-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RCqqTM8x2NQW5neobv9hl9i1aDbNRIY9c29kv3vSG4NDAbHCd6984dvsqJe8apJX U9NeW/mENer3zS8Oz8dAMg== 0000950135-04-004188.txt : 20040825 0000950135-04-004188.hdr.sgml : 20040825 20040825145507 ACCESSION NUMBER: 0000950135-04-004188 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040825 DATE AS OF CHANGE: 20040825 EFFECTIVENESS DATE: 20040825 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS FUNDS CENTRAL INDEX KEY: 0000711202 IRS NUMBER: 942874420 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-03626 FILM NUMBER: 04996232 BUSINESS ADDRESS: STREET 1: ONE HARBOUR PLACE STREET 2: SUITE 400 CITY: PORTSMOUTH STATE: NH ZIP: 03801 BUSINESS PHONE: 6034365152 MAIL ADDRESS: STREET 1: ONE HARBOUR PLACE STREET 2: SUITE 400 CITY: PORTSMOUTH STATE: NH ZIP: 03801 FORMER COMPANY: FORMER CONFORMED NAME: CITIZENS INVESTMENT TRUST DATE OF NAME CHANGE: 19951106 FORMER COMPANY: FORMER CONFORMED NAME: WORKING ASSETS COMMON HOLDINGS DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: WORKING ASSETS MONEY FUND DATE OF NAME CHANGE: 19920531 N-CSR 1 b51007cfnvcsr.txt CITIZENS FUNDS As filed with the Securities and Exchange Commission on August 25, 2004 File No. 811-03626 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANY CITIZENS FUNDS (Exact Name of Registrant as Specified in Charter) One Harbour Place, Suite 400, Portsmouth, New Hampshire 03801 (Address of Principal Executive Offices) Registrant's Telephone Number, including Area Code: (603) 436-5152 Sophia Collier Citizens Advisers, Inc. One Harbour Place Suite 400 Portsmouth, NH 03801 (Name and Address of Agent for Service) June 30 (Date of fiscal year end) June 30, 2004 (Date of reporting period) ITEM 1. REPORT TO SHAREHOLDERS. [CITIZENS FUNDS LOGO] ANNUAL REPORT and Supplemental Commentary 2004 [PICTURE] NOT A PART OF THE ANNUAL REPORT SUPPLEMENTAL COMMENTARY LETTER FROM THE PRESIDENT 1 CITIZENS FOCUS: RESPONSIBLE INVESTING AND ADVOCACY 2 COMPANY AND MARKET OVERVIEW 4 ANNUAL REPORT PORTFOLIO REVIEW 6 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 25 PORTFOLIO HOLDINGS 26 STATEMENTS OF ASSETS AND LIABILITIES 48 STATEMENTS OF OPERATIONS 50 STATEMENTS OF CHANGES IN NET ASSETS 52 FINANCIAL HIGHLIGHTS 56 FINANCIAL NOTES 62 SUPPLEMENTAL INFORMATION 68
NOT A PART OF THE ANNUAL REPORT LETTER FROM THE PRESIDENT [PHOTO OF SOPHIA COLLIER] Dear Shareholders, My blood is boiling. As I watch oil flash to $49 per barrel and the stalling of the most anemic economic recovery in my memory, I feel the urgent need for a change in national leadership. In the last three years our nation has lost 1.2 million jobs, the worst economic performance since Herbert Hoover presided over the start of the Great Depression. It is time for persons of good will to rise up in a collective act of self-help and demand change in policies that are clearly not working. As socially responsible investors we strive to do the best we can to seek the best corporate citizens and to reform corporate practices, improving the workplace and environmental performance. When the economy was rising nicely earlier in our fiscal year, we held companies we believed were best able to capture economic growth. Just as the economy began to flower and employment began to grow the economy stalled -- the result, in my opinion, of high energy costs and geopolitical uncertainty. We have repositioned our portfolios for this new environment, raising some cash in some of our funds and shifting to more conservative companies including the most environmentally responsible of the energy companies. But what is really needed is genuine, broad-based economic growth. Separate studies done by Citizens and Merrill Lynch among others have shown that the dollar value of the energy price increases is the same (and likely now exceeds) the dollar value of the tax cuts. What this means is that any stimulative impact the tax cuts may have had has been cancelled out by high energy costs. Instead of a vibrant economic climate, we are now faced with the fact that taxpayers will be paying interest for years to come on capital now held by oil producers, primarily in Saudi Arabia. It does not have to be this way. High energy prices are the result, in my opinion, of Middle East conflict, the failure to require improved gas mileage in cars and policies that encourage the use of non-renewable fuels. After the energy crisis of the 1970s the United States successfully reduced its oil consumption and began development of alternative energy technologies. These programs, now abandoned, must be embraced again. I also feel we need a change in fiscal policy and an end to deficit spending. I believe we need to return to the Ruben-era economic policies of the 1990s that brought the Federal deficit to zero and unemployment to its lowest level in memory. Shareholders, it is time for change in our national policies. I urge every one of you to get involved to make sure that the change is for the better. Sincerely yours, /s/ Sophia Collier Sophia Collier, President NOT A PART OF THE ANNUAL REPORT 1 CITIZENS FOCUS RESPONSIBLE INVESTING AND ADVOCACY To help us select the most promising companies for investment, our team of social research analysts provides in-depth analysis of all candidates considered. Here we continue a feature we began six months ago which highlights some recently screened companies. We will continue to monitor these companies to see if those we rejected make sufficient improvements to warrant potential investment in the future -- and to make sure the others maintain a high level of corporate and environmental responsibility to merit retention in our investable universe. WHY SOME FAILED OUR SCREENS DIVERSITY We believe companies which are so homogeneous that they don't have any women or minorities in leadership positions are susceptible to missing valuable perspectives that could be essential in setting a successful course for their businesses. ADMINISTAFF INC., a human resources services provider to small and medium-sized businesses, NITTO DENKO CORP., a Japanese manufacturer, and PARKER DRILLING CO., a global oil driller, failed our diversity screen because they would not confirm a single element of diversity on their board of directors or top two levels of management. ENVIRONMENT In addition to not wanting to support polluters, we believe that patterns of environmental mistreatment will eventually punish company bottom lines in terms of fines, lawsuits and harm to reputation. We have steered clear of a number companies in the past year for this reason. Here are two: HECLA MINING CO. has the distinction of being sued in what is considered the largest federal Superfund case to go to trial. According to the Environmental Protection Agency (EPA), a Superfund site is any land in the United States that has been contaminated by hazardous waste and identified by the EPA as a candidate for cleanup because it poses a risk to human health and/or the environment. Idaho's Coeur d'Alene Indian Tribe and the U.S. government have already won $100 million in the first phase of this trial, and estimates predict Hecla may be liable for $1.8 billion in the next phase. In 1999, we rejected specialty chemicals maker MACDERMID INC., and we did so again this year, as we found the company continued to exhibit a pattern of behavior that poses too great a risk in our judgment. HUMAN RIGHTS In 1997 the United States joined the global community's call for an economic embargo on Myanmar (formerly Burma). In support of this embargo, we've made it one of our exclusionary screens. The current regime is responsible for countless human rights violations, including forced labor, starvation and control through extortion, violence and intimidation. INTERGRAPH CORP., a provider of software, data processing and management systems, operates in Myanmar and has dealings with the Myanmar government. WEAPONS It's one thing to clad soldiers with armor to save lives; it's another thing to profit from making bombs. We rejected ARMOR HOLDINGS INC. because it applies its technology to missiles and also fits vehicles with gun and artillery mounts. HARRIS CORP., an international communications equipment company, has two divisions devoted to military contracts. One division produces electronics specifically designed for target acquisition by missiles. NOT A PART OF THE ANNUAL REPORT 2 SELECTED COMPANIES THAT MADE THE CUT CHIQUITA BRANDS INTERNATIONAL INC. Our social analysts rejected this company in 1999, ahead of the company's 2001 bankruptcy. Chiquita has since emerged from Chapter 11 with a healthy balance sheet. It has also turned around many of its previously objectionable environmental, worker safety and labor practices. For instance, the company participates in the Rainforest Alliance's Better Banana Project, publishes a comprehensive Corporate Social Responsibility report and no longer exposes its workers to aerial chemical applications. On June 30, 2004, Chiquita accounted for 1.12% of the Citizens Small Cap Value Fund portfolio. REEBOK INTERNATIONAL LTD. Like many in the apparel business, Reebok outsources the vast majority of its production to overseas contractors. What sets Reebok apart is its progressive approach to its outsourced facilities. It produces an annual Human Rights report detailing how it is addressing issues like child labor, fair living wages and worker environmental safety. Reebok has a stated human rights policy, which it requires all of its vendors to follow. And it has all of its facilities audited by third parties to ensure its policies are followed. On June 30, 2004, Reebok accounted for 0.63% of the Citizens Value Fund portfolio. ADVOCATING ON YOUR BEHALF [PHOTO OF JOANNE DOWDELL] Joanne Dowdell, Director of Corporate Responsibility and leader of the Citizens Advisers social research team. CORPORATE PUSH-BACK ROARS ONCE MORE In the wake of several notable corporate crimes, Congress enacted the Sarbanes-Oxley reform legislation swiftly and by overwhelming margins. Lobbyists for corporate interests, who were ineffective in that battle just two years ago, are now back in the game and getting their way. One of today's hottest corporate reform debates concerns the expensing of stock options. Citizens and others in the socially responsible investment community support a proposal to require companies to estimate and disclose the value of stock options. When such expenses are not recorded, it can be difficult for investors to get a complete picture of a company's financial health. Corporate America, led by many in the otherwise progressive high-tech community, generally opposes this reform. Shareholder resolutions calling for the expensing of options have garnered significant support, yet few companies have changed their ways. And now that the Financial Accounting Standards Board (FASB) appears ready to pass a new rule to require options to be expensed, opponents have turned to Congress to undermine it. In July, the U.S. House passed by a decisive 3 - 1 margin a measure that would severely undercut FASB's proposed rule. But the Senate has yet to vote on the legislation. So the debate rages on. Thanks to all who responded on our website to our grassroots campaign to support the FASB rule. Citizens will continue to support what we believe are in the best interests of shareholders on this and other issues we feel will help make companies improve their corporate citizenship and financial performance. To keep posted on the latest activism news, please visit www.citizensfunds.com. NOT A PART OF THE ANNUAL REPORT 3 COMPANY AND MARKET OVERVIEW MANAGEMENT COMPANY UPDATE At the management company we have been active in our continuing effort to attract strong portfolio management talent to our organization. At the end of the fiscal year we recruited Jonathan White, CFA to assume the portfolio management duties on the Core Growth Fund. Jon has over 30 years of industry experience and what we believe is a very fine investment record managing a large cap growth mutual fund at BankNorth. This is an important milestone for us in our ongoing strategy to further strengthen our investment team and improve the performance of the funds. MARKET COMMENTARY Financial markets tend to reflect expectations of events six months to a year in the future. In June 2003, U.S. equity markets were bright with anticipation of economic improvement and earnings growth after a long three-year downturn. In 2002, many companies had taken a "big bath," recording record losses as they wrote off failed investments from the dot-com era. To stimulate the economy, the Federal Reserve Bank reduced interest rates to 40-year lows. Consumers had extra dollars in their pockets from mortgage refinancing and tax cuts. Businesses were feeling competitive, anxious to start growing again instead of attempting to boost earnings through cost savings. In this climate investors were rediscovering technology and biotech stocks and looking for growth from traditional cyclical companies in sectors such as business services, electrical equipment, machinery and trucking companies. The economy was finally moving again. For a few weeks in August 2003 it almost felt like 1999. The stock market was flying with small-capitalization, lower-quality stocks leading with the largest percentage gains. Even though oil prices were higher than average, investors believed that they would soon moderate as Iraqi oil came online. China was undergoing a full-scale boom. American companies such as Intel, with 25% of their business in China, were doing very well and their share values were rising. Another factor priming the economy and corporate earnings was a weakening dollar. With the United States government's tacit support, the dollar began a steady decline versus other world currencies. Companies selling goods overseas were able to record a gain on foreign exchange. The 500 widely-held companies comprising the S&P 500 Index (an unmanaged index in which you may not invest) reported earnings growth of 29% in the third quarter, and 66% in the fourth quarter of 2003. These high rates of growth were largely the result of recovery to more normal levels of earnings from the depressed levels in the prior year. As autumn began, some investors started thinking that perhaps the market had reached a near term top and surmised that corporate earnings growth would inevitably slow. Incidents of terrorism and a growing insurgency in Iraq also made it clear that the war was far from over. Oil prices continued to rise based on demand and uncertainty over supply, reaching $34 per barrel in December. Midway through the fiscal year, notes of caution started to enter the market. As companies began reporting their earnings in January, high-tech bellwethers such as Intel and Cisco moderated their forecasts. Cisco's John Chambers stated that businesses were not spending to the levels he had expected. While most companies attained or exceeded earnings expectations, few increased their guidance significantly for future growth. NOT A PART OF THE ANNUAL REPORT 4 During 2003 certain hedge funds and other private investors anticipated that a growing economy would increase the market for metals such as copper, and subsequently took speculative positions in copper hoping to drive the prices as high as possible for actual industrial users. With China's expansion and hedge fund activity, commodities began to surge in price. Items such as steel, timber, soybeans and milk saw sharp increases raising the possibility that inflation was reigniting. With the fear of inflation came equity investors' other great concern -- the prospect of rising interest rates. Equity investors fear interest rate hikes for two basic reasons. Fundamentally, when interest rates rise it hurts corporate profits and makes borrowing for new projects more difficult. Second, if rates increase sufficiently investors will switch from stocks to bonds and cause selling pressures, driving equity markets down. However, there was an additional concern. Low interest rates provided significant economic stimulus through a house buying and mortgage refinancing boom. Climbing interest rates would likely stem the flow of cash from these transactions and reduce consumer spending, thereby ending a significant stimulus to the economy. In March 2004, the Madrid train bombing was a tragic, sobering event. Ongoing terrorism fears and increasing oil prices continued to spur fears about inflation and interest rates. Investors' obsession on increasing interest rates overshadowed the strong March payroll data and the fact that higher payrolls indicate a growing economy and more consumer spending. The market sold off sharply as oil reached $38 a barrel, and the war in Iraq and a spate of grisly kidnappings was a persistent source of bad news for investors driven by a 24-hour news cycle. Towards fiscal year end, most companies either met or exceeded earnings expectations; however, no news seemed good enough to brighten investors' spirits. Data began to suggest that the economy was likely slowing and companies reflected this possibility in their forecasts of future earnings. On the consumer front it has also become clear that rising oil and gas prices took away any net benefit of the tax cuts. In fact, various studies have shown oil price increases have equaled the amount of the tax cut in its entirety. In summary, the fiscal year ended June 30, 2004 was a disappointing period. It began on such a positive note, but had so little follow-through in what appears to have been one of the most meager economic recoveries in memory. OUTLOOK Looking ahead, we believe we are in a lower growth environment and that the election will likely serve as the next catalyst for the stock market. In general we are positioning our growth equity fund portfolios in stable growth companies and away from the more cyclical names. In the value funds we are seeking opportunities among companies that have sold off to an excessive degree. Emotion-filled times such as these are a prime time for value investors. Even in times of lower growth, companies can make progress and we will seek to identify these stable, higher quality companies to hold in our equity portfolios. One question at this point is what will be the Federal Reserve's posture. The economy is clearly slowing, but will the Fed continue to increase interest rates? If so, rates are likely to rise less rapidly than previously expected, which would be a mild positive for bonds and certain financial stocks. NOT A PART OF THE ANNUAL REPORT 5 PORTFOLIO REVIEW GOAL Capital appreciation STRATEGY Invests mainly in stocks of U.S. small-capitalization companies INCEPTION DATE Standard shares 12/28/99 CITIZENS SMALL CAP CORE GROWTH FUND AVERAGE ANNUAL RETURN (as of 6/30/2004)
Ticker 1 3 Since symbol year years inception ------ ---- ----- --------- Standard shares CSCSX 25.03% 4.42% 1.85%
Past performance is not an indication of future performance. Current performance may be lower or higher than the performance data quoted. More current performance information can be obtained at www.citizensfunds.com. Fee waivers have been instituted in the past to maintain expense limits, without which returns would have been lower. When you sell your fund shares, they may be worth more or less than what you paid for them. Citizens Small Cap Core Growth Fund had a nice year in absolute terms, returning 25.03% for its shareholders for the fiscal year ended June 30, 2004. The Russell 2000 Growth Index, the fund's benchmark, returned 31.55% during the same period. The fund's positive performance was powered by the health care sector, where the fund had several good picks. TheraSense was the fund's top contributor, adding nearly 2% to overall performance of the fund. We locked in some gains as the stock marched upwards in the first half of the fiscal year, and then reaped our final gains when the stock jumped in January on news that the company would be purchased by Abbott Labs. Cytyc was another great pick, as we benefited from the stock's 140% surge during the 12-month period. It was the fund's number two contributor, adding nearly 1.6% to the fund's overall return. American Medical Systems, which focuses on men's health needs, was another winner, adding over 1.3% to the fund's performance. Security holdings within the information technology sector also contributed significantly to fund performance during the fiscal year. The biggest winner was software maker Embarcadero Technologies, whose database products found increasing acceptance with the return of corporate spending. Semiconductor supplier International Rectifier also was a strong contributor, as its power management solutions were adopted in communications equipment, automobiles and numerous other diversified products, driving the company's margins higher. Relative to the benchmark, however, this sector underperformed due to some poor stock picks. As we have found, prices of stocks in the high-tech sector can be volatile. Even small disappointments in forecast growth can send a stock down significantly in a single day. This was the case with our largest high-tech detractor, GlobespanVirata, a manufacturer of integrated circuits for communications equipment. We sold the company's shares when they began falling on news that the market for its DSL chips was significantly weaker than expected. IMPORTANT NOTES The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investing in smaller companies involves unique risks as there may be: less seasoned management, limited product lines, financing and market share challenges, and shares that trade with more volatility, less frequently or in smaller volumes. 6 CITIZENS SMALL CAP CORE GROWTH FUND [PERFORMANCE GRAPH] SMALL CAP CORE GROWTH PERFORMANCE SINCE INCEPTION 12/28/99
DATE DATE NAV MONTHLY FUND RETURN FUND VALUE RUSSELL 2000 GROWTH RETURN INDEX VALUE 12/28/99 12/28/99 10.00 $10,000.00 $10,000.00 12/31/1999 10.00 0.00% $10,000.00 5.22% $10,522.00 1/31/2000 9.71 -2.90% $ 9,710.00 -0.93% $12,970.47 2/29/2000 10.50 8.14% $10,500.00 23.27% $11,607.27 3/31/2000 10.80 2.86% $10,800.00 -10.51% $10,434.94 4/30/2000 10.44 -3.33% $10,440.00 -10.10% $ 9,520.84 5/31/2000 10.19 -2.39% $10,190.00 -8.76% $10,750.93 6/30/2000 6/30/00 11.23 10.21% $11,230.00 12.92% $ 9,829.58 7/31/2000 10.77 -4.10% $10,770.00 -8.57% $10,863.65 8/31/2000 11.62 7.89% $11,620.00 10.52% $10,323.72 9/30/2000 10.76 -7.40% $10,760.00 -4.97% $ 9,485.44 10/31/2000 10.28 -2.60% $10,480.00 -8.12% $ 7,762.88 11/30/2000 8.94 -14.69% $ 8,940.00 -18.16% $ 8,237.97 12/31/2000 9.39 5.00% $ 9,386.60 6.12% $ 8,904.42 1/31/2001 10.48 9.50% $10,278.20 8.09% $ 7,683.63 2/28/2001 9.07 -11.79% $ 9,066.00 -13.71% $ 6,985.18 3/31/2001 8.46 -6.74% $ 8,455.40 -9.09% $ 7,840.17 4/30/2001 9.09 7.47% $ 9,086.60 12.24% $ 8,022.06 5/31/2001 9.21 1.32% $ 9,206.80 2.32% $ 8,241.06 6/30/2001 6/30/01 9.54 3.59% $ 9,537.40 2.73% $ 7,538.10 7/31/2001 9.23 -3.26% $ 9,226.80 -8.53% $ 7,067.72 8/31/2001 9.05 -1.95% $ 9,046.50 -6.24% $ 5,926.99 9/30/2001 8.02 -11.30% $ 8,024.60 -16.14% $ 6,497.17 10/31/2001 8.64 7.62% $ 8,635.80 9.62% $ 7,039.68 11/30/2001 9.54 10.44% $ 9,537.40 8.35% $ 7,478.26 12/31/2001 10.21 7.04% $10,208.60 6.23% $ 7,212.03 1/31/2002 10.30 0.88% $10,298.80 -3.56% $ 6,745.41 2/28/2002 9.94 -3.50% $ 9,938.10 -6.47% $ 7,331.59 3/31/2002 10.30 3.63% $10,298.80 8.69% $ 7,173.23 4/30/2002 10.24 -0.58% $10,238.70 -2.16% $ 6,753.59 5/31/2002 9.60 -6.26% $ 9,597.50 -5.85% $ 6,180.89 6/30/2002 6/30/02 9.20 -4.18% $ 9,196.80 -8.48% $ 5,230.89 7/31/2002 7.94 -13.62% $ 7,944.50 -15.37% $ 5,228.27 8/31/2002 7.88 -0.76% $ 7,884.40 -0.05% $ 4,850.79 9/30/2002 7.49 -4.96% $ 7,493.70 -7.22% $ 5,096.24 10/31/2002 7.73 3.21% $ 7,734.10 5.06% $ 5,601.28 11/30/2002 8.41 8.68% $ 8,405.30 9.91% $ 5,214.79 12/31/2002 7.61 -9.42% $ 7,613.90 -6.90% $ 5,072.95 1/31/2003 7.38 -3.03% $ 7,383.50 -2.72% $ 4,937.50 2/28/2003 7.34 -0.54% $ 7,343.40 -2.67% $ 5,012.05 3/31/2003 7.38 0.55% $ 7,383.50 1.51% $ 5,486.19 4/30/2003 7.88 6.78% $ 7,884.40 9.46% $ 6,104.49 5/31/2003 8.53 8.13% $ 8,525.60 11.27% $ 6,222.31 6/30/2003 6/30/03 8.69 1.88% $ 8,685.80 1.93% $ 6,692.71 7/31/2003 9.25 6.46% $ 9,246.90 7.56% $ 7,052.11 8/31/2003 9.98 7.91% $ 9,978.20 5.37% $ 6,873.69 9/30/2003 9.35 -6.33% $ 9,347.00 -2.53% $ 7,467.58 10/31/2003 10.36 10.83% $10,358.90 8.64% $ 7,711.02 11/30/2003 10.54 1.74% $10,539.20 3.26% $ 7,745.72 12/31/2003 10.60 0.57% $10,599.30 0.45% $ 8,152.37 1/31/2004 11.27 6.33% $11,270.60 5.25% $ 8,140.14 2/29/2004 11.23 -0.36% $11,230.50 -0.15% $ 8,178.40 3/31/2004 11.14 -0.80% $11,140.30 0.47% $ 7,767.85 4/30/2004 10.41 -6.56% $10,409.00 -5.02% $ 7,922.43 5/31/2004 10.55 1.35% $10,549.20 1.99% $ 8,186.24 6/30/2004 6/30/04 10.86 2.94% $10,859.80 3.33% $ 8,186.24
The poorest performing sector for the fund was materials, due to our underweight to the index and our stock selection. While a tiny sector within the small-cap growth universe, a number of mining companies exhibited very strong performance in early fiscal 2004 as commodity prices were rising. We wanted to participate but found that most mining companies we considered failed to pass our environmental screens. We did qualify two silver mining operations with good environmental records but were too late to profit from these investments and have since sold most of our positions. The cyclical theme was also in place during the fiscal year in the industrials group. A top performer was trucker Landstar System. With its unique business model and focus on logistics, Landstar grew rapidly with the economic recovery. For fiscal 2005 we are looking away from the cyclical companies and more towards what we believe are the steady growers. In line with our view that the economy is growing, but at a slower pace than first believed, we will emphasize proven business models and less risky names. Fortunately, within the small-cap universe we believe there are many exciting companies to consider. We expect health care, high-tech and consumer stocks to be leaders in the coming year. The Russell 2000 Growth Index is an unmanaged index that measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. Direct investment cannot be made in this index. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Registered Public Accounting Firm. 7 CITIZENS EMERGING GROWTH FUND PORTFOLIO REVIEW GOAL Aggressive growth STRATEGY Invests mainly in stocks of young, growing, medium-capitalization companies INCEPTION DATES Standard shares 02/08/94 Institutional shares 11/01/99 Administrative shares 02/04/00 AVERAGE ANNUAL RETURN (as of 06/30/2004)
Ticker 1 3 5 10 Since symbol year years years years inception Standard shares WAEGX 18.70% -6.25% -1.29% 11.97% 11.42% Institutional shares CEGIX 19.41% -5.63% N/A N/A -4.22% Administrative shares CGRDX 18.99% -5.90% N/A N/A -10.63%
Past performance is not an indication of future performance. Current performance may be lower or higher than the performance data quoted. More current performance information can be obtained at www.citizensfunds.com. Fee waivers have been instituted in the past to maintain expense limits, without which returns would have been lower. When you sell your fund shares, they may be worth more or less than what you paid for them. The Citizens Emerging Growth Fund (Standard shares) returned 18.70% for the fiscal year ended June 30, 2004. During the same period the benchmark Russell MidCap Growth Index returned 27.33%. The story for the fund this year was primarily played out in two of its sectors -- information technology and health care -- both of which saw a fair share of highs and lows. The holdings within the information technology sector delivered the largest absolute returns for the fund, with two software companies, Symantec Corp. and Adobe Systems, among the top contributors. We were overweight in both of these stocks versus the benchmark. Symantec has been a tremendous financial performer as it engages in its pitched battle to protect the public from virus-writing hackers. Periodically, rumors that Microsoft will enter the anti-virus market roil Symantec's stock, but despite these issues Symantec's stock almost doubled this fiscal year. Adobe is another company that successfully defended its turf from Microsoft. Adobe's recent bundling of its flagship product Photoshop into a Creative Suite with other offerings has been a strong seller. Within the high-tech space another strong stock for the fund has been Juniper Networks, whose edge routers have successfully challenged Cisco. Despite the outperformance of these and other picks, overall stock selection caused us to underperform relative to the benchmark in this sector. In fact, six of the fund's ten worst performers were in this sector. Among our high tech detractors were QLogic Corp., the fund's second worst performer, and GlobespanVirata. QLogic, which sells components of storage systems, announced weaker-than-expected sales and the stock sold off. GlobespanVirata declined on a weaker-than-expected market for its DSL chips. IMPORTANT NOTES The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investing in small-and mid-sized companies involves unique risks as there may be: less seasoned management, limited product lines, financing and market share challenges, and shares that trade with more volatility, less frequently or in smaller volumes. Health care was the second leading sector to contribute to the fund's results, led by Cytyc, which had a terrific year, steadily rising 140% over the 12-month period. This 8 CITIZENS EMERGING GROWTH FUND [PERFORMANCE GRAPH] CITIZENS EMERGING GROWTH FUND - STANDARD SHARES PERFORMANCE SINCE INCEPTION 02/08/94
DATE DATE NAV MONTHLY FUND RETURN FUND VALUE RUSSELL MID CAP GROWTH RETURN INDEX VALUE 2/8/94 2/8/94 10.00 $ 10,000.00 $ 10,000.00 2/28/1994 10.06 0.60% $ 10,060.00 -0.80% $ 9,920.00 3/31/1994 9.88 -1.79% $ 9,880.00 -4.71% $ 9,452.77 4/30/1994 10.01 1.32% $ 10,010.00 -0.24% $ 9,430.08 5/31/1994 10.07 0.60% $ 10,070.00 0.15% $ 9,444.23 6/30/1994 6/30/94 9.93 -1.39% $ 9,930.00 -4.30% $ 9,038.12 7/31/1994 10.14 2.11% $ 10,140.00 2.77% $ 9,288.48 8/31/1994 10.55 4.04% $ 10,550.00 5.96% $ 9,842.07 9/30/1994 10.73 1.71% $ 10,730.00 -1.65% $ 9,679.68 10/31/1994 10.91 1.68% $ 10,910.00 1.73% $ 9,847.14 11/30/1994 10.55 -3.30% $ 10,550.00 -4.41% $ 9,412.88 12/31/1994 10.71 1.53% $ 10,711.80 1.40% $ 9,544.66 1/31/1995 10.71 0.00% $ 10,711.80 1.20% $ 9,659.20 2/28/1995 11.00 2.70% $ 11,000.50 5.32% $ 10,173.07 3/31/1995 11.33 3.00% $ 11,330.40 3.97% $ 10,576.94 4/30/1995 11.38 0.45% $ 11,381.90 0.84% $ 10,665.78 5/31/1995 11.30 -0.72% $ 11,299.40 2.46% $ 10,928.16 6/30/1995 6/30/95 12.24 8.30% $ 12,237.60 4.55% $ 11,425.39 7/31/1995 13.25 8.26% $ 13,248.00 6.29% $ 12,144.05 8/31/1995 13.29 0.31% $ 13,289.20 1.09% $ 12,276.42 9/30/1995 13.97 5.12% $ 13,969.70 2.23% $ 12,550.18 10/31/1995 14.20 1.62% $ 14,196.50 -2.53% $ 12,232.66 11/30/1995 14.57 2.61% $ 14,567.60 4.47% $ 12,779.46 12/31/1995 15.07 3.48% $ 15,074.60 0.06% $ 12,787.13 1/31/1996 14.97 -0.70% $ 14,969.10 1.77% $ 13,013.46 2/26/1996 15.52 3.68% $ 15,520.00 3.78% $ 13,505.37 3/31/1996 15.74 1.43% $ 15,742.70 0.79% $ 13,612.06 4/30/1996 16.94 7.60% $ 16,938.40 4.83% $ 14,269.53 5/31/1996 17.90 5.67% $ 17,899.60 2.04% $ 14,560.63 6/30/1996 6/30/96 17.43 -2.62% $ 17,430.70 -3.02% $ 14,120.89 7/31/1996 16.75 -3.90% $ 16,750.80 -7.76% $ 13,025.11 8/30/1996 17.30 3.29% $ 17,301.80 5.40% $ 13,728.47 9/30/1996 18.37 6.17% $ 18,368.50 6.35% $ 14,600.23 10/31/1996 17.52 -4.59% $ 17,524.50 -1.17% $ 14,429.40 11/30/1996 17.54 0.07% $ 17,536.20 5.89% $ 15,279.30 12/31/1996 17.17 -2.08% $ 17,172.00 -1.68% $ 15,022.60 1/31/1997 18.03 5.00% $ 18,031.30 4.42% $ 15,686.60 2/28/97 16.88 -6.40% $ 16,877.10 -2.20% $ 15,341.50 3/31/1997 15.45 -8.44% $ 15,453.50 -5.65% $ 14,474.70 4/30/1997 15.95 3.24% $ 15,953.70 2.45% $ 14,829.33 5/31/1997 17.42 9.16% $ 17,415.70 8.96% $ 16,158.04 6/30/1997 6/30/97 18.13 4.12% $ 18,133.90 2.77% $ 16,605.62 7/31/1997 20.26 11.74% $ 20,262.70 9.57% $ 18,194.78 8/29/1997 19.84 -2.09% $ 19,839.50 -0.98% $ 18,016.47 09/30/97 20.98 5.75% $ 20,980.90 5.06% $ 18,928.10 10/31/1997 19.61 -6.54% $ 19,608.70 -5.01% $ 17,979.80 11/29/1997 19.47 -0.72% $ 19,467.60 1.05% $ 18,168.59 12/31/1997 20.21 3.81% $ 20,209.00 1.31% $ 18,406.60 1/31/1998 20.06 -0.75% $ 20,057.70 -1.80% $ 18,075.28 2/28/1998 22.13 10.35% $ 22,133.60 9.40% $ 19,774.36 3/31/1998 24.14 9.07% $ 24,140.80 4.19% $ 20,602.90 4/30/1998 23.85 -1.20% $ 23,852.10 1.36% $ 20,883.10 5/31/1998 22.67 -4.96% $ 22,669.80 -4.11% $ 20,024.81 6/30/1998 6/30/98 24.13 6.43% $ 24,127.00 2.83% $ 20,591.51 7/31/1998 23.78 -1.42% $ 23,783.30 -4.28% $ 19,710.19 8/31/1998 19.19 -19.31% $ 19,191.60 -19.09% $ 15,947.52 9/30/1998 21.21 10.53% $ 21,212.50 7.56% $ 17,153.15 10/31/1998 23.16 9.20% $ 23,164.70 7.36% $ 18,415.62 11/30/1998 25.06 8.19% $ 25,061.90 6.75% $ 19,658.68 12/31/1998 28.84 15.07% $ 28,839.60 10.36% $ 21,695.32 1/31/1999 29.37 1.83% $ 29,367.50 3.00% $ 22,346.17 2/28/1999 27.04 -7.91% $ 27,044.70 -4.89% $ 21,253.45 3/31/1999 28.45 5.19% $ 28,447.50 5.57% $ 22,437.26 4/30/1999 29.14 2.44% $ 29,141.30 4.56% $ 23,460.40 5/31/1999 28.98 -0.57% $ 28,975.40 -1.29% $ 23,157.76 6/30/1999 6/30/99 32.84 13.33% $ 32,836.80 6.98% $ 24,774.18 7/31/1999 33.20 1.10% $ 33,198.80 -3.18% $ 23,986.36 8/31/1999 33.64 1.32% $ 33,636.20 -1.04% $ 23,736.90 9/30/1999 34.03 1.17% $ 34,028.30 -0.85% $ 23,535.14 10/31/1999 38.86 14.18% $ 38,855.10 7.73% $ 25,354.40 11/30/1999 42.31 8.89% $ 42,309.20 10.36% $ 27,981.12 12/31/1999 48.48 14.57% $ 48,475.20 17.31% $ 32,824.65 1/31/2000 46.72 -3.61% $ 46,724.80 -0.02% $ 32,818.08 2/29/2000 58.57 25.34% $ 58,566.80 21.02% $ 39,716.44 3/31/2000 59.66 1.86% $ 59,656.30 0.10% $ 39,756.16 4/30/2000 59.50 -0.27% $ 59,495.60 -9.71% $ 35,895.84 5/31/2000 53.55 -10.00% $ 53,547.80 -7.29% $ 33,279.03 6/30/2000 6/30/00 59.78 11.64% $ 59,781.40 10.61% $ 36,809.94 7/31/2000 56.51 -5.47% $ 56,512.80 -6.33% $ 34,479.87 8/31/2000 62.10 9.89% $ 62,103.30 15.08% $ 39,679.43 9/30/2000 59.94 -3.48% $ 59,942.10 -4.89% $ 37,739.11 10/31/2000 57.89 -3.43% $ 57,888.10 -6.84% $ 35,157.75 11/30/2000 46.89 -19.01% $ 46,885.60 -21.73% $ 27,517.97 12/31/2000 48.16 2.73% $ 48,163.60 5.27% $ 28,968.17 1/31/2001 46.96 -2.51% $ 46,957.10 5.71% $ 30,622.25 2/28/2001 40.85 -13.00% $ 40,853.90 -17.30% $ 25,324.60 3/31/2001 36.41 -10.89% $ 36,406.50 -14.31% $ 21,700.65 4/30/2001 39.34 8.06% $ 39,339.90 16.67% $ 25,318.15 5/31/2001 38.46 -2.22% $ 38,464.60 -0.47% $ 25,199.16 6/30/2001 6/30/01 37.35 -2.89% $ 37,352.80 0.05% $ 25,211.75 7/31/2001 35.01 -6.27% $ 35,010.80 -6.75% $ 23,509.96 8/31/2001 32.88 -6.08% $ 32,881.80 -7.25% $ 21,805.49 9/30/2001 26.97 -17.99% $ 26,967.80 -16.53% $ 18,201.04 10/31/2001 28.88 7.11% $ 28,883.90 10.51% $ 20,113.97 11/30/2001 31.65 9.58% $ 31,651.70 10.77% $ 22,280.25 12/31/2001 32.29 2.02% $ 32,290.40 3.80% $ 23,126.90 1/31/2002 32.31 0.07% $ 32,314.10 -3.25% $ 22,375.27 2/28/2002 30.66 -5.12% $ 30,658.10 -5.67% $ 21,106.59 3/31/2002 33.40 8.95% $ 33,402.20 7.63% $ 22,717.03 4/30/2002 31.68 -5.17% $ 31,675.30 -5.29% $ 21,515.30 5/31/2002 30.54 -3.58% $ 30,539.90 -2.98% $ 20,874.14 6/30/2002 6/30/02 27.96 -8.44% $ 27,961.40 -11.04% $ 18,569.64 7/31/2002 25.90 -7.36% $ 25,903.30 -9.72% $ 16,764.67 8/31/2002 25.17 -2.83% $ 25,170.00 -0.35% $ 16,705.99 9/30/2002 23.40 -7.05% $ 23,395.80 -7.95% $ 15,377.86 10/31/2002 24.01 2.63% $ 24,010.80 7.75% $ 16,569.65 11/30/2002 24.98 4.04% $ 24,980.70 7.83% $ 17,867.05 12/31/2002 23.02 -7.86% $ 23,017.30 -6.04% $ 16,787.88 1/31/2003 22.47 -2.36% $ 22,473.20 -0.98% $ 16,623.36 2/28/2003 22.57 0.42% $ 22,567.80 -0.87% $ 16,478.74 3/31/2003 22.38 -0.84% $ 22,378.60 1.86% $ 16,785.24 4/30/2003 23.82 6.45% $ 23,821.60 6.81% $ 17,928.32 5/31/2003 25.50 7.05% $ 25,501.10 9.62% $ 19,653.02 6/30/2003 6/30/03 25.93 1.67% $ 25,926.90 1.43% $ 19,934.06 7/31/2003 26.71 3.01% $ 26,707.60 3.57% $ 20,645.71 8/31/2003 28.67 7.35% $ 28,671.00 5.51% $ 21,783.28 9/30/2003 27.58 -3.80% $ 27,582.90 -1.94% $ 21,360.69 10/31/2003 29.50 6.95% $ 29,499.00 8.06% $ 23,082.36 11/30/2003 29.97 1.60% $ 29,972.10 2.68% $ 23,700.97 12/31/2003 30.28 1.03% $ 30,279.60 1.09% $ 23,959.31 1/31/2004 30.99 2.34% $ 30,989.30 3.30% $ 24,749.96 2/29/2004 31.11 0.38% $ 31,107.60 1.68% $ 25,165.76 3/31/2004 30.89 -0.68% $ 30,894.70 -0.19% $ 25,117.95 4/30/2004 29.83 -3.45% $ 29,830.20 -2.82% $ 24,409.62 5/31/2004 30.52 2.30% $ 30,516.20 2.36% $ 24,985.69 6/30/2004 6/30/04 30.78 0.85% $ 30,776.40 1.59% $ 25,382.96
company, which designs and manufactures products for use in medical diagnostic applications primarily focused on women's health, contributed over 1.5% to the fund's return in fiscal 2004 and was our number one performer. Another significant contributor was Sierra Health Services. As with information technology, however, poor overall stock selection caused this sector to underperform versus the benchmark. The fund's worst performer was MedImmune, whose stock lost over 35% during the 12-month period. We were also overweight in this stock compared to its representation in the benchmark. Other health care detractors included Thoratec and Barr Pharmaceuticals, which together with MedImmune cut 1.3% from the fund's overall return. The fund's top contributing sector relative to the benchmark was industrials, where our stock picking outperformed. Notable performers were the low-fare airline JetBlue, the fund's number two contributor, returning over 1% for the fund, and Fastenal, a provider of industrial and construction supplies, which added nearly 1%. No sector lost money in absolute terms during the fiscal year but utilities and materials were our weakest areas, contributing very little to the portfolio. In the upcoming year we will focus the portfolio on stocks of companies that we believe have steady and strong growth prospects. We will likely keep a similar sector exposure but allocate our weight more to the less cyclical names. The Russell MidCap Growth Index is an unmanaged index that measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000 Growth Index. Direct investment cannot be made in this index. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Registered Public Accounting Firm. 9 CITIZENS CORE GROWTH FUND PORTFOLIO REVIEW GOAL Long-term capital appreciation STRATEGY Invests mainly in stocks of U.S. large-capitalization companies INCEPTION DATES Standard shares 03/03/95 Institutional shares 01/25/96 Administrative shares 02/04/00 AVERAGE ANNUL RETURNS (as of 06/30/2004)
Ticker 1 3 5 Since symbol year years years inception ------ ---- ----- ----- --------- Standard shares WAIDX 10.10% -6.46% -7.94% 8.69% Institutional shares WINIX 10.96% -5.81% -7.31% 7.75% Administrative shares CGADX 10.55% -6.09% N/A -10.75%
Past performance is not an indication of future performance. Current performance may be lower or higher than the performance data quoted. More current performance information can be obtained at www.citizensfunds.com. Fee waivers have been instituted in the past to maintain expense limits, without which returns would have been lower. When you sell your fund shares, they may be worth more or less than what you paid for them. The big news for the Citizens Core Growth Fund is that Jonathan White, CFA, took over management of the portfolio on July 1, 2004. Sophia Collier has stepped down as lead manager after almost ten years on the fund. Sophia continues as president of the management company and supports Jon as he puts his own touch on the Citizens Core Growth Fund's strategy. In fiscal 2004 Citizens Core Growth Fund (Standard shares) returned 10.10%. During the same period, the benchmark Russell 1000 Growth Index returned 17.88%. Our biggest winners were 3M and Cisco, each of which contributed almost 1% to the total return of the fund. We were overweight in each of these high-quality stocks versus the benchmark. 3M is an interesting company that has executed an impressive turnaround over the last three years. As a large industrial company, it continues to focus on reducing the environmental impact of its operations. The company's commitment to its groundbreaking "3P" program (Pollution Prevention Pays), launched in 1975, remains strong, as the company continues to set and meet aggressive pollution reduction goals. The fund's worst performer in absolute terms was Amgen, a biotech firm which sold off on concerns about Medicare reimbursements for its flagship products. In prior years Amgen had been a strong stock for the portfolio and among our top contributors. In 2004 we trimmed the position as the stock declined, but we stubbornly held on because we believed investors would soon appreciate the company's earnings growth as it was demonstrated quarter after quarter. However, despite Amgen's fundamental performance -- sales growth of more than 42% for the most recent 12 months -- the stock was selling close to its 52-week low at fiscal year-end. IMPORTANT NOTES The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The Russell 1000 Growth Index is an unmanaged index that measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The fund is changing to this index as its reference index. The companies in this index are more represenative of the fund's holdings. 10 CITIZENS CORE GROWTH FUND [PERFORMANCE GRAPH] CITIZENS CORE GROWTH FUND - STANDARD SHARES PERFORMANCE SINCE INCEPTION 03/03/95
DATE DATE NAV MONTHLY FUND RETURN FUND VALUE RUSSELL 1000 GROWTH INDEX VALUE S&P 500 INDEX VALUE 3/3/95 3/3/95 10.00 $ 10,000.00 $ 10,000.00 $ 10,000.00 3/31/1995 10.10 1.00% $ 10,100.00 2.92% $ 10,219.00 3.40% $ 10,294.00 4/30/1995 10.40 2.97% $ 10,400.00 2.19% $ 10,574.62 2.94% $ 10,705.76 5/31/1995 10.53 1.25% $ 10,530.00 3.48% $ 10,982.80 4.00% $ 10,954.13 6/30/1995 6/30/95 10.94 3.89% $ 10,940.00 3.86% $ 11,439.69 2.32% $ 11,317.81 7/31/1995 11.36 3.84% $ 11,360.00 4.16% $ 11,452.27 3.32% $ 11,346.11 8/31/1995 11.45 0.79% $ 11,450.00 0.11% $ 11,980.22 0.25% $ 11,824.91 9/30/1995 11.86 3.58% $ 11,860.00 4.61% $ 11,988.61 4.22% $ 11,782.34 10/31/1995 11.97 0.93% $ 11,970.00 0.07% $ 12,454.96 -0.36% $ 12,299.59 11/30/1995 12.33 3.01% $ 12,330.00 3.89% $ 12,525.96 4.39% $ 12,536.97 12/31/1995 12.41 0.61% $ 12,405.00 0.57% $ 12,944.32 1.93% $ 12,963.23 1/31/1996 12.65 1.95% $ 12,646.60 3.34% $ 13,181.20 3.40% $ 13,083.78 2/26/1996 12.88 1.83% $ 12,878.20 1.83% $ 13,198.34 0.93% $ 13,209.39 3/31/1996 12.86 -0.16% $ 12,858.10 0.13% $ 13,545.46 0.96% $ 13,403.57 4/30/1996 13.20 2.66% $ 13,200.40 2.63% $ 14,018.19 1.47% $ 13,749.38 5/31/1996 13.59 2.97% $ 13,593.10 3.49% $ 14,037.82 2.58% $ 13,801.63 6/30/1996 6/30/96 13.50 -0.67% $ 13,502.50 0.14% $ 13,215.20 0.38% $ 13,191.59 7/31/1996 12.91 -4.40% $ 12,908.40 -5.86% $ 13,556.15 -4.42% $ 13,469.94 8/30/1996 13.23 2.50% $ 13,230.60 2.58% $ 14,543.04 2.11% $ 14,228.29 9/30/1996 14.08 6.39% $ 14,076.40 7.28% $ 14,630.30 5.63% $ 14,620.99 10/31/1996 14.43 2.50% $ 14,428.80 0.60% $ 15,729.04 2.76% $ 15,726.34 11/30/1996 15.63 8.30% $ 15,627.10 7.51% $ 15,420.75 7.56% $ 15,414.96 12/31/1996 15.27 -2.31% $ 15,266.30 -1.96% $ 16,501.74 -1.98% $ 16,378.39 1/31/1997 16.42 7.53% $ 16,415.60 7.01% $ 16,389.53 6.25% $ 16,506.15 2/28/97 16.52 0.62% $ 16,517.30 -0.68% $ 15,502.86 0.78% $ 15,827.74 3/31/1997 15.55 -5.85% $ 15,551.10 -5.41% $ 16,532.24 -4.11% $ 16,772.66 4/30/1997 16.67 7.19% $ 16,669.90 6.64% $ 17,725.87 5.97% $ 17,794.11 5/31/1997 17.70 6.16% $ 17,697.10 7.22% $ 18,434.91 6.09% $ 18,591.29 6/30/1997 6/30/97 18.35 3.68% $ 18,348.00 4.00% $ 20,064.55 4.48% $ 20,071.16 7/31/1997 20.19 10.03% $ 20,188.90 8.84% $ 18,890.78 7.96% $ 18,947.17 8/29/1997 19.11 -5.34% $ 19,110.80 -5.85% $ 19,820.20 -5.60% $ 19,985.48 09/30/97 20.16 5.48% $ 20,158.40 4.92% $ 19,086.86 5.48% $ 19,317.96 10/31/1997 19.35 -3.99% $ 19,354.90 -3.70% $ 19,898.05 -3.34% $ 20,212.38 11/29/1997 20.40 5.41% $ 20,402.50 4.25% $ 20,120.91 4.63% $ 20,560.04 12/31/1997 20.60 0.99% $ 20,603.90 1.12% $ 20,722.52 1.72% $ 20,788.25 1/31/1998 21.20 2.90% $ 21,201.70 2.99% $ 22,280.85 1.11% $ 22,287.09 2/28/1998 22.87 7.86% $ 22,867.10 7.52% $ 23,169.86 7.21% $ 23,428.19 3/31/1998 23.98 4.86% $ 23,977.30 3.99% $ 23,489.60 5.12% $ 23,664.81 4/30/1998 24.22 1.02% $ 24,222.90 1.38% $ 22,822.50 1.01% $ 23,257.78 5/31/1998 23.53 -2.86% $ 23,529.00 -2.84% $ 24,219.24 -1.72% $ 24,202.04 6/30/1998 6/30/98 25.04 6.44% $ 25,044.90 6.12% $ 24,059.39 4.06% $ 23,945.50 7/31/1998 24.94 -0.43% $ 24,938.10 -0.66% $ 20,448.07 -1.06% $ 20,482.98 8/31/1998 21.21 -14.94% $ 21,212.40 -15.01% $ 22,018.49 -14.46% $ 21,795.94 9/30/1998 23.07 8.76% $ 23,069.90 7.68% $ 23,788.77 6.41% $ 23,567.95 10/31/1998 24.77 7.36% $ 24,767.30 8.04% $ 25,599.10 8.13% $ 24,996.17 11/30/1998 26.64 7.54% $ 26,635.60 7.61% $ 27,908.14 6.06% $ 26,435.95 12/31/1998 29.41 10.42% $ 29,412.00 9.02% $ 29,546.35 5.76% $ 27,540.97 1/31/1999 31.68 7.71% $ 31,679.40 5.87% $ 28,196.08 4.18% $ 26,684.45 2/28/1999 29.76 -6.07% $ 29,757.50 -4.57% $ 29,682.01 -3.11% $ 27,751.82 3/31/1999 31.04 4.32% $ 31,042.40 5.27% $ 29,720.60 4.00% $ 28,825.82 4/30/1999 31.87 2.68% $ 31,873.70 0.13% $ 28,808.18 3.87% $ 28,145.53 5/31/1999 31.02 -2.68% $ 31,020.80 -3.07% $ 30,824.75 -2.36% $ 29,707.61 6/30/1999 6/30/99 32.95 6.23% $ 32,953.50 7.00% $ 29,844.52 5.55% $ 28,780.73 7/31/1999 32.25 -2.13% $ 32,251.70 -3.18% $ 30,330.99 -3.12% $ 28,639.70 8/31/1999 31.98 -0.84% $ 31,981.70 1.63% $ 29,694.04 -0.49% $ 27,854.98 9/30/1999 31.20 -2.43% $ 31,204.30 -2.10% $ 31,935.94 -2.74% $ 29,618.20 10/31/1999 33.22 6.47% $ 33,223.40 7.55% $ 33,660.48 6.33% $ 30,219.44 11/30/1999 34.64 4.26% $ 34,637.90 5.40% $ 37,161.17 2.03% $ 31,999.37 12/31/1999 37.50 8.26% $ 37,497.40 10.40% $ 35,418.31 5.89% $ 30,393.00 1/31/2000 35.18 -6.18% $ 35,181.60 -4.69% $ 37,150.26 -5.02% $ 29,818.57 2/29/2000 36.06 2.50% $ 36,060.00 4.89% $ 39,810.22 -1.89% $ 32,734.83 3/31/2000 39.54 9.65% $ 39,539.40 7.16% $ 37,915.25 9.78% $ 31,749.51 4/30/2000 37.11 -6.15% $ 37,109.60 -4.76% $ 36,004.33 -3.01% $ 31,098.65 5/31/2000 35.17 -5.23% $ 35,170.20 -5.04% $ 38,733.45 -2.05% $ 31,866.78 6/30/2000 6/30/00 37.18 5.71% $ 37,178.00 7.58% $ 37,118.27 2.47% $ 31,369.66 7/31/2000 36.15 -2.76% $ 36,151.30 -4.17% $ 40,477.47 -1.56% $ 33,317.72 8/31/2000 38.23 5.74% $ 38,227.50 9.05% $ 36,648.30 6.21% $ 31,558.54 9/30/2000 35.22 -7.88% $ 35,215.90 -9.46% $ 34,914.84 -5.28% $ 31,426.00 10/31/2000 35.49 0.78% $ 35,489.60 -4.73% $ 29,768.39 -0.42% $ 28,949.63 11/30/2000 30.70 -13.50% $ 30,698.40 -14.74% $ 28,827.71 -7.88% $ 29,091.48 12/31/2000 29.72 -3.20% $ 29,715.00 -3.16% $ 30,819.70 0.49% $ 30,124.23 1/31/2001 32.16 8.22% $ 32,157.20 6.91% $ 25,586.52 3.55% $ 27,376.90 2/28/2001 27.06 -15.86% $ 27,056.30 -16.98% $ 22,802.71 -9.12% $ 25,641.20 3/31/2001 24.71 -8.67% $ 24,710.40 -10.88% $ 25,687.25 -6.34% $ 27,633.53 4/30/2001 27.03 9.40% $ 27,032.30 12.65% $ 25,309.64 7.77% $ 27,818.67 5/31/2001 27.08 0.18% $ 27,080.40 -1.47% $ 24,722.46 0.67% $ 27,142.68 6/30/2001 6/30/01 26.61 -1.73% $ 26,611.20 -2.32% $ 24,104.40 -2.43% $ 26,876.68 7/31/2001 26.31 -1.13% $ 26,310.40 -2.50% $ 22,132.66 -0.98% $ 25,194.20 8/31/2001 24.28 -7.73% $ 24,277.30 -8.18% $ 19,923.82 -6.26% $ 23,158.51 9/30/2001 21.81 -10.16% $ 21,811.10 -9.98% $ 20,969.82 -8.08% $ 23,600.83 10/31/2001 22.30 2.26% $ 22,304.30 5.25% $ 22,985.02 1.91% $ 25,411.02 11/30/2001 24.39 9.33% $ 24,385.60 9.61% $ 22,941.35 7.67% $ 25,634.64 12/31/2001 24.30 -0.35% $ 24,301.40 -0.19% $ 22,535.29 0.88% $ 25,260.37 1/31/2002 23.90 -1.63% $ 23,904.40 -1.77% $ 21,600.07 -1.46% $ 24,772.84 2/28/2002 23.00 -3.77% $ 23,002.10 -4.15% $ 22,347.44 -1.93% $ 25,704.30 3/31/2002 23.88 3.82% $ 23,880.30 3.46% $ 20,523.88 3.76% $ 24,146.62 4/30/2002 22.45 -5.99% $ 22,448.70 -8.16% $ 20,027.21 -6.06% $ 23,967.94 5/31/2002 22.04 -1.82% $ 22,039.70 -2.42% $ 18,174.69 -0.74% $ 22,261.42 6/30/2002 6/30/02 20.13 -8.68% $ 20,126.80 -9.25% $ 17,175.08 -7.12% $ 20,527.26 7/31/2002 18.64 -7.41% $ 18,635.10 -5.50% $ 17,226.61 -7.79% $ 20,662.74 8/31/2002 18.56 -0.39% $ 18,562.90 0.30% $ 15,440.21 0.66% $ 18,416.70 9/30/2002 16.91 -8.88% $ 16,914.70 -10.37% $ 16,856.08 -10.87% $ 20,037.37 10/31/2002 18.47 9.17% $ 18,466.60 9.17% $ 17,771.36 8.80% $ 21,217.57 11/30/2002 19.30 4.50% $ 19,296.70 5.43% $ 16,543.36 5.89% $ 19,972.10 12/31/2002 18.05 -6.48% $ 18,045.60 -6.91% $ 16,141.36 -5.87% $ 19,448.83 1/31/2003 17.52 -2.93% $ 17,516.20 -2.43% $ 16,067.11 -2.62% $ 19,157.09 2/28/2003 17.32 -1.10% $ 17,323.70 -0.46% $ 16,365.95 -1.50% $ 19,342.92 3/31/2003 17.48 0.90% $ 17,480.10 1.86% $ 17,575.40 0.97% $ 20,936.77 4/30/2003 18.56 6.19% $ 18,562.90 7.39% $ 18,452.41 8.24% $ 22,040.14 5/31/2003 19.60 5.57% $ 19,597.50 4.99% $ 18,707.05 5.27% $ 22,322.26 6/30/2003 6/30/03 19.78 0.92% $ 19,777.90 1.38% $ 19,172.86 1.28% $ 22,715.13 7/31/2003 20.28 2.55% $ 20,283.20 2.49% $ 19,650.26 1.76% $ 23,158.07 8/31/2003 20.91 3.08% $ 20,908.80 2.49% $ 19,440.00 1.95% $ 22,912.60 9/30/2003 20.39 -2.47% $ 20,391.50 -1.07% $ 20,532.53 -1.06% $ 24,209.45 10/31/2003 21.64 6.14% $ 21,642.70 5.62% $ 20,748.12 5.66% $ 24,422.49 11/30/2003 21.82 0.83% $ 21,823.10 1.05% $ 21,466.01 0.88% $ 25,702.23 12/31/2003 22.22 1.82% $ 22,220.10 3.46% $ 21,903.92 5.24% $ 26,175.15 1/31/2004 22.35 0.60% $ 22,352.40 2.04% $ 22,044.10 1.84% $ 26,538.99 2/29/2004 22.28 -0.32% $ 22,280.30 0.64% $ 21,634.08 1.39% $ 26,138.25 3/31/2004 22.02 -1.19% $ 22,015.60 -1.86% $ 21,383.13 -1.51% $ 25,727.88 4/30/2004 21.40 -2.79% $ 21,402.00 -1.16% $ 21,780.85 -1.57% $ 26,080.35 5/31/2004 21.73 1.52% $ 21,726.90 1.86% $ 22,053.11 1.37% $ 26,586.31 6/30/2004 6/30/04 21.78 0.22% $ 21,775.00 1.25% $ 22,053.11 1.94% $ 26,586.31
In terms of sector performance, information technology was the largest contributor to the fund's results and our largest overweight position relative to the benchmark. In addition to Cisco, Qualcomm was a huge winner, as its share price rose 104% in the 12-month period. Our holdings in semiconductor companies Intel and Maxim Integrated Products also made significant contributions to the fund's performance this year. However, despite these winners, the fund underperformed the benchmark in this sector due to overall poor stock selections. The sector's most significant detractor was Novell, a software company with Internet security and Linux solutions. Novell's stock rose significantly in the year, but our purchases were poorly timed, resulting in a loss for the fund. We sold Novell from the portfolio shortly after the end of the fiscal year. The industrial sector was the second most significant contributor for the fund, although it underperformed versus the benchmark primarily due to stock selection. Beyond 3M, we also had success with FedEx, whose international business was exceptionally strong. No sector represented in the portfolio lost money overall, but our two smallest contributors in absolute terms were consumer discretionary, which suffered relative to the benchmark because of poor stock selection, and materials, where socially rejected companies in the mining industry not in the portfolio saw significant gains. In the coming year we will continue to invest in high-quality large-cap companies. New portfolio manager Jon White plans to seek companies that have steady growth and de-emphasize the more cyclical companies. He also plans to reduce the number of holdings in the fund in order to focus more on each name and potentially benefit more from positive stock selection. The S&P 500 Index is an unmanaged broad-based index that includes 500 of the most widely held U.S. companies. Direct investment cannot be made in these indices. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Registered Public Accounting Firm. 11 PORTFOLIO REVIEW CITIZENS 300 FUND GOAL Long-term capital appreciation STRATEGY Invests mainly in stocks and other equities of U.S. large-capitalization companies INCEPTION DATE Standard shares 08/29/03 TOTAL RETURNS (as of 6/30/2004)
Ticker Since symbol inception ------ --------- Standard shares CFCDX 11.71%
Past performance is not an indication of future performance. Current performance may be lower or higher than the performance data quoted. More current performance information can be obtained at www.citizensfunds.com. Fee waivers are currently in effect and have been instituted in the past to maintain expense limits, without which returns would have been lower. When you sell your fund shares, they may be worth more or less than what you paid for them. The Citizens 300 Fund started at the end of August 2003 and ended its first fiscal year with a total return of 11.71%. During the same period the fund's benchmark, the S&P 500 Index, returned 14.81%. The 300 Fund uses an index strategy, holding companies in the Citizens Index - an index of approximately 300 companies selected to represent what we believe to be the best companies within their respective industries - in a proportion equal to their market weight. With this highly diversified strategy we seek to provide investors a core holding in primarily U.S. domestic equities. The fund's largest holdings typically affect return the most and fiscal 2004 was no exception, with drug and network giants, Pfizer and Cisco, being the top two contributors to positive performance. Other notable winners in the portfolio were the wireless innovator Qualcomm and Yahoo, whose shares appreciated 75% and 118%, respectively, during the 10-month period ended June 30, 2004. The largest detractor from performance was Viacom, which declined by 20% during the ten months. Viacom, which owns some premier assets such as the CBS television network, has struggled with an underperforming radio division. Amgen, a leading biotech firm, also was a disappointment this year, declining by slightly more than 17%. Amgen has a strong franchise, but the stock sold off on concerns about Medicare reimbursements for its flagship products. Beyond individual company performance, financial stocks were the largest sector contributors, where the Citizens Index and the 300 Fund have the largest weight. Our holdings within financials contributed nearly 2.7% of the return for the period, with the diversified insurance company American International Group making the largest contribution. It was the third highest performer for the fund overall. Stocks within the health care sector were the second largest contributors to performance. In addition to Pfizer, top names within this sector were Johnson and Johnson and Zimmer Holdings, a spin-off of Bristol-Myers which sells joint replacements and other orthopedic devices. IMPORTANT NOTES The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The S&P 500 Index is an unmanaged broad-based index that includes 500 of the most widely held U.S. companies. Direct investment cannot be made in this index or the Citiizens Index. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. 12 CITIZENS 300 FUND [PERFORMANCE GRAPH] CITIZENS 300 INDEX FUND PERFORMANCE SINCE INCEPTION 8/29/03
DATE DATE NAV MONTHLY FUND RETURN FUND VALUE S&P 500 INDEX RETURN INDEX VALUE 8/29/2003 8/29/2003 10.00 $ 10,000.00 $10,000.00 9/30/2003 9/30/2003 9.89 -1.10% $ 9,890.00 -1.06% $10,566.00 10/31/2003 10/31/2003 10.49 6.07% $ 10,490.00 5.66% $10,658.98 11/30/2003 11/30/2003 10.58 0.86% $ 10,580.00 0.88% $11,217.51 12/31/2003 12/31/2003 10.98 3.79% $ 10,980.50 5.24% $11,423.91 1/31/2004 1/31/2004 11.12 1.28% $ 11,120.70 1.84% $11,582.71 2/29/2004 2/29/2004 11.20 0.72% $ 11,200.70 1.39% $11,407.81 3/31/2004 3/31/2004 11.08 -1.07% $ 11,080.60 -1.51% $11,228.70 4/30/2004 4/30/2004 10.89 -1.72% $ 10,890.40 -1.57% $11,382.54 5/31/2004 5/31/2004 11.04 1.38% $ 11,040.60 1.37% $11,603.36 6/30/2004 6/30/2004 11.17 1.18% $ 11,170.70 1.94% $11,603.36
No sector's performance in the portfolio was negative in absolute terms, however, consumer discretionary was the lowest performing sector relative to the benchmark. For its approximately 13.4% allocation of the portfolio, this sector contributed just 0.39% to the fund's total return. In addition to the weak performance of Viacom, the consumer discretionary sector of the portfolio was also hurt by Kohl's, which declined based on difficulties in the company's expansion strategy. In March Kohl's was removed from the Citizens Index, and hence the 300 Fund as well, after it had declined 20% in the 6 months we held it - but before it fell another 16% to close out the fiscal year. Other underperforming sectors in the portfolio relative to the benchmark included information technology and financials. Looking forward, we remain positive about our fund's index strategy - seeking to reinvest the largest proportion of assets in the companies whose shares are rising and systematically invest proportionately less in companies with declining values. We believe that following this strategy and adhering to the selection of companies within the socially responsible Citizens Index can be a smart way to participate in the large-cap universe of stocks. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Registered Public Accounting Firm. PORTFOLIO REVIEW CITIZENS SMALL CAP VALUE FUND A portfolio review for the Citizens Small Cap Value Fund (inception 3/31/04) is not available in this report. Portfolio holdings and financial information for this fund are included in subsequent sections. 13 PORTFOLIO REVIEW CITIZENS VALUE FUND GOAL Long-term capital appreciation STRATEGY Invests mainly in stocks of U.S. large-capitalization companies INCEPTION DATE Standard shares 06/13/96 AVERAGE ANNUAL RETURNS (as of 6/30/2004)
Ticker 1 3 5 Since symbol year years years inception ------ ---- ----- ----- --------- Standard shares MYPVX 21.64% -8.27% 0.12% 7.57%
Past performance is not an indication of future performance. Current performance may be lower or higher than the performance data quoted. More current performance information can be obtained at www.citizensfunds.com. Fee waivers have been instituted in the past to maintain expense limits, without which returns would have been lower. When you sell your fund shares, they may be worth more or less than what you paid for them. Citizens Value Fund had a great fiscal year in 2004 returning 21.64% for its shareholders, outperforming by over 250 basis points its benchmark - the S&P 500 Index - which returned 19.11%. The fund's strategy of seeking financially strong companies whose shares are selling at a discount to their industry peers was well rewarded. Good stock picking in the consumer staples sector enabled this area to be among the fund's top contributors. CVS, the drugstore chain, was one of the fund's largest contributors, gaining over 50% during the 12-month period and delivering an absolute return of almost 1% for the fund. The underlying business of CVS continues to make progress, yet its valuation still remains below industry averages, so it remains a current holding as of the end of the fiscal year. IMPORTANT NOTES The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. The inception date of the Citizens Value Fund's predecessor, the Meyers Pride Value Fund, is June 13, 1996. On September 24, 2001, the Meyers Pride Value Fund contributed its portfolio securities in exchange for Standard shares in the Citizens Value Fund. The performance shown includes performance of the Citizens Value Fund's predecessor. In absolute terms, the largest contributor to the portfolio was Intel, which provided 1.2% of the fund's total return. At the start of the year Intel was selling at a relative discount to its peers and it almost doubled in the period. As Intel's shares rose, our strategy of automatically selling companies as they approach the average valuation of industry peers enabled the portfolio to lock in these gains. ConocoPhillips, an oil company with one of the better environmental records, was another large contributor to performance. ConocoPhillips sells at an attractive discount to socially rejected Exxon Mobil and ChevronTexaco, making it a good fit for the portfolio's strategy. During the fiscal year ConocoPhillips rose 43%, making it also one of the largest contributors to the fund's performance. Despite the positive contributions of Intel and ConocoPhillips, the information technology and energy sectors were our poorest performers relative to the benchmark. The largest detractors in the portfolio were disk drive maker Maxtor, and pharmaceutical giant Merck. When we purchased Maxtor it was selling at a significant 14 CITIZENS VALUE FUND [PERFORMANCE GRAPH] CITIZENS VALUE FUND PERFORMANCE SINCE INCEPTION 06/13/96
DATE DATE NAV MONTHLY FUND RETURN FUND VALUE S&P 500 RETURN INDEX VALUE 6/13/96 6/13/96 10.00 $ 10,000.00 $ 10,000.00 6/30/1996 9.74 -2.60% $ 9,740.00 0.38% $ 10,038.00 7/31/1996 9.22 -5.34% $ 9,220.00 -4.42% $ 9,594.32 8/30/1996 9.50 3.04% $ 9,500.00 2.11% $ 9,796.76 9/30/1996 9.91 4.32% $ 9,910.00 5.63% $ 10,348.32 10/31/1996 9.89 -0.20% $ 9,890.00 2.76% $ 10,633.93 11/30/1996 10.88 10.01% $ 10,880.00 7.56% $ 11,437.86 12/31/1996 10.81 -0.64% $ 10,810.00 -1.98% $ 11,211.39 1/31/1997 11.33 4.81% $ 11,330.00 6.25% $ 11,912.10 2/28/97 11.66 2.91% $ 11,660.00 0.78% $ 12,005.01 3/31/1997 11.24 -3.60% $ 11,240.00 -4.11% $ 11,511.61 4/30/1997 11.38 1.25% $ 11,380.00 5.97% $ 12,198.85 5/31/1997 12.23 7.47% $ 12,230.00 6.09% $ 12,941.76 6/30/1997 6/30/97 12.35 0.98% $ 12,350.00 4.48% $ 13,521.55 7/31/1997 13.47 9.07% $ 13,470.00 7.96% $ 14,597.87 8/29/1997 13.21 -1.93% $ 13,210.00 -5.60% $ 13,780.39 09/30/97 13.58 2.80% $ 13,580.00 5.48% $ 14,535.55 10/31/1997 12.83 -5.52% $ 12,830.00 -3.34% $ 14,050.06 11/29/1997 12.90 0.55% $ 12,900.00 4.63% $ 14,700.58 12/31/1997 13.17 2.06% $ 13,165.70 1.72% $ 14,953.43 1/31/1998 13.47 2.33% $ 13,472.40 1.11% $ 15,119.42 2/28/1998 14.36 6.58% $ 14,358.50 7.21% $ 16,209.52 3/31/1998 14.78 2.93% $ 14,778.80 5.12% $ 17,039.45 4/30/1998 15.07 2.00% $ 15,074.10 1.01% $ 17,211.55 5/31/1998 14.74 -2.19% $ 14,744.70 -1.72% $ 16,915.51 6/30/1998 6/30/98 14.51 -1.62% $ 14,506.10 4.06% $ 17,602.28 7/31/1998 14.06 -3.05% $ 14,063.10 -1.06% $ 17,415.70 8/31/1998 11.56 -17.77% $ 11,564.00 -14.46% $ 14,897.39 9/30/1998 12.30 6.39% $ 12,302.40 6.41% $ 15,852.31 10/31/1998 13.45 9.33% $ 13,449.70 8.13% $ 17,141.10 11/30/1998 14.56 8.28% $ 14,562.90 6.06% $ 18,179.85 12/31/1998 14.96 2.71% $ 14,957.00 5.76% $ 19,227.01 1/31/1999 14.71 -1.62% $ 14,714.40 4.18% $ 20,030.70 2/28/1999 14.08 -4.29% $ 14,083.60 -3.11% $ 19,407.75 3/31/1999 14.94 6.12% $ 14,944.90 4.00% $ 20,184.06 4/30/1999 16.51 10.47% $ 16,509.70 3.87% $ 20,965.18 5/31/1999 17.02 3.09% $ 17,019.20 -2.36% $ 20,470.40 6/30/1999 6/30/99 17.89 5.13% $ 17,892.60 5.55% $ 21,606.51 7/31/1999 17.82 -0.41% $ 17,819.80 -3.12% $ 20,932.39 8/31/1999 17.24 -3.27% $ 17,237.50 -0.49% $ 20,829.82 9/30/1999 16.61 -3.66% $ 16,606.80 -2.74% $ 20,259.08 10/31/1999 16.90 1.75% $ 16,897.90 6.33% $ 21,541.48 11/30/1999 18.65 10.36% $ 18,648.20 2.03% $ 21,978.77 12/31/1999 19.20 2.93% $ 19,195.50 5.89% $ 23,273.32 1/31/2000 18.73 -2.43% $ 18,728.30 -5.02% $ 22,105.00 2/29/2000 18.02 -3.78% $ 18,020.80 -1.89% $ 21,687.22 3/31/2000 19.42 7.78% $ 19,422.50 9.78% $ 23,808.23 4/30/2000 18.81 -3.16% $ 18,808.40 -3.01% $ 23,091.60 5/31/2000 19.46 3.48% $ 19,462.50 -2.05% $ 22,618.22 6/30/2000 6/30/00 19.21 -1.30% $ 19,208.90 2.47% $ 23,176.89 7/31/2000 18.88 -1.74% $ 18,875.20 -1.56% $ 22,815.33 8/31/2000 20.78 10.11% $ 20,784.00 6.21% $ 24,232.16 9/30/2000 19.93 -4.11% $ 19,929.70 -5.28% $ 22,952.71 10/31/2000 20.04 0.54% $ 20,036.50 -0.42% $ 22,856.31 11/30/2000 18.52 -7.59% $ 18,515.40 -7.88% $ 21,055.23 12/31/2000 19.16 3.49% $ 19,160.70 0.49% $ 21,158.40 1/31/2001 22.62 18.04% $ 22,617.90 3.55% $ 21,909.52 2/28/2001 20.82 -7.95% $ 20,820.20 -9.12% $ 19,911.37 3/31/2001 20.17 -3.10% $ 20,174.80 -6.34% $ 18,648.99 4/30/2001 22.34 10.74% $ 22,341.40 7.77% $ 20,098.02 5/31/2001 23.49 5.16% $ 23,493.80 0.67% $ 20,232.68 6/30/2001 6/30/01 23.32 -0.72% $ 23,324.70 -2.43% $ 19,741.02 7/31/2001 22.85 -2.04% $ 22,848.40 -0.98% $ 19,547.56 8/31/2001 21.40 -6.32% $ 21,404.10 -6.26% $ 18,323.88 9/30/2001 19.28 -9.91% $ 19,283.60 -8.08% $ 16,843.31 10/31/2001 19.53 1.28% $ 19,529.50 1.91% $ 17,165.02 11/30/2001 21.82 11.72% $ 21,818.90 7.67% $ 18,481.58 12/31/2001 21.73 -0.41% $ 21,730.10 0.88% $ 18,644.22 1/31/2002 20.77 -4.41% $ 20,771.20 -1.46% $ 18,372.01 2/28/2002 18.89 -9.07% $ 18,887.60 -1.93% $ 18,017.43 3/31/2002 19.95 5.62% $ 19,949.30 3.76% $ 18,694.89 4/30/2002 18.00 -9.79% $ 17,997.10 -6.06% $ 17,561.98 5/31/2002 17.48 -2.85% $ 17,483.40 -0.74% $ 17,432.02 6/30/2002 6/30/02 14.97 -14.40% $ 14,966.20 -7.12% $ 16,190.86 7/31/2002 13.08 -12.59% $ 13,082.60 -7.79% $ 14,929.59 8/31/2002 13.27 1.44% $ 13,271.00 0.66% $ 15,028.12 9/30/2002 11.34 -14.58% $ 11,336.00 -10.87% $ 13,394.57 10/31/2002 12.86 13.44% $ 12,860.00 8.80% $ 14,573.29 11/30/2002 14.18 10.25% $ 14,178.50 5.89% $ 15,431.66 12/31/2002 12.93 -8.82% $ 12,928.50 -5.87% $ 14,525.82 1/31/2003 12.74 -1.46% $ 12,740.10 -2.62% $ 14,145.24 2/28/2003 12.40 -2.69% $ 12,397.60 -1.50% $ 13,933.06 3/31/2003 12.50 0.83% $ 12,500.40 0.97% $ 14,068.21 4/30/2003 13.53 8.22% $ 13,527.80 8.24% $ 15,227.43 5/31/2003 14.74 8.99% $ 14,743.60 5.27% $ 16,029.92 6/30/2003 6/30/03 14.80 0.35% $ 14,795.00 1.28% $ 16,235.10 7/31/2003 15.12 2.20% $ 15,120.30 1.76% $ 16,520.84 8/31/2003 15.60 3.17% $ 15,599.80 1.95% $ 16,843.00 9/30/2003 15.31 -1.87% $ 15,308.70 -1.06% $ 16,664.46 10/31/2003 16.32 6.60% $ 16,319.00 5.66% $ 17,607.67 11/30/2003 16.61 1.78% $ 16,610.10 0.88% $ 17,762.62 12/31/2003 17.26 3.92% $ 17,260.80 5.24% $ 18,693.38 1/31/2004 17.50 1.39% $ 17,500.50 1.84% $ 19,037.34 2/29/2004 17.83 1.86% $ 17,825.90 1.39% $ 19,301.96 3/31/2004 17.79 -0.19% $ 17,791.70 -1.51% $ 19,010.50 4/30/2004 17.36 -2.41% $ 17,363.60 -1.57% $ 18,712.03 5/31/2004 17.60 1.38% $ 17,603.30 1.37% $ 18,968.39 6/30/2004 6/30/04 18.00 2.24% $ 17,997.10 1.94% $ 19,336.37
discount to peers, but news of falling profits within the disk drive industry spooked Wall Street and the value of the stock's shares fell by almost 12% during the 12-month period. Realizing the investment was a mistake, we sold the position in May and took a loss. Merck, whose stock price declined by approximately 16% during the time we held it, remains a current holding because we believe the sentiment on the company is overly negative. It seems to us that investors are concerned that Merck has too few new drugs in its pipeline and that in future years the company's profits will decline as its patents expire and generic replacements come on the market. Our view is that Merck is in the process of a multi-year turnaround and, with almost $10 billion in annual cash flow and enormous distribution strength, has a wide range of strategic options that are under-appreciated on Wall Street. Of course, time will tell and we will watch Merck carefully. In the coming year we will continue to follow the quality relative value strategy that is the hallmark of Citizens Value Fund. We will look for companies whose shares are selling at an attractive discount to industry peers and have sufficient assets, as well as a catalyst for fundamental improvement. The S&P 500 Index is an unmanaged broad-based index that includes 500 of the most widely held U.S. companies. Direct investment cannot be made in this index. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Registered Public Accounting Firm. 15 PORTFOLIO REVIEW CITIZENS GLOBAL EQUITY FUND GOAL Capital appreciation STRATEGY Invests mainly in stocks of foreign and U.S. companies INCEPTION DATES Standard shares 02/08/94 Institutional shares 11/01/99 Administrative shares 02/04/00 AVERAGE ANNUAL RETURNS (as of 6/30/2004)
Ticker 1 3 5 10 Since symbol year years years years inception ------ ---- ----- ----- ----- --------- Standard shares WAGEX 13.37% -6.05% -3.36% 6.55% 6.09% Institutional shares CGEIX 14.14% -5.49% N/A N/A -6.10% Administrative shares CEADX 13.69% -5.80% N/A N/A -14.60%
Past performance is not an indication of future performance. Current performance may be lower or higher than the performance data quoted. More current performance information can be obtained at www.citizensfunds.com. Fee waivers have been instituted in the past to maintain expense limits, without which returns would have been lower. When you sell your fund shares, they may be worth more or less than what you paid for them. Conditions in global equity markets differed sharply in the first and second half of fiscal 2004. The first period saw markets rally sharply from oversold levels, reacting to the stimulus provided by a worldwide easing in interest rates. Moving into the second half, price action became far more volatile, reflecting investors' uncertainty about the extent of the forthcoming recovery. Since the Madrid train bombing, the ever-present threat of terrorist activity, combined with the new reality of hikes in administered interest rates and the stirrings of inflation (given credence largely by a rise in the price of oil and other commodities), have limited the extent of progress in the securities markets. This pessimistic mood has remained deep-seated, despite the scarcity of data to support it. In the last months of the fiscal year, most companies reported better-than-expected earnings. At the macro level there is little evidence to suggest either that growth is sufficiently strong to cause inflation to rise at a threatening pace, or that the monetary tightening already embarked upon will need to be anything other than measured. By June 30, the MSCI World Index (the fund's benchmark index) had risen 24.00% for the fiscal year - almost all of the gain registered in the first six months. Citizens Global Equity Fund (Standard shares) generated a return of 13.37% over the same period. Major changes in policy in the year included a shift from Europe into Japan, where we believe the fledgling economic recovery will continue to progress. This involved taking profits in some of our long-established successful positions in banks like UBS and Royal Bank of Scotland to move into Japanese equivalents such as Mitsubishi-Tokyo Finance. Similarly, within the consumer sector we liquidated positions in the likes of Tesco to move into Seven Eleven Japan. IMPORTANT NOTES The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investments in the Citizens Global Equity Fund involve risks of investing in foreign markets, including political instability and currency risks, excessive taxation, different financial and auditing standards, increased market volatility and other factors. 16 CITIZENS GLOBAL EQUITY FUND [PERFORMANCE GRAPH] CITIZENS GLOBAL EQUITY FUND - STANDARD SHARES PERFORMANCE SINCE INCEPTION 02/08/94
DATE DATE NAV MONTHLY FUND RETURN FUND VALUE MSCI WORLD INDEX RETURN INDEX VALUE 2/8/94 2/8/94 10.00 $ 10,000.00 $ 10,000.00 2/28/1994 10.00 0.00% $ 10,000.00 0.89% $ 10,089.00 3/31/1994 10.00 0.00% $ 10,000.00 -4.33% $ 9,652.15 4/30/1994 10.00 0.00% $ 10,000.00 3.07% $ 9,948.47 5/31/1994 9.88 -1.20% $ 9,880.00 0.23% $ 9,971.35 6/30/1994 6/30/94 9.80 -0.81% $ 9,800.00 -0.30% $ 9,941.43 7/31/1994 9.99 1.94% $ 9,990.00 1.88% $ 10,128.33 8/31/1994 10.07 0.80% $ 10,070.00 2.99% $ 10,431.17 9/30/1994 10.00 -0.70% $ 10,000.00 -2.65% $ 10,154.74 10/31/1994 10.17 1.70% $ 10,170.00 2.82% $ 10,441.11 11/30/1994 9.68 -4.82% $ 9,680.00 -4.36% $ 9,985.88 12/31/1994 9.73 0.53% $ 9,731.40 0.94% $ 10,079.74 1/31/1995 9.40 -3.41% $ 9,399.30 -1.53% $ 9,925.52 2/28/1995 9.64 2.57% $ 9,640.80 1.43% $ 10,067.46 3/31/1995 9.87 2.40% $ 9,872.30 4.80% $ 10,550.70 4/30/1995 10.15 2.85% $ 10,154.10 3.46% $ 10,915.75 5/31/1995 10.62 4.56% $ 10,617.00 0.83% $ 11,006.35 6/30/1995 6/30/95 10.76 1.33% $ 10,757.90 -0.05% $ 11,000.85 7/31/1995 11.18 3.93% $ 11,180.50 4.98% $ 11,548.69 8/31/1995 10.78 -3.60% $ 10,778.00 -2.25% $ 11,288.84 9/30/1995 11.09 2.89% $ 11,090.00 2.89% $ 11,615.09 10/31/1995 10.94 -1.36% $ 10,939.00 -1.60% $ 11,429.25 11/30/1995 10.92 -0.18% $ 10,918.90 3.45% $ 11,823.56 12/31/1995 11.07 1.37% $ 11,068.60 2.90% $ 12,166.44 1/31/1996 11.44 3.31% $ 11,435.20 1.79% $ 12,384.22 2/26/1996 11.38 -0.45% $ 11,384.30 0.59% $ 12,457.29 3/31/1996 11.47 0.72% $ 11,465.80 1.64% $ 12,661.59 4/30/1996 11.96 4.35% $ 11,964.70 2.33% $ 12,956.60 5/31/1996 11.96 0.00% $ 11,964.70 0.07% $ 12,965.67 6/30/1996 6/30/96 12.11 1.19% $ 12,107.30 0.49% $ 13,029.21 7/31/1996 11.73 -3.11% $ 11,730.50 -3.55% $ 12,566.67 8/30/1996 11.92 1.65% $ 11,924.00 1.13% $ 12,708.67 9/30/1996 12.28 2.99% $ 12,280.40 3.89% $ 13,203.04 10/31/1996 12.25 -0.25% $ 12,249.80 0.68% $ 13,292.82 11/30/1996 12.68 3.49% $ 12,677.50 5.58% $ 14,034.56 12/31/1996 12.52 -1.20% $ 12,524.80 -1.62% $ 13,807.20 1/31/1997 13.00 3.82% $ 13,003.40 1.19% $ 13,971.51 2/28/97 13.00 0.00% $ 13,003.40 1.13% $ 14,129.38 3/31/1997 12.88 -0.94% $ 12,881.20 -2.00% $ 13,846.80 4/30/1997 13.22 2.61% $ 13,217.20 3.25% $ 14,296.82 5/31/1997 14.16 7.16% $ 14,164.20 6.15% $ 15,176.07 6/30/1997 6/30/97 14.73 4.03% $ 14,734.40 4.97% $ 15,930.32 7/31/1997 15.57 5.67% $ 15,569.40 4.59% $ 16,661.52 8/29/1997 14.56 -6.47% $ 14,561.30 -6.71% $ 15,543.53 09/30/97 15.50 6.43% $ 15,498.10 5.42% $ 16,385.99 10/31/1997 14.43 -6.90% $ 14,428.90 -5.28% $ 15,520.81 11/29/1997 14.66 1.62% $ 14,663.10 1.75% $ 15,792.43 12/31/1997 15.02 2.42% $ 15,018.30 1.20% $ 15,981.94 1/31/1998 15.35 2.18% $ 15,346.40 2.77% $ 16,424.64 2/28/1998 16.44 7.10% $ 16,436.60 6.75% $ 17,533.30 3/31/1998 16.96 3.16% $ 16,955.20 4.21% $ 18,271.45 4/30/1998 17.29 2.00% $ 17,293.80 0.96% $ 18,446.86 5/31/1998 17.21 -0.49% $ 17,209.20 -1.27% $ 18,212.58 6/30/1998 6/30/98 17.94 4.24% $ 17,939.40 2.36% $ 18,642.40 7/31/1998 19.27 7.43% $ 19,273.00 -0.18% $ 18,608.84 8/31/1998 16.39 -14.94% $ 16,394.20 -13.35% $ 16,124.56 9/30/1998 16.09 -1.87% $ 16,087.30 1.75% $ 16,406.74 10/31/1998 17.07 6.12% $ 17,071.60 9.02% $ 17,886.63 11/30/1998 18.14 6.26% $ 18,140.50 5.93% $ 18,947.31 12/31/1998 19.86 9.49% $ 19,862.50 4.87% $ 19,870.04 1/31/1999 21.12 6.34% $ 21,121.60 2.18% $ 20,303.21 2/28/1999 20.61 -2.42% $ 20,611.40 -2.67% $ 19,761.11 3/31/1999 21.36 3.63% $ 21,360.30 4.15% $ 20,581.20 4/30/1999 21.32 -0.20% $ 21,316.90 3.93% $ 21,390.04 5/31/1999 20.34 -4.58% $ 20,340.10 -3.67% $ 20,605.03 6/30/1999 6/30/99 21.95 7.90% $ 21,946.50 4.65% $ 21,563.16 7/31/1999 22.45 2.27% $ 22,445.70 -0.31% $ 21,496.31 8/31/1999 22.93 2.18% $ 22,934.20 -0.19% $ 21,455.47 9/30/1999 23.67 3.22% $ 23,672.20 -0.98% $ 21,245.21 10/31/1999 25.43 7.43% $ 25,430.50 5.18% $ 22,345.71 11/30/1999 29.24 14.98% $ 29,240.20 2.80% $ 22,971.39 12/31/1999 34.58 18.26% $ 34,578.50 8.08% $ 24,827.48 1/31/2000 34.13 -1.30% $ 34,129.90 -5.74% $ 23,402.38 2/29/2000 40.21 17.81% $ 40,208.90 0.26% $ 23,463.23 3/31/2000 38.71 -3.74% $ 38,706.00 6.90% $ 25,082.19 4/30/2000 35.20 -9.07% $ 35,195.40 -4.24% $ 24,018.70 5/31/2000 32.38 -8.00% $ 32,380.20 -2.54% $ 23,408.63 6/30/2000 6/30/00 33.65 3.91% $ 33,647.60 3.35% $ 24,192.82 7/31/2000 33.37 -0.83% $ 33,367.20 -2.83% $ 23,508.16 8/31/2000 35.05 5.04% $ 35,049.60 3.24% $ 24,269.83 9/30/2000 32.45 -7.42% $ 32,447.50 -5.33% $ 22,976.24 10/31/2000 30.91 -4.74% $ 30,910.90 -1.69% $ 22,587.95 11/30/2000 27.69 -10.41% $ 27,692.00 -6.08% $ 21,214.60 12/31/2000 27.88 0.68% $ 27,881.40 1.60% $ 21,554.03 1/31/2001 28.25 1.31% $ 28,247.00 1.93% $ 21,970.02 2/28/2001 24.43 -13.50% $ 24,432.80 -8.46% $ 20,111.36 3/31/2001 22.04 -9.78% $ 22,044.30 -6.59% $ 18,786.02 4/30/2001 23.84 8.13% $ 23,835.70 7.37% $ 20,170.55 5/31/2001 23.31 -2.20% $ 23,311.70 -1.30% $ 19,908.33 6/30/2001 6/30/01 22.31 -4.29% $ 22,312.40 -3.15% $ 19,281.22 7/31/2001 21.28 -4.64% $ 21,276.60 -1.34% $ 19,022.85 8/31/2001 20.17 -5.21% $ 20,167.70 -4.81% $ 18,107.85 9/30/2001 18.19 -9.79% $ 18,193.60 -8.82% $ 16,510.74 10/31/2001 18.52 1.81% $ 18,522.60 1.91% $ 16,826.10 11/30/2001 19.56 5.59% $ 19,558.40 5.90% $ 17,818.84 12/31/2001 19.79 1.18% $ 19,789.90 0.62% $ 17,929.31 1/31/2002 18.96 -4.19% $ 18,961.30 -3.04% $ 17,384.26 2/28/2002 18.52 -2.31% $ 18,522.60 -0.88% $ 17,231.28 3/31/2002 19.30 4.21% $ 19,302.50 4.40% $ 17,989.46 4/30/2002 18.63 -3.47% $ 18,632.30 -3.40% $ 17,377.82 5/31/2002 18.51 -0.65% $ 18,510.40 0.17% $ 17,407.36 6/30/2002 6/30/02 17.33 -6.39% $ 17,328.40 -6.08% $ 16,348.99 7/31/2002 15.90 -8.23% $ 15,902.60 -8.44% $ 14,969.14 8/31/2002 15.88 -0.15% $ 15,878.30 0.17% $ 14,994.58 9/30/2002 14.31 -9.90% $ 14,306.30 -11.01% $ 13,343.68 10/31/2002 15.76 10.14% $ 15,756.40 7.37% $ 14,327.11 11/30/2002 16.43 4.25% $ 16,426.60 5.38% $ 15,097.91 12/31/2002 15.55 -5.34% $ 15,549.20 -4.86% $ 14,364.15 1/31/2003 14.90 -4.15% $ 14,903.40 -3.05% $ 13,926.04 2/28/2003 14.75 -1.06% $ 14,745.00 -1.75% $ 13,682.34 3/31/2003 14.42 -2.23% $ 14,416.00 -0.33% $ 13,637.18 4/30/2003 15.54 7.78% $ 15,537.10 8.86% $ 14,845.44 5/31/2003 16.27 4.71% $ 16,268.20 5.69% $ 15,690.15 6/30/2003 6/30/03 16.32 0.30% $ 16,317.00 1.72% $ 15,960.02 7/31/2003 16.66 2.09% $ 16,658.20 2.02% $ 16,282.41 8/31/2003 17.01 2.12% $ 17,011.60 2.15% $ 16,632.48 9/30/2003 16.71 -1.79% $ 16,706.90 0.60% $ 16,732.27 10/31/2003 17.51 4.81% $ 17,511.20 5.92% $ 17,722.83 11/30/2003 17.99 2.71% $ 17,986.40 1.51% $ 17,990.44 12/31/2003 18.90 5.08% $ 18,900.40 6.27% $ 19,118.44 1/31/2004 19.12 1.16% $ 19,119.70 1.60% $ 19,424.34 2/29/2004 19.21 0.45% $ 19,205.00 1.67% $ 19,748.72 3/31/2004 18.73 -2.47% $ 18,729.80 -0.66% $ 19,618.38 4/30/2004 18.22 -2.73% $ 18,218.00 -1.38% $ 19,347.65 5/31/2004 18.32 0.53% $ 18,315.40 0.22% $ 19,390.21 6/30/2004 6/30/04 18.50 1.00% $ 18,498.20 2.05% $ 19,787.71
One of our major themes was our exposure to industrials and materials stocks in recognition of their defensive qualities as a late-cycle play. Holdings in these areas contributed positively overall, with names like Komatsu and Ingersoll-Rand both up by around 50% on the year. Our overweight versus the benchmark to health care was neutral overall but nevertheless boosted by our best-performing stock, Invitrogen. Other stand-outs in terms of performance from the IT area included SAP, Cisco and Applied Materials. Unfortunately, gains among these tech holdings were more than offset by disappointing performance from other parts of the sector. Semiconductor stocks such as Taiwan Semiconductor, where we had a sizeable overweight for much of the year, were disappointing despite strong fundamentals. So were telecoms as a whole, with both SBC and NTT DoCoMo languishing. Within financials, stock performance was highly idiosyncratic: some of our global investment banking names did well, like UBS and ING, while others such as Marsh McLennan, were hit by specific news. As mentioned above, our view is that investors are currently overwhelmed by short-term fear. To the extent that the Federal Reserve is intent on nurturing steady growth via gradual adjustments, we believe we are entering an environment in which our favored high-quality companies will start to move ahead. Accordingly, we are looking to maintain our overweight to sectors such as health care, which we believe offers good examples of companies with stable earnings and good management. We will also be holding our tech positions in expectation of a rebound in the first half of fiscal 2005. The Morgan Stanley Capital International (MSCI) World Index is an unmanaged market capitalization weighted equity index of over 1,500 stocks traded in 22 world markets. Direct investment cannot be made in this index. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Registered Public Accounting Firm. 17 PORTFOLIO REVIEW CITIZENS BALANCED FUND GOAL Current income and capital appreciation STRATEGY Invests in a blend of stocks, bonds, and money market securities INCEPTION DATE Standard shares 12/20/02 AVERAGE ANNUAL RETURNS (as of 6/30/2004)
Ticker 1 Since symbol year inception ------ ---- --------- Standard shares CFBLX 11.31% 10.65%
Past performance is not an indication of future performance. Current performance may be lower or higher than the performance data quoted. More current performance information can be obtained at www.citizensfunds.com. Fee waivers are currently in effect and have been instituted in the past to maintain expense limits, without which returns would have been lower. When you sell your fund shares, they may be worth more or less than what you paid for them. The Citizens Balanced Fund welcomed new co-manager Jonathan White, CFA, on July 1, 2004. Jon, who manages the equity portion of the Balanced Fund, joins co-manager Susan Kelly, who has managed the fixed-income portion of the fund since its inception. During fiscal 2004, the Citizens Balanced Fund returned 11.31% for its shareholders, nearly matching the 11.36% recorded by its benchmark, which is a Blended Index comprised of 60% S&P 500 Index and 40% Lehman Brothers U.S. Aggregate Index. Since its inception, we have gradually increased the fund's allocation to equities, but this climb is now leveling off. As of June 30, 2004, 74.2% of the portfolio was in equities, compared to last year's level of 68.4%. With regard to the equity portion of the portfolio, our holdings in the information technology sector made the biggest contribution to overall return and also posted the best performance versus the S&P 500 Index. The fund benefited from being overweight and making good picks in this sector. Indeed, IT stocks were the fund's top five contributors, as Intel, Cisco, Flextronics and Analog Devices each contributed approximately 1% to the fund's total return, and Symantec alone added over 1.5%. Our second-largest sector position was in financials, which as a sector contributed the second best return to the fund. However, poor overall stock selection caused this sector to fare the poorest relative to the benchmark. No sector returned a loss for the fund, although our holdings in the materials and utilities sectors, in which we were underweight, posted the smallest returns. IMPORTANT NOTES The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Interest rate increases can cause the value of bonds to decrease, meaning that a bond fund investment may lose value in a rising interest rate environment. Junk bonds offer the potential for higher returns but present significant volatility and risk of loss of principal and interest. The fixed-income portion of the portfolio underperformed the Lehman Brothers U.S. Aggregate Index. Our overweight of corporate bonds versus the benchmark during the year contributed to the lagging performance, as did being underweight in the mortgage sector. A massive reversal of interest rates for 5-year and 10-year Treasury notes put pressure on credit spreads, even though corporate bonds were supported by stellar earnings and improved credit quality. Our high-yield corporate holdings ("junk 18 CITIZENS BALANCED FUND [PERFORMANCE GRAPH] CITIZENS BALANCED FUND PERFORMANCE SINCE INCEPTION 12/20/02
DATE DATE NAV MONTHLY FUND RETURN FUND VALUE BLENDED INDEX RETURN INDEX VALUE - ---- ---- --- ------------------- ---------- -------------------- ----------- 12/20/02 12/20/2002 10.00 $ 10,000.00 $10,000.00 12/31/2002 12/31/2002 9.96 -0.40% $ 9,960.00 -3.49% $ 9,846.00 1/31/2003 9.72 -2.41% $ 9,720.00 -1.54% $ 9,811.54 2/28/2003 9.70 -0.21% $ 9,700.00 -0.35% $ 9,865.50 3/31/2003 3/31/2003 9.74 0.36% $ 9,735.30 0.55% $10,385.41 4/30/2003 10.10 3.70% $ 10,095.50 5.27% $10,791.48 5/31/2003 10.47 3.67% $ 10,465.70 3.91% $10,865.95 6/30/2003 6/30/2003 10.49 0.21% $ 10,487.30 0.69% $10,834.43 7/31/2003 10.62 1.24% $ 10,617.50 -0.29% $10,990.45 8/31/2003 10.81 1.79% $ 10,807.90 1.44% $11,036.61 9/30/2003 9/30/2003 10.77 -0.38% $ 10,767.30 0.42% $11,369.92 10/31/2003 11.20 4.00% $ 11,198.40 3.02% $11,440.41 11/30/2003 11.37 1.52% $ 11,368.80 0.62% $11,846.54 12/31/2003 12/31/2003 11.59 1.97% $ 11,592.30 3.55% $12,014.76 1/31/2004 11.68 0.80% $ 11,684.50 1.42% $12,167.35 2/29/2004 11.77 0.70% $ 11,766.50 1.27% $12,093.13 3/31/2004 3/31/2004 11.71 -0.51% $ 11,706.10 -0.61% $11,853.69 4/30/2004 11.50 -1.75% $ 11,500.90 -1.98% $11,931.92 5/31/2004 11.62 1.07% $ 11,624.00 0.66% $12,097.78 6/30/2004 6/30/04 11.67 0.42% $ 11,672.90 1.39% $12,097.78
bonds") continued to outperform versus the benchmark. Notable performers were Domino's Pizza, Nextel Communications, Flextronics and The Gap. In the last year, high-yield outperformed investment-grade corporate bonds. We believe the outlook looks stable for the corporate bond market heading into fiscal 2005. Volatility is lower and supply of bonds is one-third less than last year. Decreased volatility and corporate supply are positive factors for the corporate bond market going forward. Going into fiscal 2005, we expect to continue our overweight position in equities relative to the benchmark, as we believe the equity markets will continue to offer the most attractive returns. New co-manager Jon White will reduce the number of equity holdings and continue the fund's focus on high-quality, steadily growing companies. The S&P 500 Index is an unmanaged broad-based index that includes 500 of the most widely held U.S. companies. The Lehman Brothers U.S. Aggregate Index is an unmanaged index of taxable, investment grade fixed-income securities, including government, corporate, mortgage, and asset-backed securities. Direct investment cannot be made in these indices. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Registered Public Accounting Firm. 19 PORTFOLIO REVIEW CITIZENS INCOME FUND GOAL Current income and monthly dividend payment STRATEGY Invests mainly in bonds and mortgage-backed securities INCEPTION DATE Standard shares 06/10/92 AVERAGE ANNUAL RETURNS (as of 6/30/2004)
Ticker 1 3 5 10 Since years year years years years inception ----- ---- ----- ----- ----- --------- Standard shares WAIMX -0.63% 3.11% 4.09% 5.67% 5.59%
Past performance is not an indication of future performance. Current performance may be lower or higher than the performance data quoted. More current performance information can be obtained at www.citizensfunds.com. Fee waivers have been instituted in the past to maintain expense limits, without which returns would have been lower. When you sell your fund shares, they may be worth more or less than what you paid for them. Improving economic indicators helped set a positive tone for the corporate bond market in the 12-month period ended June 30, 2004, while better-than-expected economic data caused a significant rise in interest rates in the beginning of 2004. In a reverse from a year ago, where declining interest rates dragged down yields but boosted total return for shareholders, the past year has seen higher yields and lower total returns on bond fund investments. Corporate bonds have had negative excess returns four out of the final six months of the fiscal year and the quarter ended June 30, 2004 was the worst performing quarter ever for fixed-income funds. For the fiscal year ended June 30, 2004, the Citizens Income Fund returned - -0.63%, underperforming its benchmark, the Lehman Brothers U.S. Aggregate Index, which returned 0.32%. The underperformance can be attributed mainly to our overweight of corporate bonds versus the benchmark during this time period. In addition, being underweight versus the benchmark in the mortgage sector hurt us a bit as well. The Treasury market moved substantially during the year because of positive job reports, increased consumer confidence and positive increases in gross domestic product (GDP). The yield on 5-year Treasury notes increased 136 basis points and the yield on 10-year Treasury notes rose 107 basis points. As interest rates move higher, the prices of fixed-income securities typically move lower, creating a challenging scenario for bond fund managers. Although corporate bonds were supported by improvement in credit quality and stellar first quarter earnings, credit spreads were under pressure from the massive reversal of interest rates. The exception to that theme was the high yield market. Our high yield corporate holdings (commonly known as "junk bonds") continued to outperform versus the benchmark, including Domino's Pizza, Nextel Communications, Flextronics and The Gap. There was a meaningful tightening of spreads on the lower part of the credit curve in the last year. IMPORTANT NOTES The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Interest rate increases can cause the value of bonds to decrease, meaning that a bond fund investment may lose value in a rising interest rate environment. Junk bonds offer the potential for higher returns but present significant volatility and risk of loss of principal and interest. 20 CITIZENS INCOME FUND [PERFORMANCE GRAPH] CITIZENS INCOME FUND PERFORMANCE SINCE INCEPTION 06/10/92
DATE DATE NAV MONTHLY FUND RETURN FUND VALUE LEHMAN AGGREGATE INDEX RETURN INDEX VALUE ---- ---- --- ------------------- ---------- ----------------------------- ----------- 6/10/92 6/10/92 10.00 $ 10,000.00 $ 10,000.00 6/30/1992 10.08 0.80% $ 10,080.00 1.17% $ 10,117.00 7/31/1992 10.29 2.08% $ 10,290.10 2.04% $ 10,323.39 8/31/1992 10.37 0.81% $ 10,373.30 1.01% $ 10,427.65 9/30/1992 10.52 1.39% $ 10,517.20 1.19% $ 10,551.74 10/31/1992 10.32 -1.87% $ 10,320.30 -1.33% $ 10,411.40 11/30/1992 10.27 -0.52% $ 10,266.60 0.02% $ 10,413.49 12/31/1992 10.42 1.49% $ 10,419.20 1.59% $ 10,579.06 1/31/1993 10.62 1.92% $ 10,619.30 1.92% $ 10,782.18 2/28/1993 10.83 1.97% $ 10,828.40 1.75% $ 10,970.87 3/31/1993 10.85 0.24% $ 10,854.10 0.42% $ 11,016.94 4/30/1993 10.92 0.60% $ 10,919.30 0.70% $ 11,094.06 5/31/1993 10.88 -0.33% $ 10,882.90 0.13% $ 11,108.49 6/30/1993 6/30/93 11.10 1.95% $ 11,095.60 1.81% $ 11,309.55 7/31/1993 11.14 0.43% $ 11,142.80 0.57% $ 11,374.01 8/31/1993 11.34 1.73% $ 11,335.20 1.75% $ 11,573.06 9/30/1993 11.38 0.40% $ 11,380.50 0.27% $ 11,604.31 10/31/1993 11.45 0.60% $ 11,449.30 0.37% $ 11,647.24 11/30/1993 11.36 -0.80% $ 11,357.80 -0.85% $ 11,548.24 12/31/1993 11.46 0.87% $ 11,456.80 0.54% $ 11,610.60 1/31/1994 11.59 1.13% $ 11,585.90 1.35% $ 11,767.34 2/28/1994 11.39 -1.66% $ 11,393.70 -1.74% $ 11,562.59 3/31/1994 11.20 -1.69% $ 11,200.70 -2.47% $ 11,277.00 4/30/1994 11.09 -1.02% $ 11,086.30 -0.80% $ 11,186.78 5/31/1994 11.10 0.09% $ 11,096.10 -0.01% $ 11,185.66 6/30/1994 6/30/94 11.10 0.00% $ 11,096.10 -0.22% $ 11,161.05 7/31/1994 11.23 1.18% $ 11,226.60 1.99% $ 11,383.16 8/31/1994 11.26 0.33% $ 11,263.20 0.12% $ 11,396.82 9/30/1994 11.18 -0.77% $ 11,176.10 -1.47% $ 11,229.28 10/31/1994 11.14 -0.35% $ 11,136.90 -0.09% $ 11,219.18 11/30/1994 11.05 -0.75% $ 11,053.40 -0.22% $ 11,194.50 12/31/1994 11.10 0.46% $ 11,104.20 0.69% $ 11,271.74 1/31/1995 11.26 1.38% $ 11,257.40 1.98% $ 11,494.92 2/28/1995 11.57 2.76% $ 11,567.90 2.38% $ 11,768.50 3/31/1995 11.67 0.87% $ 11,668.50 0.61% $ 11,840.29 4/30/1995 11.84 1.45% $ 11,838.10 1.40% $ 12,006.05 5/31/1995 12.17 2.81% $ 12,171.20 3.87% $ 12,470.68 6/30/1995 6/30/95 12.26 0.70% $ 12,255.80 0.73% $ 12,561.72 7/31/1995 12.29 0.27% $ 12,289.10 -0.22% $ 12,534.08 8/31/1995 12.40 0.93% $ 12,403.10 1.21% $ 12,685.75 9/30/1995 12.59 1.49% $ 12,587.90 0.97% $ 12,808.80 10/31/1995 12.68 0.74% $ 12,680.50 1.30% $ 12,975.31 11/30/1995 12.84 1.28% $ 12,842.90 1.50% $ 13,169.94 12/31/1995 13.03 1.49% $ 13,034.10 1.40% $ 13,354.32 1/31/1996 13.12 0.69% $ 13,123.60 0.66% $ 13,442.46 2/26/1996 13.01 -0.83% $ 13,014.50 -1.74% $ 13,208.56 3/31/1996 12.90 -0.91% $ 12,895.70 -0.70% $ 13,116.10 4/30/1996 12.82 -0.55% $ 12,824.90 -0.56% $ 13,042.65 5/31/1996 12.81 -0.12% $ 12,809.80 -0.20% $ 13,016.57 6/30/1996 6/30/96 12.93 0.92% $ 12,927.50 1.34% $ 13,190.99 7/31/1996 12.97 0.34% $ 12,971.10 0.27% $ 13,226.60 8/30/1996 13.03 0.45% $ 13,029.50 -0.17% $ 13,204.12 9/30/1996 13.25 1.72% $ 13,254.00 1.74% $ 13,433.87 10/31/1996 13.48 1.69% $ 13,478.20 2.22% $ 13,732.10 11/30/1996 13.71 1.74% $ 13,712.80 1.71% $ 13,966.92 12/31/1996 13.67 -0.34% $ 13,665.80 -0.93% $ 13,837.03 1/31/1997 13.70 0.22% $ 13,696.10 0.31% $ 13,879.92 2/28/1997 13.77 0.52% $ 13,767.70 0.25% $ 13,914.62 3/31/1997 13.62 -1.07% $ 13,621.00 -1.11% $ 13,760.17 4/30/1997 13.77 1.11% $ 13,772.70 1.50% $ 13,966.57 5/31/1997 13.95 1.31% $ 13,953.30 0.95% $ 14,099.25 6/30/1997 6/30/97 14.16 1.50% $ 14,163.00 1.19% $ 14,267.04 7/31/1997 14.59 3.05% $ 14,594.40 2.70% $ 14,652.25 8/29/1997 14.45 -1.00% $ 14,448.00 -0.85% $ 14,527.70 9/30/1997 14.67 1.56% $ 14,672.80 1.47% $ 14,741.26 10/31/1997 14.86 1.25% $ 14,855.70 1.45% $ 14,955.01 11/29/1997 14.94 0.56% $ 14,938.90 0.46% $ 15,023.80 12/31/1997 15.10 1.06% $ 15,097.80 1.01% $ 15,175.54 1/31/1998 15.30 1.37% $ 15,304.90 1.28% $ 15,369.79 2/28/1998 15.28 -0.15% $ 15,281.40 -0.08% $ 15,357.49 3/31/1998 15.31 0.20% $ 15,312.10 0.34% $ 15,409.71 4/30/1998 15.34 0.19% $ 15,340.80 0.52% $ 15,489.84 5/31/1998 15.51 1.10% $ 15,509.60 0.95% $ 15,636.99 6/30/1998 6/30/98 15.65 0.90% $ 15,649.10 0.85% $ 15,769.91 7/31/1998 15.65 -0.01% $ 15,647.40 0.21% $ 15,803.02 8/31/1998 15.72 0.47% $ 15,720.30 1.63% $ 16,060.61 9/30/1998 15.92 1.27% $ 15,919.60 2.34% $ 16,436.43 10/31/1998 15.67 -1.57% $ 15,669.20 -0.53% $ 16,349.32 11/30/1998 15.85 1.12% $ 15,845.00 0.57% $ 16,442.51 12/31/1998 15.97 0.82% $ 15,974.80 0.30% $ 16,491.84 1/31/1999 16.15 1.07% $ 16,145.60 0.71% $ 16,608.93 2/28/1999 15.90 -1.55% $ 15,895.50 -1.75% $ 16,318.27 3/31/1999 15.98 0.55% $ 15,982.40 0.55% $ 16,408.02 4/30/1999 16.06 0.48% $ 16,059.20 0.32% $ 16,460.53 5/31/1999 15.91 -0.94% $ 15,907.70 -0.88% $ 16,315.68 6/30/1999 6/30/99 15.77 -0.86% $ 15,770.70 -0.32% $ 16,263.46 7/31/1999 15.75 -0.10% $ 15,754.80 -0.43% $ 16,193.53 8/31/1999 15.66 -0.58% $ 15,663.80 -0.05% $ 16,185.44 9/30/1999 15.76 0.64% $ 15,764.80 1.16% $ 16,373.19 10/31/1999 15.77 0.01% $ 15,766.70 0.37% $ 16,433.77 11/30/1999 15.83 0.39% $ 15,828.20 -0.01% $ 16,432.12 12/31/1999 15.84 0.10% $ 15,844.20 -0.48% $ 16,353.25 1/31/2000 15.82 -0.17% $ 15,817.20 -0.33% $ 16,299.28 2/29/2000 15.93 0.72% $ 15,931.60 1.21% $ 16,496.51 3/31/2000 15.98 0.30% $ 15,980.00 1.32% $ 16,714.26 4/30/2000 15.94 -0.26% $ 15,938.70 -0.29% $ 16,665.79 5/31/2000 15.91 -0.20% $ 15,906.30 -0.05% $ 16,657.45 6/30/2000 6/30/00 16.30 2.46% $ 16,298.30 2.08% $ 17,003.93 7/31/2000 16.47 1.03% $ 16,466.50 0.91% $ 17,158.67 8/31/2000 16.69 1.35% $ 16,688.70 1.45% $ 17,407.47 9/30/2000 16.67 -0.10% $ 16,671.80 0.63% $ 17,517.13 10/31/2000 16.63 -0.23% $ 16,634.10 0.66% $ 17,632.75 11/30/2000 16.66 0.17% $ 16,662.40 1.64% $ 17,921.92 12/31/2000 16.99 1.97% $ 16,990.00 1.86% $ 18,255.27 1/31/2001 17.43 2.57% $ 17,426.90 1.64% $ 18,554.66 2/28/2001 17.64 1.23% $ 17,641.20 0.87% $ 18,716.08 3/31/2001 17.66 0.09% $ 17,656.80 0.50% $ 18,809.66 4/30/2001 17.55 -0.63% $ 17,546.20 -0.42% $ 18,730.66 5/31/2001 17.62 0.44% $ 17,623.40 0.60% $ 18,843.05 6/30/2001 6/30/01 17.58 -0.25% $ 17,579.50 0.38% $ 18,914.65 7/31/2001 18.04 2.63% $ 18,041.60 2.24% $ 19,338.34 8/31/2001 18.21 0.92% $ 18,208.40 1.15% $ 19,560.73 9/30/2001 18.07 -0.75% $ 18,071.90 1.17% $ 19,789.59 10/31/2001 18.26 1.04% $ 18,259.20 2.09% $ 20,203.19 11/30/2001 17.94 -1.76% $ 17,937.60 -1.38% $ 19,924.39 12/31/2001 17.73 -1.15% $ 17,730.70 -0.64% $ 19,796.87 1/31/2002 17.76 0.17% $ 17,761.30 0.81% $ 19,957.23 2/28/2002 17.80 0.23% $ 17,802.20 0.97% $ 20,150.81 3/31/2002 17.42 -2.14% $ 17,421.50 -1.66% $ 19,816.31 4/30/2002 17.58 0.89% $ 17,576.70 1.94% $ 20,200.75 5/31/2002 17.71 0.75% $ 17,708.60 0.85% $ 20,372.45 6/30/2002 6/30/02 17.43 -1.59% $ 17,427.30 0.86% $ 20,547.65 7/31/2002 17.49 0.37% $ 17,492.10 1.21% $ 20,796.28 8/31/2002 17.81 1.81% $ 17,809.30 1.69% $ 21,147.74 9/30/2002 18.18 2.09% $ 18,181.60 1.62% $ 21,490.33 10/31/2002 18.06 -0.66% $ 18,060.90 -0.46% $ 21,391.48 11/30/2002 17.91 -0.81% $ 17,914.10 -0.03% $ 21,385.06 12/31/2002 18.35 2.45% $ 18,352.40 2.07% $ 21,827.73 1/31/2003 18.38 0.14% $ 18,377.30 0.09% $ 21,847.37 2/28/2003 18.74 1.96% $ 18,737.50 1.38% $ 22,148.87 3/31/2003 18.78 0.22% $ 18,778.10 -0.08% $ 22,131.15 4/30/2003 19.01 1.23% $ 19,008.60 0.83% $ 22,314.84 5/31/2003 19.37 1.91% $ 19,372.30 1.86% $ 22,729.89 6/30/2003 6/30/03 19.39 0.10% $ 19,392.40 -0.20% $ 22,684.43 7/31/2003 18.66 -3.80% $ 18,655.30 -3.36% $ 21,922.24 8/31/2003 18.75 0.51% $ 18,749.60 0.66% $ 22,066.92 9/30/2003 19.30 2.93% $ 19,299.70 2.65% $ 22,651.70 10/31/2003 19.15 -0.79% $ 19,147.10 -0.93% $ 22,441.04 11/30/2003 19.20 0.30% $ 19,204.00 0.24% $ 22,494.89 12/31/2003 19.42 1.10% $ 19,416.20 1.02% $ 22,724.34 1/31/2004 19.55 0.67% $ 19,547.20 0.80% $ 22,906.14 2/29/2004 19.73 0.94% $ 19,731.20 1.08% $ 23,153.52 3/31/2004 19.89 0.80% $ 19,889.20 0.75% $ 23,327.17 4/30/2004 19.37 -2.63% $ 19,366.90 -2.60% $ 22,720.67 5/31/2004 19.19 -0.91% $ 19,189.90 -0.40% $ 22,629.79 6/30/2004 6/30/04 19.27 0.42% $ 19,270.20 0.57% $ 22,758.78
Heading into the first half of fiscal 2005, many signs appear to be pointing to a somewhat stronger U.S. economy. Unemployment is improving (albeit slowly), GDP is gaining some ground, the manufacturing sector is on the upswing and inflation is relatively in check. That said, the outlook looks stable for the corporate bond market. On the fundamental side, the coming earnings season is likely to see robust company results but this news is expected; therefore, we believe it will not have much effect on bond spreads. On the technical side, volatility is lower and the supply of bonds is one-third less than last year, both of which we believe bode well for corporate spreads. Going forward, seasonal patterns suggest that the market will remain in a trading range for the rest of the summer but will pick up in the fall. Recent softer economic data has caused interest rate expectations to drop and positive trends in corporate credit ratings remain solidly in place. Upgraded bond issuers outnumbered downgrades in the second quarter for the first time in six years. In terms of the fund, Tyco International and American Standard were upgraded from high yield to investment grade. In addition, AmerisourceBergen, Domino's Pizza, The Gap and Nextel Communications were all put on positive watch to be upgraded. Within what we view as a slowly improving economy, we expect the corporate bond market to make positive contributions to the fund's performance versus its benchmark. The Lehman Brothers U.S. Aggregate Index is an unmanaged index of taxable, investment grade fixed-income securities, including government, corporate, mortgage and asset-backed securities. Direct investment cannot be made in this index. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Registered Public Accounting Firm. 21 PORTFOLIO REVIEW CITIZENS ULTRA SHORT BOND FUND GOAL High level of current income consistent with preservation of capital STRATEGY Invests mainly in short-duration investment-grade securities INCEPTION DATE Standard shares 11/21/02 AVERAGE ANNUAL RETURNS (as of 6/30/2004)
Ticker 1 Since symbol year inception ------ ---- --------- Standard shares CFSBX 0.48% 1.61%
Past performance is not an indication of future performance. Current performance may be lower or higher than the performance data quoted. More current performance information can be obtained at www.citizensfunds.com. Fee waivers are currently in effect and have been instituted in the past to maintain expense limits, without which returns would have been lower. When you sell your fund shares, they may be worth more or less than what you paid for them. The final quarter of fiscal 2004 ended with the Federal Reserve (the Fed) raising interest rates for the first time in over four years. The Fed boosted the federal-funds rate (the rate banks charge each other for overnight loans) one quarter of a percentage point, from its 40-year low of 1.00% to 1.25%. We believe this anticipated rise cuts two ways for bond funds, likely boosting yields as total returns fall. During the past fiscal year, the fund returned 0.48%, underperforming its benchmark, the Merrill Lynch 1-Year Treasury Index, which was up 0.72%. As of June 30, 2004, the fund's 30-day yield stood at 1.89%, up from 1.56% posted a year earlier. As we have done since the fund's inception, we have focused on net asset value (NAV) stability by owning high-quality corporate bonds. And at the same time, our strategy has also been to increase yield whenever possible. We moved the fund's effective duration from being somewhat longer than the one-year benchmark at the beginning of the fiscal year (1.21 years), to a neutral stance at mid-year (0.88 years), to a decidedly shorter duration by fiscal year end (0.61 years). Generally speaking, changes in interest rates will have less impact on share price when a fund (or bond) has a shorter duration. During the fiscal year, the 2-year Treasury note, from which most short-term corporate bonds are priced, rose from 1.30% to 2.68%. IMPORTANT NOTES The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Interest rate increases can cause the value of bonds to decrease, meaning that a bond fund investment may lose value in a rising interest rate environment. 22 CITIZENS ULTRA SHORT BOND FUND [PERFORMANCE GRAPH] CITIZENS ULTRA SHORT BOND FUND PERFORMANCE SINCE INCEPTION 11/21/02
DATE DATE NAV MONTHLY FUND RETURN FUND VALUE MERRILL LYNCH 1 YR TREASURY INDEX VALUE - ---- ---- --- ------------------- ---------- --------------------------- ----------- 11/21/02 11/21/02 10.00 $ 10,000.00 $10,000.00 11/30/2002 10.00 0.04% $ 10,003.70 0.01% $10,038.00 12/31/2002 12/31/02 10.05 0.49% $ 10,052.90 0.38% $10,046.03 1/31/2003 10.08 0.23% $ 10,075.70 0.08% $10,064.11 2/28/2003 10.12 0.41% $ 10,117.50 0.18% $10,082.23 3/31/2003 3/31/03 10.14 0.22% $ 10,139.40 0.18% $10,093.32 4/30/2003 10.16 0.21% $ 10,161.00 0.11% $10,105.43 5/31/2003 10.19 0.31% $ 10,192.10 0.12% $10,126.65 6/30/2003 6/30/03 10.21 0.19% $ 10,211.60 0.21% $10,121.59 7/31/2003 10.14 -0.71% $ 10,138.60 -0.05% $10,130.70 8/31/2003 10.14 -0.03% $ 10,135.50 0.09% $10,159.06 9/30/2003 9/30/03 10.19 0.56% $ 10,191.90 0.28% $10,156.02 10/31/2003 10.18 -0.14% $ 10,177.80 -0.03% $10,152.97 11/30/2003 10.18 0.05% $ 10,182.80 -0.03% $10,185.46 12/31/2003 12/31/03 10.22 0.36% $ 10,219.10 0.32% $10,200.74 1/31/2004 10.24 0.16% $ 10,235.10 0.15% $10,221.14 2/29/2004 10.26 0.25% $ 10,260.60 0.20% $10,231.36 3/31/2004 3/31/04 10.28 0.15% $ 10,276.50 0.10% $10,204.76 4/30/2004 10.25 -0.25% $ 10,250.90 -0.26% $10,203.74 5/31/2004 10.26 0.05% $ 10,256.20 -0.01% $10,200.68 6/30/2004 6/30/04 10.26 0.04% $ 10,260.80 -0.03% $10,200.68
The underperformance versus the benchmark can be attributed to our focus on high-quality corporate bonds, as well as our asset-backed securities. Within our corporate holdings, financial companies such as American Express, Wells Fargo and Goldman Sachs performed well for the fund. In addition, in a period that saw interest rates rise, we benefited from increasing our allocation of floating rate holdings, such as Sallie Mae and American Honda Finance. As we move into the first half of fiscal 2005, various indicators -- such as improved employment numbers, modest gross domestic product, low inflation and a more active manufacturing sector -- suggest to us a moderately stronger U.S. economy. In the coming fiscal year, our strategy will be focused on interest rate movements and our continuing commitment to avoiding lower-quality issues that may negatively influence the fund. The Merrill Lynch 1-Year Treasury Index is an unmanaged index that tracks the performance of U.S. Treasuries with maturities of approximately one year. Direct investment cannot be made in this index. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Registered Public Accounting Firm. 23 PORTFOLIO REVIEW CITIZENS MONEY MARKET FUND GOAL Current income consistent with safety and liquidity STRATEGY Invests exclusively in money market instruments INCEPTION DATES Standard shares 08/30/83 Institutional shares 02/01/96 AVERAGE ANNUAL RETURNS (as of 6/30/2004)
Ticker 1 3 5 10 Since symbol year years years years inception ------ ---- ----- ----- ----- --------- Standard shares WKAXX 0.10% 0.82% 2.45% 3.42% N/A Institutional shares WAIXX 0.41% 1.09% 2.73% N/A 3.63%
Past performance is not an indication of future performance. Current performance may be lower or higher than the performance data quoted. More current performance information can be obtained at www.citizensfunds.com. Fee waivers have been instituted in the past to maintain expense limits, without which returns would have been lower. The interest rate tide has definitely reversed, with the Federal Reserve boosting the federal-funds rate a quarter of a percentage point to 1.25% at the end of June. Our view is this increase will be one of many which will occur at a cautious and measured pace. There still remains a high degree of uncertainty about the long-term economic outlook and we believe the Fed does not want to quash any improvement. The Fed also has indicated it sees little upside inflation risk. The 7-day simple yield on the Citizens Money Market Fund (Standard shares) increased from 0.36% at the end of the last fiscal year to 0.48% as of June 30, 2004. The fund's 12-month return declined, reflecting the residual effects of earlier interest rates drops. We are now in a position, however, where we are replacing lower-yielding money market securities as they mature with more recently-issued securities that offer a more favorable rate of return. The fund's strategy in the past year was to stay slightly shorter than our peers in terms of maturity, with the expectation that longer rates would start to increase as the economy began to show improvement. As of June 30, 2004, the weighted average maturity of the fund was 42 days. We believe fiscal 2005 will be a period characterized by a slightly stronger economy. At this point we can see many favorable signs, including low inflation, rising employment and positive gross domestic product (GDP) levels. Going forward, the fund remains focused on holding high-quality, socially responsible securities and avoiding companies with credit and headline risk. IMPORTANT NOTES The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investments in the Citizens Money Market Fund are not insured or guaranteed by the FDIC or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Registered Public Accounting Firm. 24 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Trustees and Shareholders of Citizens Funds: In our opinion, the accompanying statements of assets and liabilities, including the portfolio holdings and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Citizens Small Cap Core Growth Fund, Citizens Emerging Growth Fund, Citizens Core Growth Fund, Citizens 300 Fund, Citizens Small Cap Value Fund, Citizens Value Fund, Citizens Global Equity Fund, Citizens Balanced Fund, Citizens Income Fund, Citizens Ultra Short Bond Fund and Citizens Money Market Fund (the "Funds") at June 30, 2004, the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods presented in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States), which require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2004 by correspondence with the custodian and brokers provides a reasonable basis for our opinion. PricewaterhouseCoopers LLP Columbus, Ohio August 13, 2004 25 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS SMALL CAP CORE GROWTH FUND
SECURITY SHARES VALUE ($) - -------- --------- --------- COMMON STOCKS - 98.0% AIRLINES - 1.9% MAIR Holdings, Inc. (a) 68,452 559 BANKS - 2.5% Franklin Bank Corp. (a) 16,358 259 PrivateBancorp, Inc. 5,300 146 Prosperity Bancshares, Inc. 14,374 349 ----- 754 BIOTECHNOLOGY - 3.9% Aphton Corp. (a) 70,100 280 Exact Sciences Corp. (a) 27,800 171 Intermune, Inc. (a) 31,750 490 Neurocrine Biosciences, Inc. (a) 4,416 229 ----- 1,170 COMPUTERS - 12.1% Akamai Technologies, Inc. (a) 9,230 166 Ansys, Inc. (a) 3,210 151 Aspen Technology, Inc. (a) 38,740 281 Computer Horizons Corp. (a) 147,600 588 Digital Insight Corp. (a) 19,900 413 Digital River, Inc. (a) 8,790 287 Embarcadero Technologies, Inc. (a) 14,830 183 F5 Networks, Inc. (a) 11,200 297 FileNET Corp. (a) 16,300 515 Hyperion Solutions Corp. (a) 3,500 153 Quest Software, Inc. (a) 30,500 393 Wind River Systems, Inc. (a) 13,300 156 ----- 3,583 EDUCATIONAL SERVICES - 2.6% Bright Horizons Family Solutions, Inc. (a) 4,650 249 Strayer Education, Inc. 4,580 511 ----- 760 ELECTRICAL EQUIPMENT - 4.0% Benchmark Electronics, Inc. (a) 18,450 537 Plexus Corp. (a) 22,215 300 Power Integrations, Inc. (a) 14,030 349 ----- 1,186 ELECTRONICS - 5.4% C-COR, Inc. (a) 10,500 108 Cabot Microelectronics Corp. (a) 18,900 578 Conexant Systems, Inc. (a) 59,100 256 Genesis Microchip, Inc. (a) 14,500 200 Photon Dynamics, Inc. (a) 9,500 333 PLX Technology, Inc. (a) 6,900 119 ----- 1,594 ENERGY & UTILITIES - 4.5% Coeur d'Alene Mines Corp. (a) 17,795 73 Newfield Exploration Co. (a) 6,590 367 Patina Oil & Gas Corp. 4,400 131 Precision Drilling Corp. (a) 13,575 652 Stone Energy Corp. (a) 2,300 105 ----- 1,328 FINANCIAL - DIVERSIFIED - 2.2% Financial Federal Corp. (a) 18,640 657 FOOD - 0.8% The Hain Celestial Group, Inc. (a) 8,290 150 United Natural Foods, Inc. (a) 3,530 102 ----- 252 HEALTH CARE - 16.9% Able Laboratories, Inc. (a) 12,440 256 American Medical Systems Holdings, Inc. (a) 20,450 690 Amerigroup Corp. (a) 8,350 411 Cyberonics, Inc. (a) 9,000 300 Cytyc Corp. (a) 24,200 614 Health Net, Inc. (a) 7,705 204 LifePoint Hospitals, Inc. (a) 14,600 543 Merit Medical Systems, Inc. (a) 39,128 623 Nuvasive, Inc. (a) 25,000 273 Quality Systems Inc. (a) 3,160 155 Sierra Health Services, Inc. (a) 8,200 367 The Medicines Co. (a) 7,050 215 Thoratec Corp. (a) 36,880 396 ----- 5,047 HOTELS & MOTELS - 1.0% Choice Hotels International, Inc. 6,000 301 INVESTMENT BANKING & BROKERAGE - 5.3% Affiliated Managers Group, Inc. (a) 9,786 493 Piper Jaffray Companies, Inc. (a) 11,485 519 Southwest BanCorp of Texas 12,550 554 ----- 1,566 MANUFACTURING - 6.1% Applied Films Corp. (a) 11,040 320 Kennametal, Inc. 8,200 375 Oshkosh Truck Corp. 5,700 327 Roper Industries, Inc. 4,000 228 Terex Corp. (a) 9,430 322 The Manitowoc Co., Inc. 7,100 240 ----- 1,812 MULTIMEDIA - 5.2% Emmis Communications Corp., Class A (a) 18,550 389 Sonic Solutions (a) 9,435 200 Spanish Broadcasting Systems, Inc. (a) 47,000 438 Standard Microsystems Corp. (a) 13,300 310 Witness Systems, Inc. (a) 16,100 196 ----- 1,533
See Financial Notes 26 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS SMALL CAP CORE GROWTH FUND (CONT.)
SECURITY SHARES VALUE ($) - -------- ------ --------- PERSONAL CARE - 0.7% Elizabeth Arden, Inc. (a) 9,600 202 PHARMACEUTICALS - 4.4% Advancis Pharmaceutical Corp. (a) 35,000 237 Angiotech Pharmaceuticals, Inc. (a) 24,792 499 Medicis Pharmaceutical Corp., Class A 4,798 192 Orphan Medical, Inc. (a) 12,900 130 Par Pharmaceutical Cos., Inc. (a) 6,700 236 ----- 1,294 RESTAURANTS - 0.9% P.F. Chang's China Bistro, Inc. (a) 3,240 133 Sonic Corp. (a) 6,170 141 ----- 274 RETAIL - 6.2% Big 5 Sporting Goods Corp. (a) 5,500 144 Claire's Stores, Inc. 12,900 280 Gymboree Corp. (a) 13,500 207 Jos. A. Bank Clothiers, Inc. (a) 7,300 229 Pacific Sunwear of California, Inc.(a) 8,400 164 The Warnaco Group, Inc. (a) 13,500 287 Tommy Hilfiger Corp. (a) 19,879 302 Tractor Supply Co. (a) 5,700 238 ----- 1,851 SERVICES - 5.1% Chemed Corp. 11,580 562 Corporate Executive Board Co. 8,330 481 Labor Ready, Inc. (a) 29,860 463 ----- 1,506 TELECOMMUNICATIONS - 4.4% Andrew Corp. (a) 27,600 553 NII Holdings, Inc., Class B (a) 7,960 268 Webmethods, Inc. (a) 57,900 496 ----- 1,317 TRANSPORTATION - 1.9% Landstar System, Inc. (a) 10,700 566 ----- TOTAL COMMON STOCKS 29,112 Cost: $28,326
SECURITY, RATE, MATURITY DATE PRINCIPAL ($) VALUE ($) - ----------------------------- ------------- --------- REPURCHASE AGREEMENTS - 1.8% Fifth Third Bank, 1.25%, 07/01/04 (Proceeds at maturity $536, collateralized by Federal Home Loan Mortgage Corp. security, 6.50%, 10/01/18) Cost: $536 536 536 --------- TOTAL INVESTMENTS - 99.8% 29,648 Cost: $28,862 (b)
Percentages indicated are based on net assets of $29,701. (a) Non-income producing security. (b) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $65. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $ 2,438 Unrealized depreciation (1,717) ------- Net unrealized appreciation $ 721
CITIZENS EMERGING GROWTH FUND
SECURITY SHARES VALUE ($) - -------- ------- --------- COMMON STOCKS - 99.7% AIRLINES - 0.5% JetBlue Airways Corp. (a) 29,100 855 BANKS - 1.1% Commerce Bancorp, Inc. 14,500 798 New York Community Bancorp, Inc. 28,900 567 North Fork Bancorporation, Inc. 17,600 670 ------ 2,035 BIOTECHNOLOGY - 7.6% Allergan, Inc. 43,240 3,872 Biogen Idec, Inc. (a) 22,108 1,398 Gilead Sciences, Inc. (a) 47,400 3,176 Intermune, Inc. (a) 165,850 2,557 MedImmune, Inc. (a) 116,300 2,721 ------ 13,724 BROADCASTING - 1.5% American Tower Corp. (a) 55,900 850 Radio One, Inc. (a) 50,400 807 Univision Communications, Inc. (a) 33,700 1,076 ------ 2,733 CHEMICALS - 0.6% Praxair, Inc. 26,100 1,042 COMPUTERS - 10.6% Affiliated Computer Services, Inc. (a) 20,825 1,102 Citrix Systems, Inc. (a) 29,970 610 Corning, Inc. (a) 111,800 1,460 DST Systems, Inc. (a) 14,170 681 Intuit, Inc. (a) 21,800 841 Lexmark International, Inc. (a) 22,320 2,156 Macromedia, Inc. (a) 33,600 825 Mercury Interactive Corp. (a) 21,412 1,067 NetIQ Corp. (a) 57,474 759 Network Appliance, Inc. (a) 49,700 1,070
27 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS EMERGING GROWTH FUND(CONT.)
SECURITY SHARES VALUE ($) - -------- ------- --------- COMPUTERS (CONT.) Novell, Inc. (a) 138,650 1,163 Pixar, Inc. (a) 14,505 1,008 Red Hat, Inc. (a) 41,100 944 Silicon Laboratories, Inc. (a) 13,600 630 SunGard Data Systems, Inc. (a) 48,245 1,254 Symantec Corp. (a) 68,600 3,004 Symbol Technologies, Inc. 46,031 678 ------- 19,252 CONSTRUCTION - 0.4% Centex Corp. 17,000 778 CONSUMER PRODUCTS - 0.6% Black & Decker Corp. 16,900 1,050 EDUCATION - 1.1% Corinthian Colleges, Inc. (a) 79,340 1,963 ELECTRICAL EQUIPMENT - 0.9% Fisher Scientific International, 16,100 930 Inc. (a) Molex, Inc. 22,100 709 ------- 1,639 ELECTRONICS - 15.4% Adobe Systems, Inc. 59,025 2,746 Agilent Technologies, Inc. (a) 23,400 685 Altera Corp. (a) 63,400 1,409 Broadcom Corp., Class A (a) 42,500 1,988 Cabot Microelectronics Corp. (a) 74,120 2,269 Electronic Arts, Inc. (a) 34,100 1,860 Harman International Industries, Inc. 12,100 1,101 International Rectifier Corp. (a) 14,700 609 Jabil Circuit, Inc. (a) 66,100 1,664 JDS Uniphase Corp. (a) 221,450 839 Johnson Controls, Inc. 24,000 1,281 Juniper Networks, Inc. (a) 101,700 2,499 KLA-Tencor Corp. (a) 29,600 1,462 Microchip Technology, Inc. 34,135 1,077 National Semiconductor Corp. (a) 54,000 1,187 Novellus Systems, Inc. (a) 19,900 626 NVIDIA Corp. (a) 28,800 590 PerkinElmer, Inc. 33,800 677 PMC-Sierra, Inc. (a) 37,875 544 QLogic Corp. (a) 44,500 1,183 Sandisk Corp. (a) 24,300 527 Waters Corp. (a) 23,200 1,108 ------- 27,931 ENERGY & UTILITIES - 4.6% Cambior, Inc. (a) 253,937 673 Coeur d'Alene Mines Corp. (a) 43,425 177 DBJ Services Co. (a) 23,760 1,089 EOG Resources, Inc. 23,200 1,386 Forest Oil Corp. (a) 38,500 1,052 Kinder Morgan, Inc. 18,600 1,103 ONEOK, Inc. 29,700 653 Patterson-UTI Energy, Inc. 28,000 935 Pogo Producing Co. 10,100 499 Smith International, Inc. (a) 14,530 810 ------- 8,377 FINANCIAL - DIVERSIFIED - 3.3% Investors Financial Services Corp. 24,500 1,068 Jefferies Group, Inc. 20,600 637 Legg Mason, Inc. 9,715 884 Moody's Corp. 22,600 1,461 SouthTrust Corp. 21,100 819 Synovus Financial Corp. 43,500 1,101 ------- 5,970 FOODS - 2.0% Bunge, Ltd. 27,550 1,074 Hershey Foods Corp. 21,400 990 Krispy Kreme Doughnuts, Inc. (a) 28,200 538 Pepsi Bottling Group, Inc. 32,000 977 ------- 3,579 HEALTH CARE - 11.2% Barr Laboratories, Inc. (a) 70,400 2,372 Biomet, Inc. 22,500 1,000 Cytyc Corp. (a) 130,500 3,311 Health Management Associates Inc., Class A 136,670 3,064 Health Net, Inc. (a) 48,908 1,296 Laboratory Corporation of America Holdings (a) 56,300 2,235 Mylan Laboratories, Inc. 142,300 2,882 Sierra Health Services, Inc. (a) 40,170 1,796 Thoratec Corp. (a) 221,100 2,372 ------- 20,328 HOTELS & MOTELS - 1.3% Hilton Hotels Corp. 38,700 722 Marriott International, Inc., Class A 33,300 1,661 ------- 2,383 INSURANCE - 2.0% American Medical Security Group, Inc. (a) 40,926 1,115 Fidelity National Financial Corp. 23,600 881 Wellchoice, Inc. (a) 39,241 1,625 ------- 3,621 INVESTMENT BANKING & BROKERAGE - 1.2% E*TRADE Group, Inc. (a) 60,155 671 Friedman, Billings, Ramsey Group, Inc. 38,600 764 T. Rowe Price Group, Inc. 16,255 819 ------- 2,254
See Financial Notes 28 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS EMERGING GROWTH FUND(CONT.)
SECURITY SHARES VALUE ($) - -------- ------- --------- MANUFACTURING - 6.2% American Standard Cos., Inc. (a) 22,100 891 Cintas Corp. 19,080 910 Donaldson Co., Inc. 30,000 879 Ecolab, Inc. 50,500 1,600 Graco, Inc. 34,100 1,059 Mattel, Inc. 70,700 1,290 Nucor Corp. 11,800 906 Oshkosh Truck Corp. 16,700 957 Pactiv Corp. (a) 30,000 748 Pentair, Inc. 34,000 1,144 Zebra Technologies Corp., Class A (a) 9,600 835 ------- 11,219 MULTIMEDIA - 0.4% Cox Radio, Inc., Class A 43,113 749 OFFICE EQUIMENT & SUPPLIES - 0.5% Pitney Bowes, Inc. 18,550 821 PERSONAL CARE - 0.6% The Estee Lauder Cos., Inc., Class A 21,400 1,044 PHARMACEUTICALS - 1.0% Angiotech Pharmaceuticals, Inc. (a) 85,532 1,723 PUBLISHING - 0.6% John Wiley & Sons, Inc. 31,300 1,002 RESTAURANTS - 3.8% Darden Restaurants, Inc. 27,900 573 Starbucks Corp. (a) 71,100 3,091 The Cheesecake Factory (a) 20,700 824 YUM! Brands, Inc. (a) 65,500 2,438 ------- 6,926 RETAIL - 11.4% Advance Auto Parts (a) 24,300 1,074 Chico's FAS, Inc. (a) 21,300 962 Claire's Stores, Inc. 46,700 1,013 Coach, Inc. (a) 27,700 1,252 Dollar General Corp. 57,900 1,133 Dollar Tree Stores, Inc. (a) 38,600 1,059 Fastenal Co. 28,600 1,625 Foot Locker, Inc. 21,003 511 Michaels Stores, Inc. 20,600 1,133 Polo Ralph Lauren 18,000 620 RadioShack Corp. 27,500 787 Staples, Inc. 111,450 3,266 The TJX Cos., Inc. 76,335 1,842 Tiffany & Co. 29,900 1,102 Tommy Hilfiger Corp. (a) 48,211 730 Whole Foods Market, Inc. 16,150 1,542 Williams Sonoma, Inc. (a) 31,400 1,035 ------- 20,686 SERVICES - 7.8% Apollo Group, Inc., Class A (a) 22,000 1,943 ARAMARK Corp. 24,425 702 Career Education Corp. (a) 22,200 1,011 Corporate Executive Board Co. 29,200 1,687 Dun & Bradstreet Corp. (a) 8,100 437 Expeditors International of Washington, Inc. 24,700 1,220 Fair Isaac & Co., Inc. 25,000 835 Fiserv, Inc. (a) 48,040 1,869 Getty Images, Inc. (a) 24,850 1,491 Iron Mountain, Inc. (a) 19,900 960 Manpower, Inc. 20,900 1,061 Monster Worldwide, Inc. (a) 32,300 831 ------- 14,047 TELECOMMUNICATIONS - 1.0% Nextel Partners, Inc. (a) 53,000 844 UTStarcom, Inc. (a) 30,300 916 ------- 1,760 TRANSPORTATION - 0.5% J.B. Hunt Transport Services, Inc. 24,300 937 ------- TOTAL COMMON STOCKS 180,428 Cost: $166,896
SECURITY, RATE, MATURITY DATE PRINCIPAL ($) VALUE ($) - ----------------------------- ------------- --------- REPURCHASE AGREEMENTS - 0.1% Fifth Third Bank, 1.25%, 07/01/04 (Proceeds at maturity $75, collateralized by Federal Home Loan Mortgage Corp. security, 5.00%, 10/01/18) Cost: $75 75 75 ------- TOTAL INVESTMENTS - 99.8% 180,503 Cost: $166,971 (b)
Percentages indicated are based on net assets of $180,900. (a) Non-income producing security. (b) Represents cost for financial reporting purposes and differs from federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $1,442. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $ 20,247 Unrealized depreciation (8,157) -------- Net unrealized appreciation $ 12,090
29 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS CORE GROWTH FUND
SECURITY SHARES VALUE ($) - -------- ------- --------- COMMON STOCKS - 99.3% AIR FREIGHT - 2.9% FedEx Corp. 80,060 6,540 United Parcel Service, Class B 47,500 3,571 ------ 10,111 AIRLINES - 1.0% Southwest Airlines Co. 213,700 3,584 BANKS - 2.8% Bank of America Corp. 54,700 4,628 Bank of New York Co., Inc. 56,000 1,651 First Horizon National Corp. 36,800 1,673 North Fork Bancorporation, Inc. 43,800 1,667 ------ 9,619 BIOTECHNOLOGY - 3.8% Allergan, Inc. 41,000 3,670 Gilead Sciences, Inc. (a) 91,700 6,145 MedImmune, Inc. (a) 139,800 3,271 ------ 13,086 CHEMICALS - 3.4% Amgen, Inc. (a) 143,050 7,807 Praxair, Inc. 51,000 2,035 Sigma-Aldrich Corp. 33,000 1,967 ------ 11,809 COMPUTERS - 8.1% Dell, Inc. (a) 77,000 2,758 Hewlett-Packard Co. 167,250 3,529 Intel Corp. 348,400 9,617 International Business Machines Corp. 29,000 2,556 Novell, Inc. (a) 413,600 3,470 Pixar, Inc. (a) 26,500 1,842 Symantec Corp. (a) 94,000 4,115 ------ 27,887 CONSUMER PRODUCTS - 0.5% Black & Decker Corp. 30,500 1,895 ELECTRONICS - 6.2% Analog Devices, Inc. 43,225 2,035 Applied Materials, Inc. (a) 120,900 2,372 Cisco Systems, Inc. (a) 234,200 5,550 Electronic Arts, Inc. (a) 35,300 1,926 Johnson Controls, Inc. 38,400 2,050 Maxim Integrated Products, Inc. 43,400 2,275 National Semiconductor Corp. (a) 78,000 1,715 Texas Instruments, Inc. 142,000 3,434 ------ 21,357 ENERGY & UTILITIES - 5.0% Anadarko Petroleum Corp. 32,000 1,875 Apache Corp. 42,100 1,833 Baker Hughes, Inc. 49,000 1,845 Burlington Resources, Inc. 52,000 1,881 ConocoPhillips 128,850 9,831 Vulcan Power Co., Class A (a) (b) 40,000 - ------ 17,265 ENTERTAINMENT - 1.3% Comcast Corp. Class A (a) 160,500 4,499 FINANCIAL - DIVERSIFIED - 9.1% AMBAC Financial Group, Inc. 26,000 1,909 American Express Co. 43,945 2,258 Capital One Financial Corp. 40,000 2,735 Citigroup, Inc. 147,000 6,836 Fannie Mae 37,000 2,640 MBNA Corp. 139,000 3,585 Mellon Financial Corp. 56,000 1,642 Synovus Financial Corp. 67,500 1,709 Wachovia Corp. 57,000 2,537 Wells Fargo & Co. 88,350 5,056 ------ 30,907 FINANCIAL SERVICES - 0.5% Golden West Financial Corp. 17,000 1,808 FOODS - 4.9% Bunge, Ltd. 49,000 1,908 Coca-Cola Co. 90,100 4,548 Hershey Foods Corp. 39,400 1,823 PepsiCo, Inc. 65,550 3,532 Sara Lee Corp. 149,600 3,439 Wm.Wrigley Jr. Co. 28,500 1,797 ------ 17,047 HEALTH CARE - 10.4% Barr Laboratories, Inc. (a) 153,650 5,178 Boston Scientific Corp. (a) 109,000 4,665 Medtronic, Inc. 104,888 5,110 Mylan Laboratories, Inc. 231,700 4,692 Pfizer, Inc. 203,200 6,965 St. Jude Medical, Inc. (a) 24,000 1,816 UnitedHealth Group, Inc. 114,100 7,102 ------ 35,528 HOTELS & MOTELS - 0.5% Marriott International, Inc., Class A 37,000 1,846 INSURANCE - 4.2% ACE, Ltd. 39,000 1,649 American International Group, Inc. 104,494 7,448 The St. Paul Travelers Companies, Inc. 43,460 1,762 The Allstate Corp. 77,020 3,585 ------ 14,444
See Financial Notes 30 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS CORE GROWTH FUND (CONT.)
SECURITY SHARES VALUE ($) - -------- ------- --------- INVESTMENT BANKING & BROKERAGE - 1.1% T. Rowe Price Group, Inc. 32,300 1,628 The Goldman Sachs Group, Inc. 24,000 2,260 ------- 3,888 MANUFACTURING - 5.8% 3M Co. 74,100 6,670 Deere & Co. 40,000 2,806 Illinois Tool Works, Inc. 47,600 4,564 Procter & Gamble Co. 110,000 5,988 ------- 20,028 PERSONAL CARE - 2.8% Avon Products, Inc. 96,100 4,435 Colgate-Palmolive Co. 35,680 2,085 Gillette Co. 73,000 3,095 ------- 9,615 PHARMACEUTICALS - 0.7% Zimmer Holdings, Inc. (a) 28,000 2,470 RESTAURANTS - 2.1% McDonald's Corp. 78,000 2,028 Starbucks Corp. (a) 123,800 5,383 ------- 7,411 RETAIL - 11.3% Costco Wholesale Corp. 99,000 4,066 CVS Corp. 185,000 7,773 eBay, Inc. (a) 16,900 1,554 Home Depot, Inc. 183,000 6,441 Lowe's Cos., Inc. 27,300 1,435 Nordstrom, Inc. 84,800 3,613 Target Corp. 120,650 5,124 The Gap, Inc. 77,000 1,867 The TJX Cos., Inc. 179,500 4,333 Walgreen Co. 65,200 2,361 ------- 38,567 SERVICES - 5.5% Apollo Group, Inc., Class A (a) 64,600 5,703 Cendant Corp. 197,500 4,835 First Data Corp. 82,000 3,651 Getty Images, Inc. (a) 31,600 1,896 Manpower, Inc. 59,300 3,011 ------- 19,096 TELECOMMUNICATIONS - 5.4% Motorola, Inc. 263,810 4,815 Nextel Communications, Inc. (a) 191,000 5,092 QUALCOMM, Inc. 58,500 4,269 Scientific-Atlanta, Inc. 56,855 1,961 Verizon Communications, Inc. 73,000 2,642 ------- 18,779 ------- TOTAL COMMON STOCKS 342,546 Cost: $302,527
SECURITY, RATE, MATURITY DATE PRINCIPAL ($) VALUE ($) - ----------------------------- ------------- --------- REPURCHASE AGREEMENTS - 0.1% Fifth Third Bank, 1.25%, 07/01/04 (Proceeds at maturity $134, collateralized by Federal Home Loan Mortgage Corp. security, 5.00%, 10/01/18) Cost: $134 134 134 -------- TOTAL INVESTMENTS - 99.4% 342,680 Cost: $302,661 (c)
Percentages indicated are based on net assets of $344,830. (a) Non-income producing security. (b) Restricted security constituting 0.00% of net assets which may not be publicly sold without registration under the Securities Act of 1933. This security is valued at its fair value as determined in good faith under consistently applied procedures under the general supervision of the Trust's Board of Trustees. Additional information on the security is as follows: Acquisition Date: March 3, 1995 Cost: $300 Value: $0 (c) Represents cost for financial reporting purposes and differs from federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $4,849. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $40,995 Unrealized depreciation (5,825) ------- Net unrealized appreciation $35,170
31 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS 300 FUND
SECURITY SHARES VALUE ($) - -------- -------- --------- COMMON STOCKS - 101.2% AIR FREIGHT - 1.8% FedEx Corp. 400 33 United Parcel Service, Class B 1,165 87 --- 120 AIRLINES - 0.2% JetBlue Airways Corp. (a) 100 3 Southwest Airlines Co. 830 14 --- 17 AUTO MANUFACTURING - 0.1% PACCAR, Inc. 150 9 BANKS - 1.7% Bank of New York Co., Inc. 800 24 BB&T Corp. 600 22 Fifth Third Bancorp 600 33 National City Corp. 600 21 Suntrust Banks, Inc. 300 19 --- 119 BIOTECHNOLOGY - 1.4% Allergan, Inc. 100 9 Biogen Idec, Inc. (a) 475 30 Chiron Corp. (a) 200 9 Forest Laboratories, Inc. (a) 400 23 Genzyme Corp. (a) 200 9 Gilead Sciences, Inc. (a) 200 13 MedImmune, Inc. (a) 200 5 --- 98 BROADCASTING - 0.6% Clear Channel Communications, Inc. 600 22 Univision Communications, Inc. (a) 500 16 --- 38 CHEMICALS - 1.7% Air Products & Chemicals, Inc. 200 10 Amgen, Inc. (a) 1,400 77 Engelhard Corp. 200 6 Praxair, Inc. 400 16 Sigma-Aldrich Corp. 100 6 --- 115 COMPUTERS - 11.3% Automatic Data Processing 700 29 Citrix Systems, Inc. (a) 225 5 Corning, Inc. (a) 1,480 19 Dell, Inc. (a) 2,700 97 EMC Corp. (a) 2,400 27 Hewlett-Packard Co. 3,210 68 Intel Corp. 6,830 189 International Business Machines Corp. 1,850 163 Intuit, Inc. (a) 200 8 Lexmark International, Inc. (a) 150 14 National Instruments Corp. 100 3 Network Appliance, Inc. (a) 200 4 Novell, Inc. (a) 400 3 Oracle Corp. (a) 5,500 66 SunGard Data Systems, Inc. (a) 500 13 Symantec Corp. (a) 400 18 Yahoo!, Inc. (a) 1,400 51 --- 777 CONSTRUCTION - 0.3% Centex Corp. 200 9 D. R. Horton, Inc. 150 4 Lennar Corp. 200 9 --- 22 CONSUMER PRODUCTS - 1.1% Black & Decker Corp. 100 6 Clorox Co. 300 16 Kimberly-Clark Corp. 500 33 Newell Rubbermaid, Inc. 500 12 Whirlpool Corp. 100 7 --- 74 ELECTRICAL EQUIPMENT - 1.9% American Power Conversion Corp. 220 4 Emerson Electric Co. 400 25 Molex, Inc. 400 13 Sanmina Corp. (a) 600 5 Tyco International, Ltd. 2,110 70 W.W. Grainger, Inc. 200 12 --- 129 ELECTRONICS - 6.0% Adobe Systems, Inc. 200 9 Analog Devices, Inc. 300 14 Applied Materials, Inc. (a) 1,800 35 Broadcom Corp., Class A (a) 300 14 Cisco Systems, Inc. (a) 7,330 174 Electronic Arts, Inc. (a) 400 22 Harman International Industries, Inc. 200 18 JDS Uniphase Corp. (a) 800 3 Johnson Controls, Inc. 200 11 Juniper Networks, Inc. (a) 600 15 Linear Technology Corp. 300 12 Maxim Integrated Products, Inc. 350 18 NVIDIA Corp. (a) 100 2 Rockwell Automation, Inc. 100 4 SPX Corp. 200 9 Texas Instruments, Inc. 1,800 44 Xilinx, Inc. 300 10 --- 414
32 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS 300 FUND (CONT.)
SECURITY SHARES VALUE ($) - -------- ------ --------- ENERGY & UTILITIES - 4.0% AES Corp. (a) 1,300 13 Anadarko Petroleum Corp. 200 12 Apache Corp. 400 17 Baker Hughes, Inc. 300 11 BJ Services Co. (a) 200 9 Burlington Resources, Inc. 400 14 Calpine Corp. (a) 300 1 ConocoPhillips 700 54 Devon Energy Corp. 200 13 Diamond Offshore Drilling, Inc. 200 5 EOG Resources, Inc. 200 12 Equitable Resources, Inc. 135 7 KeySpan Corp. 200 7 Kinder Morgan, Inc. 200 12 NiSource, Inc. 300 6 Noble Corp. (a) 200 8 Pepco Holdings, Inc. 100 2 Pioneer Natural Resources Co. 200 7 Pogo Producing Co. 100 5 Puget Energy Inc. 100 2 Smith International, Inc. (a) 100 6 The Williams Cos., Inc. 1,100 13 Transocean, Inc. (a) 200 6 Valero Energy Corp. 200 15 XTO Energy, Inc. 500 15 --- 272 ENTERTAINMENT - 3.1% Comcast Corp., Class A (a) 2,300 64 Time Warner, Inc. (a) 4,800 85 Viacom, Inc. 1,800 64 --- 213 FINANCIAL - DIVERSIFIED - 14.6% AMBAC Financial Group, Inc. 200 15 American Express Co. 1,400 72 Capital One Financial Corp. 300 21 Citigroup, Inc. 5,500 255 Fannie Mae 1,000 71 Freddie Mac 700 44 J.P. Morgan Chase & Co. 2,200 85 Lehman Brothers Holdings, Inc. 400 30 MBNA Corp. 1,300 34 Mellon Financial Corp. 400 12 Merrill Lynch & Co. 1,000 54 MetLife, Inc. 800 29 Moody's Corp. 200 13 Northern Trust Corp. 200 8 SLM Corp. 600 24 State Street Corp. 300 15 Synovus Financial Corp. 500 13 Wachovia Corp. 1,400 62 Washington Mutual, Inc. 900 35 Wells Fargo & Co. 1,760 100 --- 992 FINANCIAL SERVICES - 0.7% Charles Schwab Corp. 1,400 13 Golden West Financial Corp. 200 22 Principal Financial Group 300 10 --- 45 FOODS - 5.2% Bunge, Ltd. 100 4 Coca-Cola Co. 2,600 130 General Mills, Inc. 300 14 H.J. Heinz Co. 300 12 Hershey Foods Corp. 400 19 Kellogg Co. 449 19 McCormick & Co., Inc. 100 3 Pepsi Bottling Group, Inc. 500 15 PepsiCo, Inc. 1,850 100 Sara Lee Corp. 850 20 SUPERVALU, Inc. 100 3 Wm.Wrigley Jr. Co. 300 19 --- 358 HEALTH CARE - 12.9% Baxter International, Inc. 800 28 Becton, Dickinson & Co. 400 21 Biomet, Inc. 200 9 Boston Scientific Corp. (a) 900 39 Cardinal Health, Inc. 500 35 Eli Lilly & Co. 1,200 84 Express Scripts, Inc. (a) 100 8 Guidant Corp. 400 22 Health Management Associates Inc., Class A 100 2 Johnson & Johnson, Inc. 3,100 173 Laboratory Corporation of America Holdings (a) 225 9 Medtronic, Inc. 1,300 63 Mylan Laboratories, Inc. 150 3 Pfizer, Inc. 8,125 279 Quest Diagnostics, Inc. 100 8 St. Jude Medical, Inc. (a) 200 15 Stryker Corp. 520 29 UnitedHealth Group, Inc. 600 37 WellPoint Health Networks, Inc. (a) 200 22 --- 886 HOTELS & MOTELS - 0.1% Marriott International, Inc. Class A 200 10
33 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS 300 FUND (CONT.)
SECURITY SHARES VALUE ($) - -------- ------ --------- INSURANCE - 5.2% American International Group, Inc. 2,815 201 Anthem, Inc. (a) 100 9 Hartford Financial Services Group, Inc. 400 27 Marsh & McLennan Cos., Inc. 500 23 MBIA, Inc. 200 11 Progressive Corp. 200 17 The St. Paul Travelers Companies, Inc. 870 35 The Allstate Corp. 700 33 --- 356 INVESTMENT BANKING & BROKERAGE - 0.8% T. Rowe Price Group, Inc. 170 9 The Goldman Sachs Group, Inc. 500 47 --- 56 LEISURE - 0.4% Harley-Davidson, Inc. 400 25 MANUFACTURING - 5.9% 3M Co. 800 72 American Standard Cos., Inc. (a) 300 12 Bausch & Lomb, Inc. 100 7 Cintas Corp. 135 6 Dana Corp. 100 2 Deere & Co. 300 21 Donaldson Co., Inc. 100 3 Dover Corp. 300 13 Eaton Corp. 200 13 Ecolab, Inc. 200 6 Gentex Corp. 105 4 Illinois Tool Works, Inc. 300 29 Ingersoll-Rand Co. 200 14 Mattel, Inc. 800 15 Nucor Corp. 200 15 Parker Hannifin Corp. 100 6 Procter & Gamble Co. 2,702 146 Sealed Air Corp. (a) 100 5 Smurfit-Stone Container Corp. (a) 600 12 Sonoco Products Co. 100 3 Worthington Industries, Inc. 100 2 --- 406 OFFICE EQUIPMENT & SUPPLIES - 0.3% Avery Dennison Corp. 200 13 Pitney Bowes, Inc. 200 9 --- 22 PERSONAL CARE - 1.8% Avon Products, Inc. 600 28 Colgate-Palmolive Co. 560 33 Gillette Co. 1,100 46 The Estee Lauder Cos., Inc., Class A 300 15 --- 122 PHARMACEUTICALS - 0.5% McKesson Corp. 400 14 Zimmer Holdings, Inc. (a) 200 17 --- 31 PUBLISHING - 0.9% Gannett Co., Inc. 310 26 McGraw-Hill Cos., Inc. 200 15 New York Times Co. 200 9 Tribune Co. 300 14 --- 64 RAILROADS - 0.3% Norfolk Southern Corp. 700 19 REAL ESTATE - 0.1% The St. Joe Co. 120 5 RESTAURANTS - 0.7% McDonald's Corp. 1,300 34 Starbucks Corp. (a) 400 17 --- 51 RETAIL - 7.1% AutoZone, Inc. (a) 100 8 Bed Bath & Beyond, Inc. (a) 300 12 Best Buy & Co., Inc. 400 20 Chico's FAS, Inc. (a) 105 5 Coach, Inc. (a) 300 14 Costco Wholesale Corp. 400 16 CVS Corp. 430 18 Dollar General Corp. 400 8 eBay, Inc. (a) 700 64 Family Dollar Stores, Inc. 400 12 Hasbro, Inc. 100 2 Home Depot, Inc. 2,415 84 Limited, Inc. 725 14 Lowe's Cos., Inc. 800 42 Masco Corp. 515 16 Staples, Inc. 530 16 Target Corp. 1,000 42 The Gap, Inc. 868 21 The TJX Cos., Inc. 500 12 Tiffany & Co. 300 11 Walgreen Co. 1,100 40 Whole Foods Market, Inc. 100 10 --- 487
34 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS 300 FUND (CONT.)
SECURITY SHARES VALUE ($) - -------- ------ --------- SERVICES - 2.9% Apollo Group, Inc., Class A (a) 200 18 ARAMARK Corp. 400 12 Career Education Corp. (a) 200 9 Cendant Corp. 1,000 24 Expeditors International of Washington, Inc. 200 10 First Data Corp. 900 39 Fiserv, Inc. (a) 400 16 Monster Worldwide, Inc. (a) 100 3 Omnicom Group, Inc. 200 15 Pall Corp. 100 3 Paychex, Inc. 300 10 Sysco Corp. 710 25 Unisys Corp. (a) 700 10 Viad Corp. 125 3 ----- 197 TELECOMMUNICATIONS - 5.6% Lucent Technologies, Inc. (a) 5,000 19 Motorola, Inc. 2,500 46 Nextel Communications, Inc. (a) 1,200 32 QUALCOMM, Inc. 800 58 SBC Communications, Inc. 3,530 86 Scientific-Atlanta, Inc. 200 7 Sprint Corp. 1,517 27 UTStarcom, Inc. (a) 130 4 Verizon Communications, Inc. 2,950 106 ----- 385 ----- TOTAL COMMON STOCKS 6,934 Cost: $6,544 TOTAL INVESTMENTS - 101.2% 6,934 Cost: $6,544 (b)
Percentages indicated are based on net assets of $6,849. (a) Non-income producing security. (b) Represents cost for financial reporting purposes and differs from federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $14. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $ 527 Unrealized depreciation (151) ----- Net unrealized appreciation $ 376
CITIZENS SMALL CAP VALUE FUND
SECURITY SHARES VALUE ($) - -------- ------ --------- COMMON STOCKS - 94.6% AIRLINES - 3.4% MAIR Holdings, Inc. (a) 5,760 47 BANKS - 1.6% Bank Mutual Corp. 540 6 NewAlliance Bancshares, Inc. (a) 1,120 16 --- 22 COMPUTERS - 7.9% Blue Martini Software, Inc. (a) 2,426 11 Computer Horizons Corp. (a) 11,235 45 NetIQ Corp. (a) 970 13 Techteam Global, Inc. (a) 1,894 17 Tier Technologies, Inc. (a) 2,380 23 --- 109 ELECTRONICS -7.9% C-COR, Inc. (a) 750 8 Cabot Microelectronics Corp. (a) 820 25 Lakeland Industries, Inc. (a) 1,391 33 ONYX Software Corp. (a) 4,328 18 Optical Communication Products, Inc. (a) 4,563 11 Selectica, Inc. (a) 2,850 14 --- 109 ENERGY & UTILITIES - 8.6% Cambior, Inc. (a) 7,492 20 Coeur d'Alene Mines Corp. (a) 965 4 Forest Oil Corp. (a) 795 22 Global Industries Ltd. (a) 4,575 27 Pogo Producing Co. 270 13 Stone Energy Corp. (a) 225 10 UGI Corp. (a) 700 22 --- 118 FINANCIAL - DIVERSIFIED - 2.4% American Financial Realty Trust 920 13 BISYS Group, Inc. (a) 1,385 20 --- 33 FOODS - 3.2% Chiquita Brands International, Inc. (a) 720 15 Sanderson Farms, Inc. 543 29 --- 44 HEALTH CARE - 3.1% Cross Country Healthcare, Inc. (a) 735 13 CV Therapeutics, Inc. (a) 900 15 Vical, Inc. (a) 2,400 14 --- 42 INSURANCE - 2.6% American Medical Security Group, Inc. (a) 1,330 36
35 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS SMALL CAP VALUE FUND (CONT.)
SECURITY SHARES VALUE ($) - -------- ------ --------- MANUFACTURING - 12.1% Compass Minerals International, Inc. 2,280 44 Credence Systems Corp. (a) 1,350 19 Crown Holdings, Inc. (a) 1,985 20 Microtune, Inc. (a) 7,344 34 Omnova Solutions, Inc. (a) 2,820 17 Silgan Holdings, Inc. 385 16 Standard Motor Products, Inc. 470 7 U.S. Home Systems, Inc. (a) 1,300 9 ----- 166 MULTIMEDIA - 3.5% Alloy, Inc. (a) 2,880 17 Insight Communications Co., Inc. (a) 3,270 31 ----- 48 PHARMACEUTICALS - 3.1% A.P. Pharma, Inc. (a) 2,610 9 Noven Pharmaceuticals, Inc. (a) 680 15 Par Pharmaceutical Cos., Inc. (a) 542 19 ----- 43 REAL ESTATE - 1.2% Sunterra Corp. (a) 1,370 17 RESTAURANTS - 0.9% Champps Entertainment, Inc. (a) 1,510 12 RETAIL - 7.7% Bon-Ton Stores 840 12 Claire's Stores, Inc. 1,170 24 Department 56, Inc. (a) 1,025 16 Hancock Fabrics, Inc. 1,611 21 Talbots, Inc. 383 15 Tommy Hilfiger Corp. (a) 893 14 Too, Inc. (a) 220 4 ----- 106 SERVICES - 21.4% Captaris, Inc. (a) 2,000 13 Chemed Corp. 850 41 Digital Generation Systems, Inc. (a) 19,370 29 Dycom Industries, Inc. (a) 750 21 Freemarkets, Inc. (a) 2,870 19 Hawaiian Electric Industries, Inc. 600 16 IKON Office Solutions, Inc. 2,060 24 On Assignment, Inc. (a) 3,440 20 Per-Se Technologies, Inc. (a) 850 12 Precis, Inc. (a) 3,048 8 Private Business, Inc. (a) 8,795 21 SM&A (a) 1,050 9 Stamps.com, Inc. (a) 1,782 18 Swift Transportation Co., Inc. (a) 1,295 23 Tetra Tech, Inc. (a) 1,310 21 ----- 295 TELECOMMUNICATIONS - 4.0% Celeritek, Inc. 2,733 10 Glenayre Technologies, Inc. (a) 4,800 11 MDSI Mobile Data Solutions, Inc. (a) 1,340 9 Talk America Holdings, Inc. (a) 725 6 Webmethods, Inc. (a) 2,220 19 ----- 55 ----- TOTAL COMMON STOCKS 1,302 Cost: $1,274
SECURITY, RATE, MATURITY DATE PRINCIPAL ($) VALUE ($) - ----------------------------- ------------- --------- REPURCHASE AGREEMENTS - 3.5% Fifth Third Bank, 1.25%, 07/01/04 (Proceeds at maturity $48, collateralized by Federal Home Loan Mortgage Corp. security, 5.00%, 10/01/18) Cost: $48 48 48 ----- TOTAL INVESTMENTS - 98.1% 1,350 Cost: $1,322 (b)
Percentages indicated are based on net assets of $1,376. (a) Non-income producing security. (b) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $7. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $61 Unrealized depreciation (40) --- Net unrealized appreciation $21
See Financial Notes 36 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS VALUE FUND
SECURITY SHARES VALUE ($) - -------- ------ --------- COMMON STOCKS - 99.6% AIR FREIGHT - 2.9% FedEx Corp. 8,440 689 APPAREL MANUFACTURERS - 1.2% Reebok International, Ltd. 4,200 151 V.F. Corp. 2,815 137 ----- 288 AUTO MANUFACTURERS - 0.5% PACCAR, Inc. 2,210 128 BANKS - 3.3% Bank of America Corp. 6,200 525 KeyCorp 8,900 266 ----- 791 CHEMICALS - 1.9% Amgen, Inc. (a) 5,950 325 Engelhard Corp. 3,725 120 ----- 445 COMPUTERS - 6.5% Affiliated Computer Services, Inc.(a) 2,355 125 Hewlett-Packard Co. 27,530 580 Intel Corp. 4,130 114 International Business Machines Corp. 4,535 400 Microsoft Corp. 5,500 157 Storage Technology Corp. (a) 5,690 165 ----- 1,541 CONSTRUCTION - 1.9% KB Home 2,070 142 Lafarge North America, Inc. 6,920 300 ----- 442 CONSUMER PRODUCTS - 2.4% Kimberly-Clark Corp. 8,800 580 ELECTRONICS - 6.1% Agilent Technologies, Inc. (a) 12,375 362 Applied Materials, Inc. (a) 19,155 376 International Rectifier Corp. (a) 3,530 146 National Semiconductor Corp. (a) 11,090 244 QLogic Corp. (a) 4,550 121 SPX Corp. 4,720 219 ----- 1,468 ENERGY & UTILITIES - 7.4% Anadarko Petroleum Corp. 5,335 313 Apache Corp. 6,930 302 ConocoPhillips 9,140 696 Devon Energy Corp. 4,090 270 NiSource, Inc. 9,390 194 ----- 1,775 ENTERTAINMENT - 1.7% Viacom, Inc. 11,030 394 FINANCIAL - DIVERSIFIED - 12.0% Capital One Financial Corp. 4,605 315 Citigroup, Inc. 7,600 353 Freddie Mac 6,275 397 J.P. Morgan Chase & Co. 8,400 326 Lehman Brothers Holdings, Inc. 3,430 258 MBNA Corp. 17,820 460 MetLife, Inc. 8,860 318 Wachovia Corp. 9,900 441 ----- 2,868 FOODS - 4.8% Bunge, Ltd. 6,130 239 General Mills, Inc. 4,530 215 Pepsi Bottling Group, Inc. 7,745 237 Sara Lee Corp. 19,665 452 ----- 1,143 HEALTH CARE - 11.1% AmerisourceBergen Corp. 3,590 215 Apogent Technologies, Inc. (a) 5,200 166 Baxter International, Inc. 18,245 629 Beckman Coulter, Inc. 5,520 337 Becton, Dickinson & Co. 8,775 455 Dentsply International, Inc. 5,020 262 Merck & Co., Inc. 12,245 582 ----- 2,646 INSURANCE - 7.1% ACE, Ltd. 4,600 194 Anthem, Inc. (a) 5,020 450 Fidelity National Financial Corp. 2,915 109 Hartford Financial Services Group, Inc. 5,250 361 The St. Paul Travelers Companies, Inc. 7,030 285 The Allstate Corp. 6,150 286 ----- 1,685 MANUFACTURING - 4.4% Dana Corp. 8,100 159 Deere & Co. 5,795 405 Eaton Corp. 1,880 122 Ingersoll-Rand Co. 3,700 253 Pactiv Corp. (a) 4,880 122 ----- 1,061 PHARMACEUTICALS - 0.5% Watson Pharmaceuticals, Inc. (a) 4,145 112 PUBLISHING - 1.4% Gannett Co., Inc. 4,060 344
37 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS VALUE FUND (CONT.)
SECURITY SHARES VALUE ($) - -------- ------ --------- RESTAURANTS - 2.5% Brinker International, Inc. (a) 4,675 160 McDonald's Corp. 16,875 438 ------ 598 RETAIL - 8.0% CVS Corp. 11,945 502 Federated Department Stores, Inc. 3,330 164 Kroger Co. (a) 24,480 446 Limited, Inc. 6,000 112 Masco Corp. 11,075 345 Nieman Marcus Group, Inc., Class A 3,165 176 Office Depot, Inc. (a) 9,225 165 ------ 1,910 SERVICES - 5.2% Cendant Corp. 25,255 619 Fair Isaac & Co., Inc. 2,770 92 Omnicom Group, Inc. 4,560 346 Unisys Corp. (a) 13,000 180 ------ 1,237 TELECOMMUNICATIONS - 6.8% BellSouth Corp. 12,140 318 Motorola, Inc. 35,180 642 Scientific-Atlanta, Inc. 7,930 274 Verizon Communications, Inc. 10,785 390 ------ 1,624 ------ TOTAL COMMON STOCKS 23,769 Cost: $21,352
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE ($) - ----------------------------- ------------ --------- REPURCHASE AGREEMENTS - 1.3% Fifth Third Bank, 1.25%, 07/01/04 (Proceeds at maturity $311, collateralized by Federal Home Loan Mortgage Corp. security, 5.00%, 10/01/18) Cost: $311 311 311 ------ TOTAL INVESTMENTS - 100.9% 24,080 Cost: $21,663 (b)
Percentages indicated are based on net assets of $23,871. (a) Non-income producing security. (b) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $122. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $2,502 Unrealized depreciation (207) ------ Net unrealized appreciation $2,295
CITIZENS GLOBAL EQUITY FUND
SECURITY SHARES VALUE ($) - -------- ------- --------- COMMON STOCKS - 97.5% AUTOMOBILE MANUFACTURING - 1.3% Honda Motor Co., Ltd. 27,400 1,324 BANKS - 1.0% Bank of New York Co., Inc. 36,300 1,070 BIOTECHNOLOGY - 5.6% Amgen, Inc. (a) 17,500 955 Applied Biosystems Group 57,800 1,257 Gilead Sciences, Inc. (a) 17,000 1,139 Roche Holding AG 24,151 2,397 ------ 5,748 BROADCASTING - 4.4% British Sky Broadcasting Group plc 198,283 2,244 Clear Channel Communications, Inc. 33,000 1,219 Univision Communications, Inc. (a) 33,000 1,054 ------ 4,517 COMPUTERS - 10.4% Automatic Data Processing, Inc. 26,100 1,093 Cisco Systems, Inc. (a) 111,400 2,640 EMC Corp. (a) 150,000 1,710 Intel Corp. 40,000 1,104 Microsoft Corp. 82,000 2,342 SAP AG 11,000 1,838 ------ 10,727 ELECTRICAL EQUIPMENT - 8.7% Agilent Technologies (a) 35,100 1,028 Analog Devices, Inc. 29,900 1,408 Emerson Electric Co. 33,100 2,103 Flextronics International (a) 93,770 1,496 Taiwan Semiconductor Manufacturing Co. Ltd. ADR 133,524 1,110 Teradyne, Inc. (a) 80,000 1,815 ------ 8,960 ENERGY & UTILITIES - 6.9% Apache Corp. 26,300 1,145 BP Amoco plc 355,955 3,154 EOG Resources, Inc. 25,000 1,493 Noble Corp. (a) 36,000 1,364 ------ 7,156 FINANCIAL - DIVERSIFIED - 12.4% American Express Co. 35,000 1,798 Bank of America Corp. 14,000 1,185 Citigroup, Inc. 62,000 2,884 HBOS plc 69,628 864 HSBC Holdings plc 99,982 1,491 Mitsubishi Tokyo Financial Group, Inc. 62 575 Mitsubishi Tokyo Financial Group, Inc. ADR 148,000 1,387 UBS AG 37,729 2,665 ------ 12,849
See Financial Notes 38 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS GLOBAL EQUITY FUND (CONT.)
SECURITY SHARES VALUE ($) -------- ------ --------- FOOD & BEVERAGES - 3.8% Compass Group plc 177,388 1,086 Nestle SA 5,678 1,518 The Coca-Cola Co. 25,000 1,262 --------- 3,866 HEALTH CARE - 9.3% Cardinal Health, Inc. 14,000 981 Eli Lilly & Co. 10,000 699 GlaxoSmithKline ADR 2,546 106 GlaxoSmithKline plc 104,405 2,120 Medtronic, Inc. 41,500 2,022 Pfizer, Inc. 67,400 2,309 Sanofi-Synthelabo SA 20,733 1,317 --------- 9,554 HOTELS & MOTELS - 1.9% Hilton Hotels Corp. 102,500 1,913 INSURANCE - 7.4% American International Group, Inc. 29,000 2,067 AXA 75,128 1,658 AXA ADR 4,123 91 ING Groep NV 91,569 2,167 Zurich Financial Services AG 10,194 1,613 --------- 7,596 MANUFACTURING - 10.0% Assa Abloy AB, Class B 116,200 1,489 CRH plc 83,498 1,767 Eaton Corp. (a) 36,500 2,363 Komatsu, Ltd. 400,000 2,430 Rockwell Automation, Inc. 60,000 2,251 --------- 10,300 PERSONAL CARE - 3.1% Gillette Co. 36,000 1,526 L'Oreal SA 20,951 1,678 --------- 3,204 REAL ESTATE - 1.3% Sun Hung Kai Properties Ltd. 162,000 1,329 RETAIL - 4.5% Seven-Eleven Japan Co., Ltd. 40,000 1,309 Sysco Corp. 22,600 811 Target Corp. 32,000 1,358 The TJX Cos., Inc. 49,000 1,183 --------- 4,661 TELECOMMUNICATIONS - 5.5% NTT DoCoMo, Inc. 590 1,057 Telefonica SA 101,564 1,505 Telefonica SA ADR 1,081 48 Vodafone Group plc 1,381,639 3,035 --------- 5,645 --------- TOTAL COMMON STOCKS 100,419 Cost: $91,694
SECURITY, RATE, MATURITY DATE PRINCIPAL ($) VALUE ($) ----------------------------- ------------- --------- REPURCHASE AGREEMENTS - 1.3% Fifth Third Bank, 1.25%, 07/01/04 (Proceeds at maturity $1,351, collateralized by Federal Home Loan Mortgage Corp. security, 5.00%, 10/01/18) Cost: $ 1,351 1,351 1,351 ------- TOTAL INVESTMENTS - 98.8% 101,770 Cost: $93,045 (b)
Percentages indicated are based on net assets of $103,011. (a) Non-income producing security. (b) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $547. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $11,011 Unrealized depreciation (2,834) ------- Net unrealized appreciation $ 8,177
ADR -- American Depositary Receipt The fund's portfolio holdings as of June 30, 2004, were distributed among the following countries:
PERCENTAGE OF NET ASSETS ------------------------ Short term Equity & other Total ------ ------- ----- France 4.6% 4.6% Germany 1.8% 1.8% Hong Kong 1.3% 1.3% Ireland 1.7% 1.7% Japan 7.8% 7.8% Netherlands 2.1% 2.1% Singapore 1.5% 1.5% Spain 1.5% 1.5% Sweden 1.4% 1.4% Switzerland 8.0% 8.0% Taiwan 1.1% 1.1% United Kingdom 13.6% 13.6% United States 51.1% 1.3% 52.4% ---- --- ---- 97.5% 1.3% 98.8%
39 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS BALANCED FUND
SECURITY SHARES VALUE ($) -------- ------ --------- COMMON STOCKS - 71.2% AIR FREIGHT - 1.1% FedEx Corp. 100 8 United Parcel Service, Class B 300 23 --- 31 AIRLINES - 0.1% Southwest Airlines Co. 228 4 AUTO MANUFACTURING - 0.3% PACCAR, Inc. 150 9 BANKS - 1.4% Bank of New York Co., Inc. 300 9 BB&T Corp. 200 7 Fifth Third Bancorp 200 11 National City Corp. 171 6 Suntrust Banks, Inc. 100 6 --- 39 BIOTECHNOLOGY - 0.9% Applera Corp. 100 2 Biogen Idec, Inc. (a) 100 6 Forest Laboratories, Inc. (a) 100 6 Gilead Sciences, Inc. (a) 131 9 MedImmune, Inc. (a) 100 2 --- 25 BROADCASTING - 0.4% Clear Channel 184 7 Communications, Inc. Radio One, Inc. (a) 100 2 Univision Communications, Inc. (a) 100 3 --- 12 CHEMICALS - 1.2% Air Products & Chemicals, Inc. 100 5 Amgen, Inc. (a) 400 22 Praxair, Inc. 200 8 --- 35 COMPUTERS - 7.9% Automatic Data Processing 200 8 Corning, Inc. (a) 700 9 Dell, Inc. (a) 784 28 EMC Corp. (a) 1,050 12 Hewlett-Packard Co. 900 19 Intel Corp. 1,953 55 International Business Machines Corp. 550 48 Novell, Inc. (a) 100 1 Oracle Corp. (a) 1,600 19 Symantec Corp. (a) 148 6 Yahoo!, Inc. (a) 400 15 --- 220 CONSTRUCTION - 0.1% Lennar Corp. 100 4 CONSUMER PRODUCTS - 0.4% Kimberly-Clark Corp. 150 10 ELECTRICAL EQUIPMENT - 0.9% Emerson Electric Co. 100 6 Tyco International, Ltd. 600 20 --- 26 ELECTRONICS - 4.4% Adobe Systems, Inc. 100 5 Analog Devices, Inc. 139 7 Applied Materials, Inc. (a) 470 9 Broadcom Corp., Class A (a) 100 5 Cisco Systems, Inc. (a) 2,060 49 Electronic Arts, Inc. (a) 100 5 JDS Uniphase Corp. (a) 400 2 Johnson Controls, Inc. 100 5 Juniper Networks, Inc. (a) 100 2 Linear Technology Corp. 100 4 LSI Logic Corp. (a) 100 1 Maxim Integrated Products, Inc. 200 10 Texas Instruments, Inc. 540 13 Xilinx, Inc. (a) 200 7 --- 124 ENERGY & UTILITIES - 2.9% AES Corp. (a) 200 2 Anadarko Petroleum Corp. 100 6 Apache Corp. 140 6 Baker Hughes, Inc. 163 6 Burlington Resources, Inc. 200 7 Calpine Corp. (a) 200 1 ConocoPhillips 251 20 Devon Energy Corp. 100 7 Diamond Offshore Drilling, Inc. 100 2 KeySpan Corp. 100 4 Kinder Morgan, Inc. 100 6 Pepco Holdings, Inc. 300 5 Transocean, Inc. (a) 100 3 Valero Energy Corp. 100 7 --- 82 ENTERTAINMENT - 2.2% Comcast Corp. Class A (a) 700 20 Time Warner, Inc. (a) 1,400 24 Viacom, Inc. 529 19 --- 63
See Financial Notes 40 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS BALANCED FUND (CONT.)
SECURITY SHARES VALUE ($) -------- ------ --------- FINANCIAL - DIVERSIFIED - 9.6% American Express Co. 375 19 Citigroup, Inc. 1,554 71 Fannie Mae 260 19 Freddie Mac 200 13 J.P. Morgan Chase & Co. 600 23 MBNA Corp. 400 10 Mellon Financial Corp. 100 3 Merrill Lynch & Co. 300 16 MetLife, Inc. 200 7 Moody's Corp. 100 6 Northern Trust Corp. 200 8 SLM Corp. 100 4 State Street Corp. 100 5 Synovus Financial Corp. 100 3 Wachovia Corp. 400 18 Washington Mutual, Inc. 300 12 Wells Fargo & Co. 500 29 ----- 266 FINANCIAL SERVICES - 0.7% Charles Schwab Corp. 400 4 Golden West Financial Corp. 100 10 Principal Financial Group 200 7 ----- 21 FOODS - 3.8% Coca-Cola Co. 775 38 General Mills, Inc. 200 10 H.J. Heinz Co. 100 4 Hershey Foods Corp. 200 9 Kellogg Co. 100 4 Pepsi Bottling Group, Inc. 100 3 PepsiCo, Inc. 475 26 Wm.Wrigley Jr. Co. 200 13 ----- 107 HEALTH CARE - 9.2% Baxter International, Inc. 300 10 Becton, Dickinson & Co. 100 5 Boston Scientific Corp. (a) 300 13 Cardinal Health, Inc. 100 7 Eli Lilly & Co. 300 21 Guidant Corp. 100 6 Health Management Associates Inc., Class A 100 2 Johnson & Johnson, Inc. 900 50 Medtronic, Inc. 400 19 Mylan Laboratories, Inc. 100 2 Pfizer, Inc. 2,311 79 St. Jude Medical, Inc. (a) 100 8 Stryker Corp. 200 11 UnitedHealth Group, Inc. 174 11 WellPoint Health Networks, Inc. (a) 100 11 ----- 255 INSURANCE - 3.9% American International Group, Inc. 800 57 Hartford Financial Services Group, Inc. 100 7 Marsh & McLennan Co., Inc. 200 9 MBIA, Inc. 100 6 Progressive Corp. 100 9 The St. Paul Travelers 300 12 Companies, Inc. The Allstate Corp. 200 9 ----- 109 INVESTMENT BANKING & BROKERAGE - 0.5% The Goldman Sachs Group, Inc. 150 14 LEISURE - 0.2% Harley-Davidson, Inc. 100 6 MANUFACTURING - 4.4% 3M Co. 224 20 Deere & Co. 100 7 Dover Corp. 300 13 Eaton Corp. 100 6 Ecolab, Inc. 100 3 Illinois Tool Works, Inc. 74 7 Ingersoll-Rand Co. 100 7 Mattel, Inc. 100 2 Nucor Corp. 100 8 Parker Hannifin Corp. 100 6 Procter & Gamble Co. 788 43 ----- 122 OFFICE EQUIPMENT & SUPPLIES - 0.3% Pitney Bowes, Inc. 200 9 PERSONAL CARE - 1.2% Avon Products, Inc. 200 9 Colgate-Palmolive Co. 200 12 Gillette Co. 317 13 ----- 34 PHARMACEUTICALS - 0.6% McKesson Corp. 200 7 Zimmer Holdings, Inc. (a) 100 9 ----- 16 PUBLISHING - 0.7% Gannett Co., Inc. 100 8 McGraw-Hill Cos., Inc. 100 8 Tribune Co. 100 5 ----- 21
41 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS BALANCED FUND (CONT.)
SECURITY SHARES VALUE ($) -------- ------ --------- RAILROADS - 0.1% Norfolk Southern Corp. 100 3 RESTAURANTS - 0.7% McDonald's Corp. 400 10 Starbucks Corp. (a) 200 9 ----- 19 RETAIL - 5.5% Bed Bath & Beyond, Inc. (a) 125 5 Best Buy & Co., Inc. 200 10 Big Lots Inc. (a) 100 1 Costco Wholesale Corp. 200 8 CVS Corp. 100 4 Dollar General Corp. 100 2 eBay, Inc. (a) 200 18 Home Depot, Inc. 700 24 Limited, Inc. 300 6 Lowe's Cos., Inc. 200 11 Masco Corp. 188 6 RadioShack Corp. 200 6 Staples, Inc. 200 6 Target Corp. 300 13 The Gap, Inc. 400 10 The TJX Cos., Inc. 400 10 Walgreen Co. 333 12 ----- 152 SERVICES - 1.8% Apollo Group, Inc., Class A (a) 100 9 Cendant Corp. 300 7 First Data Corp. 300 12 Omnicom Group, Inc. 100 8 Paychex, Inc. 200 7 Sysco Corp. 212 8 ----- 51 TELECOMMUNICATIONS - 3.8% Lucent Technologies, Inc. (a) 1,700 6 Motorola, Inc. 700 13 Nextel Communications, Inc. (a) 380 10 QUALCOMM, Inc. 200 15 SBC Communications, Inc. 1,000 24 Sprint Corp. 400 7 Verizon Communications, Inc. 851 31 ----- 106 ----- TOTAL COMMON STOCKS 1,995 Cost: $1,908
SECURITY, RATE, MATURITY DATE PRINCIPAL ($) VALUE ($) ----------------------------- ------------- --------- COLLATERALIZED MORTGAGE OBLIGATIONS - 0.9% First Horizon Alternative Mortgage Securities,4.88%, 06/25/34 (b) 24 25 Cost: $25 CORPORATE BONDS - 6.7% BANKS - 0.2% Sovereign Bancorp, Inc., 10.50%, 11/15/06 5 6 BROADCASTING - 1.4% Comcast Corp., 5.30%, 01/15/14 10 10 Cox Communications, Inc., 4.63%, 06/01/13 10 9 Emmis Operating Co., 6.88%, 05/15/12 10 10 Liberty Media Corp., 5.70%, 05/15/13 10 10 ---- 39 CONSTRUCTION - 0.2% Toll Brothers, Inc., 4.95%, 03/15/14 5 5 ELECTRICAL EQUIPMENT - 0.2% Fairchild Semiconductor, 10.50%, 02/01/09 5 5 ENERGY & UTILITIES - 0.5% Valero Energy Corp., 4.75%, 06/15/13 5 5 XTO Energy, Inc., 6.25%, 04/15/13 10 10 ---- 15 FINANCIAL - DIVERSIFIED - 1.4% American General Finance Corp., 5.38%, 10/01/12 5 5 CIT Group, Inc., 5.00%, 02/13/14 10 9 Liberty Mutual Group, 5.75%, 03/15/14 10 10 MBNA America Bank Corp., 4.63%, 09/15/08 10 10 Washington Mutual, Inc., 4.63%, 04/01/14 10 9 ---- 43 INSURANCE - 0.2% Ace, Ltd., 6.00%, 04/01/07 5 5 INVESTMENT BANKING & BROKERAGE - 0.4% The Goldman Sachs Group, Inc., 3.88%, 01/15/09 10 10 MANUFACTURING - 0.2% American Standard, Inc., 7.38%, 02/01/08 5 5 RESTAURANTS - 0.4% Dominos, Inc., 8.25%, 07/01/11 10 11 RETAIL - 0.6% Kroger Co., 7.50%, 04/01/31 10 11 The GAP, Inc., 10.55%, 12/15/08 5 6 ---- 17
See Financial Notes 42 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS BALANCED FUND (CONT.)
SECURITY, RATE, MATURITY DATE PRINCIPAL ($) VALUE ($) ----------------------------- ------------- --------- TELECOMMUNICATIONS - 1.0% Nextel Communications, Inc., 5.95%, 03/15/14 10 9 7.38%, 08/01/15 10 10 Verizon Global Funding Corp., 4.38%, 06/01/13 10 9 ----- 28 ----- TOTAL CORPORATE BONDS 189 Cost: $196 U.S. GOVERNMENT AGENCY OBLIGATIONS - 9.7% FEDERAL HOME LOAN BANK - 1.0% 3.38%, 07/21/08 30 29 FEDERAL HOME LOAN MORTGAGE CORPORATION - 4.4% 2.88%, 09/15/05 3 3 3.25%, 02/25/08 4 4 4.25%, 05/04/09 10 10 4.50%, 01/15/13 9 9 5.50%, 10/01/18 95 98 ----- 124 FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.3% 1.88%, 12/15/04 6 6 3.25%, 01/15/08 9 9 5.25%, 01/15/09 14 15 6.38%, 06/15/09 3 3 4.38%, 09/15/12 4 4 4.50%, 12/01/18 19 18 6.50%, 07/01/32 5 5 6.00%, 11/01/32 6 6 5.50%, 03/01/33 36 36 5.50%, 04/01/33 18 18 ----- 120 ----- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 273 Cost: $275 U.S. TREASURY NOTES - 4.2% 3.38%, 1/15/07 4 5 6.50%, 2/15/10 100 113 ----- Cost: $118 118 REPURCHASE AGREEMENTS - 3.2% Fifth Third Bank, 1.25%, 07/01/04 (Proceeds at maturity $90, collateralized by Federal Home Loan Mortgage Corp. security, 5.00%, 10/01/18) Cost: $90 90 90 ----- TOTAL INVESTMENTS - 95.9% 2,690 Cost: $2,612 (c)
Percentages indicated are based on net assets of $2,804. (a) Non-income producing security. (b) Variable rate security. The rate presented represents the rate in effect at June 30, 2004. (c) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting by less than $1. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $131 Unrealized depreciation (53) ---- Net unrealized appreciation $ 78
43 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS INCOME FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL ($) VALUE ($) ----------------------------- ------------- --------- COLLATERALIZED MORTGAGE OBLIGATIONS - 3.3% First Horizon Alternative Mortgage Securities, 4.88%, 06/25/34 (a) 1,938 1,950 Cost: $1,966 CORPORATE BONDS - 47.4% BANKS - 1.3% Banknorth Group, Inc., 3.75%, 05/01/08 500 495 Sovereign Bancorp, Inc., 10.50%, 11/15/06 245 281 ------ 776 BROADCASTING - 11.9% Comcast Corp., 5.85%, 01/15/10 1,000 1,043 5.30%, 01/15/14 990 953 Cox Communications, Inc., 7.10%, 10/01/12 1,000 1,097 4.60%, 06/01/13 990 914 Emmis Operating Co., 6.90%, 05/15/12 990 970 Liberty Media Corp., 5.70%, 05/15/13 990 975 Univison Communications, Inc., 7.85%, 07/15/11 1,000 1,154 ------ 7,106 CONSTRUCTION - 1.5% Toll Brothers, Inc., 4.95%, 03/15/14 (b) 995 920 ELECTRICAL EQUIPMENT - 2.5% Fairchild Semiconductor, 10.50%, 02/01/09 495 538 Flextronics International, Ltd., 6.50%, 05/15/13 (b) 1,000 975 ------ 1,513 ENERGY & UTILITIES - 3.7% Valero Energy Corp., 4.75%, 06/15/13 995 936 XTO Energy, Inc., 6.25%, 04/15/13 990 1,030 4.90%, 02/01/14 250 235 ------ 2,201 FINANCIAL - DIVERSIFIED - 8.0% American General Finance Corp., 5.40%, 10/01/12 995 997 CIT Group, Inc., 5.00%, 02/13/14 990 936 Liberty Mutual Group, 5.75%, 03/15/14 990 955 MBNA America Bank Corp., 4.60%, 09/15/08 990 993 Washington Mutual, Inc., 4.60%, 04/01/14 990 903 ------ 4,784 INSURANCE - 1.8% Ace, Ltd., 6.00%, 04/01/07 995 1,051 INVESTMENT BANKING & BROKERAGE - 1.6% The Goldman Sachs Group, Inc., 3.90%, 01/15/09 990 965 MANUFACTURING - 1.8% American Standard, Inc., 7.40%, 02/01/08 995 1,075 PHARMACEUTICALS - 1.8% AmerisourceBergen Corp., 8.10%, 09/01/08 1,000 1,078 RESTAURANTS - 1.8% Dominos, Inc., 8.25%, 07/01/11 990 1,049 RETAIL - 3.9% Kroger Co., 7.50%, 04/01/31 990 1,096 The GAP, Inc., 10.55%, 12/15/08 995 1,204 ------ 2,300 TELECOMMUNICATIONS - 5.8% Nextel Communications, Inc., 5.95%, 03/15/14 490 451 7.40%, 08/01/15 990 1,000 Verizon Global Funding Corp., 7.40%, 09/01/12 1,000 1,124 4.40%, 06/01/13 990 909 ------ 3,484 ------ TOTAL CORPORATE BONDS 28,302 Cost: $28,244 U.S. GOVERNMENT AGENCY OBLIGATIONS - 35.4% FEDERAL HOME LOAN MORTGAGE CORPORATION -17.5% 4.50%, 07/23/07 1,000 1,001 4.25%, 05/04/09 990 981 4.00%, 06/15/13 2,928 2,945 6.25%, 11/14/13 1,000 1,039 3.50%, 03/15/14 2,504 2,485 5.50%, 10/01/18 1,943 1,989 ------ 10,440 FEDERAL NATIONAL MORTGAGE ASSOCIATION - 17.9% 2.75%, 08/11/06 2,000 1,983 5.00%, 11/17/11 1,000 994 4.50%, 12/01/18 1,872 1,835 6.50%, 08/01/31 837 873 6.00%, 08/01/32 830 849 5.50%, 04/01/33 4,101 4,093 ------ 10,627 ------ TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 21,067 Cost: $21,285
See Financial Notes 44 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS INCOME FUND (CONT.)
SECURITY, RATE, MATURITY DATE PRINCIPAL ($) VALUE ($) ----------------------------- ------------- --------- U.S. TREASURY NOTES - 8.1% 3.40%, 01/15/07 2,000 2,542 6.50%, 02/15/10 2,000 2,254 ------ TOTAL U.S. TREASURY NOTES 4,796 Cost: $4,752 REPURCHASE AGREEMENTS - 5.0% Fifth Third Bank, 1.25%, 07/01/04 (Proceeds at maturity $2,994, collateralized by Federal Home Loan Mortgage Corp. security, 5.00%, 10/01/18) Cost: $2,993 2,993 2,993 ------ TOTAL INVESTMENTS - 99.2% 59,108 Cost: $59,240 (c)
Percentages indicated are based on net assets of $59,562. (a) Variable rate security. The rate presented represents the rate in effect at June 30, 2004. (b) Rule 144A security. (c) Represents cost for financial reporting purposes and differs from federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $25. Cost for federal income tax purposes differs from value by net unrealized depreciation of securities as follows: Unrealized appreciation $ 799 Unrealized depreciation (957) ----- Net unrealized depreciation $(158)
CITIZENS ULTRA SHORT BOND FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL ($) VALUE ($) ----------------------------- ------------- --------- CORPORATE BONDS - 70.6% AUTOMOTIVE FINANCE - 29.3% American Honda Finance, 1.42%, 08/15/06 (a) (b) 350 351 BMW Vehicle Owner Trust, 1.94%, 02/25/07 250 249 Capital Auto Receivables Asset Trust, 1.29%, 01/16/06 (a) 300 300 Ford Credit Auto Owner Trust, 5.25%, 09/15/05 63 63 GS Auto Loan Trust, 2.08%, 04/16/07 250 250 Harley-Davidson Motorcycle Trust, 1.34%, 01/15/08 92 92 Honda Auto Receivables Owner Trust, 2.16%, 10/21/08 200 195 Toyota Auto Receivables Owner Trust, 1.69%, 03/15/07 250 249 4.39%, 05/15/09 100 102 USAA Auto Owners Trust, 1.58%, 06/15/07 250 248 Volkswagen Alt, 2.36%, 12/20/05 119 119 ----- 2,218 BANKS - 6.1% Bank of America Corp., 7.88%, 05/16/05 100 105 4.75%, 10/15/06 100 103 Wells Fargo Co., 1.60%, 03/24/05 (a) 250 250 ----- 458 BROADCASTING - 2.9% TCI Communications, 8.00%, 08/01/05 210 221 COMPUTERS - 2.8% Hewlett-Packard Co., 7.15%, 06/15/05 200 209 FINANCIAL - DIVERSIFIED - 15.3% American Express Co., 1.42%, 09/19/06 (a) 300 301 7.20%, 09/17/07 100 103 American General Finance, 7.45%, 01/15/05 50 51 3.00%, 11/15/06 250 247 Citibank Credit Card Master Trust, 6.65%, 11/15/06 150 153 Citicorp, 7.63%, 05/01/05 50 52 Merrill Lynch & Co., 1.35%, 04/28/05 (a) 250 250 ----- 1,157 INSURANCE - 3.3% Met Life Global Funding, 1.45%, 08/28/06 (a) (b) 250 250
45 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS ULTRA SHORT BOND FUND (CONT.)
SECURITY, RATE, MATURITY DATE PRINCIPAL ($) VALUE ($) ----------------------------- ------------- --------- PHARMACEUTICALS - 1.3% Pfizer, Inc., 3.63%, 11/01/04 100 101 RETAIL - 2.7% Kroger Co., 7.375%, 03/01/05 200 206 TELECOMMUNICATIONS - 6.9% CBS Corp., 7.15%, 05/20/05 150 156 Chesapeake (Bell Atlantic Virginia), 6.13%, 07/15/05 100 104 Cox Communications Inc., 6.88%, 06/15/05 250 259 ----- 519 ----- TOTAL CORPORATE BONDS 5,339 Cost: $5,362 U.S. GOVERNMENT AGENCY OBLIGATIONS - 5.7% FEDERAL HOME LOAN MORTGAGE CORPORATION - 5.4% 5.83%, 02/09/06 100 105 1.92%, 10/27/06 (a) 300 300 ----- 405 STUDENT LOAN MARKETING ASSOCIATION - 0.3% 1.53%, 06/16/08 (a) 22 22 ----- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 427 Cost: $427 REPURCHASE AGREEMENTS - 23.4% Fifth Third Bank, 1.25%, 07/01/04 (Proceeds at maturity $1,764, collateralized by Federal Home Loan Mortgage Corp. security, 5.00%, 10/01/18) Cost: $1,764 1,764 1,764 ----- TOTAL INVESTMENTS - 99.7% 7,530 Cost: $7,553 (c)
Percentages indicated are based on net assets of $7,552. (a) Variable rate security. The rate presented represents the rate in effect at June 30, 2004. (b) Rule 144A security. (c) Represents cost for financial reporting and federal income tax purposes. CITIZENS MONEY MARKET FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL ($) VALUE ($) ----------------------------- ------------- --------- CERTIFICATES OF DEPOSIT - 5.6% City National Bank of New Jersey, 1.50%, 03/15/05 (a) 100 100 Independence Federal Savings Bank, 1.30%, 09/26/04 (a) 100 100 Mercantile Safe Deposit and Trust, 1.15%, 10/29/04 5,000 5,000 Self Help Credit Union, 1.44%, 03/13/05 (a) 100 100 ------ TOTAL CERTIFICATES OF DEPOSIT 5,300 Cost: $5,300 COMMERCIAL PAPER - 73.5% American General Finance Corp., 1.12%, 07/06/04 4,426 4,425 Atlantis One Funding Corp., 1.43%, 11/08/04 (b) 4,500 4,477 Blue Ridge Asset Funding, 1.05%, 07/02/04 (b) 4,500 4,500 Charta Corp., 1.21%, 07/12/04 4,500 4,498 Cooperative Association of Tractor Dealers, 1.28%, 10/22/04 4,500 4,482 1.51%, 11/12/04 3,718 3,697 Fountain Square, 1.10%, 07/19/04 (b) 4,427 4,425 Galaxy Funding, Inc., 1.06%, 07/08/04 (b) 4,500 4,499 Galleon Capital, 1.50%, 07/01/04 (b) 4,500 4,500 Goldman Sachs Group, 1.32%, 08/23/04 3,500 3,494 ING America Insurance, 1.05%, 08/19/04 4,000 3,994 J.P. Morgan Chase & Co., 1.31%, 08/16/04 4,500 4,492 Merrill Lynch & Co., Inc., 1.45%, 07/01/04 4,500 4,500 Metlife Funding, 1.37%, 09/08/04 4,000 3,989 Pfizer, Inc., 1.14%, 10/13/04 4,000 3,987 UBS Finance Corp., 1.06%, 07/01/04 1,280 1,280 Verizon Network Funding, 1.08%, 07/07/04 4,000 3,999 ------ TOTAL COMMERCIAL PAPER 69,238 Cost: $69,238 CORPORATE BONDS - 6.9% American Express Centurion Bank, 1.18%, 07/14/04 (c) 3,000 3,000 Pelican Capital LLC, 1.33%, 04/01/28 (c) 520 520 Redding Life Care LLC, 1.38%, 10/01/05 (c) 3,000 3,000 ------ TOTAL CORPORATE BONDS 6,520 Cost: $6,520
See Financial Notes 46 PORTFOLIO HOLDINGS JUNE 30, 2004 ($ X 1,000) CITIZENS MONEY MARKET FUND (CONT.)
SECURITY, RATE, MATURITY DATE PRINCIPAL ($) VALUE ($) - ----------------------------- ------------- --------- MUNICIPAL NOTES - 3.7% New York State Housing Finance Agency, 1.35%, 11/15/29 (c) 3,500 3,500 Cost: $ 3,500 U.S. GOVERNMENT AGENCY OBLIGATIONS - 8.5% Student Loan Marketing Association 1.44%, 07/15/04 (c) 4,000 4,000 1.44%, 10/21/04 (c) 4,000 4,000 ----- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 8,000 ----- Cost: $8,000 TOTAL INVESTMENTS - 98.2% 92,558 Cost: $92,558 (d)
Percentages indicated are based on net assets of $94,242. (a) Restricted security which may not be publicly sold without registration under the Securities Act of 1933. (b) Rule 144A security. (c) Variable rate security. The rate presented represents the rate in effect at June 30, 2004. (d) Represents cost for financial reporting and federal income tax purposes. 47 STATEMENTS OF ASSETS AND LIABILITIES
SMALL CAP CORE EMERGING CORE GROWTH 300 GROWTH FUND GROWTH FUND FUND FUND ----------- ----------- ---- ---- ASSETS Investments, at value $ 29,112,761 $ 180,427,668 $ 342,546,925 $ 6,934,089 Repurchase agreements 535,713 75,440 133,538 - ------------- ------------- ------------- ------------- Total investments 29,648,474 180,503,108 342,680,463 6,934,089 Cash - - - 9,283 Foreign currency - - - - Receivables: Interest and dividends 773 55,505 196,670 3,654 Investments sold 86,078 609,970 2,344,273 - Tax reclaims - - - - Due from investment adviser - - - 1,990 Deferred offering costs - - - 1,845 Prepaid expenses 7,172 17,634 23,055 13,201 ------------- ------------- ------------- ------------- Total assets 29,742,497 181,186,217 345,244,461 6,964,062 LIABILITIES Payables: Due to custodian - - - - Dividends to shareholders - - - - Investments purchased - - - 109,284 Investment management fees 5,992 73,610 70,736 - Administrative fees 1,798 11,042 21,221 419 Shareholder service fees 833 5,689 14,219 89 Distribution fees 2,996 18,037 29,901 698 Other accrued expenses 29,572 178,089 278,627 4,807 ------------- ------------- ------------- ------------- Total liabilities 41,191 286,467 414,704 115,297 ------------- ------------- ------------- ------------- NET ASSETS $ 29,701,306 $ 180,899,750 $ 344,829,757 $ 6,848,765 ------------- ------------- ------------- ------------- NET ASSETS Standard Shares: Net assets $ 29,701,306 $ 165,781,703 $ 290,352,065 $ 6,848,765 Number of shares outstanding 2,741,226 12,746,115 16,041,448 613,950 Net asset value, offering and redemption price per share $ 10.84 $ 13.01 $ 18.10 $ 11.16 Institutional Shares: Net assets - $ 3,534,330 $ 52,842,237 - Number of shares outstanding - 263,633 3,525,471 - Net asset value, offering and redemption price per share - $ 13.41 $ 14.99 - Administrative Shares: Net assets - $ 11,583,717 $ 1,635,455 - Number of shares outstanding - 876,030 88,699 - Net asset value, offering and redemption price per share - $ 13.22 $ 18.44 - Net assets consist of: Paid-in capital $ 27,681,091 $ 355,641,761 $ 391,325,484 $ 6,435,171 Accumulated net investment income/loss - - - 13,494 Accumulated net realized gains/losses on investments and foreign currencies 1,233,929 (188,274,207) (86,514,644) 10,201 Net unrealized appreciation/depreciation on investments and foreign currencies 786,286 13,532,196 40,018,917 389,899 ------------- ------------- ------------- ------------- NET ASSETS $ 29,701,306 $ 180,899,750 $ 344,829,757 $ 6,848,765 ------------- ------------- ------------- ------------- Investments, at cost $ 28,862,188 $ 166,970,912 $ 302,661,546 $ 6,544,190 Foreign currency, at cost - - - -
See Financial Notes 48 AS OF JUNE 30, 2004
SMALL CAP VALUE GLOBAL EQUITY BALANCED INCOME ULTRA SHORT MONEY MARKET VALUE FUND FUND FUND FUND FUND BOND FUND FUND ---------- ---- ---- ---- ---- --------- ---- $ 1,302,139 $ 23,768,854 $ 100,418,662 $ 2,600,315 $ 56,114,116 $ 5,765,962 $ 92,558,492 47,547 311,005 1,351,373 89,708 2,993,447 1,764,124 - - ------------- ------------- ------------- ------------- ------------- ------------- ------------- 1,349,686 24,079,859 101,770,035 2,690,023 59,107,563 7,530,086 92,558,492 - - - - - - 1,783,503 - - 14,463 - - - - 438 28,739 100,865 10,711 708,658 31,427 62,380 17,552 1,251,722 1,178,642 109,497 - - - - - 98,075 - - - - 2,166 - - 2,196 - 3,128 - 7,501 - - - - - - 17,711 10,352 16,621 5,661 11,229 5,978 18,410 - ------------- ------------- ------------- ------------- ------------- ------------- ------------- 1,395,054 25,370,672 103,178,701 2,818,088 59,827,450 7,570,619 94,422,785 - - - - - - 26,431 - - - 6,841 188,499 10,934 27,197 15,417 1,461,906 - 2,163 - - - - 6,764 42,142 - 15,843 - 13,691 83 1,450 6,321 171 3,656 463 5,868 99 803 2,649 109 1,453 132 2,590 138 2,416 10,001 285 6,094 772 - 3,110 26,278 106,436 4,436 49,476 6,229 104,546 - ------------- ------------- ------------- ------------- ------------- ------------- ------------- 18,847 1,499,617 167,549 14,005 265,021 18,530 180,323 - ------------- ------------- ------------- ------------- ------------- ------------- ------------- $ 1,376,207 $ 23,871,055 $ 103,011,152 $ 2,804,083 $ 59,562,429 $ 7,552,089 $ 94,242,462 - ------------- ------------- ------------- ------------- ------------- ------------- ------------- $ 1,376,207 $ 23,871,055 $ 95,624,981 $ 2,804,083 $ 59,562,429 $ 7,552,089 $ 83,231,092 141,323 2,271,005 6,299,476 246,979 6,039,686 761,345 83,304,435 $ 9.74 $ 10.51 $ 15.18 $ 11.35 $ 9.86 $ 9.92 $ 1.00 - - $ 5,243,807 - - - $ 11,011,370 - - 336,516 - - - 11,013,161 - - $ 15.58 - - - $ 1.00 - - $ 2,142,364 - - - - - - 139,453 - - - - - - $ 15.36 - - - - $ 1,384,551 $ 30,720,155 $ 226,225,592 $ 2,653,516 $ 65,222,274 $ 7,662,565 $ 94,251,545 - - (441,535) - - (255) - (36,221) (9,265,638) (131,506,079) 72,112 (5,527,272) (87,234) (9,083) 27,877 2,416,538 8,733,174 78,455 (132,573) (22,987) - - ------------- ------------- ------------- ------------- ------------- ------------- ------------- $ 1,376,207 $ 23,871,055 $ 103,011,152 $ 2,804,083 $ 59,562,429 $ 7,552,089 $ 94,242,462 - ------------- ------------- ------------- ------------- ------------- ------------- ------------- $ 1,321,809 $ 21,663,321 $ 93,045,433 $ 2,611,568 $ 59,240,136 $ 7,553,073 $ 92,558,492 - - 14,552 - - - -
49 STATEMENTS OF OPERATIONS
SMALL CAP CORE EMERGING CORE GROWTH 300 GROWTH FUND GROWTH FUND FUND FUND(1) ----------- ----------- ---- ----- INVESTMENT INCOME Interest $ 4,920 $ 19,963 $ 21,328 $ 558 Dividend(3) 37,062 840,567 3,075,380 50,899 ------------ ------------ ------------ ------------ Total investment income 41,982 860,530 3,096,708 51,457 EXPENSES Investment management fees 126,528 1,863,135 1,830,177 8,015 Administrative fees 37,959 279,473 549,058 6,011 Distribution fees: Standard shares 63,264 426,611 751,360 10,019 Administrative shares - 27,817 6,307 - Shareholder service fees: Standard shares 17,309 130,199 764,213 889 Institutional shares - 125 1,245 - Administrative shares - 233 173 - Transfer agent expenses: Standard shares 76,362 540,416 707,230 9,606 Institutional shares - 353 3,694 - Administrative shares - 7,219 2,226 - Accounting expenses 14,378 75,011 143,729 8,505 Custody expenses 15,090 13,240 24,727 7,490 Offering costs - - - 8,446 Registration expenses 14,423 31,489 35,540 15,343 Trustee expenses 4,165 29,828 58,957 718 Other expenses 18,789 130,003 214,289 3,217 ------------ ------------ ------------ ------------ Total expenses before reimbursements, waivers, or expenses paid indirectly 388,267 3,555,152 5,092,925 78,259 Reimbursements or waivers from adviser - - - (42,028) Expenses paid indirectly - (28,660) (72,041) - ------------ ------------ ------------ ------------ Net expenses 388,267 3,526,492 5,020,884 36,231 NET INVESTMENT INCOME/LOSS $ (346,285) $ (2,665,962) $ (1,924,176) $ 15,226 REALIZED AND UNREALIZED GAINS/LOSSES ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Realized gains/losses on investments and foreign currency transactions $ 6,022,751 $ 37,477,874 $ 43,684,981 $ 10,201 Change in unrealized appreciation/depreciation on investments and foreign currencies (1,011,664) (3,529,402) (6,189,966) 389,899 ------------ ------------ ------------ ------------ Net realized and unrealized gains/losses on investments and foreign currencies 5,011,087 33,948,472 37,495,015 400,100 CHANGE IN NET ASSETS FROM OPERATIONS $ 4,664,802 $ 31,282,510 $ 35,570,839 $ 415,326
(1) For the period August 29, 2003, commencement of operations, to June 30, 2004. (2) For the period March 31, 2004, commencement of operations, to June 30, 2004. (3) Dividend income net of withholding taxes. For the year ended June 30, 2004, withholding taxes for the Global Equity Fund were $125,227. 50 FOR THE YEAR ENDED JUNE 30, 2004
SMALL CAP VALUE GLOBAL EQUITY BALANCED INCOME ULTRA SHORT MONEY MARKET VALUE FUND(2) FUND FUND FUND FUND BOND FUND FUND - ------------- ---- ---- ---- ---- --------- ---- $ 281 $ 2,873 $ 8,331 $ 17,202 $ 3,030,888 $ 168,825 $ 380,370 1,709 314,283 1,542,766 15,353 - - 729,997 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ 1,990 317,156 1,551,097 32,555 3,030,888 168,825 1,110,367 2,154 142,825 1,135,102 11,095 416,408 31,864 358,875 431 30,606 170,267 2,560 96,095 13,656 153,806 718 51,009 260,468 4,267 160,157 22,760 - - - 5,816 - - - - 263 16,988 62,352 1,663 32,503 3,084 59,612 - - 129 - - - 537 - - 181 - - - - 545 73,117 357,870 12,200 130,582 17,414 241,455 - - 430 - - - 1,547 - - 2,168 - - - - 834 12,940 54,224 8,792 31,634 10,428 39,663 4,052 5,993 16,859 4,012 3,305 4,689 4,827 2,494 - - 6,149 - 5,419 - 5,220 14,106 37,237 18,507 14,210 20,167 31,802 59 3,374 18,249 827 10,334 1,462 16,507 883 13,368 111,133 3,569 36,336 5,713 63,046 - ------------ ------------ ------------ ------------ ------------ ------------ ------------ 17,653 364,326 2,232,485 73,641 931,564 136,656 971,677 (12,998) - - (51,390) - (131,154) - - - - - - - - - ------------ ------------ ------------ ------------ ------------ ------------ ------------ 4,655 364,326 2,232,485 22,251 931,564 5,502 971,677 $ (2,665) $ (47,170) $ (681,388) $ 10,304 $ 2,099,324 $ 163,323 $ 138,690 $ (36,221) $ 2,404,710 $ 476,043 $ 80,597 $ 404,291 $ (69,702) - 27,877 1,384,533 14,619,718 52,694 (2,935,975) (61,472) - - ------------ ------------ ------------ ------------ ------------ ------------ ------------ (8,344) 3,789,243 15,095,761 133,291 (2,531,684) (131,174) - $ (11,009) $ 3,742,073 $ 14,414,373 $ 143,595 $ (432,360) $ 32,149 $ 138,690
51 STATEMENTS OF CHANGES IN NET ASSETS
SMALL CAP CORE GROWTH FUND EMERGING GROWTH FUND For the For the For the For the year ended year ended year ended year ended 06/30/04 06/30/03 06/30/04 06/30/03 -------- -------- -------- -------- OPERATIONS Net investment income/loss $ (346,285) $ (175,082) $ (2,665,962) $ (2,526,279) Realized gains/losses on investments 6,022,751 (3,605,564) 37,477,874 (45,670,710) Change in unrealized appreciation/depreciation on investments (1,011,664) 2,748,439 (3,529,402) 31,865,153 ------------- ------------- ------------- ------------- Change in net assets from operations 4,664,802 (1,032,207) 31,282,510 (16,331,836) Dividends to Shareholders: From net investment income: Standard Shares - - - - ------------- ------------- ------------- ------------- Change in net assets from capital transactions 7,215,282 394,033 (22,233,586) (17,500,693) CHANGE IN NET ASSETS $ 11,880,084 $ (638,174) $ 9,048,924 $ (33,832,529) ------------- ------------- ------------- ------------- NET ASSETS Beginning of period $ 17,821,222 $ 18,459,396 $ 171,850,826 $ 205,683,355 End of period $ 29,701,306 $ 17,821,222 $ 180,899,750 $ 171,850,826 ------------- ------------- ------------- ------------- Accumulated net investment income/loss - - - - ------------- ------------- ------------- ------------- CAPITAL TRANSACTIONS Standard Shares Proceeds from shares issued $ 13,121,654 $ 5,237,434 $ 21,134,996 $ 37,852,532 Dividends reinvested - - - - Cost of shares redeemed (5,906,372) (4,843,401) (41,911,039) (55,356,284) ------------- ------------- ------------- ------------- Net change 7,215,282 394,033 (20,776,043) (17,503,752) ------------- ------------- ------------- ------------- Institutional Shares Proceeds from shares issued - - $ 1,239,421 $ 2,821,812 Cost of shares redeemed - - (4,008,407) (3,432,566) ------------- ------------- ------------- ------------- Net change - - (2,768,986) (610,754) ------------- ------------- ------------- ------------- Administrative Shares Proceeds from shares issued - - $ 6,512,533 $ 6,162,025 Cost of shares redeemed - - (5,201,090) (5,548,212) ------------- ------------- ------------- ------------- Net change - - 1,311,443 613,813 ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 7,215,282 $ 394,033 $ (22,233,586) $ (17,500,693) ------------- ------------- ------------- ------------- SHARE TRANSACTIONS Standard Shares Issued 1,247,393 672,716 1,702,236 3,719,462 Reinvested - - - - Redeemed (561,227) (628,978) (3,358,592) (5,464,486) ------------- ------------- ------------- ------------- Net change 686,166 43,738 (1,656,356) (1,745,024) ------------- ------------- ------------- ------------- Institutional Shares Issued - - 96,116 273,794 Redeemed - - (311,449) (329,608) ------------- ------------- ------------- ------------- Net change - - (215,333) (55,814) ------------- ------------- ------------- ------------- Administrative Shares Issued - - 517,457 597,115 Redeemed - - (412,025) (534,955) ------------- ------------- ------------- ------------- Net change - - 105,432 62,160 ------------- ------------- ------------- ------------- CHANGE IN SHARES FROM SHARE TRANSACTIONS 686,166 43,738 (1,766,257) (1,738,678) ------------- ------------- ------------- -------------
(1) Commencement of operations. See Financial Notes 52
SMALL CAP CORE GROWTH FUND 300 FUND VALUE FUND VALUE FUND - ------------------------------ ------------- -------------- ------------------------------ For the For the For the period For the period For the For the year ended year ended 08/29/03(1) - 03/31/04(1) - year ended year ended 06/30/04 06/30/03 06/30/04 06/30/04 06/30/04 06/30/03 -------- -------- -------- -------- -------- -------- $ (1,924,176) $ (520,790) $ 15,226 $ (2,665) $ (47,170) $ (99,467) 43,684,981 (39,810,514) 10,201 (36,221) 2,404,710 (10,282,004) (6,189,966) 29,592,435 389,899 27,877 1,384,533 9,608,668 - ------------- ------------- ------------- ------------- ------------- ------------- 35,570,839 (10,738,869) 415,326 (11,009) 3,742,073 (772,803) - - (4,055) - - - - ------------- ------------- ------------- ------------- ------------- ------------- (42,077,189) (51,887,083) 6,437,494 1,387,216 3,902,663 (4,060,871) $ (6,506,350) $ (62,625,952) $ 6,848,765 $ 1,376,207 $ 7,644,736 $ (4,833,674) - ------------- ------------- ------------- ------------- ------------- ------------- $ 351,336,107 $ 413,962,059 - - $ 16,226,319 $ 21,059,993 $ 344,829,757 $ 351,336,107 $ 6,848,765 $ 1,376,207 $ 23,871,055 $ 16,226,319 - ------------- ------------- ------------- ------------- ------------- ------------- - - $ 13,494 - - - - ------------- ------------- ------------- ------------- ------------- ------------- $ 21,264,741 $ 20,813,812 $ 6,674,799 $ 1,408,985 $ 8,784,600 $ 6,319,550 - - 4,044 - - - (44,917,887) (53,825,105) (241,349) (21,769) (4,881,937) (10,380,421) - ------------- ------------- ------------- ------------- ------------- ------------- (23,653,146) (33,011,293) 6,437,494 1,387,216 3,902,663 (4,060,871) - ------------- ------------- ------------- ------------- ------------- ------------- $ 23,690,276 $ 27,922,878 - - - - (41,119,985) (47,184,580) - - - - - ------------- ------------- ------------- ------------- ------------- ------------- (17,429,709) (19,261,702) - - - - - ------------- ------------- ------------- ------------- ------------- ------------- $ 733,629 $ 1,251,277 - - - - (1,727,963) (865,365) - - - - - ------------- ------------- ------------- ------------- ------------- ------------- (994,334) 385,912 - - - - - ------------- ------------- ------------- ------------- ------------- ------------- $ (42,077,189) $ (51,887,083) $ 6,437,494 $ 1,387,216 $ 3,902,663 $ (4,060,871) - ------------- ------------- ------------- ------------- ------------- ------------- 1,188,913 1,364,126 635,272 143,670 888,579 819,291 - - 374 - - - (2,501,662) (3,545,634) (21,696) (2,347) (495,734) (1,349,990) - ------------- ------------- ------------- ------------- ------------- ------------- (1,312,749) (2,181,508) 613,950 141,323 392,845 (530,699) - ------------- ------------- ------------- ------------- ------------- ------------- 1,616,753 2,233,874 - - - - (2,794,779) (3,763,348) - - - - - ------------- ------------- ------------- ------------- ------------- ------------- (1,178,026) (1,529,474) - - - - - ------------- ------------- ------------- ------------- ------------- ------------- 40,193 80,682 - - - - (96,922) (55,257) - - - - - ------------- ------------- ------------- ------------- ------------- ------------- (56,729) 25,425 - - - - - ------------- ------------- ------------- ------------- ------------- ------------- (2,547,504) (3,685,557) 613,950 141,323 392,845 (530,699) - ------------- ------------- ------------- ------------- ------------- -------------
53 STATEMENTS OF CHANGES IN NET ASSETS
GLOBAL EQUITY FUND BALANCED FUND ------------------------------ ------------------------------ For the For the For the For the period year ended year ended year ended 12/20/02(1) - 06/30/04 06/30/03 06/30/04 06/30/03 -------- -------- -------- -------- OPERATIONS Net investment income/loss $ (681,388) $ (245,695) $ 10,304 $ 1,205 Realized gains/losses on investments and foreign currency transactions 476,043 (20,092,299) 80,597 24,140 Change in unrealized appreciation/depreciation on investments and foreign currency transactions 14,619,718 10,231,205 52,694 25,761 ------------- ------------- ------------- ------------- Change in net assets from operations 14,414,373 (10,106,789) 143,595 51,106 Dividends to Shareholders: From net investment income: Standard Shares - - (11,300) (1,502) Institutional Shares - - - - From net realized gains on investments: Standard Shares - - (31,488) - ------------- ------------- ------------- ------------- Total dividends - - (42,788) (1,502) Change in net assets from capital transactions (21,995,780) (26,919,108) 1,642,210 1,011,462 CHANGE IN NET ASSETS $ (7,581,407) $ (37,025,897) $ 1,743,017 $ 1,061,066 ------------- ------------- ------------- ------------- NET ASSETS Beginning of period $ 110,592,559 $ 147,618,456 $ 1,061,066 - End of period $ 103,011,152 $ 110,592,559 $ 2,804,083 $ 1,061,066 ------------- ------------- ------------- ------------- Accumulated net investment income/loss $ (441,535) $ (570,287) - $ 156 ------------- ------------- ------------- ------------- CAPITAL TRANSACTIONS Standard Shares Proceeds from shares issued $ 12,635,147 $ 25,646,368 $ 1,943,959 $ 1,049,586 Dividends reinvested - - 37,052 325 Cost of shares redeemed (32,146,318) (50,286,863) (338,801) (38,449) ------------- ------------- ------------- ------------- Net change (19,511,171) (24,640,495) 1,642,210 1,011,462 ------------- ------------- ------------- ------------- Institutional Shares Proceeds from shares issued $ 10,869,317 $ 37,771,071 - - Dividends reinvested - - - - Cost of shares redeemed (13,146,663) (40,033,225) - - ------------- ------------- ------------- ------------- Net change (2,277,346) (2,262,154) - - ------------- ------------- ------------- ------------- Administrative Shares Proceeds from shares issued $ 507,646 $ 706,362 - - Cost of shares redeemed (714,909) (722,821) - - ------------- ------------- ------------- ------------- Net change (207,263) (16,459) - - ------------- ------------- ------------- ------------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ (21,995,780) $ (26,919,108) $ 1,642,210 $ 1,011,462 ------------- ------------- ------------- ------------- SHARE TRANSACTIONS Standard Shares Issued 851,102 1,995,494 172,335 104,984 Reinvested - - 3,318 33 Redeemed (2,160,362) (3,944,883) (30,031) (3,660) ------------- ------------- ------------- ------------- Net change (1,309,260) (1,949,389) 145,622 101,357 ------------- ------------- ------------- ------------- Institutional Shares Issued 765,110 2,906,867 - - Reinvested - - - - Redeemed (918,483) (3,078,716) - - ------------- ------------- ------------- ------------- Net change (153,373) (171,849) - - ------------- ------------- ------------- ------------- Administrative Shares Issued 33,828 55,041 - - Redeemed (46,795) (56,965) - - ------------- ------------- ------------- ------------- Net change (12,967) (1,924) - - ------------- ------------- ------------- ------------- CHANGE IN SHARES FROM SHARE TRANSACTIONS (1,475,600) (2,123,162) 145,622 101,357 ------------- ------------- ------------- -------------
(1) Commencement of operations. See Financial Notes 54
INCOME FUND ULTRA SHORT BOND FUND MONEY MARKET FUND - ------------------------------ ------------------------------ ------------------------------ For the For the For the For the period For the For the year ended year ended year ended 11/21/02(1) - year ended year ended 06/30/04 06/30/03 06/30/04 06/30/03 06/30/04 06/30/03 -------- -------- -------- -------- -------- -------- $ 2,099,324 $ 2,597,821 $ 163,323 $ 82,660 $ 138,690 $ 844,631 404,291 3,091,917 (69,702) (2,413) - - (2,935,975) 1,619,468 (61,472) 38,485 - - - ------------- ------------- ------------- ------------- ------------- ------------- (432,360) 7,309,206 32,149 118,732 138,690 844,631 (2,247,909) (2,770,272) (172,102) (89,255) (95,186) (710,661) - - - - (43,504) (133,970) - - - - - - - ------------- ------------- ------------- ------------- ------------- ------------- (2,247,909) (2,770,272) (172,102) (89,255) (138,690) (844,631) (6,894,783) (2,889,480) (1,559,881) 9,222,446 (21,290,731) (15,276,980) $ (9,575,052) $ 1,649,454 $ (1,699,834) $ 9,251,923 $ (21,290,731) $ (15,276,980) - ------------- ------------- ------------- ------------- ------------- ------------- $ 69,137,481 $ 67,488,027 $ 9,251,923 - $ 115,533,193 $ 130,810,173 $ 59,562,429 $ 69,137,481 $ 7,552,089 $ 9,251,923 $ 94,242,462 $ 115,533,193 - ------------- ------------- ------------- ------------- ------------- ------------- - - $ (255) $ (976) - - - ------------- ------------- ------------- ------------- ------------- ------------- $ 7,287,801 $ 15,862,291 $ 6,180,634 $ 10,640,331 $ 75,687,758 $ 90,075,370 2,048,025 2,594,958 153,072 70,753 105,043 742,720 (16,230,609) (21,346,729) (7,893,587) (1,488,638) (97,203,060) (100,447,452) - ------------- ------------- ------------- ------------- ------------- ------------- (6,894,783) (2,889,480) (1,559,881) 9,222,446 (21,410,259) (9,629,362) - ------------- ------------- ------------- ------------- ------------- ------------- - - - - $ 7,048,948 $ 3,128,338 - - - - 44,467 144,697 - - - - (6,973,887) (8,920,653) - ------------- ------------- ------------- ------------- ------------- ------------- - - - - 119,528 (5,647,618) - ------------- ------------- ------------- ------------- ------------- ------------- - - - - - - - - - - - - - ------------- ------------- ------------- ------------- ------------- ------------- - - - - - - - ------------- ------------- ------------- ------------- ------------- ------------- $ (6,894,783) $ (2,889,480) $ (1,559,881) $ 9,222,446 $ (21,290,731) $ (15,276,980) - ------------- ------------- ------------- ------------- ------------- ------------- 724,145 1,597,468 618,148 1,060,718 75,687,758 90,075,370 203,510 262,370 15,347 7,042 105,043 742,730 (1,611,789) (2,151,369) (791,761) (148,149) (97,203,060) (100,447,452) - ------------- ------------- ------------- ------------- ------------- ------------- (684,134) (291,531) (158,266) 919,611 (21,410,259) (9,629,352) - ------------- ------------- ------------- ------------- ------------- ------------- - - - - 7,048,948 3,128,339 - - - - 44,467 144,697 - - - - (6,973,887) (8,920,653) - ------------- ------------- ------------- ------------- ------------- ------------- - - - - 119,528 (5,647,617) - ------------- ------------- ------------- ------------- ------------- ------------- - - - - - - - - - - - - - ------------- ------------- ------------- ------------- ------------- ------------- - - - - - - - ------------- ------------- ------------- ------------- ------------- ------------- (684,134) (291,531) (158,266) 919,611 (21,290,731) (15,276,969) - ------------- ------------- ------------- ------------- ------------- -------------
55 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INVESTMENT ACTIVITIES DIVIDENDS -------------------------------------------------------- ------------ Net asset Net realized value, Net and unrealized Total from From net beginning investment Redemption gains/losses investment investment of period income/loss fee on investments operations income --------- ----------- --- -------------- ---------- ------ SMALL CAP CORE GROWTH FUND STANDARD SHARES Year ended June 30, 2004 $ 8.67 (0.13) - 2.30 2.17 - Year ended June 30, 2003 9.18 (0.09) - (0.42) (0.51) - Year ended June 30, 2002 9.52 (0.08) - (0.26) (0.34) - Year ended June 30, 2001 11.23 (0.05) - (1.64) (1.69) - Period ended June 30, 2000(1) 10.00 - - 1.23 1.23 - EMERGING GROWTH FUND STANDARD SHARES Year ended June 30, 2004 $ 10.96 (0.20) - 2.25 2.05 - Year ended June 30, 2003 11.82 (0.17) - (0.69) (0.86) - Year ended June 30, 2002 15.79 (0.20) - (3.77) (3.97) - Year ended June 30, 2001 33.48 (0.21) - (11.41) (11.62) - Year ended June 30, 2000 21.76 (0.30)(4) - 16.58 16.28 - INSTITUTIONAL SHARES Year ended June 30, 2004 $ 11.23 (0.15) - 2.33 2.18 - Year ended June 30, 2003 12.02 (0.10) - (0.69) (0.79) - Year ended June 30, 2002 15.96 (0.11)(4) - (3.83) (3.94) - Year ended June 30, 2001 33.61 (0.12) - (11.46) (11.58) - Period ended June 30, 2000(5) 25.67 (0.11) - 12.61 12.50 - ADMINISTRATIVE SHARES Year ended June 30, 2004 $ 11.11 (0.14) - 2.25 2.11 - Year ended June 30, 2003 11.92 (0.10) - (0.71) (0.81) - Year ended June 30, 2002 15.87 (0.13) - (3.82) (3.95) - Year ended June 30, 2001 33.57 (0.17)(4) - (11.46) (11.63) - Period ended June 30, 2000(6) 28.70 (0.10)(4) - 4.97 4.87 - CORE GROWTH FUND STANDARD SHARES Year ended June 30, 2004 $ 16.44 (0.12) - 1.78 1.66 - Year ended June 30, 2003 16.73 (0.04) - (0.25) (0.29) - Year ended June 30, 2002 22.12 (0.09) - (5.30) (5.39) - Year ended June 30, 2001 32.59 (0.16) - (9.01) (9.17) - Year ended June 30, 2000 30.52 (0.22) - 4.08 3.86 - INSTITUTIONAL SHARES Year ended June 30, 2004 $ 13.52 0.01 - 1.46 1.47 - Year ended June 30, 2003 13.66 0.05 - (0.19) (0.14) - Year ended June 30, 2002 17.94 0.04 - (4.32) (4.28) - Year ended June 30, 2001 26.59 0.01 - (7.36) (7.35) - Year ended June 30, 2000 25.02 - - 3.36 3.36 - ADMINISTRATIVE SHARES Year ended June 30, 2004 $ 16.68 (0.08) - 1.84 1.76 - Year ended June 30, 2003 16.91 0.01 - (0.24) (0.23) - Year ended June 30, 2002 22.27 (0.01) - (5.35) (5.36) - Year ended June 30, 2001 32.66 (0.03)(4) - (9.06) (9.09) - Period ended June 30, 2000(6) 32.09 (0.01) - 0.58 0.57 - 300 FUND STANDARD SHARES Period ended June 30, 2004(7) $ 10.00 0.03 - 1.14 1.17 (0.01) --------- ---- - ----- ----- ----
(1) For the period December 28, 1999, commencement of operations, to June 30, 2000. (2) Not annualized. (3) Annualized. (4) Based on average shares outstanding. See Financial Notes 56
RATIOS AND SUPPLEMENTAL DATA SHAREHOLDERS ------------------------------------------------------------------------------- - ---------------------------------- Net Ratio of Ratio of net Ratio of From Net asset assets, expenses to investment expenses to net Total value, Total end of average net income/loss average net Portfolio realized dividends to end return Period assets, net of to average net assets, prior to turnover gains shareholders of period (%) ($ x 1,000) reimbursement (%) assets (%) reimbursement (%) rate(%) ----- ------------ --------- --- ----------- ----------------- ---------- ----------------- ------- - - $ 10.84 25.03 $ 29,701 1.53 (1.37) 1.53 207.80 - - 8.67 (5.56) 17,821 1.45 (1.12) 1.58 349.79 - - 9.18 (3.57) 18,459 1.34 (0.93) 1.40 294.26 (0.02) (0.02) 9.52 (15.08) 15,503 1.34 (0.57) 3.20 146.62 - - 11.23 12.30(2) 8,397 1.49(3) 0.00(3) 5.98(3) 20.16 - - $ 13.01 18.70 $165,782 1.93 (1.47) 1.94 151.80 - - 10.96 (7.28) 157,911 1.95 (1.56) 1.97 315.89 - - 11.82 (25.14) 190,812 1.80 (1.39) 1.86 202.57 (6.07) (6.07) 15.79 (37.52) 283,760 1.68 (1.09) 1.75 136.63 (4.56) (4.56) 33.48 82.19 386,670 1.69 (1.09) 1.75 159.95 - - $ 13.41 19.41 $ 3,534 1.30 (0.85) 1.31 151.80 - - 11.23 (6.57) 5,379 1.25 (0.86) 1.28 315.89 - - 12.02 (24.69) 6,428 1.20 (0.78) 1.26 202.57 (6.07) (6.07) 15.96 (37.21) 19,676 1.30 (0.69) 1.36 136.63 (4.56) (4.56) 33.61 55.02(2) 16,284 1.24(3) (0.61)(3) 1.31(3) 159.95 - - $ 13.22 18.99 $ 11,584 1.60 (1.13) 1.62 151.80 - - 11.11 (6.80) 8,561 1.51 (1.13) 1.54 315.89 - - 11.92 (24.89) 8,444 1.47 (1.07) 1.53 202.57 (6.07) (6.07) 15.87 (37.43) 9,497 1.55 (0.96) 2.06 136.63 - - 33.57 16.97(2) 8 1.55(3) (0.90(3) 158.14(3) 159.95 - - $ 18.10 10.10 $290,352 1.50 (0.65) 1.52 228.43 - - 16.44 (1.73) 285,339 1.37 (0.28) 1.53 183.75 - - 16.73 (24.37) 326,793 1.34 (0.43) 1.44 76.40 (1.30) (1.30) 22.12 (28.42) 472,779 1.34 (0.62) 1.42 44.95 (1.79) (1.79) 32.59 12.82 699,399 1.49 (0.75) 1.52 20.04 - - $ 14.99 10.96 $ 52,842 0.77 0.08 0.79 228.43 - - 13.52 (1.02) 63,571 0.69 0.36 0.76 183.75 - - 13.66 (23.86) 85,140 0.68 0.23 0.73 76.40 (1.30) (1.30) 17.94 (27.98) 123,912 0.68 0.04 0.74 44.95 (1.79) (1.79) 26.59 13.67 180,779 0.74 0.00 0.74 20.04 - - $ 18.44 10.55 $ 1,635 1.11 (0.27) 1.13 228.43 - - 16.68 (1.36) 2,426 1.00 0.09 1.06 183.75 - - 16.91 (24.07) 2,029 0.94 (0.05) 1.01 76.40 (1.30) (1.30) 22.27 (28.11) 1,964 0.94 (0.14) 5.63 44.95 - - 32.66 1.78(2) 21 0.99(3) (0.27)(3) 101.59(3) 20.04 - (0.01) $ 11.16 11.71(2) $ 6,849 0.90(3) 0.38(3) 1.94(3) 32.98 ----- ----- --------- ------- -------- ------ ------ ------ -----
(5) For the period November 1, 1999, commencement of operations, to June 30, 2000. (6) For the period February 4, 2000, commencement of operations, to June 30, 2000. (7) For the period August 29, 2003, commencement of operations, to June 30, 2004. 57 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INVESTMENT ACTIVITIES DIVIDENDS ------------------------------------------ --------- Net realized Net asset and unrealized value, Net gains/losses on Total from From net beginning investment Redemption investments and investment investment of period income/loss fee foreign currencies operations income --------- ----------- --- ------------------ ---------- ------ SMALL CAP VALUE FUND STANDARD SHARES --------- ----- ---- ---- ---- ---- Period ended June 30, 2004(1) $ 10.00 (0.02) - (0.24) (0.26) - --------- ----- ---- ---- ---- ---- VALUE FUND STANDARD SHARES Year ended June 30, 2004 $ 8.64 (0.02) - 1.89 1.87 - Year ended June 30, 2003 8.74 (0.05) - (0.05) (0.10) - One month period ended June 30, 2002(4) 10.21 (0.01) - (1.46) (1.47) - Year ended May 31, 2002 15.29 (0.08) - (3.57) (3.65) - Year ended May 31, 2001 14.58 (0.07) - 2.70 2.63 - Year ended May 31, 2000 14.03 (0.08) - 2.05 1.97 - GLOBAL EQUITY FUND STANDARD SHARES Year ended June 30, 2004 $ 13.39 (0.10)(5) -(6) 1.89 1.79 - Year ended June 30, 2003 14.22 (0.03)(5) 0.02 (0.82) (0.83) - Year ended June 30, 2002 18.31 (0.11)(5) 0.01 (3.99) (4.09) - Year ended June 30, 2001 29.99 (0.16) - (9.61) (9.77) - Year ended June 30, 2000 20.22 (0.22)(5) - 10.94 10.72 - INSTITUTIONAL SHARES Year ended June 30, 2004 $ 13.65 0.04(5) -(6) 1.89 1.93 - Year ended June 30, 2003 14.40 0.05(5) 0.02 (0.82) (0.75) - Year ended June 30, 2002 18.46 (0.01)(5) 0.01 (4.06) (4.06) - Year ended June 30, 2001 30.08 (0.05)(5) - (9.66) (9.71) - Period ended June 30, 2000(7) 23.45 (0.05)(5) - 7.63 7.58 - ADMINISTRATIVE SHARES Year ended June 30, 2004 $ 13.51 (0.02)(5) -(6) 1.87 1.85 - Year ended June 30, 2003 14.30 0.01 (5) 0.02 (0.82) (0.79) - Year ended June 30, 2002 18.38 (0.06)(5) 0.01 (4.03) (4.08) - Year ended June 30, 2001 30.02 (0.11)(5) - (9.62) (9.73) - Period ended June 30, 2000(8) 33.45 (0.06) - (3.37) (3.43) - BALANCED FUND STANDARD SHARES Year ended June 30, 2004 $ 10.47 0.06 - 1.12 1.18 (0.06) Period ended June 30, 2003(9) 10.00 0.02 - 0.47 0.49 (0.02) INCOME FUND STANDARD SHARES Year ended June 30, 2004 $ 10.28 0.34 - (0.40) (0.06) (0.36) Year ended June 30, 2003 9.62 0.37 - 0.69 1.06 (0.40) Year ended June 30, 2002 10.28 0.58 - (0.66) (0.08) (0.58) Year ended June 30, 2001 10.20 0.68 - 0.10 0.78 (0.70) Year ended June 30, 2000 10.51 0.65 - (0.32) 0.33 (0.63) ULTRA SHORT BOND FUND STANDARD SHARES Year ended June 30, 2004 $ 10.06 0.18 - (0.13) 0.05 (0.19) Period ended June 30, 2003(10) 10.00 0.14(5) - 0.07 0.21 (0.15) --------- ----- ---- ---- ---- ----
(1) For the period March 31, 2004, commencement of operations, to June 30, 2004. (2) Not annualized. (3) Annualized. (4) Subsequent to the annual report as of May 31, 2002, the Citizens Value Fund changed its fiscal year end to June 30. (5) Based on average shares outstanding. See Financial Notes 58
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA --------------- ---------------------------------------------------------------------------- Net Ratio of Ratio of net Ratio of From Net asset assets, expenses to investment expenses to net Total value, Total end of average net income/loss average net Portfolio realized dividends to end return period assets, net of to average net assets, prior to turnover gains shareholders of period (%) ($ x 1,000) reimbursement (%) assets (%) reimbursement (%) rate (%) ----- ------------ --------- --- ----------- ----------------- ---------- ----------------- -------- - - $ 9.74 (2.60)(2) $ 1,376 1.60(3) (0.92)(3) 6.07(3) 42.36 ----- ----- -------- ------ ---------- ---- ----- ------ ----- - - $ 10.51 21.64 $ 23,871 1.78 (0.23) 1.78 130.18 - - 8.64 (1.14) 16,226 1.90 (0.62) 1.90 209.72 - - 8.74 (14.40)(2) 21,060 1.95(3) (1.33)(3) 2.05(3) 5.87 (1.43) (1.43) 10.21 (25.58) 24,981 1.95 (1.04) 2.54 34.77 (1.92) (1.92) 15.29 20.71 14,378 1.95 (0.65) 4.63 62.55 (1.42) (1.42) 14.58 14.36 8,726 1.95 (0.68) 7.11 72.32 ----- ----- -------- ------ ---------- ---- ----- ------ ----- - - $ 15.18 13.37 $ 95,625 2.01 (0.60) 2.01 49.16 - - 13.39 (5.84) 101,846 1.91 (0.26) 1.91 42.05 - - 14.22 (22.34) 135,881 1.84 (0.66) 1.84 132.82 (1.91) (1.91) 18.31 (33.69) 236,080 1.82 (0.71) 1.82 151.95 (0.95) (0.95) 29.99 53.27 354,818 1.82 (0.79) 1.83 120.69 ----- ----- -------- ------ ---------- ---- ----- ------ ----- - - $ 15.58 14.14 $ 5,244 1.37 0.25 1.37 49.16 - - 13.65 (5.21) 6,688 1.26 0.42 1.26 42.05 - - 14.40 (21.99) 9,531 1.27 (0.05) 1.27 132.82 (1.91) (1.91) 18.46 (33.35) 16,475 1.39 (0.23) 1.42 151.95 (0.95) (0.95) 30.08 32.55(2) 12,544 1.39(3) (0.25)(3) 1.43(3) 120.69 ----- ----- -------- ------ ---------- ---- ----- ------ ----- - - $ 15.36 13.69 $ 2,142 1.71 (0.11) 1.71 49.16 - - 13.51 (5.52) 2,059 1.59 0.11 1.59 42.05 - - 14.30 (22.20) 2,207 1.64 (0.39) 1.64 132.82 (1.91) (1.91) 18.38 (33.52) 1,748 1.68 (0.48) 3.18 151.95 - - 30.02 (10.25)(2) 1 1.68(3) (0.48)(3) 296.20(3) 120.69 ----- ----- -------- ------ ---------- ---- ----- ------ ----- (0.24) (0.30) $ 11.35 11.31 $ 2,804 1.30 0.60 4.30 98.20 - (0.02) 10.47 4.87(2) 1,061 1.30(3) 0.41(3) 16.73(3) 140.42 ----- ----- -------- ------ ---------- ---- ----- ------ ----- - (0.36) $ 9.86 (0.63) $ 59,562 1.45 3.28 1.45 64.37 - (0.40) 10.28 11.28 69,137 1.37 3.80 1.37 195.73 - (0.58) 9.62 (0.87) 67,488 1.38 5.77 1.38 54.05 -(6) (0.70) 10.28 7.87 71,639 1.40 6.55 1.48 60.53 (0.01) (0.64) 10.20 3.35 61,836 1.45 6.34 1.47 52.96 ----- ----- -------- ------ ---------- ---- ----- ------ ----- - (0.19) $ 9.92 0.48 $ 7,552 0.06 1.79 1.50 80.96 - (0.15) 10.06 2.12(2) 9,252 0.00(3) 2.29(3) 2.10(3) 56.04 ----- ----- -------- ------ ---------- ---- ----- ------ -----
(6) Less than $0.005 per share. (7) For the period November 1, 1999, commencement of operations, to June 30, 2000. (8) For the period February 4, 2000, commencement of operations, to June 30, 2000. (9) For the period December 20, 2002, commencement of operations, to June 30, 2003. (10) For the period November 21, 2002, commencement of operations, to June 30, 2003. 59 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INVESTMENT ACTIVITIES DIVIDENDS - ------------------------ ----------------------------------------------------------- ---------- Net asset Net realized value, Net and unrealized Total from From net beginning investment Redemption gains/losses on investment investment of period income/loss fee investments operations income --------- ----------- --- ----------- ---------- ------ MONEY MARKET FUND STANDARD SHARES Year ended June 30, 2004 $ 1.00 -(1) - - -(1) -(1) Year ended June 30, 2003 1.00 0.01 - - 0.01 (0.01) Year ended June 30, 2002 1.00 0.02 - - 0.02 (0.02) Year ended June 30, 2001 1.00 0.05 - - 0.05 (0.05) Year ended June 30, 2000 1.00 0.05 - - 0.05 (0.05) INSTITUTIONAL SHARES Year ended June 30, 2004 $ 1.00 -(1) - - -(1) -(1) Year ended June 30, 2003 1.00 0.01 - - 0.01 (0.01) Year ended June 30, 2002 1.00 0.02 - - 0.02 (0.02) Year ended June 30, 2001 1.00 0.05 - - 0.05 (0.05) Year ended June 30, 2000 1.00 0.05 - - 0.05 (0.05) -------- ---- ------- ----------- ---- ----
(1) Less than $0.005 per share. 60
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA --------------- ---------------------------------------------------------------------------- Net Ratio of Ratio of net Ratio of From Net asset assets, expenses to investment expenses to net Total value, Total end of average net income/loss average net Portfolio realized dividends to end return period assets, net of to average net assets, prior to turnover gains shareholders of period (%) ($ x 1,000) reimbursement (%) assets (%) reimbursement (%) rate (%) ----- ------------- --------- --- ----------- ----------------- ---------- ----------------- -------- - -(1) $ 1.00 0.10 $ 83,231 0.98 0.10 0.98 N/A - (0.01) 1.00 0.65 104,641 0.93 0.65 0.93 N/A - (0.02) 1.00 1.71 114,271 0.92 1.72 0.92 N/A - (0.05) 1.00 5.23 117,211 0.89 5.08 0.89 N/A - (0.05) 1.00 4.67 112,700 1.17 4.59 1.18 N/A ---- ----- -------- ----- ----------- ---- ---- ---- --- - -(1) $ 1.00 0.41 $ 11,011 0.67 0.41 0.67 N/A - (0.01) 1.00 0.95 10,892 0.63 0.98 0.63 N/A - (0.02) 1.00 1.97 16,539 0.67 1.95 0.67 N/A - (0.05) 1.00 5.43 27,475 0.70 5.22 0.70 N/A - (0.05) 1.00 5.04 23,370 0.81 4.93 0.82 N/A ---- ----- -------- ----- ----------- ---- ---- ---- ---
61 FINANCIAL NOTES O R G A N I Z A T I O N Citizens Funds (the "Trust"), a Massachusetts Business Trust, is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust offers the following funds (individually a "fund,"collectively the "funds"):
FUND SHORT NAME FUND SHORT NAME ---- ---------- ---- ---------- CITIZENS SMALL CAP CORE GROWTH Small Cap Core CITIZENS GLOBAL EQUITY Global Equity Fund FUND Growth Fund FUND CITIZENS EMERGING GROWTH FUND Emerging Growth CITIZENS BALANCED FUND Balanced Fund Fund CITIZENS CORE GROWTH FUND Core Growth Fund CITIZENS INCOME FUND Income Fund CITIZENS 300 FUND 300 Fund CITIZENS ULTRA SHORT Ultra Short Bond BOND FUND Fund CITIZENS SMALL CAP VALUE FUND Small Cap Value CITIZENS MONEY MARKET Money Market Fund Fund FUND CITIZENS VALUE FUND Value Fund
The funds are authorized to issue an unlimited number of shares of beneficial interest with no par value. The Emerging Growth Fund, Core Growth Fund, and Global Equity Fund currently offer three classes of shares: Standard shares, Institutional shares and Administrative shares. The Money Market Fund offers two classes of shares: Standard shares and Institutional shares. The Small Cap Core Growth Fund, 300 Fund, Small Cap Value Fund, Value Fund, Balanced Fund, Income Fund and Ultra Short Bond Fund offer one class of shares: Standard shares. Each class of shares in the funds has identical rights and privileges except with respect to class specific expenses, voting rights on matters affecting a single class of shares, and the exchange privilege of each class of shares. INDEMNIFICATIONS Under the funds' organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Trust. In addition, in the normal course of business, the funds enter into contracts with their vendors and others that provide for general indemnifications. The funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. CITIZENS MONEY MARKET EXCHANGE On July 2, 2003, the Money Market Fund transferred $113,739,102 of securities and cash to the Citizens Prime Money Market Fund in exchange for 113,739,102 shares of the Citizens Prime Money Market Fund. From July 2, 2003 to February 20, 2004, the Money Market Fund invested substantially all of its investable assets in the Citizens Prime Money Market Fund, an open-end management investment company that has the same investment objective as the Money Market Fund. On February 20, 2004, the Money Market Fund redeemed net of previous redemptions, 96,647,324 shares from the Prime Money Market Fund in exchange for $96,647,324 of securities and cash which represented 100% of the net assets of the Citizens Prime Money Market Fund. CITIZENS INTERNATIONAL GROWTH FUND REORGANIZATION Under a plan of reorganization adopted by the Trust, all of the assets and liabilities of the Citizens International Growth Fund were transferred to the Standard shares of the Global Equity Fund. The reorganization, which qualified as a tax-free exchange for federal income tax purposes, was completed on December 19, 2003, following approval by shareholders at a special shareholder meeting. The following is a summary of shares 62 FINANCIAL NOTES outstanding, net assets, net asset value per share issued, unrealized appreciation/depreciation, and accumulated net realized loss immediately before and after the reorganization:
BEFORE REORGANIZATION AFTER REORGANIZATION --------------------- -------------------- INTERNATIONAL GLOBAL GLOBAL GROWTH FUND EQUITY FUND EQUITY FUND ----------- ----------- ----------- Shares outstanding 433,044.353 7,637,623.361 7,843,039.517 Net assets $ 3,115,732 $ 116,037,295 $ 119,153,027 Net asset value per share: Standard shares $ 7.19 $ 15.17 $ 15.17 Institutional shares NA $ 15.52 $ 15.52 Administrative shares NA $ 15.33 $ 15.33 Unrealized appreciation/depreciation $ 511,440 $ 11,275,289 $ 11,786,729 Accumulated net realized loss $ (928,080) $ (135,041,252) $ (135,969,332)
SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies 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 of America ("GAAP"). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts 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 for the period. Actual results could differ from those estimates. SECURITIES VALUATION Equity securities are generally valued at the last sale price on the primary exchange on which such securities are traded or on the principal over-the-counter market on which such securities are traded, as of the close of business on the day the securities are valued, or lacking any sales, at the last available bid price for domestic securities and halfway between the bid and ask price for international securities. Equity securities traded on the NASDAQ stock market are valued at the NASDAQ official closing price. Fixed-income investments generally are valued at the bid price for securities. Securities may also be valued on the basis of valuations furnished by a pricing service that uses both dealer-supplied valuations and valuations based upon analysis of market data or other factors if these valuations are believed to more accurately reflect the fair value of such securities. If a market quotation for a given security is unavailable, or if the adviser or a fund's sub-adviser believes an available quote does not accurately reflect the current value of a security, the adviser will use fair value procedures established by the funds' Board of Trustees to price the security. Fair value procedures may also be used if the adviser determines that a significant event has occurred between the time at which a market price is determined but prior to the time at which a fund's net asset value is calculated. The Global Equity Fund has a policy to use fair value procedures to price securities traded on foreign markets in the event there is a specific change in the value of a domestic security index. Short-term securities maturing within 60 days are valued at amortized cost, which approximates fair value. Under the amortized cost method, premium or discount, if any, is amortized or accreted, respectively, on a constant (straight-line) basis to the maturity of the security. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME Changes in holdings of portfolio securities shall be reflected no later than in the first calculation on the first business day following the trade date. However, for financial reporting purposes, portfolio security transactions are reported on trade date. The cost of securities sold 63 FINANCIAL NOTES is determined on the identified cost basis, unless otherwise specified. Interest income is recorded on an accrual basis and includes, where applicable, the amortization or accretion of a premium or discount. Dividend income is recorded on the ex-dividend date. FOREIGN CURRENCY TRANSLATION The accounting records of the funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the current rate of exchange. Purchases and sales of securities, and income and expenses, are translated into U.S. dollars at the prevailing rate of exchange on the respective dates of such transactions. The changes in foreign exchange rates on investments are not isolated on the Statement of Operations. Such fluctuations are included with the net realized and unrealized gain or loss on investments. FOREIGN CURRENCY CONTRACTS Foreign currency contracts are used to facilitate transactions in foreign-denominated securities. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contract's terms. The U.S. dollar value of foreign currency contracts is determined by using the current rate of exchange. There were no foreign currency contracts open at year end. REPURCHASE AGREEMENTS The funds may acquire repurchase agreements with an entity that is a member of the Federal Reserve System, collateralized by instruments issued by the U.S. government, its agencies or instrumentalities. The repurchase price generally equals the price paid by a fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying securities. It is the funds' policy to receive collateral securities of which the value, including accrued interest, is at least equal to 102% of the amount to be repaid to the funds under each agreement at its maturity. Collateral subject to repurchase agreements is held by the funds' custodian or another qualified custodian. If the counterparty defaults, and the fair value of the collateral declines, realization of the collateral by the funds may be delayed or limited. RESTRICTED SECURITIES The funds are permitted to invest in privately placed securities. These securities may be resold in transactions exempt from registration, or to the public, if the securities are registered under the Securities Act of 1933. Disposal of these securities may involve time-consuming negotiations and expense, and the prompt sale at an acceptable price may be difficult. REDEMPTION FEE The Global Equity Fund charges a redemption fee of 2% (paid to the fund) with respect to shares of the fund redeemed or exchanged within 60 days of purchase. The fee does not apply to shares purchased through the reinvestment of dividends or other distributions, redemptions by the fund of accounts with below minimum balances, redemptions due to shareholder death or disability, or certain omnibus accounts or retirement plans. For the year ended June 30, 2004, the Global Equity Fund collected $23,360 in redemption fees. These fees are included in the "change in net assets from capital transactions" amounts in the Statements of Changes in Net Assets. DIVIDENDS TO SHAREHOLDERS The Small Cap Core Growth Fund, Emerging Growth Fund, Core Growth Fund, 300 Fund, Small Cap Value Fund, Value Fund and Global Equity Fund declare and distribute dividends from net investment income, if any, to shareholders annually. The Balanced Fund declares and distributes dividends from net investment income to shareholders quarterly. The Income Fund declares and distributes dividends from net investment income to shareholders monthly. Dividends from net investment income for the Ultra Short Bond Fund and Money Market Fund are declared daily and paid monthly. The funds' net realized gains, if any, are distributed to shareholders at least annually. 64 FINANCIAL NOTES Additional dividends may also be paid to the funds' shareholders to the extent necessary to avoid federal excise tax on certain undistributed income and net realized gains. The amount of dividends from net investment income and net realized gains are determined in accordance with federal income tax regulations, which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions), such amounts are reclassified to capital; temporary differences do not require reclassification. OFFERING COSTS Expenses incurred in connection with the offering of fund shares for the 300 Fund, Small Cap Value Fund, Balanced Fund and Ultra Short Bond Fund were paid by the funds and are amortized over a 12-month period starting with each fund's commencement of operations. FEDERAL INCOME TAXES Each fund is a separate taxable entity for federal tax purposes. Each fund has qualified and intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended, and distributes substantially all of its taxable net investment income and net realized gains, if any, to its shareholders. FEES AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT MANAGEMENT FEE Citizens Advisers, Inc. (the "adviser") serves as adviser to each of the funds. Under the terms of the management contract, the adviser is paid a fee that is computed daily based on an annual rate for each fund's average daily net assets. Those rates are as follows:
FUND FEE RATE FUND FEE RATE ---- -------- ---- -------- Small Cap Core Growth Fund 0.50% Global Equity Fund 1.00% Emerging Growth Fund 1.00% Balanced Fund 0.65% Core Growth Fund 0.50% Income Fund 0.65% 300 Fund 0.20% Ultra Short Bond Fund 0.35% Small Cap Value Fund 0.75% Money Market Fund 0.35%* Value Fund 0.70%
*For any period that the Money Market Fund invested its assets in the Citizens Prime Money Market Fund, the total management fee payable to the adviser under the management contract with respect to the fund did not exceed 0.35% per annum of the fund's average net assets minus the fund's allocable share of the management fees paid to the adviser from Citizens Prime Money Market Fund. During the fiscal year ended June 30, 2004, SSgA Funds Management, Inc. served as the sub-adviser for the Global Equity Fund. For its services, the sub-adviser received a fee computed daily based on an annual rate of 0.35% of the fund's average daily net assets up to $500 million, and 0.25% on assets thereafter. The fee was paid by the adviser. DISTRIBUTION FEE Citizens Securities, Inc. (the "distributor") is a wholly owned subsidiary of the adviser and serves as the funds' distributor. Pursuant to Rule 12b-1 under the 1940 Act, the Trust's shareholders have adopted a separate distribution plan with respect to the funds' Standard and Administrative shares pursuant to which the funds, except the Money Market Fund, compensate the distributor for services in an amount equal to 0.25% per annum of average annual net assets represented by such shares. ADMINISTRATIVE AND SHAREHOLDER SERVICE FEES The adviser, with whom certain officers and trustees are affiliated, performs administrative duties for the Trust under a separate administrative contract, which provides for the reimbursement of out-of-pocket expenses as well as fees for services rendered. In accordance with the 65 FINANCIAL NOTES terms of the administrative contract, fees and expenses are accrued daily based on average daily net assets of each fund at the annual rate of 0.15%. In addition, Citizens Advisers provides a number of administrative services to the Trust, relating primarily to shareholder services and communications, and is paid an account fee for providing such services and communications for each of the individual funds with the exception of the Core Growth Fund, Standard shares. The Core Growth Fund, Standard shares may be charged a shareholder service fee of up to 0.35% based on the average daily net assets of the class. For the year ended June 30, 2004, a fee of 0.25% was charged. TRANSFER AGENCY, FUND ACCOUNTING AND CUSTODY BISYS Fund Services Ohio, Inc. provides transfer agency and fund accounting services to the funds pursuant to certain fee arrangements. Transfer agent expenses also include the cost of services rendered by third parties to provide sub-transfer agency services. Fifth Third Bank acts as custodian for the funds. Custody expenses may be incurred or offset from fees or credits arising from cash balances maintained on deposit. TRUSTEE FEES Certain officers and Trustees of the Trust are "interested persons,"as defined in the 1940 Act, of the adviser. Currently, each Trustee who is not an "interested person" receives an annual retainer of $12,000 and $1,250 for each day's attendance at a Trustee meeting. The independent trustees have elected a Chair, who receives an additional annual retainer of $5,000; and a Vice Chair, Audit Committee Chair and Social Responsibility Committee Chair, who each receives an additional annual retainer of $2,500. EXPENSE ALLOCATION Expenses directly attributable to a fund are charged to that fund. Expenses not directly attributable to a fund are allocated proportionately among various or all funds within the Trust in relation to the net assets of each fund or on another reasonable basis. Expenses specific to a class are charged to that class. FEE REDUCTIONS AND REIMBURSEMENTS For the year ended June 30, 2004, the adviser limited the total expenses, exclusive of taxes, brokerage commissions and extraordinary expenses, for certain funds to the extent they exceeded the following total annualized expense limits:
EXPENSE EXPENSE FUND LIMITATION FUND LIMITATION - ---- ---------- ---- ---------- 300 Fund 0.90% Balanced Fund 1.30% Small Cap Value Fund 1.60% Ultra Short Bond Fund 0.10%(1)
(1) For the period July 1, 2003 to October 27, 2003, the adviser voluntarily waived all fees and reimbursed all expenses for the Ultra Short Bond Fund. The above expense limitations for the 300 Fund, Balanced Fund and Ultra Short Bond Fund are voluntary and may be removed by the adviser at any time. The expense limitation for the Small Cap Value Fund is contractual and expires June 30, 2005. FEES PAID INDIRECTLY During the period, certain funds participated in a directed brokerage program in which the funds utilize recaptured commissions on securities transactions to pay for, in whole or in part, accounting expenses of the funds. INVESTMENT TRANSACTIONS The following summarizes purchases and sales of investment securities, other than short-term investments, by fund for the year ended June 30, 2004: 66 FINANCIAL NOTES
FUND PURCHASES SALES FUND PURCHASES SALES ---- --------- ----- ---- --------- ----- Small Cap Core Growth Fund $ 57,750,408 $ 51,546,547 Value Fund $30,181,768 $26,264,788 Emerging Growth Fund 279,288,302 304,558,394 Global Equity Fund 54,663,798 79,123,838 Core Growth Fund 824,038,217 861,988,572 Balanced Fund 3,079,227 1,573,256 300 Fund(1) 7,857,714 1,323,725 Income Fund 39,376,944 49,568,928 Small Cap Value Fund(2) 1,738,130 427,647 Ultra Short Bond Fund 5,825,901 6,641,751
(1) For the period August 29, 2003, commencement of operations, to June 30, 2004. (2) For the period March 31, 2004, commencement of operations, to June 30, 2004. FEDERAL TAX INFORMATION The tax character of dividends paid by the funds during the past two fiscal years were as follows:
FISCAL YEAR ENDED 2004 DIVIDENDS PAID FROM ----------------------- Net Tax long-term Total return Ordinary capita(l) taxable of Total income gains dividends capital dividends paid(1) -------- --------- ---------- ------- ----------------- 300 Fund $ 4,055 $ - $ 4,055 $ - $ 4,055 Balanced Fund 37,124 - 37,124 - 37,124 Income Fund 2,265,775 - 2,265,775 - 2,265,775 Ultra Short Bond Fund 177,984 - 177,984 - 177,984 Money Market Fund 152,547 - 152,547 - 152,547
FISCAL YEAR ENDED 2003 DIVIDENDS PAID FROM ----------------------- Net Tax long-term Total return Ordinary capital taxable of Total income gains dividends capital dividends paid(1) ------ ----- --------- ------- ----------------- Balanced Fund $ 325 $ - $ 325 $ - $ 325 Income Fund 2,872,716 - 2,872,716 - 2,872,716 Ultra Short Bond Fund 72,439 - 72,439 - 72,439 Money Market Fund 909,800 - 909,800 - 909,800
As of June 30, 2004 the components of accumulated earnings/deficit on a tax basis for the funds were as follows:
Undistributed Undistributed Accumulated Unrealized Total ordinary long-term Accumulated Dividends capital and appreciation/ accumulated income capital gains earnings payable other losses depreciation(2) earnings/deficit ------ ------------- -------- ------- ------------ --------------- ---------------- Small Cap Core Growth Fund $1,108,006 $190,731 $1,298,737 $ - $ - $ 721,478 $ 2,020,215 Emerging Growth Fund - - - - (186,831,604) 12,089,593 (174,742,011) Core Growth Fund - - - - (81,665,805) 35,170,078 (46,495,727) 300 Fund 37,202 - 37,202 - - 376,392 413,594 Small Cap Value Fund - - - - (29,718) 21,374 (8,344) Value Fund - - - - (9,143,852) 2,294,752 (6,849,100) Global Equity Fund - - - - (131,400,223) 8,185,783 (123,214,440) Balanced Fund 76,921 2,255 79,176 (6,841) - 78,232 150,567 Income Fund 188,499 - 188,499 (188,499) (5,502,205) (157,640) (5,659,845) Ultra Short Bond Fund 10,679 - 10,679 (10,934) (87,234) (22,987) (110,476) Money Market Fund 27,197 - 27,197 (27,197) (9,083) - (9,083)
(1) Total dividends paid may differ from the amount reported in the Statement of Changes in Net Assets because for tax purposes dividends are recognized when actually paid. (2) The differences between book-basis and tax-basis unrealized appreciation/depreciation are attributable primarily to tax deferral of losses on wash sales. 67 FINANCIAL NOTES As of June 30, 2004, the funds had the following net capital loss carryforwards, which are available to offset future realized gains:
Amount Expires Amount Expires Amount Expires Amount Expires ------ ------- ------ ------- ------ ------- ------ ------- Emerging Growth Fund $ - - $150,661,298 2010 $ 36,170,306 2011 $ - - Core Growth Fund - - 35,043,052 2010 46,622,753 2011 - - Small Cap Value Fund - - - - - - 29,718 2012 Value Fund - - 1,388,345 2010 4,976,984 2011 2,778,523 2012 Global Equity Fund(1) 432,059 2009 107,044,617 2010 9,283,310 2011 14,198,702 2012 Income Fund 59,139 2009 836,643 2010 4,606,423 2011 - - Ultra Short Bond Fund - - - - - - 74,733 2012 Money Market Fund 9,083 2009 - - - - - -
(1) Included in the above are the following amounts which are subject to certain limitations on availability, to offset future net capital gains, if any, as the successor of a merger: $432,059 expiring in 2009, $33,758 expiring in 2010 and $345,833 expiring in 2011. Net capital losses incurred after October 31, 2003, and within the taxable year are deemed to arise on the first business day of each fund's next taxable year. For the year ended June 30, 2004, the Global Equity Fund deferred to July 1, 2004 post October currency losses of $441,535, and Ultra Short Bond Fund deferred to July 1, 2004 post October capital losses of $12,501. SUPPLEMENTAL INFORMATION (UNAUDITED) FEDERAL TAX INFORMATION For the fiscal year ended June 30, 2004, $4,055 of dividends paid by the 300 Fund and $11,948 of dividends paid by the Balanced Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The funds intend to designate the maximum amount allowable as taxed at a maximum rate of 15%. Complete information will be reported in conjunction with your 2004 Form 1099-DIV. For the tax year ended June 30, 2004, 100% of income dividends paid by the 300 Fund and 10% of income dividends paid by the Balanced Fund qualify for the dividends received deduction available to corporations. THE FUNDS' TRUSTEES AND OFFICERS A Board of Trustees oversees and monitors the management of the Trust. These oversight responsibilities include selection of the investment adviser and election of officers, who are in turn responsible for the day to day operations of the Trust. The tables below show the Trustees and Trustee Emeritus and officers of Citizens Funds as of June 30, 2004. The Trustees in the second table (Independent Trustees) are not considered interested persons and have no affiliation with the funds' adviser or distributor. The third table lists fund officers who are not Trustees. All of these officers are considered interested persons. The term of office for each Trustee is eight years, except that Sophia Collier has an open-ended term. Each Trustee is a Trustee for eleven funds within the Citizens Funds complex, and no Trustee is currently a trustee or director for any other mutual fund or company. Mitchell A. Johnson, Trustee Emeritus, is a trustee/director of three funds at FBR Funds and a director of the Federal Agricultural Mortgage Corporation. Except as noted below, the address for each Trustee and officer in connection with their fund duties is One Harbour Place, Suite 400, Portsmouth, NH 03801. 68 SUPPLEMENTAL INFORMATION (UNAUDITED) AFFILIATED TRUSTEE/TRUSTEE EMERITUS
POSITION(S) WITH FUNDS AND DATE NAME AND AGE OF ELECTION OR APPOINTMENT PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS - ------------ -------------------------- ------------------------------------------- Sophia Collier(1) Trustee since 10/91 Portfolio Manager, Citizens Funds, since 3/95. Majority Owner and Chair 48 years President 1991 - 1998 and of Board of Directors, Citizens Advisers, Inc., since 12/91. since 8/02 President, Citizens Advisers, Inc., 12/91 - 9/98 and since 7/02. Chair of Board 1/02 - 8/02 President, Northpoint Technology, Ltd., 1/97 - 6/02, Chair of the Board of Directors, Northpoint Technology, Ltd., since 6/02. Mitchell A. Johnson(1) Trustee Emeritus 8/01 - 11/02 President, MAJ Capital Management (personal investments), 62 years and since 2/04. Trustee since 8/94. Senior Vice President, Corporate 12/97 - 8/01 and 11/02 - 2/04 Finance, Student Loan Marketing Association, 5/73 - 8/94.
INDEPENDENT TRUSTEES
POSITION(S) WITH FUNDS AND DATE NAME AND AGE OF ELECTION OR APPOINTMENT PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS - ------------ -------------------------- ------------------------------------------- Walter D. Bristol, Jr. Trustee since 5/01 Executive Vice President for Corporate Operations and Chief Financial 54 years Chair of the Board since Officer, American Heart Association, since 5/96. 8/04 Vice Chair of the Board 8/02 - 8/04 Jeannie H. Trustee since 5/01 Senior Vice President, Verizon, since 8/04, Vice President, Verizon, 8/02 Diefenderfer - 7/04, Group President, Verizon, 8/01 - 7/02, Senior Vice President, Verizon, 5/98-7/01, Executive Director, Verizon, 2/96 - 4/98 Pablo S. Eisenberg Trustee since 12/99 Senior Fellow, Public Policy Institute, Georgetown University, since 1/99. 72 years Executive Director, Center for Community Change, 5/75 - 6/98. Orlando Hernandez Trustee since 8/01 Vice President of Finance, Texas Instruments, 5/76 - 4/01. 57 years Martha S. Pope Trustee since 12/99 Trustee, National Park Foundation, since 8/00. Trustee, Hofstra 59 years Chair of the Board 8/02 University, since 6/00. Senior Advisor for the Northern Ireland Peace - 8/04 Negotiations, 1/95 - 7/98.
OFFICERS WHO ARE NOT TRUSTEES
POSITION(S) WITH FUNDS AND DATE NAME AND AGE OF ELECTION OR APPOINTMENT PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS - ------------ -------------------------- ------------------------------------------- Sean P. Driscoll Treasurer since 3/99 Senior Vice President, Citizens Advisers, Inc, since 4/03. Vice President, 39 years Citizens Advisers, Inc., 10/99 - 4/03. Director, Citizens Advisers, Inc., 11/98 - 10/99. Marcia Kovalik Secretary since 5/03 Vice President, Citizens Advisers, Inc., since 4/03. Counsel, Citizens 41 years Asst. Secretary 5/01 - Advisers, Inc., 2/01 - 4/03. Associate, Boynton, Waldron, Doleac, Woodman & 5/03 Scott, P.A., 9/95 - 2/01. Alaina Metz(2) Asst. Secretary since 2/01 Chief Administrative Officer, BISYS Fund Services Ohio, Inc., since 6/95. 37 years
(1) Sophia Collier and each officer listed as an interested person of the funds, is interested by virtue of their position or affiliation with the funds' investment adviser. Mitchell A. Johnson is considered an interested person as a result of a business relationship with a subsidiary of Northpoint Technology, Ltd., of which Sophia Collier is Chair of the Board of Directors. (2) Address: BISYS Fund Services, 3435 Stelzer Road, Columbus, OH 43219 The funds' Statement of Additional Information includes additional information about the Trustees and officers and is available, without charge, by calling 800.223.7010. 69
TRUSTEES MANAGER LEGAL COUNSEL Walter D. Bristol, Jr. Citizens Advisers, Inc. Bingham McCutchen LLP Sophia Collier One Harbour Place, Suite 400 Boston, MA 02110 Jeannie H. Diefenderfer Portsmouth, NH 03801 Pablo S. Eisenberg 800.223.7010 INDEPENDENT REGISTERED Orlando Hernandez 603.436.5152 PUBLIC ACCOUNTING FIRM Martha S. Pope PricewaterhouseCoopers LLP CUSTODIAN Columbus, OH 43215 TRUSTEE EMERITUS Fifth Third Bank Mitchell A. Johnson Cincinnati, OH 45263 DISTRIBUTOR TRANSFER AND Citizens Securities, Inc. ACCOUNTING AGENT One Harbour Place, Suite 400 BISYS Fund Services Ohio, Inc. Portsmouth, NH 03801 3435 Stelzer Road 800.223.7010 Columbus, OH 43219 603.436.5152
Citizens Funds are distributed by Citizens Securities, Inc., Portsmouth, NH 03801 and are available through such popular mutual fund supermarkets as Charles Schwab's Mutual Fund OneSource(R) and Fidelity Investments' FundsNetwork(R). Citizens Funds(R) is a trademark of Citizens Advisers, Inc. This report is intended for shareholders of Citizens Funds and is not authorized for distribution to other persons unless accompanied or preceded by a prospectus. Please consider the investment objectives, risks, charges and expenses of Citizens Funds carefully before investing. For this and other information, please call 800.223.7010 or visit www.citizensfunds.com for a free prospectus and read it carefully before investing. AT CITIZENS FUNDS, WE WANT OUR INVESTORS TO KNOW HOW MUCH WE VALUE THEIR BUSINESS. THAT'S WHY WE OFFER A COMPREHENSIVE RANGE OF SERVICES THAT INCLUDES EVERYTHING FROM ATTENTIVE TELEPHONE REPRESENTATIVES TO AN INFORMATIVE WEB SITE. EXCHANGES BETWEEN CITIZENS FUNDS You can move your money easily from any one of our funds to another. INDIVIDUAL RETIREMENT PLANS (IRA) We offer investors the opportunity to invest in a variety of IRAs, including Traditional, Roth and Rollover. Citizens Funds are also available for 401(k), 403(b), SEP and SIMPLE retirement plans. AUTOMATIC INVESTMENT PLAN Invest automatically on a monthly or quarterly basis with payroll deduction or electronic transfer from your bank. UNPARALLELED CUSTOMER SERVICE Our representatives are well-trained professionals whose goal is to satisfy most requests during the first phone call. They are available from 9 A.M. to 6 P.M. (ET) Monday - Friday at 800.223.7010. WWW.CITIZENSFUNDS.COM Our web site offers daily fund prices, performance, fund and manager profiles, fund prospectuses and applications, shareholder activism updates, online account access and transactions and much more. INTELLIGENT COMMUNICATIONS Citizens Funds was a pioneer of the plain English prospectus well before it became the standard for the rest of the mutual fund industry. We try to bring that same spirit of innovation, plain-speak and respect for our shareholders to all our communications. PROXY VOTING A description of the policies and procedures that the funds use to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 800.223.7010, on our website, and on the SEC's website at http://www.sec.gov. ITEM 2. CODE OF ETHICS. (a) The registrant has adopted a code of ethics that applies to the registrant's principal executive officer and principal financial officer. This code of ethics is included as Exhibit 11(a)(1). (b) During the period covered by this report, no amendments were made to the provisions of the code of ethics (c) During the period covered by this report, no implicit or explicit waivers to the provisions of the code of ethics were granted. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Walter D. Bristol, Jr. and Orlando Hernandez, members of the Audit Committee, have been determined by the Board of Trustees in their reasonable business judgment to meet the definition of "audit committee financial expert" as such term is defined in the instructions to Form N-CSR. In addition, Messrs. Bristol and Hernandez are both "independent" members of the Audit Committee as defined in the instructions to Form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Audit Fees. For the fiscal years ended June 30, 2003 and June 30, 2004, PricewaterhouseCoopers ("PWC") billed audit fees to the registrant in the amount of $132,000 and $142,000 respectively. (b) Audit Related Fees. None. (c) Tax Fees. For the fiscal years ended June 30, 2003 and June 30, 2004, PWC billed tax fees to the registrant in the amount of $34,000 and $32,000 respectively. (d) All Other Fees. None. (e)(1) The full audit committee preapproves the following: - all audit and permitted non-audit services to be provided the Funds, and - all permitted non-audit services to be provided by the Funds' independent accountant to the adviser and to entities controlling, controlled by or under common control with the adviser that provide ongoing services to the Funds, if the services relate directly to the operations and financial reporting of the Funds, except that de minimis non-audit services, may, to the extent permitted by applicable law, be approved prior to completion of the audit, and except that preapproval is not required where the services would not need to be preapproved pursuant to applicable rules and regulations. (e) (2) For the fiscal years ended June 30, 2003 and June 30, 2004, 100% of all the fees in paragraph (b) through (d) of this Item were approved by the audit committee. (f) Not Applicable. (g) Not Applicable. (h) Not Applicable. 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 A VOTE OF SECURITY HOLDERS None. ITEM 10. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded, based on their evaluation of the registrant's disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant of Form N-CSR is (i) accumulated and communicated to the investment company's management, including its certifying officers, to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that have materially affected or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (a)(1) Any code of ethics, or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy the Item 2 requirements through filing of an exhibit. Code of Ethics attached hereto. (a)(2) A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Act (17 CFR 270.30a-2). Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (a)(3) Not Applicable. (b) A certification of each principal executive officer and principal officer of the registrant as required by Rule 30a-2(b) under the Act of 1940. Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto. 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. Citizens Funds By: /s/ Sophia Collier ----------------------- Sophia Collier President Date: August 25, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Sophia Collier ----------------------- Sophia Collier President Date: August 25, 2004 By: /s/ Sean P. Driscoll ---------------------- Sean P. Driscoll Treasurer Date: August 25, 2004 EX-99.CODE ETH 2 b51007cfexv99wcodeeth.txt CODE OF ETHICS EXHIBIT 10(a)(1) NOVEMBER 2003 CITIZENS FUNDS CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND SENIOR FINANCIAL OFFICERS COVERED OFFICERS/PURPOSE OF THE CODE Citizens Funds' Senior Officer Code of Ethics (this "Code") for the investment companies within the Citizens Funds complex (collectively, "Funds" and each, "Fund") applies to the Funds' Principal Executive Officer and Principal Financial Officer (the "Covered Officers," each of whom are set forth in Exhibit A) for the purpose of promoting: - honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; - full, fair, accurate, timely and understandable disclosure in reports and documents that a registrant files with, or submits to, the Securities and Exchange Commission ("SEC") and in other public communications made by the Funds; - compliance with applicable laws and governmental rules and regulations; - the prompt internal reporting of violations of the Code to an appropriate person or persons identified in the Code; and - accountability for adherence to the Code. Each Covered Officer should adhere to a high standard of business ethics and should be sensitive to situations that may give rise to actual as well as apparent conflicts of interest. COVERED OFFICERS SHOULD HANDLE ETHICALLY ACTUAL AND APPARENT CONFLICTS OF INTEREST OVERVIEW. A "conflict of interest" occurs when a Covered Officer's private interest interferes with the interests of, or his/her service to, the Funds. For example, a conflict of interest would arise if a Covered Officer, or a member of his/her family, receives improper personal benefits as a result of his/her position with the Funds. Certain conflicts of interest arise out of the relationships between Covered Officers and the Funds and already are subject to conflict of interest provisions in the Investment Company Act of 1940 ("Investment Company Act") and the Investment Advisers Act of 1940 ("Investment Advisers Act"). For example, Covered Officers may not individually engage in certain transactions (such as the purchase or sale of securities or other property) with the Funds because of their status as "affiliated persons" of the Funds. The Funds' and the investment adviser's compliance programs and procedures are designed to prevent, or identify and correct, violations of these provisions. This Code does not, and is not intended to, repeat or replace these programs and procedures, and such conflicts fall outside of the parameters of this Code. Although typically not presenting an opportunity for improper personal benefit, conflicts arise from, or as a result of, the contractual relationship between the Funds and the investment adviser of which the Covered Officers are also officers and/or employees. As a result, this Code recognizes that the Covered Officers will, in the normal course of their duties (whether formally for the Funds or for the adviser, or for both), be involved in establishing policies and implementing decisions that will have different effects on the adviser and the Funds. The participation of the Covered Officers in such activities is inherent in the contractual relationship between the Funds and the adviser and is consistent with the performance by the Covered Officers of their duties as officers of the Funds. Thus, if performed in conformity with the provisions of the Investment Company Act and the Investment Advisers Act, such activities will be deemed to have been handled ethically. Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the Investment Company Act and the Investment Advisers Act. The following list provides examples of conflicts of interest under the Code, but Covered Officers should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Officer should not be placed improperly before the interest of the Funds. * * * * Each Covered Officer must: - not use his/her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Funds whereby the Covered Officer would benefit personally to the detriment of the Funds; - not cause the Funds to take action, or fail to take action, for the individual personal benefit of the Covered Officer rather than the benefit the Funds; - complete the Funds' Trustees and Officers Questionnaire at least annually which seeks information related to categories of affiliations or other relationships related to conflicts of interest. There are some conflict of interest situations that should always be discussed with the Chief Legal Officer if material. Examples of these include: - service as a director on the board of any public or private company; - the receipt of any non-nominal gifts in excess of $100 from any person or company with which the Funds has current or prospective business dealings; - the receipt of any entertainment from any company with which the Funds has current or prospective business dealings unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety; - any ownership interest in, or any consulting or employment relationship with, any of the Funds' service providers, other than its investment adviser, principal underwriter, administrator or any affiliated person thereof; - a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Funds for effecting portfolio transactions or for selling or redeeming shares other than an interest arising from the Covered Officer's employment, such as compensation or equity ownership. DISCLOSURE AND COMPLIANCE Each Covered Officer should familiarize himself/herself with the disclosure requirements generally applicable to the Funds; - each Covered Officer should not knowingly misrepresent, or cause others to misrepresent, facts about the Funds to others, whether within or outside the Funds, including to the Funds' trustees and auditors, and to governmental regulators and self-regulatory organizations; - each Covered Officer should, to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Funds and the adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Funds file with, or submit to, the SEC and in other public communications made by the Funds; and - it is the responsibility of each Covered Officer to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations. REPORTING AND ACCOUNTABILITY Each Covered Officer must: - upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Officer), affirm in writing to the Board that he/she has received, read, and understands the Code; - annually thereafter affirm to the Board that he/she has complied with the requirements of the Code; - not retaliate against any other Covered Officer or any employee of the Funds or their affiliated persons for reports of potential violations that are made in good faith; and - notify the Chief Legal Officer promptly if he/she knows of any violation of this Code. Failure to do so is itself a violation of this Code. The Chief Legal Officer is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, any approvals or waivers sought by the Principal Executive Officer will be considered by the Board. The Funds will follow these procedures in investigating and enforcing this Code: - the Chief Legal Officer will take all appropriate action to investigate any potential violations reported to him/her; - if, after such investigation, the Chief Legal Officer believes that no violation has occurred, the Chief Legal Officer is not required to take any further action; - any matter that the Chief Legal Officer believes is a violation will be reported to the Board; - if the Board concurs that a violation has occurred, it will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures; notification to appropriate personnel of the investment adviser or its board; or a recommendation to dismiss the Covered Officer; - the Board will be responsible for granting waivers, as appropriate; and - any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules. OTHER POLICIES AND PROCEDURES This Code shall be the sole code of ethics adopted by the Funds for purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms applicable to registered investment companies thereunder. Insofar as other policies or procedures of the Funds, the Funds' adviser, principal underwriter, or other service providers govern or purport to govern the behavior or activities of the Covered Officers who are subject to this Code, they are superseded by this Code to the extent that they overlap or conflict with the provisions of this Code. The Funds' and their investment adviser's and principal underwriter's code of ethics under Rule 17j-1 under the Investment Funds Act and their more detailed policies and procedures set forth in the Citizens Funds Compliance Manual are separate requirements applying to the Covered Officers and others, and are not part of this Code. AMENDMENTS Any amendments to this Code, other than amendments to Exhibit A, must be approved or ratified by a majority vote of the Board, including a majority of independent trustees. CONFIDENTIALITY All reports and records prepared or maintained pursuant to this Code will be considered confidential and shall be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters shall not be disclosed to anyone other than the Board and its counsel. INTERNAL USE The Code is intended solely for the internal use by the Funds and does not constitute an admission, by or on behalf of any Fund, as to any fact, circumstance, or legal conclusion. DATE: November 17, 2003 EXHIBIT A Persons Covered by this Code of Ethics: Sophia Collier, President of Citizens Funds Sean Driscoll, Treasurer of Citizens Funds EX-99.CERT 3 b51007cfexv99wcert.txt CERTIFICATIONS EXHIBIT 10(a)(2) CERTIFICATION I, Sophia Collier, certify that: 1. I have reviewed this report on Form N-CSR of Citizens Funds (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent 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; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 25, 2004 /s/ Sophia Collier --------------------------- Sophia Collier Principal Executive Officer EX-99.906CERT 4 b51007cfexv99w906cert.txt SECTION 906 CERTIFICATIONS EXHIBIT 10(a)(2) CERTIFICATION I, Sean P. Driscoll, certify that: 1. I have reviewed this report on Form N-CSR of Citizens Funds (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent 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; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 25, 2004 /s/ Sean P. Driscoll --------------------------- Sean P. Driscoll Principal Financial Officer EXHIBIT 10(b) This certification is provided pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, and accompanies the report on Form N-CSR for the period ended June 30, 2004 of Citizens Funds (the "Registrant"). Each of the undersigned, being the Principal Executive Officer and Principal Financial Officer of the Registrant, hereby certifies that, to such officer's knowledge,: 1. the Form N-CSR fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and 2. the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the Registrant. This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of Form N-CSR or as a separate disclosure document. A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request Date: August 25, 2004 /s/ Sophia Collier --------------------------- Sophia Collier Principal Executive Officer Date: August 25, 2004 /s/ Sean P. Driscoll --------------------------- Sean P. Driscoll Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----