<PAGE> 1
[SAFECO ADVISOR FUNDS LOGO]
1995
ANNUAL
REPORT
STOCK FUNDS
ADVISOR EQUITY FUND
ADVISOR NORTHWEST FUND
TAXABLE BOND FUNDS
ADVISOR INTERMEDIATE-TERM TREASURY FUND
ADVISOR U.S. GOVERNMENT FUND
ADVISOR GNMA FUND
TAX-EXEMPT BOND FUNDS
ADVISOR MUNICIPAL BOND FUND
ADVISOR INTERMEDIATE-TERM MUNICIPAL BOND FUND
ADVISOR WASHINGTON MUNICIPAL BOND FUND
<PAGE> 2
<TABLE>
- --------------------------------------------------------------------------------
Table of Contents
<S> <C>
Equity Fund ................................................ 2-5
Northwest Fund ............................................. 6-8
Intermediate-Term Treasury Fund ............................ 9-10
U.S. Government Fund ....................................... 9-11
GNMA Fund .................................................. 12-13
Municipal Bond Funds ....................................... 14-21
Statements of Assets and Liabilities ....................... 22-23
Statements of Operations ................................... 24-25
Statements of Changes in Net Assets ........................ 26-27
Notes to Financial Statements .............................. 28-34
- --------------------------------------------------------------------------------
</TABLE>
================================================================================
SAFECO ADVISOR FUND
<PAGE> 3
[PHOTO OF DAVID F. HILL]
Dear Shareholder: February 1, 1996
The strength of the financial markets in 1995 was simply striking,
especially against the flatness of 1994. Taken together, the two years exemplify
the importance of taking a long-term approach to investing, and the vagaries of
forecasting.
We began 1995 with a cautious outlook and look what happened: The stock
market as measured by the S&P 500 Index vaulted 37.14% (versus 1.32% in 1994).
The bond market as depicted by the Lehman Brothers Government Corporate Index
rose 19.24% (versus -3.51% in 1994).
Both markets built their strength on low inflation and declining interest
rates, spurred in part by the Federal Reserve Board's reversal in policy and
lowering of short-term interest rates.
Through 1995 all types of bond prices rose. The yield on the 30-year U.S.
Treasury bond fell, and ended the year below 6%.
On the stock side, lower interest rates, as they typically do, helped boost
corporate profits. That coupled with restructuring, cost cutting and increased
world competitiveness paved the way for record gains in the stock market. The
Dow Jones set new highs 69 times in 1995.
FINANCIAL OUTLOOK
Delays in economic reports caused by intermittent government shut-downs
have made forecasting more challenging than usual. That said, we expect the
atmosphere for financial assets to remain favorable in 1996. We believe gross
domestic product will expand at the Fed's targeted rate, 2.5%, and inflation
will remain subdued.
Weak to moderate economic growth and low inflation positions the Fed to
further lower short-term rates, as it did January 31 and may again in March.
That gives bond and stock prices some room to rise.
On the dark side, the budget debate is more rancorous than we foresaw. At
present, we believe that no budget agreement is better than a bad budget
agreement. The bond market would almost certainly fall given a budget deal with
tax cuts in the present and spending cuts in the future (The bond market would
conclude that such a deal wouldn't do much to reduce the deficit.) A stalemate
would likely send rates higher in the short-term, but not be of serious
consequence.
Whatever the budget outcome, we expect interest rates will be lower at the
end of 1996 than at its onset. This is good news for bonds.
Stocks will have a more difficult time. While stocks are not overvalued, it
would be a Herculean task for corporate earnings to keep 1995's pace. However,
lower interest rates will provide good support for stock prices.
While the outlook is positive, 1996 is unlikely to match 1995's bounty. One
thing is certain: The past is not prologue. Investors anticipating another year
of record gains are likely to be disappointed. Still, looking back, we're glad
to have been cautiously "in" the market, rather than "out" in 1995.
/s/ DAVID F. HILL
David F. Hill
President
===============================================================================1
1995 ANNUAL REPORT
<PAGE> 4
SAFECO ADVISOR EQUITY FUND [PHOTO OF RICH MEAGLEY]
MANAGER'S LETTER
February 1, 1996
For the 12 months ended December 31, 1995, the Advisor Equity Fund Class A
shares returned 30.42%, Class B shares 29.44% and class C shares 29.43%. The
growth and income peer group returned 31.6% for the same period while the S&P
posted a 37.14% gain.
Our technology stocks, especially MOTOROLA and ADVANCED MICRO DEVICES,
caused the fund to underperform. In the fourth quarter, Motorola's stock dropped
25% when analysts lowered earnings estimates. Advanced Micro was off 43% after
announcing a product delay and proposing a dilutive acquisition.
Weak demand for paper and forest products were also drags on performance,
as evidenced by GEORGIA-PACIFIC and WILLAMETTE's stock prices.
Still, I believe in Motorola, Willamette and the other large, established
companies that comprise our portfolio. My experience shows the most enduring
growth records are posted by such companies. Following that logic, I added
FEDERAL NATIONAL MORTGAGE, MOBIL, NATIONSBANK, CHASE MANHATTAN and SALOMON as
well as DUPONT, WAL-MART and GENERAL ELECTRIC to our holdings.
These additions significantly shifted our industry weightings from what
they were six months ago.
Petroleum and petroleum services grew from 1.9% to 11.4% of net assets. In
addition to Mobil, I added EXXON and ROYAL DUTCH to the oil group. In addition
to benefiting from intelligent cost-cutting and increased sales, the oil stocks
have attractive dividends, and, I believe their ability to pay them is more
secure than the REAL ESTATE INVESTMENT TRUSTS. I sold our REIT holdings down
from 6.4% to 2.3% of net assets.
Our holdings in computer software shrunk from 7.3% of net assets spread
among four names to 2.7% of net assets all invested in MICROSOFT. I sold MENTOR
GRAPHICS when it climbed to our price target and I gave up waiting for
INFORMATION RESOURCES and MACNEAL-SCHWENDLER's share price to appreciate.
Our financial stocks were generally winners. I consolidated our holdings
here from five names to three, without changing the industry weighting. I sold
PNC BANK when it reached our target, and FIRST INTERSTATE, when a take-over bid
launched it through our target price. I invested the gains in CHASE MANHATTAN.
Chase's merger with Chemical Banking will create huge cost-cutting potential.
NATIONSBANK remains in the fund as a quality company with an attractive price
and yield.
FEDERAL NATIONAL MORTGAGE ASSOCIATION buys mortgages and holds or pools
them into mortgage-backed securities. It was up on increases in business volume
and investment income. Given the favorable interest rate environment and the
fact that people keep buying and refinancing homes, FANNIE MAE should be able to
continue to grow earnings.
SALOMON has recovered from its government bond trading scandal, but its
share price hasn't -- yet. We think the brokerage has strong earnings potential
in a growing industry.
Establishing a position in AMERICAN BRANDS and favorable results for
PHILIP MORRIS helped boost food and tobacco holdings to 11.3% of net assets on
December 31. (I reduced Philip Morris to 2.5% of holdings in mid-January.)
Meanwhile, GTE and CENTURY are providing consistent growth on the
telephone side and rapid growth on the cellular side. Like AT&T, these stocks
look like they'll continue to be steady performers for a long time.
The stocks in our portfolio belong to larger, more established companies
that I know well and have conviction in. They are stocks that I am happy to have
and to hold -- unless their growth stalls or they become too pricey.
None of our holdings are long shots. After all, I'm managing the Advisor
Equity Fund for ongoing growth -- not to shoot out the lights in any one year,
but to shine over the years.
/s/ RICH MEAGLEY
Rich Meagley
Portfolio Manager
Rich Meagley, a 14-year veteran of the securities industry holds an M.B.A.
from the University of Washington. He is a vice president of SAFECO Asset
Management, a Chartered Financial Analyst and an avid golfer.
2===============================================================================
SAFECO ADVISOR FUNDS
<PAGE> 5
SAFECO ADVISOR EQUITY FUND
HIGHLIGHTS
As of December 31, 1995
<TABLE>
<CAPTION>
TOP TEN PERCENT OF
HOLDINGS NET ASSETS
- --------------------------------------------------------------
<S> <C>
Philip Morris Cos., Inc. 4.9%
(Food, Beverage & Tobacco Company)
Federal National Mortgage Association 4.8%
(Mortgage Broker)
NationsBank Corp. 3.5%
(Bank)
Mobil Corp. 3.5%
(Oil Company)
Salomon, Inc. 3.3%
(Brokerage)
Texaco, Inc. 3.3%
(Oil Company)
Chase Manhattan Corp. 3.2%
(Financial Services Company)
Motorola, Inc. 3.0%
(Communications Equipment Manufacturing)
Century Telephone Enterprise Co. 2.9%
(Telephone Company)
GTE Corp. 2.9%
(Telephone Company)
<CAPTION>
TOP FIVE PERCENT
PERFORMERS (JULY TO DEC.) RETURN
- --------------------------------------------------------------
*First Interstate Bancorp. 72.6%
(Bank)
Paragon Trade Brands, Inc. 62.6%
(Paper Products Manufacturer)
*Airborne Freight Corp. 37.4%
(Air Freight)
Federal National Mortgage Association 34.3%
(Mortgage Broker)
GTE Corp. 28.2%
(Telephone Company)
<CAPTION>
BOTTOM FIVE PERCENT
PERFORMERS (JULY TO DEC.) RETURN
- --------------------------------------------------------------
NeoStar Retail Group, Inc. -52.4%
(Computer Software Retailer)
Advanced Micro Devices, Inc. -46.5%
(Microcomputer Components)
Crown American Realty Corp. -37.6%
(Real Estate)
Georgia-Pacific Corp. -20.9%
(Building Products Manufacturer)
*Information Resources, Inc. -15.8%
(Software Services)
*Security sold, no longer in portfolio.
<CAPTION>
TOP FIVE PERCENT OF
INDUSTRIES NET ASSETS
- --------------------------------------------------------------
Petroleum & Petroleum Services 11.4%
Food & Tobacco 11.3%
Banking & Finance 8.8%
Retail 8.8%
Electrical Equipment & Electronics 8.2%
</TABLE>
Performance Information
- --------------------------------------------------------------------------------
Growth of a $10,000 Investment Over Life of Fund
[A graph appears here which illustrates the growth of a $10,000 investment in
Class A, B, and C shares over the life of the fund in comparison to the S&P
500 Index.]
INVESTMENT VALUE AS OF DEC. 31, 1995
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C S&P 500
---- ------- ------- ------- -------
<S> <C> <C> <C> <C>
9/30/94 $10,000 $10,000 $10,000 $10,000
12/31/95 12,162 12,248 12,647 13,711
</TABLE>
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C S&P 500
---- ------- ------- ------- -------
<S> <C> <C> <C> <C>
9/30/94 9,525 10,000 10,000 10,000
10/31/94 9,639 10,120 10,120 10,224
11/30/94 9,411 9,870 9,870 9,852
12/31/94 9,325 9,771 9,771 9,998
01/31/95 9,401 9,841 9,841 10,257
02/28/95 9,669 10,121 10,121 10,656
03/31/95 9,921 10,377 10,377 10,970
04/30/95 10,391 10,868 10,868 11,292
05/31/95 10,574 11,039 11,039 11,743
06/30/95 10,865 11,345 11,345 12,015
07/31/95 11,039 11,516 11,516 12,413
08/31/95 11,318 11,807 11,807 12,409
09/30/95 11,720 12,215 12,215 12,933
10/31/95 11,594 12,074 12,074 12,887
11/30/95 12,000 12,487 12,487 13,451
12/31/95 12,162 12,248 12,647 13,711
</TABLE>
+The Standard & Poor's 500 Index is an unmanaged index of 500 stocks weighted
by Market capitalization with dividends reinvested. Class A and Class B are
calculated net of the maximum front-end or contingent deferred sales charge,
respectively, and include the reinvestment of dividends and realized gains.
<TABLE>
<CAPTION>
AVERAGE ANNUAL SINCE
TOTAL RETURN 1 YEAR INCEPTION*
- --------------------------------------------------------
<S> <C> <C>
Class A
NAV 30.42% 21.59%
POP 24.23% 16.95%
Class B
NAV 29.44% 20.68%
CDSC 24.44% 17.61%
Class C
NAV 29.43% 20.67%
S&P 500 Index 37.14% 28.72%
</TABLE>
*Inception date of fund was September 30, 1994.
Average Annual Returns including the Public Offering Price (POP) with the
maximum 4.75% front-end sales charge on Class A Shares and the Contingent
Deferred Sales Charge (CDSC) of 5% for one year and 4% for the life of fund on
Class B Shares.
Investment returns are historical. Returns and principal value will fluctuate
causing a gain or loss at sale.
===============================================================================3
1995 ANNUAL REPORT
<PAGE> 6
SAFECO ADVISOR EQUITY FUND
PORTFOLIO OF INVESTMENTS
As of December 31, 1995
<TABLE>
<CAPTION>
SHARES OR MARKET VALUE
PRINCIPAL AMOUNT (000'S)
- -----------------------------------------------------------------
<S> <C>
COMMON STOCKS - 104.9%
Banking & Finance - 8.8%
3,400 Chase Manhattan Corp........................ $206
2,000 Citicorp.................................... 134
3,300 NationsBank Corp............................ 230
Broadcast Media - 2.3%
3,200 Viacom Inc., Class B........................ 152
Chemicals - 2.2%
2,000 Du Pont (EI) De Nemours & Co................ 140
Computer Hardware - 1.2%
900 Hewlett-Packard Co.......................... 75
Computer Software - 2.7%
2,000 *Microsoft Corp. ............................ 175
Drugs & Hospital Supplies - 3.9%
500 American Home Products Corp. ............... 48
1,300 Schering-Plough Corp........................ 71
1,400 Warner-Lambert Co........................... 136
Electrical Equipment & Electronics - 8.2%
3,000 *Advanced Micro Devices, Inc................. 50
2,000 General Electric Co. ....................... 144
2,500 Intel Corp. ................................ 142
3,450 Motorola, Inc............................... 197
Entertainment - 1.8%
2,000 Walt Disney Co.............................. 118
Financial Services - 8.1%
2,500 Federal National Mortgage
Association................................. $310
6,000 Salomon, Inc. .............................. 213
Food & Tobacco - 11.3%
3,000 American Brands, Inc........................ 134
4,100 *Dole Food Co., Inc.......................... 144
3,500 Philip Morris Cos., Inc..................... 317
6,400 Smart & Final, Inc.......................... 136
Homebuilding - 0.3%
1,367 *Castle & Cooke, Inc......................... 23
Household Products - 3.9%
2,000 Colgate-Palmolive Co........................ 141
4,800 *Paragon Trade Brands, Inc................... 112
Insurance - 7.7%
4,000 American General Corp....................... 140
750 American International Group, Inc........... 69
5,000 Equitable Cos., Inc......................... 120
3,400 Hartford Steam Boiler Inspection &
Insurance Co................................ 170
Leisure Time - 2.6%
5,850 Polaris Industries, Inc..................... 172
Paper & Forest Products - 7.0%
1,400 Georgia-Pacific Corp........................ 96
1,500 Kimberly-Clark Corp......................... 124
2,250 Weyerhaeuser Co............................. 97
2,400 Willamette Industries, Inc.................. 135
</TABLE>
See Notes to Financial Statements
4===============================================================================
SAFECO ADVISOR FUNDS
<PAGE> 7
<TABLE>
<CAPTION>
SHARES OR MARKET VALUE
PRINCIPAL AMOUNT (000'S)
- -------------------------------------------------------------------
<S> <C>
Petroleum & Petroleum Services - 11.4%
2,000 Exxon Corp.................................. $160
2,000 Mobil Corp.................................. 224
1,000 Royal Dutch Petroleum Co.................... 141
2,700 Texaco, Inc................................. 212
Real Estate Investment Trusts - 2.3%
3,700 Crown American Realty Corp.................. 29
5,182 HGI Realty, Inc............................. 119
Retail - 8.8%
4,500 Albertson's, Inc............................ 148
2,500 Gap, Inc.................................... 105
3,700 May Department Stores Co.................... 156
3,200 *NeoStar Retail Group, Inc................... 24
6,000 Wal-Mart Stores, Inc........................ 134
Telecommunications - 2.7%
2,750 AT&T Corp................................... 178
Utilities-Electric Distribution - 1.9%
5,200 Houston Industries, Inc..................... $126
Utilities-Telephone - 5.8%
5,950 Century Telephone Enterprise Co............. 189
4,250 GTE Corp.................................... 187
------
TOTAL COMMON STOCKS........................................ 6,803
------
SHORT-TERM INVESTMENTS - 7.7%
Investment Companies:
$501,857 Short-Term Investments Co.
(Prime Portfolio)........................... 502
------
TOTAL SHORT-TERM INVESTMENTS............................... 502
------
TOTAL INVESTMENTS - 112.6%................................. 7,305
Liabilities, less Other Assets............................ (817)
------
NET ASSETS................................................. $6,488
======
</TABLE>
*Non-income producing security.
See Notes to Financial Statements
===============================================================================5
1995 ANNUAL REPORT
<PAGE> 8
SAFECO ADVISOR NORTHWEST FUND [PHOTO OF CHARLES R. DRIGGS]
MANAGER'S LETTER
February 1, 1996
The SAFECO Advisor Northwest Fund Class A shares delivered a 8.38% total return
for the 12 months ended December 31, 1995. The B and C shares returned 7.57%.
A fourth quarter reversal in technology stocks, the initial public
offerings we added during the year, and individual poor performers discussed
below held our returns under the Murphy Favre Northwest 50 Index. Taken
together, the six IPOs we purchased were up 5.5% for the year. Our eight
technology stocks which comprised 21% of net assets posted a 17.6% return.
Meanwhile, the index gained 28.37%.
Having experienced the ups and downs of establishing positions in the
newly offered stock of REDHOOK ALE (a craft brewer distributed by Anheuser
Busch), HART BREWING (ales and lagers that seem destined for national
distribution), THRUSTMASTER (flight simulators, control systems and joy sticks),
SEMITOOL (silicon wafer washer), R-B RUBBER (recycles used tires into rubber
surfaces) and EMERITUS (assisted-living), I intend to give them time to grow.
Our aging population makes assisted-living a growth industry, and coming
from HILLHAVEN, Emeritus' management is well-qualified for success. Our other
elder care stock, ASSISTED LIVING CONCEPTS was a top performer, up 32.9% in the
last six months.
During the latest six months, I added to our holdings in R-B Rubber,
BARRETT BUSINESS (temporary and leased staff providers) and MONACO COACH when
their prices fell into our buy-price range. Though Monaco was down 40% for the
year on missed earnings, demographics point to increased motor home sales. And,
completion of the announced acquisition of HOLIDAY RAMBLER would, in itself,
more than double Monaco's sales.
We initiated positions in LATTICE SEMICONDUCTOR, a company that designs
and produces programmable logic devices, and EGGHEAD SOFTWARE, a specialty
software retailer with 179 stores in the US and Canada as well as catalog sales.
Despite recent poor performances, I'm hanging on to Egghead, as well as
HOLLYWOOD ENTERTAINMENT and ARROW TRANSPORTATION. Egghead's turnaround plans
seem sound. Hollywood merely experienced its first price correction since its
stock was offered, and Arrow should recover nicely as sales grow to fill its
expanded carrying capacity.
As the period closed, I did abandon several laggards, liquidating our
positions in: EAGLE HARDWARE (mortally wounded in the hardware store war), MK
RAIL (outlook for parent Morrison Knudson is dismal) and MACHEEZMO MOUSE
RESTAURANTS (couldn't sustain its healthy-fare niche).
I sold all the VENCOR stock (the Kentucky-based acquirer of Hillhaven) and
a portion of the NIKE stock for substantial gains.
On December 31, 22.5% of the portfolio was invested in banks and savings &
loans, which I expect to outperform the market in 1996 as they did in 1995. This
group's prices based on earnings remain below historical values.
MICROSOFT remains a core holding for us. This is a huge, but still
growing, company that's done a great job capitalizing on computing trends.
MENTOR GRAPHICS trades in sympathy with semiconductor stocks and, though it
suffered in the fourth quarter, we expect continued long-term growth.
I sold all of NIKE, which was up 26.8% in less than six months. NORDSTROM
maintains its place as our portfolio's premier retailer.
Picking up Pope and Talbot's diaper division, PARAGON is eliminating one
of its major competitors and acquiring huge cost-saving potential.
BOEING passed the bottom of its business cycle and made it to our
top-performers list. Orders and production levels are increasing. I believe a
Boeing rebound will benefit the service providers that populate our portfolio.
On the whole, we invest in a regional economy that is diverse and strong.
I view our portfolio as I do the Northwest economy -- with a great deal of
upside potential. We've cleaned out the weak links and are holding shares of
what we think are the Northwest's finest companies, priced to appreciate.
/s/ CHARLES R. DRIGGS
Charles R. Driggs
Charles Driggs has 28 years in securities analysis in the Northwest. He
joined SAFECO in 1984 as an equity analyst and became a fund manager in 1992.
Driggs holds a B.S. in Investments from Portland State University in Oregon.
6===============================================================================
SAFECO ADVISOR FUNDS
<PAGE> 9
SAFECO ADVISOR NORTHWEST FUND
HIGHLIGHTS
As of December 31, 1995
<TABLE>
<CAPTION>
TOP TEN PERCENT OF
HOLDINGS NET ASSETS
- --------------------------------------------------------------
<S> <C>
US Bancorp 6.8%
(Bank)
Paragon Trade Brands, Inc. 5.7%
(Disposable Diapers)
Lattice Semiconductor Corp. 4.9%
(Systems Software Developer)
Boeing Co. 4.9%
(Aerospace)
Nordstrom, Inc. 4.5%
(Retail - Clothier)
Microsoft Corp. 4.1%
(Personal Computer Software)
Mentor Graphics Corp. 4.1%
(Electronic Design Software)
Washington Mutual Savings Bank 3.7%
(Savings & Loan)
Emeritus Corp. 3.3%
(Elder Care)
Monaco Coach Corp. 3.2%
(Motor Coach Manufacturer)
<CAPTION>
TOP FIVE PERCENT
PERFORMERS (JULY TO DEC.) RETURN
- --------------------------------------------------------------
Redhook Ale Brewery, Inc. 52.9%
(Brewery)
Paragon Trade Brands, Inc. 40.0%
(Paper Products Manufacturer)
Assisted Living Concepts, Inc. 32.9%
(Elder Care)
*NIKE, Inc. 26.8%
(Athletic & Leisure Footware & Apparel)
Boeing Co. 25.1%
(Aerospace)
<CAPTION>
BOTTOM FIVE PERCENT
PERFORMERS (JULY TO DEC.) RETURN
- --------------------------------------------------------------
Arrow Transportation Co. -56.5%
(Transportation)
*Macheezmo Mouse Restaurants, Inc. -43.1%
(Restaurants)
Egghead, Inc. -38.6%
(Retail Software)
Hollywood Entertainment Corp. -38.3%
(Video Rental)
R-B Rubber Products, Inc. -36.8%
(Rubber Products Manufacturer)
*Security sold, no longer in portfolio.
<CAPTION>
TOP FIVE PERCENT OF
INDUSTRIES NET ASSETS
- --------------------------------------------------------------
Banking & Finance 13.2%
Electrical Equipment & Electronics 11.8%
Retail - Other 9.9%
Savings & Loans/Savings Banks 9.5%
Computer Software 8.6%
</TABLE>
Performance Information
- --------------------------------------------------------------------------------
[A graph appears here which illustrates the growth of a $10,000 investment in
Class A, B, and C shares over the life of the fund in comparison to the
Northwest 50 and the S&P 500 Index.]
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C S&P NW 50 INDEX
---- ------- ------- ------- --------- -----------
<S> <C> <C> <C> <C> <C>
9/30/94 9,525 10,000 10,000 10,000 10,000
10/31/94 9,544 10,010 10,010 10,224 9,940
11/30/94 9,335 9,790 9,790 9,852 9,762
12/31/94 9,287 9,730 9,730 9,998 9,816
01/31/95 9,134 9,570 9,570 10,257 9,774
02/28/95 9,258 9,690 9,690 10,656 10,102
03/31/95 9,611 10,050 10,050 10,970 10,422
04/30/95 9,630 10,070 10,070 11,292 10,736
05/31/95 9,773 10,210 10,210 11,743 10,737
06/30/95 10,325 10,780 10,780 12,015 11,389
07/31/95 10,868 11,340 11,340 12,413 11,820
08/31/95 11,125 11,600 11,600 12,409 12,046
09/30/95 10,859 11,310 11,310 12,933 12,488
10/31/95 10,697 11,140 11,140 12,887 12,200
11/30/95 10,420 10,850 10,850 13,451 12,381
12/31/95 10,065 10,067 10,467 13,711 12,533
</TABLE>
<TABLE>
<CAPTION>
Investment Value as of Dec. 31, 1995
NW 50(TM)
DATE CLASS A CLASS B CLASS C INDEX+ S&P 500
---- ------- ------- ------- --------- -------
<S> <C> <C> <C> <C> <C>
9/30/94 $10,000 $10,000 $10,000 $10,000 $10,000
12/31/95 10,065 10,067 10,467 12,533 13,711
</TABLE>
+The Northwest 50(TM) Index is an index of 50 Northwest companies weighted by
their regional impact. The Standard & Poor's 500 Index is an unmanaged index of
500 stocks weighted by market capitalization with dividends reinvested. Class A
and Class B are calculated net of the maximum front-end or contingent deferred
sales charge, respectively, and include the reinvestment of dividends and
realized gains.
<TABLE>
<CAPTION>
AVERAGE ANNUAL SINCE
TOTAL RETURN 1 YEAR INCEPTION*
- -------------------------------------------------------
<S> <C> <C>
Class A
NAV 8.38% 4.51%
POP 3.23% 0.52%
Class B
NAV 7.57% 3.72%
CDSC 2.57% 0.54%
Class C
NAV 7.57% 3.72%
Northwest 50(TM) Index 27.68% 19.79%
S&P 500 Index 37.14% 28.72%
</TABLE>
*Inception date of fund was September 30, 1994.
Average Annual Returns including the Public Offering Price (POP) with the
maximum 4.75% front-end sales charge on Class A Shares and the Contingent
Deferred Sales Charge (CDSC) of 5% for one year and 4% for the life of fund on
Class B Shares.
Investment returns are historical. Returns and principal value will fluctuate
causing a gain or loss at sale.
===============================================================================7
1995 ANNUAL REPORT
<PAGE> 10
SAFECO ADVISOR NORTHWEST FUND
PORTFOLIO OF INVESTMENTS
As of December 31, 1995
<TABLE>
<CAPTION>
SHARES OR MARKET VALUE
PRINCIPAL AMOUNT (000'S)
- -------------------------------------------------------------------
<S> <C>
COMMON STOCKS - 98.2%
Aerospace - 4.9%
3,300 Boeing Co................................. $259
Autos - 3.2%
19,000 *Monaco Coach Corp......................... 171
Banking & Finance - 13.2%
5,280 *Cascade Bancorp........................... 90
10,185 Northrim Bank............................. 83
10,839 US Bancorp................................ 364
10,098 West Coast Bancorp, Inc................... 168
Beverages - 0.9%
2,500 *Hart Brewing, Inc......................... 38
300 *Redhook Ale Brewery, Inc.................. 8
Building Materials - 5.5%
10,000 *BMC West Corp............................. 147
7,800 TJ International, Inc..................... 144
Chemicals - 0.8%
15,000 Concep, Inc............................... 41
Commercial Services - 2.8%
10,000 *Barrett Business Services, Inc............ 147
Computer Software - 8.6%
12,000 *Mentor Graphics Corp...................... 219
2,500 *Microsoft Corp............................ 219
3,500 *ThrustMaster, Inc......................... 23
Electrical Equipment & Electronics - 11.8%
11,300 *Flir Systems, Inc......................... 138
8,000 *Lattice Semiconductor Corp................ 261
5,000 *Merix Corp................................ 150
6,000 *Semitool, Inc............................. 78
Food - 2.7%
19,000 *Wholesome & Hearty Foods, Inc............. 145
Health Care - 4.7%
6,000 *Assisted Living Concepts, Inc............. 79
15,000 *Emeritus Corp............................ 174
Household Products - 5.7%
13,000 *Paragon Trade Brands, Inc................. 304
Industrial Products & Suppliers - 2.2%
11,000 Univar Corp............................... $120
Machinery Diversified - 1.6%
9,200 *Flow International Corp................... 86
Paper & Forest Products - 2.3%
7,700 Longview Fibre Co......................... 125
Pollution Control - 1.0%
18,000 *R-B Rubber Products, Inc.................. 54
Retail - Grocers - 5.9%
4,800 Albertson's, Inc.......................... 158
18,000 *Carr-Gottstein Foods Co................... 104
2,393 Quality Food Centers, Inc................. 53
Retail - Other - 9.9%
15,000 *Egghead, Inc. ............................ 97
7,000 *Hollywood Entertainment Corp.............. 59
5,900 Nordstrom, Inc............................ 239
8,800 *Price/Costco, Inc......................... 134
Savings & Loans / Savings Banks - 9.5%
7,000 Security Bancorp.......................... 140
12,100 *Sterling Financial Corp................... 166
6,900 Washington Mutual Savings Bank............ 199
Transportation - 1.0%
43,000 *Arrow Transportation Co................... 54
------
TOTAL COMMON STOCKS...................................... 5,238
------
SHORT-TERM INVESTMENTS - 3.8%
Investment Companies:
$203,753 Short-Term Investments Co.
(Prime Portfolio)........................ 204
------
TOTAL SHORT-TERM INVESTMENTS............................ 204
------
TOTAL INVESTMENTS - 102.0%.............................. 5,442
Liabilities, less Other Assets......................... (107)
------
NET ASSETS.............................................. $5,335
------
</TABLE>
*Non-income producing security.
See Notes to Financial Statements
8===============================================================================
SAFECO ADVISOR FUNDS
<PAGE> 11
SAFECO ADVISOR
INTERMEDIATE-TERM TREASURY AND
U.S. GOVERNMENT FUNDS
MANAGER'S LETTER
February 1, 1996
[PHOTO OF MICHAEL C. KNEBEL]
Who would have guessed, following 1994, arguably the worst year for bonds in
three generations, that 1995 would be so kind to fixed income investors?
Benevolent, it was. The bond market came roaring back, producing handsome
returns for patient investors.
We began the year sounding a cautionary tone. The Federal Reserve was
still raising short-term interest rates to avoid an overheated economy. As time
moved on, the Fed's actions appear to have worked as planned: economic growth
slowed in the second half of the year, but, more importantly, inflationary
pressures, which had been building from late 1994 through May 1995, subsided
significantly. (Inflation is a bond investor's worst enemy, as it erodes the
purchasing power of bonds' principal and fixed income streams.)
On these signs, the market continued to rally. Performance of both
portfolios lagged the market in the early going due to our more defensive,
lower-risk postures. As the year unfolded, however, we gradually increased the
risk profiles of both portfolios by extending maturities, thus increasing the
portfolios' interest-rate sensitivity (as measured by "duration"). As a result,
returns (in both absolute and relative terms) improved in the second half.
THE SAFECO ADVISOR
INTERMEDIATE-TERM TREASURY FUND
The Advisor Intermediate-Term Treasury Fund's annual return roughly
matched the Lehman Brothers Government Corporate Intermediate-term Index. Class
A shares returned 16.03%, Class B shares 15.17% and Class C shares 15.16% for
the 12 months ending December 31, 1995. The Index posted a return of 15.33%. The
average intermediate-term treasury fund was up 15.29% according to Lipper.
By closely monitoring and then following the market trend (rather than
anticipating where rates might go), we were able to capture much of the market's
gain while carefully controlling the risk of the portfolio. On December 31 the
fund's average maturity was 7.7 years compared to the index's 4.3 years.
THE SAFECO ADVISOR U.S. GOVERNMENT FUND
With Class A shares returning 14.92% and Class B and Class C shares
returning 14.07%, the Advisor U.S. Government Fund underperformed the Lehman
Brothers Government Corporate Index which gained 19.24%.
The unfavorable comparison is mainly due to our conservatism. We kept a
shorter-than-average duration (sensitivity to interest rates) during the first
half of the year. While performance improved in the second half, it was not
sufficient to offset the first half's weak showing.
Anticipating that little gains would be found in intermediate-range
maturities, we had structured the fund with very short and very long bonds (a
structure often called a "barbell"). Wanting to keep duration low, we
overweighted the cash side. As interest rates declined, that cash simply
couldn't keep pace with the gains being realized by intermediate and longer-term
bonds. Despite abandoning the barbell and buying longer-term securities, the
portfolio was unable to catch the rest of the field. The fund's average
maturity, 9.2 years on December 31, is somewhat shorter than that of the index,
9.8 years.
WHAT CAN WE EXPECT FOR 1996?
The temporary shutdown of many government agencies in recent weeks has
delayed the release of many economic indicators, making forecasts more
challenging than normal. That said, I'll venture this: conflicting factors will
affect bond returns in the coming months. First, let's examine the good news for
bonds:
- - Continued low inflation and the likely slow pace of economic growth.
- - Moderate consumer spending and eroding confidence could be further
dampened by corporate "downsizings" and this winter's storms.
- - Government spending is forecast to grow more slowly than the overall
economy.
- - The Federal Reserve lowered short-term rates January 31 and is expected to
ease further in the face of slow growth.
Significant risks to bond valuations in '96 include:
- - Uncertainty over fiscal policy, specifically whether a balanced Federal
budget can be achieved.
- - Lower interest rates may reduce mortgage outlays enough to spur consumer
spending, which ultimately could lead to higher interest rates.
On balance, we think the environment for bond investors remains positive.
However, repeating the astonishing returns of 1995 would take a significantly
weaker economy than we foresee in 1996.
/s/ MICHAEL C. KNEBEL
Michael C. Knebel
Mike Knebel has managed bond portfolios for SAFECO since 1989. Before that
he managed municipal bond and money market funds for Lutheran Brotherhood. He
holds an M.B.A. in Finance from the University of Minnesota, and is a Chartered
Financial Analyst.
===============================================================================9
1995 ANNUAL REPORT
<PAGE> 12
SAFECO ADVISOR
INTERMEDIATE-TERM TREASURY FUND
PORTFOLIO OF INVESTMENTS
As of December 31, 1995
WEIGHTED AVERAGE
MATURITY (IN YEARS) 7.67
- ----------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
(000'S) (000'S)
- ----------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AND
AGENCY SECURITIES - 99.1%
U.S. Treasury Notes - 68.4%
$3,525 6.25%, due 2/15/03...............$3,679
140 6.00%, due 10/15/99.............. 143
U.S. Treasury Principal Strips - 30.7%
950 0.00%, due 8/5/05................ 550
1,985 0.00%, due 5/15/05............... 1,169
------
TOTAL U.S. GOVERNMENT SECURITIES.............. 5,541
------
SHORT-TERM INVESTMENTS - 1.3%
Investment Companies:
74 Short-Term Investment Co.
(Prime Portfolio)................ 74
------
TOTAL SHORT-TERM INVESTMENTS.................. 74
------
TOTAL INVESTMENTS - 100.4%.................... 5,615
------
Liabilities, less Other Assets............... (23)
------
NET ASSETS ...................................$5,592
======
</TABLE>
See Notes to Financial Statements
PERFORMANCE INFORMATION
- ----------------------------------------------------
GROWTH OF A $10,000 INVESTMENT OVER LIFE OF FUND
[A graph appears here which illustrates the growth of a $10,000 investment in
Class A, B, and C shares over the life of the fund in comparison to the Merrill
Lynch Intermediate-Term Treasury Index.]
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C MERRILL INDEX
---- ------- ------- ------- -------------
<S> <C> <C> <C> <C>
09/30/94 9,525 10,000 10,000 10,000
10/31/94 9,532 10,001 10,001 10,002
11/30/94 9,527 9,990 9,990 9,952
12/31/94 9,564 10,022 10,022 9,990
01/31/95 9,656 10,112 10,112 10,156
02/28/95 9,783 10,239 10,239 10,350
03/31/95 9,819 10,271 10,271 10,407
04/30/95 9,939 10,390 10,390 10,526
05/31/95 10,302 10,761 10,761 10,827
06/30/95 10,376 10,833 10,832 10,898
07/31/95 10,294 10,740 10,739 10,905
08/31/95 10,466 10,913 10,913 10,995
09/30/95 10,536 10,980 10,980 11,069
10/31/95 10,701 11,144 11,144 11,193
11/30/95 10,903 11,347 11,347 11,333
12/31/95 11,097 11,143 11,542 11,448
</TABLE>
Investment Value as of Dec. 31, 1995
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C MERRILL INDEX+
---- ------- ------- ------- ----------------
<S> <C> <C> <C> <C>
9/30/94 $10,000 $10,000 $10,000 $10,000
12/31/95 11,097 11,143 11,542 11,448
</TABLE>
+The Merrill Lynch Intermediate-Term Treasury Index is a representative total
return benchmark for the fund. Investment returns are historical and not
predictive of future performance. Class A and Class B are calculated net of the
maximum front-end or contingent deferred sales charge, respectively, and
include the reinvestment of dividends and realized gains.
<TABLE>
<CAPTION>
AVERAGE ANNUAL SINCE
TOTAL RETURN 1 YEAR INCEPTION*
- ------------------------------------------------
<S> <C> <C>
Class A
NAV 16.03% 13.00%
POP 10.51% 8.68%
Class B
NAV 15.17% 12.16%
CDSC 10.17% 9.04%
Class C
NAV 15.16% 12.16%
Merrill Lynch
Intermediate-Term
Treasury Index 14.59% 11.42%
</TABLE>
*Inception date of fund was September 30, 1994.
Average Annual Returns including the Public Offering Price (POP) with the
maximum 4.75% front-end sales charge on Class A Shares and the Contingent
Deferred Sales Charge (CDSC) of 5% for one year and 4% for the life of fund on
Class B Shares.
Investment returns are historical. Returns and principal value will fluctuate
causing a gain or loss at sale.
10==============================================================================
SAFECO ADVISOR FUNDS
<PAGE> 13
SAFECO ADVISOR
U.S. GOVERNMENT FUND
PORTFOLIO OF INVESTMENTS
As of December 31, 1995
WEIGHTED AVERAGE
MATURITY (IN YEARS) 9.16
- ----------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
(000'S) (000'S)
- ----------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY
SECURITIES - 102.5%
U.S. Treasury Principal Strips - 21.4%
$1,920 0.00%, due 5/15/05...............$1,131
U.S. Treasury Notes - 81.1%
1,185 7.25%, due 5/15/16............... 1,353
700 6.25%, due 2/15/03............... 730
2,150 6.00%, due 10/15/99.............. 2,198
------
TOTAL U.S. GOVERNMENT AND
AGENCY SECURITIES............................. 5,412
------
SHORT-TERM INVESTMENTS - 0.7%
Investment Companies:
37 Short-Term Investments Co.
(Prime Portfolio)................ 37
------
TOTAL SHORT-TERM INVESTMENTS.................. 37
------
TOTAL INVESTMENTS - 103.2%.................... 5,449
Liabilities, less Other Assets............... (168)
------
NET ASSETS ...................................$5,281
======
</TABLE>
See Notes to Financial Statements
PERFORMANCE INFORMATION
- ----------------------------------------------------
GROWTH OF A $10,000 INVESTMENT OVER LIFE OF FUND
[A graph appears here which illustrates the growth of a $10,000 investment in
Class A, B, and C shares over the life of the fund in comparison to the Lehman
Brothers Gov't Corp.]
<TABLE>
<CAPTION>
LEHMAN BROS
DATE CLASS A CLASS B CLASS C GOV/CORP INDEX
---- ------- ------- ------- ----------------
<S> <C> <C> <C> <C>
09/30/94 9,525 10,000 10,000 10,000
10/31/94 9,540 10,009 10,009 9,849
11/30/94 9,563 10,027 10,027 9,838
12/31/94 9,619 10,079 10,079 9,820
01/31/95 9,711 10,170 10,170 10,009
02/28/95 9,808 10,265 10,265 10,241
03/31/95 9,853 10,305 10,305 10,310
04/30/95 9,941 10,392 10,392 10,453
05/31/95 10,281 10,739 10,739 10,891
06/30/95 10,372 10,828 10,828 10,978
07/31/95 10,258 10,703 10,703 10,935
08/31/95 10,428 10,873 10,873 11,075
09/30/95 10,517 10,959 10,959 11,188
10/31/95 10,689 11,131 11,131 11,353
11/30/95 10,878 11,321 11,321 11,540
12/31/95 11,054 11,098 11,498 11,710
</TABLE>
Investment Value as of Dec. 31, 1995
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C LEHMAN BROTHERS+
---- ------- ------- ------- ----------------
<S> <C> <C> <C> <C>
9/30/94 $10,000 $10,000 $10,000 $10,000
12/31/95 11,054 11,098 11,498 11,710
</TABLE>
+The Lehman Brothers Gov't Corp. Index is a representative total return
benchmark for the fund. Investment returns are historical and not predictive of
future performance. Class A and Class B are calculated net of the maximum
front-end or contingent deferred sales charge, respectively, and include the
reinvestment of dividends and realized gains.
<TABLE>
<CAPTION>
AVERAGE ANNUAL SINCE
TOTAL RETURN 1 YEAR INCEPTION*
- ------------------------------------------------
<S> <C> <C>
Class A
NAV 14.92% 12.65%
POP 9.46% 8.35%
Class B
NAV 14.07% 11.81%
CDSC 9.07% 8.69%
Class C
NAV 14.07% 11.81%
Lehman Brothers
Gov't Corp. Index 19.24% 13.46%
</TABLE>
*Inception date of fund was September 30, 1994.
Average Annual Returns including the Public Offering Price (POP) with the
maximum 4.75% front-end sales charge on Class A Shares and the Contingent
Deferred Sales Charge (CDSC) of 5% for one year and 4% for the life of fund on
Class B Shares.
Investment returns are historical. Returns and principal value will fluctuate
causing a gain or loss at sale.
==============================================================================11
1995 Annual Report
<PAGE> 14
[PHOTO OF PAUL STEVENSON]
SAFECO ADVISOR GNMA FUND
MANAGER'S LETTER
February 1, 1996
The SAFECO Advisor GNMA Fund Class A shares returned 15.28%, while Class B
and Class C shares posted 14.43% for the 12 months ended December 31, 1995.
Meanwhile the Lehman Brothers GNMA Index returned 17.05% and the Merrill Lynch
GNMA Index posted 17.11%.
The Fund's underperformance is fairly reflective of the emphasis we've
maintained on current coupons of 30-year GNMA pass-throughs. In the first half
of the year, the 30-year GNMAs in our portfolio with coupons in the 7.5% range
didn't gain as much as other coupons and maturities. Still, over the course of
the year, we did achieve handsome gains. Taken together, the U.S. fixed-income
markets turned in their best results since 1985.
The pass-through market (the primary sector in which this fund invests) had
a relatively robust year with fairly straight forward, predictable results given
the market conditions. The results of the different agencies were nearly
identical and there was not much difference between the returns of 30-year and
15-year securities (3.44% versus 3.25% in the fourth quarter). The 15- and
30-year securities, however, clearly outperformed the intermediate 5- and 7-year
balloons which mustered a 2.76% return in the fourth quarter.
The most significant return differences among the longer GNMAs that
dominate our portfolio were driven by perceived call, or prepayment, risk.
When interest rates fall precipitously, refinancing of the home mortgages
which back-up GNMA securities picks up, as individuals seize the opportunity to
lower monthly payments and/or lock-in lower interest rates. Thus, the securities
backed by lower-coupon mortgages (which are less likely to be prepaid and
refinanced than higher-coupon mortgages) performed the best. For example, GNMA
pass-throughs, backed with 6-1/2 to 7% mortgages, generated a 22.85% total
return, those backed by 8-1/2 to 9% mortgages a 16.14% total return, and the
premium 9-1/2 to 10% mortgages generated a 12.94% total return for the year
ended December 31.
Trading activity over the last six months was very light as I felt very
comfortable remaining with the current strategy of being fully invested in
30-year GNMA pass-throughs, with minimum cash and an effective duration longer
than that of the indexes. On December 31, our effective duration was 3.9 years
versus 3.7 years for the Merrill Lynch GNMA Index.
I did buy a small piece of a GNMA 30-year 8% pool, putting to work
additional cash while slightly extending the portfolio's duration. This
"seasoned" GNMA pool was issued in May 1987. In other words, the mortgage payers
who make up this pool went through the 1991-1993 prepayment wave without
refinancing, and may pass again in 1996-1997. Our feeling is that seasoned pools
like these have less prepayment risk than newly issued pools of GNMAs, and thus,
will provide superior returns.
At the close of the year, the fund was 98% invested in 30-year GNMA
pass-throughs, with 2% cash. Divided by mortgage rates, 65% of the fund's assets
were invested in current coupons, 6% in discounts and 27% in "seasoned"
premiums. The Fund's average coupon was 7.5% versus 8% for the index. I am
favoring GNMAs with coupons slightly lower than the market as they are less
likely to be refinanced.
If the market continues to rally or we see further cuts in the short-term
Federal Funds rate, I may trade our concentration in middle coupons for deeper
discount pass-throughs and/or non-callable U.S. Treasuries. (U.S. Treasuries
generally outperform securities subject to being prepaid when interest rates
fall.)
Meanwhile, as I keep an eye on conditions, I'm hopeful that the future
holds more of the same rewards the U.S. financial markets brought investors in
1995.
/s/ Paul Stevenson
- -------------------------
Paul Stevenson
Paul Stevenson joined SAFECO in 1986 as a mortgage securities analyst. He
became a fund manager in 1988. He holds an M.B.A. from the University of
Washington and is a Chartered Financial Analyst.
12==============================================================================
SAFECO ADVISOR FUNDS
<PAGE> 15
SAFECO ADVISOR GNMA FUND
PORTFOLIO OF INVESTMENTS
As of December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
(000'S) (000'S)
- ----------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY
SECURITIES - 98.0%
Government National Mortgage
Association (GNMA) - 98.0%
$909 9.50%, due 8/20/19............... $964
461 8.00%, due 4/15/17 - 10/15/22.... 482
898 7.50%, due 2/15/25............... 924
2,535 7.00%, due 8/15/23 - 10/15/23.... 2,564
349 6.50%, due 11/15/23.............. 346
------
TOTAL U.S. GOVERNMENT AND
AGENCY SECURITIES 5,280
------
SHORT-TERM INVESTMENTS - 2.2%
Investment Companies:
119 Short-Term Investments Co.
(Prime Portfolio)................ 119
------
TOTAL SHORT-TERM INVESTMENTS.................. 119
------
TOTAL INVESTMENTS - 100.2%.................... 5,399
Liabilities, less Other Assets............... (9)
------
NET ASSETS....................................$5,390
======
</TABLE>
See Notes to Financial Statements
PERFORMANCE INFORMATION
- ----------------------------------------------------
GROWTH OF A $10,000 INVESTMENT OVER LIFE OF FUND
[A graph appears here which illustrates the growth of a $10,000 investment in
Class A, B, and C shares over the life of the fund in comparison to the Merrill
Lynch GNMA Index.]
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C MERRILL INDEX
---- ------- ------- ------- -------------
<S> <C> <C> <C> <C>
09/30/94 9,525 10,000 10,000 10,000
10/31/94 9,471 9,937 9,937 9,993
11/30/94 9,381 9,836 9,836 9,968
12/31/94 9,457 9,910 9,910 10,074
01/31/95 9,647 10,103 10,103 10,292
02/28/95 9,855 10,314 10,314 10,567
03/31/95 9,899 10,354 10,354 10,619
04/30/95 10,016 10,470 10,470 10,770
05/31/95 10,298 10,758 10,758 11,092
06/30/95 10,350 10,805 10,805 11,164
07/31/95 10,333 10,781 10,781 11,192
08/30/95 10,476 10,923 10,923 11,312
09/30/95 10,549 10,993 10,993 11,429
10/31/95 10,645 11,085 11,085 11,524
11/30/95 10,770 11,209 11,209 11,650
12/31/95 10,902 10,940 11,339 11,798
</TABLE>
Investment Value as of Dec. 31, 1995
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C MERRILL INDEX+
---- ------- ------- ------- ----------------
<S> <C> <C> <C> <C>
9/30/94 $10,000 $10,000 $10,000 $10,000
12/31/95 10,302 10,940 11,339 11,738
</TABLE>
+The Merrill Lynch GNMA Index is a representative total return benchmark for
the fund. Class A and Class B are calculated net of the maximum front-end or
contingent deferred sales charge, respectively, and include the reinvestment of
dividends and realized gains.
<TABLE>
<CAPTION>
AVERAGE ANNUAL SINCE
TOTAL RETURN 1 YEAR INCEPTION*
- ------------------------------------------------
<S> <C> <C>
Class A
NAV 15.28% 11.40%
POP 9.80% 7.15%
Class B
NAV 14.43% 10.58%
CDSC 9.43% 7.45%
Class C
NAV 14.43% 10.58%
Merrill Lynch
GNMA Index 17.11% 14.15%
</TABLE>
*Inception date of fund was September 30, 1994.
Average Annual Returns including the Public Offering Price (POP) with the
maximum 4.75% front-end sales charge on Class A Shares and the Contingent
Deferred Sales Charge (CDSC) of 5% for one year and 4% for the life of fund on
Class B Shares.
Investment returns are historical. Returns and principal value will fluctuate
causing a gain or loss at sale.
==============================================================================12
1995 ANNUAL REPORT
<PAGE> 16
[PHOTO OF STEPHEN C. BAUER]
SAFECO ADVISOR MUNICIPAL BOND FUNDS
MANAGER'S LETTER
February 1, 1996
Clearly, 1995 was one of the great bull market years in the history of
tax-exempt bonds. As measured by the Lehman Brothers Long Municipal Bond Index,
general long-term municipal bonds gained 17.46% compared to their ten-year
average annual return, 11.25%. (The long-term SAFECO Advisor Municipal Bond Fund
total returns for 1995 outpaced the index.)
The strength of 1995 was particularly impressive in contrast to the severe
bear market of 1994. Taken together, the two years exemplify the importance of
maintaining a consistent, long-term approach to investing, and not panicking
when things go bad.
As good as 1995 was, municipal bonds should have done even better. All the
technical indicators pointed to a banner year for municipal bonds: Demand was
strong and new issue supply was dwindling.
Instead, tax reform hit the news. A common feature of all the reform
proposals was to make all investment returns tax free, thereby negating the
tax-free value of municipal bonds. While the taxable bond market continued to
rally, the tax-exempt market languished amid fears that municipal bonds would be
severely devalued by a flat tax. The rise in long-term municipal values didn't
keep pace with that of treasury bonds. Municipals came to yield 95% of the
30-year treasury by June 30 and closed 1995 yielding 93.5% of taxable treasury
bonds.
Although I don't think that tax reform, as proposed, will become law
anytime soon, damage was done. That damage, however, contains the potential for
tax-exempt bonds to outperform other bond types as municipals regain their
proper relationship to taxable bonds.
In the meantime -- yielding nearly 95% of taxable bonds on a pretax basis
- -- municipal bonds are at their relative cheapest point in seven years. This
represents an unparalleled opportunity for yield and potential appreciation.
Municipal bonds may be the best buy and the best performers of 1996.
Although 1996 is unlikely to match 1995's largess, there is room for a fine
performance. I see nothing to make me think interest rates will rise. A slow
economy and modest inflation indicate a slight downward trend for long-term
rates and this is good news for all bonds.
Furthermore, this is an election year. Political rhetoric is likely to
increase volatility in an already-nervous market. This is not a bad thing: Sharp
changes in prices create opportunities for those of us who take a long view of
things.
ADVISOR MUNICIPAL BOND FUND
The first full calendar year gave the SAFECO Advisor Municipal Bond Fund a
momentous start: Lipper Analytical Services ranked the Fund first of 225 similar
funds for the time period. The average return for general municipal bond funds
was 16.84%. Total return for Class A shares of the Advisor Municipal Bond Fund
for the 12 months ended December 31, 1995, was 24.54%, Class B shares returned
24.01% and Class C shares, 23.63%.
The excellent performance of the Fund was almost entirely due to the
structure of its holdings. As 1995 began, the Fund was heavily weighted in
long-maturity, very deep-discount bonds. Although I didn't purchase these bonds
in anticipation of declining interest rates, they typically are (and in this
case were) the best performers when interest rates fall.
Not only was the price appreciation of these bonds unencumbered by the call
features of higher coupon bonds, they were undervalued -- thanks to pricing
discrepancies created in 1994 -- when we bought them.
A look at the fund's top three and bottom three performers illustrates the
value of deep-discount, call-protected bonds in a bull market. Three California
bonds with 4.7% to 4.75% coupons appreciated 24.4% to 26.1%. In
14==============================================================================
SAFECO ADVISOR FUNDS
<PAGE> 17
comparison, the bottom performers had higher coupons (5.75% to 6.2%) but were
callable. They gained 15.3% to 15.7%.
SAFECO ADVISOR WASHINGTON FUND
The SAFECO Advisor Washington Municipal Bond Fund Class A shares returned
19.75% for the year. Class B shares returned 18.76% and Class C shares 18.87%.
The best performing bonds during the rally of 1995 were long-maturity,
deep-discount bonds. The Fund's best performer was such a bond -- a King County
4.50%, due 1/1/24, appreciated 24.4% during 1995. Unfortunately, bonds like
these are scarce in Washington.
Still, I'm trying to add long-maturity, deep-discount bonds to the fund. In
January 1995, I did trade an Everett School District bond priced below par (par
equals 100) at 97.88 to yield 6.40% for a more deeply-discounted Seattle
Drainage and Wastewater Revenue bond, priced $88.647 to yield 6.65%. (Both bonds
were callable.)
Besides the obvious .25% additional yield, the Fund got better performance
out of the longer, more deeply-discounted Seattle bond. From the sale date to
year end, the yield relationship between the two bonds remained the same, but
the Everett bond increased 9.0%, while the Seattle bond was up 13.7%. The
greater discount of the Seattle bond allowed it to appreciate faster.
Going forward, I hope to further increase the discounts and lengthen the
maturities in this Fund.
SAFECO ADVISOR INTERMEDIATE-TERM
MUNICIPAL BOND FUND
Although intermediate-term bonds did not perform as spectacularly as long
bonds, the SAFECO Advisor Intermediate-Term Municipal Bond Fund still had a good
first year. The Class A shares returned 13.93%, while the Class B and Class C
shares returned 13.09%. These returns beat by more than 1%, the average return
for intermediate funds, which was 12.89% according to Lipper.
The Fund outperformed because we were fully invested with an average
maturity at the long-end of the intermediate range. Two of the best performing
bonds in the Fund were the Washington Public Power Supply System 4.90%, due
7/1/04, up 14.6% in price, and the Detroit Sewer Rev 5.10%, due 7/1/04, up
13.1%. Both of these bonds had been deeply discounted at the beginning of the
year.
Throughout 1995 the shape of the yield curve was quite consistent and the
differential between 5-year bonds and 10-year bonds was usually 50 basis points.
I see no reason to think this will change, and plan to stay near the 10-year
range to maximize current yield.
/s/Stephen C. Bauer
- -----------------------------
Stephen C. Bauer
Steve Bauer joined SAFECO in 1971 as a fixed-income analyst. He became a
fund manager in 1981 and president of SAFECO Asset Management in January 1995.
Bauer holds a B.S. in microbiology and an M.B.A. from the University of
Washington.
==============================================================================15
1995 ANNUAL REPORT
<PAGE> 18
SAFECO ADVISOR
MUNICIPAL BOND FUND
HIGHLIGHTS
As of December 31, 1995
WEIGHTED AVERAGE
MATURITY (IN YEARS) 23.53
- --------------------------------------------------------
<TABLE>
<CAPTION>
TOP FIVE PERCENT OF
TYPES OF BONDS NET ASSETS
- --------------------------------------------------------
<S> <C>
Electric Utilities - Combination 18.8%
Utilities - Water 13.8%
Local G.O. - Unlimited Tax 8.8%
Utilities - Sewer 8.5%
Toll Road 8.5%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PERCENT OF
HOLDINGS NET ASSETS
- --------------------------------------------------------
<S> <C>
Colorado River (TX) Municipal Water District 5.3%
Wisconsin Public Power, Inc. System 5.0%
San Antonio (TX) Electric and Gas Systems Revenue 4.9%
Phoenix (AZ) Civic Improvement Corp. 4.8%
Denver (CO) School District #1 General Obligation 4.8%
</TABLE>
CREDIT RATING DISTRIBUTION (S&P RATING)
- --------------------------------------------------------
[A pie chart, appears here illustrating the credit rating distribution (as
rated by S&P) of the fund, as follows:]
A 31.8%
AA 21.2%
AAA 45.1%
Cash and Other 1.9%
PERFORMANCE OF FUND
- --------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT OVER LIFE OF FUND
[A graph appears here which illustrates the growth of a $10,000 investment in
Class A, B, and C shares over the life of the fund in comparison to the Lehman
Brothers Long Municipal Bond.]
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C SHEARSON
---- ------- ------- ------- ----------------
<S> <C> <C> <C> <C>
09/30/94 9,525 10,000 10,000 10,000
10/31/94 9,354 9,814 9,814 9,693
11/30/94 9,222 9,670 9,670 9,437
12/31/94 9,510 9,965 9,965 9,772
01/31/95 9,906 10,373 10,373 10,202
02/28/95 10,409 10,894 10,894 10,617
03/31/95 10,462 10,943 10,943 10,745
04/30/95 10,422 10,895 10,895 10,740
05/31/95 11,012 11,504 11,504 11,197
06/30/95 10,671 11,141 11,142 10,991
07/31/95 10,703 11,167 11,168 11,047
08/31/95 10,912 11,378 11,379 11,203
09/30/95 10,953 11,414 11,414 11,291
10/31/95 11,274 11,741 11,741 11,507
11/30/95 11,655 12,178 12,141 11,748
12/31/95 11,844 11,957 12,230 11,931
</TABLE>
INVESTMENT VALUE AS OF DEC. 31, 1995
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C LEHMAN BROTHERS+
---- ------- ------- ------- ----------------
<S> <C> <C> <C> <C>
9/30/94 $10,000 $10,000 $10,000 $10,000
12/31/95 11,844 11,957 12,320 11,931
</TABLE>
+The Lehman Brothers Long Municipal Bond Index is a representative total return
benchmark for the fund. Investment returns are historical and not predictive of
future performance. Class A and Class B are calculated net of the maximum
front-end or contingent deferred sales charge, respectively, and include the
reinvestment of dividends and realized gains.
<TABLE>
<CAPTION>
AVERAGE ANNUAL SINCE
TOTAL RETURN 1 YEAR INCEPTION*
- ------------------------------------------------
<S> <C> <C>
Class A
NAV 24.54% 19.04%
POP 18.63% 14.50%
Class B
NAV 23.62% 18.16%
CDSC 18.62% 15.08%
Class C
NAV 23.62% 18.16%
Lehman Brothers Long
Municipal Bond Index 23.62% 15.17%
</TABLE>
*Inception date of fund was September 30, 1994.
Average Annual Returns including the Public Offering Price (POP) with the
maximum 4.75% front-end sales charge on Class A Shares and the Contingent
Deferred Sales Charge (CDSC) of 5% for one year and 4% for the life of fund on
Class B Shares.
Investment returns are historical. Returns and principal value will fluctuate
causing a gain or loss at sale.
16==============================================================================
SAFECO ADVISOR FUNDS
<PAGE> 19
SAFECO ADVISOR INTERMEDIATE-TERM
MUNICIPAL BOND FUND
HIGHLIGHTS
As of December 31, 1995
WEIGHTED AVERAGE
MATURITY (IN YEARS) 8.01
- --------------------------------------------------------
<TABLE>
<CAPTION>
TOP FIVE PERCENT OF
HOLDINGS NET ASSETS
- --------------------------------------------------------
<S> <C>
Detroit (MI) Sewage Disposal System Revenue 5.2%
Cook County (IL) Community Consolidated School 5.0%
Benton (WA) School District #17 (Kennewick) Gene 5.0%
Washington Public Power System Nuclear 5.0%
New Madrid (MO) Power Plant Revenue 5.0%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PERCENT OF
TYPES OF BONDS NET ASSETS
- --------------------------------------------------------
<S> <C>
Local G.O. - Unlimited Tax 9.9%
Electric Utilities - Combination 9.8%
Local G.O. - Limited Tax 9.7%
Miscellaneous 9.6%
Utilities - Sewer 5.2%
</TABLE>
CREDIT RATING DISTRIBUTION (S&P RATING)
- --------------------------------------------------------
[A pie chart appears here illustrating the credit rating distribution (as
rated by S&P) of the fund, as follows:]
A 14.2%
AA 18.0%
AAA 54.0%
Cash and Other 4.2%
Not Rated 4.8%
PERFORMANCE INFORMATION
- --------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT OVER LIFE OF FUND
[A graph appears here which illustrates the growth of a $10,000 investment in
Class A, B, and C shares over the life of the fund in comparison to the Lehman
Brothers 7-Year Municipal Bond Index.]
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C LEHMAN BROTHERS
---- ------- ------- ------- ---------------
<S> <C> <C> <C> <C>
09/30/94 9,525 10,000 10,000 10,000
10/31/94 9,429 9,893 9,893 9,899
11/30/94 9,282 9,732 9,732 9,754
12/31/94 9,402 9,852 9,852 9,903
01/31/95 9,638 10,093 10,093 10,088
02/28/95 9,867 10,326 10,326 10,316
03/31/95 9,962 10,419 10,419 10,423
04/30/95 9,985 10,438 10,438 10,450
05/31/95 10,236 10,693 10,693 10,728
06/30/95 10,195 10,644 10,644 10,719
07/31/95 10,299 10,746 10,746 10,856
08/31/95 10,414 10,858 10,858 10,984
09/30/95 10,448 10,887 10,887 11,026
10/31/95 10,564 11,001 11,001 11,073
11/30/95 10,649 11,083 11,083 11,145
12/31/95 10,712 10,742 11,142 11,111
</TABLE>
Investment Values as of Dec. 31, 1995
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C LEHMAN BROTHERS+
---- ------- ------- ------- ----------------
<S> <C> <C> <C> <C>
09/30/94 $10,000 $10,000 $10,000 $10,000
12/31/95 10,712 10,742 11,142 11,111
</TABLE>
+The Lehman Brothers 7-Year Municipal Bond Index is a representative total
return benchmark for the fund. Investment returns are historical and not
predictive of future performance. Class A and Class B are calculated net of the
maximum front-end or contingent deferred sales charge, respectively, and
include the reinvestment of dividends and realized gains.
<TABLE>
<CAPTION>
AVERAGE ANNUAL SINCE
TOTAL RETURN 1 YEAR INCEPTION*
- ------------------------------------------------
<S> <C> <C>
Class A
NAV 13.93% 9.85%
POP 8.52% 5.66%
Class B
NAV 13.09% 9.04%
CDSC 8.09% 5.89%
Class C
NAV 13.09% 9.04%
Lehman Brothers 7-Year
Municipal Bond Index 12.20% 8.80%
</TABLE>
*Inception date of fund was September 30, 1994.
Average Annual Returns including the Public Offering Price (POP) with the
maximum 4.75% front-end sales charge on Class A Shares and the Contingent
Deferred Sales Charge (CDSC) of 5% for one year and 4% for the life of fund on
Class B Shares.
Investment returns are historical. Returns and principal value will fluctuate
causing a gain or loss at sale.
==============================================================================17
1995 Annual Report
<PAGE> 20
SAFECO ADVISOR WASHINGTON STATE
MUNICIPAL BOND FUND
HIGHLIGHTS
As of December 31, 1995
WEIGHTED AVERAGE
MATURITY (IN YEARS) 24.44
- -------------------------------------------------------------
<TABLE>
<CAPTION>
TOP FIVE PERCENT OF
HOLDINGS NET ASSETS
- -------------------------------------------------------------
<S> <C>
Port Angeles Water and Wastewater Utility Revenue 5.0%
Washington Health Care Facilities Authority (HMHB) 4.9%
Renton Water and Sewer Improvement Revenue 4.9%
Snohomish County Public Utility District #1 4.8%
King County Limited Tax General Obligation 4.8%
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PERCENT OF
TYPES OF BONDS NET ASSETS
- -------------------------------------------------------------
<S> <C>
Utilities - Water and Sewer 19.0%
Hospital 18.2%
Electric Utilities - Combination 13.4%
Utilities - Sewer 8.9%
Housing - Uninsured 8.1%
</TABLE>
CREDIT RATING DISTRIBUTION (S&P RATING)
- -------------------------------------------------------------
[A pie chart appears here illustrating the credit rating distribution (as
rated by S&P) of the fund, as follows:]
A 8.1%
AA 20.8%
AAA 64.1%
Cash and Other 2.2%
Not Rated 4.8%
PERFORMANCE INFORMATION
- -------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT OVER LIFE OF FUND
[A graph appears here which illustrates the growth of a $10,000 investment in
Class A, B, and C shares over the life of the fund in comparison to the Lehman
Brothers Long Municipal Bond Index.]
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C SHEARSON
---- ------- ------- ------- --------
<S> <C> <C> <C> <C>
09/30/94 9,525 10,000 10,000 10,000
10/31/94 9,318 9,776 9,776 9,693
11/30/94 9,177 9,622 9,622 9,437
12/31/94 9,436 9,888 9,888 9,772
01/31/95 9,782 10,244 10,244 10,202
02/28/95 10,189 10,654 10,664 10,617
03/31/95 10,232 10,702 10,702 10,745
04/30/95 10,202 10,664 10,664 10,740
05/31/95 10,616 11,090 11,090 11,197
06/30/95 10,424 10,883 10,883 10,991
07/31/95 10,466 10,919 10,919 11,047
08/31/95 10,626 11,080 11,080 11,203
09/30/95 10,686 11,136 11,136 11,291
10/31/95 10,888 11,339 11,340 11,507
11/30/95 11,150 11,605 11,605 11,748
12/31/95 11,300 11,343 11,754 11,931
</TABLE>
Investment Value As of Dec. 31, 1995
<TABLE>
<CAPTION>
DATE CLASS A CLASS B CLASS C LEHMAN BROTHERS+
---- ------- ------- ------- ----------------
<S> <C> <C> <C> <C>
9/30/94 $10,000 $10,000 $10,000 $10,000
12/31/95 11,300 11,343 11,754 11,931
</TABLE>
+The Lehman Brothers Long Municipal Bond Index is a representative total return
benchmark for the fund. Investment returns are historical and not predictive of
future performance. Class A and Class B are calculated net of the maximum
front-end or contingent deferred sales charge, respectively, and include the
reinvestment of dividends and realized gains.
<TABLE>
<CAPTION>
AVERAGE ANNUAL SINCE
TOTAL RETURN 1 YEAR INCEPTION*
- ------------------------------------------------
<S> <C> <C>
Class A
NAV 19.75% 14.65%
POP 14.06% 10.27%
Class B
NAV 18.76% 13.72%
CDSC 13.76% 10.61%
Class C
NAV 18.87% 13.80%
Lehman Brothers Long
Municipal Bond Index 22.09% 15.17%
</TABLE>
*Inception date of fund was September 30, 1994.
Average Annual Returns including the Public Offering Price (POP) with the
maximum 4.75% front-end sales charge on Class A Shares and the Contingent
Deferred Sales Charge (CDSC) of 5% for one year and 4% for the life of fund on
Class B Shares.
Investment returns are historical. Returns and principal value will fluctuate
causing a gain or loss at sale.
18==============================================================================
SAFECO Advisor Funds
<PAGE> 21
SAFECO ADVISOR MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
As of December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
(000'S) (000'S)
- ----------------------------------------------------
<S> <C> <C>
BONDS - 98.1%
Arizona - 4.8%
$300 Phoenix Civic Improvement Corp.
Wastewater System Lease Revenue
5.00%, due 7/01/18.................$287
California - 12.9%
250 East Bay Regional Park District
California General Obligation
5.75%, due 9/01/16................. 253
300 Los Angeles Wastewater System Revenue
4.70%, due 11/01/19 [FGIC]* ....... 278
250 Sacramento County Sanitation District
Finance Authority
4.75%, due 12/01/23 .............. 229
Colorado - 4.8%
285 Denver School District #1
General Obligation
5.125%, due 12/01/12............... 284
Delaware - 4.7%
300 Delaware River and Bay Authority Revenue
4.75%, due 1/01/24 [MBIA].......... 281
Florida - 8.4%
250 Orange County Sales Tax Revenue
5.375%, due 1/01/24................ 245
250 Orlando and Orange County Expressway
Authority Junior Lien Revenue
5.95%, due 7/01/23................. 254
Illinois - 4.8%
250 Illinois Civic Center Revenue
6.25%, due 12/15/20 [AMBAC]........ 284
Massachusetts - 4.6%
275 Massachusetts Water Resources Authority
General Revenue
5.50%, due 3/01/17 ................ 271
Michigan - 3.9%
250 Detroit Water Supply System Revenue
4.75%, due 7/01/19 [FGIC] ......... 233
Nebraska - 4.8%
300 Nebraska Public Power District
Power Supply System Revenue
5.00%, due 1/01/17 ................ 283
New York - 4.2%
250 New York State Thruway Authority
General Revenue
5.50%, due 1/01/23 [FGIC].......... 249
Pennsylvania - 3.9%
250 Pittsburgh Water and Sewer
Authority Revenue
4.75%, due 9/01/16 [FGIC].......... 233
Texas - 10.2%
325 Colorado River Municipal Water District
Water System Revenue
5.15%, due 1/01/21 [AMBAC] ........ 314
300 San Antonio Electric and Gas
Systems Revenue
5.00%, due 2/01/16 ................ 289
Utah - 3.9%
250 Intermountain Power Agency
Power Supply Revenue
5.00%, due 7/01/21............... 231
Washington - 17.3%
250 Everett School District #2
Snohomish County
Unlimited Tax General Obligation
6.20%, due 12/01/12 [MBIA]....... 267
250 King County Housing Authority
Pooled Housing Refunding Revenue
6.80%, due 3/01/26 .............. 264
250 Seattle Municipal Light and
Power Revenue
5.375%, due 11/01/18 ............ 247
250 Washington Health Care Facilities
Authority Revenue (Empire Health
Service, Spokane)
5.625%, due 11/01/19 [MBIA]...... 249
Wisconsin - 4.9%
300 Wisconsin Public Power, Inc. System
Power Supply System Revenue
5.25%, due 7/01/21 [AMBAC]....... 293
------
TOTAL BONDS .................................. 5,818
------
SHORT-TERM INVESTMENTS - 0.7%
Investment Companies:
40 Aim Tax-Exempt Money Market
Fund, Inc. .......................... 40
------
TOTAL SHORT-TERM INVESTMENTS.................. 40
------
TOTAL INVESTMENTS - 98.8%..................... 5,858
------
Other Assets, less Liabilities............... 72
------
NET ASSETS....................................$5,930
======
</TABLE>
*The provider of the guarantee of timely payment of both principal and interest
is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio are: AMBAC -- AMBAC Indemnity Corp.
(15.0% of portfolio), FGIC -- Financial Guaranty Insurance Corp. (16.7% of
portfolio), and MBIA -- Municipal Bond Investors Assurance Corp. (13.4% of
portfolio).
See Notes to Financial Statements
==============================================================================19
1995 Annual Report
<PAGE> 22
SAFECO ADVISOR INTERMEDIATE-TERM MUNICIPAL
BOND FUND PORTFOLIO OF INVESTMENTS
As of December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
(000'S) (000'S)
- ----------------------------------------------------
<S> <C> <C>
BONDS - 95.8%
California - 4.8%
$250 California Housing Finance Agency
Housing Revenue
5.75%, due 8/01/03 [MBIA]*.........$259
District of Columbia - 4.4%
220 District of Columbia University Revenue
(Georgetown University Issue)
6.30%, due 4/01/03................. 240
Illinois - 19.6%
240 Chicago General Obligation
6.20%, due 1/01/04 [AMBAC]......... 265
250 Cook County Community Consolidated
School District #21 (Wheeling)
General Obligation Limited Tax
5.80%, due 12/01/04 [AMBAC]........ 271
240 Metropolitan Pier and Exposition Authority
5.90%, due 6/15/03 [MBIA].......... 258
250 Will County School District #161
(Frankfort)
5.75%, due 1/01/05 [FGIC].......... 267
Michigan - 5.2%
270 Detroit Sewage Disposal System Revenue
5.10%, due 7/01/04 [FGIC].......... 278
Missouri - 5.0%
250 New Madrid Power Plant Revenue
5.65%, due 6/01/03 [AMBAC]......... 268
Nevada - 4.7%
235 Clark County Limited Tax General
Obligation
(Flood Control)
6.30%, due 11/01/04 [AMBAC]........ 255
New Jersey - 4.8%
240 New Jersey Turnpike Authority Revenue
6.00%, due 1/01/05................. 257
North Carolina - 4.9%
250 North Carolina Municipal Power Agency #1
Catawba Electric Revenue
5.90%, due 1/01/03 ................ 262
South Carolina - 4.9%
245 Georgetown County, Pollution
Control Revenue
(International Paper Company Project)
6.25%, due 6/15/05................. 266
Texas - 3.7%
190 Texas General Obligation
Veterans' Housing Assistance Program
5.90%, due 6/01/04................. 197
Utah - 4.8%
240 Utah State Board of Regents
Student Loan Revenue
5.45%, due 5/01/05................. 258
Washington - 24.6%
250 Benton School District #17 (Kennewick)
General Obligation
5.70%, due 12/01/03 [AMBAC] ....... 269
250 Conservation and Renewable Energy System
Conservation Project Revenue
5.85%, due 10/01/05 ............... 266
250 Pasco Water and Sewer Revenue
5.65%, due 6/01/03 [MBIA]........ 267
240 Seatac Local Option Transportation
Tax Revenue
5.75%, due 12/01/03 [MBIA]....... 258
270 Washington Public Power Supply System
Nuclear Project #3 Revenue
4.90%, due 7/01/04............... 269
Wisconsin - 4.4%
200 Wisconsin Public Power, Inc.
System Power Supply System Revenue
7.50%, due 7/01/04............... 238
------
TOTAL BONDS .................................. 5,168
------
SHORT-TERM INVESTMENTS - 3.4%
Investment Companies:
185 Aim Tax-Exempt Money Market
Fund, Inc. ........................... 185
------
TOTAL SHORT-TERM INVESTMENTS.................. 185
------
TOTAL INVESTMENTS - 99.2%..................... 5,353
Other Assets, less Liabilities............... 43
------
NET ASSETS....................................$5,396
======
</TABLE>
*The provider of the guarantee of timely payment of both principal and interest
is identified in the brackets at the end of each bond description. The
guarantors applicable to this portfolio are: AMBAC -- AMBAC Indemnity Corp.
(24.6% of portfolio), FGIC -- Financial Guaranty Insurance Corp. (10.1% of
portfolio), and MBIA -- Municipal Bond Investors Assurance Corp. (19.3% of
portfolio).
See Notes to Financial Statements
20==============================================================================
SAFECO Advisor Funds
<PAGE> 23
SAFECO ADVISOR WASHINGTON MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
As of December 31, 1995
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT MARKET VALUE
(000'S) (000'S)
- ----------------------------------------------------------------
BONDS - 97.8%
<S> <C> <C>
$250 Grant County Public Utility District #2
Wanapum Hydroelectric Revenue
6.375%, due 1/01/23......................... $260
200 King County Housing Authority
Pooled Housing Refunding Revenue
6.80%, due 3/01/26.......................... 211
320 King County Limited Tax General Obligation
4.50%, due 1/01/24.......................... 278
250 Klickitat County Public Utility District #1
Electric Revenue
5.75%, due 10/01/27......................... 253
250 Municipality of Metropolitan
Seattle Sewer Revenue
6.30%, due 1/01/33 [MBIA]*.................. 265
260 Port Angeles Water and Wastewater
Utility Revenue
6.75%, due 11/01/24 [MBIA].................. 291
175 Port of Seattle Revenue
6.25%, due 11/01/17......................... 184
285 Renton Water and Sewer
Improvement Revenue
5.375%, due 4/01/13......................... 282
250 Richland Water and Sewer Revenue
6.25%, due 4/01/12 [MBIA]................... 264
250 Seattle Drainage and Wastewater Utility
Improvement Revenue
5.75%, due 12/01/22......................... 252
250 Seattle Municipal Light and Power Revenue
5.375%, due 11/01/18........................ 247
250 Seattle Water System Revenue
5.50%, due 6/01/18.......................... 250
285 Snohomish County Public Utility District #1
Generation System Revenue
5.50%, due 1/01/20 [FGIC]................... 280
250 Spokane Public Facility District Revenue
(Arena Project)
6.50%, due 1/01/18 [AMBAC].................. 270
250 Walla Walla Water and Sewer Revenue
6.20%, due 8/01/12 [MBIA]................... $267
250 Washington Certificates of Participation
(State Office Building Project)
6.00%, due 4/01/12 [MBIA]................... 261
250 Washington Health Care Facilities Authority
Revenue (Empire Health Service Spokane)
5.625%, due 11/01/19 [MBIA]................. 249
250 Washington Health Care Facilities Authority
Revenue (Group Health)
6.25%, due 12/01/21 [MBIA].................. 262
290 Washington Health Care Facilities Authority
Revenue (Harrison Memorial
Hospital, Bremerton)
5.40%, due 8/15/23 [AMBAC].................. 285
250 Washington Health Care Facilities Authority
Revenue (Swedish Hospital Medical Center)
6.30%, due 11/15/22 [AMBAC]................. 265
250 Washington Public Power Supply System
Nuclear Project #1 Revenue
5.70%, due 7/01/17 [MBIA]................... 252
250 Washington State Housing Finance Commission
Revenue (Horizon House Project)
6.125%, due 7/01/27 [MBIA].................. 256
------
</TABLE>
<TABLE>
<S> <C>
TOTAL BONDS ............................................ 5,684
------
SHORT-TERM INVESTMENTS - 1.6%
Investment Companies:
94 Aim Tax-Exempt Money Market Fund, Inc............... 94
------
TOTAL SHORT-TERM INVESTMENTS............................ 94
------
TOTAL INVESTMENTS - 99.4%............................... 5,778
Other Assets, less Liabilities......................... 37
------
NET ASSETS.............................................. $5,815
======
</TABLE>
* The provider of the guarantee of timely payment of both principal and
interest is identified in the brackets at the end of each bond description.
The guarantors applicable to this portfolio are: AMBAC -- AMBAC Indemnity
Corp. (14.1% of portfolio), FGIC -- Financial Guaranty Insurance Corp. (4.8%
of portfolio), and MBIA -- Municipal Bond Investors Assurance Corp. (40.7% of
portfolio).
See Notes to Finanacial Statements
==============================================================================21
1995 ANNUAL REPORT
<PAGE> 24
STATEMENTS OF ASSETS & LIABILITIES
As of December 31, 1995
<TABLE>
<CAPTION>
SAFECO ADVISOR SAFECO ADVISOR SAFECO ADVISOR
EQUITY NORTHWEST INTERMEDIATE-TERM
FUND FUND TREASURY FUND
- -----------------------------------------------------------------------------------------------------------------------
-- (IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS) --
<S> <C> <C> <C>
Assets
Investments, at Value
Common Stocks (Identified Cost $6,120 and
$5,077, respectively) $6,803 $5,238
U.S. Government and Agency Obligations
(Identified Cost $5,132, $5,131 and
$4,948, respectively) $5,541
Municipal Bonds (Identified Cost $4,904,
$4,787 and $5,064, respectively)
Short-Term Investments 502 204 74
------ ------ ------
Total Investments 7,305 5,442 5,615
Receivables
Dividends and Interest 14 5 84
Trust Shares Sold 46 -- 12
Investment Securities Sold -- 54 --
Deferred Organization Expense 22 22 22
------ ------ ------
Total Assets 7,387 5,523 5,733
------ ------ ------
Liabilities
Payables
Dividends 618 94 102
Investment Securities Purchased 239 54 --
Organization Expense 22 22 22
Other 16 15 15
Investment Advisory Fees 4 3 2
Trust Shares Redeemed -- -- --
------ ------ ------
Total Liabilities 899 188 141
------ ------ ------
Net Assets $6,488 $5,335 $5,592
====== ====== ======
Class A:
Net Assets $2,363 $1,850 $1,946
------ ------ ------
Shares Outstanding 208 178 180
------ ------ ------
Net Asset Value and Redemption Price Per Share $11.35 $10.38 $10.79
====== ====== ======
Maximum Offering Price Per Share (Net Asset
Value Plus Sales Charge of 4.75%) $11.92 $10.90 $11.33
====== ====== ======
Class B:
Net Assets $1,955 $1,740 $1,799
------ ------ ------
Shares Outstanding 173 169 167
------ ------ ------
Net Asset Value and Offering Price Per Share $11.35 $10.28 $10.80
====== ====== ======
Class C:
Net Assets $2,170 $1,745 $1,847
------ ------ ------
Shares Outstanding 191 170 171
------ ------ ------
Net Asset Value, Offering Price and
Redemption Price Per Share $11.34 $10.28 $10.80
====== ====== ======
</TABLE>
See Notes to Financial Statements
22==============================================================================
SAFECO ADVISOR FUNDS
<PAGE> 25
<TABLE>
<CAPTION>
SAFECO ADVISOR SAFECO ADVISOR
SAFECO ADVISOR SAFECO ADVISOR SAFECO ADVISOR INTERMEDIATE-TERM WASHINGTON
U.S. GOVERNMENT GNMA MUNICIPAL MUNICIPAL BOND MUNICIPAL BOND
FUND FUND BOND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$5,412 $5,280 -- -- --
-- -- $5,818 $5,168 $5,684
37 119 40 185 94
------ ------ ------ ------ ------
5,449 5,399 5,858 5,353 5,778
54 31 107 75 97
-- -- -- -- --
-- -- -- -- --
22 22 22 22 22
------ ------ ------ ------ ------
5,525 5,452 5,987 5,450 5,897
------ ------ ------ ------ ------
205 22 17 15 27
-- -- -- -- --
22 22 22 22 22
14 15 15 15 15
3 3 3 2 3
-- -- -- -- 15
------ ------ ------ ------ ------
244 62 57 54 82
------ ------ ------ ------ ------
$5,281 $5,390 $5,930 $5,396 $5,815
====== ====== ====== ====== ======
$1,761 $1,838 $1,964 $1,786 $1,911
------ ------ ------ ------ ------
167 173 167 167 170
------ ------ ------ ------ ------
$10.56 $10.62 $11.78 $10.71 $11.20
====== ====== ====== ====== ======
$11.09 $11.15 $12.37 $11.24 $11.76
====== ====== ====== ====== ======
$1,760 $1,770 $1,989 $1,785 $1,970
------ ------ ------ ------ ------
167 166 169 167 176
------ ------ ------ ------ ------
$10.56 $10.62 $11.78 $10.71 $11.19
====== ====== ====== ====== ======
$1,760 $1,782 $1,977 $1,825 $1,934
------ ------ ------ ------ ------
166 168 167 170 173
------ ------ ------ ------ ------
$10.56 $10.62 $11.78 $10.71 $11.20
====== ====== ====== ====== ======
</TABLE>
==============================================================================23
1995 ANNUAL REPORT
<PAGE> 26
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
SAFECO ADVISOR SAFECO ADVISOR SAFECO ADVISOR
EQUITY NORTHWEST INTERMEDIATE-TERM
FUND FUND TREASURY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
-- (IN THOUSANDS) --
<S> <C> <C> <C>
Investment Income
Dividends $ 163 $ 44 --
Interest 18 14 $ 340
-------------- -------------- -------------
Total Investment Income 181 58 340
-------------- -------------- -------------
Expenses
Investment Advisory Fees 43 39 32
Shareholder Service Fees 15 14 13
Distribution Fees - Class B 14 13 13
Distribution Fees - Class C 14 13 13
Registration and Filing Fees 24 23 24
Legal and Auditing Fees 13 13 13
Amortization of Organization Expenses 6 6 6
Custodian Fees 16 6 3
Trustees' Fees 3 3 3
-------------- -------------- -------------
Total Expenses 148 130 120
Expenses Reimbursed by Advisor (Note 4) (24) (23) (24)
-------------- -------------- -------------
Net Expenses 124 107 96
-------------- -------------- -------------
Net Investment Income (Loss) 57 (49) 244
-------------- -------------- -------------
Net Realized and Unrealized Gain (Loss) on Investments
Net Realized Gain (Loss) on Investments 678 145 86
Net Change in Unrealized Appreciation 802 283 443
-------------- -------------- -------------
Net Gain on Investments 1,480 428 529
-------------- -------------- -------------
Net Change in Net Assets Resulting from Operations $ 1,537 $ 379 $ 773
============== ============== =============
</TABLE>
See Notes to Financial Statements
24==============================================================================
SAFECO ADVISOR FUNDS
<PAGE> 27
<TABLE>
<CAPTION>
SAFECO ADVISOR SAFECO ADVISOR
SAFECO ADVISOR SAFECO ADVISOR SAFECO ADVISOR INTERMEDIATE-TERM WASHINGTON
U.S. GOVERNMENT GNMA MUNICIPAL MUNICIPAL BOND MUNICIPAL BOND
FUND FUND BOND FUND FUND FUND
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
-- -- -- -- --
$ 321 $ 393 $ 322 $ 286 $ 332
------- ------- ------- ------- -------
321 393 322 286 332
------- ------- ------- ------- -------
30 30 32 30 32
13 13 14 13 14
13 13 14 13 14
13 13 13 13 13
23 23 23 23 23
13 13 13 13 13
6 6 6 6 6
3 4 3 3 4
3 3 3 3 3
------- ------- ------- ------- -------
117 118 121 117 122
(23) (23) (23) (23) (23)
------- ------- ------- ------- -------
94 95 98 94 99
------- ------- ------- ------- -------
227 298 224 192 233
------- ------- ------- ------- -------
191 (16) 8 -- 32
285 434 938 458 689
------- ------- ------- ------- -------
476 418 946 458 721
------- ------- ------- ------- -------
$ 703 $ 716 $ 1,170 $ 650 $ 954
======= ======= ======= ======= =======
</TABLE>
==============================================================================25
1995 ANNUAL REPORT
<PAGE> 28
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SAFECO ADVISOR SAFECO ADVISOR SAFECO ADVISOR
EQUITY NORTHWEST INTERMEDIATE-TERM
FUND FUND TREASURY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
-- (IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS) --
1995(1) 1994(2) 1995(1) 1994(2) 1995(1) 1994(2)
----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net Investment Income (Loss) $ 57 $ 9 $ (49) $ (9) $ 244 $ 49
Net Realized Gain (Loss) on
Investments 678 -- 145 -- 86 (2)
Net Change in Unrealized
Appreciation (Depreciation) 802 (119) 283 (122) 443 (34)
----------------------- ----------------------- -----------------------
Net Change in Net Assets
Resulting from Operations 1,537 (110) 379 (131) 773 13
----------------------- ----------------------- -----------------------
Distributions to Shareholders from
Net Investment Income - Class A (30) (5) -- -- (93) (19)
Net Investment Income - Class B (13) (2) -- -- (75) (15)
Net Investment Income - Class C (14) (2) -- -- (76) (15)
Net Realized Gain on Investments - Class A (242) -- (33) -- (29) --
- Class B (207) -- (31) -- (27) --
- Class C (228) -- (32) -- (28) --
----------------------- ----------------------- -----------------------
Total (734) (9) (96) -- (328) (49)
----------------------- ----------------------- -----------------------
Net Trust Share Transactions
Class A 454 1,668 121 1,668 139 1,667
Class B 61 1,669 28 1,667 -- 1,667
Class C 278 1,674 30 1,669 34 1,676
----------------------- ----------------------- -----------------------
Total 793 5,011 179 5,004 173 5,010
----------------------- ----------------------- -----------------------
Total Change in Net Assets 1,596 4,892 462 4,873 618 4,974
Net Assets at Beginning of Period 4,892 -- 4,873 -- 4,974 --
----------------------- ----------------------- -----------------------
Net Assets at End of Period $ 6,488 $ 4,892 $ 5,335 $ 4,873 $ 5,592 $ 4,974
======================= ======================= =======================
OTHER INFORMATION
Increase in Fund Shares and Amounts
Shares
Sales 65 501* 17 501* 23 501*
Reinvestments 7 -- 1 -- 1 --
Redemptions (1) -- (1) -- (7) --
----------------------- ----------------------- -----------------------
Net Change 71 501 17 501 17 501
======================= ======================= =======================
Amounts
Sales $ 731 $ 5,011* $ 180 $ 5,004* $ 234 $ 5,010*
Reinvestments 78 -- 3 -- 7 --
Redemptions (16) -- (4) -- (68) --
----------------------- ----------------------- -----------------------
Net Change $ 793 $ 5,011 $ 179 $ 5,004 $ 173 $ 5,010
======================= ======================= =======================
</TABLE>
(1) For the year ended December 31, 1995.
(2) For the period from September 30, 1994 (Commencement of Operations) to
December 31, 1994.
* Includes 500,000 shares purchased for $5,000,000 by SAFECO Corporation.
** Includes 500,000 shares purchased for $5,000,000 by SAFECO Asset Management
Company, the Fund's investment advisor.
See Notes to Financial Statements
26=============================================================================
SAFECO ADVISOR FUNDS
<PAGE> 29
<TABLE>
<CAPTION>
SAFECO ADVISOR SAFECO ADVISOR
SAFECO ADVISOR SAFECO ADVISOR SAFECO ADVISOR INTERMEDIATE-TERM WASHINGTON
U.S. GOVERNMENT GNMA MUNICIPAL MUNICIPAL BOND MUNICIPAL BOND
FUND FUND BOND FUND FUND FUND
- --------------------------------------------------------------------------------------------------------------------------------
1995(1) 1994(2) 1995(1) 1994(2) 1995(1) 1994(2) 1995(1) 1994(2) 1995(1) 1994(2)
- -------------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 227 $ 48 $ 298 $ 57 $ 224 $ 35 $ 192 $ 29 $ 233 $ 37
191 (3) (16) 1 8 (27) -- (24) 32 (21)
285 (4) 434 (102) 938 (24) 458 (77) 689 (69)
- -------------------- -------------------- -------------------- -------------------- --------------------
703 41 716 (44) 1,170 (16) 650 (72) 954 (53)
- -------------------- -------------------- -------------------- -------------------- --------------------
(84) (18) (110) (21) (84) (14) (72) (12) (86) (14)
(71) (15) (94) (18) (70) (11) (60) (9) (74) (11)
(71) (15) (94) (18) (70) (10) (60) (8) (73) (12)
(63) -- -- (1) -- -- -- -- (3) --
(63) -- -- -- -- -- -- -- (4) --
(63) -- -- -- -- -- -- -- (3) --
- -------------------- -------------------- -------------------- -------------------- --------------------
(415) (48) (298) (58) (224) (35) (192) (29) (243) (37)
- -------------------- -------------------- -------------------- -------------------- --------------------
-- 1,667 63 1,667 0 1,667 -- 1,667 41 1,667
-- 1,667 -- 1,667 23 1,667 -- 1,667 64 1,696
-- 1,666 11 1,666 12 1,666 39 1,666 2 1,724
- -------------------- -------------------- -------------------- -------------------- --------------------
-- 5,000 74 5,000 35 5,000 39 5,000 107 5,087
- -------------------- -------------------- -------------------- -------------------- --------------------
288 4,993 492 4,898 981 4,949 497 4,899 818 4,997
4,993 -- 4,898 -- 4,949 -- 4,899 -- 4,997 --
- -------------------- -------------------- -------------------- -------------------- --------------------
$ 5,281 $ 4,993 $ 5,390 $ 4,898 $ 5,930 $ 4,949 $ 5,396 $ 4,899 $ 5,815 $ 4,997
==================== ==================== ==================== ==================== ====================
-- 500* 7 500* 3 500** 4 500** 11 509**
-- -- -- -- -- -- -- -- 1 --
-- -- -- -- -- -- -- -- (1) --
- -------------------- -------------------- -------------------- -------------------- --------------------
-- 500 7 500 3 500 4 500 11 509
==================== ==================== ==================== ==================== ====================
$ -- $ 5,000* $ 70 $ 5,000* $ 35 $ 5,000** $ 39 $ 5,000** $ 114 $ 5,087**
-- -- 4 -- -- -- -- -- 8 --
-- -- -- -- -- -- -- -- (15) --
- -------------------- -------------------- -------------------- -------------------- --------------------
$ -- $ 5,000 $ 74 $ 5,000 $ 35 $ 5,000 $ 39 $ 5,000 $ 107 $ 5,087
==================== ==================== ==================== ==================== ====================
</TABLE>
==============================================================================27
1995 ANNUAL REPORT
<PAGE> 30
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The SAFECO Advisor Series Trust ("Trust") is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Trust consists of the SAFECO Advisor Equity
Fund ("Advisor Equity"), SAFECO Advisor Northwest Fund ("Advisor Northwest"),
SAFECO Advisor Intermediate-Term Treasury Fund ("Advisor Intermediate
Treasury"), SAFECO Advisor U.S. Government Fund ("Advisor U.S. Government"),
SAFECO Advisor GNMA Fund ("Advisor GNMA"), SAFECO Advisor Municipal Bond Fund
("Advisor Municipal"), SAFECO Advisor Intermediate-Term Municipal Bond Fund
("Advisor Intermediate Municipal"), SAFECO Advisor Washington Municipal Bond
Fund ("Advisor Washington") (together "the Advisor Funds," or "the Funds").
Prior to commencement of operations (September 30, 1994), the Funds had no
activities other than organizational matters and activities related to the
initial public offering. Each Fund issues three classes of stock. Each class
represents an interest in the same assets of a fund and the classes are
identical except for differences in their sales charge structure and ongoing
distribution charges. Class B shares automatically convert to Class A shares
approximately eight years after initial issuance. All classes of shares have
equal rights as to earnings, assets and voting privileges, except that each
class bears different distribution charges and has exclusive voting rights with
respect to its distribution plan. The following is a summary of significant
accounting policies consistently followed by the Trust in the preparation of its
financial statements. The policies are in conformity with generally accepted
accounting principles.
SECURITY VALUATION. Investments in equity securities are valued at the
last-reported sales price, unless there are no transactions, in which case they
are valued at the last-reported bid price. Investments in bonds are stated on
the basis of valuations provided by a pricing service, which uses information
with respect to transactions in bonds, quotations from bond dealers, market
transactions in comparable securities and various relationships between
securities in determining value. Short-term investments purchased at par are
valued at cost. All other short-term investments are valued at amortized cost.
SECURITY TRANSACTIONS. Security transactions are recorded on the trade
date. The cost of the portfolios is the same for financial statement and federal
income tax purposes. Realized gains and losses from security transactions are
determined using the identified cost basis.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS. Securities purchased on a
when-issued or delayed basis may be settled a month or more after the trade
date. The securities purchased are carried in the portfolio at market and are
subject to market fluctuation during this period. These securities begin earning
interest on the settlement date. As commitments to purchase when-issued
securities become fixed, the Fund establishes a segregated asset account equal
to the total obligation.
INCOME RECOGNITION. Dividend income less foreign taxes withheld (if any)
is recorded on the ex-dividend date. Interest is accrued on bonds and short-term
investments daily. Bond premiums and original issue discounts and market
discounts on taxable bonds are amortized to either call or maturity dates.
Market discount on municipal bonds purchased after April 30, 1993, if any, is
recorded as taxable income at disposition.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. For the Advisor Equity and
Advisor Northwest Funds, net investment income is declared as a dividend to
shareholders as of the last business day (ex-dividend date) of March, June,
September and December. For all other Advisor Funds, net investment income is
declared as a dividend to shareholders of record as of the close of each
business day and payment is made as of the last business day of each month. For
all Advisor Funds, net gains realized from security transactions, if any, are
normally distributed to shareholders at the end of December.
FEDERAL INCOME AND EXCISE TAXES. The Funds intend to continue to comply
with the requirements of the Internal Revenue Code applicable to regulated
investment companies by distributing substantially all taxable income to their
shareholders in a manner which results in no tax to the Funds. Therefore, no
federal income or excise tax provision is required. In addition, the Advisor
Municipal, Advisor Intermediate Municipal, and Advisor Washington Funds intend
to satisfy conditions which will enable them to pay dividends which, for
shareholders, are exempt from Federal income taxes. Any portion of dividends
representing net short-term capital gains, however, is not exempt and will be
treated as taxable dividends for Federal income tax purposes. In addition,
income which is derived from amortization on bonds purchased below their issued
price after April 30, 1993, will be treated as ordinary income for Federal
income tax purposes.
28==============================================================================
SAFECO ADVISOR FUNDS
<PAGE> 31
2. INVESTMENT TRANSACTIONS
<TABLE>
<CAPTION>
SAFECO SAFECO
SAFECO SAFECO ADVISOR ADVISOR
ADVISOR ADVISOR INTERMEDIATE- U.S.
EQUITY NORTHWEST TERM GOVERNMENT
FUND FUND TREASURY FUND FUND
- ---------------------------------------------------------------------------------------------------------------------------------
- -- (IN THOUSANDS) --
<S> <C> <C> <C> <C>
Purchases for the Year Ended December 31, 1995
(including $0, $0, $5,204, and $7,792, respectively,
of U.S. Government obligations) $ 7,407 $ 1,949 $ 5,204 $ 7,792
============ =========== =========== ===========
Sales for the Year Ended December 31, 1995
(including $0, $0, $5,088, and $7,726, respectively,
of U.S. Government obligations) $ 6,892 $ 1,657 $ 5,088 $ 7,726
============ =========== =========== ===========
Unrealized Appreciation (Depreciation) at
December 31, 1995
Aggregate Gross Unrealized Appreciation for
Investment Securities in Which There is an Excess
of Value Over Identified Cost $ 874 $ 759 $ 409 $ 281
Aggregate Gross Unrealized Depreciation for
Investment Securities in Which There is an Excess
of Identified Cost Over Value (191) (598) -- --
------------ ----------- ----------- -----------
Net Unrealized Appreciation $ 683 $ 161 $ 409 $ 281
============ =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SAFECO ADVISOR SAFECO
SAFECO SAFECO INTERMEDIATE- ADVISOR
ADVISOR ADVISOR TERM WASHINGTON
GNMA MUNICIPAL MUNICIPAL MUNICIPAL
FUND BOND FUND BOND FUND BOND FUND
- ----------------------------------------------------------------------------------------------------------------------------------
- -- (IN THOUSANDS) --
<S> <C> <C> <C> <C>
Purchases for the Year Ended December 31, 1995
(including $2,445, $0, $0, and $0, respectively,
of U.S. Government obligations) $ 2,445 $ 450 $ 462 $ 1,560
============ =========== =========== ===========
Sales for the Year Ended December 31, 1995
(including $2,368, $0, $0, and $0, respectively,
of U.S. Government obligations) $ 2,368 $ 250 $ 60 $ 734
============ =========== =========== ===========
Unrealized Appreciation (Depreciation) at
December 31, 1995
Aggregate Gross Unrealized Appreciation for
Investment Securities in Which There is an Excess
of Value Over Identified Cost $ 332 $ 914 $ 381 $ 620
Aggregate Gross Unrealized Depreciation for
Investment Securities in Which There is an Excess
of Identified Cost Over Value -- -- -- --
------------ ----------- ----------- -----------
Net Unrealized Appreciation $ 332 $ 914 $ 381 $ 620
============ =========== =========== ===========
</TABLE>
==============================================================================29
1995 ANNUAL REPORT
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS
3. TRUST SHARES
Each Fund has an unlimited number of Class A, B, and C shares authorized,
and par value is $.001. Paid in capital (in thousands) at December 31, 1995, is
as follows:
<TABLE>
<S> <C>
Advisor Equity $5,804*
Advisor Northwest 5,174*
Advisor Intermediate Treasury 5,183*
Advisor U.S. Government 5,000*
Advisor GNMA 5,074*
Advisor Municipal 5,035**
Advisor Intermediate Municipal 5,039**
Advisor Washington 5,194**
</TABLE>
* Includes 500,000 shares (166,667 in each of Class A, B, and C) purchased for
$5,000,000 by SAFECO Corporation.
** Includes 500,000 shares (166,667 in each of Class A, B, and C) purchased for
$5,000,000 by SAFECO Asset Management Company.
4. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEES. SAFECO Asset Management Company receives
investment advisory fees from the Funds. The fee is based on average daily net
assets at the annual rates shown below.
<TABLE>
<CAPTION>
ADVISOR INTERMEDIATE
TREASURY, ADVISOR U.S.
GOVERNMENT, ADVISOR
GNMA, ADVISOR
MUNICIPAL, ADVISOR
INTERMEDIATE
ADVISOR EQUITY AND MUNICIPAL, AND ADVISOR
ADVISOR NORTHWEST FUNDS WASHINGTON FUNDS
- ---------------------------------------------------------------
Net Assets Annual Fee Net Assets Annual Fee
<S> <C> <C> <C>
$0-$500,000,000 .75 of 1% $0-$500,000,000 .60 of 1%
$500,000,001- $500,000,001-
$1,000,000,000 .65 of 1% $1,000,000,000 .50 of 1%
Over Over
$1,000,000,000 .55 of 1% $1,000,000,000 .40 of 1%
</TABLE>
SHAREHOLDER SERVICE AND DISTRIBUTION FEES. SAFECO Services Corporation
receives transfer agent fees. Pursuant to Rule 12b-1 under the Investment
Company Act of 1940, each Class pays SAFECO Securities shareholder service fees
at the annual rate of 0.25% of the aggregate average daily net assets of a
Class. In addition to service fees, Class B and Class C shares each pay SAFECO
Securitites distribution fees at the annual rate of 0.75% of the aggregated
average daily net assets of the respective Class.
NOTES PAYABLE AND INTEREST EXPENSE. The Funds may borrow money for
temporary purposes from SAFECO Corporation or its affiliates.
AFFILIATE OWNERSHIP. At December 31, 1995, SAFECO Corporation owned
500,000 shares of the Advisor Equity, Advisor Northwest, Advisor Intermediate
Treasury, Advisor U.S. Government, and Advisor GNMA Funds, and SAFECO Asset
Management Company owned 500,000 shares of the Advisor Municipal, Advisor
Intermediate Municipal, and Advisor Washington Funds.
DEFERRED ORGANIZATION EXPENSE. Costs related to the organization of each
of the Advisor Funds have been deferred and are being amortized to operations
over a period of sixty months. These costs were advanced by the Investment
Adviser and are being reimbursed by the Funds over a period of not more than
sixty months. If any of the original affiliate ownership shares are redeemed by
SAFECO Corporation or SAFECO Asset Management Company prior to the end of the
amortization period, the redemption proceeds will be reduced by a pro rata share
of the unamortized organization expense as of the date of redemption.
EXPENSE REIMBURSMENT. SAFECO Asset Management Company voluntarily
reimbursed certain state filing fees incurred by the Funds during the year ended
December 31, 1995, as detailed in the Statement of Operations.
5. NET INVESTMENT LOSS
The Advisor Northwest Fund incurred a net investment loss of $49,116
during the year ended December 31, 1995. This amount was netted against
short-term capital gains realized during the year ended December 31, 1995.
6. ACCUMULATED UNDISTRIBUTED CAPITAL LOSS
The Funds had the following amounts of accumulated undistributed net
realized loss on investment transactions at December 31, 1995.
For Federal income tax purposes, these represent capital loss carry
forwards which expire as follows:
<TABLE>
<CAPTION>
AMOUNTS EXPIRATION
(000'S) DATES
- ----------------------------------------------------------------
<S> <C> <C>
Advisor GNMA $(16) 2003
Advisor Municipal (19) 2002 - 2003
Advisor Intermediate Municipal (24) 2002 - 2003
</TABLE>
30==============================================================================
SAFECO ADVISOR FUNDS
<PAGE> 33
7. FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO ADVISOR EQUITY FUND
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
----------------- ---------------- -----------------
1995(1) 1994(2) 1995(1) 1994(2) 1995(1) 1994(2)
----------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $9.76 $10.00 $9.76 $10.00 $9.76 $10.00
Income from Investment Operations
Net Investment Income 0.16 0.03 0.08 0.01 0.08 0.01
Net Realized and Unrealized Gain (Loss) on Investments 2.80 (0.24) 2.80 (0.24) 2.79 (0.24)
---------------- ---------------- -----------------
Total from Investment Operations 2.96 (0.21) 2.88 (0.23) 2.87 (0.23)
---------------- ---------------- -----------------
Distributions to Shareholders from
Net Investment Income (0.16) (0.03) (0.08) (0.01) (0.08) (0.01)
Net Realized Gain on Investments (1.21) -- (1.21) -- (1.21) --
---------------- ---------------- -----------------
Total Distributions (1.37) (0.03) (1.29) (0.01) (1.29) (0.01)
---------------- ---------------- -----------------
Net Asset Value at End of Period $11.35 $9.76 $11.35 $9.76 $11.34 $9.76
================ ================ =================
Total Return (a) 30.42% -2.10%** 29.44% -2.29%** 29.43% -2.29%**
Net Assets at End of Period (000's) $2,363 $1,628 $1,955 $1,629 $2,170 $1,635
Ratio of Expenses to Average Net Assets 1.62% 2.57%* 2.38% 3.31%* 2.37% 3.32%*
Ratio of Expenses to Average Net Assets
Before Expense Reimbursement 2.03% -- 2.79% -- 2.78% --
Ratio of Net Investment Income to Average Net Assets 1.44% 1.18%* 0.69% 0.44%* 0.69% 0.44%*
Portfolio Turnover Rate 120.09% 34.83%* 120.09% 34.83%* 120.09% 34.83%*
</TABLE>
<TABLE>
<CAPTION>
SAFECO ADVISOR NORTHWEST FUND
- -----------------------------------------------------------------------------------------------------------------------------
Class A Class B Class C
----------------- ---------------- -----------------
1995(1) 1994(2) 1995(1) 1994(2) 1995(1) 1994(2)
----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $9.75 $10.00 $9.73 $10.00 $9.73 $10.00
Income from Investment Operations
Net Investment Income (Loss) (0.04) (0.01) (0.12) (0.02) (0.12) (0.02)
Net Realized and Unrealized Gain (Loss) on Investments 0.86 (0.24) 0.86 (0.25) 0.86 (0.25)
----------------- ---------------- -----------------
Total from Investment Operations 0.82 (0.25) 0.74 (0.27) 0.74 (0.27)
----------------- ---------------- -----------------
Distributions to Shareholders from
Net Investment Income -- -- -- -- -- --
Net Realized Gain on Investments (0.19) -- (0.19) -- (0.19) --
----------------- ---------------- -----------------
Total Distributions (0.19) -- (0.19) -- (0.19) --
----------------- ---------------- -----------------
Net Asset Value at End of Period $10.38 $9.75 $10.28 $9.73 $10.28 $9.73
================= ================ =================
Total Return (a) 8.38% -2.50%** 7.57% -2.70%** 7.57% -2.70%**
Net Assets at End of Period (000's) $1,850 $1,626 $1,740 $1,622 $1,745 $1,625
Ratio of Expenses to Average Net Assets 1.51% 2.28%* 2.25% 3.03%* 2.25% 3.03%*
Ratio of Expenses to Average Net Assets
Before Expense Reimbursement 1.93% -- 2.67% -- 2.67% --
Ratio of Net Investment Income (Loss) to Average Net Assets -0.43% -0.20%* -1.17% -0.95%* -1.17% -0.95%*
Portfolio Turnover Rate 32.16% None 32.16% None 32.16% 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 would be lower.
** Not Annualized.
* Annualized.
(1) For the year ended December 31, 1995.
(2) For the period from September 30,1994 (Commencement of Operations) to
December 31, 1994.
- ----------------------------------------------------------------------------- 31
1995 Annual Report
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS
7. FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO ADVISOR INTERMEDIATE-TERM TREASURY FUND
- --------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
---------------- ----------------- -----------------
1995(1) 1994(2) 1995(1) 1994(2) 1995(1) 1994(2)
---------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $9.93 $10.00 $9.93 $10.00 $9.93 $10.00
Income from Investment Operations
Net Investment Income 0.53 0.11 0.45 0.09 0.45 0.09
Net Realized and Unrealized Gain (Loss) on Investments 1.02 (0.07) 1.03 (0.07) 1.03 (0.07)
---------------- ---------------- ----------------
Total from Investment Operations 1.55 0.04 1.48 0.02 1.48 0.02
---------------- ---------------- ----------------
Distributions to Shareholders from
Net Investment Income (0.53) (0.11) (0.45) (0.09) (0.45) (0.09)
Net Realized Gain on Investments (0.16) -- (0.16) -- (0.16) --
---------------- ---------------- ----------------
Total Distributions (0.69) (0.11) (0.61) (0.09) (0.61) (0.09)
---------------- ---------------- ----------------
Net Asset Value at End of Period $10.79 $9.93 $10.80 $9.93 $10.80 $9.93
================ ================ ================
Total Return (a) 16.03% 0.41%** 15.17% 0.22%** 15.16% 0.22%**
Net Assets at End of Period (000's) $1,946 $1,655 $1,799 $1,655 $1,847 $1,664
Ratio of Expenses to Average Net Assets 1.32% 1.86%* 2.06% 2.61%* 2.07% 2.61%*
Ratio of Expenses to Average Net Assets
Before Expense Reimbursement 1.77% -- 2.51% -- 2.52% --
Ratio of Net Investment Income to Average Net Assets 5.08% 4.42%* 4.33% 3.67%* 4.33% 3.67%*
Portfolio Turnover Rate 17.79% 346.43%* 17.79% 346.43%* 17.79% 346.43%*
</TABLE>
<TABLE>
<CAPTION>
SAFECO ADVISOR U.S. GOVERNMENT FUND
- ---------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
---------------- --------------- ----------------
1995(1) 1994(2) 1995(1) 1994(2) 1995(1) 1994(2)
---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $9.99 $10.00 $9.99 $10.00 $9.99 $10.00
Income from Investment Operations
Net Investment Income 0.51 0.11 0.43 0.09 0.43 0.09
Net Realized and Unrealized Gain (Loss) on Investments 0.95 (0.01) 0.95 (0.01) 0.95 (0.01)
---------------- --------------- ----------------
Total from Investment Operations 1.46 0.10 1.38 0.08 1.38 0.08
---------------- --------------- ----------------
Distributions to Shareholders from
Net Investment Income (0.51) (0.11) (0.43) (0.09) (0.43) (0.09)
Net Realized Gain on Investments (0.38) -- (0.38) -- (0.38) --
---------------- --------------- ----------------
Total Distributions (0.89) (0.11) (0.81) (0.09) (0.81) (0.09)
---------------- --------------- ----------------
Net Asset Value at End of Period $10.56 $9.99 $10.56 $9.99 $10.56 $9.99
================ =============== ================
Total Return (a) 14.92% 0.99%** 14.07% 0.79%** 14.07% 0.79%**
Net Assets at End of Period (000's) $1,761 $1,665 $1,760 $1,664 $1,760 $1,664
Ratio of Expenses to Average Net Assets 1.32% 1.85%* 2.07% 2.60%* 2.07% 2.60%*
Ratio of Expenses to Average Net Assets
Before Expense Reimbursement 1.76% -- 2.51% -- 2.51% --
Ratio of Net Investment Income to Average Net Assets 4.88% 4.29%* 4.13% 3.54%* 4.13% 3.54%*
Portfolio Turnover Rate 27.26% 445.09%* 27.26% 445.09%* 27.26% 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 would be lower.
** Not Annualized.
* Annualized.
1 For the year ended December 31, 1995.
2 For the Period from September 30, 1994 (Commencement of Operations) to
December 31, 1994.
32 -----------------------------------------------------------------------------
SAFECO Advisor Funds
<PAGE> 35
7. FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO ADVISOR GNMA FUND
- -------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------ ------------------ ------------------
1995(1) 1994(2) 1995(1) 1994(2) 1995(1) 1994(2)
------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $9.80 $10.00 $9.80 $10.00 $9.80 $10.00
Income from Investment Operations
Net Investment Income 0.64 0.13 0.56 0.11 0.56 0.11
Net Realized and Unrealized Gain (Loss) on Investments 0.82 (0.20) 0.82 (0.20) 0.82 (0.20)
------------------ ------------------ ------------------
Total from Investment Operations 1.46 (0.07) 1.38 (0.09) 1.38 (0.09)
------------------ ------------------ ------------------
Distributions to Shareholders from
Net Investment Income (0.64) (0.13) (0.56) (0.11) (0.56) (0.11)
Net Realized Gain on Investments -- -- -- -- -- --
------------------ ------------------ ------------------
Total Distributions (0.64) (0.13) (0.56) (0.11) (0.56) (0.11)
------------------ ------------------ ------------------
Net Asset Value at End of Period $10.62 $9.80 $10.62 $9.80 $10.62 $9.80
================== ================== ==================
Total Return (a) 15.28% -0.72%** 14.43% -0.90%** 14.43% -0.90%**
Net Assets at End of Period (000's) $1,838 $1,633 $1,770 $1,633 $1,782 $1,632
Ratio of Expenses to Average Net Assets 1.34% 1.98%* 2.09% 2.73%* 2.09% 2.73%*
Ratio of Expenses to Average Net Assets
Before Expense Reimbursement 1.78% -- 2.53% -- 2.53% --
Ratio of Net Investment Income to Average Net Assets 6.22% 5.11%* 5.47% 4.36%* 5.47% 4.36%*
Portfolio Turnover Rate 29.62% 2.74%* 29.62% 2.74%* 29.62% 2.74%*
</TABLE>
<TABLE>
<CAPTION>
SAFECO ADVISOR MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------ ------------------ ------------------
1995(1) 1994(2) 1995(1) 1994(2) 1995(1) 1994(2)
------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $9.90 $10.00 $9.90 $10.00 $9.90 $10.00
Income from Investment Operations
Net Investment Income 0.50 0.08 0.42 0.06 0.42 0.06
Net Realized and Unrealized Gain (Loss) on Investments 1.88 (0.10) 1.88 (0.10) 1.88 (0.10)
------------------ ---------------- ----------------
Total from Investment Operations 2.38 (0.02) 2.30 (0.04) 2.30 (0.04)
------------------ ---------------- ----------------
Distributions to Shareholders from
Net Investment Income (0.50) (0.08) (0.42) (0.06) (0.42) (0.06)
Net Realized Gain on Investments -- -- -- -- -- --
------------------ ---------------- ----------------
Total Distributions (0.50) (0.08) (0.42) (0.06) (0.42) (0.06)
------------------ ---------------- ----------------
Net Asset Value at End of Period $11.78 $9.90 $11.78 $9.90 $11.78 $9.90
================== ================ ================
Total Return (a) 24.54% -0.16%** 23.62% -0.35%** 23.62% -0.35%**
Net Assets at End of Period (000's) $1,964 $1,650 $1,989 $1,650 $1,977 $1,649
Ratio of Expenses to Average Net Assets 1.29% 1.92%* 2.04% 2.67%* 2.04% 2.67%*
Ratio of Expenses to Average Net Assets
Before Expense Reimbursement 1.70% -- 2.45% -- 2.45% --
Ratio of Net Investment Income to Average Net Assets 4.60% 3.33%* 3.85% 2.59%* 3.85% 2.59%*
Portfolio Turnover Rate 4.67% 492.95%* 4.67% 492.95%* 4.67% 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 would be lower.
** Not Annualized.
* Annualized.
1 For the year ended December 31, 1995.
2 For the Period from September 30, 1994 (Commencement of Operations) to
December 31, 1994.
- ----------------------------------------------------------------------------- 33
1995 Annual Report
<PAGE> 36
NOTES TO FINANCIAL STATEMENTS
7. FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Share Outstanding Throughout the Period)
<TABLE>
<CAPTION>
SAFECO ADVISOR INTERMEDIATE-TERM MUNICIPAL BOND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
------------------ ------------------ -------------------
1995(1) 1994(2) 1995(1) 1994(2) 1995(1) 1994(2)
------------------ ------------------ -------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $ 9.80 $ 10.00 $ 9.80 $ 10.00 $ 9.80 $ 10.00
Income from Investment Operations
Net Investment Income 0.44 0.07 0.36 0.05 0.36 0.05
Net Realized and Unrealized Gain (Loss) on Investments 0.91 (0.20) 0.91 (0.20) 0.91 (0.20)
------------------ ------------------ -------------------
Total from Investment Operations 1.35 (0.13) 1.27 (0.15) 1.27 (0.15)
------------------ ------------------ -------------------
Distributions to Shareholders from
Net Investment Income (0.44) (0.07) (0.36) (0.05) (0.36) (0.05)
------------------ ------------------ -------------------
Net Realized Gain on Investments -- -- -- -- -- --
------------------ ------------------ -------------------
Total Distributions (0.44) (0.07) (0.36) (0.05) (0.36) (0.05)
------------------ ------------------ -------------------
Net Asset Value at End of Period $ 10.71 $ 9.80 $ 10.71 $ 9.80 $ 10.71 $ 9.80
================== ================== ===================
Total Return (a) 13.93% -1.29%** 13.09% -1.48%** 13.09% -1.48%**
Net Assets at End of Period (000's) $ 1,786 $ 1,633 $ 1,785 $ 1,633 $1,825 $ 1,633
Ratio of Expenses to Average Net Assets 1.31% 1.87%* 2.06% 2.62%* 2.06% 2.62%*
Ratio of Expenses to Average Net Assets
Before Expense Reimbursement 1.74% -- 2.49% -- 2.49% --
Ratio of Net Investment Income to Average Net Assets 4.19% 2.85%* 3.44% 2.10%* 3.44% 2.10%*
Portfolio Turnover Rate 1.19% 513.36%* 1.19% 513.36%* 1.19% 513.36%*
</TABLE>
<TABLE>
<CAPTION>
SAFECO ADVISOR WASHINGTON MUNICIPAL BOND FUND
- ----------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B CLASS C
----------------- ----------------- -----------------
1995(1) 1994(2) 1995(1) 1994(2) 1995(1) 1994(2)
----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at Beginning of Period $ 9.82 $ 10.00 $ 9.82 $ 10.00 $ 9.82 $ 10.00
Income from Investment Operations
Net Investment Income 0.50 0.09 0.42 0.07 0.42 0.07
Net Realized and Unrealized Gain (Loss) on Investments 1.40 (0.18) 1.39 (0.18) 1.40 (0.18)
----------------- ----------------- -----------------
Total from Investment Operations 1.90 (0.09) 1.81 (0.11) 1.82 (0.11)
----------------- ----------------- -----------------
Distributions to Shareholders from
Net Investment Income (0.50) (0.09) (0.42) (0.07) (0.42) (0.07)
Net Realized Gain on Investments (0.02) -- (0.02) -- (0.02) --
----------------- ----------------- -----------------
Total Distributions (0.52) (0.09) (0.44) (0.07) (0.44) (0.07)
----------------- ----------------- -----------------
Net Asset Value at End of Period $11.20 $ 9.82 $11.19 $ 9.82 $11.20 $ 9.82
================= ================= =================
Total Return (a) 19.75% -0.93%** 18.76% -1.12%** 18.87% -1.12%**
Net Assets at End of Period (000's) $1,911 $ 1,636 $1,970 $ 1,667 $1,934 $ 1,694
Ratio of Expenses to Average Net Assets 1.30% 1.90%* 2.05% 2.64%* 2.04% 2.64%*
Ratio of Expenses to Average Net Assets
Before Expense Reimbursement 1.71% -- 2.46% -- 2.45% --
Ratio of Net Investment Income to Average Net Assets 4.74% 3.48%* 3.99% 2.72%* 3.99% 2.72%*
Portfolio Turnover Rate 13.86% 510.18%* 13.86% 510.18%* 13.86% 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 would be lower.
** Not Annualized.
* Annualized.
1 For the year ended December 31, 1995.
2 For the Period from September 30, 1994 (Commencement of Operations) to
December 31, 1994.
34 -----------------------------------------------------------------------------
SAFECO Advisor Funds
<PAGE> 37
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders of
SAFECO Advisor Series Trust:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of SAFECO Advisor Series Trust
(comprising, respectively, the 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, and SAFECO Advisor
Washington Municipal Bond Fund), as of December 31, 1995, and the related
statement of operations for the year then ended, and the statement of changes in
net assets, and the financial highlights for the year then ended and for the
period from September 30, 1994 (commencement of operations), to December 31,
1994. These financial statements and financial highlights are the responsibility
of the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective funds constituting the SAFECO Advisor Series Trust at
December 31, 1995, the results of their operations, the changes in their net
assets, and the financial highlights for the periods referred to above, in
conformity with generally accepted accounting principles.
/S/ Ernst & Young LLP
Seattle, Washington
January 26, 1996
- ----------------------------------------------------------------------------- 35
1995 Annual Report
<PAGE> 38
(This page left blank intentionally.)
- ----------------------------------------------------------------------------- 37
1995 Annual Report
<PAGE> 39
BOARD OF TRUSTEES
Bob A. Dickey, Chairman
Barbara J. Dingfield
Richard W. Hubbard
Richard E. Lundgren
L. D. McClean
Larry L. Pinnt
John W. Schneider
OFFICERS
David F. Hill, President
Ronald L. Spaulding, Vice President and Treasurer
Neal A. Fuller, Vice President and Controller
INVESTMENT ADVISER
SAFECO Asset Management Company
DISTRIBUTOR
SAFECO Securities, Inc.
TRANSFER AGENT
SAFECO Services Corporation
CUSTODIAN
U.S. Bank of Washington, N.A.
[SAFECO Advisor Funds logo]
SAFECO Securities, Inc.
P.O. Box 34680, Seattle, WA 98124-1680
