UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-CSRS

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number: 811-6167

Safeco Common Stock Trust

(Exact name of registrant as specified in charter)

4854 154^th Pl NE, Redmond, WA 98052

(Address of principal executive offices) (Zip code)

Roger F. Harbin

4854 154^th Pl NE, Redmond, WA 98052

(Name and address of agent for service)

Registrant’s telephone number, including area code: 425-376-8055

Date of fiscal year end: December 31, 2004

Date of reporting period: June 30, 2004

ITEM 1. REPORT TO SHAREHOLDERS

Safeco Mutual Funds

Semiannual Report

Safeco Stock Funds

Growth Opportunities Fund	1
Core Equity Fund	5
Large-Cap Value Fund	9
Multi-Cap Core Fund	14
International Stock Fund	18
Balanced Fund	24
Small-Cap Value Fund	32
Large-Cap Growth Fund	36

Report From the Fund Managers

Safeco Growth Opportunities Fund

As of June 30, 2004

How did the Fund perform?

The Safeco Growth Opportunities Fund outperformed its benchmark index, the Russell 2000 Index^®, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

The biggest factor affecting the Fund’s strong performance has been from stock selection. We have many stable, liquid and less volatile small-cap holdings. Our view continues to be that earnings growth comparisons for many companies will moderate as the economy continues to recover, thus we have positioned the portfolio toward companies with sustainable growth in earnings.

Some of the Fund’s outperformance was a result of 46% of the Fund having a market capitalization of greater than $1 billion currently. This is the segment of the market-cap spectrum that we added to during late 2003. Year-to date, the Russell 2000 Index^® sectors that contributed the most were producer durables, consumer discretionary and healthcare—all overweighted sectors in the Fund. Our underweight in technology helped as well.

What changes did you make to the Fund and why?

The turnover in the Fund remains quite low for a small-cap fund, as compared to the turnover of other funds of its type. What this symbolizes is a management team with a long-term view of the investments made in the portfolio.

We continue to upgrade the quality of the portfolio to more stable, more liquid and thereby less volatile stocks. We seek high quality companies that have consistent growth in profits, strong return on investor capital (or increasing), an ability to fund growth internally, and a seasoned management team.

Jeffrey Schwartz, CFA—Portfolio Manager/Equity Analyst

Bill Whitlow, CFA—Portfolio Manager/Equity Analyst

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 8 of Notes to the Financial Statements.

SAFECO    MUTUAL    FUNDS 1-800-624-5711

1

Performance Overview & Highlights

Safeco Growth Opportunities Fund

(Unaudited)

INVESTOR CLASS

Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	10 Year
Safeco Growth Opportunities Fund	8.40%	32.82%	4.75%	11.92%
Russell 2000 Index	6.76%	33.37%	6.63%	10.93%
Lipper, Inc. (Small-Cap Core Funds)	7.14%	33.47%	10.61%	12.54%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

TOP FIVE INDUSTRIES	Percent of Net Assets
Specialty Stores	5.6	%
Thrifts & Mortgage Finance	5.2
Homebuilding	4.1
Casinos & Gaming	4.0
Health Care Services	3.9
TOP TEN COMMON STOCK HOLDINGS	Percent of Net Assets
MICROS Systems, Inc. (Application Software)	2.9	%
Nu Skin Enterprises, Inc. (Class A) (Personal Products)	2.6
PolyMedica Corp. (Health Care Supplies)	2.6
Rent-A-Center, Inc. (Specialty Stores)	2.6
Iron Mountain, Inc. (Data Processing & Outsourced Services)	2.5
Websense, Inc. (Internet Software & Services)	2.5
American Healthways, Inc. (Health Care Services)	2.4
Station Casinos, Inc. (Casinos & Gaming)	2.3
Textronix, Inc. (Electronic Equipment Manufacturers)	2.1
W Holding Co., Inc. (Thrifts & Mortgage Finance)	2.1

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
Florida Rock Industries, Inc.	$	9,506
Scientific Games Corp.		8,266
Timberland Co. (Class A)		8,074
W Holding Co., Inc.		7,938
Scotts Co. (Class A)		5,966
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
Conceptus, Inc.	$	9,279
NCO Group, Inc.		9,264
Nastech Pharmaceutical Co., Inc.		7,681
Matria Healthcare, Inc.		6,791
iShare Russell 2000 Value Index Fund		6,615

WEIGHTINGS AS A PERCENT OF NET ASSETS

2

Portfolio of Investments

Safeco Growth Opportunities Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—90.8%
Aerospace & Defense—3.0%
119,700	*	Alliant Techsystems, Inc.	$	7,582
269,000	*	DRS Technologies, Inc.		8,581
Application Software—2.9%
332,028	*	MICROS Systems, Inc.		15,927
Asset Management & Custody Banks—1.0%
108,300	*	Affiliated Managers Group, Inc.		5,455
Auto Parts & Equipment—0.6%
403,000	*	IMPCO Technologies, Inc.		2,551
118,300	*	Quantum Fuel Systems Technologies Worldwide, Inc.		719
Biotechnology—3.0%
518,100	*	North American Scientific, Inc.		4,352
265,600	*	Novavax, Inc.		1,432
536,773	*	Serologicals Corp.		10,730
Casinos & Gaming—4.0%
480,200	*	Scientific Games Corp.		9,191
260,500	*	Station Casinos, Inc.		12,608
Commercial Printing—0.6%
97,650		R.R. Donnelley & Sons Co.		3,225
Construction & Farm Machinery & Heavy Trucks—1.1%
289,400	*	AGCO Corp.		5,895
Construction Materials—1.7%
223,900		Florida Rock Industries, Inc.		9,442
Data Processing & Outsourced Services—2.5%
285,880	*	Iron Mountain, Inc.		13,797
Diversified Commercial Services—2.9%
152,400	*	Concorde Career Colleges, Inc.		2,666
65,200	*	Kroll, Inc.		2,405
408,674	*	NCO Group, Inc.		10,908
Electronic Equipment Manufacturers—2.1%
342,500	*	Tektronix, Inc.		11,652
Employment Services—1.3%
281,800	*	Monster Worldwide, Inc.		7,248
Food Distributors—1.0%
212,600		Fresh Del Monte Produce, Inc.		5,372
Food Retail—1.1%
328,000		Casey’s General Stores, Inc.		6,002

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Footwear—2.4%
220,600	*	Steven Madden, Ltd.	$	4,405
135,600	*	Timberland Co. (Class A)		8,758
Health Care Equipment—2.7%
48,850	*	American Medical Alert Corp.		205
429,200	*	Conceptus, Inc.		4,829
998,000	*†	Med-Design Corp.		2,076
1,800,000	*	PhotoMedex, Inc.		6,174
861,000	*†	SpectRx, Inc.		1,335
Health Care Services—3.9%
497,600	*	American Healthways, Inc.		13,246
313,325	*	Matria Healthcare, Inc.		7,855
Health Care Supplies—2.6%
452,300		PolyMedica Corp.		14,039
Home Entertainment Software—2.6%
517,566	*	PLATO Learning, Inc.		5,129
391,300	*	THQ, Inc.		8,961
Homebuilding—4.1%
830,000	*	Champion Enterprises, Inc.		7,619
101,200	*	Meritage Corp.		6,963
157,800		Standard Pacific Corp.		7,780
Housewares & Specialties—1.1%
94,100	*	Scotts Co. (Class A)		6,011
Industrial Machinery—1.6%
259,400		Pentair, Inc.		8,726
Internet Software & Services—3.8%
811,703	*	Stellent, Inc.		6,932
364,600	*	Websense, Inc.		13,574
IT Consulting & Other Services—1.5%
992,508	*	CIBER, Inc.		8,158
Life & Health Insurance—3.3%
337,200		Scottish RE Group, Ltd.		7,840
153,500		StanCorp Financial Group, Inc.		10,285
Metal & Glass Containers—0.5%
367,300		Intertape Polymer Group, Inc.		2,795
Oil & Gas Drilling—0.8%
259,000	*	Pride International, Inc.		4,431
Oil & Gas Equipment & Services—1.3%
166,500	*	FMC Technologies, Inc.		4,795
67,900		Tidewater, Inc.		2,023
Oil & Gas Exploration & Production—2.3%
193,200	*	Forest Oil Corp.		5,278
132,900	*	Newfield Exploration Co.		7,408

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-624-5711

3

Portfolio of Investments

Safeco Growth Opportunities Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Personal Products—3.5%
162,600	*	NBTY, Inc.	$	4,779
560,800		Nu Skin Enterprises, Inc. (Class A)		14,199
Pharmaceuticals—2.8%
268,300	*	Connetics Corp.		5,420
711,610	*	Discovery Laboratories, Inc.		6,824
283,000	*	La Jolla Pharmaceutical Co.		688
227,100	*	Nastech Pharmaceutical Co., Inc.		2,316
Real Estate Investment Trust—1.6%
149,800		Alexandria Real Estate Equities, Inc.		8,506
Regional Banks—3.8%
339,018		Fulton Financial Corp.		6,831
159,200		United Bankshares, Inc.		5,174
166,200		Westamerica Bancorporation		8,717
Semiconductor Equipment—1.2%
51,200	*	Actel Corp.		947
110,700	*	Artisan Components, Inc.		2,856
103,800	*	DSP Group, Inc.		2,828
Semiconductors—0.4%
365,900	*	TriQuint Semiconductor, Inc.		1,998
Soft Drinks—0.8%
78,100		Coca-Cola Bottling Co.		4,521
Specialty Chemicals—0.6%
530,000	*	Omnova Solutions, Inc.		3,233
Specialty Stores—5.6%
532,213	*†	Harold’s Stores, Inc.		1,352
465,250	*	Rent-A-Center, Inc.		13,925
1,077,200	*	Rent-Way, Inc.		9,695
198,000	*	West Marine, Inc.		5,316
Thrifts & Mortgage Finance—5.2%
323,603		Doral Financial Corp.		11,164
122,700		New Century Financial Corp.		5,745
678,600		W Holding Co., Inc.		11,652
Trucking—2.0%
375,525	*	Old Dominion Freight Line, Inc.		11,070
TOTAL COMMON STOCKS (cost $344,983)				495,126
INDEXED SECURITIES—6.4%
Indexed Securities—6.4%
138,800		iShares Russell 2000		8,685
		Growth Index Fund
74,300		iShares Russell 2000		8,754
		Index Fund
50,900		iShares Russell 2000		8,754
		Value Index Fund
90,300		iShares S&P SmallCap 600/BARRA Growth Index Fund		8,812
TOTAL INDEXED SECURITIES (cost $29,253)				35,005

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
WARRANTS—0.4%
Diversified Commercial Services—0.0%
74,330	*	NCO Group, Inc. (Exp. 9/28/06)††	$	16
Health Care Equipment—0.2%
92,625	*	Endocare, Inc. (Exp. 11/23/05)††		0
260,000	*	LifePoint, Inc. (Exp. 4/01/07)††		1
156,000	*	LifePoint, Inc. (Exp. 7/21/07)††		1
450,000	*	PhotoMedex, Inc. (Exp. 6/13/07)††		974
172,200	*	SpectRx, Inc. (Exp. 6/04/06)††		38
Pharmaceuticals—0.2%
217,500	*	Nastech Pharmaceutical Co., Inc. (Exp. 3/19/06)††		1,076
TOTAL WARRANTS (cost $43)				2,106
CASH EQUIVALENTS—27.5%
Investment Companies
11,050,468		AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)		11,050
138,994,937		State Street Navigator Securities Lending PrimePortfolio **		138,995
TOTAL CASH EQUIVALENTS (cost $150,045)				150,045
TOTAL INVESTMENTS (cost $524,324)—125.1%			$	682,282
Other Assets, less Liabilities				(136,816	)
NET ASSETS			$	545,466

  * Non-income producing security.

** Represents invested collateral received related to $136,514,346 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

  † 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). Total cost of such securities is $21,898,000 and the total value is $4,763,000 or 0.9% of net assets.

†† Securities are valued at fair value as determined under the supervision of the Board of Trustees.

SEE NOTES TO FINANCIAL STATEMENTS

4

Report From the Fund Managers

Safeco Core Equity Fund

As of June 30, 2004

How did the Fund perform?

The Safeco Core Equity Fund underperformed its benchmark Index, the S&P 500, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

Trends that hurt the Fund in the fourth quarter of 2003 continued. Cyclical stocks, companies without earnings, and lower-quality companies continued to perform better than the stocks in the Fund’s benchmark.

During the first half of this year, virtually every sector had stocks that performed well. Some of these stocks, such as Ball Corp., Illinois Tool Works and Leggett & Platt performed well as the economy strengthened. Others like Hartford Financial and Schlumberger performed well because trends in the insurance and energy industries remained positive. Finally, others like Estee Lauder, Harley Davidson and PepsiCo are simply solid companies that continue to do well.

The Fund had several poor performing stocks in the first half, including some in the health care sector. In this sector, patent expirations (Abbott), legal issues (Wyeth) and concerns regarding future growth rates (Amgen) weighed on the stocks. The technology sector had several losers. Nokia is suffering from newer entrants and its own product cycle. Texas Instruments and Applied Materials remain volatile due to concerns regarding the strength and length of the cycle in their end markets.

What changes did you make to the Fund and why?

Diversification is increasing—we added two utilities stocks. The largest position sizes are decreasing: positions over 3% at year-end 2003 are down to zero at mid-year. The percentage of the funds in its top-10 holdings is decreasing (28.2% at year-end 2003 versus 24% now) and the average market capitalization is decreasing, achieved by reducing positions in Citigroup and Pfizer. The intent of these moves is to improve the relative performance of the Fund.

At the same time we were undertaking the activities outlined above, we continued to look for the correct buy and hold stocks for the Fund. This included such moves as adding to existing positions in Illinois Tool Works and Cardinal Health and initiating new positions, such as in SunGard Data Systems and Best Buy.

We eliminated our position in Altria when it reached our price objective, as well as our position in PeopleSoft, because we found a better alternative.

Rich Meagley, CFA—Portfolio Manager/Equity Analyst

Darcy MacLaren, CFA—Portfolio Manager

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 8 of Notes to the Financial Statements.

SAFECO    MUTUAL    FUNDS 1-800-624-5711

5

Performance Overview & Highlights

Safeco Core Equity Fund

(Unaudited)

INVESTOR CLASS

Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	10 Year
Safeco Core Equity Fund	1.76%	14.16%	(5.70)%	7.99%
S&P 500 Index	3.46%	19.13%	(2.20)%	11.82%
Lipper, Inc. (Large-Cap Core Funds)	2.03%	16.13%	(3.17)%	9.79%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

TOP FIVE INDUSTRIES	Percent of Net Assets
Pharmaceuticals	8.7	%
Diversified Banks	4.9
Integrated Oil & Gas	4.3
Industrial Machinery	4.2
Multi-Line Insurance	3.3
TOP TEN COMMON STOCK HOLDINGS	Percent of Net Assets
General Electric Co. (Industrial Conglomerates)	2.8	%
Microsoft Corp. (Systems Software)	2.7
Citigroup, Inc. (Other Diversified Financial Services)	2.5
Pfizer, Inc. (Pharmaceuticals)	2.5
Wells Fargo & Co. (Diversified Banks)	2.4
Exxon Mobil Corp. (Integrated Oil & Gas)	2.4
United Technologies Corp. (Aerospace & Defense)	2.3
American International Group, Inc. (Multi-Line Insurance)	2.2
Cisco Systems, Inc. (Communication Equipment)	2.1
Procter & Gamble Co. (Household Products)	2.1

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
SunGard Data Systems, Inc.	$	7,637
Apache Corp.		7,522
Ball Corp.		7,448
FirstEnergy Corp.		7,125
Exelon Corp.		6,711
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
American International Group, Inc.	$	8,284
Pfizer, Inc.		8,091
PepsiCo, Inc.		7,374
Citigroup, Inc.		6,750
Oracle Corp.		6,412

WEIGHTINGS AS A PERCENT OF NET ASSETS

6

Portfolio of Investments

Safeco Core Equity Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—98.6%
Aerospace & Defense—3.3%
130,000		Northrop Grumman Corp.	$	6,981
174,000		United Technologies Corp.		15,918
Application Software—0.4%
80,000	*	Intuit, Inc.		3,086
Asset Management & Custody Banks—0.5%
120,000		Bank of New York Co., Inc.		3,538
Auto Parts & Equipment—1.2%
153,000		Johnson Controls, Inc.		8,167
Biotechnology—1.2%
150,000	*	Amgen, Inc.		8,185
Brewers—1.6%
200,000		Anheuser-Busch Companies, Inc.		10,800
Communication Equipment—2.7%
615,000	*	Cisco Systems, Inc.		14,575
300,000		Nokia Oyj (ADR)		4,362
Computer & Electronics Retail—1.0%
132,000		Best Buy Co., Inc.		6,698
Computer Hardware—3.0%
300,000	*	Dell, Inc.		10,746
119,000		International Business Machines Corp.		10,490
Computer Storage & Peripherals—0.6%
365,000	*	EMC Corp.		4,161
Construction & Farm Machinery & Heavy Trucks—1.1%
127,500		PACCAR, Inc.		7,394
Consumer Finance—3.1%
235,000		American Express Co.		12,074
375,000		MBNA Corp.		9,671
Data Processing & Outsourced Services—2.1%
145,000		Automatic Data Processing, Inc.		6,073
185,000		First Data Corp.		8,236
Department Stores—1.0%
170,000	*	Kohl’s Corp.		7,188
Diversified Banks—4.9%
225,000		Hibernia Corp. (Class A)		5,468
420,000		U.S. Bancorp		11,575
293,000		Wells Fargo & Co.		16,768

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Electric Utilities—2.0%
200,000		Exelon Corp.	$	6,658
184,000		FirstEnergy Corp.		6,883
Electrical Components & Equipment—1.0%
105,000		Emerson Electric Co.		6,673
Food Retail—1.0%
400,000	*	Kroger Co.		7,280
General Merchandise Stores—3.1%
240,000		Target Corp.		10,193
218,000		Wal-Mart Stores, Inc.		11,502
Health Care Distributors—2.3%
140,000		Cardinal Health, Inc.		9,807
185,000		McKesson Corp.		6,351
Health Care Equipment—1.4%
200,000		Medtronic, Inc.		9,744
Home Furnishings—0.7%
185,000		Leggett & Platt, Inc.		4,941
Home Improvement Retail—1.2%
240,000		Home Depot, Inc.		8,448
Household Products—3.2%
125,000		Kimberly-Clark Corp.		8,235
262,000		Procter & Gamble Co.		14,263
Housewares & Specialties—1.5%
138,000		Fortune Brands, Inc.		10,409
Industrial Conglomerates—2.8%
590,000		General Electric Co.		19,116
Industrial Gases—1.1%
200,000		Praxair, Inc.		7,982
Industrial Machinery—4.2%
200,000		Danaher Corp.		10,370
130,000		Illinois Tool Works, Inc.		12,466
90,000		Ingersoll-Rand Co. (Class A)		6,148
Integrated Oil & Gas—4.3%
138,000		ChevronTexaco Corp.		12,987
375,000		Exxon Mobil Corp.		16,654
Integrated Telecommunications Services—2.6%
200,000		CenturyTel, Inc.		6,008
340,000		Verizon Communications, Inc.		12,305
IT Consulting & Other Services—1.1%
288,000	*	SunGard Data Systems, Inc.		7,488

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-624-5711

7

Portfolio of Investments

Safeco Core Equity Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Metal & Glass Containers—1.2%
115,000		Ball Corp.	$	8,286
Motorcycle Manufacturers—1.5%
170,000		Harley-Davidson, Inc.		10,530
Movies & Entertainment—0.9%
345,000	*	Time Warner, Inc.		6,065
Multi-Line Insurance—3.3%
215,000		American International Group, Inc.		15,325
115,000		Hartford Financial Services Group, Inc.		7,905
Oil & Gas Equipment & Services—1.0%
115,000		Schlumberger, Ltd.		7,304
Oil & Gas Exploration & Production—1.2%
190,000		Apache Corp.		8,275
Other Diversified Financial Services—2.5%
375,000		Citigroup, Inc.		17,437
Personal Products—0.9%
125,000		Estee Lauder Cos., Inc. (Class A)		6,098
Pharmaceuticals—8.7%
327,000		Abbott Laboratories		13,329
100,000		Eli Lilly & Co.		6,991
180,000		Johnson & Johnson		10,026
505,000		Pfizer, Inc.		17,311
345,000		Wyeth		12,475
Property & Casualty Insurance—1.5%
249,205		St. Paul Travelers Cos., Inc.		10,103
Publishing—1.2%
98,000		Gannett Co., Inc.		8,315
Regional Banks—2.1%
140,000		Fifth Third Bancorp		7,529
160,000		First Horizon National Corp.		7,275
Semiconductor Equipment—1.1%
395,000	*	Applied Materials, Inc.		7,750
Semiconductors—3.3%
490,000		Intel Corp.		13,524
380,000		Texas Instruments, Inc.		9,188
Soft Drinks—2.0%
260,000		PepsiCo, Inc.		14,009
Systems Software—2.7%
665,000		Microsoft Corp.		18,992

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
Thrifts & Mortgage Finance—2.3%
100,000	Federal National Mortgage Association	$	7,136
223,000	Washington Mutual, Inc.		8,617
TOTAL COMMON STOCKS (cost $482,425)			684,860
CASH EQUIVALENTS—1.8%
Investment Companies
10,640,317	AIM Short-Term Investments Co. Liquid Assets Money MarketPortfolio (InstitutionalShares)		10,640
1,871,906	State Street Navigator Securities Lending Prime Portfolio **		1,872
TOTAL CASH EQUIVALENTS (cost $12,512)			12,512
TOTAL INVESTMENTS (cost $494,937)—100.4%		$	697,372
Other Assets, less Liabilities			(2,802	)
NET ASSETS		$	694,570

  * Non-income producing security.

** Represents invested collateral received related to $1,828,685 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

8

Report From the Fund Managers

Safeco Large-Cap Value Fund

As of June 30, 2004

How did the Fund perform?

The Safeco Large-Cap Value Fund underperformed its benchmark, the Russell 1000 Value^® Index, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

The Fund’s performance was primarily due to stock selection and aided by a one-time settlement of a class action lawsuit regarding a former holding.

As usual, there were multiple factors affecting performance. One factor that has helped so far this year, after hurting last year, was the relative outperformance of large companies over smaller ones. This helped the Fund’s relative performance as we own mostly larger companies. It also helped that higher quality companies tended to perform better than lower quality ones. This too is a change from recent periods.

For the year-to-date, the Fund’s best performing sector was energy, which returned around 10%. Performance here was led by Conoco-Philips, up nearly 20%, and British Petroleum, up around 10%. This sector was up primarily due to the rise in oil prices, and the resulting improved outlook for earnings. Consumer discretionary stocks were our next best group, returning around 8%. Materials and consumer staples were our third and fourth best performing sectors.

On the negative side, our worst sectors were technology and health care, both of which declined by around 2%. Technology was hurt primarily by a large decline in both Nokia and Texas Instruments. Nokia has been losing market share in the cell phone market, and Texas Instruments is one of their suppliers. Finance stocks, the largest sector in both our Index and the Fund, were held back by rising interest rates and the negative impact this is expected to have on earnings. Finance stocks were essentially flat for the past six months.

What changes did you make to the Fund and why?

During the past six months, we made several changes to the Fund. As always, the changes were designed to own the stocks we find most attractive and to adjust sector weightings to what we believe are appropriate levels. Some recent sector weighting adjustments were due to the annual Russell Value Index re-configuration which occurred at the end of June.

Stocks added to the portfolio included PMI Group, Weyerhaeuser, and Polaris Industries. PMI Group, a mortgage insurer, was added because it’s a rarity among financial stocks in that rising rates should actually help earnings as the pace of refinancing slows. Weyerhaeuser, a stock we have wanted to own for some time in order to gain exposure to forest products, finally reached what we believe to be an attractive valuation. Polaris Industries is a maker of all-terrain vehicles, a market we expect will continue to experience good growth, especially as the economy improves and the outlook for jobs gets better. We also initiated positions in Allstate Insurance, Coca Cola and Illinois Tool Works, all of which we believe were selling at attractive valuations.

We eliminated holdings of Disney, which rose after receiving an unsolicited takeover offer. We also sold Eli Lilly, Anheuser-Busch and Hubbell based on valuation, as they had appreciated to levels that were very near our target prices.

SAFECO    MUTUAL    FUNDS 1-800-624-5711

9

Report From the Fund Managers

Safeco Large-Cap Value Fund

As of June 30, 2004

We reduced our position in the finance sector by 2.1%, mainly to lessen our exposure during what we expect to be a period of rising interest rates. We are currently 1.7% underweight in finance relative to the Russell 1000 Value Index. We reduced our exposure to stocks in the producer durables sector, which performed very well. We do, however, remain overweighted in this sector by 2.0% as we expect these stocks to continue to perform well as the economy improves. We are overweighted in the materials sector for the same reason, and have added to our position, primarily by buying Weyerhaeuser as discussed earlier. We also added to our exposure to what Russell calls “other” (primarily includes multi-industry companies, such as GE), as this sector went from 1.6% to 6.6% of the Index at the June re-configuration.

Rex Bentley, CFA—Portfolio Manager/Equity Analyst

Lynette Sagvold, CFA—Portfolio Manager/Equity Analyst

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 8 of Notes to the Financial Statements.

10

Performance Overview & Highlights

Safeco Large-Cap Value Fund

(Unaudited)

INVESTOR CLASS

Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	10 Year
Safeco Large-Cap Value Fund	3.37%	18.91%	(1.71)%	7.52%
Russell 1000 Value Index	3.94%	21.13%	1.87%	12.64%
Lipper, Inc. (Equity-Income Funds)	3.24%	19.19%	0.67%	10.41%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

TOP FIVE INDUSTRIES	Percent of Net Assets
Diversified Banks	11.2	%
Integrated Oil & Gas	10.2
Multi-Line Insurance	5.8
Integrated Telecommunications Services	5.7
Pharmaceuticals	3.5
TOP TEN COMMON STOCK HOLDINGS	Percent of Net Assets
ChevronTexaco Corp. (Integrated Oil & Gas)	3.7	%
Citigroup, Inc. (Other Diversified Financial Services)	3.3
Exxon Mobil Corp. (Integrated Oil & Gas)	2.9
Hartford Financial Services Group, Inc. (Multi-Line Insurance)	2.7
U.S. Bancorp (Diversified Banks)	2.6
General Electric Co. (Industrial Conglomerates)	2.6
Wells Fargo & Co. (Diversified Banks)	2.3
Bank of America Corp. (Diversified Banks)	2.1
Kimberly-Clark Corp. (Household Products)	2.0
American International Group, Inc. (Multi-Line Insurance)	1.9

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
MBNA Corp.	$	2,441
Mellon Financial Corp.		2,013
General Electric Co.		1,958
Allstate Corp.		1,828
Praxair, Inc.		1,755
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
Travelers Property Casualty Corp. (Class B)	$	2,048
American Express Co.		1,619
Northrop Grumman Corp.		1,585
Nokia Oyj (ADR)		1,579
Kroger Co.		1,512

WEIGHTINGS AS A PERCENT OF NET ASSETS

11

Portfolio of Investments

Safeco Large-Cap Value Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—97.9%
Aerospace & Defense—1.3%
21,800		United Technologies Corp.	$	1,994
Air Freight & Logistics—0.5%
10,600		United Parcel Service, Inc. (Class B)		797
Aluminum—0.8%
37,500		Alcoa, Inc.		1,239
Application Software—0.8%
64,000	*	PeopleSoft, Inc.		1,184
Asset Management & Custody Banks—1.7%
48,900		Bank of New York Co., Inc.		1,442
24,600		State Street Corp.		1,206
Auto Parts & Equipment—0.9%
27,000		Johnson Controls, Inc.		1,441
Automobile Manufacturers—0.8%
25,000		General Motors Corp.		1,165
Broadcasting & Cable TV—0.8%
36,000		Viacom, Inc. (Class B)		1,286
Computer Hardware—2.7%
25,000	*	Dell, Inc.		895
13,300		Diebold, Inc.		703
29,400		International Business Machines Corp.		2,592
Construction & Farm Machinery & Heavy Trucks—0.5%
14,100		PACCAR, Inc.		818
Consumer Finance—2.0%
14,900		American Express Co.		766
89,700		MBNA Corp.		2,313
Department Stores—1.7%
60,300		Nordstrom, Inc.		2,569
Diversified Banks—11.2%
37,900		Bank of America Corp.		3,207
84,000		Hibernia Corp. (Class A)		2,041
59,600		Mellon Financial Corp.		1,748
145,000		U.S. Bancorp		3,996
58,000		Wachovia Corp.		2,581
60,600		Wells Fargo & Co.		3,468
Diversified Capital Markets—1.3%
51,800		J.P. Morgan Chase & Co.		2,008
Diversified Chemicals—0.8%
26,300		Du Pont (E.I.) de Nemours & Co.		1,168

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
Electric Utilities—3.5%
57,400	Exelon Corp.	$	1,911
50,000	FirstEnergy Corp.		1,870
51,400	Southern Co.		1,498
Food Distributors—0.9%
40,400	SYSCO Corp.		1,449
Forest Products—1.1%
25,500	Weyerhaeuser Co.		1,610
General Merchandise Stores—0.9%
33,100	Target Corp.		1,406
Health Care Distributors—0.8%
38,000	McKesson Corp.		1,305
Home Furnishings—1.3%
73,700	Leggett & Platt, Inc.		1,969
Home Improvement Retail—0.7%
32,300	Home Depot, Inc.		1,137
Household Products—2.6%
46,500	Kimberly-Clark Corp.		3,063
15,800	Procter & Gamble Co.		860
Housewares & Specialties—1.2%
24,100	Fortune Brands, Inc.		1,818
Industrial Conglomerates—2.6%
121,600	General Electric Co.		3,940
Industrial Gases—3.2%
38,000	Air Products and Chemicals, Inc.		1,993
72,800	Praxair, Inc.		2,905
Industrial Machinery—1.7%
9,800	Illinois Tool Works, Inc.		940
23,800	Ingersoll-Rand Co. (Class A)		1,626
Integrated Oil & Gas—10.2%
35,800	BP, plc (ADR)		1,918
60,000	ChevronTexaco Corp.		5,647
20,785	ConocoPhillips		1,586
98,812	Exxon Mobil Corp.		4,388
39,300	Royal Dutch Petroleum Co. (ADR)		2,031
Integrated Telecommunications Services—5.7%
45,000	ALLTEL Corp.		2,278
58,600	BellSouth Corp.		1,536
93,800	SBC Communications, Inc.		2,275
71,500	Verizon Communications, Inc.		2,588
Investment Banking & Brokerage—1.7%
50,000	Morgan Stanley		2,638

SEE NOTES TO FINANCIAL STATEMENTS

12

Portfolio of Investments

Safeco Large-Cap Value Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Leisure Products—0.8%
25,400		Polaris Industries, Inc.	$	1,219
Metal & Glass Containers—0.8%
16,900		Ball Corp.		1,218
Multi-Line Insurance—5.8%
40,800		Allstate Corp.		1,899
41,000		American International Group, Inc.		2,922
59,700		Hartford Financial Services Group, Inc.		4,104
Multi-Utilities & Unregulated Power—1.2%
88,000		NiSource, Inc.		1,815
Office Services & Supplies—1.0%
33,000		Pitney Bowes, Inc.		1,460
Other Diversified Financial Services—3.3%
108,300		Citigroup, Inc.		5,036
Packaged Foods & Meats—1.7%
47,900		Kraft Foods, Inc. (Class A)		1,517
48,200		Sara Lee Corp.		1,108
Pharmaceuticals—3.5%
47,500		Abbott Laboratories		1,936
51,300		Pfizer, Inc.		1,759
46,000		Wyeth		1,663
Property & Casualty Insurance—0.8%
28,691		St. Paul Travelers Cos., Inc.		1,163
Publishing—1.4%
25,600		Gannett Co., Inc.		2,172
Railroads—0.7%
19,000		Union Pacific Corp.		1,130
Real Estate Investment Trust—1.3%
21,200		Alexandria Real Estate Equities, Inc.		1,204
20,300		Liberty Property Trust		816
Restaurants—1.0%
38,900	*	YUM! Brands, Inc.		1,448
Semiconductor Equipment—0.5%
39,200	*	Applied Materials, Inc.		769
Semiconductors—2.2%
71,300		Intel Corp.		1,968
59,500		Texas Instruments, Inc.		1,439
Soft Drinks—1.6%
32,000		Coca-Cola Co.		1,615
14,000		PepsiCo, Inc.		754

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Systems Software—1.0%
52,700		Microsoft Corp.	$	1,505
Technology Distributors—0.5%
24,900	*	Agilent Technologies, Inc.		729
Thrifts & Mortgage Finance—2.9%
10,300		Federal National Mortgage Association		735
26,300		PMI Group, Inc.		1,145
65,000		Washington Mutual, Inc.		2,512
TOTAL COMMON STOCKS (cost $117,546)				149,572
CASH EQUIVALENTS—3.8%
Investment Companies
3,717,303		AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)		3,717
2,071,095		State Street Navigator Securities Lending Prime Portfolio **		2,071
TOTAL CASH EQUIVALENTS (cost $5,788)				5,788
TOTAL INVESTMENTS (cost $123,334)—101.7%			$	155,360
Other Assets, less Liabilities				(2,611	)
NET ASSETS			$	152,749

  * Non-income producing security.

** Represents invested collateral received related to $2,029,205 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-624-5711

13

Report From the Fund Managers

Safeco Multi-Cap Core Fund

As of June 30, 2004

How did the Fund perform?

The Safeco Multi-Cap Core Fund outperformed its benchmark Index, the Russell 3000^® Index, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

The market posted a modest gain during the first half of the year as the improving economy and strong corporate earnings outweighed investors’ concerns about rising rates, the conflict in Iraq and higher oil prices.

During the period, small- and mid-cap stocks outperformed large-cap stocks. In the first half of this year, the Russell 2000^® Index of small-cap stocks advanced 6.76% and the Russell Mid-Cap Index advanced 6.67% versus a 3.3% rise in the Russell 1000^® Index of large-cap issues.

We attribute our better performance in the period to the Fund’s high exposure to mid- and small-cap stocks relative to the benchmark.

What changes did you make to the Fund and why?

During the first half we continued our strategy of increasing diversification to improve the risk/reward trade-off in the Fund. We added 17 new positions, and deleted six, bringing our total number of names to 73. The additions were mostly economically sensitive companies in the mid-cap size range. The deletions were all small-cap companies which had not been performing well. We continue to seek a better balance among market capitalizations as we modestly reduce our exposure to small-caps relative to our benchmark.

Four of the five top performers for the period—Coldwater Creek, Starbucks, Expeditors International and Nordstrom—are cyclical companies. Our poor performers were either companies that had company-specific problems, like Performance Food Group, Intuit and Penwest Pharmaceutical, or stocks that retreated after a good run, like Primus Knowledge.

Bill Whitlow, CFA—Portfolio Manager/Equity Analyst

Brian Clancy, CFA—Portfolio Manager/Equity Analyst

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 8 of Notes to the Financial Statements.

14

Performance Overview & Highlights

Safeco Multi-Cap Core Fund

(Unaudited)

INVESTOR CLASS

Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	10 Year
Safeco Multi-Cap Core Fund	4.86%	25.78%	2.32%	9.53%
Russell 3000 Index	3.59%	20.46%	(1.07)%	11.66%
S&P 500 Index	3.46%	19.13%	(2.20)%	11.82%
Lipper, Inc. (Multi-Cap Core Funds)	3.34%	19.72%	1.66%	11.38%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

TOP FIVE INDUSTRIES	Percent of Net Assets
Diversified Banks	5.6	%
Pharmaceuticals	5.2
Semiconductors	4.0
Oil & Gas Exploration & Production	3.7
Electronic Equipment Manufacturers	3.6
TOP TEN COMMON STOCK HOLDINGS	Percent of Net Assets
StanCorp Financial Group, Inc. (Life & Health Insurance)	2.5	%
Tektronix, Inc. (Electronic Equipment Manufacturers)	2.5
Starbucks Corp. (Restaurants)	2.4
Expeditors International of Washington, Inc. (Air Freight & Logistics)	2.3
Nordstrom, Inc. (Department Stores)	2.3
Kroger Co. (Food Retail)	2.2
Costco Wholesale Corp. (Hypermarkets & Super Centers)	2.2
Pfizer, Inc. (Pharmaceuticals)	2.1
Microsoft Corp. (Systems Software)	2.1
U.S. Bancorp (Diversified Banks)	2.0

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
Performance Food Group Co.	$	1,388
A.G. Edwards, Inc.		1,354
Investors Financial Services Corp.		1,274
Accredo Health, Inc.		1,098
American Healthways, Inc.		1,043
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
Coldwater Creek, Inc.	$	2,028
Monaco Coach Corp.		1,267
Starbucks Corp.		1,169
Penford Corp.		1,020
Tektronix, Inc.		978

WEIGHTINGS AS A PERCENT OF NET ASSETS

15

Portfolio of Investments

Safeco Multi-Cap Core Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—98.8%
Advertising—0.8%
12,200	*	Getty Images, Inc.	$	732
Aerospace & Defense—1.3%
21,200		Northrop Grumman Corp.		1,139
Air Freight & Logistics—2.3%
42,100		Expeditors International of Washington, Inc.		2,080
Airlines—1.6%
59,800	*	Alaska Air Group, Inc.		1,428
Application Software—2.0%
126,200	*	Captaris, Inc.		815
25,900	*	Intuit, Inc.		999
Asset Management & Custody Banks—1.0%
41,900		Waddell & Reed Financial, Inc.		927
Automobile Manufacturers—1.1%
34,300	*	Monaco Coach Corp.		966
Biotechnology—2.6%
25,160	*	Amgen, Inc.		1,373
35,600	*	Dendreon Corp.		436
19,400	*	Icos Corp.		579
Broadcasting & Cable TV—1.2%
30,000		Viacom, Inc. (Class B)		1,072
Catalog Retail—1.4%
47,600	*	Coldwater Creek, Inc.		1,260
Communication Equipment—1.2%
39,600	*	F5 Networks, Inc.		1,049
Construction & Farm Machinery & Heavy Trucks—1.0%
15,750		PACCAR, Inc.		913
Consumer Finance—1.5%
52,000		MBNA Corp.		1,341
Data Processing & Outsourced Services—1.1%
26,200	*	Fiserv, Inc.		1,019
Department Stores—2.3%
48,000		Nordstrom, Inc.		2,045
Distributors—0.8%
50,200	*	Ingram Micro, Inc. (Class A)		726
Diversified Banks—5.6%
19,500		Bank of America Corp.		1,650

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Diversified Banks—(continued)
66,300		U.S. Bancorp	$	1,827
27,952		Wells Fargo & Co.		1,600
Diversified Commercial Services—0.9%
47,300	*	FTI Consulting, Inc.		780
Electronic Equipment Manufacturers—3.6%
43,400	*	FEI Co.		1,038
65,600	*	Tektronix, Inc.		2,232
Environmental Services—1.2%
37,200		Republic Services, Inc.		1,077
Food Distributors—1.2%
38,900	*	Performance Food Group Co.		1,032
Food Retail—3.0%
111,200	*	Kroger Co.		2,024
26,600	*	Safeway, Inc.		674
Health Care Distributors—1.0%
15,700		AmerisourceBergen Corp.		939
Health Care Equipment—1.5%
55,800	*	SonoSite, Inc.		1,334
Health Care Facilities—1.3%
30,600	*	Accredo Health, Inc.		1,192
Health Care Services—2.2%
41,800	*	American Healthways, Inc.		1,113
37,900		IMS Health, Inc.		888
Health Care Supplies—1.4%
19,900		Cooper Companies, Inc.		1,257
Home Furnishings—1.7%
56,700		Leggett & Platt, Inc.		1,514
Hotels, Resorts & Cruise Lines—1.4%
54,300	*	Ambassadors Group, Inc.		1,277
Hypermarkets & Super Centers—2.2%
47,200	*	Costco Wholesale Corp.		1,939
Industrial Machinery—1.6%
43,200	*	Terex Corp.		1,474
Integrated Oil & Gas—1.0%
16,400		BP, plc (ADR)		879
Integrated Telecommunications Services—3.2%
34,200		CenturyTel, Inc.		1,027
37,000		SBC Communications, Inc.		897
26,400		Verizon Communications, Inc.		955

SEE NOTES TO FINANCIAL STATEMENTS

16

Portfolio of Investments

Safeco Multi-Cap Core Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Internet Software & Services—1.9%
30,100	*	CheckFree Corp.	$	903
201,000	*	Primus Knowledge Solutions, Inc.		370
63,800	*	WatchGuard Technologies, Inc.		461
Life & Health Insurance—2.5%
33,600		StanCorp Financial Group, Inc.		2,251
Metal & Glass Containers—1.5%
18,500		Ball Corp.		1,333
Multi-Utilities & Unregulated Power—1.7%
81,900		Avista Corp.		1,509
Oil & Gas Drilling—1.7%
53,300	*	Pride International, Inc.		912
22,700		Transocean Sedco Forex, Inc.		657
Oil & Gas Exploration & Production—3.7%
20,900		Anadarko Petroleum Corp.		1,225
25,500		Apache Corp.		1,111
34,500		XTO Energy, Inc.		1,028
Other Diversified Financial Services—3.0%
38,300		A.G. Edwards, Inc.		1,303
32,200		Investors Financial Services Corp.		1,403
Personal Products—1.9%
34,200		Estee Lauder Cos., Inc. (Class A)		1,668
Pharmaceuticals—5.2%
74,700	*	Penwest Pharmaceuticals Co.		957
55,700		Pfizer, Inc.		1,909
49,400		Wyeth		1,786
Regional Banks—2.9%
83,720		Washington Banking Co.		1,247
64,100		West Coast Bancorp, Inc.		1,374
Restaurants—2.4%
50,300	*	Starbucks Corp.		2,187
Semiconductors—4.0%
64,400		Intel Corp.		1,777
65,000	*	Micron Technology, Inc.		995
147,200	*	TriQuint Semiconductor, Inc.		804
Soft Drinks—1.5%
24,500		PepsiCo, Inc.		1,320
Specialty Chemicals—1.0%
29,500		Ecolab, Inc.		935
Steel—1.1%
28,950		Schnitzer Steel Industries, Inc.		983

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Systems Software—2.6%
65,900		Microsoft Corp.	$	1,882
33,960	*	NetIQ Corp.		448
Thrifts & Mortgage Finance—1.7%
38,600		Washington Mutual, Inc.		1,492
Trading Companies & Distributors—1.3%
20,600		W.W. Grainger, Inc.		1,185
TOTAL COMMON STOCKS (cost $63,450)				88,933
CASH EQUIVALENTS—9.9%
Investment Companies
1,094,730		AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)		1,095
7,790,496		State Street Navigator Securities Lending Prime Portfolio **		7,790
TOTAL CASH EQUIVALENTS (cost $8,885)				8,885
TOTAL INVESTMENTS (cost $72,335)—108.7%			$	97,818
Other Assets, less Liabilities				(7,825	)
NET ASSETS			$	89,993

  * Non-income producing security.

** Represents invested collateral received related to $7,758,739 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-624-5711

17

Report From the Fund Manager

Safeco International Stock Fund

As of June 30, 2004

How did the Fund perform?

The Safeco International Fund underperformed its benchmark index, the MSCI EAFE Net Index, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

Against a backdrop of improved economic conditions, global equity markets posted moderate gains in most instances for the first six months of 2004. However, concern about the future sustainability of the economic improvement, peaking of the corporate profit cycle, rising interest rates, persistent geopolitical strains and the ascent in the crude oil price counteracted some of the gains in stocks.

The American and Japanese economies—the world’s largest and second largest—and China, produced much of the economic vigor. These economies also provided the tonic for the rest of the world that buoyed corporate earnings’ prospects and underpinned the equity markets’ advance.

Performance of the Fund was mixed over the first half of the year. Some of the factors that weighed on performance during 2003 persisted while others dissipated. Smaller companies continued to outperform their larger peers during the first half of 2004. This continues to negatively impact the Fund as our focus is large-cap companies.

However, encouragingly, we have begun to see a broadening out of performance in the markets. Many of the low quality, “recovery play” stocks which led the markets last year have begun to lag and high quality companies which generate consistent earnings growth have begun to come back into favor.

Lastly, the Fund was held back somewhat by its underexposure to the strongly performing Japanese market, however, as evidenced by the Fund’s increased weighting in Japan and greater Asia, we are encouraged by developments in the region.

What changes did you make to the Fund and why?

There was considerable activity in the Fund during the first half of the year, with much of the activity occurring in the Asia region. The Fund’s exposure to a particular country or sector is strictly a residual of the stock selection process; however we have identified a number of attractive investment opportunities in Japan and Asia in general.

Several Japanese financial services companies were added to the Fund including, Sumitomo Mitsui Financial Group NPV, Millea Holdings Incorporated NPV and Mitsui Sumitomo Insurance Company. The recovery in the Japanese economy continues to gain momentum and, more importantly the underlying causes appear to be more structural rather than cyclical and therefore more sustainable. Financial services companies should be among the beneficiaries of this recovery.

Similarly Hong Kong banking group Hang Seng Bank was added to the fund. Hang Seng Bank is one of the largest financial services companies in Hong Kong and is well placed to benefit from the recovery in the Hong Kong economy as well as the strong growth in mainland China where it is the largest foreign investor in any Chinese bank.

18

Report From the Fund Manager

Safeco International Stock Fund

As of June 30, 2004

During the second quarter, Japan Tobacco and Taiwan Semiconductor (TSMC) were added to the Fund. Japan Tobacco is the dominate tobacco company in Japan and owns the international rights to three of the top six global cigarette brands. There is potential for re-rating of the stock as management pursues a number of restructuring initiatives. TSMC is a global leader in the design and manufacture of integrated circuit chips. The company is well positioned to benefit from the growth in outsourcing of chip manufacturing yet trades on an attractive multiple relative to its peers and historical growth record.

Positions disposed of during the period include Lloyds TSB, Shell T&T and China Life. Shell’s announcement that it has overstated proven reserves by 20% raised a credibility issue about the management and we felt better opportunities were available elsewhere. We participated in the IPO of China Life in December of 2003. Shares in the company soared shortly thereafter making the stock look expensive in our view.

Although Lloyds TSB is the highest yielding of the U.K. banks, we had concerns regarding the sustainability of the dividend given the potential need for capital support for its insurance subsidiary, Scottish Widows. Further, we believe that other financial companies, in particular Royal Bank of Scotland and BNP Paribas (also purchased during the period) are more attractive at this time.

Bank of Ireland

Asset Management (U.S.) Limited

As of August 2, 2004, Pioneer Investment Management, Inc. was named the investment advisor to the fund. See Note 8 of Notes to the Financial Statements.

SAFECO    MUTUAL    FUNDS 1-800-624-5711

19

Performance Overview & Highlights

Safeco International Stock Fund

(Unaudited)

INVESTOR CLASS

Average Annual Total Return for the periods ended June 30, 2004	Six Month*		1 Year		5 Year		Since Inception**
Safeco International Stock Fund	2.35	%	23.29	%	(2.72	)%	2.74	%
MCSI EAFE Index	4.56	%	32.37	%	0.06	%	3.59	%
Lipper, Inc. (International Funds)	2.49	%	25.48	%	(1.31	)%	N/A
* Not annualized.
** Graph and average annual return comparison begins January 31, 1996, inception date of the Fund. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

TOP FIVE COUNTRIES	Percent of Net Assets
United Kingdom	23.5	%
Japan	17.4
Switzerland	12.2
France	9.7
Netherlands	8.3
TOP TEN COMMON STOCK HOLDINGS	Percent of Net Assets
Nestle SA (Food Retail)	3.6	%
Total SA (Integrated Oil & Gas)	3.4
Canon, Inc. (Office Electronics)	3.1
UBS AG (Investment Banking & Brokerage)	2.9
E.On AG (Electric Utilities)	2.4
ING Groep NV (Other Diversified Financial Services)	2.4
Nippon Telegraph & Telephone Corp. (Integrated Telecommunications Services)	2.2
Samsung Electronics Co., Ltd. (Electronic Equipment Manufacturers)	2.2
HSBC Holdings, plc (Diversified Banks)	2.2
Novartis AG (Pharmaceuticals)	2.2

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
Royal Bank of Scotland Group, plc	$	539
BNP Paribas SA		528
Sumitomo Mitsui Financial Group, Inc.		341
HSBC Holdings, plc		325
Japan Tobacco, Inc.		299
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
Lloyds TSB Group, plc	$	585
Shell Transport & Trading Co., plc		548
Aventis SA		169
Barclays, plc		160
Acom Co., Ltd.		149

20

Portfolio of Investments

Safeco International Stock Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
COMMON STOCKS—96.8%
Australia—2.0%
17,106	James Hardie Industries NV Building Products	$	72
10,983	National Australia Bank, Ltd. Diversified Banks		229
28,621	News Corp., Ltd. Movies & Entertainment		254
17,143	Westpac Banking Corp., Ltd. Diversified Banks		211
Canada—0.4%
3,373	Royal Bank of Canada Diversified Banks		150
Finland—1.0%
26,381	Nokia Oyj Communication Equipment		381
France—9.7%
10,172	Aventis SA Pharmaceuticals		770
18,351	Axa Multi-Line Insurance		405
8,351	BNP Paribas SA Diversified Capital Markets		515
12,334	France Telecom SA Integrated Telecommunications Services		322
3,913	Lafarge SA Construction Materials		350
6,669	Total SA Integrated Oil & Gas		1,274
Germany—5.9%
9,917	Bayer AG Diversified Chemicals		287
14,215	Bayerische Motoren Werke AG Automobile Manufacturers		630
5,007	Deutsche Bank AG Diversified Capital Markets		395
12,521	E.On AG Electric Utilities		904
Hong Kong—3.5%
32,000	Cheung Kong Holdings, Ltd. Real Estate Investment Trust		236
31,500	Esprit Holdings, Ltd. Distributors		141
19,600	Hang Seng Bank, Ltd. Regional Banks		251
91,500	Johnson Electric Holdings, Ltd. Electrical Components & Equipment		93
90,000	Li & Fung, Ltd. Distributors		132

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Hong Kong—(continued)
33,000		Sun Hung Kai Properties, Ltd. Real Estate Investment Trust	$	271
31,000		Swire Pacific, Ltd. Diversified Commercial Services		201
Ireland—1.0%
16,843		CRH, plc Construction Materials		357
Italy—3.6%
39,376		ENI SpA Integrated Oil & Gas		784
178,623		Telecom Italia SpA Integrated Telecommunications Services		557
Japan—17.4%
570		Acom Co., Ltd. Consumer Finance		37
21,900		Canon, Inc. Office Electronics		1,157
4,200		FANUC, Ltd. Electronic Equipment Manufacturers		251
15,000		Honda Motor Co., Ltd. Automobile Manufacturers		725
4,700		Hoya Corp. Health Care Supplies		493
39	*	Japan Tobacco, Inc. Tobacco		304
18		Millea Holdings, Inc. Property & Casualty Insurance		268
36		Mitsubishi Tokyo Financial Group, Inc. Diversified Banks		334
24,000		Mitsui Sumitomo Insurance, Co. Property & Casualty Insurance		226
156		Nippon Telegraph & Telephone Corp. Integrated Telecommunications Services		836
131		NTT DoCoMo, Inc. Wireless Telecommunication Services		235
10,000		RICOH Co., Ltd. Office Electronics		213
2,100		Rohm Co., Ltd. Electronic Manufacturing Services		252
9,100		Shin-Etsu Chemical Co., Ltd. Diversified Chemicals		326
14,000		Shionogi & Co., Ltd. Pharmaceuticals		241
47		Sumitomo Mitsui Financial Group, Inc. Regional Banks		323
6,600		Takeda Chemical Industries Pharmaceuticals		291

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-624-5711

21

Portfolio of Investments

Safeco International Stock Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
Netherlands—8.3%
32,257	ABN AMRO Holding NV Diversified Banks	$	707
4,265	Heineken NV Brewers		140
37,755	ING Groep NV Other Diversified Financial Services		893
22,956	Koninklijke (Royal) Philips Electronics NV Semiconductors		620
8,371	Koninklijke Ahold NV Food Retail		66
22,502	Reed Elsevier NV Publishing		317
8,558	TPG NV Air Freight & Logistics		196
4,878	VNU NV Publishing		142
Singapore—0.6%
27,000	United Overseas Bank, Ltd. Diversified Banks		211
South Korea—4.1%
3,476	Hyundai Motor Co., Ltd. (GDR) *** Automobile Manufacturers		69
20,160	Korea Electric Power Corp. (ADR) ** Electric Utilities		185
9,100	KT Corp. (ADR) ** Integrated Telecommunications Services		164
8,750	POSCO (ADR) ** Steel		293
4,044	Samsung Electronics Co., Ltd. (GDR) *** Electronic Equipment Manufacturers		835
Spain—3.0%
55,189	Banco Santander Central Hispano SA Diversified Banks		574
36,001	Telefonica SA Integrated Telecommunications Services		533
Switzerland—12.2%
5,097	Nestle SA Food Retail		1,362
18,366	Novartis AG Pharmaceuticals		812
7,081	Roche Holding AG Pharmaceuticals		702
8,980	Swiss Re Multi-Line Insurance		584
15,476	UBS AG Investment Banking & Brokerage		1,093

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Taiwan—0.6%
25,009	*	Taiwan Semiconductor Manufacturing Co., Ltd. (ADR) ** Semiconductors	$	208
United Kingdom—23.5%
79,145		Barclays, plc Diversified Banks		676
24,322		British American Tobacco, plc Tobacco		378
47,308		BT Group, plc Integrated Telecommunications Services		171
38,409		Cadbury Schweppes, plc Packaged Foods & Meats		332
54,512		Centrica, plc Gas Utilities		222
47,141		Compass Group, plc Food Retail		288
33,031		Diageo, plc Distillers & Vintners		447
9,457		Enterprise Inns, plc Restaurants		99
25,759		GlaxoSmithKline, plc Pharmaceuticals		524
6,594		GUS, plc Catalog Retail		101
55,638		HSBC Holdings, plc Diversified Banks		831
46,828		Kingfisher, plc Home Improvement Retail		244
15,215		Marks & Spencer Group, plc Department Stores		100
32,305		Prudential, plc Multi-Line Insurance		279
16,804		Reed Elsevier, plc Publishing		164
18,076		Royal Bank of Scotland Group, plc Banks (Foreign)		522
32,107		Smith & Nephew, plc Health Care Supplies		346
9,873		Smiths Group, plc Industrial Conglomerates		134
129,083		Tesco, plc Food Retail		626
19,100	*	TI Automotives, Ltd. (Illiquid) † Industrial Conglomerates		0
28,031		Tomkins, plc Industrial Machinery		140
3,668		Travis Perkins, plc Construction Materials		91
57,815		Unilever, plc Packaged Foods & Meats		569

SEE NOTES TO FINANCIAL STATEMENTS

22

Portfolio of Investments

Safeco International Stock Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
United Kingdom—(continued)
351,803	Vodafone Group, plc Wireless Telecommunication Services	$	774
6,562	Whitbread, plc Restaurants		98
27,662	Wolseley, plc Distributors		430
20,048	WPP Group, plc Advertising		204
TOTAL COMMON STOCKS (cost $27,040)			36,180
CORPORATE BONDS—0.1%
France—0.1%
1,146	Axa SA 2.40%, due 12/21/04 Multi-Line Insurance		26
TOTAL CORPORATE BONDS (cost $17)			26
TOTAL INVESTMENTS (cost $27,057)—96.9%		$	36,206
	Domestic Cash		1,047
	Foreign Cash		135
	Other Assets, less Liabilities		(21	)
			1,161
NET ASSETS		$	37,367

    * Non-income producing security.

  ** American Depository Receipt.

*** Global Depository Receipt.

    † Securities are valued at fair value as determined under supervision of the Board of Trustees.

Industry Diversification	Percent of Net Assets
Diversified Banks	10.5	%
Pharmaceuticals	8.9
Integrated Telecommunications Services	6.9
Food Retail	6.3
Integrated Oil & Gas	5.5
Automobile Manufacturers	3.8
Office Electronics	3.7
Multi-Line Insurance	3.5
Investment Banking & Brokerage	2.9
Electric Utilities	2.9
Other	45.1
	100.0	%

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-624-5711

23

Report From the Fund Managers

Safeco Balanced Fund

As of June 30, 2004

How did the Fund perform?

The Safeco Balanced Fund underperformed its benchmark—a 60/40 mix of the Russell 1000 Value and Lehman Aggregate Bond indices, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

The two dominant factors effecting performance over the past six months were the rise in interest rates in the second quarter, and the dramatic outperformance of smaller, lower-quality stocks in the first quarter. Higher interest rates caused a decline in fixed-income assets over the past three months, resulting in an essentially flat bond market over the six-month period.

Rising interest rates also had a negative impact on financial stocks, our largest equity sector. Asset allocation had a favorable impact, as 64.9% of the assets were invested in equities, which had a somewhat higher return than fixed income assets year-to-date. This allocation is toward the upper end of our allowable range of 50% to 70% equity exposure. Year-to-date both stocks and bonds lagged their respective indices. Most of the underperformance in equities occurred early in the year, when lower quality stocks performed exceptionally well.

For the year-to-date, the Fund’s best-performing sector was energy, which returned around 10%. Performance here was led by Conoco-Philips, up nearly 20%, and British Petroleum, up around 10%. This sector was up primarily due to the rise in oil prices, and the resulting improved outlook for earnings. Consumer discretionary stocks were our next best group, returning around 8%. Materials and consumer staples were our third and fourth best-performing sectors.

On the negative side, our worst sectors were technology and health care, both of which declined by around 2%. Technology was hurt primarily by a large decline in both Nokia and Texas Instruments. Nokia has been losing market share in the cell phone market, and Texas Instruments is one of their suppliers. Finance stocks, the largest sector in both our index and the Fund, were held back by the negative impact that rising interest rates are expected to have on earnings. This essentially led to flat performance for the six-month period.

The bond portion of the Fund benefited from a relatively short duration of 4.48 compared to the 4.7 duration of the Lehman Aggregate Index. This is because longer duration bonds declined more than shorter ones after rates began rising. The Fund also benefited from being underweight in Treasury securities, as Treasuries were the worst-performing sector of the bond market for the six-month period.

We were hurt in the fixed-income portion of the portfolio by being underweight in mortgages, which were the bond market’s best-performing sector. Being overweight in corporate debt also negatively impacted performance, even though we were mostly overweight in A-rated bonds, which performed better than lower-quality bonds.

What changes did you make to the Fund and why?

During the past six months, we made several changes to the equity portion of the Fund. As always, the changes were designed to own the stocks we find most attractive and to adjust sector weightings to what we believe are appropriate levels.

24

Report From the Fund Managers

Safeco Balanced Fund

As of June 30, 2004

Stocks added to the portfolio included PMI Group, Weyerhaeuser, and Polaris Industries. PMI Group, a mortgage insurer, was added because it’s a rarity among financial stocks in that rising rates should actually help earnings as the pace of refinancing slows. Weyerhaeuser, a stock we have wanted to own for some time in order to gain exposure to forest products, finally reached what we believe to be an attractive valuation. Polaris Industries is a maker of all-terrain vehicles, a market we expect will continue to experience good growth, especially as the economy improves and the outlook for jobs gets better. We also initiated positions in Allstate Insurance, Coca Cola and Illinois Tool Works, all of which we believe were selling at attractive valuations.

We eliminated holdings of Disney, which rose after receiving an unsolicited takeover offer. We also sold Eli Lilly, Anheuser-Busch and Hubbell based on valuation, as they had appreciated to levels that were very near our target prices.

We reduced our position in the finance sector, mainly to reduce our exposure during what we expect to be a period of rising interest rates. We are currently marginally underweight in finance relative to the Russell 1000 value Index. We also reduced our exposure to producer durables due to these stocks having performed very well. We do however remain overweighted in this sector by just over 2% as we expect these stocks to continue to perform well as the economy improves. We are overweight in the materials sector for the same reason, and have added to our position in this sector, primarily by buying Weyerhaeuser as discussed earlier. We also added to our exposure to what Russell calls “other” (primarily includes multi-industry companies, such as GE), as this sector went from 1.6% to 6.6% of the index at the June re-configuration.

In the fixed income portion of the Fund, over the past six months we increased our holdings in corporate debt, where we are overweight. We also added to our holdings in government debt, while decreasing the portion of the assets invested in mortgages. We also reduced the duration of the bonds, and currently have a lower duration than the index.

Rex Bentley, CFA—Portfolio Manager/Equity Analyst

Lynette Sagvold, CFA—Portfolio Manager/Equity Analyst

Lesley Fox—Portfolio Manager

Gregory Card, CFA—Portfolio Manager

Tim Hokari—Portfolio Manager

Nancy McFadden, CFA—Portfolio Manager

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 8 of Notes to the Financial Statements.

SAFECO    MUTUAL    FUNDS 1-800-624-5711

25

Performance Overview & Highlights

Safeco Balanced Fund

(Unaudited)

INVESTOR CLASS

Average Annual Total Return for the periods ended June 30, 2004	Six Month*		1 Year		5 Year		Since Inception**
Safeco Balanced Fund	1.05	%	9.97	%	1.78	%	6.28	%
60% Russell 1000 Value/40% Lehman Brothers Aggregate Bond Index	2.42	%	12.81	%	3.90	%	8.90	%
S&P 500 Index	3.46	%	19.13	%	(2.20	)%	8.90	%
Lipper, Inc. (Balanced Funds)	1.79	%	11.65	%	1.67	%	N/A
* Not annualized. ** Graph and average annual return comparison begins January 31, 1996, inception date of the Fund. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

TOP FIVE INDUSTRIES (Common Stocks)	Percent of Net Assets
Diversified Banks	7.6	%
Integrated Oil & Gas	6.7
Integrated Telecommunications Services	3.9
Multi-Line Insurance	3.8
Electric Utilities	2.3
TOP TEN COMMON STOCK HOLDINGS	Percent of Net Assets
ChevronTexaco Corp. (Integrated Oil & Gas)	2.3	%
Exxon Mobil Corp. (Integrated Oil & Gas)	2.3
Citigroup, Inc. (Other Diversified Financial Services)	2.2
U.S. Bancorp (Diversified Banks)	1.8
Hartford Financial Services Group, Inc. (Multi-Line Insurance)	1.7
General Electric Co. (Industrial Conglomerates)	1.6
Wells Fargo & Co. (Diversified Banks)	1.5
Bank of America Corp. (Diversified Banks)	1.4
Kimberly-Clark Corp. (Household Products)	1.3
American International Group, Inc. (Multi-Line Insurance)	1.3

TOP FIVE PURCHASES (Common Stocks) For the Period Ended June 30, 2004	Cost (000’s)
MBNA Corp.	$	210
Mellon Financial Corp.		172
Air Products and Chemicals, Inc.		168
Allstate Corp.		157
General Electric Co.		144
TOP FIVE SALES (Common Stocks) For the Period Ended June 30, 2004	Proceeds (000’s)
Travelers Property Casualty Corp. (Class B)	$	172
Kroger Co.		133
American Express Co.		131
United Parcel Service, Inc. (Class B)		129
Costco Wholesale Corp.		117

WEIGHTINGS AS A PERCENT OF NET ASSETS

26

Portfolio of Investments

Safeco Balanced Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—65.1%
Aerospace & Defense—1.0%
2,100		United Technologies Corp.	$	192
Air Freight & Logistics—0.3%
900		United Parcel Service, Inc. (Class B)		68
Aluminum—0.5%
3,200		Alcoa, Inc.		106
Application Software—0.5%
5,500	*	PeopleSoft, Inc.		102
Asset Management & Custody Banks—1.2%
4,900		Bank of New York Co., Inc.		145
1,700		State Street Corp.		83
Auto Parts & Equipment—0.6%
2,300		Johnson Controls, Inc.		123
Automobile Manufacturers—0.5%
2,200		General Motors Corp.		103
Broadcasting & Cable TV—0.5%
3,000		Viacom, Inc. (Class B)		107
Computer Hardware—1.8%
1,900	*	Dell, Inc.		68
1,100		Diebold, Inc.		58
2,500		International Business Machines Corp.		220
Construction & Farm Machinery & Heavy Trucks—0.4%
1,200		PACCAR, Inc.		70
Consumer Finance—1.4%
1,300		American Express Co.		67
7,700		MBNA Corp.		199
Department Stores—1.2%
5,300		Nordstrom, Inc.		226
Diversified Banks—7.6%
3,300		Bank of America Corp.		279
7,300		Hibernia Corp. (Class A)		177
5,100		Mellon Financial Corp.		150
12,820		U.S. Bancorp		353
5,000		Wachovia Corp.		223
5,200		Wells Fargo & Co.		298
Diversified Capital Markets—1.0%
5,100		J.P. Morgan Chase & Co.		198
Diversified Chemicals—0.5%
2,200		Du Pont (E.I.) de Nemours & Co.		98

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
Electric Utilities—2.3%
4,800	Exelon Corp.	$	160
4,200	FirstEnergy Corp.		157
4,400	Southern Co.		128
Food Distributors—0.6%
3,400	SYSCO Corp.		122
Forest Products—0.8%
2,400	Weyerhaeuser Co.		151
General Merchandise Stores—0.6%
2,800	Target Corp.		119
Health Care Distributors—0.6%
3,100	McKesson Corp.		106
Home Furnishings—0.9%
6,300	Leggett & Platt, Inc.		168
Home Improvement Retail—0.5%
2,700	Home Depot, Inc.		95
Household Products—1.8%
3,900	Kimberly-Clark Corp.		257
1,800	Procter & Gamble Co.		98
Industrial Conglomerates—1.6%
9,700	General Electric Co.		314
Industrial Gases—2.1%
3,200	Air Products and Chemicals, Inc.		168
6,200	Praxair, Inc.		247
Industrial Machinery—1.2%
800	Illinois Tool Works, Inc.		77
2,400	Ingersoll-Rand Co. (Class A)		164
Integrated Oil & Gas—6.7%
2,400	BP, plc (ADR)		129
4,700	ChevronTexaco Corp.		442
1,801	ConocoPhillips		137
9,876	Exxon Mobil Corp.		439
3,000	Royal Dutch Petroleum Co. (ADR)		155
Integrated Telecommunications Services—3.9%
4,100	ALLTEL Corp.		208
5,000	BellSouth Corp.		131
7,900	SBC Communications, Inc.		192
6,114	Verizon Communications, Inc.		221
Investment Banking & Brokerage—1.0%
3,500	Morgan Stanley		185
Leisure Products—0.5%
2,200	Polaris Industries, Inc.		106

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-624-5711

27

Portfolio of Investments

Safeco Balanced Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Metal & Glass Containers—0.5%
1,400		Ball Corp.	$	101
Multi-Line Insurance—3.8%
3,500		Allstate Corp.		163
3,500		American International Group, Inc.		249
4,800		Hartford Financial Services Group, Inc.		330
Multi-Utilities & Unregulated Power—0.8%
7,700		NiSource, Inc.		159
Office Services & Supplies—0.7%
2,900		Pitney Bowes, Inc.		128
Other Diversified Financial Services—2.2%
9,300		Citigroup, Inc.		432
Packaged Foods & Meats—1.2%
4,400		Kraft Foods, Inc. (Class A)		139
4,100		Sara Lee Corp.		94
Pharmaceuticals—2.2%
3,900		Abbott Laboratories		159
4,380		Pfizer, Inc.		150
3,400		Wyeth		123
Property & Casualty Insurance—0.5%
2,427		St. Paul Travelers Cos., Inc.		98
Publishing—1.0%
2,200		Gannett Co., Inc.		187
Railroads—0.5%
1,600		Union Pacific Corp.		95
Real Estate Investment Trust—1.1%
2,500		Alexandria Real Estate Equities, Inc.		142
1,700		Liberty Property Trust		68
Restaurants—0.6%
3,300	*	YUM! Brands, Inc.		123
Semiconductor Equipment—0.4%
3,700	*	Applied Materials, Inc.		73
Semiconductors—1.5%
6,100		Intel Corp.		168
5,100		Texas Instruments, Inc.		123
Soft Drinks—1.0%
2,700		Coca-Cola Co.		136
1,200		PepsiCo, Inc.		65
Systems Software—0.7%
4,500		Microsoft Corp.		129

SHARES OR PRINCIPAL AMOUNT				Value (000’s)
	Technology Distributors—0.4%
	2,500	*	Agilent Technologies, Inc.	$	73
	Thrifts & Mortgage Finance—1.9%
	900		Federal National Mortgage Association		64
	2,300		PMI Group, Inc.		100
	5,550		Washington Mutual, Inc.		214
	TOTAL COMMON STOCKS (cost $10,726)				12,674
	CORPORATE BONDS—10.2%
	Aerospace & Defense—0.5%
$	80,000		Honeywell International, Inc. 7.50%, due 3/01/10		91
	Agricultural Products—0.2%
	35,000		Unilever Capital Corp. 7.125%, due 11/01/10		39
	Apparel Retail—0.1%
	15,000		Nordstrom, Inc. 5.625%, due 1/15/09		16
	Automobile Manufacturers—0.4%
	80,000		Ford Motor Co. 7.25%, due 10/01/08		85
	Brewers—0.2%
	35,000	#	Miller Brewing Co. (144A) 5.50%, due 8/15/13 (acquired 11/19 /03) (cost $35,882)		35
	Broadcasting & Cable TV—0.4%
	80,000		Comcast Corp. 5.30%, due 1/15/14		77
	Computer Hardware—0.3%
	65,000		International Business Machines Corp. 1.535%, due 9/10/04		65
	Construction & Farm Machinery & Heavy Trucks—0.3%
	70,000		John Deere Capital Corp. 2.16%, due 9/17/04		70
	Diversified Banks—1.0%
	35,000		HSBC Bank USA 4.625%, due 4/01/14		33
	80,000		International Bank for Reconstruction & Development 4.375%, due 9/28/06		82
	30,000		U.S. Bancorp 3.125%, due 3/15/08		29

SEE NOTES TO FINANCIAL STATEMENTS

28

Portfolio of Investments

Safeco Balanced Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT				Value (000’s)
	Diversified Banks—(continued)
$	50,000		Wachovia Corp. 5.00%, due 8/15/15	$	48
	Electric Utilities—0.5%
	15,000		Dominion Resources, Inc. 6.25%, due 6/30/12		16
	40,000		PSEG Power LLC 6.95%, due 6/01/12		43
	35,000		Southern California Edison Co. 8.00%, due 2/15/07		39
	Fertilizers & Agricultural Chemicals—0.1%
	30,000		Potash Corp. of Saskatchewan, Inc. 4.875%, due 3/01/13		29
	Forest Products—0.0%
	12,000		Weyerhaeuser Co. 5.50%, due 3/15/05		12
	Housewares & Specialties—0.2%
	35,000		Newell Rubbermaid, Inc. 4.625%, due 12/15/09		35
	Integrated Oil & Gas—0.5%
	65,000		Pemex Project Funding Master Trust 9.125%, due 10/13/10		74
	15,000		USX Corp. 6.85%, due 3/01/08		16
	Integrated Telecommunications Services—0.6%
	25,000		Verizon Global Funding Corp. 7.375%, due 9/01/12		28
	85,000		Verizon Wireless Capital LLC 5.375%, due 12/15/06		89
	Investment Banking & Brokerage—0.4%
	30,000		Goldman Sachs Group, Inc. 4.125%, due 1/15/08		30
	30,000		J.P. Morgan Chase & Co., Inc. 4.50%, due 11/15/10		29
	25,000		Morgan Stanley 6.60%, due 4/01/12		27
	Life & Health Insurance—0.7%
	65,000	#	Jackson National Life Global Funding, LLC (144A) 1.5975%, due 3/11/05 (acquired 9/05/02) (cost $65,000)		65
	70,000		Lincoln National Corp. 5.25%, due 6/15/07		73
	Movies & Entertainment—0.2%
	30,000		Time Warner, Inc. 6.75%, due 4/15/11		32

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
	Multi-Utilities & Unregulated Power—0.4%
$	75,000	Avista Corp. 7.75%, due 1/01/07	$	81
	Oil & Gas Refining, Marketing & Transportation—0.2%
	40,000	Kinder Morgan Energy Partners, L.P. 6.75%, due 3/15/11		43
	Other Diversified Financial Services—1.2%
	50,000	American Express Co. 4.875%, due 7/15/13		49
	30,000	Citigroup, Inc. 7.25%, due 10/01/10		34
	80,000	General Electric Capital Corp. 5.45%, due 1/15/13		81
	25,000	Household Finance Corp. 7.875%, due 3/01/07		28
	35,000	Lehman Brothers Holdings, Inc. 4.375%, due 11/30/10		34
	Regional Banks—0.2%
	40,000	KeyCorp 2.75%, due 2/27/07		39
	Soft Drinks—0.2%
	35,000	Bottling Group, LLC 5.00%, due 11/15/13		34
	Specialized Finance—0.8%
	75,000	General Motors Acceptance Corp. 6.125%, due 9/15/06		78
	65,000	National Rural Utilities Cooperative Finance Corp. 7.25%, due 3/01/12		74
	Thrifts & Mortgage Finance—0.4%
	70,000	Countrywide Home Loans, Inc. 3.50%, due 12/19/05		71
	Wireless Telecommunication Services—0.2%
	35,000	Vodafone Group, plc (ADR) 5.00%, due 12/16/13		34
	TOTAL CORPORATE BONDS (cost $1,955)			1,987
	ASSET BACKED SECURITIES—0.5%
	Consumer Finance—0.5%
	36,078	Americredit Automobile Receivables Trust 1.39%, due 12/12/07		36
	70,000	MBNA Credit Card Master Note Trust 1.25%, due 12/15/08		70
	TOTAL ASSET BACKED SECURITIES (cost $106)			106

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-624-5711

29

Portfolio of Investments

Safeco Balanced Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
	COLLATERALIZED MORTGAGE OBLIGATIONS—1.4%
	Commercial—0.1%
$	25,346	Asset Securitization Corp. 7.32%, due 1/13/30	$	26
	Residential—0.4%
	80,000	Washington Mutual, Inc. 4.10%, due 10/25/33		78
	U.S. Government Agency Obligations—0.9%
	50,000	Freddie Mac 3.50%, due 9/15/10		50
	110,000	Freddie Mac 6.00%, due 4/15/32		114
	TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (cost $273)			268
	U.S. GOVERNMENT AGENCY— MORTGAGE BACKED SECURITIES—7.6%
	Federal National Mortgage Association (FNMA)—7.1%
	151,887	4.816%, due 12/01/12		151
	228,207	5.00%, due 12/01/17		229
	165,006	5.00%, due 3/01/33		160
	121,297	5.50%, due 2/01/18		125
	72,792	5.50%, due 7/01/23		74
	85,142	5.50%, due 9/01/17		87
	64,414	6.00%, due 1/01/29		66
	84,718	6.00%, due 3/01/33		87
	79,908	6.00%, due 8/01/32		82
	26,663	6.00%, due 9/01/29		27
	23,045	6.50%, due 1/01/15		24
	73,670	6.50%, due 7/01/29		77
	29,768	7.00%, due 3/01/12		32
	8,740	8.00%, due 1/01/31		10
	13,531	8.00%, due 10/01/30		15
	24,241	8.00%, due 2/01/29		27
	5,949	8.00%, due 2/01/30		6
	71,889	8.00%, due 3/01/31		78
	14,603	8.00%, due 4/01/20		16
	5,922	8.00%, due 4/01/30		6
	5,565	8.00%, due 5/01/31		6
	5,333	8.00%, due 7/01/30		6
	Government National Mortgage Association (GNMA)—0.5%
	6,768	6.00%, due 4/15/14		7
	33,573	6.00%, due 8/15/13		35
	25,595	7.00%, due 4/15/28		27

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
	Government National Mortgage Association (GNMA)—(continued)
$	6,137	7.00%, due 8/15/28	$	7
	14,310	7.75%, due 11/15/29		15
	TOTAL U.S. GOVERNMENT AGENCY— MORTGAGE BACKED SECURITIES (cost $1,467)			1,482
	U.S. GOVERNMENT & AGENCY OBLIGATIONS—12.0%
	U.S. Government Agency Obligations—8.0%
	100,000	Fannie Mae (Unsecured Note) 5.24%, due 8/07/18		97
	190,000	Fannie Mae 2.87724%, due 2/17/09		189
	145,000	Federal Home Loan Bank (Unsecured Bond) 3.625%, due 11/14/08		143
	65,000	Federal Home Loan Bank (Unsecured Bond) 3.875%, due 6/14/13		60
	320,000	Federal Home Loan Mortgage Corp. (Unsecured Note) 3.34%, due 6/09/10		300
	345,000	Federal Home Loan Mortgage Corp. (Unsecured Note) 3.50%, due 2/13/08		342
	205,000	Federal Home Loan Mortgage Corp. (Unsecured Note) 4.00%, due 6/12/13		187
	110,000	Freddie Mac (Unsecured Note) 4.00%, due 12/30/13		100
	140,000	Freddie Mac (Unsecured Note) 5.20%, due 3/05/19		132
	U.S. Treasury Notes—4.0%
	110,000	2.375%, due 8/15/06		109
	100,000	3.125%, due 10/15/08		98
	75,000	5.50%, due 8/15/28		76
	100,000	7.00%, due 7/15/06		108
	100,000	7.125%, due 2/15/23		121
	220,000	U.S. Treasury Inflation Index Note 3.50%, due 1/15/11		264
	TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (cost $2,369)			2,326

SEE NOTES TO FINANCIAL STATEMENTS

30

Portfolio of Investments

Safeco Balanced Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
	MUNICIPAL BONDS—0.4%
	Electric Utilities—0.4%
$	70,000	California State Department of Water Resources Supply Revenue 4.33%, due 5/01/06	$	71
	TOTAL MUNICIPAL BONDS (cost $70)			71
	CASH EQUIVALENTS—3.4%
	Investment Companies
	587,122	AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)		587
	68,850	State Street Navigator Securities Lending Prime Portfolio **		69
	TOTAL CASH EQUIVALENTS (cost $656)			656
	TOTAL INVESTMENTS (cost $17,622)—100.6%		$	19,570
	Other Assets, less Liabilities			(111	)
	NET ASSETS		$	19,459

  * Non-income producing security.

** Represents invested collateral received related to $68,357 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

  # Securities are exempt from registration and restricted as to resale only to dealers, or through a dealer to a “qualified institutional buyer” as permitted under Rule 144A of the Securities Act of 1933. The total cost of such securities is $101,000 and the total value is $100,000 or 0.5% of net assets.

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-624-5711

31

Report From the Fund Manager

Safeco Small-Cap Value Fund

As of June 30, 2004

How did the Fund perform?

Overall the Fund essentially matched the performance of our benchmark Russell 2000 Value index for the six-month period ending June 30, 2004. All the positive contributions took place in the first quarter, and then the small-cap market seesawed down and up from April through June. In retrospect, the first few months were a continuation of the “take off” phase of the market cycle that began last March. The April/May timeframe saw the first significant correction since that rally began.

What factors impacted the Fund’s performance?

Market leadership by higher quality stocks has continued, following a trend that began in the fourth quarter of last year. I define high quality as companies with stock prices above $5 per share, with positive earnings, low P/E ratios versus the universe, and market capitalization above $250 million.

This trend helped the Fund, since it owns stocks all across the small-cap-size spectrum and the weighted average tends towards the middle of the small-cap-size range. Also, the Fund has less of its assets invested in companies that are not currently more profitable than the index, and we didn’t have much exposure to under-$5 price stocks.

In early April, one single government report of job growth was all it took to crystallize the market’s worry that the Federal Reserve would start raising short-term interest rates. This precipitated a fast and steep correction in the Fund’s most interest-rate-sensitive stocks. Those stocks have made a partial recovery since then.

What changes did you make to the Fund and why?

I added new stocks, which I believed were not discounting their full potential or had not participated in the “lift off” phase of the early market cycle. From the March 2003 bottom, the entire market experienced a “rising tide” effect. That effect has run its course, and so I’ve tried to find stocks that represent value opportunities in the traditional sense of the word.

For example, Pacer International was bought on price weakness after I had multiple meetings with management to cement an understanding of their business. Pacer arranges for the transportation of ocean freight containers by reselling space on the railroads in a service called the Stack Train. They produce significant free cash flow, but their service offering is aligned with the Union Pacific and CSX railroads, and those companies are experiencing a period of poor service quality that has temporarily hurt Pacer. In time this will change. However, Pacer’s stock was down based on the current view of conditions, not what they’ll be in the future. The future is where I see the stock’s opportunity.

I also exited positions that I believe have run their course, or have taken a turn for the worse. Examples of the former include the last of the utility preferred stocks in the Fund. An example of the latter would be the company Osteotech, which abandoned one of its product lines in January, calling into doubt its growth prospects and valuation. I was fortunate to exit the stock before the worst of the damage was done.

I continue to believe stocks with traditional “value” characteristics, in terms of their overall valuation and free cash flow generation, are a successful strategy to own for the long term. I am a believer in owning stocks that are priced cheaper than the overall market, and that have sustainable businesses and cash flows. I think the Fund is currently positioned this way.

Greg Eisen, CFA—Portfolio Manager/Equity Analyst

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 8 of Notes to the Financial Statements.

32

Performance Overview & Highlights

Safeco Small-Cap Value Fund

(Unaudited)

INVESTOR CLASS

Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	Since Inception**
Safeco Small-Cap Value Fund	7.82%	31.58%	14.80%	10.05%
Russell 2000 Value Index	7.83%	35.17%	12.82%	13.26%
Lipper, Inc. (Small-Cap Value Funds)	8.15%	34.14%	13.08%	N/A
* Not annualized.
** Graph and average annual return comparison begins January 31, 1996, inception date of the Fund. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

TOP FIVE INDUSTRIES	Percent of Net Assets
Real Estate Investment Trust	6.7	%
Specialty Stores	6.4
Regional Banks	5.9
Trucking	5.3
Consumer Finance	4.8
TOP TEN COMMON STOCK HOLDINGS	Percent of Net Assets
World Fuel Services Corp. (Integrated Oil & Gas)	3.3	%
Lone Star Technologies, Inc. (Oil & Gas Equipment & Services)	2.9
Cash America International, Inc. (Consumer Finance)	2.5
Imation Corp. (Computer Storage & Peripherals)	2.5
Foot Locker, Inc. (Specialty Stores)	2.4
Champion Enterprises, Inc. (Homebuilding)	2.4
AmeriCredit Corp. (Consumer Finance)	2.3
Precision Castparts Corp. (Diversified Metals & Mining)	2.3
Hollywood Entertainment Corp. (Specialty Stores)	2.3
Insight Enterprises, Inc. (Catalog Retail)	2.2

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
Champion Enterprises, Inc.	$	1,534
Pacer International, Inc.		1,371
Apollo Investment Corp.		1,188
Hanger Orthopedic Group, Inc.		1,149
Impac Mortgage Holdings, Inc.		1,134
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
Pacific Crest Capital, Inc.	$	1,310
Nordic American Tanker Shipping, Ltd.		1,003
Isle of Capri Casinos, Inc.		731
Furniture Brands International, Inc.		721
SonoSite, Inc.		680

WEIGHTINGS AS A PERCENT OF NET ASSETS

33

Portfolio of Investments

Safeco Small-Cap Value Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—93.4%
Aerospace & Defense—1.4%
31,400	*	United Defense Industries, Inc.	$	1,099
Application Software—0.0%
3	*	Versata, Inc.		0
Asset Management & Custody Banks—1.5%
83,800	*	Apollo Investment Corp.		1,154
Casinos & Gaming—2.2%
49,200	*	Ameristar Casinos, Inc.		1,652
Catalog Retail—2.2%
96,900	*	Insight Enterprises, Inc.		1,721
Commercial Printing—1.4%
36,600	*	Valassis Communications, Inc.		1,115
Communication Equipment—3.0%
28,300		Black Box Corp.		1,337
23,600	*	Plantronics, Inc.		993
Computer Storage & Peripherals—3.8%
116,000	*	Hypercom Corp.		980
44,800	*	Imation Corp.		1,909
Construction & Engineering—3.9%
76,600	*	Astec Industries, Inc.		1,442
55,500		URS Corp.		1,521
Construction Materials—1.2%
22,025		Florida Rock Industries, Inc.		929
Consumer Finance—4.8%
92,100	*	AmeriCredit Corp.		1,799
83,200		Cash America International, Inc.		1,914
Diversified Metals & Mining—2.3%
32,500		Precision Castparts Corp.		1,777
Electric Utilities—1.5%
42,000		IDACORP, Inc.		1,134
Electronic Equipment Manufacturers—1.8%
47,200	*	Benchmark Electronics, Inc.		1,373
Environmental Services—1.1%
18,800		Landauer, Inc.		840
Health Care Facilities—1.4%
93,700	*	Hanger Orthopedic Group, Inc.		1,098
Health Care Services—1.7%
44,900	*	National Dentex Corp.		1,301

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Home Furnishings—0.5%
14,700		Furniture Brands International, Inc.	$	368
Home Improvement Retail—1.5%
60,500		Building Materials Holding Corp.		1,145
Homebuilding—3.8%
10,900	*	Beazer Homes USA, Inc.		1,093
196,900	*	Champion Enterprises, Inc.		1,807
Integrated Oil & Gas—3.3%
56,400		World Fuel Services Corp.		2,543
Investment Banking & Brokerage—1.6%
81,800		SWS Group, Inc.		1,252
Life & Health Insurance—1.7%
19,600		StanCorp Financial Group, Inc.		1,313
Oil & Gas Equipment & Services—4.2%
105,700	*	Key Energy Services, Inc.		998
80,400	*	Lone Star Technologies, Inc.		2,216
Packaged Foods & Meats—0.7%
13,600		Lancaster Colony Corp.		566
Photographic Products—0.7%
159,200	*	Concord Camera Corp.		525
Property & Casualty Insurance—4.6%
22,500		First American Corp.		583
74,000	*	Ohio Casualty Corp.		1,490
40,800		RLI Corp.		1,489
Real Estate Investment Trust—6.7%
23,000		Alexandria Real Estate Equities, Inc.		1,306
23,900		Camden Property Trust		1,095
46,300		First Potomac Realty Trust		888
72,800		Hanover Capital Mortgage Holdings, Inc.		856
43,200		Impac Mortgage Holdings, Inc.		973
Regional Banks—5.9%
58,200		Central Pacific Financial Corp.		1,601
47,600		Greater Bay Bancorp		1,376
38,829		Hanmi Financial Corp.		1,145
13,115		Provident Bankshares Corp.		378
Restaurants—0.9%
24,200	*	Jack in the Box, Inc.		719

SEE NOTES TO FINANCIAL STATEMENTS

34

Portfolio of Investments

Safeco Small-Cap Value Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Semiconductors—1.5%
166,600	*	Lattice Semiconductor Corp.	$	1,168
Specialty Chemicals—1.7%
60,900		Sensient Technologies Corp.		1,308
Specialty Stores—6.4%
76,100		Foot Locker, Inc.		1,852
129,500	*	Hollywood Entertainment Corp.		1,730
29,800		Regis Corp.		1,329
Steel—1.5%
32,850		Schnitzer Steel Industries, Inc.		1,116
Technology Distributors—1.8%
41,600	*	Anixter International, Inc.		1,416
Thrifts & Mortgage Finance—2.5%
30,700	*	BankUnited Financial Corp. (Class A)		792
30,840		PFF Bancorp, Inc.		1,148
Tobacco—1.4%
20,900		Universal Corp.		1,065
Trucking—5.3%
27,100		Arkansas Best Corp.		892
32,000	*	Landstar System, Inc.		1,692
1,100	*	Overnite Corp.		32
77,400	*	Pacer International, Inc.		1,432
TOTAL COMMON STOCKS (cost $52,077)				71,785
INDEXED SECURITIES—3.6%
Indexed Securities—3.6%
16,100		iShares Russell 2000 Value Index Fund		2,769
TOTAL INDEXED SECURITIES (cost $2,647)				2,769

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
CASH EQUIVALENTS—27.5%
Investment Companies
2,488,753	AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)	$	2,489
18,644,211	State Street Navigator Securities Lending Prime Portfolio **		18,644
TOTAL CASH EQUIVALENTS (cost $21,133)			21,133
TOTAL INVESTMENTS (cost $75,857)—124.5%		$	95,687
Other Assets, less Liabilities			(18,858	)
NET ASSETS		$	76,829

  * Non-income producing security.

** Represents invested collateral received related to $18,409,097 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-624-5711

35

Report From the Fund Managers

Safeco Large-Cap Growth Fund

As of June 30, 2004

How did the Fund perform?

For the six-month period ending June 30, 2004, the Safeco Large-Cap Growth Fund underperformed its benchmark, the Russell 1000 Growth Index.

The Fund’s performance since inception in late 2001 also trails its benchmark, although the majority of the Fund’s underperformance since inception occurred in calendar year 2003, when smaller stocks with no earnings and speculative characteristics significantly outperformed the overall market. Conversely, stocks with better fundamentals such as high levels of profitability and balance sheet strength underperformed in 2003. This provided a major headwind to our quality investment style. While volatile conditions may persist near term, we believe that we are in the midst of a transitional phase, into an environment in which investors again return to high quality large cap stocks with sustainable growth characteristics.

What factors impacted the Fund’s performance?

Many companies have been demonstrating very strong fundamentals and exceptional earnings growth. Returns have been muted, however, due in part to investor anxieties regarding inflation, rising interest rates, slowing growth in China, the Iraqi Government transition, terrorism, near record oil prices and the upcoming presidential election.

Returns were helped most by internet software and services holdings, while the largest detractors from returns came from software. Individual stocks that had a major impact on performance included:

• Yahoo! Inc. appreciated by 62% over the half-year, helped by increases in paid search activity and online advertising, along with a growing user base.

• Avon Products was also a top performer, benefiting from growth in developing markets such as central/eastern Europe, Latin America, and China.

• Software storage firm Veritas lost 25% over the period, and recently announced that revenues and earnings would come in below investor expectations. We trimmed our holding in the stock and are monitoring developments closely.

What changes did you make to the Fund and why?

The relatively flat first half returns masked an erratic period in which market leadership shifted frequently between cyclical and defensive areas of the market. Since the beginning of the year, we reduced our holdings of technology stocks, and the Fund is now slightly underweight in technology. We also took profits in some areas of health care, notably in health care equipment and supplies. Some proceeds were re-deployed into biotechnology. The Fund’s largest position remained with the global, research-based pharmaceutical firm, Pfizer Inc.

Energy was one of the best performing segments in the Fund, appreciating by over 25%. We continue to like the operating environment for several energy and oil services companies, which are indirectly benefiting from high oil and gas prices, limited supply growth and increasing demand associated with the global economic recovery. Accordingly, we added to this sector over the period, and hold an overweight position here.

RCM Capital Management LLC, formerly Dresdner RCM Global Investors LLC acts as an investment sub-advisor to the Safeco Large-Cap Growth Fund.

Peter Goetz, MBA, CFA—Portfolio Manager

Seth A. Reicher, CFA—Portfolio Manager

As of August 2, 2004, Pioneer Investment Management, Inc. was named investment advisor to the fund. See Note 8 of Notes to the Financial Statements.

36

Performance Overview & Highlights

Safeco Large-Cap Growth Fund

(Unaudited)

INVESTOR CLASS

Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	Since Inception**
Safeco Large-Cap Growth Fund	0.65%	10.77%	(2.30)%
Russell 1000 Growth Index	2.74%	17.88%	1.91%
Lipper, Inc. (Large-Cap Growth Funds)	2.35%	15.56%	N/A
* Not annualized.
** Total return comparison begins October 31, 2001, inception date of the Fund. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

TOP FIVE INDUSTRIES	Percent of Net Assets
Pharmaceuticals	12.4	%
Industrial Conglomerates	6.3
Systems Software	6.3
Communication Equipment	5.1
Internet Software & Services	4.5
TOP TEN COMMON STOCK HOLDINGS	Percent of Net Assets
Pfizer, Inc. (Pharmaceuticals)	5.4	%
Intel Corp. (Semiconductors)	3.4
Cisco Systems, Inc. (Communication Equipment)	3.3
Minnesota Mining & Manufacturing Co. (Industrial Conglomerates)	3.3
Yahoo!, Inc. (Internet Software & Services)	3.3
General Electric Co. (Industrial Conglomerates)	3.0
Wal-Mart Stores, Inc. (General Merchandise Stores)	2.6
Dell, Inc. (Computer Hardware)	2.6
Procter & Gamble Co. (Household Products)	2.4
Microsoft Corp. (Systems Software)	2.2

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
Paychex, Inc.	$	123
Guidant Corp.		122
International Game Technology, Inc.		115
Coca-Cola Co.		114
Agilent Technologies, Inc.		104
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
St. Jude Medical, Inc.	$	117
Lowe’s Companies, Inc.		113
General Electric Co.		93
Agilent Technologies, Inc.		76
Microsoft Corp.		75

WEIGHTINGS AS A PERCENT OF NET ASSETS

37

Portfolio of Investments

Safeco Large-Cap Growth Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—97.4%
Aerospace & Defense—1.0%
750		United Technologies Corp.	$	69
Air Freight & Logistics—1.5%
1,350		United Parcel Service, Inc. (Class B)		101
Apparel, Accessories & Luxury Goods—1.1%
1,600	*	Coach, Inc.		72
Application Software—1.1%
1,700		SAP AG (ADR)		71
Asset Management & Custody Banks—1.0%
1,300		Franklin Resources, Inc.		65
Biotechnology—3.9%
2,300	*	Amgen, Inc.		125
1,050	*	Biogen Idec, Inc.		66
1,150	*	Genentech, Inc.		65
Broadcasting & Cable TV—1.1%
2,100		Viacom, Inc. (Class B)		75
Casinos & Gaming—1.5%
2,600	*	International Game Technology, Inc.		100
Communication Equipment—5.1%
9,300	*	Cisco Systems, Inc.		220
5,100	*	Corning, Inc.		67
1,850	*	Juniper Networks, Inc.		45
Computer Hardware—2.6%
4,700	*	Dell, Inc.		168
Data Processing & Outsourced Services—1.1%
2,100		Paychex, Inc.		71
Diversified Banks—1.5%
1,450		Mellon Financial Corp.		43
1,300		Wachovia Corp.		58
Diversified Commercial Services—1.8%
900	*	Apollo Group, Inc. (Class A)		79
800	*	Career Education Corp.		36
Drug Retail—1.6%
2,900		Walgreen Co.		105
Food Distributors—1.2%
2,200		SYSCO Corp.		79
Footwear—1.5%
1,300		NIKE, Inc. (Class B)		98

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
General Merchandise Stores—2.6%
3,200		Wal-Mart Stores, Inc.	$	169
Health Care Equipment—3.3%
1,400	*	Boston Scientific Corp.		60
550		Guidant Corp.		31
2,600		Medtronic, Inc.		127
Hotels, Resorts & Cruise Lines—1.2%
1,650		Carnival Corp.		78
Household Products—2.4%
2,900		Procter & Gamble Co.		158
Industrial Conglomerates—6.3%
6,200		General Electric Co.		201
2,400		Minnesota Mining & Manufacturing Co.		216
Industrial Gases—0.6%
700		Air Products and Chemicals, Inc.		37
Industrial Machinery—2.9%
1,900		Danaher Corp.		99
1,300		Ingersoll-Rand Co. (Class A)		89
Insurance Brokers—0.6%
1,050		Willis Group Holdings, Ltd.		39
Internet Software & Services—4.5%
1,850	*	Symantec Corp.		81
5,900		Yahoo!, Inc.		214
Investment Banking & Brokerage—2.3%
800		Goldman Sachs Group, Inc.		75
1,400		Merrill Lynch & Co., Inc.		76
IT Consulting & Other Services—1.4%
3,300	*	Accenture, Ltd. (Class A)		91
Life & Health Insurance—0.7%
1,200		AFLAC, Inc.		49
Movies & Entertainment—0.9%
1,900		News Corp., Ltd. (ADR)		62
Oil & Gas Equipment & Services—3.0%
2,600		Baker Hughes, Inc.		98
1,500	*	BJ Services Co.		69
600	*	Smith International, Inc.		33
Oil & Gas Exploration & Production—1.2%
800		Apache Corp.		35
1,500		XTO Energy, Inc.		45

SEE NOTES TO FINANCIAL STATEMENTS

38

Portfolio of Investments

Safeco Large-Cap Growth Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Other Diversified Financial Services—0.8%
1,150		Citigroup, Inc.	$	53
Personal Products—1.5%
2,200		Avon Products, Inc.		102
Pharmaceuticals—12.4%
2,050	*	Caremark Rx, Inc.		68
1,200		Eli Lilly & Co.		84
1,400	*	Gilead Sciences, Inc.		94
1,400		Novartis AG (ADR)		62
10,400		Pfizer, Inc.		357
1,350		Teva Pharmaceutical Industries, Ltd. (ADR)		91
1,700		Wyeth		61
Property & Casualty Insurance—1.0%
1,600		St. Paul Travelers Cos., Inc.		65
Publishing—1.1%
1,600		Tribune Co.		73
Regional Banks—0.9%
1,100		Fifth Third Bancorp		59
Restaurants—1.1%
1,650	*	Starbucks Corp.		72
Semiconductor Equipment—1.3%
2,700		Microchip Technology, Inc.		85
Semiconductors—3.4%
8,200		Intel Corp.		226
Soft Drinks—3.4%
2,200		Coca-Cola Co.		111
2,050		PepsiCo, Inc.		110
Systems Software—6.3%
5,000		Microsoft Corp.		143
3,300	*	Novell, Inc.		28
11,700	*	Oracle Corp.		140
800	*	Red Hat, Inc.		18
3,100	*	VERITAS Software Corp.		86
Thrifts & Mortgage Finance—1.7%
1,550		Federal National Mortgage Association		111
TOTAL COMMON STOCKS (cost $5,760)				6,409

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
CASH EQUIVALENTS—2.8%
Investment Companies
185,739	AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)	$	186
TOTAL CASH EQUIVALENTS (cost $186)			186
TOTAL INVESTMENTS (cost $5,946)—100.2%		$	6,595
Other Assets, less Liabilities			(13	)
NET ASSETS		$	6,582

* Non-income producing security.

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-624-5711

39

Statements of Assets and Liabilities

As of June 30, 2004

(Unaudited)

—(In Thousands, Except Per-Share Amounts)—		Safeco Growth Opportunities Fund			Safeco Core Equity Fund
Assets
Investments, at Cost		$	524,324		$	494,937
Investments in Unaffiliated Issuers, at Value		$	677,519		$	697,372
Investments in Affiliated Issuers, at Value			4,763			—
Total Investments at Value			682,282			697,372
Cash			1,812			—
Receivable for Investment Securities Sold			614			—
Receivable for Trust Shares Sold			41			1
Dividends and Interest Receivable			312			649
Receivable From Advisor			23			7
Other Assets			2			—
Total Assets			685,086			698,029
Liabilities
Payable for Investment Securities Purchased			—			—
Payable for Trust Shares Redeemed			67			28
Payable Upon Return of Securities Loaned			138,995			1,872
Dividends Payable			—			886
Investment Advisory Fees Payable			293			382
Other Accrued Expenses			265			291
Total Liabilities			139,620			3,459
Net Assets		$	545,466		$	694,570
Components of Net Assets
Paid in Capital (Par Value $.001, Unlimited Shares Authorized)		$	532,736		$	526,235
Net Unrealized Appreciation (Depreciation) on Investments and Foreign Currency			157,958			202,435
Accumulated Undistributed Net Investment Income (Loss)			(1,189	)		—
Accumulated Realized Gain (Loss)			(144,039	)		(34,100	)
Net Assets		$	545,466		$	694,570
Investor Class	Net Assets	$	509,622		$	668,097
	Trust Shares Outstanding		18,996			39,269
	Net Asset Value, Offering Price, and Redemption Price Per Share	$	26.83		$	17.01
Class A	Net Assets	$	26,671		$	17,431
	Trust Shares Outstanding		1,011			1,023
	Net Asset Value and Redemption Price Per Share	$	26.39		$	17.04
	Maximum Offering Price Per Share (Including Sales Charge of 5.75%)	$	28.00		$	18.08
Class B	Net Assets	$	8,953		$	8,846
	Trust Shares Outstanding		360			533
	Net Asset Value and Offering Price Per Share	$	24.85		$	16.58
Class C	Net Assets	$	220		$	196
	Trust Shares Outstanding		9			12
	Net Asset Value and Offering Price Per Share	$	24.85		$	16.60
Institutional Class	Net Assets		—			—
	Trust Shares Outstanding
	Net Asset Value and Offering Price Per Share

SEE NOTES TO FINANCIAL STATEMENTS

40

Safeco Large-Cap Value Fund		Safeco Multi-Cap Core Fund			Safeco International Stock Fund			Safeco Balanced Fund			Safeco Small-Cap Value Fund			Safeco Large-Cap Growth Fund
$	123,334	$	72,335		$	27,057		$	17,622		$	75,857		$	5,946
$	155,360	$	97,818		$	36,206		$	19,570		$	95,687		$	6,595
	—		—			—			—			—			—
	155,360		97,818			36,206			19,570			95,687			6,595
	—		—			1,182			—			—			—
	—		—			23			—			—			—
	—		18			1			—			349			—
	236		44			86			81			86			3
	1		11			20			7			8			8
	—		—			37			—			1			—
	155,597		97,891			37,555			19,658			96,131			6,606
	—		—			23			—			539			—
	134		7			91			—			31			—
	2,071		7,790			—			69			18,644			—
	487		—			—			99			—			—
	88		51			30			11			44			4
	68		50			44			20			44			20
	2,848		7,898			188			199			19,302			24
$	152,749	$	89,993		$	37,367		$	19,459		$	76,829		$	6,582
$	119,547	$	70,185		$	36,134		$	18,315		$	61,340		$	6,841
	32,026		25,483			9,153			1,948			19,830			649
	—		(56	)		342			(10	)		123			(44	)
	1,176		(5,619	)		(8,262	)		(794	)		(4,464	)		(864	)
$	152,749	$	89,993		$	37,367		$	19,459		$	76,829		$	6,582
$	149,892	$	79,493		$	26,265		$	15,944		$	70,752		$	3,483
	7,787		3,649			2,413			1,348			3,492			372
$	19.25	$	21.78		$	10.89		$	11.83		$	20.26		$	9.36
$	1,591	$	6,833		$	1,385		$	1,784		$	4,515		$	1,197
	82		321			128			150			227			129
$	19.37	$	21.29		$	10.78		$	11.88		$	19.93		$	9.32
$	20.55	$	22.59		$	11.44		$	12.60		$	21.15		$	9.89
$	1,125	$	3,553		$	665		$	1,622		$	1,421		$	972
	58		176			63			137			75			106
$	19.37	$	20.12		$	10.51		$	11.84		$	18.97		$	9.13
$	141	$	114		$	103		$	109		$	141		$	930
	7		6			10			9			7			102
$	19.45	$	20.13		$	10.52		$	11.84		$	19.04		$	9.13
	—		—		$	8,949			—			—			—
						814
					$	10.99

SEE NOTES TO FINANCIAL STATEMENTS

41

Statements of Operations

For the Six Month Period Ended June 30, 2004

(Unaudited)

—(In Thousands)—	Safeco Growth Opportunities Fund			Safeco Core Equity Fund
Investment Income
Dividends from Unaffiliated Issuers (Net of Foreign Taxes Withheld of $86 in the International Stock Fund)	$	1,477		$	5,498
Interest		30			58
Securities Lending and Other Income		160			6
Total Investment Income		1,667			5,562
Expenses
Investment Advisory		1,781			2,389
Fund Accounting and Administration		123			141
Transfer Agent—Investor Class		629			841
—Class A		132			35
—Class B		24			25
—Class C		—			—
—Institutional Class		—			—
Shareholder Servicing—Class A		28			21
—Class B		12			12
—Class C		—			—
Distribution—Class B		37			37
—Class C		1			1
Legal and Auditing		28			35
Custodian		23			24
Registration		23			26
Reports to Shareholders		106			122
Trustees		7			8
Other		36			49
Total Expenses Before Expense Reimbursement		2,990			3,766
Expense Reimbursement From Advisor—Investor Class		—			—
—Class A		(121	)		(17	)
—Class B		(13	)		(15	)
—Class C		—			—
—Institutional Class		—			—
Total Expenses After Expense Reimbursement		2,856			3,734
Net Investment Income (Loss)		(1,189	)		1,828
Realized and Unrealized Gain (Loss) on Investments and Foreign Currency
Net Realized Gain (Loss) from:
Investments in Unaffiliated Issuers		3,601			31,474
Investments in Affiliated Issuers		4,970			—
Foreign Currency Transactions		—			—
Total Net Realized Gain (Loss)		8,571			31,474
Net Change in Unrealized Appreciation (Depreciation)		35,175			(20,435	)
Net Gain (Loss) on Investments and Foreign Currency		43,746			11,039
Net Change in Net Assets Resulting from Operations	$	42,557		$	12,867

SEE NOTES TO FINANCIAL STATEMENTS

42

Safeco Large-Cap Value Fund			Safeco Multi-Cap Core Fund			Safeco International Stock Fund			Safeco Balanced Fund			Safeco Small-Cap Value Fund			Safeco Large-Cap Growth Fund
$	1,692		$	452		$	585		$	151		$	482		$	27
	17			7			1			153			15			1
	3			6			—			—			7			—
	1,712			465			586			304			504			28
	533			313			183			69			239			24
	69			40			16			9			29			3
	158			91			49			18			82			2
	3			12			3			3			8			1
	2			10			4			4			4			1
	—			—			—			—			—			—
	—			—			4			—			—			—
	2			8			2			2			5			1
	1			5			1			2			2			1
	—			—			—			—			—			1
	4			15			3			6			6			4
	—			—			—			1			—			3
	16			14			12			12			13			11
	8			6			46			3			6			4
	19			20			20			14			15			18
	18			14			7			3			10			1
	5			5			5			5			5			5
	11			7			3			2			4			1
	849			560			358			153			428			81
	—			(23	)		(74	)		(24	)		(38	)		(18	)
	(2	)		(8	)		(5	)		(5	)		(6	)		(7	)
	(1	)		(8	)		(5	)		(5	)		(3	)		(5	)
	—			—			(1	)		—			—			(5	)
	—			—			(25	)		—			—			—
	846			521			248			119			381			46
	866			(56	)		338			185			123			(18	)
	6,978			7,103			259			340			722			19
	—			—			—			—			—			—
	—			—			4			—			—			—
	6,978			7,103			263			340			722			19
	(2,856	)		(2,858	)		202			(328	)		3,888			32
	4,122			4,245			465			12			4,610			51
$	4,988		$	4,189		$	803		$	197		$	4,733		$	33

SEE NOTES TO FINANCIAL STATEMENTS

43

Statements of Changes in Net Assets

(Unaudited)

	Safeco Growth Opportunities Fund						Safeco Core Equity Fund						Safeco Large-Cap Value Fund
—(In Thousands)—	2004*			2003**			2004*			2003**			2004*			2003**
Operations
Net Investment Income (Loss)	$	(1,189	)	$	(2,294	)	$	1,828		$	4,918		$	866		$	1,906
Net Realized Gain (Loss) on Investments and Foreign Currency		8,571			(22,928	)		31,474			(17,919	)		6,978			(165	)
Net Change in Unrealized Appreciation (Depreciation)		35,175			199,157			(20,435	)		167,641			(2,856	)		28,922
Net Change in Net Assets Resulting from Operations		42,557			173,935			12,867			154,640			4,988			30,663
Distributions to Shareholders From
Net Investment Income
—Investor Class		—			—			(1,810	)		(4,852	)		(858	)		(1,891	)
—Class A		—			—			(19	)		(69	)		(7	)		(11	)
—Class B		—			—			—			—			(1	)		(4	)
—Class C		—			—			—			—			—			—
—Institutional Class		—			—			—			—			—			—
Net Realized Gain on Investments
—Investor Class		—			—			—			—			—			—
—Class A		—			—			—			—			—			—
—Class B		—			—			—			—			—			—
—Class C		—			—			—			—			—			—
—Institutional Class		—			—			—			—			—			—
Total		—			—			(1,829	)		(4,921	)		(866	)		(1,906	)
Net Trust Share Transactions		(23,136	)		(89,184	)		(59,569	)		(89,749	)		(5,250	)		(8,895	)
Redemption Fees		14			214			—			—			—			—
Total Change in Net Assets		19,435			84,965			(48,531	)		59,970			(1,128	)		19,862
Net Assets at Beginning of Period		526,031			441,066			743,101			683,131			153,877			134,015
Net Assets at End of Period	$	545,466		$	526,031		$	694,570		$	743,101		$	152,749		$	153,877
Tax Character of Distributions Paid
Ordinary Income	$	—		$	—		$	—		$	—		$	—		$	—
Qualified Dividend Income		—			—			1,829			4,921			866			1,906
Long-term Capital Gains		—			—			—			—			—			—
Total	$	—		$	—		$	1,829		$	4,921		$	866		$	1,906

 * For the six-month period ended June 30, 2004.

** For the year ended December 31, 2003.

SEE NOTES TO FINANCIAL STATEMENTS

44

Safeco Multi-Cap Core Fund						Safeco International Stock Fund					Safeco Balanced Fund						Safeco Small-Cap Value Fund					Safeco Large-Cap Growth Fund
2004*			2003**			2004*		2003**			2004*			2003**			2004*		2003**			2004*			2003**
$	(56	)	$	18		$	338	$	304		$	185		$	379		$	123	$	271		$	(18	)	$	(18	)
	7,103			(447	)		263		(1,517	)		340			(219	)		722		2,799			19			(393	)
	(2,858	)		28,581			202		8,538			(328	)		2,650			3,888		13,968			32			1,334
	4,189			28,152			803		7,325			197			2,810			4,733		17,038			33			923
	—			(21	)		—		(288	)		(169	)		(349	)		—		(282	)		—			—
	—			—			—		(16	)		(15	)		(31	)		—		(9	)		—			—
	—			—			—		(4	)		(9	)		(23	)		—		—			—			—
	—			—			—		—			(1	)		—			—		—			—			—
	—			—			—		(49	)		—			—			—		—			—			—
	—			—			—		—			—			—			—		—			—			—
	—			—			—		—			—			—			—		—			—			—
	—			—			—		—			—			—			—		—			—			—
	—			—			—		—			—			—			—		—			—			—
	—			—			—		—			—			—			—		—			—			—
	—			(21	)		—		(357	)		(194	)		(403	)		—		(291	)		—			—
	(3,855	)		(3,429	)		1,430		8,267			(708	)		942			19,672		(4,922	)		717			456
	2			3			1		48			—			—			5		21			—			—
	336			24,705			2,234		15,283			(705	)		3,349			24,410		11,846			750			1,379
	89,657			64,952			35,133		19,850			20,164			16,815			52,419		40,573			5,832			4,453
$	89,993		$	89,657		$	37,367	$	35,133		$	19,459		$	20,164		$	76,829	$	52,419		$	6,582		$	5,832
$	—		$	—		$	—	$	—		$	55		$	151		$	—	$	—		$	—		$	—
	—			21			—		357			139			252			—		291			—			—
	—			—			—		—			—			—			—		—			—			—
$	—		$	21		$	—	$	357		$	194		$	403		$	—	$	291		$	—		$	—

SEE NOTES TO FINANCIAL STATEMENTS

45

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Growth Opportunities Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Investor Class	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	24.75		$	17.19		$	27.25		$	22.33		$	23.30		$	22.70
Income (Loss) From Investment Operations
Net Investment Loss		(0.06	)		(0.10	)		(0.22	)		(0.16	)		(0.19	)		(0.16	)
Net Realized and Unrealized Gain (Loss) on Investments		2.14			7.65			(9.86	)†		5.08			(0.78	)		0.76
Total from Investment Operations		2.08			7.55			(10.08	)		4.92			(0.97	)		0.60
Redemption Fees		—			0.01			0.02			—			—			—
Net Asset Value at End of Period	$	26.83		$	24.75		$	17.19		$	27.25		$	22.33		$	23.30
Total Return		8.40%	*		43.98%			(36.92%	)		22.03%			(4.16%	)		2.64%
Net Assets at End of Period (000’s)	$	509,622		$	493,232		$	413,147		$	829,052		$	637,557		$	815,041
Ratios to Average Net Assets:
Gross Expenses		1.05%	**		1.14%			1.09%			1.03%			1.05%			1.07%
Required Reimbursement^		—			(0.06%	)		(0.01%	)		—			—			(0.05%	)
Net Expenses		1.05%	**		1.08%			1.08%			1.03%			1.05%			1.02%
Net Investment Loss		(0.42%	)**		(0.46%	)		(0.91%	)		(0.71%	)		(0.74%	)		(0.57%	)
Portfolio Turnover Rate		31%	**		46%			37%			65%			63%			38%
Safeco Core Equity Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Investor Class	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	16.76		$	13.54		$	18.54		$	20.65		$	24.02		$	23.25
Income (Loss) From Investment Operations
Net Investment Income		0.05			0.11			0.12			0.10			0.13			0.18
Net Realized and Unrealized Gain (Loss) on Investments		0.25			3.22			(5.00	)		(2.11	)		(2.76	)		2.00
Total from Investment Operations		0.30			3.33			(4.88	)		(2.01	)		(2.63	)		2.18
Less Distributions
Dividends from Net Investment Income		(0.05	)		(0.11	)		(0.12	)		(0.10	)		(0.13	)		(0.18	)
Distributions from Realized Gains		—			—			—			—			(0.61	)		(1.23	)
Total Distributions		(0.05	)		(0.11	)		(0.12	)		(0.10	)		(0.74	)		(1.41	)
Net Asset Value at End of Period	$	17.01		$	16.76		$	13.54		$	18.54		$	20.65		$	24.02
Total Return		1.76%	*		24.68%			(26.33%	)		(9.72%	)		(10.97%	)		9.37%
Net Assets at End of Period (000’s)	$	668,097		$	716,106		$	658,585		$	1,083,035		$	1,419,589		$	2,147,299
Ratios to Average Net Assets:
Expenses		1.02%	**		1.05%			1.01%			0.94%			0.89%			0.83%
Net Investment Income		0.53%	**		0.72%			0.77%			0.53%			0.57%			0.73%
Portfolio Turnover Rate		19%	**		24%			45%			31%			35%			34%

 * Not annualized.

** Annualized.

† Includes $0.10 related to investment reimbursement by affiliate.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

46

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Large-Cap Value Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Investor Class	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	18.73		$	15.29		$	18.82		$	20.58		$	22.39		$	23.47
Income (Loss) From Investment Operations
Net Investment Income		0.11			0.23			0.27			0.30			0.38			0.50
Net Realized and Unrealized Gain (Loss) on Investments		0.52			3.44			(3.53	)†		(1.76	)		(1.81	)		(0.25	)
Total from Investment Operations		0.63			3.67			(3.26	)		(1.46	)		(1.43	)		0.25
Less Distributions
Dividends from Net Investment Income		(0.11	)		(0.23	)		(0.27	)		(0.30	)		(0.38	)		(0.50	)
Distributions from Realized Gains		—			—			—			—			—			(0.83	)
Total Distributions		(0.11	)		(0.23	)		(0.27	)		(0.30	)		(0.38	)		(1.33	)
Net Asset Value at End of Period	$	19.25		$	18.73		$	15.29		$	18.82		$	20.58		$	22.39
Total Return		3.37%	*		24.20%			(17.40%	)		(7.06%	)		(6.36%	)		1.17%
Net Assets at End of Period (000’s)	$	149,892		$	151,192		$	132,467		$	177,920		$	217,053		$	303,537
Ratios to Average Net Assets:
Gross Expenses		1.10%	**		1.14%			1.11%			1.08%			1.07%			0.99%
Required Reimbursement^		—			(0.04%	)		(0.01%	)		—			—			—
Net Expenses		1.10%	**		1.10%			1.10%			1.08%			1.07%			0.99%
Net Investment Income		1.15%	**		1.39%			1.54%			1.57%			1.80%			2.18%
Portfolio Turnover Rate		48%	**		38%			17%			58%			45%			42%
Safeco Multi-Cap Core Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Investor Class	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	20.77		$	14.31		$	18.86		$	21.25		$	25.33		$	17.73
Income (Loss) From Investment Operations
Net Investment Income (Loss)		(0.01	)		0.01			(0.03	)		(0.03	)		(0.11	)		(0.10	)
Net Realized and Unrealized Gain (Loss) on Investments		1.02			6.46			(4.52	)		(2.36	)		(3.97	)		9.71
Total from Investment Operations		1.01			6.47			(4.55	)		(2.39	)		(4.08	)		9.61
Less Distributions
Dividends from Net Investment Income		—			(0.01	)		—			—			—			—
Distributions from Realized Gains		—			—			—			—			—			(2.01	)
Total Distributions		—			(0.01	)		—			—			—			(2.01	)
Net Asset Value at End of Period	$	21.78		$	20.77		$	14.31		$	18.86		$	21.25		$	25.33
Total Return		4.86%	*		45.18%			(24.13%	)		(11.25%	)		(16.11%	)		54.25%
Net Assets at End of Period (000’s)	$	79,493		$	79,504		$	57,624		$	85,290		$	108,113		$	97,534
Ratios to Average Net Assets:
Gross Expenses		1.16%	**		1.23%			1.24%			1.21%			1.11%			1.17%
Required Reimbursement^		(0.06%	)**		(0.13%	)		(0.14%	)		(0.11%	)		(0.01%	)		(0.07%	)
Net Expenses		1.10%	**		1.10%			1.10%			1.10%			1.10%			1.10%
Net Investment Income (Loss)		(0.06%	)**		0.09%			(0.15%	)		(0.15%	)		(0.45%	)		(0.54%	)
Portfolio Turnover Rate		37%	**		27%			15%			50%			36%			49%

 * Not annualized.

** Annualized.

† Includes $0.07 related to investment reimbursement by affiliate.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

47

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco International Stock Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Investor Class	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	10.64		$	8.43		$	10.54		$	14.24		$	16.95		$	13.14
Income (Loss) From Investment Operations
Net Investment Income		0.10			0.11			0.08			0.06			0.08			0.03
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency		0.15			2.22			(2.13	)		(3.65	)		(1.94	)		3.78
Total from Investment Operations		0.25			2.33			(2.05	)		(3.59	)		(1.86	)		3.81
Redemption Fees		—			0.01			0.03			0.14			—			—
Less Distributions
Dividends from Net Investment Income		—			(0.13	)		(0.09	)		(0.25	)		(0.08	)		—
Distributions from Realized Gains		—			—			—			—			(0.77	)		—
Total Distributions		—			(0.13	)		(0.09	)		(0.25	)		(0.85	)		—
Net Asset Value at End of Period	$	10.89		$	10.64		$	8.43		$	10.54		$	14.24		$	16.95
Total Return		2.35%	*		27.74%			(19.12%	)		(24.30%	)		(10.95%	)		29.00%
Net Assets at End of Period (000’s)	$	26,265		$	23,983		$	18,241		$	23,398		$	33,019		$	36,967
Ratios to Average Net Assets:
Gross Expenses		1.98%	**		2.19%			2.09%			2.08%			1.79%			1.72%
Required Reimbursement^		(0.58%	)**		(0.79%	)		(0.69%	)		(0.62%	)		(0.39%	)		(0.03%	)
Net Expenses		1.40%	**		1.40%			1.40%			1.46%			1.40%			1.69%
Net Investment Income		1.81%	**		1.28%			0.86%			0.46%			0.23%			0.21%
Portfolio Turnover Rate		19%	**		37%			16%			163%			33%			24%
Safeco Balanced Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Investor Class	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	11.83		$	10.36		$	11.69		$	12.06		$	11.81		$	12.22
Income (Loss) From Investment Operations
Net Investment Income		0.12			0.25			0.29			0.33			0.34			0.31
Net Realized and Unrealized Gain (Loss) on Investments		—			1.48			(1.31	)		(0.37	)		0.25			(0.18	)
Total from Investment Operations		0.12			1.73			(1.02	)		(0.04	)		0.59			0.13
Less Distributions
Dividends from Net Investment Income		(0.12	)		(0.26	)		(0.31	)		(0.33	)		(0.34	)		(0.31	)
Distributions from Realized Gains		—			—			—			—			—			(0.23	)
Total Distributions		(0.12	)		(0.26	)		(0.31	)		(0.33	)		(0.34	)		(0.54	)
Net Asset Value at End of Period	$	11.83		$	11.83		$	10.36		$	11.69		$	12.06		$	11.81
Total Return		1.05%	*		16.90%			(8.74%	)		(0.29%	)		5.09%			1.05%
Net Assets at End of Period (000’s)	$	15,944		$	16,596		$	13,588		$	14,736		$	14,816		$	18,008
Ratios to Average Net Assets:
Gross Expenses		1.40%	**		1.43%			1.47%			1.49%			1.43%			1.33%
Required Reimbursement^		(0.30%	)**		(0.33%	)		(0.37%	)		(0.39%	)		(0.33%	)		(0.19%	)
Net Expenses		1.10%	**		1.10%			1.10%			1.10%			1.10%			1.14%
Net Investment Income		1.99%	**		2.23%			2.67%			2.82%			2.83%			2.51%
Portfolio Turnover Rate		41%	**		37%			59%			75%			63%			95%

 * Not annualized.

** Annualized.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

48

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Small-Cap Value Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Investor Class	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	18.79		$	13.21		$	13.78		$	11.77		$	12.73		$	11.16
Income (Loss) From Investment Operations
Net Investment Income (Loss)		0.04			0.10			0.05			0.13			(0.02	)		(0.06	)
Net Realized and Unrealized Gain (Loss) on Investments		1.43			5.58			(0.57	)		2.01			(0.94	)		1.63
Total from Investment Operations		1.47			5.68			(0.52	)		2.14			(0.96	)		1.57
Redemption Fees		—			0.01			—			—			—			—
Less Distributions
Dividends from Net Investment Income		—			(0.11	)		(0.05	)		(0.13	)		—			—
Net Asset Value at End of Period	$	20.26		$	18.79		$	13.21		$	13.78		$	11.77		$	12.73
Total Return		7.82%	*		43.10%			(3.76%	)		18.20%			(7.54%	)		14.07%
Net Assets at End of Period (000’s)	$	70,752		$	47,407		$	37,733		$	29,643		$	22,477		$	28,319
Ratios to Average Net Assets:
Gross Expenses		1.28%	**		1.43%			1.42%			1.48%			1.41%			1.44%
Required Reimbursement^		(0.13%	)**		(0.28%	)		(0.27%	)		(0.29%	)		(0.26%	)		(0.24%	)
Net Expenses		1.15%	**		1.15%			1.15%			1.19%			1.15%			1.20%
Net Investment Income (Loss)		0.43%	**		0.63%			0.44%			1.01%			(0.13%	)		(0.49%	)
Portfolio Turnover Rate		34%	**		52%			54%			141%			107%			117%

Safeco Large-Cap Growth Fund	Six-Month Period Ended June 30			For the Year Ended December 31						October 31, 2001 (Commencement of Operations) to December 31
Investor Class	2004			2003			2002			2001
Net Asset Value at Beginning of Period	$	9.30		$	7.74		$	10.64		$	10.00
Income (Loss) From Investment Operations
Net Investment Loss		(0.01	)		—			(0.02	)		—
Net Realized and Unrealized Gain (Loss) on Investments		0.07			1.56			(2.84	)		0.64
Total from Investment Operations		0.06			1.56			(2.86	)		0.64
Less Distributions
Dividends from Net Investment Income		—			—			(0.02	)		—
Distributions from Realized Gains		—			—			(0.02	)		—
Total Distributions		—			—			(0.04	)		—
Net Asset Value at End of Period	$	9.36		$	9.30		$	7.74		$	10.64
Total Return		0.65%	*		20.16%			(26.95%	)		6.40%	*
Net Assets at End of Period (000’s)	$	3,483		$	2,857		$	2,083		$	2,372
Ratios to Average Net Assets:
Gross Expenses		2.32%	**		2.55%			3.51%			4.29%	**
Voluntary Reimbursement^		(1.17%	)**		(1.40%	)		(2.11%	)		(2.89%	)**
Net Expenses		1.15%	**		1.15%			1.40%			1.40%	**
Net Investment Income (Loss)		(0.23%	)**		0.03%			(0.55%	)		(0.28%	)**
Portfolio Turnover Rate		75%	**		50%			29%			2%	**

 * Not annualized.

** Annualized.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

49

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, Safeco Core Equity Fund, Safeco Large-Cap Value Fund, Safeco Multi-Cap Core Fund, Safeco International Stock Fund, Safeco Balanced Fund, Safeco Small-Cap Value Fund, and the Safeco Large-Cap Growth Fund (together “the Funds”).

The Funds offer up to five classes of shares:

* Investor 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.

* Institutional Class shares (International Stock Fund Only)—sold directly to financial institutions subject to minimum investment requirements as outlined in the Prospectus.

Each class of shares has equal rights as to earnings and assets except that each class bears different transfer agent, shareholder service, and distribution expenses. Each class of shares has exclusive voting rights with respect to matters that affect only that class. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets. Class B shares automatically convert to Class A shares after the sixth anniversary of issuance.

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 shareholder service fee to the distributor, Safeco Securities, Inc., at the annual rate of 0.25% 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 0.75% of the average daily net assets of each class. Under the Plan, the distributor uses the service fees primarily to compensate persons 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.

On March 15, 2004, Safeco Corporation, the parent company of Safeco Asset Management Company (SAM), which serves as the Funds’ investment advisor, announced that it has entered into an agreement to sell SAM, Safeco Securities, Inc., the Funds’ distributor and Safeco Services Corporation, the Funds’ transfer agent, as part of a larger transaction to sell its life insurance and investment businesses (collectively “Safeco Life and Investments”) to a holding company formed by a group of investors led by White Mountains Insurance Group, Ltd. and Berkshire Hathaway, Inc. The holding company was subsequently named Symetra Financial Corporation. On August 2, 2004 the sale closed. See Note 8 to the financial statements for further disclosure.

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 accounting principles generally accepted in the United States.

Security Valuation.    Equity investments listed on securities exchanges are based on the last reported sale price on the national exchange on which the securities are primarily traded, unless there are no transactions, in which case the value is based on the last reported bid price. Values for equity portfolio securities traded primarily on the NASDAQ National Market System are based on the NASDAQ Official Closing Price, unless there are no transactions, in which case the value is based on the last reported bid price. Values for fixed income portfolio securities (other than short-term securities) are based on matrix pricing models, which consider bid prices, quotations from dealers, transactions in comparable

50

Notes to Financial Statements

(Unaudited)

securities, and various relationships between securities. Short term portfolio securities maturing within 60 days at the time of purchase are valued at amortized cost, which approximates market value. Short-term investments in other mutual funds are valued at the net asset value of the respective fund. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the Fund’s pricing time, but after the close of the securities’ primary markets, are valued by methods deemed by the Board of Trustees to represent fair value.

Security Transactions.    Security transactions are recorded on the trade date. Realized gains and losses from security transactions are determined using the identified cost basis.

Dividend and Interest 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. Bond premiums and discounts are amortized to either call or maturity dates. Interest income is recorded on an accrual basis.

Securities Lending Income.    The Funds (excluding the International Stock and Large-Cap Growth Funds) may lend portfolio securities to broker-dealers and to qualified banks. The loans are secured by cash collateral in an amount equal to at least 102% of the market value, as of the prior business day, of the loaned securities plus any accrued interest and dividends. During the time the securities are on loan, the Funds continue to receive payments for the interest and dividends on the loaned securities, while earning interest on the investment of the cash collateral. Loans are subject to termination at the option of the borrower or each Fund. Upon termination of the loan, the borrower is required to return to each Fund securities identical to the loaned securities. The Funds generally share the interest earned on the cash collateral with the borrower and the securities lending administrator. Gain or loss in the value of the securities loaned that occur during the term of the loan will be for the account of each Fund.

Expense Allocation.    Expenses directly attributable to a Fund are charged to that Fund. Expenses not directly attributed to a Fund are allocated on the basis of relative net assets, except where a more appropriate allocation of expenses to each of the Funds can otherwise be made fairly. Each Fund’s expenses (other than those specific to each class) are allocated proportionally each day between the classes based upon the relative net assets of each class.

Redemption Fees.    Shares held for less than 90 days in the Growth Opportunities, Multi-Cap Core, International Stock and Small-Cap Value are subject to an early redemption fee equal to 2% of the proceeds of the redeemed shares. Effective July 1, 2004, shares held for less than 30 days in all Funds are subject to an early redemption fee equal to 2% of the proceeds of the redeemed shares. These fees, which are retained by the Funds, are accounted for as an addition to paid in capital for financial statement reporting purposes.

Dividends and Distributions to Shareholders.    For the Growth Opportunities, Multi-Cap Core, International Stock, Small-Cap Value and Large-Cap Growth Funds, net investment income (if any) is distributed to shareholders on the last business day (ex-dividend date) of December. For all other Funds, net investment income is distributed as of the last business day of March, June, September and December. For all Funds, net gains realized from security transactions on investments, if any, are normally distributed to shareholders in March and December. Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date.

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 that results in no taxes to the Funds. Therefore, no Federal income or excise tax provision is required.

SAFECO    MUTUAL    FUNDS 1-800-624-5711

51

Notes to Financial Statements

(Unaudited)

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 in the International Stock Fund’s accounting records 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 spot contracts and forward foreign currency exchange contracts as a way of managing foreign currency 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. With respect to forward foreign currency exchange contracts, liquid securities, with a value at least equal to the market value of the commitment, are segregated on the accounting records of the Fund.

Estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States, 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.

3.    INVESTMENT TRANSACTIONS

Following is a summary of investment transactions (excluding short-term securities) during the six-month period ended June 30, 2004 (in thousands):

	Purchases		Sales
Growth Opportunities Fund	$	82,073	$	115,770
Core Equity Fund		65,569		123,459
Large-Cap Value Fund		35,387		39,811
Multi-Cap Core Fund		16,326		20,757
International Stock Fund		5,314		3,273
Balanced Fund		3,986		4,921
Small-Cap Value Fund		29,908		10,525
Large-Cap Growth Fund		2,811		2,231

Purchases in the Balanced Fund include $611 of U.S. Government securities.

Sales in the Balanced Fund include $1,160 of U.S. Government securities.

52

Notes to Financial Statements

(Unaudited)

4.    COMPONENTS OF DISTRIBUTABLE EARNINGS

Estimated components of distributable earnings on a tax basis at June 30, 2004, were as follows (in thousands):

	Growth Opportunities Fund			Core Equity Fund			Large-Cap Value Fund			Multi-Cap Core Fund
Federal Tax Cost on Investments	$	527,172		$	494,937		$	123,334		$	72,368
Gross Unrealized Appreciation on Investments	$	189,639		$	220,094		$	35,853		$	30,016
Gross Unrealized Depreciation on Investments		(34,529	)		(17,659	)		(3,827	)		(4,566	)
Net Unrealized Appreciation on Investments		155,110			202,435			32,026			25,450
Undistributed Income (Loss)		(1,175	)		—			—			(54	)
Realized Capital Gain (Loss)—Current Period		8,571			31,474			6,978			7,103
Capital Loss Carryforward*		(149,762	)		(65,574	)		(5,802	)		(12,689	)
Distributable Earnings	$	12,744		$	168,335		$	33,202		$	19,810
	International Stock Fund			Balanced Fund			Small-Cap Value Fund			Large-Cap Growth Fund
Federal Tax Cost on Investments	$	28,540		$	17,654		$	75,955		$	5,960
Gross Unrealized Appreciation on Investments	$	9,499		$	2,370		$	21,130		$	844
Gross Unrealized Depreciation on Investments		(1,833	)		(454	)		(1,398	)		(209	)
Net Unrealized Appreciation on Investments		7,666			1,916			19,732			635
Undistributed Income (Loss)		342			—			128			(18	)
Realized Capital Gain (Loss)—Current Period		259			329			722			19
Capital Loss Carryforward*		(6,921	)		(1,101	)		(5,088	)		(774	)
Deferred Loss**		(117	)		—			—			(95	)
Distributable Earnings	$	1,229		$	1,144		$	15,494		$	(233	)

* At December 31, 2003, the following funds had accumulated net realized losses on investment transactions that represent capital loss carryforwards for Federal income tax purposes, which expire as follows (in thousands):

	2007		2008		2009		2010		2011		Total
Growth Opportunities Fund	$	36	$	—	$	7,990	$	82,677	$	59,059	$	149,762
Core Equity Fund		—		—		18,667		25,302		21,605		65,574
Large-Cap Value Fund		—		462		298		4,526		516		5,802
Multi-Cap Core Fund		—		167		4,512		6,946		1,064		12,689
International Stock Fund		—		—		3,062		2,532		1,327		6,921
Balanced Fund		—		100		—		686		315		1,101
Small-Cap Value Fund		4,351		—		737		—		—		5,088
Large-Cap Growth Fund		—		—		—		451		323		774

** From November 1, 2003, through December 31, 2003, the funds incurred net realized capital losses. As permitted by tax regulations, these funds have elected to defer those losses and treat them as arising on January 1, 2004.

Differences between financial statement reporting basis and tax-basis reporting are attributable primarily to the tax deferral of losses on wash sales, premium and discount amortization methods, classification of paydown gains and losses, redemption fees, and amortization methods of deferred offering costs.

SAFECO    MUTUAL    FUNDS 1-800-624-5711

53

Notes to Financial Statements

(Unaudited)

5.    TRUST SHARE TRANSACTIONS

Following is a summary of transactions in Trust shares and the related amounts (in thousands):

	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003**
	Safeco Growth Opportunities Fund
Shares:
Sales		1,087			3,665			425			770			18			39			—			1
Reinvestments		—			—			—			—			—			—			—			—
Redemptions		(2,019	)		(7,773	)		(295	)		(1,010	)		(140	)		(97	)		—			(2	)
Net Change		(932	)		(4,108	)		130			(240	)		(122	)		(58	)		—			(1	)
Amounts:
Sales	$	27,930		$	71,571		$	10,718		$	15,684		$	424		$	676		$	7		$	11
Reinvestments		—			—			—			—			—			—			—			—
Redemptions		(51,511	)		(154,829	)		(7,373	)		(20,480	)		(3,331	)		(1,783	)		—			(34	)
Net Change	$	(23,581	)	$	(83,258	)	$	3,345		$	(4,796	)	$	(2,907	)	$	(1,107	)	$	7		$	(23	)
	Safeco Core Equity Fund
Shares:
Sales		755			3,532			192			350			24			58			1			2
Reinvestments		52			306			1			5			—			—			—			—
Redemptions		(4,272	)		(9,757	)		(131	)		(420	)		(144	)		(198	)		—			—
Net Change		(3,465	)		(5,919	)		62			(65	)		(120	)		(140	)		1			2
Amounts:
Sales	$	12,787		$	51,062		$	3,263		$	5,286		$	395		$	836		$	15		$	25
Reinvestments		878			4,537			9			66			—			—			—			—
Redemptions		(72,335	)		(142,252	)		(2,209	)		(6,399	)		(2,369	)		(2,905	)		(3	)		(5	)
Net Change	$	(58,670	)	$	(86,653	)	$	1,063		$	(1,047	)	$	(1,974	)	$	(2,069	)	$	12		$	20
	Safeco Large-Cap Value Fund
Shares:
Sales		419			1,234			23			43			3			32			1			1
Reinvestments		17			98			—			—			—			—			—			—
Redemptions		(721	)		(1,924	)		(17	)		(14	)		(5	)		(20	)		—			—
Net Change		(285	)		(592	)		6			29			(2	)		12			1			1
Amounts:
Sales	$	7,969		$	19,083		$	438		$	724		$	65		$	526		$	18		$	8
Reinvestments		325			1,628			2			8			—			3			—			—
Redemptions		(13,638	)		(30,311	)		(320	)		(232	)		(109	)		(332	)		—			—
Net Change	$	(5,344	)	$	(9,600	)	$	120		$	500		$	(44	)	$	197		$	18		$	8

 * For the six-month period ended June 30, 2004.

** For the year ended December 31, 2003.

54

Notes to Financial Statements

(Unaudited)

5.    TRUST SHARE TRANSACTIONS (continued)

	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003**
	Safeco Multi-Cap Core Fund
Shares:
Sales		198			385			77			107			10			21			—			3
Reinvestments		—			1			—			—			—			—			—			—
Redemptions		(378	)		(585	)		(31	)		(83	)		(61	)		(71	)		(3	)		—
Net Change		(180	)		(199	)		46			24			(51	)		(50	)		(3	)		3
Amounts:
Sales	$	4,242		$	6,609		$	1,595		$	1,753		$	187		$	336		$	1		$	51
Reinvestments		—			17			—			—			—			—			—			—
Redemptions		(7,983	)		(9,777	)		(645	)		(1,263	)		(1,191	)		(1,155	)		(61	)		—
Net Change	$	(3,741	)	$	(3,151	)	$	950		$	490		$	(1,004	)	$	(819	)	$	(60	)	$	51
	Investor Class						Class A						Class B						Class C						Institutional Class
	2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003***
	Safeco International Stock Fund
Shares:
Sales		384			660			38			1,361			3			14			—			6			38			872
Reinvestments		—			19			—			1			—			—			—			—			—			4
Redemptions		(226	)		(588	)		(47	)		(1,320	)		(10	)		(32	)		—			(6	)		(51	)		(49	)
Net Change		158			91			(9	)		42			(7	)		(18	)		—			—			(13	)		827
Amounts:
Sales	$	4,206		$	5,772		$	415		$	10,732		$	24		$	113		$	1		$	53		$	422		$	7,663
Reinvestments		—			198			—			14			—			4			—			—			—			44
Redemptions		(2,463	)		(5,101	)		(512	)		(10,417	)		(105	)		(279	)		—			(54	)		(558	)		(475	)
Net Change	$	1,743		$	869		$	(97	)	$	329		$	(81	)	$	(162	)	$	1		$	(1	)	$	(136	)	$	7,232
	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003****
	Safeco Balanced Fund
Shares:
Sales		78			260			27			53			15			44			—			9
Reinvestments		4			20			1			2			—			2			—			—
Redemptions		(137	)		(188	)		(19	)		(67	)		(29	)		(53	)		—			—
Net Change		(55	)		92			9			(12	)		(14	)		(7	)		—			9
Amounts:
Sales	$	932		$	2,824		$	328		$	584		$	172		$	480		$	1		$	100
Reinvestments		50			213			6			28			4			21			—			—
Redemptions		(1,635	)		(2,035	)		(222	)		(698	)		(344	)		(575	)		—			—
Net Change	$	(653	)	$	1,002		$	112		$	(86	)	$	(168	)	$	(74	)	$	1		$	100

   * For the six-month period ended June 30, 2004.

  ** For the year ended December 31, 2003.

 *** For the period from March 7, 2003 (initial issue date of Institutional Class shares) through December 31, 2003.

**** For the period from October 1, 2003 (initial issue date of Class C shares) through December 31, 2003.

SAFECO    MUTUAL    FUNDS 1-800-624-5711

55

Notes to Financial Statements

(Unaudited)

5.    TRUST SHARE TRANSACTIONS (continued)

	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*		2003***
Safeco Small-Cap Value Fund
Shares:
Sales		1,345			1,136			83			176			1			15			1		7
Reinvestments		—			15			—			1			—			—			—		—
Redemptions		(376	)		(1,484	)		(26	)		(124	)		(26	)		(22	)		—		—
Net Change		969			(333	)		57			53			(25	)		(7	)		1		7
Amounts:
Sales	$	26,335		$	16,760		$	1,598		$	2,497		$	24		$	226		$	14	$	101
Reinvestments		—			280			—			8			—			—			—		—
Redemptions		(7,333	)		(22,817	)		(483	)		(1,668	)		(483	)		(309	)		—		—
Net Change	$	19,002		$	(5,777	)	$	1,115		$	837		$	(459	)	$	(83	)	$	14	$	101
	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*		2003**
Safeco Large-Cap Growth Fund
Shares:
Sales		74			95			13			14			1			4			—		1
Reinvestments		—			—			—			—			—			—			—		—
Redemptions		(9	)		(57	)		(2	)		(2	)		—			(1	)		—		—
Net Change		65			38			11			12			1			3			—		1
Amounts:
Sales	$	685		$	788		$	119		$	120		$	12		$	32		$	1	$	4
Reinvestments		—			—			—			—			—			—			—		—
Redemptions		(84	)		(468	)		(15	)		(13	)		(1	)		(7	)		—		—
Net Change	$	601		$	320		$	104		$	107		$	11		$	25		$	1	$	4

   * For the six-month period ended June 30, 2004.

  ** For the year ended December 31, 2003.

 *** For the period from October 1, 2003 (initial issue date of Class C shares) through December 31, 2003.

6.    INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory Fees.    The Funds received investment management and advisory services pursuant to an agreement with Safeco Asset Management Company. The investment advisory fees were based on each Fund’s net assets and the rates specified in the tables below. See Note 8 to financial statements.

Growth Opportunities, Core Equity, Large-Cap Value, Multi-Cap Core, and Balanced Funds:		Small-Cap Value Fund:		International Stock Fund:
First $250 million	.70%	First $250 million	.75%	First $250 million	1.00%
Next $500 million	.65	Next $500 million	.70	Next $500 million	.90
Next $500 million	.60	Next $500 million	.65	Over $750 million	.80
Over $1.25 billion	.55	Over $1.25 billion	.60
Large-Cap Growth Fund:
First $250 million	.80%
Next $500 million	.75
Next $500 million	.70
Over $1.25 billion	.65

56

Notes to Financial Statements

(Unaudited)

Safeco Asset Management Company paid sub-advisory fees for investment research and advice to the Bank of Ireland Asset Management Company (U.S.) Limited for the International Stock Fund and to RCM Capital Management LLC for the Large-Cap Growth Fund. See Note 8 to the financial statements.

Fund Accounting and Fund Administration Fees.    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:

Fund Accounting:		Fund Administration:
First $200 million	.04%	First $200 million	.05%
Over $200 million	.01	Over $200 million	.01

Transfer Agent, Shareholder Service, and Distribution Fees.    Safeco Services Corporation receives transfer agent fees. Safeco Securities, Inc. receives shareholder service and distribution fees.

Low Balance Fees.    As described in the Prospectus, Safeco Services Corporation assesses shareholder accounts an annual $12 low balance fee on shareholder accounts containing balances less than $1,000. Low balance fees received directly by Safeco Services are then applied in their entirety to reduce the contractual billings that Safeco Services charges the Funds for transfer agent services. For financial statement presentation purposes, the amount of low balance fees collected are reported as other income in the Statement of Operations. Transfer agent expenses are recorded gross of the low balance fee offset.

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, 2004 no such borrowings were outstanding. Interest rates on affiliated loans during the six-month period ended June 30, 2004 ranged from 0.97% to 1.04%. This arrangement was terminated on August 2, 2004.

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, $50 million is currently available to meet short-term financing needs. At June 30, 2004, no such borrowings were outstanding.

Affiliate Ownership.    At June 30, 2004, Safeco Insurance Company of America owned 450,000 shares (11% of outstanding shares) of the Multi-Cap Core Fund and Safeco Asset Management Company owned 708,095 shares (21%) of the International Stock Fund, 528,334 shares (32%) of the Balanced Fund and 500,000 shares (70%) of the Large-Cap Growth Fund.

Expense Reimbursement.    Beginning May 1, 1999 through April 30, 2009, Safeco Asset Management Company contractually agreed to reimburse the Funds (excluding the Large-Cap Growth Fund) for operating expenses (i.e., all expenses except investment advisory, distribution fees, service fees, and interest expense) that exceed on an annual basis 0.40% of the average daily net assets of each respective class of the Funds. Beginning October 31, 2001 (commencement of operations) through June 25, 2003, Safeco Asset Management Company voluntarily agreed to reimburse the Large-Cap Growth Fund for operating expenses which exceeded on an annual basis 0.60% of the Funds average daily net assets. Beginning June 26, 2003 through June 30, 2004, Safeco Asset Management Company voluntarily agreed to reimburse all expenses of the Investor Class of the Large-Cap Growth Fund to the extent that they exceed on an annual basis 1.15% of the average daily net assets of that class. Beginning March 7, 2003 through June 30, 2004, Safeco Asset Management Company voluntarily agreed to reimburse all expenses of the Institutional Class of the International Stock Fund that exceed on an annual basis 1.10% of the average daily net assets for that class. See Note 8 to the financial statements.

SAFECO    MUTUAL    FUNDS 1-800-624-5711

57

Notes to Financial Statements

(Unaudited)

Board of Trustees.    The Funds, along with several other affiliated funds not reported herein, pay each of the Trustees not affiliated with Safeco Corporation an annual retainer of $25,000. Independent Trustees receive an additional fee for attending each board and committee meeting.

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, 2004 (in thousands):

	Commissions Retained
Growth Opportunities Fund	$	3
Core Equity Fund		2
Multi-Cap Core Fund		1
Small-Cap Value Fund		1

7.    INVESTMENTS IN AFFILIATES

Each of the companies listed below is an affiliate of the Fund because the Fund owned at least 5% of the company’s voting securities during the six-month period ended June 30, 2004.

(In Thousands)	Shares at Beginning of Period	Additions	Reductions		Shares at End of Period	Dividends		Realized Gain (Loss)			Market Value of Investment in Affiliates at June 30, 2004
Safeco Growth Opportunities Fund
Conceptus, Inc.*	1,247	—	(818	)	429	$	—	$	1,767		$	—
Harold’s Stores, Inc.	532	—	—		532		—		—			1,352
Matria Healthcare, Inc.*	586	—	(273	)	313		—		2,274			—
Med-Design Corp.	1,173	—	(175	)	998		—		(1,794	)		2,076
Nastech Pharmaceutical Co., Inc.*	835	—	(608	)	227		—		4,567			—
North American Scientific, Inc.*	676	—	(158	)	518		—		(1,288	)		—
Rent-Way, Inc.*	1,731	—	(654	)	1,077		—		(556	)		—
SpectRx, Inc.	861	—	—		861		—		—			1,335
						$	—	$	4,970		$	4,763

* Company was not an affiliate at the end of the period.

8.    SUBSEQUENT EVENTS

On August 2, 2004, Safeco Corporation announced that it had completed the sale of the Safeco Life and Investments division of Safeco Corporation to Symetra Financial Corporation. Among the entities included in this sale were Safeco Asset Management Company (SAM), Safeco Services, and Safeco Securities, all of which are affiliates of the Funds.

Symetra Financial Corporation made the decision to exit the mutual fund business. Effective August 2, 2004, Pioneer Investment Management, Inc. (Pioneer) was named the investment advisor for the Funds pursuant to an interim investment advisory agreement approved by the Board of Trustees of the Funds. The terms of the interim investment advisory agreements are substantially the same as the prior investment advisory agreements with SAM, with no change in the investment advisory fee schedule or the expense reimbursement arrangements. The investment advisory agreements with SAM and its sub-advisory agreements with RCM Capital Management LLC and Bank of Ireland Asset Management (U.S.) Limited have been terminated.

The Boards of Trustees for the Funds have also approved the plan of reorganization of each of the Funds into a corresponding Pioneer mutual fund. It is anticipated that shareholders of each Safeco mutual fund will be asked, at a meeting of shareholders to be held this fall, to consider the reorganization of that Safeco mutual fund into a similar mutual fund managed by Pioneer.

58

Trustees and Officers Information

Name, Address, and Age	Position Held with Trusts	Term of Office* and Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Series in a Fund Complex Overseen by Trustee	Other Directorships Held by Trustees
INDEPENDENT (disinterested) TRUSTEES
Scott M. Boggs 4854 154th Place NE Redmond, WA 98052 (49)	Trustee	Served since August 8, 2002	Retired in 2003 from position as Corporate Vice President, Finance for Microsoft Corporation, a software company, Redmond, Washington.	22	Director of Cascade Natural Gas Corp., Seattle, Trustee for Financial Executives Research Foundation (Industry Group)
Barbara J. Dingfield 4854 154th Place NE Redmond, WA 98052 (58)	Trustee	Served since May 3, 1990	Consultant to corporate and private foundations. From 1994 to 1999 she was the Director of Community Affairs for Microsoft Corporation, Redmond, Washington, a computer software company. Member of the Board of Managers, Swarthmore College (1995-1999). Trustee and Board Chair of United Way of King County (1991-2000). Board member, Pacific Northwest Grantmakers Forum (1997-1999). Trustee and past Chair, Seattle Housing Resources Group (1993-1999).	22	Director of First Safeco National Life Insurance Co. of New York. Trustee, United Way of Skagit County. Board Chair Npower (non-profit organization providing technology assistance and training to other non-profits). Board of Directors, YMCA of Greater Seattle.
Richard E. Lundgren 4854 154th Place NE Redmond, WA 98052 (66)	Trustee	Served since February 3, 1983	Retired in 2000 from position as Director of Marketing and Customer Relations, Weyerhaeuser Company, Tacoma, Washington.	22	Director of First Safeco National Life Insurance Co. of New York
Larry L. Pinnt 4854 154th Place NE Redmond, WA 98052 (69)	Trustee	Served since August 1, 1985	Retired Vice president and Chief Financial Officer of U.S. WEST Communications, Seattle, Washington.	22	Director of First Safeco National Life Insurance Co. of New York. Chairman of the Board of Directors for Cascade Natural Gas Corp., Seattle, Washington. Board Member of University of Washington Medical Center, Seattle, Washington.
John W. Schneider 4854 154th Place NE Redmond, WA 98052 (62)	Trustee	Served since February 3, 1983	President and owner of Wallingford Group, Inc., Seattle, Washington, a consulting company currently involved in the development, repositioning, and acquisition/disposition of real estate (1995-present).	22	Director of First Safeco National Life Insurance Co. of New York

* Mandatory retirement at age 72.

Name, Address, and Age	Position(s) Held with Trusts	Term of Office** and Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Series in a Fund Complex Overseen by Trustee	Other Directorships Held by Trustees
INTERESTED TRUSTEE*
Roger F. Harbin 5069 154th Place NE Redmond, WA 98052 (53)	Trustee and Chairman; President	Served since May 7, 2003; Served as President or Sr. Vice President since November 8, 2001	Senior Vice President and Director of Safeco Services Corporation and Safeco Securities, Inc. since November 2002. Named Director and interim President of Safeco Services Corporation, Director of Safeco Asset Management Company, interim President of Safeco Mutual Funds, Director and interim President of Safeco Securities, Inc. in 2001. Executive Vice President and Actuary of Safeco Life Insurance Company since 1998. Senior Vice President of Safeco Life Insurance Company from 1992 to 1998.	22	Director of several direct and indirect subsidiaries of Safeco Corporation, including Director of First Safeco National Life Insurance Co. of New York
*    Trustees who are defined as “interested persons” under 2(a)(19) of the Investment Company Act of 1940. Mr. Harbin meets this definition due to his position as a Director of the Fund’s investment advisor, Safeco Asset Management Co. **    Mandatory retirement at age 72. Chairman is an annual appointment.
Name, Address, and Age	Position(s) Held with Trusts	Term of Office* and Length of Time Served	Principal Occupation(s) During Past 5 Years
PRINCIPAL OFFICERS who are not Trustees
David H. Longhurst 4854 154th Place NE Redmond, WA 98052 (47)	Vice President, Treasurer, and Controller	Served since August 7, 1997	Secretary of the Trusts from July 2000 through May 2004. Vice President, Treasurer, Controller and Secretary of Safeco Asset Management Company; Vice President, Treasurer, Controller and Secretary of Safeco Services Corporation; and Vice President, Treasurer, Controller and Secretary and Financial Principal of Safeco Securities, Inc. since July 2000. Treasurer, Controller, Secretary and Financial Principal of Safeco Investment Services, Inc. since March 2000; Assistant Controller of Safeco Securities, Inc., Safeco Services Corporation and Safeco Asset Management Company from 1996 to June 2000.
William E. Crawford 5069 154th Place NE Redmond, WA 98052 (47)	Secretary	Served since May 6, 2004	Counsel of the Trusts since May 2001 and Assistant General Counsel of Safeco Life Insurance Company since February 1997.
Michael F. Murphy 4854 154th Place NE Redmond, WA 98052 (37)	Chief Compliance Officer	Served since November 6, 2003	Director of Compliance and Assistant Vice President for Thornburg Investment Management, Inc. and Thornburg Securities Corporation 1999-2003. Compliance Specialist for Technology Funding, Inc. 1997-1999.
David N. Evans 4854 154th Place NE Redmond, WA 98052 (31)	Assistant Controller	Served since November 7, 2002	Former Controller and Assistant Controller of Rosetta Inpharmatics from 2001-2002 and 2000-2001, respectively. From 1994 to 2000, he worked at PricewaterhouseCoopers LLP, where he focused on financial services.

* Annual Appointment

The Statement of Additional Information (“SAI”) includes additional information about Fund trustees and is available upon request without charge by contacting the Fund at 1-800-624-5711 or by mail at Safeco Securites, Inc. P.O. Box 219241, Kansas City, MO 64121-9241.

A description of the Fund’s proxy voting policies and procedures are available without charge by calling 1-800-624-5711. The information is additionally available at http://www.sec.gov.

SAFECO COMMON STOCK FUNDS

INVESTMENT ADVISOR

Pioneer Investment Management, Inc.

DISTRIBUTOR

Safeco Securities, Inc.

TRANSFER AGENT

Safeco Services Corporation

CUSTODIAN

State Street Bank and Trust Company

JP Morgan Chase Bank

(International Stock Fund)

For Shareholder Services

1-800-624-5711

*All telephone calls are tape-recorded

for your protection.

For Financial Professionals Only

1-800-706-0700

For 24-Hour Automated

Performance Information

and Transactions

Nationwide: 1-800-835-4391

Mailing Address

Safeco Mutual Funds

P.O. Box 219241

Kansas City, MO 64121-9241

Internet

www.safecoinvestorclass.com

Printed on Recycled Paper

Safeco^® and the Safeco

Logo are trademarks of

Safeco Corporation

GMF-1054 8/04

ITEM 1. REPORT TO SHAREHOLDERS

Safeco Mutual Funds

Semiannual Report

Safeco Stock Funds
Growth Opportunities Fund	1
Core Equity Fund	5
Large-Cap Value Fund	9
Multi-Cap Core Fund	14
International Stock Fund (A, B, C and Institutional Classes)	18
Balanced Fund	25
Small-Cap Value Fund	33
Large-Cap Growth Fund	37
Safeco Taxable Bond Funds
High-Yield Bond Fund	42
Intermediate-Term U.S. Government Fund	49
Intermediate-Term Bond Fund	53
Safeco Tax-Exempt Bond Funds
California Tax-Free Income Fund	58
Municipal Bond Fund	62
Intermediate-Term Municipal Bond Fund	68
Safeco Money Market Fund
Money Market Fund	72

Report From the Fund Managers

Safeco Growth Opportunities Fund

As of June 30, 2004

How did the Fund perform?

Excluding the applicable sales charges, the Safeco Growth Opportunities Fund outperformed its benchmark index, the Russell 2000 Index^®, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

The biggest factor affecting the Fund’s performance has been from stock selection. We have many stable, liquid and less volatile small-cap holdings. Our view continues to be that earnings growth comparisons for many companies will moderate as the economy continues to recover, thus we have positioned the portfolio toward companies with sustainable growth in earnings.

Some of the Fund’s performance was a result of 46% of the Fund having a market capitalization of greater than $1 billion currently. This is the segment of the market-cap spectrum that we added to during late 2003. Year-to date, the Russell 2000 Index^® sectors that contributed the most were producer durables, consumer discretionary and healthcare—all overweighted sectors in the Fund. Our underweight in technology helped as well.

What changes did you make to the Fund and why?

The turnover in the Fund remains quite low for a small-cap fund, as compared to the turnover of other funds of its type. What this symbolizes is a management team with a long-term view of the investments made in the portfolio.

We continue to upgrade the quality of the portfolio to more stable, more liquid and thereby less volatile stocks. We seek high quality companies that have consistent growth in profits, strong return on investor capital (or increasing), an ability to fund growth internally, and a seasoned management team.

Jeffrey Schwartz, CFA—Portfolio Manager/Equity Analyst

Bill Whitlow, CFA—Portfolio Manager/Equity Analyst

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 9 of Notes to the Financial Statements.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

1

Performance Overview & Highlights

Safeco Growth Opportunities Fund

(Unaudited)

	With Sales Charge				Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	10 Year	Six Month*	1 Year	5 Year	10 Year
Safeco Growth Opportunities Fund
Class A	2.01%	24.83%	3.24%	11.08%	8.24%	32.48%	4.47%	11.74%
Class B	2.81%	26.48%	3.37%	11.24%	7.81%	31.48%	3.72%	11.24%
Class C	6.81%	30.48%	3.72%	11.09%	7.81%	31.48%	3.72%	11.09%
Russell 2000 Index	N/A	N/A	N/A	N/A	6.76%	33.37%	6.63%	10.93%
Lipper, Inc. (Small-Cap Core Funds)	N/A	N/A	M/A	N/A	7.14%	33.47%	10.61%	12.54%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund’s benchmark index.

TOP FIVE INDUSTRIES	Percent of Net Assets
Specialty Stores	5.6	%
Thrifts & Mortgage Finance	5.2
Homebuilding	4.1
Casinos & Gaming	4.0
Health Care Services	3.9
TOP TEN HOLDINGS	Percent of Net Assets
MICROS Systems, Inc. (Application Software)	2.9	%
Nu Skin Enterprises, Inc. (Class A) (Personal Products)	2.6
PolyMedica Corp. (Health Care Supplies)	2.6
Rent-A-Center, Inc. (Specialty Stores)	2.6
Iron Mountain, Inc. (Data Processing & Outsourced Services)	2.5
Websense, Inc. (Internet Software & Services)	2.5
American Healthways, Inc. (Health Care Services)	2.4
Station Casinos, Inc. (Casinos & Gaming)	2.3
Textronix, Inc. (Electronic Equipment Manufacturers)	2.1
W Holding Co., Inc. (Thrifts & Mortgage Finance)	2.1

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
Florida Rock Industries, Inc.	$	9,506
Scientific Games Corp.		8,266
Timberland Co. (Class A)		8,074
W Holding Co., Inc.		7,938
Scotts Co. (Class A)		5,966
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
Conceptus, Inc.	$	9,279
NCO Group, Inc.		9,264
Nastech Pharmaceutical Co., Inc.		7,681
Matria Healthcare, Inc.		6,791
iShare Russell 2000 Value Index Fund		6,615

WEIGHTINGS AS A PERCENT OF NET ASSETS

2

Portfolio of Investments

Safeco Growth Opportunities Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—90.8%
Aerospace & Defense—3.0%
119,700	*	Alliant Techsystems, Inc.	$	7,582
269,000	*	DRS Technologies, Inc.		8,581
Application Software—2.9%
332,028	*	MICROS Systems, Inc.		15,927
Asset Management & Custody Banks—1.0%
108,300	*	Affiliated Managers Group, Inc.		5,455
Auto Parts & Equipment—0.6%
403,000	*	IMPCO Technologies, Inc.		2,551
118,300	*	Quantum Fuel Systems Technologies Worldwide, Inc.		719
Biotechnology—3.0%
518,100	*	North American Scientific, Inc.		4,352
265,600	*	Novavax, Inc.		1,432
536,773	*	Serologicals Corp.		10,730
Casinos & Gaming—4.0%
480,200	*	Scientific Games Corp.		9,191
260,500	*	Station Casinos, Inc.		12,608
Commercial Printing—0.6%
97,650		R.R. Donnelley & Sons Co.		3,225
Construction & Farm Machinery & Heavy Trucks—1.1%
289,400	*	AGCO Corp.		5,895
Construction Materials—1.7%
223,900		Florida Rock Industries, Inc.		9,442
Data Processing & Outsourced Services—2.5%
285,880	*	Iron Mountain, Inc.		13,797
Diversified Commercial Services—2.9%
152,400	*	Concorde Career Colleges, Inc.		2,666
65,200	*	Kroll, Inc.		2,405
408,674	*	NCO Group, Inc.		10,908
Electronic Equipment Manufacturers—2.1%
342,500	*	Tektronix, Inc.		11,652
Employment Services—1.3%
281,800	*	Monster Worldwide, Inc.		7,248
Food Distributors—1.0%
212,600		Fresh Del Monte Produce, Inc.		5,372
Food Retail—1.1%
328,000		Casey’s General Stores, Inc.		6,002

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Footwear—2.4%
220,600	*	Steven Madden, Ltd.	$	4,405
135,600	*	Timberland Co. (Class A)		8,758
Health Care Equipment—2.7%
48,850	*	American Medical Alert Corp.		205
429,200	*	Conceptus, Inc.		4,829
998,000	*†	Med-Design Corp.		2,076
1,800,000	*	PhotoMedex, Inc.		6,174
861,000	*†	SpectRx, Inc.		1,335
Health Care Services—3.9%
497,600	*	American Healthways, Inc.		13,246
313,325	*	Matria Healthcare, Inc.		7,855
Health Care Supplies—2.6%
452,300		PolyMedica Corp.		14,039
Home Entertainment Software—2.6%
517,566	*	PLATO Learning, Inc.		5,129
391,300	*	THQ, Inc.		8,961
Homebuilding—4.1%
830,000	*	Champion Enterprises, Inc.		7,619
101,200	*	Meritage Corp.		6,963
157,800		Standard Pacific Corp.		7,780
Housewares & Specialties—1.1%
94,100	*	Scotts Co. (Class A)		6,011
Industrial Machinery—1.6%
259,400		Pentair, Inc.		8,726
Internet Software & Services—3.8%
811,703	*	Stellent, Inc.		6,932
364,600	*	Websense, Inc.		13,574
IT Consulting & Other Services—1.5%
992,508	*	CIBER, Inc.		8,158
Life & Health Insurance—3.3%
337,200		Scottish RE Group, Ltd.		7,840
153,500		StanCorp Financial Group, Inc.		10,285
Metal & Glass Containers—0.5%
367,300		Intertape Polymer Group, Inc.		2,795
Oil & Gas Drilling—0.8%
259,000	*	Pride International, Inc.		4,431
Oil & Gas Equipment & Services—1.3%
166,500	*	FMC Technologies, Inc.		4,795
67,900		Tidewater, Inc.		2,023
Oil & Gas Exploration & Production—2.3%
193,200	*	Forest Oil Corp.		5,278
132,900	*	Newfield Exploration Co.		7,408

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

3

Portfolio of Investments

Safeco Growth Opportunities Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Personal Products—3.5%
162,600	*	NBTY, Inc.	$	4,779
560,800		Nu Skin Enterprises, Inc. (Class A)		14,199
Pharmaceuticals—2.8%
268,300	*	Connetics Corp.		5,420
711,610	*	Discovery Laboratories, Inc.		6,824
283,000	*	La Jolla Pharmaceutical Co.		688
227,100	*	Nastech Pharmaceutical Co., Inc.		2,316
Real Estate Investment Trust—1.6%
149,800		Alexandria Real Estate Equities, Inc.		8,506
Regional Banks—3.8%
339,018		Fulton Financial Corp.		6,831
159,200		United Bankshares, Inc.		5,174
166,200		Westamerica Bancorporation		8,717
Semiconductor Equipment—1.2%
51,200	*	Actel Corp.		947
110,700	*	Artisan Components, Inc.		2,856
103,800	*	DSP Group, Inc.		2,828
Semiconductors—0.4%
365,900	*	TriQuint Semiconductor, Inc.		1,998
Soft Drinks—0.8%
78,100		Coca-Cola Bottling Co.		4,521
Specialty Chemicals—0.6%
530,000	*	Omnova Solutions, Inc.		3,233
Specialty Stores—5.6%
532,213	*†	Harold’s Stores, Inc.		1,352
465,250	*	Rent-A-Center, Inc.		13,925
1,077,200	*	Rent-Way, Inc.		9,695
198,000	*	West Marine, Inc.		5,316
Thrifts & Mortgage Finance—5.2%
323,603		Doral Financial Corp.		11,164
122,700		New Century Financial Corp.		5,745
678,600		W Holding Co., Inc.		11,652
Trucking—2.0%
375,525	*	Old Dominion Freight Line, Inc.		11,070
TOTAL COMMON STOCKS (cost $344,983)				495,126
INDEXED SECURITIES—6.4%
Indexed Securities—6.4%
138,800		iShares Russell 2000		8,685
		Growth Index Fund
74,300		iShares Russell 2000		8,754
		Index Fund
50,900		iShares Russell 2000		8,754
		Value Index Fund
90,300		iShares S&P SmallCap 600/BARRA Growth Index Fund		8,812
TOTAL INDEXED SECURITIES (cost $29,253)				35,005

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
WARRANTS—0.4%
Diversified Commercial Services—0.0%
74,330	*	NCO Group, Inc. (Exp. 9/28/06)††	$	16
Health Care Equipment—0.2%
92,625	*	Endocare, Inc. (Exp. 11/23/05)††		0
260,000	*	LifePoint, Inc. (Exp. 4/01/07)††		1
156,000	*	LifePoint, Inc. (Exp. 7/21/07)††		1
450,000	*	PhotoMedex, Inc. (Exp. 6/13/07)††		974
172,200	*	SpectRx, Inc. (Exp. 6/04/06)††		38
Pharmaceuticals—0.2%
217,500	*	Nastech Pharmaceutical Co., Inc. (Exp. 3/19/06)††		1,076
TOTAL WARRANTS (cost $43)				2,106
CASH EQUIVALENTS—27.5%
Investment Companies
11,050,468		AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)		11,050
138,994,937		State Street Navigator Securities Lending PrimePortfolio **		138,995
TOTAL CASH EQUIVALENTS (cost $150,045)				150,045
TOTAL INVESTMENTS (cost $524,324)—125.1%			$	682,282
Other Assets, less Liabilities				(136,816	)
NET ASSETS			$	545,466

  * Non-income producing security.

** Represents invested collateral received related to $136,514,346 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

  † 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). Total cost of such securities is $21,898,000 and the total value is $4,763,000 or 0.9% of net assets.

†† Securities are valued at fair value as determined under the supervision of the Board of Trustees.

SEE NOTES TO FINANCIAL STATEMENTS

4

Report From the Fund Managers

Safeco Core Equity Fund

As of June 30, 2004

How did the Fund perform?

The Safeco Core Equity Fund underperformed its benchmark Index, the S&P 500, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

Trends that hurt the Fund in the fourth quarter of 2003 continued. Cyclical stocks, companies without earnings, and lower-quality companies continued to perform better than the stocks in the Fund’s benchmark.

During the first half of this year, virtually every sector had stocks that performed well. Some of these stocks, such as Ball Corp., Illinois Tool Works and Leggett & Platt performed well as the economy strengthened. Others like Hartford Financial and Schlumberger performed well because trends in the insurance and energy industries remained positive. Finally, others like Estee Lauder, Harley Davidson and PepsiCo are simply solid companies that continue to do well.

The Fund had several poor performing stocks in the first half, including some in the health care sector. In this sector, patent expirations (Abbott), legal issues (Wyeth) and concerns regarding future growth rates (Amgen) weighed on the stocks. The technology sector had several losers. Nokia is suffering from newer entrants and its own product cycle. Texas Instruments and Applied Materials remain volatile due to concerns regarding the strength and length of the cycle in their end markets.

What changes did you make to the Fund and why?

Diversification is increasing—we added two utilities stocks. The largest position sizes are decreasing: positions over 3% at year-end 2003 are down to zero at mid-year. The percentage of the funds in its top-10 holdings is decreasing (28.2% at year-end 2003 versus 24% now) and the average market capitalization is decreasing, achieved by reducing positions in Citigroup and Pfizer. The intent of these moves is to improve the relative performance of the Fund.

At the same time we were undertaking the activities outlined above, we continued to look for the correct buy and hold stocks for the Fund. This included such moves as adding to existing positions in Illinois Tool Works and Cardinal Health and initiating new positions, such as in SunGard Data Systems and Best Buy.

We eliminated our position in Altria when it reached our price objective, as well as our position in PeopleSoft, because we found a better alternative.

Rich Meagley, CFA—Portfolio Manager/Equity Analyst

Darcy MacLaren, CFA—Portfolio Manager

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund See Note 9 of Notes to the Financial Statements.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

5

Performance Overview & Highlights

Safeco Core Equity Fund

(Unaudited)

	With Sales Charge				Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	10 Year	Six Month*	1 Year	5 Year	10 Year
Safeco Core Equity Fund
Class A	(4.16)%	7.30%	(7.12)%	7.11%	1.66%	13.88%	(6.01)%	7.74%
Class B	(3.78)%	8.02%	(7.03)%	7.22%	1.22%	13.02%	(6.68)%	7.22%
Class C	0.28%	12.00%	(6.66)%	7.09%	1.28%	13.00%	(6.66)%	7.09%
S&P 500 Index	N/A	N/A	N/A	N/A	3.46%	19.13%	(2.20)%	11.82%
Lipper, Inc. (Large-Cap Core Funds)	N/A	N/A	N/A	N/A	2.03%	16.13%	(3.17)%	9.79%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund’s benchmark index.

TOP FIVE INDUSTRIES	Percent of Net Assets
Pharmaceuticals	8.7	%
Diversified Banks	4.9
Integrated Oil & Gas	4.3
Industrial Machinery	4.2
Multi-Line Insurance	3.3
TOP TEN HOLDINGS	Percent of Net Assets
General Electric Co. (Industrial Conglomerates)	2.8	%
Microsoft Corp. (Systems Software)	2.7
Citigroup, Inc. (Other Diversified Financial Services)	2.5
Pfizer, Inc. (Pharmaceuticals)	2.5
Wells Fargo & Co. (Diversified Banks)	2.4
Exxon Mobil Corp. (Integrated Oil & Gas)	2.4
United Technologies Corp. (Aerospace & Defense)	2.3
American International Group, Inc. (Multi-Line Insurance)	2.2
Cisco Systems, Inc. (Communication Equipment)	2.1
Procter & Gamble Co. (Household Products)	2.1

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
SunGard Data Systems, Inc.	$	7,637
Apache Corp.		7,522
Ball Corp.		7,448
FirstEnergy Corp.		7,125
Exelon Corp.		6,711
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
American International Group, Inc.	$	8,284
Pfizer, Inc.		8,091
PepsiCo, Inc.		7,374
Citigroup, Inc.		6,750
Oracle Corp.		6,412

WEIGHTINGS AS A PERCENT OF NET ASSETS

6

Portfolio of Investments

Safeco Core Equity Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—98.6%
Aerospace & Defense—3.3%
130,000		Northrop Grumman Corp.	$	6,981
174,000		United Technologies Corp.		15,918
Application Software—0.4%
80,000	*	Intuit, Inc.		3,086
Asset Management & Custody Banks—0.5%
120,000		Bank of New York Co., Inc.		3,538
Auto Parts & Equipment—1.2%
153,000		Johnson Controls, Inc.		8,167
Biotechnology—1.2%
150,000	*	Amgen, Inc.		8,185
Brewers—1.6%
200,000		Anheuser-Busch Companies, Inc.		10,800
Communication Equipment—2.7%
615,000	*	Cisco Systems, Inc.		14,575
300,000		Nokia Oyj (ADR)		4,362
Computer & Electronics Retail—1.0%
132,000		Best Buy Co., Inc.		6,698
Computer Hardware—3.0%
300,000	*	Dell, Inc.		10,746
119,000		International Business Machines Corp.		10,490
Computer Storage & Peripherals—0.6%
365,000	*	EMC Corp.		4,161
Construction & Farm Machinery & Heavy Trucks—1.1%
127,500		PACCAR, Inc.		7,394
Consumer Finance—3.1%
235,000		American Express Co.		12,074
375,000		MBNA Corp.		9,671
Data Processing & Outsourced Services—2.1%
145,000		Automatic Data Processing, Inc.		6,073
185,000		First Data Corp.		8,236
Department Stores—1.0%
170,000	*	Kohl’s Corp.		7,188
Diversified Banks—4.9%
225,000		Hibernia Corp. (Class A)		5,468
420,000		U.S. Bancorp		11,575
293,000		Wells Fargo & Co.		16,768

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Electric Utilities—2.0%
200,000		Exelon Corp.	$	6,658
184,000		FirstEnergy Corp.		6,883
Electrical Components & Equipment—1.0%
105,000		Emerson Electric Co.		6,673
Food Retail—1.0%
400,000	*	Kroger Co.		7,280
General Merchandise Stores—3.1%
240,000		Target Corp.		10,193
218,000		Wal-Mart Stores, Inc.		11,502
Health Care Distributors—2.3%
140,000		Cardinal Health, Inc.		9,807
185,000		McKesson Corp.		6,351
Health Care Equipment—1.4%
200,000		Medtronic, Inc.		9,744
Home Furnishings—0.7%
185,000		Leggett & Platt, Inc.		4,941
Home Improvement Retail—1.2%
240,000		Home Depot, Inc.		8,448
Household Products—3.2%
125,000		Kimberly-Clark Corp.		8,235
262,000		Procter & Gamble Co.		14,263
Housewares & Specialties—1.5%
138,000		Fortune Brands, Inc.		10,409
Industrial Conglomerates—2.8%
590,000		General Electric Co.		19,116
Industrial Gases—1.1%
200,000		Praxair, Inc.		7,982
Industrial Machinery—4.2%
200,000		Danaher Corp.		10,370
130,000		Illinois Tool Works, Inc.		12,466
90,000		Ingersoll-Rand Co. (Class A)		6,148
Integrated Oil & Gas—4.3%
138,000		ChevronTexaco Corp.		12,987
375,000		Exxon Mobil Corp.		16,654
Integrated Telecommunications Services—2.6%
200,000		CenturyTel, Inc.		6,008
340,000		Verizon Communications, Inc.		12,305
IT Consulting & Other Services—1.1%
288,000	*	SunGard Data Systems, Inc.		7,488

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

7

Portfolio of Investments

Safeco Core Equity Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Metal & Glass Containers—1.2%
115,000		Ball Corp.	$	8,286
Motorcycle Manufacturers—1.5%
170,000		Harley-Davidson, Inc.		10,530
Movies & Entertainment—0.9%
345,000	*	Time Warner, Inc.		6,065
Multi-Line Insurance—3.3%
215,000		American International Group, Inc.		15,325
115,000		Hartford Financial Services Group, Inc.		7,905
Oil & Gas Equipment & Services—1.0%
115,000		Schlumberger, Ltd.		7,304
Oil & Gas Exploration & Production—1.2%
190,000		Apache Corp.		8,275
Other Diversified Financial Services—2.5%
375,000		Citigroup, Inc.		17,437
Personal Products—0.9%
125,000		Estee Lauder Cos., Inc. (Class A)		6,098
Pharmaceuticals—8.7%
327,000		Abbott Laboratories		13,329
100,000		Eli Lilly & Co.		6,991
180,000		Johnson & Johnson		10,026
505,000		Pfizer, Inc.		17,311
345,000		Wyeth		12,475
Property & Casualty Insurance—1.5%
249,205		St. Paul Travelers Cos., Inc.		10,103
Publishing—1.2%
98,000		Gannett Co., Inc.		8,315
Regional Banks—2.1%
140,000		Fifth Third Bancorp		7,529
160,000		First Horizon National Corp.		7,275
Semiconductor Equipment—1.1%
395,000	*	Applied Materials, Inc.		7,750
Semiconductors—3.3%
490,000		Intel Corp.		13,524
380,000		Texas Instruments, Inc.		9,188
Soft Drinks—2.0%
260,000		PepsiCo, Inc.		14,009
Systems Software—2.7%
665,000		Microsoft Corp.		18,992

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
Thrifts & Mortgage Finance—2.3%
100,000	Federal National Mortgage Association	$	7,136
223,000	Washington Mutual, Inc.		8,617
TOTAL COMMON STOCKS (cost $482,425)			684,860
CASH EQUIVALENTS—1.8%
Investment Companies
10,640,317	AIM Short-Term Investments Co. Liquid Assets Money MarketPortfolio (InstitutionalShares)		10,640
1,871,906	State Street Navigator Securities Lending Prime Portfolio **		1,872
TOTAL CASH EQUIVALENTS (cost $12,512)			12,512
TOTAL INVESTMENTS (cost $494,937)—100.4%		$	697,372
Other Assets, less Liabilities			(2,802	)
NET ASSETS		$	694,570

  * Non-income producing security.

** Represents invested collateral received related to $1,828,685 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

8

Report From the Fund Managers

Safeco Large-Cap Value Fund

As of June 30, 2004

How did the Fund perform?

The Safeco Large-Cap Value Fund underperformed its benchmark, the Russell 1000 Value^® Index, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

The Fund’s performance was primarily due to stock selection and aided by a one-time settlement of a class action lawsuit regarding a former holding.

As usual, there were multiple factors affecting performance. One factor that has helped so far this year, after hurting last year, was the relative outperformance of large companies over smaller ones. This helped the Fund’s relative performance as we own mostly larger companies. It also helped that higher quality companies tended to perform better than lower quality ones. This too is a change from recent periods.

For the year-to-date, the Fund’s best performing sector was energy, which returned around 10%. Performance here was led by Conoco-Philips, up nearly 20%, and British Petroleum, up around 10%. This sector was up primarily due to the rise in oil prices, and the resulting improved outlook for earnings. Consumer discretionary stocks were our next best group, returning around 8%. Materials and consumer staples were our third and fourth best performing sectors.

On the negative side, our worst sectors were technology and health care, both of which declined by around 2%. Technology was hurt primarily by a large decline in both Nokia and Texas Instruments. Nokia has been losing market share in the cell phone market, and Texas Instruments is one of their suppliers. Finance stocks, the largest sector in both our Index and the Fund, were held back by rising interest rates and the negative impact this is expected to have on earnings. Finance stocks were essentially flat for the past six months.

What changes did you make to the Fund and why?

During the past six months, we made several changes to the Fund. As always, the changes were designed to own the stocks we find most attractive and to adjust sector weightings to what we believe are appropriate levels. Some recent sector weighting adjustments were due to the annual Russell Value Index re-configuration which occurred at the end of June.

Stocks added to the portfolio included PMI Group, Weyerhaeuser, and Polaris Industries. PMI Group, a mortgage insurer, was added because it’s a rarity among financial stocks in that rising rates should actually help earnings as the pace of refinancing slows. Weyerhaeuser, a stock we have wanted to own for some time in order to gain exposure to forest products, finally reached what we believe to be an attractive valuation. Polaris Industries is a maker of all-terrain vehicles, a market we expect will continue to experience good growth, especially as the economy improves and the outlook for jobs gets better. We also initiated positions in Allstate Insurance, Coca Cola and Illinois Tool Works, all of which we believe were selling at attractive valuations.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

9

Report From the Fund Managers

Safeco Large-Cap Value Fund

As of June 30, 2004

We eliminated holdings of Disney, which rose after receiving an unsolicited takeover offer. We also sold Eli Lilly, Anheuser-Busch and Hubbell based on valuation, as they had appreciated to levels that were very near our target prices.

We reduced our position in the finance sector by 2.1%, mainly to lessen our exposure during what we expect to be a period of rising interest rates. We are currently 1.7% underweight in finance relative to the Russell 1000 Value Index. We reduced our exposure to stocks in the producer durables sector, which performed very well, We do, however, remain overweighted in this sector by 2.0% as we expect these stocks to continue to perform well as the economy improves. We are overweighted in the materials sector for the same reason, and have added to our position, primarily by buying Weyerhaeuser as discussed earlier. We also added to our exposure to what Russell calls “other” (primarily includes multi-industry companies, such as GE), as this sector went from 1.6% to 6.6% of the Index at the June re-configuration.

Rex Bentley, CFA—Portfolio Manager/Equity Analyst

Lynette Sagvold, CFA—Portfolio Manager/Equity Analyst

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 9 of Notes to the Financial Statements.

10

Performance Overview & Highlights

Safeco Large-Cap Value Fund

(Unaudited)

	With Sales Charge				Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	10 Year	Six Month*	1 Year	5 Year	10 Year
Safeco Large-Cap Value Fund
Class A	(2.68)%	11.80%	(3.11)%	6.63%	3.26%	18.66%	(1.95)%	7.26%
Class B	(2.16)%	12.69%	(3.07)%	6.83%	2.84%	17.69%	(2.71)%	6.83%
Class C	1.87%	16.72%	(2.62)%	6.72%	2.87%	17.72%	(2.62)%	6.72%
Russell 1000 Value Index	N/A	N/A	N/A	N/A	3.94%	21.13%	1.87%	12.64%
Lipper, Inc. (Equity-Income Funds)	N/A	N/A	N/A	N/A	3.24%	19.19%	0.67%	10.41%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund’s benchmark index.

TOP FIVE INDUSTRIES	Percent of Net Assets
Diversified Banks	11.2	%
Integrated Oil & Gas	10.2
Multi-Line Insurance	5.8
Integrated Telecommunications Services	5.7
Pharmaceuticals	3.5
TOP TEN HOLDINGS	Percent of Net Assets
ChevronTexaco Corp. (Integrated Oil & Gas)	3.7	%
Citigroup, Inc. (Other Diversified Financial Services)	3.3
Exxon Mobil Corp. (Integrated Oil & Gas)	2.9
Hartford Financial Services Group, Inc. (Multi-Line Insurance)	2.7
U.S. Bancorp (Diversified Banks)	2.6
General Electric Co. (Industrial Conglomerates)	2.6
Wells Fargo & Co. (Diversified Banks)	2.3
Bank of America Corp. (Diversified Banks)	2.1
Kimberly-Clark Corp. (Household Products)	2.0
American International Group, Inc. (Multi-Line Insurance)	1.9

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
MBNA Corp.	$	2,441
Mellon Financial Corp.		2,013
General Electric Co.		1,958
Allstate Corp.		1,828
Praxair, Inc.		1,755
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
Travelers Property Casualty Corp. (Class B)	$	2,048
American Express Co.		1,619
Northrop Grumman Corp.		1,585
Nokia Oyj (ADR)		1,579
Kroger Co.		1,512

WEIGHTINGS AS A PERCENT OF NET ASSETS

11

Portfolio of Investments

Safeco Large-Cap Value Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—97.9%
Aerospace & Defense—1.3%
21,800		United Technologies Corp.	$	1,994
Air Freight & Logistics—0.5%
10,600		United Parcel Service, Inc. (Class B)		797
Aluminum—0.8%
37,500		Alcoa, Inc.		1,239
Application Software—0.8%
64,000	*	PeopleSoft, Inc.		1,184
Asset Management & Custody Banks—1.7%
48,900		Bank of New York Co., Inc.		1,442
24,600		State Street Corp.		1,206
Auto Parts & Equipment—0.9%
27,000		Johnson Controls, Inc.		1,441
Automobile Manufacturers—0.8%
25,000		General Motors Corp.		1,165
Broadcasting & Cable TV—0.8%
36,000		Viacom, Inc. (Class B)		1,286
Computer Hardware—2.7%
25,000	*	Dell, Inc.		895
13,300		Diebold, Inc.		703
29,400		International Business Machines Corp.		2,592
Construction & Farm Machinery & Heavy Trucks—0.5%
14,100		PACCAR, Inc.		818
Consumer Finance—2.0%
14,900		American Express Co.		766
89,700		MBNA Corp.		2,313
Department Stores—1.7%
60,300		Nordstrom, Inc.		2,569
Diversified Banks—11.2%
37,900		Bank of America Corp.		3,207
84,000		Hibernia Corp. (Class A)		2,041
59,600		Mellon Financial Corp.		1,748
145,000		U.S. Bancorp		3,996
58,000		Wachovia Corp.		2,581
60,600		Wells Fargo & Co.		3,468
Diversified Capital Markets—1.3%
51,800		J.P. Morgan Chase & Co.		2,008
Diversified Chemicals—0.8%
26,300		Du Pont (E.I.) de Nemours & Co.		1,168

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
Electric Utilities—3.5%
57,400	Exelon Corp.	$	1,911
50,000	FirstEnergy Corp.		1,870
51,400	Southern Co.		1,498
Food Distributors—0.9%
40,400	SYSCO Corp.		1,449
Forest Products—1.1%
25,500	Weyerhaeuser Co.		1,610
General Merchandise Stores—0.9%
33,100	Target Corp.		1,406
Health Care Distributors—0.8%
38,000	McKesson Corp.		1,305
Home Furnishings—1.3%
73,700	Leggett & Platt, Inc.		1,969
Home Improvement Retail—0.7%
32,300	Home Depot, Inc.		1,137
Household Products—2.6%
46,500	Kimberly-Clark Corp.		3,063
15,800	Procter & Gamble Co.		860
Housewares & Specialties—1.2%
24,100	Fortune Brands, Inc.		1,818
Industrial Conglomerates—2.6%
121,600	General Electric Co.		3,940
Industrial Gases—3.2%
38,000	Air Products and Chemicals, Inc.		1,993
72,800	Praxair, Inc.		2,905
Industrial Machinery—1.7%
9,800	Illinois Tool Works, Inc.		940
23,800	Ingersoll-Rand Co. (Class A)		1,626
Integrated Oil & Gas—10.2%
35,800	BP, plc (ADR)		1,918
60,000	ChevronTexaco Corp.		5,647
20,785	ConocoPhillips		1,586
98,812	Exxon Mobil Corp.		4,388
39,300	Royal Dutch Petroleum Co. (ADR)		2,031
Integrated Telecommunications Services—5.7%
45,000	ALLTEL Corp.		2,278
58,600	BellSouth Corp.		1,536
93,800	SBC Communications, Inc.		2,275
71,500	Verizon Communications, Inc.		2,588
Investment Banking & Brokerage—1.7%
50,000	Morgan Stanley		2,638

SEE NOTES TO FINANCIAL STATEMENTS

12

Portfolio of Investments

Safeco Large-Cap Value Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Leisure Products—0.8%
25,400		Polaris Industries, Inc.	$	1,219
Metal & Glass Containers—0.8%
16,900		Ball Corp.		1,218
Multi-Line Insurance—5.8%
40,800		Allstate Corp.		1,899
41,000		American International Group, Inc.		2,922
59,700		Hartford Financial Services Group, Inc.		4,104
Multi-Utilities & Unregulated Power—1.2%
88,000		NiSource, Inc.		1,815
Office Services & Supplies—1.0%
33,000		Pitney Bowes, Inc.		1,460
Other Diversified Financial Services—3.3%
108,300		Citigroup, Inc.		5,036
Packaged Foods & Meats—1.7%
47,900		Kraft Foods, Inc. (Class A)		1,517
48,200		Sara Lee Corp.		1,108
Pharmaceuticals—3.5%
47,500		Abbott Laboratories		1,936
51,300		Pfizer, Inc.		1,759
46,000		Wyeth		1,663
Property & Casualty Insurance—0.8%
28,691		St. Paul Travelers Cos., Inc.		1,163
Publishing—1.4%
25,600		Gannett Co., Inc.		2,172
Railroads—0.7%
19,000		Union Pacific Corp.		1,130
Real Estate Investment Trust—1.3%
21,200		Alexandria Real Estate Equities, Inc.		1,204
20,300		Liberty Property Trust		816
Restaurants—1.0%
38,900	*	YUM! Brands, Inc.		1,448
Semiconductor Equipment—0.5%
39,200	*	Applied Materials, Inc.		769
Semiconductors—2.2%
71,300		Intel Corp.		1,968
59,500		Texas Instruments, Inc.		1,439

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Soft Drinks—1.6%
32,000		Coca-Cola Co.	$	1,615
14,000		PepsiCo, Inc.		754
Systems Software—1.0%
52,700		Microsoft Corp.		1,505
Technology Distributors—0.5%
24,900	*	Agilent Technologies, Inc.		729
Thrifts & Mortgage Finance—2.9%
10,300		Federal National Mortgage Association		735
26,300		PMI Group, Inc.		1,145
65,000		Washington Mutual, Inc.		2,512
TOTAL COMMON STOCKS (cost $117,546)				149,572
CASH EQUIVALENTS—3.8%
Investment Companies
3,717,303		AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)		3,717
2,071,095		State Street Navigator Securities Lending Prime Portfolio **		2,071
TOTAL CASH EQUIVALENTS (cost $5,788)				5,788
TOTAL INVESTMENTS (cost $123,334)—101.7%			$	155,360
Other Assets, less Liabilities				(2,611	)
NET ASSETS			$	152,749

  * Non-income producing security.

** Represents invested collateral received related to $2,029,205 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

13

Report From the Fund Managers

Safeco Multi-Cap Core Fund

As of June 30, 2004

How did the Fund perform?

Excluding any applicable sales charges, the Safeco Multi-Cap Core Fund outperformed its benchmark Index, the Russell 3000^® Index, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

The market posted a modest gain during the first half of the year as the improving economy and strong corporate earnings outweighed investors’ concerns about rising rates, the conflict in Iraq and higher oil prices.

During the period, small- and mid-cap stocks outperformed large-cap stocks. In the first half of this year, the Russell 2000^® Index of small-cap stocks advanced 6.76% and the Russell Mid-Cap Index advanced 6.67% versus a 3.3% rise in the Russell 1000^® Index of large-cap issues.

We attribute our performance in the period to the Fund’s high exposure to mid- and small-cap stocks relative to the benchmark.

What changes did you make to the Fund and why?

During the first half we continued our strategy of increasing diversification to improve the risk/reward trade-off in the Fund. We added 17 new positions, and deleted six, bringing our total number of names to 73. The additions were mostly economically sensitive companies in the mid-cap size range. The deletions were all small-cap companies which had not been performing well. We continue to seek a better balance among market capitalizations as we modestly reduce our exposure to small-caps relative to our benchmark.

Four of the five top performers for the period—Coldwater Creek, Starbucks, Expeditors International and Nordstrom—are cyclical companies. Our poor performers were either companies that had company-specific problems, like Performance Food Group, Intuit and Penwest Pharmaceutical, or stocks that retreated after a good run, like Primus Knowledge.

Bill Whitlow, CFA—Portfolio Manager/Equity Analyst

Brian Clancy, CFA—Portfolio Manager/Equity Analyst

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 9 of Notes to the Financial Statements.

14

Performance Overview & Highlights

Safeco Multi-Cap Core Fund

(Unaudited)

	With Sales Charge				Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	10 Year	Six Month*	1 Year	5 Year	10 Year
Safeco Multi-Cap Core Fund
Class A	(1.25)%	18.34%	0.89%	8.64%	4.77%	25.53%	2.09%	9.29%
Class B	(0.64)%	19.50%	0.98%	8.85%	4.36%	24.50%	1.35%	8.85%
Class C	3.35%	23.57%	1.36%	8.70%	4.35%	24.57%	1.36%	8..70%
Russell 3000 Index	N/A	N/A	N/A	N/A	3.59%	20.46%	(1.07)%	11.66%
S&P 500 Index	N/A	N/A	N/A	N/A	3.46%	19.13%	(2.20)%	11.82%
Lipper, Inc. (Multi-Cap Core Funds)	N/A	N/A	N/A	N/A	3.34%	19.72%	1.66%	11.38%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund’s benchmark index.

TOP FIVE INDUSTRIES	Percent of Net Assets
Diversified Banks	5.6	%
Pharmaceuticals	5.2
Semiconductors	4.0
Oil & Gas Exploration & Production	3.7
Electronic Equipment Manufacturers	3.6
TOP TEN HOLDINGS	Percent of Net Assets
StanCorp Financial Group, Inc. (Life & Health Insurance)	2.5	%
Tektronix, Inc. (Electronic Equipment Manufacturers)	2.5
Starbucks Corp. (Restaurants)	2.4
Expeditors International of Washington, Inc. (Air Freight & Logistics)	2.3
Nordstrom, Inc. (Department Stores)	2.3
Kroger Co. (Food Retail)	2.2
Costco Wholesale Corp. (Hypermarkets & Super Centers)	2.2
Pfizer, Inc. (Pharmaceuticals)	2.1
Microsoft Corp. (Systems Software)	2.1
U.S. Bancorp (Diversified Banks)	2.0

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
Performance Food Group Co.	$	1,388
A.G. Edwards, Inc.		1,354
Investors Financial Services Corp.		1,274
Accredo Health, Inc.		1,098
American Healthways, Inc.		1,043
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
Coldwater Creek, Inc.	$	2,028
Monaco Coach Corp.		1,267
Starbucks Corp.		1,169
Penford Corp.		1,020
Tektronix, Inc.		978

WEIGHTINGS AS A PERCENT

OF NET ASSETS

15

Portfolio of Investments

Safeco Multi-Cap Core Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—98.8%
Advertising—0.8%
12,200	*	Getty Images, Inc.	$	732
Aerospace & Defense—1.3%
21,200		Northrop Grumman Corp.		1,139
Air Freight & Logistics—2.3%
42,100		Expeditors International of Washington, Inc.		2,080
Airlines—1.6%
59,800	*	Alaska Air Group, Inc.		1,428
Application Software—2.0%
126,200	*	Captaris, Inc.		815
25,900	*	Intuit, Inc.		999
Asset Management & Custody Banks—1.0%
41,900		Waddell & Reed Financial, Inc.		927
Automobile Manufacturers—1.1%
34,300	*	Monaco Coach Corp.		966
Biotechnology—2.6%
25,160	*	Amgen, Inc.		1,373
35,600	*	Dendreon Corp.		436
19,400	*	Icos Corp.		579
Broadcasting & Cable TV—1.2%
30,000		Viacom, Inc. (Class B)		1,072
Catalog Retail—1.4%
47,600	*	Coldwater Creek, Inc.		1,260
Communication Equipment—1.2%
39,600	*	F5 Networks, Inc.		1,049
Construction & Farm Machinery & Heavy Trucks—1.0%
15,750		PACCAR, Inc.		913
Consumer Finance—1.5%
52,000		MBNA Corp.		1,341
Data Processing & Outsourced Services—1.1%
26,200	*	Fiserv, Inc.		1,019
Department Stores—2.3%
48,000		Nordstrom, Inc.		2,045
Distributors—0.8%
50,200	*	Ingram Micro, Inc. (Class A)		726
Diversified Banks—5.6%
19,500		Bank of America Corp.		1,650

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Diversified Banks—(continued)
66,300		U.S. Bancorp	$	1,827
27,952		Wells Fargo & Co.		1,600
Diversified Commercial Services—0.9%
47,300	*	FTI Consulting, Inc.		780
Electronic Equipment Manufacturers—3.6%
43,400	*	FEI Co.		1,038
65,600	*	Tektronix, Inc.		2,232
Environmental Services—1.2%
37,200		Republic Services, Inc.		1,077
Food Distributors—1.2%
38,900	*	Performance Food Group Co.		1,032
Food Retail—3.0%
111,200	*	Kroger Co.		2,024
26,600	*	Safeway, Inc.		674
Health Care Distributors—1.0%
15,700		AmerisourceBergen Corp.		939
Health Care Equipment—1.5%
55,800	*	SonoSite, Inc.		1,334
Health Care Facilities—1.3%
30,600	*	Accredo Health, Inc.		1,192
Health Care Services—2.2%
41,800	*	American Healthways, Inc.		1,113
37,900		IMS Health, Inc.		888
Health Care Supplies—1.4%
19,900		Cooper Companies, Inc.		1,257
Home Furnishings—1.7%
56,700		Leggett & Platt, Inc.		1,514
Hotels, Resorts & Cruise Lines—1.4%
54,300	*	Ambassadors Group, Inc.		1,277
Hypermarkets & Super Centers—2.2%
47,200	*	Costco Wholesale Corp.		1,939
Industrial Machinery—1.6%
43,200	*	Terex Corp.		1,474
Integrated Oil & Gas—1.0%
16,400		BP, plc (ADR)		879
Integrated Telecommunications Services—3.2%
34,200		CenturyTel, Inc.		1,027
37,000		SBC Communications, Inc.		897
26,400		Verizon Communications, Inc.		955

SEE NOTES TO FINANCIAL STATEMENTS

16

Portfolio of Investments

Safeco Multi-Cap Core Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Internet Software & Services—1.9%
30,100	*	CheckFree Corp.	$	903
201,000	*	Primus Knowledge Solutions, Inc.		370
63,800	*	WatchGuard Technologies, Inc.		461
Life & Health Insurance—2.5%
33,600		StanCorp Financial Group, Inc.		2,251
Metal & Glass Containers—1.5%
18,500		Ball Corp.		1,333
Multi-Utilities & Unregulated Power—1.7%
81,900		Avista Corp.		1,509
Oil & Gas Drilling—1.7%
53,300	*	Pride International, Inc.		912
22,700		Transocean Sedco Forex, Inc.		657
Oil & Gas Exploration & Production—3.7%
20,900		Anadarko Petroleum Corp.		1,225
25,500		Apache Corp.		1,111
34,500		XTO Energy, Inc.		1,028
Other Diversified Financial Services—3.0%
38,300		A.G. Edwards, Inc.		1,303
32,200		Investors Financial Services Corp.		1,403
Personal Products—1.9%
34,200		Estee Lauder Cos., Inc. (Class A)		1,668
Pharmaceuticals—5.2%
74,700	*	Penwest Pharmaceuticals Co.		957
55,700		Pfizer, Inc.		1,909
49,400		Wyeth		1,786
Regional Banks—2.9%
83,720		Washington Banking Co.		1,247
64,100		West Coast Bancorp, Inc.		1,374
Restaurants—2.4%
50,300	*	Starbucks Corp.		2,187
Semiconductors—4.0%
64,400		Intel Corp.		1,777
65,000	*	Micron Technology, Inc.		995
147,200	*	TriQuint Semiconductor, Inc.		804
Soft Drinks—1.5%
24,500		PepsiCo, Inc.		1,320
Specialty Chemicals—1.0%
29,500		Ecolab, Inc.		935
Steel—1.1%
28,950		Schnitzer Steel Industries, Inc.		983

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Systems Software—2.6%
65,900		Microsoft Corp.	$	1,882
33,960	*	NetIQ Corp.		448
Thrifts & Mortgage Finance—1.7%
38,600		Washington Mutual, Inc.		1,492
Trading Companies & Distributors—1.3%
20,600		W.W. Grainger, Inc.		1,185
TOTAL COMMON STOCKS (cost $63,450)				88,933
CASH EQUIVALENTS—9.9%
Investment Companies
1,094,730		AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)		1,095
7,790,496		State Street Navigator Securities Lending Prime Portfolio **		7,790
TOTAL CASH EQUIVALENTS (cost $8,885)				8,885
TOTAL INVESTMENTS (cost $72,335)—108.7%			$	97,818
Other Assets, less Liabilities				(7,825	)
NET ASSETS			$	89,993

  * Non-income producing security.

** Represents invested collateral received related to $7,758,739 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

17

Report From the Fund Manager

Safeco International Stock Fund

As of June 30, 2004

How did the Fund perform?

The Safeco International Fund underperformed its benchmark index, the MSCI EAFE Net Index, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

Against a backdrop of improved economic conditions, global equity markets posted moderate gains in most instances for the first six months of 2004. However, concern about the future sustainability of the economic improvement, peaking of the corporate profit cycle, rising interest rates, persistent geopolitical strains and the ascent in the crude oil price counteracted some of the gains in stocks.

The American and Japanese economies—the world’s largest and second largest—and China, produced much of the economic vigor. These economies also provided the tonic for the rest of the world that buoyed corporate earnings’ prospects and underpinned the equity markets’ advance.

Performance of the Fund was mixed over the first half of the year. Some of the factors that weighed on performance during 2003 persisted while others dissipated. Smaller companies continued to outperform their larger peers during the first half of 2004. This continues to negatively impact the Fund as our focus is large-cap companies.

However, encouragingly, we have begun to see a broadening out of performance in the markets. Many of the low quality, “recovery play” stocks which led the markets last year have begun to lag and high quality companies which generate consistent earnings growth have begun to come back into favor.

Lastly, the Fund was held back somewhat by its underexposure to the strongly performing Japanese market, however, as evidenced by the Fund’s increased weighting in Japan and greater Asia, we are encouraged by developments in the region.

What changes did you make to the Fund and why?

There was considerable activity in the Fund during the first half of the year, with much of the activity occurring in the Asia region. The Fund’s exposure to a particular country or sector is strictly a residual of the stock selection process; however we have identified a number of attractive investment opportunities in Japan and Asia in general.

Several Japanese financial services companies were added to the Fund including, Sumitomo Mitsui Financial Group NPV, Millea Holdings Incorporated NPV and Mitsui Sumitomo Insurance Company. The recovery in the Japanese economy continues to gain momentum and, more importantly the underlying causes appear to be more structural rather than cyclical and therefore more sustainable. Financial services companies should be among the beneficiaries of this recovery.

Similarly Hong Kong banking group Hang Seng Bank was added to the fund. Hang Seng Bank is one of the largest financial services companies in Hong Kong and is well placed to benefit from the recovery in the Hong Kong economy as well as the strong growth in mainland China where it is the largest foreign investor in any Chinese bank.

During the second quarter, Japan Tobacco and Taiwan Semiconductor (TSMC) were added to the Fund. Japan Tobacco is the dominate tobacco company in Japan and owns the international rights to three of the top six global cigarette brands. There is potential for re-rating of the stock as management pursues a number of restructuring initiatives. TSMC is a global leader in the design and manufacture of integrated

18

Report From the Fund Manager

Safeco International Stock Fund

As of June 30, 2004

circuit chips. The company is well positioned to benefit from the growth in outsourcing of chip manufacturing yet trades on an attractive multiple relative to its peers and historical growth record.

Positions disposed of during the period include Lloyds TSB, Shell T&T and China Life. Shell’s announcement that it has overstated proven reserves by 20% raised a credibility issue about the management and we felt better opportunities were available elsewhere. We participated in the IPO of China Life in December of 2003. Shares in the company soared shortly thereafter making the stock look expensive in our view.

Although Lloyds TSB is the highest yielding of the U.K. banks, we had concerns regarding the sustainability of the dividend given the potential need for capital support for its insurance subsidiary, Scottish Widows. Further, we believe that other financial companies, in particular Royal Bank of Scotland and BNP Paribas (also purchased during the period) are more attractive at this time.

Bank of Ireland

Asset Management (U.S.) Limited

Bank of Ireland Asset Management (U.S.) Limited is registered as an investment adviser with the US Securities and Exchange Commission, is also registered with various provinces in Canada, and is authorized by the Irish Financial Services Regulatory Authority under the Investment Intermediaries Act 1995.

The information contained herein is believed to be reliable, but its accuracy cannot be guaranteed. It should not be assumed that the future performance of any company identified in this commentary will equal its prior performance or that any future recommendation regarding the securities of any such company will be profitable. Past performance is not necessarily a guide to future performance. Investment values can fall as well as rise in value.

Upon request, BIAM (U.S.) will provide details of all transactions on your portfolio, during the proceeding 12-month period.

As of August 2, 2004, Pioneer Investment Management, Inc. was named the investment advisor to the fund. See Note 9 of Notes to the Financial Statements.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

19

Performance Overview

Safeco International Stock Fund

(Unaudited)

INSTITUTIONAL CLASS

Average Annual Total Return for the periods ended june 30, 2004	Six Month*	1 Year	5 Year	Since Inception**
Safeco International Stock Fund
Institutional Class	2.42%	23.47%	(2.67)%	2.77%
MSCI EAFE Index	4.56%	32.37%	0.06%	3.59%
Lipper, Inc. (International Funds)	2.49%	25.48%	(1.31)%	N/A
* Not annualized. ** Graph and average annual return comparison begins January 31, 1996, inception date of the Fund. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund’s benchmark index.

20

	With Sales Charge				Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	Since Inception**	Six Month*	1 Year	5 Year	Since Inception**
Safeco International Stock Fund
Class A	(3.58)%	15.99%	(4.12)%	1.74%	2.28%	23.05%	(2.98)%	2.46%
Class B	(3.16)%	17.05%	(4.07)%	1.88%	1.84%	22.05%	(3.71)%	1.88%
Class C	0.84%	21.02%	(3.73)%	1.70%	1.84%	22.02%	(3.73)%	1.70%
MSCI EAFE Index	N/A	N/A	N/A	N/A	4.56%	32.37%	0.06%	3.59%
Lipper, Inc. (International Funds)	N/A	N/A	N/A	N/A	2.49%	25.48%	(1.31)%	N/A
* Not annualized. ** Graph and average annual return comparison begins January 31, 1996, inception date of the Fund. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund’s benchmark index.

Performance Highlights

Safeco International Stock Fund

(Unaudited)

TOP FIVE COUNTRIES	Percent of Net Assets
United Kingdom	23.5	%
Japan	17.4
Switzerland	12.2
France	9.7
Netherlands	8.3
TOP TEN HOLDINGS	Percent of Net Assets
Nestle SA (Food Retail)	3.6	%
Total SA (Integrated Oil & Gas)	3.4
Canon, Inc. (Office Electronics)	3.1
UBS AG (Investment Banking & Brokerage)	2.9
E.On AG (Electric Utilities)	2.4
ING Groep NV (Other Diversified Financial Services)	2.4
Nippon Telegraph & Telephone Corp. (Integrated Telecommunications Services)	2.2
Samsung Electronics Co., Ltd. (Electronic Equipment Manufacturers)	2.2
HSBC Holdings, plc (Diversified Banks)	2.2
Novartis AG (Pharmaceuticals)	2.2

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
Royal Bank of Scotland Group, plc	$	539
BNP Paribas SA		528
Sumitomo Mitsui Financial Group, Inc.		341
HSBC Holdings, plc		325
Japan Tobacco, Inc.		299
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
Lloyds TSB Group, plc	$	585
Shell Transport & Trading Co., plc		548
Aventis SA		169
Barclays, plc		160
Acom Co., Ltd.		149

SEE NOTES TO FINANCIAL STATEMENTS

21

Portfolio of Investments

Safeco International Stock Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
COMMON STOCKS—96.8%
Australia—2.0%
17,106	James Hardie Industries NV Building Products	$	72
10,983	National Australia Bank, Ltd. Diversified Banks		229
28,621	News Corp., Ltd. Movies & Entertainment		254
17,143	Westpac Banking Corp., Ltd. Diversified Banks		211
Canada—0.4%
3,373	Royal Bank of Canada Diversified Banks		150
Finland—1.0%
26,381	Nokia Oyj Communication Equipment		381
France—9.7%
10,172	Aventis SA Pharmaceuticals		770
18,351	Axa Multi-Line Insurance		405
8,351	BNP Paribas SA Diversified Capital Markets		515
12,334	France Telecom SA Integrated Telecommunications Services		322
3,913	Lafarge SA Construction Materials		350
6,669	Total SA Integrated Oil & Gas		1,274
Germany—5.9%
9,917	Bayer AG Diversified Chemicals		287
14,215	Bayerische Motoren Werke AG Automobile Manufacturers		630
5,007	Deutsche Bank AG Diversified Capital Markets		395
12,521	E.On AG Electric Utilities		904
Hong Kong—3.5%
32,000	Cheung Kong Holdings, Ltd. Real Estate Investment Trust		236
31,500	Esprit Holdings, Ltd. Distributors		141
19,600	Hang Seng Bank, Ltd. Regional Banks		251
91,500	Johnson Electric Holdings, Ltd. Electrical Components & Equipment		93
90,000	Li & Fung, Ltd. Distributors		132

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Hong Kong—(continued)
33,000		Sun Hung Kai Properties, Ltd. Real Estate Investment Trust	$	271
31,000		Swire Pacific, Ltd. Diversified Commercial Services		201
Ireland—1.0%
16,843		CRH, plc Construction Materials		357
Italy—3.6%
39,376		ENI SpA Integrated Oil & Gas		784
178,623		Telecom Italia SpA Integrated Telecommunications Services		557
Japan—17.4%
570		Acom Co., Ltd. Consumer Finance		37
21,900		Canon, Inc. Office Electronics		1,157
4,200		FANUC, Ltd. Electronic Equipment Manufacturers		251
15,000		Honda Motor Co., Ltd. Automobile Manufacturers		725
4,700		Hoya Corp. Health Care Supplies		493
39	*	Japan Tobacco, Inc. Tobacco		304
18		Millea Holdings, Inc. Property & Casualty Insurance		268
36		Mitsubishi Tokyo Financial Group, Inc. Diversified Banks		334
24,000		Mitsui Sumitomo Insurance, Co. Property & Casualty Insurance		226
156		Nippon Telegraph & Telephone Corp. Integrated Telecommunications Services		836
131		NTT DoCoMo, Inc. Wireless Telecommunication Services		235
10,000		RICOH Co., Ltd. Office Electronics		213
2,100		Rohm Co., Ltd. Electronic Manufacturing Services		252
9,100		Shin-Etsu Chemical Co., Ltd. Diversified Chemicals		326
14,000		Shionogi & Co., Ltd. Pharmaceuticals		241
47		Sumitomo Mitsui Financial Group, Inc. Regional Banks		323
6,600		Takeda Chemical Industries Pharmaceuticals		291

SEE NOTES TO FINANCIAL STATEMENTS

22

Portfolio of Investments

Safeco International Stock Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
Netherlands—8.3%
32,257	ABN AMRO Holding NV Diversified Banks	$	707
4,265	Heineken NV Brewers		140
37,755	ING Groep NV Other Diversified Financial Services		893
22,956	Koninklijke (Royal) Philips Electronics NV Semiconductors		620
8,371	Koninklijke Ahold NV Food Retail		66
22,502	Reed Elsevier NV Publishing		317
8,558	TPG NV Air Freight & Logistics		196
4,878	VNU NV Publishing		142
Singapore—0.6%
27,000	United Overseas Bank, Ltd. Diversified Banks		211
South Korea—4.1%
3,476	Hyundai Motor Co., Ltd. (GDR) *** Automobile Manufacturers		69
20,160	Korea Electric Power Corp. (ADR) ** Electric Utilities		185
9,100	KT Corp. (ADR) ** Integrated Telecommunications Services		164
8,750	POSCO (ADR) ** Steel		293
4,044	Samsung Electronics Co., Ltd. (GDR) *** Electronic Equipment Manufacturers		835
Spain—3.0%
55,189	Banco Santander Central Hispano SA Diversified Banks		574
36,001	Telefonica SA Integrated Telecommunications Services		533
Switzerland—12.2%
5,097	Nestle SA Food Retail		1,362
18,366	Novartis AG Pharmaceuticals		812
7,081	Roche Holding AG Pharmaceuticals		702
8,980	Swiss Re Multi-Line Insurance		584
15,476	UBS AG Investment Banking & Brokerage		1,093

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Taiwan—0.6%
25,009	*	Taiwan Semiconductor Manufacturing Co., Ltd. (ADR) ** Semiconductors	$	208
United Kingdom—23.5%
79,145		Barclays, plc Diversified Banks		676
24,322		British American Tobacco, plc Tobacco		378
47,308		BT Group, plc Integrated Telecommunications Services		171
38,409		Cadbury Schweppes, plc Packaged Foods & Meats		332
54,512		Centrica, plc Gas Utilities		222
47,141		Compass Group, plc Food Retail		288
33,031		Diageo, plc Distillers & Vintners		447
9,457		Enterprise Inns, plc Restaurants		99
25,759		GlaxoSmithKline, plc Pharmaceuticals		524
6,594		GUS, plc Catalog Retail		101
55,638		HSBC Holdings, plc Diversified Banks		831
46,828		Kingfisher, plc Home Improvement Retail		244
15,215		Marks & Spencer Group, plc Department Stores		100
32,305		Prudential, plc Multi-Line Insurance		279
16,804		Reed Elsevier, plc Publishing		164
18,076		Royal Bank of Scotland Group, plc Banks (Foreign)		522
32,107		Smith & Nephew, plc Health Care Supplies		346
9,873		Smiths Group, plc Industrial Conglomerates		134
129,083		Tesco, plc Food Retail		626
19,100	*	TI Automotives, Ltd. (Illiquid) † Industrial Conglomerates		0
28,031		Tomkins, plc Industrial Machinery		140
3,668		Travis Perkins, plc Construction Materials		91
57,815		Unilever, plc Packaged Foods & Meats		569

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

23

Portfolio of Investments

Safeco International Stock Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
United Kingdom—(continued)
351,803	Vodafone Group, plc Wireless Telecommunication Services	$	774
6,562	Whitbread, plc Restaurants		98
27,662	Wolseley, plc Distributors		430
20,048	WPP Group, plc Advertising		204
TOTAL COMMON STOCKS (cost $27,040)			36,180
CORPORATE BONDS—0.1%
France—0.1%
1,146	Axa SA 2.40%, due 12/21/04 Multi-Line Insurance		26
TOTAL CORPORATE BONDS (cost $17)			26
TOTAL INVESTMENTS (cost $27,057)—96.9%		$	36,206
	Domestic Cash		1,047
	Foreign Cash		135
	Other Assets, less Liabilities		(21	)
			1,161
NET ASSETS		$	37,367

    * Non-income producing security.

  ** American Depository Receipt.

*** Global Depository Receipt.

    † Securities are valued at fair value as determined under supervision of the Board of Trustees.

Industry Diversification	Percent of Net Assets
Diversified Banks	10.5	%
Pharmaceuticals	8.9
Integrated Telecommunications Services	6.9
Food Retail	6.3
Integrated Oil & Gas	5.5
Automobile Manufacturers	3.8
Office Electronics	3.7
Multi-Line Insurance	3.5
Investment Banking & Brokerage	2.9
Electric Utilities	2.9
Other	45.1
	100.0	%

SEE NOTES TO FINANCIAL STATEMENTS

24

Report From the Fund Managers

Safeco Balanced Fund

As of June 30, 2004

How did the Fund perform?

The Safeco Balanced Fund underperformed its benchmark—a 60/40 mix of the Russell 1000 Value and Lehman Aggregate Bond indices, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

The two dominant factors effecting performance over the past six months were the rise in interest rates in the second quarter, and the dramatic outperformance of smaller, lower-quality stocks in the first quarter. Higher interest rates caused a decline in fixed-income assets over the past three months, resulting in an essentially flat bond market over the six-month period.

Rising interest rates also had a negative impact on financial stocks, our largest equity sector. Asset allocation had a favorable impact, as 64.9% of the assets were invested in equities, which had a somewhat higher return than fixed income assets year-to-date. This allocation is toward the upper end of our allowable range of 50% to 70% equity exposure. Year-to-date both stocks and bonds lagged their respective indices. Most of the underperformance in equities occurred early in the year, when lower quality stocks performed exceptionally well.

For the year-to-date, the Fund’s best-performing sector was energy, which returned around 10%. Performance here was led by Conoco-Philips, up nearly 20%, and British Petroleum, up around 10%. This sector was up primarily due to the rise in oil prices, and the resulting improved outlook for earnings. Consumer discretionary stocks were our next best group, returning around 8%. Materials and consumer staples were our third and fourth best-performing sectors.

On the negative side, our worst sectors were technology and health care, both of which declined by around 2%. Technology was hurt primarily by a large decline in both Nokia and Texas Instruments. Nokia has been losing market share in the cell phone market, and Texas Instruments is one of their suppliers. Finance stocks, the largest sector in both our index and the Fund, were held back by the negative impact that rising interest rates are expected to have on earnings. This essentially led to flat performance for the six-month period.

The bond portion of the Fund benefited from a relatively short duration of 4.48 compared to the 4.7 duration of the Lehman Aggregate Index. This is because longer duration bonds declined more than shorter ones after rates began rising. The Fund also benefited from being underweight in Treasury securities, as Treasuries were the worst-performing sector of the bond market for the six-month period.

We were hurt in the fixed-income portion of the portfolio by being underweight in mortgages, which were the bond market’s best-performing sector. Being overweight in corporate debt also negatively impacted performance, even though we were mostly overweight in A-rated bonds, which performed better than lower-quality bonds.

What changes did you make to the Fund and why?

During the past six months, we made several changes to the equity portion of the Fund. As always, the changes were designed to own the stocks we find most attractive and to adjust sector weightings to what we believe are appropriate levels.

Stocks added to the portfolio included PMI Group, Weyerhaeuser, and Polaris Industries. PMI Group, a mortgage insurer, was added because it’s a rarity among financial stocks in that rising rates should actually help earnings as the pace of refinancing slows. Weyerhaeuser, a stock we have wanted to own

SAFECO    MUTUAL    FUNDS 1-800-528-6501

25

Report From the Fund Managers

Safeco Balanced Fund

As of June 30, 2004

for some time in order to gain exposure to forest products, finally reached what we believe to be an attractive valuation. Polaris Industries is a maker of all-terrain vehicles, a market we expect will continue to experience good growth, especially as the economy improves and the outlook for jobs gets better. We also initiated positions in Allstate Insurance, Coca Cola and Illinois Tool Works, all of which we believe were selling at attractive valuations.

We eliminated holdings of Disney, which rose after receiving an unsolicited takeover offer. We also sold Eli Lilly, Anheuser-Busch and Hubbell based on valuation, as they had appreciated to levels that were very near our target prices.

We reduced our position in the finance sector, mainly to reduce our exposure during what we expect to be a period of rising interest rates. We are currently marginally underweight in finance relative to the Russell 1000 value Index. We also reduced our exposure to producer durables due to these stocks having performed very well. We do however remain overweighted in this sector by just over 2% as we expect these stocks to continue to perform well as the economy improves. We are overweight in the materials sector for the same reason, and have added to our position in this sector, primarily by buying Weyerhaeuser as discussed earlier. We also added to our exposure to what Russell calls “other” (primarily includes multi-industry companies, such as GE), as this sector went from 1.6% to 6.6% of the index at the June re-configuration.

In the fixed income portion of the Fund, over the past six months we increased our holdings in corporate debt, where we are overweight. We also added to our holdings in government debt, while decreasing the portion of the assets invested in mortgages. We also reduced the duration of the bonds, and currently have a lower duration than the index.

Rex Bentley, CFA—Portfolio Manager/Equity Analyst

Lynette Sagvold, CFA—Portfolio Manager/Equity Analyst

Lesley Fox—Portfolio Manager

Gregory Card, CFA—Portfolio Manager

Nancy McFadden, CFA—Portfolio Manager

Tim Hokari—Portfolio Manager

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 9 of Notes to the Financial Statements.

26

Performance Overview & Highlights

Safeco Balanced Fund

(Unaudited)

	With Sales Charge				Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	Since Inception**	Six-Month *	1 Year	5 Year	Since Inception**
Safeco Balanced Fund
Class A	(4.88)%	3.40%	0.32%	5.26%	0.88%	9.69%	1.51%	6.00%
Class B	(4.44)%	3.91%	0.41%	5.43%	0.56%	8.91%	0.78%	5.43%
Class C	(0.46)%	7.86%	0.77%	5.26%	0.54%	8.86%	0.77%	5.26%
60% Russell 1000 Value/40% Lehman Brothers Aggregate Bond Index	N/A	N/A	N/A	N/A	2.42%	12.81%	3.90%	8.90%
S&P 500 Index	N/A	N/A	N/A	N/A	3.46%	19.13%	(2.20)%	8.90%
Lipper, Inc. (Balanced Funds)	N/A	N/A	N/A	N/A	1.79%	11.65%	1.67%	N/A
* Not annualized. ** Graph and average annual return comparison begins January 31, 1996, inception date of the Fund. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund's benchmark index.

TOP FIVE INDUSTRIES (Common Stocks)	Percent of Net Assets
Diversified Banks	7.6	%
Integrated Oil & Gas	6.7
Integrated Telecommunications Services	3.9
Multi-Line Insurance	3.8
Electric Ultilities	2.3
TOP TEN STOCK HOLDINGS	Percent of Net Assets
ChevronTexaco Corp. (Integrated Oil & Gas)	2.3	%
Exxon Mobil Corp. (Integrated Oil & Gas)	2.3
Citigroup, Inc. (Other Diversified Financial Services)	2.2
U.S. Bancorp (Diversified Banks)	1.8
Hartford Financial Services Group, Inc. (Multi-Line Insurance)	1.7
General Electric Co. (Industrial Conglomerates)	1.6
Wells Fargo & Co. (Diversified Banks)	1.5
Bank of America Corp. (Diversified Banks)	1.4
Kimberly-Clark Corp. (Household Products)	1.3
American International Group, Inc. (Multi-Line Insurance)	1.3

TOP FIVE PURCHASES (Common Stocks) For the Period Ended June 30, 2004	Cost (000’s)
MBNA Corp.	$	210
Mellon Financial Corp.		172
Air Products and Chemicals, Inc.		168
Allstate Corp.		157
General Electric Co.		144
TOP FIVE SALES (Common Stocks) For the Period Ended June 30, 2004	Proceeds (000’s)
Travelers Property Casualty Corp. (Class B)	$	172
Kroger Co.		133
American Express Co.		131
United Parcel Service, Inc. (Class B)		129
Costco Wholesale Corp.		117

WEIGHTING AS A PERCENT OF NET ASSETS

27

Portfolio of Investments

Safeco Balanced Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—65.1%
Aerospace & Defense—1.0%
2,100		United Technologies Corp.	$	192
Air Freight & Logistics—0.3%
900		United Parcel Service, Inc. (Class B)		68
Aluminum—0.5%
3,200		Alcoa, Inc.		106
Application Software—0.5%
5,500	*	PeopleSoft, Inc.		102
Asset Management & Custody Banks—1.2%
4,900		Bank of New York Co., Inc.		145
1,700		State Street Corp.		83
Auto Parts & Equipment—0.6%
2,300		Johnson Controls, Inc.		123
Automobile Manufacturers—0.5%
2,200		General Motors Corp.		103
Broadcasting & Cable TV—0.5%
3,000		Viacom, Inc. (Class B)		107
Computer Hardware—1.8%
1,900	*	Dell, Inc.		68
1,100		Diebold, Inc.		58
2,500		International Business Machines Corp.		220
Construction & Farm Machinery & Heavy Trucks—0.4%
1,200		PACCAR, Inc.		70
Consumer Finance—1.4%
1,300		American Express Co.		67
7,700		MBNA Corp.		199
Department Stores—1.2%
5,300		Nordstrom, Inc.		226
Diversified Banks—7.6%
3,300		Bank of America Corp.		279
7,300		Hibernia Corp. (Class A)		177
5,100		Mellon Financial Corp.		150
12,820		U.S. Bancorp		353
5,000		Wachovia Corp.		223
5,200		Wells Fargo & Co.		298
Diversified Capital Markets—1.0%
5,100		J.P. Morgan Chase & Co.		198
Diversified Chemicals—0.5%
2,200		Du Pont (E.I.) de Nemours & Co.		98

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
Electric Utilities—2.3%
4,800	Exelon Corp.	$	160
4,200	FirstEnergy Corp.		157
4,400	Southern Co.		128
Food Distributors—0.6%
3,400	SYSCO Corp.		122
Forest Products—0.8%
2,400	Weyerhaeuser Co.		151
General Merchandise Stores—0.6%
2,800	Target Corp.		119
Health Care Distributors—0.6%
3,100	McKesson Corp.		106
Home Furnishings—0.9%
6,300	Leggett & Platt, Inc.		168
Home Improvement Retail—0.5%
2,700	Home Depot, Inc.		95
Household Products—1.8%
3,900	Kimberly-Clark Corp.		257
1,800	Procter & Gamble Co.		98
Industrial Conglomerates—1.6%
9,700	General Electric Co.		314
Industrial Gases—2.1%
3,200	Air Products and Chemicals, Inc.		168
6,200	Praxair, Inc.		247
Industrial Machinery—1.2%
800	Illinois Tool Works, Inc.		77
2,400	Ingersoll-Rand Co. (Class A)		164
Integrated Oil & Gas—6.7%
2,400	BP, plc (ADR)		129
4,700	ChevronTexaco Corp.		442
1,801	ConocoPhillips		137
9,876	Exxon Mobil Corp.		439
3,000	Royal Dutch Petroleum Co. (ADR)		155
Integrated Telecommunications Services—3.9%
4,100	ALLTEL Corp.		208
5,000	BellSouth Corp.		131
7,900	SBC Communications, Inc.		192
6,114	Verizon Communications, Inc.		221
Investment Banking & Brokerage—1.0%
3,500	Morgan Stanley		185
Leisure Products—0.5%
2,200	Polaris Industries, Inc.		106

SEE NOTES TO FINANCIAL STATEMENTS

28

Portfolio of Investments

Safeco Balanced Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Metal & Glass Containers—0.5%
1,400		Ball Corp.	$	101
Multi-Line Insurance—3.8%
3,500		Allstate Corp.		163
3,500		American International Group, Inc.		249
4,800		Hartford Financial Services Group, Inc.		330
Multi-Utilities & Unregulated Power—0.8%
7,700		NiSource, Inc.		159
Office Services & Supplies—0.7%
2,900		Pitney Bowes, Inc.		128
Other Diversified Financial Services—2.2%
9,300		Citigroup, Inc.		432
Packaged Foods & Meats—1.2%
4,400		Kraft Foods, Inc. (Class A)		139
4,100		Sara Lee Corp.		94
Pharmaceuticals—2.2%
3,900		Abbott Laboratories		159
4,380		Pfizer, Inc.		150
3,400		Wyeth		123
Property & Casualty Insurance—0.5%
2,427		St. Paul Travelers Cos., Inc.		98
Publishing—1.0%
2,200		Gannett Co., Inc.		187
Railroads—0.5%
1,600		Union Pacific Corp.		95
Real Estate Investment Trust—1.1%
2,500		Alexandria Real Estate Equities, Inc.		142
1,700		Liberty Property Trust		68
Restaurants—0.6%
3,300	*	YUM! Brands, Inc.		123
Semiconductor Equipment—0.4%
3,700	*	Applied Materials, Inc.		73
Semiconductors—1.5%
6,100		Intel Corp.		168
5,100		Texas Instruments, Inc.		123
Soft Drinks—1.0%
2,700		Coca-Cola Co.		136
1,200		PepsiCo, Inc.		65
Systems Software—0.7%
4,500		Microsoft Corp.		129

SHARES OR PRINCIPAL AMOUNT				Value (000’s)
	Technology Distributors—0.4%
	2,500	*	Agilent Technologies, Inc.	$	73
	Thrifts & Mortgage Finance—1.9%
	900		Federal National Mortgage Association		64
	2,300		PMI Group, Inc.		100
	5,550		Washington Mutual, Inc.		214
	TOTAL COMMON STOCKS (cost $10,726)				12,674
	CORPORATE BONDS—10.2%
	Aerospace & Defense—0.5%
$	80,000		Honeywell International, Inc. 7.50%, due 3/01/10		91
	Agricultural Products—0.2%
	35,000		Unilever Capital Corp. 7.125%, due 11/01/10		39
	Apparel Retail—0.1%
	15,000		Nordstrom, Inc. 5.625%, due 1/15/09		16
	Automobile Manufacturers—0.4%
	80,000		Ford Motor Co. 7.25%, due 10/01/08		85
	Brewers—0.2%
	35,000	#	Miller Brewing Co. (144A) 5.50%, due 8/15/13 (acquired 11/19 /03) (cost $35,882)		35
	Broadcasting & Cable TV—0.4%
	80,000		Comcast Corp. 5.30%, due 1/15/14		77
	Computer Hardware—0.3%
	65,000		International Business Machines Corp. 1.535%, due 9/10/04		65
	Construction & Farm Machinery & Heavy Trucks—0.3%
	70,000		John Deere Capital Corp. 2.16%, due 9/17/04		70
	Diversified Banks—1.0%
	35,000		HSBC Bank USA 4.625%, due 4/01/14		33
	80,000		International Bank for Reconstruction & Development 4.375%, due 9/28/06		82
	30,000		U.S. Bancorp 3.125%, due 3/15/08		29

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

29

Portfolio of Investments

Safeco Balanced Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT				Value (000’s)
	Diversified Banks—(continued)
$	50,000		Wachovia Corp. 5.00%, due 8/15/15	$	48
	Electric Utilities—0.5%
	15,000		Dominion Resources, Inc. 6.25%, due 6/30/12		16
	40,000		PSEG Power LLC 6.95%, due 6/01/12		43
	35,000		Southern California Edison Co. 8.00%, due 2/15/07		39
	Fertilizers & Agricultural Chemicals—0.1%
	30,000		Potash Corp. of Saskatchewan, Inc. 4.875%, due 3/01/13		29
	Forest Products—0.0%
	12,000		Weyerhaeuser Co. 5.50%, due 3/15/05		12
	Housewares & Specialties—0.2%
	35,000		Newell Rubbermaid, Inc. 4.625%, due 12/15/09		35
	Integrated Oil & Gas—0.5%
	65,000		Pemex Project Funding Master Trust 9.125%, due 10/13/10		74
	15,000		USX Corp. 6.85%, due 3/01/08		16
	Integrated Telecommunications Services—0.6%
	25,000		Verizon Global Funding Corp. 7.375%, due 9/01/12		28
	85,000		Verizon Wireless Capital LLC 5.375%, due 12/15/06		89
	Investment Banking & Brokerage—0.4%
	30,000		Goldman Sachs Group, Inc. 4.125%, due 1/15/08		30
	30,000		J.P. Morgan Chase & Co., Inc. 4.50%, due 11/15/10		29
	25,000		Morgan Stanley 6.60%, due 4/01/12		27
	Life & Health Insurance—0.7%
	65,000	#	Jackson National Life Global Funding, LLC (144A) 1.5975%, due 3/11/05 (acquired 9/05/02) (cost $65,000)		65
	70,000		Lincoln National Corp. 5.25%, due 6/15/07		73
	Movies & Entertainment—0.2%
	30,000		Time Warner, Inc. 6.75%, due 4/15/11		32

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
	Multi-Utilities & Unregulated Power—0.4%
$	75,000	Avista Corp. 7.75%, due 1/01/07	$	81
	Oil & Gas Refining, Marketing & Transportation—0.2%
	40,000	Kinder Morgan Energy Partners, L.P. 6.75%, due 3/15/11		43
	Other Diversified Financial Services—1.2%
	50,000	American Express Co. 4.875%, due 7/15/13		49
	30,000	Citigroup, Inc. 7.25%, due 10/01/10		34
	80,000	General Electric Capital Corp. 5.45%, due 1/15/13		81
	25,000	Household Finance Corp. 7.875%, due 3/01/07		28
	35,000	Lehman Brothers Holdings, Inc. 4.375%, due 11/30/10		34
	Regional Banks—0.2%
	40,000	KeyCorp 2.75%, due 2/27/07		39
	Soft Drinks—0.2%
	35,000	Bottling Group, LLC 5.00%, due 11/15/13		34
	Specialized Finance—0.8%
	75,000	General Motors Acceptance Corp. 6.125%, due 9/15/06		78
	65,000	National Rural Utilities Cooperative Finance Corp. 7.25%, due 3/01/12		74
	Thrifts & Mortgage Finance—0.4%
	70,000	Countrywide Home Loans, Inc. 3.50%, due 12/19/05		71
	Wireless Telecommunication Services—0.2%
	35,000	Vodafone Group, plc (ADR) 5.00%, due 12/16/13		34
	TOTAL CORPORATE BONDS (cost $1,955)			1,987
	ASSET BACKED SECURITIES—0.5%
	Consumer Finance—0.5%
	36,078	Americredit Automobile Receivables Trust 1.39%, due 12/12/07		36
	70,000	MBNA Credit Card Master Note Trust 1.25%, due 12/15/08		70
	TOTAL ASSET BACKED SECURITIES (cost $106)			106

SEE NOTES TO FINANCIAL STATEMENTS

30

Portfolio of Investments

Safeco Balanced Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
	COLLATERALIZED MORTGAGE OBLIGATIONS—1.4%
	Commercial—0.1%
$	25,346	Asset Securitization Corp. 7.32%, due 1/13/30	$	26
	Residential—0.4%
	80,000	Washington Mutual, Inc. 4.10%, due 10/25/33		78
	U.S. Government Agency Obligations—0.9%
	50,000	Freddie Mac 3.50%, due 9/15/10		50
	110,000	Freddie Mac 6.00%, due 4/15/32		114
	TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (cost $273)			268
	U.S. GOVERNMENT AGENCY—MORTGAGE BACKED SECURITIES—7.6%
	Federal National Mortgage Association (FNMA)—7.1%
	151,887	4.816%, due 12/01/12		151
	228,207	5.00%, due 12/01/17		229
	165,006	5.00%, due 3/01/33		160
	121,297	5.50%, due 2/01/18		125
	72,792	5.50%, due 7/01/23		74
	85,142	5.50%, due 9/01/17		87
	64,414	6.00%, due 1/01/29		66
	84,718	6.00%, due 3/01/33		87
	79,908	6.00%, due 8/01/32		82
	26,663	6.00%, due 9/01/29		27
	23,045	6.50%, due 1/01/15		24
	73,670	6.50%, due 7/01/29		77
	29,768	7.00%, due 3/01/12		32
	8,740	8.00%, due 1/01/31		10
	13,531	8.00%, due 10/01/30		15
	24,241	8.00%, due 2/01/29		27
	5,949	8.00%, due 2/01/30		6
	71,889	8.00%, due 3/01/31		78
	14,603	8.00%, due 4/01/20		16
	5,922	8.00%, due 4/01/30		6
	5,565	8.00%, due 5/01/31		6
	5,333	8.00%, due 7/01/30		6
	Government National Mortgage Association (GNMA)—0.5%
	6,768	6.00%, due 4/15/14		7
	33,573	6.00%, due 8/15/13		35
	25,595	7.00%, due 4/15/28		27

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
	Government National Mortgage Association (GNMA)—(continued)
$	6,137	7.00%, due 8/15/28	$	7
	14,310	7.75%, due 11/15/29		15
	TOTAL U.S. GOVERNMENT AGENCY— MORTGAGE BACKED SECURITIES (cost $1,467)			1,482
	U.S. GOVERNMENT & AGENCY OBLIGATIONS—12.0%
	U.S. Government Agency Obligations—8.0%
	100,000	Fannie Mae (Unsecured Note) 5.24%, due 8/07/18		97
	190,000	Fannie Mae 2.87724%, due 2/17/09		189
	145,000	Federal Home Loan Bank (Unsecured Bond) 3.625%, due 11/14/08		143
	65,000	Federal Home Loan Bank (Unsecured Bond) 3.875%, due 6/14/13		60
	320,000	Federal Home Loan Mortgage Corp. (Unsecured Note) 3.34%, due 6/09/10		300
	345,000	Federal Home Loan Mortgage Corp. (Unsecured Note) 3.50%, due 2/13/08		342
	205,000	Federal Home Loan Mortgage Corp. (Unsecured Note) 4.00%, due 6/12/13		187
	110,000	Freddie Mac (Unsecured Note) 4.00%, due 12/30/13		100
	140,000	Freddie Mac (Unsecured Note) 5.20%, due 3/05/19		132
	U.S. Treasury Notes—4.0%
	110,000	2.375%, due 8/15/06		109
	100,000	3.125%, due 10/15/08		98
	75,000	5.50%, due 8/15/28		76
	100,000	7.00%, due 7/15/06		108
	100,000	7.125%, due 2/15/23		121
	220,000	U.S. Treasury Inflation Index Note 3.50%, due 1/15/11		264
	TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (cost $2,369)			2,326

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

31

Portfolio of Investments

Safeco Balanced Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
	MUNICIPAL BONDS—0.4%
	Electric Utilities—0.4%
$	70,000	California State Department of Water Resources Supply Revenue 4.33%, due 5/01/06	$	71
	TOTAL MUNICIPAL BONDS (cost $70)			71
	CASH EQUIVALENTS—3.4%
	Investment Companies
	587,122	AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)		587
	68,850	State Street Navigator Securities Lending Prime Portfolio **		69
	TOTAL CASH EQUIVALENTS (cost $656)			656
	TOTAL INVESTMENTS (cost $17,622)—100.6%		$	19,570
	Other Assets, less Liabilities			(111	)
	NET ASSETS		$	19,459

  * Non-income producing security.

** Represents invested collateral received related to $68,357 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

  # Securities are exempt from registration and restricted as to resale only to dealers, or through a dealer to a “qualified institutional buyer” as permitted under Rule 144A of the Securities Act of 1933. The total cost of such securities is $101,000 and the total value is $100,000 or 0.5% of net assets.

SEE NOTES TO FINANCIAL STATEMENTS

32

Report From the Fund Manager

Safeco Small-Cap Value Fund

As of June 30, 2004

How did the Fund perform?

The Safeco Small-Cap Value Fund underperformed its benchmark Russell 2000 Value index for the six-month period ending June 30, 2004. All the positive contributions took place in the first quarter, and then the small-cap market seesawed down and up from April through June. In retrospect, the first few months were a continuation of the “take off” phase of the market cycle that began last March. The April/May timeframe saw the first significant correction since that rally began.

What factors impacted the Fund’s performance?

Market leadership by higher quality stocks has continued, following a trend that began in the fourth quarter of last year. I define high quality as companies with stock prices above $5 per share, with positive earnings, low P/E ratios versus the universe, and market capitalization above $250 million.

This trend helped the Fund, since it owns stocks all across the small-cap-size spectrum and the weighted average tends towards the middle of the small-cap-size range. Also, the Fund has less of its assets invested in companies that are not currently more profitable than the index, and we didn’t have much exposure to under-$5 price stocks.

In early April, one single government report of job growth was all it took to crystallize the market’s worry that the Federal Reserve would start raising short-term interest rates. This precipitated a fast and steep correction in the Fund’s most interest-rate-sensitive stocks. Those stocks have made a partial recovery since then.

What changes did you make to the Fund and why?

I added new stocks, which I believed were not discounting their full potential or had not participated in the “lift off” phase of the early market cycle. From the March 2003 bottom, the entire market experienced a “rising tide” effect. That effect has run its course, and so I’ve tried to find stocks that represent value opportunities in the traditional sense of the word.

For example, Pacer International was bought on price weakness after I had multiple meetings with management to cement an understanding of their business. Pacer arranges for the transportation of ocean freight containers by reselling space on the railroads in a service called the Stack Train. They produce significant free cash flow, but their service offering is aligned with the Union Pacific and CSX railroads, and those companies are experiencing a period of poor service quality that has temporarily hurt Pacer. In time this will change. However, Pacer’s stock was down based on the current view of conditions, not what they’ll be in the future. The future is where I see the stock’s opportunity.

I also exited positions that I believe have run their course, or have taken a turn for the worse. Examples of the former include the last of the utility preferred stocks in the Fund. An example of the latter would be the company Osteotech, which abandoned one of its product lines in January, calling into doubt its growth prospects and valuation. I was fortunate to exit the stock before the worst of the damage was done.

I continue to believe stocks with traditional “value” characteristics, in terms of their overall valuation and free cash flow generation, are a successful strategy to own for the long term. I am a believer in owning stocks that are priced cheaper than the overall market, and that have sustainable businesses and cash flows. I think the Fund is currently positioned this way.

Greg Eisen, CFA—Portfolio Manager/Equity Analyst

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 9 of Notes to the Financial Statements.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

33

Performance Overview & Highlights

Safeco Small-Cap Value Fund

(Unaudited)

	With Sales Charge				Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	Since Inception**	Six Month*	1 Year	5 Year	Since Inception**
Safeco Small-Cap Value Fund
Class A	1.53%	23.99%	13.21%	8.96%	7.73%	31.59%	14.55%	9.73%
Class B	2.30%	25.29%	13.45%	9.12%	7.30%	30.29%	13.69%	9.12%
Class C	6.69%	29.77%	13.78%	9.00%	7.69%	30.77%	13.78%	9.00%
Russell 2000 Value Index	N/A	N/A	N/A	N/A	7.83%	35.17%	12.82%	13.26%
Lipper, Inc. (Small-Cap Value Funds)	N/A	N/A	N/A	N/A	8.15%	34.14%	13.08%	N/A
* Not annualized. ** Graph and average annual return comparison begins January 31, 1996, inception date of the Fund. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund's benchmark index.

TOP FIVE INDUSTRIES	Percent of Net Assets
Real Estate Investment Trust	6.7	%
Specialty Stores	6.4
Regional Banks	5.9
Trucking	5.3
Consumer Finance	4.8
TOP TEN HOLDINGS	Percent of Net Assets
World Fuel Services Corp. (Integrated Oil & Gas)	3.3	%
Lone Star Technologies, Inc. (Oil & Gas Equipment & Services)	2.9
Cash America International, Inc. (Consumer Finance)	2.5
Imation Corp. (Computer Storage & Peripherals)	2.5
Foot Locker, Inc. (Specialty Stores)	2.4
Champion Enterprises, Inc. (Homebuilding)	2.4
AmeriCredit Corp. (Consumer Finance)	2.3
Precision Castparts Corp. (Diversified Metals & Mining)	2.3
Hollywood Entertainment Corp. (Specialty Stores)	2.3
Insight Enterprises, Inc. (Catalog Retail)	2.2

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
Champion Enterprises, Inc.	$	1,534
Pacer International, Inc.		1,371
Apollo Investment Corp.		1,188
Hanger Orthopedic Group, Inc.		1,149
Impac Mortgage Holdings, Inc.		1,134
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
Pacific Crest Capital, Inc.	$	1,310
Nordic American Tanker Shipping, Ltd.		1,003
Isle of Capri Casinos, Inc.		731
Furniture Brands International, Inc.		721
SonoSite, Inc.		680

WEIGHTINGS AS A PERCENT

OF NET ASSETS

34

Portfolio of Investments

Safeco Small-Cap Value Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—93.4%
Aerospace & Defense—1.4%
31,400	*	United Defense Industries, Inc.	$	1,099
Application Software—0.0%
3	*	Versata, Inc.		0
Asset Management & Custody Banks—1.5%
83,800	*	Apollo Investment Corp.		1,154
Casinos & Gaming—2.2%
49,200	*	Ameristar Casinos, Inc.		1,652
Catalog Retail—2.2%
96,900	*	Insight Enterprises, Inc.		1,721
Commercial Printing—1.4%
36,600	*	Valassis Communications, Inc.		1,115
Communication Equipment—3.0%
28,300		Black Box Corp.		1,337
23,600	*	Plantronics, Inc.		993
Computer Storage & Peripherals—3.8%
116,000	*	Hypercom Corp.		980
44,800	*	Imation Corp.		1,909
Construction & Engineering—3.9%
76,600	*	Astec Industries, Inc.		1,442
55,500		URS Corp.		1,521
Construction Materials—1.2%
22,025		Florida Rock Industries, Inc.		929
Consumer Finance—4.8%
92,100	*	AmeriCredit Corp.		1,799
83,200		Cash America International, Inc.		1,914
Diversified Metals & Mining—2.3%
32,500		Precision Castparts Corp.		1,777
Electric Utilities—1.5%
42,000		IDACORP, Inc.		1,134
Electronic Equipment Manufacturers—1.8%
47,200	*	Benchmark Electronics, Inc.		1,373
Environmental Services—1.1%
18,800		Landauer, Inc.		840
Health Care Facilities—1.4%
93,700	*	Hanger Orthopedic Group, Inc.		1,098
Health Care Services—1.7%
44,900	*	National Dentex Corp.		1,301

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Home Furnishings—0.5%
14,700		Furniture Brands International, Inc.	$	368
Home Improvement Retail—1.5%
60,500		Building Materials Holding Corp.		1,145
Homebuilding—3.8%
10,900	*	Beazer Homes USA, Inc.		1,093
196,900	*	Champion Enterprises, Inc.		1,807
Integrated Oil & Gas—3.3%
56,400		World Fuel Services Corp.		2,543
Investment Banking & Brokerage—1.6%
81,800		SWS Group, Inc.		1,252
Life & Health Insurance—1.7%
19,600		StanCorp Financial Group, Inc.		1,313
Oil & Gas Equipment & Services—4.2%
105,700	*	Key Energy Services, Inc.		998
80,400	*	Lone Star Technologies, Inc.		2,216
Packaged Foods & Meats—0.7%
13,600		Lancaster Colony Corp.		566
Photographic Products—0.7%
159,200	*	Concord Camera Corp.		525
Property & Casualty Insurance—4.6%
22,500		First American Corp.		583
74,000	*	Ohio Casualty Corp.		1,490
40,800		RLI Corp.		1,489
Real Estate Investment Trust—6.7%
23,000		Alexandria Real Estate Equities, Inc.		1,306
23,900		Camden Property Trust		1,095
46,300		First Potomac Realty Trust		888
72,800		Hanover Capital Mortgage Holdings, Inc.		856
43,200		Impac Mortgage Holdings, Inc.		973
Regional Banks—5.9%
58,200		Central Pacific Financial Corp.		1,601
47,600		Greater Bay Bancorp		1,376
38,829		Hanmi Financial Corp.		1,145
13,115		Provident Bankshares Corp.		378
Restaurants—0.9%
24,200	*	Jack in the Box, Inc.		719

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

35

Portfolio of Investments

Safeco Small-Cap Value Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Semiconductors—1.5%
166,600	*	Lattice Semiconductor Corp.	$	1,168
Specialty Chemicals—1.7%
60,900		Sensient Technologies Corp.		1,308
Specialty Stores—6.4%
76,100		Foot Locker, Inc.		1,852
129,500	*	Hollywood Entertainment Corp.		1,730
29,800		Regis Corp.		1,329
Steel—1.5%
32,850		Schnitzer Steel Industries, Inc.		1,116
Technology Distributors—1.8%
41,600	*	Anixter International, Inc.		1,416
Thrifts & Mortgage Finance—2.5%
30,700	*	BankUnited Financial Corp. (Class A)		792
30,840		PFF Bancorp, Inc.		1,148
Tobacco—1.4%
20,900		Universal Corp.		1,065
Trucking—5.3%
27,100		Arkansas Best Corp.		892
32,000	*	Landstar System, Inc.		1,692
1,100	*	Overnite Corp.		32
77,400	*	Pacer International, Inc.		1,432
TOTAL COMMON STOCKS (cost $52,077)				71,785
INDEXED SECURITIES—3.6%
Indexed Securities—3.6%
16,100		iShares Russell 2000 Value Index Fund		2,769
TOTAL INDEXED SECURITIES (cost $2,647)				2,769

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
CASH EQUIVALENTS—27.5%
Investment Companies
2,488,753	AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)	$	2,489
18,644,211	State Street Navigator Securities Lending Prime Portfolio **		18,644
TOTAL CASH EQUIVALENTS (cost $21,133)			21,133
TOTAL INVESTMENTS (cost $75,857)—124.5%		$	95,687
Other Assets, less Liabilities			(18,858	)
NET ASSETS		$	76,829

  * Non-income producing security.

** Represents invested collateral received related to $18,409,097 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

36

Report From the Fund Managers

Safeco Large-Cap Growth Fund

As of June 30, 2004

How did the Fund perform?

For the six-month period ending June 30, 2004, the Safeco Large-Cap Growth Fund underperformed its benchmark, the Russell 1000 Growth Index.

The Fund’s performance since inception in late 2001 also trails its benchmark, although the majority of the Fund’s underperformance since inception occurred in calendar year 2003, when smaller stocks with no earnings and speculative characteristics significantly outperformed the overall market. Conversely, stocks with better fundamentals such as high levels of profitability and balance sheet strength underperformed in 2003. This provided a major headwind to our quality investment style. While volatile conditions may persist near term, we believe that we are in the midst of a transitional phase, into an environment in which investors again return to high quality large cap stocks with sustainable growth characteristics.

What factors impacted the Fund’s performance?

Many companies have been demonstrating very strong fundamentals and exceptional earnings growth. Returns have been muted, however, due in part to investor anxieties regarding inflation, rising interest rates, slowing growth in China, the Iraqi Government transition, terrorism, near record oil prices and the upcoming presidential election.

Returns were helped most by internet software and services holdings, while the largest detractors from returns came from software. Individual stocks that had a major impact on performance included:

• Yahoo! Inc. appreciated by 62% over the half-year, helped by increases in paid search activity and online advertising, along with a growing user base.

• Avon Products was also a top performer, benefiting from growth in developing markets such as central/eastern Europe, Latin America, and China.

• Software storage firm Veritas lost 25% over the period, and recently announced that revenues and earnings would come in below investor expectations. We trimmed our holding in the stock and are monitoring developments closely.

What changes did you make to the Fund and why?

The relatively flat first half returns masked an erratic period in which market leadership shifted frequently between cyclical and defensive areas of the market. Since the beginning of the year, we reduced our holdings of technology stocks, and the Fund is now slightly underweight in technology. We also took profits in some areas of health care, notably in health care equipment and supplies. Some proceeds were re-deployed into biotechnology. The Fund’s largest position remained with the global, research-based pharmaceutical firm, Pfizer Inc.

Energy was one of the best performing segments in the Fund, appreciating by over 25%. We continue to like the operating environment for several energy and oil services companies, which are indirectly benefiting from high oil and gas prices, limited supply growth and increasing demand associated with the global economic recovery. Accordingly, we added to this sector over the period, and hold an overweight position here.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

37

Report From the Fund Managers

Safeco Large-Cap Growth Fund

As of June 30, 2004

RCM Capital Management LLC, formerly RCM Global Investors LLC acts as an investment sub-advisor to the Safeco Large-Cap Growth Fund.

Peter Goetz, MBA, CFA—Portfolio Manager

Seth A. Reicher, CFA—Portfolio Manager

As of August 2, 2004, Pioneer Investment Management, Inc. was named the investment advisor to the fund. See Note 9 of Notes to the Financial Statements.

38

Performance Overview & Highlights

Safeco Large-Cap Growth Fund

(Unaudited)

	With Sales Charge			Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	Since Inception**	Six Month*	1 Year	Since Inception**
Safeco Large-Cap Growth Fund
Class A	(5.28)%	4.25%	(4.67)%	0.54%	10.56%	(2.53)%
Class B	(4.89)%	4.74%	(4.38)%	0.11%	9.74%	(3.28)%
Class C	(0.89)%	8.74%	(3.28)%	0.11%	9.74%	(3.28)%
Russell 1000 Growth Index	N/A	N/A	N/A	2.74%	17.88%	1.91%
Lipper, Inc. (Large-Cap Growth Funds)	N/A	N/A	N/A	2.35%	15.56%	N/A
* Not annualized. ** Total return comparison begins October 31, 2001, inception date of the Fund. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund’s benchmark index.

TOP FIVE INDUSTRIES	Percent of Net Assets
Pharmaceuticals	12.4	%
Industrial Conglomerates	6.3
Systems Software	6.3
Communication Equipment	5.1
Internet Software & Services	4.5
TOP TEN HOLDINGS	Percent of Net Assets
Pfizer, Inc. (Pharmaceuticals)	5.4	%
Intel Corp. (Semiconductors)	3.4
Cisco Systems, Inc. (Communication Equipment)	3.3
Minnesota Mining & Manufacturing Co. (Industrial Conglomerates)	3.3
Yahoo!, Inc. (Internet Software & Services)	3.3
General Electric Co. (Industrial Conglomerates)	3.0
Wal-Mart Stores, Inc. (General Merchandise Stores)	2.6
Dell, Inc. (Computer Hardware)	2.6
Procter & Gamble Co. (Household Products)	2.4
Microsoft Corp. (Systems Software)	2.2

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
Paychex, Inc.	$	123
Guidant Corp.		122
International Game Technology, Inc.		115
Coca-Cola Co.		114
Agilent Technologies, Inc.		104
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
St. Jude Medical, Inc.	$	117
Lowe’s Companies, Inc.		113
General Electric Co.		93
Agilent Technologies, Inc.		76
Microsoft Corp.		75

WEIGHTINGS AS A PERCENT OF NET ASSETS

39

Portfolio of Investments

Safeco Large-Cap Growth Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
COMMON STOCKS—97.4%
Aerospace & Defense—1.0%
750		United Technologies Corp.	$	69
Air Freight & Logistics—1.5%
1,350		United Parcel Service, Inc. (Class B)		101
Apparel, Accessories & Luxury Goods—1.1%
1,600	*	Coach, Inc.		72
Application Software—1.1%
1,700		SAP AG (ADR)		71
Asset Management & Custody Banks—1.0%
1,300		Franklin Resources, Inc.		65
Biotechnology—3.9%
2,300	*	Amgen, Inc.		125
1,050	*	Biogen Idec, Inc.		66
1,150	*	Genentech, Inc.		65
Broadcasting & Cable TV—1.1%
2,100		Viacom, Inc. (Class B)		75
Casinos & Gaming—1.5%
2,600	*	International Game Technology, Inc.		100
Communication Equipment—5.1%
9,300	*	Cisco Systems, Inc.		220
5,100	*	Corning, Inc.		67
1,850	*	Juniper Networks, Inc.		45
Computer Hardware—2.6%
4,700	*	Dell, Inc.		168
Data Processing & Outsourced Services—1.1%
2,100		Paychex, Inc.		71
Diversified Banks—1.5%
1,450		Mellon Financial Corp.		43
1,300		Wachovia Corp.		58
Diversified Commercial Services—1.8%
900	*	Apollo Group, Inc. (Class A)		79
800	*	Career Education Corp.		36
Drug Retail—1.6%
2,900		Walgreen Co.		105
Food Distributors—1.2%
2,200		SYSCO Corp.		79
Footwear—1.5%
1,300		NIKE, Inc. (Class B)		98

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
General Merchandise Stores—2.6%
3,200		Wal-Mart Stores, Inc.	$	169
Health Care Equipment—3.3%
1,400	*	Boston Scientific Corp.		60
550		Guidant Corp.		31
2,600		Medtronic, Inc.		127
Hotels, Resorts & Cruise Lines—1.2%
1,650		Carnival Corp.		78
Household Products—2.4%
2,900		Procter & Gamble Co.		158
Industrial Conglomerates—6.3%
6,200		General Electric Co.		201
2,400		Minnesota Mining & Manufacturing Co.		216
Industrial Gases—0.6%
700		Air Products and Chemicals, Inc.		37
Industrial Machinery—2.9%
1,900		Danaher Corp.		99
1,300		Ingersoll-Rand Co. (Class A)		89
Insurance Brokers—0.6%
1,050		Willis Group Holdings, Ltd.		39
Internet Software & Services—4.5%
1,850	*	Symantec Corp.		81
5,900		Yahoo!, Inc.		214
Investment Banking & Brokerage—2.3%
800		Goldman Sachs Group, Inc.		75
1,400		Merrill Lynch & Co., Inc.		76
IT Consulting & Other Services—1.4%
3,300	*	Accenture, Ltd. (Class A)		91
Life & Health Insurance—0.7%
1,200		AFLAC, Inc.		49
Movies & Entertainment—0.9%
1,900		News Corp., Ltd. (ADR)		62
Oil & Gas Equipment & Services—3.0%
2,600		Baker Hughes, Inc.		98
1,500	*	BJ Services Co.		69
600	*	Smith International, Inc.		33
Oil & Gas Exploration & Production—1.2%
800		Apache Corp.		35
1,500		XTO Energy, Inc.		45

SEE NOTES TO FINANCIAL STATEMENTS

40

Portfolio of Investments

Safeco Large-Cap Growth Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Other Diversified Financial Services—0.8%
1,150		Citigroup, Inc.	$	53
Personal Products—1.5%
2,200		Avon Products, Inc.		102
Pharmaceuticals—12.4%
2,050	*	Caremark Rx, Inc.		68
1,200		Eli Lilly & Co.		84
1,400	*	Gilead Sciences, Inc.		94
1,400		Novartis AG (ADR)		62
10,400		Pfizer, Inc.		357
1,350		Teva Pharmaceutical Industries, Ltd. (ADR)		91
1,700		Wyeth		61
Property & Casualty Insurance—1.0%
1,600		St. Paul Travelers Cos., Inc.		65
Publishing—1.1%
1,600		Tribune Co.		73
Regional Banks—0.9%
1,100		Fifth Third Bancorp		59
Restaurants—1.1%
1,650	*	Starbucks Corp.		72
Semiconductor Equipment—1.3%
2,700		Microchip Technology, Inc.		85
Semiconductors—3.4%
8,200		Intel Corp.		226
Soft Drinks—3.4%
2,200		Coca-Cola Co.		111
2,050		PepsiCo, Inc.		110
Systems Software—6.3%
5,000		Microsoft Corp.		143
3,300	*	Novell, Inc.		28
11,700	*	Oracle Corp.		140
800	*	Red Hat, Inc.		18
3,100	*	VERITAS Software Corp.		86
Thrifts & Mortgage Finance—1.7%
1,550		Federal National Mortgage Association		111
TOTAL COMMON STOCKS (cost $5,760)				6,409

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
CASH EQUIVALENTS—2.8%
Investment Companies
185,739	AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)	$	186
TOTAL CASH EQUIVALENTS (cost $186)			186
TOTAL INVESTMENTS (cost $5,946)—100.2%		$	6,595
Other Assets, less Liabilities			(13	)
NET ASSETS		$	6,582

* Non-income producing security.

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

41

Report From the Fund Managers

Safeco High-Yield Bond Fund

As of June 30, 2004

How did the Fund perform?

For the six-month period ending June 30, 2004, the Safeco High-Yield Bond Fund has underperformed its benchmark, the Merrill Lynch High-Yield Master II Index.

What Factors impacted the Fund’s performance?

Our credit selection and overweight in CCC-rated bonds largely accounted for the Fund’s performance during the first half of the year. We likely removed the overweight in CCC too soon and missed the rally during the last part of the second quarter.

Nine of our holdings announced refinancing and/or tenders, which provided a positive “pop” to returns reflecting our credit picks. Two negative credit events were Pegasus Satellite, which deteriorated quickly, and in MCI stock we received in exchange for WorldCom bonds. The latter declined as short-term bankruptcy investors sold the stock and long-term holders have been slow to add positions in a difficult sector.

What changes did you make to the Fund and why?

The number of overall holdings has been reduced to a more manageable level, between 100 and 120 positions. Diversification remained strong as we trimmed larger holdings and selectively added to several top-25 positions. No bond exceeds 2% of assets and we continue to reduce the percentage of our asset level in the top 10.

We continue to overweight industrial and cyclical sectors, underweight defensive sectors and BB-rated credits, and maintain a shorter duration versus our benchmark. Our overall yield-to-maturity and coupon return to shareholders are close to or exceed the benchmark. We achieve this by holding high coupon “cushion” bonds likely to be called in the near term.

High-yield bonds, especially those rated BB, will be hurt as Treasury rates rise at this point in the cycle. The effort to counteract rising interest rates is three-fold. First, underweighting BB-rated issues and slightly shorten the duration. Second, adding adjustable rate bonds to offset the Federal Reserve rate increases. Finally, identifying near-term credit upgrade candidates not fully reflected in the market. The latter is admittedly difficult in this fairly valued market.

Gregory Card, CFA—Portfolio Manager

Beverly R. Denny, CFA—Portfolio Manager

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 9 of Notes to the Financial Statements.

42

Performance Overview & Highlights

Safeco High-Yield Bond Fund

(Unaudited)

	With Sales Charge				Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six-Month*	1 Year	5 Year	10 Year	Six-Month*	1 Year	5 Year	10 Year
Safeco High-Yield Bond Fund
Class A	(3.48)%	6.42%	(0.42)%	3.94%	1.14%	11.42%	0.50%	4.42%
Class B	(3.93)%	5.56%	(0.48)%	3.95%	0.94%	10.56%	(0.21)%	3.95%
Class C	(0.22)%	9.51%	(0.20)%	3.84%	0.75%	10.51%	(0.20)%	3.84%
Merrill Lynch High-Yield Master II Index	N/A	N/A	N/A	N/A	1.36%	10.19%	4.79%	7.50%
Lipper, Inc. (High Current Yield Funds)	N/A	N/A	N/A	N/A	1.15%	9.63%	3.48%	5.45%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund’s benchmark index.

Current Yield (30-day) Class A	6.37%
Current Yield (30-day) Class B	5.92%
Current Yield (30-day) Class C	5.92%
Weighted Average Maturity	5.33 years

TOP FIVE INDUSTRIES	Percent of Net Assets
Integrated Telecommunications Services	6.0	%
Metal & Glass Containers	5.8
Specialty Stores	4.5
Auto Parts & Equipment	4.0
Electric Utilities	3.7
TOP FIVE HOLDINGS	Percent of Net Assets
Champion Enterprises, Inc. (Homebuilding)	1.6	%
LCI International, Inc. (Integrated Telecommunications Services)	1.6
Cogentrix Energy, Inc. (Multi-Utilities & Unregulated Power)	1.4
Graham Packaging Co., Inc. (Paper Packaging)	1.4
AMF Bowling Worldwide, Inc. (Leisure Facilities)	1.2

TOP FIVE PURCHASES For the Period Ended June 30, 2004	Cost (000’s)
Interface, Inc.	$	1,000
AMF Bowling Worldwide, Inc.		650
Petro Stopping Centers, LP		513
BCP Caylux Holdings Luxembourg SCA		508
American Casino & Entertainment Properties, LLC		500
TOP FIVE SALES For the Period Ended June 30, 2004	Proceeds (000’s)
Interface, Inc.	$	598
Schuler Homes, Inc.		583
Nalco Co.		527
NRG Energy, Inc.		526
Petrozuata Finance, Inc.		524

CREDIT RATING DISTRIBUTION AS A PERCENT OF NET ASSETS

43

Portfolio of Investments

Safeco High-Yield Bond Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT				Value (000’s)
	CORPORATE BONDS—81.5%
	Advertising—0.9%
$	300,000	^	Advanstar, Inc. 15.00% beg. 10/15/05 Step Bond due 10/15/11	$	242
	100,000		Penton Media, Inc. 11.875%, due 10/01/07		101
	Agricultural Products—2.6 %
	250,000	#	Gold Kist, Inc. (144A) 10.25%, due 3/15/14 (acquired 3/05/04) (cost $246,175)		271
	250,000		Hines Nurseries, Inc. 10.25%, due 10/01/11		272
	400,000		Seminis, Inc. 10.25%, due 10/01/13		435
	Airlines—0.3%
	100,000		Continental Airlines, Inc. 7.568%, due 12/01/06		75
	50,000		Northwest Airlines Corp. 7.625% to 11/15/08 Step Bond due 11/15/23		40
	Apparel, Accessories & Luxury Goods—0.7%
	250,000		Perry Ellis International, Inc. 8.875%, due 9/15/13		258
	Auto Parts & Equipment—3.4%
	450,000		Accuride Corp. 9.25%, due 2/01/08		459
	400,000		Collins & Aikman Corp. 10.75%, due 12/31/11		402
	162,000		HLI Operating Co., Inc. 10.50%, due 6/15/10		182
	250,000		Park-Ohio Industries, Inc. 9.25%, due 12/01/07		254
	Broadcasting & Cable TV—1.1%
	200,000		Charter Communications Holdings, Inc. 11.125%, due 1/15/11		168
	250,000	#	Kabel Deutschland GmbH (144A) 10.625%, due 7/01/14 (acquired 6/24/04) (cost $250,000)		257
	Casinos & Gaming—1.4%
	300,000	#	Inn of the Mountain Gods Resort & Casino (144A) 12.00%, due 11/15/10 (acquired 10/21/03) (cost $300,000)		333

SHARES OR PRINCIPAL AMOUNT				Value (000’s)
	Casinos & Gaming—(continued)
$	200,000	#	Premier Entertainment Biloxi, LLC (144A) 10.75%, due 2/01/12 (acquired 3/16/04) (cost $216,000)	$	210
	Catalog Retail—0.7%
	250,000		Jafra Cosmetics International, Inc. 10.75%, due 5/15/11		279
	Commodity Chemicals—2.1%
	400,000		Resolution Performance Products, LLC 9.50%, due 4/15/10		412
	400,000		Tekni-Plex, Inc. 12.75%, due 6/15/10		384
	Communication Equipment—0.7%
	250,000		General Cable Corp. 9.50%, due 11/15/10		269
	Computer Hardware—1.1%
	400,000	#	Stratus Technologies, Inc. (144A) 10.375%, due 12/01/08 (acquired 11/06/03) (cost $400,000)		410
	Construction & Engineering—1.0%
	200,000	#	J Ray McDermott SA (144A) 11.00%, due 12/15/13 (acquired 11/21/03) (cost $194,128)		193
	162,000		URS Corp. 11.50%, due 9/15/09		186
	Construction & Farm Machinery & Heavy Trucks—0.7%
	250,000		NMHG Holding Co. 10.00%, due 5/15/09		275
	Construction Materials—2.2%
	350,000	#	Case New Holland, Inc. (144A) 9.25%, due 8/01/11 (acquired 6/25/04) (cost $371,000)		367
	400,000		Texas Industries, Inc. 10.25%, due 6/15/11		446
	Consumer Finance—1.0%
	350,000	#	BCP Caylux Holdings Luxembourg SCA (144A) 9.625%, due 6/15/14 (acquired 6/03/04) (cost $358,438)		363

SEE NOTES TO FINANCIAL STATEMENTS

44

Portfolio of Investments

Safeco High-Yield Bond Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT				Value (000’s)
	Distributors—2.1%
$	400,000		Adesa, Inc. 7.625%, due 6/15/12	$	403
	375,000		Wesco Distribution, Inc. 9.125%, due 6/01/08		386
	Diversified Chemicals—0.4%
	150,000		Terra Capital, Inc. 11.50%, due 6/01/10		164
	Diversified Commercial Services—2.9%
	250,000		Jacuzzi Brands, Inc. 9.625%, due 7/01/10		267
	250,000		Mobile Mini, Inc. 9.50%, due 7/01/13		274
	300,000		Quintiles Transnational Corp. 10.00%, due 10/01/13		297
	250,000		Williams Scotsman, Inc. 9.875%, due 6/01/07		248
	Electric Utilities—2.5%
	200,000	#	AES Corp. (144A) 8.75%, due 5/15/13 (acquired 10/09/03) (cost $212,500)		214
	100,000	#	Calpine Corp. (144A) 8.50%, due 7/15/10 (acquired 10/09/03) (cost $95,750)		83
	300,000		Centerpoint Energy, Inc. 3.75%, due 5/15/23		340
	300,000		Reliant Resources, Inc. 9.50%, due 7/15/13		323
	Electronic Equipment Manufacturers—0.2%
	100,000	#	Graftech International, Ltd. (144A) 1.625%, due 1/15/24 (acquired 1/22/04) (cost $110,500)		90
	Environmental Services—0.7%
	250,000		Casella Waste Systems, Inc. 9.75%, due 2/01/13		270
	Fertilizers & Agricultural Chemicals—1.4%
	350,000	#	Fertinitro Finance, Inc. (144A) 8.29%, due 4/01/20 (acquired 9/12/03) (cost $201,500)		277
	250,000		United Industries Corp. 9.875%, due 4/01/09		260

SHARES OR PRINCIPAL AMOUNT				Value (000’s)
	Gas Utilities—1.1%
$	200,000	#	Dynegy Holdings, Inc. (144A) 9.875%, due 7/15/10 (acquired 10/09/03) (cost $215,500)	$	215
	168,000		GulfTerra Energy Partners, LP 10.625%, due 12/01/12		200
	Health Care Distributors—2.9%
	400,000	#	IASIS Healthcare, LLC (144A) 8.75%, due 6/15/14 (acquired 6/10/04) (cost $400,000)		409
	250,000	#	Medical Device Manufacturing, Inc. (144A) 10.00%, due 7/15/12 (acquired 6/23/04) (cost $250,000)		255
	500,000		Rural/Metro Corp. 7.875%, due 3/15/08		435
	Health Care Equipment—1.2%
	227,900		Dade Behring Holdings, Inc. 11.91%, due 10/03/10		261
	250,000	#	HMP Equity Holdings Corp. (144A) 0.00%, due 5/15/08 (acquired 4/30/03) (cost $118,588)		192
	Health Care Facilities—2.9%
	400,000		Healthsouth Corp. 8.50%, due 2/01/08		394
	250,000		Psychiatric Solutions, Inc. 10.625%, due 6/15/13		284
	400,000	#	Tenet Healthcare Corp. (144A) 9.875%, due 7/01/14 (acquired 6/15/04) (cost $390,696)		407
	Homebuilding—2.6%
	650,000		Champion Enterprises, Inc. 7.625%, due 5/15/09		611
	350,000		D.R. Horton, Inc. 8.50%, due 4/15/12		387
	Household Products—0.5%
	250,000		Johnsondiversey, Inc. 10.67% beg. 5/15/07 Step Bond due 5/15/13		193

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

45

Portfolio of Investments

Safeco High-Yield Bond Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT				Value (000’s)
	Housewares & Specialties—0.6%
$	250,000	#	Vitro SA de CV (144A) 11.75%, due 11/01/13 (acquired 10/15/03) (cost $246,390)	$	229
	Industrial Machinery—0.7%
	250,000		National Waterworks, Inc. 10.50%, due 12/01/12		277
	Integrated Oil & Gas—0.7%
	300,000	#	Cerro Negro Finance, Ltd. (144A) 7.90%, due 12/01/20 (acquired 1/23/03) (cost $178,500)		269
	Integrated Telecommunications Services—5.4%
	200,000		Alaska Communications Systems Holdings Group, Inc. 9.875%, due 8/15/11		209
	300,000		Call-Net Enterprises, Inc. 10.625%, due 12/31/08		299
	250,000		FairPoint Communications, Inc. 11.875%, due 3/01/10		286
	250,000		FairPoint Communications, Inc. 12.50%, due 5/01/10		266
	650,000		LCI International, Inc. 7.25%, due 6/15/07		588
	110,854		MCI, Inc. 5.908%, due 5/01/07		108
	854		MCI, Inc. 6.688%, due 5/01/09		1
	18		MCI, Inc. 7.735%, due 5/01/14		0
	250,000	#	Qwest Corp. (144A) 9.125%, due 3/15/12 (acquired 8/28/03) (cost $271,250)		270
	Leisure Facilities—1.5%
	450,000	#	AMF Bowling Worldwide, Inc. (144A) 10.00%, due 3/01/10 (acquired 2/19/04) (cost $450,000)		461
	100,000	#	Global Cash Acces, LLC/Global Cash Finance Corp. (144A) 8.75%, due 3/15/12 (acquired 3/04/04) (cost $100,000)		104

SHARES OR PRINCIPAL AMOUNT				Value (000’s)
	Leisure Products—0.6%
$	250,000	#	Warner Music Group (144A) 7.375%, due 4/15/14 (acquired 4/01/04) (cost $250,000)	$	241
	Metal & Glass Containers—5.3%
	100,000		BWAY Corp. 10.00%, due 10/15/10		105
	400,000		Constar International, Inc. 11.00%, due 12/01/12		374
	250,000		Crown Holdings, Inc. 10.875%, due 3/01/13		285
	400,000	#	Hylsa SA de CV (144A) 10.50%, due 12/15/10 (acquired 6/10/04) (cost $380,000)		388
	300,000	#	Neenah Corp. (144A) 11.00%, due 9/30/10 (acquired 10/16/03) (cost $300,919)		318
	100,000		Pliant Corp. 11.125%, due 9/01/09		107
	450,000	#	Solo Cup Co. (144A) 8.50%, due 2/15/14 (acquired 2/12/04) (cost $440,000)		419
	Movies & Entertainment—0.4%
	190,000		Muzak Holdings Finance Corp. 13.00% beg. 3/15/04 Step Bond due 3/15/10		167
	Multi-Utilities & Unregulated Power—1.4%
	500,000		Cogentrix Energy, Inc. 8.75%, due 10/15/08		516
	Oil & Gas Drilling—0.6%
	250,000		Grey Wolf, Inc. 3.75%, due 5/07/23		234
	Oil & Gas Equipment & Services—1.1%
	400,000		Petroleum Geo-Services ASA 10.00%, due 11/05/10		414
	Oil & Gas Exploration & Production—0.8%
	300,000		Harvest Natural Resources, Inc. 9.375%, due 11/01/07		306
	Oil & Gas Refining, Marketing & Transportation—1.1%
	350,000		CITGO Petroleum Corp. 11.375%, due 2/01/11		406

SEE NOTES TO FINANCIAL STATEMENTS

46

Portfolio of Investments

Safeco High-Yield Bond Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Paper Packaging—2.0%
$   500,000		Graham Packaging Co., Inc. 10.75% beg. 1/15/03 Step Bond due 1/15/09	$	514
250,000		Norske Skog Canada, Ltd. 7.375%, due 3/01/14		242
Paper Products—1.1%
400,000	#	Abitibi-Consolidated, Inc.(144A) 5.02%, due 6/15/11 (acquired 6/10/04) (cost $400,000)		401
Personal Products—0.7%
250,000		Herbalife International, Inc. 11.75%, due 7/15/10		285
Property & Casualty Insurance—0.7%
250,000		Crum & Forster Holdings Corp. 10.375%, due 6/15/13		273
Publishing—0.7%
250,000		Houghton Mifflin Co. 9.875%, due 2/01/13		250
Restaurants—3.3%
250,000		Buffets, Inc. 11.25%, due 7/15/10		261
194,000		Carrols Corp. 9.50%, due 12/01/08		201
400,000	#	Friendly Ice Cream Corp.(144A) 8.375%, due 6/15/12 (acquired 3/03/04) (cost $400,000)		388
400,000	#	Vicorp Restaurants, Inc. (144A) 10.50%, due 4/15/11 (acquired 4/06/04) (cost $395,164)		398
Specialized Finance—0.7%
100,000	#	New ASAT Finance, Ltd. (144A) 9.25%, due 2/01/11 (acquired 1/16/04) (cost $100,000)		99
150,000		UCAR Finance, Inc. 10.25%, due 2/15/12		167
Specialty Chemicals—1.1%
300,000		Huntsman International, LLC 10.125%, due 7/01/09		306
100,000		Huntsman International, LLC 11.625%, due 10/15/10		111

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Specialty Stores—4.5%
$     81,000		Big 5 Corp. 10.875%, due 11/15/07	$	84
250,000	#	General Nutrition Center, Inc. (144A) 8.50%, due 12/01/10 (acquired 11/25/03) (cost $250,000)		259
250,000	#	Jo-Ann Stores, Inc. (144A) 7.50%, due 3/01/12 (acquired 2/19/04) (cost $250,000)		245
400,000	#	Petro Stopping Centers, LP (144A) 9.00%, due 2/15/12 (acquired 1/30/04) (cost $411,000)		396
250,000		United Auto Group, Inc. 9.625%, due 3/15/12		274
350,000		United Rentals North America,Inc. 7.75%, due 11/15/13		331
100,000		United Rentals, Inc. 1.875%, due 10/15/23		96
Steel—0.7%
250,000		Shaw Group, Inc. 10.75%, due 3/15/10		245
Textiles—1.1%
400,000	#	Interface, Inc. (144A) 9.50%, due 2/01/14 (acquired 1/26/04) (cost $400,000)		398
Tobacco—0.9%
350,000	#	North Atlantic Trading Co., Inc. (144A) 9.25%, due 3/01/12 (acquired 2/11/04) (cost $348,250)		339
Trucking—0.7%
250,000		Laidlaw International, Inc. 10.75%, due 6/15/11		273
Wireless Telecommunication Services—1.8%
250,000	#	Millicom International Cellular SA (144A) 10.00%, due 12/01/13 (acquired 11/19/03) (cost $250,000)		254
177,000		Nextel Communications, Inc. 7.375%, due 8/01/15		179

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

47

Portfolio of Investments

Safeco High-Yield Bond Fund

As of June 30, 2004

(Unaudited)

SHARES OR PRINCIPAL AMOUNT			Value (000’s)
Wireless Telecommunication Services—(continued)
$      250,000		SBA Communications Corp. 10.25%, due 2/01/09	$	256
TOTAL CORPORATE BONDS (cost $29,449)				30,854
PREFERRED STOCKS—2.3%
Auto Parts & Equipment—0.6%
3,000		Cummins Capital Trust 7.00% Callable 6/15/06 @ $51.75		217
Electric Utilities—1.2%
402		TNP Enterprises, Inc. 14.50% Payment in Kind to 4/01/05 Callable 4/01/05 @ $1,100.00		450
Metal & Glass Containers—0.5%
7,500		Smurfit-Stone Container Corp. 7.00% Callable 7/30/04 @ $25.00		184
TOTAL PREFERRED STOCKS (cost $710)				851
COMMON STOCKS—1.9%
Integrated Telecommunications Services—0.6%
16,005	*	MCI, Inc.		226
Packaged Foods & Meats—1.3%
8,000	*	Chiquita Brands International, Inc.		167
241	*	Crunch Equity Voting Trust (Illiquid) †		325
TOTAL COMMON STOCKS (cost $862)				718
COMMERCIAL PAPER—9.5%
Communication Equipment—4.8%
1,800,000		Motorola, Inc. 1.34%, due 7/07/04		1,799
Other Diversified Financial Services—4.7%
1,798,000		Ford Motor Credit Co. 1.30%, due 7/01/04		1,798
TOTAL COMMERCIAL PAPER (cost $3,597)				3,597

SHARES OR PRINCIPAL AMOUNT		Value (000’s)
CASH EQUIVALENTS—18.7%
$1,843,203	AIM Short-Term Investments Co.Liquid Assets Money Market Portfolio (Institutional Shares)	$	1,843
5,246,735	State Street Navigator Securities Lending Prime Portfolio **		5,247
TOTAL CASH EQUIVALENTS (cost $7,090)			7,090
TOTAL INVESTMENTS (cost $41,708)—113.9%		$	43,110
Other Assets, less Liabilities			(5,268	)
NET ASSETS		$	37,842

  ^ Non-income producing security. Security in default.

  * Non-income producing security.

** Represents invested collateral received related to $5,134,804 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

  † Securities are valued at fair value as determined under the supervision of the Board of Trustees.

  # Securities are exempt from registration and restricted as to resale only to dealers, or through a dealer to a “qualified institutional buyer” as permitted under Rule 144A of the Securities Act of 1933. The total cost of such securities is $10,175,000 and the total value is $10,422,000 or 27.5% of net assets.

SEE NOTES TO FINANCIAL STATEMENTS

48

Report From the Fund Managers

Safeco Intermediate-Term U.S. Government Fund

As of June 30, 2004

How did the Fund perform?

Excluding the applicable sales charges, the Safeco Intermediate-Term U.S. Government Fund outperformed its benchmark index, the Lehman Intermediate Government Index, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

Rising interest rates marked a performance shift between the first and second quarters. While rates fell in the first quarter, favoring longer duration securities, rates began an upward climb in the second. The Fund’s shorter duration, along with its exposure to mortgage-backed securities (MBS), allowed it to benefit from this rising interest-rate environment.

What changes did you make to the Fund and why?

Trading activity for the first six months was aimed at modestly lengthening the Fund’s duration, increasing yield, and maintaining the MBS allocation.

During the first half of the year, we sold a four-plus year Treasury to buy a longer duration Treasury security (2023 maturity) to increase the Fund’s exposure to the long end of the yield curve and lengthen its duration. Some of the proceeds were also used to buy 30-year 5.5% FNMA pass-throughs to maintain the allocation of MBS slightly above 40%.

The Fund used the cash from mortgage pay downs to purchase a 30-year 5.0% FNMA pass-through to maintain the allocation of MBS slightly above 40%. The Fund also sold an eight-year Treasury and bought a 10-year Federal Home Loan Bank (FHLB) bond. The FHLB bond yielded almost 1.5% more than the Treasury. This added both yield and duration to the portfolio.

Paul Stevenson, CFA—Portfolio Manager

Lesley Fox—Portfolio Manager

Tim Hokari—Portfolio Manager

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the Fund. See Note 9 of Notes to the Financial Statements.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

49

Performance Overview & Highlights

Safeco Intermediate-Term U.S. Government Fund

(Unaudited)

	With Sales Charge				Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	10 Year	Six Month*	1 Year	5 Year	10 Year
Safeco Intermediate-Term U.S. Government Fund
Class A	(3.50)%	(4.56)%	4.73%	5.79%	0.02%	(1.08)%	5.49%	6.16%
Class B	(4.27)%	(5.63)%	4.69%	5.84%	(0.35)%	(1.83)%	4.85%	5.84%
Class C	(1.33)%	(2.78)%	4.85%	5.84%	(0.35)%	(1.83)%	4.85%	5.84%
Lehman Brothers Intermediate Government Index	N/A	N/A	N/A	N/A	(0.15)%	(0.48)%	6.25%	6.56%
Merrill Lynch U.S. Treasury/Agency Master Index	N/A	N/A	N/A	N/A	(0.18)%	(1.29)%	6.66%	7.13%
Lipper, Inc. (General U.S. Gov’t Funds)	N/A	N/A	N/A	N/A	(0.32)%	(1.45)%	5.68%	6.14%
* Not annualized Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund’s benchmark index.

Current Yield (30-day) Class A	2.81%
Current Yield (30-day) Class B	2.17%
Current Yield (30-day) Class C	2.17%
Weighted Average Maturity	4.60 years

50

Portfolio of Investments

Safeco Intermediate-Term U.S. Government Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)		Value (000’s)
ASSET BACKED SECURITIES—5.4%
Consumer Finance—5.4%
$2,000	Americredit Automobile Receivables Trust 4.41%, due 11/12/08	$	2,032
1,500	Chemical Master Credit Card Trust 5.98%, due 9/15/08		1,564
TOTAL ASSET BACKED SECURITIES (cost $3,624)			3,596
COLLATERALIZED MORTGAGE OBLIGATIONS—8.3%
U.S. Government Agency Obligations—8.3%
2,500	Freddie Mac 3.50%, due 8/01/33		2,520
3,000	Freddie Mac 3.50%, due 9/15/10		3,017
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (cost $5,603)			5,537
U.S. GOVERNMENT AGENCY—MORTGAGE BACKED SECURITIES—32.1%
Federal Home Loan Mortgage Corporation (FHLMC)—6.2%
97	5.50%, due 8/01/17		99
1,070	5.50%, due 9/01/17		1,096
297	6.00%, due 4/01/14		310
1,844	6.00%, due 9/01/32		1,887
382	6.50%, due 4/01/29		399
333	8.00%, due 9/01/25		365
Federal National Mortgage Association (FNMA)—19.0%
1,189	5.00%, due 5/01/34		1,150
3,781	5.00%, due 9/01/33		3,664
1,285	5.50%, due 11/01/33		1,283
2,863	5.50%, due 3/01/33		2,858
284	6.00%, due 4/01/32		291
308	6.00%, due 8/01/32		315
1,825	6.50%, due 10/01/28		1,905
105	7.00%, due 10/01/29		111
614	7.00%, due 4/01/29		650
150	7.00%, due 5/01/29		159
140	8.00%, due 7/01/27		154
140	9.00%, due 11/01/22		158
Government National Mortgage Association (GNMA)—6.9%
1,545	6.00%, due 11/20/31		1,585
262	6.50%, due 1/20/24		276

PRINCIPAL AMOUNT (000’s)		Value (000’s)
Government National Mortgage Association (GNMA)—(continued)
$   242	7.00%, due 1/15/30	$	257
342	7.00%, due 4/15/28		364
284	7.00%, due 7/20/31		301
544	7.50%, due 10/15/27		587
419	8.00%, due 12/15/29		459
148	8.00%, due 3/20/30		162
529	8.25%, due 5/15/20		587
TOTAL U.S. GOVERNMENT AGENCY— MORTGAGE BACKED SECURITIES (cost $21,327)			21,432
U.S. GOVERNMENT & AGENCY OBLIGATIONS—52.6%
U.S. Government Agency Obligations—10.7%
2,000	Federal Farm Credit Bank (Designated Bond) 3.00%, due 4/15/08		1,940
1,400	Federal Home Loan Bank (Unsecured Bond) 5.25%, due 6/18/14		1,404
2,500	Freddie Mac (Unsecured Note) 2.125%, due 11/15/05		2,484
1,350	Freddie Mac (Unsecured Note) 4.375%, due 2/04/10		1,334
U.S. Treasury Notes—41.9%
1,750	1.125%, due 6/30/05		1,734
2,000	1.625%, due 4/30/05		1,994
3,100	10.00%, due 5/15/10		3,309
3,500	3.50%, due 11/15/06		3,545
3,000	4.00%, due 11/15/12		2,904
1,300	4.75%, due 11/15/08		1,358
1,750	5.50%, due 2/15/08		1,874
2,000	5.50%, due 8/15/28		2,026
3,300	5.75%, due 11/15/05		3,451
250	6.125%, due 8/15/29		275
800	6.25%, due 8/15/23		886
250	6.50%, due 11/15/26		286
1,300	6.50%, due 2/15/10		1,465
500	8.75%, due 5/15/20		691
1,795	U.S. Treasury Inflation Index Note 3.50%, due 1/15/11		2,153
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (cost $35,732)			35,113

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

51

Portfolio of Investments

Safeco Intermediate-Term U.S. Government Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)		Value (000’s)
CASH EQUIVALENTS—1.3%
Investment Companies
$   887	AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)	$	887
TOTAL CASH EQUIVALENTS (cost $887)			887
TOTAL INVESTMENTS (cost $67,173)—99.7%		$	66,565
Other Assets, less Liabilities			177
NET ASSETS		$	66,742

SEE NOTES TO FINANCIAL STATEMENTS

52

Report From the Fund Managers

Safeco Intermediate-Term Bond Fund

As of June 30, 2004

How did the Fund perform?

The Safeco Intermediate-Term Bond Fund underperformed its benchmark index, the Lehman Aggregate Bond Index, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

While interest rates declined in the first quarter, they rose sharply during the second. The Fund benefited its relatively short duration and 10.5% underweight holdings in Treasury securities, which underperformed the most of any sector. However, the fund was hurt by its 6.4% underweight in mortgage securities, the best-performing sector of the second quarter.

The Federal Reserve increased the Fed Funds rate to 1.25% from 1.00% on June 30; the first rate change in a year. We believe that the Fed will continue to raise rates through year-end and into 2005, most likely in 25 basis points steps. The Fed appears to be focused on inflation and employment so we expect the bond market will be very sensitive to both data releases. Any unanticipated strength or weakness in either could cause yields to gyrate in either direction although we believe the overall trend should be up. In this scenario the Fund, with its shorter duration versus the peer group, should perform well.

What changes did you make to the Fund and why?

Early in the year we restructured the maturity profile of our Treasury exposure, laddering holdings across the entire yield curve and selecting specific positions with the highest yield per unit of duration risk. We also increased our exposure to callable agency securities to increase the portfolio’s yield; this helped cushion the blow from the second quarter’s rise in rates.

Second quarter activity was aimed at maintaining our slightly short duration and maintaining the mortgage-backed securities (MBS) allocation. The Fund used the cash from mortgage paydowns to purchase mortgage pass-through to maintain the allocation of MBS helping to maintain the portfolio’s yield. The Fund reduced its exposure in the corporate bond sector modestly, swapping a 30-year corporate bond for a similar maturity Treasury bond. The Fund also tendered some 10-year corporate bonds and invested the proceeds in similar maturity Corporates.

Lesley Fox—Portfolio Manager

Nancy McFadden, CFA—Portfolio Manager

Tim Hokari—Portfolio Manager

Gregory Card, CFA—Portfolio Manager

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 9 of Notes to the Financial Statements.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

53

Performance Overview & Highlights

Safeco Intermediate-Term Bond Fund

(Unaudited)

	With Sales Charge				Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	10 Year	Six Month*	1 Year	5 Year	10 Year
Safeco Intermediate-Term Bond Fund
Class A	(3.48)%	(3.66)%	4.86%	5.24%	0.04%	(0.11)%	5.60%	5.61%
Class B	(4.38)%	(4.83)%	4.62%	5.09%	(0.45)%	(0.98)%	4.79%	5.09%
Class C	(1.32)%	(2.01)%	4.78%	4.95%	(0.34)%	(1.05)%	4.78%	4.95%
Lehman Brothers Aggregate Bond Index	N/A	N/A	N/A	N/A	0.15%	0.32%	6.95%	7.39%
Lipper, Inc. (Intermediate Investment-Grade Bond Funds)	N/A	N/A	N/A	N/A	(0.08)%	0.18%	6.16%	6.61%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund’s benchmark index.

Current Yield (30-day) Class A	3.31%
Current Yield (30-day) Class B	2.67%
Current Yield (30-day) Class C	2.68%
Weighted Average Maturity	5.50 years

BONDS BY TYPE	Percent of Net Assets
Asset Backed Securities	1.4	%
Corporate Bonds	32.5
Collateralized Mortgage Obligations	4.0
U.S. Government & Agency Obligations	25.6
U.S. Government Agency—Mortgage Backed Securities	28.3
Municipal Bonds	1.1
Cash & Other	7.1
	100.0	%

CREDIT RATING DISTRIBUTION

AS A PERCENT OF NET ASSETS

54

Portfolio of Investments

Safeco Intermediate-Term Bond Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)			Value (000’s)
ASSET BACKED SECURITIES—1.4%
Consumer Finance—1.4%
$  47		Americredit Automobile Receivables Trust 1.39%, due 12/12/07	$	48
90		MBNA Credit Card Master Note Trust 1.25%, due 12/15/08		90
TOTAL ASSET BACKED SECURITIES (cost $138)				138
CORPORATE BONDS—32.5%
Aerospace & Defense—1.4%
120		Honeywell International, Inc. 7.50%, due 3/01/10		137
Agricultural Products—0.6%
55		Unilever Capital Corp. 7.125%, due 11/01/10		62
Apparel Retail—0.3%
25		Nordstrom, Inc. 5.625%, due 1/15/09		26
Automobile Manufacturers—1.4%
130		Ford Motor Co. 7.25%, due 10/01/08		138
Brewers—0.6%
55	#	Miller Brewing Co. (144A) 5.50%, due 8/15/13 (acquired 11/19/03) (cost $56,385)		55
Broadcasting & Cable TV—1.3%
135		Comcast Corp. 5.30%, due 1/15/14		130
Computer Hardware—0.9%
85		International Business Machines Corp. 1.535%, due 9/10/04		85
Construction & Farm Machinery & Heavy Trucks—1.7%
165		John Deere Capital Corp. 2.16%, due 9/17/04		165
Diversified Banks—3.3%
50		HSBC Bank USA 4.625%, due 4/01/14		47
145		International Bank for Reconstruction & Development 4.375%, due 9/28/06		149
45		U.S. Bancorp 3.125%, due 3/15/08		44

PRINCIPAL AMOUNT (000’s)			Value (000’s)
Diversified Banks—(continued)
$  80		Wachovia Corp. 5.00%, due 8/15/15	$	76
Electric Utilities—1.6%
25		Dominion Resources, Inc. 6.25%, due 6/30/12		26
65		PSEG Power LLC 6.95%, due 6/01/12		71
55		Southern California Edison Co. 8.00%, due 2/15/07		61
Fertilizers & Agricultural Chemicals—0.4%
45		Potash Corp. of Saskatchewan, Inc. 4.875%, due 3/01/13		43
Forest Products—0.2%
17		Weyerhaeuser Co. 5.50%, due 3/15/05		17
Housewares & Specialties—0.6%
55		Newell Rubbermaid, Inc. 4.625%, due 12/15/09		55
Integrated Oil & Gas—1.2%
75		Pemex Project Funding Master Trust 9.125%, due 10/13/10		86
25		USX Corp. 6.85%, due 3/01/08		27
Integrated Telecommunications Services—1.7%
40		Verizon Global Funding Corp. 7.375%, due 9/01/12		45
110		Verizon Wireless Capital LLC 5.375%, due 12/15/06		115
Investment Banking & Brokerage—1.4%
50		Goldman Sachs Group, Inc. 4.125%, due 1/15/08		50
40		J.P. Morgan Chase & Co., Inc. 4.50%, due 11/15/10		39
40		Morgan Stanley 6.60%, due 4/01/12		43
Life & Health Insurance—1.9%
85	#	Jackson National Life Global Funding, LLC (144A) 1.5975%, due 3/11/05 (acquired 9/05/02) (cost $ 85,000)		85
90		Lincoln National Corp. 5.25%, due 6/15/07		94
Movies & Entertainment—0.5%
45		Time Warner, Inc. 6.75%, due 4/15/11		49

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

55

Portfolio of Investments

Safeco Intermediate-Term Bond Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)		Value (000’s)
Multi-Utilities & Unregulated Power—1.1%
$100	Avista Corp. 7.75%, due 1/01/07	$	108
Oil & Gas Refining, Marketing & Transportation—0.7%
65	Kinder Morgan Energy Partners, L.P. 6.75%, due 3/15/11		70
Other Diversified Financial Services—3.6%
80	American Express Co. 4.875%, due 7/15/13		78
40	Citigroup, Inc. 7.25%, due 10/01/10		45
120	General Electric Capital Corp. 5.45%, due 1/15/13		122
40	Household Finance Corp. 7.875%, due 3/01/07		44
55	Lehman Brothers Holdings, Inc. 4.375%, due 11/30/10		53
Regional Banks—0.5%
55	KeyCorp 2.75%, due 2/27/07		54
Soft Drinks—0.6%
55	Bottling Group, LLC 5.00%, due 11/15/13		54
Specialized Finance—2.7%
150	General Motors Acceptance Corp. 6.125%, due 9/15/06		156
90	National Rural Utilities Cooperative Finance Corp. 7.25%, due 3/01/12		102
Thrifts & Mortgage Finance—1.8%
105	Countrywide Home Loans, Inc. 3.50%, due 12/19/05		106
65	Washington Mutual Bank Corp. 5.50%, due 1/15/13		65
Wireless Telecommunication Services—0.5%
55	Vodafone Group, plc (ADR) 5.00%, due 12/16/13		53
TOTAL CORPORATE BONDS (cost $3,086)			3,130
COLLATERALIZED MORTGAGE OBLIGATIONS—4.0%
Commercial—0.5%
42	Asset Securitization Corp. 7.32%, due 1/13/30		42
Residential—1.4%
140	Washington Mutual, Inc. 4.10%, due 10/25/33		137

PRINCIPAL AMOUNT (000’s)		Value (000’s)
U.S. Government Agency Obligations—2.1%
$195	Freddie Mac 6.00%, due 4/15/32	$	202
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (cost $389)			381
U.S. GOVERNMENT AGENCY—MORTGAGE BACKED SECURITIES—28.3%
Federal Home Loan Mortgage Corporation (FHLMC)—1.0%
94	6.50%, due 1/01/29		98
Federal National Mortgage Association (FNMA)—26.3%
260	4.816%, due 12/01/12		259
346	5.00%, due 12/01/17		347
226	5.00%, due 3/01/33		219
173	5.00%, due 5/01/34		168
326	5.50%, due 2/01/18		335
125	5.50%, due 7/01/23		127
311	5.50%, due 9/01/17		319
13	6.00%, due 1/01/29		13
169	6.00%, due 3/01/33		173
107	6.00%, due 8/01/32		109
25	6.00%, due 9/01/29		25
21	6.50%, due 1/01/15		22
115	6.50%, due 7/01/29		120
29	7.00%, due 3/01/12		30
9	8.00%, due 1/01/31		10
8	8.00%, due 10/01/30		8
23	8.00%, due 2/01/29		26
19	8.00%, due 2/01/30		21
6	8.00%, due 2/01/30		6
118	8.00%, due 3/01/31		129
15	8.00%, due 4/01/08		16
19	8.00%, due 4/01/20		21
9	8.00%, due 4/01/30		10
5	8.00%, due 5/01/31		6
5	8.00%, due 7/01/30		6
Government National Mortgage Association (GNMA)—1.0%
7	6.00%, due 4/15/14		7
30	6.00%, due 8/15/13		32
25	7.00%, due 4/15/28		26
19	7.00%, due 8/15/28		20
13	7.75%, due 11/15/29		14
TOTAL U.S. GOVERNMENT AGENCY— MORTGAGE BACKED SECURITIES (cost $2,708)			2,722

SEE NOTES TO FINANCIAL STATEMENTS

56

Portfolio of Investments

Safeco Intermediate-Term Bond Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)		Value (000’s)
U.S. GOVERNMENT & AGENCY OBLIGATIONS—25.6%
U.S. Government Agency Obligations—12.6%
$140	Fannie Mae (Unsecured Note) 5.24%, due 8/07/18	$	135
265	Fannie Mae 2.87724%, due 2/17/09		264
130	Federal Home Loan Bank (Unsecured Bond) 3.625%, due 11/14/08		128
65	Federal Home Loan Bank (Unsecured Bond) 3.875%, due 6/14/13		60
55	Federal Home Loan Mortgage Corp. (Unsecured Note) 3.34%, due 6/09/10		51
60	Federal Home Loan Mortgage Corp. (Unsecured Note) 3.50%, due 2/13/08		59
165	Federal Home Loan Mortgage Corp. (Unsecured Note) 4.00%, due 6/12/13		151
170	Freddie Mac (Unsecured Note) 4.00%, due 12/30/13		155
220	Freddie Mac (Unsecured Note) 5.20%, due 3/05/19		207
U.S. Treasury Notes—13.0%
35	1.50%, due 7/31/05		35
135	3.125%, due 10/15/08		132
100	4.00%, due 2/15/14		95
35	4.25%, due 8/15/13		34
120	5.50%, due 8/15/28		122
105	6.00%, due 8/15/09		115
135	7.00%, due 7/15/06		146
135	7.125%, due 2/15/23		164
340	U.S. Treasury Inflation Index Note 3.50%, due 1/15/11		408
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (cost $2,518)			2,461
MUNICIPAL BONDS—1.1%
Electric Utilities—1.1%
105	California State Department of Water Resources Supply Revenue 4.33%, due 5/01/06		107
TOTAL MUNICIPAL BONDS (cost $105)			107

PRINCIPAL AMOUNT (000’s)		Value (000’s)
CASH EQUIVALENTS—7.0%
Investment Companies
$479	AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)	$	479
140	American AAdvantage Money Market Select Fund		140
54	State Street Navigator Securities Lending Prime Portfolio **		54
TOTAL CASH EQUIVALENTS (cost $673)			673
TOTAL INVESTMENTS (Cost $9,617)—99.9%		$	9,612
Other Assets, less Liabilities			7
NET ASSETS		$	9,619

** Represents invested collateral received related to $53,233 in securities on loan under securities lending agreements. See Securities Lending Income in Note 2 to the financial statements.

  # Securities are exempt from registration and restricted as to resale only to dealers, or through a dealer to a “qualified institutional buyer” as permitted under Rule 144A of the Securities Act of 1933. The total cost of such securities is $141,385 and the total value is $140,000 or 1.5% of net assets.

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

57

Report From the Fund Managers

Safeco California Tax-Free Income Fund

As of June 30, 2004

How did the Fund perform?

Excluding the applicable sales charges, the Safeco California Tax-Free Income Fund outperformed its benchmark index, the Lehman Brothers Long Municipal Bond Index, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

After a first quarter market rally, then sell-off, the first half ended with long-term bond yields rising about 50 basis points during the second quarter. The impetus for this change was more news demonstrating a stronger economy and an increasing threat of renewed inflation, which in turn could inspire the Federal Reserve to increase short-term yields at a faster pace than expected. With a longer average maturity than most of its peers, the Fund performed relatively poorly as bond prices declined sharply.

What changes did you make to the Fund and why?

Transactions for the period included two small sales of Los Angeles DWAP 4.25 ’34 to retail customers at aggressive prices, and a tax swap. We sold San Jose Airport 5 ’32 and bought Orange County Sanitary District 5 ’33 in order to realize a small loss, which can be used to offset gains for tax purposes.

Stephen Bauer—Portfolio Manager

Mary Metastasio—Portfolio Manager

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 9 of Notes to the Financial Statements.

58

Performance Overview & Highlights

Safeco California Tax-Free Income Fund

(Unaudited)

	With Sales Charge				Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	10 Year	Six Month*	1 Year	5 Year	10 Year
Safeco California Tax-Free Income Fund
Class A	(5.48)%	(5.01)%	4.30%	5.86%	(1.01)%	(0.53)%	5.27%	6.35%
Class B	(6.15)%	(5.95)%	4.16%	5.87%	(1.31)%	(1.20)%	4.50%	5.87%
Class C	(2.35)%	(2.22)%	4.48%	5.73%	(1.38)%	(1.27)%	4.48%	5.73%
Lehman Brothers Long Municipal Bond Index	N/A	N/A	N/A	N/A	(1.26)%	0.53%	6.04%	7.08%
Lipper, Inc. (California Municipal Bond Funds)	N/A	N/A	N/A	N/A	(0.96)%	0.23%	4.74%	5.71%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund's benchmark index.

Current Yield (30-day) Class A	4.09%
Current Yield (30-day) Class B	3.52%
Current Yield (30-day) Class C	3.53%
Weighted Average Maturity	24.76 years

TOP FIVE TYPE OF BONDS	Percent of Net Assets
Hospital	18.6	%
Lease Rental	10.2
University Revenue	9.8
Utilities (Water)	9.1
Utilities (Sewer)	8.1
TOP FIVE HOLDINGS	Percent of Net Assets
Alameda Corridor Transportation Authority Revenue	5.8	%
California Health Facilities Financing Authority Health Facility Revenue (Cedars Sinai Medical Center)	5.8
Duarte California Certificates of Participation (City of Hope Medical Center)	5.6
San Joaquin Hills Transportation Corridor Agency Senior Lien Toll Road Revenue	5.2
State of California General Obligation Bonds	5.0

CREDIT RATING DISTRIBUTION

AS A PERCENT OF NET ASSETS

59

Portfolio of Investments

Safeco California Tax-Free Income Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)		Value (000’s)
MUNICIPAL BONDS *—93.4%
$5,000	Alameda Corridor Transportation Authority Revenue 4.75%, due 10/01/25 [MBIA]	$	4,774
2,000	California Health Facilities Financing Authority Revenue (Adventist Health System) 5.00%, due 3/01/33		1,873
4,500	California Health Facilities Financing Authority Health Facility Revenue (Cedars Sinai Medical Center) 6.25%, due 12/01/34		4,773
2,990	California State Department of Water Resources Power Supply Revenue 5.25%, due 5/01/20		3,082
3,000	California State University Fresno Association Revenue 6.00%, due 7/01/26		3,067
2,000	California State University Fresno Association Revenue 6.00%, due 7/01/31		2,049
2,645	Capistrano Beach Water District Wastewater Enterprise Capital 4.75%, due 12/01/28 [MBIA]		2,485
1,475	Capistrano Beach Water District Wastewater Enterprise Capital 4.75%, due 12/01/28 [MBIA]		1,396
4,000	Central California Joint Powers Health Finance Authority 6.00%, due 2/01/30		3,995
20	Concord Redevelopment Agency Tax Allocation Central Concord Redevelopment Project 8.00%, due 7/01/18 [BIG]		20
1,000	Contra Costa Water District Water Revenue 4.50%, due 10/01/27 [FSA]		911
5,000	Duarte California Certificates of Participation City of Hope Medical Center 5.25%, due 4/01/31		4,648
2,100	Fresno Joint Powers Financing Authority Lease Revenue Exhibition Hall Expansion Project 4.75%, due 9/01/28 [AMBAC]		1,974
2,000	Los Angeles California Unifed School District 5.00%, due 1/01/28 [MBIA]		1,976
2,000	Los Angeles California Wastewater System Revenue 5.00%, due 6/01/29 [FGIC]		1,972

PRINCIPAL AMOUNT (000’s)			Value (000’s)
$1,200	†	Los Angeles Convention and Exhibition Center Authority Certificates of Participation 9.00%, due 12/01/20 (Prerefunded 12/01/05 @ 100)	$	1,317
3,000		Los Angeles County California Certificates of Participation (Disney Parking Refund Project) 4.75%, due 3/01/23 [AMBAC]		2,927
1,700		Los Angeles Department of Water and Power Waterworks Revenue 4.25%, due 10/15/34 [MBIA]		1,474
3,585		Metropolitan Water District of Southern California Waterworks Revenue 5.00%, due 7/01/37		3,496
2,315		Orange County Sanitation District Certificates of Participation 5.00%, due 2/01/33 [FGIC]		2,254
1,180		Pomona Unified School District General Obligation 6.55%, due 8/01/29 [MBIA]		1,407
1,000		Sacramento City Financing Authority Revenue 5.00%, due 12/01/32 [AMBAC]		973
2,500		Sacramento City Unified School District General Obligation 4.75%, due 7/01/29 [FGIC]		2,361
2,500		San Bernardino County Certificates of Participation (Medical Center Financing Project) 5.50%, due 8/01/24		2,509
5,000		San Joaquin Hills Transportation Corridor Agency Senior Lien Toll Road Revenue 5.00%, due 1/01/33		4,267
3,000		San Jose Redevelopment Agency (Merged Area Redevelopment Project Tax Allocation) 4.75%, due 8/01/22		2,921
1,335		Southern California Public Power Authority Power Project Revenue (Multiple Projects) 5.50%, due 7/01/20		1,338
2,000		Southern California Public Power Authority Power Project Revenue (Magnolia Power Project) 5.00%, due 7/01/33 [AMBAC]		1,947
4,500		State of California General Obligation Bonds 4.75%, due 4/01/29		4,143
3,000		University of California Revenue 5.00%, due 5/15/36 [AMBAC]		2,935

SEE NOTES TO FINANCIAL STATEMENTS

60

Portfolio of Investments

Safeco California Tax-Free Income Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)		Value (000’s)
$1,750	West Kern County Water District Certificates of Participation 5.625%, due 6/01/31	$	1,727
TOTAL MUNICIPAL BONDS (cost $73,961)			76,991
CASH EQUIVALENTS—5.5%
375	Provident Bankshares Corp.		375
4,104	SEI Tax-Exempt Institutional Tax-Free Portfolio		4,104
TOTAL CASH EQUIVALENTS (cost $4,479)			4,479
TOTAL INVESTMENTS ($78,440)—98.9%		$	81,470
Other Assets, less Liabilities			932
NET ASSETS		$	82,402

† Prerefunded bonds are collateralized by securities (generally U.S. Treasury securities) held in an irrevocable trust in an amount sufficient to pay interest and principal.

* The provider of the guarantee of timely payment of both principal and interest is identified in the brackets at the end of each bond description. The guarantors applicable to this portfolio and the percentage of the net assets they guarantee at the period end are as follows:

Municipal Bond Investors Assurance Corp. [MBIA]	16.4	%
Financial Guaranty Insurance Corp. [FGIC]	8.0
AMBAC Indemnity Corp. [AMBAC]	13.1
Financial Security Assurance, Inc. [FSA]	1.1
	38.6	%

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

61

Report From the Fund Managers

Safeco Municipal Bond Fund

As of June 30, 2004

How did the Fund perform?

Excluding the applicable sales charges, the Safeco Municipal Bond Fund outperformed its benchmark Index, the Lehman Long Municipal Bond Index, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

After a typical first quarter, long-term bond yields rose about 50 basis points during the second quarter. This was due to more news demonstrating a stronger economy and an increasing threat of renewed inflation, both of which could inspire the Federal Reserve to increase short-term yields at a faster pace than expected.

With a longer average maturity than most of its peers, the Fund performed relatively poorly during the first half, as bond prices declined sharply.

What changes did you make to the Fund and why?

Three new issues were purchased during the first half of 2004. All were rated A by Standard & Poor’s, and offered significant additional yield to the benchmark AAA scale. In the first quarter, we purchased $4 million of Dorchester County School District 5.25 12/1/29 to yield 4.90%. These A-rated bonds provided 55 basis points more yield than AAA bonds, a very attractive spread.

In the second quarter, Empire State Development Authority 5.125 7/1/21 came to market at a yield of 4.70%, 49 basis points more than AAA bonds. Puerto Rico Highway 5.125% 7/1/43 bonds were offered at a yield of 5.20%, which was an additional 42 basis points over AAA-rated bonds.

We also swapped out of several bonds priced near par into deeper discounts. This move afforded a greater total return in the event of a market turnaround without adding significant downside potential.

Stephen Bauer—Portfolio Manager

Mary Metastasio—Portfolio Manager

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 9 of Notes to the Financial Statements.

62

Performance Overview & Highlights

Safeco Municipal Bond Fund

(Unaudited)

	With Sales Charge				Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	10 Year	Six Month*	1 Year	5 Year	10 Year
Safeco Municipal Bond Fund
Class A	(5.39)%	(4.36)%	4.61%	5.82%	(0.94)%	0.13%	5.58%	6.31 %
Class B	(6.20)%	(5.37)%	4.43%	5.86%	(1.38)%	(0.64)%	4.76%	5.86 %
Class C	(2.42)%	(1.70)%	4.74%	5.70%	(1.46)%	(0.76)%	4.74%	5.70 %
Lehman Brothers Long Municipal Bond Index	N/A	N/A	N/A	N/A	(1.26)%	0.53%	6.04%	7.08%
Lipper, Inc. (General Municipal Bond Funds)	N/A	N/A	N/A	N/A	(0.99)%	0.32%	4.64%	5.40%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund’s benchmark index.

Current Yield (30-day) Class A	3.90%
Current Yield (30-day) Class B	3.28%
Current Yield (30-day) Class C	3.15%
Weighted Average Maturity	22.59 years

TOP FIVE HOLDINGS	Percent of Net Assets
San Joaquin Hills Transportation Corridor Agency Senior Lien Toll Road Revenue	3.9	%
Massachusetts State Housing Finance Agency (Series B)	3.7
Indiana State Development Finance Authority Environmental Revenue	3.7
Los Angeles California Unified School District	2.7
Golden State Tobacco Securitization Corp. Tobacco Settlement Revenue	2.7

TOP FIVE STATES	Percent of Net Assets
California	20.4	%
Texas	7.3
Illinois	6.9
Massachusetts	5.6
Washington	5.6

CREDIT RATING DISTRIBUTION

AS A PERCENT OF NET ASSETS

63

Portfolio of Investments

Safeco Municipal Bond Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)			Value (000’s)
MUNICIPAL BONDS *—95.6%
Alabama—1.0%
$  1,590		Alabama State University Revenue (General Tuition & Fee) 5.25%, due 3/01/28	$	1,612
3,855	†	Jefferson County Sewer Revenue 4.75%, due 2/01/38 [FGIC] (Prerefunded 8/01/12 @ 100)		4,132
Alaska—0.9%
5,000		Alaska Housing Finance Corp. 5.00%, due 12/01/39		4,821
Arizona—2.2%
7,000		Phoenix Civic Improvement Corp. Wastewater System Lease Revenue 4.75%, due 7/01/23		6,914
5,000		Scottsdale Industrial Development Authority Hospital Revenue 5.80%, due 12/01/31		5,017
California—20.4%
4,000		California Health Facilities Financing Authority Revenue (Adventist Health System) 5.00%, due 3/01/33		3,747
8,000		California Infrastructure & Economic Development Bank Revenue (Bay Area Toll Bridge) 5.00%, due 7/01/36 [AMBAC]		7,803
15,020		Golden State Tobacco Securitization Corp. Tabacco Settlement Revenue 5.50%, due 6/01/43		14,740
15,000		Los Angeles California Unifed School District 5.00%, due 1/01/28 [MBIA]		14,818
3,550	†	Northern California Power Agency Geothermal Project Revenue 5.00%, due 7/01/09 (Prerefunded 7/01/08 @ 100)		3,851
11,995		Pittsburg Redevelopment Agency Los Medanos Community Development Project Tax Allocation 5.80%, due 8/01/34 [FSA]		12,819
7,010		San Joaquin County Public Facilities Financing Corp. Certificates of Participation Capital Facitlities Project 4.75%, due 11/15/19 [MBIA]		7,023
25,000		San Joaquin Hills Transportation Corridor Agency Senior Lien Toll Road Revenue 5.00%, due 1/01/33		21,333

PRINCIPAL AMOUNT (000’s)			Value (000’s)
California—(continued)
$  3,165		Southern California Public Power Authority Power Project Revenue (Multiple Projects) 5.50%, due 7/01/20	$	3,172
5,000		State of California General Obligation Bonds 5.00%, due 11/01/30		4,907
7,500		State of California General Obligation Bonds 5.00%, due 2/01/32		7,166
5,000		University of California Revenue 5.00%, due 5/15/28 [AMBAC]		4,938
6,000		University of California Revenue 5.00%, due 5/15/33 [AMBAC]		5,884
Colorado—3.2%
13,000		Colorado Springs Hospital Revenue 6.375%, due 12/15/30		13,743
4,000		University of Colorado Hospital Authority Revenue 5.60%, due 11/15/31		3,992
Florida—3.3%
8,000		Escambia County Health Facilities Authority Revenue (Ascenson Health Credit Group) 5.25%, due 11/15/32		7,886
2,750		Mid-Bay Bridge Authority Revenue 6.05%, due 10/01/22		2,796
7,500		Tallahassee Florida Health Facilities Revenue (Tallahassee Memorial Healthcare, Inc.) 6.375%, due 12/01/30		7,500
Illinois—6.9%
9,000		Chicago General Obligation 5.50%, due 1/01/35 [FGIC]		9,220
2,000		Chicago Illinois Sales Tax Revenue 5.375%, due 1/01/27 [FGIC]		2,023
10,000		Illinois Educational Facilities Authority Student Housing Revenue 6.25%, due 5/01/30		10,148
10,000		Metropolitan Pier and Exposition Authority Dedicated State Tax McCormick Place Expansion Project 5.25%, due 6/15/42 [MBIA]		10,015
5,000	†	Metropolitan Pier and Exposition Authority McCormick Place Convention Complex Hospitality Facilities Revenue 7.00%, due 7/01/26 (Escrowed to Maturity)		6,311

SEE NOTES TO FINANCIAL STATEMENTS

64

Portfolio of Investments

Safeco Municipal Bond Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)				Value (000’s)
	Indiana—5.3%
$	20,550		Indiana State Development Finance Authority Environmental Revenue 5.60%, due 12/01/32	$	20,182
	6,450	†	Indianapolis Gas Utility System Revenue 4.00%, due 6/01/11 [FGIC] (Escrowed to Maturity)		6,642
	2,500		St. Joseph County Hospital Health System Revenue 4.50%, due 8/15/18 [MBIA]		2,438
	Iowa—0.0%
	250		Marshalltown Pollution Control Revenue (Iowa Electric Light and Power Co. Project) 5.50%, due 11/01/23 [MBIA]		256
	Kentucky—0.4%
	2,000		Kentucky Economic Development Finance Authority Health System Revenue (Norton Healthcare, Inc.) Series A 6.625%, due 10/01/28		2,066
	Maryland—1.7%
	3,400	†	Baltimore Project and Revenue Prerefunded (Water Projects) 5.00%, due 7/01/24 [FGIC] (Escrow to Maturity)		3,413
	1,725		Baltimore Project and Revenue Unrefunded (Water Projects) 5.00%, due 7/01/24 [FGIC]		1,771
	4,000		Maryland Health and Higher Educational Facilities Authority Revenue (University of Maryland Medical System) 6.75%, due 7/01/30		4,453
	Massachusetts—5.6%
	5,250		Massachusetts Bay Transportation Authority System Revenue 4.50%, due 3/01/26 [MBIA]		4,801
	5,740		Massachusetts Housing Finance Agency Housing Revenue 6.20%, due 7/01/38 [AMBAC]		5,930
	20,000		Massachusetts State Housing Finance Agency (Series B) 5.40%, due 12/01/28 [MBIA]		20,207
	Michigan—2.1%
	4,250		Detroit Water Supply System Revenue 4.75%, due 7/01/19 [FGIC]		4,335

PRINCIPAL AMOUNT (000’s)			Value (000’s)
	Michigan—(continued)
$	5,000	Michigan Hospital Finance Authority Revenue (Ascension Health Credit Group) 5.25%, due 11/15/26	$	4,942
	1,000	North Muskegon Michigan Public School District General Obligation 5.25%, due 5/01/28		1,013
	1,210	North Muskegon Michigan Public School District General Obligation 5.25%, due 5/01/33		1,219
	Minnesota—0.9%
	5,000	Minneapolis Health Care System Revenue (Allina Health) 5.75%, due 11/15/32		5,127
	Mississippi—1.0%
	5,500	Harrison County Wastewater Management and Solid Waste Revenue 4.75%, due 2/01/27 [FGIC]		5,258
	Missouri—0.7%
	3,000	Missouri Health and Education Facilities Authority Educational Facilities Revenue 4.75%, due 11/15/37		2,810
	1,000	Missouri State Health and Education Facilities Authority Revenue (SSM Healthcare) 5.25%, due 6/01/28 [AMBAC]		1,008
	Montana—0.5%
	2,785	Forsyth Montana Pollution Control Revenue (Puget Sound Engery) 5.00%, due 3/01/31 [AMBAC]		2,737
	New Jersey—0.6%
	3,735	New Jersey Economic Development Authority Revenue 4.375%, due 9/01/29 [AMBAC]		3,278
	New Mexico—0.4%
	2,055	Farmington Collateralized Pollution Control Revenue (Tucson Gas and Electric Co.) 6.10%, due 1/01/08		2,055
	New York—5.3%
	900	Long Island Power Authority Electric System Revenue 5.125%, due 12/01/22 [FSA]		916
	3,820	Metropolitan Transportation Authority New York Dedicated Tax Fund 4.75%, due 4/01/28 [FGIC]		4,056

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

65

Portfolio of Investments

Safeco Municipal Bond Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)				Value (000’s)
	New York—(continued)
$	5,500		New York Dormitory Authority State University Educational Facilities Revenue 5.25%, due 5/15/15	$	5,908
	2,975		New York Dormitory Authority State University Educational Facilities Revenue 7.50%, due 5/15/11		3,448
	1,425	†	New York Dormitory Authority State University Educational Facilities Revenue 7.50%, due 5/15/11 (Prerefunded 5/15/09 @ 100)		1,706
	5,250		New York Dormitory Authority State University Educational Facilities Revenue 7.50%, due 5/15/13		6,527
	1,000		New York State Urban Development Corp. 5.125%, due 7/01/21		1,007
	6,050		Port Authority New York & New Jersey Consolidated Revenue 4.375%, due 10/01/33 [FGIC]		5,362
	North Carolina—2.3%
	12,000		North Carolina Eastern Municipal Power Agency Power System Revenue 6.00%, due 1/01/22		12,765
	North Dakota—0.6%
	3,000		Grand Forks North Dakota Health Care System Revenue (Altru Health System) 7.125%, due 8/15/24		3,206
	Oklahoma—1.2%
	5,590		McGee Creek Authority Water Revenue 6.00%, due 1/01/23 [MBIA]		6,397
	Pennsylvania—1.8%
	5,000		Pennsylvania State Higher Educational Facilities Authority Revenue (UPMC Health System) 6.00%, due 1/15/31		5,183
	5,000		Southeastern Pennsylvania Transportation Authority (Series A) 4.75%, due 3/01/29 [FGIC]		4,756

PRINCIPAL AMOUNT (000’s)				Value (000’s)
	Puerto Rico—1.8%
$	5,000		Puerto Rico Commonwealth Highway & Transportation Authority Transportation Revenue 5.125%, due 7/01/43	$	4,866
	5,000		Puerto Rico Electric Power Authority Power Revenue 5.125%, due 7/01/29		4,942
	South Carolina—4.9%
	4,000		Dorchester County School District No. 2 Installment Purchase Revenue 5.25%, due 12/01/29		3,859
	15,000		Piedmont Municipal Power Agency South Carolina Electric Revenue 5.25%, due 1/01/21		14,235
	7,500	†	South Carolina Jobs—Economic Development Authority Hospital Facilities Revenue (Palmetto Health Alliance) 7.375%, due 12/15/21 (Prerefunded 12/15/10 @ 102)		9,103
	Tennessee—1.3%
	7,000		Greenville County Building Equity General Obligation 5.50%, due 12/01/28		7,063
	Texas—7.3%
	3,000		Austin Combined Utility Revenue 4.25%, due 5/15/28 [MBIA]		2,597
	10,000		Austin Combined Utility System Revenue 12.50%, due 11/15/07 [MBIA]		12,897
	3,000		Houston Independent School District General Obligation 4.75%, due 2/15/22 [PSF]		2,947
	13,300		Hurst-Euless-Bedford Texas Independed School District General Obligation Unlimited Tax Refund 4.50%, due 8/15/25 [PSF]		12,162
	10	†	Lower Colorado River Authority Junior Lien Revenue 5.625%, due 1/01/17 [FSA] (Prerefunded 1/01/15 @ 100)		11
	5,350		North East Texas School District General Obligation 4.50%, due 10/01/28 [PSF]		4,810
	5,000		San Antonio Electric & Gas Revenue 4.50%, due 2/01/21		4,835

SEE NOTES TO FINANCIAL STATEMENTS

66

Portfolio of Investments

Safeco Municipal Bond Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)				Value (000’s)
	Virginia—3.2%
$	2,500		Loudoun County Sanitation Authority Water and Sewer Revenue 4.75%, due 1/01/30 [MBIA]	$	2,390
	7,000		Virginia Housing Development Authority 4.95%, due 1/01/43		6,763
	3,085		Virginia Public School Authority Revenue 4.75%, due 8/01/26		2,963
	2,235		Virginia Public School Authority Revenue 4.75%, due 8/01/27		2,135
	3,500		Virginia Public School Authority Revenue 5.00%, due 8/01/20		3,608
	Washington—5.6%
	700		CDP-King County III Lease Revenue (King Street Center Project) 5.25%, due 6/01/26 [MBIA]		702
	5,055		Douglas County Public Utility District #1 Wells Hydroelectric Revenue 8.75%, due 9/01/18		5,979
	2,200	†	Douglas County Public Utility District #1 Wells Hydroelectric Revenue 8.75%, due 9/01/18 (Prerefunded 9/01/06 @ 106)		2,629
	2,500		King County Housing Authority Pooled Housing Revenue 6.80%, due 3/01/26		2,596
	2,255		King County Public Hospital District #1 Hospital Facilities Revenue (Valley Medical Center) 5.50%, due 9/01/17 [AMBAC]		2,263
	3,089		Seattle Housing Authority Low Income Housing Revenue (Mt. Zion Project) 6.60%, due 8/20/38		3,344
	6,290		Vancouver Washington Housing Authority Revenue (Springbrook Square) 5.65%, due 3/01/31		5,757
	7,750		Washington State General Obligation 4.50%, due 7/01/23 [FSA]		7,233

PRINCIPAL AMOUNT (000’s)				Value (000’s)
	West Virginia—3.2%
$	2,945		West Virginia State Hospital Finance Authority (Charleston Area Medical Center) 6.75%, due 9/01/30	$	3,155
	12,055	†	West Virginia State Hospital Finance Authority (Charleston Area Medical Center) 6.75%, due 9/01/30 (Prerefunded 9/01/10 @101)		14,363
	TOTAL MUNICIPAL BONDS (cost $490,106)				525,716
	CASH EQUIVALENTS—3.3%
	18,286		AIM Short-Term Investments Co. Tax-Free Cash Reserve Portfolio (Institutional Shares)		18,286
	TOTAL CASH EQUIVALENTS (cost $18,286)				18,286
	TOTAL INVESTMENTS (cost $508,392)—98.9%			$	544,002
	Other Assets, less Liabilities				5,962
	NET ASSETS			$	549,964

† Prerefunded bonds are collateralized by securites (generally U.S. Treasury securities) held in an irrevocable trust in an amount sufficient to pay interest and principal.

* The provider of the guarantee of timely payment of both principal and interest is identified in the brackets at the end of each bond description. The guarantors applicable to this portfolio and the percentage of the net assets they guarantee at the period end are as follows:

AMBAC Indemnity Corp. [AMBAC]	6.2	%
Financial Guaranty Insurance Corp. [FGIC]	9.3
Financial Security Assurance, Inc. [FSA]	3.8
Municipal Bond Investors Assurance Corp. [MBIA]	15.4
Texas Permanent School Fund [PSF]	3.6
	38.3	%

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

67

Report From the Fund Managers

Safeco Intermediate-Term Municipal Bond Fund

As of June 30, 2004

How did the Fund perform?

The Safeco Intermediate-Term Municipal Bond Fund underperformed its benchmark index, the Lehman Brothers 7-Year Municipal Bond Index, for the six-month period ending June 30, 2004.

What factors impacted the Fund’s performance?

After gaining fairly steadily since last summer, bond prices moved down during most of the first quarter, recovering somewhat in late May and June. We underperformed during the period. The steep decline (approximately 100 basis point in a two-month period beginning in March and ending in May) hurt us, and the period of increased stability at the end of the quarter was not long enough for us to recover from the hit.

What changes did you make to the Fund and why?

We did not make any changes in the basic structure of the fund. We did just one trade during each quarter. During the first quarter, we added to our position in Chicago, IL Tax Increment 5%. During the second quarter, we purchased Columbus, Ohio, general obligation bonds. These are very high credit-quality bonds from a state where a significant premium is usually paid by investors in order to gain the state tax exemption. The bonds, however, were sold at close to general market values. We believe that at some point in the future, the spread will widen out and their value will increase relative to other bonds.

Mary Metastasio—Portfolio Manager

Stephen Bauer—Portfolio Manager

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 9 of Notes to the Financial Statements.

68

Performance Overview & Highlights

Safeco Intermediate-Term Municipal Bond Fund

(Unaudited)

69

	With Sales Charge				Without Sales Charge
Average Annual Total Return for the periods ended June 30, 2004	Six Month*	1 Year	5 Year	10 Year	Six Month*	1 Year	5 Year	10 Year
Safeco Intermediate-Term Municipal Bond Fund
Class A	(4.53)%	(3.82)%	4.13%	4.84%	(1.11)%	(0.33)%	4.88%	5.22%
Class B	(5.36)%	(5.00)%	4.50%	5.11%	(1.48)%	(1.19)%	4.66%	5.11%
Class C	(2.45)%	(2.14)%	4.66%	5.11%	(1.48)%	(1.18)%	4.66%	5.11%
Lehman Brothers 7-Year Municipal Bond Index	N/A	N/A	N/A	N/A	(1.03)%	0.50%	5.88%	6.04%
Lipper, Inc. (Intermediate Municipal Bond Funds)	N/A	N/A	N/A	N/A	(1.00)%	0.02%	4.93%	5.29%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund’s benchmark index.

Current Yield (30-day) Class A	2.87%
Current Yield (30-day) Class B	2.25%
Current Yield (30-day) Class C	2.22%
Weighted Average Maturity	6.81 years

TOP FIVE HOLDINGS	Percent of Net Assets
New York State Housing Finance Agency Health Facilities Revenue	4.3	%
Tempe Arizona Unified High School District #213 General Obligation	3.8
Chicago Illinois Metropolitan Water Reclamation District of Greater Chicago General Obligation	3.7
Ohio State Building Authority Adult Correction	3.4
Michigan State Trunk Line Revenue	3.4
TOP FIVE STATES	Percent of Net Assets
Washington	11.9	%
Illinois	11.3
New York	10.9
Texas	10.1
South Carolina	6.4

CREDIT RATING DISTRIBUTION

AS A PERCENT OF NET ASSETS

Portfolio of Investments

Safeco Intermediate-Term Municipal Bond Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)			Value (000’s)
MUNICIPAL BONDS *—99.1%
Alabama—3.3%
$500		Southeast Alabama Gas District System Revenue (Series A) 5.30%, due 6/01/12 [AMBAC]	$	546
Arizona—3.8%
600		Tempe Arizona Unified High School District #213 General Obligation 4.50%, due 7/01/11 [FGIC]		627
California—5.3%
300		Los Angeles California Unified School District Unlimited General Obligation 4.50%, due 7/01/10 [FSA]		319
260	†	Sacramento Municipal Utility District Electric Revenue (Series A) 5.50%, due 2/01/11 (Escrowed to Maturity)		282
250		State of California General Obligation Bonds 5.00%, due 11/01/13		266
Florida—3.3%
500		Escambia County Health Facilities Authority Revenue (Ascenson Health Credit Group) 5.25%, due 11/15/11		534
Illinois—11.3%
500	†	Chicago Illinois Metropolitan Water Reclamation District of Greater Chicago General Obligation 5.25%, due 12/01/10 (Escrowed to Maturity)		551
595		Chicago Tax Increment Jr Lien South Redevelopment Revenue 5.00%, due 11/15/10 [ACA]		614
500		Illinois Educational Facilities Authority Student Housing Revenue (Educational Advancement Fund) 5.50%, due 5/01/12		509
180		Joliet Waterworks and Sewage Revenue 7.00%, due 1/01/05 [FGIC]		185
Kentucky—3.2%
500		Kentucky Economic Development Finance Authority Health System Revenue (Norton Healthcare, Inc.) Series A 6.25%, due 10/01/12		529
Maine—2.0%
300		Maine Municipal Bond Bank 5.00%, due 11/01/09 [FSA]		323

PRINCIPAL AMOUNT (000’s)			Value (000’s)
Massachusetts—2.7%
$400		Massachusetts Water Resources Authority General Revenue 5.25%, due 12/01/08	$	435
Michigan—6.0%
500		Michigan State Trunk Line Revenue 5.50%, due 11/01/10 [FSA]		555
400		Wayne Charter County Airport Revenue (Series C) 5.00%, due 12/01/12 [FGIC]		427
Montana—3.1%
500		Forsyth Pollution Control Revenue 5.20%, due 5/01/33		511
New York—10.9%
500		Metropolitan Transportation Authority New York State Service Contract 5.50%, due 7/01/14		550
700		New York State Housing Finance Agency Health Facilities Revenue 6.375%, due 11/01/04		710
500		New York Urban Development Corp. Correctional and Youth Facilities Revenue 5.00%, due 1/01/17		529
North Carolina—3.2%
500		North Carolina Eastern Municipal Power Agency Power System Revenue 5.50%, due 1/01/14		531
Ohio—6.0%
400		Columbus Ohio City School District School Facilities Construction & Improvement 5.00%, due 12/01/14 [FSA]		431
500		Ohio State Building Authority Adult Correction 5.50%, due 10/01/11 [FSA]		557
Oklahoma—0.4%
65	†	Oklahoma Industries Authority Health Facilities Revenue (Sisters of Mercy Health System, St. Louis, Inc.) 5.20%, due 6/01/05 (Escrowed to Maturity)		67
Pennsylvania—3.3%
500		Philadelphia Parking Authority Airport Parking Revenue 4.875%, due 9/01/09 [FSA]		538
South Carolina—6.4%
500		Greenville County School District Installment Purchase Revenue 5.50%, due 12/01/12		545

SEE NOTES TO FINANCIAL STATEMENTS

70

Portfolio of Investments

Safeco Intermediate-Term Municipal Bond Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)		Value (000’s)
South Carolina—(continued)
$500	South Carolina Jobs Economic Development Authority Hospital Facilities Revenue (Palmetto Health Alliance) 6.00%, due 8/01/13	$	511
Texas—10.1%
250	Austin Combined Utility Systems Revenue 5.80%, due 11/15/06		269
500	Sam Rayburn Municipal Power Agency 5.00%, due 10/01/09		532
300	San Felipe Del Rio Texas Independent School District Unlimited General Obligation 5.00%, due 8/15/12 [PSF]		319
500	Tomball Independent School District General Obligation 5.00%, due 2/15/11 [PSF]		538
Washington—11.9%
360	King County Housing Authority Pooled Housing Revenue 4.70%, due 7/01/08		372
485	King County School District #415 (Kent) Unlimited General Obligation 5.50%, due 6/01/13 [FSA]		539
500	Renton Water and Sewer Revenue 4.40%, due 12/01/15 [FSA]		504
500	Seattle Library Facilities Unlimited General Obligation (Series A) 5.375%, due 12/01/10		546
Wyoming—2.9%
500	Lincoln County Pollution Control Revenue 3.40%, due 1/01/16		476
TOTAL MUNICIPAL BONDS (cost $15,734)			16,277

PRINCIPAL AMOUNT (000’s)		Value (000’s)
CASH EQUIVALENTS—2.7%
$441	AIM Short-Term Investments Co. Tax-Free Cash Reserve Portfolio (Institutional Shares)	$	441
TOTAL CASH EQUIVALENTS (cost $441)			441
TOTAL INVESTMENTS (cost $16,175)—101.8%		$	16,718
Other Assets, less Liabilities			(292	)
NET ASSETS		$	16,426

† Prerefunded bonds are collateralized by securities (generally U.S. Treasury securities) held in an irrevocable trust in an amount sufficient to pay interest and principal.

* The provider of the guarantee of timely payment of both principal and interest is identified in the brackets at the end of each bond description. The guarantors applicable to this portfolio and the percentage of net assets they guarantee at the period end are as follows:

Financial Guaranty Insurance Corp. [FGIC]	7.5	%
Financial Security Assurance, Inc. [FSA]	22.9
American Capital Access Corp. [ACA]	3.8
AMBAC Indemnity Corp. [AMBAC]	3.3
Texas Permanent School Fund [PSF]	5.2
	42.7	%

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

71

Report From the Fund Managers

Safeco Money Market Fund

As of June 30, 2004

How did the Fund Perform?

The Fund had returns for the six-month period ending June 30, 2004 above the average of other taxable money market funds. However, the 12-month return on the Fund was lower than the 3.2% year-over-year increase in the Consumer Price Index (CPI) as of the end of June 2004.

What factors impacted the Fund’s performance?

After a full year of the Federal Funds target rate of 1.00%, the Federal Reserve’s Open Market Committee (FOMC) finally raised the rate to 1.25% on June 30. The Fed Funds futures market anticipates a 0.25% rise in the rate at each of the four remaining FOMC meetings in 2004 and even higher rates in 2005.

The main reason the Fund outperformed the Lipper benchmark was the large holdings (33%) of 7-day reset floating rate notes that reset off of the 1-month London inter-bank offer rate (LIBOR). LIBOR-based securities currently offer higher rates than other available money market securities, and the frequent rate reset of the notes captures higher rates more quickly in a rapidly rising rate environment. Also contributing to the superior returns were the Fund’s holdings of longer-term corporate bonds purchased at relatively high yields on a steep money market yield curve.

What changes did you make to the Fund and why?

We increased the allocation of floating rate notes. This has become our asset class of choice because the spread is much higher than commercial paper. We continued to reduce our holdings of Commercial paper (to 31% of Fund) relative to our peers (49% according to iMoneyNet). Commercial paper remains one of the lowest-yielding assets in the prime money markets.

After rates had risen significantly, we made a purchase of a Federal Home Loan Bank (FHLB) thirteen-month maturity bond which is callable every three months and some purchases of one-year bank and broker paper.

Lesley Fox—Portfolio Manager

Cathleen Beauchamp, CFA—Portfolio Manager/Taxable Fixed Income Analyst

As of August 2, 2004, Pioneer Investment Management, Inc. replaced Safeco Asset Management Company as the investment advisor to the fund. See Note 9 of Notes to the Financial Statements.

72

Performance Overview & Highlights

Safeco Money Market Fund

(Unaudited)

Average Annual Total Return for the periods ended June 30, 2004	Six Month*		1 Year		5 Year		10 Year
Safeco Money Market Fund
Class A	0.21	%	0.42	%	2.82	%	3.82	%
Class B	0.21	%	0.42	%	2.83	%	3.81	%
Class C	0.21	%	0.42	%	2.82	%	3.80	%
Lipper, Inc. (Money Market Funds)	0.17	%	0.35	%	2.63	%	3.81	%
* Not annualized. Performance does not reflect the deduction for taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Different share classes of mutual funds differ in their performance returns, and in how those returns compare to the Fund’s benchmark index.

Weighted Average Maturity 56 Days 7 Day Yield Classes A, B and C 0.57%

Portfolio of Investments

As of June 30, 2004

PRINCIPAL AMOUNT (000’s)		Value (000’s)
COMMERCIAL PAPER—30.7%
Asset Backed—3.5%
$10,000	Apreco, Inc. 1.16%, due 7/19/04	$	9,994
Consumer Finance—9.2%
1,600	Cooperative Association of Tractor Dealers, Inc. 1.07%, due 8/27/04		1,597
1,000	Cooperative Association of Tractor Dealers, Inc. 1.10%, due 9/22/04		998
1,000	Cooperative Association of Tractor Dealers, Inc. 1.15%, due 8/10/04		999
1,200	Cooperative Association of Tractor Dealers, Inc. 1.25%, due 10/22/04		1,195
2,000	Cooperative Association of Tractor Dealers, Inc. 1.30%, due 7/26/04		1,998
3,000	Cooperative Association of Tractor Dealers, Inc. 1.32%, due 10/27/04		2,987
4,600	Cooperative Association of Tractor Dealers, Inc. 1.50%, due 11/03/04		4,576
12,000	Moat Fundings, LLC 1.06%, due 7/01/04		12,000
Diversified Banks—3.7%
10,500	Dexia Delaware, LLC 1.06%, due 7/07/04		10,498
Investment Banking & Brokerage—3.0%
8,500	UBS Finance Delaware, LLC 1.42%, due 7/01/04		8,500

PRINCIPAL AMOUNT (000’s)		Value (000’s)
Other Diversified Financial Services—8.5%
$14,400	Household Finance Corp. 1.09%, due 7/08/04	$	14,397
10,000	Receivables Capital Corp. 1.08%, due 7/09/04		9,998
Specialized Finance—2.8%
8,000	National Rural Utilities Cooperative Finance Corp. 1.30%, due 7/14/04		7,996
TOTAL COMMERCIAL PAPER (cost $87,733)			87,733
CORPORATE BONDS—40.7%
Asset Management & Custody Banks—0.7%
2,000	Mellon Funding Corp. 7.50%, due 6/15/05		2,100
Brewers—1.0%
2,970	New Belgium Brewery Co. 1.30%, due 7/01/15 Put Date 7/01/04		2,970
Diversified Banks—4.5%
2,360	Banc One Corp. 7.00%, due 7/15/05		2,467
3,500	Banc One Corp. 7.25%, due 8/15/04		3,525
1,430	Chase Manhattan Corp. 6.75%, due 12/01/04		1,461
1,680	Nationsbank Corp. 6.125%, due 7/15/04		1,684
3,150	Nationsbank Corp. 6.875%, due 2/15/05		3,255
550	Nationsbank Corp. 7.75%, due 8/15/04		555

SEE NOTES TO FINANCIAL STATEMENTS

73

SAFECO    MUTUAL    FUNDS 1-800-528-6501

Portfolio of Investments

Safeco Money Market Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)			Value (000’s)
Electric Utilities—0.9%
$      750		National Rural Utilities Cooperative Finance Corp. 5.50%, due 1/15/05	$	765
1,900		National Rural Utilities Cooperative Finance Corp. 6.375%, due 10/15/04		1,925
General Merchandise Stores—0.7%
2,100		Racetrac Capital, LLC 1.36%, due 4/01/18 Put Date 7/07/04		2,100
Health Care Facilities—2.9%
8,200		ACTS Retirement-Life Communities, Inc. 1.13%, due 11/15/29 Put Date 7/01/04		8,200
Hotels, Resorts & Cruise Lines—0.9%
2,485		Smuggler's Notch Management Co. 1.35%, due 9/01/15 Put Date 7/01/04		2,485
Investment Banking & Brokerage—5.9%
5,200		J.P. Morgan & Co., Inc. 7.625%, due 9/15/04		5,268
3,000		Lehman Brothers Holdings, Inc. 7.75%, due 1/15/05		3,095
7,000		Merrill Lynch & Co., Inc. 1.13125%, due 2/04/05		7,000
1,503		Merrill Lynch & Co., Inc. 6.00%, due 11/15/04		1,529
Other Diversified Financial Services—6.7%
17,000	#	CC USA, Inc. (144A) 1.335%, due 8/13/04 (acquired 1/02/04) (cost $17,001,201)		17,001
1,100		Commercial Credit Co. 6.50%, due 8/01/04		1,105
1,000		General Electric Capital Corp. 1.37%, due 10/25/04		1,000
Real Estate Management & Development—4.7%
7,940		Loft Quest, LLC 1.39%, due 6/01/27 Put Date 7/01/04		7,940
5,500		SF Tarns, LLC 1.39%, due 1/01/28 Put date 7/01/04		5,500
Regional Banks—1.3%
3,765		PNC Funding Corp. 7.00%, due 9/01/04		3,800

PRINCIPAL AMOUNT (000’s)		Value (000’s)
Thrifts & Mortgage Finance—10.5%
$15,400	Abbey National, plc 8.20%, due 10/15/04	$	15,698
14,000	Countrywide Home Loans, Inc. 6.84%, due 10/22/04		14,235
TOTAL CORPORATE BONDS (cost $116,663)			116,663
MUNICIPAL BONDS—17.7%
Diversified Commercial Services—0.7%
2,000	Wake Forest University 1.29%, due 7/01/17 Put Date 7/01/04		2,000
Health Care Distributors—2.9%
8,340	New Hampshire Business Finance Authority Revenue 1.30%, due 6/01/28 Put Date 7/01/04		8,340
Homebuilding—3.2%
1,000	Breckenridge Terrace, LLC Tax Revenue 1.35%, due 5/01/39 Put Date 7/01/04		1,000
2,000	Eagle County Colorado Housing Facilities Revenue 1.35%, due 5/01/39 Put Date 7/01/04		2,000
6,233	Summer Station Apartments, LLC 1.41%, due 6/01/19 Put Date 7/07/04		6,233
Hotels, Resorts & Cruise Lines—1.4%
3,885	Tenderfoot Seasonal Housing Facilities Revenue 1.35%, due 7/01/35 Put Date 7/01/04		3,885
Industrial Development—0.7%
2,000	Platte County Industrial Development Authority 1.39%, due 2/01/14 Put Date 7/01/04		2,000
Managed Health Care—8.3%
7,105	Maryland Health and Higher Education Facilities Authority Revenue (University of Maryland Medical System) 1.25%, due 7/01/29 Put Date 7/01/04		7,105

SEE NOTES TO FINANCIAL STATEMENTS

74

Portfolio of Investments

Safeco Money Market Fund

As of June 30, 2004

(Unaudited)

PRINCIPAL AMOUNT (000’s)			Value (000’s)
	Managed Health Care—(continued)
$	6,020	Maryland Health and Higher Education Facilities Authority Revenue 1.25% due 1/01/28 Put Date 7/01/04	$	6,020
	5,000	Presbyterian Homes and Service 1.15%, due 12/01/28 Put Date 7/01/04		5,000
	5,600	Village Green Finance Co. 1.36%, due 11/01/22 Put Date 7/07/04		5,600
	Miscellaneous—0.5%
	1,500	American National Fish and Wildlife Museum District Museum Revenue 1.42%, due 3/01/33 Put Date 7/01/04		1,500
	TOTAL MUNICIPAL BONDS (cost $50,683)			50,683
	COLLATERALIZED MORTGAGE OBLIGATIONS—5.2%
	U.S. Government Agency Obligations—5.2%
	14,988	Freddie Mac 1.32%, due 1/15/42		14,988
	TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (cost $14,988)			14,988
	U.S. GOVERNMENT & AGENCY OBLIGATIONS—5.3%
	U.S. Government Agency Obligations—5.3%
	15,000	Federal Home Loan Bank (Unsecured Bond) 1.70%, due 5/24/05		15,000
	TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (cost $15,000)			15,000

PRINCIPAL AMOUNT (000’s)			Value (000’s)
	CASH EQUIVALENTS—0.0%
	Investment Companies
$	97	AIM Short-Term Investments Co. Liquid Assets Money Market Portfolio (Institutional Shares)	$	97
	TOTAL CASH EQUIVALENTS (cost $97)			97
	TOTAL INVESTMENTS (cost $285,164)—99.6%		$	285,164
	Other Assets, less Liabilities			1,216
	NET ASSETS		$	286,380

If a Put date is indicated, the Fund has a right to sell a specified underlying security at an exercise price equal to the amortized cost of the underlying security plus interest, if any, as of that date.

Securities with a maturity of more than thirteen months have variable rates and/or demand features which qualify them as short-term securities. Rates shown are those in effect on 6/30/04. These rates change periodically based on specified market rates or indices.

# Securities are exempt from registration and restricted as to resale only to dealers, or through a dealer to a “qualified institutional buyer” as permitted under Rule 144A of the Securities Act of 1933. The total cost and value of such securities is $17,001,201 or 5.9% of net assets.

SEE NOTES TO FINANCIAL STATEMENTS

SAFECO    MUTUAL    FUNDS 1-800-528-6501

75

Statements of Assets and Liabilities

As of June 30, 2004

(Unaudited)

—(In Thousands, Except Per-Share Amounts)—		Safeco Growth Opportunities Fund			Safeco Core Equity Fund
Assets
Investments, at Cost		$	524,324		$	494,937
Investments in Unaffiliated Issuers, at Value		$	677,519		$	697,372
Investments in Affiliated Issuers, at Value			4,763			—
Total Investments at Value			682,282			697,372
Cash			1,812			—
Receivable for Investment Securities Sold			614			—
Receivable for Trust Shares Sold			41			1
Dividends and Interest Receivable			312			649
Receivable From Advisor			23			7
Other Assets			2			—
Total Assets			685,086			698,029
Liabilities
Payable for Investment Securities Purchased			—			—
Payable for Trust Shares Redeemed			67			28
Payable Upon Return of Securities Loaned			138,995			1,872
Dividends Payable			—			886
Investment Advisory Fees Payable			293			382
Other Accrued Expenses			265			291
Total Liabilities			139,620			3,459
Net Assets		$	545,466		$	694,570
Components of Net Assets
Paid in Capital (Par Value $.001, Unlimited Shares Authorized)		$	532,736		$	526,235
Net Unrealized Appreciation (Depreciation) on Investments and Foreign Currency			157,958			202,435
Accumulated Undistributed Net Investment Income (Loss)			(1,189	)		—
Accumulated Realized Gain (Loss)			(144,039	)		(34,100	)
Net Assets		$	545,466		$	694,570
Investor Class	Net Assets	$	509,622		$	668,097
	Trust Shares Outstanding		18,996			39,269
	Net Asset Value, Offering Price, and Redemption Price Per Share	$	26.83		$	17.01
Class A	Net Assets	$	26,671		$	17,431
	Trust Shares Outstanding		1,011			1,023
	Net Asset Value and Redemption Price Per Share	$	26.39		$	17.04
	Maximum Offering Price Per Share (Including Sales Charge of 5.75%)	$	28.00		$	18.08
Class B	Net Assets	$	8,953		$	8,846
	Trust Shares Outstanding		360			533
	Net Asset Value and Offering Price Per Share	$	24.85		$	16.58
Class C	Net Assets	$	220		$	196
	Trust Shares Outstanding		9			12
	Net Asset Value and Offering Price Per Share	$	24.85		$	16.60
Institutional Class	Net Assets		—			—
	Trust Shares Outstanding
	Net Asset Value and Offering Price Per Share

SEE NOTES TO FINANCIAL STATEMENTS

76

Safeco Large-Cap Value Fund		Safeco Multi-Cap Core Fund			Safeco International Stock Fund			Safeco Balanced Fund			Safeco Small-Cap Value Fund			Safeco Large-Cap Growth Fund
$	123,334	$	72,335		$	27,057		$	17,622		$	75,857		$	5,946
$	155,360	$	97,818		$	36,206		$	19,570		$	95,687		$	6,595
	—		—			—			—			—			—
	155,360		97,818			36,206			19,570			95,687			6,595
	—		—			1,182			—			—			—
	—		—			23			—			—			—
	—		18			1			—			349			—
	236		44			86			81			86			3
	1		11			20			7			8			8
	—		—			37			—			1			—
	155,597		97,891			37,555			19,658			96,131			6,606
	—		—			23			—			539			—
	134		7			91			—			31			—
	2,071		7,790			—			69			18,644			—
	487		—			—			99			—			—
	88		51			30			11			44			4
	68		50			44			20			44			20
	2,848		7,898			188			199			19,302			24
$	152,749	$	89,993		$	37,367		$	19,459		$	76,829		$	6,582
$	119,547	$	70,185		$	36,134		$	18,315		$	61,340		$	6,841
	32,026		25,483			9,153			1,948			19,830			649
	—		(56	)		342			(10	)		123			(44	)
	1,176		(5,619	)		(8,262	)		(794	)		(4,464	)		(864	)
$	152,749	$	89,993		$	37,367		$	19,459		$	76,829		$	6,582
$	149,892	$	79,493		$	26,265		$	15,944		$	70,752		$	3,483
	7,787		3,649			2,413			1,348			3,492			372
$	19.25	$	21.78		$	10.89		$	11.83		$	20.26		$	9.36
$	1,591	$	6,833		$	1,385		$	1,784		$	4,515		$	1,197
	82		321			128			150			227			129
$	19.37	$	21.29		$	10.78		$	11.88		$	19.93		$	9.32
$	20.55	$	22.59		$	11.44		$	12.60		$	21.15		$	9.89
$	1,125	$	3,553		$	665		$	1,622		$	1,421		$	972
	58		176			63			137			75			106
$	19.37	$	20.12		$	10.51		$	11.84		$	18.97		$	9.13
$	141	$	114		$	103		$	109		$	141		$	930
	7		6			10			9			7			102
$	19.45	$	20.13		$	10.52		$	11.84		$	19.04		$	9.13
	—		—		$	8,949			—			—			—
						814
					$	10.99

SEE NOTES TO FINANCIAL STATEMENTS

77

Statements of Assets and Liabilities

As of June 30, 2004

(Unaudited)

—(In Thousands, Except Per-Share Amounts)—		Safeco High-Yield Bond Fund			Safeco Intermediate-Term U.S. Government Fund
Assets
Investments, at Cost		$	41,708		$	67,173
Investments, at Value		$	43,110		$	66,565
Receivable for Investment Securities Sold			314			—
Receivable for Trust Shares Sold			—			—
Dividends and Interest Receivable			624			463
Receivable From Advisor			15			16
Other Assets			33			—
Total Assets			44,096			67,044
Liabilities
Payable for Investment Securities Purchased			712			—
Payable for Trust Shares Redeemed			25			20
Payable Upon Return of Securities Loaned			5,247			—
Dividends Payable			230			226
Investment Advisory Fees Payable			18			30
Other Accrued Expenses			22			26
Total Liabilities			6,254			302
Net Assets		$	37,842		$	66,742
Components of Net Assets
Paid in Capital (Par Value $.001, Unlimited Shares Authorized)		$	62,352		$	69,256
Net Unrealized Appreciation on Investments			1,402			(608	)
Accumulated Undistributed Net Investment Income (Loss)			143			(477	)
Accumulated Realized Gain (Loss)			(26,055	)		(1,429	)
Net Assets		$	37,842		$	66,742
Investor Class	Net Assets	$	35,385		$	59,198
	Trust Shares Outstanding		6,229			6,291
	Net Asset Value, Offering Price, and Redemption Price Per Share	$	5.68		$	9.41
Class A	Net Assets	$	1,699		$	5,109
	Trust Shares Outstanding		299			543
	Net Asset Value and Redemption Price Per Share	$	5.68		$	9.41
	Maximum Offering Price Per Share†	$	5.95		$	9.75
Class B	Net Assets	$	505		$	2,338
	Trust Shares Outstanding		89			248
	Net Asset Value and Offering Price Per Share	$	5.68		$	9.42
Class C	Net Assets	$	253		$	97
	Trust Shares Outstanding		44			10
	Net Asset Value and Offering Price Per Share	$	5.69		$	9.42

† Including Sales Charges of 4.5% for High-Yield, California, and Municipal Bond Funds and 3.5% for intermediate-term bond funds.

SEE NOTES TO FINANCIAL STATEMENTS

78

Safeco Intermediate-Term Bond Fund			Safeco California Tax-Free Income Fund		Safeco Municipal Bond Fund		Safeco Intermediate-Term Municipal Bond Fund		Safeco Money Market Fund
$	9,617		$	78,440	$	508,392	$	16,175	$	285,164
$	9,612		$	81,470	$	544,002	$	16,718	$	285,164
	—			—		—		—		—
	—			—		74		—		—
	91			1,296		8,311		191		1,561
	12			9		—		7		2
	—			—		6		—		—
	9,715			82,775		552,393		16,916		286,727
	—			—		—		429		—
	—			—		—		—		—
	54			—		—		—		—
	30			307		2,119		52		142
	4			34		213		7		117
	8			32		97		2		88
	96			373		2,429		490		347
$	9,619		$	82,402	$	549,964	$	16,426	$	286,380
$	9,853		$	77,872	$	507,654	$	15,881	$	286,380
	(5	)		3,030		35,610		543		—
	—			583		3,132		—		—
	(229	)		917		3,568		2		—
$	9,619		$	82,402	$	549,964	$	16,426	$	286,380
$	7,362		$	80,718	$	539,750	$	15,843	$	279,574
	880			6,577		38,814		1,467		279,574
$	8.37		$	12.27	$	13.91	$	10.80	$	1.00
$	1,460		$	1,081	$	7,343	$	324	$	5,488
	175			88		527		30		5,488
$	8.36		$	12.28	$	13.93	$	10.80	$	1.00
$	8.66		$	12.86	$	14.59	$	11.19	$	1.00
$	699		$	505	$	2,717	$	152	$	1,194
	84			41		196		14		1,194
$	8.35		$	12.26	$	13.89	$	10.79	$	1.00
$	98		$	98	$	154	$	107	$	124
	11			8		11		10		124
$	8.35		$	12.25	$	13.89	$	10.79	$	1.00

SEE NOTES TO FINANCIAL STATEMENTS

79

Statements of Operations

For the Six Month Period Ended June 30, 2004

(Unaudited)

—(In Thousands)—	Safeco Growth Opportunities Fund			Safeco Core Equity Fund
Investment Income
Dividends from Unaffiliated Issuers (Net of Foreign Taxes Withheld of $86 in the International Stock Fund)	$	1,477		$	5,498
Interest		30			58
Securities Lending and Other Income		160			6
Total Investment Income		1,667			5,562
Expenses
Investment Advisory		1,781			2,389
Fund Accounting and Administration		123			141
Transfer Agent—Investor Class		629			841
—Class A		132			35
—Class B		24			25
—Class C		—			—
—Institutional Class		—			—
Shareholder Servicing—Class A		28			21
—Class B		12			12
—Class C		—			—
Distribution—Class B		37			37
—Class C		1			1
Legal and Auditing		28			35
Custodian		23			24
Registration		23			26
Reports to Shareholders		106			122
Trustees		7			8
Other		36			49
Total Expenses Before Expense Reimbursement		2,990			3,766
Expense Reimbursement From Advisor—Investor Class		—			—
—Class A		(121	)		(17	)
—Class B		(13	)		(15	)
—Class C		—			—
—Institutional Class		—			—
Total Expenses After Expense Reimbursement		2,856			3,734
Net Investment Income (Loss)		(1,189	)		1,828
Realized and Unrealized Gain (Loss) on Investments and Foreign Currency
Net Realized Gain (Loss) from:
Investments in Unaffiliated Issuers		3,601			31,474
Investments in Affiliated Issuers		4,970			—
Foreign Currency Transactions		—			—
Total Net Realized Gain (Loss)		8,571			31,474
Net Change in Unrealized Appreciation (Depreciation)		35,175			(20,435	)
Net Gain (Loss) on Investments and Foreign Currency		43,746			11,039
Net Change in Net Assets Resulting from Operations	$	42,557		$	12,867

SEE NOTES TO FINANCIAL STATEMENTS

80

Safeco Large-Cap Value Fund			Safeco Multi-Cap Core Fund			Safeco International Stock Fund			Safeco Balanced Fund			Safeco Small-Cap Value Fund			Safeco Large-Cap Growth Fund
$	1,692		$	452		$	585		$	151		$	482		$	27
	17			7			1			153			15			1
	3			6			—			—			7			—
	1,712			465			586			304			504			28
	533			313			183			69			239			24
	69			40			16			9			29			3
	158			91			49			18			82			2
	3			12			3			3			8			1
	2			10			4			4			4			1
	—			—			—			—			—			—
	—			—			4			—			—			—
	2			8			2			2			5			1
	1			5			1			2			2			1
	—			—			—			—			—			1
	4			15			3			6			6			4
	—			—			—			1			—			3
	16			14			12			12			13			11
	8			6			46			3			6			4
	19			20			20			14			15			18
	18			14			7			3			10			1
	5			5			5			5			5			5
	11			7			3			2			4			1
	849			560			358			153			428			81
	—			(23	)		(74	)		(24	)		(38	)		(18	)
	(2	)		(8	)		(5	)		(5	)		(6	)		(7	)
	(1	)		(8	)		(5	)		(5	)		(3	)		(5	)
	—			—			(1	)		—			—			(5	)
	—			—			(25	)		—			—			—
	846			521			248			119			381			46
	866			(56	)		338			185			123			(18	)
	6,978			7,103			259			340			722			19
	—			—			—			—			—			—
	—			—			4			—			—			—
	6,978			7,103			263			340			722			19
	(2,856	)		(2,858	)		202			(328	)		3,888			32
	4,122			4,245			465			12			4,610			51
$	4,988		$	4,189		$	803		$	197		$	4,733		$	33

SEE NOTES TO FINANCIAL STATEMENTS

81

Statements of Operations

For the Six-Month Period Ended June 30, 2004

(Unaudited)

—(In Thousands)—	Safeco High-Yield Bond Fund			Safeco Intermediate-Term U.S. Government Fund
Investment Income
Dividends and Interest	$	1,727		$	1,420
Securities Lending and Other Income		6			—
Total Investment Income		1,733			1,420
Expenses
Investment Advisory		133			192
Fund Accounting and Administration		18			31
Transfer Agent—Investor Class		48			44
—Class A		5			6
—Class B		2			3
—Class C		—			—
Shareholder Service—Class A		2			7
—Class B		1			3
Distribution—Class B		2			10
—Class C		1			—
Legal and Auditing		13			14
Custodian		7			5
Registration		20			19
Reports to Shareholders		8			8
Trustees		5			5
Other		4			5
Total Expenses Before Expense Reimbursement/Waiver		269			352
Expense Reimbursement/Waiver From Advisor—Investor Class		(69	)		(62	)
—Class A		(6	)		(8	)
—Class B		(3	)		(4	)
—Class C		(1	)		—
Total Expenses After Expense Reimbursement/Waiver		190			278
Net Investment Income		1,543			1,142
Realized and Unrealized Gain (Loss) on Investments
Net Realized Gain (Loss) on Investments		605			214
Net Change in Unrealized Appreciation (Depreciation)		(1,644	)		(1,235	)
Net Gain (Loss) on Investments		(1,039	)		(1,021	)
Net Change in Net Assets Resulting from Operations	$	504		$	121

SEE NOTES TO FINANCIAL STATEMENTS

82

Safeco Intermediate-Term Bond Fund			Safeco California Tax-Free Income Fund			Safeco Municipal Bond Fund			Safeco Intermediate-Term Municipal Bond Fund			Safeco Money Market Fund
$	214		$	2,326		$	15,171		$	370		$	1,938
	—			—			—			—			—
	214			2,326			15,171			370			1,938
	24			215			1,335			42			779
	4			39			126			8			102
	8			29			156			5			133
	3			—			2			—			13
	2			—			1			—			3
	—			—			—			—			—
	2			1			6			—			—
	1			1			4			—			—
	3			3			11			1			—
	—			—			1			—			—
	12			14			30			12			22
	2			5			19			2			15
	18			4			26			10			31
	2			5			22			1			19
	5			5			7			5			6
	1			6			38			2			24
	87			327			1,784			88			1,147
	(31	)		(49	)		—			(26	)		—
	(8	)		(1	)		—			(1	)		(10	)
	(5	)		(1	)		—			(1	)		(3	)
	(1	)		—			—			—			—
	42			276			1,784			60			1,134
	172			2,050			13,387			310			804
	19			918			3,572			1			—
	(187	)		(3,703	)		(22,138	)		(489	)		—
	(168	)		(2,785	)		(18,566	)		(488	)		—
$	4		$	(735	)	$	(5,179	)	$	(178	)	$	804

SEE NOTES TO FINANCIAL STATEMENTS

83

Statements of Changes in Net Assets

(Unaudited)

	Safeco Growth Opportunities Fund						Safeco Core Equity Fund						Safeco Large-Cap Value Fund
—(In Thousands)—	2004*			2003**			2004*			2003**			2004*			2003**
Operations
Net Investment Income (Loss)	$	(1,189	)	$	(2,294	)	$	1,828		$	4,918		$	866		$	1,906
Net Realized Gain (Loss) on Investments and Foreign Currency		8,571			(22,928	)		31,474			(17,919	)		6,978			(165	)
Net Change in Unrealized Appreciation (Depreciation)		35,175			199,157			(20,435	)		167,641			(2,856	)		28,922
Net Change in Net Assets Resulting from Operations		42,557			173,935			12,867			154,640			4,988			30,663
Distributions to Shareholders From
Net Investment Income
—Investor Class		—			—			(1,810	)		(4,852	)		(858	)		(1,891	)
—Class A		—			—			(19	)		(69	)		(7	)		(11	)
—Class B		—			—			—			—			(1	)		(4	)
—Class C		—			—			—			—			—			—
—Institutional Class		—			—			—			—			—			—
Net Realized Gain on Investments
—Investor Class		—			—			—			—			—			—
—Class A		—			—			—			—			—			—
—Class B		—			—			—			—			—			—
—Class C		—			—			—			—			—			—
—Institutional Class		—			—			—			—			—			—
Total		—			—			(1,829	)		(4,921	)		(866	)		(1,906	)
Net Trust Share Transactions		(23,136	)		(89,184	)		(59,569	)		(89,749	)		(5,250	)		(8,895	)
Redemption Fees		14			214			—			—			—			—
Total Change in Net Assets		19,435			84,965			(48,531	)		59,970			(1,128	)		19,862
Net Assets at Beginning of Period		526,031			441,066			743,101			683,131			153,877			134,015
Net Assets at End of Period	$	545,466		$	526,031		$	694,570		$	743,101		$	152,749		$	153,877
Tax Character of Distributions Paid
Ordinary Income	$	—		$	—		$	—		$	—		$	—		$	—
Qualified Dividend Income		—			—			1,829			4,921			866			1,906
Long-term Capital Gains		—			—			—			—			—			—
Total	$	—		$	—		$	1,829		$	4,921		$	866		$	1,906

 * For the six-month period ended June 30, 2004.

** For the year ended December 31, 2003.

SEE NOTES TO FINANCIAL STATEMENTS

84

Safeco Multi-Cap Core Fund						Safeco International Stock Fund					Safeco Balanced Fund						Safeco Small-Cap Value Fund					Safeco Large-Cap Growth Fund
2004*			2003**			2004*		2003**			2004*			2003**			2004*		2003**			2004*			2003**
$	(56	)	$	18		$	338	$	304		$	185		$	379		$	123	$	271		$	(18	)	$	(18	)
	7,103			(447	)		263		(1,517	)		340			(219	)		722		2,799			19			(393	)
	(2,858	)		28,581			202		8,538			(328	)		2,650			3,888		13,968			32			1,334
	4,189			28,152			803		7,325			197			2,810			4,733		17,038			33			923
	—			(21	)		—		(288	)		(169	)		(349	)		—		(282	)		—			—
	—			—			—		(16	)		(15	)		(31	)		—		(9	)		—			—
	—			—			—		(4	)		(9	)		(23	)		—		—			—			—
	—			—			—		—			(1	)		—			—		—			—			—
	—			—			—		(49	)		—			—			—		—			—			—
	—			—			—		—			—			—			—		—			—			—
	—			—			—		—			—			—			—		—			—			—
	—			—			—		—			—			—			—		—			—			—
	—			—			—		—			—			—			—		—			—			—
	—			—			—		—			—			—			—		—			—			—
	—			(21	)		—		(357	)		(194	)		(403	)		—		(291	)		—			—
	(3,855	)		(3,429	)		1,430		8,267			(708	)		942			19,672		(4,922	)		717			456
	2			3			1		48			—			—			5		21			—			—
	336			24,705			2,234		15,283			(705	)		3,349			24,410		11,846			750			1,379
	89,657			64,952			35,133		19,850			20,164			16,815			52,419		40,573			5,832			4,453
$	89,993		$	89,657		$	37,367	$	35,133		$	19,459		$	20,164		$	76,829	$	52,419		$	6,582		$	5,832
$	—		$	—		$	—	$	—		$	55		$	151		$	—	$	—		$	—		$	—
	—			21			—		357			139			252			—		291			—			—
	—			—			—		—			—			—			—		—			—			—
$	—		$	21		$	—	$	357		$	194		$	403		$	—	$	291		$	—		$	—

SEE NOTES TO FINANCIAL STATEMENTS

85

Statements of Changes in Net Assets

(Unaudited)

	Safeco High-Yield Bond Fund						Safeco Intermediate-Term U.S. Government Fund						Safeco Intermediate-Term Bond Fund
—(In Thousands)—	2004*			2003**			2004*			2003**			2004*			2003**
Operations
Net Investment Income	$	1,543		$	3,613		$	1,142		$	2,001		$	172		$	393
Net Realized Gain (Loss) on Investments		605			1,127			214			1,212			19			124
Net Change in Unrealized Appreciation (Depreciation)		(1,644	)		6,280			(1,235	)		(2,494	)		(187	)		(175	)
Net Change in Net Assets Resulting from Operations		504			11,020			121			719			4			342
Distributions to Shareholders From
Net Investment Income
—Investor Class		(1,609	)		(3,312	)		(1,267	)		(2,497	)		(144	)		(339	)
—Class A		(84	)		(244	)		(101	)		(76	)		(24	)		(51	)
—Class B		(22	)		(52	)		(40	)		(36	)		(12	)		(33	)
—Class C		(9	)		(10	)		(2	)		(1	)		(2	)		(1	)
Net Realized Gain on Investments
—Investor Class		—			—			—			—			—			—
—Class A		—			—			—			—			—			—
—Class B		—			—			—			—			—			—
—Class C		—			—			—			—			—			—
Total		(1,724	)		(3,618	)		(1,410	)		(2,610	)		(182	)		(424	)
Net Trust Share Transactions		(3,959	)		230			(6,519	)		19,711			94			(739	)
Redemption Fees		37			48			2			7			—			—
Total Change in Net Assets		(5,142	)		7,680			(7,806	)		17,827			(84	)		(821	)
Net Assets at Beginning of Period		42,984			35,304			74,548			56,721			9,703			10,524
Net Assets at End of Period	$	37,842		$	42,984		$	66,742		$	74,548		$	9,619		$	9,703
Tax Character of Distributions Paid
Ordinary Income	$	1,724		$	3,618		$	1,410		$	2,610		$	182		$	424
Tax-Exempt Income		—			—			—			—			—			—
Long-term Capital Gains		—			—			—			—			—			—
Total	$	1,724		$	3,618		$	1,410		$	2,610		$	182		$	424

 * For the six-month period ended June 30, 2004.

** For the year ended December 31, 2003.

SEE NOTES TO FINANCIAL STATEMENTS

86

Safeco California Tax-Free Income Fund						Safeco Municipal Bond Fund						Safeco Intermediate-Term Municipal Bond Fund						Safeco Money Market Fund
2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003**
$	2,050		$	4,318		$	13,387		$	27,809		$	310		$	627		$	804		$	2,637
	918			217			3,572			7,642			1			133			—			—
	(3,703	)		(59	)		(22,138	)		(1,537	)		(489	)		39			—			—
	(735	)		4,476			(5,179	)		33,914			(178	)		799			804			2,637
	(1,890	)		(4,043	)		(12,532	)		(26,456	)		(299	)		(614	)		(788	)		(2,599	)
	(18	)		(31	)		(111	)		(221	)		(7	)		(8	)		(13	)		(30	)
	(14	)		(36	)		(50	)		(111	)		(2	)		(3	)		(3	)		(7	)
	(2	)		(1	)		(2	)		(1	)		(2	)		(2	)		—			(1	)
	(125	)		(255	)		(3,667	)		(6,896	)		(34	)		(93	)		—			—
	(1	)		(2	)		(50	)		(80	)		(1	)		(2	)		—			—
	(1	)		(3	)		(18	)		(38	)		—			(1	)		—			—
	—			—			(1	)		(1	)		—			(1	)		—			—
	(2,051	)		(4,371	)		(16,431	)		(33,804	)		(345	)		(724	)		(804	)		(2,637	)
	(2,406	)		(7,564	)		(1,547	)		(2,868	)		132			155			(71,380	)		(2,109	)
	—			13			37			77			—			—			—			—
	(5,192	)		(7,446	)		(23,120	)		(2,681	)		(391	)		230			(71,380	)		(2,109	)
	87,594			95,040			573,084			575,765			16,817			16,587			357,760			359,869
$	82,402		$	87,594		$	549,964		$	573,084		$	16,426		$	16,817		$	286,380		$	357,760
$	—		$	21		$	—		$	723		$	—		$	—		$	804		$	2,637
	1,924			4,090			12,695			26,385			310			627			—			—
	127			260			3,736			6,696			35			97			—			—
$	2,051		$	4,371		$	16,431		$	33,804		$	345		$	724		$	804		$	2,637

SEE NOTES TO FINANCIAL STATEMENTS

87

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Growth Opportunities Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class A	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	24.38		$	16.97		$	26.96		$	22.16		$	23.21		$	22.66
Income (Loss) From Investment Operations
Net Investment Loss		(0.07	)		(0.16	)		(0.24	)		(0.20	)		(0.25	)		(0.19	)
Net Realized and Unrealized Gain (Loss) on Investments		2.08			7.56			(9.77	)††		5.00			(0.80	)		0.74
Total from Investment Operations		2.01			7.40			(10.01	)		4.80			(1.05	)		0.55
Redemption Fees		—			0.01			0.02			—			—			—
Net Asset Value at End of Period	$	26.39		$	24.38		$	16.97		$	26.96		$	22.16		$	23.21
Total Return†		8.24%	*		43.67%			(37.05%	)		21.66%			(4.52%	)		2.43%
Net Assets at End of Period (000’s)	$	26,671		$	21,475		$	19,024		$	33,877		$	26,020		$	27,597
Ratios to Average Net Assets:
Gross Expenses		2.38%	**		2.38%			1.67%			1.36%			1.49%			1.34%
Required Reimbursement^		(1.06%	)**		(1.05%	)		(0.34%	)		(0.05%	)		(0.18%	)		(0.11%	)
Net Expenses		1.32%	**		1.33%			1.33%			1.31%			1.31%			1.23%
Net Investment Loss		(0.68%	)**		(0.70%	)		(1.17%	)		(1.00%	)		(1.00%	)		(0.80%	)
Portfolio Turnover Rate		31%	**		46%			37%			65%			63%			38%
Safeco Growth Opportunities Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class B	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	23.05		$	16.16		$	25.87		$	21.42		$	22.57		$	22.21
Income (Loss) From Investment Operations
Net Investment Loss		(0.20	)		(0.28	)		(0.39	)		(0.40	)		(0.41	)		(0.35	)
Net Realized and Unrealized Gain (Loss) on Investments		2.00			7.16			(9.34	)††		4.85			(0.74	)		0.71
Total from Investment Operations		1.80			6.88			(9.73	)		4.45			(1.15	)		0.36
Redemption Fees		—			0.01			0.02			—			—			—
Net Asset Value at End of Period	$	24.85		$	23.05		$	16.16		$	25.87		$	21.42		$	22.57
Total Return†		7.81%	*		42.64%			(37.53%	)		20.77%			(5.10%	)		1.62%
Net Assets at End of Period (000’s)	$	8,953		$	11,126		$	8,734		$	14,346		$	12,391		$	14,637
Ratios to Average Net Assets:
Gross Expenses		2.33%	**		2.45%			2.21%			2.09%			2.16%			2.24%
Required Reimbursement^		(0.26%	)**		(0.37%	)		(0.13%	)		(0.03%	)		(0.10%	)		(0.21%	)
Net Expenses		2.07%	**		2.08%			2.08%			2.06%			2.06%			2.03%
Net Investment Loss		(1.45%	)**		(1.43%	)		(1.92%	)		(1.75%	)		(1.71%	)		(1.59%	)
Portfolio Turnover Rate		31%	**		46%			37%			65%			63%			38%

    * Not annualized.

  ** Annualized.

  † Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

†† Includes $0.10 related to investment reimbursement by affiliate.

  ^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

88

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Growth Opportunities Fund	Six-Month Period Ended June 30			For the Year Ended December 31									Eight-Month Period Ended December 31 #
Class C	2004			2003			2002			2001			2000
Net Asset Value at Beginning of Period	$	23.05		$	16.16		$	25.85		$	21.40		$	23.34
Income (Loss) From Investment Operations
Net Investment Loss		(0.17	)		(0.29	)		(0.33	)		(0.35	)		(0.23	)
Net Realized and Unrealized Gain (Loss) on Investments		1.97			7.17			(9.38	)††		4.80			(1.71	)
Total from Investment Operations		1.80			6.88			(9.71	)		4.45			(1.94	)
Redemption Fees		—			0.01			0.02			—			—
Net Asset Value at End of Period	$	24.85		$	23.05		$	16.16		$	25.85		$	21.40
Total Return†		7.81%	*		42.64%			(37.49%	)		20.74%			(8.27%	)*
Net Assets at End of Period (000’s)	$	220		$	198		$	161		$	194		$	120
Ratios to Average Net Assets:
Gross Expenses		2.33%	**		2.48%			2.33%			2.06%			2.02%	**
Required Reimbursement^		(0.26%	)**		(0.40%	)		(0.25%	)		—			—
Net Expenses		2.07%	**		2.08%			2.08%			2.06%			2.02%	**
Net Investment Loss		(1.44%	)**		(1.45%	)		(1.93%	)		(1.75%	)		(1.71%	)**
Portfolio Turnover Rate		31%	**		46%			37%			65%			63%	**
Safeco Core Equity Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class A	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	16.78		$	13.55		$	18.56		$	20.68		$	24.06		$	23.27
Income (Loss) From Investment Operations
Net Investment Income		0.02			0.07			0.08			0.04			0.04			0.11
Net Realized and Unrealized Gain (Loss) on Investments		0.26			3.23			(5.01	)		(2.12	)		(2.77	)		2.02
Total from Investment Operations		0.28			3.30			(4.93	)		(2.08	)		(2.73	)		2.13
Less Distributions
Dividends from Net Investment Income		(0.02	)		(0.07	)		(0.08	)		(0.04	)		(0.04	)		(0.11	)
Distributions from Realized Gains		—			—			—			—			(0.61	)		(1.23	)
Total Distributions		(0.02	)		(0.07	)		(0.08	)		(0.04	)		(0.65	)		(1.34	)
Net Asset Value at End of Period	$	17.04		$	16.78		$	13.55		$	18.56		$	20.68		$	24.06
Total Return†		1.66%	*		24.41%			(26.59%	)		(10.06%	)		(11.34%	)		9.13%
Net Assets at End of Period (000’s)	$	17,431		$	16,117		$	13,897		$	21,519		$	53,410		$	61,625
Ratios to Average Net Assets:
Gross Expenses		1.53%	**		3.40%			2.17%			1.42%			1.35%			1.12%
Required Reimbursement^		(0.21%	)**		(2.08%	)		(0.86%	)		(0.14%	)		(0.09%	)		—
Net Expenses		1.32%	**		1.32%			1.31%			1.28%			1.26%			1.12%
Net Investment Income		0.24%	**		0.46%			0.48%			0.18%			0.19%			0.44%
Portfolio Turnover Rate		19%	**		24%			45%			31%			35%			34%

    * Not annualized.

  ** Annualized.

  † Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

†† Includes $0.10 related to investment reimbursement by affiliate.

  # For the period from May 1, 2000 (initial issue date of Class C shares) through December 31, 2000.

  ^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

89

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Core Equity Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class B	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	16.38		$	13.26		$	18.20		$	20.38		$	23.83		$	23.15
Income (Loss) From Investment Operations
Net Investment Loss		(0.05	)		(0.04	)		(0.05	)		(0.11	)		(0.13	)		(0.07	)
Net Realized and Unrealized Gain (Loss) on Investments		0.25			3.16			(4.89	)		(2.07	)		(2.71	)		1.98
Total from Investment Operations		0.20			3.12			(4.94	)		(2.18	)		(2.84	)		1.91
Less Distributions
Distributions from Realized Gains		—			—			—			—			(0.61	)		(1.23	)
Net Asset Value at End of Period	$	16.58		$	16.38		$	13.26		$	18.20		$	20.38		$	23.83
Total Return†		1.22%	*		23.53%			(27.14%	)		(10.70%	)		(11.91%	)		8.18%
Net Assets at End of Period (000’s)	$	8,846		$	10,697		$	10,520		$	16,423		$	20,349		$	28,260
Ratios to Average Net Assets:
Gross Expenses		2.37%	**		2.38%			2.16%			2.05%			2.06%			2.05%
Required Reimbursement^		(0.30%	)**		(0.31%	)		(0.10%	)		(0.02%	)		(0.05%	)		(0.10%	)
Net Expenses		2.07%	**		2.07%			2.06%			2.03%			2.01%			1.95%
Net Investment Loss		(0.51%	)**		(0.26%	)		(0.28%	)		(0.58%	)		(0.54%	)		(0.41%	)
Portfolio Turnover Rate		19%	**		24%			45%			31%			35%			34%
Safeco Core Equity Fund	Six-Month Period Ended June 30			For the Year Ended December 31									Eight-Month Period Ended December 31 #
Class C	2004			2003			2002			2001			2000
Net Asset Value at Beginning of Period	$	16.39		$	13.28		$	18.22		$	20.40		$	22.87
Income (Loss) From Investment Operations
Net Investment Loss		(0.04	)		(0.04	)		(0.03	)		(0.09	)		(0.06	)
Net Realized and Unrealized Gain (Loss) on Investments		0.25			3.15			(4.91	)		(2.09	)		(1.80	)
Total from Investment Operations		0.21			3.11			(4.94	)		(2.18	)		(1.86	)
Less Distributions
Distributions from Realized Gains		—			—			—			—			(0.61	)
Net Asset Value at End of Period	$	16.60		$	16.39		$	13.28		$	18.22		$	20.40
Total Return†		1.28%	*		23.42%			(27.11%	)		(10.73%	)		(8.08%	)*
Net Assets at End of Period (000’s)	$	196		$	181		$	129		$	155		$	119
Ratios to Average Net Assets:
Gross Expenses		2.31%	**		2.41%			2.34%			2.03%			1.84%	**
Required Reimbursement^		(0.24%	)**		(0.34%	)		(0.28%	)		—			—
Net Expenses		2.07%	**		2.07%			2.06%			2.03%			1.84%	**
Net Investment Loss		(0.51%	)**		(0.29%	)		(0.24%	)		(0.58%	)		(0.44%	)**
Portfolio Turnover Rate		19%	**		24%			45%			31%			35%	**

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

# For the period from May 1, 2000 (initial issue date of Class C shares) through December 31, 2000.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

90

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Large-Cap Value Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class A	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	18.84		$	15.37		$	18.91		$	20.68		$	22.52		$	23.55
Income (Loss) From Investment Operations
Net Investment Income		0.08			0.18			0.23			0.25			0.35			0.42
Net Realized and Unrealized Gain (Loss) on Investments		0.53			3.47			(3.54	)††		(1.77	)		(1.84	)		(0.20	)
Total from Investment Operations		0.61			3.65			(3.31	)		(1.52	)		(1.49	)		0.22
Less Distributions
Dividends from Net Investment Income		(0.08	)		(0.18	)		(0.23	)		(0.25	)		(0.35	)		(0.42	)
Distributions from Realized Gains		—			—			—			—			—			(0.83	)
Total Distributions		(0.08	)		(0.18	)		(0.23	)		(0.25	)		(0.35	)		(1.25	)
Net Asset Value at End of Period	$	19.37		$	18.84		$	15.37		$	18.91		$	20.68		$	22.52
Total Return†		3.26%	*		23.90%			(17.57%	)		(7.33%	)		(6.59%	)		1.01%
Net Assets at End of Period (000’s)	$	1,591		$	1,426		$	712		$	882		$	1,092		$	2,046
Ratios to Average Net Assets:
Gross Expenses		1.59%	**		1.71%			1.62%			1.52%			1.62%			1.47%
Required Reimbursement^		(0.24%	)**		(0.36%	)		(0.27%	)		(0.17%	)		(0.27%	)		(0.16%	)
Net Expenses		1.35%	**		1.35%			1.35%			1.35%			1.35%			1.31%
Net Investment Income		0.89%	**		1.15%			1.30%			1.30%			1.56%			1.84%
Portfolio Turnover Rate		48%	**		38%			17%			58%			45%			42%
Safeco Large-Cap Value Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class B	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	18.85		$	15.39		$	18.95		$	20.71		$	22.53		$	23.57
Income (Loss) From Investment Operations
Net Investment Income		0.01			0.07			0.10			0.11			0.18			0.25
Net Realized and Unrealized Gain (Loss) on Investments		0.52			3.46			(3.56	)††		(1.76	)		(1.82	)		(0.21	)
Total from Investment Operations		0.53			3.53			(3.46	)		(1.65	)		(1.64	)		0.04
Less Distributions
Dividends from Net Investment Income		(0.01	)		(0.07	)		(0.10	)		(0.11	)		(0.18	)		(0.25	)
Distributions from Realized Gains		—			—			—			—			—			(0.83	)
Total Distributions		(0.01	)		(0.07	)		(0.10	)		(0.11	)		(0.18	)		(1.08	)
Net Asset Value at End of Period	$	19.37		$	18.85		$	15.39		$	18.95		$	20.71		$	22.53
Total Return†		2.84%	*		22.98%			(18.28%	)		(7.98%	)		(7.29%	)		0.18%
Net Assets at End of Period (000’s)	$	1,125		$	1,140		$	747		$	1,160		$	1,532		$	2,365
Ratios to Average Net Assets:
Gross Expenses		2.38%	**		2.55%			2.35%			2.24%			2.27%			2.22%
Required Reimbursement^		(0.28%	)**		(0.45%	)		(0.25%	)		(0.14%	)		(0.17%	)		(0.16%	)
Net Expenses		2.10%	**		2.10%			2.10%			2.10%			2.10%			2.06%
Net Investment Income		0.15%	**		0.42%			0.52%			0.55%			0.80%			1.09%
Portfolio Turnover Rate		48%	**		38%			17%			58%			45%			42%

    * Not annualized.

  ** Annualized.

  † Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

†† Includes $0.07 related to investment reimbursement by affiliate.

  ^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

91

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Large-Cap Value Fund	Six-Month Period Ended June 30			For the Year Ended December 31									Eight-Month Period Ended December 31 #
Class C	2004			2003			2002			2001			2000
Net Asset Value at Beginning of Period	$	18.92		$	15.44		$	18.99		$	20.75		$	21.06
Income (Loss) From Investment Operations
Net Investment Income		0.01			0.06			0.12			0.12			0.12
Net Realized and Unrealized Gain (Loss) on Investments		0.53			3.48			(3.55	)††		(1.76	)		(0.31	)
Total from Investment Operations		0.54			3.54			(3.43	)		(1.64	)		(0.19	)
Less Distributions
Dividends from Net Investment Income		(0.01	)		(0.06	)		(0.12	)		(0.12	)		(0.12	)
Net Asset Value at End of Period	$	19.45		$	18.92		$	15.44		$	18.99		$	20.75
Total Return†		2.87%	*		23.00%			(18.12%	)		(7.90%	)		(0.90%	)*
Net Assets at End of Period (000’s)	$	141		$	119		$	89		$	97		$	99
Ratios to Average Net Assets:
Gross Expenses		2.22%	**		2.33%			2.36%			2.03%			1.95%	**
Required Reimbursement^		(0.12%	)**		(0.23%	)		(0.26%	)		—			—
Net Expenses		2.10%	**		2.10%			2.10%			2.03%			1.95%	**
Net Investment Income		0.16%	**		0.38%			0.68%			0.60%			0.85%	**
Portfolio Turnover Rate		48%	**		38%			17%			58%			45%	**
Safeco Multi-Cap Core Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class A	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	20.32		$	14.03		$	18.54		$	20.94		$	25.01		$	17.56
Income (Loss) From Investment Operations
Net Investment Loss		(0.03	)		(0.02	)		(0.07	)		(0.08	)		(0.14	)		(0.12	)
Net Realized and Unrealized Gain (Loss) on Investments		1.00			6.31			(4.44	)		(2.32	)		(3.93	)		9.58
Total from Investment Operations		0.97			6.29			(4.51	)		(2.40	)		(4.07	)		9.46
Less Distributions
Distributions from Realized Gains		—			—			—			—			—			(2.01	)
Net Asset Value at End of Period	$	21.29		$	20.32		$	14.03		$	18.54		$	20.94		$	25.01
Total Return†		4.77%	*		44.83%			(24.33%	)		(11.46%	)		(16.27%	)		53.90%
Net Assets at End of Period (000’s)	$	6,833		$	5,590		$	3,527		$	5,141		$	6,621		$	4,774
Ratios to Average Net Assets:
Gross Expenses		1.63%	**		1.78%			1.62%			1.52%			1.49%			1.56%
Required Reimbursement^		(0.28%	)**		(0.43%	)		(0.27%	)		(0.17%	)		(0.14%	)		(0.20%	)
Net Expenses		1.35%	**		1.35%			1.35%			1.35%			1.35%			1.36%
Net Investment Loss		(0.31%	)**		(0.14%	)		(0.40%	)		(0.41%	)		(0.67%	)		(0.81%	)
Portfolio Turnover Rate		37%	**		27%			15%			50%			36%			49%

    * Not annualized.

  ** Annualized.

  † Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

†† Includes $0.07 related to investment reimbursement by affiliate.

  # For the period from May 1, 2000 (initial issue date of Class C shares) through December 31, 2000.

  ^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

92

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Multi-Cap Core Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class B	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	19.28		$	13.41		$	17.86		$	20.33		$	24.46		$	17.31
Income (Loss) From Investment Operations
Net Investment Loss		(0.12	)		(0.16	)		(0.19	)		(0.21	)		(0.30	)		(0.25	)
Net Realized and Unrealized Gain (Loss) on Investments		0.96			6.03			(4.26	)		(2.26	)		(3.83	)		9.41
Total from Investment Operations		0.84			5.87			(4.45	)		(2.47	)		(4.13	)		9.16
Less Distributions
Distributions from Realized Gains		—			—			—			—			—			(2.01	)
Net Asset Value at End of Period	$	20.12		$	19.28		$	13.41		$	17.86		$	20.33		$	24.46
Total Return†		4.36%	*		43.77%			(24.92%	)		(12.15%	)		(16.88%	)		52.57%
Net Assets at End of Period (000’s)	$	3,553		$	4,397		$	3,726		$	5,753		$	6,449		$	4,842
Ratios to Average Net Assets:
Gross Expenses		2.49%	**		2.54%			2.35%			2.26%			2.22%			2.32%
Required Reimbursement^		(0.39%	)**		(0.44%	)		(0.25%	)		(0.16%	)		(0.12%	)		(0.20%	)
Net Expenses		2.10%	**		2.10%			2.10%			2.10%			2.10%			2.12%
Net Investment Loss		(1.06%	)**		(0.90%	)		(1.15%	)		(1.16%	)		(1.42%	)		(1.56%	)
Portfolio Turnover Rate		37%	**		27%			15%			50%			36%			49%
Safeco Multi-Cap Core Fund	Six-Month Period Ended June 30			For the Year Ended December 31									Eight-Month Period Ended December 31 #
Class C	2004			2003			2002			2001			2000
Net Asset Value at Beginning of Period	$	19.29		$	13.42		$	17.87		$	20.33		$	24.21
Income (Loss) From Investment Operations
Net Investment Loss		(0.12	)		(0.12	)		(0.18	)		(0.20	)		(0.21	)
Net Realized and Unrealized Gain (Loss) on Investments		0.96			5.99			(4.27	)		(2.26	)		(3.67	)
Total Loss from Investment Operations		0.84			5.87			(4.45	)		(2.46	)		(3.88	)
Net Asset Value at End of Period	$	20.13		$	19.29		$	13.42		$	17.87		$	20.33
Total Return†		4.35%	*		43.74%			(24.90%	)		(12.10%	)		(16.03%	)*
Net Assets at End of Period (000’s)	$	114		$	166		$	75		$	100		$	103
Ratios to Average Net Assets:
Gross Expenses		2.38%	**		2.46%			2.57%			2.25%			2.07%	**
Required Reimbursement^		(0.28%	)**		(0.36%	)		(0.47%	)		(0.15%	)		—
Net Expenses		2.10%	**		2.10%			2.10%			2.10%			2.07%	**
Net Investment Loss		(1.04%	)**		(0.87%	)		(1.15%	)		(1.15%	)		(1.34%	)**
Portfolio Turnover Rate		37%	**		27%			15%			50%			36%	**

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

# For the period from May 1, 2000 (initial issue date of Class C shares) through December 31, 2000.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

93

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco International Stock Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class A	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	10.54		$	8.36		$	10.45		$	14.20		$	16.89		$	13.13
Income (Loss) From Investment Operations
Net Investment Income (Loss)		0.08			0.10			0.06			0.05			0.05			(0.01	)
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency		0.16			2.19			(2.11	)		(3.71	)		(1.92	)		3.77
Total from Investment Operations		0.24			2.29			(2.05	)		(3.66	)		(1.87	)		3.76
Redemption Fee		—			0.01			0.03			0.14			—			—
Less Distributions
Dividends from Net Investment Income		—			(0.12	)		(0.07	)		(0.23	)		(0.05	)		—
Distributions from Realized Gains		—			—			—			—			(0.77	)		—
Total Distributions		—			(0.12	)		(0.07	)		(0.23	)		(0.82	)		—
Net Asset Value at End of Period	$	10.78		$	10.54		$	8.36		$	10.45		$	14.20		$	16.89
Total Return†		2.28%	*		27.51%			(19.27%	)		(24.49%	)		(11.05%	)		28.64%
Net Assets at End of Period (000’s)	$	1,385		$	1,449		$	795		$	969		$	1,423		$	1,215
Ratios to Average Net Assets:
Gross Expenses		2.41%	**		2.49%			2.45%			2.40%			2.21%			2.11%
Required Reimbursement^		(0.76%	)**		(0.84%	)		(0.80%	)		(0.69%	)		(0.56%	)		(0.38%	)
Net Expenses		1.65%	**		1.65%			1.65%			1.71%			1.65%			1.73%
Net Investment Income (Loss)		1.50%	**		1.22%			0.68%			0.36%			0.04%			(0.06%	)
Portfolio Turnover Rate		19%	**		37%			16%			163%			33%			24%
Safeco International Stock Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class B	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	10.32		$	8.21		$	10.25		$	13.88		$	16.56		$	12.99
Income (Loss) From Investment Operations
Net Investment Income (Loss)		0.04			0.04			(0.01	)		(0.06	)		(0.09	)		(0.10	)
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency		0.15			2.12			(2.06	)		(3.60	)		(1.82	)		3.67
Total from Investment Operations		0.19			2.16			(2.07	)		(3.66	)		(1.91	)		3.57
Redemption Fee		—			0.01			0.03			0.14			—			—
Less Distributions
Dividends from Net Investment Income		—			(0.06	)		—			(0.11	)		—			—
Distributions from Realized Gains		—			—			—			—			(0.77	)		—
Total Distributions		—			(0.06	)		—			(0.11	)		(0.77	)		—
Net Asset Value at End of Period	$	10.51		$	10.32		$	8.21		$	10.25		$	13.88		$	16.56
Total Return†		1.84%	*		26.41%			(19.89%	)		(25.07%	)		(11.52%	)		27.48%
Net Assets at End of Period (000’s)	$	665		$	733		$	736		$	1,027		$	1,492		$	1,392
Ratios to Average Net Assets:
Gross Expenses		3.92%	**		4.16%			3.34%			3.20%			2.97%			3.02%
Required Reimburement^		(1.52%	)**		(1.76%	)		(0.94%	)		(0.74%	)		(0.57%	)		(0.51%	)
Net Expenses		2.40%	**		2.40%			2.40%			2.46%			2.40%			2.51%
Net Investment Income (Loss)		0.73%	**		0.44%			(0.11%	)		(0.52%	)		(0.64%	)		(0.84%	)
Portfolio Turnover Rate		19%	**		37%			16%			163%			33%			24%

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

94

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco International Stock Fund	Six-Month Period Ended June 30			For the Year Ended December 31									Eight-Month Period Ended December 31 #
Class C	2004			2003			2002			2001			2000
Net Asset Value at Beginning of Period	$	10.33		$	8.21		$	10.25		$	13.85		$	15.82
Income (Loss) From Investment Operations
Net Investment Income (Loss)		0.04			0.03			(0.01	)		(0.07	)		(0.07	)
Net Realized and Unrealized Gain (Loss) on Investments and Foreign Currency		0.15			2.13			(2.06	)		(3.57	)		(1.13	)
Total from Investment Operations		0.19			2.16			(2.07	)		(3.64	)		(1.20	)
Redemption Fee		—			0.01			0.03			0.14			—
Less Distributions
Dividends from Net Investment Income		—			(0.05	)		—			(0.10	)		—
Distributions from Realized Gains		—			—			—			—			(0.77	)
Total Distributions		—			(0.05	)		—			(0.10	)		(0.77	)
Net Asset Value at End of Period	$	10.52		$	10.33		$	8.21		$	10.25		$	13.85
Total Return†		1.84%	*		26.38%			(19.90%	)		(25.08%	)		(7.76%	)*
Net Assets at End of Period (000’s)	$	103		$	99		$	78		$	80		$	97
Ratios to Average Net Assets:
Gross Expenses		3.16%	**		3.29%			3.28%			3.03%			2.66%	**
Required Reimbursement^		(0.76%	)**		(0.89%	)		(0.88%	)		(0.57%	)		(0.26%	)**
Net Expenses		2.40%	**		2.40%			2.40%			2.46%			2.40%	**
Net Investment Income (Loss)		0.79%	**		0.34%			(0.19%	)		(0.68%	)		(0.75%	)**
Portfolio Turnover Rate		19%	**		37%			16%			163%			33%	**
Safeco International Stock Fund	Six-Month Period Ended June 30			Ten-Month Period Ended December 31 ^^
Institutional Class	2004			2003
Net Asset Value at Beginning of Period	$	10.73		$	7.35
Income From Investment Operations
Net Investment Income		0.11			0.04
Net Realized and Unrealized Gain on Investments and Foreign Currency		0.15			3.39
Total from Investment Operations		0.26			3.43
Redemption Fees		—			0.01
Less Distributions
Dividends from Net Investment Income		—			(0.06	)
Net Asset Value at End of Period	$	10.99		$	10.73
Total Return		2.42%	*		44.63%	*
Net Assets at End of Period (000’s)	$	8,949		$	8,869
Ratios to Average Net Assets:
Gross Expenses		1.67%	**		2.43%	**
Required Reimbursement^		(0.27%	)**		(1.03%	)**
Voluntary Reimbursement^		(0.30%	)**		(0.30%	)**
Net Expenses		1.10%	**		1.10%	**
Net Investment Income		2.08%	**		0.84%	**
Portfolio Turnover Rate		19%	**		37%	**

    * Not annualized.

  ** Annualized.

  † Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

  # For the period from May 1, 2000 (initial issue date of Class C shares) through December 31, 2000.

  ^ See Note 6 to the financial statements.

^^ For the period from March 7, 2003 (initial issue date of Institutional Class) through December 31, 2003.

SEE NOTES TO FINANCIAL STATEMENTS

95

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Balanced Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class A	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	11.88		$	10.40		$	11.73		$	12.09		$	11.87		$	12.23
Income (Loss) From Investment Operations
Net Investment Income		0.10			0.22			0.26			0.30			0.32			0.22
Net Realized and Unrealized Gain (Loss) on Investments		0.01			1.49			(1.30	)		(0.36	)		0.22			(0.13	)
Total from Investment Operations		0.11			1.71			(1.04	)		(0.06	)		0.54			0.09
Less Distributions
Dividends from Net Investment Income		(0.11	)		(0.23	)		(0.29	)		(0.30	)		(0.32	)		(0.22	)
Distributions from Realized Gains		—			—			—			—			—			(0.23	)
Total Distributions		(0.11	)		(0.23	)		(0.29	)		(0.30	)		(0.32	)		(0.45	)
Net Asset Value at End of Period	$	11.88		$	11.88		$	10.40		$	11.73		$	12.09		$	11.87
Total Return†		0.88%	*		16.62%			(8.95%	)		(0.42%	)		4.71%			0.75%
Net Assets at End of Period (000’s)	$	1,784		$	1,671		$	1,586		$	1,733		$	1,789		$	2,573
Ratios to Average Net Assets:
Gross Expenses		1.89%	**		1.93%			1.81%			1.82%			1.88%			1.68%
Required Reimbursement^		(0.54%	)**		(0.58%	)		(0.46%	)		(0.47%	)		(0.53%	)		(0.32%	)
Net Expenses		1.35%	**		1.35%			1.35%			1.35%			1.35%			1.36%
Net Investment Income		1.74%	**		2.00%			2.42%			2.57%			2.62%			2.16%
Portfolio Turnover Rate		41%	**		37%			59%			75%			63%			95%
Safeco Balanced Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class B	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	11.84		$	10.37		$	11.71		$	12.07		$	11.83		$	12.24
Income (Loss) From Investment Operations
Net Investment Income		0.06			0.14			0.19			0.21			0.23			0.18
Net Realized and Unrealized Gain (Loss) on Investments		0.01			1.48			(1.32	)		(0.36	)		0.24			(0.18	)
Total from Investment Operations		0.07			1.62			(1.13	)		(0.15	)		0.47			0.00
Less Distributions
Dividends from Net Investment Income		(0.07	)		(0.15	)		(0.21	)		(0.21	)		(0.23	)		(0.18	)
Distributions from Realized Gains		—			—			—			—			—			(0.23	)
Total Distributions		(0.07	)		(0.15	)		(0.21	)		(0.21	)		(0.23	)		(0.41	)
Net Asset Value at End of Period	$	11.84		$	11.84		$	10.37		$	11.71		$	12.07		$	11.83
Total Return†		0.56%	*		15.79%			(9.70%	)		(1.19%	)		4.03%			(0.01%	)
Net Assets at End of Period (000’s)	$	1,622		$	1,789		$	1,641		$	1,979		$	1,904		$	2,553
Ratios to Average Net Assets:
Gross Expenses		2.73%	**		2.75%			2.59%			2.55%			2.56%			2.46%
Required Reimbursement^		(0.63%	)**		(0.65%	)		(0.49%	)		(0.45%	)		(0.46%	)		(0.32%	)
Net Expenses		2.10%	**		2.10%			2.10%			2.10%			2.10%			2.14%
Net Investment Income		0.99%	**		1.27%			1.66%			1.82%			1.89%			1.43%
Portfolio Turnover Rate		41%	**		37%			59%			75%			63%			95%

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

96

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Balanced Fund	Six-Month Period Ended June 30			Three-Month Period Ended December 31 #
Class C	2004			2003
Net Asset Value at Beginning of Period	$	11.84		$	11.03
Income From Investment Operations
Net Investment Income		0.06			0.02
Net Realized and Unrealized Gain on Investments		—			0.82
Total from Investment Operations		0.06			0.84
Less Distributions
Dividends from Net Investment Income		(0.06	)		(0.03	)
Net Asset Value at End of Period	$	11.84		$	11.84
Total Return†		0.54%	*		7.65%	*
Net Assets at End of Period (000’s)	$	109		$	108
Ratios to Average Net Assets:
Gross Expenses		2.49%	**		42.09%	**
Required Reimbursement^		(0.39%	)**		(39.99%	)**
Net Expenses		2.10%	**		2.10%	**
Net Investment Income		1.00%	**		0.65%	**
Portfolio Turnover Rate		41%	**		37%	**
Safeco Small-Cap Value Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class A	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	18.50		$	13.01		$	13.57		$	11.59		$	12.55		$	11.09
Income (Loss) From Investment Operations
Net Investment Income (Loss)		0.02			0.04			0.02			0.10			(0.04	)		(0.09	)
Net Realized and Unrealized Gain (Loss) on Investments		1.41			5.49			(0.56	)		1.98			(0.92	)		1.55
Total from Investment Operations		1.43			5.53			(0.54	)		2.08			(0.96	)		1.46
Redemption Fees		—			0.01			—			—			—			—
Less Distributions
Dividends from Net Investment Income		—			(0.05	)		(0.02	)		(0.10	)		—			—
Net Asset Value at End of Period	$	19.93		$	18.50		$	13.01		$	13.57		$	11.59		$	12.55
Total Return†		7.73%	*		42.61%			(4.01%	)		17.92%			(7.65%	)		13.17%
Net Assets at End of Period (000’s)	$	4,515		$	3,127		$	1,507		$	1,009		$	847		$	1,067
Ratios to Average Net Assets:
Gross Expenses		1.70%	**		1.82%			1.75%			1.82%			1.92%			1.97%
Required Reimbursement^		(0.30%	)**		(0.42%	)		(0.35%	)		(0.38%	)		(0.52%	)		(0.50%	)
Net Expenses		1.40%	**		1.40%			1.40%			1.44%			1.40%			1.47%
Net Investment Income (Loss)		0.17%	**		0.38%			0.23%			0.75%			(0.32%	)		(0.79%	)
Portfolio Turnover Rate		34%	**		52%			54%			141%			107%			117%

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

# For the period from October 1, 2003 (initial issue date of Class C shares) through December 31, 2003.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

97

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Small-Cap Value Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class B	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	17.68		$	12.48		$	13.10		$	11.19		$	12.22		$	10.88
Income (Loss) From Investment Operations
Net Investment Income (Loss)		(0.06	)		(0.05	)		(0.07	)		0.01			(0.12	)		(0.16	)
Net Realized and Unrealized Gain (Loss) on Investments		1.35			5.24			(0.55	)		1.91			(0.91	)		1.50
Total from Investment Operations		1.29			5.19			(0.62	)		1.92			(1.03	)		1.34
Redemption Fees		—			0.01			—			—			—			—
Less Distributions
Dividends from Net Investment Income		—			—			—			(0.01	)		—			—
Net Asset Value at End of Period	$	18.97		$	17.68		$	12.48		$	13.10		$	11.19		$	12.22
Total Return†		7.30%	*		41.67%			(4.73%	)		17.11%			(8.43%	)		12.32%
Net Assets at End of Period (000’s)	$	1,421		$	1,767		$	1,333		$	1,334		$	1,144		$	1,274
Ratios to Average Net Assets:
Gross Expenses		2.58%	**		2.72%			2.54%			2.56%			2.63%			2.75%
Required Reimbursement^		(0.43%	)**		(0.57%	)		(0.39%	)		(0.37%	)		(0.48%	)		(0.54%	)
Net Expenses		2.15%	**		2.15%			2.15%			2.19%			2.15%			2.21%
Net Investment Income (Loss)		(0.57%	)**		(0.36%	)		(0.57%	)		0.04%			(1.01%	)		(1.55%	)
Portfolio Turnover Rate		34%	**		52%			54%			141%			107%			117%
Safeco Small-Cap Value Fund	Six-Month Period Ended June 30			Three-Month Period Ended December 31 #
Class C	2004			2003
Net Asset Value at Beginning of Period	$	17.68		$	15.13
Income (Loss) From Investment Operations
Net Investment Loss		(0.05	)		(0.02	)
Net Realized and Unrealized Gain on Investments		1.41			2.56
Total from Investment Operations		1.36			2.54
Redemption Fees		—			0.01
Net Asset Value at End of Period	$	19.04		$	17.68
Total Return†		7.69%	*		16.85%	*
Net Assets at End of Period (000’s)	$	141		$	118
Ratios to Average Net Assets:
Gross Expenses		2.28%	**		39.37%	**
Required Reimbursement^		(0.13%	)**		(37.22%	)**
Net Expenses		2.15%	**		2.15%	**
Net Investment Loss		(0.56%	)**		(0.64%	)**
Portfolio Turnover Rate		34%	**		52%	**

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

# For the period from October 1, 2003 (initial issue date of Class C shares) through December 31, 2003.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

98

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Large-Cap Growth Fund	Six-Month Period Ended June 30			For the Year Ended December 31						October 31, 2001 (Commencement of Operations) to December 31
Class A	2004			2003			2002			2001
Net Asset Value at Beginning of Period	$	9.27		$	7.73		$	10.63		$	10.00
Income (Loss) From Investment Operations
Net Investment Loss		(0.02	)		(0.02	)		(0.05	)		(0.01	)
Net Realized and Unrealized Gain (Loss) on Investments		0.07			1.56			(2.83	)		0.64
Total from Investment Operations		0.05			1.54			(2.88	)		0.63
Less Distributions
Distributions from Realized Gains		—			—			(0.02	)		—
Net Asset Value at End of Period	$	9.32		$	9.27		$	7.73		$	10.63
Total Return†		0.54%	*		19.92%			(27.12%	)		6.30%	*
Net Assets at End of Period (000’s)	$	1,197		$	1,088		$	811		$	1,074
Ratios to Average Net Assets:
Gross Expenses		2.59%	**		2.79%			3.71%			4.54%	**
Voluntary Reimbursement^		(1.19%	)**		(1.39%	)		(2.06%	)		(2.89%	)**
Net Expenses		1.40%	**		1.40%			1.65%			1.65%	**
Net Investment Loss		(0.48%	)**		(0.23%	)		(0.55%	)		(0.50%	)**
Portfolio Turnover Rate		75%	**		50%			29%			2%	**
Safeco Large-Cap Growth Fund	Six-Month Period Ended June 30			For the Year Ended December 31						October 31, 2001 (Commencement of Operations) to December 31
Class B	2004			2003			2002			2001
Net Asset Value at Beginning of Period	$	9.12		$	7.66		$	10.62		$	10.00
Income (Loss) From Investment Operations
Net Investment Loss		(0.06	)		(0.08	)		(0.11	)		(0.02	)
Net Realized and Unrealized Gain (Loss) on Investments		0.07			1.54			(2.83	)		0.64
Total from Investment Operations		0.01			1.46			(2.94	)		0.62
Less Distributions
Distributions from Realized Gains		—			—			(0.02	)		—
Net Asset Value at End of Period	$	9.13		$	9.12		$	7.66		$	10.62
Total Return†		0.11%	*		19.06%			(27.71%	)		6.20%	*
Net Assets at End of Period (000’s)	$	972		$	960		$	784		$	1,062
Ratios to Average Net Assets:
Gross Expenses		3.33%	**		3.55%			4.46%			5.29%	**
Voluntary Reimbursement^		(1.18%	)**		(1.40%	)		(2.06%	)		(2.89%	)**
Net Expenses		2.15%	**		2.15%			2.40%			2.40%	**
Net Investment Loss		(1.24%	)**		(0.97%	)		(1.32%	)		(1.25%	)**
Portfolio Turnover Rate		75%	**		50%			29%			2%	**

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

99

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Large-Cap Growth Fund	Six-Month Period Ended June 30			For the Year Ended December 31						October 31, 2001 (Commencement of Operations) to December 31
Class C	2004			2003			2002			2001
Net Asset Value at Beginning of Period	$	9.12		$	7.66		$	10.62		$	10.00
Income (Loss) From Investment Operations
Net Investment Loss		(0.06	)		(0.08	)		(0.11	)		(0.02	)
Net Realized and Unrealized Gain (Loss) on Investments		0.07			1.54			(2.83	)		0.64
Total from Investment Operations		0.01			1.46			(2.94	)		0.62
Less Distributions
Distributions from Realized Gains		—			—			(0.02	)		—
Net Asset Value at End of Period	$	9.13		$	9.12		$	7.66		$	10.62
Total Return†		0.11%	*		19.06%			(27.71%	)		6.20%	*
Net Assets at End of Period (000’s)	$	930		$	927		$	775		$	1,062
Ratios to Average Net Assets:
Gross Expenses		3.20%	**		3.46%			4.44%			5.29%	**
Voluntary Reimbursement^		(1.05%	)**		(1.31%	)		(2.04%	)		(2.89%	)**
Net Expenses		2.15%	**		2.15%			2.40%			2.40%	**
Net Investment Loss		(1.24%	)**		(0.98%	)		(1.32%	)		(1.25%	)**
Portfolio Turnover Rate		75%	**		50%			29%			2%	**
Safeco High-Yield Bond Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class A	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	5.85		$	4.89		$	6.51		$	7.26		$	8.38		$	8.78
Income (Loss) from Investment Operations
Net Investment Income		0.21			0.47			0.51			0.60			0.66			0.69
Net Realized and Unrealized Gain (Loss) on Investments		(0.15	)		0.95			(1.64	)		(0.75	)		(1.12	)		(0.40	)
Total from Investment Operations		0.06			1.42			(1.13	)		(0.15	)		(0.46	)		0.29
Redemption Fees		0.01			0.01			0.01			—			—			—
Less Distributions
Dividends from Net Investment Income		(0.24	)		(0.47	)		(0.50	)		(0.60	)		(0.66	)		(0.69	)
Net Asset Value at End of Period	$	5.68		$	5.85		$	4.89		$	6.51		$	7.26		$	8.38
Total Return†		1.14%	*		30.41%			(17.68%	)		(2.29%	)		(5.75%	)		3.52%
Net Assets at End of Period (000’s)	$	1,699		$	2,857		$	1,934		$	1,086		$	1,144		$	1,583
Ratios to Average Net Assets:
Gross Expenses		1.74%	**		1.41%			1.63%			1.45%			1.56%			1.35%
Required Reimbursement^		(0.44%	)**		(0.11%	)		(0.32%	)		(0.13%	)		(0.26%	)		(0.17%	)
Voluntary Reimbursement^		(0.15%	)**		(0.15%	)		—			—			—			—
Net Expenses		1.15%	**		1.15%			1.31%			1.32%			1.30%			1.18%
Net Investment Income		7.24%	**		8.56%			9.32%			8.39%			8.38%			8.01%
Portfolio Turnover Rate		113%	**		177%			163%			185%			45%			71%

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

100

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco High-Yield Bond Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class B	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	5.84		$	4.89		$	6.51		$	7.25		$	8.38		$	8.78
Income (Loss) from Investment Operations
Net Investment Income		0.19			0.42			0.46			0.55			0.60			0.63
Net Realized and Unrealized Gain (Loss) on Investments		(0.14	)		0.94			(1.64	)		(0.74	)		(1.13	)		(0.40	)
Total from Investment Operations		0.05			1.36			(1.18	)		(0.19	)		(0.53	)		0.23
Redemption Fees		0.01			0.01			0.01			—			—			—
Less Distributions
Dividends from Net Investment Income		(0.22	)		(0.42	)		(0.45	)		(0.55	)		(0.60	)		(0.63	)
Net Asset Value at End of Period	$	5.68		$	5.84		$	4.89		$	6.51		$	7.25		$	8.38
Total Return†		0.94%	*		29.21%			(18.29%	)		(2.88%	)		(2.52%	)		2.73%
Net Assets at End of Period (000’s)	$	505		$	654		$	630		$	920		$	995		$	1,599
Ratios to Average Net Assets:
Gross Expenses		2.88%	**		2.88%			2.54%			2.31%			2.35%			2.19%
Required Reimbursement^		(0.83%	)**		(0.83%	)		(0.48%	)		(0.25%	)		(0.30%	)		(0.22%	)
Voluntary Reimbursement^		(0.15%	)**		(0.15%	)		—			—			—			—
Net Expenses		1.90%	**		1.90%			2.06%			2.06%			2.05%			1.97%
Net Investment Income		6.56%	**		7.90%			8.41%			7.86%			7.73%			7.34%
Portfolio Turnover Rate		113%	**		177%			163%			185%			45%			71%
Safeco High-Yield Bond Fund	Six-Month Period Ended June 30			For the Year Ended December 31									Eight-Month Period Ended December 31 #
Class C	2004			2003			2002			2001			2000
Net Asset Value at Beginning of Period	$	5.86		$	4.90		$	6.52		$	7.26		$	7.90
Income (Loss) from Investment Operations
Net Investment Income		0.19			0.42			0.46			0.55			0.39
Net Realized and Unrealized Gain (Loss) on Investments		(0.16	)		0.95			(1.64	)		(0.74	)		(0.64	)
Total from Investment Operations		0.03			1.37			(1.18	)		(0.19	)		(0.25	)
Redemption Fees		0.01			0.01			0.01			—			—
Less Distributions
Dividends from Net Investment Income		(0.21	)		(0.42	)		(0.45	)		(0.55	)		(0.39	)
Net Asset Value at End of Period	$	5.69		$	5.86		$	4.90		$	6.52		$	7.26
Total Return†		0.75%	*		29.35%			(18.26%	)		(2.86%	)		(3.25%	)*
Net Assets at End of Period (000’s)	$	253		$	161		$	93		$	87		$	92
Ratios to Average Net Assets:
Gross Expenses		2.28%	**		2.45%			2.60%			2.15%			2.04%	**
Required Reimbursement^		(0.23%	)**		(0.40%	)		(0.54%	)		(0.09%	)		—
Voluntary Reimbursement^		(0.15%	)**		(0.15%	)		—			—			—
Net Expenses		1.90%	**		1.90%			2.06%			2.06%			2.04%	**
Net Investment Income		6.53%	**		7.80%			8.56%			7.88%			7.61%	**
Portfolio Turnover Rate		113%	**		177%			163%			185%			45%	**

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

# For the period from May 1, 2000 (initial issue date of Class C shares) through December 31, 2000.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

101

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Intermediate-Term U.S. Government Fund	Six-Month Period Ended June 30			For the Year Ended December 31									Eight-Month Period Ended December 31 #
Class A	2004			2003			2002			2001			2000
Net Asset Value at Beginning of Period	$	9.59		$	9.88		$	9.47		$	9.35		$	9.01
Income (Loss) From Investment Operations
Net Investment Income		0.15			0.36			0.43			0.52			0.36
Net Realized and Unrealized Gain (Loss) on Investments		(0.15	)		(0.25	)		0.45			0.12			0.34
Total from Investment Operations		—			0.11			0.88			0.64			0.70
Less Distributions
Dividends from Net Investment Income		(0.18	)		(0.40	)		(0.47	)		(0.52	)		(0.36	)
Net Asset Value at End of Period	$	9.41		$	9.59		$	9.88		$	9.47		$	9.35
Total Return†		0.02%	*		1.14%			9.53%			7.02%			8.03%	*
Net Assets at End of Period (000’s)	$	5,109		$	5,375		$	740		$	266		$	105
Ratios to Average Net Assets:
Gross Expenses		1.29%	**		1.31%			1.41%			1.47%			1.27%	**
Required Reimbursement^		(0.09%	)**		(0.11%	)		(0.21%	)		(0.27%	)		(0.07%	)**
Voluntary Reimbursement^		(0.21%	)**		(0.21%	)		—			—			—
Net Expenses		0.99%	**		0.99%			1.20%			1.20%			1.20%	**
Net Investment Income		3.09%	**		2.93%			3.99%			5.44%			5.97%	**
Portfolio Turnover Rate		14%	**		78%			63%			63%			160%	**
Safeco Intermediate-Term U.S. Government Fund	Six-Month Period Ended June 30			For the Year Ended December 31									Eight-Month Period Ended December 31 #
Class B	2004			2003			2002			2001			2000
Net Asset Value at Beginning of Period	$	9.60		$	9.89		$	9.47		$	9.36		$	9.01
Income (Loss) From Investment Operations
Net Investment Income		0.12			0.29			0.36			0.45			0.25
Net Realized and Unrealized Gain (Loss) on Investments		(0.15	)		(0.25	)		0.46			0.11			0.35
Total from Investment Operations		(0.03	)		0.04			0.82			0.56			0.60
Less Distributions
Dividends from Net Investment Income		(0.15	)		(0.33	)		(0.40	)		(0.45	)		(0.25	)
Net Asset Value at End of Period	$	9.42		$	9.60		$	9.89		$	9.47		$	9.36
Total Return†		(0.35%	)*		0.38%			8.83%			6.10%			7.61%	*
Net Assets at End of Period (000’s)	$	2,338		$	2,965		$	337		$	189		$	139
Ratios to Average Net Assets:
Gross Expenses		2.07%	**		2.10%			2.28%			2.14%			1.99%	**
Required Reimbursement^		(0.12%	)**		(0.15%	)		(0.33%	)		(0.19%	)		(0.04%	)**
Voluntary Reimbursement^		(0.21%	)**		(0.21%	)		—			—			—
Net Expenses		1.74%	**		1.74%			1.95%			1.95%			1.95%	**
Net Investment Income		2.33%	**		2.16%			3.49%			4.74%			5.22%	**
Portfolio Turnover Rate		14%	**		78%			63%			63%			160%	**

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

# For the period from May 1, 2000 (initial issue date of Class A and B shares) through December 31, 2000.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

102

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Intermediate-Term U.S. Government Fund	Six-Month Period Ended June 30			Three-Month Period Ended December 31 #
Class C	2004			2003
Net Asset Value at Beginning of Period	$	9.60		$	9.71
Loss From Investment Operations
Net Investment Income (Loss)		0.12			(0.03	)
Net Realized and Unrealized Loss on Investments		(0.15	)		(0.01	)
Total from Investment Operations		(0.03	)		(0.04	)
Less Distributions
Dividends from Net Investment Income		(0.15	)		(0.07	)
Net Asset Value at End of Period	$	9.42		$	9.60
Total Return†		(0.35%	)*		(0.27%	) *
Net Assets at End of Period (000’s)	$	97		$	99
Ratios to Average Net Assets:
Gross Expenses		2.16%	**		43.56%	**
Required Reimbursement^		(0.21%	)**		(41.61%	)**
Voluntary Reimbursement^		(0.21%	)**		(0.21%	)**
Net Expenses		1.74%	**		1.74%	**
Net Investment Income (Loss)		2.34%	**		(0.93%	)**
Portfolio Turnover Rate		14%	**		78%	**

Safeco Intermediate-Term Bond Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class A	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	8.51		$	8.57		$	8.40		$	8.29		$	7.90		$	8.65
Income (Loss) From Investment Operations
Net Investment Income		0.14			0.31			0.39			0.43			0.46			0.39
Net Realized and Unrealized Gain (Loss) on Investments		(0.14	)		(0.03	)		0.20			0.11			0.39			(0.75	)
Total from Investment Operations		—			0.28			0.59			0.54			0.85			(0.36	)
Less Distributions
Dividends from Net Investment Income		(0.15	)		(0.34	)		(0.42	)		(0.43	)		(0.46	)		(0.39	)
Net Asset Value at End of Period	$	8.36		$	8.51		$	8.57		$	8.40		$	8.29		$	7.90
Total Return†		0.04%	*		3.30%			7.18%			6.69%			11.19%			(4.24%	)
Net Assets at End of Period (000’s)	$	1,460		$	1,166		$	1,282		$	1,092		$	539		$	573
Ratios to Average Net Assets:
Gross Expenses		2.19%	**		2.05%			1.95%			1.97%			2.07%			1.87%
Required Reimbursement^		(1.04%	)**		(0.90%	)		(0.80%	)		(0.82%	)		(0.92%	)		(0.66%	)
Voluntary Reimbursement^		(0.16%	)**		(0.16%	)		—			—			—			—
Net Expenses		0.99%	**		0.99%			1.15%			1.15%			1.15%			1.21%
Net Investment Income		3.45%	**		3.60%			4.48%			5.12%			5.80%			4.79%
Portfolio Turnover Rate		45%	**		51%			93%			126%			102%			147%

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

# For the period from October 1, 2003 (initial issue date of Class C shares) through December 31, 2003.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

103

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Intermediate-Term Bond Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class B	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	8.51		$	8.56		$	8.40		$	8.28		$	7.89		$	8.64
Income (Loss) From Investment Operations
Net Investment Income		0.11			0.24			0.32			0.37			0.40			0.32
Net Realized and Unrealized Gain (Loss) on Investments		(0.15	)		(0.02	)		0.19			0.12			0.39			(0.75	)
Total from Investment Operations		(0.04	)		0.22			0.51			0.49			0.79			(0.43	)
Less Distributions
Dividends from Net Investment Income		(0.12	)		(0.27	)		(0.35	)		(0.37	)		(0.40	)		(0.32	)
Net Asset Value at End of Period	$	8.35		$	8.51		$	8.56		$	8.40		$	8.28		$	7.89
Total Return†		(0.45%	)*		2.65%			6.26%			6.03%			10.39%			(4.98%	)
Net Assets at End of Period (000’s)	$	699		$	1,020		$	1,024		$	915		$	746		$	924
Ratios to Average Net Assets:
Gross Expenses		2.89%	**		2.78%			2.67%			2.76%			2.79%			2.61%
Required Reimbursement^		(0.99%	)**		(0.88%	)		(0.77%	)		(0.86%	)		(0.89%	)		(0.67%	)
Voluntary Reimbursement^		(0.16%	)**		(0.16%	)		—			—			—			—
Net Expenses		1.74%	**		1.74%			1.90%			1.90%			1.90%			1.94%
Net Investment Income		2.68%	**		2.89%			3.76%			4.40%			5.08%			4.02%
Portfolio Turnover Rate		45%	**		51%			93%			126%			102%			147%
Safeco Intermediate-Term Bond Fund	Six-Month Period Ended June 30			Three-Month Period Ended December 31 #
Class C	2004			2003
Net Asset Value at Beginning of Period	$	8.50		$	8.56
Income From Investment Operations
Net Investment Income		0.11			0.04
Net Realized and Unrealized Gain (Loss) on Investments		(0.14	)		(0.03	)
Total from Investment Operations		(0.03	)		0.01
Less Distributions
Dividends from Net Investment Income		(0.12	)		(0.07	)
Net Asset Value at End of Period	$	8.35		$	8.50
Total Return†		(0.34%	)*		0.01%	*
Net Assets at End of Period (000’s)	$	98		$	99
Ratios to Average Net Assets:
Gross Expenses		2.73%	**		42.54%	**
Required Reimbursement^		(0.83%	)**		(40.64%	)**
Voluntary Reimbursement^		(0.16%	)**		(0.16%	)**
Net Expenses		1.74%	**		1.74%	**
Net Investment Income		2.69%	**		1.90%	**
Portfolio Turnover Rate		45%	**		51%	**

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

# For the period from October 1, 2003 (initial issue date of Class C shares) through December 31, 2003.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

104

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco California Tax-Free Income Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class A	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	12.69		$	12.67		$	12.40		$	12.50		$	11.05		$	12.74
Income (Loss) From Investment Operations
Net Investment Income		0.30			0.56			0.57			0.58			0.53			0.52
Net Realized and Unrealized Gain (Loss) on Investments		(0.41	)		0.03			0.43			(0.11	)		1.45			(1.69	)
Total from Investment Operations		(0.11	)		0.59			1.00			0.47			1.98			(1.17	)
Less Distributions
Dividends from Net Investment Income		(0.28	)		(0.53	)		(0.51	)		(0.57	)		(0.53	)		(0.52	)
Distributions in Excess of Net Investment Income		—			—			(0.04	)		—			—			—
Distributions from Realized Gains		(0.02	)		(0.04	)		(0.18	)		—			—			—
Total Distributions		(0.30	)		(0.57	)		(0.73	)		(0.57	)		(0.53	)		(0.52	)
Net Asset Value at End of Period	$	12.28		$	12.69		$	12.67		$	12.40		$	12.50		$	11.05
Total Return†		(1.01%	)*		4.79%			8.31%			3.82%			18.41%			(9.41%	)
Net Assets at End of Period (000’s)	$	1,081		$	741		$	636		$	645		$	675		$	740
Ratios to Average Net Assets:
Gross Expenses		1.06%	**		1.06%			1.06%			1.06%			1.05%			1.07%
Voluntary Reimbursement^		(0.20%	)**		(0.20%	)		—			—			—			—
Net Expenses		0.86%	**		0.86%			1.06%			1.06%			1.05%			1.07%
Net Investment Income		4.57%	**		4.49%			4.25%			4.66%			4.62%			4.36%
Portfolio Turnover Rate		5%	**		19%			25%			32%			26%			25%
Safeco California Tax-Free Income Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class B	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	12.66		$	12.65		$	12.39		$	12.49		$	11.04		$	12.73
Income (Loss) From Investment Operations
Net Investment Income		0.24			0.47			0.48			0.49			0.45			0.43
Net Realized and Unrealized Gain (Loss) on Investments		(0.40	)		0.02			0.42			(0.11	)		1.45			(1.69	)
Total from Investment Operations		(0.16	)		0.49			0.90			0.38			1.90			(1.26	)
Less Distributions
Dividends from Net Investment Income		(0.22	)		(0.44	)		(0.42	)		(0.48	)		(0.45	)		(0.43	)
Distributions in Excess of Net Investment Income		—			—			(0.04	)		—			—			—
Distributions from Realized Gains		(0.02	)		(0.04	)		(0.18	)		—			—			—
Total Distributions		(0.24	)		(0.48	)		(0.64	)		(0.48	)		(0.45	)		(0.43	)
Net Asset Value at End of Period	$	12.26		$	12.66		$	12.65		$	12.39		$	12.49		$	11.04
Total Return†		(1.31%	)*		3.96%			7.47%			3.02%			17.63%			(10.07%	)
Net Assets at End of Period (000’s)	$	505		$	1,021		$	1,111		$	1,613		$	1,176		$	799
Ratios to Average Net Assets:
Gross Expenses		1.78%	**		1.76%			1.77%			1.80%			1.72%			1.80%
Voluntary Reimbursement^		(0.17%	)**		(0.15%	)		—			—			—			—
Net Expenses		1.61%	**		1.61%			1.77%			1.80%			1.72%			1.80%
Net Investment Income		3.78%	**		3.74%			3.54%			3.97%			3.88%			3.63%
Portfolio Turnover Rate		5%	**		19%			25%			32%			26%			25%

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

105

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco California Tax-Free Income Fund	Six-Month Period Ended June 30			Three-Month Period Ended December 31#
Class C	2004			2003
Net Asset Value at Beginning of Period	$	12.66		$	12.55
Income From Investment Operations
Net Investment Income		0.24			0.14
Net Realized and Unrealized Gain (Loss) on Investments		(0.41	)		0.09
Total from Investment Operations		(0.17	)		0.23
Less Distributions
Dividends from Net Investment Income		(0.22	)		(0.11	)
Distributions from Realized Gains		(0.02	)		(0.01	)
Total Distributions		(0.24	)		(0.12	)
Net Asset Value at End of Period	$	12.25		$	12.66
Total Return†		(1.38%	)*		1.91%	*
Net Assets at End of Period (000’s)	$	98		$	101
Ratios to Average Net Assets:
Gross Expenses		2.04%	**		4.09%	**
Required Reimbursement^		(0.14%	)**		(2.19%	)**
Voluntary Reimbursement^		(0.29%	)**		(0.29%	)**
Net Expenses		1.61%	**		1.61%	**
Net Investment Income		3.80%	**		4.60%	**
Portfolio Turnover Rate		5%	**		19%	**

Safeco Municipal Bond Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class A	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	14.45		$	14.46		$	13.98		$	13.97		$	12.90		$	14.45
Income (Loss) From Investment Operations
Net Investment Income		0.31			0.66			0.66			0.66			0.65			0.64
Net Realized and Unrealized Gain (Loss) on Investments		(0.45	)		0.13			0.69			0.02			1.07			(1.55	)
Total from Investment Operations		(0.14	)		0.79			1.35			0.68			1.72			(0.91	)
Less Distributions
Dividends from Net Investment Income		(0.29	)		(0.63	)		(0.64	)		(0.64	)		(0.65	)		(0.64	)
Distributions from Realized Gains		(0.09	)		(0.17	)		(0.23	)		(0.03	)		—			—
Total Distributions		(0.38	)		(0.80	)		(0.87	)		(0.67	)		(0.65	)		(0.64	)
Net Asset Value at End of Period	$	13.93		$	14.45		$	14.46		$	13.98		$	13.97		$	12.90
Total Return†		(0.94%	)*		5.66%			9.99%			4.92%			13.76%			(6.47%	)
Net Assets at End of Period (000’s)	$	7,343		$	6,538		$	3,787		$	1,273		$	1,052		$	929
Ratios to Average Net Assets:
Expenses		0.89%	**		0.87%			0.89%			0.98%			0.97%			0.98%
Net Investment Income		4.41%	**		4.58%			4.74%			4.63%			4.96%			4.66%
Portfolio Turnover Rate		8%	**		20%			19%			9%			32%			17%

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

# For the period from October 1, 2003 (initial issue date of Class C shares) through December 31, 2003.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

106

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Municipal Bond Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class B	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	14.42		$	14.42		$	13.95		$	13.94		$	12.88		$	14.43
Income (Loss) From Investment Operations
Net Investment Income		0.26			0.55			0.55			0.55			0.56			0.54
Net Realized and Unrealized Gain (Loss) on Investments		(0.46	)		0.14			0.68			0.02			1.06			(1.55	)
Total from Investment Operations		(0.20	)		0.69			1.23			0.57			1.62			(1.01	)
Less Distributions
Dividends from Net Investment Income		(0.24	)		(0.52	)		(0.53	)		(0.53	)		(0.56	)		(0.54	)
Distributions from Realized Gains		(0.09	)		(0.17	)		(0.23	)		(0.03	)		—			—
Total Distributions		(0.33	)		(0.69	)		(0.76	)		(0.56	)		(0.56	)		(0.54	)
Net Asset Value at End of Period	$	13.89		$	14.42		$	14.42		$	13.95		$	13.94		$	12.88
Total Return†		(1.38%	)*		4.93%			9.07%			4.14%			12.87%			(7.14%	)
Net Assets at End of Period (000’s)	$	2,717		$	3,141		$	2,494		$	1,236		$	686		$	1,322
Ratios to Average Net Assets:
Expenses		1.68%	**		1.66%			1.68%			1.73%			1.71%			1.70%
Net Investment Income		3.69%	**		3.78%			3.86%			3.87%			4.24%			3.94%
Portfolio Turnover Rate		8%	**		20%			19%			9%			32%			17%
Safeco Municipal Bond Fund	Six-Month Period Ended June 30			Three-Month Period Ended December 31 #
Class C	2004			2003
Net Asset Value at Beginning of Period	$	14.42		$	14.45
Income From Investment Operations
Net Investment Income		0.25			0.16
Net Realized and Unrealized Gain (Loss) on Investments		(0.46	)		0.04
Total from Investment Operations		(0.21	)		0.20
Less Distributions
Dividends from Net Investment Income		(0.23	)		(0.13	)
Distributions from Realized Gains		(0.09	)		(0.10	)
Total Distributions		(0.32	)		(0.23	)
Net Asset Value at End of Period	$	13.89		$	14.42
Total Return†		(1.46%	)*		1.40%	*
Net Assets at End of Period (000’s)	$	154		$	100
Ratios to Average Net Assets:
Expenses		1.85%	**		43.13%	**
Required Reimbursement^		—			(41.26%	)**
Net Expenses		1.85%	**		1.87%	**
Net Investment Income		3.56%	**		4.36%	**
Portfolio Turnover Rate		8%	**		20%	**

 * Not annualized.

** Annualized.

† Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

# For the period from October 1, 2003 (initial issue date of Class C shares) through December 31, 2003.

^ See Note 6 to the financial statements.

SEE NOTES TO FINANCIAL STATEMENTS

107

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

	Class A						Class B						Class C
Safeco Intermediate-Term Municipal Bond Fund	Six-Month Period Ended June 30			Ten-Month Period Ended December 31 #			Six-Month Period Ended June 30			Ten-Month Period Ended December 31 #			Six-Month Period Ended June 30			Ten-Month Period Ended December 31 #
	2004			2003			2004			2003			2004			2003
Net Asset Value at Beginning of Period	$	11.14		$	11.21		$	11.13		$	11.21		$	11.13		$	11.21
Income (Loss) from Investment Operations
Net Investment Income		0.20			0.32			0.16			0.26			0.16			0.26
Net Realized and Unrealized Gain (Loss) on Investments		(0.32	)		(0.01	)		(0.32	)		(0.02	)		(0.32	)		(0.02	)
Total from Investment Operations		(0.12	)		0.31			(0.16	)		0.24			(0.16	)		0.24
Less Distributions
Dividends from Net Investment Income		(0.20	)		(0.32	)		(0.16	)		(0.26	)		(0.16	)		(0.26	)
Distributions from Realized Gains		(0.02	)		(0.06	)		(0.02	)		(0.06	)		(0.02	)		(0.06	)
Total Distributions		(0.22	)		(0.38	)		(0.18	)		(0.32	)		(0.18	)		(0.32	)
Net Asset Value at End of Period	$	10.80		$	11.14		$	10.79		$	11.13		$	10.79		$	11.13
Total Return†*		(1.11%	)		3.07%			(1.48%	)		2.38%			(1.48%	)		2.39%
Net Assets at End of Period (000’s)	$	324		$	416		$	152		$	150		$	107		$	99
Ratios to Average Net Assets:
Gross Expenses**		1.32%			7.70%			2.24%			16.43%			2.33%			20.82%
Required Reimbursement^**		(0.17%	)		(6.55%	)		(0.34%	)		(14.53%	)		(0.43%	)		(18.92%	)
Voluntary Reimbursement^**		(0.30%	)		(0.30%	)		(0.30%	)		(0.30%	)		(0.30%	)		(0.30%	)
Net Expenses**		0.85%			0.85%			1.60%			1.60%			1.60%			1.60%
Net Investment Income**		3.57%			3.51%			2.82%			2.78%			2.81%			2.81%
Portfolio Turnover Rate**		3%			22%			3%			22%			3%			22%

Safeco Money Market Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class A	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Income From Investment Operations
Net Investment Income		—	^^		0.01			0.01			0.04			0.06			0.05
Less Distributions		—	^^		(0.01	)		(0.01	)		(0.04	)		(0.06	)		(0.05	)
Net Asset Value at End of Period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Total Return		0.21%	*		0.55%			1.28%			3.75%			5.91%			4.64%
Net Assets at End of Period (000’s)	$	5,488		$	6,641		$	5,429		$	5,193		$	4,532		$	3,554
Ratios to Average Net Assets:
Gross Expenses		1.12%	**		0.98%			0.96%			0.99%			1.04%			1.00%
Required Reimbursement^		(0.33%	)**		(0.20%	)		(0.17%	)		(0.19%	)		(0.24%	)		(0.20%	)
Net Expenses		0.79%	**		0.78%			0.79%			0.80%			0.80%			0.80%
Net Investment Income		0.43%	**		0.54%			1.26%			3.68%			5.88%			4.60%

    * Not annualized.

  ** Annualized.

  † Excludes the effects of sales charges. If sales charges were included, the total return would be lower.

  # For the period from March 7, 2003 (initial issue date of Class A, B and C shares) through December 31, 2003.

  ^ See Note 6 to the financial statements.

^^ Amounts are less than $0.005 per share.

SEE NOTES TO FINANCIAL STATEMENTS

108

Financial Highlights

(For a Share Outstanding Throughout the Period)

(Unaudited)

Safeco Money Market Fund	Six-Month Period Ended June 30			For the Year Ended December 31
Class B	2004			2003			2002			2001			2000			1999
Net Asset Value at Beginning of Period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Income From Investment Operations
Net Investment Income		—	^^		0.01			0.01			0.04			0.06			0.05
Less Distributions		—	^^		(0.01	)		(0.01	)		(0.04	)		(0.06	)		(0.05	)
Net Asset Value at End of Period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Total Return		0.21%	*		0.55%			1.28%			3.75%			5.93%			4.65%
Net Assets at End of Period (000’s)	$	1,194		$	1,173		$	1,081		$	1,192		$	742		$	979
Ratios to Average Net Assets:
Gross Expenses		1.20%	**		1.17%			1.03%			1.00%			1.13%			1.08%
Required Reimbursement^		(0.41%	)**		(0.39%	)		(0.24%	)		(0.20%	)		(0.33%	)		(0.26%	)
Net Expenses		0.79%	**		0.78%			0.79%			0.80%			0.80%			0.82%
Net Investment Income		0.42%	**		0.56%			1.27%			3.61%			5.78%			4.56%
Safeco Money Market Fund	Six-Month Period Ended June 30			For the Year Ended December 31									Eight-Month Period Ended December 31 #
Class C	2004			2003			2002			2001			2000
Net Asset Value at Beginning of Period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Income From Investment Operations
Net Investment Income		—	^^		0.01			0.01			0.04			0.04
Less Distributions		—	^^		(0.01	)		(0.01	)		(0.04	)		(0.04	)
Net Asset Value at End of Period	$	1.00		$	1.00		$	1.00		$	1.00		$	1.00
Total Return		0.21%	*		0.55%			1.28%			3.75%			4.08%	*
Net Assets at End of Period (000’s)	$	124		$	138		$	123		$	112		$	100
Ratios to Average Net Assets:
Gross Expenses		1.05%	**		1.01%			1.18%			0.88%			0.98%	**
Required Reimbursement^		(0.26%	)**		(0.23%	)		(0.39%	)		(0.08%	)		(0.18%	)**
Net Expenses		0.79%	**		0.78%			0.79%			0.80%			0.80%	**
Net Investment Income		0.43%	**		0.54%			1.27%			3.64%			5.93%	**

    * Not annualized.

  ** Annualized.

  # For the period from May 1, 2000 (initial issue date of Class C shares) through December 31, 2000.

  ^ See Note 6 to the financial statements

^^ Amounts are less than $0.005 per share.

SEE NOTES TO FINANCIAL STATEMENTS

109

Notes to Financial Statements

(Unaudited)

1.    GENERAL

This financial report is on the 15 Safeco Mutual Funds that issue Class A, B, C and Institutional shares. Each Fund is a series of one of the following trusts (each a “Trust”) listed below. Each Trust is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company.

Safeco Common Stock Trust

Safeco Growth Opportunities Fund

Safeco Core Equity Fund

Safeco Large-Cap Value Fund

Safeco Multi-Cap Core Fund

Safeco International Stock Fund

Safeco Balanced Fund

Safeco Small-Cap Value Fund

Safeco Large-Cap Growth Fund

Safeco Taxable Bond Trust

Safeco High-Yield Bond Fund

Safeco Intermediate-Term U.S. Government Fund

Safeco Managed Bond Trust

Safeco Intermediate-Term Bond Fund

Safeco Tax-Exempt Bond Trust

Safeco California Tax-Free Income Fund

Safeco Municipal Bond Fund

Safeco Intermediate-Term Municipal Bond Fund

Safeco Money Market Trust

Safeco Money Market Fund

The Funds offer up to five classes of shares:

* Investor Class 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.

* Institutional Class shares (International Stock Fund only)—sold directly to financial institutions subject to minimum investment requirements as outlined in the Prospectus.

Each class of shares has equal rights as to earnings and assets except that each class bears different transfer agent, shareholder service, and distribution expenses. Each class of shares has exclusive voting rights with respect to matters that affect only that class. Income, expenses (other than expenses attributable to a specific class), and realized and unrealized gains or losses on investments are allocated to each class of shares based on its relative net assets. For the Common Stock Trust, Class B shares automatically convert to Class A shares after the sixth anniversary of issuance. Class B shares of the High-Yield Bond, California Tax-Free Income, Municipal Bond, and Money Market Funds automatically convert to Class A shares after the sixth anniversary of issuance. Class B shares of the Intermediate-Term U.S. Government, Intermediate-Term Bond, and Intermediate-Term Municipal Bond Funds automatically convert to class A shares after the fifth anniversary of issuance.

110

Notes to Financial Statements

(Unaudited)

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., at the annual rate of 0.25% 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 0.75% of the average daily net assets of each class. Under the Plan, the distributor uses the service fees primarily to compensate persons 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.

On March 15, 2004, Safeco Corporation, the parent company of Safeco Asset Management Company (SAM), which serves as the Funds’ investment advisor, announced that it had entered into an agreement to sell SAM, Safeco Securities, Inc., the Funds’ distributor and Safeco Services Corporation, the Funds’ transfer agent, as part of a larger transaction to sell its life insurance and investment businesses (collectively “Safeco Life and Investments”) to a holding company formed by a group of investors led by White Mountains Insurance Group, Ltd. and Berkshire Hathaway, Inc. The holding company was subsequently named Symetra Financial Corporation. As of August 2, 2004 the sale closed. See Note 9 to the financial statements for further disclosure.

2.    SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently followed by the Funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States.

Security Valuation.    Equity investments listed on securities exchanges are based on the last reported sale price on the national exchange on which the securities are primarily traded, unless there are no transactions, in which case the value is based on the last reported bid price. Values for equity portfolio securities traded primarily on the NASDAQ National Market System are based on the NASDAQ Official Closing Price, unless there are no transactions, in which case the value is based on the last reported bid price. Values for fixed income portfolio securities (other than short-term securities) are based on matrix pricing models, which consider bid prices, quotations from dealers, transactions in comparable securities, and various relationships between securities. Short-term portfolio securities maturing within 60 days at the time of purchase are valued at amortized cost, which approximates market value. Short-term investments in other mutual funds are valued at the net asset value of the respective fund. Securities in the money market funds are valued at amortized cost, which approximates market value. Securities for which market quotations are not readily available, or whose values have been materially affected by events occurring before the Fund’s pricing time, but after the close of the securities’ primary markets, are valued by methods deemed by the Board of Trustees to represent the fair value.

Security Transactions.    Security transactions are recorded on the trade date. Realized gains and losses from security transactions are determined using the identified cost basis.

Forward Commitment.    The Funds may contract to purchase securities for a fixed price at a future date beyond customary settlement time consistent with a Funds’ ability to manage their investment portfolios and meet redemption requests. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The Funds may dispose of a forward commitment transaction prior to settlement if it is appropriate to do so and realize short-term gains (or losses) upon such sale. The value of the securities purchased on a delayed delivery or when issued basis are identified as such in each respective Portfolio of Investments. With respect to such transactions, liquid securities, with a value at least equal to the market value of the commitment, are segregated on the accounting records of the respective Fund.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

111

Notes to Financial Statements

(Unaudited)

Dividend and Interest Income Recognition.    Dividend income less foreign taxes withheld (if any) for the Common Stock Trust is recorded on the ex-dividend date or upon receipt of ex-dividend notification in the case of certain foreign securities. Bond premiums and discounts are amortized to either call or maturity dates. In the Tax-Exempt Bond Trust, market discount on bonds purchased after April 30, 1993 is recorded as taxable income. Interest is recorded on an accrual basis.

Securities Lending Income.    The Common Stock Trust (excluding the International Stock and Large-Cap Growth Funds), High-Yield Bond and the Intermediate- Term Bond Funds may lend portfolio securities to broker-dealers and to qualified banks. The loans are secured by cash collateral in an amount equal to at least 102% of the market value, as of the prior business day, of the loaned securities plus any accrued interest and dividends. During the time the securities are on loan, the Funds continue to receive payments for the interest and dividends on the loaned securities, while earning interest on the investment of the cash collateral. Loans are subject to termination at the option of the borrower or each Fund. Upon termination of the loan, the borrower is required to return to each Fund securities identical to the loaned securities. The Funds generally share the interest earned on the cash collateral with the borrower and the securities lending administrator. Gain or loss in the value of the securities loaned that may occur during the term of the loan will be for the account of each Fund.

Expense Allocation.    Expenses directly attributable to a Fund are charged to that Fund. Expenses not directly attributed to a Fund are allocated on the basis of relative net assets, except where a more appropriate allocation of expenses to each of the Funds can otherwise be made fairly. Each Fund’s expenses (other than those specific to each class) are allocated proportionally each day between the classes based upon the relative net assets of each class.

Redemption Fees.    Effective July 1, 2004, shares held for less than 30 days in the Class A and the Institutional Class shares of the Funds, other than the Money Market Fund, are subject to an early to redemption fee equal 2% of the proceeds of the redeemed shares. These fees, which are retained by the Funds, are accounted for as an addition to paid in capital for financial statement reporting purposes. As indicated in the Funds prospectus, Class B and Class C shares are not subject to these redemption fees.

Dividends and Distributions to Shareholders.    For the Growth Opportunities, Multi-Cap Core, International Stock, Small-Cap Value and Large-Cap Growth Funds, net investment income (if any) is distributed to shareholders on the last business day (ex-dividend date) of December. For the Core Equity, Large-Cap Value, and Balanced Funds, net investment income (if any) is distributed as of the last business day of March, June, September and December. Net investment income for Funds in the Taxable Bond Trust, Managed Bond Trust, Tax-Exempt Bond Trust and Money Market Trust is declared as a dividend to shareholders of record as of the close of each business day and payment is made as of the last business day of each month. For all Funds, net gains realized from security transactions on investments, if any, are normally distributed to shareholders in March and December. Distributions to shareholders, which are determined in accordance with income tax regulations, are recorded on the ex-dividend date.

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 that results in no taxes to the Funds. Therefore, no Federal income or excise tax provision is required. In addition, the Tax-Exempt Bond Trust intend to satisfy conditions that will enable it to pay dividends which, for shareholders, are exempt from Federal income taxes. However, certain Fund distributions may be taxable, including any portion of dividends representing net capital gains and income derived from certain bonds bought below their issue price (at a discount).

112

Notes to Financial Statements

(Unaudited)

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 and forward foreign currency exchange contracts as a way of managing foreign currency 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. With respect to forward foreign currency exchange contracts, liquid securities, with a value at least equal to the market value of the commitment, are segregated on the accounting records of the Fund.

Estimates.    The preparation of financial statements in conformity with accounting principles generally accepted in the United States, 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.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

113

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, 2004 (in thousands):

	Purchases		Sales
Growth Opportunities Fund	$	82,073	$	115,770
Core Equity Fund		65,569		123,459
Large-Cap Value Fund		35,387		39,811
Multi-Cap Core Fund		16,326		20,757
International Stock Fund		5,314		3,273
Balanced Fund		3,986		4,921
Small-Cap Value Fund		29,908		10,525
Large-Cap Growth Fund		2,811		2,231
High-Yield Bond Fund		20,743		28,269
Intermediate-Term U.S. Government Fund		4,925		11,346
Intermediate-Term Bond Fund		2,089		2,650
California Tax-Free Income Fund		2,220		8,198
Municipal Bond Fund		22,502		25,356
Intermediate-Term Municipal Bond Fund		533		260

Purchases include $611, $924 and $946 of U.S. Government securities in the Balanced, Intermediate-Term U.S. Government, and Intermediate-Term Bond Funds, respectively.

Sales include $1,160, $6,806 and $1,447 of U.S. Government securities in the Balanced, Intermediate-Term U.S. Government, and Intermediate-Term Bond Funds, respectively.

114

Notes to Financial Statements

(Unaudited)

4.    COMPONENTS OF DISTRIBUTABLE EARNINGS

Estimated components of distributable earnings on a tax basis at June 30, 2004, were as follows (in thousands):

	Growth Opportunities Fund			Core Equity Fund			Large-Cap Value Fund			Multi-Cap Core Fund
Federal Tax Cost on Investments	$	527,172		$	494,937		$	123,334		$	72,368
Gross Unrealized Appreciation on Investments	$	189,639		$	220,094		$	35,853		$	30,016
Gross Unrealized Depreciation on Investments		(34,529	)		(17,659	)		(3,827	)		(4,566	)
Net Unrealized Appreciation on Investments		155,110			202,435			32,026			25,450
Undistributed Income (Loss)		(1,175	)		—			—			(54	)
Realized Capital Gain (Loss)—Current Period		8,571			31,474			6,978			7,103
Capital Loss Carryforward*		(149,762	)		(65,574	)		(5,802	)		(12,689	)
Distributable Earnings	$	12,744		$	168,335		$	33,202		$	19,810
	International Stock Fund			Balanced Fund			Small-Cap Value Fund			Large-Cap Growth Fund
Federal Tax Cost on Investments	$	28,540		$	17,654		$	75,955		$	5,960
Gross Unrealized Appreciation on Investments	$	9,499		$	2,370		$	21,130		$	844
Gross Unrealized Depreciation on Investments		(1,833	)		(454	)		(1,398	)		(209	)
Net Unrealized Appreciation on Investments		7,666			1,916			19,732			635
Undistributed Income (Loss)		342			—			128			(18	)
Realized Capital Gain (Loss)—Current Period		259			329			722			19
Capital Loss Carryforward*		(6,921	)		(1,101	)		(5,088	)		(774	)
Deferred Loss**		(117	)		—			—			(95	)
Distributable Earnings	$	1,229		$	1,144		$	15,494		$	(233	)

* At December 31, 2003, the following funds had accumulated net realized losses on investment transactions that represent capital loss carryforwards for Federal income tax purposes, which expire as follow (in thousands):

	2007		2008		2009		2010		2011		Total
Growth Opportunities Fund	$	36	$	—	$	7,990	$	82,677	$	59,059	$	149,762
Core Equity Fund		—		—		18,667		25,302		21,605		65,574
Large-Cap Value Fund		—		462		298		4,526		516		5,802
Multi-Cap Core Fund		—		167		4,512		6,946		1,064		12,689
International Stock Fund		—		—		3,062		2,532		1,327		6,921
Balanced Fund		—		100		—		686		315		1,101
Small-Cap Value Fund		4,351		—		737		—		—		5,088
Large-Cap Growth Fund		—		—		—		451		323		774

** From November 1, 2003, through December 31, 2003, the funds incurred net realized capital losses. As permitted by tax regulations, these funds have elected to defer those losses and treat them as arising on January 1, 2004.

Differences between financial statement reporting basis and tax-basis reporting are attributable primarily to the tax deferral of losses on wash sales, premium and discount amortization methods, classification of paydown gains and losses, redemption fees, and amortization methods of deferred offering costs.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

115

Notes to Financial Statements

(Unaudited)

4.    COMPONENTS OF DISTRIBUTABLE EARNINGS (continued)

Estimated components of distributable earnings on a tax basis at June 30, 2004, were as follows (in thousands):

	High-Yield Bond Fund			Intermediate-Term U.S. Government Fund			Intermediate-Term Bond Fund
Federal Tax Cost on Investments	$	41,668		$	67,682		$	9,618
Gross Unrealized Appreciation on Investments	$	2,066		$	468		$	130
Gross Unrealized Depreciation on Investments		(624	)		(1,585	)		(136	)
Net Unrealized Appreciation on Investments		1,442			(1,117	)		(6	)
Undistributed Realized Capital Gain (Loss)—Current Period		596			47			9
Capital Loss Carryforward*		(26,548	)		(1,398	)		(237	)
Deferred Loss **		—			(46	)		—
Distributable Earnings	$	(24,510	)	$	(2,514	)	$	(234	)
	California Tax- Free Income Fund			Municipal Bond Fund			Intermediate-Term Municipal Bond Fund
Federal Tax Cost on Investments	$	77,874		$	505,367		$	16,175
Gross Unrealized Appreciation on Investments	$	3,765		$	38,672		$	584
Gross Unrealized Depreciation on Investments		(169	)		(37	)		(41	)
Net Unrealized Appreciation on Investments		3,596			38,635			543
Undistributed Income		17			107			—
Undistributed Realized Capital Gain (Loss)—Current Period		917			3,568			2
Distributable Earnings	$	4,530		$	42,310		$	545

* At December 31, 2003, the following funds had accumulated net realized losses on investment transactions that represent capital loss carry forwards for Federal income tax purposes, which expire as follows (in thousands):

	2004		2005		2006		2007		2008		2009		2010		2011		Total
High-Yield Bond Fund	$	339	$	—	$	58	$	1,769	$	4,090	$	11,224	$	8,183	$	885	$	26,548
Intermediate-Term U.S. Government Fund		—		—		—		742		656		—		—		—		1,398
Intermediate-Term Bond Fund		—		—		—		43		82		—		112		—		237

** From November 1, 2003, through December 31, 2003, the funds incurred net realized capital losses. As permitted by tax regulations, the fund has elected to defer those losses and treat them as arising on January 1, 2004.

Differences between financial statement reporting basis and tax-basis reporting are attributable primarily to the tax deferral of losses on wash sales, premium and discount amortization methods, redemption fees, and the classification of paydown gains and losses.

116

Notes to Financial Statements

(Unaudited)

5.    TRUST SHARE TRANSACTIONS

Following is a summary of transactions in Trust shares and the related amounts (in thousands):

	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003**
	Safeco Growth Opportunities Fund
Shares:
Sales		1,087			3,665			425			770			18			39			—			1
Reinvestments		—			—			—			—			—			—			—			—
Redemptions		(2,019	)		(7,773	)		(295	)		(1,010	)		(140	)		(97	)		—			(2	)
Net Change		(932	)		(4,108	)		130			(240	)		(122	)		(58	)		—			(1	)
Amounts:
Sales	$	27,930		$	71,571		$	10,718		$	15,684		$	424		$	676		$	7		$	11
Reinvestments		—			—			—			—			—			—			—			—
Redemptions		(51,511	)		(154,829	)		(7,373	)		(20,480	)		(3,331	)		(1,783	)		—			(34	)
Net Change	$	(23,581	)	$	(83,258	)	$	3,345		$	(4,796	)	$	(2,907	)	$	(1,107	)	$	7		$	(23	)
	Safeco Core Equity Fund
Shares:
Sales		755			3,532			192			350			24			58			1			2
Reinvestments		52			306			1			5			—			—			—			—
Redemptions		(4,272	)		(9,757	)		(131	)		(420	)		(144	)		(198	)		—			—
Net Change		(3,465	)		(5,919	)		62			(65	)		(120	)		(140	)		1			2
Amounts:
Sales	$	12,787		$	51,062		$	3,263		$	5,286		$	395		$	836		$	15		$	25
Reinvestments		878			4,537			9			66			—			—			—			—
Redemptions		(72,335	)		(142,252	)		(2,209	)		(6,399	)		(2,369	)		(2,905	)		(3	)		(5	)
Net Change	$	(58,670	)	$	(86,653	)	$	1,063		$	(1,047	)	$	(1,974	)	$	(2,069	)	$	12		$	20
	Safeco Large-Cap Value Fund
Shares:
Sales		419			1,234			23			43			3			32			1			1
Reinvestments		17			98			—			—			—			—			—			—
Redemptions		(721	)		(1,924	)		(17	)		(14	)		(5	)		(20	)		—			—
Net Change		(285	)		(592	)		6			29			(2	)		12			1			1
Amounts:
Sales	$	7,969		$	19,083		$	438		$	724		$	65		$	526		$	18		$	8
Reinvestments		325			1,628			2			8			—			3			—			—
Redemptions		(13,638	)		(30,311	)		(320	)		(232	)		(109	)		(332	)		—			—
Net Change	$	(5,344	)	$	(9,600	)	$	120		$	500		$	(44	)	$	197		$	18		$	8

 * For the six-month period ended June 30, 2004.

** For the year ended December 31, 2003.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

117

Notes to Financial Statements

(Unaudited)

5.    TRUST SHARE TRANSACTIONS (continued)

	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003**
	Safeco Multi-Cap Core Fund
Shares:
Sales		198			385			77			107			10			21			—			3
Reinvestments		—			1			—			—			—			—			—			—
Redemptions		(378	)		(585	)		(31	)		(83	)		(61	)		(71	)		(3	)		—
Net Change		(180	)		(199	)		46			24			(51	)		(50	)		(3	)		3
Amounts:
Sales	$	4,242		$	6,609		$	1,595		$	1,753		$	187		$	336		$	1		$	51
Reinvestments		—			17			—			—			—			—			—			—
Redemptions		(7,983	)		(9,777	)		(645	)		(1,263	)		(1,191	)		(1,155	)		(61	)		—
Net Change	$	(3,741	)	$	(3,151	)	$	950		$	490		$	(1,004	)	$	(819	)	$	(60	)	$	51
	Investor Class						Class A						Class B						Class C						Institutional Class
	2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003***
	Safeco International Stock Fund
Shares:
Sales		384			660			38			1,361			3			14			—			6			38			872
Reinvestments		—			19			—			1			—			—			—			—			—			4
Redemptions		(226	)		(588	)		(47	)		(1,320	)		(10	)		(32	)		—			(6	)		(51	)		(49	)
Net Change		158			91			(9	)		42			(7	)		(18	)		—			—			(13	)		827
Amounts:
Sales	$	4,206		$	5,772		$	415		$	10,732		$	24		$	113		$	1		$	53		$	422		$	7,663
Reinvestments		—			198			—			14			—			4			—			—			—			44
Redemptions		(2,463	)		(5,101	)		(512	)		(10,417	)		(105	)		(279	)		—			(54	)		(558	)		(475	)
Net Change	$	1,743		$	869		$	(97	)	$	329		$	(81	)	$	(162	)	$	1		$	(1	)	$	(136	)	$	7,232
	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003****
	Safeco Balanced Fund
Shares:
Sales		78			260			27			53			15			44			—			9
Reinvestments		4			20			1			2			—			2			—			—
Redemptions		(137	)		(188	)		(19	)		(67	)		(29	)		(53	)		—			—
Net Change		(55	)		92			9			(12	)		(14	)		(7	)		—			9
Amounts:
Sales	$	932		$	2,824		$	328		$	584		$	172		$	480		$	1		$	100
Reinvestments		50			213			6			28			4			21			—			—
Redemptions		(1,635	)		(2,035	)		(222	)		(698	)		(344	)		(575	)		—			—
Net Change	$	(653	)	$	1,002		$	112		$	(86	)	$	(168	)	$	(74	)	$	1		$	100

   * For the six-month period ended June 30, 2004.

  ** For the year ended December 31, 2003.

 *** For the period from March 7, 2003 (initial issue date of Institutional Class shares) through December 31, 2003.

**** For the period from October 1, 2003 (initial issue date of Class C shares) through December 31, 2003.

118

Notes to Financial Statements

(Unaudited)

5.    TRUST SHARE TRANSACTIONS (continued)

	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003***
	Safeco Small-Cap Value Fund
Shares:
Sales		1,345			1,136			83			176			1			15			1			7
Reinvestments		—			15			—			1			—			—			—			—
Redemptions		(376	)		(1,484	)		(26	)		(124	)		(26	)		(22	)		—			—
Net Change		969			(333	)		57			53			(25	)		(7	)		1			7
Amounts:
Sales	$	26,335		$	16,760		$	1,598		$	2,497		$	24		$	226		$	14		$	101
Reinvestments		—			280			—			8			—			—			—			—
Redemptions		(7,333	)		(22,817	)		(483	)		(1,668	)		(483	)		(309	)		—			—
Net Change	$	19,002		$	(5,777	)	$	1,115		$	837		$	(459	)	$	(83	)	$	14		$	101
	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003**
	Safeco Large-Cap Growth Fund
Shares:
Sales		74			95			13			14			1			4			—			1
Reinvestments		—			—			—			—			—			—			—			—
Redemptions		(9	)		(57	)		(2	)		(2	)		—			(1	)		—			—
Net Change		65			38			11			12			1			3			—			1
Amounts:
Sales	$	685		$	788		$	119		$	120		$	12		$	32		$	1		$	4
Reinvestments		—			—			—			—			—			—			—			—
Redemptions		(84	)		(468	)		(15	)		(13	)		(1	)		(7	)		—			—
Net Change	$	601		$	320		$	104		$	107		$	11		$	25		$	1		$	4
	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003**
	Safeco High-Yield Bond Fund
Shares:
Sales		2,005			6,902			258			1,715			14			17			17			9
Reinvestments		168			435			10			18			3			8			1			1
Redemptions		(2,670	)		(7,290	)		(458	)		(1,640	)		(40	)		(42	)		(1	)		(1	)
Net Change		(497	)		47			(190	)		93			(23	)		(17	)		17			9
Amounts:
Sales	$	11,775		$	36,932		$	1,519		$	9,111		$	84		$	87		$	100		$	51
Reinvestments		977			2,364			64			96			16			45			5			4
Redemptions		(15,561	)		(39,348	)		(2,699	)		(8,882	)		(234	)		(223	)		(5	)		(7	)
Net Change	$	(2,809	)	$	(52	)	$	(1,116	)	$	325		$	(134	)	$	(91	)	$	100		$	48

  * For the six-month period ended June 30, 2004.

 ** For the year ended December 31, 2003.

*** For the period from October 1, 2003 (initial issue date of Class C shares) through December 31, 2003.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

119

Notes to Financial Statements

(Unaudited)

5.    TRUST SHARE TRANSACTIONS (continued)

	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*		2003***
	Safeco Intermediate-Term U.S. Government Fund
Shares:
Sales		160			3,019			68			537			4			318			—		10
Issued on Merger (Note 9)		—			2,246			—			453			—			299			—		—
Reinvestments		83			210			8			8			3			3			—		—
Redemptions		(846	)		(1,968	)		(93	)		(59	)		(68	)		(47	)		—		—
Net Change		(603	)		3,507			(17	)		939			(61	)		573			—		10
Amounts:
Sales	$	1,534		$	7,556		$	654		$	811		$	37		$	189		$	—	$	100
Value of Shares Issued on Merger (Note 9)		—			21,744			—			4,382			—			2,897			—		—
Reinvestments		794			2,040			74			77			28			34			—		—
Redemptions		(8,096	)		(19,096	)		(896	)		(569	)		(648	)		(454	)		—		—
Net Change	$	(5,768	)	$	12,244		$	(168	)	$	4,701		$	(583	)	$	2,666		$	—	$	100
	Safeco Intermediate-Term Bond Fund
Shares:
Sales		75			122			47			614			2			16			—		12
Reinvestments		6			20			3			5			1			3			—		—
Redemptions		(72	)		(229	)		(12	)		(632	)		(39	)		(19	)		—		—
Net Change		9			(87	)		38			(13	)		(36	)		—			—		12
Amounts:
Sales	$	641		$	1,048		$	404		$	5,251		$	11		$	140		$	—	$	100
Reinvestments		55			172			18			44			9			26			—		—
Redemptions		(616	)		(1,954	)		(100	)		(5,403	)		(328	)		(163	)		—		—
Net Change	$	80		$	(734	)	$	322		$	(108	)	$	(308	)	$	3		$	—	$	100
	Safeco California Tax-Free Income Fund
Shares:
Sales		220			1,589			38			36			—			10			—		8
Reinvestments		101			256			1			2			1			3			—		—
Redemptions		(504	)		(2,450	)		(10	)		(30	)		(40	)		(20	)		—		—
Net Change		(183	)		(605	)		29			8			(39	)		(7	)		—		8
Amounts:
Sales	$	2,787		$	19,950		$	480		$	461		$	—		$	130		$	—	$	100
Reinvestments		1,274			3,227			12			22			12			32			—		—
Redemptions		(6,340	)		(30,864	)		(119	)		(368	)		(509	)		(254	)		—		—
Net Change	$	(2,279	)	$	(7,687	)	$	373		$	115		$	(497	)	$	(92	)	$	—	$	100

  * For the six-month period ended June 30, 2004.

 ** For the year ended December 31, 2003.

*** For the period from October 1, 2003 (initial issue date of Class C shares) through December 31, 2003.

120

Notes to Financial Statements

(Unaudited)

5.    TRUST SHARE TRANSACTIONS (continued)

	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003***
	Safeco Municipal Bond Fund
Shares:
Sales		1,837			16,199			405			1,094			(9	)		67			4			7
Reinvestments		691			1,603			8			17			3			8			—			—
Redemptions		(2,718	)		(18,217	)		(338	)		(921	)		(16	)		(30	)		—			—
Net Change		(190	)		(415	)		75			190			(22	)		45			4			7
Amounts:
Sales	$	26,432		$	233,513		$	5,661		$	15,743		$	(139	)	$	972		$	60		$	100
Reinvestments		9,919			23,123			109			252			46			113			1			—
Redemptions		(38,583	)		(262,964	)		(4,827	)		(13,295	)		(226	)		(425	)		—			—
Net Change	$	(2,232	)	$	(6,328	)	$	943		$	2,700		$	(319	)	$	660		$	61		$	100
	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003†			2004*			2003†			2004*			2003†
	Safeco Intermediate-Term Municipal Bond Fund
Shares:
Sales		134			308			—			36			1			13			1			9
Reinvestments		16			40			—			1			—			—			—			—
Redemptions		(133	)		(392	)		(8	)		—			—			—			—			—
Net Change		17			(44	)		(8	)		37			1			13			1			9
Amounts:
Sales	$	1,486		$	3,411		$	5		$	415		$	7		$	150		$	10		$	100
Reinvestments		175			437			5			7			—			1			—			—
Redemptions		(1,466	)		(4,366	)		(90	)		—			—			—			—			—
Net Change	$	195		$	(518	)	$	(80	)	$	422		$	7		$	151		$	10		$	100
	Investor Class						Class A						Class B						Class C
	2004*			2003**			2004*			2003**			2004*			2003**			2004*			2003**
	Safeco Money Market Fund
Shares and Amounts ($):
Sales		49,827			261,850			3,743			9,254			683			717			22			27
Reinvestments		585			2,435			10			28			2			6			—			—
Redemptions		(120,646	)		(267,712	)		(4,906	)		(8,070	)		(664	)		(632	)		(36	)		(12	)
Net Change		(70,234	)		(3,427	)		(1,153	)		1,212			21			91			(14	)		15

  * For the six-month period ended June 30, 2004.

 ** For the year ended December 31, 2003.

*** For the period from October 1, 2003 (initial issue date of Class C shares) through December 31, 2003.

 † For the period from March 7, 2003 (initial issue date of Class A, B and C shares) through December 31, 2003.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

121

Notes to Financial Statements

(Unaudited)

6.    INVESTMENT ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES

Investment Advisory Fees.    The Funds received investment management and advisory services pursuant to an agreement with Safeco Asset Management Company. The investment advisory fees are based on each Fund’s net assets and the rates specified in the tables below. See Note 9 to the financial statements.

Growth Opportunities, Core Equity, Large-Cap Value, Multi-Cap Core, and Balanced Funds:		Small-Cap Value Fund:		International Stock Fund:
First $250 million	.70%	First $250 million	.75%	First $250 million	1.00%
Next $500 million	.65	Next $500 million	.70	Next $500 million	.90
Next $500 million	.60	Next $500 million	.65	Over $750 million	.80
Over $1.25 billion	.55	Over $1.25 billion	.60
Large-Cap Growth Fund:		Intermediate-Term U.S. Government Fund:		High-Yield Bond Fund:
First $250 million	.80%	First $250 million	.55%	First $250 million	.65%
Next $500 million	.75	Next $500 million	.50	Next $500 million	.55
Next $500 million	.70	Next $500 million	.45	Over $750 million	.50
Over $1.25 billion	.65	Over $1.25 billion	.40
Intermediate-Term Bond Fund:		Intermediate-Term Municipal, Municipal and California Funds:		Money Market Fund:
First $750 million	.50%	First $250 million	.50%	First $250 million	.50%
Next $500 million	.45	Next $500 million	.45	Next $500 million	.45
Over $1.25 billion	.40	Over $750 million	.40	Next $500 million	.40
				Over $1.25 billion	.35

Safeco Asset Management Company paid sub-advisory fees for investment research and advice to the Bank of Ireland Asset Management Company (U.S.) Limited for the International Stock Fund and to RCM Capital Management LLC for the Large-Cap Growth Fund. See Note 9 to the financial statements.

Fund Accounting and Fund Administration Fees.    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:

Fund Accounting:		Fund Administration:
First $200 million	.04%	First $200 million	.05%
Over $200 million	.01	Over $200 million	.01

Transfer Agent, Shareholder Service, and Distribution Fees.    Safeco Services Corporation receives transfer agent fees. Safeco Securities, Inc. receives shareholder service and distribution fees.

Low Balance Fees.    As described in the Prospectus, Safeco Services Corporation assesses shareholder accounts an annual $12 low balance fee on shareholder accounts containing balances less than $1,000. Low balance fees received directly by Safeco Services are then applied in their entirety to reduce the contractual billings that Safeco Services charges the Funds for transfer agent services. For financial statement presentation purposes, the amount of low balance fees collected are reported as other income in the Statement of Operations. Transfer agent expenses are recorded gross of the low balance fee offset.

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, 2004 no such borrowings were outstanding. Interest rates on affiliated loans during the six-month period ended June 30, 2004 ranged from 0.97% to 1.04%. This arrangement was terminated on August 2, 2004.

122

Notes to Financial Statements

(Unaudited)

Line of Credit.    The Trusts, 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, $50 million is available to meet short-term financing needs. At June 30, 2004, no such borrowings were outstanding.

Affiliate Ownership.    At June 30, 2004, Safeco Insurance Company of America owned 450,000 shares (11% of outstanding shares) of the Multi-Cap Core Fund, 554,667 shares (8%) of the Intermediate-Term U.S. Government Fund and 397,434 shares (26%) of the Intermediate-Term Municipal Bond Fund. Safeco Asset Management Company owned 708,095 shares (21%) of the International Stock Fund, 528,334 shares (32%) of the Balanced Fund, 500,000 shares (70%) of the Large-Cap Growth Fund and 463,785 shares (40%) of the Intermediate-Term Bond Fund.

Expense Reimbursement.    Beginning May 1, 1999 through April 30, 2009, Safeco Asset Management Company contractually agreed to reimburse the Funds (excluding the Large-Cap Growth Fund) for operating expenses (i.e., all expenses except investment advisory, distribution fees, service fees, and interest expense) that exceed on an annual basis 0.30% of the average daily net assets for the Money Market Fund and 0.40% for all other Funds.

Beginning October 31, 2001 (commencement of operations) through June 25, 2003, Safeco Asset Management Company voluntarily agreed to reimburse the Large-Cap Growth Fund for operating expenses which exceeded on an annual basis 0.60% of the Fund’s average daily net assets.

Beginning March 7, 2003 through June 30, 2004, Safeco Asset Management Company voluntarily agreed to reimburse all expenses of the Institutional Class of the International Stock Fund that exceed on an annual basis 1.10% of the average daily net assets for that class.

Beginning June 26, 2003 through June 30, 2004, Safeco Asset Management Company voluntarily agreed to reimburse all expenses to the extent they exceed on an annual basis the following percentages based on the average daily net assets for each of the Classes of the following Funds:

	Class A		Class B		Class C
Large-Cap Growth Fund	1.40	%	2.15	%	2.15	%
High-Yield Bond Fund	1.15		1.90		1.90
Intermediate-Term U.S. Government Fund	0.99		1.74		1.74
Intermediate-Term Bond Fund	0.99		1.74		1.74
California Tax-Free Income Fund	0.86		1.61		1.61
Intermediate-Term Municipal Bond Fund	0.85		1.60		1.60

See Note 9 to the financial statements.

Board of Trustees.    The Funds, along with several other funds not reported herein, pay each of the Trustees not affiliated with Safeco Corporation an annual retainer of $25,000. Independent Trustees receive an additional fee for attending each board and committee meeting.

SAFECO    MUTUAL    FUNDS 1-800-528-6501

123

Notes to Financial Statements

(Unaudited)

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, 2004 (in thousands):

	Commissions Retained
Growth Opportunities Fund	$	3
Core Equity Fund		2
Multi-Cap Core Fund		1
Small-Cap Value Fund		1
Municipal Bond Fund		1

7.    INVESTMENTS IN AFFILIATES

Each of the companies listed below is an affiliate of the Fund because the Fund owned at least 5%

of the company’s voting securities during the six-month period ended June 30, 2004.

(In Thousands)	Shares at Beginning of Period	Additions	Reductions		Shares at End of Period	Dividends		Realized Gain (Loss)			Market Value of Investments in Affiliates at June 30, 2004
Safeco Growth Opportunities Fund
Conceptus, Inc.*	1,247	—	(818	)	429	$	—	$	1,767		$	—
Harold’s Stores, Inc.	532	—	—		532		—		—			1,352
Matria Healthcare, Inc.*	586	—	(273	)	313		—		2,274			—
Med-Design Corp.	1,173	—	(175	)	998		—		(1,794	)		2,076
Nastech Pharmaceutical Co., Inc.*	835	—	(608	)	227		—		4,567			—
North American Scientific, Inc.*	676	—	(158	)	518		—		(1,288	)		—
Rent-Way, Inc.*	1,731	—	(654	)	1,077		—		(556	)		—
SpectRx, Inc.	861	—	—		861		—		—			1,335
						$	—	$	4,970		$	4,763

* Company was not an affiliate at the end of the period.

124

Notes to Financial Statements

(Unaudited)

8.    FUND MERGER

On September 26, 2003, pursuant to an Agreement and Plan of Reorganization approved by the Board of Trustees and the shareholders of the Safeco Intermediate-Term U.S. Treasury Fund (“Treasury Fund”), formerly a series of the Safeco Taxable Bond Trust (the “Trust”), the Treasury Fund merged into the Safeco Intermediate-Term U.S. Government Fund (“Government Fund”). Under the terms of the reorganization, the Government Fund acquired all of the assets of the Treasury Fund in exchange for shares of the Government Fund and the assumption by the Government Fund of all the liabilities of the Treasury Fund, followed by the distribution of those shares to the shareholders of the Treasury Fund and subsequent liquidation of the Treasury Fund. The merger was consummated as a tax-free business reorganization pursuant to 368(a) of the Internal Revenue Code of 1986, as amended, with no gain or loss recognized by the Funds or Shareholders as a consequence of the reorganization. Unrealized appreciation on securities held by the Treasury Fund immediately before the merger was $657,000. Summarized financial information related to the reorganization is outlined below.

	Pre-Merger						Post-Merger
	Treasury Fund				Government Fund		Combined Government Fund
	Before Share Exchange		After Share Exchange
Investor Class
Net Assets	$	21,743,798	$	21,743,798	$	49,617,504	$	71,361,302
Treasury Fund Shares		2,025,166		—		—		—
Government Fund Shares		—		2,246,585		5,126,534		7,373,119
Net Asset Value Per Share	$	10.74	$	9.68	$	9.68	$	9.68
Exchange Ratio		1.1093		1.1093		—		—
Class A
Net Assets	$	4,382,330	$	4,382,330	$	869,227	$	5,251,557
Treasury Fund Shares		409,044		—		—		—
Government Fund Shares		—		452,617		89,776		542,393
Net Asset Value Per Share	$	10.71	$	9.68	$	9.68	$	9.68
Exchange Ratio		1.1065		1.1065		—		—
Class B
Net Assets	$	2,896,760	$	2,896,760	$	418,793	$	3,315,553
Treasury Fund Shares		269,421		—		—		—
Government Fund Shares		—		298,928		43,217		342,145
Net Asset Value Per Share	$	10.75	$	9.69	$	9.69	$	9.69
Exchange Ratio		1.1095		1.1095		—		—

SAFECO    MUTUAL    FUNDS 1-800-528-6501

125

Notes to Financial Statements

(Unaudited)

9.    SUBSEQUENT EVENT

On August 2, 2004, Safeco Corporation announced that it had completed the sale of the Safeco Life and Investments division of Safeco Corporation to Symetra Financial Corporation. Among the entities included in this sale were Safeco Asset Management Company (SAM), Safeco Services, and Safeco Securities, all of which are affiliates of the Funds.

Symetra Financial Corporation made the decision to exit the mutual fund business. Effective August 2, 2004, Pioneer Investment Management, Inc. (Pioneer) was named the investment advisor for the Funds pursuant to an interim investment advisory agreement approved by the Board of Trustees of the Funds. The terms of the interim investment advisory agreements are substantially the same as the prior investment advisory agreements with SAM, with no change in the investment advisory fee schedule or the expense reimbursement arrangements. The investment advisory agreements with SAM and its sub-advisory agreements with RCM Capital Management LLC and Bank of Ireland Asset Management (U.S.) Limited have been terminated.

The Boards of Trustees for the Funds have also approved the plan of reorganization of each of the Funds into a corresponding Pioneer mutual fund. It is anticipated that shareholders of each Safeco mutual fund will be asked, at a meeting of shareholders to be held this fall, to consider the reorganization of that Safeco mutual fund into a similar mutual fund managed by Pioneer.

126

Trustees and Officers Information

Name, Address, and Age	Position Held with Trusts	Term of Office* and Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Series in a Fund Complex Overseen by Trustee	Other Directorships Held by Trustees
INDEPENDENT (disinterested) TRUSTEES
Scott M. Boggs 4854 154th Place NE Redmond, WA 98052 (49)	Trustee	Served since August 8, 2002	Retired in 2003 from position as Corporate Vice President, Finance for Microsoft Corporation, a software company, Redmond, Washington.	22	Director of Cascade Natural Gas Corp., Seattle, Trustee for Financial Executives Research Foundation (Industry Group)
Barbara J. Dingfield 4854 154th Place NE Redmond, WA 98052 (58)	Trustee	Served since May 3, 1990	Consultant to corporate and private foundations. From 1994 to 1999 she was the Director of Community Affairs for Microsoft Corporation, Redmond, Washington, a computer software company. Member of the Board of Managers, Swarthmore College (1995-1999). Trustee and Board Chair of United Way of King County (1991-2000). Board member, Pacific Northwest Grantmakers Forum (1997-1999). Trustee and past Chair, Seattle Housing Resources Group (1993-1999).	22	Director of First Safeco National Life Insurance Co. of New York. Trustee, United Way of Skagit County. Board Chair Npower (non-profit organization providing technology assistance and training to other non-profits). Board of Directors, YMCA of Greater Seattle.
Richard E. Lundgren 4854 154th Place NE Redmond, WA 98052 (66)	Trustee	Served since February 3, 1983	Retired in 2000 from position as Director of Marketing and Customer Relations, Weyerhaeuser Company, Tacoma, Washington.	22	Director of First Safeco National Life Insurance Co. of New York
Larry L. Pinnt 4854 154th Place NE Redmond, WA 98052 (69)	Trustee	Served since August 1, 1985	Retired Vice president and Chief Financial Officer of U.S. WEST Communications, Seattle, Washington.	22	Director of First Safeco National Life Insurance Co. of New York. Chairman of the Board of Directors for Cascade Natural Gas Corp., Seattle, Washington. Board Member of University of Washington Medical Center, Seattle, Washington.
John W. Schneider 4854 154th Place NE Redmond, WA 98052 (62)	Trustee	Served since February 3, 1983	President and owner of Wallingford Group, Inc., Seattle, Washington, a consulting company currently involved in the development, repositioning, and acquisition/disposition of real estate (1995-present).	22	Director of First Safeco National Life Insurance Co. of New York

* Mandatory retirement at age 72.

Name, Address, and Age	Position(s) Held with Trusts	Term of Office** and Length of Time Served	Principal Occupation(s) During Past 5 Years	Number of Series in a Fund Complex Overseen by Trustee	Other Directorships Held by Trustees
INTERESTED TRUSTEE*
Roger F. Harbin 5069 154th Place NE Redmond, WA 98052 (53)	Trustee and Chairman; President	Served since May 7, 2003; Served as President or Sr. Vice President since November 8, 2001	Senior Vice President and Director of Safeco Services Corporation and Safeco Securities, Inc. since November 2002. Named Director and interim President of Safeco Services Corporation, Director of Safeco Asset Management Company, interim President of Safeco Mutual Funds, Director and interim President of Safeco Securities, Inc. in 2001. Executive Vice President and Actuary of Safeco Life Insurance Company since 1998. Senior Vice President of Safeco Life Insurance Company from 1992 to 1998.	22	Director of several direct and indirect subsidiaries of Safeco Corporation, including Director of First Safeco National Life Insurance Co. of New York

  * Trustees who are defined as “interested persons” under 2(a)(19) of the Investment Company Act of 1940. Mr. Harbin meets this definition due to his position as a Director of the Fund’s investment advisor, Safeco Asset Management Co.

** Mandatory retirement at age 72. Chairman is an annual appointment.

Name, Address, and Age	Position(s) Held with Trusts	Term of Office* and Length of Time Served	Principal Occupation(s) During Past 5 Years
PRINCIPAL OFFICERS who are not Trustees
David H. Longhurst 4854 154th Place NE Redmond, WA 98052 (47)	Vice President, Treasurer, and Controller	Served since August 7, 1997	Secretary of the Trusts from July 2000 through May 2004. Vice President, Treasurer, Controller and Secretary of Safeco Asset Management Company; Vice President, Treasurer, Controller and Secretary of Safeco Services Corporation; and Vice President, Treasurer, Controller and Secretary and Financial Principal of Safeco Securities, Inc. since July 2000. Treasurer, Controller, Secretary and Financial Principal of Safeco Investment Services, Inc. since March 2000; Assistant Controller of Safeco Securities, Inc., Safeco Services Corporation and Safeco Asset Management Company from 1996 to June 2000.
William E. Crawford 5069 154th Place NE Redmond, WA 98052 (47)	Secretary	Served since May 6, 2004	Counsel of the Trusts since May 2001 and Assistant General Counsel of Safeco Life Insurance Company since February 1997.
Michael F. Murphy 4854 154th Place NE Redmond, WA 98052 (37)	Chief Compliance Officer	Served since November 6, 2003	Director of Compliance and Assistant Vice President for Thornburg Investment Management, Inc. and Thornburg Securities Corporation 1999-2003. Compliance Specialist for Technology Funding, Inc. 1997-1999.
David N. Evans 4854 154th Place NE Redmond, WA 98052 (31)	Assistant Controller	Served since November 7, 2002	Former Controller and Assistant Controller of Rosetta Inpharmatics from 2001-2002 and 2000-2001, respectively. From 1994 to 2000, he worked at PricewaterhouseCoopers LLP, where he focused on financial services.

* Annual Appointment

The Statement of Additional Information (“SAI”) includes additional information about Fund trustees and is available upon request without charge by contacting the Fund at 1-800-528-6501 or by mail at Safeco Securities, Inc. P.O. Box 219241, Kansas City, MO 64121-9241.

A description of the Fund’s proxy voting policies and procedures are available without charge by calling 1-800-528-6501. The information is additionally available at http://www.sec.gov.

SAFECO MUTUAL FUNDS

INVESTMENT ADVISOR

Pioneer Investment Management, Inc.

DISTRIBUTOR

Safeco Securities, Inc.

TRANSFER AGENT

Safeco Services Corporation

CUSTODIAN

State Street Bank and Trust Company

JP Morgan Chase Bank

(International Stock Fund)

For Shareholder Services

1-800-528-6501

*All telephone calls are tape-recorded

for your protection.

For Financial Professionals

Only

1-800-706-0700

For 24-Hour Automated

Performance Information and Transactions

Nationwide: 1-800-463-8794

Mailing Address

Safeco Mutual Funds

P.O. Box 219241

Kansas City, MO 64121-9241

Internet

www.safecofunds.com

Email

invest@safeco.com

Printed on Recycled Paper

Safeco^® and the Safeco

Logo are trademarks of

Safeco Corporation

GMF-4415 8/04

Table of Contents

ITEM 1. REPORT TO SHAREHOLDERS

ITEM 2. CODE OF ETHICS

Response is only required for annual Form N-CSR

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT

Response is only required for annual Form N-CSR

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Response is only required for annual Form N-CSR

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS

Not applicable.

ITEM 6. SCHEDULE OF INVESTMENTS

Not applicable.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES

Not applicable.

ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS

Not applicable.

ITEM 9. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees that would require disclosure herein.

ITEM 10. CONTROLS AND PROCEDURES

(a) An evaluation was performed within 90 days of the filing of this report, under the supervision and with the participation of the registrant’s management, including the President and Treasurer, of the effectiveness of the design and operation of the registrant’s disclosure controls and procedures. Based on that evaluation, the registrant’s management, including the President and Treasurer, concluded that the registrant’s disclosure controls and procedures are effective.

(b) There were no significant changes in the Registrant’s internal control over financial reporting that occurred in during the registrant’s last fiscal half-year (the registrant’s second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting

ITEM 11. EXHIBITS

(a) (1) Response is only required for annual Form N-CSR

(a) (2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2) is attached as Exhibit 99.CERT.

(a) (3) Not applicable

(b) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(b) under the Act (17 CFR 270.30a-2(b)) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350) is attached as Exhibit 99.906CERT. The certifications furnished pursuant to this paragraph will not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Safeco Common Stock Trust
By:	/s/    Roger F. Harbin
	Roger F. Harbin
	President

Date: August 19, 2004

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Safeco Common Stock Trust
By:	/s/    David H. Longhurst
	David H. Longhurst
	Treasurer

Date: August 19, 2004