<PAGE>
-------------- --------------
SAFECO Mutual Funds
Stock Funds
No-Load Class
<TABLE>
<S> <C>
Growth Opportunities Fund........................................... 2
Equity Fund......................................................... 6
Dividend Income Fund................................................ 10
Northwest Fund...................................................... 14
International Stock Fund............................................ 18
Balanced Fund....................................................... 23
Small Company Value Fund............................................ 28
U.S. Value Fund..................................................... 32
</TABLE>
Semiannual Report
June 30, 2000
--------------------------------------------------------------------------------
[LOGO OF SAFECO]
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO Growth Opportunities Fund
June 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PHOTO]
THOMAS M. Over the course of the first half of 2000, the Growth
MAGUIRE Opportunities Fund moved from nicely ahead to behind its mid-cap
core peers. Reeling from the beating the market gave two of our
large holdings, The Fund finished the period behind the S&P 500
as well. However, it remains ahead of the broad market index for
the 12-month period.
MICROS and Ciber plummeted when they missed their earnings
estimates. These two are suffering from reductions in corporate
technology spending that have followed Y2K. A third tech
holding, S3, fell off its high. This company, which
manufactures the leading MP3 player and home networking devices, is
transforming itself into an Internet appliance company. To me it appears to
have great value and a great future.
I took some gains and trimmed the size of our Rent-Way position. Along with
Rent-A-Center, we own the number one and number two companies in the $4 billion
rental industry. These businesses generate great cash flow and demand for their
product is growing.
The rental companies and our collection company, NCO Group, are counter-
cyclical. That is, demand for their services increases as the economy declines.
NCO is growing very quickly.
I also trimmed back United Stationers which continues to gain as it builds
its e-fulfillment operations.
Iron Mountain climbed into our top ten holdings when it merged with Pierce
Leahy, which we also owned. This company picks up, stores, and retrieves
records, reducing a business' office space requirements. We continue to hold
Dura Pharmaceutical, which I think is the best value in the pharmaceutical
sector.
To me, our current portfolio, with both bricks and clicks, makes good sense
in ways that range from valuations to demographics, and from the old economy to
the new. I've always believed that good sense will prevail and I know that
while the Fund is down, it is not out.
Thomas M. Maguire
--------------------------------------------------------------------------------
After completing his MBA at the University of Washington, Thomas M. Maguire
joined the company as an equity analyst in 1981 and today is a Vice President.
From 1984 to 1989, he co-managed the SAFECO Equity Fund.
- 2 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - NO-LOAD CLASS
Average Annual Total Return for the
period ended June 30, 2000 Six-Month* 1 Year 5 Year 10 Year
--------------------------------------------------------------------------------
SAFECO Growth Opportunities Fund (1.97)% 7.38% 16.30% 13.46%
S&P 500 Index (0.43)% 7.24% 23.79% 17.78%
Lipper, Inc. (Mid-Cap Core Funds) 11.15% 37.70% 20.94% 16.63%
* Not Annualized
SAFECO Growth S&P 500
Opportunities Fund Index
6/30/90 10,000 10,000
7/31/90 9,642 9,968
8/31/90 7,979 9,068
9/30/90 7,085 8,627
10/31/90 6,608 8,591
11/30/90 7,097 9,145
12/31/90 7,643 9,400
1/31/91 8,407 9,808
2/28/91 9,565 10,509
3/31/91 10,032 10,763
4/30/91 10,516 10,788
5/31/91 11,210 11,252
6/30/91 10,542 10,737
7/31/91 11,528 11,237
8/31/91 11,987 11,503
9/30/91 12,059 11,310
10/31/91 12,422 11,462
11/30/91 11,374 11,001
12/31/91 12,431 12,257
1/31/92 13,341 12,029
2/29/92 13,246 12,185
3/31/92 12,261 11,948
4/30/92 11,501 12,299
5/31/92 11,216 12,359
6/30/92 10,353 12,175
7/31/92 10,788 12,672
8/31/92 10,177 12,413
9/30/92 9,909 12,559
10/31/92 10,327 12,602
11/30/92 11,631 13,030
12/31/92 12,049 13,190
1/31/93 12,552 13,300
2/28/93 11,716 13,481
3/31/93 12,177 13,766
4/30/93 11,425 13,433
5/31/93 12,014 13,791
6/30/93 12,389 13,832
7/31/93 12,347 13,776
8/31/93 13,141 14,297
9/30/93 13,717 14,185
10/31/93 14,067 14,478
11/30/93 13,474 14,340
12/31/93 14,723 14,514
1/31/94 15,516 15,007
2/28/94 14,774 14,600
3/31/94 14,033 13,965
4/30/94 14,407 14,143
5/31/94 14,539 14,375
6/30/94 13,460 14,023
7/31/94 13,761 14,483
8/31/94 14,620 15,076
9/30/94 14,249 14,708
10/31/94 14,455 15,037
11/30/94 14,061 14,490
12/31/94 14,484 14,705
1/31/95 14,261 15,086
2/28/95 15,045 15,673
3/31/95 14,988 16,135
4/30/95 15,062 16,610
5/31/95 15,664 17,272
6/30/95 16,613 17,673
7/31/95 17,199 18,259
8/31/95 17,141 18,305
9/30/95 17,659 19,077
10/31/95 17,581 19,009
11/30/95 17,760 19,842
12/31/95 18,265 20,224
1/31/96 18,941 20,912
2/29/96 19,652 21,106
3/31/96 19,352 21,310
4/30/96 20,175 21,623
5/31/96 21,032 22,180
6/30/96 20,119 22,265
7/31/96 18,134 21,282
8/31/96 19,216 21,731
9/30/96 20,160 22,953
10/31/96 20,591 23,586
11/30/96 21,387 25,367
12/31/96 22,448 24,865
1/31/97 24,379 26,417
2/28/97 23,731 26,625
3/31/97 22,898 25,533
4/30/97 21,839 27,056
5/31/97 25,146 28,702
6/30/97 27,236 29,987
7/31/97 28,824 32,372
8/31/97 29,856 30,560
9/30/97 32,263 32,233
10/31/97 31,668 31,158
11/30/97 33,043 32,599
12/31/97 33,664 33,158
1/31/98 34,069 33,525
2/28/98 37,503 35,941
3/31/98 39,812 37,780
4/30/98 41,356 38,160
5/31/98 39,422 37,505
6/30/98 39,392 39,028
7/31/98 37,413 38,613
8/31/98 28,326 33,036
9/30/98 29,390 35,153
10/31/98 31,714 38,009
11/30/98 33,334 40,312
12/31/98 35,133 42,634
1/31/99 35,938 44,416
2/28/99 31,713 43,036
3/31/99 31,868 44,758
4/30/99 32,378 46,492
5/31/99 31,728 45,394
6/30/99 32,920 47,913
7/31/99 31,914 46,417
8/31/99 30,784 46,186
9/30/99 30,862 44,920
10/31/99 31,249 47,762
11/30/99 32,595 48,737
12/31/99 36,062 51,606
1/31/00 33,973 49,013
2/29/00 37,842 48,085
3/31/00 39,699 52,790
4/30/00 37,424 51,196
5/31/00 32,998 50,146
6/30/00 35,350 51,382
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
--------------------------------------------------------------------------------
HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of
TOP TEN HOLDINGS Net Assets
--------------------------------------------------------------------------------
<S> <C>
Rent-A-Center, Inc......................................................... 7.0%
(Services--Commercial & Consumer)
NCO Group, Inc............................................................. 6.3
(Services--Commercial & Consumer)
Rent-Way, Inc.............................................................. 5.9
(Services--Commercial & Consumer)
PolyMedica Corp............................................................ 5.1
(Health Care--Medical Products & Supplies)
United Stationers, Inc..................................................... 4.5
(Office Equipment & Supplies)
Dura Pharmaceuticals, Inc.................................................. 4.1
(Health Care--Drugs--Generic & Other)
Aspen Technology, Inc...................................................... 3.8
(Computers--Software & Services)
S3, Inc.................................................................... 3.3
(Computers--Peripherals)
MICROS Systems, Inc........................................................ 3.1
(Computers--Hardware)
Iron Mountain, Inc......................................................... 2.6
(Services--Commercial & Consumer)
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PURCHASES Cost
For the Period Ended June 30, 2000 (000's)
--------------------------------------------------------------------------------
<S> <C>
S3, Inc. .............................................................. $24,252
American Eagle Outfitters, Inc......................................... 21,446
J.D. Edwards & Co...................................................... 20,441
NCO Group, Inc......................................................... 18,050
Go2Net, Inc............................................................ 15,358
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE SALES Proceeds
For the Period Ended June 30, 2000 (000's)
--------------------------------------------------------------------------------
<S> <C>
Emisphere Technologies, Inc........................................... $35,161
Research In Motion, Ltd............................................... 33,786
SFX Entertainment, Inc. (Class A)..................................... 27,150
Conseco, Inc.......................................................... 25,817
PolyMedica Corp....................................................... 20,898
</TABLE>
<TABLE>
<CAPTION>
Percent of
TOP FIVE INDUSTRIES Net Assets
--------------------------------------------------------------------------------
<S> <C>
Services (Commercial & Consumer)........................................... 25%
Computers (Software & Services)............................................ 12
Health Care (Medical Products & Supplies).................................. 8
Computers (Peripherals).................................................... 6
Office Equipment & Supplies................................................ 5
</TABLE>
Weightings As a Percent of Net Assets
----------------------------------------------------------
[PIE CHART]
1 Small - Common Stocks: (Less Than $1.5 Bil.) 85%
2 Large - Common Stocks: ($4 Bil. and above) 1%
3 Medium - Common Stocks: ($1.5 Bil. - $4 Bil.) 10%
4 Cash & Other: 4%
- 3 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Growth Opportunities Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 96.3%
Air Freight - 0.0%
611,000 *+Dynamex, Inc. (Illiquid) $ 244
Auto Parts & Equipment - 0.0%
437,400 *+Precision Auto Care, Inc. 301
Biotechnology - 0.7%
700,000 Novavax, Inc. 5,119
Broadcasting (TV, Radio & Cable) - 0.4%
301,900 * Salem Communications Corp. (Class A) 2,802
Communication Equipment - 1.3%
219,700 * PSi Technologies Holdings, Inc. (ADR) 4,559
112,300 * Research In Motion, Ltd. 5,082
Computers (Hardware) - 3.2%
1,251,628 *+MICROS Systems, Inc. 23,233
25,000 * NYFIX, Inc. 1,048
Computers (Peripherals) - 5.8%
307,400 * Go2Net, Inc. 15,466
75,000 * IntraNet Solutions, Inc. 2,878
1,649,200 * S3, Inc. 24,326
Computers (Software & Services) - 11.5%
724,700 * Aspen Technology, Inc. 27,901
325,641 Autodesk, Inc. 11,296
1,119,600 * Ciber, Inc. 14,835
140,500 * F5 Networks, Inc. 7,666
1,168,152 * J.D. Edwards & Co. 17,595
831,700 *+Phoenix International Ltd., Inc. 2,495
294,200 * TRO Learning, Inc. 4,045
Consumer Finance - 0.8%
397,535 Doral Financial Corp. 4,547
1,398,000 *+Towne Services, Inc. 1,311
Distributors (Food & Health) - 1.8%
2,166,100 *+Nu Skin Enterprises, Inc. (Class A) 12,455
331,540 Weider Nutrition International, Inc. 995
Engineering & Construction - 0.5%
156,600 * Tetra Tech, Inc. 3,582
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<C> <S> <C>
Financial (Diversified) - 0.6%
417,300 *+BNC Mortgage, Inc. $ 4,043
403,700 * United PanAm Financial Corp. 404
Health Care (Diversified) - 2.2%
38,200 * Anesta Corp. 950
358,235 * Emisphere Technologies, Inc. 15,264
Health Care (Drugs - Generic & Other) - 4.9%
2,131,300 * Dura Pharmaceuticals, Inc. 30,637
580,000 * First Horizon Pharmaceutical Corp. 5,655
Health Care (Long-Term Care) - 0.9%
1,299,000 *+Res-Care, Inc. 6,982
Health Care (Major Pharmaceuticals) - 1.4%
2,064,756 *+Serologicals Corp. 10,324
Health Care (Managed Care) - 0.7%
1,144,300 * Matria Healthcare, Inc. 5,257
Health Care (Medical Products & Supplies) - 7.9%
117,200 DENTSPLY International, Inc. 3,611
560,550 *+Lifeline Systems, Inc. 7,848
870,200 *+PolyMedica Corp. 37,636
411,200 * STAAR Surgical Co. 4,600
306,300 * Virologic, Inc. 4,556
Health Care (Specialized Services) - 2.5%
680,000 * Aksys, Ltd. 5,823
552,600 *+American Healthways, Inc. 2,832
1,226,300 *+Prime Medical Services, Inc. 9,504
Housewares - 0.2%
369,900 *+Home Products International, Inc. 1,433
Leisure Time (Products) - 0.1%
297,400 * American Coin Merchandising, Inc. 743
Lodging (Hotels) - 0.7%
622,400 * ResortQuest International, Inc. 3,190
406,800 * Suburban Lodges of America, Inc. 2,314
Manufacturing (Diversified) - 2.1%
211,000 * GSI Lumonics, Inc. 7,411
402,400 * Nortek, Inc. 7,947
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 4 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Growth Opportunities Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
--------------------------------------------------------------------------------
<C> <S> <C>
Office Equipment & Supplies - 5.0%
710,000 *+RM Copy Centers Corp. $ 3,816
1,039,700 * United Stationers, Inc. 33,660
Personal Care - 1.0%
925,000 *+French Fragrances, Inc. 7,573
Restaurants - 0.2%
244,400 * Schlotzsky's, Inc. 1,390
Retail (Department Stores) - 0.4%
233,700 * Rainbow Rentals, Inc, 2,629
Retail (Food Chains) - 0.4%
307,500 * NPC International, Inc. 2,758
Retail (General Merchandise) - 0.9%
360,000 Claire's Stores, Inc. 6,930
Retail (Home Shopping) - 1.9%
652,400 *+DAMARK International, Inc. 14,027
Retail (Specialty - Apparel) - 3.8%
907,300 * American Eagle Outfitters, Inc. 12,702
479,500 *+Concepts Direct, Inc. 4,765
542,213 *+Harold's Stores, Inc. 1,356
167,500 * Pacific Sunwear of California, Inc. 3,141
521,900 Wet Seal, Inc. (Class A) 6,850
Retail (Specialty) - 0.9%
598,600 *+Blue Rhino Corp. 4,826
271,000 *+Travis Boats & Motors, Inc. 1,491
Services (Commercial & Consumer) - 24.6%
783,100 * Bluegreen Corp. 2,154
498,200 Central Parking Corp. 11,801
495,600 * FirstService Corp. 5,947
554,720 * Iron Mountain, Inc. 18,860
2,015,735 *+NCO Group, Inc. 46,614
2,290,200 *+Rent-A-Center, Inc. 51,530
1,487,400 *+Rent-Way, Inc. 43,413
305,800 SunSource, Inc. 1,548
Services (Computer Systems) - 1.2%
650,800 * Computer Horizons Corp. 8,745
Services (Employment) - 2.0%
445,100 * Hall, Kinion & Associates, Inc. 14,827
Specialty Printing - 1.4%
1,221,900 * Mail-Well, Inc. 10,539
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
--------------------------------------------------------------------------------
<C> <S> <C>
Telecommunications (Cellular/Wireless) - 2.0%
60,700 * Powertel, Inc. $ 4,306
88,200 * VoiceStream Wireless Corp. 10,257
Telephone - 0.3%
497,300 * Innotrac Corp. 2,549
---------
TOTAL COMMON STOCKS 713,749
---------
WARRANTS - 0.1%
Biotechnology - 0.1%
175,000 * Novavax, Inc. (Illiquid) 775
---------
TOTAL WARRANTS 775
---------
COMMERCIAL PAPER - 2.8%
Financial (Diversified) - 2.8%
20,832,000 PHH Corporation
7.25%, due 7/03/00 20,832
---------
TOTAL COMMERCIAL PAPER 20,832
---------
CASH EQUIVALENTS - 0.0%
Investment Companies
5,248 AIM Short-Term Investments Co. Liquid Assets Money
Market Portfolio (Institutional Shares) 5
---------
TOTAL CASH EQUIVALENTS 5
---------
TOTAL INVESTMENTS - 99.2% 735,361
Other Assets, less Liabilities 5,527
---------
NET ASSETS $ 740,888
=========
--------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
+ Affiliated issuer as defined by the Investment Company Act of 1940 (the Fund
controls 5% or more of the outstanding voting shares of the company).
SEE NOTES TO FINANCIAL STATEMENTS
- 5 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO Equity Fund
June 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PHOTO]
RICHARD The Fund's six-month and one-year underperformance of the S&P
MEAGLEY 500 and Lipper large-cap value peer group is a hangover from
being underweighted in technology and the first-quarter halving
of Procter & Gamble on missed earnings.
I rectified our tech problem by increasing our tech holdings
from 16% to 28.6% of net assets over the first quarter. From
there, for second quarter 2000, the Fund beat the S&P and its
peer funds.
When Microsoft declined on uncertainties surrounding its anti-trust case, I
added to it. This seemed a prudent way to further build our tech allocation,
which was 32% at June 30. All our tech positions meet our long-standing
criteria for admission to the portfolio: They are quality companies with more
predictable earnings, durable business franchises and strong core competencies.
Two major purchases I made in the first quarter--Washington Mutual for its
value and Pfizer for its earnings growth--gained handsomely in the second
quarter. The Fund is now slightly overweighted in financials due to 30% + gains
in Washington Mutual. Pfizer, one of the fastest-growing health-care companies
merged with Warner Lambert and gained over 20% in the second quarter.
I eliminated Anheuser-Busch and Bestfoods from the portfolio to reduce our
weighting in the slower-growing consumer staples sector.
On a housekeeping note, I replaced higher-cost shares of Procter & Gamble
and WorldCom with lower-cost shares. This loss-taking benefited shareholders in
taxable accounts without slighting our positions, or our shareholders in tax-
deferred accounts. Intending to make more of these trades, I purchased May
Department Stores and CenturyTel.
Our holdings now range from value to growth companies. Combining value and
reasonably-priced growth stocks makes sense to me. A "blended" portfolio can
reduce the whiplash caused when styles rotate, and provide more consistent
returns over the long run. Doing well over the long run is what investing is
all about.
Richard Meagley
--------------------------------------------------------------------------------
Richard Meagley joined SAFECO in 1983. After advancing from analyst to
Northwest Fund Manager, he left the company for two years, then he re-joined in
January 1995 as Equity Fund Manager. He holds an MBA from the University of
Washington, and is a Chartered Financial Analyst.
- 6 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - NO-LOAD CLASS
Average Annual Total Return for the
period ended June 30, 2000 Six-Month* 1 Year 5 Year 10 Year
-------------------------------------------------------------------------------
SAFECO Equity Fund (3.18)% (3.93)% 18.01% 16.58%
S&P 500 Index (0.43)% 7.24% 23.79% 17.78%
Lipper, Inc. (Large-Cap Value Funds) (1.65)% (3.93)% 18.19% 14.90%
* Not Annualized
SAFECO Equity S&P 500
Fund Index
------------- -------
6/30/90 10,000 10,000
7/31/90 9,821 9,968
8/31/90 8,784 9,068
9/30/90 8,356 8,627
10/31/90 8,178 8,591
11/30/90 8,624 9,145
12/31/90 8,959 9,400
1/31/91 9,418 9,808
2/28/91 9,978 10,509
3/31/91 10,259 10,763
4/30/91 10,470 10,788
5/31/91 10,891 11,252
6/30/91 10,191 10,737
7/31/91 10,875 11,237
8/31/91 11,046 11,503
9/30/91 10,896 11,310
10/31/91 11,074 11,462
11/30/91 10,381 11,001
12/31/91 11,459 12,257
1/31/92 12,141 12,029
2/29/92 12,347 12,185
3/31/92 11,792 11,948
4/30/92 11,889 12,299
5/31/92 11,781 12,359
6/30/92 10,930 12,175
7/31/92 11,377 12,672
8/31/92 10,909 12,413
9/30/92 10,940 12,559
10/31/92 11,468 12,602
11/30/92 12,226 13,030
12/31/92 12,521 13,190
1/31/93 12,936 13,300
2/28/93 12,947 13,481
3/31/93 13,643 13,766
4/30/93 13,331 13,433
5/31/93 14,428 13,791
6/30/93 14,487 13,832
7/31/93 14,290 13,776
8/31/93 15,090 14,297
9/30/93 15,510 14,185
10/31/93 15,918 14,478
11/30/93 16,005 14,340
12/31/93 16,391 14,514
1/31/94 17,373 15,007
2/28/94 16,938 14,600
3/31/94 16,288 13,965
4/30/94 16,812 14,143
5/31/94 17,299 14,375
6/30/94 16,676 14,023
7/31/94 17,102 14,483
8/31/94 18,143 15,076
9/30/94 18,071 14,708
10/31/94 18,410 15,037
11/30/94 18,045 14,490
12/31/94 18,019 14,705
1/31/95 18,151 15,086
2/28/95 18,625 15,673
3/31/95 18,777 16,135
4/30/95 19,280 16,610
5/31/95 19,771 17,272
6/30/95 20,261 17,673
7/31/95 20,581 18,259
8/31/95 21,154 18,305
9/30/95 21,972 19,077
10/31/95 21,700 19,009
11/30/95 22,403 19,842
12/31/95 22,571 20,224
1/31/96 23,174 20,912
2/29/96 23,381 21,106
3/31/96 23,621 21,310
4/30/96 24,123 21,623
5/31/96 24,685 22,180
6/30/96 25,142 22,265
7/31/96 24,177 21,282
8/31/96 24,429 21,731
9/30/96 25,936 22,953
10/31/96 26,770 23,586
11/30/96 28,783 25,367
12/31/96 28,215 24,865
1/31/97 29,847 26,417
2/28/97 29,966 26,625
3/31/97 28,764 25,533
4/30/97 29,599 27,056
5/31/97 31,560 28,702
6/30/97 32,849 29,987
7/31/97 35,072 32,372
8/31/97 33,260 30,560
9/30/97 34,458 32,233
10/31/97 33,361 31,158
11/30/97 34,441 32,599
12/31/97 35,045 33,158
1/31/98 35,583 33,525
2/28/98 38,399 35,941
3/31/98 39,687 37,780
4/30/98 39,758 38,160
5/31/98 39,022 37,505
6/30/98 40,019 39,028
7/31/98 39,551 38,613
8/31/98 34,433 33,036
9/30/98 36,880 35,153
10/31/98 40,151 38,009
11/30/98 42,699 40,312
12/31/98 43,783 42,634
1/31/99 44,480 44,416
2/28/99 43,595 43,036
3/31/99 44,984 44,758
4/30/99 47,797 46,492
5/31/99 46,815 45,394
6/30/99 48,260 47,913
7/31/99 47,276 46,417
8/31/99 46,803 46,186
9/30/99 45,026 44,920
10/31/99 48,284 47,762
11/30/99 47,469 48,737
12/31/99 47,886 51,606
1/31/00 45,932 49,013
2/29/00 43,161 48,085
3/31/00 47,360 52,790
4/30/00 46,122 51,196
5/31/00 45,862 50,146
6/30/00 46,363 51,382
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index.. The index is unmanaged
and includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
--------------------------------------------------------------------------------
HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of
TOP TEN HOLDINGS Net Assets
--------------------------------------------------------------------------------
<S> <C>
Washington Mutual, Inc.............................................. 5.6%
(Savings & Loans)
General Electric Co................................................. 5.3
(Electrical Equipment)
Microsoft Corp...................................................... 4.9
(Computers--Software & Services)
Intel Corp.......................................................... 4.9
(Electronics--Semiconductors)
Johnson & Johnson................................................... 3.4
(Health Care--Diversified)
Citigroup, Inc...................................................... 2.7
(Banks--Major Regional)
Pfizer, Inc......................................................... 2.7
(Health Care--Generic and Other
Drugs)
Lucent Technologies, Inc............................................ 2.6
(Telecommunications--Equipment)
Exxon Mobil Corp.................................................... 2.6
(Oil--International Integrated)
American International Group, Inc................................... 2.6
(Insurance--Multi-Line)
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PURCHASES Cost
For the Period Ended June 30, 2000 (000's)
--------------------------------------------------------------------------------
<S> <C>
Cisco Systems, Inc. ................................................ $38,227
Pfizer, Inc. ....................................................... 37,250
Dell Computer Corp. ................................................ 24,848
Sun Microsystems, Inc. ............................................. 24,575
Motorola, Inc. ..................................................... 22,276
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE SALES Proceeds
For the Period Ended June 30, 2000 (000's)
--------------------------------------------------------------------------------
<S> <C>
Kimberly-Clark Corp. ............................................... $53,858
Bestfoods........................................................... 48,236
Albertson's, Inc. .................................................. 40,454
Dover Corp. ........................................................ 34,265
Anheuser-Busch Co., Inc. ........................................... 32,006
</TABLE>
<TABLE>
<CAPTION>
Percent of
TOP FIVE INDUSTRIES Net Assets
--------------------------------------------------------------------------------
<S> <C>
Health Care (Diversified)........................................... 8%
Electrical Equipment................................................ 8
Computers (Hardware)................................................ 7
Telephone........................................................... 6
Savings & Loans..................................................... 6
</TABLE>
Weightings As a Percent of Net Assets
------------------------------------------------------------
[PIECHART]
1 Large - Common Stocks: ($4 Bil. and above) 97.4%
2 Cash & Other: 2.6%
- 7 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Equity Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS - 97.4%
Banks (Major Regional) - 3.9%
500,000 Bank of America Corp. $21,500
800,000 Citigroup, Inc. 48,200
Banks (Money Center) - 1.4%
525,000 Chase Manhattan Corp. 24,183
Beverages (Non-Alcoholic) - 2.0%
800,000 PepsiCo, Inc. 35,550
Chemicals - 2.5%
505,000 Du Pont (E.I.) de Nemours & Co. 22,094
600,000 Praxair, Inc. 22,463
Communication Equipment - 2.9%
465,000 Motorola, Inc. 13,514
350,000 Nortel Networks Corp. 23,887
210,000 * Tellabs, Inc. 14,372
Computers (Hardware) - 7.2%
450,000 * Dell Computer Corp. 22,191
300,000 Hewlett-Packard Co. 37,462
400,000 International Business Machines Corp. 43,825
300,000 * Sun Microsystems, Inc. 27,281
Computers (Networking) - 2.5%
700,000 * Cisco Systems, Inc. 44,494
Computers (Peripherals) - 0.7%
250,000 * America Online, Inc. 13,187
Computers (Software & Services) - 5.5%
500,000 * Cadence Design Systems, Inc. 10,188
1,100,000 * Microsoft Corp. 88,000
Electrical Equipment - 7.8%
114,420 * Agilent Technologies, Inc. 8,438
600,000 Emerson Electric Co. 36,225
1,800,000 General Electric Co. 95,400
Electronics (Semiconductors) - 4.9%
650,000 Intel Corp. 86,897
Entertainment - 3.6%
700,000 The Walt Disney Co. 27,169
500,000 Time Warner, Inc. 38,000
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<S> <C>
Equipment (Semiconductor) - 0.8%
150,000 * Applied Materials, Inc. $13,594
Financial (Diversified) - 3.1%
500,000 Federal Home Loan Mortgage Corp. 20,250
700,000 Federal National Mortgage Association 36,531
Health Care (Diversified) - 8.1%
700,000 Abbott Laboratories 31,194
423,000 American Home Products Corp. 24,851
500,000 Bristol-Myers Squibb Co. 29,125
600,000 Johnson & Johnson 61,125
Health Care (Drugs - Generic & Other) - 2.7%
1,000,000 Pfizer, Inc. 48,000
Health Care (Major Pharmaceuticals) - 1.7%
400,000 Merck & Co., Inc. 30,650
Household Products (Non-Durables) - 1.9%
600,000 Procter & Gamble Co. 34,350
Insurance (Multi-Line) - 2.6%
400,000 American International Group, Inc. 47,000
Manufacturing (Diversified) - 1.1%
600,000 Honeywell International, Inc. 20,212
Office Equipment & Supplies - 0.5%
400,000 Xerox Corp. 8,300
Oil (International Integrated) - 5.1%
600,000 Exxon Mobil Corp. 47,100
725,000 Royal Dutch Petroleum Co. (ADR) 44,633
Publishing (Newspapers) - 1.7%
500,000 Gannett Co., Inc. 29,906
Retail (Department Stores) - 2.0%
1,500,000 May Department Stores Co. 36,000
Retail (Drug Stores) - 1.5%
650,000 CVS Corp. 26,000
Retail (Food Chains) - 1.3%
700,000 Albertson's, Inc. 23,275
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 8 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Equity Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
<C> <S> <C>
--------------------------------------------------------------------------
Retail (General Merchandise) - 1.5%
470,000 Wal-Mart Stores, Inc. $ 27,084
Savings & Loans - 5.6%
3,500,000 Washington Mutual, Inc. 101,062
Services (Data Processing) - 1.2%
400,000 Automatic Data Processing, Inc. 21,425
Telecommunications (Equipment) - 2.6%
800,000 Lucent Technologies, Inc. 47,400
Telecommunications (Long Distance) - 1.6%
900,000 AT&T Corp. 28,463
Telephone - 5.7%
700,000 Bell Atlantic Corp. 35,569
1,062,300 CenturyTel, Inc. 30,541
800,000 * MCI WorldCom, Inc. 36,700
----------
TOTAL COMMON STOCKS 1,744,860
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
<C> <S> <C>
-----------------------------------------------------------------------------
COMMERCIAL PAPER - 2.7%
Trucks & Parts - 2.7%
48,631,000 Cooperative Association of
Tractor Dealers
7.05%, due 7/03/00 $ 48,631
----------
TOTAL COMMERCIAL PAPER 48,631
----------
CASH EQUIVALENTS - 0.0%
Investment Companies
4,087 AIM Short-Term Investments Co.
Liquid Assets Money Market Portfolio
(Institutional Shares) 4
----------
TOTAL CASH EQUIVALENTS 4
----------
TOTAL INVESTMENTS - 100.1% 1,793,495
Other Assets, less Liabilities (2,950)
----------
NET ASSETS $1,790,545
==========
-----------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
- 9 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO Dividend Income Fund
June 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PHOTO]
THOMAS The SAFECO Dividend Income Fund's performance over the first
RATH half of 2000 was disappointing. Hit hard by the Y2K hangover,
the Fund is behind the Lipper average for equity-income funds
and the S&P 500. The trouble is information technology spending,
which was above trend, has remained below trend since the first
of the year. This has translated into disappointing revenue and
lower share prices for three of the Fund's largest holdings,
MICROS, Ciber and J.D. Edwards.
MICROS, which provides systems for the hotel/restaurant
industry, declined 70% in the second quarter. When spending does
resume, we are confident
MICROS will get the business. It dominates its industry and has new products to
expand into the fast food arena.
Ciber and J.D. Edwards slowed as we expected, however, their recoveries have
taken longer than we anticipated. J.D. Edwards provides resource planning
software systems for businesses. Ciber's information technology services range
from consulting and temporary staffing to software implementation and Web
design.
The good news is that hangovers are temporary. When this one passes, we will
be left with what I think is a robust portfolio.
Intel is taking new products into the higher-end server market. With its
manufacturing prowess, it should be able to rapidly capture share.
We are overweighted in drug stocks, bought cheap and with the belief that
demographics bode well for this sector. Indeed, in the second quarter, Abbott
Laboratories, Bristol-Myers, and Johnson & Johnson all outperformed within the
sector. Albertson's rallied nicely in first quarter and held its gains through
the second. We've made money in Lucent as well.
Through the first half of 2000, the market lacked consistent leadership. My
sense is that a transition to more reasoned investing is underway. This should
bode well for the Fund. As always, we try to be discriminating in terms of
price and growth potential.
Thomas Rath
--------------------------------------------------------------------------------
In addition to being an equity and convertible securities portfolio manager at
SAFECO, Rath has been an analyst and portfolio manager at First Interstate Bank
and a principal at Meridian Capital Management. He holds an MBA from the
University of Washington and is a Chartered Financial Analyst.
- 10 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - NO-LOAD CLASS
Average Annual Total Return for the
period ended June 30, 2000 Six-Month* 1 Year 5 Year 10 Year
-------------------------------------------------------------------------------
SAFECO Dividend Income Fund (7.81)% (8.37)% 11.86% 11.05%
S&P 500 Index (0.43)% 7.24% 23.79% 17.78%
Lipper, Inc. (Equity-Income Funds) (1.86)% (6.63)% 13.68% 12.42%
* Not Annualized
SAFECO Dividend
Income Fund S&P 500 Index
--------------- -------------
6/30/90 10,000 10,000
7/31/90 9,821 9,968
8/31/90 9,094 9,068
9/30/90 8,720 8,627
10/31/90 8,511 8,591
11/30/90 9,031 9,145
12/31/90 9,203 9,400
1/31/91 9,561 9,808
2/28/91 10,111 10,509
3/31/91 10,265 10,763
4/30/91 10,376 10,788
5/31/91 10,690 11,252
6/30/91 10,421 10,737
7/31/91 10,717 11,237
8/31/91 11,042 11,503
9/30/91 11,025 11,310
10/31/91 11,140 11,462
11/30/91 10,680 11,001
12/31/91 11,343 12,257
1/31/92 11,430 12,029
2/29/92 11,466 12,185
3/31/92 11,356 11,948
4/30/92 11,687 12,299
5/31/92 11,798 12,359
6/30/92 11,841 12,175
7/31/92 12,281 12,672
8/31/92 12,191 12,413
9/30/92 12,321 12,559
10/31/92 12,094 12,602
11/30/92 12,404 13,030
12/31/92 12,644 13,190
1/31/93 12,919 13,300
2/28/93 13,165 13,481
3/31/93 13,611 13,766
4/30/93 13,425 13,433
5/31/93 13,603 13,791
6/30/93 13,673 13,832
7/31/93 13,603 13,776
8/31/93 14,050 14,297
9/30/93 14,089 14,185
10/31/93 14,334 14,478
11/30/93 14,160 14,340
12/31/93 14,230 14,514
1/31/94 14,695 15,007
2/28/94 14,367 14,600
3/31/94 13,865 13,965
4/30/94 14,027 14,143
5/31/94 14,035 14,375
6/30/94 13,830 14,023
7/31/94 14,256 14,483
8/31/94 14,707 15,076
9/30/94 14,508 14,708
10/31/94 14,483 15,037
11/30/94 13,970 14,490
12/31/94 14,075 14,705
1/31/95 14,432 15,086
2/28/95 14,883 15,673
3/31/95 15,305 16,135
4/30/95 15,632 16,610
5/31/95 16,089 17,272
6/30/95 16,288 17,673
7/31/95 16,923 18,259
8/31/95 17,045 18,305
9/30/95 17,561 19,077
10/31/95 17,368 19,009
11/30/95 17,975 19,842
12/31/95 18,348 20,224
1/31/96 18,934 20,912
2/29/96 18,981 21,106
3/31/96 19,206 21,310
4/30/96 19,282 21,623
5/31/96 19,920 22,180
6/30/96 20,169 22,265
7/31/96 19,601 21,282
8/31/96 19,970 21,731
9/30/96 20,894 22,953
10/31/96 21,665 23,586
11/30/96 22,802 25,367
12/31/96 22,750 24,865
1/31/97 23,644 26,417
2/28/97 23,676 26,625
3/31/97 22,807 25,533
4/30/97 23,122 27,056
5/31/97 24,780 28,702
6/30/97 25,801 29,987
7/31/97 27,210 32,372
8/31/97 26,795 30,560
9/30/97 27,990 32,233
10/31/97 27,067 31,158
11/30/97 28,045 32,599
12/31/97 28,763 33,158
1/31/98 29,221 33,525
2/28/98 30,882 35,941
3/31/98 32,161 37,780
4/30/98 32,403 38,160
5/31/98 31,701 37,505
6/30/98 32,358 39,028
7/31/98 30,959 38,613
8/31/98 26,213 33,036
9/30/98 26,696 35,153
10/31/98 28,302 38,009
11/30/98 29,860 40,312
12/31/98 30,579 42,634
1/31/99 31,035 44,416
2/28/99 28,886 43,036
3/31/99 29,557 44,758
4/30/99 30,621 46,492
5/31/99 30,279 45,394
6/30/99 31,126 47,913
7/31/99 30,030 46,417
8/31/99 28,552 46,186
9/30/99 27,762 44,920
10/31/99 29,727 47,762
11/30/99 29,661 48,737
12/31/99 30,937 51,606
1/31/00 28,947 49,013
2/29/00 27,883 48,085
3/31/00 30,032 52,790
4/30/00 29,060 51,196
5/31/00 28,824 50,146
6/30/00 28,521 51,382
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal values may flactuate so that shares,
when redeemed, may be worth more or less than their original cost.
--------------------------------------------------------------------------------
HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOP TEN Percent of
HOLDINGS Net Assets
--------------------------------------------------------------------------------
<S> <C>
Merrill Lynch & Co. 7.875%
Convertible........................................................... 5.1%
(Computers--Software & Services)
Intel Corp. ........................................................... 3.7
(Electronics--Semiconductors)
Abbott Laboratories.................................................... 3.6
(Health Care--Diversified)
Johnson & Johnson...................................................... 3.3
(Health Care--Diversified)
Lucent Technologies, Inc. ............................................. 3.2
(Telecommunications--Equipment)
Bristol-Myers Squibb Co. .............................................. 3.1
(Health Care--Diversified)
Texaco, Inc. .......................................................... 3.0
(Oil--International Integrated)
Albertson's, Inc. ..................................................... 2.9
(Retail--Food Chains)
American Home Products Corp. .......................................... 2.8
(Health Care--Diversified)
S3, Inc. .............................................................. 2.8
(Computers--Peripherals)
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PURCHASES Cost
For the Period Ended June 30, 2000 (000's)
--------------------------------------------------------------------------------
<S> <C>
J.D. Edwards & Co. .................................................... $11,479
S3, Inc. .............................................................. 6,919
Johnson & Johnson...................................................... 6,277
Lucent Technologies, Inc. ............................................. 4,170
AT&T Corp. ............................................................ 3,815
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE SALES Proceeds
For the Period Ended June 30, 2000 (000's)
--------------------------------------------------------------------------------
<S> <C>
AMFM, Inc. .............................................................. $7,447
Merck & Co., Inc. ....................................................... 7,406
BEA Systems, Inc. ....................................................... 5,009
Iron Mountain, Inc. ..................................................... 4,900
Nortel Networks Corp. ................................................... 4,454
</TABLE>
<TABLE>
<CAPTION>
Percent of
TOP FIVE INDUSTRIES Net Assets
--------------------------------------------------------------------------------
<S> <C>
Health Care (Diversified............................................... 13%
Computers (Software & Services)........................................ 9
Oil (International Integrated)......................................... 7
Real Estate Investment Trust........................................... 6
Computers (Hardware)................................................... 5
</TABLE>
Weightings As a Percent of Net Assets
--------------------------------------------------------------------------------
[PIE CHART]
1 Large - Common Stocks: ($4 Bil. and above) 71.0%
2 Medium - Common Stocks: ($1.5 Bil. - $4 Bil.) 13.0%
3 Small - Common Stocks: (Less Than $1.5 Bil.) 10.0%
4 Preferred Stock: 5.0%
5 Cash & Other: 1.0%
- 11 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Dividend Income Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 94.3%
Airlines - 1.3%
101,400 * Northwest Airlines Corp. $ 3,086
Banks (Major Regional) - 1.3%
72,511 Bank of America Corp. 3,118
Banks (Money Center) - 1.6%
85,500 Chase Manhattan Corp. 3,938
Beverages (Non-Alcoholic) - 3.7%
130,000 PepsiCo, Inc. 5,777
54,500 The Coca-Cola Co. 3,130
Broadcasting (TV, Radio & Cable) - 1.0%
34,300 * AMFM, Inc. 2,367
Chemicals - 1.2%
64,000 Du Pont (E.I.) de Nemours & Co. 2,800
Communication Equipment - 0.9%
29,000 Scientific-Atlanta, Inc. 2,161
Computers (Hardware) - 5.1%
56,700 * Dell Computer Corp. 2,796
41,200 Hewlett-Packard Co. 5,145
231,000 * MICROS Systems, Inc. 4,288
Computers (Peripherals) - 3.4%
27,500 * Go2Net, Inc. 1,384
460,300 * S3, Inc. 6,789
Computers (Software & Services) - 4.0%
142,100 * Cadence Design Systems, Inc. 2,895
449,300 * J.D. Edwards & Co. 6,768
Electric Companies - 1.9%
250,000 NIPSCO Industries, Inc. 4,656
Electrical Equipment - 2.1%
97,200 General Electric Co. 5,152
Electronics (Semiconductors) - 3.7%
66,400 Intel Corp. 8,877
Financial (Diversified) - 1.7%
80,000 Federal National Mortgage Association 4,175
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<C> <S> <C>
Foods - 1.1%
135,700 ConAgra, Inc. $ 2,587
Health Care (Diversified) - 12.8%
195,800 Abbott Laboratories 8,725
115,900 American Home Products Corp. 6,809
128,000 Bristol-Myers Squibb Co. 7,456
76,800 Johnson & Johnson 7,824
Household Products (Non-Durables) - 3.6%
104,000 Kimberly-Clark Corp. 5,967
44,300 Procter & Gamble Co. 2,536
Insurance (Multi-Line) - 1.7%
75,000 Hartford Financial Services Group, Inc. 4,195
Manufacturing (Diversified) - 2.7%
80,000 Minnesota Mining & Manufacturing Co. 6,600
Manufacturing (Specialized) - 1.0%
90,000 Diebold, Inc. 2,509
Office Equipment & Supplies - 1.2%
88,900 * United Stationers, Inc. 2,878
Oil (International Integrated) - 6.8%
59,406 Exxon Mobil Corp. 4,663
75,000 Royal Dutch Petroleum Co. (ADR) 4,617
135,000 Texaco, Inc. 7,189
Paper & Forest Products - 0.8%
47,300 Weyerhaeuser Co. 2,034
Railroads - 2.0%
138,600 GATX Corp. 4,712
Real Estate Investment Trust - 6.4%
100,000 Equity Residential Properties Trust 4,600
205,000 First Industrial Realty Trust, Inc. 6,047
185,000 Liberty Property Trust 4,798
Retail (Building Supplies) - 0.6%
30,600 Home Depot, Inc. 1,528
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 12 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Dividend Income Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<C> <S> <C>
Retail (Drug Stores) - 2.0%
119,200 CVS Corp. $ 4,768
Retail (Food Chains) - 2.9%
206,700 Albertson's, Inc. 6,873
Retail (General Merchandise) - 0.5%
35,300 * Costco Wholesale Corp. 1,165
Savings & Loans - 2.1%
171,000 Washington Mutual, Inc. 4,938
Services (Commercial & Consumer) - 4.1%
124,700 Central Parking Corp. 2,954
79,500 * Iron Mountain, Inc. 2,703
72,300 United Parcel Service, Inc. (Class B) 4,266
Services (Data Processing) - 0.7%
33,300 Automatic Data Processing, Inc. 1,784
Telecommunications (Equipment) - 3.2%
129,200 Lucent Technologies, Inc. 7,655
Telecommunications (Long Distance) - 1.0%
73,000 AT&T Corp. 2,309
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<C> <S> <C>
Telephone - 3.3%
67,000 GTE Corp. $ 4,171
82,950 * MCI WorldCom, Inc. 3,805
Waste Management - 0.8%
121,500 Landauer, Inc. 1,891
---------
TOTAL COMMON STOCKS 226,858
---------
PREFERRED STOCKS - 5.1%
Computers (Software & Services) - 5.1%
414,200 Merrill Lynch & Co.
7.875% Convertible 12,374
---------
TOTAL PREFERRED STOCKS 12,374
---------
CASH EQUIVALENTS - 0.4%
Investment Companies
886,192 AIM Short-Term Investments Co.
Liquid Assets Money Market
Portfolio (Institutional Shares) 886
---------
TOTAL CASH EQUIVALENTS 886
---------
TOTAL INVESTMENTS - 99.8% 240,118
Other Assets, less Liabilities 477
---------
NET ASSETS $ 240,595
=========
-------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
- 13 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO Northwest Fund
June 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PHOTO]
WILLIAM B. SAFECO Northwest Fund remained well ahead of the Lipper
WHITLOW average for multi-cap core funds and the S&P 500 for the six
months and year ended June 30, 2000.
While our heavy weighting in technology is responsible for
the Fund's outperformance over those periods, it caused the Fund
to lag in the second quarter. Still, I am pleased with the way
the portfolio weathered the storm April and May unleashed on the
technology sector. Our well-calculated, but aggressive, approach
to high tech enabled us to benefit in the red-hot speculative
market; while our balancing act kept us from getting burned.
We continue to take small positions in numerous companies that generally
enable, rather than use, the Internet. We balance our heavy weighting in
technology with "old economy" stocks. Indeed, our consumer staples, basic
industry and financial stocks--namely Albertson's, Washington Mutual,
Starbucks, Weyerhaeuser and Kroger--cushioned the Fund through the tech
correction.
Microsoft fell 33% over the first half of 2000 on concerns surrounding its
anti-trust case and I actually bought a little bit. I believe Microsoft will
come back no matter how its legal issues are resolved.
Still, many of the Internet stocks have yet to--and may never--regain their
highs. During the second quarter, we weeded N2H2 from our portfolio and added
to other positions when they came into our price range, including Internet
companies InterNap and Go2Net.
Demand for its commodity memory chips, primarily for PCs and cell phones,
powered Micron Technologies through the correction. It was the Fund's biggest
contributor, up 130% through June 30.
I have kept the Fund positioned to take advantage of what I think are the
drivers of the Northwest's economy. Going forward I will continue to manage in
a growth style, while remaining sensitive to value and risk.
William B. Whitlow
--------------------------------------------------------------------------------
William B. Whitlow began his career at SAFECO in 1976 and left in 1980. Before
re-joining SAFECO in April 1997 as Northwest Fund Manager, he was Director of
Research at Pacific Crest Securities. He holds a BA in chemistry from the
University of Colorado and an MBA from the University of California at
Berkeley. He is a CFA and a member of the Washington State Governor's Council
of Economic Advisors.
- 14 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - NO LOAD CLASS
Average Annual Total Return
for the period ended
June 30, 2000 Six-Month* 1 Year 5 Year Since Inception**
-------------------------------------------------------------------------------
SAFECO Northwest Fund 7.26% 39.87% 21.80% 16.21%
S&P 500 Index (0.43)% 7.24% 23.79% 22.45%
Lipper, Inc. (Multi-Cap
Core Funds) 2.57% 11.60% 19.54% N/A
WM Group NW 50 Index (4.66)% 1.08% 23.60% 16.54%
* Not Annualized
** Graph and average annual return comparison begins February 7, 1991, inception
date of the fund
SAFECO Northwest Fund S&P 500 Index WM GROUP NW 50 Index
--------------------- ------------- --------------------
2/7/91 10,000
2/28/91 10,130 10,000 10,000
3/31/91 10,357 10,242 10,392
4/30/91 10,660 10,266 10,633
5/31/91 11,024 10,708 11,255
6/30/91 10,379 10,217 10,489
7/31/91 10,998 10,693 10,981
8/31/91 11,454 10,946 11,410
9/30/91 11,173 10,763 11,177
10/31/91 11,061 10,907 11,156
11/30/91 10,380 10,469 10,697
12/31/91 11,643 11,664 11,963
1/31/92 12,144 11,447 12,572
2/29/92 12,533 11,595 12,744
3/31/92 12,258 11,370 12,322
4/30/92 11,828 11,703 11,744
5/31/92 11,950 11,760 11,623
6/30/92 11,573 11,586 11,201
7/31/92 11,840 12,059 11,301
8/31/92 11,522 11,812 10,976
9/30/92 12,002 11,951 11,393
10/31/92 12,403 11,992 11,830
11/30/92 12,927 12,399 12,345
12/31/92 13,282 12,551 12,353
1/31/93 13,334 12,656 12,432
2/28/93 12,680 12,829 12,028
3/31/93 13,176 13,099 12,508
4/30/93 12,638 12,783 12,211
5/31/93 12,912 13,124 12,497
6/30/93 12,791 13,162 12,212
7/31/93 12,685 13,109 11,757
8/31/93 13,044 13,605 12,223
9/30/93 13,035 13,498 11,932
10/31/93 13,204 13,777 12,343
11/30/93 13,257 13,646 12,592
12/31/93 13,418 13,811 12,743
1/31/94 13,655 14,280 13,113
2/28/94 14,000 13,893 13,294
3/31/94 13,407 13,288 12,809
4/30/94 13,375 13,459 12,754
5/31/94 13,580 13,679 12,930
6/30/94 13,233 13,344 12,520
7/31/94 13,427 13,782 12,599
8/31/94 14,031 14,346 13,308
9/30/94 13,711 13,996 12,781
10/31/94 13,580 14,309 12,687
11/30/94 13,243 13,789 12,442
12/31/94 13,210 13,993 12,493
1/31/95 13,373 14,355 12,439
2/28/95 13,711 14,914 12,882
3/31/95 14,169 15,354 13,290
4/30/95 14,354 15,806 13,674
5/31/95 14,573 16,436 13,659
6/30/95 15,291 16,818 14,473
7/31/95 16,088 17,375 15,005
8/31/95 16,230 17,418 15,275
9/30/95 16,317 18,153 15,817
10/31/95 16,125 18,088 15,432
11/30/95 16,091 18,882 15,641
12/31/95 15,875 19,245 15,811
1/31/96 16,026 19,900 15,710
2/29/96 16,514 20,085 16,054
3/31/96 17,513 20,278 16,569
4/30/96 17,990 20,577 17,546
5/31/96 18,292 21,106 17,812
6/30/96 17,911 21,187 17,716
7/31/96 17,062 20,251 16,828
8/31/96 17,609 20,679 17,643
9/30/96 17,885 21,842 18,080
10/31/96 17,431 22,444 17,936
11/30/96 18,197 24,139 19,215
12/31/96 18,262 23,661 19,644
1/31/97 19,585 25,138 20,502
2/28/97 19,598 25,336 20,863
3/31/97 18,768 24,297 20,266
4/30/97 19,443 25,746 21,151
5/31/97 20,741 27,312 22,863
6/30/97 21,935 28,535 23,922
7/31/97 23,817 30,805 26,083
8/31/97 23,194 29,081 25,217
9/30/97 24,349 30,673 26,959
10/31/97 23,207 29,649 25,154
11/30/97 24,219 31,021 26,659
12/31/97 23,945 31,553 26,033
1/31/98 23,724 31,902 25,911
2/28/98 26,158 34,201 28,536
3/31/98 26,490 35,951 29,872
4/30/98 27,140 36,313 30,098
5/31/98 25,162 35,690 28,281
6/30/98 25,730 37,138 30,030
7/31/98 24,153 36,744 28,168
8/31/98 19,352 31,437 23,651
9/30/98 20,473 33,451 24,743
10/31/98 21,759 36,169 27,482
11/30/98 23,613 38,360 30,600
12/31/98 24,782 40,570 34,256
1/31/99 26,264 42,266 35,968
2/28/99 25,243 40,953 35,432
3/31/99 25,523 42,591 37,914
4/30/99 26,096 44,241 39,419
5/31/99 27,270 43,196 39,469
6/30/99 29,311 45,593 41,296
7/31/99 28,654 44,170 38,129
8/31/99 28,668 43,950 38,011
9/30/99 28,332 42,745 37,238
10/31/99 31,281 45,450 39,173
11/30/99 33,853 46,377 39,811
12/31/99 38,220 49,107 43,781
1/31/00 38,144 46,640 43,213
2/29/00 42,354 45,757 44,947
3/31/00 43,290 50,234 47,598
4/30/00 37,948 48,718 43,221
5/31/00 36,258 47,718 40,445
6/30/00 40,996 48,895 41,741
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal values may flactuate so that shares,
when redeemed, may be worth more or less than their original cost.
--------------------------------------------------------------------------------
HIGHLIGHTS
--------------------------------------------------------------------------------
Percent of
TOP TEN HOLDINGS Net Assets
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Micron Technology, Inc. ................................................ 5.9%
(Electronics--Semiconductors)
Microsoft Corp. ........................................................ 5.6
(Computers--Software & Services)
Expeditors International of Washington, Inc. ........................... 5.0
(Air Freight)
NEXTLINK Communications, Inc.
(Class A).............................................................. 4.9
(Telephone)
Western Wireless Corp. (Class A)........................................ 4.9
(Telecommunications--Cellular/Wireless)
VoiceStream Wireless Corp. ............................................. 4.5
(Telecommunications--Cellular/Wireless)
Hewlett-Packard Co. .................................................... 4.4
(Computers--Hardware)
Intel Corp. ............................................................ 4.3
(Electronics--Semiconductors)
Starbucks Corp. ........................................................ 4.1
(Restaurants)
Kroger Co. ............................................................. 3.9
(Retail--Food Chains)
</TABLE>
TOP FIVE PURCHASES Cost
For the Period Ended June 30, 2000 (000's)
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Western Wireless Corp. (Class A)........................................ $5,500
AVT Corp. .............................................................. 4,497
Micron Technology, Inc. ................................................ 3,753
Go2Net, Inc. ........................................................... 3,389
Weyerhaeuser Co. ....................................................... 3,382
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE SALES Proceeds
For the Period Ended June 30, 2000 (000's)
--------------------------------------------------------------------------------
<S> <C>
TJ International, Inc. ................................................. $3,444
Mylan Laboratories, Inc. ............................................... 3,241
Alaska Air Group, Inc. ................................................. 2,749
Corixa Corp. ........................................................... 2,139
WatchGuard Technologies, Inc. .......................................... 1,589
</TABLE>
<TABLE>
<CAPTION>
Percent of
TOP FIVE INDUSTRIES Net Assets
--------------------------------------------------------------------------------
<S> <C>
Computers (Software & Services)........................................... 114%
Electronics (Semiconductors).............................................. 10
Telecommunications (Cellular/Wireless).................................... 9
Computers (Hardware)...................................................... 7
Retail (Food Chains)...................................................... 6
</TABLE>
Weightings As a Percent of Net Assets
--------------------------------------------------------------------------------
[PIE CHART]
1 Large - Common Stocks: ($4 Bil. and above) 53.5%
2 Small - Common Stocks: (Less Than $1.5 Bil.) 32.0%
3 Medium - Common Stocks: ($1.5 Bil. - $4 Bil.) 14.2%
4 Cash & Other: 0.3%
- 15 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Northwest Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 99.6%
Air Freight - 5.0%
161,000 Expeditors International of Washington, Inc. $ 7,648
Airlines - 2.7%
136,000 *Northwest Airlines Corp. 4,140
Banks (Major Regional) - 1.4%
75,000 U.S. Bancorp 1,444
74,800 West Coast Bancorp, Inc. 748
Banks (Regional) - 0.4%
79,000 Washington Banking Co. 681
Biotechnology - 2.2%
80,000 *Corixa Corp. 3,435
Chemicals (Diversified) - 2.1%
152,000 Penford Corp. 3,268
Communication Equipment - 2.3%
484,000 *AVT Corp. 3,570
Computers (Hardware) - 7.2%
100,000 *Apex, Inc. 4,375
54,000 Hewlett-Packard Co. 6,743
Computers (Peripherals) - 5.9%
133,000 *click2learn.com, Inc. 2,344
49,000 *Go2Net, Inc. 2,465
78,000 *ImageX.com, Inc. 473
30,000 *Loudeye Technologies, Inc. 523
31,000 *Primus Knowledge Solutions, Inc. 1,395
36,000 *WatchGuard Technologies, Inc. 1,978
Computers (Software & Services) - 11.4%
27,000 *Digimarc Corp. 1,039
28,000 *F5 Networks, Inc. 1,528
41,000 *Internap Network Services Corp. 1,702
108,000 *Microsoft Corp. 8,640
95,000 *ONYX Software Corp. 2,820
48,000 *WebTrends Corp. 1,857
Electrical Equipment - 1.0%
20,595 *Agilent Technologies, Inc. 1,519
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<C> <S> <C>
Electronics (Semiconductors) - 10.2%
50,000 Intel Corp. $ 6,684
104,000 *Micron Technology, Inc. 9,158
Hardware & Tools - 0.5%
141,000 *Jore Corporation 767
Health Care (Diversified) - 2.4%
62,000 American Home Products Corp. 3,642
Health Care (Drugs--Generic & Other) - 1.0%
59,000 *PathoGenesis Corp. 1,534
Health Care (Major Pharmaceuticals) - 1.2%
183,000 *Penwest Pharmaceuticals Co. 1,841
Health Care (Medical Products & Supplies) - 4.3%
229,000 *Protocol Systems, Inc. 3,650
100,000 *SonoSite, Inc. 2,881
Insurance (Life & Health) - 2.6%
126,500 StanCorp Financial Group, Inc. 4,064
Iron & Steel - 1.7%
161,000 Schnitzer Steel Industries, Inc. 2,556
Leisure Time (Products) - 1.0%
94,000 *Ambassadors International, Inc. 1,480
Paper & Forest Products - 1.9%
67,000 Weyerhaeuser Co. 2,881
Restaurants - 4.1%
164,000 *Starbucks Corp. 6,263
Retail (Food Chains) - 6.2%
109,000 Albertson's, Inc. 3,624
269,000 *Kroger Co. 5,935
Retail (General Merchandise) - 2.7%
124,000 *Costco Wholesale Corp. 4,092
Retail (Specialty) - 0.8%
33,000 *Amazon.com, Inc. 1,198
Savings & Loans - 2.8%
150,000 Washington Mutual, Inc. 4,331
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 16 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Northwest Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
--------------------------------------------------------------------------------
<C> <S> <C>
Services (Data Processing) - 0.3%
171,500 *ARIS Corp. $ 472
Telecommunications (Cellular/Wireless) - 9.4%
60,000 *VoiceStream Wireless Corp. 6,978
139,000 *Western Wireless Corp. (Class A) 7,576
Telephone - 4.9%
200,000 * NEXTLINK Communications,
Inc. (Class A) 7,588
---------
TOTAL COMMON STOCKS 153,530
---------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
--------------------------------------------------------------------------------
<C> <S> <C>
CASH EQUIVALENTS - 0.4%
Investment Companies
681,028 AIM Short-Term Investments Co.
Liquid Assets Money Market
Portfolio (Institutional Shares) $ 681
---------
TOTAL CASH EQUIVALENTS 681
---------
TOTAL INVESTMENTS - 100.0% 154,211
Other Assets, less Liabilities (31)
---------
NET ASSETS $ 154,180
=========
--------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
- 17 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO International Stock Fund
June 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
The portfolio has outperformed the EAFE index and the Lipper averages for
international funds through June 30, 2000.
The first half of the year was marked by changing investor sentiment. As
investors took profits and sent technology, telecom and media stocks from
leaders to laggards, "old economy" stocks benefited. We suffered less than
others from this volatility, having earlier trimmed our telecom and Japanese
technology stocks and re-invested the proceeds into lower-valued, more
attractive investments.
Financial and pharmaceutical stocks drove the Fund's outperformance.
Aventis' earnings growth accelerated on cost savings and increased drug sales.
Other contributing pharmaceuticals were Swiss-quoted Novartis and UK-quoted
AstraZeneca. Among the financial stocks, Netherlands-quoted ING Groep reduced
surplus capital by expanding its business through the acquisition of U.S. based
Reliastar. Paris-based AXA announced 33% revenue growth over the same period
last year.
Vodafone AirTouch, as well as other mobile operators fell on profit-taking
and concerns over continued network expansion costs. Meanwhile Alcatel profited
from exiting its low-growth and low-margin businesses to enter the surging
broadband equipment arena.
While economic data from the Eurozone is encouraging, growth in the UK has
slowed. In Japan, the economy is showing signs of economic recovery, but that
market declined, in part on investor impatience with the pace of reform. We
took profits in some of our better-performing Japanese investments and
redirected this money towards more value-orientated companies in Europe.
At this juncture--with profit warnings from high-profile technology
companies and aborted IPOs, we perceive a greater concern with company
fundamentals and have positioned the portfolio to benefit from a broadening of
the market into industry sectors largely ignored over the last two years.
Bank of Ireland
Asset Management (U.S.) Limited
--------------------------------------------------------------------------------
The Bank of Ireland Asset Management (U.S.) Limited (BIAM) investment committee
is comprised of senior analysts and economists and headed by the company's
chief financial officer. BIAM has managed international equities since 1966 and
began managing U.S. Funds in 1989.
- 18 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - NO LOAD CLASS
Average Annual Total Return for the
period ended June 30, 2000 Six-Month* 1 Year Since Inception**
-------------------------------------------------------------------------------
SAFECO International Stock Fund (2.01)% 19.67% 13.15%
EAFE Index (4.63)% 15.72% 9.19%
Lipper, Inc. (International Funds) (4.55)% 24.48% N/A
* Not Annualized
** Graph and average annual return comparison begins January 31, 1996, inception
date of the fund
SAFECO International
Stock Fund EAFE Index
---------- ----------
1/31/96 10,000 10,000
2/29/96 9,930 10,021
3/31/96 10,040 10,220
4/30/96 10,290 10,504
5/31/96 10,250 10,298
6/30/96 10,240 10,342
7/31/96 9,840 10,026
8/31/96 10,240 10,035
9/30/96 10,454 10,288
10/31/96 10,585 10,169
11/30/96 11,249 10,560
12/31/96 11,423 10,410
1/31/97 11,382 10,033
2/28/97 11,534 10,183
3/31/97 11,463 10,207
4/30/97 11,514 10,247
5/31/97 12,050 10,900
6/30/97 12,414 11,488
7/31/97 12,850 11,660
8/31/97 11,747 10,776
9/30/97 12,556 11,366
10/31/97 11,514 10,478
11/30/97 11,585 10,358
12/31/97 11,943 10,435
1/31/98 12,203 10,899
2/28/98 13,013 11,584
3/31/98 13,522 11,926
4/30/98 13,594 12,007
5/31/98 13,719 11,934
6/30/98 13,854 12,010
7/31/98 14,010 12,118
8/31/98 12,182 10,602
9/30/98 11,444 10,263
10/31/98 12,317 11,318
11/30/98 13,272 11,883
12/31/98 13,646 12,337
1/31/99 13,677 12,286
2/28/99 13,594 11,979
3/31/99 13,958 12,464
4/30/99 14,633 12,955
5/31/99 13,916 12,273
6/30/99 14,415 12,737
7/31/99 14,664 13,100
8/31/99 14,716 13,133
9/30/99 14,695 13,251
10/31/99 15,235 13,732
11/30/99 16,035 14,194
12/31/99 17,603 15,454
1/31/00 16,554 14,458
2/29/00 17,146 14,833
3/31/00 17,779 15,394
4/30/00 16,866 14,570
5/31/00 16,679 14,199
6/30/00 17,250 14,739
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal values may fluctuate so that shares,
when redeemed, may be worth more or less than their original cost.
--------------------------------------------------------------------------------
HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of
TOP TEN HOLDINGS Net Assets
--------------------------------------------------------------------------------
<S> <C>
Vodafone AirTouch, plc.................................................... 4.9%
(Telephone)
ING Groep NV.............................................................. 3.4
(Banks--Foreign)
Canon, Inc................................................................ 2.5
(Office Equipment & Supplies)
Vivendi................................................................... 2.5
(Services--Commercial & Consumer)
Axa....................................................................... 2.4
(Insurance--Multi-Line)
Hitachi, Ltd.............................................................. 2.4
(Electrical Equipment)
Telecom Italia SpA........................................................ 2.4
(Telephone)
Shell Transport & Trading Co., plc........................................ 2.2
(Oil--International Integrated)
Total Fina Elf SA......................................................... 2.2
(Oil--International Integrated)
Nestle SA................................................................. 2.2
(Foods)
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PURCHASES Cost
For the Period Ended June 30, 2000 (000's)
--------------------------------------------------------------------------------
<S> <C>
NEC Corp.................................................................. $637
Hitachi, Ltd.............................................................. 581
Koninklijke (Royal) Philips Electronics NV................................ 474
Marconi, plc.............................................................. 456
Reuters Group, plc........................................................ 366
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE SALES Proceeds
For the Period Ended June 30, 2000 (000's)
--------------------------------------------------------------------------------
<S> <C>
Vodafone AirTouch, plc.................................................... $789
Sony Corp................................................................. 749
NTT Mobile Communication Network, Inc..................................... 637
Keyence Corp.............................................................. 215
Pioneer Corp.............................................................. 209
</TABLE>
<TABLE>
<CAPTION>
Percent of
TOP FIVE COUNTRIES Net Assets
--------------------------------------------------------------------------------
<S> <C>
United Kingdom............................................................. 26%
Japan...................................................................... 18
Netherlands................................................................ 12
France..................................................................... 11
Switzerland................................................................ 9
</TABLE>
- 19 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO International Stock Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (000's)
--------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS - 97.1%
Australia - 3.6%
6,755 Brambles Industries, Ltd. $ 209
Services (Commercial & Consumer)
21,500 National Australia Bank, Ltd. 361
Banks (Foreign)
43,471 News Corp., Ltd. 601
Publishing
53,068 Telstra Corp., Ltd. 216
Telephone
26,977 Westpac Banking Corp., Ltd. 195
Banks (Foreign)
Denmark - 0.6%
3,780 Tele Danmark AS-B 255
Telephone
France - 11.2%
11,250 Alcatel 741
Telephone
11,334 Aventis SA 831
Chemicals
6,613 Axa 1,046
Insurance (Multi-Line)
5,005 Compagnie Generale des Etablissements Michelin 161
Auto Parts & Equipment
6,269 Total SA 965
Oil (International Integrated)
12,324 Vivendi 1,092
Services (Commercial & Consumer)
Germany - 3.6%
6,710 Bayerische HypoVereinsbank AG 438
Banks (Foreign)
16,132 Bayerische Motoren Werke AG 489
Automobiles
12,506 VEBA AG 616
Electric Companies
Hong Kong - 3.2%
26,000 Cheung Kong Holdings, Ltd. 288
Real Estate Investment Trust
42,000 China Telecom (Hong Kong), Ltd. 370
Telecommunications (Cellular/Wireless)
94,000 China Unicom, Ltd. 200
Telecommunications (Cellular/Wireless)
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000's)
--------------------------------------------------------------------------------
<C> <S> <C>
16,000 Hongkong Electric Holdings, Ltd. $ 52
Electric Companies
1,476,000 PetroChina Co., Ltd. 307
Oil & Gas (Exploration & Production)
24,000 Sun Hung Kai Properties, Ltd. 172
Real Estate Investment Trust
Italy - 3.1%
52,617 Ente Nazionale Idrocarburi SpA 305
Oil (International Integrated)
73,980 Telecom Italia SpA 1,021
Telephone
Japan - 18.3%
2,200 Acom Co., Ltd. 185
Consumer Finance
12,000 Bank of Tokyo--Mitsubishi, Ltd. 145
Banks (Foreign)
22,000 Canon, Inc. 1,098
Office Equipment & Supplies
11,000 Fuji Photo Film Co. 451
Office Equipment & Supplies
71,000 Hitachi, Ltd. 1,026
Electrical Equipment
5,000 Honda Motor Co., Ltd. 171
Automobiles
4,000 Hoya Corp. 359
Health Care (Medical Products & Supplies)
9,000 Kao Corp. 276
Personal Care
4,000 Murata Manufacturing Co., Ltd. 575
Electrical Equipment
27,000 NEC Corp. 849
Electronics (Semiconductors)
27 Nippon Telegraph & Telephone Corp. 360
Telephone
16 NTT Mobile Communication Network, Inc. 434
Telephone
1,600 Rohm Co., Ltd. 469
Electrical Equipment
9,000 Shiseido Co., Ltd. 139
Personal Care
4,500 Sony Corp. 421
Electrical Equipment
12,000 Takeda Chemical Industries 789
Health Care (Major Pharmaceuticals)
1,600 Takefuji Corp. 194
Consumer Finance
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 20 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO International Stock Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (000's)
-------------------------------------------------------------------------------
<C> <S> <C>
Netherlands - 12.2%
21,548 ABN Amro Holdings NV $ 530
Banks (Foreign)
20,449 Elsevier NV 249
Publishing
6,450 Fortis NV 189
Financial (Diversified)
3,660 Heineken NV 224
Beverages (Alcoholic)
21,682 ING Groep NV 1,472
Banks (Foreign)
17,000 Koninkijke KPN NV 764
Telephone
10,930 Koninklijke (Royal) Philips Electonics NV 518
Electronics (Semiconductors)
15,595 Koninklijke Ahold NV 461
Retail (Food Chains)
7,525 Royal Dutch Petroleum Co. 470
Oil (International Integrated)
9,535 TNT Post Group NV 258
Shipping
2,955 VNU NV 153
Publishing
New Zealand - 0.1%
12,479 Telecom Corp of New Zealand, Ltd. 44
Telephone
Portugal - 0.3%
6,765 Electricidade de Portugal, SA 123
Electric Companies
Singapore - 1.3%
25,122 DBS Group Holdings Ltd. 323
Banks (Foreign)
15,500 Oversea Chinese Banking Corp. Ltd. 107
Banks (Foreign)
10,000 Singapore Press Holdings, Ltd. 156
Publishing
South Korea - 0.6%
3,175 #Korea Telecom Corp. (ADR) 154
Telephone
4,600 #Pohang Iron & Steel Co., Ltd. (ADR) 110
Iron & Steel
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000's)
-------------------------------------------------------------------------------
<C> <S> <C>
Spain - 2.4%
45,100 Banco Santander Central Hispano, SA $ 478
Banks (Foreign)
26,723 Telefonica SA 576
Telephone
Sweden - 1.1%
25,040 Telefonaktiebolaget LM Ericsson AB 498
Telecommunications (Long Distance)
Switzerland - 9.2%
233 Alusuisse Lonza Group AG 152
Manufacturing (Diversified)
63 Givaudan AG 19
Health Care (Specialized Services)
233 Lonza AG 122
Chemicals
475 Nestle SA 954
Foods
439 Novartis AG 698
Health Care (Major Pharmaceuticals)
63 Roche Holding AG 615
Health Care (Major Pharmaceuticals)
374 Schweizerische Rueckversicherungs - Gesellschaft 765
Insurance (Multi-Line)
4,380 UBS AG 644
Banks (Foreign)
United Kingdom - 26.4%
7,500 3I Group, plc 154
Investment Management
33,585 Allied Zurich, plc 396
Insurance (Multi-Line)
10,775 AstraZeneca Group, plc 503
Health Care (Medical Products & Supplies)
29,225 Barclays, plc 725
Banks (Foreign)
11,837 British American Tobacco, plc 79
Tobacco
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 21 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO International Stock Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
VALUE
SHARES (000's)
--------------------------------------------------------------------------------
<C> <S> <C>
46,540 Cable & Wireless, plc $ 790
Telephone
49,110 Cadbury Schweppes, plc 322
Beverages (Non-Alcoholic)
54,098 Diageo, plc 484
Beverages (Alcoholic)
20,286 EMI Group, plc 188
Leisure Time (Products)
26,660 Glaxo Wellcome, plc 776
Health Care (Major
Pharmaceuticals)
61,290 Granada Group, plc 603
Leisure Time (Products)
58,540 Hilton Group, plc 205
Lodging (Hotels)
95,119 Ivensys, plc 357
Manufacturing (Diversified)
55,132 Lloyds TSB Group, plc 522
Banks (Foreign)
37,050 Marconi, plc 481
Communication Equipment
9,150 Old Mutual, plc 20
Insurance (Multi-Line)
10,250 Pearson, plc 322
Publishing
48,880 Prudential, plc 716
Insurance (Multi-Line)
6,590 Railtrack Group, plc 102
Railroads
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (000's)
--------------------------------------------------------------------------------
<C> <S> <C>
20,100 Reuters Group, plc $ 344
Services (Commercial &
Consumer)
2,850 RMC Group, plc 37
Building Materials
115,604 Shell Transport & Trading Co.,
plc 972
Oil (International Integrated)
12,650 The Peninsular and Oriental
Steam Navigation Co 108
Shipping
19,100 TI Group, plc 103
Manufacturing (Diversified)
523,944 Vodafone AirTouch, plc 2,124
Telephone
---------
TOTAL COMMON STOCKS 42,131
---------
TOTAL INVESTMENTS - 97.1% 42,131
Domestic Cash 942
Foreign Cash 176
Other Assets, less Liabilities 121
---------
1,239
---------
NET ASSETS $ 43,370
=========
--------------------------------------------------------------------------------
</TABLE>
# Security traded on NYSE and valued in USD.
<TABLE>
<CAPTION>
INDUSTRY Percent of
DIVERSIFICATION Net Assets
--------------------------------------------------------------------------------
<S> <C>
Telephone........................................................... 17.3%
Banks (Foreign)..................................................... 13.7
Insurance (Multi-Line).............................................. 6.8
Health Care (Major
Pharmaceuticals)................................................... 6.6
Oil (International Integrated)...................................... 6.3
Electrical Equipment................................................ 5.7
Services (Commercial & Consumer).................................... 3.8
Office Equipment & Supplies......................................... 3.6
Publishing.......................................................... 3.4
Electronics (Semiconductors)........................................ 3.2
Foods............................................................... 2.2
Chemicals........................................................... 2.2
Health Care (Medical Products &
Supplies).......................................................... 2.0
Leisure Time (Products)............................................. 1.8
Electric Companies.................................................. 1.8
Beverages (Alcoholic)............................................... 1.6
Automobiles......................................................... 1.5
Manufacturing (Diversified)......................................... 1.4
Telecommunications
(Cellular/Wireless)................................................ 1.3
</TABLE>
<TABLE>
<CAPTION>
INDUSTRY Percent of
DIVERSIFICATION Net Assets
--------------------------------------------------------------------------------
<S> <C>
Communication Equipment............................................. 1.1%
Telecommunications (Long
Distance).......................................................... 1.1
Real Estate Investment Trust........................................ 1.1
Retail (Food Chains)................................................ 1.1
Personal Care....................................................... 1.0
Consumer Finance.................................................... 0.9
Shipping............................................................ 0.8
Beverages (Non-Alcoholic)........................................... 0.7
Oil & Gas (Exploration &
Production)........................................................ 0.7
Lodging (Hotels).................................................... 0.5
Financial (Diversified)............................................. 0.4
Auto Parts & Equipment.............................................. 0.4
Investment Management............................................... 0.3
Iron & Steel........................................................ 0.3
Railroads........................................................... 0.2
Tobacco............................................................. 0.2
Building Materials.................................................. 0.1
----
97.1%
====
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 22 -
<PAGE>
REPORT FROM THE FUND MANAGERS
SAFECO Balanced Fund
June 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PHOTO] For the six months ending June 30, the Fund remains behind
REX BENTLEY the Lipper Balanced Fund universe and its aggregate (60% S&P
500/40% Lehman Gov./Corp.) index. The underperformance came
early in the period, and is attributable to the year-to-date
underperformance of value versus growth investing. However,
Value investing shined long enough in the second quarter for the
Balanced Fund to enjoy its best relative performance against its
peers and benchmark index in some time.
Relative to the S&P 500, the Fund benefited by its
underweighting in the poor-performing technology sector and its
selections within that sector. Our holdings in Micron Technology
and Hewlett-Packard climbed while tech sold off.
We also benefited by our overweighting in healthcare, our REITs (Real Estate
Investment Trusts), insurance stocks, and our stake in Washington Mutual. It
advanced nearly 10% after having lagged for some time.
Costco dropped over 50% on an earnings shortfall. We added to
it, as well as Procter & Gamble and McDonalds; at what we
believe to be very attractive valuations. We added to Bank of
America and Washington Mutual after the Federal Reserve raised
interest rates. We eliminated Dean Foods, Mylan Labs, and
PeopleSoft as their outlooks deteriorated.
At June 30, based on this year's earnings forecast, the price
earnings ratio (P/E), a measure of stock price in relation to
company earnings, of the S&P 500 was 25.3; the Fund's P/E is [PHOTO]
16.2. MICHAEL HUGHES
The bond portion of the Balanced Fund has outperformed. In the
first quarter,
as long-term Treasuries outperformed, we benefited by our underweighting in
non-Treasury
securities. During the second quarter, we increased our
allocation to asset- and mortgage-backed credits, which were
historically cheap, and the fund outperformed as they recovered.
Yield premiums on non-Treasury securities remain extremely
generous and we believe these sectors will outperform over the
second half of the year. We will continue to overweight
mortgage- and asset-backed securities because of their minimal
credit risk.
[PHOTO] We are encouraged by the Fund's relative performance in the
LYNETTE D. latest quarter and believe that we have positioned the Fund to
SAGRELD provide competitive, risk-adjusted returns in the future.
Rex Bentley
Michael Hughes
Lynette D. Sagvold
--------------------------------------------------------------------------------
Rex Bentley, an MBA from Brigham Young University and Chartered Financial
Analyst, has more than 20 years of investment experience.
Michael Hughes joined SAFECO as portfolio manager in January 1997. He began his
investment career in 1983. He graduated magna cum laude with a B.S. in finance
from the University of Colorado in Boulder and holds an MBA from the University
of Southern California in Los Angeles. He is a Chartered Financial Analyst.
Lynette D. Sagvold holds a BA in business administration from the University of
Washington and is a Chartered Financial Analyst. She began her investment
career in 1981 at Kidder Peabody and was a trust officer for Key Trust and
First Interstate before joining SAFECO in 1995 as a portfolio manager and
insurance analyst.
- 23 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - NO-LOAD CLASS
Average Annual Total Return for the Since
period ended June 30, 2000 Six Month* 1 Year Inception**
--------------------------------------------------------------------------------
SAFECO Balanced Fund (1.32)% (4.60)% 8.93%
60% S&P 500/40% Lehman Brothers Gov't./Corp Index 1.41% 6.07% 15.65%
S&P 500 Index (0.43)% 7.24% 2.47%
Lipper, Inc. (Balanced Funds) 1.34% 4.40% N/A
* Not Annualized
** Graph and average annual return comparison begins January 31, 1996, inception
date of the fund
S&P 500/Lehman
SAFECO Balanced Brothers Gov't./ S&P 500
Fund Corp. Index Index
--------------- ---------------- -------
1/31/96 10,000 10,000 10,000
2/29/96 9,950 9,971 10,093
3/31/96 10,017 9,996 10,190
4/30/96 10,077 10,060 10,340
5/31/96 10,218 10,213 10,607
6/30/96 10,345 10,289 10,647
7/31/96 10,112 10,016 10,177
8/31/96 10,243 10,135 10,392
9/30/96 10,599 10,555 10,976
10/31/96 10,813 10,829 11,279
11/30/96 11,272 11,415 12,131
12/31/96 11,140 11,225 11,890
1/31/97 11,473 11,675 12,633
2/28/97 11,567 11,743 12,732
3/31/97 11,163 11,381 12,210
4/30/97 11,414 11,877 12,938
5/31/97 11,896 12,388 13,725
6/30/97 12,209 12,807 14,340
7/31/97 12,905 13,620 15,480
8/31/97 12,420 13,051 14,614
9/30/97 12,760 13,598 15,414
10/31/97 12,621 13,360 14,900
11/30/97 12,834 13,796 15,589
12/31/97 12,993 14,004 15,856
1/31/98 13,083 14,172 16,031
2/28/98 13,654 14,856 17,187
3/31/98 13,964 15,398 18,066
4/30/98 13,885 15,530 18,248
5/31/98 13,761 15,391 17,935
6/30/98 13,806 15,875 18,663
7/31/98 13,500 15,760 18,465
8/31/98 12,593 14,251 15,798
9/30/98 13,275 14,995 16,810
10/31/98 13,983 15,780 18,176
11/30/98 14,417 16,469 19,277
12/31/98 14,626 17,147 20,387
1/31/99 14,638 17,694 21,240
2/28/99 14,183 17,180 20,580
3/31/99 14,388 17,698 21,403
4/30/99 15,026 18,208 22,232
5/31/99 15,014 17,842 21,707
6/30/99 15,287 18,550 22,912
7/31/99 14,984 18,108 22,196
8/31/99 14,633 18,038 22,086
9/30/99 14,296 17,718 21,481
10/31/99 14,723 18,546 22,840
11/30/99 14,699 18,822 23,306
12/31/99 14,779 19,616 24,678
1/31/00 14,191 18,867 23,433
2/29/00 13,565 18,662 22,991
3/31/00 14,596 20,081 25,239
4/30/00 14,571 19,600 24,477
5/31/00 14,659 19,294 23,975
6/30/00 14,584 19,749 24,567
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index.. The index is unmanaged
and includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
--------------------------------------------------------------------------------
HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of
TOP TEN STOCK HOLDINGS Net Assets
--------------------------------------------------------------------------------
<S> <C>
Intel Corp......................................................... 2.0%
(Electronics--Semiconductors)
Lucent Technologies, Inc........................................... 1.9
(Telecommunications--Equipment)
Harford Financial Services Group,
Inc............................................................... 1.8
(Insurance--Multi-Line)
Abbott Laboratories................................................ 1.8
(Health Care--Diversified)
Johnson & Johnson.................................................. 1.7
(Health Care--Diversified)
Albertson's, Inc................................................... 1.6
(Retail--Food Chains)
Washington Mutual, Inc............................................. 1.5
(Savings & Loans)
ALLTEL Corp........................................................ 1.5
(Telephone)
Exxon Mobil Corp................................................... 1.5
(Oil--International Integrated)
The Gillette Co.................................................... 1.5
(Personal Care)
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PURCHASES (Common Stocks)
For the Period Ended June 30, 2000 Cost (000's)
--------------------------------------------------------------------------------
<S> <C>
The Gillette Co.................................................... $288
Procter & Gamble Co................................................ 265
McDonald's Corp.................................................... 226
United Parcel Service, Inc. (Class
B)................................................................ 218
Diebold, Inc....................................................... 198
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE SALES (Common Stocks) Proceeds
For the Period Ended June 30, 2000 (000's)
--------------------------------------------------------------------------------
<S> <C>
Kimberly-Clark Corp................................................ $395
Nortel Networks Corp............................................... 355
Mylan Laboratories, Inc............................................ 296
PepsiCo, Inc....................................................... 290
Hewlett-Packard Co................................................. 230
</TABLE>
<TABLE>
<CAPTION>
Percent of
TOP FIVE INDUSTRIES (Common Stocks) Net Assets
--------------------------------------------------------------------------------
<S> <C>
Telephone.......................................................... 7%
Health Care (Diversified).......................................... 6
Oil (International Integrated)..................................... 4
Electronics (Semiconductors)....................................... 3
Real Estate Investment Trust....................................... 3
</TABLE>
Weightings As a Percent of Net Assets
---------------------------------------
[PIE CHART]
1 Large - Common Stocks:
($4 Bil. and above) 56.0%
2 Mortgage Backed Securities: 12.0%
3 U.S. Government Securities: 11.0%
4 Corporate Bonds: 10.0%
5 Asset Backed Securities 5.0%
6 Medium - Common Stocks:
($1.5 Bil. - $4 Bil.) 3.0%
7 Small - Common Stocks:
(Less Than $1.5 Bil.) 2.0%
8 Cash & Other 1.0%
- 24 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Balanced Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS - 61.6%
Banks (Major Regional) - 1.9%
5,500 Bank of America Corp. $ 236
7,800 KeyCorp 137
Banks (Money Center) - 1.3%
5,400 Chase Manhattan Corp. 249
Chemicals - 1.9%
3,400 Du Pont (E.I.) de Nemours & Co. 149
5,800 Praxair, Inc. 217
Computers (Hardware) - 2.3%
3,200 * Apple Computer, Inc. 168
2,100 Hewlett-Packard Co. 262
Computers (Software & Services) - 0.6%
5,400 * Cadence Design Systems, Inc. 110
Electric Companies - 1.1%
11,700 NIPSCO Industries, Inc. 218
Electrical Equipment - 1.7%
800 * Agilent Technologies, Inc. 59
4,500 Emerson Electric Co. 272
Electronics (Semiconductors) - 3.1%
2,800 Intel Corp. 374
2,300 * Micron Technology, Inc. 203
Entertainment - 1.1%
5,500 The Walt Disney Co. 213
Financial (Diversified) - 2.6%
4,300 American General Corp. 262
4,200 Federal National Mortgage Association 219
Foods - 0.7%
6,600 ConAgra, Inc. 126
Health Care (Diversified) - 6.0%
7,600 Abbott Laboratories 339
4,700 American Home Products Corp. 276
3,300 Bristol-Myers Squibb Co. 192
3,200 Johnson & Johnson 326
Household Products (Non-Durables) - 1.3%
4,400 Procter & Gamble Co. 252
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
----------------------------------------------------------------
<S> <C>
Insurance (Life & Health) - 1.1%
10,700 UnumProvident Corp. $ 215
Insurance (Multi-Line) - 1.8%
6,100 Hartford Financial Services Group, Inc. 341
Manufacturing (Diversified) - 2.5%
10,900 Crane Co. 265
2,500 Minnesota Mining & Manufacturing Co. 206
Manufacturing (Specialized) - 1.1%
7,700 Diebold, Inc. 215
Office Equipment & Supplies - 1.2%
11,200 Xerox Corp. 232
Oil & Gas (Drilling & Equipment) - 0.9%
3,500 Halliburton Co. 165
Oil (International Integrated) - 3.8%
2,000 Chevron Corp. 170
3,588 Exxon Mobil Corp. 282
4,900 Texaco, Inc. 261
Paper & Forest Products - 0.8%
5,000 International Paper Co. 149
Personal Care - 1.5%
8,000 The Gillette Co. 279
Publishing (Newspapers) - 0.9%
4,100 New York Times Co. (Class A) 162
Real Estate Investment Trust - 2.7%
3,200 Equity Residential Properties Trust 147
6,800 First Industrial Realty Trust, Inc. 201
5,800 Liberty Property Trust 150
Restaurants - 1.0%
6,000 McDonald's Corp. 198
Retail (Department Stores) - 0.6%
4,650 May Department Stores Co. 112
Retail (Drug Stores) - 1.3%
6,400 CVS Corp. 256
Retail (Food Chains) - 1.6%
9,049 Albertson's, Inc. 301
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 25 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Balanced Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<C> <S> <C>
Retail (General Merchandise) - 1.1%
6,500 *Costco Wholesale Corp. $ 214
Savings & Loans - 1.5%
10,100 Washington Mutual, Inc. 292
Services (Advertising/Marketing) - 1.2%
5,300 Interpublic Group Cos., Inc. 228
Services (Commercial & Consumer) - 1.1%
3,700 United Parcel Service, Inc. (Class B) 218
Telecommunications (Equipment) - 1.9%
6,200 Lucent Technologies, Inc. 367
Telephone - 6.5%
4,700 ALLTEL Corp. 291
9,000 CenturyTel, Inc. 259
3,700 GTE Corp. 230
5,400 *MCI WorldCom, Inc. 248
4,800 SBC Communications, Inc. 208
---------
TOTAL COMMON STOCKS 11,721
---------
CORPORATE BONDS - 10.4%
Banks (Money Center) - 0.9%
165,000 Bank of America Corp.
7.80%, due 2/15/10 164
Beverages (Alcoholic) - 0.7%
125,000 Anheuser-Busch Cos., Inc.
7.50%, due 3/15/12 125
Financial (Diversified) - 2.9%
155,000 Ford Motor Credit Co.
7.375%, due 10/28/09 150
150,000 General Motors Acceptance Corp.
5.95%, due 3/14/03 144
125,000 Hertz Corp.
7.00%, due 7/01/04 122
130,000 Newcourt Credit Group, Inc.
6.875%, due 2/16/05 125
Investment Banking & Brokerage - 0.9%
165,000 Morgan Stanley Dean Witter Co.
8.00%, due 6/15/10 167
Manufacturing (Diversified) - 1.0%
210,000 Tyco International Group SA
6.375%, due 6/15/05 198
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<C> <S> <C>
Publishing (Newspapers) - 1.1%
210,000 Times-Mirror Co.
6.65%, due 10/15/01 $ 208
Retail (General Merchandise) - 1.4%
60,000 Sears Roebuck & Co.
6.25%, due 1/15/04 58
205,000 Wal-Mart Stores, Inc.
6.15%, due 8/10/01 203
Telecommunications (Cellular/Wireless) - 1.6%
110,000 TCI Communications, Inc.
8.00%, due 8/01/05 113
195,000 Worldcom, Inc.
8.00%, due 5/15/06 197
---------
TOTAL CORPORATE BONDS 1,974
---------
ASSET BACKED SECURITIES - 5.0%
Electric Companies - 0.8%
170,000 ComEd Transitional Funding Trust
5.63%, due 6/25/09 157
Financial (Diversified) - 4.1%
254,000 Citicorp Mortgage Securities, Inc.
6.50%, due 6/25/29 230
115,000 CNH Equipment Trust
7.34%, due 2/16/07 115
180,000 Fleet Credit Card Master
6.90%, due 4/16/07 178
265,000 Providian Master Trust
7.49%, due 8/17/09 268
---------
TOTAL ASSET BACKED SECURITIES 948
---------
MORTGAGE BACKED SECURITIES - 12.2%
Federal Home Loan Mortgage Corp. (FHLMC) - 1.0%
185,400 7.50%, due 10/01/29 183
Federal National Mortgage Association (FNMA) - 8.4%
283,255 6.00%, due 1/01/29 260
130,000 6.00%, due 6/01/30 119
156,386 6.50%, due 1/01/15 151
187,724 7.00%, due 3/01/12 185
299,027 8.00%, due 12/01/29 300
227,505 8.00%, due 2/01/30 229
171,730 8.00%, due 2/15/29 173
164,393 8.00%, due 4/01/20 166
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 26 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Balanced Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
--------------------------------------------------------------------------------
<C> <S> <C>
Government National Mortgage Association (GNMA) - 2.9%
23,486 6.00%, due 4/15/14 $ 22
132,741 6.00%, due 8/15/13 127
224,433 7.00%, due 4/15/28 218
57,127 7.00%, due 8/15/28 55
132,026 7.75%, due 10/15/29 132
-------------------
TOTAL MORTGAGE BACKED SECURITIES 2,320
-------------------
U.S. GOVERNMENT OBLIGATIONS - 10.8%
Federal National Mortgage Association (FNMA) - 1.8%
340,000 Discount Note
0.00%, due 9/07/00 336
U.S. Federal Agency Notes - 3.2%
655,000 5.125%, due 2/13/04 615
U.S. Treasury Notes - 5.8%
975,000 7.50%, due 11/15/16 1,098
-------------------
TOTAL U.S. GOVERNMENT OBLIGATIONS 2,049
-------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
--------------------------------------------------------------------------------
<C> <S> <C>
CASH EQUIVALENTS - 0.4%
Investment Companies
69,126 AIM Short-Term Investments Co. Liquid Assets Money
Market Portfolio (Institutional Shares) $ 69
---------
TOTAL CASH EQUIVALENTS 69
---------
TOTAL INVESTMENTS - 100.4% 19,081
Other Assets, less Liabilities (62)
---------
NET ASSETS $ 19,019
=========
--------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
- 27 -
<PAGE>
REPORT FROM THE FUND MANAGER
SAFECO Small Company Value Fund
June 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PHOTO]
GREG EISEN The Small Company Value Fund's one-year total return is
double that of its peers. However, the Fund is behind the index
and Lipper small cap value group for the six months.
The Fund outperformed over the longer term by owning stocks
that moved into the growth mode and by participating in the
previously hot initial public offering market. The second
quarter underperformance is largely due to earnings shortfalls.
In each case, the setbacks appear temporary and I'm holding the
stocks.
MICROS fell 70% in the second quarter on disappointing sales and revenue. I
believe spending will resume, and MICROS, a proven leader in hospitality
software systems, will get the business.
A change in insurance regulation caused slower sales at Portamedic, Hooper
Holmes' largest subsidiary. This caused a second-quarter earnings shortfall. I
think this company is set to resume its historical growth rates in an expanded
marketplace. In addition to no debt and good cash flow, Portamedic has systems
in place to participate in Web-based distribution of life insurance.
S3's stock fell as the company divested its money-losing graphics-card
business to concentrate on Internet appliances, such as the MP3 Rio Player, and
its semiconductor business.
On the up side, GSI Lumonics flew into our top ten. I initiated the position
in the second quarter and it doubled in value. This company makes lasers for
three existing markets and is expanding into optical networking. Insight
Enterprises, a position I built in the first quarter is also up over 100%. It's
met great success telemarketing computer products to mid-size business.
BSQUARE, another strong performer, is a company of ex-Microsoft talent that
develops Windows CE operating systems for such devices as set-top boxes and
palm-size computers.
Going forward, I will continue to buy value in pursuit of growth.
Greg Eisen
--------------------------------------------------------------------------------
Greg Eisen joined SAFECO in 1986. He holds a BA from Rutgers University and is
a Certified Public Accountant and a Chartered Financial Analyst.
- 28 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - NO-LOAD CLASS
Average Annual Total Return for the
period ended June 30, 2000 Six-Month* 1 Year Since Inception
----------------------------------------------------------------------------
SAFECO Growth Opportunities Fund (2.04)% 20.37% 7.06%
S&P 500 Index (3.08)% 14.51% 13.66%
Lipper, Inc. (Mid-Cap Core Funds) 6.54% 6.40% N/A
* Not Annualized
** Graph and average annual return comparison begins January, 31, 1996,
inception date of the fund
SAFECO Small Russell 2000
Co. Value Fund Index
-------------- ------------
1/31/96 10,000 10,000
2/29/96 10,150 10,316
3/31/96 10,490 10,521
4/30/96 11,550 11,086
5/31/96 12,350 11,531
6/30/96 12,030 11,061
7/31/96 11,220 10,096
8/31/96 11,910 10,682
9/30/96 12,183 11,099
10/31/96 12,162 10,927
11/30/96 12,024 11,375
12/31/96 12,501 11,667
1/31/97 12,606 11,898
2/28/97 12,342 11,610
3/31/97 11,918 11,066
4/30/97 11,675 11,093
5/31/97 12,786 12,330
6/30/97 13,464 12,854
7/31/97 14,385 13,454
8/31/97 14,670 13,757
9/30/97 16,121 14,762
10/31/97 15,538 14,105
11/30/97 15,443 14,009
12/31/97 15,423 14,261
1/31/98 15,325 14,044
2/28/98 16,886 15,097
3/31/98 18,458 15,731
4/30/98 19,119 15,817
5/31/98 18,078 14,969
6/30/98 17,677 15,012
7/31/98 15,640 13,786
8/31/98 11,120 11,113
9/30/98 11,673 11,973
10/31/98 11,413 12,464
11/30/98 11,586 13,123
12/31/98 12,096 13,942
1/31/99 12,453 14,126
2/28/99 11,684 12,987
3/31/99 11,044 13,187
4/30/99 10,936 14,368
5/31/99 10,979 14,580
6/30/99 11,229 15,235
7/31/99 11,424 14,815
8/31/99 10,817 14,269
9/30/99 10,860 14,270
10/31/99 10,903 14,333
11/30/99 12,432 15,203
12/31/99 13,797 16,924
1/31/00 13,201 16,650
2/29/00 14,263 19,403
3/31/00 14,534 18,127
4/30/00 13,938 17,036
5/31/00 12,865 16,042
6/30/00 13,515 17,445
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index.. The index is unmanaged
and includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal value may fluctuate so that shares, when
redeemed, may be worth more or less than their original cost.
--------------------------------------------------------------------------------
HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOP TEN HOLDINGS Percent of Net Assets
--------------------------------------------------------------------------------
<S> <C>
Optimal Robotics Corp. ........................................... 4.6%
(Computers--Hardware)
Rent-Way, Inc. ................................................... 4.2
(Services--Commercial & Consumer)
Rent-A-Center, Inc. .............................................. 3.8
(Services--Commercial & Consumer)
ACT Manufacturing, Inc. .......................................... 3.8
(Electronics--Component
Distributors)
Insight Enterprises, Inc. ........................................ 3.4
(Retail--Computers & Electronics)
International Aircraft Investors,
Inc. ............................................................ 3.3
(Aerospace/Defense)
Landstar System, Inc. ............................................ 3.1
(Trucking)
GSI Lumonics, Inc. ............................................... 3.1
(Manufacturing--Diversified)
BSQUARE Corp. .................................................... 3.1
(Computers--Software & Services)
Astec Industries, Inc. ........................................... 3.0
(Engineering & Construction)
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PURCHASES
For the Period Ended June 30, 2000 Cost (000's)
--------------------------------------------------------------------------------
<S> <C>
Audiovox Corp. (Class A)............................................... $888
Hooper Holmes, Inc..................................................... 867
Wet Seal, Inc. (Class A)............................................... 829
Insight Enterprises, Inc. ............................................. 822
Alaska Air Group, Inc. ................................................ 802
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE SALES
For the Period Ended June 30, 2000 Proceeds (000's)
--------------------------------------------------------------------------------
<S> <C>
U.S. Foodservice.................................................... $1,370
BEA Systems, Inc. .................................................. 926
Vyyo, Inc. ......................................................... 846
Alaska Air Group, Inc. ............................................. 831
GRIC Communications, Inc. .......................................... 718
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE INDUSTRIES Percent of Net Assets
--------------------------------------------------------------------------------
<S> <C>
Services (Commercial & Consumer)................................... 12%
Computers (Software & Services).................................... 7
Trucking........................................................... 7
Computers (Hardware)............................................... 6
Oil & Gas (Drilling & Equipment)................................... 6
</TABLE>
Weightings As a Percent of Net Assets
--------------------------------------------------------------------------------
[PIE CHART]
1 Medium - Common Stocks: ($250 Mil. - $750 Mil.) 48.0%
2 Small-Cap Common Stocks: (Under $1 Bil.)
Small: (Under $250 Mil.) 26.0%
Large: (Over $750 Mil.) 11.0%
3 Mid-Cap Common Stocks: ($1 Bil. - $4 Bil.) 14.0%
4 Cash & Other: 1.0%
- 29 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Small Company Value Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
--------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS - 99.0%
Aerospace/Defense - 3.3%
186,950 *International Aircraft Investors, Inc. $ 981
Banks (Regional) - 2.0%
42,857 Hanmi Bank (Los Angeles, CA) 587
Communication Equipment - 4.7%
51,000 *Concurrent Computer Corp. 669
18,700 *SBS Technologies, Inc. 691
Computers (Hardware) - 6.1%
23,100 *MICROS Systems, Inc. 429
35,100 *Optimal Robotics Corp. 1,347
Computers (Peripherals) - 4.5%
32,000 *Integrated Measurement Systems, Inc. 504
51,700 *S3, Inc. 763
1,700 *Versata, Inc. 69
Computers (Software & Services) - 7.2%
40,700 *BSQUARE Corp. 913
27,500 *Ciber, Inc. 364
38,800 *ITT Educational Services, Inc. 681
34,000 *Smith-Gardner & Associates, Inc. 164
Electronics (Component Distributors) - 4.7%
23,700 *ACT Manufacturing, Inc. 1,101
13,800 *Audiovox Corp. (Class A) 304
Engineering & Construction - 3.0%
34,200 *Astec Industries, Inc. 868
Financial (Diversified) - 1.6%
24,000 Cash America International, Inc. 177
39,000 *Hawthorne Financial Corp. 302
Health Care (Medical Products & Supplies) - 4.6%
78,600 Hooper Holmes, Inc. 629
25,600 *SonoSite, Inc. 738
Insurance (Property-Casualty) - 1.0%
71,100 *American Safety Insurance Group, Ltd. 298
Manufacturing (Diversified) - 4.8%
30,000 Federal Signal Corp. 495
26,000 *GSI Lumonics, Inc. 913
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
--------------------------------------------------------------------------------
<S> <C>
Manufacturing (Specialized) - 2.0%
25,200 *Imax Corp. $ 573
Oil & Gas (Drilling & Equipment) - 6.0%
22,600 *Marine Drilling Cos., Inc. 633
22,600 *Patterson Energy, Inc. 644
12,000 *UTI Energy Corp. 481
Real Estate Investment Trust - 1.1%
9,700 Alexandria Real Estate Equities, Inc. 333
Restaurants - 2.0%
87,200 *Taco Cabana, Inc. (Class A) 578
Retail (Computers & Electronics) - 3.4%
17,000 *Insight Enterprises, Inc. 1,008
Retail (Department Stores) - 2.0%
79,500 *Musicland Stores Corp. 591
Retail (Food Chains) - 2.4%
68,900 Ingles Markets, Inc. (Class A) 719
Retail (General Merchandise) - 0.7%
15,400 Deb Shops, Inc. 192
Retail (Specialty-Apparel) - 4.3%
50,000 *Stein Mart, Inc. 512
58,200 Wet Seal, Inc. (Class A) 764
Retail (Specialty) - 2.0%
47,900 Regis Corp. 599
Services (Advertising/Marketing) - 1.5%
19,000 *Snyder Communications, Inc. 451
Services (Commercial & Consumer) - 12.1%
32,600 *Dollar Thrifty Automotive Group, Inc. 601
37,000 *Profit Recovery Group International, Inc. 615
49,850 *Rent-A-Center, Inc. 1,122
42,200 *Rent-Way, Inc. 1,232
Shipping - 1.2%
21,000 Nordic American Tanker Shipping, Ltd. 347
Telecommunications (Cellular/Wireless) - 1.3%
20,500 *Dobson Communications Corp. (Class A) 395
Textiles (Apparel) - 1.2%
42,800 *Cutter & Buck, Inc. 340
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 30 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO Small Company Value Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
--------------------------------------------------------------------------------
<C> <S> <C>
Trucking - 6.6%
15,500 *Landstar System, Inc. $ 923
75,600 Rollins Truck Leasing Corp. 524
34,700 *Swift Transportation Co., Inc. 486
Waste Management - 1.5%
27,500 Landauer, Inc. 428
---------
TOTAL COMMON STOCKS 29,078
---------
PREFERRED STOCKS - 1.0%
Electric Companies - 1.0%
4,000 Massachusetts Electric Co. 286
---------
TOTAL PREFERRED STOCKS 286
---------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
--------------------------------------------------------------------------------
<C> <S> <C>
CASH EQUIVALENTS - 3.9%
Investment Companies
1,156,634 AIM Short-Term Investments Co. $ 1,157
Liquid Assets Money Market
Portfolio (Institutional Shares)
---------
TOTAL CASH EQUIVALENTS 1,157
---------
TOTAL INVESTMENTS - 103.9% 30,521
Other Assets, less Liabilities (1,149)
---------
NET ASSETS $ 29,372
=========
--------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
- 31 -
<PAGE>
REPORT FROM THE FUND MANAGERS
SAFECO U.S. Value Fund
June 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PHOTO]
REX Value investing shined long enough in the second quarter for
BENTLEY the U.S. Value Fund to beat its peers and the S&P 500. The
Fund's six-month underperformance of the broad market index came
during the first quarter and is attributable to the year-to-date
underperformance of value versus growth investing.
Relative to the S&P 500, the Fund benefited by its
underweighting in the poor-performing technology sector and its
selections within that sector. Our holdings in Micron Technology
and Hewlett-Packard climbed while tech sold off.
The Fund also benefited by being overweighted in healthcare
stocks relative to most value indices and from good stock
selection in the communication sector, where our stocks declined
less than the overall sector.
The Fund's stock selections within the financial sector--
REITs (Real Estate Investment Trusts), insurance stocks, and
[PHOTO] Washington Mutual--helped our performance relative to the value
LYNETTE D. benchmarks. We added to Washington Mutual and Bank of America
SAVGOLD after the Federal Reserve raised interest rates. At June 30, the
Fund was overweighted in financials relative to the S&P 500, but
substantially underweighted compared to the value indices.
In the second quarter, Costco dropped over 50% on an earnings shortfall. We
added to it, as well as Procter & Gamble and McDonald's; at what we believe to
be very attractive valuations. We expect these stocks to perform well in a
slowing U.S. economy.
During the period we eliminated Dean Foods, Mylan Labs, and PeopleSoft as
our outlooks for them deteriorated.
At June 30, based on this year's earnings forecast, the price earnings ratio
(P/E), a measure of stock price in relation to company earnings, P/E of the S&P
500 was 25.3. The equities in the Balanced Fund were trading at a P/E of just
16.1.
We are encouraged by the bias for profitability and reasonable prices that
we are seeing in the market at this time, and we are pleased by the recent
relative performance of the U.S. Value Fund.
Rex Bentley
Lynette D. Sagvold
--------------------------------------------------------------------------------
Rex Bentley, an MBA from Brigham Young University and Chartered Financial
Analyst, has more than 20 years of investment experience.
Lynette D. Sagvold holds a BA in business administration from the University of
Washington and is a Chartered Financial Analyst. She began her investment
career in 1981 at Kidder Peabody and was a trust officer for Key Trust and
First Interstate before joining SAFECO in 1995 as a portfolio manager and
insurance analyst.
- 32 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
[PERFORMANCE GRAPH]
PERFORMANCE OVERVIEW - NO-LOAD CLASS
Average Annual Total Return for the
period ended June 30, 2000 Six Month* 1 Year Since Inception**
-------------------------------------------------------------------------------
SAFECO U.S. Value Fund (4.77)% (9.22)% 9.29%
S&P 500 Index (0.43)% 7.24% 22.45%
Lipper, Inc. (Large-Cap Value Funds) (1.65)% (0.93)% N/A
* Not Annualized
** Graph and average annual return comparison begins April 30, 1997, inception
date of the fund
SAFECO
U.S. Value Fund S&P 500 Index
--------------- -------------
4/30/97 10,000 10,000
5/31/97 10,670 10,608
6/30/97 11,053 11,083
7/31/97 11,915 11,965
8/31/97 11,283 11,295
9/30/97 11,669 11,914
10/31/97 11,307 11,516
11/30/97 11,599 12,049
12/31/97 11,750 12,256
1/31/98 11,760 12,391
2/28/98 12,621 13,284
3/31/98 13,095 13,964
4/30/98 12,905 14,104
5/31/98 12,632 13,862
6/30/98 12,615 14,425
7/31/98 12,150 14,272
8/31/98 10,662 12,210
9/30/98 11,380 12,993
10/31/98 12,375 14,048
11/30/98 12,999 14,900
12/31/98 13,231 15,758
1/31/99 13,242 16,417
2/28/99 12,799 15,907
3/31/99 13,042 16,543
4/30/99 13,996 17,184
5/31/99 14,118 16,778
6/30/99 14,593 17,709
7/31/99 14,182 17,156
8/31/99 13,681 17,071
9/30/99 13,105 16,603
10/31/99 13,708 17,653
11/30/99 13,674 18,013
12/31/99 13,912 19,074
1/31/00 13,027 18,115
2/29/00 12,014 17,773
3/31/00 13,398 19,511
4/30/00 13,375 18,922
5/31/00 13,550 18,534
6/30/00 13,248 18,991
The performance graph compares a hypothetical $10,000 investment in the Fund to
a hypothetical investment in a relevant market index. The index is unmanaged and
includes no operating expenses or transaction costs. Past performance is not
predictive of future results. Principal values may flactuate so that shares,
when redeemed, may be worth more or less than their original cost.
--------------------------------------------------------------------------------
HIGHLIGHTS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Percent of
TOP TEN HOLDINGS Net Assets
--------------------------------------------------------------------------------
<S> <C>
Abbott Laboratories................................................. 3.6%
(Health Care--Diversified)
Hartford Financial Services Group,
Inc................................................................ 3.2
(Insurance--Multi-Line)
Intel Corp.......................................................... 3.0
(Electronics--Semiconductors)
Albertson's, Inc.................................................... 3.0
(Retail--Food Chains)
Exxon Mobil Corp.................................................... 3.0
(Oil--International Integrated)
Lucent Technologies, Inc............................................ 3.0
(Telecommunications--Equipment)
Crane Co............................................................ 2.6
(Manufacturing--Diversified)
Washington Mutual, Inc.............................................. 2.6
(Savings & Loans)
Emerson Electric Co................................................. 2.5
(Electrical Equipment)
ALLTEL Corp......................................................... 2.5
(Telephone)
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE PURCHASES Cost
For the Period Ended June 30, 2000 (000's)
--------------------------------------------------------------------------------
<S> <C>
Procter & Gamble Co................................................. $213
McDonald's Corp..................................................... 203
The Gillette Co..................................................... 192
United Parcel Service, Inc. (Class
B)................................................................. 188
Diebold, Inc........................................................ 172
</TABLE>
<TABLE>
<CAPTION>
TOP FIVE SALES
For the Period Ended June 30, Proceeds
2000 (000's)
--------------------------------------------------------------------------------
<S> <C>
Kimberly-Clark Corp................................................. $272
Nortel Networks Corp................................................ 271
PepsiCo, Inc........................................................ 229
Hewlett-Packard Co.................................................. 182
Mylan Laboratories, Inc............................................. 179
</TABLE>
<TABLE>
<CAPTION>
Percent of
TOP FIVE INDUSTRIES Net Assets
--------------------------------------------------------------------------------
<S> <C>
Telephone........................................................... 11%
Health Care (Diversified)........................................... 10
Oil (International Integrated)...................................... 7
Electronics (Semiconductors)........................................ 5
Manufacturing (Diversified)......................................... 5
</TABLE>
Weightings As a Percent of Net Assets
--------------------------------------------------------------------------------
[PIE CHART]
1 Large - Common Stocks: ($4 Bil. and above) 94.0%
2 Medium - Common Stocks: ($1.5 Bil. - $4 Bil.) 5.0%
3 Small - Common Stocks: (Less Than $1.5 Bil.) 4.0%
4 Cash & Other: (3.0)%
- 33 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO U.S. Value Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<S> <C>
COMMON STOCKS - 103.6%
Banks (Major Regional) - 3.5%
4,800 Bank of America Corp. $ 206
7,000 KeyCorp 123
Banks (Money Center) - 2.2%
4,500 Chase Manhattan Corp. 207
Chemicals - 3.2%
3,100 Du Pont (E.I.) de Nemours & Co. 136
4,400 Praxair, Inc. 165
Computers (Hardware) - 3.7%
2,800 *Apple Computer, Inc. 147
1,600 Hewlett-Packard Co. 200
Computers (Software & Services) - 0.9%
4,100 *Cadence Design Systems, Inc. 84
Electric Companies - 1.8%
9,200 NIPSCO Industries, Inc. 171
Electrical Equipment - 3.0%
610 *Agilent Technologies, Inc. 45
3,800 Emerson Electric Co. 229
Electronics (Semiconductors) - 4.8%
2,100 Intel Corp. 281
1,900 *Micron Technology, Inc. 167
Entertainment - 2.0%
4,800 The Walt Disney Co. 186
Financial (Diversified) - 4.0%
3,300 American General Corp. 201
3,200 Federal National Mortgage Association 167
Foods - 1.7%
8,400 ConAgra, Inc. 160
Health Care (Diversified) - 9.9%
7,500 Abbott Laboratories 334
3,700 American Home Products Corp. 217
2,600 Bristol-Myers Squibb Co. 152
2,200 Johnson & Johnson 224
Household Products (Non-Durables) - 2.1%
3,500 Procter & Gamble Co. 200
Insurance (Life & Health) - 1.8%
8,400 UnumProvident Corp. 169
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
-------------------------------------------------------------------------------
<S> <C>
Insurance (Multi-Line) - 3.2%
5,400 Hartford Financial Services Group, Inc. $ 302
Manufacturing (Diversified) - 4.7%
10,150 Crane Co. 247
2,400 Minnesota Mining & Manufacturing Co. 198
Manufacturing (Specialized) - 2.0%
6,600 Diebold, Inc. 184
Office Equipment & Supplies - 1.7%
7,800 Xerox Corp. 162
Oil & Gas (Drilling & Equipment) - 2.1%
4,200 Halliburton Co. 198
Oil (International Integrated) - 6.6%
1,600 Chevron Corp. 136
3,564 Exxon Mobil Corp. 280
3,700 Texaco, Inc. 197
Paper & Forest Products - 1.2%
3,700 International Paper Co. 110
Personal Care - 2.0%
5,300 The Gillette Co. 185
Publishing (Newspapers) - 1.4%
3,400 New York Times Co. (Class A) 134
Real Estate Investment Trust - 4.0%
2,500 Equity Residential Properties Trust 115
5,100 First Industrial Realty Trust, Inc. 150
4,300 Liberty Property Trust 112
Restaurants - 1.9%
5,400 McDonald's Corp. 178
Retail (Department Stores) - 0.9%
3,550 May Department Stores Co. 85
Retail (Drug Stores) - 2.1%
5,000 CVS Corp. 200
Retail (Food Chains) - 3.0%
8,400 Albertson's, Inc. 281
Retail (General Merchandise) - 1.9%
5,400 *Costco Wholesale Corp. 178
Savings & Loans - 2.6%
8,300 Washington Mutual, Inc. 240
Services (Advertising/Marketing) - 1.9%
4,100 Interpublic Group Cos., Inc. 176
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 34 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
SAFECO U.S. Value Fund
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
<C> <S> <C>
----------------------------------------------------------------------------
Services (Commercial & Consumer) - 2.0%
3,200 United Parcel Service, Inc.
(Class B) $ 189
Telecommunications (Equipment) - 3.0%
4,700 Lucent Technologies, Inc. 279
Telephone - 10.7%
3,700 ALLTEL Corp. 229
7,300 CenturyTel, Inc. 210
3,400 GTE Corp. 212
4,300 *MCI WorldCom, Inc. 197
3,700 SBC Communications, Inc. 160
---------
TOTAL COMMON STOCKS 9,695
---------
</TABLE>
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL VALUE
AMOUNT (000's)
<C> <S> <C>
----------------------------------------------------------------------------
CASH EQUIVALENTS - 0.1%
Investment Companies
4,798 AIM Short-Term Investments Co. Liquid Assets Money
Market Portfolio (Institutional Shares) $ 5
---------
TOTAL CASH EQUIVALENTS 5
---------
TOTAL INVESTMENTS - 103.7% 9,700
Other Assets, less Liabilities (342)
---------
NET ASSETS $ 9,358
=========
----------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
- 35 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Statements of Assets and Liabilities
As of June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SAFECO SAFECO
GROWTH SAFECO DIVIDEND
(In Thousands, OPPORTUNITIES EQUITY INCOME
Except Per Share Amounts) FUND FUND FUND
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Investments, at Cost $773,429 $1,262,379 $200,654
======== ========== ========
Investments, at Value
Unaffiliated Issuers $435,309 $1,793,495 $240,118
Affiliated Issuers 300,052 -- --
-------- ---------- --------
Total Investments at Value 735,361 1,793,495 240,118
Cash -- -- --
Receivables
Investment Securities Sold 6,693 -- 1,201
Trust Shares Sold 614 173 1
Dividends and Interest 40 765 470
From Advisor 8 9 1
Deferred Organization Expense -- -- --
-------- ---------- --------
Total Assets 742,716 1,794,442 241,791
Liabilities
Payables
Investment Securities Purchased 951 -- --
Trust Shares Redeemed 15 30 --
Notes Payable -- 10 --
Dividends -- 2,301 946
Investment Advisory Fees 430 971 152
Forward Currency Contracts Open, Net -- -- --
Other 432 585 98
-------- ---------- --------
Total Liabilities 1,828 3,897 1,196
-------- ---------- --------
Net Assets $740,888 $1,790,545 $240,595
======== ========== ========
No-Load Class:
Net Assets $699,427 $1,705,736 $237,502
Trust Shares Outstanding 30,620 73,565 11,602
-------- ---------- --------
Net Asset Value, Offering Price, and
Redemption
Price Per Share $ 22.84 $ 23.19 $ 20.47
======== ========== ========
Class A:
Net Assets $ 28,017 $ 60,640 $ 1,261
Trust Shares Outstanding 1,232 2,611 61
-------- ---------- --------
Net Asset Value and Redemption Price Per
Share $ 22.73 $ 23.22 $ 20.57
======== ========== ========
Maximum Offering Price Per Share (Net Asset
Value Plus Sales Charge of 5.75%) $ 24.12 $ 24.64 $ 21.82
======== ========== ========
Class B:
Net Assets $ 13,339 $ 24,061 $ 1,734
Trust Shares Outstanding 606 1,049 84
-------- ---------- --------
Net Asset Value and Offering Price Per
Share* $ 22.01 $ 22.94 $ 20.60
======== ========== ========
Class C:
Net Assets $ 105 $ 108 $ 98
Trust Shares Outstanding 5 5 5
-------- ---------- --------
Net Asset Value and Offering Price Per
Share* $ 22.01 $ 22.95 $ 20.64
======== ========== ========
</TABLE>
--------------------------------------------------------------------------------
* For Class B and Class C shares, the redemption price per share may be lower
as a result of applying contingent deferred sales charges.
SEE NOTES TO FINANCIAL STATEMENTS
- 36 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SAFECO
SAFECO SAFECO SAFECO SMALL COMPANY SAFECO
NORTHWEST INTERNATIONAL BALANCED VALUE U.S. VALUE
FUND STOCK FUND FUND FUND FUND
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$100,214 $31,721 $18,567 $30,024 $9,294
======== ======= ======= ======= ======
$154,211 $42,131 $19,081 $30,521 $9,700
-- -- -- -- --
-------- ------- ------- ------- ------
154,211 42,131 19,081 30,521 9,700
-- 1,118 -- -- --
-- 158 -- -- --
117 -- -- 203 --
12 116 96 29 13
1 12 6 7 5
-- 2 4 2 7
-------- ------- ------- ------- ------
154,341 43,537 19,187 30,762 9,725
-- 70 -- 1,334 --
-- -- -- -- --
-- -- -- -- 310
-- -- 128 -- 24
91 39 12 19 6
-- 2 -- -- --
70 56 28 37 27
-------- ------- ------- ------- ------
161 167 168 1,390 367
-------- ------- ------- ------- ------
$154,180 $43,370 $19,019 $29,372 $9,358
======== ======= ======= ======= ======
$139,376 $40,056 $15,169 $27,262 $8,485
5,129 2,411 1,320 2,187 750
-------- ------- ------- ------- ------
$ 27.17 $ 16.61 $ 11.49 $ 12.47 $11.32
======== ======= ======= ======= ======
$ 7,304 $ 1,479 $ 1,970 $ 914 $ 310
273 90 171 74 27
-------- ------- ------- ------- ------
$ 26.79 $ 16.54 $ 11.53 $ 12.28 $11.31
======== ======= ======= ======= ======
$ 28.42 $ 17.55 $ 12.23 $ 13.03 $12.00
======== ======= ======= ======= ======
$ 7,378 $ 1,733 $ 1,880 $ 1,196 $ 563
282 107 164 101 50
-------- ------- ------- ------- ------
$ 26.12 $ 16.15 $ 11.50 $ 11.90 $11.26
======== ======= ======= ======= ======
$ 122 $ 102 -- -- --
5 6
-------- -------
$ 26.12 $ 16.14
======== =======
</TABLE>
--------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
- 37 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Statements of Operations
For the Six-Month Period Ended June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
SAFECO
SAFECO GROWTH SAFECO DIVIDEND
OPPORTUNITIES EQUITY INCOME
(In Thousands) FUND FUND FUND
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Income
Dividends (Net of Foreign Taxes Withheld
of $61 in the International Fund) $ 915 $ 12,188 $ 3,473
Interest 184 1,492 55
-------- --------- --------
Total Investment Income 1,099 13,680 3,528
Expenses
Investment Advisory 2,626 5,761 914
Transfer Agent 1,196 1,977 300
Fund Accounting and Administration 149 259 96
Shareholder Service--Class A 36 74 2
--Class B 18 32 2
Distribution--Class B 53 95 7
Legal and Auditing 18 39 13
Custodian 26 77 13
Registration 40 54 18
Reports to Shareholders 131 179 21
Trustees 4 8 3
Loan Interest Expense 41 2 5
Other 64 115 18
-------- --------- --------
Total Expenses Before Reimbursement 4,402 8,672 1,412
Expense Reimbursement (43) (50) (4)
-------- --------- --------
Total Expenses After Reimbursement 4,359 8,622 1,408
-------- --------- --------
Net Investment Income (Loss) (3,260) 5,058 2,120
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Net Realized Gain from:
Investments in Unaffiliated Issuers 17,231 83,446 10,776
Investments in Affiliated Issuers 11,896 -- --
Foreign Currency Transactions -- -- --
-------- --------- --------
Total Net Realized Gain 29,127 83,446 10,776
Net Change in Unrealized Appreciation
(Depreciation) (38,076) (166,643) (35,914)
-------- --------- --------
Net Gain (Loss) on Investments and Foreign
Currency (8,949) (83,197) (25,138)
-------- --------- --------
Net Change in Net Assets Resulting from
Operations $(12,209) $ (78,139) $(23,018)
======== ========= ========
-------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 38 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SAFECO SAFECO SAFECO SAFECO SAFECO
NORTHWEST INTERNATIONAL BALANCED SMALL COMPANY U.S. VALUE
FUND STOCK FUND FUND VALUE FUND FUND
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 304 $ 370 $ 129 $ 81 $ 101
96 47 260 39 4
------ ------- ----- ------- -----
400 417 389 120 105
481 210 70 112 35
162 61 31 45 13
62 19 9 14 4
8 2 3 1 --
8 2 3 2 1
24 6 8 5 2
11 10 9 9 9
5 33 3 4 2
16 12 10 10 12
10 6 6 9 2
3 3 3 3 3
-- -- -- -- --
6 6 4 5 3
------ ------- ----- ------- -----
796 370 159 219 86
(7) (65) (35) (39) (28)
------ ------- ----- ------- -----
789 305 124 180 58
------ ------- ----- ------- -----
(389) 112 265 (60) 47
3,346 1,698 37 2,909 229
-- -- -- -- --
-- 45 -- -- --
------ ------- ----- ------- -----
3,346 1,743 37 2,909 229
4,956 (2,108) (717) (3,447) (800)
------ ------- ----- ------- -----
8,302 (365) (680) (538) (571)
------ ------- ----- ------- -----
$7,913 $ (253) $(415) $ (598) $(524)
====== ======= ===== ======= =====
-----------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 39 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
(Unaudited)
<TABLE>
<CAPTION>
SAFECO SAFECO
GROWTH SAFECO DIVIDEND
OPPORTUNITIES EQUITY INCOME
FUND FUND FUND
---------------------- ----------------------- ----------------------
Six-Month Six-Month
Period Six-Month Period
Ended Year Ended Period Year Ended Ended Year Ended
June 30 December 31 Ended June December 31 June 30 December 31
2000 1999 30 2000 1999 2000 1999
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net Investment
Income (Loss) $ (3,260) $ (6,033) $ 5,058 $ 16,109 $ 2,120 $ 7,467
Net Realized
Gain (Loss)
on
Investments
and Foreign
Currency
Transactions 29,127 (30,246) 83,446 108,654 10,776 11,161
Net Change in
Unrealized
Appreciation
(Depreciation) (38,076) 8,592 (166,643) 72,979 (35,914) (17,088)
--------- ---------- ---------- ---------- -------- --------
Net Change in
Net Assets
Resulting
from
Operations (12,209) (27,687) (78,139) 197,742 (23,018) 1,540
Dividends to
Shareholders
from
Net Investment
Income
No-Load Class -- -- (5,045) (15,806) (2,097) (7,391)
Class A -- -- (51) (255) (10) (42)
Class B -- -- -- -- (6) (25)
Class C -- -- -- -- -- --
Net Realized
Gain on
Investments
No-Load Class -- -- -- (104,376) -- (10,871)
Class A -- -- -- (2,993) -- (73)
Class B -- -- -- (1,372) -- (85)
Class C -- -- -- -- -- --
--------- ---------- ---------- ---------- -------- --------
Total -- -- (5,096) (124,802) (2,113) (18,487)
Net Trust Share
Transactions
No-Load Class (104,277) (551,458) (361,564) 51,436 (41,249) (79,020)
Class A 980 (6,151) 1,156 9,565 (634) 99
Class B (992) (935) (3,104) 10,780 (439) 288
Class C 111 -- 108 -- 100 --
--------- ---------- ---------- ---------- -------- --------
Total (104,178) (558,544) (363,404) 71,781 (42,222) (78,633)
--------- ---------- ---------- ---------- -------- --------
Total Change in
Net Assets (116,387) (586,231) (446,639) 144,721 (67,353) (95,580)
Net Assets at
Beginning of
Period 857,275 1,443,506 2,237,184 2,092,463 307,948 403,528
--------- ---------- ---------- ---------- -------- --------
Net Assets at
End of Period $ 740,888 $ 857,275 $1,790,545 $2,237,184 $240,595 $307,948
========= ========== ========== ========== ======== ========
-----------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 40 -
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
SAFECO
SAFECO SAFECO SAFECO SMALL COMPANY SAFECO
NORTHWEST INTERNATIONAL BALANCED VALUE U.S. VALUE
FUND STOCK FUND FUND FUND FUND
---------------------- ---------------------- ---------------------- ---------------------- ----------------------
Six-Month Six-Month Six-Month Six-Month Six-Month
Period Period Period Period Period
Ended Year Ended Ended Year Ended Ended Year Ended Ended Year Ended Ended Year Ended
June 30 December 31 June 30 December 31 June 30 December 31 June 30 December 31 June 30 December 31
2000 1999 2000 1999 2000 1999 2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ (389) $ (444) $ 112 $ 49 $ 265 $ 552 $ (60) $ (163) $ 47 $ 96
3,346 8,020 1,743 488 37 438 2,909 (5,990) 229 451
4,956 28,195 (2,108) 7,927 (717) (709) (3,447) 9,193 (800) (51)
-------- -------- ------- ------- ------- ------- ------- ------- ------- -------
7,913 35,771 (253) 8,464 (415) 281 (598) 3,040 (524) 496
-- -- -- -- (219) (481) -- -- (46) (93)
-- -- -- -- (27) (32) -- -- (1) (1)
-- -- -- -- (20) (37) -- -- -- --
-- -- -- -- -- -- -- -- -- --
-- (7,222) -- -- -- (344) -- -- -- (408)
-- (358) -- -- -- (49) -- -- -- (14)
-- (370) -- -- -- (49) -- -- -- (30)
-- -- -- -- -- -- -- -- -- --
-------- -------- ------- ------- ------- ------- ------- ------- ------- -------
-- (7,950) -- -- (266) (992) -- -- (47) (546)
34,707 8,418 3,286 6,926 (2,317) (547) (510) (9,618) (903) (70)
2,164 1,472 296 338 (521) 1,732 (129) (272) (4) 125
2,133 1,034 367 329 (596) 574 (51) 94 (147) 126
113 -- 100 -- -- -- -- -- -- --
-------- -------- ------- ------- ------- ------- ------- ------- ------- -------
39,117 10,924 4,049 7,593 (3,434) 1,759 (690) (9,796) (1,054) 181
-------- -------- ------- ------- ------- ------- ------- ------- ------- -------
47,030 38,745 3,796 16,057 (4,115) 1,048 (1,288) (6,756) (1,625) 131
107,150 68,405 39,574 23,517 23,134 22,086 30,660 37,416 10,983 10,852
-------- -------- ------- ------- ------- ------- ------- ------- ------- -------
$154,180 $107,150 $43,370 $39,574 $19,019 $23,134 $29,372 $30,660 $ 9,358 $10,983
======== ======== ======= ======= ======= ======= ======= ======= ======= =======
----------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- 41 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial Highlights
(For a Share Outstanding Throughout the Period)
(Unaudited)
SAFECO Growth Opportunities Fund
No-Load Class
<TABLE>
<CAPTION>
Six-Month Three-Month For the
Period Ended For the Year Ended Period Ended Year Ended
June 30 December 31 December 31 September 30
-----------------------------------------------------------------------------
2000 1999 1998 1997 1996 1996
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 23.30 $ 22.70 $ 22.45 $ 16.97 $ 15.45 $ 15.83
Income From Investment
Operations
Net Investment Income
(Loss) (0.10) (0.16) (0.01) (0.02) (0.02) (0.02)
Net Realized and
Unrealized Gain (Loss)
on Investments (0.36) 0.76 0.99 8.50 1.77 2.24
-------- -------- ---------- -------- -------- --------
Total from Investment
Operations (0.46) 0.60 0.98 8.48 1.75 2.22
Less Distributions
Dividends from Net
Investment Income -- -- -- -- -- --
Distributions from
Realized Gains -- -- (0.73) (3.00) (0.23) (2.60)
-------- -------- ---------- -------- -------- --------
Total Distributions -- -- (0.73) (3.00) (0.23) (2.60)
-------- -------- ---------- -------- -------- --------
Net Asset Value at End
of Period $ 22.84 $ 23.30 $ 22.70 $ 22.45 $ 16.97 $ 15.45
======== ======== ========== ======== ======== ========
Total Return (1.97%)* 2.64% 4.37% 49.96% 11.35%* 14.16%
Net Assets at End of
Period (000's) $699,427 $815,041 $1,394,225 $638,562 $195,760 $179,574
Ratio of Gross Expenses
to Average Net Assets 1.07%** 1.07% 0.77% 0.85% 0.99%** 1.02%
Ratio of Net Expenses to
Average Net Assets 1.07%** 1.02% 0.77% 0.85% 0.99%** 1.02%
Ratio of Net Investment
Income (Loss) to
Average Net Assets (0.80%)** (0.57%) (0.06%) (0.17%) (0.51%)** (0.14%)
Portfolio Turnover Rate 61.48%** 38.32% 54.58% 82.57% 82.93%** 124.79%
-------------------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
** Annualized.
- 42 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial Highlights
(For a Share Outstanding Throughout the Period)
(Unaudited)
SAFECO Equity Fund
No-Load Class
<TABLE>
<CAPTION>
Six-Month Three-Month For the
Period Ended Period Ended Year Ended
June 30 For the Year Ended December 31 December 31 September 30
-------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1996
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 24.02 $ 23.25 $ 19.54 $ 16.60 $ 15.85 $ 15.31
Income From Investment
Operations
Net Investment Income 0.07 0.18 0.21 0.23 0.06 0.28
Net Realized and
Unrealized Gain (Loss)
on Investments (0.83) 2.00 4.64 3.78 1.33 2.42
---------- ---------- ---------- ---------- -------- --------
Total from Investment
Operations (0.76) 2.18 4.85 4.01 1.39 2.70
Less Distributions
Dividends from Net
Investment Income (0.07) (0.18) (0.21) (0.23) (0.06) (0.28)
Distributions from
Realized Gains -- (1.23) (0.93) (0.84) (0.58) (1.88)
---------- ---------- ---------- ---------- -------- --------
Total Distributions (0.07) (1.41) (1.14) (1.07) (0.64) (2.16)
---------- ---------- ---------- ---------- -------- --------
Net Asset Value at End
of Period $ 23.19 $ 24.02 $ 23.25 $ 19.54 $ 16.60 $ 15.85
========== ========== ========== ========== ======== ========
Total Return (3.18%)* 9.37% 24.93% 24.21% 8.79%* 18.04%
Net Assets at End of
Period (000's) $1,705,736 $2,147,299 $2,024,877 $1,490,198 $849,831 $725,780
Ratio of Expenses to
Average Net Assets 0.89%** 0.83% 0.74% 0.73% 0.78%** 0.79%
Ratio of Net Investment
Income to Average Net
Assets 0.57%** 0.73% 0.99% 1.24% 1.48%** 1.74%
Portfolio Turnover Rate 34.83%** 33.66% 32.94% 34.26% 59.34%** 74.07%
--------------------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
** Annualized.
- 43 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial Highlights
(For a Share Outstanding Throughout the Period)
(Unaudited)
SAFECO Dividend Income Fund
No-Load Class
<TABLE>
<CAPTION>
Six-Month Three-Month For the
Period Ended For the Year Ended Period Ended Year Ended
June 30 December 31 December 31 September 30
-------------------------------------------------------------------------
2000 1999 1998 1997 1996 1996
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 22.39 $ 23.47 $ 23.89 $ 21.13 $ 20.03 $ 19.11
Income From Investment
Operations
Net Investment Income 0.18 0.50 0.64 0.65 0.15 0.73
Net Realized and
Unrealized Gain (Loss)
on Investments (1.92) (0.25) 0.86 4.87 1.63 2.84
-------- -------- -------- -------- -------- --------
Total from Investment
Operations (1.74) 0.25 1.50 5.52 1.78 3.57
Less Distributions
Dividends from Net
Investment Income (0.18) (0.50) (0.64) (0.65) (0.15) (0.73)
Distributions from
Realized Gains -- (0.83) (1.28) (2.11) (0.53) (1.92)
-------- -------- -------- -------- -------- --------
Total Distributions (0.18) (1.33) (1.92) (2.76) (0.68) (2.65)
-------- -------- -------- -------- -------- --------
Net Asset Value at End
of Period $ 20.47 $ 22.39 $ 23.47 $ 23.89 $ 21.13 $ 20.03
======== ======== ======== ======== ======== ========
Total Return (7.81%)* 1.17% 6.31% 26.43% 8.89%* 18.98%
Net Assets at End of
Period (000's) $237,502 $303,537 $399,279 $401,985 $289,968 $260,023
Ratio of Expenses to
Average Net Assets 1.06%** 0.99% 0.82% 0.85% 0.89%** 0.86%
Ratio of Net Investment
Income to
Average Net Assets 1.64%** 2.18% 2.54% 2.81% 2.89%** 3.56%
Portfolio Turnover Rate 45.92%** 42.25% 46.14% 52.14% 37.84%** 50.11%
--------------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
** Annualized.
- 44 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial Highlights
(For a Share Outstanding Throughout the Period)
(Unaudited)
SAFECO Northwest Fund
No-Load Class
<TABLE>
<CAPTION>
Six-Month Three-Month For the
Period Ended For the Year Ended Period Ended Year Ended
June 30 December 31 December 31 September 30
------------------------------------------------------------------------
2000 1999 1998 1997 1996 1996
--------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 25.33 $ 17.73 $ 17.31 $ 14.07 $ 13.78 $ 14.41
Income From Investment
Operations
Net Investment Income
(Loss) (0.06) (0.10) (0.09) (0.03) (0.01) 0.02
Net Realized and
Unrealized Gain on
Investments 1.90 9.71 0.70 4.41 0.30 1.32
-------- ------- ------- ------- ------- -------
Total from Investment
Operations 1.84 9.61 0.61 4.38 0.29 1.34
Less Distributions
Dividends from Net
Investment Income -- -- -- -- -- (0.02)
Distributions from
Realized Gains -- (2.01) (0.19) (1.14) -- (1.95)
-------- ------- ------- ------- ------- -------
Total Distributions -- (2.01) (0.19) (1.14) -- (1.97)
-------- ------- ------- ------- ------- -------
Net Asset Value at End
of Period $ 27.17 $ 25.33 $ 17.73 $ 17.31 $ 14.07 $ 13.78
======== ======= ======= ======= ======= =======
Total Return 7.26%* 54.25% 3.50% 31.12% 2.10%* 9.61%
Net Assets at End of
Period (000's) $139,376 $97,534 $63,594 $64,635 $43,345 $43,128
Ratio of Gross Expenses
to Average Net Assets 1.09%** 1.17% 1.12% 1.09% 1.25%** 1.07%
Ratio of Net Expenses to
Average Net Assets 1.09%** 1.10% 1.12% 1.09% 1.25%** 1.07%
Ratio of Net Investment
Income (Loss) to
Average Net Assets (0.57%)** (0.54%) (0.49%) (0.19%) (0.31%)** 0.11%
Portfolio Turnover Rate 34.74%** 48.52% 50.40% 55.42% 67.32%** 35.69%
</TABLE>
--------------------------------------------------------------------------------
* Not annualized.
** Annualized.
- 45 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial Highlights
(For a Share Outstanding Throughout the Period)
(Unaudited)
SAFECO International Stock Fund
No-Load Class
<TABLE>
<CAPTION>
January 31, 1996
Six-Month Three-Month (Commencement
Period Ended Period Ended of Operations) to
June 30 For the Year Ended December 31 December 31 September 30
-------------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1996
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 16.95 $ 13.14 $ 11.50 $ 11.29 $ 10.39 $10.00
Income From Investment
Operations
Net Investment Income 0.05 0.03 0.01 0.24 -- 0.06
Net Realized and
Unrealized Gain (Loss)
on Investments and
Foreign Currency
Transactions (0.39) 3.78 1.63 0.28 0.96 0.39
------- ---------- ---------- ---------- ------- ------
Total from Investment
Operations (0.34) 3.81 1.64 0.52 0.96 0.45
Less Distributions
Dividends from Net
Investment Income -- -- -- (0.29) (0.06) (0.06)
Distributions from
Realized Gains -- -- -- (0.02) -- --
------- ---------- ---------- ---------- ------- ------
Total Distributions -- -- -- (0.31) (0.06) (0.06)
------- ---------- ---------- ---------- ------- ------
Net Asset Value at End
of Period $ 16.61 $ 16.95 $ 13.14 $ 11.50 $ 11.29 $10.39
======= ========== ========== ========== ======= ======
Total Return (2.01%)* 29.00% 14.26% 4.55% 9.27%* 4.54%*
Net Assets at End of
Period (000's) $40,056 $ 36,967 $ 22,111 $ 14,754 $11,157 $8,323
Ratio of Gross Expenses
to Average Net Assets 1.69%** 1.72% 1.79% 1.89% 1.68%** 2.36%**
Ratio of Net Expenses to
Average Net Assets 1.40%** 1.69% 1.62% 1.63% 1.37%** 2.36%**
Ratio of Net Investment
Income (Loss) to
Average Net Assets 0.58%** 0.21% 0.14% 0.58% (0.19%)** (0.93%)**
Portfolio Turnover Rate 14.89%** 23.56% 25.62% 22.13% 18.51%** 15.73%**
---------------------------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
** Annualized.
- 46 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial Highlights
(For a Share Outstanding Throughout the Period)
(Unaudited)
SAFECO Balanced Fund
No-Load Class
<TABLE>
<CAPTION>
January 31, 1996
Six-Month Three-Month (Commencement
Period Ended For the Year Ended Period Ended of Operations) to
June 30 December 31 December 31 September 30
--------------------------------------------------------------------------
2000 1999 1998 1997 1996 1996
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 11.81 $ 12.22 $ 11.61 $ 10.70 $10.38 $ 10.00
Income From Investment
Operations
Net Investment Income 0.16 0.31 0.32 0.32 0.08 0.21
Net Realized and
Unrealized Gain (Loss)
on Investments (0.32) (0.18) 1.12 1.45 0.45 0.39
------- ------- ------- ------- ------ -------
Total from Investment
Operations (0.16) 0.13 1.44 1.77 0.53 0.60
Less Distributions
Dividends from Net
Investment Income (0.16) (0.31) (0.32) (0.32) (0.08) (0.21)
Distributions from
Realized Gains -- (0.23) (0.51) (0.54) (0.13) (0.01)
------- ------- ------- ------- ------ -------
Total Distributions (0.16) (0.54) (0.83) (0.86) (0.21) (0.22)
------- ------- ------- ------- ------ -------
Net Asset Value at End
of Period $ 11.49 $ 11.81 $ 12.22 $ 11.61 $10.70 $ 10.38
======= ======= ======= ======= ====== =======
Total Return (1.32%)* 1.05% 12.56% 16.64% 5.11%* 5.99%*
Net Assets at End of
Period (000's) $15,169 $18,008 $19,137 $13,667 $8,262 $ 7,632
Ratio of Gross Expenses
to Average Net Assets 1.41%** 1.33% 1.17% 1.23% 1.52%** 1.32%**
Ratio of Net Expenses to
Average Net Assets 1.10%** 1.14% 1.17% 1.23% 1.16%** 1.32%**
Ratio of Net Investment
Income to
Average Net Assets 2.80%** 2.51% 2.74% 2.85% 3.19%** 3.21%**
Portfolio Turnover Rate 58.25%** 94.73% 74.76% 101.22% 36.10%** 143.87%**
------------------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
** Annualized.
- 47 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial Highlights
(For a Share Outstanding Throughout the Period)
(Unaudited)
SAFECO Small Company Value Fund
No-Load Class
<TABLE>
<CAPTION>
January 31, 1996
Six-Month Three-Month (Commencement
Period Ended For the Year Ended Period Ended of Operations) to
June 30 December 31 December 31 September 30
-------------------------------------------------------------------------------
2000 1999 1998 1997 1996 1996
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value at
Beginning of Period $ 12.73 $ 11.16 $ 14.23 $ 11.81 $ 11.51 $ 10.00
Income From Investment
Operations
Net Investment Income
(Loss) (0.02) (0.06) (0.06) (0.04) (0.01) (0.01)
Net Realized and
Unrealized Gain (Loss)
on Investments (0.24) 1.63 (3.01) 2.80 0.31 2.19
------- ------- ------- ------- ------- -------
Total from Investment
Operations (0.26) 1.57 (3.07) 2.76 0.30 2.18
Less Distributions
Distributions from
Realized Gains -- -- -- (0.34) -- (0.67)
------- ------- ------- ------- ------- -------
Net Asset Value at End
of Period $ 12.47 $ 12.73 $ 11.16 $ 14.23 $ 11.81 $ 11.51
======= ======= ======= ======= ======= =======
Total Return (2.04%)* 14.07% (21.57%) 23.38% 2.61%* 21.83%*
Net Assets at End of
Period (000's) $27,262 $28,319 $35,162 $22,658 $13,169 $12,552
Ratio of Gross Expenses
to Average Net Assets 1.39%** 1.44% 1.28% 1.33% 1.58%** 1.49%**
Ratio of Net Expenses to
Average
Net Assets 1.15%** 1.20% 1.28% 1.33% 1.35%** 1.49%**
Ratio of Net Investment
(Loss) to
Average Net Assets (0.35%)** (0.49%) (0.49%) (0.41%) (0.44%)** (0.24%)**
Portfolio Turnover Rate 118.65%** 116.58% 90.23% 60.81% 73.47%** 91.03%**
---------------------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
** Annualized.
- 48 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Financial Highlights
(For a Share Outstanding Throughout the Period)
(Unaudited)
SAFECO U.S. Value Fund
No-Load Class
<TABLE>
<CAPTION>
April 30, 1997
Six-Month For the Year (Commencement
Period Ended Ended of Operations) to
June 30 December 31 December 31
---------------------------------------------------
2000 1999 1998 1997
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value at Beginning
of Period $11.95 $11.95 $ 11.19 $10.00
Income From Investment
Operations
Net Investment Income 0.06 0.11 0.12 0.09
Net Realized and Unrealized
Gain (Loss) on Investments (0.63) 0.50 1.28 1.66
------ ------ ------- ------
Total from Investment
Operations (0.57) 0.61 1.40 1.75
Less Distributions
Dividends from Net
Investment Income (0.06) (0.11) (0.12) (0.09)
Distributions from Realized
Gains -- (0.50) (0.52) (0.47)
------ ------ ------- ------
Total Distributions (0.06) (0.61) (0.64) (0.56)
------ ------ ------- ------
Net Asset Value at End of
Period $11.32 $11.95 $ 11.95 $11.19
====== ====== ======= ======
Total Return (4.77%)* 5.15% 12.61% 17.50%*
Net Assets at End of Period
(000's) $8,485 $9,905 $10,014 $9,063
Ratio of Gross Expenses to
Average Net Assets 1.63%** 1.52% 1.19% 1.19%**
Ratio of Net Expenses to
Average Net Assets 1.10%** 1.17% 1.19% 1.19%**
Ratio of Net Investment
Income to Average Net
Assets 1.03%** 0.93% 1.06% 1.26%**
Portfolio Turnover Rate 42.29%** 52.15% 55.15% 36.37%**
-------------------------------------------------------------------------------------------
</TABLE>
* Not annualized.
** Annualized.
- 49 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Notes to Financial Statements
(Unaudited)
1. GENERAL
The SAFECO Common Stock 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 Growth Opportunities Fund
(formerly the Growth fund), SAFECO Equity Fund, SAFECO Dividend Income Fund
(formerly the Income fund), SAFECO Northwest Fund, SAFECO International Stock
Fund, SAFECO Balanced Fund, SAFECO Small Company Value Fund (formerly the Small
Company fund), and SAFECO U.S. Value Fund (together "the Funds").
Effective May 1, 2000, the SAFECO Growth Opportunities Fund, SAFECO Equity
Fund, SAFECO Dividend Income Fund, SAFECO Northwest Fund, and SAFECO
International Stock Fund began issuing a new class of shares--Class C shares.
With the addition of Class C shares, each of the funds now offers up to four
classes of shares:
* No-Load shares--sold directly to shareholders with no associated sales
charges.
* Class A, Class B, and Class C shares--sold by financial advisors to
shareholders with associated sales and distribution charges.
Each class of shares represents an interest in the net assets of the fund.
In connection with issuing Class A, B and C shares, the Funds have adopted a
Plan of Distribution (the "Plan"). Under the Plan, these classes pay a service
fee to the distributor, SAFECO Securities, Inc., for selling its shares at the
annual rate of .25% of the average daily net assets of each class. Class B and
Class C shares also pay the distributor a distribution fee at the annual rate
of .75% of the average daily net assets of each class. Under the plan, the
distributor uses the service fees primarily to compensate persons for selling
shares in each class and for providing ongoing services to shareholders. The
distributor uses the distribution fees primarily to offset commissions it pays
to financial advisors for selling these shares.
2.SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
Security Valuation. Investments in 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. When valuations are not readily
available, securities are valued at fair value as determined in good faith by
the board of trustees. Temporary investments purchased at par are valued at
cost. All other temporary 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.
Income Recognition. Dividend income less foreign taxes withheld (if any) is
recorded on the ex-dividend date or upon receipt of ex-dividend notification in
the case of certain foreign securities. Interest is accrued on short-term
investments and bonds daily. Income from market discount is recorded at
disposition.
Dividends and Distributions to Shareholders. For the Growth Opportunities,
Northwest, International Stock and Small Company Value Funds, net investment
income (if any) is declared as a dividend to shareholders as of the last
business day (ex-dividend date) of December. For all other
- 50 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Funds net investment income is distributed as of the last business day of
March, June, September and December. Net realized gains on investments, if any,
are normally distributed to shareholders at the end of December. Income
dividends and capital gain distributions are determined in accordance with
income tax regulation which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
foreign exchange contracts and wash sale deferrals. Accumulated net investment
income and realized gain/loss may include temporary financial reporting and tax
basis differences which will reverse in subsequent years.
Federal Income and Excise Taxes. Each Fund intends 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 taxes to the Funds. Therefore, no
federal income or excise tax provision is required.
Foreign Currency Translation. The accounting records of the International
Stock Fund are maintained in U.S. dollars. All assets and liabilities initially
expressed in foreign currencies are converted into U.S. dollars at prevailing
exchange rates. Purchases and sales of investment securities, and dividend and
interest income, are translated at the rates of exchange prevailing on the
respective dates of such transactions. The International Stock Fund does not
isolate that portion of the results of operations resulting from changes in
foreign exchange rates on investments from the fluctuations arising from
changes in market prices of securities held. Such fluctuations are included
with the net realized and unrealized gain or loss from investments.
Reported net realized gains or losses from foreign currency transactions
arise from gains or losses realized between the trade and settlement dates on
securities transactions, the difference between the amounts of dividends,
interest, and foreign withholding taxes recorded on the International Stock
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in
the value of assets and liabilities other than investments in securities,
resulting from changes in the exchange rate.
Foreign Exchange Contracts. The International Stock Fund may enter into
foreign currency exchange contracts as a way of managing foreign exchange rate
risk. The International Stock Fund may enter into these contracts for the
purchase or sale of a specific foreign currency at a fixed price on a future
date as a hedge or cross-hedge against either specific transactions or
portfolio positions. The objective of the International Stock Fund's foreign
currency hedging transactions is to reduce the risk that the U.S. dollar value
of the International Stock Fund's foreign currency denominated securities will
decline in value due to changes in foreign currency exchange rates. All foreign
currency exchange contracts are "marked-to-market" daily at the applicable
translation rates resulting in unrealized gains or losses. Realized and
unrealized gains or losses on foreign currency contracts are recorded on
settlement date of the foreign currency exchange contract and are included in
the Statements of Assets and Liabilities and the Statement of Operations. Risks
may arise upon entering into these contracts from the potential inability of
counterparties to meet the terms of their contracts and from unanticipated
movements in the value of a foreign currency relative to the U.S. dollar.
Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
- 51 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
3. INVESTMENT TRANSACTIONS
Following is a summary of investment transactions (excluding short-term
securities) during the six-month period ended June 30, 2000:
<TABLE>
<CAPTION>
(In Thousands) Purchases Sales
-------------------------------------------------------------------------------
<S> <C> <C>
Growth Opportunities Fund $240,937 $376,430
Equity Fund 324,440 703,562
Dividend Income Fund 59,695 99,899
Northwest Fund 61,468 23,381
International Stock Fund 9,833 5,390
Balanced Fund 6,350 9,766
Small Company Value Fund 17,310 17,304
U.S. Value Fund 2,077 2,752
-------------------------------------------------------------------------------
</TABLE>
Purchases in the Balanced Fund include $1,352 of U.S. Government securities.
Sales in the Balanced Fund include $3,537 of U.S. Government securities.
4. TRUST SHARE TRANSACTIONS
Following is a summary of transactions in shares and the related amounts (in
thousands):
<TABLE>
<CAPTION>
SAFECO GROWTH OPPORTUNITIES FUND
---------------------------------------------------------------------------------------------
No-Load Class A Class B Class C
------------------------- ------------------------- ------------------------- ------------
Six-Month Six-Month Six-Month Two-Month*
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended Period Ended
June 30 December 31 June 30 December 31 June 30 December 31 June 30
2000 1999 2000 1999 2000 1999 2000
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares:
Sales 13,243 26,975 294 536 49 211 5
Reinvestments -- -- -- -- -- -- --
Redemptions (17,606) (53,419) (250) (835) (92) (264) --
--------- ----------- ------- -------- ------- ------- ----
Net Change (4,363) (26,444) 44 (299) (43) (53) 5
========= =========== ======= ======== ======= ======= ====
Amounts:
Sales $ 311,471 $ 571,275 $ 6,848 $ 11,412 $ 1,113 $ 4,371 $111
Reinvestments -- -- -- -- -- -- --
Redemptions (415,748) (1,122,733) (5,868) (17,563) (2,105) (5,306) --
--------- ----------- ------- -------- ------- ------- ----
Net Change $(104,277) $ (551,458) $ 980 $ (6,151) $ (992) $ (935) $111
========= =========== ======= ======== ======= ======= ====
</TABLE>
--------------------------------------------------------------------------------
* For the period from 4/30/2000 (initial issue date of Class C shares) through
June 30, 2000.
- 52 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
No-Load Class A Class B Class C
------------------------- ------------------------- ------------------------- ------------
Six-Month Six-Month Six-Month Two-Month*
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended Period Ended
June 30 December 31 June 30 December 31 June 30 December 31 June 30
2000 1999 2000 1999 2000 1999 2000
------------------------------------------------------------------------------------------------------------
SAFECO EQUITY FUND
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares:
Sales 5,887 22,947 454 784 86 540 5
Reinvestments 110 4,755 1 132 -- 57 --
Redemptions (21,812) (25,424) (405) (518) (223) (156) --
--------- --------- ------- -------- ------- ------- ----
Net Change (15,815) 2,278 50 398 (137) 441 5
========= ========= ======= ======== ======= ======= ====
Amounts:
Sales $ 136,430 $ 559,406 $10,451 $ 19,136 $ 1,968 $13,214 $108
Reinvestments 2,615 114,357 30 3,189 -- 1,359 --
Redemptions (500,609) (622,327) (9,325) (12,760) (5,072) (3,793) --
--------- --------- ------- -------- ------- ------- ----
Net Change $(361,564) $ 51,436 $ 1,156 $ 9,565 $(3,104) $10,780 $108
========= ========= ======= ======== ======= ======= ====
------------------------------------------------------------------------------------------------------------
<CAPTION>
SAFECO DIVIDEND INCOME FUND
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares:
Sales 755 1,419 3 41 3 35 5
Reinvestments 52 717 1 4 1 4 --
Redemptions (2,761) (5,594) (33) (42) (24) (27) --
--------- --------- ------- -------- ------- ------- ----
Net Change (1,954) (3,458) (29) 3 (20) 12 5
========= ========= ======= ======== ======= ======= ====
Amounts:
Sales $ 15,674 $ 32,738 $ 69 $ 951 $ 68 $ 808 $100
Reinvestments 1,122 16,035 5 92 3 98 --
Redemptions (58,045) (127,793) (708) (944) (510) (618) --
--------- --------- ------- -------- ------- ------- ----
Net Change $ (41,249) $ (79,020) $ (634) $ 99 $ (439) $ 288 $100
========= ========= ======= ======== ======= ======= ====
------------------------------------------------------------------------------------------------------------
<CAPTION>
SAFECO NORTHWEST FUND
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares:
Sales 2,188 1,370 96 78 98 49 5
Reinvestments -- 238 -- 13 -- 14 --
Redemptions (910) (1,343) (14) (26) (14) (16) --
--------- --------- ------- -------- ------- ------- ----
Net Change 1,278 265 82 65 84 47 5
========= ========= ======= ======== ======= ======= ====
Amounts:
Sales $ 58,511 $ 29,203 $ 2,526 $ 1,632 $ 2,476 $ 1,006 $113
Reinvestments -- 6,029 -- 331 -- 342 --
Redemptions (23,804) (26,814) (362) (491) (343) (314) --
--------- --------- ------- -------- ------- ------- ----
Net Change $ 34,707 $ 8,418 $ 2,164 $ 1,472 $ 2,133 $ 1,034 $113
========= ========= ======= ======== ======= ======= ====
------------------------------------------------------------------------------------------------------------
</TABLE>
* For the period from 4/30/2000 (initial issue date of Class C shares) through
June 30, 2000.
- 53 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
No-Load Class A Class B Class C
------------------------- ------------------------- ------------------------- ------------
Six-Month Six-Month Six-Month Two-Month*
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended Period Ended
June 30 December 31 June 30 December 31 June 30 December 31 June 30
2000 1999 2000 1999 2000 1999 2000
------------------------------------------------------------------------------------------------------------
SAFECO INTERNATIONAL STOCK FUND
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shares:
Sales 2,830 3,678 35 47 34 35 6
Reinvestments -- -- -- -- -- -- --
Redemptions (2,600) (3,179) (18) (23) (11) (11) --
-------- -------- ----- ------ ----- ------ ----
Net Change 230 499 17 24 23 24 6
======== ======== ===== ====== ===== ====== ====
Amounts:
Sales $ 46,232 $ 52,012 $ 593 $ 654 $ 539 $ 482 $100
Reinvestments -- -- -- -- -- -- --
Redemptions (42,946) (45,086) (297) (316) (172) (153) --
-------- -------- ----- ------ ----- ------ ----
Net Change $ 3,286 $ 6,926 $ 296 $ 338 $ 367 $ 329 $100
======== ======== ===== ====== ===== ====== ====
------------------------------------------------------------------------------------------------------------
<CAPTION>
SAFECO BALANCED FUND
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares:
Sales 96 453 19 176 13 93
Reinvestments 6 44 1 7 1 7
Redemptions (306) (539) (66) (39) (66) (52)
-------- -------- ----- ------ ----- ------
Net Change (204) (42) (46) 144 (52) 48
======== ======== ===== ====== ===== ======
Amounts:
Sales $ 1,099 $ 5,531 $ 221 $2,126 $ 146 $1,129
Reinvestments 66 527 13 75 10 81
Redemptions (3,482) (6,605) (755) (469) (752) (636)
-------- -------- ----- ------ ----- ------
Net Change $ (2,317) $ (547) $(521) $1,732 $(596) $ 574
======== ======== ===== ====== ===== ======
------------------------------------------------------------------------------------------------------------
<CAPTION>
SAFECO SMALL COMPANY VALUE FUND
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares:
Sales 811 3,426 10 33 23 40
Reinvestments -- -- -- -- -- --
Redemptions (849) (4,351) (20) (59) (27) (31)
-------- -------- ----- ------ ----- ------
Net Change (38) (925) (10) (26) (4) 9
======== ======== ===== ====== ===== ======
Amounts:
Sales $ 10,181 $ 36,187 $ 123 $ 347 $ 279 $ 405
Reinvestments -- -- -- -- -- --
Redemptions (10,691) (45,805) (252) (619) (330) (311)
-------- -------- ----- ------ ----- ------
Net Change $ (510) $ (9,618) $(129) $ (272) $ (51) $ 94
======== ======== ===== ====== ===== ======
------------------------------------------------------------------------------------------------------------
</TABLE>
* For the period from 4/30/2000 (initial issue date of Class C shares) through
June 30, 2000.
- 54 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
No-Load Class A Class B
------------------------- ------------------------- -------------------------
Six-Month Six-Month Six-Month
Period Ended Year Ended Period Ended Year Ended Period Ended Year Ended
June 30 December 31 June 30 December 31 June 30 December 31
2000 1999 2000 1999 2000 1999
-----------------------------------------------------------------------------------------------
SAFECO U.S. VALUE FUND
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares:
Sales 35 163 5 15 4 16
Reinvestments 1 17 -- 1 -- 2
Redemptions (115) (189) (5) (5) (17) (8)
------- ------- ---- ---- ----- ----
Net Change (79) (9) -- 11 (13) 10
======= ======= ==== ==== ===== ====
Amounts:
Sales $ 392 $ 2,043 $ 54 $179 $ 49 $196
Reinvestments 9 202 -- 9 -- 25
Redemptions (1,304) (2,315) (58) (63) (196) (95)
------- ------- ---- ---- ----- ----
Net Change $ (903) $ (70) $ (4) $125 $(147) $126
======= ======= ==== ==== ===== ====
</TABLE>
5. COMMITMENTS
At June 30, 2000, the International Stock Fund had open forward foreign
currency exchange contracts obligating it to receive or deliver the following
foreign currencies:
<TABLE>
<CAPTION>
(In Thousands)
U.S. Dollar Unrealized
Currency In Exchange Settlement Value as of Appreciation
to be Delivered For Date June 30, 2000 (Depreciation)
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
23,584 Japanese Yen $ 224 7/3/00 $ 223 $ 1
(23,584) Japanese Yen (225) 7/3/00 (223) (2)
35,739 Japanese Yen 343 7/18/00 339 4
21,662 Japanese Yen 208 7/28/00 206 2
19,669 Japanese Yen 184 8/9/00 187 (3)
36,428 Japanese Yen 345 8/21/00 347 (2)
30,844 Japanese Yen 291 8/30/00 295 (4)
23,184 Japanese Yen 224 9/5/00 222 2
------ ------ ---
$1,594 $1,596 $(2)
====== ====== ===
</TABLE>
- 55 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
6. COMPONENTS OF NET ASSETS
At June 30, 2000, the components of net assets were as follows:
<TABLE>
<CAPTION>
GROWTH OPPORTUNITIES EQUITY DIVIDEND INCOME NORTHWEST
(In Thousands) FUND FUND FUND FUND
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aggregate Gross Unrealized
Appreciation on Investments
and Forward Contracts in
Which There Is an Excess of
Value Over Identified Cost $ 146,249 $ 621,200 $ 59,359 $ 63,266
Aggregate Gross Unrealized
Depreciation on Investments
and Forward Contracts in
Which There is an Excess of
Identified Cost Over Value (184,317) (90,084) (19,895) (9,269)
--------- ---------- -------- --------
Net Unrealized
Appreciation/(Depreciation) (38,068) 531,116 39,464 53,997
Accumulated Net Investment
Income (Loss) (3,261) -- -- (389)
Accumulated Net Realized
Gain (Loss) on Investments:
Wash Sale Deferral* (351) -- -- --
Other (2,021)** 83,388 10,773 3,346
Paid in Capital (Par Value
$.001, Unlimited Shares
Authorized) 784,589 1,176,041 190,358 97,226
--------- ---------- -------- --------
Net Assets at June 30, 2000 $ 740,888 $1,790,545 $240,595 $154,180
========= ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL BALANCED SMALL COMPANY U.S. VALUE
(In Thousands) STOCK FUND FUND VALUE FUND FUND
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aggregate Gross Unrealized
Appreciation on Investments
and Forward Contracts in
Which There Is an Excess of
Value Over Identified Cost $11,175 $ 1,745 $ 5,195 $1,300
Aggregate Gross Unrealized
Depreciation on Investments
and Forward Contracts in
Which There is an Excess of
Identified Cost Over Value (767) (1,231) (4,698) (894)
------- ------- ------- ------
Net Unrealized Appreciation 10,408 514 497 406
Accumulated Net Investment
Income (Loss) 112 -- (60) --
Accumulated Net Realized Gain
(Loss) on Investments:
Wash Sale Deferral* (30) (5) -- --
Other 1,583 ** 38 (7,253)** 229
Paid in Capital (Par Value
$.001, Unlimited Shares
Authorized) 31,297 18,472 36,188 8,723
------- ------- ------- ------
Net Assets at June 30, 2000 $43,370 $19,019 $29,372 $9,358
======= ======= ======= ======
-------------------------------------------------------------------------------
</TABLE>
* Represents accumulated realized losses not currently available to offset
future distributions.
** At December 31, 1999, these funds had the following amounts of accumulated
net realized losses on investment transactions that represented capital
loss carryforwards for federal income tax purposes, which expire as
follows:
<TABLE>
<CAPTION>
Amounts Expiration Dates
------- ----------------
<S> <C> <C>
Growth Opportunities Fund $31,148 2006-2007
International Stock Fund 160 2006-2007
Small Company Value Fund 10,162 2006-2007
</TABLE>
- 56 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
7. INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Investment Advisory Fees. Effective May 1, 1999, shareholders approved an
amended and restated investment advisory contract with SAFECO Asset Management
Company. The fees paid by the Funds under the new contract are based on a
percentage of each day's net assets, which, on an annual basis, are as follows:
<TABLE>
<S> <C>
Growth Opportunities, Equity,
Dividend Income, Northwest,
Balanced and U.S. Value
Funds:
First $250 million .70%
Next $500 million .65
Next $500 million .60
Over $1.25 billion .55
</TABLE>
<TABLE>
<S> <C>
International Stock Fund:
First $250 million 1.00%
Next $500 million .90
Over $750 million .80
</TABLE>
<TABLE>
<S> <C>
Small Company Value
Fund:
First $250 million .75%
Next $500 million .70
Next $500 million .65
Over $1.25 billion .60
</TABLE>
SAFECO Asset Management Company pays sub-advisory fees to Bank of Ireland
Asset Management Company (U.S.) Limited for providing investment research and
advice to the International Fund.
Fund Accounting and Fund Administration Fees. Beginning May 1, 1999, SAFECO
Asset Management Company receives a fee for these services on a percentage of
each day's net assets, which, on an annual basis is as follows:
<TABLE>
<S> <C>
Fund Accounting:
First $200 million 0.04%
Over $200 million 0.01
</TABLE>
<TABLE>
<S> <C>
Fund Administration:
First $200 million 0.05%
Over $200 million 0.01
</TABLE>
Transfer Agent, Shareholder Service, and Distribution Fees. SAFECO Services
Corporation receives transfer agent fees. SAFECO Securities, Inc. receives
shareholder service and distribution fees.
Notes Payable and Interest Expense. The Funds may borrow money for temporary
purposes from SAFECO Corporation or its affiliates at rates equivalent to
commercial bank interest rates. At June 30, 2000, the Equity and U.S. Value
Funds had 6.63% notes payable to American States Economy for $10,000 and
$310,000. The notes were repaid on July 3, 2000.
Line of Credit. The Trust, together with all other management investment
companies for which SAFECO Asset Management Company serves as investment
advisor, has line of credit arrangements with certain financial institutions.
Under these arrangements, $200 million is available to meet short-term
financing needs. No balance was outstanding under these arrangements as of June
30, 2000.
Affiliate Ownership. At June 30, 2000, SAFECO Insurance Company of America,
owned 450,000 shares (8% of outstanding shares) of the Northwest Fund and
SAFECO Asset Management
- 57 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Company owned 694,490 shares (27%) of the International Stock Fund, 519,268
shares (31%) of the Balanced Fund, and 500,000 shares (61%) of the U.S. Value
Fund.
Expense Reimbursement. Beginning May 1, 1999 through April 30, 2009, SAFECO
Asset Management Company agreed to reimburse the Funds for operating expenses
(i.e. all expenses except investment advisory, distribution, shareholder
service, and interest expense) which exceed on an annual basis 0.40% of Fund
average daily net assets.
Dealer Concessions. SAFECO Securities, Inc. retained the following amounts
in dealer commissions from sales of Class A shares during the six-month period
ended June 30, 2000:
<TABLE>
<CAPTION>
Commissions
Retained
--------------------------------------------------------------------------------
<S> <C>
Growth Opportunities Fund $ 3,364
Equity Fund 15,393
Dividend Income Fund 216
Northwest Fund 2,523
International Stock Fund 259
Balanced Fund 546
Small Company Value Fund 156
U.S. Value Fund 153
--------------------------------------------------------------------------------
</TABLE>
- 58 -
<PAGE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
8. INVESTMENTS IN AFFILIATES
Each of the companies listed below is an affiliate of the Growth
Opportunities Fund because the Fund owned at least 5% of the company's voting
securities during the six-month period ended June 30, 2000.
<TABLE>
<CAPTION>
(In Thousands) Shares at Shares at Market Value
Beginning End June 30,
Security of Period Additions Reductions of Period Dividends 2000
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
*American Coin
Merchandising, Inc. 357 -- (60) 297 -- $ --
American Healthcorp,
Inc. 553 -- -- 553 -- 2,832
*Anesta Corp. 759 38 (759) 38 -- --
Blue Rhino Corp. 624 -- (25) 599 -- 4,826
BNC Mortgage, Inc. 417 -- -- 417 -- 4,043
Concepts Direct, Inc. 480 -- -- 480 -- 4,765
DAMARK International,
Inc. 715 -- (63) 652 -- 14,027
*Dura Pharmaceuticals,
Inc. 2,306 -- (175) 2,131 -- --
Dynamex, Inc. 611 -- -- 611 -- 244
*Emisphere Technologies,
Inc. 984 82 (708) 358 -- --
French Fragrances, Inc. 925 -- -- 925 -- 7,573
*Funco, Inc. 354 -- (354) -- -- --
*Hall, Kinion &
Associates, Inc. 805 -- (360) 445 -- --
Harold's Stores, Inc. 542 -- -- 542 -- 1,356
Home Products
International, Inc. 370 -- -- 370 -- 1,433
*Innotrac Corp. 1,013 -- (516) 497 -- --
Lifeline Systems, Inc. 561 -- -- 561 -- 7,848
MICROS Systems, Inc. 1,152 174 (74) 1,252 -- 23,233
NCO Group, Inc. 1,528 752 (264) 2,016 -- 46,614
*Nastech Pharmaceutical
Co., Inc. 495 -- (495) -- -- --
Nu Skin Enterprises,
Inc. (Class A) 2,348 -- (182) 2,166 -- 12,455
Phoenix International
Ltd., Inc. 832 -- -- 832 -- 2,495
PolyMedica Corp. 1,245 46 (421) 870 -- 37,636
Precision Auto Care,
Inc. 592 -- (155) 437 -- 301
Prime Medical Services,
Inc. 1,226 -- -- 1,226 -- 9,504
Rent-A-Center, Inc. 2,288 124 (122) 2,290 -- 51,530
Rent-Way, Inc. 1,706 428 (647) 1,487 -- 43,413
Res-Care, Inc. 735 564 -- 1,299 -- 6,982
Serologicals Corp. 2,347 -- (282) 2,065 -- 10,324
*Suburban Lodges of
America, Inc. 1,027 -- (620) 407 -- --
TRM Copy Centers Corp. 710 -- -- 710 -- 3,816
Towne Services, Inc. 1,435 -- (37) 1,398 -- 1,311
Travis Boats & Motors,
Inc. 271 -- -- 271 -- 1,491
*Weider Nutrition
International, Inc. 516 -- (184) 332 -- --
--------
$300,052
========
------------------------------------------------------------------------------------------
</TABLE>
* Company was not an affiliate at the end of the period.
- 59 -
<PAGE>
SAFECO COMMON STOCK FUNDS
BOARD OF TRUSTEES:
Boh A. Dickey, Chairman
Barbara J. Dingfield
David F. Hill
Richard W. Hubbard
Richard E. Lundgren
Larry L. Pinnt
John W. Schneider
OFFICERS:
David F. Hill, President
Ronald L. Spaulding Vice President and Treasurer
David H. Longhurst Vice President and Controller
INVESTMENT ADVISOR:
SAFECO Asset Management Company
DISTRIBUTOR:
SAFECO Securities, Inc.
TRANSFER AGENT:
SAFECO Services Corporation
CUSTODIAN:
State Street Bank
Chase Manhattan Bank
(International Fund)
GMF 1054 8/00
This report must be preceded or accompanied by a current prospectus.
(R) A registered trademark of SAFECO Corporation.
CLIENT SERVICES*:
Monday-Friday,
5:30am-7:00pm Pacific Time
Nationwide: 1-800-624-5711
Deaf and Hard of Hearing TTY/TDD Service: 1-800-438-8718
* All telephone calls are tape-recorded for your protection.
FOR 24-HOUR AUTOMATED PERFORMANCE INFORMATION AND TRANSACTIONS:
Nationwide: 1-800-835-4391
MAILING ADDRESS:
SAFECO Mutual Funds
P.O. Box 34890
Seattle, WA 98124-1890
INTERNET:
www.safecofunds.com
EMAIL: [email protected]
