Rule 497(c)
File Nos. 2-80886
811-3626
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October 31, 1996 Citizens Trust
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OUR PORTFOLIOS:
This Prospectus relates solely to the Institutional Shares of the Working
Assets Money Market Portfolio and the Citizens Index Portfolio. It sets forth
concisely the information that a prospective investor ought to know before
investing and should be retained for future reference.
WORKING ASSETS MONEY MARKET PORTFOLIO'S objective is current income consistent
with safety and liquidity. WE SEEK TO MAINTAIN A STABLE $1.00 NET ASSET VALUE
PER SHARE AT ALL TIMES, ALTHOUGH THERE IS NO ASSURANCE THAT WE WILL BE ABLE TO
DO SO. SHARES ARE NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT.
CITIZENS INDEX PORTFOLIO is a market weighted portfolio of 300 companies, with
the objective of long-term capital appreciation.
TABLE OF CONTENTS
Introduction: Our Portfolios .........................................1
Fee Information .......................................................2
Financial Highlights ..................................................3
How We Select Our Investments .........................................4
Investment Objectives, Policies and Risk Factors ......................5
Organization and Management of the Trust ..............................7
How to Purchase and Redeem Shares .....................................9
Shareholder Services .................................................11
Dividends, Distributions and Taxes ...................................12
NO LOAD
All portfolios are no load. All portfolios are subject to 12b-1 fees.
MINIMUM INVESTMENT.
The minimum initial investment in Institutional Shares is $100,000.
STATEMENT OF ADDITIONAL INFORMATION.
We also have a "Statement of Additional Information" dated the same date
as this Prospectus, which provides detailed information on investment and
operational policies. This booklet has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by reference. We
will be happy to send you a free copy if you write to us at:
Citizens Trust
One Harbour Place Portsmouth, NH
03801
For Shareholder Service and
New Account Information:
1-800-223-7010
For Broker-Dealer Sales & Service:
1-800-982-7200
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Citizens Investment Trust, the Trust, is an open-ended, diversified
mangement company. Shares are not insured by the Federal Deposit
Insurance Corporation (FDIC) or any other agency.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED ON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Fee Information
The following chart is set up in a standard format that has been
developed by the SEC and is used by all mutual funds. This chart will enable
you to easily compare the fees and costs of Citizens Trust with other mutual
funds.
This information is intended to assist you in understanding your various
direct and indirect costs and expenses of a $1,000 investment in the
institutional Classes. The example should not be considered a representation of
past or future expenses or past or future return. Actual expenses and actual
return may be greater or less than those included in the example below.
The expenses and example shown below pertain only to the Institutional
Shares of the Working Assets Money Market Portfolio and the Citizens Index
Portfolio.
EXPENSE TABLE INSTITUTIONAL SHARES
WORKING ASSETS CITIZENS
MONEY MARKET INDEX
Shareholder Transaction Expenses
Maximum Sales Load Imposed on Purchases
(as a % of offering price) None None
Maximum Sales Load Imposed on Reinvested
Dividends (as a % of offering price) None None
Deferred Sales Load (as a % of amount redeemed) None None
Redemption Fees (as a % of amount redeemed) None None
Exchange Fee (per exchange) None None
Costs For Other Services
Returned checks (All portfolios): $10.00
Outgoing wire transfer (All portfolios): $10.00
Stop payments: $10.00
Annual Portfolio Operating Expenses
Management Fee ......................................0.35% 0.50%
Distribution Expense (12b-1 Fee).....................0.00% 0.00%
Other Expenses ......................................0.20% 0.60%
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Total Operating Expenses...........................0.55% 1.10%
Example: You would have paid the following expenses on a $1,000 investment
assuming a 5% annual return and redemption at the end of each period:
1 Year 3 Years
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Working Assets Money Market Portfolio $6 $18
Citizens Index Portfolio $11 $35
The example should not be considered a representation of past or future
expenses or past or future return. Actual expenses and actual return may be
greater or less than those included in the example above.
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
WORKING ASSETS
MONEY MARKET CITIZENS INDEX
PORTFOLIO PORTFOLIO
Institutional Class* Institutional Class***
<S> <C> <C>
Year Ended June 30 1996 1996
NAV, Beginning of period $1.00 $10.00
Net Income (Loss) 0.02 0.08
Net Gains (Losses) on Securities
(both realized and unrealized) 0 .92
Total from Investment Operations 0.02 1
Dividends (from Net Income) 0.02 0
Total Distributions (0.02) 0
Net Asset Value, End of period $1.00 $11.00
Total Return 2.09% 10.00%
Net Assets End of Period (in 000's) $14,539 $7,524
Ratio of Expenses to Average Net Assets 0.50%** 1.01%**
Ratio of Net Income (Loss) to Average Net Assets 5.16% 2.37%**
Portfolio Turnover Rate N/A 64.95%
* Commencement of Operations February 1, 1996
** Annualized
*** Commencement of Operations January 25, 1996
</TABLE>
<PAGE>
A partner at the firm Tait, Weller & Baker, Jim Mahoney has served as the
Trust's Certified Public Accountant and Auditor since 1986.
"While I have learned that most people do not share my fascination with
tables of numbers, I think two columns from the `Financial Highlights' table
should be of interest to any prospective investor. They reflect the two ways
your shares can earn you money. They are Net Income and Net Asset Value. Your
share of the Trust's Net Income can be paid to you in cash or be reinvested in
the Trust. In order to realize your profits from increases in Net Asset Value,
you will need to sell your shares."
ABOUT THE "FINANCIAL HIGHLIGHTS" TABLE
The "Financial Highlights" on the preceeding page are for the fiscal year
ended June 30, 1996. The complete statements and our auditor's opinion on the
condensed financial information for the most recent five years appear in the
1996 Annual Report to Shareholders for each of the portfolios and are part of
this prospectus. For a copy of the Annual Report, please call the Trust's
toll-free number. It contains a full discussion of each portfolio's
performance.
HOW WE SELECT OUR INVESTMENTS
FINANCIALLY SOUND
Citizens Trust has certain policies that we consider fundamental such as
consistently applying both social and financial screens to all our investment
decisions. This, together with each portfolio's investment objective and other
technical investment policies described in the Statement of Additional
Information, cannot be changed without the approval of a majority of the
outstanding shares of each portfolio that would be affected by the change. In
addition to the specific policies for each portfolio, we also have some general
policies that we use to manage all of our portfolios.
SOCIALLY RESPONSIBLE
We are always seeking profitable investments for our shareholders. To
find them, we favor companies which make good and useful products and have
positive environmental, community and workplace records. We avoid companies
which engage in discrimination or union busting; whose primary business is the
manufacture of alcohol, tobacco, firearms or nuclear power; and those that use
animals to test personal care products or otherwise treat animals in an
inhumane manner.
ADDITIONAL INVESTMENT POLICIES
We try not to put all our eggs in one basket. This means that 75% of a
portfolio's assets will never hold more than 5% of any one company. We do not
invest more than 25% of the value of any one portfolio in one industry with the
exception of securities of U.S. government agencies or enterprises, or in our
money market portfolios, domestic banks.
We believe Citizens Trust's role is to be a conscientious and alert
investor, not a controlling manager; therefore, across all our portfolios, we
will not accumulate more than 10% of the voting securities of any one company.
We sometimes purchase securities issued by companies that do not trade in
the public market. To obtain a good investment balance, we will limit these and
all other illiquid securities to a total of no more than 10% of each
portfolio's assets.
<PAGE>
Each of our portfolios may, from time to time, invest in money market
securities such as the ones we use in our money market funds.
Each portfolio may temporarily borrow money from banks (and pledge its
assets to secure such borrowing) to meet redemption requests, or for other
purposes. We will keep this borrowing down to no more than 10% of the value of
each portfolio's total assets and make no purchases while we have any
outstanding loans.
DANITA WRIGHT
The primary Manager of the Working Assets Money Market Portfolio, Danita is an
associate at GMG/Seneca Capital Management where she has worked since 1990.
Previously, Danita was employed by Merus Capital Management, L.P. Here she
explains the investment approach that she and our other managers use in
managing the Working Assets Money Market Portfolio:
"Our goal is to earn a market rate of return (or better) for our
shareholders by investing in financially attractive companies whose operations
have a positive impact on the human and natural environment."
INVESTMENT OBJECTIVES, POLICIES, AND RISK FACTORS
WORKING ASSETS MONEY MARKET PORTFOLIO
Objective: Current income consistent with safety and liquidity.
This is a good vehicle for short-term cash management and for investors
who need stability of principal. Checking services are available.
In our money market portfolios, we only invest in short-term money market
instruments (short-term debt issued by branches of the government,
corporations, banks, or other financial institutions) that we believe present
minimal risk and we maintain a weighted average maturity of 90 days or less for
the portfolio as a whole.
U.S. GOVERNMENT SECURITIES
When we look at government securities, we only buy those that are issued
or guaranteed, as to both interest and principal, by agencies or other
enterprises of the United States government.
COMMERCIAL PAPER
We will also buy high quality "commercial paper," which is short-term
debt issued by well-established corporations. One hundred percent of this
short-term debt must be rated A-1 by Standard & Poor's Corporation or have a
comparably high rating by another nationally recognized rating service. If a
security is only rated by one agency, it must be rated in one of the two
highest ratings by that agency. If a security is not rated, it must be as good
as A-1 in our judgment. We also use our own research and experience to help
assure our money market securities have only a minimal credit risk.
<PAGE>
Other types of debt that offer us a yield advantage are sometimes issued
by banks. These include certificates of deposit, time deposits, and bankers'
acceptances of U.S.
banks or thrift institutions.
CITIZENS INDEX PORTFOLIO
Objective: A market weighted portfolio of 300 companies, with the
objective of long-term capital appreciation (Income from dividends will be
similar to the income of the S&P 500).
EDWIN EK
Edwin spent eight years at Wilshire Associates before joining the
RhumbLine team in October, 1994. He oversees the day to day operations of the
Citizens Index Portfolio. Here Edwin explains the investment objectives,
policies, and risk factors of the Portfolio.
"The Citizens Index Portfolio is highly diversified, both by industry and
in the number of individual companies. We think it presents lower risk than a
portfolio with fewer holdings or more industry concentration."
The Citizens Index Portfolio is invested in 300 companies that make up
the Citizens Index. We believe these companies best represent their industries.
Approximately 200 are very large companies that are also included in the S&P
500. The others are companies selected in order to provide industry diversity
that we believe is essential to a sound investment program.
On a day-to-day basis, the portfolio is run by purchasing and holding
common stock of all the companies in the Index in a percentage, as closely as
possible, equal to each security's total market value divided by the total
market value of all the companies in the Index. In addition, under normal
circumstances the portfolio will usually hold a small amount of cash or money
market instruments (no more than 5%) resulting from shareholder purchase and
redemption activity and a provision for operating expenses. Holding this cash,
together with the costs of operations, will prevent us from ever perfectly
tracking the theoretical performance of the underlying Index. Payment of our
operating expenses will reduce returns. Our small allocation to cash will
improve returns when the market is heading down and hurt them when the market
is moving up.
Companies will be deleted from the Index and divested from the portfolio
if they fail our annual social responsibility review. If a company is removed
we will replace it with another company from the same industry which meets all
social criteria. In addition, from time to time we may make other small changes
in the Index to include, for example, exceptional companies, or to reflect
changes in the composition of the S&P 500. We do not expect these changes to
exceed 10% of the members of the Index on an annual basis.
RISK FACTORS
Like all stock funds, the Net Asset Value of the Citizens Index Portfolio
will fluctuate based on market and economic conditions, or other factors that
affect particular companies or industries.
We are always pleased to send interested investors a current list of the
members of our Index.
ADDITIONAL INVESTMENT POLICIES
We try not to put all our eggs in one basket. This means that 75% of a
portfolio's assets will never hold more than 5% of any one company. We do not
invest more than 25% of the value of any one portfolio in one industry with the
exception of securities of U.S. government agencies or enterprises, or in our
money market portfolios, domestic banks.
<PAGE>
We believe Citizens Trust's role is to be a conscientious and alert
investor, not a controlling manager; therefore, across all our portfolios, we
will not accumulate more than 10% of the voting securities of any one company.
We sometimes purchase securities issued by companies that do not trade in
the public market. To maintain a good investment balance, we will limit these
and all other illiquid securities to a total of no more than 10% of each
portfolio's assets.
Each of our portfolios may, from time to time, invest in money market
securities such as the ones we use in our money market funds.
Each portfolio may temporarily borrow money from banks (and pledge its
assets to secure such borrowing) to meet redemption requests, or for other
purposes. We will keep this borrowing down to no more than 10% of the value of
each portfolio's total assets and make no purchases while we have any
outstanding loans.
ORGANIZATION AND MANAGEMENT OF THE TRUST
Citizens Investment Trust, or, as it is affectionately known, Citizens
Trust, began its existence as Working Assets Money Fund on November 24, 1982.
The Trust is the type of organization that is commonly known as a mutual fund
or, more technically, a Massachusetts business trust and an open end investment
company, registered under the Investment Company Act of 1940 as a diversified
management company. Citizens Trust is a "series" company. This means that our
Trust can have several portfolios, each with its own investment objectives,
assets, and liabilities.
With an institutional class of shares we are able to offer institutional
investors an opportunity to invest their money with lower overall expenses.
Both the Working Assets Money Market Portfolio and the Citizens Index Portfolio
also offer a retail class of shares with expense levels different from those of
the institutional classes of shares, which may affect the performance of each
class. To obtain additional information about the retail classes of shares,
please call us toll free at 1-800-223-7010.
In order to manage the Trust on a day-to-day basis, we have signed a
Management Agreement with Citizens Advisers, which has served as the Trust's
Adviser since its inception in 1982. This relationship is one of the most
important of all the Trust's contracts. Citizens Securities, a subsidiary of
Citizens Advisers, serves as the Trust's Distributor.
SOPHIA COLLIER
Sophia Collier owns a majority share of Citizens Advisers, our Investment
Adviser. She also serves as its manager. Here she explains the role of the
management company:
Our responsibility at Citizens Advisers is to translate the Trust's
fundamental policies into a workable investment program and to administer this
program in a smooth and friendly manner.
We have two offices. One is located at 111 Pine Street, San Francisco, CA
94111; the other is One Harbour Place, Portsmouth, NH 03801.
OWNERS
Citizens Advisers and its subsidiary, Citizens Securities, are both
California corporations. I individually own 60% of the outstanding stock of
Citizens Advisers. My fellow shareholders are three brothers, John P. Dunfey,
Robert J. Dunfey, Sr., and Gerald F. Dunfey, who own 12% each, and one of our
friends, William B. Hart, who owns 4%. Citizens Advisers owns 100% of Citizens
Securities.
THE ROLE OF INVESTMENT ADVISER
In our role as Investment Adviser to the Trust we determine which
companies meet our social and financial criteria and therefore will be approved
for inclusion in the Trust's portfolios. To assist us with actual portfolio
management we have retained several "sub-advisers" to determine which
securities should be bought and sold for the individual portfolios. In addition
to our work as Investment Adviser, we also provide additional administrative
functions as needed.
<PAGE>
GMG/SENECA CAPITAL MANAGEMENT, L.P.
Our sub-adviser for the Working Assets Money Market Portfolio is
GMG/Seneca Capital Management. A registered investment adviser established in
1990, GMG/Seneca manages over $2 billion for its clients. GMG/Seneca's offices
are located at 909 Montgomery Street, San Francisco, CA. The firm has
significant experience in fixed income management and equity selection. GMG/
Seneca ranked among the top 20 managers in America in the categories
"Intermediate term fixed income" and "Mid-cap growth" in the 1993 edition of
Nelson's America's Best Money Managers.
GMG/Seneca Capital Management is organized as a California limited
partnership. It has two general partners, Gail Seneca and Genesis Merchant
Group, L.P., an Illinois Limited Partnership. Genesis Merchant Group, in turn,
has four general partners: William K. Weinstein, Gail Seneca, Paul Jones, and
Philip C. Stapleton. Prior to starting GMG/ Seneca, Gail was employed by Wells
Fargo Bank as a senior investment officer.
RHUMBLINE ADVISERS, INC.
The Citizens Index Portfolio is sub-advised by RhumbLine Advisers, a
registered investment adviser established in 1990 with offices at 30 Rowes
Wharf, Boston, MA. RhumbLine is owned in excess of 97% by J.D. Nelson, who is
also an interested trustee of the Trust.
Citizens Advisers also provides administrative services and acts as the
Trust's distributor through its subsidiary, Citizens Securities.
HOW THE TRUST'S FINANCES WORK
Azie Taylor Morton, chair of the Audit Committee, explains the Citizens
Advisers fee structure:
One of the Trust's most important contracts is its Management Agreement
with Citizens Advisers. This agreement specifies fees to be paid to Citizens
Advisers. These fees are based upon average annual net assets and are 35/100 of
1% for the Working Assets Money Market Portfolio and 50/100 of 1% for the
Citizens Index Portfolio. Citizens Advisers provides all office space,
facilities, equipment, and personnel necessary to do its job as Investment
Adviser.
Citizens Advisers is also responsible for all fees paid to sub-advisers.
It pays GMG/Seneca Capital Management 8/100 of 1% of average annual net assets
and pays RhumbLine Advisers based on 10/100 of 1% of average annual net assets.
INSTITUTIONAL SHARE EXPENSES
Institutional Shareholders will pay their pro rata portion of expenses of
the Portfolio ("Portfolio Expenses"), as well as any expenses attributable to
Institutional Shares only ("Class Expenses").
Citizens Advisers may from time to time enter into agreements and make
payments to other third party providers of Trust-related advisory and
administrative services.
Citizens Advisers also provides administrative services to the Trust
under a separate administrative contract. This contract provides for payment to
the management company of `market price' (a price comparable to the cost to the
Trust from an unaffiliated vendor) for services contracted with the Trust and
reimbursement of out-of-pocket expenses.
<PAGE>
Services provided by Citizens Advisers and paid for by the Trust under
this agreement include, but are not limited to, shareholder servicing and
subaccounting, telephone charges, services related to the organization of new
portfolios, and blue sky reporting services. Citizens Advisers may at times
perform services provided under this agreement directly, or may contract to
have such services provided by a third party. Under the administrative
contract, for the year ended June 30, 1996 the Trust paid $583,226 to the
adviser for its administrative services.
The individual portfolios pay all expenses not expressly assumed by
Citizens Advisers. Portfolio Expenses include, but are not limited to,
interest, taxes, audit and legal fees, custodian charges, insurance premiums,
cost of registering shares under federal laws, dues, and any litigation costs
attributable to the portfolio as a whole. When a cost is shared by several
portfolios, the staff, under the supervision of the Board of Trustees at
Citizens Advisers, will allocate it among the portfolios in a reasonable
manner.
Class Expenses include, but are not limited to, transfer agent fees, cost
of registering shares under state laws, the cost of typesetting, printing, and
distributing of shareholder reports and prospectuses sent to shareholders,
administrative expenses necessary to support the Institutional Shares, and the
cost of litigation and Trustees' fees directly related to the Institutional
Shares.
12B-1 FEES
Citizens Trust has a 12b-1 plan which allows us to reimburse Citizens
Securities and other distributors of the Trust's shares for sales-related costs
such as advertising or sales salaries up to a total of 5/100 of 1% and 7/100 of
1% of the average annual assets of the Working Assets Money Market Portfolio
and the Citizens Index Portfolio, respectively.
Sometimes Citizens Securities makes additional promotional expenditures
that are not reimbursed by the 12b-1 plan. This may include paying dealers who
employ salespeople, called "registered representatives," additional fees beyond
the 12b-1 fees or giving them non-cash incentives, such as trips or merchandise
for special promotional purposes. They may also make expense reimbursements to
non-dealers for valid promotional purposes.
VOTING RIGHTS
As shareholders, you are entitled to one vote for each full share you own
and a fractional vote for fractional shares. Shareholders of each portfolio or
Class generally vote separately on matters that only concern that portfolio or
Class. This includes, for example, the approval of a new or amended management
contract or a change in investment objectives. However, all shareholders of the
Trust vote together on the selection of trustees and accountants and other
matters as required by the Investment Company Act of 1940. The holders of
shares have no preemptive, conversion, or subscription rights, and voting
rights are not cumulative. Due to the expense and because we are not required
to do so, we do not plan to hold annual meetings of the shareholders. However,
we may hold special meetings of the Trust or of a specific portfolio when our
trustees feel it is necessary or desirable, or at the request of 10% of the
Trust's shares. We will assist shareholders in communicating with one another to
arrange such a meeting.
HOW TO PURCHASE AND REDEEM SHARES
We are available Monday through Friday from 9 AM to 8 PM, Eastern
Standard Time to assist you on the phone, or, if you wish, we can refer you to
a qualified broker or financial planner in your area who is not affiliated with
us.
<PAGE>
HOW TO BUY SHARES
It is easy to buy shares through Citizens Securities or another
participating broker/dealer.
You can pay for your investment in several ways: by check, wire transfer,
by exchange from another portfolio, or through another arrangement with your
investment dealer. If you have invested by check, you may not be able to
withdraw your funds for seven business days. Wired funds are available
immediately. See "How to Redeem Shares" for further information. We accept
checks drawn on foreign banks provided they are in U.S. dollars. However, these
checks take much longer to clear and may be subject to foreign collection
charges. If a check is returned for any reason, we will charge you a service
fee of $10.00.
When you buy shares in the Citizens Index Portfolio, you will get the Net
Asset Value next determined after we receive your check.
You can purchase both full and fractional shares, which we will round to
the nearest 1/1000 of a share. Your share balance and its value will be listed
on your Citizens Trust statement.
INVESTMENT MINIMUMS
The minimum initial investment in Institutional Shares is $100,000.
HOW TO REDEEM SHARES
We offer you several convenient ways to redeem your shares in any of the
Citizens Trust Portfolios:
CALL US: TELEPHONE EXCHANGE AND REDEMPTION
The easiest way to get access to your money is to check off the Telephone
Exchange and Redemption Option on your account application. Then, when you want
to make a redemption, you simply call us up and tell us how much you want us to
redeem. Depending upon your instructions, we will then deposit your redemption
into your account, mail you a check, or electronically transfer your redemption
to your predesignated account. We have two types of electronic transfer options
available. We can wire in one day for $10, or transfer through the automated
Clearing House (ACH) at no charge. This takes two days. You will earn dividends
up to and including the date when we receive your redemption request.
If you do select the Telephone Exchange and Redemption option, you should
be aware that even though redemption by phone is very convenient, it may
increase the risk of error or of an unauthorized party gaining access to your
account. We take care to safeguard your account in several ways. To help us
straighten out any errors, we record all telephone calls and maintain these
tapes for at least six months. To protect against unauthorized access, we offer
you the option on your account application of establishing a personal password
to use with telephone transactions. But please remember, neither the Trust, our
Advisers, nor our Transfer Agent will be responsible if we properly act on
telephone instructions we reasonably believe to be genuine.
Normally, we will send you your money on the next business day after we
receive your request. Another thing to keep in mind is that we reserve the
right to wait up to seven business days to redeem any investments that have
been made by check, or five for an electronic funds transfer. This is because
there is a "window" when a check can be returned for insufficient funds and for
an electronic funds transfer to be reversed. Funds that are wired are always
good on the day they are received. Therefore, if you need to redeem shares
within seven business days of your purchase, please invest by wire.
Your instructions to us on redemptions are normally set up through your
initial account application. You can change these instructions to us at any
time by sending us a written request accompanied by a signature guarantee from
an "eligible guarantor" and a corporate resolution or trust document when
applicable.
<PAGE>
WRITTEN REQUEST FOR REDEMPTION
If you do not want to use Telephone Exchange and Redemption, you can
still redeem your shares at any time, although the process will take longer.
Send us a written request together with your signature guarantee and a
corporate resolution or trust document when applicable. We may require further
documentation from corporations, fiduciaries, pension plans, and/or
institutional investors.
REDEEM YOUR SHARES IN PERSON THROUGH CITIZENS SECURITIES AND OTHER BROKERS
Investors may also redeem their shares through Citizens Securities or
through participating broker-dealers (who may charge a fee for this service).
Certain broker-dealers may have arrangements with the Trust that permit them to
order redemption of shares by telephone or facsimile transmission.
SHAREHOLDER SERVICES
CHECK-WRITING PRIVILEGES
When you open an account in the Working Assets Money Market Portfolio,
upon your request and a completed signature card we will send you free checks.
Although these checks are payable through a designated banking agent, your
account is not FDIC insured and your shares are subject to fluctuations in
value. You can write a check for any amount. There will be a $10.00 charge for
any checks returned for any reason.
EXCHANGE PRIVILEGE
You may make an exchange at any time and to any portfolio, provided the
portfolio is legally registered for sale in your state.
MAKING A CHANGE IN YOUR ACCOUNT
After your account is set up, you may want to make a change in one of the
options. We are pleased to assist, but will require a signature guarantee from
all registered owners of the accounts. The occasional need for a signature
guarantee is one of the most frustrating aspects of mutual fund investing,
because, in our experience, transactions which need a signature guarantee are
frequently ones that are time pressured as well. The signature guarantee is our
only way to protect your account from access by unauthorized parties. The
following transactions are the most common that require signature guarantees:
written request for redemption, authorizing telephone transaction for the first
time, changing your predesignated wire or ACH instructions, establishing or
modifying a systematic withdrawal plan, exchanges between accounts which do not
have identical titles. The following are eligible guarantors (please note,
notaries public are not eligible guarantors): commercial banks, trust
companies, credit unions, savings associations, members of domestic stock
exchange. Advance planning will make these changes go smoothly.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Unless you give us other instructions, we will automatically reinvest
your dividends and distributions at Net Asset Value in additional shares. We
can also pay your dividends and other distributions to you by check or
electronic transfer through the Automated Clearing House to your bank account.
<PAGE>
Payment of dividends and distribution of capital gains, if any, are
declared daily and paid monthly for the Working Assets Money Market Portfolio.
Payment of dividends and distribution of capital gains for the Citizens Index
Portfolio, if any, are paid annually.
HOW WE REPORT THE PORTFOLIO'S INVESTMENT RESULTS
Our Trust's president, Sophia Collier, describes how we calculate and
report the results of the Portfolio and how to compare these results with other
funds or potential investments.
TOTAL RETURN AND OTHER QUOTATIONS
When you add a Portfolio's income (or yield) together with any changes in
its Net Asset Value, this is called the Portfolio's "Total Return," which shows
you the pure investment results of that Portfolio. Our aggregate total return
will always be quoted in our advertisements in addition to any other figures.
WORKING ASSETS MONEY MARKET PORTFOLIO
Every business day Working Assets Money Market Portfolio quotes both a
"7-day yield" and a "7-day effective yield." To calculate the 7-day yield, we
take our Net Investment Income per share for the most recent 7 days (a week)
and multiply it by 52 and divide by the Net Asset Value per share (expected
always to be $1.00) to get a percentage.
We calculate "effective yield" in the same way, except we assume that you
have reinvested your dividends.
CITIZENS INDEX PORTFOLIO
To compute Total Return for the Citizens Trust Index Portfolio, we start
with the total number of shares that you can buy for $1,000 at the beginning of
the period. We then add all the additional shares that you would have purchased
within the period with reinvested dividends and distributions (this takes into
account the Portfolio's income, if any). Finally, we multiply the number of
these shares by the Net Asset Value on the last day of the period and divide
the result by the initial $1,000 investment to see our percentage gain or loss.
For periods of more than one year, we adjust the cumulative Total Return to get
an average annual Total Return.
When we quote our investment results, we will sometimes compare them to
unmanaged market indices such as the Dow Jones Industrial Average and Standard
& Poor's 500, and other data and rankings from recognized independent
publishers or sources such as Donoghue's Money Fund Report, Bank Rate Monitor,
Money Magazine, Forbes Magazine, Lipper Analytical Services, among others.
VALUATION OF SHARES
At the end of every day that the New York Stock Exchange is open, we
calculate the Portfolio's Net Asset Value per share. To calculate our Net Asset
Value, we add up the total assets of the Portfolio, subtract all liabilities
and then divide by the number of shares outstanding. While this is generally
straightforward, different types of securities require special valuation
methods. For example, in Working Assets Money Market Portfolio we seek to
maintain a $1.00 Net Asset Value. To help us with this goal we use an
accounting system called the amortized cost method to value our individual
holdings. This system is fully described in the Statement of Additional
Information.
In the Citizens Index Portfolio, where our Net Asset Value fluctuates,
most of our holdings are securities that trade on the open market. We value
<PAGE>
these at their most recent closing sale price or, if there is no closing price,
halfway between the bid and asked price. If no market quotation is available
for a given security, we have told our adviser to value that security in good
faith. If a security is maturing within 60 days, we will normally value it at
its amortized cost, which approximates market value.
TRUSTEE PROFILES
William D. Glenn II, chair of the board of trustees, is the executive director
of Continuum HIV Day Services in San Francisco.
Azie Taylor Morton, audit chair, operates an investment management firm, and
was the 36th Treasurer of the United States.
*Sophia Collier is the Trust's president and principal owner of our investment
adviser, Citizens Advisers.
Lokelani Devone is assistant general counsel at DFS Group Limited, an
international retail business group.
Juliana Eades is the executive director of the New Hampshire Community Loan
Fund, one of the country's oldest local community economic development
institutions.
*J.D. Nelson is the chief executive officer of RhumbLine Advisers, an
investment advisory firm specializing in institutional and pension assets.
Ada Sanchez is director of the Public Service and Social Change Program at
Hampshire College.
*Interested person (inside trustee)
<PAGE>
Rule 497(c)
File Nos. 2-80886
811-3626
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 31, 1996
This Statement is not a prospectus and should be read in conjunction
with the Prospectus dated the same date as this Statement of Additional
Information. A copy of the current Prospectus dated October 31, 1996,
as it may be amended from time to time, can be obtained by calling (800)
223-7010, or by writing Citizens Investment Trust (hereafter "Citizens
Trust" or the "Fund"), One Harbour Place, Portsmouth, NH 03801. This
Statement and the Fund's Prospectus may be supplemented from time to
time.
CITIZENS INVESTMENT TRUST
INSTITUTIONAL SHARES
Working Assets Money Market Portfolio
Citizens Index Portfolio
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TABLE OF CONTENTS PAGE
The Fund 2
Investment Objective and Policies 2
Other Investment Techniques 5
Factors that Affect the Value of Our Investments 7
Turnover and Portfolio Transactions 7
The Value of Our Shares 8
Information About Our Yield and Total Return 9
Total Return and Other Quotations 10
Dividends and Distributions 11
Federal Taxes 11
Additional Redemption Information 13
Trustees and Officers 14
Additional Information Regarding The Management Company 16
Investment Advisery and Other Services 16
Additional Information 18
Voting Rights 19
Shareholder and Trustee Liability 19
Custodian 19
Auditors 20
Legal Counsel 20
Financial Statements 20
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<PAGE>
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THE FUND
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Citizens Investment Trust ("Citizens Trust" or the "Fund") presently
consists of seven separate portfolios: Working Assets Money Market Portfolio,
Citizens Income Portfolio, Citizens Emerging Growth Portfolio, Citizens Global
Equity Portfolio, Muir California Tax-Free Income Portfolio, Citizens Index
Portfolio and E.fund. On May 28, 1992 the Fund, which had operated as a money
market fund since 1983, changed its name from Working Assets Money Fund, and
added the Income, Balanced and Growth Portfolios. On February 8, 1994 the
Emerging Growth and Global Equity Portfolios were added, and on February 6,
1995 the Index Portfolio was added. On May 30, 1995 the Balanced and Growth
Portfolios were acquired by the Index Portfolio. On July 1, 1995 the E.fund was
added. On October 5, 1995 the Fund changed its name from Working Assets Common
Holdings to Citizens Investment Trust.
This Statement of Additional Information relates to the Institutional
Shares of Working Assets Money Market Portfolio and the Citizens Index
Portfolio.
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INVESTMENT OBJECTIVE AND POLICIES
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The following are fundamental investment policies followed by the Working
Assets Money Market Portfolio and the Citizens Index Portfolio (each a
"Portfolio" and collectively, the "Portfolios") which supplement those listed
in the Prospectus. Any policy identified as a fundamental investment policy of
a Portfolio may be amended only with approval of the holders of a majority of
the outstanding shares of that Portfolio as defined by the Investment Company
Act of 1940 (known as the "1940 Act").
1. A Portfolio may not buy the securities of any company if the Portfolio would
then own more than 10% of the total value of all of the company's outstanding
voting securities, or if the Fund as a whole would then own more than 10% of
the total value of all of the company's outstanding voting securities. A
Portfolio may not concentrate its investments by buying the securities of
companies in any one industry if more than 25% of the value of the Portfolio's
total assets would then be invested in that industry; however, obligations
issued or guaranteed by the U. S. Government, its agencies and
instrumentalities, and obligations of domestic branches of domestic banks, are
not included in this limit.
2. A Portfolio will not invest in limited partnerships, including those which
own commodities, real estate, and oil, gas and mineral leases.
3. A Portfolio may not make loans other than pursuant to repurchase agreements.
When we buy money market instruments or loan participation interests, we are
investing, not making a loan.
4. A Portfolio may not invest for the purpose of exercising control or
management of other companies.
5. A Portfolio may not buy or continue to hold securities if our Trustees,
officers or the Directors or officers of our Adviser own more than certain
limits of these securities. If all of these people who own more than 1/2 of 1%
of the shares of a company together own more than 5% of the company's shares,
we cannot buy, or continue to own, that company's shares.
6. A Portfolio may not participate with others on a joint, or a joint and
several, basis in any trading account in any securities.
7. A Portfolio may not underwrite securities, which means we may not sell
securities for others.
<PAGE>
8. A Portfolio can borrow only under special circumstances. We do not normally
borrow money, but for temporary purposes a Portfolio may borrow from banks up
to 10% of the Portfolio's total assets. If we borrow, we can pledge our assets
up to the amount borrowed. A Portfolio cannot borrow to purchase securities or
to increase its income, but can borrow to pay for shares being redeemed so that
we do not have to sell securities we do not want to sell. Thus, a Portfolio
will not purchase any securities while the Portfolio has borrowings above 5% of
assets outstanding. The interest paid on our borrowings would reduce our net
income.
9. Subject to the provisions of our Declaration of Trust which provides that we
may issue several classes of shares in any one Portfolio, we may not issue
senior securities. We may not issue securities that have priority over others
in dividends, redemption rights, or have other privileges. We must limit our
involvement in "illiquid instruments," that is, repurchase agreements that have
a term of more than seven days, and securities that have restrictions on resale
or lack readily available market quotations, to 10% of the total value of a
Portfolio's net assets and we will buy no such securities for a Portfolio
unless the assets in the Portfolio exceed $10 million at the time of purchase.
Private Placements which may be traded under Rule 144A will not be subject to
these limitations, if our Board of Trustees finds that a liquid trading market
exists for these securities. Our Trustees will review on an ongoing basis any
determination by the Adviser to treat a restricted security as a liquid
security, including the Adviser's assessment of current trading activity and
the availability of reliable price information. In determining whether a
privately placed security is properly considered a liquid security, the Adviser
and our Trustees will take into account the following factors: (i) the nature
of the security and the nature of the marketplace trades (e.g., the time needed
to dispose of the security, the method of soliciting offers, and the mechanics
of transfer); (ii) dealer undertakings to make a market in the security; and
(iii) the number of dealers willing to purchase or sell the security and the
number of other potential purchasers. To the extent the Portfolio invests in
restricted securities that are deemed liquid, the general level of illiquidity
in the Portfolio may be increased if qualified institutional buyers become
uninterested in purchasing these securities or the market for these securities
contracts. Acquisitions of such liquid restricted securities will be made from
a list approved by our Trustees.
10. There is a limit on a Portfolio's ability to loan portfolio securities. If
a Portfolio loans securities, then it must maintain collateral at 100% of the
value of the securities and any collateral must be marketable on an exchange.
11. A Portfolio may place only 5% of its total assets in companies which have
been in operation, including operations of predecessors, for less than three
years.
The following are general (non-fundamental) policies of all Citizens Trust
Portfolios: None of the Citizens Trust Portfolios will invest in real estate
assets or interests therein, excluding readily marketable securities.
Notwithstanding investment policy 1 above, not more than 25% of the value of
the total assets of each Citizens Trust Portfolio that is not a money-market
fund will be invested in obligations of domestic branches of domestic banks.
The following discussion elaborates on the description of Working Assets
Money Market Portfolio's and Citizens Index Portfolio's investment objectives
and policies as contained in the Prospectus, including any fundamental
investment policies of a Portfolio that supplement the fundamental policies of
the Fund listed above and in the Prospectus.
WORKING ASSETS MONEY MARKET PORTFOLIO
Working Assets Money Market Portfolio, as a fundamental investment policy
of the Portfolio, may not buy any securities other than money market
securities. Thus, the Portfolio cannot buy any commodities or commodity futures
contracts, any mineral programs or leases, any shares of other investment
companies or any warrants, puts, calls or combinations of these. The Portfolio
may not buy real estate, or real estate loans, but may buy money market
securities even though the issuer invests in real estate or interests in real
estate.
<PAGE>
The following are also the present policies of Working Assets Money
Market Portfolio, but may be changed by our Trustees without a vote of the
shareholders of the Portfolio:
1. The Portfolio may invest in variable amount master demand notes, which are
obligations that permit us to invest fluctuating amounts at varying rates of
interest pursuant to direct arrangements between us and the borrower, subject
to the 10% limitation referred to in paragraph 3 below. The interest rates and
amounts involved may change daily. We have the right to increase the amount
under the note at any time up to the full amount provided by the note
agreement, or to decrease the amount; and the borrower may repay up to the full
amount of the note without penalty. Because these types of notes are direct
lending arrangements between us and the borrower, they generally will not be
traded and there is no active secondary market for these notes. However, they
are redeemable on demand, and thus immediately repayable by the borrower, at
face value plus accrued interest at any time. Our right to redeem is dependent
on the borrower's ability to pay principal and interest on demand. Accordingly,
our Adviser will consider and continuously monitor the earning power, cash flow
and other liquidity ratios of the borrower to assess its ability to meet its
obligations on demand. We will invest in these notes only if the Board of
Trustees or its designee determines that they present minimal credit risks and
are of comparable quality to commercial paper having the highest rating of
Moody's Investors Service or Standard & Poor's Corporation.
2. The Portfolio may not invest more than 10% of its assets in time deposits
maturing in more than two business days but less than seven business days.
3. The Portfolio will not enter into a repurchase agreement if it would cause
more than 10% of its assets to be subject to repurchase agreements having a
maturity of more than seven days; included in this 10% limitation would be any
illiquid securities (as described below). See "Other Investment Techniques -
Money Market Instruments and Repurchase Agreements."
4. The Portfolio will not invest more than 10% of its net assets in illiquid
securities. Generally an illiquid security is any security that cannot be
disposed of promptly and in the ordinary course of business at approximately
the amount at which the Portfolio has valued the instrument. Subject to this
limitation, our Trustees have authorized the Portfolio to invest in restricted
securities, specifically privately placed commercial paper, where such
investment is consistent with the Portfolio's investment objective, and has
authorized such securities to be considered to be liquid to the extent the
Adviser determines that there is a liquid institutional or other daily market
for such securities. For example, restricted securities which may be freely
transferred among qualified institutional buyers pursuant to Rule 144A under
the Securities Act of 1933, as amended, and for which a liquid institutional
market has developed may be considered to be liquid securities. See the
discussion relating to the purchase of illiquid securities in the section on
the fundamental investment policies of the Portfolios under "Investment
Objective and Policies" above.
The Portfolio may not sell short or buy on margin and may not write put
or call options.
PORTFOLIO QUALITY AND REQUIRED MATURITIES
Because the Working Assets Money Market Portfolio uses the amortized cost
method of valuation (see "The Value of Our Shares"), the Portfolio will not
purchase any instruments with a remaining maturity of more than 397 days (13
months), except for certain exceptions permitted by rules under the 1940 Act.
Obligations of U.S. Government agencies and instrumentalities which have a
variable rate of interest which is adjusted no less frequently than every 762
days are considered to have a maturity equal to the period remaining until the
next adjustment date. A variable rate instrument which permits us to demand
payment of the principal amount of the instrument at any time or at specified
intervals of no more than 397 days (13 months), on no more than thirty days'
notice, is deemed to have a maturity of the longer of the period remaining
until the interest rate is adjusted or the period remaining until the principal
amount will be paid to us on demand. A variable rate instrument maturing in 397
days (13 months) or less is deemed to have a maturity equal to the period
remaining until the next interest adjustment date. A floating rate instrument
with a demand feature, and which has its interest rate pegged to an identified
market interest rate, is deemed to have a maturity equal to the period of time
<PAGE>
remaining until the principal amount will be paid to us on demand, provided
that our Trustees determine that the floating rate feature insures that the
market value of the instrument will always approximate par value and that the
instrument is of high quality. Our Trustees will review our holdings of
variable rate instruments quarterly to assure themselves that these instruments
continue to be of high quality. A repurchase agreement is considered to have a
maturity equal to the period remaining until the delivery date on resale. An
instrument called for redemption is considered as maturing on the date on which
the redemption payment must be made. The Money Market Portfolio will maintain a
dollar-weighted average portfolio maturity that does not exceed 90 days.
The Money Market Portfolio intends to comply with Rule 2a7 under the 1940
Act. Under that Rule, the Portfolio may not invest more than 5% of its total
assets in the securities of any one issuer, except for U. S. Government agency
securities. In addition, we may only invest in securities which are rated
within the top two rating categories (or, if unrated, deemed by our Adviser to
be of equivalent credit quality). We may not invest more than 5% of the Money
Market Portfolio's assets in securities which are not rated in the highest
rating category by at least two nationally recognized statistical rating
organizations (for single-rated securities, one rating organization will
suffice; for unrated securities, our Adviser may rely on its own credit
equivalency assessment based upon procedures approved by our Trustees). If we
do invest in securities which are not rated in (or, if unrated, not deemed
equivalent to) the highest rating category, we will limit such investments so
that no more than 1% of the total assets of the Money Market Portfolio is
invested in securities of any one issuer rated below the highest category. In
addition, pursuant to our own credit procedures, we will not invest in any
unrated security or in any security rated by only one rating organization
unless such security is on a list approved by our Trustees.
CITIZENS INDEX PORTFOLIO
The objective of the Citizens Index Portfolio is capital appreciation by
investing in a specially designed index of 300 socially responsible companies.
The Citizens Index Portfolio invests primarily in the securities
comprising the Citizens Social Index, a market weighted index of companies
included in the S&P 500 that have passed Citizens Trust's social screens in
addition to companies that are not part of the S&P 500 but which pass our
social and financial screens. Companies outside the S&P 500 are used in the
Citizens Social Index to add industry diversity and other financial
characteristics that we believe will enable the Index to more closely track the
returns of the S&P 500 as a whole.
Securities will be purchased in a proportion equal to the weight of each
company to the total Index. At times we will also buy short-term fixed income
securities for the Citizens Index Portfolio. Under normal circumstances these
short-term investments will amount to no more than 5% of the Portfolio's total
assets. Our investment results will usually lag the performance of the
underlying Index due to short-term cash investments and the deduction of
portfolio expenses and transaction costs.
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OTHER INVESTMENT TECHNIQUES
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MONEY MARKET INSTRUMENTS AND REPURCHASE AGREEMENTS
During periods of unusual market conditions, or for liquidity purposes or
pending the investment of the proceeds of the sale of its shares, we may invest
all or a portion of assets of the Citizens Index Portfolio in money market
instruments, including: obligations of agencies and instrumentalities of the U.
S. Government; certificates of deposit of banks; and commercial paper or other
corporate notes of investment grade quality. We may also buy such securities
subject to repurchase agreements with primary dealers or banks which are
<PAGE>
members of the Federal Reserve System, secured by instruments issued or
guaranteed by the agencies or instrumentalities of the U.S. Government, the
values, including accrued interest, of which are equal to or greater than the
repurchase price agreed to be paid by the seller. The repurchase price may be
higher than the purchase price, the difference being income to the Portfolio,
or the purchase and repurchase prices may be the same, with interest at a
standard rate due to the Portfolio together with the repurchase price on
repurchase. In either case, the income to the Portfolio is unrelated to the
interest rate on the securities collateralizing the repurchase. In the event of
bankruptcy or other default by the seller of a repurchase agreement, the
underlying security constitutes collateral for the seller's obligation to pay.
However, there may be possible delays and expenses in liquidating the
securities, decline in the value of the securities and loss of principal or
interest. Nevertheless, in the opinion of our management these risks do not
outweigh the benefits of repurchase agreements.
OPTIONS TRANSACTIONS
Each Portfolio may from time to time buy and write (sell) call and put
options on securities, security indices, and foreign currencies that are traded
on recognized securities exchanges and over-the-counter markets. A call option
gives the holder (buyer) the right to purchase a security or currency at a
specified price (the exercise price) at any time until or on a certain date
(the expiration date). A put option gives the purchaser of the option the right
to sell, and the writer (seller) the obligation to buy, the underlying security
or currency at the exercise price at any time until or on the expiration date.
The premium that a Portfolio receives for buying or writing a call or put
option is deemed to constitute the market value of an option. Aggregate
premiums paid for put and call options will not exceed 5% of the Portfolio's
total assets at the time of each purchase. The premium that a Portfolio will
receive from writing a call option will reflect, among other things, the
current market price of the underlying investment, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying investment, and the length of the option period. These instruments
are often referred to as "derivatives" which may be defined as financial
instruments whose performance is derived, at least in part, from the
performance of another asset (such as a security, currency or an index of
securities). The Portfolios may use these techniques to hedge against changes
in interest rates, foreign currency exchange rates, changes in securities
prices or other factors affecting the value of their investments, or as part of
their overall investment strategies. Each Portfolio will maintain segregated
accounts consisting of liquid assets (or, as permitted by applicable
regulations, enter into certain offsetting positions to cover its obligations
under derivatives transactions) to avoid "leveraging" the Portfolio.
Risks in the use of these derivative securities depends on the Adviser's
ability to predict correctly the direction of interest rates, securities prices
or other factors. Risks include: a) the risk that interest rates, securities
prices, or other factors do not move in the directions being hedged against, in
which case the Fund will have incurred the cost of the derivative (either its
purchase price or, by writing an option, losing the opportunity to profit from
increases in the value of the securities covered) with no tangible benefits; b)
an imperfect correlation between the price of derivatives and the movements of
the securities prices, interest rates or currency exchange rates being hedged;
c) the possible absence of a liquid secondary market for any particular
derivative at any time; d) the potential loss if the counterparty to the
transaction does not perform as promised; and e) the possible need to defer
closing out certain positions to avoid adverse tax consequences.
FOREIGN SECURITIES
Each of the Portfolios may invest in foreign securities which meet our
social and financial criteria. As discussed in the Prospectus, investing in
foreign securities generally presents a greater degree of risk than investing
in domestic securities due to possible exchange rate fluctuations, less
publicly available information, more volatile markets, less securities
regulation, less favorable tax provisions, war or expropriation. As a result of
its investments in foreign securities, a Portfolio may receive interest or
dividend payments, or the proceeds of the sale or redemption of such
securities, in the foreign currencies in which such securities are denominated.
Under certain circumstances, such as where we believe that the applicable
exchange rate is unfavorable at the time the currencies are received or we
anticipate, for any other reason, that the exchange rate will improve, a
Portfolio may hold such currencies for an indefinite period of time. A
<PAGE>
Portfolio may also hold foreign currency in anticipation of purchasing foreign
securities. While the holding of currencies will permit the Portfolio to take
advantage of favorable movements in the applicable exchange rate, such strategy
also exposes the Portfolio to risk of loss if exchange rates move in a
direction adverse to the Portfolio's position. Such losses could reduce any
profits or increase any losses sustained by the Portfolio from the sale or
redemption of securities and could reduce the dollar value of interest or
dividend payments received.
WHEN-ISSUED SECURITIES
The Citizens Index Portfolio may purchase securities on a "when-issued"
or on a "forward delivery" basis. It is expected that, in many cases, a
Portfolio purchasing securities on a when-issued basis, will take delivery of
such securities. When a Portfolio commits to purchase a security on a
when-issued or on a forward delivery basis, it will set up procedures
consistent with current policies of the Securities and Exchange Commission
concerning such purchases. Since that policy currently recommends that an
amount of a fund's assets equal to the amount of the purchase be held aside or
segregated to be used to pay for the commitment, we intend that a Portfolio
will always have cash, short-term money market instruments or high quality debt
securities sufficient to cover any commitments or to limit any potential risk.
However, although we do not intend to make such purchases for speculative
purposes and we intend to adhere to current regulatory policies with respect to
such purchases, purchases of securities on such bases may involve more risk
than other types of purchases. For example, we may have to sell assets which
have been set aside to cover our commitments in order to meet redemptions.
Also, if we were to determine that it is necessary to sell the when-issued or
forward delivery securities before delivery to a Portfolio, the Portfolio may
incur a loss because of market fluctuations since the time the commitment to
purchase such securities was made. When the time comes to pay for when-issued
or forward delivery securities, a Portfolio will meet its obligations from the
then-available cash flow on the sale of securities, or, although it would not
normally expect to do so, from the sale of the when-issued or forward delivery
securities themselves (which may have a value greater or less than the
Portfolio's payment obligation).
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FACTORS THAT AFFECT THE VALUE OF OUR INVESTMENTS
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Money Market Instruments and Fixed Income Securities: The value of the
fixed income securities in which we invest will fluctuate depending in large
part on changes in prevailing interest rates. Fixed income securities comprise
all assets in the Working Assets Money Market Portfolio. If these rates go up
after we buy a security, its value may go down. On the other hand, if the rates
go down, the security's value may go up. Changes in value and yield based on
changes in interest rate may have different effects on short-term obligations
than on long-term obligations. Long-term obligations, which often have higher
yields, may fluctuate in value more than short-term ones. We do not expect
changes in interest rates to significantly affect the value of our shares in
the Working Assets Money Market Portfolio, since we use the amortized cost
method, which is described in the section "The Value of Our Shares." However,
changes in interest rates can have a significant effect on the value of
non-money market fixed income securities.
The value of equity securities held in the Citizens Index Portfolio will
fluctuate based upon market conditions and issues specific to the issuer. These
include changes in the management and fundamental financial condition of the
issuing company, prevailing economic and competitive conditions in the industry
sectors in which the company does business and other factors which affect
individual securities and the equity market as a whole.
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TURNOVER AND PORTFOLIO TRANSACTIONS
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In Working Assets Money Market Portfolio, we generally purchase
investments and hold them until they mature. Historically, securities of U.S.
Government agencies or instrumentalities have involved minimal risk when they
<PAGE>
have been held by investors to maturity. However, we may from time to time sell
securities and purchase others to attempt to take advantage of short-term
market variations. We may also sell securities prior to maturity to meet
redemptions or as a result of a revised evaluation of the issuer by our
Adviser.
For the Citizens Index Portfolio, we may purchase both equity and fixed
income securities and hold them until such time as we believe it is advisable
to sell them in order to closely track the market weightings of companies in
the S &P 500 that have passed Citizens Trust's social screens we reinvest these
assets in other securities. The Citizens Index Portfolio seeks to have a
turnover of less than 25% per year.
Our Adviser seeks to obtain for us the best net price and the most
favorable execution of orders. Purchases are made from issuers, underwriters,
dealers or brokers, and banks who specialize in the types of securities we buy.
Purchases from underwriters include a commission or concession paid by the
issuer to the underwriters. Purchases from dealers include the spread between
the bid and asked prices and purchases from brokers include commissions paid to
the broker based upon the transaction size. If the execution and price offered
by more than one dealer are comparable, the order may be given to a dealer who
has provided research advice, quotations on portfolio securities or other
services. Our Adviser will comply with Rule 17e-1 under the 1940 Act in regards
to brokerage transactions with affiliates, to assure that commissions will be
fair and reasonable to the shareholders.
Our Adviser may allocate transactions to broker/dealers in exchange for
services. By allocating transactions to obtain services, the Adviser is able to
supplement its own efforts. While it is not possible to place a dollar value on
these services, it is the opinion of the Adviser that the receipt of these
services does not materially reduce the Adviser's overall expenses. These
services may or may not be useful to us or to our Adviser and its affiliates
which engage in securities activities. For the fiscal years ended June 30,
1994, 1995, and 1996 all portfolio purchases, as described above, were made
directly from issuers or from dealers, we paid commissions in aggregate as
follows: 1994-$329,000, 1995-$250,000, 1996-$171,957.
Our Adviser also may enter into "soft dollar" arrangements with
broker/dealers. A soft dollar arrangement is one in which the brokerage
commissions generated through trading are used to purchase ancillary products
and services relating to social and investment research.
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THE VALUE OF OUR SHARES
- -------------------------------------------------------------------------------
The value of our shares is expressed as net asset value. The net asset
value per share is computed by subtracting total Portfolio and Class
liabilities from total assets and dividing that number by the total number of
our outstanding shares. All expenses are accrued daily and taken into account
in determining net asset value.
We attempt to keep the net asset value of our Money Market Portfolio
fixed at $1.00 per share, while we expect the net asset value per share in our
Citizens Index Portfolio to fluctuate.
The value of our shares is determined at 4:00 p.m. Eastern Time on each
day on which the New York Stock Exchange is open for regular trading and at
such other times as we feel may be necessary or appropriate.
WORKING ASSETS MONEY MARKET PORTFOLIO
Our Trustees have determined that it is appropriate for us to value our
Money Market Portfolio using the amortized cost method and that this method
represents the fair value of the Portfolio's shares. This method values a
security at the time of its purchase at cost and thereafter assumes a constant
amortization to maturity of any discount or premium, regardless of the impact
of fluctuating interest rates on the market value of the security. This method
does not take into account unrealized gains and losses.
<PAGE>
While the amortized cost method provides certainty in valuation, there
may be periods during which value, as determined by the amortized cost method,
is higher or lower than the price we would receive if we sold the instrument.
During periods of declining interest rates, the daily yield on our shares may
tend to be higher than a like computation made by a fund with identical
investments which uses a method of valuation based on market prices and which
reflects capital changes in its dividends. Thus, if the use of amortized cost
by us resulted in a lower aggregate portfolio value on a particular day, a
prospective investor in our shares would be able to obtain a somewhat higher
yield from us than he would from investment in the other fund, and existing
investors in our shares would receive less investment income. The converse
would apply in a period of rising interest rates.
To use the amortized cost method, our Board of Trustees must establish
procedures designed to stabilize the net asset value of the Money Market
Portfolio at $1.00 per share, to the extent reasonably possible. These
procedures must include review of the Portfolio by the Board at intervals it
deems appropriate and reasonable in the light of market conditions to determine
how much the net asset value using available market quotations deviates from
the net asset value based on amortized cost. For this purpose, when market
quotations are available, securities are valued at bid price. If market
quotations are not available, investments are valued at their fair value as
determined in good faith under procedures established by and under the general
supervision and responsibility of our Board of Trustees, including being valued
at prices based on market quotations for investments of similar type, yield and
maturity.
Under the procedures which our Trustees have adopted in connection with
valuation of our securities at amortized cost, our dividend policy will change
under certain circumstances. If on any day there is a deviation of more than
3/10th of 1% between the net asset value of a share computed on the amortized
cost basis and that computed on an available market price basis, the amount of
the deviation in excess of $0.003 will be added to or subtracted from the
dividend for that day in order to reduce the deviation to within $0.003. If on
any day the dividend is not large enough to absorb any such reduction and the
deviation is more than $0.005, our Board will be required, under a rule of the
Securities and Exchange Commission, to consider taking other action. Such
action could include the sale of portfolio securities, reducing or eliminating
dividends or establishing a net asset value per share based on market
quotations.
To use the amortized cost method, we must also limit our portfolio
investments, including repurchase agreements, to those U.S. dollar denominated
instruments which our Board of Trustees determines present minimal credit risks
and which are of "high quality," e.g., portfolio investments rated in one of the
top two rating categories by at least two rating organizations or, if not rated
or created by only one rating agency, are of comparable quality in the judgment
of our Adviser and Trustees. A rated instrument that is subject to some
external agreement (such as a bank letter of credit), which agreement was not
considered in rating the instrument, is considered unrated, and the Board of
Trustees and our Adviser will determine whether the external agreement makes
the instrument of comparable quality.
CITIZENS INDEX PORTFOLIO
As described in the Prospectus, the Citizens Index Portfolio is generally
valued on the basis of market values. Equity securities, if any, in a Portfolio
are valued at the last sales price on the exchange on which they are primarily
traded or on the NASDAQ system for unlisted national market issues, or at the
last quoted bid price for listed securities in which there were no sales during
the day or for unlisted securities not reported on the NASDAQ system. Debt
securities are generally valued at their most recent closing sale prices, or,
if there is no closing sale price, at the bid price, in the principal market in
which such securities are normally traded. Fixed income securities maturing
within 60 days are normally valued at cost, plus or minus any amortized
discount or premium. Securities and other assets for which market quotations
are not readily available (including restricted securities, if any) are
appraised at their fair value as determined in good faith under consistently
applied procedures under the general supervision of the Fund's Board of
Trustees.
<PAGE>
Securities may also be valued on the basis of valuations furnished by a
pricing service that uses both dealer supplied valuations and evaluation based
upon expert analysis of market data or other factors if such valuations are
believed to reflect more accurately the fair value of such securities.
Use of a pricing service has been approved by the Fund's Board of
Trustees. There are a number of pricing services available, and the Trustees
and officers of the Fund acting on behalf of the Trustees, may use or
discontinue the use of any pricing service now, or in the future, employed.
- -------------------------------------------------------------------------------
INFORMATION ABOUT OUR YIELD AND TOTAL RETURN
- -------------------------------------------------------------------------------
We report the investment performance of the Money Market Portfolio and
Citizens Index Portfolio in several ways. All performance reported in
advertisements is historical and not intended to indicate future returns.
YIELD
From time to time the "yield" and "compounded effective yield" of the
Portfolios may be published in advertisements and sales material. For the
Working Assets Money Market Portfolio, the yield is usually quoted for a seven
day period. For the seven-day period ended June 30, 1996 for the Institutional
Class of Working Assets Money Market Portfolio, our average seven-day yield was
5.03% and our compounded effective yield was 5.16%.
The current yield of the Money Market Portfolio for a specific period of
time is calculated based on a hypothetical account containing exactly one share
at the beginning of the period. The net change in the value of the account
during the period is determined by subtracting this beginning value from the
value of the account at the end of the period including a hypothetical charge
reflecting deductions from shareholder accounts. Capital changes (i.e.,
realized gains and losses from the sale of securities and unrealized
appreciation and depreciation) are excluded from the calculation. Because the
change will not reflect any capital changes, the dividends used in the yield
computation may not be the same as the dividends actually declared. The
dividends used in the yield calculation will be those which would have been
declared if there had been no capital changes included in our actual dividends.
The net change in the account value is then divided by the value of the account
at the beginning of the period and the resulting figure is called the "base
period return." The base period return is then multiplied by (365/7) for a
seven day effective yield with the resulting yield figure carried to the
nearest hundredth of one percent.
The "compounded effective yield" for the Money Market Portfolio is
determined by annualizing the base period return and assuming that dividends
earned are reinvested daily. Compounded effective yield is calculated by adding
1 to the base period return (which is derived in the same manner as discussed
above) raising the sum to a power equal to 365 divided by 7 and subtracting 1
from the result.
Compounded effective yield information is useful to investors in
reviewing the performance of our Money Market Portfolio since the yield is
calculated on the same basis as those of other money market funds. However, you
should take a number of factors into account in using our yield information as
a basis for comparison with other investments.
Since our Portfolio is invested in short-term money market instruments,
our yield will fluctuate with money market rates. Therefore, the compounded
effective yield is not an indication of future yields. Other investment
alternatives such as savings certificates provide a fixed yield if held full
term, but there may be penalties if redeemed before maturity, whereas there is
no penalty for withdrawal at any time in the case of our Portfolios.
<PAGE>
- -------------------------------------------------------------------------------
TOTAL RETURN AND OTHER QUOTATIONS
- -------------------------------------------------------------------------------
We also can express the investment results in terms of "total return." We
do this for the Citizens Index Portfolio to take account of fluctuations in
share value in addition to income from interest and dividends. Total return
refers to the total change in value of an investment in the Portfolio over a
specified period, while the yield calculation only reflects the income
component. We compute total return by taking the total number of shares
purchased by a hypothetical $1,000 investment after deducting any applicable
sales charge, adding all additional shares purchased within the period with
reinvested dividends and distributions, calculating the value of these shares
at the end of the period, and dividing the result by the initial $1,000
investment. For periods of more than one year, we adjust the cumulative total
return to calculate average annual total return during that period.
When we quote each Portfolio's yield or total return we are referring to
its past results and not predicting our future performance. We quote total
return for the most recent one year period as well as average annual total
return for the most recent five- and ten-year periods, or from the time when we
first offered shares, whichever is shorter. Sometimes we advertise our overall
and actual return quotations for annual or quarterly periods or quote
cumulative return for various periods. When we do this, we also always present
the standardized total return quotations at the same time.
For the period of January 25, 1996 to June 30, 1996 the Institutional
Class of the Citizens Index Portfolio had the following performance:
Hypothetical Investment
Since Inception return of $1,000 for the
Portfolio Total Return 1 year period ending 6/30/96
- --------- -------------------------------------------------------
Institutional Class
of Citizens Index
Portfolio 10.00% $1,100
When we quote our investment results we sometimes will compare them to
unmanaged market indices such as the Dow Jones Industrial Average and the
Standard & Poor's 500, and other data and rankings from recognized independent
publishers, sources such as Donoghue's Money Fund Report, Bank Rate Monitor,
Money Magazine, Forbes Magazine, Lipper Analytical Services and others.
- -------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS
- -------------------------------------------------------------------------------
WORKING ASSETS MONEY MARKET PORTFOLIO
As described in the Prospectus, net income is determined and accrued
daily and paid monthly. This dividend is payable to everyone who was a
shareholder at 4:00 p.m. Eastern time on the day the dividend is declared.
Accordingly, when shares are purchased dividends begin to accrue on the day the
Transfer Agent receives payment for the shares, provided that the payment is
received by 4:00 p.m. Eastern time. When shares are redeemed, the shares are
entitled to the dividend declared on the day the redemption request is received
by the Transfer Agent, provided that the request is received after 4:00 p.m.
Eastern time. Dividends are automatically reinvested in shares, at net asset
value, unless a shareholder otherwise instructs the Transfer Agent in writing.
Shareholders so requesting will be mailed checks in the amount of the
accumulated dividends. For the purpose of calculating dividends, our daily net
investment income consists of: (a) all interest income accrued on investments
(including any discount or premium ratably amortized to the date of maturity or
determined in such other manner as the Trustees may determine); and (b) minus
all estimated Portfolio and Class liabilities accrued, including interest,
taxes and other expense items, amounts determined and declared as dividends or
distributions and reserves for contingent or undetermined liabilities, all
determined in accordance with generally accepted accounting principles; and (c)
plus or minus all realized and unrealized gains or losses on investments.
<PAGE>
CITIZENS INDEX PORTFOLIO
The Citizens Index Portfolio normally declares and pays dividends
substantially equal to all net investment income annually. Net investment
income consists of non-capital gain income less Portfolio and Fund expenses.
Net realized short-term capital gains, if any, and net realized long-term
capital gains, if any, will be distributed by the Portfolios at least annually.
Dividends and capital gains distributions are automatically reinvested at net
asset value in additional shares, unless a shareholder elects cash
distributions. Cash distributions will be paid annually.
- -------------------------------------------------------------------------------
FEDERAL TAXES
- -------------------------------------------------------------------------------
Status as a "Regulated Investment Company." Each of the Portfolios
intends to qualify as a "Regulated Investment Company" under Subchapter M of
the Internal Revenue Code. We plan to continue this election in the future for
all Portfolios of the Fund.
To qualify for the tax treatment afforded a "regulated investment
company" under the Internal Revenue Code, a Portfolio must annually distribute
at least 90% of its net investment income and net short-term capital gains and
meet certain requirements with respect to sources of income, diversification of
assets, and distributions to shareholders. If a Portfolio elects and qualifies
for such tax treatment, the Portfolio will not be subject to federal income tax
with respect to amounts distributed. Under current law, in order to qualify, a
Portfolio must (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other disposition of stock or securities, and income from certain other
sources; (b) derive less than 30% of its gross income from the sale or other
disposition of stock, or securities and certain other investments held less
than three months; and (c) diversify its holdings so that, at the end of each
fiscal quarter, (i) at least 50% of the market value of the fund's assets is
represented by cash, U.S. Government securities, and other securities, limited,
in respect of any one issuer, to an amount not greater than 5% of the fund's
assets and 10% of the outstanding voting securities of such issuer, and (ii)
not more than 25% of the value of its assets is invested in the securities of
any one issuer (other than U.S. Government securities). Options that are held
by a Portfolio at the end of its taxable year are subject to section 1256 of
the Code and will be deemed to have been sold at market value for federal
income tax purposes. Sixty percent of any net gain or loss recognized on these
deemed sales, and 60% of any net gain or loss realized from any actual sales of
Section 1256 Contracts, will be treated as long-term capital gain or loss, and
the balance will be treated as short-term capital gain or loss.
A Portfolio that qualifies as a "qualified investment company," may
nonetheless be subject to certain federal excise taxes unless the Portfolio
meets certain additional distribution requirements. Under the Internal Revenue
Code, a nondeductible excise tax of 4% is imposed on the excess of a regulated
investment company's "required distribution" for the calendar year ending
within the regulated investment company's taxable year over the "distributed
amount" for such calendar year. The term "required distribution" means the sum
of (i) 98% of ordinary income (generally net investment income) for the
calendar year, (ii) 98% of capital gain net income (both long-term and
short-term) for the one-year period ending on October 31 (as though the
one-year period ending on October 31 were the regulated investment company's
taxable year), and (iii) the excess, if any, of the sum of the taxable income
of the regulated investment company for the previous calendar year plus all
amounts from previous years that were not distributed over the amount actually
distributed for such preceding calendar year. The term "distributed amount"
generally means the sum of (i) amounts actually distributed by a Portfolio from
the Portfolio's current year's ordinary income and capital gain net income and
(ii) any amount on which the Portfolio pays income tax for the year. We intend
to meet these distribution requirements, to avoid the excise tax liability,
with respect to each of the Portfolios. As long as a Portfolio maintains its
status as a regulated investment company and distributes all of its income, the
Portfolio will not be subject to any Massachusetts or California income or
excise tax.
<PAGE>
DISTRIBUTIONS OF NET INVESTMENT INCOME
Dividends derived from net investment income and any excess of net
short-term capital gains over net long-term capital losses will be taxable to
shareholders as ordinary income. For the Citizens Index Portfolio a portion of
these ordinary income dividends is normally eligible for the dividends received
deduction for corporations if the recipient otherwise qualified for that
deduction with respect to its holding of a Portfolio's shares. Availability of
the deduction to particular corporate shareholders is subject to certain
limitations and deductible amounts may be subject to the alternative minimum
tax and result in certain basis adjustments. Since the investment income of the
Working Assets Money Market Portfolio is derived from interest rather than
dividends, no portion of the dividends received from this Portfolio will be
eligible for the dividends received deduction. Moreover, to the extent that a
Portfolio derives investment income from sources within foreign countries, such
Portfolio's dividends and distributions will not qualify for such deduction.
Shareholders will be taxed for federal income tax purposes on dividends
in the same manner whether such dividends are received as shares or in cash.
Distributions from the Portfolios will also be included in individual and
corporate shareholders' income on which the alternative minimum tax may be
imposed.
Any dividend or distribution (except for dividends of net investment
income declared by the Money Market Portfolio) will have the effect of reducing
the per share net asset value of shares in a Portfolio by the amount of the
dividend or distribution. Shareholders purchasing shares in any of the
Portfolios shortly before the record date of any taxable dividend or other
distribution may thus pay the full price for the shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
Any loss realized upon a redemption of the shares in a Portfolio held for
six months or less will be treated as a long-term capital loss to the extent of
any distributions of net capital gain made with respect to those shares. Any
loss realized upon redemption of shares may also be disallowed under the rules
relating to wash sales.
Special tax considerations apply with respect to foreign investments of
those Portfolios which permit such investments. For example, foreign exchange
gains and losses realized by a Portfolio generally will be treated as ordinary
income or losses. In addition, investment income received by a Portfolio from
sources within foreign countries may be subject to foreign income taxes
withheld at the source. The United States has entered into tax treaties with
many foreign countries which entitle a Portfolio to a reduced rate of tax or an
exemption from tax on such income.
NON-U.S. SHAREHOLDERS
Distributions of net investment income to non-resident aliens and foreign
corporations will be subject to U.S. tax. For shareholders who are not engaged
in a trade or business in the U.S. to which the distribution is effectively
connected, this tax is withheld at the rate of 30% upon the gross amount of the
distribution in the absence of a Tax Treaty providing for a reduced rate or
exemption from U.S. taxation. However, if the distribution is effectively
connected with the conduct of the shareholder's trade or business within the
United States, the distribution will be included in the net income of the
shareholder and subject to U.S. income tax at the applicable marginal rate.
The foregoing is limited to a discussion of federal taxation. It should
not be viewed as a comprehensive discussion of the items referred to nor as
covering all provisions relevant to investors. Dividends and distributions may
also be subject to state or local taxes. Shareholders should consult their own
tax advisers for additional details on their particular tax status.
After the end of each calendar year, each shareholder receives
information for tax purposes on the dividends and distributions for that year,
including any portion taxable as ordinary income, any portion taxable as
capital gains, any portion representing a return of capital and any amount of
dividends eligible for the dividends-received deduction for corporations.
<PAGE>
- -------------------------------------------------------------------------------
ADDITIONAL REDEMPTION INFORMATION
- -------------------------------------------------------------------------------
The redemption information below supplements the information contained in
the Prospectus. We pay redemption proceeds within five business days after we
receive a proper redemption request. Our obligation to pay for redemptions can
be suspended when the New York Stock Exchange is closed other than for weekends
or holidays or under certain emergency conditions determined by the Securities
and Exchange Commission. The holidays on which the New York Stock Exchange is
closed currently are: New Year's Day, Presidents' Day (observed), Good Friday,
Memorial Day (observed), Independence Day, Labor Day, Thanksgiving Day and
Christmas. We pay redemption proceeds in cash, except that our Board of
Trustees has the power to decide that conditions exist which would make cash
payments undesirable. In that case, we could send redemption payments in
securities from our portfolio, valued in the same method as we used to
determine our net asset value. There might then be brokerage or other costs to
the shareholder in selling these securities. We have elected to be governed by
Rule 18f-1 under the 1940 Act, which requires us to redeem shares solely in
cash up to the lesser of $250,000 or 1% of our total net assets during any 90
day period for any one shareholder. Your redemption proceeds may be more or
less than your cost, depending on the value or our shares.
If any of the shares being redeemed were recently purchased by check or
electronic funds transfer, we may delay sending the redemption proceeds for up
to five business days while we determine whether the check or electronic funds
transfer used to purchase the shares has been honored by the bank on which it
was drawn or made. You can eliminate any possible delay by making your
investment by wire.
We have the right to compel the redemption of shares held in an amount if
the aggregate net asset value of the shares in the account is less than $2,500.
If our Adviser decides to do this, we will advise shareholders who would be
affected to increase the size of their accounts to the $2,500 minimum.
- -------------------------------------------------------------------------------
TRUSTEES AND OFFICERS
- -------------------------------------------------------------------------------
We have a Board of Trustees which provides broad supervision over our
affairs. Our officers are elected by the Board and are responsible for day to
day operations. The Trustees and officers are listed below, together with their
principal occupations during at least the past five years. (Their titles may
have varied during that period.) The address of each, except where an address
is indicated, is 111 Pine Street, San Francisco, California 94111.
The Trustees who are "interested persons" as defined in the 1940 Act are
indicated by an asterisk.
William D. Glenn, II (born 9/9/48), Chair of the Board and Trustee, has
been a shareholder of Working Assets since 1983. He is a psychotherapist and
the executive director of Continuum HIV Day Services in San Francisco. He is a
past President of the San Francisco AIDS Foundation and former member of the
Board of Directors of the Gay Rights Chapter of the Northern California
American Civil Liberties Union. From 1981 to 1988, Mr. Glenn was the Assistant
Principal and Dean of Students at Mercy High School in San Francisco. He
currently serves on the boards of San Francisco's KQED and the 18th St.
Services Chemical Dependency Recovery Center. Address: 915 Las Ovejas, San
Rafael, CA 94903
Sophia Collier* (born 3/13/56), Trustee, is President and Principal owner
of Working Assets Management Company. Please see the section entitled
"Additional Information Regarding The Management Company" for more information
regarding Ms. Collier.
Lokelani Devone (born 4/8/57), Trustee, is Assistant General Counsel for
DFS Group Limited, an international retail business group. She has been with
DFS Group since 1989. Prior to holding this position, Ms. Devone was a District
Representative for Congresswoman Nancy Pelosi of the 5th Congressional District
<PAGE>
in San Francisco. She has also worked as a corporate attorney and as a foreign
legal Adviser for Nichimen Corporation in Tokyo, Japan. Address: 424
Collingwood Street, San Francisco CA 94114.
Juliana Eades, (born 2/2/53), Trustee, has served as Executive Director
of the $4 million New Hampshire Community Loan Fund since its inception in
1984. In this capacity she has been a leading force in the creation of jobs and
affordable housing in New Hampshire. Prior to accepting her position at the
Loan Fund, Ms. Eades was Program Manager at the N.H. Governor's Council on
Energy. In other community activities, Ms. Eades is a member of the Campaign
for Rate Payers' Rights and the Society for the Protection of New Hampshire
Forests. Address: 79 South State Street, Concord, New Hampshire 03301.
Azie Taylor Morton (born 2/1/36), Trustee, was Treasurer of the United
States during the Carter Administration. From 1984 - 89, she owned and operated
the Stami Corporation, a franchisee of Wendy's Old Fashioned Hamburgers. Her
thirty year career began as a teacher at the State School for Girls in
Crockett, Texas. She went on to work at the AFLCIO, the White House Conference
on Civil Rights and U.S. Equal Employment Opportunity Commission. She has
served as the Commissioner of the Virginia Department of Labor and Industry as
well as Executive Director of the Human Rights Project, Inc. In 1990 - 92 she
was Director of Resource Coordination at Reading is Fundamental, Inc. She is
currently an investment adviser. Address: 2801 Park Center Drive, Suite A-912,
Alexandria, Virginia 22302.
J.D. Nelson* (born 3/28/38), Trustee, is the founder and C.E.O. of
RhumbLine Advisers , a minority-owned investment firm specializing in the
management of institutional pension assets using indexed and quantitative
techniques. Mr. Nelson was formerly Senior Vice President and Director of
Public Funds Services at State Street Bank and Trust Company in Boston. Prior
to his twelve years at State Street, he was the Administrator of the Democratic
National Committee. He currently serves on the Board of the City of Boston's
Economic Development Industrial Corporation. He is a former Chairman of the
Roxbury MultiService Center (Mass.), a past director of the United Way and has
taught at the School of Banking at Williams College. Address: RhumbLine
Advisers, 50 Rowes Wharf, Boston, Massachusetts 02110.
Ada Sanchez (born 8/17/52), Trustee, is Director of the Public Service
and Social Change Program at Hampshire College. This program is a
multi-disciplinary program designed to engage students and faculty in community
service learning research and volunteer projects, primarily in low income
Latino and African-American communities. From 1985 - 87 she was the National
Toxic Waste Campaign Coordinator for Greenpeace USA. Prior to that Ms. Sanchez
was involved with a number of activist organizations including; Western States
Field Consultant for the Disarmament Program for the National Fellowship of
Reconciliation, co-director and founder of Viewpoint Syndicate, lecturer for
Progressive Foundation Speakers Bureau, national coordinator for Supporters of
Silkwood and outreach coordinator for Coalition for Non-Nuclear World. Address:
177 Bridge Street, North Hampton, MA 01060.
Our Board of Trustees functions with a Nominating Committee comprised of
the whole board, but pursuant to our Distribution Plan (see "Distribution
Plan") below, we have agreed that Trustees who are not "interested persons" of
the Fund, as defined in the 1940 Act, and who have no direct or indirect
financial interest in the operation of the Distribution Plan or any agreement
relating to the Plan ("Qualified Trustees") shall have primary responsibility
for the selection and nomination of other Qualified Trustees. This agreement
will continue for so long as our Distribution Plan is in effect.
The following compensation table discloses the aggregate compensation
from Citizens Trust for services provided for the year ended June 30, 1996:
<PAGE>
<TABLE>
<CAPTION>
CITIZENS INVESTMENT TRUST - COMPENSATION TABLE
=================================================================================================
(1) (2) (3) (4) (5)
Pension or
Aggregate Retirement Total
Name of Compensa- Benefits Accrued Estimated Annual Compensation from
Person, tion From As Part of Fund Benefits Upon and Fund Complex
Position* Registrant Expenses Retirement Paid to Directors
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Azie Taylor Morton $4,000 0 0 $4,000
Aileen Hernandez 1,000 0 0 1,000
Juliana Eades 4,000 0 0 4,000
Jeffrey Mori 2,500 0 0 2,500
William D. Glenn, II 6,500 0 0 6,500
Ada Sanchez 4,000 0 0 4,000
Lokelani Devone 750 0 0 750
Sophia Collier** 0 0 0 0
J.D. Nelson** 0 0 0 0
Wilma Mankiller 1,000 1,000
</TABLE>
*Each of the above-named persons served on the Board of Citizens Trust, which
consists of seven separate portfolios.
**Sophia Collier is an interested Trustee and received no compensation from
Citizens Trust. J.D. Nelson did not become an interested Trustee until March
1995 and received compensation from Citizens Trust prior to his change in
status to an interested Trustee.
The Trustees who are not "interested persons" received aggregate fees
from us of $23,750 for services provided through June 30, 1996 and were also
reimbursed for out of pocket expenses. Our Trustees, officers and members of
the Board of Advisers as a group owned less than 1% of our outstanding shares
as of June 30, 1996.
OTHER OFFICERS OF THE FUND
Christine Pratt, Senior Vice-President of Citizens Advisers began working
for Citizens Advisers in June of 1996. Prior to that time Ms. Pratt was
employed by BayBanks, where she headed up the lending and servicing division
for BayBanks Consumer Lending and Mortgage
subsidiaries.
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION REGARDING THE MANAGEMENT COMPANY
- -------------------------------------------------------------------------------
Sophia Collier individually owns 60% of the outstanding stock of Citizens
Advisers, Inc. Ms. Collier is the founder of American Natural Beverage Corp.,
the maker of Soho Natural Soda, a company which Ms. Collier co-founded in her
Brooklyn kitchen when she was 21 years old and built up over the next 12 years
to an enterprise with 52 employees and retail sales of $25 million. Soho Soda
was the first natural soda in America and was created as an alternative to
unhealthful mass market sodas. Sophia and her partners sold American Natural
Beverage Corp. in 1989.
Four other individuals own the remaining 40% of the outstanding stock of
the Management Company, as follows: John F. Dunfey (12%); Robert J. Dunfey, Sr.
(12%); Gerald F. Dunfey (12%); and William B. Hart, Jr. (4%). John, Robert and
Gerald Dunfey, brothers, now serve as directors of the Dunfey Group, a venture
capital and investment company. The Dunfey family has been associated, over a
number of years, with progressive social and political causes and has actively
participated in organizations dedicated to world peace, human and civil rights,
and economic justice. The family founded and continues to sponsor New England
Circle, a forum for the "discussion of social, political, literary and
educational topics that can lead to constructive change in our lives, our
nation and our world."
<PAGE>
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INVESTMENT ADVISERY AND OTHER SERVICES
- -------------------------------------------------------------------------------
We are advised by Citizens Advisers, Inc (the "Adviser") under a contract
known as the Management Agreement. The Adviser has offices at 111 Pine Street,
San Francisco, California 94111 and One Harbour Place, Portsmouth, New
Hampshire 03801. The Adviser is a California corporation. Citizens Securities,
Inc, a wholly-owned subsidiary and a California corporation, serves as the
Fund's distributor.
The Management Agreement provides for the Adviser, which is subject to
the control of our Board of Trustees, to decide what securities will be bought
and sold, and when, and requires the Adviser to place purchase and sale orders.
At the Adviser's discretion and sold expense, these duties may be delegated to
a sub-adviser.
GMG/Seneca serves as sub-adviser to the Working Assets Money Market
Portfolio. GMG/Seneca is a registered investment adviser, established in 1990.
Its offices are located at 909 Montgomery Street, San Francisco, California. It
is organized as a limited partnership with two general partners, Gail Seneca
and Genesis Merchant Group. Genesis Merchant Group in turn has four general
partners: William K. Weinstein, Gail Seneca, Paul Jones and Philip C.
Stapleton. Prior to starting GMG/Seneca, Gail was employed by Wells Fargo Bank.
RhumbLine Advisers serves as subadviser for Citizens Index Portfolio .
RhumbLine Advisers is a registered investment adviser established in 1990
and with offices at 30 Rowes Wharf, Boston, Massachusetts. RhumbLine is 97%
owned by J.D. Nelson, a trustee of the Fund whose profile appears earlier in
this document.
The Adviser (or a sub-adviser) provides us, at the Adviser's expense,
with all office space and facilities and equipment and clerical personnel
necessary to carry out its duties under the Management Agreement. Some of our
Trustees and our officers are employees of our Adviser and receive their
compensation from the Adviser. Our custodian bank maintains, as part of its
services for which we pay a fee, many of the books and records as we are
required to have and computes our net assets value and dividends per share.
We pay the Adviser a fee for its services at annual rates as follows:
Working Assets Money Market Portfolio, 35/100 of 1% of the Portfolio's
net assets, and Citizens Index Portfolio, 50/100 of 1% of the Portfolio's
average net assets. The fee is accrued daily and paid at least monthly. The
Adviser has agreed to limit our expenses each year. If expenses exceed this
limit, the Adviser will reduce its fee by, or refund, the amount of the excess.
The limit on our expenses, pursuant to the Management Agreement, is as follows:
Working Assets Money Market Portfolio: 1 1/2% of the first $40 million or our
average annual net assets and 1% thereafter. There is no limit on expenses for
the Citizens Index Portfolio. Not all our expenses are subject to this limit.
Interest expenses, taxes, brokerage commissions, and extraordinary expenses,
such as litigation, that do not usually occur in the operations of a mutual
fund are not included. We are also subject to a statutory expense limitation
imposed by the State of California. This expense limitation requires the
Adviser to reduce its fee to the extent the aggregate annual expenses of a
Portfolio exceed 2 1/2% of the first $30 million of average net assets in the
Portfolio, 2% of the next $70 million of average net assets, and 1 1/2% of the
remaining average net assets in a Portfolio in any fiscal year.
For the fiscal years ended June 30, 1994, 1995 and 1996, the Adviser
received the following fees: Working Assets Money Market Portfolio,
1994-$619,206, 1995-$526,422, 1996-$423,731; The Citizens Index Portfolio,
1994-$0, 1995-$750,572, 1996-$689,466.
Holders of each class of shares of a Portfolio will pay a pro rata share
of all expenses incurred by the Portfolio ("Portfolio Expenses"). In addition,
holders of each class of shares will pay those expenses directly attributable
to those shares as a class ("Class Expenses"). Portfolio expenses which will be
paid pro rata by each class of shares within the Portfolio which include, but
are not limited to, investment management fees, trustees' fees, audit fees,
<PAGE>
legal fees, dividend disbursing and shareholder servicing fees, federal
registration fees and custodian costs and expenses, interest, taxes, insurance
premiums, and dues and assessments of the Investment Company Institute, as well
as any non-recurring expenses.
In addition to the expenses indicated above, holders of each class of
shares will pay their respective Class Expenses which include, but are not
limited to, transfer agent fees, printing and postage expenses, state
registration fees, the expenses of administrative personnel and services as
required to support the shareholders of a specific class, litigation or other
legal expenses relating solely to a class and Trustees' fees incurred as a
result of issues relating to a particular class. Under circumstances where the
allocation of an expense as a class expense might be viewed by the Internal
Revenue service as resulting in a preferential dividend, the expense may be
reallocated to the Portfolio as a Portfolio expense.
The Management Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations, thereunder, the Adviser is not liable for any loss sustained by
the purchase, sale or retention of any security and permits the Adviser to act
as investment adviser and/or principal underwriter for any other person, firm
or corporation. The Management Agreement provides that we will indemnify the
Adviser to the full extent permitted under the Declaration of Trust. The
Management Agreement also states that it is agreed that the Adviser shall have
no responsibility or liability for the accuracy or completeness of our
Registration Statement under the Securities Act of 1933 and the 1940 Act except
for information supplied by the Adviser for inclusion therein.
There are similar provisions with respect to the liability of a
sub-adviser, and the obligation of the Fund to indemnify a sub-adviser.
DISTRIBUTION PLAN
Citizens Securities, Inc (the "Distributor"), a wholly-owned subsidiary
of Citizens Advisers, Inc, acts as the distributor of our shares. Shareholders
do not pay a sales charge on purchasing the shares of the Money Market
Portfolio or the Citizens Index Portfolio.
Broker-dealer and other organizations, known as Service Organizations,
which assist in the distribution of our shares may receive fees from us or our
Adviser. Our Board of Trustees has adopted a Distribution Plan under Section
12(b) of the 1940 Act and Rule 12b1 thereunder. In approving the Plan, the
Trustees determined, in the exercise of their business judgment and in light of
their fiduciary duties, that there is a reasonable likelihood that the Plan
will benefit us and our shareholders. Pursuant to this Plan, Service
Organizations that enter into written agreements with us and our Distributor
may receive, for administration, shareholder service and distribution
assistance, fees at rates determined by our Trustees. In addition, our
Distributor is authorized to purchase advertising, sales literature and other
promotional material and to pay its own salespeople. We will reimburse the
Distributor for these expenditures and for fees paid to Service Organizations,
up to a limit of 0.25% on an annual basis of our average daily net assets. In
addition, if and to the extent that the fee we pay our Distributor as well as
other payments we make are considered as indirectly financing any activity
which is primarily intended to result in the sale of our shares, such payments
are authorized under the Plan.
The Plan was approved on July 5, 1983, by our Trustees, including a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act) and who have no financial interest in the operation of the Plan or in
any agreement related to the Plan. These Trustees are known as Qualified
Trustees. The Plan was approved by a majority of our shareholders at our annual
meeting on April 24, 1984, and has been continued from year to year thereafter
subject to annual approval by a majority vote of our Trustees, including a
majority of the Qualified Trustees, cast in person at a meeting called for the
purpose of voting on the Plan. The Plan was approved by the shareholders of the
Citizens Income Portfolio, Citizens Balanced Portfolio and Citizens Growth
Portfolio on June 11, 1992. Agreements related to the Plan must also be
approved in the same manner by a vote of the Trustees and the Qualified
Trustees. These agreements will terminate automatically if assigned, and may be
terminated at any time, without payment of any penalty, by a vote of the
<PAGE>
majority of the Qualified Trustees or a vote of our outstanding voting
securities on not more than 60 days' notice.
The Plan provides that the Adviser shall provide and the Trustees shall
review quarterly reports setting forth the amounts, payments and the purpose
for which the amounts were expended. The Plan further provides that while it is
in effect the selection and nomination of the Trustees who are not interested
persons shall be committed to the discretion of the Qualified Trustees. The
Plan may not be amended to increase materially the amounts to be spent without
shareholder approval, as set forth above, and all amendments must be approved
by the Trustees, as described above. The Plan only permits reimbursement of
actual expenses and does not permit expenses to be carried forward from one
fiscal period to another. For the years ended June 30, the following fees were
approved and paid under this Plan, 1991-$474,900, 1992-$508,374, 1993-$
606,018, 1994-$713,847, 1995-$783,111 and 1996-$683,515. The major categories
of expenses for 1994 were as follows: Advertising, printing and mailing
prospectuses to other than current shareholders, compensation to
broker/dealers, compensation to sales personnel.
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION
- -------------------------------------------------------------------------------
Our Declaration of Trust permits our Trustees to issue an unlimited
number of full and fractional shares of beneficial interest and to divide or
combine the shares into a greater or lesser number of shares without thereby
changing the proportionate beneficial interests in the Fund. Each share
represents an interest in the Fund. Certificates representing our shares are
not issued. In the event of our liquidation, all shareholders would share pro
rata in our net assets available for distribution to shareholders. The Trustees
also have the power to designate "series" of the Fund which will function as
separate Portfolios, each having it's own assets and liabilities. They may also
create additional classes of shares which may differ from each other as to
dividends. Shares of each class are entitled to vote as a class or series only
to the extent required by the 1940 Act or as provided in our Declaration of
Trust or as permitted by our Trustees. Income and operating expenses are
allocated fairly among the series and classes by our Trustees. We intend to
manage our Portfolios in such a way as to be a "diversified" investment
company, as defined in the 1940 Act. As of June 30, 1996, there were 108,006
outstanding shares of our Common Stock, representing all the shares of all of
the Citizens Trust Portfolios. The following are the shareholders who owned
beneficially or of record 5% or more of the outstanding shares: Working Assets
Money Market Portfolio and Citizens Income Portfolio and no holders of 5% or
more. Citizens Emerging Growth Portfolio - Charles Schwab & Co, Inc., 9.0%.
Citizens Global Equity Portfolio - Charles Schwab & Co, Inc., 17.9%. Citizens
Index Portfolio - Charles Schwab & Co, Inc., 2.3%.
- -------------------------------------------------------------------------------
VOTING RIGHTS
- -------------------------------------------------------------------------------
Shareholders are entitled to one vote for each full shares held (and
fractional votes for fractional shares) and may vote in the election of
Trustees and on other matters submitted to meetings of shareholders. Voting is
generally by class and series except as otherwise provided by the provisions of
the 1940 Act. The Trustees will call a meeting of shareholders to vote on the
removal of a Trustee upon the written request of the record holders of ten
percent of our shares. No amendment may be made to the Declaration of Trust
without the affirmative vote of the holders of more than 50% of our outstanding
shares. The holders of shares have no preemptive or conversion rights. Shares
when issued are fully paid and non-assessable, except as set forth under
"Shareholder and Trustee Liability" below. The Fund may be terminated upon the
sale of its assets to another issuer, if such sale is approved by the vote of
the holders or more than 50% of our outstanding shares, or upon liquidation and
distribution of our assets, if approved by the vote of the holders of more than
50% of our outstanding shares. If not so terminated, the Fund will continue
indefinitely.
- -------------------------------------------------------------------------------
SHAREHOLDER AND TRUSTEE LIABILITY
- -------------------------------------------------------------------------------
We are an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust may, under
<PAGE>
certain circumstances, be held personally liable as partners for the
obligations of the trust. Our Declaration of Trust contains an express
disclaimer of shareholder liability for our acts or obligations and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by us or our Trustees. The Declaration of
Trust provides for indemnification and reimbursement of expenses by the
relevant Portfolio out of the Portfolio's property for any shareholder held
personally liable for the Portfolio's obligations. The Declaration of Trust
also provides that we shall, upon request, assume the defense of any claim made
against any shareholder for any act or obligation of ours and satisfy our
judgment thereon. Thus, the risk of a shareholder incurring financial loss on
account of shareholders liability is highly unlikely and is limited to the
relatively remote circumstances in which we would be unable to meet our
obligations.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he or
she would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct
of his or her office.
- -------------------------------------------------------------------------------
CUSTODIAN
- -------------------------------------------------------------------------------
State Street Bank and Trust of Boston, Massachusetts, is the custodian of
the assets of the Fund. The custodian takes no part in determining the
investment policies of the Fund or in deciding which securities are purchased
or sold by the Fund. We, however, may invest in obligations of the custodian
and may purchase or sell securities from or to the custodian.
- -------------------------------------------------------------------------------
AUDITORS
- -------------------------------------------------------------------------------
Tait, Weller & Baker of Philadelphia, Pennsylvania serves as our Fund's
independent auditors, providing audit services including (1) examination of the
annual financial statements and limited review of unaudited semi-annual
financial statements (2) assistance and consultation in connection with
Securities and Exchange Commission filings and (3) review of the federal and
state income tax returns filed on our behalf. The financial statements of the
Fund incorporated here by reference, have been examined by Tait, Weller &
Baker, independent auditors, as stated in their report which is incorporated by
reference, and have been so incorporated in reliance upon such report given
upon their authority as experts in accounting and auditing.
- -------------------------------------------------------------------------------
LEGAL COUNSEL
- -------------------------------------------------------------------------------
Bingham, Dana & Gould LLP of Boston, Massachusetts serves as our legal
counsel.
- -------------------------------------------------------------------------------
FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
The following financial statements of the Fund and the opinion of its
independent auditors, included in the Annual Report to the shareholders for the
year ended June 30, 1996, are incorporated herein by reference:
Statement of Investments - June 30, 1996
Statement of Assets and Liabilities - June 30,1996
Statement of Operations for the year ended -June 30, 1996
Statement of Changes in Net Assets for the year ended June 30, 1995, and the
year ended June 30, 1996.
A list of securities held by the Citizens Index Portfolio is attached as
Schedule A.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The above referenced financial statements and the report of the
independent auditors are included in the 1996 Annual Report (Accession Number
0000950146-96-001706) which is provided to each person to whom the Statement of
Additional Information is sent or given.
<PAGE>
CITIZENS INDEX LIST
The 300 Companies that make up the Citizens Index
As of 10/25/96
ADC Telecommunications, Inc. ADCT
Adobe Systems, Inc. ADBE
Advanced Micro Devices, Inc. AMD
Ahmanson & Co., H.F. AHM
Air Products and Chemicals, Inc. APD
Airtouch Communications ATI
Alco Standard Corporation ASN
Alltel Corporation AT
Altera Corporation ALTR
ALZA Corporation AZA
Amdahl Corporation AMH
America On-Line AOL
American Express Company AXP
American General Corporation AGC
American Greetings Corporation AGRE.A
American Medical Response EMT
American Power Conversion APCC
Ameritech AIT
AMP, Inc. AMP
Antec Corporation ANTC
AON Corporation AOC
Apogee Enterprises, Inc. APOG
Apple Computer, Inc. AAPL
Applied Materials AMAT
Armstrong World Industries, Inc. ACK
Ascend Communications Inc. ASND
Autodesk, Inc. ADSK
Automatic Data Processing, Inc. AUD
Avery Dennison Corporation AVY
Avnet AVT
Avon Products, Inc. AVP
Bandag, Inc. BDG
Bank of Boston Corporation BKB
Bank New York Inc. BK
Bankers Trust New York Corporation BT
Barnes & Noble Inc. BKS
Barnett Banks, Inc. BBI
Belden Inc. BWC
Bell Atlantic Corporation BEL
<PAGE>
Bell Sports Corporation BSPT
BellSouth Corporation BLS
Ben & Jerry's Homemade, Inc. BJIC.A
Beneficial Corporation BNL
Bergen Brunswig Corporation BBC
Betz Laboratories, Inc. BTL
Biomet, Inc. BMET
Block, H& R HRB
Boatmen's Bancshares, Inc. BOAT
Broderbund Software BROD
Bruno's Inc. BRNO
C-Cube Microsystems Inc. CUBE
Caliber Systems CBB
California Energy Company, Inc. CE
Callaway Golf Company ELY
Campbell Soup Company CPB
Caraustar Industries, Inc. CSAR
CasTech Aluminum Group Inc. CTA
Celestial Seasonings CTEA
Centex Corporation CTX
Charming Shoppes, Inc. CHRS
Chubb Corporation CB
Church & Dwight Co., Inc. CHD
Cincinnati Milacron CMZ
Circuit City Stores, Inc. CC
Cisco Systems, Inc. CSCO
Coca-Cola Company KO
Coleman Company CLN
Comcast Corporation CMCS.K
Community Psychiatric CMY
Compaq Computer Corporation CPQ
Computer Associates International, Inc. CA
Consolidated Natural Gas Company CNG
Consolidated Papers, Inc. CDP
Cooper Tire & Rubber Company CTB
CoreStates Financial Corporation CFL
CPC International CPC
CUC International CU
Cummins Engine CUM
Dean Witter, Discover & Co. DWD
Deere & Company DE
Dell Computer Corporation DELL
Deluxe Corporation DLX
<PAGE>
Dialogic Corporation DLGC
Digital Equipment Corporation DEC
Dow Jones & Company DJ
Dun & Bradstreet Corporation, The DNB
Duriron Company Inc., The DURI
Edwards, Inc., A.G. AGE
Emerson Electric Company EMR
Engelhard Corporation EC
Enron Corporation ENE
Envirotest Systems Corporation ENVI
Fedders Corporation FJC
Federal Express Company FDX
Federal Home Loan Mortgage Corp. (Freddie Mac) FRE
Federal National Mortgage Association FNM
Federal-Mogul Corporation FMO
Federated Department Store FD
First Chicago NBD Corporation FCN
First Union Corp. FTU
Fleetwood Enterprises FLE
Fort Howard Corporation FORT
Fresh Choice, Inc. SALD
Gap, Inc., The GPS
Gateway 2000, Inc. GATE
General Instrument GIC
General Mills GIS
General Re Corporation GRN
Genuine Parts Company GPC
Giant Food Inc. GFS.A
Global Village Communication, Inc. GVIL
Golden West Financial Corporation GDW
Great Atlantic & Pacific Tea GAP
Great Western Financial Corporation GWF
Green Tree Financial Corporation GNT
Gymboree Corporation GYMB
Hannaford Brothers Company HRD
Harcourt General H
Harland Company, John H. JH
Harley-Davidson, Inc. HDI
Harman International Industries, Inc. HAR
Hasbro, Inc. HAS
Heinz Company, H.J. HNZ
Hershey Foods Corporation HSY
Hewlett-Packard Company HWP
<PAGE>
HFS Inc. HFS
Huffy Corporation HUF
ICC Technologies Inc. ICGN
Idex Corporation IEX
Idexx Laboratories, Inc. IDXX
Illinois Central Corporation IC
Illinois Tool Works Inc. ITW
IMCO Recycling IMR
Inland Steel IAD
Intel Corporation INTC
Invacare Corporation IVCR
Ionics, Inc. ION
Jefferson-Pilot Corporation JP
Jostens Inc. JOS
Kellogg Company K
Kenetech Corporation KWND
KeyCorp KEY
Keystone International Inc. KII
King World Productions Inc. KWP
Knight-Ridder, Inc. KRI
Kroger Company KR
Landmark Graphics Corporation LMRK
Limited, Inc., The LTD
Liz Claiborne, Inc. LIZ
Longs Drug Stores Corporation LDG
Lowe's Companies, Inc. LOW
LSI Logic Corporation LSI
Luby's Cafeteria LUB
Manor Care, Inc. MNR
Masco Corporation MAS
Mattel, Inc. MAT
May Department Stores MA
Maytag Corporation MYG
MBNA Corporation KRB
McGraw-Hill, Inc. MHP
Medtronic, Inc. MDT
Mellon Bank Corporation MEL
Melville Corporation CVS
Merck & Co., Inc. MRK
Meredith Corporation MDP
MGIC Investment Corporation MTG
Micron Technology Inc. MU
Microsoft Corporation MSFT
<PAGE>
Miller, Inc., Herman MLHR
Millipore Corporation MIL
Minnesota Mining & Manufacturing MMM
Mobile Telecommunication Technologies Corp. MTEL
Molex Incorporated MOLX
Moore Corporation Limited MCL
Nalco Chemical Company NLC
National City Corporation NCC
National Service Industries, Inc. NSI
NationsBank Corporation NB
Nature's Sunshine Products NATR
Network General Corporation NETG
New York Times Company NYT.A
NICOR, Inc. GAS
NorAm Energy NAE
Nordson Corporation NDSN
Nordstrom, Inc. NOBE
Norwest Corporation NOB
Novell, Inc. NOVL
Nucor Corporation NUE
Odwalla Inc. ODWA
Oneok Inc. OKE
Owens & Minor Inc. OMI
Pacific Enterprises PET
Pacific Telesis Group PAC
Parametric Technology Corporation PMTC
Penney Co., Inc., J.C. JCP
Peoples Energy Corporation PGL
Perkin Elmer Corporation PKN
Physician Corporation of America PCAM
Pitney Bowes, Inc. PBI
PNC Bank Corporation PNC
Polaroid Corporation PRD
Praxair Inc. PX
Price/Costco Inc. PCCW
Providian Corporation PVN
Pulte Corporation PHM
Quaker Oats Company OAT
Qualcomm Inc. QCOM
Raychem RYC
Real Goods Trading Corporation RGT
Recovery Engineering Inc. REIN
Reebok International Ltd. RBK
<PAGE>
Ringer Corp. RING
Rite Aid Corp. RAD
Roadway Express, Inc. ROAD
Rouse Company RSE
Rubbermaid, Inc. RBD
Ryder System, Inc. R
Safeco Corporation SAFC
SBC Communications Inc. SBC
Scherer Corporation, R.P. SHR
Schering-Plough Corporation SGP
Scholastic Corporation SCHL
Schwab, Charles Corporation SCH
Sealed Air Corporation SEE
Sears Roebuck & Company S
Shared Medical Systems SMED
Sigma Aldrich SIAL
Silicon Graphics Inc. SGI
Smucker (J.M.) Company SJM.A
Snap-On Tools Corporation SNA
Sofamor Danek Group, Inc. SDG
SONAT Inc. SNT
Sonoco Products Company SON
Southwest Airlines Company LUV
Springs Industries, Inc. SMI
SPX Corporation SPW
St. Jude Medical Inc. STJM
St. Paul Companies SPC
Standard Products Company SPD
Stanley Works SWK
Stratus Computer, Inc. SRA
Stride Rite Corporation SRR
Sun Healthcare Group Inc. SHG
Sun Microsystems, Inc. SUNW
Sunrise Medical SMD
SunTrust Bank, Inc. STI
Supervalu SVU
Sybase, Inc. SYBS
Symantec Corporation SYMC
Sysco Corporation SYY
Tandem Computers TDM
Tandy TAN
Target Therapeutics, Inc. TGET
Tecumseh Products Company TECU.A
<PAGE>
Tektronix, Inc. TEK
Tellabs, Inc. TLAB
Tennant Company TANT
Thomas & Betts Corporation TNB
3COM Corporation COMS
Time Warner TWX
Times Mirror Company TMC
Timken Company, The TKR
TJ International, Inc. TJCO
TJX Companies Inc., The TJX
Tootsie Roll Industries, Inc. TR
Toro Company TTC
Toys 'R' Us TOY
Trinity Industries Inc. TRN
Turner Broadcast Sys. TBS.B
U.S. Bancorp USBC
U.S. Robotics, Inc. USRX
U.S. West Communications Group USW
U.S. West Media Group UMG
UNUM Corporation UNM
USF& G FG
USLIFE USH
V.F. Corporation VFC
Ventritex Inc. VNTX
Viacom, Inc. VIA.B
Viad Corporation VVI
Vivra, Inc. V
VLSI Technology Inc. VLSI
Wachovia Corporation WB
Walgreen Company WAG
Warnaco Group Inc., The WAC
Wellman, Inc. WLM
Wells Fargo Bank, N.A. WFC
Western Atlas, Inc. WAI
Whirlpool Corporation WHR
Whitman Corporation WH
Whole Foods Market WFMI
Wholesome & Hearty Foods Inc. WHFI
Williams Companies, Inc., The WMB
Woolworth Corporation Z
Worldcom Inc. Ga WCOM
Worthington Foods Inc. WFDS
Worthington Industries, Inc. WTHG
<PAGE>
Wrigley, William WWY
Xerox XRX
Yankee Energy System Inc. YES
