UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-03626
CITIZENS FUNDS
One Harbour Place
Suite 400
Portsmouth, New Hampshire 03801
Sophia Collier
Citizens Advisers, Inc.
One Harbour Place, Suite 400
Portsmouth, NH 03801
Registrant's telephone number, including area code: (603) 436-5152
Date of fiscal year end: June 30
Date of reporting period: June 30, 2007
ITEM 1. REPORTS TO STOCKHOLDERS.
(CITIZENS FUNDS LOGO)
ANNUAL REPORT
AND SUPPLEMENTAL COMMENTARY
JUNE 30, 2007
(DOLPHIN PICTURE OF THE WORLD)
CITIZENS FOR RESPONSIBLE INVESTING
TABLE OF CONTENTS
SUPPLEMENTAL COMMENTARY
Letter from the president ................................................ 1
Citizens focus ........................................................... 3
ANNUAL REPORT
Risks of mutual fund investing ........................................... 6
Benchmarks ............................................................... 7
Portfolio review disclosure .............................................. 8
Portfolio review ......................................................... 9
Portfolio composition .................................................... 40
Report of independent registered public accounting firm .................. 42
Holdings ................................................................. 44
Statements of assets and liabilities ..................................... 64
Statements of operations ................................................. 66
Statements of changes in net assets ...................................... 68
Financial highlights ..................................................... 72
Financial notes .......................................................... 78
Supplemental information ................................................. 89
Shareholder services ..................................................... 100
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.
COVER IMAGE: NASA Goddard Space Flight Center, Blue Marble Series-Eastern
Hemisphere, HTTP://VISIBLEEARTH.NASA.GOV
LETTER FROM THE PRESIDENT
Dear Shareholders:
Stock markets rallied strongly during the one-year period ended June 30 that
comprised the funds' fiscal 2007. It is very satisfying to see double-digit
one-year returns across all of our equity funds. Our approach of emphasizing
companies that we believe have excellent financial prospects and a good record
of social responsibility was a winning formula. I am particularly pleased with
the results of Citizens Value Fund which is approaching five years under our
in-house management. Bill Rocco at Morningstar has called this fund a "worthy
core holding for socially conscious investors." We agree and hope you will
consider the fund as an option for your socially responsible investment
portfolio.
An interesting discussion that has been taking place in the socially responsible
investing community is the consideration of how socially responsible investors
can have the greatest impact. Some funds have recently adopted what they are
calling a "positive" approach to screening, looking for companies that have
positive social characteristics instead of screening out those with negative
practices. Other fund groups are actively investing in specific companies in
order to gain a platform for advocating change. Still others are investing with
an eye only to financial return but charging their social research team with
executing specific social initiatives. Each of these strategies presents an
opportunity and we look forward to partnering in the future with funds taking
new approaches, as well as strengthening our relationships with existing
institutional investors employing traditional social screens similar to
Citizens.
(PHOTO OF SOPHIA COLLIER)
"IT IS VERY SATISFYING TO SEE DOUBLE-DIGIT ONE-YEAR RETURNS ACROSS ALL OF OUR
EQUITY FUNDS."
- -- SOPHIA COLLIER, PRESIDENT
1
As I look to the future I feel encouraged. I believe this is a good time to be a
socially responsible investor. The financial markets are doing well and there
has never been greater awareness of the importance of environmental and
corporate responsibility.
Sincerely yours,
/s/ Sophia Collier
Sophia Collier
President
Views expressed are exclusively those of Citizens Advisers and are not intended
as financial advice.
See pages 6-8, and the funds' prospectus for important fund risks and other
disclosures. In considering performance of the funds for the one-year 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.
2
CITIZENS FOCUS
(PHOTO OF JOANNE DOWDELL)
"WE BELIEVE THE NEXT DECADE WILL SHOW AN EVEN GREATER NUMBER OF INDIVIDUAL
SHAREHOLDERS, INSTITUTIONAL INVESTORS AND MONEY MANAGERS INCORPORATING SOCIAL
AND ENVIRONMENT CRITERIA IN THEIR INVESTMENT PROCESS."
- -- JOANNE DOWDELL
VP OF CORPORATE RESPONSIBILITY
SHAREHOLDER RIGHTS -- NEVER AN ASSUMED PRIVILEGE
At Citizens we believe strongly in defending shareholders' rights to file
non-binding resolutions and have access to the proxy to nominate directors.
These prerogatives represent the opportunity to maintain open communication
between shareholders and companies, as well as an avenue for more active
participation in companies' policies and direction.
Although the debate on these rights has been ongoing for many years, it
re-emerged with more force during the period when the U.S. Securities and
Exchange Commission (SEC) hosted a series of roundtable discussions to explore
changes to existing rules. One roundtable focused on the possibility of
substituting non-binding shareholder resolutions with formal online
communications between shareholders and companies; another proposal would
require an ownership threshold of at least 5% of outstanding shares in order to
propose changing corporate by-laws to allow shareholders to nominate director
candidates.
We believe shareholder proposals are imperative to bringing about positive
change and encouraging meaningful dialogue between shareholders, management and
corporate board members. According to the Social Investment Forum, "More than
95% of the shareowner resolutions filed in the last 35 years have been
'advisory,' yet have had a profound and identifiable impact on business thinking
and decision making in corporate board rooms."
Citizens supported many noteworthy proposals during the period. For example, one
proposal requested that companies amend their by-laws from requiring a super
majority to elect directors to requiring a simple majority.
3
We supported this proposal at the annual shareholder meetings of Johnson &
Johnson, JCPenney, Kimberly-Clark, Kellogg, TJX, Valero, Staples, JPMorgan
Chase, IBM, Praxair and Newell Rubbermaid. According to Institutional
Shareholder Services (ISS), Citizens' third-party proxy voting agent, "Support
for a majority standard averaged 49.3% at 29 meetings where results are known,
up from 47.7% in 2006." Most notable was the 76.2% of shareholders who supported
the proposal at Praxair and the more than 80% who supported the same proposal at
Newell Rubbermaid.
Another proposal we favored was a shareholder resolution on Google's proxy
statement calling for management to institute policies that would help to
protect free access to the Internet. With Internet-based communications playing
a more substantial and contributory role in the lives of all citizens, we would
like to see technology pioneers like Google remain committed to a free and open
forum for sharing information.
From proposals petitioning companies to produce sustainability reports to others
seeking greater transparency and disclosure of corporate political
contributions, Citizens and other institutional and individual shareholders have
relied on non-binding proposals to help communicate shareholder concerns. We
will continue to monitor developments in the area of shareholder rights and
communicate our concerns to the SEC.
To view our proxy voting record, go to
www.citizensfunds.com/responsible/proxy.html.
THE NEW FACE OF CORPORATE SOCIAL RESPONSIBILITY
Each year Citizens' social research department employs interns who are
interested in acquiring hands-on experience in socially responsible investing.
During the year we brought on three exceptional students from Temple University,
University of New Hampshire and Babson College Graduate School of Business.
Their time at Citizens has allowed them to explore first-hand an emerging new
career path: Chief Sustainability Officers are being designated more and more
frequently, not only in investment firms but in corporations around the globe.
"These are not simply environmental watchdogs, there to keep operations safe and
regulators at bay. The new environmental chiefs are helping companies profit
from the push to go green...their rise shows that companies finally realize that
sustainability and efficiency go hand in hand."(1)
- ----------
(1) Companies Giving Green and Office, Claudia Deutsch, The New York Times,
July 3, 2007
4
This year our interns will review more than 300 companies held in Citizens'
portfolios and verify that each company continues to pass our exclusionary
screens. They also will participate in regular investment team meetings in order
to experience our integrated investment process at work. We believe that
exposing students to our innovative process will help them better prepare for
careers in investment management and corporate responsibility--positions that
will play an increasingly significant role in the way companies compete and are
held accountable.
CITIZENS' INTEGRATED INVESTMENT PROCESS DRIVES MOMENTUM
As pioneers integrating environmental, social and governance factors (ESG) into
the investment process, Citizens' social research team has been closely
monitoring an important shift that has been taking place in the investment
community--asset managers in the U.S. and abroad are, at long last, recognizing
the importance of evaluating ESG factors when making their investment decisions.
A July 6, 2007 article in Ethics Monitor noted, "The people that represent the
largest amounts of money in the world--institutional investors--are integrating
environmental, social and governance considerations into their investment
strategies. That means mutual funds, hedge funds, pension funds and corporate
investment programs are seeking out companies that act with more social
responsibility and are pressuring those companies in which they already invest
to become more ethical."
Many credit the corporate accounting scandals as the catalyst; others point to
global climate change and the human and financial devastation caused by
Hurricane Katrina. We feel these and other factors created a tipping point of
awareness that legislators, regulators, world leaders, corporations and Wall
Street can no longer ignore.
For over two decades Citizens' shareholders have come to rely on our rigorous
process of identifying companies worthy of investment based on their
fundamental, corporate governance, and social and environmental business models.
We believe the next decade will show an even greater number of individual
shareholders, institutional investors and money managers incorporating ESG
criteria in their investment process. As a leader in the process, we are pleased
to see others following in our footsteps.
5
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.
6
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 and 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.
7
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 provided by 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.
8
CITIZENS CORE GROWTH FUND
(PHOTO OF JONATHAN WHITE)
(PHOTO OF SOPHIA COLLIER)
(PHOTO OF ROBERT MAGAN)
"IN JANUARY 2007, WE REFOCUSED THE PORTFOLIO EMPHASIZING COMPANIES THAT WE
BELIEVED HAD THE TWIN VIRTUES OF STRONG NEAR-TERM GROWTH PROSPECTS AND GOOD
RELATIVE VALUE FOR THAT GROWTH. THE RESULTS HAVE BEEN GOOD."
CO - PORTFOLIO MANAGERS
Jonathan White, CFA
Sophia Collier
Robert Magan, 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 6-8 for important fund risk and benchmark
disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
Citizens Core Growth Fund, standard shares, gained 11.56% for the one-year
period ended June 30, 2007. This trailed the one-year return for the Russell
1000 Growth Index, which advanced 19.04%, and the broader S&P 500 Index which
gained 20.59%.
The fund's underperformance versus the benchmark occurred exclusively in the
first half of the fiscal year. The portfolio was positioned in what turned out
to be an excessively defensive posture with overweights in stalwart sectors such
as consumer staples and healthcare. The rationale for the fund's caution was
concern over a slowing economy, high oil prices and international conflict.
Despite this negative backdrop, the stock market began to rally in July 2006
when global growth was stronger than expected. In this environment the fund's
holdings gained in value but not to the same
9 CITIZENS CORE GROWTH FUND
CITIZENS CORE GROWTH FUND PERFORMANCE (as of 6.30.07)
AVERAGE ANNUAL RETURN
---------------------------------- EXPENSE RATIOS*
Ticker 1 5 10 Since ---------------
Share class symbol year years years inception Gross Net
- ----------- ------ ------ ----- ----- --------- ------ -----
STANDARD SHARES WAIDX 11.56% 6.36% 4.09% 8.52% 1.52% 1.52%
INSTITUTIONAL SHARES WINIX 12.39% 7.13% 4.83% 8.01% 0.80% 0.80%
ADMINISTRATIVE SHARES CGADX 12.06% 6.79% NA -3.44% 1.12% 1.12%
* Reflects the expense ratio as reported in the Prospectus dated August 29,
2006.
PERFORMANCE OVER TIME (as of 6.30.07)
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.
(PERFORMANCE GRAPH)
CITIZENS CORE GROWTH FUND - STANDARD SHARES
PERFORMANCE SINCE INCEPTION 03/03/95
Core Growth Russell 1000 Growth S&P 500
DATE FUND VALUE INDEX VALUE INDEX VALUE
- ---- ----------- ------------------- -----------
3/3/1995 $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
2/28/1997 $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
09/30/1997 $20,158.40 $20,398.95 $20,664.98
10/31/1997 $19,354.90 $19,644.19 $19,974.77
11/29/1997 $20,402.50 $20,479.07 $20,899.61
12/31/1997 $20,603.90 $20,708.44 $21,259.08
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 $29,223.34
7/31/2005 $24,722.68 $24,210.81 $30,310.45
8/31/2005 $24,589.17 $23,898.49 $30,034.63
9/30/2005 $25,167.02 $24,008.42 $30,277.91
10/31/2005 $24,469.89 $23,775.54 $29,772.27
11/30/2005 $25,529.44 $24,800.26 $30,897.66
12/31/2005 $25,613.69 $24,723.38 $30,906.93
1/31/2006 $26,394.90 $25,158.51 $31,725.96
2/28/2006 $26,191.66 $25,118.26 $31,811.62
3/31/2006 $26,372.39 $25,490.01 $32,206.08
4/30/2006 $26,251.07 $25,454.32 $32,637.65
5/31/2006 $24,578.88 $24,591.42 $31,697.68
6/30/2006 $24,554.30 $24,495.52 $31,742.06
7/31/2006 $23,844.68 $24,030.10 $31,938.86
8/31/2006 $23,916.22 $24,779.84 $32,699.00
9/30/2006 $24,169.73 $25,461.29 $33,542.64
10/31/2006 $24,662.79 $26,357.52 $34,636.13
11/30/2006 $24,963.68 $26,879.40 $35,294.22
12/31/2006 $25,095.98 $26,970.79 $35,788.33
1/31/2007 $25,552.73 $27,663.94 $36,328.74
2/28/2007 $25,059.56 $27,143.86 $35,616.69
3/31/2007 $25,613.38 $27,290.44 $36,015.60
4/30/2007 $26,768.54 $28,575.82 $37,611.09
5/31/2007 $27,756.30 $29,604.55 $38,923.72
6/30/2007 $27,392.78 $29,154.46 $38,277.75
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.
extent as the market as a whole.
In January 2007, we re-evaluated the fund's positioning and refocused the
portfolio emphasizing companies that we believed had the twin virtues of strong
near-term growth prospects and good relative value for that growth. In the
second half of the fiscal year the fund's standard shares gained 9.16%,
outperforming the Russell Growth 1000 Index return of 8.13% and the S&P 500
Index return of 6.96%. The lesson we take from the first half of the fiscal year
is that we need to focus more on specific stock picking and
CITIZENS CORE GROWTH FUND 10
less on a macroeconomic theme. Regardless of the changing economic conditions,
we believe there are always some companies that are doing well and presenting
attractive value for their growth prospects. We are focused on finding these
names and placing them in the portfolio.
The strongest sector for the fund during the fiscal year was industrials, which
generated almost 0.76% of relative outperformance versus the Russell 1000 Growth
Index during the period. The average company within the fund's holdings in the
sector was up by 29.25% during the period compared to a return of only 15.38%
for the average name within the Russell Index industrial group. Standout
companies within the industrials group were specialty metal component maker
Precision Castparts and automotive company Volvo AB, which contributed 1.69% and
0.50% to the fund's performance, respectively. Precision Castparts is a good
example of what we are seeking in our growth-focused strategy. The company is
forecast to grow its earnings by 35% in the next twelve months and its forecast
long-term growth rate of 16% is 31% better than its average peer. Yet this
excellent growth company trades at a price earnings over growth ratio that is 5%
less than the average peer. This provides us what we believe is high growth
potential at an attractive valuation.
Another outperforming sector was telecommunications services where AT&T
appreciated by more than 36%, and added 0.63% to the fund's return during the
period. AT&T is the new name of the company that was originally known as
Southwest Bell. This remarkable company began an acquisition juggernaut in the
mid-1990s that continued in full force in 2007 with the final crowning
achievement of buying its original parent company AT&T.
Underperforming sectors within the period included financials and information
technology. Within information technology, the fund's average holding
appreciated by 24.64%, quite close to the 25.62% return of the average company
in the Russell 1000 Growth Index. However the fund had only about 15% of its
assets in this sector versus more than 25% for the benchmark. One stand out
performer within information technology was information technology consultancy
Accenture, which appreciated by almost 51%, and generated 0.59% of the fund's
return during the period. Another winner within information technology was
microprocessor Freescale. It produced an over 40% return based on its
acquisition during the period, and contributed 0.54% of the fund's gain. High
tech losers included Broadcom, which declined by more than 25% and was sold
during
11 CITIZENS CORE GROWTH FUND
the period, and Qualcomm, down 13.2% and also sold.
Within financials our approximately 20% weight returned 11.63% with our strong
performer being JPMorgan Chase & Co. It rose 15.36% during the period, and added
0.40% to the fund's performance.
The fund's most significant decliners were Rockwell Automation and Valero Energy
Corp., which declined by almost 22% and 21%, and detracted 0.56% and 0.59%,
respectively, from the fund's return during the period. Rockwell had been a
strong performer for the fund in the prior fiscal year, and had been doing very
well with global growth and investor-friendly spin offs. In early summer the
company had an earnings disappointment and provided future earnings guidance
that was more conservative than investors expected. The shares fell sharply and
we sold the fund's position in the company. Valero Energy Corp. declined with
oil prices over the summer. We trimmed the fund's position in October and sold
it in its entirety in January.
OUTLOOK
Looking ahead, we feel the fund now has the right strategy for the current
economic conditions. We think it makes sense to look for companies that are
growing now and have attractive valuations for their growth potential. We also
feel positive about the economy and its prospects. While the economy within the
U.S. has slowed, we believe it is far from recession or decline. In fact, the
economy may have already bottomed and be in the process of re-accelerating.
Employment is good and interest rates are still low--both positive indicators
for the future of consumer spending and investment. Further, as we have seen in
2007, the U.S. is not the only economy in the world that can drive growth. We
believe the fund is well positioned to benefit from opportunities within
transitional economic conditions.
CITIZENS CORE GROWTH FUND 12
CITIZENS EMERGING GROWTH FUND
(PHOTO OF J. MICHAEL GALLIPO)
(PHOTO OF JONATHAN WHITE)
"A NOTABLE TREND DURING THE FISCAL YEAR WAS A HIGH LEVEL OF MERGER AND
ACQUISITION ACTIVITY FROM BOTH CORPORATE BUYERS AS WELL AS PRIVATE EQUITY FUNDS.
THE FUND BENEFITED FROM THIS TREND WITH FIVE OF ITS HOLDINGS AGREEING TO BE
ACQUIRED DURING THE PERIOD."
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 6-8 for
important fund risk and benchmark disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
For the one-year period ended June 30, 2007, the Citizens Emerging Growth Fund,
standard shares, gained 13.29%. This trailed the one-year return of the fund's
benchmark, the Russell Midcap Growth Index, which advanced 19.73% during the
period. The fund experienced periods in July/August and late October/early
November that accounted for much of the underperformance.
Consumer discretionary stocks were the largest contributors to total return with
the fund's stocks rising over 22% and accounting for 4.85% of the fund's gains
during the period. Strength within the sector was widespread with six stocks
generating returns in excess of 35%. Information technology stocks also made a
considerable contribution to the fund's return during the fiscal year and
provided the greatest upside relative to the fund's benchmark.
13 CITIZENS CORE GROWTH FUND
CITIZENS EMERGING GROWTH FUND PERFORMANCE (as of 6.30.07)
AVERAGE ANNUAL RETURN EXPENSE
--------------------------------- RATIOS*
Ticker 1 5 10 Since -------------
Share class symbol year years years inception Gross Net
- ----------- ------ ----- ----- ----- --------- ----- -----
STANDARD SHARES WAEGX 13.29% 9.47% 9.26% 11.69% 1.90% 1.90%
INSTITUTIONAL SHARES CEGIX 13.85% 10.14% NA 2.27% 1.35% 1.35%
ADMINISTRATIVE SHARES CGRDX 13.66% 9.84% NA -1.73% 1.60% 1.60%
* Reflects the expense ratio as reported in the Prospectus dated August 29,
2006.
PERFORMANCE OVER TIME (as of 6.30.07)
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.
(PERFORMANCE GRAPH)
CITIZENS EMERGING GROWTH FUND - STANDARD SHARES
PERFORMANCE SINCE INCEPTION 02/08/94
DATE FUND VALUE INDEX VALUE
- ---- ---------- -----------
2/8/1994 $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
2/28/1997 $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
09/30/1997 $20,980.90 $18,928.10
10/31/1997 $19,608.70 $17,979.80
11/29/1997 $19,467.60 $18,168.59
12/31/1997 $20,209.00 $18,406.60
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 $31,807.76
7/31/2006 $36,878.81 $30,669.04
8/31/2006 $37,184.90 $31,374.43
9/30/2006 $38,014.13 $32,089.76
10/31/2006 $39,006.30 $33,322.01
11/30/2006 $40,094.57 $34,628.23
12/31/2006 $39,525.23 $34,316.58
1/31/2007 $41,086.47 $35,565.70
2/28/2007 $41,037.17 $35,487.46
3/31/2007 $41,816.88 $35,671.99
4/30/2007 $42,715.94 $37,237.99
5/31/2007 $44,561.27 $38,749.86
6/30/2007 $43,951.19 $38,083.43
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.
Effective stock selection in the sector generated a 23.71% return during the
period, considerably better than the comparable benchmark return of 18.12%.
The fund struggled in the industrials sector during the period where the stock
selections posted the lowest absolute return, 4.32%, of any sector, resulting in
the worst performance relative to the benchmark. We saw a decided shift within
the sector away from asset-light companies such as logistics and consulting
towards more traditional "heavy" industries such
CITIZENS EMERGING GROWTH FUND 14
as construction, defense and equipment. The fund was not well-positioned to
benefit from that shift. Materials was another sector where the fund's stock
selection hurt performance. There were numerous takeovers in the sector and
strong performance within the benchmark from a number of companies that do not
meet Citizens' social screening criteria. Although the fund's cash levels during
the period averaged a modest 4.2%, that allocation still subtracted about 0.75%
from the fund's return relative to the benchmark during that time.
A notable trend during the fiscal year was a high level of merger and
acquisition activity from both corporate buyers as well as private equity funds.
The fund benefited from this trend with five of its holdings agreeing to be
acquired during the period.
One of the themes emphasized in the fund was the growth of data traffic driven
by Web 2.0 applications such as music and video. One company that fit into this
theme was CommScope, Inc., which makes coaxial and other cables for high-speed
communication applications. The stock was a top performer for the fund during
the period rising 85.71% and contributing 0.90% to the fund's total return. The
company benefited from increased capital spending from both cable and
traditional telecommunications providers. Despite the strong performance, we
believe the operating environment is still favorable and that CommScope's
recently announced acquisition of Andrew Corp. provides additional upside
potential.
In a repeat performance, MEMC Electronic Materials improved from the second
largest contributor to performance in the prior fiscal year to the top
contributor during the period. It returned 63.22% and contributed 1.21% to total
fund return. The company, which manufactures silicon wafers for a variety of
applications, has benefited from a shortage of polysilicon driven by increased
production of solar panels. Although we have trimmed the position from time to
time, the company remains one of our favorite ways to get exposure to
alternative energy.
Trailing just behind MEMC in contribution to the fund's return was Polo Ralph
Lauren Corp. which rose 78.71% during the period and contributed 1.18% to the
fund's total return. The company, which makes and licenses high-end apparel,
accessories, fragrances and home furnishings under such brands as Polo, Polo
Sport and Ralph Lauren, benefited from continued strength in high-end consumer
spending.
15 CITIZENS EMERGING GROWTH FUND
Expeditors International of Washington, Inc. was the largest detractor from the
fund's performance during the fiscal year. The stock had a negative return of
26.29% during the period and detracted 0.89% from the fund's performance. The
company is a global logistics company whose earnings continued to grow at a
rapid rate, but was hurt by falling short of investor expectations over multiple
quarters and the general shift out of asset-light industrials.
Choice Hotels International, Inc., after being a top performer for the fund in
the prior fiscal year, detracted from fund performance this fiscal year. The
stock declined 31.45% and this subtracted 0.66% from the fund's total return.
The company operates mid-priced hotels such as Comfort Inn and Econo Lodge.
During the fiscal year, the company had a frustrating pattern of erratic
earnings guidance which reduced our confidence in management's visibility on its
core operating business. As a result, the fund chose to exit its position in the
company.
OUTLOOK
Our outlook for the coming year remains cautiously optimistic. We believe that
the Federal Reserve Board (the Fed) will remain on the sidelines. The Fed seems
to have been successful in slowing the economy without inducing a recession or
having a great impact on the labor market. The weakness in the housing market
has impacted consumer spending domestically, but this has been partially offset
by a pick-up in global growth. As a result, estimates of corporate earnings
growth declined significantly. However, we still expect growth to remain
positive and provide underlying support for the equity markets.
There are a number of risks that we continue to monitor closely. Foremost is the
risk that the current weakness in the housing market and especially in the
subprime mortgage market may have a wider impact on the economy resulting in a
harder landing. After contracting for several years, price to earnings multiples
for the major indices have been expanding and a reversal of this trend could put
pressure on forward returns. As always, we will continue to look for attractive
growth stocks in the mid-capitalization range and position the fund in those we
believe have the greatest near-term opportunities.
CITIZENS EMERGING GROWTH FUND 16
CITIZENS SMALL CAP CORE GROWTH FUND
(PHOTO OF J. MICHAEL GALLIPO)
(PHOTO OF NATHAN MOSER)
(PHOTO OF JONATHAN WHITE)
"WE REMAIN OPTIMISTIC IN OUR OUTLOOK FOR SMALL-CAP STOCKS IN 2007. THE MARKET
CONTINUES TO BENEFIT FROM REASONABLE VALUATIONS, STRONG CORPORATE BALANCE SHEETS
AND RAPID MERGER AND ACQUISITION ACTIVITY.
CO-PORTFOLIO MANAGERS
J. Michael Gallipo, CFA
Nathan Moser, CFA
Jonathan White, CFA
INVESTMENT GOAL
Capital appreciation
INVESTMENT STRATEGY
Invests mainly in stocks of small-capitalization U.S. companies
INCEPTION DATE
Standard shares 12.28.99
RISKS
Growth investing; small- and medium-sized company risks (See pages 6-8 for
important fund risk and benchmark disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
The Citizens Small Cap Core Growth Fund gained 14.22% for the one-year period
ended June 30, 2007. This performance trailed the Russell 2000 Growth Index,
which advanced 16.83% over the same time period.
Consumer discretionary was a top performing sector during the period, adding
3.28% to the fund's total return. The fund maintained a slight underweight
relative to the index as pressures on the U.S. consumer were building. One stock
bucking the trend was Deckers Outdoor Corp., best known for their UGG and Teva
footwear brands. The stock increased 161.58% during the period and added 2.55%
to the fund's total return, due in large part to higher demand for UGG boots and
upward estimate revisions. Deckers management did an outstanding job introducing
new UGG styles, keeping them "on
17 CITIZENS SMALL CAP CORE GROWTH FUND
CITIZENS SMALL CAP CORE GROWTH FUND PERFORMANCE (as of 6.30.07)
AVERAGE ANNUAL RETURN
--------------------------------- EXPENSE RATIOS*
Ticker 1 3 5 Since ---------------
Share class symbol year years years inception Gross Net
- ----------- ------ ----- ----- ----- --------- ------ ------
STANDARD SHARES CSCSX 14.22% 11.24% 10.20% 5.50% 1.44% 1.44%
* Reflects the expense ratio as reported in the Prospectus dated August 29,
2006.
PERFORMANCE OVER TIME (as of 6.30.07)
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.
(PERFORMANCE GRAPH)
CITIZENS SMALL CAP CORE GROWTH FUND
PERFORMANCE SINCE INCEPTION 12/28/99
DATE FUND VALUE INDEX VALUE
- ---- ---------- -----------
12/28/1999 $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 $ 9,690.07
7/31/2006 $12,309.12 $ 9,187.16
8/31/2006 $12,225.42 $ 9,456.34
9/30/2006 $12,445.47 $ 9,520.64
10/31/2006 $13,095.13 $10,137.58
11/30/2006 $13,367.51 $10,379.87
12/31/2006 $13,304.68 $10,354.96
1/31/2007 $13,596.05 $10,547.56
2/28/2007 $13,456.01 $10,513.81
3/31/2007 $13,726.48 $10,610.53
4/30/2007 $14,136.90 $10,888.53
5/31/2007 $14,751.86 $11,385.05
6/30/2007 $14,945.76 $11,320.91
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.
trend" for several years. Another strong performer was internet travel-focused
Priceline.com. It increased 106.97% during the period and added 1.29% to the
fund's overall return. International gross bookings remain strong, which we
believe provides an opportunity for future growth. In addition, management
leveraged Priceline's cost structure, which had a positive impact on consensus
expectations.
Energy and technology were also positive contributors, adding 3.06% and 3.36% to
the fund's total return, respectively, during the period. Core Laboratories
increased 65.58% and added 1.55% to total return as a favorable energy
environment drove positive financial results. Core
CITIZENS SMALL CAP CORE GROWTH FUND 18
Laboratories has been a long-term holding of the fund and we continue to view
the company favorably as its reservoir description and production enhancement
services are in high demand. This focus, along with strong international
presence, reduces volatility from minor energy price swings. While the
technology sector contributed positively to the fund's return, it returned less
than it did for the benchmark because of less-than-optimal stock picks. We did,
however, have some strong performers in this sector. Commscope returned 85.59%
and added 0.82% to the fund's performance; and WebEx Communications increased
60.20%, and contributed 0.96% to the fund's total return during the period. Both
companies were a play on our theme of the maturation of internet infrastructure.
Commscope sells coaxial and fiber optic cable for data networking, internet
access and other broadband applications. Strong demand from large telecom
companies led to positive financial results. WebEx posted strong financial
results and was eventually acquired by Cisco Systems in early 2007.
Merger and acquisition activity surged over the past year due in large part to
the increased role of private equity and strong corporate balance sheets. The
fund benefited from this activity, with several portfolio holdings being
acquired. Most recently, Roche made an unsolicited offer for Ventana Medical,
which helped propel the stock 59.76%, and contribute 0.60% to the fund's
performance since adding the position in late April. The fund continues to hold
its position as the potential exists for a higher offer from Roche and/or a
competing offer.
During the period, industrials contributed 1.02% and healthcare added 1.27% to
the fund's total return. However, poor stock selections within each sector led
to relative underperformance versus the benchmark. Regional train operator
Genesee & Wyoming declined 30.61% and detracted 0.81% from the fund's return
during the holding period. We initially purchased Genesee & Wyoming based on a
positive industry operating environment and strong management execution. The
company was negatively impacted by lower volumes stemming from exposure to
paper, housing, and damage from a hurricane in Mexico. We sold the fund's
position because we believed these issues could take several quarters to be
resolved. Within healthcare, the fund maintained an underweight position
relative to the benchmark as industry fundamentals remained challenging.
Political pressure to reduce the high cost of healthcare increased and, in our
opinion, could accelerate in the coming years. We believe Healthways--a managed
care company--is well positioned to capitalize on this opportunity
19 CITIZENS SMALL CAP CORE GROWTH FUND
by helping its clients lower medical costs. However, due to poor performance in
their Medicare business, Healthways declined 10.09% and reduced the fund's total
return for the fiscal year by 0.31%. The fund continues to hold its position in
Healthways based on our belief that management will take steps to improve the
Medicare business.
OUTLOOK
We remain optimistic in our outlook for small-cap stocks in 2007. The market
continues to benefit from reasonable valuations, strong corporate balance sheets
and rapid merger and acquisition activity. Long-term interest rates rose during
the fund's last fiscal quarter, but remain at low levels. With very strong
performance in the first half of 2007 market volatility could increase in the
coming months as rising energy costs and continued housing weakness pressure the
U.S. consumer. We believe we are undergoing an economic "soft landing" and that
growth will reaccelerate in 2008. Global economies continue to be strong and we
continue to seek out companies benefiting from this growth.
CITIZENS SMALL CAP CORE GROWTH FUND 20
CITIZENS VALUE FUND
(PHOTO OF SOPHIA COLLIER)
"WE ARE ENCOURAGED ABOUT THE PROSPECTS FOR THE CITIZENS VALUE FUND BECAUSE WE
BELIEVE ITS FOCUSED RELATIVE VALUE STRATEGY IS PARTICULARLY SUITED TO UNCOVER
OPPORTUNITIES WITHIN TRANSITIONAL ECONOMIC CONDITIONS."
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 investing (See pages 6-8 for important fund risk and benchmark disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
Citizens Value Fund had a strong year in fiscal 2007. For the one-year period
ended June 30, 2007 the fund's standard shares returned 20.63%, outperforming
the benchmark S&P 500 Index return of 20.59%.
Our single best stock was Precision Castparts which appreciated almost 97%
during the fiscal year accounting for 6.23% of the fund's gain. The company is
an expert at making complex high-value metal components used in gas turbines,
aircraft and other critical devices. Its success is the result of a booming
global economy and the increasing need for new large-scale infrastructure and
equipment.
Global growth and relative value were important themes that drove success
throughout the portfolio. Our strongest sector was consumer
21 CITIZENS VALUE FUND
CITIZENS VALUE FUND PERFORMANCE (as of 6.30.07)
AVERAGE ANNUAL RETURN
--------------------------------- EXPENSE RATIOS*
Ticker 1 5 10 Since ---------------
Share class symbol year years years inception Gross Net
- ----------- ------ ----- ----- ----- --------- ----- ----
STANDARD SHARES MYPVX 20.63% 11.95% 7.86% 9.15% 1.62% 1.29%
INSTITUTIONAL SHARES CVALX 21.16% NA NA 15.95% 1.26% 0.90%
* Reflects the expense ratio as reported in the Prospectus dated August 29,
2006. Contractual fee waivers are in effect through June 30, 2008.
PERFORMANCE OVER TIME (as of 6.30.07)
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.
(PERFORMANCE GRAPH)
CITIZENS VALUE FUND
PERFORMANCE SINCE INCEPTION 06/13/96
DATE FUND VALUE INDEX VALUE
- ---- ---------- -----------
6/13/1996 $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
2/28/1997 $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
09/30/1997 $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 $21,816.64 $22,327.06
7/31/2006 $21,679.19 $22,465.49
8/31/2006 $22,091.09 $23,000.17
9/30/2006 $22,588.14 $23,593.57
10/31/2006 $23,306.45 $24,362.72
11/30/2006 $23,837.83 $24,825.61
12/31/2006 $24,064.29 $25,173.17
1/31/2007 $24,665.90 $25,553.29
2/28/2007 $24,253.98 $25,052.44
3/31/2007 $24,632.34 $25,333.03
4/30/2007 $25,474.77 $26,455.28
5/31/2007 $26,593.11 $27,378.57
6/30/2007 $26,317.41 $26,924.20
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.
discretionary where the fund's average holding appreciated over 50% during the
period. Within this sector the fund focused its holdings on companies we
believed would benefit from international growth such as the farm products
company Bunge and apparel giant Nike, which contributed 0.80% and 0.54% to the
fund's total return, respectively. Both companies were selling at what we
believed were attractive relative values when we purchased them and each had
what we believed were unappreciated growth prospects. Bunge sells fundamental
farm commodities such as soybeans, corn, wheat, vegetable oils and fertilizers.
CITIZENS VALUE FUND 22
Population growth and improving nutrition create strong markets for all of these
products. The Nike franchise also operates on a worldwide scale and has growth
driven by the development of consumer economies in growing countries. The fund
continues to hold both names.
The fund also was rewarded by our holding luxury retailer Nordstrom, whose
shares were up 42.53% for the period, adding 0.79% to the fund's total return.
The fund sold its shares of the company in May 2007. A review of the Nordstrom
holding is a good example of our relative value strategy at work. The fund had
initiated a position in the company in October of 2004 when Nordstrom shares
were selling at a price earnings ratio of a little more than 14.5 based on a
consensus forecast of approximately $1.40 in earnings for the next twelve
months. At that time Nordstrom's multiple was more than 15% below the industry
average. We thought that Nordstrom was undervalued and we believed that the
company could grow earnings more than expected. With a strong global economy we
thought it was inevitable that increasing amounts of money would find its way to
Nordstrom where luxury goods appeal strongly to the affluent consumer. In our
relative value strategy we look for situations where we can gain from both
earnings growth and a positive "re-rating" by investors. By May of 2007 when the
fund sold the last of its Nordstrom position, the company was trading at 17.5
times earnings that were expected to be $2.80 for the coming year. Importantly
for us, the company was trading at a little more than the industry average--a
sell signal for our strategy.
The fund's second best sector was information technology where the fund
continued to be rewarded by the growth of long-time holding MEMC Electronic
Materials, a maker of silicon wafers used in solar panels and other
semiconductors. MEMC increased in value by almost 63%, returning 0.65% of the
fund's total return during the period and continues to execute effectively and
benefit from favorable pricing and tight capacity for its basic products. The
fund also benefited from another long-time holding, Hewlett Packard, which
appreciated more than 40% during the period contributing 0.67% of the fund's
gains. The fund continues to hold both names.
The fund's weakest sector both in absolute terms and relative to the S&P 500
Index was financials where the average holding increased in value by 10.27%
versus a gain of 14.80% for the average company within the benchmark. Within
financials the fund had some good holdings such as Goldman Sachs, which returned
almost 43% and Merrill Lynch which rose 20% during the period. They contributed
0.61% and 0.56%, respectively.
23 CITIZENS VALUE FUND
However, the fund was hurt by a decline in the share prices of its holdings in
commercial banks and consumer finance. The fund's worst position for the fiscal
year was Wachovia Corp. which declined by more than 28%, detracting 0.56% from
the fund's performance. The fund also saw an 8.51% decline in Capital One and a
drop of 6.51% in Bank of America during the period detracting 0.23% and 0.05%,
respectively, from the fund's performance. The weakness of this sector was
related to investor concerns that current levels of interest rates would
compress these companies' earnings that are already under pressure from a slow
housing market. In addition to these industry-wide factors, Wachovia in
particular has been under a cloud of negative investor perception that it has
overpaid for several acquisitions. Taking a longer-term view, the fund still
holds all of these companies, as we believe that the fundamental business of
these financial institutions is still fairly strong and the names are quite
reasonably valued. We will continue to monitor these names closely.
OUTLOOK
Looking ahead, we feel positive about the economy and its prospects. It is true
that growth within the U.S. has slowed, but we believe the economy is far from
recession or decline. In fact the economy may have already bottomed and be in
the process of re-accelerating. Employment is good and interest rates are
low--both positive indicators for the future of consumer spending and
investment. Further, as we have seen in the first half of 2007 the U.S. is not
the only economy in the world that can drive growth. We are encouraged about the
prospects for the Citizens Value Fund because we believe its focused relative
value strategy is particularly suited to uncover opportunities within
transitional economic conditions.
CITIZENS VALUE FUND 24
CITIZENS GLOBAL EQUITY FUND
(PHOTO OF JONATHAN WHITE)
"WE EXPECT THAT IN THE COMING YEAR THE MOST ENERGETIC ECONOMIC GROWTH WILL
CONTINUE TO OCCUR OUTSIDE OF THE UNITED STATES. WE BELIEVE THE FUND IS WELL
POSITIONED TO BENEFIT FROM THIS TREND."
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 6-8 for important fund risk and
benchmark disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
The Citizens Global Equity Fund, standard shares, gained 16.91% for the one-year
period ended June 30, 2007. The MSCI World Index returned 23.59%. Markets around
the globe powered their way higher, driven by a surplus of liquidity that sought
a home in an environment of low interest rates, low inflation and positive
earnings reports.
In retrospect, we were too focused on the developing problems of the U.S.
economy and had too generous an assessment of the importance of the American
consumer as a driver of international growth. As a result, we overreacted to the
market correction in the second quarter of 2006, and for the first half of the
fiscal year adopted a somewhat defensive posture--we increased the fund's
exposure in healthcare, consumer staples and financial
25 CITIZENS GLOBAL EQUITY FUND
CITIZENS GLOBAL EQUITY FUND PERFORMANCE (as of 6.30.07)
AVERAGE ANNUAL RETURN
---------------------------------- EXPENSE RATIOS*
Ticker 1 5 10 Since ---------------
Share class symbol year years years inception Gross Net
- ----------- ------ ------ ----- ----- --------- ----- -----
STANDARD SHARES WAGEX 16.91% 8.55% 5.89% 7.43% 2.01% 2.01%
INSTITUTIONAL SHARES CGEIX 17.69% 9.26% NA 0.92% 1.40% 1.40%
ADMINISTRATIVE SHARES CEADX 17.26% 8.88% NA -4.51% 1.73% 1.73%
* Reflects the expense ratio as reported in the Prospectus dated August 29,
2006.
PERFORMANCE OVERTIME (as of 6.30.07)
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.
(PERFORMANCE GRAPH)
CITIZENS GLOBAL EQUITY FUND - STANDARD SHARES
PERFORMANCE SINCE INCEPTION 02/08/94
DATE FUND VALUE INDEX VALUE
- ---- ---------- -----------
2/8/1994 $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
2/28/1997 $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
09/30/1997 $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 $25,467.82
7/31/2006 $22,191.23 $25,625.72
8/31/2006 $22,508.56 $26,291.99
9/30/2006 $22,483.81 $26,604.87
10/31/2006 $23,288.73 $27,581.26
11/30/2006 $23,654.36 $28,257.01
12/31/2006 $24,091.96 $28,830.62
1/31/2007 $24,482.25 $29,170.82
2/28/2007 $24,141.95 $29,019.14
3/31/2007 $24,506.49 $29,550.19
4/30/2007 $25,347.07 $30,853.35
5/31/2007 $26,028.90 $31,717.24
6/30/2007 $26,113.50 $31,470.68
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.
stocks, and trimmed the technology, energy and industrial sectors. Fundamental
developments, particularly the continued deterioration of the U.S. housing
market and housing related financial instruments, led us to believe that it was
just a matter of time before the American consumer would cut back on spending.
This, we expected, would lead to slower overseas economies dependent on exports
to the U.S. and hence weaker markets and a meaningful correction in equity
prices. However, our assessment of international sensitivity to a moderate
slowing of U.S. economic activity proved to be exaggerated, and our stock
selections
CITIZENS GLOBAL EQUITY FUND 26
lagged. By the final quarter of the fiscal year we adjusted the portfolio and
the fund performed in line with the index, but was unable to make up for its
earlier underperformance.
The fund's best performer for the fiscal year was Volvo. The stock of the
Swedish maker of trucks, busses and engines rose by over 102% and contributed
2.28% of the fund's performance. We trimmed the fund's position in Volvo, but it
was still over 2.0% of the portfolio at fiscal year end. Volvo was followed in
performance by Nintendo, which was added to the portfolio in November, just
prior to its introduction of the Wii gaming console. A 1.8% position at fiscal
year end, it appreciated over 74% to contribute 0.87% to the fund's total
return. Two European financial stocks rose by over 64% each--Deutsche Boerse
contributed 1.61% and Julius Baer Holding contributed 0.88% to the fund's total
return during the period. Both benefited from the strong capital markets during
the year, Duetsche Boerse as the primary German stock exchange and Julius Baer
as a notable wealth manager.
Many of the fund's worst performing stocks were sold early in the fiscal year,
when the market was near its low point. The fund's greatest detractor from
performance was Corning, sold in July 2006, which cost the fund 0.38% of its
return as the stock declined by almost 25% in less than a month. It suffered
when the supply of LCD panels went from shortage to surplus at a time when
stocks were particularly vulnerable in July 2006. Similarly, Fluor, an
engineering and construction firm, was sold in September after a 16% decline
amidst fears of a slowdown in capital spending. This detracted 0.36% from the
fund's performance. The fund's performance problem was not so much an abundance
of losing stocks as it was not owning enough stocks that could keep up with the
market.
OUTLOOK
As the fund ends the fiscal year, it is worthwhile to review how the
characteristics of the portfolio have changed from a year ago. First, the
companies held are generally smaller. The weighted average market capitalization
for the fund declined over the year from $61 billion to $49 billion while that
of the index increased from $67 billion to $78 billion. This reflects a move
toward a stock selection process focused on more company specific data than on
country and sector selection. Valuation parameters have not changed much. At the
end of the last fiscal year the trailing twelve-month price to earnings ratio
was 17.6 times. This year it stands at 17.1. Dividend yield declined from 1.6%
to 1.4%. However, growth
27 CITIZENS GLOBAL EQUITY FUND
has picked up. Actual sales growth rose from 13.0% last year to 24.2% this year.
Forecasted earnings growth for the next five years rose from 12.8% to 13.6%.
Geographically, exposure to the U.S., Japanese and United Kingdom markets has
been reduced, while it has grown to continental Europe, the Pacific rim, and
emerging markets. At the fiscal year end, emerging markets comprised 7.7% of the
fund, up from 1.1% one year ago.
We expect that in the coming year the most energetic economic growth will
continue to occur outside of the United States. We are challenged here by a weak
housing market, high energy costs, and rising interest rates. These impact our
ability to maintain and increase consumer spending levels, and consumer spending
is the primary driver of our economy. Fortunately, a number of mature economies
in Europe are experiencing a bit of renewal, and emerging markets are prospering
and demonstrating a new ability to sustain a less volatile, while still high,
level of growth. We believe this should provide opportunities for the fund,
although the levels of the recent past may be tough to maintain.
CITIZENS GLOBAL EQUITY FUND 28
CITIZENS BALANCED FUND
(PHOTO OF SOPHIA COLLIER)
(PHOTO OF ROBERT MAGAN)
"IN JANUARY 2007, WE ADOPTED A MANAGEMENT APPROACH SIMILAR TO THAT OF THE
CITIZENS VALUE FUND FOR THE EQUITY PORTION OF THE FUND. THIS PROVIDES EXPOSURE
TO A STRATEGY WITH A PROVEN TRACK RECORD."
PORTFOLIO MANAGERS
Sophia Collier
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
Value and fixed-income investing (See pages 6-8 for important fund risk and
benchmark disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
Citizens Balanced Fund had double-digit returns for the one-year period ended
June 30, 2007 with a return of 11.81% compared to the 14.67% return of the
Blended Index, the fund's benchmark. 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 Index gained 20.59% and the Lehman Brothers U.S. Aggregate
Index gained 6.12%.
The fund's defensive position in the first half of the period meant it did not
fully participate in the stock market rally that began in July of 2006. This
resulted in its underperformance. However, in January 2007, we adopted a
management approach similar to that of the Citizens Value Fund for the equity
portion of the fund. Our intent was to provide the fund exposure to a proven
strategy
29 CITIZENS BALANCED FUND
CITIZENS BALANCED FUND PERFORMANCE (as of 6.30.07)
AVERAGE ANNUAL RETURN
--------------------------------- EXPENSE RATIOS*
Ticker 1 3 5 Since ---------------
Share class symbol year years years inception Gross Net
- ----------- ------ ----- ----- ----- --------- ----- ----
STANDARD SHARES CFBLX 11.81% 7.87% NA 8.80% 1.80% 1.30%
* Reflects the expense ratio as reported in the Prospectus dated August 29,
2006.
PERFORMANCE OVER TIME (as of 6.30.07)
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.
(PERFORMANCE GRAPH)
CITIZENS BALANCED FUND
PERFORMANCE SINCE INCEPTION 12/20/02
DATE FUND VALUE INDEX VALUE
- ---------- ---------- -----------
12/20/2002 $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 $13,103.14 $13,415.54
7/31/2006 $13,017.97 $13,537.62
8/31/2006 $13,135.13 $13,813.79
9/30/2006 $13,246.78 $14,076.25
10/31/2006 $13,461.38 $14,388.75
11/30/2006 $13,655.22 $14,620.41
12/31/2006 $13,776.75 $14,709.59
1/31/2007 $13,973.76 $14,840.50
2/28/2007 $13,875.94 $14,757.40
3/31/2007 $14,017.48 $14,856.27
4/30/2007 $14,369.32 $15,282.65
5/31/2007 $14,809.02 $15,556.21
6/30/2007 $14,650.62 $15,383.60
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.
with good opportunity for appreciation, consistent with the lower risk profile
that we believe is inherent in a valuation sensitive strategy. Results from this
change were positive and the fund outperformed its benchmark for the six months
ended June 30, 2007 with a total return of 6.35% versus 4.59% for the benchmark.
The fund's single best stock holding during the period was Precision Castparts,
which appreciated almost 102%, and contributed 1.00% to the fund's performance.
The company's expertise is making complex high-value metal components used in
gas turbines, aircraft and other critical devices. Its success is the result of
a booming global economy and the increasing need for new large-scale
infrastructure and equipment.
CITIZENS BALANCED FUND 30
During the period, the fund's best performing sector was consumer discretionary
where the fund's average holding appreciated by over 25% versus 19% for the
average company within the fund's benchmark. McDonald's, Walt Disney and Polo
Ralph Lauren were the top contributors within the group during the period,
contributing 0.32%, 0.29% and 0.28%, respectively to the fund's performance.
Socially responsible investors are sometimes surprised to see a company like
McDonald's in the portfolio. When a company the size of McDonald's takes a
positive social or environmental action the results can be very significant.
Over the last ten years McDonald's has developed a comprehensive social and
environmental responsibility plan and made what we believe is excellent progress
in implementing its plan. For example, a significant public health issue is the
emergence of "super-bugs" that are resistant to antibiotics. It is believed one
factor creating this problem is routine administration of antibiotics to promote
growth of poultry and cattle. McDonald's has addressed this issue by prohibiting
this practice and taking a leadership position within the industry to encourage
other companies to follow suit. This is just one example of a long list of
corporate social responsibility initiatives undertaken by the company.
Another stand-out sector during the period was telecommunications services where
the fund's holding America Movil S.A.B de C.V. appreciated by over 30% while the
fund held it, and contributed 0.35% of the fund's performance. The company is
the largest wireless provider in Latin America. The fund sold its position in
the company in January 2007.
The financials sector was the fund's weakest sector during the period on a
relative basis versus the benchmark--the fund's average holding gained 10.3%
compared to 14.8% for the average company within the benchmark. The sector's
weakness was concentrated in the commercial banking industry where investors
were concerned that current interest rate levels would compress company
earnings, in an environment already under pressure from a slow housing market.
In addition to these industry-wide factors, one of the fund's commercial banking
holdings--Wachovia--which declined by 5% during the year, came under a cloud of
negative investor perception that it overpaid for several acquisitions. Taking a
longer term view, the fund still holds Wachovia and select other names within
the commercial banking sector as we believe that the fundamental businesses of
these financial institutions are still fairly strong and the names are quite
31 CITIZENS BALANCED FUND
reasonably valued. We will continue to monitor these names closely. The fund's
largest single detractor from performance was Valero Energy Corp. which fell by
more than 23%, detracting 0.37% from the fund's performance. The fund sold
Valero in January 2007.
In terms of asset allocation, over the course of the one-year period the fund
increased the weight of the equity portion of its portfolio, moving from
approximately 60% in December 2006 to 70% on June 30, 2007. We believed equities
would likely outperform fixed income securities and this proved to be the
correct call. To generate the cash needed to make the changes to the fund's
holdings, we reduced the fund's weighting in corporate and federal agency bonds.
At the same time we sought to position the fixed income portion of the portfolio
closer to the benchmark. To accomplish this realignment, the fund purchased U.S.
Treasury securities. This also benefited the fund because in the second half of
the fund's fiscal year, U.S. Treasury securities outperformed other fixed income
securities during the one-year period. We kept the average duration and maturity
of the fund short of the benchmark in anticipation of higher interest rates.
OUTLOOK
Looking ahead, we feel positive about the economy and its prospects. It is true
that growth within the United States has slowed, but we believe the economy is
far from recession or decline. In fact, the economy may have already bottomed
and be in the process of re-accelerating. Employment is good and interest rates
are low --both positive indicators for the future of consumer spending and
investment. Further, as we have seen in 2007, the United States is not the only
economy in the world that can drive growth. We are encouraged about the
prospects for the Citizens Balanced Fund because we believe the focused relative
value strategy used in the equity portion is particularly suited to uncover
opportunities within transitional economic conditions. At the same time we
believe the fund's fixed income holdings will continue to add balance and a
measure of safety to the portfolio.
CITIZENS BALANCED FUND 32
CITIZENS INCOME FUND
(DWIGHT ASSET MANAGEMENT COMPANY)
PORTFOLIO MANAGER
The fund is managed by a team of portfolio managers at Dwight Asset Management
Company
INVESTMENT GOAL
Current income and monthly dividend payment
INVESTMENT STRATEGY
Invests in bonds that are diversified across sectors, including U.S. treasury,
mortgages, corporate, and asset-backed securities
INCEPTION DATE
Standard shares 6.10.92
RISKS
Fixed-income investing; high-yield security risks (See pages 6-8 for important
fund risk and benchmark disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
For the one-year period ended June 30, 2007, the Citizens Income Fund gained
4.60%--trailing the benchmark, the Lehman Brothers U.S. Aggregate Index, which
returned 6.12%.
The fund's underweight position in both the investment grade corporate bond
sector and to residential mortgage-backed securities in the early part of the
fiscal year detracted from performance as these were the two best performing
investment grade sectors.
The fund benefited, however, from a maturity structure shorter than that of the
index from early October through early January and from overweight positions in
both commercial mortgage-backed securities (CMBS) and asset-backed securities
(ABS). In addition, the fund maintained a modest allocation in the high-yield
sector which outperformed duration-matched Treasuries by a wide margin.
The close of the fourth quarter of the fund's fiscal year marked the one-year
anniversary of a 5.25% federal funds rate, a policy prescription that worked
well. During the last year, real gross domestic product (GDP) growth slowed to a
moderate rate, and core inflation slipped back into the Federal Reserve's (the
Fed's) comfort
33 CITIZENS INCOME FUND
CITIZENS INCOME FUND PERFORMANCE (as of 6.30.07)
AVERAGE ANNUAL RETURN
-------------------------------- EXPENSE RATIOS*
Ticker 1 5 10 Since ---------------
Share class symbol year years years inception Gross Net
- ----------- ------ ---- ----- ----- --------- ----- ----
STANDARD SHARES WAIMX 4.60% 3.68% 3.96% 5.01% 1.49% 1.49%
* Reflects the expense ratio as reported in the Prospectus dated August 29,
2006.
PERFORMANCE OVER TIME (as of 6.30.07)
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.
(PERFORMANCE GRAPH)
CITIZENS INCOME FUND
PERFORMANCE SINCE INCEPTION 06/10/92
DATE FUND VALUE INDEX VALUE
- ---- ---------- -----------
6/10/1992 $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 $19,964.16 $24,111.17
7/31/2006 $20,175.78 $24,436.67
8/31/2006 $20,427.98 $24,810.55
9/30/2006 $20,597.53 $25,028.88
10/31/2006 $20,727.30 $25,194.07
11/30/2006 $20,947.00 $25,486.32
12/31/2006 $20,823.42 $25,338.50
1/31/2007 $20,781.77 $25,328.37
2/28/2007 $21,083.11 $25,718.42
3/31/2007 $21,024.07 $25,718.42
4/30/2007 $21,118.68 $25,857.30
5/31/2007 $20,945.51 $25,660.79
6/30/2007 $20,882.51 $25,586.77
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.
zone of 1-2%. When the Fed stopped tightening policy a year ago, inflation was
high and still rising, while the economy showed signs of overheating. The
housing market was entering a downturn, however, so the Fed gambled that they
could step aside.
Against this background, interest rates fell significantly over the course of
the past twelve months with the bond-equivalent yield on six-month U.S. Treasury
bills declining to end the period at 4.94% while the yield on five-year Treasury
notes fell to a level of 4.93%. Falling interest rates translated into positive
returns for the broad-based indices of the fixed-income
CITIZENS INCOME FUND 34
market. As a result, the Lehman Brothers U.S. Aggregate Index returned 6.12% for
the one-year period ended June 30, 2007, compared to a return of -0.81% for the
year ended June 30, 2006.
OUTLOOK
Our estimates show that inflation-adjusted GDP growth exceeded 3% on a
seasonally-adjusted annual basis in the fourth quarter of the fund's fiscal
year. We believe the resulting momentum as we begin the new fiscal year,
together with continued strength in the labor market, will help maintain a
moderate level of growth (2.5-3.0%) throughout the next two quarters. We remain
committed to our current investment strategy. We continue to believe, for
example, that the highest quality tiers of the ABS and CMBS sectors continue to
offer better relative value versus the corporate sector where event risks remain
elevated. Consequently, we expect that the fund will continue to maintain an
underweight position in investment grade corporate bonds and just a modest
exposure to high-yield fixed income securities.
Subsequent to a sell-off in residential mortgage-backed securities in early
June, the fund moved from an underweight to a neutral position in this sector
which we anticipate maintaining as long as interest rate volatility remains
relatively muted. The fund remains neutral to the index with regard to the
overall level of sensitivity to changes in interest rates. We stand poised,
however, to move away from a neutral stance should the economic environment
deviate significantly from our forecast. At this juncture we rate the chances as
better than even that we will, within the next two quarters, increase the fund's
sensitivity to interest rate changes in response to what may well turn out to be
disappointing news on the pace of the economy.
35 CITIZENS INCOME FUND
CITIZENS MONEY MARKET FUND
(PHOTO OF ROBERT MAGAN)
"IF INFLATION CONTINUES TO SUBSIDE AND THE ECONOMY CONTINUES TO GROW, EVEN AT A
SUB-POTENTIAL GROWTH RATE, WE BELIEVE THERE SHOULD BE NO CHANGE IN THE TARGET
RATE FOR SOME TIME."
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 6-8 for important fund risk and benchmark
disclosure)
PORTFOLIO REVIEW (UNAUDITED)
HOW DID THE FUND PERFORM?
The seven-day simple yield of the Citizens Money Market Fund, standard shares,
rose from 4.37% on June 30, 2006 to 4.56% on June 30, 2007. The fund's standard
share class had a total return of 4.45% for the period.
During the one-year period, the average weighted maturity of the fund's holdings
was lengthened from 35 days to a range of 45 to 50 days. This reflected our
belief that the Federal Reserve Board (the Fed) would continue to hold
short-term interest rates stable during the period. While we could have been
more aggressive in extending the average maturity to achieve a greater yield, we
took a more conservative approach given the chance that there could be a
surprise increase in the Federal Funds Target Rate (a key rate that
CITIZENS MONEY MARKET FUND 36
CITIZENS MONEY MARKET FUND PERFORMANCE (as of 6.30.07)
AVERAGE ANNUAL RETURN
-------------------------------- EXPENSE RATIOS*
Ticker 1 5 10 Since ---------------
Share class symbol year years years inception Gross Net
- ----------- ------ ---- ----- ----- --------- ----- ----
STANDARD SHARES WKAXX 4.45% 1.92% 2.98% NA 0.98% 0.98%
INSTITUTIONAL SHARES WAIXX 4.72% 2.22% 3.33% 3.54% 0.69% 0.69%
* Reflects the expense ratio as reported in the Prospectus dated August 29,
2006.
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.
influences mortgage rates and credit card rates) as inflation expectations were
not subsiding.
The Federal Open Market Committee (FOMC) held steady its target for the federal
funds rate at 5.25% during the entire one-year period ending June 30, 2007. Fed
Chairman, Ben Bernanke, and other FOMC members, moderated their views of
inflation during the period and took a balanced view of inflation expectations
and the outlook for economic growth. In past statements from the Fed it was
clear their primary focus was inflation, even if that focus came at the expense
of future economic growth. Inflation expectations persisted at the higher end of
the Fed's comfort range during the period even while the most recent economic
data showed a decline in the inflation rate throughout the period. The FOMC kept
the target for federal funds rate at 5.25% while the economy grew below their 3%
sustainable growth rate and inflation rates were easing into their target range
of 1-2%.
OUTLOOK
How long will the Fed keep the target rate at 5.25%? This is the question that
Fed watchers and market enthusiasts will be trying to answer for many months to
come. If inflation continues to subside and the economy continues to grow, even
at a sub-potential growth rate, we believe there should be no change in the
target rate for some time. The FOMC has made it clear to the markets that they
are in a data dependent decision process
37 CITIZENS MONEY MARKET FUND
and will watch economic releases closely. We too, will be watching those data
points closely in the coming months. The decision to raise or lower rates will
be a difficult next step for the Fed as the economy is at an inflection point.
We believe that the U.S. economy will grow through the rest of 2007 at
sub-potential levels but should not fall into a recession and will likely return
to more sustainable growth levels in 2008. We will continue to move the average
weighted maturity of the fund's holdings to the outside end of the 45 - 50 day
range as rates, in our opinion, will remain stable into 2008. Moving maturities
longer as the Fed holds rates steady for an extended period allows us to capture
higher yields now, with the expectation that the next move by the Fed is to
lower rates.
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
- ------------------------------------------------------------
Financials 21.0%
Information Technology 16.3%
Healthcare 12.4%
Consumer Discretionary 11.7%
Industrials 11.1%
Energy 9.6%
Consumer Staples 7.3%
Telecommunication Services 3.4%
Materials 3.0%
Utilities 2.6%
Cash Equivalents 1.6%
- ------------------------------------------------------------
</Table>
<Table>
<Caption>
PERCENTAGE OF
EMERGING GROWTH FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
Consumer Discretionary 19.9%
Information Technology 17.9%
Industrials 15.2%
Healthcare 14.4%
Energy 10.2%
Financials 8.7%
Materials 4.6%
Consumer Staples 2.8%
Utilities 2.2%
Cash Equivalents 2.1%
Telecommunication Services 2.0%
- ------------------------------------------------------------
</Table>
<Table>
<Caption>
SMALL CAP PERCENTAGE OF
CORE GROWTH FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
Information Technology 21.3%
Consumer Discretionary 18.3%
Industrials 16.0%
Healthcare 15.5%
Financials 9.3%
Energy 7.3%
Materials 5.2%
Cash Equivalents 4.7%
Consumer Staples 2.4%
- ------------------------------------------------------------
</Table>
<Table>
<Caption>
PERCENTAGE OF
VALUE FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
Financials 19.9%
Information Technology 15.1%
Consumer Discretionary 11.7%
Healthcare 11.3%
Industrials 11.0%
Energy 9.8%
Consumer Staples 8.8%
Telecommunication Services 3.7%
Cash Equivalents 3.3%
Utilities 2.8%
Materials 2.6%
- ------------------------------------------------------------
</Table>
<Table>
<Caption>
PERCENTAGE OF
GLOBAL EQUITY FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
Financials 20.9%
Consumer Discretionary 12.2%
Industrials 11.9%
Information Technology 11.2%
Energy 9.9%
Healthcare 8.7%
Materials 7.0%
Telecommunication Services 5.1%
Consumer Staples 4.6%
Utilities 4.6%
Cash Equivalents 3.9%
- ------------------------------------------------------------
</Table>
SEE FINANCIAL NOTES
40
JUNE 30, 2007
<Table>
<Caption>
PERCENTAGE OF
BALANCED FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
Equity
Financials 15.2%
Information Technology 11.6%
Healthcare 8.7%
Industrials 8.5%
Consumer Discretionary 8.1%
Energy 7.6%
Consumer Staples 5.2%
Telecommunication Services 2.7%
Materials 2.3%
Utilities 1.8%
- ------------------------------------------------------------
Fixed Income
U.S. Government Agency Obligations 13.0%
Corporate Bonds 6.5%
U.S. Government Obligations 6.0%
Collateralized Mortgage Obligations 1.0%
Foreign Government Bonds 0.1%
- ------------------------------------------------------------
Cash Equivalents 1.7%
- ------------------------------------------------------------
</Table>
<Table>
<Caption>
PERCENTAGE OF
INCOME FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
U.S. Government Agency Obligations 32.8%
U.S. Government Obligations 29.3%
Collateralized Mortgage Obligations 20.7%
Corporate Bonds 11.1%
Cash Equivalents 6.1%
- ------------------------------------------------------------
</Table>
<Table>
<Caption>
PERCENTAGE OF
MONEY MARKET FUND INVESTMENTS
SECURITY ALLOCATION AT VALUE
- ------------------------------------------------------------
Commercial Paper 73.2%
U.S. Government Agency Obligations 13.5%
Municipal Notes 8.1%
Certificate of Deposit 5.2%
- ------------------------------------------------------------
</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,
2007 and 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, 2007 by correspondence with the custodian
and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Columbus, Ohio
August 22, 2007
42
(THIS PAGE INTENTIONALLY LEFT BLANK)
43
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
CORE GROWTH FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
COMMON STOCKS - 99.7%
Air Freight - 1.8%
FedEx Corp. 49,500 5,493
Apparel Manufacturers - 1.2%
NIKE, Inc., Class B 60,600 3,532
Banks - 6.5%
Banco Santander Central Hispano SA ADR 198,000 3,639
ICICI Bank Ltd. ADR 83,400 4,099
UBS AG ADR 99,900 5,995
Wells Fargo & Co. 164,000 5,768
-------
19,501
Biotechnology - 1.6%
Roche Holding AG ADR 54,300 4,816
Chemicals - 3.4%
Amgen, Inc. (a) 65,900 3,644
Praxair, Inc. 90,975 6,549
-------
10,193
Computers - 9.7%
Apple, Inc. (a) 42,500 5,187
Corning, Inc. (a) 193,700 4,949
Google, Inc., Class A (a) 7,800 4,082
Hewlett-Packard Co. 114,000 5,087
Microsoft Corp. 143,400 4,226
Oracle Corp. (a) 283,100 5,580
-------
29,111
Electrical Equipment - 1.5%
Emerson Electric Co. 95,800 4,483
Electronics - 5.4%
Cisco Systems, Inc. (a) 165,000 4,595
Garmin, Ltd. 44,000 3,255
NVIDIA Corp. (a) 92,000 3,801
Thermo Fisher Scientific, Inc. (a) 86,300 4,463
-------
16,114
Energy & Utilities - 12.3%
Allegheny Energy, Inc. (a) 78,500 4,062
Baker Hughes, Inc. 60,000 5,048
ConocoPhillips 55,875 4,386
GlobalSantaFe Corp. 64,200 4,638
Silvan Power Co. (a) (b) 24,000 -
The AES Corp. (a) 176,400 3,860
Transocean, Inc. (a) 79,875 8,466
Vulcan Power Co., Class A (a) (b) 40,000 -
XTO Energy, Inc. 113,500 6,821
-------
37,281
Entertainment - 1.3%
The Walt Disney Co. 118,000 4,029
Financial - Diversified - 4.5%
JPMorgan Chase & Co. 103,700 5,024
Lehman Brothers Holdings Inc. 45,100 3,361
Merrill Lynch & Co., Inc. 62,300 5,207
-------
13,592
Financial Services - 3.5%
Franklin Resources, Inc. 39,700 5,259
Prudential Financial, Inc. 55,200 5,367
-------
10,626
Foods - 3.1%
Hansen Natural Corp. (a) 58,200 2,501
PepsiCo, Inc. 104,500 6,777
-------
9,278
Healthcare - 5.7%
Becton, Dickinson & Co. 55,800 4,157
C.R. Bard, Inc. 31,712 2,620
Hologic, Inc. (a) 49,218 2,722
Intuitive Surgical, Inc. (a) 21,269 2,951
WellPoint, Inc. (a) 57,400 4,583
-------
17,033
Insurance - 3.7%
AFLAC, Inc. 79,800 4,102
American International Group, Inc. 98,200 6,877
-------
10,979
Investment Banking & Brokerage - 2.1%
Affiliated Managers Group, Inc. (a) 20,400 2,627
The Goldman Sachs Group, Inc. 17,400 3,771
-------
6,398
</Table>
SEE FINANCIAL NOTES
44
JUNE 30, 2007 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
CORE GROWTH FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
Manufacturing - 10.3%
Crown Holdings, Inc. (a) 100,000 2,497
Danaher Corp. 67,000 5,059
General Cable Corp. (a) 40,000 3,030
Oshkosh Truck Corp. 43,600 2,743
Precision Castparts Corp. 55,600 6,748
Procter & Gamble Co. 111,800 6,841
Roper Industries, Inc. 70,100 4,003
-------
30,921
Multimedia - 1.5%
News Corp., Class A 27,000 573
News Corp., Class B 166,000 3,808
-------
4,381
Office Equipment & Supplies - 1.1%
CANON, Inc. ADR 55,000 3,225
Pharmaceuticals - 2.6%
Schering-Plough Corp. 164,700 5,014
Sepracor, Inc. (a) 67,289 2,760
-------
7,774
Real Estate - 1.0%
CB Richard Ellis Group, Inc., Class A (a) 82,200 3,000
Restaurants - 1.6%
Starbucks Corp. (a) 188,200 4,938
Retail - 6.0%
Best Buy & Co., Inc. 66,800 3,118
Coach, Inc. (a) 89,000 4,218
CVS/Caremark Corp. 163,575 5,962
Netflix, Inc. (a) 70,000 1,357
Target Corp. 55,100 3,504
-------
18,159
Services - 3.8%
Accenture Ltd., Class A 115,100 4,936
Cognizant Technology Solutions Corp. Class A
(a) 55,000 4,130
Monster Worldwide, Inc. (a) 55,000 2,261
-------
11,327
Telecommunications - 4.5%
AT&T, Inc. 162,625 6,748
Comcast Corp., Class A (a) 115,000 3,234
NII Holdings, Inc. (a) 44,200 3,569
-------
13,551
-------
TOTAL COMMON STOCKS 299,735
Cost: $267,827
<Caption>
CORE GROWTH FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 1.6%
Fifth Third Bank, Inc.,
4.80%, 07/02/07
(Date of Agreement 06/29/07, proceeds at maturity $4,767,
collateralized by Federal National Mortgage Assoc.
security, 5.00%, 07/01/33, market value $4,908)
Cost: $4,765 4,765 4,765
-------
TOTAL INVESTMENTS - 101.3% 304,500
Cost: $272,592
</Table>
<Table>
<Caption>
- -------------------------------------------------------------------------
CORE GROWTH FUND
- -------------------------------------------------------------------------
Percentages indicated are based on net assets of $300,571.
</Table>
(a) Non-income producing security.
(b) On June 30, 2007, 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 - 97.5%
Apparel Manufacturers - 3.3%
Crocs, Inc. (a) 70,000 3,012
Gildan Activewear, Inc. (a) 90,000 3,086
-------
6,098
Biotechnology - 1.7%
Gilead Sciences, Inc. (a) 80,400 3,117
Computers - 4.8%
Akamai Technologies, Inc. (a) 45,000 2,189
Corning, Inc. (a) 75,360 1,925
SanDisk Corp. (a) 50,000 2,447
VeriFone Holdings, Inc. (a) 60,000 2,115
-------
8,676
Consumer Products - 2.8%
Energizer Holdings, Inc. (a) 25,000 2,490
Newell Rubbermaid, Inc. 90,000 2,649
-------
5,139
Electrical Equipment - 1.3%
WESCO International, Inc. (a) 40,000 2,418
Electronics - 6.7%
Broadcom Corp., Class A (a) 60,000 1,755
Lam Research Corp. (a) 51,000 2,621
MEMC Electronic Materials, Inc. (a) 70,000 4,278
PerkinElmer, Inc. 75,000 1,955
Tessera Technologies, Inc. (a) 40,000 1,622
-------
12,231
Energy & Utilities - 11.9%
Airgas, Inc. 40,000 1,916
Allegheny Energy, Inc. (a) 50,000 2,587
Core Laboratories N.V. (a) 21,000 2,135
Dresser-Rand Group, Inc. (a) 60,000 2,370
EOG Resources, Inc. 46,400 3,390
Noble Energy, Inc. 25,000 1,560
Patterson-UTI Energy, Inc. 85,200 2,233
The AES Corp. (a) 65,000 1,422
Transocean, Inc. (a) 37,700 3,996
-------
21,609
Financial Services - 4.4%
CME Group, Inc. 5,406 2,889
IntercontinentalExchange, Inc. (a) 12,000 1,774
T. Rowe Price Group, Inc. 66,110 3,430
-------
8,093
Foods - 1.3%
Campbell Soup Co. 60,000 2,329
Healthcare - 8.5%
C.R. Bard, Inc. 30,000 2,479
Intuitive Surgical, Inc. (a) 17,650 2,449
Kyphon, Inc. (a) 37,000 1,782
Laboratory Corp. of America Holdings (a) 40,000 3,130
PDL BioPharma, Inc. (a) 50,000 1,165
Psychiatric Solutions, Inc. (a) 60,000 2,176
St. Jude Medical, Inc. (a) 55,000 2,282
-------
15,463
Hotels & Motels - 0.9%
Hilton Hotels Corp. 50,000 1,674
Investment Banking & Brokerage - 2.0%
A.G. Edwards, Inc. 20,000 1,691
Affiliated Managers
Group, Inc. (a) 15,000 1,931
-------
3,622
Manufacturing - 12.7%
BE Aerospace, Inc. (a) 50,000 2,065
Commercial Metals Co. 40,000 1,351
Cummins, Inc. 40,000 4,047
Eagle Materials, Inc. 41,500 2,036
Lennox International, Inc. 70,000 2,396
National-Oilwell Varco, Inc. (a) 27,000 2,814
Oshkosh Truck Corp. 58,568 3,685
Roper Industries, Inc. 45,000 2,570
Terex Corp. (a) 25,000 2,033
-------
22,997
Mining - 0.7%
Yamana Gold, Inc. 110,000 1,223
Multimedia - 0.7%
Sinclair Broadcast Group, Inc., Class A 90,000 1,280
Pharmaceuticals - 3.1%
McKesson Corp. 31,000 1,849
Pharmaceutical Product Development, Inc. 60,000 2,296
Sepracor, Inc. (a) 38,000 1,559
-------
5,704
Real Estate - 2.2%
CB Richard Ellis Group, Inc., Class A (a) 110,000 4,015
</Table>
SEE FINANCIAL NOTES
46
JUNE 30, 2007 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
EMERGING GROWTH FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
Restaurants - 1.8%
Burger King Holdings, Inc. 60,000 1,580
Jack in the Box, Inc. (a) 25,000 1,774
-------
3,354
Retail - 10.3%
Chico's FAS, Inc. (a) 70,000 1,704
Coach, Inc. (a) 58,000 2,749
J.C. Penney Co., Inc. 24,000 1,737
Nordstrom, Inc. 48,012 2,454
Polo Ralph Lauren 40,000 3,924
Priceline.com, Inc. (a) 20,000 1,375
The Men's Wearhouse, Inc. 44,000 2,247
Urban Outfitters, Inc. (a) 100,000 2,403
Whole Foods Market, Inc. 5,900 226
-------
18,819
Services - 9.6%
CheckFree Corp. (a) 60,000 2,412
Cognizant Technology Solutions Corp.,
Class A (a) 40,000 3,004
Expeditors International of Washington, Inc. 63,200 2,610
Fluor Corp. 9,000 1,002
Macrovision Corp. (a) 80,000 2,405
Monster Worldwide, Inc. (a) 45,000 1,850
Nalco Holding Co. 65,000 1,784
Pool Corp. 63,500 2,478
-------
17,545
Telecommunications - 5.2%
CommScope, Inc. (a) 56,000 3,267
NII Holdings, Inc. (a) 22,500 1,817
Polycom, Inc. (a) 75,000 2,520
Time Warner Telecom, Inc., Class A (a) 95,000 1,910
-------
9,514
Transportation - 1.6%
American Commercial
Lines, Inc. (a) 45,000 1,172
Canadian Pacific Railway, Ltd. 25,000 1,721
-------
2,893
-------
TOTAL COMMON STOCKS 177,813
Cost: $129,979
<Caption>
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 2.1%
Fifth Third Bank, Inc., 4.80%, 07/02/07
(Date of Agreement 06/29/07, proceeds at maturity $3,753,
collateralized by Federal National Mortgage Assoc.
security, 5.00%, 07/01/33, market value $3,864)
Cost: $3,751 3,751 3,751
-------
TOTAL INVESTMENTS - 99.6% 181,564
Cost: $133,730
</Table>
Percentages indicated are based on net assets of $182,229.
(a) Non-income producing security.
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
47
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
SMALL CAP CORE GROWTH FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
COMMON STOCKS - 94.5%
Apparel Manufacturers - 4.7%
Crocs, Inc. (a) 15,000 645
Deckers Outdoor Corp. (a) 13,000 1,312
------
1,957
Banks - 0.5%
Pinnacle Financial Partners, Inc. (a) 7,000 206
Biotechnology - 1.8%
American Oriental Bioengineering, Inc. (a) 45,000 400
Myriad Genetics, Inc. (a) 10,000 372
------
772
Broadcasting - 1.2%
Lin TV Corp., Class A (a) 26,000 489
Computers - 8.7%
American Reprographics Co. (a) 18,000 554
ANSYS, Inc.(a) 20,000 530
Concur Technologies, Inc. (a) 27,000 617
Mentor Graphics Corp. (a) 25,000 329
NIC, Inc. 70,000 479
Sykes Enterprises, Inc. (a) 31,500 598
VeriFone Holdings, Inc. (a) 15,000 529
------
3,636
Electrical Equipment - 1.6%
Genlyte Group (a) 8,500 668
Electronics - 2.4%
Diodes, Inc. (a) 16,000 668
SiRF Technology
Holdings, Inc. (a) 16,000 332
------
1,000
Energy & Utilities - 8.6%
Airgas, Inc. 11,500 551
Atwood Oceanics, Inc. (a) 6,000 412
Core Laboratories N.V. (a) 11,000 1,119
Dresser-Rand Group, Inc. (a) 14,000 553
Holly Corp. 13,000 964
------
3,599
Financial - Diversified - 1.1%
Advanta Corp., Class B 15,000 467
Foods - 1.5%
Spartan Stores, Inc. 18,500 609
Healthcare - 13.6%
Allscripts Healthcare Solutions, Inc. (a) 19,000 484
American Medical Systems Holdings, Inc. (a) 14,000 253
Arena Pharmaceuticals, Inc. (a) 20,000 220
Bio-Reference
Laboratories, Inc. (a) 16,000 438
Healthways, Inc. (a) 7,000 332
Integra LifeSciences Holdings Corp. (a) 9,500 469
Kyphon, Inc. (a) 8,500 409
Natus Medical, Inc. (a) 25,000 398
Omnicell, Inc. (a) 15,000 312
PDL BioPharma, Inc. (a) 14,000 326
Psychiatric Solutions, Inc. (a) 13,000 471
Quality Systems, Inc. 13,000 494
Sirona Dental Systems, Inc. (a) 12,000 454
Ventana Medical
Systems, Inc. (a) 8,000 617
------
5,677
Insurance - 0.9%
Tower Group, Inc. 12,000 383
Investment Banking & Brokerage - 4.0%
Affiliated Managers Group, Inc. (a) 6,000 773
Investment Technology
Group, Inc. (a) 10,000 433
Knight Capital Group, Inc., Class A (a) 28,000 465
------
1,671
Manufacturing - 15.8%
Apogee Enterprises, Inc. 20,000 556
Baldor Electric Co. 13,000 641
Barnes Group, Inc. 17,500 554
BE Aerospace, Inc. (a) 21,000 867
Century Aluminum Co. (a) 8,500 464
Eagle Materials, Inc. 11,500 564
Gardner Denver, Inc. (a) 11,500 489
Itron, Inc. (a) 8,500 662
Oshkosh Truck Corp. 11,000 692
Roper Industries, Inc. 10,500 600
Silgan Holdings, Inc. 10,000 553
------
6,642
</Table>
SEE FINANCIAL NOTES
48
JUNE 30, 2007 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
SMALL CAP CORE GROWTH FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
Pharmaceuticals - 2.0%
Pharmion Corp. (a) 10,000 290
Progenics Pharmaceuticals, Inc. (a) 13,500 291
ViroPharma, Inc. (a) 20,000 276
------
857
Restaurants - 2.2%
AFC Enterprises, Inc. (a) 25,000 432
Jack in the Box, Inc. (a) 7,000 497
------
929
Retail - 6.1%
Casual Male Retail Group, Inc. (a) 45,000 455
Guitar Center, Inc. (a) 7,500 449
Monro Muffler Brake, Inc. 12,000 449
Priceline.com, Inc. (a) 12,000 824
The Children's Place Retail Stores, Inc. (a) 7,500 387
------
2,564
Services - 12.2%
Bankrate, Inc. (a) 13,000 623
First Cash Financial Services, Inc. (a) 20,000 469
Forrester Research, Inc. (a) 14,000 394
LIFE TIME FITNESS, Inc. (a) 12,000 639
LKQ Corp. (a) 19,000 469
Mobile Mini, Inc. (a) 20,000 584
Pool Corp. 14,000 546
Portfolio Recovery
Associates, Inc. 11,000 660
The Knot, Inc. (a) 15,000 303
TheStreet.com, Inc. 38,000 413
------
5,100
Telecommunications - 4.5%
Atheros Communications, Inc. (a) 15,500 478
CommScope, Inc. (a) 9,000 525
NICE Systems Ltd. ADR (a) 25,000 869
------
1,872
Transportation - 1.1%
Hub Group, Inc., Class A (a) 12,500 440
------
TOTAL COMMON STOCKS 39,538
Cost: $30,044
<Caption>
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 4.6%
Fifth Third Bank, Inc.,
4.80%, 07/02/07
(Date of Agreement 06/29/07, proceeds at maturity
$1,937, collateralized by Federal National
Mortgage Assoc. security, 5.00%, 07/01/33,
market value $1,995)
Cost: $1,937 1,937 1,937
------
TOTAL INVESTMENTS - 99.1% 41,475
Cost: $31,981
</Table>
Percentages indicated are based on net assets of $41,830
(a) Non-income producing security.
ADR -- American Depositary Receipt
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
49
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
VALUE FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
COMMON STOCKS - 99.3%
Air Freight - 1.9%
FedEx Corp. 11,116 1,234
Apparel Manufacturers - 4.0%
Liz Claiborne, Inc. 24,200 902
NIKE, Inc., Class B 14,028 818
VF Corp. 9,430 864
------
2,584
Auto Manufacturing - 1.2%
Toyota Motor Corp. ADR 5,970 752
Banks - 3.4%
Bank of America Corp. 18,511 904
Huntington Bancshares, Inc. 33,800 769
KeyCorp 15,600 536
------
2,209
Chemicals - 3.0%
Amgen, Inc. (a) 17,900 990
Praxair, Inc. 13,142 946
------
1,936
Computers - 8.6%
Corning, Inc. (a) 37,188 950
Hewlett-Packard Co. 20,917 933
Intel Corp. 40,113 953
International Business Machines Corp. 10,350 1,090
Microsoft Corp. 22,024 649
Oracle Corp. (a) 49,603 978
------
5,553
Consumer Products - 1.5%
Kimberly-Clark Corp. 14,353 960
Electrical Equipment - 1.0%
Emerson Electric Co. 13,306 623
Electronics - 6.2%
Cisco Systems, Inc. (a) 29,487 821
International Rectifier Corp. (a) 17,350 646
MEMC Electronic Materials, Inc. (a) 13,207 807
Rockwell Automation, Inc. 11,111 772
Texas Instruments, Inc. 24,580 925
------
3,971
Energy & Utilities - 12.9%
Allegheny Energy, Inc. (a) 15,850 820
Baker Hughes, Inc. 11,151 938
ConocoPhillips 28,366 2,227
Devon Energy Corp. 8,957 701
GlobalSantaFe Corp. 16,600 1,199
Transocean, Inc. (a) 13,071 1,385
UGI Corp. 36,612 999
------
8,269
Financial - Diversified - 10.0%
Capital One Financial Corp. 14,539 1,140
JPMorgan Chase & Co. 27,226 1,319
Lehman Brothers Holdings, Inc. 11,921 888
Merrill Lynch & Co., Inc. 10,358 866
MetLife, Inc. 10,741 693
Wachovia Corp. 29,064 1,490
------
6,396
Foods - 5.3%
Bunge, Ltd. 7,700 651
General Mills, Inc. 12,500 730
Kellogg Co. 22,174 1,148
PepsiCo, Inc. 13,387 868
------
3,397
Healthcare - 11.4%
Baxter International. Inc. 15,490 873
Becton, Dickinson & Co. 12,156 906
Coventry Health Care, Inc. (a) 11,091 639
Johnson & Johnson, Inc. 15,562 959
NBTY, Inc. (a) 20,500 886
Omnicare, Inc. 28,241 1,018
Pfizer, Inc. 39,914 1,020
WellPoint, Inc. (a) 12,859 1,026
------
7,327
Insurance - 5.0%
American International Group, Inc. 12,902 904
The Allstate Corp. 12,881 792
The Chubb Corp. 14,092 763
The Hartford Financial Services Group, Inc. 7,656 754
------
3,213
Investment Banking & Brokerage - 2.0%
The Goldman Sachs Group, Inc. 6,040 1,309
Manufacturing - 5.7%
3M Co. 9,378 814
Eagle Materials, Inc. 16,089 789
Ingersoll-Rand Co. 15,017 823
Precision Castparts Corp. 9,907 1,203
------
3,629
</Table>
SEE FINANCIAL NOTES
50
JUNE 30, 2007 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
VALUE FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
Railroads - 1.3%
Norfolk Southern Corp. 15,899 836
Real Estate - 1.0%
Pulte Homes, Inc. 28,200 633
Restaurants - 1.5%
McDonald's Corp. 18,633 946
Retail - 4.4%
The Home Depot, Inc. 20,200 794
Priceline.com, Inc. (a) 10,850 746
SUPERVALU, INC 12,000 556
Target Corp. 11,082 705
------
2,801
Services - 2.4%
Omnicom Group, Inc. 11,000 582
URS Corp. (a) 19,209 933
------
1,515
Telecommunications - 5.6%
AT&T, Inc. 32,451 1,347
Motorola, Inc. 65,826 1,165
Sprint Nextel Corp. 52,110 1,079
------
3,591
------
TOTAL COMMON STOCKS 63,684
Cost: $53,631
</Table>
<Table>
<Caption>
- -------------------------------------------------------------------------
VALUE FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL(S) VALUE($)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 3.4%
Fifth Third Bank, Inc.,
4.80%, 07/02/07
(Date of Agreement 06/29/07, proceeds at
maturity $2,207, collateralized by Federal
National Mortgage Assoc. security, 5.00%,
07/01/33, market value $2,273)
Cost: $2,206 2,206 2,206
------
TOTAL INVESTMENTS - 102.7% 65,890
Cost: $55,837
</Table>
Percentages indicated are based on net assets
of $64,170.
(a) Non-income producing security.
ADR - American Depositary Receipt
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
51
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
GLOBAL EQUITY FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
COMMON STOCKS - 97.8%
Automobile Manufacturing - 3.2%
Toyota Motor Co. ADR 8,000 1,007
Volvo AB ADR 82,500 1,641
------
2,648
Banks - 9.2%
Australia and New Zealand Banking
Group Ltd. ADR 9,500 1,170
Banco Santander Central Hispano SA ADR 70,000 1,287
Bank of Ireland (a) 45,000 905
Bank of Nova Scotia 20,000 977
ICICI Bank Ltd. ADR 20,000 983
Julius Baer Holding Ltd. (a) 22,000 1,578
UBS AG ADR 13,000 780
------
7,680
Building Products - 1.6%
Lafarge S.A ADR 30,000 1,367
Chemicals - 1.5%
Sigma-Aldrich Corp. 29,000 1,237
Computer Services - 2.5%
Akamai Technologies, Inc. (b) 22,500 1,094
Cognizant Technology Solutions Corp.,
Class A (b) 13,500 1,014
------
2,108
Computers - 1.3%
International Business Machines Corp. 10,000 1,053
Construction - 1.0%
Desarrolladora Homex SA de C.V. ADR (b) 14,000 848
Electronics - 2.7%
Agilent Technologies, Inc. (b) 30,000 1,153
Cisco Systems, Inc. (b) 40,000 1,114
------
2,267
Energy & Utilities - 14.9%
Allegheny Energy, Inc. (b) 15,000 776
Apache Corp. 12,000 979
BG Group plc ADR 12,000 981
ConocoPhillips 24,500 1,924
EnCana Corp. 17,500 1,075
Questar Corp. 20,000 1,057
Statoil ASA ADR 32,000 992
The AES Corp. (b) 50,000 1,094
Transocean, Inc. (b) 13,000 1,378
Valero Energy Corp. 14,000 1,034
Veolia Environnement ADR 12,500 980
------
12,270
Entertainment - 3.8%
Nintendo Co., Ltd. (a) 4,000 1,464
The Walt Disney Co. 50,000 1,707
------
3,171
Financial - Diversified - 6.1%
AFLAC, Inc. 18,000 925
American Express Co. 16,000 979
Deutsche Boerse AG (a) 19,000 2,127
JPMorgan Chase & Co. 21,000 1,017
------
5,048
Food & Beverages - 4.7%
Groupe Danone ADR 80,000 1,301
Nestle SA (a) 4,000 1,518
PepsiCo, Inc. 17,000 1,102
------
3,921
Healthcare - 7.7%
Becton, Dickinson & Co. 16,000 1,192
C.R. Bard, Inc. 10,000 826
Fresenius Medical Care AG & Co. KGaA ADR 27,000 1,241
Gilead Sciences, Inc. (b) 20,000 775
Laboratory Corp. of America Holdings (b) 15,000 1,174
Stryker Corp. 18,500 1,167
------
6,375
Insurance - 4.1%
Allianz SE ADR 57,000 1,327
ING Groep NV (a) 19,000 837
Lincoln National Corp. 17,000 1,206
------
3,370
</Table>
SEE FINANCIAL NOTES
52
JUNE 30, 2007 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
GLOBAL EQUITY FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
Manufacturing - 14.1%
Danaher Corp. 12,000 906
Deere & Co. 11,000 1,328
FANUC Ltd. (a) 9,000 929
Johnson Matthey plc (a) 33,000 1,117
Kennametal, Inc. 11,500 943
Komatsu, Ltd. (a) 45,000 1,307
L'Air Liquide SA ADR 66,000 1,736
POSCO ADR 4,000 480
Precision Castparts Corp. 8,000 971
Samsung Heavy Industries Co., Ltd. (a) 24,000 1,174
Taiwan Semiconductor
Manufacturing Co. Ltd. ADR 77,635 864
------
11,755
Office Equipment & Supplies - 2.0%
CANON, Inc. ADR 29,000 1,701
Pharmaceuticals - 1.1%
Novo Nordisk A/S ADR 8,500 924
Real Estate - 1.0%
City Developments, Ltd. (a) 70,000 792
Retail - 6.4%
Industria de Diseno Textil SA (Inditex) (a) 14,000 823
Kohl's Corp. (b) 17,000 1,208
Luxottica Group SpA ADR 45,000 1,739
Marks & Spencer
Group plc ADR 20,000 1,512
------
5,282
Services - 2.7%
Swire Pacific, Ltd., Class A (a) 70,000 781
WPP Group plc (a) 99,000 1,481
------
2,262
Telecommunications - 5.2%
America Movil SA de C.V. ADR 19,000 1,177
PT Telekomunikasi Indonesia ADR 22,000 948
Telenor ASA ADR 20,000 1,177
Vodafone Group plc (a) 300,000 1,009
------
4,311
Transportation - 1.0%
Canadian Pacific Railway, Ltd. 12,000 826
------
TOTAL COMMON STOCKS 81,216
Cost: $62,509
<Caption>
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 3.9%
Fifth Third Bank, Inc., 4.80%, 07/02/07
(Date of Agreement 06/29/07, proceeds at
maturity $3,283, collateralized by Federal
National Mortgage Assoc. security, 5.00%,
07/01/33, market value $3,381)
Cost: $3,282 3,282 3,282
------
TOTAL INVESTMENTS - 101.7% 84,498
Cost: $65,791
</Table>
SEE FINANCIAL NOTES
53
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
GLOBAL EQUITY FUND
- -------------------------------------------------------------------------
Percentages indicated are based on net assets of $83,125.
(a) Fair valued security. The approximate market value and percentage of
investments of securities that were fair valued for the Global Equity
Fund were $17,842 and 21.1%.
(b) Non-income producing security.
ADR - American Depositary Receipt
</Table>
<Table>
The fund's portfolio holdings as of June 30, 2007, were distributed among
the following countries:
-------------------------
PERCENTAGE OF NET ASSETS
SHORT TERM
EQUITY & OTHER TOTAL
-------------------------
Australia 1.4% 1.4%
Canada 3.5% 3.5%
Cayman Islands 1.7% 1.7%
Denmark 1.1% 1.1%
France 6.5% 6.5%
Germany 5.6% 5.6%
Hong Kong 1.0% 1.0%
India 1.2% 1.2%
Indonesia 1.1% 1.1%
Ireland 1.1% 1.1%
Italy 2.1% 2.1%
Japan 7.7% 7.7%
Republic of Korea 2.0% 2.0%
Mexico 2.4% 2.4%
Netherlands 1.0% 1.0%
Norway 2.6% 2.6%
Singapore 1.0% 1.0%
Spain 2.5% 2.5%
Sweden 2.0% 2.0%
Switzerland 4.7% 4.7%
Taiwan 1.0% 1.0%
United Kingdom 7.3% 7.3%
United States 37.3% 2.2% 39.5%
----------------------------
Total 97.8% 2.2% 100.0%
</Table>
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
54
JUNE 30, 2007 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
BALANCED FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
COMMON STOCKS - 72.0%
Air Freight - 1.2%
FedEx Corp. 1,320 146
Apparel Manufacturers - 3.3%
Liz Claiborne, Inc. 3,400 127
NIKE, Inc., Class B 2,100 122
VF Corp. 1,521 140
-----
389
Auto Manufacturing - 1.0%
Toyota Motor Corp. ADR 900 113
Banks - 1.8%
Bank of America Corp. 2,780 136
KeyCorp 2,340 80
-----
216
Chemicals - 2.5%
Amgen, Inc. (a) 2,650 147
Praxair, Inc. 2,045 147
-----
294
Computers - 6.5%
Corning, Inc. (a) 5,338 136
Hewlett-Packard Co. 2,200 98
Intel Corp. 5,960 142
International Business Machines Corp. 1,430 151
Microsoft Corp. 3,410 100
Oracle Corp. (a) 6,850 135
-----
762
Consumer Products - 1.2%
Kimberly-Clark Corp. 2,160 144
Electrical Equipment - 0.8%
Emerson Electric Co. 2,000 94
Electronics - 4.9%
Cisco Systems, Inc. (a) 4,200 117
International Rectifier Corp. (a) 2,100 78
MEMC Electronic
Materials, Inc. (a) 1,980 121
Rockwell Automation, Inc. 1,740 121
Texas Instruments, Inc. 3,793 143
-----
580
Energy & Utilities - 9.5%
Allegheny Energy, Inc. (a) 1,920 99
Baker Hughes, Inc. 1,600 135
ConocoPhillips 4,200 330
Devon Energy Corp. 1,450 114
GlobalSantaFe Corp. 1,750 126
Transocean, Inc. (a) 1,817 193
UGI Corp. 4,370 119
-----
1,116
Financial - Diversified - 8.2%
Capital One Financial Corp. 2,182 171
JPMorgan Chase & Co. 4,186 203
Lehman Brothers Holdings, Inc. 1,799 134
Merrill Lynch & Co., Inc. 1,660 139
MetLife, Inc. 1,710 110
Wachovia Corp. 4,140 212
-----
969
Foods - 2.6%
Kellogg Co. 3,420 177
PepsiCo, Inc. 2,010 130
-----
307
Healthcare - 8.4%
Baxter International, Inc. 2,330 131
Becton, Dickinson & Co. 1,280 95
Coventry Health Care, Inc. (a) 1,670 96
Johnson & Johnson, Inc. 2,340 145
NBTY, Inc. (a) 2,335 101
Omnicare, Inc. 4,300 156
Pfizer, Inc. 4,850 124
WellPoint, Inc. (a) 1,730 138
-----
986
Insurance - 4.0%
American International Group, Inc. 1,690 118
The Allstate Corp. 1,935 119
The Chubb Corp. 2,120 115
The Hartford Financial Services Group, Inc. 1,250 123
-----
475
Investment Banking & Brokerage - 1.2%
The Goldman Sachs Group, Inc. 678 147
Manufacturing - 4.2%
3M Co. 1,510 130
Eagle Materials, Inc. 2,424 119
Ingersoll-Rand Co. 2,253 124
Precision Castparts Corp. 1,028 125
-----
498
Railroads - 1.1%
Norfolk Southern Corp. 2,392 126
</Table>
SEE FINANCIAL NOTES
55
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
BALANCED FUND
SECURITY SHARES VALUE($)
- -------------------------------------------------------------------------
Real Estate - 0.7%
Pulte Homes, Inc. 3,800 85
Restaurants - 1.2%
McDonald's Corp. 2,890 147
Retail - 2.5%
The Home Depot, Inc. 3,000 118
SUPERVALU, INC 1,300 60
Target Corp. 1,756 112
-----
290
Services - 1.2%
URS Corp. (a) 2,912 141
Telecommunications - 4.0%
AT&T, Inc. 3,880 161
Motorola, Inc. 8,690 154
Sprint Nextel Corp. 7,730 160
-----
475
-----
TOTAL COMMON STOCKS 8,500
Cost: $7,885
<Caption>
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.2%
First Horizon Alternative Mortgage
Securities, 4.73%, 06/25/34 (b) 8 8
5.50%, 03/25/35 (b) 10 10
-----
Cost: $19 18
CORPORATE BONDS - 7.4%
Banks - 0.9%
Bank of America Corp., 4.38%, 12/01/10 50 48
Capital One Bank, 6.50%, 06/13/13 50 52
-----
100
Chemicals - 0.3%
Amgen, Inc., 6.50%, 12/01/07 40 40
Computers - 0.1%
Corning, Inc., 6.20%, 03/15/16 15 15
Construction - 0.2%
KB HOME, 5.88%, 01/15/15 15 13
Pulte Homes, Inc., 6.00%, 02/15/35 10 9
-----
22
Energy & Utilities - 0.6%
Atmos Energy, 4.95%, 10/15/14 15 14
Chesapeake Energy Corp., 6.88%, 01/15/16 20 20
Enterprise Products Partners LP, 4.95%,
06/01/10 20 19
XTO Energy, Inc., 5.30%, 06/30/15 20 19
-----
72
Financial - Diversified - 2.7%
Chase Issuance Trust, 3.22%, 06/15/10 100 99
CIT Group, Inc., 5.00%, 02/01/15 50 46
Citigroup, Inc., 5.51%, 05/18/10 (b) 50 50
HSBC Finance Corp., 4.63%, 09/15/10 50 49
International Lease Finance Corp., 5.80%,
08/15/07 50 50
Liberty Mutual Group, 5.75%, 03/15/14 (c) 10 10
Riddell Bell Holdings, 8.38%, 10/01/12 15 15
-----
319
Financial Services - 0.4%
Franklin Resources, Inc., 3.70%, 04/15/08 48 47
Food - 0.4%
The Pepsi Bottling Group, Inc., 5.63%,
02/17/09 (c) 50 50
Healthcare - 0.5%
Medtronic, Inc., 4.75%, 09/15/15 50 47
</Table>
SEE FINANCIAL NOTES
56
JUNE 30, 2007 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
BALANCED FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
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 - 0.4%
McDonald's Corp., 5.00%, 02/15/15 50 47
Telecommunications - 0.8%
AT&T, Inc., 5.88%, 02/01/12 50 51
Directv Holdings, 6.38%, 06/15/15 30 28
Sprint Nextel Corp., 7.38%, 08/01/15 10 10
-----
89
-----
TOTAL CORPORATE BONDS 872
Cost: $895
FOREIGN GOVERNMENT BOND - 0.1%
United Mexican States, 6.75%, 09/27/34 15 16
-----
Cost: $15 16
U.S. GOVERNMENT AGENCY OBLIGATIONS - 13.1%
Federal Farm Credit Bank - 1.0%
5.83%, 01/14/08 25 25
5.43%, 10/24/12 100 99
-----
124
Federal Home Loan Bank - 1.4%
5.50%, 01/12/11 50 50
5.20%, 05/11/12 15 15
4.88%, 03/11/16 100 96
-----
161
Federal Home Loan Mortgage Corporation - 4.1%
4.55%, 01/20/11 5 5
4.50%, 01/15/13 9 9
5.00%, 10/01/18 80 78
5.50%, 10/01/18 50 49
5.20%, 03/05/19 40 38
5.50%, 08/20/19 20 20
6.00%, 12/01/20 38 38
5.50%, 03/01/21 83 82
5.50%, 04/01/21 82 81
5.00%, 06/01/35 85 80
-----
480
Federal National Mortgage Association - 6.6%
5.25%, 01/15/09 14 14
4.38%, 09/15/12 4 4
5.00%, 04/15/15 20 20
5.55%, 08/04/15 100 98
6.00%, 02/25/17 82 82
5.00%, 10/01/18 73 71
4.50%, 06/01/19 117 111
5.00%, 09/01/19 32 31
5.50%, 03/25/29 100 100
6.50%, 07/01/32 2 2
6.00%, 11/01/32 1 1
5.50%, 03/01/33 24 23
4.58%, 12/01/34 32 31
4.84%, 01/01/35 16 16
4.82%, 08/01/35 85 83
5.50%, 10/01/35 98 95
-----
782
-----
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 1,547
Cost: $1,579
U.S. TREASURY NOTES - 6.0%
6.50%, 02/15/10 100 105
4.00%, 03/15/10 100 98
3.88%, 05/15/10 35 34
4.75%, 05/15/14 10 10
4.00%, 02/15/15 100 94
4.13%, 05/15/15 30 28
4.50%, 11/15/15 100 96
4.50%, 02/15/16 100 96
4.50%, 05/15/17 100 96
5.38%, 02/15/31 50 51
-----
Cost: $723 708
</Table>
SEE FINANCIAL NOTES
57
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
BALANCED FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS - 1.7%
Fifth Third Bank, Inc., 4.80%, 07/02/07
(Date of Agreement 06/29/07, proceeds at
maturity $199, collateralized by
Federal National Mortgage Assoc. security,
5.00%, 07/01/33, market value $205)
Cost: $199 199 199
-----
TOTAL INVESTMENTS - 100.5% 11,860
Cost: $11,315
</Table>
Percentages indicated are based on net assets of $11,801.
(a) Non-income producing security.
(b) Variable rate security. The rate presented represents the rate in effect at
June 30, 2007.
(c) Rule 144A security.
* Rounds to less than 0.1%
ADR - American Depositary Receipt
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
58
JUNE 30, 2007 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
INCOME FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS - 21.7%
Capital One Multi-Asset Execution Trust
5.50%, 09/15/11 (a) 700 702
Chase Manhattan Auto Owner Trust, 4.88%,
06/15/12 240 238
Citibank Credit Card Issuance Trust, 3.50%,
08/16/10 285 279
Citigroup Commercial Mortgage Trust,
4.22%, 09/20/51 (b) 500 487
Crusade Global Trust,
5.42%, 11/15/37 (a) 437 437
5.49%, 11/19/37 (a) 325 326
First Horizon Alternative Mortgage
Securities,
4.73%, 06/25/34 (a) 661 652
First Union National Bank Commercial
Mortgage,
6.94%, 10/15/32 36 36
6.42%, 08/15/33 296 303
Greenwich Capital Commercial Funding Corp.,
4.95%, 01/11/35 525 508
3.92%, 08/10/42 267 263
GS Mortgage Securities Corp. II,
4.61%, 01/10/40 800 761
Harley-Davidson Motorcycle Trust, 3.20%,
05/15/12 555 542
LB-UBS Commercial Mortgage Trust,
6.65%, 11/15/27 425 440
6.37%, 12/15/28 900 925
5.02%, 09/15/40 (a) 407 386
Merrill Lynch/Countrywide Commercial Mortgage
Trust,
4.71%, 07/12/46 (a) 685 672
5.53%, 03/12/51 (a) 280 271
MLCC Mortgage Investors, Inc.,
5.55%, 03/25/30 (a) 220 220
Puma Finance Limited,
5.56%, 08/09/35 (a) (b) 755 755
Wachovia Bank Commercial Mortgage Trust,
4.96%, 11/15/35 500 479
5.18%, 07/15/42 510 488
------
Cost: $10,270 10,170
CORPORATE BONDS - 11.7%
Airlines - 1.0%
Northwest Airlines, Inc.,
6.26%, 11/20/21 480 482
Banking - 2.1%
Banco Mercantil del Norte,
6.86%, 10/13/21 (b) 600 600
Bank of America Corp.,
5.30%, 03/15/17 375 358
------
958
Broadcasting - 0.5%
Rogers Cable, Inc.,
5.50%, 03/15/14 250 242
Computers - 0.8%
Dell, Inc., 7.10%, 04/15/28 350 368
Energy & Utilities - 0.2%
Chesapeake Energy Corp.,
6.50%, 08/15/17 110 104
Financial - Diversified - 0.7%
Citigroup, Inc.,
5.50%, 02/15/17 355 344
Insurance - 2.0%
W.R. Berkley Corp.,
5.60%, 05/15/15 300 290
Fidelity National Financial,
5.25%, 03/15/13 250 238
Lincoln National Corp.,
7.00%, 05/17/66 350 359
------
887
Multimedia - 1.5%
Comcast Corp.,
6.45%, 03/15/37 355 342
Time Warner Cable, Inc.,
5.85%, 05/01/17 (b) 355 345
------
687
Real Estate - 0.7%
iStar Financial, Inc.,
5.875%, 03/15/16 355 342
</Table>
SEE FINANCIAL NOTES
59
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
INCOME FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
REITS - Diversified - 0.8%
CBG Florida REIT Corp., 7.11%, 02/15/49 (b) 375 370
Telecommunications - 1.4%
Embarq Corp., 8.00%, 06/01/36 355 360
Sprint Nextel Corp., 7.38%, 08/01/15 310 310
------
670
------
TOTAL CORPORATE BONDS 5,454
Cost: $5,563
U.S. GOVERNMENT AGENCY OBLIGATIONS - 34.4%
Federal Home Loan Mortgage
Corporation - 12.4%
4.50%, 04/01/20 1,254 1,191
5.00%, 10/01/35 1,750 1,645
6.00%, 07/01/36 1,779 1,764
5.50%, 03/01/37 1,230 1,186
------
5,786
Federal National Mortgage Association - 22.0%
5.76%, 12/25/11 200 203
4.50%, 01/01/20 1,443 1,370
5.00%, 08/01/20 1,405 1,359
4.40%, 11/25/33 760 753
5.50%, 03/01/36 1,787 1,724
5.50%, 04/01/36 1,766 1,708
6.00%, 07/01/36 1,888 1,870
5.50%, 06/01/37 1,350 1,294
------
10,281
------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 16,067
Cost: $16,153
U.S. TREASURY NOTES - 30.7%
4.50%, 04/30/09 6,481 6,437
4.50%, 04/30/12 4,164 4,087
4.50%, 05/15/17 2,036 1,952
4.50%, 02/15/36 2,083 1,886
------
Cost: $14,516 14,362
REPURCHASE AGREEMENTS - 6.4%
Fifth Third Bank, Inc., 4.80%, 07/02/07
(Date of Agreement 06/29/07, proceeds at
maturity $3,017, collateralized by Federal
National Mortgage Assoc. security, 5.00%,
07/01/33, market value $3,106)
Cost: $3,015 3,015 3,015
------
TOTAL INVESTMENTS - 104.9% 49,068
Cost: $49,517
</Table>
Percentages indicated are based on net assets of $46,765.
(a) Variable rate security. The rate presented represents the rate in effect at
June 30, 2007.
(b) Rule 144A security.
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
60
JUNE 30, 2007 ($ X 1,000)
<Table>
<Caption>
- -------------------------------------------------------------------------
MONEY MARKET FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT - 5.1%
Abbey National,
5.35%, 10/24/07 1,000 1,000
City National Bank of New Jersey,
4.50%, 3/13/08 (a) 100 100
PNC Bank,
5.27%, 09/27/07 1,000 1,000
Self Help Credit Union,
5.08%, 09/14/07 (a) 100 100
Wilmington Trust Corp.,
5.31%, 09/04/07 1,000 1,000
5.29%, 10/05/07 1,000 1,000
------
TOTAL CERTIFICATES OF DEPOSIT 4,200
Cost: $4,200
COMMERCIAL PAPER - 71.6%
American Express Credit,
5.36%, 05/16/08 2,000 1,959
American General Finance Corp.,
5.41%, 07/05/07 1,700 1,699
5.41%, 07/06/07 1,114 1,113
5.41%, 07/17/07 763 761
APRECO LLC,
5.39%, 08/10/07 (b) 1,100 1,094
5.40%, 09/17/07 (b) 1,500 1,483
Atlantis One Funding Corp.,
5.37%, 07/26/07 (b) 400 399
5.38%, 08/02/07 (b) 400 398
5.38%, 10/18/07 (b) 1,119 1,101
Banco Santander Puerto Rico,
5.40%, 07/26/07 473 471
5.39%, 08/27/07 685 679
Barclays Capital plc,
5.37%, 07/25/07 1,715 1,709
Barton Capital LLC,
5.52%, 07/12/07 (b) 778 777
5.39%, 07/17/07 (b) 774 772
5.39%, 07/19/07 (b) 1,255 1,252
5.38%, 08/07/07 (b) 1,233 1,226
CAFCO, Inc.,
5.36%, 07/06/07 (b) 1,023 1,022
5.37%, 07/11/07 (b) 910 909
5.38%, 07/19/07 (b) 1,153 1,150
5.41%, 08/14/07 (b) 541 537
Chariot Funding,
5.39%, 07/11/07 (b) 502 501
Cooperative Association of Tractor Dealers,
5.41%, 07/17/07 500 499
5.41%, 07/19/07 108 108
5.39%, 07/24/07 1,500 1,494
5.41%, 08/02/07 1,022 1,017
5.46%, 08/06/07 280 279
5.44%, 08/29/07 100 99
5.53%, 08/30/07 159 158
Countrywide Home Loans,
5.41%, 07/05/07 500 500
5.42%, 07/20/07 1,000 997
CRC Funding,
5.38%, 07/10/07 (b) 460 459
5.39%, 07/31/07 (b) 596 593
5.41%, 08/24/07 (b) 373 370
Falcon Asset Securitization Corp.,
5.40%, 07/20/07 (b) 335 334
5.42%, 08/13/07 (b) 250 248
Fountain Square,
5.38%, 07/02/07 (b) 2,500 2,501
5.37%, 07/16/07 (b) 1,169 1,166
Harley Davidson Funding Corp.,
5.35%, 07/05/07 (b) 400 400
ING America Insurance,
5.38%, 07/10/07 1,788 1,785
5.37%, 07/16/07 1,450 1,447
5.37%, 08/13/07 560 557
Ivory Funding,
5.38%, 07/03/07 (b) 1,536 1,536
5.38%, 07/09/07 (b) 1,250 1,249
5.39%, 09/04/07 (b) 261 259
J.P. Morgan Chase & Co.,
5.36%, 08/16/07 1,269 1,261
McGraw Hill Cos., Inc.,
5.39%, 07/03/07 939 939
5.40%, 08/08/07 1,132 1,126
Merrill Lynch & Co., Inc.,
5.36%, 08/20/07 1,100 1,092
5.37%, 08/28/07 1,600 1,586
Metlife Funding Inc.,
5.37%, 08/15/07 (b) 1,448 1,439
5.38%, 09/17/07 (b) 771 762
</Table>
SEE FINANCIAL NOTES
61
CITIZENS FUNDS HOLDINGS
<Table>
<Caption>
- -------------------------------------------------------------------------
MONEY MARKET FUND
SECURITY, RATE, MATURITY DATE PRINCIPAL($) VALUE($)
- -------------------------------------------------------------------------
The Procter & Gamble Co.,
5.34%, 08/01/07 (b) 735 732
5.35%, 08/30/07 (b) 2,269 2,250
Societe Generale,
5.37%, 07/24/07 909 906
5.38%, 08/06/07 1,919 1,908
5.34%, 08/14/07 225 224
5.35%, 11/05/07 869 853
Stanley Works,
5.36%, 08/24/07 (b) 1,182 1,173
UBS Finance Corp.,
5.37%, 07/09/07 1,000 999
5.38%, 07/11/07 800 799
5.41%, 10/15/07 400 394
5.40%, 10/23/07 1,650 1,622
------
TOTAL COMMERCIAL PAPER 59,132
Cost: $59,132
MUNICIPAL NOTES - 7.9%
Massachusetts State Development Finance
Agency,
5.38%, 12/01/40 (c) 3,000 3,000
New York State Housing Finance Agency,
5.32%, 11/15/29 (c) 3,500 3,500
------
TOTAL MUNICIPAL NOTES 6,500
Cost: $6,500
U.S. GOVERNMENT AGENCY OBLIGATIONS - 13.2%
4.75%, 08/03/07 2,000 1,999
4.35%, 08/15/07 1,135 1,134
5.25%, 12/26/07 2,390 2,390
3.25%, 01/15/08 1,000 989
4.31%, 03/24/08 900 894
4.00%, 06/30/08 1,000 1,000
5.30%, 11/07/08 1,500 1,500
5.50%, 04/16/12 1,000 1,000
------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS 10,906
------
Cost: $10,906
TOTAL INVESTMENTS - 97.8% 80,738
Cost: $80,738
</Table>
Percentages indicated are based on net assets of $82,532.
(a) On June 30, 2007, the fund owned the following restricted securities
constituting 0.24% 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:
City National Bank of New Jersey
Acquisition Date: March 14, 2007
Cost: $100
Unit Cost: $1.00
Value: $100
Self Help Credit Union
Acquisition Date: March 14, 2007
Cost: $100
Unit Cost: $1.00
Value: $100
(b) Rule 144A security.
(c) Variable rate security. The rate presented represents the rate in effect at
June 30, 2007.
- --------------------------------------------------------------------------------
SEE FINANCIAL NOTES
62
(THIS PAGE INTENTIONALLY LEFT BLANK)
63
STATEMENTS OF ASSETS
AND LIABILITIES
<Table>
<Caption>
Core Growth Emerging Growth Small Cap Core
Fund Fund Growth Fund
- ------------------------------------------------------------------------------------------------
ASSETS
Investments, at value $299,735,171 $ 177,812,969 $39,538,120
Repurchase agreements 4,764,977 3,751,120 1,936,562
------------------------------------------------
Total investments 304,500,148 181,564,089 41,474,682
Cash -- -- --
Foreign currency -- -- --
Receivables:
Interest and dividends 124,342 54,971 7,627
Investments sold -- 2,127,870 934,488
Tax reclaims -- -- --
Capital shares issued 296,234 56,986 11,992
Due from investment adviser -- -- --
Prepaid expenses 20,684 14,868 6,182
------------------------------------------------
Total assets 304,941,408 183,818,784 42,434,971
LIABILITIES
Payables:
Dividends to shareholders -- -- --
Investments purchased 3,771,451 1,256,430 522,778
Capital shares redeemed 264,566 70,166 32,708
Investment management fees 62,204 75,595 8,544
Administrative fees 18,662 11,339 2,563
Distribution fees 26,086 18,846 4,272
Shareholder service fees 9,911 4,120 853
Transfer agent expenses 127,142 97,066 20,588
Other accrued expenses 90,567 55,833 12,276
------------------------------------------------
Total liabilities 4,370,589 1,589,395 604,582
- ------------------------------------------------------------------------------------------------
NET ASSETS $300,570,819 $ 182,229,389 $41,830,389
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
NET ASSETS
Standard Shares:
Net assets $249,707,189 $ 177,514,009 $41,830,389
Number of shares outstanding 10,965,674 9,554,570 3,023,014
Net asset value, offering and redemption
price per share $ 22.77 $ 18.58 $ 13.84
Institutional Shares:
Net assets $ 49,000,978 $ 515,111 --
Number of shares outstanding 2,559,119 26,443 --
Net asset value, offering and redemption
price per share $ 19.15 $ 19.48 --
Administrative Shares:
Net assets $ 1,862,652 $ 4,200,269 --
Number of shares outstanding 79,478 220,362 --
Net asset value, offering and redemption
price per share $ 23.44 $ 19.06 --
Net assets consist of:
Paid-in capital $272,718,567 $ 290,189,221 $30,709,027
Accumulated (Distributions in excess of) net
investment income/loss -- -- --
Accumulated net realized gains/losses on
investments and foreign currencies (4,055,989) (155,794,087) 1,627,851
Net unrealized appreciation/depreciation on
investments and foreign currencies 31,908,241 47,834,255 9,493,511
- ------------------------------------------------------------------------------------------------
NET ASSETS $300,570,819 $ 182,229,389 $41,830,389
- ------------------------------------------------------------------------------------------------
Investments, at cost $272,591,907 $ 133,729,834 $31,981,171
Foreign currency, at cost -- -- --
</Table>
SEE FINANCIAL NOTES
64
AS OF JUNE 30, 2007
<Table>
<Caption>
Value Global Equity Balanced Income Money Market
Fund Fund Fund Fund Fund
- --------------------------------------------------------------------------
$63,683,816 $ 81,215,559 $11,661,052 $46,052,728 $80,737,545
2,206,138 3,281,976 198,722 3,015,456 --
- --------------------------------------------------------------------------
65,889,954 84,497,535 11,859,774 49,068,184 80,737,545
-- -- -- -- 1,784,305
-- 24,167 -- -- --
55,047 207,909 40,892 319,697 219,851
-- 23,941 -- -- --
-- 23,073 -- -- --
210,539 4,778 -- 2,090 200,634
25,727 -- 4,633 -- --
11,606 12,169 5,015 6,813 16,185
- --------------------------------------------------------------------------
66,192,873 84,793,572 11,910,314 49,396,784 82,958,520
-- -- 4,295 12,601 8,783
1,900,254 1,303,868 86,670 2,459,947 --
40,422 240,816 -- 100,861 336,435
29,211 34,350 5,364 12,471 11,915
3,947 5,151 729 2,878 5,106
5,774 8,545 1,215 4,796 --
1,066 1,951 325 1,056 1,812
24,734 45,373 5,716 20,863 34,173
17,092 28,870 5,465 15,859 28,252
- --------------------------------------------------------------------------
2,022,500 1,668,924 109,779 2,631,332 426,476
- --------------------------------------------------------------------------
$64,170,373 $ 83,124,648 $11,800,535 $46,765,452 $82,532,044
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
$56,385,349 $ 81,749,945 $11,800,535 $46,765,452 $73,015,877
3,681,744 3,814,247 887,381 4,886,717 73,113,436
$ 15.31 $ 21.43 $ 13.30 $ 9.57 $ 1.00
$ 7,785,024 $ 414,154 -- -- $ 9,516,167
507,510 18,476 -- -- 9,521,409
$ 15.34 $ 22.42 -- -- $ 1.00
-- $ 960,549 -- -- --
-- 43,898 -- -- --
-- $ 21.88 -- -- --
$56,277,854 $ 177,027,519 $10,418,748 $53,945,835 $82,568,794
77,613 (352,257) (512) 5,444 1,750
(2,238,502) (112,257,938) 837,559 (6,737,436) (38,500)
10,053,408 18,707,324 544,740 (448,391) --
- --------------------------------------------------------------------------
$64,170,373 $ 83,124,648 $11,800,535 $46,765,452 $82,532,044
- --------------------------------------------------------------------------
$55,836,546 $ 65,790,595 $11,315,034 $49,516,575 $80,737,545
-- 24,107 -- -- --
</Table>
SEE FINANCIAL NOTES
65
STATEMENTS OF OPERATIONS
<Table>
<Caption>
Core Growth Emerging Growth Small Cap Core
Fund Fund Growth Fund
- -----------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 565,969 $ 356,972 $ 93,202
Dividend (1) 3,715,911 1,679,358 198,031
- -----------------------------------------------------------------------------------------------
Total investment income 4,281,880 2,036,330 291,233
EXPENSES
Investment management fees 1,495,445 1,756,510 192,804
Administrative fees 448,636 263,477 57,841
Distribution fees:
Standard shares 635,956 425,539 96,402
Administrative shares 4,233 12,001 --
Shareholder service fees:
Standard shares 648,818 101,987 20,760
Institutional shares 629 110 --
Administrative shares 58 78 --
Transfer agent expenses:
Standard shares 576,667 466,227 112,294
Institutional shares 2,013 410 --
Administrative shares 1,078 837 --
Accounting expenses 116,573 69,529 17,936
Custody expenses 11,839 6,171 2,798
Registration expenses 41,442 36,077 15,920
Trustee expenses 50,740 30,946 7,361
Other expenses 188,397 115,957 24,850
- -----------------------------------------------------------------------------------------------
Total expenses before reimbursements or
waivers 4,222,524 3,285,856 548,966
Reimbursements or waivers from adviser -- -- --
- -----------------------------------------------------------------------------------------------
Net expenses 4,222,524 3,285,856 548,966
- -----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME/LOSS $ 59,356 $ (1,249,526) $ (257,733)
REALIZED AND UNREALIZED GAINS INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS
Realized gains on investments and foreign
currency transactions $ 22,954,092 $ 18,114,469 $ 2,559,643
Change in unrealized appreciation on
investments and foreign currencies 9,443,863 5,259,708 3,014,717
- -----------------------------------------------------------------------------------------------
Net realized and unrealized gains on
investments and foreign currencies 32,397,955 23,374,177 5,574,360
CHANGE IN NET ASSETS FROM OPERATIONS $ 32,457,311 $ 22,124,651 $ 5,316,627
(1) Dividend income net of withholding taxes. For the year ended June 30, 2007, withholding
taxes for the Global Equity Fund were $41,502.
</Table>
SEE FINANCIAL NOTES
66
YEAR ENDED JUNE 30, 2007
<Table>
<Caption>
Value Global Equity Balanced Income Money Market
Fund Fund Fund Fund Fund
- -----------------------------------------------------------------------
$ 135,051 $ 175,434 $ 207,286 $2,660,042 $4,582,276
693,784 1,566,225 107,478 -- --
- -----------------------------------------------------------------------
828,835 1,741,659 314,764 2,660,042 4,582,276
348,141 815,282 74,314 317,267 301,397
74,602 122,292 17,150 73,216 129,171
107,488 199,620 28,582 122,025 --
-- 2,882 -- -- --
21,420 47,972 7,351 25,639 42,935
29 46 -- -- 441
-- 42 -- -- --
117,281 253,953 24,952 99,501 166,285
308 120 -- -- 1,419
-- 1,119 -- -- --
21,810 50,931 16,953 28,483 36,777
3,149 9,471 5,940 4,075 10,780
30,385 34,699 15,195 16,135 33,082
10,151 13,377 2,113 7,869 15,159
35,516 59,542 8,542 29,555 54,443
- -----------------------------------------------------------------------
770,280 1,611,348 201,092 723,765 791,889
(154,113) -- (52,439) -- --
- -----------------------------------------------------------------------
616,167 1,611,348 148,653 723,765 791,889
- -----------------------------------------------------------------------
$ 212,668 $ 130,311 $ 166,111 $1,936,277 $3,790,387
$4,566,736 $ 8,768,100 $ 861,077 $ 66,811 $ 96
4,599,628 3,906,892 256,234 290,021 --
- -----------------------------------------------------------------------
9,166,364 12,674,992 1,117,311 356,832 96
$9,379,032 $12,805,303 $1,283,422 $2,293,109 $3,790,483
</Table>
SEE FINANCIAL NOTES
67
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
06/30/07 06/30/06 06/30/07 06/30/06
- -----------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income/loss $ 59,356 $ (1,068,071) $ (1,249,526) $ (2,244,099)
Realized gains/losses on investments and foreign
currency transactions 22,954,092 46,437,932 18,114,469 16,391,277
Change in unrealized appreciation/depreciation on
investments and foreign currencies 9,443,863 (32,840,999) 5,259,708 11,851,314
- -----------------------------------------------------------------------------------------------------------------
Change in net assets from operations 32,457,311 12,528,862 22,124,651 25,998,492
Dividends to Shareholders:
From net investment income:
Standard Shares -- -- -- --
Institutional Shares (267,821) -- -- --
Administrative Shares (3,435) -- -- --
From net realized gains on investments:
Standard Shares -- -- -- --
- -----------------------------------------------------------------------------------------------------------------
Total dividends (271,256) -- -- --
Change in net assets from capital transactions (46,703,158) (21,131,884) (16,568,980) (15,191,378)
CHANGE IN NET ASSETS $(14,517,103) $ (8,603,022) $ 5,555,671 $ 10,807,114
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period $315,087,922 $323,690,944 $176,673,718 $165,866,604
End of period $300,570,819 $315,087,922 $182,229,389 $176,673,718
- -----------------------------------------------------------------------------------------------------------------
Accumulated (distributions in excess of) net
investment income/loss $ -- $ -- $ -- $ --
- -----------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS
Standard Shares
Proceeds from shares issued $ 11,987,796 $ 19,766,782 $ 17,850,867 $ 23,763,198
Dividends reinvested -- -- -- --
Cost of shares redeemed (58,212,483) (40,508,379) (32,484,880) (36,013,649)
---------------------------------------------------
Net change (46,224,687) (20,741,597) (14,634,013) (12,250,451)
---------------------------------------------------
Institutional Shares
Proceeds from shares issued $ 22,907,918 $ 28,867,126 $ 110,287 $ 232,979
Dividends reinvested 260,617 -- -- --
Cost of shares redeemed (23,655,264) (29,194,052) (568,881) (2,151,187)
---------------------------------------------------
Net change (486,729) (326,926) (458,594) (1,918,208)
---------------------------------------------------
Administrative Shares
Proceeds from shares issued $ 295,116 $ 531,600 $ 432,065 $ 854,234
Dividends reinvested 3,435 -- -- --
Cost of shares redeemed (290,293) (594,961) (1,908,438) (1,876,953)
---------------------------------------------------
Net change 8,258 (63,361) (1,476,373) (1,022,719)
---------------------------------------------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $(46,703,158) $(21,131,884) $(16,568,980) $(15,191,378)
- -----------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS
Standard Shares
Issued 570,483 933,592 1,041,779 1,485,237
Reinvested -- -- -- --
Redeemed (2,762,464) (1,923,535) (1,896,311) (2,282,753)
---------------------------------------------------
Net change (2,191,981) (989,943) (854,532) (797,516)
---------------------------------------------------
Institutional Shares
Issued 1,265,704 1,646,381 6,012 13,737
Reinvested 14,850 -- -- --
Redeemed (1,335,466) (1,651,566) (32,123) (141,270)
---------------------------------------------------
Net change (54,912) (5,185) (26,111) (127,533)
---------------------------------------------------
Administrative Shares
Issued 13,711 24,473 24,460 51,723
Reinvested 160 -- -- --
Redeemed (13,525) (28,026) (106,436) (116,060)
---------------------------------------------------
Net change 346 (3,553) (81,976) (64,337)
---------------------------------------------------
CHANGE IN SHARES FROM SHARE TRANSACTIONS (2,246,547) (998,681) (962,619) (989,386)
- -----------------------------------------------------------------------------------------------------------------
* The Value Fund Institutional Class commenced operations on March 31, 2006.
</Table>
SEE FINANCIAL NOTES
68
<Table>
<Caption>
SMALL CAP CORE GROWTH FUND VALUE FUND
- ---------------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
06/30/07 06/30/06 06/30/07 06/30/06 *
- ---------------------------------------------------------
$ (257,733) $ (283,687) $ 212,668 $ 54,391
2,559,643 3,401,326 4,566,736 1,120,508
3,014,717 938,778 4,599,628 1,764,193
- ---------------------------------------------------------
5,316,627 4,056,417 9,379,032 2,939,092
-- -- (156,486) --
-- -- (32,960) --
-- -- -- --
(1,113,792) -- -- --
- ---------------------------------------------------------
(1,113,792) -- (189,446) --
(282,388) 3,794,453 16,463,300 7,787,498
$3,920,447 $7,850,870 $25,652,886 $10,726,590
- ---------------------------------------------------------
- ---------------------------------------------------------
$37,909,942 $30,059,072 $38,517,487 $27,790,897
$41,830,389 $37,909,942 $64,170,373 $38,517,487
- ---------------------------------------------------------
$ -- $ -- $ 77,613 $ 54,391
- ---------------------------------------------------------
$8,206,292 $10,643,513 $23,089,245 $13,809,233
1,065,027 -- 147,501 --
(9,553,707) (6,849,060) (7,879,983) (11,505,434)
- ---------------------------------------------------------
(282,388) 3,794,453 15,356,763 2,303,799
- ---------------------------------------------------------
-- -- $1,073,577 $ 5,483,699
-- -- 32,960 --
-- -- -- --
- ---------------------------------------------------------
-- -- 1,106,537 5,483,699
- ---------------------------------------------------------
-- -- -- --
-- -- -- --
-- -- -- --
- ---------------------------------------------------------
-- -- -- --
- ---------------------------------------------------------
$ (282,388) $3,794,453 $16,463,300 $ 7,787,498
- ---------------------------------------------------------
659,884 873,576 1,635,323 1,115,039
86,799 -- 10,528 --
(760,894) (569,176) (561,158) (913,517)
- ---------------------------------------------------------
(14,211) 304,400 1,084,693 201,522
- ---------------------------------------------------------
-- -- 77,788 427,368
-- -- 2,354 --
-- -- -- --
- ---------------------------------------------------------
-- -- 80,142 427,368
- ---------------------------------------------------------
-- -- -- --
-- -- -- --
-- -- -- --
- ---------------------------------------------------------
-- -- -- --
- ---------------------------------------------------------
(14,211) 304,400 1,164,835 628,890
- ---------------------------------------------------------
</Table>
SEE FINANCIAL NOTES
69
STATEMENTS OF CHANGES
IN NET ASSETS
<Table>
<Caption>
GLOBAL EQUITY FUND BALANCED FUND
- -------------------------------------------------------------------------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
06/30/07 06/30/06 06/30/07 06/30/06
- -------------------------------------------------------------------------------------------------------------------
OPERATIONS
Net investment income/loss $ 130,311 $ (38,404) $ 166,111 $ 100,799
Realized gains/losses on investments and foreign
currency transactions 8,768,100 3,754,241 861,077 215,779
Change in unrealized appreciation/depreciation on
investments and foreign currencies 3,906,892 8,302,807 256,234 (140,549)
- -------------------------------------------------------------------------------------------------------------------
Change in net assets from operations 12,805,303 12,018,644 1,283,422 176,029
Dividends to Shareholders:
From net investment income:
Standard Shares -- -- (165,712) (101,583)
Institutional Shares -- -- -- --
From net realized gains on investments:
Standard Shares -- -- (160,217) --
- -------------------------------------------------------------------------------------------------------------------
Total dividends -- -- (325,929) (101,583)
Change in net assets from capital transactions (11,239,914) (15,299,387) (237,534) 5,514,670
CHANGE IN NET ASSETS $ 1,565,389 $ (3,280,743) $ 719,959 $ 5,589,116
- -------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period $ 81,559,259 $ 84,840,002 $ 11,080,576 $ 5,491,460
End of period $ 83,124,648 $ 81,559,259 $ 11,800,535 $ 11,080,576
- -------------------------------------------------------------------------------------------------------------------
Accumulated (distributions in excess of) net investment
income/loss $ (352,257) $ (4,618) $ (512) $ --
- -------------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS
Standard Shares
Proceeds from shares issued $ 8,295,007 $ 7,340,857 $ 1,839,305 $ 7,086,693
Dividends reinvested -- -- 303,088 87,089
Cost of shares redeemed (18,526,500) (19,880,961) (2,379,927) (1,659,112)
--------------------------------------------------
Net change (10,231,493) (12,540,104) (237,534) 5,514,670
--------------------------------------------------
Institutional Shares
Proceeds from shares issued $ 10,408 $ 5,389 -- --
Dividends reinvested -- -- -- --
Cost of shares redeemed (410,482) (2,346,225) -- --
--------------------------------------------------
Net change (400,074) (2,340,836) -- --
--------------------------------------------------
Administrative Shares
Proceeds from shares issued 188,720 267,371 -- --
Dividends reinvested -- -- -- --
Cost of shares redeemed (797,067) (685,818) -- --
--------------------------------------------------
Net change (608,347) (418,447) -- --
--------------------------------------------------
CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS $(11,239,914) $(15,299,387) $ (237,534) $ 5,514,670
- -------------------------------------------------------------------------------------------------------------------
SHARE TRANSACTIONS
Standard Shares
Issued 423,164 416,762 145,765 568,623
Reinvested -- -- 23,875 6,975
Redeemed (943,976) (1,148,666) (187,256) (133,278)
--------------------------------------------------
Net change (520,812) (731,904) (17,616) 442,320
--------------------------------------------------
Institutional Shares
Issued 494 116 -- --
Reinvested -- -- -- --
Redeemed (20,506) (137,975) -- --
--------------------------------------------------
Net change (20,012) (137,859) -- --
--------------------------------------------------
Administrative Shares
Issued 9,461 14,995 -- --
Reinvested -- -- -- --
Redeemed (39,819) (37,945) -- --
--------------------------------------------------
Net change (30,358) (22,950) -- --
--------------------------------------------------
CHANGE IN SHARES FROM SHARE TRANSACTIONS (571,182) (892,713) (17,616) 442,320
- -------------------------------------------------------------------------------------------------------------------
</Table>
SEE FINANCIAL NOTES
70
<Table>
<Caption>
INCOME FUND MONEY MARKET FUND
- -----------------------------------------------------------
For the For the For the For the
year ended year ended year ended year ended
06/30/07 06/30/06 06/30/07 06/30/06
- -----------------------------------------------------------
$ 1,936,277 $ 1,795,793 $3,790,387 $ 2,837,876
66,811 (1,579,679) 96 (62)
290,021 (1,158,558) -- --
- -----------------------------------------------------------
2,293,109 (942,444) 3,790,483 2,837,814
(1,880,480) (1,825,925) (3,307,059) (2,416,825)
-- -- (482,567) (420,062)
-- -- -- --
- -----------------------------------------------------------
(1,880,480) (1,825,925) (3,789,626) (2,836,887)
(3,967,851) (3,507,745) (1,629,502) (5,327,092)
$ (3,555,222) $ (6,276,114) $(1,628,645) $(5,326,165)
- -----------------------------------------------------------
- -----------------------------------------------------------
$ 50,320,674 $ 56,596,788 $84,160,689 $89,486,854
$ 46,765,452 $ 50,320,674 $82,532,044 $84,160,689
- -----------------------------------------------------------
$ 5,444 $ -- $ 1,750 $ 989
- -----------------------------------------------------------
$ 5,138,791 $ 6,731,817 $65,280,521 $62,680,511
1,711,712 1,653,835 3,201,732 2,342,559
(10,818,354) (11,893,397) (69,727,223) (67,488,052)
- -----------------------------------------------------------
(3,967,851) (3,507,745) (1,244,970) (2,464,982)
- -----------------------------------------------------------
-- -- $4,849,568 $ 3,178,033
-- -- 481,559 419,204
-- -- (5,715,659) (6,459,347)
- -----------------------------------------------------------
-- -- (384,532) (2,862,110)
- -----------------------------------------------------------
-- -- -- --
-- -- -- --
-- -- -- --
- -----------------------------------------------------------
-- -- -- --
- -----------------------------------------------------------
$ (3,967,851) $ (3,507,745) $(1,629,502) $(5,327,092)
- -----------------------------------------------------------
529,874 687,649 65,280,521 62,680,511
176,434 169,782 3,201,732 2,342,559
(1,112,958) (1,222,490) (69,727,223) (67,488,052)
- -----------------------------------------------------------
(406,650) (365,059) (1,244,970) (2,464,982)
- -----------------------------------------------------------
-- -- 4,849,568 3,178,033
-- -- 481,559 419,204
-- -- (5,715,659) (6,459,347)
- -----------------------------------------------------------
-- -- (384,532) (2,862,110)
- -----------------------------------------------------------
-- -- -- --
-- -- -- --
-- -- -- --
- -----------------------------------------------------------
-- -- -- --
- -----------------------------------------------------------
(406,650) (365,059) (1,629,502) (5,327,092)
- -----------------------------------------------------------
</Table>
SEE FINANCIAL NOTES
71
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, 2007 $20.41 (0.02) 2.38 2.36 --
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) --
INSTITUTIONAL SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2007 $17.15 0.12 2.00 2.12 (0.12)
Year ended June 30, 2006 16.45 0.06 0.64 0.70 --
Year ended June 30, 2005 14.99 0.07 1.39 1.46 --
Year ended June 30, 2004 13.52 0.01 1.46 1.47 --
Year ended June 30, 2003 13.66 0.05 (0.19) (0.14) --
ADMINISTRATIVE SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2007 $20.96 0.06 2.46 2.52 (0.04)
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) --
- ---------------------------------------------------------------------------------------------------------
EMERGING GROWTH FUND
STANDARD SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2007 $16.40 (0.12)(2) 2.30 2.18 --
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) --
INSTITUTIONAL SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2007 $17.11 (0.05)(2) 2.42 2.37 --
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) --
ADMINISTRATIVE SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2007 $16.77 (0.07)(2) 2.36 2.29 --
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) --
- ---------------------------------------------------------------------------------------------------------
(1) Less than $0.005 per share.
(2) Based on average shares outstanding.
</Table>
SEE FINANCIAL NOTES
72
<Table>
<Caption>
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
Net Ratio of Ratio of net
From Net asset assets, expenses to investment
net Total value, Total end of average net income/loss
realized dividends to Redemption end return period assets, net of to average net
gains shareholders fee of period (%) ($ X 1,000) reimbursement (%) assets (%)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- -- -- $22.77 11.56 $249,707 1.52 (0.08)
-- -- -- 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)
- -----------------------------------------------------------------------------------------------------------------
-- (0.12) -- $19.15 12.39 $ 49,001 0.79 0.62
-- -- -- 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
- -----------------------------------------------------------------------------------------------------------------
-- (0.04) -- $23.44 12.06 $ 1,863 1.10 0.32
-- -- -- 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
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- -- -- $18.58 13.29 $177,514 1.88 (0.72)
-- -- -- 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)
- -----------------------------------------------------------------------------------------------------------------
-- -- -- $19.48 13.85 $ 515 1.38 (0.29)
-- -- -- 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)
- -----------------------------------------------------------------------------------------------------------------
-- -- -- $19.06 13.66 $ 4,200 1.57 (0.39)
-- -- -- 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)
- -----------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------------
Ratio of
expenses to
average net Portfolio
assets, prior to turnover
reimbursement (%) rate (%)
- ----------------------------------
1.52 153.08
1.52 101.35
1.55 101.34
1.52 228.43
1.53 183.75
- ----------------------------------
0.79 153.08
0.80 101.35
0.80 101.34
0.79 228.43
0.76 183.75
- ----------------------------------
1.10 153.08
1.12 101.35
1.14 101.34
1.13 228.43
1.06 183.75
- ----------------------------------
- ----------------------------------
1.88 47.54
1.90 60.19
1.96 109.56
1.94 151.80
1.97 315.89
- ----------------------------------
1.38 47.54
1.35 60.19
1.33 109.56
1.31 151.80
1.28 315.89
- ----------------------------------
1.57 47.54
1.60 60.19
1.64 109.56
1.62 151.80
1.54 315.89
- ----------------------------------
</Table>
SEE FINANCIAL NOTES
73
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, 2007 $12.48 (0.09) 1.82 1.73 --
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) --
- -----------------------------------------------------------------------------------------------------------------
VALUE FUND
STANDARD SHARES
- -----------------------------------------------------------------------------------------------------------------
Year ended June 30, 2007 $12.74 0.04 2.58 2.62 (0.05)
Year ended June 30, 2006 11.60 0.02 1.12 1.14 --
Year ended June 30, 2005 10.51 (0.01) 1.10 1.09 --
Year ended June 30, 2004 8.64 (0.02) 1.89 1.87 --
Year ended June 30, 2003 8.74 (0.05) (0.05) (0.10) --
INSTITUTIONAL SHARES
- -----------------------------------------------------------------------------------------------------------------
Year ended June 30, 2007 $12.72 0.10 2.59 2.69 (0.07)
For the period ended June 30, 2006(2) 12.81 0.02 (0.11) (0.09) --
- -----------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY FUND
STANDARD SHARES
- -----------------------------------------------------------------------------------------------------------------
Year ended June 30, 2007 $18.33 0.03(1) 3.07 3.10 --
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) --
INSTITUTIONAL SHARES
- -----------------------------------------------------------------------------------------------------------------
Year ended June 30, 2007 $19.05 0.13(1) 3.24 3.37 --
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) --
ADMINISTRATIVE SHARES
- -----------------------------------------------------------------------------------------------------------------
Year ended June 30, 2007 $18.66 0.06(1) 3.16 3.22 --
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) --
- -----------------------------------------------------------------------------------------------------------------
(1) Based on average shares outstanding.
(2) For the period March 31, 2006, commencement of operations, to June 30,2006.
(3) Not Annualized.
(4) Annualized.
(5) Less than $0.005 per share.
</Table>
SEE FINANCIAL NOTES
74
<Table>
<Caption>
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
Net Ratio of Ratio of net
From Net asset assets, expenses to investment
net Total value, Total end of average net income/loss
realized dividends to Redemption end return period assets, net of to average net
gains shareholders fee (1) of period (%) ($ X 1,000) reimbursement (%) assets (%)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
(0.37) (0.37) -- $13.84 14.22 $ 41,830 1.42 (0.67)
-- -- -- 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)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- (0.05) -- $15.31 20.63 $ 56,385 1.29 0.37
-- -- -- 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)
- -----------------------------------------------------------------------------------------------------------------
-- (0.07) -- $15.34 21.16 $ 7,785 0.90 0.78
-- -- -- 12.72 (0.70)(3) 5,436 0.90(4) 0.64(4)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- -- --(5) $21.43 16.91 $ 81,750 1.98 0.15
-- -- --(5) 18.33 15.57 79,441 2.01 (0.06)
-- -- --(5) 15.86 4.48 80,384 2.05 0.13
-- -- --(5) 15.18 13.37 95,625 2.01 (0.60)
-- -- 0.02 13.39 (5.84) 101,846 1.91 (0.26)
- -----------------------------------------------------------------------------------------------------------------
-- -- --(5) $22.42 17.69 $ 414 1.39 0.65
-- -- --(5) 19.05 16.23 733 1.40 0.38
-- -- --(5) 16.39 5.20 2,891 1.39 0.75
-- -- --(5) 15.58 14.14 5,244 1.37 0.25
-- -- 0.02 13.65 (5.21) 6,688 1.26 0.42
- -----------------------------------------------------------------------------------------------------------------
-- -- --(5) $21.88 17.26 $ 961 1.71 0.28
-- -- --(5) 18.66 15.83 1,385 1.73 0.20
-- -- --(5) 16.11 4.88 1,566 1.73 0.40
-- -- --(5) 15.36 13.69 2,142 1.71 (0.11)
-- -- 0.02 13.51 (5.52) 2,059 1.59 0.11
- -----------------------------------------------------------------------------------------------------------------
<Caption>
RATIOS AND SUPPLEMENTAL DATA
- ----------------------------------
Ratio of
expenses to
average net Portfolio
assets, prior to turnover
reimbursement (%) rate (%)
- ----------------------------------
- ----------------------------------
1.42 53.78
1.44 96.80
1.51 120.89
1.53 207.80
1.58 349.79
- ----------------------------------
- ----------------------------------
1.61 40.28
1.62 58.32
1.70 172.95
1.78 130.18
1.90 209.72
- ----------------------------------
1.14 40.28
1.26(4) 58.32(3)
- ----------------------------------
- ----------------------------------
1.98 58.74
2.01 36.77
2.05 80.36
2.01 49.16
1.91 42.05
- ----------------------------------
1.39 58.74
1.40 36.77
1.39 80.36
1.37 49.16
1.26 42.05
- ----------------------------------
1.71 58.74
1.73 36.77
1.73 80.36
1.71 49.16
1.59 42.05
- ----------------------------------
</Table>
SEE FINANCIAL NOTES
75
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, 2007 $12.24 0.19 1.24 1.43 (0.19)
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, 2007 $ 9.51 0.39 0.05 0.44 (0.38)
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)
- ---------------------------------------------------------------------------------------------------------
MONEY MARKET FUND
STANDARD SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2007 $ 1.00 0.04 -- 0.04 (0.04)
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)
INSTITUTIONAL SHARES
- ---------------------------------------------------------------------------------------------------------
Year ended June 30, 2007 $ 1.00 0.05 -- 0.05 (0.05)
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)
- ---------------------------------------------------------------------------------------------------------
(1) For the period December 20, 2002, commencement of operations, to June 30, 2003.
(2) Not Annualized.
(3) Annualized.
(4) Less than $0.005 per share.
</Table>
SEE FINANCIAL NOTES
76
<Table>
<Caption>
TO SHAREHOLDERS RATIOS AND SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
Net Ratio of Ratio of net
From Net asset assets, expenses to investment
net Total value, Total end of average net income/loss
realized dividends to Redemption end return period assets, net of to average net
gains shareholders fee of period (%) ($ X 1,000) reimbursement (%) assets (%)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
(0.18) (0.37) -- $13.30 11.81 $ 11,801 1.30 1.45
-- (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)
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- (0.38) -- $ 9.57 4.60 $ 46,765 1.48 3.97
-- (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
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
-- (0.04) -- $ 1.00 4.45 $ 73,016 0.95 4.37
-- (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
- -----------------------------------------------------------------------------------------------------------------
-- (0.05) -- $ 1.00 4.72 $ 9,516 0.69 4.63
-- (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
- -----------------------------------------------------------------------------------------------------------------
<Caption>
TO RATIOS AND SUPPLEMENTAL DATA
- ----------------------------------
Ratio of
expenses to
average net Portfolio
assets, prior to turnover
reimbursement (%) rate (%)
- ----------------------------------
- ----------------------------------
1.76 99.86
1.80 89.13
2.33 109.56
4.30 98.20
16.73(3) 140.42(2)
- ----------------------------------
- ----------------------------------
1.48 225.80
1.49 490.92
1.48 111.76
1.45 64.37
1.37 195.73
- ----------------------------------
- ----------------------------------
0.95 N/A
0.98 N/A
1.00 N/A
0.98 N/A
0.93 N/A
- ----------------------------------
0.69 N/A
0.69 N/A
0.68 N/A
0.67 N/A
0.63 N/A
- ----------------------------------
</Table>
SEE FINANCIAL NOTES
77
FINANCIAL NOTES
ORGANIZATION
Citizens Funds (the "trust"), a Massachusetts business trust, is registered as
an open-end management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"). The trust offers the following funds
(individually a "fund," collectively the "funds"):
FUND SHORT NAME
- ---- --------------------------
Citizens Core Growth Fund Core Growth Fund
Citizens Emerging Growth Fund Emerging Growth Fund
Citizens Small Cap Core Growth Fund Small Cap Core Growth Fund
Citizens Value Fund Value Fund
Citizens Global Equity Fund Global Equity Fund
Citizens Balanced Fund Balanced Fund
Citizens Income Fund Income Fund
Citizens Money Market Fund Money Market Fund
The funds are authorized to issue an unlimited number of shares of beneficial
interest with no par value. The Core Growth Fund, Emerging Growth Fund, and
Global Equity Fund currently offer three classes of shares: Standard shares,
Institutional shares and Administrative shares. The Money Market Fund and Value
Fund offer 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.
78
SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
funds in the preparation of their financial statements. The policies are in
conformity with accounting principles generally accepted in the United States of
America ("GAAP"). The preparation of financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses for the
period. Actual results could differ from those estimates.
SECURITIES VALUATION
The board of trustees has approved procedures to be used to value each fund's
securities for the purpose of determining the fund's net asset value (NAV).
Equity securities traded on an exchange are valued at the market price
determined as the closing sale or official closing price on that exchange. For
securities not traded on an exchange, or if an exchange price is not readily
available, securities are valued at a market price determined by independent
third-party pricing vendors approved by the funds' valuation committee. The
market price for debt obligations is determined by an independent third-party
pricing service which uses a matrix, formula or other objective method that
considers the effect of market indices, yield curves and other specific
adjustments. Short-term securities maturing within 60 days and all securities in
the Money Market Fund are valued at amortized cost, unless it is determined that
using this method would not reflect a security's fair value. Under the amortized
cost method, premium or discount, if any, is amortized or accreted,
respectively, on a constant basis to the maturity of the security. If a price
for a given security is unavailable or deemed unreliable by the adviser, the
market price may be determined using quotations received from one or more
brokers that make a market in the security. When such prices or quotations are
not available, or when the adviser believes they are unreliable, the funds'
valuation committee will value securities using fair value procedures approved
by the funds' board of trustees. Fair value procedures may also be used if the
adviser determines that a significant event has occurred between the time at
which a market price is determined and the time at which a fund's NAV is
calculated. The Global Equity Fund uses a fair value model developed by an
independent third-party pricing service in its valuation considerations for
foreign equity securities on days when there is a specific percentage change in
the value of a domestic equity security index. This percentage is determined by
the funds' valuation committee.
79
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 are accounted for on trade date. The cost of
securities sold is determined on the identified cost basis, unless otherwise
specified. Interest income is recorded on an accrual basis and includes, where
applicable, the amortization or accretion of a premium or discount. Dividend
income is recorded on the ex-dividend date.
FOREIGN CURRENCY TRANSLATION
The accounting records of the funds are maintained in U.S. dollars. Investment
securities and other assets and liabilities denominated in a foreign currency
are translated into U.S. dollars at the current rate of exchange. Purchases and
sales of securities, and income and expenses, are translated into U.S. dollars
at the prevailing rate of exchange on the respective dates of such transactions.
The changes in foreign exchange rates on investments are not isolated on the
Statement of Operations. Such fluctuations are included with the net realized
and unrealized gain or loss on investments.
FOREIGN CURRENCY CONTRACTS
Foreign currency contracts are used to facilitate transactions in
foreign-denominated securities. Losses may arise from changes in the value of
the foreign currency or if the counterparties do not perform under the
contract's terms. The U.S. dollar value of foreign currency contracts is
determined using the current rate of exchange. There were no foreign currency
contracts open at June 30, 2007.
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 maturity. Collateral
80
subject to repurchase agreements is held by the funds' custodian. If the
counterparty defaults, and the fair value of the collateral declines,
realization of the collateral by the funds may be delayed or limited.
RESTRICTED SECURITIES
The funds are permitted to invest in privately placed securities. These
securities may be resold in transactions exempt from registration, or to the
public, if the securities are registered under the Securities Act of 1933.
Disposal of these securities may involve time-consuming negotiations and
expense, and the prompt sale at an acceptable price may be difficult.
REDEMPTION FEE
The Global Equity Fund charges a redemption fee of 2% (paid to the fund) with
respect to shares of the fund redeemed or exchanged within 60 days of purchase.
The fee does not apply to shares purchased through the reinvestment of dividends
or other distributions, redemptions by the fund of accounts with below minimum
balances, redemptions due to shareholder death or disability, or certain omnibus
accounts or retirement plans. For the years ended June 30, 2007 and June 30,
2006, the Global Equity Fund collected $1,940 and $4,572 respectively, 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.
81
FINANCIAL NOTES
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.
FEES AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT MANAGEMENT FEE
Citizens Advisers, Inc. (the "adviser") serves as adviser to each of the funds.
Under the terms of the management contract, the adviser is paid a fee that is
computed daily based on an annual rate for each fund's average daily net assets.
Those rates are as follows:
FUND FEE RATE
- ---- --------
Core Growth Fund 0.50%
Emerging Growth Fund 1.00%
Small Cap Core Growth Fund 0.50%
Value Fund 0.70%
Global Equity Fund 1.00%
Balanced Fund 0.65%
Income Fund 0.65%
Money Market Fund 0.35%
Dwight Asset Management Company serves as the subadviser for the Income Fund.
For its services, the subadviser receives a fee computed daily based on an
annual rate of 0.25% of the fund's average daily net assets. The fee is paid by
the adviser.
82
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.
ADMINISTRATIVE AND SHAREHOLDER SERVICE FEES
The adviser, with whom certain officers and a trustee are affiliated, performs
administrative duties for the trust under a separate administrative contract,
which provides for the reimbursement of out-of-pocket expenses as well as fees
for services rendered. In accordance with the terms of the administrative
contract, fees are accrued daily based on average daily net assets of each fund
at the annual rate of 0.15%. In addition, Citizens Advisers provides a number of
administrative services to the trust, relating primarily to shareholder services
and communications, and is paid an account fee and is reimbursed for
out-of-pocket expenses as well, for providing such services and communications
for each of the individual funds with the exception of the Core Growth Fund,
Standard shares. The Core Growth Fund, Standard shares may be charged a
shareholder service fee of up to 0.35% based on the average daily net assets of
the class. For the year ended June 30, 2007, a fee of 0.25% was charged.
TRANSFER AGENCY, FUND ACCOUNTING AND CUSTODY
BISYS Fund Services Ohio, Inc. provides transfer agency and fund accounting
services to the funds pursuant to certain fee arrangements. As transfer agent
for the funds, BISYS is paid a fee based on the number of funds and shareholder
accounts, other service fees, and is reimbursed for out-of-pocket expenses as
well. Transfer agent expenses also include the cost of services rendered by
third parties to provide sub-transfer agency services. As fund accountant for
the funds, BISYS is paid a fee based on assets (ranging from 0.0125% -- 0.035%)
and the number of share classes per fund, subject to certain minimums, other
service fees, and is reimbursed for out-of-pocket expenses as well. Fifth Third
Bank acts as a custodian for the funds and is paid a fee based on the funds'
assets and other transaction based fees, subject to certain minimums. Custody
expenses may be incurred or offset from fees or credits arising from cash
balances maintained on deposit. There were no custody credits received for the
period ended June 30, 2007.
83
FINANCIAL NOTES
SUBSEQUENT EVENTS
On May 2, 2007, BISYS Group, Inc., the parent of BISYS Fund Services Ohio, Inc.
(BISYS Fund Services) announced that it had entered into a definitive agreement
to be acquired by Citi. The transaction closed effective August 1, 2007, at
which time BISYS Fund Services changed its name to Citi Fund Services Ohio, Inc.
TRUSTEE FEES
All of the officers and one of the trustees of the trust are "interested
persons," as defined in the 1940 Act, of the adviser. Currently, each trustee
who is not an "interested person" receives an annual retainer of $12,000 and
$1,250 for each day's attendance at a trustee meeting. The independent trustees
include a chair of the board, who receives an additional annual retainer of
$5,000; and an audit committee chair, social responsibility committee chair, and
nominating committee chair who each receive an additional annual retainer of
$2,500.
ALLOCATIONS
Expenses directly attributable to a fund are charged to that fund. Expenses not
directly attributable to a fund are allocated proportionately among various or
all funds within the trust in relation to the net assets of each fund or on
another reasonable basis. Expenses specific to a class of shares are charged to
that class.
FEE REDUCTIONS AND REIMBURSEMENTS
For the period ended June 30, 2007, the adviser limited the total expenses,
exclusive of taxes, brokerage commissions and extraordinary expenses, for
certain funds to the extent they exceeded the following limits:
FUND EXPENSE LIMITATION
- ---- ------------------
Value Fund - Standard shares 1.29%
Value Fund - Institutional shares 0.90%
Balanced Fund - Standard shares 1.30%
Expense limitations for the Value Fund Standard shares and Institutional shares
listed above are contractual. The adviser may recoup the investment management
fees waived or limited and other expenses reimbursed by it within three years
from the fiscal year in which they were waived/reimbursed. Such repayments may
be made twice monthly, but in no event less frequently than semi-annually, but
only to the extent that such repayments would not cause annualized operating
expenses of the Value Fund to exceed any expense
84
limitation. As of June 30, 2007, the amount that may potentially be recouped by
the adviser from the Value Fund is $44,181 expiring on June 30, 2009 and
$154,113 expiring on June 30, 2010.
The Balanced Fund expense limitation listed above is voluntary, may be removed
by the adviser at any time and is not subject to recoupment in subsequent fiscal
periods.
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, 2007:
FUND PURCHASES SALES
- ---- ------------ ------------
Core Growth Fund $442,301,039 $481,344,072
Emerging Growth Fund 80,161,051 93,167,766
Small Cap Core Growth Fund 19,790,474 21,628,694
Value Fund 38,305,279 19,239,334
Global Equity Fund 45,785,023 54,947,983
Balanced Fund 11,123,678 11,011,385
Income Fund 40,480,753 44,054,205
The following summarizes purchases and sales of U.S. Government securities by
fund for the period ended June 30, 2007:
FUND PURCHASES SALES
- ---- ----------- -----------
Balanced Fund $ 98,859 $ --
Income Fund 64,391,868 66,820,044
85
FINANCIAL NOTES
FEDERAL INCOME TAX INFORMATION
At June 30, 2007 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 $272,686,865 $37,250,063 $(5,436,780) $31,813,283
Emerging Growth Fund 133,744,359 50,556,803 (2,737,073) 47,819,730
Small Cap Core Growth Fund 31,981,171 10,226,402 (732,891) 9,493,511
Value Fund 55,920,046 10,533,337 (563,429) 9,969,908
Global Equity Fund 65,920,501 19,096,201 (519,167) 18,577,034
Balanced Fund 11,315,518 757,001 (212,745) 544,256
Income Fund 49,645,909 69,583 (647,308) (577,725)
Money Market Fund 80,737,545 -- -- --
The tax character of dividends paid by the funds during the past two fiscal
years were as follows:
DIVIDENDS PAID FROM
-----------------------
NET LONG TAX
TERM TOTAL RETURN TOTAL
ORDINARY CAPITAL TAXABLE OF DIVIDENDS
INCOME GAINS DIVIDENDS CAPITAL PAID(1)
---------- ---------- ---------- ------- ----------
FISCAL YEAR ENDED 2007
Core Growth Fund $ 271,256 $ -- $ 271,256 $-- $ 271,256
Small Cap Core Growth Fund -- 1,113,792 1,113,792 -- 1,113,792
Value Fund 189,446 -- 189,446 -- 189,446
Balanced Fund 165,641 160,217 325,858 -- 325,858
Income Fund 1,890,990 -- 1,890,990 -- 1,890,990
Money Market Fund 3,782,046 -- 3,782,046 -- 3,782,046
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
86
As of June 30, 2007, the components of accumulated earnings/(deficit) on a tax
basis for the funds were as follows:
UNREALIZED TOTAL
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED APPRECIATION/ ACCUMULATED
ORDINARY LONG-TERM ACCUMULATED DIVIDENDS CAPITAL & DEPRECIATION EARNINGS/
INCOME CAPITAL GAINS EARNINGS PAYABLE(1) OTHER LOSSES (2) DEFICIT
------------- ------------- ----------- ---------- ------------- ------------- -------------
Core Growth Fund $ -- $ -- $ -- $ -- $ (3,961,031) $31,813,283 $ 27,852,252
Emerging Growth Fund -- -- -- -- (155,779,562) 47,819,730 (107,959,832)
Small Cap Core Growth
Fund 323,849 1,304,002 1,627,851 -- -- 9,493,511 11,121,362
Value Fund 69,244 -- 69,244 -- (2,146,633) 9,969,908 7,892,519
Global Equity Fund 43,196 -- 43,196 -- (112,523,485) 18,577,418 (93,902,871)
Balanced Fund 588,701 282,961 871,662 (34,131) -- 544,256 1,381,787
Income Fund 152,601 -- 152,601 (147,158) (6,608,101) (577,725) (7,180,383)
Money Market Fund 307,773 -- 307,773 (306,023) (38,500) -- (36,750)
(1) Total dividends payable and paid may differ from the amount reported in the
Statements of Assets and Liabilities and Statement 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.
As of June 30, 2007, 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 $ -- -- $ 3,961,031 2011 $ -- -- $ -- --
Emerging Growth Fund 116,147,198 2010 36,170,306 2011 3,462,058 2013 -- --
Value Fund -- -- -- -- 2,146,633 2012 -- --
Global Equity Fund(1) 88,646,020 2010 9,283,310 2011 14,198,702 2012 -- --
Income Fund 638,367 2010 4,606,423 2011 438,112 2014 900,616 2015
Money Market Fund 9,049 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: $24,611 expiring in 2010, $345,833
expiring in 2011.
Net capital losses incurred after October 31, 2006, 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, 2007, the Global Equity Fund deferred to July 1,
2007 post October currency losses of $395,453, and the Income Fund deferred to
July 1, 2007 post October capital losses of $24,583.
87
FINANCIAL NOTES
NEW ACCOUNTING PRONOUNCEMENTS
In September 2006 the Financial Accounting Standards Board (FASB) issued
Statement on Financial Accounting Standards (SFAS) No. 157, "Fair Value
Measurements." This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and requires
additional disclosures about fair value measurements. SFAS No. 157 applies to
fair value measurements already required or permitted by existing standards.
SFAS No. 157 is effective for financial statements issued for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years.
The changes to current GAAP from the application of this Statement relate to the
definition of fair value, the methods used to measure fair value, and expanded
disclosures about fair value measurements. As of June 30, 2007, the funds do not
believe the adoption of SFAS No. 157 will significantly impact the financial
statement amounts, however; additional disclosures may be required about the
inputs used to develop the measurements and the effect of certain of the
measurements on changes in net assets for the period.
In July 2006, FASB issued FASB Interpretation No. 48 - "Accounting for
Uncertainty in Income Taxes," which requires for all entities, including
pass-through entities such as the funds, a minimum threshold for financial
statement recognition of the benefit of positions taken in filing tax returns
(including whether an entity is taxable in a particular jurisdiction), and
requires certain expanded tax disclosures. The Interpretation is required no
later than the last business day of the first financial statement reporting for
fiscal years beginning after December 15, 2006. Management is currently
evaluating the impact of this interpretation to the funds.
88
SUPPLEMENTAL INFORMATION (UNAUDITED)
FEDERAL TAX INFORMATION
For the fiscal year ended June 30, 2007, $59,356, $189,446 and $36,993 of
dividends paid by the Core Growth Fund, Value Fund and Balanced Fund,
respectively, may be subject to a maximum tax rate of 15%, as provided for by
the Jobs and Growth Tax Relief Reconciliation Act of 2003. The funds intend to
designate the maximum amount allowable as taxed at a maximum rate of 15%.
Complete information will be reported in conjunction with your 2007 Form
1099-DIV. For the tax year ended June 30, 2007, 100%, 100% and 22.23% of income
dividends paid by the Core Growth Fund, Value Fund and Balanced Fund,
respectively, 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 fund's 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.
89
SUPPLEMENTAL INFORMATION (UNAUDITED)
TABLE OF SHAREHOLDER EXPENSES
As a shareholder of the funds, you may incur two types of costs: (1) redemption
fees (for Global Equity Fund only) and (2) ongoing costs, including management
fees; distribution fees; and other fund expenses. This example is intended to
help you understand your ongoing costs (in dollars) of investing in the funds
and to compare these costs with the ongoing costs of investing in other mutual
funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period from January 1, 2007 through June 30,
2007.
ACTUAL EXPENSES
The table on the page opposite provides information about actual account values
and actual expenses. You may use the information below, together with the amount
you invested, to estimate the expenses that you paid over the period. Simply
divide your account value by $1,000 (for example, an $8,600 account value
divided by $1,000 = 8.6), then multiply the result by the number in the table
under the heading entitled "Expenses paid during period" to estimate the
expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table on the page opposite also provides information about hypothetical
account values and hypothetical expenses based on each fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare this 5% hypothetical example
with the 5% hypothetical examples that appear in the shareholder reports of
other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees and other individual shareholder fees mentioned in the
prospectus. Therefore, the table is useful in comparing ongoing costs only, and
will not help you determine the relative total costs of owning different funds.
In addition, if these transactional costs were included, your costs would have
been higher.
90
JUNE 30, 2007
EXPENSES ANNUALIZED
BEGINNING ENDING PAID DURING EXPENSE RATIO
ACCOUNT ACCOUNT PERIOD (1) DURING THE PERIOD
VALUE VALUE 01/01/07 -- 01/01/07 --
01/01/07 06/30/07 06/30/07 06/30/07
--------- --------- ----------- -----------------
CORE GROWTH FUND
Standard -- actual $1,000.00 $1,091.60 $ 7.73 1.49%
Standard -- hypothetical 1,000.00 1,017.41 7.45 1.49%
Institutional -- actual 1,000.00 1,095.50 4.00 0.77%
Institutional -- hypothetical 1,000.00 1,020.98 3.86 0.77%
Administrative -- actual 1,000.00 1,093.80 5.61 1.08%
Administrative -- hypothetical 1,000.00 1,019.44 5.41 1.08%
EMERGING GROWTH FUND
Standard -- actual $1,000.00 $1,111.90 $ 9.74 1.86%
Standard -- hypothetical 1,000.00 1,015.57 9.30 1.86%
Institutional -- actual 1,000.00 1,114.40 7.29 1.39%
Institutional -- hypothetical 1,000.00 1,017.90 6.95 1.39%
Administrative -- actual 1,000.00 1,114.00 8.07 1.54%
Administrative -- hypothetical 1,000.00 1,017.16 7.70 1.54%
SMALL CAP CORE GROWTH FUND
Standard -- actual $1,000.00 $1,123.40 $ 7.53 1.43%
Standard -- hypothetical 1,000.00 1,017.70 7.15 1.43%
VALUE FUND
Standard -- actual $1,000.00 $1,093.60 $ 6.70 1.29%
Standard -- hypothetical 1,000.00 1,018.40 6.46 1.29%
Institutional -- actual 1,000.00 1,095.70 4.68 0.90%
Institutional -- hypothetical 1,000.00 1,020.33 4.51 0.90%
GLOBAL EQUITY FUND
Standard -- actual $1,000.00 $1,084.00 $10.08 1.95%
Standard -- hypothetical 1,000.00 1,015.12 9.74 1.95%
Institutional -- actual 1,000.00 1,087.80 6.99 1.35%
Institutional -- hypothetical 1,000.00 1,018.10 6.76 1.35%
Administrative -- actual 1,000.00 1,085.30 8.53 1.65%
Administrative -- hypothetical 1,000.00 1,016.61 8.25 1.65%
BALANCED FUND
Standard -- actual $1,000.00 $1,063.50 $ 6.65 1.30%
Standard -- hypothetical 1,000.00 1,018.35 6.51 1.30%
INCOME FUND
Standard -- actual $1,000.00 $1,002.80 $ 7.20 1.45%
Standard -- hypothetical 1,000.00 1,017.60 7.25 1.45%
MONEY MARKET FUND
Standard -- actual $1,000.00 $1,021.90 $ 4.61 0.92%
Standard -- hypothetical 1,000.00 1,020.23 4.61 0.92%
Institutional -- actual 1,000.00 1,023.10 3.46 0.69%
Institutional -- hypothetical 1,000.00 1,021.37 3.46 0.69%
(1) Expenses equal the average account value times the fund's annualized
expense ratio multiplied by 181/365 (to reflect the one-half year period).
91
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 30, 2007. This approval was
based on the following conclusions:
(i) that the adviser has the capabilities, resources and personnel necessary to
provide the advisory services currently provided to each fund; and
(ii) that the advisory fees paid by each fund represent reasonable compensation
to the adviser in light of the services provided, the costs to the adviser
of providing those services, the fees paid by similar funds, and such other
matters as the trustees considered relevant in the exercise of their
reasonable judgment, and represent an appropriate sharing at the present
time between fund shareholders and the adviser of any economies of scale in
the management of each fund at current asset levels.
In advance of the meeting, the independent trustees, through their independent
legal counsel, submitted to the adviser a written request for information in
connection with their consideration of the funds' management agreements. The
requested information was provided by the adviser in advance of and at the board
meeting. In preparation for the board meeting, the independent trustees met with
their counsel to discuss the proposed continuance of the funds' management
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 relationship to the funds; (ix) information about fees
charged by the adviser to other clients with similar investment objectives; (x)
the
92
professional experience and qualifications of each fund's portfolio management
team; and (xi) the terms of the management agreement.
The adviser has informed the board that it is considering a sale of its
investment advisory business. At the meeting, the board received a progress
report from the adviser on the status of the possible sale. In its consideration
of the selection of the adviser, the board took into account the possible sale
and the potential impact of a possible sale on portfolio management, shareholder
services, retention of personnel of the adviser, and the funds' fees and
expenses. The trustees noted that any sale of the adviser's business would
result in the termination of the funds' existing management agreements and that
new management agreements that would take effect upon such a sale would be
subject to board and shareholder approval.
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 and record, 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 allocation of additional portfolio management personnel to certain funds.
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 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
93
SUPPLEMENTAL INFORMATION (UNAUDITED)
BOARD APPROVAL OF INVESTMENT
MANAGEMENT AGREEMENT (CONT.)
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 it is a fair entrepreneurial profit for managing
each fund. The board noted that there appeared to be a reasonable basis for the
methodology underlying the adviser's profitability analysis and that the
profitability with respect to each fund did not appear to be excessive.
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 trustees reviewed detailed comparative
performance information for each fund and considered information showing
performance of each fund versus one or more selected securities indices over the
one-, three-, five- and ten-year periods ended March 31, 2007 (or those relevant
periods in which the applicable fund existed) and each fund's Lipper ranking
among like funds. The comparative information showed that: the Core Growth Fund
underperformed the applicable indices for the one-, three-, five- and ten-year
periods; the Emerging Growth Fund underperformed the applicable index for the
one-, three- and five-year periods and outperformed the index for the ten-year
period; the Small Cap Core Growth Fund underperformed the applicable index for
the one-, three- and five-year periods, but outperformed the index for the since
inception period; the Value Fund outperformed the applicable index for the one-
and three-year periods, but underperformed the index for the five- and ten-year
periods; the Global Equity Fund underperformed
94
the applicable index for the one-, three-, five- and ten-year periods; the
Balanced Fund underperformed the blended index for the one- and three-year
periods; the Income Fund underperformed the applicable index for the one-,
three-, five- and ten-year periods; and the Money Market Fund's seven and thirty
day yields were slightly lower than the average seven and thirty day yields of a
comparable universe of funds.
The trustees considered the recent changes made by the adviser in the portfolio
management teams of the Core Growth and Balanced Funds and the enhancement of
the investment process of each fund. They noted the improved performance of each
fund since the changes had been implemented in that each of these funds
outperformed their respective indices for the three-month period ended March 31,
2007. The trustees considered the Value Fund's strong one- and three-year
performance, and noted that the fund had been subadvised for a portion of the
five- and ten-year periods. With respect to the Global Equity Fund, the trustees
considered the adviser's one-year tenure as the in-house portfolio manager of
the fund and noted an improvement in the fund's Lipper ranking. With respect to
the Income Fund, the trustees considered the adviser's 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. The board also reviewed the funds' fees and expense ratios
versus a universe made up of funds with the same Lipper investment
classification and objective (Lipper universe), a smaller group of comparable
funds selected by Lipper (Lipper peer group), and certain comparable SRI 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. It was noted that the
adviser was not managing any accounts with similar investment objectives to the
funds.
95
SUPPLEMENTAL INFORMATION (UNAUDITED)
BOARD APPROVAL OF INVESTMENT MANAGEMENT AGREEMENT (CONT.)
The Lipper comparative information showed that: the 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 total expenses for Standard Class shares were above the median).
The trustees noted that the Emerging Growth Fund's administration fee was equal
to the Lipper universe and peer group median, while the fund's management fee,
total management and administration fees and total expenses were higher than the
medians. They further noted that the Emerging Growth Fund's fees and expense
ratio were reasonable in light of the nature, extent and quality of the services
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. The trustees noted that the Value Fund's
administration fee, total management and administration fees and total expenses
were equal to or below the Lipper universe and peer group medians, while the
fund's management fee was slightly higher than the medians (except that the
total management and administration fees were higher than the Lipper universe
median). The trustees further noted that the fund's total expenses had been
reduced as a result of the adviser's contractual agreement to limit the fees and
expenses of the fund. The trustees noted that the Global Equity Fund's
management fee, administration fee, total management and administration fees and
total expenses were higher than the Lipper universe and peer group medians. The
trustees concluded that the fund's fees and expense ratio were reasonable in
light of the nature, extent and quality of the services the fund receives and
the other factors considered. It was noted that the Balanced Fund's management
fee was equal to or less than the Lipper medians and the fund's administration
fee and total management and administration fees were below the Lipper peer
group medians. The trustees further noted that the fund's administration fee and
total management and administration fees were higher than the Lipper universe
medians and that the total expenses were equal to or higher than the Lipper
medians. They noted that the Income Fund's management fee, administration fee,
total management and administration fees and total expenses were higher than the
Lipper peer group and universe medians. The trustees had a detailed discussion
regarding the fund and noted that while the fund's fees and expense ratio were
high, cutting fees at this time would be incompatible with the decision to hire
a subadviser for the fund.
96
The trustees concluded that the Income Fund's fees and expense ratio were
reasonable in light of the nature, extent and quality of the services the fund
receives and the other factors considered. They noted that the Money Market
Fund's management fee, administration fee, total management and administration
fees and total expenses were equal to or higher than the Lipper universe and
peer group medians. The trustees concluded that the fund's fees and expense
ratio were reasonable in light of the size of the fund.
The board next considered, in light of current asset levels and current
circumstances, whether breakpoints in the fee structure for each fund were
appropriate, and determined that the 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, 2007.
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.
97
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 Funds, since 3/95.
51 President 1991-1998 and Majority Owner and Chair of Board of
since 8/02, Chair of Board Directors, Citizens Advisers, Inc., since
1/02-8/02 12/91. President, Citizens Advisers, Inc.,
and Citizens Securities, Inc., 12/91-9/98
and since 7/02. Chair of the Board of
Directors, Citizens Securities, Inc., since
12/91. President, Northpoint Technology,
Ltd., 1/97-6/02. Chair of the Board of
Directors, Northpoint Technology, Ltd.,
since 6/02.
INDEPENDENT TRUSTEES
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 Retired; formerly Executive Vice President
57 Chair since 8/04 for Corporate Operations and Chief
Vice Chair 8/02-8/04 Financial Officer, American Heart
Association, 5/96-12/06.
Jeannie H. Diefenderfer Trustee since 5/01 Vice President, Verizon Business, since
46 1/06. Senior Vice President, Verizon, 8/04-
12/05. Vice President, Verizon, 8/01-7/02.
Pablo S. Eisenberg Trustee since 12/99 Senior Fellow, Public Policy Institute,
75 Georgetown University, since 6/98.
Orlando Hernandez Trustee since 8/01 Retired; formerly Vice President of Finance,
60 Texas Instruments, 5/76-4/01.
Martha S. Pope Trustee since 12/99 Trustee, National Park Foundation, since 8/00.
62 Chair 8/02-8/04 Trustee, Hofstra University, since 6/00.
Henry L.P. Schmelzer Trustee since 11/05 President and CEO, Maine Community
64 Foundation, since 2/00. Director, Maine
Bank & Trust, since 9/95. Trustee, Fisher
Charitable Foundation, since 9/01.
(1) Sophia Collier is an interested person of the funds by virtue of her
position with the funds' investment adviser.
98
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
- ------------ -------------------------- ----------------------------------------------
Robert Silva Assistant Treasurer since Assistant Vice President, Citizens Advisers,
41 2/07 Inc., since 1/07. Director, Citizens Advisers,
Inc., 9/05-1/07. Senior Fund Administrator,
Citizens Advisers, Inc., 5/02-9/05.
Marcia Kovalik Chief Compliance Officer General Counsel, Citizens Advisers, Inc.,
44 since 8/04 since 1/07. Vice President, Citizens Advisers,
Secretary since 5/03 Inc., 4/03-12/06. Counsel, Citizens Advisers,
Inc., 2/01-4/03.
The funds' statement of additional information includes additional information
about the trustees and officers and is available, without charge, by calling
800.223.7010.
99
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 shareholder service 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.
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, 2007 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.
100
NOTES
(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
Citi 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
(CO-OP AMERICA LOGO)
APPROVED FOR PEOPLE AND PLANET
Citizens Funds are distributed by Citizens Securities, Inc., Portsmouth, NH
03801 and are available through such popular mutual fund supermarkets as Charles
Schwab's Mutual Fund OneSource(R) and Fidelity Investments' FundsNetwork(R).
Citizens Funds(R) is a trademark of Citizens Advisers, Inc.
This report is intended for shareholders of Citizens Funds and is not authorized
for distribution to other persons unless accompanied or preceded by a
prospectus.
PLEASE CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES OF
CITIZENS FUNDS CAREFULLY BEFORE INVESTING. FOR THIS AND OTHER INFORMATION,
PLEASE VISIT WWW.CITIZENSFUNDS.COM OR CALL 800.223.7010 FOR A FREE PROSPECTUS
AND READ IT CAREFULLY BEFORE INVESTING.
(C) 2007 CITIZENS ADVISERS, INC.
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions. This 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, principal
financial officer, principal accounting officer or controller, or persons
performing similar functions; there have been no amendments to, nor any waivers
granted from, a provision that relates to any element of the 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, 2006 and June 30,
2007, PWC billed audit fees to the registrant in the amount of
$124,000 and $127,750, respectively.
(b) Audit Related Fees. None
(c) Tax Fees. For the fiscal years ended June 30, 2006 and June 30, 2007,
PWC billed tax fees to the registrant in the amount of $33,855 and
$31,060, 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, 2006 and June 30, 2007, 100%
of all 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 (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) 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.
(Registrant) Citizens Funds
By (Signature and Title)* /s/ Sophia Collier
-------------------------------------
President
Date August 24, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ Sophia Collier, President
-------------------------------------
Date August 24, 2007
By (Signature and Title)* /s/ Robert Silva, Assistant Treasurer
-------------------------------------
Date August 24, 2007
* Print the name and title of each signing officer under his or her
signature.