-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SBXVTVgSs4HXag6dkFjxzmvVgs8ifJdVvmtvRgjDK5FxpBhAXDo7wEkXVI6lUrW9 FUnPRaKQ41rWfe6uQSD1Kw== 0000950135-07-001202.txt : 20070228 0000950135-07-001202.hdr.sgml : 20070228 20070228152709 ACCESSION NUMBER: 0000950135-07-001202 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070228 DATE AS OF CHANGE: 20070228 EFFECTIVENESS DATE: 20070228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS FUNDS CENTRAL INDEX KEY: 0000711202 IRS NUMBER: 942874420 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03626 FILM NUMBER: 07657408 BUSINESS ADDRESS: STREET 1: ONE HARBOUR PLACE STREET 2: SUITE 400 CITY: PORTSMOUTH STATE: NH ZIP: 03801 BUSINESS PHONE: 6034365152 MAIL ADDRESS: STREET 1: ONE HARBOUR PLACE STREET 2: SUITE 400 CITY: PORTSMOUTH STATE: NH ZIP: 03801 FORMER COMPANY: FORMER CONFORMED NAME: CITIZENS INVESTMENT TRUST DATE OF NAME CHANGE: 19951106 FORMER COMPANY: FORMER CONFORMED NAME: WORKING ASSETS COMMON HOLDINGS DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: WORKING ASSETS MONEY FUND DATE OF NAME CHANGE: 19920531 0000711202 S000009286 Citizens Value Fund C000025348 Standard MYPVX C000033806 Institutional CVALX C000038510 Administrative 0000711202 S000009287 Citizens Core Growth C000025349 Standard WAIDX C000025350 Institutional WINIX C000025351 Administrative CGADX 0000711202 S000009288 Citizens Emerging Growth C000025352 Standard WAEGX C000025353 Institutional CEGIX C000025354 Administrative CGRDX 0000711202 S000009289 Citizens Small Cap Core Growth C000025355 Standard CSCSX C000038511 Administrative 0000711202 S000009290 Citizens Global Equity C000025356 Standard WAGEX C000025357 Institutional CGEIX C000025358 Administrative CEADX 0000711202 S000009291 Citizens Income Fund C000025359 Standard WAIMX 0000711202 S000009292 Citizens Money Market C000025360 Standard WKAXX C000025361 Institutional WAIXX 0000711202 S000009293 Citizens Balanced Fund C000025362 Standard CFBLX N-CSRS 1 b63839a1nvcsrs.txt CITIZENS FUNDS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANY Investment Company File Number: 811-03626 CITIZENS FUNDS (Exact Name of Registrant as Specified in Charter) One Harbour Place, Suite 400, Portsmouth, New Hampshire 03801 (Address of Principal Executive Offices) Sophia Collier Citizens Advisers, Inc. One Harbour Place Portsmouth, NH 03801 (Name and Address of Agent for Service) Registrant's Telephone Number, including Area Code: (603) 436-5152 Date of fiscal year end: June 30 Date of reporting period: December 31, 2006 ITEM 1. REPORT TO SHAREHOLDERS. (CITIZENS FUNDS LOGO) SEMI-ANNUAL REPORT AND SUPPLEMENTAL COMMENTARY DECEMBER 31, 2006 SHARE THE SEEDS OF RESPONSIBLE INVESTING NOT A PART OF THE SEMI-ANNUAL REPORT TABLE OF CONTENTS SUPPLEMENTAL COMMENTARY Letter from the president ................................................ 1 Citizens focus ........................................................... 3 SEMI-ANNUAL REPORT Risks of mutual fund investing ........................................... 7 Benchmarks ............................................................... 8 Portfolio review disclosure .............................................. 9 Portfolio review ......................................................... 10 Portfolio composition .................................................... 34 Holdings ................................................................. 36 Statements of assets and liabilities ..................................... 54 Statements of operations ................................................. 56 Statements of changes in net assets ...................................... 58 Financial highlights ..................................................... 62 Financial notes .......................................................... 68 Supplemental information ................................................. 77 Shareholder services ..................................................... 80
PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF CITIZENS FUNDS CAREFULLY BEFORE INVESTING. FOR THIS AND OTHER INFORMATION, PLEASE VISIT WWW.CITIZENSFUNDS.COM OR CALL 800.223.7010 FOR A FREE PROSPECTUS AND READ IT CAREFULLY BEFORE INVESTING. NOT A PART OF THE SEMI-ANNUAL REPORT LETTER FROM THE PRESIDENT Dear Shareholder, The financial markets finished 2006 on a strong note with an upswing and an improved landscape for public policy issues such as the environment and corporate governance. Also, Citizens Value Fund has developed into the flagship of our fund family with strong financial returns and increasing recognition by investors and the financial press. Morningstar wrote that Citizens Value Fund was a "worthy core holding for socially conscious investors" and Citizens' investors seem to agree with strong purchase activity in 2006. We instituted a contractual expense limit of 1.29% through June 30, 2007 for Citizens Value Fund standard shares, and we also established an institutional share class for foundations, endowments and larger investors. The success of Citizens Value Fund exemplifies what we are seeking to do with our investment group: build strong performing products that invest in companies with high standards for social and environmental responsibility. I hope you will take time to read the individual managers' commentaries inside this report and note the effort and insight that goes into structuring the portfolios to seek return for shareholders. We were active in 2006 on a number of social and environmental initiatives. In March, we were the first mutual fund company to call on corporations to divest of their operation in Sudan. We believe too little attention has been paid to the humanitarian crisis in Sudan and that corporations need to do more. To date, 20 of the 23 corporations we targeted have responded, affirming they have ended or will not establish ties to Sudan. We think this is significant as these companies were reported to be involved with Sudan prior to our letter. (PHOTO OF SOPHIA COLLIER) "IT IS ENCOURAGING TO SEE NEW NATIONAL LEADERSHIP EMERGE, AND I FEEL THE FINANCIAL MARKETS ARE ATTRACTIVELY VALUED. IN MY OPINION, IT IS A GOOD TIME TO BE A SOCIALLY RESPONSIBLE INVESTOR!" - -- SOPHIA COLLIER, PRESIDENT NOT A PART OF THE SEMI-ANNUAL REPORT 1 Our other initiatives focused on discrimination, climate change and toxics in consumer products. We filed shareholder resolutions at Whole Foods Market, Inc. on a toxics issue and YUM! Brands, Inc. on disability access. Our four year campaign with Cisco Systems, Inc. saw success with the release of their first corporate social responsibility report. We view this as an important victory because we believe that only by reporting on their social and environmental impact will companies have meaningful benchmarks for progress. In this regard, we also had productive conversations with Intel Corp., Hewlett-Packard Co. and Pfizer, Inc. regarding disclosure of social and environmental impacts. With a changed political climate, we expect more company interest in this initiative in 2007. I look to the New Year with optimism. It is encouraging to see new national leadership emerge, and I feel the financial markets are attractively valued with under appreciated growth prospects. In my opinion, it is a good time to be a socially responsible investor! I wish you a happy and healthy New Year. Sincerely yours, /s/ Sophia Collier - ------------------------------------- Sophia Collier President Stock values fluctuate in response to individual company actions, as well as general economic, political and market conditions. 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. See pages 7-9 for important fund risks and benchmark and other disclosures. In considering performance of the funds for the six and twelve month periods, you should also consider the funds' longer term track records described elsewhere in this report. Of course, data presented reflects past performance which does not guarantee future results. NOT A PART OF THE SEMI-ANNUAL REPORT 2 CITIZENS FOCUS (PHOTO OF JOANNE DOWDELL) "WHETHER FACE-TO-FACE OR BY TELEPHONE, COMPANIES TODAY ARE MORE WILLING TO MEET WITH SOCIALLY RESPONSIBLE SHAREHOLDERS AND STAKEHOLDERS." - -- JOANNE DOWDELL VP OF CORPORATE RESPONSIBILITY CORPORATE ENGAGEMENT - A STEP IN THE RIGHT DIRECTION Speaking directly with corporate executives is an important and often effective part of our activism and advocacy work. Productive dialog can lead to positive change at the companies we engage, thus helping prevent the need to file a shareholder proposal. Dialog also can be the by-product after a shareholder proposal has been filed. The desired outcomes can sometimes take months and even years to come to fruition, and may take several parties working together to achieve. Whether face-to-face or by telephone, companies today are more willing to meet with socially responsible shareholders and stakeholders than they were just two or three years ago. As a result, we had a robust corporate dialog schedule during the six month period ended December 31, 2006. In July, we participated in a meeting with Johnson & Johnson, to get an update on the company's work to improve product safety and provide greater transparency of its non-proprietary activities. We plan to meet with Johnson & Johnson again in 2007 to follow up. Citizens filed a resolution on the topic of toxic ingredient usage with Johnson & Johnson in 2005. We withdrew the proposal once the company agreed to on-going and constructive dialog with the shareholder group. During the period, Citizens joined an investor group to engage Cisco Systems ("Cisco") company representatives on right-to-privacy issues. Cisco, along with Google, Microsoft and Yahoo!, have been targeted by Human Rights Watch for aiding Chinese censorship policies. Companies argue they are following the law and have little recourse. John Chambers, CEO of Cisco, has stated that the company has no plans to stop doing business in NOT A PART OF THE SEMI-ANNUAL REPORT 3 China, where research firm IDC projects the e-commerce market will reach $390 billion by 2009(1). We would like to see Internet companies like Cisco take a stronger stand against censorship and will continue to follow the issue. In July, Citizens' social research analysts met with the representatives from Pfizer responsible for reporting to stakeholders on the company's sustainability initiatives. We provided feedback on the company's 2005 Corporate Citizenship Report, including the issues of access to affordable medicines and transparency of political contributions. Pfizer is one of a growing number of companies issuing sustainability reports using the Global Reporting Initiative (GRI) as a guide. A company that uses the GRI as a guide to structure the contents of a sustainability report gives analysts the ability to compare "apples to apples" and evaluate the risks of the company compared to its peers. Pfizer is a company that continues to face public criticism, most recently on the issue of executive compensation, yet understands the importance of working with socially responsible investors like Citizens. Pfizer's willingness to increase disclosure and have open discussions on these issues with shareholders and stakeholders is an example of the changing attitudes towards dialog. In August, Citizens and other socially responsible investors met with representatives of Intel to discuss the company's social and environmental initiatives. Intel is an example of a company that takes the initiative to meet with socially responsible investors on an annual basis. This year's meeting focused on the increased quantity of chemicals used to clean smaller chips, and efforts to attract and retain a diverse workforce. Intel also is working to update its contract manufacturer guidelines to the emerging industry standard, the Electronics Industry Code of Conduct (EICC). Citizens' work continued with the Investor Environmental Health Network (IEHN) on the issue of toxic chemicals in consumer products. In September, we participated in a meeting with representatives of Whole Foods Market as part of our ongoing shareholder dialog with the company regarding potentially harmful chemicals in their products. In addition to direct dialog, we also use the "power of the pen" to help get our views and concerns across to corporate executives. Letters provide a - ---------- (1) Carrie Kirby, "Chinese Internet vs. free speech. Hard choices for U.S. tech giants," San Francisco Chronicle, September 18, 2005 NOT A PART OF THE SEMI-ANNUAL REPORT 4 permanent record and can be an appropriate starting point for on-going communication. In September, Citizens joined a group of investors and co-signed a letter to Target calling on the company to support cleaner gold mining and production. The coalition of investors, which at the time held more than 1.5 million shares of Target, felt it was time for management to address the issue, and minimize the potential risk to shareholder value. We believe bad publicity related to gold poses a threat to the reputations of companies that sell products containing gold. Industrial gold mining involves serious risks to worker health and safety, the environment and surrounding communities. It uses and produces large volumes of toxic chemicals, including cyanide and mercury, and creates massive amounts of waste material. The pollution and destruction of local community lands and livelihoods caused by this industry recently have begun to attract the attention of human rights and environmental organizations. An effort involving jewelry retailer is currently under way to establish a mechanism for certifying more responsible mining operations. Retailers such as Tiffany's, Zales and Kay Jewelers are leading the way and we would like to see others follow suit. Citizens Funds was a signatory to the Carbon Disclosure Project's annual survey of global companies for the third year in a row. The survey, which will help assess the risks posed by climate change on certain companies, will be sent in early 2007. It asks companies to detail their methods for tracking carbon emissions and outline the risks posed to their business by climate change. Additionally, the survey asks companies for information about the opportunities they might pursue in a carbon-constrained economy -- one in which carbon emissions are taxed or capped at an absolute amount. The survey will also look at whether companies are developing new technologies to reduce emissions, or to generate renewable energy. Companies that are proactive in this area may be able to benefit shareholders in the longer term. Last year's survey, released in February 2006, was signed by 211 institutional investors with over $31 trillion in assets. In 2007, we believe a greater number of investors will pay attention to the environmental, social and financial consequences of climate change, and we are proud to be part of this ongoing effort. NOT A PART OF THE SEMI-ANNUAL REPORT 5 In November, Citizens co-signed a letter to ConocoPhillips regarding the company's efforts to secure permits to drill for oil near Teshekpuk Lake in the National Petroleum Reserve-Alaska (NPR-A). We want to see the company take a leadership position on the issue by dropping its plans to drill in this environmentally sensitive area. The Teshekpuk Lake area is vital to caribou herds, migratory birds and Alaska Natives who rely on the area for subsistence hunting and fishing. At ConocoPhillip's 2006 annual shareholder meeting, over 25% of shareholders voted in favor of a resolution asking the company to pursue oil drilling rights in other, less controversial areas. LOOKING AHEAD We are very optimistic that 2007 will bring further progress in how corporations respond to address the environmental and social risks they face around the globe. You only need to look at Exxon Mobil's participation in discussions regarding potential carbon regulations to recognize progress has been made. It was not too long ago that some company executives rejected the science on climate change. A January 11, 2007 Wall Street Journal article stated that the company has stopped funding research to refute studies showing a correlation between fossil-fuel and global warming. We would like to see this shift in Exxon's long-standing view serve as a catalyst for change in other companies approaches to climate change and other environmental issues. We believe opportunities for socially responsible investors will expand and expect there will be growth in the industry. Decades of planting the seeds of change are bearing fruit. An increased number of institutional shareholders are including SRI mandates, and "Generation Next," many believe, is poised to carry on the work of so many before them. Their progressive, global perspectives will be a force to be reckoned with, and we believe, will serve to further advance the use of technology to help bring positive change in corporate, social and environmental performance. NOT A PART OF THE SEMI-ANNUAL REPORT 6 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 estimates of 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. 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 downgraded or may default, potentially reducing the fund's income level and share price. HIGH-YIELD SECURITY RISKS High-yield securities (so-called "junk bonds") offer the potential for higher returns but present significant volatility and risk of loss of principal and interest. 7 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? Below is a brief description of the benchmarks we use. Please keep in mind that these benchmark indices are unmanaged, meaning you cannot 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 of the U.S. equity universe. 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 Growth 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 Growth 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 Growth Index covers the small-cap segment of the U.S. equity universe. The MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) WORLD INDEX is a market capitalization-weighted equity index of more than 1,500 stocks traded in 23 world markets. 8 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. PORTFOLIO REVIEW DISCLOSURE The information in each portfolio review was obtained from the portfolio manager(s) for each fund. Any views and opinions expressed are those of the portfolio manager(s). Portfolio managers with different funds and strategies may have opinions that vary from their colleagues'. Citizens Advisers considers diversity of investment opinion to be a strength that contributes to healthy debate and is part of a strong overall investment process. The portfolio reviews are provided for informational purposes only and should not be used or construed as a recommendation for any security. 9 CITIZENS CORE GROWTH FUND (PHOTO OF ROBERT MAGAN, JONATHAN WHITE) "WE HAVE INCREASED OUR EXPOSURE TO FOREIGN-BASED STOCKS TO BENEFIT FROM WHAT WE BELIEVE IS MORE ROBUST GROWTH AVAILABLE IN INTERNATIONAL MARKETS." CO-PORTFOLIO MANAGERS Robert Magan, CFA Jonathan White, CFA 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 7-9 for important fund risk and benchmark disclosure) PORTFOLIO REVIEW (UNAUDITED) HOW DID THE FUND PERFORM? For the second half of 2006 the Core Growth Fund standard shares returned 2.20%, lagging far behind the benchmark indexes of the S&P 500 Index, which returned 12.74%, and the Russell 1000 Growth Index, which returned 10.10% during the same period. In hindsight, we were too focused on the uncertain economic outlook during the period. Worries over the health of the housing market and its potential effect on consumer spending dominated the debate over "hard" or "soft economic landing" scenarios. Economic concerns were complicated further by the anticipation and results of the November elections, as expectations of a split in control of Congress became a Democratic majority in both houses. This affected the outlook for legislative activity on taxes, healthcare, the minimum CITIZENS CORE GROWTH FUND 10 CITIZENS CORE GROWTH FUND PERFORMANCE (as of 12.31.06) CORE GROWTH
TOTAL RETURN AVERAGE ANNUAL RETURN -------------- ------------------------- Ticker 6 1 5 10 Since Share class symbol months year years years inception - ----------- ------ ------ ----- ----- ----- --------- STANDARD SHARES WAIDX 2.20% -2.02% 0.65% 5.10% 8.09% INSTITUTIONAL SHARES WINIX 2.59% -1.26% 1.37% 5.85% 7.49% ADMINISTRATIVE SHARES CGADX 2.45% -1.59% 1.05% NA -4.92%
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. 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 cost. 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. wage, energy, Iraq, and many other issues impacting both the overall economy and specific companies. The stock markets chose to ignore the uncertainty and advanced steadily from July through the end of 2006. This advance was driven by reasonable valuation levels, given the continuing strength in earnings growth in both second and third quarter reports, and the pause in raising interest rates by the Federal Reserve Board (Fed). These events attracted the ample amount of cash available for investment from hedge funds, private equity groups, foreign sources and high corporate cash balances, into both U.S. and foreign markets pushing stock prices higher. This upward momentum countered our changes to the portfolio to reflect our specific economic expectations. While we moved the portfolio from a late economic cycle orientation, emphasizing capital spending related stocks such as industrials, to a defensive posture, with staples and healthcare stocks, to finally a more neutral position, the market continued to advance almost independent of economic developments. One sector specific strategy that significantly hurt performance was our emphasis on energy early in the summer. The price of oil in early July was $78 per barrel and there was a significant chance of a disruption in oil production due to the potential for an above average hurricane season, events in the Middle East and problems with Alaskan pipelines. No hurricanes entered the Gulf CITIZENS CORE GROWTH FUND 11 of Mexico, the Middle East problems were settled without escalation and the pipeline problems were fixed more quickly than anticipated. By late September, oil was at $55 per barrel and our energy stocks suffered. Our holdings in the energy sector reduced the fund's return by 1.90% for the six month period ended December 31, 2006. Four of the ten stocks that under performed the most in the fund during the period were industrial stocks. Rockwell Automation, Norfolk Southern, Fluor and Fastenal were all significantly impacted during the summer by the deteriorating economic picture. We sold all of these stocks during the third quarter, but in aggregate they hurt the fund's returns by over 1.5% for the period. Performance also suffered from staying too long in our position of Chicos FAS, the retailer of women's clothing. It detracted 0.42% from the fund's return during the period. This company had problems in the spring, which we thought were short term in nature, however, they turned out to be more extensive. We sold the stock in late summer. Some of our strategies did work for us during the period. Toward the end of the year we positioned the portfolio to take advantage of the "soft economic landing" scenario, by cutting back on healthcare and consumer staples stocks and increasing our exposure to the consumer discretionary sector and other sectors that we believed would benefit from an improved economic outlook. Two stocks that contributed most to performance were from the industrial sector, Precision Cast Parts, which manufactures complex metal components, and Paccar, a producer of large trucks. Also our holdings in the consumer discretionary sector, particularly J.C. Penney, McDonald's and Walt Disney Co., worked well and helped performance during the period. WHAT IS THE OUTLOOK? As we enter 2007 it appears that the economy has had a "soft landing" and may be poised to reaccelerate. One critical factor will be continued stabilization in the housing market. This is necessary to support both employment levels and consumer spending. History suggests that the current strength of the stock market indicates the start of a strengthening economy sometime around mid-year, but false signals have been known to occur in the past. We have positioned the portfolio in companies that show the greatest growth prospects with an eye to valuation so we are not paying too much for growth. Also, we have increased our exposure to foreign-based stocks such as Roche Holdings and Canon to benefit from what we believe is more robust growth available in international markets. CITIZENS CORE GROWTH FUND 12 CITIZENS EMERGING GROWTH FUND EMERGING GROWTH (PHOTO OF J. MICHAEL GALLIPO, JONATHAN WHITE) "EARNINGS GROWTH AMONG COMPANIES REMAINS ROBUST, AND WE EXPECT GROWTH TO REMAIN STRONG ENOUGH TO SUPPORT EQUITY PRICES." CO-PORTFOLIO MANAGERS J. Michael Gallipo, CFA Jonathan White, CFA 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 7-9 for important fund risk and benchmark disclosure) PORTFOLIO REVIEW (UNAUDITED) HOW DID THE FUND PERFORM? Citizens Emerging Growth Fund standard shares returned 1.89% during the six month period ended December 31, 2006, lagging its benchmark the Russell Midcap Growth Index, which returned 7.90% during the same period. The period saw persistent rallies in all of the major equity indices as investors remained optimistic that the economy would make a successful "soft landing". Earnings growth for the third quarter came in much stronger than expected, which helped extend the rally. Liquidity remained abundant during the period, whether measured through traditional money supply growth, continued stock buybacks by companies or a steady flow of deals from private equity investors. Financials was the best performing sector for the fund compared to the fund's benchmark during the CITIZENS EMERGING GROWTH FUND 13 CITIZENS EMERGING GROWTH FUND PERFORMANCE (as of 12.31.06)
TOTAL RETURN AVERAGE ANNUAL RETURN ------------- ------------------------- Ticker 6 1 5 10 Since Share class symbol months year years years inception - ------------ ------ ------ ---- ----- ----- --------- STANDARD SHARES WAEGX 1.89% 7.46% 4.13% 8.69% 11.25% INSTITUTIONAL SHARES CEGIX 2.16% 7.97% 4.78% NA 0.89% ADMINISTRATIVE SHARES CGRDX 2.03% 7.68% 4.47% NA -3.38%
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. 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 cost. 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. period. The fund benefited from an overweight position versus the benchmark (10.5% vs. 9.0%), although performance was hurt slightly by stock selection within the sector. Consumer discretionary was the largest contributor to the fund's absolute performance. This sector returned 11.30% and contributed 2.30% to the fund's total return. Fears about the health and strength of the consumer, which arose in the spring and early summer of 2006, abated during the period resulting in a significant rally in retail-related stocks. Industrial stocks were the greatest detractors from the fund's relative performance during the period with the sector falling 8.01%, versus the benchmark's 1.66% increase and subtracting 1.11% from fund performance. Weak performance from a couple of the fund's larger holdings in this sector drove the underperformance. Energy stocks were the largest detractor from the fund's absolute performance. Our holdings in this sector fell 9.21% during the six-month period, subtracting 1.15% from the fund's total return. Concerns over the decline in natural gas and oil prices, and the possibility of a subsequent decline in activity and earnings for the group, contributed to the sell-off. CB Richard Ellis, the country's largest commercial real estate services firm, was the fund's biggest contributor to performance. The stock rose 33.33% and added 0.66% to the fund's total return. The performance validated our CITIZENS EMERGING GROWTH FUND 14 decision to focus on the commercial real estate market rather than the residential market. The next three largest contributors to the fund's relative performance were all retail stocks that cater to either upper-income or teen consumers - Nordstrom, Polo Ralph Lauren and American Eagle Outfitters. All three companies posted very strong comparable sales data during the period and look to be well-poised to maintain growth into 2007. Akamai Technologies had the largest absolute gain during the period, with its stock price rising 47.53% as the company benefited from the growth in high bandwidth content on the Internet. The worst performing stock on an absolute basis, and second largest detractor from fund performance, was Choice Hotels, which fell 30.53% and subtracted 0.58% from the fund's total return. The stock, a strong performer for the fund over the past several years, was hurt after the company's second quarter earnings came in below investor forecasts and the company lowered guidance for the rest of the year. Expeditors International, another long-time fund holding, was the largest detractor from fund performance, falling 27.72% and subtracting 0.82% from the fund's return. The company, which had a track record of beating analyst forecasts, came in slightly below forecasts at the end of July, and was also hurt by general weakness within the transportation and logistics industry. We reduced the size of our position in Expeditors during the fourth quarter, but we still believe the company has more growth ahead. WHAT IS THE OUTLOOK? Our outlook for 2007 is reasonably optimistic. The series of interest rate hikes by the Fed seem to be having the desired effect of slowing, but not hurting, the economy. We expect the Fed to remain on the sidelines for most, if not all, of 2007. Earnings growth among companies remains robust, and while we expect the rate of growth to slow, we expect it to remain strong enough to support equity prices. Also, the third year of a Presidential term has historically been a strong year for the markets. As always, however, there are risks that we will continue to watch closely. Foremost is the risk that the current weakness in the housing market (while currently showing signs of bottoming out) may become more pronounced and have a wider impact on the economy resulting in a harder landing. In addition, political developments in Washington have the potential to negatively impact certain segments of the market such as healthcare. CITIZENS EMERGING GROWTH FUND 15 CITIZENS SMALL CAP CORE GROWTH FUND (PHOTO OF J. MICHAEL GALLIPO, NATHAN MOSER, JONATHAN WHITE) "WE BELIEVE 2007 SHOULD BE A GOOD YEAR FOR EQUITIES, AND SMALL CAP STOCKS IN PARTICULAR." CO-PORTFOLIO MANAGERS J. Michael Gallipo, CFA Nathan Moser, CFA Jonathan White, CFA 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- and medium-sized company risks (See pages 7-9 for important fund risk and benchmark disclosure) PORTFOLIO REVIEW (UNAUDITED) HOW DID THE FUND PERFORM? Citizens Small Cap Core Growth Fund returned 1.68% for the six months ended December 31, 2006, lagging its benchmark the Russell 2000 Growth Index, which returned 6.86% for the same period. Small cap stocks underperformed their larger counterparts for the period, despite outperforming during the fourth quarter. The markets rallied as inflation expectations decreased, confidence in an economic "soft landing" for 2007 increased and merger and acquisition activity surged. The fund's best performing sector during the six month period was financials, contributing 1.64% to the fund's total return. Strong stock selection and a significant overweight position relative to the benchmark contributed to the strong performance. Consumer discretionary was the fund's next CITIZENS SMALL CAP CORE GROWTH FUND 16 CITIZENS SMALL CAP CORE GROWTH FUND PERFORMANCE (as of 12.31.06) SMALL CAP CORE GROWTH
TOTAL RETURN AVERAGE ANNUAL RETURN ------------- ------------------------- Ticker 6 1 3 5 Since Share class symbol months year years years inception - ----------- ------ ------ ---- ----- ----- --------- STANDARD SHARES CSCSX 1.68% 8.74% 7.87% 5.44% 4.16%
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. 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 cost. 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. best performing sector, with a total return of 4.36%. However, due to poor stock selection, this sector underperformed the benchmark by 0.89%. Information technology and industrials were the fund's worst performing sectors, detracting 0.23% and 1.74% from the fund's total return, respectively. The fund maintained overweight positions in both the financials and consumer staples sectors, while continuing to underweight healthcare and industrials relative to the benchmark. We added to our biotechnology exposure during the period, and anticipate increasing our exposure to the healthcare sector further in 2007. The largest contributor to fund performance for the period was Decker's Outdoor Corp., a footwear retailer best known for their UGG and Teva brands. The stock gained 55.59% and added 0.98% to the fund's total return. Decker's strong stock performance was driven by better than expected second and third quarter results as well as increased optimism for a strong holiday season. Philadelphia Consolidated Holding Corp., a property and casualty insurance company, was another strong performer and gained 46.70% and added 0.53% to total return on very strong third quarter results. Choice Hotels International Inc., which operates mid-priced hotel chains such as Clarion, Comfort Inn and Econo Lodge, declined 30.53% during the period. This detracted 0.89% from the fund's total return. Choice Hotels' financial results for the second quarter were below expectations and they reduced full year guidance. The combination of high expectations and a CITIZENS SMALL CAP CORE GROWTH FUND 17 lofty valuation magnified the decline. Dress Barn Inc., a retailer targeting value-conscious women, declined 31.43% during the period in which the fund held it. This decline was based in part on weaker than expected same store sales. We sold our position due to our belief that the company's fundamentals had deteriorated. WHAT IS THE OUTLOOK? Despite nearly two years of Federal Funds interest rate increases, liquidity remains abundant. Corporations, private equity investors and foreign countries are all looking to invest their cash, and we believe this trend should continue in 2007. In our opinion, the current environment is positive for equities as excess cash keeps interest rates low and leads to increased dividends, share repurchases and mergers and acquisitions. We expect that economic growth will slow - which should help ease the Federal Reserve's inflation concerns. We believe 2007 should be a good year for equities, and small cap stocks in particular, along with an expectation for periods with heightened volatility. CITIZENS SMALL CAP CORE GROWTH FUND 18 CITIZENS VALUE FUND VALUE (PHOTO OF SOPHIA COLLIER) "THIS MARKS THE FOURTH CONSECUTIVE YEAR IN WHICH THE FUND HAS OUTPERFORMED THE S&P 500 INDEX." PORTFOLIO MANGER Sophia Collier 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 Institutional shares 3.31.06 RISKS Value risks (See pages 7-9 for important fund risk and benchmark disclosure) PORTFOLIO REVIEW (UNAUDITED) HOW DID THE FUND PERFORM? Citizens Value Fund standard shares returned 10.30% for the six months ended December 31, 2006 and 15.95% for the year. During the six months we underperformed the benchmark S&P 500 Index's return of 12.74%, but we outperformed its 15.80% result for the year. This marks the fourth consecutive year in which the fund has outperformed the S&P 500 Index. Within the six month period, the fund's underperformance was almost completely the result of the underperformance of ConocoPhillips, the environmentally approved energy company compared to ExxonMobil, a rejected company that is among the largest names in the S&P 500 Index. Exxon's stock price rose almost 25% during the second half of the year, while ConocoPhillips' stock was up only CITIZENS VALUE FUND 19 CITIZENS VALUE FUND PERFORMANCE (as of 12.31.06)
TOTAL RETURN AVERAGE ANNUAL RETURN -------------- ------------------------- Ticker 6 1 5 10 Since Share class symbol months year years years inception - ----------- ------ ------ ----- ----- ----- --------- STANDARD SHARES MYPVX 10.30% 15.95% 2.06% 8.33% 8.68% INSTITUTIONAL SHARES CVALX 10.58% NA NA NA 9.80%*
* Aggregate return 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. 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 cost. 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. 9.80% in the period. ConocoPhillips' smaller return was the result of a sell-off in the stock in the third quarter, following their announcement to acquire Burlington Resources. ConocoPhillips rallied in the fourth quarter, but not enough to overtake Exxon. Interestingly, we now believe that Exxon may be overvalued, trading at a price/earnings multiple of almost 12, versus ConocoPhillips which is valued at a much more reasonable price/earnings ratio of 7.3. This suggests to us that ConocoPhillips has the potential to exceed the performance of its pricier counterpart in the year ahead, so we continue to hold the stock. Citizens Value Fund's top performing sector in the second half of the year was consumer discretionary, where our holdings such as luxury retailer Nordstrom, Inc. and Toyota Motor Corp. showed strong appreciation. Both companies seem to be well in tune with consumer tastes. Toyota's ability to succeed with a hybrid car is particularly encouraging. Automobiles are among the largest contributors to global warming, and it is essential that new strategies for lower emission vehicles be developed and commercialized. The fund's second best performing sector in the period was information technology led by the fund's holding of Freescale, a semiconductor company that spun off from Motorola and then was acquired in the period CITIZENS VALUE FUND 20 at a nice price premium by private equity investors. We liked Freescale because it had what we believed was a depressed valuation with motivated management and a specific and focused action plan to increase profit margins. This is the type of company favored by our quality relative value strategy. While we do not buy companies just because we believe they are acquisition candidates, it is nice when they are acquired. WHAT IS THE OUTLOOK? Looking ahead, I believe the United States economy is fairly strong, and that the global economy is even stronger. I do not believe that inflation is a significant risk. I also believe that low unemployment will continue in the U.S. and that interest rates, while higher than in recent years, are still at historically low levels. Thus, I believe that the slowing housing market will temper, but not destroy, consumer spending, the largest source of economic growth. With this view, we will continue to position the portfolio in what we consider undervalued companies with growing profitability. We will also keep an eye out for special situations where we can seek to add value to the portfolio. CITIZENS VALUE FUND 21 CITIZENS GLOBAL EQUITY FUND (PHOTO OF JONATHAN WHITE) "WE BELIEVE STOCKS IN EMERGING MARKETS HAVE THE POTENTIAL TO PROVIDE ATTRACTIVE RETURNS." PORTFOLIO MANAGER Jonathan White, CFA INVESTMENT GOAL Capital appreciation INVESTMENT STRATEGY Invests in promising companies throughout the world INCEPTION DATES Standard shares 2.08.94 Institutional shares 11.01.99 Administrative shares 2.04.00 RISKS Growth and foreign investing (See pages 7-9 for important fund risk and benchmark disclosure) PORTFOLIO REVIEW (UNAUDITED) HOW DID THE FUND PERFORM? World equity markets were strong during the second half of 2006. The MSCI World Index returned 13.21% during the period. This was slightly above the 12.74% return of the U.S. market, as measured by the S&P 500 Index. The fund's standard share class returned 7.86% during the six month period. During the period, emerging markets and many European markets were very strong. This overall strength in world markets was in the face of evidence of generally slowing world economic growth and central banks more inclined to raise interest rates rather than lower them. This reflects the substantial amounts of cash available for investment from hedge funds, private equity investors, central banks and corporations. CITIZENS GLOBAL EQUITY FUND 22 CITIZENS GLOBAL EQUITY FUND PERFORMANCE (as of 12.31.06) GLOBAL EQUITY
TOTAL RETURN AVERAGE ANNUAL RETURN -------------- ------------------------- Ticker 6 1 5 10 Since Share class symbol months year years years inception - ----------- ------ ------ ----- ----- ----- --------- STANDARD SHARES WAGEX 7.86% 14.41% 4.01% 6.76% 7.06% INSTITUTIONAL SHARES CGEIX 8.19% 15.01% 4.66% NA -0.19% ADMINISTRATIVE SHARES CEADX 8.04% 14.74% 4.30% NA -5.95%
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. 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 cost. 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. Our stock selections in the consumer discretionary and telecommunications services sectors worked well. Performance suffered from our energy holdings, an underweight relative to the index in the financial sector and somewhat mediocre returns in other sectors. In retrospect, we were a bit too cautious with our assessment of the ability of global markets to perform as economies slowed and we positioned the portfolio a bit too defensively both geographically and by maintaining an above average cash position. Our biggest contributor to performance was Volvo AB, the Swedish manufacturer of trucks and engines. It has long been and continues to be one of our larger positions. The stock was up over 40% during the period and contributed 0.93% to overall fund performance. Another strong performer was Deutsche Boerse, the German stock exchange. Deutsche Boerse has benefited from takeover speculation that affected many international financial marketplaces in 2006. The stock was up over 30% during the six month period, and contributed 0.86% to the fund's return. Another notable winner in the portfolio was Nintendo, which was purchased in early November, shortly before the company introduced its innovative Wii video gaming console that was such a success during the Christmas season. Although we had a relatively small position in the CITIZENS GLOBAL EQUITY FUND 23 portfolio (1.30%), Nintendo contributed 0.25% to the fund's return in less than two months. Two energy companies were the largest detractors from fund performance during the second half of 2006. Valero Energy, a U.S. based petroleum refining and marketing company, was down over 23% during the period hurting fund performance by 0.46%. Consol Energy, which produces coal and natural gas, was down 29%, and detracted 0.39% from the fund performance. The energy sector was weak overall as multiple potential threats to supply from weather and geopolitical events passed without causing disruption and the price of oil declined from $78 per barrel in July to approximately $60 per barrel on December 31, 2006. WHAT IS THE OUTLOOK? As we enter 2007, the portfolio remains somewhat cautious given our outlook for slowing economic growth, but we have reduced the defensive posture of the portfolio that we had in the last quarter of 2006. The fund's primary divergence from the MSCI World Index is an overweight in European stocks that is offset by an underweight in U.S. stocks. We have increased the fund's direct participation in emerging markets to approximately 5% of the portfolio with investments in typically larger, infrastructure related stocks. These include ICICI Bank, a major Indian bank, and two telecommunications companies, Telekomunikasi Indonesia and America Movil S. A., a major provider of cellular service in Mexico. We believe stocks in emerging markets have the potential to provide attractive returns but they also can be quite volatile so we will carefully monitor our position size and geographic exposures. On a sector basis, we are overweight in the healthcare sector, primarily in non-U.S. companies which are less vulnerable to U.S. legislative activities. CITIZENS GLOBAL EQUITY FUND 24 CITIZENS BALANCED FUND BALANCED (PHOTO OF ROBERT MAGAN) "WE BELIEVE THE OUTLOOK FOR EQUITIES IS POSITIVE IN 2007 AS THE ECONOMY CONTINUES TO GROW AND COMPANIES CONTINUE TO REPORT GOOD EARNINGS." PORTFOLIO MANAGER Robert Magan, CFA 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 (See pages 7-9 for important fund risk and benchmark disclosure) PORTFOLIO REVIEW (UNAUDITED) HOW DID THE FUND PERFORM? For the six-month period ended December 31, 2006, the Citizens Balanced Fund returned 5.14%. This trailed the fund's benchmark, the Blended Index, which returned 9.64%. The Blended Index is a combination of 60% of the S&P 500 Index and 40% of the Lehman Brothers U.S. Aggregate Index. The S&P 500 and the Lehman Brothers U.S. Aggregate indices both increased in value during the period, 12.74% and 5.09% respectively. The stock market provided strong performance during the six month period to the surprise of some Wall Street analysts. Reduced concerns about inflation and rising interest rates and reports of slower but continued economic growth fueled this rally. The Federal Open Market Committee (FOMC) held its target for the federal funds rate steady at 5.25% during the entire six month period. CITIZENS BALANCED FUND 25 CITIZENS BALANCED FUND PERFORMANCE (as of 12.31.06)
AVERAGE TOTAL RETURN ANNUAL RETURN -------------- ---------------- Ticker 6 1 3 Since Share class symbol months year years inception - ----------- ------ ------ ----- ----- --------- STANDARD SHARES CFBLX 5.14% 2.99% 5.92% 8.27%
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. 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 cost. 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. At the end of the period the fund had a slight overweight in stocks, 61.9%, relative to the Blended Index's weighting of 60%. The remainder of the portfolio was allocated to bonds (34.1%) and short-term cash investments (4.0%). During the period, the fund increased its exposure to stocks and reduced its exposure to fixed income securities and cash investments. This reflected our positive outlook for stocks in the longer term. We reduced the fund's allocation to fixed income securities by reinvesting cash received from called bonds in stocks. The fixed income portion of the portfolio slightly outperformed the Lehman Brothers U.S. Aggregate Index during the period as the average maturity and average duration of the fixed income portion of the portfolio was short of the benchmark. The fund's holdings in telecommunications stocks returned 27.08% during the period, as investors began to take advantage of this undervalued sector versus the rest of the market. This sector accounted for 0.90% of the fund's return. Financial stocks in the fund returned 11.31%, accounting for 2.10% of the fund's return. This sector responded nicely to the news that the FOMC was expected to continue to hold short term rates steady and the potential that the next move would be to lower rates. Industrial stocks were volatile during the period due to the change in economic outlook from recession to continued growth. The fund's industrial stocks returned 3.08% accounting for only 0.01% of total return. The energy sector contributed negatively to the return of the fund. Our holdings in this CITIZENS BALANCED FUND 26 sector returned -4.19%, accounting for -0.68% of the fund's return for the period. Precision Castparts, a metal processing and manufacturing company, was the largest contributor to positive performance for the period. The stock returned 30.96% during the period, which accounted for 0.64% of the fund's return. The company benefited from strong third quarter earnings and an outlook for increased earnings and revenue in the future. In addition, analysts increased their estimates for 2007 and 2008. Their growth is likely to come from their strong original equipment manufacturing business with the airline industry as both Boeing and Airbus continue to take orders for new airplanes. America Movil S.A. de C.V. (AMX), a wireless communications provider in Mexico and South America, gained 35.88%, accounting for 0.60% of the fund's return. The stock price moved higher as the company reported very solid earnings as subscriber and market share growth drove improvement in bottom line earnings. We believe future growth looks strong as AMX continues to grow organically and through acquisition. Shares of both Valero Energy Corp and Rockwell Automation Inc. fell during the quarter 23.13% and 21.85% respectively, detracting 0.56% and 0.66% from the fund's return. Valero's decline was caused by the drop in oil prices and a recovery of gasoline inventories in the U.S. Rockwell declined due to slower profit margin growth attributed to a decline in automotive orders. We sold Rockwell and trimmed our position in Valero during the period. WHAT IS THE OUTLOOK? In our opinion the stock market will likely continue its year end rally into January and then retreat as fourth quarter earnings reports are released and economic strategists suggest that the years of double digit earnings growth have ended. We believe that once the equity market comes to terms with slower earnings, it should return to higher levels by year end. We continue to believe that the greater long-term risk to economic growth is inflation, not higher interest rates. Therefore, we expect the Fed to hold the target for the federal funds rate at 5.25% through most of 2007. This gives them the flexibility to battle inflation while trying to construct a "soft landing" scenario for the economy. We believe that opportunities for capital appreciation in the bond market are currently limited. We also believe that CITIZENS BALANCED FUND 27 yields should move higher in the earlier part of the year as the economy shows signs that it is not going into recession. Therefore, we continue to keep the duration of the bond portfolio short of its benchmark in anticipation of higher long term rates by the end of the first quarter. We believe the outlook for equities is positive in 2007 as the economy continues to grow and companies continue to report good earnings. It is our belief that annualized GDP growth will likely slow in 2007 to a more sustainable rate of 2% to 3%, with growth somewhat below the Fed's target of 3% to 3.5% during the first two quarters. The third and fourth quarters will in our opinion, likely see a return to sustainable levels of growth as the housing market bottoms and the consumer continues to be active. We believe the consumer should continue to be a driver through the housing downturn as long as unemployment remains low and job growth continues at sustainable levels. CITIZENS BALANCED FUND 28 CITIZENS INCOME FUND INCOME (GRAPHIC) PORTFOLIO MANAGER The fund is managed by a team of portfolio managers at Dwight Asset Management Company INVESTMENT GOAL Current income and monthly dividend payment INVESTMENT STRATEGY Invests in bonds that are diversified across sectors, including U.S. treasury, mortgages, corporate, and asset-backed securities INCEPTION DATE Standard shares 6.10.92 RISKS Fixed-income investing; high-yield security risks (See pages 7-9 for important fund risk and benchmark disclosure) PORTFOLIO REVIEW (UNAUDITED) HOW DID THE FUND PERFORM? During the six month period ended December 31, 2006, the fund returned 4.30% or 0.79% less than the 5.09% return of the Lehman Brothers U.S. Aggregate Index. The fund's interest rate exposure, or duration, remained neutral during the third quarter yet was moved to a defensive stance (less than that of the index) during the fourth quarter, which had a small but positive effect on return. The effect of sector decisions on return was positive for most broad market sectors with the exception of corporate bonds; we maintained an underweight to corporates, due to concern of potential events detrimental to bondholder value, yet the sector proved to be one of the best performing pockets of the fixed income market. The fund maintained an overweight, relative to the index, to both commercial mortgage-backed debt and asset-backed securities, each of which added to return during the period. The fund maintained an approximate 2.5% average allocation to high yield over the period that assisted in offsetting the return drag associated with our underweight to the corporate investment grade sector. The second half of 2006 was, from an interest rate perspective, the CITIZENS INCOME FUND 29 CITIZENS INCOME FUND PERFORMANCE (as of 12.31.06)
TOTAL RETURN AVERAGE ANNUAL RETURN ------------- ------------------------- Ticker 6 1 5 10 Since Share class symbol months year years years inception - ----------- ------ ------ ---- ----- ----- --------- STANDARD SHARES WAIMX 4.30% 2.91% 3.27% 4.30% 5.17%
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. 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 cost. 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. mirror image of the first 6 months of the year. The Treasury yield curve, which saw yields rise across the entire curve but most prominently at the short end during the first half of the year, reversed course as prices rose and yields fell 34, 40 and 43 basis points during the latter half of the year for the 2-year, 5-year, and 10-year Treasury notes, respectively. The curve remained flat despite the Fed's decision to leave the target Fed Funds rate unchanged at each of the four Federal Open Market Committee (FOMC) meetings during the period. The fixed income market, benefited from the Treasury market rally during the second half of the year. In addition to Treasury securities performing well, all broad spread sectors (mortgages, corporates, and asset-backed) also performed admirably as spreads tightened amid consistent demand. Economic growth began to wane in the second half of the year partially due to a severe downturn in housing. World events during the period, such as the continued war in Iraq, conflict between Lebanon and Israel and unrest in Darfur, when coupled with investor expectations that the Fed was done raising rates, caused rates to drop across the yield curve. WHAT IS THE OUTLOOK? We anticipate that the Fed will continue to hold interest rates at the current level at least until the second quarter of 2007, based on moderating CITIZENS INCOME FUND 30 inflation concerns and lower growth expectations. The Fed expects that GDP growth is likely to trend "close to or below the economy's long-run sustainable pace." We may consider moving to a neutral duration posture in the near term and have removed the fund's corporate bond underweight. We added slightly to our mortgage position during the fourth quarter but will re-evaluate our position based on demand for debt and the interest rate environment. We will likely continue to overweight the commercial mortgage-backed and asset-backed securities sectors and maintain an up-in-quality bias. CITIZENS INCOME FUND 31 CITIZENS MONEY MARKET FUND (PHOTO OF ROBERT MAGAN) "WE BELIEVE THE FEDERAL RESERVE BOARD IS LIKELY DONE INCREASING SHORT TERM RATES AND THAT THEIR NEXT MOVE MAY BE TO LOWER THE TARGET RATE." PORTFOLIO MANAGER Robert Magan, CFA INVESTMENT GOAL Current income consistent with safety and liquidity INVESTMENT STRATEGY Invests exclusively in money market instruments INCEPTION DATES Standard shares 8.30.83 Institutional shares 2.01.96 RISKS Money market investing (See pages 7-9 for important fund risk and benchmark disclosure) PORTFOLIO REVIEW (UNAUDITED) HOW DID THE FUND PERFORM? The seven-day simple yield on standard shares of the Citizens Money Market Fund was 4.39% as of December 31, 2006, up slightly from the yield of 4.35% on June 30, 2006. During the six month period ended December 31, 2006 the fund's standard share class returned 2.21%. During the six-month period, the average weighted maturity of the fund's portfolio was lengthened from 35 days to a range of 40 to 45 days. This reflects our belief that the Federal Reserve Board (Fed) is likely done increasing short term rates and that their next move may be to lower the target rate. The Federal Open Market Committee (FOMC) held steady its target for the federal funds rate (a key rate that influences mortgage rates and credit card rates) at 5.25% CITIZENS MONEY MARKET FUND 32 CITIZENS MONEY MARKET FUND PERFORMANCE (as of 12.31.06) MONEY MARKET
TOTAL RETURN AVERAGE ANNUAL RETURN -------------- ------------------------- Ticker 6 1 5 10 Since Share class symbol months year years years inception - ------------ ------ ------ ----- ----- ----- --------- STANDARD SHARES WKAXX 2.21% 4.13% 1.59% 2.97% NA INSTITUTIONAL SHARES WAIXX 2.35% 4.40% 1.89% 3.34% 3.49%
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. 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 cost. 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. throughout the six month period. Fed Chairman, Ben Bernanke, and other FOMC members, continue to indicate that their focus is on inflation and they have expressed a willingness to raise interest rates as much as necessary to ward off any return of higher inflation. We believe the Fed will hold interest rates at their current levels for most of 2007. Our belief is based upon the most recent economic data which showed a modest slowing in the pace of inflation and economic growth at or just above the Fed's sustainable growth rate of 3%. A reduced expectation level of inflation continues although it could very easily change course with the return of higher oil prices and the resulting effect of prices at the gasoline pump. How long the pause in changing the interest rate lasts, and whether the next move is lower or higher rates, is still open to debate WHAT IS THE OUTLOOK? While the FOMC currently is in a data dependent decision mode and will watch economic releases closely, it is clear that the Fed's current campaign to increase the federal funds target rate at a measured pace has ended. We will continue to hold the average weighted maturity of the fund's portfolio closer to the 40 - 45 day range as we believe that the FOMC will continue to hold the fed funds rate steady well into 2007 and possibly longer. Keeping the portfolio's average weighted maturity in this range locks in higher rates now and positions the portfolio well if or when rates move lower in the future. We will be watching the economic data points closely in the coming months. CITIZENS MONEY MARKET FUND 33 PORTFOLIO COMPOSITION (UNAUDITED) PORTFOLIO COMPOSITION
PERCENTAGE OF CORE GROWTH FUND INVESTMENTS SECURITY ALLOCATION AT VALUE - ------------------------------------------------------------ Financials 21.6% Information Technology 13.8% Healthcare 12.7% Consumer Discretionary 11.9% Industrials 9.9% Consumer Staples 8.5% Energy 8.3% Materials 4.8% Cash Equivalents 3.9% Utilities 2.7% Telecommunication Services 1.9% - ------------------------------------------------------------
PERCENTAGE OF EMERGING GROWTH FUND INVESTMENTS SECURITY ALLOCATION AT VALUE - ------------------------------------------------------------ Consumer Discretionary 20.5% Information Technology 18.0% Healthcare 15.9% Financials 11.6% Industrials 11.4% Energy 8.9% Cash Equivalents 4.5% Materials 3.4% Consumer Staples 2.3% Utilities 1.9% Telecommunication Services 1.6% - ------------------------------------------------------------
SMALL CAP PERCENTAGE OF CORE GROWTH FUND INVESTMENTS SECURITY ALLOCATION AT VALUE - ------------------------------------------------------------ Information Technology 22.6% Consumer Discretionary 16.3% Healthcare 15.3% Industrials 14.4% Financials 13.8% Energy 6.0% Consumer Staples 4.4% Materials 4.3% Cash Equivalents 2.9% - ------------------------------------------------------------
PERCENTAGE OF VALUE FUND INVESTMENTS SECURITY ALLOCATION AT VALUE - ------------------------------------------------------------ Financials 21.7% Information Technology 15.0% Healthcare 11.5% Consumer Discretionary 10.6% Industrials 9.9% Energy 9.3% Consumer Staples 8.9% Cash Equivalents 4.6% Telecommunication Services 3.4% Utilities 2.6% Materials 2.5% - ------------------------------------------------------------
PERCENTAGE OF GLOBAL EQUITY FUND INVESTMENTS SECURITY ALLOCATION AT VALUE - ------------------------------------------------------------ Financials 25.4% Consumer Discretionary 13.0% Healthcare 12.7% Information Technology 11.8% Consumer Staples 8.3% Industrials 7.2% Energy 7.0% Materials 5.4% Telecommunication Services 4.7% Utilities 2.4% Cash Equivalents 2.1% - ------------------------------------------------------------
SEE FINANCIAL NOTES 34 DECEMBER 31, 2006
PERCENTAGE OF BALANCED FUND INVESTMENTS SECURITY ALLOCATION AT VALUE - ------------------------------------------------------------ Equity Financials 13.7% Information Technology 10.2% Healthcare 8.2% Consumer Discretionary 7.8% Industrials 6.4% Consumer Staples 5.4% Energy 5.4% Telecommunication Services 2.3% Utilities 2.1% Materials 1.8% Preferred Stock 0.4% - ------------------------------------------------------------ Fixed Income U.S. Government Agency Obligations 18.1% Corporate Bonds 8.0% U.S. Government Obligations 5.4% Collateralized Mortgage Obligations 0.2% Foreign Government Bonds 0.1% - ------------------------------------------------------------ Cash Equivalents 4.5% - ------------------------------------------------------------
PERCENTAGE OF INCOME FUND INVESTMENTS SECURITY ALLOCATION AT VALUE - ------------------------------------------------------------ U.S. Government Agency Obligations 38.2% Collateralized Mortgage Obligations 22.7% U.S. Government Obligations 17.4% Corporate Bonds 16.7% Cash Equivalents 5.0% - ------------------------------------------------------------
PERCENTAGE OF MONEY MARKET FUND INVESTMENTS SECURITY ALLOCATION AT VALUE - ------------------------------------------------------------ Commercial Paper 65.6% U.S. Government Agency Obligations 10.7% Corporate Bonds 10.0% Municipal Notes 7.6% Certificates of Deposit 6.1% - ------------------------------------------------------------
All portfolio compositions subject to change. SEE FINANCIAL NOTES 35 CITIZENS FUNDS HOLDINGS (UNAUDITED)
- ------------------------------------------------------------------------- CORE GROWTH FUND SECURITY SHARES VALUE($) - ------------------------------------------------------------------------- COMMON STOCKS - 94.0% Air Freight - 1.5% FedEx Corp. 40,000 4,345 Apparel Manufacturers - 1.7% VF Corp. 60,000 4,925 Auto Manufacturing - 1.3% Volvo AB ADR 55,000 3,785 Banks - 4.4% Banco Santander Central Hispano SA ADR 150,000 2,799 Bank of America Corp. 55,000 2,936 UBS AG ADR 75,000 4,525 Wells Fargo & Co. 80,000 2,845 ------- 13,105 Biotechnology - 2.3% Gilead Sciences, Inc. (a) 60,000 3,896 Roche Holding AG ADR 32,000 2,864 ------- 6,760 Chemicals - 2.9% Praxair, Inc. 90,000 5,340 Sigma-Aldrich Corp. 40,000 3,109 ------- 8,449 Computers - 7.1% Autodesk, Inc. (a) 70,000 2,832 Hewlett-Packard Co. 70,000 2,883 Intuit, Inc. (a) 90,000 2,746 Network Appliance, Inc. (a) 115,000 4,517 Oracle Corp. (a) 300,000 5,143 VeriFone Holdings, Inc. (a) 80,000 2,832 ------- 20,953 Electrical Equipment - 1.3% Emerson Electric Co. 90,000 3,966 Electronics - 2.9% Agilent Technologies, Inc. (a) 85,000 2,962 Cisco Systems, Inc. (a) 210,000 5,740 ------- 8,702 Energy & Utilities - 10.7% The AES Corp. (a) 210,000 4,627 Baker Hughes, Inc. 60,000 4,480 ConocoPhillips 50,000 3,598 CONSOL Energy, Inc. 80,000 2,570 EnCana Corp. 70,000 3,217 Questar Corp. 40,000 3,322 Silvan Power Co. (a) (b) 24,000 -- The Williams Cos., Inc. 120,000 3,134 Valero Energy Corp. 80,000 4,093 Vulcan Power Co., Class A (a) (b) 40,000 -- XTO Energy, Inc. 65,000 3,058 ------- 32,099 Entertainment - 1.6% The Walt Disney Co. 140,000 4,798 Financial - Diversified - 6.2% American Express Co. 55,000 3,337 JPMorgan Chase & Co. 90,000 4,347 Merrill Lynch & Co., Inc. 40,000 3,724 Moodys, Inc. 50,000 3,453 State Street Corp. 50,000 3,372 ------- 18,233 Financial Services - 1.2% T. Rowe Price Group, Inc. 80,000 3,502 Foods - 6.5% Campbell Soup Co. 75,000 2,917 Dean Foods Co. (a) 65,000 2,748 Groupe Danone ADR 110,000 3,586 McCormick & Co., Inc. 110,000 4,241 PepsiCo, Inc. 45,000 2,815 Sysco Corp. 80,000 2,941 ------- 19,248 Healthcare - 10.1% Allergan, Inc. 26,000 3,113 Baxter International, Inc. 100,000 4,639 Becton, Dickinson & Co. 75,000 5,261 C.R. Bard, Inc. 65,000 5,393 Johnson & Johnson, Inc. 100,000 6,602 Laboratory Corp. of America Holdings (a) 70,000 5,143 ------- 30,151
SEE FINANCIAL NOTES 36 DECEMBER 31, 2006 ($ X 1,000)
- ------------------------------------------------------------------------- CORE GROWTH FUND SECURITY SHARES VALUE($) - ------------------------------------------------------------------------- Insurance - 7.5% Allianz SE ADR 150,000 3,063 American International Group, Inc. 50,000 3,583 Lincoln National Corp. 100,000 6,640 The Chubb Corp. 100,000 5,291 The St. Paul Travelers Cos., Inc. 65,000 3,490 ------- 22,067 Manufacturing - 5.6% Cummins, Inc. 25,000 2,955 Deere & Co. 35,000 3,327 PACCAR, Inc. 70,000 4,543 Precision Castparts Corp. 75,000 5,871 ------- 16,696 Multimedia - 1.4% News Corp., Class B 190,000 4,229 Office Equipment & Supplies - 1.1% CANON, Inc. ADR 55,000 3,112 Personal Care - 1.8% Colgate-Palmolive Co. 80,000 5,219 Publishing - 0.9% The McGraw-Hill Cos., Inc. 40,000 2,721 Real Estate - 1.9% Simon Property Group, Inc. 55,000 5,571 Restaurants - 1.5% McDonald's Corp. 100,000 4,433 Retail - 3.2% J.C. Penney Co., Inc. 70,000 5,415 Kohl's Corp. (a) 60,000 4,106 ------- 9,521 Services - 4.3% Accenture Ltd., Class A 80,000 2,954 CA, Inc. 467 11 Cognizant Technology Solutions Corp. (a) 55,000 4,244 Ecolab, Inc. 120,000 5,424 ------- 12,633 Telecommunications - 3.1% AT&T, Inc. 150,000 5,362 Comcast Corp., Class A (a) 90,000 3,810 ------- 9,172 ------- TOTAL COMMON STOCKS 278,395 Cost: $254,075 REPURCHASE AGREEMENTS - 3.8% Fifth Third Bank, Inc., 4.80%, 01/02/07 (Date of Agreement 12/29/06, proceeds at maturity $11,309, collateralized by Federal Home Loan Bank security, 5.30%, 06/20/08, market value $11,643) Cost: $11,303 11,303 11,303 ------- TOTAL INVESTMENTS - 97.8% 289,698 Cost: $265,378
Percentages indicated are based on net assets of $296,170. (a) Non-income producing security. (b) On December 31, 2006, 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 their 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 Unit Cost: $7.50 Value: $0 Silvan Power Co. Acquisition Date: July 27, 2004 Cost: $0 Unit Cost: $0 Value: $0 ADR - American Depositary Receipt - -------------------------------------------------------------------------------- SEE FINANCIAL NOTES 37 CITIZENS FUNDS HOLDINGS (UNAUDITED)
- ------------------------------------------------------------------------- EMERGING GROWTH FUND SECURITY SHARES VALUE($) - ------------------------------------------------------------------------- COMMON STOCKS - 95.8% Apparel Manufacturers - 1.2% Gildan Activewear, Inc. (a) 45,000 2,098 Biotechnology - 1.5% Gilead Sciences, Inc. (a) 40,200 2,610 Computers - 5.9% Akamai Technologies, Inc. (a) 45,000 2,390 Corning, Inc. (a) 75,360 1,410 Komag, Inc. (a) 40,000 1,515 Lexmark International, Inc. (a) 30,000 2,196 Webex Communications, Inc. (a) 75,000 2,617 ------- 10,128 Consumer Products - 1.5% Newell Rubbermaid, Inc. 90,000 2,606 Electrical Equipment - 1.7% WESCO International, Inc. (a) 50,000 2,941 Electronics - 4.9% Broadcom Corp., Class A (a) 60,000 1,939 Lam Research Corp. (a) 59,000 2,987 MEMC Electronic Materials, Inc. (a) 90,000 3,522 ------- 8,448 Energy & Utilities - 10.7% AES Corp. (a) 45,000 992 Airgas, Inc. 35,000 1,418 Allegheny Energy, Inc. (a) 50,000 2,296 Arch Coal, Inc. 35,000 1,051 Baker Hughes, Inc. 38,840 2,900 EOG Resources, Inc. 46,400 2,898 Hydril (a) 25,000 1,880 Patterson-UTI Energy, Inc. 85,200 1,979 Transocean, Inc. (a) 37,700 3,049 ------- 18,463 Financial - Diversified - 1.2% Moodys, Inc. 30,988 2,140 Financial Services - 3.9% Chicago Mercantile Exchange Holdings, Inc. 7,606 3,877 T. Rowe Price Group, Inc. 66,110 2,894 ------- 6,771 Foods - 2.2% Campbell Soup Co. 60,000 2,333 The Pepsi Bottling Group, Inc. 45,000 1,391 ------- 3,724 Healthcare - 11.5% Allergan, Inc. 17,000 2,036 C.R. Bard, Inc. 44,975 3,731 Express Scripts, Inc. (a) 30,000 2,148 Intuitive Surgical, Inc. (a) 17,650 1,693 Laboratory Corp. of America Holdings (a) 40,000 2,939 Psychiatric Solutions, Inc. (a) 70,000 2,626 Sierra Health Services, Inc. (a) 81,776 2,947 St. Jude Medical, Inc. (a) 45,000 1,645 ------- 19,765 Hotels & Motels - 1.1% Choice Hotels International, Inc. 46,060 1,939 Insurance - 1.6% W. R. Berkley Corp. 82,287 2,840 Investment Banking & Brokerage - 2.3% A.G. Edwards, Inc. 30,000 1,899 Investment Technology Group, Inc. (a) 47,000 2,015 ------- 3,914 Manufacturing - 8.7% Commercial Metals Co. 40,000 1,032 Cummins, Inc. 20,000 2,364 Eagle Materials, Inc. 51,500 2,226 Lennox International, Inc. 70,000 2,143 National-Oilwell Varco, Inc. (a) 27,000 1,652 Oshkosh Truck Corp. 58,568 2,835 Roper Industries, Inc. 32,000 1,608 Sonoco Products Co. 30,000 1,142 ------- 15,002 Pharmaceuticals - 3.0% Barr Pharmaceuticals, Inc. (a) 32,000 1,604 McKesson Corp. 31,000 1,572 Pharmaceutical Product Development, Inc. 60,000 1,933 ------- 5,109
SEE FINANCIAL NOTES 38 DECEMBER 31, 2006 ($ X 1,000)
- ------------------------------------------------------------------------- EMERGING GROWTH FUND SECURITY SHARES VALUE($) - ------------------------------------------------------------------------- Real Estate - 2.6% CB Richard Ellis Group, Inc., Class A (a) 135,000 4,482 Restaurants - 2.4% Darden Restaurants, Inc. 55,000 2,209 Domino's Pizza, Inc. 70,000 1,960 ------- 4,169 Retail - 13.2% American Eagle Outfitters, Inc. 99,000 3,090 Coach, Inc. (a) 58,000 2,492 J.C. Penney Co., Inc. 34,000 2,630 Limited Brands, Inc. 75,000 2,171 Nordstrom, Inc. 68,012 3,355 Polo Ralph Lauren 40,000 3,106 The Men's Wearhouse, Inc. 44,000 1,683 The TJX Cos., Inc. 70,000 1,994 Urban Outfitters, Inc. (a) 90,000 2,073 Whole Foods Market, Inc. 5,900 277 ------- 22,871 Services - 10.8% CheckFree Corp. (a) 60,000 2,410 Cognizant Technology Solutions Corp. (a) 58,400 4,505 Corporate Executive Board Co. 36,549 3,205 Expeditors International of Washington, Inc. 63,200 2,560 Macrovision Corp. (a) 60,000 1,696 Monster Worldwide, Inc. (a) 45,000 2,099 Pool Corp. 55,000 2,154 ------- 18,629 Telecommunications - 3.9% CommScope, Inc. (a) 56,000 1,707 NII Holdings, Inc. (a) 20,000 1,289 Polycom, Inc. (a) 75,000 2,318 Time Warner Telecom, Inc., Class A (a) 70,000 1,395 ------- 6,709 ------- TOTAL COMMON STOCKS 165,358 Cost: $124,230 SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) - ------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 4.5% Fifth Third Bank, Inc., 4.80%, 01/02/07 (Date of Agreement 12/29/06, proceeds at maturity $7,833, collateralized by Federal Home Loan Bank security, 5.30%, 06/20/08, market value $8,064) Cost: $7,829 7,829 7,829 ------- TOTAL INVESTMENTS - 100.3% 173,187 Cost: $132,059
Percentages indicated are based on net assets of $172,615. (a) Non-income producing security. - -------------------------------------------------------------------------------- SEE FINANCIAL NOTES 39 CITIZENS FUNDS HOLDINGS (UNAUDITED)
- ------------------------------------------------------------------------- SMALL CAP CORE GROWTH FUND SECURITY SHARES VALUE($) - ------------------------------------------------------------------------- COMMON STOCKS - 97.2% Apparel Manufacturers - 2.3% Deckers Outdoor Corp. (a) 15,000 899 Banks - 2.9% Capitol Bancorp Ltd. 12,000 555 Pinnacle Financial Partners, Inc. (a) 7,000 232 PrivateBancorp, Inc. 8,000 333 ------ 1,120 Biotechnology - 1.4% American Oriental Bioengineering, Inc. (a) 20,000 233 Myriad Genetics, Inc. (a) 10,000 313 ------ 546 Computers - 12.8% American Reprographics Co. (a) 18,000 600 ANSYS, Inc. (a) 8,500 370 Blackbaud, Inc. 30,000 779 Concur Technologies, Inc. (a) 27,000 433 Komag, Inc. (a) 12,000 455 Mentor Graphics Corp. (a) 25,000 451 NIC, Inc. (a) 70,000 348 Sykes Enterprises, Inc. (a) 26,500 467 VeriFone Holdings, Inc. (a) 15,000 531 Webex Communications, Inc. (a) 14,000 488 ------ 4,922 Electrical Equipment - 2.0% Genlyte Group (a) 10,000 781 Electronics - 2.9% Diodes, Inc. (a) 20,000 710 SiRF Technology Holdings, Inc. (a) 16,000 408 ------ 1,118 Energy & Utilities - 7.9% Airgas, Inc. 18,000 729 Core Laboratories N.V. (a) 11,000 891 Holly Corp. 16,000 822 Hydril (a) 8,000 602 ------ 3,044 Financial - Diversified - 1.7% Advanta Corp., Class B 15,000 654 Foods - 2.3% Jones Soda Co. (a) 35,000 431 Spartan Stores, Inc. 21,000 439 ------ 870 Healthcare - 12.9% Allscripts Healthcare Solutions, Inc. (a) 19,000 513 Arena Pharmaceuticals, Inc. (a) 20,000 258 Bio-Reference Laboratories, Inc. (a) 16,000 360 DJO, Inc. (a) 12,000 514 Healthways, Inc. (a) 7,000 334 Integra LifeSciences Holdings Corp. (a) 9,500 405 Natus Medical, Inc. (a) 20,000 332 Omnicell, Inc. (a) 15,000 279 Psychiatric Solutions, Inc. (a) 14,000 525 Quality Systems, Inc. 13,000 485 Sierra Health Services, Inc. (a) 14,000 505 Sirona Dental Systems, Inc. 12,000 462 ------ 4,972 Hotels & Motels - 1.6% Choice Hotels International, Inc. 15,000 632 Insurance - 1.5% Philadelphia Consolidated Holding Corp. (a) 13,000 579 Investment Banking & Brokerage - 4.5% Affiliated Managers Group, Inc. (a) 8,000 841 Investment Technology Group, Inc. (a) 10,000 429 Knight Capital Group, Inc., Class A (a) 25,000 479 ------ 1,749 Manufacturing - 9.9% Baldor Electric Co. 13,000 434 BE Aerospace, Inc. (a) 17,000 437 Eagle Materials, Inc. 11,500 497 Gardner Denver, Inc. (a) 15,000 559 Itron, Inc. (a) 7,000 363 Oshkosh Truck Corp. 11,000 533 Roper Industries, Inc. 10,500 528 Silgan Holdings, Inc. 10,000 439 ------ 3,790
SEE FINANCIAL NOTES 40 DECEMBER 31, 2006 ($ X 1,000)
- ------------------------------------------------------------------------- SMALL CAP CORE GROWTH FUND SECURITY SHARES VALUE($) - ------------------------------------------------------------------------- Pharmaceuticals - 2.9% Pharmaceutical Product Development, Inc. 19,500 628 Progenics Pharmaceuticals, Inc. (a) 7,000 180 ViroPharma, Inc. (a) 20,000 293 ------ 1,101 Restaurants - 1.1% Jack in the Box, Inc. (a) 7,000 427 Retail - 6.9% Casual Male Retail Group, Inc. (a) 45,000 587 Coldwater Creek, Inc. (a) 23,000 564 Monro Muffler Brake, Inc. 15,000 527 The Children's Place Retail Stores, Inc. (a) 5,500 349 The Pantry, Inc. (a) 13,000 609 ------ 2,636 Services - 16.7% Bankrate, Inc. (a) 13,000 493 Corporate Executive Board Co. 7,000 614 First Cash Financial Services, Inc. (a) 30,000 777 Forrester Research, Inc. (a) 14,000 380 LIFE TIME FITNESS, Inc. (a) 12,000 582 LKQ Corp. (a) 30,500 702 Mobile Mini, Inc. (a) 20,000 539 Pool Corp. 12,000 470 Portfolio Recovery Associates, Inc. (a) 9,000 420 Priceline.com, Inc. (a) 12,000 523 Ritchie Bros. Auctioneers, Inc. 10,000 535 The Knot, Inc. (a) 15,000 394 ------ 6,429 Telecommunications - 3.0% CommScope, Inc. (a) 12,000 366 NICE Systems Ltd. ADR (a) 25,000 769 ------ 1,135 ------ TOTAL COMMON STOCKS 37,404 Cost: $30,790 SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) - ------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 2.9% Fifth Third Bank, Inc., 4.80%, 01/02/07 (Date of Agreement 12/29/06, proceeds at maturity $1,109, collateralized by Federal Home Loan Bank security, 5.30%, 06/20/08, market value $1,143) Cost: $1,109 1,109 1,109 ------ TOTAL INVESTMENTS - 100.1% 38,513 Cost: $31,899
Percentages indicated are based on net assets of $38,464. (a) Non-income producing security. ADR - American Depositary Receipt - -------------------------------------------------------------------------------- SEE FINANCIAL NOTES 41 CITIZENS FUNDS HOLDINGS (UNAUDITED)
- ------------------------------------------------------------------------- VALUE FUND SECURITY SHARES VALUE($) - ------------------------------------------------------------------------- COMMON STOCKS - 99.4% Air Freight - 1.8% FedEx Corp. 8,116 882 Apparel Manufacturers - 2.4% NIKE, Inc., Class B 7,014 695 VF Corp. 6,047 496 ------ 1,191 Auto Manufacturing - 1.6% Toyota Motor Corp. ADR 5,970 802 Banks - 3.2% Bank of America Corp. 18,511 989 KeyCorp 15,600 593 ------ 1,582 Broadcasting - 1.0% Grupo Televisa SA ADR 17,724 479 Chemicals - 1.3% Praxair, Inc. 10,921 648 Computers - 8.8% Corning, Inc. (a) 28,004 524 Hewlett-Packard Co. 14,617 602 Intel Corp. 25,713 521 International Business Machines Corp. 8,850 859 Microsoft Corp. 22,024 658 Oracle Corp. (a) 46,303 793 SanDisk Corp. (a) 9,869 425 ------ 4,382 Consumer Products - 2.0% Kimberly-Clark Corp. 14,353 975 Electrical Equipment - 1.2% Emerson Electric Co. 13,306 586 Electronics - 4.3% Cisco Systems, Inc. (a) 21,951 600 MEMC Electronic Materials, Inc. (a) 13,207 517 Rockwell Automation, Inc. 7,611 465 Texas Instruments, Inc. 20,118 579 ------ 2,161 Energy & Utilities - 11.2% Allegheny Energy, Inc. (a) 12,750 585 Baker Hughes, Inc. 10,001 747 ConocoPhillips 24,341 1,750 Devon Energy Corp. 8,957 601 Patterson-UTI Energy, Inc. 26,292 611 Transocean, Inc. (a) 6,802 550 UGI Corp. 28,412 775 ------ 5,619 Financial - Diversified - 11.0% Capital One Financial Corp. 13,561 1,042 JPMorgan Chase & Co. 24,421 1,180 Lehman Brothers Holdings, Inc. 9,440 737 Merrill Lynch & Co., Inc. 10,358 964 MetLife, Inc. 10,741 634 Wachovia Corp. 16,788 956 ------ 5,513 Foods - 5.2% Bunge, Ltd. 10,906 791 Kellogg Co. 19,474 975 PepsiCo, Inc. 13,387 837 ------ 2,603 Healthcare - 11.0% Baxter International, Inc. 15,490 719 Becton, Dickinson & Co. 7,856 551 Coventry Health Care, Inc. (a) 11,091 555 Johnson & Johnson, Inc. 15,562 1,027 Omnicare, Inc. 21,941 848 Pfizer, Inc. 39,914 1,034 WellPoint, Inc. (a) 9,499 747 ------ 5,481 Insurance - 6.0% American International Group, Inc. 10,602 760 The Allstate Corp. 11,656 759 The Chubb Corp. 14,092 746 The Hartford Financial Services Group, Inc. 7,656 714 ------ 2,979
SEE FINANCIAL NOTES 42 DECEMBER 31, 2006 ($ X 1,000)
- ------------------------------------------------------------------------- VALUE FUND SECURITY SHARES VALUE($) - ------------------------------------------------------------------------- Investment Banking & Brokerage - 1.4% The Goldman Sachs Group, Inc. 3,489 696 Manufacturing - 6.4% 3M Co. 9,378 730 Eagle Materials, Inc. 14,423 624 Ingersoll-Rand Co. 13,154 515 National-Oilwell Varco, Inc. (a) 9,648 590 Precision Castparts Corp. 9,000 705 ------ 3,164 Pharmaceuticals - 1.0% Hospira, Inc. (a) 14,700 494 Railroads - 1.3% Norfolk Southern Corp. 13,011 654 Real Estate - 1.0% Simon Property Group, Inc. 4,794 486 Restaurants - 1.7% McDonald's Corp. 19,233 853 Retail - 4.7% CVS Corp. 32,529 1,006 Nordstrom, Inc. 16,892 833 Target Corp. 8,817 503 ------ 2,342 Services - 4.2% Affiliated Computer Services, Inc. (a) 13,092 639 Apollo Group, Inc., Class A (a) 9,415 367 Getty Images, Inc. (a) 11,562 495 URS Corp. (a) 14,330 614 ------ 2,115 Telecommunications - 5.7% AT&T, Inc. 25,151 899 Motorola, Inc. 52,326 1,076 Sprint Nextel Corp. 44,810 846 ------ 2,821 ------ TOTAL COMMON STOCKS 49,508 Cost: $41,743 SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) - ------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 4.8% Fifth Third Bank, Inc., 4.80%, 01/02/07 (Date of Agreement 12/29/06, proceeds at maturity $2,368, collateralized by Federal Home Loan Bank security, 5.30%, 06/20/08, market value $2,438) Cost: $2,367 2,367 2,367 ------ TOTAL INVESTMENTS - 104.2% 51,875 Cost: $44,110
Percentages indicated are based on net assets of $49,784. (a) Non-income producing security. ADR - American Depositary Receipt - -------------------------------------------------------------------------------- SEE FINANCIAL NOTES 43 CITIZENS FUNDS HOLDINGS (UNAUDITED)
- ------------------------------------------------------------------------- GLOBAL EQUITY FUND SECURITY SHARES VALUE($) - ------------------------------------------------------------------------- COMMON STOCKS - 98.1% Air Freight - 1.0% FedEx Corp. 7,500 815 Automobile Manufacturing - 4.2% Toyota Motor Co. ADR 8,000 1,074 Volvo AB ADR 34,000 2,340 ------ 3,414 Banks - 13.8% Australia and New Zealand Banking Group Ltd. ADR 9,500 1,060 Banco Santander Central Hispano SA ADR 56,000 1,045 Bank of America Corp. 23,000 1,228 Bank of Ireland (a) 45,000 1,037 Bank of New York Co., Inc. 36,000 1,417 Bank of Nova Scotia 24,000 1,075 ICICI Bank Ltd. ADR 20,000 835 Julius Baer Holding Ltd. (a) 11,000 1,206 Royal Bank of Scotland Group plc (a) 25,301 983 UBS AG ADR 21,600 1,303 ------ 11,189 Biotechnology - 2.2% Roche Holding AG (a) 10,000 1,790 Chemicals - 1.1% Sigma-Aldrich Corp. 12,000 933 Computers - 4.1% International Business Machines Corp. 10,000 972 Intuit, Inc. (b) 44,000 1,342 SAP AG (a) 20,000 1,064 ------ 3,378 Electronics - 2.6% Agilent Technologies, Inc. (b) 30,000 1,046 Cisco Systems, Inc. (b) 40,000 1,093 ------ 2,139 Energy & Utilities - 9.4% Apache Corp. 12,000 798 BG Group plc ADR 18,000 1,231 CONSOL Energy, Inc. 20,000 643 EnCana Corp. 25,000 1,149 Questar Corp. 10,000 831 Statoil ASA ADR 44,000 1,158 The AES Corp. (b) 50,000 1,102 Valero Energy Corp. 14,000 716 ------ 7,628 Entertainment - 5.4% Comcast Corp., Class A (b) 40,000 1,675 Nintendo Co., Ltd. (a) 4,000 1,037 The Walt Disney Co. 50,000 1,714 ------ 4,426 Financial - Diversified - 6.3% American Express Co. 16,000 971 Deutsche Boerse AG (a) 12,000 2,211 HSBC Holdings plc ADR 10,000 917 JPMorgan Chase & Co. 21,000 1,014 ------ 5,113 Foods - 6.5% Groupe Danone ADR 40,000 1,304 McCormick & Co., Inc. 30,000 1,157 Nestle SA (a) 4,000 1,419 PepsiCo, Inc. 22,000 1,376 ------ 5,256 Healthcare - 9.5% Becton, Dickinson & Co. 16,000 1,122 C.R. Bard, Inc. 14,000 1,162 Fresenius Medical Care AG & Co. KGaA ADR 27,000 1,200 Johnson & Johnson, Inc. 20,000 1,320 Laboratory Corp. of America Holdings (b) 15,000 1,102 Novartis AG ADR 31,000 1,781 ------ 7,687 Insurance - 4.1% Allianz SE ADR 45,000 919 ING Groep NV (a) 29,000 1,285 Lincoln National Corp. 17,000 1,129 ------ 3,333 Manufacturing - 6.3% FANUC Ltd. (a) 9,000 883 Johnson Matthey plc (a) 33,000 909 Komatsu, Ltd. (a) 45,000 907 L'Air Liquide ADR 33,000 1,565 Taiwan Semiconductor Manufacturing Co. Ltd. ADR 77,249 844 ------ 5,108 Office Equipment & Supplies - 3.8% Avery Dennison Corp. 13,500 917 CANON, Inc. ADR 39,000 2,207 ------ 3,124
SEE FINANCIAL NOTES 44 DECEMBER 31, 2006 ($ X 1,000)
- ------------------------------------------------------------------------- GLOBAL EQUITY FUND SECURITY SHARES VALUE($) - ------------------------------------------------------------------------- Personal Care - 1.8% Colgate-Palmolive Co. 23,000 1,501 Pharmaceuticals - 1.1% Eisai Co. Ltd. (a) 16,300 896 Real Estate - 1.4% Simon Property Group, Inc. 11,000 1,114 Retail - 5.9% Kohl's Corp. (b) 26,000 1,779 Luxottica Group SpA ADR 45,000 1,380 Marks & Spencer Group plc ADR 20,000 1,684 ------ 4,843 Services - 2.9% Ecolab, Inc. 23,000 1,040 WPP Group plc (a) 99,000 1,340 ------ 2,380 Telecommunications - 4.7% America Movil SA de C.V. ADR 19,000 859 PT Telekomunikasi Indonesia ADR 22,000 1,003 Telenor ASA ADR 20,000 1,129 Vodafone Group plc (a) 300,000 827 ------ 3,818 ------ TOTAL COMMON STOCKS 79,885 Cost: $61,223 SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) - ------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 2.1% Fifth Third Bank, Inc., 4.80%, 01/02/07 (Date of Agreement 12/29/06, proceeds at maturity $1,739, collateralized by Federal Home Loan Bank security, 5.30%, 06/20/08, market value $1,790) Cost: $1,738 1,738 1,738 ------ TOTAL INVESTMENTS - 100.2% 81,623 Cost: $62,961
- ------------------------------------------------------------------------- GLOBAL EQUITY FUND - ------------------------------------------------------------------------- Percentages indicated are based on net assets of $81,461. (a) Fair valued security. The approximate market value and percentage of investments of securities that were fair valued for the Global Equity Fund were $17,794 and 21.8%. (b) Non-income producing security. ADR - American Depositary Receipt
The fund's portfolio holdings as of December 31, 2006, were distributed among the following countries: ------------------------- PERCENTAGE OF NET ASSETS SHORT TERM EQUITY & OTHER TOTAL ------------------------- Australia 1.3% 1.3% Canada 2.7% 2.7% France 3.5% 3.5% Germany 6.6% 6.6% India 1.0% 1.0% Indonesia 1.2% 1.2% Ireland 1.3% 1.3% Italy 1.7% 1.7% Japan 8.6% 8.6% Mexico 1.1% 1.1% Netherlands 1.6% 1.6% Norway 2.8% 2.8% Spain 1.3% 1.3% Sweden 2.9% 2.9% Switzerland 9.2% 9.2% Taiwan 1.0% 1.0% United Kingdom 9.7% 9.7% United States 40.4% 2.1% 42.5% ---------------------------- TOTAL 97.9% 2.1% 100.0%
- -------------------------------------------------------------------------------- SEE FINANCIAL NOTES 45 CITIZENS FUNDS HOLDINGS (UNAUDITED)
- ------------------------------------------------------------------------- BALANCED FUND SECURITY SHARES VALUE($) - ------------------------------------------------------------------------- COMMON STOCKS - 63.4% Air Freight - 0.9% FedEx Corp. 950 103 Apparel Manufacturers - 0.9% VF Corp. 1,300 107 Banks - 3.1% Bank of America Corp. 2,200 117 Compass Bancshares, Inc. 2,000 120 SunTrust Banks, Inc. 1,350 114 ------ 351 Biotechnology - 0.6% Gilead Sciences, Inc. (a) 1,000 65 Chemicals - 0.7% Praxair, Inc. 1,275 76 Computers - 4.9% Autodesk, Inc. (a) 3,000 121 Hewlett-Packard Co. 3,000 124 Intuit, Inc. (a) 2,000 61 Oracle Corp. (a) 8,000 137 SAP AG ADR 2,200 117 ------ 560 Construction - 0.5% Fluor Corp. 750 61 Electrical Equipment - 1.0% Emerson Electric Co. 2,600 115 Electronics - 2.4% Agilent Technologies, Inc. (a) 3,850 134 Cisco Systems, Inc. (a) 5,200 142 ------ 276 Energy & Utilities - 7.5% Baker Hughes, Inc. 1,600 119 Cameron International Corp. (a) 2,300 122 ConocoPhillips 1,850 133 Questar Corp. 1,500 125 Suncor Energy, Inc. 1,000 79 UGI Corp. 4,000 109 Valero Energy Corp. 1,400 72 XTO Energy, Inc. 2,000 94 ------ 853 Entertainment - 0.9% The Walt Disney Co. 3,150 108 Financial - Diversified - 4.0% JPMorgan Chase & Co. 3,400 164 State Street Corp. 2,325 157 Wachovia Corp. 2,450 140 ------ 461 Financial Services - 0.8% T. Rowe Price Group, Inc. 2,150 94 Foods - 4.3% Campbell Soup Co. 2,500 97 Groupe Danone ADR 3,500 114 McCormick & Co., Inc. 2,250 87 PepsiCo, Inc. 1,600 100 Sysco Corp. 2,450 90 ------ 488 Healthcare - 7.7% Allergan, Inc. 1,275 153 Baxter International, Inc. 1,600 74 C.R. Bard, Inc. 950 79 Fresenius Medical Care AG & Co. KGaA ADR 3,000 133 Johnson & Johnson, Inc. 2,000 132 Laboratory Corp. of America Holdings (a) 2,575 188 Stryker Corp. 2,000 110 ------ 869 Insurance - 3.0% American International Group, Inc. 1,000 72 The Chubb Corp. 2,800 148 The St. Paul Travelers Cos., Inc. 2,200 118 ------ 338 Investment Banking & Brokerage - 0.9% Affiliated Managers Group, Inc. (a) 1,000 105 Manufacturing - 4.1% Deere & Co. 800 76 PACCAR, Inc. 2,400 156 Precision Castparts Corp. 2,000 156 Taiwan Semiconductor Manufacturing Co. Ltd. ADR 7,000 77 ------ 465 Multimedia - 0.8% News Corp., Class B 4,300 96
SEE FINANCIAL NOTES 46 DECEMBER 31, 2006 ($ X 1,000)
- ------------------------------------------------------------------------- BALANCED FUND SECURITY SHARES VALUE($) - ------------------------------------------------------------------------- Personal Care - 1.1% Colgate-Palmolive Co. 2,000 130 Railroads - 0.6% Norfolk Southern Corp. 1,350 68 Real Estate - 1.9% CB Richard Ellis Group, Inc., Class A (a) 2,700 90 Simon Property Group, Inc. 1,250 126 ------ 216 Restaurants - 1.1% McDonald's Corp. 2,800 124 Retail - 4.0% American Eagle Outfitters, Inc. 4,500 141 J.C. Penney Co., Inc. 1,500 116 Polo Ralph Lauren 1,600 124 Staples, Inc. 2,700 72 ------ 453 Services - 3.4% Accenture Ltd., Class A 3,100 114 Cognizant Technology Solutions Corp. (a) 1,750 135 Ecolab, Inc. 3,000 136 ------ 385 Telecommunications - 2.3% America Movil SA de C.V. ADR 3,000 136 Verizon Communications, Inc. 3,500 130 ------ 266 ------ TOTAL COMMON STOCKS 7,233 Cost: $6,558 PREFERRED STOCK - 0.4% Financial - Diversified - 0.4% Citigroup Capital XV, 6.50%, 9/15/66 2,000 51 Cost: $50 SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) - ------------------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 0.2% First Horizon Alternative Mortgage Securities, 4.75%, 06/25/34 (b) 9 9 5.50%, 03/25/35 (b) 13 13 ------ Cost: $23 22 CORPORATE BONDS - 8.0% Banks - 1.0% Bank of America Corp., 4.38%, 12/01/10 50 49 Capital One Bank, 6.50%, 06/13/13 50 53 ------ 102 Chemicals - 0.4% Amgen, Inc., 6.50%, 12/01/07 40 40 Computers - 0.1% Corning, Inc., 6.20%, 03/15/16 15 15 Construction - 0.2% KB Home, 5.88%, 01/15/15 15 14 Pulte Homes, Inc., 6.00%, 02/15/35 10 9 ------ 23 Energy & Utilities - 0.6% Atmos Energy, 4.95%, 10/15/14 15 14 Chesapeake Energy Corp., 6.88%, 01/15/16 20 20 Enterprise Products Partners LP, 4.95%, 06/01/10 20 20 XTO Energy, Inc., 5.30%, 06/30/15 20 19 ------ 73 Entertainment - 0.2% Comcast Cable Communications, 8.38%, 05/01/07 25 25 Financial - Diversified - 2.9% Chase Issuance Trust, 3.22%, 06/15/10 100 99 CIT Group, Inc., 5.00%, 02/01/15 50 48 Citigroup, Inc., 5.52%, 05/18/10 (b) 50 50 HSBC Finance Corp., 4.63%, 09/15/10 50 49 International Lease Finance Corp., 5.80%, 08/15/07 50 50
SEE FINANCIAL NOTES 47 CITIZENS FUNDS HOLDINGS (UNAUDITED)
- ------------------------------------------------------------------------- BALANCED FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) - ------------------------------------------------------------------------- Financial - Diversified (continued) Liberty Mutual Group, 5.75%, 03/15/14 (c) 10 10 Riddell Bell Holdings, 8.38%, 10/01/12 15 15 ------ 321 Financial Services - 0.4% Franklin Resources, Inc., 3.70%, 04/15/08 48 47 Food - 0.4% The Pepsi Bottling Group, Inc., 5.63%, 02/17/09 (c) 50 50 Healthcare - 0.4% Medtronic, Inc., 4.75%, 09/15/15 50 47 Investment Banking & Brokerage - 0.1% The Goldman Sachs Group, Inc., 5.00%, 10/01/14 15 15 Manufacturing - 0.0%* American Standard, Inc., 7.38%, 02/01/08 5 5 Real Estate - 0.0%* Brandywine Realty Trust, 5.40%, 11/01/14 5 5 Restaurants - 0.5% Domino's, Inc., 8.25%, 07/01/11 7 7 McDonald's Corp., 5.00%, 02/15/15 50 48 ------ 55 Telecommunications - 0.8% AT&T, Inc., 5.88%, 02/01/12 50 51 Directv Holdings, 6.38%, 06/15/15 30 29 Sprint Nextel Corp., 7.38%, 08/01/15 10 10 ------ 90 ------ TOTAL CORPORATE BONDS 913 Cost: $927 FOREIGN GOVERNMENT BOND - 0.1% United Mexican States, 6.75%, 09/27/34 15 16 Cost: $15 U.S. GOVERNMENT AGENCY OBLIGATIONS - 18.1% Federal Farm Credit Bank - 1.1% 5.83%, 01/14/08 25 25 5.43%, 10/24/12 100 99 ------ 124 Federal Home Loan Bank - 4.0% 4.28%, 11/05/07 100 100 4.50%, 02/15/08 100 99 5.50%, 01/12/11 50 50 5.20%, 05/11/12 15 15 6.00%, 12/28/15 100 99 4.88%, 03/11/16 100 99 ------ 462 Federal Home Loan Mortgage Corporation - 4.6% 4.55%, 01/20/11 5 5 4.50%, 01/15/13 9 9 5.00%, 10/01/18 87 86 5.50%, 10/01/18 55 55 5.20%, 03/05/19 40 39 5.50%, 08/20/19 20 20 6.00%, 12/01/20 42 43 5.50%, 03/01/21 91 90 5.50%, 04/01/21 90 89 5.00%, 06/01/35 90 86 ------ 522 Federal National Mortgage Association - 8.4% 5.25%, 01/15/09 14 14 5.00%, 08/10/10 100 99 6.00%, 05/10/12 25 25 4.38%, 09/15/12 4 4 5.00%, 04/15/15 20 20 5.55%, 08/04/15 100 99 6.00%, 02/25/17 92 93 5.00%, 10/01/18 81 80 4.50%, 06/01/19 126 122 5.00%, 09/01/19 34 34 5.50%, 03/25/29 100 100 6.50%, 07/01/32 2 2 6.00%, 11/01/32 1 1 5.50%, 03/01/33 24 24 4.58%, 12/01/34 33 33 4.85%, 01/01/35 (b) 18 18
SEE FINANCIAL NOTES 48 DECEMBER 31, 2006 ($ X 1,000)
- ------------------------------------------------------------------------- BALANCED FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) - ------------------------------------------------------------------------- Federal National Mortgage Association (continued) 4.82%, 08/01/35 89 88 5.50%, 10/01/35 99 97 ------ 953 ------ TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 2,061 Cost: $2,078 U.S. TREASURY NOTES - 5.4% 6.50%, 02/15/10 100 106 4.00%, 03/15/10 100 98 3.88%, 05/15/10 35 34 4.75%, 05/15/14 10 10 4.00%, 02/15/15 100 95 4.13%, 05/15/15 30 29 4.50%, 11/15/15 100 98 4.50%, 02/15/16 100 98 5.38%, 02/15/31 50 54 ------ Cost: $625 622 REPURCHASE AGREEMENTS - 4.5% Fifth Third Bank, Inc., 4.80%, 01/02/07 (Date of Agreement 12/29/06, proceeds at maturity $517, collateralized by Federal Home Loan Bank security, 5.30%, 06/20/08, market value $533) Cost: $517 517 517 ------ TOTAL INVESTMENTS - 100.1% 11,435 Cost: $10,793
Percentages indicated are based on net assets of $11,426. (a) Non-income producing security. (b) Variable rate security. The rate presented represents the rate in effect at December 31, 2006. (c) Rule 144A security. * Rounds to less than 0.1%. ADR - American Depositary Receipt - -------------------------------------------------------------------------------- SEE FINANCIAL NOTES 49 CITIZENS FUNDS HOLDINGS (UNAUDITED)
- ------------------------------------------------------------------------- INCOME FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) - ------------------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 22.7% Capital One Multi-Asset Execution Trust, 5.50%, 09/15/11 (a) 700 703 Chase Manhattan Auto Owner Trust, 4.88%, 06/15/12 240 239 Citibank Credit Card Issuance Trust, 3.50%, 08/16/10 285 278 Citigroup Commercial Mortgage Trust, 4.22%, 09/20/51 (b) 500 488 Crusade Global Trust, 5.43%, 11/15/37 (a) 488 488 5.51%, 11/19/37 (a) 384 384 First Horizon Alternative Mortgage Securities, 4.75%, 06/25/34 (a) 738 733 First Union National Bank Commercial Mortgage, 6.94%, 10/15/32 (a) 133 133 6.42%, 08/15/33 (a) 300 313 Greenwich Capital Commercial Funding Corp., 4.95%, 01/11/35 525 517 3.92%, 08/10/42 331 325 GS Mortgage Securities Corp. II, 4.61%, 01/10/40 800 773 Harley-Davidson Motorcycle Trust, 3.20%, 05/15/12 658 645 LB-UBS Commercial Mortgage Trust, 3.27%, 09/15/26 253 251 6.65%, 11/15/27 425 447 6.37%, 12/15/28 (a) 500 522 5.02%, 09/15/40 407 398 MBNA Credit Card Master Note Trust, 4.95%, 06/15/09 987 986 MLCC Mortgage Investors, Inc., 5.58%, 03/25/30 (a) 311 311 Puma Finance Limited, 5.58%, 08/09/35 (a) (b) 912 913 Wachovia Bank Commercial Mortgage Trust, 4.96%, 11/15/35 500 490 5.18%, 07/15/42 498 504 ------ TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 10,841 Cost: $10,830 CORPORATE BONDS - 16.7% Airlines - 0.5% Delta Air Lines, 6.42%, 07/02/12 110 111 6.72%, 01/02/23 124 126 ------ 237 Banking - 1.1% Barclays Bank plc, 5.93%, 12/15/16 (b) 500 506 Broadcasting - 0.5% Rogers Cable, Inc., 5.50%, 03/15/14 250 239 Construction - 0.5% KB Home, 5.88%, 01/15/15 250 229 Electrical Equipment - 0.5% Flextronics International, Ltd., 6.50%, 05/15/13 250 247 Energy & Utilities - 1.8% Chesapeake Energy Corp., 6.50%, 08/15/17 250 244 Devon Financing Corp., 7.88%, 09/30/31 500 602 ------ 846 Financial - Diversified - 0.9% Countrywide Financial Corp., 6.25%, 05/15/16 400 408 Insurance - 2.2% W.R. Berkley Corp., 5.60%, 05/15/15 300 295 Fidelity National Financial, 5.25%, 03/15/13 250 237 Lincoln National Corp., 7.00%, 05/17/66 500 530 ------ 1,062
SEE FINANCIAL NOTES 50 DECEMBER 31, 2006 ($ X 1,000)
- ------------------------------------------------------------------------- INCOME FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) - ------------------------------------------------------------------------- Multimedia - 3.1% Comcast Corp., 6.45%, 03/15/37 500 500 Time Warner, Inc., 5.88%, 11/15/16 400 399 8.38%, 07/15/33 500 604 ------ 1,503 Real Estate - 2.1% iStar Financial, Inc., 5.88%, 03/15/16 500 496 Simon Property Group LP, 5.10%, 06/15/15 500 486 ------ 982 Restaurants - 0.5% Domino's, Inc., 8.25%, 07/01/11 250 259 Telecommunications - 3.0% Embarq Corp., 8.00%, 06/01/36 520 541 Sprint Nextel Corp., 7.38%, 08/01/15 310 318 Verizon Communications, Inc., 5.55%, 02/15/16 600 598 ------ 1,457 ------ TOTAL CORPORATE BONDS 7,975 Cost: $7,931 U.S. GOVERNMENT AGENCY OBLIGATIONS - 38.0% Federal Home Loan Mortgage Corporation - 10.4% 4.50%, 04/01/20 1,365 1,316 5.00%, 10/01/35 1,844 1,780 6.00%, 07/01/36 1,845 1,859 ------ 4,955 ------ Federal National Mortgage Association - 27.6% 5.76%, 12/25/11 200 207 4.50%, 01/01/20 1,566 1,510 5.00%, 07/01/20 1,654 1,626 5.00%, 08/01/20 1,518 1,493 4.40%, 11/25/33 890 880 5.50%, 03/01/36 1,912 1,889 5.50%, 04/01/36 1,878 1,857 5.50%, 05/01/36 1,840 1,818 6.00%, 07/01/36 1,955 1,967 ------ 13,247 ------ TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 18,202 Cost: $18,012 U.S. TREASURY NOTES - 17.3% 4.63%, 11/30/08 4,280 4,265 4.63%, 11/15/16 3,400 3,378 5.38%, 02/15/31 213 228 4.50%, 02/15/36 443 421 ------ Cost: $8,320 8,292 REPURCHASE AGREEMENTS - 5.0% Fifth Third Bank, Inc., 4.80%, 01/02/07 (Date of Agreement 12/29/06, proceeds at maturity $2,396, collateralized by Federal Home Loan Bank security, 5.30%, 06/20/08, market value $2,467) Cost: $2,395 2,395 2,395 ------ TOTAL INVESTMENTS - 99.7% 47,705 Cost: $47,488
Percentages indicated are based on net assets of $47,835. (a) Variable rate security. The rate presented represents the rate in effect at December 31, 2006. (b) Rule 144A security. - -------------------------------------------------------------------------------- SEE FINANCIAL NOTES 51 CITIZENS FUNDS HOLDINGS (UNAUDITED)
- ------------------------------------------------------------------------- MONEY MARKET FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) - ------------------------------------------------------------------------- CERTIFICATES OF DEPOSIT - 6.0% City National Bank of New Jersey, 4.25%, 03/14/07 (a) 100 100 PNC Bank, 4.79%, 01/24/07 2,000 1,999 Self Help Credit Union, 4.73%, 03/14/07 (a) 100 100 Wilmington Trust Corp., 5.60%, 04/05/07 1,000 1,000 5.27%, 06/08/07 2,000 2,001 ------ TOTAL CERTIFICATES OF DEPOSIT 5,200 Cost: $5,200 COMMERCIAL PAPER - 63.8% American General Finance Corp., 5.41%, 02/12/07 1,000 994 5.41%, 02/16/07 1,950 1,937 APRECO LLC, 5.38%, 02/15/07 (b) 1,000 993 5.42%, 04/16/07 (b) 550 542 Atlantis One Funding Corp., 5.38%, 01/04/07 (b) 1,382 1,381 5.38%, 01/11/07 (b) 1,500 1,498 5.39%, 02/21/07 (b) 1,325 1,315 Barclays Capital plc, 5.39%, 02/02/07 1,400 1,393 Barton Capital LLC, 5.42%, 01/11/07 (b) 362 361 5.35%, 01/18/07 (b) 1,325 1,322 5.37%, 02/09/07 (b) 1,000 995 CAFCO, Inc., 5.38%, 01/30/07 (b) 1,255 1,250 Chariot Funding, 5.37%, 01/05/07 (b) 1,060 1,059 5.40%, 01/18/07 (b) 527 526 5.37%, 01/23/07 (b) 1,150 1,146 Cooperative Association of Tractor Dealers, 5.42%, 01/03/07 122 122 5.50%, 01/05/07 550 550 5.50%, 01/08/07 124 124 5.46%, 02/09/07 336 334 5.41%, 03/16/07 1,462 1,446 5.41%, 03/19/07 160 158 5.41%, 03/20/07 1,000 989 5.44%, 04/26/07 120 118 Countrywide Home Loans, 5.48%, 01/02/07 1,000 1,000 5.39%, 01/29/07 1,379 1,373 CRC Funding, 5.39%, 01/12/07 (b) 1,700 1,697 5.38%, 01/23/07 (b) 1,600 1,595 Fountain Square, 5.38%, 02/09/07 (b) 1,690 1,681 5.45%, 03/15/07 (b) 650 643 Galaxy Funding, Inc., 5.39%, 02/07/07 (b) 1,240 1,233 Galleon Capital, 5.37%, 01/24/07 (b) 1,147 1,143 Harley-Davidson Funding, 5.33%, 01/11/07 (b) 1,239 1,237 5.33%, 02/08/07 (b) 2,000 1,989 ING America Insurance, 5.39%, 01/09/07 350 350 5.37%, 01/16/07 3,175 3,168 Ivory Funding, 5.40%, 03/15/07 (b) 1,766 1,747 Merrill Lynch & Co., Inc., 5.37%, 02/23/07 950 943 Metlife Funding, Inc., 5.38%, 01/17/07 (b) 1,878 1,873 5.34%, 02/14/07 (b) 138 137 Procter & Gamble, 5.36%, 02/06/07 (b) 1,631 1,622 Rabobank, 5.33%, 01/02/07 2,294 2,293 5.35%, 02/01/07 1,000 995 Societe Generale, 5.38%, 01/08/07 2,250 2,248 5.40%, 03/01/07 1,860 1,844 UBS Finance Corp., 5.49%, 01/10/07 150 150 5.36%, 01/22/07 1,480 1,475 5.38%, 01/26/07 100 100 5.42%, 03/01/07 500 496 5.39%, 03/08/07 611 605 Verizon Network Funding, 5.45%, 01/23/07 (b) 321 320 5.39%, 01/25/07 (b) 1,200 1,196 ------ TOTAL COMMERCIAL PAPER 55,706 Cost: $55,706
SEE FINANCIAL NOTES 52 DECEMBER 31, 2006 ($ X 1,000)
- ------------------------------------------------------------------------- MONEY MARKET FUND SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($) - ------------------------------------------------------------------------- CORPORATE BONDS - 9.7% Allstate Financial Global Funding, 5.25%, 02/01/07 (b) 2,000 1,999 SLM Corp., 5.50%, 01/25/07 (c) 950 950 The Goldman Sachs Group, Inc., 5.46%, 03/30/07 (c) 3,000 3,002 Verizon Global Funding Corp., 6.13%, 06/15/07 2,500 2,508 ------ TOTAL CORPORATE BONDS 8,459 Cost: $8,459 MUNICIPAL NOTES - 7.5% Massachusetts State Development Finance Agency, 5.38%, 12/01/40 (c) 3,000 3,000 New York State Housing Finance Agency, 5.35%, 11/15/29 (c) 3,500 3,500 ------ TOTAL MUNICIPAL NOTES 6,500 Cost: $6,500 U.S. GOVERNMENT AGENCY OBLIGATIONS - 10.4% Federal Home Loan Bank - 4.4% 3.38%, 02/15/07 2,250 2,245 4.25%, 04/16/07 870 867 4.25%, 05/08/07 750 747 ------ 3,859 Federal Home Loan Mortgage Corporation - 1.7% 5.35%, 11/21/07 1,510 1,510 Federal National Mortgage Association - 4.3% 4.75%, 01/02/07 500 500 5.25%, 04/20/07 1,200 1,200 5.41%, 12/28/07 2,000 2,000 ------ 3,700 ------ TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 9,069 ------ Cost: $9,069 TOTAL INVESTMENTS - 97.4% 84,934 Cost: $84,934
Percentages indicated are based on net assets of $87,228. (a) Restricted security which may not be publicly sold without registration under the Securities Act of 1933. (b) Rule 144A security. (c) Variable rate security. The rate presented represents the rate in effect at December 31, 2006. - -------------------------------------------------------------------------------- SEE FINANCIAL NOTES 53 STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
Core Growth Emerging Growth Small Cap Core Fund Fund Growth Fund - ------------------------------------------------------------------------------------------------ ASSETS Investments, at value $278,394,597 $ 165,358,016 $37,404,250 Repurchase agreements 11,303,451 7,828,897 1,108,718 ------------------------------------------------ Total investments 289,698,048 173,186,913 38,512,968 Cash -- -- -- Receivables: Interest and dividends 543,366 78,409 5,946 Investments sold 6,776,584 -- -- Tax reclaims -- -- -- Capital shares issued 224,475 132,485 38,143 Due from investment adviser -- -- -- Prepaid expenses 25,459 19,163 9,667 ------------------------------------------------ Total assets 297,267,932 173,416,970 38,566,724 LIABILITIES Payables: Dividends to shareholders -- -- -- Investments purchased -- -- -- Capital shares redeemed 322,791 227,125 15,050 Investment management fees 250,558 292,598 32,298 Administrative fees 75,168 43,890 9,689 Distribution fees 108,204 72,908 16,149 Shareholder service fees 95,768 20,713 3,976 Transfer agent expenses 144,529 90,969 15,539 Other accrued expenses 101,356 53,295 9,926 ------------------------------------------------ Total liabilities 1,098,374 801,498 102,627 - ------------------------------------------------------------------------------------------------ NET ASSETS $296,169,558 $ 172,615,472 $38,464,097 - ------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------ NET ASSETS Standard Shares: Net assets $253,728,593 $ 167,260,126 $38,464,097 Number of shares outstanding 12,162,842 10,011,463 3,121,783 Net asset value, offering and redemption price per share $ 20.86 $ 16.71 $ 12.32 Institutional Shares: Net assets $ 40,763,776 $ 575,044 -- Number of shares outstanding 2,332,234 32,906 -- Net asset value, offering and redemption price per share $ 17.48 $ 17.48 -- Administrative Shares: Net assets $ 1,677,189 $ 4,780,302 -- Number of shares outstanding 78,281 279,348 -- Net asset value, offering and redemption price per share $ 21.43 $ 17.11 -- Net assets consist of: Paid-in capital $294,510,700 $ 300,878,124 $31,987,280 Accumulated (Distributions in excess of) net investment income/loss 320,924 (937,496) (148,288) Accumulated net realized gains/losses on investments and foreign currencies (22,981,622) (168,453,055) 10,681 Net unrealized appreciation/depreciation on investments and foreign currencies 24,319,556 41,127,899 6,614,424 - ------------------------------------------------------------------------------------------------ NET ASSETS $296,169,558 $ 172,615,472 $38,464,097 - ------------------------------------------------------------------------------------------------ Investments, at cost $265,378,492 $ 132,059,014 $31,898,544 Foreign currency, at cost -- -- --
SEE FINANCIAL NOTES 54 AS OF DECEMBER 31, 2006
Value Global Equity Balanced Income Money Market Fund Fund Fund Fund Fund - -------------------------------------------------------------------------- $49,508,015 $ 79,885,315 $10,917,959 $45,310,189 $84,934,318 2,366,954 1,737,810 517,184 2,394,601 -- - -------------------------------------------------------------------------- 51,874,969 81,623,125 11,435,143 47,704,790 84,934,318 -- -- -- -- 1,783,366 43,198 119,594 54,129 306,519 283,345 -- -- 109,697 -- -- -- 86,505 -- -- -- 82,355 42,146 42,704 144,458 878,366 21,857 -- 9,380 -- -- 9,574 16,671 9,127 7,055 14,168 - -------------------------------------------------------------------------- 52,031,953 81,888,041 11,660,180 48,162,822 87,893,563 -- -- 48,733 157,667 326,224 1,981,035 -- 156,414 -- -- 160,434 147,588 -- 35,650 192,512 55,516 136,069 12,354 53,079 51,234 11,896 20,408 2,851 12,249 21,958 16,899 33,810 4,751 20,415 -- 4,020 9,554 1,379 5,490 9,416 12,520 49,142 4,146 23,780 39,609 5,991 29,972 4,004 19,200 24,127 - -------------------------------------------------------------------------- 2,248,311 426,543 234,632 327,530 665,080 - -------------------------------------------------------------------------- $49,783,642 $ 81,461,498 $11,425,548 $47,835,292 $87,228,483 - -------------------------------------------------------------------------- - -------------------------------------------------------------------------- $42,679,919 $ 79,657,889 $11,425,548 $47,835,292 $75,661,699 3,048,233 4,029,781 907,534 4,916,792 75,760,378 $ 14.00 $ 19.77 $ 12.59 $ 9.73 $ 1.00 $ 7,103,723 $ 501,472 -- -- $11,566,784 507,510 24,329 -- -- 11,572,130 $ 14.00 $ 20.61 -- -- $ 1.00 -- $ 1,302,137 -- -- -- -- 64,612 -- -- -- -- $ 20.15 -- -- -- $47,004,375 $ 182,052,528 $10,689,137 $54,238,235 $87,266,457 (18,658) (119,512) 2,898 14,254 622 (4,967,045) (119,139,620) 91,013 (6,634,283) (38,596) 7,764,970 18,668,102 642,500 217,086 -- - -------------------------------------------------------------------------- $49,783,642 $ 81,461,498 $11,425,548 $47,835,292 $87,228,483 - -------------------------------------------------------------------------- $44,109,999 $ 62,960,994 $10,792,643 $47,487,704 $84,934,318 -- -- -- -- --
SEE FINANCIAL NOTES 55 STATEMENTS OF OPERATIONS (UNAUDITED)
Core Growth Emerging Growth Small Cap Core Fund Fund Growth Fund - ----------------------------------------------------------------------------------------------- INVESTMENT INCOME Interest $ 443,434 $ 220,605 $ 54,032 Dividend (1) 2,343,293 471,272 63,358 - ----------------------------------------------------------------------------------------------- Total investment income 2,786,727 691,877 117,390 EXPENSES Investment management fees 761,658 862,934 94,089 Administrative fees 228,499 129,440 28,227 Distribution fees: Standard shares 325,225 208,798 47,044 Administrative shares 2,068 6,035 -- Shareholder service fees: Standard shares 331,664 54,192 10,662 Institutional shares 398 61 -- Administrative shares -- -- -- Transfer agent expenses: Standard shares 308,393 228,403 51,010 Institutional shares 1,137 184 -- Administrative shares 614 858 -- Accounting expenses 66,569 36,001 8,579 Custody expenses 6,037 3,310 1,963 Registration expenses 22,155 19,824 8,280 Trustee expenses 33,853 17,892 3,217 Other expenses 106,277 61,441 12,607 - ----------------------------------------------------------------------------------------------- Total expenses before reimbursements or waivers 2,194,547 1,629,373 265,678 Reimbursements or waivers from adviser -- -- -- - ----------------------------------------------------------------------------------------------- Net expenses 2,194,547 1,629,373 265,678 - ----------------------------------------------------------------------------------------------- NET INVESTMENT INCOME/LOSS $ 592,180 $ (937,496) $(148,288) REALIZED AND UNREALIZED GAINS/LOSSES ON INVESTMENTS AND FOREIGN CURRENCY TRANSACTIONS Realized gains on investments and foreign currency transactions $4,028,459 $5,455,501 $ 684,740 Change in unrealized appreciation/depreciation on investments and foreign currencies 1,855,178 (1,446,648) 135,630 - ----------------------------------------------------------------------------------------------- Net realized and unrealized gains/losses on investments and foreign currencies 5,883,637 4,008,853 820,370 CHANGE IN NET ASSETS FROM OPERATIONS $6,475,817 $3,071,357 $ 672,082 (1) Dividend income net of withholding taxes. For the six months ended December 31, 2006, withholding taxes for the Global Equity Fund were $1,994.
SEE FINANCIAL NOTES 56 FOR THE SIX MONTHS ENDED DECEMBER 31, 2006
Value Global Equity Balanced Income Money Market Fund Fund Fund Fund Fund - --------------------------------------------------------------------- $ 77,769 $ 100,387 $113,616 $1,356,893 $2,333,478 304,892 602,560 50,628 -- -- - --------------------------------------------------------------------- 382,661 702,947 164,244 1,356,893 2,333,478 150,723 406,312 36,659 164,073 153,363 32,298 60,947 8,460 37,863 65,727 46,214 99,199 14,100 63,105 -- -- 1,613 -- -- -- 10,320 25,177 3,732 13,996 23,761 -- 34 -- -- 214 -- 21 -- -- -- 44,667 130,264 11,199 52,274 90,367 244 95 -- -- 736 -- 797 -- -- -- 9,009 26,714 8,654 15,747 17,873 1,167 6,350 2,959 2,000 4,663 16,819 18,762 8,033 9,351 18,317 3,064 9,379 518 5,763 9,363 14,743 32,177 3,953 17,073 28,433 - --------------------------------------------------------------------- 329,268 817,841 98,267 381,245 412,817 (63,004) -- (24,937) -- -- - --------------------------------------------------------------------- 266,264 817,841 73,330 381,245 412,817 - --------------------------------------------------------------------- $ 116,397 $ (114,894) $ 90,914 $ 975,648 $1,920,661 1,838,193 2,364,368 115,442 220,317 -- 2,311,190 3,867,670 353,994 955,498 -- - --------------------------------------------------------------------- 4,149,383 6,232,038 469,436 1,175,815 -- $4,265,780 $6,117,144 $560,350 $2,151,463 $1,920,661
SEE FINANCIAL NOTES 57 STATEMENTS OF CHANGES IN NET ASSETS
CORE GROWTH FUND EMERGING GROWTH FUND - ---------------------------------------------------------------------------------------------------------- For the For the six months six months ended For the ended For the 12/31/06 year ended 12/31/06 year ended (Unaudited) 06/30/06 (Unaudited) 06/30/06 - ---------------------------------------------------------------------------------------------------------- OPERATIONS Net investment income/loss $ 592,180 $ (1,068,071) $ (937,496) $ (2,244,099) Realized gains/losses on investments and foreign currency transactions 4,028,459 46,437,932 5,455,501 16,391,277 Change in unrealized appreciation/depreciation on investments and foreign currency transactions 1,855,178 (32,840,999) (1,446,648) 11,851,314 - ---------------------------------------------------------------------------------------------------------- Change in net assets from operations 6,475,817 12,528,862 3,071,357 25,998,492 Dividends to Shareholders: From net investment income: Standard Shares -- -- -- -- Institutional Shares (267,821) -- -- -- Administrative Shares (3,435) -- -- -- From net realized gains on investments: Standard Shares -- -- -- -- - ---------------------------------------------------------------------------------------------------------- Total dividends (271,256) -- -- -- Change in net assets from capital transactions (25,122,925) (21,131,884) (7,129,603) (15,191,378) CHANGE IN NET ASSETS $(18,918,364) $ (8,603,022) $ (4,058,246) $ 10,807,114 - ---------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------- NET ASSETS Beginning of period $315,087,922 $323,690,944 $176,673,718 $165,866,604 End of period $296,169,558 $315,087,922 $172,615,472 $176,673,718 - ---------------------------------------------------------------------------------------------------------- Accumulated (distributions in excess of) net investment income/loss $ 320,924 -- $ (937,496) -- - ---------------------------------------------------------------------------------------------------------- CAPITAL TRANSACTIONS Standard Shares Proceeds from shares issued $ 5,246,227 $ 19,766,782 $ 7,746,806 $ 23,763,198 Dividends reinvested -- -- -- -- Cost of shares redeemed (25,527,827) (40,508,379) (14,168,638) (36,013,649) ------------------------------------------------------ Net change (20,281,600) (20,741,597) (6,421,832) (12,250,451) ------------------------------------------------------ Institutional Shares Proceeds from shares issued $ 5,848,308 $ 28,867,126 $ 8,282 $ 232,979 Dividends reinvested 260,617 -- -- -- Cost of shares redeemed (10,930,691) (29,194,052) (343,311) (2,151,187) ------------------------------------------------------ Net change (4,821,766) (326,926) (335,029) (1,918,208) ------------------------------------------------------ Administrative Shares Proceeds from shares issued $ 140,197 $ 531,600 $ 182,798 $ 854,234 Dividends reinvested 3,435 -- -- -- Cost of shares redeemed (163,191) (594,961) (555,540) (1,876,953) ------------------------------------------------------ Net change (19,559) (63,361) (372,742) (1,022,719) ------------------------------------------------------ CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $(25,122,925) $(21,131,884) $ (7,129,603) $(15,191,378) - ---------------------------------------------------------------------------------------------------------- SHARE TRANSACTIONS Standard Shares Issued 259,559 933,592 475,311 1,485,237 Reinvested -- -- -- -- Redeemed (1,254,372) (1,923,535) (872,950) (2,282,753) ------------------------------------------------------ Net change (994,813) (989,943) (397,639) (797,516) ------------------------------------------------------ Institutional Shares Issued 341,894 1,646,381 490 13,737 Reinvested 14,850 -- -- -- Redeemed (638,541) (1,651,566) (20,138) (141,270) ------------------------------------------------------ Net change (281,797) (5,185) (19,648) (127,533) ------------------------------------------------------ Administrative Shares Issued 6,759 24,473 10,919 51,723 Reinvested 160 -- -- -- Redeemed (7,770) (28,026) (33,909) (116,060) ------------------------------------------------------ Net change (851) (3,553) (22,990) (64,337) ------------------------------------------------------ CHANGE IN SHARES FROM SHARE TRANSACTIONS (1,277,461) (998,681) (440,277) (989,386) - ---------------------------------------------------------------------------------------------------------- * The Value Fund Institutional shares commenced operations on March 31, 2006.
SEE FINANCIAL NOTES 58
SMALL CAP CORE GROWTH FUND VALUE FUND GLOBAL EQUITY FUND - ---------------------------------------------------------------------------------------- For the For the For the six months six months six months ended For the year ended For the year ended For the year 12/31/06 ended 12/31/06 ended 12/31/06 ended (Unaudited) 06/30/06 (Unaudited) 6/30/2006 * (Unaudited) 06/30/06 - ---------------------------------------------------------------------------------------- $ (148,288) $ (283,687) $ 116,397 $ 54,391 $ (114,894) $ (38,404) 684,740 3,401,326 1,838,193 1,120,508 2,364,368 3,754,241 135,630 938,778 2,311,190 1,764,193 3,867,670 8,302,807 - ---------------------------------------------------------------------------------------- 672,082 4,056,417 4,265,780 2,939,092 6,117,144 12,018,644 -- -- (156,486) -- -- -- -- -- (32,960) -- -- -- -- -- -- -- -- -- (1,113,792) -- -- -- -- -- - ---------------------------------------------------------------------------------------- (1,113,792) -- (189,446) -- -- -- 995,865 3,794,453 7,189,821 7,787,498 (6,214,905) (15,299,387) $ 554,155 $ 7,850,870 $11,266,155 $10,726,590 $ (97,761) $ (3,280,743) - ---------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------- $37,909,942 $30,059,072 $38,517,487 $27,790,897 $81,559,259 $ 84,840,002 $38,464,097 $37,909,942 $49,783,642 $38,517,487 $81,461,498 $ 81,559,259 - ---------------------------------------------------------------------------------------- $ (148,288) -- $ (18,658) $ 54,391 $ (119,512) $ (4,618) - ---------------------------------------------------------------------------------------- $ 4,212,012 $10,643,513 $ 9,326,048 $13,809,233 $ 3,390,115 $ 7,340,857 1,065,024 -- 147,501 -- -- -- (4,281,171) (6,849,060) (3,390,264) (11,505,434) (9,154,042) (19,880,961) - ---------------------------------------------------------------------------------------- 995,865 3,794,453 6,083,285 2,303,799 (5,763,927) (12,540,104) - ---------------------------------------------------------------------------------------- -- -- $ 1,073,576 $ 5,483,699 $ -- $ 5,389 -- -- 32,960 -- -- -- -- -- -- -- (275,391) (2,346,225) - ---------------------------------------------------------------------------------------- -- -- 1,106,536 5,483,699 (275,391) (2,340,836) - ---------------------------------------------------------------------------------------- -- -- -- -- $ 93,670 $ 267,371 -- -- -- -- -- -- -- -- -- -- (269,257) (685,818) - ---------------------------------------------------------------------------------------- -- -- -- -- (175,587) (418,447) - ---------------------------------------------------------------------------------------- $ 995,865 $ 3,794,453 $ 7,189,821 $ 7,787,498 $(6,214,905) $(15,299,387) - ---------------------------------------------------------------------------------------- 349,509 873,576 694,263 1,115,039 181,353 416,762 86,799 -- 10,528 -- -- -- (351,750) (569,176) (253,609) (913,517) (486,631) (1,148,666) - ---------------------------------------------------------------------------------------- 84,558 304,400 451,182 201,522 (305,278) (731,904) - ---------------------------------------------------------------------------------------- -- -- 77,788 427,368 -- 116 -- -- 2,354 -- -- -- -- -- -- -- (14,159) (137,975) - ---------------------------------------------------------------------------------------- -- -- 80,142 427,368 (14,159) (137,859) - ---------------------------------------------------------------------------------------- -- -- -- -- 4,930 14,995 -- -- -- -- -- -- -- -- -- -- (14,574) (37,945) - ---------------------------------------------------------------------------------------- -- -- -- -- (9,644) (22,950) - ---------------------------------------------------------------------------------------- 84,558 304,400 531,324 628,890 (329,081) (892,713) - ----------------------------------------------------------------------------------------
SEE FINANCIAL NOTES 59 STATEMENTS OF CHANGES IN NET ASSETS
BALANCED FUND INCOME FUND - ------------------------------------------------------------------------------------------------------ For the For the six months six months ended For the year ended For the year 12/31/06 ended 12/31/06 ended (Unaudited) 06/30/06 (Unaudited) 06/30/06 - ------------------------------------------------------------------------------------------------------ OPERATIONS Net investment income/loss $ 90,914 $ 100,799 $ 975,648 $ 1,795,793 Realized gains/losses on investments and foreign currency transactions 115,442 215,779 220,317 (1,579,679) Change in unrealized appreciation/depreciation on investments and foreign currencies 353,994 (140,549) 955,498 (1,158,558) - ------------------------------------------------------------------------------------------------------ Change in net assets from operations 560,350 176,029 2,151,463 (942,444) Dividends to Shareholders: From net investment income: Standard Shares (88,016) (101,583) (961,394) (1,825,925) Institutional Shares -- -- -- -- From net realized gains on investments: Standard Shares (160,217) -- -- -- - ------------------------------------------------------------------------------------------------------ Total dividends (248,233) (101,583) (961,394) (1,825,925) Change in net assets from capital transactions 32,855 5,514,670 (3,675,451) (3,507,745) CHANGE IN NET ASSETS $ 344,972 $ 5,589,116 $(2,485,382) $ (6,276,114) - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ NET ASSETS Beginning of period $11,080,576 $ 5,491,460 $50,320,674 $ 56,596,788 End of period $11,425,548 $11,080,576 $47,835,292 $ 50,320,674 - ------------------------------------------------------------------------------------------------------ Accumulated (distributions in excess of) net investment income/loss $ 2,898 -- $ 14,254 -- - ------------------------------------------------------------------------------------------------------ CAPITAL TRANSACTIONS Standard Shares Proceeds from shares issued $ 856,940 $ 7,086,693 $ 2,598,993 $ 6,731,817 Dividends reinvested 235,288 87,089 872,427 1,653,835 Cost of shares redeemed (1,059,373) (1,659,112) (7,146,871) (11,893,397) ----------------------------------------------------- Net change 32,855 5,514,670 (3,675,451) (3,507,745) ----------------------------------------------------- Institutional Shares Proceeds from shares issued -- -- -- -- Dividends reinvested -- -- -- -- Cost of shares redeemed -- -- -- -- ----------------------------------------------------- Net change -- -- -- -- ----------------------------------------------------- Administrative Shares Proceeds from shares issued -- -- -- -- Dividends reinvested -- -- -- -- Cost of shares redeemed -- -- -- -- ----------------------------------------------------- Net change -- -- -- -- ----------------------------------------------------- CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 32,855 $ 5,514,670 $(3,675,451) $ (3,507,745) - ------------------------------------------------------------------------------------------------------ SHARE TRANSACTIONS Standard Shares Issued 69,534 568,623 268,806 687,649 Reinvested 18,657 6,975 89,832 169,782 Redeemed (85,654) (133,278) (735,213) (1,222,490) ----------------------------------------------------- Net change 2,537 442,320 (376,575) (365,059) ----------------------------------------------------- Institutional Shares Issued -- -- -- -- Reinvested -- -- -- -- Redeemed -- -- -- -- ----------------------------------------------------- Net change -- -- -- -- ----------------------------------------------------- Administrative Shares Issued -- -- -- -- Reinvested -- -- -- -- Redeemed -- -- -- -- ----------------------------------------------------- Net change -- -- -- -- ----------------------------------------------------- CHANGE IN SHARES FROM SHARE TRANSACTIONS 2,537 442,320 (376,575) (365,059) - ------------------------------------------------------------------------------------------------------
SEE FINANCIAL NOTES 60
MONEY MARKET FUND - -------------------------------- For the six months ended For the year 12/31/06 ended (Unaudited) 06/30/06 - -------------------------------- $ 1,920,661 $ 2,837,876 -- (62) -- -- - -------------------------------- 1,920,661 2,837,814 (1,672,883) (2,416,825) (248,145) (420,062) -- -- - -------------------------------- (1,921,028) (2,836,887) 3,068,161 (5,327,092) $ 3,067,794 $ (5,326,165) - -------------------------------- - -------------------------------- $ 84,160,689 $ 89,486,854 $ 87,228,483 $ 84,160,689 - -------------------------------- $ 622 $ 989 - -------------------------------- $ 31,967,816 $ 62,680,511 1,618,986 2,342,559 (32,184,830) (67,488,052) - -------------------------------- 1,401,972 (2,464,982) - -------------------------------- $ 2,940,661 $ 3,178,033 247,641 419,204 (1,522,113) (6,459,347) - -------------------------------- 1,666,189 (2,862,110) - -------------------------------- -- -- -- -- -- -- - -------------------------------- -- -- - -------------------------------- $ 3,068,161 $ (5,327,092) - -------------------------------- 31,967,816 62,680,511 1,618,986 2,342,559 (32,184,830) (67,488,052) - -------------------------------- 1,401,972 (2,464,982) - -------------------------------- 2,940,661 3,178,033 247,641 419,204 (1,522,113) (6,459,347) - -------------------------------- 1,666,189 (2,862,110) - -------------------------------- -- -- -- -- -- -- - -------------------------------- -- -- - -------------------------------- 3,068,161 (5,327,092) - --------------------------------
SEE FINANCIAL NOTES 61 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INVESTMENT ACTIVITIES DIVIDENDS - ------------------------------------------------------------------------------------------------------------------ Net asset Net realized value, Net and unrealized Total from From net beginning investment gains/losses investment investment of period income/loss on investments operations income - ------------------------------------------------------------------------------------------------------------------ CORE GROWTH FUND STANDARD SHARES - ------------------------------------------------------------------------------------------------------------------ Six months ended December 31, 2006 (Unaudited) $20.41 0.03 0.42 0.45 -- Year ended June 30, 2006 19.72 (0.09) 0.78 0.69 -- 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) -- INSTITUTIONAL SHARES - ------------------------------------------------------------------------------------------------------------------ Six months ended December 31, 2006 (Unaudited) $17.15 0.10 0.35 0.45 (0.12) Year ended June 30, 2006 16.45 0.06 0.64 0.70 -- 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) -- ADMINISTRATIVE SHARES - ------------------------------------------------------------------------------------------------------------------ Six months ended December 31, 2006 (Unaudited) $20.96 0.07 0.44 0.51 (0.04) Year ended June 30, 2006 20.17 --(3) 0.79 0.79 -- 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) -- - ------------------------------------------------------------------------------------------------------------------ EMERGING GROWTH FUND STANDARD SHARES - ------------------------------------------------------------------------------------------------------------------ Six months ended December 31, 2006 (Unaudited) $16.40 (0.09) 0.40 0.31 -- Year ended June 30, 2006 14.10 (0.20)(4) 2.50 2.30 -- 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) -- INSTITUTIONAL SHARES - ------------------------------------------------------------------------------------------------------------------ Six months ended December 31, 2006 (Unaudited) $17.11 (0.06) 0.43 0.37 -- Year ended June 30, 2006 14.62 (0.12)(4) 2.61 2.49 -- 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) -- ADMINISTRATIVE SHARES - ------------------------------------------------------------------------------------------------------------------ Six months ended December 31, 2006 (Unaudited) $16.77 (0.07) 0.41 0.34 -- Year ended June 30, 2006 14.37 (0.16)(4) 2.56 2.40 -- 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) -- - ------------------------------------------------------------------------------------------------------------------ (1) Not Annualized. (2) Annualized. (3) Less than $0.005 per share. (4) Based on average shares outstanding.
SEE FINANCIAL NOTES 62
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------- Net Ratio of From Net asset assets, expenses to net Total value, Total end of average net realized dividends to Redemption end return period assets, net of gains shareholders fee of period (%) ($ X 1,000) reimbursement (%) - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- -- -- -- $20.86 2.20(1) $253,729 1.55(2) -- -- -- 20.41 3.50 268,593 1.52 -- -- -- 19.72 8.95 278,940 1.55 -- -- -- 18.10 10.10 290,352 1.50 -- -- -- 16.44 (1.73) 285,339 1.37 -- -- -- 16.73 (24.37) 326,793 1.34 - ---------------------------------------------------------------------------------------------------- -- (0.12) -- $17.48 2.59(1) $ 40,764 0.81(2) -- -- -- 17.15 4.26 44,836 0.80 -- -- -- 16.45 9.74 43,083 0.80 -- -- -- 14.99 10.96 52,842 0.77 -- -- -- 13.52 (1.02) 63,571 0.69 -- -- -- 13.66 (23.86) 85,140 0.68 - ---------------------------------------------------------------------------------------------------- -- (0.04) -- $21.43 2.45(1) $ 1,677 1.13(2) -- -- -- 20.96 3.92 1,659 1.12 -- -- -- 20.17 9.38 1,667 1.14 -- -- -- 18.44 10.55 1,635 1.11 -- -- -- 16.68 (1.36) 2,426 1.00 -- -- -- 16.91 (24.07) 2,029 0.94 - ---------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------- -- -- -- $16.71 1.89(1) $167,260 1.90(2) -- -- -- 16.40 16.31 170,704 1.90 -- -- -- 14.10 8.38 157,963 1.96 -- -- -- 13.01 18.70 165,782 1.93 -- -- -- 10.96 (7.28) 157,911 1.95 -- -- -- 11.82 (25.14) 190,812 1.80 - ---------------------------------------------------------------------------------------------------- -- -- -- $17.48 2.16(1) $ 575 1.38(2) -- -- -- 17.11 17.03 899 1.35 -- -- -- 14.62 9.02 2,633 1.33 -- -- -- 13.41 19.41 3,534 1.30 -- -- -- 11.23 (6.57) 5,379 1.25 -- -- -- 12.02 (24.69) 6,428 1.20 - ---------------------------------------------------------------------------------------------------- -- -- -- $17.11 2.03(1) $ 4,780 1.60(2) -- -- -- 16.77 16.70 5,071 1.60 -- -- -- 14.37 8.70 5,270 1.64 -- -- -- 13.22 18.99 11,584 1.60 -- -- -- 11.11 (6.80) 8,561 1.51 -- -- -- 11.92 (24.89) 8,444 1.47 - ---------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - --- ---------------------------------------------- Ratio of net Ratio of investment expenses to income/loss average net Portfolio to average net assets, prior to turnover assets (%) reimbursement (%) rate (%) - ------------------------------------------------------------- 0.29(2) 1.55(2) 80.85(1) (0.43) 1.52 101.35 (0.32) 1.55 101.34 (0.65) 1.52 228.43 (0.28) 1.53 183.75 (0.43) 1.44 76.40 - ------------------------------------------------------------- 1.01(2) 0.81(2) 80.85(1) 0.30 0.80 101.35 0.42 0.80 101.34 0.08 0.79 228.43 0.36 0.76 183.75 0.23 0.73 76.40 - ------------------------------------------------------------- 0.71(2) 1.13(2) 80.85(1) (0.02) 1.12 101.35 0.09 1.14 101.34 (0.27) 1.13 228.43 0.09 1.06 183.75 (0.05) 1.01 76.40 - ------------------------------------------------------------- - ------------------------------------------------------------- (1.10)(2) 1.90(2) 17.22(1) (1.30) 1.90 60.19 (1.39) 1.96 109.56 (1.47) 1.94 151.80 (1.56) 1.97 315.89 (1.39) 1.86 202.57 - ------------------------------------------------------------- (0.58)(2) 1.38(2) 17.22(1) (0.77) 1.35 60.19 (0.76) 1.33 109.56 (0.85) 1.31 151.80 (0.86) 1.28 315.89 (0.78) 1.26 202.57 - ------------------------------------------------------------- (0.79)(2) 1.60(2) 17.22(1) (1.00) 1.60 60.19 (1.08) 1.64 109.56 (1.13) 1.62 151.80 (1.13) 1.54 315.89 (1.07) 1.53 202.57 - -------------------------------------------------------------
SEE FINANCIAL NOTES 63 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INVESTMENT ACTIVITIES DIVIDENDS - -------------------------------------------------------------------------------------------------------------------------- Net realized Net asset and unrealized value, Net gains/losses Total from From net beginning investment on investments investment investment of period income/loss and foreign currencies operations income - -------------------------------------------------------------------------------------------------------------------------- SMALL CAP CORE GROWTH FUND STANDARD SHARES - -------------------------------------------------------------------------------------------------------------------------- Six months ended December 31, 2006 (Unaudited) $12.48 (0.05) 0.26 0.21 -- Year ended June 30, 2006 11.00 (0.09) 1.57 1.48 -- 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) -- - -------------------------------------------------------------------------------------------------------------------------- VALUE FUND STANDARD SHARES - -------------------------------------------------------------------------------------------------------------------------- Six months ended December 31, 2006 (Unaudited) $12.74 0.02 1.29 1.31 (0.05) Year ended June 30, 2006 11.60 0.02 1.12 1.14 -- 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(4) 10.21 (0.01) (1.46) (1.47) -- Year ended May 31, 2002 15.29 (0.08) (3.57) (3.65) -- INSTITUTIONAL SHARES - -------------------------------------------------------------------------------------------------------------------------- Six months ended December 31, 2006 (Unaudited) $12.72 0.05 1.30 1.35 (0.07) For the period ended June 30, 2006(5) 12.81 0.02 (0.11) (0.09) -- - -------------------------------------------------------------------------------------------------------------------------- GLOBAL EQUITY FUND STANDARD SHARES - -------------------------------------------------------------------------------------------------------------------------- Six months ended December 31, 2006 (Unaudited) $18.33 (0.03)(1) 1.47 1.44 -- Year ended June 30, 2006 15.86 (0.01)(1) 2.48 2.47 -- Year ended June 30, 2005 15.18 0.02(1) 0.66 0.68 -- Year ended June 30, 2004 13.39 (0.10)(1) 1.89 1.79 -- Year ended June 30, 2003 14.22 (0.03)(1) (0.82) (0.85) -- Year ended June 30, 2002 18.31 (0.11)(1) (3.99) (4.10) -- INSTITUTIONAL SHARES - -------------------------------------------------------------------------------------------------------------------------- Six months ended December 31, 2006 (Unaudited) $19.05 0.04(1) 1.52 1.56 -- Year ended June 30, 2006 16.39 0.07(1) 2.59 2.66 -- Year ended June 30, 2005 15.58 0.12(1) 0.69 0.81 -- Year ended June 30, 2004 13.65 0.04(1) 1.89 1.93 -- Year ended June 30, 2003 14.40 0.05(1) (0.82) (0.77) -- Year ended June 30, 2002 18.46 (0.01)(1) (4.06) (4.07) -- ADMINISTRATIVE SHARES - -------------------------------------------------------------------------------------------------------------------------- Six months ended December 31, 2006 (Unaudited) $18.66 --(1,6) 1.49 1.49 -- Year ended June 30, 2006 16.11 0.04(1) 2.51 2.55 -- Year ended June 30, 2005 15.36 0.06(1) 0.69 0.75 -- Year ended June 30, 2004 13.51 (0.02)(1) 1.87 1.85 -- Year ended June 30, 2003 14.30 0.01(1) (0.82) (0.81) -- Year ended June 30, 2002 18.38 (0.06)(1) (4.03) (4.09) -- - -------------------------------------------------------------------------------------------------------------------------- (1) Based on average shares outstanding. (2) Not annualized. (3) Annualized. (4) Subsequent to the annual report as of May 31, 2002, the Citizens Value Fund changed its fiscal year end to June 30. (5) For the period March 31, 2006, commencement of operations, to June 30,2006. (6) Less than $0.005 per share.
SEE FINANCIAL NOTES 64
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------- Net Ratio of Ratio of net From Net asset assets, expenses to investment net Total value, Total end of average net income/loss realized dividends to Redemption end return period assets, net of to average net gains shareholders fee (1) of period (%) ($ X 1,000) reimbursement (%) assets (%) - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- (0.37) (0.37) -- $12.32 1.68(2) $ 38,464 1.41(3) (0.79)(3) -- -- -- 12.48 13.45 37,910 1.44 (0.83) (0.50) (0.50) -- 11.00 6.21 30,059 1.51 (1.07) -- -- -- 10.84 25.03 29,701 1.53 (1.37) -- -- -- 8.67 (5.56) 17,821 1.45 (1.12) -- -- -- 9.18 (3.57) 18,459 1.34 (0.93) - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- -- (0.05) -- $14.00 10.30(2) $ 42,680 1.29(3) 0.48(3) -- -- -- 12.74 9.83 33,081 1.29 0.15 -- -- -- 11.60 10.37 27,791 1.70 (0.11) -- -- -- 10.51 21.64 23,871 1.78 (0.23) -- -- -- 8.64 (1.14) 16,226 1.90 (0.62) -- -- -- 8.74 (14.40)(2) 21,060 1.95(3) (1.33)(3) (1.43) (1.43) -- 10.21 (25.58) 24,981 1.95 (1.04) - --------------------------------------------------------------------------------------------------------------------- -- (0.07) -- $14.00 10.58(2) $ 7,104 0.90(3) 0.90(3) -- -- -- 12.72 (0.70)(2) 5,436 0.90(3) 0.64(3) - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- -- -- --(6) $19.77 7.86(2) $ 79,658 2.02(3) (0.29)(3) -- -- --(6) 18.33 15.57 79,441 2.01 (0.06) -- -- --(6) 15.86 4.48 80,384 2.05 0.13 -- -- --(6) 15.18 13.37 95,625 2.01 (0.60) -- -- 0.02 13.39 (5.84) 101,846 1.91 (0.26) -- -- 0.01 14.22 (22.34) 135,881 1.84 (0.66) - --------------------------------------------------------------------------------------------------------------------- -- -- --(6) $20.61 8.19(2) $ 501 1.42(3) 0.36(3) -- -- --(6) 19.05 16.23 733 1.40 0.38 -- -- --(6) 16.39 5.20 2,891 1.39 0.75 -- -- --(6) 15.58 14.14 5,244 1.37 0.25 -- -- 0.02 13.65 (5.21) 6,688 1.26 0.42 -- -- 0.01 14.40 (21.99) 9,531 1.27 (0.05) - --------------------------------------------------------------------------------------------------------------------- -- -- --(6) $20.15 8.04(2) $ 1,302 1.76(3) (0.03)(3) -- -- --(6) 18.66 15.83 1,385 1.73 0.20 -- -- --(6) 16.11 4.88 1,566 1.73 0.40 -- -- --(6) 15.36 13.69 2,142 1.71 (0.11) -- -- 0.02 13.51 (5.52) 2,059 1.59 0.11 -- -- 0.01 14.30 (22.20) 2,207 1.64 (0.39) - --------------------------------------------------------------------------------------------------------------------- RATIOS AND SUPPLEMENTAL DATA - --- ----------------------------- Ratio of expenses to average net Portfolio assets, prior to turnover reimbursement (%) rate (%) - -------------------------------------------- 1.41(3) 24.07(2) 1.44 96.80 1.51 120.89 1.53 207.80 1.58 349.79 1.40 294.26 - -------------------------------------------- - -------------------------------------------- 1.59(3) 23.41(2) 1.62 58.32 1.70 172.95 1.78 130.18 1.90 209.72 2.05(3) 5.87(2) 2.54 34.77 - -------------------------------------------- 1.13(3) 23.41(2) 1.26(3) 58.32(2) - -------------------------------------------- - -------------------------------------------- 2.02(3) 30.86(2) 2.01 36.77 2.05 80.36 2.01 49.16 1.91 42.05 1.84 132.82 - -------------------------------------------- 1.42(3) 30.86(2) 1.40 36.77 1.39 80.36 1.37 49.16 1.26 42.05 1.27 132.82 - -------------------------------------------- 1.76(3) 30.86(2) 1.73 36.77 1.73 80.36 1.71 49.16 1.59 42.05 1.64 132.82 - --------------------------------------------
SEE FINANCIAL NOTES 65 FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INVESTMENT ACTIVITIES DIVIDENDS - --------------------------------------------------------------------------------------------------------- Net asset Net realized value, Net and unrealized Total from From net beginning investment gains/losses investment investment of period income/loss on investments operations income - --------------------------------------------------------------------------------------------------------- BALANCED FUND STANDARD SHARES - --------------------------------------------------------------------------------------------------------- Six months ended December 31, 2006 (Unaudited) $12.24 0.10 0.53 0.63 (0.10) Year ended June 30, 2006 11.87 0.13 0.37 0.50 (0.13) 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(3) 10.00 0.02 0.47 0.49 (0.02) - --------------------------------------------------------------------------------------------------------- INCOME FUND STANDARD SHARES - --------------------------------------------------------------------------------------------------------- Six months ended December 31, 2006 (Unaudited) $ 9.51 0.19 0.22 0.41 (0.19) Year ended June 30, 2006 10.00 0.32 (0.48) (0.16) (0.33) 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) - --------------------------------------------------------------------------------------------------------- MONEY MARKET FUND STANDARD SHARES - --------------------------------------------------------------------------------------------------------- Six months ended December 31, 2006 (Unaudited) $ 1.00 0.02 -- 0.02 (0.02) Year ended June 30, 2006 1.00 0.03 -- 0.03 (0.03) 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) INSTITUTIONAL SHARES - --------------------------------------------------------------------------------------------------------- Six months ended December 31, 2006 (Unaudited) $ 1.00 0.02 -- 0.02 (0.02) Year ended June 30, 2006 1.00 0.04 -- 0.04 (0.04) 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) - --------------------------------------------------------------------------------------------------------- (1) Not Annualized. (2) Annualized. (3) For the period December 20, 2002, commencement of operations, to June 30, 2003. (4) Less than $0.005 per share.
SEE FINANCIAL NOTES 66
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------------------- Net Ratio of Ratio of net From Net asset assets, expenses to investment net Total value, Total end of average net income/loss realized dividends to Redemption end return period assets, net of to average net gains shareholders fee of period (%) ($ X 1,000) reimbursement (%) assets (%) - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- (0.18) (0.28) -- $12.59 5.14(1) $ 11,426 1.30(2) 1.61(2) -- (0.13) -- 12.24 4.17 11,081 1.30 1.10 (0.23) (0.35) -- 11.87 7.76 5,491 1.30 1.07 (0.24) (0.30) -- 11.35 11.31 2,804 1.30 0.60 -- (0.02) -- 10.47 4.87(1) 1,061 1.30(2) 0.41(2) - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- -- (0.19) -- $ 9.73 4.30(1) $ 47,835 1.51(2) 3.87(2) -- (0.33) -- 9.51 (1.66) 50,321 1.49 3.28 -- (0.38) -- 10.00 5.34 56,597 1.48 3.66 -- (0.36) -- 9.86 (0.63) 59,562 1.45 3.28 -- (0.40) -- 10.28 11.28 69,137 1.37 3.80 -- (0.58) -- 9.62 (0.87) 67,488 1.38 5.77 - --------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------- -- (0.02) -- $ 1.00 2.21(1) $ 75,662 0.98(2) 4.35(2) -- (0.03) -- 1.00 3.27 74,260 0.98 3.22 -- (0.01) -- 1.00 1.21 76,724 1.00 1.19 -- --(4) -- 1.00 0.10 83,231 0.98 0.10 -- (0.01) -- 1.00 0.65 104,641 0.93 0.65 -- (0.02) -- 1.00 1.71 114,271 0.92 1.72 - --------------------------------------------------------------------------------------------------------------------- -- (0.02) -- $ 1.00 2.35(1) $ 11,567 0.70(2) 4.62(2) -- (0.04) -- 1.00 3.57 9,901 0.69 3.48 -- (0.02) -- 1.00 1.53 12,763 0.68 1.55 -- --(4) -- 1.00 0.41 11,011 0.67 0.41 -- (0.01) -- 1.00 0.95 10,892 0.63 0.98 -- (0.02) -- 1.00 1.97 16,539 0.67 1.95 - --------------------------------------------------------------------------------------------------------------------- TO RATIOS AND SUPPLEMENTAL DATA - --- ----------------------------- Ratio of expenses to average net Portfolio assets, prior to turnover reimbursement (%) rate (%) - --------------------------------------- - --------------------------------------- 1.74(2) 35.83(1) 1.80 89.13 2.33 109.56 4.30 98.20 16.73(2) 140.42(1) - --------------------------------------- - --------------------------------------- 1.51(2) 118.97(1) 1.49 490.92 1.48 111.76 1.45 64.37 1.37 195.73 1.38 54.05 - --------------------------------------- - --------------------------------------- 0.98(2) NA 0.98 NA 1.00 NA 0.98 NA 0.93 NA 0.92 NA - --------------------------------------- 0.70(2) NA 0.69 NA 0.68 NA 0.67 NA 0.63 NA 0.67 NA - ---------------------------------------
SEE FINANCIAL NOTES 67 FINANCIAL NOTES (UNAUDITED) 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 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 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 and Value Fund offers two classes of shares: Standard shares and Institutional shares. The Small Cap Core Growth Fund, Balanced Fund and Income 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. 68 SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. SECURITIES VALUATION 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 uses 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 NAV 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. 69 FINANCIAL NOTES (UNAUDITED) SECURITIES TRANSACTION AND RELATED INVESTMENT INCOME During the period, security transactions were accounted for no later than one business day following the trade date for purposes of calculating daily net asset values. For financial reporting purposes, however, security transactions are accounted for on trade date. The cost of securities sold is determined on the identified cost basis, unless otherwise specified. Interest income is recorded on an accrual basis and includes, where applicable, the amortization or accretion of a premium or discount. Dividend income is recorded on the ex-dividend date. FOREIGN CURRENCY TRANSLATION The accounting records of the funds are maintained in U.S. dollars. Investment securities and other assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the current rate of exchange. Purchases and sales of securities, and income and expenses, are translated into U.S. dollars at the prevailing rate of exchange on the respective dates of such transactions. The changes in foreign exchange rates on investments are not isolated on the Statement of Operations. Such fluctuations are included with the net realized and unrealized gain or loss on investments. FOREIGN CURRENCY CONTRACTS Foreign currency contracts are used to facilitate transactions in foreign-denominated securities. Losses may arise from changes in the value of the foreign currency or if the counterparties do not perform under the contract's terms. The U.S. dollar value of foreign currency contracts is determined using the current rate of exchange. There were no foreign currency contracts open at December 31, 2006. REPURCHASE AGREEMENTS The funds may acquire repurchase agreements with an entity that is a member bank of the Federal Reserve System and government securities dealers that are on the Federal Reserve Bank of New York's list of primary dealers, 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 70 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. 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 below minimum balances, redemptions due to shareholder death or disability, or certain omnibus accounts or retirement plans. For the period ended December 31, 2006, the Global Equity Fund collected $507 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 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 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 71 FINANCIAL NOTES (UNAUDITED) 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. FEES AND OTHER TRANSACTIONS WITH AFFILIATES INVESTMENT MANAGEMENT FEE Citizens Advisers, Inc. (the "adviser") serves as adviser to each of the funds. Under the terms of the management contract, the adviser is paid a fee that is computed daily based on an annual rate for each fund's average daily net assets. Those rates are as follows:
FUND FEE RATE - ---- -------- 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% Money Market Fund 0.35%
Dwight Asset Management Company serves as the subadviser for the Income Fund. For its services, the subadviser receives a fee computed daily based on an annual rate of 0.25% of the fund's average daily net assets. The subadvisory fee is 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 72 shares pursuant to which the funds, except the Money Market Fund, compensate the distributor for services in an amount equal to 0.25% per annum of average annual net assets represented by such shares. ADMINISTRATIVE AND SHAREHOLDER SERVICE FEES The adviser, with whom certain officers and 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 a per 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 period ended December 31, 2006, a fee of 0.25% was charged. TRANSFER AGENCY, FUND ACCOUNTING AND CUSTODY BISYS Fund Services Ohio, Inc. provides transfer agency and fund accounting services to the funds pursuant to certain fee arrangements. As transfer agent for the funds, BISYS is paid a fee based on the number of funds and shareholder accounts, other service 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 a 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. There were no custody credits received for the period ended December 31, 2006. 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 73 FINANCIAL NOTES (UNAUDITED) 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 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 period ended December 31, 2006, 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 - ---- ------------------ Value Fund -- Standard shares 1.29% Value Fund -- Institutional shares 0.90% Balanced Fund -- Standard shares 1.30%
The Value Fund Standard shares and Institutional shares expense limitations listed above are contractual. The adviser may recoup the investment management fees waived or limited and other expenses reimbursed by it within three years from the fiscal year in which they were waived/reimbursed. Such repayments may be made twice monthly, but in no event less frequently than semi-annually, but only to the extent that such repayments would not cause annualized operating expenses of the Value Fund to exceed any expense limitation. As of December 31, 2006, the amount that may potentially be recouped by the adviser from the Value Fund is $107,185 expiring on June 30, 2009. The Balanced Fund expense limitation listed above is voluntary, may be removed by the adviser at any time and is not subject to recoupment in subsequent fiscal periods. 74 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 period ended December 31, 2006:
FUND PURCHASES SALES - ---- ------------ ------------ Core Growth Fund $231,086,196 $264,968,161 Emerging Growth Fund 28,173,235 34,269,579 Small Cap Core Growth Fund 9,352,418 8,570,518 Value Fund 19,270,243 9,418,743 Global Equity Fund 23,736,966 27,628,011 Balanced Fund 3,871,755 3,787,320 Income Fund 30,058,178 28,760,305
The following summarizes purchases and sales of U.S. Government securities by fund for the period ended December 31, 2006:
FUND PURCHASES SALES - ---- ----------- ----------- Income Fund $27,063,701 $35,875,873
FEDERAL INCOME TAX INFORMATION At December 31, 2006 the cost, gross unrealized appreciation and gross unrealized depreciation on securities, for federal income tax purposes, were as follows:
NET UNREALIZED TAX UNREALIZED TAX UNREALIZED APPRECIATION/ FUND TAX COST APPRECIATION DEPRECIATION DEPRECIATION - ---- ------------ -------------- -------------- -------------- Core Growth Fund $265,378,492 $27,773,839 $(3,454,283) $24,319,556 Emerging Growth Fund 132,073,539 43,310,709 (2,197,335) 41,113,374 Small Cap Core Growth Fund 31,898,544 7,325,568 (711,144) 6,614,424 Value Fund 44,200,362 8,235,359 (560,752) 7,674,607 Global Equity Fund 63,090,900 19,093,868 (561,643) 18,532,225 Balanced Fund 10,792,067 730,592 (87,516) 643,076 Income Fund 47,562,953 355,618 (213,781) 141,837 Money Market Fund 84,934,318 -- -- --
75 FINANCIAL NOTES (UNAUDITED) NEW ACCOUNTING PRONOUNCEMENTS In September 2006 the Financial Accounting Standards Board (FASB) issued Statement on Financial Accounting Standards (SFAS) No. 157, "Fair Value Measurements." This standard establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires additional disclosures about fair value measurements. SFAS No. 157 applies to fair value measurements already required or permitted by existing standards. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The changes to current GAAP from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. As of December 31, 2006, the funds do not believe the adoption of SFAS No. 157 will impact the financial statement amounts, however, additional disclosures may be required about the inputs used to develop the measurements and the effect of certain of the measurements on changes in net assets for the period. In July 2006, FASB issued FASB Interpretation No. 48 - "Accounting for Uncertainty in Income Taxes," which requires for all entities, including pass-through entities such as the funds, a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. The Interpretation is required to be implemented no later than the last net asset value calculation in the first required financial statement reporting period for fiscal years beginning after December 15, 2006. Management has not yet begun to evaluate the impact of this interpretation to the funds. 76 SUPPLEMENTAL INFORMATION (UNAUDITED) PORTFOLIO HOLDINGS DISCLOSURE Each fund, except the Money Market Fund, posts its full portfolio holdings monthly, with a 30-day lag, on www.citizensfunds.com. The portfolio holdings are 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, including 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' end on Form N-Q. You can receive a copy of each funds' Form N-Q without charge by calling 800.223.7010 or by visiting the website at www.citizensfunds.com. The fund's Form N-Q is also available through a variety of methods. You can: - - find it on the EDGAR Database of the SEC internet site at www.sec.gov - - have copies sent to you (after paying a copying fee) by writing the SEC's Public Reference Section, Washington, D.C. 20549-0102, or by electronic request to publicinfo@sec.gov - - view and copy it in person at the SEC's Public Reference Room in Washington D.C.; for more information call 202.942.8090. 77 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. ACTUAL EXPENSES The table on the opposite page 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 opposite page 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. 78 DECEMBER 31, 2006
ANNUALIZED EXPENSES EXPENSE BEGINNING ENDING PAID DURING RATIO DURING ACCOUNT ACCOUNT PERIOD(1) THE PERIOD VALUE VALUE 07/01/06 -- 07/01/06 -- 07/01/06 12/31/06 12/31/06 12/31/06 --------- --------- ----------- ------------ CORE GROWTH FUND Standard -- actual $1,000.00 $1,022.00 $ 7.90 1.55% Standard -- hypothetical 1,000.00 1,017.39 7.88 1.55% Institutional -- actual 1,000.00 1,025.90 4.14 0.81% Institutional -- hypothetical 1,000.00 1,021.12 4.13 0.81% Administrative -- actual 1,000.00 1,024.50 5.77 1.13% Administrative -- hypothetical 1,000.00 1,019.51 5.75 1.13% EMERGING GROWTH FUND Standard -- actual $1,000.00 $1,018.90 $ 9.67 1.90% Standard -- hypothetical 1,000.00 1,015.63 9.65 1.90% Institutional -- actual 1,000.00 1,021.60 7.03 1.38% Institutional -- hypothetical 1,000.00 1,018.25 7.02 1.38% Administrative -- actual 1,000.00 1,020.30 8.15 1.60% Administrative -- hypothetical 1,000.00 1,017.14 8.13 1.60% SMALL CAP CORE GROWTH FUND Standard -- actual $1,000.00 $1,016.80 $ 7.17 1.41% Standard -- hypothetical 1,000.00 1,018.10 7.17 1.41% VALUE FUND Standard -- actual $1,000.00 $1,103.00 $ 6.84 1.29% Standard -- hypothetical 1,000.00 1,018.70 6.56 1.29% Institutional -- actual 1,000.00 1,105.80 4.78 0.90% Institutional -- hypothetical 1,000.00 1,020.67 4.58 0.90% GLOBAL EQUITY FUND Standard -- actual $1,000.00 $1,078.60 $10.58 2.02% Standard -- hypothetical 1,000.00 1,015.02 10.26 2.02% Institutional -- actual 1,000.00 1,081.90 7.45 1.42% Institutional -- hypothetical 1,000.00 1,018.05 7.22 1.42% Administrative -- actual 1,000.00 1,080.40 9.23 1.76% Administrative -- hypothetical 1,000.00 1,016.33 8.94 1.76% BALANCED FUND Standard -- actual $1,000.00 $1,051.40 $ 6.72 1.30% Standard -- hypothetical 1,000.00 1,018.65 6.61 1.30% INCOME FUND Standard -- actual $1,000.00 $1,043.00 $ 7.78 1.51% Standard -- hypothetical 1,000.00 1,017.59 7.68 1.51% MONEY MARKET FUND Standard -- actual $1,000.00 $1,022.10 $ 4.99 0.98% Standard -- hypothetical 1,000.00 1,020.27 4.99 0.98% Institutional -- actual 1,000.00 1,023.50 3.57 0.70% Institutional -- hypothetical 1,000.00 1,021.68 3.57 0.70%
(1) Expenses equal the average account value times the fund's annualized expense ratio multiplied by 184/365 (to reflect the one-half year period). 79 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 highly trained client shareholder representatives to an informative website. EXCHANGES BETWEEN CITIZENS FUNDS* You can move your money from any one of our funds to another. RETIREMENT INVESTING You have 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 You can invest automatically on a monthly or quarterly basis with payroll deduction or electronic transfer from your bank. UNARALLELED CUSTOMER SERVICE Our representatives are well trained professionals whose goal is to satisfy your request during the first phone call. Representatives are available from 9 AM to 6 PM (ET) Monday -- Friday at 800.223.7010. CLIENT WEALTH MANAGEMENT You have access to receive personal, one on one advice and consultation from a Client Wealth Management specialist. WWW.CITIZENS FUNDS.COM Citizens Funds' website offers daily fund prices and monthly performance updates, fund and manager profiles, the funds' prospectus 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 December 31, 2006 are available online at www.citizensfunds.com without charge, or upon request, by calling 800.223.7010, or on the SEC's website at www.sec.gov. * Citizens Global Equity Fund charges a redemption fee of 2% on shares redeemed or exchanged within 60 days of purchase. 80 NOTES 81 NOTES 82 NOTES 83 NOTES 84 NOTES 85 (CITIZENS FUNDS LOGO) TRUSTEES Walter D. Bristol, Jr. Sophia Collier Jeannie H. Diefenderfer Pablo S. Eisenberg Orlando Hernandez Martha S. Pope Henry L.P. Schmelzer MANAGER Citizens Advisers, Inc. One Harbour Place Suite 400 Portsmouth, NH 03801 800.223.7010 603.436.5152 DISTRIBUTOR Citizens Securities, Inc. One Harbour Place Suite 400 Portsmouth, NH 03801 800.223.7010 603.436.5152 CUSTODIAN Fifth Third Bank Cincinnati, OH 45263 TRANSFER AND ACCOUNTING AGENT BISYS Fund Services Ohio, Inc. Columbus, OH 43219 LEGAL COUNSEL Bingham McCutchen LLP Boston, MA 02110 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP Columbus, OH 43215 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 VISIT WWW.CITIZENSFUNDS.COM OR CALL 800.223.7010 FOR A FREE PROSPECTUS AND READ IT CAREFULLY BEFORE INVESTING. (C) 2007 CITIZENS ADVISERS, INC. NOT A PART OF THE SEMI-ANNUAL REPORT ITEM 2. CODE OF ETHICS. Not Applicable to Semi-Annual Report. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not Applicable to Semi-Annual Report. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not Applicable to Semi-Annual Report. 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 is (i) accumulated and communicated to the investment company's management, including its certifying officers to allow timely decision 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) Not Applicable. (a)(2) Certifications pursuant to Rule 30a-2(a) are attached hereto. (a)(3) Not Applicable. (b) Certifications pursuant to Rule 30a-2(b) are furnished herewith. 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: February 28, 2007 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: February 28, 2007 By: /s/ Sean P. Driscoll -------------------------------- Sean P. Driscoll Treasurer Date: February 28, 2007 EX-99.CERT 2 b63839a1exv99wcert.txt CERTIFICATIONS CERTIFICATIONS I, Sophia Collier, certify that: 1. I have reviewed this report on Form N-CSR of Citizens Funds (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. February 28, 2007 /s/ Sophia Collier Date ---------------------------------------- Sophia Collier President CERTIFICATIONS I, Sean P. Driscoll, certify that: 1. I have reviewed this report on Form N-CSR of Citizens Funds (the "registrant"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. February 28, 2007 /s/ Sean P. Driscoll Date ---------------------------------------- Sean P. Driscoll Treasurer -----END PRIVACY-ENHANCED MESSAGE-----