N-CSR 1 b56006cfnvcsr.txt CITIZENS FUNDS As filed with the Securities and Exchange Commission on August 24, 2005 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 June 30 (Date of fiscal year end) June 30, 2005 (Date of reporting period) ITEM 1. REPORT TO SHAREHOLDERS [CITIZENS FUNDS LOGO] ("GRAPHIC OF DOLPHINS") 2005 ANNUAL REPORT AND SUPPLEMENTAL COMMENTARY NOT A PART OF THE ANNUAL REPORT TABLE OF CONTENTS
SUPPLEMENTAL COMMENTARY Letter from the president 1 Citizens focus: Advocating on your behalf 3 Citizens focus: Market overview 6 ANNUAL REPORT Risks of mutual fund investing 8 Benchmarks 9 Portfolio review 11 Portfolio composition 38 Report of independent registered public accounting firm 40 Citizens Funds holdings 41 Statements of assets and liabilities 64 Statements of operations 66 Statements of changes in net assets 68 Financial highlights 72 Financial notes 78 Supplemental information 86 Shareholder services 97
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. NOT A PART OF THE ANNUAL REPORT LETTER FROM THE PRESIDENT Dear Shareholder, The twelve months ended June 30, 2005 have been good ones for Citizens Funds. The financial markets have been doing well, and so have we. It is satisfying to see the positive results for our shareholders from the investments we have made over the last three years in research, investment personnel and related information technology. Our goal at Citizens has always been to create strong financial returns by investing in financially promising companies that are managed with a high level of corporate responsibility. I believe we made significant progress toward reaching that goal in fiscal 2005. Our flagship Citizens Core Growth Fund* led by portfolio manager Jon White was a particular highlight in fiscal 2005, celebrating its ten year anniversary during the period. Jon's disciplined, high quality, growth strategy has been quite effective and the results are evident in the fund's performance. Citizens Core Growth Fund standard shares placed in the 9th percentile of 672 large-cap growth funds tracked by Lipper based on its one year total return ending June 30, 2005. For the fund's 10 year annualized total return, Lipper placed it in the 31st percentile in a peer group of 142 funds, and for the 5 year annualized total return Lipper placed it in the 49th percentile in a peer group of 438 funds as of the end of the period. As you consider your investment options, I hope you will take a look at this fund. One source of strong performance for a number of our funds over those twelve months came directly from our research effort and stock selection within the energy sector. In 2003, one of our initiatives was to identify the best energy companies that met our high standards for corporate and environmental responsibility so that we would be ready to invest, should the energy theme develop. We believed at the time, energy could be an important investment theme in the future. As it turned out energy has been a very strong area and our shareholders invested in those of our funds with energy holdings, have benefited nicely. NOT A PART OF THE ANNUAL REPORT (CONTINUED) "Our flagship Citizens Core Growth Fund* ("PHOTO OF SOPHIA COLLIER") led by portfolio manager Jon White was a particular highlight in 2005... Jon's disciplined, high quality, growth strategy has been quite effective and the results are evident in the fund's performance." I was interested to see a cover story in a recent issue of Forbes magazine entitled "GE Goes Green." General Electric (GE) has long been a rejected company at Citizens based on its environmental record and military sales. GE's chairman and CEO Jack Welch retired in 2002, ushering in a new era for the company. While it is going to take a lot more progress than was described by Forbes for Citizens to invest in GE, it is encouraging to see a very large company begin moving in more positive directions. One of the key innovations at GE (and elsewhere) is improving Light Emitting Diode (LED) technology. The energy saving potential from this type of improvement is enormous, and it is thought that these low-level power devices can one day replace light bulbs. In the coming years, I believe we will see a continuation of the dramatic increases in development in the emerging world. It is crucial for our global environment that energy efficient technologies take hold. It is encouraging to see progress in energy efficient technologies under development by our portfolio companies. We will continue to research this area and look forward to developing this, and other promising investment themes, in the coming year. Sincerely yours, -s- Sophia Collier Sophia Collier President * See pages 8-10 for important fund risks and benchmark and other disclosures. In considering performance of the funds for the twelve month period, you should also consider the funds' longer term track record described elsewhere in this report. Of course, past performance does not guarantee future results. NOT A PART OF THE ANNUAL REPORT 2 CITIZENS FOCUS ADVOCATING ON YOUR BEHALF We are making headway in our efforts to change how companies define, manage and report on environmental and corporate governance performance. During the year Citizens Advisers became a founding supporter of SIRAN (Social Investment Research Analyst Network). SIRAN, a working group of the Social Investment Forum, is an analyst network that supports more than 100 North American social research analysts from 30 investment firms, research providers, and affiliated investor groups. Citizens is an active participant in SIRAN's project to benchmark use of the Global Reporting Initiative's (GRI) Sustainability Reporting Requirements, by companies in the U.S. S&P 100 Index. The goal of the project is to have 25% of the S&P 100 referencing the GRI in their Corporate Social Responsibility (CSR) reports by the end of 2005. We require at least one element of diversity ("PHOTO OF on the board or the top two tiers of management DAVID LOEHWING, SR.") for domestic or global companies to be considered for inclusion in our portfolios... It is startling how many of the nation's largest companies do not publicly disclose this information. ------------------------------------------------------ David Loehwing, Sr. Social Research Analyst Another important SIRAN initiative we focused on was to engage companies on the issue of increasing and improving disclosure of Equal Employment Opportunity (EEO) data. Citizens wrote to S&P 100 Index companies to encourage the disclosure of this information. We require at least one element of diversity on the board or the top two tiers of management, for domestic or global companies to be considered for inclusion in our portfolios. We believe this information gives us a better perspective on a company's commitment to hiring, retaining and promoting a diverse S&P 100 INDEX COMPANIES EE0-1 DATA DISCLOSURE SURVEY
YES NO -------------------------------------------------------------------------------- Company provides full public EEO-1 disclosure 8 92 Company provides full EEO-1 disclosure to analysts on request 59 41 Company provides partial public EEO-1 disclosure 26 74 -------------------------------------------------------------------------------
(Source: SIRAN June 2005, http://www.siran.org/eeo1.php) 3 NOT A PART OF THE ANNUAL REPORT workforce. While companies with more than 100 employees are required by law to report the data, it is startling how many of the nation's largest companies do not publicly disclose this information. WHY DISCLOSURE IS IMPORTANT Seeking to minimize risk is a key element of our investment process. We believe companies that integrate sustainability reporting into their operations will be better prepared to manage, track and evaluate the effectiveness of environmental management, community involvement, diversity and corporate governance initiatives. A growing body of evidence suggests companies may avoid lawsuits and liabilities, market exclusion and damaged reputations through increased monitoring and reporting. We believe companies with strong fundamentals that are actively working to evaluate and report on the costs and benefits of sustainability initiatives may pose less risk to long-term investors. COSMETICS SAFETY Citizens joined other SRI investors to engage in dialogs with global cosmetics manufacturers Estee Lauder and Avon on their toxics reduction and ingredient reformulation efforts. A European Union (EU) directive banning toxic and carcinogenic ingredients (CMRs) requires companies to reformulate products sold and distributed in the EU. However, the U.S. currently does not require the reformulation of ingredients used in cosmetics and personal care products sold in the U.S. Despite the lack of U.S. regulation requiring reformulation, we believe shareholder value is at risk in companies that do not proactively reformulate products sold in the U.S. We feel the increased level of awareness of health risks posed by carcinogenic ingredients will raise consumer demand for reformulated cosmetics and personal care products. We believe companies that move forward with reformulation will have a competitive advantage. ("PHOTO OF We feel the increased level of awareness of VESELA VELEVA SC.D.") health risks posed by carcinogenic ingredients will raise consumer demand for reformulated cosmetics and personal care products. We believe companies that move forward with reformulation will have a competitive advantage. ------------------------------------------------------ Vesela Veleva Sc.D., Social Research Analyst NOT A PART OF THE ANNUAL REPORT 4 Citizens' Dr. Vesela Veleva's paper entitled "New EU rules for the cosmetics industry: What do they mean for U.S. companies and stakeholders?" compares and contrasts the EU directive with current U.S. requirements. An excerpt of the paper, to be published later this year in Corporate Environmental Strategy (CES), will be made available on our website at www.citizensfunds.com. We will watch this issue closely to help us identify which companies will be the leaders and which will be the laggards to improve the safety of personal care products we use every day. Of particular interest will be companies moving forward to find alternatives to testing such products on animals. OUTLOOK We remain encouraged by the increased awareness and media attention of corporate governance and environmental issues. Our focus to identify companies providing robust disclosure of corporate, social and environmental performance will continue, as will our work with companies we hold to help them improve their social/environmental disclosure. We believe increased disclosure helps make companies better corporate citizens and strong investment candidates. We believe increased disclosure helps make ("PHOTO OF companies better corporate citizens and strong JOANNE DOWDELL") investment candidates. ----------------------------------------------------------- Joanne Dowdell, Vice President -- Corporate Responsibility 5 NOT A PART OF THE ANNUAL REPORT CITIZENS FOCUS MARKET OVERVIEW The financial markets had a positive year for Citizens ("PHOTO OF JON WHITE") Funds' fiscal 2005, the twelve months ended June 30, 2005. The S&P 500 Index, a proxy for large cap stocks in the United States was up 6.32% for the period and the Lehman Brothers U.S. Aggregate Index, which is representative of the domestic fixed income markets, was up 6.80%. Smaller stocks did even better in the period with the S&P 600 SmallCap Index up 13.45% during the period. The route to these solid returns, however, was anything, but average. It is said that the stock market climbs a "wall of worry." This pattern was highly evident during the fiscal year. Jon White, CFA, Chief Market Strategist Strong earnings reports and signs of economic growth rekindled the markets in the last quarter. The fiscal year began with a sharp sell off in the markets. Investor attention was focused on the prospect of the economy slowing as a result of high oil prices and rising interest rates. Small cap stocks were particularly hard hit, and few sectors were immune from what seemed to be indiscriminate selling pressure. As the fall season came, investor sentiment improved as it became apparent the economy was stronger than many thought. Corporate profits, which serve as a sometimes humbling, sometimes exhilarating reality check on investor opinions, came in stronger than many predicted. In November and December the U.S. stock market had a strong rally. Small cap stocks had the best results during this period, but most sectors participated with excellent gains. Profit taking and the reemergence of fears of slowing growth caused negative returns for virtually all stock market indices in the third quarter of the fiscal year, but strong earnings reports and signs of economic growth rekindled the markets in the last quarter. NOT A PART OF THE ANNUAL REPORT 6 During the fiscal year "value" strategies, which typically focus on inexpensive, slower growing stocks outperformed "growth" strategies, which seek companies with high growth forecasts. However, this pattern may be changing. For the last five years, value stocks have outperformed growth stocks. In the last quarter of the fiscal year, growth stocks began to show signs of improvement and many believe growth stocks are overdue for a period of outperformance versus value stocks. Concerns about the pace of the economic recovery and inflation spurred the Federal Reserve to move the federal funds rate to what is considered a more neutral level. The Federal Reserve raised its target for the federal funds rate eight times during the fiscal year, mostly expected and anticipated by the markets. Consequently, the short term interest rates increased and longer term rates decreased, during the same period. At present, the federal funds futures market is pricing in even more increases to the federal funds rate. We believe this is a reasonable expectation under current economic conditions, and the resulting increase in the cost of borrowing may temper the robust growth we witnessed during the fiscal year. Looking ahead we believe market sentiment is improving. While the market has not returned to the highs of March 2000, indexes have been steadily climbing the "wall of worry." For example, the S&P 500 Index has returned 55.5% since the market low in October 2002. These gains have been based on a strong recovery in corporate earnings, a satisfying and appropriate foundation for increasing value. 7 NOT A PART OF THE ANNUAL REPORT RISKS OF MUTUAL FUND INVESTING As with any fund that invests in stocks or fixed-income securities, the value of your investment will fluctuate in response to individual company actions, as well as general economic, political and market conditions. Reactions to these factors may differ among various stock types, and investments in specific funds may present unique risks -- and benefits -- given the nature of their focus. Many of these risks are discussed below and additional information on risks may also be found in the Citizens Funds prospectus. GROWTH INVESTING RISKS Growth stocks may be especially volatile, because their prices are largely based on future earnings. VALUE INVESTING RISKS Value stocks may fall or remain flat if certain conditions or investor perceptions do not change as expected, or if the companies prove not to be underpriced. SMALL- AND MEDIUM-SIZED COMPANY RISKS Small- and medium-sized companies pose unique investment risks as they may have less seasoned management, limited product lines, financing and market share challenges, and shares that trade with more volatility, less frequently or in smaller volumes. INDEX-RELATED RISKS The performance of the Citizens 300 Fund may deviate from that of the Citizens Index due to factors such as fund fees and expenses and the fund's composition differing from that of the index. FOREIGN INVESTING RISKS Foreign markets pose unique investment risks, including political instability and currency risks, excessive taxation, different financial and auditing standards, increased market volatility and other factors. FIXED-INCOME INVESTING RISKS 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. There is also the chance that some of the fund's holdings will have their credit ratings down-graded or may default, potentially reducing the fund's income level and share price. 8 HIGH-YIELD SECURITY RISKS High-yield securities offer the potential for higher returns but present significant volatility and risk of loss of principal and interest. MONEY MARKET RISKS 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. BENCHMARKS When evaluating performance of any investment, it is useful to look at both absolute and relative return. In other words, how much did the fund generate or lose for shareholders in the reporting period, and how did that performance compare to the fund's benchmark? We present this information in each of our portfolio reviews. Below is a brief description of the benchmarks we use. Please keep in mind that these benchmark indices are unmanaged, meaning you can't invest directly in them, and their performance does not reflect the impact of fees and expenses that apply to our funds. The S&P 500 INDEX includes a representative sample of 500 leading companies in the U.S. economy, focused on the large-cap segment. The S&P SMALLCAP 600 INDEX includes small-sized U.S. companies. The RUSSELL 1000 GROWTH INDEX measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Index covers the large-cap segment of the U.S. equity universe. The RUSSELL MIDCAP GROWTH INDEX measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The Russell Midcap Index covers the mid-cap segment of the U.S. equity universe; it includes the smallest 800 securities in the Russell 1000 Index. The RUSSELL 2000 GROWTH INDEX measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 2000 Index covers the small-cap segment of the U.S. equity universe. 9 The MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) WORLD INDEX is a market capitalization-weighted equity index of over 1,500 stocks traded in 23 world markets. The LEHMAN BROTHERS U.S. AGGREGATE INDEX is comprised of taxable, investment grade fixed-income securities, including government, corporate, mortgage and asset-backed securities. The BLENDED INDEX is comprised of 60% S&P 500 Index and 40% Lehman Brothers U.S. Aggregate Index. The MERRILL LYNCH 1-YEAR TREASURY INDEX tracks the performance of U.S. Treasury notes with maturities of approximately one year. The index is produced by Merrill Lynch, Pierce, Fenner & Smith, Ltd. The CITIZENS INDEX, though not one of our benchmarks, consists of 300 mostly U.S. companies that meet Citizens Advisers financial and social criteria. The Citizens 300 Fund seeks to replicate the composition and performance of the Citizens Index. 10 CITIZENS 300 FUND PORTFOLIO REVIEW FUND INFORMATION INVESTMENT GOAL Long-term capital appreciation INVESTMENT STRATEGY Invests mainly in stocks and other equities of U.S. large-capitalization companies INCEPTION DATE Standard shares: 8.29.03 RISKS Growth, value and index-related investing (See pages 8-10 for important fund risk and benchmark disclosures.) WE BELIEVE ADHERING TO THE SELECTION OF COMPANIES WITHIN THE SOCIALLY RESPONSIBLE CITIZENS INDEX CAN BE AN INTELLIGENT WAY TO PARTICIPATE IN THE LARGE CAP UNIVERSE OF STOCKS. HOW DID WE DO? The Citizens 300 Fund returned 1.84% versus the benchmark S&P 500 Index return of 6.32% for the fiscal year ended June 30, 2005. The returns for the S&P 500 Index during this period were dominated by the benchmark's holdings in the energy and utility sectors, with each sector returning in excess of 38%. Although we managed a respectable return in excess of 34% for each of these sectors within our fund, relative to the benchmark these sectors underperformed, and we were underweighted in these same sectors versus the S&P 500 Index. Two of the fund's four largest holdings, energy giant British Petroleum and Johnson & Johnson, were strong contributors to positive performance during the period. We believe the pharmaceutical giant, Johnson & Johnson, to be one of the best-run public pharmaceutical companies in the United States. Among other notable winners in the fund were energy giant Conoco-Phillips and UnitedHealth Group. Conoco-Phillip's and UnitedHealth Group, both of whose stock prices provided double digit price appreciation for the period, contributed significantly to positive fund performance. Other sectors also contributed to positive performance of the fund, including our holdings in the telecommunications services sector, which returned 8.4%, and our holdings within the consumer discretionary sector, which returned 3.8%. CITIZENS 300 FUND 11 PERFORMANCE (as of 6.30.05)
AVERAGE ANNUAL RETURN 1 Since Ticker Year inception --------------------------------------------------------------------------------------------- STANDARD SHARES CFCDX 1.84% 7.27%
PERFORMANCE OVER TIME (as of 6.30.05) This chart shows the performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over time for the index shown. (PERFORMANCE OVERTIME) CITIZENS 300 INDEX FUND PERFORMANCE SINCE INCEPTION 8/29/03
DATE CITIZENS 300 INDEX FUND S&P 500 INDEX RETURN ---- ----------------------- ------------------- 08/29/2003 $ 10,000.00 $ 10,000.00 09/30/2003 $ 9,890.00 $ 9,894.00 10/31/2003 $ 10,490.00 $ 10,454.00 11/30/2003 $ 10,580.00 $ 10,546.00 12/31/2003 $ 10,980.50 $ 11,098.61 01/31/2004 $ 11,120.70 $ 11,302.82 02/29/2004 $ 11,200.70 $ 11,459.93 03/31/2004 $ 11,080.60 $ 11,286.88 04/30/2004 $ 10,890.40 $ 11,109.68 05/31/2004 $ 11,040.60 $ 11,261.88 06/30/2004 $ 11,170.70 $ 11,480.36 07/31/2004 $ 10,650.20 $ 11,100.36 08/31/2004 $ 10,660.20 $ 11,145.10 09/30/2004 $ 10,740.30 $ 11,265.80 10/31/2004 $ 10,910.50 $ 11,437.94 11/30/2004 $ 11,310.80 $ 11,900.72 12/31/2004 $ 11,690.00 $ 12,305.70 01/31/2005 $ 11,376.10 $ 12,005.75 02/28/2005 $ 11,507.30 $ 12,258.35 03/31/2005 $ 11,244.90 $ 12,041.26 04/30/2005 $ 10,992.50 $ 11,812.47 05/31/2005 $ 11,416.50 $ 12,188.34 06/30/2005 $ 11,376.10 $ 12,205.65
Data presented reflects past performance of the fund, which is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month end may be obtained online 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. Investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original costs. Performance figures and the growth of a $10,000 hypothetical investment assume reinvestment of dividends and distributions but do not reflect the deduction of taxes you would pay on fund distributions or redemptions of fund shares. -------------------------------------------------------------------------------- The largest detractor from performance of the fund for the period was the pharmaceutical giant Pfizer, whose stock price ended the fiscal year with a decline of more than 19%. Pfizer struggled earlier in the second half of the fiscal year, as concerns over Cox-2 inhibitors (including Pfizer's Celebrex) made headlines. Our exposure to the technology sector, with an average weight of 16.9% during the fiscal year, also detracted from fund performance. OUTLOOK Looking ahead, we remain positive about the markets. We believe earnings growth will remain positive, but increasing costs of oil, energy and capital will dampen the acceleration of growth. We believe expansion will continue, though at decreasing rates as a result of the current economic environment. We believe adhering to the selection of companies within the socially responsible Citizens Index can be an intelligent way to participate in the large cap universe of stocks. CITIZENS 300 FUND 12 CITIZENS CORE GROWTH FUND PORTFOLIO REVIEW FUND INFORMATION INVESTMENT GOAL Long-term capital appreciation INVESTMENT STRATEGY Invests mainly in stocks of U.S. large-capitalization companies INCEPTION DATES Standard shares: 3.03.95 Institutional shares: 1.25.96 Administrative shares: 2.04.00 RISKS Growth investing (See pages 8-10 for important fund risk and benchmark disclosures.) OUR GOAL IS TO MAINTAIN A PORTFOLIO THAT IS WELL DIVERSIFIED, BUT SUFFICIENTLY CONCENTRATED SO GOOD IDEAS WILL MAKE A DIFFERENCE. HOW DID WE DO? The fund's standard shares returned 8.95% for the fiscal year ended June 30, 2005, while the Russell 1000 Growth Index returned 1.68%, and the S&P 500 Index returned 6.32% for the same period. The outperformance of the fund relative to the benchmark Russell 1000 Growth Index can be attributed to portfolio design and management. Over the period the number of holdings in the fund have been deliberately reduced, while still maintaining focus on diversification across sectors and quality stock selection criteria. Our goal is to maintain a portfolio that is well diversified, but sufficiently concentrated so good ideas will make a difference. Additionally, we believe the reduction in holdings has helped to avoid companies we believe will not contribute healthy returns to the fund. Our fund strategy includes stock selection focused on consistency in delivering growth with strong stock price performance over time. Our purchase of Johnson and Johnson (JNJ) stock is truly reflective of our investment selection criteria at work, and contributed to positive fund performance during the period. The company is a strong leader in the industry of healthcare manufacturers' products serving the consumer, pharmaceutical and professional markets. We believe JNJ is a quality large cap company, has a strong management team and will deliver consistent growth, year over year, and we look forward to seeing what JNJ management has in store for the upcoming year. CITIZENS CORE GROWTH FUND 13 PERFORMANCE (as of 6.30.05)
AVERAGE ANNUAL RETURN 1 5 10 Since Ticker Year Years Years inception --------------------------------------------------------------------------------------------- STANDARD SHARES WAIDX 8.95% -8.59% 8.05% 8.73% INSTITUTIONAL SHARES WINIX 9.74% -7.96% NA 7.97% ADMINISTRATIVE SHARES CGADX 9.38% -8.22% NA -7.33%
PERFORMANCE OVER TIME (as of 6.30.05) This chart shows the performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over time for the indexes shown. (PERFORMANCE OVERTIME) CITIZENS CORE GROWTH FUND - STANDARD SHARES PERFORMANCE SINCE INCEPTION 03/03/95
DATE CITIZENS CORE GROWTH FUND RUSSELL 1000 GROWTH S&P 500 ---- ------------------------- ------------------- ----------- 3/3/95 $ 10,000.00 $ 10,000.00 $ 10,000.00 03/31/1995 $ 10,100.00 $ 10,292.00 $ 10,340.00 04/30/1995 $ 10,400.00 $ 10,517.39 $ 10,644.00 05/31/1995 $ 10,530.00 $ 10,883.40 $ 11,069.76 06/30/1995 $ 10,940.00 $ 11,303.50 $ 11,326.57 07/31/1995 $ 11,360.00 $ 11,773.72 $ 11,702.62 08/31/1995 $ 11,450.00 $ 11,786.68 $ 11,731.87 09/30/1995 $ 11,860.00 $ 12,330.04 $ 12,226.96 10/31/1995 $ 11,970.00 $ 12,338.67 $ 12,182.94 11/30/1995 $ 12,330.00 $ 12,818.65 $ 12,717.77 12/31/1995 $ 12,405.00 $ 12,891.71 $ 12,963.23 01/31/1996 $ 12,646.60 $ 13,322.30 $ 13,403.97 02/26/1996 $ 12,878.20 $ 13,566.09 $ 13,528.63 03/31/1996 $ 12,858.10 $ 13,583.73 $ 13,658.51 04/30/1996 $ 13,200.40 $ 13,940.98 $ 13,859.29 05/31/1996 $ 13,593.10 $ 14,427.52 $ 14,216.86 06/30/1996 $ 13,502.50 $ 14,447.72 $ 14,270.88 07/31/1996 $ 12,908.40 $ 13,601.09 $ 13,640.11 08/30/1996 $ 13,230.60 $ 13,951.99 $ 13,927.91 09/30/1996 $ 14,076.40 $ 14,967.70 $ 14,712.06 10/31/1996 $ 14,428.80 $ 15,057.50 $ 15,118.11 11/30/1996 $ 15,627.10 $ 16,188.32 $ 16,261.04 12/31/1996 $ 15,266.30 $ 15,871.03 $ 15,939.07 01/31/1997 $ 16,415.60 $ 16,983.59 $ 16,935.26 2/28/97 $ 16,517.30 $ 16,868.10 $ 17,067.36 03/31/1997 $ 15,551.10 $ 15,955.54 $ 16,365.89 04/30/1997 $ 16,669.90 $ 17,014.99 $ 17,342.93 05/31/1997 $ 17,697.10 $ 18,243.47 $ 18,399.11 06/30/1997 $ 18,348.00 $ 18,973.21 $ 19,223.40 07/31/1997 $ 20,188.90 $ 20,650.44 $ 20,753.58 08/29/1997 $ 19,110.80 $ 19,442.39 $ 19,591.38 09/30/1997 $ 20,158.40 $ 20,398.95 $ 20,664.98 10/31/1997 $ 19,354.90 $ 19,644.19 $ 19,974.77 11/29/1997 $ 20,402.50 $ 20,479.07 $ 20,899.61 12/31/1997 $ 20,603.90 $ 20,708.44 $ 21,259.08 01/31/1998 $ 21,201.70 $ 21,327.62 $ 21,495.05 02/28/1998 $ 22,867.10 $ 22,931.45 $ 23,044.85 03/31/1998 $ 23,977.30 $ 23,846.42 $ 24,224.74 04/30/1998 $ 24,222.90 $ 24,175.50 $ 24,469.41 05/31/1998 $ 23,529.00 $ 23,488.92 $ 24,048.54 06/30/1998 $ 25,044.90 $ 24,926.44 $ 25,024.91 07/31/1998 $ 24,938.10 $ 24,761.92 $ 24,759.65 08/31/1998 $ 21,212.40 $ 21,045.16 $ 21,179.40 09/30/1998 $ 23,069.90 $ 22,661.43 $ 22,537.00 10/31/1998 $ 24,767.30 $ 24,483.41 $ 24,369.26 11/30/1998 $ 26,635.60 $ 26,346.59 $ 25,846.04 12/31/1998 $ 29,412.00 $ 28,723.06 $ 27,334.77 01/31/1999 $ 31,679.40 $ 30,409.10 $ 28,477.36 02/28/1999 $ 29,757.50 $ 29,019.40 $ 27,591.72 03/31/1999 $ 31,042.40 $ 30,548.73 $ 28,695.39 04/30/1999 $ 31,873.70 $ 30,588.44 $ 29,805.90 05/31/1999 $ 31,020.80 $ 29,649.37 $ 29,102.48 06/30/1999 $ 32,953.50 $ 31,724.83 $ 30,717.67 07/31/1999 $ 32,251.70 $ 30,715.98 $ 29,759.27 08/31/1999 $ 31,981.70 $ 31,216.65 $ 29,613.45 09/30/1999 $ 31,204.30 $ 30,561.10 $ 28,802.04 10/31/1999 $ 33,223.40 $ 32,868.46 $ 30,625.21 11/30/1999 $ 34,637.90 $ 34,643.36 $ 31,246.91 12/31/1999 $ 37,497.40 $ 38,246.27 $ 33,087.35 01/31/2000 $ 35,181.60 $ 36,452.52 $ 31,426.36 02/29/2000 $ 36,060.00 $ 38,235.05 $ 30,832.41 03/31/2000 $ 39,539.40 $ 40,972.68 $ 33,847.81 04/30/2000 $ 37,109.60 $ 39,022.38 $ 32,829.00 05/31/2000 $ 35,170.20 $ 37,055.65 $ 32,156.00 06/30/2000 $ 37,178.00 $ 39,864.47 $ 32,950.25 07/31/2000 $ 36,151.30 $ 38,202.12 $ 32,436.23 08/31/2000 $ 38,227.50 $ 41,659.41 $ 34,450.52 09/30/2000 $ 35,215.90 $ 37,718.43 $ 32,631.53 10/31/2000 $ 35,489.60 $ 35,934.35 $ 32,494.48 11/30/2000 $ 30,698.40 $ 30,637.63 $ 29,933.92 12/31/2000 $ 29,715.00 $ 29,669.48 $ 30,080.59 01/31/2001 $ 32,157.20 $ 31,719.64 $ 31,148.45 02/28/2001 $ 27,056.30 $ 26,333.64 $ 28,307.71 03/31/2001 $ 24,710.40 $ 23,468.54 $ 26,513.00 04/30/2001 $ 27,032.30 $ 26,437.32 $ 28,573.07 05/31/2001 $ 27,080.40 $ 26,048.69 $ 28,764.50 06/30/2001 $ 26,611.20 $ 25,444.36 $ 28,065.53 07/31/2001 $ 26,310.40 $ 24,808.25 $ 27,790.49 08/31/2001 $ 24,277.30 $ 22,778.93 $ 26,050.80 09/30/2001 $ 21,811.10 $ 20,505.60 $ 23,945.90 10/31/2001 $ 22,304.30 $ 21,582.14 $ 24,403.26 11/30/2001 $ 24,385.60 $ 23,656.18 $ 26,274.99 12/31/2001 $ 24,301.40 $ 23,611.24 $ 26,506.21 01/31/2002 $ 23,904.40 $ 23,193.32 $ 26,119.22 02/28/2002 $ 23,002.10 $ 22,230.79 $ 25,615.12 03/31/2002 $ 23,880.30 $ 22,999.98 $ 26,578.25 04/30/2002 $ 22,448.70 $ 21,123.18 $ 24,967.61 05/31/2002 $ 22,039.70 $ 20,612.00 $ 24,782.85 06/30/2002 $ 20,126.80 $ 18,705.39 $ 23,018.31 07/31/2002 $ 18,635.10 $ 17,676.59 $ 21,225.18 08/31/2002 $ 18,562.90 $ 17,729.62 $ 21,365.27 09/30/2002 $ 16,914.70 $ 15,891.06 $ 19,042.86 10/31/2002 $ 18,466.60 $ 17,348.27 $ 20,718.64 11/30/2002 $ 19,296.70 $ 18,290.28 $ 21,938.96 12/31/2002 $ 18,045.60 $ 17,026.43 $ 20,651.15 01/31/2003 $ 17,516.20 $ 16,612.68 $ 20,110.09 02/28/2003 $ 17,323.70 $ 16,536.26 $ 19,808.44 03/31/2003 $ 17,480.10 $ 16,843.84 $ 20,000.58 04/30/2003 $ 18,562.90 $ 18,088.60 $ 21,648.62 05/31/2003 $ 19,597.50 $ 18,991.22 $ 22,789.51 06/30/2003 $ 19,777.90 $ 19,253.30 $ 23,081.21 07/31/2003 $ 20,283.20 $ 19,732.71 $ 23,487.44 08/31/2003 $ 20,908.80 $ 20,224.05 $ 23,945.45 09/30/2003 $ 20,391.50 $ 20,007.65 $ 23,691.63 10/31/2003 $ 21,642.70 $ 21,132.08 $ 25,032.57 11/30/2003 $ 21,823.10 $ 21,353.97 $ 25,252.86 12/31/2003 $ 22,220.10 $ 22,092.82 $ 26,576.11 01/31/2004 $ 22,352.40 $ 22,543.51 $ 27,065.11 02/29/2004 $ 22,280.30 $ 22,687.79 $ 27,441.31 03/31/2004 $ 22,015.60 $ 22,265.80 $ 27,026.95 04/30/2004 $ 21,402.00 $ 22,007.51 $ 26,602.63 05/31/2004 $ 21,726.90 $ 22,416.85 $ 26,967.08 06/30/2004 $ 21,775.00 $ 22,697.06 $ 27,490.24 07/31/2004 $ 20,896.80 $ 21,414.11 $ 26,580.32 08/31/2004 $ 20,644.10 $ 21,308.50 $ 26,687.44 09/30/2004 $ 21,317.80 $ 21,511.32 $ 26,976.46 10/31/2004 $ 21,714.80 $ 21,846.76 $ 27,388.66 11/30/2004 $ 22,689.30 $ 22,598.05 $ 28,496.81 12/31/2004 $ 23,363.00 $ 23,483.76 $ 29,466.55 01/31/2005 $ 22,857.70 $ 22,700.66 $ 28,748.30 02/28/2005 $ 23,206.60 $ 22,942.49 $ 29,353.17 03/31/2005 $ 22,978.00 $ 22,524.24 $ 28,833.32 04/30/2005 $ 22,376.50 $ 22,095.79 $ 28,285.49 05/31/2005 $ 23,314.90 $ 23,164.52 $ 29,185.54 06/30/2005 $ 23,723.90 $ 23,079.31 $ 29,226.98
Data presented reflects past performance of the fund, which is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month end may be obtained online at www.citizensfunds.com. Fee waivers have been instituted in the past to maintain expense limits, without which returns would have been lower. Investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original costs. Performance figures and the growth of a $10,000 hypothetical investment assume reinvestment of dividends and distributions but do not reflect the deduction of taxes you would pay on fund distributions or redemptions of fund shares. -------------------------------------------------------------------------------- The strongest performing sectors within the portfolio were utilities, with a return of 50.5% and energy, with a return of 42.9%. Neither sector is a traditional growth venue, but we believe the potential supply/demand imbalances that developed as the year progressed appeared to offer sustainable earnings growth for a more extended period than in the past. Questar, a natural gas producer and utility, and ConocoPhillips, the integrated oil giant, did particularly well for the period in which we held them. The financial and consumer discretionary sectors were also strong, each returning 19% for the period. However, one of the strongest performers in the portfolio was not in any of those sectors. It was CITIZENS CORE GROWTH FUND 14 UnitedHealth Group, a provider of healthcare coverage and related services, with a double-digit price increase for the period. The fund was underweight in the information technology sector relative to the benchmark Russell 1000 Growth Index for the period. This decision was validated as the information technology sector came in as one of the bottom performers within the index for the period. The performance of the fund suffered from the decline in stock price from such bellwether stocks as Intel and Cisco. Both stock prices declined amidst the unfavorable technology environment during the year, and we exited the positions. Avoiding losing stocks is just as much a part of our strategy as picking winning stocks. Choosing not to hold a specific stock can also contribute to positive performance. While we are mindful of the sector weightings and specific stocks within the benchmark index, we do not mirror the index. We research each stock and each industry diligently. Each stock must pass our stock selection criteria before even being considered for investment. We believe one of the most reliable ways to preserve gains is by avoiding large losses. OUTLOOK For the next year we think the stock market will focus on how best to cope with an economy faced with possible slowing growth and increasing international imbalances. We believe valuation parameters now tilt in favor of the bigger companies, and the market may favor the lower risk profile typical of the larger stocks. If earnings growth declines as the economy slows, we believe investors will move toward stocks that can show more stable growth patterns. In our view this will lead to a market with modest, but positive returns, and one where growth and value stocks are once again competitive with each other. CITIZENS CORE GROWTH FUND 15 CITIZENS EMERGING GROWTH FUND PORTFOLIO REVIEW FUND INFORMATION INVESTMENT GOAL Aggressive growth INVESTMENT STRATEGY Invests mainly in stocks of young, growing, medium-capitalization companies INCEPTION DATES Standard shares: 2.08.94 Institutional shares: 11.01.99 Administrative shares: 2.04.00 RISKS Growth investing; small- and medium-sized company risks (See pages 8-10 for important fund risk and benchmark disclosures.) ULTIMATELY, WHAT MATTERS IS NOT THE PERFORMANCE OF ANY INDIVIDUAL STOCK OR GROUP, BUT THE PERFORMANCE OF THE ENTIRE PORTFOLIO. TO THAT END, WE WILL CONTINUE TO FOCUS ON BUILDING A PORTFOLIO COMPRISED OF WHAT WE BELIEVE ARE HIGH QUALITY COMPANIES WHOSE STOCKS ARE SHOWING GOOD RELATIVE PERFORMANCE. HOW DID WE DO? The fund's standard shares returned 8.38% for the fiscal year ended June 30, 2005 while the Russell Midcap Growth Index returned 10.86% for the same period. The principal behind our mid cap growth strategy is that well managed companies have the potential to continue and compound their growth. We look for companies with growing earnings, sales, and margins, as well as favorable returns on assets and strong balance sheets. Apple Computer was the best performing stock in the fund for the year and is a good example of our stock selection criteria at work. The price of Apple Computer shares increased significantly during the period in which we held it, fueled by the explosive growth of its iPod music player and the release of a new operating system for its Macintosh line of computers. Despite continually rising expectations, Apple has been able to consistently produce positive surprises. Although we still like the stock, we have trimmed our position in Apple repeatedly over the recent past as part of our upside sell discipline. In evaluating the investing climate, we expected that the rapid increase in oil prices would have a disparate impact on the consumer sector. We believed consumer companies that catered to the luxury or near-luxury segments of the market as well as those catering to teens would be less vulnerable to any oil-induced slowdown. That thesis was borne out over the past year and the fund CITIZENS EMERGING GROWTH FUND 16 PERFORMANCE (as of 6.30.05)
AVERAGE ANNUAL RETURN 1 5 10 Since Ticker Year Years Years inception --------------------------------------------------------------------------------------------- STANDARD SHARES WAEGX 8.38% -11.01% 10.55% 11.16% INSTITUTIONAL SHARES CEGIX 9.02% -10.47% NA -2.01% ADMINISTRATIVE SHARES CGRDX 8.70% -10.74% NA -7.34%
PERFORMANCE OVER TIME (as of 6.30.05) This chart shows the performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over time for the index shown. (PERFORMANCE OVERTIME) CITIZENS EMERGING GROWTH FUND - STANDARD SHARES PERFORMANCE SINCE INCEPTION 02/08/94
DATE CITIZENS EMERGING GROWTH FUND RUSSELL MID CAP GROWTH RETURN ---- ----------------------------- ----------------------------- 2/8/94 $ 10,000.00 $ 10,000.00 02/28/1994 $ 10,060.00 $ 9,920.00 03/31/1994 $ 9,880.00 $ 9,452.77 04/30/1994 $ 10,010.00 $ 9,430.08 05/31/1994 $ 10,070.00 $ 9,444.23 06/30/1994 $ 9,930.00 $ 9,038.12 07/31/1994 $ 10,140.00 $ 9,288.48 08/31/1994 $ 10,550.00 $ 9,842.07 09/30/1994 $ 10,730.00 $ 9,679.68 10/31/1994 $ 10,910.00 $ 9,847.14 11/30/1994 $ 10,550.00 $ 9,412.88 12/31/1994 $ 10,711.80 $ 9,544.66 01/31/1995 $ 10,711.80 $ 9,659.20 02/28/1995 $ 11,000.50 $ 10,173.07 03/31/1995 $ 11,330.40 $ 10,576.94 04/30/1995 $ 11,381.90 $ 10,665.78 05/31/1995 $ 11,299.40 $ 10,928.16 06/30/1995 $ 12,237.60 $ 11,425.39 07/31/1995 $ 13,248.00 $ 12,144.05 08/31/1995 $ 13,289.20 $ 12,276.42 09/30/1995 $ 13,969.70 $ 12,550.18 10/31/1995 $ 14,196.50 $ 12,232.66 11/30/1995 $ 14,567.60 $ 12,779.46 12/31/1995 $ 15,074.60 $ 12,787.13 01/31/1996 $ 14,969.10 $ 13,013.46 02/26/1996 $ 15,520.00 $ 13,505.37 03/31/1996 $ 15,742.70 $ 13,612.06 04/30/1996 $ 16,938.40 $ 14,269.53 05/31/1996 $ 17,899.60 $ 14,560.63 06/30/1996 $ 17,430.70 $ 14,120.89 07/31/1996 $ 16,750.80 $ 13,025.11 08/30/1996 $ 17,301.80 $ 13,728.47 09/30/1996 $ 18,368.50 $ 14,600.23 10/31/1996 $ 17,524.50 $ 14,429.40 11/30/1996 $ 17,536.20 $ 15,279.30 12/31/1996 $ 17,172.00 $ 15,022.60 01/31/1997 $ 18,031.30 $ 15,686.60 2/28/97 $ 16,877.10 $ 15,341.50 03/31/1997 $ 15,453.50 $ 14,474.70 04/30/1997 $ 15,953.70 $ 14,829.33 05/31/1997 $ 17,415.70 $ 16,158.04 06/30/1997 $ 18,133.90 $ 16,605.62 07/31/1997 $ 20,262.70 $ 18,194.78 08/29/1997 $ 19,839.50 $ 18,016.47 09/30/1997 $ 20,980.90 $ 18,928.10 10/31/1997 $ 19,608.70 $ 17,979.80 11/29/1997 $ 19,467.60 $ 18,168.59 12/31/1997 $ 20,209.00 $ 18,406.60 01/31/1998 $ 20,057.70 $ 18,075.28 02/28/1998 $ 22,133.60 $ 19,774.36 03/31/1998 $ 24,140.80 $ 20,602.90 04/30/1998 $ 23,852.10 $ 20,883.10 05/31/1998 $ 22,669.80 $ 20,024.81 06/30/1998 $ 24,127.00 $ 20,591.51 07/31/1998 $ 23,783.30 $ 19,710.19 08/31/1998 $ 19,191.60 $ 15,947.52 09/30/1998 $ 21,212.50 $ 17,153.15 10/31/1998 $ 23,164.70 $ 18,415.62 11/30/1998 $ 25,061.90 $ 19,658.68 12/31/1998 $ 28,839.60 $ 21,695.32 01/31/1999 $ 29,367.50 $ 22,346.17 02/28/1999 $ 27,044.70 $ 21,253.45 03/31/1999 $ 28,447.50 $ 22,437.26 04/30/1999 $ 29,141.30 $ 23,460.40 05/31/1999 $ 28,975.40 $ 23,157.76 06/30/1999 $ 32,836.80 $ 24,774.18 07/31/1999 $ 33,198.80 $ 23,986.36 08/31/1999 $ 33,636.20 $ 23,736.90 09/30/1999 $ 34,028.30 $ 23,535.14 10/31/1999 $ 38,855.10 $ 25,354.40 11/30/1999 $ 42,309.20 $ 27,981.12 12/31/1999 $ 48,475.20 $ 32,824.65 01/31/2000 $ 46,724.80 $ 32,818.08 02/29/2000 $ 58,566.80 $ 39,716.44 03/31/2000 $ 59,656.30 $ 39,756.16 04/30/2000 $ 59,495.60 $ 35,895.84 05/31/2000 $ 53,547.80 $ 33,279.03 06/30/2000 $ 59,781.40 $ 36,809.94 07/31/2000 $ 56,512.80 $ 34,479.87 08/31/2000 $ 62,103.30 $ 39,679.43 09/30/2000 $ 59,942.10 $ 37,739.11 10/31/2000 $ 57,888.10 $ 35,157.75 11/30/2000 $ 46,885.60 $ 27,517.97 12/31/2000 $ 48,163.60 $ 28,968.17 01/31/2001 $ 46,957.10 $ 30,622.25 02/28/2001 $ 40,853.90 $ 25,324.60 03/31/2001 $ 36,406.50 $ 21,700.65 04/30/2001 $ 39,339.90 $ 25,318.15 05/31/2001 $ 38,464.60 $ 25,199.16 06/30/2001 $ 37,352.80 $ 25,211.75 07/31/2001 $ 35,010.80 $ 23,509.96 08/31/2001 $ 32,881.80 $ 21,805.49 09/30/2001 $ 26,967.80 $ 18,201.04 10/31/2001 $ 28,883.90 $ 20,113.97 11/30/2001 $ 31,651.70 $ 22,280.25 12/31/2001 $ 32,290.40 $ 23,126.90 01/31/2002 $ 32,314.10 $ 22,375.27 02/28/2002 $ 30,658.10 $ 21,106.59 03/31/2002 $ 33,402.20 $ 22,717.03 04/30/2002 $ 31,675.30 $ 21,515.30 05/31/2002 $ 30,539.90 $ 20,874.14 06/30/2002 $ 27,961.40 $ 18,569.64 07/31/2002 $ 25,903.30 $ 16,764.67 08/31/2002 $ 25,170.00 $ 16,705.99 09/30/2002 $ 23,395.80 $ 15,377.86 10/31/2002 $ 24,010.80 $ 16,569.65 11/30/2002 $ 24,980.70 $ 17,867.05 12/31/2002 $ 23,017.30 $ 16,787.88 01/31/2003 $ 22,473.20 $ 16,623.36 02/28/2003 $ 22,567.80 $ 16,478.74 03/31/2003 $ 22,378.60 $ 16,785.24 04/30/2003 $ 23,821.60 $ 17,928.32 05/31/2003 $ 25,501.10 $ 19,653.02 06/30/2003 $ 25,926.90 $ 19,934.06 07/31/2003 $ 26,707.60 $ 20,645.71 08/31/2003 $ 28,671.00 $ 21,783.28 09/30/2003 $ 27,582.90 $ 21,360.69 10/31/2003 $ 29,499.00 $ 23,082.36 11/30/2003 $ 29,972.10 $ 23,700.97 12/31/2003 $ 30,279.60 $ 23,959.31 01/31/2004 $ 30,989.30 $ 24,749.96 02/29/2004 $ 31,107.60 $ 25,165.76 03/31/2004 $ 30,894.70 $ 25,117.95 04/30/2004 $ 29,830.20 $ 24,409.62 05/31/2004 $ 30,516.20 $ 24,985.69 06/30/2004 $ 30,776.40 $ 25,382.96 07/31/2004 $ 28,789.30 $ 23,701.88 08/31/2004 $ 28,363.50 $ 23,409.66 09/30/2004 $ 29,522.70 $ 24,283.74 10/31/2004 $ 30,587.20 $ 25,107.51 11/30/2004 $ 31,746.30 $ 26,404.12 12/31/2004 $ 32,787.20 $ 27,669.13 01/31/2005 $ 31,462.40 $ 26,928.58 02/28/2005 $ 32,645.20 $ 27,610.43 03/31/2005 $ 32,385.00 $ 27,206.93 04/30/2005 $ 30,918.40 $ 26,130.29 05/31/2005 $ 32,976.40 $ 27,626.88 06/30/2005 $ 33,354.90 $ 28,140.68
Data presented reflects past performance of the fund, which is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month end may be obtained online at www.citizensfunds.com. Fee waivers have been instituted in the past to maintain expense limits, without which returns would have been lower. Investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original costs. Performance figures and the growth of a $10,000 hypothetical investment assume reinvestment of dividends and distributions but do not reflect the deduction of taxes you would pay on fund distributions or redemptions of fund shares. -------------------------------------------------------------------------------- got excellent performance from stocks such as Nordstroms, American Eagle, Coach, Starbucks and Whole Foods Markets. Despite a good deal of stock picking success, the fund underperformed the benchmark Russell Midcap Growth Index for the fiscal year. Most of the underperformance occurred in the first half of the fiscal year. One area that hurt performance was the fund's holdings in the for-profit education sector. That sector had been very strong for several years, but a series of allegations of improprieties and government investigations took their toll on the group in the first six months of the fiscal year and the fund suffered from significant declines in stock prices of Apollo Group, Career Education and Corinthian Colleges. None of those positions remain in the fund at this time. CITIZENS EMERGING GROWTH FUND 17 During the second half of the fiscal year, the fund closely matched the return of the benchmark Russell MidCap Growth Index, with the standard shares returning 1.73% compared to the Index return of 1.70%. Ultimately, what matters is not the performance of any individual stock or group, but the performance of the entire portfolio. To that end, we will continue to focus on building a portfolio comprised of what we believe are high quality companies whose stocks are showing good relative performance. OUTLOOK Although there is disagreement about the exact levels of economic and earnings growth over the coming year, there is fairly widespread agreement that growth rates will slow. The combined impact of higher oil prices, Federal Reserve tightening, lower money supply growth and increased foreign competition should keep overall growth rates muted. In that environment, we are redoubling our efforts to find what we believe are companies that can still produce strong organic sales and earnings growth. CITIZENS EMERGING GROWTH FUND 18 CITIZENS SMALL CAP CORE GROWTH FUND PORTFOLIO REVIEW FUND INFORMATION INVESTMENT GOAL Capital appreciation INVESTMENT STRATEGY Invests mainly in stocks of small-capitalization U.S. companies INCEPTION DATE Standard shares: 12.28.99 RISKS Growth risks; small-sized company risks (See pages 8-10 for important fund risk and benchmark disclosure.) WE LOOK FOR PROFITS AND PROVEN GROWTH, NOT LOFTY PROMISES. WE LISTEN TO THE MARKET AND BELIEVE THAT A SUCCESSFUL COMPANY'S WORTH SHOULD BE REFLECTED IN A RISING STOCK PRICE. HOW DID WE DO? For the fiscal year ended June 30, 2005 the fund returned 6.21%, comfortably ahead of the benchmark Russell 2000 Growth Index which returned 4.29%. The outperformance of the fund relative to the benchmark can be attributed to portfolio construction and favorable stock selection. The portfolio construction targets specific portfolio characteristics versus the benchmark Russell 2000 Growth Index. This includes identifying companies with comparable valuation metrics, superior growth and superior profitability. We maintain the desired portfolio characteristics by monitoring key factors such as profitability, earnings surprises and quality. Our monitoring system helps identify individual company circumstances and percentages of the portfolio exposed to specific issues. In addition, our downside sell disciplines include alerts to material adverse events and reduced earnings expectations. We believe these types of investment disciplines and systems help the fund preserve gains while potentially avoiding large losses. While being mindful of the sector weightings of the benchmark, our strategy is to select each stock based on it's own merits, and not focus only on sector or benchmark membership. We look for profits and proven growth, not lofty promises. We listen to the market and believe that a successful company's worth should be reflected in a rising stock price. This strategy was evident in the fund, and contributed to positive performance for the fiscal year. CITIZENS SMALL CAP CORE GROWTH FUND 19 PERFORMANCE (as of 6.30.05)
AVERAGE ANNUAL RETURN 1 3 5 Since Ticker Year Years Years inception --------------------------------------------------------------------------------------------- STANDARD SHARES CSCSX 6.21% 7.84% 0.54% 2.63%
PERFORMANCE OVER TIME (as of 6.30.05) This chart shows the performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over time for the index shown. (PERFORMANCE OVERTIME) CITIZENS SMALL CAP CORE GROWTH FUND PERFORMANCE SINCE INCEPTION 12/28/99
DATE CITIZENS SMALL CAP CORE GROWTH FUND RUSSELL 2000 GROWTH RETURN -------- ----------------------------------- -------------------------- 12/28/99 $ 10,000.00 $ 10,000.00 12/31/1999 $ 10,000.00 $ 10,522.00 01/31/2000 $ 9,710.00 $ 10,424.15 02/29/2000 $ 10,500.00 $ 12,849.84 03/31/2000 $ 10,800.00 $ 11,499.33 04/30/2000 $ 10,440.00 $ 10,337.89 05/31/2000 $ 10,190.00 $ 9,432.29 06/30/2000 $ 11,230.00 $ 10,650.95 07/31/2000 $ 10,770.00 $ 9,738.16 08/31/2000 $ 11,620.00 $ 10,762.61 09/30/2000 $ 10,760.00 $ 10,227.71 10/31/2000 $ 10,480.00 $ 9,397.22 11/30/2000 $ 8,940.00 $ 7,690.69 12/31/2000 $ 9,386.60 $ 8,161.36 01/31/2001 $ 10,278.20 $ 8,821.61 02/28/2001 $ 9,066.00 $ 7,612.17 03/31/2001 $ 8,455.40 $ 6,920.22 04/30/2001 $ 9,086.60 $ 7,767.26 05/31/2001 $ 9,206.80 $ 7,947.46 06/30/2001 $ 9,537.40 $ 8,164.42 07/31/2001 $ 9,226.80 $ 7,468.00 08/31/2001 $ 9,046.50 $ 7,001.99 09/30/2001 $ 8,024.60 $ 5,871.87 10/31/2001 $ 8,635.80 $ 6,436.75 11/30/2001 $ 9,537.40 $ 6,974.22 12/31/2001 $ 10,208.60 $ 7,408.71 01/31/2002 $ 10,298.80 $ 7,144.96 02/28/2002 $ 9,938.10 $ 6,682.68 03/31/2002 $ 10,298.80 $ 7,263.40 04/30/2002 $ 10,238.70 $ 7,106.52 05/31/2002 $ 9,597.50 $ 6,690.78 06/30/2002 $ 9,196.80 $ 6,123.41 07/31/2002 $ 7,944.50 $ 5,182.24 08/31/2002 $ 7,884.40 $ 5,179.65 09/30/2002 $ 7,493.70 $ 4,805.68 10/31/2002 $ 7,734.10 $ 5,048.84 11/30/2002 $ 8,405.30 $ 5,549.18 12/31/2002 $ 7,613.90 $ 5,166.29 01/31/2003 $ 7,383.50 $ 5,025.77 02/28/2003 $ 7,343.40 $ 4,891.58 03/31/2003 $ 7,383.50 $ 4,965.44 04/30/2003 $ 7,884.40 $ 5,435.17 05/31/2003 $ 8,525.60 $ 6,047.72 06/30/2003 $ 8,685.80 $ 6,164.44 07/31/2003 $ 9,246.90 $ 6,630.47 08/31/2003 $ 9,978.20 $ 6,986.53 09/30/2003 $ 9,347.00 $ 6,809.77 10/31/2003 $ 10,358.90 $ 7,398.13 11/30/2003 $ 10,539.20 $ 7,639.31 12/31/2003 $ 10,599.30 $ 7,673.69 01/31/2004 $ 11,270.60 $ 8,076.56 02/29/2004 $ 11,230.50 $ 8,064.44 03/31/2004 $ 11,140.30 $ 8,102.34 04/30/2004 $ 10,409.00 $ 7,695.61 05/31/2004 $ 10,549.20 $ 7,848.75 06/30/2004 $ 10,859.80 $ 8,110.11 07/31/2004 $ 9,858.00 $ 7,382.13 08/31/2004 $ 9,687.70 $ 7,223.22 09/30/2004 $ 10,248.70 $ 7,622.62 10/31/2004 $ 10,519.20 $ 7,807.85 11/30/2004 $ 11,020.10 $ 8,467.79 12/31/2004 $ 11,313.60 $ 8,772.14 01/31/2005 $ 11,082.90 $ 8,376.97 02/28/2005 $ 11,303.10 $ 8,491.95 03/31/2005 $ 11,061.90 $ 8,173.41 04/30/2005 $ 10,621.60 $ 7,653.24 05/31/2005 $ 11,376.50 $ 8,192.82 06/30/2005 $ 11,533.80 $ 8,457.70
Data presented reflects past performance of the fund, which is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month end may be obtained online at www.citizensfunds.com. Fee waivers have been instituted in the past to maintain expense limits, without which returns would have been lower. Investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original costs. Performance figures and the growth of a $10,000 hypothetical investment assume reinvestment of dividends and distributions but do not reflect the deduction of taxes you would pay on fund distributions or redemptions of fund shares. -------------------------------------------------------------------------------- For the period, holdings within the consumer discretionary and industrial sectors of the fund contributed positively to performance, outpacing the same sectors in the benchmark for the same period. While the performance of the holdings within the information technology sector finished toward the bottom relative to all of the other fund sectors, the largest contributor to positive performance for the fund during the period was in the information technology sector -- Quality Systems. Quality Systems is a good example of our stock selection criteria at work. Quality Systems develops and markets proprietary healthcare information systems that automate medical and dental group practices, and is a leader in its field. We believe Quality Systems is a high quality company with sustainable competitive advantages and a proven consistent growth pattern. In our view, the value of the company was continually reflected in the rising stock price. Quality CITIZENS SMALL CAP CORE GROWTH FUND 20 Systems stock price appreciated significantly by the end of the fiscal year, having a positive impact on fund performance. The worst performer in the fund for the one year period was a healthcare stock, Able Laboratories. This generic drug maker ran into unforeseen difficulties with the FDA, and the stock price fell. We exited the position shortly after the news of the difficulties broke, but not before experiencing a loss for the fund. OUTLOOK In the coming year, we will continue to seek returns from small cap stocks in attractive niche markets with the potential for above average growth. Our investment disciplines, which we believe lead us to solid companies with profitability potential, in our view, should also help us identify those successful companies that will contribute positively to the fund. CITIZENS SMALL CAP CORE GROWTH FUND 21 CITIZENS VALUE FUND PORTFOLIO REVIEW FUND INFORMATION INVESTMENT GOAL Long-term capital appreciation INVESTMENT STRATEGY Invests mainly in stocks and other equities of U.S. large-capitalization companies INCEPTION DATE Standard shares 6.13.96 RISK Value risks (See pages 8-10 for important fund risk and benchmark disclosure.) OUR OUTLOOK IS POSITIVE. WE FEEL THAT THE STOCK MARKET IS REASONABLY VALUED AND THAT INFLATIONARY FORCES ARE UNDER CONTROL. HOW DID WE DO? Citizens Value Fund had a strong year delivering 10.37% in total return for the fiscal year ended June 30, 2005. This handily beat the benchmark S&P 500 Index's return of 6.32% for the same period. The two sectors contributing most positively to fund performance were the energy and financial sectors. The fund also benefited from our stock selection in the healthcare sector during the period, including strong gains in our holdings of WellPoint and UnitedHealth Group. Our ownership of each stock represents a good illustration of the Citizens Value Fund strategy at work. We came to own WellPoint through its merger with our portfolio holding Anthem. We liked Anthem because we believed it was a high quality HMO with excellent geographic diversity and it was selling at a nice discount to industry peers. In our view, it was just the type of quality value stock we like to find and hold, potentially, for a long time. Investors began warming up to the stock shortly after Anthem merged with WellPoint last year and it appeared that together the two companies would be much stronger than they were alone. We continue to hold WellPoint as we think it still represents a good value and the benefits of the merger have only begun to be realized. CITIZENS VALUE FUND 22 PERFORMANCE (as of 6.30.05)
AVERAGE ANNUAL RETURN 1 3 5 Since Ticker Year Years Years inception --------------------------------------------------------------------------------------------- STANDARD SHARES MYPVX 10.37% 9.90% 0.67% 7.88%
PERFORMANCE OVER TIME (as of 6.30.05) This chart shows the performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over time for the index shown. (PERFORMANCE OVERTIME) CITIZENS VALUE FUND PERFORMANCE SINCE INCEPTION 06/13/96
DATE CITIZENS VALUE FUND S&P 500 RETURN ---- ------------------- -------------- 6/13/96 $ 10,000.00 $ 10,000.00 6/30/1996 $ 9,740.00 $ 10,038.00 7/31/1996 $ 9,220.00 $ 9,594.32 8/30/1996 $ 9,500.00 $ 9,796.76 9/30/1996 $ 9,910.00 $ 10,348.32 10/31/1996 $ 9,890.00 $ 10,633.93 11/30/1996 $ 10,880.00 $ 11,437.86 12/31/1996 $ 10,810.00 $ 11,211.39 1/31/1997 $ 11,330.00 $ 11,912.10 2/28/97 $ 11,660.00 $ 12,005.01 3/31/1997 $ 11,240.00 $ 11,511.61 4/30/1997 $ 11,380.00 $ 12,198.85 5/31/1997 $ 12,230.00 $ 12,941.76 6/30/1997 $ 12,350.00 $ 13,521.55 7/31/1997 $ 13,470.00 $ 14,597.87 8/29/1997 $ 13,210.00 $ 13,780.39 09/30/97 $ 13,580.00 $ 14,535.55 10/31/1997 $ 12,830.00 $ 14,050.06 11/29/1997 $ 12,900.00 $ 14,700.58 12/31/1997 $ 13,165.70 $ 14,953.43 1/31/1998 $ 13,472.40 $ 15,119.42 2/28/1998 $ 14,358.50 $ 16,209.52 3/31/1998 $ 14,778.80 $ 17,039.45 4/30/1998 $ 15,074.10 $ 17,211.55 5/31/1998 $ 14,744.70 $ 16,915.51 6/30/1998 $ 14,506.10 $ 17,602.28 7/31/1998 $ 14,063.10 $ 17,415.70 8/31/1998 $ 11,564.00 $ 14,897.39 9/30/1998 $ 12,302.40 $ 15,852.31 10/31/1998 $ 13,449.70 $ 17,141.10 11/30/1998 $ 14,562.90 $ 18,179.85 12/31/1998 $ 14,957.00 $ 19,227.01 1/31/1999 $ 14,714.40 $ 20,030.70 2/28/1999 $ 14,083.60 $ 19,407.75 3/31/1999 $ 14,944.90 $ 20,184.06 4/30/1999 $ 16,509.70 $ 20,965.18 5/31/1999 $ 17,019.20 $ 20,470.40 6/30/1999 $ 17,892.60 $ 21,606.51 7/31/1999 $ 17,819.80 $ 20,932.39 8/31/1999 $ 17,237.50 $ 20,829.82 9/30/1999 $ 16,606.80 $ 20,259.08 10/31/1999 $ 16,897.90 $ 21,541.48 11/30/1999 $ 18,648.20 $ 21,978.77 12/31/1999 $ 19,195.50 $ 23,273.32 1/31/2000 $ 18,728.30 $ 22,105.00 2/29/2000 $ 18,020.80 $ 21,687.22 3/31/2000 $ 19,422.50 $ 23,808.23 4/30/2000 $ 18,808.40 $ 23,091.60 5/31/2000 $ 19,462.50 $ 22,618.22 6/30/2000 $ 19,208.90 $ 23,176.89 7/31/2000 $ 18,875.20 $ 22,815.33 8/31/2000 $ 20,784.00 $ 24,232.16 9/30/2000 $ 19,929.70 $ 22,952.71 10/31/2000 $ 20,036.50 $ 22,856.31 11/30/2000 $ 18,515.40 $ 21,055.23 12/31/2000 $ 19,160.70 $ 21,158.40 1/31/2001 $ 22,617.90 $ 21,909.52 2/28/2001 $ 20,820.20 $ 19,911.37 3/31/2001 $ 20,174.80 $ 18,648.99 4/30/2001 $ 22,341.40 $ 20,098.02 5/31/2001 $ 23,493.80 $ 20,232.68 6/30/2001 $ 23,324.70 $ 19,741.02 7/31/2001 $ 22,848.40 $ 19,547.56 8/31/2001 $ 21,404.10 $ 18,323.88 9/30/2001 $ 19,283.60 $ 16,843.31 10/31/2001 $ 19,529.50 $ 17,165.02 11/30/2001 $ 21,818.90 $ 18,481.58 12/31/2001 $ 21,730.10 $ 18,644.22 1/31/2002 $ 20,771.20 $ 18,372.01 2/28/2002 $ 18,887.60 $ 18,017.43 3/31/2002 $ 19,949.30 $ 18,694.89 4/30/2002 $ 17,997.10 $ 17,561.98 5/31/2002 $ 17,483.40 $ 17,432.02 6/30/2002 $ 14,966.20 $ 16,190.86 7/31/2002 $ 13,082.60 $ 14,929.59 8/31/2002 $ 13,271.00 $ 15,028.12 9/30/2002 $ 11,336.00 $ 13,394.57 10/31/2002 $ 12,860.00 $ 14,573.29 11/30/2002 $ 14,178.50 $ 15,431.66 12/31/2002 $ 12,928.50 $ 14,525.82 1/31/2003 $ 12,740.10 $ 14,145.24 2/28/2003 $ 12,397.60 $ 13,933.06 3/31/2003 $ 12,500.40 $ 14,068.21 4/30/2003 $ 13,527.80 $ 15,227.43 5/31/2003 $ 14,743.60 $ 16,029.92 6/30/2003 $ 14,795.00 $ 16,235.10 7/31/2003 $ 15,120.30 $ 16,520.84 8/31/2003 $ 15,599.80 $ 16,843.00 9/30/2003 $ 15,308.70 $ 16,664.46 10/31/2003 $ 16,319.00 $ 17,607.67 11/30/2003 $ 16,610.10 $ 17,762.62 12/31/2003 $ 17,260.80 $ 18,693.38 1/31/2004 $ 17,500.50 $ 19,037.34 2/29/2004 $ 17,825.90 $ 19,301.96 3/31/2004 $ 17,791.70 $ 19,010.50 4/30/2004 $ 17,363.60 $ 18,712.03 5/31/2004 $ 17,603.30 $ 18,968.39 6/30/2004 $ 17,997.10 $ 19,336.37 7/31/2004 $ 17,209.40 $ 18,696.34 8/31/2004 $ 17,089.60 $ 18,771.69 9/30/2004 $ 17,603.30 $ 18,974.98 10/31/2004 $ 17,808.80 $ 19,264.92 11/30/2004 $ 18,647.80 $ 20,044.38 12/31/2004 $ 19,230.10 $ 20,726.49 1/31/2005 $ 18,767.70 $ 20,221.28 2/28/2005 $ 19,521.20 $ 20,646.74 3/31/2005 $ 19,264.30 $ 20,281.08 4/30/2005 $ 18,716.30 $ 19,895.74 5/31/2005 $ 19,555.40 $ 20,528.83 6/30/2005 $ 19,863.60 $ 20,557.98
Data presented reflects past performance of the fund, which is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month end may be obtained online at www.citizensfunds.com. Fee waivers have been instituted in the past to maintain expense limits, without which returns would have been lower. Investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original costs. Performance figures and the growth of a $10,000 hypothetical investment assume reinvestment of dividends and distributions but do not reflect the deduction of taxes you would pay on fund distributions or redemptions of fund shares. For the periods prior to September 24, 2001, performance includes that of the fund's predecessor, the Meyers Pride Value Fund. -------------------------------------------------------------------------------- The fund's strategy of seeking financially strong companies whose shares are selling at a discount to their industry peers was well rewarded. In addition, positive performance can be attributed to our strategy of seeking out "special situations," opportunity where we believe the market over-reacted to news or a specific event. Our gain from UnitedHealth Group (UNH) was the result of an opportunistic buy and it is the type of "special situation" we look for to add return to the portfolio. UNH is considered the true gold standard among HMOs and it typically trades at a premium so usually we would never consider it for the Citizens Value Fund. However, in the fall when Eliot Spitzer began investigating certain companies within the insurance industry, other insurance related companies were sold off in a Wall Street mini panic. We knew the UnitedHealth Group story very well as it was a core holding in CITIZENS VALUE FUND 23 the Citizens Core Growth Fund. At the temporarily beaten down price, it was attractive for the Citizens Value Fund strategy and we established a position. Over the next few months the stock price increased 20% and we sold it. One of our current "special situations" holdings is Harley Davidson. The famous motorcycle manufacturer's shares sold off sharply when the company announced a reduction in production at the end of its model year and we established a position. So far, Harley's stock has risen slightly more than a dollar a share from where we bought it and we will continue to monitor the stock price and the company's progress carefully. Our holdings within the energy sector have also been significant positive contributors for the Citizens Value Fund during the fiscal year. In 2003, we did a considerable amount of environmental research in the energy sectors in order to find the companies with the best environmental records, and started building our stock positions in these companies at that time. We believed that we were entering a new time when energy investing could be very profitable and we wanted to find companies that would allow us to participate. This work continued to pay off in the fiscal year as the stock price of companies such as ConocoPhillips, Valero and Apache generated double-digit price appreciation during the period. At fiscal year end, we continue to be overweight in energy versus the benchmark. We started to see some benefit from our communications equipment holdings during the last quarter of the fiscal year, but it is still a mixed area for the fund. We believe that wireless technologies are in the early stages of a long period of expansion and we have sought to participate through our holdings in the handset and infrastructure companies such as Motorola and Lucent. The Motorola story is beginning to get some traction among investors. We still hold Lucent at a loss. In fact, Lucent was our top detractor from performance during the year. We erred in buying Lucent stock at too high a price in the second quarter of the fiscal year. In the third quarter of the fiscal year, during a market sell off, the shares of Lucent were pummeled and although the stock rose sharply in the last quarter of the period, they have yet to fully recover to the price we paid. We continue to hold Lucent and will be monitoring the stock price and the company's progress carefully. OUTLOOK Our outlook is positive. We feel that the stock market is reasonably valued and that inflationary forces are under control. Although energy prices remain high and are certainly holding down global growth, we believe our positioning in companies that we view as high quality and reasonably valued, as well as opportunistic purchases of special situations can continue to make progress in the coming year. CITIZENS VALUE FUND 24 CITIZENS GLOBAL EQUITY FUND PORTFOLIO REVIEW FUND INFORMATION INVESTMENT GOAL Capital appreciation INVESTMENT STRATEGY Invests in promising companies throughout the world INCEPTION DATE Standard shares: 2.08.94 Institutional shares: 11.01.99 Administrative shares: 2.04.00 RISKS Growth and foreign investing (See pages 8-10 for important fund risk and benchmark disclosures). THE MANAGEMENT TEAM BELIEVES THAT THE CORRECTION THAT WE HAVE SEEN IN THE EURO SHOULD SUPPORT FURTHER GROWTH ABROAD AND THAT IT APPEARS LIKELY THAT THE UK WILL CUT RATES. HOW DID WE DO? On August 27, 2005, McLean Budden Limited assumed management of the fund as the new subadviser. At that time the fund had underperformed the benchmark for approximately the first two months of the fiscal year. Although the underperformance during this period detracted from overall fund performance for the fiscal year, the underperformance for the following ten months contributed to the fund lagging the benchmark for the full fiscal year period. The fund's standard shares returned 4.48% for the fiscal year ended June 30, 2005, lagging the 10.05% return of the benchmark MSCI World Index for the same period. Global financial markets performed well during the fiscal year. Throughout the entire period, the utility and energy sectors of the benchmark were the standout positive sectors. This was mostly due to high-energy prices and falling bond yields. Sector selection and weighting relative to the benchmark accounted for most of the shortfall of fund performance. Stocks in the information technology sector of the fund were the weakest performers. Fund performance also suffered from the absence of utility stocks as utility companies benefited from renewed consolidation fervor in the U.S. CITIZENS GLOBAL EQUITY FUND 25 PERFORMANCE (as of 6.30.05)
AVERAGE ANNUAL RETURN 1 5 10 Since Ticker Year Years Years inception -------------------------------------------------------------------------------------------- STANDARD SHARES WAGEX 4.48% -10.50% 6.03% 5.96% INSTITUTIONAL SHARES CGEIX 5.20% -9.96% NA -4.20% ADMINISTRATIVE SHARES CEADX 4.88% -10.24% NA -11.30%
PERFORMANCE OVER TIME (as of 6.30.05) This chart shows the performance since inception of a $10,000 hypothetical investment in the fund's standard shares, compared with the performance over time for the index shown. (PERFORMANCE OVERTIME) CITIZENS GLOBAL EQUITY FUND - STANDARD SHARES PERFORMANCE SINCE INCEPTION 02/08/94
DATE CITIZENS GLOBAL EQUITY FUND MSCI WORLD INDEX RETURN ---- --------------------------- ----------------------- 2/8/94 $ 10,000.00 $ 10,000.00 2/28/1994 $ 10,000.00 $ 10,089.00 3/31/1994 $ 10,000.00 $ 9,652.15 4/30/1994 $ 10,000.00 $ 9,948.47 5/31/1994 $ 9,880.00 $ 9,971.35 6/30/1994 $ 9,800.00 $ 9,941.43 7/31/1994 $ 9,990.00 $ 10,128.33 8/31/1994 $ 10,070.00 $ 10,431.17 9/30/1994 $ 10,000.00 $ 10,154.74 10/31/1994 $ 10,170.00 $ 10,441.11 11/30/1994 $ 9,680.00 $ 9,985.88 12/31/1994 $ 9,731.40 $ 10,079.74 1/31/1995 $ 9,399.30 $ 9,925.52 2/28/1995 $ 9,640.80 $ 10,067.46 3/31/1995 $ 9,872.30 $ 10,550.70 4/30/1995 $ 10,154.10 $ 10,915.75 5/31/1995 $ 10,617.00 $ 11,006.35 6/30/1995 $ 10,757.90 $ 11,000.85 7/31/1995 $ 11,180.50 $ 11,548.69 8/31/1995 $ 10,778.00 $ 11,288.84 9/30/1995 $ 11,090.00 $ 11,615.09 10/31/1995 $ 10,939.00 $ 11,429.25 11/30/1995 $ 10,918.90 $ 11,823.56 12/31/1995 $ 11,068.60 $ 12,166.44 1/31/1996 $ 11,435.20 $ 12,384.22 2/26/1996 $ 11,384.30 $ 12,457.29 3/31/1996 $ 11,465.80 $ 12,661.59 4/30/1996 $ 11,964.70 $ 12,956.60 5/31/1996 $ 11,964.70 $ 12,965.67 6/30/1996 $ 12,107.30 $ 13,029.21 7/31/1996 $ 11,730.50 $ 12,566.67 8/30/1996 $ 11,924.00 $ 12,708.67 9/30/1996 $ 12,280.40 $ 13,203.04 10/31/1996 $ 12,249.80 $ 13,292.82 11/30/1996 $ 12,677.50 $ 14,034.56 12/31/1996 $ 12,524.80 $ 13,807.20 1/31/1997 $ 13,003.40 $ 13,971.51 2/28/97 $ 13,003.40 $ 14,129.38 3/31/1997 $ 12,881.20 $ 13,846.80 4/30/1997 $ 13,217.20 $ 14,296.82 5/31/1997 $ 14,164.20 $ 15,176.07 6/30/1997 $ 14,734.40 $ 15,930.32 7/31/1997 $ 15,569.40 $ 16,661.52 8/29/1997 $ 14,561.30 $ 15,543.53 09/30/97 $ 15,498.10 $ 16,385.99 10/31/1997 $ 14,428.90 $ 15,520.81 11/29/1997 $ 14,663.10 $ 15,792.43 12/31/1997 $ 15,018.30 $ 15,981.94 1/31/1998 $ 15,346.40 $ 16,424.64 2/28/1998 $ 16,436.60 $ 17,533.30 3/31/1998 $ 16,955.20 $ 18,271.45 4/30/1998 $ 17,293.80 $ 18,446.86 5/31/1998 $ 17,209.20 $ 18,212.58 6/30/1998 $ 17,939.40 $ 18,642.40 7/31/1998 $ 19,273.00 $ 18,608.84 8/31/1998 $ 16,394.20 $ 16,124.56 9/30/1998 $ 16,087.30 $ 16,406.74 10/31/1998 $ 17,071.60 $ 17,886.63 11/30/1998 $ 18,140.50 $ 18,947.31 12/31/1998 $ 19,862.50 $ 19,870.04 1/31/1999 $ 21,121.60 $ 20,303.21 2/28/1999 $ 20,611.40 $ 19,761.11 3/31/1999 $ 21,360.30 $ 20,581.20 4/30/1999 $ 21,316.90 $ 21,390.04 5/31/1999 $ 20,340.10 $ 20,605.03 6/30/1999 $ 21,946.50 $ 21,563.16 7/31/1999 $ 22,445.70 $ 21,496.31 8/31/1999 $ 22,934.20 $ 21,455.47 9/30/1999 $ 23,672.20 $ 21,245.21 10/31/1999 $ 25,430.50 $ 22,345.71 11/30/1999 $ 29,240.20 $ 22,971.39 12/31/1999 $ 34,578.50 $ 24,827.48 1/31/2000 $ 34,129.90 $ 23,402.38 2/29/2000 $ 40,208.90 $ 23,463.23 3/31/2000 $ 38,706.00 $ 25,082.19 4/30/2000 $ 35,195.40 $ 24,018.70 5/31/2000 $ 32,380.20 $ 23,408.63 6/30/2000 $ 33,647.60 $ 24,192.82 7/31/2000 $ 33,367.20 $ 23,508.16 8/31/2000 $ 35,049.60 $ 24,269.83 9/30/2000 $ 32,447.50 $ 22,976.24 10/31/2000 $ 30,910.90 $ 22,587.95 11/30/2000 $ 27,692.00 $ 21,214.60 12/31/2000 $ 27,881.40 $ 21,554.03 1/31/2001 $ 28,247.00 $ 21,970.02 2/28/2001 $ 24,432.80 $ 20,111.36 3/31/2001 $ 22,044.30 $ 18,786.02 4/30/2001 $ 23,835.70 $ 20,170.55 5/31/2001 $ 23,311.70 $ 19,908.33 6/30/2001 $ 22,312.40 $ 19,281.22 7/31/2001 $ 21,276.60 $ 19,022.85 8/31/2001 $ 20,167.70 $ 18,107.85 9/30/2001 $ 18,193.60 $ 16,510.74 10/31/2001 $ 18,522.60 $ 16,826.10 11/30/2001 $ 19,558.40 $ 17,818.84 12/31/2001 $ 19,789.90 $ 17,929.31 1/31/2002 $ 18,961.30 $ 17,384.26 2/28/2002 $ 18,522.60 $ 17,231.28 3/31/2002 $ 19,302.50 $ 17,989.46 4/30/2002 $ 18,632.30 $ 17,377.82 5/31/2002 $ 18,510.40 $ 17,407.36 6/30/2002 $ 17,328.40 $ 16,348.99 7/31/2002 $ 15,902.60 $ 14,969.14 8/31/2002 $ 15,878.30 $ 14,994.58 9/30/2002 $ 14,306.30 $ 13,343.68 10/31/2002 $ 15,756.40 $ 14,327.11 11/30/2002 $ 16,426.60 $ 15,097.91 12/31/2002 $ 15,549.20 $ 14,364.15 1/31/2003 $ 14,903.40 $ 13,926.04 2/28/2003 $ 14,745.00 $ 13,682.34 3/31/2003 $ 14,416.00 $ 13,637.18 4/30/2003 $ 15,537.10 $ 14,845.44 5/31/2003 $ 16,268.20 $ 15,690.15 6/30/2003 $ 16,317.00 $ 15,960.02 7/31/2003 $ 16,658.20 $ 16,282.41 8/31/2003 $ 17,011.60 $ 16,632.48 9/30/2003 $ 16,706.90 $ 16,732.27 10/31/2003 $ 17,511.20 $ 17,722.83 11/30/2003 $ 17,986.40 $ 17,990.44 12/31/2003 $ 18,900.40 $ 19,118.44 1/31/2004 $ 19,119.70 $ 19,424.34 2/29/2004 $ 19,205.00 $ 19,748.72 3/31/2004 $ 18,729.80 $ 19,618.38 4/30/2004 $ 18,218.00 $ 19,347.65 5/31/2004 $ 18,315.40 $ 19,390.21 6/30/2004 $ 18,498.20 $ 19,787.71 7/31/2004 $ 17,706.20 $ 19,141.64 8/31/2004 $ 17,462.40 $ 19,225.78 9/30/2004 $ 17,657.40 $ 19,589.48 10/31/2004 $ 18,096.10 $ 20,068.84 11/30/2004 $ 18,876.00 $ 21,123.08 12/31/2004 $ 19,546.20 $ 21,929.42 1/31/2005 $ 19,034.40 $ 21,435.69 2/28/2005 $ 19,716.80 $ 22,114.73 3/31/2005 $ 19,375.60 $ 21,685.45 4/30/2005 $ 18,936.90 $ 21,212.94 5/31/2005 $ 19,217.20 $ 21,589.84 6/30/2005 $ 19,326.90 $ 21,776.65
Data presented reflects past performance of the fund, which is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month end may be obtained online at www.citizensfunds.com. Fee waivers have been instituted in the past to maintain expense limits, without which returns would have been lower. Investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original costs. Performance figures and the growth of a $10,000 hypothetical investment assume reinvestment of dividends and distributions but do not reflect the deduction of taxes you would pay on fund distributions or redemptions of fund shares. -------------------------------------------------------------------------------- The fund derived sizeable gains from stocks in the energy sector during the period. The fund's weighting and stock selection in Valero Energy, whose complex refinery system benefited from widening spreads between light and heavy oil, provided double digit stock price appreciation for the period. Bellwether Apache and integrated natural gas producer BG Group also contributed to positive performance of the fund for the fiscal year. Other strong stock selections included NCR and Deutsche Boerse, whose share prices increased significantly during the period. CITIZENS GLOBAL EQUITY FUND 26 The selection of healthcare stocks did not fare as well. Boston Scientific, whose stock price declined during the period in which the fund held it, continued its effort to win back investor confidence in the wake of last year's stent recall. The stock price for Pfizer also declined, but the stock price is up from its low of the period, perhaps indicating a shift in sentiment toward high quality, high yielding and inexpensive large cap pharmaceutical companies. The fund's holding of Caremark has been a bright spot in healthcare, but its positive return to the portfolio was not sufficient enough to offset the negative returns of the other stocks in the group. The fund purchased Avery Dennison shares during the second quarter of the fiscal year, and the price of the stock subsequently declined for the period. In April, the company updated its earnings guidance and reduced its growth expectations in light of a slower demand environment and foreshadowed higher costs. The portfolio managers believe that growth in 2006 will be healthy, albeit tempered from previous expectations and that management's initiatives will lead to share price recovery for this firm. The fund will continue to emphasize healthcare stocks relative to the benchmark, and the portfolio management team believes the market is still underestimating the earnings power inherent in the product pipelines of companies such as Roche and GlaxoSmithKline. The fund's holdings in Estee Lauder suffered after it reported in-line sales but higher than expected operating expenses for their first quarter. This led to a reduction in earnings estimates and a subsequent decline in the price of the stock. The portfolio management team believes the sell off was overdone and used the opportunity to increase the holdings. OUTLOOK The portfolio management team believes global equity market returns for the coming year will be somewhat muted as the headwinds of interest rate increases, increasing oil prices, and slower earnings growth keep the upside returns constrained. Portfolio management believes the Federal Reserve rate hikes are in late stages and the risk for the next 12 months is a Federal Reserve overshoot in rate hikes. The management team believes the correction we have seen in the Euro should support further growth abroad and it appears likely the UK will cut rates. The forecast is for single digit earnings growth in the next 12 months as global growth moderates. In light of this outlook, the portfolio is conservatively positioned, emphasizing, what portfolio management believes are high quality global franchises. CITIZENS GLOBAL EQUITY FUND 27 CITIZENS BALANCED FUND PORTFOLIO REVIEW FUND INFORMATION INVESTMENT GOAL Current income and capital appreciation INVESTMENT STRATEGY Invests in a blend of stocks, bonds and money market securities INCEPTION DATE Standard shares 12.20.02 RISKS Growth and fixed income investing; high-yield security risks (See pages 8-10 for important fund risk and benchmark disclosures.) OUR APPROACH WILL BE TO REMAIN ALERT FOR ANY ATTRACTIVE NICHE OPPORTUNITIES. HOW DID WE DO? The Balanced Fund returned 7.76% for the fiscal year ended June 30, 2005. This was ahead of the benchmark blended index (60% S&P 500 Index and 40% Lehman Brothers U.S. Aggregate Index), which returned 6.62% for the same period. We maintained a modestly aggressive asset allocation average of approximately 64% equities, 26% bonds and 10% cash equivalents during the fiscal year. The outperformance of the fund can partly be attributed to asset allocation. The fund's asset allocation strategy was built on the belief throughout the period, that stocks were modestly attractive in a growing, yet slowing, economy, and bonds could fall victim to a Federal Reserve intent on raising interest rates. Our first belief was on the mark, as demonstrated by the return of 6.32% for the S&P 500 Index. The second belief was not as accurate. We anticipated the increases in the federal funds rate, but we did not anticipate the moderate decline in long term rates. The energy and utility sectors were strong performers for the fund, with each sector returning approximately 50% for the fiscal year. While neither sector is a traditional growth venue, the potential supply/demand imbalances that developed as the year progressed appeared to offer sustainable earnings growth for a more extended period than in the past. Our best performing stock for the year was Valero Energy, a refiner and retailer of petroleum products, whose stock price CITIZENS BALANCED FUND 28 PERFORMANCE (as of 6.30.05)
AVERAGE ANNUAL RETURN 1 Since Ticker Year inception --------------------------------------------------------------------------------------------- STANDARD SHARES CFBLX 7.76% 9.51%
PERFORMANCE OVER TIME (as of 6.30.05) This chart shows the performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over time for the index shown. (PERFORMANCE OVERTIME) CITIZENS BALANCED FUND PERFORMANCE SINCE INCEPTION 12/20/02
DATE CITIZENS BALANCED FUND BLENDED INDEX RETURN ---- ---------------------- -------------------- 12/20/02 $ 10,000.00 $ 10,000.00 12/31/2002 $ 9,960.00 $ 9,921.00 1/31/2003 $ 9,720.00 $ 9,768.22 2/28/2003 $ 9,700.00 $ 9,734.03 3/31/2003 $ 9,735.30 $ 9,787.56 4/30/2003 $ 10,095.50 $ 10,303.37 5/31/2003 $ 10,465.70 $ 10,706.23 6/30/2003 $ 10,487.30 $ 10,780.10 7/31/2003 $ 10,617.50 $ 10,748.84 8/31/2003 $ 10,807.90 $ 10,903.63 9/30/2003 $ 10,767.30 $ 10,949.42 10/31/2003 $ 11,198.40 $ 11,280.09 11/30/2003 $ 11,368.80 $ 11,350.03 12/31/2003 $ 11,592.30 $ 11,752.96 1/31/2004 $ 11,684.50 $ 11,919.85 2/29/2004 $ 11,766.50 $ 12,071.23 3/31/2004 $ 11,706.10 $ 11,997.60 4/30/2004 $ 11,500.90 $ 11,760.04 5/31/2004 $ 11,624.00 $ 11,837.66 6/30/2004 $ 11,672.90 $ 12,002.20 7/31/2004 $ 11,323.30 $ 11,811.43 8/31/2004 $ 11,302.70 $ 11,930.12 9/30/2004 $ 11,578.70 $ 12,020.58 10/31/2004 $ 11,743.60 $ 12,171.10 11/30/2004 $ 12,073.60 $ 12,427.74 12/31/2004 $ 12,287.40 $ 12,727.24 1/31/2005 $ 12,139.70 $ 12,573.04 2/28/2005 $ 12,308.50 $ 12,702.10 3/31/2005 $ 12,221.70 $ 12,541.01 4/30/2005 $ 12,031.40 $ 12,465.93 5/31/2005 $ 12,412.00 $ 12,757.88 6/30/2005 $ 12,578.40 $ 12,796.58
Data presented reflects past performance of the fund, which is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month end may be obtained online 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. Investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original costs. Performance figures and the growth of a $10,000 hypothetical investment assume reinvestment of dividends and distributions but do not reflect the deduction of taxes you would pay on fund distributions or redemptions of fund shares. -------------------------------------------------------------------------------- more than doubled during the period we held it. In the utility sector, our holding in Questar, a natural gas producer and utility, did well, with its stock price moving up more than 50% during the period. Stocks within the financial sector also did well. Legg Mason, a financial company, had strong growth and contributed positively to fund performance during the period. Many widely respected icons of the American business scene faced very visible industry and regulatory concerns that were played out in the public eye, resulting in declining stock prices for these companies. Cisco was hit hard, and was the worst performing stock for the fund during the period. Other stock holdings that hurt fund performance included American International Group, 3M and Pfizer. We sold out of these positions before the end of the fiscal year. CITIZENS BALANCED FUND 29 Positive contribution to fund performance from the fixed income allocation came from companies that were upgraded during the fiscal year because of their improving credit metrics including Nextel Communications, Corning and Chesapeake Energy. OUTLOOK We believe that the economy remains healthy, but may slow as the Federal Reserve continues to raise rates and energy costs take their toll. At present, the Federal Funds futures market is pricing in an increase in the federal funds rate to 4.00% by year-end. We believe this is a reasonable expectation with the current economic outlook. We expect positive growth in the economy, but at a decreasing rate. Our approach will be to remain alert for any attractive niche opportunities. CITIZENS BALANCED FUND 30 CITIZENS INCOME FUND PORTFOLIO REVIEW FUND INFORMATION INVESTMENT GOAL Current income and monthly dividend payment INVESTMENT STRATEGY Invests mainly in bonds and mortgage-backed securities INCEPTION DATE Standard shares 6.10.92 RISKS Fixed-income investing; high-yield security risks (See pages 8-10 for important fund risk and benchmark disclosures.) WE BELIEVE THAT CORPORATE BONDS SHOULD CONTINUE TO DO WELL IN THE SHORT TERM. . . HOW DID WE DO? The fund returned 5.34% for the fiscal year ended June 30, 2005 versus the benchmark Lehman Brothers U.S. Aggregate Index which returned 6.80%. Most of the underperformance can be attributed to an underweight in treasury securities compared to the benchmark during the third quarter of the fiscal year. The underweight position detracted from performance as concerns in the corporate market produced an unanticipated flight to quality. The fund's performance was helped by companies that we held during the period that were upgraded because of their improving credit metrics, including Nextel Communications, Corning, Chesapeake Energy and Xerox. As a result of the Federal Reserve raising the federal funds rate consistently since the beginning of the fiscal year, the Treasury market yield curve flattened. Typically, the yield curve flattens when short term rates rise more than longer term rates. Although the markets anticipated the federal funds rate increases, the dramatic decline in long term rates was unexpected. The intermediate to longer term maturities posted very strong returns during the fiscal year period and the fund's underweighting in these securities relative to the index dampened our performance. CITIZENS INCOME FUND 31 PERFORMANCE (as of 6.30.05)
AVERAGE ANNUAL RETURN 1 3 5 10 Since Ticker Year Years Years Years inception -------------------------------------------------------------------------------------------- STANDARD SHARES WAIMX 5.34% 5.22% 4.49% 5.18% 5.57%
PERFORMANCE OVER TIME (as of 6.30.05) This chart shows the performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over time for the index shown. (PERFORMANCE OVERTIME) CITIZENS INCOME FUND PERFORMANCE SINCE INCEPTION 06/10/92
DATE CITIZENS INCOME FUND LEHMAN AGGREGATE INDEX RETURN ---- -------------------- ----------------------------- 6/10/92 $ 10,000.00 $ 10,000.00 6/30/1992 $ 10,080.00 $ 10,117.00 7/31/1992 $ 10,290.10 $ 10,323.39 8/31/1992 $ 10,373.30 $ 10,427.65 9/30/1992 $ 10,517.20 $ 10,551.74 10/31/1992 $ 10,320.30 $ 10,411.40 11/30/1992 $ 10,266.60 $ 10,413.49 12/31/1992 $ 10,419.20 $ 10,579.06 1/31/1993 $ 10,619.30 $ 10,782.18 2/28/1993 $ 10,828.40 $ 10,970.87 3/31/1993 $ 10,854.10 $ 11,016.94 4/30/1993 $ 10,919.30 $ 11,094.06 5/31/1993 $ 10,882.90 $ 11,108.49 6/30/1993 $ 11,095.60 $ 11,309.55 7/31/1993 $ 11,142.80 $ 11,374.01 8/31/1993 $ 11,335.20 $ 11,573.06 9/30/1993 $ 11,380.50 $ 11,604.31 10/31/1993 $ 11,449.30 $ 11,647.24 11/30/1993 $ 11,357.80 $ 11,548.24 12/31/1993 $ 11,456.80 $ 11,610.60 1/31/1994 $ 11,585.90 $ 11,767.34 2/28/1994 $ 11,393.70 $ 11,562.59 3/31/1994 $ 11,200.70 $ 11,277.00 4/30/1994 $ 11,086.30 $ 11,186.78 5/31/1994 $ 11,096.10 $ 11,185.66 6/30/1994 $ 11,096.10 $ 11,161.05 7/31/1994 $ 11,226.60 $ 11,383.16 8/31/1994 $ 11,263.20 $ 11,396.82 9/30/1994 $ 11,176.10 $ 11,229.28 10/31/1994 $ 11,136.90 $ 11,219.18 11/30/1994 $ 11,053.40 $ 11,194.50 12/31/1994 $ 11,104.20 $ 11,271.74 1/31/1995 $ 11,257.40 $ 11,494.92 2/28/1995 $ 11,567.90 $ 11,768.50 3/31/1995 $ 11,668.50 $ 11,840.29 4/30/1995 $ 11,838.10 $ 12,006.05 5/31/1995 $ 12,171.20 $ 12,470.68 6/30/1995 $ 12,255.80 $ 12,561.72 7/31/1995 $ 12,289.10 $ 12,534.08 8/31/1995 $ 12,403.10 $ 12,685.75 9/30/1995 $ 12,587.90 $ 12,808.80 10/31/1995 $ 12,680.50 $ 12,975.31 11/30/1995 $ 12,842.90 $ 13,169.94 12/31/1995 $ 13,034.10 $ 13,354.32 1/31/1996 $ 13,123.60 $ 13,442.46 2/26/1996 $ 13,014.50 $ 13,208.56 3/31/1996 $ 12,895.70 $ 13,116.10 4/30/1996 $ 12,824.90 $ 13,042.65 5/31/1996 $ 12,809.80 $ 13,016.57 6/30/1996 $ 12,927.50 $ 13,190.99 7/31/1996 $ 12,971.10 $ 13,226.60 8/30/1996 $ 13,029.50 $ 13,204.12 9/30/1996 $ 13,254.00 $ 13,433.87 10/31/1996 $ 13,478.20 $ 13,732.10 11/30/1996 $ 13,712.80 $ 13,966.92 12/31/1996 $ 13,665.80 $ 13,837.03 1/31/1997 $ 13,696.10 $ 13,879.92 2/28/1997 $ 13,767.70 $ 13,914.62 3/31/1997 $ 13,621.00 $ 13,760.17 4/30/1997 $ 13,772.70 $ 13,966.57 5/31/1997 $ 13,953.30 $ 14,099.25 6/30/1997 $ 14,163.00 $ 14,267.04 7/31/1997 $ 14,594.40 $ 14,652.25 8/29/1997 $ 14,448.00 $ 14,527.70 9/30/1997 $ 14,672.80 $ 14,741.26 10/31/1997 $ 14,855.70 $ 14,955.01 11/29/1997 $ 14,938.90 $ 15,023.80 12/31/1997 $ 15,097.80 $ 15,175.54 1/31/1998 $ 15,304.90 $ 15,369.79 2/28/1998 $ 15,281.40 $ 15,357.49 3/31/1998 $ 15,312.10 $ 15,409.71 4/30/1998 $ 15,340.80 $ 15,489.84 5/31/1998 $ 15,509.60 $ 15,636.99 6/30/1998 $ 15,649.10 $ 15,769.91 7/31/1998 $ 15,647.40 $ 15,803.02 8/31/1998 $ 15,720.30 $ 16,060.61 9/30/1998 $ 15,919.60 $ 16,436.43 10/31/1998 $ 15,669.20 $ 16,349.32 11/30/1998 $ 15,845.00 $ 16,442.51 12/31/1998 $ 15,974.80 $ 16,491.84 1/31/1999 $ 16,145.60 $ 16,608.93 2/28/1999 $ 15,895.50 $ 16,318.27 3/31/1999 $ 15,982.40 $ 16,408.02 4/30/1999 $ 16,059.20 $ 16,460.53 5/31/1999 $ 15,907.70 $ 16,315.68 6/30/1999 $ 15,770.70 $ 16,263.46 7/31/1999 $ 15,754.80 $ 16,193.53 8/31/1999 $ 15,663.80 $ 16,185.44 9/30/1999 $ 15,764.80 $ 16,373.19 10/31/1999 $ 15,766.70 $ 16,433.77 11/30/1999 $ 15,828.20 $ 16,432.12 12/31/1999 $ 15,844.20 $ 16,353.25 1/31/2000 $ 15,817.20 $ 16,299.28 2/29/2000 $ 15,931.60 $ 16,496.51 3/31/2000 $ 15,980.00 $ 16,714.26 4/30/2000 $ 15,938.70 $ 16,665.79 5/31/2000 $ 15,906.30 $ 16,657.45 6/30/2000 $ 16,298.30 $ 17,003.93 7/31/2000 $ 16,466.50 $ 17,158.67 8/31/2000 $ 16,688.70 $ 17,407.47 9/30/2000 $ 16,671.80 $ 17,517.13 10/31/2000 $ 16,634.10 $ 17,632.75 11/30/2000 $ 16,662.40 $ 17,921.92 12/31/2000 $ 16,990.00 $ 18,255.27 1/31/2001 $ 17,426.90 $ 18,554.66 2/28/2001 $ 17,641.20 $ 18,716.08 3/31/2001 $ 17,656.80 $ 18,809.66 4/30/2001 $ 17,546.20 $ 18,730.66 5/31/2001 $ 17,623.40 $ 18,843.05 6/30/2001 $ 17,579.50 $ 18,914.65 7/31/2001 $ 18,041.60 $ 19,338.34 8/31/2001 $ 18,208.40 $ 19,560.73 9/30/2001 $ 18,071.90 $ 19,789.59 10/31/2001 $ 18,259.20 $ 20,203.19 11/30/2001 $ 17,937.60 $ 19,924.39 12/31/2001 $ 17,730.70 $ 19,796.87 1/31/2002 $ 17,761.30 $ 19,957.23 2/28/2002 $ 17,802.20 $ 20,150.81 3/31/2002 $ 17,421.50 $ 19,816.31 4/30/2002 $ 17,576.70 $ 20,200.75 5/31/2002 $ 17,708.60 $ 20,372.45 6/30/2002 $ 17,427.30 $ 20,547.65 7/31/2002 $ 17,492.10 $ 20,796.28 8/31/2002 $ 17,809.30 $ 21,147.74 9/30/2002 $ 18,181.60 $ 21,490.33 10/31/2002 $ 18,060.90 $ 21,391.48 11/30/2002 $ 17,914.10 $ 21,385.06 12/31/2002 $ 18,352.40 $ 21,827.73 1/31/2003 $ 18,377.30 $ 21,847.37 2/28/2003 $ 18,737.50 $ 22,148.87 3/31/2003 $ 18,778.10 $ 22,131.15 4/30/2003 $ 19,008.60 $ 22,314.84 5/31/2003 $ 19,372.30 $ 22,729.89 6/30/2003 $ 19,392.40 $ 22,684.43 7/31/2003 $ 18,655.30 $ 21,922.24 8/31/2003 $ 18,749.60 $ 22,066.92 9/30/2003 $ 19,299.70 $ 22,651.70 10/31/2003 $ 19,147.10 $ 22,441.04 11/30/2003 $ 19,204.00 $ 22,494.89 12/31/2003 $ 19,416.20 $ 22,724.34 1/31/2004 $ 19,547.20 $ 22,906.14 2/29/2004 $ 19,731.20 $ 23,153.52 3/31/2004 $ 19,889.20 $ 23,327.17 4/30/2004 $ 19,366.90 $ 22,720.67 5/31/2004 $ 19,189.90 $ 22,629.79 6/30/2004 $ 19,270.20 $ 22,758.78 7/31/2004 $ 19,443.50 $ 22,984.39 8/31/2004 $ 19,740.40 $ 23,422.87 9/30/2004 $ 19,817.50 $ 23,486.38 10/31/2004 $ 20,027.30 $ 23,683.30 11/30/2004 $ 19,892.80 $ 23,494.40 12/31/2004 $ 20,054.00 $ 23,710.61 1/31/2005 $ 20,117.50 $ 23,859.39 2/28/2005 $ 20,101.30 $ 23,718.67 3/31/2005 $ 19,805.00 $ 23,596.74 4/30/2005 $ 19,991.10 $ 23,916.08 5/31/2005 $ 20,196.80 $ 24,174.82 6/30/2005 $ 20,299.60 $ 24,306.65
Data presented reflects past performance of the fund, which is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month end may be obtained online at www.citizensfunds.com. Fee waivers have been instituted in the past to maintain expense limits, without which returns would have been lower. Investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original costs. Performance figures and the growth of a $10,000 hypothetical investment assume reinvestment of dividends and distributions but do not reflect the deduction of taxes you would pay on fund distributions or redemptions of fund shares. -------------------------------------------------------------------------------- In the past year, the two year Treasury note rose 96 basis points to offer a yield of 3.63%, the yield on the 10 year Treasury fell 67 basis points to yield 3.91%, and the yield on the 30 year Treasury fell 110 basis points to yield 4.19%. In other words, the spread between the 2 year and 10 year Treasury notes decreased from 191 to 28 basis points, certainly a significant change. The past year was interesting for corporate bonds as well. Spreads continued to tighten throughout the year until a setback at the end of the third quarter of the fiscal year. In the third quarter of the period, General Motors was put on watch to be downgraded to high yield status, which created a flight to quality scenario in spread products. Although the fund does not hold GM, it can serve as a bellwether to other corporate bonds. The corporate bond market seemed to settle down and improve when General CITIZENS INCOME FUND 32 Motors was finally downgraded to high yield, and corporate bonds experienced steady improvement in the last month of the period. OUTLOOK We believe that corporate bonds should continue to do well in the short term, while we do have some concerns for the longer term. One specific concern is within the credit environment. In the last half of the fiscal year, we have observed more downgrades than upgrades. There has also been an increase in merger and acquisition activity, which we foresee as possibly having a negative consequence for bondholders. As a result, we will be watchful and wary of the increase in event risk, unforeseen corporate reorganizations and bond buybacks that may have negative impacts going forward. Additionally, our strategy will be to continue to remain focused on the interest rate movements. CITIZENS INCOME FUND 33 CITIZENS ULTRA SHORT BOND FUND PORTFOLIO REVIEW FUND INFORMATION INVESTMENT GOAL High level of current income consistent with preservation of capital INVESTMENT STRATEGY Invests mainly in short-duration investment-grade securities INCEPTION DATE Standard shares 11.21.02 RISKS Fixed-income investing (See pages 8-10 for important fund risk and benchmark disclosure.) HOW DID WE DO? The Ultra Short Bond Fund returned 2.23% for the fiscal year ended June 30, 2005. The benchmark Merrill Lynch 1-Year Treasury Index returned 1.73% for the same period, resulting in the fund outperforming the benchmark by 50 basis points. The fund had a 30 day SEC yield of 3.10% as of June 30, 2005 up from 1.89% as of June 30, 2004. The fund's position in floating rate corporate notes, such as American Express and CIT Group, contributed to outperformance during the period. The coupon rates on these floating rate corporate notes reset on either a monthly or quarterly basis. During the fiscal year, as interest rates rose, this feature of the floating rate corporate note allowed us to take advantage of the rising interest rate environment, by reinvesting the coupon payout at higher rates. Other spread products that we held performed better than Treasuries during the past year, including corporate bonds and asset backed securities. During the fiscal year period, the yield on the six month Treasury bill rose 169 basis points to 3.32% and the yield on the two year Treasury note rose 96 basis points to 3.63%. The Federal Reserve began tightening short term interest rates back on June 30, 2004, when the federal funds rate had been at 1.00% for almost a full year. Since then, the federal funds rate has increased another eight times to its current rate of 3.25%, with no real CITIZENS ULTRA SHORT BOND FUND 34 PERFORMANCE (as of 6.30.05)
AVERAGE ANNUAL RETURN 1 Since Ticker Year inception --------------------------------------------------------------------------------------------- STANDARD SHARES CFSBX 2.23% 1.85%
PERFORMANCE OVER TIME (as of 6.30.05) This chart shows the performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over time for the index shown. (PERFORMANCE OVERTIME) CITIZENS ULTRA SHORT BOND FUND PERFORMANCE SINCE INCEPTION 11/22/02
DATE CITIZENS ULTRA SHORT BOND FUND MERRILL LYNCH 1 YR TREASURY INDEX RETURN ---- ------------------------------ ---------------------------------------- 11/21/02 $ 10,000.00 $ 10,000.00 11/30/2002 $ 10,003.70 $ 10,001.00 12/31/2002 $ 10,052.90 $ 10,039.00 1/31/2003 $ 10,075.70 $ 10,047.04 2/28/2003 $ 10,117.50 $ 10,065.12 3/31/2003 $ 10,139.40 $ 10,083.24 4/30/2003 $ 10,161.00 $ 10,094.33 5/31/2003 $ 10,192.10 $ 10,106.44 6/30/2003 $ 10,211.60 $ 10,127.67 7/31/2003 $ 10,138.60 $ 10,122.60 8/31/2003 $ 10,135.50 $ 10,131.71 9/30/2003 $ 10,191.90 $ 10,160.08 10/31/2003 $ 10,177.80 $ 10,157.03 11/30/2003 $ 10,182.80 $ 10,153.99 12/31/2003 $ 10,219.10 $ 10,186.48 1/31/2004 $ 10,235.10 $ 10,201.76 2/29/2004 $ 10,260.60 $ 10,222.16 3/31/2004 $ 10,276.50 $ 10,232.38 4/30/2004 $ 10,250.90 $ 10,205.78 5/31/2004 $ 10,256.20 $ 10,204.76 6/30/2004 $ 10,260.80 $ 10,201.70 7/31/2004 $ 10,276.80 $ 10,224.75 8/31/2004 $ 10,304.30 $ 10,254.61 9/30/2004 $ 10,321.70 $ 10,251.53 10/31/2004 $ 10,340.10 $ 10,268.96 11/30/2004 $ 10,330.50 $ 10,253.45 12/31/2004 $ 10,351.00 $ 10,269.55 1/31/2005 $ 10,372.30 $ 10,277.67 2/28/2005 $ 10,381.90 $ 10,277.77 3/31/2005 $ 10,404.80 $ 10,292.47 4/30/2005 $ 10,438.00 $ 10,328.80 5/31/2005 $ 10,463.20 $ 10,360.40 6/30/2005 $ 10,489.20 $ 10,378.12
Data presented reflects past performance of the fund, which is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month end may be obtained online 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. Investment return and principal value of an investment in the fund will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original costs. Performance figures and the growth of a $10,000 hypothetical investment assume reinvestment of dividends and distributions but do not reflect the deduction of taxes you would pay on fund distributions or redemptions of fund shares. -------------------------------------------------------------------------------- change of bias in sight. Our belief is that the stance of the Federal Reserve remains accommodative and is providing ongoing support to economic activity. At present, the futures market is pricing in an increase for the federal funds rate by year end. Citizens Ultra Short Bond Fund was created so that our shareholders would have an option to earn a higher yield in the fixed income market. Due to the small asset size of the fund, and our belief that rising short-term interest rates now allow money market oriented investors an opportunity to earn a good yield without the credit and principal risk inherent in a bond fund, we have closed the Citizens Ultra Short Bond Fund. CITIZENS ULTRA SHORT BOND FUND 35 CITIZENS MONEY MARKET FUND PORTFOLIO REVIEW FUND INFORMATION INVESTMENT GOAL Current income consistent with safety and liquidity INVESTMENT STRATEGY Invests exclusively in money market instruments INCEPTION DATE Standard shares: 8.30.83 Institutional shares: 2.01.96 RISKS Money market investing (See pages 8-10 for important fund risk and benchmark disclosures.) HOW DID WE DO? The 7 day simple yield on the standard shares rose from 0.50% on June 30, 2004 to 2.20% on June 30, 2005. The fund had a total return of 1.21% for the fiscal year. During this time, the average weighted maturity of the fund fell from 42 days to 31 days. We anticipated the federal funds rate increases during the fiscal year, and believed that short term rates would continue to increase. This belief resulted in an investment strategy of keeping the fund at a shorter duration than our peer group. An additional strategy for the fund was to target maturities and structure the portfolio so we could take advantage of the higher interest rates, as they materialized, throughout the fiscal year. With the federal funds rate at 1.00% for almost a full year and a much improved economy, the Federal Reserve began tightening short term interest rates on June 30, 2004. Since then, the federal funds rate has been increased eight times to its current rate of 3.25% for a total increase of 225 basis points with no real change of bias in sight. In addition, corporate commercial paper supply has been increasing modestly because of this increase in rates, which is a positive for the market. CITIZENS MONEY MARKET FUND 36 PERFORMANCE (as of 6.30.05)
AVERAGE ANNUAL RETURN 1 5 10 Since Ticker Year Years Years inception --------------------------------------------------------------------------------------------- STANDARD SHARES WKAXX 1.21% 1.77% 3.09% NA INSTITUTIONAL SHARES WAIXX 1.53% 2.04% NA 3.41%
Data presented reflects past performance, which is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month end may be obtained online at www.citizensfunds.com. Fees have been instituted in the past to maintain expense limits, without which returns would have been lower. Performance figures assume reinvestment of dividends and distributions but do not reflect the deduction of taxes you would pay on fund distributions or redemptions 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. -------------------------------------------------------------------------------- OUTLOOK We believe the Federal Reserve will continue to raise rates at least through year end unless there is a considerable change in the growth of the economy, unemployment or inflation. At present, the futures market is pricing in an increase to 4.00% for the federal funds rate by the calendar year end. We believe that is a reasonable expectation with the current economic outlook. If this occurs, we expect at some point higher short term rates may have an impact on corporate profits as companies may have to borrow money at higher rates. We believe this may slow the economy down. That said, one concern we have going forward is that the Federal Reserve may overshoot with their tightening, increasing the federal funds rate to a point that stops growth, which could hurt the economy down the road. We are mindful of these concerns as we choose investments for the fund. CITIZENS MONEY MARKET FUND 37 PORTFOLIO COMPOSITION (UNAUDITED) PORTFOLIO COMPOSITION
PERCENTAGE OF 300 FUND INVESTMENTS SECURITY ALLOCATION AT VALUE ------------------------------------------------------------ Financials 23.5% Information Technology 16.7% Healthcare 14.9% Consumer Discretionary 12.9% Consumer Staples 10.4% Energy 8.1% Industrials 7.5% Telecommunication Services 3.6% Materials 1.2% Utilities 0.8% Cash Equivalents 0.4% ------------------------------------------------------------
PERCENTAGE OF CORE GROWTH FUND INVESTMENTS SECURITY ALLOCATION AT VALUE ------------------------------------------------------------ Healthcare 17.4% Financials 14.5% Information Technology 13.7% Consumer Discretionary 12.4% Consumer Staples 9.0% Energy 8.6% Industrials 7.8% Cash Equivalents 5.4% Utilities 5.0% Telecommunication Services 3.2% Materials 3.0% ------------------------------------------------------------
PERCENTAGE OF EMERGING GROWTH FUND INVESTMENTS SECURITY ALLOCATION AT VALUE ------------------------------------------------------------ Consumer Discretionary 21.3% Information Technology 19.9% Healthcare 17.8% Industrials 11.3% Financials 10.5% Energy 8.2% Consumer Staples 4.9% Materials 3.3% Telecommunication Services 1.4% Utilities 1.1% Cash Equivalents 0.3% ------------------------------------------------------------
SMALL CAP PERCENTAGE OF CORE GROWTH FUND INVESTMENTS SECURITY ALLOCATION AT VALUE ------------------------------------------------------------ Consumer Discretionary 22.2% Healthcare 17.8% Information Technology 17.7% Industrials 15.7% Cash Equivalents 7.7% Financials 6.4% Energy 5.4% Materials 3.7% Consumer Staples 2.2% Telecommunication Services 1.2% ------------------------------------------------------------
PERCENTAGE OF VALUE FUND INVESTMENTS SECURITY ALLOCATION AT VALUE ------------------------------------------------------------ Financials 21.5% Healthcare 13.5% Energy 12.2% Consumer Discretionary 11.9% Information Technology 11.0% Industrials 10.1% Consumer Staples 9.2% Materials 3.8% Utilities 3.5% Telecommunication Services 3.3% Cash Equivalents 0.0%* ------------------------------------------------------------
PERCENTAGE OF GLOBAL EQUITY FUND INVESTMENTS SECURITY ALLOCATION AT VALUE ------------------------------------------------------------ Financials 20.5% Healthcare 14.7% Information Technology 12.9% Consumer Discretionary 12.7% Energy 10.2% Industrials 9.4% Consumer Staples 8.5% Telecommunication Services 5.7% Materials 2.9% Cash Equivalents 2.5% ------------------------------------------------------------
* Less than 0.1% SEE FINANCIAL NOTES 38 JUNE 30, 2005
PERCENTAGE OF BALANCED FUND INVESTMENTS SECURITY ALLOCATION AT VALUE ------------------------------------------------------------ Equity Financials 11.2% Healthcare 10.8% Information Technology 9.2% Consumer Discretionary 7.4% Energy 6.6% Industrials 6.4% Consumer Staples 6.0% Utilities 2.9% Materials 1.8% Telecommunication Services 1.7% ------------------------------------------------------------ Fixed Income U.S. Government Agency Obligations 12.6% U.S. Government Obligations 8.7% Corporate Bonds 6.4% Collateralized Mortgage Obligations 0.7% Foreign Government Bonds 0.3% ------------------------------------------------------------ Cash Equivalents 7.3% ------------------------------------------------------------
PERCENTAGE OF INCOME FUND INVESTMENTS SECURITY ALLOCATION AT VALUE ------------------------------------------------------------ U.S. Government Agency Obligations 41.7% Corporate Bonds 33.3% U.S. Government Obligations 15.5% Collateralized Mortgage Obligations 4.0% Cash Equivalents 3.6% Foreign Government Bonds 1.9% ------------------------------------------------------------
PERCENTAGE OF ULTRA SHORT BOND FUND INVESTMENTS SECURITY ALLOCATION AT VALUE ------------------------------------------------------------ Corporate Bonds 51.8% Cash Equivalents 25.8% U.S. Government Agency Obligations 18.5% U.S. Government Obligations 3.9% ------------------------------------------------------------
PERCENTAGE OF MONEY MARKET FUND INVESTMENTS SECURITY ALLOCATION AT VALUE ------------------------------------------------------------ Commercial Paper 77.3% Certificates of Deposit 12.8% U.S. Government Agency Obligations 4.8% Municipal Notes 4.0% Cash Equivalents 1.1% ------------------------------------------------------------
All portfolio compositions subject to change. SEE FINANCIAL NOTES 39 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 funds' 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 300 Fund, Citizens Core Growth Fund, Citizens Emerging Growth Fund, Citizens Small Cap Core Growth Fund, Citizens Value Fund, Citizens Global Equity Fund, Citizens Balanced Fund, Citizens Income Fund, Citizens Ultra Short Bond Fund and Citizens Money Market Fund (hereinafter referred to as the "Funds") at June 30, 2005, 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). Those standards require that we plan and perform the audit 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, 2005 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Columbus, Ohio August 18, 2005 40 CITIZENS FUNDS HOLDINGS JUNE 30, 2005 ($ X 1,000)
------------------------------------------------------------------------- 300 FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- COMMON STOCKS - 99.9% Air Freight - 1.6% FedEx Corp. 300 24 United Parcel Service, Class B 1,065 74 ----- 98 Airlines - 0.2% jetBlue Airways Corp. (a) 100 2 Southwest Airlines Co. 830 12 ----- 14 Apparel Manufacturers - 0.1% Jones Apparel Group, Inc. 200 6 Auto Manufacturing - 0.2% PACCAR, Inc. 150 10 Banks - 4.7% Bank of America Corp. 3,700 169 Bank of New York Co., Inc. 800 23 BB&T Corp. 600 24 Fifth Third Bancorp 600 25 First Horizon National Corp. 200 8 National City Corp. 700 24 North Fork Bancorporation, Inc. 500 14 Suntrust Banks, Inc. 100 7 ----- 294 Biotechnology - 1.5% Allergan, Inc. 100 9 Applera Corp. 200 4 Biogen Idec, Inc. (a) 375 13 Chiron Corp. (a) 200 7 Forest Laboratories, Inc. (a) 400 16 Genzyme Corp. (a) 300 18 Gilead Sciences, Inc. (a) 500 21 MedImmune, Inc. (a) 200 5 ----- 93 Broadcasting - 0.2% Radio One, Inc., Class D (a) 200 3 Univision Communications, Inc. (a) 350 9 ----- 12 Chemicals - 1.6% Air Products & Chemicals, Inc. 200 12 Amgen, Inc. (a) 1,100 66 Engelhard Corp. 200 6 International Flavors & Fragrances, Inc. 100 4
------------------------------------------------------------------------- 300 FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Praxair, Inc. 200 9 Sigma-Aldrich Corp. 100 6 ----- 103 Computers - 9.6% Apple Computer, Inc. (a) 740 27 Citrix Systems, Inc. (a) 225 5 Corning, Inc. (a) 1,480 25 Dell, Inc. (a) 2,200 87 EMC Corp. (a) 2,200 30 Intel Corp. 5,655 147 International Business Machines Corp. 1,450 108 Intuit, Inc. (a) 200 9 Lexmark International, Inc. (a) 150 10 National Instruments Corp. 100 2 Network Appliance, Inc. (a) 400 11 Novell, Inc. (a) 400 2 Oracle Corp. (a) 4,740 63 Pixar, Inc. (a) 100 5 SunGard Data Systems, Inc. (a) 300 11 Symantec Corp. (a) 750 16 Yahoo!, Inc. (a) 1,300 45 ----- 603 Construction - 0.4% D. R. Horton, Inc. 366 13 Lennar Corp. 200 13 ----- 26 Consumer Products - 1.0% Black & Decker Corp. 100 9 Clorox Co. 200 11 Kimberly-Clark Corp. 400 25 Newell Rubbermaid, Inc. 300 7 The Stanley Works 100 5 Whirlpool Corp. 100 7 ----- 64 Electrical Equipment - 0.6% American Power Conversion Corp. 220 5 Emerson Electric Co. 400 26 Sanmina Corp. (a) 600 3 W.W. Grainger, Inc. 100 5 ----- 39 Electronics - 5.1% Adobe Systems, Inc. 500 14 Applied Materials, Inc. 1,500 24 Broadcom Corp., Class A (a) 300 11 Cisco Systems, Inc. (a) 5,855 112
SEE FINANCIAL NOTES 41 CITIZENS FUNDS HOLDINGS
------------------------------------------------------------------------- 300 FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Electronics (continued) Electronic Arts, Inc. (a) 300 17 Freescale Semiconductor, Inc., Class B (a) 520 11 Harman International Industries, Inc. 100 8 JDS Uniphase Corp. (a) 1,600 2 Johnson Controls, Inc. 200 11 Juniper Networks, Inc. (a) 600 15 Linear Technology Corp. 300 11 Maxim Integrated Products, Inc. 350 13 NVIDIA Corp. (a) 100 3 Rockwell Automation, Inc. 220 11 SPX Corp. 100 5 Texas Instruments, Inc. 1,600 45 Xilinx, Inc. 300 8 ----- 321 Energy & Utilities - 8.9% AES Corp. (a) 700 11 AGL Resources, Inc. 100 4 Anadarko Petroleum Corp. 250 21 Apache Corp. 200 13 Baker Hughes, Inc. 400 20 BJ Services Co. 200 10 BP Amoco plc ADR 3,225 202 Burlington Resources, Inc. 400 22 Calpine Corp. (a) 300 1 ConocoPhillips 1,300 76 Devon Energy Corp. 500 25 Diamond Offshore Drilling, Inc. 200 11 EOG Resources, Inc. 100 6 Equitable Resources, Inc. 35 2 Hawaiian Electric Industries, Inc. 125 3 KeySpan Corp. 200 8 Newfield Exploration Co. (a) 200 8 NiSource, Inc. 300 7 Noble Corp. 200 12 Noble Energy, Inc. 100 8 Pepco Holdings, Inc. 100 2 Pioneer Natural Resources Co. 200 8 Pogo Producing Co. 100 5 Puget Energy, Inc. 100 2 Questar Corp. 100 7 Rowan Cos., Inc. 200 6
------------------------------------------------------------------------- 300 FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Smith International, Inc. 100 6 The Williams Cos., Inc. 500 10 Valero Energy Corp. 300 24 Western Gas Resources, Inc. 100 3 XTO Energy, Inc. 400 14 ----- 557 Entertainment - 2.8% Comcast Corp., Class A (a) 2,000 61 Time Warner, Inc. (a) 4,150 70 Viacom, Inc. 1,500 48 ----- 179 Financial - Diversified - 12.5% AMBAC Financial Group, Inc. 100 7 American Express Co. 1,100 59 Citigroup, Inc. 4,800 222 Fannie Mae 900 53 Freddie Mac 600 39 Legg Mason, Inc. 100 10 Lehman Brothers Holdings, Inc. 300 30 MBNA Corp. 1,200 31 Mellon Financial Corp. 400 11 Merrill Lynch & Co. 900 50 MetLife, Inc. 700 31 Moody's Corp. 250 11 Northern Trust Corp. 200 9 State Street Corp. 400 19 Synovus Financial Corp. 390 11 Wachovia Corp. 1,400 69 Washington Mutual, Inc. 800 33 Wells Fargo & Co. 1,560 96 ----- 791 Financial Services - 1.0% Charles Schwab Corp. 1,400 16 Golden West Financial Corp. 320 20 Principal Financial Group 300 13 T. Rowe Price Group, Inc. 170 11 ----- 60 Foods - 4.9% Bunge, Ltd. 100 6 Campbell Soup Co. 400 12 Coca-Cola Co. 2,200 91 General Mills, Inc. 400 19 H.J. Heinz Co. 400 14 Hershey Foods Corp. 250 16 Kellogg Co. 449 20 McCormick & Co., Inc. 100 3 Pepsi Bottling Group, Inc. 200 6 PepsiCo, Inc. 1,550 84
SEE FINANCIAL NOTES 42 JUNE 30, 2005 ($ X 1,000)
------------------------------------------------------------------------- 300 FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Foods (continued) Sara Lee Corp. 850 17 SUPERVALU, Inc. 100 3 Wm. Wrigley Jr. Co. 230 16 ----- 307 Healthcare - 12.1% Baxter International, Inc. 600 22 Becton, Dickinson & Co. 250 13 Biomet, Inc. 300 10 Boston Scientific Corp. (a) 900 24 DENTSPLY International, Inc. 100 5 Eli Lilly & Co. 1,000 56 Express Scripts, Inc. (a) 200 10 Guidant Corp. 300 20 Health Management Associates, Inc., Class A 300 8 Johnson & Johnson, Inc. 2,700 176 Laboratory Corp. of America Holdings (a) 125 6 Medtronic, Inc. 1,100 57 Mylan Laboratories, Inc. 350 7 Pfizer, Inc. 6,850 189 Quest Diagnostics, Inc. 200 11 St. Jude Medical, Inc. (a) 400 17 Stryker Corp. 420 20 UnitedHealth Group, Inc. 1,200 63 WellPoint, Inc. (a) 600 42 Zimmer Holdings, Inc. (a) 100 8 ----- 764 Insurance - 4.4% American International Group, Inc. 2,365 138 Fidelity National Financial Corp. 200 7 Marsh & McLennan Cos., Inc. 500 14 MBIA, Inc. 200 12 Progressive Corp. 200 20 The Allstate Corp. 600 36 The Hartford Financial Services Group, Inc. 300 22 The St. Paul Travelers Cos., Inc. 670 26 ----- 275
------------------------------------------------------------------------- 300 FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Investment Banking & Brokerage - 0.8% The Goldman Sachs Group, Inc. 500 51 Leisure - 0.2% Harley-Davidson, Inc. 300 15 Manufacturing - 6.1% 3M Co. 700 51 Bausch & Lomb, Inc. 100 8 Cintas Corp. 135 5 Cooper Cameron Corp. (a) 100 6 Crane Co. 100 3 Dana Corp. 100 2 Donaldson Co., Inc. 100 3 Dover Corp. 300 11 Eaton Corp. 200 12 Gentex Corp. 210 4 Graco, Inc. 100 3 Illinois Tool Works, Inc. 300 24 Ingersoll-Rand Co. 200 14 Masco Corp. 515 16 Mattel, Inc. 570 10 Nucor Corp. 200 9 Pactiv Corp. (a) 200 4 Parker Hannifin Corp. 100 6 Pentair, Inc. 100 4 Procter & Gamble Co. 2,302 122 Sealed Air Corp. (a) 100 5 Smurfit-Stone Container Corp. (a) 500 5 Sonoco Products Co. 100 3 Tyco International, Ltd. 1,810 53 Worthington Industries, Inc. 100 2 ----- 385 Office Equipment & Supplies - 0.2% Avery Dennison Corp. 120 6 Pitney Bowes, Inc. 200 9 ----- 15 Personal Care - 1.7% Avon Products, Inc. 500 19 Colgate-Palmolive Co. 560 28 Gillette Co. 900 45 The Estee Lauder Cos., Inc., Class A 300 12 ----- 104
SEE FINANCIAL NOTES 43 CITIZENS FUNDS HOLDINGS
------------------------------------------------------------------------- 300 FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Pharmaceuticals - 0.1% McKesson Corp. 200 9 Publishing - 0.5% Dow Jones & Co., Inc. 100 4 The McGraw-Hill Cos., Inc. 400 17 Tribune Co. 300 11 ----- 32 Railroads - 0.4% CSX Corp. 300 13 Norfolk Southern Corp. 500 15 ----- 28 Real Estate - 0.2% The St. Joe Co. 120 10 Restaurants - 1.2% Darden Restaurants, Inc. 200 7 McDonald's Corp. 1,200 33 Starbucks Corp. (a) 400 21 YUM! Brands, Inc. 250 13 ----- 74 Retail - 7.3% AutoZone, Inc. (a) 100 9 Bed Bath & Beyond, Inc. (a) 300 13 Best Buy & Co., Inc. 300 21 Big Lots, Inc. (a) 200 3 Chico's FAS, Inc. (a) 210 7 Coach, Inc. (a) 400 13 Costco Wholesale Corp. 500 22 CVS Corp. 860 25 Dollar General Corp. 400 8 eBay, Inc. (a) 1,200 40 Family Dollar Stores, Inc. 250 7 Fastenal Co. 120 7 Hasbro, Inc. 100 2 Home Depot, Inc. 1,965 76 Limited Brands, Inc. 430 9 Lowe's Cos., Inc. 700 41 Michaels Stores, Inc. 200 8 Nordstrom, Inc. 100 7 RadioShack Corp. 235 5
------------------------------------------------------------------------- 300 FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Staples, Inc. 795 17 Target Corp. 800 44 The Gap, Inc. 868 17 The TJX Cos., Inc. 500 12 Tiffany & Co. 200 7 Walgreen Co. 900 41 ----- 461 Services - 2.3% Apollo Group, Inc., Class A (a) 200 16 ARAMARK Corp. 200 5 Career Education Corp. (a) 200 7 Cendant Corp. 1,000 22 Ecolab, Inc. 300 10 Fair Isaac & Co., Inc. 100 4 First Data Corp. 700 28 Fiserv, Inc. (a) 200 9 Manpower, Inc. 100 4 Monster Worldwide, Inc. (a) 100 3 Omnicom Group, Inc. 200 16 Pall Corp. 100 3 Paychex, Inc. 400 13 Unisys Corp. (a) 700 4 Viad Corp. 31 1 ----- 145 Telecommunications - 5.4% Lucent Technologies, Inc. (a) 5,000 15 Motorola, Inc. 2,200 40 Nextel Communications, Inc. (a) 1,000 32 QUALCOMM, Inc. 1,550 51 SBC Communications, Inc. 2,980 71 Scientific-Atlanta, Inc. 200 7 Sprint Corp. 1,317 33 Verizon Communications, Inc. 2,550 88 ----- 337 Transportation - 0.1% Ryder System, Inc. 100 4 ----- TOTAL COMMON STOCKS 6,286 Cost: $5,835
SEE FINANCIAL NOTES 44 JUNE 30, 2005 ($ X 1,000)
------------------------------------------------------------------------- 300 FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 0.4% Fifth Third Bank, Inc., 2.50%, 07/01/05 (Proceeds at maturity $23, collateralized by Federal Home Loan Mortgage Corp. security, 4.00%, 07/01/18) Cost: $23 23 23 ----- TOTAL INVESTMENTS - 100.3% 6,309 Cost: $5,858 (b)
Percentages indicated are based on net assets of $6,290. (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 $31. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $ 693 Unrealized depreciation (273) ------ Net unrealized appreciation $ 420
ADR - American Depositary Receipt -------------------------------------------------------------------------------- SEE FINANCIAL NOTES 45 CITIZENS FUNDS HOLDINGS
------------------------------------------------------------------------- CORE GROWTH FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- COMMON STOCKS - 94.7% Air Freight - 0.9% FedEx Corp. 35,000 2,835 Apparel Manufacturers - 1.1% Nike, Inc., Class B 40,000 3,464 Auto Manufacturing - 1.1% PACCAR, Inc. 50,000 3,400 Biotechnology - 1.4% Gilead Sciences, Inc. (a) 100,000 4,399 Chemicals - 2.7% Amgen, Inc. (a) 60,000 3,628 Praxair, Inc. 110,000 5,126 ------- 8,754 Computers - 4.9% Cognos, Inc. (a) 120,000 4,097 Dell, Inc. (a) 100,000 3,951 Network Appliance, Inc. (a) 120,000 3,392 Symantec Corp. (a) 200,000 4,348 ------- 15,788 Consumer Products - 1.2% Black & Decker Corp. 45,000 4,043 Electronics - 6.5% Adobe Systems, Inc. 200,000 5,724 Electronic Arts, Inc. (a) 75,000 4,246 Rockwell Automation, Inc. 125,000 6,089 Texas Instruments, Inc. 175,000 4,912 ------- 20,971 Energy & Utilities - 13.5% Apache Corp. 100,000 6,460 BJ Services Co. 70,000 3,674 Burlington Resources, Inc. 100,000 5,524 ConocoPhillips 120,000 6,899 Equitable Resources, Inc. 110,000 7,479 Murphy Oil Corp. 100,000 5,223 Questar Corp. 130,000 8,566 Silvan Power Co. (a)(b) 24,000 -- Vulcan Power Co., Class A (a)(b) 40,000 -- ------- 43,825
------------------------------------------------------------------------- CORE GROWTH FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Financial - Diversified - 6.1% Legg Mason, Inc. 75,000 7,808 Moody's Corp. 150,000 6,744 SLM Corp. 105,000 5,334 ------- 19,886 Financial Services - 3.8% Franklin Resources, Inc. 85,000 6,544 Golden West Financial Corp. 90,000 5,794 ------- 12,338 Foods - 5.6% Hershey Foods Corp. 100,000 6,211 PepsiCo, Inc. 80,000 4,314 Sysco Corp. 100,000 3,619 Wm. Wrigley Jr. Co. 60,000 4,130 ------- 18,274 Healthcare - 12.7% Becton, Dickinson & Co. 125,000 6,559 C.R. Bard, Inc. 100,000 6,651 Johnson & Johnson, Inc. 125,000 8,124 St. Jude Medical, Inc. (a) 80,000 3,489 UnitedHealth Group, Inc. 150,000 7,821 WellPoint, Inc. (a) 80,000 5,571 Zimmer Holdings, Inc. (a) 40,000 3,047 ------- 41,262 Hotels & Motels - 1.7% Marriott International, Inc., Class A 80,000 5,458 Insurance - 3.5% The Allstate Corp. 130,020 7,769 The Chubb Corp. 40,000 3,424 ------- 11,193 Manufacturing - 5.3% Pentair, Inc. 125,000 5,351 Precision Castparts Corp. 60,000 4,674 Taiwan Semiconductor ADR 472,500 4,309 Tyco International, Ltd. 100,000 2,920 ------- 17,254 Personal Care - 1.3% Gillette Co. 80,000 4,050 Pharmaceuticals - 2.2% Barr Pharmaceuticals, Inc. (a) 80,000 3,899 Schering-Plough Corp. 175,000 3,336 ------- 7,235 Publishing - 1.5% The McGraw-Hill Cos., Inc. 110,000 4,868 Real Estate - 1.1% Simon Property Group, Inc. 50,000 3,625 Retail - 7.3% Coach, Inc. (a) 100,000 3,357 CVS Corp. 240,000 6,977
SEE FINANCIAL NOTES 46 JUNE 30, 2005 ($ X 1,000)
------------------------------------------------------------------------- CORE GROWTH FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Retail (continued) Nordstrom, Inc. 100,000 6,797 Staples, Inc. 300,000 6,396 ------- 23,527 Services - 4.7% Ecolab, Inc. 140,000 4,530 Fiserv, Inc. (a) 110,000 4,725 Getty Images, Inc. (a) 80,000 5,941 ------- 15,196 Telecommunications - 4.6% Alltel Corp. 85,000 5,294 Comverse Technology, Inc. (a) 200,000 4,730 Sprint Corp. 200,000 5,018 ------- 15,042 ------- TOTAL COMMON STOCKS 306,687 Cost: $251,382 SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 5.4% Fifth Third Bank, Inc., 2.50%, 07/01/05 (Proceeds at maturity $17,439, collateralized by Federal Home Loan Mortgage Corp. securities, 4.00%-5.50%, 07/01/18-05/01/33) Cost: $17,438 17,438 17,438 ------- TOTAL INVESTMENTS - 100.1% 324,125 Cost: $268,820 (c)
------------------------------------------------------------------------- CORE GROWTH FUND ------------------------------------------------------------------------- Percentages indicated are based on net assets of $323,691. (a) Non-income producing security. (b) On June 30, 2005, the fund owned the following restricted securities constituting 0.00% of net assets which may not be publicly sold without registration under the Securities Act of 1933. These securities are valued at 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 securities is as follows: Vulcan Power Co., Class A Acquisition Date: March 3, 1995 Cost: $300 Value: $0 Silvan Power Co. Acquisition Date: July 27, 2004 Cost: $0 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 $5. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $58,338 Unrealized depreciation (3,038) ------- Net unrealized appreciation $55,300
ADR - American Depositary Receipt -------------------------------------------------------------------------------- SEE FINANCIAL NOTES 47 CITIZENS FUNDS HOLDINGS
------------------------------------------------------------------------- EMERGING GROWTH FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- COMMON STOCKS - 99.0% Apparel Manufacturers - 1.0% Reebok International Ltd. 38,900 1,627 Banks - 1.3% East West Bancorp, Inc. 63,059 2,118 Biotechnology - 3.3% Affymetrix, Inc. (a) 50,110 2,702 Gilead Sciences, Inc. (a) 63,200 2,781 ------- 5,483 Chemicals - 1.1% Praxair, Inc. 39,650 1,848 Computers - 7.8% Apple Computer, Inc. (a) 86,432 3,182 Autodesk, Inc. 62,500 2,148 Corning, Inc. (a) 147,360 2,449 Network Appliance, Inc. (a) 66,500 1,880 Pixar, Inc. (a) 29,010 1,452 Websense, Inc. (a) 37,865 1,819 ------- 12,930 Construction - 2.5% Lafarge North America, Inc. 34,000 2,123 Toll Brothers, Inc. (a) 20,100 2,041 ------- 4,164 Electrical Equipment - 1.7% Fisher Scientific International, Inc. (a) 42,400 2,752 Electronics - 9.3% Adobe Systems, Inc. 128,050 3,665 Harman International Industries, Inc. 17,780 1,447 International Rectifier Corp. (a) 38,800 1,852 Lam Research Corp. (a) 59,000 1,707 MEMC Electronic Materials, Inc. (a) 139,500 2,200 QLogic Corp. (a) 50,600 1,562 Rockwell Automation, Inc. 26,000 1,266 Trimble Navigation Ltd. (a) 42,340 1,650 ------- 15,349 Energy & Utilities - 9.2% Baker Hughes, Inc. 43,840 2,243 EOG Resources, Inc. 46,400 2,635 Murphy Oil Corp. 38,600 2,016 Newfield Exploration Co. (a) 57,484 2,293
------------------------------------------------------------------------- EMERGING GROWTH FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- ONEOK, Inc. 54,200 1,770 Patterson-UTI Energy, Inc. 85,200 2,371 Transocean, Inc. (a) 37,700 2,035 ------- 15,363 Financial - Diversified - 2.9% Legg Mason, Inc. 21,000 2,186 Moody's Corp. 56,988 2,562 ------- 4,748 Financial Services - 5.2% Chicago Mercantile Exchange Holdings, Inc. 10,856 3,208 Golden West Financial Corp. 45,080 2,902 T. Rowe Price Group, Inc. 39,555 2,476 ------- 8,586 Foods - 3.6% Bunge Ltd. 47,850 3,033 Hershey Foods Corp. 46,950 2,916 ------- 5,949 Healthcare - 11.1% AMERIGROUP Corp. (a) 42,000 1,688 C.R. Bard, Inc. 34,975 2,326 Cooper Cos., Inc. 43,915 2,674 Intuitive Surgical, Inc. (a) 34,150 1,593 Laboratory Corp. of America Holdings (a) 41,850 2,088 Sierra Health Services, Inc. (a) 50,888 3,637 Triad Hospitals, Inc. (a) 48,300 2,639 Varian Medical Systems, Inc. (a) 50,489 1,885 ------- 18,530 Hotels & Motels - 2.2% Choice Hotels International, Inc. 30,530 2,006 Starwood Hotels & Resorts Worldwide, Inc. 29,300 1,716 ------- 3,722 Insurance - 1.1% W. R. Berkley Corp. 51,525 1,838 Manufacturing - 4.6% Graco, Inc. 71,906 2,450 Nucor Corp. 32,100 1,464 Oshkosh Truck Corp. 29,284 2,292 Pentair, Inc. 34,000 1,456 ------- 7,662 Pharmaceuticals - 1.6% Barr Pharmaceuticals, Inc. (a) 53,450 2,605
SEE FINANCIAL NOTES 48 JUNE 30, 2005 ($ X 1,000)
------------------------------------------------------------------------- EMERGING GROWTH FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Publishing - 1.1% John Wiley & Sons, Inc. 44,400 1,764 Railroads - 0.9% Norfolk Southern Corp. 50,270 1,556 Restaurants - 3.9% Sonic Corp. (a) 79,615 2,430 Starbucks Corp. (a) 39,000 2,015 YUM! Brands, Inc. 40,302 2,099 ------- 6,544 Retail - 9.7% American Eagle Outfitters, Inc. 56,000 1,716 Claire's Stores, Inc. 101,400 2,439 Coach, Inc. (a) 91,650 3,077 Foot Locker, Inc. 100,246 2,729 Nordstrom, Inc. 60,356 4,103 Whole Foods Market, Inc. 17,950 2,123 ------- 16,187 Services - 8.9% CheckFree Corp. (a) 53,000 1,805 Cognizant Technology Solutions Corp. (a) 68,400 3,224 Corporate Executive Board Co. 51,549 4,037 Dun & Bradstreet Corp. (a) 19,200 1,184 Expeditors International of Washington, Inc. 41,600 2,072 Getty Images, Inc. (a) 32,235 2,394 ------- 14,716 Telecommunications - 3.6% Comverse Technology, Inc. (a) 73,600 1,741 Macromedia, Inc. (a) 48,000 1,835 Nextel Partners, Inc. (a) 94,500 2,378 ------- 5,954 Transportation - 1.4% Landstar System, Inc. (a) 74,480 2,243 ------- TOTAL COMMON STOCKS 164,238 Cost: $133,515
------------------------------------------------------------------------- EMERGING GROWTH FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 0.3% Fifth Third Bank, Inc., 2.50%, 07/01/05 (Proceeds at maturity $431, collateralized by Federal Home Loan Mortgage Corp. security, 5.50%, 05/01/33) Cost: $431 431 431 ------- TOTAL INVESTMENTS - 99.3% 164,669 Cost: $133,946 (b)
Percentages indicated are based on net assets of $165,867. (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 $15. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $33,892 Unrealized depreciation (3,184) ------- Net unrealized appreciation $30,708
-------------------------------------------------------------------------------- SEE FINANCIAL NOTES 49 CITIZENS FUNDS HOLDINGS
------------------------------------------------------------------------- SMALL CAP CORE GROWTH FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- COMMON STOCKS - 93.5% Apparel Manufacturers - 1.9% Carter's, Inc. (a) 10,000 584 Banks - 2.9% PrivateBancorp, Inc. 14,000 496 SVB Financial Group (a) 8,000 383 ------ 879 Computers - 8.5% Ansys, Inc. (a) 15,760 559 Digital River, Inc. (a) 9,500 302 F5 Networks, Inc. (a) 10,960 518 NETGEAR, Inc. (a) 35,300 656 Websense, Inc. (a) 11,000 529 ------ 2,564 Educational Services - 2.4% Bright Horizons Family Solutions, Inc. (a) 18,000 733 Electrical Equipment - 1.9% Genlyte Group (a) 12,004 585 Electronics - 3.6% Diodes, Inc. (a) 16,000 499 Trimble Navigation Ltd. (a) 15,000 585 ------ 1,084 Energy & Utilities - 7.8% Airgas, Inc. 10,845 268 Cal Dive International, Inc. (a) 9,000 471 Headwaters, Inc. (a) 12,700 437 Hydril (a) 7,000 380 Precision Drilling Corp. (a) 12,500 494 RPC, Inc. 17,400 294 ------ 2,344 Healthcare - 20.2% Advanced Medical Optics (a) 10,882 433 American Healthways, Inc. (a) 14,000 592 American Medical Systems Holdings, Inc. (a) 24,006 496 AMERIGROUP Corp. (a) 12,000 482 Centene Corp. (a) 16,000 537 LifePoint Hospitals, Inc. (a) 14,600 737 Quality Systems, Inc. 13,000 616 Respironics, Inc. (a) 16,000 578 Sierra Health Services, Inc. (a) 11,000 785
------------------------------------------------------------------------- SMALL CAP CORE GROWTH FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Sybron Dental Specialties, Inc. (a) 12,000 451 Ventana Medical Systems, Inc. (a) 8,000 322 ------ 6,029 Hotels & Motels - 1.7% Choice Hotels International, Inc. 8,000 526 Insurance - 1.8% RLI Corp. 12,000 535 Investment Banking & Brokerage - 1.8% Affiliated Managers Group, Inc. (a) 8,000 547 Manufacturing - 9.0% Ceradyne, Inc. (a) 11,000 265 Oshkosh Truck Corp. 6,780 531 Roper Industries, Inc. 6,760 482 Silgan Holdings, Inc. 7,500 422 The Manitowoc Co., Inc. 12,900 529 Toro Co. 12,500 483 ------ 2,712 Multimedia - 1.5% Witness Systems, Inc. (a) 24,630 449 Personal Care - 4.1% Chattem, Inc. (a) 16,000 662 Steiner Leisure Ltd. (a) 15,000 556 ------ 1,218 Restaurants - 3.5% P.F. Chang's China Bistro, Inc. (a) 8,000 472 Sonic Corp. (a) 19,005 580 ------ 1,052 Retail - 9.4% Finish Line, Inc., Class A 25,000 473 Genesco, Inc. (a) 15,000 556 Guitar Center, Inc. (a) 9,650 563 Marinemax, Inc. (a) 12,000 375 Quiksilver, Inc. (a) 24,000 384 The Men's Wearhouse, Inc. (a) 13,500 465 ------ 2,816 Services - 8.0% Corporate Executive Board Co. 5,500 431 Labor Ready, Inc. (a) 27,000 630 Mine Safety Appliances 6,500 300
SEE FINANCIAL NOTES 50 JUNE 30, 2005 ($ X 1,000)
------------------------------------------------------------------------- SMALL CAP CORE GROWTH FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Services (continued) SCP Pool Corp. 14,000 491 Waste Connections, Inc. (a) 15,000 559 ------ 2,411 Telecommunications - 3.5% Macromedia, Inc. (a) 17,500 668 NII Holdings, Inc., Class B (a) 6,000 384 ------ 1,052 ------ TOTAL COMMON STOCKS 28,120 Cost: $22,580
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 7.8% Fifth Third Bank, Inc., 2.50%, 07/01/05 (Proceeds at maturity $2,343, collateralized by Federal Home Loan Mortgage Corp. security, 5.50%, 05/01/33) Cost: $2,343 2,343 2,343 ------ TOTAL INVESTMENTS - 101.3% 30,463 Cost: $24,923 (b)
Percentages indicated are based on net assets of $30,059. (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 $10. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $5,901 Unrealized depreciation (371) ------ Net unrealized appreciation $5,530
-------------------------------------------------------------------------------- SEE FINANCIAL NOTES 51 CITIZENS FUNDS HOLDINGS
------------------------------------------------------------------------- VALUE FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- COMMON STOCKS - 99.8% Air Freight - 2.6% FedEx Corp. 9,051 733 Apparel Manufacturers - 1.7% V.F. Corp. 8,359 478 Banks - 3.0% Bank of America Corp. 12,694 579 Marshall & Ilsley Corp. 6,000 267 ------ 846 Chemicals - 2.5% Amgen, Inc. (a) 6,400 387 Praxair, Inc. 6,781 316 ------ 703 Computers - 5.9% Hewlett-Packard Co. 14,699 346 International Business Machines Corp. 5,586 414 Microsoft Corp. 15,696 390 Symantec Corp. (a) 22,197 483 ------ 1,633 Construction - 2.9% Lafarge North America, Inc. 6,670 417 Standard Pacific Corp. 4,359 383 ------ 800 Consumer Products - 2.0% Kimberly-Clark Corp. 9,009 564 Electrical Equipment - 1.0% Emerson Electric Co. 4,253 266 Electronics - 1.7% International Rectifier Corp. (a) 10,093 482 Energy & Utilities - 15.7% AES Corp. (a) 23,955 392 Apache Corp. 7,990 516 Baker Hughes, Inc. 12,870 658 ConocoPhillips 16,878 971 Devon Energy Corp. 9,333 473 ONEOK, Inc. 17,875 584 Patterson-UTI Energy, Inc. 7,900 220 Precision Drilling Corp. (a) 8,810 348 Valero Energy Corp. 2,454 194 ------ 4,356
------------------------------------------------------------------------- VALUE FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Financial - Diversified - 8.2% Capital One Financial Corp. 7,651 612 Lehman Brothers Holdings, Inc. 5,695 565 MetLife, Inc. 10,741 483 Wachovia Corp. 12,362 613 ------ 2,273 Financial Services - 2.1% Golden West Financial Corp. 9,235 595 Foods - 2.0% Bunge Ltd. 8,853 561 Healthcare - 12.1% Baxter International, Inc. 15,490 575 Becton, Dickinson & Co. 3,399 178 CIGNA Corp. 5,002 535 Johnson & Johnson, Inc. 7,479 486 Pfizer, Inc. 24,760 683 WellPoint, Inc. (a) 12,810 892 ------ 3,349 Insurance - 5.1% American International Group, Inc. 4,888 284 The Allstate Corp. 12,352 738 The Hartford Financial Services Group, Inc. 5,397 404 ------ 1,426 Leisure - 1.5% Harley-Davidson, Inc. 8,163 405 Manufacturing - 6.3% 3M Co. 5,473 396 Eaton Corp. 6,702 400 Illinois Tool Works, Inc. 3,070 245 Masco Corp. 12,055 383 Nucor Corp. 7,140 326 ------ 1,750 Personal Care - 2.1% Avon Products, Inc. 15,760 597 Publishing - 1.1% The McGraw-Hill Cos., Inc. 6,607 292 Railroads - 1.4% Norfolk Southern Corp. 12,135 376 Real Estate - 2.9% General Growth Properties 9,488 390 Simon Property Group, Inc. 5,898 427 ------ 817
SEE FINANCIAL NOTES 52 JUNE 30, 2005 ($ X 1,000)
------------------------------------------------------------------------- VALUE FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Restaurants - 3.0% McDonald's Corp. 14,842 412 YUM! Brands, Inc. 8,120 423 ------ 835 Retail - 6.3% CVS Corp. 28,970 842 Nordstrom, Inc. 8,446 574 Target Corp. 5,900 321 ------ 1,737 Telecommunications - 6.7% Alltel Corp. 4,580 285 Lucent Technologies, Inc. (a) 140,734 410 Motorola, Inc. 28,308 516 Sprint Corp. 10,960 275 Verizon Communications, Inc. 10,646 368 ------ 1,854 ------ TOTAL COMMON STOCKS 27,728 Cost: $24,039
------------------------------------------------------------------------- VALUE FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 0.0% Fifth Third Bank, Inc., 2.50%, 07/01/05 (Proceeds at maturity $10, collateralized by Federal Home Loan Mortgage Corp. security, 5.50%, 05/01/33) Cost: $10 10 10 ------ TOTAL INVESTMENTS - 99.8% 27,738 Cost: $24,049 (b)
Percentages indicated are based on net assets of $27,791. (a) Represents 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 $130. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $3,805 Unrealized depreciation (246) ------ Net unrealized appreciation $3,559
-------------------------------------------------------------------------------- SEE FINANCIAL NOTES 53 CITIZENS FUNDS HOLDINGS
------------------------------------------------------------------------- GLOBAL EQUITY FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- COMMON STOCKS - 97.1% Automobile Manufacturing - 4.8% Bayerische Motoren Werke AG (a) 38,000 1,735 Toyota Motor Co. 12,000 858 Volvo AB 36,000 1,460 ------ 4,053 Banks - 3.8% Bank of New York Co., Inc. 45,000 1,295 Royal Bank of Scotland Group plc (a) 25,000 753 UBS AG ADR 15,000 1,168 ------ 3,216 Biotechnology - 1.9% Roche Holding AG (a) 12,492 1,575 Broadcasting - 3.2% Clear Channel Communications, Inc. 37,000 1,144 Viacom, Inc., Class B 50,000 1,601 ------ 2,745 Computers - 10.1% First Data Corp. 41,000 1,646 Intel Corp. 59,000 1,538 International Business Machines Corp. 10,000 742 Intuit, Inc. (b) 20,000 902 Microsoft Corp. 98,000 2,434 SAP AG (a) 7,500 1,306 ------ 8,568 Construction - 1.0% Fluor Corp. 15,000 864 Consumer Products - 1.1% Kimberly-Clark ADR 53,000 907 Energy & Utilities - 10.9% Apache Corp. 32,000 2,067 BG Group plc ADR 42,000 1,747 BP Amoco plc (a) 224,000 2,331 Gold Fields Ltd. ADR 60,000 681 Statoil ASA ADR 50,000 1,015 Valero Energy Corp. 18,000 1,424 ------ 9,265 Entertainment - 1.9% Comcast Corp., Class A (b) 53,000 1,587
------------------------------------------------------------------------- GLOBAL EQUITY FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Financial - Diversified - 13.6% American Express Co. 16,000 852 Bank of America Corp. 19,000 867 Citigroup, Inc. 52,000 2,403 Deutsche Boerse AG (a) 32,000 2,494 Fannie Mae 12,000 701 HBOS plc (a) 110,000 1,693 HSBC Holdings plc ADR 10,000 797 Mitsubishi Tokyo Financial Group, Inc. (a) 62 524 Mitsubishi Tokyo Financial Group, Inc. ADR 148,000 1,255 ------ 11,586 Food & Beverages - 3.1% Nestle SA (a) 5,678 1,452 PepsiCo, Inc. 22,000 1,186 ------ 2,638 Healthcare - 12.8% Beckman Coulter, Inc. 25,000 1,589 Boston Scientific Corp. (b) 50,000 1,350 Caremark Rx, Inc. (b) 18,000 801 Eli Lilly & Co. 15,000 836 GlaxoSmithKline plc (a) 95,000 2,294 Novartis AG ADR 35,000 1,660 Pfizer, Inc. 83,000 2,289 ------ 10,819 Insurance - 2.9% American International Group, Inc. 14,000 813 ING Groep NV (a) 60,000 1,689 ------ 2,502 Manufacturing - 6.9% 3M Co. 11,000 795 Komatsu, Ltd. (a) 218,000 1,684 L'Air Liquide ADR 26,000 887 Rexam plc (a) 102,000 878 Tyco International, Ltd. 56,000 1,635 ------ 5,879 Office Equipment & Supplies - 3.7% Avery Dennison Corp. 29,000 1,536 Canon, Inc. ADR 30,000 1,579 ------ 3,115
SEE FINANCIAL NOTES 54 JUNE 30, 2005 ($ X 1,000)
------------------------------------------------------------------------- GLOBAL EQUITY FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Personal Care - 4.3% Colgate-Palmolive Co. 24,000 1,198 Henkel KGaA ADR 10,000 843 The Estee Lauder Cos., Inc., Class A 41,000 1,604 ------ 3,645 Restaurants - 1.1% Wendy's International, Inc. 20,000 953 Retail - 2.4% Kohl's Corp. (b) 22,000 1,230 Petsmart, Inc. 27,000 819 ------ 2,049 Services - 0.9% WPP Group plc (a) 76,000 780 Telecommunications - 6.7% France Telecom SA ADR 28,000 816 Nippon Telegraph and Telephone Corp. 38,000 816 NTT DoCoMo, Inc. (b) 40,000 792 Verizon Communications, Inc. 46,000 1,589 Vodafone Group plc (a) 670,000 1,629 ------ 5,642 ------ TOTAL COMMON STOCKS 82,388 Cost: $75,889 SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 2.5% Fifth Third Bank, Inc., 2.50%, 07/01/05 (Proceeds at maturity $2,152, collateralized by Federal Home Loan Mortgage Corp. security, 5.50%, 05/01/33) Cost: $2,152 2,152 2,152 ------ TOTAL INVESTMENTS - 99.6% 84,540 Cost: $78,041 (c)
Percentages indicated are based on net assets of $84,840. (a) Fair valued security. The approximate market value and percentage of securities that are fair valued for the Global Equity Fund was $22,817 and 26.99%. (b) Non-income producing security. (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 of approximately $222. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $10,481 Unrealized depreciation (4,204) ------- Net unrealized appreciation $ 6,277
ADR - American Depositary Receipt The fund's portfolio holdings as of June 30, 2005, were distributed among the following countries: PERCENTAGE OF TOTAL INVESTMENTS ------------------------- SHORT TERM EQUITY & OTHER TOTAL ------------------------- Bermuda 1.9% 1.9% France 2.0% 2.0% Germany 7.5% 7.5% Israel 0.9% 0.9% Japan 8.0% 8.0% Mexico 1.1% 1.1% Netherlands 2.0% 2.0% Norway 1.2% 1.2% South Africa 0.8% 0.8% Sweden 1.7% 1.7% Switzerland 5.6% 5.6% United Kingdom 15.3% 15.3% United States 49.5% 2.5% 52.0% ---------------------------- TOTAL 97.5% 2.5% 100.0%
-------------------------------------------------------------------------------- SEE FINANCIAL NOTES 55 CITIZENS FUNDS HOLDINGS
------------------------------------------------------------------------- BALANCED FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- COMMON STOCKS - 63.7% Air Freight - 0.6% FedEx Corp. 400 32 Auto Manufacturing - 0.6% PACCAR, Inc. 450 31 Biotechnology - 0.6% Gilead Sciences, Inc. (a) 800 35 Chemicals - 1.9% Amgen, Inc. (a) 750 45 Praxair, Inc. 1,250 59 ----- 104 Computers - 4.2% Automatic Data Processing 1,400 59 Cognos, Inc. (a) 1,400 48 Dell, Inc. (a) 800 32 Network Appliance, Inc. (a) 1,500 42 Symantec Corp. (a) 2,400 52 ----- 233 Construction - 1.1% Pulte Homes, Inc. 750 63 Consumer Products - 0.6% Black & Decker Corp. 350 31 Electronics - 3.5% Adobe Systems, Inc. 2,200 63 Rockwell Automation, Inc. 1,500 73 Texas Instruments, Inc. 2,000 56 ----- 192 Energy & Utilities - 9.4% Apache Corp. 1,000 65 BJ Services Co. 500 26 Burlington Resources, Inc. 1,000 55 ConocoPhillips 1,300 75 Equitable Resources, Inc. 1,200 82 Murphy Oil Corp. 1,200 63 Questar Corp. 1,200 79 Valero Energy Corp. 1,000 79 ----- 524 Financial - Diversified - 5.1% Legg Mason, Inc. 900 94 Merrill Lynch & Co., Inc. 750 41 Moody's Corp. 1,600 72 SLM Corp. 1,400 71 ----- 278
------------------------------------------------------------------------- BALANCED FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Financial Services - 2.6% Franklin Resources, Inc. 1,000 77 Golden West Financial Corp. 1,000 64 ----- 141 Foods - 3.2% General Mills, Inc. 1,200 56 Hershey Foods Corp. 1,100 68 PepsiCo, Inc. 1,000 54 ----- 178 Healthcare - 7.7% Becton, Dickinson & Co. 1,200 63 C.R. Bard, Inc. 1,000 67 Johnson & Johnson, Inc. 1,400 92 St. Jude Medical, Inc. (a) 900 39 UnitedHealth Group, Inc. 1,000 52 WellPoint, Inc. (a) 1,000 70 Zimmer Holdings, Inc. (a) 500 38 ----- 421 Hotels & Motels - 1.1% Marriott International, Inc., Class A 900 61 Insurance - 2.3% The Allstate Corp. 1,400 83 The Chubb Corp. 500 43 ----- 126 Manufacturing - 6.2% Genuine Parts Co. 900 37 Ingersoll-Rand Co. 500 36 Pentair, Inc. 1,800 77 Precision Castparts Corp. 900 70 Procter & Gamble Co. 600 32 Taiwan Semiconductor ADR 6,300 57 Tyco International, Ltd. 1,000 29 ----- 338 Personal Care - 0.5% Gillette Co. 600 30 Pharmaceuticals - 1.7% Barr Pharmaceuticals, Inc. (a) 1,000 49 Schering-Plough Corp. 2,200 42 ----- 91 Publishing - 0.7% The McGraw-Hill Cos., Inc. 900 40 Real Estate - 1.2% Simon Property Group, Inc. 900 65
SEE FINANCIAL NOTES 56 JUNE 30, 2005 ($ X 1,000)
------------------------------------------------------------------------- BALANCED FUND SECURITY SHARES VALUE($) ------------------------------------------------------------------------- Retail - 3.7% CVS Corp. 3,000 87 Nordstrom, Inc. 1,000 68 Staples, Inc. 2,200 47 ----- 202 Services - 2.4% Ecolab, Inc. 1,250 40 Fiserv, Inc. (a) 800 34 Getty Images, Inc. (a) 800 60 ----- 134 Telecommunications - 2.8% Alltel Corp. 700 44 Comverse Technology, Inc. (a) 2,400 57 Sprint Corp. 2,000 50 ----- 151 ----- TOTAL COMMON STOCKS 3,501 Cost: $3,092 SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 0.7% First Horizon Alternative Mortgage Securities 4.81%, 06/25/34 (b) 17 17 5.50%, 03/25/35 (b) 23 23 ----- Cost: $40 40 CORPORATE BONDS - 6.4% Broadcasting - 0.2% Liberty Media Corp., 8.50%, 07/15/29 10 10 Computers - 0.3% Corning, Inc., 6.20%, 03/15/16 15 16 Construction - 0.5% KB Home, 5.88%, 01/15/15 15 15 Pulte Homes, Inc., 6.00%, 02/15/35 10 10 ----- 25 Energy & Utilities - 1.4% Atmos Energy, 4.95%, 10/15/14 15 15 Chesapeake Energy Corp., 6.88%, 01/15/16 20 21
------------------------------------------------------------------------- BALANCED FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- Enterprise Products Partners LP, 4.95%, 06/01/10 20 20 XTO Energy, Inc., 5.30%, 06/30/15 20 20 ----- 76 Financial - Diversified - 1.9% Citigroup, Inc., 3.42%, 05/18/10 50 51 Liberty Mutual Group, 5.75%, 03/15/14 (c) 10 10 Riddell Bell Holdings, 8.38%, 10/01/12 (c) 15 15 SLM Corp., 3.63%, 03/17/08 35 34 ----- 110 Healthcare - 0.3% Community Health Systems, 6.50%, 12/15/12 (c) 15 15 Investment Banking & Brokerage - 0.3% The Goldman Sachs Group, Inc., 5.00%, 10/01/14 15 15 Manufacturing - 0.1% American Standard, Inc., 7.38%, 02/01/08 5 5 Office Equipment & Supplies - 0.3% Xerox Corp., 6.88%, 08/15/11 15 16 Real Estate - 0.1% Brandywine Realty Trust, 5.40%, 11/01/14 5 5 Restaurants - 0.1% Dominos, Inc., 8.25%, 07/01/11 7 7 Telecommunications - 0.9% Directv Holdings, 6.38%, 06/15/15 (c) 30 30 Nextel Communications, Inc., 5.95%, 03/15/14 10 10 7.38%, 08/01/15 10 11 ----- 51 ----- TOTAL CORPORATE BONDS 351 Cost: $351
SEE FINANCIAL NOTES 57 CITIZENS FUNDS HOLDINGS
------------------------------------------------------------------------- BALANCED FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- FOREIGN GOVERNMENT BONDS - 0.3% United Mexican States, 6.75%, 09/27/34 15 16 Cost: $15 U.S. GOVERNMENT AGENCY OBLIGATIONS - 12.6% Federal Home Loan Bank - 3.0% 4.28%, 11/05/07 100 101 4.10%, 06/13/08 20 20 3.38%, 07/21/08 30 29 5.20%, 05/11/12 15 15 ----- 165 Federal Home Loan Mortgage Corporation - 5.0% 2.88%, 09/15/05 3 3 3.25%, 11/02/07 15 15 3.25%, 02/25/08 4 4 4.55%, 01/20/11 5 5 4.50%, 01/15/13 9 9 5.50%, 10/01/18 75 77 5.20%, 03/05/19 40 41 5.50%, 08/20/19 20 20 5.00%, 06/01/35 100 100 ----- 274 Federal National Mortgage Association - 4.6% 3.25%, 01/15/08 9 9 5.25%, 01/15/09 14 15 6.38%, 06/15/09 3 3 4.13%, 05/15/10 20 20 6.00%, 05/10/12 25 26 4.38%, 09/15/12 4 4 5.00%, 04/15/15 20 21 5.00%, 09/01/19 45 46 6.50%, 07/01/32 3 3 6.00%, 11/01/32 3 3 5.50%, 03/01/33 33 33 4.58%, 12/01/34 41 40 4.91%, 01/01/35 28 28 ----- 251 ----- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 690 Cost: $690
------------------------------------------------------------------------- BALANCED FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- U.S. TREASURY NOTES - 8.7% 6.50%, 02/15/10 100 112 4.00%, 03/15/10 100 101 3.88%, 05/15/10 35 35 4.75%, 05/15/14 10 11 4.00%, 02/15/15 100 100 5.38%, 02/15/31 100 118 ----- Cost: $458 477 REPURCHASE AGREEMENTS - 7.3% Fifth Third Bank, Inc., 2.50%, 07/01/05 (Proceeds at maturity $399, collateralized by Federal Home Loan Mortgage Corp. security, 4.00%, 07/01/18) Cost: $399 399 399 ----- TOTAL INVESTMENTS - 99.7% 5,474 Cost: $5,045 (d)
Percentages indicated are based on net assets of $5,491. (a) Non-income producing security. (b) Variable rate security. The rate presented represents the rate in effect on June 30, 2005. (c) Rule 144A security. (d) 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 $3. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $ 479 Unrealized depreciation (53) ------ Net unrealized appreciation $ 426
ADR - American Depositary Receipt -------------------------------------------------------------------------------- SEE FINANCIAL NOTES 58 JUNE 30, 2005 ($ X 1,000)
------------------------------------------------------------------------- INCOME FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 3.9% First Horizon Alternative Mortgage Securities 4.81%, 06/25/34 (a) 1,329 1,319 5.50%, 03/25/35 (a) 897 908 ------ Cost: $2,263 2,227 CORPORATE BONDS - 32.9% Broadcasting - 0.9% Liberty Media Corp., 8.50%, 07/15/29 490 495 Computers - 1.8% Corning, Inc., 6.20%, 03/15/16 985 1,028 Construction - 2.6% KB Home, 5.88%, 01/15/15 985 977 Pulte Homes, Inc., 6.00%, 02/15/35 490 477 ------ 1,454 Electrical Equipment - 1.8% Flextronics International, Ltd., 6.50%, 05/15/13 (b) 1,000 1,035 Energy & Utilities - 6.1% Atmos Energy, 4.95%, 10/15/14 985 983 Chesapeake Energy Corp., 6.88%, 01/15/16 980 1,023 Enterprise Products Partners LP, 4.95%, 06/01/10 480 482 XTO Energy, Inc., 5.30%, 06/30/15 980 999 ------ 3,487 Financial - Diversified - 4.3% Citigroup, Inc., 3.42%, 05/18/10 500 500 Liberty Mutual Group, 5.75%, 03/15/14 (b) 990 997 Riddell Bell Holdings, 8.38%, 10/01/12 (b) 985 987 ------ 2,484
------------------------------------------------------------------------- INCOME FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- Healthcare - 1.8% Community Health Systems, 6.50%, 12/15/12 (b) 985 1,002 Investment Banking & Brokerage - 1.8% The Goldman Sachs Group, Inc., 5.00%, 10/01/14 985 996 Manufacturing - 1.9% American Standard, Inc., 7.38%, 02/01/08 995 1,059 Office Equipment & Supplies - 1.8% Xerox Corp., 6.88%, 08/15/11 985 1,044 Pharmaceuticals - 1.9% AmerisourceBergen Corp., 8.13%, 09/01/08 1,000 1,085 Real Estate - 0.9% Brandywine Realty Trust, 5.40%, 11/01/14 495 498 Restaurants - 1.4% Dominos, Inc., 8.25%, 07/01/11 722 769 Telecommunications - 3.9% Directv Holdings, 6.38%, 06/15/15 (b) 620 617 Nextel Communications, Inc. 5.95%, 03/15/14 490 509 7.38%, 08/01/15 990 1,069 ------ 2,195 ------ TOTAL CORPORATE BONDS 18,631 Cost: $18,363 FOREIGN GOVERNMENT BONDS - 1.8% United Mexican States, 6.75%, 09/27/34 985 1,044 Cost: $970 U.S. GOVERNMENT AGENCY OBLIGATIONS - 41.4% Federal Home Loan Bank - 2.7% 4.10%, 06/13/08 500 499 5.20%, 05/11/12 985 1,001 ------ 1,500
SEE FINANCIAL NOTES 59 CITIZENS FUNDS HOLDINGS
------------------------------------------------------------------------- INCOME FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- Federal Home Loan Mortgage Corporation - 16.4% 3.25%, 11/02/07 985 971 4.55%, 01/20/11 495 497 4.00%, 06/15/13 2,230 2,226 6.25%, 11/14/13 1,000 1,009 5.50%, 10/01/18 1,532 1,573 5.20%, 03/05/19 1,960 1,990 5.50%, 08/20/19 980 995 ------ 9,261 Federal National Mortgage Association - 22.3% 4.13%, 05/15/10 480 483 6.00%, 05/10/12 975 1,008 5.00%, 04/15/15 980 1,035 5.00%, 09/01/19 1,795 1,816 4.58%, 12/01/34 1,986 1,977 4.91%, 01/01/35 2,287 2,316 6.00%, 04/01/35 3,872 3,970 ------ 12,605 ------ TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 23,366 Cost: $23,428 U.S. TREASURY NOTES - 15.3% 4.00%, 04/15/10 2,000 2,022 3.88%, 05/15/10 1,465 1,473 4.75%, 05/15/14 990 1,050 4.00%, 02/15/15 2,500 2,509 4.13%, 05/15/15 1,000 1,015 5.38%, 02/15/31 500 590 ------ Cost: $8,483 8,659
------------------------------------------------------------------------- INCOME FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 3.6% Fifth Third Bank, Inc., 2.50%, 07/01/05 (Proceeds at maturity $2,019, collateralized by Federal Home Loan Mortgage Corp. security, 5.50%, 05/01/33) Cost: $2,019 2,019 2,019 ------ TOTAL INVESTMENTS - 98.9% 55,946 Cost: $55,526 (c)
Percentages indicated are based on net assets of $56,597. (a) Variable rate security. The rate presented represents the rate in effect on June 30, 2005. (b) Rule 144A security. (c) Represents cost for financial reporting purposes and federal income tax purposes and differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $ 706 Unrealized depreciation (286) ------ Net unrealized appreciation $ 420
-------------------------------------------------------------------------------- SEE FINANCIAL NOTES 60 JUNE 30, 2005 ($ X 1,000)
------------------------------------------------------------------------- ULTRA SHORT BOND FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- CORPORATE BONDS - 54.2% Automotive Finance - 23.7% American Honda Finance, 3.44%, 08/15/06 (a)(b) 350 351 BMW Vehicle Owner Trust, 1.94%, 02/25/07 68 68 Chase Manhattan Auto Owner Trust, 3.87%, 06/15/09 250 250 GS Auto Loan Trust, 2.08%, 04/16/07 89 89 Harley-Davidson Motorcycle Trust, 1.34%, 01/15/08 17 17 3.56%, 02/15/12 200 198 Honda Auto Receivables Owner Trust, 2.16%, 10/21/08 200 196 Toyota Auto Receivables Owner Trust, 1.69%, 03/15/07 95 94 4.39%, 05/15/09 77 77 USAA Auto Owner Trust, 1.58%, 6/15/07 114 113 Volkswagon Credit, Inc., 3.40%, 07/21/05(a) 250 250 ----- 1,703 Banks - 1.4% Bank of America Corp., 4.75%, 10/15/06 100 101 Broadcasting - 2.9% TCI Communications, 8.00%, 08/01/05 210 211 Financial - Diversified - 21.3% American Express Co., 3.40%, 09/19/06 (a) 300 300 American General Finance, 3.00%, 11/15/06 250 246 CIT Group, Inc., 3.66%, 09/20/07 (a) 250 250 Citigroup, Inc., 3.42%, 05/18/10 200 200
------------------------------------------------------------------------- ULTRA SHORT BOND FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- Merrill Lynch & Co., 4.25%, 02/08/10 (a) 140 140 Nelnet Student Loan Trust, 3.13%, 06/22/11 (a) 200 200 SLM Corp., 3.63%, 03/17/08 200 197 ----- 1,533 Insurance - 3.5% Met Life Global Funding, 3.47%, 08/28/06 (a)(b) 250 250 Telecommunications - 1.4% Chesapeake (Bell Atlantic Virginia), 6.13%, 07/15/05 100 100 ----- TOTAL CORPORATE BONDS 3,898 Cost: $3,911 U.S. GOVERNMENT AGENCY OBLIGATIONS - 19.4% Federal Home Loan Bank - 4.9% 4.28%, 11/05/07 150 150 4.10%, 06/13/08 200 200 ----- 350 Federal Home Loan Mortgage Corporation - 4.1% 5.83%, 02/09/06 100 101 3.25%, 11/02/07 200 197 ----- 298 Federal National Mortgage Association - 6.9% 1.75%, 11/29/05 250 249 3.00%, 12/15/06 250 247 ----- 496 Student Loan Marketing Association - 3.5% 3.19%, 10/25/08 (a) 250 250 ----- TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 1,394 Cost: $1,401 U.S. TREASURY NOTES - 4.1% 2.50%, 05/31/06 200 198 3.63%, 04/30/07 100 100 ----- Cost: $298 298
SEE FINANCIAL NOTES 61 CITIZENS FUNDS HOLDINGS
------------------------------------------------------------------------- ULTRA SHORT BOND FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 27.0% Fifth Third Bank, Inc., 2.50%, 07/01/05 (Proceeds at maturity $1,944, collateralized by Federal Home Loan Mortgage Corp. security, 5.50%, 05/01/33) Cost: $1,943 1,943 1,943 ----- TOTAL INVESTMENTS - 104.7% 7,533 Cost: $7,553 (c)
Percentages indicated are based on net assets of $7,198. (a) Variable rate security. The rate presented represents the rate in effect on June 30, 2005. (b) Rule 144A security. (c) Represents cost for financial reporting purposes and federal income tax purposes and differs from value by net unrealized depreciation of securities as follows: Unrealized appreciation $ 3 Unrealized depreciation (23) ------ Net unrealized depreciation $ (20)
-------------------------------------------------------------------------------- SEE FINANCIAL NOTES 62 JUNE 30, 2005 ($ X 1,000)
------------------------------------------------------------------------- MONEY MARKET FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- CERTIFICATES OF DEPOSIT - 12.5% City National Bank of New Jersey, 3.23%, 09/13/05 (a) 100 100 First Tennessee Bank, 3.33%, 09/12/05 4,000 4,001 Mercantile Safe Deposit and Trust, 3.21%, 12/12/05 (b) 4,000 4,000 Self Help Credit Union, 3.23%, 09/13/05 (a) 100 100 Toronto Dominion, 3.52%, 12/29/05 3,000 3,000 ------ TOTAL CERTIFICATES OF DEPOSIT 11,201 Cost: $11,201 COMMERCIAL PAPER - 75.7% American Express Credit, 3.14%, 07/26/05 4,000 3,991 American General Finance Corp., 3.25%, 07/01/05 4,000 4,000 Banco Santander Puerto Rico, 3.11%, 07/06/05 4,000 3,998 Bank of America, 3.31%, 08/15/05 4,000 3,984 Blue Ridge Asset Funding, 3.11%, 07/29/05 (c) 3,930 3,921 Charta Corp., 3.10%, 07/15/05 4,000 3,995 Coca Cola Co., 3.07%, 07/21/05 4,000 3,993 Cooperative Association of Tractor Dealers, 2.94%, 07/15/05 2,000 1,998 3.13%, 08/16/05 2,000 1,992 3.33%, 09/19/05 2,000 1,985 3.49%, 11/22/05 2,000 1,973 Fountain Square, 3.13%, 07/29/05 (c) 4,000 3,990 Galaxy Funding, Inc., 3.39%, 09/21/05 (c) 4,000 3,969 Goldman Sachs, 3.11%, 07/11/05 4,000 3,997 HSBC ECN, 3.13%, 07/05/05 3,996 3,995 ING America Insurance, 3.25%, 09/01/05 4,000 3,978
------------------------------------------------------------------------- MONEY MARKET FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) ------------------------------------------------------------------------- Mid States Federal Credit Union Corp., 3.17%, 07/14/05 4,000 3,995 Procter & Gamble, 3.22%, 08/24/05 4,000 3,981 UBS Finance Corp., 3.39%, 07/01/05 4,000 4,000 ------ TOTAL COMMERCIAL PAPER 67,735 Cost: $67,735 MUNICIPAL NOTES - 3.9% New York State Housing Finance Agency, 3.32%, 11/15/29 (b) 3,500 3,500 Cost: $3,500 U.S. GOVERNMENT AGENCY OBLIGATIONS - 4.7% Federal National Mortgage Association, 3.03%, 07/18/05 4,200 4,194 Cost: $4,194 REPURCHASE AGREEMENTS - 1.1% Fifth Third Bank, Inc., 2.50%, 07/01/05 (Proceeds at maturity $971, collateralized by Federal Home Loan Mortgage Corp. security, 5.50%, 05/01/33) Cost: $971 971 971 ------ TOTAL INVESTMENTS - 97.9% 87,601 Cost: $87,601 (d)
Percentages indicated are based on net assets of $89,487. (a) Restricted security which may not be publicly sold without registration under the Securities Act of 1933. (b) Variable rate security. The rate presented represents the rate in effect on June 30, 2005. (c) Rule 144A security. (d) Represents cost and value for financial reporting and federal income tax purposes. -------------------------------------------------------------------------------- SEE FINANCIAL NOTES 63 STATEMENTS OF ASSETS AND LIABILITIES
300 Core Growth Emerging Growth Fund Fund Fund ---------------------------------------------------------------------------------------------- ASSETS Investments, at value $6,286,232 $306,687,195 $ 164,238,054 Repurchase agreements 22,526 17,438,266 430,836 ------------------------------------------- Total investments 6,308,758 324,125,461 164,668,890 Cash -- -- -- Foreign currency -- -- -- Receivables: Interest and dividends 3,842 283,963 44,672 Investments sold -- -- 4,339,825 Tax reclaims -- -- -- Capital shares issued -- 59,190 80,359 Due from investment adviser 1,022 -- -- Prepaid expenses 7,021 18,971 15,418 ------------------------------------------- Total assets 6,320,643 324,487,585 169,149,164 LIABILITIES Payables: Dividends to shareholders -- -- -- Investments purchased 22,157 -- 2,893,133 Capital shares redeemed 102 343,791 89,402 Investment management fees 555 67,017 68,691 Administrative fees 416 20,105 10,304 Shareholder service fees 117 13,184 4,703 Distribution fees 694 29,040 16,902 Other accrued expenses 6,975 323,504 199,425 ------------------------------------------- Total liabilities 31,016 796,641 3,282,560 ---------------------------------------------------------------------------------------------- NET ASSETS $6,289,627 $323,690,944 $ 165,866,604 ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- NET ASSETS Standard Shares: Net assets $6,289,627 $278,940,457 $ 157,963,434 Number of shares outstanding 557,956 14,147,598 11,206,618 Net asset value, offering and redemption price per share $ 11.27 $ 19.72 $ 14.10 Institutional Shares: Net assets -- $ 43,083,001 $ 2,632,870 Number of shares outstanding -- 2,619,216 180,087 Net asset value, offering and redemption price per share -- $ 16.45 $ 14.62 Administrative Shares: Net assets -- $ 1,667,486 $ 5,270,300 Number of shares outstanding -- 82,685 366,675 Net asset value, offering and redemption price per share -- $ 20.17 $ 14.37 Net assets consist of: Paid-in capital $5,793,016 $341,833,580 $ 325,452,010 Accumulated net investment income/loss 24,904 -- -- Accumulated net realized gains/losses on investments and foreign currencies 20,589 (73,448,013) (190,308,639) Net unrealized appreciation/depreciation on investments and foreign currencies 451,118 55,305,377 30,723,233 ---------------------------------------------------------------------------------------------- NET ASSETS $6,289,627 $323,690,944 $ 165,866,604 ---------------------------------------------------------------------------------------------- Investments, at cost $5,857,640 $268,820,084 $ 133,945,657 Foreign currency, at cost -- -- --
SEE FINANCIAL NOTES 64 AS OF JUNE 30, 2005
Small Cap Core Value Global Equity Balanced Income Ultra Short Money Market Growth Fund Fund Fund Fund Fund Bond Fund Fund -------------------------------------------------------------------------------------------------------- $28,120,469 $27,728,145 $ 82,387,731 $5,075,252 $53,927,637 $5,590,025 $86,630,001 2,342,887 10,013 2,152,300 398,661 2,018,832 1,943,471 971,018 -------------------------------------------------------------------------------------------------------- 30,463,356 27,738,158 84,540,031 5,473,913 55,946,469 7,533,496 87,601,019 -- -- -- -- -- -- 1,783,503 -- -- 109,467 -- -- -- -- 2,833 16,670 120,918 21,764 628,602 32,212 31,374 487,906 2,944,287 -- -- -- -- -- -- -- 97,078 -- -- -- -- 90,027 63,592 185,713 -- 121,109 4,500 383,730 -- -- -- 3,173 -- 3,683 -- 6,227 4,899 15,859 5,701 6,319 5,337 13,028 -------------------------------------------------------------------------------------------------------- 31,050,349 30,767,606 85,069,066 5,504,551 56,702,499 7,579,228 89,812,654 -- -- -- 374 16,075 3,113 3,878 941,413 2,929,645 -- -- -- -- -- 4,524 2,838 68,873 3,165 7,042 367,841 199,734 6,113 7,964 35,329 1,437 15,070 1,105 12,857 1,834 1,707 5,299 332 3,478 473 5,510 748 682 2,337 163 -- 134 2,115 3,057 2,844 8,534 553 5,796 789 -- 33,588 31,029 108,692 7,067 58,250 7,484 101,706 -------------------------------------------------------------------------------------------------------- 991,277 2,976,709 229,064 13,091 105,711 380,939 325,800 -------------------------------------------------------------------------------------------------------- $30,059,072 $27,790,897 $ 84,840,002 $5,491,460 $56,596,788 $7,198,289 $89,486,854 -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- $30,059,072 $27,790,897 $ 80,383,695 $5,491,460 $56,596,788 $7,198,289 $76,724,268 2,732,825 2,395,529 5,066,963 462,677 5,658,426 727,077 76,823,388 $ 11.00 $ 11.60 $ 15.86 $ 11.87 $ 10.00 $ 9.90 $ 1.00 -- -- $ 2,890,599 -- -- -- $12,762,586 -- -- 176,347 -- -- -- 12,768,051 -- -- $ 16.39 -- -- -- $ 1.00 -- -- $ 1,565,708 -- -- -- -- -- -- 97,206 -- -- -- -- -- -- $ 16.11 -- -- -- -- $27,480,649 $32,028,344 $ 203,631,401 $5,141,612 $61,421,431 $7,320,363 89,525,388 -- -- (13,609) (1) 1 (297) -- (2,961,593) (7,927,034) (125,275,415) (79,206) (5,244,790) (102,220) (38,534) 5,540,016 3,689,587 6,497,625 429,055 420,146 (19,557) -- -------------------------------------------------------------------------------------------------------- $30,059,072 $27,790,897 $ 84,840,002 $5,491,460 $56,596,788 $7,198,289 $89,486,854 -------------------------------------------------------------------------------------------------------- $24,923,340 $24,048,571 $ 78,041,351 $5,044,858 $55,526,323 $7,553,053 $87,601,019 -- -- 114,686 -- -- -- --
SEE FINANCIAL NOTES 65 STATEMENTS OF OPERATIONS
300 Core Growth Emerging Growth Fund Fund Fund ---------------------------------------------------------------------------------------------- INVESTMENT INCOME Interest $ 438 $ 240,045 $ 49,812 Dividend (1) 107,331 3,722,980 881,932 ---------------------------------------------------------------------------------------------- Total investment income 107,769 3,963,025 931,744 EXPENSES Investment management fees 13,729 1,621,821 1,668,693 Administrative fees 10,297 486,549 250,304 Distribution fees: Standard shares 17,161 698,833 393,705 Administrative shares -- 3,983 16,280 Shareholder service fees: Standard shares 2,206 708,924 116,496 Institutional shares -- 904 113 Administrative shares -- 116 187 Transfer agent expenses: Standard shares 7,834 701,510 508,878 Institutional shares -- 3,474 365 Administrative shares -- 1,441 4,811 Accounting expenses 12,209 124,784 71,319 Custody expenses 5,915 13,193 8,272 Registration expenses 18,023 36,087 34,413 Trustee expenses 1,468 69,939 36,154 Other expenses 6,511 218,352 127,278 ---------------------------------------------------------------------------------------------- Total expenses before reimbursements, waivers, or expenses paid indirectly 95,353 4,689,910 3,237,268 Reimbursements or waivers from adviser (33,585) -- -- Expenses paid indirectly -- (18,354) (19,421) ---------------------------------------------------------------------------------------------- Net expenses 61,768 4,671,556 3,217,847 ---------------------------------------------------------------------------------------------- NET INVESTMENT INCOME/LOSS $ 46,001 $ (708,531) $(2,286,103) REALIZED AND UNREALIZED GAINS/LOSSES ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Realized gains/losses on investments and foreign currency transactions $ 34,659 $13,066,631 $(2,034,432) Change in unrealized appreciation/depreciation on investments and foreign currencies 61,219 15,286,460 17,191,037 ---------------------------------------------------------------------------------------------- Net realized and unrealized gains/losses on investments and foreign currencies 95,878 28,353,091 15,156,605 CHANGE IN NET ASSETS FROM OPERATIONS $141,879 $27,644,560 $12,870,502 (1) Dividend income net of withholding taxes. For the year ended June 30, 2005, withholding taxes for the Global Equity Fund were $61,325.
SEE FINANCIAL NOTES 66 FOR THE YEAR ENDED JUNE 30, 2005
Small Cap Core Value Global Equity Balanced Income Ultra Short Money Market Growth Fund Fund Fund Fund Fund Bond Fund Fund ---------------------------------------------------------------------------------------------------- $ 26,102 $ 8,184 $ 46,272 $ 52,011 $2,915,255 $163,898 $2,010,798 92,887 389,945 1,950,661 38,068 52,167 4,074 -- ---------------------------------------------------------------------------------------------------- 118,989 398,129 1,996,933 90,079 2,967,422 167,972 2,010,798 139,786 175,152 920,249 24,691 375,312 24,276 320,729 41,936 37,533 138,037 5,698 86,611 10,404 137,456 69,893 62,554 217,324 9,496 144,351 17,340 -- -- -- 4,679 -- -- -- -- 18,465 17,074 56,093 3,609 30,138 2,977 50,961 -- -- 77 -- -- -- 472 -- -- 82 -- -- -- -- 86,687 78,000 309,554 11,563 121,491 12,860 213,290 -- -- 356 -- -- -- 1,667 -- -- 1,884 -- -- -- -- 15,105 12,322 56,934 9,196 26,661 7,111 34,773 4,974 5,549 17,593 6,134 3,909 4,920 8,701 16,114 14,614 33,571 14,275 16,736 14,142 29,541 6,030 5,392 19,973 772 12,381 1,432 19,497 22,437 18,115 79,502 3,070 38,194 5,025 58,788 ---------------------------------------------------------------------------------------------------- 421,427 426,305 1,855,908 88,504 855,784 100,487 875,875 -- -- -- (39,026) -- (90,637) -- (2,129) -- -- -- -- -- -- ---------------------------------------------------------------------------------------------------- 419,298 426,305 1,855,908 49,478 855,784 9,850 875,875 ---------------------------------------------------------------------------------------------------- $ (300,309) $ (28,176) $ 141,025 $ 40,601 $2,111,638 $158,122 $1,134,923 $(2,896,785) $1,338,604 $ 6,000,124 $(77,836) $ 352,980 $ (6,647) $ (29,451) 4,753,730 1,273,049 (2,235,549) 350,600 552,719 3,430 -- ---------------------------------------------------------------------------------------------------- 1,856,945 2,611,653 3,764,575 272,764 905,699 (3,217) (29,451) $ 1,556,636 $2,583,477 $ 3,905,600 $313,365 $3,017,337 $154,905 $1,105,472
SEE FINANCIAL NOTES 67 STATEMENTS OF CHANGES IN NET ASSETS
300 FUND CORE GROWTH FUND ------------------------------------------------------------------------------------------------ For the For the period For the For the year ended 08/29/03 (1)- year ended year ended 06/30/05 06/30/04 06/30/05 06/30/04 ------------------------------------------------------------------------------------------------ OPERATIONS Net investment income/loss $ 46,001 $ 15,226 $ (708,531) $ (1,924,176) Realized gains/losses on investments 34,659 10,201 13,066,631 43,684,981 Change in unrealized appreciation/ depreciation on investments 61,219 389,899 15,286,460 (6,189,966) ------------------------------------------------------------------------------------------------ Change in net assets from operations 141,879 415,326 27,644,560 35,570,839 Dividends to Shareholders: From net investment income: Standard Shares (34,591) (4,055) -- -- From net realized gains on investments: Standard Shares (24,271) -- -- -- ------------------------------------------------------------------------------------------------ Total dividends (58,862) (4,055) -- -- Change in net assets from capital transactions (642,155) 6,437,494 (48,783,373) (42,077,189) CHANGE IN NET ASSETS $ (559,138) $6,848,765 $(21,138,813) $ (6,506,350) ------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------ NET ASSETS Beginning of period $ 6,848,765 -- $344,829,757 $351,336,107 End of period $ 6,289,627 $6,848,765 $323,690,944 $344,829,757 ------------------------------------------------------------------------------------------------ Accumulated net investment income/loss $ 24,904 $ 13,494 -- -- ------------------------------------------------------------------------------------------------ CAPITAL TRANSACTIONS Standard Shares Proceeds from shares issued $ 2,053,618 $6,674,799 $ 13,543,217 $ 21,264,741 Dividends reinvested 58,104 4,044 -- -- Cost of shares redeemed (2,753,877) (241,349) (48,788,003) (44,917,887) ---------------------------------------------------------- Net change (642,155) 6,437,494 (35,244,786) (23,653,146) ---------------------------------------------------------- Institutional Shares Proceeds from shares issued -- -- $ 18,399,176 $ 23,690,276 Cost of shares redeemed -- -- (31,826,203) (41,119,985) ---------------------------------------------------------- Net change -- -- (13,427,027) (17,429,709) ---------------------------------------------------------- Administrative Shares Proceeds from shares issued -- -- $ 426,879 $ 733,629 Cost of shares redeemed -- -- (538,439) (1,727,963) ---------------------------------------------------------- Net change -- -- (111,560) (994,334) ---------------------------------------------------------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ (642,155) $6,437,494 $(48,783,373) $(42,077,189) ------------------------------------------------------------------------------------------------ SHARE TRANSACTIONS Standard Shares Issued 185,089 635,272 728,440 1,188,913 Reinvested 5,039 374 -- -- Redeemed (246,122) (21,696) (2,622,290) (2,501,662) ---------------------------------------------------------- Net change (55,994) 613,950 (1,893,850) (1,312,749) ---------------------------------------------------------- Institutional Shares Issued -- -- 1,176,634 1,616,753 Redeemed -- -- (2,082,889) (2,794,779) ---------------------------------------------------------- Net change -- -- (906,255) (1,178,026) ---------------------------------------------------------- Administrative Shares Issued -- -- 22,427 40,193 Redeemed -- -- (28,441) (96,922) ---------------------------------------------------------- Net change -- -- (6,014) (56,729) ---------------------------------------------------------- CHANGE IN SHARES FROM SHARE TRANSACTIONS (55,994) 613,950 (2,806,119) (2,547,504) ------------------------------------------------------------------------------------------------
(1) Commencement of operations. SEE FINANCIAL NOTES 68
EMERGING GROWTH FUND SMALL CAP CORE GROWTH FUND VALUE FUND --------------------------------------------------------------------------------------- For the For the For the For the For the For the year ended year ended year ended year ended year ended year ended 06/30/05 06/30/04 06/30/05 06/30/04 06/30/05 06/30/04 --------------------------------------------------------------------------------------- $ (2,286,103) $ (2,665,962) $ (300,309) $ (346,285) $ (28,176) $ (47,170) (2,034,432) 37,477,874 (2,896,785) 6,022,751 1,338,604 2,404,710 17,191,037 (3,529,402) 4,753,730 (1,011,664) 1,273,049 1,384,533 --------------------------------------------------------------------------------------- 12,870,502 31,282,510 1,556,636 4,664,802 2,583,477 3,742,073 -- -- -- -- -- -- -- -- (1,298,737) -- -- -- --------------------------------------------------------------------------------------- -- -- (1,298,737) -- -- -- (27,903,648) (22,233,586) 99,867 7,215,282 1,336,365 3,902,663 $(15,033,146) $ 9,048,924 $ 357,766 $11,880,084 $ 3,919,842 $ 7,644,736 --------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------- $180,899,750 $171,850,826 $29,701,306 $17,821,222 $23,871,055 $16,226,319 $165,866,604 $180,899,750 $30,059,072 $29,701,306 $27,790,897 $23,871,055 --------------------------------------------------------------------------------------- -- -- -- -- -- -- --------------------------------------------------------------------------------------- $ 13,949,825 $ 21,134,996 $ 7,867,590 $13,121,654 $ 8,531,488 $ 8,784,600 -- -- 1,265,634 -- -- -- (34,269,158) (41,911,039) (9,033,357) (5,906,372) (7,195,123) (4,881,937) --------------------------------------------------------------------------------------- (20,319,333) (20,776,043) 99,867 7,215,282 1,336,365 3,902,663 --------------------------------------------------------------------------------------- $ 559,501 $ 1,239,421 -- -- -- -- (1,710,905) (4,008,407) -- -- -- -- --------------------------------------------------------------------------------------- (1,151,404) (2,768,986) -- -- -- -- --------------------------------------------------------------------------------------- $ 890,326 $ 6,512,533 -- -- -- -- (7,323,237) (5,201,090) -- -- -- -- --------------------------------------------------------------------------------------- (6,432,911) 1,311,443 -- -- -- -- --------------------------------------------------------------------------------------- $(27,903,648) $(22,233,586) $ 99,867 $ 7,215,282 $ 1,336,365 $ 3,902,663 --------------------------------------------------------------------------------------- 1,059,522 1,702,236 750,734 1,247,393 795,995 888,579 -- -- 117,843 -- -- -- (2,599,019) (3,358,592) (876,978) (561,227) (671,471) (495,734) --------------------------------------------------------------------------------------- (1,539,497) (1,656,356) (8,401) 686,166 124,524 392,845 --------------------------------------------------------------------------------------- 41,357 96,116 -- -- -- -- (124,903) (311,449) -- -- -- -- --------------------------------------------------------------------------------------- (83,546) (215,333) -- -- -- -- --------------------------------------------------------------------------------------- 67,524 517,457 -- -- -- -- (576,879) (412,025) -- -- -- -- --------------------------------------------------------------------------------------- (509,355) 105,432 -- -- -- -- --------------------------------------------------------------------------------------- (2,132,398) (1,766,257) (8,401) 686,166 124,524 392,845 ---------------------------------------------------------------------------------------
SEE FINANCIAL NOTES 69 STATEMENTS OF CHANGES IN NET ASSETS
GLOBAL EQUITY FUND BALANCED FUND ---------------------------------------------------------------------------------------------- For the For the For the For the year ended year ended year ended year ended 06/30/05 06/30/04 06/30/05 06/30/04 ---------------------------------------------------------------------------------------------- OPERATIONS Net investment income/loss $ 141,025 $ (681,388) $ 40,601 $ 10,304 Realized gains/losses on investments and foreign currency transactions 6,000,124 476,043 (77,836) 80,597 Change in unrealized appreciation/ depreciation on investments and foreign currencies (2,235,549) 14,619,718 350,600 52,694 ---------------------------------------------------------------------------------------------- Change in net assets from operations 3,905,600 14,414,373 313,365 143,595 Dividends to Shareholders: From net investment income: Standard Shares -- -- (41,749) (11,300) Institutional Shares -- -- -- -- From net realized gains on investments: Standard Shares -- -- (72,335) (31,488) ---------------------------------------------------------------------------------------------- Total dividends -- -- (114,084) (42,788) Change in net assets from capital transactions (22,076,750) (21,995,780) 2,488,096 1,642,210 CHANGE IN NET ASSETS $(18,171,150) $ (7,581,407) $2,687,377 $1,743,017 ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- NET ASSETS Beginning of period $103,011,152 $110,592,559 $2,804,083 $1,061,066 End of period $ 84,840,002 $103,011,152 $5,491,460 $2,804,083 ---------------------------------------------------------------------------------------------- Accumulated net investment loss $ (13,609) $ (441,535) $ (1) -- ---------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS Standard Shares Proceeds from shares issued $ 7,159,084 $ 12,635,147 $3,202,991 $1,943,959 Dividends reinvested -- -- 116,909 37,052 Cost of shares redeemed (26,154,054) (32,146,318) (831,804) (338,801) ----------------------------------------------------- Net change (18,994,970) (19,511,171) 2,488,096 1,642,210 ----------------------------------------------------- Institutional Shares Proceeds from shares issued $ 613,484 $ 10,869,317 -- -- Dividends reinvested -- -- -- -- Cost of shares redeemed (3,015,760) (13,146,663) -- -- ----------------------------------------------------- Net change (2,402,276) (2,277,346) -- -- ----------------------------------------------------- Administrative Shares Proceeds from shares issued $ 313,429 $ 507,646 -- -- Cost of shares redeemed (992,933) (714,909) -- -- ----------------------------------------------------- Net change (679,504) (207,263) -- -- ----------------------------------------------------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $(22,076,750) $(21,995,780) $2,488,096 $1,642,210 ---------------------------------------------------------------------------------------------- SHARE TRANSACTIONS Standard Shares Issued 468,530 851,102 278,643 172,335 Reinvested -- -- 10,053 3,318 Redeemed (1,701,043) (2,160,362) (72,998) (30,031) ----------------------------------------------------- Net change (1,232,513) (1,309,260) 215,698 145,622 ----------------------------------------------------- Institutional Shares Issued 38,057 765,110 -- -- Reinvested -- -- -- -- Redeemed (198,226) (918,483) -- -- ----------------------------------------------------- Net change (160,169) (153,373) -- -- ----------------------------------------------------- Administrative Shares Issued 20,183 33,828 -- -- Redeemed (62,430) (46,795) -- -- ----------------------------------------------------- Net change (42,247) (12,967) -- -- ----------------------------------------------------- CHANGE IN SHARES FROM SHARE TRANSACTIONS (1,434,929) (1,475,600) 215,698 145,622 ----------------------------------------------------------------------------------------------
SEE FINANCIAL NOTES 70
INCOME FUND ULTRA SHORT BOND FUND MONEY MARKET FUND ----------------------------------------------------------------------------------------- For the For the For the For the For the For the year ended year ended year ended year ended year ended year ended 06/30/05 06/30/04 06/30/05 06/30/04 06/30/05 06/30/04 ----------------------------------------------------------------------------------------- $ 2,111,638 $ 2,099,324 $ 158,122 $ 163,323 $ 1,134,923 $ 138,690 352,980 404,291 (6,647) (69,702) (29,451) -- 552,719 (2,935,975) 3,430 (61,472) -- -- ----------------------------------------------------------------------------------------- 3,017,337 (432,360) 154,905 32,149 1,105,472 138,690 (2,182,135) (2,247,909) (166,503) (172,102) (951,801) (95,186) -- -- -- -- (183,122) (43,504) -- -- -- -- -- -- ----------------------------------------------------------------------------------------- (2,182,135) (2,247,909) (166,503) (172,102) (1,134,923) (138,690) (3,800,843) (6,894,783) (342,202) (1,559,881) (4,726,157) (21,290,731) $ (2,965,641) $ (9,575,052) $ (353,800) $(1,699,834) $ (4,755,608) $(21,290,731) ----------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------- $ 59,562,429 $ 69,137,481 $ 7,552,089 $ 9,251,923 $ 94,242,462 $115,533,193 $ 56,596,788 $ 59,562,429 $ 7,198,289 $ 7,552,089 $ 89,486,854 $ 94,242,462 ----------------------------------------------------------------------------------------- $ 1 -- $ (297) $ (255) -- -- ----------------------------------------------------------------------------------------- $ 5,746,190 $ 7,287,801 $ 3,471,248 $ 6,180,634 $ 67,336,900 $ 75,687,758 2,140,899 2,048,025 142,022 153,072 946,951 105,043 (11,687,932) (16,230,609) (3,955,472) (7,893,587) (74,764,898) (97,203,060) ----------------------------------------------------------------------------------------- (3,800,843) (6,894,783) (342,202) (1,559,881) (6,481,047) (21,410,259) ----------------------------------------------------------------------------------------- -- -- -- -- $ 4,217,756 $ 7,048,948 -- -- -- -- 187,562 44,467 -- -- -- -- (2,650,428) (6,973,887) ----------------------------------------------------------------------------------------- -- -- -- -- 1,754,890 119,528 ----------------------------------------------------------------------------------------- -- -- -- -- -- -- -- -- -- -- -- -- ----------------------------------------------------------------------------------------- -- -- -- -- -- -- ----------------------------------------------------------------------------------------- $ (3,800,843) $ (6,894,783) $ (342,202) $(1,559,881) $ (4,726,157) $(21,290,731) ----------------------------------------------------------------------------------------- 572,962 724,145 350,231 618,148 67,336,900 75,687,758 214,215 203,510 14,336 15,347 946,951 105,043 (1,168,437) (1,611,789) (398,835) (791,761) (74,764,898) (97,203,060) ----------------------------------------------------------------------------------------- (381,260) (684,134) (34,268) (158,266) (6,481,047) (21,410,259) ----------------------------------------------------------------------------------------- -- -- -- -- 4,217,756 7,048,948 -- -- -- -- 187,562 44,467 -- -- -- -- (2,650,428) (6,973,887) ----------------------------------------------------------------------------------------- -- -- -- -- 1,754,890 119,528 ----------------------------------------------------------------------------------------- -- -- -- -- -- -- -- -- -- -- -- -- ----------------------------------------------------------------------------------------- -- -- -- -- -- -- ----------------------------------------------------------------------------------------- (381,260) (684,134) (34,268) (158,266) (4,726,157) (21,290,731) -----------------------------------------------------------------------------------------
SEE FINANCIAL NOTES 71 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 ------------------------------------------------------------------------------------------------------------------ 300 FUND STANDARD SHARES ------------------------------------------------------------------------------------------------------------------ Year ended June 30, 2005 $11.16 0.08 -- 0.13 0.21 (0.06) Period ended June 30, 2004 (1) 10.00 0.03 -- 1.14 1.17 (0.01) ------------------------------------------------------------------------------------------------------------------ CORE GROWTH FUND STANDARD SHARES ------------------------------------------------------------------------------------------------------------------ Year ended June 30, 2005 $18.10 (0.06) -- 1.68 1.62 -- 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) -- INSTITUTIONAL SHARES ------------------------------------------------------------------------------------------------------------------ Year ended June 30, 2005 $14.99 0.07 -- 1.39 1.46 -- 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) -- ADMINISTRATIVE SHARES ------------------------------------------------------------------------------------------------------------------ Year ended June 30, 2005 $18.44 0.02 -- 1.71 1.73 -- 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) -- ------------------------------------------------------------------------------------------------------------------ EMERGING GROWTH FUND STANDARD SHARES ------------------------------------------------------------------------------------------------------------------ Year ended June 30, 2005 $13.01 (0.18)(4) -- 1.27 1.09 -- 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) -- INSTITUTIONAL SHARES ------------------------------------------------------------------------------------------------------------------ Year ended June 30, 2005 $13.41 (0.10)(4) -- 1.31 1.21 -- 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) -- ADMINISTRATIVE SHARES ------------------------------------------------------------------------------------------------------------------ Year ended June 30, 2005 $13.22 (0.14)(4) -- 1.29 1.15 -- Year ended June 30, 2004 11.11 (0.14) -- 2.25 2.11 -- Year ended June 30, 2003 11.92 (0.10) -- (0.71) (0.81) -- Year ended June 30, 2002 15.87 (0.13) -- (3.82) (3.95) -- Year ended June 30, 2001 33.57 (0.17)(4) -- (11.46) (11.63) -- ------------------------------------------------------------------------------------------------------------------ (1) For the period August 29, 2003, commencement of operations, to June 30, 2004. (2) Not annualized. (3) Annualized. (4) Based on average shares outstanding.
SEE FINANCIAL NOTES 72
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA ------------------------------------------------------------------------------------------------------------------------------------ Net Ratio of Ratio of net Ratio of From Net asset assets, expenses to investment expenses to net Total value, Total end of average net income/loss average net Portfolio realized dividends to end return period assets, net of to average net assets, prior to turnover gains shareholders of period (%) ($ X 1,000) reimbursement (%) assets (%) reimbursement (%) rate (%) ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ (0.04) (0.10) $11.27 1.84 $ 6,290 0.90 0.67 1.39 31.76 -- (0.01) 11.16 11.71(2) 6,849 0.90(3) 0.38(3) 1.94(3) 32.98 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ -- -- $19.72 8.95 $278,940 1.55 (0.32) 1.55 101.34 -- -- 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 ------------------------------------------------------------------------------------------------------------------------------------ -- -- $16.45 9.74 $ 43,083 0.80 0.42 0.80 101.34 -- -- 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 ------------------------------------------------------------------------------------------------------------------------------------ -- -- $20.17 9.38 $ 1,667 1.14 0.09 1.14 101.34 -- -- 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 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ -- -- $14.10 8.38 $157,963 1.96 (1.39) 1.96 109.56 -- -- 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 ------------------------------------------------------------------------------------------------------------------------------------ -- -- $14.62 9.02 $ 2,633 1.33 (0.76) 1.33 109.56 -- -- 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 ------------------------------------------------------------------------------------------------------------------------------------ -- -- $14.37 8.70 $ 5,270 1.64 (1.08) 1.64 109.56 -- -- 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 ------------------------------------------------------------------------------------------------------------------------------------
SEE FINANCIAL NOTES 73 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 CORE GROWTH FUND STANDARD SHARES -------------------------------------------------------------------------------------------------------------------- Year ended June 30, 2005 $10.84 (0.11) -- 0.77 0.66 -- 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) -- -------------------------------------------------------------------------------------------------------------------- VALUE FUND STANDARD SHARES -------------------------------------------------------------------------------------------------------------------- Year ended June 30, 2005 $10.51 (0.01) -- 1.10 1.09 -- 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 (1) 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 -- -------------------------------------------------------------------------------------------------------------------- GLOBAL EQUITY FUND STANDARD SHARES -------------------------------------------------------------------------------------------------------------------- Year ended June 30, 2005 $15.18 0.02(4) --(5) 0.66 0.68 -- Year ended June 30, 2004 13.39 (0.10)(4) --(5) 1.89 1.79 -- Year ended June 30, 2003 14.22 (0.03)(4) 0.02 (0.82) (0.83) -- Year ended June 30, 2002 18.31 (0.11)(4) 0.01 (3.99) (4.09) -- Year ended June 30, 2001 29.99 (0.16) -- (9.61) (9.77) -- INSTITUTIONAL SHARES -------------------------------------------------------------------------------------------------------------------- Year ended June 30, 2005 $15.58 0.12(4) --(5) 0.69 0.81 -- Year ended June 30, 2004 13.65 0.04(4) --(5) 1.89 1.93 -- Year ended June 30, 2003 14.40 0.05(4) 0.02 (0.82) (0.75) -- Year ended June 30, 2002 18.46 (0.01)(4) 0.01 (4.06) (4.06) -- Year ended June 30, 2001 30.08 (0.05)(4) -- (9.66) (9.71) -- ADMINISTRATIVE SHARES -------------------------------------------------------------------------------------------------------------------- Year ended June 30, 2005 $15.36 0.06(4) --(5) 0.69 0.75 -- Year ended June 30, 2004 13.51 (0.02)(4) --(5) 1.87 1.85 -- Year ended June 30, 2003 14.30 0.01(4) 0.02 (0.82) (0.79) -- Year ended June 30, 2002 18.38 (0.06)(4) 0.01 (4.03) (4.08) -- Year ended June 30, 2001 30.02 (0.11)(4) -- (9.62) (9.73) -- -------------------------------------------------------------------------------------------------------------------- (1) Subsequent to the annual report as of May 31, 2002, the Citizens Value Fund changed its fiscal year end to June 30. (2) Not annualized. (3) Annualized. (4) Based on average shares outstanding. (5) Less than $0.005 per share.
SEE FINANCIAL NOTES 74
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA ------------------------------------------------------------------------------------------------------------------------------------ Net Ratio of Ratio of net Ratio of From Net asset assets, expenses to investment expenses to net Total value, Total end of average net income/loss average net Portfolio realized dividends to end return period assets, net of to average net assets, prior to turnover gains shareholders of period (%) ($ X 1,000) reimbursement (%) assets (%) reimbursement (%) rate (%) ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ (0.50) (0.50) $11.00 6.21 $ 30,059 1.51 (1.07) 1.51 120.89 -- -- 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 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ -- -- $11.60 10.37 $ 27,791 1.70 (0.11) 1.70 172.95 -- -- 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 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ -- -- $15.86 4.48 $ 80,384 2.05 0.13 2.05 80.36 -- -- 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 ------------------------------------------------------------------------------------------------------------------------------------ -- -- $16.39 5.20 $ 2,891 1.39 0.75 1.39 80.36 -- -- 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 ------------------------------------------------------------------------------------------------------------------------------------ -- -- $16.11 4.88 $ 1,566 1.73 0.40 1.73 80.36 -- -- 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 ------------------------------------------------------------------------------------------------------------------------------------
SEE FINANCIAL NOTES 75 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 ------------------------------------------------------------------------------------------------------------------ BALANCED FUND STANDARD SHARES ------------------------------------------------------------------------------------------------------------------ Year ended June 30, 2005 $11.35 0.12 -- 0.75 0.87 (0.12) Year ended June 30, 2004 10.47 0.06 -- 1.12 1.18 (0.06) Period ended June 30, 2003 (1) 10.00 0.02 -- 0.47 0.49 (0.02) ------------------------------------------------------------------------------------------------------------------ INCOME FUND STANDARD SHARES ------------------------------------------------------------------------------------------------------------------ Year ended June 30, 2005 $ 9.86 0.37 -- 0.15 0.52 (0.38) 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) ------------------------------------------------------------------------------------------------------------------ ULTRA SHORT BOND FUND STANDARD SHARES ------------------------------------------------------------------------------------------------------------------ Year ended June 30, 2005 $ 9.92 0.23 -- (0.01) 0.22 (0.24) Year ended June 30, 2004 10.06 0.18 -- (0.13) 0.05 (0.19) Period ended June 30, 2003 (5) 10.00 0.14(6) -- 0.07 0.21 (0.15) ------------------------------------------------------------------------------------------------------------------ MONEY MARKET FUND STANDARD SHARES ------------------------------------------------------------------------------------------------------------------ Year ended June 30, 2005 $ 1.00 0.01 -- -- 0.01 (0.01) Year ended June 30, 2004 1.00 --(4) -- -- --(4) --(4) 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) INSTITUTIONAL SHARES ------------------------------------------------------------------------------------------------------------------ Year ended June 30, 2005 $ 1.00 0.02 -- -- 0.02 (0.02) Year ended June 30, 2004 1.00 --(4) -- -- --(4) --(4) 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) ------------------------------------------------------------------------------------------------------------------ (1) For the period December 20, 2002, commencement of operations, to June 30, 2003. (2) Not Annualized. (3) Annualized. (4) Less than $0.005 per share. (5) For the period November 21, 2002, commencement of operations, to June 30, 2003. (6) Based on average shares outstanding.
SEE FINANCIAL NOTES 76
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA ------------------------------------------------------------------------------------------------------------------------------------ Net Ratio of Ratio of net Ratio of From Net asset assets, expenses to investment expenses to net Total value, Total end of average net income/loss average net Portfolio realized dividends to end return period assets, net of to average net assets, prior to turnover gains shareholders of period (%) ($ X 1,000) reimbursement (%) assets (%) reimbursement (%) rate (%) ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ (0.23) (0.35) $11.87 7.76 $ 5,491 1.30 1.07 2.33 109.56 (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 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ -- (0.38) $10.00 5.34 $ 56,597 1.48 3.66 1.48 111.76 -- (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 --(4) (0.70) 10.28 7.87 71,639 1.40 6.55 1.48 60.53 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ -- (0.24) $ 9.90 2.23 $ 7,198 0.14 2.28 1.45 65.70 -- (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 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ -- (0.01) $ 1.00 1.21 $ 76,724 1.00 1.19 1.00 N/A -- --(4) 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 ------------------------------------------------------------------------------------------------------------------------------------ -- (0.02) $ 1.00 1.53 $ 12,763 0.68 1.55 0.68 N/A -- --(4) 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 ------------------------------------------------------------------------------------------------------------------------------------
SEE FINANCIAL NOTES 77 FINANCIAL NOTES ORGANIZATION 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 --------------------------------------------------------------------------------- Citizens 300 Fund 300 Fund Citizens Core Growth Fund Core Growth Fund Citizens Emerging Growth Fund Emerging Growth Fund Citizens Small Cap Core Growth Fund Small Cap Core Growth Fund Citizens Value Fund Value Fund Citizens Global Equity Fund Global Equity Fund Citizens Balanced Fund Balanced Fund Citizens Income Fund Income Fund Citizens Ultra Short Bond Fund Ultra Short Bond Fund Citizens Money Market Fund Money Market Fund ---------------------------------------------------------------------------------
The funds are authorized to issue an unlimited number of shares of beneficial interest with no par value. The Core Growth Fund, Emerging 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 300 Fund, Small Cap Core Growth 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 fees paid under class-specific agreements, 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. 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 78 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 The board of trustees has approved procedures to be used to value each fund's securities for the purpose of determining the fund's net asset value (NAV). Equity securities traded on an exchange are valued at the market price determined as the closing sale or official closing price on that exchange. For securities not traded on an exchange, or if an exchange price is not readily available, securities are valued at a market price determined by independent third party pricing vendors approved by the funds' valuation committee. The market price for debt obligations is determined by an independent third-party pricing service which use a matrix, formula or other objective method that considers the effect of market indices, yield curves and other specific adjustments. Short-term securities maturing within 60 days and all securities in the Money Market Fund are valued at amortized cost, unless it is determined that using this method would not reflect a security's fair value. Under the amortized cost method, premium or discount, if any, is amortized or accreted, respectively, on a constant basis to the maturity of the security. If a price for a given security is unavailable or deemed unreliable by the adviser, the market price may be determined using quotations received from one or more brokers that make a market in the security. When such prices or quotations are not available, or when the adviser believes they are unreliable, the funds' valuation committee will value securities using fair value procedures approved by the funds' board of trustees. 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 and the time at which a fund's net asset value is calculated. The Global Equity Fund uses a fair value model developed by an independent third party pricing service in its valuation considerations for foreign equity securities on days when there is a specific percentage change in the value of a domestic equity security index. This percentage is determined by the funds' valuation committee. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME Changes in holdings of portfolio securities shall be reflected no later than 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 is determined on the identified cost basis, unless otherwise 79 FINANCIAL NOTES 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 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. 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. 80 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, 2005, the Global Equity Fund collected $4,014 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 300 Fund, Core Growth Fund, Emerging Growth Fund, Small Cap Core Growth 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. 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. 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. 81 FINANCIAL NOTES 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 agreement, 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 ------------------------------------------------------ 300 Fund 0.20% Core Growth Fund 0.50% Emerging Growth Fund 1.00% Small Cap Core Growth Fund 0.50% Value Fund 0.70% Global Equity Fund 1.00% Balanced Fund 0.65% Income Fund 0.65% Ultra Short Bond Fund 0.35% Money Market Fund 0.35% ------------------------------------------------------
McLean Budden Limited serves as the subadviser for the Global Equity Fund. For its services, the subadviser receives a fee computed daily based on an annual rate of 0.33% of the fund's average daily net assets up to $50 million, 0.30% on the next $50 million, and 0.25% on assets thereafter. The fee is paid by the adviser. Prior to August 27, 2004, SSgA Funds Management, Inc. served as the subadviser for the Global Equity Fund. For its services, SSgA Funds Management, Inc. 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. 82 ADMINISTRATIVE AND SHAREHOLDER SERVICE FEES The adviser, with whom certain officers and a trustee 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 terms of the administrative contract, fees 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 and is reimbursed for out-of- pocket expenses as well, 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, 2005, 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. As transfer agent for the funds, BISYS is paid a fee based on the number of funds and shareholder accounts, other services fees, and is reimbursed for out-of-pocket expenses as well. Transfer agent expenses also include the cost of services rendered by third parties to provide sub-transfer agency services. As fund accountant for the funds, BISYS is paid a fee based on assets (ranging from 0.0125% -- 0.035%) and the number of share classes per fund, subject to certain minimums, other service fees, and is reimbursed for out-of-pocket expenses as well. Fifth Third Bank acts as custodian for the funds and is paid a fee based on the funds' assets and other transaction based fees, subject to certain minimums. Custody expenses may be incurred or offset from fees or credits arising from cash balances maintained on deposit. TRUSTEE FEES All of the officers and one of the 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 include a chair of the board, who receives an additional annual retainer of $5,000; and an audit committee chair, social responsibility committee chair, and nominating committee chair who each receive an additional annual retainer of $2,500. ALLOCATIONS Expenses directly attributable to a fund are charged to that fund. Expenses not directly attributable to a fund are allocated proportionately among various or 83 FINANCIAL NOTES 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, 2005, the adviser limited the total expenses, exclusive of taxes, brokerage commissions and extraordinary expenses, for certain funds to the extent they exceeded the following limits:
-------------------------------------------------------- FUND EXPENSE LIMITATION -------------------------------------------------------- 300 Fund 0.90% Balanced Fund 1.30% Ultra Short Bond Fund 0.14% --------------------------------------------------------
The expense limitations above are voluntary and may be removed by the adviser at any time. 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, fund accounting expenses of the funds. INVESTMENT TRANSACTIONS The following summarizes purchases and sales of investment securities, other than short-term investments and U.S. Government securities, by fund for the year ended June 30, 2005:
------------------------------------------------------------------------------- FUND PURCHASES SALES ------------------------------------------------------------------------------- 300 Fund $ 2,164,649 $ 2,908,375 Core Growth Fund 317,817,654 382,016,836 Emerging Growth Fund 181,128,925 212,119,528 Small Cap Core Growth Fund 32,875,444 35,720,667 Value Fund 44,374,424 43,025,133 Global Equity Fund 71,733,011 93,748,003 Balanced Fund 5,629,784 3,765,484 Income Fund 50,764,014 57,333,914 Ultra Short Bond Fund 3,459,266 3,868,216 -------------------------------------------------------------------------------
84 SUBSEQUENT EVENT On July 5, 2005, the Board of Trustees of the funds, on behalf of the Ultra Short Bond Fund, approved the termination and liquidation of the fund. The fund will be liquidated on or about August 22, 2005. FEDERAL TAX INFORMATION The tax character of dividends paid by the funds during the past two fiscal years were as follows:
--------------------------------------------------------------------------------------------- Dividends Paid From ---------------------- Net long term Total Total Ordinary capital taxable Tax return dividends income gains dividends of capital paid(1) --------------------------------------------------------------------------------------------- FISCAL YEAR ENDED 2005 300 Fund $ 58,299 $ 563 $ 58,862 $ -- $ 58,862 Small Cap Core Growth Fund 1,108,006 190,731 1,298,737 -- 1,298,737 Balanced Fund 105,988 2,255 108,243 -- 108,243 Income Fund 2,197,109 -- 2,197,109 -- 2,197,109 Ultra Short Bond Fund 158,672 -- 158,672 -- 158,672 Money Market Fund 1,003,934 -- 1,003,934 -- 1,003,934 --------------------------------------------------------------------------------------------- FISCAL YEAR ENDED 2004 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 ---------------------------------------------------------------------------------------------
As of June 30, 2005, the components of accumulated earnings/deficit on a tax basis for the funds were as follows:
------------------------------------------------------------------------------------------------------------------------------------ Total Undistributed Undistributed Accumulated Unrealized accumulated ordinary long term Accumulated Dividends capital and other appreciation/ earnings/ income capital gains earnings payable losses depreciation(2) deficit ------------------------------------------------------------------------------------------------------------------------------------ 300 Fund $ 24,904 $ 52,018 $ 76,922 $ -- $ -- $ 419,689 $ 496,611 Core Growth Fund -- -- -- -- (73,442,190) 55,299,554 (18,142,636) Emerging Growth Fund -- -- -- -- (190,293,663) 30,708,257 (159,585,406) Small Cap Core Growth Fund -- -- -- -- (2,951,533) 5,529,956 2,578,423 Value Fund -- -- -- -- (7,796,193) 3,558,746 (4,237,447) Global Equity Fund -- -- -- -- (125,067,572) 6,276,173 (118,791,399) Balanced Fund 12,681 -- 12,681 (12,682) (76,507) 426,356 349,848 Income Fund 173,526 -- 173,526 (173,525) (5,244,790) 420,146 (4,824,643) Ultra Short Bond Fund 18,468 -- 18,468 (18,765) (102,220) (19,557) (122,074) Money Market Fund 158,186 -- 158,186 (158,186) (38,534) -- (38,534) ------------------------------------------------------------------------------------------------------------------------------------
(1)Total dividends paid may differ from the amount reported in the Statements 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 the tax deferral of losses on wash sales. 85 FINANCIAL NOTES As of June 30, 2005, 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 Amount ------------------------------------------------------------------------------------------------------------------------------- Core Growth Fund $ -- -- $ 26,819,438 2010 $46,622,753 2011 $ -- -- $ -- Emerging Growth Fund -- -- 150,661,298 2010 36,170,306 2011 -- -- 3,462,058 Small Cap Core Growth Fund -- -- -- -- -- -- -- -- 2,896,910 Value Fund -- -- 40,687 2010 4,976,984 2011 2,778,523 2012 -- Global Equity Fund (1) 284,977 2009 101,286,974 2010 9,283,310 2011 14,198,702 2012 -- Balanced Fund -- -- -- -- -- -- -- -- 76,507 Income Fund -- -- 638,367 2010 4,606,423 2011 -- -- -- Ultra Short Bond Fund -- -- -- -- -- -- 74,733 2012 14,656 Money Market Fund 9,083 2009 -- -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------- --------------------- ------- Expires --------------------- ------- Core Growth Fund -- Emerging Growth Fund 2013 Small Cap Core Growth Fund 2013 Value Fund -- Global Equity Fund (1) -- Balanced Fund 2013 Income Fund -- Ultra Short Bond Fund 2013 Money Market Fund -- --------------------------------------
(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: $284,977 expiring in 2009, $33,758 expiring in 2010, $345,833 expiring in 2011. Net capital losses incurred after October 31, 2004, 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, 2005, the Global Equity Fund deferred to July 1, 2005 post October currency losses of $13,609, and the Small Cap Core Growth Fund, Ultra Short Bond Fund and Money Market Fund deferred to July 1, 2005 post October capital losses of $54,622, $12,831 and $29,451 respectively. SUPPLEMENTAL INFORMATION (UNAUDITED) FEDERAL TAX INFORMATION For the fiscal year ended June 30, 2005, $58,299 of dividends paid by the 300 Fund, $34,125 of dividends paid by the Small Cap Core Growth Fund, and $34,105 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 2005 Form 1099-DIV. For the tax year ended June 30, 2005, 100% of income dividends paid by the 300 Fund, 3% of income dividends paid by the Small Cap Core Growth Fund, and 32% of income dividends paid by the Balanced Fund qualify for the dividends received deduction available to corporations. 86 SUPPLEMENTAL INFORMATION (UNAUDITED) PORTFOLIO HOLDINGS DISCLOSURE Each Citizens fund, except the Citizens Money Market Fund, posts it full portfolio holdings monthly, with a 30-day lag, on www.citizensfunds.com. The portfolio holdings will be posted within approximately five business days after month end. The funds' portfolio holdings will remain available until the following month's information is posted. In addition, each fund's, except the Citizens Money Market Fund's, top ten portfolio holdings in order of position size and as a percentage of the total portfolio as well as sector breakdowns and portfolio characteristics are available quarterly, within approximately fifteen business days after quarter end on www.citizensfunds.com. Each fund's top ten portfolio holdings, sector breakdown and portfolio characteristics will remain available until the following quarter's information is posted. Details of the funds' portfolio holdings policies and procedures, which includes a discussion of any exceptions, are contained in the funds' SAI. Each fund files its complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year within 60 days of such quarters on Form N-Q. You can receive a copy of each fund's Form N-Q without charge by calling 800.223.7010 or by visiting our website at www.citizensfunds.com. Each fund's Form N-Q is also available through a variety of methods. You can: -- find them on the EDGAR Database of the SEC internet site at http://www.sec.gov -- have copies sent to you (after paying a copying fee) by writing the the SEC's Public Reference Section, Washington, D.C. 20549-0102, or by electronic request to publicinfo@sec.gov -- view and copy them in person at the SEC's Public Reference Room in Washington, D.C.; for more information call 202.942.8090. 87 SUPPLEMENTAL INFORMATION (UNAUDITED) TABLE OF SHAREHOLDER EXPENSES As a shareholder of the funds, you may incur two types of costs: (1) redemption fees (for Global Equity Fund only) and (2) ongoing costs, including management fees; distribution fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the funds and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period from January 1, 2005 through June 30, 2005. ACTUAL EXPENSES The table on the page opposite provides information about actual account values and actual expenses. You may use the information below, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the table under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table on the page opposite also provides information about hypothetical account values and hypothetical expenses based on each fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees and other individual shareholder fees mentioned in the prospectus. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. * Expenses equal the average account value times the fund's annualized expense ratio multiplied by 181/365 (to reflect the one-half year period). 88
JUNE 30, 2005 ----------------------------------------------------------------------------------------- Annualized Beginning Ending Expenses paid expense ratio account account during period * during the period value value 01/01/05 - 01/01/05 - 01/01/05 06/30/05 06/30/05 06/30/05 ----------------------------------------------------------------------------------------- 300 FUND Standard -- actual $1,000.00 $ 973.20 $4.40 0.90% Standard -- hypothetical 1,000.00 1,020.33 4.51 0.90% ----------------------------------------------------------------------------------------- CORE GROWTH FUND Standard -- actual $1,000.00 $1,015.40 $7.75 1.55% Standard -- hypothetical 1,000.00 1,017.11 7.75 1.55% Institutional -- actual 1,000.00 1,019.20 4.11 0.82% Institutional -- hypothetical 1,000.00 1,020.73 4.11 0.82% Administrative -- actual 1,000.00 1,017.70 5.50 1.10% Administrative -- hypothetical 1,000.00 1,019.34 5.51 1.10% ----------------------------------------------------------------------------------------- EMERGING GROWTH FUND Standard -- actual $1,000.00 $1,017.30 $9.70 1.94% Standard -- hypothetical 1,000.00 1,015.17 9.69 1.94% Institutional -- actual 1,000.00 1,020.20 6.71 1.34% Institutional -- hypothetical 1,000.00 1,018.15 6.71 1.34% Administrative -- actual 1,000.00 1,019.10 7.91 1.58% Administrative -- hypothetical 1,000.00 1,016.96 7.90 1.58% ----------------------------------------------------------------------------------------- SMALL CAP CORE GROWTH FUND Standard -- actual $1,000.00 $1,019.50 $7.56 1.51% Standard -- hypothetical 1,000.00 1,017.31 7.55 1.51% ----------------------------------------------------------------------------------------- VALUE FUND Standard -- actual $1,000.00 $1,032.90 $8.62 1.71% Standard -- hypothetical 1,000.00 1,016.31 8.55 1.71% ----------------------------------------------------------------------------------------- GLOBAL EQUITY FUND Standard -- actual $1,000.00 $ 988.80 $9.91 2.01% Standard -- hypothetical 1,000.00 1,014.83 10.04 2.01% Institutional -- actual 1,000.00 992.10 6.96 1.41% Institutional -- hypothetical 1,000.00 1,017.80 7.05 1.41% Administrative -- actual 1,000.00 990.80 8.49 1.72% Administrative -- hypothetical 1,000.00 1,016.27 8.60 1.72% ----------------------------------------------------------------------------------------- BALANCED FUND Standard -- actual $1,000.00 $1,023.70 $6.52 1.30% Standard -- hypothetical 1,000.00 1,018.35 6.51 1.30% ----------------------------------------------------------------------------------------- INCOME FUND Standard -- actual $1,000.00 $1,012.20 $7.23 1.45% Standard -- hypothetical 1,000.00 1,017.60 7.25 1.45% ----------------------------------------------------------------------------------------- ULTRA SHORT BOND FUND Standard -- actual $1,000.00 $1,013.30 $0.50 0.10% Standard -- hypothetical 1,000.00 1,024.30 0.50 0.10% ----------------------------------------------------------------------------------------- MONEY MARKET FUND Standard -- actual $1,000.00 $1,008.40 $5.28 1.06% Standard -- hypothetical 1,000.00 1,019.54 5.31 1.06% Institutional -- actual 1,000.00 1,010.30 3.39 0.68% Institutional -- hypothetical 1,000.00 1,021.42 3.41 0.68% -----------------------------------------------------------------------------------------
89 SUPPLEMENTAL INFORMATION (UNAUDITED) BOARD APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT The trustees unanimously approved the continuance of the management agreement with respect to each fund at a meeting held on May 16, 2005. This approval was based on the following conclusions: (i) that the adviser has the capabilities, resources and personnel necessary to provide the advisory services currently provided to each fund; and (ii) that the advisory fees paid by each fund represent reasonable compensation to the adviser in light of the services provided, the costs to the adviser of providing those services, the fees paid by similar funds, and such other matters as the trustees considered relevant in the exercise of their reasonable judgment, and represent an appropriate sharing at the present time between fund shareholders and the adviser of any economies of scale in the management of each fund at current asset levels. In advance of the meeting, the independent trustees, through their counsel, submitted to the adviser a written request for information in connection with their consideration of the funds' management agreements. The requested information was provided by the adviser in advance of and at the board meeting. In preparation for the board meeting, the independent trustees met with their counsel to discuss the proposed continuance of the funds' management agreement and received a memorandum from their counsel outlining the legal standards and certain other considerations relevant to their deliberations. In reaching these conclusions, the trustees considered all factors they believed relevant, including (i) information comparing the performance of each fund to other investment companies with similar investment objectives and to an index; (ii) the nature, extent and quality of investment services rendered by the adviser; (iii) payments received by the adviser from all sources in respect of each fund; (iv) the costs borne by, and profitability of, the adviser in providing services to each fund; (v) comparative fee and expense data for each fund and other investment companies with similar investment objectives; (vi) the extent to which economies of scale would be realized as the funds grow and whether fee levels reflect these economies of scale for the benefit of fund shareholders; (vii) information about "revenue sharing" arrangements that the adviser enters into in respect of the funds; (viii) fall-out benefits which the adviser receives from its relationship to the 90 funds; (ix) information about fees charged by the adviser to other clients with similar investment objectives; (x) the professional experience and qualifications of each fund's portfolio management team; and (xi) the terms of the management agreement. In their deliberations, the trustees did not identify any particular information that was all-important or controlling, and each trustee attributed different weights to the various factors. The trustees evaluated all information available to them on a fund-by-fund basis, and their determinations were made separately in respect of each fund. In voting to renew the funds' management agreement with the adviser, the Board also considered the adviser's compliance program, its implementation by the adviser as well as its effectiveness and noted with approval the strong ethical compliance culture at the adviser. The board also noted the adviser's recent addition of portfolio management personnel. The trustees noted that pursuant to the management agreement, the adviser, subject to the direction of the board, is responsible for providing advice and guidance with respect to the funds and for managing the investment of the assets of each fund. With the exception of the Global Equity Fund, the adviser provides the day-to-day portfolio management of the funds, including making purchases and sales of portfolio securities consistent with each fund's investment objective and policies. The adviser oversees the activities of the subadviser it has engaged to provide the day-to- day portfolio management of the Global Equity Fund. The trustees noted that the services required to be provided had expanded over time as a result of regulatory and other developments. The trustees cited, by way of example, the enhanced obligations involving the adviser's and the funds' compliance programs and the substantial commitment of time and resources that the adviser had made in this area. The trustees concluded that, overall, they were satisfied with the nature, extent and quality of services provided to the funds under the management agreement. The board reviewed the information concerning the costs of services provided and the profitability to the adviser of its advisory relationship with the funds, along with a description of the methodology used by the adviser in preparing the profitability information. The board considered the cost to the adviser of its services to each fund and what is a fair entrepreneurial profit for managing each fund. The board noted that there appeared to be a reasonable basis for the methodology underlying the adviser's profitability analysis and that the profitability with respect to each fund did not appear to be excessive. 91 SUPPLEMENTAL INFORMATION (UNAUDITED) BOARD APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT (CONT.) The trustees considered that the adviser benefits from soft dollar arrangements whereby it receives brokerage and research services from brokers that execute the funds' purchases and sales of investment securities. It was noted that during the course of the year the trustees had received presentations from the adviser about its trading practices and brokerage arrangements, including its policies with respect to soft dollar arrangements. The trustees also considered that the adviser receives administrative and shareholder service fees from the funds and that Citizens Securities, Inc., an affiliate of the adviser, receives 12b-1 fees from the funds. In addition, the board considered certain aggregate benefits, other than fees, that the adviser receives by virtue of its relationship with each fund. In considering performance, the board noted the successful efforts by the adviser over the prior year to improve performance by attracting additional talented personnel. The trustees received detailed comparative performance information for each fund and considered information showing performance of each fund versus one or more selected securities indices over the one, three, five and ten year periods ended March 31, 2005 (or those relevant periods in which the applicable fund existed). The comparative information showed that: the 300 Fund underperformed the indices for the one year period; the Core Growth Fund had solid one year and ten year returns; the Emerging Growth Fund underperformed the index for the one, three and five year periods and outperformed the index for the ten year period; the Small Cap Core Growth Fund underperformed the index for the one and three year periods, but outperformed the index for the five year period; the Value Fund had outperformed the index for the one and five year periods, but underperformed the index for the three year period; the Global Equity Fund significantly underperformed the index for the one, three and five year periods; the Balanced Fund slightly underperformed the blended indices for the one year period; the Income Fund underperformed the index for the one, three, five and ten year periods; the Ultra Short Bond Fund outperformed the index for the one year period; and the Money Market Fund's seven and thirty day yields were lower than the average seven and thirty day yields of a comparable universe of funds. The trustees noted that the 300 Fund was a relatively new fund with a limited performance history. The trustees considered the recent changes made by the adviser in the portfolio management teams of the Core Growth, 92 Emerging Growth, Small Cap Core Growth and Balanced Funds and the enhancement of the investment process of each fund. The trustees noted the Value Fund's improved one year performance, and that the fund had been previously subadvised for portions of the three and five year periods. With respect to the Global Equity Fund, the trustees considered the adviser's recent engagement of a new subadviser, McLean Budden Ltd., to manage the fund. The trustees noted that they had asked the adviser to bring additional or different resources to bear in the management of the Income Fund, and that the adviser had undertaken to fulfill their request. With respect to the Money Market Fund, the trustees considered the effect of the relatively small size of the fund and the information presented by the adviser to the effect that the fund was managed in a very conservative fashion. The board considered the advisory fee rate paid by each fund to the adviser under the management agreement. The board reviewed reports detailing each fund's management fee, administration fee, total management and administration fees and total expense levels and versus comparable mutual funds with similar investment objectives including a broad universe group, a smaller peer group including funds with similar asset levels, if possible ("comparison group"), and other specific funds. The trustees recognized that it is difficult to make comparisons of management fees because there are variations in the services that are included in the fees paid by comparable mutual funds. The board also reviewed information concerning the fees paid by other accounts managed by the adviser with investment objectives similar to the funds. The fee rates charged to those accounts are higher than those charged to the relevant funds. The comparative information showed that: the 300 Fund's management fee, administration fee, total management and administration fees and total expenses were below the comparison group median; the management fee, administration fee, total management and administration fees and total expenses of the Core Growth and Small Cap Core Growth Funds were equal to or below the comparison group median (except that total expenses for the Core Growth Fund's Standard shares were above the median); the Emerging Growth Fund's administration fee was approximately equal to the comparison group median, while the fund's management fee, total management and administration fees and total expenses were higher than the comparison group median; the management fee, administration fee and total management and administration fees of the Value Fund were equal to or lower than the comparison group median, while the fund's total expenses were higher than the comparison group median; the Global Equity Fund's management fee was equal to the comparison group median, while the fund's administration fees and total management and administration fees were 93 SUPPLEMENTAL INFORMATION (UNAUDITED) BOARD APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT (CONT.) lower than the comparison group median and the total expenses were above the median; the Balanced Fund's management fee was higher than the comparison group median while the total expenses were lower than the median and the fund's administration fees and total management and administration fees were equal to or slightly higher the comparison group median; the Income Fund's management fee, administration fee, total management and administration fees and total expenses were higher than the comparison group median; and the Ultra Short Bond Fund's management fee, administration fee and total management and administration fees were lower than the comparison group median and the fund's total expenses (as a result of voluntary reimbursements by the adviser) were lower than the median; and the Money Market Fund's management fee, administration fee, total management and administration fees and total expenses were higher than the comparison group median. The trustees concluded that the expense ratio of each fund was acceptable in light of the quality of service each fund receives and the other factors considered. With respect to the Income Fund, the trustees concluded that, while the expense ratio was higher than the comparison group median, cutting fees at this time would be incompatible with the trustees' request that additional and/or different resources be brought to bear for this fund. The board next considered, in light of current asset levels and current circumstances, whether breakpoints in the fee structure for each fund were appropriate, and determined that the funds' current fee structure was appropriate. Based on the above factors, the board voted to renew each fund's management agreement with the adviser for an additional one-year period. 94 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 on the following page show the trustees and officers of the funds as of June 30, 2005. 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 ten funds within the Citizens Funds complex, and no trustee is currently a trustee or director for any other mutual fund or company. Except as noted on the following page, the address for each trustee and officer in connection with their fund duties is One Harbour Place, Suite 400, Portsmouth, NH 03801. 95 SUPPLEMENTAL INFORMATION (UNAUDITED)
------------------------------------------------------------------------------------------------------ AFFILIATED TRUSTEE ------------------------------------------------------------------------------------------------------ POSITION(S) W/FUNDS AND DATE OF ELECTION NAME AND AGE OR APPOINTMENT PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS ------------------------------------------------------------------------------------------------------ Sophia Collier (1) Trustee since 10/91 Portfolio Manager, Citizens Advisers, Inc., since 49 President 1991-1998 and 3/95. Majority Owner and Chair of Board of since 8/02, Chair of Directors, Citizens Advisers, Inc., since 12/91. Board 1/02-8/02 President, Citizens Advisers, Inc., and Citizens Securities, Inc., 12/91-9/98 and since 7/02. Chair of the Board of Directors, Citizens Securities, Inc., since 12/91. President, Northpoint Technology, Ltd., 1/97-6/02. Chair of the Board of Directors, Northpoint Technology, Ltd., since 6/02. ------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES ------------------------------------------------------------------------------------------------------ POSITION(S) W/FUNDS AND DATE OF ELECTION NAME AND AGE OR APPOINTMENT PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS ------------------------------------------------------------------------------------------------------ Walter D. Bristol, Jr. Trustee since 5/01 Executive Vice President for Corporate Operations 55 Chair of the Board since and Chief Financial Officer, American Heart 8/04 Association, since 5/96. Vice Chair of the Board 8/02-8/04 Jeannie H. Diefenderfer Trustee since 5/01 Senior Vice President, Verizon, since 8/04. Vice 44 President, Verizon, 8/02-7/04. Group President, Verizon, 8/01-7/02. Senior Vice President, Verizon, 5/98-7/01. Pablo S. Eisenberg Trustee since 12/99 Senior Fellow, Public Policy Institute, 73 Georgetown University, since 1/99. Executive Director, Center for Community Change, 5/75-6/98. Orlando Hernandez Trustee since 8/01 Vice President of Finance, Texas Instruments, 58 5/76- 4/01. Martha S. Pope Trustee since 12/99 Trustee, National Park Foundation, since 8/00. 60 Chair of the Board Trustee, Hofstra University, since 6/00. Senior 8/02-8/04 Advisor for the Northern Ireland Peace Negotiations, 1/95-7/98. ------------------------------------------------------------------------------------------------------
OFFICERS WHO ARE NOT TRUSTEES ------------------------------------------------------------------------------------------------------ POSITION(S) W/FUNDS AND DATE OF ELECTION NAME AND AGE OR APPOINTMENT PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS ------------------------------------------------------------------------------------------------------ Sean P. Driscoll Treasurer since 3/99 Executive Vice President, Citizens Advisers, 40 Inc., since 9/04. Senior Vice President, Citizens Advisers, Inc., 4/03-9/04. Vice President, Citizens Advisers, Inc., 10/99-4/03. Assistant Treasurer, Citizens Advisers, Inc., 10/02-12/02. Director, Citizens Advisers Inc., 11/98-10/99. Marcia Kovalik Chief Compliance Officer Chief Compliance Officer, Citizens Advisers, 42 since 8/04 Inc., since 8/04. Vice President, Citizens Secretary since 5/03 Advisers, Inc., since 4/03. Counsel, Citizens Asst. Secretary 5/01-5/03 Advisers, Inc., 2/01-4/03. Associate, Boynton, Waldron, Doleac, Woodman & Scott, P.A., 9/95-2/01. Alaina Metz (2) Asst. Secretary since Chief Administrative Officer, BISYS Fund Services 38 2/01 Ohio, Inc., since 6/95. ------------------------------------------------------------------------------------------------------
(1) Sophia Collier is an interested person of the funds by virtue of her position with the funds' investment adviser. (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. 96 SHAREHOLDER SERVICES (UNAUDITED) 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 website. EXCHANGES BETWEEN CITIZENS FUNDS* You can move your money from any one of our funds to another. RETIREMENT INVESTING 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. Representatives are available from 9 am to 6 pm (ET) Monday - Friday at 800.223.7010. CLIENT WEALTH MANAGEMENT Receive personal, one on one advice and consultation from our Client Wealth Management specialist. WWW.CITIZENSFUNDS.COM Our website offers daily fund prices and monthly performance updates, 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 and a copy of the funds' voting record for the 12-month period ended June 30, 2005 are available on-line at www.citizensfunds.com without charge, or upon request, by calling 800.223.7010, and on the SEC's website at http://www.sec.gov. * Citizens Global Equity Fund charges a redemption fee of 2% on shares redeemed or exchanged within 60 days of purchase. 97 NOTES 98 NOTES 99 NOTES 100 NOTES 101 [CITIZENS FUNDS LOGO] TRUSTEES MANAGER TRANSFER AND Walter D. Bristol, Jr. Citizens Advisers, Inc. ACCOUNTING AGENT Sophia Collier One Harbour Place BISYS Fund Services Ohio, Inc. Jeannie H. Diefenderfer Suite 400 Columbus, OH 43219 Pablo S. Eisenberg Portsmouth, NH 03801 Orlando Hernandez 800.223.7010 LEGAL COUNSEL Martha S. Pope 603.436.5152 Bingham McCutchen LLP Boston, MA 02110 DISTRIBUTOR CUSTODIAN Citizens Securities, Inc. Fifth Third Bank INDEPENDENT REGISTERED One Harbour Place Cincinnati, OH 45263 PUBLIC ACCOUNTING FIRM Suite 400 PricewaterhouseCoopers LLP Portsmouth, NH 03801 Columbus, OH 43215 800.223.7010 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. (C) 2005 CITIZENS ADVISERS, INC. NOT A PART OF THE ANNUAL REPORT ITEM 2. CODE OF ETHICS. (a) A code of ethics that applies to the registrant's principal executive officer and principal financial officer was previously filed as an exhibit to the registrant's annual Form N-CSR. (c) During the period covered by this report, no amendments were made to the provisions of the code of ethics. (d) 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. The Board of Trustees has appointed PricewaterhouseCoopers ("PWC") to serve as independent accountants to the series of the registrant. (a) Audit Fees. For the fiscal years ended June 30, 2004 and June 30, 2005, ("PWC") billed audit fees to the registrant in the amount of $142,000 and $138,600 respectively. (b) Audit Related Fees. None. (c) Tax Fees. For the fiscal years ended June 30, 2004 and June 30, 2005, PWC billed tax fees to the registrant in the amount of $32,000 and $36,960 respectively. The fees included under "Tax Fees" are fees associated with tax compliance, tax advice and tax planning, including services relating to the filing or amendment of federal, state or local income tax returns, regulated investment company qualification reviews and tax distribution and analysis. (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, 2004 and June 30, 2005, 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 A schedule of investments for each series of the Registrant is included as part of the report to shareholders of such series under Item 1 of this Form N-CSR. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES Not Applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not Applicable ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS Not Applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 11. 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 second fiscal quarter of the period covered by this report that have materially affected or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) A code of ethics that is the subject of the disclosure required by Item 2 is 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 24, 2005 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 24, 2005 By: /s/ Sean P. Driscoll ----------------------- Sean P. Driscoll Treasurer Date: August 24, 2005