the
Securities and Exchange Commission ("SEC") has adopted Rule 144A under the
1933 Act, which is designed to further facilitate efficient trading among
institutional investors by permitting the sale of Rule 144A securities to
qualified institutional buyers. To the extent privately placed securities
held by a Fund qualify under Rule 144A and an institutional market develops
for those securities, the Fund likely will be able to dispose of the
securities without registering them under the 1933 Act. SAM, acting under
guidelines established by the Trustees, may determine that certain
securities qualified for trading under Rule 144A are liquid.

Where registration is required, a Fund may be obligated to pay all or part
of the registration expenses, and a considerable period may elapse between
the decision to sell and the time the Fund may be permitted to sell a
security under an effective registration statement. If, during such a
period, adverse market conditions were to develop, the Fund might obtain a
less favorable price than prevailed when it decided to sell. To the extent
privately placed securities are illiquid, purchases thereof will be subject
to any limitations on investments in illiquid securities. Restricted
securities for which no market exists are priced at fair value as determined
in accordance with procedures approved and periodically reviewed by the
Trustees.

2. WARRANTS. A warrant is an option issued by a corporation that gives the
holder the right to buy a stated number of shares of common stock of the
corporation at a specified price within a designated time period. Warrants
may be purchased and sold separately or attached to stocks or bonds as part
of a unit offering. The term of a warrant may run from two to five years
and in some cases the term may be longer. The exercise price carried by the
warrant is usually well above the prevailing market price of the underlying
common stock at the time the warrant is issued. The holder of a warrant has
no voting rights and receives no dividends. Warrants are freely
transferable and may trade on the major national exchanges.

Warrants may be speculative. Generally, the value of a warrant will
fluctuate by greater percentages than the value of the underlying common
stock. The primary risk associated with a warrant is that the term of the
warrant may expire before the exercise price of the common stock has been
reached. Under these circumstances, a Fund could lose all of its principal
investment in the warrant.

A Fund will invest in a warrant only if the Fund has the authority to hold
the underlying common stock. Additionally, if a warrant is part of a unit
offering, a Fund will purchase the warrant only if it is attached to a
security in which the Fund has authority to invest. In all cases, a Fund

5
<PAGE> 42
will purchase warrants only after SAM determines that the exercise price for
the underlying common stock is likely to be achieved within the required
time-frame and for which an actively traded market exists. SAM will make
this determination by analyzing the issuer's financial health, quality of
management and any other factors deemed to be relevant.

3. FOREIGN SECURITIES. Each Fund may invest in U.S. dollar-denominated
securities issued by foreign issuers (including governments and
quasi-governments) and foreign branches of U.S. banks, including negotiable
certificates of deposit ("CDs") and commercial paper. These investments are
subject to each Fund's quality standards. While investments in foreign
securities are intended to reduce risk by providing further diversification,
such investments involve sovereign and other risks, in addition to the
credit and market risks normally associated with domestic securities. These
additional risks include the possibility of adverse political and economic
developments (including political instability) and the potentially adverse
effects of unavailability of public information regarding issuers, reduced
governmental supervision regarding financial markets, reduced liquidity of
certain financial markets, and the lack of uniform accounting, auditing, and
financial standards or the application of standards that are different or
less stringent than those applied in the U.S.

Each Fund also may invest in equity, debt, or other income-producing
securities of issuers in countries whose governments are considered stable
by SAM that are denominated in or indexed to foreign currencies, including
(1) common and preferred stocks, (2) CDs, commercial paper, fixed time
deposits, and bankers' acceptances issued by foreign banks, (3) obligations
of other corporations, and (4) obligations of foreign governments, or their
subdivisions, agencies, and instrumentalities, international agencies, and
supranational entities. Investing in these securities includes the special
risks associated with investing in non-U.S. issuers described in the
preceding paragraph and the additional risks of (1) nationalization,
expropriation, or confiscatory taxation and (2) adverse changes in
investment or exchange control regulations (which could prevent cash from
being brought back to the U.S.). Additionally, dividends and interest
payable on foreign securities may be subject to foreign taxes, including
taxes withheld from those payments, and there are generally higher
commission rates on foreign fund transactions.

Foreign securities often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility. Additional
costs associated with an investment in foreign securities may include higher
custodian fees than apply to domestic custodial arrangements, and
transaction costs of foreign currency conversions. Changes in foreign
exchange rates may also affect the value of the foreign securities
denominated.

In order to limit the risk inherent in investing in foreign
currency-denominated securities, a Fund may not purchase any such security
if after such purchase more than 10% of its total assets (taken at market
value) would be invested in such securities. Within such limitation,
however, no Fund is restricted in the amount it may invest in securities
denominated in any one foreign currency.

4. REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which a
Fund purchases securities from a bank or recognized securities dealer and
simultaneously commits to resell the securities to the bank or dealer at an
agreed-upon date and price reflecting a market rate of interest unrelated to
the coupon rate or maturity of the purchased securities. No

6
<PAGE> 43
Fund currently intends to invest more than 5% of its net assets in
repurchase agreement transactions. A Fund maintains custody of the
underlying securities prior to their repurchase; thus, the obligation of the
bank or dealer to pay the repurchase price on the date agreed to is, in
effect, secured by such securities. If the value of these securities is
less than the repurchase price, plus any agreed-upon additional amount, the
other party to the agreement must provide additional collateral so that at
all times the collateral is at least equal to the repurchase price, plus any
agreed-upon additional amount.

Repurchase agreements carry certain risks not associated with direct
investments in securities, including possible declines in the market value
of the underlying securities and delays and costs to a Fund if the other
party to a repurchase agreement becomes bankrupt. Each Fund intends to
enter into repurchase agreements only with banks and dealers in transactions
believed by SAM to present minimum credit risks in accordance with
guidelines established by the Trust's board of trustees. SAM will review
and monitor the creditworthiness of those institutions under the board's
general supervision.

SPECIAL RISKS OF BELOW INVESTMENT GRADE BONDS - ADVISOR EQUITY FUND

Below investment grade bonds (commonly referred to as high-yield or "junk"
bonds) have certain additional risks associated with them. Yields on below
investment grade bonds will fluctuate over time. These bonds tend to reflect
short-term economic and corporate developments to a greater extent than higher
quality bonds which primarily react to fluctuations in interest rates. During
an economic downturn or period of rising interest rates, issuers of below
investment grade bonds may experience financial difficulties which adversely
affect their ability to make principal and interest payments, meet projected
business goals and obtain additional financing. In addition, issuers often
rely on cash flow to service debt. Failure to realize projected cash flows may
seriously impair the issuer's ability to service its debt load which in turn
might cause a Fund to lose all or part of its investment in that security. SAM
will seek to minimize these additional risks through diversification, careful
assessment of the issuer's financial structure, business plan and management
team and monitoring of the issuer's progress toward its financial goals.

The liquidity and price of below investment grade bonds can be affected by a
number of factors, including investor perceptions and adverse publicity
regarding major issues, underwriters or dealers of lower-quality corporate
obligations. These effects can be particularly pronounced in a thinly-traded
market with few participants and may adversely impact the Fund's ability to
dispose of the bonds as well as make valuation of the bonds more difficult.
Because there tend to be fewer investors in below investment grade bonds, it
may be difficult for the Fund to sell these securities at an optimum time.
Consequently, these bonds may be subject to more price changes, fluctuations in
yield and risk to principal and income than higher-rated bonds of the same
maturity.

Credit ratings evaluate the likelihood that an issuer will make principal and
interest payments, but may not reflect market value risks associated with
lower-rated bonds. Credit rating agencies may not timely revise ratings to
reflect subsequent events affecting an issuer's ability to pay principal and
interest.

INVESTMENT RISKS OF CONCENTRATION IN WASHINGTON ISSUERS

WASHINGTON STATE

A discussion of certain economic, financial and legal matters regarding the
State of Washington follows. Since, during normal market conditions, the
Advisor

7
<PAGE> 44
Washington Municipal Fund plans to invest at least 80% of its net assets in
bonds issued by Washington and its political subdivisions, municipalities,
agencies, instrumentalities or public authorities, the investment risk of such
concentration should be carefully considered. The information in the
discussion is drawn primarily from official statements relating to securities
offerings of the State which are dated prior to the date of this Statement of
Additional Information. This information may be relevant in evaluating the
economic and financial position of the State, but is not intended to provide
all relevant data necessary for a complete evaluation of the State's economic
and financial position. Discussions regarding the financial health of the State
government may not be relevant to municipal obligations issued by a political
subdivision of the State. Furthermore, general economic conditions discussed
may or may not affect issuers of the obligations of the State. The Advisor
Washington Municipal Fund has not independently verified any of the information
presented in this section.

GENERAL INFORMATION

According to the U.S. Census Bureau's 1990 Census, Washington State's
population is ranked 18th of the 50 states. During the ten year time period
from 1980-1990, the State's population increased at an average annual rate of
1.8% while the U.S. population grew at an average annual rate of 1.1%.

The State's largest city, Seattle, is part of a strong international trade,
manufacturing, high technology and business service corridor which extends
along Puget Sound from Everett to Tacoma. The State's Pacific Coast-Puget
Sound region includes 75% of its population, the major portion of its
industrial activity and the major part of the forests important to its timber
and paper industries. The remainder of the State has rich agricultural areas
primarily devoted to grain, fruit orchard and dairy operations.

The State's economy has recently diversified with employment in the trade and
service sectors representing an increasing portion of total employment relative
to the manufacturing sector. Both employment and personal income growth
compare favorably with the national averages. The rate of economic growth
slowed as measured by employment in the State has slowed from 4.9% in 1990 to
1.2% in 1993.

The State operates on a July 1 to June 30 fiscal year and on a biennial budget
basis. Fiscal controls are exercised during the biennium through an allotment
process which requires each agency to submit a monthly expenditure plan. The
plan must be approved by the Office of Financial Management, which is the
Governor's budget agency. It provides the authority for agencies to spend funds
within statutory maximums specified in a legislatively adopted budget. State
law requires a balanced biennial budget. Whenever it appears that
disbursements will exceed the aggregate of estimated receipts plus beginning
cash surplus, the Governor is required to reduce allotments, thereby reducing
expenditures of appropriated funds.

As interpreted by the State Supreme Court, Washington's Constitution prohibits
the imposition of personal income taxes.

The State's tax revenues are primarily comprised of excise and ad valorem
taxes. By constitutional provision, the aggregate of all regular (unvoted) tax
levies on real and personal property by state and local taxing districts cannot
exceed one percent of the true and fair value. Excess levies are subject to
voter approval. For the fiscal year ending June 30, 1993, nearly 77.4% of the
State's tax revenues came from general and selective sales and gross receipts
taxes, of which the retail sales tax and its companion use tax represented 47%
of total collections. Business and occupation tax collections represented
about 15.1% and the motor vehicle fuel tax represented approximately 7.2% of
total State

8
<PAGE> 45
taxes for the year. Ad valorem taxes represented 10.5% of State revenues for
the year.

State law prohibits State tax revenue growth from exceeding the growth rate of
State personal income averaged over a three year period. State revenue
increases have remained substantially below the State revenue limit. In
addition, the State may not impose on local governments responsibility for new
programs or increased levels of service under existing programs without
providing the financing to pay for the added services. Expenditures of State
revenues are made in accordance with constitutional and statutory mandates.

STATE EXPENDITURE LIMITATION - INITIATIVE 601

Initiative 601, which was voted into law in November 1993, limits increases in
General Fund-State government expenditures to the average rate of population
and inflation growth. The new initiative will replace Initiative 62 effective
July 1, 1995, and sets forth a series of guidelines for limiting tax and
expenditure increases and stabilizing long range budget planning.

Provisions of Initiative 601 establish a procedure for computing a fiscal year
growth factor based on a lagged, three year average of population and inflation
growth. This growth factor is used to determine a state spending limit for
programs and expenditures supported by the state General Fund. The new
initiative creates two new reserve funds (the Emergency Reserve Fund and the
Education Construction Fund) for depositing revenues in excess of the spending
limit and abolishes the current Budget Stabilization Account. Like Initiative
62, restrictions are placed on the addition or transfer of functions to local
government unless there is reimbursement.

Most of Initiative 601, including the General Fund-State expenditure limit,
does not go into effect until July 1, 1995. Only two provisions of the
initiative are currently applicable: the requirement for legislative approval
of fee increases beyond the fiscal year growth factor, and a restriction on new
taxes being imposed without voter approval. At the beginning of Fiscal Year
1996, the requirement for voter approval for new tax measures expires. Taxes
can then be enacted with a two-thirds majority of both houses of the State
Legislature if resulting General Fund-State expenditures do not exceed the
spending limit.

The State Constitution and enabling statutes authorize the incurrence of State
general obligation debt to the payment of which the State's full faith and
credit and taxing power are pledged. With certain exceptions, the amount of
State general obligation debt which may be incurred is limited by
constitutional and statutory restrictions. These limitations are imposed by
prohibiting the issuance of new debt if the new debt would cause the maximum
annual debt service on all thereafter outstanding general obligation debt to
exceed a specified percentage of the arithmetic mean of general State revenues
for the preceding three years. These limitations apply to the incurrence of
new debt and are not limitations on the amount of debt service which may be
paid by the State in future years.

The State Legislature is obligated to appropriate money for State debt service
requirements. Generally, on or before June 30 of each year, the State Finance
Committee certifies to the State Treasurer the amount required for bond payment
of interest and principal for the coming year. Some general obligation bond
statutes provide that the general fund will be reimbursed from discrete
revenues which are not considered general State revenues. Other bonds are
limited obligation bonds not payable from the general fund.

The State began the 1992-1993 Biennium with a $468 million surplus and $260
million in the Budget Stabilization Account. The 1991-93 Biennium Budget was

9
<PAGE> 46
signed into law by the Governor on June 30, 1991 and reflected expected revenue
growth of 12.45%. However, weaker than expected revenue collections in the
first six months of 1991 prompted the State Economic and Revenue Forecast
Council to reduce projected revenue growth to a rate of 7.2%, resulting in a
forecast General Fund cash deficit for the 1991-93 biennium. In addition,
supplemental operating budget adjustments for state and federally mandated
funding of social and health service programs, prisons and correctional
facilities and K-12 education contributed to the projected shortfall.

In response to the forecast and to fulfill his statutory duty to maintain a
balanced budget, the Governor issued an Executive Order to implement a 2.5%
across the board reduction in general fund appropriations, effective December
1, 1991. In April 1992, a 1991-93 Biennium Supplemental Budget was adopted by
the State legislature and signed by the Governor. The Supplemental Budget added
spending reductions, selected tax increases and use of a portion of the Budget
Stabilization Account. As a result, the projected General Fund-State balance
ended the 1991-93 biennium with a $234 million balance and $100 million in the
Budget Stabilization Account.

For most municipalities in the State, the fiscal year is the calendar year
except that school districts have a September 1 - August 31 fiscal year. All
municipalities must maintain balanced budgets. Depending on the type of
municipality, local revenues are derived from ad valorem taxes, excise and
gross receipts taxes, special assessments, fees, user charges and State and
federal grants.

Municipalities incur debt by the issuance of general obligations or other
borrowings which are payable from taxes, though other revenue sources may be
used. Revenue obligations do not constitute debt under constitutional and
statutory limitations as long as taxes are not pledged or used to pay debt
service. Only nontax revenue from the operation of a project or enterprise
financed by the revenue obligations (and sometimes special assessments on
property benefitted from the financed improvements) may be used to pay that
debt service. Usually, revenue bonds are secured by a reserve funded in an
amount based on a factor of debt service. Many municipalities may issue
improvement district obligations payable only from special assessments on
benefitted property, but some of those obligations also may be secured by a
special guaranty fund.

ECONOMIC OVERVIEW

Over the past few years, the State's economic performance has remained
relatively strong compared to the U.S. as a whole. From 1989-1992, preliminary
figures show that, after adjusting for inflation, growth in per capita income
has outperformed the national economy each year. This recent growth is broadly
based, having taken place throughout various segments of the State's economy.

The State's economic base includes manufacturing and service industries as well
as agricultural and timber production. During 1987-1993, the State experienced
growth in both the manufacturing and non-manufacturing industries. Growth in
employment in the durable and non-durable goods manufacturing, services and
government sectors have exceeded comparable figures for the U.S.

Washington's economy consists of both export and local industries. Leading
export industries are aerospace, forest products, agriculture and food
processing. The aerospace, timber and food processing industries together
employ approximately 9% of the State's non-farm workers. However, the
non-manufacturing sector has played an increasingly significant role in
contributing to the State's economy in recent years.

10
<PAGE> 47
Below is a summary of key industry segments of the State's economy as well as
of selected economic and employment data.

Manufacturing. The State's manufacturing base consists primarily of aircraft
manufacturing. The Boeing Company, a major aerospace firm, is the largest
commercial employer in the State and has a significant impact on the State in
terms of production, employment and labor earnings. Financial performance of
Boeing has been strong in recent years as measured by increased sales, airplane
deliveries and backlogs of orders. In January 1993, Boeing announced
production cuts and is expected to substantially trim jobs over the next
several years. Such cuts may have an adverse effect on the Washington economy.
Exclusive of aerospace, manufacturing jobs have shown steady growth.

Technology-Related Industries. The State ranks fourth among 12 leading states
in the percentage of its work force employed by technology-related industries.
It ranks third among the largest software development centers. The State is
the home of approximately 1000 advanced technology firms of which approximately
50% are computer related. Microsoft, headquartered in Redmond, Washington, is
the largest microcomputer software company in the world. In addition, several
biotechnical firms located in the State have attained international acclaim for
their research and development.

Timber. Natural forests cover more than 40% of the State's land area and forest
products rank second behind aerospace in terms of total production. The
primary employer in the timber industry is The Weyerhaeuser Company.
Productivity in the State's forest products industry has been increasing
steadily in recent years. However, in 1991 productivity declined primarily
because of the recession. Overall production in the timber industry is expected
to decline over the next few years due to federally imposed limitations on the
harvest of old-growth timber and because it may be difficult to maintain the
recent record levels of production increases. Some unemployment is anticipated
in certain regions, but the impact is not expected to materially affect the
State's overall economic performance.

Agriculture and Food Processing. Agriculture and food processing is the State's
most important industry by most measures. Growth in agricultural products was
an integral factor in the State's economic growth in the late 1980s and early
1990s.

Finance, Insurance and Real Estate. Employment in finance, insurance and real
estate is estimated to represent 5.4% of the State's wage and salary employment
in 1993. Since 1987, annual growth in employment in this sector has averaged
2.3% compared to 1.3% for the U.S.

Trade. International trade plays an important role in the State's employment
base and one in six jobs are related to this area. During the past 20 years
the State has consistently ranked number one or number two in international
exports per capita. Seattle-Tacoma International Airport is the focus of the
region's air traffic and trade. The State, particularly the Puget Sound
Corridor, is a trade center for the Northwest and the State of Alaska. A
system of public ports, the largest of which are the Ports of Seattle and
Tacoma, handle waterborne trade primarily to and from the Far East. These two
Ports each rank among the top 20 ports in the world based on volume of
containerized cargo shipped. Approximately 70% of the cargo entering the
Ports of Seattle and Tacoma has an ultimate destination outside the Pacific
Northwest. Therefore, trade levels depend largely on national and world rather
than local economic conditions.

Trade employment experienced the third highest growth in the State between 1981
and 1991. Growth in retail sales in the State between 1985 and 1990 was 33.5%
compared to that of 24.4% in the U.S.

11
<PAGE> 48
Services/Tourism. The highest employment growth between 1981 and 1991 took
place in the services sector although rate of growth has shown small but
consistent decline since 1990 from 7% to 3.5% forecast for 1994. Seattle is
the location for the Washington State Convention and Trade Center which opened
in June 1988. The State also has many tourist attractions such as the Olympic
and Cascade mountain ranges, ocean beaches and local wineries.

Construction. Employment in the construction sector in the Puget Sound area
increased 69.2% between 1981 and 1991. The increase in employment in the late
1980s was due in part to the affordability of housing compared to other areas
of the country. Construction employment growth flattened between 1991 through
1993, but is estimated to show a modest increase in 1994. Commercial building
while not increasing at the pace of the 1980s remains healthy.

Federal, State and Local Government. Employment in the government sector
represents approximately 18% of all wage and salary employment in the State on
a combined basis. Seattle is the regional headquarters for a number of federal
government agencies and the State receives an above average share of defense
expenditures. Employment in the government sector has expanded in the State
since 1987 at a more rapid rate than in the U.S. as a whole. State and local
government employment has increased at a faster pace than employment by the
federal government.

LITIGATION

At any given time, including the present, there are numerous lawsuits pending
against the State of Washington which could affect the State's revenues and
expenditures. However, none of the lawsuits, are expected to have a material
adverse impact on either State revenues or expenditures.

ADDITIONAL TAX INFORMATION

GENERAL

Each Fund is treated as a separate corporation for federal income tax purposes.
In order to qualify for treatment as a regulated investment company under the
Internal Revenue Code of 1986, as amended ("Code"), a Fund must distribute to
its shareholders for each taxable year at least 90% of its investment company
taxable income (consisting generally of taxable net investment income and net
short-term capital gain) plus, in the case of a Municipal Bond Fund, its net
interest income excludable from gross income under section 103(a) of the Code
and must meet several additional requirements.

If shares of a Fund are sold at a loss after being held for six months or less,
the loss will be treated as long-term, instead of short-term, capital loss to
the extent of any capital gain distributions received on those shares.
Investors also should be aware that if shares are purchased shortly before the
record date for any distribution (other than an "exempt-interest dividend," see
below), the shareholder will pay full price for the shares and receive some
portion of the purchase price back as a taxable dividend or capital gain
distribution.

Each Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.

Each Fund is required to withhold 31% of all taxable dividends, capital gain
distributions and redemption proceeds payable to individuals and certain other
noncorporate shareholders who do not furnish the Fund with a correct taxpayer
identification number. Withholding at that rate also is required from
dividends

12
<PAGE> 49
and those distributions for shareholders who otherwise are subject to backup
withholding.

MUNICIPAL BOND FUNDS

Dividends paid by a Municipal Bond Fund will qualify as exempt-interest
dividends as defined in the Prospectus, and thus will be excludable from gross
income by its shareholders, if the Fund satisfies the requirement that, at the
close of each quarter of its taxable year, at least 50% of the value of its
total assets consists of securities the interest on which is excludable from
gross income under section 103(a); each Municipal Bond Fund intends to satisfy
this requirement. The aggregate dividends excludable from shareholders' gross
income of such a Fund may not exceed the Fund's net tax-exempt income. The
shareholders' treatment of dividends from these Funds under local and state
income tax laws may differ from the treatment thereof under the Code.

Interest on indebtedness incurred or continued to purchase or carry shares of a
Municipal Bond Fund will not be deductible for federal income tax purposes to
the extent that Fund's distributions consist of exempt-interest dividends.
Each Municipal Bond Fund will not invest in private activity bonds the interest
on which is treated as a tax preference item for investors in determining their
liability for the alternative minimum tax.

Each Municipal Bond Fund may invest in municipal bonds that are purchased,
generally not on their original issue, with market discount (that is, at a
price less than the principal amount of the bond or, in the case of a bond that
was issued with original issue discount, at a price less than the amount of the
issue price plus accrued original issue discount) ("municipal market discount
bonds"). Gain on the disposition of a municipal market discount bond (other
than a bond with a fixed maturity date within one year from its issuance),
generally is treated as ordinary (taxable) income, rather than capital gain, to
the extent of the bond's accrued market discount at the time of disposition.
Market discount on such a bond generally is accrued ratably, on a daily basis,
over the period from the acquisition date to the date of maturity. In lieu of
treating the disposition gain as above, a Municipal Bond Fund may elect to
include market discount in its gross income currently, for each taxable year to
which it is attributable.

Proposals may be introduced before Congress for the purpose of restricting or
eliminating the federal income tax exemption for interest on municipal bonds.
If such a proposal were enacted, the availability of municipal bonds for
investment by each Municipal Bond Fund and the value of their portfolios would
be affected. In such event, each Municipal Bond Fund would reevaluate its
investment objective and policies.

If shares of a Municipal Bond Fund are sold at a loss after being held for six
months or less, the loss will be disallowed to the extent of any
exempt-interest dividends received on those shares.

Exempt-interest dividends received by a corporate shareholder also may be
indirectly subject to income tax without regard to whether a Municipal Bond
Fund's tax-exempt interest was attributable to those bonds.

Up to 85% of social security and railroad retirement benefits may be included
in taxable income for recipients whose adjusted gross income (including income
from tax-exempt sources such as a Municipal Bond Fund) plus 50% of their
benefits exceeds certain base amounts. Exempt-interest dividends still are
tax-exempt to

13
<PAGE> 50
the extent described in the Prospectus; they are only included in the
calculation of whether a recipient's income exceeds the established amounts.

If a Municipal Bond Fund invests in any instruments that generate taxable
income, under the circumstances described in the Prospectus, distributions of
the interest earned thereon will be taxable to the Fund's shareholders as
ordinary income to the extent of the Fund's earnings and profits. Moreover, if
a Municipal Bond Fund realizes capital gain as a result of market transactions,
any distribution of that gain will be taxable to its shareholders. There also
may be collateral federal income tax consequences regarding the receipt of
exempt-interest dividends by shareholders such as S corporations, financial
institutions and property and casualty insurance companies. A shareholder
falling into any such category should consult its tax adviser concerning its
investment in shares of a Municipal Bond Fund.

CONVERSION OF CLASS B SHARES

Class B shares of each Fund will automatically convert to Class A shares, based
on the relative net asset values of each of the Classes, as of the close of
business on the first business day of the month in which the eighth anniversary
of the shareholder's purchase of such Class B shares of the Fund occurs. For
the purpose of calculating the holding period required for conversion of Class
B shares, the date of initial purchase shall mean (1) the date on which such
Class B shares were purchased, or (2) for Class B shares obtained through an
exchange, or a series of exchanges, the date on which the original Class B
shares were purchased. For purposes of conversion to Class A, Class B shares
purchased through the reinvestment of dividends and other distributions paid in
respect of Class B shares will be held in a separate sub-account. Each time
any Class B shares in the shareholder's regular account (other than those in
the sub-account) convert to Class A, a pro rata portion of the Class B shares
in the sub-account will also convert to Class A. The portion will be
determined by the ratio that the shareholder's Class B shares converting to
Class A bears to the shareholder's total Class B shares not acquired through
dividends and other distributions.

The availability of the conversion feature is subject to the continuing
applicability of a ruling of the Internal Revenue Service that (1) the
dividends and other distributions paid on Class A and Class B shares will not
result in "preferential dividends" under the Code and (2) the conversion of
shares does not constitute a taxable event. If the conversion feature ceased
to be available, the Class B shares of each Fund would not be converted and
would continue to be subject to the higher ongoing expenses of the Class B
shares beyond eight years from the date of purchase. SAM has no reason to
believe that these conditions for the availability of the conversion feature
will not continue to be met.

ADDITIONAL INFORMATION ON CALCULATION OF NET ASSET VALUE PER SHARE

Each Fund determines its net asset value per share ("NAV") by subtracting the
Fund's liabilities (including accrued expenses and dividends payable) from its
total assets (the market value of the securities the Fund holds plus cash and
other assets, including interest accrued but not yet received) and dividing the
result by the total number of shares outstanding. The NAV of each Fund is
calculated as of the close of regular trading on the New York Stock Exchange
("Exchange") every day the Exchange is open for trading. The Exchange is
closed on the following days: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.

Each Fund has selected a pricing service to assist in computing the value of
its securities. There are a number of pricing services available and the
decision as to whether, or how, a pricing service should be used by a Fund will
be subject to review by the Trust's Board of Trustees.

14
<PAGE> 51
Short-term debt securities held by each Fund having a remaining maturity of
less than 60 days when purchased, and securities originally purchased with
maturities in excess of 60 days but which currently have maturities of 60 days
or less, may be valued at cost adjusted for amortization of premiums or accrual
of discounts, or under such other methods as the Board of Trustees may from
time to time deem to be appropriate. The cost of those securities that had
original maturities in excess of 60 days shall be determined by their fair
market value as of the 61st day prior to maturity. All other securities and
assets in the portfolios will be appraised in accordance with those procedures
established by the Board of Trustees in good faith in computing the fair market
value of those assets.

ADDITIONAL PERFORMANCE INFORMATION

The yield and total return calculations set forth below are for the dates
indicated and are not a prediction of future results.

The yields for the 30-day period ended December 31, 1994, for the Funds were as
follows:

<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Advisor Intermediate-Term
Treasury Fund 4.88% 4.37% 4.37%
Advisor U.S. Government Fund 4.76% 4.25% 4.25%
Advisor GNMA Fund 5.95% 5.49% 5.49%
Advisor Municipal Bond Fund 3.98% 3.43% 3.43%
Advisor Intermediate-Term
Municipal Bond Fund 3.28% 2.70% 2.70%
Advisor Washington Municipal
Bond Fund 3.94% 3.42% 3.46%
</TABLE>

"Yield" is computed using the following formula:

Yield = 2[(a-b +1) 6-1]
---------------
cd
Where: a = dividends and interest earned during the period

b = expenses accrued for the period (net of
reimbursements)

c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends

d = the maximum offering price per share on the last day
of the period

15
<PAGE> 52
The tax equivalent yields for the 30 day period ended December 31, 1994, at the
maximum federal tax rate of 39.6% for the Funds were as follows:

<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Advisor Municipal Bond Fund 6.59% 5.68% 5.68%
Advisor Intermediate-Term
Municipal Bond Fund 5.43% 4.47% 4.47%
Advisor Washington Municipal
Bond Fund 6.52% 5.66% 5.73%
</TABLE>

"Tax-equivalent yield" is computed using the following formula:

Tax-equivalent yield = [ eg ] + [e(1-g)]
-------------------
(1-f)

Where: e = "yield" as calculated above

f = tax rate

g = percentage of "yield" which is tax-free

TOTAL RETURN

The total returns, expressed as a percentage, for the period from September 30,
1994 (commencement of operations) to December 31, 1994, for the Funds were as
follows:

<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Advisor Equity Fund -2.10% -2.29% -2.29%
Advisor Northwest Fund -2.50% -2.70% -2.70%
Advisor Intermediate-Term
Treasury Fund 0.41% 0.22% 0.22%
Advisor U.S. Government Fund 0.99% 0.79% 0.79%
Advisor GNMA Fund -0.72% -0.90% -0.90%
Advisor Municipal Bond Fund -0.16% -.35% -.35%
Advisor Intermediate-Term
Municipal Bond Fund -1.29% -1.48% -1.48%
Advisor Washington Municipal -0.93% -1.12% -1.12%
Bond Fund
</TABLE>

16
<PAGE> 53
The total returns, expressed in dollars and assuming a $10,000 initial
investment, for the period from September 30, 1994 (commencement of operations)
to December 31, 1994, for the Funds were as follows:

<TABLE>
<CAPTION>
Class A Class B Class C
------- ------- -------
<S> <C> <C> <C>
Advisor Equity Fund $ 9,790 $ 9,771 $ 9,771

Advisor Northwest Fund $ 9,750 $ 9,730 $ 9,730

Advisor Intermediate-Term
Treasury Fund $10,041 $10,022 $10,022

Advisor U.S. Government Fund $10,099 $10,079 $10,079

Advisor GNMA Fund $ 9,928 $ 9,910 $ 9,910

Advisor Municipal Bond Fund $ 9,984 $ 9,965 $ 9,965

Advisor Intermediate-Term
Municipal Bond Fund $ 9,871 $ 9,852 $ 9,852

Advisor Washington Municipal
Bond Fund $ 9,907 $ 9,888 $ 9,888
</TABLE>

The total return is computed using the following formula:

T = ERV-P x 100
-----
P
In making the above calculations, all dividends and other distributions are
assumed to be reinvested at a Fund's NAV on the reinvestment date.

In addition to performance figures, the Funds may advertise their rankings as
calculated by independent rating services which monitor mutual funds'
performance (e.g. CDA Investment Technologies, Lipper Analytical Services,
Inc., Morningstar, Inc. and Wiesenberger Investment Companies Service). These
rankings may be among mutual funds with similar objectives and/or size or with
mutual funds in general. In addition, the Funds may advertise rankings which
are in part based upon subjective criteria developed by independent rating
services to measure relative performance. Such criteria may include methods to
account for levels of risk and potential tax liability, sales commissions and
expense and turnover ratios. These rating services may also base the measure
of relative performance on time periods deemed by them to be representative of
up and down markets.

17
<PAGE> 54
The Funds may occasionally reproduce articles or portions of articles about the
Funds written by independent third parties such as financial writers, financial
planners and financial analysts, which have appeared in financial publications
of general circulation or financial newsletters (including but not limited to
Barrons, Business Week, Forbes, Fortune, Investor's Daily, Kiplinger's, Money
Magazine, Newsweek, Pensions & Investments, Time Magazine, U.S. News and World
Report and The Wall Street Journal).

Each Fund may also present in its advertisements and sales literature (i) a
biography or the credentials of its portfolio manager (including but not
limited to educational degrees, professional designations, work experience,
work responsibilities and outside interests), (ii) descriptions, including
quotations attributable to the portfolio manager, of the investment style used
to manage a Fund's portfolio, the research methodologies underlying securities
selection and a Fund's investment objective, (iii) current facts (including but
not limited to number of employees, number of shareholders, business
characteristics) about the Fund's investment adviser (SAM), the investment
adviser's parent company (SAFECO Corporation), or the SAFECO Family of Funds
and (iv) information about particular securities held in a Fund's portfolio.

PRINCIPAL SHAREHOLDERS OF THE FUNDS

At February 28, 1995, SAFECO Corporation owned 500,000 shares each of the
Advisor Equity Fund, Advisor Northwest Fund, Advisor Intermediate Treasury
Fund, Advisor Government Fund and the Advisor GNMA Fund, which represented 97%,
99%, 98%, 100% and 99%, respectively, of each Fund's outstanding shares.
SAFECO Corporation is a holding company whose primary subsidiaries are engaged
in the insurance and related financial services businesses. SAFECO Corporation
is a Washington corporation with its principal place of business at SAFECO
Plaza, Seattle, Washington 98185.

At February 28, 1995, SAM owned 500,000 shares each of the Advisor Municipal
Fund, Advisor Intermediate Municipal Fund and Advisor Washington Municipal
Fund, which represented 100%, 100% and 97%, respectively, of each Fund's
outstanding shares. SAM is the investment advisor of each Fund and a
wholly-owned subsidiary of SAFECO Corporation.

18
<PAGE> 55
TRUSTEES AND OFFICERS

<TABLE>
<CAPTION>
Position Held with Principal Occupation
Name, Address and Age the Trust During Past 5 Years
--------------------- ----------------- --------------------
<S> <C> <C>
Boh A. Dickey* Chairman Executive Vice President, Chief Financial
SAFECO Plaza and Trustee Officer and Director of SAFECO
Seattle, Washington 98185 Corporation. He has been an executive officer
(51) of SAFECO Corporation and its subsidiaries
since 1982. See table under "Investment
Advisory and Other Services."

Barbara J. Dingfield Trustee Manager, Corporate Contributions and
Microsoft Corporation Community Programs for Microsoft
One Microsoft Way Corporation, Redmond, Washington, a
Redmond, Washington 98052 computer software company; Director and
(50) former Executive Vice President of Wright
Runstad & Co., Seattle, Washington, a real
estate development company; Director of
First SAFECO National Life Insurance Company
of New York;

Richard W. Hubbard* Trustee Retired Vice President and Treasurer of
1270 NW Blakely Ct. the Trust and other SAFECO Trusts; retired
Seattle, Washington 98177 Senior Vice President and Treasurer of
(66) SAFECO Corporation; former President of
SAFECO Asset Management Company.

Richard E. Lundgren Trustee Director of Marketing and Customer
764 S. 293rd Street Relations, Building Materials
Federal Way, Washington 98032 Distribution, Weyerhaeuser Company,
(58) Tacoma, Washington; Director of First
SAFECO National Life Insurance Company of
New York.
</TABLE>

19
<PAGE> 56
TRUSTEES AND OFFICERS

<TABLE>
<CAPTION>
Position Held with Principal Occupation
Name, Address and Age the Trust During Past 5 Years
--------------------- ----------------- --------------------
<S> <C> <C>
L. D. McClean* Trustee Retired Assistant Secretary of SAFECO
7231 91st Avenue SE Corporation and its property and casualty
Mercer Island, WA 98040 and life insurance affiliates; Director of
(68) First SAFECO National Life Insurance
Company of New York; former President of
the SAFECO Mutual Funds; former Director
of SAFECO Asset Management Company, SAFECO
Securities, Inc. and SAFECO Services
Corporation.

Larry L. Pinnt Trustee Retired Vice President and Chief Financial
1600 Bell Plaza Officer of US WEST Communications,
Room 1802 Seattle, Washington; Director of Key Bank
Seattle, Washington of Washington; Director of PREMERA;
98191 Director of Blue Cross of Washington and
(61) Alaska; Director of First SAFECO National
Life Insurance Company of New York.

John W. Schneider Trustee President of Merit Hotel Associates, Inc.,
1808 N 41st St. Seattle, Washington; former President of
Seattle, Washington 98103 Coast Hotels, Inc.; Director of First
(54) SAFECO National Life Insurance Company of
New York.

David F. Hill President President of SAFECO Securities, Inc. and
SAFECO Plaza SAFECO Services Corporation; Senior Vice
Seattle, Washington 98185 President of SAFECO Asset Management
(47) Company. See table under "Investment
Advisory and Other Services."
</TABLE>

20
<PAGE> 57
TRUSTEES AND OFFICERS

<TABLE>
<CAPTION>
Position Held with Principal Occupation
Name, Address and Age the Trust During Past 5 Years
--------------------- ----------------- --------------------
<S> <C> <C>
Neal A. Fuller Vice President Vice President, Controller, Assistant
SAFECO Plaza Controller, Assistant Secretary and Treasurer of SAFECO
Seattle, Washington 98185 Secretary Securities, Inc. and SAFECO Services
(33) Corporation; Vice President, Controller,
Secretary and Treasurer of SAFECO Asset
Management Company; former Chief Assistant
Treasurer for the State of Idaho. See
Table under "Investment Advisory and Other
Services."

Ronald L. Spaulding Vice President Vice Chairman of SAFECO Asset Management
SAFECO Plaza Treasurer Company; Vice President and Treasurer of
Seattle, WA 98185 SAFECO Corporation; Director and Vice
(51) President of SAFECO Life Insurance
Company; former Senior Portfolio Manager
of SAFECO insurance companies' taxable
bond portfolios; former Portfolio Manager
for several SAFECO mutual funds.
See Table under "Investment Advisory and
Other Services."
</TABLE>

* Trustees who are interested persons as defined by the 1940 Act.

For the fiscal period ended December 31, 1994, the Trustees of the Trust not
employed by SAFECO Corporation or its affiliates, as a group, received $1,780
per Fund for their services as Trustees. The officers received no compensation
for their services as officers or, if applicable, as Trustees.

At February 28, 1995, the Trustees and officers of the Trust as a group owned
less than 1% of the outstanding shares of each Fund.

21
<PAGE> 58
COMPENSATION TABLE

<TABLE>
<CAPTION>
Pension or
Retirement Total Compensation
Aggregate Benefits Accrued Estimated Annual From Registrant and
Compensation from As Part of Fund Benefits Upon Fund Complex Paid
Trustee Registrant Expenses Retirement to Trustees
------- ---------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Barbara J. Dingfield $1,800 N/A N/A $16,200

Richard E. Lundgren $1,800 N/A N/A $16,200

L.D. McClean $1,700 N/A N/A $14,900

Larry L. Pinnt $1,800 N/A N/A $16,200

John W. Schneider $1,800 N/A N/A $16,200

Boh A. Dickey $0 N/A N/A $0

Richard W. Hubbard $0 N/A N/A $0
</TABLE>

Currently, there is no pension, retirement, or other plan or any arrangement
pursuant to which Trustees or officers of the Trust are compensated by the
Trust. Each Trustee also serves as Trustee for six other registered open-end,
management investment companies that have, in the aggregate, twenty series
companies managed by SAM.

INVESTMENT ADVISORY AND OTHER SERVICES

ADVISORY SERVICES

SAM, SAFECO Securities, Inc. ("SAFECO Securities") and SAFECO Services
Corporation ("SAFECO Services") are wholly-owned subsidiaries of SAFECO
Corporation. SAFECO Securities is the principal underwriter of each Fund and
SAFECO Services is the transfer, dividend and distribution disbursement and
shareholder servicing agent of each Fund under agreements with the Trust.

22
<PAGE> 59
The following individuals have the following positions and offices with the
Trust, SAM, SAFECO Securities and SAFECO Services:

<TABLE>
<CAPTION>
SAFECO SAFECO
Name Trust SAM Securities Services
---- ----- --- ---------- --------
<S> <C> <C> <C> <C>
B. A. Dickey Chairman Director Director
Trustee

D. F. Hill President Senior Vice President President
President, Director Director
Director

N. A. Fuller Vice President Vice President Vice President Vice President
Controller Controller Controller Controller
Assistant Secretary Assistant Secretary Assistant Secretary
Secretary Treasurer Treasurer Treasurer

R.A. Spaulding Vice President Vice President Director
Treasurer

S.C. Bauer President

</TABLE>

Mr. Dickey is Executive Vice President, Chief Financial Officer and a director
of SAFECO Corporation and Mr. Spaulding is Assistant Treasurer of SAFECO
Corporation. Mssrs. Dickey and Spaulding are also directors of other SAFECO
Corporation subsidiaries.

In connection with its investment advisory contract with the Trust, SAM
provides, without cost, office space, equipment and facilities and personnel
necessary to perform executive, administrative, and clerical functions and pays
all salaries, expenses and fees of the officers, trustees and employees of the
Trust who are officers, directors and employees of SAM.

The Trust's Trust Instrument provides that the Trust will indemnify its
Trustees and its officers against liabilities and expenses reasonably incurred
in connection with litigation in which they may be involved because of their
offices with the Trust, unless it is adjudicated that they engaged in bad
faith, wilful misfeasance, gross negligence, or reckless disregard of the
duties involved in the conduct of their offices. In the case of settlement,
such indemnification will not be provided unless it has been determined -- by a
court or other body approving the settlement or other disposition, or by a
majority of disinterested Trustees, based upon a review of readily available
facts, or in a written opinion of independent counsel -- that such officers or
Trustees have not engaged in wilful misfeasance, bad faith, gross negligence,
or reckless disregard of their duties.

23
<PAGE> 60
SAM also serves as the investment adviser for other investment companies in
addition to the Funds. Several of these investment companies have investment
objectives similar to those of certain Funds. It is therefore possible that
the same securities will be purchased for both a Fund and another investment
company advised by SAM. When two or more funds advised by SAM are
simultaneously engaged in the purchase or sale of the same security, the prices
and amounts will be allocated in accordance with a formula considered by the
officers of the funds involved to be equitable to each fund. In some cases
this system could have a detrimental effect on the price or value of the
security as far as a Fund is concerned. In other cases, however, the ability
of a Fund to participate in volume transactions will produce better executions
and prices for the Fund.

For the services and facilities furnished by SAM, each Fund has agreed to pay
an annual fee computed on the basis of the average market value of the net
assets of each Fund ascertained each business day and paid monthly in
accordance with the following schedules. The reduction in fees occurs only at
such time as the respective Fund's net assets reach the dollar amounts of the
break points and applies only to those assets which fall within the specified
range:

ADVISOR EQUITY AND ADVISOR NORTHWEST FUNDS
<TABLE>
<CAPTION>
NET ASSETS ANNUAL FEE
<S> <C>
For assets up to and including $500,000,000 .75 of 1%

For assets in excess of $500,000,000 and .65 of 1%
up to and including $1,000,000,000

For assets over $1,000,000,000 .55 of 1%
</TABLE>

ADVISOR INTERMEDIATE TREASURY, ADVISOR GOVERNMENT, ADVISOR GNMA,
ADVISOR MUNICIPAL, ADVISOR INTERMEDIATE MUNICIPAL AND
ADVISOR WASHINGTON MUNICIPAL FUNDS
<TABLE>
<CAPTION>
NET ASSETS ANNUAL FEE
<S> <C>
For assets up to and including $500,000,000 .60 of 1%

For assets in excess of $500,000,000 and .50 of 1%
up to and including $1,000,000,000

For assets over $1,000,000,000 .40 of 1%
</TABLE>

SAM shall reimburse each Fund for the amount by which a Fund's expenses in any
full fiscal year (excluding interest expense, taxes, brokerage expense,
distribution fees, certain expenses attributable to investing outside the
United States and extraordinary expenses) exceed the limits prescribed by any

24
<PAGE> 61
state in which a Fund's shares are qualified for sale. Presently, the most
restrictive expense ratio limitation imposed by any such state is 2.5% of the
first $30 million of a Fund's average daily net assets, 2.0% of the next $70
million of such assets, and 1.5% of the remaining net assets. For the purpose
of determining whether a Fund is entitled to reimbursement, the expenses of the
Fund are calculated on a monthly basis. If a Fund is entitled to a
reimbursement, that month's advisory fee will be reduced or postponed, with any
adjustment made after the end of the fiscal year.

The following table states the total amount of compensation in the form of
advisory fees paid to SAM for the fiscal period ended December 31, 1994:

<TABLE>
<CAPTION>
Fees Paid to SAM
(000s omitted)
Fiscal Period Ended
Fund December 31, 1994
- ---- -----------------
<S> <C>
Advisor Equity Fund $9

Advisor Northwest Fund $9

Advisor Intermediate-Term
Treasury Fund $7

Advisor U.S. Government Fund $7

Advisor GNMA Fund $7

Advisor Municipal Bond Fund $5

Advisor Intermediate-Term
Municipal Bond Fund $5

Advisor Washington Municipal
Bond Fund $6
</TABLE>

DISTRIBUTION ARRANGEMENTS. SAFECO Securities is the principal underwriter for
each Fund and acts as the distributor of the Class A, Class B and Class C
shares of each Fund under a Distribution Services Agreement with the Trust
dated September 20, 1994 that requires SAFECO Securities to use its best
efforts, consistent with its other businesses, to sell shares of the Funds.
Shares of the Funds are offered continuously.

Under separate plans of distribution pertaining to the Class A, Class B and
Class C shares of each Fund adopted by the Trust in the manner prescribed under
Rule 12b-1 under the 1940 Act (each a "Plan"), each Class pays fees described
in the Prospectus.

25
<PAGE> 62
For the fiscal period ended December 31, 1994, (from the initial public
offering date of September 30, 1994) the Funds paid (or accrued) the following
fees to SAFECO Securities under the Plans (in thousands):

<TABLE>
<CAPTION>
SAFECO SAFECO
SAFECO SAFECO Advisor Advisor
Advisor Advisor Intermediate- U.S.
Equity Northwest Term Treasury Government
Fund Fund Fund Fund
-------- --------- -------------- ----------
<S> <C> <C> <C> <C>
Class A Service Fees 1 1 1 1
Class B Service Fees 1 1 1 1
Class B Distribution Fees 3 3 3 3
Class C Service Fees 1 1 1 1
Class C Distribution Fees 3 3 3 3
-------- --------- -------------- ----------
9 9 9 9
======== ========= ============== ==========
</TABLE>

<TABLE>
<CAPTION>
SAFECO SAFECO
SAFECO SAFECO Advisor Advisor
Advisor Advisor Intermediate- Washington
GNMA Municipal Term Municipal Municipal
Fund Bond Fund Bond Fund Bond Fund
-------- --------- -------------- ----------
<S> <C> <C> <C> <C>
Class A Service Fees 1 1 1 1
Class B Service Fees 1 1 1 1
Class B Distribution Fees 3 3 3 3
Class C Service Fees 1 1 1 1
Class C Distribution Fees 3 3 3 3
-------- --------- -------------- ----------
9 9 9 9
======== ========= ============== ==========
</TABLE>

SAFECO Securities estimates that it and its affiliate, SAM, incurred
the following shareholder service-related and distribution-related expenses
with respect to the Funds during the fiscal period ended December 31, 1994
(from initial public offering on September 30, 1994) (in thousands):

CLASS A
<TABLE>
<CAPTION>
SAFECO SAFECO
SAFECO SAFECO Advisor Advisor
Advisor Advisor Intermediate- U.S.
Equity Northwest Term Treasury Government
Fund Fund Fund Fund
-------- --------- -------------- ----------
<S> <C> <C> <C> <C>
Marketing and Advertising 4 4 4 4
Printing and Mailing of Prospectuses 2 2 2 2
Compensation to dealers:
Trail (Service Fees) 1 1 1 1
B and C Share Commissions
(Distribution Fees) -- -- -- --
-------- --------- -------------- ----------
7 7 7 7
======== ========= ============== ==========
</TABLE>

<TABLE>
<CAPTION>
SAFECO SAFECO
SAFECO SAFECO Advisor Advisor
Advisor Advisor Intermediate- Washington
GNMA Municipal Term Municipal Municipal
Fund Bond Fund Bond Fund Bond Fund
-------- --------- -------------- ----------
<S> <C> <C> <C> <C>
Marketing and Advertising 4 4 4 4
Printing and Mailing of Prospectuses 2 2 2 2
Compensation to dealers:
Trail (Service Fees) 1 1 1 1
B and C Share Commissions
(Distribution Fees) -- -- -- --
-------- --------- -------------- ----------
7 7 7 7
======== ========= ============== ==========
</TABLE>

CLASS B
<TABLE>
<CAPTION>
SAFECO SAFECO
SAFECO SAFECO Advisor Advisor
Advisor Advisor Intermediate- U.S.
Equity Northwest Term Treasury Government
Fund Fund Fund Fund
-------- --------- -------------- ----------
<S> <C> <C> <C> <C>
Marketing and Advertising 4 4 4 4
Printing and Mailing of Prospectuses 2 2 2 2
Compensation to dealers:
Trail (Service Fees) 1 1 1 1
B and C Share Commissions
(Distribution Fees) -- -- -- --
-------- --------- -------------- ----------
7 7 7 7
======== ========= ============== ==========
</TABLE>

<TABLE>
<CAPTION>
SAFECO SAFECO
SAFECO SAFECO Advisor Advisor
Advisor Advisor Intermediate- Washington
GNMA Municipal Term Municipal Municipal
Fund Bond Fund Bond Fund Bond Fund
-------- --------- -------------- ----------
<S> <C> <C> <C> <C>
Marketing and Advertising 4 4 4 4
Printing and Mailing of Prospectuses 2 2 2 2
Compensation to dealers:
Trail (Service Fees) 1 1 1 1
B and C Share Commissions
(Distribution Fees) -- -- -- 1
-------- --------- -------------- ----------
7 7 7 8
======== ========= ============== ==========
</TABLE>

CLASS C
<TABLE>
<CAPTION>
SAFECO SAFECO
SAFECO SAFECO Advisor Advisor
Advisor Advisor Intermediate- U.S.
Equity Northwest Term Treasury Government
Fund Fund Fund Fund
-------- --------- -------------- ----------
<S> <C> <C> <C> <C>
Marketing and Advertising 4 4 4 4
Printing and Mailing of Prospectuses 2 2 2 2
Compensation to dealers:
Trail (Service Fees) 1 1 1 1
B and C Share Commissions
(Distribution Fees) -- -- -- --
-------- --------- -------------- ----------
7 7 7 7
======== ========= ============== ==========
</TABLE>

<TABLE>
<CAPTION>
SAFECO SAFECO
SAFECO SAFECO Advisor Advisor
Advisor Advisor Intermediate- Washington
GNMA Municipal Term Municipal Municipal
Fund Bond Fund Bond Fund Bond Fund
-------- --------- -------------- ----------
<S> <C> <C> <C> <C>
Marketing and Advertising 4 4 4 4
Printing and Mailing of Prospectuses 2 2 2 2
Compensation to dealers:
Trail (Service Fees) 1 1 1 1
B and C Share Commissions
(Distribution Fees) -- -- -- 1
-------- --------- -------------- ----------
7 7 7 8
======== ========= ============== ==========
</TABLE>

Among other things, each Plan provides that (1) SAFECO Securities will submit
to the Trust's board of trustees at least quarterly, and the trustees will
review, reports regarding all amounts expended under the Plan and the purposes
for which such expenditures were made, (2) the Plan will continue in effect so
long as it is approved at least annually and any material amendment thereto is
approved, by the Trust's board of trustees, including those trustees who are
not "interested persons" of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or any agreement related to the
Plan, acting in person at a meeting called for that purpose, (3) payments by a
Fund under the Plan shall not be materially increased without the affirmative
vote of the holders of a majority of the outstanding voting securities of the
relevant Class of that Fund and (4) while the Plan remains in effect, the
selection and nomination of trustees who are not "interested persons" of the
Trust shall be committed to the discretion of the trustees who are not
"interested persons" of the Trust.

In reporting amounts expended under the Plans to the trustees, SAFECO
Securities will allocate expenses attributable to the sale of each Class of
Fund shares to such Class based on the ratio of sales of shares of such Class
to the sales of all three Classes of shares. Expenses attributable to a
specific Class will be allocated to that Class.

In approving the adoption of each Plan, the Trustees determined that the
adoption was in the best interests of the Fund's shareholders. Each Plan also
was approved by SAFECO Corporation, the initial sole shareholder of the Advisor
Equity Fund and the Advisor Intermediate Treasury Fund, on September 27, 1994
and SAM, the initial sole shareholder of the Advisor Northwest Fund, the Advisor
Government Fund, the Advisor GNMA Fund, the Advisor Intermediate Municipal
Fund, and the Advisor Washington Municipal Fund on September 27, 1994.

In the event that a Plan is terminated or not continued with respect to the
Class A shares, Class B shares or Class C shares, (i) no fees would be owed by
a Fund to SAFECO Securities with respect to that class, and (ii) a Fund would
not be obligated to pay SAFECO Securities for any amounts expended under the
Plan not previously recovered by SAFECO Securities.

The Plans comply with rules of the National Association of Securities Dealers,
Inc. which limit the annual asset-based sales charges and service fees that a
mutual fund may impose on a class of shares to .75% and .25%, respectively, of
the average annual net assets attributable to that class. The rules also limit
the aggregate of all front-end, deferred and asset-based sales charges imposed
with respect to a class of shares by a mutual fund that also charges a service

26
<PAGE> 63
fee to 6.25% of cumulative gross sales of shares of that class, plus interest
at the prime rate plus 1% per annum.

CUSTODIAN AND INDEPENDENT AUDITORS

U.S. Bank of Washington, N.A., 1420 Fifth Avenue, Seattle, Washington 98101, is
the custodian of the securities, cash and other assets of each Fund under an
agreement with the Trust. Ernst & Young LLP, 999 Third Avenue, Suite 3500,
Seattle, Washington 98104, is the independent auditor which audit the financial
statements of the Trust.

TRANSFER, DIVIDEND AND DISTRIBUTION DISBURSING AND SHAREHOLDER SERVICING AGENT

SAFECO Services, SAFECO Plaza, Seattle, Washington 98185, is the transfer,
dividend and distribution disbursement and shareholder servicing agent for each
Fund under an agreement with the Trust. SAFECO Services is responsible for all
required transfer agent activity, including maintenance of records of each
Fund's shareholders, records of transactions involving each Fund's shares, and
the compilation, distribution, or reinvestment of income dividends or capital
gains distributions. SAFECO Services is paid a fee of $3.10 per each
shareholder transaction. The following table states the total amount of
compensation paid by each Fund to SAFECO Services for the fiscal period ended
December 31, 1994:

Fees Paid to SAFECO Services
<TABLE>
<CAPTION>
Fiscal Period Ended
Fund December 31, 1994
- ---- -----------------
<S> <C>
Advisor Equity $0
Advisor Northwest $0
Advisor Intermediate-
Term Treasury $0
Advisor Government $0
Advisor GNMA $0
Advisor Municipal $0
Advisor Intermediate
Municipal Bond $0
Advisor Washington
Municipal Bond $0
</TABLE>

BROKERAGE PRACTICES

SAM places orders for the purchase or sale of each Fund's portfolio securities.
In deciding which broker to use in a given transaction, SAM uses the following
criteria:

27
<PAGE> 64
(1) Which broker gives the best execution (i.e., which broker is able to
trade the securities in the size and at the price desired and on a
timely basis);

(2) Whether the broker is known to SAM as being reputable;

(3) Whether the broker has sold shares of the Funds; and

(4) All other things being equal, which broker has provided useful research
services to SAM.

Such research services as are furnished to SAM during the year, (e.g., written
reports analyzing economic and financial characteristics of industries and
companies, telephone conversations between brokerage security analysts and
members of SAM's staff and personal visits by such analysts and brokerage
strategists and economists to SAM's office) are used by SAM to advise all of
its clients including the Funds, but not all such research services furnished
to SAM are used by it to advise the Funds. SAM will not pay excess commissions
or mark-ups to any broker or dealer for research services or for any other
reason.

REDEMPTION IN KIND

If the Trust concludes that cash payment upon redemption to a shareholder would
be prejudicial to the best interest of the other shareholders of a Fund, a
portion of the payment may be made in kind. The Trust has elected to be
governed by Rule 18(f)(1) under the 1940 Act, pursuant to which the Trust must
redeem shares tendered by a shareholder solely in cash up to the lesser of
$250,000 or 1% of the net asset value of a Fund during any 90-day period. Any
shares tendered by the shareholder in excess of the above-mentioned limit may
be redeemed through distribution of a Fund's assets. Any securities or other
property so distributed in kind shall be valued by the same method as is used
in computing NAV. Distributions in kind will be made in readily marketable
securities unless the investor elects otherwise. Investors may incur brokerage
costs in disposing of securities received in such a distribution in kind.

FINANCIAL STATEMENTS

The following financial statement and the report thereon of Ernst & Young LLP,
independent auditors, are incorporated herein:

Portfolio of Investments as of December 31, 1994
Statement of Assets and Liabilities as of December 31, 1994
Statement of Operations for the Period September 30, 1994 (commencement of
operations) through December 31, 1994
Statement of Changes in Net Assets for the Period September 30, 1994
(commencement of operations) through December 31, 1994
Notes to the Financial Statements

28
<PAGE> 65
A copy of the Trust's Annual Report accompanies this Statement of Additional
Information. Additional copies may be obtained by calling SAFECO Services at
1-800-426-6730 nationwide or 206-545-5530 in Seattle or by writing to the
address on the Prospectus cover.

DESCRIPTION OF PREFERRED STOCK RATINGS

Generally, a preferred stock rating is an assessment of the capacity and
willingness of an issuer to pay preferred stock dividends. A preferred stock
rating differs from a bond rating since it is assigned to an equity issue which
is different from, and subordinated to, a debt issue.

Excerpts from the description by Moody's Investors Service, Inc. ("Moody's") of
its preferred stock ratings:

aaa - Top-quality preferred stock. This rating indicates good asset protection
and the least risk of dividend impairment within the universe of preferred
stocks.

aa - High-grade preferred stock. This rating indicates that there is a
reasonable assurance that earnings and asset protection will remain relatively
well maintained in the foreseeable future.

a - Upper-medium grade preferred stock. While risks are judged to be
somewhat greater than in the "aaa" and "aa" classifications, earnings and asset
protections are, nevertheless, expected to be maintained at adequate levels.

baa - Medium grade preferred stock, neither highly protected nor poorly
secured. Earnings and asset protection appear adequate at present but may be
questionable over any great length of time.

ba - Considered to have speculative elements and its future cannot be
considered well assured. Earnings and asset protection may be very moderate
and not well safeguarded during adverse periods. Uncertainty of position
characterizes preferred stocks in this class.

b - Generally lacks the characteristics of a desirable investment. Assurance
of dividend payments and maintenance of other terms of the issue over any long
period of time may be small.

caa - Likely to be in arrears on dividend payments. This rating designation
does not purport to indicate the future status of payments.

ca - Speculative in a high degree and is likely to be in arrears on dividends
with little likelihood of eventual payments.

c - Lowest rated class of preferred or preference stock. Issues so rated can
be regarded as having extremely poor prospects of ever attaining any real
investment standing.

29
<PAGE> 66
Excerpts from the description by Standard & Poor's Ratings Group ("S&P") of its
preferred stock ratings:

AAA - The highest rating that may be assigned by S&P to a preferred stock issue
and indicates an extremely strong capacity to pay the preferred stock
obligations.

AA - Qualifies as a high-quality fixed-income security. The capacity to pay
preferred stock obligations is very strong, although not as overwhelming as for
issues rated "AAA."

A - Backed by a sound capacity to pay the preferred stock obligations,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions.

BBB - Backed by an adequate capacity to pay the preferred stock obligations.
Whereas it normally exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a weakened
capacity to make payments for a preferred stock in this category than for
issues in the "A" category.

BB, B, CCC - Preferred stock rated "BB", "B", and "CCC" are regarded, on
balance, as predominately speculative with respect to the issuer's capacity to
pay preferred stock obligations. "BB" indicates the lowest degree of
speculation and "CCC" the highest degree of speculation. While such issues
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse
conditions.

CC - The rating "CC" is reserved for a preferred stock issue in arrears on
dividends or sinking fund payments but that is currently paying.

C - A preferred stock rated "C" is a non-paying issue.

D - A preferred stock rated "D" is a non-paying issue with issuer in default on
debt instruments.

NR indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.

Plus (+) or Minus (-) To provide more detailed indications of preferred stock
quality, the ratings from "AA" to "CCC" may be modified by the addition of a
plus or minus sign to show relative standing within the major rating
categories.