As filed with the Securities and Exchange Commission on March 7, 2005
File No. 811-03626
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANY
CITIZENS FUNDS
(Exact Name of Registrant as Specified in Charter)
One Harbour Place, Suite 400, Portsmouth, New Hampshire 03801
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (603) 436-5152
Sophia Collier
Citizens Advisers, Inc.
One Harbour Place
Suite 400
Portsmouth, NH 03801
(Name and address of agent for service)
June 30
(Date of fiscal year end)
December 31, 2004
(Date of reporting period)
ITEM 1. REPORTS TO STOCKHOLDERS.
[CITIZENS FUNDS LOGO]
SEMI-ANNUAL
REPORT 12.31.2004
AND SUPPLEMENTAL COMMENTARY
CITIZENS 300 FUND
CITIZENS CORE GROWTH FUND
CITIZENS EMERGING GROWTH FUND
CITIZENS SMALL CAP CORE GROWTH FUND
CITIZENS VALUE FUND
CITIZENS SMALL CAP VALUE FUND
CITIZENS GLOBAL EQUITY FUND
CITIZENS BALANCED FUND
CITIZENS INCOME FUND
CITIZENS ULTRA SHORT BOND FUND
CITIZENS MONEY MARKET FUND
[PICTURE]
NOT A PART OF THE SEMI-ANNUAL REPORT
TABLE OF CONTENTS
SUPPLEMENTAL COMMENTARY
Letter from the president 1
Citizens focus: responsible investing and advocacy 2
Citizens focus: market overview 5
SEMI-ANNUAL REPORT
Risks of mutual fund investing 6
Benchmarks 7
Portfolio review 9
Citizens Funds holdings 35
Portfolio composition 58
Statements of assets and liabilities 60
Statements of operations 62
Statements of changes in net assets 64
Financial highlights 68
Financial notes 74
Table of shareholder expenses 82
Shareholder services 84
PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF
CITIZENS FUNDS CAREFULLY BEFORE INVESTING. FOR THIS AND OTHER INFORMATION,
PLEASE CALL 800.223.7010 OR VISIT WWW.CITIZENSFUNDS.COM FOR A FREE PROSPECTUS
AND READ IT CAREFULLY BEFORE INVESTING.
NOT A PART OF THE SEMI-ANNUAL REPORT
LETTER FROM THE PRESIDENT
[PHOTO OF SOPHIA COLLIER]
DEAR SHAREHOLDER
This report debuts a few changes, such as more detailed portfolio reviews
to give you more of the thinking behind our decisions. We have also sought
to highlight some of the opportunities and risks of each fund's investment
approach which I hope you will consider as you read the report.
We continue to make significant progress on our efforts to strengthen our
organization. Jon White took the helm of Citizens Core Growth Fund on July
1st and I believe that Jon has already made an impact, delivering positive
returns that exceed the fund's benchmark.
I am also pleased McLean Budden, a respected global manager based in
Toronto, began managing Citizens Global Equity Fund on August 27th. They
use a team approach, and, impressively, their team has been working
together very successfully for over 14 years! We are optimistic that their
experience working together will benefit the fund.
Citizens Small Cap Core Growth Fund celebrated its five-year anniversary
in December by placing in the 26th percentile of 310 small-cap growth
funds tracked by Lipper based on its total return from 12.31.99 through
12.31.04. In calendar year 2004, Lipper placed it in the 74th percentile
in a peer group of 515 funds. As you consider investment options, I hope
you will take a look at this fund.
We had several exciting social responsibility initiatives, which you can
read about on page 4. Overall, our funds finished the year on a positive
trend, and going forward we will continue to focus strongly on investment
performance, client service and social responsibility -- the same "back to
basics" strategy we adopted when I returned as president over two years
ago.
Sincerely,
/s/ Sophia Collier
------------------
Sophia Collier
President
1 NOT A PART OF THE SEMI-ANNUAL REPORT
CITIZENS FOCUS
RESPONSIBLE INVESTING AND ADVOCACY
We know companies, like people, can change their ways. After paying fines
and losing goodwill for bad actions, some set a straighter course, and a
few may become progressive leaders in their industries. That's why we
never deem a company "rejected" forever.
As with old dogs and new tricks, however, we find many companies just
don't learn. In the last six months our social research team screened
several companies that failed earlier reviews. We found the following
companies still didn't meet our standards.
WHY SOME FAILED OUR SCREENS - AGAIN
We rejected Abbott Laboratories in late 2002 for low marks on product
safety and business practices. In our review this fall we found progress
on product safety, including a new team of executives focused solely on
improving safety and quality procedures. Regrettably, we found more
reasons to be concerned about the company's business practices. In 2003
the company paid over $600 million for obstructing a federal investigation
into Medicare and Medicaid billing practices. This was on top of the $800
million we knew the company had paid in 2001 relating to separate fraud
allegations against these healthcare programs.
We rejected Church & Dwight, maker of toiletries such as Nair hair
remover, Aim toothpaste and ARRID deodorant, for testing some of its
products on animals. When rescreening Church & Dwight in the fall of 2004,
a representative said the company had significantly reduced but not yet
eliminated such testing. We still believe the company can and should do
better.
Longview Fibre is one of the largest pulp and paper mills in the world. We
rejected the company several years ago for environmental pollution. The
good news is our rescreening uncovered nothing objectionable on this
front. In fact the company looked pretty good. What concerned us this
time, however, was learning that it was cited and fined numerous times by
state authorities for safety matters, including a repeat violation which
led to the death of a worker in January 2004.
In 2002 we rejected Morgan Stanley due to concerns about gender
discrimination. The company later settled a class action lawsuit for $54
million. Disappointing us now is what we believe is the company's weak
efforts to improve its treatment and inclusion
NOT A PART OF THE SEMI-ANNUAL REPORT 2
RESPONSIBLE INVESTING AND ADVOCACY
of women. The company has failed to demonstrate its few programs
aimed at recruiting women have been effective and substantial.
Additionally, the company has been alleged to be involved in a
pattern of unethical business practices.
SELECTED COMPANIES THAT MADE THE CUT
We believe that examining corporate citizenship not only helps us
reduce investment risk, it can also help us identify good
investments which others might overlook. Here is a sampling of
companies, not previously reviewed, that passed our social screens
in the last six months.
Peet's Coffee and Tea has excellent environmental and social
practices. We like the company's long-term relationships with its
coffee growers and its commitment to paying them a fair price. The
company has several initiatives to help protect the environment,
such as offering "use your own cup" discounts, recycling and
composting, and the use of energy efficient lighting. The company
donates coffee and has a strong record promoting community
education, health, arts and entrepreneurship -- both in the U.S. and
abroad.
[PHOTO OF JOANNE DOWDELL AND THE SOCIAL RESEARCH TEAM]
In the 1970s Germany's Henkel KGaA set out to become a corporate
leader in environmental protection, and we believe it has done so.
This global producer of industrial adhesives and various consumer
products has published an environmental report since 1992 and a
sustainability report since 2001. The company openly discusses its
achievements and failures. In addition to reducing harmful emissions
in its manufacturing, we are also impressed with Henkel's focus on
product stewardship. By making environmental considerations an
integral part of its R&D process, the company has developed several
eco-friendly products, including water based adhesives, solvent-free
stick bond materials, and chrome-free anti-corrosive coatings.
3 NOT A PART OF THE SEMI-ANNUAL REPORT
CITIZENS FOCUS
RESPONSIBLE INVESTING AND ADVOCACY (continued)
ADVOCATING ON YOUR BEHALF
Don't let fewer headlines on corporate wrongdoing fool you into believing
all is right in Corporate America. Nothing could be further from the
truth, as our long list of rejected companies will attest. We have been
working on several initiatives to encourage companies to improve their
corporate, social and environmental performance, as we believe even our
approved companies can often do better.
We co-filed a resolution at Burlington Resources requesting the company
issue a sustainability report with emphasis on human rights issues. We
share the same concerns that other investors have about the oil
exploration and liquid natural gas company's operations in Ecuador.
Concerns about Costco Wholesale's land procurement policies, particularly
for non-U.S. facilities, also raised human rights concerns for us. We
co-filed a resolution requesting the "big box" warehouse club to develop a
land procurement policy that incorporates social and environmental
criteria.
We believe diversity at the board and management levels is an essential
component of a sustainable business model. Some companies openly disclose
this information on their websites or in annual reports, while others like
YUM! Brands and Home Depot do not. We co-filed resolutions requesting each
company to disclose EEO data. Each company has come under fire for alleged
discrimination, and we are seeking information that can help us analyze
their efforts.
Another issue we are working on is urging manufacturers of personal care
products and cosmetics to remove toxic ingredients from their products.
These chemicals can stay in the body for years and may contribute to
various forms of cancer. The E.U. has issued a set of directives requiring
elimination of certain toxic ingredients from personal care products and
cosmetics by July 2006. We are looking for the companies we hold to apply
these standards to products sold in all countries -- not just in Europe.
This is just a glimpse at what we've been up to for the past six months.
For a more complete review, click the Shareholder Activism tab on
www.citizensfunds.com to see our quarterly shareholder activism reports.
NOT A PART OF THE SEMI-ANNUAL REPORT 4
MARKET OVERVIEW
TENTATIVE RECOVERY GROWS FIRM
As we closed 2004, concerns over sustainability of the economic
recovery faded away. Tax cuts and fiscal policy appeared to have
created a stability of growth at the historical average rate of
three to four percent as the year ended. Consumers began to spend
more as employment and incomes improved. Despite the oil hikes,
inflation remained tame, and the Fed's modest and steady rate
increases seemed just about right for the emerging economic
recovery. These factors helped fuel the markets to eventually pick
up where we left off in 2003, appearing to finally shake off the
malaise that started the decade.
TWO IN A ROW
The S&P 500 Index closed the year up 10.88% -- that's two
back-to-back years of double digit gains. Much of this gain, 7.19%,
was toted up in the second half of 2004, and that period started
with a third-quarter loss. This was not a speculative market, as
value-oriented stocks proved to be the biggest gainers in the last
six months of the year, but it was driven by swings in perceptions
of energy prices and the election. International markets did well
overall, but with outperformance concentrated away from the major
exchanges of London, Frankfurt and Tokyo. Remarkably, the Treasury
market rallied in the second half of the year, despite the Fed's
four rate increases.
LOOKING AHEAD
In our view 2005 has the makings of a decent year economically, with
growth slowing to something around 3%. Consumers may spend less and
save more in the face of higher interest rates, which we expect to
result from continued Federal Reserve actions. We believe businesses
will watch their cost structures closely, keeping inventories and
job growth low. We will not be surprised to see periodic spells of
concern over terrorism and Iraq drive financial markets in an
uncomfortable imitation of a roller coaster, with jolts higher and
lower along the way. As the recovery becomes more extended -- and
investors turn more cautious -- market leadership may change, with
stability of growth and earnings regaining a premium in investors'
eyes.
5 NOT A PART OF THE SEMI-ANNUAL REPORT
SEMI-ANNUAL REPORT
RISKS OF MUTUAL FUND INVESTING
As with any fund that invests in stocks or fixed-income securities, the
value of your investment will fluctuate in response to individual company
actions, as well as general economic, political and market conditions.
Reactions to these factors may differ among various stock types, and
investments in specific funds may present unique risks -- and benefits --
given the nature of their focus. Many of these risks are discussed below
and additional information on risks may also be found in the Citizens
Funds prospectus.
GROWTH INVESTING RISKS
Growth stocks may be especially volatile, because their prices are largely
based on future earnings.
VALUE INVESTING RISKS
Value stocks may fall or remain flat if certain conditions or investor
perceptions do not change as expected, or if the companies prove not to be
underpriced.
SMALL- AND MEDIUM-SIZED COMPANY RISKS
Small- and medium-sized companies pose unique investment risks as they may
have less seasoned management, limited product lines, financing and market
share challenges, and shares that trade with more volatility, less
frequently or in smaller volumes.
INDEX-RELATED RISKS
The performance of the Citizens 300 Fund may deviate from that of the
Citizens Index due to factors such as fund fees and expenses and the
fund's composition differing from that of the index.
FOREIGN INVESTING RISKS
Foreign markets pose unique investment risks, including political
instability and currency risks, excessive taxation, different financial
and auditing standards, increased market volatility and other factors.
6
RISKS OF MUTUAL FUND INVESTING
FIXED-INCOME INVESTING RISKS
Interest rate increases can cause the value of bonds to decrease,
meaning that a bond fund investment may lose value in a rising
interest rate environment. There is also the chance that one or more
of the fund's holdings will have its credit rating downgraded or may
default, potentially reducing the fund's income level and share
price.
HIGH-YIELD SECURITY RISKS
High-yield securities offer the potential for higher returns but
present significant volatility and risk of loss of principal and
interest.
MONEY MARKET RISKS
Investments in the Citizens Money Market Fund are not insured or
guaranteed by the FDIC or any other government agency. Although the
fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.
BENCHMARKS
When evaluating performance of any investment, it is useful to look
at both absolute and relative return. In other words, how much did
the fund generate or lose for shareholders in the reporting period,
and how did that performance compare to the fund's benchmark? We
present this information in each of our portfolio reviews. Below is
a brief description of the benchmarks we use. Please keep in mind
that these benchmark indices are unmanaged, meaning you can't invest
directly in them, and their performance does not reflect the impact
of fees and expenses that apply to our funds.
The S&P 500 INDEX includes a representative sample of 500 leading
companies in the U.S. economy, focused on the large-cap segment.
The RUSSELL 1000 GROWTH INDEX measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values. The Russell 1000 Index covers the
large-cap segment of the U.S. equity universe.
7
BENCHMARKS (continued)
The RUSSELL MIDCAP GROWTH INDEX measures the performance of those Russell
Midcap companies with higher price-to-book ratios and higher forecasted
growth values. The Russell Midcap Index covers the mid-cap segment of the
U.S. equity universe; it includes the smallest 800 securities in the
Russell 1000 Index.
The RUSSELL 2000 GROWTH INDEX measures the performance of those Russell
2000 companies with higher price-to-book ratios and higher forecasted
growth values. The Russell 2000 Index covers the small-cap segment of the
U.S. equity universe.
The RUSSELL 2000 VALUE INDEX measures the performance of those Russell
2000 companies with lower price-to-book ratios and lower forecasted growth
values. The Russell 2000 Index covers the small-cap segment of the U.S.
equity universe.
The MORGAN STANLEY CAPITAL INTERNATIONAL(MSCI)WORLD INDEX is a market
capitalization-weighted equity index of over 1,500 stocks traded in 23
world markets.
The LEHMAN BROTHERS U.S. AGGREGATE INDEX is comprised of taxable,
investment grade fixed-income securities, including government, corporate,
mortgage and asset-backed securities.
The BLENDED INDEX is comprised of 60% S&P 500 Index and 40% Lehman
Brothers U.S. Aggregate Index.
The MERRILL LYNCH 1-YEAR TREASURY INDEX tracks the performance of U.S.
Treasury notes with maturities of approximately one year. The index is
produced by Merrill Lynch, Pierce, Fenner & Smith, Inc.
The CITIZENS INDEX, though not one of our benchmarks, consists of 300
mostly U.S. companies that meet Citizens Advisers financial and social
criteria. The Citizens 300 Fund seeks to replicate the composition and
performance of the Citizens Index.
8
PORTFOLIO REVIEW
CITIZENS 300 FUND
PERFORMANCE as of 12.31.2004
AVERAGE ANNUAL
TOTAL RETURN RETURN
Ticker 6 1 Since
Share class symbol months year inception
- ------------ ------ ------ ---- ----------------
STANDARD CFCDX 4.64% 6.45% 12.35%
Data presented reflects past performance, which is not a guarantee
of future results. Current performance, obtainable at
www.citizensfunds.com, may be lower or higher than the performance
data quoted. When sold, your shares may be worth more or less than
what you paid for them. Performance figures assume reinvestment of
dividends and distributions but do not reflect the deduction of
taxes you would pay on fund distributions or redemptions of fund
shares. Fee waivers are currently in effect and have been instituted
in the past to maintain expense limits, without which returns would
have been lower.
INVESTMENT GOAL long-term capital appreciation
INVESTMENT STRATEGY invests mainly in stocks and other equities of
U.S. large-capitalization companies
INCEPTION DATE standard shares 08.29.03
RISKS growth, value, and index-related investing
See pages 6-8 for important fund risk and benchmark disclosures.
THE MARKET
Despite a summer swoon, overall the last six months were a good
period to participate in the financial markets, although large-cap
stocks did not see the same extent of gains as smaller-cap stocks.
HOW DID WE DO ?
The Citizens 300 Fund uses an index strategy, investing in stocks of
Citizens Index companies.
One theory behind index investing is that broad market exposure can reduce
risk.
This was well demonstrated in the second half of the year when our
largest contributor was healthcare giant Johnson & Johnson, and our
largest single detractor was another healthcare giant,
9
PORTFOLIO REVIEW
CITIZENS 300 FUND (continued)
Pfizer. While not perfect hedges for one another, we believe few active
managers would have chosen to hold both names.
During the past six months, Citizens 300 Fund returned 4.64% for investors
compared to 7.19% for its benchmark, the S&P 500 Index. The consumer
discretionary sector proved to be the fund's top performing sector, led by
strong results from the likes of Home Depot, eBay and Target, all of which
rose over 20% in the last half year. Holding better consumer discretionary
companies with more exposure in this sector helped the fund beat the
benchmark in this sector. Three sectors posted negative returns for the
fund, led by information technology, which was dragged down by companies
like Cisco and Intel, both of which lost over 15% during the period. Poor
performance of the fund's holdings in healthcare and consumer staples was
responsible for losses sustained in those sectors.
A significant change to the Citizens Index that occurred during the second
half of the year was the addition of BPPLC , which served to bring up
the weight of the energy sector. BP's inclusion in the Citizens Index is a
recognition of the company's superior environmental record which shows
energy companies can make positive progress in this area. It was a
fortuitous addition, as BP was the fund's second best performer during the
last six months.
OUTLOOK
In 2005 Citizens 300 Fund will continue to pursue the index strategy as it
has since inception. We believe its returns should effectively represent
large-cap market companies that we believe exhibit a high standard of
corporate responsibility.
10
CITIZENS CORE GROWTH FUND
PERFORMANCE as of 12.31.2004
TOTAL RETURN AVERAGE ANNUAL RETURN
Ticker 6 1 5 Since
Share class symbol months year years inception
- ------------ ------ ------ ----- ----- ---------
STANDARD WAIDX 7.29% 5.14% -9.03% 9.02%
INSTITUTIONAL WINIX 7.67% 5.91% -8.39% 8.19%
ADMINISTRATIVE CGADX 7.48% 5.54% NA -8.37%
Data presented reflects past performance, which is not a guarantee
of future results. Current performance, obtainable at
www.citizensfunds.com, may be lower or higher than the performance
data quoted. When sold, your shares may be worth more or less than
what you paid for them. Performance figures assume reinvestment of
dividends and distributions but do not reflect the deduction of
taxes you would pay on fund distributions or redemptions of fund
shares. Fee waivers were instituted in the past to maintain expense
limits, without which returns would have been lower.
INVESTMENT GOAL long-term capital appreciation
INVESTMENT 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
RISKS growth investing
See pages 6-8 for important fund risk and benchmark disclosures.
THE MARKET
There were two distinct markets in the last six months. The third
quarter continued the decline of the first half of the year, as
investor doubts and fears, reinforced by higher energy prices, drove
the market lower. During October, however, the price of oil showed
signs of stabilizing and the U.S. elections neared resolution,
reducing investor concerns and freeing the market to move strongly
upwards. Significantly, the fundamental news behind the market
results was positive throughout the last six months of 2004, with
the economy growing at a moderate rate, earnings growth continually
stronger than anticipated, and long-term
11
PORTFOLIO REVIEW
CITIZENS CORE GROWTH FUND (continued)
interest rates declining despite the tightening posture of the Federal
Reserve.
HOW DID WE DO ?
Citizens Core Growth Fund got off to a terrific start under the leadership
of new portfolio manager Jon White, CFA, who took the reins on July 1st.
In the initial six months of his management the fund's standard shares
gained 7.29%. Even more impressive is that this performance more than
doubled that posted by the benchmark Russell 1000 Growth Index, which
gained 3.47% during the period. The fund also slightly outperformed the
S&P 500 Index, despite the boost the S&P 500 got from value stocks during
this six-month period.
The three stocks that were the most significant contributors to
performance for the six-month period were United Healthcare, Starbucks,
and Adobe Systems. It is a sign of the fund's strength that such a diverse
group of companies were the drivers of performance. Respectively, a
provider of healthcare services, a merchant of all things coffee, and a
software company specializing in graphics and imaging, their common
threads are the leadership position that each has in its field and proven
records of success. The fund added Adobe in July, while the others are
longer-term holdings. All three had strong records as the second half of
2004 began and continued to prove their worth as the period unfolded.
Notably, the three major detractors from performance (Intel, Cisco and
Boston Scientific) came from the two sectors in which we had significantly
less exposure than the Russell 1000 Growth Index -- information technology
and healthcare. At year end, the fund held less than 15% of assets in each
of these sectors, while the index had 27% in technology and 24% in
healthcare. We sold the fund's entire positions in Intel and Boston
Scientific, but continued to hold a reduced market weighting in Cisco due
to its broad exposure in critical technology product areas. Intel saw
growth and margins suffer from slowing sales at hardware customers. Boston
Scientific faced manufacturing problems in its critical cardiac stent
business and had to conduct a related product recall.
12
CITIZENS CORE GROWTH FUND
Jon White restructured the portfolio, primarily during the third
quarter. The number of holdings was reduced by about one-third, some
existing holdings were enlarged, and new names were added during the
period.
Half of the twenty largest contributors to
performance were new to the portfolio.
In addition to the previously mentioned Adobe Systems, these new
names included Johnson & Johnson and Becton Dickinson, two medical
supply companies with well diversified product lines in the
healthcare sector which replaced some major pharmaceutical
companies. Network Appliance, a manufacturer of storage devices was
added to partially offset reduced semiconductor holdings. Other
additions included Questar, a natural gas producer and utility, Legg
Mason, a diversified financial asset manager and broker, and Sprint
Corp. in the telecom services arena. The largest detractors from
performance during the period -- which included such well known
companies as 3M, American International Group, The Gap, and Pfizer
-- were all sold except for the previously highlighted Cisco. An
important part of our investment process is to recognize that even
the best companies can go through periods of sustained
underperformance, and there normally is no need to maintain them in
the portfolio when they do.
OUTLOOK
We approach the coming months with a cautious, but not a defensive,
posture. We believe that decent investment returns are achievable,
but they will result from astute targeting of specific stocks rather
than from the success of the market overall or any specific sector.
The ability to avoid troubled situations will be critical to
generating successful results. We expect our concentration on
well-established, successful companies will help us in this regard.
13
PORTFOLIO REVIEW
CITIZENS EMERGING GROWTH FUND
PERFORMANCE as of 12.31.2004
TOTAL RETURN AVERAGE ANNUAL RETURN
Ticker 6 1 5 10 Since
Share class symbol months year years years inception
- -------------- ------ ------ ----- ------ ----- ---------
STANDARD WAEGX 6.53% 8.28% -7.52% 11.84% 11.52%
INSTITUTIONAL CEGIX 6.86% 8.97% -6.95% NA -2.58%
ADMINISTRATIVE CGRDX 6.66% 8.55% NA NA -8.41%
Data presented reflects past performance, which is not a guarantee of
future results. Current performance, obtainable at www.citizensfunds.com,
may be lower or higher than the performance data quoted. When sold, your
shares may be worth more or less than what you paid for them. Performance
figures assume reinvestment of dividends and distributions but do not
reflect the deduction of taxes you would pay on fund distributions or
redemptions of fund shares. Fee waivers were instituted in the past to
maintain expense limits, without which returns would have been lower.
INVESTMENT GOAL aggressive growth
INVESTMENT 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
RISKS growth investing; small- and medium-sized company risks
See pages 6-8 for important fund risk and benchmark disclosures.
THE MARKET
It is always striking how the markets move in short bursts, interspersed
by longer periods where stocks trade in a narrow range. Such was the case
in the second half of 2004. Over the summer the markets swooned, as record
high oil prices, insurance industry scandals, growing insurgency in Iraq
and the prospect of further rate increases created a negative climate
across the board. Then, in the final quarter, the markets rallied very
sharply.
HOW DID WE DO ?
The fund's standard shares returned 8.28% for the year, over
three-quarters of which was generated in the second half. Our
14
CITIZENS EMERGING GROWTH FUND
single best performing stock was Apple, which almost doubled thanks
to the iPod and iTunes music service. Before investing we wanted to
understand whether sales and earnings would follow the initial wave
of excitement. Apple's first-quarter earnings were down but
surprised Wall Street in a positive way. Our experience has shown
that one upside surprise is often followed by another. We confirmed
Apple's products were selling better than expected, so we began
building a position. We happily trimmed our position twice to
realize gains as Apple floored Wall Street with large upside
earnings surprises in the last two quarters. Another profitable
holding was American Eagle Outfitters, up almost 68% in the last six
months.
Our consumer analyst Rajani Vaithinathan believes
the clothier has "hit the formula for pleasing both mom and teen."
With strong stock picks like these, why did the fund's standard
shares return only 6.53% in the last six months, underperforming the
Russell MidCap Growth Index's gain of 9.01%? One reason is
healthcare, normally a strong sector for the fund, which had a very
weak year overall. We have been successful at identifying early
stage biotech or other medical companies, and enjoyed excellent
gains when they received approvals or achieved other milestones.
In the second half of 2004, however, we were wrong on InterMune, a
biotech firm that makes therapies for serious liver, lung and
infectious diseases. We believed it had several promising
formulations. Its product, Actimmune, was approved for two uses and
it was in a last-stage trial to expand uses for ovarian cancer and
pulmonary fibrosis, both large potential markets. Like many
biotechs, InterMune was losing money. But unlike others, it had
approximately $150 million in revenue, which gave it a much lower
"burn" rate and we thought the company was positioned to weather
difficulties that players in this industry can be expected to face
from time to time. Despite these positives, investor sentiment
turned negative when a medical journal article cast doubt on the use
of Actimmune for certain ailments and the company lowered its
revenue forecast. Our mistake was
15
PORTFOLIO REVIEW
CITIZENS EMERGING GROWTH FUND (continued)
buying when the stock price was still falling. Wall Street has not yet
gained confidence in the new management and worries persist over the
potential for the drugs still undergoing tests. Of course, "buy low/sell
high" is the formula to make money, but we have to make sure we do not buy
low when a stock is still going lower. We learned a hard lesson and will
be more careful to buy stocks when we are sure the selling has stopped and
the stock is poised to appreciate.
Another reason we underperformed in the second half was our slightly more
defensive posture than the benchmark. This means we had less weight in the
highly volatile tech sector and more weight overall in seasoned companies.
This defensive orientation helped us outperform the index when the markets
were in a rut over the summer, but it did not allow us to profit from the
year-end rally as much as the index. Some of these high flying stocks saw
declines on profit-taking this January, so we feel somewhat vindicated.
Underperforming our index is never good, but we prefer our positioning to
generally gain less in an up market rather than lose more in a down
market.
OUTLOOK
While we paid a price for our caution, we believe the fund is positioned
to benefit as we head into 2005. Many economists are forecasting a slower
economy in 2005. In this type of environment companies with weaker
business fundamentals can generate earnings disappointments and their
share prices will decline. By sticking with more proven companies, we
think the fund will benefit as investors shed shares of disappointing
companies and take refuge in higher quality names.
16
CITIZENS SMALL CAP CORE GROWTH FUND
PERFORMANCE as of 12.31.2004
TOTAL RETURN AVERAGE ANNUAL RETURN
Ticker 6 1 5 Since
Share class symbol months year years inception
- ------------ ------ ------ ---- ----- ---------
STANDARD CSCSX 4.16% 6.74% 2.50% 2.50%
Data presented reflects past performance, which is not a guarantee
of future results. Current performance, obtainable at
www.citizensfunds.com, may be lower or higher than the performance
data quoted. When sold, your shares may be worth more or less than
what you paid for them. Performance figures assume reinvestment of
dividends and distributions but do not reflect the deduction of
taxes you would pay on fund distributions or redemptions of fund
shares. Fee waivers were instituted in the past to maintain expense
limits, without which returns would have been lower.
INVESTMENT GOAL capital appreciation
INVESTMENT STRATEGY invests mainly in stocks of small-
capitalization U.S. companies
INCEPTION DATE standard shares 12.28.99
RISKS growth investing; small-sized company risks
See pages 6-8 for important fund risk and benchmark disclosures.
THE MARKET
In a rollercoaster market during the six-month period, small-growth
stocks initially lost a lot of ground but regained all that and more
during a strong fourth-quarter rally.
HOW DID WE DO ?
It is gratifying to report the fund ranks in the 26th percentile
among its peers based on total return, according to Lipper. This
ranking is based on 310 small-cap growth funds from 12.31.99 through
12.31.04. In calendar year 2004, Lipper tracked 515 funds in this
style, and our fund placed in the 74th percentile. From July through
December the fund returned 4.16% versus the Russell 2000 Growth
Index's return of 8.16%.
By being a little more conservative than our benchmark index, we
tend to avoid the smallest, most speculative companies and
17
PORTFOLIO REVIEW
CITIZENS SMALL CAP CORE GROWTH FUND (continued)
instead seek companies that show they can operate successfully and still
have a lot of room to grow. We seek to do well in both up and down
markets, but typically underperform when lower quality stocks rally, as
they did in November and December. Our top contributor during the
six-month period was Landstar System, a logistics company, which gained
40%. We're impressed by its use of information technology to knit together
an effective shipping network. F5 Networks was another strong contributor.
F5 Networks stood out while many small-cap high-tech hardware companies
were caught up in a selling fracas.
The company's strong management, desirable specialized niche and steady
earnings growth were a winning combination.
Our worst performer was FileNet, whose products can be used by enterprises
managing high volumes of paperwork. We believed its products had vast
application and that its marketing partnerships with IBM and Microsoft
were strengths. We bought in around $27 per share in late 2003 and the
stock rose to $32 by the end of June 2004. Then the company announced new
sales were coming in at a slower rate than previously forecast, and the
stock fell below $20. After reviewing more information we concluded that
fears of an economic downturn had muted corporate appetites for new
software systems, and we decided to exit our position and did so once the
stock had recovered somewhat. We missed the warnings implicit in the
revenue shortfalls suffered by other enterprise software companies. We
will monitor FileNet's progress from a distance and take great care to
better understand cross-company warnings contained in industry trends.
OUTLOOK
Looking ahead we see a period of slowing economic growth. These periods
can be rewarding for stock market participants who select stocks with
care. We think our bias for better established companies and higher
quality names is likely to be rewarded in the current environment as we
seek to build on our five-year record of success.
18
CITIZENS VALUE FUND
PERFORMANCE as of 12.31.2004
TOTAL RETURN AVERAGE ANNUAL RETURN
Ticker 6 1 5 Since
Share class symbol months year years inception
- ----------- ------ ------ ----- ----- ---------
STANDARD MYPVX 6.85% 11.41% 0.04% 7.95%
Data presented reflects past performance, which is not a guarantee
of future results. Current performance, obtainable at
www.citizensfunds.com, may be lower or higher than the performance
data quoted. When sold, your shares may be worth more or less than
what you paid for them. Performance figures assume reinvestment of
dividends and distributions but do not reflect the deduction of
taxes you would pay on fund distributions or redemptions of fund
shares. Fee waivers were instituted in the past to maintain expense
limits, without which returns would have been lower. For periods
prior to September 24, 2001, performance includes that of the fund's
predecessor, the Meyers Pride Value Fund.
INVESTMENT GOAL long-term capital appreciation
INVESTMENT STRATEGY invests mainly in stocks and other equities of
U.S. large-capitalization companies using a quality, relative
value strategy
INCEPTION DATE standard shares 06.13.96
RISKS value investing
See pages 6-8 for important fund risk and benchmark disclosures.
THE MARKET
The final six months of the year contained two distinct periods: a
sharp selloff over several weeks in the summer and an equally short
late fall rally. While these periods offered some dramatic moments,
they also highlighted how emotional reactions can determine price
action on stocks.
HOW DID WE DO ?
Citizens Value Fund had another strong year, returning 11.41% for
the calendar year, of which 6.85% came in the second half. The
six-month performance was modestly below that of the S&P 500 Index,
the fund's benchmark, which gained 7.19%. Our top contributor to
return in the second half was Veritas Software,
19
PORTFOLIO REVIEW
CITIZENS VALUE FUND (continued)
which appreciated 61% for us. Prior to our purchase in July its shares
sold off dramatically on a bad earnings announcement, and analysts reduced
near-term earnings forecasts and long-term growth estimates.
Veritas moved from industry darling to pariah, but we thought there was
still a lot of life in it.
Our minds were not clouded by a bitter taste of loss, as we did not own
the stock when it plummeted. The company had just made a small acquisition
of a new email storage technology, building on a long and successful
history of acquiring new technologies and marketing them to their large
base of installed customers. Further, its competitors were primarily
hardware based storage solution providers, whereas Veritas' software could
operate on a wide range of hardware from numerous vendors. Given the rapid
decline in hardware prices, it seemed cost conscious buyers would prefer
Veritas. We stepped up and bought Veritas, and the stock began to rise.
When it hit our initial price target we reduced our position for risk
control purposes, but we thought the stock could still rise higher and
indeed it did when Symantec bought the entire company. We sold our entire
position on the day of the announcement in mid-December.
Citizens Value Fund uses what we call a "quality, relative value"
strategy. We look for companies that are profitable or forecast to become
profitable in the current year, have significant assets and are selling at
a discount to peer companies. We buy stocks of those companies where we
believe a catalyst such as new management or changing industry dynamics
will unlock the value of the company and allow it to trade up in value
closer to its industry average.
The strategy does not always work and sometimes our assessment of the
power or timing of the catalyst is wrong. Another risk involves stocks
selling at attractive discounts that continue to decline in price after
you buy them. Some value managers believe this makes such stocks even more
attractive -- perhaps true, but when it happens to us we view it as an
investment mistake. A recent example is Hewlett Packard, a stock that made
money
20
CITIZENS VALUE FUND
for us in 2003 but became a top detractor in the six-month period.
In mid-August the CEO preannounced an earnings miss, which in and of
itself is not a reason to sell. However, we weren't impressed with
the rushed pre-dawn conference call in which the CEO focused more on
placing blame than offering solutions. The stock then opened
approximately 20% lower and we waited for the stock to recover
before selling our position at a loss. Looking back, we made two
mistakes. First, the stock had already been in a price decline, and
we had been considering reducing our position before the scheduled
earnings release. Second, the company had a previous earnings
disappointment and was having trouble executing its strategy. Our
quality, relative value discipline only works well when companies
are making fundamental improvement, otherwise the companies' stocks
are cheap and ought to be.
OUTLOOK
Going forward we will continue to look for stocks that trade at a
discount and add value to shareholders. This is a tricky period for
our strategy because the economy appears to be slowing. Companies
may not be able to benefit from a rising economic tide. In choosing
names to hold in the portfolio we will need to be even more
selective than usual and watch our portfolio very carefully.
Assisting us with that task will be a new quantitative tool we have
developed to rank companies using objective measures, such as
ability to generate positive returns in a consistent manner, grow
earnings and pay dividends. We believe companies that excel in these
measures are of higher quality and less likely to show earnings
disappointments than companies with more patchy histories. We look
forward to using this tool with all of our funds, together with our
social and fundamental research, to build good portfolios for our
shareholders.
21
PORTFOLIO REVIEW
CITIZENS SMALL CAP VALUE FUND
PERFORMANCE as of 12.31.2004
TOTAL RETURN TOTAL RETURN
Ticker 6 Since
Share class symbol months inception
- ----------- ------ ------ ----------------
STANDARD CFSVX 7.70% 4.90%
Data presented reflects past performance, which is not a guarantee of
future results. Current performance, obtainable at www.citizensfunds.com,
may be lower or higher than the performance data quoted. When sold, your
shares may be worth more or less than what you paid for them. Performance
figures assume reinvestment of dividends and distributions but do not
reflect the deduction of taxes you would pay on fund distributions or
redemptions of fund shares. Fee waivers are currently in effect and have
been instituted in the past to maintain expense limits, without which
returns would have been lower.
INVESTMENT GOAL capital appreciation
INVESTMENT STRATEGY invests in equity securities of small- capitalization
companies we believe are undervalued relative to the market
INCEPTION DATE standard shares 3.31.04
RISKS value investing, small-sized company risks
See pages 6-8 for important fund risk and benchmark disclosures.
THE MARKET
The last six months were marked by broad swings in energy prices, rising
interest rates, and the election. Oil peaked over $55 a barrel before
plummeting below $41 a barrel. Investors seemed to interpret Fed rate
increases as favoring a stronger economy versus a deliberate intent to
slow the economy, and resolution of the election gave the market further
assurances. Over this period, value stock indices recorded double digit
gains, while growth stock indices stayed in single digits, and small value
stocks fared best of all.
HOW DID WE DO ?
The good news is that the fund finished 2004 at a year-to-date high,
buoyed by strong gains in the last quarter, particularly those which
occurred in December. We had solid results from technology and healthcare
stocks.
22
CITIZENS SMALL CAP VALUE FUND
Our top performer was Chemed, a somewhat unlikely pairing of the nation's
largest hospice company, Vitas, and Roto-Rooter.
As its name suggests, Chemed's roots are in the healthcare industry,
but the company briefly changed its name in 2003 to Roto-Rooter, the
well-known plumbing company it had acquired. Last year, in
recognition of its purchase of Vitas Healthcare, the original Chemed
name returned. We believe management is improving the profitability
of the plumbing company, and we think further value may be unlocked
with a spinout of either business. Although the fund fared nearly as
well as the benchmark in the last quarter, the six-month
differential was more substantial, as the fund returned 7.70% and
the Russell 2000 Value Index returned 13.37%. We were hurt by our
underweighting in financial services stocks during the third
quarter, a period in which that sector -- representing over 33% of
the benchmark -- delivered the best performance. However, we feel
this exposure is excessively high. Anticipating rising interest
rates, we did not expect financial stocks to perform well.
OUTLOOK
We believe stocks currently appear modestly overvalued. We also
believe continued interest rate hikes should strengthen the dollar
but will result in reduced liquidity. Additional uncertainty will be
added as details of the Bush administration's policy initiatives are
revealed. Corporate balance sheets are strong and can drive
increased share repurchases, stock dividends, mergers or increased
capital spending. We believe that corporate earnings expectations
will be largely met as companies release results during late January
and February. Our strategy will be to raise cash modestly and then
rotate into higher quality companies. Industries that appear
attractive to us are telecommunications equipment, energy services,
healthcare, and selective names within consumer cyclicals.
23
PORTFOLIO REVIEW
CITIZENS GLOBAL EQUITY FUND
PERFORMANCE as of 12.31.2004
TOTAL RETURN AVERAGE ANNUAL RETURN
Ticker 6 1 5 10 Since
Share class symbol months year years years inception
- -------------- ------ ------ ---- ------ ----- ---------
STANDARD WAGEX 5.67% 3.42% -10.78% 7.22% 6.35%
INSTITUTIONAL CGEIX 6.03% 4.10% -10.27% NA -4.45%
ADMINISTRATIVE CEADX 5.86% 3.70% NA NA -12.20%
Data presented reflects past performance, which is not a guarantee of
future results. Current performance, obtainable at www.citizensfunds.com,
may be lower or higher than the performance data quoted. When sold, your
shares may be worth more or less than what you paid for them. Performance
figures assume reinvestment of dividends and distributions but do not
reflect the deduction of taxes you would pay on fund distributions or
redemptions of fund shares. Fee waivers were instituted in the past to
maintain expense limits, without which returns would have been lower.
INVESTMENT GOAL capital appreciation
INVESTMENT STRATEGY invests in promising companies throughout the world
INCEPTION DATES standard shares 02.08.94, institutional shares 11.01.99,
administrative shares 02.04.00
RISKS growth and foreign investing
See pages 6-8 for important fund risk and benchmark disclosures.
THE MARKET
Global financial markets performed well in the last six months of 2004,
moving ahead strongly since bottoming out in early August. The last two
months were particularly impressive, as even non-U.S. equity markets
celebrated the removal of the uncertainty around the U.S. elections.
Undoubtedly markets also celebrated the decline in the price of oil, as
well as the lack of response from the long-term interest rates in the face
of continued increases at the short end of the yield curve.
24
CITIZENS GLOBAL EQUITY FUND
HOW DID WE DO ?
The significant news for Citizens Global Equity Fund was the
appointment of a new portfolio management team. On August 27th,
Toronto-based McLean Budden took over as the new sub-adviser. This
well-regarded Canadian firm places a premium on recruiting and
maintaining outstanding talent, and the team managing the fund has
worked together for many years. Their process is to build a
portfolio through bottom-up stock selection, concentrating on larger
capitalization companies with above-average earnings growth.
We think McLean Budden's style is a very good fit for Citizens.
We frankly lost confidence in the performance of the prior
subadviser, as the fund had lagged its benchmark, the MSCI World
Index, by a substantial margin, for over a year. Through August
26th, the year-to-date performance of the fund's standard shares
lagged the benchmark by 768 basis points. Turning the tide on such
underperformance is certainly a challenge, and McLean Budden has
begun to improve relative performance.
It would not be meaningful to comment further on the fund prior to
the new manager's appointment. Therefore, the following information
pertains primarily to the fourth quarter, the first full quarter in
which McLean Budden had sole responsibility for the portfolio. The
fund performed very well in absolute terms, with standard shares
gaining 10.70% during the quarter, but somewhat lagged the 11.94%
return of the benchmark. The fund's concentration in large-cap
stocks during a buoyant quarter in which small- and mid-cap stocks
performed better contributed to the underperformance. Many of the
fund's mid-cap holdings performed well, enabling the fund to keep
pace to a large degree. We derived sizeable gains from names such as
Checkpoint, which shot up 45% during the quarter when earnings
concerns proved unfounded. Large-cap financial stocks posted healthy
gains, particularly HBOS, which rose nearly 21% during the period,
as UK banks performed well, having fully discounted a negative
interest rate scenario. Other large-caps yielded below-index
returns, such as Pfizer, which dropped almost 12% during the period,
as concerns over cox-2 inhibitors,
25
PORTFOLIO REVIEW
CITIZENS GLOBAL EQUITY FUND (continued)
which began with Merck's Vioxx, eventually infected Pfizer's Celebrex. And
while declining oil prices helped bolster strong overall returns for the
portfolio, it caused oil companies BP and Apache to eke out only modest
gains. Gold Fields also declined almost 9%, but prior to the decline we
had sold half of our position, taking advantage of higher prices generated
during merger negotiations.
OUTLOOK
We forecast a tough year for equities in 2005, and the portfolio is
positioned conservatively in light of this outlook. We also contend
large-cap companies will outperform in the upcoming market, as premiums
return for liquid instruments in such an environment. We believe margins
will decline or companies will pass through increasing costs to consumers,
which would exacerbate inflation. The first scenario may result in no
earnings growth and therefore minimal upside in equities, while the second
scenario may result in higher earnings but reductions in the amount the
market is willing to pay for those earnings given rising inflation. It is
just a question of which pill companies administer.
We intend to place more emphasis on healthcare stocks than the benchmark,
holding positions in names such as Pfizer, Novartis, Beckman Coulter and
Boston Scientific. U.S. pharmaceutical stocks are basically discounting no
growth for the next five years, and while we don't believe healthcare
growth stocks will outpace that of high fliers like eBay, we also don't
believe it will be zero. The fund is positioned to emphasize the consumer
area, with significant representation in media names which have been
laggards. The fund's representation is below average in financials and
basic materials, as valuations appear stretched, and we believe yield
curves will flatten and earnings growth will slow. In summary, we are
cautious and will strive to improve our relative performance.
26
CITIZENS BALANCED FUND
PERFORMANCE as of 12.31.2004
TOTAL RETURN AVERAGE ANNUAL RETURN
Ticker 6 1 Since
Share class symbol months year inception
- ----------- ------ ------ ---- ---------------------
STANDARD CFBLX 5.26% 6.00% 10.68%
Data presented reflects past performance, which is not a guarantee
of future results. Current performance, obtainable at
www.citizensfunds.com, may be lower or higher than the performance
data quoted. When sold, your shares may be worth more or less than
what you paid for them. Performance figures assume reinvestment of
dividends and distributions but do not reflect the deduction of
taxes you would pay on fund distributions or redemptions of fund
shares. Fee waivers are currently in effect and have been instituted
in the past to maintain expense limits, without which returns would
have been lower.
INVESTMENT GOAL current income and capital appreciation
INVESTMENT STRATEGY invests in a blend of stocks, bonds, and money
market securities
INCEPTION DATE standard shares 12.20.02
RISKS growth and fixed-income investing; high-yield security risks
See pages 6-8 for important fund risk and benchmark disclosures.
THE MARKET
The markets moved modestly higher during the second half of 2004,
with the S&P 500 gaining 7.19% and the Lehman Brothers U.S.
Aggregate Index gaining 4.18%. The economic recovery continued, with
unemployment falling and consumers spending at a decent level. Even
steady interest rate hikes had little dampening effect. More
important to the markets was the completion of an orderly election
and a modest retreat in energy costs.
HOW DID WE DO ?
The Balanced Fund returned 5.26% for the period, trailing the 6.04%
gain of the benchmark Blended Index. The shortfall was partially due
to a cautious approach that kept our cash position higher than
normal at a time of high equity valuations, slowing earnings growth
and rising interest rates. These conditions have
27
PORTFOLIO REVIEW
CITIZENS BALANCED FUND (continued)
traditionally been dangerous for the financial markets, where a more prudent,
restrained approach to asset exposures is ultimately rewarded.
New co-portfolio manager Jon White instituted several changes to the fund's
equity portion during this period. The portfolio became more concentrated with
the reduction of almost two-thirds of the equity holdings as we emphasize
companies with demonstrated profitability.
We believe these changes enhance our ability to identify the most attractive
opportunities.
Top performers during the period were United Healthcare, Adobe Systems and
PACCAR, the maker of Peterbilt and Kenworth trucks. Hurting us were corporate
leaders Intel, Cisco, Coca-Cola, Pfizer and Citigroup, all of which we sold or
trimmed early in the period.
To take advantage of the favorable credit environment, we increased our exposure
to high-yield bonds from approximately 8% to 12% within our fixed-income
holdings, adding names like Corning and Xerox. We added Corning to benefit from
its strong market share in the lcd glass market. Outperformers within the
fixed-income portion of the portfolio included Nextel, Cox Communications and
Comcast, while Ace Ltd. underperformed.
OUTLOOK
Many of the cautions that affected the markets in 2004 remain. We believe
interest rates will continue to move higher and earnings growth will slow
further, and daily headlines are likely to create volatility. We approach the
coming months with a cautious but not a defensive posture, with our cash
position remaining higher than normal. We believe both stocks and bonds may
provide decent returns, but this will require astute targeting of specific
securities. The ability to avoid troubled situations will be critical, and we
believe our concentration on established, successful companies will help us in
this regard.
28
CITIZENS INCOME FUND
PERFORMANCE as of 12.31.2004
TOTAL RETURN AVERAGE ANNUAL RETURN
Ticker 6 1 5 10
Share class symbol months year years years
- ----------- ------ ------ ---- ----- -----
STANDARD WAIMX 4.07% 3.29% 4.83% 6.09%
Data presented reflects past performance, which is not a guarantee of future
results. Current performance, obtainable at www.citizensfunds.com, may be lower
or higher than the performance data quoted. When sold, your shares may be worth
more or less than what you paid for them. Performance figures assume
reinvestment of dividends and distributions but do not reflect the deduction of
taxes you would pay on fund distributions or redemptions of fund shares. Fee
waivers were instituted in the past to maintain expense limits, without which
returns would have been lower.
INVESTMENT GOAL current income and monthly
dividend payment
INVESTMENT STRATEGY invests mainly in bonds
and mortgage-backed securities
INCEPTION DATE standard shares 06.10.92
RISKS fixed-income investing; high-yield security risks
See pages 6-8 for important fund risk and benchmark disclosures.
THE MARKET
A key story for the credit markets in the last six months of 2004 was the steady
decline in the yield of the benchmark 10-year Treasury note, which at year's end
stood at 4.22%, well below expectations that exceeded 5.00%. One has to wonder
why the Treasury market rallied when the Federal Reserve raised its overnight
lending rate between banks four times during this period, reaching 2.25% by the
end of the year. We believe one reason is inflation has been relatively subdued;
another is strong foreign demand for U.S. debt, primarily from Japan and China.
HOW DID WE DO ?
Our high-yield investments contributed to the improved performance of the Income
Fund in the second half of the
29
PORTFOLIO REVIEW
CITIZENS INCOME FUND (continued)
year, a period in which the fund returned 4.07% for investors, just 11 basis
points shy of the return posted by the Lehman Brothers U.S. Aggregate Index.
We were able to take advantage of greater returns being
posted by high-yield bonds.
We successfully executed our strategy as high-yield bonds on December 31, 2004,
accounted for approximately 25% of the assets of the Income Fund, up from
approximately 14% at June 30, 2004. We added KB Home, for example, to capitalize
on positive trends in homebuilding, along with Community Health Systems, and
Markwest Energy. Some outperformers included Nextel, which marched ahead on news
of its planned merger with rival Sprint and improving operating results, plus
Comcast, XTO Energy and another homebuilder, Toll Brothers. Insurer Ace Ltd.
pulled up the rear, suffering from asbestos exposure and the investigation of
the insurance industry by New York Attorney General Eliot Spitzer.
OUTLOOK
Going into 2005, we believe the credit cycle will remain favorable due to
companies having much stronger balance sheets and improving operating metrics.
Indeed, we believe all the variables seem to be in place for a positive credit
environment, such as a decline in crude oil prices, payroll increases, the
ongoing economic expansion, and a monetary policy supporting economic growth.
Things we will watch for during the year include a return of inflation, a
further decline in the U.S. dollar and quicker than expected interest rate
increases by the Fed.
30
CITIZENS ULTRA SHORT BOND FUND
PERFORMANCE as of 12.31.2004
TOTAL RETURN AVERAGE ANNUAL RETURN
Ticker 6 1 Since
Share class symbol months year inception
- ----------- ------ ------ ---- ---------------------
STANDARD CFSBX 0.88% 1.29% 1.65%
Data presented reflects past performance, which is not a guarantee of future
results. Current performance, obtainable at www.citizensfunds.com, may be lower
or higher than the performance data quoted. When sold, your shares may be worth
more or less than what you paid for them. Performance figures assume
reinvestment of dividends and distributions but do not reflect the deduction of
taxes you would pay on fund distributions or redemptions of fund shares. Fee
waivers are currently in effect and have been instituted in the past to maintain
expense limits, without which returns would have been lower.
INVESTMENT GOAL high level of current income consistent
with preservation of capital
INVESTMENT STRATEGY invests mainly in short-duration
investment-grade fixed-income securities
INCEPTION DATE standard shares 11.21.02
RISKS fixed-income investing
See pages 6-8 for important fund risk and benchmark disclosures.
THE MARKET
We continued to see signs of economic expansion in the second half of 2004. GDP
growth, which during the second quarter was 3.3%, increased to 4% in the third
quarter, and economists currently estimate 3.5% growth for the fourth quarter.
Job growth also continued as the U.S. economy added an average of 181,000 jobs
per month in 2004. During the same period, the Federal Reserve increased the
federal-funds rate four times, 25 basis points at a time, to close the year at
2.25%. We believe the recent interest rate hikes reflect the Fed's concerns that
monetary policy is still highly accommodative and the ongoing economic expansion
may give rise to inflationary pressures. Inflation is bad for bond investors
because it reduces the value of interest payments and principal.
31
PORTFOLIO REVIEW
CITIZENS ULTRA SHORT BOND FUND (continued)
HOW DID WE DO ?
During the second half of 2004, the fund returned 0.88%, outperforming its
benchmark index, the Merrill Lynch 1-Year Treasury Index, by 21 basis points.
The fund's 30-day yield also improved during this period, rising from 1.89% on
June 30th to 2.48% on December 31st. We continued to focus on high quality
corporate bonds and asset-backed securities (with an average quality of Aa2),
which accounted for approximately 52% and 22% of the fund's total assets,
respectively, during the period. Corporate notes outperformed Treasury notes on
a total return basis in the last six-month period.
Our exposure to corporate notes enabled the fund to do well.
Our focus has been on maintaining a relatively stable net asset value combined
with increasing yields, when appropriate. The fund's effective duration at the
end of the year was 0.6 years. With low duration, bonds are less sensitive to
interest rate movements. Shorter durations also enable us to replace expired
securities with higher yielding replacements in a favorable interest rate
environment. For example, in the last six months of 2004, the two-year Treasury
note yield moved from 2.68% to 3.07%.
OUTLOOK
We are optimistic about the upcoming year, and believe the corporate credit
cycle will remain favorable. Moody's, a bond rating service, expects default
rates to be relatively low, around 1.6% in 2005 for investment grade bonds. We
believe the volume of net issuances will be low going forward, which should bode
well for corporate bond spreads. Cautionary factors we will watch for during the
year include greater than expected inflationary pressures, a weaker dollar, and
increased shareholder appeasement through share buybacks and higher dividend
payments.
32
CITIZENS MONEY MARKET FUND
PERFORMANCE as of 12.31.2004
TOTAL RETURN AVERAGE ANNUAL RETURN
Ticker 6 1 5 10 Since
Share class symbol months year years years inception
- ----------- ------ ------ ---- ----- ----- ---------
STANDARD WKAXX 0.37% 0.44% 2.09% 3.26% NA
INSTITUTIONAL WAIXX 0.50% 0.71% 2.37% NA 3.49%
Data presented reflects past performance, which is not a guarantee of future
results. Current performance, obtainable at www.citizensfunds.com, may be lower
or higher than the performance data quoted. When sold, your shares may be worth
more or less than what you paid for them. Performance figures assume
reinvestment of dividends and distributions but do not reflect the deduction of
taxes you would pay on fund distributions or redemptions of fund shares. Fee
waivers were instituted in the past to maintain expense limits, without which
returns would have been lower.
INVESTMENT GOAL current income consistent with safety
and liquidity
INVESTMENT STRATEGY invests exclusively in money
market instruments
INCEPTION DATES standard shares 08.30.83, institutional
shares 02.01.96
RISKS money market investing
See pages 6-8 for important fund risk and benchmark disclosures.
THE MARKET
In the last six months of 2004 the federal-funds rate rose four times, in 25
basis point increments, to reach 2.25% year's end. The rate is the most
prominent mechanism through which the Federal Reserve controls monetary policy.
Bond prices and interest rates have an inverse relationship with each other. In
other words, when interest rates rise, bond prices fall. This relationship
between interest rates and bond prices does not necessarily hold true for money
market funds. This is due to the short-term nature of the securities held in the
fund. For instance, in a rising interest rate environment, securities that reach
maturity are typically replaced by higher yielding securities on an ongoing
basis.
33
PORTFOLIO REVIEW
CITIZENS MONEY MARKET FUND (continued)
HOW DID WE DO ?
The interest rate hikes during the period helped improve the fund's performance.
For instance, the 7-day simple yield on the standard share class was 1.17% at
December 31st, compared to 0.5% at June 30th. During the second half of 2004,
our strategy was to lower the fund's average weighted maturity in order to
benefit from the rising interest rate environment. At December 31st, the average
weighted maturity for the portfolio was 33 days compared to 42 days at June
30th. We were also shorter than our peers in terms of average weighted maturity
at the end of the year.
We believe this fund can be a good alternative to a traditional savings account.
OUTLOOK
As we head into 2005, we believe the Fed will continue to raise interest rates
as the current monetary policy still appears highly accommodative. The
federal-funds rate is expected to be around 3.5% - 4% by the end of 2005,
assuming inflationary pressures remain tame and crude oil price levels remain
below the highs of last fall. Other factors contributing to future rate
increases include overall economic expansion characterized by earnings growth,
payroll increases and higher consumer spending. In 2004, the economy added an
average 181,000 jobs per month, which is above the 100 - 150 thousand jobs
required to absorb new people coming into the job market. We believe there will
be similar job growth in 2005, primarily resulting from improved operating
results being reported by companies. We will continue to avoid investing in
securities that we believe pose significant credit and headline risk and invest
in first-tier securities in order to maintain minimal credit risk.
34
CITIZENS FUNDS HOLDINGS
DECEMBER 31, 2004 ($ X 1,000) UNAUDITED
300 FUND
Security Shares Value ($)
- ------------------------------- ------ ---------
COMMON STOCKS - 100.0%
Air Freight - 1.8%
FedEx Corp. 300 30
United Parcel Service, Class B 1,165 99
---
129
Airlines - 0.2%
jetBlue Airways Corp. (a) 100 2
Southwest Airlines Co. 830 14
---
16
Apparel Manufacturers - 0.1%
Jones Apparel Group, Inc. 200 7
Auto Manufacturing - 0.2%
PACCAR, Inc. 150 12
Banks - 4.7%
Bank of America Corp. 4,100 192
Bank of New York Co., Inc. 800 27
BB&T Corp. 600 25
Fifth Third Bancorp 600 28
National City Corp. 700 26
North Fork Bancorporation, Inc. 300 9
SunTrust Banks, Inc. 400 30
---
337
Biotechnology - 1.3%
Allergan, Inc. 100 8
Biogen Idec, Inc. (a) 375 25
Chiron Corp. (a) 200 7
Forest Laboratories, Inc. (a) 400 18
Genzyme Corp. (a) 200 12
Gilead Sciences, Inc. (a) 400 14
MedImmune, Inc. (a) 200 5
---
89
Broadcasting - 0.3%
Univision Communications,
Inc. (a) 700 20
Chemicals - 1.8%
Air Products & Chemicals, Inc. 200 12
Amgen, Inc. (a) 1,300 83
Engelhard Corp. 200 6
International Flavors
& Fragrances, Inc. 100 4
Praxair, Inc. 400 18
Sigma-Aldrich Corp. 100 6
---
129
Computers - 9.7%
Apple Computer, Inc. (a) 370 24
Automatic Data Processing 300 13
Citrix Systems, Inc. (a) 225 6
Corning, Inc. (a) 1,480 17
Dell, Inc. (a) 2,500 104
EMC Corp. (a) 2,400 36
Intel Corp. 6,355 148
International Business
Machines Corp. 1,650 162
Intuit, Inc. (a) 200 9
Lexmark International, Inc. (a) 150 13
National Instruments Corp. 100 3
Network Appliance, Inc. (a) 500 17
Novell, Inc. (a) 400 3
Oracle Corp. (a) 5,140 71
SunGard Data Systems, Inc. (a) 300 8
Symantec Corp. (a) 450 12
Yahoo!, Inc. (a) 1,400 53
---
699
Construction - 0.5%
Centex Corp. 200 12
D. R. Horton, Inc. 275 11
Lennar Corp. 200 11
---
34
Consumer Products - 1.2%
Alberto-Culver Co., Class B 200 10
Black & Decker Corp. 100 9
Clorox Co. 200 12
Kimberly-Clark Corp. 500 32
Newell Rubbermaid, Inc. 500 12
Whirlpool Corp. 100 7
---
82
Electrical Equipment - 1.6%
American Power Conversion Corp. 220 5
Emerson Electric Co. 400 28
Sanmina Corp. (a) 600 5
Tyco International Ltd. 2,010 72
---
110
Electronics - 4.6%
Adobe Systems, Inc. 200 13
Applied Materials, Inc. (a) 1,700 29
Broadcom Corp., Class A (a) 300 10
Cisco Systems, Inc. (a) 6,655 127
Electronic Arts, Inc. (a) 300 19
SEE FINANCIAL NOTES
35
CITIZENS FUNDS HOLDINGS
300 FUND
Security Shares Value ($)
- ------------------------------- ------ ---------
Electronics (continued)
Freescale Semiconductor,
Inc., Class B (a) 264 5
JDS Uniphase Corp. (a) 1,600 5
Johnson Controls, Inc. 200 13
Juniper Networks, Inc. (a) 600 16
Linear Technology Corp. 300 12
Maxim Integrated Products, Inc. 350 15
NVIDIA Corp. (a) 100 2
Rockwell Automation, Inc. 100 5
SPX Corp. 200 8
Texas Instruments, Inc. 1,700 42
Xilinx, Inc. 300 9
---
330
Energy & Utilities - 7.3%
AES Corp. (a) 700 10
Anadarko Petroleum Corp. 250 16
Apache Corp. 400 20
Baker Hughes, Inc. 300 13
BJ Services Co. 200 9
BP Amoco plc ADR 3,625 213
Burlington Resources, Inc. 400 17
Calpine Corp. (a) 300 1
ConocoPhillips 700 62
Devon Energy Corp. 600 23
Diamond Offshore Drilling, Inc. 200 8
Equitable Resources, Inc. 135 8
KeySpan Corp. 200 8
Kinder Morgan, Inc. 200 15
Newfield Exploration Co. (a) 100 6
NiSource, Inc. 300 7
Noble Corp. (a) 200 10
Noble Energy, Inc. 100 6
Pepco Holdings, Inc. 100 2
Pioneer Natural Resources Co. 200 7
Pogo Producing Co. 100 5
Puget Energy, Inc. 100 2
Questar Corp. 200 10
Smith International, Inc. (a) 100 5
The Williams Cos., Inc. 500 8
Transocean, Inc. (a) 400 17
Western Gas Resources, Inc. 100 3
XTO Energy, Inc. 150 5
---
516
Entertainment - 3.2%
Comcast Corp., Class A (a) 2,200 73
Time Warner, Inc. (a) 4,550 89
Viacom, Inc. 1,700 62
---
224
Financial - Diversified - 13.1%
AMBAC Financial Group, Inc. 100 8
American Express Co. 1,300 73
Capital One Financial Corp. 300 25
Citigroup, Inc. 5,200 251
Fannie Mae 1,000 71
Freddie Mac 700 52
Lehman Brothers Holdings, Inc. 300 26
MBNA Corp. 1,300 37
Mellon Financial Corp. 400 12
Merrill Lynch & Co. 900 54
MetLife, Inc. 700 28
Moody's Corp. 200 17
Northern Trust Corp. 200 10
SLM Corp. 400 21
State Street Corp. 300 15
Synovus Financial Corp. 390 11
Wachovia Corp. 1,600 84
Washington Mutual, Inc. 900 38
Wells Fargo & Co. 1,660 103
---
936
Financial Services - 0.5%
Charles Schwab Corp. 1,400 17
Golden West Financial Corp. 120 7
Principal Financial Group 300 12
---
36
Foods - 4.6%
Bunge, Ltd. 100 6
Campbell Soup Co. 400 12
Coca-Cola Co. 2,400 99
General Mills, Inc. 400 20
H.J. Heinz Co. 300 12
Kellogg Co. 449 20
McCormick & Co., Inc. 100 4
Pepsi Bottling Group, Inc. 100 3
PepsiCo, Inc. 1,650 86
Sara Lee Corp. 850 21
SUPERVALU, Inc. 100 3
Sysco Corp. 710 27
Wm. Wrigley Jr. Co. 200 14
---
327
Healthcare - 11.5%
Baxter International, Inc. 600 21
Becton, Dickinson & Co. 250 14
Biomet, Inc. 200 9
SEE FINANCIAL NOTES
36
DECEMBER 31, 2004 ($ X 1,000) UNAUDITED
300 FUND
Security Shares Value ($)
- ----------------------------------- ------ ---------
Healthcare (continued)
Boston Scientific Corp. (a) 800 28
Cardinal Health, Inc. 500 29
DENTSPLY International, Inc. 100 6
Eli Lilly & Co. 1,100 62
Express Scripts, Inc. (a) 100 8
Guidant Corp. 300 22
Health Management
Associates, Inc., Class A 100 2
Johnson & Johnson, Inc. 3,000 190
Laboratory Corp. of
America Holdings (a) 225 11
Medtronic, Inc. 1,200 60
Mylan Laboratories, Inc. 350 6
Pfizer, Inc. 7,550 202
Quest Diagnostics, Inc. 100 10
St. Jude Medical, Inc. (a) 400 17
Stryker Corp. 420 20
UnitedHealth Group, Inc. 700 62
Wellpoint, Inc. (a) 300 35
---
814
Hotels & Motels - 0.2%
Marriott International, Inc.,
Class A 200 13
Insurance - 4.3%
American International
Group, Inc. 2,565 168
Fidelity National Financial Corp. 300 14
Hartford Financial Services
Group, Inc. 300 21
Marsh & McLennan Cos., Inc. 500 16
MBIA, Inc. 200 13
Progressive Corp. 200 17
The Allstate Corp. 700 36
The St. Paul Travelers Cos., Inc. 670 25
---
310
Investment Banking & Brokerage -0.9%
T. Rowe Price Group, Inc. 170 11
The Goldman Sachs Group, Inc. 500 52
---
63
Leisure - 0.3%
Harley-Davidson, Inc. 300 18
Manufacturing - 5.9%
3M Co. 800 67
American Standard Cos., Inc. (a) 300 12
Bausch & Lomb, Inc. 100 6
Cintas Corp. 135 6
Cooper Cameron Corp. (a) 100 5
Dana Corp. 100 2
Deere & Co. 300 22
Donaldson Co., Inc. 100 3
Dover Corp. 300 13
Eaton Corp. 200 14
Gentex Corp. 105 4
Graco, Inc. 100 4
Illinois Tool Works, Inc. 300 28
Ingersoll-Rand Co. 200 16
Masco Corp. 515 19
Mattel, Inc. 570 11
Nucor Corp. 200 10
Parker Hannifin Corp. 100 8
Pentair, Inc. 100 4
Procter & Gamble Co. 2,602 144
Sealed Air Corp. (a) 100 5
Smurfit-Stone Container Corp. (a) 500 9
Sonoco Products Co. 100 3
Worthington Industries, Inc. 100 2
---
417
Office Equipment & Supplies - 0.3%
Avery Dennison Corp. 200 12
Pitney Bowes, Inc. 200 9
---
21
Personal Care - 1.5%
Avon Products, Inc. 500 19
Colgate-Palmolive Co. 560 29
Gillette Co. 1,000 45
The Estee Lauder Cos., Inc.,
Class A 300 14
---
107
Pharmaceuticals - 0.5%
McKesson Corp. 400 13
Zimmer Holdings, Inc. (a) 300 24
---
37
Publishing - 0.9%
Dow Jones & Co., Inc. 100 4
Gannett Co., Inc. 310 26
McGraw-Hill Cos., Inc. 200 18
Tribune Co. 300 13
---
61
Railroads - 0.4%
CSX Corp. 300 12
Norfolk Southern Corp. 500 18
---
30
SEE FINANCIAL NOTES
37
CITIZENS FUNDS HOLDINGS
300 FUND
Security Shares Value ($)
- -------------------------------- ------ ---------
Real Estate - 0.1%
The St. Joe Co. 120 8
Restaurants - 1.2%
McDonald's Corp. 1,300 41
Starbucks Corp. (a) 400 25
YUM! Brands, Inc. 400 19
-----
85
Retail - 7.3%
AutoZone, Inc. (a) 100 9
Bed Bath & Beyond, Inc. (a) 300 12
Best Buy & Co., Inc. 400 24
Big Lots, Inc. (a) 200 2
Chico's FAS, Inc. (a) 105 5
Coach, Inc. (a) 200 11
Costco Wholesale Corp. 500 24
CVS Corp. 430 19
Dollar General Corp. 400 8
eBay, Inc. (a) 700 81
Fastenal Co. 120 7
Hasbro, Inc. 100 2
Home Depot, Inc. 2,165 93
Lowe's Cos., Inc. 800 46
Michaels Stores, Inc. 200 6
Nordstrom, Inc. 100 5
RadioShack Corp. 235 8
Staples, Inc. 530 18
Target Corp. 900 47
The Gap, Inc. 868 18
The TJX Cos., Inc. 500 13
Tiffany & Co. 300 10
Walgreen Co. 1,000 38
Whole Foods Market, Inc. 100 10
-----
516
Services - 2.3%
Apollo Group, Inc., Class A (a) 100 8
ARAMARK Corp. 200 5
Career Education Corp. (a) 200 8
Cendant Corp. 1,000 23
Ecolab, Inc. 300 11
Expeditors International
of Washington, Inc. 200 11
Fair Isaac & Co., Inc. 100 4
First Data Corp. 900 38
Fiserv, Inc. (a) 200 8
Monster Worldwide, Inc. (a) 100 3
Omnicom Group, Inc. 200 17
Pall Corp. 100 3
Paychex, Inc. 400 14
Unisys Corp. (a) 700 7
Viad Corp. 31 1
-----
161
Telecommunications - 5.7%
Lucent Technologies, Inc. (a) 5,000 19
Motorola, Inc. 2,400 41
Nextel Communications, Inc. (a) 1,100 33
QUALCOMM, Inc. 1,650 70
SBC Communications, Inc. 3,280 85
Scientific-Atlanta, Inc. 200 7
Sprint Corp. 1,417 35
Verizon Communications, Inc. 2,750 111
-----
401
-----
TOTAL COMMON STOCKS 7,095
Cost: $6,409
Security, rate, maturity date Principal ($) Value ($)
- ----------------------------------------- ------------ ---------
REPURCHASE AGREEMENTS - 0.1%
Fifth Third Bank, Inc., 1.25%, 01/03/05
(Proceeds at maturity $10,
collateralized by Federal
Home Loan Mortgage Corp.
security, 6.00%, 04/01/17)
Cost: $10 10 10
------
TOTAL INVESTMENTS - 100.1% 7,105
Cost: $6,419 (b)
Percentages indicated are based on net
assets of $7,097.
(a) Non-income producing security.
(b) Represents cost for financial reporting
purposes and differs from federal income tax
purposes by the amount of losses recognized for
financial reporting purposes in excess of federal
income tax reporting of approximately $28.
Cost for federal income tax purposes differs from
value by net unrealized appreciation of securities
as follows:
Unrealized appreciation $ 838
Unrealized depreciation (180)
-------
Net unrealized appreciation $ 658
ADR - American Depositary Receipt
SEE FINANCIAL NOTES
38
DECEMBER 31, 2004 ($ X 1,000) UNAUDITED
CORE GROWTH FUND
Security Shares Value ($)
- --------------------------------- ------- ---------
COMMON STOCKS - 96.3%
Air Freight - 2.3%
FedEx Corp. 80,060 7,885
Apparel Manufacturers - 1.6%
Nike, Inc., Class B 60,000 5,441
Auto Manufacturing - 1.8%
PACCAR, Inc. 75,000 6,036
Banks - 1.9%
Bank of America Corp. 140,000 6,579
Biotechnology - 1.4%
Gilead Sciences, Inc. (a) 140,000 4,899
Chemicals - 1.4%
Praxair, Inc. 110,000 4,857
Computers - 6.2%
Cognos, Inc. (a) 120,000 5,287
Dell, Inc. (a) 100,000 4,214
Network Appliance, Inc. (a) 150,000 4,983
Symantec Corp. (a) 250,000 6,440
------
20,924
Consumer Products - 1.8%
Black & Decker Corp. 70,000 6,183
Electronics - 6.0%
Adobe Systems, Inc. 100,000 6,274
Cisco Systems, Inc. (a) 200,000 3,860
Electronic Arts, Inc. (a) 75,000 4,626
Rockwell Automation, Inc. 110,000 5,451
------
20,211
Energy & Utilities - 9.4%
Apache Corp. 82,100 4,152
BJ Services Co. 70,000 3,258
Burlington Resources, Inc. 100,000 4,350
ConocoPhillips 75,000 6,512
Equitable Resources, Inc. 110,000 6,672
Questar Corp. 130,000 6,625
Silvan Power Co. (a) (b) 24,000 -
Vulcan Power Co.,
Class A (a) (b) 40,000 -
------
31,569
Financial - Diversified - 8.5%
American Express Co. 110,000 6,201
Legg Mason, Inc. 60,000 4,396
MBNA Corp. 120,000 3,383
Moody's Corp. 75,000 6,513
SLM Corp. 60,000 3,203
Wells Fargo & Co. 80,000 4,972
------
28,668
Financial Services - 2.8%
Golden West
Financial Corp. 80,000 4,913
Hibernia Corp. 160,000 4,722
------
9,635
Foods - 5.6%
Hershey Foods Corp. 125,000 6,942
McCormick & Co., Inc. 130,000 5,018
Sysco Corp. 100,000 3,817
Wm. Wrigley Jr. Co. 45,000 3,114
------
18,891
Healthcare - 12.6%
Becton, Dickinson & Co. 125,000 7,100
C.R. Bard, Inc. 100,000 6,398
Johnson & Johnson, Inc. 150,000 9,512
St. Jude Medical, Inc. (a) 120,000 5,032
UnitedHealth Group, Inc. 100,000 8,803
Varian Medical
Systems, Inc. (a) 125,000 5,405
------
42,250
Hotels & Motels - 2.0%
Marriott International,
Inc., Class A 110,000 6,928
Insurance - 2.0%
The Allstate Corp. 130,020 6,725
Manufacturing - 5.8%
Illinois Tool Works, Inc. 63,600 5,894
Masco Corp. 135,000 4,932
Pentair, Inc. 125,000 5,445
Procter & Gamble Co. 60,000 3,305
------
19,576
Personal Care - 1.1%
Gillette Co. 80,000 3,582
Pharmaceuticals - 0.9%
Zimmer Holdings, Inc. (a) 40,000 3,205
Restaurants - 2.2%
Starbucks Corp. (a) 120,000 7,483
Retail - 7.7%
Bed Bath & Beyond, Inc. (a) 100,000 3,983
Costco Wholesale Corp. 70,000 3,389
CVS Corp. 145,000 6,535
SEE FINANCIAL NOTES
39
CITIZENS FUNDS HOLDINGS
CORE GROWTH FUND
Security Shares Value ($)
- -------- ------ ---------
Retail (continued)
Nordstrom, Inc. 100,000 4,673
Staples, Inc. 220,000 7,416
-------
25,996
Services - 5.6%
Ecolab, Inc. 140,000 4,918
Expeditors International
of Washington, Inc. 90,000 5,029
First Data Corp. 100,000 4,254
Getty Images, Inc. (a) 70,000 4,820
-------
19,021
Telecommunications - 5.7%
Alltel Corp. 85,000 4,995
QUALCOMM, Inc. 220,000 9,328
Sprint Corp. 200,000 4,970
-------
19,293
-------
TOTAL COMMON STOCKS 325,837
Cost: $266,958
WARRANTS - 0.0%
Telecommunications - 0.0%
Lucent Technologies, Inc. 4,066 6
Cost: $0
Security, rate, maturity date Principal ($) Value ($)
- ----------------------------------------------------- ------------- ---------
REPURCHASE AGREEMENTS - 3.9%
Fifth Third Bank, Inc., 1.25%, 01/03/05
(Proceeds at maturity $13,079,
collateralized by Federal Home
Loan Mortgage Corp. securities,
5.00%-6.00%, 04/01/17-11/01/17)
Cost: $13,077 13,077 13,077
-------
TOTAL INVESTMENTS - 100.2% 338,920
Cost: $280,035 (c)
Percentages indicated are based on net assets of
$338,328.
(a) Non-income producing security.
(b) On December 31, 2004, the fund owned the
following restricted securities constituting 0.00%
of net assets which may not be publicly sold
without registration under the Securities Act of
1933. These securities are valued at fair value as
determined in good faith under consistently
applied procedures under the general supervision
of the Trust's Board of Trustees. Additional
information on the securities is as follows:
Vulcan Power Co., Class A
Acquisition Date: March 3, 1995
Cost: $300
Value: $0
Silvan Power Co.
Acquisition Date: July 27, 2004
Cost : $0
Value : $0
(c) Represents cost for financial reporting
purposes and differs from federal income tax
purposes by the amount of losses recognized for
financial reporting purposes in excess of
federal income tax reporting of approximately $666.
Cost for federal income tax purposes differs
from value by net unrealized appreciation of
securities as follows:
Unrealized appreciation $ 58,935
Unrealized depreciation (716)
--------
Net unrealized appreciation $ 58,219
SEE FINANCIAL NOTES
40
DECEMBER 31, 2004 ($ X 1,000) UNAUDITED
EMERGING GROWTH FUND
Security Shares Value ($)
- ------------------------------ ------ ---------
COMMON STOCKS - 100.3%
Banks - 1.9%
East West Bancorp, Inc. 77,759 3,263
Biotechnology - 1.0%
Gilead Sciences, Inc. (a) 51,200 1,791
Broadcasting - 0.6%
American Tower Corp. (a) 55,900 1,029
Chemicals - 1.0%
Praxair, Inc. 39,650 1,751
Computers - 11.6%
Affiliated Computer
Services, Inc. (a) 28,125 1,693
Apple Computer, Inc. (a) 71,916 4,632
ARM Holdings plc ADR 341,862 2,109
Autodesk, Inc. 50,400 1,913
Corning, Inc. (a) 147,360 1,734
Pixar, Inc. (a) 14,505 1,242
Symantec Corp. (a) 137,200 3,534
Veritas Software Corp. (a) 64,066 1,829
Wind River Systems, Inc. (a) 119,500 1,619
------
20,305
Construction - 1.6%
Centex Corp. 17,000 1,013
Lafarge North America, Inc. 34,000 1,745
------
2,758
Consumer Products - 1.1%
Black & Decker Corp. 20,790 1,836
Electrical Equipment - 1.5%
Fisher Scientific
International, Inc. (a) 42,400 2,645
Electronics - 12.4%
Adobe Systems, Inc. 71,525 4,487
Advanced Micro
Devices, Inc. (a) 78,500 1,729
Cree, Inc. (a) 55,240 2,214
Harman International
Industries, Inc. 26,780 3,401
International Rectifier
Corp. (a) 77,700 3,463
Juniper Networks, Inc. (a) 110,275 2,998
Rockwell Automation, Inc. 26,000 1,288
Silicon Image, Inc. (a) 129,314 2,129
------
21,709
Energy & Utilities - 4.8%
Baker Hughes, Inc. 43,840 1,871
EOG Resources, Inc. 23,200 1,656
Newfield Exploration Co. (a) 28,742 1,697
ONEOK, Inc. 54,200 1,540
Patterson-UTI Energy, Inc. 85,200 1,657
------
8,421
Financial - Diversified - 2.5%
Investors Financial
Services Corp. 38,227 1,911
Moody's Corp. 28,494 2,474
------
4,385
Financial Services - 3.6%
Chicago Mercantile Exchange 15,156 3,466
Golden West Financial Corp. 45,080 2,769
------
6,235
Foods - 2.9%
Bunge, Ltd. 47,850 2,728
Hershey Foods Corp. 42,425 2,356
------
5,084
Healthcare - 9.5%
Biomet, Inc. 52,725 2,288
Cooper Cos., Inc. 38,075 2,688
Cytyc Corp. (a) 59,809 1,649
Laboratory Corp. of
America Holdings (a) 21,850 1,089
Sierra Health
Services, Inc. (a) 50,888 2,804
St. Jude Medical, Inc. (a) 78,840 3,305
Varian Medical
Systems, Inc. (a) 64,600 2,793
------
16,616
Hotels & Motels - 1.0%
Choice Hotels
International, Inc. 30,530 1,771
Investment Banking &
Brokerage - 1.4%
T. Rowe Price Group, Inc. 39,555 2,460
Manufacturing - 6.5%
Graco, Inc. 71,906 2,686
Nucor Corp. 58,850 3,081
Oshkosh Truck Corp. 29,284 2,002
Pentair, Inc. 34,000 1,481
Zebra Technologies Corp.,
Class A (a) 38,706 2,178
------
11,428
SEE FINANCIAL NOTES
41
CITIZENS FUNDS HOLDINGS
EMERGING GROWTH FUND
Security Shares Value ($)
- ----------------------------------- ------- ---------
Personal Care - 0.6%
The Estee Lauder Cos., Inc.,
Class A 21,400 979
Pharmaceuticals - 1.1%
Medicis Pharmaceutical
Corp., Class A 53,800 1,889
Publishing - 0.9%
John Wiley & Sons, Inc. 44,400 1,547
Railroads - 1.0%
Norfolk Southern Corp. 50,270 1,819
Restaurants - 4.9%
Sonic Corp. (a) 33,230 1,014
Starbucks Corp. (a) 71,100 4,434
YUM! Brands, Inc. 65,500 3,090
-------
8,538
Retail - 12.7%
American Eagle Outfitters, Inc. 68,200 3,212
Claire's Stores, Inc. 101,400 2,155
Coach, Inc. (a) 27,700 1,562
Fastenal Co. 39,097 2,407
Foot Locker, Inc. 100,246 2,700
Nordstrom, Inc. 60,356 2,820
Polo Ralph Lauren 18,000 767
Regis Corp. 30,700 1,417
Staples, Inc. 81,870 2,760
Whole Foods Market, Inc. 26,750 2,551
-------
22,351
Services - 9.5%
Cognizant Technology
Solutions Corp. (a) 68,400 2,895
Corporate Executive
Board Co. 51,549 3,451
Dun & Bradstreet Corp. (a) 19,200 1,145
Ecolab, Inc. 62,511 2,196
Expeditors International
of Washington, Inc. 41,600 2,325
Getty Images, Inc. (a) 32,235 2,219
VCA Antech, Inc. (a) 120,000 2,352
-------
16,583
Telecommunications - 1.7%
Andrew Corp. (a) 60,700 827
Macromedia, Inc. (a) 33,600 1,046
Nextel Partners, Inc. (a) 53,000 1,036
-------
2,909
Transportation - 3.0%
Landstar System, Inc. (a) 37,240 2,743
Ryder System, Inc. 51,694 2,469
-------
5,212
-------
TOTAL COMMON STOCKS 175,314
Cost: $142,286
Security, rate, maturity date Principal ($) Value ($)
- ----------------------------------------------------- ------------- ---------
REPURCHASE AGREEMENTS - 0.1%
Fifth Third Bank, 1.25%, 01/03/05
(Proceeds at maturity $201,
collateralized by Federal Home
Loan Mortgage Corp. security,
5.00%, 11/01/17)
Cost: $201 201 201
-------
TOTAL INVESTMENTS - 100.4% 175,515
Cost: $142,487 (b)
Percentages indicated are based on net assets of
$174,861.
(a) Non-income producing security.
(b) Represents cost for financial reporting
purposes and differs from federal
income tax purposes by the amount of losses
recognized for financial reporting purposes
in excess of federal income tax reporting of
approximately $28. Cost for federal income
tax purposes differs from value by net
unrealized appreciation of securities
as follows:
Unrealized appreciation $ 33,624
Unrealized depreciation (624)
--------
Net unrealized appreciation $ 33,000
ADR - American Depositary Receipt
SEE FINANCIAL NOTES
42
DECEMBER 31, 2004 ($ X 1,000) UNAUDITED
SMALL CAP CORE GROWTH FUND
Security Shares Value ($)
- ---------------------------- ------ ---------
COMMON STOCKS - 100.0%
Airlines - 1.0%
MAIR Holdings, Inc. (a) 30,786 283
Banks - 6.1%
Cathay Bancorp, Inc. 9,100 341
East West Bancorp, Inc. 10,940 460
Glacier Bancorp, Inc. 6,800 231
PrivateBancorp, Inc. 9,890 319
Prosperity Bancshares, Inc. 15,074 440
-----
1,791
Biotechnology - 3.1%
Merit Medical Systems,
Inc. (a) 59,278 906
Computers - 10.1%
Ansys, Inc. (a) 15,760 505
ARM Holdings plc ADR 45,974 284
Digital River, Inc. (a) 12,780 532
F5 Networks, Inc. (a) 10,960 534
Factset Research Systems, Inc. 7,960 465
NETGEAR, Inc. (a) 35,300 642
-----
2,962
Educational Services - 1.7%
Bright Horizons Family
Solutions, Inc. (a) 7,850 508
Electrical Equipment - 1.4%
Genlyte Group (a) 4,802 411
Electronics - 5.9%
Diodes, Inc. (a) 20,500 464
Silicon Image, Inc. (a) 33,135 546
Skyworks Solutions, Inc. (a) 37,040 349
Trimble Navigation Ltd. (a) 11,665 385
-----
1,744
Energy & Utilities - 6.4%
Airgas, Inc. 10,845 288
Carbo Ceramics, Inc. 4,825 333
Headwaters, Inc. (a) 12,700 362
Patina Oil & Gas Corp. 8,945 335
Precision Drilling Corp. (a) 4,750 298
RPC, Inc. 9,800 246
-----
1,862
Financial - Diversified - 1.4%
R & G Finanical Corp., Class B 10,615 413
Healthcare - 13.0%
Able Laboratories, Inc. (a) 18,240 415
Advanced Medical Optics (a) 10,882 448
American Medical Systems
Holdings, Inc. (a) 12,003 502
Amerigroup Corp. (a) 8,350 632
Centene Corp. (a) 16,800 476
LifePoint Hospitals, Inc. (a) 14,600 508
Quality Systems, Inc. (a) 7,590 454
Sierra Health Services, Inc. (a) 6,744 372
-----
3,807
Hotels & Motels - 1.8%
Choice Hotels
International, Inc. 9,105 528
Insurance - 1.0%
RLI Corp. 7,055 293
Investment Banking & Brokerage - 2.4%
Affiliated Managers
Group, Inc. (a) 5,460 370
Southwest BanCorp of Texas 14,030 327
-----
697
Manufacturing - 14.4%
Ceradyne, Inc. (a) 8,700 498
Kennametal, Inc. 8,200 408
Matthews International
Corp., Class A 9,600 353
Oshkosh Truck Corp. 6,780 464
Oxford Industries, Inc. 6,650 275
Roper Industries, Inc. 6,760 411
Simpson Manufacturing
Co., Inc. 13,515 472
Steel Dynamics, Inc. 14,820 561
The Manitowoc Co., Inc. 9,025 340
Toro Co. 5,655 460
-----
4,242
Multimedia - 2.7%
Sonic Solutions (a) 16,140 362
Witness Systems, Inc. (a) 24,630 430
-----
792
Personal Care - 2.5%
Chattem, Inc. (a) 12,740 421
Steiner Leisure Ltd. (a) 10,000 299
-----
720
Publishing - 0.9%
Thomas Nelson, Inc. 11,200 253
SEE FINANCIAL NOTES
43
CITIZENS FUNDS HOLDINGS
SMALL CAP CORE GROWTH FUND
Security Shares Value ($)
- ----------------------------------- ------ ---------
Restaurants - 3.3%
P.F. Chang's China
Bistro, Inc. (a) 7,040 397
Sonic Corp. (a) 19,005 579
------
976
Retail - 7.2%
Claire's Stores, Inc. 18,815 400
Finish Line, Inc., Class A 25,000 458
Guitar Center, Inc. (a) 9,650 507
Peet's Coffee & Tea, Inc. (a) 8,525 226
Quiksilver, Inc. (a) 7,400 220
The Warnaco Group, Inc. (a) 13,500 292
------
2,103
Services - 7.8%
Corporate Executive Board Co. 9,285 621
Labor Ready, Inc. (a) 20,010 339
Mine Safety Appliances 7,055 358
SCP Pool Corp. 9,200 293
VCA Antech, Inc. (a) 13,500 265
Waste Connections, Inc. (a) 12,210 418
------
2,294
Telecommunications - 3.4%
Macromedia, Inc. (a) 15,000 467
NII Holdings, Inc., Class B (a) 2,860 136
Symmetricom, Inc. (a) 41,300 401
------
1,004
Transportation - 2.5%
Landstar System, Inc. (a) 9,935 732
------
TOTAL COMMON STOCKS 29,321
Cost: $24,545
Security, rate, maturity date Principal ($) Value ($)
- ------------------------------------------------ ------------- ---------
REPURCHASE AGREEMENTS - 4.1%
Fifth Third Bank, Inc., 1.25%, 01/03/05
(Proceeds at maturity $1,195,
collateralized by Federal Home
Loan Mortgage Corp. security,
5.00%, 11/01/17)
Cost: $1,195 1,195 1,195
----- ------
TOTAL INVESTMENTS - 104.1% 30,516
Cost: $25,740 (b)
Percentages indicated are based on net assets of
$29,313.
(a) Non-income producing security.
(b) Represents cost for financial reporting
purposes and differs from federal income tax
purposes by the amount of losses recognized for
financial reporting purposes in excess of
federal income tax reporting of approximately
$63. Cost for federal income tax purposes
differs from value by net unrealized
appreciation of securities
as follows:
Unrealized appreciation $ 4,809
Unrealized depreciation (96)
---------
Net unrealized appreciation $ 4,713
ADR - American Depositary Receipt
SEE FINANCIAL NOTES
44
DECEMBER 31, 2004 ($ X 1,000) UNAUDITED
VALUE FUND
Security Shares Value ($)
- -------------------------------- ------ ---------
COMMON STOCKS - 100.1%
Air Freight - 2.8%
FedEx Corp. 7,455 734
Apparel Manufacturers - 1.6%
V.F. Corp. 7,400 410
Auto Manufacturing - 1.3%
PACCAR, Inc. 4,270 344
Banks - 5.8%
Bank of America Corp. 15,040 706
KeyCorp 13,650 463
Regions Financial Corp. 9,934 354
-------
1,523
Chemicals - 2.4%
Amgen, Inc. (a) 4,380 281
Praxair, Inc. 7,943 351
-------
632
Computers - 7.8%
Affiliated Computer
Services, Inc. (a) 5,535 333
Corning, Inc. (a) 28,486 335
International Business
Machines Corp. 6,630 654
Microsoft Corp. 13,805 369
Storage Technology Corp. (a) 10,942 346
-------
2,037
Construction - 1.3%
Lafarge North America, Inc. 6,670 342
Consumer Products - 1.9%
Kimberly-Clark Corp. 7,571 498
Electronics - 2.7%
Cisco Systems, Inc. (a) 14,436 279
International Rectifier Corp. (a) 9,508 423
-------
702
Energy & Utilities - 9.1%
Anadarko Petroleum Corp. 6,842 443
Apache Corp. 6,797 344
ConocoPhillips 7,458 647
Devon Energy Corp. 11,091 432
ONEOK, Inc. 17,875 508
-------
2,374
Financial - Diversified - 9.2%
Capital One Financial Corp. 6,710 565
Lehman Brothers Holdings, Inc. 6,743 590
Merrill Lynch & Co. 10,835 647
Wachovia Corp. 11,252 592
-------
2,394
Financial Services - 1.8%
Golden West Financial Corp. 7,870 483
Foods - 1.6%
Bunge, Ltd. 7,130 406
Healthcare - 11.9%
Baxter International, Inc. 10,265 355
Beckman Coulter, Inc. 5,705 382
Becton, Dickinson & Co. 9,475 538
Cardinal Health, Inc. 8,137 473
Pfizer, Inc. 19,715 530
Wellpoint, Inc. (a) 7,134 820
-------
3,098
Insurance - 2.4%
The Allstate Corp. 12,352 639
Manufacturing - 8.0%
Eaton Corp. 7,285 527
Ingersoll-Rand Co. 8,274 665
Masco Corp. 12,055 440
Nucor Corp. 8,960 469
-------
2,101
Personal Care - 1.0%
Avon Products, Inc. 6,635 257
Publishing - 1.5%
McGraw-Hill Cos., Inc. 4,210 385
Railroads - 1.7%
Norfolk Southern Corp. 12,135 439
Real Estate - 1.2%
Simon Property Group 4,855 314
Restaurants - 4.2%
McDonald's Corp. 22,189 711
YUM! Brands, Inc. 8,120 383
-------
1,094
Retail - 7.1%
Claire's Stores, Inc. 17,825 379
CVS Corp. 14,485 653
Nieman Marcus Group,
Inc., Class A 6,115 437
Nordstrom, Inc. 8,446 395
-------
1,864
SEE FINANCIAL NOTES
45
CITIZENS FUNDS HOLDINGS
VALUE FUND
Security Shares Value ($)
- ----------------------------- ------ ---------
Telecommunications - 9.9%
Alltel Corp. 6,591 387
Avaya, Inc. (a) 17,174 295
Lucent Technologies, Inc.(a) 85,877 323
Motorola, Inc. 29,910 515
Nextel Communications,
Inc. (a) 8,765 263
Scientific-Atlanta, Inc. 8,870 293
Sprint Corp. 20,200 503
------
2,579
Transportation - 1.9%
Ryder System, Inc. 10,480 501
TOTAL COMMON STOCKS 26,150
Cost: $22,715
WARRANTS - 0.0%
Telecommunications - 0.0%
Lucent Technologies, Inc. 1,603 3
Cost: $0
Security, rate, maturity date Principal ($) Value ($)
- ------------------------------------------------- ------------ ---------
REPURCHASE AGREEMENTS - 0.1%
Fifth Third Bank, 1.25%, 01/03/05
(Proceeds at maturity $21,
collateralized by Federal Home
Loan Mortgage Corp. security,
5.00%, 11/01/17)
Cost: $21 21 21
------
TOTAL INVESTMENTS - 100.2% 26,174
Cost: $22,736 (b)
Percentages indicated are based on net assets
of $26,125 .
(a) Non-income producing security.
(b) Represents cost for financial reporting
purposes and differs from federal income tax
purposes by the amount of losses recognized for
financial reporting purposes in excess of
federal income tax reporting of approximately
$143. Cost for federal income tax purposes
differs from value by net unrealized
appreciation of securities as follows:
Unrealized appreciation $ 3,340
Unrealized depreciation (45)
----------
Net unrealized appreciation $ 3,295
SMALL CAP VALUE FUND
Security Shares Value ($)
- ------------------------------------- ------ ---------
COMMON STOCKS - 97.7%
Airlines - 3.0%
MAIR Holdings, Inc. (a) 6,997 64
Banks - 3.8%
Bank Mutual Corp. 3,250 40
NewAlliance Bancshares, Inc. 2,695 41
---
81
Biotechnology - 5.6%
Harvard Bioscience, Inc. (a) 5,547 26
Meridian Bioscience, Inc. 2,110 37
Merit Medical Systems, Inc. (a) 3,625 55
---
118
Computers - 1.2%
Computer Horizons Corp. (a) 6,576 25
Construction - 1.8%
Champion Enterprises (a) 3,304 39
Electronics - 3.0%
Cabot Microelectronics Corp. (a) 585 24
Lakeland Industries, Inc. (a) 1,072 22
Optical Communication
Products, Inc. (a) 7,342 18
---
64
Energy & Utilities - 11.9%
Cambior, Inc. (a) 11,202 30
Forest Oil Corp. (a) 1,275 40
Global Industries Ltd. (a) 7,916 65
St. Mary Land & Exploration Co. 925 39
UGI Corp. 700 29
Vectren Corp. 1,835 49
---
252
Financial - Diversified - 1.4%
Commercial Federal Corp. 1,000 30
Foods - 4.2%
Chiquita Brands
International, Inc. 1,520 34
Performance Food Group Co. (a) 975 26
Sanderson Farms, Inc. 668 29
---
89
Healthcare - 5.6%
America Service Group, Inc. (a) 2,122 56
Cross Country
Healthcare, Inc. (a) 1,690 31
CV Therapeutics, Inc. (a) 1,385 32
---
119
SEE FINANCIAL NOTES
46
DECEMBER 31, 2004 ($ X 1,000) UNAUDITED
SMALL CAP VALUE FUND
Security Shares Value ($)
- ---------------------------------------- ------ ---------
Insurance - 3.0%
Max Re Capital Ltd. 1,535 32
RLI Corp. 735 31
-----
63
Investment Banking & Brokerage - 2.7%
Affiliated Managers
Group, Inc. (a) 845 57
Manufacturing - 17.5%
Circor International, Inc. 1,246 29
Compass Minerals
International, Inc. 2,855 70
Constar International, Inc. (a) 4,407 34
Crown Holdings, Inc. (a) 4,260 60
Gentek, Inc. 390 17
Mueller Industries, Inc. 808 26
Newport Corp. (a) 1,949 27
Omnova Solutions, Inc. (a) 3,519 20
Packaging Corp. of America 850 20
RC2 Corp. (a) 380 12
Silgan Holdings, Inc. 363 22
Thomas Industries, Inc. 906 36
-----
373
Personal Care - 2.4%
Steiner Leisure Ltd. (a) 1,687 50
Pharmaceuticals - 2.0%
Par Pharmaceutical
Cos., Inc. (a) 1,027 42
Real Estate - 9.2%
American Financial Realty Trust 1,170 19
Ashford Hospitality Trust 3,475 38
Capital Lease Funding, Inc. 4,290 53
Healthcare Realty Trust, Inc. 750 31
Washington Real Estate
Investment Trust 1,555 53
-----
194
Retail - 2.5%
Brookstone, Inc. (a) 759 15
Department 56, Inc. (a) 865 14
Rocky Shoes & Boots, Inc. (a) 811 24
-----
53
Services - 8.9%
Chemed Corp. 391 26
Digital Generation
Systems, Inc. (a) 22,959 29
Dycom Industries, Inc. (a) 1,115 34
eSPEED, Inc. (a) 5,098 63
Per-Se Technologies, Inc. (a) 1,225 19
Private Business, Inc. (a) 6,860 17
-----
188
Telecommunications - 8.0%
Arris Group, Inc. (a) 3,600 25
C-Cor, Inc. (a) 2,200 20
Glenayre Technologies,
Inc. (a) 12,600 27
MRV Communications,
Inc. (a) 4,331 16
Tollgrade
Communications, Inc. (a) 1,865 23
Tumbleweed
Communications Corp. (a) 4,160 14
webMethods, Inc. (a) 2,442 18
Westell Technologies, Inc. (a) 3,815 26
-----
169
-----
TOTAL COMMON STOCKS 2,070
Cost: $1,850
Security, rate, maturity date Principal ($) Value ($)
- -------------------------------------------------- ------------ --------
REPURCHASE AGREEMENTS - 0.6%
Fifth Third Bank, 1.25%, 01/03/05
(Proceeds at maturity $12,
collateralized by Federal Home
Loan Mortgage Corp. security,
5.00%, 11/01/17)
Cost: $12 12 12
-----
TOTAL INVESTMENTS - 98.3% 2,082
Cost: $1,862 (b)
Percentages indicated are based on net assets of
$2,118.
(a) Non-income producing security.
(b) Represents cost for financial reporting
purposes and differs from federal income tax
purposes by the amount of losses recognized for
financial reporting purposes in excess of
federal income tax reporting of approximately
$16. Cost for federal income tax purposes
differs from value by net unrealized
appreciation of securities as follows:
Unrealized appreciation $ 212
Unrealized depreciation (8)
-------
Net unrealized appreciation $ 204
SEE FINANCIAL NOTES
47
CITIZENS FUNDS HOLDINGS
GLOBAL EQUITY FUND
Security Shares Value ($)
- ------------------------------------ ------ ---------
COMMON STOCKS - 98.5%
Automobile Manufacturing - 5.1%
Bayerische Motoren Werke AG 43,000 1,934
Toyota Motor Co. 12,000 982
Volvo AB 50,000 1,983
------
4,899
Banks - 4.2%
Bank of New York Co., Inc. 45,000 1,504
Royal Bank of Scotland
Group plc 30,000 1,008
UBS AG ADR 18,000 1,509
------
4,021
Biotechnology - 1.7%
Roche Holding AG 14,492 1,664
Broadcasting - 4.2%
British Sky Broadcasting
Group plc 90,000 970
Clear Channel
Communications, Inc. 37,000 1,239
Viacom, Inc., Class B 50,000 1,820
------
4,029
Computers - 9.9%
First Data Corp. 43,000 1,829
Intel Corp. 82,500 1,930
International Business
Machines Corp. 10,000 986
Microsoft Corp. 98,000 2,617
NCR Corp. (a) 15,000 1,038
SAP AG 6,200 1,104
------
9,504
Construction - 1.2%
Fluor Corp. 21,000 1,145
Consumer Products - 2.1%
Electrolux AB ADR 22,000 1,015
Kimberly-Clark ADR 56,000 967
------
1,982
Energy & Utilities - 10.9%
Apache Corp. 35,000 1,770
BG Group plc ADR 54,000 1,860
BP Amoco plc 224,000 2,183
Gold Fields Ltd. ADR 60,000 749
Kinder Morgan, Inc. 27,000 1,975
Statoil ASA ADR 59,000 937
Valero Energy Corp. 21,000 953
------
10,427
Entertainment - 2.2%
Comcast Corp., Class A (a) 65,000 2,135
Financial - Diversified - 13.5%
American Express Co. 25,000 1,409
Bank of America Corp. 28,000 1,316
Citigroup, Inc. 62,000 2,988
Deutsche Boerse AG 36,000 2,161
HBOS plc 120,000 1,952
HSBC Holdings plc ADR 10,000 851
Mitsubishi Tokyo
Financial Group, Inc. 62 630
Mitsubishi Tokyo
Financial Group, Inc. ADR 148,000 1,513
------
12,820
Food & Beverages - 3.0%
Nestle SA 5,678 1,483
PepsiCo, Inc. 27,000 1,409
------
2,892
Healthcare - 12.9%
Beckman Coulter, Inc. 28,000 1,876
Boston Scientific Corp. (a) 50,000 1,778
Caremark Rx, Inc. (a) 28,000 1,104
Eli Lilly & Co. 15,000 851
GlaxoSmithKline plc 104,405 2,447
Novartis AG ADR 40,000 2,022
Pfizer, Inc. 83,000 2,232
------
12,310
Insurance - 2.1%
ING Groep NV 67,000 2,023
Manufacturing - 7.2%
3M Co. 11,000 903
Komatsu, Ltd. 270,000 1,890
L'Air Liquide ADR 29,000 1,072
Rexam plc 110,000 970
Tyco International, Ltd. 57,000 2,037
------
6,872
Office Equipment & Supplies - 4.0%
Avery Dennison Corp. 29,000 1,739
Canon, Inc. ADR 38,000 2,062
------
3,801
Personal Care - 4.5%
Colgate-Palmolive Co. 30,000 1,535
Henkel KGaA ADR 11,000 908
The Estee Lauder Cos.,
Inc., Class A 41,000 1,876
------
4,319
SEE FINANCIAL NOTES
48
DECEMBER 31, 2004 ($ X 1,000) UNAUDITED
GLOBAL EQUITY FUND
Security Shares Value ($)
- ---------------------------- ------- ---------
Restaurants - 1.0%
Wendy's International, Inc. 25,000 982
Retail - 2.0%
Kohl's Corp. (a) 18,000 885
Petsmart, Inc. 30,000 1,066
------
1,951
Services - 1.0%
WPP Group plc 85,000 934
Telecommunications - 5.8%
Nippon Telegraph and
Telephone Corp. 38,000 857
NTT DoCoMo, Inc. (a) 40,000 985
Verizon Communications, Inc. 46,000 1,863
Vodafone Group plc 670,000 1,816
------
5,521
------
TOTAL COMMON STOCKS 94,231
Cost: $83,948
Security, rate, maturity date Principal ($) Value ($)
- ------------------------------------------------ ------------- ---------
REPURCHASE AGREEMENTS - 0.6%
Fifth Third Bank, 1.25%, 01/03/05
(Proceeds at maturity $548,
collateralized by Federal Home
Loan Mortgage Corp. security,
5.00%, 11/01/17)
Cost: $548 548 548
------
TOTAL INVESTMENTS - 99.1% 94,779
Cost: $84,496 (b)
Percentages indicated are based on net assets
of $95,642.
(a) Non-income producing security.
(b) Represents cost for financial reporting
purposes and differs from federal income tax
purposes by the amount of losses recognized
for financial reporting purposes in excess
of federal income tax reporting of
approximately $220. Cost for federal income
tax purposes differs from value by net
unrealized appreciation of securities as follows:
Unrealized appreciation $ 11,839
Unrealized depreciation (1,776)
---------
Net unrealized appreciation $ 10,063
ADR - American Depositary Receipt
GLOBAL EQUITY FUND
The fund's portfolio holdings as of December 31, 2004, were distributed among
the following countries:
PERCENTAGE OF NET ASSETS
----------------------------
SHORT TERM
EQUITY & OTHER TOTAL
------ ----------- -----
France 1.1% 1.1%
Germany 6.4% 6.4%
Israel 1.0% 1.0%
Japan 8.3% 8.3%
Mexico 1.0% 1.0%
Netherlands 2.1% 2.1%
Norway 1.0% 1.0%
South Africa 0.8% 0.8%
Sweden 3.1% 3.1%
Switzerland 5.4% 5.4%
United Kingdom 15.7% 15.7%
United States 52.6% 0.6% 53.2%
---- --- ----
TOTAL 98.5% 0.6% 99.1%
FOREIGN CURRENCY CONTRACTS (actual $)
- -------------------------- -------------
Delivery date 01/04/05
Contract amount
(Great Britain Pound) 100,000 GBP
Contract value (U.S.dollar) $ 191,570
Current value
at 12/31/04 (U.S. dollar) $ 191,800
Unrealized depreciation $ (230)
SEE FINANCIAL NOTES
49
CITIZENS FUNDS HOLDINGS
BALANCED FUND
Security Shares Value ($)
- ------------------------------- ------ ---------
COMMON STOCKS - 66.4%
Air Freight - 1.6%
FedEx Corp. 600 59
Apparel Manufacturers - 1.2%
Nike, Inc., Class B 500 45
Auto Manufacturing - 1.4%
PACCAR, Inc. 650 52
Banks - 1.3%
Bank of America Corp. 1,000 47
Biotechnology - 0.8%
Gilead Sciences, Inc. (a) 800 28
Chemicals - 1.2%
Praxair, Inc. 1,000 44
Computers - 5.3%
Automatic Data Processing 700 31
Cognos, Inc. (a) 900 40
Dell, Inc. (a) 900 38
Network Appliance, Inc. (a) 1,250 42
Symantec Corp. (a) 1,800 46
---
197
Consumer Products - 1.2%
Black & Decker Corp. 500 44
Electronics -3.2%
Adobe Systems, Inc. 800 50
Cisco Systems, Inc. (a) 1,400 27
Rockwell Automation, Inc. 800 40
---
117
Energy & Utilities - 8.6%
Anadarko Petroleum Corp. 400 26
Apache Corp. 550 28
Baker Hughes, Inc. 600 26
BJ Services Co. 650 30
Burlington Resources, Inc. 650 28
ConocoPhillips 550 47
Equitable Resources, Inc. 600 36
KeySpan Corp. 500 20
Questar Corp. 800 41
Valero Energy Corp. 800 36
---
318
Financial - Diversified - 4.4%
American Express Co. 800 45
MBNA Corp. 900 25
Moody's Corp. 700 61
Wells Fargo & Co. 500 31
---
162
Financial Services - 2.3%
Golden West Financial Corp. 800 50
Hibernia Corp. 1,200 35
---
85
Foods - 2.4%
Hershey Foods Corp. 900 50
McCormick & Co., Inc. 1,000 39
---
89
Healthcare - 7.8%
Becton, Dickinson & Co. 900 51
C.R. Bard, Inc. 800 51
Johnson & Johnson, Inc. 1,000 63
St. Jude Medical, Inc. (a) 600 25
UnitedHealth Group, Inc. 700 62
Varian Medical Systems, Inc. (a) 900 39
---
291
Hotels & Motels - 1.4%
Marriott International, Inc.,
Class A 800 50
Insurance - 1.3%
The Allstate Corp. 900 47
Manufacturing - 4.9%
Illinois Tool Works, Inc. 500 46
Masco Corp. 1,000 37
Pentair, Inc. 1,200 53
Procter & Gamble Co. 788 43
---
179
Personal Care - 0.7%
Gillette Co. 600 27
Pharmaceuticals - 0.7%
Zimmer Holdings, Inc. (a) 300 24
Publishing - 1.1%
McGraw-Hill Cos., Inc. 450 41
Restaurants - 1.4%
Starbucks Corp. (a) 800 50
Retail - 4.2%
Costco Wholesale Corp. 800 39
CVS Corp. 1,000 45
SEE FINANCIAL NOTES
50
DECEMBER 31, 2004 ($ X 1,000) UNAUDITED
BALANCED FUND
Security Shares Value ($)
- -------- ------ ---------
Retail (continued)
Nordstrom, Inc. 500 23
Staples, Inc. 1,400 47
-----
154
Services - 4.1%
Ecolab, Inc. 1,400 49
Expeditors International
of Washington, Inc. 600 34
First Data Corp. 600 26
Getty Images, Inc. (a) 600 41
-----
150
Telecommunications - 3.9%
Alltel Corp. 700 41
QUALCOMM, Inc. 1,200 51
Sprint Corp. 2,000 50
-----
142
-----
TOTAL COMMON STOCKS 2,442
Cost: $2,111
Security, rate, maturity date Principal ($) Value ($)
- ----------------------------- ------------- ---------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 0.6%
First Horizon Alternative Mortgage
Securities, 4.84%, 06/25/34 (b)
Cost: $21 21 21
CORPORATE BONDS - 8.9%
Banks - 0.4%
First Tennessee Bank,
5.05%, 01/15/15 15 15
Broadcasting - 1.3%
Comcast Corp., 5.30%, 01/15/14 10 10
Cox Communications, Inc.,
5.45%, 12/15/14 (c), 15 15
Emmis Operating Co.,
6.88%, 05/15/12 10 10
Liberty Media Corp.,
8.50%, 07/15/29 10 12
---
47
Computers - 0.4%
Corning, Inc., 6.20%, 03/15/16 15 15
Construction - 0.5%
KB Home, 5.88%, 01/15/15 15 15
Toll Brothers, Inc.,
4.95%, 03/15/14 5 5
---
20
Electrical Equipment - 0.1%
Fairchild Semiconductor,
10.50%, 02/01/09 5 5
Energy & Utilities - 1.3%
Atmos Energy, 4.95%, 10/15/14 15 15
Markwest Energy,
6.88%, 11/01/14 (c) 15 15
Valero Energy Corp.,
4.75%, 06/15/13 5 5
XTO Energy, Inc.,
6.25%, 04/15/13 10 11
---
46
Financial - Diversified - 1.7%
CIT Group, Inc.,
5.00%, 02/13/14 10 10
Countrywide Home Loan,
4.13%, 09/15/09 15 15
Liberty Mutual Group,
5.75%, 03/15/14 10 10
MBNA America Bank Corp.,
4.63%, 09/15/08 10 10
Riddell Bell Holdings,
8.38%, 10/01/12 15 16
---
61
Healthcare - 0.4%
Community Health Systems,
6.50%, 12/15/12 (c) 15 15
Insurance - 0.1%
Ace, Ltd., 6.00%, 04/01/07 5 5
Investment Banking & Brokerage - 0.8%
J.P. Morgan Chase & Co.,
5.13%, 09/15/14 15 15
The Goldman Sachs Group, Inc.,
5.00%, 10/01/14 15 15
---
30
Manufacturing - 0.1%
American Standard, Inc.,
7.38%, 02/01/08 5 5
Office Equipment - 0.4%
Xerox Corp., 6.88%, 08/15/11 15 16
Real Estate - 0.1%
Brandywine Realty Trust,
5.40%, 11/01/14 5 5
SEE FINANCIAL NOTES
51
CITIZENS FUNDS HOLDINGS
BALANCED FUND
Security, rate, maturity date Principal ($) Value ($)
- ----------------------------- ------------ ---------
Restaurants - 0.2%
Dominos, Inc., 8.25%, 07/01/11 7 8
Retail - 0.2%
The GAP, Inc., 10.05%, 12/15/08 5 6
Telecommunications - 0.9%
Directv Holdings,
8.38%, 03/15/13 10 11
Nextel Communications, Inc.,
5.95%, 03/15/14 10 10
7.38%, 08/01/15 10 12
---
33
---
TOTAL CORPORATE BONDS 332
Cost: $330
FOREIGN GOVERNMENT BONDS - 0.4%
United Mexican States,
6.75%, 09/27/34 15 15
Cost: $15
U.S. GOVERNMENT AGENCY OBLIGATIONS - 9.5%
Federal Home Loan Bank - 0.8%
3.38%, 07/21/08 30 30
Federal Home Loan Mortgage Corporation - 4.8%
2.88%, 09/15/05 3 3
3.25%, 11/02/07 15 15
3.25%, 02/25/08 4 4
4.25%, 05/04/09 10 10
4.50%, 01/15/13 9 9
5.50%, 10/01/18 84 87
6.00%, 09/01/34 47 48
---
176
Federal National Mortgage Association - 3.9%
3.25%, 01/15/08 9 9
5.25%, 01/15/09 14 15
6.38%, 06/15/09 3 3
5.50%, 07/18/12 20 20
4.38%, 09/15/12 4 4
5.00%, 09/01/19 48 48
6.50%, 07/01/32 4 4
6.00%, 11/01/32 5 5
5.50%, 03/01/33 33 34
---
142
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS 348
Cost: $347
U.S. TREASURY NOTES - 3.4%
6.50%, 02/15/10 100 114
4.75%, 05/15/14 10 10
---
Cost: $122 124
REPURCHASE AGREEMENTS - 10.6%
Fifth Third Bank, 1.25%, 01/03/05
(Proceeds at maturity $388,
collateralized by Federal Home
Loan Mortgage Corp. security,
6.00%, 04/01/17)
Cost: $388 388 388
-----
TOTAL INVESTMENTS - 99.8% 3,670
Cost: $3,334 (d)
Percentages indicated are based on net assets of
$3,677.
(a) Non-income producing security.
(b) Variable rate security.
The rate presented represents the rate in
effect at December 31, 2004.
(c) Rule 144A security.
(d) 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 $ 347
Unrealized depreciation (11)
--------
Net unrealized appreciation $ 336
SEE FINANCIAL NOTES
52
DECEMBER 31, 2004 ($ X 1,000) UNAUDITED
INCOME FUND
Security, rate, maturity date Principal ($) Value ($)
- ------------------------------- ------------- ---------
COLLATERALIZED MORTGAGE
OBLIGATIONS - 2.8%
First Horizon Alternative
Mortgage Securities,
4.84%, 06/25/34 (a) 1,631 1,634
Cost: $1,654
CORPORATE BONDS - 57.8%
Banks - 1.7%
First Tennessee Bank,
5.05%, 01/15/15 985 986
Broadcasting - 9.0%
Comcast Corp.,
5.85%, 01/15/10 1,000 1,072
5.30%, 01/15/14 990 1,021
Cox Communications, Inc.,
5.45%, 12/15/14 (b) 985 985
Emmis Operating Co.,
6.88%, 05/15/12 990 1,036
Liberty Media Corp.,
8.50%, 07/15/29 990 1,148
-----
5,262
Computers - 1.7%
Coming, Inc., 6.20%, 03/15/16 985 987
Construction - 3.4%
KB Home,
5.88%, 01/15/15 985 975
Toll Brothers, Inc.,
4.95%, 03/15/14 995 974
-----
1,949
Electrical Equipment - 2.7%
Fairchild Semiconductor,
10.50%, 02/01/09 495 522
Flextronics International, Ltd.,
6.50%, 05/15/13 1,000 1,025
-----
1,547
Energy & Utilities - 7.4%
Atmos Energy,
4.95%, 10/15/14 985 976
Markwest Energy,
6.88%, 11/01/14 (b) 985 1,000
Valero Energy Corp.,
4.75%, 06/15/13 995 983
XTO Energy, Inc.,
6.25%, 04/15/13 990 1,084
4.90%, 02/01/14 250 249
-----
4,292
Financial - Diversified - 8.4%
CIT Group, Inc.,
5.00%, 02/13/14 990 988
Countrywide Home Loan,
4.13%, 09/15/09 985 981
Liberty Mutual Group,
5.75%, 03/15/14 990 973
MBNA America Bank Corp.,
4.63%, 09/15/08 990 1,005
Riddell Bell Holdings,
8.38%, 10/01/12 985 1,020
-----
4,967
Healthcare - 1.7%
Community Health Systems,
6.50%, 12/15/12 (b) 985 992
Insurance - 1.8%
Ace, Ltd., 6.00%, 04/01/07 995 1,038
Investment Banking & Brokerage - 3.4%
J.P. Morgan Chase & Co.,
5.13%, 09/15/14 985 991
The Goldman Sachs Group, Inc.,
5.00%, 10/01/14 985 984
-----
1,975
Manufacturing - 1.9%
American Standard, Inc.,
7.38%, 02/01/08 995 1,091
Office Equipment - 1.8%
Xerox Corp.,
6.88%, 08/15/11 985 1,049
Pharmaceuticals - 1.9%
AmerisourceBergen Corp.,
8.13%, 09/01/08 1,000 1,113
Real Estate - 0.9%
Brandywine Realty Trust,
5.40%, 11/01/14 495 495
Restaurants - 1.3%
Dominos, Inc.,
8.25%, 07/01/11 722 789
SEE FINANCIAL NOTES
53
CITIZENS FUNDS HOLDINGS
INCOME FUND
Security, rate, maturity date Principal($) Value($)
- ----------------------------- ------------ --------
Retail - 2.1%
The GAP, Inc.,
10.05%, 12/15/08 995 1,211
Telecommunications - 6.7%
Directv Holdings,
8.38%, 03/15/13 990 1,110
Nextel Communications, Inc.,
5.95%, 03/15/14 490 507
7.38%, 08/01/15 990 1,089
Verizon Global Funding Corp.,
7.38%, 09/01/12 1,000 1,177
------
3,883
------
TOTAL CORPORATE BONDS 33,626
Cost: $32,816
FOREIGN GOVERNMENT BONDS - 1.7%
United Mexican States,
6.75%, 09/27/34 985 973
Cost: $970
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 30.6%
Federal Home Loan Mortgage Corporation - 23.1%
3.25%, 11/02/07 985 980
4.25%, 05/04/09 990 992
4.00%, 06/15/13 2,590 2,603
6.25%, 11/14/13 1,000 1,028
3.50%, 03/15/14 2,199 2,186
5.50%, 10/01/18 1,715 1,772
6.00%, 09/01/34 3,740 3,864
------
13,425
Federal National Mortgage Association - 7.5%
5.50%, 07/18/12 980 992
5.00%, 09/01/19 1,918 1,949
6.50%, 08/01/31 655 688
6.00%, 08/01/32 727 753
------
4,382
------
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS 17,807
Cost: $17,828
U.S. TREASURY NOTES - 5.7%
6.50%, 02/15/10 2,000 2,264
4.75%, 05/15/14 990 1,032
------
TOTAL U.S. TREASURY NOTES 3,296
Cost: $3,236
REPURCHASE AGREEMENTS - 0.8%
Fifth Third Bank, 1.25%, 01/03/05
(Proceeds at maturity $474,
collateralized by Federal Home
Loan Mortgage Corp. security,
5.00%, 11/01/17)
Cost: $474 474 474
------
TOTAL INVESTMENTS - 99.4% 57,810
Cost: $56,978 (c)
Percentages indicated are based on net assets of
$58,179.
(a) Variable rate security.
The rate presented represents the rate in
effect at
December 31, 2004.
(b) Rule 144A security.
(c) Represents cost for financial reporting
purposes and federal income tax purposes and
differs from value by net unrealized
appreciation
of securities as follows:
Unrealized appreciation $ 1,076
Unrealized depreciation (244)
---------
Net unrealized appreciation $ 832
SEE FINANCIAL NOTES
54
DECEMBER 31, 2004 ($ X 1,000) UNAUDITED
ULTRA SHORT BOND FUND
Security, rate, maturity date Principal ($) Value ($)
- ----------------------------- ------------- ---------
CORPORATE BONDS - 72.9%
Automotive Finance - 29.1%
American Honda Finance,
2.46%, 08/15/06 (a) (b) 350 350
BMW Vehicle Owner Trust,
1.94%, 02/25/07 171 171
Capital Auto Receivables
Asset Trust,
2.45%, 01/16/06 (a) 144 144
GS Auto Loan Trust,
2.08%, 04/16/07 199 199
Harley-Davidson Motorcycle
Trust, 1.34%, 01/15/08 51 51
Honda Auto Receivables
Owner Trust,
2.16%, 10/21/08 200 196
Toyota Auto Receivables Owner Trust,
1.69%, 03/15/07 183 181
4.39%, 05/15/09 100 101
USAA Auto Owners Trust,
1.58%, 06/15/07 233 231
Volkswagen Auto Lease Trust,
2.36%, 12/20/05 44 44
Volkswagen Credit, Inc.,
2.33%, 07/21/05 (a) 250 250
-----
1,918
Banks - 6.9%
Bank of America Corp.
7.88%, 05/16/05 100 102
4.75%, 10/15/06 100 102
Wells Fargo Co.,
2.57%, 03/24/05 (a) 250 250
-----
454
Broadcasting - 7.1%
Cox Communications Inc.,
6.88%, 06/15/05 250 254
TCI Communications,
8.00%, 08/01/05 210 216
-----
470
Computers - 3.1%
Hewlett-Packard Co.,
7.15%, 06/15/05 200 204
Financial - Diversified - 19.0%
American Express Co.
2.55%, 09/19/06 (a) 300 300
7.20%, 09/17/07 100 101
American General Finance
7.45%, 01/15/05 50 50
3.00%, 11/15/06 250 247
CIT Group, Inc.,
2.74%, 09/20/07 (a) 250 250
Citicorp, 7.63%, 05/01/05 50 51
Merrill Lynch & Co.,
2.30%, 04/28/05 (a) 250 250
-----
1,249
Insurance - 3.8%
Met Life Global Funding,
2.54%, 08/28/06 (a) (b) 250 251
Telecommunications - 3.9%
CBS Corp., 7.15%, 05/20/05 150 152
Chesapeake (Bell
Atlantic Virginia),
6.13%, 07/15/05 100 102
-----
254
-----
TOTAL CORPORATE BONDS 4,800
Cost: $4,819
U.S. GOVERNMENT AGENCY
OBLIGATIONS - 15.9%
Federal Home Loan Mortgage Corporation - 4.6%
5.83%, 02/09/06 100 103
3.25%, 11/02/07 200 199
-----
302
Federal National Mortgage Association - 7.5%
1.75%, 11/29/05 250 247
3.00%, 12/15/06 250 247
-----
494
Student Loan Marketing Association- 3.8%
2.13%, 10/25/08 (a) 250 250
-----
TOTAL U.S. GOVERNMENT
AGENCY OBLIGATIONS 1,046
Cost: $1,053
SEE FINANCIAL NOTES
55
CITIZENS FUNDS HOLDINGS
ULTRA SHORT BOND FUND
Security, rate, maturity date Principal ($) Value ($)
- ----------------------------- ------------- ---------
REPURCHASE AGREEMENTS - 10.9%
Fifth Third Bank, 1.25%, 01/03/05
(Proceeds at maturity $719,
collateralized by Federal Home
Loan Mortgage Corp. security,
5.00%, 11/01/17)
Cost: $719 719 719
-----
TOTAL INVESTMENTS - 99.7% 6,565
Cost: $6,591 (c)
Percentages indicated are based on net assets
of $6,586.
(a) Variable rate security.
The rate presented represents the rate in
effect at December 31, 2004.
(b) Rule 144A security.
(c) Represents cost for financial reporting
purposes and federal income tax purposes and
differs from value by net unrealized
depreciation of securities as follows:
Unrealized appreciation $ 3
Unrealized depreciation (29)
------
Net unrealized depreciation $ (26)
- --------------------------------------------------------------------------------
MONEY MARKET FUND
Security, rate, maturity date Principal ($) Value ($)
- ----------------------------- ------------- ---------
CERTIFICATES OF DEPOSIT - 9.1%
City National Bank of New Jersey,
1.50%, 03/15/05 (a) 100 100
Independence Federal
Savings Bank,
1.95%, 03/26/05 (a) 100 100
Mercantile Safe Deposit
and Trust,
2.11%, 12/12/05 4,000 4,000
Self Help Credit Union,
1.44%, 03/13/05 (a) 100 100
Wilmington Trust Corp.,
2.07%, 01/05/05 4,000 4,000
-----
TOTAL CERTIFICATES OF DEPOSIT 8,300
Cost: $8,300
COMMERCIAL PAPER - 84.8%
American General
Finance Corp.,
2.23%, 01/14/05 4,064 4,061
Atlantis One Funding Corp.,
2.16%, 01/06/05 (b) 4,500 4,499
Banco Santander Puerto Rico,
2.35%, 01/18/05 4,100 4,095
Bank of America,
2.11%, 03/21/05 3,000 2,986
BMW USA Capital Corp.,
2.29%, 01/20/05 4,200 4,195
Charta Corp.,
2.39%, 02/23/05 4,200 4,185
Coca Cola Co.,
2.16%, 01/13/05 2,694 2,692
Cooperative Association
of Tractor Dealers,
2.17%, 03/09/05 4,000 3,984
Galaxy Funding, Inc.,
2.43%, 03/04/05 (b) 4,200 4,182
Galleon Capital,
2.34%, 02/11/05 (b) 4,500 4,488
Goldman Sachs Group,
1.92%, 02/14/05 4,485 4,475
Harley Davidson
Funding Corp.,
2.27%, 02/23/05 2,324 2,316
ING America Insurance,
2.45%, 03/23/05 4,100 4,077
Merrill Lynch, Inc.,
2.28%, 01/31/05 4,200 4,192
SEE FINANCIAL NOTES
56
DECEMBER 31, 2004 ($ X 1,000) UNAUDITED
MONEY MARKET FUND
Security, rate, maturity date Principal ($) Value ($)
- ----------------------------- ------------- --------
COMMERCIAL PAPER (CONTINUED)
Metlife Funding,
2.24%, 01/03/05 4,218 4,217
Pfizer, Inc., 2.16%, 01/10/05 4,249 4,247
Proctor & Gamble Co.,
2.15%, 01/19/05 4,000 3,996
Rabobank USA Financial Corp.,
2.45%, 03/31/05 4,000 3,976
State Street Corp.,
2.14%, 01/11/05 4,000 3,998
UBS Finance Corp.,
2.15%, 01/03/05 2,451 2,451
------
TOTAL COMMERCIAL PAPER 77,312
Cost: $77,312
CORPORATE BONDS - 0.6%
Pelican Capital LLC,
2.57%, 04/01/28 (c) 520 520
Cost: $520
MUNICIPAL NOTES - 3.8%
New York State Housing
Finance Agency,
2.47%, 11/15/29 (c)
Cost: $3,500 3,500 3,500
------
TOTAL INVESTMENTS - 98.3% 89,632
Cost: $89,632 (d)
Percentages indicated are based on net assets of $91,196.
(a) Restricted security which may not be publicly sold without registration
under the Securities Act of 1933.
(b) Rule 144A security.
(c) Variable rate security. The rate presented represents the rate in effect at
December 31, 2004.
(d) Represents cost for financial reporting and federal income tax purposes.
- --------------------------------------------------------------------------------
Each fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N - Q.
You can receive a copy of each fund's Form N - Q without charge by calling
800.223.7010 or by visiting our website at www.citizensfunds.com. Each fund's
Form N - Q is also available from the SEC through a variety of methods. You can:
- - find them on the EDGAR Database of the SEC internet site at
http://www.sec.gov
- - have copies sent to you (after paying a copying fee) by writing the the
SEC'S Public Reference Section, Washington, D.C. 20549 - 0102, or by
electronic request to publicinfo@sec.gov
- - view and copy them in person at the SEC'S Public Reference Room in
Washington, D.C.; for more information call 202.942.8090.
SEE FINANCIAL NOTES
57
PORTFOLIO COMPOSITION
300 FUND
PERCENTAGE OF
INVESTMENTS
SECURITY ALLOCATION AT VALUE
- -------------------------- -------------
Financials 23.8%
Information Technology 17.1%
Health Care 14.5%
Consumer Discretionary 13.4%
Consumer Staples 10.2%
Industrials 8.6%
Energy 6.7%
Telecommunication Services 3.7%
Materials 1.2%
Utilities 0.7%
Cash Equivalents 0.1%
CORE GROWTH FUND
PERCENTAGE OF
INVESTMENTS
SECURITY ALLOCATION AT VALUE
- -------------------------- -------------
Financials 15.2%
Health Care 14.9%
Information Technology 14.5%
Consumer Discretionary 13.8%
Industrials 12.0%
Consumer Staples 10.5%
Energy 5.4%
Cash Equivalents 4.0%
Utilities 3.9%
Materials 2.9%
Telecommunication Services 2.9%
EMERGING GROWTH FUND
PERCENTAGE OF
INVESTMENTS
SECURITY ALLOCATION AT VALUE
- -------------------------- -------------
Information Technology 24.5%
Consumer Discretionary 20.3%
Industrials 15.5%
Health Care 14.4%
Financials 9.3%
Materials 5.0%
Consumer Staples 4.9%
Energy 3.9%
Telecommunication Services 1.2%
Utilities 0.9%
Cash Equivalents 0.1%
SMALL CAP CORE GROWTH FUND
PERCENTAGE OF
INVESTMENTS
SECURITY ALLOCATION AT VALUE
- -------------------------- -------------
Information Technology 22.3%
Industrials 22.0%
Health Care 16.0%
Consumer Discretionary 14.8%
Financials 10.5%
Energy 4.0%
Materials 4.0%
Cash Equivalents 3.9%
Consumer Staples 2.1%
Telecommunication Services 0.4%
Utilities 0.0%*
VALUE FUND
PERCENTAGE OF
INVESTMENTS
SECURITY ALLOCATION AT VALUE
- -------------------------- -------------
Financials 20.5%
Information Technology 15.9%
Industrials 14.0%
Health Care 12.9%
Consumer Discretionary 11.9%
Energy 7.1%
Consumer Staples 6.9%
Materials 4.4%
Telecommunication Services 4.4%
Utilities 1.9%
Cash Equivalents 0.1%
SMALL CAP VALUE FUND
PERCENTAGE OF
INVESTMENTS
SECURITY ALLOCATION AT VALUE
- -------------------------- -------------
Financials 23.4%
Health Care 15.6%
Information Technology 13.5%
Materials 12.2%
Consumer Discretionary 10.7%
Industrials 9.1%
Energy 6.9%
Consumer Staples 4.3%
Utilities 3.7%
Cash Equivalents 0.6%
Telecommunication Services 0.0%*
* Less than 0.1%
SEE FINANCIAL NOTES
58
AS OF DECEMBER 31, 2004 UNAUDITED
GLOBAL EQUITY FUND
PERCENTAGE OF
INVESTMENTS
SECURITY ALLOCATION AT VALUE
- -------------------------- -------------
Financials 19.9%
Consumer Discretionary 14.7%
Health Care 14.7%
Information Technology 13.2%
Energy 10.2%
Industrials 10.2%
Consumer Staples 8.7%
Telecommunication Services 4.8%
Materials 3.0%
Cash Equivalents 0.6%
Utilities 0.0%*
BALANCED FUND
PERCENTAGE OF
INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ----------------------------- -------------
Equity
Information Technology 9.5%
Health Care 9.4%
Consumer Discretionary 9.3%
Financials 9.3%
Industrials 8.7%
Consumer Staples 6.6%
Energy 6.0%
Utilities 2.6%
Materials 2.5%
Telecommunication Services 2.5%
Fixed Income
U.S. Government
Agency Obligations 9.5%
Corporate Bonds 8.9%
U.S. Treasury Notes 3.4%
Collateralized Mortgage
Obligations 0.6%
Foreign Government Bonds 0.4%
------
Cash Equivalents 10.8%
------
INCOME FUND
PERCENTAGE OF
INVESTMENTS
SECURITY ALLOCATION AT VALUE
- -------------------------- -------------
Corporate Bonds 58.1%
U.S. Government
Agency Obligations 30.8%
U.S. Treasury Notes 5.7%
Collateralized Mortgage
Obligations 2.8%
Foreign Government Bonds 1.7%
Cash Equivalents 0.9%
ULTRA SHORT BOND FUND
PERCENTAGE OF
INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ----------------------- -------------
Corporate Bonds 73.1%
U.S. Government
Agency Obligations 15.9%
Cash Equivalents 11.0%
MONEY MARKET FUND
PERCENTAGE OF
INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------ -------------
Commercial Paper 86.3%
Certificates of Deposit 9.2%
Municipal Notes 3.9%
Corporate Bonds 0.6%
All portfolio compositions subject to change
SEE FINANCIAL NOTES
59
STATEMENTS OF ASSETS AND LIABILITIES
300 Core Growth Emerging Small Cap Core
Fund Fund Growth Fund Growth Fund
---------- ------------ ------------ --------------
ASSETS
Investments, at value $7,095,293 $325,842,963 $175,313,517 $ 29,320,992
Repurchase agreements 10,045 13,077,223 201,371 1,195,110
---------- ------------ ------------ --------------
Total investments 7,105,338 338,920,186 175,514,888 30,516,102
Cash -- -- -- --
Foreign currency -- -- -- --
Receivables:
Interest and dividends 4,200 351,022 34,518 3,295
Investments sold -- -- -- 173,493
Tax reclaims -- -- -- --
Due from investment adviser 3,624 -- -- --
Capital shares issued -- -- 1,995 --
Deferred offering costs -- -- -- --
Prepaid expenses 5,694 36,403 28,187 9,964
---------- ------------ ------------ --------------
Total assets 7,118,856 339,307,611 175,579,588 30,702,854
LIABILITIES
Payables:
Dividends to shareholders -- -- -- --
Investments purchased 7,368 -- -- 1,306,324
Unrealized depreciation on forward
foreign currency contracts -- -- -- --
Investment management fees -- 348,910 360,908 29,534
Administrative fees 2,143 104,674 54,136 8,860
Shareholder service fees 518 133,662 34,074 5,212
Distribution fees 3,572 151,937 88,517 14,767
Other accrued expenses 7,906 240,247 180,985 25,657
---------- ------------ ------------ --------------
Total liabilities 21,507 979,430 718,620 1,390,354
---------- ------------ ------------ --------------
NET ASSETS $7,097,349 $338,328,181 $174,860,968 $ 29,312,500
========== ============ ============ ==============
NET ASSETS
Standard Shares:
Net assets $7,097,349 $292,892,440 $166,764,680 $ 29,312,500
Number of shares outstanding 613,093 15,081,164 12,035,344 2,715,386
Net asset value, offering and
redemption price per share $ 11.58 $ 19.42 $ 13.86 $ 10.79
Institutional Shares:
Net assets -- $ 43,808,221 $ 2,591,575 --
Number of shares outstanding -- 2,713,523 180,860 --
Net asset value, offering and
redemption price per share -- $ 16.14 $ 14.33 --
Administrative Shares
Net assets -- $ 1,627,520 $ 5,504,713 --
Number of shares outstanding -- 82,116 390,287 --
Net asset value, offering and
redemption price per share -- $ 19.82 $ 14.10 --
Net assets consist of:
Paid-in capital $6,436,487 $361,801,930 $339,331,454 $ 27,580,528
Accumulated net investment
income/loss (124) (411,514) (1,175,425) (165,387)
Accumulated net realized losses on
investments and foreign currencies (25,600) (81,947,891) (196,322,840) (2,878,464)
Net unrealized appreciation/
depreciation on investments
and foreign currencies 686,586 58,885,656 33,027,779 4,775,823
---------- ------------ ------------ --------------
NET ASSETS $7,097,349 $338,328,181 $174,860,968 $ 29,312,500
---------- ------------ ------------ --------------
Investments, at cost $6,418,752 $280,034,530 $142,487,109 $ 25,740,279
Foreign currency, at cost -- -- -- --
SEE FINANCIAL NOTES
60
AS OF DECEMBER 31, 2004 UNAUDITED
Value Small Cap Global Equity Balanced Income Ultra Short Money
Fund Value Fund Fund Fund Fund Bond Fund Market Fund
- ----------- ---------- ------------- ---------- ----------- ----------- -----------
$26,153,399 $2,070,479 $ 94,230,420 $3,281,463 $57,335,990 $5,845,675 $89,632,428
20,569 11,582 548,274 388,129 474,089 719,161 --
- ----------- ---------- ------------- ---------- ----------- ---------- -----------
26,173,968 2,082,061 94,778,694 3,669,592 57,810,079 6,564,836 89,632,428
-- -- -- -- -- -- 1,783,576
-- -- 68,208 -- -- -- --
26,304 2,280 89,923 13,892 730,285 29,052 25,682
-- 17,808 984,394 -- -- -- --
-- -- 98,380 -- -- -- --
-- 7,682 -- 1,874 -- 11,463 --
-- -- -- -- -- -- --
-- 4,106 -- -- -- -- --
8,499 12,512 22,779 9,716 11,540 9,238 17,416
- ----------- ---------- ------------- ---------- ----------- ---------- -----------
26,208,771 2,126,449 96,042,378 3,695,074 58,551,904 6,614,589 91,459,102
-- -- -- 10,355 180,043 13,130 89,454
-- 2,238 -- -- -- -- --
-- -- 230 -- -- -- --
37,501 -- 200,404 -- 80,142 -- 68,017
8,036 616 30,061 1,113 18,495 2,138 29,150
4,866 533 16,114 724 7,300 795 15,102
13,393 1,026 48,424 1,855 30,824 3,564 --
20,397 4,437 105,341 3,970 56,348 8,860 61,273
- ----------- ---------- ------------- ---------- ----------- ---------- -----------
84,193 8,850 400,574 18,017 373,152 28,487 262,996
- ----------- ---------- ------------- ---------- ----------- ---------- -----------
$26,124,578 $2,117,599 $ 95,641,804 $3,677,057 $58,178,752 $6,586,102 $91,196,106
=========== ========== ============= ========== =========== ========== ===========
$26,124,578 $2,117,599 $ 90,749,188 $3,677,057 $58,178,752 $6,586,102 $79,636,090
2,326,634 201,907 5,659,415 315,608 5,775,808 665,283 79,735,209
$ 11.23 $ 10.49 $ 16.04 $ 11.65 $ 10.07 $ 9.90 $ 1.00
-- -- $ 2,719,862 -- -- -- $11,560,016
-- -- 164,651 -- -- -- 11,565,482
-- -- $ 16.52 -- -- -- $ 1.00
-- -- $ 2,172,754 -- -- -- --
-- -- 133,653 -- -- -- --
-- -- $ 16.26 -- -- -- --
$31,245,711 $1,940,927 $ 213,943,055 $3,428,543 $62,595,859 $6,708,685 $91,234,640
12,672 (1,181) (470,567) (698) (32,96) (7,713) --
(8,571,871) (41,735) (128,134,661) (86,706) (5,215,806) (88,291) (38,534)
--
3,438,066 219,588 10,303,977 335,918 831,667 (26,579)
- ----------- ---------- ------------- ---------- ----------- ---------- -----------
$26,124,578 $2,117,599 $ 95,641,804 $3,677,057 $58,178,752 $6,586,102 $91,196,106
- ----------- ---------- ------------- ---------- ----------- ---------- -----------
$22,735,902 $1,862,473 $ 84,496,359 $3,333,674 $56,978,412 $6,591,415 $89,632,428
-- -- 64,781 -- -- -- --
SEE FINANCIAL NOTES
61
STATEMENTS OF OPERATIONS
300 Core Growth Emerging Small Cap Core
Fund Fund Growth Fund Growth Fund
-------- ----------- ----------- --------------
INVESTMENT INCOME
Interest $ 267 $ 104,948 $ 26,822 $ 5,357
Dividend(1) 50,913 1,832,531 446,849 33,161
-------- ----------- ----------- --------------
Total investment income 51,180 1,937,479 473,671 38,518
EXPENSES
Investment management fees 6,711 825,601 849,357 68,587
Administrative fees 5,033 247,682 127,404 20,576
Distribution fees:
Standard shares 8,389 352,683 198,443 34,293
Administrative shares -- 2,001 9,865 --
Shareholder service fees:
Standard shares 932 356,568 61,592 9,465
Institutional shares -- 552 80 --
Administrative shares -- 96 129 --
Transfer agent expenses:
Standard shares 5,465 376,131 281,013 42,107
Institutional shares -- 2,024 184 --
Administrative shares -- 1,195 4,675 --
Accounting expenses 5,648 65,682 35,131 7,058
Custody expenses 3,516 9,124 8,461 6,500
Offering costs 1,845 -- -- --
Registration expenses 12,370 18,284 16,651 8,383
Trustee expenses 611 30,606 15,670 2,485
Other expenses 2,058 116,185 63,507 9,813
-------- ----------- ----------- --------------
Total expenses before reimbursements,
waivers, or expenses paid indirectly 52,578 2,404,414 1,672,162 209,267
Reimbursements or waivers from adviser (22,371) -- -- --
Expenses paid indirectly -- (55,421) (23,066) (5,362)
-------- ----------- ----------- --------------
Net expenses 30,207 2,348,993 1,649,096 203,905
-------- ----------- ----------- --------------
NET INVESTMENT INCOME/LOSS $ 20,973 $ (411,514) $(1,175,425) $ (165,387)
REALIZED AND UNREALIZED
GAINS/LOSSES ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Realized gains/losses on investments and
and foreign currency transactions $(11,530) $ 4,566,753 $(8,048,633) $ (2,813,656)
Change in unrealized
appreciation/depreciation
on investments and foreign currencies 296,687 18,866,739 19,495,583 3,989,537
-------- ----------- ----------- --------------
Net realized and unrealized gains/losses
on investments and foreign currencies 285,157 23,433,492 11,446,950 1,175,881
CHANGE IN NET ASSETS FROM OPERATIONS $306,130 $23,021,978 $10,271,525 $ 1,010,494
(1) Dividend income net of withholding taxes. For the six months ended December
31, 2004, withholding taxes for the Global Equity Fund were $23,125.
SEE FINANCIAL NOTES
62
FOR THE SIX MONTHS ENDED DECEMBER 31, 2004 UNAUDITED
Value Small Cap Global Equity Balanced Income Ultra Short Money
Fund Value Fund Fund Fund Fund Bond Fund Market Fund
- ------------ ---------- ------------- ---------- ----------- ----------- -----------
$ 2,944 $ 492 $ 19,729 $ 19,825 $ 1,470,186 $ 70,457 $ 784,260
216,735 11,312 934,400 19,184 36,219 4,371 --
- ------------ ---------- ------------- ---------- ----------- ----------- -----------
219,679 11,804 954,129 39,009 1,506,405 74,828 784,260
85,191 6,072 480,193 10,574 191,497 12,482 163,925
18,255 1,214 72,029 2,440 44,192 5,349 70,254
30,425 2,024 112,817 4,067 73,653 8,916 --
-- -- 2,598 -- -- -- --
8,808 719 29,434 1,438 15,570 1,472 26,958
-- -- 49 -- -- -- 239
-- -- 92 -- -- -- --
38,366 1,499 184,940 4,340 68,425 8,060 83,359
-- -- 217 -- -- -- 868
-- -- 1,250 -- -- -- --
5,979 1,909 28,351 4,573 14,333 4,223 19,145
2,958 5,500 9,317 2,895 2,940 2,576 3,744
-- 5,125 -- -- -- -- --
7,774 11,874 17,479 5,986 8,647 6,454 16,211
2,149 153 8,932 272 5,457 731 8,668
8,596 607 35,463 1,155 20,374 2,652 32,200
- ------------ ---------- ------------- ---------- ----------- ----------- -----------
208,501 36,696 983,161 37,740 445,088 52,915 425,571
-- (23,711) -- (16,561) -- (46,437) --
(1,494) -- -- -- -- -- --
- ------------ ---------- ------------- ---------- ----------- ----------- -----------
207,007 12,985 983,161 21,179 445,088 6,478 425,571
- ------------ ---------- ------------- ---------- ----------- ----------- -----------
$ 12,672 $ (1,181) $ (29,032) $ 17,830 $ 1,061,317 $ 68,350 $ 358,689
$ 693,767 $ (5,514) $ 3,371,418 $ (86,483) $ 311,466 $ (1,057) $ (29,451)
1,021,528 191,711 1,570,803 257,463 964,240 (3,592) --
- ------------ ---------- ------------- ---------- ----------- ----------- -----------
1,715,295 186,197 4,942,221 170,980 1,275,706 (4,649) (29,451)
$ 1,727,967 $ 185,016 $ 4,913,189 $ 188,810 $ 2,337,023 $ 63,701 $ 329,238
SEE FINANCIAL NOTES
63
STATEMENTS OF CHANGES IN NET ASSETS
300 FUND CORE GROWTH FUND EMERGING
-------------------------- --------------------------- -------------
For the For the For the
six For six For the six
months ended the period months ended year months ended
12/31/04 08/29/03(1)- 12/31/04 ended 12/31/04
(unaudited) 06/30/04 (unaudited) 06/30/04 (unaudited)
----------- ------------ ------------- ------------ -------------
OPERATIONS
Net investment income/loss $ 20,973 $ 15,226 $ (411,514) $ (1,924,176) $ (1,175,425)
Realized gains/losses on
investments (11,530) 10,201 4,566,753 43,684,981 (8,048,633)
Change in unrealized
appreciation/ depreciation
on investments 296,687 389,899 18,866,739 (6,189,966) 19,495,583
----------- ---------- ------------ ------------ ------------
Change in net assets from
operations 306,130 415,326 23,021,978 35,570,839 10,271,525
Dividends to shareholders:
From net investment income:
Standard shares (34,591) (4,055) -- -- --
From net realized gains on
investments:
Standard shares (24,271) -- -- -- --
----------- ----------- ------------ ------------ ------------
Total dividends (58,862) (4,055) -- -- --
Change in net assets
from capital transactions 1,316 6,437,494 (29,523,554) (42,077,189) (16,310,307)
CHANGE IN NET ASSETS $ 248,584 $ 6,848,765 $ (6,501,576) $ (6,506,350) $ (6,038,782)
=========== =========== ============ ============ ============
NET ASSETS
Beginning of period $ 6,848,765 -- $344,829,757 $351,336,107 $180,899,750
End of period $ 7,097,349 $ 6,848,765 $338,328,181 $344,829,757 $174,860,968
----------- ----------- ------------ ------------ ------------
Accumulated net investment
income/loss $ (124) $ 13,494 $ (411,514) -- $ (1,175,425)
----------- ----------- ------------ ------------ ------------
CAPITAL TRANSACTIONS
Standard Shares
Proceeds from shares issued $ 1,289,591 $ 6,674,799 $ 5,715,187 $ 21,264,741 $ 6,272,682
Dividends reinvested 58,104 4,044 -- -- --
Cost of shares redeemed (1,346,379) (241,349) (23,075,813) (44,917,887) (15,332,905)
----------- ----------- ------------ ------------ ------------
Net change 1,316 6,437,494 (17,360,626) (23,653,146) (9,060,223)
----------- ----------- ------------ ------------ ------------
Institutional Shares
Proceeds from shares issued -- -- $ 7,002,095 $ 23,690,276 $ 224,127
Cost of shares redeemed -- -- (19,040,657) (41,119,985) (1,369,293)
----------- ----------- ------------ ------------ ------------
Net change -- -- (12,038,562) (17,429,709) (1,145,166)
----------- ----------- ------------ ------------ ------------
Administrative Shares
Proceeds from shares issued -- -- $ 206,240 $ 733,629 $ 516,790
Cost of shares redeemed -- -- (330,606) (1,727,963) (6,621,708)
----------- ----------- ------------ ------------ ------------
Net change -- -- (124,366) (994,334) (6,104,918)
----------- ----------- ------------ ------------ ------------
CHANGE IN NET ASSETS FROM
CAPITAL TRANSACTIONS $ 1,316 $ 6,437,494 $(29,523,554) $(42,077,189) $(16,310,307)
----------- ----------- ------------ ------------ ------------
SHARE TRANSACTIONS
Standard Shares
Issued 117,103 635,272 318,765 1,188,913 493,636
Reinvested 5,039 374 -- -- --
Redeemed (122,999) (21,696) (1,279,049) (2,501,662) (1,204,407)
----------- ----------- ------------ ------------ ------------
Net change (857) 613,950 (960,284) (1,312,749) (710,771)
----------- ----------- ------------ ------------ ------------
Institutional Shares
Issued -- -- 466,809 1,616,753 17,562
Redeemed -- -- (1,278,757) (2,794,779) (100,335)
----------- ----------- ------------ ------------ ------------
Net change -- -- (811,948) (1,178,026) (82,773)
----------- ----------- ------------ ------------ ------------
Administrative Shares
Issued -- -- 11,187 40,193 40,619
Redeemed -- -- (17,770) (96,922) (526,362)
----------- ----------- ------------ ------------ ------------
Net change -- -- (6,583) (56,729) (485,743)
----------- ----------- ------------ ------------ ------------
CHANGE IN SHARES FROM
SHARE TRANSACTIONS (857) 613,950 (1,778,815) (2,547,504) (1,279,287)
----------- ----------- ------------ ------------ ------------
(1) Commencement of operations.
SEE FINANCIAL NOTES
64
GROWTH FUND SMALL CAP CORE GROWTH FUND VALUE FUND SMALL CAP VALUE FUND
- -------------------------------------------- ------------------------- -----------------------
For
For the For the For the For the For the the period
For the six months year six months year six months 03/31/04
year ended ended ended ended ended ended (1)-
06/30/04 12/31/04 06/30/04 12/31/04 06/30/04 12/31/04 06/30/04
(unaudited) (unaudited) (unaudited)
- ------------ ----------- ----------- ----------- ------------ ----------- ----------
$ (2,665,962) $ (165,387) $ (346,285) $ 12,672 $ (47,170) $ (1,181) $ (2,665)
37,477,874 (2,813,656) 6,022,751 693,767 2,404,710 (5,514) (36,221)
(3,529,402) 3,989,537 (1,011,664) 1,021,528 1,384,533 191,711 27,877
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
31,282,510 1,010,494 4,664,802 1,727,967 3,742,073 185,016 (11,009)
-- -- -- -- -- -- --
-- (1,298,737) -- -- -- -- --
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
-- (1,298,737) -- -- -- -- --
(22,233,586) (100,563) 7,215,282 525,556 3,902,663 556,376 1,387,216
$ 9,048,924 $ (388,806) $11,880,084 $ 2,253,523 $ 7,644,736 $ 741,392 $1,376,207
============ =========== =========== =========== ============ ========== ==========
$171,850,826 $29,701,306 $17,821,222 $23,871,055 $ 16,226,319 $1,376,207 --
$180,899,750 $29,312,500 $29,701,306 $26,124,578 $ 23,871,055 $2,117,599 $1,376,207
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
-- $ (165,387) -- $ 12,672 -- $ (1,181) --
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
$ 21,134,996 $ 3,701,806 $13,121,654 $ 4,671,896 $ 8,784,600 $ 898,781 $1,408,985
-- 1,265,634 -- -- -- -- --
(41,911,039) (5,068,003) (5,906,372) (4,146,340) (4,881,937) (342,405) (21,769)
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
(20,776,043) (100,563) 7,215,282 525,556 3,902,663 556,376 1,387,216
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
$ 1,239,421 -- -- -- -- -- --
(4,008,407) -- -- -- -- -- --
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
(2,768,986) -- -- -- -- -- --
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
$ 6,512,533 -- -- -- -- -- --
(5,201,090) -- -- -- -- -- --
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
1,311,443 -- -- -- -- -- --
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
$(22,233,586) $ (100,563) $ 7,215,282 $ 525,556 $ 3,902,663 $ 556,376 $1,387,216
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
1,702,236 359,334 1,247,393 455,545 888,579 95,415 143,670
-- 117,843 -- -- -- -- --
(3,358,592) (503,017) (561,227) (399,916) (495,734) (34,831) (2,347)
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
(1,656,356) (25,840) 686,166 55,629 392,845 60,584 141,323
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
96,116 -- -- -- -- -- --
(311,449) -- -- -- -- -- --
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
(215,333) -- -- -- -- -- --
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
517,457 -- -- -- -- -- --
(412,025) -- -- -- -- -- --
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
105,432 -- -- -- -- -- --
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
(1,766,257) (25,840) 686,166 55,629 392,845 60,584 141,323
- ------------ ----------- ----------- ----------- ------------ ---------- ----------
SEE FINANCIAL NOTES
65
STATEMENTS OF CHANGES IN NET ASSETS
GLOBAL EQUITY FUND BALANCED FUND
------------------------------- ---------------------------
For the six For the six
months ended For the months ended For the
12/31/04 year ended 12/31/04 year ended
(unaudited) 06/30/04 (unaudited) 06/30/04
------------- ------------ ------------ ----------
OPERATIONS
Net investment income/loss $ (29,032) $ (681,388) $ 17,830 $ 10,304
Realized gains/losses on investments
and foreign currency transactions 3,371,418 476,043 (86,483) 80,597
Change in Unrealized appreciation/
depreciation on investments and
foreign currency transactions 1,570,803 14,619,718 257,463 52,694
------------- ------------ ------------ ----------
Change in net assets from operations 4,913,189 14,414,373 188,810 143,595
Dividends to Shareholders:
From net investment income:
Standard Shares -- -- (18,528) (11,300)
Institutional Shares -- -- -- --
From net realized gains on investments:
Standard Shares -- -- (72,335) (31,488)
------------- ------------ ------------ ----------
Total dividends -- -- (90,863) (42,788)
Change in net assets
from capital transactions (12,282,537) (21,995,780) 775,027 1,642,210
CHANGE IN NET ASSETS $ (7,369,348) $ (7,581,407) $ 872,974 $1,743,017
============= ============ ============ ==========
NET ASSETS
Beginning of period $ 103,011,152 $110,592,559 $ 2,804,083 $1,061,066
End of period $ 95,641,804 $103,011,152 $ 3,677,057 $2,804,083
------------- ------------ ------------ ----------
Accumulated net investment loss $ (470,567) $ (441,535) $ (698) --
------------- ------------ ------------ ----------
CAPITAL TRANSACTIONS
Standard shares
Proceeds from Shares issued $ 3,668,816 $ 12,635,147 $ 1,045,025 $1,943,959
Dividends reinvested -- -- 84,446 37,052
Cost of shares redeemed (13,265,132) (32,146,318) (354,444) (338,801)
------------- ------------ ------------ ----------
Net change (9,596,316) (19,511,171) 775,027 1,642,210
------------- ------------ ------------ ----------
Institutional Shares
Proceeds from shares issued $ 179,651 $ 10,869,317 -- --
Dividends reinvested -- -- -- --
Cost of shares redeemed (2,777,779) (13,146,663) -- --
------------- ------------ ------------ ----------
Net change (2,598,128) (2,277,346) -- --
------------- ------------ ------------ ----------
Administrative Shares
Proceeds from shares issued $ 156,263 $ 507,646 -- --
Cost of shares redeemed (244,356) (714,909) -- --
------------- ------------ ------------ ----------
Net change (88,093) (207,263) -- --
------------- ------------ ------------ ----------
CHANGE IN NET ASSETS FROM
CAPITAL TRANSACTIONS $ (12,282,537) $(21,995,780) $ 775,027 $1,642,210
------------- ------------ ------------ ----------
SHARE TRANSACTIONS
Standard Shares
Issued 248,570 851,102 93,051 172,335
Reinvested -- -- 7,279 3,318
Redeemed (888,631) (2,160,362) (31,701) (30,031)
------------- ------------ ------------ ----------
Net change (640,061) (1,309,260) 68,629 145,622
------------- ------------ ------------ ----------
Institutional Shares
Issued 11,660 765,110 -- --
Reinvested -- -- -- --
Redeemed (183,525) (918,483) -- --
------------- ------------ ------------ ----------
Net change (171,865) (153,373) -- --
------------- ------------ ------------ ----------
Administrative Shares
Issued 10,402 33,828 -- --
Redeemed (16,202) (46,795) -- --
------------- ------------ ------------ ----------
Net change (5,800) (12,967) -- --
------------- ------------ ------------ ----------
CHANGE IN SHARES FROM
SHARE TRANSACTIONS (817,726) (1,475,600) 68,629 145,622
------------- ------------ ------------ ----------
SEE FINANCIAL NOTES
66
INCOME FUND ULTRA SHORT BOND FUND MONEY MARKET FUND
- --------------------------- --------------------------- ------------------------------
For the six For the six For the six
months ended For the months ended For the months ended For the
12/31/04 year ended 12/31/04 year ended 12/31/04 year ended
(unaudited) 06/30/04 (unaudited) 06/30/04 (unaudited) 06/30/04
- ------------ ------------ ------------ ------------ -------------- -------------
$ 1,061,317 $ 2,099,324 $ 68,350 $ 163,323 $ 358,689 $ 138,690
311,466 404,291 (1,057) (69,702) (29,451) --
964,240 (2,935,975) (3,592) (61,472) -- --
- ------------ ------------ ----------- ------------ -------------- -------------
2,337,023 (432,360) 63,701 32,149 329,238 138,690
(1,094,285) (2,247,909) (75,808) (172,102) (301,773) (95,186)
-- -- -- -- (56,916) (43,504)
-- -- -- -- -- --
- ------------ ------------ ----------- ------------ -------------- -------------
(1,094,285) (2,247,909) (75,808) (172,102) (358,689) (138,690)
(2,626,415) (6,894,783) (953,880) (1,559,881) (3,016,905) (21,290,731)
$ (1,383,677) $ (9,575,052) $ (965,987) $ (1,699,834) $ (3,046,356) $ (21,290,731)
============ ============ =========== ============ ============== =============
$ 59,562,429 $ 69,137,481 $ 7,552,089 $ 9,251,923 $ 94,242,462 $ 115,533,193
$ 58,178,752 $ 59,562,429 $ 6,586,102 $ 7,552,089 $ 91,196,106 $ 94,242,462
- ------------ ------------ ----------- ------------ -------------- -------------
$ (32,968) -- $ (7,713) $ (255) -- --
- ------------ ------------ ----------- ------------ -------------- -------------
$ 3,074,470 $ 7,287,801 $ 1,633,470 $ 6,180,634 $ 34,852,505 $ 75,687,758
994,618 2,048,025 56,188 153,072 241,710 105,043
(6,695,503) (16,230,609) (2,643,538) (7,893,587) (38,663,441) (97,203,060)
- ------------ ------------ ----------- ------------ -------------- -------------
(2,626,415) (6,894,783) (953,880) (1,559,881) (3,569,226) (21,410,259)
- ------------ ------------ ----------- ------------ -------------- -------------
-- -- -- -- $ 1,818,202 $ 7,048,948
-- -- -- -- 47,657 44,467
-- -- -- -- (1,313,538) (6,973,887)
- ------------ ------------ ----------- ------------ -------------- -------------
-- -- -- -- 552,321 119,528
- ------------ ------------ ----------- ------------ -------------- -------------
-- -- -- -- -- --
-- -- -- -- -- --
- ------------ ------------ ----------- ------------ -------------- -------------
-- -- -- -- -- --
- ------------ ------------ ----------- ------------ -------------- -------------
$ (2,626,415) $ (6,894,783) $ (953,880) $ (1,559,881) $ (3,016,905) $ (21,290,731)
- ------------ ------------ ----------- ------------ -------------- -------------
305,843 724,145 164,555 618,148 34,852,505 75,687,758
99,427 203,510 5,664 15,347 241,710 105,043
(669,148) (1,611,789) (266,281) (791,761) (38,663,441) (97,203,060)
- ------------ ------------ ----------- ------------ -------------- -------------
(263,878) (684,134) (96,062) (158,266) (3,569,226) (21,410,259)
- ------------ ------------ ----------- ------------ -------------- -------------
-- -- -- -- 1,818,202 7,048,948
-- -- -- -- 47,657 44,467
-- -- -- -- (1,313,538) (6,973,887)
- ------------ ------------ ----------- ------------ -------------- -------------
-- -- -- -- 552,321 119,528
- ------------ ------------ ----------- ------------ -------------- -------------
-- -- -- -- -- --
-- -- -- -- -- --
- ------------ ------------ ----------- ------------ -------------- -------------
-- -- -- -- -- --
- ------------ ------------ ----------- ------------ -------------- -------------
(263,878) (684,134) (96,062) (158,266) (3,016,905) (21,290,731)
- ------------ ------------ ----------- ------------ -------------- -------------
SEE FINANCIAL NOTES
67
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INVESTMENT ACTIVITIES DIVIDENDS
--------------------- ---------
Net asset Net realized
value, Net and unrealized Total from From net
beginning investment Redemption gains/losses investment investment
of period income/loss fee on investments operations income
--------- ----------- ---------- -------------- ---------- ----------
300 FUND
STANDARD SHARES
Six months ended
December 31, 2004 (unaudited) $ 11.16 0.04 -- 0.48 0.52 (0.06)
Period ended June 30, 2004(3) 10.00 0.03 -- 1.14 1.17 (0.01)
CORE GROWTH FUND
STANDARD SHARES
Six months ended
December 31, 2004 (unaudited) $ 18.10 (0.03) -- 1.35 1.32 --
Year ended June 30, 2004 16.44 (0.12) -- 1.78 1.66 --
Year ended June 30, 2003 16.73 (0.04) -- (0.25) (0.29) --
Year ended June 30, 2002 22.12 (0.09) -- (5.30) (5.39) --
Year ended June 30, 2001 32.59 (0.16) -- (9.01) (9.17) --
Year ended June 30, 2000 30.52 (0.22) -- 4.08 3.86 --
INSTITUTIONAL SHARES
Six months ended
December 31, 2004 (unaudited) $ 14.99 0.03 -- 1.12 1.15 --
Year ended June 30, 2004 13.52 0.01 -- 1.46 1.47 --
Year ended June 30, 2003 13.66 0.05 -- (0.19) (0.14) --
Year ended June 30, 2002 17.94 0.04 -- (4.32) (4.28) --
Year ended June 30, 2001 26.59 0.01 -- (7.36) (7.35) --
Year ended June 30, 2000 25.02 -- -- 3.36 3.36 --
ADMINISTRATIVE SHARES
Six months ended
December 31, 2004 (unaudited) $ 18.44 --(4) -- 1.38 1.38 --
Year ended June 30, 2004 16.68 (0.08) -- 1.84 1.76 --
Year ended June 30, 2003 16.91 0.01 -- (0.24) (0.23) --
Year ended June 30, 2002 22.27 (0.01) -- (5.35) (5.36) --
Year ended June 30, 2001 32.66 (0.03)(5) -- (9.06) (9.09) --
Period ended June 30, 2000(6) 32.09 (0.01) -- 0.58 0.57 --
EMERGING GROWTH FUND
STANDARD SHARES
Six months ended
December 31, 2004 (unaudited) $ 13.01 (0.09)(5) -- 0.94 0.85 --
Year ended June 30, 2004 10.96 (0.20) -- 2.25 2.05 --
Year ended June 30, 2003 11.82 (0.17) -- (0.69) (0.86) --
Year ended June 30, 2002 15.79 (0.20) -- (3.77) (3.97) --
Year ended June 30, 2001 33.48 (0.21) -- (11.41) (11.62) --
Year ended June 30, 2000 21.76 (0.30)(5) -- 16.58 16.28 --
INSTITUTIONAL SHARES
Six months ended
December 31, 2004 (unaudited) $ 13.41 (0.05)(5) -- 0.97 0.92 --
Year ended June 30, 2004 11.23 (0.15) -- 2.33 2.18 --
Year ended June 30, 2003 12.02 (0.10) -- (0.69) (0.79) --
Year ended June 30, 2002 15.96 (0.11)(5) -- (3.83) (3.94) --
Year ended June 30, 2001 33.61 (0.12) -- (11.46) (11.58) --
Period ended June 30, 2000(7) 25.67 (0.11) -- 12.61 12.50 --
ADMINISTRATIVE SHARES
Six months ended
December 31, 2004 (unaudited) $ 13.22 (0.07)(5) -- 0.95 0.88 --
Year ended June 30, 2004 11.11 (0.14) -- 2.25 2.11 --
Year ended June 30, 2003 11.92 (0.10) -- (0.71) (0.81) --
Year ended June 30, 2002 15.87 (0.13) -- (3.82) (3.95) --
Year ended June 30, 2001 33.57 (0.17)(5) -- (11.46) (11.63) --
Period ended June 30, 2000(6) 28.70 (0.10)(5) -- 4.97 4.87 --
(1) Not annualized.
(2) Annualized.
(3) For the period August 29, 2003, commencement of operations, to June 30,
2004.
(4) Less than $0.005 per share
SEE FINANCIAL NOTES
68
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA
--------------- ----------------------------
Net Ratio of Ratio of net Ratio of
From Net asset assets, expenses to investment expenses to
net Total value, Total end of average net income/loss average net Portfolio
realized dividends to end return period assets, net of to average assets, prior to turnover
gains shareholders of period (%) ($x 1,000) reimbursement(%) net assets(%) reimbursement(%) rate (%)
- -------- ------------ --------- --------- --------- ---------------- --------------- --------------- ----------
(0.04) (0.10) $11.58 4.64(1) $ 7,097 0.90(2) 0.62(2) 1.57(2) 22.71
-- (0.01) 11.16 11.71(1) 6,849 0.90(2) 0.38(2) 1.94(2) 32.98
-- -- $19.42 7.29(1) $292,892 1.53(2) (0.36)(2) 1.57(2) 73.39
-- -- 18.10 10.10 290,352 1.50 (0.65) 1.52 228.43
-- -- 16.44 (1.73) 285,339 1.37 (0.28) 1.53 183.75
-- -- 16.73 (24.37) 326,793 1.34 (0.43) 1.44 76.40
(1.30) (1.30) 22.12 (28.42) 472,779 1.34 (0.62) 1.42 44.95
(1.79) (1.79) 32.59 12.82 699,399 1.49 (0.75) 1.52 20.04
-- -- $16.14 7.67(1) $ 43,808 0.77(2) 0.39(2) 0.79(2) 73.39
-- -- 14.99 10.96 52,842 0.77 0.08 0.79 228.43
-- -- 13.52 (1.02) 63,571 0.69 0.36 0.76 183.75
-- -- 13.66 (23.86) 85,140 0.68 0.23 0.73 76.40
(1.30) (1.30) 17.94 (27.98) 123,912 0.68 0.04 0.74 44.95
(1.79) (1.79) 26.59 13.67 180,779 0.74 0.00 0.74 20.04
-- -- $19.82 7.48(1) $ 1,628 1.17(2) --(2) 1.20(2) 73.39
-- -- 18.44 10.55 1,635 1.11 (0.27) 1.13 228.43
-- -- 16.68 (1.36) 2,426 1.00 0.09 1.06 183.75
-- -- 16.91 (24.07) 2,029 0.94 (0.05) 1.01 76.40
(1.30) (1.30) 22.27 (28.11) 1,964 0.94 (0.14) 5.63 44.95
-- -- 32.66 1.78(1) 21 0.99(2) (0.27)(2) 101.59(2) 20.04
-- -- $13.86 6.53(1) $166,765 1.97(2) (1.41)(2) 2.00(2) 76.66
-- -- 13.01 18.70 165,782 1.93 (1.47) 1.94 151.80
-- -- 10.96 (7.28) 157,911 1.95 (1.56) 1.97 315.89
-- -- 11.82 (25.14) 190,812 1.80 (1.39) 1.86 202.57
(6.07) (6.07) 15.79 (37.52) 283,760 1.68 (1.09) 1.75 136.63
(4.56) (4.56) 33.48 82.19 386,670 1.69 (1.09) 1.75 159.95
-- -- $14.33 6.86(1) $ 2,592 1.30(2) (0.75)(2) 1.32(2) 76.66
-- -- 13.41 19.41 3,534 1.30 (0.85) 1.31 151.80
-- -- 11.23 (6.57) 5,379 1.25 (0.86) 1.28 315.89
-- -- 12.02 (24.69) 6,428 1.20 (0.78) 1.26 202.57
(6.07) (6.07) 15.96 (37.21) 19,676 1.30 (0.69) 1.36 136.63
(4.56) (4.56) 33.61 55.02(1) 16,284 1.24(2) (0.61)(2) 1.31(2) 159.95
-- -- $14.10 6.66(1) $ 5,505 1.66(2) (1.12)(2) 1.68(2) 76.66
-- -- 13.22 18.99 11,584 1.60 (1.13) 1.62 151.80
-- -- 11.11 (6.80) 8,561 1.51 (1.13) 1.54 315.89
-- -- 11.92 (24.89) 8,444 1.47 (1.07) 1.53 202.57
(6.07) (6.07) 15.87 (37.43) 9,497 1.55 (0.96) 2.06 136.63
-- -- 33.57 16.97(1) 8 1.55(2) (0.90)(2) 158.14(2) 159.95
(5) Based on average shares outstanding.
(6) For the period February 4, 2000, commencement of operations, to June 30,
2000.
(7) For the period November 1, 1999, commencement of operations, to June 30,
2000.
SEE FINANCIAL NOTES
69
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INVESTMENT ACTIVITIES DIVIDENDS
- ----------------------- --------------------- ---------
Net
realized and
Net asset unrealized
value, Net gains/losses on Total from From net
beginning investment Redemption investments and investment investment
of period income/loss fee foreign currencies operations income
--------- ----------- ---------- ------------------ ----------- ----------
SMALL CAP CORE GROWTH FUND
STANDARD SHARES
Six months ended
December 31, 2004 (unaudited) $ 10.84 (0.06) - 0.51 0.45 -
Year ended June 30, 2004 8.67 (0.13) - 2.30 2.17 -
Year ended June 30, 2003 9.18 (0.09) - (0.42) (0.51) -
Year ended June 30, 2002 9.52 (0.08) - (0.26) (0.34) -
Year ended June 30, 2001 11.23 (0.05) - (1.64) (1.69) -
Period ended June 30, 2000(3) 10.00 - - 1.23 1.23 -
VALUE FUND
STANDARD SHARES
Six months ended
December 31, 2004 (unaudited) $ 10.51 0.01 - 0.71 0.72 -
Year ended June 30, 2004 8.64 (0.02) - 1.89 1.87 -
Year ended June 30, 2003 8.74 (0.05) - (0.05) (0.10) -
One month period ended
June 30, 2002(4) 10.21 (0.01) - (1.46) (1.47) -
Year ended May 31, 2002 15.29 (0.08) - (3.57) (3.65) -
Year ended May 31, 2001 14.58 (0.07) - 2.70 2.63 -
Year ended May 31, 2000 14.03 (0.08) - 2.05 1.97 -
SMALL CAP VALUE FUND
STANDARD SHARES
Six months ended
December 31, 2004 (unaudited) $ 9.74 (0.01) - 0.76 0.75 -
Period ended June 30, 2004(5) 10.00 (0.02) - (0.24) (0.26) -
GLOBAL EQUITY FUND
STANDARD SHARES
Six months ended
December 31, 2004 (unaudited) $ 15.18 (0.01) (6) -(7) 0.87 0.86 -
Year ended June 30, 2004 13.39 (0.10) (6) -(7) 1.89 1.79 -
Year ended June 30, 2003 14.22 (0.03) (6) 0.02 (0.82) (0.83) -
Year ended June 30, 2002 18.31 (0.11) (6) 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) (6) - 10.94 10.72 -
INSTITUTIONAL SHARES
Six months ended
December 31, 2004 (unaudited) $ 15.58 0.04 (6) -(7) 0.90 0.94 -
Year ended June 30, 2004 13.65 0.04 (6) -(7) 1.89 1.93 -
Year ended June 30, 2003 14.40 0.05 (6) 0.02 (0.82) (0.75) -
Year ended June 30, 2002 18.46 (0.01) (6) 0.01 (4.06) (4.06) -
Year ended June 30, 2001 30.08 (0.05) (6) - (9.66) (9.71) -
Period ended June 30, 2000(8) 23.45 (0.05) (6) - 7.63 7.58 -
ADMINISTRATIVE SHARES
Six months ended
December 31, 2004 (unaudited) $ 15.36 0.02 (6) -(7) 0.88 0.90 -
Year ended June 30, 2004 13.51 (0.02) (6) -(7) 1.87 1.85 -
Year ended June 30, 2003 14.30 0.01 (6) 0.02 (0.82) (0.79) -
Year ended June 30, 2002 18.38 (0.06) (6) 0.01 (4.03) (4.08) -
Year ended June 30, 2001 30.02 (0.11) (6) - (9.62) (9.73) -
Period ended June 30, 2000(9) 33.45 (0.06) - (3.37) (3.43) -
(1) Not annualized
(2) Annualized.
(3) For the period December 28, 1999, commencement of operations, to June 30,
2000.
(4) Subsequent to the annual report as of May 31, 2002, the Citizens Value
Fund changed its fiscal year end to June 30.
(5) For the period March 31, 2004, commencement of operations, to June 30,
2004.
SEE FINANCIAL NOTES
70
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA
- --------------- ----------------------------
Ratio of Ratio of
Net asset Net expenses to Ratio of net expenses to
From Total value, assets, average net investment average net
net dividends end Total end of assets, income/loss assets, Portfolio
realized to of return period net of to average net prior to turnover
gains shareholders period (%) ($ x 1,000) reimbursement (%) assets (%) reimbursement(%) rate (%)
- -------- ------------ --------- ------ ----------- ----------------- --------------- ---------------- ---------
(0.50) (0.50) $10.79 4.16(1) $ 29,313 1.49(2) (1.21)(2) 1.53(2) 84.42
- - 10.84 25.03 29,701 1.53 (1.37) 1.53 207.80
- - 8.67 (5.56) 17,821 1.45 (1.12) 1.58 349.79
- - 9.18 (3.57) 18,459 1.34 (0.93) 1.40 294.26
(0.02) (0.02) 9.52 (15.08) 15,503 1.34 (0.57) 3.20 146.62
- - 11.23 12.30(1) 8,397 1.49(2) 0.00(2) 5.98(2) 20.16
- - $11.23 6.85(1) $ 26,125 1.70(2) 0.10(2) 1.71(2) 121.71
- - 10.51 21.64 23,871 1.78 (0.23) 1.78 130.18
- - 8.64 (1.14) 16,226 1.90 (0.62) 1.90 209.72
- - 8.74 (14.40)(1) 21,060 1.95(2) (1.33)(2) 2.05(2) 5.87
(1.43) (1.43) 10.21 (25.58) 24,981 1.95 (1.04) 2.54 34.77
(1.92) (1.92) 15.29 20.71 14,378 1.95 (0.65) 4.63 62.55
(1.42) (1.42) 14.58 14.36 8,726 1.95 (0.68) 7.11 72.32
- - $10.49 7.70(1) $ 2,118 1.60(2) (0.15)(2) 4.52(2) 116.04
- - 9.74 (2.60)(1) 1,376 1.60(2) (0.92)(2) 6.07(2) 42.36
- - $16.04 5.67(1) $ 90,749 2.08(2) (0.09)(2) 2.08(2) 71.75
- - 15.18 13.37 95,625 2.01 (0.60) 2.01 49.16
- - 13.39 (5.84) 101,846 1.91 (0.26) 1.91 42.05
- - 14.22 (22.34) 135,881 1.84 (0.66) 1.84 132.82
(1.91) (1.91) 18.31 (33.69) 236,080 1.82 (0.71) 1.82 151.95
(0.95) (0.95) 29.99 53.27 354,818 1.82 (0.79) 1.83 120.69
- - $16.52 6.03(1) $ 2,720 1.37(2) 0.57(2) 1.37(2) 71.75
- - 15.58 14.14 5,244 1.37 0.25 1.37 49.16
- - 13.65 (5.21) 6,688 1.26 0.42 1.26 42.05
- - 14.40 (21.99) 9,531 1.27 (0.05) 1.27 132.82
(1.91) (1.91) 18.46 (33.35) 16,475 1.39 (0.23) 1.42 151.95
(0.95) (0.95) 30.08 32.55(1) 12,544 1.39(2) (0.25)(2) 1.43(2) 120.69
- - $16.26 5.86(1) $ 2,173 1.74(2) 0.25(2) 1.74(2) 71.75
- - 15.36 13.69 2,142 1.71 (0.11) 1.71 49.16
- - 13.51 (5.52) 2,059 1.59 0.11 1.59 42.05
- - 14.30 (22.20) 2,207 1.64 (0.39) 1.64 132.82
(1.91) (1.91) 18.38 (33.52) 1,748 1.68 (0.48) 3.18 151.95
- - 30.02 (10.25)(1) 1 1.68(2) (0.48)(2) 296.20(2) 120.69
(6) Based on average shares outstanding.
(7) Less than $0.005 per share.
(8) For the period November 1, 1999, commencement of operations, to June 30,
2000.
(9) For the period February 4, 2000, commencement of operations, to June 30,
2000.
SEE FINANCIAL NOTES
71
FINANCIAL HIGHLIGHTS
SELECTED PER SHARE DATA INVESTMENT ACTIVITIES DIVIDENDS
- ------------------------ --------------------- ---------
Net
Net asset realized
value, Net and unrealized Total from From net
beginning investment Redemption gains/losses investment investment
of period income/loss fee on investments operations income
--------- ----------- ---------- -------------- ---------- ----------
BALANCED FUND
STANDARD SHARES
Six months ended
December 31, 2004 (unaudited) $ 11.35 0.06 - 0.53 0.59 (0.06)
Year ended June 30, 2004 10.47 0.06 - 1.12 1.18 (0.06)
Period ended June 30, 2003(3) 10.00 0.02 - 0.47 0.49 (0.02)
INCOME FUND
STANDARD SHARES
Six months ended
December 31, 2004 (unaudited) $ 9.86 0.18 - 0.22 0.40 (0.19)
Year ended June 30, 2004 10.28 0.34 - (0.40) (0.06) (0.36)
Year ended June 30, 2003 9.62 0.37 - 0.69 1.06 (0.40)
Year ended June 30, 2002 10.28 0.58 - (0.66) (0.08) (0.58)
Year ended June 30, 2001 10.20 0.68 - 0.10 0.78 (0.70)
Year ended June 30, 2000 10.51 0.65 - (0.32) 0.33 (0.63)
ULTRA SHORT BOND FUND
STANDARD SHARES
Six months ended
December 31, 2004 (unaudited) $ 9.92 0.10 - (0.01) 0.09 (0.11)
Year ended June 30, 2004 10.06 0.18 - (0.13) 0.05 (0.19)
Period ended June 30, 2003(5) 10.00 0.14(6) - 0.07 0.21 (0.15)
MONEY MARKET FUND
STANDARD SHARES
Six months ended
December 31, 2004 (unaudited) $ 1.00 -(4) - - -(4) -(4)
Year ended June 30, 2004 1.00 -(4) - - -(4) -(4)
Year ended June 30, 2003 1.00 0.01 - - 0.01 (0.01)
Year ended June 30, 2002 1.00 0.02 - - 0.02 (0.02)
Year ended June 30, 2001 1.00 0.05 - - 0.05 (0.05)
Year ended June 30, 2000 1.00 0.05 - - 0.05 (0.05)
INSTITUTIONAL SHARES
Six months ended
December 31, 2004 (unaudited) $ 1.00 -(4) - - -(4) -(4)
Year ended June 30, 2004 1.00 -(4) - - -(4) -(4)
Year ended June 30, 2003 1.00 0.01 - - 0.01 (0.01)
Year ended June 30, 2002 1.00 0.02 - - 0.02 (0.02)
Year ended June 30, 2001 1.00 0.05 - - 0.05 (0.05)
Year ended June 30, 2000 1.00 0.05 - - 0.05 (0.05)
(1) Not annualized.
(2) Annualized.
(3) For the period December 20, 2002, commencement of operations, to June 30,
2003.
(4) Less than $0.005 per share.
(5) For the period November 21, 2002, commencement of operations, to June 30,
2003.
(6) Based on average shares outstanding.
SEE FINANCIAL NOTES
72
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA
- ---------------- ----------------------------
Ratio of Ratio of
Net asset Net expenses to Ratio of net expenses to
From Total value, assets, average net investment average net
net dividends end Total end of assets, income/loss assets, Portfolio
realized to of return period net of to average net prior to turnover
gains shareholders period (%) ($x 1,000) reimbursement (%) assets (%) reimbursement (%) rate (%)
- -------- ------------ --------- ------- ---------- --------------- -------------- ---------------- ---------
(0.23) (0.29) $ 11.65 5.26(1) $ 3,677 1.30(2) 1.09(2) 2.32(2) 92.98
(0.24) (0.30) 11.35 11.31 2,804 1.30 0.60 4.30 98.20
- (0.02) 10.47 4.87(1) 1,061 1.30(2) 0.41(2) 16.73(2) 140.42
- (0.19) $ 10.07 4.07(1) $ 58,179 1.51(2) 3.60(2) 1.51(2) 56.50
- (0.36) 9.86 (0.63) 59,562 1.45 3.28 1.45 64.37
- (0.40) 10.28 11.28 69,137 1.37 3.80 1.37 195.73
- (0.58) 9.62 (0.87) 67,488 1.38 5.77 1.38 54.05
-(4) (0.70) 10.28 7.87 71,639 1.40 6.55 1.48 60.53
(0.01) (0.64) 10.20 3.35 61,836 1.45 6.34 1.47 52.96
- (0.11) $ 9.90 0.88(1) $ 6,586 0.18(2) 1.92(2) 1.48(2) 30.07
- (0.19) 9.92 0.48 7,552 0.06 1.79 1.50 80.96
- (0.15) 10.06 2.12(1) 9,252 0.00(2) 2.29(2) 2.10(2) 56.04
- -(4) $ 1.00 0.37(1) $ 79,636 0.94(2) 0.73(2) 0.94(2) NA
- -(4) 1.00 0.10 83,231 0.98 0.10 0.98 NA
- (0.01) 1.00 0.65 104,641 0.93 0.65 0.93 NA
- (0.02) 1.00 1.71 114,271 0.92 1.72 0.92 NA
- (0.05) 1.00 5.23 117,211 0.89 5.08 0.89 NA
- (0.05) 1.00 4.67 112,700 1.17 4.59 1.18 NA
- -(4) $ 1.00 0.50(1) $ 11,560 0.69(2) 0.99(2) 0.69(2) NA
- -(4) 1.00 0.41 11,011 0.67 0.41 0.67 NA
- (0.01) 1.00 0.95 10,892 0.63 0.98 0.63 NA
- (0.02) 1.00 1.97 16,539 0.67 1.95 0.67 NA
- (0.05) 1.00 5.43 27,475 0.70 5.22 0.70 NA
- (0.05) 1.00 5.04 23,370 0.81 4.93 0.82 NA
SEE FINANCIAL NOTES
73
FINANCIAL NOTES
UNAUDITED
ORGANIZATION
Citizens Funds (the "trust"), a Massachusetts Business Trust, is registered as
an open-end management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"). The trust offers the following funds
(individually a "fund," collectively the "funds"):
FUND
Short name
CITIZENS 300 FUND
300 Fund
CITIZENS CORE GROWTH FUND
Core Growth Fund
CITIZENS EMERGING GROWTH FUND
Emerging Growth Fund
CITIZENS SMALL CAP CORE GROWTH FUND
Small Cap Core Growth Fund
CITIZENS VALUE FUND
Value Fund
CITIZENS SMALL CAP VALUE FUND
Small Cap Value Fund
CITIZENS GLOBAL EQUITY FUND
Global Equity Fund
CITIZENS BALANCED FUND
Balanced Fund
CITIZENS INCOME FUND
Income Fund
CITIZENS ULTRA SHORT BOND FUND
Ultra Short Bond Fund
CITIZENS MONEY MARKET FUND
Money Market Fund
The funds are authorized to issue an unlimited number of shares of beneficial
interest with no par value. The Core Growth Fund, Emerging Growth Fund, and
Global Equity Fund currently offer three classes of shares: Standard shares,
Institutional shares and Administrative shares. The Money Market Fund offers two
classes of shares: Standard shares and Institutional shares. The 300 Fund, Small
Cap Core Growth Fund, Value Fund, Small Cap Value Fund, Balanced Fund, Income
Fund and Ultra Short Bond Fund offer one class of shares: Standard shares. Each
class of shares in the funds has identical rights and privileges except with
respect to fees paid under class-specific arrangements, voting rights on matters
affecting a single class of shares, and the exchange privilege of each class of
shares.
INDEMNIFICATIONS
Under the funds' organizational documents, its officers and trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the trust. In addition, in the normal course of business, the funds
enter into contracts with their vendors and others that provide for general
indemnifications. The funds' maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the funds.
74
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. If a market quotation for a given security is unavailable, or if the
adviser or a fund's subadviser believes an available quote does not accurately
reflect the current value of a security, the adviser will use fair value
procedures established by the fund's board of trustees to price the security.
Fair value procedures may also be used if the adviser determines that a
significant event has occurred between the time at which a market price is
determined but prior to the time at which a fund's net asset value is
calculated. The Global Equity Fund has a policy to use fair value procedures to
price securities traded on foreign markets in the event there is a specific
change in the value of a domestic security index. Short-term securities maturing
within 60 days and all securities in 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.
75
FINANCIAL NOTES
UNAUDITED
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
Changes in holdings of portfolio securities are reflected no later than in the
first calculation on the first business day following the trade date. However,
for financial reporting purposes, portfolio security transactions are reported
on trade date. The cost of securities sold is determined on the identified cost
basis, unless otherwise specified. Interest income is recorded on an accrual
basis and includes, where applicable, the amortization or accretion of a premium
or discount. Dividend income is recorded on the ex-dividend date.
FOREIGN CURRENCY TRANSLATION
The accounting records of the funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in a foreign currency
are translated into U.S. dollars at the current rate of exchange. Purchases and
sales of securities, and income and expenses, are translated into U.S. dollars
at the prevailing rate of exchange on the respective dates of such transactions.
The changes in foreign exchange rates on investments are not isolated on the
Statements of Operations. Such fluctuations are included with the net realized
and unrealized gain or loss on investments.
FOREIGN CURRENCY CONTRACTS
Foreign currency contracts are used to facilitate transactions in
foreign-denominated securities. Losses may arise from changes in the value of
the foreign currency or if the counterparties do not perform under the
contract's terms. The U.S. dollar value of foreign currency contracts is
determined using the current rate of exchange. Foreign currency contracts open
at period end are listed in the funds' portfolio holdings.
REPURCHASE AGREEMENTS
The funds may acquire repurchase agreements with an entity that is a member of
the Federal Reserve System, collateralized by instruments issued by the U.S.
government, its agencies or instrumentalities. The repurchase price generally
equals the price paid by a fund plus interest negotiated on the basis of current
short-term rates, which may be more or less than the rate on the underlying
securities. It is the funds' policy to receive collateral securities of which
the value, including accrued interest, is at least equal to 102% of the amount
to be repaid to the funds under each agreement at its maturity. Collateral
subject to repurchase agreements is held by the funds' custodian. If the
counterparty defaults, and the fair value of the
76
collateral declines, realization of the collateral by the funds may be delayed
or limited.
RESTRICTED SECURITIES
The funds are permitted to invest in privately placed securities. These
securities may be resold in transactions exempt from registration, or to the
public, if the securities are registered under the Securities Act of 1933.
Disposal of these securities may involve time-consuming negotiations and
expense, and the prompt sale at an acceptable price may be difficult.
REDEMPTION FEE
The Global Equity Fund charges a redemption fee of 2% (paid to the fund) with
respect to shares of the fund redeemed or exchanged within 60 days of purchase.
The fee does not apply to shares purchased through the reinvestment of dividends
or other distributions, redemptions by the fund of accounts with below minimum
balances, redemptions due to shareholder death or disability, or certain omnibus
accounts or retirement plans. For the six months ended December 31, 2004, the
Global Equity Fund collected $2,234 in redemption fees. These fees are included
in the "change in net assets from capital transactions" amounts in the
Statements of Changes in Net Assets.
DIVIDENDS TO SHAREHOLDERS
The 300 Fund, Core Growth Fund, Emerging Growth Fund, Small Cap Core Growth
Fund, Value Fund, Small Cap Value Fund, and Global Equity Fund declare and
distribute dividends from net investment income, if any, to shareholders
annually. The Balanced Fund declares and distributes dividends from net
investment income to shareholders quarterly. The Income Fund declares and
distributes dividends from net investment income to shareholders monthly.
Dividends from net investment income for the Ultra Short Bond Fund and Money
Market Fund are declared daily and paid monthly. The funds' net realized gains,
if any, are distributed to shareholders at least annually.
Additional dividends may also be paid to the funds' shareholders to the extent
necessary to avoid federal excise tax on certain undistributed income and net
realized gains. The amount of dividends from net investment income and net
realized gains are determined in accordance with federal income tax regulations,
which may differ from GAAP. These "book/tax" differences are either considered
temporary or permanent in nature. To the extent these differences are permanent
in nature (i.e., reclassification of market discounts, gain/loss, paydown, and
distributions), such
77
FINANCIAL NOTES
UNAUDITED
amounts are reclassified to capital; temporary differences do not require
reclassification.
OFFERING COSTS
Expenses incurred in connection with the offering of fund shares for the 300
Fund and Small Cap Value Fund were paid by the funds and are amortized over a
12-month period starting with each fund's commencement of operations.
FEDERAL INCOME TAXES
Each fund is a separate taxable entity for federal tax purposes. Each fund has
qualified and intends to qualify each year as a "regulated investment company"
under Subchapter M of the Internal Revenue Code, as amended, and distributes
substantially all of its taxable net investment income and net realized gains,
if any, to its shareholders.
FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT MANAGEMENT FEE
Citizens Advisers, Inc. (the "adviser") serves as adviser to each of the funds.
Under the terms of the management contract, the adviser is paid a fee that is
computed daily based on an annual rate for each fund's average daily net assets.
Those rates are as follows:
FUND FEE RATE
- -------------------------- --------
300 FUND 0.20%
CORE GROWTH FUND 0.50%
EMERGING GROWTH FUND 1.00%
SMALL CAP CORE GROWTH FUND 0.50%
VALUE FUND 0.70%
SMALL CAP VALUE FUND 0.75%
GLOBAL EQUITY FUND 1.00%
BALANCED FUND 0.65%
INCOME FUND 0.65%
ULTRA SHORT BOND FUND 0.35%
MONEY MARKET FUND 0.35%
McLean Budden Limited serves as the subadviser for the Global Equity Fund. For
its services, the subadviser receives a fee computed daily based on an annual
rate of 0.33% of the fund's average daily net assets up to $50 million, 0.30% on
the next $50 million, and 0.25% on assets thereafter. The fee is paid by the
adviser.
Prior to August 27, 2004, SSgA Funds Management, Inc. served as the subadviser
for the Global Equity Fund. For its services, SSgA Funds Management, Inc.
received a fee computed daily based on an annual rate of 0.35% of the fund's
average daily net assets up to $500 million, and 0.25% on assets thereafter. The
fee was paid by the adviser.
78
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-l under
the 1940 Act, the trust's shareholders have adopted a separate distribution plan
with respect to the funds' Standard and Administrative shares pursuant to which
the funds, except the Money Market Fund, compensate the distributor for services
in an amount equal to 0.25% per annum of average annual net assets represented
by such shares.
ADMINISTRATIVE AND SHAREHOLDER SERVICE FEES
The adviser, with whom certain officers and trustees are affiliated, performs
administrative duties for the trust under a separate administrative contract,
which provides for the reimbursement of out-of-pocket expenses as well as fees
for services rendered. In accordance with the terms of the administrative
contract, fees are accrued daily based on average daily net assets of each fund
at the annual rate of 0.15%. In addition, Citizens Advisers provides a number of
administrative services to the trust, relating primarily to shareholder services
and communications, and is paid an account fee and is reimbursed for
out-of-pocket expenses as well,
for providing such services and communications for each of the individual funds
with the exception of the Core Growth Fund, Standard shares. The Core Growth
Fund, Standard shares may be charged a shareholder service fee of up to 0.35%
based on the average daily net assets of the class. For the six months ended
December 31, 2004, a fee of 0.25% was charged.
TRANSFER AGENCY, FUND ACCOUNTING AND CUSTODY
BISYS Fund Services Ohio, Inc. provides transfer agency and fund accounting
services to the funds pursuant to certain fee arrangements. Transfer agent
expenses also include the cost of services rendered by third parties to provide
sub-transfer agency services. Fifth Third Bank acts as custodian for the funds.
Custody expenses may be incurred or offset from fees or credits arising from
cash balances maintained on deposit.
79
FINANCIAL NOTES
UNAUDITED
TRUSTEE FEES
All of the officers and one of the trustees of the trust are "interested
persons," as defined in the 1940 Act, of the adviser. Currently, each trustee
who is not an "interested person" receives an annual retainer of $12,000 and
$1,250 for each day's attendance at a trustee meeting. The independent trustees
include a chair of the board, who receives an additional annual retainer of
$5,000, and an audit committee chair and social responsibility committee chair,
who each receives an additional annual retainer of $2,500.
ALLOCATIONS
Expenses directly attributable to a fund are charged to that fund. Expenses not
directly attributable to a fund are allocated proportionately among various or
all funds within the trust in relation to the net assets of each fund or on
another reasonable basis. Expenses specific to a class are charged to that
class.
FEE REDUCTIONS AND REIMBURSEMENTS
For the six months ended December 31, 2004, the adviser limited the total
expenses, exclusive of taxes, brokerage commissions and extraordinary expenses,
for certain funds to the extent they exceeded the following limits:
FUND EXPENSE LIMITATION
- --------------------- ------------------
300 FUND 0.90%
SMALL CAP VALUE FUND 1.60%
BALANCED FUND 1.30%
ULTRA SHORT BOND FUND 0.10%
The expense limitations above are voluntary, except for the Small Cap Value
Fund, and may be removed by the adviser at any time. The expense limitation for
the Small Cap Value Fund is contractual and expires June 30, 2005. The adviser
may recoup expense reimbursements from the Small Cap Value Fund in future years,
to the extent the fund's annualized operating expenses plus the amount recouped
do not exceed the annual expense limitation set forth above.
FEES PAID INDIRECTLY
During the period, certain funds participated in a directed brokerage program in
which the funds utilize recaptured commissions on securities transactions to pay
for, in whole or in part, fund accounting expenses of the funds.
80
INVESTMENT TRANSACTIONS
The following summarizes purchases and sales of investment securities, other
than short-term investments, and U.S Government securities, by fund for the six
months ended December 31, 2004:
300 FUND
Purchases $ 1,519,897
Sales 1,643,851
CORE GROWTH FUND
Purchases 232,939,396
Sales 273,076,849
EMERGING GROWTH FUND
Purchases 128,376,731
Sales 144,929,857
SMALL CAP CORE GROWTH FUND
Purchases 22,885,343
Sales 23,852,994
VALUE FUND
Purchases 29,875,220
Sales 29,205,970
SMALL CAP VALUE FUND
Purchases 2,411,522
Sales 1,829,379
GLOBAL EQUITY FUND
Purchases 66,439,025
Sales 77,744,804
BALANCED FUND
Purchases 3,171,966
Sales 2,669,493
INCOME FUND
Purchases 29,632,256
Sales 30,580,273
ULTRA SHORT BOND FUND
Purchases 1,924,988
Sales 1,802,714
81
TABLE OF SHAREHOLDER EXPENSES
UNAUDITED
As a shareholder of the funds, you may incur two types of costs: (i) redemption
fees (for Global Equity Fund only) and (2) ongoing costs, including management
fees; distribution fees; and other fund expenses. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the funds
and to compare these costs with the ongoing costs of investing in other mutual
funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period from July 1, 2004 through December 31,
2004.
ACTUAL EXPENSES
The table on the page opposite provides information about actual account values
and actual expenses. You may use the information below, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled Expenses Paid During Period to estimate the expenses
you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table on the page opposite also provides information about hypothetical
account values and hypothetical expenses based on each fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds.
Please note the expenses shown in the table are meant to highlight your ongoing
costs only and do not reflect any transactional costs, such as redemption fees
and other individual shareholder fees mentioned in the prospectus. Therefore,
the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
*Expenses equal the average account value times the fund's annualized expense
ratio multiplied by 184/365 (to reflect the one-half year period).
82
DECEMBER 31, 2004
EXPENSES ANNUALIZED
ENDING PAID DURING EXPENSE RATIO
BEGINNING ACCOUNT PERIOD* DURING PERIOD
ACCOUNT VALUE VALUE 07/01/04 07/01/04
07/01/04 12/31/04 -12/31/04 -12/31/04
------------- ---------- ----------- ------------
300 FUND
Standard -- actual $ 1,000.00 $ 1,046.40 $ 4.64 0.90%
Standard -- hypothetical 1,000.00 1,020.67 4.58 0.90%
CORE GROWTH FUND
Standard -- actual 1,000.00 1,072.90 7.99 1.53%
Standard -- hypothetical 1,000.00 1,017.49 7.78 1.53%
Institutional -- actual 1,000.00 1,076.70 4.03 0.77%
Institutional -- hypothetical 1,000.00 1,021.32 3.92 0.77%
Administrative -- actual 1,000.00 1,074.80 6.12 1.17%
Administrative -- hypothetical 1,000.00 1,019.31 5.96 1.17%
EMERGING GROWTH FUND
Standard -- actual 1,000.00 1,065.30 10.26 1.97%
Standard -- hypothetical 1,000.00 1,015.27 10.01 1.97%
Institutional -- actual 1,000.00 1,068.60 6.78 1.30%
Institutional -- hypothetical 1,000.00 1,018.65 6.61 1.30%
Administrative -- actual 1,000.00 1,066.60 8.65 1.66%
Administrative -- hypothetical 1,000.00 1,016.84 8.44 1.66%
SMALL CAP CORE GROWTH FUND
Standard -- actual 1,000.00 1,041.60 7.67 1.49%
Standard -- hypothetical 1,000.00 1,017.69 7.58 1.49%
VALUE FUND
Standard -- actual 1,000.00 1,068.50 8.86 1.70%
Standard -- hypothetical 1,000.00 1,016.64 8.64 1.70%
SMALL CAP VALUE FUND
Standard -- actual 1,000.00 1,077.00 8.38 1.60%
Standard -- hypothetical 1,000.00 1,017.14 8.13 1.60%
GLOBAL EQUITY FUND
Standard -- actual 1,000.00 1,056.70 10.78 2.08%
Standard -- hypothetical 1,000.00 1,014.72 10.56 2.08%
Institutional -- actual 1,000.00 1,060.30 7.11 1.37%
Institutional -- hypothetical 1,000.00 1,018.30 6.97 1.37%
Administrative -- actual 1,000.00 1,058.60 9.03 1.74%
Administrative -- hypothetical 1,000.00 1,016.43 8.84 1.74%
BALANCED FUND
Standard -- actual 1,000.00 1,052.60 6.73 1.30%
Standard -- hypothetical 1,000.00 1,018.65 6.61 1.30%
INCOME FUND
Standard -- actual 1,000.00 1,040.70 7.77 1.51%
Standard -- hypothetical 1,000.00 1,017.59 7.68 1.51%
ULTRA SHORT BOND FUND
Standard -- actual 1,000.00 1,008.80 0.91 0.18%
Standard -- hypothetical 1,000.00 1,024.30 0.92 0.18%
MONEY MARKET FUND
Standard -- actual 1,000.00 1,003.70 4.75 0.94%
Standard -- hypothetical 1,000.00 1,020.47 4.79 0.94%
Institutional -- actual 1,000.00 1,005.00 3.49 0.69%
Institutional -- hypothetical 1,000.00 1,021.73 3.52 0.69%
83
SHAREHOLDER SERVICES
At Citizens Funds, we want our investors to know how much we value their
business. That's why we offer a comprehensive range of services that includes
everything from attentive telephone representatives to an informative website.
EXCHANGES BETWEEN CITIZENS FUNDS*
You can move your money from any one of our funds to another.
RETIREMENT INVESTING
We offer investors the opportunity to invest in a variety of IRAs, including
Traditional, Roth and Rollover. Citizens Funds are also available for 401(k),
403(b), SEP and SIMPLE retirement plans.
AUTOMATIC INVESTMENT PLAN
Invest automatically on a monthly or quarterly basis with payroll deduction or
electronic transfer from your bank.
UNPARALLELED CUSTOMER SERVICE
Our representatives are well-trained professionals whose goal is to satisfy most
requests during the first phone call. Representatives are available from 9 AM to
6 PM (ET) Monday - Friday at 800.223.7010.
WWW.CITIZENSFUNDS.COM
Our website 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 and a copy of the funds' voting
record for the 12-month period ended June 30, 2004 are available without charge,
upon request, by calling 800.223.7010, on our website, and on the SEC'S website
at http://www.sec.gov.
*Citizens Global Equity Fund charges a redemption fee of 2% on shares redeemed
or exchanged within 60 days of purchase.
84
[CITIZENS FUNDS LOGO]
Citizens Funds are distributed by Citizens Securities, Inc., Portsmouth, NH
03801 and are available through such popular mutual fund supermarkets as Charles
Schwab's Mutual Fund OneSource(R) and Fidelity Investments' FundsNetwork(R).
Citizens Funds(R) is a trademark of Citizens Advisers, Inc.
This report is intended for shareholders of Citizens Funds and is not authorized
for distribution to other persons unless accompanied or preceded by a
prospectus.
PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF
CITIZENS FUNDS CAREFULLY BEFORE INVESTING. FOR THIS AND OTHER INFORMATION,
PLEASE CALL 800.223.7010 OR VISIT WWW.CITIZENSFUNDS.COM FOR A FREE PROSPECTUS
AND READ IT CAREFULLY BEFORE INVESTING.
(C)2005 Citizens Advisers, Inc.
TRUSTEES
Walter D. Bristol, Jr.
Sophia Collier
Jeannie H. Diefenderfer
Pablo S. Eisenberg
Orlando Hernandez
Martha S. Pope
DISTRIBUTOR
Citizens Securities, Inc.
One Harbour Place
Suite 400
Portsmouth, NH 03801
800.223.7010
603.436.5152
MANAGER
Citizens Advisers, Inc.
One Harbour Place
Suite 400
Portsmouth, NH 03801
800.223.7010
603.436.5152
CUSTODIAN
Fifth Third Bank
Cincinnati, OH 45263
TRANSFER AND
ACCOUNTING AGENT
BISYS Fund Services Ohio, Inc.
3435 Stelzer Road
Columbus, OH 43219
LEGAL COUNSEL
Bingham McCutchen LLP
Boston, MA 02110
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP
Columbus, OH 43215
NOT A PART OF THE SEMI-ANNUAL REPORT
ITEM 2. CODE OF ETHICS.
(a) A code of ethics that applies to the registrant's principal executive
officer and principal financial office was filed as an exhibit to the
registrant's annual Form N-CSR.
(c) During the period covered by this report, no amendments were made to
the provisions of the code of ethics.
(d) During the period covered by this report, no implicit or explicit
waivers to the provisions of the code of ethics were granted.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not Applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not Applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
Not Applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not Applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not Applicable
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded, based on their evaluation of the registrant's disclosure
controls and procedures as conducted within 90 days of the filing date of this
report, that these disclosure controls and procedures are adequately designed
and are operating effectively to ensure that information required to be
disclosed by the registrant of Form N-CSR is (i) accumulated and communicated to
the investment company's management, including its certifying officers, to allow
timely decisions regarding required disclosure; and (ii) recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the second fiscal quarter of the period covered
by this report that have materially affected or are reasonably likely to
materially affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not Applicable.
(a)(2) A separate certification for each principal executive officer and
principal financial officer of the registrant as required by Rule 30a-2(a) under
the Act (17 CFR 270.30a-2). Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not Applicable.
(b) A certification of each principal executive officer and principal officer of
the registrant as required by Rule 30a-2(b) under the Act of 1940. Certification
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Citizens Funds
By (Signature and Title)* /s/ Sophia Collier
-------------------------------------------------------
President
Date 3/7/05
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Sophia Collier
-------------------------------------------------------
President
Date 3/7/05
By (Signature and Title)* /s/ Sean Driscoll
-------------------------------------------------------
Treasurer
Date 3/7/05
* Print the name and title of each signing officer under his or her signature.