As filed with the Securities and Exchange Commission on August 29, 2006
File No. 811-03626
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANY
CITIZENS FUNDS
(Exact Name of Registrant as Specified in Charter)
One Harbour Place, Suite 400, Portsmouth, New Hampshire 03801
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (603) 436-5152
June 30
(Date of fiscal year end)
June 30, 2006
(Date of reporting period)
ITEM 1. REPORT TO SHAREHOLDERS.
(CITIZENS FUNDS LOGO)
ANNUAL REPORT
AND SUPPLEMENTAL COMMENTARY
JUNE 30, 2006
CITIZENS FOR RESPONSIBLE INVESTING
NOT A PART OF THE ANNUAL REPORT
TABLE OF CONTENTS
SUPPLEMENTAL COMMENTARY
<Table>
Letter from the president.................................................... 1
Citizens focus............................................................... 3
ANNUAL REPORT
Risks of mutual fund investing............................................... 7
Benchmarks................................................................... 8
Portfolio review disclosure.................................................. 9
Portfolio review............................................................ 10
Portfolio composition....................................................... 40
Report of independent registered public accounting firm..................... 42
Holdings.................................................................... 44
Statements of assets and liabilities........................................ 62
Statements of operations.................................................... 64
Statements of changes in net assets......................................... 66
Financial highlights........................................................ 70
Financial notes............................................................. 76
Supplemental information.................................................... 87
Shareholder services........................................................ 98
</Table>
PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF
CITIZENS FUNDS CAREFULLY BEFORE INVESTING. FOR THIS AND OTHER INFORMATION,
PLEASE VISIT WWW.CITIZENSFUNDS.COM OR CALL 800.223.7010 FOR A FREE PROSPECTUS
AND READ IT CAREFULLY BEFORE INVESTING.
NOT A PART OF THE ANNUAL REPORT
LETTER FROM THE PRESIDENT
Dear Shareholder,
I am pleased to report that Citizens Funds had a strong positive year in fiscal
2006. All of our equity funds are now managed by our in-house equity team. We
have built, what I believe, is the best investment group currently available
dedicated to managing a family of socially responsible mutual funds across a
range of asset classes. From growth to value, from small-cap to large-cap funds,
domestic and global, we have what I believe are strong effective strategies.
In fiscal year (FY) 2006, our small- and mid-cap funds, Citizens Small Cap Core
Growth and Citizens Emerging Growth had the highest total returns among the
domestic funds we manage. I believe these returns came from strong stock picking
and from the fact that in periods of economic expansion smaller companies are
often best able to capitalize on growth opportunities. By positioning these
funds in companies experiencing accelerated growth we were able to deliver these
returns for shareholders.
Within the large-cap universe, in FY 2006 we continued our strategy of
emphasizing "active management" by closing the Citizens 300 Fund. Most
shareholders elected to exchange their 300 Fund assets into another large cap
fund within the Citizens family. Even though the large-cap universe is well
understood by investors we continue to believe that we can actively add value by
stock selection as we seek to discriminate between corporate winners and losers.
Our Citizens Value Fund is a good example of how active stock selection can
provide positive returns ahead of the market. The Value Fund's standard shares
gained 9.83% for the fiscal year, beating the S&P 500 which was up 8.63%.
"FROM GROWTH TO VALUE, FROM SMALL- CAP TO LARGE-CAP FUNDS, DOMESTIC AND GLOBAL,
WE HAVE WHAT I BELIEVE ARE STRONG EFFECTIVE STRATEGIES."
-- SOPHIA COLLIER, PRESIDENT
(PHOTO OF SOPHIA COLLIER)
NOT A PART OF THE ANNUAL REPORT
1
Our Corporate Responsibility and Social Research team was very active in FY
2006. We were the first mutual fund company to call for Sudan divestment by
portfolio companies. With this action we leveraged our shareholders' combined
economic power to advocate for positive action in a heart-wrenching desperate
situation. We hope others follow this same course and that the Sudan divestment
campaign can generate the same positive impact as the South Africa divestment
strategy in previous years. We also filed shareholder resolutions at Whole Foods
Market, CVS and Johnson & Johnson, where we advocated for the removal of toxic
ingredients from products and packaging. We filed another resolution at YUM!
Brands asking about its progress in making Taco Bell restaurants accessible for
the disabled.
In sum, FY 2006 was generally a good year for the funds and their shareholders.
Looking to the future we will continue our mission to seek strong financial
returns for shareholders by investing in companies that we believe have high
standards for corporate and environmental responsibility.
Sincerely yours,
/s/ Sophia Collier
Sophia Collier
President
See pages 7-9 for important fund risks and benchmark and other disclosures. In
considering performance of the funds for the 12 month period, you should also
consider the funds' longer-term track records described elsewhere in this
report. Of course, data presented reflects past performance which does not
guarantee future results.
NOT A PART OF THE ANNUAL REPORT
2
CITIZENS FOCUS
(PHOTO OF JOANNE DOWDELL)
"WE ARE ENCOURAGED BY CONTINUED ADVANCEMENTS MADE BY THE SOCIALLY RESPONSIBLE
INVESTMENT COMMUNITY, OF WHICH CITIZENS HAS BEEN A PROUD MEMBER FOR WELL OVER
20 YEARS."
-- JOANNE DOWDELL
VP OF CORPORATE RESPONSIBILITY
SHAREHOLDER ACTIVISM AND ADVOCACY
Over the past year, Citizens Funds participated in a number of initiatives
designed to improve corporate governance, augment sustainable business
practices, and support environmentally friendly policies. Below is a synopsis of
some of our key achievements.
SEEKING A SOLUTION IN SUDAN
For more than 20 years, a government-backed militia known as the Janjaweed has
engaged in a campaign of ethnic cleansing against non-Arabs in the Darfur region
of western Sudan. In that time, an estimated 2 million people have died and
millions more have been driven out of the region, according to reports from the
United Nations. In 1997, the U.S. issued sanctions restricting all trade--except
humanitarian aid--with Sudan. This has done little if anything to stop the
atrocities.
Many universities, state legislatures, foundations, and other entities are
calling for divestment from companies with ties to or operations in Sudan. In
late March, Citizens Funds' trustees wrote to the CEOs of 23 companies that were
identified by third-party research services as having possible ties to Sudan. To
date, we have responses in writing from 17 companies, each stating that it
complies with the U.S. sanctions. Citizens' Social Research team spoke with
research providers and the portfolio companies themselves to confirm each
company's assertion. We sought this disclosure to avoid exposing our
shareholders to negative stock price performance that could result from
premature divestment selling, and to verify that these companies continue to
pass our human rights screen.
NOT A PART OF THE ANNUAL REPORT
3
In May 2006, Joanne Dowdell, Citizens' Vice President of Corporate
Responsibility, participated on a panel at the University of Massachusetts-
Boston to discuss developments in the Sudan divestment campaign.
Many of the leading universities across the country have implemented divestment
strategies with the goal to force multinational companies to recognize the
seriousness of the situation in Sudan and to stop doing business there. For more
information on the campaign for Sudanese divestiture, visit
www.citizensfunds.com/sudan and download a copy of our recently released
position paper on the issue, or go to www.divestsudan.org for additional
in-depth coverage.
NUCLEAR POWER -- IS IT SAFE ENOUGH?
During the year, Citizens' Social Research team participated in several
discussions with subject matter experts and colleagues in the SRI community
regarding the efficacy and safety of nuclear energy. With the rising cost of
oil, and the environmental and financial risks posed by climate change, it is
increasingly important to seek alternative solutions to the burning of fossil
fuels. Many believe nuclear energy to be one such alternative. Our concern
continues to be the catastrophic harm one accident can cause to surrounding
communities and the environment. Until these issues are resolved to our
satisfaction, we will continue to exclude companies from our portfolios that do
not pass our nuclear energy screen.
IMPROVING SUSTAINABILITY REPORTING
In August 2005, Citizens met with members of Intel's corporate responsibility
team to discuss the content of the company's Global Citizenship Report. In our
view, Intel, Hewlett-Packard, and other select companies in our portfolios have
made significant strides in improving disclosure of their social and
environmental risks.
In September 2005, Citizens participated in a meeting with Steven Farris, CEO of
Apache Corporation, a gas and oil exploration and development company. The
objective was to discuss the company's efforts to reduce greenhouse gas
emissions, as well as the risks and opportunities that the regulation of carbon
emissions may have for the company. The meeting was prompted by a shareholder
proposal requesting that the company improve its reporting on issues related to
climate change.
NOT A PART OF THE ANNUAL REPORT
4
We were pleased by the discussion and Apache's stated commitment to improve its
future reporting. The meeting was a very positive step in the right direction.
We were encouraged by the willingness of Mr. Farris to communicate with
shareholders. Not long after the meeting, Apache unveiled a new climate-change
section on its website. The site states that Apache "shares the widespread
concern that the emission of greenhouse gases (GHG) is leading to changes in
global climate." We expect Apache to begin including greenhouse gas emissions
data on its website this year.
In November 2005, Citizens co-filed a shareholder resolution with Walden Asset
Management at SBC Communications, now known as AT&T. The resolution requested
that the company prepare a sustainability report based on the Global Reporting
Initiative (GRI). This would enable research analysts to better evaluate the
social risks of investing in the company compared to its peers. An analysis of
our holdings revealed that AT&T's existing reporting lags that of other
companies in its peer group. Citizens and other shareholders agreed to withdraw
the resolution after meetings with company executives led to AT&T's commitment
to work toward improving the quality and content of its sustainability
reporting. We will provide updates on our engagement with AT&T in future
activism reports.
ELIMINATING TOXIC CHEMICALS FROM COSMETICS AND OTHER CONSUMER PRODUCTS
Citizens joined a group of 17 firms with more than $20 billion in combined
assets under management to launch the Investor Environmental Health Network
(IEHN). The IEHN's mission is to advance the use of alternatives to toxic
chemicals in consumer products.
Dr. Vesela Veleva, a Social Research Analyst at Citizens, published an article
on the topic in Corporate Environmental Strategy (Issues 3 & 4, 2005). The
article was titled "New EU Rules for the Cosmetics Industry: What do They Mean
for U.S. Companies and Stakeholders?" The article outlines the EU legislation,
which bans the use of more than 1,000 dangerous chemicals in cosmetic products,
and the consequences for U.S. companies, consumers, and shareholders. The EU
requirements are currently the highest standard for consumer safety in the
world.
In preparation for the 2006 proxy season, Citizens filed a resolution at Johnson
& Johnson and co-filed a resolution at CVS, requesting each company report on
the feasibility of reformulating their cosmetic products
NOT A PART OF THE ANNUAL REPORT
5
to comply with the recent EU directive. Discussions with Johnson & Johnson
executives led to the withdrawal of the resolution. The company has agreed to
work with SRI investors and other stakeholders to improve the transparency and
disclosure of the company's ongoing efforts to have the safest products on the
market. CVS strongly argued to the Securities and Exchange Commission (SEC) that
the proposal be kept from a shareholder vote. Despite the company's opposition,
the SEC ruled the proposal should remain on the proxy and brought to a vote at
the company's May 2006 annual meeting, where it garnered 8.74% support.
We also co-filed a resolution at Whole Foods Market, Inc. requesting a report on
the feasibility of eliminating bisphenol A. This chemical with
endocrine-disrupting properties is found in polycarbonate plastics such as
Nalgene bottles and baby bottles. The shareholder resolution received 10%
support at the annual meeting held in March 2006.
OUTLOOK
We are encouraged by continued advancements made by the socially responsible
investment community, of which Citizens has been a proud member for well over 20
years. This past April, UN Secretary-General Kofi Annan launched the Principles
for Responsible Investment at the New York Stock Exchange. The Principles were
endorsed by a group of institutional investors with combined assets under
management of approximately $3 trillion.
The group included public pension funds, foundations, and other institutional
investors. The Principles are aimed at furthering integration of environmental,
social, and corporate governance factors into investment decision-making.
Organizations like Ceres and the Social Investment Forum have made tremendous
inroads in raising the investing public's awareness of the benefits to
integrating social, environmental, and corporate governance performance measures
in investment decisions. We too have seen a greater level of corporate awareness
of the importance of building sustainable business models, engaging
shareholders, and providing greater transparency. We believe the momentum in
place will spur more companies to greatly improve their corporate social
responsibility and sustainability reporting in 2006 and beyond.
NOT A PART OF THE ANNUAL REPORT
6
RISKS OF MUTUAL FUND INVESTING
As with any fund that invests in stocks or fixed-income securities, the value of
your investment will fluctuate in response to individual company actions, as
well as general economic, political and market conditions. Reactions to these
factors may differ among various stock types, and investments in specific funds
may present unique risks -- and benefits given the nature of their focus. Many
of these risks are discussed below, and additional information on risks may also
be found in the Citizens Funds prospectus.
GROWTH INVESTING RISKS
Growth stocks may be especially volatile, because their prices are largely based
on estimates of future earnings.
VALUE INVESTING RISKS
Value stocks may fall or remain flat if certain conditions or investor
perceptions do not change as expected, or if the companies prove not to be
underpriced.
SMALL- AND MEDIUM-SIZED COMPANY RISKS
Small- and medium-sized companies pose unique investment risks as they may have
less seasoned management, limited product lines, financing and market share
challenges, and shares that trade with more volatility, less frequently or in
smaller volumes.
FOREIGN INVESTING RISKS
Foreign markets pose unique investment risks, including political instability
and currency risks, excessive taxation, different financial and auditing
standards, increased market volatility and other factors.
FIXED-INCOME INVESTING RISKS
Interest rate increases can cause the value of bonds to decrease, meaning that a
bond fund investment may lose value in a rising interest rate environment. There
is also the chance that some of the fund's holdings will have their credit
ratings downgraded or may default, potentially reducing the fund's income level
and share price.
HIGH-YIELD SECURITY RISKS
High-yield securities (so-called "junk bonds") offer the potential for higher
returns but present significant volatility and risk of loss of principal and
interest.
7
MONEY MARKET RISKS
Investments in the Citizens Money Market Fund are not insured or guaranteed by
the FDIC or any other government agency. Although the fund seeks to preserve the
value of your investment at $1.00 per share, it is possible to lose money by
investing in the fund.
BENCHMARKS
When evaluating performance of any investment, it is useful to look at both
absolute and relative return. In other words, how much did the fund generate or
lose for shareholders in the reporting period, and how did that performance
compare to the fund's benchmark? Below is a brief description of the benchmarks
we use. Please keep in mind that these benchmark indices are unmanaged, meaning
you cannot invest directly in them, and their performance does not reflect the
impact of fees and expenses that apply to our funds.
The S & P 500 INDEX includes a representative sample of 500 leading companies in
the U.S. economy, focused on the large-cap segment of the U.S. equity universe.
The RUSSELL 1000 GROWTH INDEX measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000 Growth Index covers the large-cap segment of the U.S. equity
universe.
The RUSSELL MIDCAP GROWTH INDEX measures the performance of those Russell Midcap
companies with higher price-to-book ratios and higher forecasted growth values.
The Russell Midcap Growth Index covers the mid cap segment of the U.S. equity
universe; it includes the smallest 800 securities in the Russell 1000 Index.
The RUSSELL 2000 GROWTH INDEX measures the performance of those Russell 2000
companies with higher price-to-book ratios and higher forecasted growth values.
The Russell 2000 Growth Index covers the small-cap segment of the U.S. equity
universe.
The MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) WORLD INDEX is a market
capitalization-weighted equity index of more than 1,500 stocks traded in 23
world markets.
8
The LEHMAN BROTHERS U.S. AGGREGATE INDEX is comprised of taxable, investment
grade fixed-income securities, including government, corporate, mortgage and
asset-backed securities.
The BLENDED INDEX is comprised of 60% S&P 500 Index and 40% Lehman Brothers U.S.
Aggregate Index.
PORTFOLIO REVIEW DISCLOSURE
The information in each portfolio review was obtained through an interview with
the portfolio manager(s) for each fund. Any views and opinions expressed are
those of the portfolio manager(s). Portfolio managers with different funds and
strategies may have opinions that vary from their colleagues'. Citizens Advisers
considers diversity of investment opinion to be a strength that contributes to
healthy debate and is part of a strong overall investment process. The portfolio
reviews are provided for informational purposes only and should not be used or
construed as a recommendation for any security.
9
CITIZENS CORE GROWTH FUND
(PHOTO OF ROBERT MAGAN AND JONATHAN WHITE)
"WE EXPECT THAT COMPANIES THAT HAVE HISTORICALLY PERFORMED WELL DURING THE
LATTER STAGES OF AN ECONOMIC GROWTH CYCLE WILL CONTINUE TO GROW."
CO-PORTFOLIO MANAGERS
Robert Magan, CFA
Jonathan White, CFA
INVESTMENT GOAL
Long-term capital appreciation
INVESTMENT STRATEGY
Invests mainly in stocks of U.S. large-capitalization companies
INCEPTION DATES
Standard shares 3.03.95
Institutional shares 1.25.96
Administrative shares 2.04.00
RISKS
Growth investing (See pages 7-9 for important fund risk and benchmark
disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
For the one-year period ended June 30, 2006, standard shares of the Citizens
Core Growth Fund gained 3.50%. This trailed the one-year return for the Russell
1000 Growth Index, which advanced 6.12%, and the S&P 500 Index, which gained
8.63%.
For the first nine months of the fund's fiscal year (July 1, 2005 through March
31, 2006), the fund's standard shares outperformed the Russell 1000 Growth Index
by 0.74% and was ahead of the S&P 500 Index by 0.94%. The fund's
underperformance for the one-year period occurred largely in the final three
months, when the market tone changed dramatically to favor lower-risk, more
stable investments over those with strong growth potential and higher
valuations. High-quality companies that had been doing well for the fund
declined precipitously
CITIZENS CORE GROWTH FUND
10
CORE GROWTH
CITIZENS CORE GROWTH FUND PERFORMANCE (as of 6.30.06)
<Table>
<Caption>
AVERAGE ANNUAL RETURN
Ticker 1 5 10 Since
Share class symbol year years years inception
- ------------------------------------------------------------------------------------
STANDARD SHARES WAIDX 3.50% -1.60% 6.16% 8.25%
INSTITUTIONAL SHARES WINIX 4.26% -0.90% 6.92% 7.60%
ADMINISTRATIVE SHARES CGADX 3.92% -1.21% NA -5.66%
PERFORMANCE OVERTIME (as of 6.30.06)
This chart shows performance since inception of a $10,000 hypothetical
investment in the fund's Standard shares, compared with the performance over the
same period for the indices shown.
(LINE GRAPH)
RUSSELL
CORE GROWTH 1000 GROWTH S&P 500
DATE FUND INDEX INDEX
3/3/95 $ 10,000.00 $ 10,000.00 $ 10,000.00
3/31/1995 $ 10,100.00 $ 10,292.00 $ 10,340.00
4/30/1995 $ 10,400.00 $ 10,517.39 $ 10,644.00
5/31/1995 $ 10,530.00 $ 10,883.40 $ 11,069.76
6/30/1995 $ 10,940.00 $ 11,303.50 $ 11,326.57
7/31/1995 $ 11,360.00 $ 11,773.72 $ 11,702.62
8/31/1995 $ 11,450.00 $ 11,786.68 $ 11,731.87
9/30/1995 $ 11,860.00 $ 12,330.04 $ 12,226.96
10/31/1995 $ 11,970.00 $ 12,338.67 $ 12,182.94
11/30/1995 $ 12,330.00 $ 12,818.65 $ 12,717.77
12/31/1995 $ 12,405.00 $ 12,891.71 $ 12,963.23
1/31/1996 $ 12,646.60 $ 13,322.30 $ 13,403.97
2/26/1996 $ 12,878.20 $ 13,566.09 $ 13,528.63
3/31/1996 $ 12,858.10 $ 13,583.73 $ 13,658.51
4/30/1996 $ 13,200.40 $ 13,940.98 $ 13,859.29
5/31/1996 $ 13,593.10 $ 14,427.52 $ 14,216.86
6/30/1996 $ 13,502.50 $ 14,447.72 $ 14,270.88
7/31/1996 $ 12,908.40 $ 13,601.09 $ 13,640.11
8/30/1996 $ 13,230.60 $ 13,951.99 $ 13,927.91
9/30/1996 $ 14,076.40 $ 14,967.70 $ 14,712.06
10/31/1996 $ 14,428.80 $ 15,057.50 $ 15,118.11
11/30/1996 $ 15,627.10 $ 16,188.32 $ 16,261.04
12/31/1996 $ 15,266.30 $ 15,871.03 $ 15,939.07
1/31/1997 $ 16,415.60 $ 16,983.59 $ 16,935.26
2/28/97 $ 16,517.30 $ 16,868.10 $ 17,067.36
3/31/1997 $ 15,551.10 $ 15,955.54 $ 16,365.89
4/30/1997 $ 16,669.90 $ 17,014.99 $ 17,342.93
5/31/1997 $ 17,697.10 $ 18,243.47 $ 18,399.11
6/30/1997 $ 18,348.00 $ 18,973.21 $ 19,223.40
7/31/1997 $ 20,188.90 $ 20,650.44 $ 20,753.58
8/29/1997 $ 19,110.80 $ 19,442.39 $ 19,591.38
09/30/97 $ 20,158.40 $ 20,398.95 $ 20,664.98
10/31/1997 $ 19,354.90 $ 19,644.19 $ 19,974.77
11/29/1997 $ 20,402.50 $ 20,479.07 $ 20,899.61
12/31/1997 $ 20,603.90 $ 20,708.44 $ 21,259.08
1/31/1998 $ 21,201.70 $ 21,327.62 $ 21,495.05
2/28/1998 $ 22,867.10 $ 22,931.45 $ 23,044.85
3/31/1998 $ 23,977.30 $ 23,846.42 $ 24,224.74
4/30/1998 $ 24,222.90 $ 24,175.50 $ 24,469.41
5/31/1998 $ 23,529.00 $ 23,488.92 $ 24,048.54
6/30/1998 $ 25,044.90 $ 24,926.44 $ 25,024.91
7/31/1998 $ 24,938.10 $ 24,761.92 $ 24,759.65
8/31/1998 $ 21,212.40 $ 21,045.16 $ 21,179.40
9/30/1998 $ 23,069.90 $ 22,661.43 $ 22,537.00
10/31/1998 $ 24,767.30 $ 24,483.41 $ 24,369.26
11/30/1998 $ 26,635.60 $ 26,346.59 $ 25,846.04
12/31/1998 $ 29,412.00 $ 28,723.06 $ 27,334.77
1/31/1999 $ 31,679.40 $ 30,409.10 $ 28,477.36
2/28/1999 $ 29,757.50 $ 29,019.40 $ 27,591.72
3/31/1999 $ 31,042.40 $ 30,548.73 $ 28,695.39
4/30/1999 $ 31,873.70 $ 30,588.44 $ 29,805.90
5/31/1999 $ 31,020.80 $ 29,649.37 $ 29,102.48
6/30/1999 $ 32,953.50 $ 31,724.83 $ 30,717.67
7/31/1999 $ 32,251.70 $ 30,715.98 $ 29,759.27
8/31/1999 $ 31,981.70 $ 31,216.65 $ 29,613.45
9/30/1999 $ 31,204.30 $ 30,561.10 $ 28,802.04
10/31/1999 $ 33,223.40 $ 32,868.46 $ 30,625.21
11/30/1999 $ 34,637.90 $ 34,643.36 $ 31,246.91
12/31/1999 $ 37,497.40 $ 38,246.27 $ 33,087.35
1/31/2000 $ 35,181.60 $ 36,452.52 $ 31,426.36
2/29/2000 $ 36,060.00 $ 38,235.05 $ 30,832.41
3/31/2000 $ 39,539.40 $ 40,972.68 $ 33,847.81
4/30/2000 $ 37,109.60 $ 39,022.38 $ 32,829.00
5/31/2000 $ 35,170.20 $ 37,055.65 $ 32,156.00
6/30/2000 $ 37,178.00 $ 39,864.47 $ 32,950.25
7/31/2000 $ 36,151.30 $ 38,202.12 $ 32,436.23
8/31/2000 $ 38,227.50 $ 41,659.41 $ 34,450.52
9/30/2000 $ 35,215.90 $ 37,718.43 $ 32,631.53
10/31/2000 $ 35,489.60 $ 35,934.35 $ 32,494.48
11/30/2000 $ 30,698.40 $ 30,637.63 $ 29,933.92
12/31/2000 $ 29,715.00 $ 29,669.48 $ 30,080.59
1/31/2001 $ 32,157.20 $ 31,719.64 $ 31,148.45
2/28/2001 $ 27,056.30 $ 26,333.64 $ 28,307.71
3/31/2001 $ 24,710.40 $ 23,468.54 $ 26,513.00
4/30/2001 $ 27,032.30 $ 26,437.32 $ 28,573.07
5/31/2001 $ 27,080.40 $ 26,048.69 $ 28,764.50
6/30/2001 $ 26,611.20 $ 25,444.36 $ 28,065.53
7/31/2001 $ 26,310.40 $ 24,808.25 $ 27,790.49
8/31/2001 $ 24,277.30 $ 22,778.93 $ 26,050.80
9/30/2001 $ 21,811.10 $ 20,505.60 $ 23,945.90
10/31/2001 $ 22,304.30 $ 21,582.14 $ 24,403.26
11/30/2001 $ 24,385.60 $ 23,656.18 $ 26,274.99
12/31/2001 $ 24,301.40 $ 23,611.24 $ 26,506.21
1/31/2002 $ 23,904.40 $ 23,193.32 $ 26,119.22
2/28/2002 $ 23,002.10 $ 22,230.79 $ 25,615.12
3/31/2002 $ 23,880.30 $ 22,999.98 $ 26,578.25
4/30/2002 $ 22,448.70 $ 21,123.18 $ 24,967.61
5/31/2002 $ 22,039.70 $ 20,612.00 $ 24,782.85
6/30/2002 $ 20,126.80 $ 18,705.39 $ 23,018.31
7/31/2002 $ 18,635.10 $ 17,676.59 $ 21,225.18
8/31/2002 $ 18,562.90 $ 17,729.62 $ 21,365.27
9/30/2002 $ 16,914.70 $ 15,891.06 $ 19,042.86
10/31/2002 $ 18,466.60 $ 17,348.27 $ 20,718.64
11/30/2002 $ 19,296.70 $ 18,290.28 $ 21,938.96
12/31/2002 $ 18,045.60 $ 17,026.43 $ 20,651.15
1/31/2003 $ 17,516.20 $ 16,612.68 $ 20,110.09
2/28/2003 $ 17,323.70 $ 16,536.26 $ 19,808.44
3/31/2003 $ 17,480.10 $ 16,843.84 $ 20,000.58
4/30/2003 $ 18,562.90 $ 18,088.60 $ 21,648.62
5/31/2003 $ 19,597.50 $ 18,991.22 $ 22,789.51
6/30/2003 $ 19,777.90 $ 19,253.30 $ 23,081.21
7/31/2003 $ 20,283.20 $ 19,732.71 $ 23,487.44
8/31/2003 $ 20,908.80 $ 20,224.05 $ 23,945.45
9/30/2003 $ 20,391.50 $ 20,007.65 $ 23,691.63
10/31/2003 $ 21,642.70 $ 21,132.08 $ 25,032.57
11/30/2003 $ 21,823.10 $ 21,353.97 $ 25,252.86
12/31/2003 $ 22,220.10 $ 22,092.82 $ 26,576.11
1/31/2004 $ 22,352.40 $ 22,543.51 $ 27,065.11
2/29/2004 $ 22,280.30 $ 22,687.79 $ 27,441.31
3/31/2004 $ 22,015.60 $ 22,265.80 $ 27,026.95
4/30/2004 $ 21,402.00 $ 22,007.51 $ 26,602.63
5/31/2004 $ 21,726.90 $ 22,416.85 $ 26,967.08
6/30/2004 $ 21,775.00 $ 22,697.06 $ 27,490.24
7/31/2004 $ 20,896.80 $ 21,414.68 $ 26,580.32
8/31/2004 $ 20,644.10 $ 21,309.75 $ 26,686.64
9/30/2004 $ 21,317.80 $ 21,512.19 $ 26,974.85
10/31/2004 $ 21,714.80 $ 21,847.78 $ 27,387.57
11/30/2004 $ 22,689.30 $ 22,599.34 $ 28,496.77
12/31/2004 $ 23,363.00 $ 23,485.24 $ 29,465.66
1/31/2005 $ 22,857.70 $ 22,703.18 $ 28,746.69
2/28/2005 $ 23,206.60 $ 22,943.83 $ 29,350.37
3/31/2005 $ 22,978.00 $ 22,526.26 $ 28,830.87
4/30/2005 $ 22,376.50 $ 22,098.26 $ 28,283.09
5/31/2005 $ 23,314.90 $ 23,167.81 $ 29,182.49
6/30/2005 $ 23,723.90 $ 23,082.09 $ 29,227.63
7/31/2005 $ 24,722.68 $ 24,210.81 $ 30,314.89
8/31/2005 $ 24,589.17 $ 23,898.49 $ 30,039.03
9/30/2005 $ 25,167.02 $ 24,008.42 $ 30,282.35
10/31/2005 $ 24,469.89 $ 23,775.54 $ 29,776.63
11/30/2005 $ 25,529.44 $ 24,800.26 $ 30,902.19
12/31/2005 $ 25,613.69 $ 24,723.38 $ 30,911.46
1/31/2006 $ 26,394.90 $ 25,158.51 $ 31,730.61
2/28/2006 $ 26,191.66 $ 25,118.26 $ 31,816.28
3/31/2006 $ 26,372.39 $ 25,490.01 $ 32,210.81
4/30/2006 $ 26,251.07 $ 25,454.32 $ 32,642.43
5/31/2006 $ 24,578.88 $ 24,591.42 $ 31,702.33
6/30/2006 $ 24,554.30 $ 24,491.00 $ 31,749.97
Data presented reflects past performance, which is no guarantee of future
results. Current performance may be lower or higher than the performance data
quoted. Performance data current to the most recent month end may be obtained
online at www.citizensfunds.com. Fee waivers have been instituted in the past to
maintain expense limits, without which returns would have been lower. Investment
return and principal value of an investment in the fund will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance figures and the growth of a $10,000 hypothetical
investment assume reinvestment of dividends and distributions but do not reflect
the deduction of taxes you would pay on fund distributions or redemptions of
fund shares.
- --------------------------------------------------------------------------------
during this period. Though we worked to reposition the fund by buying stocks of
larger, more stable companies like Bank of America and Johnson & Johnson, we
were not able to react quickly enough to completely offset the speed and depth
of the decline.
The energy and industrial sectors contributed the most to the fund's gains for
the year (2.02% and 1.72%, respectively). Stock selection within these two
sectors also had a positive impact on fund performance. The fund favored the
types of companies that have typically performed well during
11 CITIZENS CORE GROWTH FUND
the latter stages of an economic growth cycle. This included stocks in the
industrial and information technology sectors, as well as selected names in the
consumer discretionary sector.
The fund also maintained an overweight position in the industrial and consumer
discretionary sectors. The fund took some profits in the energy sector and
reduced its exposure to the healthcare sector.
Burlington Resources, a natural gas producer, was the largest contributor to
positive performance for the year. The stock price gained 66.38% during the
period the fund held it, which accounted for 1.03% of the fund's annual return.
ConocoPhillips acquired Burlington Resources in December 2005 for $90 a share.
Valero Energy, an oil refiner and gasoline retailer, was another solid
performer, returning 49.08% during the period the fund held it. Valero
contributed 0.64% to the fund's total return for the period. The company
benefited from strong results in its refining operations. Valero also received
Star Site certification from the Occupational Safety and Health Administration
(OSHA) for 10 of its sites' safety programs in 2005. Only 21 out of 149
refineries in the U.S. received this rating.
Fluor Corporation chipped in with a gain of 48.38%. The stock of this large
construction and engineering company accounted for 0.65% of the fund's total
return for the period. The company's 2006 first-quarter earnings jumped 88%. In
addition, the U.S. Equal Employment Opportunity Commission awarded Fluor the
Freedom to Compete Award in recognition of the company's Mentoring Circles
Program.
As discussed above, several stocks that had previously performed well for the
fund declined in the last quarter of the fund's fiscal year. Chico's FAS Inc.,
which had a negative return of 30.61% during the period the fund held it, was
the fund's worst performer for the fiscal year. The stock detracted 0.42% from
the fund's annual return. This clothing retailer for women age 35 and older
suffered from unfavorable comparisons to last year's same-store sales growth. We
believe that Chico's has solid fundamentals and continue to hold a position in
the stock.
Qualcomm Inc., a manufacturer of semiconductors for the wireless industry, had a
negative return of 15.82%, during the period the fund owned the stock. The stock
performed well for the majority of the period,
CITIZENS CORE GROWTH FUND 12
but its stock price declined in the second quarter of 2006, despite an
announcement of higher forecasted profits. Overall, Qualcomm detracted 0.38%
from the fund's annual return.
OUTLOOK
The second half of 2006 could be a challenging time for stocks. Concerns about
how far the Federal Reserve will raise interest rates to combat inflation could
dampen returns. While some investors are fearful that the Fed may go too far and
send the economy into a recession, many have overlooked what could happen if the
Fed fails to contain inflation. We believe that higher inflation poses a bigger
long-term risk to the economy than does higher interest rates. Therefore, we
expect the Fed will raise rates higher by year end.
We expect that companies that have historically performed well during the latter
stages of an economic growth cycle will continue to grow. Annualized Gross
Domestic Product growth will likely slow to a more sustainable rate of 2% to 3%
in the latter part of 2006 and heading into 2007. After uncertainty about
interest rates is resolved, stocks may be poised for solid returns in 2007.
13 CITIZENS CORE GROWTH FUND
CITIZENS EMERGING GROWTH FUND
(PHOTO OF J. MICHAEL GALLIPO AND JONATHAN WHITE)
"WE BELIEVE THE CURRENT TIGHTENING CYCLE IS ALMOST FINISHED, THEREFORE WE ARE
MORE OPTIMISTIC ABOUT STOCK RETURNS ONCE THE CURRENT PERIOD OF UNCERTAINTY IS
PAST."
CO-PORTFOLIO MANAGERS
J. Michael Gallipo, CFA
Jonathan White, CFA
INVESTMENT GOAL
Aggressive growth
INVESTMENT STRATEGY
Invests mainly in stocks of young, growing, medium capitalization companies
INCEPTION DATES
Standard shares 2.08.94
Institutional shares 11.01.99
Administrative shares 2.04.00
RISKS
Growth investing; small- and medium-sized company risks (See pages 7-9 for
important fund risk and benchmark disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
For the one-year period ended June 30, 2006, standard shares of the Citizens
Emerging Growth Fund gained 16.31%. This surpassed the one-year return for the
fund's benchmark, the Russell Midcap Growth Index, which advanced 13.04%.
The fund's holdings in the information technology sector made significant
contributions to the fund's returns. Effective stock selection contributed a
return of 29.31%, accounting for 6.20% of the fund's gains. Within the
industrial sector, strong stock selection also helped this sector return 44.71%
to the fund, accounting for 4.02% of the fund's gains. Industrial stocks
benefited from healthy growth in capital expenditures, Gulf Coast
reconstruction, and spending on equipment for natural resources exploration. A
modest overweight to
CITIZENS EMERGING GROWTH FUND
14
EMERGING GROWTH
CITIZENS EMERGING GROWTH FUND PERFORMANCE (as of 6.30.06)
<Table>
<Caption>
AVERAGE ANNUAL RETURN
Ticker 1 5 10 Since
Share class symbol year years years inception
- ------------------------------------------------------------------------------------
STANDARD SHARES WAEGX 16.31% 0.76% 8.33% 11.56%
INSTITUTIONAL SHARES CEGIX 17.03% 1.40% NA 0.64%
ADMINISTRATIVE SHARES CGRDX 16.70% 1.11% NA -3.94%
</Table>
PERFORMANCE OVER TIME (as of 6.30.06)
This chart shows performance since inception of a $10,000 hypothetical
investment in the fund's Standard shares, compared with the performance over the
same period for the index shown.
(LINE GRAPH)
RUSSELL
EMERGING MIDCAP
GROWTH GROWTH
DATE FUND INDEX
2/8/94 $ 10,000.00 $ 10,000.00
2/28/1994 $ 10,060.00 $ 9,920.00
3/31/1994 $ 9,880.00 $ 9,452.77
4/30/1994 $ 10,010.00 $ 9,430.08
5/31/1994 $ 10,070.00 $ 9,444.23
6/30/1994 $ 9,930.00 $ 9,038.12
7/31/1994 $ 10,140.00 $ 9,288.48
8/31/1994 $ 10,550.00 $ 9,842.07
9/30/1994 $ 10,730.00 $ 9,679.68
10/31/1994 $ 10,910.00 $ 9,847.14
11/30/1994 $ 10,550.00 $ 9,412.88
12/31/1994 $ 10,711.80 $ 9,544.66
1/31/1995 $ 10,711.80 $ 9,659.20
2/28/1995 $ 11,000.50 $ 10,173.07
3/31/1995 $ 11,330.40 $ 10,576.94
4/30/1995 $ 11,381.90 $ 10,665.78
5/31/1995 $ 11,299.40 $ 10,928.16
6/30/1995 $ 12,237.60 $ 11,425.39
7/31/1995 $ 13,248.00 $ 12,144.05
8/31/1995 $ 13,289.20 $ 12,276.42
9/30/1995 $ 13,969.70 $ 12,550.18
10/31/1995 $ 14,196.50 $ 12,232.66
11/30/1995 $ 14,567.60 $ 12,779.46
12/31/1995 $ 15,074.60 $ 12,787.13
1/31/1996 $ 14,969.10 $ 13,013.46
2/26/1996 $ 15,520.00 $ 13,505.37
3/31/1996 $ 15,742.70 $ 13,612.06
4/30/1996 $ 16,938.40 $ 14,269.53
5/31/1996 $ 17,899.60 $ 14,560.63
6/30/1996 $ 17,430.70 $ 14,120.89
7/31/1996 $ 16,750.80 $ 13,025.11
8/30/1996 $ 17,301.80 $ 13,728.47
9/30/1996 $ 18,368.50 $ 14,600.23
10/31/1996 $ 17,524.50 $ 14,429.40
11/30/1996 $ 17,536.20 $ 15,279.30
12/31/1996 $ 17,172.00 $ 15,022.60
1/31/1997 $ 18,031.30 $ 15,686.60
2/28/97 $ 16,877.10 $ 15,341.50
3/31/1997 $ 15,453.50 $ 14,474.70
4/30/1997 $ 15,953.70 $ 14,829.33
5/31/1997 $ 17,415.70 $ 16,158.04
6/30/1997 $ 18,133.90 $ 16,605.62
7/31/1997 $ 20,262.70 $ 18,194.78
8/29/1997 $ 19,839.50 $ 18,016.47
09/30/97 $ 20,980.90 $ 18,928.10
10/31/1997 $ 19,608.70 $ 17,979.80
11/29/1997 $ 19,467.60 $ 18,168.59
12/31/1997 $ 20,209.00 $ 18,406.60
1/31/1998 $ 20,057.70 $ 18,075.28
2/28/1998 $ 22,133.60 $ 19,774.36
3/31/1998 $ 24,140.80 $ 20,602.90
4/30/1998 $ 23,852.10 $ 20,883.10
5/31/1998 $ 22,669.80 $ 20,024.81
6/30/1998 $ 24,127.00 $ 20,591.51
7/31/1998 $ 23,783.30 $ 19,710.19
8/31/1998 $ 19,191.60 $ 15,947.52
9/30/1998 $ 21,212.50 $ 17,153.15
10/31/1998 $ 23,164.70 $ 18,415.62
11/30/1998 $ 25,061.90 $ 19,658.68
12/31/1998 $ 28,839.60 $ 21,695.32
1/31/1999 $ 29,367.50 $ 22,346.17
2/28/1999 $ 27,044.70 $ 21,253.45
3/31/1999 $ 28,447.50 $ 22,437.26
4/30/1999 $ 29,141.30 $ 23,460.40
5/31/1999 $ 28,975.40 $ 23,157.76
6/30/1999 $ 32,836.80 $ 24,774.18
7/31/1999 $ 33,198.80 $ 23,986.36
8/31/1999 $ 33,636.20 $ 23,736.90
9/30/1999 $ 34,028.30 $ 23,535.14
10/31/1999 $ 38,855.10 $ 25,354.40
11/30/1999 $ 42,309.20 $ 27,981.12
12/31/1999 $ 48,475.20 $ 32,824.65
1/31/2000 $ 46,724.80 $ 32,818.08
2/29/2000 $ 58,566.80 $ 39,716.44
3/31/2000 $ 59,656.30 $ 39,756.16
4/30/2000 $ 59,495.60 $ 35,895.84
5/31/2000 $ 53,547.80 $ 33,279.03
6/30/2000 $ 59,781.40 $ 36,809.94
7/31/2000 $ 56,512.80 $ 34,479.87
8/31/2000 $ 62,103.30 $ 39,679.43
9/30/2000 $ 59,942.10 $ 37,739.11
10/31/2000 $ 57,888.10 $ 35,157.75
11/30/2000 $ 46,885.60 $ 27,517.97
12/31/2000 $ 48,163.60 $ 28,968.17
1/31/2001 $ 46,957.10 $ 30,622.25
2/28/2001 $ 40,853.90 $ 25,324.60
3/31/2001 $ 36,406.50 $ 21,700.65
4/30/2001 $ 39,339.90 $ 25,318.15
5/31/2001 $ 38,464.60 $ 25,199.16
6/30/2001 $ 37,352.80 $ 25,211.75
7/31/2001 $ 35,010.80 $ 23,509.96
8/31/2001 $ 32,881.80 $ 21,805.49
9/30/2001 $ 26,967.80 $ 18,201.04
10/31/2001 $ 28,883.90 $ 20,113.97
11/30/2001 $ 31,651.70 $ 22,280.25
12/31/2001 $ 32,290.40 $ 23,126.90
1/31/2002 $ 32,314.10 $ 22,375.27
2/28/2002 $ 30,658.10 $ 21,106.59
3/31/2002 $ 33,402.20 $ 22,717.03
4/30/2002 $ 31,675.30 $ 21,515.30
5/31/2002 $ 30,539.90 $ 20,874.14
6/30/2002 $ 27,961.40 $ 18,569.64
7/31/2002 $ 25,903.30 $ 16,764.67
8/31/2002 $ 25,170.00 $ 16,705.99
9/30/2002 $ 23,395.80 $ 15,377.86
10/31/2002 $ 24,010.80 $ 16,569.65
11/30/2002 $ 24,980.70 $ 17,867.05
12/31/2002 $ 23,017.30 $ 16,787.88
1/31/2003 $ 22,473.20 $ 16,623.36
2/28/2003 $ 22,567.80 $ 16,478.74
3/31/2003 $ 22,378.60 $ 16,785.24
4/30/2003 $ 23,821.60 $ 17,928.32
5/31/2003 $ 25,501.10 $ 19,653.02
6/30/2003 $ 25,926.90 $ 19,934.06
7/31/2003 $ 26,707.60 $ 20,645.71
8/31/2003 $ 28,671.00 $ 21,783.28
9/30/2003 $ 27,582.90 $ 21,360.69
10/31/2003 $ 29,499.00 $ 23,082.36
11/30/2003 $ 29,972.10 $ 23,700.97
12/31/2003 $ 30,279.60 $ 23,959.31
1/31/2004 $ 30,989.30 $ 24,749.96
2/29/2004 $ 31,107.60 $ 25,165.76
3/31/2004 $ 30,894.70 $ 25,117.95
4/30/2004 $ 29,830.20 $ 24,409.62
5/31/2004 $ 30,516.20 $ 24,985.69
6/30/2004 $ 30,776.40 $ 25,382.96
7/31/2004 $ 28,789.30 $ 23,702.61
8/31/2004 $ 28,363.50 $ 23,411.07
9/30/2004 $ 29,522.70 $ 24,284.30
10/31/2004 $ 30,587.20 $ 25,107.54
11/30/2004 $ 31,746.30 $ 26,403.09
12/31/2004 $ 32,787.20 $ 27,667.80
1/31/2005 $ 31,462.40 $ 26,926.30
2/28/2005 $ 32,645.20 $ 27,607.53
3/31/2005 $ 32,385.00 $ 27,204.46
4/30/2005 $ 30,918.40 $ 26,127.17
5/31/2005 $ 32,976.40 $ 27,624.25
6/30/2005 $ 33,354.90 $ 28,138.06
7/31/2005 $ 34,585.70 $ 29,781.33
8/31/2005 $ 34,066.91 $ 29,599.66
9/30/2005 $ 34,492.75 $ 29,981.50
10/31/2005 $ 34,113.33 $ 29,100.04
11/30/2005 $ 36,146.48 $ 30,680.17
12/31/2005 $ 36,786.27 $ 31,017.66
1/31/2006 $ 39,626.17 $ 32,875.61
2/28/2006 $ 39,269.54 $ 32,471.24
3/31/2006 $ 41,115.21 $ 33,377.19
4/30/2006 $ 41,801.83 $ 33,517.37
5/31/2006 $ 38,583.09 $ 31,938.71
6/30/2006 $ 38,795.30 $ 31,811.27
Data presented reflects past performance, which is no guarantee of future
results. Current performance may be lower or higher than the performance data
quoted. Performance data current to the most recent month end may be obtained
online at www.citizensfunds.com. Fee waivers have been instituted in the past to
maintain expense limits, without which returns would have been lower. Investment
return and principal value of an investment in the fund will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance figures and the growth of a $10,000 hypothetical
investment assume reinvestment of dividends and distributions but do not reflect
the deduction of taxes you would pay on fund distributions or redemptions of
fund shares.
- --------------------------------------------------------------------------------
the financial sector, with an emphasis on non-bank financial companies such as
asset managers and insurers, made a positive contribution. With interest rates
rising, the housing market cooling, and gasoline prices higher, the consumer
discretionary sector faced stiff headwinds and had a negative return of 1.70%
during the fund's fiscal year. However, the fund benefited from an underweight
in this sector compared to the Russell Midcap Growth Index.
In the last two months of the fund's fiscal year, concerns about inflation, the
possibility of slowing growth and rising interest rates in the U.S. and
CITIZENS EMERGING GROWTH FUND
15
internationally, caused a shift in market sentiment. A number of the stocks that
had performed most strongly for the fund in the first quarter of the fiscal year
gave back some of those gains toward the end of the fiscal year, despite the
fact that the underlying business fundamentals of these companies remained
strong. In response to this shift in market sentiment, we added a few more core
growth stocks, better-established companies growing at reliable rates and
trading at reasonable valuations. One such example is Campbell Soup Company,
which the fund added toward the end of the fiscal year.
Consumer electronics retailer Apple Computer, Inc. was the largest contributor
to positive performance for the period. The stock price returned 55.58% during
the period the fund held it, which accounted for 1.72% of the fund's annual
return. The company benefited from robust sales of its iPod music player. We
believe that Apple's current product cycle is maturing and have reduced our
exposure to the stock in recent weeks.
All computers and peripherals manufactured by Apple are certified EnergyStar
compliant. Apple dramatically reduced energy consumption by using more efficient
microchips and processors, sometimes by as much as 87%. Apple Computer also
conducts environmental audits of its supply chain to ensure prohibited toxic
chemicals are not used during the manufacturing process, as well as to conduct
other environmental evaluations. The company is working with its suppliers to
develop viable alternatives to chemicals where there are currently no non-toxic
solutions. Apple is using alternative materials, like aluminum and
polycarbonate, to dramatically reduce the use of toxins.
MEMC Electronic Materials was another standout performer, returning nearly
137.79% during the period the fund held it. This accounted for 1.59% of the
fund's annual gain. This company manufactures silicon wafers, a key component in
semiconductors that are being used in more places than ever, such as digital
cameras, cars, and cell phones. The company, a supplier of polysilicon to solar
panel manufacturers, is also benefiting from growth in this market. In addition,
eight of the company's nine manufacturing facilities are ISO 14001 certified,
and the company has an environmental management system in place.
Intuitive Surgical, a manufacturer of surgical robots for prostate surgery,
advanced 146.57% during the period the fund owned the stock. This
CITIZENS EMERGING GROWTH FUND
16
accounted for 1.45% of the fund's annual return. While richly valued, this
stock's advance demonstrated that even expensive stocks can grow into their
valuations when their growth prospects are positive.
Choice Hotels International, Inc., which operates mid-priced hotel chains such
as Clarion, Comfort Inn, and Econo Lodge, gained 84.47% during the period the
fund owned the stock. This accounted for 0.85% of the fund's annual return. The
company has benefited from a strong diversity record and policies. It operates a
Diversity Committee that seeks to assist female-and minority-owned suppliers and
service providers.
Jabil Circuit, Inc. was the largest detractor from the fund's performance during
the fiscal year. The stock had a negative return to the fund of 16.69% and
detracted 0.48% from the fund's annual return. Jabil Circuit is a contract
manufacturer that had been executing well until the company experienced an
operational misstep in the most recent quarter ended June 30. This material
change in the company's operating conditions caused us to exit our position in
Jabil Circuit.
Toll Brothers, Inc., a builder of high-end homes, had a negative return of
49.64%, detracting 0.45% from the fund's annual return. Higher mortgage rates
have had a negative impact on the demand for new homes and Toll Brothers'
affluent clientele was not immune to these pressures. The fund no longer owns
shares of Toll Brothers or any other homebuilder.
OUTLOOK
The next several months could be a challenging time for stocks. The Federal
Reserve is at a delicate point in its process of raising interest rates. It is
attempting to balance going too far in raising interest rates and negatively
impacting economic growth against not going far enough and allowing inflation,
which has so far been largely contained to raw materials, to become a more
extensive problem. But regardless of the exact end point, we believe the current
tightening cycle is almost finished; therefore, we are more optimistic about
stock returns once the current period of uncertainty is past.
We believe annualized Gross Domestic Product growth will come down to a more
sustainable rate of 2% to 3% toward the end of 2006. We believe stocks may be
poised for solid returns in 2007 after uncertainty about interest rates is
resolved.
CITIZENS EMERGING GROWTH FUND
17
CITIZENS SMALL CAP CORE GROWTH FUND
(PHOTOGRAPH OF J. MICHAEL GALLIPO,SOPHIA COLLIER, AND JONATHAN WHITE)
"FOR THE PAST SEVERAL YEARS, SMALL-CAP STOCKS HAVE
OUTPERFORMED LARGE-CAP STOCKS. IF THE ECONOMY
CONTINUES TO EXPAND AT A SOLID PACE AND SMALL-CAP
COMPANIES CONTINUE TO INNOVATE, WE EXPECT THAT THIS
TREND WILL CONTINUE."
CO - PORTFOLIO MANAGERS
J. Michael Gallipo, CFA
Sophia Collier
Jonathan White, CFA
INVESTMENT GOAL
Capital appreciation
INVESTMENT STRATEGY
Invests mainly in stocks of small-capitalization U.S. companies
INCEPTION DATE
Standard shares 12.28.99
RISKS
Growth risks; small- and medium-sized company risks (See pages 7-9 for important
fund risk and benchmark disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
For the one-year period ended June 30, 2006, the Citizens Small Cap Core Growth
Fund gained 13.45%, slightly less than its benchmark, the Russell 2000 Growth
Index, which advanced 14.58% for the same period.
An overweighting in industrial stocks helped drive portfolio returns for the
one-year period. The fund maintained an average weighting of 19.47% in
industrial stocks, versus the Russell 2000 Growth Index's weighting of 14.86%.
This overweighting, along with positive stock selection within the sector,
contributed a total return to the fund of 41.25%, accounting for 6.71% of the
fund's gains for the period.
Strong stock selection among energy stocks also helped the fund, accounting for
6.02% of its annual return. Early in the fund's fiscal
CITIZENS SMALL CAP CORE GROWTH FUND
18
SMALL CAP CORE GROWTH
CITIZENS SMALL CAP CORE GROWTH FUND PERFORMANCE (as of 6.30.06)
<Table>
<Caption>
Ticker 1 3 5 Since
Share class symbol year years years inception
- ----------------------------------------------------------------------------
STANDARD SHARES CSCSX 13.45% 14.64% 6.53% 4.22%
</Table>
PERFORMANCE OVER TIME (as of 6.30.06)
This chart shows performance since inception of a $10,000 hypothetical
investment in the fund's Standard shares, compared with the performance over the
same period for the index shown.
(LINE GRAPH)
SMALL
CAP CORE RUSSELL 2000
GROWTH GROWTH
DATE FUND INDEX
12/28/99 $ 10,000.00 $10,000.00
12/31/1999 $ 10,000.00 $ 10,522.00
1/31/2000 $ 9,710.00 $ 10,424.15
2/29/2000 $ 10,500.00 $12,849.84
3/31/2000 $ 10,800.00 $ 11,499.33
4/30/2000 $ 10,440.00 $ 10,337.89
5/31/2000 $ 10,190.00 $ 9,432.29
6/30/2000 $ 11,230.00 $ 10,650.95
7/31/2000 $ 10,770.00 $ 9,738.16
8/31/2000 $ 11,620.00 $ 10,762.61
9/30/2000 $ 10,760.00 $ 10,227.71
10/31/2000 $ 10,480.00 $ 9,397.22
11/30/2000 $ 8,940.00 $ 7,690.69
12/31/2000 $ 9,386.60 $ 8,161.36
1/31/2001 $ 10,278.20 $ 8,821.61
2/28/2001 $ 9,066.00 $ 7,612.17
3/31/2001 $ 8,455.40 $ 6,920.22
4/30/2001 $ 9,086.60 $ 7,767.26
5/31/2001 $ 9,206.80 $ 7,947.46
6/30/2001 $ 9,537.40 $ 8,164.42
7/31/2001 $ 9,226.80 $ 7,468.00
8/31/2001 $ 9,046.50 $ 7,001.99
9/30/2001 $ 8,024.60 $ 5,871.87
10/31/2001 $ 8,635.80 $ 6,436.75
11/30/2001 $ 9,537.40 $ 6,974.22
12/31/2001 $ 10,208.60 $ 7,408.71
1/31/2002 $ 10,298.80 $ 7,144.96
2/28/2002 $ 9,938.10 $ 6,682.68
3/31/2002 $ 10,298.80 $ 7,263.40
4/30/2002 $ 10,238.70 $ 7,106.52
5/31/2002 $ 9,597.50 $ 6,690.78
6/30/2002 $ 9,196.80 $ 6,123.41
7/31/2002 $ 7,944.50 $ 5,182.24
8/31/2002 $ 7,884.40 $ 5,179.65
9/30/2002 $ 7,493.70 $ 4,805.68
10/31/2002 $ 7,734.10 $ 5,048.84
11/30/2002 $ 8,405.30 $ 5,549.18
12/31/2002 $ 7,613.90 $ 5,166.29
1/31/2003 $ 7,383.50 $ 5,025.77
2/28/2003 $ 7,343.40 $ 4,891.58
3/31/2003 $ 7,383.50 $ 4,965.44
4/30/2003 $ 7,884.40 $ 5,435.17
5/31/2003 $ 8,525.60 $ 6,047.72
6/30/2003 $ 8,685.80 $ 6,164.44
7/31/2003 $ 9,246.90 $ 6,630.47
8/31/2003 $ 9,978.20 $ 6,986.53
9/30/2003 $ 9,347.00 $ 6,809.77
10/31/2003 $ 10,358.90 $ 7,398.13
11/30/2003 $ 10,539.20 $ 7,639.31
12/31/2003 $ 10,599.30 $ 7,673.69
1/31/2004 $ 11,270.60 $ 8,076.56
2/29/2004 $ 11,230.50 $ 8,064.44
3/31/2004 $ 11,140.30 $ 8,102.34
4/30/2004 $ 10,409.00 $ 7,695.61
5/31/2004 $ 10,549.20 $ 7,848.75
6/30/2004 $ 10,859.80 $ 8,110.11
7/31/2004 $ 9,858.00 $ 7,381.82
8/31/2004 $ 9,687.70 $ 7,223.11
9/30/2004 $ 10,248.70 $ 7,622.55
10/31/2004 $ 10,519.20 $ 7,807.78
11/30/2004 $ 11,020.10 $ 8,467.54
12/31/2004 $ 11,313.60 $ 8,771.52
1/31/2005 $ 11,082.90 $ 8,376.80
2/28/2005 $ 11,303.10 $ 8,491.57
3/31/2005 $ 11,061.90 $ 8,173.13
4/30/2005 $ 10,621.60 $ 7,653.32
5/31/2005 $ 11,376.50 $ 8,192.88
6/30/2005 $ 11,533.80 $ 8,457.51
7/31/2005 $ 12,058.59 $ 9,048.69
8/31/2005 $ 11,796.92 $ 8,921.10
9/30/2005 $ 11,891.29 $ 8,991.58
10/31/2005 $ 11,576.17 $ 8,658.89
11/30/2005 $ 12,152.67 $ 9,148.99
12/31/2005 $ 12,236.52 $ 9,135.26
1/31/2006 $ 13,368.40 $ 10,016.81
2/28/2006 $ 13,106.38 $ 9,963.73
3/31/2006 $ 13,798.39 $ 10,447.96
4/30/2006 $ 13,850.83 $ 10,417.66
5/31/2006 $ 13,043.32 $ 9,684.26
6/30/2006 $ 13,085.06 $ 9,690.62
Data presented reflects past performance, which is no guarantee of future
results. Current performance may be lower or higher than the performance data
quoted. Performance data current to the most recent month end may be obtained
online at www.citizensfunds.com. Fee waivers have been instituted in the past to
maintain expense limits, without which returns would have been lower. Investment
return and principal value of an investment in the fund will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance figures and the growth of a $10,000 hypothetical
investment assume reinvestment of dividends and distributions but do not reflect
the deduction of taxes you would pay on fund distributions or redemptions of
fund shares.
- --------------------------------------------------------------------------------
year, the fund maintained an overweighting in energy stocks. However, the fund
has since reduced its exposure to the energy sector to be more in line with the
Russell 2000 Growth Index. In the financial sector, the fund avoided bank stocks
in favor of asset managers and other types of specialty finance companies. This
sector advanced 19.91%, accounting for 1.59% of the fund's annual return. While
the fund maintained an underweighting in healthcare stocks (14.00% versus 20.25%
for the Russell 2000 Growth Index), poor stock selection within this sector hurt
the fund's performance. Healthcare stocks posted a negative return of 11.20% to
the fund and reduced the fund's annual return for the year by 1.82%.
CITIZENS SMALL CAP CORE GROWTH FUND
19
RPC, Inc., a provider of oilfield services and equipment primarily to oil and
gas companies, was the largest contributor to positive performance during the
period the fund held it. The stock gained 115.25% for the fund, which accounted
for 2.09% of its annual return. The fund sold its RPC, Inc. shares after the end
of the fiscal year.
Manitowoc Company was another solid performer, returning 116.97% during the
period the fund held it. This accounted for 1.93% of the fund's annual return.
The company, which manufactures industrial cranes and related products, is
benefiting from a strong global economy and Gulf Coast reconstruction efforts.
Quality Systems Inc., a developer of proprietary healthcare information systems
that automate medical and dental group practices, also posted strong returns.
Growing demand for the company's services propelled its stock to a 55.42% gain
for the fund, accounting for 1.15% of the fund's annual return.
AMERIGROUP, which declined 22.79% during the period the fund held it, was the
fund's worst performer. The stock detracted 1.00% from the fund's annual return.
This multi-state managed healthcare company provides healthcare services through
contracts with primary care physicians, specialists, hospitals, and ancillary
providers. The company missed earnings estimates in two consecutive quarters,
causing a significant drop in its share price. We have since sold all shares of
the stock. Jos. A. Bank, a men's clothing retailer, lost 30.83% for the fund,
detracting 0.68% from the fund's annual return. We bought the stock based on the
belief that its strong sales growth would continue. However, expanding
inventories and markdowns caused the company to miss quarterly earnings
estimates. The fund exited its position in Jos. A. Bank.
OUTLOOK
For the past several years, small-cap stocks have outperformed large-cap stocks.
If the economy continues to expand at a solid pace and small-cap companies
continue to innovate, we expect that this trend will continue. However, if
concerns about interest rates accelerate or runaway inflation causes a
significant decline in the stock market, investors could start to favor more
defensive large-cap stocks. This is what occurred during the fourth quarter of
the fund's fiscal year (April-June 2006) when the Russell 2000 Growth Index
declined 7.25%, versus a decline of only 1.44% for the S&P 500 Index.
CITIZENS SMALL CAP CORE GROWTH FUND 20
We expect the Fed will raise the federal funds rate and then pause to evaluate
whether additional increases are necessary to fight inflation. Until the Fed
stops raising rates, the stock market and small-cap stocks in particular could
experience more volatility. However, we expect that uncertainty about the Fed's
ultimate target for the federal funds rate will be resolved later this year. In
2007, we believe that a strong global economy will help stocks post solid
returns. We will continue to be highly selective in our stock selection, seeking
industry leaders that should perform well despite near-term uncertainty.
21 CITIZENS SMALL CAP CORE GROWTH FUND
CITIZENS VALUE FUND
(PHOTO OF SOPHIA COLLIER)
"DOWNTURNS ARE GOLDEN PERIODS FOR VALUE-ORIENTED INVESTORS BECAUSE GREAT STOCKS
GO ON SALE."
PORTFOLIO MANAGER
Sophia Collier
INVESTMENT GOAL
Long-term capital appreciation
INVESTMENT STRATEGY
Invests mainly in stocks and other equities of U.S. large-capitalization
companies
INCEPTION DATE
Standard shares 6.13.96
Institutional shares 3.31.06
RISKS
Value risks (See pages 7-9 for important fund risk and benchmark disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
For the one-year period ended June 30, 2006, standard shares of Citizens Value
Fund gained 9.83%. This outpaced the S&P 500 Index, which advanced 8.63%.
Outperformance was the result of good stock selection in the industrials,
materials, technology and energy sectors. Poor stock selection in consumer
staples, notably Avon Products, detracted from performance.
The fund's strategy is to seek companies that are selling at a relative discount
to peer companies within the same industry, with a particular focus on companies
where management is actively seeking to improve fundamental performance. The
fund also looks for stocks where another macro catalyst, such as an improving
economic climate or product cycle, is present. The
CITIZENS VALUE FUND
22
VALUE
CITIZENS VALUE FUND PERFORMANCE (as of 6.30.06)
<Table>
<Caption>
AVERAGE ANNUAL RETURN
Ticker 1 5 10 Since
Share class symbol year years years inception
- --------------------------------------------------------------------------------
STANDARD SHARES MYPVX 9.83% -1.33% 8.40% 8.07%
INSTITUTIONAL SHARES CVALX NA NA NA -0.70%*
</Table>
* Aggregate return.
PERFORMANCE OVER TIME (as of 6.30.06)
This chart shows performance since inception of a $10,000 hypothetical
investment in the fund's Standard shares, compared with the performance over the
same period for the index shown.
(LINE GRAPH)
DATE VALUE FUND S&P 500 INDEX
6/13/96 $10,000.00 $ 10,000.00
6/30/1996 $ 9,740.00 $ 10,038.00
7/31/1996 $ 9,220.00 $ 9,594.32
8/30/1996 $ 9,500.00 $ 9,796.76
9/30/1996 $ 9,910.00 $ 10,348.32
10/31/1996 $ 9,890.00 $ 10,633.93
11/30/1996 $10,880.00 $ 11,437.86
12/31/1996 $10,810.00 $ 11,211.39
1/31/1997 $11,330.00 $ 11,912.10
2/28/97 $11,660.00 $ 12,005.01
3/31/1997 $11,240.00 $ 11,511.61
4/30/1997 $11,380.00 $ 12,198.85
5/31/1997 $12,230.00 $ 12,941.76
6/30/1997 $12,350.00 $ 13,521.55
7/31/1997 $13,470.00 $ 14,597.87
8/29/1997 $13,210.00 $ 13,780.39
09/30/97 $13,580.00 $ 14,535.55
10/31/1997 $12,830.00 $ 14,050.06
11/29/1997 $12,900.00 $ 14,700.58
12/31/1997 $13,165.70 $ 14,953.43
1/31/1998 $13,472.40 $ 15,119.42
2/28/1998 $14,358.50 $ 16,209.52
3/31/1998 $14,778.80 $ 17,039.45
4/30/1998 $15,074.10 $ 17,211.55
5/31/1998 $14,744.70 $ 16,915.51
6/30/1998 $14,506.10 $ 17,602.28
7/31/1998 $14,063.10 $ 17,415.70
8/31/1998 $11,564.00 $ 14,897.39
9/30/1998 $12,302.40 $ 15,852.31
10/31/1998 $13,449.70 $ 17,141.10
11/30/1998 $14,562.90 $ 18,179.85
12/31/1998 $14,957.00 $ 19,227.01
1/31/1999 $14,714.40 $ 20,030.70
2/28/1999 $14,083.60 $ 19,407.75
3/31/1999 $14,944.90 $ 20,184.06
4/30/1999 $16,509.70 $ 20,965.18
5/31/1999 $17,019.20 $ 20,470.40
6/30/1999 $17,892.60 $ 21,606.51
7/31/1999 $17,819.80 $ 20,932.39
8/31/1999 $17,237.50 $ 20,829.82
9/30/1999 $16,606.80 $ 20,259.08
10/31/1999 $16,897.90 $ 21,541.48
11/30/1999 $18,648.20 $ 21,978.77
12/31/1999 $19,195.50 $ 23,273.32
1/31/2000 $18,728.30 $ 22,105.00
2/29/2000 $18,020.80 $ 21,687.22
3/31/2000 $19,422.50 $ 23,808.23
4/30/2000 $18,808.40 $ 23,091.60
5/31/2000 $19,462.50 $ 22,618.22
6/30/2000 $19,208.90 $ 23,176.89
7/31/2000 $18,875.20 $ 22,815.33
8/31/2000 $20,784.00 $ 24,232.16
9/30/2000 $19,929.70 $ 22,952.71
10/31/2000 $20,036.50 $ 22,856.31
11/30/2000 $18,515.40 $ 21,055.23
12/31/2000 $19,160.70 $ 21,158.40
1/31/2001 $22,617.90 $ 21,909.52
2/28/2001 $20,820.20 $ 19,911.37
3/31/2001 $20,174.80 $ 18,648.99
4/30/2001 $22,341.40 $ 20,098.02
5/31/2001 $23,493.80 $ 20,232.68
6/30/2001 $23,324.70 $ 19,741.02
7/31/2001 $22,848.40 $ 19,547.56
8/31/2001 $21,404.10 $ 18,323.88
9/30/2001 $19,283.60 $ 16,843.31
10/31/2001 $19,529.50 $ 17,165.02
11/30/2001 $21,818.90 $ 18,481.58
12/31/2001 $21,730.10 $ 18,644.22
1/31/2002 $20,771.20 $ 18,372.01
2/28/2002 $18,887.60 $ 18,017.43
3/31/2002 $19,949.30 $ 18,694.89
4/30/2002 $17,997.10 $ 17,561.98
5/31/2002 $17,483.40 $ 17,432.02
6/30/2002 $14,966.20 $ 16,190.86
7/31/2002 $13,082.60 $ 14,929.59
8/31/2002 $13,271.00 $ 15,028.12
9/30/2002 $11,336.00 $ 13,394.57
10/31/2002 $12,860.00 $ 14,573.29
11/30/2002 $14,178.50 $ 15,431.66
12/31/2002 $12,928.50 $ 14,525.82
1/31/2003 $12,740.10 $ 14,145.24
2/28/2003 $12,397.60 $ 13,933.06
3/31/2003 $12,500.40 $ 14,068.21
4/30/2003 $13,527.80 $ 15,227.43
5/31/2003 $14,743.60 $ 16,029.92
6/30/2003 $14,795.00 $ 16,235.10
7/31/2003 $15,120.30 $ 16,520.84
8/31/2003 $15,599.80 $ 16,843.00
9/30/2003 $15,308.70 $ 16,664.46
10/31/2003 $16,319.00 $ 17,607.67
11/30/2003 $16,610.10 $ 17,762.62
12/31/2003 $17,260.80 $ 18,693.38
1/31/2004 $17,500.50 $ 19,037.34
2/29/2004 $17,825.90 $ 19,301.96
3/31/2004 $17,791.70 $ 19,010.50
4/30/2004 $17,363.60 $ 18,712.03
5/31/2004 $17,603.30 $ 18,968.39
6/30/2004 $17,997.10 $ 19,336.37
7/31/2004 $17,209.40 $ 18,696.34
8/31/2004 $17,089.60 $ 18,771.12
9/30/2004 $17,603.30 $ 18,973.85
10/31/2004 $17,808.80 $ 19,264.15
11/30/2004 $18,647.80 $ 20,044.35
12/31/2004 $19,230.10 $ 20,725.86
1/31/2005 $18,767.70 $ 20,220.15
2/28/2005 $19,521.20 $ 20,644.77
3/31/2005 $19,264.30 $ 20,279.36
4/30/2005 $18,716.30 $ 19,894.05
5/31/2005 $19,555.40 $ 20,526.68
6/30/2005 $19,863.60 $ 20,555.42
7/31/2005 $20,960.07 $ 21,320.08
8/31/2005 $20,788.20 $ 21,126.07
9/30/2005 $20,942.03 $ 21,297.19
10/31/2005 $20,085.50 $ 20,941.53
11/30/2005 $20,788.49 $ 21,733.12
12/31/2005 $20,755.23 $ 21,739.64
1/31/2006 $21,612.42 $ 22,315.74
2/28/2006 $21,647.00 $ 22,375.99
3/31/2006 $21,937.07 $ 22,653.45
4/30/2006 $22,467.95 $ 22,957.01
5/31/2006 $21,697.30 $ 22,295.84
6/30/2006 $21,816.19 $ 22,332.35
Data presented reflects past performance, which is no guarantee of future
results. Current performance may be lower or higher than the performance data
quoted. Performance data current to the most recent month end may be obtained
online at www.citizensfunds.com. Fee waivers are currently in effect and have
been instituted in the past to maintain expense limits, without which returns
would have been lower. Investment return and principal value of an investment in
the fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Performance figures and the growth
of a $10,000 hypothetical investment assume reinvestment of dividends and
distributions but do not reflect the deduction of taxes you would pay on fund
distributions or redemptions of fund shares.
- --------------------------------------------------------------------------------
confluence of an inexpensive stock, motivated management, and a favorable macro
environment creates strong potential investment prospects, in our experience. We
think of macro catalysts as "themes" and we will often identify multiple
companies across several sectors that can potentially benefit from themes we
have identified.
Our top contributors for the fiscal year show where this strategy has worked
well. MEMC Electronic Materials gained 137.79% during the period that the fund
owned it. This accounted for 1.29% of the fund's annual
CITIZENS VALUE FUND
23
return. MEMC manufactures silicon wafers, a key component in semiconductors that
are being used in more places than ever, such as digital cameras, cars, and cell
phones.
NuCor Corporation, an operator of energy-efficient mini-mill steel plants,
benefited from corporate restructuring efforts, strong global growth, and energy
efficiency. The stock gained 137.83% during the period the fund held it,
accounting for 1.27% of the fund's annual gain.
Two transportation-related companies were also top contributors to the fund.
Norfolk Southern Corporation stock sold at approximately 1.5 times book value at
the start of the fund's fiscal year and was the most inexpensive of the large
rail operators. The company has benefited from surging demand for coal transport
and its ability to conduct intermodal transport in an energy-efficient manner.
By the end of the fund's fiscal year, Norfolk Southern's stock was trading at
2.2 times book value, and its price had increased 71.90%. This accounted for
1.13% of the fund's annual return.
FedEx Corporation, the global air and ground carrier, continued to successfully
execute on its simple, technology-driven efficiency plans. At the fund's fiscal
year end, it was still trading at a discount relative to its archrival UPS.
Given FedEx stock's lower valuation and execution as compared with UPS, it was
not surprising that its stock appreciated more than UPS, whose stock price
already reflected its strong performance. FedEx stock appreciated 44.25% during
the period the fund owned it, which was more than twice the return of UPS, which
the fund did not own.
In some cases, inexpensive stocks of companies that are undergoing a turnaround
do not rebound as expected. Avon Products, which detracted from the fund's
performance during the fiscal year, is an example. The stock had a negative
return of 18.10% to the fund, which detracted 0.38% from the fund's annual
return.
The development of consumer products markets in the emerging world is an
important theme, and we liked Avon Products for its global franchise and
international expansion opportunities. However, we failed to appreciate the
weakness of the United States market for Avon and the fiscal drag it provided.
In retrospect, we bought the stock too soon and too expensively. In our
experience, a stock's price is a proxy for the expectations imbedded in the
stock. When stock prices fall it is because of
CITIZENS VALUE FUND
24
net selling pressure as investors give up on the company and its prospects. Our
strategy works best when expectations are low and selling pressure has ceased.
When we bought Avon stock it was selling at multi-year lows in terms of
valuation, but clearly investors had high hopes for a quick turnaround based on
the record of Avon's management.
Avon disappointed the Street with a major reduction in its forecast of near-term
and mid-term earnings. Investor confidence fell sharply and so did the stock. We
sold our position and now monitor Avon from the safety of the sidelines.
OUTLOOK
Looking ahead, the big questions are whether the economic cycle reached its
near-term peak, whether inflation has re-emerged, and what the future is for
interest rates. Since the economy is cyclical, eventually we will have a
downturn. Downturns are golden periods for value-oriented investors because
great stocks go on sale. However, if we are too pessimistic in our view and
prematurely place the portfolio in a defensive position while we await a strong
buying opportunity, we may lose the opportunity to gain appreciation from
continued economic growth. We believe that there are more growth opportunities.
While we have started to raise a little bit of cash and take profits in some
companies, we still see opportunities to invest in inexpensive turnaround
situations that are benefiting from expansion-related themes. This could change,
and if so, the portfolio will also change.
We remain very enthusiastic about the investment opportunities in the world in
which we are living. Global growth and innovation are just beginning. We want to
be part of it, but we will do so with care and our focused relative value
strategy.
CITIZENS VALUE FUND
25
CITIZENS GLOBAL EQUITY FUND
(PHOTO OF JONATHAN WHITE, CFA)
"UNCERTAINTY IN MARKETS WORLDWIDE HAS HEIGHTENED OUR ATTENTION TO CONTROLLING
RISK THROUGH POSITION SIZE AND EXPOSURE TO BUSINESS SECTORS AND COUNTRIES."
PORTFOLIO MANAGER
Jonathan White, CFA
INVESTMENT GOAL
Capital appreciation
INVESTMENT STRATEGY
Invests in promising companies throughout the world
INCEPTION DATES
Standard shares 2.08.94
Institutional shares 11.01.99
Administrative shares 2.04.00
RISKS
Growth and foreign investing (See pages 7-9 for important fund risk and
benchmark disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
For the one-year period ended June 30, 2006, standard shares of the Citizens
Global Equity Fund gained 15.57%. This trailed the one-year return for the MSCI
World Index, which advanced 16.93%.
Effective May 1, 2006, Jon White of Citizens Advisers took over responsibility
for the fund's portfolio management from McLean Budden Limited, which had served
as the fund's subadviser. Mr. White, a Chartered Financial Analyst, also serves
as Citizens' Growth Group Leader. He has more than 30 years of experience in
investment management. Before joining Citizens in 2004, he was senior vice
president and chief investment strategist at Banknorth Wealth Management, where
he oversaw the investment process used to manage more than $4 billion of client
assets.
CITIZENS GLOBAL EQUITY FUND
26
GLOBAL EQUITY
CITIZENS GLOBAL EQUITY FUND PERFORMANCE (as of 6.30.06)
<Table>
<Caption>
AVERAGE ANNUAL RETURN
Ticker 1 5 10 Since
Share class symbol year years years inception
- --------------------------------------------------------------------------------
STANDARD SHARES WAGEX 15.57% 0.02% 6.32% 6.70%
INSTITUTIONAL SHARES CGEIX 16.23% 0.63% NA -1.38%
ADMINISTRATIVE SHARES CEADX 15.83% 0.30% NA -7.53%
</Table>
PERFORMANCE OVER TIME (as of 6.30.06)
This chart shows performance since inception of a $10,000 hypothetical
investment in the fund's Standard shares, compared with the performance over the
same period for the index shown.
(LINE GRAPH)
GLOBAL
DATE EQUITY MSCI WORLD
FUND INDEX
2/8/94 $ 10,000.00 $ 10,000.00
2/28/1994 $ 10,000.00 $ 10,089.00
3/31/1994 $ 10,000.00 $ 9,652.15
4/30/1994 $ 10,000.00 $ 9,948.47
5/31/1994 $ 9,880.00 $ 9,971.35
6/30/1994 $ 9,800.00 $ 9,941.43
7/31/1994 $ 9,990.00 $ 10,128.33
8/31/1994 $ 10,070.00 $ 10,431.17
9/30/1994 $ 10,000.00 $ 10,154.74
10/31/1994 $ 10,170.00 $ 10,441.11
11/30/1994 $ 9,680.00 $ 9,985.88
12/31/1994 $ 9,731.40 $ 10,079.74
1/31/1995 $ 9,399.30 $ 9,925.52
2/28/1995 $ 9,640.80 $ 10,067.46
3/31/1995 $ 9,872.30 $ 10,550.70
4/30/1995 $ 10,154.10 $ 10,915.75
5/31/1995 $ 10,617.00 $ 11,006.35
6/30/1995 $ 10,757.90 $ 11,000.85
7/31/1995 $ 11,180.50 $ 11,548.69
8/31/1995 $ 10,778.00 $ 11,288.84
9/30/1995 $ 11,090.00 $ 11,615.09
10/31/1995 $ 10,939.00 $ 11,429.25
11/30/1995 $ 10,918.90 $ 11,823.56
12/31/1995 $ 11,068.60 $ 12,166.44
1/31/1996 $ 11,435.20 $ 12,384.22
2/26/1996 $ 11,384.30 $ 12,457.29
3/31/1996 $ 11,465.80 $ 12,661.59
4/30/1996 $ 11,964.70 $ 12,956.60
5/31/1996 $ 11,964.70 $ 12,965.67
6/30/1996 $ 12,107.30 $ 13,029.21
7/31/1996 $ 11,730.50 $ 12,566.67
8/30/1996 $ 11,924.00 $ 12,708.67
9/30/1996 $ 12,280.40 $ 13,203.04
10/31/1996 $ 12,249.80 $ 13,292.82
11/30/1996 $ 12,677.50 $ 14,034.56
12/31/1996 $ 12,524.80 $ 13,807.20
1/31/1997 $ 13,003.40 $ 13,971.51
2/28/97 $ 13,003.40 $ 14,129.38
3/31/1997 $ 12,881.20 $ 13,846.80
4/30/1997 $ 13,217.20 $ 14,296.82
5/31/1997 $ 14,164.20 $ 15,176.07
6/30/1997 $ 14,734.40 $ 15,930.32
7/31/1997 $ 15,569.40 $ 16,661.52
8/29/1997 $ 14,561.30 $ 15,543.53
09/30/97 $ 15,498.10 $ 16,385.99
10/31/1997 $ 14,428.90 $ 15,520.81
11/29/1997 $ 14,663.10 $ 15,792.43
12/31/1997 $ 15,018.30 $ 15,981.94
1/31/1998 $ 15,346.40 $ 16,424.64
2/28/1998 $ 16,436.60 $ 17,533.30
3/31/1998 $ 16,955.20 $ 18,271.45
4/30/1998 $ 17,293.80 $ 18,446.86
5/31/1998 $ 17,209.20 $ 18,212.58
6/30/1998 $ 17,939.40 $ 18,642.40
7/31/1998 $ 19,273.00 $ 18,608.84
8/31/1998 $ 16,394.20 $ 16,124.56
9/30/1998 $ 16,087.30 $ 16,406.74
10/31/1998 $ 17,071.60 $ 17,886.63
11/30/1998 $ 18,140.50 $ 18,947.31
12/31/1998 $ 19,862.50 $ 19,870.04
1/31/1999 $ 21,121.60 $ 20,303.21
2/28/1999 $ 20,611.40 $ 19,761.11
3/31/1999 $ 21,360.30 $ 20,581.20
4/30/1999 $ 21,316.90 $ 21,390.04
5/31/1999 $ 20,340.10 $20,605.03
6/30/1999 $ 21,946.50 $ 21,563.16
7/31/1999 $ 22,445.70 $ 21,496.31
8/31/1999 $ 22,934.20 $ 21,455.47
9/30/1999 $ 23,672.20 $ 21,245.21
10/31/1999 $ 25,430.50 $ 22,345.71
11/30/1999 $ 29,240.20 $ 22,971.39
12/31/1999 $ 34,578.50 $24,827.48
1/31/2000 $ 34,129.90 $23,402.38
2/29/2000 $ 40,208.90 $23,463.23
3/31/2000 $ 38,706.00 $ 25,082.19
4/30/2000 $ 35,195.40 $ 24,018.70
5/31/2000 $ 32,380.20 $23,408.63
6/30/2000 $ 33,647.60 $ 24,192.82
7/31/2000 $ 33,367.20 $ 23,508.16
8/31/2000 $ 35,049.60 $24,269.83
9/30/2000 $ 32,447.50 $22,976.24
10/31/2000 $ 30,910.90 $ 22,587.95
11/30/2000 $ 27,692.00 $ 21,214.60
12/31/2000 $ 27,881.40 $ 21,554.03
1/31/2001 $ 28,247.00 $ 21,970.02
2/28/2001 $ 24,432.80 $ 20,111.36
3/31/2001 $ 22,044.30 $ 18,786.02
4/30/2001 $ 23,835.70 $ 20,170.55
5/31/2001 $ 23,311.70 $ 19,908.33
6/30/2001 $ 22,312.40 $ 19,281.22
7/31/2001 $ 21,276.60 $ 19,022.85
8/31/2001 $ 20,167.70 $ 18,107.85
9/30/2001 $ 18,193.60 $ 16,510.74
10/31/2001 $ 18,522.60 $ 16,826.10
11/30/2001 $ 19,558.40 $ 17,818.84
12/31/2001 $ 19,789.90 $ 17,929.31
1/31/2002 $ 18,961.30 $ 17,384.26
2/28/2002 $ 18,522.60 $ 17,231.28
3/31/2002 $ 19,302.50 $ 17,989.46
4/30/2002 $ 18,632.30 $ 17,377.82
5/31/2002 $ 18,510.40 $ 17,407.36
6/30/2002 $ 17,328.40 $ 16,348.99
7/31/2002 $ 15,902.60 $ 14,969.14
8/31/2002 $ 15,878.30 $ 14,994.58
9/30/2002 $ 14,306.30 $ 13,343.68
10/31/2002 $ 15,756.40 $ 14,327.11
11/30/2002 $ 16,426.60 $ 15,097.91
12/31/2002 $ 15,549.20 $ 14,364.15
1/31/2003 $ 14,903.40 $ 13,926.04
2/28/2003 $ 14,745.00 $ 13,682.34
3/31/2003 $ 14,416.00 $ 13,637.18
4/30/2003 $ 15,537.10 $ 14,845.44
5/31/2003 $ 16,268.20 $ 15,690.15
6/30/2003 $ 16,317.00 $ 15,960.02
7/31/2003 $ 16,658.20 $ 16,282.41
8/31/2003 $ 17,011.60 $ 16,632.48
9/30/2003 $ 16,706.90 $ 16,732.27
10/31/2003 $ 17,511.20 $ 17,722.83
11/30/2003 $ 17,986.40 $ 17,990.44
12/31/2003 $ 18,900.40 $ 19,118.44
1/31/2004 $ 19,119.70 $ 19,424.34
2/29/2004 $ 19,205.00 $ 19,748.72
3/31/2004 $ 18,729.80 $ 19,618.38
4/30/2004 $ 18,218.00 $ 19,347.65
5/31/2004 $ 18,315.40 $ 19,390.21
6/30/2004 $ 18,498.20 $ 19,787.71
7/31/2004 $ 17,706.20 $ 19,142.63
8/31/2004 $ 17,462.40 $ 19,226.86
9/30/2004 $ 17,657.40 $ 19,590.25
10/31/2004 $ 18,096.10 $ 20,070.21
11/30/2004 $ 18,876.00 $ 21,123.89
12/31/2004 $ 19,546.20 $ 21,930.83
1/31/2005 $ 19,034.40 $ 21,437.38
2/28/2005 $ 19,716.80 $ 22,116.95
3/31/2005 $ 19,375.60 $ 21,690.09
4/30/2005 $ 18,936.90 $ 21,215.08
5/31/2005 $ 19,217.20 $ 21,592.71
6/30/2005 $ 19,326.90 $ 21,780.56
7/31/2005 $ 19,898.98 $ 22,540.70
8/31/2005 $ 20,191.49 $ 22,709.76
9/30/2005 $ 20,496.38 $ 23,300.21
10/31/2005 $ 20,033.16 $22,734.02
11/30/2005 $ 20,630.15 $ 23,491.06
12/31/2005 $ 21,057.20 $ 24,012.56
1/31/2006 $ 21,996.35 $ 25,085.92
2/28/2006 $ 21,716.99 $25,048.30
3/31/2006 $ 22,422.80 $ 25,599.36
4/30/2006 $ 23,238.99 $ 26,377.58
5/31/2006 $ 22,262.95 $ 25,475.46
6/30/2006 $ 22,336.42 $ 25,464.01
Data presented reflects past performance, which is no guarantee of future
results. Current performance may be lower or higher than the performance data
quoted. Performance data current to the most recent month end may be obtained
online at www.citizensfunds.com. Fee waivers have been instituted in the past to
maintain expense limits, without which returns would have been lower. Investment
return and principal value of an investment in the fund will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance figures and the growth of a $10,000 hypothetical
investment assume reinvestment of dividends and distributions but do not reflect
the deduction of taxes you would pay on fund distributions or redemptions of
fund shares.
- --------------------------------------------------------------------------------
During the first 10 months of the fund's fiscal year, the fund's domestic
holdings included several large-cap U.S. stocks, such as Fannie Mae and Boston
Scientific, that the fund's subadviser believed were poised for a turnaround.
When these companies did not rebound as expected, their stocks detracted from
the fund's performance. Within the fund's international holdings, the fund
favored large-cap stocks in developed markets, which underperformed those of
international stocks in emerging markets such as Brazil, whose representative
index of stocks in that country was up 46%, and Russia, whose stock index was up
112%.
CITIZENS GLOBAL EQUITY FUND
27
In the second half of the fund's fiscal year, concerns about inflation and
rising interest rates in the U.S. and overseas caused a shift in market
sentiment. Many investors who had previously focused solely on the potential
returns of stocks began to reconsider the potential risks as well. As a result,
equity markets became more volatile and more stable companies outperformed
higher-risk stocks with extended valuations, particularly those based in
emerging markets. This change played to the fund's strengths.
During the fund's fiscal year, allocations to the financial and industrial
sectors made significant contributions to the fund's returns. Financial sector
stocks gained 29.39% for the fund during the period, accounting for 5.99% of the
fund's annual return. Industrial stocks advanced 41.26%, contributing 4.09% to
the fund's returns. Stock selection within the healthcare and information
technology sectors detracted from the fund's performance. In recent months, the
fund trimmed its holdings in large-cap stocks with weaker fundamentals and added
more high-quality names. The fund also added stocks with lower market
capitalizations. The fund maintained a relatively even balance between domestic
and international stocks, and reduced its exposure to emerging markets.
Deutsche Boerse Group was a standout performer for the fund. The German stock
market operator continued to exceed growth expectations, and ongoing
consolidation within the financial exchange industry helped fuel speculation
about a possible merger.
Valero Energy Corp. was another solid performer. This oil refiner and gasoline
retailer benefited from strong results in its refining operations.
Fluor Corporation, a large construction and engineering company, also posted
strong gains. The company's 2006 first-quarter earnings jumped 88%.
Boston Scientific was a significant detractor from the fund's returns. The
company has experienced performance problems with its heart stents. The fund
sold its position in Boston Scientific before the end of the fiscal year. Intel,
the world's largest semiconductor company, also contributed negative returns.
Market share losses to rival AMD, slower demand for personal computers, and
planned inventory liquidations all weighed heavily on Intel's share price. Weak
performance also spurred the fund to sell all holdings in pharmaceutical
companies Pfizer and Eli Lilly.
CITIZENS GLOBAL EQUITY FUND 28
OUTLOOK
The second half of 2006 could be a challenging time for stocks. Concerns about
how far the Federal Reserve will raise interest rates to combat inflation could
dampen returns. While some investors are fearful that the Fed may go too far and
send the economy into a recession, many have overlooked what could happen if the
Fed fails to contain inflation. We believe that higher inflation poses a bigger
long-term risk to the economy than does higher interest rates. Therefore, we
believe the Fed could raise the target for the federal funds rate higher by year
end.
We believe that annualized GDP growth will slow to a more sustainable rate of 2%
to 3% in the latter part of 2006 and into 2007. We expect that companies that
have historically performed well during the latter stages of an economic growth
cycle will continue to grow. We also expect that once the uncertainty about
interest rates is resolved, domestic stocks should be poised for solid returns
in 2007.
In overseas markets, we do not expect that volatility within emerging markets
will lead to a repeat of the systemic problems experienced in the late 1990s.
Foreign central banks are taking a more measured approach toward their
currencies and are no longer trying to maintain a fixed exchange rate. We do not
expect emerging markets to outperform the way they have over the past couple of
years.
Recent developments in the Middle East raise many uncertainties that have the
potential to cause rapid changes in markets worldwide. This heightens our
attention to controlling risk through position size and exposure to business
sectors and countries.
29 CITIZENS GLOBAL EQUITY FUND
CITIZENS BALANCED FUND
(PHOTO OF ROBERT MAGAN, CFA)
"WE ARE SEEKING TO AUGMENT FIXED-INCOME RETURNS BY FOCUSING ON SHORT-TERM BONDS
WITH HIGHER INCOME LEVELS."
PORTFOLIO MANAGER
Robert Magan, CFA
INVESTMENT GOAL
Current income and capital appreciation
INVESTMENT STRATEGY
Invests in a blend of stocks, bonds and money market securities
INCEPTION DATE
Standard shares 12.20.02
RISKS
Growth and fixed income investing (See pages 7-9 for important fund risk and
benchmark disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
For the one-year period ended June 30, 2006, the Citizens Balanced Fund gained
4.17%. This trailed the fund's benchmark, the Blended Index, which advanced
4.83%. The Blended Index combines 60% of the S&P 500 Index and 40% of the Lehman
Brothers U.S. Aggregate Index. For the one-year period, the S&P 500 gained 8.63%
and the Lehman Brothers U.S. Aggregate Index fell 0.81%.
The Federal Open Market Committee (FOMC) increased its target for the federal
funds rate (a key rate that influences mortgage rates and credit card rates)
eight times during the fund's fiscal year, raising the target rate from 3.25% to
5.25%. Bond prices fell in response, and yields on the 10-year U.S. Treasury
note, a bellwether for long-term interest rates, rose. Bond yields move in the
opposite direction of bond prices, so when prices rise, yields decline.
CITIZENS BALANCED FUND
30
BALANCED
CITIZENS BALANCED FUND PERFORMANCE (as of 6.30.06)
<Table>
<Caption>
AVERAGE ANNUAL RETURN
Ticker 1 3 5 Since
Share class symbol year years years inception
- --------------------------------------------------------------------------------
STANDARD SHARES CFBLX 4.17% 7.70% NA 7.97%
</Table>
PERFORMANCE OVER TIME (as of 6.30.06)
This chart shows performance since inception of a $10,000 hypothetical
investment in the fund's Standard shares, compared with the performance over the
same period for the index shown.
(LINE GRAPH)
DATE BALANCED BLENDED
FUND INDEX
12/20/02 $ 10,000.00 $ 10,000.00
12/31/2002 $ 9,960.00 $ 9,921.00
1/31/2003 $ 9,720.00 $ 9,768.22
2/28/2003 $ 9,700.00 $ 9,734.03
3/31/2003 $ 9,735.30 $ 9,787.56
4/30/2003 $ 10,095.50 $ 10,303.37
5/31/2003 $ 10,465.70 $ 10,706.23
6/30/2003 $ 10,487.30 $ 10,780.10
7/31/2003 $ 10,617.50 $ 10,748.84
8/31/2003 $ 10,807.90 $ 10,903.63
9/30/2003 $ 10,767.30 $ 10,949.42
10/31/2003 $ 11,198.40 $ 11,280.09
11/30/2003 $ 11,368.80 $ 11,350.03
12/31/2003 $ 11,592.30 $ 11,752.96
1/31/2004 $ 11,684.50 $ 11,919.85
2/29/2004 $ 11,766.50 $ 12,071.23
3/31/2004 $ 11,706.10 $ 11,997.60
4/30/2004 $ 11,500.90 $ 11,760.04
5/31/2004 $ 11,624.00 $ 11,837.66
6/30/2004 $ 11,672.90 $ 12,002.20
7/31/2004 $ 11,323.30 $ 11,811.37
8/31/2004 $ 11,302.70 $ 11,930.66
9/30/2004 $ 11,578.70 $ 12,021.34
10/31/2004 $ 11,743.60 $ 12,171.60
11/30/2004 $ 12,073.60 $ 12,428.42
12/31/2004 $ 12,287.40 $ 12,727.95
1/31/2005 $ 12,139.70 $ 12,573.94
2/28/2005 $ 12,308.50 $ 12,703.45
3/31/2005 $ 12,221.70 $ 12,542.12
4/30/2005 $ 12,031.40 $ 12,466.86
5/31/2005 $ 12,412.00 $ 12,758.59
6/30/2005 $ 12,578.40 $ 12,796.87
7/31/2005 $ 12,938.14 $ 13,036.17
8/31/2005 $ 12,970.49 $ 13,032.26
9/30/2005 $ 13,113.16 $ 13,041.38
10/31/2005 $ 12,869.26 $ 12,869.23
11/30/2005 $ 13,261.77 $ 13,184.53
12/31/2005 $ 13,375.82 $ 13,237.27
1/31/2006 $ 13,620.60 $ 13,447.74
2/28/2006 $ 13,525.26 $ 13,488.08
3/31/2006 $ 13,628.05 $ 13,535.29
4/30/2006 $ 13,606.24 $ 13,634.10
5/31/2006 $ 13,019.81 $ 13,392.77
6/30/2006 $ 13,102.92 $ 13,414.95
Data presented reflects past performance, which is no guarantee of future
results. Current performance may be lower or higher than the performance data
quoted. Performance data current to the most recent month end may be obtained
online at www.citizensfunds.com. Fee waivers are currently in effect and have
been instituted in the past to maintain expense limits, without which returns
would have been lower. Investment return and principal value of an investment in
the fund will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Performance figures and the growth
of a $10,000 hypothetical investment assume reinvestment of dividends and
distributions but do not reflect the deduction of taxes you would pay on fund
distributions or redemptions of fund shares.
- --------------------------------------------------------------------------------
At fiscal year end, the fund maintained a slight underweight in stocks of 58.50%
relative to the Citizens Blended Index's neutral weighting of 60%. The remaining
assets were allocated to bonds (35.50%) and short-term cash investments (6.00%).
In recent months, the fund has reduced its exposure to stocks and raised its
allocation to cash investments. This reflected the portfolio manager's cautious
outlook for stocks in the near term.
In the early part of the fiscal year the fixed-income portion of the portfolio
was extremely underweight mortgage backed securities, the largest sector of the
Lehman Brothers U.S. Aggregate Index; it was also the best-performing sector
during that period. At the same time the fund was more heavily weighted in U.S.
corporate bonds, the worst-performing sector of the index
CITIZENS BALANCED FUND
31
during that time. Changes over the course of the remaining period were designed
to more closely align the fixed-income holdings of the fund and the Lehman
index.
Over the course of the fiscal year, the fund's fixed-income assets were
realigned to bring the fund more in line with the asset weightings in the Lehman
Brothers U.S. Aggregate Index. In particular the fund increased its allocation
to mortgage-backed securities, which return principal each month that can be
reinvested at higher interest rates, while reducing its exposure to corporate
bonds, the riskier asset class in the portfolio. The fund also reduced the
average maturity of its bond portfolio by favoring bonds with shorter
maturities. These changes helped the fund perform in line with the index over
the last four months of the period while also helping to reduce the volatility
in returns that the fixed-income portion of the fund has seen over the whole
period.
The fund's equity holdings moved to a more defensive posture by the end of the
fiscal year by reducing exposure to industrial and information technology
stocks. The fund also reduced its allocation to the financial sector, which
historically has not performed well when interest rates are rising.
The fund's holdings in energy stocks contributed the most to the fund's returns
over the period. This sector contributed a total return to the fund of 30.93%,
accounting for 2.13% of its annual gains. The industrial sector gained 19.07%
for the fund, accounting for 1.77% of the fund's returns.
Valero Energy, an oil refiner and gasoline retailer, was the largest contributor
to positive performance for the year. The stock returned 68.17% during the
period the fund held it, which accounted for 1.09% of its annual return. The
company benefited from strong results in its refining operations. Valero also
received Star Site certification from the Occupational Safety and Health
Administration (OSHA) for 10 of its sites' safety programs in 2005. Only 21 out
of 149 refineries in the U.S. received this rating.
Burlington Resources, a natural gas producer that ConocoPhillips acquired in
December, 2005, was another standout performer for the year. The stock gained
64.65% for the fund, which accounted for 0.96% of its annual return.
CITIZENS BALANCED FUND
32
Consumer electronics retailer Apple Computer, Inc. returned 55.58% to the fund,
which accounted for 0.90% of its annual return. The company benefited from
robust sales of its iPod music player. All computers and peripherals
manufactured by Apple are certified EnergyStar compliant. Apple dramatically
reduced energy consumption by using more efficient microchips and processors,
sometimes by as much as 87%. The fund booked profits by selling its shares of
Apple and does not currently own the stock.
St. Jude Medical was one of the fund's weakest performers. The stock had a
negative return to the fund of 25.66%, reducing the fund's return for the period
by 0.24%. The company, which develops, manufactures and distributes
cardiovascular medical devices, lost market share against competitors and
experienced unexpectedly slow sales of an implantable cardiac defibrillator. The
fund has since exited its position in St. Jude Medical.
Accenture Ltd., which offers management consulting, technology and outsourcing
services worldwide, experienced difficulties deploying systems for the National
Health Institutes of England. The stock fell on the news and had a negative
return for the fund, reducing the fund's returns for the period by 0.24%.
OUTLOOK
During the second half of 2006 we could see downward pressure on the markets due
to slower earnings growth and fears that the FOMC will continue to increase
rates beyond current levels in an effort to contain inflation. We believe that
the greater long-term risk to economic growth is inflation and not higher
interest rates. Therefore, we expect the Fed is likely to raise rates higher by
year end.
Yields for fixed-income investments will likely move in tandem with future
changes in the federal funds rate. We believe that opportunities for capital
appreciation in the bond market are currently limited. Therefore, we are seeking
to augment fixed-income returns by focusing on short-term bonds with higher
income levels.
Annualized GDP growth will likely slow to a more sustainable rate of 2% to 3% in
the latter part of 2006. After uncertainty about interest rates is resolved,
stocks may be poised for solid returns in 2007.
CITIZENS BALANCED FUND
33
CITIZENS INCOME FUND
(PHOTO OF BUILDING)
PORTFOLIO MANAGER
The fund is managed by a team of portfolio managers at Dwight Asset Management
Company
INVESTMENT GOAL
Current income and monthly dividend payment
INVESTMENT STRATEGY
Invests in bonds that are diversified acrosssectors, including U.S. treasury,
mortgages, corporate, and asset-backed securities
INCEPTION DATE
Standard shares 6.10.92
RISKS
Fixed-income investing; high- yield security risks (See pages 7-9 for
importantfund risk and benchmark disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
Dwight Asset Management Company, as subadviser, assumed portfolio management
responsibility for the Citizens Income Fund on August 29, 2005. At that time the
fund had performed relatively in line with its benchmark for approximately the
first two months of the fiscal year. For the entire fiscal year period, the fund
had a negative return of 1.66% while the benchmark returned -0.81% during the
same period.
The Federal Open Market Committee (FOMC) raised its target for the federal funds
rate eight times during the 12-month period between July 1, 2005 and June 30,
2006, from 3.25% to 5.25%. This caused short-term interest rates to rise
dramatically. By the end of the period, there was a slight inversion in the
yield curve. This means that short-term bonds were yielding more than
longer-term bonds. Normally, investors demand higher interest rates in exchange
for the risk of investing in long-term bonds. Fixed-income markets, represented
by the Lehman Brothers U.S. Aggregate Index, fell 0.81% for the one-year period
ended June 30, 2006, primarily due to rising interest rates.
Other U.S. and world events also affected investor sentiment and their appetite
for U.S. assets. Among
CITIZENS INCOME FUND
34
INCOME
CITIZENS INCOME FUND PERFORMANCE (as of 6.30.06)
<Table>
<Caption>
AVERAGE ANNUAL RETURN
Ticker 1 5 10 Since
Share class symbol year years years inception
- --------------------------------------------------------------------------------
STANDARD SHARES WAIMX -1.66% 2.58% 4.44% 5.04%
</Table>
PERFORMANCE OVER TIME (as of 6.30.06)
This chart shows performance since inception of a $10,000 hypothetical
investment in the fund's Standard shares, compared with the performance over the
same period for the index shown.
LEHMAN BROTHERS
INCOME U.S. AGGREGATE
DATE FUND INDEX
6/10/92 $ 10,000.00 $ 10,000.00
6/30/1992 $ 10,080.00 $ 10,117.00
7/31/1992 $ 10,290.10 $ 10,323.39
8/31/1992 $ 10,373.30 $ 10,427.65
9/30/1992 $ 10,517.20 $ 10,551.74
10/31/1992 $ 10,320.30 $ 10,411.40
11/30/1992 $ 10,266.60 $ 10,413.49
12/31/1992 $ 10,419.20 $ 10,579.06
1/31/1993 $ 10,619.30 $ 10,782.18
2/28/1993 $ 10,828.40 $ 10,970.87
3/31/1993 $ 10,854.10 $ 11,016.94
4/30/1993 $ 10,919.30 $ 11,094.06
5/31/1993 $ 10,882.90 $ 11,108.49
6/30/1993 $ 11,095.60 $ 11,309.55
7/31/1993 $ 11,142.80 $ 11,374.01
8/31/1993 $ 11,335.20 $ 11,573.06
9/30/1993 $ 11,380.50 $ 11,604.31
10/31/1993 $ 11,449.30 $ 11,647.24
11/30/1993 $ 11,357.80 $ 11,548.24
12/31/1993 $ 11,456.80 $ 11,610.60
1/31/1994 $ 11,585.90 $ 11,767.34
2/28/1994 $ 11,393.70 $ 11,562.59
3/31/1994 $ 11,200.70 $ 11,277.00
4/30/1994 $ 11,086.30 $ 11,186.78
5/31/1994 $ 11,096.10 $ 11,185.66
6/30/1994 $ 11,096.10 $ 11,161.05
7/31/1994 $ 11,226.60 $ 11,383.16
8/31/1994 $ 11,263.20 $ 11,396.82
9/30/1994 $ 11,176.10 $ 11,229.28
10/31/1994 $ 11,136.90 $ 11,219.18
11/30/1994 $ 11,053.40 $ 11,194.50
12/31/1994 $ 11,104.20 $ 11,271.74
1/31/1995 $ 11,257.40 $ 11,494.92
2/28/1995 $ 11,567.90 $ 11,768.50
3/31/1995 $ 11,668.50 $ 11,840.29
4/30/1995 $ 11,838.10 $ 12,006.05
5/31/1995 $ 12,171.20 $ 12,470.68
6/30/1995 $ 12,255.80 $ 12,561.72
7/31/1995 $ 12,289.10 $ 12,534.08
8/31/1995 $ 12,403.10 $ 12,685.75
9/30/1995 $ 12,587.90 $ 12,808.80
10/31/1995 $ 12,680.50 $ 12,975.31
11/30/1995 $ 12,842.90 $ 13,169.94
12/31/1995 $ 13,034.10 $ 13,354.32
1/31/1996 $ 13,123.60 $ 13,442.46
2/26/1996 $ 13,014.50 $ 13,208.56
3/31/1996 $ 12,895.70 $ 13,116.10
4/30/1996 $ 12,824.90 $ 13,042.65
5/31/1996 $ 12,809.80 $ 13,016.57
6/30/1996 $ 12,927.50 $ 13,190.99
7/31/1996 $ 12,971.10 $ 13,226.60
8/30/1996 $ 13,029.50 $ 13,204.12
9/30/1996 $ 13,254.00 $ 13,433.87
10/31/1996 $ 13,478.20 $ 13,732.10
11/30/1996 $ 13,712.80 $ 13,966.92
12/31/1996 $ 13,665.80 $ 13,837.03
1/31/1997 $ 13,696.10 $ 13,879.92
2/28/1997 $ 13,767.70 $ 13,914.62
3/31/1997 $ 13,621.00 $ 13,760.17
4/30/1997 $ 13,772.70 $ 13,966.57
5/31/1997 $ 13,953.30 $ 14,099.25
6/30/1997 $ 14,163.00 $ 14,267.04
7/31/1997 $ 14,594.40 $ 14,652.25
8/29/1997 $ 14,448.00 $ 14,527.70
9/30/1997 $ 14,672.80 $ 14,741.26
10/31/1997 $ 14,855.70 $ 14,955.01
11/29/1997 $ 14,938.90 $ 15,023.80
12/31/1997 $ 15,097.80 $ 15,175.54
1/31/1998 $ 15,304.90 $ 15,369.79
2/28/1998 $ 15,281.40 $ 15,357.49
3/31/1998 $ 15,312.10 $ 15,409.71
4/30/1998 $ 15,340.80 $ 15,489.84
5/31/1998 $ 15,509.60 $ 15,636.99
6/30/1998 $ 15,649.10 $ 15,769.91
7/31/1998 $ 15,647.40 $ 15,803.02
8/31/1998 $ 15,720.30 $ 16,060.61
9/30/1998 $ 15,919.60 $ 16,436.43
10/31/1998 $ 15,669.20 $ 16,349.32
11/30/1998 $ 15,845.00 $ 16,442.51
12/31/1998 $ 15,974.80 $ 16,491.84
1/31/1999 $ 16,145.60 $ 16,608.93
2/28/1999 $ 15,895.50 $ 16,318.27
3/31/1999 $ 15,982.40 $ 16,408.02
4/30/1999 $ 16,059.20 $ 16,460.53
5/31/1999 $ 15,907.70 $ 16,315.68
6/30/1999 $ 15,770.70 $ 16,263.46
7/31/1999 $ 15,754.80 $ 16,193.53
8/31/1999 $ 15,663.80 $ 16,185.44
9/30/1999 $ 15,764.80 $ 16,373.19
10/31/1999 $ 15,766.70 $ 16,433.77
11/30/1999 $ 15,828.20 $ 16,432.12
12/31/1999 $ 15,844.20 $ 16,353.25
1/31/2000 $ 15,817.20 $ 16,299.28
2/29/2000 $ 15,931.60 $ 16,496.51
3/31/2000 $ 15,980.00 $ 16,714.26
4/30/2000 $ 15,938.70 $ 16,665.79
5/31/2000 $ 15,906.30 $ 16,657.45
6/30/2000 $ 16,298.30 $ 17,003.93
7/31/2000 $ 16,466.50 $ 17,158.67
8/31/2000 $ 16,688.70 $ 17,407.47
9/30/2000 $ 16,671.80 $ 17,517.13
10/31/2000 $ 16,634.10 $ 17,632.75
11/30/2000 $ 16,662.40 $ 17,921.92
12/31/2000 $ 16,990.00 $ 18,255.27
1/31/2001 $ 17,426.90 $ 18,554.66
2/28/2001 $ 17,641.20 $ 18,716.08
3/31/2001 $ 17,656.80 $ 18,809.66
4/30/2001 $ 17,546.20 $ 18,730.66
5/31/2001 $ 17,623.40 $ 18,843.05
6/30/2001 $ 17,579.50 $ 18,914.65
7/31/2001 $ 18,041.60 $ 19,338.34
8/31/2001 $ 18,208.40 $ 19,560.73
9/30/2001 $ 18,071.90 $ 19,789.59
10/31/2001 $ 18,259.20 $ 20,203.19
11/30/2001 $ 17,937.60 $ 19,924.39
12/31/2001 $ 17,730.70 $ 19,796.87
1/31/2002 $ 17,761.30 $ 19,957.23
2/28/2002 $ 17,802.20 $ 20,150.81
3/31/2002 $ 17,421.50 $ 19,816.31
4/30/2002 $ 17,576.70 $ 20,200.75
5/31/2002 $ 17,708.60 $ 20,372.45
6/30/2002 $ 17,427.30 $ 20,547.65
7/31/2002 $ 17,492.10 $ 20,796.28
8/31/2002 $ 17,809.30 $ 21,147.74
9/30/2002 $ 18,181.60 $ 21,490.33
10/31/2002 $ 18,060.90 $ 21,391.48
11/30/2002 $ 17,914.10 $ 21,385.06
12/31/2002 $ 18,352.40 $ 21,827.73
1/31/2003 $ 18,377.30 $ 21,847.37
2/28/2003 $ 18,737.50 $ 22,148.87
3/31/2003 $ 18,778.10 $ 22,131.15
4/30/2003 $ 19,008.60 $ 22,314.84
5/31/2003 $ 19,372.30 $ 22,729.89
6/30/2003 $ 19,392.40 $ 22,684.43
7/31/2003 $ 18,655.30 $ 21,922.24
8/31/2003 $ 18,749.60 $ 22,066.92
9/30/2003 $ 19,299.70 $ 22,651.70
10/31/2003 $ 19,147.10 $ 22,441.04
11/30/2003 $ 19,204.00 $ 22,494.89
12/31/2003 $ 19,416.20 $ 22,724.34
1/31/2004 $ 19,547.20 $ 22,906.14
2/29/2004 $ 19,731.20 $ 23,153.52
3/31/2004 $ 19,889.20 $ 23,327.17
4/30/2004 $ 19,366.90 $ 22,720.67
5/31/2004 $ 19,189.90 $ 22,629.79
6/30/2004 $ 19,270.20 $ 22,758.78
7/31/2004 $ 19,443.50 $ 22,984.09
8/31/2004 $ 19,740.40 $ 23,423.08
9/30/2004 $ 19,817.50 $ 23,486.33
10/31/2004 $ 20,027.30 $ 23,683.61
11/30/2004 $ 19,892.80 $ 23,494.14
12/31/2004 $ 20,054.00 $ 23,710.29
1/31/2005 $ 20,117.50 $ 23,859.66
2/28/2005 $ 20,101.30 $ 23,718.89
3/31/2005 $ 19,805.00 $ 23,597.92
4/30/2005 $ 19,991.10 $ 23,916.50
5/31/2005 $ 20,196.80 $ 24,174.79
6/30/2005 $ 20,299.60 $ 24,307.76
7/31/2005 $ 20,175.77 $ 24,086.56
8/31/2005 $ 20,377.53 $ 24,394.86
9/30/2005 $ 20,210.43 $ 24,143.60
10/31/2005 $ 20,018.44 $ 23,952.86
11/30/2005 $ 20,088.50 $ 24,058.25
12/31/2005 $ 20,235.15 $ 24,286.81
1/31/2006 $ 20,214.91 $ 24,289.24
2/28/2006 $ 20,287.68 $ 24,369.39
3/31/2006 $ 20,054.38 $ 24,130.57
4/30/2006 $ 19,984.19 $ 24,087.14
5/31/2006 $ 19,944.22 $ 24,060.64
6/30/2006 $ 19,962.63 $ 24,110.86
$ 19,962.63 $ 24,110.86
Data presented reflects past performance, which is no guarantee of future
results. Current performance may be lower or higher than the performance data
quoted. Performance data current to the most recent month end may be obtained
online at www.citizensfunds.com. Fee waivers have been instituted in the past to
maintain expense limits, without which returns would have been lower. Investment
return and principal value of an investment in the fund will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance figures and the growth of a $10,000 hypothetical
investment assume reinvestment of dividends and distributions but do not reflect
the deduction of taxes you would pay on fund distributions or redemptions of
fund shares.
- --------------------------------------------------------------------------------
them were the retirement of Fed Chairman Alan Greenspan, continued conflict in
Iraq, and concerns over nuclear ambitions in Iran and weapons testing in North
Korea.
Over the 10-month period that Dwight subadvised the fund, the fund benefited by
investing in bonds with shorter average maturities than those found in the
Lehman Brothers U.S. Aggregate Index. The fund also benefited from an overweight
to both the asset-backed and commercial mortgage-backed sectors, as each
returned more than U.S. Treasuries. A relatively small exposure to high-yield
securities also aided returns, as this
CITIZENS INCOME FUND
35
sector was the best-performing area of the U.S. fixed-income market. The fund
increased its residential mortgage allocation over the period and that proved to
be a slight drag on performance, as the sector underperformed U.S. Treasuries.
OUTLOOK
We believe that continued consumer consumption and strong labor markets may
cause the FOMC to raise the federal funds rate higher later this year.
Therefore, we plan to invest in shorter-term bonds until alternative
opportunities present themselves. We continue to favor fixed-income sectors with
potential to outperform U.S. Treasuries and will diversify our portfolio of
corporate bonds, while adding selectively to the asset-backed sector. We will
also opportunistically invest in residential mortgage bonds and look for
opportunities to profit from interest rate volatility.
CITIZENS INCOME FUND
36
MONEY MARKET
CITIZENS MONEY MARKET FUND
(PHOTO OF ROBERT MAGAN)
"THE HIGH INFLATION OF THE 1970S AND EARLY 1980S DEMONSTRATED THE HARMFUL
EFFECTS THAT UNCHECKED INFLATION CAN HAVE ON THE ECONOMY." PORTFOLIO MANAGER
Robert Magan, CFA
INVESTMENT GOAL
Current income consistent with safety and liquidity
INVESTMENT STRATEGY
Invests exclusively in money market instruments
INCEPTION DATES
Standard shares 8.30.83
Institutional shares 2.01.96
RISKS
Money market investing (See pages 7-9 for important fund risk and benchmark
disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
The seven-day simple yield on standard shares of the Citizens Money Market Fund
rose from 2.20% on June 30, 2005, to 4.35% on June 30, 2006. The fund's standard
share class had a total return of 3.27% for the period.
During the one-year period, the average weighted maturity of the fund's holdings
ranged from approximately 35 days to 40 days. This reflected our belief that
shorter-term investments would outperform investments with longer maturities in
a rising interest rate environment. Holding securities with shorter maturities
allowed the fund to take advantage of rising interest rates as they materialized
throughout the year.
The Federal Open Market Committee (FOMC) increased its target for the
CITIZENS MONEY MARKET FUND
37
CITIZENS MONEY MARKET FUND PERFORMANCE (as of 6.30.06)
<Table>
<Caption>
AVERAGE ANNUAL RETURN
Ticker 1 5 10 Since
Share class symbol year years years inception
- --------------------------------------------------------------------------------
STANDARD SHARES WKAXX 3.27% 1.38% 2.96% NA
INSTITUTIONAL SHARES WAIXX 3.57% 1.68% 3.36% 3.42%
</Table>
Data presented reflects past performance, which is no guarantee of future
results. Current performance may be lower or higher than the performance data
quoted. Performance data current to the most recent month end may be obtained
online at www.citizensfunds.com. Fee waivers have been instituted in the past to
maintain expense limits, without which returns would have been lower. Investment
return and principal value of an investment in the fund will fluctuate so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. Performance figures assume reinvestment of dividends and
distributions but do not reflect the deduction of taxes you would pay on fund
distributions or redemptions of fund shares.
- --------------------------------------------------------------------------------
federal funds rate (a key rate that influences mortgage rates and credit card
rates) eight times during the fund's fiscal year, raising the target rate from
3.25% to 5.25%. The high inflation of the 1970s and early 1980s demonstrated the
harmful effects that unchecked inflation can have on the economy. The Federal
Reserve Board's (Fed) new Chairman, Ben Bernanke, has indicated his willingness
to raise interest rates as much as necessary to ward off a return of higher
inflation. However, we believe that as long as wage inflation remains low, the
Fed should be able to continue to raise rates in a controlled manner of 25 basis
point increments.
OUTLOOK
There has been much speculation about when the Fed's campaign to raise interest
rates may end. Therefore, we expect the FOMC will continue to raise rates higher
by year end. Future changes will depend on the performance of the economy. When
it becomes clear that the Fed's current campaign to increase the federal funds
target rate has ended, we may gradually increase the average weighted maturity
of the fund's holdings.
CITIZENS MONEY MARKET FUND
38
(THIS PAGE INTENTIONALLY LEFT BLANK.)
39
PORTFOLIO COMPOSITION (UNAUDITED)
PORTFOLIO COMPOSITION
<Table>
<Caption>
PERCENTAGE OF
CORE GROWTH FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
Information Technology 17.8%
Financials 17.2%
Industrials 16.6%
Consumer Discretionary 14.2%
Healthcare 12.2%
Consumer Staples 8.0%
Energy 6.2%
Materials 5.0%
Cash Equivalents 2.8%
- ------------------------------------------------------------
</Table>
<Table>
<Caption>
PERCENTAGE OF
EMERGING GROWTH FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
Information Technology 19.0%
Consumer Discretionary 17.9%
Healthcare 17.6%
Industrials 13.5%
Financials 10.5%
Energy 9.8%
Cash Equivalents 5.3%
Consumer Staples 3.5%
Materials 2.9%
- ------------------------------------------------------------
</Table>
<Table>
<Caption>
SMALL CAP PERCENTAGE OF
CORE GROWTH FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
Industrials 21.9%
Information Technology 20.5%
Consumer Discretionary 16.4%
Financials 11.8%
Healthcare 9.8%
Cash Equivalents 7.0%
Energy 6.8%
Materials 4.9%
Consumer Staples 0.9%
- ------------------------------------------------------------
</Table>
<Table>
<Caption>
PERCENTAGE OF
VALUE FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
Financials 20.2%
Healthcare 12.1%
Information Technology 12.0%
Industrials 11.3%
Energy 11.0%
Consumer Discretionary 9.4%
Consumer Staples 8.0%
Cash Equivalents 7.7%
Utilities 4.0%
Materials 3.3%
Telecommunication Services 1.0%
- ------------------------------------------------------------
</Table>
<Table>
<Caption>
PERCENTAGE OF
GLOBAL EQUITY FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
Financials 19.1%
Information Technology 15.1%
Consumer Discretionary 14.2%
Healthcare 11.2%
Industrials 11.0%
Energy 10.3%
Consumer Staples 8.7%
Cash Equivalents 5.8%
Materials 3.1%
Telecommunication Services 1.5%
- ------------------------------------------------------------
</Table>
SEE FINANCIAL NOTES
40
JUNE 30, 2006
<Table>
<Caption>
PERCENTAGE OF
BALANCED FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
Equity
Financials 11.9%
Information Technology 9.5%
Industrials 8.1%
Healthcare 7.9%
Consumer Discretionary 6.9%
Consumer Staples 5.7%
Energy 5.3%
Materials 2.1%
Telecommunication Services 1.6%
Utilities 1.1%
- ------------------------------------------------------------
Fixed Income
U.S. Government Agency Obligations 19.1%
Corporate Bonds 9.0%
U.S. Government Obligations 5.5%
Collateralized Mortgage Obligations 0.3%
Foreign Government Bonds 0.1%
- ------------------------------------------------------------
Cash Equivalents 5.9%
- ------------------------------------------------------------
</Table>
<Table>
<Caption>
PERCENTAGE OF
INCOME FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
U.S. Government Agency Obligations 25.7%
U.S. Government Obligations 24.5%
Cash Equivalents 23.4%
Collateralized Mortgage Obligations 16.8%
Corporate Bonds 9.6%
- ------------------------------------------------------------
</Table>
<Table>
<Caption>
PERCENTAGE OF
MONEY MARKET FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
Commercial Paper 86.3%
U.S. Government Agency Obligations 9.3%
Municipal Notes 4.2%
Certificates of Deposit 0.2%
- ------------------------------------------------------------
</Table>
All portfolio compositions subject to change.
SEE FINANCIAL NOTES
41
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Shareholders of Citizens Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of funds' holdings, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Citizens Core Growth Fund, Citizens
Emerging Growth Fund, Citizens Small Cap Core Growth Fund, Citizens Value Fund,
Citizens Global Equity Fund, Citizens Balanced Fund, Citizens Income Fund and
Citizens Money Market Fund (hereinafter referred to as the "Funds") at June 30,
2006, the results of each of their operations for the year then ended and the
changes in each of their net assets and the financial highlights for each of the
periods presented, in conformity with accounting principles generally accepted
in the United States of America. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at June 30, 2006 by correspondence with the custodian
and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Columbus, Ohio
August 22, 2006
42
(THIS PAGE INTENTIONALLY LEFT BLANK.)
43
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
CORE GROWTH FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
COMMON STOCKS - 97.2%
Air Freight - 2.2%
FedEx Corp. 60,000 7,012
Banks - 5.3%
Bank of America Corp. 90,000 4,329
PNC Financial Services Group, Inc. 110,000 7,719
Zions Bancorp 60,000 4,676
-------
16,724
Biotechnology - 2.1%
Gilead Sciences, Inc. (a) 110,000 6,508
Chemicals - 2.2%
Praxair, Inc. 130,000 7,020
Computers - 3.2%
Network Appliance, Inc. (a) 100,000 3,530
SAP AG ADR 125,000 6,565
-------
10,095
Construction - 2.2%
Fluor Corp. 75,000 6,970
Electrical Equipment - 2.1%
Emerson Electric Co. 80,000 6,705
Electronics - 7.7%
Agilent Technologies, Inc. (a) 175,000 5,523
Broadcom Corp., Class A (a) 125,000 3,756
NVIDIA Corp. (a) 200,000 4,258
Rockwell Automation, Inc. 100,000 7,201
Texas Instruments, Inc. 120,000 3,635
-------
24,373
Energy & Utilities - 6.2%
Baker Hughes, Inc. 60,000 4,911
BJ Services Co. 100,000 3,726
Diamond Offshore Drilling, Inc. 50,000 4,197
Silvan Power Co. (a) (b) 24,000 --
Valero Energy Corp. 100,000 6,652
Vulcan Power Co., Class A (a) (b) 40,000 --
-------
19,486
Entertainment - 1.4%
The Walt Disney Co. 150,000 4,500
Financial - Diversified - 6.7%
JPMorgan Chase & Co. 140,000 5,880
Lehman Brothers Holdings, Inc. 70,000 4,561
Moody's Corp. 80,000 4,357
State Street Corp. 110,000 6,389
-------
21,187
Financial Services - 1.0%
Franklin Resources, Inc. 35,000 3,038
Foods - 2.7%
McCormick & Co., Inc. 150,000 5,033
PepsiCo, Inc. 60,000 3,602
-------
8,635
Healthcare - 8.2%
Allergan, Inc. 35,000 3,754
Becton, Dickinson & Co. 90,000 5,502
C.R. Bard, Inc. 85,000 6,227
Express Scripts, Inc. (a) 80,000 5,739
Johnson & Johnson, Inc. 75,000 4,494
-------
25,716
Hotels & Motels - 1.4%
Starwood Hotels & Resorts Worldwide, Inc. 75,000 4,526
Insurance - 2.2%
The Chubb Corp. 140,000 6,986
Manufacturing - 6.1%
Illinois Tool Works, Inc. 120,000 5,700
Precision Castparts Corp. 100,000 5,976
Taiwan Semiconductor Manufacturing Co. Ltd.
ADR 502,118 4,609
Temple-Inland, Inc. 70,000 3,001
-------
19,286
Multimedia - 1.0%
News Corp., Class B 150,000 3,027
Personal Care - 1.9%
Colgate-Palmolive Co. 100,000 5,990
Pharmaceuticals - 1.9%
McKesson Corp. 130,000 6,146
Publishing - 2.1%
The McGraw-Hill Cos., Inc. 130,000 6,530
Railroads - 2.4%
Norfolk Southern Corp. 140,000 7,451
Real Estate - 2.0%
Simon Property Group, Inc. 75,000 6,221
</Table>
SEE FINANCIAL NOTES
44
JUNE 30, 2006 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
CORE GROWTH FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
Retail - 9.7%
Chico's FAS, Inc. (a) 170,000 4,587
Costco Wholesale Corp. 120,000 6,855
CVS Corp. 120,000 3,684
J.C. Penney Co., Inc. 95,000 6,413
Nordstrom, Inc. 80,000 2,920
Staples, Inc. 250,000 6,080
-------
30,539
Services - 10.1%
Accenture Ltd., Class A 225,000 6,371
Ecolab, Inc. 140,000 5,680
Fastenal Co. 140,000 5,641
First Data Corp. 65,000 2,928
Johnson Controls, Inc. 75,000 6,166
Paychex, Inc. 125,000 4,873
-------
31,659
Telecommunications - 3.2%
Nokia Corp. ADR 200,000 4,052
QUALCOMM, Inc. 150,000 6,011
-------
10,063
-------
TOTAL COMMON STOCKS 306,393
Cost: $283,929
<Caption>
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 2.9%
Fifth Third Bank, Inc.,
4.95%, 07/03/06
(Date of agreement 06/30/06, proceeds at maturity $8,955,
collateralized by Federal Home Loan Mortgage Corp.
security, 3.45%, 03/12/08, market value $9,220)
Cost: $8,951 8,951 8,951
-------
TOTAL INVESTMENTS - 100.1% 315,344
Cost: $292,880
</Table>
<Table>
<Caption>
- -------------------------------------------------------------------------
CORE GROWTH FUND
- -------------------------------------------------------------------------
Percentages indicated are based on net assets of $315,088.
</Table>
(a) Non-income producing security.
(b) On June 30, 2006, the fund owned the following restricted securities
constituting 0.00% of net assets which may not be publicly sold without
registration under the Securities Act of 1933. These securities are valued at
their fair value as determined in good faith under consistently applied
procedures under the general supervision of the Trust's Board of Trustees.
Additional information on the securities is as follows:
Vulcan Power Co., Class A
Acquisition Date: March 3, 1995
Cost: $300
Unit Cost: $7.50
Value: $0
Silvan Power Co.
Acquisition Date: July 27, 2004
Cost: $0
Unit Cost: $0
Value: $0
ADR - American Depositary Receipt
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
45
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
EMERGING GROWTH FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
COMMON STOCKS - 94.7%
Apparel Manufacturers - 1.2%
Gildan Activewear, Inc. (a) 45,000 2,115
Biotechnology - 2.1%
Gilead Sciences, Inc. (a) 63,200 3,739
Computers - 7.0%
Akamai Technologies, Inc. (a) 70,000 2,533
Autodesk, Inc. (a) 32,500 1,120
Corning, Inc. (a) 115,360 2,790
Lexmark International, Inc. (a) 30,000 1,675
Palm, Inc. (a) 100,000 1,610
Webex Communications, Inc. (a) 75,000 2,666
-------
12,394
Consumer Products - 1.3%
Newell Rubbermaid, Inc. 90,000 2,325
Electrical Equipment - 1.8%
WESCO International, Inc. (a) 45,000 3,105
Electronics - 7.3%
Adobe Systems, Inc. (a) 89,000 2,702
Broadcom Corp., Class A (a) 60,000 1,803
Freescale Semiconductor, Inc., Class B (a) 80,000 2,352
Lam Research Corp. (a) 59,000 2,751
MEMC Electronic Materials, Inc. (a) 90,000 3,375
-------
12,983
Energy & Utilities - 9.4%
Airgas, Inc. 25,000 931
Arch Coal, Inc. 35,000 1,483
Baker Hughes, Inc. 43,840 3,588
EOG Resources, Inc. 46,400 3,217
Hydril (a) 25,000 1,963
Patterson-UTI Energy, Inc. 85,200 2,412
Transocean, Inc. (a) 37,700 3,028
-------
16,622
Entertainment - 1.0%
World Wrestling Entertainment, Inc. 100,000 1,689
Financial - Diversified - 2.1%
Legg Mason, Inc. 21,000 2,090
Moody's Corp. 30,988 1,688
-------
3,778
Financial Services - 3.7%
Chicago Mercantile Exchange Holdings, Inc. 8,106 3,981
T. Rowe Price Group, Inc. 66,110 2,500
-------
6,481
Foods - 2.5%
Campbell Soup Co. 60,000 2,227
Flowers Foods, Inc. 75,000 2,148
-------
4,375
Healthcare - 13.2%
Allergan, Inc. 15,000 1,609
C.R. Bard, Inc. 44,975 3,295
Coventry Health Care, Inc. (a) 30,000 1,648
Express Scripts, Inc. (a) 30,000 2,152
Intuitive Surgical, Inc. (a) 17,650 2,082
Laboratory Corp. of America Holdings (a) 40,000 2,489
LifePoint Hospitals, Inc. (a) 55,000 1,767
Psychiatric Solutions, Inc. (a) 70,000 2,006
Respironics, Inc. (a) 41,000 1,403
Sierra Health Services, Inc. (a) 81,776 3,682
St. Jude Medical, Inc. (a) 40,000 1,297
-------
23,430
Hotels & Motels - 2.8%
Choice Hotels International, Inc. 46,060 2,791
Starwood Hotels & Resorts Worldwide, Inc. 34,300 2,070
-------
4,861
Insurance - 1.8%
W. R. Berkley Corp. 92,287 3,150
Investment Banking & Brokerage - 1.0%
Investment Technology Group, Inc. (a) 35,000 1,780
Manufacturing - 9.0%
BorgWarner, Inc. 25,000 1,628
Commercial Metals Co. 80,000 2,056
Cummins, Inc. 20,000 2,444
Eagle Materials, Inc. 46,500 2,209
Lennox International, Inc. 60,000 1,589
National-Oilwell Varco, Inc. (a) 27,000 1,710
</Table>
SEE FINANCIAL NOTES
46
JUNE 30, 2006 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
EMERGING GROWTH FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
Manufacturing (continued)
Oshkosh Truck Corp. 58,568 2,782
Roper Industries, Inc. 32,000 1,496
-------
15,914
Pharmaceuticals - 2.3%
McKesson Corp. 41,000 1,938
Pharmaceutical Product Development, Inc. 60,000 2,108
-------
4,046
Real Estate - 1.9%
CB Richard Ellis Group, Inc., Class A (a) 135,000 3,362
Restaurants - 2.2%
Darden Restaurants, Inc. 55,000 2,167
Domino's Pizza, Inc. 70,000 1,732
-------
3,899
Retail - 8.4%
American Eagle Outfitters, Inc. 66,000 2,247
Coach, Inc. (a) 58,000 1,734
J.C. Penney Co., Inc. 34,000 2,295
Nordstrom, Inc. 90,712 3,312
Polo Ralph Lauren 40,000 2,196
The Men's Wearhouse, Inc. 44,000 1,333
Whole Foods Market, Inc. 25,900 1,674
-------
14,791
Services - 10.5%
CheckFree Corp. (a) 53,000 2,627
Cognizant Technology Solutions Corp. (a) 58,400 3,934
Corporate Executive Board Co. 36,549 3,662
Expeditors International of Washington, Inc. 83,200 4,659
Monster Worldwide, Inc. (a) 45,000 1,920
Pool Corp. 45,000 1,963
-------
18,765
Telecommunications - 1.0%
CommScope, Inc. (a) 56,000 1,760
Transportation - 1.2%
Landstar System, Inc. 44,480 2,101
-------
TOTAL COMMON STOCKS 167,465
Cost: $124,891
<Caption>
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 5.4%
Fifth Third Bank, Inc.,
4.95%, 07/03/06
(Date of agreement 06/30/06, proceeds at maturity $9,459,
collateralized by Federal Home Loan Mortgage Corp.
security, 3.45%, 03/12/08, market value $9,739)
Cost: $9,455 9,455 9,455
-------
TOTAL INVESTMENTS - 100.1% 176,920
Cost: $134,346
</Table>
Percentages indicated are based on net assets of $176,674.
(a) Non-income producing security.
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
47
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
SMALL CAP CORE GROWTH FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
COMMON STOCKS - 94.5%
Apparel Manufacturers - 2.0%
Deckers Outdoor Corp. (a) 20,000 771
Banks - 2.9%
Capitol Bancorp Ltd. 12,000 467
First Community Bancorp 11,000 650
------
1,117
Chemicals - 0.6%
American Vanguard Corp. 15,000 232
Computers - 12.3%
American Reprographics Co. (a) 20,000 725
ANSYS, Inc. (a) 12,000 574
Blackbaud, Inc. 35,000 795
Concur Technologies, Inc. (a) 27,000 418
Komag, Inc. (a) 12,000 554
NIC, Inc. (a) 43,603 315
Sykes Enterprises, Inc. (a) 26,500 428
VeriFone Holdings, Inc. (a) 13,000 396
Webex Communications, Inc. (a) 12,000 426
------
4,631
Construction - 2.5%
Beacon Roofing Supply, Inc. (a) 22,500 496
Universal Forest Products, Inc. 7,500 470
------
966
Electrical Equipment - 1.9%
Genlyte Group (a) 10,000 724
Electronics - 3.5%
Diodes, Inc. (a) 20,000 828
SiRF Technology Holdings, Inc. (a) 16,000 516
------
1,344
Energy & Utilities - 8.7%
Airgas, Inc. 18,000 671
Core Laboratories N.V. (a) 17,000 1,037
Holly Corp. 20,000 964
Hydril (a) 8,000 628
------
3,300
Financial - Diversified - 1.4%
Advanta Corp., Class B 15,000 539
Foods - 0.9%
Flowers Foods, Inc. 12,500 358
Healthcare - 9.1%
HealthExtras, Inc. (a) 12,000 363
Healthways, Inc. (a) 13,500 711
Intermagnetics General Corp. (a) 15,000 405
Psychiatric Solutions, Inc. (a) 14,000 401
Quality Systems, Inc. 13,000 479
Sierra Health Services, Inc. (a) 14,000 630
Sirona Dental Systems, Inc. 12,000 475
------
3,464
Hotels & Motels - 2.4%
Choice Hotels International, Inc. 15,000 909
Insurance - 0.9%
Philadelphia Consolidated Holding Corp. (a) 11,000 334
Investment Banking & Brokerage - 3.8%
Affiliated Managers Group, Inc. (a) 8,000 695
Investment Technology Group, Inc. (a) 15,000 763
------
1,458
Manufacturing - 12.6%
Baldor Electric Co. 10,000 313
BE Aerospace, Inc. (a) 15,000 343
Ceradyne, Inc. (a) 8,000 396
Eagle Materials, Inc. 9,000 428
Gardner Denver, Inc. (a) 20,000 769
Itron, Inc. (a) 7,000 415
Oshkosh Truck Corp. 11,000 523
Roper Industries, Inc. 9,000 421
Silgan Holdings, Inc. 15,000 555
The Manitowoc Co., Inc. 12,500 556
------
4,719
Pharmaceuticals - 2.0%
Pharmaceutical Product Development, Inc. 22,000 773
Railroads - 1.9%
Genesee & Wyoming, Inc., Class A (a) 20,000 709
Retail - 7.8%
Coldwater Creek, Inc. (a) 30,000 803
Monro Muffler Brake, Inc. 15,000 488
</Table>
SEE FINANCIAL NOTES
48
JUNE 30, 2006 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
SMALL CAP CORE GROWTH FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
Retail (continued)
The Dress Barn, Inc. (a) 32,000 811
The Pantry, Inc. (a) 15,000 864
------
2,966
Services - 14.4%
Bankrate, Inc. (a) 18,000 680
Corporate Executive Board Co. 7,500 752
First Cash Financial Services, Inc. (a) 30,000 593
LIFE TIME FITNESS, Inc. (a) 12,000 555
LKQ Corp. (a) 35,000 665
Mobile Mini, Inc. (a) 20,000 585
Pool Corp. 10,000 436
Portfolio Recovery Associates, Inc. (a) 11,000 503
Ritchie Bros. Auctioneers, Inc. 12,000 638
------
5,407
Telecommunications - 2.9%
CommScope, Inc. (a) 12,000 377
NICE Systems Ltd. ADR (a) 25,000 704
------
1,081
------
TOTAL COMMON STOCKS 35,802
Cost: $29,323
<Caption>
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 7.1%
Fifth Third Bank, Inc.,
4.95%, 07/03/06
(Date of agreement 06/30/06, proceeds at maturity $2,711,
collateralized by Federal Home Loan Mortgage Corp.
security, 3.45%, 03/12/08, market value $2,792)
Cost: $2,710 2,710 2,710
------
TOTAL INVESTMENTS - 101.6% 38,512
Cost: $32,033
</Table>
Percentages indicated are based on net assets of $37,910.
(a) Non-income producing security.
ADR - American Depositary Receipt
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
49
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
VALUE FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
COMMON STOCKS - 92.2%
Air Freight - 2.2%
FedEx Corp. 7,218 843
Apparel Manufacturers - 1.2%
NIKE, Inc., Class B 5,800 470
Auto Manufacturing - 1.5%
Toyota Motor Corp. ADR 5,370 562
Broadcasting - 0.9%
Grupo Televisa SA ADR 17,724 342
Chemicals - 1.0%
Praxair, Inc. 6,781 366
Computers - 7.9%
Expedia, Inc. (a) 25,820 387
Hewlett-Packard Co. 20,417 647
Intel Corp. 25,713 487
International Business Machines Corp. 5,586 429
Microsoft Corp. 22,024 513
Oracle Corp. (a) 40,465 586
------
3,049
Consumer Products - 1.3%
Kimberly-Clark Corp. 7,907 488
Electrical Equipment - 1.4%
Emerson Electric Co. 6,653 558
Electronics - 5.2%
Cisco Systems, Inc. (a) 21,951 429
Freescale Semiconductor, Inc., Class B (a) 18,644 548
MEMC Electronic Materials, Inc. (a) 13,207 495
Rockwell Automation, Inc. 7,611 548
------
2,020
Energy & Utilities - 14.1%
AES Corp. (a) 28,443 525
Allegheny Energy, Inc. (a) 12,750 473
Baker Hughes, Inc. 10,001 819
ConocoPhillips 21,316 1,396
Devon Energy Corp. 8,310 502
Helix Energy Solutions Group, Inc. (a) 11,744 474
Patterson-UTI Energy, Inc. 13,070 370
Precision Drilling Corp. 8,810 292
UGI Corp. 21,945 540
------
5,391
Financial - Diversified - 10.6%
Capital One Financial Corp. 7,651 654
JPMorgan Chase & Co. 17,332 728
Lehman Brothers Holdings, Inc. 12,634 823
Merrill Lynch & Co., Inc. 10,358 721
MetLife, Inc. 10,741 550
Wachovia Corp. 10,878 588
------
4,064
Financial Services - 1.8%
Golden West Financial Corp. 9,235 685
Foods - 4.7%
Bunge, Ltd. 10,206 513
Kellogg Co. 16,057 778
PepsiCo, Inc. 8,518 511
------
1,802
Healthcare - 12.1%
Baxter International, Inc. 15,490 569
Becton, Dickinson & Co. 7,856 480
Coventry Health Care, Inc. (a) 9,091 499
Johnson & Johnson, Inc. 15,562 933
Omnicare, Inc. 10,216 484
Pfizer, Inc. 20,775 488
The Cooper Cos., Inc. 3,552 157
WellPoint, Inc. (a) 14,459 1,053
------
4,663
Insurance - 5.5%
American International Group, Inc. 10,602 626
The Allstate Corp. 9,437 516
The Chubb Corp. 8,134 406
The Hartford Financial Services Group, Inc. 6,938 587
------
2,135
Investment Banking & Brokerage - 1.2%
The Goldman Sachs Group, Inc. 3,129 471
Manufacturing - 6.0%
3M Co. 7,523 607
Eagle Materials, Inc. 8,841 420
Ingersoll-Rand Co. 10,040 430
</Table>
SEE FINANCIAL NOTES
50
JUNE 30, 2006 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
VALUE FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
Manufacturing (continued)
National-Oilwell Varco, Inc. (a) 6,006 380
Nucor Corp. 8,954 486
------
2,323
Railroads - 2.4%
Norfolk Southern Corp. 17,660 940
Real Estate - 1.0%
Simon Property Group, Inc. 4,794 398
Restaurants - 1.1%
McDonald's Corp. 12,554 422
Retail - 5.8%
CVS Corp. 25,478 782
Home Depot, Inc. 11,147 399
Nordstrom, Inc. 16,892 617
Target Corp. 8,817 431
------
2,229
Services - 1.0%
URS Corp. (a) 9,580 402
Telecommunications - 2.3%
Motorola, Inc. 24,812 500
Sprint Nextel Corp. 19,209 384
------
884
------
TOTAL COMMON STOCKS 35,507
Cost: $30,053
REPURCHASE AGREEMENTS - 7.7%
Fifth Third Bank, Inc.,
4.95%, 07/03/06
(Date of agreement 06/30/06, proceeds at maturity $2,975,
collateralized by Federal Home Loan Mortgage Corp.
security, 3.45%, 03/12/08, market value $3,064)
Cost: $2,974 2,974 2,974
------
TOTAL INVESTMENTS - 99.9% 38,481
Cost: $33,027
</Table>
Percentages indicated are based on net assets of $38,517.
(a) Non-income producing security.
ADR - American Depositary Receipt
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
51
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
GLOBAL EQUITY FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
COMMON STOCKS - 94.2%
Automobile Manufacturing - 4.4%
Bayerische Motoren Werke AG (a) 22,000 1,097
Toyota Motor Co. ADR 8,000 837
Volvo AB ADR 34,000 1,666
------
3,600
Banks - 8.2%
Bank of New York Co., Inc. 36,000 1,159
Julius Baer Holdings Ltd. (a) 11,000 954
PNC Financial Services Group, Inc. 12,500 877
Royal Bank of Scotland Group plc (a) 50,301 1,651
UBS AG ADR 10,800 1,185
Zions Bancorp 11,000 857
------
6,683
Biotechnology - 2.0%
Roche Holding AG (a) 10,000 1,652
Computers - 4.5%
Corning, Inc. (b) 40,000 968
Intuit, Inc. (b) 22,000 1,329
SAP AG (a) 6,500 1,368
------
3,665
Construction - 1.7%
Fluor Corp. 15,000 1,394
Electronics - 3.5%
Agilent Technologies, Inc. (b) 30,000 947
Cisco Systems, Inc. (b) 57,000 1,113
IBIDEN CO., Ltd. (a) 16,000 769
------
2,829
Energy & Utilities - 11.4%
Apache Corp. 27,500 1,876
BG Group plc ADR 23,000 1,538
BP Amoco plc (a) 134,000 1,555
EnCana Corp. 15,000 790
Gold Fields Ltd. ADR 40,000 916
Statoil ASA ADR 44,000 1,255
Valero Energy Corp. 20,800 1,384
------
9,314
Entertainment - 4.2%
Comcast Corp., Class A (b) 58,000 1,901
The Walt Disney Co. 50,000 1,500
------
3,401
Financial - Diversified - 8.8%
American Express Co. 16,000 852
Bank of America Corp. 19,000 914
Deutsche Boerse AG (a) 18,000 2,450
HSBC Holdings plc ADR 10,000 884
Mitsubishi UFJ Financial Group, Inc. ADR 148,000 2,065
------
7,165
Food & Beverages - 4.4%
McCormick & Co., Inc. 30,000 1,007
Nestle SA (a) 4,000 1,255
PepsiCo, Inc. 22,000 1,321
------
3,583
Healthcare - 9.3%
Becton, Dickinson & Co. 16,000 978
C.R. Bard, Inc. 14,000 1,026
Fresenius Medical Care AG & Co. KGaA ADR 27,000 1,032
GlaxoSmithKline plc (a) 58,000 1,619
Johnson & Johnson, Inc. 20,000 1,198
Novartis AG ADR 31,000 1,672
------
7,525
Insurance - 1.1%
ING Groep NV (a) 23,000 902
Investment Banking & Brokerage - 1.0%
Investment Technology Group, Inc. (b) 16,000 814
Manufacturing - 8.2%
3M Co. 20,000 1,615
FANUC Ltd. (a) 9,000 812
Johnson Matthey plc (a) 33,000 809
Komatsu, Ltd. (a) 97,000 1,944
L'Air Liquide ADR 22,000 857
Taiwan Semiconductor Manufacturing Co. Ltd.
ADR 77,249 709
------
6,746
Office Equipment & Supplies - 4.2%
Avery Dennison Corp. 27,000 1,568
Canon, Inc. ADR 26,000 1,905
------
3,473
Personal Care - 3.1%
Colgate-Palmolive Co. 23,000 1,378
The Estee Lauder Cos., Inc., Class A 30,000 1,160
------
2,538
</Table>
SEE FINANCIAL NOTES
52
JUNE 30, 2006 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
GLOBAL EQUITY FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
Retail - 6.7%
Kohl's Corp. (b) 26,000 1,538
Luxottica Group SpA ADR 30,000 814
Marks & Spencer Group plc ADR 15,000 977
PetSmart, Inc. 27,000 691
Staples, Inc. 60,000 1,459
------
5,479
Services - 4.1%
First Data Corp. 35,000 1,576
WPP Group plc (a) 144,000 1,741
------
3,317
Telecommunications - 3.4%
Nokia Corp. ADR 35,000 709
QUALCOMM, Inc. 23,000 922
Vodafone Group plc (a) 560,000 1,191
------
2,822
------
TOTAL COMMON STOCKS 76,902
Cost: $62,106
<Caption>
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 5.9%
Fifth Third Bank, Inc.,
4.95%, 07/03/06
(Date of agreement 06/30/06, proceeds at maturity $4,734,
collateralized by Federal Home Loan Mortgage Corp.
security, 3.45%, 03/12/08, market value $4,875)
Cost: $4,732 4,732 4,732
------
TOTAL INVESTMENTS - 100.1% 81,634
Cost: $66,838
</Table>
<Table>
<Caption>
- -------------------------------------------------------------------------
GLOBAL EQUITY FUND
- -------------------------------------------------------------------------
Percentages indicated are based on net assets of $81,559.
(a) Fair valued security. The approximate market value and percentage of
investments of securities that are fair valued for the Global Equity Fund
was $21,772 and 26.67%.
(b) Non-income producing security.
ADR - American Depositary Receipt
</Table>
<Table>
The fund's portfolio holdings as of June 30, 2006, were distributed among
the following countries:
-------------------------
PERCENTAGE OF NET ASSETS
SHORT TERM
EQUITY & OTHER TOTAL
-------------------------
Canada 1.0% 1.0%
Finland 0.9% 0.9%
France 1.0% 1.0%
Germany 7.3% 7.3%
Italy 1.0% 1.0%
Japan 10.2% 10.2%
Netherlands 1.1% 1.1%
Norway 1.5% 1.5%
South Africa 1.1% 1.1%
Sweden 2.0% 2.0%
Switzerland 8.2% 8.2%
Taiwan 0.9% 0.9%
United Kingdom 14.7% 14.7%
United States 43.3% 5.8% 49.1%
----------------------------
TOTAL 94.2% 5.8% 100.0%
</Table>
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
53
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
BALANCED FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
COMMON STOCKS - 59.8%
Air Freight - 1.3%
FedEx Corp. 1,200 140
Banks - 2.9%
Compass Bancshares, Inc. 2,000 111
SunTrust Banks, Inc. 1,000 76
Zions Bancorp 1,750 137
-----
324
Biotechnology - 1.4%
Gilead Sciences, Inc. (a) 2,550 151
Chemicals - 0.6%
Praxair, Inc. 1,275 69
Computers - 2.6%
Blackbaud, Inc. 3,000 68
Corning, Inc. (a) 3,000 73
SAP AG ADR 2,750 144
-----
285
Construction - 1.3%
Fluor Corp. 1,500 139
Electrical Equipment - 1.6%
Emerson Electric Co. 2,100 176
Electronics - 4.5%
Agilent Technologies, Inc. (a) 3,100 98
Cisco Systems, Inc. (a) 6,000 117
Rockwell Automation, Inc. 2,500 180
Texas Instruments, Inc. 3,450 105
-----
500
Energy & Utilities - 6.3%
Baker Hughes, Inc. 1,000 82
BJ Services Co. 3,700 138
Cameron International Corp. (a) 2,800 134
ConocoPhillips 1,100 72
Questar Corp. 1,500 121
Valero Energy Corp. 2,400 159
-----
706
Entertainment - 1.5%
The Walt Disney Co. 5,350 161
Financial - Diversified - 4.4%
JPMorgan Chase & Co. 3,400 142
Merrill Lynch & Co., Inc. 1,000 70
Moody's Corp. 1,300 71
State Street Corp. 2,325 135
Wachovia Corp. 1,250 68
-----
486
Foods - 1.9%
Campbell Soup Co. 2,000 74
PepsiCo, Inc. 2,300 138
-----
212
Healthcare - 6.4%
Allergan, Inc. 1,275 137
C.R. Bard, Inc. 1,700 125
Cardinal Health, Inc. 1,500 96
Express Scripts, Inc. (a) 1,925 138
Johnson & Johnson, Inc. 1,000 60
Laboratory Corp. of America Holdings (a) 2,575 160
-----
716
Hotels & Motels - 0.7%
Choice Hotels International, Inc. 1,200 73
Insurance - 2.7%
The Chubb Corp. 2,800 140
W. R. Berkley Corp. 4,512 154
-----
294
Manufacturing - 2.9%
Commercial Metals Co. 3,000 77
Precision Castparts Corp. 2,275 136
Taiwan Semiconductor Manufacturing Co. Ltd.
ADR 11,484 105
-----
318
Multimedia - 0.6%
News Corp., Class B 3,500 71
Personal Care - 1.1%
Colgate-Palmolive Co. 2,000 120
Publishing - 0.6%
The McGraw-Hill Cos., Inc. 1,375 69
Real Estate - 1.9%
CB Richard Ellis Group, Inc., Class A (a) 3,250 81
Simon Property Group, Inc. 1,500 124
-----
205
Retail - 6.1%
Costco Wholesale Corp. 2,600 149
CVS Corp. 4,850 149
J.C. Penney Co., Inc. 1,500 101
Nordstrom, Inc. 2,050 75
</Table>
SEE FINANCIAL NOTES
54
JUNE 30, 2006 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
BALANCED FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
Retail (continued)
Polo Ralph Lauren 1,225 67
Staples, Inc. 5,725 139
-----
680
Services - 4.0%
Accenture Ltd., Class A 3,600 102
Cognizant Technology Solutions Corp. (a) 1,000 67
Ecolab, Inc. 2,000 81
Fastenal Co. 3,100 125
First Data Corp. 1,500 68
-----
443
Telecommunications - 2.5%
America Movil S.A. de C.V. ADR 3,425 114
Nokia Corp. ADR 5,000 101
Verizon Communications, Inc. 2,000 67
-----
282
-----
TOTAL COMMON STOCKS 6,620
Cost: $6,218
<Caption>
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.2%
First Horizon Alternative Mortgage
Securities, 4.74%, 06/25/34 (b) 11 10
5.50%, 03/25/35 (b) 16 16
-----
Cost: $27 26
CORPORATE BONDS - 9.0%
Banks - 0.9%
Bank of America Corp., 4.38%, 12/01/10 50 48
Capital One Bank, 6.50%, 06/13/13 50 51
-----
99
Chemicals - 0.4%
Amgen, Inc., 6.50%, 12/01/07 40 40
Computers - 0.1%
Corning, Inc., 6.20%, 03/15/16 15 15
Construction - 0.2%
KB Home, 5.88%, 01/15/15 15 13
Pulte Homes, Inc., 6.00%, 02/15/35 10 8
-----
21
Energy & Utilities - 0.6%
Atmos Energy, 4.95%, 10/15/14 15 14
Chesapeake Energy Corp., 6.88%, 01/15/16 20 19
Enterprise Products Partners LP, 4.95%,
06/01/10 20 19
XTO Energy, Inc., 5.30%, 06/30/15 20 18
-----
70
Entertainment - 0.2%
Comcast Cable Communications, 8.38%, 05/01/07 25 26
Financial - Diversified - 3.4%
Chase Issuance Trust, 3.22%, 06/15/10 100 98
CIT Group, Inc., 5.00%, 02/01/15 50 46
Citigroup, Inc., 5.32%, 05/18/10 (b) 50 50
HSBC Finance Corp., 4.63%, 09/15/10 50 48
International Lease Finance Corp., 5.80%,
08/15/07 50 51
JPMorgan Chase & Co., 3.13%, 12/11/06 50 49
Liberty Mutual Group, 5.75%, 03/15/14 (c) 10 9
Riddell Bell Holdings, 8.38%, 10/01/12 15 15
-----
366
Financial Services - 0.4%
Franklin Resources, Inc., 3.70%, 04/15/08 48 46
</Table>
SEE FINANCIAL NOTES
55
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
BALANCED FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
Food - 0.5%
Pepsi Bottling Group, Inc., 5.63%, 02/17/09
(c) 50 50
Healthcare - 0.4%
Medtronic, Inc., 4.75%, 09/15/15 50 46
Investment Banking & Brokerage - 0.1%
The Goldman Sachs Group, Inc., 5.00%,
10/01/14 15 14
Manufacturing - 0.0%*
American Standard, Inc., 7.38%, 02/01/08 5 5
Real Estate - 0.0%*
Brandywine Realty Trust, 5.40%, 11/01/14 5 5
Restaurants - 0.5%
Domino's, Inc., 8.25%, 07/01/11 7 7
McDonald's Corp., 5.00%, 02/15/15 50 46
-----
53
Telecommunications - 1.3%
AT&T, Inc., 5.88%, 02/01/12 50 50
Directv Holdings, 6.38%, 06/15/15 30 28
Sprint Nextel Corp., 6.00%, 01/15/07 50 49
7.38%, 08/01/15 10 10
-----
137
-----
TOTAL CORPORATE BONDS 993
Cost: $1,028
FOREIGN GOVERNMENT BOND - 0.1%
United Mexican States, 6.75%, 09/27/34 15 15
Cost: $15
U.S. GOVERNMENT AGENCY OBLIGATIONS - 18.9%
Federal Farm Credit Bank - 1.1%
5.83%, 01/14/08 25 25
5.43%, 10/24/12 100 98
-----
123
Federal Home Loan Bank - 4.1%
4.28%, 11/05/07 100 99
4.50%, 02/15/08 100 98
5.50%, 01/12/11 50 49
5.20%, 05/11/12 15 15
6.00%, 12/28/15 100 98
4.88%, 03/11/16 100 95
-----
454
Federal Home Loan Mortgage Corporation - 5.0%
3.25%, 02/25/08 4 4
4.55%, 01/20/11 5 5
4.50%, 01/15/13 9 9
5.00%, 10/01/18 94 91
5.50%, 10/01/18 61 59
5.20%, 03/05/19 40 38
5.50%, 08/20/19 20 19
6.00%, 12/01/20 46 46
5.50%, 03/01/21 97 95
5.50%, 04/01/21 97 95
5.00%, 06/01/35 94 88
-----
549
Federal National Mortgage Association - 8.7%
5.25%, 01/15/09 14 14
5.00%, 08/10/10 100 98
6.00%, 05/10/12 25 25
4.38%, 09/15/12 4 4
5.00%, 04/15/15 20 19
5.55%, 08/04/15 100 97
6.00%, 02/25/17 104 103
5.00%, 10/01/18 89 86
4.50%, 06/01/19 136 128
5.00%, 09/01/19 37 36
5.50%, 03/25/29 100 99
6.50%, 07/01/32 2 2
6.00%, 11/01/32 2 2
5.50%, 03/01/33 25 24
4.58%, 12/01/34 37 36
4.86%, 01/01/35 20 20
4.82%, 08/01/35 95 92
5.50%, 10/01/35 99 95
-----
980
-----
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 2,106
Cost: $2,163
</Table>
SEE FINANCIAL NOTES
56
JUNE 30, 2006 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
BALANCED FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
U.S. TREASURY NOTES - 5.5%
6.50%, 02/15/10 100 105
4.00%, 03/15/10 100 96
3.88%, 05/15/10 35 33
4.75%, 05/15/14 10 10
4.00%, 02/15/15 100 92
4.13%, 05/15/15 30 28
4.50%, 11/15/15 100 95
4.50%, 02/15/16 100 95
5.38%, 02/15/31 50 51
-----
Cost: $625 605
REPURCHASE AGREEMENTS - 5.9%
Fifth Third Bank, Inc.,
4.95%, 07/03/06
(Date of agreement 06/30/06, proceeds at maturity $654,
collateralized by Federal Home Loan Mortgage Corp.
security, 3.45%, 03/12/08, market value $674)
Cost: $654 654 654
-----
TOTAL INVESTMENTS - 99.4% 11,019
Cost: $10,730
</Table>
Percentages indicated are based on net assets of $11,081.
(a) Non-income producing security.
(b) Variable rate security. The rate presented represents the rate in effect at
June 30, 2006.
(c) Rule 144A security.
* Rounds to less than 0.1%.
ADR - American Depositary Receipt
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
57
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
INCOME FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 22.5%
Capital One Auto Finance Trust,
3.07%, 07/15/08 (a) 426 425
Capital One Multi-Asset Execution Trust,
5.38%, 09/15/11 (a) (b) 700 703
Chase Manhattan Auto Owner Trust,
4.88%, 06/15/12 240 236
Citibank Credit Card Issuance Trust,
6.88%, 11/16/09 375 381
3.50%, 08/16/10 285 273
Citigroup Commercial Mortgage Trust,
4.22%, 09/20/51 (c) 500 475
CNH Equipment Trust,
3.64%, 09/17/07 (a) 328 327
Crusade Global Trust,
5.30%, 11/19/37 (a) (b) 437 436
First Horizon Alternative Mortgage
Securities,
4.74%, 06/25/34 (b) 839 823
First Union National Bank Commercial
Mortgage,
6.94%, 10/15/32 (b) 370 372
6.42%, 08/15/33 (b) 300 308
Granite Mortgages plc,
5.24%, 07/20/20 (a) (b) 664 664
Greenwich Capital Commercial Funding Corp.,
4.95%, 01/11/35 525 502
3.92%, 08/10/42 381 371
GS Mortgage Securities Corp. II,
4.61%, 01/10/40 800 749
Harley-Davidson Motorcycle Trust,
3.20%, 05/15/12 658 640
LB-UBS Commercial Mortgage Trust,
7.95%, 05/15/25 (b) 525 561
3.27%, 09/15/26 438 431
6.65%, 11/15/27 425 440
6.37%, 12/15/28 (b) 500 513
MLCC Mortgage Investors, Inc.,
5.55%, 03/25/30 (a) (b) 499 499
Puma Finance Limited,
5.37%, 08/09/35 (a) (b) (c) 690 691
Wachovia Bank Commercial Mortgage Trust,
4.96%, 11/15/35 500 473
------
Cost: $11,426 11,293
CORPORATE BONDS - 12.9%
Airlines - 1.4%
Delta Air Lines,
6.42%, 07/02/12 110 111
6.72%, 01/02/23 124 126
Northwest Airlines, Inc.,
6.26%, 11/20/21 461 460
------
697
Broadcasting - 0.4%
Rogers Cable, Inc.,
5.50%, 03/15/14 250 222
Construction - 0.4%
KB Home,
5.88%, 01/15/15 250 218
Electrical Equipment - 1.4%
Chartered Semiconductor,
6.25%, 04/04/13 500 485
Flextronics International, Ltd.,
6.50%, 05/15/13 250 238
------
723
Energy & Utilities - 0.5%
Chesapeake Energy Corp.,
6.50%, 08/15/17 250 228
Financial - Diversified - 1.0%
Merrill Lynch & Co.,
6.05%, 05/16/16 500 497
Insurance - 1.0%
W. R. Berkley Corp.,
5.60%, 05/15/15 300 283
Fidelity National Financial,
5.25%, 03/15/13 250 228
------
511
Multimedia - 2.4%
Time Warner, Inc.,
7.70%, 05/01/32 510 554
Viacom, Inc.,
6.25%, 04/30/16 (c) 675 655
------
1,209
</Table>
SEE FINANCIAL NOTES
58
JUNE 30, 2006 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
INCOME FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
Real Estate - 1.9%
iStar Financial, Inc.,
5.88%, 03/15/16 500 480
Simon Property Group LP,
5.10%, 06/15/15 500 462
------
942
Restaurants - 0.5%
Domino's, Inc.,
8.25%, 07/01/11 250 259
Telecommunications - 2.0%
America Movil S.A. de C.V.,
5.50%, 03/01/14 500 462
Embarq Corp.,
8.00%, 06/01/36 520 523
------
985
------
TOTAL CORPORATE BONDS 6,491
Cost: $6,695
U.S. GOVERNMENT AGENCY OBLIGATIONS - 34.4%
Federal Home Loan Mortgage Corporation - 11.6%
5.50%, 07/15/36 (d) (e) 6,100 5,857
Federal National Mortgage Association - 22.8%
5.76%, 12/25/11 200 202
4.50%, 07/01/20 (d) (e) 2,700 2,552
5.00%, 07/15/20 (d) (e) 3,100 2,985
5.00%, 07/01/35 (d) (e) 4,300 4,019
6.50%, 07/01/32 (d) (e) 1,700 1,708
------
11,466
------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 17,323
Cost: $17,458
U.S. TREASURY NOTES - 32.8%
4.88%, 05/31/08 3,000 2,983
4.88%, 05/15/09 2,500 2,483
4.88%, 05/31/11 3,600 3,563
4.00%, 11/15/12 3,470 3,262
5.13%, 05/15/16 1,900 1,898
5.38%, 02/15/31 2,283 2,322
------
Cost: $16,778 16,511
REPURCHASE AGREEMENTS - 31.4%
Fifth Third Bank, Inc.,
4.95%, 07/03/06 (a)
(Date of agreement 06/30/06, proceeds at maturity $15,811,
collateralized by Federal Home Loan Mortgage Corp.
security, 3.45%, 03/12/08, market value $16,280)
Cost: $15,805 15,805 15,805
------
TOTAL INVESTMENTS - 134.0% 67,423
Cost: $68,162
</Table>
Percentages indicated are based on net assets of $50,321.
(a) Security considered collateral for "to be announced" mortgage dollar roll
transactions.
(b) Variable rate security. The rate presented represents the rate in effect at
June 30, 2006.
(c) Rule 144A security.
(d) Security was traded on a "to be announced" basis.
(e) Security was acquired under a mortgage dollar roll transaction.
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
59
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
MONEY MARKET FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
CERTIFICATES OF DEPOSITS - 0.2%
City National Bank of New Jersey,
4.25%, 03/14/07 (a) 100 100
Self Help Credit Union,
4.73%, 03/14/07 (a) 100 100
------
TOTAL CERTIFICATES OF DEPOSIT 200
Cost: $200
COMMERCIAL PAPER - 85.4%
American General Finance Corp.,
5.11%, 07/06/06 443 443
5.40%, 08/30/06 1,000 991
Atlantis One Funding Corp.,
5.07%, 07/25/06 (b) 1,000 997
5.21%, 08/18/06 (b) 1,000 993
5.17%, 09/07/06 (b) 1,050 1,040
5.42%, 09/21/06 (b) 1,125 1,111
Barclays Capital plc,
5.17%, 08/16/06 2,000 1,987
Barton Capital LLC,
5.33%, 07/10/06 (b) 1,028 1,027
5.17%, 08/11/06 (b) 1,548 1,539
Charta Corp.,
5.06%, 07/11/06 (b) 1,500 1,498
5.08%, 07/12/06 (b) 1,750 1,747
5.14%, 08/03/06 (b) 1,000 995
Cooperative Association of Tractor Dealers,
5.08%, 07/25/06 588 586
5.16%, 07/26/06 263 262
5.03%, 07/27/06 1,040 1,036
5.16%, 08/01/06 555 553
5.03%, 08/07/06 1,195 1,189
5.23%, 08/29/06 250 248
5.26%, 11/21/06 288 282
Countrywide Home Loans,
5.30%, 07/03/06 1,047 1,047
5.11%, 07/13/06 600 599
5.25%, 07/20/06 1,543 1,538
Fountain Square,
5.08%, 07/31/06 (b) 1,347 1,340
5.11%, 08/03/06 (b) 514 512
5.12%, 08/04/06 (b) 1,125 1,120
5.18%, 08/24/06 (b) 1,089 1,081
Galaxy Funding, Inc.,
5.09%, 08/08/06 (b) 2,551 2,537
5.20%, 08/10/06 (b) 1,200 1,193
5.09%, 08/17/06 (b) 560 556
Galleon Capital,
5.06%, 07/07/06 (b) 794 793
5.05%, 07/13/06 (b) 1,300 1,298
5.09%, 07/28/06 (b) 2,185 2,177
General Re Corp.,
4.97%, 07/17/06 3,948 3,939
Harley-Davidson Funding Corp.,
5.12%, 07/14/06 (b) 1,004 1,002
ING America Insurance,
4.99%, 07/19/06 4,298 4,287
Merrill Lynch & Co., Inc.,
4.92%, 07/05/06 2,156 2,154
4.93%, 07/12/06 995 994
4.96%, 07/14/06 1,148 1,146
Metlife Funding, Inc.,
5.14%, 08/02/06 (b) 2,425 2,414
Mid States Federal Credit Union Corp.,
5.27%, 07/25/06 1,380 1,375
Rabobank,
4.87%, 07/05/06 500 500
5.23%, 09/29/06 3,411 3,368
Societe Generale,
5.01%, 07/19/06 134 134
5.17%, 08/08/06 900 895
5.09%, 08/09/06 1,267 1,260
5.14%, 08/15/06 281 279
5.20%, 08/22/06 1,600 1,588
Toronto Dominion Bank,
5.10%, 07/24/06 (b) 3,360 3,349
5.50%, 10/27/06 (b) 500 491
UBS Finance Corp.,
4.99%, 07/07/06 3,000 2,999
5.17%, 08/21/06 200 199
5.17%, 08/22/06 1,000 993
Verizon Network Funding,
5.10%, 07/06/06 2,000 1,998
5.19%, 07/17/06 600 599
5.23%, 08/17/06 1,621 1,610
------
TOTAL COMMERCIAL PAPER 71,888
Cost: $71,888
</Table>
SEE FINANCIAL NOTES
60
JUNE 30, 2006 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
MONEY MARKET FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
MUNICIPAL NOTES - 4.2%
New York State Housing Finance Agency,
5.36%, 11/15/29 (c) 3,500 3,500
Cost: $3,500
U.S. GOVERNMENT AGENCY OBLIGATIONS - 9.2%
Federal Home Loan Bank - 3.8%
5.25%, 07/21/06 1,000 997
5.31%, 08/23/06 489 485
5.30%, 09/15/06 1,652 1,634
------
3,116
Federal Home Loan Mortgage Corporation - 3.5%
4.91%, 07/18/06 2,085 2,080
5.06%, 08/22/06 100 99
5.31%, 10/10/06 836 824
------
3,003
Federal National Mortgage Association - 1.9%
5.06%, 08/21/06 100 99
5.26%, 09/13/06 1,540 1,524
------
1,623
------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 7,742
Cost: $7,742
TOTAL INVESTMENTS - 99.0% 83,330
Cost: $83,330
</Table>
Percentages indicated are based on net assets of $84,161.
(a) Restricted security which may not be publicly sold without registration
under the Securities Act of 1933.
(b) Rule 144A security.
(c) Variable rate security. The rate presented represents the rate in effect at
June 30, 2006.
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
61
STATEMENTS OF ASSETS
AND LIABILITIES
<Table>
<Caption>
Core Growth Emerging Growth Small Cap Core
Fund Fund Growth Fund
- ------------------------------------------------------------------------------------------------
ASSETS
Investments, at value $306,392,944 $ 167,465,295 $35,801,980
Repurchase agreements 8,951,234 9,454,854 2,709,744
------------------------------------------------
Total investments 315,344,178 176,920,149 38,511,724
Cash -- -- --
Foreign currency -- -- --
Receivables:
Interest and dividends 285,842 58,358 4,108
Investments sold -- 1,742,979 290,671
Tax reclaims -- -- --
Capital shares issued 131,183 43,954 24,458
Due from investment adviser -- -- --
Prepaid expenses 29,105 21,362 7,614
------------------------------------------------
Total assets 315,790,308 178,786,802 38,838,575
LIABILITIES
Payables:
Dividends to shareholders -- -- --
Investments purchased -- 1,768,088 880,641
Capital shares redeemed 308,913 68,699 --
Investment management fees 63,468 69,887 7,428
Administrative fees 19,040 10,483 2,228
Distribution fees 27,214 17,383 3,714
Shareholder service fees 11,765 4,540 871
Transfer agent expenses 174,026 117,902 22,378
Other accrued expenses 97,960 56,102 11,373
------------------------------------------------
Total liabilities 702,386 2,113,084 928,633
- ------------------------------------------------------------------------------------------------
NET ASSETS $315,087,922 $ 176,673,718 $37,909,942
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
NET ASSETS
Standard Shares:
Net assets $268,593,019 $ 170,703,590 $37,909,942
Number of shares outstanding 13,157,655 10,409,102 3,037,225
Net asset value, offering and redemption
price per share $ 20.41 $ 16.40 $ 12.48
Institutional Shares:
Net assets $ 44,835,952 $ 899,284 --
Number of shares outstanding 2,614,031 52,554 --
Net asset value, offering and redemption
price per share $ 17.15 $ 17.11 --
Administrative Shares:
Net assets $ 1,658,951 $ 5,070,844 --
Number of shares outstanding 79,132 302,338 --
Net asset value, offering and redemption
price per share $ 20.96 $ 16.77 --
Net assets consist of:
Paid-in capital $319,633,625 $ 308,007,727 $30,991,415
Accumulated (Distributions in excess of) net
investment income/loss -- -- --
Accumulated net realized gains/losses on
investments and foreign currencies (27,010,081) (173,908,556) 439,733
Net unrealized appreciation/depreciation on
investments and foreign currencies 22,464,378 42,574,547 6,478,794
- ------------------------------------------------------------------------------------------------
NET ASSETS $315,087,922 $ 176,673,718 $37,909,942
- ------------------------------------------------------------------------------------------------
Investments, at cost $292,879,800 $ 134,345,602 $32,032,930
Foreign currency, at cost -- -- --
</Table>
SEE FINANCIAL NOTES
62
AS OF JUNE 30, 2006
<Table>
<Caption>
Value Global Equity Balanced Income Money Market
Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------
$35,507,132 $ 76,901,465 $10,364,594 $51,618,311 $83,330,334
2,974,128 4,732,039 654,108 15,804,892 --
- --------------------------------------------------------------------------
38,481,260 81,633,504 11,018,702 67,423,203 83,330,334
-- -- -- -- 1,783,701
-- 55,176 -- -- --
31,060 153,431 47,642 309,750 14,115
-- -- 103,203 -- --
-- 84,211 -- -- --
5,570 7,646 -- 961 553,814
27,302 -- 3,443 -- --
22,304 18,865 6,003 10,476 20,802
- --------------------------------------------------------------------------
38,567,496 81,952,833 11,178,993 67,744,390 85,702,766
-- -- 4,520 16,477 9,204
-- -- 66,930 17,287,247 --
5,153 261,074 11,386 49,548 1,435,319
10,741 32,530 2,907 13,356 12,289
2,302 4,878 671 3,082 5,267
3,291 8,059 1,118 5,137 --
911 2,117 271 1,100 1,952
20,869 59,488 6,247 28,985 51,238
6,742 25,428 4,367 18,784 26,808
- --------------------------------------------------------------------------
50,009 393,574 98,417 17,423,716 1,542,077
- --------------------------------------------------------------------------
$38,517,487 $ 81,559,259 $11,080,576 $50,320,674 $84,160,689
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
$33,081,217 $ 79,440,548 $11,080,576 $50,320,674 $74,260,055
2,597,051 4,335,059 904,997 5,293,367 74,358,406
$ 12.74 $ 18.33 $ 12.24 $ 9.51 $ 1.00
$ 5,436,270 $ 733,295 -- -- $ 9,900,634
427,368 38,488 -- -- 9,905,941
$ 12.72 $ 19.05 -- -- $ 1.00
-- $ 1,385,416 -- -- --
-- 74,256 -- -- --
-- $ 18.66 -- -- --
$39,814,554 $ 188,267,433 $10,656,282 $57,913,686 $84,198,296
54,391 (4,618) -- -- 989
(6,805,238) (121,503,988) 135,788 (6,854,600) (38,596)
5,453,780 14,800,432 288,506 (738,412) --
- --------------------------------------------------------------------------
$38,517,487 $ 81,559,259 $11,080,576 $50,320,674 $84,160,689
- --------------------------------------------------------------------------
$33,027,480 $ 66,837,525 $10,730,196 $68,161,615 $83,330,334
-- 54,873 -- -- --
</Table>
SEE FINANCIAL NOTES
63
STATEMENTS OF OPERATIONS
<Table>
<Caption>
Core Growth Emerging Growth Small Cap Core
Fund Fund Growth Fund
- -----------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 552,403 $ 145,257 $ 70,862
Dividend (1) 3,155,004 908,826 135,769
- -----------------------------------------------------------------------------------------------
Total investment income 3,707,407 1,054,083 206,631
EXPENSES
Investment management fees 1,692,307 1,747,371 170,069
Administrative fees 507,694 262,106 51,021
Distribution fees:
Standard shares 716,121 421,237 85,035
Administrative shares 4,100 13,172 --
Shareholder service fees:
Standard shares 725,794 106,057 19,095
Institutional shares 671 95 --
Administrative shares 114 114 --
Transfer agent expenses:
Standard shares 633,684 461,785 98,684
Institutional shares 2,232 317 --
Administrative shares 1,134 1,977 --
Accounting expenses 130,413 69,595 15,606
Custody expenses 11,723 5,676 2,300
Registration expenses 37,297 34,286 14,708
Trustee expenses 61,896 31,445 5,853
Other expenses 250,298 142,949 27,947
- -----------------------------------------------------------------------------------------------
Total expenses before reimbursements or
waivers 4,775,478 3,298,182 490,318
Reimbursements or waivers from adviser -- -- --
- -----------------------------------------------------------------------------------------------
Net expenses 4,775,478 3,298,182 490,318
- -----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME/LOSS $ (1,068,071) $(2,244,099) $ (283,687)
REALIZED AND UNREALIZED GAINS/LOSSES ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS
Realized gains/losses on investments and
foreign currency transactions $ 46,437,932 $16,391,277 $3,401,326
Change in unrealized
appreciation/depreciation on investments
and foreign currencies (32,840,999) 11,851,314 938,778
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gains/losses
on investments and foreign currencies 13,596,933 28,242,591 4,340,104
CHANGE IN NET ASSETS FROM OPERATIONS $ 12,528,862 $25,998,492 $4,056,417
(1) Dividend income net of withholding taxes. For the year ended June 30, 2006, withholding
taxes for the Global Equity Fund were $37,866.
</Table>
SEE FINANCIAL NOTES
64
YEAR ENDED JUNE 30, 2006
<Table>
<Caption>
Value Global Equity Balanced Income Money Market
Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------
$ 44,536 $ 78,752 $ 160,525 $ 2,613,695 $3,659,069
433,469 1,541,077 59,366 -- --
- -----------------------------------------------------------------------
478,005 1,619,829 219,891 2,613,695 3,659,069
232,268 830,403 59,447 356,345 305,002
49,772 124,561 13,718 82,234 130,716
79,883 201,278 22,864 137,056 --
-- 3,848 -- -- --
18,215 49,871 5,718 29,275 46,451
5 57 -- -- 464
-- 47 -- -- --
83,755 264,867 19,535 108,218 181,949
200 219 -- -- 1,404
-- 1,642 -- -- --
15,138 50,642 14,276 27,424 33,713
2,557 13,274 6,110 3,375 8,806
17,786 34,608 13,805 15,083 29,128
5,723 15,324 1,551 10,328 15,292
28,842 67,592 7,835 48,564 68,268
- -----------------------------------------------------------------------
534,144 1,658,233 164,859 817,902 821,193
(110,530) -- (45,767) -- --
- -----------------------------------------------------------------------
423,614 1,658,233 119,092 817,902 821,193
- -----------------------------------------------------------------------
$ 54,391 $ (38,404) $ 100,799 $ 1,795,793 $2,837,876
1,120,508
$ $ 3,754,241 $ 215,779 $(1,579,679) $ (62)
1,764,193 8,302,807 (140,549) (1,158,558) --
- -----------------------------------------------------------------------
2,884,701 12,057,048 75,230 (2,738,237) (62)
$2,939,092 $12,018,644 $ 176,029 $ (942,444) $2,837,814
</Table>
SEE FINANCIAL NOTES
65
STATEMENTS OF CHANGES
IN NET ASSETS
<Table>
<Caption>
CORE GROWTH FUND EMERGING GROWTH FUND
- ---------------------------------------------------------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
06/30/06 06/30/05 06/30/06 06/30/05
- ---------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income/loss $ (1,068,071) $ (708,531) $ (2,244,099) $ (2,286,103)
Realized gains/losses on investments and
foreign currency transactions 46,437,932 13,066,631 16,391,277 (2,034,432)
Change in unrealized appreciation/
depreciation on investments and foreign
currencies (32,840,999) 15,286,460 11,851,314 17,191,037
- ---------------------------------------------------------------------------------------------------
Change in net assets from operations 12,528,862 27,644,560 25,998,492 12,870,502
Dividends to Shareholders:
From net realized gains on investments:
Standard Shares -- -- -- --
- ---------------------------------------------------------------------------------------------------
Total dividends -- -- -- --
Change in net assets from capital
transactions (21,131,884) (48,783,373) (15,191,378) (27,903,648)
CHANGE IN NET ASSETS $ (8,603,022) $(21,138,813) $ 10,807,114 $(15,033,146)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period $323,690,944 $344,829,757 $165,866,604 $180,899,750
End of period $315,087,922 $323,690,944 $176,673,718 $165,866,604
- ---------------------------------------------------------------------------------------------------
Accumulated (distributions in excess of)
net investment income/loss $ -- $ -- $ -- $ --
- ---------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS
Standard Shares
Proceeds from shares issued $ 19,766,782 $ 13,543,217 $ 23,763,198 $ 13,949,825
Dividends reinvested -- -- -- --
Cost of shares redeemed (40,508,379) (48,788,003) (36,013,649) (34,269,158)
---------------------------------------------------------
Net change (20,741,597) (35,244,786) (12,250,451) (20,319,333)
---------------------------------------------------------
Institutional Shares
Proceeds from shares issued $ 28,867,126 $ 18,399,176 $ 232,979 $ 559,501
Cost of shares redeemed (29,194,052) (31,826,203) (2,151,187) (1,710,905)
---------------------------------------------------------
Net change (326,926) (13,427,027) (1,918,208) (1,151,404)
---------------------------------------------------------
Administrative Shares
Proceeds from shares issued $ 531,600 $ 426,879 $ 854,234 $ 890,326
Cost of shares redeemed (594,961) (538,439) (1,876,953) (7,323,237)
---------------------------------------------------------
Net change (63,361) (111,560) (1,022,719) (6,432,911)
---------------------------------------------------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $(21,131,884) $(48,783,373) $(15,191,378) $(27,903,648)
- ---------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS
Standard Shares
Issued 933,592 728,440 1,485,237 1,059,522
Reinvested -- -- -- --
Redeemed (1,923,535) (2,622,290) (2,282,753) (2,599,019)
---------------------------------------------------------
Net change (989,943) (1,893,850) (797,516) (1,539,497)
---------------------------------------------------------
Institutional Shares
Issued 1,646,381 1,176,634 13,737 41,357
Redeemed (1,651,566) (2,082,889) (141,270) (124,903)
---------------------------------------------------------
Net change (5,185) (906,255) (127,533) (83,546)
---------------------------------------------------------
Administrative Shares
Issued 24,473 22,427 51,723 67,524
Redeemed (28,026) (28,441) (116,060) (576,879)
---------------------------------------------------------
Net change (3,553) (6,014) (64,337) (509,355)
---------------------------------------------------------
CHANGE IN SHARES FROM SHARE TRANSACTIONS (998,681) (2,806,119) (989,386) (2,132,398)
- ---------------------------------------------------------------------------------------------------
* The Value Fund Institutional shares commenced operations on March 31, 2006.
</Table>
SEE FINANCIAL NOTES
66
<Table>
<Caption>
SMALL CAP CORE GROWTH FUND VALUE FUND GLOBAL EQUITY FUND
- -------------------------------------------------------------------------------------------
For the year For the year For the year For the year For the year For the year
ended ended ended ended ended ended
06/30/06 06/30/05 6/30/2006 * 06/30/05 06/30/06 06/30/05
- -------------------------------------------------------------------------------------------
$ (283,687) $ (300,309) $ 54,391 $ (28,176) $ (38,404) $ 141,025
3,401,326 (2,896,785) 1,120,508 1,338,604 3,754,241 6,000,124
938,778 4,753,730 1,764,193 1,273,049 8,302,807 (2,235,549)
- -------------------------------------------------------------------------------------------
4,056,417 1,556,636 2,939,092 2,583,477 12,018,644 3,905,600
-- (1,298,737) -- -- -- --
- -------------------------------------------------------------------------------------------
-- (1,298,737) -- -- -- --
3,794,453 99,867 7,787,498 1,336,365 (15,299,387) (22,076,750)
$ 7,850,870 $ 357,766 $10,726,590 $ 3,919,842 $ (3,280,743) $(18,171,150)
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
$30,059,072 $29,701,306 $27,790,897 $23,871,055 $ 84,840,002 $103,011,152
$37,909,942 $30,059,072 $38,517,487 $27,790,897 $ 81,559,259 $ 84,840,002
- -------------------------------------------------------------------------------------------
$ -- $ -- $ 54,391 $ -- $ (4,618) $ (13,609)
- -------------------------------------------------------------------------------------------
$10,643,513 $ 7,867,590 $13,809,233 $ 8,531,488 $ 7,340,857 $ 7,159,084
-- 1,265,634 -- -- -- --
(6,849,060) (9,033,357) (11,505,434) (7,195,123) (19,880,961) (26,154,054)
- -------------------------------------------------------------------------------------------
3,794,453 99,867 2,303,799 1,336,365 (12,540,104) (18,994,970)
- -------------------------------------------------------------------------------------------
-- -- 5,483,699 -- $ 5,389 $ 613,484
-- -- -- -- (2,346,225) (3,015,760)
- -------------------------------------------------------------------------------------------
-- -- 5,483,699 -- (2,340,836) (2,402,276)
- -------------------------------------------------------------------------------------------
-- -- -- -- $ 267,371 $ 313,429
-- -- -- -- (685,818) (992,933)
- -------------------------------------------------------------------------------------------
-- -- -- -- (418,447) (679,504)
- -------------------------------------------------------------------------------------------
$ 3,794,453 $ 99,867 $ 7,787,498 $ 1,336,365 $(15,299,387) $(22,076,750)
- -------------------------------------------------------------------------------------------
873,576 750,734 1,115,039 795,995 416,762 468,530
-- 117,843 -- -- -- --
(569,176) (876,978) (913,517) (671,471) (1,148,666) (1,701,043)
- -------------------------------------------------------------------------------------------
304,400 (8,401) 201,522 124,524 (731,904) (1,232,513)
- -------------------------------------------------------------------------------------------
-- -- 427,368 -- 116 38,057
-- -- -- -- (137,975) (198,226)
- -------------------------------------------------------------------------------------------
-- -- 427,368 -- (137,859) (160,169)
- -------------------------------------------------------------------------------------------
-- -- -- -- 14,995 20,183
-- -- -- -- (37,945) (62,430)
- -------------------------------------------------------------------------------------------
-- -- -- -- (22,950) (42,247)
- -------------------------------------------------------------------------------------------
304,400 (8,401) 628,890 124,524 (892,713) (1,434,929)
- -------------------------------------------------------------------------------------------
</Table>
SEE FINANCIAL NOTES
67
STATEMENTS OF CHANGES
IN NET ASSETS
<Table>
<Caption>
BALANCED FUND INCOME FUND
- -----------------------------------------------------------------------------------------------
For the year For the For the year For the year
ended year ended ended ended
06/30/06 06/30/05 06/30/06 06/30/05
- -----------------------------------------------------------------------------------------------
OPERATIONS
Net investment income/loss $ 100,799 $ 40,601 $ 1,795,793 $ 2,111,638
Realized gains/losses on investments
and foreign currency transactions 215,779 (77,836) (1,579,679) 352,980
Change in unrealized appreciation/
depreciation on investments and
foreign currencies (140,549) 350,600 (1,158,558) 552,719
- -----------------------------------------------------------------------------------------------
Change in net assets from operations 176,029 313,365 (942,444) 3,017,337
Dividends to Shareholders:
From net investment income:
Standard Shares (101,583) (41,749) (1,825,925) (2,182,135)
Institutional Shares -- -- -- --
From net realized gains on
investments:
Standard Shares -- (72,335) -- --
- -----------------------------------------------------------------------------------------------
Total dividends (101,583) (114,084) (1,825,925) (2,182,135)
Change in net assets from capital
transactions 5,514,670 2,488,096 (3,507,745) (3,800,843)
CHANGE IN NET ASSETS $ 5,589,116 $2,687,377 $ (6,276,114) $ (2,965,641)
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period $ 5,491,460 $2,804,083 $ 56,596,788 $ 59,562,429
End of period $11,080,576 $5,491,460 $ 50,320,674 $ 56,596,788
- -----------------------------------------------------------------------------------------------
Accumulated (distributions in excess
of) net investment income/loss $ -- $ (1) $ -- $ 1
- -----------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS
Standard Shares
Proceeds from shares issued $ 7,086,693 $3,202,991 $ 6,731,817 $ 5,746,190
Dividends reinvested 87,089 116,909 1,653,835 2,140,899
Cost of shares redeemed (1,659,112) (831,804) (11,893,397) (11,687,932)
--------------------------------------------------------
Net change 5,514,670 2,488,096 (3,507,745) (3,800,843)
--------------------------------------------------------
Institutional Shares
Proceeds from shares issued -- -- -- --
Dividends reinvested -- -- -- --
Cost of shares redeemed -- -- -- --
--------------------------------------------------------
Net change -- -- -- --
--------------------------------------------------------
CHANGE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ 5,514,670 $2,488,096 $ (3,507,745) $ (3,800,843)
- -----------------------------------------------------------------------------------------------
SHARE TRANSACTIONS
Standard Shares
Issued 568,623 278,643 687,649 572,962
Reinvested 6,975 10,053 169,782 214,215
Redeemed (133,278) (72,998) (1,222,490) (1,168,437)
--------------------------------------------------------
Net change 442,320 215,698 (365,059) (381,260)
--------------------------------------------------------
Institutional Shares
Issued -- -- -- --
Reinvested -- -- -- --
Redeemed -- -- -- --
--------------------------------------------------------
Net change -- -- -- --
--------------------------------------------------------
CHANGE IN SHARES FROM SHARE
TRANSACTIONS 442,320 215,698 (365,059) (381,260)
- -----------------------------------------------------------------------------------------------
</Table>
SEE FINANCIAL NOTES
68
<Table>
<Caption>
MONEY MARKET FUND
- --------------------------------
For the year For the year
ended ended
06/30/06 06/30/05
- --------------------------------
$ 2,837,876 $ 1,134,923
(62) (29,451)
-- --
- --------------------------------
2,837,814 1,105,472
(2,416,825) (951,801)
(420,062) (183,122)
-- --
- --------------------------------
(2,836,887) (1,134,923)
(5,327,092) (4,726,157)
$ (5,326,165) $ (4,755,608)
- --------------------------------
- --------------------------------
$ 89,486,854 $ 94,242,462
$ 84,160,689 $ 89,486,854
- --------------------------------
$ 989 $ --
- --------------------------------
$ 62,680,511 $ 67,336,900
2,342,559 946,951
(67,488,052) (74,764,898)
- --------------------------------
(2,464,982) (6,481,047)
- --------------------------------
$ 3,178,033 $ 4,217,756
419,204 187,562
(6,459,347) (2,650,428)
- --------------------------------
(2,862,110) 1,754,890
- --------------------------------
$ (5,327,092) $ (4,726,157)
- --------------------------------
62,680,511 67,336,900
2,342,559 946,951
(67,488,052) (74,764,898)
- --------------------------------
(2,464,982) (6,481,047)
- --------------------------------
3,178,033 4,217,756
419,204 187,562
(6,459,347) (2,650,428)
- --------------------------------
(2,862,110) 1,754,890
- --------------------------------
(5,327,092) (4,726,157)
- --------------------------------
</Table>
SEE FINANCIAL NOTES
69
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
SELECTED PER SHARE DATA INVESTMENT ACTIVITIES DIVIDENDS
- ---------------------------------------------------------------------------------------------------------
Net asset Net realized
value, Net and unrealized Total from From net
beginning investment gains/losses investment investment
of period income/loss on investments operations income
- ---------------------------------------------------------------------------------------------------------
CORE GROWTH FUND
STANDARD SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $19.72 (0.09) 0.78 0.69 --
Year ended June 30, 2005 18.10 (0.06) 1.68 1.62 --
Year ended June 30, 2004 16.44 (0.12) 1.78 1.66 --
Year ended June 30, 2003 16.73 (0.04) (0.25) (0.29) --
Year ended June 30, 2002 22.12 (0.09) (5.30) (5.39) --
INSTITUTIONAL SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $16.45 0.06 0.64 0.70 --
Year ended June 30, 2005 14.99 0.07 1.39 1.46 --
Year ended June 30, 2004 13.52 0.01 1.46 1.47 --
Year ended June 30, 2003 13.66 0.05 (0.19) (0.14) --
Year ended June 30, 2002 17.94 0.04 (4.32) (4.28) --
ADMINISTRATIVE SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $20.17 --(1) 0.79 0.79 --
Year ended June 30, 2005 18.44 0.02 1.71 1.73 --
Year ended June 30, 2004 16.68 (0.08) 1.84 1.76 --
Year ended June 30, 2003 16.91 0.01 (0.24) (0.23) --
Year ended June 30, 2002 22.27 (0.01) (5.35) (5.36) --
- ---------------------------------------------------------------------------------------------------------
EMERGING GROWTH FUND
STANDARD SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $14.10 (0.20)(2) 2.50 2.30 --
Year ended June 30, 2005 13.01 (0.18)(2) 1.27 1.09 --
Year ended June 30, 2004 10.96 (0.20) 2.25 2.05 --
Year ended June 30, 2003 11.82 (0.17) (0.69) (0.86) --
Year ended June 30, 2002 15.79 (0.20) (3.77) (3.97) --
INSTITUTIONAL SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $14.62 (0.12)(2) 2.61 2.49 --
Year ended June 30, 2005 13.41 (0.10)(2) 1.31 1.21 --
Year ended June 30, 2004 11.23 (0.15) 2.33 2.18 --
Year ended June 30, 2003 12.02 (0.10) (0.69) (0.79) --
Year ended June 30, 2002 15.96 (0.11)(2) (3.83) (3.94) --
ADMINISTRATIVE SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $14.37 (0.16)(2) 2.56 2.40 --
Year ended June 30, 2005 13.22 (0.14)(2) 1.29 1.15 --
Year ended June 30, 2004 11.11 (0.14) 2.25 2.11 --
Year ended June 30, 2003 11.92 (0.10) (0.71) (0.81) --
Year ended June 30, 2002 15.87 (0.13) (3.82) (3.95) --
- ---------------------------------------------------------------------------------------------------------
(1) Less than $0.005 per share.
(2) Based on average shares outstanding.
</Table>
SEE FINANCIAL NOTES
70
<Table>
<Caption>
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
Net Ratio of Ratio of net
From Net asset assets, expenses to investment
net Total value, Total end of average net income/loss
realized dividends to Redemption end return period assets, net of to average net
gains shareholders fee of period (%) ($ X 1,000) reimbursement (%) assets (%)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- -- -- $20.41 3.50 $268,593 1.52 (0.43)
-- -- -- 19.72 8.95 278,940 1.55 (0.32)
-- -- -- 18.10 10.10 290,352 1.50 (0.65)
-- -- -- 16.44 (1.73) 285,339 1.37 (0.28)
-- -- -- 16.73 (24.37) 326,793 1.34 (0.43)
- -----------------------------------------------------------------------------------------------------------------
-- -- -- $17.15 4.26 $ 44,836 0.80 0.30
-- -- -- 16.45 9.74 43,083 0.80 0.42
-- -- -- 14.99 10.96 52,842 0.77 0.08
-- -- -- 13.52 (1.02) 63,571 0.69 0.36
-- -- -- 13.66 (23.86) 85,140 0.68 0.23
- -----------------------------------------------------------------------------------------------------------------
-- -- -- $20.96 3.92 $ 1,659 1.12 (0.02)
-- -- -- 20.17 9.38 1,667 1.14 0.09
-- -- -- 18.44 10.55 1,635 1.11 (0.27)
-- -- -- 16.68 (1.36) 2,426 1.00 0.09
-- -- -- 16.91 (24.07) 2,029 0.94 (0.05)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- -- -- $16.40 16.31 $170,704 1.90 (1.30)
-- -- -- 14.10 8.38 157,963 1.96 (1.39)
-- -- -- 13.01 18.70 165,782 1.93 (1.47)
-- -- -- 10.96 (7.28) 157,911 1.95 (1.56)
-- -- -- 11.82 (25.14) 190,812 1.80 (1.39)
- -----------------------------------------------------------------------------------------------------------------
-- -- -- $17.11 17.03 $ 899 1.35 (0.77)
-- -- -- 14.62 9.02 2,633 1.33 (0.76)
-- -- -- 13.41 19.41 3,534 1.30 (0.85)
-- -- -- 11.23 (6.57) 5,379 1.25 (0.86)
-- -- -- 12.02 (24.69) 6,428 1.20 (0.78)
- -----------------------------------------------------------------------------------------------------------------
-- -- -- $16.77 16.70 $ 5,071 1.60 (1.00)
-- -- -- 14.37 8.70 5,270 1.64 (1.08)
-- -- -- 13.22 18.99 11,584 1.60 (1.13)
-- -- -- 11.11 (6.80) 8,561 1.51 (1.13)
-- -- -- 11.92 (24.89) 8,444 1.47 (1.07)
- -----------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS AND SUPPLEMENTAL DATA
-----------------------------
Ratio of
expenses to
average net Portfolio
assets, prior to turnover
reimbursement (%) rate (%)
- ----------------------------------
1.52 101.35
1.55 101.34
1.52 228.43
1.53 183.75
1.44 76.40
- ----------------------------------
0.80 101.35
0.80 101.34
0.79 228.43
0.76 183.75
0.73 76.40
- ----------------------------------
1.12 101.35
1.14 101.34
1.13 228.43
1.06 183.75
1.01 76.40
- ----------------------------------
- ----------------------------------
1.90 60.19
1.96 109.56
1.94 151.80
1.97 315.89
1.86 202.57
- ----------------------------------
1.35 60.19
1.33 109.56
1.31 151.80
1.28 315.89
1.26 202.57
- ----------------------------------
1.60 60.19
1.64 109.56
1.62 151.80
1.54 315.89
1.53 202.57
- ----------------------------------
</Table>
SEE FINANCIAL NOTES
71
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
SELECTED PER SHARE DATA INVESTMENT ACTIVITIES DIVIDENDS
- -----------------------------------------------------------------------------------------------------------------
Net realized
Net asset and unrealized
value, Net gains/losses Total from From net
beginning investment on investments investment investment
of period income/loss and foreign currencies operations income
- -----------------------------------------------------------------------------------------------------------------
SMALL CAP CORE GROWTH FUND
STANDARD SHARES
- -----------------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $11.00 (0.09) 1.57 1.48 --
Year ended June 30, 2005 10.84 (0.11) 0.77 0.66 --
Year ended June 30, 2004 8.67 (0.13) 2.30 2.17 --
Year ended June 30, 2003 9.18 (0.09) (0.42) (0.51) --
Year ended June 30, 2002 9.52 (0.08) (0.26) (0.34) --
- -----------------------------------------------------------------------------------------------------------------
VALUE FUND
STANDARD SHARES
- -----------------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $11.60 0.02 1.12 1.14 --
Year ended June 30, 2005 10.51 (0.01) 1.10 1.09 --
Year ended June 30, 2004 8.64 (0.02) 1.89 1.87 --
Year ended June 30, 2003 8.74 (0.05) (0.05) (0.10) --
One month period ended June 30,
2002 (2) 10.21 (0.01) (1.46) (1.47) --
Year ended May 31, 2002 15.29 (0.08) (3.57) (3.65) --
INSTITUTIONAL SHARES
- -----------------------------------------------------------------------------------------------------------------
Period ended June 30, 2006 (5) $12.81 0.02 (0.11) (0.09) --
- -----------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY FUND
STANDARD SHARES
- -----------------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $15.86 (0.01)(1) 2.48 2.47 --
Year ended June 30, 2005 15.18 0.02(1) 0.66 0.68 --
Year ended June 30, 2004 13.39 (0.10)(1) 1.89 1.79 --
Year ended June 30, 2003 14.22 (0.03)(1) (0.82) (0.85) --
Year ended June 30, 2002 18.31 (0.11)(1) (3.99) (4.10) --
INSTITUTIONAL SHARES
- -----------------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $16.39 0.07(1) 2.59 2.66 --
Year ended June 30, 2005 15.58 0.12(1) 0.69 0.81 --
Year ended June 30, 2004 13.65 0.04(1) 1.89 1.93 --
Year ended June 30, 2003 14.40 0.05(1) (0.82) (0.77) --
Year ended June 30, 2002 18.46 (0.01)(1) (4.06) (4.07) --
ADMINISTRATIVE SHARES
- -----------------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $16.11 0.04(1) 2.51 2.55 --
Year ended June 30, 2005 15.36 0.06(1) 0.69 0.75 --
Year ended June 30, 2004 13.51 (0.02)(1) 1.87 1.85 --
Year ended June 30, 2003 14.30 0.01(1) (0.82) (0.81) --
Year ended June 30, 2002 18.38 (0.06)(1) (4.03) (4.09) --
- -----------------------------------------------------------------------------------------------------------------
(1) Based on average shares outstanding.
(2) Subsequent to the annual report as of May 31, 2002, the Citizens Value Fund changed its fiscal year end to
June 30.
(3) Not annualized.
(4) Annualized.
(5) For the period March 31, 2006, commencement of operations, to June 30, 2006.
(6) Less than $0.005 per share.
</Table>
SEE FINANCIAL NOTES
72
<Table>
<Caption>
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
Net Ratio of Ratio of net
From Net asset assets, expenses to investment
net Total value, Total end of average net income/loss
realized dividends to Redemption end return period assets, net of to average net
gains shareholders fee (1) of period (%) ($ X 1,000) reimbursement (%) assets (%)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- -- -- $12.48 13.45 $ 37,910 1.44 (0.83)
(0.50) (0.50) -- 11.00 6.21 30,059 1.51 (1.07)
-- -- -- 10.84 25.03 29,701 1.53 (1.37)
-- -- -- 8.67 (5.56) 17,821 1.45 (1.12)
-- -- -- 9.18 (3.57) 18,459 1.34 (0.93)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- -- -- $12.74 9.83 $ 33,081 1.29 0.15
-- -- -- 11.60 10.37 27,791 1.70 (0.11)
-- -- -- 10.51 21.64 23,871 1.78 (0.23)
-- -- -- 8.64 (1.14) 16,226 1.90 (0.62)
-- -- -- 8.74 (14.40)(3) 21,060 1.95(4) (1.33)(4)
(1.43) (1.43) -- 10.21 (25.58) 24,981 1.95 (1.04)
- -----------------------------------------------------------------------------------------------------------------
-- -- -- $12.72 (0.70)(3) $ 5,436 0.90(4) 0.64(4)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- -- --(6) $18.33 15.57 $ 79,441 2.01 (0.06)
-- -- --(6) 15.86 4.48 80,384 2.05 0.13
-- -- --(6) 15.18 13.37 95,625 2.01 (0.60)
-- -- 0.02 13.39 (5.84) 101,846 1.91 (0.26)
-- -- 0.01 14.22 (22.34) 135,881 1.84 (0.66)
- -----------------------------------------------------------------------------------------------------------------
-- -- --(6) $19.05 16.23 $ 733 1.40 0.38
-- -- --(6) 16.39 5.20 2,891 1.39 0.75
-- -- --(6) 15.58 14.14 5,244 1.37 0.25
-- -- 0.02 13.65 (5.21) 6,688 1.26 0.42
-- -- 0.01 14.40 (21.99) 9,531 1.27 (0.05)
- -----------------------------------------------------------------------------------------------------------------
-- -- --(6) $18.66 15.83 $ 1,385 1.73 0.20
-- -- --(6) 16.11 4.88 1,566 1.73 0.40
-- -- --(6) 15.36 13.69 2,142 1.71 (0.11)
-- -- 0.02 13.51 (5.52) 2,059 1.59 0.11
-- -- 0.01 14.30 (22.20) 2,207 1.64 (0.39)
- -----------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS AND SUPPLEMENTAL DATA
-----------------------------
Ratio of
expenses to
average net Portfolio
assets, prior to turnover
reimbursement (%) rate (%)
- ----------------------------------
- ----------------------------------
1.44 96.80
1.51 120.89
1.53 207.80
1.58 349.79
1.40 294.26
- ----------------------------------
- ----------------------------------
1.62 58.32
1.70 172.95
1.78 130.18
1.90 209.72
2.05(4) 5.87(3)
2.54 34.77
- ----------------------------------
1.26(4) 58.32
- ----------------------------------
- ----------------------------------
2.01 36.77
2.05 80.36
2.01 49.16
1.91 42.05
1.84 132.82
- ----------------------------------
1.40 36.77
1.39 80.36
1.37 49.16
1.26 42.05
1.27 132.82
- ----------------------------------
1.73 36.77
1.73 80.36
1.71 49.16
1.59 42.05
1.64 132.82
- ----------------------------------
</Table>
SEE FINANCIAL NOTES
73
FINANCIAL HIGHLIGHTS
<Table>
<Caption>
SELECTED PER SHARE DATA INVESTMENT ACTIVITIES DIVIDENDS
- ---------------------------------------------------------------------------------------------------------
Net asset Net realized
value, Net and unrealized Total from From net
beginning investment gains/losses investment investment
of period income/loss on investments operations income
- ---------------------------------------------------------------------------------------------------------
BALANCED FUND
STANDARD SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $11.87 0.13 0.37 0.50 (0.13)
Year ended June 30, 2005 11.35 0.12 0.75 0.87 (0.12)
Year ended June 30, 2004 10.47 0.06 1.12 1.18 (0.06)
Period ended June 30, 2003(1) 10.00 0.02 0.47 0.49 (0.02)
- ---------------------------------------------------------------------------------------------------------
INCOME FUND
STANDARD SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $10.00 0.32 (0.48) (0.16) (0.33)
Year ended June 30, 2005 9.86 0.37 0.15 0.52 (0.38)
Year ended June 30, 2004 10.28 0.34 (0.40) (0.06) (0.36)
Year ended June 30, 2003 9.62 0.37 0.69 1.06 (0.40)
Year ended June 30, 2002 10.28 0.58 (0.66) (0.08) (0.58)
- ---------------------------------------------------------------------------------------------------------
MONEY MARKET FUND
STANDARD SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $ 1.00 0.03 -- 0.03 (0.03)
Year ended June 30, 2005 1.00 0.01 -- 0.01 (0.01)
Year ended June 30, 2004 1.00 --(4) -- --(4) --(4)
Year ended June 30, 2003 1.00 0.01 -- 0.01 (0.01)
Year ended June 30, 2002 1.00 0.02 -- 0.02 (0.02)
INSTITUTIONAL SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2006 $ 1.00 0.04 -- 0.04 (0.04)
Year ended June 30, 2005 1.00 0.02 -- 0.02 (0.02)
Year ended June 30, 2004 1.00 --(4) -- --(4) --(4)
Year ended June 30, 2003 1.00 0.01 -- 0.01 (0.01)
Year ended June 30, 2002 1.00 0.02 -- 0.02 (0.02)
- ---------------------------------------------------------------------------------------------------------
(1) For the period December 20, 2002, commencement of operations, to June 30, 2003.
(2) Not Annualized.
(3) Annualized.
(4) Less than $0.005 per share.
</Table>
SEE FINANCIAL NOTES
74
<Table>
<Caption>
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
Net Ratio of Ratio of net
From Net asset assets, expenses to investment
net Total value, Total end of average net income/loss
realized dividends to Redemption end return period assets, net of to average net
gains shareholders fee of period (%) ($ X 1,000) reimbursement (%) assets (%)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- (0.13) -- $12.24 4.17 $ 11,081 1.30 1.10
(0.23) (0.35) -- 11.87 7.76 5,491 1.30 1.07
(0.24) (0.30) -- 11.35 11.31 2,804 1.30 0.60
-- (0.02) -- 10.47 4.87(2) 1,061 1.30(3) 0.41(3)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- (0.33) -- $ 9.51 (1.66) $ 50,321 1.49 3.28
-- (0.38) -- 10.00 5.34 56,597 1.48 3.66
-- (0.36) -- 9.86 (0.63) 59,562 1.45 3.28
-- (0.40) -- 10.28 11.28 69,137 1.37 3.80
-- (0.58) -- 9.62 (0.87) 67,488 1.38 5.77
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- (0.03) -- $ 1.00 3.27 $ 74,260 0.98 3.22
-- (0.01) -- 1.00 1.21 76,724 1.00 1.19
-- --(4) -- 1.00 0.10 83,231 0.98 0.10
-- (0.01) -- 1.00 0.65 104,641 0.93 0.65
-- (0.02) -- 1.00 1.71 114,271 0.92 1.72
- -----------------------------------------------------------------------------------------------------------------
-- (0.04) -- $ 1.00 3.57 $ 9,901 0.69 3.48
-- (0.02) -- 1.00 1.53 12,763 0.68 1.55
-- --(4) -- 1.00 0.41 11,011 0.67 0.41
-- (0.01) -- 1.00 0.95 10,892 0.63 0.98
-- (0.02) -- 1.00 1.97 16,539 0.67 1.95
- -----------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS AND SUPPLEMENTAL DATA
-----------------------------
Ratio of
expenses to
average net Portfolio
assets, prior to turnover
reimbursement (%) rate (%)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
1.80 89.13
2.33 109.56
4.30 98.20
16.73(3) 140.42(2)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
1.49 490.92
1.48 111.76
1.45 64.37
1.37 195.73
1.38 54.05
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
0.98 NA
1.00 NA
0.98 NA
0.93 NA
0.92 NA
- -----------------------------------------------------------------------------------------------------------------
0.69 NA
0.68 NA
0.67 NA
0.63 NA
0.67 NA
- -----------------------------------------------------------------------------------------------------------------
</Table>
SEE FINANCIAL NOTES
75
FINANCIAL NOTES
ORGANIZATION
Citizens Funds (the "trust"), a Massachusetts Business Trust, is registered as
an open-end management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"). The trust offers the following funds
(individually a "fund," collectively the "funds"):
<Table>
<Caption>
FUND SHORT NAME
- --------------------------------------------------------------------------------
Citizens Core Growth Fund Core Growth Fund
Citizens Emerging Growth Fund Emerging Growth Fund
Citizens Small Cap Core Growth Fund Small Cap Core Growth Fund
Citizens Value Fund Value Fund
Citizens Global Equity Fund Global Equity Fund
Citizens Balanced Fund Balanced Fund
Citizens Income Fund Income Fund
Citizens Money Market Fund Money Market Fund
</Table>
The funds are authorized to issue an unlimited number of shares of beneficial
interest with no par value. The Core Growth Fund, Emerging Growth Fund, and
Global Equity Fund currently offer three classes of shares: Standard shares,
Institutional shares and Administrative shares. The Money Market Fund and Value
Fund offers two classes of shares: Standard shares and Institutional shares. The
Small Cap Core Growth Fund, Balanced Fund, and Income Fund offer one class of
shares: Standard shares. Each class of shares in the funds has identical rights
and privileges except with respect to fees paid under class-specific agreements,
voting rights on matters affecting a single class of shares, and the exchange
privilege of each class of shares.
INDEMNIFICATIONS
Under the funds' organizational documents, its officers and trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the trust. In addition, in the normal course of business, the funds
enter into contracts with their vendors and others that provide for general
indemnifications. The funds' maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the funds.
76
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
funds in the preparation of their financial statements. The policies are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP"). The preparation of financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITIES VALUATION
The board of trustees has approved procedures to be used to value each fund's
securities for the purpose of determining the fund's net asset value (NAV).
Equity securities traded on an exchange are valued at the market price
determined as the closing sale or official closing price on that exchange. For
securities not traded on an exchange, or if an exchange price is not readily
available, securities are valued at a market price determined by independent
third-party pricing vendors approved by the funds' valuation committee. The
market price for debt obligations is determined by an independent third-party
pricing service which use a matrix, formula or other objective method that
considers the effect of market indices, yield curves and other specific
adjustments. Short-term securities maturing within 60 days and all securities in
the Money Market Fund are valued at amortized cost, unless it is determined that
using this method would not reflect a security's fair value. Under the amortized
cost method, premium or discount, if any, is amortized or accreted,
respectively, on a constant basis to the maturity of the security. If a price
for a given security is unavailable or deemed unreliable by the adviser, the
market price may be determined using quotations received from one or more
brokers that make a market in the security. When such prices or quotations are
not available, or when the adviser believes they are unreliable, the funds'
valuation committee will value securities using fair value procedures approved
by the funds' board of trustees. Fair value procedures may also be used if the
adviser determines that a significant event has occurred between the time at
which a market price is determined and the time at which a fund's NAV is
calculated. The Global Equity Fund uses a fair value model developed by an
independent third party pricing service in its valuation considerations for
foreign equity securities on days when there is a specific percentage change in
the value of a domestic equity security index. This percentage is determined by
the funds' valuation committee.
77
FINANCIAL NOTES
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME
During the period, security transactions were accounted for no later than one
business day following the trade date. For financial reporting purposes,
however, security transactions were accounted for on trade date. The cost of
securities sold is determined on the identified cost basis, unless otherwise
specified. Interest income is recorded on an accrual basis and includes, where
applicable, the amortization or accretion of a premium or discount. Dividend
income is recorded on the ex-dividend date.
FOREIGN CURRENCY TRANSLATION
The accounting records of the funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in a foreign currency
are translated into U.S. dollars at the current rate of exchange. Purchases and
sales of securities, and income and expenses, are translated into U.S. dollars
at the prevailing rate of exchange on the respective dates of such transactions.
The changes in foreign exchange rates on investments are not isolated on the
Statement of Operations. Such fluctuations are included with the net realized
and unrealized gain or loss on investments.
FOREIGN CURRENCY CONTRACTS
Foreign currency contracts are used to facilitate transactions in
foreign-denominated securities. Losses may arise from changes in the value of
the foreign currency or if the counterparties do not perform under the
contract's terms. The U.S. dollar value of foreign currency contracts is
determined using the current rate of exchange. There were no foreign currency
contracts open at June 30, 2006.
REPURCHASE AGREEMENTS
The funds may acquire repurchase agreements with an entity that is a member bank
of the Federal Reserve System and government securities dealers that are on the
Federal Reserve Bank of New York's list of primary dealers, collateralized by
instruments issued by the U.S. government, its agencies or instrumentalities.
The repurchase price generally equals the price paid by a fund plus interest
negotiated on the basis of current short-term rates, which may be more or less
than the rate on the underlying securities. It is the funds' policy to receive
collateral securities of which the value, including accrued interest, is at
least equal to 102% of the amount to be repaid to the funds under each agreement
at its
78
maturity. Collateral subject to repurchase agreements is held by the funds'
custodian. If the counterparty defaults, and the fair value of the collateral
declines, realization of the collateral by the funds may be delayed or limited.
SECURITIES TRADED ON A TO-BE-ANNOUNCED BASIS
The Income Fund may invest in to-be-announced ("TBA") mortgage pass-through
securities issued by Ginnie Mae, Fannie Mae, and Freddie Mac for forward
delivery. The fund purchases TBA securities, which have not yet been issued by
the issuer, and for which specific information may not be known at the time of
purchase. The forward purchases may be rolled from month to month on or prior to
the delivery dates of such securities and therefore delivery of securities may
not occur.
TBA MORTGAGE DOLLAR ROLLS
The Income Fund enters into dollar roll transactions in which the fund sells
mortgage-backed securities for delivery in the current month and simultaneously
contracts to repurchase substantially similar securities to settle on a
specified future date. The fund treats dollar roll transactions as purchases and
sales in the portfolio, and does not receive fee income for these transactions.
The risk of entering into a mortgage dollar roll is that the market value of the
securities the fund is obligated to repurchase under the agreement may decline
below the repurchase price. The fund will hold aside or segregate cash,
short-term money market instruments or high quality debt securities in an amount
sufficient to cover any commitments or to limit any potential risk.
RESTRICTED SECURITIES
The funds are permitted to invest in privately placed securities. These
securities may be resold in transactions exempt from registration, or to the
public, if the securities are registered under the Securities Act of 1933.
Disposal of these securities may involve time-consuming negotiations and
expense, and the prompt sale at an acceptable price may be difficult.
REDEMPTION FEE
The Global Equity Fund charges a redemption fee of 2% (paid to the fund) with
respect to shares of the fund redeemed or exchanged within 60 days of purchase.
The fee does not apply to shares purchased through the reinvestment of dividends
or other distributions, redemptions by the fund of accounts below minimum
balances, redemptions due to shareholder death or disability, or certain omnibus
accounts or retirement plans. For
79
FINANCIAL NOTES
the year ended June 30, 2006, the Global Equity Fund collected $4,572 in
redemption fees. These fees are included in the "change in net assets from
capital transactions" amounts in the Statements of Changes in Net Assets.
DIVIDENDS TO SHAREHOLDERS
The Core Growth Fund, Emerging Growth Fund, Small Cap Core Growth Fund, Value
Fund, and Global Equity Fund declare and distribute dividends from net
investment income, if any, to shareholders annually. The Balanced Fund declares
and distributes dividends from net investment income to shareholders quarterly.
The Income Fund declares and distributes dividends from net investment income to
shareholders monthly. Dividends from net investment income for the Money Market
Fund are declared daily and paid monthly. The funds' net realized gains, if any,
are distributed to shareholders at least annually.
Additional dividends may also be paid to the funds' shareholders to the extent
necessary to avoid federal excise tax on certain undistributed income and net
realized gains. The amount of dividends from net investment income and net
realized gains are determined in accordance with federal income tax regulations,
which may differ from GAAP. These "book/tax" differences are either considered
temporary or permanent in nature. To the extent these differences are permanent
in nature (i.e., reclassification of market discounts, gain/loss, paydowns, and
distributions), such amounts are reclassified to capital; temporary differences
do not require reclassification.
FEDERAL INCOME TAX
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.
80
FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT MANAGEMENT FEE
Citizens Advisers, Inc. (the "adviser") serves as adviser to each of the funds.
Under the terms of the management contract, the adviser is paid a fee that is
computed daily based on an annual rate for each fund's average daily net assets.
Those rates are as follows:
FUND FEE RATE
- --------------------------------------------------------------------------------
Core Growth Fund 0.50%
Emerging Growth Fund 1.00%
Small Cap Core Growth Fund 0.50%
Value Fund 0.70%
Global Equity Fund 1.00%
Balanced Fund 0.65%
Income Fund 0.65%
Money Market Fund 0.35%
- --------------------------------------------------------------------------------
Effective May 1, 2006, the adviser took over all advisory services for the
Global Equity Fund. Prior to May 1, 2006, McLean Budden Limited served as the
subadviser for the Global Equity Fund. For its services, the subadviser received
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 was paid by the adviser.
Effective August 29, 2005, Dwight Asset Management Company began serving as the
subadviser for the Income Fund. For its services, the subadviser receives a fee
computed daily based on an annual rate of 0.25% of the fund's average daily net
assets. The fee is paid by the adviser. Prior to August 29, 2005, all advisory
services were performed by the adviser.
DISTRIBUTION FEE
Citizens Securities, Inc. (the "distributor") is a wholly owned subsidiary of
the adviser and serves as the funds' distributor. Pursuant to Rule 12b-1 under
the 1940 Act, the trust's shareholders have adopted a separate distribution plan
with respect to the funds' Standard and Administrative shares pursuant to which
the funds, except the Money Market Fund, compensate the distributor for services
in an amount equal to 0.25% per annum of average annual net assets represented
by such shares.
81
FINANCIAL NOTES
ADMINISTRATIVE AND SHAREHOLDER SERVICE FEES
The adviser, with whom certain officers and a trustee are affiliated, performs
administrative duties for the trust under a separate administrative contract,
which provides for the reimbursement of out-of-pocket expenses as well as fees
for services rendered. In accordance with the terms of the administrative
contract, fees are accrued daily based on average daily net assets of each fund
at the annual rate of 0.15%. In addition, Citizens Advisers provides a number of
administrative services to the trust, relating primarily to shareholder services
and communications, and is paid a per account fee and is reimbursed for
out-of-pocket expenses as well, for providing such services and communications
for each of the individual funds with the exception of the Core Growth Fund,
Standard shares. The Core Growth Fund, Standard shares may be charged a
shareholder service fee of up to 0.35% based on the average daily net assets of
the class. For the year ended June 30, 2006, a fee of 0.25% was charged.
TRANSFER AGENCY, FUND ACCOUNTING AND CUSTODY
BISYS Fund Services Ohio, Inc. provides transfer agency and fund accounting
services to the funds pursuant to certain fee arrangements. As transfer agent
for the funds, BISYS is paid a fee based on the number of funds and shareholder
accounts, other service fees, and is reimbursed for out-of-pocket expenses as
well. Transfer agent expenses also include the cost of services rendered by
third parties to provide sub-transfer agency services. As fund accountant for
the funds, BISYS is paid a fee based on assets (ranging from 0.0125% - 0.035%)
and the number of share classes per fund, subject to certain minimums, other
service fees, and is reimbursed for out-of-pocket expenses as well. Fifth Third
Bank acts as a custodian for the funds and is paid a fee based on the funds'
assets and other transaction based fees, subject to certain minimums. Custody
expenses may be incurred or offset from fees or credits arising from cash
balances maintained on deposit. There were no custody credits received for the
fiscal year ended 2006.
TRUSTEE FEES
All of the officers and one of the trustees of the trust are "interested
persons," as defined in the 1940 Act, of the adviser. Currently, each trustee
who is not an "interested person" receives an annual retainer of $12,000 and
$1,250 for each day's attendance at a trustee meeting. The independent trustees
include a chair of the board, who receives an additional annual retainer of
$5,000; and an audit committee chair, social responsibility committee chair, and
nominating committee chair who each receive an additional annual retainer of
$2,500.
82
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 year ended June 30, 2006, the adviser limited the total expenses,
exclusive of taxes, brokerage commissions and extraordinary expenses, for
certain funds to the extent they exceeded the following limits:
FUND EXPENSE LIMITATION
- --------------------------------------------------------------------------------
Balanced Fund 1.30%
Value Fund -- Standard shares 1.29%
Value Fund -- Institutional shares 0.90%
- --------------------------------------------------------------------------------
The Balanced Fund expense limitation is voluntary, may be removed by the adviser
at any time and is not subject to recoupment in subsequent fiscal periods.
Effective March 17, 2006 for the Value Fund Standard shares, and March 31, 2006
for the Institutional shares, the adviser began contractually limiting expenses
as set forth above. The adviser may recoup the investment management fees waived
or limited and other expenses reimbursed by it within three years from the
fiscal year in which they were waived/reimbursed. Such repayments may be made
twice monthly, but in no event less frequently than semi-annually, but only to
the extent that such repayments would not cause annualized operating expenses of
the Value Fund to exceed the expense limitation. As of June 30, 2006, the amount
that may potentially be recouped by the adviser from the Value Fund is $44,181
expiring on June 30, 2009.
83
FINANCIAL NOTES
INVESTMENT TRANSACTIONS
The following summarizes purchases and sales of investment securities, other
than short-term investments and U.S. Government securities, by fund for the year
ended June 30, 2006:
FUND PURCHASES SALES
- --------------------------------------------------------------------------------
Core Growth Fund $328,374,797 $339,456,440
Emerging Growth Fund 103,247,128 125,784,845
Small Cap Core Growth Fund 34,944,669 31,588,015
Value Fund 23,769,129 18,869,366
Global Equity Fund 29,747,831 47,296,908
Balanced Fund 12,612,897 7,561,262
Income Fund 190,591,018 198,925,744
- --------------------------------------------------------------------------------
The following summarizes purchases and sales of U.S. Government securities by
fund for the year ended June 30, 2006:
FUND PURCHASES SALES
- --------------------------------------------------------------------------------
Balanced Fund $222,748 $55,781
Income Fund 64,949,309 56,150,088
- --------------------------------------------------------------------------------
FEDERAL INCOME TAX INFORMATION
At June 30, 2006 the cost, gross unrealized appreciation and gross unrealized
depreciation on securities, for federal income tax purposes, were as follows:
NET UNREALIZED
TAX UNREALIZED TAX UNREALIZED APPRECIATION/
FUND TAX COST APPRECIATION DEPRECIATION DEPRECIATION
- ------------------------------------------------------------------------------------------------------------------------------------
Core Growth Fund $292,879,800 $ 31,349,170 $ (8,884,792) $ 22,464,378
Emerging Growth Fund 134,360,127 44,756,093 (2,196,071) 42,560,022
Small Cap Core Growth Fund 32,032,930 7,246,831 (768,037) 6,478,794
Value Fund 33,117,843 5,903,923 (540,506) 5,363,417
Global Equity Fund 66,967,431 16,381,613 (1,715,540) 14,666,073
Balanced Fund 10,729,620 493,767 (204,685) 289,082
Income Fund 68,235,673 21,529 (833,999) (812,470)
Money Market Fund 83,330,334 -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
84
FEDERAL TAX INFORMATION
The tax character of dividends paid by the funds during the past two fiscal
years were as follows:
DIVIDENDS PAID FROM
------------------------------
NET LONG
TERM TOTAL TAX TOTAL
ORDINARY CAPITAL TAXABLE RETURN OF DIVIDENDS
INCOME GAINS DIVIDENDS CAPITAL PAID 1
- ------------------------------------------------------------------------------------------------------------------------------------
FISCAL YEAR ENDED 2006
Balanced Fund $ 80,205 $-- $ 80,205 $-- $ 80,205
Income Fund 1,841,782 -- 1,841,782 -- 1,841,782
Money Market Fund 2,696,630 -- 2,696,630 -- 2,696,630
FISCAL YEAR ENDED 2005
Small Cap Core Growth Fund $1,108,006 $190,731 $1,298,737 $-- $1,298,737
Balanced Fund 105,988 2,255 108,243 -- 108,243
Income Fund 2,197,109 -- 2,197,109 -- 2,197,109
Money Market Fund 1,003,934 -- 1,003,934 -- 1,003,934
- ------------------------------------------------------------------------------------------------------------------------------------
As of June 30, 2006, the components of accumulated earnings/deficit on a tax
basis for the funds were as follows:
TOTAL
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED UNREALIZED ACCUMULATED
ORDINARY LONG TERM ACCUMULATED DIVIDENDS CAPITAL & OTHER APPRECIATION/ EARNINGS/
INCOME CAPITAL GAINS EARNINGS PAYABLE 1 LOSSES DEPRECIATION 2 DEFICIT
- ------------------------------------------------------------------------------------------------------------------------------------
Core Growth Fund $ -- $ -- $ -- $ -- $ (27,010,081) $22,464,378 (4,545,703)
Emerging Growth Fund -- -- -- -- (173,894,031) 42,560,022 (131,334,009)
Small Cap Core Growth Fund -- 439,733 439,733 -- -- 6,478,794 6,918,527
Value Fund 52,885 -- 52,885 -- (6,713,369) 5,363,417 (1,297,067)
Global Equity Fund -- -- -- -- (121,378,699) 14,670,525 (106,708,174)
Balanced Fund 33,484 135,788 169,272 (34,060) -- 289,082 424,294
Income Fund 157,667 -- 157,667 (157,667) (6,780,542) (812,470) (7,593,012)
Money Market Fund 299,432 -- 299,432 (298,443) (38,596) -- (37,607)
- ------------------------------------------------------------------------------------------------------------------------------------
1 Total dividends payable and paid may differ from the amount reported in
the Statements of Assets and Liabilities and Statements of Changes in Net
Assets because for tax purposes dividends are recognized when actually
paid.
2 The differences between book-basis and tax-basis unrealized
appreciation/depreciation are attributable primarily to the tax deferral
of losses on wash sales.
85
FINANCIAL NOTES
As of June 30, 2006, the funds had the following net capital loss carryforwards,
which are available to offset future realized gains:
AMOUNT EXPIRES AMOUNT EXPIRES AMOUNT EXPIRES AMOUNT EXPIRES
- ------------------------------------------------------------------------------------------------------------------------------------
Core Growth Fund $ -- -- $ -- -- $ 27,010,081 2011 $ -- --
Emerging Growth Fund -- -- 134,261,667 2010 36,170,306 2011 3,462,058 2013
Value Fund -- -- -- -- 3,934,846 2011 2,778,523 2012
Global Equity Fund 1 137,915 2009 97,754,155 2010 9,283,310 2011 14,198,701 2012
Income Fund -- -- 638,367 2010 4,606,423 2011 438,113 2014
Money Market Fund 9,083 2009 -- -- -- -- 29,451 2014
- ------------------------------------------------------------------------------------------------------------------------------------
1 Included in the above are the following amounts which are subject to
certain limitations on availability, to offset future net capital gains,
if any, as the successor of a merger: $137,915 expiring in 2009, $33,758
expiring in 2010, $345,833 expiring in 2011.
Net capital losses incurred after October 31, 2005, and within the taxable year
are deemed to arise on the first business day of each fund's next taxable year.
For the year ended June 30, 2006, the Global Equity Fund deferred to July 1,
2006 post October currency losses of $4,618, and the Income Fund and Money
Market Fund deferred to July 1, 2006 post October capital losses of $1,097,639
and $62 respectively.
NEW PRONOUNCEMENT
In July 2006, the Financial Accounting Standards Board issued FASB
Interpretation No. 48 -- "Accounting for Uncertainty in Income Taxes," which
requires for all entities, including pass-through entities such as the funds, a
minimum threshold for financial statement recognition of the benefit of
positions taken in filing tax returns (including whether an entity is taxable in
a particular jurisdiction), and requires certain expanded tax disclosures. The
Interpretation is effective for fiscal years beginning after December 15, 2006.
Management does not believe this interpretation will have a significant impact
on the funds, however, management has not yet begun to evaluate the impact of
this interpretation to the funds.
86
SUPPLEMENTAL INFORMATION (UNAUDITED)
FEDERAL TAX INFORMATION
For the fiscal year ended June 30, 2006, $46,981 of dividends paid by the
Balanced Fund may be subject to a maximum tax rate of 15%, as provided for by
the Jobs and Growth Tax Relief Reconciliation Act of 2003. The fund intends to
designate the maximum amount allowable as taxed at a maximum rate of 15%.
Complete information will be reported in conjunction with your 2006 Form
1099-DIV. For the tax year ended June 30, 2006, 58.5% of income dividends paid
by the Balanced Fund qualify for the dividends received deduction available to
corporations.
PORTFOLIO HOLDINGS DISCLOSURE
Each fund, except the Money Market Fund, posts its full portfolio holdings
monthly, with a 30-day lag, on www.citizensfunds.com. The portfolio holdings are
posted within approximately five business days after month end. The funds'
portfolio holdings will remain available until the following month's information
is posted.
In addition, each fund's, except the Money Market Fund's, top ten portfolio
holdings in order of position size and as a percentage of the total portfolio as
well as sector breakdowns and portfolio characteristics are available quarterly,
within approximately fifteen business days after quarter end on
www.citizensfunds.com. Each fund's top ten portfolio holdings, sector breakdown
and portfolio characteristics remain available until the following quarter's
information is posted.
Details of the funds' portfolio holdings disclosure policies and procedures,
including a discussion of any exceptions, are contained in the funds' SAI.
Each fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year within 60 days of such quarters'
end on Form N-Q. You can receive a copy of the funds' Form N-Q without charge by
calling 800.223.7010 or by visiting the website at www.citizensfunds.com. Each
funds' Form N-Q is also available through a variety of methods. You can:
- -- find it on the EDGAR Database of the SEC internet site at www.sec.gov
- -- have copies sent to you (after paying a copying fee) by writing the SEC's
Public Reference Section, Washington, D.C. 20549-0102, or by electronic
request to publicinfo@sec.gov
- -- view and copy it in person at the SEC's Public Reference Room in Washington
D.C.; for more information call 202.942.8090.
87
SUPPLEMENTAL INFORMATION (UNAUDITED)
TABLE OF SHAREHOLDER EXPENSES
As a shareholder of the funds, you may incur two types of costs: (1) redemption
fees (for Global Equity Fund only) and (2) ongoing costs, including management
fees; distribution fees; and other fund expenses. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the funds
and to compare these costs with the ongoing costs of investing in other mutual
funds.
ACTUAL EXPENSES
The table on the opposite page provides information about actual account values
and actual expenses. You may use the information below, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Expenses paid during period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table on the opposite page also provides information about hypothetical
account values and hypothetical expenses based on each fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees and other individual shareholder fees mentioned in the
prospectus. Therefore, the table is useful in comparing ongoing costs only, and
will not help you determine the relative total costs of owning different funds.
In addition, if these transactional costs were included, your costs would have
been higher.
88
JUNE 30, 2006
EXPENSES ANNUALIZED
BEGINNING ENDING PAID DURING EXPENSE RATIO
ACCOUNT ACCOUNT PERIOD(1) DURING THE PERIOD
VALUE VALUE 01/01/06 -- 01/01/06 --
01/01/06 06/30/06 06/30/06 06/30/06
- ------------------------------------------------------------------------------------------------------------
CORE GROWTH FUND
Standard -- actual $1,000.00 $ 958.70 $ 7.38 1.52%
Standard -- hypothetical 1,000.00 1,017.26 7.60 1.52%
Institutional -- actual 1,000.00 962.40 3.94 0.81%
Institutional -- hypothetical 1,000.00 1,020.78 4.06 0.81%
Administrative -- actual 1,000.00 960.60 5.59 1.15%
Administrative -- hypothetical 1,000.00 1,019.09 5.76 1.15%
- ------------------------------------------------------------------------------------------------------------
EMERGING GROWTH FUND
Standard -- actual $1,000.00 $1,054.70 $ 9.58 1.88%
Standard -- hypothetical 1,000.00 1,015.47 9.39 1.88%
Institutional -- actual 1,000.00 1,056.80 6.94 1.36%
Institutional -- hypothetical 1,000.00 1,018.05 6.80 1.36%
Administrative -- actual 1,000.00 1,055.40 8.31 1.63%
Administrative -- hypothetical 1,000.00 1,016.71 8.15 1.63%
- ------------------------------------------------------------------------------------------------------------
SMALL CAP CORE GROWTH FUND
Standard -- actual $1,000.00 $1,069.40 $ 7.39 1.44%
Standard -- hypothetical 1,000.00 1,017.65 7.20 1.44%
- ------------------------------------------------------------------------------------------------------------
VALUE FUND
Standard -- actual $1,000.00 $1,051.20 $ 5.14 1.01%
Standard -- hypothetical 1,000.00 1,019.79 5.06 1.01%
Institutional -- actual(2) 1,000.00 993.00 2.19 0.90%
Institutional -- hypothetical(3) 1,000.00 1,020.33 4.51 0.90%
- ------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY FUND
Standard -- actual $1,000.00 $1,060.80 $10.12 1.98%
Standard -- hypothetical 1,000.00 1,014.98 9.89 1.98%
Institutional -- actual 1,000.00 1,063.10 7.11 1.39%
Institutional -- hypothetical 1,000.00 1,017.90 6.95 1.39%
Administrative -- actual 1,000.00 1,062.00 8.79 1.72%
Administrative -- hypothetical 1,000.00 1,016.27 8.60 1.72%
- ------------------------------------------------------------------------------------------------------------
BALANCED FUND
Standard -- actual $1,000.00 $ 979.60 $ 6.38 1.30%
Standard -- hypothetical 1,000.00 1,018.35 6.51 1.30%
- ------------------------------------------------------------------------------------------------------------
INCOME FUND
Standard -- actual $1,000.00 $ 986.60 $ 7.44 1.51%
Standard -- hypothetical 1,000.00 1,017.31 7.55 1.51%
- ------------------------------------------------------------------------------------------------------------
MONEY MARKET FUND
Standard -- actual $1,000.00 $1,018.80 $ 4.81 0.96%
Standard -- hypothetical 1,000.00 1,020.03 4.81 0.96%
Institutional -- actual 1,000.00 1,020.00 3.51 0.70%
Institutional -- hypothetical 1,000.00 1,021.32 3.51 0.70%
- ------------------------------------------------------------------------------------------------------------
1 Expenses are equal to the average account value times the fund's
annualized expense ratio multiplied by 181/365 (to reflect the one-half
year period).
2 Information shown reflects values using the expense ratios and rates of
return for the period from March 31, 2006, commencement of operations, to
June 30, 2006.
3 Information shown reflects values using the expense ratios and rates of
return for the period from March 31, 2006, commencement of operations, to
June 30, 2006, and has been annualized to reflect values for the period
January 1, 2006 to June 30, 2006.
89
SUPPLEMENTAL INFORMATION (UNAUDITED)
BOARD APPROVAL OF INVESTMENT
MANAGEMENT AGREEMENT
The trustees unanimously approved the continuance of the management agreement
with respect to each fund at a meeting held on May 22, 2006. This approval was
based, in part, on the following conclusions:
(i) that the adviser has the capabilities, resources and personnel necessary
to provide the advisory services currently provided to each fund; and
(ii) that the advisory fees paid by each fund represent reasonable compensation
to the adviser in light of the services provided, the costs to the adviser
of providing those services, the fees paid by similar funds, and such
other matters as the trustees considered relevant in the exercise of their
reasonable judgment, and represent an appropriate sharing at the present
time between fund shareholders and the adviser of any economies of scale
in the management of each fund at current asset levels.
In advance of the meeting, the independent trustees, through their counsel,
submitted to the adviser a written request for information in connection with
their consideration of the funds' management agreements. The requested
information was provided by the adviser in advance of and at the board meeting.
In preparation for the board meeting, the independent trustees met privately
with their counsel to discuss the proposed continuance of the funds' management
agreements and received a memorandum from their counsel outlining the legal
standards and certain other considerations relevant to their deliberations.
In reaching these conclusions, the trustees considered all factors they believed
relevant, including (i) information comparing the performance of each fund to
other investment companies with similar investment objectives and to an index;
(ii) the nature, extent and quality of investment services rendered by the
adviser; (iii) payments received by the adviser from all sources in respect of
each fund; (iv) the costs borne by, and profitability of, the adviser in
providing services to each fund; (v) comparative fee and expense data for each
fund and other investment companies with similar investment objectives; (vi) the
extent to which economies of scale would be realized as the funds grow and
whether fee levels reflect these economies of scale for the benefit of fund
shareholders; (vii) information about "revenue sharing" arrangements that the
adviser enters into in respect of the funds; (viii) fall-out benefits which the
adviser receives from its
90
relationship to the funds; (ix) information about fees charged by the adviser to
other clients with similar investment objectives; (x) the professional
experience and qualifications of each fund's portfolio management team; and (xi)
the terms of the management agreement.
In their deliberations, the trustees did not identify any particular information
that was all-important or controlling, and each trustee attributed different
weights to the various factors. The trustees evaluated all information available
to them on a fund-by-fund basis, and their determinations were made separately
in respect of each fund.
In voting to renew the funds' management agreement with the adviser, the board
also considered the adviser's compliance program, its implementation by the
adviser as well as its effectiveness and noted with approval the strong ethical
compliance culture at the adviser. The board also noted the adviser's recent
addition of portfolio management personnel. The trustees noted that pursuant to
the management agreement, the adviser, subject to the direction of the board, is
responsible for providing advice and guidance with respect to the funds and for
managing the investment of the assets of each fund. With the exception of the
Income Fund, the adviser provides the day-to-day portfolio management of the
funds, including making purchases and sales of portfolio securities consistent
with each fund's investment objective and policies. The adviser oversees the
activities of the subadviser it has engaged to provide the day-to-day portfolio
management of the Income Fund. The trustees noted that the services required to
be provided by the adviser had expanded over time as a result of regulatory and
other developments. The trustees cited, by way of example, the enhanced
obligations involving the adviser's and the funds' compliance programs and the
substantial commitment of time and resources that the adviser had made in this
area. The trustees concluded that, overall, they were satisfied with the nature,
extent and quality of services provided to the funds under the management
agreement.
The board reviewed the information concerning the costs of services provided and
the profitability to the adviser of its advisory relationship with the funds,
along with a description of the methodology used by the adviser in preparing the
profitability information. The board considered the cost to the adviser of its
services to each fund and what is a fair
91
SUPPLEMENTAL INFORMATION (UNAUDITED)
BOARD APPROVAL OF INVESTMENT
MANAGEMENT AGREEMENT (CONT.)
entrepreneurial profit for managing each fund. The board noted that there
appeared to be a reasonable basis for the methodology underlying the adviser's
profitability analysis and that the profitability with respect to each fund did
not appear to be excessive.
The trustees considered that the adviser benefits from soft dollar arrangements
whereby it receives brokerage and research services from brokers that execute
the funds' purchases and sales of investment securities. It was noted that
during the course of the year the trustees had received presentations from the
adviser about its trading practices and brokerage arrangements, including its
policies with respect to soft dollar arrangements. The trustees also considered
that the adviser receives administrative and shareholder service fees from the
funds and that Citizens Securities, Inc., an affiliate of the adviser, receives
12b-1 fees from the funds. In addition, the board considered certain aggregate
benefits, other than fees, that the adviser receives by virtue of its
relationship with each fund.
In considering performance, the board noted the successful efforts by the
adviser over the prior year to improve performance by attracting additional
talented personnel. The trustees received detailed comparative performance
information for each fund and considered information showing performance of each
fund versus one or more selected securities indices over the one, three, five,
or ten year periods ended March 31, 2006 (or those relevant periods in which the
applicable fund existed). The comparative information showed that: the Core
Growth Fund outperformed the index for the one and ten year periods and
underperformed the index for the three and five year periods; the Emerging
Growth Fund underperformed the index for the three and five year periods and
outperformed the index for the one and ten year periods; the Small Cap Core
Growth Fund underperformed the index for the one and three year periods, but
outperformed the index for the five year and since inception periods; the Value
Fund had outperformed the index for the one and three year periods, but
underperformed the index for the five year period; the Global Equity Fund
underperformed the index for the one, three, five and ten year periods; the
Balanced Fund outperformed the blended index for the one and three year periods;
the Income Fund underperformed the index for the one, three, five and ten year
periods; and the Money Market Fund's seven and thirty day yields were lower than
the average seven and thirty day yields of a comparable universe of funds.
92
The trustees considered the recent changes made by the adviser in the portfolio
management teams of the Core Growth, Small Cap Core Growth, Global Equity,
Income and Balanced Funds and the enhancement of the investment process of each
fund. The trustees noted the Value Fund's strong one and three year performance,
and that the fund had been previously subadvised for a portion of the five year
period. With respect to the Global Equity Fund, the trustees considered the
adviser's recent termination of the subadviser, McLean Budden Ltd., in favor of
in-house management of the fund. With respect to the Income Fund, the trustees
considered the adviser's recent engagement of a subadviser, Dwight Asset
Management Company, to manage the fund. With respect to the Money Market Fund,
the trustees considered the effect of the relatively small size of the fund and
the information presented by the adviser to the effect that the fund was managed
in a very conservative fashion.
The board considered the advisory fee rate paid by each fund to the adviser
under the management agreement. The board reviewed reports detailing each fund's
management fee, administration fee, total management and administration fees and
total expense levels and versus comparable mutual funds with similar investment
objectives including a broad universe group, a smaller peer group including
funds with similar asset levels, if possible ("comparison group"), and other
specific funds. The trustees recognized that it is difficult to make comparisons
of management fees because there are variations in the services that are
included in the fees paid by comparable mutual funds. The board also reviewed
information concerning the fees paid by other accounts managed by the adviser
with investment objectives similar to the funds. The fee rates charged to those
accounts are higher than those charged to the relevant funds. The comparative
information showed that: the Core Growth Fund's management fee, administration
fee, and total management and administration fee were equal to or below the
Lipper universe and peer group medians (except that the administration fee was
above the Lipper universe median). The trustees noted that the Core Growth
Fund's total expenses were below the Lipper universe and peer group medians
(except the total expenses for Standard shares were above the universe and peer
group medians). The trustees noted that the Emerging Growth Fund's
administration fee was below or equal to the Lipper universe and peer group
median, while the Fund's management fee, total management and administration fee
and total expenses were higher than the median. They further noted that the
expense ratio was acceptable in
93
SUPPLEMENTAL INFORMATION (UNAUDITED)
BOARD APPROVAL OF INVESTMENT
MANAGEMENT AGREEMENT (CONT.)
light of the quality of service the Fund receives and the other factors
considered. The trustees noted that the Small Cap Core Growth Fund's management
fee, administration fee, total management and administration fees and total
expenses were equal to or below the Lipper universe and peer group medians
(except that the administration fee was higher than the peer group median). They
also noted that the Value Fund's management fee, administration fee and total
management and administration fees were equal to or higher than the Lipper
universe and peer group medians, while the Fund's total expenses were below the
medians. The trustees further noted that the expense ratio was acceptable in
light of the quality of service the Fund receives and the other factors
considered. The trustees noted that the Global Equity Fund's management fee was
higher than or equal to the Lipper universe and peer group medians, while the
Fund's administration fees, total management and administration fees and total
expenses were above the Lipper universe and peer group medians. The trustees
concluded that the expense ratio was acceptable in light of the other factors
considered. It was noted that Balanced Fund's management fee and administration
fee were equal to or less than the Lipper universe and peer group medians. It
was further noted that the Balanced Fund's total management and administration
fee was slightly above and equal to the Lipper universe and peer group medians
respectively and total expenses were above the Lipper universe median but below
the Lipper peer group median. They noted that the Income Fund's administration
fee was equal to the Lipper universe median, while the Fund's management fee,
total management and administration fees and total expenses were higher than the
median. They also noted that the Fund's management fee, administration fee,
total management and administration fee and total expenses were higher than the
Lipper peer group median. The trustees had a detailed discussion regarding the
Fund and noted that while the expense ratio was high, cutting fees at this time
would be incompatible with the recent decision to hire a subadviser for the
Fund. The trustees further noted that the expense ratio was acceptable in light
of the other factors considered. They noted that the Money Market Fund's
administration fee, total management and administration fees and total expenses
were higher than or equal to the Lipper universe and peer group medians, while
the Fund's management fee was equal to or lower than the medians. The trustees
concluded that the expense ratio was acceptable in light of the size of the
Fund. The Board next considered, in light of current asset levels and current
circumstances,
94
whether breakpoints in the fee structure for each fund were appropriate, and
determined that the fund's current fee structure was appropriate.
Based on the above factors, the board voted to renew each fund's management
agreement with the adviser for an additional one-year period.
THE FUNDS' TRUSTEES AND OFFICERS
A board of trustees oversees and monitors the management of the trust. These
oversight responsibilities include selection of the investment adviser and
election of officers, who are in turn responsible for the day to day operations
of the trust. The tables on the following pages show the trustees and officers
of the funds as of June 30, 2006.
The trustees in the second table (independent trustees) are not considered
interested persons and have no affiliation with the funds' adviser or
distributor. The third table lists fund officers who are not trustees. All of
these officers are considered interested persons.
The term of office for each trustee is eight years, except that Sophia Collier
has an open-ended term. Each trustee is a trustee for eight funds within the
Citizens Funds complex, and no trustee is currently a trustee or director for
any other mutual fund or company. Except as noted on the following page, the
address for each trustee and officer in connection with their fund duties is One
Harbour Place, Suite 400, Portsmouth, NH 03801.
95
SUPPLEMENTAL INFORMATION (UNAUDITED)
AFFILIATED TRUSTEE
POSITIONS(S) WITH
FUNDS AND DATE OF ELECTION
NAME AND AGE OR APPOINTMENT PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ---------------------------------------------------------------------------------------------------
Sophia Collier(1) Trustee since 10/91 Portfolio Manager, Citizens Advisers, Inc.,
50 President 1991-1998 and since 3/95. Majority Owner and Board of
since 8/02, Chair of Board Directors, Citizens Advisers, Inc., since
1/02-8/02 12/91. President, Citizens Advisers, Inc.,
12/91-9/98 and since 7/02. President
Citizens Securities, Inc., 12/91-9/98 and
since 7/02. Chair of Board of Directors,
Citizens Securities, Inc., since 12/91.
President, Northpoint Technology, Ltd.,
1/97-6/02. Chair of the Board of Directors,
Northpoint Technology, Ltd., since 6/02.
INDEPENDENT TRUSTEES
POSITIONS(S) WITH
FUNDS AND DATE OF ELECTION
NAME AND AGE OR APPOINTMENT PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ----------------------------------------------------------------------------------------------------------
Walter D. Bristol, Jr. Trustee since 5/01 Executive Vice President for Corporate
56 Chair of Board since 8/04 Operations and Chief Financial Officer,
Vice Chair of Board American Heart Association, since 5/96.
8/02-8/04
Jeannie H. Diefenderfer Trustee since 5/01 Senior Vice President, Verizon, since 8/04.
45 Vice President, Verizon, 8/02-7/04.
Group President, Verizon, 8/01-7/02.
Senior Vice President, Verizon, 5/98-7/01.
Pablo S. Eisenberg Trustee since 12/99 Senior Fellow, Public Policy Institute
74 Georgetown University, since 1/99.
Executive Director, Center for Community
Change, 5/75-6/98.
Orlando Hernandez Trustee since 8/01 Vice President of Finance, Texas
59 Instruments, 5/76-4/01.
Martha S. Pope Trustee since 12/99 Trustee, National Park Foundation, since
61 Chair of Board 8/02-8/04 8/00. Trustee, Hofstra University, since
6/00. Senior Advisor for the Northern
Ireland Peace Negotiations, 1/95-7/98.
Henry L.P. Schmelzer Trustee since 10/05 President and CEO, Maine Community
63 Foundation, since 2/00. Director, Maine
Bank & Trust, since 9/95. Trustee, Fisher
Charitable Foundation, since 9/01.
96
OFFICERS WHO ARE NOT TRUSTEES
POSITIONS(S) WITH
FUNDS AND DATE OF ELECTION
NAME AND AGE OR APPOINTMENT PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS
- ----------------------------------------------------------------------------------------------------
Sean P. Driscoll Treasurer since 3/99 Executive Vice President, Citizens Advisers,
41 Inc., since 9/04. Senior Vice President,
Citizens Advisers, Inc., 4/03-9/04. Vice
President, Citizens Advisers, Inc., 10/99-
4/03. Assistant Treasurer, Citizens
Advisers, Inc., 10/02-12/02. Director,
Citizens Advisers, Inc., 11/98-10/99.
Marcia Kovalik Chief Compliance Officer Chief Compliance Officer, Citizens Advisers,
43 since 8/04 Inc., since 8/04. Vice President, Citizens
Secretary since 5/03 Advisers, Inc., since 4/03. Counsel,
Asst. Secretary 5/01-5/03 Citizens Advisers, Inc., 2/01-4/03.
Alaina Metz(2) Asst. Secretary since 2/01 Chief Administrative Officer, BISYS Fund
39 Services Ohio, Inc., since 6/95.
(1) Sophia Collier is an interested person of the funds by virtue of her
position with the funds' investment adviser.
(2) Address: BISYS Fund Services, 3435 Stelzer Road, Columbus, OH 43219
The funds statement of additional information include additional information
about the trustees and officers and is available, without charge, by calling
800-223-7010.
97
SHAREHOLDER SERVICES (UNAUDITED)
At Citizens Funds, we want our investors to know how much we value their
business. That's why we offer a comprehensive range of services that includes
everything from highly trained client shareholder representatives to an
informative website.
EXCHANGES BETWEEN
CITIZENS FUNDS*
You can move your money from any one of our funds to another.
RETIREMENT INVESTING
You have the opportunity to invest in a variety of IRAs, including Traditional,
Roth and Rollover. Citizens Funds are also available for 401(k), 403(b), SEP and
SIMPLE retirement plans.
AUTOMATIC INVESTMENT PLAN
You can invest automatically on a monthly or quarterly basis with payroll
deduction or electronic transfer from your bank.
UNPARALLELED CUSTOMER SERVICE
Our representatives are well trained professionals whose goal is to satisfy your
request during the first phone call. Representatives are available from 9 AM to
6 PM (ET) Monday -- Friday at 800.223.7010.
CLIENT WEALTH MANAGEMENT
You have access to receive personal, one on one advice and consultation from our
Client Wealth Management specialist.
WWW.CITIZENSFUNDS.COM
Citizens Funds' website offers daily fund prices and monthly performance
updates, fund and manager profiles, the funds' prospectus and applications,
shareholder activism updates, online account access and transactions and much
more.
INTELLIGENT COMMUNICATIONS
Citizens Funds was a pioneer of the plain English prospectus well before it
became the standard for the rest of the mutual fund industry. We try to bring
that same spirit of innovation, plain-speak and respect for our shareholders to
all our communications.
PROXY VOTING
A description of the policies and procedures that the funds use to determine how
to vote proxies relating to portfolio securities and a copy of the funds' voting
record for the 12-month period ended June 30, 2006 are available on-line at
www.citizensfunds.com without charge, or upon request, by calling 800.223.7010,
or on the SEC's website at www.sec.gov.
* Citizens Global Equity Fund charges a redemption fee of 2% on shares
redeemed or exchanged within 60 days of purchase.
98
NOTES
99
NOTES
100
NOTES
101
(CITIZENS FUNDS LOGO)
TRUSTEES
Walter D. Bristol, Jr.
Sophia Collier
Jeannie H. Diefenderfer
Pablo S. Eisenberg
Orlando Hernandez
Martha S. Pope
Henry L.P. Schmelzer
MANAGER
Citizens Advisers, Inc.
One Harbour Place
Suite 400
Portsmouth, NH 03801
800.223.7010
603.436.5152
DISTRIBUTOR
Citizens Securities, Inc.
One Harbour Place
Suite 400
Portsmouth, NH 03801
800.223.7010
603.436.5152
CUSTODIAN
Fifth Third Bank
Cincinnati, OH 45263
TRANSFER AND ACCOUNTING AGENT
BISYS Fund Services Ohio, Inc.
Columbus, OH 43219
LEGAL COUNSEL
Bingham McCutchen LLP
Boston, MA 02110
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
PricewaterhouseCoopers LLP
Columbus, OH 43215
Citizens Funds are distributed by Citizens Securities, Inc., Portsmouth, NH
03801 and are available through such popular mutual fund supermarkets as Charles
Schwab's Mutual Fund OneSource(R) and Fidelity Investments' FundsNetwork(R).
Citizens Funds(R) is a trademark of Citizens Advisers, Inc.
This report is intended for shareholders of Citizens Funds and is not authorized
for distribution to other persons unless accompanied or preceded by a
prospectus.
PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF
CITIZENS FUNDS CAREFULLY BEFORE INVESTING. FOR THIS AND OTHER INFORMATION,
PLEASE VISIT WWW.CITIZENSFUNDS.COM OR CALL 800.223.7010 FOR A FREE PROSPECTUS
AND READ IT CAREFULLY BEFORE INVESTING.
(C)2006 CITIZENS ADVISERS, INC. NOT A PART OF THE ANNUAL REPORT
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer and principal financial
officer. The code of ethics is filed as an exhibit to the
registrant's Form N-CSR.
(b) During the period covered by the report, with respect to the
registrant's code of ethics that applies to its principal executive
officer and principal financial officer; there have been no
amendments to, nor any waivers granted from, a provision that
relates to any code of ethics definition enumerated in paragraph (b)
of this Item 2.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Walter D. Bristol, Jr. and Orlando Hernandez, members of the Audit Committee,
have been determined by the Board of Trustees in their reasonable business
judgment to meet the definition of "audit committee financial expert" as such
term is defined in the instructions to Form N-CSR. In addition, Messrs. Bristol
and Hernandez are both "independent" members of the Audit Committee as defined
in the instructions to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The Board of Trustees has appointed PricewaterhouseCoopers ("PWC") to serve as
independent accountants to the series of the registrant.
(a) Audit Fees. For the fiscal years ended June 30, 2005 and June 30,
2006, PWC billed audit fees to the registrant in the amount of
$138,600 and $124,000, respectively.
(b) Audit Related Fees. None.
(c) Tax Fees. For the fiscal years ended June 30, 2005 and June 30,
2006, PWC billed tax fees to the registrant in the amount of $36,960
and $33,855, respectively. The fees included under "Tax Fees" are
fees associated with tax compliance, tax advice and tax planning,
including services relating to the filing or amendment of federal,
state or local income tax returns, regulated investment company
qualification reviews and tax distribution and analysis.
(d) All Other Fees. None.
(e)(1) The full audit committee pre-approves the following:
- all audit and permitted non-audit services to be provided the
Funds, and
- all permitted non-audit services to be provided by the Funds'
independent accountant to the adviser and to entities
controlling, controlled by or under common control with the
adviser that provide ongoing services to the Funds, if the
services relate directly to the operations and financial
reporting of the Funds, except that de minimis non-audit
services, may, to the extent permitted by applicable law, be
approved prior to completion of the audit, and except that
pre-approval is not required where the services would not need to
be pre-approved pursuant to applicable rules and regulations.
(e)(2) For the fiscal years ended June 30, 2005 and June 30, 2006, 100% of
all the fees in paragraph (b) through (d) of this Item were approved
by the audit committee.
(f) Not Applicable.
(g) Not Applicable.
(h) Not Applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
Not Applicable.
ITEM 6. SCHEDULE OF INVESTMENTS
A schedule of investments for each series of the registrant is included as part
of the report to shareholders of such series under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
Not Applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not Applicable
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS
Not Applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer
have concluded, based on their evaluation of the registrant's disclosure
controls and procedures as conducted within 90 days of the filing date of this
report, that these disclosure controls and procedures are adequately designed
and are operating effectively to ensure that information required to be
disclosed by the registrant of Form N-CSR is (i) accumulated and communicated to
the investment company's management, including its certifying officers, to allow
timely decisions regarding required disclosure; and (ii) recorded, processed,
summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the second fiscal quarter of the period covered
by this report that have materially affected or are reasonably likely to
materially affect, the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) A code of ethics that is the subject of the disclosure required by Item 2
is attached hereto.
(a)(2) Certifications for each principal executive officer and principal
financial officer of the registrant as required by Rule 30a-2(a) 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) is attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
CITIZENS FUNDS
By /s/ Sophia Collier
--------------------------
Sophia Collier
President
Date: August 29, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Sophia Collier
--------------------------
Sophia Collier
President
Date: August 29, 2006
By /s/ Sean Driscoll
--------------------------
Sean P. Driscoll
Treasurer
Date: August 29, 2006