-----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, K7aJINhOfgM/V3IDT2S9VUCzWypKuqrpjn38HItIxK0JfWpz3+k2FNm4EfjxqU/e 5z4VYS+kX42UEWlQXE6pzA== 0001206774-03-000673.txt : 20030905 0001206774-03-000673.hdr.sgml : 20030905 20030905163742 ACCESSION NUMBER: 0001206774-03-000673 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030630 FILED AS OF DATE: 20030905 EFFECTIVENESS DATE: 20030905 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CITIZENS FUNDS CENTRAL INDEX KEY: 0000711202 IRS NUMBER: 942874420 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-03626 FILM NUMBER: 03884184 BUSINESS ADDRESS: STREET 1: 230 COMMERCE WAY STREET 2: STE 300 CITY: PORTSMOUTH STATE: NH ZIP: 03801 BUSINESS PHONE: 6034365152 FORMER COMPANY: FORMER CONFORMED NAME: CITIZENS INVESTMENT TRUST DATE OF NAME CHANGE: 19951106 FORMER COMPANY: FORMER CONFORMED NAME: WORKING ASSETS COMMON HOLDINGS DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: WORKING ASSETS MONEY FUND DATE OF NAME CHANGE: 19920531 N-CSR 1 d13180.txt [LOGO] CITIZENS FUNDS(R) Fundamentally Strong. Socially Responsible. Annual Report 2003 [GRAPHIC] TABLE OF CONTENTS PORTFOLIO REVIEW 2 REPORT OF INDEPENDENT AUDITORS 21 PORTFOLIO HOLDINGS 22 STATEMENTS OF ASSETS AND LIABILITIES 38 STATEMENTS OF OPERATIONS 40 STATEMENTS OF CHANGES IN NET ASSETS 42 FINANCIAL HIGHLIGHTS 46 FINANCIAL NOTES 50 SUPPLEMENTAL INFORMATION 56 DEAR SHAREHOLDER [PHOTO OF SOPHIA COLLIER] Our fiscal year ended June 30, 2003 has been a year of hard work, reflection and recovery for Citizens and many corporations throughout the world. In the second half of our fiscal year ended June 30, our funds began to show good, positive performance and shareholders once again had the pleasure of opening their statements to see asset values increasing. We have worked very hard to improve the performance of our funds and made significant new investments in research, personnel and investment technology to strengthen the fundamental social research process that is at the core of our investment approach. We have also strengthened our advocacy efforts with the corporations in which we invest, co-filing three shareholder resolutions, and joining with other like-minded investors and corporations to support corporate governance reforms and improved social responsibility. As much progress as we have made, however, I am still not satisfied and believe that we can dig deeper and do much more. In fiscal 2004 we will continue to strengthen our investment process and find ways to advocate more effectively for social responsibility. While the accounting scandals and revelations of corporate malfeasance have led to higher awareness of the importance of ethics and accountability, the work is far from done. One area we have identified for advocacy is reform of the Boards of Directors of corporations. Too often board members lack independence from management. For example, board members may have additional relationships -- personal or business - -- with the company or the Chief Executive. In other cases boards lack diversity and exposure to a wider range of view points. Citizens has advocated for the Securities and Exchange Commission to require companies to provide means for shareholders to have much greater participation in the election of corporate directors, including the option to nominate candidates for the Board. Often times, shareholders are restricted to voting for or against a single pre-selected slate. Another area of long-time interest for Citizens Funds is the environment. We are pleased that we have been able to invest in a number of profitable companies that are creating positive environmental products that support energy efficiency and alternative energy. In addition, we continue to encourage companies we own to adopt energy efficient policies across all industries. We have also been working to encourage companies to be more transparent in their operations and embrace the Global Reporting Initiative (or GRI). The GRI provides companies a standard way to report on their environmental impact, health and worker safety and other similar values. This provides a means for benchmarks and best practices to be identified. Lagging companies will be able to see what is possible and, with effort, make progress towards better practices. We look forward to the next year with optimism. Even though the last several years have been difficult ones for the equity markets I strongly believe that with energy, effort and sincerity we can make real progress. Thank you for sticking with Citizens Funds. Sincerely yours, /s/ Sophia Collier Sophia Collier, President Please call (800) 223-7010 for a prospectus that contains information about fees and expenses and should be read carefully before investing. Distributed by Citizens Securities, Inc., Portsmouth, NH 03801 1 PORTFOLIO REVIEW CITIZENS CORE GROWTH FUND Goal Long-term capital appreciation Strategy Invests mainly in stocks of U.S. large-capitalization companies Inception Dates Standard shares 03/03/95 Institutional shares 01/25/96 Administrative shares 02/04/00 Important Notes The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance does not guarantee future results. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. The index is unmanaged, and you cannot invest directly in it. When you sell your fund shares, they may be worth more or less than what you paid for them. Fee waivers were instituted in the past and during the report period to maintain expense limits, without which returns would have been lower. The S&P 500 Index is an unmanaged index comprised of 500 common stocks chosen for market size, liquidity and industry group representation. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Auditors. AVERAGE ANNUAL RETURNS (AS OF 06/30/2003)
Ticker 6 1 5 Since Symbol Months Year Years Inception Standard shares WAIDX 9.60% -1.73% -4.61% 8.53% Institutional shares WINIX 9.93% -1.02% -3.93% 7.33% Administrative shares CGADX 9.81% -1.36% N/A -16.20%
Positive factors throughout the period included strong consumer spending and an accommodating Fed monetary policy. However, investors were still faced with a weak U.S. economy. In addition to ongoing economic and geopolitical anxieties, the majority of the year was characterized by low growth expectations, depressed corporate earnings, flat capital expenditures, and lower global demand and output. U.S. stocks (as measured by the S&P 500 Index, the fund's benchmark) see-sawed from quarter to quarter during the fiscal year ended June 30, 2003. During the first three months of the period, stocks suffered their largest quarterly loss (-17%) since 1987. In the following three months, a strong GDP report and a surprise interest rate cut by the Fed set off a rally that pushed stock prices up more than 8%. In the first three months of 2003, the war in Iraq dominated people's minds, and stocks finished the quarter down 3%. However, the end of major combat action in Iraq sparked a rally where stocks rebounded more than 15% over the last three months of the period. All told, the S&P 500 Index ended the 12-month period relatively flat with a 0.25% gain. In keeping with our quality growth approach, our strategy was to position the portfolio to benefit from the early stages of a potential economic recovery. We focused our attention on high-quality names (i.e., companies with healthy balance sheets and stable, more predictable earnings) within higher-growth, economically sensitive sectors. This led us to overweight technology and underweight consumer staples and industrials -- allocation decisions that proved their merit based on how these sectors of the index performed over the 12-month period. Citizens Core Growth Fund (Standard shares) generated a -1.73% return during the 12-month period ended June 30, 2003, underperforming its benchmark index, the S&P 500 Index, which gained 0.25%. The most positive contributions to performance during the period came from our holdings in the health care, energy, and industrials sectors. The health care sector as a whole was up 9%, and our overweighting and stock selection allowed us to fully participate in the rally. In particular, our biotechnology holdings alone produced a 2 CITIZENS CORE GROWTH FUND 13.8% gain during the period. Our stock selection in the energy sector produced strong gains, as we were able to exploit our thesis that oil and gas prices would remain high after the war. The energy sector within the S&P 500 Index lost 6.8% over the 12-month period, while our energy holdings generated a 9.9% gain. Our stock selection within industrials also performed well, gaining 4.5% despite the sector losing 1.6% within the index during the period. PERFORMANCE OVER TIME (AS OF 06/30/03) This chart shows performance since inception of a $10,000 hypothetical investment in the fund's standard shares, compared with the performance over the same period for the index shown. [THE FOLLOWING WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL] Citizens Core S&P 500 Date Growth - Standard Index ---- ----------------- ------- 3/3/1995 10,000 10,000 06/30/95 10,940 11,712 06/30/96 13,503 14,757 06/30/97 18,348 19,877 06/30/98 25,045 25,873 06/30/99 32,953 31,761 06/30/00 37,178 34,063 06/30/01 26,611 29,011 06/30/02 20,127 23,792 06/30/03 19,778 23,852 The biggest detractors from performance during the period came from our consumer discretionary holdings. Our overweighting in Kohls detracted from performance, as lower sales figures and excess inventory created a loss in that holding. Not owning Best Buy also hurt, as the company's stock experienced a strong rebound based on its sell-off of unproductive business units and continued strong demand for electronics. Our commitment to the media industry also hurt performance. However, that industry started to show improvement late in the fiscal year. Our ongoing commitment to owning high-quality companies was not fully rewarded during the period -- particularly in the second and fourth quarters. While U.S. stocks generated positive returns across the board during those two quarters, the most speculative issues led the rally. We believe that the economy is beginning the road to recovery and that the market environment will ultimately reward our strategy of investing in high-quality companies offering strong long-term prospects. We stand committed to our disciplined long-term approach of investing in fundamentally and socially strong companies for the benefit of our shareholders. 3 PORTFOLIO REVIEW CITIZENS EMERGING GROWTH FUND Goal Aggressive growth Strategy Invests mainly in stocks of young, growing, medium-capitalization companies Inception Dates Standard shares 02/08/94 Institutional shares 11/01/99 Administrative shares 02/04/00 Important Notes The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance does not guarantee future results. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. The index is unmanaged, and you cannot invest directly in it. When you sell your fund shares, they may be worth more or less than what you paid for them. Fee waivers were instituted in the past and during the report period, without which returns would have been lower. Investments in the Citizens Emerging Growth Fund involve unique risks, as small- and medium-sized companies may have inexperienced management, limited product line, a difficult time obtaining financing or market share, and their shares may be more volatile and not traded as frequently or in as large a volume as larger companies. 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 stocks are also members of the Russell 1000 Growth index. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Auditors. AVERAGE ANNUAL RETURNS (AS OF 06/30/2003)
Ticker 6 1 5 Since Symbol Months Year Years Inception Standard shares WAEGX 12.64% -7.28% 1.45% 10.67% Institutional shares CEGIX 13.09% -6.57% N/A -9.82% Administrative shares CGRDX 12.91% -6.80% N/A -17.85%
While strong consumer spending and an accommodating Fed monetary policy were positives throughout the period, ongoing economic and geopolitical anxieties lingered. The fiscal year ended June 30, 2003 was generally characterized by muted corporate earnings, flat capital expenditures, and lower global demand and output. However, during the second half of the fiscal year, capital expenditures and corporate earnings showed signs of improvement. Moving in alternating directions from quarter to quarter, the broad equity market (as measured by the S&P 500 Index) was exceptionally volatile over the 12-month period. Stocks suffered their largest quarterly loss (-17%) since 1987 during the first three months of the period. In the following quarter, stock prices gained more than 8% following a strong GDP report and a surprise interest rate cut by the Fed. In the first three months of 2003, the war in Iraq dominated people's minds, and stocks finished the quarter down 3%. However, the end of major combat action in Iraq sparked a rally where stocks rebounded more than 15% over the last three months of the period. Mid-cap growth stocks (as measured by the Russell MidCap Growth Index, the fund's benchmark) followed a similar see-saw pattern as the broad equity market. However, while the S&P 500 ended the 12-month period with a 0.25% return, mid-cap growth stocks gained 7.35%. Citizens Emerging Growth Fund (Standard shares) generated a -7.28% return during the 12-month period ended June 30, 2003. The general market trend during the period was that stocks of lower-quality companies (i.e., unprofitable, low-dollar-priced companies with weak balance sheets) experienced the most dramatic increases. This tendency impacted the mid-cap market, where the smaller and most beaten-down stocks noticeably outperformed stocks of larger and more fundamentally sound companies. Early in the period our strategy was to position the portfolio to benefit from the early stages of a potential economic recovery. This focused our attention on stocks of high-quality companies within higher-growth, economically sensitive sectors. 4 CITIZENS EMERGING GROWTH FUND PERFORMANCE OVER TIME (AS OF 06/30/03) This chart shows performance since inception (02/08/94) of a $10,000 hypothetical investment in the fund's standard shares, compared with the performance (since 02/28/94) for the index shown. [THE FOLLOWING WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL] Citizens Emerging Russell MidCap Date Growth - Standard Growth Index ---- ----------------- -------------- 02/08/94 10,000 02/28/94 10,060 10,000 06/30/94 9,930 9,110 06/30/95 12,238 11,518 06/30/96 17,431 14,235 06/30/97 18,134 16,739 06/30/98 24,127 20,758 06/30/99 32,837 24,974 06/30/00 59,781 37,108 06/30/01 37,353 25,415 06/30/02 27,961 18,721 06/30/03 25,927 20,097 The most positive contributions to performance came from the consumer staples, health care and industrials sectors. Our underweighting in consumer staples paid off, as that sector of the benchmark index experienced the biggest loss over the 12-month period. In health care, a significant overweighting and good stock selection in biotechnology generated positive results. Strong gains came from Gilead Sciences Inc., MedImmune Inc., and Neurocrine Biosciences Inc. Good stock selection in industrials (more specifically, within commercial services and suppliers) protected the portfolio from a sector of the index that was down during the period. The biggest detractors from performance during the period came from our consumer discretionary, information technology and financials sector allocations. Our consumer discretionary picks underperformed versus the index. Within that sector, our investments in both media and automobiles hurt performance, although they started to show improvement late in the fiscal year. Our holdings in information technology, particularly software and hardware equipment, also underperformed their more speculative peers. In software, strong performance by some holdings was more than offset by stocks that suffered steep declines during the period. Security selection in the financial sector also hurt performance. We believe that the market will soon begin to take a longer-term view that discriminates between companies offering strong long-term prospects and those lacking solid fundamentals. When that happens, we feel that our commitment to holding quality companies should reward our shareholders to a greater degree. 5 PORTFOLIO REVIEW CITIZENS SMALL CAP CORE GROWTH FUND Goal Capital appreciation Strategy Invests mainly in stocks of small-capitalization U.S. companies Inception Dates Standard shares 12/28/99 Important Notes The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance does not guarantee future results. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. The index is unmanaged, and you cannot invest directly in it. When you sell your fund shares, they may be worth more or less than what you paid for them. Fee waivers were instituted in the past and during the report period to maintain expense limits, without which returns would have been lower. Investments in the Citizens Small Cap Core Growth Fund involve unique risks, as small-and medium-sized companies may have inexperienced management, limited product line, a difficult time obtaining financing or market share, and their shares may be more volatile and not traded as frequently or in as large a volume as larger companies. The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Auditors. AVERAGE ANNUAL RETURNS (AS OF 06/30/2003)
Ticker 6 1 5 Since Symbol Months Year Years Inception Standard shares CSCSX 14.08% -5.56% -8.21 -3.94%
Despite strong consumer spending and an accommodating Fed monetary policy throughout the fiscal year ended June 30, 2003, the U.S. economy remained weak. In addition to ongoing economic and geopolitical anxieties, the majority of the period was characterized by muted corporate earnings, flat capital expenditures, and lower global demand and output. However, during the second half of the fiscal year, capital expenditures and corporate earnings started showing signs of improvement. U.S. stocks (as measured by the S&P 500 Index) moved in alternating directions from quarter to quarter during the fiscal year ended June 30, 2003. During the first three months of the period, stocks suffered their largest quarterly loss (-17%) since 1987. In the following three months, a strong GDP report and a surprise interest rate cut by the Fed set off a rally that pushed stock prices up more than 8%. In the first three months of 2003, the war in Iraq dominated people's minds, and stocks finished the quarter down 3%. However, the end of major combat action in Iraq sparked a rally where stocks rebounded more than 15% over the last three months of the period. All told, the S&P 500 Index ended the 12-month period relatively flat with a 0.25% gain. Small-cap growth stocks (as measured by the Russell 2000 Growth Index, the fund's benchmark) followed a similar pattern as the S&P 500 Index -- but with even greater quarter-to-quarter volatility. In the end, small-cap growth stocks finished the 12-month period with a small gain of 0.69%. The Citizens Small Cap Core Growth Fund (Standard shares) generated a -5.56% return during the fiscal year ended June 30, 2003. Our strategy was to invest in high-quality small-cap stocks. However, the general market trend during the period was that stocks of lower-quality companies (i.e., unprofitable, low-dollar-priced companies with weak balance sheets) experienced the most dramatic increases. This pattern was quite strong in the small-cap market during the period, as the most beaten-down stocks noticeably outperformed stocks of more fundamentally sound companies. Positive contributions to the fund's performance during the period came from our health care, industrials and consumer staples holdings. Within health care, our 6 CITIZENS SMALL CAP CORE GROWTH FUND equipment and services holdings in Integra LifeSciences and Thoratec Corp. performed strongly during the period. Within industrials, strong performers in commercial services and suppliers included Career Education and United Stationers Inc. Within consumer staples, good stock selection helped performance, as did our avoidance of Fleming Cos., an index holding that went bankrupt during the period. PERFORMANCE OVER TIME (AS OF 06/30/03) This chart shows performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over the same period for the index shown. [THE FOLLOWING WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL] Citizens Small Cap Russell 2000 Date Core Growth Growth Index ---- ------------------ ------------ 12/28/99 10,000 10,000 06/30/00 11,230 10,651 06/30/01 9,537 8,165 06/30/02 9,197 6,124 06/30/03 8,686 6,166 The biggest detractors from performance came within the technology and consumer discretionary sectors. In technology, our higher-quality holdings in both the software and services and the hardware and equipment industries underperformed more speculative issues. This was particularly noticeable during the rally late in the period. In the consumer discretionary sector, solid stock selection in automobiles and components and consumer durables and apparel were more than offset by weak performance from our media, restaurants, and retailing holdings. Our investments in both media and restaurants hurt performance, although they started to show improvement late in the fiscal year. In retailing, a number of our holdings suffered declines due to disappointing earnings, as a turnaround in consumer spending on retail goods was slow to materialize. We believe that the early stages of economic recovery are starting to take hold, and that the market will soon begin to take a longer-term view regarding companies offering strong long-term prospects. As the economy continues to improve, we feel that our commitment to holding quality companies should reward our shareholders to a greater degree. 7 PORTFOLIO REVIEW CITIZENS VALUE FUND Goal Long-term capital appreciation Strategy Invests mainly in stocks and other equities of U.S. large-capitalization companies Inception Dates Standard shares 06/13/96 Important Notes The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance does not guarantee future results. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. The index is unmanaged, and you cannot invest directly in it. When you sell your fund shares, they may be worth more or less than what you paid for them. Fee waivers were instituted in the past to maintain expense limits, without which returns would have been lower. The S&P 500 Index is an unmanaged index comprised of 500 common stocks chosen for market size, liquidity and industry group representation. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Auditors. (1) Includes performance of the fund's predecessor, the Meyers Pride Value Fund, for the periods prior to September 24, 2001. (2) According to Lipper Analytical Services, Inc., within the large value category for the period ended June 30, 2003, the fund's performance ranked it 125 out of 387 funds for one year, 278 out of 288 funds for three years, and 69 out of 207 funds for five years. AVERAGE ANNUAL RETURNS (AS OF 06/30/2003)
Ticker 6 1 5 Since Symbol Months Year Years Inception Standard shares(1) MYPVX 14.44% -1.14% 0.39% 5.71%
It was encouraging to see positive signs such as strong consumer spending and an accommodating Fed monetary policy throughout the period. However, those two factors alone were not enough to jump start a weak U.S. economy. In addition to ongoing economic and geopolitical anxieties, the majority of the year was characterized by low growth expectations, depressed corporate earnings, flat capital expenditures, and lower global demand and output. U.S. stocks (as measured by the S&P 500 Index) moved in alternating directions from quarter to quarter during the fiscal year ended June 30, 2003. During the first three months of the period, stocks suffered their largest quarterly loss (-17%) since 1987. In the following three months, a strong GDP report and a surprise interest rate cut by the Fed set off a rally that pushed stock prices up more than 8%. In the first three months of 2003, the war in Iraq dominated people's minds, and stocks finished the quarter down 3%. However, the end of major combat action in Iraq sparked a rally where stocks rebounded more than 15% over the last three months of the period. All told, the S&P 500 Index ended the 12-month period relatively flat with a 0.25% gain. Fiscal 2003 was a year of successful transition for Citizens Value Fund. In October 2002 Citizens Advisers began managing the fund in-house. Our approach is to use fundamental analysis to identify high-quality companies (i.e., those with healthy balance sheets and stable, more predictable earnings) that are selling at a discount to their peers or historic values. We believe this "quality value" style has excellent potential to be a rewarding investment strategy with a lower risk profile. The results over the last nine months of the period were encouraging. The fund made up much of its loss from the beginning of the fiscal year, finishing with a - -1.14% return for the 12 months ended June 30, 2003. This placed the fund in the top third of its large-cap value peer group(2) for the one year period. (The fund finished in the 97th percentile for three years and the 34th percentile for five years.) During the second half of the fiscal year the fund gained 14.44%, while its benchmark index, the S&P 500 Index, returned 11.76%. Good stock selection across most sectors 8 CITIZENS VALUE FUND enabled the fund to perform well over the six months ended June 30, 2003. Financials, health care, consumer discretionary and information technology were the top contributing sectors. The weakest sectors were telecomm services and energy. PERFORMANCE OVER TIME (AS OF 06/30/03) This chart shows performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over the same period for the index shown. [THE FOLLOWING WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL] Date Citizens Value Fund S&P 500 Index ---- ------------------- ------------- 06/13/96 10,000 10,000 06/30/96 9,740 10,029 06/30/97 12,350 13,509 06/30/98 14,506 17,584 06/30/99 17,893 21,585 06/30/00 19,209 23,150 06/30/01 23,325 19,716 06/30/02 14,966 16,170 06/30/03 14,795 16,210 For the full year the fund benefited both from stocks it held as well as from the stocks it avoided. The best performing stock for the year was Qualcomm, which we held during two periods of rapid appreciation. Qualcomm benefited from a resurgence of the wireless industry. The fund also benefited from owning AOL Time Warner and FleetBoston, two large companies whose shares were under pressure, but experienced nice recoveries during the year. Avoiding the shares of ExxonMobil, Boeing and Lockheed Martin also benefited the fund versus the S&P 500, because these socially rejected companies experienced significant market value declines during the 12-month period. Less successful investments made during the early part of the year included Calpine and Digital Lightwave. These were names that had fallen significantly in price at the time they were acquired. However, each of them continued to have financial and operational issues that precipitated further declines. The current quality value strategy seeks to avoid investing in highly distressed companies and these holdings were sold in October 2002 when the new strategy was put in place. Our outlook is positive for the Citizens Value Fund. We believe we are in the early stages of an economic recovery and that a disciplined, fundamentally driven value strategy should outperform over the long term. 9 PORTFOLIO REVIEW CITIZENS BALANCED FUND Goal Current income and capital appreciation Strategy Invests in a blend of stocks, bonds, and money market securities Inception Dates Standard shares 12/20/02 Important Notes The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance does not guarantee future results. All index and fund performance figures assume reinvestment of interest, dividends and distributions. Index results do not include costs of investing, which would lower performance. The index is unmanaged, and you cannot invest directly in it. When you sell your fund shares, they may be worth more or less than what you paid for them. Fee waivers are currently in effect and have been instituted in the past to maintain expense limits, without which returns would have been lower. The S&P 500 Index is an unmanaged index comprised of 500 common stocks chosen for market size, liquidity and industry group representation. The Lehman Brothers U.S. Aggregate Bond Index is an unmanaged index of taxable, investment- grade fixed-income securities, including government, corporate, mortgage and asset-backed securities. 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. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Auditors. (1) Blended Index is comprised of 60% S&P 500 Index and 40% Lehman Brothers U.S. Aggregate Bond Index. TOTAL RETURNS (AS OF 06/30/2003)
Ticker 6 1 5 Since Symbol Months Year Years Inception Standard shares N/A 5.29% N/A N/A 4.87%
Since the fund's inception on December 20, 2002, through June 30, 2003, both domestic equity and bond prices experienced gains. In the first three months of 2003, the war in Iraq dominated people's minds, and stocks (as measured by the S&P 500 Index) finished the quarter down 3%. However, the end of major combat action in Iraq sparked a rally where stocks rebounded more than 15% over the last three months of the period. During the last six months of fiscal 2003, the S&P 500 Index gained 11.76% and the Lehman Brothers U.S. Aggregate Bond Index gained 3.93%. The Citizens Balanced Fund generated a total return of 4.87% from its inception date through June 30, 2003, while its benchmark index, a blended index of 60% S&P 500 Index and 40% Lehman Brothers U.S. Aggregate Bond Index, gained 8.64%. Since the fund started we have taken a gradual but increasingly aggressive posture in allocating the portfolio between stocks and bonds. Our cautious pre-war stance shifted in a more opportunistic direction based on timely resolution of the conflict in Iraq. Believing that the economy would gradually recover and the market would move to the upside, we adjusted the fund's equity allocation from 66% on March 31, 2003, to 68.4% as of June 30, 2003. While our thesis of increasing our overweight to equities proved valid, our commitment to investing in high-quality stocks (i.e., companies with healthy balance sheets and stable, more predictable earnings) within higher-growth, economically sensitive sectors was not fully rewarded in the last six months of fiscal 2003. Stocks generated positive returns during that period. However, the most speculative issues generated the biggest gains. Positive contributions to performance in our equity holdings came from our underweighting to consumer staples, as that turned out to be one of the weakest performing (albeit, still positive) sectors of the S&P 500 Index during the last half of fiscal 2003. Stock selection was also strong within the sector, particularly in the food and staples retailing industry and household and personal products industry. Positive contributions also came from health care, where good stock selection in the pharmaceuticals and biotechnology industry created gains. 10 CITIZENS BALANCED FUND PERFORMANCE OVER TIME (AS OF 06/30/03) This chart shows performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over the same period for the index shown. [THE FOLLOWING WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL] Citizens Balanced Date Fund - Standard Balanced Index ---- ----------------- -------------- 12/20/02 10,000 10,000 12/31/02 9,960 9,998 03/31/03 9,735 9,864 06/30/03 10,487 10,864 Detractors from our equity performance came from our technology, telecommunications and consumer discretionary holdings. In technology, our overweighting versus the equity portion of the benchmark proved helpful. However, our holdings in the hardware and equipment industry and software and services industry underperformed. Our telecommunications holdings made a negative contribution to return, as some of the companies that faltered and were sold during the first calendar quarter of 2003 subsequently achieved strong performance during the following quarter. Within the consumer discretionary sector our overweighting in retailer Kohls detracted from performance, as lower sales figures and excess inventory created a loss for that holding. Not owning Best Buy also hurt, as the company's stock experienced a strong rebound based on its sell-off of unproductive business units and continued strong demand for electronics. Our commitment to the media industry detracted from performance. However, that industry started to show improvement late in the period. The fixed-income portion of the fund lagged the Lehman Brothers U.S. Aggregate Bond Index. This was due primarily to our underweighting in the corporate market versus the index, where both investment-quality and lower-quality higher-yield corporates outperformed higher-quality issues. As the asset size of the fund increases we plan to boost our allocation to investment-quality corporates, assuming market fundamentals continue to support such a move. We believe that the market will soon begin to take a longer-term view that discriminates between companies offering strong long-term prospects and those lacking solid fundamentals. When that happens, we feel that our commitment to holding quality companies should reward shareholders to a greater degree. 11 PORTFOLIO REVIEW CITIZENS GLOBAL EQUITY FUND Goal Capital appreciation Strategy Invests mainly in stocks and other equities of foreign and U.S. companies Inception Dates Standard shares 02/08/94 Institutional shares 11/01/99 Administrative shares 02/04/00 Important Notes The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance does not guarantee future results. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. The index is unmanaged, and you cannot invest directly in it. When you sell your fund shares, they may be worth more or less than what you paid for them. Fee waivers were instituted in the past to maintain expense limits, without which returns would have been lower. Investments in the Citizens Global Equity Fund involve risks of investing in foreign markets, including political instability and currency risks, excessive taxation, different financial and auditing standards, increased market volatility and other factors. The Morgan Stanley Capital International (MSCI) World Index is an unmanaged market capitalization weighted equity index of over 1,500 stocks traded in 22 world markets. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Auditors. AVERAGE ANNUAL RETURNS (AS OF 06/30/2003)
Ticker 6 1 5 Since Symbol Months Year Years Inception Standard shares WAGEX 4.94% -5.84% -1.88% 5.35% Institutional shares CGEIX 5.24% -5.21% N/A -10.97% Administrative shares CEADX 5.05% -5.52% N/A -21.50%
Over the first six to nine months of fiscal year 2003, stocks around the world struggled to make progress against a combination of slowing economic activity and growing economic and geopolitical anxieties. Much of the period was characterized by lower growth expectations, depressed corporate earnings, flat capital expenditures, and lower global demand and output. Until the last quarter or so, the monetary stimulus administered by global central banks appeared to have failed to jump start the global economy or boost global equity prices. More recently, there have been increasing signs of an incipient -- albeit anemic -- economic recovery. Throughout the fiscal year, global equity markets showed unprecedented quarterly volatility. After a near-panic rout in the first three months, global equity markets moved up sharply on a technical bounce only to languish again in the following three months on geopolitical concerns. A similar whiplash took place during the last three months of the period -- one which we believe marks a turning point in global markets. Despite a 17.04% gain in the last three months of the period, global equity markets (as measured by the MSCI World Index, the fund's benchmark index) were down -2.36% over the fiscal year ended June 30, 2003. Citizens Global Equity Fund (Standard shares) generated a return of -5.84% during this period. Investment themes developed during the period included our overweight in energy, where we favored natural gas companies that would benefit from capacity constraints and increased demand. We also looked to biotechnology in order to add higher growth potential within our health care allocation. In addition, we focused our telecommunications exposure on entrenched local carriers and wireless companies. During the period our best performing sectors included energy, information technology, and telecommunications. Within the energy sector EnCana was the best performing of our natural gas holdings. In telecommunications, Vodafone and Telefonica were standouts during the period. Other strong performers included two financial stocks, Citigroup and Amvescap -- each benefiting from the surge in global equity markets. In general, our defensive stocks within the utilities, materials and consumer staples 12 CITIZENS GLOBAL EQUITY FUND sectors performed resiliently under a difficult market backdrop. PERFORMANCE OVER TIME (AS OF 06/30/03) This chart shows performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over the same period for the index shown. [THE FOLLOWING WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL] Citizens Global Merrill Lynch 1-Year Date Equity - Standard Treasury Note Index ---- ----------------- -------------------- 02/08/94 10,000 10,000 06/30/94 9,800 9,942 06/30/95 10,758 11,002 06/30/96 12,107 13,031 06/30/97 14,734 15,934 06/30/98 17,939 18,647 06/30/99 21,946 21,569 06/30/00 33,648 24,199 06/30/01 22,312 19,287 06/30/02 17,328 16,352 06/30/03 16,317 15,966 Detractors from performance came from our holdings within the consumer discretionary and financials sectors. We held a number of stocks that underperformed for their own individual reasons. Sony's stock price suffered after it announced a profits warning toward the end of the period. In a disparate financials sector, Allianz and Mitsubishi Tokyo Financial failed to perform and were subsequently sold. In very volatile trading, companies like ASML Holding, which we view as an early recovery stock, moved to the downside, although it did start to show improvement during the rally late in the fiscal year. We are looking to the first half of fiscal 2004 to provide confirmation that the easing of monetary conditions around the world is indeed sufficient to stimulate economic growth. Should that occur, we expect psychology in equity markets worldwide to recover markedly. Coupled with better than anticipated earnings releases, we believe these signs will underpin further rallies from current levels. Accordingly, we are positioning the fund for what we expect to be better markets ahead and are retaining our overweights to the growth areas of technology and telecommunications in particular. 13 PORTFOLIO REVIEW CITIZENS INTERNATIONAL GROWTH FUND Goal Capital appreciation Strategy Invests mainly in stocks and other equities of foreign companies Inception Dates Standard shares 12/20/00 Important Notes The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance does not guarantee future results. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. The index is unmanaged, and you cannot invest directly in it. When you sell your fund shares, they may be worth more or less than what you paid for them. Fee waivers were instituted in the past and during the report period to maintain expense limits, without which returns would have been lower. Investments in the Citizens International Growth Fund involve risks of investing in foreign markets, including political instability and currency risks, excessive taxation, different financial and auditing standards, increased market volatility and other factors. The MSCI EAFE Index is an unmanaged index of foreign stock funds and is an aggregate of 21 individual country indices that collectively represent many of the major markets of the world. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Auditors. AVERAGE ANNUAL RETURNS (AS OF 06/30/2003)
Ticker 6 1 5 Since Symbol Months Year Years Inception Standard shares N/A 4.26% -9.06 N/A -17.67%
Over the first six to nine months of the fiscal year ended June 30, 2003, stock markets around the world struggled to make progress against a combination of slowing economic activity and growing economic and geopolitical anxieties. Much of the period was characterized by lower growth expectations, depressed corporate earnings, flat capital expenditures, and lower global demand and output. Until the last quarter or so, the monetary stimulus administered by global central banks appeared to have failed to jump start the economy or boost equity prices. More recently, there have been increasing signs of an incipient - -- albeit anemic -- economic recovery. Throughout the fiscal year, foreign equity markets showed unprecedented quarterly volatility. After a near-panic rout in first three months, global equity markets moved up sharply on a technical bounce only to languish in the following three months on geopolitical concerns. A similar whiplash took place during the last three months of the period -- one which we believe marks a turning point in international markets. Despite a 19.27% gain over the last three months of the period, foreign equity markets (as measured by the MSCI EAFE Index, the fund's benchmark index) were down -6.43% over the 12-month period. Citizens International Growth Fund (Standard shares) generated a return of - -9.06% during this period. In large part, this underperformance can be attributed to our focus on high-quality, large-cap companies (i.e., companies with healthy balance sheets and stable, more predictable earnings) during a period in which more speculative companies led the fledgling recovery. Although growth-oriented sectors such as technology began to recover toward the end of the period, in general more defensive value stocks performed better. Positive contributions to the fund's return came from our overweight to energy. EnCana and Precision Drilling did well -- both offering exposure to natural gas prices. Both oil and natural gas surged over the 12-month period, mainly on supply/demand imbalances. Other positive sector performance came from the basic materials and 14 CITIZENS INTERNATIONAL GROWTH FUND utilities areas, where strong commodity prices and lower interest rates respectively helped buoy financial performance. PERFORMANCE OVER TIME (AS OF 06/30/03) This chart shows performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over the same period for the index shown. [THE FOLLOWING WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL] Citizens MSCI Date International Growth EAFE Index ---- -------------------- ---------- 12/20/00 10,000 10,000 06/30/01 8,220 8,688 06/30/02 6,730 7,863 06/30/03 6,120 8,129 Our overweight to technology detracted from performance over the 12 months, despite having racked up gains in the last quarter of the fiscal year. We increased our exposure when prices were falling during the first three months of the period. However, technology stocks -- and in particular the semi-conductor industry -- have remained quite volatile. We are retaining our overweight in this sector given that a recovery in levels of capital expenditure is already being seen, albeit unevenly. We are looking to the first half of fiscal 2004 to provide confirmation that the easing of monetary conditions around the world is indeed sufficient to stimulate economic growth. Should that occur, we expect psychology in equity markets worldwide to recover markedly. Coupled with better than anticipated earnings releases, we believe these signs will underpin further rallies from current levels. Accordingly, we are positioning the fund for better markets ahead and are retaining our overweights to the growth areas of technology and telecommunications in particular. 15 PORTFOLIO REVIEW CITIZENS INCOME FUND Goal Current income and monthly dividend payment Strategy Invests mainly in bonds and mortgage-backed securities Inception Dates Standard shares 06/10/92 Important Notes The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance does not guarantee future results. All index and fund performance figures assume reinvestment of interest, dividends and distributions. Index results do not include costs of investing, which would lower performance. The index is unmanaged, and you cannot invest directly in it. When you sell your fund shares, they may be worth more or less than what you paid for them. Fee waivers were instituted in the past to maintain expense limits, without which returns would have been lower. The Lehman Brothers U.S. Aggregate Bond Index is an unmanaged index of taxable, investment-grade fixed-income securities, including government, corporate, mortgage and asset-backed securities. 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. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Auditors. AVERAGE ANNUAL RETURNS (AS OF 06/30/2003)
Ticker 6 1 5 Since Symbol Months Year Years Inception Standard shares WAIMX 5.67% 11.28% 4.38% 5.74%
Throughout the fiscal year ended June 30, 2003, interest rates have trended downward in reaction to an ongoing effort by the Federal Reserve Bank to restart the economy. The federal funds rate (the rate banks charge each other for overnight loans) declined from 1.75% in June 2002 to 1.00% at the end of the fiscal year, marking a 40-year low. Strong consumer spending and an accommodating Fed monetary policy were positives throughout the period. However, those two factors alone were not enough to jump start a weak U.S. economy. In addition to ongoing economic and geopolitical anxieties, the majority of the year was characterized by low growth expectations, depressed corporate earnings, flat capital expenditures, and lower global demand and output. While declining interest rates pushed yields on bond funds lower over the past year, they have had a positive impact on the total return investors have earned on bond fund investments. For the fiscal year ended June 30, 2003, the Citizens Income Fund generated a total return of 11.28%, outperforming its benchmark index, the Lehman Brothers U.S. Aggregate Bond Index, which gained 10.40%. Our thesis early in the fiscal year was that corporate spreads (the difference between yields on corporate bonds and U.S. Treasury bonds) were too wide and that corporate bonds in general were undervalued. Therefore, we increased our corporate exposure to take advantage of this market condition. After a slow start through the summer of 2002, the corporate bond market experienced one of its best performing periods in two decades, signaling an upturn in profit growth over the next 12 months. Within the corporate market, we were overweighted in financials, cable, and telecommunications versus the benchmark index. These sectors performed well during the period due to a number of factors, including improving balance sheets, cost-cutting measures, and improvements in productivity. Specifically, the fund holdings that performed well included Bear Stearns and Goldman Sachs in the financials sector, Comcast and Cox in the cable industry, and Verizon in the telecommunications sector. 16 CITIZENS INCOME FUND PERFORMANCE OVER TIME (AS OF 06/30/03) This chart shows performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over the same period for the index shown. [THE FOLLOWING WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL] Citizens Lehman Brothers Date Income U.S. Aggregate Bond Index ---- -------- ------------------------- 06/10/92 10,000 10,000 06/30/92 10,080 10,117 06/30/93 11,096 11,310 06/30/94 11,100 11,162 06/30/95 12,255 12,563 06/30/96 12,927 13,193 06/30/97 14,163 14,268 06/30/98 15,649 15,773 06/30/99 15,770 16,269 06/30/00 16,298 17,011 06/30/01 17,579 18,922 06/30/02 17,427 20,554 06/30/03 19,393 22,872 At different points throughout the fiscal year, there were various factors that detracted from performance. Being underweight in mortgage-backed securities and Treasuries had a negative impact during a flight-to-quality in bond markets during July and August 2002. Our underweighting in lower-quality, higher-yielding corporates also was a detractor, as that sector of the bond market performed strongly throughout most of the 12-month period ended June 30, 2003. Despite these short-term challenges, the portfolio generated strong risk-managed returns during the fiscal year. We believe that improving corporate balance sheets and a gradually improving economic picture will be some of the key factors influencing the fixed-income market in the first half of fiscal 2004. That said, it is our opinion that the Fed appears unlikely to raise interest rates until there are clear signs of a stronger and sustainable economic recovery. Within this environment, we will remain cautious as we look for opportunities to increase yield while attempting to minimize share price volatility. 17 PORTFOLIO REVIEW CITIZENS ULTRA SHORT BOND FUND Goal High level of current income consistent with preservation of capital Strategy Invests mainly in short-duration investment-grade securities Inception Dates Standard shares 11/21/02 Important Notes The table and graph do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance does not guarantee future results. All index and fund performance figures assume reinvestment of dividends and distributions. Index results do not include costs of investing, which would lower performance. The index is unmanaged, and you cannot invest directly in it. When you sell your fund shares, they may be worth more or less than what you paid for them. Fee waivers are currently in effect and have been instituted in the past to maintain expense limits, without which returns would have been lower. The Merrill Lynch 1-Year Treasury Note Index is an unmanaged index that tracks the performance of U.S. Treasury notes with maturities of approximately one year. The index is produced by Merrill Lynch, Pierce, Fenner & Smith, Inc. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Auditors. TOTAL RETURNS (AS OF 06/30/2003)
Ticker 6 1 5 Since Symbol Months Year Years Inception Standard shares N/A 1.58% N/A N/A 2.12%
Throughout the fiscal year ended June 30, 2003, interest rates have trended downward in reaction to an ongoing effort by the Federal Reserve Bank to restart the economy. The federal funds rate (the rate banks charge each other for overnight loans) declined from 1.75% in June 2002 to 1.00% at the end of the fiscal year, marking a 40-year low. Strong consumer spending and an accommodating Fed monetary policy were positives throughout the period. However, those two factors alone were not enough to jump start a weak U.S. economy. In addition to ongoing economic and geopolitical anxieties, the majority of the year was characterized by low growth expectations, depressed corporate earnings, flat capital expenditures, and lower global demand and output. Since the inception of the fund on November 21, 2002, short-term interest rates declined in reaction to a reduction of the federal funds rate. The yield on the Merrill Lynch 1-Year Treasury Note Index (the fund's benchmark index) fell from 1.52% in the beginning of December 2002 to 1.05% as of June 30, 2003. While declining rates have negatively impacted the fund's yield, they had a positive impact on the total return of the fund. During this historically low interest rate environment, the 30-day yield on the Citizens Ultra Short Bond Fund (Standard shares) stood at 1.56% as of June 30, 2003. Since its inception on November 21, 2002 through June 30, 2003, the fund generated a total return of 2.12%, outperforming its benchmark index, which gained 1.27%. Since its inception, the fund's strategy has been to focus on share price stability as well as increasing yield when possible. This was achieved by owning low-duration, high-quality corporate bonds and asset-backed securities. In particular, our corporate exposure made a strong contribution to the fund's yield and total return since inception. Also, the fund's asset-backed securities outperformed U.S. Treasuries and government agency issues. Other funds have benefited from buying higher-yielding, lower-quality securities. Avoiding these types of issues has hampered fund performance to some degree, as the 18 CITIZENS ULTRA SHORT BOND FUND market has favored more speculative issues during the last two quarters of the fiscal year. Going forward, we plan to continue to stay clear of lower-quality issues due to their increased credit risk and their potential negative impact on the fund's share price in the event of a default. PERFORMANCE OVER TIME (AS OF 06/30/03) This chart shows performance since inception of a $10,000 hypothetical investment in the fund's Standard shares, compared with the performance over the same period for the index shown. [THE FOLLOWING WAS REPRESENTED BY A MOUNTAIN CHART IN THE PRINTED MATERIAL] Citizens Ultra Merrill Lynch 1-Year Date Short Bond Fund Treasury Note Index ---- --------------- -------------------- 11/30/02 10,000 10,000 12/31/02 10,053 10,039 03/31/03 10,139 10,083 06/30/03 10,212 10,127 We believe that improving corporate balance sheets and a gradually improving economic picture will be some of the key factors influencing the fixed-income market in the first half of fiscal 2004. That said, it appears that the Fed is unlikely to raise interest rates until there are clear signs of a stronger and sustainable economic recovery. Within this environment, we will remain cautious as we look for opportunities to pick up yield while attempting to minimize share price volatility. 19 PORTFOLIO REVIEW CITIZENS MONEY MARKET FUND Goal Current income consistent with safety and liquidity Strategy Invests exclusively in money market instruments Inception Dates Standard shares 08/30/83 Institutional shares 02/01/96 Important Notes The table does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance does not guarantee future results. When you sell your fund shares, they may be worth more or less than what you paid for them. Investments in the Citizens Money Market Fund are not insured or guaranteed by the FDIC or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund. Information contained in the Portfolio Review is not audited and therefore is excluded from the Report of Independent Auditors. AVERAGE ANNUAL RETURNS (AS OF 06/30/2003)
Ticker 6 1 5 10 Since Symbol Months Year Years Years Inception Standard shares WKAXX 0.22% 0.65% 3.25% 3.65% N/A Institutional shares WAIXX 0.35% 0.95% 3.57% N/A 4.08%
Throughout the fiscal year ended June 30, 2003, interest rates trended downward in reaction to an ongoing effort by the Federal Reserve Bank to restart the economy. The federal funds rate (the rate banks charge each other for overnight loans) declined from 1.75% in June 2002 to 1.00% at the end of the fiscal year, marking a 40-year low. In reaction to the Fed lowering rates, the yields offered by money market instruments also continued to fall throughout the fiscal year. Commercial paper rates in general have taken a very similar path as the federal funds rate, dropping from approximately 1.75% in June 2002 to approximately 0.99% in June 2003. One of the most significant factors impacting all money market funds during the period was the 50 basis point interest rate cut by the Fed in November 2002. This hurt performance because most of the investment community did not expect such a large cut in the Fed funds rate. During this historically low interest rate environment, the seven-day simple yield on the Citizens Money Market Fund (Standard shares) moved from 0.94% as of June 30, 2002, to 0.36% as of June 30, 2003. Over the 12-month period the fund's Standard shares had a total return of 0.65%. The fund's strategy during the period remained focused on investing in high-quality securities of socially responsible companies, avoiding those with credit and headline risk, and keeping the fund's weighted average maturity in line with that of its peers. We believe that improving corporate balance sheets and a gradually improving economic picture will be some of the key factors influencing the fixed-income market in the first half of fiscal 2004. That said, it appears that the Fed is unlikely to raise rates until there are clear signs of a stronger and sustainable economic recovery. Within this environment, we will remain cautious as we look for opportunities to pick up yield while staying relatively close to the weighted average maturity of our peers. 20 REPORT OF INDEPENDENT AUDITORS To the Shareholders and Trustees of Citizens Funds: In our opinion, the accompanying statements of assets and liabilities, including the portfolio holdings, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Citizens Core Growth Fund, Citizens Emerging Growth Fund, Citizens Small Cap Core Growth Fund, Citizens Value Fund, Citizens Balanced Fund, Citizens Global Equity Fund, Citizens International Growth Fund, Citizens Income Fund, Citizens Ultra Short Bond Fund and Citizens Money Market Fund (the "Funds") at June 30, 2003, the results of each of their operations, the changes in each of their net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at June 30, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Columbus, Ohio August 15, 2003 21 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Core Growth Fund Security Shares Value($) - -------------------------------------------------------------------------------- COMMON STOCKS - 97.7% Air Freight - 1.6% FedEx Corp. 93,060 5,773 Airlines - 0.6% Southwest Airlines Co. 116,000 1,995 Banks - 1.7% Bank of America Corp. 44,000 3,477 PNC Bank Corp. 54,000 2,636 -------- 6,113 Biotechnology - 4.4% Amgen, Inc. (a) 134,150 8,912 Cephalon, Inc. (a) 60,000 2,470 Gilead Sciences, Inc. (a) 48,000 2,668 Millenium Pharmaceuticals, Inc. (a) 87,000 1,369 -------- 15,419 Broadcasting - 3.0% Clear Channel Communications, Inc. (a) 188,000 7,969 Fox Entertainment Group, Inc., Class A (a) 95,000 2,734 -------- 10,703 Computers - 12.8% Dell Computer Corp. (a) 106,500 3,404 Intel Corp. 257,200 5,346 International Business Machines Corp. 67,000 5,527 Mercury Interactive Corp. (a) 66,000 2,548 Microsoft Corp. 492,100 12,602 Oracle Corp. (a) 381,000 4,580 Seagate Technology (a) 160,000 2,824 Symantec Corp. (a) 57,700 2,531 Veritas Software Corp. (a) 92,000 2,638 Yahoo!, Inc. (a) 88,000 2,883 -------- 44,883 Electronics - 7.7% Adobe Systems, Inc. 145,000 4,651 Analog Devices, Inc. (a) 88,000 3,064 Broadcom Corp., Class A (a) 107,000 2,665 Cisco Systems, Inc. (a) 201,900 3,370 Electronic Arts, Inc. (a) 24,000 1,776 Flextronics International (a) 336,000 3,492 Juniper Networks, Inc. (a) 133,000 1,645 Marvel Technology Group, Ltd. (a) 58,000 1,993 Maxim Integrated Products, Inc. 75,000 2,564 Texas Instruments, Inc. 99,000 1,742 -------- 26,962 Energy & Utilities - 5.4% Apache Corp. 41,600 2,706 Baker Hughes, Inc. 77,000 2,585 BJ Services Co. (a) 67,000 2,503 ConocoPhillips 63,000 3,452 Devon Energy Corp. 50,000 2,670 EOG Resources, Inc. 86,000 3,599 Vulcan Power Co., Class A (a) (b) 40,000 -- Weatherford International, Ltd. (a) 38,739 1,623 -------- 19,138 Entertainment - 3.5% AOL Time Warner, Inc. (a) 461,000 7,417 Comcast Corp., Class A (a) 53,000 1,600 Viacom, Inc. (a) 78,424 3,424 -------- 12,441 Financial - Diversified - 9.8% American Express Co. 124,945 5,224 Citigroup, Inc. 286,700 12,270 J.P.Morgan Chase & Co. 130,000 4,443 Janus Capital Group, Inc. 160,000 2,624 Legg Mason, Inc. 27,000 1,754 Mellon Financial Corp. 65,000 1,804 State Street Corp. 67,000 2,640 Wells Fargo & Co. 75,000 3,780 -------- 34,539 Foods - 3.8% Campbell Soup Co. 141,000 3,455 PepsiCo, Inc. 180,500 8,032 Wm.Wrigley Jr. Co. 31,000 1,743 -------- 13,230 Health Care - 15.1% AmerisourceBergen Corp. 39,000 2,705 Barr Laboratories, Inc. (a) 56,000 3,668 Boston Scientific Corp. (a) 26,500 1,619 Eli Lilly & Co. 64,900 4,476 Express Scripts, Inc. (a) 27,000 1,845 Johnson & Johnson, Inc. 102,948 5,321 Medtronic, Inc. 53,338 2,559 Merck & Co., Inc. 61,000 3,694 Mylan Laboratories, Inc. 53,000 1,843 Pfizer, Inc. 492,200 16,808 St. Jude Medical, Inc. (a) 32,000 1,840 UnitedHealth Group, Inc. 94,000 4,723 WellPoint Health Networks, Inc. (a) 20,000 1,686 -------- 52,787 See Financial Notes 22 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Core Growth Fund (cont.) Security Shares Value($) - -------------------------------------------------------------------------------- Insurance - 4.3% American International Group, Inc. 167,934 9,267 Willis Group Holdings, Ltd. 78,700 2,420 XL Capital, Ltd. 41,000 3,403 -------- 15,090 Investment Banking & Brokerage - 1.0% The Goldman Sachs Group, Inc. 40,000 3,350 Leisure - 0.5% Harley-Davidson, Inc. 44,000 1,754 Manufacturing - 3.6% 3M Co. 84,300 10,873 Illinois Tool Works, Inc. 28,000 1,844 -------- 12,717 Personal Care - 2.5% Colgate-Palmolive Co. 88,800 5,146 Gillette Co. 110,000 3,505 -------- 8,651 Publishing - 1.0% Gannett Co., Inc. 45,800 3,518 Restaurants - 1.3% Brinker International, Inc. (a) 76,000 2,738 YUM! Brands, Inc. (a) 63,000 1,862 -------- 4,600 Retail - 5.9% Costco Wholesale Corp. (a) 118,400 4,334 eBay, Inc. (a) 18,000 1,875 InterActiveCorp, Inc. (a) 98,096 3,882 Kohl's Corp. (a) 35,700 1,834 Target Corp. 94,000 3,557 Tiffany & Co. 53,000 1,732 Walgreen Co. 121,200 3,648 -------- 20,862 Services - 4.9% Apollo Group, Inc., Class A (a) 62,000 3,829 Cendant Corp. (a) 336,000 6,155 First Data Corp. 42,000 1,740 Fiserv, Inc. (a) 73,000 2,600 Paychex, Inc. 88,000 2,579 -------- 16,903 Telecommunications - 3.3% Amdocs, Ltd. (a) 111,600 2,678 Nextel Communications, Inc. (a) 141,000 2,549 QUALCOMM, Inc 81,000 2,896 Verizon Communications, Inc. 88,000 3,472 -------- 11,595 -------- Total Common Stocks 343,023 Cost:$296,814 Security, Rate, Maturity Date Principal($) Value($) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 1.6% Fifth Third Bank, 0.95%, 07/01/03 (Proceeds at maturity $5,735, collateralized by Federal Home Loan Mortgage Corporation security, 5.00%, 10/15/31) Cost: $5,735 5,735 5,735 -------- TOTAL INVESTMENTS - 99.3% 348,758 Cost: $302,549 (c) Percentages indicated are based on net assets of $351,336. (a) Non-income producing security. (b) Restricted security constituting 0.00% of net assets which may not be publicly sold without registration under the Securities Act of 1933. This security is valued at its fair value as determined in good faith under consistently applied procedures under the general supervision of the Trust's Board of Trustees. Additional information on the security is as follows: Acquisition Date: March 3, 1995 Cost: $300 Value: $0 (c) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $9,488. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $43,385 Unrealized depreciation (6,664) ------- Net unrealized appreciation $36,721 23 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Emerging Growth Fund Security Shares Value($) - -------------------------------------------------------------------------------- COMMON STOCKS - 100.0% Airlines - 2.3% Jetblue Airways Corp. (a) 92,300 3,903 Biotechnology - 8.8% Allergan, Inc. 33,600 2,591 Gilead Sciences, Inc. (a) 59,200 3,290 IDEC Pharmaceuticals Corp. (a) 21,500 731 MedImmune, Inc. (a) 56,600 2,059 Millenium Pharmaceuticals, Inc. (a) 228,465 3,593 Neurocrine Biosciences, Inc. (a) 55,686 2,781 -------- 15,045 Computers - 13.0% Cognos, Inc. ADR (a) 84,600 2,284 Hyperion Solutions Corp. (a) 52,000 1,756 Intuit, Inc. (a) 21,000 935 Mercury Interactive Corp. (a) 81,212 3,136 Network Associates, Inc. (a) 162,100 2,055 Pixar, Inc. (a) 29,760 1,811 Seagate Technology (a) 160,000 2,824 Symantec Corp. (a) 36,200 1,588 Veritas Software Corp. (a) 90,000 2,580 Yahoo!, Inc. (a) 104,600 3,426 -------- 22,395 Construction - 0.9% Standard Pacific Corp. 48,700 1,615 Electrical Equipment - 2.0% Fairchild Semiconductor Corp. (a) 67,930 869 Symbol Technologies, Inc. 203,481 2,647 -------- 3,516 Electronics - 18.1% Adobe Systems, Inc. 91,300 2,928 Analog Devices, Inc. (a) 56,890 1,981 Broadcom Corp., Class A (a) 125,500 3,126 Conexant Systems, Inc. (a) 427,000 1,751 Electronic Arts, Inc. (a) 33,700 2,493 Flextronics International (a) 168,800 1,754 International Rectifier Corp. (a) 31,900 856 Intersil Corp., Class A (a) 87,800 2,336 Jabil Circuit, Inc. (a) 89,600 1,980 Juniper Networks, Inc. (a) 130,200 1,611 Linear Technology Corp. 47,600 1,533 Marvel Technology Group, Ltd. (a) 83,600 2,873 Maxim Integrated Products, Inc. 37,500 1,282 Qlogic Corp. (a) 34,700 1,677 Sandisk Corp. (a) 69,700 2,812 -------- 30,993 Energy & Utilities - 3.8% Devon Energy Corp. 33,488 1,788 Noble Energy, Inc. 39,928 1,509 Smith International, Inc. (a) 39,588 1,454 Weatherford International, Ltd. (a) 44,359 1,860 -------- 6,611 Financial - Diversified - 2.7% Jefferies Group, Inc. 70,300 3,501 The Bear Stearns Cos., Inc. 16,300 1,180 -------- 4,681 Health Care - 9.8% AdvancePCS (a) 74,200 2,837 Cytyc Corp. (a) 273,400 2,876 SICOR, Inc. (a) 82,500 1,678 St. Jude Medical, Inc. (a) 36,600 2,105 Trimeris, Inc. (a) 76,800 3,508 WellPoint Health Networks, Inc. (a) 45,500 3,835 -------- 16,839 Insurance - 4.1% Anthem, Inc. (a) 31,500 2,430 W.R.Berkley Corp. 52,227 2,753 Willis Group Holdings, Ltd. 60,400 1,857 -------- 7,040 Investment Banking & Brokerage - 2.2% Affiliated Managers Group, Inc. (a) 62,080 3,784 Leisure - 1.5% Harley-Davidson, Inc. 65,000 2,591 Multimedia - 4.2% Cox Radio, Inc., Class A (a) 147,600 3,411 Emmis Communications Corp., Class A (a) 163,900 3,762 -------- 7,173 Restaurants - 1.8% Brinker International, Inc. (a) 48,400 1,743 YUM! Brands, Inc. (a) 46,315 1,369 -------- 3,112 Retail - 8.5% Abercrombie & Fitch Co. (a) 59,500 1,690 Bed Bath & Beyond, Inc. (a) 39,300 1,525 Claire's Stores, Inc. 58,100 1,473 Costco Wholesale Corp. (a) 54,000 1,976 Fastenal Co. 76,400 2,594 Hasbro, Inc. 106,000 1,854 Tiffany & Co. 105,300 3,442 -------- 14,554 See Financial Notes 24 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Emerging Growth Fund (cont.) Security Shares Value($) - -------------------------------------------------------------------------------- Services - 12.6% Apollo Group, Inc., Class A (a) 41,600 2,569 Career Education Corp. (a) 54,200 3,708 Corporate Executive Board Co. (a) 61,700 2,519 Fiserv, Inc. (a) 72,800 2,592 FTI Consulting, Inc. (a) 140,800 3,516 Getty Images, Inc. (a) 43,800 1,809 Kroll, Inc. (a) 4,062 110 Lamar Advertising Co. (a) 69,600 2,451 Paychex, Inc. 83,003 2,433 -------- 21,707 Telecommunications - 3.7% Amdocs, Ltd. (a) 88,200 2,117 Nextel Communications, Inc. (a) 138,300 2,500 UTStarcom, Inc. (a) 48,600 1,729 -------- 6,346 -------- Total Common Stocks 171,905 Cost: $154,844 Security, Rate, Maturity Date Principal($) Value($) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 3.1% Fifth Third Bank, 0.95%, 07/01/03 (Proceeds at maturity $5,307, collateralized by Federal National Mortgage Bank security, 7.00%, 12/01/17) Cost: $5,307 5,307 5,307 -------- TOTAL INVESTMENTS - 103.1% $177,212 Cost: $160,151 (b) Percentages indicated are based on net assets of $171,851. (a) Non-income producing security. (b) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $2,293. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $17,884 Unrealized depreciation (3,115) ------- Net unrealized appreciation $14,769 ADR - American Depositary Receipt Citizens Small Cap Core Growth Fund Security Shares Value($) - -------------------------------------------------------------------------------- COMMON STOCKS - 99.9% Airlines - 2.3% Jetblue Airways Corp. (a) 9,780 414 Banks - 4.1% East West Bancorp, Inc. 10,270 371 Hudson United Bancorp 6,320 216 UCBH Holdings, Inc. 4,860 139 -------- 726 Biotechnology - 3.1% Exact Sciences Corp. (a) 16,350 179 Neurocrine Biosciences, Inc. (a) 5,794 289 SangStat Medical Corp. (a) 6,700 88 -------- 556 Computers - 11.3% Cognos, Inc. ADR (a) 8,300 224 Embarcadero Technologies, Inc. (a) 36,630 256 Hutchinson Technology, Inc. (a) 12,400 408 Hyperion Solutions Corp. (a) 5,800 196 Magma Design Automation, Inc. (a) 13,670 234 Mercury Interactive Corp. (a) 2,230 86 Network Associates, Inc. (a) 17,870 227 Synaptics, Inc. (a) 27,900 376 -------- 2,007 Electrical Equipment - 4.0% Fairchild Semiconductor Corp. (a) 18,290 234 Mindspeed Technologies, Inc. (a) 4,634 13 Symbol Technologies, Inc. 22,324 290 Wilson Greatbatch Technologies, Inc. (a) 5,100 184 -------- 721 Electronics - 15.1% Chippac, Inc. (a) 48,800 374 Conexant Systems, Inc. (a) 68,600 281 Daktronics, Inc. (a) 14,270 233 Integrated Circuit Systems, Inc. (a) 11,270 354 International Rectifier Corp. (a) 8,740 234 Intersil Corp., Class A (a) 12,500 333 Photon Dynamics, Inc. (a) 9,900 274 Sandisk Corp. (a) 6,930 280 Zoran Corp. (a) 15,820 304 -------- 2,667 Energy & Utilities - 4.4% Newfield Exploration Co. (a) 8,790 330 Precision Drilling Corp. (a) 6,690 253 Western Gas Resources, Inc. 5,050 200 -------- 783 25 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Small Cap Core Growth Fund (cont.) Security Shares Value($) - -------------------------------------------------------------------------------- Financial - Diversified - 2.7% BOK Financial Corp. (a) 2,538 98 Jefferies Group, Inc. 7,790 388 -------- 486 Health Care - 13.2% American Medical Systems Holdings, Inc. (a) 22,500 379 Cytyc Corp. (a) 32,200 339 Merit Medical Systems, Inc. (a) 17,810 356 SICOR, Inc. (a) 6,300 128 The Medicines Co. (a) 6,500 128 Therasense, Inc. (a) 36,720 367 Thoratec Corp. (a) 20,180 301 Trimeris, Inc. (a) 7,730 353 -------- 2,351 Insurance - 1.9% W.R.Berkley Corp. 6,453 340 Investment Banking & Brokerage - 2.4% Affiliated Managers Group, Inc. (a) 6,937 423 Manufacturing - 6.2% A.O. Smith Corp. 9,520 268 Applied Films Corp. (a) 11,740 304 BorgWarner, Inc. 2,830 182 Pentair, Inc. 3,450 135 Ryland Group, Inc. 3,205 222 -------- 1,111 Multimedia - 4.2% Cox Radio, Inc., Class A (a) 15,460 357 Emmis Communications Corp., Class A (a) 17,200 395 -------- 752 Restaurants - 5.0% Brinker International, Inc. (a) 5,310 191 Jack in the Box, Inc. (a) 16,700 372 RARE Hospitality International, Inc. (a) 10,180 333 -------- 896 Retail - 5.6% Aeropostale, Inc. (a) 8,200 176 Claire's Stores, Inc. 6,450 164 Fastenal Co. 8,410 285 The Men's Wearhouse, Inc. (a) 17,100 374 -------- 999 Services - 11.1% Career Education Corp. (a) 6,180 424 Coinstar, Inc. (a) 5,430 102 Corporate Executive Board Co. (a) 9,030 366 Documentum, Inc. (a) 9,770 192 FTI Consulting, Inc. (a) 14,830 370 Getty Images, Inc. (a) 4,700 194 Kroll, Inc. (a) 838 23 Overture Services, Inc. (a) 17,400 315 -------- 1,986 Telecommunications - 1.7% Commonwealth Telephone Enterprises, Inc. (a) 4,150 183 Tekelec (a) 10,890 123 -------- 306 Waste Management - 1.6% Waste Connections, Inc. (a) 8,130 285 -------- Total Common Stocks 17,809 Cost: $16,011 Security, Rate, Maturity Date Principal($) Value($) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 3.4% Fifth Third Bank, 0.95%, 07/01/03 (Proceeds at maturity $599, collateralized by Federal National Mortgage Association security, 6.50%, 08/01/14) Cost: $599 599 599 -------- TOTAL INVESTMENTS - 103.3% 18,408 Cost: $16,610 (b) Percentages indicated are based on net assets of $17,821. (a) Non-income producing security. (b) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $171. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $1,790 Unrealized depreciation (163) ------ Net unrealized appreciation $1,627 ADR - American Depositary Receipt See Financial Notes 26 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Value Fund Security Shares Value($) - -------------------------------------------------------------------------------- COMMON STOCKS - 99.1% Air Freight - 2.2% FedEx Corp. 5,800 360 Auto Manufacturers - 0.5% PACCAR, Inc. 1,235 83 Banks - 3.2% BB&T Corp. 4,700 161 U.S.Bancorp 14,500 355 -------- 516 Chemicals - 1.9% Engelhard Corp. 3,800 94 Praxair, Inc. 3,670 221 -------- 315 Computers - 13.2% Automatic Data Processing 10,500 356 Hewlett-Packard Co. 25,790 549 Intel Corp. 23,080 480 Microsoft Corp. 25,000 640 Synopsys, Inc. (a) 1,600 99 -------- 2,124 Construction - 2.5% Lafarge North America, Inc. 3,300 102 Masco Corp. 12,400 296 -------- 398 Consumer Finance - 0.5% Capital One Financial Corp. 1,740 86 Consumer Products - 2.7% Kimberly-Clark Corp. 8,520 444 Electronics - 1.9% Intersil Corp., Class A (a) 3,100 82 SPX Corp. (a) 5,020 222 -------- 304 Energy & Utilities - 6.1% Anadarko Petroleum Corp. 3,600 160 Apache Corp. 1,500 98 Burlington Resources, Inc. 2,230 121 ConocoPhillips 7,900 433 KeySpan Corp. 2,200 78 Valero Energy Corp. 2,600 94 -------- 984 Entertainment - 1.7% Viacom, Inc. (a) 6,330 276 Financial - Diversified - 16.6% Citigroup, Inc. 11,700 500 Fannie Mae 3,500 236 FleetBoston Financial Corp. 17,500 519 Freddie Mac 9,000 457 J.P.Morgan Chase & Co. 7,100 243 MBNA Corp. 15,900 331 The Bear Stearns Cos., Inc. 1,100 80 Washington Mutual, Inc. 7,600 314 -------- 2,680 Foods - 4.1% H.J. Heinz Co. 6,800 224 Pepsi Bottling Group, Inc. 5,700 114 Sara Lee Corp. 17,080 322 -------- 660 Health Care - 7.7% Baxter International, Inc. 15,140 393 Becton, Dickinson & Co. 5,710 222 CIGNA Corp. 1,600 75 Guidant Corp. 8,200 364 Laboratory Corporation of America Holdings (a) 4,300 130 Tenet Healthcare Corp. (a) 5,900 69 -------- 1,253 Insurance - 5.2% Anthem, Inc. (a) 2,100 162 Fidelity National Financial Corp. 3,850 118 Hartford Financial Services Group, Inc. 4,800 242 The Allstate Corp. 9,050 323 -------- 845 Manufacturing - 2.8% Deere & Co. 4,700 215 Eaton Corp. 1,010 79 ITT Industries, Inc. 1,300 85 Pactiv Corp. (a) 4,200 83 -------- 462 Pharmaceuticals - 4.6% Bristol-Myers Squibb Co. 17,900 486 McKesson Corp. 7,500 268 -------- 754 Publishing - 2.9% Gannett Co., Inc. 3,200 246 McGraw-Hill Cos., Inc. 3,500 217 -------- 463 Restaurants - 3.1% McDonald's Corp. 22,870 505 27 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Value Fund (cont.) Security Shares Value($) - -------------------------------------------------------------------------------- Retail - 7.0% CVS Corp. 12,800 358 Kroger Co. (a) 19,880 332 Office Depot, Inc. (a) 5,800 84 Polo Ralph Lauren 3,100 80 Target Corp. 7,600 288 -------- 1,142 Services - 2.8% Cendant Corp. (a) 13,680 250 Omnicom Group, Inc. 2,800 201 -------- 451 Telecommunications - 5.9% Alltel Corp. 2,800 135 BellSouth Corp. 6,660 177 QUALCOMM,Inc 5,060 181 SBC Communications, Inc. 10,100 259 UTStarcom, Inc. (a) 6,000 213 -------- 965 -------- Total Common Stocks 16,070 Cost: $15,038 Security, Rate, Maturity Date Principal($) Value($) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 0.7% Fifth Third Bank, 0.95%, 07/01/03 (Proceeds at maturity $118, collateralized by Federal Home Loan Mortgage Corporation security, 6.50%, 01/01/19) Cost: $118 118 118 -------- TOTAL INVESTMENTS - 99.8% 16,188 Cost: $15,156 (b) Percentages indicated are based on net assets of $16,226. (a) Non-income producing security. (b) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $176. Cost for federal income tax purposes differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $1,187 Unrealized depreciation (331) ------ Net unrealized appreciation $856 Citizens Balanced Fund Security Shares Value($) - -------------------------------------------------------------------------------- COMMON STOCKS - 67.7% Air Freight - 1.8% FedEx Corp. 304 19 Banks - 1.3% Bank of America Corp. 181 14 Biotechnology - 5.5% Amgen, Inc. (a) 438 29 Gilead Sciences, Inc. (a) 531 30 -------- 59 Broadcasting - 3.4% Clear Channel Communications, Inc. (a) 854 36 Computers - 9.7% Dell Computer Corp. (a) 684 22 Intel Corp. 1,053 22 Microsoft Corp. (a) 700 18 Oracle Corp. (a) 1,711 21 Symantec Corp. (a) 471 20 -------- 103 Electronics - 3.8% Analog Devices, Inc. (a) 639 22 Flextronics International (a) 1,764 19 -------- 41 Energy & Utilities - 3.1% Apache Corp. 220 14 Baker Hughes, Inc. 213 7 ConocoPhillips 201 11 -------- 32 Financial - Diversified - 5.3% American Express Co. 675 28 Citigroup, Inc. 654 28 -------- 56 Health Care - 8.1% Pfizer, Inc. 811 28 St. Jude Medical, Inc. (a) 505 29 UnitedHealth Group, Inc. 574 29 -------- 86 Insurance - 4.7% Willis Group Holdings Ltd. 704 22 XL Capital Ltd. 344 28 -------- 50 See Financial Notes 28 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Balanced Fund (cont.) Security Shares Value($) - -------------------------------------------------------------------------------- Investment Banking & Brokerage - 2.0% The Goldman Sachs Group, Inc. 250 21 Leisure - 2.4% Harley-Davidson, Inc. 631 25 Manufacturing - 3.1% 3M Co. 112 14 Illinois Tool Works, Inc. 274 18 -------- 32 Personal Care - 2.3% Colgate-Palmolive Co. 429 24 Retail - 8.2% Costco Wholesale Corp. (a) 697 25 Kohl's Corp. (a) 718 37 Walgreen Co. 833 25 -------- 87 Services - 1.7% Cendant Corp. (a) 1,004 19 Telecommunications - 1.3% Verizon Communications, Inc. 351 16 -------- Total Common Stocks 720 Cost: $697 Security, Rate, Maturity Date Principal($) Value($) - -------------------------------------------------------------------------------- U.S. GOVERNMENT AGENCY OBLIGATIONS - 17.5% Federal Farm Credit Bank - 0.5% 5.10%, 11/24/03 5 5 Federal Home Loan Mortgage Corporation - 1.6% 2.88%, 09/15/05 3 3 3.25%, 02/25/08 4 4 4.50%, 01/15/13 9 10 -------- 17 Federal National Mortgage Association - 15.4% 1.88%, 12/15/04 6 6 3.25%, 01/15/08 9 9 5.25%, 01/15/09 14 16 6.38%, 06/15/09 3 4 4.38%, 09/15/12 4 4 4.38%, 03/15/13 30 31 6.50%, 07/01/32 12 12 6.00%, 11/01/32 14 14 5.50%, 03/01/33 44 45 5.50%, 04/01/33 22 23 -------- 164 -------- Total U.S. Government Agency Obligations 186 Cost: $184 U.S. TREASURY NOTES - 4.3% 3.38%, 01/15/07 5 5 2.63%, 05/15/08 20 20 3.63%, 05/15/13 20 20 -------- Cost: $44 45 REPURCHASE AGREEMENTS - 9.4% Fifth Third Bank, 0.95%, 07/01/03 (Proceeds at maturity $99, collateralized by Federal National Mortgage Association Security, 6.75%, 07/01/09) Cost: $99 99 99 -------- TOTAL INVESTMENTS - 98.9% 1,050 Cost: $1,024 (b) Percentages indicated are based on net assets of $1,061. (a) Non-income producing security. (b) Represents cost for financial reporting purposes and federal income tax purposes and differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $32 Unrealized depreciation (6) --- Net unrealized appreciation $26 29 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Global Equity Fund Security Shares Value($) - -------------------------------------------------------------------------------- COMMON STOCKS - 98.0% Automobile Manufacturing - 1.9% Honda Motor Co., Ltd. 36,900 1,398 Volkswagen AG 15,800 664 -------- 2,062 Banks - 1.3% Royal Bank of Scotland Group plc 51,390 1,442 Biotechnology - 3.6% Amgen, Inc. (a) 24,000 1,595 Applied Biosystems Group 57,800 1,100 Invitrogen Corp. (a) 34,700 1,331 -------- 4,026 Broadcasting - 3.5% British Sky Broadcasting Group plc (a) 99,303 1,100 Cox Communications, Inc., Class A (a) 50,900 1,624 Univision Communications, Inc. (a) 38,000 1,155 -------- 3,879 Chemicals - 1.4% Shin-Etsu Chemical Co. 45,400 1,550 Computers - 8.5% Automatic Data Processing, Inc. 27,900 945 Dell Computer Corp. (a) 42,400 1,355 EMC Corp. (a) 60,000 628 Intel Corp. 40,300 838 International Business Machines Corp. 14,700 1,213 Microsoft Corp. 107,400 2,750 Oracle Corp. (a) 95,200 1,144 SAP AG 4,900 574 -------- 9,447 Electrical Equipment - 4.4% Analog Devices, Inc. (a) 29,900 1,041 Applied Materials, Inc. (a) 78,000 1,237 Celestica, Inc. (a) 18,800 296 Emerson Electric Co. 30,300 1,549 Flextronics International Ltd. (a) 76,800 798 -------- 4,921 Electronics - 2.5% Cisco Systems, Inc. (a) 80,400 1,342 Sony Corp. 51,100 1,438 -------- 2,780 Energy & Utilities - 9.9% Encana Corp. 65,943 2,509 EOG Resources, Inc. 46,600 1,950 Noble Corp. (a) 40,000 1,372 Precision Drilling Corp. (a) 38,530 1,441 Scottish Power plc 308,672 1,854 Weatherford International, Ltd. (a) 42,000 1,760 -------- 10,886 Financial - Diversified - 9.9% Amvescap plc 250,275 1,726 Citigroup, Inc. 69,500 2,974 HBOS plc 65,861 853 HSBC Holdings plc 147,066 1,738 UBS AG 36,576 2,035 Wells Fargo & Co. 30,300 1,527 -------- 10,853 Financial Services - 1.5% American Express Co. 40,700 1,702 Food & Beverages - 3.5% Nestle SA 5,415 1,117 PepsiCo, Inc. 31,500 1,402 The Coca-Cola Co. 30,200 1,402 -------- 3,921 Health & Beauty Aids - 1.5% L'Oreal SA 23,191 1,635 Health Care - 11.0% AstraZeneca plc 21,407 858 Cardinal Health, Inc. 14,000 900 Eli Lilly & Co. 10,000 690 GlaxoSmithKline plc 87,927 1,774 HCA, Inc. 23,100 740 Medtronic, Inc. 26,600 1,276 Merck & Co., Inc. 15,800 957 Novartis AG 29,336 1,161 Pfizer, Inc. 62,400 2,131 Sanofi-Synthelabo SA 27,697 1,622 -------- 12,109 Insurance - 6.2% American International Group, Inc. 21,200 1,170 AXA 87,416 1,356 ING Groep NV 93,338 1,622 Marsh & McLennan Cos., Inc. 41,600 2,124 Swiss Re 11,499 637 -------- 6,909 Investment Banking & Brokerage - 1.6% The Goldman Sachs Group, Inc. 21,000 1,759 See Financial Notes 30 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Global Equity Fund (cont.) Security Shares Value($) - -------------------------------------------------------------------------------- Manufacturing - 3.3% 3M Co. 7,500 968 Assa Abloy AB, Class B 87,400 846 CRH plc 47,927 751 Ingersoll-Rand Co., Class A 7,700 364 Komatsu, Ltd. 192,000 736 -------- 3,665 Office Equipment & Supplies - 2.1% Canon, Inc. 51,000 2,340 Personal Care - 2.2% Gillette Co. 48,000 1,529 Kimberly-Clark Corp. 18,300 954 -------- 2,483 Railroads - 1.1% Norfolk Southern Corp. 63,100 1,212 Retail - 3.1% Li & Fung, Ltd. 414,000 534 Target Corp. 40,300 1,525 Tesco plc 74,626 270 The TJX Cos., Inc. 58,300 1,098 -------- 3,427 Services - 3.2% Ecolab, Inc. 46,400 1,188 Omnicom Group, Inc. 21,000 1,506 Sysco Corp. 28,200 847 -------- 3,541 Telecommunications - 10.8% Alltel Corp. 21,300 1,027 Nokia Oyj 163,250 2,688 NTT DoCoMo, Inc. 853 1,847 SBC Communications, Inc. 46,700 1,193 Telefonica SA (a) 129,590 1,505 Vodafone Group plc 1,803,361 3,526 -------- 11,786 -------- Total Common Stocks 108,335 Cost: $114,751 Security, Rate, Maturity Date Principal($) Value($) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 1.2% Fifth Third Bank, 0.95%, 07/01/03 (Proceeds at maturity $1,381, collateralized by Federal Home Loan Mortgage Corporation security, 7.00%, 05/01/31) Cost: $1,381 1,381 1,381 -------- TOTAL INVESTMENTS - 99.2% 109,716 Cost: $116,132 (b) Percentages indicated are based on net assets of $110,593. (a) Non-income producing security. (b) Represents cost for financial reporting purposes and differs for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $642. Cost for federal income tax purposes differs from value by net unrealized depreciation of securities as follows: Unrealized appreciation $5,288 Unrealized depreciation (12,346) ------- Net unrealized depreciation $(7,058) The fund's portfolio holdings as of June 30, 2003, were distributed among the following countries: Percentage of Net Assets ------------------------------- Short Term Equity & Other Total ------------------------------- Bermuda 0.3% 0.3% Canada 3.6% 3.6% Finland 2.4% 2.4% France 4.2% 4.2% Germany 1.1% 1.1% Hong Kong 0.5% 0.5% Ireland 0.7% 0.7% Japan 8.4% 8.4% Netherlands 1.5% 1.5% Singapore 0.7% 0.7% Spain 1.4% 1.4% Sweden 0.8% 0.8% Switzerland 4.5% 4.5% United Kingdom 13.7% 13.7% United States 54.2% 1.2% 55.4% ------------------------------ 98.0% 1.2% 99.2% 31 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens International Growth Fund Security Shares Value($) - -------------------------------------------------------------------------------- COMMON STOCKS - 98.9% Apparel Manufacturers - 1.8% Gucci Group NV 529 52 Automobile Manufacturing - 4.8% Honda Motor Co. Ltd. 1,300 49 Toyota Motor Corp. 2,400 62 Volkswagen AG 600 25 -------- 136 Banks - 3.6% Barclays plc 8,511 63 Royal Bank of Scotland Group plc 1,422 40 -------- 103 Biotechnology - 1.7% Roche Holding AG 605 47 Broadcasting - 2.2% British Sky Broadcasting Group plc (a) 5,514 61 Computers - 2.1% SAP AG 500 59 Electrical Equipment - 5.8% ASML Holding NV (a) 4,914 47 Celestica, Inc. (a) 3,614 57 Flextronics International Ltd.(a) 5,970 62 -------- 166 Electronics - 1.8% Sony Corp. 1,800 51 Energy & Utilities - 12.2% BP Amoco plc 11,115 77 Encana Corp. 2,594 99 Precision Drilling Corp. (a) 1,815 68 Scottish Power plc 17,272 104 -------- 348 Financial - Diversified - 12.9% Amvescap plc 11,038 76 HBOS plc 5,026 65 HSBC Holdings plc 8,133 96 Lloyds TSB Group plc 4,759 34 UBS AG 1,780 99 -------- 370 Food & Beverages - 2.6% Nestle SA 354 73 Health & Beauty Aids - 2.5% L'Oreal SA 1,008 71 Health Care - 10.4% AstraZeneca plc 1,095 44 GlaxoSmithKline ADR 2,546 103 Novartis AG 2,492 99 Sanofi-Synthelabo SA 849 50 -------- 296 Insurance - 6.5% AXA ADR 4,123 64 ING Groep NV 4,960 86 Swiss Re 603 33 -------- 183 Manufacturing - 3.5% Assa Abloy AB, Class B 2,000 19 CRH plc 2,955 47 Komatsu Ltd. 9,000 34 -------- 100 Office Equipment & Supplies - 2.7% Canon, Inc. ADR 1,656 76 Retail - 5.0% Carrefour SA 1,286 63 Li & Fung Ltd. 28,000 36 Tesco plc 11,951 43 -------- 142 Telecommunications - 16.8% Nippon Telegraph & Telephone Corp. 6 24 Nokia Oyj 7,400 122 NTT DoCoMo, Inc. 42 91 Telefonica SA ADR (a) 1,081 37 Telefonica SA (a) 7,001 81 Vodafone Airtouch plc ADR 6,305 124 -------- 479 -------- Total Common Stocks 2,813 Cost: $2,767 See Financial Notes 32 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens International Growth Fund (cont.) Security, Rate, Maturity Date Principal($) Value($) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS - 0.9% Fifth Third Bank, 0.95%, 07/01/03 (Proceeds at maturity $24, collateralized by Federal Home Loan Bank security, 7.03%, 10/01/26) Cost: $24 24 24 -------- TOTAL INVESTMENTS - 99.8% 2,837 Cost: $2,791 (b) Percentages indicated are based on net assets of $2,842. (a) Non-income producing security. (b) Represents cost for financial reporting purposes and differs from cost basis for federal income tax purposes by the amount of losses recognized for financial reporting purposes in excess of federal income tax reporting of approximately $158. Cost for federal income tax purposes differs from value by net unrealized depreciation of securities as follows: Unrealized appreciation $42 Unrealized depreciation (153) ----- Net unrealized depreciation $(111) ADR - American Depositary Receipt The fund's portfolio holdings as of June 30, 2003, were distributed among the following countries: Percentage of Net Assets ------------------------------- Short Term Equity & Other Total ------------------------------- Canada 5.9% 5.9% Finland 4.3% 4.3% France 8.7% 8.7% Germany 2.9% 2.9% Hong Kong 1.3% 1.3% Ireland 1.6% 1.6% Japan 13.6% 13.6% Netherlands 6.5% 6.5% Singapore 2.2% 2.2% Spain 4.2% 4.2% Sweden 0.7% 0.7% Switzerland 12.4% 12.4% United Kingdom 32.6% 32.6% United States 2.0% 0.9% 2.9% ------------------------------- Total 98.9% 0.9% 99.8% Citizens Income Fund Security, Rate, Maturity Date Principal($) Value($) - -------------------------------------------------------------------------------- CORPORATE BONDS - 65.4% Banks - 8.8% Banknorth Group, Inc., 3.75%, 05/01/08 500 510 First Tennessee Bank, 4.50%, 05/15/13 1,000 1,012 Fleet Boston Financial Corp., 3.85%, 02/15/08 1,000 1,038 Greater Bay Bankcorp., 5.25%, 03/31/08 (a) 1,000 1,016 Sovereign Bancorp, Inc., 10.50%, 11/15/06 1,000 1,201 Webster Bank, 5.90%, 01/15/13 250 263 Wilmington Trust Corp., 4.90%, 04/15/13 (a) 1,000 1,024 -------- 6,064 Broadcasting - 12.2% Clear Channel Communications, Inc., 4.40%, 05/15/11 2,000 2,007 Comcast Corp., 5.85%, 01/15/10 1,000 1,100 5.30%, 01/15/14 1,000 1,028 Cox Communications, Inc., 7.10%, 10/01/12 1,000 1,194 4.60%, 06/01/13 1,000 1,002 Liberty Media Corp., 5.70%, 05/15/13 1,000 1,017 Univison Communications, Inc., 7.85%, 07/15/11 1,000 1,190 -------- 8,538 Construction - 1.8% Pulte Homes Inc., 8.10%, 03/01/11 1,000 1,227 Electrical Equipment - 3.0% Fairchild Semiconductor, 10.50%, 02/01/09 500 563 Flextronics International, Ltd., 6.50%, 05/15/13 (a) 1,000 962 9.90%,07/01/10 500 548 -------- 2,073 Energy & Utilities - 3.0% Valero Energy Corp., 4.75%, 06/15/13 1,000 978 XTO Energy, Inc., 6.25%, 04/15/13 (a) 1,000 1,062 -------- 2,040 33 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Income Fund (cont.) Security, Rate, Maturity Date Principal($) Value($) - -------------------------------------------------------------------------------- Financial - Diversified - 12.1% American General Finance Corp., 5.40%, 10/01/12 1,000 1,079 Bear Stearns Co., Inc., 4.65%, 07/02/18 1,000 973 Citigroup, Inc., 3.50%, 02/01/08 1,000 1,029 4.90%, 05/07/15 1,000 1,028 Countrywide Financial, 4.25%, 12/19/07 1,000 1,050 Greenpoint Financial Corp., 3.20%, 06/06/08 (a) 1,000 992 J.P.Morgan Chase & Co., 5.25%, 05/01/15 1,000 1,047 MBNA America Bank Corp., 7.10%, 11/15/12 1,000 1,173 -------- 8,371 Financial Services - 1.4% Prudential Financial, Inc., 4.50%, 07/15/13 1,000 998 Health Care - 1.6% AmerisourceBergen Corp., 8.10%, 09/01/08 1,000 1,100 Insurance - 4.8% Ace, Ltd., 6.00%, 04/01/07 1,000 1,101 Anthem, Inc., 6.80%, 08/01/12 1,000 1,167 Chubb Corp., 3.95%, 04/01/08 (a) 500 518 Marsh & McLennan Cos, Inc., 3.60%, 02/15/08 500 515 -------- 3,301 Investment Banking & Brokerage - 3.1% The Goldman Sachs Group, Inc., 4.10%, 01/15/08 500 525 5.25%, 04/01/13 500 533 5.50%, 11/15/14 1,000 1,086 -------- 2,144 Manufacturing - 1.6% American Standard, Inc., 7.40%, 02/01/08 1,000 1,105 Retail - 6.5% Dominos, Inc., 8.25%, 07/01/11 (a) 1,000 1,033 Kroger Co., 5.50%, 02/01/13 1,000 1,056 The GAP, Inc., 10.55%, 12/15/08 1,000 1,214 Tricon Global Restaurants, 8.90%, 04/15/11 1,000 1,185 -------- 4,488 Services - 2.3% Cendant Corp., 6.25%, 01/15/08 1,000 1,107 Fiserv, Inc., 4.00%, 04/15/08 (a) 500 515 -------- 1,622 Telecommunications - 3.2% Verizon Global Funding Corp., 7.40%, 09/01/12 1,000 1,220 4.40%, 06/01/13 1,000 997 -------- 2,217 -------- Total Corporate Bonds 45,288 Cost: $42,783 FOREIGN GOVERNMENT BONDS - 1.5% United Mexican States 4.60%, 10/08/08 1,000 1,021 Cost: $997 U.S. GOVERNMENT AGENCY OBLIGATIONS - 24.6% Federal Home Loan Mortgage Corporation - 5.8% 4.50%, 07/23/07 2,000 2,065 4.00%, 06/12/13 2,000 1,964 -------- 4,029 Federal National Mortgage Association - 13.0% 6.50%, 08/01/31 1,952 2,035 6.00%, 08/01/32 1,744 1,813 5.50%, 04/01/33 4,915 5,089 -------- 8,937 Government National Mortgage Association - 5.8% 6.00%, 04/15/31 152 159 6.50%, 12/15/31 1,280 1,344 6.50%, 06/15/32 2,417 2,538 -------- 4,041 -------- Total U.S. Government Agency Obligations 17,007 Cost: $16,782 See Financial Notes 34 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Income Fund (cont.) Security, Rate, Maturity Date Principal($) Value($) - -------------------------------------------------------------------------------- U.S. TREASURY NOTES - 3.7% 3.40%, 01/15/07 2,320 2,548 Cost: $2,499 REPURCHASE AGREEMENTS - 2.3% Fifth Third Bank, 0.95%, 07/01/03 (Proceeds at maturity $1,574, collateralized by Federal National Mortgage Association security, 6.50%, 03/01/19) Cost: $1,574 1,574 1,574 -------- TOTAL INVESTMENTS - 97.5% 67,438 Cost: $64,635 (b) Percentages indicated are based on net assets of $69,137. (a) Rule 144A security. (b) Represents cost for financial reporting purposes and federal income tax purposes and differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $2,955 Unrealized depreciation (152) ------ Net unrealized appreciation $2,803 Citizens Ultra Short Bond Fund Security, Rate, Maturity Date Principal($) Value($) - -------------------------------------------------------------------------------- COLLATERALIZED MORTGAGE OBLIGATIONS - 0.8% Bear Stearns Asset Backed Securities, Inc. 5.49%, 06/25/32 76 76 Cost: $78 CORPORATE BONDS - 47.7% Automotive Finance - 15.1% BMW Vehicle Owner Trust 1.94%, 02/25/07 250 252 Ford Credit Auto Owner Trust 5.25%, 09/15/05 100 103 Goldman Sachs Auto Loan Trust 2.08%, 04/16/07 250 252 Harley-Davidson Motorcycle Trust 1.34%, 01/15/08 193 193 Honda Auto Receivables Owner Trust 2.16%, 10/21/08 200 200 Toyota Trust 1.69%, 03/15/07 250 251 Volkswagen Alt, 2.36%, 12/20/05 150 152 -------- 1,403 Banks - 5.5% Bank of America Corp. 7.88%, 05/16/05 100 112 JP Morgan Chase & Co., 1.47%, 02/05/04 150 150 Wells Fargo Co., 1.06%, 03/24/05 250 250 -------- 512 Broadcasting - 4.7% Clear Channel Communications, Inc., 7.25%, 09/15/03 200 202 TCI Communications 8.00%, 08/01/05 210 229 -------- 431 Computers - 2.4% Hewlett-Packard Co. 7.15%, 06/15/05 200 221 Financial - Diversified - 10.8% American Express Co. 7.20%, 09/17/07 100 109 American General Finance 7.45%, 01/15/05 50 54 35 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Ultra Short Bond Fund (cont.) Security, Rate, Maturity Date Principal($) Value($) - -------------------------------------------------------------------------------- Financial - Diversified (cont.) Citibank Credit Card Master Trust 6.65%, 11/15/06 150 161 Citicorp 7.63%, 05/01/05 50 56 Countrywide Capital 5.25%,06/15/04 250 259 Goldman Sachs 7.25%, 10/01/05 (a) 100 112 Merrill Lynch & Co. 1.50%, 04/28/05 250 250 ------- 1,001 Personal Care - 2.8% Gillette Co. 3.50%, 10/15/07 250 256 Pharmaceuticals - 1.1% Pfizer, Inc. 3.63%, 11/01/04 100 103 Retail - 2.3% Kroger Co. 7.38%, 03/01/05 200 216 Telecommunications - 3.0% CBS Corp. 7.15%, 05/20/05 150 165 Chesapeake (Bell Atlantic Virginia) 6.13%, 07/15/05 100 107 ------- 272 ------- Total Corporate Bonds 4,415 Cost: $4,387 YANKEE BONDS - 2.7% Province of Ontario 2.35%, 06/30/06 250 253 Cost: $250 U.S. GOVERNMENT AGENCY OBLIGATIONS - 26.8% Federal Home Loan Bank - 9.2% 2.70%, 10/07/05 200 200 2.00%, 10/16/06 200 200 2.75%, 10/30/06 200 202 2.04%, 12/29/06 250 250 ------- 852 Federal Home Loan Mortgage Corporation - 6.1% 4.20%, 11/7/05 100 101 5.83%, 02/09/06 100 110 3.67%, 02/12/08 250 254 5.50%, 03/15/30 97 98 ------- 563 Federal National Mortgage Association - 9.3% 2.88%, 12/02/05 100 101 2.38%, 03/17/06 250 252 3.50%, 10/15/07 250 255 5.50%, 11/25/13 123 124 4.03%, 08/25/29 126 128 ------- 860 Student Loan Marketing Association - 2.2% 1.27%, 06/16/08 200 200 ------- Total U.S. Government Agency Obligations 2,475 Cost: $2,466 REPURCHASE AGREEMENTS - 23.7% Fifth Third Bank, 0.95%, 07/01/03 (Proceeds at maturity $2,192, collateralized by Federal Home Loan Mortgage Corporation security, 8.00%, 12/01/30) Cost: $2,192 2,192 2,192 ------- TOTAL INVESTMENTS - 101.7% 9,411 Cost: $9,373 (b) Percentages indicated are based on net assets of $9,252. (a) Rule 144A security. (b) Represents cost for financial reporting purposes and for federal income tax purposes and differs from value by net unrealized appreciation of securities as follows: Unrealized appreciation $46 Unrealized depreciation (8) --- Net unrealized appreciation $38 36 PORTFOLIO HOLDINGS JUNE 30, 2003 ($ X 1,000) Citizens Money Market Fund Security, Rate, Maturity Date Principal($) Value($) - -------------------------------------------------------------------------------- CERTIFICATES OF DEPOSIT - 8.9% Bank of New York, 2.14%, 08/12/03 3,000 3,000 City National Bank of New Jersey, 1.50%, 03/17/04 (a) 100 100 Independence Federal Savings Bank, 2.05%, 09/26/03 (a) 100 100 Mercantile Safe Deposit and Trust, 1.60%, 12/09/03 3,000 3,000 1.20%, 06/02/04 2,000 2,000 Self Help Credit Union, 1.30%, 03/14/04 (a) 100 100 US Bank, 1.42%, 01/08/04 2,000 2,000 -------- Total Certificates of Deposit 10,300 Cost: $10,300 COMMERCIAL PAPER - 71.2% American Express Corp. 0.87%, 08/25/03 3,500 3,495 American General Finance Corp. 1.30%, 07/31/03 5,250 5,244 Atlantis One Funding Corp. 1.20%, 07/18/03 (b) 2,530 2,529 1.19%, 09/25/03 (b) 2,800 2,792 Blue Ridge Asset 1.23%, 07/08/03 (b) 4,006 4,005 Citicorp 1.20%, 07/02/03 5,315 5,315 Cooperative Association of Tractor Dealers 1.27%, 07/16/03 1,541 1,540 1.25%, 09/12/03 4,000 3,990 1.00%, 10/10/03 1,100 1,097 0.97%, 12/08/03 3,500 3,485 Dow Jones & Co, Inc., 1.08%, 01/06/04 (b) 1,988 1,977 Galaxy Funding, Inc., 1.25%, 07/28/03 (b) 5,000 4,996 The Goldman Sachs Group, Inc. 1.16%, 08/18/03 3,059 3,054 0.92%, 01/26/04 2,200 2,188 Harley-Davidson, Inc., 1.17%, 07/09/03 (b) 2,827 2,826 Home Depot Funding Corp., 1.08%, 12/02/03 (b) 5,200 5,176 J.P.Morgan Chase & Co. 1.23%, 07/24/03 5,263 5,259 Marsh and McLennan Cos., Inc., 1.20%, 07/14/03 (b) 2,741 2,740 McGraw-Hill Co., 0.91%, 08/22/03 3,285 3,281 Pfizer, Inc., 1.00%, 07/30/03 (b) 3,000 2,998 Stellar Funding Group, Inc., 1.55%, 07/25/03 (b) 2,024 2,022 1.27%, 09/18/03 (b) 2,188 2,182 Toronto Dominion Holdings USA, 0.92%, 09/11/03 3,272 3,266 UBS Finance Corp., 1.31%, 07/01/03 3,025 3,024 Verizon Network Funding, 1.18%, 08/27/03 3,731 3,723 -------- Total Commercial Paper Cost: $82,204 $82,204 CORPORATE BONDS - 11.9% The Bear Stearns Cos., 1.02%, 03/25/04 (c) 5,000 5,000 Merrill Lynch and Co., Inc., 1.59%, 03/08/04 (c) 5,000 5,013 Pelican Capital LLC, 1.28%, 04/01/28 (c) 560 560 Redding Life Care LLC, 1.10%, 10/01/05 (c) 3,200 3,200 -------- Total Corporate Bonds 13,773 Cost: $13,773 MUNICIPAL NOTES - 3.0% New York State Housing Finance Agency 1.05%, 11/15/29 (c) 3,500 3,500 Cost: $3,500 U.S. GOVERNMENT AGENCY OBLIGATIONS - 3.5% Student Loan Marketing Association 0.88%, 10/16/03 (c) 4,000 4,000 Cost: $4,000 -------- TOTAL INVESTMENTS - 98.5% 113,777 Cost: $113,777 (d) Percentages indicated are based on net assets of $115,533. (a) Restricted security which may not be publicly sold without registration under the Securities Act of 1933. (b) Rule 144A security. (c) Variable rate security. The rate presented represents the rate in effect at June 30, 2003. (d) Represents cost for financial reporting and federal income tax purposes. 37 STATEMENTS OF ASSETS AND LIABILITIES AS OF JUNE 30, 2003
Core Growth Emerging Growth Small Cap Core Value Balanced Fund Fund Growth Fund Fund Fund - --------------------------------------------------------------------------------------------------------------------------------- Assets Investments, at value $ 343,023,127 $ 171,904,920 $ 17,808,644 $ 16,069,547 $ 950,430 Repurchase agreements 5,735,282 5,307,430 599,407 118,430 99,266 Total investments 348,758,409 177,212,350 18,408,051 16,187,977 1,049,696 Cash -- -- -- -- -- Foreign currency -- -- -- -- -- Receivables: Interest and dividends 54,411 21,639 1,156 19,464 2,047 Investments sold 7,287,479 4,590,928 881,569 1,056,550 -- Tax reclaims -- -- -- -- -- Due from investment adviser -- -- -- -- 2,503 Deferred offering costs -- -- -- -- 4,974 Prepaid expenses 21,976 16,494 5,730 8,868 11,283 Total assets 356,122,275 181,841,411 19,296,506 17,272,859 1,070,503 Liabilities Payables: Dividends to shareholders -- -- -- -- 1,177 Investments purchased 4,350,625 9,703,045 1,446,494 1,013,763 -- Investment management fees 66,184 71,165 4,909 6,431 -- Administrative fees 14,600 7,116 732 674 44 Shareholder service fees 13,742 6,233 686 740 50 Distribution fees 29,913 17,230 1,831 1,685 110 Other accrued expenses 311,104 185,796 20,632 23,247 8,056 Total liabilities 4,786,168 9,990,585 1,475,284 1,046,540 9,437 - --------------------------------------------------------------------------------------------------------------------------------- Net assets $ 351,336,107 $ 171,850,826 $ 17,821,222 $ 16,226,319 $ 1,061,066 - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- Net Assets Standard Shares: Net assets $ 285,339,325 $ 157,910,911 $ 17,821,222 $ 16,226,319 $ 1,061,066 Number of shares outstanding 17,354,197 14,402,471 2,055,060 1,878,160 101,357 Net asset value, offering and redemption price per share $ 16.44 $ 10.96 $ 8.67 $ 8.64 $ 10.47 Institutional Shares: Net assets $ 63,570,617 $ 5,378,621 -- -- -- Number of shares outstanding 4,703,497 478,966 -- -- -- Net asset value, offering and redemption price per share $ 13.52 $ 11.23 -- -- -- Administrative Shares: Net assets $ 2,426,165 $ 8,561,294 -- -- -- Number of shares outstanding 145,428 770,598 -- -- -- Net asset value, offering and redemption price per share $ 16.68 $ 11.11 -- -- -- Net assets consist of: Paid-in capital $ 435,326,849 $ 380,541,309 $ 20,465,809 $ 26,864,662 $ 1,011,306 Accumulated net investment income/loss -- -- -- -- 156 Accumulated net realized gains/losses on investments and foreign currencies (130,199,625) (225,752,081) (4,442,537) (11,670,348) 23,843 Net unrealized appreciation/depreciation on investments and foreign currencies 46,208,883 17,061,598 1,797,950 1,032,005 25,761 - --------------------------------------------------------------------------------------------------------------------------------- Net assets $ 351,336,107 $ 171,850,826 $ 17,821,222 $ 16,226,319 $ 1,061,066 - --------------------------------------------------------------------------------------------------------------------------------- Investments, at cost $ 302,549,526 $ 160,150,752 $ 16,610,101 $ 15,155,972 $ 1,023,935 Foreign currency, at cost -- -- -- -- -- Global Equity International Income Ultra Short Money Market Fund Growth Fund Fund Bond Fund Fund - --------------------------------------------------------------------------------------------------------------------------------- Assets Investments, at value $ 108,335,119 $ 2,813,046 $ 65,864,102 $ 7,219,416 $ 113,776,636 Repurchase agreements 1,380,576 24,415 1,574,159 2,191,947 -- Total investments 109,715,695 2,837,461 67,438,261 9,411,363 113,776,636 Cash -- -- -- -- 1,783,988 Foreign currency 18,558 1,869 -- -- -- Receivables: Interest and dividends 89,953 2,256 737,997 48,555 127,217 Investments sold 1,182,636 -- 2,239,423 -- -- Tax reclaims 113,604 2,475 -- -- -- Due from investment adviser -- -- -- 877 -- Deferred offering costs -- -- -- 4,119 -- Prepaid expenses 16,872 5,875 8,328 12,700 18,065 Total assets 111,137,318 2,849,936 70,424,009 9,477,614 115,705,906 Liabilities Payables: Dividends to shareholders -- -- 206,365 16,816 41,054 Investments purchased 363,627 -- 998,310 200,000 -- Investment management fees 46,678 929 18,628 -- 16,655 Administrative fees 4,668 115 2,866 371 4,759 Shareholder service fees 2,981 112 1,412 125 3,026 Distribution fees 10,946 299 7,165 927 -- Other accrued expenses 115,859 6,645 51,782 7,452 107,219 Total liabilities 544,759 8,100 1,286,528 225,691 172,713 - --------------------------------------------------------------------------------------------------------------------------------- Net assets $ 110,592,559 $ 2,841,836 $ 69,137,481 $ 9,251,923 $ 115,533,193 - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- Net Assets Standard Shares: Net assets $ 101,846,160 $ 2,841,836 $ 69,137,481 $ 9,251,923 $ 104,641,351 Number of shares outstanding 7,608,736 464,342 6,723,820 919,611 104,714,694 Net asset value, offering and redemption price per share $ 13.39 $ 6.12 $ 10.28 $ 10.06 $ 1.00 Institutional Shares: Net assets $ 6,687,767 -- -- -- $ 10,891,842 Number of shares outstanding 489,889 -- -- -- 10,893,633 Net asset value, offering and redemption price per share $ 13.65 -- -- -- $ 1.00 Administrative Shares: Net assets $ 2,058,632 -- -- -- -- Number of shares outstanding 152,420 -- -- -- -- Net asset value, offering and redemption price per share $ 13.51 -- -- -- -- Net assets consist of: Paid-in capital $ 249,571,591 $ 3,841,073 $ 72,117,057 $ 9,222,446 $ 115,542,276 Accumulated net investment income/loss (570,287) (57,479) -- (976) -- Accumulated net realized gains/losses on investments and foreign currencies (132,010,761) (988,663) (5,782,978) (8,032) (9,083) Net unrealized appreciation/depreciation on investments and foreign currencies (6,397,984) 46,905 2,803,402 38,485 -- - --------------------------------------------------------------------------------------------------------------------------------- Net assets $ 110,592,559 $ 2,841,836 $ 69,137,481 $ 9,251,923 $ 115,533,193 - --------------------------------------------------------------------------------------------------------------------------------- Investments, at cost $ 116,132,179 $ 2,790,722 $ 64,634,859 $ 9,372,878 $ 113,776,636 Foreign currency, at cost 18,656 1,872 -- -- --
See Financial Notes 38 & 39 STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2003
Core Growth Emerging Growth Small Cap Core Value Balanced Fund Fund Growth Fund Fund Fund(1) - --------------------------------------------------------------------------------------------------------------------------------- Investment Income Interest $ 126,138 $ 92,374 $ 11,345 $ 7,149 $ 2,994 Dividend(3) 3,655,792 561,378 40,119 198,217 2,068 Total investment income 3,781,930 653,752 51,464 205,366 5,062 Expenses Investment management fees 1,735,879 1,673,022 78,127 129,824 1,909 Administrative fees 347,173 166,775 15,625 16,034 294 Distribution fees: Standard shares 695,810 385,583 39,064 40,084 735 Administrative shares 4,944 17,919 -- -- -- Shareholder service fees: Standard shares 704,901 140,915 15,504 16,639 280 Institutional shares 1,145 163 -- -- -- Administrative shares 179 244 -- -- -- Transfer agent expenses: Standard shares 777,676 573,988 59,522 66,568 7,269 Institutional shares 3,773 553 -- -- -- Administrative shares 1,050 1,637 -- -- -- Accounting expenses 133,123 65,418 9,386 8,325 8,098 Custody expenses 14,505 13,339 8,509 4,697 15,154 Offering costs -- -- -- -- 5,520 Registration expenses 14,967 15,284 5,686 7,920 8,702 Trustee expenses 70,691 34,220 3,226 1,983 71 Other expenses 273,115 133,474 11,490 12,759 1,609 Total expenses before reimbursements or waivers 4,778,931 3,222,534 246,139 304,833 49,641 Reimbursements or waivers from adviser (476,211) (42,503) (19,593) -- (45,784) Net expenses 4,302,720 3,180,031 226,546 304,833 3,857 Net investment income/loss $ (520,790) $ (2,526,279) $ (175,082) $ (99,467) $ 1,205 Realized and unrealized gains/losses on investments and foreign currency transactions Realized gains/losses on investments and foreign currency transactions $ (39,810,514) $ (45,670,710) $ (3,605,564) $ (10,282,004) $ 24,140 Change in unrealized appreciation/depreciation on investments and foreign currencies 29,592,435 31,865,153 2,748,439 9,608,668 25,761 Net realized and unrealized gains/losses on investments and foreign currencies (10,218,079) (13,805,557) (857,125) (673,336) 49,901 Change in net assets from operations $ (10,738,869) $ (16,331,836) $ (1,032,207) $ (772,803) $ 51,106 Global Equity International Income Ultra Short Money Market Fund Growth Fund Fund Bond Fund(2) Fund - --------------------------------------------------------------------------------------------------------------------------------- Investment Income Interest $ 19,522 $ 1,253 $ 3,536,378 $ 82,660 $ 1,956,303 Dividend(3) 1,927,570 52,645 -- -- -- Total investment income 1,947,092 53,898 3,536,378 82,660 1,956,303 Expenses Investment management fees 1,180,182 27,935 443,943 12,468 431,640 Administrative fees 118,017 2,661 68,298 3,562 123,325 Distribution fees: Standard shares 271,487 6,651 170,747 8,906 -- Administrative shares 5,018 -- -- -- -- Shareholder service fees: Standard shares 66,576 2,407 30,545 1,001 67,616 Institutional shares 187 -- -- -- 620 Administrative shares 169 -- -- -- -- Transfer agent expenses: Standard shares 370,279 10,622 118,864 14,394 283,937 Institutional shares 651 -- -- -- 2,042 Administrative shares 1,581 -- -- -- -- Accounting expenses 51,709 6,693 32,992 10,226 46,813 Custody expenses 9,373 6,655 4,816 2,737 6,843 Offering costs -- -- -- 6,249 -- Registration expenses 19,776 -- 6,627 10,864 29,166 Trustee expenses 24,056 556 13,748 789 25,215 Other expenses 73,726 883 47,977 4,435 94,455 Total expenses before reimbursements or waivers 2,192,787 65,063 938,557 75,631 1,111,672 Reimbursements or waivers from adviser -- (15,859) -- (75,631) -- Net expenses 2,192,787 49,204 938,557 -- 1,111,672 Net investment income/loss $ (245,695) $ 4,694 $ 2,597,821 $ 82,660 $ 844,631 Realized and unrealized gains/losses on investments and foreign currency transactions Realized gains/losses on investments and foreign currency transactions $ (20,092,299) $ (543,939) $ 3,091,917 $ (2,413) -- Change in unrealized appreciation/depreciation on investments and foreign currencies 10,231,205 263,354 1,619,468 38,485 -- Net realized and unrealized gains/losses on investments and foreign currencies (9,861,094) (280,585) 4,711,385 36,072 -- Change in net assets from operations $ (10,106,789) $ (275,891) $ 7,309,206 $ 118,732 $ 844,631
(1) For the period December 20, 2002 (commencement of operations) to June 30, 2003. (2) For the period November 21, 2002 (commencement of operations) to June 30, 2003. (3) Dividend income net of withholding taxes. For the year ended June 30, 2003, withholding taxes for the Citizens Global Equity and International Growth Funds were $157,794 and $5,826, respectively. See Financial Notes 40 & 41 STATEMENTS OF CHANGES IN NET ASSETS
Small Cap Core Growth Fund Emerging Growth Fund Core Growth Fund - ---------------------------------------------------------------------------------------------------------------------------------- For the For the For the For the For the year ended year ended year ended year ended year ended 06/30/03 06/30/02 06/30/03 06/30/02 06/30/03 - ---------------------------------------------------------------------------------------------------------------------------------- Operations Net investment income/loss $ (520,790) $ (1,512,276) $ (2,526,279) $ (3,375,032) $ (175,082) Realized gains/losses on investments and foreign currency transactions (39,810,514) (39,059,766) (45,670,710) (65,722,098) (3,605,564) Change in unrealized appreciation/ depreciation on investments 29,592,435 (99,310,432) 31,865,153 (5,409,210) 2,748,439 Change in net assets from operations (10,738,869) (139,882,474) (16,331,836) (74,506,340) (1,032,207) Dividends to Shareholders: >From net investment income: Standard shares -- -- -- -- -- >From net realized gains on investments: Standard shares -- -- -- -- -- Total dividends -- -- -- -- -- Change in net assets from capital transactions (51,887,083) (44,810,423) (17,500,693) (32,743,870) 394,033 Change in net assets $ (62,625,952) $(184,692,897) $ (33,832,529) $(107,250,210) $ (638,174) - ---------------------------------------------------------------------------------------------------------------------------------- Net Assets Beginning of period $ 413,962,059 $ 598,654,956 $ 205,683,355 $ 312,933,565 $ 18,459,396 End of period $ 351,336,107 $ 413,962,059 $ 171,850,826 $ 205,683,355 $ 17,821,222 - ---------------------------------------------------------------------------------------------------------------------------------- Accumulated net investment income/loss -- -- -- -- -- - ---------------------------------------------------------------------------------------------------------------------------------- Capital Transactions Standard Shares Proceeds from shares issued $ 20,813,812 $ 42,567,841 $ 37,852,532 $ 56,221,231 $ 5,237,434 Dividends reinvested -- -- -- -- -- Cost of shares redeemed (53,825,105) (77,794,151) (55,356,284) (80,428,934) (4,843,401) Net change (33,011,293) (35,226,310) (17,503,752) (24,207,703) 394,033 Institutional Shares Proceeds from shares issued $ 27,922,878 $ 31,393,835 $ 2,821,812 $ 3,944,080 -- Cost of shares redeemed (47,184,580) (41,615,831) (3,432,566) (13,893,132) -- Net change (19,261,702) (10,221,996) (610,754) (9,949,052) -- Administrative Shares Proceeds from shares issued $ 1,251,277 $ 943,987 $ 6,162,025 $ 9,721,056 -- Cost of shares redeemed (865,365) (306,104) (5,548,212) (8,308,171) -- Net change 385,912 637,883 613,813 1,412,885 -- Change in net assets from capital transactions $ (51,887,083) $ (44,810,423) $ (17,500,693) $ (32,743,870) $ 394,033 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Share Transactions Standard Shares Issued 1,364,126 2,152,690 3,719,462 4,217,604 672,716 Reinvested -- -- -- -- -- Redeemed (3,545,634) (3,989,536) (5,464,486) (6,041,917) (628,978) Net change (2,181,508) (1,836,846) (1,745,024) (1,824,313) 43,738 Institutional Shares Issued 2,233,874 1,964,990 273,794 293,475 -- Redeemed (3,763,348) (2,637,569) (329,608) (991,621) -- Net change (1,529,474) (672,579) (55,814) (698,146) -- Administrative Shares Issued 80,682 47,642 597,115 721,866 -- Redeemed (55,257) (15,822) (534,955) (611,698) -- Net change 25,425 31,820 62,160 110,168 -- Change in shares from share transactions (3,685,557) (2,477,605) (1,738,678) (2,412,291) 43,738 - ---------------------------------------------------------------------------------------------------------------------------------- Small Cap Core Growth Fund Value Fund Balanced Fund - ---------------------------------------------------------------------------------------------------------------------------------- For the For the For the period For the For the period year ended year ended 06/01/02 - year ended 12/20/02(1) - 06/30/02 06/30/03 06/30/02 5/31/02 06/30/03 Operations Net investment income/loss $ (156,548) $ (99,467) $ (25,121) $ (201,215) $ 1,205 Realized gains/losses on investments and foreign currency transactions 815,380 (10,282,004) (163,773) (771) 24,140 Change in unrealized appreciation/ depreciation on investments (1,534,841) 9,608,668 (3,403,915) (6,143,982) 25,761 Change in net assets from operations (876,009) (772,803) (3,592,809) (6,345,968) 51,106 Dividends to Shareholders: >From net investment income: Standard shares -- -- -- -- (1,502) >From net realized gains on investments: Standard shares -- -- -- (2,126,224) -- Total dividends -- -- -- (2,126,224) (1,502) Change in net assets from capital transactions 3,832,696 (4,060,871) (328,336) 19,075,057 1,011,462 Change in net assets $ 2,956,687 $ (4,833,674) $ (3,921,145) $ 10,602,865 $ 1,061,066 - ---------------------------------------------------------------------------------------------------------------------------------- Net Assets Beginning of period $ 15,502,709 $ 21,059,993 $ 24,981,138 $ 14,378,273 -- End of period $ 18,459,396 $ 16,226,319 $ 21,059,993 $ 24,981,138 $ 1,061,066 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Accumulated net investment income/loss -- -- -- -- $ 156 Capital Transactions Standard Shares Proceeds from shares issued $ 12,270,553 $ 6,319,550 $ 938,031 $ 24,800,162 $ 1,049,586 Dividends reinvested -- -- -- 2,070,609 325 Cost of shares redeemed (8,437,857) (10,380,421) (1,266,367) (7,795,714) (38,449) Net change 3,832,696 (4,060,871) (328,336) 19,075,057 1,011,462 Institutional Shares Proceeds from shares issued -- -- -- -- -- Cost of shares redeemed -- -- -- -- -- Net change -- -- -- -- -- Administrative Shares Proceeds from shares issued -- -- -- -- -- Cost of shares redeemed -- -- -- -- -- Net change -- -- -- -- -- Change in net assets from capital transactions $ 3,832,696 $ (4,060,871) $ (328,336) $ 19,075,057 $ 1,011,462 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Share Transactions Standard Shares Issued 1,251,105 819,291 100,445 1,987,625 104,984 Reinvested -- -- -- 165,516 33 Redeemed (868,569) (1,349,990) (138,633) (646,233) (3,660) Net change 382,536 (530,699) (38,188) 1,506,908 101,357 Institutional Shares Issued -- -- -- -- -- Redeemed -- -- -- -- -- Net change -- -- -- -- -- Administrative Shares Issued -- -- -- -- -- Redeemed -- -- -- -- -- Net change -- -- -- -- -- Change in shares from share transactions 382,536 (530,699) (38,188) 1,506,908 101,357 - ----------------------------------------------------------------------------------------------------------------------------------
(1) Commencement of operations. See Financial Notes 42 & 43 STATEMENTS OF CHANGES IN NET ASSETS
Global Equity Fund International Growth Fund - ------------------------------------------------------------------------------------------------------------------ For the For the For the For the year ended year ended year ended year ended 06/30/03 06/30/02 06/30/03 06/30/02 - ------------------------------------------------------------------------------------------------------------------ Operations Net investment income/loss $ (245,695) $ (1,187,621) $ 4,694 $ (6,805) Realized gains/losses on investments and foreign currency transactions (20,092,299) (58,190,264) (543,939) (445,542) Change in unrealized appreciation/depreciation on investments and foreign currencies 10,231,205 8,768,398 263,354 (148,631) Change in net assets from operations (10,106,789) (50,609,487) (275,891) (600,978) Dividends to Shareholders: From net investment income: Standard shares -- -- -- -- Institutional shares -- -- -- -- Total dividends -- -- -- -- Change in net assets from capital transactions (26,919,108) (56,075,279) (50,039) 2,131,472 Change in net assets $ (37,025,897) $(106,684,766) $ (325,930) $ 1,530,494 - ------------------------------------------------------------------------------------------------------------------ Net Assets Beginning of period $ 147,618,456 $ 254,303,222 $ 3,167,766 $ 1,637,272 End of period $ 110,592,559 $ 147,618,456 $ 2,841,836 $ 3,167,766 - ------------------------------------------------------------------------------------------------------------------ Accumulated net investment income/loss $ (570,287) $ (723,041) $ (57,479) $ (25,644) - ------------------------------------------------------------------------------------------------------------------ Capital Transactions Standard Shares Proceeds from shares issued $ 25,646,368 $ 198,374,332 $ 2,826,850 $ 4,791,279 Dividends reinvested -- -- -- -- Cost of shares redeemed (50,286,863) (251,921,233) (2,876,889) (2,659,807) Net change (24,640,495) (53,546,901) (50,039) 2,131,472 Institutional Shares Proceeds from shares issued $ 37,771,071 $ 54,298,201 -- -- Dividends reinvested -- -- -- -- Cost of shares redeemed (40,033,225) (57,777,479) -- -- Net change (2,262,154) (3,479,278) -- -- Administrative Shares Proceeds from shares issued $ 706,362 $ 1,591,347 -- -- Cost of shares redeemed (722,821) (640,447) -- -- Net change (16,459) 950,900 -- -- Change in net assets from capital transactions $ (26,919,108) $ (56,075,279) $ (50,039) $ 2,131,472 - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ Share Transactions Standard Shares Issued 1,995,494 12,492,604 497,446 644,662 Reinvested -- -- -- -- Redeemed (3,944,883) (15,828,132) (504,006) (372,894) Net change (1,949,389) (3,335,528) (6,560) 271,768 Institutional Shares Issued 2,906,867 3,421,162 -- -- Reinvested -- -- -- -- Redeemed (3,078,716) (3,652,158) -- -- Net change (171,849) (230,996) -- -- Administrative Shares Issued 55,041 99,269 -- -- Redeemed (56,965) (40,048) -- -- Net change (1,924) 59,221 -- -- Change in shares from share transactions (2,123,162) (3,507,303) (6,560) 271,768 - ------------------------------------------------------------------------------------------------------------------ Ultra Short Income Fund Bond Fund Money Market Fund - --------------------------------------------------------------------------------------------------------------------------------- For the For the For the period For the For the year ended year ended 11/21/02(1) - year ended year ended 06/30/03 06/30/02 06/30/03 06/30/03 6/30/02 - --------------------------------------------------------------------------------------------------------------------------------- Operations Net investment income/loss $ 2,597,821 $ 4,289,896 $ 82,660 $ 844,631 $ 2,637,823 Realized gains/losses on investments and foreign currency transactions 3,091,917 (7,467,992) (2,413) -- -- Change in unrealized appreciation/depreciation on investments and foreign currencies 1,619,468 2,469,102 38,485 -- -- Change in net assets from operations 7,309,206 (708,994) 118,732 844,631 2,637,823 Dividends to Shareholders: From net investment income: Standard shares (2,770,272) (4,272,706) (89,255) (710,661) (2,026,320) Institutional shares -- -- -- (133,970) (602,601) Total dividends (2,770,272) (4,272,706) (89,255) (844,631) (2,628,921) Change in net assets from capital transactions (2,889,480) 830,365 9,222,446 (15,276,980) (13,884,963) Change in net assets $ 1,649,454 $ (4,151,335) $ 9,251,923 $ (15,276,980) $ (13,876,061) - --------------------------------------------------------------------------------------------------------------------------------- Net Assets Beginning of period $ 67,488,027 $ 71,639,362 $- $ 130,810,173 $ 144,686,234 End of period $ 69,137,481 $ 67,488,027 $ 9,251,923 $ 115,533,193 $ 130,810,173 - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- Accumulated net investment income/loss -- $ (3,553) $ (976) -- -- Capital Transactions Standard Shares Proceeds from shares issued $ 15,862,291 $ 26,499,837 $ 10,640,331 $ 90,075,370 $ 131,426,668 Dividends reinvested 2,594,958 3,903,979 70,753 742,720 2,214,847 Cost of shares redeemed (21,346,729) (29,573,451) (1,488,638) (100,447,452) (136,588,995) Net change (2,889,480) 830,365 9,222,446 (9,629,362) (2,947,480) Institutional Shares Proceeds from shares issued -- -- -- $ 3,128,338 $ 17,644,804 Dividends reinvested -- -- -- 144,697 658,558 Cost of shares redeemed -- -- -- (8,920,653) (29,240,845) Net change -- -- -- (5,647,618) (10,937,483) Administrative Shares Proceeds from shares issued -- -- -- -- -- Cost of shares redeemed -- -- -- -- -- Net change -- -- -- -- -- Change in net assets from capital transactions $ (2,889,480) $ 830,365 $ 9,222,446 $ (15,276,980) $ (13,884,963) - --------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------- Share Transactions Standard Shares Issued 1,597,468 2,597,522 1,060,718 90,075,370 131,415,588 Reinvested 262,370 383,963 7,042 742,730 2,214,857 Redeemed (2,151,369) (2,932,132) (148,149) (100,447,452) (136,588,544) Net change (291,531) 49,353 919,611 (9,629,352) (2,958,099) Institutional Shares Issued -- -- -- 3,128,339 17,655,439 Reinvested -- -- -- 144,697 658,558 Redeemed -- -- -- (8,920,653) (29,240,845) Net change -- -- -- (5,647,617) (10,926,848) Administrative Shares Issued -- -- -- -- -- Redeemed -- -- -- -- -- Net change -- -- -- -- -- Change in shares from share transactions (291,531) 49,353 919,611 (15,276,969) (13,884,947) - ---------------------------------------------------------------------------------------------------------------------------------
(1) Commencement of operations. See Financial Notes 44 & 45 FINANCIAL HIGHLIGHTS
Dividends to Selected Per Share Data Investment Activities Shareholders - ------------------------------------------------------------------------------------------------------------------------------ Net asset Net realized value, Net and unrealized Total from From net beginning investment Redemption gains/losses investment investment of period income/loss fee on investments operations income - ------------------------------------------------------------------------------------------------------------------------------ Core Growth Fund Standard Shares Year ended June 30, 2003 $16.73 (0.04) -- (0.25) (0.29) -- Year ended June 30, 2002 22.12 (0.09) -- (5.30) (5.39) -- Year ended June 30, 2001 32.59 (0.16) -- (9.01) (9.17) -- Year ended June 30, 2000 30.52 (0.22) -- 4.08 3.86 -- Year ended June 30, 1999 23.46 (0.15) -- 7.52 7.37 -- Institutional Shares Year ended June 30, 2003 $13.66 0.05 -- (0.19) (0.14) -- Year ended June 30, 2002 17.94 0.04 -- (4.32) (4.28) -- Year ended June 30, 2001 26.59 0.01 -- (7.36) (7.35) -- Year ended June 30, 2000 25.02 -- -- 3.36 3.36 -- Year ended June 30, 1999 19.13 0.01 -- 6.19 6.20 -- Administrative Shares Year ended June 30, 2003 $16.91 0.01 -- (0.24) (0.23) -- Year ended June 30, 2002 22.27 (0.01) -- (5.35) (5.36) -- Year ended June 30, 2001 32.66 (0.03)(1) -- (9.06) (9.09) -- Period ended June 30, 2000(2) 32.09 (0.01) -- 0.58 0.57 -- - ------------------------------------------------------------------------------------------------------------------------------ Emerging Growth Fund Standard Shares Year ended June 30, 2003 $11.82 (0.17) -- (0.69) (0.86) -- Year ended June 30, 2002 15.79 (0.20) -- (3.77) (3.97) -- Year ended June 30, 2001 33.48 (0.21) -- (11.41) (11.62) -- Year ended June 30, 2000 21.76 (0.30)(1) -- 16.58 16.28 -- Year ended June 30, 1999 17.55 (0.19) -- 6.19 6.00 -- Institutional Shares Year ended June 30, 2003 $12.02 (0.10) -- (0.69) (0.79) -- Year ended June 30, 2002 15.96 (0.11)(1) -- (3.83) (3.94) -- Year ended June 30, 2001 33.61 (0.12) -- (11.46) (11.58) -- Period ended June 30, 2000(5) 25.67 (0.11) -- 12.61 12.50 -- Administrative Shares Year ended June 30, 2003 $11.92 (0.10) -- (0.71) (0.81) -- Year ended June 30, 2002 15.87 (0.13) -- (3.82) (3.95) -- Year ended June 30, 2001 33.57 (0.17)(1) -- (11.46) (11.63) -- Period ended June 30, 2000(6) 28.70 (0.10)(1) -- 4.97 4.87 -- - ------------------------------------------------------------------------------------------------------------------------------ Small Cap Core Growth Fund Standard Shares Year ended June 30, 2003 $9.18 (0.09) -- (0.42) (0.51) -- Year ended June 30, 2002 9.52 (0.08) -- (0.26) (0.34) -- Year ended June 30, 2001 11.23 (0.05) -- (1.64) (1.69) -- Period ended June 30, 2000(7) 10.00 -- -- 1.23 1.23 -- - ------------------------------------------------------------------------------------------------------------------------------ Value Fund Standard Shares Year ended June 30, 2003 $8.74 (0.05) -- (0.05) (0.10) -- One month period ended June 30, 2002(8) 10.21 (0.01) -- (1.46) (1.47) -- Year ended May 31, 2002 15.29 (0.08) -- (3.57) (3.65) -- Year ended May 31, 2001 14.58 (0.07) -- 2.70 2.63 -- Year ended May 31, 2000 14.03 (0.08) -- 2.05 1.97 -- Year ended May 31, 1999 12.98 (0.08) -- 1.95 1.87 -- - ------------------------------------------------------------------------------------------------------------------------------ Balanced Fund Standard Shares - ------------------------------------------------------------------------------------------------------------------------------ Period ended June 30, 2003(9) $10.00 0.02 -- 0.47 0.49 (0.02) - ------------------------------------------------------------------------------------------------------------------------------ Dividends to Shareholders Ratios and Supplemental Data - ------------------------------------------------------------------------------------------------------------------------------- Net Ratio of From Net asset assets, expenses to net Total value, Total end of average net realized dividends to end return period assets, net of gains shareholders of period (%) ($x1,000) reimbursement(%) - ------------------------------------------------------------------------------------------------------------------------------- Core Growth Fund Standard Shares Year ended June 30, 2003 -- -- $16.44 (1.73) $285,339 1.37 Year ended June 30, 2002 -- -- 16.73 (24.37) 326,793 1.34 Year ended June 30, 2001 (1.30) (1.30) 22.12 (28.42) 472,779 1.34 Year ended June 30, 2000 (1.79) (1.79) 32.59 12.82 699,399 1.49 Year ended June 30, 1999 (0.31) (0.31) 30.52 31.58 578,286 1.58 Institutional Shares Year ended June 30, 2003 -- -- $13.52 (1.02) $63,571 0.69 Year ended June 30, 2002 -- -- 13.66 (23.86) 85,140 0.68 Year ended June 30, 2001 (1.30) (1.30) 17.94 (27.98) 123,912 0.68 Year ended June 30, 2000 (1.79) (1.79) 26.59 13.67 180,779 0.74 Year ended June 30, 1999 (0.31) (0.31) 25.02 32.62 98,705 0.83 Administrative Shares Year ended June 30, 2003 -- -- $16.68 (1.36) $2,426 1.00 Year ended June 30, 2002 -- -- 16.91 (24.07) 2,029 0.94 Year ended June 30, 2001 (1.30) (1.30) 22.27 (28.11) 1,964 0.94 Period ended June 30, 2000(2) -- -- 32.66 1.78(3) 21 0.99(4) - ------------------------------------------------------------------------------------------------------------------------------- Emerging Growth Fund Standard Shares Year ended June 30, 2003 -- -- $10.96 (7.28) $157,911 1.95 Year ended June 30, 2002 -- -- 11.82 (25.14) 190,812 1.80 Year ended June 30, 2001 (6.07) (6.07) 15.79 (37.52) 283,760 1.68 Year ended June 30, 2000 (4.56) (4.56) 33.48 82.19 386,670 1.69 Year ended June 30, 1999 (1.79) (1.79) 21.76 36.04 136,137 1.82 Institutional Shares Year ended June 30, 2003 -- -- $11.23 (6.57) $5,379 1.25 Year ended June 30, 2002 -- -- 12.02 (24.69) 6,428 1.20 Year ended June 30, 2001 (6.07) (6.07) 15.96 (37.21) 19,676 1.30 Period ended June 30, 2000(5) (4.56) (4.56) 33.61 55.02(3) 16,284 1.24(4) Administrative Shares Year ended June 30, 2003 -- -- $11.11 (6.80) $8,561 1.51 Year ended June 30, 2002 -- -- 11.92 (24.89) 8,444 1.47 Year ended June 30, 2001 (6.07) (6.07) 15.87 (37.43) 9,497 1.55 Period ended June 30, 2000(6) -- -- 33.57 16.97(3) 8 1.55(4) - ------------------------------------------------------------------------------------------------------------------------------- Small Cap Core Growth Fund Standard Shares Year ended June 30, 2003 -- -- $8.67 (5.56) $17,821 1.45 Year ended June 30, 2002 -- -- 9.18 (3.57) 18,459 1.34 Year ended June 30, 2001 (0.02) (0.02) 9.52 (15.08) 15,503 1.34 Period ended June 30, 2000(7) -- -- 11.23 12.30(3) 8,397 1.49(4) - ------------------------------------------------------------------------------------------------------------------------------- Value Fund Standard Shares Year ended June 30, 2003 -- -- $8.64 (1.14) $16,226 1.90 One month period ended June 30, 2002(8) -- -- 8.74 (14.40)(3) 21,060 1.95(4) Year ended May 31, 2002 (1.43) (1.43) 10.21 (25.58) 24,981 1.95 Year ended May 31, 2001 (1.92) (1.92) 15.29 20.71 14,378 1.95 Year ended May 31, 2000 (1.42) (1.42) 14.58 14.36 8,726 1.95 Year ended May 31, 1999 (0.82) (0.82) 14.03 15.43 4,611 1.95 - ------------------------------------------------------------------------------------------------------------------------------- Balanced Fund Standard Shares - ------------------------------------------------------------------------------------------------------------------------------- Period ended June 30, 2003(9) -- (0.02) $10.47 4.87(3) $1,061 1.30(4) - ------------------------------------------------------------------------------------------------------------------------------- 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(%) - --------------------------------------------------------------------------------------- Core Growth Fund Standard Shares Year ended June 30, 2003 (0.28) 1.53 183.75 Year ended June 30, 2002 (0.43) 1.44 76.40 Year ended June 30, 2001 (0.62) 1.42 44.95 Year ended June 30, 2000 (0.75) 1.52 20.04 Year ended June 30, 1999 (0.68) 1.58 18.04 Institutional Shares Year ended June 30, 2003 0.36 0.76 183.75 Year ended June 30, 2002 0.23 0.73 76.40 Year ended June 30, 2001 0.04 0.74 44.95 Year ended June 30, 2000 0.00 0.74 20.04 Year ended June 30, 1999 0.05 0.83 18.04 Administrative Shares Year ended June 30, 2003 0.09 1.06 183.75 Year ended June 30, 2002 (0.05) 1.01 76.40 Year ended June 30, 2001 (0.14) 5.63 44.95 Period ended June 30, 2000(2) (0.27)(4) 101.59(4) 20.04 - --------------------------------------------------------------------------------------- Emerging Growth Fund Standard Shares Year ended June 30, 2003 (1.56) 1.97 315.89 Year ended June 30, 2002 (1.39) 1.86 202.57 Year ended June 30, 2001 (1.09) 1.75 136.63 Year ended June 30, 2000 (1.09) 1.75 159.95 Year ended June 30, 1999 (1.20) 1.83 208.49 Institutional Shares Year ended June 30, 2003 (0.86) 1.28 315.89 Year ended June 30, 2002 (0.78) 1.26 202.57 Year ended June 30, 2001 (0.69) 1.36 136.63 Period ended June 30, 2000(5) (0.61)(4) 1.31(4) 159.95 Administrative Shares Year ended June 30, 2003 (1.13) 1.54 315.89 Year ended June 30, 2002 (1.07) 1.53 202.57 Year ended June 30, 2001 (0.96) 2.06 136.63 Period ended June 30, 2000(6) (0.90)(4) 158.14(4) 159.95 - --------------------------------------------------------------------------------------- Small Cap Core Growth Fund Standard Shares Year ended June 30, 2003 (1.12) 1.58 349.79 Year ended June 30, 2002 (0.93) 1.40 294.26 Year ended June 30, 2001 (0.57) 3.20 146.62 Period ended June 30, 2000(7) 0.00(4) 5.98(4) 20.16 - --------------------------------------------------------------------------------------- Value Fund Standard Shares Year ended June 30, 2003 (0.62) 1.90 209.72 One month period ended June 30, 2002(8) (1.33)(4) 2.05(4) 5.87 Year ended May 31, 2002 (1.04) 2.54 34.77 Year ended May 31, 2001 (0.65) 4.63 62.55 Year ended May 31, 2000 (0.68) 7.11 72.32 Year ended May 31, 1999 (0.79) 10.32 73.70 - --------------------------------------------------------------------------------------- Balanced Fund Standard Shares - --------------------------------------------------------------------------------------- Period ended June 30, 2003(9) 0.41(4) 16.73(4) 140.42 - ---------------------------------------------------------------------------------------
(1) Based on average shares outstanding. (2) For the period February 4, 2000, commencement of operations, to June 30, 2000. (3) Not annualized. (4) Annualized. (5) For the period November 1, 1999, commencement of operations, to June 30, 2000. (6) For the period February 4, 2000, commencement of operations, to June 30, 2000. (7) For the period December 28, 1999, commencement of operations, to June 30, 2000. (8) Subsequent to the annual report as of May 31, 2002, the Citizens Value Fund changed its fiscal year end to June 30. (9) For the period December 20, 2002, commencement of operations, to June 30, 2003. See Financial Notes 46 & 47 FINANCIAL HIGHLIGHTS
Dividends to Selected Per Share Data Investment Activities Shareholders - ------------------------------------------------------------------------------------------------------------------------------ Net asset Net realized value, Net and unrealized Total from From net beginning investment Redemption gains/losses investment investment of period income/loss fee on investments operations income - ------------------------------------------------------------------------------------------------------------------------------ Global Equity Fund Standard Shares Year ended June 30, 2003 $14.22 (0.03)(1) 0.02 (0.82) (0.83) -- Year ended June 30, 2002 18.31 (0.11)(1) 0.01 (3.99) (4.09) -- Year ended June 30, 2001 29.99 (0.16) -- (9.61) (9.77) -- Year ended June 30, 2000 20.22 (0.22)(1) -- 10.94 10.72 -- Year ended June 30, 1999 16.95 (0.12) -- 3.86 3.74 -- Institutional Shares Year ended June 30, 2003 $14.40 0.05(1) 0.02 (0.82) (0.75) -- Year ended June 30, 2002 18.46 (0.01)(1) 0.01 (4.06) (4.06) -- Year ended June 30, 2001 30.08 (0.05)(1) -- (9.66) (9.71) -- Period ended June 30, 2000(2) 23.45 (0.05)(1) -- 7.63 7.58 -- Administrative Shares Year ended June 30, 2003 $14.30 0.01(1) 0.02 (0.82) (0.79) -- Year ended June 30, 2002 18.38 (0.06)(1) 0.01 (4.03) (4.08) -- Year ended June 30, 2001 30.02 (0.11)(1) -- (9.62) (9.73) -- Period ended June 30, 2000(5) 33.45 (0.06) -- (3.37) (3.43) -- - ------------------------------------------------------------------------------------------------------------------------------ International Growth Fund Standard Shares Year ended June 30, 2003 $6.73 0.01(1) 0.04 (0.66) (0.61) -- Year ended June 30, 2002 8.22 (0.02)(1) 0.02 (1.49) (1.49) -- Period ended June 30, 2001(6) 10.00 0.04(1) -- (1.82) (1.78) -- - ------------------------------------------------------------------------------------------------------------------------------ Income Fund Standard Shares Year ended June 30, 2003 $9.62 0.37 -- 0.69 1.06 (0.40) Year ended June 30, 2002 10.28 0.58 -- (0.66) (0.08) (0.58) Year ended June 30, 2001 10.20 0.68 -- 0.10 0.78 (0.70) Year ended June 30, 2000 10.51 0.65 -- (0.32) 0.33 (0.63) Year ended June 30, 1999 11.03 0.59 -- (0.50) 0.09 (0.59) - ------------------------------------------------------------------------------------------------------------------------------ Ultra Short Bond Fund Standard Shares Period ended June 30, 2003(8) $10.00 0.14(1) -- 0.07 0.21 (0.15) - ------------------------------------------------------------------------------------------------------------------------------ Money Market Fund Standard Shares Year ended June 30, 2003 $1.00 0.01 -- -- 0.01 (0.01) Year ended June 30, 2002 1.00 0.02 -- -- 0.02 (0.02) Year ended June 30, 2001 1.00 0.05 -- -- 0.05 (0.05) Year ended June 30, 2000 1.00 0.05 -- -- 0.05 (0.05) Year ended June 30, 1999 1.00 0.04 -- -- 0.04 (0.04) Institutional Shares Year ended June 30, 2003 $1.00 0.01 -- -- 0.01 (0.01) Year ended June 30, 2002 1.00 0.02 -- -- 0.02 (0.02) Year ended June 30, 2001 1.00 0.05 -- -- 0.05 (0.05) Year ended June 30, 2000 1.00 0.05 -- -- 0.05 (0.05) Year ended June 30, 1999 1.00 0.05 -- -- 0.05 (0.05) Dividends to Shareholders Ratios and Supplemental Data - ------------------------------------------------------------------------------------------------------------------------------- Net Ratio of From Net asset assets, expenses to net Total value, Total end of average net realized dividends to end return period assets, net of gains shareholders of period (%) ($x1,000) reimbursement(%) - ------------------------------------------------------------------------------------------------------------------------------- Global Equity Fund Standard Shares Year ended June 30, 2003 -- -- $13.39 (5.84) $101,846 1.91 Year ended June 30, 2002 -- -- 14.22 (22.34) 135,881 1.84 Year ended June 30, 2001 (1.91) (1.91) 18.31 (33.69) 236,080 1.82 Year ended June 30, 2000 (0.95) (0.95) 29.99 53.27 354,818 1.82 Year ended June 30, 1999 (0.47) (0.47) 20.22 22.34 90,549 1.96 Institutional Shares Year ended June 30, 2003 -- -- $13.65 (5.21) $6,688 1.26 Year ended June 30, 2002 -- -- 14.40 (21.99) 9,531 1.27 Year ended June 30, 2001 (1.91) (1.91) 18.46 (33.35) 16,475 1.39 Period ended June 30, 2000(2) (0.95) (0.95) 30.08 32.55(3) 12,544 1.39(4) Administrative Shares Year ended June 30, 2003 -- -- $13.51 (5.52) $2,059 1.59 Year ended June 30, 2002 -- -- 14.30 (22.20) 2,207 1.64 Year ended June 30, 2001 (1.91) (1.91) 18.38 (33.52) 1,748 1.68 Period ended June 30, 2000(5) -- -- 30.02 (10.25)(3) 1 1.68(4) - ------------------------------------------------------------------------------------------------------------------------------ International Growth Fund Standard Shares Year ended June 30, 2003 -- -- $6.12 (9.06) $2,842 1.85 Year ended June 30, 2002 -- -- 6.73 (18.13) 3,168 1.85 Period ended June 30, 2001(6) -- -- 8.22 (17.80)(3) 1,637 1.85(4) - ------------------------------------------------------------------------------------------------------------------------------ Income Fund Standard Shares Year ended June 30, 2003 -- (0.40) $10.28 11.28 $69,137 1.37 Year ended June 30, 2002 -- (0.58) 9.62 (0.87) 67,488 1.38 Year ended June 30, 2001 --(7) (0.70) 10.28 7.87 71,639 1.40 Year ended June 30, 2000 (0.01) (0.64) 10.20 3.35 61,836 1.45 Year ended June 30, 1999 (0.02) (0.61) 10.51 0.78 62,837 1.45 - ------------------------------------------------------------------------------------------------------------------------------ Ultra Short Bond Fund Standard Shares Period ended June 30, 2003(8) -- (0.15) $10.06 2.12(3) $9,252 0.00(4) - ------------------------------------------------------------------------------------------------------------------------------ Money Market Fund Standard Shares Year ended June 30, 2003 -- (0.01) $1.00 0.65 $104,641 0.93 Year ended June 30, 2002 -- (0.02) 1.00 1.71 114,271 0.92 Year ended June 30, 2001 -- (0.05) 1.00 5.23 117,211 0.89 Year ended June 30, 2000 -- (0.05) 1.00 4.67 112,700 1.17 Year ended June 30, 1999 -- (0.04) 1.00 4.07 105,740 1.19 Institutional Shares Year ended June 30, 2003 -- (0.01) $1.00 0.95 $10,892 0.63 Year ended June 30, 2002 -- (0.02) 1.00 1.97 16,539 0.67 Year ended June 30, 2001 -- (0.05) 1.00 5.43 27,475 0.70 Year ended June 30, 2000 -- (0.05) 1.00 5.04 23,370 0.81 Year ended June 30, 1999 -- (0.05) 1.00 4.58 22,464 0.70 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(%) - --------------------------------------------------------------------------------------- Global Equity Fund Standard Shares Year ended June 30, 2003 (0.26) 1.91 42.05 Year ended June 30, 2002 (0.66) 1.84 132.82 Year ended June 30, 2001 (0.71) 1.82 151.95 Year ended June 30, 2000 (0.79) 1.83 120.69 Year ended June 30, 1999 (0.88) 1.96 64.07 Institutional Shares Year ended June 30, 2003 0.42 1.26 42.05 Year ended June 30, 2002 (0.05) 1.27 132.82 Year ended June 30, 2001 (0.23) 1.42 151.95 Period ended June 30, 2000(2) (0.25)(4) 1.43(4) 120.69 Administrative Shares Year ended June 30, 2003 0.11 1.59 42.05 Year ended June 30, 2002 (0.39) 1.64 132.82 Year ended June 30, 2001 (0.48) 3.18 151.95 Period ended June 30, 2000(5) (0.48)(4) 296.20(4) 120.69 - --------------------------------------------------------------------------------------- International Growth Fund Standard Shares Year ended June 30, 2003 0.18 2.45 90.26 Year ended June 30, 2002 (0.23) 3.06 158.84 Period ended June 30, 2001(6) 0.86(4) 17.47(4) 39.88 - --------------------------------------------------------------------------------------- Income Fund Standard Shares Year ended June 30, 2003 3.80 1.37 195.73 Year ended June 30, 2002 5.77 1.38 54.05 Year ended June 30, 2001 6.55 1.48 60.53 Year ended June 30, 2000 6.34 1.47 52.96 Year ended June 30, 1999 5.50 1.49 44.07 - --------------------------------------------------------------------------------------- Ultra Short Bond Fund Standard Shares Period ended June 30, 2003(8) 2.29(4) 2.10(4) 56.04 - --------------------------------------------------------------------------------------- Money Market Fund Standard Shares Year ended June 30, 2003 0.65 0.93 N/A Year ended June 30, 2002 1.72 0.92 N/A Year ended June 30, 2001 5.08 0.89 N/A Year ended June 30, 2000 4.59 1.18 N/A Year ended June 30, 1999 4.00 1.24 N/A Institutional Shares Year ended June 30, 2003 0.98 0.63 N/A Year ended June 30, 2002 1.95 0.67 N/A Year ended June 30, 2001 5.22 0.70 N/A Year ended June 30, 2000 4.93 0.82 N/A Year ended June 30, 1999 4.47 0.70 N/A
(1) Based on average shares outstanding. (2) For the period November 1, 1999, commencement of operations, to June 30, 2000. (3) Not annualized. (4) Annualized. (5) For the period February 4, 2000, commencement of operations, to June 30, 2000. (6) For the period December 20, 2000, commencement of operations, to June 30, 2001. (7) Less than $0.005 per share. (8) For the period November 21, 2002, commencement of operations, to June 30, 2003. See Financial Notes 48 & 49 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 contains 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 Balanced Fund Balanced Fund Citizens Global Equity Fund Global Equity Fund Citizens International Growth Fund International Growth Fund Citizens Income Fund Income Fund Citizens Ultra Short Bond Fund Ultra Short Bond Fund Citizens Money Market Fund Money Market Fund The funds are authorized to issue an unlimited number of shares of beneficial interest with no par value. The Core Growth Fund, Emerging Growth Fund and Global Equity Fund currently offer three classes of shares: Standard shares, Institutional shares and Administrative shares. The Money Market Fund offers two classes of shares: Standard shares and Institutional shares. The Small Cap Core Growth Fund, Value Fund, Balanced Fund, International Growth Fund, Income Fund and Ultra Short Bond Fund offer one class of shares: Standard shares. Each class of shares in the funds has identical rights and privileges except with respect to fees paid under class-specific agreements, voting rights on matters affecting a single class of shares, and the exchange privilege of each class of shares. SIGNIFICANT ACCOUNTING POLICIES The following is a summary of significant accounting policies followed by the funds in the preparation of their financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses for the period. Actual results could differ from those estimates. Securities Valuation Equity securities are valued at the last sale price on the primary exchange on which such securities are traded or on the principal over-the-counter market on which such securities are traded, as of the close of business on the day the securities are valued, or lacking any sales, at the last available bid price for domestic securities and halfway between the bid and ask price for international securities. Equity securities traded on the NASDAQ stock market are valued at the NASDAQ official closing price. Fixed-income investments generally are valued at the bid price for securities. Securities may also be valued on the basis of valuations furnished by a pricing service that uses both dealer-supplied valuations and valuations based upon analysis of market data or other factors if these valuations are believed to more accurately reflect the fair value of such securities. Investments for which market quotations are not readily available are valued at fair value, using procedures determined in good faith by the Board of Trustees. Short-term securities maturing within 60 days and investments of the Money Market Fund are valued at amortized cost, which approximates fair value. Under the amortized cost method, premium or discount, if any, is amortized or accreted, respectively, on a constant (straight-line) basis to the maturity of the security. Security Transactions and Related Investment Income Security transactions are accounted for on the trade date (date the order to buy or sell is executed). The cost of securities sold is determined on the identified cost 50 FINANCIAL NOTES 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 The Global Equity Fund and International Growth Fund use foreign currency contracts 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 contractual currency exchange rates established at the time of each trade. There were no open foreign currency contracts as of June 30, 2003. Repurchase Agreements The funds may acquire repurchase agreements with an entity which is a member of the Federal Reserve System collateralized by instruments issued by the U.S.Government, its agencies or instrumentalities. The repurchase price generally equals the price paid by a fund plus interest negotiated on the basis of current short-term rates, which may be more or less than the rate on the underlying securities. It is the funds' policy to receive collateral securities of which the value, including accrued interest, is at least equal to 102% of the amount to be repaid to the funds under each agreement at its maturity. Collateral subject to repurchase agreements is held by the funds' custodian or another qualified custodian. If the counterparty defaults, and the fair value of the collateral declines, realization of the collateral by the funds may be delayed or limited. Restricted Securities The funds are permitted to invest in privately placed securities. These securities may be resold in transactions exempt from registration, or to the public, if the securities are registered under the Securities Act of 1933. Disposal of these securities may involve time-consuming negotiations and expense, and the prompt sale at an acceptable price may be difficult. Redemption Fee The Global Equity Fund and International Growth Fund charge a redemption fee of 2% (paid to the funds) with respect to shares of those funds redeemed within 60 days of purchase. The fee does not apply to shares purchased through the reinvestment of dividends or other distributions, redemptions by the funds of accounts below minimum balances, redemptions due to shareholder death or disability, or certain omnibus accounts or retirement plans. For the year ended June 30, 2003, the Global Equity and International Growth Funds collected $158,810 and $20,283 respectively, in redemption fees. These fees are included in the "increase/ decrease 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, Global Equity Fund and International Growth Fund declare and distribute dividends from net investment income, if any, to shareholders annually. The Balanced Fund declares and distributes dividends from net investment income to shareholders quarterly. The Income Fund declares and distributes dividends from net investment income to shareholders monthly. Dividends from net investment income for the Ultra Short Bond Fund and the Money Market Fund are declared daily and paid monthly. The funds' net realized gains, if any, are distributed to shareholders at least annually. 51 FINANCIAL NOTES Additional dividends may also be paid to the funds' shareholders to the extent necessary to avoid federal excise tax on certain undistributed income and net realized gains. The amount of dividends from net investment income and net realized gains is determined in accordance with federal income tax regulations which may differ from GAAP. These "book/tax" differences are either considered temporary or permanent in nature. To the extent these differences are permanent in nature (i.e., reclassification of market discounts, gain/loss, paydowns, and distributions) such amounts are reclassified to capital; temporary differences do not require reclassification. Offering Costs Expenses incurred in connection with the offering of fund shares (such as drafting of registration statements and agreements) for the Balanced and Ultra Short Bond Funds were paid by the funds and amounted to $10,368 for each fund. Such expenses are being amortized over a 12-month period starting with the commencement of operations. Federal Income Taxes Each fund is a separate taxable entity for federal tax purposes. Each fund has qualified and intends to qualify each year as a "regulated investment company" under Subchapter M of the Internal Revenue Code, as amended and distributes substantially all of its taxable net investment income and net realized gains, if any, to their 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% Balanced Fund 0.65% Global Equity Fund 1.00% International Growth Fund 1.05% Income Fund 0.65% Ultra Short Bond Fund 0.35% Money Market Fund 0.35% >From July 1, 2002 through October 30, 2002, the Adviser was paid a fee based on an annual rate of 1.00% for the Value Fund. State Street Global Advisors Funds Management, Inc. serves as the Sub-Adviser for the Global Equity Fund and International Growth Fund. For its services, the Sub-Adviser receives a fee computed daily based on an annual rate for each funds' average daily net assets, paid by the Adviser as follows: Fund Fee Rate Global Equity Fund 0.35% of the first $500 million, 0.25% thereafter International Growth Fund 0.40% of the first $500 million, 0.30% thereafter For the period July 1, 2002 through October 30, 2002, Meyers Capital Management, LLC ("Meyers") served as the Sub-Adviser for the Citizens Value Fund. For its services, Meyers received a fee based on an annual rate of 0.30% of the first $100 million of average daily net assets and 0.45% of average daily net assets in excess of $100 million, 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 52 FINANCIAL NOTES a separate distribution plan with respect to the funds' Standard and Administrative shares pursuant to which the funds, except the Money Market Fund, compensate the Distributor for services in an amount equal to 0.25% per annum of average annual net assets. Administrative and Shareholder Service Fees The Adviser, with whom certain officers and Trustees are affiliated, performs administrative duties for the Trust under a separate administrative contract, which provides for the reimbursement of out of pocket expenses as well as fees for services rendered. In accordance with the terms of the administrative contract, fees and expenses are accrued daily based on average daily net assets of each fund at the annual rate of 0.10%. Effective July 1, 2003 the fee for these services is an annual rate of 0.15%. Pursuant to the administrative contract for the year ended June 30, 2003, the Adviser was also paid a fee of $100,000 annually for services rendered in connection with the preparation and filing of annual and semi-annual reports and annual updates to the Trust's registration statement. The Adviser may also be compensated an hourly rate for services rendered in connection with the preparation and filing of any and all regulatory communications and shareholder reports and communication except those described above. In addition, Citizens Securities, Inc., a wholly owned subsidiary of the Adviser, provides a number of administrative services to the Trust relating primarily to shareholder services and communications, and is paid an account fee for providing such services and communications for each of the individual funds with the exception of the Core Growth Fund, Standard shares. The Core Growth Fund, Standard shares, may be charged a shareholder service fee of up to 0.35% based on the average daily net assets of the class. For the year ended June 30, 2003, a fee of 0.25% was charged. Transfer Agency, Fund Accounting and Custody BISYS Fund Services Ohio, Inc. provides transfer agency and fund accounting services to the funds pursuant to certain fee arrangements. Transfer agent expenses also include the cost of services rendered by third parties to provide sub-transfer agency services. Fifth Third Bank acts as custodian for the funds. Custody expenses may be incurred or offset from fees or credits arising from cash balances maintained on deposit. Trustee Fees Certain officers and Trustees of the Trust are "interested persons," as defined in the 1940 Act, of the Adviser. Currently, each Trustee who is not an "interested person" receives an annual retainer of $12,000 and $1,250 for each day's attendance at a Trustee meeting. The Trustees have elected a Chair, who receives an additional annual retainer of $5,000; and a Vice Chair, Audit Committee Chair and Social Responsibility Chair -- who receive an additional annual retainer of $2,500. Expense Allocation Expenses directly attributable to a fund are charged to that fund. Expenses not directly attributable to a fund are allocated proportionately among various or all funds within the Trust in relation to the net assets of each fund or on another reasonable basis. Expenses specific to a class are charged to that class. 53 FINANCIAL NOTES Fee Reductions and Reimbursements For the year ended June 30, 2003, the Adviser contractually agreed to limit the total expenses, exclusive of taxes, brokerage commissions and extraordinary expenses, for certain classes of the funds to the extent they exceeded the following limits: Expense Fund Class Limitation Core Growth Fund Standard 1.39% Institutional 0.74% Administrative 1.06% Emerging Growth Fund Institutional 1.30% Administrative 1.55% Small Cap Core Growth Fund Standard 1.45% Value Fund Standard 1.95% Global Equity Fund Standard 2.05% Institutional 1.39% Administrative 1.68% International Growth Fund Standard 1.85% Income Fund Standard 1.40% of the first $100 million of net assets and 1.25% thereafter Money Market Fund Standard 1.50% of the first $40 million of net assets and 1.00% thereafter Effective July 1, 2003 there are no contractual limits on total expenses. For the period July 1, 2002 to November 30, 2002, the Adviser contractually agreed to limit total expenses for the Core Growth Fund to 1.34%, 0.68% and 0.94% for the Standard, Institutional and Administrative shares, respectively. For the period July 1, 2002 to December 31, 2002, the Adviser voluntarily waived 0.10% of its fee for the Emerging Growth Fund when the fund's monthly average net assets exceeded $100 million. In addition, the Adviser voluntarily waived fees and reimbursed expenses so that total annual operating expenses did not exceed 1.30% on the Balanced Fund and 0.00% on the Ultra Short Bond Fund. The Adviser may terminate these waivers at any time. Investment Transactions The following summarizes purchases and sales of investment securities, other than short-term investments, by fund for the year ended June 30, 2003: Fund Purchases Sales Core Growth Fund $625,238,774 $680,218,150 Emerging Growth Fund 517,182,539 531,635,376 Small Cap Core Growth Fund 54,221,257 53,444,334 Value Fund 33,127,408 36,973,002 Balanced Fund 1,564,211 668,305 Global Equity Fund 49,060,888 74,816,583 International Growth Fund 2,396,224 2,319,854 Income Fund 127,757,386 131,303,900 Ultra Short Bond Fund 9,170,933 2,262,532 Meyers Pride Value Fund Reorganization The Trust entered an agreement and plan of reorganization and liquidation with Meyers Investment Trust on behalf of its series Meyers Pride Value Fund, pursuant to which the net assets of the Meyers Pride Value Fund ($12,506,840) were transferred to the Citizens Value Fund in exchange for 1,083,741 shares of the Citizens Value Fund. The reorganization, which qualified as a tax-free exchange for federal income tax purposes, was completed on September 24, 2001, following approval by shareholders of the Meyers Pride Value Fund at a special shareholder meeting. The aggregate net assets of the Meyers Pride Value Fund and the Citizens Value Fund were $12,506,840 and $0, respectively, prior to the reorganization and the combined net assets were $12,506,840 immediately after the reorganization. Subsequent Event On July 1, 2003, the Citizens Money Market Fund transferred all security related assets to the Citizens Prime Money Market Fund. 54 FINANCIAL NOTES Federal Tax Information The tax character of dividends paid by the funds during the past two fiscal years were as follows:
Fiscal Year Ended 2003 Dividends Paid From ------------------------- Ordinary Net long-term Total taxable Tax return Total income capital gains dividends of capital dividends paid(1) - ---------------------------------------------------------------------------------------------------- Balanced Fund $ 325 $ -- $ 325 $ -- $ 325 Income Fund 2,872,716 -- 2,872,716 -- 2,872,716 Ultra Short Bond Fund 72,439 -- 72,439 -- 72,439 Money Market Fund 909,800 -- 909,800 -- 909,800
Fiscal Year Ended 2002 Dividends Paid From Ordinary Net long-term Total taxable Tax return Total income capital gains dividends of capital dividends paid(1)
Fiscal Year Ended 2002 Dividends Paid From ------------------------- Ordinary Net long-term Total taxable Tax return Total income capital gains dividends of capital dividends paid(1) - ---------------------------------------------------------------------------------------------------- Income Fund $4,341,300 $ -- $4,341,300 $ -- $4,341,300 Money Market Fund 2,937,861 -- 2,937,861 -- 2,937,861
As of June 30, 2003 the components of accumulated earnings/deficit on a tax basis for the funds were as follows:
Undistributed Undistributed Accumulated Unrealized Total ordinary long-term Accumulated Dividends capital and appreciation/ accumulated income capital gains earnings payable other losses depreciation(2) earnings/deficit - ----------------------------------------------------------------------------------------------------------------------------------- Core Growth Fund $ -- $ -- $ -- $ -- $(120,712,170) $ 36,721,428 $ (83,990,742) Emerging Growth Fund -- -- -- -- (223,459,606) 14,769,123 (208,690,483) Small Cap Core Growth Fund -- -- -- -- (4,271,892) 1,627,305 (2,644,587) Value Fund -- -- -- -- (11,494,098) 855,755 (10,638,343) Balanced Fund 25,176 -- 25,176 (1,177) -- 25,761 49,760 Global Equity Fund -- -- -- -- (131,939,653) (7,057,879) (138,997,532) International Growth Fund -- -- -- -- (888,473) (110,930) (999,403) Income Fund 206,365 -- 206,365 (206,365) (5,782,978) 2,803,402 (2,979,576) Ultra Short Bond Fund 15,840 -- 15,840 (16,816) (8,032) 38,485 29,477 Money Market Fund 41,054 -- 41,054 (41,054) (9,083) -- (9,083)
As of June 30, 2003, the funds had the following net capital loss carryforwards, which are available to offset future realized gains:
Amount Expires Amount Expires Amount Expires - ----------------------------------------------------------------------------------------------------------------------- Core Growth Fund $ -- -- $ 74,089,417 2010 $ 46,622,753 2011 Emerging Growth Fund 8,861,924 2009 170,319,594 2010 36,170,306 2011 Small Cap Core Growth Fund -- 644,241 2010 3,579,720 2011 Value Fund -- -- 1,388,344 2010 4,976,984 2011 Global Equity Fund -- -- 107,010,861 2010 8,937,477 2011 International Growth Fund -- -- 432,059 2010 33,758 2011 Income Fund 339,912 2009 836,643 2010 4,606,423 2011 Citizens Money Market Fund 9,083 2009 -- -- -- --
(1) Total dividends paid may differ from the amount reported in the Statements of Changes in Net Assets because for tax purposes dividends are recognized when actually paid. (2) The differences between book-basis and tax-basis unrealized appreciation/depreciation are attributable primarily to: tax deferral of losses on wash sales, the realization for tax purposes of unrealized gains/losses on certain derivative instruments, the difference between book and tax amortization methods for premium and market discount, the realization for tax purposes of unrealized gains/losses on investments in passive foreign investment companies, and the return of capital adjustments from real estate investment trusts. 55 FINANCIAL NOTES Net capital losses incurred after October 31, 2002, and within the taxable year are deemed to arise on the first business day of each fund's next taxable year. For the year ended June 30, 2003, the fund deferred to July 1, 2003 post October capital losses, and post October currency losses of: Capital losses Currency losses - -------------------------------------------------------------------- Emerging Growth Fund $ 8,107,782 $ -- Small Cap Core Growth Fund 47,931 -- Value Fund 5,128,770 -- Global Equity Fund 15,421,030 570,285 International Growth Fund 365,177 57,479 Ultra Short Bond Fund 8,032 -- SUPPLEMENTAL INFORMATION (UNAUDITED) Federal Tax Information For the fiscal year ended June 30, 2003, $1,502 of dividends paid by the Balanced Fund may be subject to a maximum tax rate of 15%, as provided for by the Jobs and Growth Tax Relief Reconciliation Act of 2003. The funds intend to designate the maximum amount allowable as taxed at a maximum rate of 15%. Complete information will be reported in conjunction with your 2003 Form 1099-DIV. For the tax year ended June 30, 2003, 7.06% of income dividends paid by the Citizens Balanced Fund qualify for the dividends received deduction available to corporations. The Funds' Trustees and Officers A Board of Trustees oversees and monitors the management of the Trust. These oversight responsibilities include selection of the investment adviser and election of officers, who are in turn responsible for the day to day operations of the Trust. The tables below show the Trustees and officers of Citizens Funds as of June 30, 2003. The Trustees in the first table (Interested Trustees) are considered interested persons under the 1940 Act, because they have an affiliation with the funds' Adviser or Distributor. The Trustees in the second table (Independent Trustees) are not considered interested persons and have no affiliation with the funds' Adviser or Distributor. The third table lists fund officers who are not Trustees. All of these officers are considered interested persons. The term of office for each Trustee is eight years, except that Sophia Collier has an open-ended term. Each Trustee is a Trustee for ten funds within the Citizens Funds complex, and no Trustee is currently a trustee or director for any other mutual fund or company, except Mitchell A. Johnson, who is a trustee/director of three funds at FBR Funds and a director of the Federal Agricultural Mortgage Corporation. Except as noted below, the address for each Trustee and officer in connection with their fund duties is 230 Commerce Way, Portsmouth, NH 03801. AFFILIATED TRUSTEES
Position(s) with Funds and Date of Principal Occupation(s) During Name and Age Election or Appointment Past 5 Years Sophia Collier(1) Trustee since 10/91 Portfolio Manager, Citizens Funds, 46 years President 1991-1998 and since 8/02 since 3/95. Majority Owner and Chair of the Board of Directors, Citizens Advisers, Inc., since 12/91. President, Citizens Advisers, Inc., 12/91 - 9/98 and since 7/02. Chair of the Board of Directors, Northpoint Technology, Ltd., since 1/97. Mitchell A. Johnson(1) Trustee 12/97 - 8/01 and since 11/02 President, MAJ Capital Management 60 years Trustee Emeritus 8/01 -11/02 (personal investments), since 8/94. Senior Vice President, Corporate Finance, Student Loan Marketing Association, 5/73 - 8/94.
56 SUPPLEMENTAL INFORMATION (UNAUDITED) INDEPENDENT TRUSTEES
Position(s) with Funds and Date of Principal Occupation(s) During Name and Age Election or Appointment Past 5 Years Judy Belk Trustee since 5/01 Vice President & Senior Advisor, 50 years Rockefeller Philanthropy Advisors, since 2/03. Senior Advisor and Consultant to Philanthropic and Non-Profit Organizations, 11/00-1/03. Vice President, Global Public Affairs, Levi Strauss & Co., 6/90-6/00. Walter D. Bristol, Jr. Trustee since 5/01 Executive Vice President for 53 years Vice Chair of the Board since 8/02 Corporate Operations and Chief Financial Officer, American Heart Association, since 5/96. Jeannie H. Diefenderfer Trustee since 5/01 Vice President, Verizon, since 42 years 8/02. Group President, Verizon, 8/01-7/02. Senior Vice President, Verizon, 5/98-7/01. Executive Director, Verizon, 2/96-4/98. Pablo S. Eisenberg Trustee since 12/99 Senior Fellow, Public Policy 71 years Institute, Georgetown University, since 1/99. Executive Director, Center for Community Change, 5/75-6/98. Orlando Hernandez Trustee since 8/01 Vice President of Finance,Texas 56 years Instruments, 5/76-4/01. Martha S. Pope Trustee since 12/99 Trustee, National Park Foundation, 58 years Chair of the Board since 8/02 since 8/00. Trustee, Hofstra University, since 6/00. Senior Advisor for the Northern Ireland Peace Negotiations, 1/95-7/98.
OFFICERS WHO ARE NOT TRUSTEES
Position(s) with Funds and Date of Principal Occupation(s) During Name and Age Election or Appointment Past 5 Years Sean P. Driscoll Treasurer since 3/99 Senior Vice President, Citizens 38 years Advisers, Inc, since 4/03. Vice President, Citizens Advisers, Inc., 10/99-4/03. Director, Citizens Advisers, Inc., 11/98-10/99. Director, Fund Administration, State Street Bank and Trust Company, 3/98-11/98. Marcia Kovalik Secretary since 5/03 Vice President, Citizens Advisers, 40 years Asst. Secretary 5/01-5/03 Inc., since 4/03. Counsel, Citizens Advisers, Inc., 2/01-4/03. Associate, Boynton, Waldron, Doleac, Woodman & Scott, P.A., 9/95-2/01. Alaina Metz(2) Asst. Secretary since 2/01 Chief Administrative Officer, 35 years BISYS Fund Services Ohio, Inc., since 6/95. James Darden Rives Asst. Treasurer since 5/03 Controller, Finance and 50 years Accounting, Citizens Advisers, Inc., since 5/03. Controller, Video Network Communications, Inc., 4/97-4/03.
(1) Sophia Collier and each officer listed as an interested person of the funds, is interested by virtue of their position or affiliation with the funds' investment adviser. Mitchell A. Johnson is considered an interested person as a result of a business relationship with Northpoint Technology, Inc., of which Sophia Collier is Chair of the Board of Directors. (2) Address: BISYS Fund Services, 3435 Stelzer Road, Columbus, OH 43219 The funds' Statement of Additional Information includes additional information about the Trustees and officers and is available, without charge, by calling 800.223.7010. 57 [LOGO] CITIZENS FUNDS (R) Fundamentally Strong. Socially Responsible. Trustees Judy Belk Walter D. Bristol, Jr. Sophia Collier Jeannie H. Diefenderfer Pablo S. Eisenberg Orlando Hernandez Mitchell A. Johnson Martha S. Pope Distributor Citizens Securities, Inc. 230 Commerce Way Portsmouth, NH 03801 800.223.7010 603.436.5152 Manager Citizens Advisers, Inc. 230 Commerce Way 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. 3435 Stelzer Road Columbus, OH 43219 Legal Counsel Bingham McCutchen LLP Boston, MA 02110 Independent Auditors PricewaterhouseCoopers LLP Columbus, OH 43215 At Citizens Funds, we want our investors to know how much we value their business. That's why we offer a comprehensive range of services that includes everything from attentive telephone representatives to an informative web site. Exchanges Between Citizens Funds You can move your money easily from any one of our funds to another. Individual Retirement Plans (IRA) We offer investors the opportunity to invest in a variety of IRAs, including Traditional, Roth and Rollover. Citizens Funds are also available for 401(k), 403(b), SEP and SIMPLE retirement plans. Automatic Investment Plan Invest automatically on a monthly or quarterly basis with payroll deduction or electronic transfer from your bank. Unparalleled Customer Service Our representatives are welltrained professionals whose goal is to satisfy most requests during the first phone call. Representatives are available from 9 A.M. to 6 P.M. (ET) Monday - Friday at 800.223.7010. www.citizensfunds.com Our web site offers daily fund prices and performance, fund and manager profiles, fund prospectuses and applications, shareholder activism updates, online account access and transactions and much more. Intelligent Communications Citizens Funds was a pioneer of the plain English prospectus well before it became the standard for the rest of the mutual fund industry. We try to bring that same spirit of innovation, plain-speak and respect for our shareholders to all our communications. Proxy Voting A description of the policies and procedures that the funds use to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling 800.223.7010, on the funds' website, and on the SEC's website at http://www.sec.gov. - -------------------------------------------------------------------------------- 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 call 800.223.7010 for a prospectus that contains complete details of fees and expenses and should be read carefully before investing. Printed on recycled paper with soy-based inks. AR 8/03 EX-99 3 d13180_items10a2-b.txt Item 10(a)(2). CERTIFICATIONS I, Sophia Collier, certify that: 1. I have reviewed this report on Form N-CSR of Citizens Funds; 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) 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) 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 (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 5, 2003 /s/ Sophia Collier Sophia Collier Principal Executive Officer Item 10(a)(2). CERTIFICATIONS I, Sean P. Driscoll, certify that: 1. I have reviewed this report on Form N-CSR of Citizens Funds; 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) 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) 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 (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: September 5, 2003 /s/Sean P. Driscoll Sean P. Driscoll Principal Financial Officer Item 10(b). CERTIFICATION UNDER SECTION 906 OF SARBANES-OXLEY ACT OF 2002 Name of Issuer: Citizens Funds In connection with the Report on Form N-CSR for the above named issuer, the undersigned hereby certifies, to the best of his/her knowledge, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: September 5, 2003 /s/ Sophia Collier Sophia Collier Principal Executive Officer Date: September 5, 2003 /s/ Sean P. Driscoll Sean P. Driscoll Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----